It happens regularly to homeowners: the unsurprising surprise of receiving a mailing stating that someone is ready to buy their home, cash, as-is, no hassles, no costs, and regardless of conditions. If one thinks that such offer is too good to be true… than probably it is.

As it happens, REALTORS® are not excluded from the pool. In fact last week it was my turn to receive my share of opportunities.

One card was inviting me to call immediately to discuss my options in case I were interested to sell for “top” money, with the promise of a quick close and a “hassle free” transaction. Another letter was proposing me to sell for “cash” and “no hassles” with the commitment to close in less than one month, and no costs; however warning of a markdown on purchase price. “I Buy Houses” signs appear time to time near intersections, and websites where to find real estate investment companies abound. Fill in a form, share some information on your property, and someone will contact you with a cash offer.

Anyone would feel enticed. After all it is every homeowner’s dream to sell effortlessly, quickly, as-is, in cash, with no costs, fees, or commissions, while having someone else handling all the paperwork. So, why hasn’t the market already rushed completely to these investment companies? And how much top dollar or discount is involved? As of now, the vast majority of sellers still hires REALTORS®, and for a good reason.

These companies promise transactions completely free to seller. Analyzing the costs attached to a property sale could help bring some clarity. Let’s consider an average house valued and appraised at $300,000 as-isbilled a yearly total of $3,600 in property taxes. What would its owner save by selling at “no cost”?

Property Taxes. A quick cash transaction closing at the end of August would save a seller four months of taxes at $300 per month, equaling $1,200 total.

Brokers’ commissions. Commissions vary, depending on multiple factors. In this example, we could assume a total of 5% to 7% of sale price, to be divided between listing and selling broker. At an average of 6%, saved fees to seller would amount to $18,000.

Seller is typically responsible for the Michigan Transfer Tax, which has a State and a County component. The former is calculated at $3.75 per each $500, and the latter at $0.55 per each $500 of sale price. Hence, seller would save $2,250 plus $300 for a total of $2,550.

Seller is also responsible for Title Insurance, which is a set amount based on purchase price. This corresponds to $1,570.73 in further savings.

There is also a series of smaller items to consider, such as broker’s fees, closing fees, sometimes a water bill final reading, and similar. We can approximate the total of these figures to $700.

Seller is not responsible for appraisal or inspection charges, and unless agreed, is also not responsible for any land survey costs.

One of the websites I visited was claiming to spare sellers those “hidden fees.” In real estate nothing is hidden. Everything is disclosed and accounted for, including all fees down to the cent. Before a listing, agents provide their clients with a net-to-seller sheet. Before a closing, seller and buyer receive a statement with each and every credit and debit involved in the transaction, and how these figures have been computed.

If we add all these fees and costs that these companies are willing to take off sellers’ hands, we obtain $24,020.73, or about 8% of the purchase price. This is a typical percentage for most sales.

Now the buyer’s costs. Per their messages, these companies do not seem interested in having REALTORS® involved. One went as far as stating that licensed real estate agents add “costs” and “confusion” 😂 to the field! One only wonders why the State of Michigan is still willing to license a horde of professionals to bring chaos to a specific sector of its economy.

Hence, by handling everything in-house, these companies would probably incur in lawyer’s fees, some closing costs, and have to cover title work, appraisal, inspection, and land survey where necessary. These costs could easily amount to a few thousand dollars: let’s pin them at around $6,000.

Numbers speak for themselves. In our case property is valued and appraised at $300,000. Some homeowners might be led to believe that these companies would agree to pay up to about $312,000 (a figure that includes all the costs excluding brokers’ commissions, as no agent is involved) netting them $300,000. A seller’s dream – but too good to be true! In a different scenario, if these companies were represented by a REALTOR®, and had a cash offer accepted at $300,000 on a listed property, with $1,200 in inspection, appraisal, land survey, and some closing costs, their total check would be cut for only $301,200, netting seller $275,979.27 – significantly less, but an amount to which seller has already agreed at the time of listing. This option would save any company $10,800 on just one single purchase! Or close to $1,000,000,000 (one billion) for any company that would  pride itself of closing tens of thousands of transactions.

If one wonders why would any investors go to great length to buy random properties paying cash about 4% above market and appraised value, the answer is simple. They won’t. It is vastly more advantageous for any investment company to shop currently listed properties. And even more profitable to extend cash offers below market value to those random sellers who are still willing to accept an offer on their unlisted houses. If a seller’s best option is to net $276,000 at market value on our sample property, a cash offer from these companies at around $276,000 ($282,000 out of pocket to the investment company versus the $301,200 on the market) might be the highest and best they could expect to receive. But investors are typically extremely attentive to nickels and dimes. If we take into account the premium that a cash and hassle-free transaction would command, the offer could prove even more discouraging to seller, perhaps 10, 15, or even 20% below market value. How does it sound a hassle-free cash offer of $255,000 on a $300,000 property as-is?

In the end, sellers, enjoy your moment in the spotlight; and if the numbers do not meet your expectations please do not be disappointed. Before accepting any offer I would encourage any homeowner to seek the services and the experience of a REALTOR®. A listing with professional marketing would certainly provide a wider chance at a stronger net return by letting the market speak first.

Happy cash sales everyone!


Giuseppe Lupis REALTOR®

A Week In The Life Of A REALTOR® – August 2018

Yes, I’m back! Welcome back everyone!

It has been an eventful summer during which I traveled to Europe. Thanks to technology, even from the other side of the ocean I still managed to work on a pending, write and negotiate an offer, and observe the different ways real estate works in other countries. These pictures of real estate offices come from Italy and Germany. Notice how the listings are displayed.

Rome, Italy
Rome, Italy
Bremerhaven, Germany








In Rome, Italy, there were these two interesting pieces of property. Neither was for sale, although Italian actor Toto’ did manage to sell the Fontana di Trevi once. To be precise, he was only able to collect the EMD…

Trevi Fountain
Trevi Fountain

And for the number lovers, below are those related to the first week of work in August – as soon as I was back!

  • 63 miles driven
  • 56 significant incoming emails, countless the insignificant
  • 44 outgoing emails
  • 43 phone calls, to or from clients, lenders, agents, FSBO’s, and floor (the technical term to indicate the agent on duty who answers office calls)
  • 21 separate text conversations with clients, agents, lenders, prospective tenants, and sellers
  • 13 car drives
  • 8 new real estate articles read, including property rentals
  • 7 scheduling of showings
  • 5 real estate article draft prepared for publication on blog
  • 5 showings of in-town properties concluded
  • 4 clients served
  • 4 hours of floor
  • 2 deck repair quotes
  • 1 verbal land negotiation
  • 1 meeting with City Assessor
  • 1 meeting with Planning officer
  • 1 comparative market analysis’ (CMA’s) completed and delivered to client
  • 1 managing of a rental property
  • 1 new MLS automated search set up
  • 1 maintenance
  • 1 leased property
  • 1 picking up keys for a past client at the end of a 30 DAC possession period
  • 1 research on investment property for client
  • 1 research on land lot
  • 1 outgoing referral for client
  • 1 meeting with new lender
  • 1 work with title company in preparation of a closing
  • 1 preparation for an upcoming open house: listing cards, business cards, signs, disclosures, publicity, and signs
  • 1 prospecting activity
  • 1 new business card design
  • 1 license renewal
  • 1 meeting with a management company
  • 1 travel to other office to pick up open house sign
  • 1 travel to client’s new home to drop off keys
  • 1 closing
  • 1 office business meeting
  • 1 accounting
  • 1 open house

More posts and stories coming soon. Happy summer everyone!



The Risk Of Overpricing

It is not uncommon to entertain in-depth conversations with sellers regarding how to properly price their property. A Comparative Market Analysis (CMA) serves as general tool, whereas experience helps fill the voids.

The subject of a recent exchange was a pond-facing condo unit: whether it should be priced at, or above, similar units facing elsewhere. And if above, whether overpricing could carry some risks.

The CMA showed that twelve similar units were transacted in the last four months: three were pending, and nine sold. Days on market ranged from 0 to 31, with an average of 8 days, suggesting high demand and a quick turnaround. Of the sold properties, three were closed at the same exact price – the highest historically paid for these units based on MLS data – regardless of listing price, and slightly above asking. The others were all sold within a 4.7% range below. Asking price for the three pending units was well within such range, with one unit on the market for 6 days and two for just 2.

The fact that half of these units were facing the pond and half weren’t did not seem to have any particular impact on the purchase price, even if the listing remarks were keen to point at the water view. Of the two units that sold barely below asking, one was pond-facing and the other wasn’t. All other units, equally distributed location wise, sold slightly above asking. As if the market was indifferent to a specific view.

Locations and communities vary, therefore pricing must be considered on a case-by-case. In general, my personal experience seems to confirm that where properties face non-navigable bodies of water, and other units facing elsewhere are also available at a lower price, waterfront units tend to sell at or around that lower price.

This is a situation comparable to a yard effect. Yards are expensive to maintain, and require time and dedication. All residential buyers appreciate a nice-looking yard, but in the end they are only willing to pay for the house. A yard – or a pond – will definitely help sell the unit or make it stand out. Where buyers are given a choice, they prefer the property with pond view or detailed yard work. However, data shows that in a homogeneous landscape – such as a condo or a HOA – these features might not command a premium.

Case in point. Last year I listed a nicer-end waterfront property in my area. Pond was not navigable. Compared to nearby properties without water access, seller was aiming at a significant premium. The only offer ever in the talks in which buyer was willing to pay a small premium for the waterfront was nothing close to seller’s expectations: a gap large enough to purchase a brand new Mercedes. In the end it is buyers who have the last say on property value, which is whatever they are willing to pay for it.

If one’s property is worth X thousand dollars, whether listed at $1 or $10,000,000 it will eventually sell at X thousand dollars. The difference is in how quickly, and how many offers and showings one is willing to entertain. At $1 seller will receive endless showing requests and a similar number of offers. At $10,000,000 seller may not see a showing or offer until price is lowered close to X thousand dollars.

In the real estate market the first few weeks of a listing are critical. Overpricing a unit risks alienating the bulk of potential buyers, that is all buyers currently on the market. After the first weeks, unsold units will be targeted mostly by new buyers coming to the market, which are disproportionately less. The risk of overpricing means that sellers have to chase down these buyers with further price reductions, while fueling that something-must-be-wrong feeling of any property sitting unsold.

Any unsold property carries a cost. Mortgage payments, taxes, insurance, HOA fees, utilities, ground maintenance, general maintenance, and other expenses, continue to be needed. That could add up to a few hundred to a few thousand dollars per month. Non to mention the necessity to keep the property constantly clean and ready for showings or open houses.

The conclusion is obvious. If you believe your property has some unique or special features that in your opinion would translate in a higher listing price, such as a pond or a nicely kept yard, always trust your REALTOR®. Numbers, whether found on internet sites, or computed through algorithms, or comparative market analysis, are only a conversation starting point. The experience of your REALTOR® will provide you with the best possible outcome.

Happy sales everyone!