Watertown Wisconsin Realty Network Frequently Asked Real Estate Questions (F.A.Q.)

Have a general question about the real estate business? You're invited to fill out the "Ask Realty Network" form and submit it and get your answer right here. Questions asked will become part of our Frequently Asked Question (F.A.Q.) and will remain on our site for others to view. Our very own Real Estate Professional, Jennifer Schuster of our local RE/MAX Realty Center is our resident "expert" however, please note that only general questions will be answered. If your question deals to closely with a legal issue, you will be directed to contact your lawyer or your own personal real estate professional for clarification and further information. Please read and understand the DISCLAIMER at the bottom of this page before making any decisions based on our replies to your questions.

- Q - What's the average time frame to sell a property?
- Q - What services does the real estate agent's or REALTOR'S commission cover?
- Q - Is it odd that I've not had one or very few potential buyers view my home?
- Q - My house isn't selling. How long should I wait before dropping the price?
- Q - What's the general guideline for how much to reduce a property's price?
- Q - Why does it take so long to close a real estate sale?
- Q - What does it mean when a buyer is "pre-approved?"
- Q - What's a market study and how does it work?
- Q - Why are all real estate commission fees identical?
- Q - If a real estate agent is part owner in a title company, can he suggest a buyer or seller use his company, or is this a conflict of interest?
- Q - What is the "going commission rate" for a realtor to sell my home?
- Q - My realtor is charging 5% commission to sell my home. My question is, 5% of sale price? Equity? and does it come out of my pocket? or buyer?
- Q - Upon the closing of a real estate contract, how long does the broker have to send the commission check to the sales associate?

- Q - What's the average time frame to sell a property?

- A - Generally speaking, if a home is marketed right and priced right it should sell within 3 to 6 months of the listing date. A seller has every right to ask a prospective agent what their office's average marketing time is. Most offices do keep a record.

- Q - What services does the real estate agent's or REALTOR'S commission cover?

- A - Most people don't realize the costs and time involved with selling a home until they try it.

» Advertising isn't cheap.

» All agents have to pay self employment tax on their income.

» Most realtors have fees and dues they have to pay to the company they work for and the state. Many times, depending on the individual sale of the property, the total commission gets split 4 ways:

• listing office • listing agent • selling office • selling agent

» If a real estate agent or REALTOR doesn't sell a listed house, we don't get paid. (This is a really good reason for us to try our hardest to see that your property sells!) Unfortunately, (for various reasons) not selling a property does occasionally occur, yet we still have to pay for all of the expenses that were involved in attempting to sell the property. If a person were to sit down and figure it, they'd find that an individual agent or REALTOR makes less than $20.00 an hour. That's half of what most plumbers and electricians charge. Keep in mind that one should always consider that each sale is different.

- Q - Is it odd that my home has been for sale for a month or more and I've not had one or very few potential buyers go through it?

- A - If you've not had any activity on your home after having it on the market for a month, something usually isn't right.

» First, take a look at the market. How many homes are for sale? How fast are other ones selling? What makes your home desirable? How many out their in your price range have more or better features

» If everything looks right then a seller should discuss the marketing being done with their agent. If that all looks good, it's usually safe to say it's the asking price. My experience indicates this is the issue over 75% of the time with homes that are not selling. No one likes to hear that though. There is no home that will not sell at some point for the right price.

» Sometimes people purchase high ticket items such as vehicles and include them in an equity loan. Perhaps they've consolidated a overly large amount of credit cards bills and/or a large sum of remodeling money into an equity loan. What happens is that then the equity loan combined with the home's mortgage totals more than a 100% of the true market value of the home. This is not to say that an equity loan is a bad thing, certainly not! Equity loans can be wonderful things if used wisely. The best advice I can give for making use of an equity loan is to think ahead, consider all potential possibilities and then choose wisely what one puts into an equity loan.

An equity loan as defined in the Home and Real Estate glossary is: "the difference between the market value of the property and the homeowners mortgage debt."

- Q - My house isn't selling. How long should I wait before dropping the price?

- A - If the market is good and your home isn't selling I usually suggest to a seller who is eager to sell to drop the price after 1 month. A seller should not, in my opinion drop the price more than once or twice or the general public start to think that there is something wrong with the home. I much rather see a home priced right the 1st time because it makes things much easier on the agent and the seller.

- Q - What's the general guideline for how much to reduce a property's price if it's not selling?

- A - Most sellers also want to only drop a thousand or two and that usually doesn't make any difference to a potential buyer. Generally speaking, most potential buyers look for price drops in increments of $5,000 or $10,000.

- Q - I've found my new house, sold my current residence and am anxious to move. Seems like things are taking forever! Why does it take so long to close a real estate sale?

- A - The time it takes to close a home most often depends on the following:

» What is most convenient for the seller and buyer?

» Has the seller found a new home that they need to coordinate the closing with a 3rd party?

» Is the buyer tied into a lease at an apartment?

» Is someone transferring to any area for a job, etc?

» If the buyer needs financing (which is usually the case) the bank and the title companies need time to do all of their paper work such as appraisals and title searches. Banks and title companies have many transactions going on at once and many factors determine the time they need. Generally speaking, most closings occur after about 30 days from the date of an accepted offer.

- Q - What does it mean when a buyer is "pre-approved?"

- A - It's always good for a buyer to get preapproved before writing an offer on a home. It looks good to the seller. It is quite simple to do. Lenders can produce a pre-approval letter with very little information. One thing to know though is that a preapproval letter is just that. It does not guarantee someone a loan as most of the information is provided by the buyer and not varified yet by the lender.

- Q - What's a market study and how does it work?

- A - Most people refer to it as a Market Analysis. It's a (usually free) service that most agents supply to someone thinking about listing. It's much like an appraisal except not in as much detail. The object of a Market Analysis is to inform seller how they should price their home where as an appraisal is usually done to get a home worth as much as possible ON PAPER for an equity loan. Appraisals don't always hold up in the market.

- Q - Why do all the real estate agents and REALTORS charge the same commission fee? I've shopped around and they all charge the same percentage for their fees. Isn't it possible to find an agent who charges lower real estate commission fee?

- A - It's pretty much impossible to find a lesser fee as it's more or less a real estate standard. Varied real estate commission rates bring with it the potential of a "real estate commission war" thus making the real estate business very difficult. If real estate professionals engaged in a commission war, we'd all keep trying lower our rates to the point where we'd not be able to make a living in this profession.

- Q - If a real estate agent is part owner in a title company, can he suggest a buyer or seller use his company, or is that conflict of interest?

He may suggest his company but first he MUST disclose to the buyer & seller that he holds interest in that company and by them using it he may benefit. Some real estate offices have an addendum that they include with their listing contracts and offers to purchase for that exact reason.

- Q - What is the going commission for a realtor to sell my home?

There is no law that states what a Realtor must charge for a commission. They are negotiated and determined by the client and the agent. Some offices may require their agents to charge a set commission fee. In some cases the Realtor is able to personally choose what to charge according to each individual case. Unfortunately, it's illegal for me to discuss a "going commission" and I suggest you check with your own Realtor or real estate agent if you have one, or discuss this with the agent at or the real estate agency you wish to work with.

- Q - My realtor is charging 5% commission to sell my home. My question is, 5% of sale price? Equity? and does it come out of my pocket? or buyer?

The commission is based on the sale price unless they have some special arrangements. Example: Sale price of $100,000 Commission of $5,000 means the Seller Receives $95,000 BUT they still have to deduct the rest of their closing costs (title policy, transfer tax, etc.).

- Q - Upon the closing of a real estate contract, how long does the broker have to send the commission check to the sales associate?

It is only stated "in a timely manner."

DISCLAIMER: Every real estate transaction is individual and should be treated as such. The answers provided in our F.A.Q. are based on the knowledge, experience and are the opinion of our resident expert. The answers are provided as a guide only and are not intended to provide legal advice of any kind and should not be construed as such. Watertown Realty Network and it's associates and affiliates are not responsible for any real estate decisions you make based on the use of the answers to our questions. Legal counsel should be obtained from your lawyer or other legal source prior to coming to any conclusive decision regarding your personal real estate business.

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