“I’d Rather Sell My House To OPENDOOR THAN HIRE A REAL ESTATE AGENT”

Ever since we had the NAR lawsuit, there were some changes that came down the line in terms of how buyers agents particularly would be working with clients moving forward and how they would be getting paid. And one thing that was thought to be is that a lot of these buyers agents would be out of work now that the seller would no longer be forced to pay their commission and now that would be up to the buyer. But in many cases what we're seeing is actually business as usual where the seller is still paying commissions. And on top of that, according to the NAR, 86% of home buyers in 2024 still used a real estate agent. So it's not like people are losing as much business as originally anticipated. But there are people out there that refuse to use a real estate agent. This has happened way before the NAR suit and we thought there was going to be more people that kind of joined this club, right? Where now that, wow, the seller doesn't have to pay the buyer's agent anymore. It was looking like maybe many more of those people would just start finding ways to sell the homes on their own. But it turns out that the NAR suit actually has little to do with people's intentions when it comes to selling a house without a real estate agent or looking for an agent that will do it for a reduced fee. It turns out that people who go this route and try to sell without an agent or use a reduced fee broker, they actually value saving time and making the process more convenient as their top priorities. And a lot of these sellers who go this route, they even acknowledge like, listen, we know we might be able to get more for our house if we go the traditional route, but then we also have to pay the real estate agent more. And if we're in a hurry and we just want to get rid of it, then it's more convenient to take some of these other routes, which I'm going to go over with you here in a minute. One thing that people are still doing, surprisingly, and I can't believe people still do this because it's kind of a bad deal for them most of the time, unless you're really just desperate to get out of the house, is people are still selling to companies like Opendoor. In fact, there's a story here of two different people who did this. The thing is, people believe that Opendoor is going to pay them a fair market value for your house, but they're not. They're going to pay you less than fair market value, and they're still going to charge you pretty close to what a seller's agent will charge you, which covers the buyer's agent and the selling agent's commission. For example, Opendoor, they charge you a 5% fee to the seller. And typically, the traditional commission model for real estate agents has always been about 6%. But I've seen many people negotiate that down to 5% and even 4% throughout my career. So it's not like that's a number that was burned in stone, like so many people accused real estate agents of that was always a negotiable figure. So you got Opendoor, they're going to pay you less than what the house is worth and still charge you a 5% commission on top of that. And the crazy thing is you're paying that 5% commission, but there's not really any real estate agents involved because Opendoor is doing the entire transaction. There's no listing necessary. So you don't have to list the house and they're the buyer. So they're taking care of the whole thing and charging you 5% on top of that. But the number one reason people go for this is because they want the time savings and convenience because they can typically close faster when you sell to a place like Opendoor than if you were to try and sell it with a traditional agent. So this woman who decided to sell to Opendoor, she talked to a real estate agent and they told her we can sell your house for $565,000. So she ended up going with Opendoor, which only gave her $535,000, which was $30,000 less, but it gave her the speed and convenience she was looking for. She was going through divorce and relocating to a different state at the same time. So flexibility was her top priority. And since she ended up paying $26,750 in service fees to Opendoor, rather than the $32,100 she would have paid to a seller's broker. But she still would have come out ahead if she would have sold it the traditional route, but she might not have got the time savings she was looking for. And for some people, time is money. They really need that time savings. I guess going through divorce and relocating can kind of put you in this mindset where you have this extra pressure to sell. But I never understood people who felt this way because the reality is even if you go the traditional route and sold the house with a regular real estate agent the way most people do, if you price the house properly, you're still going to get it sold fast. The only difference is the buyer might not be able to close as fast as you would like. And so I think that's the key difference here and why people like this would go with a company like Opendoor. Another woman who decided to sell to Opendoor, she's in the Las Vegas area, and she sold her house to Opendoor for $448,500. And it took 60 days to close the transactions. That's not exactly fast, but it seems like she's happy with this time frame. And this one in particular, I really don't get it. I get it if you want to close in a couple of weeks and Opendoor claims they can make that happen, fine. And that's the convenience you're looking for. But 60 days, that's like a traditional closing. In fact, a lot of them happen faster than that. I've had many closings that close in 30 days, 45 days. So a 60-day closing is not fast at all. So I also think some of these sellers, they end up getting duped into believing that Opendoor is the better buyer in a lot of cases by their marketing material. They get the flyers in the mail or they get emails from them claiming X, Y, and Z, and they don't really do much research or check into what the market's like, where they live, or how fast or how much money they'd be able to get if they sold it the traditional route. If this first person did, but the second one, they're just like, okay, take it. So I just want to make it clear, I'm not against people selling their homes to Opendoor or any of these iBuyer companies. If that's something that works for you, then go for it. But just make sure you have your priorities in a row. Because one thing I can tell just from reading these couple of stories is that if you have time to kill, then there's really no reason not to try to go the traditional route because you could still negotiate a lower commission, 5%, or maybe even less with a traditional agent and get more money for the house. So you're actually leaving a lot of money on the table by going with one of these more convenient options. Speaking of all this, just remember, if you need a real estate agent, I can always set you up with that, guys. I have the link for that down in the description below. Whether you need a seller's agent, buyer's agent, it's always there free for you to use. Now, this situation isn't really an example of people not needing a real estate agent, but rather putting real estate agents up against each other and making them compete for business. Apparently, there's a new company called Ready, R-E-D-Y, and it was founded by the Million Dollar Listing star Josh Altman. What this company does is it's a marketplace where home sellers post their properties and agents compete with each other for the opportunity to sell them. And on top of that, agents also give sellers a cash bonus after they are chosen by the seller. They talked to one guy who sold a couple of properties like this. He said the best thing about this platform was that it saved him a ton of time because typically, whenever he would go to list a home for sale in the past, then he would have to do research on the local market and the local agents and find out who's going to be the best candidate to hire. But this platform kind of skipped those steps for him and brought all of the agents to his doorstep. And since they're competing on price, he was able to get the agent that he hired to settle on a four and a half percent commission. And typically, he was used to paying six like a lot of people were. So not only did this guy save time by not having to hunt down a real estate agent and figure out who to hire, he was able to get somebody pretty fast with the platform, but also he was able to negotiate a lower commission. And I think this is great too. However, just keep in mind, if you're somebody that goes to use a service like this, you've got to understand that what you're doing is you're basically putting up a reverse auction. You're putting your property up and seeing who's going to race to the bottom the hardest. Who's going to be the most desperate to take that listing? Because if you're just looking at who's going to list it for the lowest amount of commission, that might not be the smartest thing to do. If you're really worried about how much it's going to cost commission-wise, you might be better off going with one of those flat fee brokers where they just charge you the buyer's agent commission and then a flat fee to post the property on the MLS because you're probably going to save more money like that and get the same level of service. But this guy claims with the two properties he sold on the Ready platform, he saved about $10,000 in broker commissions between the two transactions and selling each home took less than a month. So he was very satisfied with the service. This other guy out of California, he decided to use an entirely different type of company, which is one I haven't really heard of before. He decided to sell his home with this company called Turbo Home, and they're a home buying service in California, Texas, and Washington currently. They claim to be the real estate brokerage of the future. And what they do is they use AI in addition to licensed real estate agents, and they pay real estate agent salaries, and then the buyers pay a flat fee rather than a percentage of the commission. So this is sort of like the same business model that the flat fee brokers are already using where you pay a flat fee to put it on the MLS, and then you pay the buyer's agent commission. But in this case, what they're doing, it sounds like they're charging the seller a flat fee, and then they're actually charging the buyer a fee as well. So I'm not sure how this is appealing to buyers. I can definitely see how this is appealing to a seller, but this guy claims he saved about $40,000 compared to using a traditional real estate agent, and he sold a $600,000 house. But the bottom line is there are other options out there for people to take advantage of. If you're looking to buy or sell a house and you don't want to go the traditional method, you don't have to feel like you have to go the traditional method. It seems like to me, though, that a lot of people are still most comfortable with the traditional method, and you only have a small percentage of buyers and sellers utilizing these other services. So the best thing you can do is do what you feel comfortable with, but just be very careful if you're a seller in particular, when it comes to selling to these eye-buying companies like Open Door, Zillow's out of the game, but there's other ones too. I don't know who else is still doing this, but just make sure you're not trading too much money and leaving too much cash on the table for that small little bit of extra convenience that you might get. It is truly mind-blowing how many companies out there have information about you that you have no clue who they are or how they even got this information, and that's why today's video is sponsored by Delete.me. Delete.me is a hands-free subscription service that will remove your personal information that's being sold online. Delete.me's privacy experts will also remove you from hundreds of data brokers all year long. So for example, here is my most recent report that came out in November, and you can see they reviewed almost 2,200 listings on my behalf, and 24 listings have been removed. And you can see in previous reports, I've had many more listings removed. In September, it was 115. In July, it was 127. I mean, take a look at this example, guys. The 24 removals that I have in progress right now, they have things like my name, my address, my marital status, past addresses, relatives' info, court records. It's a crazy amount of stuff. So if you're like me and you value your online privacy, make sure you sign up for Delete.me today and get 20% off your Delete.me subscription by joining today using my link down in the description below or by using the QR code on the screen. Now, there are a lot of reasons right now why homebuyers are on the sidelines. The main thing is prices and interest rates. Most people cannot or will not pay these prices and rates, but there's actually other reasons to hold off from buying a house right now, and I want to go over some of them now. The number one reason would be if you are deeply in debt. If you have a lot of credit card debt, car loan debt, student loan debt, this can be a major problem, and it's a major drain on your income every month, and it's going to make it harder for you to qualify even if you did want to buy a home. So adding a huge new payment to somebody who's already deeply in debt isn't going to be very good for your financial situation. It might not even be possible either. The next person who should be waiting to buy a house is somebody who does not have an emergency fund. You know, many people head into home ownership thinking they've made the down payment and now you're scot-free, but a lot of people find out the hard way that this is exactly the opposite once they actually move in and they see, oh, the roof started leaking or, oh, the AC system's not working properly or, oh, we need to buy a new refrigerator. Oh, the house didn't come with the washer and dryer. These expenses add up, guys, and they're all surprise expenses. And on top of that, we're in this very shaky economy right now where people are going through a massive amount of layoffs all by surprise, and a lot of them are happening right now around the holiday season. And starting next year, you can really expect the hammer to drop as companies look to cut their losses even further. So if you're just going to be somebody that just thinks that all I need to do is come up with the down payment and the rest is gravy, you got another thing coming to you. It's not that simple when it comes to buying a house. Even if you pay cash for a house, you could be looking at a significant amount of expenses that are not accounted for, and it's just impossible to know what can come up until you're actually living in the house. The third type of person who should be waiting to buy right now is somebody who does not have enough money for a down payment. And I love this one because there are so many programs out there right now that cater to the opposite. They want you to buy a house with 1% down or 0% down. FHA has been around forever for 3.5% down. You basically have no money to put into the deal, but they want you to buy a house. And this goes right back to the last point. If all you think you're going to do is put down the down payment and move in, and everything's going to be peachy, it's not, guys. Also, when you put less than 20% down, you're going to have PMI, which is private mortgage insurance, which isn't a huge expense, but it is an extra expense nonetheless. And I know what people are going to say. They're going to be like, well, Michael, sometimes it's impossible for people to save up a 20% down payment. A lot of people, they just need to buy the house now because they found the house now, and this is all they can afford. I understand that point of view. However, you've got to sit there and be real with yourself and look at things and be like, if this is all I have, all of my savings are going into this house right now, and everything is going towards this very small down payment that I can barely afford, do you really think you're going to be able to afford to live in that house with all the problems that could come up and all the rising expenses? I just got my escrow statement. My monthly mortgage payment is going to go up $25 a month in 2025. Is that a huge deal? No, but that's $25 extra a month on top of the special assessment I'm going to have to pay next year, on top of anything else that might come up as well. For you, it might not be a special assessment because you don't live in a condo or a townhouse, but it could be that roof or the AC or a bursted pipe during the winter. Anything can happen, an unexpected flood, just like what happened in Tennessee and in North Carolina. Well, well, well, what do we have here? Another flip. That's right. This house was just purchased back in January of this year for $1.32 million, and the previous seller started off asking $1.5 million, and they were able to get this house for $200,000 less, and now they turn around and put it up for sale in August for $1.835 million, and now as of December, they're down to $1.795 million. Guys, who in their right mind is going to spend an extra $500,000 on this house? What would be the motivation for a buyer to come in here? Why didn't they just buy the house back in January? They could have bought it back then for the $1.3 million that this person bought it for. Instead, they think they're going to get an extra half a million dollars just for purchasing a house. I'm going to talk some more about home flipping because there could be some interesting changes coming up in the next Trump presidency that I want to talk about, but we'll save that for a future video, but just know a lot of these home flippers have basically reached the breaking point, and it's made very apparent by these situations where they buy these houses. They think they're going to turn around and sell it for this huge profit. It doesn't happen, and then they get stuck with the house, and people don't think about how much money these guys are losing every single month. That house sits empty, guys. Assuming they have a mortgage, to purchase that house at today's listing price, it would cost you about $10,650 a month. You can easily say these guys are paying $8,000, $9,000 a month just to hold the house, not including any of the utility costs or landscaping or anything like that. Now, the next person who should be waiting to buy a house right now is somebody who doesn't think they can get an affordable mortgage. The rule of thumb is you really don't want to spend more than 30% of your take-home pay maximum on a mortgage. If you can get a mortgage within that parameter, that's great. But if you can't, and you have to go to 40%, 45% debt-to-income ratio, there are some lenders who will do it, guys, but I think it's a very bad idea. You're just going to be stretching yourself to the max from the very beginning of buying your new home. Unless you know for sure you can increase your income pretty rapidly and find a way to make more money, this can be a huge financial mistake for people. Another okay-ish reason maybe to wait to buy a house is if you think mortgage rates are going to come down. Obviously, they've gone nowhere but up for the most part ever since the Fed started cutting rates, but there is a possibility that rates can start coming down once Trump actually does get into office. They have come down slightly in recent weeks. It's down to 6.8 or something like that. It was hovering at 7, but still, that's an insignificant drop. It doesn't really make a huge difference for you when you're really looking at your monthly payment. We're talking maybe like 20, 30 bucks a month. This is my favorite reason to hold off on buying a house right now is if you see that in your market, home prices are declining. Now, there's no way to know for sure what's going to happen with future trends of any market, but typically, once prices start coming down, that carries momentum, guys, just like we saw the momentum with the prices going up during the pandemic. That's pretty much how it goes when prices start coming down as well. It's not just that prices are coming down. It's that there's a lot of dynamics at play in your local housing market that are causing the prices to come down, and those trends are not readily reversible. Typically, it's because inventory is going up and affordability is down, and that's the reason where most places that are seeing price reductions right now are seeing them because there's just too many houses coming up for sale. The current owners either need to sell or can't afford to live in the house anymore due to all the rising costs, and there's not really any new buyers to come and take their place because they can't afford it either. I want to give you guys a real-world example here of how much property taxes can jump unexpectedly. One of my viewers lives in Allegheny County in Pennsylvania, and he shared a story with me that showed that the Allegheny County Council, they just passed a 36% property tax increase starting in 2025, and this is the first property tax increase they've had in more than a decade there, and this is in order to increase the county budget by an additional $133 million, guys. How property taxes are calculated is using the mill rate or the millage rate, so they raised the millage rate there by 1.7. The current millage rate is at 4.73, so the millage rate in Allegheny County is going to go from 4.73 up to 6.43. They always say the same thing, guys. They say, well, this isn't a big deal because this is only going to increase your property taxes about $156 a year at the county's median value assessment of a $110,000 home, and that might be great if you only have a home that's worth $110,000, but what if you have a home that's worth $400,000, $500,000, or a million dollars, and it's not always your fault that the house is valued at that price, right? You could have bought the house 20 years ago, and now the property has gone up tremendously in value. You can't control what the house is worth. Therefore, you pay that higher property tax just because your house is worth more, not because you're planning on selling it or anything, and what this also means for the county is that they're not going to be laying off any of the county's employees, and that the public works and human services departments will be fully funded, and of course, the current administration says, you know, we inherited this deficit from the previous administration, and this was the only way forward in order to continue funding our county's services. They're like, listen, how can you say no to a senior citizen that needs us? You know, how can you say no to children that need care? Because a lot of this is focused on human services, which usually ends up meaning that they probably give some sort of subsidy or freebie to somebody in need, and you can look at all this and say, well, Michael, a 36 percent increase for the first time seeing an increase in 10 years isn't too bad because that's only like a 3.6 percent increase every year, but imagine even if your property taxes were going up 3.6 percent every year, that's more than most people would be comfortable with, and on top of that, it's an increase that people were not expecting. You know, just all of a sudden, wham, you're getting hit with this 36 percent increase, guys, and they're not even alone. There was another county that had to raise property taxes by 32 and a half percent last year. We had another one that is going to be raising taxes 33 percent in 2025 as well, and they say the problem in Pennsylvania is that property taxes don't automatically increase with inflation like income taxes do, and then check this out. Allegheny County also says that the sales tax revenue was down 8 percent through the first six months of this year, and revenue from taxes on alcoholic beverages are down 18 percent, so they're also raising taxes in order to compensate for a lower sales volume, guys. This is a bad economy, okay, so that's why you're seeing sales tax revenue down 8 percent and booze taxes down 18 percent. It's because people don't have the extra money for those things, and guess what? All the local homeowners are subsidizing it and footing the bill for that shortfall, which is why owning a home going into 2025 and beyond is not the deal that it used to be, guys. Everybody is still set on this notion that owning a home is the best option when it comes to having a place to live. It's better than paying off someone else's mortgage via rent, right? And sometimes landlords try to pass these type of expenses onto their tenants, but that doesn't work if they try to increase the rent far beyond what the market can bear. You know, if you're a landlord and you're charging $1,700 a month in rent, and then you want to jack it up to $1,900 the following year because you're hit with an increase like this, well, why would the tenant pay that $1,900 if they can find a similar place where they can rent for $1,700 still or maybe even $1,750, just slightly more? Doesn't make any sense. So landlords aren't able to increase their costs just because they get a cost increase and think that they're going to be able to keep the place occupied. It doesn't work that way. It's not that simple. But as a homeowner, you have no choice. It's either pay or you're going to lose your house in foreclosure to the county. These are all things I hope people consider when they're looking into buying a home or even selling a home going into next year. Just realize you have a lot of options if you're a buyer or a seller and understand that owning a home might not be the deal that you think it is. And you really need to run the numbers and see what's going to be the best deal for you and your family. So if you enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here, and I'll see you in the next one.