Caroline Ashe Your Source in Augusta, GA Real Estate December 30th, 2007
Wow check out this Google Search. Who is the best Augusta GA Realtor in 2007? Well, If that means total houses sold (no, unfortunately not)… but maybe in service? Let’s hope so! I certainly try to be!
Caroline Ashe Your Source in Augusta, GA Real Estate December 28th, 2007
The debate rages on…
There are a lot of people out there that believe that Realtor fees are outrageous and Realtors are way overpaid. That is a debate that has gone on for a long time, and I won’t address it here.
What I will address is the misconception that an agent walks away with huge commissions for a house sale. In most cases, it’s patently untrue, and stems from most people not realizing the number of parties involved and the expenses behind the scenes.
Let’s discuss the payment that Realtors receive when handling a real estate transaction. First of all, the payment is normally handled by the seller. That means if you use a Realtor to buy a house, their fees are not coming out of your pocket. Sure, the fees might be built into the ‘overhead’ of the house price, but all the same, as a buyer you won’t see the cost. As I just mentioned, the fees are paid by the seller at the house closing. It is taken out of the equity (if there is any) of the house before the seller gets their check. That means if the transaction falls through (for whatever reason), neither Realtor gets paid. Realtors fees vary from Brokerage to Brokerage – For example Meybohm Realtors fees are different than Re/Max which is different than Keller-Williams.
Let the Splitting begin…
I’ll walk you through an example of a typical fee split. In a typical sale, there are four parties that split the Realtor’s fees:
In my case, I work through Meybohm Realtors. They charge 7% for a residential property transaction. Last year the average cost of a home in the Augusta area was approximately $155,000.
7% of that average sale price amounts to $10,850. That’s a high number, but remember we have a 4-way split to follow. The first split is between the selling parties and the buyers parties, so normally each side cuts the number 50/50:
To seller’s agent and broker: $5,425, and then to buyer’s agent and broker: $5,425.
This money goes to the managing broker on both sides, who takes their cut and gives the remainder to the agents. In my case, Meybohm takes 50%, leaving me with $2,712.50. Once again, this varies depending upon brokerage, but even if the agent’s broker takes nothing, leaving the agent with a 100% commission (well 100% of the remaining 50%), they are certainly paying office dues that run around $1,500 a month in addition to their other expenses.
That’s probably the #1 reason people think huge commissions are the norm in real estate. They see a $150K house, they see a 7% commission…Do some quick math…and jump to the conclusion someone just made 10 grand. Wrong.
Uh-oh. Now the fixed expenses kick in…
But wait- there’s more. A real estate agent works as an independent contractor in the eyes of the IRS. The taxes start at 40%, leaving me with $1,627.50. I can get write-offs for certain business expenses, but I’m still going to get hit to the tune of a third or better. (If your CPA is much more ‘creative’ than mine, tell him to call me when he gets out of jail.)
Then you take out an additional 10% for state taxes. I’m down again to $1356.25.
Now, we get to fixed costs: Agency dues (over $300/year), hosting fees ($360/year), IDX/MLS feeds ($200/year), marketing (I average $2400/year), increased automobile insurance (carrying clients requires additional coverage), continuing education required to maintain your license ($300/year), and a cell phone ($200/month). Website development and tweaks I set aside $50/month. Then you have your lockboxes, yard signs, and electronic keys. The key access has a monthly fee of $40/month. In addition, I figure I consume about $200 in business supplies per year.
Then I have the wear and tear on my car and the gas driving people around. I conservatively estimate that at about $200 a month.
My fixed costs alone exceed $600 per MONTH. If this theoretical house sale is my only sale for the month, I’ve made just $752.92.
And the results are in…
Now I’ve shared my split with you before and after taxes, and shared some of my fixed expenses. I’m sure some of you have already computed that if I only sold (1) $150,00 house per month my net income would be approximately $9,035 a year. Now consider that the average agent in Augusta has one transaction every THREE months. That is why there are so many part-time agents! It’s very difficult to get enough business to make it a primary career.
My first year start up expenses, including website, etc were over $7,500. Most established agents will tell you not to count on any income at all for the first 2-3 years.
Typically it takes a minimum of 30-60 days of work for a sale, and then you get your check. This means that unless you have a working spouse, or carry some capital in your checking account, you are always floating expenses before you realize the income. Believe it or not most agents work pretty hard for the wages that they make.
Being in business for yourself requires an extraordinary amount of work and the weekend is the busiest time, since everyone else is NOT working. I get calls late at night pretty much every day. And you should try planning a vacation!
I’m not looking for a pity party. In fact, I do pretty well in real estate, and I conservatively expect my business to double in ’08. But it always makes me grimace when people make jokes about the high commissions. Since when?!? (LOL)
Don’t get me wrong – I love the work – but if you think money is the only reason why Real Estate professionals do the job then you would be mistaken. Because at the end of the day the money is not enough. If you do not enjoy people, homes, and a lot of hard work, you need to find another career.
Caroline Ashe Your Source in Augusta, GA Real Estate December 27th, 2007
I get this question every now and again, ‘Why does an Augusta Real Estate website have such a strange domain name? Isn’t Augusta south and west of the Savannah River??’ Well, the answer to the question is more personal than professional. Here are a few reasons:
I thought up the name while brainstorming names for a real estate site to focus on the North Augusta real estate market. However, the market there compared to Augusta is much smaller, and there are a few well-established agents in North Augusta that make it tough on younger real estate professionals to get started. Later on, during site development, I decided that focusing the website on a much larger market was a better use for my marketing time and money.
The peculiar domain has had a few side effects, the most bizarre being a front page ranking for Savannah GA real estate on Google. The big G has just now caught on to that and moved me back to the 3rd page of results. (Thanks guys).
The sensible thing to do would have been to choose a domain name that is easier to spell, has something to do with houses, and is shorter, but I do love my ‘pieces of flair’ (Obscure Office Space reference?)
For me the domain name is a way of being unconventional and giving my site a little bit of myself. It does seem to be easy to remember, and it’s worked so far. If you have trouble you can always try www.ElegantAugustaRealEstate.com – that works too.
Caroline Ashe Your Source in Augusta, GA Real Estate December 21st, 2007
I had a request today to share some historical housing data for Columbia County. The question was, “Can you post some information from the MLS concerning average DOMs and declining prices in Columbia County?” It took a little bit of digging, but I found it! So, here you go:
For the year 2006:
Columbia County had 3,958 residential listings, of which 2,901 were sold, 675 withdrawn, and 438 expired before sale. The average days on the market (DOM) was 76 days, with a sale price 99% of the list price. The average sale price of a Columbia County home was $208K.
Year to date 2007:
Columbia County had 4,004 residential listings, of which 2,274 were sold, 1,044 withdrawn, and 318 expired before sale. The average DOM is 88 days. Sales are closing with an amount within 99% of the listing price. The average sale price so far is $217K. There are 154 homes that are marked pending (under contract as of today).
So to answer the question directly, the average DOM has increased 12 days, while the average listing price has increased $9,000. Home values in Columbia County increased roughly 4.25% last year.
Not exactly a gloom-and-doom scenario. In fact I had someone remind me this was a normal market several years ago, before the real estate boom.
Caroline Ashe Your Source in Augusta, GA Real Estate December 18th, 2007
The year 2007 in Review:
Before I get into the stats today I just wanted to make a comment on my own activity. In terms of clients, I’ve pretty much closed out what I am going to do for the year. I do have one more house closing scheduled before the end of 2007, but unless someone new pops out of the woodwork…I can put a fork in this year because it’s done.
My activity didn’t really start until late summer, and then all of a sudden I was busy. The spring and early summer of 2007 were slow- I’ll concede that point. But the back half of the year was very productive. And thats what gets me very optimistic about 2008. The growth in inquiries, the growth in web traffic, and my own growth in working clients at the close of this year points to a great 2008. And on top of it all, we have several large groups relocating into the area. The new T-Mobile call center, a new signals operation at the Fort, and expanding operations at several manufacturing plants in the area have all brought me new clients this fall. A FED cut in the interest rate makes the outlook that much better.
Take a look at a line in a recent report: “If my own personal activity on behalf of clients -and this websites’ traffic- are any indication at all, we are in for a very productive fall. I’m not sure if it’s a fluke or not yet, but I saw a very large burst in inquiries this month that continued all through September.”
Would you like to see what I was referring to? Here is a graph of this website’s traffic for the whole year. Notice the steady increase? Now you can certainly attribute some of that traffic to higher visibility in search engines. However, I ended a paid advertising campaign in September (that was bringing in visitor traffic) and relied on strictly ‘organic’ traffic from then on. This graph is showing interest in buying real estate, folks:
[Click on thumbnail for larger version]
Still not convinced? Take a look at pageviews starting in late summer:
The pageviews almost doubled in a few months! All this makes me feel like we are turning the corner on the recent housing doldrum. I’m very excited about next year. So if you are worried about the market next year- let not your heart be troubled. I have an optimistic outlook, and I think you should too!
Current Status of the Augusta Real Estate Market:
OK. Now lets focus on inventory. The last time I took a snapshot on inventory was September 4th, so I’ll use those for some historical comparison. The first number is the # of unsold home listings as of 9/4. The second is as of 12/16. Percent change is the third number*.
Richmond County: 1473, 1554, up 5%
Columbia County: 1184, 1276, up 7%
Aiken County: 501, 536, up 7%
Edgefield County: 64, 70, up 9%
Augusta, Georgia: 1151, 1193, up 4%
Evans, Georgia: 451, 470, up 4%
North Augusta, SC: 279, 301, up 7%
Aiken, SC: 116, 121, up 4%
In every area there is an increase in inventory. The numbers don’t lie. It’s a buyers market. More houses were listed than sold, and the bulk of them will stay on the market until spring.
The market is still sluggish for sellers, so continue to expect to have holding costs. As a seller, if you haven’t sold your home yet, hang on. It’s going to be a while longer! The market doesn’t really start until March-April timeframe, so some of you may be disappointed if you want a quick sale.
So, do the inventory numbers disprove my personal view of how this fall went? Perhaps. My business certainly can’t be reflective of everyone. However, I think my earlier comments still hold true. I fully expect the inventory numbers to start to drop by summer. So, my advice is that if you are an investor, or are looking to make a move into the area right now, consider buying in the first 3 months of next year. That is when the best deals will be made. After that, it might be a little tougher to get a deal on a new home.
* These numbers are for residential real estate (homes for sale). Listings data obtained from NorthoftheSavannah.com’s feed from GAAR-MLS (The Greater Augusta Realtors-MLS). This data does not include commercial listings, lots and land, or multi-family housing.
