AIPIS 87 - Eliminate the 6% Fees by DIY Home Selling with Sissy Lappin

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com. Welcome to the AIPIS show for accredited income property investment specialists and those who aspire to be. If you're a real estate, mortgage or financial professional, this is the place for you. We'll explore innovative investment analysis, sales, marketing and income generating strategies for the most historically proven wealth creator income property. Learn from the experts as they show you how to build a better business and a better life.

Welcome to the AIPIS show for accredited income property investment specialists and those who desire to be. This is your host, Jason Hartman where we talk about increasing your income, your productivity and just generally having a better life while serving your clients better with America's most historically proven asset class income property. We have a great interview for you today and we will be back with that in less than 60 seconds. It's my pleasure to welcome Sissy Lapin to the show. She is co founder of Listing Door and CEO of Lapin Properties and the author of simple and Sold. Cissy, welcome. How are you?

Thank you, Jason, for having me.

It's good to have you on the show. So are real estate brokers overcharging for their services? What do you think? I mean, there's been a lot of talk over the years about commission rates and of course they're not fixed by law. But somehow this 6% tradition, although not fixed by law, has seemed to. It's pretty pervasive.

Well, let me just say this. Right now, innovation is rocking the real estate industry. I mean, it's being rocked in every which way with technology and innovation and also with transparency. And so you're seeing, you know, as I said, it started with like the discount brokerage model, which is Redfin, and it's quickly morphed into the FSBO model. One out of eight homes was sold last year. FSBO. There are estimates that say it's as low as 1.5 million homes. And others say it was over 2 million homes last year that were sold this way. So what has happened, Jason, is people have really. And they realized that the 6% commission is a lot of money. And when you let me just kind of walk you through the math real quick, let's say your home is 400,000. Let's say your equity is 40,000. In that home you pay a standard 6% real estate commission and 60% of that commission is eating up your equity. That $24,000 commission is 60% of your equity.

So let me just outline this Sissy for the listeners. Okay, so they'll get the debate is when you sell a property, since most people don't own much of their property, in other words, they've got a high loan balance on it, maybe. I mean, some people assert that you should pay a commission based on the amount of equity traded rather than on the amount of the debt and equity. Okay. And now the common practice, well, more than common, almost complete, is that you pay on the debt and the equity. And so if you only have $40,000 of equity in that $400,000 home, you know, you can just do the math there and see that many times the broker can make more than the, the client. Well, not make more. I mean, the client got control of that property and, and they got the benefits of seeing it appreciate on a leveraged return. So I don't know if you're going to argue this for brokers, maybe got to argue it for the bank. The bank gets a cut too, because if the property goes up. And you know, we all love leverage as real estate investors and I've always found it odd that the bank doesn't get to participate in that. Although I think it's great because it's more for us.

Right? Well, you know, I think one mistake we all make, especially when we look at the commission, but when we look at our homes or any real estate investment, is we confuse equity with appreciation. And a lot of times people will say, you know, I have 10 or 15% equity in their home or in their real estate investment when they really don't because they're looking at their down payment. And to me, when you look at your equity, you've got to look at, you know, how much is it appreciated? In other words, is that commission eating into my down payment? Because those are hard dollars and they're lost forever once you do it. Right.

Yeah, sure.

So, you know, it's no wonder we associate homeownership with risk and depreciation. The average American moves every five. Well, there was a study done that said it takes eight years for a homeowner to own a piece of their home and to have enough appreciation to cover the commission and the closing cost. I mean, you know, it's a no win situation with the 6% commission.

Well, it's certainly a win for high end brokers in high end areas. By the way, there's a survey done of the 10 most overpaid professions in America every year. I can't remember if that was Forbes who does this or who does it. But anyway, it's out every year. Oddly, they are not in any particular order, but a couple of them that I remembered and were surprised by is wedding photographer, baggage handler at the curb at the airport. Because think about it, they're getting like union scale wages, plus they're getting tips constantly as people are checking bags at the curb, you know, and so a lot of those guys are making 120 grand a year, believe it or not. Wedding photographer, high end real estate agent. So a real estate agent selling high end properties, you know, one of the most overpaid professions in America, according to the survey. And it's hard for me to disagree with that. Tell us what you're doing. You know, what, what, what is your business?

Okay, but let me, if you don't mind, I'm going to touch on one thing. The national association of Realtors last month released a report, it's called the Danger Report. And the number one, I guess threat that they need to address was the marginal agents. In other words, for the first time they came out and said, look, the real estate industry has a big problem. We have a large number of part time, untrained and unethical agents.

I gotta tell you something, I am shocked that nar the national association of Realtors would admit that. And a lot of it is their fault. In my opinion. That is a shocking admission. Or you're shocked too, right?

Yes. If you go on and Google search National association of Realtor danger report, you'll see it. But they went one step further, which I was shocked, and they went to tell you how a nail technician, nothing against nail technicians requires 372 hours. In most states, it's 70 to 13 hours for a real estate agent to get licensed. So we're talking five times more training. But yet a nail technician doesn't handle the most, typically the most expensive assets somebody owns. And then it went on to say, the spiraling of commissions. And then the third one was how agents are no longer relevant. It's a great report for anyone to read. So anyway, so what we did was I wrote the book simple and Sold. And it's a guide that walks you through how to fsbo.

Meaning for sale by owner.

Yeah, for sale by owner. And I released the book and I, you know, I thought I'd do okay. Well, all of a sudden it was downloaded. I think we just broke 16,000 downloads on Amazon then. In fact, today we just released the updated version that has how to deal with the appraisals under Dodd Frank. So then we said, okay, let's take it one Step further and let's give the homeowner the tools they need to make this happen. So we went out, we hired five great programmers that have worked and developed a very, very large real estate space. And they went to work on this. And when we created Listing Door, our goal was to let sellers have everything they needed to sell their own home with zero experience. I like to call it the TurboTax of for sale by owner. With each step, it guides you what the next step is. And so that's what we've created. Then we went one step further and we did cut and paste technology to build your sign, to build your website, to build your brochures. And then FedEx came in and said, we love you guys. We want to be your print partner. So you put in your zip code and you pick up your listing door package at FedEx. Wow. Yeah.

How much does the package cost?

It's $379. And let me tell you what I think is the coolest thing. Everything. Well, there's two parts that I think are great. First of all, everything is personalized for your home. You're not advertising a real estate firm in your front yard. It is all about your home. And it's all customized and very simple to use. That's something even if you're paying 6%, you do not get. Everything's about marketing.

The brokerage firm, I know that's, that's a, that's a lame deal for the consumer too, because they're paying for the brokerage firm's advertising, not for advertising their house. But to be fair, the broker has the economy of scale of being able to advertise even properties that aren't in the ad with their other ad because ads are just lead generation machines. So there is a little bit of a balance to that. But I'm curious, can people do this anywhere? Use your system in any location?

They can use it in any location. And it's being used nationwide now. You know, and the cool thing is that we get mass marketing campaigns, they're dead. Everybody wants that individual small town feeling. And self directed marketing is the way we go. You know, we have Facebook, Instagram, and all of that to be thankful you know, for. And so, you know, Jason, I will tell you this one thing I think that we have focused on, and you know, I don't want to sound like an infomercial, so I apologize for that, is we have really tested what works to sell a home. And I see all this great new real estate technology coming out and most of it is so the agent has less work to do, or, you know, it's geared so the agent can get more leads, but nobody's testing it to see if it actually works and sells a home. And theory is great, but it cannot beat experience.

Well, you've got to, you know, you know, look it, I mean, so many people have tried to disrupt the real estate industry for the decades that I've been in it, and nobody has been successful at it at all. I mean, we've seen help you sell, we've seen all of the others. There's been a million iterations of discount brokerage and so forth. And that's not what yours is. Yours is more of an empower the owner thing. But, but you've got to, you got to just know, sissy, that this industry is ripe for some disruption because it's so inefficient. I mean, realtors spend 80, 90% of their time on marketing or networking or prospecting to get new clients and so little time actually selling the property or helping a buyer buy a property. And of course those percentages vary by whether it's a listing agent or a selling agent or what the mix is of their business. But you know, that's just, that's just so inefficient. I mean, it's not, you know, Stephen Covey, the late Stephen Covey has a great quote I often try to remember. And it is, the main thing is to keep the main thing. The main thing. And you know, the main thing in the real estate business is definitely not selling your house. Okay. The main thing is getting more leads.

Yeah, that is so true. And you know, so much has changed since these other companies came out. I mean, you know, we have the Internet now. It's the greatest democratizer of all times. And it's really great that homeowners, you know, the sales data is no longer just the privy of real estate agents. You know, we have a thing that, we have the intel report. It is absolutely the most accurate data out there for you to price your home. It comes to us in 15 pages of data. And then we have then gone through and worked on algorithm and we give you an avm, an automated valuation model that is incredible. And we do it on two pages. That is so simple to understand. You know, this day of trying to make something look difficult to just your fees, those things are gone. It just makes people mad. And that's now available to sellers where they get to make their own opinion versus an agent dependent. And then the other huge change is how would you let People know your home was for sale. And, Jason, I got to tell you, this is a big change. And we now have Zillow, Trulia, Yahoo Homes. I joke that the opposite has happened. We almost have too many posting sites. It's no longer the mls. The MLS has taken a back seat to. Zillow is the number one search for homeowners. Many of these MLSs, they're owned by the town that they're representing. There's a large percent of them that don't even have a mobile app. And so that's how Zillow has been able to come in and take the number one position.

Yeah, real estate has always been pretty primitive as far as software and technology. I. I would agree with that. But, yeah. Okay, talk about this $379 package. You actually have three packages. That's the medium one that you talked about. So does it include a professional photographer to come out and take the photos?

That's actually a more expensive package. But let me tell you what the $379 does cover.

Well, it says 16 photos.

Yes, it does. Well, that's for you to take with your smart. You take them with your smartphone and upload them.

Right. Okay.

Which I've actually. You know, I think the new iPhones take incredible pictures. Yeah. But the first thing we give you is an intel report. You know, it is the most reliable comparable data out there. It gives you the whole picture. Then we give you three different steps to tweak that price. You look at the conditions, the consumption, how quickly homes are selling in your area, and then you look at the competition. That process takes about 30 minutes to do. Then the next thing that's just amazing is the marketing side. You know, advertising is based on one thing. Happiness. Don Draper and Madman said that. And what our program does is you load your photos, you drag and drop them, and it literally creates a personalized website. It creates a customized sign. It creates your brochure. Then we take it one step further. It then formats it into a social media campaign where you can. With a click of a button, you can put it on any form of social media that you want to. We go in, and we pull the data from your area, and so we run a Facebook ad campaign for you. I mean, it is. It's pretty slick, let me tell you.

Now, they can put it in the MLS and pay, you know, two and a half or 3% of the selling agent or whatever they want, Right?

Absolutely. Absolutely. You know what? We're. I joke that, you know, we're a company that loves everyone. So if somebody says, you know what, we want to put it in mls, that's no problem. But we suggest that they wait. The average home, actually, unless they're in a hot market, takes 65 days to sell. So we tell them, you know, give it some time. Like I said, Zillow is now the number one search site. But, you know, if you need to sell it fast, then absolutely, you put it on mls. If you go on listing door, we have a blog that says, to MLS or not to MLS that pretty well explains, you know, where you decide what's best for your situation. You're in total control.

So the website is listingdoor.com, right?

Correct, listingdoor.com and Susie, just kind of.

Wrap this up for us. What else do you want people to know?

I want people to know that don't be afraid to sell your own home. It's actually very, very simple when it's broken down into easy steps.

Well, that's true. You know, we've only talked and. Sorry, let me interrupt you there. We've only talked about, like, the marketing side of it. What about the technical side of it? What about the contracts? What about negotiating? I mean, certainly having a third party negotiating for you can be beneficial. I mean, no one would deny that, I don't think. I'm not saying it's always beneficial. I'm saying it could be if they do it right. So that's my disclaimer on that one. But, you know, there are other aspects to it. There's paperwork, there's legal stuff. There's, you know, managing the escrow, understanding how loan approvals work, that kind of thing, you know.

Absolutely. And let me go into that. You know what, though? We're becoming such a DIY world. I joke that DIY is the new MBA. I mean, people now embrace TurboTax. There's going to be some that are going to use a cpa. You know, they use autotrader now to sell their cars, E trade instead of, you know, having to use a stockbroker. So we've really kind of changed how we do things. And as far as the paperwork, you know, it's kind of funny when you sell a home, there's really two main documents. That's the contract and the disclosure. All these other documents that go along with it are now. They basically come from the real estate firm. They are showing that now brokerage firms, because the commissions have gone down, are all having to. They're with affiliated businesses. So they have these forms now letting you know that they're getting paid by the vendors. They have, they indemnify the agent should they forget or misrepresent something. And that's, you know, all the. One of the forms that I saw the other day was to make sure the homeowner had insurance. Well, you can't get a mortgage without insurance. So the real estate firm actually had it. And I thought, oh my goodness, did somebody forget or not? Tell them, you know, insurance. But the other thing is, and let me go into the mortgage, things have changed so much with Dodd Frank that I can assure you, whoever is lending you that money, it's like having the best law firm in the world look over your documents.

The lender is a great partner. Okay, good. Okay, so just finish your wrap up, if you would.

Okay. You know, let me say this. The consumer is now empowered with information and tools thanks to the Internet. And you know, they can make smarter decisions on what works best for them. You know, there's going to be some people that this is not right for them because of the time and there's going to be other people that say, you know what? Heck yeah, for four or five hours. You bet I'm doing it this way.

Okay, thank you so much, Sissy. I appreciate you sharing this with us. It's a unique idea and I look forward to hearing more and seeing if it really catches on. Thank you so much.

Thank you so much.

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