Your home is likely your largest asset. In this conversation, Paul Sydlansky sits down with real estate expert Dan Mower to discuss how to choose the right agent, avoid common pitfalls, and protect your investment when buying or selling.

Topics Discussed:

• How to pick the right real estate agent
• Why deals fall apart and how to prevent it
• What the NAR settlement means for buyers and sellers
• Getting an accurate value for your home

Transcript:

If you’re in your early 50s, there’s a good chance your home is one of the biggest financial assets you have.

And at some point — maybe not today, maybe not for a few years — you’re going to have to make a decision about it. Do we stay? Do we downsize? Do we move closer to the kids, or finally to that place we’ve always talked about?

That decision is a big one. And in my experience, most people don’t think about it nearly early enough.

So I sat down with Dan Mower, a real estate expert here in the Finger Lakes region, to talk through what that process actually looks like — how to pick the right agent, what typically derails a sale, how to read today’s market, and, honestly, why the number you see on Zillow might not be the number you should be planning around.

Whether you’re thinking about selling in two years or ten, this conversation is worth your time.

Let’s get into it.

Paul Sydlansky, CFP®

Okay. I am excited today to be joined by Dan Mower. Dan Mower leads the Mower McLennan team here in the Finger Lake region of New York. They are a highly regarded real estate team, and with multiple decades of experience leading teams that deliver on all types of market expertise, data-driven pricing strategies, and just really a client focus. And I’m really excited again to have Dan, because as a financial planner, there are so many times when a home purchase, a home sale comes up, it’s an important part of most people’s lives, whether that’s upsizing, downsizing, relocating, I mean, you name it, it’s a big decision and for most folks, it’s either their largest or their second largest asset. So really understanding what’s going on is super critical. Really, what I wanted to do with Dan is have him introduce himself really quickly. I just have a couple of questions that I think will take us through kind of the life cycle of a sale, and we’ll go through those, and then hopefully you guys will find this enlightening. So without further ado, Dan, thanks for joining. We appreciate it.

Dan Mower

Thanks for having me. Appreciate it as well.

Paul Sydlansky, CFP®

Dan, if you wouldn’t mind, could you just give us a quick two-minute or one-minute blurb on your background? I know you’ve worked in different industries before real estate, which I think is really exciting and allows you to bring a different perspective, but if you wouldn’t mind just giving us a kind of quick background.

Dan Mower

Sure, sure. So in a previous life, I was a chef, was a chef down in Florida at a four-star Fort Diamond hotel, got out of the restaurant industry. I got into the restaurant industry when I was in kindergarten. I won my first baking contest, so I loved food and got out of the restaurant industry in the nineties, late nineties, and bought an industrial and commercial janitorial outfit in Connecticut and ran that for about 10 years, and was doing a lot of negotiation with the state of Connecticut and a lot of builders around central Connecticut, larger offices in the area. And my wife was getting her PhD at Yukon, and she took a job here at Corning, and we moved here. I moved here sight unseen. I had never come to visit, and my first visit was a house-hunting visit. We had a little bit of a difficult experience with our house hunting, and it was a very good prompt for me to look at real estate as a potential career move with the negotiating background and a lot of building background, things like that. It really seemed to fit the bill. So that’s what we did when we moved here in 2007.

Paul Sydlansky, CFP®

That’s great. And that’s funny. I wonder now, looking back, if you’d ever recommend anybody to purchase a home site unseen, but we’ll get to that.

Dan Mower

Yeah. Oh no. Yeah, we didn’t purchase sight unseen, but I moved here without visiting.

Paul Sydlansky, CFP®

Got it. Got it. Okay, good, good.

Alright, so what I was thinking is I’d love to. I have a couple of questions that I hear a lot from clients again when it comes to purchasing and selling homes, and I thought that maybe we would just take this through the life cycle. One of the questions that we get a lot is, ” How do we pick a real estate agent? I find most people, maybe they have a friend who does it, maybe a neighbor, but how do you pick somebody, and are there a couple of questions that you should be asking your real estate agent when you’re trying to find somebody to work with?

Dan Mower

Sure, sure. So I do have some notes here. I hope you don’t mind if I do refer to ’em.

Paul Sydlansky, CFP®

No, no, this is great.

Dan Mower

So I wrote down some points I thought you might ask about. So I guess the best way to think about it is a more holistic approach rather than pointed. And think of your real estate agent as a risk manager, as someone who is helping you mitigate the risk in multiple different areas and the things that you should probably be doing. Number one, you should be interviewing a number of agents, at least two agents. A lot of people go with, as you said, someone they know, or they’ll go with the person who gives ’em the highest price. What they should really be asking are questions that get to the core of how the agent operates, what their communication styles are like. They should be asking what systems and models the agents have in place that ensure the risk mitigation aspect, so that things are not falling through the cracks.

Timely communication, all of these, when you’re looking at picking an agent, a lot of people say, come to my house, tell me what my house is worth, and we’ll pick the person who gets the highest price. We’re all working with the same data, we’re all looking at the same data, and if we’re coming up with different pricing, many times agents are acutely aware of the fact that people will pick based on price sometimes, so they’ll give you a higher price than they actually think you’re going to get. Your decision should be twofold. You should be first. Who’s the right person to market? Represent my home, negotiate strongly, mitigate my risk, and then secondly, what price should I offer it at? And that should be a completely separate aspect.

Paul Sydlansky, CFP®

Got it.

Dan Mower

Some of the questions that you should be asking would be days on market, average list price, sale price ratio, and the ratio between what it was listed at and what it sold at. One number that agents are very reluctant to talk about is their original list, price-to-sale price ratio. And people don’t know that that’s actually a statistic, and that’s actually the number that the house was listed at when they originally listed, versus what it sold at, rather than what it was listed at the time that they sold, after any price drops. So that’s something you should be asking people about. Another thing is their marketing strategy. Is there an overarching concept to their marketing strategy, or is it a throw-it-at-the-wall, see-what-sticks type of thing?

We’ve gone with our team, it’s got Ruthie McClennan, who’s been in the business for decades and decades, and me. We have a really good mindset group, a good group of real estate minds that have been doing this for so long that we’ve broken the entire thing down to the base, rebuilt it top to bottom on what works, what doesn’t, where do buyers actually buy from, and where’s the psychological motivation for them to buy a house? All of that should be built in, and it should be an overarching model rather than a, Hey, we stick you on the internet, and we get you sold.

Paul Sydlansky, CFP®

Yeah, no, that’s fantastic. And as I mentioned, I love your data approach because in full disclosure, I’m on Dan’s newsletter and I get a lot of good statistics that I just love as a financial planner, and things like time to close and especially, Hey, what are you selling versus what are you originally listing at? To me, that’s just really good insight. So a couple questions here on the actual transaction. So when you see a buyer and seller agree, what are the reasons why it falls apart? I mean, I think that when I think of common things, inspections, financing, things like that. But I guess, is there anything that you can do as a buyer or seller, to prepare yourself in advance to maybe get ahead of these common pitfalls?

Dan Mower

Yes, and those common pitfalls are the most common inspection is by far number one. Number two is financing issues and the things, I guess some of where you can prepare for that is on the sellers. It depends on what side you’re on with it.

A lot of it comes in with mindset. A lot of it is being prepared for buyers, understanding that no house is perfect understanding there’s going to be issues with a house. And if you’re not working with an agent who’s experienced enough, you’re not going to be able to determine, you’re not going to be able to determine upfront a number of those things. You’re not going to notice those things, and a lot of them are going to come as a surprise and surprises tend to freak people out. And once people get freaked out, that’s when they start to try to cancel on you. So, a couple steps back in ensuring a contract gets to closing and doesn’t get sidetracked by some of these things, having a really good experienced agent representing your home that knows the other side, knows the other agent, is going to be very helpful in being able to prepare that agent.

If I know that someone is not as experienced as I am, perhaps doesn’t know a lot of things about the home, I’m going to be explaining those things to them upfront to prepare them and their buyer prior to them having the inspection, explaining the contract terms very well. When you’re a seller, having a pre-inspection is a fantastic way to mitigate that risk. It’s not only a good way to know what you’re looking at upfront, you can usually address it for pennies on the dollar if you do find issues upfront, but it’s also good negotiating strategy. You can disclose things upfront that you found out about the home that you don’t plan on taking care of that the buyers are aware of before they place the offer and they place the offer accepting those items. So there’s multiple different ways to mitigate those items upfront. As far as the financing goes, use a well-regarded local bank rather than some of the national banks, and places that tend to run into issues, making sure that your attorney has already gotten the deed work taken care of and some of the survey work taken care of.

Because surveys are some of the main things dragging out closings currently, and we’re starting to run into a lot of survey issues that are killing the deals right now as well.

Paul Sydlansky, CFP®

Got it. Got it. No, that’s good. And I think it’s a great point on the relationship between the agents because I imagine there’s a lot that goes down behind the scenes at the buyers sellers are maybe protected from and are ironed out without causing people to get upset. But I also agree to go in without hiding things, be upfront, and because whether I think in any part of a transaction, a surprise is going to freak people out, because the next question is what else are they hiding? Right? What else are we going to find under the covers, so to speak? So one last question. So I guess with that in mind, is there any, if you had to pick as part of the transaction, anything that a buyer or seller should focus on to say, look, the thing that’s most in your control is going to be the financing, or the condition of your home or the inspection, getting it ready. Is there any one thing that you would say is paramount or is it just a combination of everything?

Dan Mower

It really is a combination, but I think being proactive in gathering your team, making sure your team is communicating your agent and your attorney and your lender, and all of those moving pieces, being proactive and making sure that, number one, they’re communicating together and number two, that you’re communicating with them on a regular basis. One of the places that we see a lot of issues is where our clients are not necessarily in contact with their attorney on a regular basis. They don’t know what’s going on. They’re looking for info, and the attorneys are overwhelmed with work, honestly right now. So they’re not, if you’re the squeaky wheel, if you’re calling ’em on a weekly basis, your file’s somehow going to find its way up a little bit in that pile of files that they’ve got. So reaching out to them, that type of thing is going to be key. In terms of sellers, right now, the market is really finicky. The market is we’re low on inventory, average days on market are higher than they’ve been in the past couple of years. They’re still rising even though we’re still low on inventory.

Paul Sydlansky, CFP®

Yeah, it seems counterintuitive.

Dan Mower

It does. It does. So if you look at the statistics, on average, what’s considered a balanced market is six months’ worth of inventory. We are down as low as 1.2 months of inventory in March of 23, ridiculously low. Historically low inventory has slowly been working its way back towards normal with ebbs and flows with ups and downs. Right now, we’re in one of the downs of that, but we’re anticipating it to go back up again. Even with that being said, with us being about two thirds of what typical inventory would be, the market is acting balanced and the market is acting balanced in that are jumping, absolutely jumping on homes that are really well prepared and priced within what the market suggests that they should be priced within. And they’re absolutely rejecting outright and letting homes sit that are either pushing the pricing or aren’t prepared for the market. And so it’s a really finicky market where people are being really trepidatious. So on the seller side, preparing that home and again, ensuring you’re with an agent who’s advising you potentially the highest you can possibly price the house legitimately but not overprice it, that’s going to be absolutely key in getting your home sold in a reasonable amount of time.

Paul Sydlansky, CFP®

Okay, great. All right, so we have a couple more minutes. I just want to hit on two more quick questions for you on current market state. So you alluded to low levels of inventory, although it is appearing like a balanced market, but I know there’s been some change from a compensation standpoint and how things actually get done, and I’m by no means an expert, but can you kind of to the layman give a high level understanding of, I believe it’s NAR settlement and what that means from a pricing standpoint for when for buyers and sellers and how that impacts kind of the industry? Is that a cost saving, is it not? Just curious if you could give us a little bit of insight on that.

Dan Mower

Sure. So it’s a big thing to unpack. There’s a lot of introduce.

Paul Sydlansky, CFP®

I know it’s probably a loaded question, but

Dan Mower

This is one that normally runs really long and I’m going to try and make it concise. I guess overall, not a lot has changed functionally. The two primary outcomes of the NAR settlement — for those that don’t know the NAR settlement, there was a large lawsuit class action lawsuit against the National Association of Realtors regarding primarily, it boils down to essentially price fixing when it comes to commissions, where it was being communicated in some areas, not necessarily in ours, and definitely not with us, that commissions are standard and they’re not. They’ve always been negotiable, and there’s a buyer side and the seller side of that transaction. And traditionally what’s happened is when you sell your home, when you’re a seller of a home and you go to pay a commission, you’re paying that out of the proceeds of the home. So you’ve got your value of the home, you’re not paying something, you don’t have to have a bank account with the commission, you don’t have to have a bank account with those closing costs, generally speaking, because it’s going to come out of the value of the home.

Paul Sydlansky, CFP®

Got it. Yep.

Dan Mower

Therefore, buyers, when buyers are, on the other hand, when buyers are purchasing, they got to have in the bank account 20% down, generally speaking, they’ve got to have their closing costs with another, what, six to 10% depending on where you’re at. And then if they have to pay their buyer’s agent, it’s another whatever percentage their buyer’s agent is receiving, most buyers don’t have that cash, and especially in an environment where interest rates are higher, it’s much more expensive for them to do so. So over time, historically, commissions have just ended up built into the seller side of things just functionally as a result of buyers saying, Hey, I don’t have it. I’ll pay you a little bit more for the house if you pay my commission so that way I can roll it into my mortgage. So functionally, the commission’s got built in. So the NAR lawsuit determined two things. Number one, buyer agent commission cannot be listed in the multiple listing system. It can still be offered by sellers. They cannot limit the seller’s ability to incentivize a buyer or a buyer’s agent to sell their home. They can’t do that. So what they can do is limit where it’s listed so that people can all get together and say, oh, these guys are all charging this, so we’re going to charge that.

So what they determined is we can distribute buyer agent commission offers – offers of compensation through any means other websites, phone, smoke signal, carrier pigeon, doesn’t matter, as long as it’s not within the multiple listing systems. So there’s no complete aggregate system to be able to look at. And the second determination was that there needs to be more transparency in how buyer’s agents get paid. So they determined that buyers must have a buyer agency contract. If they’re going to look at a home with a buyer’s agent, the buyer’s agent has to have a contract with that buyer stating, yeah, I’ll work for you Mr. And Mrs. Buyer, if you do decide to buy this home, I need to get paid X percent in whatever that percent is.

The unintended consequence that ended up coming out of this is that a lot of buyers, like I said, simply don’t have the funds to be able to pay their own agent. So they’re looking at their agents, and they’re saying, if that seller’s not offering a buyer agency compensation, I can’t afford to pay you. I don’t want to see that house. So you’re getting a little bit of that in there, along with a negotiation process. Many times in the offer, the offer says that the seller will pay the buyer agent fee of X. The seller comes back, says, I’m willing to pay Y, and so on and so forth. The net result is that, actually, nationwide buyer agency, average buyer agency compensation has gone up, not down, but by a very marginal amount. I think it was like 0.02%. It was just basically nothing. Where it has had an impact is on luxury homes. When you’re talking about high-wealth individuals and homes over a million or a million and a half, that’s where the fee has gone down a bit. And that makes perfect sense because if you’re selling in New York state, like we do an average home right now, $243,000 in the area, my average is generally around 375.

Working at 2% is generally not very functional for a business model. Listing costs are generally $3,000, $3,500 just to get a house on the market. But if I’m selling everything that’s million, million five and up, I’d happily take that kind of commission on a regular basis. Right, right.

Paul Sydlansky, CFP®

Yeah, no, understood. Yeah. Thank you for walking that back. And it’s interesting just how the unintended consequences, right? That’s a part that it’s with every decision, but it’s interesting to see how it’s playing out here. Alright, so one last question for you. For somebody who’s like, Hey, I want to understand the market value of my home, and I know this is what you do, and there’s a lot of analysis that goes into it, but are there any good websites things? I think of Zillow, but I often see that that can be really off. Do you recommend any for people to get just a high level idea or is it just maybe there isn’t a great site for this?

Dan Mower

For the automated valuation models, there’s really, in our area specifically, not so much if you’re looking at North Carolina, South Carolina, or Florida, where you’ve got development of 350 homes that are relatively the same age, relatively the same size and shape, so to speak. The algorithms that they have work really, really well, and they can get within, I think, the average statistic and national statistic is like 7.5%. 8% is where they end up between their Zestimate and close. When Zillow stopped publishing their average error between their zestimate and closing, this was a long, long time ago; it might’ve gotten better since then, but when they stopped publishing in Steuben County, I believe the number I remember was 25% error between the zestimate and closing price.

Paul Sydlansky, CFP®

Yeah, that’s big.

Dan Mower

It’s difficult when you’ve got, for instance, a 6,000 square foot mansion on the South Side Hill, and across the street is a two-unit rental, and their algorithms just really can’t handle that, and they don’t know. With older housing stock, it’s difficult because of updates versus older housing. I would say it’s useful in that you can get maybe a roundabout, but don’t place a lot of stock in it. Usually what you’re going to want to do with the automated valuation models, it is you’re going to want to look at your tax assessment, your Zillow, your homes.com, and get a feel where the variation is in those, and you’re going to be somewhere likely in that range. Most of the time, those are on the high end of things. Once in a while, super low – your assessment – tax assessment, many times used to come back low, but since they’ve been doing a lot of revals, they’re actually coming in high a bit recently.

Paul Sydlansky, CFP®

Got it. No, that’s a great insight. Using a combination of multiple sources to get to a place that’s more realistic. But of course, yeah, for financial planning, it’s just important that we have some sort of understanding, because like I said, your home usually plays a big role in figuring out what’s next and what you can afford, and retirement planning. So Dan, this was awesome. Thank you so much for your time. I really appreciate it. Again, some great insights here. So thank you again for your time.

Dan Mower

My pleasure. Awesome.

Paul Sydlansky, CFP®

All right, have a good day.

Dan Mower

You as well. Take care.