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What a "PITI" - How to know what your home will really cost you.

Most first time Indiana home buyers are tricked into only looking at the month-to-month cost of owning a home by calculating the amount of the loan from the bank. They are caught off guard when they receive a large bill from the bank, either on their first statement, or in the case of a new home purchase, on the first statement of the 2nd year.

The month-to-month "cost" most people think of when they buy their first home is essentially the principal -- that is, the amount they are borrowing from the bank -- plus the interest of that loan. Little do they know that this is only 1/2 of the equation.

The monthly calculation you really want to look at is called "PITI" -- or "Principal + Interest + Taxes + Insurance." As you can see, the calculation that you'll get from a site like http://www.bankrates.com/ will only include the first two variables. What many home buyers don't realize is that Taxes and Insurance are inevitable costs and are very important when calculating what they can afford to pay for him a home.This is all best described through an example:

• Liz and Jon are looking to buy a home (remember these two from our intro video?)
• They find an home on the east side of Indianapolis that costs $140,000
• Since they have been good about saving for their home, they are going to put down 20% and borrow the remaining 80% from the bank. That leaves $112,000 to be borrowed.
• Let's say they get a rate of 7% from the bank. The monthly payment the bank will initially tell them will be something like $745 per month. This doesn't sound too bad, right? "We can swing that," Liz and Jon say.

What they haven't taken into account is that the taxes on that home might be as much as 3% per year and insurance on their new home might cost them $1,200 per year.

Assuming Liz and Jon don't properly file for their home owners exemptions (this is very common and a topic for another posting), that means an additional $380 per month. All of a sudden they suddenly have to pay $1,125 per month. That's a 51% increase that they really weren't expecting.

These are the types of things a qualified real estate agent can help you anticipate when purchasing a home. Here is some buying advice: Head over to DoorFly.com and find an agent that can help you avoid these types of common pitfalls. Yes, this is a shameless plug, but a relevant one none the less.

Thanks for reading, and happy home buying!

Agent Interview Number #1

Introducing Realtor Amy Walker, Century 21 Scheetz

I had the pleasure of meeting with Amy Walker at the beginning of August (Friday, 8/1/08 @ 10:30). She's a good friend of a colleague, so agreed to chat with me about DoorFly.com.

I walked into her office and instantly felt comfortable. Within the first few minutes, I knew I was talking with a woman who knew her stuff about real estate, and I was certain she would have good insight and ideas. I wanted to get to know her, how she conducts business, what she felt about the real estate market, and eventually her thoughts about DoorFly. So, the interview began....

Q: How long have you been in real estate?
A: "3 years, but I'm a real estate brat, " she told me. Her mother was an agent her whole life, so she is no stranger to the industry. In fact, she later told me her mother works at a competing agency in town.

Q: How do you find new business?
A: Referrals from past clients and friends a lot. Also, open houses.

Q: How has the real estate market effected your business or process?
A: Really the down market just means "a little more trying" and "requires me to work harder," Amy reported. She went on to tell me that she still enjoys seller listings... even though they take longer in today's market, she finds the process enjoyable and rewarding.

Q: Do you like to work with home buyers too? What about first time home buyers?
A: Amy said, "I love working with first time home buyers." She told me she likes it because of the education part of it. She enjoys watching her clients, not the house, for research and reaction -- which helps her find them the best home for their needs.

Q: Why should a client choose you over another agent?
A: Amy told me that she is very "flexible" with her clients, but also understands the balance with family. She added that she "is willing to work very hard for her clients." She gave me an example of a recent closing that would not have gone through if she didn't work through the night to make last minute details fall into place -- the client never even knew and moved in without a glitch.

Q: I've heard there is a lot of turnover in the industry. Why do you think this is?
A: "It's harder than most people think." She explained that the process takes a lot of time, there are so many details, and a lot of follow up is required.

Q: What else can you tell DoorFly's users from your experience as a Realtor?
A: The most important thing for home buyers to know is that it helps them to have their own agent to work on their behalf. The agent gives them protection, and the fees for buyers are already negotiated.

Q: Do you enjoy what you do?
A: "Yes, I love it." Amy said she loves working with families and likes to take away stress from them as much as possible.

Q: How many clients do you have at any give time (approx.)?
A: This is constantly changing, but "I like to have 10 listings, 10 pending, and 10 prospects."

Q: So, what do you think about DoorFly? Would you consider using it to help with your list of prospects each month?
A: Amy said she wasn't sure if she would be able to participate in the bidding because of how rebating might reflect on Century 21.** She was open to the concept though and thought it might be useful during slow times or to agents just starting out. She definitely thought the realtor directory was a no-brainer to help promote herself.

She offered some ideas to make the system more inviting to agents like herself:

**She didn't like that it showed which agents were bidding and what amounts.
Jon and I discussed this comment (and had actually heard it before). We decided this was a valid suggestion -- we did not want any agent to feel negative perception from offering a rebate. DoorFly now only shows who is bidding to the home buyer. The general public and other agents only see the bid summary (number of bids, high bid and low bid).

She also suggested we add sellers functionality -- we're adding it! Home seller listings will be available in a couple weeks.

Thanks Amy for your time and suggestions!

To learn more about Amy, visit her DoorFly real estate agent profile.

DoorFly.com featured on Fox 59 News at 10:00

Money Works Segment: A new local web site brings home buyers and realtors together.

Bob Donaldson reports: DoorFly.com connects home buyers with the right real estate agent, while giving home buyers the upper hand. The site allows realtors to attract clients by offering cash back at closing. Many long time agents say DoorFly could be a preview of things to come in home sales....

Learn more about DoorFly.com

Thank you Dave Hosick, Fox 59, and Bob Donaldson for producing and reporting about DoorFly.com. We are very thankful for your coverage and interest.

Negotiating Real Estate Fees Can Save You Money

DoorFly.com is not the first company to suggest negotiating real estate commission and/or incentive rebates. In fact, many brokers and agents are already negotiating their fees and offering incentives in some way.

What DoorFly.com does is bring it all together in a non-threatening system that is win-win for both parties.

I found an article (written by Tanya Waxler) the other day explaining in simple terms that negotiating the fee for selling a home is becoming common (to a certain extent). It further states that "many real estate agents have been more than willing to take a lower fee simply to be able to list the home."

The article also says that many brokers are not willing to negotiate their fee. From our research, we found most agents were willing to negotiate and a only couple agents who thought it is offensive even to ask. (In what other industry is the price set in stone?) Anyway, the average person is likely, and understandably, a little shy about making such a request. DoorFly allows you (the home buyer/seller) to ask for the best deal in a non-awkward manner. Agents who are willing to negotiate their fees come to you. What could be better? Sit back and watch as agents make you offers for the privilege of serving you. No pressure and no awkwardness of asking. So, if you are buying/selling your home in Indiana, check out DoorFly.com.

The article referenced in this post:
Negotiating Real Estate Commissions Can Save You Thousands of Dollars
By Tanya Waxler (no date provided)

DoorFly is covered in the Indy Star...

On the front page of the Business section

I woke up this morning and jumped online to see the story about DoorFly.com at IndyStar.com. Then I went to pick up a hard copy too (we only get Thursday and Sunday delivered). Dana Hunsinger did a great job on the story, and I could not be more pleased with the article and explanation of our concept.

The story says:
"One of the latest trends in real estate is taking place right here in Indiana with the launch of Doorfly.com.

Think eBay with a twist -- an online auction site that pits agent against agent in a bidding war for home buyers' business.

Here's how it works: Doorfly.com lets agents go to the site for free and create profiles listing their qualifications. Home buyers go on, research and list what they are looking for."

Read the full story >>

I'm looking forward to seeing the response from this coverage in the Indy Star. Thanks Dana for writing the story and your interest in our business.

DoorFly's First Auction is Complete

Indiana home buyer selects real estate agent and will earn money back at closing!

The first home buyers (Jake Fritz and his fiance, Stephanie Black) received five "bids" from qualified real estate agents at DoorFly.com. The bids were between $100 to $510, and they selected agent Laura Musall. Her rebate offer was not the highest offer, but they chose Laura based on her qualifications and detailed profile. (Note: Laura was one of the first agents to fill in a lot of detail and upload a photo to her profile.)

This is exactly what we hoped for -- a combination of bidding and qualifications, where both parties win. Laura met Jake and Stephanie to begin discussions of their home search today.