Well, first they form some sort of organization, and then they lobby to demand that licensing be required to do what they do. That limits the supply of workers, which raises their wages.
We DID NOT DEMAND LICENSING. The govt step in and demanded it from a consumer protection issue. Seriously, we have "secret shoppers". If I hand a blue pen to the guy and a black pen to the women for the same contract I could be charged on ethics violations. Why do you think we scribble the pen on a piece of paper before you sign? It isn't to check if there is ink, it is to check that they are the same color of ink!
If you know RE law, you know it is against the law to SET commission rates. It is always negotiable. That is a NATIONAL law. Do you really believe RE agents wanted this law?
My problem is with their use of the state (violence) to advantage themselves. See my last post.
Again, you do not understand the RE licensing. FIRST you must pass the National, than the state. Don't know the federal law regarding lead paint and you can't get your license. BTW that is NATIONAL and it is 1978. Don't know Civil Rights act regarding unwed mothers, well than it is over.
OBTW is violence harsh in your response? Do you know that RE agents are killed or raped weekly because of their profession? Yes, weekly! The reason why is that they hold open houses and take clients into their cars. They are very vulnerable to violent crimes.
I was in a close call, and after that every Sunday when I had to do an open house Bullet came with me. My office also made a decision to create a no-name file. If a realtor called and asked for that file it meant they wanted back up. The office would call back in 5 minutes.
Violence is not a word someone or anyone should throw around willy nilly. Be a female RE agent and you will get it.
Trust me as an agent I have to go on trust when I place somebody in my car. It can be frightening. I can't say I only want married couples or females. WHY? Because than ethically I would be charged with discrimination. I have to take everyone.
Thank the Lord for Bullet, because I swear on my kids he knew something wasn't right. I was showing 1 home, 15 minutes away and 60 minutes later I wasn't home. His instincts clicked in. He called my cell phone and got me out of there safely.
SO when you say violent...make sure you chose your words correctly from an RE world.
-- Edited by pima on Monday 20th of December 2010 07:15:41 PM
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Raising a teenager is like nailing Jello to a tree
You misunderstood me. I have no objection to using, or to others using a real estate agent. My problem is with their use of the state (violence) to advantage themselves. See my last post.
Well, first they form some sort of organization, and then they lobby to demand that licensing be required to do what they do. That limits the supply of workers, which raises their wages.
Wait, that's probably not what you were looking for...
Well, ImSoAnarchist, that's your right to feel the way you do. Trust me, before Pima became a Realtor, I harbored very similar feelings. Particularly as a homeowner who brought and sold 6 or 7 homes over the course of my career due to all the moves I made. Who were these group of people who demanded 6% of my money to just a few hours of work showing my home to potential buyers that I probably could have gotten myself if I spent the time and effort to do it all myself?
Then I saw Pima join that business, and I saw the real time and effort she had to put into ensuring she was protecting her clients during the most critical and expensive financial transaction 99% of Americans would ever have to face in their lives. I saw some of the horror-stories she encountered from homeowners who were trying to sell their homes by themselves and found themselves in the middle of a law-suit due to their ignorance of real-estate law. I watched as she answered phone calls at all hours from friends and family who decided they would conduct their own home search and ended up being screwed in the process, and now needed some advice.
Based on what I've seen and what I know now, I'll give you one piece of advice:
- Selling your house, and think you could do it yourself? Go ahead, if you think you know what you're doing, have the time, and you want to save a few bucks. No one is forcing you to use a Realtor, and I'm pretty sure the vast majority of home sellers who do it on their own usually have no problems. But some do, and the cost of their mistakes can be in the THOUSANDS. Conduct your own risk / benefit analysis to see if it's worth it to you.
- Buying a house? Well, most states have the cost of the Realtors involved, for both the buyer and the seller, come out of the seller's side of the transaction. Check your state laws. And if you now have representation from someone who is there and under contract to protect YOUR interests, and YOU don't pay their fees, you'd be a fool not to use their services.
But heck, it's your money. You decide if its worth it to you or not. I also recommend you watch a lot of Law and Order and become your own attorney if you are ever faced with legal issues. I expect the same can be said for your tax preparation if you ever become lucky enough to need their services; you COULD do it yourself...
Bottom Line: no one is twisting your arm to use a Realtor. Many don't. I've seen it work out fine, many times, for those who choose not to. I've also seen it come back to bite quite a few in the face. These usually became the loudest advocates of Realtor services after their experiences.
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You can't handle the truth! Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Whose gonna do it? You? I have a greater responsibility than you could possibly fathom.
Well, first they form some sort of organization, and then they lobby to demand that licensing be required to do what they do. That limits the supply of workers, which raises their wages.
Wait, that's probably not what you were looking for...
-- Edited by ImSoAnarchist on Thursday 16th of December 2010 11:00:15 PM
I enjoy doing it, because the more I inform everyone what a RE agent does, and how the $$$ work out, the more they realize that there is more to RE than plopping down a sign and waiting for the phone to ring.
For those who think they want to cut out the RE agent because of the cost, think again.
1. Statistically 85%+ homebuyers use an RE agent.
~~~That means you are cutting out a big pool of potential clients
2. Statistically FSBOs list below the market because they reduce a % of the RE cost
~~~Yet, because they do not how to negotiate contracts and can't pull up CMAs, they don't know what the real closing cost is, thus, they also get a lower contract ~~~ FSBO buyers automatically think you are keeping that RE rate and thus, they low ball you even more. ~~~They also don't know their rights when it comes to inspection. If they do a FSBO and allow me to come in I make sure the inspector writes REPLACE not repair. That tallies up.
3. Do you want to be locked to the house 24/7. Buyers don't look just on the weekend, they look at homes during the weekdays and at night.
~~~Have a kid in soccer? Who is going to show the home
4. RE agents qualify the buyer before they step out the door.
~~~ You could accept a contract and they could be not qualified at all. ~~~You are also allowing strangers and would be burgulars into your home to "case it" because you don't know if they really intend to buy.
Good agents will respect you every step of the way. They show that by being honest about what they do.
When I interview for a listing, I take a blank listing contract with me. I tell the owner, this is your bed time reading, because once we sign papers will start flying fast and furious. I want you to feel comfortable in knowing what you are signing.
I also do this for my buying side.
It is amazing when you hand them 50 pages of paper, to read with legal jargon how quickly they get that they need a RE agent.
__________________
Raising a teenager is like nailing Jello to a tree
Actually, in this market from a non-distressed sale you do not need to pay them a generous fee.
Here's why:
A SS or foreclosure will come through the REO dept. The bank dictates the % they are paying in commission.
THE REO dept than refers it to an agent. Since, you did not bring it in your split is handled differently. For me, that means my split drops from 77.5% to 50% because it was a gimme.
Now I have 2 sellers, 1 distressed at 300K and I non-distressed at the same price, both at 2.5%.
Do the math.
Distressed sells at 300K and the commission is 7500, I get 3750 in the split.
Non-distressed sells at 300K, commission is 7500, but now I get over 5750 in the split.
I have both listings for 120 days. Where am I going to through my advertising money into? The distressed or non-distressed?
Additionally, the non-distressed is most likely going to now buy, thus I get that end of the deal too. The distressed owner is the bank. They aren't buying from me. The non-distressed will refer me, and that means I get more clients. The bank isn't going to do that.
Again, it would be wiser from a fiscal standpoint for me to take the lower rate because now I will get more sales down the line.
Successful Realtors are successful because of referrals, not because of generous commissions.
Also, when the buyer usually sweetens the pot it is to the selling agent, and not them. Reason why, is because they want to get more foot traffic in the home. If you sweeten the pot for the selling side it does not motivate the listing side.
It is a stupid game that sellers buy into. Give the selling agent 500 bonus and that will get foot traffic. In NoVA, if someone came in and said they want to be in 22003, at a certain price with X BDRMs, I download everything on the MRIS that matches their criteria. I could have 35 listings, I don't go through them to see what my split is.
Now, on the flip side, if you throw back the 5% 2-3 split. I do that not because I want them to choose my listing over another, but because 3-3 is traditional, it was my choice to take that listing, and I respect the selling side.
Remember, listing has advertisement costs, but selling has GAS costs, and that tallies up just as quickly. Sometimes, most of the times listing walks out with more money in their pocket than selling.
My suggestions for listing:
1. Demand a brokers open house 2. Demand that the home is on every web site available 3. Go with a national company.
Jobin, Keller and Long and Foster are known in VA, but people moving from TX or CA have never heard of them, thus they will hit national web sites like C21, ReMax, Prudential.
They will find your house on realtor.com, but because they never heard of the company they will go to the names they know to represent them, which means C21, ReMax, Prudential, etc.
While they click onto the C21 site to find an agent, now they see more C21 properties, and your listing with the small fish gets lost in the mix.
4. Demand weekly reports.
That means they state how many viewings occurred, how many comps went under contract, and what marketing tools they are using
5. Demand 2 brochures.
In most states they require a disclosure/disclaimer form. I always make 2 different brochures. One in color for clients and one in b/w for the Realtor. The Realtor brochure includes the disclosure/disclaimer form. If that brochure is taken, it means the agent knows the client is seriously considering the property.
Buyers will always take the brochure...next suggestion, ask for it to be created in an off color. You want them to keep going back to it. Beige paper sticks out when it is in a pile of white. It makes them keep talking about the house.
6. Don't demand a flyer box by the sign.
The only people that take them are nosy neighbors and looky lou's. It is a waste of their time and worse yet, it gets your hopes up because for the first few weeks it is being constantly re-filled.
People who are interested will call the agent.
7. BUY A WARRANTY
If anything is found during the inspection regarding HVAC, plumbing, electric, etc, you will be covered minus a small deductible.
You might think the house is in great shape, but when the inspector comes and says your HVAC readings are off and it is your condensor, you could be hit with a big bill. The Warranty absorbs that.
Additionally, older homes 8 yr+ make buyers nervous because they think of the hot water heater going or the roof, etc. Knowing that the sellers picked up a warranty to cover this for a yr makes them more comfortable in their decision.
8. CLEAN UP, paint and upgrade!
You may love the salmon color bathroom, but it can cost you money because buyers will say 1980.
You may think that the closets are organized, but buyers see everything squished in and think it is small (Box up clothing that will not be used while listed)
You may offer a carpet allowance of 3K, but it is better to put in the carpet yourself now if you can afford to.
Carpet allowance means you know there are flaws, thus, they will knock down the price and still want the allowance.
New carpet and the house is seen as well maintained and turn-key.
9. Please do not BURN candles.
The 1st thing buyers think when they enter and smell candles is "WHAT are they hiding?"
Dump your trash every night, and NEVER fry anything. Also, scrubbed down every light fixture. Remove every ounce of dust. People do not realize that if you don't pull the sofa from the wall and vacuum away that they are the number 1 reason for odors.
10. DO not put showing hours on a contingency
Do not ask for 24 hours notice or no showings between 2-5, because buyers will throw your listing in the garbage can.
Have a dog...kennel it in the garage.
Have a cat...kennel it in the garage.
Nothing freaks out a buyer more than pets.
Buyers who know there is a cat also start knocking down prices because they swear there is a smell from urine.
11. Bleach the exterior of the house.
1 part bleach to 2 parts water. Use a pump sprayer (the ones for bugs). Hit everything including the door frames. Let it sit for 15 minutes and hose off with the garden hose.
12. Plant flowers and trim bushes
The lockbox is on the front door and it takes about 1-2 minutes for us to gain entry. Meanwhile the buyer is on the porch looking everything up and down to see how they can knock the price off.
If the realtor parks in the driveway next to the house that is the kiss of death! We do that because of curb appeal and by getting as close to the house we are giving a smaller picture.
13. Set the DR table
Make it look like tonight you are having company and entertaining. Make them want to be at your table.
14. CLEAN the Fridge and oven.
Trust me every woman opens these appliances. You want her to think you have them pristine because you live that way. PLEASE, oh please, don't put foil under your burners, all you do is highlight they are old.
15. Remove window screens
Number one complaint is the house feels dark. Window screens add into this. Remove them and place them in the garage.
Clean all of the windows from both sides.
16. New linens/towels
Go to Wal-Mart and buy new bath towels, new shower liner. New bedding. Even in re-sale they will want to see a model home. Ratty old towels places an image in their head that the house is old and dated, which will equate to lowering the offer.
17. Strategically place chairs at the table and cushions on the sofa.
If you come home and see that 2 of your kitchen chairs are not where you left them, that is a good sign because it meant they sat down and "talked" in your home.
If you placed every pillow on the sofa in a way that it is uncomfortable to dsit without moving and the pillows are now moved. That is a good sign because it meant they moved them to get comfy. That means they are talking about your home and envisioning themselves there with their furniture.
I think I covered everything anybody should think about when it comes to listing their home.
-- Edited by pima on Wednesday 15th of December 2010 10:54:02 AM
__________________
Raising a teenager is like nailing Jello to a tree
1. It is against the law to set a % for commission. They may say "we typically charge 6%", but that is ALWAYS negotiable.
In this market I would fight to lower that % by at least 1 pt to 5. HERE's the caveat: Tell them you want them to get 2% and the selling (buyer) agent to get 3%.
Remind them they can either take 2% of something or 0% of nothing because you can go somewhere else where a Realtor will take that 2%. It is important to say this because every listing contract has to be signed off by the managing broker, and the broker is not going to be please that they reduced the commission rate.
This allows the Realtor to fight for that listing. Any Realtor who fights for a listing is the Realtor you want.
2. There are different types of Realtors and they fall into 3 groups ~~~A. High baller: This agent uses the sales price in their marketing tools to "sow their farm". I.E. Ads will say sold for asking price ...they don't advertise that it took 200 days to get it.
~~~B. Low baller: This agent believes in putting the price low to get as many people in and hope for an escalation clause. Their marketing is "Sold in 3 days", they don't say that they were underprice.
~~~C. Realistic: This agent places it at mainstream prices. Their marketing is to get more listings, because word of mouth is how they sow their farm.
I have always been a "realistic" agent. I know that with high balling, you need the appraisal to match, and if it doesn't the contract is void. Getting a high ball appraisal in this market is rare. I know with low balling, that the owners will never be satisfied unless it comes with an escalation...the problem is that appraisals require 3 actives, that means if everyone low balls in their listing, the actives will be lower and thus, the appraisal will not come in correctly...AGAIN contract voided.
3. Things to review with the Realtor when coming to the price.
~~~A. CMA - Comparative Market Analysis. The agent should show you every home that has been listed, under contract and sold in your neighborhood for the last 6 months...same as the appraiser.
If your home is in a small development, they should go no more than 10 miles out. They should try to keep the age, size and school district the same. Schools matter because many buyers select an area based on a school system. Same with age and size. You can't compare a 2500 sqft home on 1 acre built in 92 to a 2500 sqft home on 1/4 acre built in 08.
~~~B. Length of contract. If you are going to ask the agent to reduce their commission rate, you should also give them a longer listing contract. Traditionally 120 days is a short contract, 180 is a good length.
As Samurai stated, RE agents pay out of pocket for advertisements, open houses, broker opens and the lock box on your door. An ad in the WAPO for Sunday costs @200 bucks, lockbox fees run @100 a month, broker opens cost @200 to host. Add in Harmon homes, or Homes and Land magazines and now you can see we are up to 600-700.
I am not a fan of Sunday Open Houses. People that come are either nosy neighbors or buyers with agents. The success rate of selling is very little.
Agents that insist upon doing it, traditionally do it to get new clients.
I do believe Brokers Open are the way to go. It is typically held on a weekday (in VA it is Tuesday). The agent brings in the food and feeds them from 11-1. RE agents love free food. During this the agent will leave evaluation forms for them to fill out. These forms ask things like: * Do you think it is priced correctly? * Do you have clients in this price range? * Will you show it to these clients? * Anything negative that you see?
Realtors are brutally honest. Now you will not only have your agents opinion, but also many more agents opinions and you can re-address your course of action from there.
You also now have gotten agents in the home, agents talk. They may not have a client, but they know someone else in their office that does, thus, they put you on the radar, where before you may have gone un-noticed.
The other beauty is it is done during a weekday while you are at work. You are not forced to leave your home on a Sunday for 4 hours.
THAT IS THE ONE THING I WOULD DEMAND FROM AN RE AGENT!
People think we walk away with gobs of money. Let's use the 1500 for an example. Now if you are like me, your % share is very high (77.5%), so you get @1200 bucks. However, you are self employed and pay 30% in taxes, which means you are now down to 860. BUT wait, you just spent 200 in advertising and 200 for an open house, so you are down to 460. WAIT, now you have to minus out NAR dues (several K a yr), MRIS and lock box fees, and you are down to about 300. Even worse for an agent that only gets 50% split. So when you see that high number and think they are making so much money, you need to realize they aren't.
The exception is REMAX because they pay a "desk fee". Than again that fee is thousands a month for a good office. I am not a REMAX fan because the ones that I have dealt with really are very aggressive about closing a deal. They care more about the check than the client.
I am someone who puts the client first. My sales pitch has always been this:
You are selling a home, they are buying a house. There is a difference. I know for certain you are going to call me all hours of the day and there will be times you will ream me out. (They always say, no, not me, and yet they always do). Selling and buying a home is emotional from both sides, and it is my job to remove the emotion and remind you that this is a fiscal transaction.
When you select a realtor you need to know that the two of you will be connected at the hip until this is done. You need to feel they are in sync with you. High balling, low balling should not be placed into the equation, because this is your home and you should always feel you have the final say in the equation. If the two of you don't mesh, than move on. This is business, it is not personal.
There are ways to break a contract if you decide you made the wrong decision. Typically the broker will be allowed to bring in another agent to try to rectify the situation. If that still doesn't work you can cancel the contract.
FINALLY, ALWAYS, ALWAYS interview 3 agents and ask for CMAs from all 3. By doing so, you will quickly learn their marketing plans. You will also be able to see a true price.
ALSO, if you live in a military area, demand that they list you on militarybyowner.com Make sure they use sites like Trillow and Redfin. Make sure they get a virtual tour done, and have NAR place a red banner on it with realtor.com.
Sorry this was so long, but hope that helps
Also look into their national advertising for the company. For example, C21 has Fine Homes and Estates, if you are in this price market you get special signing and special advertising. They also have it for 55 and over communities. Know your targeted market.
-- Edited by pima on Wednesday 15th of December 2010 07:35:27 AM
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Raising a teenager is like nailing Jello to a tree
No offense to Pima or any other real estate agent, but an agent is going to sell your house for what it will sell for. Any good agent will have a good idea of what will sell and what won't. They want to make money (like most people), and want to do it in the quickest amount of time.
I have a dear friend who is an agent and she has told me repeatedly how much it costs for her to list a house and represent a buyer/seller. The amount of time can be ridiculous, especially with difficult sellers and buyers.
They have advertising costs and open house costs and maybe even staging costs. Why sell your house for top dollar if it takes them 10 weeks to sell it? Or a lot of work has to be done to get the house ready for a sale?
There was an expose on tv that talked about this process.
The Freakonomics economist and authors have a whole chapter about this.
How do real estate agents work? My specific question is, do they really price a house the way they think it should be priced to maximize benefit to the seller, or do they try to price for quicker sale? If a house is, for argument's sake, a $100,000 house, all the agents would split about 6%, right? As I understand it, the listing agent and company split 3%, and the other agent and company split the other 3%. At this example, the listing agent would receive $1,500. If they price the house for below markets, say $90,000, they would $1,350, or only $150 less.
An agent tells me they are incentivized to always sell for top dollar, and intellectually that's certainly true. But if an agent can sell quickly for $1,350 rather than drag the process out a long time for $1,500, would they do that?
I know each agent is different just as any two persons are different. But is there some industry norm of behavior ?
