Explanations of a Realtors World - Posted by Dave Holls

Posted by Doug (ON) on August 16, 2001 at 17:57:27:

It would be nice to go to every one of his listings and offer to give them full price but only AFTER their listing has expired. But of course, that would be against OUR code of ethics :slight_smile:


Explanations of a Realtors World - Posted by Dave Holls

Posted by Dave Holls on August 16, 2001 at 13:05:24:

These are answers to some questions and statements made by a fellow poster over in the commercial group. I thought they would be useful to those of you over here. You may want to read his post for further explanation. http://www.creonline.com/commercial-real-estate/wwwboard5/messages/3561.html

Questions on comps

  1. There are times when even a good Realtor cannot find comps for a property. The area may be slow, or the comps may be too old. Or some of the information in the MLS listings may be incorrect so it doesn’t come up on a search for the correct comp criteria. Or a particular Realtor just doesn’t have the expertise to perform the tasks you’re looking for.

As far as lying about the true market value, that is a different story. I don’t know if you mean their telling you a property is worth more or less than it actually is, but I can tell you that doing so is wrong, for a couple of reasons. One, the public relies on our expertise, and if we begin to lie just to get business the faith the public has in us will deteriorate. Two, by pricing properties incorrectly the entire market will begin to change and immense problems will begin - whether it be that buyers can’t afford the properties, so the market stops - or the Sellers loose their property values. Three, it isn’t good business for a Realtor. By overpricing a property a Realtor will have a much harder time selling a property because it is over priced and other Realtors see this and won’t show this to their clients. By underpricing a property it will sell at a lower price than it is worth, and the Seller will get less money from the sale - and quite frankly the Realtor will get less money in their commission.

  1. As far as appraisers, I belive in many places it is against the law for an appraiser to lie on an appraisal. The appraiser use our MLS databases for their comps. Now, they may do their best to get an appraisal amount that will make a deal work. But if they can absolutley not find anything that will work, they will give back an unsuccesful appraisal. It has happened to me before and it has happened to ever Realtor out there. If it were true that we could just tell an appraiser what to put on their appraisal than there would never be an unsuccesful appraisal. The fact of the matter is that thousands of appraisels are unsuccesful every day, this is far too many to say that we have influence over an appraiser. Banks are careful what appraisers they use, because if the appraisal is wrong and the buyer defaults and they have to foreclose, they don’t want the actual value of the property to be less than the outstanding mortgage.

  2. Finding a good agent - how do you find them? Interviewing, YES! How else do you find anyone you work with - a doctor, an accountant, a lawyer? Either they are referred to you or you interview some. That is how you find a professional. That is your responsabilty. If you want to find a good Realtor it is your responsabilty to find him.

  3. Buyer’s Agency. First, you can get out of an Exclusive Buyer’s Agency Agreement with 24 hours of your written termination. That is written into every agreement I have seen. You are certtainly not locked in. Why would a Broker insist on keeping you in, for the bad publicity when you go to the press complaining?

(I will also post this next part separately,for those who didn’t read this)

  1. As far as a Non-Exclusive Agency Agreement, I will tell you why so many Realtors don’t know about it - because it’s not good business, and most brokers don’t even teach their associates it exists! What you think it does, it really doesn’t. You think it is some kind of agreement between you and a Realtor, but here is why it isn’t. You say that entering into this contract means that if the Realtor brings you a deal and you accept it and purchase that property you owe them a commission - and if you bring the Realtor a deal and you accept it you owe them a commission. But you see this would happen anyway when you close a deal. If you brought a deal to the Realtor and you wanted him to represent you, then you would sign your agency disclosure and sign the agreed upon purchase agreement and you are responible for that agents commission. All without having the non-exclusive agreement. You see without this agreement, everything still works the same. So why have it? Here is why you want to have it"

You want to say to the Realtor - I want to sign this agreement with you stating that you are representing me. But I am free to work with as many other Realtors I want and have them represent me as well. So you are to work for me and pull up information and send me listings and keep me informed and if I decide to work with you then I will pay you. And if you never do? That Realtor never gets paid for their work. Hmm, why wouldn’t a Realtor jump at that?

What if I came to you and said: I want to you to sign this non-exclusive agreement that states that you will represent me as my lawyer. But I am free to have as many other lawyers represent me as I want. Now I want you to do some research for me and find out some things and keep me updated and send my files and paperwork, and if I decide to work a case with you then you will get paid. Boy, I’m sure you would love that. All that work you would be doing, just in case I decide to pay you some day. Uh, no.

Why do you think that a Non-exclusive listing contract is not popular. That has existed for a long time. For the same reason. I want you to list my house, but I will also list with 10 other Realtors. Whoever brings me a buyer I will pay. Oh, OK. That seems like a win-win situation. If you want someone to work hard FOR YOU, you need to give them a reason. That is the purpose of the Exclusive Agency Agreement. That states that you will work with one Realtor, and one Realtor alone. This gives the security that if you buy a home within the term of the agreement you will pay the Realtor a commission. This gives them the incentive to work FOR YOU. And the agreement protects you to. It spells out exactly what the Realtors duties are. The Realtor has obligations too. They must follow the agreement as well. This is absolutely not just some sham to get you locked up - heck, you can leave at any time with 24 hours written notice. This was designed for both of your protection. But in any case, this is why IT IS UP TO YOU to find a Realtor you are comfortable working with and feel confident in. It is your responsability.

  1. Yes, many Realtors still have trouble with the mentality of representing the Buyer, especially older Realtors who were around way before Buyers Agency. But that is why you must find one who isn’t.

Also, Dual-Agency isn’t very beneficial, but things are changing there too. Designated Agency which is emerging in many states is cleaning up many of the problems we have encountered with Buyer’s & Dual agency.

  1. As far as you county’s database, I’m not sure what you are talking about. My county has it’s recorded documents online. But they have nothing descriptive about the property. I don’t see how they could, the county doesn’t even keep those kinds of records on properties - those are the responsability of the cities. The sale price, taxes, and amount owed are one things. But knowing what the house has, how it compares to others, its condition, the market trends, the market in general, and so much more are what really matter.

  2. As I said as far as I am aware none of the detailed information that we keep in our MLS systems has been made public. County records that are being made public have no bearing on our job. Our job is to bring Buyers and Sellers together, not to force people to talk to us before they get any information. Why do you think we have put all of our listings online, or in newspapers. So people can look at our inventory before they call. So people find out for themselves what the market is like right now in different areas.

Our cash stream as you say will not dry up. Because we will always have people that WANT to work with us. This is our job. We know the area. We know the market condition, what they have been, what they will be. We know how to sell a home, how to buy a home. How to help a buyer get qualified, where to go, who to talk to, what points are good and bad. We know about government programs. We know everything involved in buying and selling a property. This is what people come to us for. Now, this may not be what an investor needs. But investors are a small bunch ( not to mean they are unworthy of our time and business relationships), compared to the tens of millions of home buyers out there. I am simply trying to point out to people what are job is. Because once someone starts investing in real estate they think we are just there to collect money. Our real job is to bring Buyers and Seller together. The people that need us most are the people who buy a home once every 10 years. They don’t know anything about real estate. They just want the home they want, and in the best deal possible. That is what we do for them. That is why we will always be around.

** A Realtor can be a great asset for an investor. But YOU must find a Realtor that CAN and WILL work with you according to your terms. They are out there, but YOU must find them. Just like investing, the good deals don’t fall into your lap and niether will a good Realtor. Most Realtors, don’t understand the investing side and can’t provide you with the service you require. So find one that does.

Anyway, I hope this answers your questions.

Happy Investing.

Re: Explanations of a Realtors World - Posted by Jim FL

Posted by Jim FL on August 16, 2001 at 20:18:34:

I agree with Johnboy 100%.
I’ll also add that I DO NOT interview agents anymore looking for “Good ones”.
My time is better spent buying houses.
When I do find agents to work with, it is usually thru referals, or the agents contacting me.
When they do, I ask them right away, “Have you EVER bought a property using anything other than a conventional sale method?”
And if they say, "No, then I move on.
IF they say, “Yes”, I ask about it.
I’ll then tell them very openly that I am not some seminar junkie with crazy schemes that do not work.
I’ve bought and sold well over 100 homes, and intend on keeping on with it.
IF they want a regular client, who will not waste their time, and will not allow my time to be wasted either, then we can talk.
I tell them the things I will require for them to work for me. (See, I’m hiring them, not doing them a favor)
We then proceed to work together.
If they perform, they keep my business, without anything signed to limit me in anyway.
I also tell ALL agents/brokers that the majority of homes I buy are not on the MLS.
and, the majority of the homes I sell with not be listed.
Their expertise is usually in buying/selling homes conventionally, and I just don’t have time for that.

Bottom line, they can work with me, or not.
I do not NEED them, and this is just the way it is.

I also try to see if the agent/broker understands cash flow, and wants to have some for themselves.
Do they understand the difference between investing and sales?
Can they do both?
Is it clear that in our relationship, I am in control?
If not, there is no relationship.

Again, they may not need me, and I certainly do not need them.
But, if they are willing to be employed, then they can and will make money with me, because I am VERY serious about my business, and do it well.

Have a nice day,
Jim FL

P.S. By the way, I think you picked the wrong forum to try and sell the usefulness of agents/brokers.
We all know we can do this without them, and that sometimes there is a place for them in our plans.
Its just too bad that 99% of them do not recognize this.

Re: Explanations of a Realtors World - Posted by JohnBoy

Posted by JohnBoy on August 16, 2001 at 14:07:30:

When I talk about non-exclusive agency I don’t mean that I want the realtor to do all the work and I have the right to go around that realtor to avoid having to pay them.

What I expect is the right to find my own properties and if I do without the realtor having anything to do with me finding that property, then they aren’t entitled to be paid for anything pertaining to that property! Any property they do present to me then they are entitled to be paid. You say you can cancel the agreement within 24 hours. And??? So what, I cancel the agreement everytime I find something on my own then sign a new one after closing on a property I found without any help from the agent? Wrong!

The bottom line is simple and it’s only common sense. If “I” find a property without any involvement by the realtor then they aren’t entitled to be paid just because they have an agreement signed where they are suppose to be finding property for me! There are thousands of properties out there and no one realtor can represent them all nor can they find them all nor can they put in the time required to even try! That is if they plan on representing other buyers and sellers of course. That would be like me saying, OK, everything I buy you get paid regardless if you had anything to do with it or not because you did spend time trying to find me something! Well, then you pay ME something on every deal you close that doesn’t involve me for the time I lost that I could have been spending finding my own deals while you were suppose to be doing that and instead, you were busy representing someone else when you should have been working for ME!!! It works both ways, but you want your cake and eat it too! WRONG!

If you present any deals to me or if I use your services to that involve a deal I’m doing then you get paid. Otherwise if I find a deal on my own or through another realtor where you had NOTHING to do with it and I don’t need to use your services to close the deal, then you don’t get paid. You ONLY get paid when you perform. Just like you wouldn’t pay me something from other deals you get involved with where that time you spend on them could have been time you could have spent finding more deals for me!

From what I’ve been told by other agents is that those top performers out there don’t get to be top performers by SELLING the properties listed. They become top performers by getting the LISTINGS and letting other agents do the selling! The more listings they get the more money they make because they are guaranteed a pay day of half the commission for just getting the listing. Spending there time by showing properties to buyers pays a lot less than spending there time on getting the listings! When you think about it, it makes sense to me!

You say it’s bad business for realtors to over price properties because they won’t sell and many realtors won’t even show them. I agree. So then WHY do so many realtors keep doing it then??? Because it’s a numbers game and the name of the game is to get as many listings as you can! That’s where the money is! Then if the property doesn’t sell just go back to the sellers and tell them the reason it isn’t selling is because they are asking to much for the property! The funny thing is, now they’re telling the seller they are the ones asking to much when it was the realtor that told them they could get that much just to get the listing from them!

I know there are some sellers out there that think their property is worth a lot more than what it really is and they won’t list it for anything less. But in my opinion, a GOOD realtor wouldn’t take the listing then and let some other agent list it instead.

Then they hold their open houses leading the sellers on to believe they are really working hard for them, but what most sellers don’t know is that open houses don’t sell properties, they are for the realtors to get new prospects for finding buyers for other properties and getting new listings! A very SMALL percentage of homes sell at open houses, but they don’t tell the sellers that! I guess you can’t blame them though, after all, what sellers are going to go along with it when you tell them…“Hey Mr/Mrs Seller, I’d like to drum up some new business so I want to use your house to hold a open house so I can try and get 50 strangers in here to trample through your house in hopes of me getting some new clients! You don’t mind, do you???” LOL

A realtor can be a great asset and it is up to the investor to find that one in a thousand or so that exist, but I’d rather be spending all that time out there buying properties than looking for that one agent and wasting a lot of time running through the ones that don’t cut it. I think the ones that are out there that are GOOD and do work with investors are losing out by them not getting the word out that they do work with investors, rather than waiting for investors to come along and find them. Make it EASY for the invstors to find them just like the investors that make easy for motivated sellers to find them! I honestly don’t understand why those GOOD agents out there don’t market themselves to investors so they can be easily found?

Re: Explanations of a Realtors World - Posted by CMS

Posted by CMS on August 16, 2001 at 13:19:43:

Thanks for the information.

All my experiences with realtors have been been horrible to say the least.

I would love to hire a realtor who truly had my best interest in mind. Understood my investment strategy and was there when I needed them. Also a realtor who does not have a problem showing me any property, doesn’t pass judgement on an idea. If I could find a realtor like this I would sign an agreeement for life !
But so far the realtors I meet just don’t get it.

Amen Brother… - Posted by Jen

Posted by Jen on August 16, 2001 at 14:49:27:

We have had nothing but bad experiences, and this last one, with an agent we’d used exclusively for over a year, he botched the closing on an investment/ rehab of ours, and then, before we could blink, sold it to his girlfriend and her parent’s. Not to mention the fsbo I found and mentioned to him which he did the same with. These were not properties HE’D found, I’D found them with no help from him. In fact, I’ve never had an agent bring me a property. Anyway, that man who was supposed to be looking out for our best interests, bilked us out of potentially $40k. I just find them to be mostly worthless to a good investor and no 4 page email can convince me otherwise. Sorry this is so harsh, but we’re a tad bitter. :slight_smile: