legal protections or benefits of AGENTS? - Posted by me

import · June 16, 2001, 10:57pm

Posted by Ed Copp (OH) on June 23, 2001 at 14:26:21:

that the desperate seller is not the person that the competent real estate agent should be getting advice from, that is if success is desired.

It is normal for a seller to want Cadillac type service at a 'Chevette cost. It is very ordianry for the seller to want an open house, and as I noted earlier, open houses very seldom get the house sold. They most of the time, already know that and many have tried. The neighbors come to the house shopping the price, and picking the agents brain for clues (this is a good place to find other listings).

If the seller insists on an open house then I will have one for them but I make sure that they understand that this, in my opinion is not the best way to go. All sellers want to see a “full page ad” for thier open house, guess what I will do that too. I will pay for the first six lines, and they can pay the rest in advance…they usually reconsider.

You mention MLS, which in some markets comes with the deal, and some markets it is an option. Also in some cases the broker does not offer this service at all. In my particular case this service was not available in my county for many years (I am way out in the country). It has just become available in my county and I have chosen not to participate, as is the case with all the other brokers in my county.

In the more populated areas the MLS definately has a useful function IF, there is no other way to find a buyer. The best listings sell before they have an opportunity to be sent to MLS. When I worked in the “big city” many of my listings got sold before anyone knew I had the listing. Often I had an accepted contract before I put up a “for sale” sign.

Now you ask about how I would advise a sibling, and I have some of them too. One is also a real estate broker, and married to a doctor (doing O.K.) so I can’t immagine being asked by that one.

In most areas the listing salesperson will use a name panels on thier for sale sign. Take a drive around your neighborhoos and look for this person. They will know more about values that anyone else. They will also have more of what I call “pocket buyers” than anyone else. So that is who I would talk to. Ask for information, and then have the courtesy to shut up and listen for the answers. Don’t proceed to tell the pro how to do his craft. There is really no substitute for name recognition.

There are a lot of reasons that FSBO houses do not sell. Without a doubt the number one reson is overpricing, followed very closely by emotional attachments of the seller. Sometimes it is very difficult to get past the problems that are evident here. I personally would prefer to work with the owner of a property where the listing has just expired. It sometimes takes one or more 90 day listings to educate the seller (at someone elses expense is O.K. with me). The do eventually learn that thiers is not better than everyone elses, is not one of a kind, and several other things that come under the heading of becoming motivated.

Very often it is possible to find a good deal from a “motivated” agent. That would be an agent who listed one of these houses just a little too high, and let the seller tell them what to do, and how to do it. About 80 days into the 90 day listing the agent will get real motivated and this is a good place to look.

import · June 16, 2001, 10:57pm

legal protections or benefits of AGENTS? - Posted by me

Posted by me on June 16, 2001 at 22:57:56:

Can anyone tell me about the benefits of using an agent to sell an old California starter home “as is” in a hot market. From my research so far it seems that there are few if any benefits or legal protections gained by using an agent. My research indicates that all legal protections are for the agent and the firm, but not the seller. Does anyone have information to the contrary?

I’m aware of the money that can be saved by trying to sell your own properties. A close friend is a real estate agent and I’m trying to justify giving her the listing considering the 6% that will be lost. We are leaving the area and not coming back since we are starting jobs in a neighboring city 100 miles away. Also, the agent friend is suggesting pricing a home around 159k in a hot market. Would it be reasonable to add 6% to the asking price in order to try to justify the commission.

import · June 17, 2001, 4:18pm

Re: legal protections or benefits of AGENTS? - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on June 17, 2001 at 16:18:35:

Hello me (you).

As a long time real estate broker, I have heard this story hundreds of times, so lets clear up a few things. You seem to be focused on selling “as is” and legal protection. I have found that when I hear "as is " too many times in a conversation that there is usually something to hide. Often the seller is attempting to sell “as is” because there is some latent defect in the property that should be disclosed to the buyer…

So, what is it?

The fact that an agent is a friend has nothing to do with the ability of the agent. Presuming that the house is worth 159K, in this hot market; the commission is included in that figure and you know that. Anything else is just a pipe dream, and you know that too. When you the seller suggest adding a commission on, you are in essence saying that you are willing to do all the work required to get your house sold, financed and closed for nothing ($0), this is not the case and you know that too. You intend to keep the commission, and that is as it should be if you are capable of doing the work that is required here, not to mention the possible concealment that I sense may be a factor too.

If you are going to move to a new city, start a new job, and do a good job selling a house that is 100 miles away; I can only surmise that you have not done this before (especially the 100 miles away part).

If this is a good sellable house and yours is a “hot market” then you should be able to sell the house yourself, if you are competent and willing to be fair. For that you are entitled to keep the commissiion which is already included in the selling price. You can of course raise the asking price and then guarantee that the sale will not take place quickly, probably need to be reduced in the future, thus creating substantial added expense for you. Or you can do the classic FSBO thing, that would be to give the commission to the buyer just to show the world that you did not have to list your houes with a Realtor.

Now if you really want a recipie for disaster just read the post by Vicky, and do what she says.

import · June 17, 2001, 12:23pm

Re: legal protections or benefits of AGENTS? - Posted by Vicky

Posted by Vicky on June 17, 2001 at 12:23:13:

I am an agent and an investor. Sometimes I sell my homes FSBO, sometimes through the MLS. There are good agents and not so good agents, just like in any field. If you do hire an agent, may I suggest the following ideas?

Make sure you have good service by requiring the following:

A WRITTEN marketing plan. Where the property will be advertised, when it will be advertised, etc…If you are going to pay for it in the end, make sure your property gets maximum exposure to get competition among buyers and therefore the best price.

In a hot market their is a good chance the agent will sell it themselves. If this is the case, ask the agent how much commission they will require from you. (in a typical relationship 3 percent goes to the selling broker, 3 percent to the listing broker). True, the agent will be handling both sides which they will say is “twice the work”, but honestly many of us feel it is easier to control both sides because it eliminates many of the middlemen calls that eat our schedule up. This can save you some money - maybe offer 4-percent for both sides.

Also insist on an open house. Many agents don’t hold them in a hot market, but in this case again the more competitive the buyers feel the higher your sales price. It will also increase your agent’s chance of selling it themselves, and maybe you can end up with the lower commission rate.

There are pros and cons to both, but hopefully if you go with an agent this will save you some expenses.

If you go FSBO, and want to cooperate with agents at a set percentage (usually 3%), make up a flier and be sure to have the proper disclosures on the bottom of it to protect yourself - ask your attorney what you need to have - it differs state to state. Fax the fliers to the larger real estate offices in your area and invite the agents to bring their clients through.

Good luck

import · June 17, 2001, 10:15am

How to get an almost FREE listing - Posted by Richard Roop

Posted by Richard Roop on June 17, 2001 at 10:15:59:

Me:

If you decide to use an agent, (not such a bad idea if you are 100 miles away) try this:

Add $8,000 to the price (about 5%) of your $159k house. Then have your agent advertise, “Owner will help finance down payment” or “Owner will help finance.”

By offering owner financing, you’ll have more demand for the house. If your house is worth $159k then it would likely appraise for $167k if you had a buyer ready and willing to pay it. A house with flexible terms is worth more.

When buyers ask the agent about the owner financing, they’re told that the seller is willing to take a small second mortgage. This makes it easier for a qualifying buyer. If they can borrow 90%, and you take back 5% on a note, then they only need 5% down, instead of 10%. More buyers will have $8,500 to work with than $17,000, so they is a better chance of getting full price quickly.

But you don’t want to carry paper? You want all your cash now? Well, you are getting all your cash now:

$159k x 100% - 6% = about $149,500 cash
or
$167k x 95% - 6% = about $148,500 cash plus $8,300 note

What are the terms on the second note? Anything you want! If is free money. But don’t plan to sell it at a discount for cash. Just keep it for yourself… or trade it at full face value on another property as part of YOUR down payment!

The extra 5% covers most the 6% commission. Maybe your agent friend will take your note plus some cash instead of all cash for the commission.

I use this marketing approach to sell my houses all the time. But I don’t use agents. I know how to close a deal and the houses are in my area. By getting a nice premium on the house, keeping it for myself, and selling quickly, I can in turn make more attractive offers to my sellers when I am buying new properties.

Richard Roop

import · June 16, 2001, 11:40pm

Re: legal protections or benefits of AGENTS? - Posted by JELE

Posted by JELE on June 16, 2001 at 23:40:52:

Hot market or not, an agent can be a useful tool in selling your property. They should advertise it well and when that happens buyers from all over the country can be reached. No, it would not be good to add 6% to the price. I don’t know about you, but I would not pay 6% more than a property is worth just because it is listed with an agent. Often times an agent can get your full asking price. Now, this does not mean you could not do it yourself and still get a good price, but for the ease of sale a GOOD (there are great ones and bad ones) agent can be a very valuable tool.

Jele

import · June 18, 2001, 12:05pm

Re: legal protections or benefits of AGENTS? - Posted by Vicky

Posted by Vicky on June 18, 2001 at 12:05:45:

I do not think I provided a “recipe for disaster”. I offered some suggestions regarding listing with an agent and suggestions to do if not listing with an agent. In no way did I tell the person he/she could add the commission to the price of the house and list it and expect it to sell. In no way did I give this person legal advice - I am not an attorney. Did you wake up on the nasty side today?

From your posting I read a scare tactic. Some people really do not have the room for a commission and must sell FSBO. I thought this was a forum for advice and support, not personal attacks nor scare tactics.

import · June 17, 2001, 12:01am

Re: legal protections or benefits of AGENTS? - Posted by mo

Posted by mo on June 17, 2001 at 24:01:53:

Good point but, what circumstances would make it worth it to pay the agent 6%? When does it make sense and when doesn’t it make sense to use an agent? What can an agent provide for an “as is” sale that an owner cannot do themselves?

import · June 18, 2001, 1:54pm

Re: Recipie for disaster… - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on June 18, 2001 at 13:54:14:

for sure.

Thanks for responding, Vicky. Now the channel is open and we can learn from each other.

You mention a WRITTEN marketing plan, for the seller.

I contend that the marketing plan is NOT the business of the seller at all, not now not ever. You indicate that (you think) that the property should be advertised. You are incorrect (in my opinion). You see the seller can advertise the property, so why would she need you.

I only advertise for buyers, never a certain house. Often I have several houses to sell that may fit the general description of a house ad that I write. You will not be able to determine the location or the price from the ad. To advertise a certain house specifically is not cost effective, and to put a plan in writing that says I will is what I might call a “recipie for disaster”.

This post refers to a “hot market”. If this is a true fact there will be no need for the services of a real estate professional…'nuff said.

If the “hot market” talk is just that (talk) then there is probably a listing to be had here. You mention offering the selling broker 3% commission on the sale of this FSBO, and this is common. I would probably also make that type of suggestion, with qualifications (that means to keep from being shown the door).

It is of the utmost importance here that you explain to the FSBO that all real estate offices keep the trash can right next to the fax machine and that thier fax has a 99% chance of being “in the can” by the end of the day. They need to know this.

My personal policy is that it is unacceptaqble to “cut” a commission going in, and I almost never do it in the first 30 days of the listing (there will be plenty of chances to cut your paycheck later on no need to rush this).

Now the comment that got my attention was “also insist on an open house”. This is a recipie for dister in my opinion (that is what got me fired up). First off do you think that a FSBO could hold an open house? I think so. Now what is the purpose of an open house? Oh once in a while a house will sell on an open, but it is not worth my time; and generally not cost effective for me. It is a great way to get listings, and suspects for other houses. When I see a sign that says “open house” I read "help, I’m desperate, I can’t sell this turkey; and I am willing to have anybody on earth walking around in my house for whatever purpose, I do not know if you are a pro burglar, a petty thief or just what. I will take my chances because I am desperate. Help).

I consider a real estate professional to be just that, and worth the full fee. If not why not. How I do my craft is of no concern to the seller.

The suggestions that you have posted are what I would call a “recipie for disaster” (nothing personal). They will most likely leave the house unsold, and the agent looking rather foolish. Who needs that?

I often want to bargain with my dentist, but I don’t. He is a professional and worth his fee, so am I and so are you.

import · June 17, 2001, 2:56am

Re: legal protections or benefits of AGENTS? - Posted by JELE

Posted by JELE on June 17, 2001 at 02:56:02:

The circumstances that make it worth paying an agent 6% is very simple–if they sell your house they get 6%. If they don’t sell it they don’t get paid. I think 6% is reasonable under almost any circumstance. Unless you use the same agent frequently, I cannot see a full service brokerage taking a listing for less than 6% unless they are going to lose the listing to competition. When does it make sense to use an agent? Always, unless you have no equity at all and have to dip into your checking acct. to pay the commission. As far as the "as is question, I would say nothing more than if the house was a gem. Service should be the same irregardless and you should demand that. This is how I look at it–unless the house is paid for, it might take me a lot longer to sell it myself than if I listed it. I have to pay the mortgage in that time and it comes out about the same but if I list the agent does all the work. This is your house so make a decision. If you sell yourself just make sure you understand the process. Good Luck.

import · June 23, 2001, 6:53am

Re: Recipe for disaster… - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on June 23, 2001 at 06:53:06:

Ed,

I was hoping since the “channel is now open” that there’d be some continued dialogue regarding this topic.

I understand what you’re saying about an agent’s motives for advertising to attract buyers versus advertising to sell a specific property. I also understand the objectives and concerns regarding holding an open house. Additionally, your position with respect to negotiating the commission is understandable.

You’ve been fairly clear regarding what the seller should NOT expect from a professional agent. But what about the flip side of the coin? What specific action steps SHOULD the seller expect his/her agent to take in order to get that individual property sold?

Obviously, the seller should be able to rely on a professional agent to provide market data in an effort to price the property for the quickest sale at the highest price. Additionally, I’d assume that a professional agent should be able to tactfully counsel the seller with regard to “staging” or preparing the property for showing to potential buyers. Also the seller should expect that the home will be listed on the MLS for maximum exposure to other professionals in the area who, in turn, will expose the property to additional buyer prospects.

Are there any other things a seller should expect from a professional during the marketing phase of the transaction?

Naturally, a professional should be able to coordinate all of the details once the property is under contract in preparation for a smooth transaction and a successful closing.

Ed, if you had a sibling (one that you love by the way) who lives in another state, what advice would you give regarding the selection of an agent? While I agree that there are some highly qualified and extremely competent REALTORS® out there, over the years, I’ve also encountered many inept brokers and untrained agents who don’t have a clue. Every profession has its share of schleps, it just seems that residential real estate brokerage has more than its fair share.

Best of Success!!

Jim Kennedy,
Houston, TX