From November 2007: Why Use a Realtor – decoding NAR-Speak

Inspired by these two comments on the BHB, today I’m going to respond to/pick apart the National Association of Realtors’ Why use a Realtor? page. I hope that few consumers had read the referenced page on Realtor.com. Numbers two, nine and ten in particular jump out as being particularly wrong/offensive to me.

If we eliminate Dual Agency and End Cooperative Compensation (have the buyer pay the buyer’s agent, seller pay the seller’s agent – simple, huh?) many of the problems, perils and public perception (reality) issues with Realtors will be eliminated.
1. Your Realtor can help you determine your buying power – by guiding you to the right lender for you. This is part professional recommendation and matchmaking. Choosing the right lender is crucial. Knowing his or her reputation, track record and competence is something that is almost impossible to do without direct person-to-person feedback. As of yet there are no tools online to rate lenders or check their professional histories. Local is usually better.

2. Your Realtor has many resources to assist you in your home search – sure – the MLS, Craigslist, Trulia, etc. Oh, wait – many of those are available to the buyers, too. The time when we controlled the flow of information is long gone.

3. Your Realtor can assist you in the selection process by providing objective information about each property. – yes and no. One of the key components is removing emotion from the negotiating process. However – a lot of questions buyers ask – Realtors can’t answer. Part of the foundation of a good Realtor is acknowledging the value of being the “source of the source” – and then knowing that source.

4. Your Realtor can help you negotiate. Absolutely. A good Realtor will look at all of the various factors. There is more to the equation that price. This is more and more a core component of one’s value proposition in today’s Buyers’ Market.

5. Your Realtor provides due diligence during the evaluation of the property. Absolutely. Good Realtors know what questions to ask, and to whom to address them. They also can recommend qualified and trust home inspectors.

6. Your Realtor can help you in understanding different financing options and in identifying qualified lenders. – Absolutely; but in today’s fluid lending market, I am more qualified to know who is the best lender than I am the best loan terms for you.

7. Your Realtor can guide you through the closing process and make sure everything flows together smoothly. It’s about the competence of the closing attorney/title company (we don’t do attorney review in Charlottesville) and the relationship and trust therein.

8. When selling your home, your Realtor can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. Buyers can usually do this, too – but it’s a Realtor’s job to know this information; not yours. (What’s your time worth?)

9. Your Realtor markets your property to other real estate agents and the public. Often, your Realtor can recommend repairs or cosmetic work that will significantly enhance the salability of your property. Your Realtor markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your Realtor acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc. The Realtor Code of Ethics requires Realtors to utilize these cooperative relationships when they benefit their clients.

I should hope that more than 50% of sales are done with Realtors’ involvement performed without Dual Agency. More on Exclusive Buyer Representation here (and here).

10. Your Realtor will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF Realtors studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your Realtor, you do not have to allow strangers into your home. Your Realtor will generally prescreen and accompany qualified prospects through your property.

a – I want to see that study.
b – Allowing strangers into your home is the whole point of the MLS and lockbox system we use! (I have a great local anecdote about this coming soon)

11. Your Realtor can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing — a lot of possible pitfalls. Your Realtor can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

Absolutely.

12. Your Realtor can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your Realtor is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).

Managing the process and transaction and knowing the pitfalls and problems that may arise is one of the key components a good Realtor brings to the transaction.

It’s getting harder to say “I’m going to market your property better than the rest,” because the distribution tools are flattening; more on this in another post.

Did I mention that if we eliminate Dual Agency and End Cooperative Compensation many of the problems go away?

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January 2006: The Future of Realtor.com, etc.

Inman has a simple question:

If Zillow competes with Realtor.com, will (and how will) some of the folks at NAR … position the Seattle company as bad for the industry?

That is an interesting question. With such a vast number of innovative tools, which ones will survive and thrive? The MLS is one of the most valuable tools that we Realtors have. Rather than treat it as such and ensure that it is the comprehensive source of data, we have gotten comfortable and used to having a great source of information; complacency in any profession or industry will inevitably lead to failure. Make no mistake, information is fluid and much more widely available than it has ever been. A potential Seller client made this point to me in no uncertain terms last week.

This excellent post (and subsequent follow-up) details many of the problems of the MLS. It is frustrating to me that so many Realtors apparently see such little value in the MLS.

The MLS is a product, a tremendous amount of information that is leveraged by its owners – Realtors. Simply put, when the MLS becomes just another product, it will lose its efficacy.

My job is to represent my clients to the fullest and best of my abilities. The MLS is a tool, but not the end-all and be-all of my abilities. As technology evolves, professional, successful Realtors will have to evolve as well. Those who have gotten used to putting a sign in the yard and waiting will see some unwelcome changes.

How does this affect the consumer? More on this later.

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

January 2006 – Recycling in Albemarle?

The HooK has an interesting story this morning that says that even though Albemarle County does not pick up recycling anymore,

… county code mandates that haulers have to offer the service, “but doesn’t say how it should be managed,” … and George Shadman, Albemarle County’s director of general services, urges residents whose recycling isn’t getting picked up to call general services at 296-5811. “We will call the hauler,” he says, “and remind them of their obligation.”

I called my hauler and they do not in fact offer recycling, for simple reasons which I understand. It doesn’t make financial sense to pick up recycling. They would have to come around with another truck to pick up the recycling, on a different day most likely, and this would cost more – gas prices have gone up, labor costs, etc. Personally, I would be willing to pay a little bit more (I’m not sure what amount would be the Tipping Point where I would not want to pay for this service) so that I could feel better about subscribing to the Wall Street Journal.

Maybe if we were all more willing to pay for this service, it would be more freely offered … free market anyone? I know that I and many of my clients (and friends and neighbors) would love the option to easily recycle. One would think that a progressive community such as ours would be able to achieve a progressive recycling program.

Update: July 2008 brought recycling to Albemarle

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From January 2006: What is a Buyer’s Broker?  

I read this at UrbanDigs, thanks to Curbed, and thought it worth republishing (with permission, and a few edits to make it applicable to the Central Va market) -

My Definition of a Buyer Broker: A broker who represents the buyer and has a fiduciary responsibility to the buyer in finding a property that meets their needs on all levels (price, location, size, condition, style, and living quality). A buyer broker should look to find the best value for their client and negotiate on their behalf during the bidding process to get the lowest possible purchase price from the seller. In times of bidding wars, the buyer broker should advise their client on how high over ask the buyer should bid without overvaluing the property or putting their client in financial risk.

In addition to these services a Buyer Broker will prepare the client for the real estate transaction in a number of ways:

1. Assist the buyer in finding a mortgage broker if one is needed. A good buyer broker will ask their client what their strategy is with their investment and advise their client on possible mortgage products that could be used. Ultimately, the mortgage broker is the professional you should rely on for the final product to use.

2. Co-ordinate visits to the property for contractors as needed and accompany the client on the final walk-through prior to closing to fully inspect the property based on the contract of sale’s terms and conditions. All electrical, plumbing, and appliances should be in working order (or not, per contract – JD).

Most buyer brokers, also known as Real Estate Salespersons or Agents, are in real estate as their full time profession which does not mean they know what they are doing. It is up to the buyer to determine whether or not their buyer broker is responsible, knowledgeable, and privy to the current housing market prices and developments.

I can tell you that as a broker (aka, Real Estate Salesperson) there is a ton of competition out there and very little loyalty. The more experienced brokers understand the need to ‘set themselves apart’ by offering their clients exceptional service in the most professional manner possible. My thinking is:

I am going to find you the highest quality property that meets your needs for the lowest possible price, and do it in a way that makes this transaction a positive experience for you that you will refer my services to all of your friends and family when they need to satisfy their real estate needs. (I have referred to this in the past as Raving Fan service – JD)

As a buyer you should be especially vigilant that your buyer broker is really out there to assist you, and is not just trying to make another sale. Is your broker showing you properties in your price range? Is your broker going out of their way to accommodate your schedule? Is your broker constantly showing you properties that are away from your desired neighborhood? These are the things you should ask yourself when analyzing your broker.

In the end its not about the deal, its about finding you the best home possible and making you happy with your new home and investment!

What he said.

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From March 2009:

You’re Going about It all Wrong – Or How to Search for Homes in Charlottesville (Without a Realtor)

How do you search for homes? In Charlottesville or anywhere else?

I got a call recently from a buyer who was searching homes.com and found one of my listings. Unfortunately, the listing was actually under contract (and had been for a while). I first thanked her for telling me that one of my listings was inaccurately displayed on Homes.com and asked how I could help.

She expressed her frustration – that she had been searching online for a home for a while; that whenever she found a home she was interested in, she would call the agent to go see it. Real estate search is fragmented, and it’s likely to be that way for a while. I’m frustrated, too. There is no credible aggregator of all the homes for sale – whether they be “marketed”

To which I said – “I think you’re going about this the wrong way.”

- First – pick an agent who will be able to guide you through the process (for instance, tell you where to search for homes online).

- When you call a sellers’ agent to show you the house, that agent is not representing your best interests – that agent is representing the seller and the sellers’ best interests.

How do you pick a good Buyer’s Agent – for you?

Once you have an agent who is able to guide you through the process, search well and search often.

How do I learn about how my clients and others are searching for homes? I ask. (I’m not afraid of either asking or saying “I don’t know”)

This is one of my clients’ search processes – and this is my public “thank you!” for sharing and allowing me to publish your work -

How do you search for homes in Charlottesville?

1. Your IDX site- Browse the map for affordable homes in places I want to live. Or, check the local MLS for new listings and then look on IDX to see if there is more information there.

2. Look up found home on City Assessment (Ed note: or Albemarle County or Fluvanna, etc.) website to find:

a. Tax Assessment price (editor’s note:In my opinion, assessed values have little to no correlation to what a property’s actual market value would be)

b. Who owns it? Does the owner live there? This often leads to another search on the City Assessment website for the owner’s name to see how many properties the owner has. Do the owners seem to be in good financial shape or have they made a lot of bad decisions (i.e. may need to get rid of the property to stay above water)?

c. Check for any inconsistencies in square ft, room numbers, etc between MLS listing and tax assessment. d. Look at picture to see how different the home looked a few years back (pics usually taken in 2002 or 2003). (ed note: this leads to a separate rant about Realtors stripping the MLS of photos of their listings when the listing expires/sells – this kills the accuracy and historical context of the MLS)e. Study transfer information to see when house was last sold, what it sold for, when it may have had work done, etc.

3. Use Google Maps to see what surrounds the house. Is the street tree-y? Industrial? How far is the nearest park? How far to downtown, UVA, etc? (ed note: check this out)

4. Google the street address + Charlottesville to get more information about the neighborhood. For example: Grove St. plus Charlottesville clued me into the Grove Square development (which I was unaware of because I’m new to C’ville). (ed note: don’t forget to visit Charlottesville Tomorrow for the most in-depth reporting on growth, development and politics in Charlottesville/Albemarle)

5. Google the complete address of the house to see if anyone has written anything about the house. Search the address of the house on Real C’ville Bubble blog to see if people have been blogging/laughing about the home’s asking price.

6. Lastly, physically drive or walk by the house the old-fashioned way.


For readers – what improvements would you like to see in the search process? What do you like about how you search for homes?

For Realtors – if you’re not using the MLS photo capacity – 50 pictures – you’re often doing your fellow Realtors, prospective buyers, and most importantly, your clients – a remarkable disservice.

For Sellers – do you check your home’s listing online to make sure your Realtor is putting sufficient pictures online? (I assume that the very first visitor to the listing online is going to be my client – and that they will tell me if they thing I’m doing something wrong. In fact, I ask for and encourage their feedback – it’s one of the ways I improve.

I’ll help you search – that’s why I provide what I perceive to be the best ways to search for homes here/here – but when you want representation, let me know.

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

From January 2007 – Transparency in Real Estate Fees:

Realtors don’t make tons of money. Seriously. Take for example what happens when I accept a referral from a relocation company.

Say, for example that the Seller is offering 3% commission on a $250,000 house.

$250,000 x 3% = $7500

If I made that much, that would be great.

Now, take the referral fee off the top -

$7500 – 35% = $4875.

Still, not so bad.

Now, split it with the Broker -

$4875 – 50% = $2437.50

Now, from this, take out taxes (being an independent contractor, there is no withholding, etc.), Realtor dues, all marketing expenses … and do you still think that Realtors make a lot of money all the time?

Prices of properties and sales volume certainly help offset the potential negative income when dealing with referrals, as does the repeat business when those buyer referrals contact me to market their homes … but … there is at least one (big) company from whom I never accept referrals because their agreement stipulates that once I work with someone whom they referred to me, all future transactions with that client must send this particular company a 35% referral fee.

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

From May 2008 – How Much Do I Charge For Sending Out a Referral?

Karma. Just (hopefully good) Karma.

I don’t like the feeling when I pay a referral fee (although they do pay the bills occasionally), so I don’t want to transfer that same ill feeling to another agent.

Inspiration for this post – Ardell’s STOP TAKING MONEY FOR REFERRALS!!!

Related reading -

Transparency in real estate fees (or why do I hate referral fees)

Go to Hell, relo company

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.

First from August of 2007, a post that is short, simple and conveys how I try to treat every single one of my clients.

There are no little deals

Every transaction is a huge transaction for the buyer, and usually the seller, too.

Dismissing the “little” deals as such is detrimental to everybody involved. We were all, at some point, a “little deal” ourselves.

Copyright RealCentralVA.com, LLC. If you like this post, please, visit RealCentralVA.comwhere this was originally posted.