What is a real estate agents time worth?

Real estate fees are most commonly a percentage based fee. Fees are based on the sellers ultimatel selling price, and established at the time of listing for both the buyer and seller. There are some different models out there offering a flat fee service or several FSBO sites offering discounted listing entry only services. But no one has truly been successful at creating a new model. Has its time come? While the seller disperses the fees to both buyer and seller brokerages at closing, it is the buyers purchase offer and price that creates the money. So in a sense, it is the buyers who are paying the the fees. Do you think buyers and sellers would mind paying only THEIR agent?

Buyers and sellers are not the same when it comes to the time,energy,money that I may require. And not all sellers nor all buyers all require the same. Am I free to establish my worth and charge accordingly? Absolutely-under my current broker that is. Not all agents and REALTORS can. There are company policies to adhere to, and I do as well.

But rather than have a percentage, as a buyer or seller wouldn’t it be nice to see a breakdown of what I will or won’t charge for what I will or won’t do? As a seller, wouldn’t it be nice to only pay for YOUR agent and not the buyer’s agent. Shouldn’t the buyers agent fee be between the buyer and agent? If a buyer calls me today and I show them one home which they love and are ready to write an offer on, have I earned the thousands of dollars the seller will be paying me? Possibly, but I personally don’t think I have. Can I adjust my fee and collect less? Not necessarily the way things work today. Because the listing broker, already committed the seller to paying the broker a fee-regardless of what I am charging the buyer.

Perhaps the time is getting close to a new way of doing things! Stay tuned to this blog for more thoughts on this subject and if you’d like to add your two cents worth, please do so. I’ll consider it research and it will be most helpful!

The Dual Agent Tango….

 So…you listed your home for sale after doing the thousand things YOUR agent suggested. You made it available to show on a minutes notice for several months. YOUR agent was by your side the whole time offering advice and guidance. Showings happen, rumors of offers, finally…an offer materializes!

YOUR agent lets you know it’s someone he or she showed it to. Now what?

YOUR agent did their job.  They listed the home for sale, and marketed the property to locate a ready willing and able buyer. Now is when you need someone to tell you what you should do. Good thing you hired a REALTOR. Or so you thought.

The following is the  DUAL AGENT TANGO that would get you voted off “Dancing With The Stars”!

At some point during the discussion with every buyer, there will be a question asked by the buyer that will be considered a substantive question about the property or the possible transaction. A listing agent who is showing the home and gets asked that question needs to stop and inform the buyer THEY represent the seller as a client and if  the “customer” is  represented by an agent. This assumes the buyer called from an ad or sign or some other introduction. Sometimes an agent will be asked to find a house, but they are probably urged to have representation so they are hired via a Buyer Agency Agreement-every state and every REALTOR or agent has one in one form or another. It is a contract and should be understood completely before signing.

A customer is an unrepresented party. When a listing agent shows a customer buyer a home and they want to write an offer, it can be done. The agent goes into a brief discussion of agency and says don’t worry. I can “represent” you as a customer and work with you to write an offer. The seller (client)  hasn’t agreed to this as of yet. The buyer as a customer though has no representation. The agent cannot advise them at with regards  to price or terms of an offer. Fair enough-the buyer has to say write this, these are MY terms. If the buyers asks for a suggestion or If the agent so much as hints to a suggested term-anything-they would be considering the cardinal sin of REALTORS, performing undisclosed dual agency.

Another option is the buyer and seller are convinced that dual agency is the best way to go. The agent ultimately “represents” neither party though so neither party can benefit from the agents knowledge of real estate  negotiating or contract writing skills. All laws must still be followed but that’s the easy part. They have to be followed regardless. But the terms of an offer are critical now and all the way through closing. Advice and expertise may be needed-make that always needed right through closing and even after.

Now the tango. A friend of mine had this happen to them. A neutral agent was selected to help them through a life situation. This agent listed their home and represented them as a client. At some point an offer was made by a buyer the listing agent brought to the home. I’m not sure what the relationship was between the buyer and agent prior to seeing the home-perhaps no relationship existed. But in end, you’ll see the point and result of whatever relationship they had. A price and terms were agreed to including a home inspection. Ultimately, some things were found on the home inspection and the buyer decided to terminate the contract within the terms allowed and agreed to at the onset.

Did everyone get the representation they were expecting? Did the seller and buyer agree to agency terms that were presented completely? Did the buyer get any counsel on what terms they should write to protect them? If the agent represented the seller as a client, could they go back to the buyer and advise them they could “walk away” based on the terms of the home inspection? Could they walk away-did the agent leave the seller vulnerable by not presenting terms more favorable to them? As a dual agent, the agent represents no one egually.

There are a lot of “what if’s” in just this one scenario. I do not know what relationship they all shared. The agent may be sworn to protecting the seller or buyers confidentiality, but my friend is not. At some point he might want to call or cry on my shoulder. The important thing is that each side has an option at the onset to have their agent represent them and them alone. The seller clearly already established that relationship. Was it abandoned in favor of potentially earning double the commission? Who knows. Was the buyer acting solely on their own, receiving NO advice from the agent? Could the transaction have been salvaged?

At some point a question was probably asked from one side or the other…what should we do or what do you suggest? If the agent represented neither party, why in the world would that service be worth $20,000-$30,000? The agent could easily have referred that buyer to another agent so he/she could stay by my friends side-fully representing them. The agent could have said NO, I cannot write your offer-but another agent can. It’s doubtful the buyer would have argued that was not okay with them. Was the agent worried another agent would out negotiate them? Was the agent motivated in any way by money? Did the agent gloss over the possible agency relationships at the beginning?  Who knows….

But a strong, professional and committed REALTOR or agent will say NO- I cannot work for two people effectively on the same transaction. If I establish a buyer agency agreement with a buyer first, who then wants to by a home I just listed who do I choose to abandon or should I have to? TOUGH-TOUGH-TOUGH scenarios exist in real estate and you should have someone to advise you on almost every element even beyond closing. Buyers and sellers need to get full disclosure and that might mean you don’t earn a commission but isn’t it the clients and customers we should be concerned with most?

Ultimately this deal failed.  The buyer walked on a home inspection term. The agent (dual agent) couldn’t negotiate for either party or advise either person how to work it out. My friend made plans  to vacate the home and moved out, anticipating this chapter of his life was now over and he could move on. Or so he thought…

Maybe it would never have worked out. That happens. But when the agent has to sit on the sidelines without be able to offer professional experience and guidance to at least one person, it will never end good for either person.

This is written from a Virginia REALTOR perspective. Agency laws are different in every state. Not all agents are REALTORS who have to follow a Code of Ethics standard that in many cases is higher than state license laws.

CNBC Fast Money And “Renovation Nation”

http://plus.cnbc.com/rssvideosearch/action/player/id/3000082638/code/cnbcplayershare

This recent video segment presented by the Fast Money crew and Michelle Meyer an analyst with Bank of America/Merril Lynch was just aired. I believe this matches up nicely with what we see here locally in Virginia. There is tremendous opportunity now because we have inventory to buy at great prices if you’re OK taking on a few projects. The perfect house might still be available, but don’t look for deep discount prices on the home that has everything you want, in the perfect location. You’ll likely be competing with several buyers for that home and it might sell pretty quickly for very close to the sellers asking price.

But if you look at doing the renovations to make it the perfect home, you’ll likely do better in the long-term. The segment looks at some companies who will benefit from this next phase of the housing recovery. The ripple effect of the housing crisis will be mirrored by the ripple effect of the recovery. Investors, contractors, builders, home improvement stores all will see a much better balance sheet. That means hiring people, reinvesting in their business, municipal tax revenues, real estate commissions are just the beginning. Housing employs or provides income to more industries and people nationwide than any other industry. That’s why everyone will benefit from a strong recovery-even those not directly tied to housing. Contact a local real estate pro in your area to see what they see happening.

A Stunning Executive home at Millpond at Stonehouse-$625,000

A wonderful display of true craftsmanship! For a full color brochure with a complete list of features you will love…

 please call me!  757-810-3642

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A wonderful ranch home just minutes from Williamsburg!

3101 Trailwood for $450,000  Millpond at Stonehouse Golf Community      VIEW SLIDE SHOW

A Beautiful City of Williamsburg Home For Sale-$669,000

 

116 Sir Thomas Lunsford-A Colonial Williamsburg Tradition     VIEW SLIDE SHOW

My Views of Williamsburg-FALL 2011

 

		Colonial Williamsburg VIEW SLIDE SHOW DOWNLOAD ALL

Where is the good news in housing stats?

 I am always trying to look at the positive in our housing market. It’s much easier to follow the crowd and to be negative, but that’s not me!

In looking at the chart above I obviously highlighted what I think is the good news. This chart is for single family detached homes in our 3 biggest local zip codes-23168-23185-23188. That would include the City of Williamsburg, James City County and the upper section of York County. I think the fact that we saw a 38% increase in Feb 2012 sales over Feb 2011 is a huge positive. And with the first two months gone a modest 16% increase YTD is also good news. Our projected average of 60 units/month is bound to go up as we head into our “busy season” which is typically April thru July.

Better news can be found in the last highlight-months supply of inventory. We’ve been seeing this drop from the high teens for the last 15 months or so. As we wind our inventory down two things will happen. Buyers will have fewer choices and will have to act faster, and prices will begin that slow climb up. A buyer market, which is what we have today, typically happens with longer than 6 months of inventory. In 2006 and 2007 we had inventory in this group of homes in the 4-5 month range. And in price ranges below $300,000 it was less than 30 days inventory!

In looking at some of the negatives in the chart-asking price vs sold price and days on the market trickled up. and continue to stabilize but we have some work to do there. Most of that-I believe-is more evident in the homes that are not meeting the demands of the market. The more desirable the condition and the more realistic sellers are with the right asking price, the quicker the home will sell. Our biggest price sacrifice is clearly happening in the $400,000 and up price ranges. We still have some high inventory levels and bigger price reductions in that part of the market. Maybe because buyers are buying smaller, less expensive homes. Today, if you have a 2000sf 4 BR home in good condition, priced right and in the right neighborhood you might just sell it in a week. Location is huge-it always has been. We do have some delays in the market caused by buyers who want to buy but can’t until they sell their home, but more often, the buyer lacks the qualifications to buy what they want. They will end up settling for what they need, which is OK as long as they don’t have to start all over again in 2 or 3 years!

Buyers have to know exactly what they want and communicate it with the agent.They have to work with a professional who can ferret out the data and show them what they want. All too often , showing agents seem to be hunting a price range first and the criteria second. I start with your minimum needs. Then add your desired features you want but can live without, then factor in the price. Add and subtract features within your budget. You’ll have far fewer choices than you think and have a lot less frustration than looking at everything in a wide open price range.

Where is the good news in housing stats?

 I am always trying to look at the positive in our housing market. It’s much easier to follow the crowd and to be negative, but that’s not me!

In looking at the chart above I obviously highlighted what I think is the good news. This chart is for single family detached homes in our 3 biggest local zip codes-23168-23185-23188. That would include the City of Williamsburg, James City County and the upper section of York County. I think the fact that we saw a 38% increase in Feb 2012 sales over Feb 2011 is a huge positive. And with the first two months gone a modest 16% increase YTD is also good news. Our projected average of 60 units/month is bound to go up as we head into our “busy season” which is typically April thru July.

Better news can be found in the last highlight-months supply of inventory. We’ve been seeing this drop from the high teens for the last 15 months or so. As we wind our inventory down two things will happen. Buyers will have fewer choices and will have to act faster, and prices will begin that slow climb up. A buyer market, which is what we have today, typically happens with longer than 6 months of inventory. In 2006 and 2007 we had inventory in this group of homes in the 4-5 month range. And in price ranges below $300,000 it was less than 30 days inventory!

In looking at some of the negatives in the chart-asking price vs sold price and days on the market trickled up. and continue to stabilize but we have some work to do there. Most of that-I believe-is more evident in the homes that are not meeting the demands of the market. The more desirable the condition and the more realistic sellers are with the right asking price, the quicker the home will sell. Our biggest price sacrifice is clearly happening in the $400,000 and up price ranges. We still have some high inventory levels and bigger price reductions in that part of the market. Maybe because buyers are buying smaller, less expensive homes. Today, if you have a 2000sf 4 BR home in good condition, priced right and in the right neighborhood you might just sell it in a week. Location is huge-it always has been.

Buyers have to know exactly what they want and communicate it with the agent.They have to work with a professional who can ferret out the data and show them what they want. All too often , showing agents seem to be hunting a price range first and the criteria second. I start with your minimum needs. Then add your desired features you want but can live without, then factor in the price. Add and subtract features within your budget. You’ll have far fewer choices than you think and have a lot less frustration than looking at everything in a wide open price range.

Condo and Townhome buyers (and SELLERS!) need to read this!

Attached is an article from the latest issue of the Virginia Association of REALTOS Commonwealth magazine.

It is no secret that lending has gotten tighter the last few years. That being said, while the governement wants to appear as the superhero to rid the world of evil, sometimes the message is mixed!

We have always had a moire difficult time selling townhomes and condos. Dealing with POA management companies, occupancy rules, lack of communication and sometimes high transfer fees and capital contributions, the list goes on.

Now buyers-and sellers for the most part might be facing a steep uphill climb to sell and buy what is often someone’s first home after renting. New FHA rules for financing has placed a huge burden on the process. Before writing an offer on a townhome or condo, you need to understand what has to happen long before that. Read this article! Please email me for a a pdf version that will be easier to read!