Sunday, July 31, 2011

Discount Real Estate Brokers - Can You Save Money?

Discount Real Estate Brokers - Can You Save Money?

To talk about discount brokers is to say there are standard-fee brokers, and nobody will own up to that statement. Why? Because all real estate commissions are negotiable.
However, many real estate brokerages, hoping to capitalize on the growing realization among consumers that real estate commissions are negotiable, have created market niches for themselves that promise to save sellers money and rebate commissions to buyers.

How Do Discount Brokers Operate?

In Minneapolis, for example, the traditional brokerage fees are as high as 7% of the sales price. The average co-brokering fee, the fee paid to selling agents who cooperate, is often as low as 3.15%. So those listing agents make a lot more money than selling agents.
An agent in Minneapolis was advertising fees of 4.5%, giving 2.5% to the selling agents and keeping 2% for her company. After a client explained to her that she would gladly pay 5% if the agent would co-op 3% to the selling agent, the agent changed her advertising policy, figuring she was still 2% under the rate most other brokers charged.
Here are other examples:
  • Flat-fee listing policies. This brokerage takes all listings at a flat rate, paying a cooperating fee on top of that amount to selling brokers. That cooperating fee is also paid by the seller. You might see a brokerage ad offering to list your house at a fee of $2,000. Somewhere in the tiny print, if it's disclosed at all, will be a disclaimer that this fee is exclusive of the fee paid to the selling broker. This type of advertising is misleading to the consumer.
  • Small percentage-fee listing policies. Some brokers advertise it will take a listing for 1% or 2%. Again, many of these brokers don't draw attention to the fact that the selling broker, in most instances, is still paid an additional fee by the seller.
  • Buyer commission rebates. You can also find real estate agents who advertise that if you hire one of them to buy a home, the company will credit the buyer a percentage of its commission or a flat-fee at closing. This money comes from the fee the seller pays the broker who presents the buyer. Generally, a company that elects to give away part of its income to buyers does so in the hopes that it will attract such a huge volume of business that it won't miss the money. You may or may not receive individualized attention and service due to increasing pressure on these low-profit companies to keep the business coming in the door.
  • Graduated fee policies. These brokers offer a cornucopia of fees and services, depending on the type of representation and work required. For example, if you think you can sell your home without any assistance from the listing broker, you might be able to work out an arrangement for MLS input only. This means the broker will put your home into the multiple listing service but take no phone calls from agents, will not show your home, nor put a sign in the yard or advertise it elsewhere. Some MLS groups prohibit this practice, but it's done anyway. On the other hand, if you want the listing broker to handle increased responsibilities, the fee will go up, but it will still be less than most full-service brokerages charge.
  • Reduced fees in exchange for another transaction. A few brokerages subscribe to the theory that two in the bush is better than one in the hand. If you agree to buy a home through the listing brokerage instead of hiring a selling agent, many times the broker will reduce the listing commission fee.

Why Would Sellers / Buyers Accept Reduced Services?

To save money. That's the number one motivation. Some sellers are extremely savvy about selling their own homes and don't believe they need a full-fledged marketing campaign. Sometimes they don't. Especially if it's a seller's market.
I once sold a home in one afternoon. I'd been thinking about selling, and had an old metal For Sale sign in my garage that was rusting out. When I saw the next-door neighbors were holding an Open House one Sunday afternoon, I dashed outside and stuck the sign in my yard. The house sold that afternoon. Some markets are like that.

Saturday, July 30, 2011

How To Get Your Home Sales to the Closing Table

How To Get Your Home Sales to the Closing Table

Techniques for Real Estate Agents

It's surprising how many real estate agents feel the most important part of their job is getting a signed contract. In the real world, a contract is just the beginning for any agent who plans to take the real estate profession seriously.  
Closings Don't Just Happen
What about getting the sale to closing? Most closings don't just happen, they take place because at least one agent involved in the transaction makes the effort to ensure everything is progressing as it should.
I've seen many contracts fall apart simply because the agents weren't staying in touch with their clients and other parties involved in the sale. They sent their clients off with a few names, waved good-bye, and said see you at closing. Does that sound crazy? It sure is, but it happens–more often than you can imaginep] The bottom line: no closing, no commission–and probably no referrals, your future income. Those of us who plan to be around for the long term must show that we are the people clients can look to for advice and results.
Agents Working with Buyers
Ask the lender for a list of items required for closing, and find out if they provide online or faxed loan status updates. If not, talk to the lender as often as necessary to make sure all work is being done–on your part and theirs.

  • If you're working with a VA or FHA loan, make sure you're up-to-date on all the current requirements.

  • Be sure deadlines are met, such as promised dates for all inspections and loan commitments. Convey all information to the seller's agent on time.

  • Although you shouldn't steer a client to specific individuals, you should provide a list of service professionals who have good track records: surveyors, home inspectors, pest control companies, attorneys.

  • Go with your clients to inspections if possible, sticking to the sidelines and watching what takes place. Home buyers are more likely to be stressed if repairs are required, even if they are minor. A thorough understanding of needed repairs makes it easier for you to counsel your clients and negotiate with the other agent if necessary.

  • Don't forget to give your clients a list of all utility companies that service the new home. They'll need to arrange for services to begin on the day of closing.

  • Make sure clients are talking with someone about home insurance. That sounds pretty elementary, but many home buyers wait until the last minute to obtain an insurance rider.

  • In my state, most closings are managed by attorneys, and an attorney performs the title search. In other states title companies perform the title searches. Make sure arrangements are made for the type of work required in your area. In short, make yourself available and stay informed.
    Agents Working with Sellers

  • If a commitment date passes with no confirmation from the buyer's agent, call the agent to find out why it's late, and when it can be expected.

  • The appraisal is critical. If more than a few weeks go by with no appraisal, get on the phone to find out why. After the appraisal is complete, verify that the results meet the lender's expectations.

  • Your office staff should tell you when inspections are scheduled, since the inspector must enter the house. Call the buyer's agent the next day to ask for feedback. If there's a problem, you want to know now, not in two weeks.

  • Check-in with the other agent occasionally, to make sure things are progressing as they should.

  • Remind your clients about utility shutoffs or transfers.

  • If your clients are selling one house to move to another, you may be handling two transactions. That means double-duty in making sure both deals are progressing towards synchronized closings. Every transaction is different, you'll sometimes have problems that are deal killers. It happens. But it shouldn't happen simply because someone doesn't do their job.

  • Becoming a Success Real Estate Agent

    Monday, July 25, 2011

    How to Interview an Agent

    How to Interview an Agent

    Smart consumers interview potential real estate agents before deciding on whom to hire. Just as you are sizing up the potential for a good fit, rest assured that the real estate agent will likely be interviewing you, too. Be wary of agents who don't ask you questions and probe for your motivation. You wouldn't work with just any agent off the street, and good agents are just as selective about their clients, too.
    Caution: Don't interview agents from the same company!

    1. How Long Have You Been in the Business?

    The standard joke is there's nothing wrong with a new agent that a little experience won't fix. But that's not to say that freshly licensed agents aren't valuable. Much depends on whether they have access to competent mentors and the level of their training. Newer agents tend to have more time to concentrate on you. Some agents with 20 years of experience repeat their first year over and over. Other 20-year agents learn something new every year.

    2. What is Your Average List-Price-to-Sales-Price Ratio?

    Knowing the agent's average ratio speaks volumes. Excluding sizzling seller's markets, a good buyer's agent should be able to negotiate a sales price that is lower than list price for buyers. A competent listing agent should hold a track record for negotiating sales prices that are very close to list prices. Therefore, listing agents should have higher ratios closer to 100%. Buyer's agent ratios should fall below 99%.

    3. What is Your Best Marketing Plan or Strategy for My Needs?

    As a buyer, you will need to know:
    • How will you search for my new home?
    • How many homes will I likely see before I find a home I want to buy?
    • Will I be competing against other buyers?
    • How do you handle multiple offers?
    • Do you present offers yourself?

    As a seller, you will need to know:
    • Specifically, how will you sell my home?
    • What is your direct mail campaign?
    • Where and how often do you advertise?
    • Will you show me a sample flyer?
    • How do you market online?

    4. Will You Please Provide References?

    Everybody has references. Even new agents have references from previous employers.
    • Ask to see references.
    • Ask if any of the individuals providing references are related to the agent.
    • Ask if you can call the references with additional questions.

    5. What Are the Top Three Things That Separate You From Your Competition?

    A good agent won't hesitate to answer this question and will be ready to fire off why she is best suited for the job. Everyone has their own standards, but most consumers say they are looking for agents who say they are:
    • Honest and trustworthy
    • Assertive
    • Excellent negotiators
    • Available by phone or e-mail
    • Good communicators
    • Friendly
    • Analytical
    • Able to maintain a good sense of humor under trying circumstances

    6. May I Review Documents Beforehand That I Will Be Asked to Sign?

    A sign of a good real estate agent is a professional who makes forms available to you for preview before you are required to sign them. If at all possible, ask for these documents upfront.

    As a buyer, ask for copies of the following:
    • Buyer's Broker Agreement (is it exclusive or non-exclusive?)
    • Agency Disclosures
    • Purchase Agreement
    • Buyer Disclosures

    As a seller, ask to see:
    • Agency Disclosure
    • Listing Agreement
    • Seller Disclosures

    7. How Will You Help Me Find Other Professionals?

    Let the real estate agent explain to you who she works with and why she chooses these professionals. Your agent should be able to supply you with a written list of referring vendors such as mortgage brokers, home inspectors and title companies. Ask for an explanation if you see the term "affiliated" because it could mean that the agent and her broker are receiving compensation from one or all of vendors, and you could be paying a premium for the service.

    8. How Much Do You Charge?

    Don't ask if the fee is negotiable. All real estate fees are negotiable. Typically, real estate agents charge a percentage, from 1% to 4% to represent one side of a transaction: a seller or a buyer. A listing agent may charge, for example, 3.5% for herself and another 3.5% for the buyer's agent, for a total of 7%.

    9. What Kind of Guarantee Do You Offer?

    If you sign a listing or buying agreement with the agent and later find that you are unhappy with the arrangement, will the agent let you cancel the agreement? Will the agent stand behind her service to you? What is her company's policy about canceled agreements? Has anybody ever canceled an agreement with her before?

    10. What Haven't I Asked You That I Need to Know?

    Pay close attention to how the real estate agent answers this question because there is always something you need to know, always. You want an agent to take her time with you -- to make sure you feel comfortable and secure with her knowledge and experience. She should know how to listen and how to counsel you, how to ask the right questions to find out what she needs to know to better serve you.

    Friday, July 22, 2011

    How to Sell property even in Down Market

    How to Sell property even in Down Market

    Marketing to Real Estate Investors During Down Markets

    If Prices are Down, It Could be Time for Investors to Move

    Depressed home prices generally cause concern with home buyers. They do not necessarily want to purchase a home when it may be worth less next year. Examples of declining home prices are rare since 1991, however the period from 2005 through 2007 is a great example.
    The home price indexes show differing severity in depreciation for the two years from 2005 through 2007. The Case-Shiller Home Price Index was the most depressing, with the OFHEO (Office of Federal Housing Enterprise Oversight) showing less severe price drops.
    What enterprising brokerages do to respond to this very dramatic decrease in retail home buying activity is to market to real estate investors. When coupled with a huge increase in foreclosures due to Adjustable Rate Mortgages (ARMs) adjusting to rates not affordable for the homeowners, the stage is set.
    Articles and web pages began to appear, making several points of interest to residential rental property investors.

    • Home price declines present opportunities to purchase bargains that will generate positive cash flows.
    • Stable homeowners were losing their homes, but not their jobs.
    • Homes in good neighborhoods were available for purchase at lower prices than in recent history.
    • Demand for single family homes in good neighborhoods was up.
    There can be opportunities in just about any real estate market, one just has to look for them. These brokerages created investor client relationships that resulted in multiple transactions over time.

    Secret , how to use technology to get potential transaction

    1. Using a Netbook or iPad for Your Mobile Real Estate Office

    The first piece of the mobile real estate office is of course the computer. It's the core piece, but the steps that follow will fill out the picture with tools to use our computer remotely. While a notebook computer is fine, many have moved to the netbook for the smaller form factor. With WiFi access, you can work with documents, send emails, work online and more. So, sitting in a customer's hotel room or home isn't a problem...if you have the WiFi.
    As for the iPad, you lose some functionality, but I use it almost exclusively when I'm traveling. I take the netbook for the now-and-then task that I can't accomplish with the iPad. Also, just because of many years of keyboard work, I find it faster to work in the netbook for many tasks. But, the long boot time, shorter battery life and heavier weight make it a second choice when the iPad will get the job done.
    So, for the first component of our real estate mobile office, I recommend a netbook with at least a 10 inch screen, and/or an iPad. One definite advantage of the netbook comes in our third step when we talk about printing and scanning. With no USB ports, the iPad just can't do what the netbook can.
    Now let's look at the next piece, getting our WiFi access when and where we need it.

    2. Carry Your WiFi 3G Hotspot With You for a Mobile Real Estate Office

    We now have our netbook computer and/or our iPad, but now we need to be able to access the Web from wherever we are, preferably without traveling to a WiFi hotspot. I've written about my use of the Verizon MiFi device, which provides this capability, but the $60/month access fee was a bit steep unless you use it a lot.
    Well, the situation is now better, with two phones from Verizon that have 3G hotspot capability as a part of the cell phone. I bought a Palm Pre Plus, and can turn on a hotspot at any time, for use by multiple computers or devices. It works great, and now I don't have to carry the phone and a WiFi box, and worry about multiple different batteries to keep charged. The same level of access is also less expensive with the phone hotspot.
    With the Palm Pre, I have Web access for the netbook or the iPad wherever I get cell service. I have no problem accessing Zipforms Online and doing contract documents. In fact, there's an app with the iPad that makes it easier yet. Now I can do purchase agreements, counter offers, and other documents in my customer's home, hotel room or other location.
    That's all great, but it isn't good enough unless I can easily print out the document to get their signatures. Sure, some love their tablet computers for signatures, but I found it a pain to try and show my client the contract clauses on the screen for explanation, then keep turning the computer around for their signatures. They prefer the paper, and the last piece of our mobile real estate office, printing, is next.
    3. HP Web Enabled Printer for Your Mobile Real Estate Office

    In our first two steps, we talked about the computer we'll need for our mobile real estate office, and then about an easier and less expensive way to carry around our own mobile 3G hotspot as a cell phone feature.
    Now, let's talk about printing. Sure, some of us are already carrying a printer in the vehicle, powered off of our car electric system. But, when I switched much of my out-of-office activity to the iPad, a physical USB connection wasn't there. Besides, all of those cables were a pain anyway. Well, HP responded with a printer series that communicates with the Internet via WiFi. It has its own email address. I can email a document as an attachment, and the printer receives and prints it.
    Now, here's my remote office routine with a customer:

    • We're meeting at their home to do a listing or purchase agreement.
    • I get the details, their information, and use my Palm Pre hotspot and iPad to fill out the documents online.
    • I email the documents as an attachment directly to the HP D110a Printer.
    • Excusing myself, I go to my vehicle, the printer picks up my Palm Pre hotspot, and it receives the email and prints the documents.
    • I take them back in for signatures.
    • If you're using a netbook, you can take them back out and use the scanning function of the printer via USB to scan in the signed documents and print the customer a copy. With the iPad, I just tell them I'll do it back at the office and email them a copy
    It's as easy as 1-2-3! You can set up a truly mobile real estate office with these tools.

    Wednesday, July 20, 2011

    What is Buyer Agency?

    Buyer Agency 

    Buyer agency is defined as a principal-agent relationship in which the broker is the agent for a buyer, with fiduciary responsibilities to the buyer. What does that mean? It means that as a buyer's agent you are tied to the buyer, and that all of your loyalties are to the buyer.
    Buyer agency is a relatively new concept for the real estate world. In the past, agents were Seller's Agents, working for the person who signed a contract employing them to sell real estate. Over time that arrangement resulted in too many misunderstandings. A buyer working with a Seller's Agent often regarded that person as his agent, and felt free to make confidential statements, not understanding they would be passed on to the seller.
    Complaints were made to real estate commissions, and lawsuits were filed. As a result, many states now require us to explain agency status to the buyer. In North Carolina we must make this disclosure at the first significant contact. Agents in our office talk with a great number of long-distance buyers, so that means we often disclose agency status over the phone.
    In today's real estate world, you'll find agents who work as Seller's Agents and Buyer's Agents, and in some areas you'll see Dual Agents and Designated Agents. Here's a simplified recap of those terms.

    Seller's Agent Your duty is to obtain the best deal for the seller. You are allowed to give the buyer only material facts about the property. A Seller's Sub Agent is an agent from another office who is not working as a Buyer's Agent.
    Buyer's Agent Your duty is to obtain the best deal for the buyer. You may pass on any and all information you obtain about the seller or the property.
    Dual Agent You must be loyal to both parties. Dual agency occurs when a real estate agency owns a listing, and an agent from the office, working as a buyer's representative, shows that listing. In areas where it's allowed, Dual Agency must be disclosed and agreed-to in writing by both parties. Roger Cumbie, one of our area real estate educators, compares Dual Agency to "walking a tightrope," since it's sometimes difficult to focus on the needs of one client versus the other.
    I will work as a Dual Agent only if the seller is not my own lister. That's a personal choice, and not all agents feel the same way.
    Designated Agent Very similar to Dual Agency, and also not available everywhere. The broker-in-charge designates two agents to work a transaction, one for the seller, one for the buyer.

    How Do I Choose the Best Property Brokerage?

    How Do I Choose the Best Property Brokerage?
    Choosing the best property brokerage is extremely important if you want to get the best possible price for the property in question. There are many different ways to search for brokerages of this type, including online or through some type of national or international network. In order to make sure that the property brokerage firm selected is the best for your needs, make sure to consider such factors as the reputation of the brokerage, the schedule of fees, charges and commissions that apply, and the expertise of the brokerage in selling similar properties.
    When investigating the reputation of any property brokerage, it is important to look closely at how that business is perceived in the community where the property is located. One mistake that many people make is to look at the reputation of a nationwide brokerage and assume the quality of service offered in other places will be similar in the local setting. Rather than making that assumption, find out how others in the community perceive the professionalism, integrity and honesty of those working in the local office of that national brokerage. Only consider them as a viable option if that local reputation is positive and appears to meet your own personal standards for business partners.

    Along with reputation, it is important to select a property brokerage that has experience with the type of property you wish to sell. Some brokerages take on properties of all types, while others may specialize in a limited number of property types. If you have a manufacturing plant to sell, working with a hotel brokerage is likely not the best idea. Make it a point to ask for references from clients who have sold similar properties through the brokerage, and contact the references. If those clients indicate they are happy with the way the property brokerage firm handled their properties, consider the firm a possibility.
    In order to achieve the maximum return on your property, it is important to look closely at what types of charges and fees each potential property brokerage will assess while attempting to sell your property. This includes getting some idea of the percentage of the commission that will be due once the property is successfully sold. Keep in mind that while one firm on your list may be the cheapest brokerage, that does not automatically mean it is the best option. Go with the cheaper firm only if the necessary expertise, positive client feedback, and general local reputation of that brokerage is equal to your other options. By basing your decision on more than just cost, the chances of finding the right property brokerage and selling your property at a reasonable price are greatly enhanced.