The subject of ethics and ethical behavior is a sensitive one. In real estate, with such large transactions being involved, there needs to be the expectation that everyone involved is acting in an ethical manner.
Realtors are bound by a strict Code of Ethics and risk significant penalties should they fail to adhere to this code. These penalties can include monetary damages and the loss of their license. That's not to say that everyone working as a licensed realtor is 100% ethical. That would be an unrealistic assumption. However, there are guidelines in place to prevent unethical behavior and to punish those that are found to have breached that code.
Clients, however, have no written code that they must adhere to. As a realtor, I have to assume that everyone I work with is being completely honest and aboveboard. In 99 out of 100 cases, that is true. Every now and then, though, a situation will arise where information is provided that is patently false. Or, in other scenarios, a client will omit certain facts that ultimately have a bearing on the transaction. One result is that the transaction doesn't close and money and time is wasted.
Another result is something that I am currently experiencing. Sellers sign listing agreements that provide written evidence of the relationship between the client and the realtor. During the term of that agreement, the seller cannot reach out to another agent (nor would another agent want to be in contact with the seller - see Code of Ethics above). It's clearly defined and easy to manage.
The actions of buyers, on the other hand, are not so clearly defined, unless a realtor compels a new client to sign an Exclusive Buyer's Agreement. I, personally, have chosen not to go that route. I find it to be oft-putting to the client when they show up to see their first house only to find a legal document thrust in their hand by a person they have never met before, asking for their signature. It has been my experience that, once I meet the client and we've made a connection, that trust has been established. As I said, that's true in 99 out of a 100 cases.
Some clients are truly unaware of the reciprocal process of the Multiple Listing Service (MLS) and believe, for example, that they need to talk to a RE/MAX agent to see RE/MAX homes and a Century 21 agent to see what they have to offer. Once I explain the MLS and how it works - that all agents have access to everyone's MLS-listed homes, it usually isn't a problem after that. If they continue to contact multiple agents at that point, I can only assume that they have some ulterior motive.
The frustrating point is that a client can choose to work with any agent they choose. If at some point they no longer feel comfortable with that agent or aren't happy with the service the agent is providing, then they have the right to look elsewhere. It's the client who has two agents working simultaneously, unbeknownst to each other, who I really find bothersome. These are the clients who will call the first agent about seeing a house on Saturday afternoon, only to find out the agent is already booked for that time period. The client then turns around and calls the 2nd agent to make the appointment.
This situation can go on for a long time, with both agents putting in countless hours and driving untold miles while trying to help "their " client. The matter is discovered when the client has one of the agents submit an offer that is accepted. Only one of the agents is on the contract and is due the commission. The other agent (in this case ME) is shut out and receives nothing for the work done to that point.
There are remedies for this, however. Negotiations between brokerage firms many times result in a split of commission. Or, if all else fails, arbitration by the real estate board can resolve the issue. However, both agents were fully expecting to receive the full commission once they closed and now are in a battle to get the maximum split they can. Both end up with a really bad taste in their mouth. The client, however, happily closes on their property and moves on. The commission is paid by the seller, so they don't even have to worry about it.
My recommendation to prospective buyers: choose a realtor, meet with them and, if you like how they work and they are responsive, work solely with them and they will help you find your dream home. There is no advantage in working with multiple agents as we all have access to the same properties. If, however, you aren't happy with your realtor, be upfront and tell them so. It doesn't have to be a loud, emotional discussion. You have the right to work with anyone you choose. Your buying experience will be much smoother and when you finally get handed the keys at the closing table, you will have gained a trusted professional that you may choose to work with again, or to refer to your family and friends.
Realty Trac
Wednesday, July 11, 2012
Saturday, July 7, 2012
Using a Realtor
This subject gets pondered a lot, by both buyers and sellers. I want to address it, but I want to disclose upfront that I am a realtor, so my perspective will be somewhat biased.
If you are purchasing a new home, I would always, ALWAYS recommend using the services of a realtor. First of all, and this may be your most important reason, you do not pay for any of the services provided. That's because the realtors on both sides of the transaction are paid by the seller as part of their Listing Fee.
Beyond any economic reasons, however, a realtor will have access to every property for sale that is listed on the Multiple Listing Service (MLS) for your area. Simply by providing a few details about what you are looking for and where, a realtor can literally make hundreds of homes available to you for your review (depending on how specific your parameters are). That gives you the chance to review the list from the comfort of your home and weed out those properties that don't suit your needs. If any questions are raised during your research, your realtor will be the one to track down the answers for you..
When you have narrowed down your selection and have chosen properties you'd actually like to visit, working with a realtor is key. Most sellers that list their home, do so in order to make sure that their home is being shown to "real" buyers being accompanied by a licensed real estate professional. For convenience, most listings provide for a lockbox or Sentrilock box for secure access to the home. Obtaining the lockbox code will be impossible unless you are a licensed realtor. Homes that are being sold by the owner (FSBO's) are a different matter and I will get into that later in this post.
The buying process includes a number of steps that a realtor can not only facilitate, but expedite, as well. Once a buyer has decided on a property, the realtor can prepare your offer documents (contracts, addenda, disclosures, etc.) for your signature and present them to the seller. One your offer is accepted, your realtor can guide you through the process to a successful close of escrow. This will include having the home inspected, the attorney review of the contracts and the processing of your mortgage financing. If a buyer doesn't have access to an attorney, lender or home inspector, a realtor will be able to provide references for those services.
Your realtor can also provide significant help in the negotiating process. They know the current market and can tell you whether the home is priced accordingly. They will also be able to assess the market value of the home based on its condition or any upgrades the seller has made.
From a buyer's perspective, it only makes sense to utilize the services of a professional as you search for your dream home. This is especially true when you consider that you pay no fee for those services.
As a seller, the decision becomes a bit more complicated. Many sellers are discovering that the market value of their home is not as much as they had hoped and they have to sharpen their pencils in order to break even. When you consider a realtor may charge a listing fee of anywhere from 4-6%, the list of costs to sell your home, after the payoff of your mortgage, can make that break even point difficult to attain.
The advantages to listing your home with a realtor are myriad. They include, but are not limited to, the accurate analysis of your home's market value, the Open Houses, staging recommendations, signage, Multiple Listing Service inclusion and, most of all, the extensive marketing of the home (THE most important advantage).
If a homeowner decides to sell their home by themselves (FSBO or For Sale By Owner), all these costs are borne by the seller. Obviously, the marketing becomes the most costly item. Putting a For Sale sign in your yard and paying for a 2" x 2" ad in your local newspaper will not reach the amount of prospective buyers needed to sell your home in a reasonable amount of time. The speed at which a home is sold is directly proportionate to the amount of buyers that view the home. A realtor's marketing campaign, if effective, can produce a consistent stream of showings. Showings produce offers and offers lead to successful closings.
In the final analysis, a seller has to look at their net proceeds to determine the viability of listing with a realtor. Even with all the advantages listed above, if a seller has to bring money to the closing table, that will weigh heavily on their decision. Being a realtor, I would always recommend listing your home with one of my esteemed colleagues. However, I am not oblivious to the economic conditions that many homeowners face and many people have successfully sold their homes as a FSBO.
Whatever your decision and whether you are a buyer or seller, there are always going to be obstacles that you must overcome. If you find you can't seem to navigate these obstacles alone...call your local realtor.
If you are purchasing a new home, I would always, ALWAYS recommend using the services of a realtor. First of all, and this may be your most important reason, you do not pay for any of the services provided. That's because the realtors on both sides of the transaction are paid by the seller as part of their Listing Fee.
Beyond any economic reasons, however, a realtor will have access to every property for sale that is listed on the Multiple Listing Service (MLS) for your area. Simply by providing a few details about what you are looking for and where, a realtor can literally make hundreds of homes available to you for your review (depending on how specific your parameters are). That gives you the chance to review the list from the comfort of your home and weed out those properties that don't suit your needs. If any questions are raised during your research, your realtor will be the one to track down the answers for you..
When you have narrowed down your selection and have chosen properties you'd actually like to visit, working with a realtor is key. Most sellers that list their home, do so in order to make sure that their home is being shown to "real" buyers being accompanied by a licensed real estate professional. For convenience, most listings provide for a lockbox or Sentrilock box for secure access to the home. Obtaining the lockbox code will be impossible unless you are a licensed realtor. Homes that are being sold by the owner (FSBO's) are a different matter and I will get into that later in this post.
The buying process includes a number of steps that a realtor can not only facilitate, but expedite, as well. Once a buyer has decided on a property, the realtor can prepare your offer documents (contracts, addenda, disclosures, etc.) for your signature and present them to the seller. One your offer is accepted, your realtor can guide you through the process to a successful close of escrow. This will include having the home inspected, the attorney review of the contracts and the processing of your mortgage financing. If a buyer doesn't have access to an attorney, lender or home inspector, a realtor will be able to provide references for those services.
Your realtor can also provide significant help in the negotiating process. They know the current market and can tell you whether the home is priced accordingly. They will also be able to assess the market value of the home based on its condition or any upgrades the seller has made.
From a buyer's perspective, it only makes sense to utilize the services of a professional as you search for your dream home. This is especially true when you consider that you pay no fee for those services.
As a seller, the decision becomes a bit more complicated. Many sellers are discovering that the market value of their home is not as much as they had hoped and they have to sharpen their pencils in order to break even. When you consider a realtor may charge a listing fee of anywhere from 4-6%, the list of costs to sell your home, after the payoff of your mortgage, can make that break even point difficult to attain.
The advantages to listing your home with a realtor are myriad. They include, but are not limited to, the accurate analysis of your home's market value, the Open Houses, staging recommendations, signage, Multiple Listing Service inclusion and, most of all, the extensive marketing of the home (THE most important advantage).
If a homeowner decides to sell their home by themselves (FSBO or For Sale By Owner), all these costs are borne by the seller. Obviously, the marketing becomes the most costly item. Putting a For Sale sign in your yard and paying for a 2" x 2" ad in your local newspaper will not reach the amount of prospective buyers needed to sell your home in a reasonable amount of time. The speed at which a home is sold is directly proportionate to the amount of buyers that view the home. A realtor's marketing campaign, if effective, can produce a consistent stream of showings. Showings produce offers and offers lead to successful closings.
In the final analysis, a seller has to look at their net proceeds to determine the viability of listing with a realtor. Even with all the advantages listed above, if a seller has to bring money to the closing table, that will weigh heavily on their decision. Being a realtor, I would always recommend listing your home with one of my esteemed colleagues. However, I am not oblivious to the economic conditions that many homeowners face and many people have successfully sold their homes as a FSBO.
Whatever your decision and whether you are a buyer or seller, there are always going to be obstacles that you must overcome. If you find you can't seem to navigate these obstacles alone...call your local realtor.
Thursday, July 5, 2012
Foreclosures - Myth vs. Reality
In today's real estate market, foreclosures are a hot topic. The sheer number of foreclosed homes that are available (and that continue to hit the market every day), as well as their discounted prices, make them desirable for owner occupants and investors alike.
If you talk to home buyers, which I do every day, there is a common perception that foreclosed homes have been damaged by the previous owners and that significant amounts of money will be required to repair this damage and make the home livable. While this is true in some cases, I can tell you from experience that the market is rife with foreclosures that are nearly move-in ready. Many of these homes are only a few years old, thereby making them even more attractive to the prospective buyer.
What generally happens, however, is that foreclosures in good condition don't stay on the market for very long. In addition, because they are so desirable, there is usually competition for these homes. Don't be scared off by that either! If a multiple offer scenario exists, it usually means that the property ends up selling at (or sometimes above) the listed price. Keep in mind, however, that the foreclosed home is normally selling at well below the market price anyway and with the exception of some paint or carpet replacement, a buyer won't have to sink large amounts of cash into repairing the house.
With that being said, even at list price, a buyer will get a great deal on a house that provides immediate equity. It requires quick and decisive action on the buyer's part, along with all the requisite financial requirements in place (a pre-approval in hand). With these types of deals, you don't get a lot of time to "mull it over" before you decide to make an offer. Don't worry, however, as you will still be able to have the home inspected if your offer is accepted.
Foreclosures are "As Is" purchases, but if your home inspection turns up a problem that you anticipate would be cost prohibitive, your purchase contract provides for the buyer to terminate the contract and have their earnest money refunded. Just be advised that should the home inspection find issues that you will accept, you will not be able to ask the seller to make repairs or provide a credit at closing.
So, if you're considering a foreclosure, don't be apprehensive. Contact your local real estate professional, give them your buying parameters and let them work for you to find that perfect home. Good luck!!
If you talk to home buyers, which I do every day, there is a common perception that foreclosed homes have been damaged by the previous owners and that significant amounts of money will be required to repair this damage and make the home livable. While this is true in some cases, I can tell you from experience that the market is rife with foreclosures that are nearly move-in ready. Many of these homes are only a few years old, thereby making them even more attractive to the prospective buyer.
What generally happens, however, is that foreclosures in good condition don't stay on the market for very long. In addition, because they are so desirable, there is usually competition for these homes. Don't be scared off by that either! If a multiple offer scenario exists, it usually means that the property ends up selling at (or sometimes above) the listed price. Keep in mind, however, that the foreclosed home is normally selling at well below the market price anyway and with the exception of some paint or carpet replacement, a buyer won't have to sink large amounts of cash into repairing the house.
With that being said, even at list price, a buyer will get a great deal on a house that provides immediate equity. It requires quick and decisive action on the buyer's part, along with all the requisite financial requirements in place (a pre-approval in hand). With these types of deals, you don't get a lot of time to "mull it over" before you decide to make an offer. Don't worry, however, as you will still be able to have the home inspected if your offer is accepted.
Foreclosures are "As Is" purchases, but if your home inspection turns up a problem that you anticipate would be cost prohibitive, your purchase contract provides for the buyer to terminate the contract and have their earnest money refunded. Just be advised that should the home inspection find issues that you will accept, you will not be able to ask the seller to make repairs or provide a credit at closing.
So, if you're considering a foreclosure, don't be apprehensive. Contact your local real estate professional, give them your buying parameters and let them work for you to find that perfect home. Good luck!!
Tuesday, July 3, 2012
Short Sales - Patience is a Virtue
Along with foreclosures, short sales have become a major topic of conversation over the last couple of years. In essence, short sales are pre-foreclosures. The homeowner, in an attempt to avoid foreclosure, will negotiate with their lender to sell the house for less than what is still owed on the mortgage. This has also created a market for buyers to buy a home at a significant discount.
The biggest complaint about short sales is the amount of time it takes to get an accepted contract and close on the house. The buyer's initial offer is to the homeowner. Once that is accepted by the seller, it goes to the bank (the holder of the mortgage), along with the seller's hardship package which initiates the bank's review process. Buyers often are frustrated because they think that the seller's acceptance of their offer should lead to a relatively quick close.
Unfortunately, that's usually not the case. Unlike a foreclosure, where the bank (or Fannie Mae or Freddie Mac) knows exactly what they paid for the home, the bank reviewing a short sale only knows what is remaining on the mortgage. They have no idea what the market value of the home is, first of all, so that has to be established. Once they have that value, they can then compare it to the buyer's offer. That's only one step in the process, though. Before final approval, all the details of the transaction (price, commission, fees, etc.) have to be approved and signed off by various representatives of the bank, as well as the investor who holds the mortgage. If there is a 2nd mortgage, all these approvals are needed for the 2nd bank, as well.
If the lender is one of the bigger banks, with a huge portfolio of short sales to deal with, you can expect that the process could take longer than normal. On average, my experience has shown that short sales can take 4-6 months before a buyer gets their offer accepted by the bank. I have been lucky in the past and had short sales close in less than 90 days. I've also been on the other end of the spectrum - I'm working with a client now who had their offer accepted by the homeowner in May of 2011 and we are still waiting for bank approval.
One thing that can expedite the process is making an offer on a house that had been under contract previously. Many times, buyers will get frustrated by the lengthy wait, find another house and terminate their contract. Banks usually require that buyers are "locked in" for at least 90 days, but after that a buyer can pull out and get their earnest money refunded. The new buyer, if they make an offer soon thereafter, can expect that some of the upfront work has been completed by the bank. This should speed the process along, however, that is never a guarantee.
In the end, short sales are not for everyone. Most buyers start looking for houses with the intent on finding the one that best suits their needs, making an offer that is acceptable to the seller and closing 30-45 days later. If that is your plan, I would look only at resales and foreclosures. You can have reliable expectations for a move-in date with these types of transactions. If you're not locked into a move-in date, however, and you have the patience of Job, short sales might be the best deal available for you.
Monday, July 2, 2012
Welcome to Real Estate 101!
Welcome and thank you for visiting my blog. I will be talking about anything and everything related to the real estate industry and how it pertains to buyers and sellers. I hope you will feel free to leave a comment if you so desire. I welcome your feedback.
Please be advised that anything I post on this blog will be based on my own experiences as a realtor. I am not an attorney, so do not interpret anything I may write as legal advice. In addition, I am licensed in Illinois. As a result, your state may have laws that contradict the laws and regulations that I work under here in my state. Always direct any specific questions you have about real estate to a licensed professional in your state.
With that said, fasten your seatbelts and enjoy the ride!
Please be advised that anything I post on this blog will be based on my own experiences as a realtor. I am not an attorney, so do not interpret anything I may write as legal advice. In addition, I am licensed in Illinois. As a result, your state may have laws that contradict the laws and regulations that I work under here in my state. Always direct any specific questions you have about real estate to a licensed professional in your state.
With that said, fasten your seatbelts and enjoy the ride!
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