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The piece below was posted on Trulia Voices in relation to a question about buyer agency. I am A Realtor, yes, and it pains me to read such ill advice.
Chachi answered:
Don’t get a buyer’s agent unless you have a friend in Real Estate to act in this manner. A buyer’s agent will say that they are looking out for your best interest but in fact, they want to make a commission. High price = high commission. Buyer’s agent was created by real estate to make more money from the home buyer.
If you insist on a buyer agent, one option would be to negotiate a flat fee. Again, why do you need a buyer agent? Hire an attorney to make sure all your stuff is in order.
Google “buyer’s agents” and see which ones are positive (usually from real estate agents – see the responses below for a bunch of blood-thirsty examples) and the negatives are from homebuyers who got burned (which includes a lot of homeowners suing thier buyer agents for not getting them the correct/best price).
Good luck- do your research
Use a friend in the business as long as they are full time and know the inventory and are professional: absolutely hire them to be your buyer agent. But don’t go there if they practice only when a far and in-between relative needs them to help them sell or buy.
Hey Chachi, maybe you were burned once before but please understand every profession has good, bad and ugly practitioners. Painters, doctors, nannys, store merchants. Would you only use a friend or family for these things? What if you don’t have a friend in the business?
The best advice is to understand the law. If you hire a buyer agent they are contracted to give you fiduciary. They can not tell you what home to buy, that is for you to decide. But they should guide you in the process and help you understand value.
I work everyday at what I do. I help the homeowner and the homebuyer find the compromise to make a sale happen. My job is to get a homeowner who wants more than his home is worth and a buyer that wants to pay less than it is worth, to come to an agreement. That’s not easy. Not to mention getting to the closing table. Clearing title, expediting permit and C of O issues. Carrying a short sale or foreclosure burden for both buyer and seller. Deflecting, cajoling and persuading…
For NYstate Law: http://www.sabrinateplin.com/Agency%20Law.html
Most of us are not blood sucking harpies. We dont make oodles of money either. Ask any realtor to figure out what they make an hour based on the amount of time they spend working. Not only will it surprise you it will also surprise the realtor.
Click on the link to go to the Wall Street Journal article…
http://online.wsj.com/article/SB121553612650836199.html?mod=RealEstateMain_1
1. DON’T WAIT AROUND.
Even in the better housing areas, it’s taking a long time to sell houses; and in the hardest-hit metro areas, inventories of unsold homes are stretching well past 180 days.
So, don’t try to sit out the market. That’s what hundreds of other timid sellers are doing, each of them hoping — somehow, some way — that hanging on the sidelines will improve prices and, ultimately improve his or her chances for selling success. It won’t. Not if you expect to sell anytime soon. If you want your place sold, the best way to make sure that happens is to put it up for sale.
Obviously, you should take advantage of your local market cycles — early spring is usually better for selling in much of the country — but otherwise don’t try timing the market. You won’t have any better luck than a stock trader who’s always holding out for the market highs or lows.
2. FIX IT UP AND CLEAN IT UP.
Buyers are taking your house out on a date. It has to make a good impression.
Don’t spend a lot of money — absolutely no big-ticket renovations — but do see that everything is in good repair. And give the place a new paint job and a general sprucing up. (Caution: This won’t necessarily give you any pricing advantage over less fixed-up places, but it will attract buyers and keep them interested.)
As you get closer to the date that the house actually goes up for sale, start moving out by decluttering the place. No buyer wants to see a house filled to the rafters with other people’s things. They want to imagine their stuff filling the place. “Stage” the place with only enough furniture to make it look livable; put the rest in storage.
3. PRICE IT CHEAPLY.
Don’t fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won’t fly.
Set a realistic, salable price on day one. Don’t let the house hang around on the market as you gradually lower the price. Forget what you think the house should be worth or what it was worth three years ago. That’s not what it’s worth today.
Smart buyers will be looking for bargains. So you must set your price below comparable nearby properties. Look at the asking prices of neighboring houses, and set your price to beat them. If prices in your area are generally down 20% from where they were at the bubble peak in 2005, then price your house 25% to 30% below its peak bubble value. Your area down 40%? Be prepared to take just half of what the house was worth three years ago. Yes, it’s painful. But if you want to sell, you don’t have much choice.
And remember: In much of the country, renting is still a better deal right now than buying. As you try to settle on a price, look at rents on comparable properties. Buyers are not likely to be counting on huge price appreciation, as they did during the bubble, so they may be less willing to take on the higher monthly costs of home buying and owning. You must set a price that makes someone’s prospective mortgage and home-owning costs look like a better deal than a month’s rent.
4. HIRE A TOP REAL-ESTATE AGENT.
Get the best, most aggressive selling (listing) agent you can find.
When everything was selling before it even hit the market, of course, you didn’t need the best. You just needed the cheapest. But not these days.
Fortunately, in this market, real-estate brokers are even more anxious than you. They’re eager to get whatever work they can, so don’t rely on your cousin with the real-estate license or your best friend’s wife.
Ask, instead, for the local real-estate office’s top salesperson. All offices have one or two sellers who greatly outperform their colleagues. That’s who you want.
Interview various agents and insist that they present you with a well-conceived marketing plan that goes way beyond the usual Internet page, one or two open houses and a yard sign. (Think about using a professional photographer for multiple shots on the primary Web listing, your house as the featured “home of the week” in the local newspaper, a decorating segment on a morning chat show, a stop on the local garden club’s spring tour.)
Sellers of higher-end properties should be able to negotiate a lower commission percentage, but this is no time to quibble over a couple of percentage points. Also, offer the agent a big bonus if he or she sells the house in 30 days or at your asking price. Offer other agents bonuses if they bring in the ultimate buyer.
5. PROMOTE. PROMOTE. PROMOTE.
Don’t rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.
You want the house listed regularly in local newspaper classifieds and, if it’s a special, high-end property in a desirable location, in national publications, too.
Make sure your house is on the leading real-estate Web sites; Trulia, Zillow, Cyberhomes, Eppraisal and Realtor.com are some of the top ones.
Beyond that, get really creative. Advertise in corporate newsletters and intranet listings. Check in with local relocation firms that help transferring corporate executives find new homes. List the house on eBay. Put it on Craigslist. Put it in your church bulletin.
Trophy house in an upscale neighborhood? Hire a string quartet for the open house. Something a bit more midmarket in a family-friendly subdivision? Put a clown on the corner handing out brochures.
6. PLAY THE BANKER.
As bad as things are, there’s one big factor in your favor: the tight credit market. If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer’s purchase.
You’re a lot more flexible than a bank that has the Federal Reserve looking over its shoulders, so you might even be able to charge a higher interest rate than a commercial lender as well as command a higher sale price. (You’ll need a real-estate lawyer to make sure everything is done to protect you and an accountant to set up a payment system. Peer-to-peer lenders such as virginmoneyus.com have systems to handle mortgage payments.)
Worst case? Your borrower defaults and you take the property back. And sell it again.
7. TAKE THE OFFER.
If any qualified buyer comes in with a reasonable offer, be prepared to accept it.
You don’t want to lose the deal by digging in your heels over a few dollars. Every real-estate office keeps records that show the percentage difference between asking and selling prices, so it’s easy to figure what’s an appropriate offer and what’s not.
Negotiate, of course, but recognize that the buyer has a lot more clout than you do. Your house, as wonderful as you think it is, is worth only as much as someone is willing to pay for it.
And that, unfortunately, will probably be a lot less than you think.
–Mr. Crook is editor of The Wall Street Journal Sunday and author of “The Wall Street Journal Complete Real-Estate Investing Guidebook.”
Two and three years ago my old office managers (I was with another real estate agency at the time) were spewing “there is no bubble”. The mantra was: it’s a sellers market and there is no bubble that is going to burst! As months drew on it seemed as if we were riding a never ending wave of profitable forecasts for both seller and buyer. Everybody wanted a piece of the action. Buyers felt with prices jolting upward there was value in what they were buying. Homes were selling like mad for unheard of price tags. EVERYBODY wanted IN! Sellers got greedy but so did the buyers. and the banks….The banks couldn’t get enough of the paper being written. No one was turned away from a loan. It was a feeding frenzy.
The real estate market has been described as a freight train. Slow to stop, but equally slow to bring back up to speed.
The train has left the station.
While everyone was boarding, jumping on and buying up, nobody was bothering to check the tickets. Not everyone was qualified. And I’m here to tell you everyone is to blame. The Banks first and for most by not being responsible to go by simple things like CREDIT CHECKS. Remember the crazy idea of having money to put down to buy a house, you would borrow from Uncle Louie or Grandma Fay, and in order to prove ability you needed to prove you had a real job with longevity. The buyers who, at the most simple level, never allowed the agents showing them property access to the basic information of documentation to prove their worth and ability to actually buy a property. Existing homeowners were caught up in the fact that the house they lived in was worth so much more than they originally payed they REFINANCED. They got windfall money. They went on trips, bought cars, boats or improved the property (which is what the loan was probably slated for in order to borrow in the first place) Realtors who were completely unprofessional showing properties without pre-qualifying the customer. The sellers only wanted to hear how much could the buyer pay up? And now we are here. The dust has not completely settled yet but some are seeing a bit clearly. There are still crooks in the mortgage industry. You would think not, but I still see the wool being pulled over on buyers eyes. It’s unbelievable. There are still sellers that will not see the reality of the situation. Even now with common knowledge of the economic landscape, sellers are still not listening to the market. Realtors are the professionals who have to hold the line. We have to speak with absolute truth, whether it is what the homeowner wants to hear or not. What is the point of adding more overpriced inventory to the already bloated market?
And we are seeing forecloser. People are loosing their homes.
As a buyer: There is no such thing as a free lunch. Work with a Certified Buyer Representative. Find out from that agent what TRUE MARKET VALUE is in today’s market. You can not speculate. If you are buying a house now: you should pay today’s price. You have to anticipate the property you buy will appreciate and depreciate in the future. My advice to you is buy a house to LIVE IN, and don’t think about what it will be worth two or twenty years from now. Are you going to move in two years? If you are ( It happens. I moved every 18 months to 2 years for a time period in my life) work out the right loan for the property. You will not get the house if you under bid!
As a Seller: Listen to the market.Which in turn means listen to your listing broker. Hire a professional full time reputable Realtor. Realtors have up to the minute real information that gives us the facts. We are OBJECTIVE. Don’t loose site of the fact that this is a business transaction. This is one of the real reasons where homeowners that try to sell on there own are unsuccessful.
Take advice from WSJ: http://online.wsj.com/article/SB121553612650836199.html?mod=RealEstateMain_1
