So, you've found a piece of property or home you're interested in viewing more closely. What do you do? Whom do you call?
Or, in case you haven't found a home or property of which to inquire, but perhaps you've made the decision to invest in a home after years of renting an apartment or home, or have just married or had another child and need space. For whatever reason, you find yourself looking through all those real estate brochures you find at the supermarket and become confused.
Having been a first home buyer 13yrs ago, and now being an affiliate broker myself, I hope I can offer some personal ideas to answer such questions as those above and below.
Perhaps one of the easiest but most important first steps in home hunting, is finding an agent to represent you. ALL agents, brokers, realtors and affiliate brokers are trained and licensed in those particular states they contract business. They are to understand the laws that pertain to real estate nationally, state, and locally. They are accountable for the disclosures of certain facets of the properties they contract to sell, the content of the advertisement of the properties they contract, and the manner in which they do business, whether as a buyer's agent, seller's agent, or facilitator.
There's no harm in *shopping around* for the right agent for you and your circumstances. You could start by asking friends, neighbors, and family members who have been involved in recent realestate transactions and the agents they used or coldcall some agents to see whom sounds knowledgeable and has a pleasant attitude. Call at different times of the day and different days of the week. If those you call seem to be to busy to answer questions concerning certain properties you have chosen to view, perhaps they're having a bad day or may not have the time it would need to devote to you.
First off, choose a few different offices or branches within your range of travel. You DO NOT have to contact the agency with whom the listing has originated. Any agency can realy to you the information contained within the MLS. Sometimes, however it does help by contacting the originating agent as he/she is closer to the seller with information concerning the listing, that may not be in the MLS.
Within each office, normal procedure is that of floor duty with each agent taking a time slot for a day of the week or month, depending on how many agents are in that brokerage firm. Each agent has access to the MLS system which is a database of all the listings in that particular area. An agent should be kind, courteous and attempt to address each of your questions. DO NOT be offended if an agent inquires of your prequalifying status. It is normal for an agent to ask such question in order to understand how to proceed with you. If you're not prequalified for a loan, the agent should recommend a lender that he/she has good faith and experiences with their clients and possibly arrange a meeting with this loan officer.
And they should ask if you'd like to meet the agent in person to talk, not necessarily about business but a get-to-know each other type of session. The meeting place could be at the actual property if it's vacant at the time, the office of the agent, or a local fast-food restaurant. I mention the latter because all agents have to eat at some point during the day, and contrary to popular belief not ALL agents make six figures in their profession. Most work hard and live from payday to payday as any other type of working person would. Believe me, I know.. just ask my family. *smile* This allows agents to apply their lunches to tax deductions at the end of the year.
Some stats from surveys performed by NAR on how previous buyers chose a salesperson:
How buyers choose a salesperson
The No. 1 way to capture buyers, particularly first-timers, is through referrals.
All buyers
First-time buyers
Repeat buyers
Referral (family, friend)
34%
40%
30%
Worked with before
10
2
16
Reputation
8
9
7
Yard sign, brochure
7
7
7
Referral (employer or relocation co.)
6
3
8
Personal contact
6
8
5
Open house
6
6
6
On-duty salesperson
6
6
6
Referral (other broker)
3
3
4
Newspaper ad
3
4
3
Model home
2
2
3
Internet
2
2
2
Yellow Pages
1
2
1
Direct mail
1
1
1
Referral (membership
organization)
1
1
*
*Less than 1 percent Source:The 2000 NATIONAL ASSOCIATION OF REALTORS® Profile of Home Buyers and Sellers, NAR Economic Research
A Buyer's Agent works solely in the buyer's interest in the particular contract that may be at hand. A Seller's Agent is otherwise known as a Listing Agent for the seller and works for their interests. Beyond popular belief, there are few agents who work ONLY for buyers or sellers. We all take business where we can. We all have listings, and we all have prospective buyers whom we assist. There are those that prefer or choose only to work for either end of realestate. Usually it is the more established agents who find themselves servicing one particular facet of real estate as opposed to the other due to their own choosing or personality. Some agents prefer to service the individuals home buying customers, other find their niche in commercial buildings or properties, a portion of agents prefer lots to invest their time, a few feel a calling to provide service to churches and their congreational needs, some concentrate on low-income housing needs in a particular area, a few specialize in *brownfield* projects to revitalize a community, a few techno-savvy agents have home-selling business centering around the internet, etc... We all have a niche in life and it is to the glory of the realestate profession and our own lives to find that niche. For the most part, agents do business in all areas where exchange of properties can exist.
In addition to the above, there are those agents who find themselves on both ends of the realestate transaction. A prospective customer may have called upon a listing agent concerning a home or property that particular agent holds a contract, and may end up liking, or trusting that agent or for whatever reason, decides to allow that agent to represent their interests as well. This agent therefore, becomes a facilitator, or a mediator as my little boy often hears me making references to that term. It takes a special personality for such an agent to be a successful facilitator between two parties.
The agent at that time should declare that he/she will act in this facilitator manner. (If the seller does not feel comfortable with such a proposed arrangement the agent should ask the buyer to be represented by another trusted agent.) To which he/she will perform the same duties for a buyer as he/she would normally do, such as advise them towards lenders and all the legal paperwork necessary. The agent will remit all offers to the seller as would normally occur, except the agent should inact a degree of confidentiality towards the buyer in dealing with the seller. And as well, inact a code of confidentiality towards the seller when dealing with the buyer.
It can be sometimes a difficult tightrope to walk, but some of the most successful exchanges of properties between buyers and sellers for me, have been as a facilitator. Making both sides comfortable with one another, providing a friendly atmosphere, and making each side happy when leaving the table has been the most satisfying for me. I trust my own judgment, whereas sometimes other parties being involved can leave a bad taste in some mouths especially if two agents' personalities clashes. It can be felt as adversarial; THEM against US premise. Most of the home owners in this type situation have enjoyed personally meeting the prospective buyers in the company of just one agent (Of course ONLY with permission of both parties). They can get to know one another, and feel comfortable that their home/property will be cared for in the future. The buyer comes to know the *personal* history of the property through the eyes of seller and appreciates more the work that a seller may have put into the property. Recently I have had such a property with much cultural and area history involved, and the owner really wanted a family to take over the reins of the property, instead of a company that would subdivide and destroy the history of the property. Both sides became in fact very good friends as a result of mediation. Both parties left feeling they had received what they wanted, both in terms of monetary and personal satisfaction.
The For Sale By Owner case is one that is multi-faceted. In m y experiences, a FSBO is not as easy as it the name may indicate and often, intimidate prospective buyers. Trying to reach a FSBO via phone and make an appointment to see the home is one more added stress. Some FSBO home owners will have their home/property on the market for longer time due to the fact that their asking price is either too high for the market, or too low which raises questions in the mind of those prospective buyers.
A certain percentage of FSBO owners expect the customer to already have financing, and often want cash or conventional loan, and are unwilling to pay for any of the costs that are associated with the sale. They often don't understand that the commission fees that an agency and agent receive are built into the asking price and actually save them money in the end result. Those FSBO owners more serious about selling their homes, protecting themselves and the prospective buyers often do so, when a trained realestate agent or realtor brings a customer to them and sits down at the bargaining table. According to recent statistics reported by Realtor Magazine,
FSBOs gain no ground
FSBO sales haven't gained ground since 1995, despite a hot market in much of the country.
To sell their homes, sellers
1995
1997
1999
Used a pro
81%
68%
77%
Went FSBO
15
15
16
Sold to a homebuying company
2
1
2
Other
2
16
5
Last but not least, the FSBO owner being a personal home owner with his/her home/property on the market can lawfully be selective with whom they do the transaction. See topic of Ethics for more information. In short, if the owner decides not to sell to you, they may do so. Even if you have offered the amount set for the home/property, even if you agree with all terms of the transaction. The owner can even refuse to show you the home/property. Just another way that home owners and prospective buyers are protected by Federal, State and Local law, regulations and bylaws.
Prospective buyers and sellers must be careful these days to protect themselves whereas electrical systems, heating/cooling systems, utility and other type of home/property necessities of regulations have changed. From experiece, I have seen and discussed with a couple whom are personal friends with a wide degree of intelligence get caught in a FSBO situation and discover damages and changes in code that they now have little recourse to resolve the situation. They knew I was in real estate and they knew the FSBO owner and chose to make this contract without counsel.
This type situation doesn't just occur with FSBO's, let me make myself clear. It can happen in any transaction, but considering state real estate laws, there are more chances for recourse if something does go wrong in a realty company backed transaction than by using the do-it-yourself packets now available at most large office retail stores and online. If something does go wrong, and forbid that it should, there are many safety-nets and protocols that are employed in the day-to-day realestate office. The main factor in all these protocols being used on a regular basis is that the agent(s) involved can have their license(s) revoked by the board if the offense is of the serious nature and can be fined or both. The company and brokerage can also suffer similar fates. The choice ultimately is one that you must decide.
In any rate, do make sure that the advertisement for the home/property is accurate and don't fear asking questions. If a home is advertised as having a fireplace, new central heat/air, new roof, or other items, TRY THEM OUT! Ask for documentation on what is considered New. Ask for how long the roof is warrantied, and if a copy of the contract for the H/A, roof or pest control is readily available.. If the listing agent or seller refuses to answer or becomes agitated, or has very little to say, head for the door as soon as possible, and take your business to someone else. It is collectively their responsibility to know such answers and readily supply those answers.
Imagine your asleep, snuggled under warm covers perhaps in the company of your significant other. The time is 2AM in the morning, and the phone rings. BRRRRNNNNNNGGGG. You groggily mope one hand loose from the covers and hunt for the receiver. You say, "Helloooooo'. The other party, whom actually sounds like they're at a party as indicated from the background noise asks, "Uhhhh, yeahhhh.. is this the owner of that house for sale at the end of Anywhere Street? " You groggily answer, "Yessss it is". The calling party asks, "Well, we were just wonderin' what the asking price for ya'lls house is, considering all the damages and all?" You slam the phone down on the rude caller as you aren't aware of ANY damages to your home, but you are aware of what time it is now in the morning.
Next few days, you find yourself working as usual, or wanting to take a vacation, and miss calls on the home. What calls you do receive are perhaps during dinner or special moments, and most want to inquire of the "least amount you'll take for your home". You may decide to invest in various selling techniques, including a \\$49.99 copy of "How to Sell Your Own Home" book, some more expensive signs, purchase a fancy camera for taking good quality photos, purchase color ads in the newspaper (relaying information while you're on your lunch break at work) and area FSBO magazine (while you buy some more signs from them),
Then you decide to take a day off from work to have an Open House, to which your spouse may become upset because she's there at the time a passer-in makes comments on her taste in draperies, carpet, wallpaper and choice of coordinating towels after she worked so hard getting the house in shape for the Open House. Or, you become ill when Joe Blow down the street waltzes in and tells you that your prize workshop is "Definitely gonna need some work" before he would consider paying the kinda money you're asking for your worked-hard-for-all-your-life home sweet home.
Is it worth the frustration? Is it worth the not knowing if you're asking too much or perhaps getting too little from your home? Is it worth the time and money spent in your own materials and media? How many months will the home sit, especially if you're living out of state? And what do prospective home owners think when they see a FSBO sign in the yard for an extended period of time? Will they think something is wrong with the home? In my experience, yes.
A few homeowners may say yes it's worth the extra hassle. Those that are retired, and/or live in another home while trying to sell this other piece of property. They may say it's worth waiting months for that special person who can perform their own financing, and/or pay for all the closing costs, inspections, title search, etc.. Again from my own personal experience with selling homes for prior for sale by owners, most say no. Especially after their homes sale for more than what they could've received from haggling with personal financiers, in just a short time on the market. For more intuitive information, see the Seller's End title contained on this page.
Where buyers get their information*
Buyers still rely on their salesperson for most of their information on homes for sale. The survey shows big swings (down) for open houses and (up) for the Internet.
1995
1997
1999
Salesperson
86%
82%
80%
Newspaper ad
51
51
43
Open house
41
39
28
Yard sign
37
38
36
Home magazine
30
34
29
Family, friend
29
24
24
Builder
15
9
10
Internet
2
18
37
*Buyers are getting information less than 5 percent of the time from TV, sellers, relocation companies, a property hot line, the Yellow Pages, or other source.
Before we discuss what an agent actually makes from the sale of a home or property, or for what uses the agent uses the commission fees, let me tell you a little about commission structures.
The average percentage of monies coming off the top of the sell of a home or property can be anywhere from 3% - 6%. (Some lower or higher depending on the company and the contract negotiated) Of that percentage around half of that goes to the parent realestate company. The agent receives an amount from 50-90 percent of the other half, depending on the parent company's procedures. Mostly, this percentage depends on the time of service and/or sale volume of the individual agent. The rest goes to the individual broker agency to keep it operating. However, if the home that is sold is via another agency that does not have the originating contract, the percentage is first split between the companies. This gives a person an idea of what an agent may make from one sell that he/she may work on for some time. A home selling for \\$100,000 will be $6,000 for the originating contracting company. If the agent who sells the home to the buyer is from the orginating company, he/she will receive their percentage of of the 50% of the fee. If the buyer's agent is also the listing agent, they will receive full commissions. If the agent who sells the home to the buyer is from another company, he/she will receive their percentage of 50% of the 50% of the fee split.
A good agent will consider any sale a good sale, or a sale is a sale no matter if the originating contract is with their company or brokerage or if it lies with another company or brokerage. It may sound complicated, and yes it can become complicated. However, a good agent will never allow the complicities to carry over in his/her work attitude. Once an agent finds a good buyer for whatever home the buyers are interested, they keep trying to make it happen for them.
So what does the buyer's agent actually do for the prospective buyer? Many aspects.. They can provide information to the customer on any aspect of the particular home/property in which the buyer is interested. Many good agents will also, after discovering what price range and parameters the customer wishes in a home/property, provide a prepared booklet of all the listings, including fact sheets, fliers, tax records, etc.. of those homes/properties within the booklet. The agent makes first contact with the listing agent, makes appointments for viewing with the listing agent's appointment maker, or makes it be known to the listing agent that the buyer's agent will be bringing a customer out to visit. This is a standard policy of not only politeness, but also provides security protection for all involved. The agent will accompany you throughout the home and allow you to make your own mental notes. After viewing the home, the agent advises if he/she believes that the home should have a home inspection, property survey, title search, title transfer fees, home warranty, and repairs if needed, etc.. All for the protection of the prospective buyer, seller, selling agent and to protect themselves. Once deciding to put forth an offer on the home/property, the agent can advise what they believe the home/property is worth, and what the sellers may be willing to accept, including negotiating closing costs and other items mentioned in the prior two sentences. There may be counter offers and the agent handles all the intricate details of the counter offers and the legal matters included in all items of the transaction.
If all goes well, and the contract is agreeable to both parties, a closing date will be set with a title company that both agencies agree upon. The agents involved along with buyers, sellers, title company, mortgage company and other parties tied to the contract sit down at the table to review the contract and sign away!
Some more statistics collected from buyers relating to what they want from their salespeople.
What buyers want from their salespeople
Buyers, too, are unwavering in their vision of the salesperson's role.
First-timebuyers
Repeat buyers
Find right house
56%
62%
Negotiate price
13
11
Complete paperwork
10
14
Identify comparable home prices
5
8
Calculate purchasing power
8
2
Arrange financin
8
3
Source:The 2000 NATIONAL ASSOCIATION OF REALTORS® Profile of Home Buyers and Sellers, NAR Economic Research
So what does an agent do for a prospective seller? First look at the above paragraph on the Buyer's End. The listing agent takes care of all intricate legal details of the appointments, negotiations, closing and attempts to protect the seller's best interests. Then allow me to explain how most realtors may market your home and how they spend their own money in order to give your listing good exposure.
In the beginning of nearly every agent's career, they must pay in order to take classes in order to be able to take their state's realestate exam. The exam costs a fee as well. Once passing the board exam, the realtor must pay dues to the board in order to have access to the MLS system, have a key pad to gain access to homes for showing purposes, and be considered a member in order to take mandatory classes that are offered throughout each year that each agent must take in order to keep their license. Each class charges a minimum of member fee or nonmember fee. Keep in mind that this varies from state to state. Each agent once signing his/her loyalty to a particular realestate brokerage, is expected to market themselves first, which often includes paying for postcards, business cards, stamps, envelopes, fee to use certain office materials, and other supplies incurred. The agent's company may have an account which they can *charge* such things as signs for their car, special yard signs, business cards, letters and postcards, flier boxes, and advertisement with whatever newspaper the realestate company has an account..etc.. Setup of a first time agent can easily cost him his/her first two commissions. It takes at least 6mos for most agents to become established and for those who have spouses, very understanding spouses.
Once established, the agent who contracts an owner to sell his home/property, still pays for all the expenses to sell that home/property. As mentioned above, the agent pays for the signage, flier boxes, fliers, letters and postcards sent out to prospective buyers, materials for an Open House, advertisements, travel to and from various other associated firms and persons and hours talking to prospective buyers. It's also not uncommon for an agent to care for the home or property of those owners who do not live in the home or live away from the property. Cleaning windows, appliances, clearing brush, and yard maintenance are just a few of the tasks we often perform for the owner.
The agent if somewhat techno savvy, may as well employ such devices as The Talking House ® and website exposure as this one does. The agent may also have an electronic room measure that instills confidence in prospective buyers in the realtor's skills. Many companies also offer voice mail and Smart Line ®, so that interested parties may call up and find out information concerning the home/property instantly. Sometimes weeding out the *just curious* callers from serious buyers. Once a customer is found, the agent assists buyers as necessary with financing their prospective home and all other aspects as mentioned in the prior section, if the buyer(s) are comfortable with the agent being a facilitator. All this and more in order to sell your home for top market dollar and ease of mind.
In my own opinion, we definnitely work hard for our commission fees. And for those who maintain real estate as their career choice, we LOVE IT! Or we wouldn't do it. Just ask my 6yo son, what a facilitator is, and you'll get some idea. *smile* A true gem of an agent is one who genuinely cares for people, wants to see people happy for years to come whether it be in buying or selling a home/property, and who has business sensibility. All this and more so that the buyer can still lead a normal life, spending time with family, going to church, attending activities, going fishing with that favorite grandchild, or just plain resting without the phone ringing off the wall. What could be better? Below are some of the ways in which a listing agent markets your home to be sold.
How listing agents market homes
Yard sign
82%
Newspaper ad
65
Open house
52
Real estate magazine
47
Internet
39
Direct mail
20
TV
7
Other
11
Ethics of an Agent
There are many issues of ethics in the field of realestate that are actually in writing in the code of ethics that each state has concerning real estate practices. Most regulation of ethics concern the topic of representation and fair housing laws. You may wish to review your state's Association of Realtors for particulars and also federal laws concerning fair housing.
Briefly, each agent must adhere to those standards set forth by their state, local board and federal guidelines in ethical practices. They must be truthful in the information they list in any media including MLS, concerning a house/property and those considering the neighborhood in which the house/property lies which may adversely affect prospective customers. Some examples which may be included are: deaths or tragic deaths in a household; "paranormal" phenomena; dump sites or NPL sites in or in proximity to the neighborhood; infestations that have or have not been addressed; prior or current damages; any known defects or not up to code facets; and any other factors that the owner and agent have prior knowledge. All items that are of concern and addressed are to be separately disclosed in documents. This protects sellers, agents, buyers and all those concerned in selling the home/property.
On the issue of fair housing, an agent or seller must not discriminate against anyone for those conditions listed in the Fair Housing Act, in selling realestate to anyone who presents a good faith offer. See the official law for particulars. The terms discussed in this law however, do NOT apply to FSBO's that are sold or rented without the use of a broker. Another manner in which the homeowner and prospectiver buyers are protected while employing the use of a realestate professional licensed in that state. All real estate firms must adhere to the Fair Housing Act!
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Disclaimer: All advice listed in these pages are purely the opinions and reflection of experiences by affiliate broker, Thomas J. Akehurst and not to be considered those of Crye-Leike, Realty. By viewing these advice pages, you as an internet viewer understand and hold that these are simply opinions that could have human error involved. You as viewer must agree not to hold liable, legally, ethically, or otherwise the opinions of Mr. Akehurst in any future endeavor you may have dealing with realestate. Realestatebuytom, and Content Copyrighted by Webmistress and Thomas J. Akehurst and are the sole property of above said individuals; 5/2000. No portion of this website may be reproduced for ANY reason nor purpose without prior written consent of Webmistress AND Thomas J. Akehurst. This includes I-Framing.
