agent

Buying a house without a Realtor

Posted on by Teresa Boardman
smallhouse

I confess my husband and I bought our first home without a Realtor. Actually, we thought we bought our house without a Realtor but we really did not.  It was a Realtor who showed us the house and wrote an offer.  She worked for the seller and we did not understand “agency”.

We never had a home inspection.  When we asked the agent about it she said we did not need an inspection because the city had already inspected it.  That was before the days of Google and blogs like mine.

Buyers should make inspection contingent offers.  The city truth in housing report or code compliance is not the same as a buyers inspection.  Maybe if we had an inspection we would have known that the contractor took a few shortcuts and that the seller made some claims that were not true.  Maybe we could have gotten the seller to fix a few things before we moved in.

The reason we were working without an agent was because we did not understand that buyers could have their own agent and that having an agent does not make home-buying more expensive.  We did not know about broker reciprocity which makes it easy for any real estate agent to show a buyer any home on the market.

We did not want to bother anyone we just wanted to see houses.  We went to open houses and we called the phone numbers on the for sale signs.  This was all before homes for sale could easily be found on the internet.

Today with all the information on the internet it is easier to buy a home without an agent than it used to be but buyers who are working with agents have an advantage in today’s seller’s markets.  An experienced real estate agent has helped 100 or more home buyers buy a house. It is hard for a home buyer, especially a first time buyer to compete against someone with that much experience.

Buyers who are working with agents get a lot of help knowing about homes for sale early on before they have multiple offers on them and an offer from an agent may have more credibility than an offer directly from a buyer in a multiple offer situation because serious home buyers are pre-approved by a lender and working with an agent.  Buyers can engage in “dual agency” and have the listing agent help them make an offer but that agent can not negotiate on their behalf.

Sometimes buyers believe that they will save money if they do not work with an agent. Usually, the seller pays commissions, and either the seller comes out ahead with a lower commission or the listing agent gets it all because there is no buyer’s agent to pay.

Buyers who represent themselves should ask for some kind of discount.  It is probably better for buyers to represent themselves than to work with an inexperienced agent or one who doesn’t do a good job.

I used to think that one day the internet would replace real estate agents but it isn’t happening because the websites are supported by agent dollars.  Trulia and Zillow are supported by the money that real estate agents spend on ads and for premium accounts, so they can “capture” leads for their own listings.

Also see:

Agency and Dual Agency

Broker Reciprocity

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Real estate is local, search your state department of commerce to learn about real estate and agency in your state.

How to get a Minnesota Real estate license

Posted on by Teresa Boardman
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House

I am going to call this a public service message on how to get a real estate license.  Real estate is local so this won’t be of much use to persons in other states who wish to get a license.

The great state of Minnesota requires that people who sell real estate that does not belong to them to have a license.  You do not have to call a local real estate company to get started, in fact they will just explain how to get a license and work hard to recruit you if you do get one.  Agents are independent contractors so we decide where we want to go and even though brokerages recruit like crazy they don’t have to pay agents and will take almost anyone who can a mirror.

Brokerages make money by taking a percentage of each agents commissions and agents make money by selling real estate but only after a successful closing.  Newer agents will get the smaller share of the commissions they earn,  and the broker will get the bigger share.  There are also various fees that the agent and their clients will pay to the brokerage in addition to the commission split. (I really need to recruit me some agents)

All real estate sales people have to work under a licensed broker and that is what a real estate company provides.  I have a Minnesota brokers license which means I can be my own broker.  We can not start out as brokers but have to have a real estate license for three years and then take a class and a test.  The rules and requirements can be found on the Minnesota Department of Commerce web site because they regulate the real estate industry.

The first step in getting a real real estate license is to take a 30 hour class in preperation for the real estate exam and then take the exam.  After the exam there are two more courses each is 30 hours long.   There are 90 hours of required training, split into three 30 hour courses known as course 1, 2 and 3.  They can be taken in a class room or online and prices vary.   I went to the local real estate school to take mine.  Currently they charge $295 for each course.   I have found the entire ninety hours of classes online for $229.00*

It costs $75 to register for the licensing exam and $135 for the license once the courses have been completed.  Agents have to join a brokerage to get the license and to start selling real estate.  After attending the classes most agents will not be able to fill out a basic purchase or listing agreement but will generally charge as much as a seasoned pro.

The big brokerages offer excellent training programs to get new agents up and running and how to sell real estate the XYZ company way and how to promote the brand.   Did you know that most agents have to pay for those signs with the brokerage logo on them?

Brokerages require that agents join the MLS which means we join the National Association of Realtors (NAR) and can print Realtor after our names on our business cards.  Joining is about signing up and paying yearly dues.  There is more to it than that but I am already over 500 words.

I’ll write another article on what it really takes to succeed as a real estate agent.  What I have to say may surprise you unless you are a regular reader then nothing will surprise you.

* as of the summer of 2012 I have gotten many calls about this.  Right now I can only find one place to take these courses online and that is at continuingedexpress.com but the courses are $199 for each course and there are three pre-licensing course which adds up to $597 .

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Minnesota agent population declines

Posted on by Teresa Boardman

 January is a great time to write about how well our Minnesota Realtors are doing.  This is the time of year when people decide to be come real estate agents. This is the time of year when they call and ask questions.    

First off let me point out that a Realtor is a member of the National Association of Realtors and that is it possible to be a real estate agent and not a member of the association.  A real estate agent in this context is a someone with a real estate license. It is that license that allows us to work on behalf of others for a fee.

In 2001 there were 14,230 Realtors in Minnesota.  Durning the peak of the real estate boom in 2006 there were 25,429 Realtors.   In 2011 we had 15,892 agents which is still way to many.  There were more home sales in 2001 than there were in 2011 and home prices were about the same both years. 

MNrealtorchart
Minnesota Realtors

There is always churning.  Most of us are self employed independent contractors.  There were people who became Realtors in 2011 and people who left.  The failure rate is very high.  When the unemployment rate goes up people decide to become Realtors and some of them succeed.  Being in 100% commissioned sales is something that most people never experience and even if it doesn’t work out it is a learning opportunity like no other. 

Getting a real estate license is easy and once licensed an agent can join the National Association of Realtors by paying dues.  

When choosing an agent experience matters.  An agent with no experience will  charge the same amount as an agent with decades of experience.  Real estate companies give agents training but they are on their own, real estate companies do not sell real estate. [see The Truth About real estate companies]  

Also see How Many Realtors in Minnesota?

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