Real estate broker cooperation

It is common for an agent from one company to list a home for sale and an agent from another company brings in the buyer. It is called broker reciprocity. When your home is on the market and listed with a REALTOR thousands of local agents are competing with each other to find a buyer.

Broker reciprocity works because of the promise to pay the buyers agent. The agent who represents the seller charges a commission and shares it with the buyer’s agent who may end up getting paid more than the seller’s agent.

As far as I know, this type of arrangement is unique to real estate sales.

Often the agent who actually “sells” the house isn’t the agent who listed it and put the sign in front. The listing agent gets his or her name on the sign but the buyer’s agent does not.

People who are buying or selling a home are not required to use a real estate agent.

If you search for homes for sale on the internet usually the fine print on the bottom of the page will say that the listing is provided courtesy of XYZ company.

The days when only a real estate agent knew about homes for sale are long gone, yet we still add value to the process because an experienced agent has worked through many home sales. Finding a house that is for sale is one small part of the home buying process.

The home buying process should be more transparent than it is. If you are buying real estate and working with a buyers agent ask questions. Most people do not buy houses all that often.

tower
Brownstone

Also, see Agency in real estate

real estate commissions are always negotiable

You may have heard or you may believe that REALTORS and real estate agents all charge X%.

The truth is we are not allowed to know what other agents are charging and there is no central data repository where commissions data can be collected and analyzed.

Some real estate companies tell their agents to charge X amount. Real estate agents are independent contractors and can say no or move to another company.

Real estate commissions are always negotiable. It isn’t always easy to negotiate with real estate agents. We negotiate all the time. Most of us wake up unemployed each morning and spend the day looking for clients. Those of us who survive get to be pretty good at negotiating.

If you find real estate agent who will not negotiate find one who will. There are like a zillion agents who are qualified to sell your home and who would do a good job. There isn’t any reason to settle.

You want an agents who is easy to work with and one who can negotiate.

When negotiating commission agents are taught to tell homeowners that agents who will discount their commission will likely get less for your house. There is no data to back that up. It is the sellers who have the last word about which offer gets accepted, not the agent.

Some agents will tell you they are worth “X” % and show you a list of services they provide and ask you which services they should cut so that they can work for less. Go ahead and challenge the agent to tell you how much each of those services cost.

Buyers agents usually get paid by the seller through the listing agent. I for one have never asked a buyer to pay my commission directly but I certainly could.

If a home buyer asked me to give them part of the commission I would probably say no. What some buyers do not realize is that working with a buyer is a lot more work than working with a seller.

Finding a home for sale has gotten fairly easy but is only a small part of the job. Learning to handle the multiple offers, negotiations during the inspection period and getting it all the way to the closing table can be challenging.

When choosing an agent a home buyer or seller should be choosing an agent who has experience. Agents with no experience can charge as much as experienced agents charge.

When looking for an agent ask your neighbors, friends, family, and co-workers for a recommendation. Talk to a few agents and ask them how much they charge. Also, ask about any fees charged by the real estate company in addition to a commission.

Also see Oink!

How not to chose a real estate agent

Social media do’s and don’ts for home buyers

Victorian homes
turrets – Dayton’s Bluff

Social media has been around awhile and there are people who use it to ask their friends for advice on every subject including how to buy a house.

This is going to come as a shock to many out there but your friends don’t have the answers. Maybe they bought one house once. They have an experience which isn’t the same as experience and their advice isn’t going to help.

There are a lot of real estate agents on social media and they will also offer advice. So will people who have opinions on how to buy a house but no experience or experience from 20 years ago.

Sometimes home buyers post about the process step by step on Facebook. They want to keep their Facebook friends in the loop.

One of the first things I do when I get an offer on one of my listings is I look for the buyer on Facebook, Linked-in, Twitter, and Instagram.

First I am looking to verify their identity and I am looking for insight into how important the purchase is to them. Are they struggling to afford it? Do they love it so much that they will pay full price or more? I gather any and all information I think may help me advise my clients and negotiate the very best terms for them.

The only “do” I can think of is to limit who sees your posts on social media. If you must share with “friends” make sure they are people that you actually know and are friends.

I once walked away from the opportunity to work with a home buyer because she shared every little detail on Facebook and I didn’t want my name or reputation dragged into the drama. Everything in her life has been a huge struggle. The drama continued after the home purchase as there were numerous problems with the house.

There are no secrets on social media or on the internet for that matter.

Also, see:

Use social media with care

Contingent offer, what could go wrong?

There are all sorts of contingencies that can be put on an offer to buy real estate. The two most common are inspection contingencies and contingent on financing.

Buyers can also make an offer contingent on the sale of their home. It happens all the time but those contingencies get complicated.  Usually offers that are contingent on the sale of real estate can be bumped by non-contingent offers from other buyers.

Here are a few things that can and do go wrong:

  1. A non-contingent offer comes along and the seller accepts it and the contingent buyer’s offer gets canceled because they do not get an offer on their home fast enough.
  2. The contingent offer isn’t accepted because there are several other offers that are non-contingent.
  3. The seller asks that the contingency is removed within 48 hours because they can and they got cold feet and you all agreed to the 48 hours.
  4. The buyer gets an offer on their property but it is a contingent offer, which means it can not be used to remove the sale contingency.
  5. The buyer gets an offer but the financing on that offer falls through and offerer is unable to perform.

Sometimes there is a chain of 3 or more home sales that depend upon that first home sale in the chain closing.

When selling your home is contingent on the sale of someone else’s home it will cause a lot of extra stress if your purchase is also contingent on a sale.

I have been through chains of sales with multiple contingencies and they often work out. I have learned to go into these situations believing that everything will work out and I encourage my clients to do the same.

In a strong seller’s market is especially important for home sellers to have a plan and know where they are going to live after their home is sold.

All offers have to be presented

One of the issues we are running into in this seller’s market is that offers from buyers are not always being presented to the sellers . . or sometimes we are not sure they were presented or sometimes they are not presented right away.

If a buyer makes an offer, even after the seller has accepted an offer that offer must be presented to the seller unless the seller had waived this obligation in writing.

When I represent buyers I sometimes ask that the seller initial the offer as an indication that he or she has seen it. The initials also give me proof to offer the buyers.

As a rule, offers should be presented quickly but there is no hard and fast rule about how quickly. We use terms like “timely manner”. In some situations that “timely manner” can be several days or even a week.

“Timely manner” can also mean right now.  Some of our clients give the seller a 24 or 48-hour deadline. Giving a deadline can backfire too.

REALTORS are bound by a code of ethics which is an extra set of rules that dictate how we handle offers.

From the code of ethics:

  • Standard of Practice 1-7

When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. Upon the written request of a cooperating broker who submits an offer to the listing broker, the listing broker shall provide a written affirmation to the cooperating broker stating that the offer has been submitted to the seller/landlord, or a written notification that the seller/ landlord has waived the obligation to have the offer presented. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/19)”

The code of ethics only applies to REALTORS® and there is a complaint process.   Anyone can file a complaint.

looking for a real estate bargain?

Almost everyone wants a bargain when they buy real estate. Most home buyers look for bargains in the wrong places. They choose that one house that is priced just right that everyone wants to buy. After the house gets multiple offers it won’t be a bargain.

The bargain is the overpriced house that has been on the market for a long time. Homeowners often believe that if they price their real estate high that they may not get the asking price but they will get more for their home.

Instead of making offers buyers avoid even looking at the overpriced house. Eventually, that house will sell and in most cases, the seller ends up accepting an offer that is less than the asking price. Sometimes that offer is significantly less than the asking price.

The bargains are the houses that have been on the market for 4 to 12 months. Buyers looking for opportunities should look for overpriced vacant houses that have been on the market for several months. There is little competition because most buyers won’t make an offer.

Right now there are about 80 homes on the market in St. Paul that have been on the market for 90 days or more that do not have an offer on them. These houses can be found in all St. Paul neighborhoods and the listed prices are between 75K and 560K.

If you would like to learn more about these opportunities you know how to contact me.