Finding a Real Estate Agent

Re: FSBO

No agent, no tithing to the agent. If I sell my house through an agent, the agent is going to want {x}% of the sale, taking away from my net. If I sell it myself, no tithing.

I may have the numbers wrong, but they are close. When a house is sold through an agent 6% of the sale price of the home is up for grabs. 3% goes to the agent that lists it, and 3% goes to the agent that sells it. This is why, in many cases, you'll see an agent show you THIER listings first because, in that case, they are both listing and selling and therefore get 6%. FSBO is a way of getting rid of those costs. If a house is sold by owner but they agree to pay an agent 3% to sell it, then, at least they get to keep the other 3%. And, if they sell it themselves and you buy it without an agent, they get to keep the whole 6%.

In short, real-estate agents, essentially, work on commision. Don't forget that.

Derek:

Right, but what I don't get is why it's so common in the low-end market (condos and town houses) but not with the "real" houses.

It's just sorta weird.

revjim:

Of course. I've been thru this before and know how the numbers work out. I'm just surprised by the percentage of FSBO units I see in the conod world--that's all.

Put another way, why are condo folks such cheap bastards? :-)

I also thought the reason why people tried to sell their own instead of going through a realator was also to try to get more than what their property may be worth. While I'm pretty sure a realator doesn't set the price, they're not going to as agressivly show houses that they know are overpriced for where they are or what they are.

The 6% figure can be negotiated down, especially in Silicon Valley in this market. What you're paying for (indirectly, since the seller pays the realtor) is the use of someone who knows how the system works, and can help you navigate through inspections, disclaimers, disclosures, etc., etc. This is stuff you *can* figure out on your own, though at a high opportunity cost.

The realtor I used when I bought in Mountain View (email me for her contact info if you're interested) did a bunch of legwork for me, and bludgeoned the seller's agent when that agent did something stupid. (I got a free carpet cleaning out of the deal.) There are also some agents in the Mountain View/Los Altos area who specialize in condos and townhouses. I'll dig up their contact info if you're interested.

One way to test for agent savvy is to ask about DSL. The good agents figured out that DSL availability was important several years ago, and will know to call PacBell (or whoever).

The phenomenon you are seeing: cheaper houses being FSBO, seems to have some pretty obvious logical reasons to me.

1) The cheaper the unit, means the realtor either is going to want a bigger cut, or is going to be less committed to selling the unit (and possibly both.)

2) Cheaper units are more likely to be owned by people who have less money, and possibly earn less money. That 6% means more to them, and their personal time is cheaper so they are willing to do the work and take the risk.

3) The cheaper the unit the less risky/complicated the transaction... this lessens the need for the services of a realtor.

4) Condos are much more of a commodity than houses. They are therefore much easier to sell and to list. I'd imagine that some of the gritty details that crop up when buying a house: inspections, surveying, utilities, etc... are all take care of by the condo association.

I could probably think of a few more, but my lunch was just delivered.

--Mark

I found your blog via maraweb, yadda yadda...and have enjoyed it. I like the house blog, as I'm looking to buy as well.

-fyi-
you've made some headlines on CNN. http://www.cnn.com/2004/TECH/ptech/01/09/bus2.feat.geek.camp/index.html

I'd love to find out more about these ideas that are hatching.

For condos, its standardization. Easy to compare against previous sales (and thus price the deal), much smaller mechanical risk (similarity to other units and nature of condo ownership), less need for advertising since people will monitor complexes looking for units and you can piggyback off people visiting a broker-listed property. Much easier than selling a house FSBO.

I bought a condo in the NYC burbs last year. The best thing a real estate agent can do for you (other than the obvious of finding suitable properties easier than by yourself) is give you "comps" of what things are really selling for in that area. In condos, knowing the actual sale prices combined with an agent who actually saw the units makes putting toghether a bid on the unit you're interested in much easier. When we transitioned from ad surfing and open houses to an agent, she was even able to get us real sale prices for units we had seen that had sold a few months earlier. Not a single one of them had sold within 15k of what the person was asking -- some cases it was lower, some cases higher. There are sites on the web that supposedly provide the same data, but they are old and not nearly as comprehensive as what the agents have. The same goes for a seller -- if they have a good agent they will know when you give them a good offer. This is why it's also harder to buy from an owner since they often have a wrong or misconceived value of their place.

I think some of the reason that you see FSBO for condos is (as others have said) it's more of a commodity but also the risk of not using a realtor is less. Since the units are typically similar, your less likely to pay way too much (or too little). Also inspections are (somewhat) less critical since the HOA manages the outside of the building (you only own the inside of the condo).

Spend some time investigating the HMO. Most owners (if you are serious) will give you a copy of the CC&Rs. Find out if they are currently suing the developer. Have alot of people stiffed them on Home Owners Fees? Is this thing run by a nut with a hitler complex who enforce byzantine rules? The longer the HOA has been around the less likely it is to run into big problems. New developments have the HOA run by the developer for the first few years before it is turned over to the owners fully -- and obviously have a short term interest in the HOA fees being low. This is when the HOA fees are likely to go up if they do not have enough reserves. If the HOA does not have sufficient reserves when something big needs repairs then the home owners will have to pay the difference (this is apparently rare but not unheard of -- insurance is available to cover you against this but as with all insurance it's a question of cost). Also your insurance will typically be cheaper in a condo since the HOA insures the exterior of the building.

Find a good realestate attorney. In Ohio you don't need one for closing as there is a closing agent that can handle everything. In other states you may be required to provide your own representation, ask your agent. I had a lawyer for my closing in IL (standard in the sate) and he made everything a much smoother process. Sure I had to pay him but there were no bubbles or bumps in the closing and he explained every document to me and was able to make corrections to the documents if anything was wrong. This is money well spent as all problems were handled before closing!

Even if it is a for sale by owner tell your Real-estate agent that you want to see that house/condo. They can make arrangements with the seller to show you the house and they can negiote a fee with them. I bought my current house that was FSOB using a real-estate agent. She negiated a fee from the seller. If a agent won't show you a property that you are interested in get a new agent.

First, if you do decide to go with an agent, make sure he is a Buyer's agent so he will represent your best interests. Second, be careful when looking at FSBO's with agents. If you decide to buy one you'll owe the agent whatever the agreed upon percentage is in the contract that you signed with them. So either be careful what FSBO's you talk to your agent about, or put something in the contract so you don't end up having to fork up 6 grand out of your pocket to pay your agent. I think it's generally a good idea to have an agent on properties listed by agents, since the price is already included in the cost of the house you likely won't see much extra savings by buying yourself.

Getting an agent is a really good idea. I work in a real estate related job (nothing to do with agents, though) in Toledo, and a good agent a huge help.

The best thing an agent will do for you is identify which properties are overpriced. He'll know just what something is worth, and can save you from wasting time looking overly valued properties.

A good agent isn't going to push towards an expensive property just to boost his commission. First of all, a good agent sells lots of properties, and the amount won't be all that much to him. Second, since agents get so much business from word of mouth your enthusiastic recommendation is literally worth far more in dollars to him than one inflated sale.

Of course, the trick is finding a good agent. Move back to Toledo, and I've got the guy.

The first question you asked, "why are there so many FSBOs" was answered by the second point you made, "the market seems to be pretty dynamic". People think they can make more money by selling by themselves.

The sales practices in CA are very different than in OH, so I would recommend that you get a sales agent. Even if you buy a FSBO, pay the agent out of your own pocket. The agent will (should) know about the local schools, and help you to identify hidden defects in the area, etc. A sales agent that represents you should expect to receive only about 2-3 percent of the sales price. Typically, the 5-6 percent is usually split between two agents.

I highly recommend Shirley Olea at Keller Williams (http://agent.kw.com/80588/index.php). She sold our house in Half Moon Bay. She's smart and honest. Just tell her what you want and she'll tell you whether she's the right person to find it for you.

In case someone hasn't already mentioned it keep in mind who the real estate agents are working for. As a rule it's not you but the seller. I've enjoyed reading your blog/journal since you moved west.

ASSISTANCE REQUIRED FOR ACQUISITION OF ESTATES.

Dear sir,

I write to inform you of my desire to acquire estates or landed properties in your country on behalf of the Director of Contracts and Finance Allocation of the Federal Ministry of works and Housing in Nigeria.
Considering his very strategic and influential position, he would want the transaction to be strictly as confidential as possible. He further want his identity to remain undisclosed at least for now, until the completion of the transaction. Hence our desire to have an overseas agent. I have therefore been directed to inquire if you would agree to act as our overseas agent in order to actualise this transaction. The deal in brief is that the funds with which to carry out our proposed investments in your country is presently in a coded account in the Nigerian apex bank and we need your assistance to transfer the funds to your country or any safe account outside your country in a convenient bank account that will be provided by you before we can put the funds into use. For this you shall be considered to have executed a contract for the ministry. The contract sum of which shall run into US$15.5Million of which your share shall be 30% if you agree to be our overseas agent. Your area of specialisation does not matter in this transaction, all that is required of you is a safe account and your willingness to assist us acquire estates in your country.
As soon as payment is effected and the amount mentioned above is successfully transferred into your account, we intend to use our own share in acquiring some estates abroad. For this too, you shall serve as our agent . It might interest you to note that last year, a similar transaction was carried out with one MR. CHIENCHEN YU of Taiwan but after securing the payment approvals, and payment effected, MR.CHIENCHEN YU changed his numbers and addresses, and was no where to be found on our getting to Taiwan.
That was how we lost US$7.5Million. So this time around , I will be with you before the remmittance is made into your provided account to avoid future occurrence and allow trust to play a very minimal role until performance is seen. You are requested to communicate your acceptance or otherwise of this proposal, through my email address after which i will send my telephone and fax number to you. After which we shall discuss in details the modalities for seeing this transaction through. If however, you are not disposed to assist, kindly destroy this letter in view of the confidentiality of the proposed transaction and interest of personalities involved. Thank you in anticipation of your co-operation.

Best Regards,
Dr.Opara Momo.

I realize this is not exactly answering your question.
We have bought and sold places through an agent and without. We have used several agents and I must say we were always frustrated when using an agent. When you sell a property you want very good service as you have the most to loose. It would be interesting to hear how many people have frustating stories when dealing with an agent. On the seller side: They do not deliver what they promise ie putting up pictures on MLS on time for an Open house which also failed to be listed on MLS. They have every excuse in the book. They only have time for their personal they tell you the place is worth 30K over what you end up selling for.

As a buyer if you want to buy from a listing you found as an FBO agents will try to redirect you. Or only its faults will be pointed out.

As a seller if you are left hanging ie you signed a contract and the agent is not performing up to their potential you have no recourse.

I would be very weary to use a real estate agent again.

When we sold our own property we had control of the situation and felt satisfaction with the sale.

Using an agent we felt was only because we thought we needed a quicker sale.

We are now trying to sell another unit with the same agent and are quickly realizing how little recourse we have.

There's a wide variety of posts. On craigslist, for example, many folks post very basic ads which leave out critical details (how many square feet?!) and don't bother with pictures. I find it difficult to get interested in those.

I too was tired of poorly designed ads on craigslist and created a free ad "enhancer" to our offering: http://www.realtybaron.com/craigslist/ .

I've ventured out into the "ghost tech sector" a few times and marveled at the abandoned campuses. It's a shame we can't utilize them in some way. Imagine how one of those ultra modern structures could be utilized as high end mod apartments if they could re-zone the areas for housing, and then gut and renovate the buildings. It would be like a little slice of europe in Silicon Valley.

I am a huge advocate for FSBO when selling, however, whenever I buy a home, I use an agent. It seems much more complicated to buy than to sell, at least for me. The nice thing about using a buying agent is that they will drive you around and basically cater to you. This is particularly nice if you live in a place like California where there is a ton of traffic. Remember you want to interview the real estate agent and make sure there is a good fit before you actually sign an agreement with them. Most agents specialize in specific areas so you want to make sure your agent has experience / knowledge in the places you want to live.

After reading your blog I had to do a Craigslist Half Moon Bay $682500 FSBO home post. If no buyers to the RE agent I shall go. Thanks for the ideas!

The FSOB's need to be able to market their homes effectively in order to sell their home. Most receive a number of phone calls from eager agents daily. If the homeowner can market their home effectively they can save the real estate agent commission. Sadly, 80% of FSBO's end up listing their home with a real estate agent.

-Randy
www.4mysales.com

I don't believe a thing real estate agents say. I don't hate them just the tricky and unexperienced ones. Which in my opinion is most of them. Take the "no obligation market evaluation" for example, the oldest and most unoriginal term you will see advertised. Do they think people are stupid? The real definition should be, “yes I will come over to your home, tell you what it’s worth, then I will bug the hell out of you until you list it with me". In the meantime, they will send you some “awesome” fridge magnets, calendars and pencils just so you don’t forget them. I have written at length about this, I'm NOT selling anything, just a frank, real world discussion.

I need to know if a seller has any recourse when your agent is NOT working in your best interest, does not deliver certain documents, etc. Am I going to need an attorney?

I signed a contract agreement with a realtor but now I
have a friend who wants to buy my property. Since I found
the buyer is their a way I can cancel the contract or
at least get a reduction in his commission since I found
the buyer.

What is a real estate agent's incentive to help you get a lower price on the house?? The more it costs, the more it gets. There should be flat fees for their help. Otherwise, like others have said, they try to push their properties on you even if it's not what you asked for when the one you really want could be out there & may be sold before your agent gets to it. And I'm sure it has to be tempting not to push very hard for a lower price (esp. if they know you'll go higher!) The process definitely needs to change!!!!!!!