Tag Archives: Listing

What Your Agent Doesn’t Know Can Cost You Now and Beyond the Sale

What Your Agent Doesn’t Know Can Cost You Now and Beyond the Sale

Getting the right agent is crucial when putting your home on the market.

When you hire an agent to sell your home, you spend quite a bit of money at closing, but what are you actually paying for? It really depends on who you hire and how they perform their duties. Unfortunately, many sellers end up hiring what we refer to as “real estate secretaries” – someone who enters the listing into the MLS, puts up their sign, (maybe) answers calls, fills out a contract, and shows up at closing to get their check. When sellers see bare-minimum service like this, they ask “Why am I paying them thousands of dollars to do so little?” and they are right to question this.

Being well represented as a seller goes beyond not just getting your value out of your listing commission in the form of great marketing, communication, and follow-up. The process of selling a property involves multiple parties, legally binding contracts, and many complex steps before closing, so it must be executed diligently, to avoid the risk of large expenses and even lawsuits. It is your agent’s knowledge, advice, guidance, and experience (or lack thereof) which will make the difference here. This is where the value is found in information that you can’t just get from Google and wing it. A seasoned, thorough, detail-oriented agent will have those skills, which prove to be priceless in many situations.

While these concepts all sound good, let’s look at a real life example which came up very recently. The seller of a property had some previous title work done with a title company and was under the impression that if the buyer used their title company, then the seller would save significant closing fees. So, the seller told the listing agent to mandate that the buyer must close with their title company. First of all, the seller was mistaken about the closing costs, since most closing costs are the buyer’s responsibility and a seller’s fees typically only run $250-$500 at closing, and often less. Far more important however was the fact that by mandating the closing company, the seller (and agent) were actually violating the Real Estate Settlement and Procedures Act (RESPA), a federal law that governs the sale and purchase of residential property. This law “prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale.” (Reference: HUD RESPA Section 9) Violating this section of RESPA allows a buyer to sue the seller for up to 3 times the amount of the title insurance, so with a typical title insurance cost of $800-$1200, the liability to the seller is $2400-$3600 (probably in addition to attorney fees etc), all to try to save at most $500.

Not only was I concerned about putting everyone in the transaction in a position to be sued if something were to go wrong with the title, but I also wanted to have a different set of eyes on the title work to be sure that it all gets processed correctly. I emailed my concerns to the listing agent, citing the federal law and the liability vs. potential benefit for the sellers, and the sellers decided that it, indeed, was in their best interest to not push this issue with my buyer. All of this happened in the background without upsetting my buyer and causing them unnecessary stress.

“Real estate secretaries” will not anticipate issues such as this one, and often lead the seller into dangerous territory, where expensive litigation or other financial losses could result. So, when you interview and choose a listing agent, keep in mind that the discount commission charged by an inexperienced agent or one who rushes through everything very superficially can ultimately cost you far more than an agent who has the experience, knowledge, and skills to keep you out of trouble and to maximize your profits at closing.

The Danger is In the Details

The Danger is In the Details

Seemingly small things can lead to big problems when listing your house.

When it comes to deciding on a listing agent, many sellers are often confused about what they should be looking for. Most won’t know what to ask except the commission question. Others will Google questions to ask and find some which are very helpful, such as, “are you full time?”, “How many homes did you sell last year?”, and “What will you do to market my house?”. These are definitely good things to know about the person who will be representing your home for the next 6 months. However, this only scratches the surface. Far beyond that is a level of professionalism and knowledge that you will be glad you have, or sorry you don’t. With agents of such high caliber comes one often overlooked facet – security and safety procedures for your home while it’s listed.

More and more, we face reminders that we cannot assume every person who requests a showing has the intention of buying. Yet, in order to sell a house, a buyer needs to be able to view it. So, sellers paint, declutter, repair, and stage their home to encourage their visitors to choose their property over others. However, often sellers do not think about protecting themselves from those who aren’t interested in buying, and this is where a truly professional agent will fill the gap.

Among the listing paperwork and sign installation should be a discussion regarding safety and security during the listing period. Yes, the buyer’s agents will be present when the property is shown, and theoretically they should be right next to their buyer the whole time, but that might not always be the case. With that in mind, the seller should prepare their home accordingly. A quality agent will run down a list of suggestions that greatly reduce any problems for sellers.

One very important consideration, which on the surface doesn’t seem to be a problem, but can make a world of difference, is your lockbox. These hold the keys to your home and allow agents to access them. In an attempt to save money, many agents use combination lockboxes, which have either dials or push-button mechanisms. When a call is received to book a showing on a house with a combination box, the code is simply given over the phone to the caller, thus granting them access to the home. Yes, the listing broker could ask a few questions to try to verify the caller, but most of the time, that simply is a matter of the agent’s name, brokerage name, time they want to show it, and maybe phone number. Since agents market themselves for a living, these pieces of information are not hard for anyone to find on the internet via a simple search.

In addition to easily getting the code, there is the issue of keeping the code private. Not only will buyer agents need to find/remember this code and enter it without their buyers seeing, but they have to remember to re-scramble the letters/numbers when closing the lockbox. Commonly though, we have walked up to many listings where the code was still showing on the lockbox, meaning it was unlocked, and therefore the keys were available to anyone who walked up. The latest incident of this was on a local listing in January, and the keys were actually missing! Since the lockbox was on the front door, it was obvious to passersby that it was there. Just by checking periodically for that inevitable time when the last person forgot to scramble the code, someone who probably doesn’t have good intentions got those house keys. Of course, I immediately told the owners, but when showing multiple houses, not all agents will remember to do so.

In order to prevent the combination lockbox security issue, we use electronic lockboxes called Supra boxes. These are expensive, but they are the only lockboxes we use, because of the peace of mind they afford to us and our clients. Only authorized, monitored entry to your home is allowed. These boxes are industry-specific and require paid membership with an electronic key that is assigned to each agent. When they get their e-key, the agent is also given an individual access code which must be punched in. This prevents anyone from just picking up their key and using it. So, without an e-key AND the matching personal code, no one can enter our listings!

Perhaps the greatest advantage of using a Supra lockbox is that it automatically reports all access. After a lockbox is opened, we are sent a notification containing the property address, date, time, and WHO is opening the lockbox. We carefully monitor all access to our listings, and compare the notification to our list of showing appointments. Although it is a no-no, and all of our listings require appointments before showing, once in a great while agents will show without an appointment. If this occurs, we immediately call when we see the notification, and find out what they were doing there. These notifications allow us to immediately send each agent a request for feedback about the property. We can also eliminate the question of whether or not an agent showed a property, as sometimes the sellers aren’t sure they actually did so. In addition, should something happen at a property during a showing, such as lights being left on, etc. we can narrow it down and determine who did it.

So, although asking about the type of lockboxes an agent employs in the listing of your home seems trivial and way down the list of priorities, it, along with other security and liability-prevention measures, is a substantial question. The answers to these questions are indicative of the overall approach of the listing agent you are considering. Are they going with the easy, cheap, unconcerned route, or have they invested in your home’s security and taken steps to prevent larger problems down the road?

Changes coming in October 2015

Changes coming in October 2015

In just a few weeks, 2 significant changes are being implemented which will affect residential real estate transactions.

These changes are:

1. On October 1, 2015, the upfront guarantee fee for Rural Development (RD) loans is increasing. Currently, RD loans require that the buyer pay a 2.0% upfront guarantee fee. After October 1, the fee will increase to 2.75%. To illustrate the difference this will make, let’s use a $150,000 loan as an example. Currently, the fee would be $3,000. At the new rate, it will be higher by $1,125.00 for a total of $4,125.00. This increase means buyers will have to bring more money to closing, or finance it into their loan, or negotiate it from the seller.

As long as RD has issued their commitment (in other words, has approved the file and sent it back to the lender to finish the pre-closing process) by September 30, 2015, the existing rate will still apply. As we’ll discuss in another article, RD is and has been taking about 32 days to issue their commitment after receiving a file from a lender. If this turnaround time continues, loans will have to be sent to RD by August 29, 2015 if they are to obtain the RD commitment prior to the fee increase.

2. The government has mandated that effective October 3, 2015, new forms and procedures must be used on ALL closings. According to title companies and others, it will take longer to get to closing, and other delays as well as higher closing costs may result. This was supposed to become effective on August 1, but concerns from the real estate industry, as well as errors which were found in the new forms and procedures, prompted the government to push it back to October. In our opinion, this will not provide any benefit to buyers and sellers whatsoever. Instead, like almost everything the government does when it meddles in private markets, the only result will be more paperwork, more delay, and more costs.

These changes are not minor, and will make the process of buying or selling a home take longer and cost more.

If you are thinking about buying or selling, there is still enough of a window left to avoid these upcoming issues. However, you must act fast in order to do so.

If you have any questions about either of these impending changes, post them below and we’ll get you the answers fast.

Details, Details, Details!

Details, Details, Details!

It is crucial to include as much information as possible when selling a house, as sometimes one key item makes all the difference.

Not long ago we listed a beautiful home. It was about 30 years old, but had been lovingly maintained. When listing the house, the seller was concerned about the walk-in bathtub which had been installed. They told us that the cost of doing so was $10,000.00! The seller feared that because the tub was not a common feature, it might turn off some buyers.

Our reply was that while not the most common type of tub, this was truly a top-quality fixture, and one which they certainly would not want to remove. We said it was quite possible that it would catch the attention of buyers who might very well need such a tub for themselves.

Only 8 days after listing the house, we received a full-price offer, and closed the sale soon afterwards. While communicating with the buyer’s agent, we learned that they had been hunting 6 months for a house which was suited for their elderly parent, who has special needs. Upon seeing this home’s wonderful tub, they immediately wrote their offer. It didn’t hurt that they loved the rest of the house too, but the tub is what clinched it.

Another well-maintained older home had been listed for 8 months with another agent. When the listing expired, the owners chose us to represent them. At the listing appointment, the owners gave us lots of information about the updated electrical panel, high efficiency AC system, solar shades, incredibly low utility bills, and many other great aspects of the house. We were amazed. When we asked why none of this was in their previous listing, they said the other agent had told them, “That stuff isn’t important!” We listed the house, and included all of its great features. The owners told us they had gotten more showings after 2 weeks with us than they had during the 8 months they were listed before! The house had many showings, received multiple offers, and successfully sold.

Details and information are VERY important to buyers, which is why we are so thorough in our listings. All it takes is that ONE right buyer to sell a house, and if they see up front that your home has the feature or features which they need, then they will look no further, and your house is sold.