The real world of real estate; Frequently Asked Questions and Our Answers:
A real estate salesperson is more than just a “sales person.” They act on your behalf as your agent, providing you with advice and guidance and doing a job – helping you buy or sell a home. While it is true they get paid for what they do, so do other professions that provide advice, guidance, and have a service to sell – such as Certified Public Accountants and Attorneys.
The Internet has opened up a world of information that wasn’t previously available to homebuyers and seller. The data on listings available for sale is almost current – but not quite. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with an agent.
If you’re selling a home, you gain access to the most buyers by being listed in the Multiple Listing Service. Only a licensed real estate agent who is a member of your local MLS can get you listed there – which then gets you automatically listed on some of the major real estate web sites. If you’re buying or selling a home, the MLS is your agent’s best tool.
However, the role of an agent has changed in the last couple of years. In the past, agents were the only way home buyers and sellers could access information. Now agents are evolving. Because today’s home buyers and sellers are so much better informed than in the past, expertise and ability are becoming more important.
The real estate agent is becoming more of a “guide” than a “salesperson” – your personal representative in buying or selling a home.
Q. I have a family friend who is a Realtor. I like her and she is a help but she gives me one price to sell my home for and I think it is too low. So I called another agent who suggested a price more in line with my expectations. Who do I choose?
You might want to consult a couple more Realtors on the market value of your home. Most of the estimates should be in the same ballpark.
It could be that your friend is being more honest with you about the value of your home and the other Realtor gave you a higher number because he already knew you expected it. This is called “Buying a Listing”. Or it could simply be that your friend is a good friend, but not that great of a real estate agent.
Mixing business and friendships is always risky to the friendship. On the other hand, if your friend is truly competent and was providing wise advice, she may be offended if you ignore the advice and choose another agent.
Q. I want to buy a house. I know the property and the seller has an agent. Do I need my own agent or can I negotiate a lower fee if I act as my own agent?
If you have to ask this question, you probably don’t have the necessary knowledge to properly represent yourself.
The seller pays the real estate commission, not the buyer, and real estate commissions are already set in the listing contract. It doesn’t cost you anything extra to have your own agent represent you because the seller is already paying for it.
If you don’t have your own agent, the seller’s agent will often represent both you and the seller as a “dual agent” or just represent the seller. This means the agent either has divided loyalties or is working for the seller, not you.
In this situation, since there is only one agent to be paid, sometimes you can get a reduction in price by getting the agent to accept a lower commission from the seller. However, you have to realize that you are interfering in what is essentially an agreement between the agent and the seller — and something that has already been negotiated and agreed upon.
The seller can net the same gain on a lower price if they have to pay less commission. At the same time, the agent is not going to be willing to cut the commission totally in half because – since you don’t have an agent – they are going to be doing some of the work that your agent would normally be doing (whether you realize it or not).
And you’d better know what you’re doing – because the listing agent isn’t going to be on your side. If your offer causes them to reduce their commission from what the seller has already agreed to — that agent isn’t going to be real happy with you.
Q. What is a buyers agent, what does this specifically do for a buyer and who usually pays this “buyers agent”?
However…There are some agents that market themselves as “buyer’s agents,” “exclusive buyer’s agents,” buyer’s representatives,” and so on. Mostly it is just marketing. At the same time, part of it is because they want to accentuate the reasons a buyer should not go directly to the listing agent when they purchase real estate. This has to do with agency.See, if a buyer goes directly to the listing agent, they are dealing with an agent that has conflicting responsibilities. Their job is to get a good price for the seller and they may not zealously represent the interests of the buyer. Those who market themselves as “Buyer’s Agents” indicate they are only working for the buyer in a real estate transaction.The commission is still paid by the seller, no matter what they say in their marketing (with extremely rare exceptions). They either get paid directly by the seller or set up the transaction so that the seller provides a “credit” to the buyer for how much the real estate commission is — then the buyer pays the commission.Like a Realtor I once knew said, “No matter how it is set up, the buyer still walks away with the house and the seller still walks away with 94% of the purchase price.”
Q. I looked at a property yesterday with a realtor who quite obviously has no clue what he is doing. I really want to purchase that house, but don’t want the hassle of working with an agent who doesn’t know his business. Can I switch agents and still buy that house?
If you want to purchase that property, the only ethical thing is to purchase it through that Realtor. Otherwise, you could set up potential conflicts between your previous agent and whatever new agent you may choose.
You see, if your previous agent finds out you purchased the home with a new agent, he may want to claim all or a portion of you new agent’s commission. This could develop into a “battle royale” involving real estate agents, offices, managers, brokers, and attorneys. You may be able to resolve the issue by letting your current agent know you have misgivings about their expertise and ask if a more experienced Realtor from his office can be aboard as your adviser, too.
That is the only ethical way I can think of to handle your situation. It isn’t “your” ethics I mean, but the ethics of the two agents. One agent isn’t supposed to make an offer on a property you have already previewed with another agent. It happens, but it isn’t ethical without some sort of disclosure and agreement between the parties.
Q: I want to buy a home and approached two different real estate agents. One was very informative, handed us brochures, especially on the real estate law and the responsibility of the agent. The other was very informal, made a lot of gestures, and presented nothing in writing.
Q: My home has been listed with an agent for over three months and I’m not happy. What options do I have?
All listing contracts have expiration dates. When is yours?
If it is not coming up soon, tell the agent and/or his manager that you want to cancel your listing. Often they will let you cancel easily, since they do not want to build ill will in the community.
If they won’t, you can always pull your home off the market until the listing contract expires.
Q: If a 6 month listing agreement was signed last month and an argument occurred and I don’t want to use that agent, can the listing be cancelled?
Before you sign a listing agreement you should first ask the agent to research the average selling time in your neighborhood. If a listing contract is for more than ninety days, it should not exceed double the average selling time.
As for canceling the contract, a lot depends on whether the agent works for a larger office with management, etc. Usually, the office or company wants to retain your good will, and will usually let you out of a listing agreement. It would be best to broach the matter in a calm pleasant way instead of getting hot and excited. Simply explain that you can no longer work with that agent or company any longer and you wish to cancel your listing.
Initially, they will (of course) try to talk you out of it. Just keep repeating that you want to cancel and your reason for doing so. If you do it calmly, they won’t get defensive.
Most of the time, this works. Make sure to get the cancellation in writing.
If it doesn’t work, then you have two options. First, take your home off the market during those six months. Second, consult an attorney. I always hesitate to bring attorneys into things because you can never tell when that will get messy. Once things get messy, fees go up. Plus, real estate companies usually have attorneys already on retainer. You don’t.
Q: I signed a listing agreement, but am having second thoughts about selling. How do I cancel and will it cost me anything?
It should be pretty simple. Just tell the agent you have changed your mind and decided not to sell after all.
Since your cooperation is required to sell the house, most agents won’t give a hard time about canceling. Their hope is that when you later do decide to sell, you will get back in touch with them. However, if you attempt to put it back on the market during the contracted listing period using another agent, your original agent will attempt to enforce their contract.
Just listed with a realtor for 3 months but decided I would like to change to another. Is that allowed or legal?
Since you have a contract for 90 days, you would have to get your agent’s permission to be released from the contract so you can go with the other agent.
Most of the time they will attempt to dissuade you from making the change, but will release you because they don’t want to engender any bad will. The agent will be reluctant of course, especially since you just “changed your mind,” and cannot point to any lack of performance problems with your present agent.
The agent can refuse to release you from the listing agreement and there are various reasons they may do so. In that case, you’re either stuck or you have to simply take your home off the market for the rest of the listing period.
I have to make a choice between an updated home in an older neighborhood or a newer home in a more modern neighborhood. The home in the older neighborhood has almost everything I want and is much larger, but which makes the most sense as an investment?
If your goal is to buy a home for it’s resale value and the one you are thinking of buying in the older neighborhood is at the upper end of values for that neighborhood, then it may not be the wisest choice. If it is similar or lower in price to the others, then there should be no problem, because pricing should be considered in relation to the local neighborhood and not compared to homes in other neighborhoods (for the most part). Plus, is it a neighborhood on the decline, or are others going to be fixing things up, too, so that it is a neighborhood that is improving? It could turn out to be a very good deal as long as you don’t “overpay” because of the recent improvements.
Remember that you also buy a home for it’s value to you as a “home,” and that is something else you should consider. Which neighborhood would you AND your family feel most comfortable in?
When buying a new home, what upgrades should we go for? What holds the most value? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom?, etc.
A lot depends on why you are buying the house. Are you buying it mostly as a home or mostly as an investment? There is a difference.
For the most part, upgrades are high-profit items for builders. They aren’t designed to enhance the value of the house, but make you happier with the house you do buy.
If you are looking at your home as an investment, then you buy from the smaller to medium size in the tract and spend only a minimal amount on upgrades. If you are looking at your purchase as a home, then you select upgrades that will enhance your quality of living.
One rule of thumb is to always upgrade the carpet and padding.
I need to buy a house with a good resale value. How do I determine if my house will increase in value within the next five years so that we can upgrade? I can buy a smaller house in a great location or get twice as much house in a good location. Which is a wiser decision?
It’s like buying stocks. How do you really know which ones will increase most in value over the next five years? As with any investment, there are risks.
The most often quoted rule is that location is the most important factor. You want to make sure that the house does not back to busy streets and is as close to the interior of the tract as possible. Avoid corners and intersections. Choose the middle of the block or a cul de sac. You’ll want to be sure it has at least two bathrooms (if you are buying in an older area).
Sometimes it is just timing that works out best for you. For example, if you buy a home before a major surge in local prices.