June 2010

Repair Requests on Home Buying and Selling

Requesting Seller Repairs

Every house needs repairs. There is no perfect house. If a house were perfect, everything would break or fall apart at the same time. But as it is, the envelope of a home: its roof, floors, walls, windows, structural support members, all have different life spans. Although, today, many appliances seem to stop working as soon as the warranties expire. But if you're looking for a perfect house, you can stop home searching now. It doesn't exist.

It doesn't really matter whether the home is newer or older, a home inspection is still likely to turn up a list of repairs. An older home, of course, will likely generate a longer laundry list of repair items. The objectives are to figure out which repairs are serious or safety issues and to determine whether a seller will honor a buyer's request for repairs.

Get a Professional Home Inspection

Sellers will be reluctant to listen to or negotiate a request for repair from a buyer without receipt of a home inspection. I've had inexperienced agents refuse to give sellers a copy of the home inspection until after the request for repairs was agreed upon; however, that's like putting the cart before the horse. Besides, sellers will be more agreeable to making repairs if they see other deficiencies on the report that a buyer didn't request.

Every buyer should hire an independent and qualified home inspector to conduct a home inspection before buying a home. Not every state certifies inspectors, but most reputable inspectors will belong to a trade association. Ask for those credentials.

Don't ask your cousin or a friend to do this for you. There is little recourse available if your cousin or friend misses defects, plus a seller won't accept your friend's opinion.

Older Plumbing and Wiring

- Ungrounded Electrical.

Homes built before 1960 often have ungrounded wiring and polarized receptacles. These are two-plug outlets. You cannot change out a two-prong for a three-prong outlet without grounding the receptacle or installing a GFCI. Check your city code requirements.

While there is nothing bad about ungrounded wiring, it's not a good idea to plug in sensitive electronic equipment such as computers or televisions to an ungrounded outlet, much less appliances that draw a lot of power such as microwaves or newer refrigerators. Many homeowners run Romex from the electrical box to new receptacles for these items.

While some sellers will agree to rewire the house, the majority of them will adamantly refuse. If you do not want to buy a house with ungrounded wiring, do yourself a favor and look at newer homes.

- Galvanized Water Pipes

Most homes built before 1970 have galvanized steel pipes. Over time, minerals in the water supply can cause a build up inside the pipes. If you see low-water pressure, build up could be your problem. Galvanized pipes can also rust and leak.

Many home owners do not replace galvanized pipes but repair them when they leak. It is not unreasonable to ask a seller to repair a leaking galvanized pipe. Few sellers will replace all galvanized pipes with copper, CVPC or Pex.

- Orangeburg Sewer Pipes

Ask your agent if other homes in the neighborhood have had Orangeburg or "tar paper" sewer pipes. You can hire plumbing specialists to insert a camera down the sewer line to look for tree roots or find out if the sewer line is Orangeburg. If so, these types of pipes last about 50 years before they disintegrate. Ask for a sewer inspection. Replacement of sewer lines is expensive, but it's an item many sellers will replace.

Roofing

Sellers will often provide a roof certification for the buyer, which is issued by a roofing company. If the roofing company recommends repairs, the certificate will not be issued until the repairs are made. Sometimes sellers will offer a cash credit for a new roof, if it needs to be replaced. Many home inspectors do not inspect roofs.

HVAC Systems / Water Heaters

Age is a good indicator for determining when heating and cooling systems need to be replaced. Check with city code enforcers to find out if you will need a permit and today's standards requirements. It's not unusual for a buyer to request new systems, but it is expensive to replace. The average life expectancy of a furnace is about 20 years, and 10 years for a water heater.

Cash Credit or Repair

Sometimes buyers are better off asking for a cash credit on a repair item instead of asking the seller to replace or repair. The seller has no vested interest in the home once it is sold, and might not hire the most qualified contractor or do the repair in a manner that is satisfactory to a buyer. Before asking for a cash credit, check with your lender to determine if a cash credit is allowed.

Closing Tips

Above all, unless the home is brand new, do not nitpick small items. Address major issues and safety issues. Do not make repair requests for items that could have been readily ascertained on your initial inspection such as cracked sidewalks, bad paint jobs or uneven floors. Otherwise, the seller will feel you should have asked for those items in the purchase offer.

Smart buyers will ask the seller to pay for a home warranty. Home warranties cover major defects for a year and provide a buyer with peace of mind.

In closing, if the home has foundation problems or a wet basement, you might want to think twice about pursuing a purchase on this type of home.

Get Ready for a Home Inspection

Some local governments require that the seller provide the buyer with a detailed home inspection while giving the buyer the option to obtain her own inspection. In other parts of the country, the seller provides only disclosures and the buyer pays for her own home inspection. Whether you're producing a seller's home inspection for the buyer or expecting the buyer's home inspector to show up on your doorsteps, it's best to be thoroughly prepared.

1. Clean the House

This sounds so simple yet home owners often overlook this tactic. Home inspectors are people first and inspectors second. As people, they carry preconceived ideas of how well a home has been maintained. Clean homes say you care and take care of the house.

2. Be On Time Because the Inspector Will Be

Sometimes home inspectors are early. If an inspector makes an appointment with you for 9:00 a.m., have the house ready for inspection at 8:30. It's also common for inspectors to start on the exterior of the home, so leave the shades down or drapes drawn until you are dressed. More than one unprepared seller has been "surprised" by a stranger stomping around in the back yard.

3. Leave the Utilities Connected

The home inspector will need to turn on the stove, run the dishwasher, test the furnace and air conditioning, so leave the utilities on, especially if the house is vacant. It's impossible to check receptacles for grounding and reverse polarity if the power is turned off. Without utilities, the inspector will have to reschedule, which could delay the closing of your transaction and the removal of the buyer's home inspection contingency.

4. Provide Workspace Around Furnace and Water Heaters

Remove boxes, bookcases, furniture and anything else blocking access to your furnace, air conditioner and water heater. The inspector will need three to four feet of working space to inspect these items.

5. Keep Pilot Lights Ignited

Many home inspectors will refuse to light pilot lights because they are not covered for that type of liability. If your pilot lights are not lit, then important items such as the water heater, gas stove or furnace will not be inspected and the buyer could delay closing until those inspections are completed.

6. Provide Access to Attic and Garage

The inspector will need to get into your basement and / or attic as well, so keep a path cleared. Move boxes away from the walls. Vacuum spider webs.

7. Leave Keys for Outbuildings & Electrical Boxes

Leave the remote controls for your garage door opener or a key if the garage is unattached to the house. Unlock the covers for your sprinkler system and electrical box. Leave a key for exterior building access.

8. Clear Away Brush from Exterior Inspection Points

Nobody expects you to shovel a tunnel around your home if snow drifts are blocking the foundation but, in the winter, do provide a path around the house. In the summer, cut down dead tree branches and clear brush from the foundation. Move trash cans away from the house.

9. Provide Repair Documents

Make available to the home inspector all invoices and documents regarding remodeling projects or new items such as a roof or furnace. If you've upgraded the electrical from ungrounded to grounded, installed a new dishwasher or repaired a leaky faucet, find the paperwork. It will give the buyer peace of mind to know those items were reinspected.

10. Prepare to be Away for Three Hours Minimum

Often the buyer will accompany the home inspector, and buyers feel uncomfortable asking questions if the owner is present. Try to schedule a time for the inspection when you can be out of the house, and take the children with you. Crate your pets if you cannot remove them from the premises.

Doing the Final Home Inspection Walk-Through

What's a Final Walk-Through?

Final walk-throughs are not a home inspection. It's not a time to begin negotiations with the seller to do repairs, nor is it a contingency. A final walk-through is an inspection performed anywhere from a few hours to five days before closing, and its primary purpose is to make certain that the property is in the condition you agreed to buy — that agreed-upon repairs, if any, were made and nothing has gone wrong with the home since you last looked at it.

Buyers are often pressed for time as the day draws near for closing, which means buyers can be tempted to pass on the final walk-through. It is never a good idea to forego the final walk-through.

Vacant Homes

Sellers often move out before closing. Ever watch HGTV's House Hunters and try to guess which home the buyers will choose? Well, I'll let you in on a secret. It's the vacant house! Trust me, nine times out of 10, it's the vacant one. That's because they film the show backwards, starting with the house the buyer purchased, just before it closes escrow.

Now, in situations where the seller has already moved out, it is even more imperative that buyers conduct a final walk-through. Problems arise when homes sit vacant for any period of time. For example, when termite companies test showers, they plug the shower drain and let the water run. Guess what happens if the termite inspector forgets to remove all the paper over the drain and doesn't completely turn off the shower handle? A small drip, drip, drip can turn into a flooded bathroom. You don't want to find out your home is flooded after you buy it.

Case Example

Let's call these clients Angie and Carl. They were a few days away from closing on an adorable California bungalow. This house was owned by a local sportswriter who had been transferred to Phoenix, and the owner left shortly after putting the home on the market. The home inspection went smoothly, and the home inspector did not note any items that required immediate attention. In fact, there was nothing about this situation that was cause for alarm.

The day Angie and Carl arrived for the final walk-through, they were advised to turn on all the lights, run water and make sure the stove worked, all those sorts of logical precautions, but these buyers were engrossed in other spur-of-the-moment distractions and "new home" excitement. Instead of listening to their agent's advice, they were discussing their sofa placement and which window treatments they should buy for the living room. Although it is not within my scope to perform a final walk-through for clients, it was apparent that the buyers had no interest and would likely, if given the chance, have waived the final walk-through. I could hear them in the back yard talking about how far the present decking could extend before striking the fence as I wandered around the house turning on lights, and then I hit the handle on the toilet. All of a sudden Angie screamed. I dashed into the back yard in time to witness a geyser — water gushing from the ground! And it smelled.

If I hadn't depressed the flushing mechanism on the toilet, we would never have had subsequently discovered that the sewer line had tree roots growing in it. The following day we received an estimate of $5,000 to fix it. Since we were a few days away from closing, we had time to withhold that money from the seller's proceeds and order the work completed.

Here is a list of items to check on a final walk-through:

• Turn on and off every light fixture
• Run water & look under sinks for leaks
• Test all appliances
• Check garage door openers
• Open and close all doors
• Flush toilets
• Inspect ceilings, wall and floors
• Run garbage disposal and exhaust fans
• Test heating and air conditioning
• Open and close windows
• Make sure all debris is removed from the home

When the Home is Occupied

Sometimes sellers don't move out until the day the transaction closes or even a few days after closing. In those situations, I recommend that buyers do a final walk-through in the presence of the seller. Why? Because the seller knows all the little quirks about the home and can answer questions the buyers may have.

A good question to ask a seller is:

What is the one improvement you've always wanted but never got around to implementing?

This is also a good time to ask the seller for a forwarding address so the buyers can send mail. It's smart to stay on good terms with the seller and, in some parts of the country, like California, buyers almost never meet the sellers. Moreover, because you never know when you might need to get in touch with the former owners, the final walk-through is an excellent opportunity, as strange as this may sound, for the parties to say hello.

Home Selling Mistakes

Home Sellers' Biggest Mistakes & How to Avoid Them

People say the best days to own a boat are the day you buy the boat and the day you sell it. That's not true when it comes to home ownership, unless, maybe, you live on a boat. The best days in home ownership are when you buy a home and all the way through until the day you decide to sell.

Lots of home owners cry when they sell. Before the ink is dry on the listing agreement, eyes often swell with tears, and we're not talking about the listing agent. That's because sellers have developed relationships with their homes. Homes hold treasured memories. It's common for sellers to be very emotional about their home. Some are overcome by seller's remorse. However, some sellers weep for a different reason. They sob because they can't sell their home.

Home is Priced Too High

• By far, the worst home selling mistake a seller can make is hanging the wrong price tag on a home. If the home is priced too high, buyers won't look at it. If it's priced too low, sellers worry that they'll give away profits.
• Pricing a home to sell is an art. Part of the market value is based on comparable sales, but other factors to consider include market movement, demand, the home's location and its condition.
• If the home is overpriced, buyers might submit lowball offers, which tend to result in an immediate offer rejection. These extremely low offers tend to infuriate and insult sellers.
• Some agents deliberately overstate the value of a home and push a seller to sign an overpriced listing. There are many reasons why agents do this, but the bottom line is sellers lose a competitive edge when later reducing the price. The bottom line is sellers who "test the market" get stung.

The Home is in Bad Condition

• Getting your house ready for market goes beyond making the beds and washing dirty dishes. Although I've seen plenty of homes with toys scattered throughout and dishes piled in the sink; buyers can't get out of those homes fast enough. There are at least 10 essential steps to take to preparing the home for sale.
• Some homes need updating and quick fixes. Doing repairs before resale can boost chances of quickly selling. If items are broken or buyers see deferred maintenance, they wonder what else is wrong. It's more expensive, actually, not to fix the house.
• Dressing your home for showings is called staging a home. Think of the process like arranging flowers in an attractive vase. If you or your agent lack the vision or ability to stage, consider hiring a professional home stager.

Home is Marketed Wrong

• Whenever I see a badly shot photograph in MLS, and perhaps it's the only photo, I want to shake the agent and scream, "What are you thinking?" But agents and sellers make plenty of marketing mistakes.
• The battle cry of frustrated sellers is: "Why isn't my home selling?" These are likely sellers who are not employing marketing strategies designed to expose a home to the largest pool of buyers. Here are 10 good marketing tips that take the guesswork out of selling your home.
• Once a buyer has entered a home, the marketing continues. To increase the chances that a buyer will entertain an offer, here are 10 home showing tips.

Open Houses – How to Hold a Successful Open House

Selling a House at an Open House

Open houses. The professional real estate community appears split on whether it's a good idea to hold open a house for sale; although, I don't really understand the negative thoughts. It doesn't make sense to blatantly announce that no house should ever be held open, yet agents say it. Why would an agent want to restrict market exposure for a listing?

Common sense says it's smart to expose your home to the largest number of buyers, and getting buyers inside to preview a home is a huge hurdle to jump. It's like keeping the house for sale a secret and saying, "Sshh, let's not tell anybody about this house or invite them over to see it because it just might sell!"

A side benefit for an agent to hold open a listing is the real estate agent might receive buyer leads just from being in the right place at the right time. Yet some agents have actually said, "Well, that open house sold my listing, so I better not do that again!" The successful real estate agents I know report that at least 20% of their sales, or one in five homes, sell through an open house.

Why Some Agents Don't Hold Open Houses

There are many reasons why some houses just aren't suited for an open. Here are a sampling of those reasons:

• Too many listings. Agents can't be in two places at the same time.
• Too much inventory to pull in buyers driving through the area.
• All the homes in the neighborhood look the same.
• Inclement weather discourages venturing outside.
• Home doesn't show well; too messy, smelly or cramped.
• Off the beaten path of traffic.
• Condominium in the center of a complex that is hard to find.
• Agent apathy.

Hosting a Successful Open House

Assuming your home is presentable, spotless from top to bottom, priced correctly and located in a high traffic area, here are tips to improve the odds your house will sell at an open:

• Advertise online (newspapers are a waste of money). Write colorful, descriptive ads and place them in web classifieds or open house directories, too. Post Internet listings everywhere.
• Map Your Open House Signs.

1. Attach strings of balloons to each open house sign.
2. Find the busiest intersection closest to your home and put an open house sign at that corner.
3. The arrows should point buyers in the right direction.
4. Place a sign every few blocks until you end up at your house.

• Remove all vehicles from the driveway. Ask your neighbors to help out by not parking in front of your house.
• Open all the drapes, blinds and window coverings –– let in that light.
• Do not put spices on the stove to simmer without offering cookies, and do not, under any circumstances, use an air freshener because many people are allergic to synthetic odors.
• Turn on every light in the house, except lights that produce noise such as exhaust fans without separate on / off switches.
• Turn on soft music on each floor to help set a mood.
• Have available four-color flyers filled with quality photos and reasons for a buyer to purchase your home.
• Put out flyers that contain financing options so buyers can readily determine their monthly mortgage payment.
• Serve refreshments and snacks or, depending on your budget, maybe a catered lunch.
• Create a bulletin board of seasonal house photographs so buyers can see what the home would look like at another time of the year. This is especially helpful to showcase gardens during the winter.
• Set out all documents pertaining to the house:

1. Inspection reports
2. Appraisal or comps
3. Major repairs & warranties
4. Blueprints for additions or future possible improvements

• Be upbeat, cheery and greet each buyer who enters the home. Find out what the buyers are looking for and, if possible, show them why your home fits those requirements.
• And finally, ask for feedback. Ask each buyer what they thought of your home and would they consider buying it. Agents and sellers are hesitant to ask for a buyer's opinion, so just grit your teeth and ask. It's the only way you're going to get a direct answer, and the answer just might astonish you. They might decide to sit at the kitchen table and write an offer. It happens more often than you would think!

Home Marketing Tips – How to Market Your House

When real estate markets transition from seller's to buyer's markets, agents tend to put a lot more money and work into selling listings. However, I believe that employing strong marketing techniques is just smart business, regardless. In seller's markets, good marketing can bring higher prices and, in buyer's markets, it could mean the difference between sold or expired. Good marketing might not sell your house, but it will make the phone ring. Because if buyers don't call, you won't sell.

1. Photograph the Front

Most home buyers begin a home search online, so good photos are essential. Listings without a photo or with only an exterior shot are often passed over and ignored. Buyers are visual. Follow these tips and your house photo will look ten times better than the competition's: 

• Crop out sidewalks and streets.
• Remove vehicles from driveway / front of home.
• Shoot up-close & angled photos.
• Avoid shade on the house.
• Clear away vegetation blocking front door or path to door.

2. Exterior Photographs

If you own a condo or townhome without a yard, then take pictures of the clubhouse, pool, spa or tennis courts. If you have a yard, however, buyers will want to see it.

• Emphasize space and shoot long.
• Mow the lawn & trim bushes.
• Remove evidence of pets.
• Put away children's toys.
• Avoid shooting into the sun.

3. Interior Photographs

Take photographs of every room. Even if you suspect the room won't photograph well, shoot it anyway because the photo quality just might astonish you and be useable.

• Open drapes & blinds
• Turn on lights.
• Focus on interesting details like the condition of a wood floor or a fireplace mantle.
• Remove trash cans & close toilet lids in bathrooms.
• Use floral arrangements in kitchens & dining rooms.
• Avoid shooting into mirrors because your image will reflect.

4. Virtual Tours

Virtual tours aren't just to showcase million-dollar homes anymore. Every home should have a virtual tour, even if it's only two spins. Buyers love, love, love virtual tours. 

• A good virtual tour will grab a buyer by the hand and lead her from room to room, showing a 360-degree view.
• Depending on the tour company, you can add sound, music or an exciting, professionally written description that scrolls with the movement of the tour.
• Virtual tours can also include individual photos available for download or to print.

5. Signage

Signage encourages home shoppers to immediately call you or your agent. It's free advertising! If your home is a corner lot, put up two signs.

• Some homeowner associations prohibit real estate signs.
• Some HOAs allow only window signs.
• Try talking to a neighbor whose home is located at the corner of a busy street, asking for permission to put a sign in that yard with an arrow pointing toward yours.
• Agent signs should include the phone number of the closest office (if the brokerage operates multiple offices) and the agent's cell or voice mail number.

6. Print Advertising

Print advertising reaches buyers who read newspapers. Online ads reach the rest. If your neighbors say, "Everywhere I look, I see your home advertised," you're doing a good job. Puts ads in: 

• Major newspapers. Find out which days pull the most readers. Typically it's Sunday but some newspapers also publish "picture classifieds" on other days.
• Local newspapers. You can probably run a larger ad for less money that will more closely target those looking in your area.
• Real estate publications. Check on press date; can you wait?
• Every Web site you can find. Most online listings are free.

7. Direct Mail

If you're an unrepresented seller, you can buy mailing lists from list brokers. If you are represented by an agent, ask about a direct mail program. I prefer oversized four-color postcards because they are inexpensive to mail and eye-catching. Here are three places to mail: 

• Neighbors. Everybody has friends and relatives who might want to move near them.
• Agents who represent buyers in your neighborhood.
• Buyers who live in other areas and often relocate to your neighborhood.

8. Open Houses

Not every home is suitable for an open house due to location or other factors, and sometimes the only way to determine that is to try it. If nobody comes, that's probably a good indication. However, if your home is located near a high traffic area where buyers often swarm, then it's a good candidate. 

• Place open house signs throughout the area directing buyers.
• Advertise in the newspaper.
• Advertise open house times online.
• Invite the neighbors; they're going to come anyway.

9. Host Broker / Agent Tours

If you're planning to sell your home without representation, then skip this step. However, since most buyers are represented by an agent, it's a good idea to draw as many agents and brokers as possible to view your home.

• Agents who linger in your home will better remember details to later describe to buyers.
• The best way to entice an agent to hang around is food. Doesn't need to be expensive, sandwiches will suffice.
• As agents munch and network, the hope is they will admire your home and bring back a buyer.

10. Send E-Flyers

Technology has made it very easy to create and send electronic flyers. You can also include multiple photographs of your house. Costs vary but it's generally less than $100 to produce. Here are ideas for recipients: 

• Real estate agents who sell in your area.
• Friends, family and coworkers.
• Out-of-area brokers and agents who represent buyers in your area.

Top 10 Home Showing Tips

How to Show Your Home to Buyers

When you show your home, you want to engage the buyer emotionally because the decision to buy is based more on emotions, and less on logic. Give the buyer permission to say, "Yes, I want to buy this home," by staging, accentuating your home's positive attributes, and do not draw any attention to the negative aspects.

Besides, there will be plenty of time after the deal is signed to talk about the drawbacks.

1) The Gracious Welcome

Although the buyer is a guest in your home, you want the buyer to imagine owning the home. You don't want to make the buyer feel like an intruder.

• Don't expect the buyer to remove her shoes, unless you are selling to a buyer for whom religious or cultural reasons mandate it. Otherwise, the presumption is insulting.
• Leave the house. The buyer won't talk about the house in front of you or open doors with you standing there.
• Don't pressure or hurry the buyer. Tell the buyer to take all the time that is needed.
• Leave a bowl of wrapped candy or other treats near the front door with a small note thanking the buyer for coming to see your home.

2) Check the Temperature

• Now is not the time to worry about your utility bill. If it's cold enough to wear a sweater to stay warm, turn on the heat.
• If it's warm outside, turn on the air conditioning. It's better to heat or cool the house a degree or two warmer / colder than usual and then set the temperature at normal. This prevents the heat or A/C from kicking on when the buyer is present, because some HVAC systems are loud.
• You want the temperature inside to be comfortable and to give the buyer more of a reason to linger, especially on hot or cold days!

3) Create a Mood

• Light a fire in the fireplace.
• Make it romantic by placing two champagne glasses on a nearby table.
• Turn on soft music. I used to play Enya until one day I heard it piped in at a mortuary.
• If you have water fountains, turn them on. They are especially useful for drowning out traffic noise.

4) Play Down the Scent

• Many people are allergic to certain scents and deodorizers, so don't spray the air or plug-in air fresheners.
• Don't burn candles or spray perfume in the bedroom for the same reason.
• If weather permits, open the windows — if there is too much noise outside, close them.
• If you're going to bake cookies or simmer spices such as cinnamon in water on the stove, put out munchies so buyers aren't disappointed. More than one buyer has said, "Oh, darn, I thought there were cookies in here!"

5) Play Up the Visual

• If you have seasonal photographs showcasing flower gardens, leaves bursting in color or a snow-covered lawn twinkling from street lights, then display them in a prominent position.
• Open all the window coverings to let in light.
• Keep blinds partially closed that otherwise show undesirable outdoor scenery such as a dilapidated fence or a nearby structure that obstructs views.

6) Light up the House

• Turn on every light in the house, including appliance lights and closet lights.
• Brighten dark rooms with few windows by placing spot lights on the floor behind furniture.
• Turn off TV.

7) Encourage Touching

• Drape sensuous fabrics such as velvet or silk throws over chair arms.
• Leave doors slightly ajar.
• If you have carpeting, vacuum in one direction.

Provide Thoughtful Cards

Attach printed cards to items and in rooms that provide further information the buyer might miss or might not know. You have so little time to make an impression.

• If you have an antique chandelier in your dining room, put a card on it that discloses its age and other important details.
• If you have removed the washer and dryer from the laundry room, attach a card to the wall describing the room.
• If your basement stairs are steep, attach a card to the railing that cautions buyers to watch their step.
• Take care when placing a card that says: "Not included in the sale." That will make a buyer want it, but you can play that later to your advantage.

9) Top It Off With Food

The best way to entice buyers to linger and notice even more details about your home is to offer them food. You don't need to cater a lunch, but finger sandwiches, cookies, soft drinks, water, desserts, all are welcome.

• Set out serving utensils, if needed.
• Provide plates, cups and napkins. They can be paper products.
• In plain sight, provide a waste receptacle.

10) Encourage Buyer Feedback

• Near the snacks, leave pens and a stack of preprinted questionnaire cards or a guest book to sign.
• Buyers will feel obligated to respond to your request after being fed.
• The showing feedback you receive will be invaluable.
• Allow buyer anonymity.

Top 10 Myths About Real Estate Agents – Debunking Real Estate Agent Myths

Myths About Agents: What's True and What's Not

Just when you think you've found out everything you need to know about the "dirty, little secrets agents don't want you to know" from a bazillion of misinformed and, in all fairness, probably well meaning Web sites, here's what you really need to know:

Forget the hype. Forget the books you need to buy, the online services you need to subscribe to and start looking at what's really going on. Here's the straight story:

1) Real Estate Agents are Always Late for Appointments

False. There is no excuse for habitual tardiness among professionals. None. I don't care if it's your doctor, your cable TV installer or your Realtor.

Every person deserves respect, and respect is earned by providing what is promised and being on time. If your agent has a god-like, self-deluded impression of her or his own importance, find another. The agents I know are on time. Clients who listen to agents' excuses allow tardiness to happen. The agents I know are always prompt. Don't let a few bad apples give the entire industry a perception it doesn't deserve.

2) The More You Pay for a House, The More an Agent Makes

False. Ever hear a friend say this: "Every dime more you pay for that house makes the agent more money, so don't trust that agent." That's a misunderstanding. The difference between $300,000 and $310,000 is about $150 to an agent. Do you really think the agent pays any attention to the commission difference of a $10,000 spread?

3) The Less Commission You Pay to Sell, The More you Make

False. Discount brokers like to propel this myth. They claim to save sellers money by charging less. The truth is agents who are top producers and excel in this business do not discount services. Why? Because they don't have to.

Less-than-full-service agents can't afford all the bells & whistles paid for by full-service agents, who tend to draw higher offers. It boils down to you get what you pay for. A 2% commission reduction doesn't amount to much when your price is discounted 10% or more because your agent couldn't afford full market exposure.

4) Agents Must Show You Homes On Demand

False. Unless you have a signed contract with an agent or that agent represents the seller, that agent you call doesn't have to show you anything. You can't call a local real estate office and demand service or demand to be shown homes, because agents don't work for free.

If you aren't planning on writing an offer with the agent you call, be upfront or don't waste that agent's time. But don't expect that agent — who is likely to earn nothing — to be too excited about jumping in the car with you. That agent is not obligated to show you anything.

Nor is the listing agent obligated to show you a listing if you are represented by another Realtor without a request from that Realtor.

5) Agents Get Kickbacks from Lenders / Title / Inspectors

False. Since 1974, agents have been prevented from receiving any kind of kickback or favor from real estate vendors. It's against the law. It's against RESPA: the Real Estate Settlement Procedures Act. Some agents are slower than others to realize how the law affects them, but most have heard of RESPA and would not jeopardize their license, regardless of the temptation.

6) An Agent's Home Inspector Will Always Favor the Agent

Any agent worth her salt wants disclosure. Why? Because she wants what is best for her client but also, and this is not to be taken lightly, because she does not want to be sued.

Agents must disclose material facts. A buyer is always, without fail, better off knowing the truth about a house. Good agents care that a buyer receives full disclosure and are willing to fight for repairs on the buyer's behalf or help the buyer cancel the transaction.

7) All Real Estate Agents Make Too Much Money

False. An agent's average annual salary is less than $36,000 a year. You will find that about half the agents in any large brokerage close less than four deals a year. Nobody can live on that. Not once office fees are paid, MLS fees and lockbox fees are deducted, overhead and expenses for the agent are deducted, errors & omissions insurance and office supplies are paid.

Agents Sell Their Own Homes for More Money Than Yours

False. Busy agents and top producers don't have the luxury of time to waste when selling their own home. They also understand the market better than your average home seller, which means if a home isn't selling within a reasonable period of time, it means it is priced too high.

 

I have witnessed first-hand what happens when agents put their residences on the market. If they need to sell, they might even cut the buyer a better deal than the buyer can get on the open market. After all, the person most likely to be persuaded by a sales pitch is a person who sells for a living.

9) Agents Should Tell You About Crime, Schools & Ethnic Make-up of Neighborhoods

False. Federal Fair Housing laws prevent a real estate agent from discriminating against a number of protected classes, which automatically prohibits an agent from disclosing anything remotely relating to the protected classes.

Therefore, it may come as a shock to many people that agents cannot disclose crime rates, school stats or ethnic mixes of neighborhoods. If that kind of information is important to you, an agent can tell you where to find it but cannot provide it.

Those who tell you otherwise are misinformed.

10) Agents Will Say Anything to Make the Sale

False. Although it is true that some agents will lie to you, it's unfair to paint all agents with such a broad brush. Top producing agents, those who enjoy a solid reputation in the community and practice real estate honestly and truthfully, are very careful to uphold a client's trust.

Making misrepresentations or a false statement is against the law. Agents who break fiduciary relationships or fail to disclose material facts are subject to prosecution and a loss of their license to sell real estate.

All About Listing Agreements

Types of Real Estate Listings, Terms, Conditions & Fees

If you're ready to read about listing agreements, it's likely that you've already found a good real estate agent and had a lengthy discussion with this agent — noting the agent's responses to your 10 interview questions — and are now ready to think about listing your home for sale.

The common top three listing agreement choices are:

1) Open Listing;

2) Exclusive Agency Listing;

3) Exclusive Right-to-Sell Listing.

The best choice for you will depend on your willingness and ability to tackle some of the home selling duties and your overall real estate market climate.

Open Listing

An open listing lets an owner sell her home by herself. It is a non-exclusive agreement, meaning the owner may execute open listings with more than one real estate broker and pay only the broker who brings an able buyer whose offer the owner accepts. The big difference is an owner will probably pay only a selling broker's commission, which is about one-half of typical fees. The reason is because the owner is unrepresented. Therefore, owners do not pay a broker to represent the owner, but do pay the broker to represent the buyer. However, if the owner finds the buyer herself, the owner will not owe anybody a commission. Open listings are not popular with many full-service real estate brokers.

Exclusive Agency Listing

An exclusive agency listing is similar to an open listing except the major difference is the broker will represent the owner. The owner still reserves the right to sell the property herself and not pay a commission. The broker is free to cooperate with another brokerage, meaning the second brokerage could bring an able buyer whose offer the owner accepts. Typically, the broker is paid a listing commission that is shared with the selling broker, so the owner pays both fees.

Exclusive Right-to-Sell Listing

An exclusive right-to-sell listing is the most commonly utilized instrument. It gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and selling broker fees. The owner cannot sell the property herself without paying a commission, unless an exception is noted in the contract.

Exception to the contract: Say, your next-door neighbor has expressed an interest in buying your house. Often a listing broker will give the seller X number of days to produce a contract with the neighbor without owing a commission.

Other Terms & Conditions to Consider

Length of Listing

The duration of the listing agreement is negotiable. Common terms can be 30 days, 90 days, six months, one year or more.

Selling Commission

How much will you pay the selling agent? When there is a lot of inventory on the market and fewer buyers, to generate traffic, you might want to consider paying the selling agent more than you would in a market where inventory is tight and a lot of buyers are vying for few listings. For example, if the total commission is 6%, and the listing broker wants to offer 2.5% to the selling office, you could insist on paying 3% instead. It's your money. The listing agent will get less, but so what?

Cancellation of Contract

Will the broker / agent let you cancel the agreement? Why would you want to do business with a broker who would not release you from the contract if you were unhappy or dissatisfied with their service? If the broker will agree to let you cancel at any time, that broker is giving you a guarantee. In that instance, the duration of the contract doesn't much matter.

Expiration of Contract

If the contract should expire without mutual renewal or the parties elect to cancel the contract, the listing broker might supply the owner with a list of names of prospective buyers the broker produced. If any of those buyers approach the owner within the time period specified in the listing contract and successfully purchase the property, the owner could still owe a commission.

Top 10 Reasons to Hire a Real Estate Agent

With so much information readily available online, clients sometimes ask me, "Why should we hire a real estate agent?" They wonder, and rightfully so, if they couldn't buy or sell a home through the Internet or through regular marketing and advertising channels without representation, without a a real estate agent. Some do OK, many don't. So if you've wondered the same thing, here are 10 reasons why you might want to consider hiring a professional real estate agent.

1. Education & Experience

You don't need to know everything about buying and selling real estate if you hire a real estate professional who does. Henry Ford once said that when you hire people who are smarter than you are, it proves you are smarter than they are. The trick is to find the right person. For the most part, they all cost about the same. Why not hire a person with more education and experience than you? We're all looking for more precious time in our lives, and hiring pros gives us that time.

2. Agents are Buffers

Agents take the spam out of your property showings and visits. If you're a buyer of new homes, your agent will whip out her sword and keep the builder's agents at bay, preventing them from biting or nipping at your heels. If you're a seller, your agent will filter all those phone calls that lead to nowhere from lookie loos and try to induce serious buyers to immediately write an offer.

3. Neighborhood Knowledge

Agents either possess intimate knowledge or they know where to find the industry buzz about your neighborhood. They can identify comparable sales and hand these facts to you, in addition to pointing you in the direction where you can find more data on schools, crime or demographics. For example, you may know that a home down the street was on the market for $350,000, but an agent will know it had upgrades and sold at $285,000 after 65 days on the market and after twice falling out of escrow.

4. Price Guidance

Contrary to what some people believe, agents do not select prices for sellers or buyers. However, an agent will help to guide clients to make the right choices for themselves. If a listing is at 7%, for example, an agent has a 7% vested interest in the sale, but the client has a 93% interest. Selling agents will ask buyers to weigh all the data supplied to them and to choose a price. Then based on market supply, demand and the conditions, the agent will devise a negotiation strategy.

5. Market Conditions Information

Real estate agents can disclose market conditions, which will govern your selling or buying process. Many factors determine how you will proceed. Data such as the average per square foot cost of similar homes, median and average sales prices, average days on market and ratios of list-to-sold prices, among other criteria, will have a huge bearing on what you ultimately decide to do.

6. Professional Networking

Real estate agents network with other professionals, many of whom provide services that you will need to buy or sell. Due to legal liability, many agents will hesitate to recommend a certain individual or company over another, but they do know which vendors have a reputation for efficiency, competency and competitive pricing. Agents can, however, give you a list of references with whom they have worked and provide background information to help you make a wise selection.

7. Negotiation Skills & Confidentiality

Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are skilled. It's part of their job description. Good agents are not messengers, delivering buyer's offers to sellers and vice versa. They are professionals who are trained to present their client's case in the best light and agree to hold client information confidential from competing interests.

8. Handling Volumes of Paperwork

One-page deposit receipts were prevalent in the early 1970s. Today's purchase agreements run 10 pages or more. That does not include the federal- and state-mandated disclosures nor disclosures dictated by local custom. Most real estate files average thicknesses from one to three inches of paper. One tiny mistake or omission could land you in court or cost you thousands. In some states, lawyers handle the disclosures, thank goodness!

9. Answer Questions After Closing

Even the smoothest transactions that close without complications can come back to haunt. For example, taxing authorities that collect property tax assessments, doc stamps or transfer tax can fall months behind and mix up invoices, but one call to your agent can straighten out the confusion. Many questions can pop up that were overlooked in the excitement of closing. Good agents stand by ready to assist. Worthy and honest agents don't leave you in the dust to fend for yourself.

10. Develop Relationships for Future Business

The basis for an agent's success and continued career in real estate is referrals. Few agents would survive if their livelihood was dependent on consistently drumming up new business. This emphasis gives agents strong incentives to make certain clients are happy and satisfied. It also means that an agent who stays in the business will be there for you when you need to hire an agent again. Many will periodically mail market updates to you to keep you informed and to stay in touch.

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