Scott thinks clearly and expresses himself well. He wrote a good post.  Though Lenn Harley makes a valid point (consumers may never see the baragain) I think that often they do as a transaction progresses - especially those that 'go sideways'.

I got the following from a big real estate franchise company website - it suggests that you should find an agent by looking for someone with a lot of signs in the area in which you want to buy: 

                                                           DO NOT DO THAT

"3. If you've already determined where you'd like to live, drive through neighborhoods in the area and survey them for REALTOR® yard signs. Seeing the same name pop up on signs time after time may indicate that the agent is a specialist in the area. If you're thinking about selling, monitor the signs in your own neighborhood."  

That company is suggesting that a buyer should use an agent that already has an obligation to the seller to try and  get the seller their list price.   The suggestion that you use the seller's agent is deceptive and intentionally so.

Don't use the seller's agent and don't use the seller's company.  Find your own agent.  Consider at least 3 agents and compare their buyer agent contracts.  If they say they don't have a contract - be concerned.  Say 'next'. 

Paul Howard, Broker/Owner
NJHomeBuyer.com Realty
Cherry Hill NJ 
856-488-8444
Paul@SouthJerseyHomes.com

I just read the first part of an article in Inman by Mary Umberger. The part I read was about some real estate 'team' of a guy named Creig Northrop. I almost broke out laughing.    The quote that prompted that was:  " I've seen jeans and shorts and, oh, my gosh, we don't allow that kind of thing. If you want people to treat you professionally, you have to look it."    The quote was beside a photo of a bunch of agents all dressed in suits.

Wow.  Just Wow.    Now I suppose if all the homes they show are upscale condos in center city where you don't need to know ANYTHING about the workings of a house that might be just fine.  But in the real world where I work that kind of thing would never do.  Can you imagine an agent in a dark suit showing a 90 year old house with a basement that hasn't had the cobwebs wiped away for 5 years.  And, oh my, would the agent even have a clue what to say about the 250 gallon oil tank just sitting there in a house with a furnace fuled by natural gas.  

It is far from professional (no matter how it may look to a first time buyer) to show such a house in a suit.   And yet, this clueless person apparently judges professionalism by clothing.  They are professional sales persons - nothing more.

 Paul Howard, Broker/Owner

NJHomeBuyer.com Realty

80 Barclay Center Suite 4A

Cherry Hill NJ 08034

856-488-8444

 

 

Facebook.com/homebuyers

Unless there is something I really consider 'for agent's eyes only' (Ex: lock box codes or owner phone numbers)  I have decided to make it a practice to give my clients a full agent copy of the MLS sheet -the one that discloses the "offer" of compensation.  After all, the seller has this informaion so the buyer should too.

I keep hoping that the FTC will get involed and ban the "offer" in the MLS but I don't expect any action on that front any time soon -even though I believe it is the major reason there is no real price competition in the industry.  I'd actually like to see them ban to "offer" from the listing agent all together and let buyer's agents negotiate their fees with their client without the interference that so called 'offer' brings.   

When buyer's agents have to negotiate their fees directly with the buyer the practice of working without a contract (which is harmful to both the buyer and the agent) will stop.  

 

 

 

Sellers: Your agent's 'offer' of compensation to a buyer's agent may not be accepted.

This topic is rarely discussed because Realtors don't want it discussed.

In brief, here is the typical situation. The seller's agent presents a listing agreement to the seller containing a compensation section with the total amount of the brokerage fee to be paid when the house sells. This is an agreement between the seller and their agent's company - no one else.

So far so good.

They have a discussion (maybe) about what the agent's company should offer an agent bringing a buyer that buys the property. They (usually) decide that they will offer, in compensation to the buyer's agent, half of what the seller's agent's company is to receive. Then, they (usually) subtract an additional fee from what the buyer's agent will receive (it is unclear why they do this but they do). Example: 6% of sales price commission to be paid by seller to their agent's company: From that a 3% commission MINUS an amount (could be zero or could be $100) will be offered to any other company bringing a buyer.

Where does the buyer's agent see this 'offer'? In the MLS. Consumers can't see it because there is a section of the MLS detail sheet just for agents. One of the things in that section is the amount of compensation the listing company is "offering" the buyer's agent's company. The INDUSTRY does not permit home buyers to see what is being offered "their" agent as an inducement to get the agent to bring them to the home that is for sale.

The industry is so screwed up that:

• Rarely, if ever, does a listing agent tell the seller that the fee 'offered' is not binding on a buyer's agent.
  
• Sellers often have their agents "offer" buyer's agents a 'bonus' inducement to get them to show a house they might not otherwise think their buyer client would want to see. ---- Some seller's take a different approach and have their agent offer minimal compensation to the buyer's agent thinking they will save money. Generally only buyer's that have a compensation agreement with their agent will find out.
• Both of these approaches ignore the fact that buyer's agents may have contracts with their clients. If they don't, though, the bonus approach may get an unethical buyer's agent to push their client into a house that is not suitable - just to collect the bonus. That is a good outcome for the seller. The minimal compensation approach is likely to cost the seller much more because many agents (working without a buyer agent contract) will avoid showing those homes if they can.
• Many listing agents think buyer's agents must accept whatever they 'offer'.
• Many buyer's agents think they have to accept whatever they are offered, because it is in the MLS.

Buyer's agents may have, and increasingly they do have, a service and compensation agreement with their buyer client - just as the seller and their agent have a listing agreement.

What are the enablers that keep this system in place?

1. Listing companies
2. The MLS system of offers of compensation
3. HUD
4. Deceptive advertising of buyer representation services by companies that also represent sellers without disclosing that the agent may not be able to provide that service.

• The listing company and the seller determine the fee to 'offer' a buyer's agent's company.
• The MLS system is the mechanism used both to communicate this fee to agents that may bring buyer's to the home and keep the fee concealed from the buyers.
• HUD settlement statements (the HUD-1) reference a "Division of Commission" at line 700, thus institutionalizing a system that works against creating price competition in the industry.
• A prime example of deceptive advertising is agents that use a web address purporting to put buyer's first yet they work for a company that lists homes and indeed they list homes themselves. They can not fully represent a buyer in those cases. Google: buyers agent in cherry hill nj
  look at the results and you will find a prime example.

What is the effect of this system of the listing company offer of compensation and subsequent acceptance of said compensation by a buyer's agent via the MLS system on compensation competition in the real estate industry?

• It reduces the incentive buyer's agent have to enter into negotiated compensation and service agreements with home buyers.
• It reduces the proportion of home buyers that receive state mandated real estate agency disclosures -- simply because, often, no written and signed agreement specifying the compensation and services is entered into.

  The solution

  As a requirement for receiving compensation for brokerage activity:
  
  • real estate companies representing buyers should be required to have in place written compensation and service agreements signed by a representative of the company and the buyer.
  • real estate companies representing buyers should have to have written and signed documentation that state required disclosure requirements have been met.
  • Ideally the mishmash of state disclosures would be replaced with a standard Federal agency disclosure. Similar federal requirements exist for Lead Based Paint disclosures and in FHA transactions the "For your Protection Get a Home Inspection" disclosure and the appraisal amendment language is required in contracts.
  • The point of disclosure has also been part of the problem. Too many in the industry believe that it is ok to advertise their services as 'buyers agents' without disclosing that they may not be able to offer that service. This is deceptive advertising.

    Given the state of the industry this topic is, I believe, particularly apropos.
    
    Many in the industry strive to obfuscate the related issues of compensation and disclosure in their discussion of the residential real estate industry. It is time for transparency and clarity.

     

    Paul Howard, Broker

    NJHomeBuyer.com Realty

    80 Barclay Center Suite 4A

    Cherry Hill NJ 08034

    856-488-8444

I went to the RE/MAX.com website today and clicked Real Estate101 in the learning center tab.

I found this statement under tips for choosing a real estate agent (this is their suggestion for both sellers AND buyers):

"If you've already determined where you'd like to live, drive through neighborhoods in the area and survey them for REALTOR® yard signs. Seeing the same name pop up on signs time after time may indicate that the agent is a specialist in the area."

If you take RE/MAX's advice you may very likely end up with a dual agent or just as bad - a seller's agent as your agent.  If you want buyer representation and an agent that will be proactive in protecting your interest (expecially at the expense of the seller's interest) never never agree to 'work with' an agent that works for a company that already has obligations to the seller.

In both New Jersey and Pennsylvania, where I'm licensed, the states require that agents disclose who they are working for at the beginning of their relationship.  The laws requiring that disclosure were generally written before the internet became the main information source for consumers. The result is that, although the internet is generally the first significant point of contact between a consumer and a company offering real estate services, the states' licensing authorities do not require (apparently) that a company disclose  issues of representation to consumers. And so far they have not been required to provide disclaimers.

Therefore, when you read a real estate company's  (or even an individual agen'ts)  website - beware. Although such websites may contain much useful information some information that  seems to be helpful may only be serving the interest of the real estate company.

The following text is provided in the 'Buyer's Guide' "Making an Offer"  information section on the Weichert.com website:

"After helping you think through the issues to determine the best offer for you to make at the time, your Sales Associate is well qualified to negotiate on your behalf with your best interests in mind."

No mention of the agency status. No mention of who they are representing.  But it IS a "Buyer's Guide". 

Of course, they might try to say that the statement says that the associate is 'well qualified' to represent the consumer - not that they will represent them - but that is not what a consumer will get from reading that statement, which I believe is intentionally misleading. Besides, if they are a dual agent or seller's agent they will not be helping the buyer think through the issues to determine the best offer anyway.

I point this out because Weichert is not alone.  Many real estate websites (both company and individual) make similar representations, which are nothing less than misleading and deceptive advertising.

It is time to start being honest with home buyers.  Unless a company ONLY represents buyers they CAN NOT make such representations without a disclaimer.

 

 

 

 

 

 

 

 

Sometimes buyers - and sellers too, forget that they control the transaction.  Some agents forget that too.  I've heard agents say they 'have their client under control'.  If everyone is doing their job that is NOT the way it works. 

Agents are guides, advisors and advocates for their clients (if the client has chosen their agent well) - but the client makes the decisions. 

Sometimes the buyer or seller are not clients - they are customers.  Customers don't get to have a loyal advocate - they are, instead,  working with a sales person that is trying to sell them something.

Sometimes the buyer and seller choose the very same company to represent them. They may be clients of the agent (s) involved but the agent(s) are not their loyal advocate because the agent(s) are working for a company that has two masters - the buyer and seller.

The most important factor in determining the buyer's or seller's satisfaction with their transaction is the agent they choose.  Choose wisely.\

 

Paul Howard

NJHomeBuyer.com Realty

80 Barclay Center

Suite 4A

Cherry Hill NJ 08034

856-488-8444

Please destroy your fax machine and never use it again. Ever!
I am sooo serious. I hate fax machines. I don't own one and neither should you. If you must use 'fax' get an efax (or similar ) number already.

I don't have a fax number on my business card for one simple reason - I DON'T WANT YOU TO SEND ME A FAX.

Believe it or not I have email. Unless you don't there is no reason to be sending faxes. And if you don't I probably will not be doing business with you anyway.
It is just too much trouble.

Thank you for your time.

Regards,

Paul Howard, Broker/Owner
NJHomeBuyer.com Realty
Cherry Hill, NJ
856-488-8444
OH, don't forget to fan my business page on facebook at:
facebook.com/homebuyers

 

"Open House Weekend", be it national, state, local or otherwise is an opportunity for home buyers to get out and see some homes they might not otherwise look at.  It is also an opportunity for some less than ethical agents to trap buyers'.

Lets face it, it is rare that an open house results in the sale of the house that is open.  But it can happen.  If that buyer came to the house unrepresented the seller's agent is likely to end up  effectively owning the right to represent then - as a dual agent.

Even though it is true that one showing 'might' not be enough for an agent to prevail if they argue 'procuring cause' enough real buyers agents believe that it is that they will refuse to get involved - effectively eliminating the buyers opportunity to have an advocate represent them during their purchase.

Up above, I made reference to 'less than ethical agents' trapping buyers.  It may not be ethical but it IS legal - if, and only if, the agent truly provided the disclosures about agency relationships their state requires (Even NAR studies show that many agents do not provide the disclosures the law requires.).  So is it ever ethical for an agent to make a procuring cause claim in a case where the buyer entered an open house unrepresented?  In my opinion, it is not, but it can and does happen. Buyer's protect your right to representation by finding an agent that is not working for the company that listed the house. The best option is to find one that NEVER represents sellers. Check out the link that Suse Orman uses on her website. NAEBA

 

 

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