Chichi's Blog

Is Your REALTOR on Your Side? (Yet Another Realtor Slam)

Chichi Ahia (RE/MAX Advantage) — Fri, 26 Jan 2007 20:20:44 -0600

Is your realtor on your side? - Make sure your agent gets you the best house at the best price.

I came across an article By Stephen Gandel, Money Magazine senior writer, (senior in high school perhaps... judging by his lack of insight) on CNN Money.com titled "How to make your Realtor work for you". Naturally my curiosity was peaked.

He begins by making, in my opinion, a rather brash generalization about Realtors. "When you're shopping for a house, it might appear that the friendly broker who listens to your needs, drives you around to showings and answers your questions is unflaggingly devoted to you. In reality, however, most agents work for sellers. Now, even more so. These days, see, agents representing buyers are increasingly being showered with extra incentives that may cause them to push certain houses." Gandel goes on to assert that these "extra incentives" are causing Realtors to show the houses in their own interest, rather than the interest of their clients. He then has the audacity to offer the following suggestions to consumers to ensure that homes that they are shown are what's best for them, not their broker.

Go it alone

Finding a house yourself, rather than relying on a broker, is easier than ever. Realtor.com has extensive listings, and you can call listing agents directly to set up appointments.

Once you decide to buy, ask for 3 percent off your final price. Listing agents often try to collect the full 6 percent if a buyer is broker-less.

But you did the work; you deserve the rebate.

Set the fee

If you'd rather use a broker, have him put in writing what percentage he'll get paid and guarantee that it will be the same for every house.

Tom Early, spokesman for the National Association of Exclusive Buyer Agents, says to sign a contract before looking at houses. Stipulate that any bonus being paid by a seller be used to pay closing costs.

Put it in dollars

Eliminate all conflicts by getting your agent to agree to a set dollar fee rather than a percentage of the sale. That way your broker will have no incentive to show you overpriced homes or discourage you from negotiating the price down, since she'll get paid the same either way.

Well, Mr. Gandel, unfortunately you have made too many broad generalizations with out enough substantiation, something which is typically a no-no for a journalist for a respected publication. Are there unethical Real Estate Agents/ Brokers? Yes, there are. There are also unethical Mortgage Brokers who charge exorbitant fees without justification. There are unethical Physicians who will prescribe certain brands of medication to get kickbacks from pharmaceutical companies. There are unethical Attorneys who take cases that they know that they can't win in order to rack up billable hours. There are unethical Mechanics who recommend repairs that may not be necessary as a means of increasing profits. What do all of these businesses have in common? They are businesses where a reputation of integrity is (or at least should be) very important. While there are always a few bad apples in every bunch, there are still countless professionals who possess a high degree of ethics which govern their business practices. I guess I should also note that there are also unethical JOURNALISTS that do everything from invading the privacy of individuals and families to publishing inconclusive, inaccurate articles that deceive, ill-inform and misadvise their readers due to a lack of research prior to publication. Does this mean that I should condemn all journalists and/or Money Magazine for your mistake(s) Mr. Gandel?

The following are the fundamental problems with Mr. Gandel's suggestions.

Go it alone

There are several problems here. First, Buyers Agents are not just "lock-box" openers. They are professional representatives that work in the BUYERS favor. If a buyer makes an appointment with the listing agent directly, while this is acceptable, the buyer should be advised that the agent is working for the SELLER. This means that the buyers are not represented in the transaction and therefore assume all responsibility for issues that arise. This serious problem if the buyers are not home-savvy. It is not the Sellers Agent's responsibility to inform you that the roof is not as new as you may like or to remind you that the sewer line has not been replaced. They are there to show you the positive features of the home. That's why it is important for the buyer to have an Agent. A good Realtor can spot many things that can indicate a problem with a given property; many of which may not be observed by the lay person. It pays to put that knowledge and experience to work for you.

Secondly, the fact that the buyer doesn't have an agent doesn't automatically entitle them to the commission or a discount on their price. That determination is dependent on the listing contract and/ or the seller.

Set the fee

Buyers can offer a commission to the buyer's agent and ask that the buyer's agent decline the commission offered by the listing agent, but they can't control the compensation of the buyer's agent when they aren't under contract or are offering no compensation. If the agent works for the seller, he has fiduciary duty to the seller and has no obligation to help the buyer buy the home for less.

Put it in dollars

Another bad point. Assuming that the buyer is looking at homes priced between 300k and 350k and buyer's agent agrees to be paid $10,000 regardless of the home purchased. Now, suppose the buyer is between two properties, one of which will pay the Agent $8,900 the other of which will pay the buyer $9,600. They are right back in the same situation they are were trying so hard to avoid. Also, probably a better point is that if a set fee established and the generated commissions do not cover it, they buyer would be responsible to pay the difference, in this case, up to $1,100.

The bottom line is that you have to find an agent that you can trust. If you don't know one, ask around. Ask your friends and neighbors who they used and if they were satisfied. If you don't feel that an agent honestly does have your best interest at heart then you probably shouldn't be using them in the first place. Speaking for myself, I just don't have the time to sit down and figure out how much I will get paid from house to house. If I find my clients the best house for them and they are happy, I will make far more money in the long run then I would from stirring them into the wrong property today.

74 Red Rose Drive

Chichi Ahia (RE/MAX Advantage) — Sat, 02 Dec 2006 20:44:03 -0600

Welcome to Red Rose Gate in Beautiful Middletown Township

5 Bedrooms

3 Full Bathrooms

Aprox. 2300 Int. SqFt

Annual Tax: 4947

Award winning Neshaminy Schools

Proudly offered at $359,900

Virtual Tour

This gorgeous country clubber is situated in an ideal, private location overlooking a Middletown Twp. park. Your family will immediately feel at home it this completely renovated home featuring ceramic tile floors, newer neutral carpet, fresh paint and updated bathrooms. The home also boasts a remodeled gourmet kitchen with new, extra tall cabinets for plenty of storage, a GE profile cook top, range and dishwasher. The exterior of the home offers new siding and a new garage door with electric openers. This home is truly a find!

For more information on this property or to schedule a showing, call me today @ (267) 981-9110.

"Nothing personal!"

Chichi Ahia (RE/MAX Advantage) — Sat, 02 Dec 2006 19:52:07 -0600

Last week I had a settlement that served as a reminder of one of the aspects of professional representation (be it a REALTOR® or an attorney) that is essential to maintain both for achieving the best results for your client as well as maintaining a positive reputation among your peers. It can be summed up with one simple saying; "Nothing personal".

A little background...

I had a listing that went under contract. The agent with the buyer is someone that I know to be a very reasonable person. His client, unfortunately, was anything but! Oh, and by the way, the seller and buyer the knew each other prior to the sale and disliked one another.

After a long an painful contingency process, (loaded with knock down-drag out fights between the buyer and the seller over what could not have amounted to more than $100) we finally completed all of the terms of the contract about 30 days before the closing and we just were sitting back waiting for the settlement date to arrive.

All is well...until...

The day before settlement I meet the buyer and her agent at the property for the final walk through. (I had to meet them there because the seller made me remove the lock box because she "didn't want that crazy lady trying to get in there by herself").

I unlock the door and the buyer pushes past me into the house and proceeds (for the next hour or so) to do the most impressive job of nitpicking that that think I've ever seen. Finally she hands me a list of ten or so items that must be fixed otherwise she is "WALKING". I glanced over the list, half tempted to just give her $20 out of my pocket and call it a day. Before leaving the buyers agent informs me that they are looking to escrow $2500 for the repairs. I let my seller know this and she says "I'm not giving her a penny; I'd sooner put the house back on the market.....".

So, to make a long story short, the buyer and the seller get into a huge fight and, while we were eventually able to close the deal, we ended up settling from two different rooms because the buyer and seller refused to be in the same room together. The entire settlement consisted of myself and the other agent shuffling back and fourth between the rooms and informing the other party of the most recent "demand", some of which were HIGHLY unreasonable. Now, to be honest, I found my self quite angry and on the verge of raising my voice a few times when a little voice in the back of my head whispered "it's nothing personal".

I guess over the course if time I just took it for granted that I knew this but the reality is that this statement is a staple in negotiation. After all, the point of negotiation is not to "win a fight"; it's to find an amicable solution that is mutually beneficial for all parties. Without a strong resolve to maintain this position, we drastically reduce the effectiveness of our negotiating. I know that I have seen situations in the past where agents had taken certain things personally and as a result got frustrated. I would notice that as time would pass, there arguments would become less and less coherent. When a representative allows himself to end up in a position or frame of mind like this, where the effectiveness of the negotiation is diminished in this way, the client suffers a great disservice.

Also, REALTORS® (and attorneys and loan officers for that matter) are like elephants; we never forget. Successful deals are the building blocks of an excellent reputation. On the contrary, deals that don't go so smoothly often times can leave a bad taste in the mouth of all parties involved; and the unfortunate truth is that not only will it, in all probability, never go away, but it also will likely be conveyed to others at any given opportunity.

The Last Stand of the 6-Percenters?

Chichi Ahia (RE/MAX Advantage) — Sat, 18 Nov 2006 12:41:53 -0600

This was the title of an article in the New York Times a few months ago predicting future trends in Real Estate Commissions.

"The Internet has radically changed the way consumers buy books and airline tickets, trade stock and learn news. But the real estate industry has resisted change - and protected its commission structure - by controlling the information on its Multiple Listing Service database of properties for sale.

Traditional agents still firmly control the M.L.S., which allows all participating brokers to view almost every home for sale in a particular area, even those being offered through competitors' agencies. But the typical 6 percent commission, paid out of the seller's proceeds and split between the seller's and buyer's agents, is under attack because, as economists note, it does not serve consumers well."

Read the Article Here

While I did find this article interesting, I have to disagree with very many of the assertions. Bottom line, representing a client is about more than taking them to a few houses or sticking a sign up in a yard; it's about REPRESENTATION. In my opinion, engaging in a real estate transaction without a Realtor is very much like going to trial without an attorney. Sure, you can probably get through it, but the success rate is substantially lower. I can't count the number of clients that I have protected from problematic issues that didn't even make their radar. A Home is one of the most valuable assets of most Americans. It just makes sense to protect your investment by consulting with a professional.

Big waste of money??

Chichi Ahia (RE/MAX Advantage) — Sat, 18 Nov 2006 12:07:15 -0600

I am in just finishing up my marketing budget for 2007 and was going over some things that I have tried in the past. Some were great, others, a huge waste of money. Just curious what everyone else feels is giving them good bang for the advertising buck. Thanks!

"I think it may be time to lower your price..."

Chichi Ahia (RE/MAX Advantage) — Sat, 18 Nov 2006 11:18:17 -0600

"NOOOOOOOOOOOOO!!!!!....&%#@^%..."

It's a statement that I have had to make more times this year than I prefer to think about, and without fail, it's to the sellers that refuse to allow me to price their home correctly to begin with. I know, I know, it's just part of the business and nothing that I should get too worked up about, and I don't. I am just curious how other agents are handling these situations in a "soft market".