Homebuyer Blues: How To Avoid A Terrible Realtor Experience

Credit: bigworldofbeauty.blogspot.com

About a month ago, my wife called me up while she was at work asking me for some business cards and contact info.  A coworker of hers, Jenny* (*all names are changed), wanted to pass my information along to another person in the office because she heard them mention that they would be looking into buying a home soon.  (In the Interest of full disclosure, Jenny and her husband Jim* have been friends of ours for a few years now.)  Geesh–it’s like the Six Degrees Of Kevin Bacon over here!  “So, how’d you meet Jeff?”  “Well, it’s kind of a weird thing…”  Heh.

Flattered as I was, Jenny later told me when we next met that she and Jim had a really terrible experience with their Realtor, and since she couldn’t refer theirs, she wanted to refer me instead.  Always wanting to learn and grow in this business, I asked her why their realtor hadn’t been up to snuff.  These are hard-won lessons sometimes, and I wanted to make sure I was providing the level of service that was opposite of what their guy had been.

“Oh man,” she said, “he didn’t listen to us at all.  It was like we were taking up his time when we had questions, or any time we weren’t out looking at homes.”

Jim chimed in, “He kept taking us to places that were either out of our price range by sixty or eighty grand or dumps that were way under, the places we did like were already under contract when we got there, and it seemed like he could care less about us.  I almost punched him once, I was so angry at him.”

Woah.  At first I thought, “This guy really makes us look bad,” but that was quickly followed by, “This guy makes my job really easy!”  

As we’ve covered before, it’s generally in your best interest to hire a Realtor like me, but there is an easy way to avoid service like this.  Choosing a Realtor is not as roll-of-the-dice as you would expect, where you have to just hope you’ll “get a good one”…it really comes down to three simple things:

First, when you are getting into the process, I want you to treat your Realtor as someone whom you are hiring.  The truth is, you are hiring them as an independent contractor for their services.  Find someone who wants to earn your business, not the commission.  Interview at least three — preferably five — before making your final decision.

Second, make sure the Realtor you pick is either independently experienced, or backed by a mentor or support team if new.  That’s what I did.  I want to give every one of my clients the most stress-free experience possible.  Being new in the industry, I knew that couldn’t happen until I had a couple of transactions under my belt, but I wasn’t willing to let my first few clients be guinea pigs.  I hired a mentor to help me handle the things I didn’t know or wasn’t prepared for, and it has served me all the better for it.

And finally, pick someone you like.  Pick someone you get good vibes from during the consultation.  Everybody’s personality is different.  It is entirely possible, for example, that two Realtors are equally likable and equally qualified, but their personalities and approaches are different.  One agent might be trying to give you the speediest transaction for the least (or most, if he’s a listing agent) amount of money, and has a plan to do so.  The other agent might spend more time learning the story of how your oldest dog (three dogs ago) lost its hind legs, and that’s how you came to have Fluffy III.  If your personality lends itself to wanting a more intimate Realtor/client relationship, choose number two.  If you are someone who is more focused on wanting results, number one is your best bet.

As a short fourth point, I’ll mention that you can always choose to fire your Realtor if he or she is not performing.  I’ll cover the ins and outs of this in a later post, but just keep in mind that no part of your relationship with this person is forever, unless you want it to be.

I hope this helps ease your mind.  Have a great weekend, and Happy Home Hunting! 

 

Mythbusting, Real Estate-Style.

Hey All!  Thanks for being with me on this glorious day in late-April.  Today I am coming to you from the sunny front porch of my home, with a cup of coffee next to me, and the dog basking in the sun.  It’s a fantastic day today.  

I thought I’d do a little post that would be helpful — you know, give you a little insight into some common myths and misconceptions, and I’ll clarify or debunk a couple of them today.

Misconception Numero Uno:  I don’t need a Realtor to find me a home.  These days, with websites everywhere, apps, and infinite research-capabilities thanks to the internet, it may seem like you don’t need a Realtor to find you a great home.  The truth is, you don’t.  But what happens after you’ve found your dream home?

The sheer amount of paperwork involved is staggering.  My last clients bought a typical townhome in the Franconia/Springfield area.  All told, after the contract had been executed fully and completely, there are no fewer than 40 pages in their file.  (There are actually about twice that number, including the homes we’ve seen, the comps we’ve shown, and the other associated representative paperwork involved.  Now, we’re up to 80 pages.)  Not only that, from the time that your offer is accepted until closing, I will make somewhere in the neighborhood of 100-150 phone calls as I guide the contract through its proper execution.  As your (a buyer’s) representative, I have to coordinate the schedules of the listing agent, the sellers, the home inspector, the title company representative(s), the lender(s), and the termite inspection guy — and there’s still no guarantee that all contingencies will have been met by the time we get to the closing table.  This also discounts including your schedules and mine.  And by the way, there’s a good chance you aren’t my only clients.

Misconception Numero Dos:  Listing agents aren’t worth three percent anymore.  Ooh boy, if you believe this, you’re in for a world of hurt.  The fact is, listing agents (great ones, anyway) earn every penny of that three percent, and here’s why.  First and foremost, it costs us money to advertise your home in the right places to get it sold.  It costs us real, out-of-pocket money, and we aren’t just talking about a couple of hundred bucks.  The smartest Realtors already know how much they’ll spend to market your home, where it will be best used, and what kind of return-on-investment they’ll get from it.

This brings me to another point.  Please keep in mind that we don’t actually get to keep all of that three percent.  A smart Realtor runs her business like a business, and that means every commission she earns gets broken up three ways — one third in an account to sit until the tax-man cometh, one third into the account where all of the business’ operating costs come from (the continuing education and subscriptions we keep aren’t cheap), and finally, the last third to our own personal accounts, as a paycheck.  At the end of the day, she really only gets to keep one percent.

My last clarification on Numero Dos is simple:  Between 85 and 90 percent of all For-Sale-By-Owners (or FSBOs) will end up listing their home with a Realtor — and they’ll end up getting less money for it than if they had ponied up and hired him for three percent to start with.  The reasons are several.  First, you don’t know what the market is doing at the same level that a Realtor does.  This will lead you probably price your home improperly, and the longer your home sits on the market, the less money you will get for it.  The buyers who come around will see that you are unrepresented, and expect to negotiate a real “steal-of-a-deal” with you (which, of course, you will not be open to).  Or, people will watch what you do with your home’s price, and simply wait you out until you drop it again out of desperation to make your life’s deadlines.  If you do a simple cost/benefit analysis, in the great majority of cases, you will walk away from the table with more money after hiring a Realtor than by not hiring one, and it’ll have taken significantly less of your time.  It’s really as simple as that.

Now, every market has its challenges, and a great Realtor has the experience and resources to get the job done.  Choose yours carefully.  Do not shy away from inexperienced agents, but do shy away from inexperienced agents who aren’t well-supported in their office.  I paid a goodly portion of my very first commission (40%) for the right and confidence to tell my clients that I would not steer them wrong.  (And I didn’t.)

Whew, this post went a little longer than I’d anticipated…and now my coffee’s cold again!  Anyway, I hope this is helpful information; after all, the truth is that there is still great value in one of the world’s oldest professions.

Have a great week, and by the way:  If you meet someone who needs my help buying or selling their home, please get out your cell phone and call me at 630.306.3537 right then and there, and we can discuss how you can introduce us.  Don’t keep me a secret! 

March Numbers Are In!

Nice Uptick In Closings, Inventory Is Lagging

Another crazy month in real estate here in the Northern Virginia area.  We are still seeing depressed inventory levels — between six and seven weeks — and it’s getting so bad that I’m hearing now that buyers are dropping typical “CYA” contingencies (such as the Home Inspection and Financing contingencies) in order to make their offer more attractive than the next seven.  For clarity, let me explain what that means.

Any good contract will contain some ways to release both the buyer and seller from the transaction as protection against certain pitfalls, and this is typically done by way of contingencies.  The Home Inspection Contingency, for example, does what it sounds like it would do:  Makes full execution of the contract contingent upon a successful home inspection.  This is a way for the buyers to “test drive” the home before they buy it, and the items that come up during the inspection can be used as negotiation tools by the buyers to try and lower the purchase price of the home.  But that is only true in a fair or buyer’s market.  

In a seller’s market like the one we have, the buyers don’t have much leverage against the seller even if big items come up during inspection (like an old roof, water heater or heat pump) because for the seller, the odds are good that another buyer will come along soon even if he doesn’t negotiate on the price.  If the seller decides not to, and the two parties cannot come to an agreement, the contract can be dissolved because the Home Inspection contingency will not have been fully fulfilled.  

What is happening increasingly, however, is that buyers who find themselves in very competitive situations (a well-priced, nicely-showing home will go in a week, easily) are choosing to waive the Home Inspection Contingency to show the sellers that they want the home badly, and will deal with inspection items on their own.  (This translates into a smooth, issue-free transaction for the sellers, and is highly desirable.)

You may notice on the graph that inventories are typically the lowest they’ll be all year, coming out of Christmas and through the Spring, but I also find it fascinating that this particular winter has seen the lowest amount of inventory since winter of 2010.

You can check out the full report for yourself, and compare and contrast Fairfax County with Arlington and Alexandria — both markets which are similarly as crazy as ours.  In the meantime, stay tuned, and Happy Home Hunting! 

February 2013 Numbers Are In!

Hey All, I know it’s been a while but holy cow, have things been busy over here!

February numbers are in for the Northern Virginia real estate market (yes, I know it’s already April, but there’s a lag because April’s business is happening as we speak, and March’s numbers aren’t released for two and a half more weeks).  

The market is cookin’ out here!  We had an average sold price in the NoVA area of $436,000, and we if you’ll notice on the graph, follow the grey line to the right-hand edge of the border:  We are still below two months of inventory.  Average inventory in the area runs between six and seven months, and we are at about seven weeks.

 

This makes for a pretty solid seller’s market, with buyers rarely being able to secure closing costs, and multiple offers on nicely-presented, well-priced properties.  (And I’m talking 4 to 9 solid offers, here in the Arlington/Alexandria/Fairfax areas.)  One property in DC took in 168 offers, and eventually sold for $430K more than the asking price.

Supply and demand is crazy.  Simple economics, right?

One reason people are reluctant to put their home up for sale in this area is the sequestration:  Many folks are waiting to see how badly it affects them, if at all.  Others are waiting to see what the latest house on the block sells for–if that home sells for above what all of the others have sold for in the past five years, it automatically sets a new high “comp” for the area, and does everyone in the neighborhood a big favor.

Check it out here to see the whole report.  I hope that you, like me, will have a fantastic and bountiful April!

 

Now THIS Should Be Fun.

You may know me from my blog over at The Pen IS Mightier, and if you have followed me here, I can’t thank you enough for your support.

I’ve started this new blog up because as time goes on, and the market changes, so too has my business.  While I still enjoy writing for fun, this blog is dedicated specifically to real estate-related information:  You’ll see me throw out videos, get to know Google Earth’s “guided tours” capabilities, and stay up-to-date on the northern Virginia (DC Metro) market with reports from the Northern Virginia Association of Realtors and the Dulles Area Association of Realtors, as well as from the boots-on-the-ground folks in the field (myself and many of my friends in the industry).  I plan to provide timely, relevant information for everyone in some form or another–buyers, sellers, FSBOs, first-time homebuyers…with a little luck, I’ll deliver what you want to see, and it will convince you to give me, a licensed Realtor, the chance to earn your business.

Yep, let’s go!

In a former life, I made a living working on private jets.  There was always one phrase which we used to govern our every-day work-lives:  “Work on the plane as though your own family would fly on it.”

I just want you to know that even though selling or purchasing real estate can be one of the biggest transactions you’ll ever make in your life, I will look after your goals as though they were my own family’s.

Thanks again for joining me, and Happy Home Hunting!