Stop Looking at Homes....

And Start Looking For an Agent!

We've all heard the expression "don't put the cart

before the horse."  Unfortunately, that is what many home buyers do.  How's that?  They go on-line to various websites and start shopping for homes.  "Jim," you say, "why is this a bad thing?"  Well, read on....

First off, as a buyer, you really want to learn what it means to actually buy a home first. There are so many things buyers, especially first-time buyers, do not know about home buying.  And many of those things can be answered by a competent buyer's agent.  The home buying process is much more complicated that just "picking a home" off of the internet and going to see it.  That really isn't the way a buyer should proceed.

It's very important as a buyer to have the proper foundation and understanding about how the process works.  I spoke about this in one of my previous postings (see: I Just Want to Look At Homes).  If you are out there just plinking around on the internet you are really not ready to buy a home.  You may think you are, but you are probably not.

Yes, I know it's fun to window shop.  I do it all of the time on E-Bay and Amazon. But as I said, that isn't really how you buy a  house.  Why?  Well, first off, if you do not have a buyer's agent and you actually see something on the internet that you want to see and potentially buy did you know the agent listing the house is working for the seller, primarily?  You can easily fall into a Dual Agency situation, which is the absolute worst situation you can be in as a buyer.  Buyers who end up in a Dual Agency situation are typically not educated buyers and they typically regret it.  Basically, this is where the agent selling the home ends up "representing" you and the seller at the same time....and gets double commission for doing it.  If you want to know more about the perils of Dual Agency just Google it.

Why else is it bad to shop for homes before having a buyer's agent?  Because much of the data that you see out there on the web is inaccurate and/or outdated.  Many of the homes you see on various "home" websites are either "in contract" or have already been sold.  Problem?  These sites are not regularly updated and the data is not in real-time.  How do you like looking at homes on a website and then finding out that half of them are already sold?  This does not happen if you have a buyer's agent that you have established a relationship with.  Why not?  Because a buyer's agent has access to the local MLS (Multiple Listing Service) which is were ALL listing data comes from.  Nothing you will find out there is as current as the MLS for your area.  It is the most accurate, real-time data base that is out there.  And in most locations the MLS can send you updates automatically as soon as they are on the market. Of course, unless you establish a relationship with a buyer's agent you can't get access to these listings.

Again, I know you like to browse.  Not a problem.  Get a buyer's agent to set you up on the MLS search so you can get all current listings and keep browsing if you want to.  Keep in mind that the data from MLS is more current, so you will see homes that show "available" that are not.  That is not a problem with the MLS, it's a problem of data management with the website that shows it as available when it's not.  Basically, all available listings will be sent to you.  If you find a listing on a website that matches your criteria but does not show up in the listings being sent to you by your buyer's agent then 99% of the time it's not available. How much time will it save you to get accurate, real-time listings and not have to keep browsing home websites hoping to find a home that you like AND that's actually available? 

A buyer's agent is also there to answer your questions and guide you in the right direction.  He/she is on your side, and is there to help you make an informed decision, not to "sell you a home."  Do you really want to continue to call/e-mail random seller's agents on these listings, hoping that they respond?  Half the time the agents don't even respond to you.  And when they do they just want to talk about how great their listing is and push you into buying it.  Is that really what you want? YOUR agent will get you the information you want in a timely manner and not try to "push" any particular home on you.  Again, your agent is in your side, and is there to help you make an informed decision based on unbiased information that he/she has provided to you, based on what you want.

Now go find yourself a good, competent, experienced buyer's agent.

I Just Want to Look at Homes

It never fails.  I constantly get e-mails and phone calls from people who "want to look at homes" - or want to look at a specific home - right now.  A potential buyer will see a home on a particular website, or driving down the street and call me or e-mail me and say, "Hi, my name is John.  I saw a home on ABC website.  I want to see it.  When can you show it to me?"  That's typically how the conversation starts.  Every agent's dream, right?  A hot-to-trot buyer, ready to go, already has a home picked out.  Not so fast....

Some buyers need to be educated.  Most that contact me in the above manner do not understand how the process works.  It's not as simple as "I'm a buyer, there's a house, show it to me."  If, in fact, you are a buyer who "just wants to see houses" then you need to find an agent who "just shows houses."  In that case, I am not the right agent for you.  Let me explain.

Don't I show houses to people?  Isn't that what I do?  Why can't I just "show you a house?"  Well, I could.  But I prefer not to.  Why?  Because you probably aren't ready to buy a house.  Are you pre-approved with a lender?  Have you established a relationship with your "own" agent, or are you randomly calling agents?  Do you even know what you can afford?  Do you understand the steps in the process of buying a home?    If you answered "no" to any of these questions, you are not ready to buy a home, and therefore, shouldn't be actually looking at homes in person (vs. browsing on the Internet or driving around).

I realize that it's easy to get excited when you are window shopping.  Many people window shop for things when they are not quite ready to purchase.  And there are lots of websites out there that have homes for sale.  I'm not trying to kill the American Dream here, or trying to burst your bubble.    But buying a home is different from, say, buying a big screen t.v. or buying a car.  You can't learn the ins-and-outs of buying a home on line.  You can't research specific homes because every home is unique, vs. finding a certain t.v., finding the place where it has the best price, and just going a buying it.  Buying a home is different.  You really need to understand the process before you start looking at homes.  It can be complicated and treacherous if you do not know what you are doing.  There are many mistakes that first-time buyers have made that they have regretted later: mistakes that have cost them time, money, and even the home of their dreams.  I know, there are plenty of agents who will "just show you homes" if that is all you want.  Just make a few calls, you will find them pretty easily.  Not to mention the fact that if you're just calling on listings on a website that some of the agents you are calling are working for the seller, and not for you.  But that's another story (see my previous blog postings).

Most agents are salespeople.  You want to "buy" a home.  They will "sell it to you."  Great, deal done.  Or is it?

I don't "sell homes," I educate people on how to buy homes.  I give them the tools they need so that they can make an informed decision when the time comes.  I take them through the process from A to Z in the very beginning, before we even look at a single home.  I give my clients an edge that other buyers don't have because I lay the foundation upon which everything else will be built.  My clients are savvy, educated and informed.  They come to me looking for someone who will educate them and guide them through the process of buying (or building) a home.  I am their guide, counselor and instructor.  And I am their advocate.

So, going back to my description in the first paragraph, I have a real challenge.  When I get calls and e-mails from people who are hot-to-trot I try to ask a few relevant questions and see if I can guide them back to a starting point, one that they have missed.  The first thing I ask them is if they are pre-approved with a lender.  If they are not, back to square one.  Why would you consider looking at a home if you are not even pre-approved?  No seller would ever see you as a serious buyer.  And frankly, neither would any agent worth their salt.  Regardless if a potential buyer is pre-approved, or not, my first goal is to get them to meet with me so we can go through the process and make sure they are in the best position to buy a home.  And if they say "no" and "well, I really just want to see this home"  that is usually the end of the conversation if I can't get them to come in and meet with me first.  At that point I know, for the most part, that they are not serious buyers.  If they can't spend an hour of their time learning about the most important financial transaction of their life then I really don't have time for them.  And they usually don't seem to mind.  They can always find an agent, one not like me, who will just "show them homes." 

So, if you are considering buying a home get your ducks in a row!  Become an educated and informed buyer first and you will be in the best position to buy the best home for you at the right time.      

      

So You Wanna Buy a For-Sale-By-Owner (FISBO)?

Being in the real estate business you can't avoid things like For-Sale-By-Owner properties, they are part of the territory. Also known as FISBO's (pronounced "fizz-bow'), one might think that they can get a bargain if they are trying to buy one of these properties. Unfortunately, that is not always true. Typically, in my experience, it's rarely true. What is true, however, is that people who try to sell their homes on their own and Realtors don't get along very well.

Almost everything in life comes down to numbers, or math, in some form or another. Such is usually the case for the seller who just wants to sell his home on his own. So why do people decide to try to sell their homes on their own? Because they think they can save money. That's pretty much it. For-Sale-By-Owners think they can cut out the listing Realtor, and possibly the buyer's agent as well, and save a bunch on commissions. But can they? And can a buyer get a "deal" on a FISBO? Are there other concerns?

First off, it's important to understand that homes are rarely sold in an arms-length transaction without the use of a Realtor. Why is that? Well, let's say the seller doesn't want a Realtor to list his home; he want's to try and sell it on his own. That's fine. However, almost all buyers, the savvy ones anyway, have their "own" agent, a buyer's agent. Rarely will buyers undertake such an important transaction without having someone to guide them. Why should they? Why would they? Considering that buyers rarely, if ever, have to pay their agent, why wouldn't they engage the services of a knowledgeable buyer's agent? Well, they would. So, what
normally happens is that these buyers are paired up with a buyer's agent and either the agent, or they, come across a FISBO. What now? As I said, buyers don't normally "pay" their agent. This is because in most situations a buyer's agent's fee is included in the price of the home, paid (shared) by the listing agent, for any home that is listed on the MLS (multiple listing service). So, you have a situation where the seller, in this case, is not a Realtor (agent). That means the FISBO seller has no agreement to pay any fees (or commissions) to anybody. However, will buyers look at a FISBO knowing that their agent may not get paid? Will buyer's agents show a home if they are not going to get paid in the end? Can you see how complicated this can get?
In reality, most FISBO sellers will agree to pay a "buyer's agent," they just don't want to "list" the house and pay "full commission." Most of them are aware that if they don't offer a fee to the buyer's agents it will be difficult to get showings and difficult to sell. So typically FISBO sellers will say "Realtor's welcome," or "will co-op," both of which mean that they are willing to pay the agent who is representing the buyer. So in essence, they may save partial commission, the commission that they didn't pay the listing Realtor. So is this a good deal for a buyer? I mean, if the seller doesn't have to pay a "full" commission, they will sell the house for less, right? Hardly. Did I mention that most FISBO sellers are  mostly motivated by money? 99% of the time if a buyer purchases a For-Sale-By-Owner the seller just pockets the extra commission they saved by not paying their own Realtor. Savings rarely get passed on to the buyer. So where are the savings to the buyer? Typically, there aren't any. In addition to not getting a discount from a FISBO purchase, sellers who attempt sell on their own notoriously over-price their homes. They always think their houses are better than the ones up and down the block. And occasionally they have some strange ways of coming to their asking price. Rarely does a FISBO seller accurately price their home due to lack of understanding, lack of knowledge, or just plain stubbornness. Ultimately, these homes are NOT a value for a buyer. And along with over-valuing their homes and being overly -thrifty (read: cheap), they usually do not understand how to negotiate a sale and they also rarely budge on their asking price. (Note: many FISBO sellers are not very motiveated to sell, either).  And some FISBO sellers seem downright paranoid that some  pesky buyer's agent is trying to get his clients, the buyers, a fair price on a home. That doesn't seem to resonate with most FISBO sellers that I've encountered. In the end, if the sellers save a few bucks on commission and sell for what they want, don't they save money? Isn't that goal in the first place?

Well, the answer is really "no." The main problem with true For-Sale-By-Owner homes is that they aren't marketed very well, if at all. Even with the internet it is difficult to find a For-Sale-By-Owner home, even if you are looking for one. These sellers are competing with the marketing power of thousands of Realtors in their local market. The bottom line is that buyers rarely find these properties. And that means they sit on the market, and eventually they end up being listed with a Realtor anyway. I would guess that 90% of homes that try to go FISBO end of being listed eventually (I read that stat just today). That means that the seller will now have to pay "full" commission anyway. And what about all of the lost market time, where the house just sat? It seems like, to me, that FISBO sellers who eventually list with an agent do so after six to twelve months. That's more mortgage payments, more upkeep, and potentially missed opportunities to buy something else because you couldn't sell your home fist.
In the end, there are rarely any savings to be had if you are a buyer considering buying a For-Sale-By-Owner home. But if you must buy one, proceed cautiously, know the value, and make sure you have a buyer's agent!

The Life of a Realtor Part 1

Back in 1995 a friend of mine told me he was going to open his own real estate company and asked me if I'd be interested in coming to work for him as an agent. I had no real experience in the real estate field and not really any experience in "sales." But I was interested in houses, how they were built, how neighborhoods were put together and I liked working with people. I liked watching HGTV. So I made one of the few really risky moves in my entire life, against the advice of a few others. I went to real estate school, got my license, quit my comfortable, secure job with the county government, and went to work for my friend at his brand-new company. And I stepped out into the world of working for one's self and humping for commission.

My conversation with my friend, who eventually became my broker, was over 16 years ago. Initially, I thought a career in real estate would be a "good opportunity" but likely just be a stepping stone to my next "career move." I honestly never thought I'd be in this business this long. And it appears that I'll be sticking around for as long as the economy allows. For the first ten years in the business I learned and honed my craft and became a successful agent for my friend's company. And for over five years now I have been the broker and owner of a successful (non-franchise) real estate company, with no plans to do anything else any time soon. I pretty much started the company from scratch and made it work.

I remember asking my friend "what's a normal day as a Realtor like?" To which he said "There is no "normal" day in this business. Every day is different." So I pressed him, "Well, what do you do all day?" He Said, "It depends. Every day is different. Some days I'm out showing homes, some days I'm in the office doing paperwork. It just depends." That answer left me with more questions than answers. Eventually, as I got my wings as a new agent, I learned what he meant. No day is ever the same.

The nice thing about being a Realtor, especially if you are the broker/owner, is that you can pretty much do what you want, when you want. Now before you rush out the door to sign up for your classes, there are limits. You really can do what you what when you want. However, if what your doing and when you are doing it isn't leading to any income you soon find that there are limits to how you do what you do. What you can do, what you have the freedom to do, is find a way to be successful. You have the ability to be creative and find ways to make things work for you. You have the ability to be your own boss, to make decisions completely by and for yourself, and to also reap the rewards of those decisions, or suffer the consequences. And if you step out to try an idea there is probably a better chance that it won't work than it will. So you dust yourself off and try something else. It's a pattern I have repeated over the years. Find what works by trial and error. And then when find something that IS successful, don't sit on your laurels. Find something else that works as well. But try something, try anything. And remember the old adage: it takes money to make money. If you don't believe that then you wouldn't make it in this business.

But I digress. So, every day is a little bit different. Some days are scheduled and regimented, others allow more flexibility to catch up on paperwork, work on some marketing, go buy office supplies, or catch lunch with a lender or a friend (or both). Some days start at 8:00 a.m. and end at 10:00 p.m. Many times I've left the office after everybody in my building is gone and the crickets tell me "goodnight." When it's busy it's not uncommon for me to eat dinner after my kids are in bed and most of the day is gone. Some days I put it 8 hours of work but it takes 12 hours because I squeeze in other things: personal appointments, kid things, stuff like that. Sometimes I'll work most of a day, go see my daughters' (x 2, same team) soccer game and then go back to work. Sometimes I'll work in the office all day, go home at dinner time, and then work in my home office for a while. Some days I'm on showing appointments or home inspections most of the day. Other days I have appointments in and out of the office so I come and go. Once in a great while I'll take the afternoon off an just go goof off. Don't worry, I always make up for it later.

Some days all I do is work on client files and get caught up on contract issues and paperwork. Other times, like now, I'm caught up on that stuff so before I have to leave for showings I work on my blog, or my company Facebook page, or I revise some document I use or I create a new document of some sort. On the days that I'm caught up on client files the sky is the limit. Sometimes I'm extremely productive, sometimes I'm not that motivated. Remember: I can do what I want when I want. And since I'm my own boss I sometimes don't feel like working! YouTube comes calling and I zone out for a while. But usually just for a while and it's back to work.

Realtors don't have "normal" hours, either, or "normal" days off, for that matter. We are expected to be available from sun up to sun down (and then some), seven days a week, to service our clients. Now, it's not always like that, and every client isn't overly-demanding. But the industry has created a model that basically says that real estate business goes on seven days a week. We do not have "business days" like other people have. We're like doctors who are on call and all of our clients are like patients. We need to be there for them. But it's the sacrifice we make because we believe in what we do and we enjoy our careers. Holidays, you say? Well I normally get Christmas, Easter and Thanksgiving off. But I've probably worked every other holiday at one time. I've negotiated contracts on Christmas eve, shown houses on labor day, and met a client on the 4th of July. A few years ago I even stepped away from my daughters' birthday party to negotiate a transaction with the other (impatient) agent. I won't do that again.

Being a Realtor, and especially a broker/owner means I have to wear several hats. I am a counselor. I counsel people on their decision about buying a home. I help them understand the financial implications of owning a home as well. So I know a little about lending and investing. I also have to constantly negotiate contracts and home inspection issues so I'm a negotiator. I have to try and understand people and sometimes predict how things will turn out so I'm bit of a sociologist, psychologist and a soothsayer! As a broker, I have to manage the business, make financial decisions, pay bills, and clean the office. And I have to be familiar with any legal changes that affect real estate and keep up on industry trends. I also have to train my agents occasionally.

I have to stay up on technology because our industry is very technology-driven, when you consider the information that is out there on web sites and the "speed" at which things move these days. I also stay sharp on home construction because I need to know what I'm looking at when my clients and I are considering potential homes. So I'm a bit of a home inspector as well.

In some ways, my most important job is to be a captain. I help people make their way thorough the sea of home buying, trying to avoid the waves, and give them a safe, comfortable, and memorable journey. And I do that while trying to make sure we don't get boarded by the pirates of bad experiences or sunk by cannonballs fired by resistant sellers, bad home inspections, or bad lenders. It's quite a job, if you ask me. In the end, though, we are normally sailing into the sunset on a bed of calm waters.

Stay tuned for more in the life of a Realtor.

What Do Buyers Look For in a Real Estate Agent?

So, the National Association of Realtors puts out a "Profile of Home Buyers and Sellers" every year for it's members. I downloaded and printed it, all 122 pages, (and in color as well, I might add). Being a bit of statistics guy I always look forward to data on buyers, sellers, the housing market, etc. That being said, I've been reading over some of the statistics for the past year, 2010.

Since I work only with buyers I'm mostly interested in what buyers have to say about their experiences in this past year with buying a home. This profile is exhaustive. Unfortunately, if you are not a Realtor, you cannot read it on-line or download it. However, I think you can purchase a copy from the website.

Anyway, regarding what buyers wanted regarding their agents a couple of things stood out:

1. When buyers were ask what they most wanted mostly from their agents, 51% of buyers said the most important thing they wanted from their agent was to help them find the right home. The second most important thing they want from their agent, at 14%, was to help them negotiate the terms of the sale. Help with price negotiations came in at 12%.

2. When buyers were asked "what is the most important factor when choosing an agent" 32%, the highest percentage, said that the agent is honest and trustworthy. The next closest answer, at 20%, was the reputation of the agent.

The data also shows that 83% of all people people who purchased a home in 2010 used a real estate agent/broker, which is up 6% over 2009 and up 15% over 2001. I find this interesting since 89% of all buyers use the internet in one form or another to help them in their home purchase. So, although buyers are searching for homes on the internet on their own, more of them are turning to a Realtor to help them complete the transaction. This is good news for us Realtors and it also show that the internet, with all of the listings available to anybody, is not our enemy, it's really our friend.

Going back to points (1) and (2), I just want to make a couple of observations. First, buyers want somebody to help them find the right home, the home that is for them. They don't want a slick-talking agent who chauffers them around and shows them homes that the agent likes. They want somebody to listen to their needs and wants and they want an agent who interacts with them on a personal level. The want somebody who is responsive. Gone are the days when an agent's job was just to drive you around a couple of times and "sell you a home." Buyers these days are seekers, seekers of information and seekers of agents who will actually help them to find a home and listen to what they want. Buyers want to be treated like they are valuable and like they matter. They don't just want to be a number, one of several "customers" for the average agent. They want to be treated as "clients," as somebody who has real value to their agent.

And then, even in 2010, the most important factor in choosing an agent is finding one who is honest and trustworthy. Not one who knows everything about everything in real estate, not one who's flashy, not one who has a bunch of designations next to their name. Buyers want somebody they can trust. Is that surprising? Well, if they are looking for somebody who they can actually establish a relationship with and who will be responsive to their wants and needs, doesn't it follow that they would have to trust that person as well? Of course it does. They are putting their trust in somebody because they need somebody who will guide them down the path to home ownership. And they are not willing to start down that path with somebody they don't trust. Again, not like the old days when you just "bought a house from the local Realtor." Buyers are much more sophisticated these days and they want the same rights that sellers have always had. They want an agent who is working for them, not just with them.

Buying a Home? Use an Exclusive Buyer's Agent

I was eventually going to break down different types of "agency" and "representation" offered to people who choose to buy a home. However, I feel this video does a better job of explaining "representation" for home buyers than anything I could have put in writing. This video is from NAEBA, the National Association of Exclusive Buyer Agents, a group that I have been a member of since 1997. They are an ADVOCATE for home buyer's rights. Watch the entire video, it really breaks down how having your "own" agent will protect you and why its not just a good idea, It's necessary.

http://www.facebook.com/index.php#!/video/video.php?v=1599654625844&oid=45574398770&comments