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September 26, 2006

Blogoff Post #1: Cry, ‘Havoc!’ and let slip the war of blogs . . .

by

Suburban Phoenix Real Estate Broker

Author website

Welcome to the Sellsius° 101 Blogoff, a competition between Greg Swann of BloodhoundBlog and Ardell DellaLoggia of SearchingSeattleBlog, more famously of Rain City Guide. The objective is for each of us to compose 101 relevant posts over the next 24 hours.

This might sound like a dumb stunt, but, in fact, there may be no two people in the real estate blogosphere better-suited for such a test. Ardell and I write many posts and comments every day, and we each of us write with our own unique, easily-identified style. We are both smart, both opinionated, and both very forthcoming — to say the least — with our views. Moreover, each of has a very high moral commitment to quality in everything we do. So, although there may be a lot of blog entries posted in this contest, I don’t think there will be any wasted entries. Your attention will be repaid with knowledge, insight, wisdom and, one hopes, grace.

I have beside me two quad-shot lattes, two chicken breasts, a glass of orange juice and a glass of water. I’m in this for the haul. Settle in and read, if you please. Comment where you will. I’ll see you in a hundred posts…

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September 25, 2006

Zillow gets the address right . . .

by

Realtor, Staging Consultant

Author website

You can’t be too careful. So, when I received a call from a man who introduced himself as the appraiser for my client’s condo, which is under contract for an October close, I wanted some proof he was who he said he was. My client is a pretty young woman who lives on her own, so I don’t give out her phone number indiscriminately. I confirmed the inspector’s information with the Arizona Board of Appraisals and my client scheduled an appointment for this past Saturday, when she could be home and grant him access herself.

I just heard from the appraiser. He thought it was strange when he got to the condo that no one was home. But, the door was open. He figured the owner had had to run out unexpectedly, so he let himself in. He hadn’t expected the distinctly masculine decor and level of housekeeping he discovered as he went through the home, and was especially surprised by the absence of women’s clothing but abundance of men’s when he opened the closets, but we’re an enlightened society…

The good news, he reported, was that the home appraised for the sales price.

The bad news was that he had appraised the wrong condo!

So Zillow might not have the accuracy advantage of feet on the ground, but, up in its ivory tower, it gets the address right!

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September 25, 2006

Do you think you know who will win the Sellsius° 101 Blogoff? Here’s your chance to bet on the outcome . . .

by

Suburban Phoenix Real Estate Broker

Author website

Kevin Boer of In The Trenches has put together a virtual prediction market (a play-money betting line) on the outcome of the Sellsius° 101 Blogoff. BloodhoundBlog is heavily favored just now, so there’s money to be made by backing Ardell. The action starts tonight at midnight, so lay down your bet before then…

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September 23, 2006

Project planning in the real estate industry: Putting the client first . . .

by

Realtor, Staging Consultant

Author website

Responding to my post on the spec-home I’m working on right now, John Keith commented

I still don’t get where you guys are coming from. Is it the actual dollar amount that bothers you, the percentage, the feeling that agents don’t add value equal to their commissions, or what?

How does Bloodhound Realty do things, and how are they different?

I might add, at most agencies, you wouldn’t end up with $12,000 off a $200,000 sale. The company might take up to 50% of the commission.

Again, is it the size of the commission, the rate, or the entire commission structure that is the problem, and what are the solutions you suggest?

It is the compensation structure. And probably the fact that the “company might take up to 50% of the commission.” And of course there’s a problem with “agents not adding value equal to their commissions.” None of these is the main point, but each is certainly an issue. And, I don’t think it’s a matter of where us guys at Bloodhound are coming from. The grumbling and discontent is out there in general. Anyone who doesn’t hear it isn’t listening.

There are people, lots of people, who are emotionally invested in the idea that our profession should just disappear! I know that it would not be a good thing for the consumer if everyone who wanted to buy and sell a house had to manage the transaction for himself. But there’s a big pool of should-be prospects out there who don’t see it this way. Why do so many people mistrust our profession? What does the public think is broken? How can we fix it?

In my corporate life, before entering real estate, I was the buffer between IT and the end user… at different points when implementing different applications, I might have fulfilled the roll of systems analyst or project manager or user support. Too often I saw a technology being readied for implementation without listening to the end user and basing the product on his wants. Instead, the project was driven by what some pompous leader wanted the end users to want. If Read more

September 23, 2006

Coming Tuesday, the real estate webloggers blogoff . . .

by

Suburban Phoenix Real Estate Broker

Author website

First, Sellsius° gave us 50 new posts in one day. They threw down a gauntlet: Could anyone do 101 new weblog entries in a single day?

Ardell DellaLoggia took up the challenge and dared me to compete against her.

We agreed on Tuesday, September 26th, for the blogoff. We’ll start at midnight on Monday night and continue through to midnight Tuesday night — or until we collapse from exhaustion or dementia. New, original, creditable posts — and may the divil take the hindmost.

Sellsius° and The Property Monger promise post-by-post coverage. Tune in Tuesday at BloodhoundBlog and Ardell’s Searching Seattle Blog to see who wins.

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September 22, 2006

More buyer agency email: The quality of representation is not strained — by full disclosure . . .

by

Suburban Phoenix Real Estate Broker

Author website

No hostile phone calls today, which is not usually the case. But here is another email from another testy real estate broker. For what it’s worth, I think these brokers deserve credit for standing up for their opinions, rather than hiding behind anonymous phone calls.

But: I think the argument quoted below is fatuous — if the buyer’s agent disclosed that he was getting paid 10% by the builder, there would be a “meeting of the minds” right then and there. But, of course, agents in Arizona don’t have to disclose commission payments to buyers.

Mr. Swann, It was with great amazement that I read your article in this morning’s edition of the Peoria Republic. The headline you chose is not only mis-leading but also is disrespectful to the Realtors that provide a very much needed and necessary service to new home buyers. They need representation in the transaction as much, if not more, than any Buyer. The statement by you as to the Realtors fees being paid by the Buyer is also extremely mis leading. In most real estate transactions, the commission dollars come to the Agent only through escrow where the Buyer’s funds, usually a combination of cash and loan proceeds, are transferred and become the Sellers. In this way the funds are the Sellers to distribute to the Agent and pay any other related transaction costs. As to your statement that 2% would be more than enough compensation, I stress to you that if proper representation is made on behalf of the Buyer, everything is negotiable and the other costs involved will still be reduced with a fair and reasonable fee paid to the Agent. For you to say that a certain fee should be enough compensation for any Agent is ludicrous. It appears that you have truly found the value of your particular services, but please don’t set the bar for the value of services supplied by other Realtor professionals. The last time I checked, we still lived in the United States of America and buyers and sellers needed a meeting of the minds to proceed with a transaction Read more

September 22, 2006

Realty reality: Calculating the value of effective new-build buyer representation . . .

by

Realtor, Staging Consultant

Author website

Greg just posted an email he received from a West Valley broker, Joe Bourland. I want to respond to his last paragraph:

Maybe you should look into your established practices of real estate. There is an immense value in representation. Hopefully, the educated buyer you warn will realize the disservice you promote for clients.

Mr. Bourland,

Specifically, what disservice have you identified? Let’s assume that the base price of the home is $200,000. If the builder is offering me, the buyer’s agent, 6% for bringing my buyer into the community, I could look forward to a $12,000 payday when the sale closes! What is the most effort and money I could possibly do to earn that money? Well, I am in process of such a transaction at this very moment, working with numbers close to these. Let’s see what I’ve done and what I plan to do to earn this money:

At the beginning of this process, I introduced the couple to a few lenders who I thought would be a good match for them. They loved one, and she worked up a couple of Loan Status Reports (a loan document referenced in the Arizona Department of Real Estate’s standard contract language for Residential Resale Real Estate Purchases), depending upon whether we found a free standing house or a condo that the couple wanted to buy. (Ardell did a great job of explaining why this is important yesterday on Rain City Guide.) This filled in an important parameter of what we could look for.

Over the next couple of weeks I researched on MLS, looking for new and resale houses that fit the criteria that the clients gave me. I drove the wife around for about 20 hours total, and during this period I was better able to refine our search, based upon her reaction to what she was seeing. Once we had narrowed our search down to houses that would truly please her, the husband joined us to exercise his veto power. Finally, we found something they could qualify for, which satisfied both of their wants and needs, in a new home development.

The house Read more

September 22, 2006

Buyer’s agency at new home subdivisions: “There is an immense value in representation . . . “

by

Suburban Phoenix Real Estate Broker

Author website

This is email I had from Joe Bourland, branch manager of a Century 21 office in Avondale, Arizona, objecting to my column in this morning’s Republic. His arguments are not wrong, they’re just beside the point. There is no possible doubt that a good buyer’s agent will do a lot more work on a resale home than on a new build. So the question his response studiously avoids is this one: Why should a buyer’s agent get paid as much as three times more for doing less work?

Mr. Swann,

Disappointment is probably not a strong enough word to describe my feeling after reading your article in the Southwest addition of the Arizona Republic. The simplistic approach to real estate you highlight in the article may be indicative of your approach to real estate but is certainly NOT the structure of a real estate professional.

New home builders may “only pay for the introduction” but the buyer is expecting representation. Some builder salespersons may not want a buyer’s agent involvement in the transaction. That is not their option. Real estate agents will continue to have a fiduciary responsibility to the buyer client. You neglect to comment on the role of a competent buyer agent to protect the client from the builder. Too many cases of padded lender fees, lack of proper inspections and ridiculous “necessary” upgrade charges show on the settlement statement of unsuspecting new home buyers. A buyer’s representative can help deter all of that.

It is unfortunate that a real estate agent may put greed in front of what is best for the consumer. Indeed it has happened. But the majority of real estate professionals, more specifically REALTORS, overtly choose to put the client’s needs as the highest priority.

Maybe you should look into your established practices of real estate. There is an immense value in representation. Hopefully, the educated buyer you warn will realize the disservice you promote for clients.

Joe Bourland PC, CRS,ABR,QSC, REALTOR?
Branch Manager
Century 21 Metro Alliance-Palm Valley
Director-Glendale Board of REALTORS?

Bourland copies his email to nine other local real estate brokers, which I consider well-poisoning Read more

September 22, 2006

Friday morning read-a-thon . . .

by

Suburban Phoenix Real Estate Broker

Author website

Sellsius° delivers 50 meaty posts in one marathon session.

Kris Berg’s daughter discovers that moment of intense exhilaration you only know in the instant after you just might have been killed — but survived.

Transparent Real Estate details a Realtor’s money-back guarantee.

Jay Thompson, The Phoenix Real Estate Guy, argues that we should raise the bar on real estate licensing. His post is thoughtful and comprehensive, very well documented. My own take is that we should get rid of real estate licensing laws altogether and let anyone who chooses to work in real estate brokerage compete on reputation — and on his or her ability to obtain Errors and Omissions insurance. The Leggy Blonde is Teacher’s Pet to three movers and shakers in the Arizona Association of Realtors, and they insist that Change Is Coming. What they want is what Jay is suggesting, an apprentice-level real estate license, with the apprentice having to hit certain targets to obtain a full salesperson’s license. What we’re likely to get is Designated Agency, which covers the broker’s behind while resolving absolutely nothing else.

Christine at NY Houses 4 Sale has a detailed run-down of her favorite real estate weblogs.

And if there is anything I’ve missed, Todd Tarson probably caught it before he lit out of town.

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September 22, 2006

Greater Phoenix Chamber of Commerce: Residential real estate rebounding, commercial real estate strong, population growth unabated

by

Suburban Phoenix Real Estate Broker

Author website

Two articles in today’s Arizona Republic on the state of the local economy as detailed by the Greater Phoenix Chamber of Commerce, both largely good news. Catherine Reagor continues her slow apprehension of the idea that this year is not last year. And R.L. Brown advises us all to adapt to the housing slowdown — even though it might be ending.

For Market Basket resale homes so far this month, prices are up over August. Prices are up for the first 21 days of September, as compared with the first 21 days of August — a better comparison, since most home sales close near the end of the month. Sales volume for those 21 days is up significantly, but so is the average Days on Market. Builder’s spec-home inventory will be substantially reduced by the end of the month, so it is conceivable that we could be six months away from something like a normal market.

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September 22, 2006

Buying a new-built home? How much is your agent getting paid?

by

Suburban Phoenix Real Estate Broker

Author website

This is me from this morning’s Arizona Republic (permanent link).

 
Protect yourself from agent bonus fees by builders

Are you buying a home? How much is your agent getting paid?

If you’re buying resale, the answer is probably 3 percent, and possibly even less, although there may be buyer’s agent bonuses that your agent should have disclosed to you.

But what if you’re buying a new home? Right now, builders are paying agents 5 percent, 6 percent, 8 percent — even 10 percent of the base price of your home.

The builders are paying for the introduction. They don’t expect — or even want — your agent to represent your interests.

They’re paying so much right now for two reasons: They want to sell as much inventory as possible between now and the end of the fiscal quarter on September 30th. And they hope that by offering very high commissions, they can induce your agent to persuade you to buy at one subdivision over another.

Your agent may be faithfully representing your interests, but the objective of an exorbitant commission is to induce the agent to betray your interests in the builder’s behalf.

Here’s the kicker: Every cent of that commission will be paid by you. The buyer pays for everything in the sale of the home. If the builders were offering a 2 percent buyer’s agent’s commission instead of 10 percent they could charge you 8 percentage points less for the home, or give you 8 percentage points more in upgrades, or pay your down payment or closing costs, or buy down your interest rate.

How can you protect yourself?

First, stipulate in your employment agreement with your agent that all commissions and bonuses will be disclosed to you.

Secondly, agree in advance on the maximum compensation to be paid to your agent, with all the rest of any sales commission or bonuses going toward your down payment or other costs.

How much is enough?

New home builders make all the rules. No matter how much your agent might want to work on your behalf, there is a hard limit to how much the builder will permit.

Except in extraordinary circumstances, I think 2 Read more

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