Real Estate Update

Archive for January, 2011

Competition is and always has been the American way. In virtually any product category, there are multiple competitors. It is up to the buyer to determine the right product or service for them, weighing the costs and benefits, comparing pricing, examining service levels, etc. For instance, walk down a grocery aisle and you will see that there are hundreds of brands of cereal, each with different ingredients, packaging, colors, size, etc. For those that don’t want to pour their own cereal, there are many different restaurants that offer it, and there are even some new restaurants whose whole theme revolves around mixing and serving different types of cereal.

Residential real estate brokerages are no different. They compete amongst one another to gain listing share, or a greater number of listings in a particular area. For years, the primary focus has been on differentiating services based on sometimes minor details, such as the type of sign offered, the number of open houses held per month, and having more designations on one’s business card. As those factors become less important, the focus has shifted to pricing. Discount real estate brokers now offer homeowners the opportunity to list their home for a fraction of the cost they may have paid in the past. Some discount realty companies charge a flat fee, others have a commission rate that is a lower percentage than customers are used to paying. Either way, homeowners benefit from this competition in the form of lower prices.

One of the main drivers of the increase in discount realty companies has been the commoditization of the Multiple Listing Service (MLS). This system compiles thousands of listings into a database for buyers’ agents to locate properties. Simply being in this database is the #1 most powerful tool in selling one’s home; 80-90% of the homes in many areas sell through the MLS. Since all broker-members of the local MLS could list properties, homeowners realized that if that was the only service they wanted, they wanted to pay a fair price for it. Using the cereal analogy, some might be more focused on the price of the box instead of the fancy packaging or complimentary plastic toy inside. Others might want to pay extra for marshmallows or prefer more raisins or more bran. Many homeowners have simply chosen not to pay much more money for things they do not want or need.

Twenty years ago, discount realty may have been considered a trend that would come and go. Today, it is a major driving force in the real estate industry and homeowners across America are clamoring for discount realty options like flat fee listings and ala carte services. Just like all other companies, each competitor must market its products and services to buyers. In the end, the marketplace will decide which competing brokerage firms will succeed. Discount realty firms have staked their place in real estate. Other full price firms have also continued to succeed. Their symbiotic existence is a perfect example of the wonders of free market capitalism and free choice.

Bad Real Estate Agents in Disguise

I classify bad Real Estate Agents are those sneaky Real Estate Agents who claim to help you, but really just looking to get the commission.

How do these bad Real Estate Agent masquerade as good ones?

1. The Bad Real Estate Agent pretends to be a Hard Worker
If you hire a Real Estate Agent, you want them to work hard for your money because you do. And Real Estate Agent knows that. Salesmen know that. But working hard never guarantees success. A Real Estate Agent, like all people, should be have some level of workmanship, but not to the point of slavery. Do not be gullible enough to believe your Real Estate Agent will climb mountains for you. It is just a job. He should have other priorities. Do not base your Real Estate Agent selection based on how hard they work or how must time they spend with you. If your Real Estate Agent is wasting too much time pretending to work hard, then your Real Estate won’t have time to actually get you valuable information you need to make an informed decision. The moment the contract is signed and the agent get the commission, Bad Real Estate Agents will run to the next sucker and never want to talk or help you anymore.

2. Charmer
Every now and then, you’ll meet the person who knows exactly what to say. He knows the words you are looking for you and make you feel comfortable to trust him. When trusting an agent, don’t look for how kind, gentle, or how witty he is. Look for the results. What has the Real Estate Agent really done for you?

3. Not providing sufficient information.
Information is vital for you to make important decisions. Bad Real Estate Agents will hide information in order to get you to make the decision to buy the house. To make sure the agent is being absolutely honest with you and providing you all the information you need to know, always have another reliable source to verify the information.

One good way to find honest Real Estate Agents is through referrals. If you friends have experience good results from the agent, then at least you found someone honest and you know the results.

Do NOT go through the Internet and pick the first agent you see or the agent that has the most advertisements. They are just spending marketing money, which they intend to recover from you. I especially find the ones that are top ranked search engines to be the most conniving, especially the Mississauga location!!!

Now for the good news. If you are fair and you are looking for a human being Real Estate Agent and you treat them like a human being with no slavery expectation, you should be able to find a decent Real Estate Agent to help you. There are indeed plenty of honest agents that are really hiding because they are too busy helping their clients. You have to scout around and do a lot of homework to find that close-to-perfect agent that matches your needs. Using the information in this article, you should be able to filter out the bad agents.

Now, after all this discussion, one may even be asking whether you need a Real Estate agent. In private homes sellers, you do not. Only homes where sellers have a Real Estate Agent, you do need buyer’s Real Estate Agent to protect you. Whether you want to purchase home through private or through an agent should not be a deciding factor. Simply look at the house you want to buy and the price you want to buy it at. If your selected house requires a Real Estate Agent, then you should get one, too.

If you have any more questions or concerns, feel free to e-mail me at admin@freerentalads.ca

You are also certainly welcome to e-mail me your good and bad home buying experiences. I may or may not choose to post them up.

For those who have not read my part 1, please do so.

My next articles will take a closer look at tactics Bad Real Estate Agents pull.

1. Showing you bad houses to buy before showing you the target house.
Your Real Estate will first show you a series of houses in terrible condition and is overpriced. Then, after you see your terrible selection and you believe these houses are what you after to work with. Once that belief is set in, then your Real Estate Agent will show you a nice house.

By the Law of Contrast, a valuable house looks even more valuable when it comes after a worthless house.

If you find yourself viewing houses that are just rip offs, be careful when you see a decent house. It is actually less valuable than you believe. You Real Estate Agent may even try to compliment those worthless houses so that when decent house shows up, you believe it’s your perfect home!

2. Making you travel to look at the houses you want to buy first.
This is a very common practice and it would seem to make sense. You would need to look at the houses before buying it, correct? Well, there is reason behind the Real Estate Agent wanting you to travel and spend your valuable time staring at these houses. By spending so much time on one house, it becomes too much of an effort to find your perfect house. You end up settling for your less than desired house.

What should be happening is that before looking at the house, you should request a comparable analysis. Your Real Estate Agent has statistical information about the houses you are looking at and houses similar to what you are looking at. This statistical information reveals the market value of the home and whether the home is worth you TIME. By not showing you the comparable analysis, the time, effort and pain it takes for you to search for a home causes you to make a decision faster. If the Real Estate Agent shows you the comparable analysis first, it reduces the pain and you would wait longer to decide. Also, the Real Estate agent has to spend time to create the comparable analysis report where most likely, they would not want to do.

Rule of thumb: Find a Real Estate Agent that will give you the comparable analysis first.

Now, this isn’t to say you should never look for the house first.

There is one exception.

When you first meet your new Real Estate Agent, there is some level of concern on the agent’s side. The agent is spending valuable free time on you, gambling that you would buy a house through him. So if you start off by requesting comparable analysis, he will not do it. Any honest Real Estate Agent would not do it. A comparable analysis is valuable information that the Real Estate Agent gets for being a Real Estate Agent. They need to pay a fee to be a Real Estate Agent.

What the Real Estate Agent needs to know, is that you need to provide some “level of comfort” that you will certainly buy the house through him in order to get the comparable analysis. To me, this is fair because if the Real Estate Agent is going to spend the time on you to help you find a home, then it would only be fair that you buy through him and let him get the commission.

The legal way to show this “level of comfort” is to sign the 90-day commitment contract that indicates you would only work with him and no other agent for 90 days. This legal way is by no means the only way nor is this a bad way, either. It is only a matter of preference and your relationship with your Real Estate Agent that determines the best approach.

3. Encouraging you to put a high security deposit when writing up a contract to purchase your desired home.

A security deposit informs the seller you are interested in purchasing the property and the amount lets the seller know how serious you are. The higher the amount, the more serious you are.

The moment the contract is agreed upon by both parties and signed, you must provide the security deposit within the set time specified in the contract. This security deposit is suppose to be returned to you if the contract becomes null and void, if the conditions (usually financing and inspection) specified in the contract fails.

Now, this procedure seems to be fair. Here is where the problem lies:

If the contract becomes null and void and you want your money back, all parties must sign a form called a Mutual Release. This signature must include the buyer, buyer’s agent, seller and seller’s agent. If any one party does not sign, you will not get your money even if the contract has been null and void. If anyone party refuses to sign, you have to go through court, most likely small claims court, to settle your dispute and if you know anything about the court system in Canada, you know your court date could be as long as two years away!

You should never be serious in buying house. It is poor negotiating tactics. If your Real Estate Agent encourages you to put a high security deposit, it is because your Real Estate Agent wants you to be serious about purchasing the property even though it is poor negotiating tactics.

The reality is your security deposit can be very difficult to get back. Sadly, this is the general process in most home buying transactions and it is a very poor process.

And did you know…

IT IS NOT NECESSARY TO PUT A SECURITY DEPOSIT AT ALL!

There are no limitations to a contract. It is only a matter of agreement. You can write anything you want on the contract as long as both party agrees. My suggestion is to encourage your Real Estate Agent to only provide the deposit after the contract passes the conditions. This is possible, but only if your Real Estate Agent is willing.

Once again, I cannot stress this enough, to find a Real Estate Agent do not search through the Internet and pick the first one you see. Good salesmen do not make good Real Estate Agents.

If you have any more questions or concerns, feel free to e-mail me at admin@freerentalads.ca
You are also certainly welcome to e-mail me your good and bad home buying experiences. I may or may not choose to post them up.

More to Come!

What if you knew how to easily locate the right real estate agent, one that puts your interests first. Use my tips and advice to decrease the stress of buying a home and find the best real estate agent for you.

I certainly understand if you question why I believe I know what constitutes a good real estate agent. I would wonder if I were you.

Here is the answer. For more than 28 years, my husband and I have helped people buy homes. Since I left off being a kid, residential real estate and mortgage financing have occupied my life. I was a licensed real estate agent in the first part of my career and the owner of a mortgage company the last part of my career.

Most people will buy one home, maybe two. Others may purchase an investment or vacation house. In most cases you are going need the services of a qualified real estate agent. And yes, choosing a good real estate agent is crucial.

Instead of listing warnings, do’s and don’ts, allow me to share how I interview and choose a real estate agent.

Number one on my list is to find an individual who makes me feel at ease. Buying a house can be difficult and exhausting at times so why complicate it by employing a real estate broker you don’t feel comfortable with.

It is a shame how many home buyers I observe working with agents who are not matched well to them. The dissatisfaction is discussed for weeks, months and sometimes years after moving into a home.

I believe that buying a home should be fun and exciting. After all it will probably be the most significant and most expensive purchase that you are ever going to make. So why not work with someone that you feel comfortable with since you are likely to be in contact with them on a daily or weekly basis for several months.

Second I am looking for an agent who has my best interests in mind. But how do I know if a real estate broker is truly interested in my personal well being and not simply concerned with making the sale? There are several indications.

Does this agent listen to me? If your agent doesn’t directly address your concerns and questions, this may not be the real estate agent for you.

Does your prospective real estate representative talk first and ask questions later? This is another indication of whether your best interests have been kept in mind. Every great agent listens to what’s on your mind after they ask what is important to you.

A thorough agent will always ask you a lot of questions before ever offering to take you out to view houses. You see, a real estate agent is a valuable asset and they know that your time as well as theirs is valuable too. So they are not going to waste your time showing you houses that you can’t afford or don’t fit your circumstances.

Even though it can feel a little uncomfortable, anticipate a trained agent inquiring into your finances. This is the type of real estate agent I look for.

Some agents give advice without taking into consideration your circumstances. A good agent doesn’t give advice but instead presents options. Your agent should be solution oriented by presenting you with choices that allow you to select what you feel is best for your particular circumstances. Watch for and choose a real estate broker who considers options based on your needs rather than theirs. Above all never feel rushed to make a decision.

High on my list when I interview real estate professionals is watching for individuals who admit when they are unsure of an answer to my question. No matter how experienced a agent, no one has all the answers. So when I ask a question and I hear the words “I don’t know” followed by “but I will find out” it is refreshing. Possessing every answer is not what I care about. That is why I rarely decide on a broker based on age or even experience. A real estate broker with enough enthusiasm and energy to do that little bit extra is who I pick.

Even though it will be your home and a place to live, central to every transaction is money. Although a real estate agent isn’t qualified to approve you for a mortgage, it is still important to be asked about your financial ability such as how much money you have saved for down payment and closing costs.

Top real estate agents know from experience that mortgage financing is the hub of every real estate transaction. As a home buyer, protect yourself by understanding the cost before going out to view houses and especially before you make an offer.

A good agent can help you with this too or you can simply contact a licensed mortgage broker who can prepare a Good Faith Estimate of Closing Costs. If you are comfortable asking your real estate agent, most can refer you to a couple of mortgage brokers for detailed estimates of mortgage costs for your comparison. It is critical that you know what costs to expect before you shop for a house and especially before you make an offer.

Lastly, remember that buying a house is your decision. Take responsibility for your decision by seeking advice from people you like and feel can trust.

I often say when it comes to buying or refinancing a home, it is your house and your mortgage, no one is going to care about it more than you.

When you are looking for cheap property for sale in Spain it is adviseable speak with local agents and friends before commiting to buy any of the cheap property for sale in Spain.

You need to make sure you have spent time in a specific area not just in summer but during winter as well so you get to see both sides of the area, so that you can see what the property looks like in the off season as well. This will be very important if you are looking for a cheap property for sale in Spain in a more rural area. Knowing the area beforehand would be highly recommended.

Timing is important when looking to buy cheap property for sale in Spain so you get the best deal possible, if you look you will always find excellent opportunities to purchase your ideal property in Spain.

Always remember that property in Spain might need some form of heating if it is not already included. The residents in the perticular area you are interested in can be great for getting advice and local knowledge.

One of the biggest benefits of looking to buy cheap property for sale in Spain is the weather, with over 300 days of sunshine a year and hardly any rain, it is the perfect location to buy a property. Sunshine is almost always guaranteed from May to October so you do not have to just use your villa in the busiest months of July and August. If you are looking to get away and use your property in the winter months then December and January produce some lovely sunny days.

Spain has some of the best beaches in the world and the majority of them are very safe and many of the beaches are blue flag beaches, these are nearly always cleaned every day and will often have life guards working during the summer months.

So if you are looking for cheap property to buy then look no further than Spain.