Realty Speaking! Which Realtor?

If you're like many people, you pick the Realtor that says they can get the most for your house. This is an agent who seems willing to listen to your input and work with you. Thgis is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everybody else does it!

The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing". He bought the listing by suggesting you might be able to get a higher sales price than the other agents quoted. Most likely, he is quite doubtful that your home will actually sell at that price. The intention is to eventually get you to lower the price.

Why do agents buy the listings? There are basically 2 reasons. A well meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his homes worth. On the other hand, there are some agents who engage in this sales practice routinely.

Whichever the case, if you start out too high a price on your home, you may have just added to your stress level. If you and your agent have overpriced, fewer agents will show your home. After all, they are Realtors, and it is their job to know the local market. If your home is too overpriced, why waste their time showing it? Their time is better spent showing homes that re priced realistically. Later, when you drop your price, your house is "old news".

Realty Speaking! Dropping Your Price, Too Late!

If you and your agent have over priced, fewer agents will show your property. After all, the are Realtors, and it is their job to know local market conditions and property values. If your property is dramatically above market, why waste time? Their time is better spent showing properties that are listed realistically. Later, when you drop your price, your property is "old news". You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your property could take longer to sell. Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last 6 months and current market conditions do not support your sales price, the property won't appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your property could go back on the market. Once your property has fallen out of escrow or sits on the market for a while, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your property in the beginning, you could actually end up settling for a lower price than you would have originally been offered.

Realty Speaking! What to Offer?

The first step in determining the price you are willing to offer for your next "Dream Home" is to look at the recent sales of similar homes. These "comparable sales" are recent sales of homes that compare closely to the one you are looking to purchase. You want to compare prices of homes that are similar in square footage, number of bedrooms and bathrooms, lot size, type of construction and maybe lake frontage or view.

The most accessible source of information on comparable sales is the public record. When someone buys a home, the property is deeded from the seller to the buyer and the deed is recorded at the local county recorder's office. Accessing the data is another matter, at least for the general public. Realtors can generally look up this information through www.TaxNetUSA.com, an online service that most Real Estate offices subscribe to.

The next source is the Multiple Listing Service (MLS). Most of the public is aware that the MLS is a private resource where Realtors list properties available for sale. Once a listed property is sold and closed the selling price is posted to the MLS. Over time, it has become a huge database on past sales, containing much more information on individual homes than can be gleaned from the public record. This information is only available to agents who are members of the local MLS.

Your agent will provide you with this data to help determine your offer price. Although your agent may provide advice and guidance, you are the one who makes the decision. The price you put in the offer is totally up to you.

Realty Speaking! Commissions Earned!

There is a certain percentage that real estate agents expect to earn as a commission for the successful sale of your property. This commission amount is a certain precent of the sales price. Or, some companies will charge a set fee for their services. However, just like anything else in real estate, this amount is sometimes negotiable. When completing the listing agreement, you and your agent will agree on the amount of the real estate commission.

Your listing contract specifies a listing price. Your agent's job is to bring a "ready,willing, and able" buyer to present an offer. If you reach an agreement with the buyer, then the agent has done his job and earned the commission. Once the sale has closed, the real estate broker gets paid from the proceeds of the sale.

If the buyer proves unable or unwilling to conclude the sale, the house is placed back on the market and the agent has to begin earning his or her commission all over again.

However, if the seller backs out or does not accept an offer that meets the price and terms of the listing agreement, the listing broker has still earned the commission. They may want to be paid, even though you did not actually sell your home. Therefore, it is very important to carefully consider every detail when completing your listing agreement and accepting an offer to buy your property. After all, this is a legal & binding contract between you and your broker.

Realty Speaking! Inspections

Besides appraisal and the termite inspection, you should also have a professional go through the house and seek out potential problems. Of course, you will have inspected the home, but you are not used to looking at some things that a professional will find. Even if they are not things the seller is expected to repair, at least you will have foreknowledge of any potential problems.
You will want to allow yourself enough time so that once you receive the inspection, you will have sufficient time to review and approve the report. If you do not approve the report, you may negotiate with the sellers on which repairs should be performed and who should pay for those repairs. Otherwise, you can cancel the purchase without losing your “Earnest Money”, provided you have included a “Termination Option”. This gives you the unrestricted right to terminate the contract by giving notice to the seller within a stated number of days.
Before closing, you will want to revisit the property to ensure it is in the condition you have required in your offer, and to inspect that any required repairs have been performed. The contract provides that the seller will deliver possession of the property to you in the same condition as on the date you executed the contract, ordinary wear & tear excepted, and subject to any agreed repairs being completed. You should do this “Final Walk Thru” no sooner than five days before you intend to close.