Ruta Ramblings

Pennsylvania Real Estate Info for the masses

Archive for the month “November, 2011”

A gazillion web sites for my listing? But can you sell my house?

Technology is  a wonderful thing…. I think. Especially if you are a syndicator or an aggregator. When I think of “Syndicate” I think of the FBI busting a bunch  of guys for running numbers.  When I think of “Aggregator” my brain presumes some secret society  that is revealed on the History Channel.  Hopefully not. Real Estate Syndication is a real estate broker’s ability to send his or her listing for exposure via software to an aggregator site. Sites like Trulia, Zillow ,Realtor. Com.  and Yahoo. That so everyone in the world who is looking for real estate can find your little piece of the American dream on those gazillion sites. You know, so the folks who live in Abu Dhabi can find that 2 story Colonial in Little Rock. This syndication process can happen by the broker individually or through the local Realtor association and MLS(Multiple Listing Service). If the organization does it, they contract with a service to supply the listings for massive distribution to a plethora of web sites, those aggregators I mentioned.

Well there is a lot going on right now regarding  brokers’  desire to continue in the syndicating process through their local association. You see the problem is that if your local Realtor association provides that access for the aggregators, some of those sites gather leads and the sell them back to the broker who has the listing.  Basically paying for leads that come from their inventory but via that third-party who wouldn’t even get the lead if it wasn’t for the brokers listings in the first place.   I apologize for any confusion. It gets worse.

Because of the rise of the internet and over 85% of all buyers starting their home search on-line, this has given rise to an entire digital industry devoted to the marketing of real estate. While it was true that at one time the Multiple Listing Service was primarily a venue to share listings between member brokers, it’s now pretty much a consumer necessity for immediate access to those listings. Thus we have IDX(Internet Data Exchange). Fancy words for sharing all brokers listings on each others web sites. That sharing of info comes through the local association and MLS guided by rules of the National Association of Realtors and their subcommittee on MLS.  The customer in some cases see the houses before other agents do.  In the old days, the really old days, listings came in books or sheets that we had to purge every week or so and then we would send them out to clients.  The customer maybe knew about the house because of an ad in the newspaper….  newspaper??? what’s that? or from the  sign outside or maybe an open house. From the seller side that’s about all they could expect.

Well the big mahoffs of the National Association of Realtors, that would be the board of directors, just met last week in California and decided, effective immediately, that franchisors can no longer upload IDX information from their local franchisees . So if you go to those national franchise sites you are only going to see branded listings from their franchisees. You will only find IDX on the local franchisee site.  It’s important to note that IDX is not Syndication. The brokers certainly have the option to continue to syndicate on their own to the aggregators sites. As Saul Klein ,CEO of Point2 Technologies and InternetCrusade, indicates in a really good presentation “It’s about distribution and not destination” See the link below. 

Saul Klein Article

From what I gather there is a movement afoot to just bail out of  MLS and the Realtor Associations. The large franchisors  and Independents think with their own websites and huge marketing departments that they can capture the buyer on their own and not have to pay an outsider any fee. Syndication will continue without the aid of the local association and IDX. This movement doesn’t have much traction right now but who knows.In tough economic times I certainly can appreciate these actions.

 But the big question is, how are the sellers and buyers going to take this?  It’s been pretty much  standard fare to offer sellers as much internet exposure as possible. If you are a seller you need to be asking your agent about a detailed internet marketing plan he or she has in mind. Where do their companies or franchises stand on this issue? And of course what is the total marketing plan? i.e. open houses,  videos, and social media, radio, tv, etc.

As far as buyers go we know they want pictures and videos of  houses on-line. The Realtor. Com site will allow a few pictures but as an agent you have the ability to purchase an “enhanced site” that will allow you to put several  pictures on-line with your picture and contact information. But it costs the agent a lot. If you carry a large inventory in this market it could run the agent several thousands of dollars a year. In a lot of cases the broker is picking up the tab for the entire company. If you are a buyer and you are on a company or national franchise site are you seeing all the listings in your area or the area you might be relocating to?

All in all it is very confusing. I am not proposing any answers here but it is certainly something we as agents need to be aware of. Our sellers have come to expect a full marketing program that includes  total internet exposure through many web sites.  The buyers of today want one stop shopping. If companies start to pull out of traditional boards and MLSs ,what kind of business relationships will develop to keep the flow of properties coming between those companies that stay and those that don’t? Right now, not a lot of answers. Some how I don’t think this one is going to be easy or short-term.

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I should have known better

April 1, 1978. You think I would know better. It’s not that I am superstitious, but I thought to myself that a guy with a Master’s degree, married with two kids and fresh off a 4 year stint as a city planning analyst really could start a new career on any day of the year.  That’s the day I started my full-time career as a real estate agent. That’s  the day I  thought  I am my own boss, the master of my own destiny, the sky’s the limit,  and the money would come rolling in.  I don’t think I have to tell you the significance of the April first date. It’s not just the fact that I am a  pretty gullible guy and you could tell me that the moon is made of green cheese (I prefer provolone) Let’s just say I am now  100% died in the wool credulous and make a real effort to verify every statement made that might affect my sense of  awe of mere existence but also go to great lengths to  dodge black cats, not to walk under ladders, get real concerned when I break a mirror, and wear the same tee-shirt and baseball cap when the Phillies are on a winning streak. This explains their early exit from this year’s playoffs, since I varied my routine and changed my apparel watching game 5. Like I said I should have known better and It’s just that I don’t want to take any unnecessary chances if confronted with quasi truths working hand in hand with the gods of dark probability.

I was fooled. Fooled into thinking that I only needed knowledge, some start-up  money and if could learn how to be  tenacious I could make it in this business.  Well those attributes certainly are important but a little luck sure can be important. Luck in the sense of being lucky to have the right mentors, the right manager, the right company and  a family that will back you all the way when you move ahead based on your gut and the fact that they didn’t have much say in the matter, and most importantly, being lucky enough to have clients that liked your work and now  will recommend you to other folks.

Well here I am now. 33 years later.  Survived 1980 and 18% interest rates, and now 2007 – present, the longest real estate depression since the great depression.  I am lucky enough that I am still here, still selling real estate, still learning and still working with the greatest clients in the world.  And of course still lucky enough to have the greatest family in the world that supports me 100%.

Oh yeh and by the way, make no mistake about it. We are in a depression in real estate. Don’t believe those talking heads in the media who are telling you that we have bottomed out and are on our way back. For every pin head who says we are out of it, there are two more who think the Apocalypse is around the corner. There are a lot of people hurting out there and they need our help. They have lost jobs, values in their home, credit and faith in our system.  What they need is someone with some knowledge on how to keep their home in this market, how to refinance their existing mortgage, how to get help in credit repair and maybe someone just to listen and give them some hope. And let’s not forget the buyers out there. A lot of them are frightened to death. They have heard the bad news and the stories of never being able to save enough down money, the autocratic mortgage process and the fear of being scammed. If they are lucky, they have a trusted advisor who can navigate the barriers with them. You know people like the folks I work with, knowledgeable, tenured and ethical.  But it’s going to take some time. If we are lucky enough, we might come out of this a little bit better and stronger for the experience.  Knock on Wood.

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Should Realtors pull listings from Trulia and Realtor. Com?

There’s a big discussion going on across the country whether brokers should continue to allow inventory they own be uploaded to third-party aggregators such as Realtor. Com and Trulia and Zillow. Well here’s  one firm that made the decision to pull them. I don’t know how I feel about this but I thought maybe some of you could chime in and give me thoughts on the matter. Things keep a changing. I would only suggest that whatever decision we make as agents has to ultimately be good for the customers. Here is the link. Little lengthy but very informative. Edina Realty

 

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What is this Agency Stuff?

Sooner or later you are going to meet a real estate agent  that you want to do business with. Pennsylvania law and most other states require that  the agent sit and discuss with you ” Agency”.  What does that mean? It means;  how is that agent going to represent you?. And before you agree to that representation you need to know about  the different kinds of representation that are out there.  Let’s itemize those  descriptions first, and then  in future blogs I will discuss each in detail.

Buyers agency Representing the Buyer
Sellers agency. Representing the Seller
Transaction agency. Representing neither party and acting as a facilitator to the transaction.
Designated agent.   The Broker designates  agents from the company to represent buyer and seller for a property in a particular transaction
Dual agent. Agent and Broker represent the buyer and seller for the same transaction . Client has to agree to this in writing.

Get It?  Yeh, sure. If you get this on the first pass you are a better human being than I am. I have been practicing Real Estate for over 30 years and it still confuses me to the point that I have to  remind myself to reread the PA Consumer Notice before explaining it to a client.  By the way the Consumer Notice is a document that you have to sign and acknowledge that the agent sat down and discussed agency with you. This is supposed to occur at the first “significant meeting ” where the possibility of business is going to be discussed. Whenever  that happens is sometimes anybody’s guess. But you should know that it also includes phone conversations. This has been the  cause of some interesting personal situations. For example, I went to a baseball game with a buddy of mine who also invited a friend of his who I didn’t know. I was introduced as Sam in Real Estate.  As many of the vets will tell you, it doesn’t take long before someone in that scene will be asking “So you”re in real estate, how’s the market?…I live over in XYZ subdivision, in a 2 story colonial, what do you think my house is worth?” Or maybe its a buyer who wants info on a house he’s seen on the internet, or maybe its your listing. What do I do? Am I required to whip out the consumer notice between balls and strikes and go from stoic business professional or crazed fan as I watch my favorite player strike out again. Or how about that phone conversation for the first time caller. We have been instructed to use certain language to that customer that makes me feel more like law school instructor than a sales person who is trying to determine what your needs are. Nobody seems to have the answer for similar real life situations. But regardless you, the customer, have to sign that piece of paper because its going into a file somewhere in case the Real Estate Commission audits that Broker’s office for compliance. The fine is substantial to the agent and the Broker if it is not there. But enough of all of this legalize. Lets discuss Buyers Agency. The definition comes right from the Consumer Notice.

 “As a buyer agent, the licensee and the licensee’s company work exclusively for the buyer/tenant even if paid by the seller/landlord. The buyer agent must act in the buyer/tenant’s best interest, including making a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.”

In other words, that agent is your agent only, exclusively. He or she and their company has to go out and work in your best interest to find a house for you, Find it at  the best possible price and keep all of your information private.  If you sign a buyers agency contract to seal the representation, there is usually a fee. But don’t worry, just make sure the language is in there that your agent is willing to accept the cooperating fee from the other broker as payment in full for your fee obligation. Most do, but in some cases if you agree to a percentage of the sale price and the other broker is offering less, than you are on the hook for the difference. But to be fair there are some companies that provide extra services to buyers and they want to be compensated for that. That’s a decision you make but ask the questions up front. No agent worth their salt will refuse to give you a breakdown of their services.  Check the link below to get a look at the full Consumer Notice and take particular notice to the duties of the agent regardless of the type of representation.

PA Consumer Notice

Once the agency is established be fair with your agent. He or she is going to work very hard to help you find that dream house. But the loyalty thing is a two-way street. Yes you signed a contract. But I know agents who are  working night and day for their buyer but find out later that the client is out calling other companies and going to open houses without discussing it with their agent. I would say in most cases they are not purposely dodging their agent. Its more of a lack of understanding of  the agent’s duties. If you are not happy with the agent’s performance, tell them or go to their Broker.

Well that’s a beginning. Next time I’ll talk about Sellers Agency. Have a good one. Leave me a comment and let me know what you think about this explanation.

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Pre Approval vs Pre Approved

If you are a buyer you are probably running into agents who are asking you to get  a pre approval before you start looking for that dream home. That’s great but don’t get that confused with a mortgage that has been pre approved.  In the former you are getting a cursory review from a mortgage broker based on a credit check and some voluntary info regarding your income and obligations. That takes about 15 minutes and you get a one page note from them indicating maximum loan amount and minimum cash requirements. Agents use that to submit to the listing agent to let them know that it appears that you qualify to buy the home.  What you can expect now is  the full-blown application process with all the fees and  verification to follow. Time consuming and you could still get turned down.

A better way to go might be to get pre approved for a mortgage. In this case even though you haven’t found a home you actually apply for a mortgage.  The entire full application then begins with detailed information supplied to the lender. You pay all the fees  and wait for all verification to be approved by the lender. If  formally approved you will get an actual mortgage committment from the lender conditioned upon an appraisal for the home of your choice. This approval is usually good for several months. You will know up front if you need to explain to the lender such things as: where is the down payment coming from, credit dings on your report, gaps in employment and whether you might need a co signer. Time consuming again but much more valuable than a pre approval. Now you can find the home, write-up an offer but be in a  terrific negotiating position with the owner since you already have your mortgage. At that point you will end up haggling pretty much only about the price and what tests you are going to require.

Another important point is that if you are jumping around from lender to lender  shopping rates  based on different agents recommending a particular lender, you have to be careful  on all of those credit inquiries. Several inquiries could affect your credit. A better strategy might be to speak to each lender first , compare costs and rates and then pick one to actually do the mortgage. One company, one credit check. Means a little more preparation but makes you much stronger in the long run.

Thanks Nick

Nick is my son. He’s a geek, a computer engineer. He is also a husband and the father of my two grandkids. He is always bailing me out of a computer mess. Never complains, just tells me to drop it off and fixes it. Nick is also an Air Force Veteran. He was on active duty for 4 years as an Avionics Expert. He worked on the flight control systems in the cockpit of F-15 fighters. During one of his duty stations, his mother and I got to visit him at Eglin Air Base in the panhandle of Florida. He was working in a test wing where the Air Force played around with new types of aircraft. We were allowed to visit his work place. What struck us as we entered the huge hangar was that the place was overrun by a bunch of kids!!!
19 and 20-year-old kids ! They all wore the Air Force uniform and different color web belts to designate their specialty for working on these $40 million dollar airplanes. Gloria and I looked at each other and thought…. Kids for Gods sake. Then the pilots came out for the flights and kids again. Maybe a couple of years older but still kids. As I looked with admiration at this group of fine young adults, oh and by the way there were girl kids there too working on the airplanes, I thought to myself how proud we were and how proud his grandparents would be of him and his brother and sister “kids” working for their country.  His grandparents were kids once too. My father Carmen, WWII veteran,  a tanker who fought in North Africa and Italy and who was wounded twice. Or Gloria’s dad, Cliff, a machine gunner with the Big Red One who won the bronze star on the beach of Normandy on that fateful June day in 1944. Or my friend Bob who was with the 101 Airborne at Firebase Rip Cord during the Viet Nam war.  Or those thousands of Americans buried at the American cemetery at Normandy that I was so blessed to visit with my friend Bob a few years ago. Or two of my best friends from college who just retired as Lt. Colonels in the US Army.Or those crazy helicopter pilots that I served with in the Army Reserve. Viet Nam Vets who just loved to fly. For whatever reason they would fly over Harrisburg during our “2 weeks” training and buzz the Capitol.  I went along for a few rides as observer. All I remember is they would  tell me to ignore the red warning light on the instrument panel because they had everything under control. Or those “kids'” who served in Iraq and Afghanistan. All those “kids”  who served and are serving so I have the privilege of getting up and going to work everyday in the greatest country in the world. They keep me and those that I love safe and secure. November 11 is Veterans Day. So thanks  Nick… and Bob… and Chuck and Jerry and Steve and Joan and ……….

 

Uncle Louie

We learn real quick in this business that to make a sale as an agent we are going to have to deal with Uncle Louie. Who is Uncle Louie? Well really anybody who is an advisor to a buyer or a seller. You know, “Uncle Louie has to come over and check the house before we make an offer”. Uncle Louie could be Dad, Mom, an inspector, or a friend who has bought or sold other homes. Any body who in the customer’s mind can slow the sales process down and help them be absolutely sure they are doing the right thing. Been there myself. ( Why do I always take my buddy the auto mechanic with me when I buy a car?) A lot of agents get upset over these stops in the process and try to “overcome the objection”. That sales 101 from the old school.  Today’s reality means being an agent who understands needs and wants from the client and also overcoming a lot of anxiety in this crazy economy. Today’s agent isn’t discouraging anybody from “Uncle Louie”. Rather we’re empathetic to concerns of those folks who are dealing with the largest single investment that they usually own.  No problem, in fact ask us and we will give you  a list of “Uncle Louies” to help you navigate the maze of inspectors, mortgages, title companies, lawyers and even throw in  a home warranty to get you through this nuttiness. Don’t worry Mom would be proud.

Real Estate short and sweet.

Thanks for stopping by.  I will be posting items of  interest to help you make that decision to buy or sell  a home  that makes sense. Feel free to comment on my ideas or suggestions. Or send us your ideas and questions on  anything real estate related. I  can help you decide to go ahead or not. Anyway, give me a crack at helping you make or save money.

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