This idea is ingenious!
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Things that blow out deals are usually avoidable, and are easy to identify in hindsight. In this case, the agent let the buyers pick a roofer out of the book, which is a terrible way to do business. He gets paid the same whether he blows the deal or not, so of course he tells the buyers the house will fall down some day. No wonder he has great reviews – think of all the homebuyers he saved from buying a regular house, and are still renting!
But the most important lesson is how the agent handled the situation once a concern has been identified. Buyers are counting on their agent for expert guidance, which should include pointing out that there are no perfect homes out there, and let’s find a way to deal with the imperfections – because in this case, the house had far more positives than negatives.
But instead, the agent – who had been telling me that everything was fine – just sends over the cancellation form in the dead of night. She didn’t give me any more opportunity to address the concern (even though I has already provided ample evidence), or try to fix it herself. Instead, once her buyers objected, she just cancelled.
This is where we will see the last nine years of a bull market come back to haunt us. There are plenty of agents who got into the business since 2009 that not only consider themselves one-percenters, but have built teams and are riding a high horse. But they have never had to handle buyer objections.
Expect a long, stagnant, bumpy market ahead.
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What did I do? I went back to the second-place finisher and sold it to them.
Hat tip to Eddie89 for alerting us to how the sale turned out:
A bidding war recently broke out over a prime piece of California real estate — and it wasn’t for a tiny San Francisco condo.
In this case, a dozen offers were made for an entire town, the 19th-century mining hub of Cerro Gordo, on 300 acres in the Inyo Mountains outside Lone Pine, Calif. It was listed for for $925,000 in June and closed on Friday the 13th for $1.4 million.
“I would say the date was very coincidental,” says listing agent Jake Rasmuson of Bishop Real Estate. “Strictly by chance but very fitting for the property.”
The seller accepted an offer from a group of Los Angeles investors who plan to preserve the relic of the American West and keep it open to the public.
“We did have higher offers, however the sellers really liked the buyers’ proposal and liked the buyers’ plan,” says Rasmuson.
Cerro Gordo has been in the hands of the same family for decades, and though privately owned, it was open to the public for tours. The owners were hoping to sell to someone who appreciates the property’s history.
The buyers are Brent Underwood, who founded the youth hostel HK Austin and Jon Bier, who runs a public relations firm catering to athletes. The two teamed up with other investors to make the purchase; they include Ryan Holiday, former director of marketing at American Apparel; Tero Isokauppila, CEO/founder of superfood company Four Sigmatic; Brendan Gahan, CEO/founder of Epic Signal; George Rutolo, owner of The Whisky Bars; and Kelley Mooney, an en executive at Hulu.
“We want to maintain the historic nature of the property while introducing amenities that will allow more people to enjoy this piece of American history,” Underwood says. “We have spent a lot of time with the current owners and caretaker to learn the history of the place. I’ve read all the books I can find on the town. I can’t express our excitement to be able to continue the care of this beautiful location.”
He adds that they also hope to eventually add overnight accommodations and events such as writing retreats, concerts, photo shoots, theater and more.
Silver was first discovered in the hills of Cerro Gordo in 1865, and in the following years prospectors flocked to its rich veins of silver. It became known as the “silver thread” to Los Angeles and silver was loaded onto mule trains and taken to the city. The town population swelled to some 5,000 at its height and quickly dwindled when silver prices dropped in 1877.
“We want to create a place that pays tribute to this historic part of American history,” Underwood says.
Choosing the right realtor to sell your home is critical.
It’s not life-or-death critical. We’re just talking about the extra 5% to 10% that is available when effective marketing creates maximum urgency – and the agent’s skills and salesmanship creates competition between buyers to achieve a top dollar sale.
Here’s what I do:
My last thirty listings have averaged an SP:LP ratio of 99% (selling within 1% of list price), with an average of 20 days on market – and half of them sold in ten days or less. Commissions are described HERE, and you’re only paying a little more than Redfin to get the maximum service available.
I am happy to give you a free consultation in person, or by phone or email!
The selling of listings prior to MLS input has happened since the beginning, but in the era of inventory desperation, we’re now seeing companies openly advertising ‘previews’ of their listings before they put them on the MLS. Before long, the MLS will just become the market of last resort, much like Loopnet is for the commercial brokers.
Home sellers expect and deserve open-market exposure, but nobody in the business wants to give up the hope of double-ending a commission, or making a quick deal and moving on to the next. Many of these off-market deals involve an outside buyer’s agent, which is really mind-boggling that listing agents are so lazy that they are willing to compromise their fiduciary duty to their own seller just to make a quick buck.
Frankly, this issue is only going to get worse. Redfin (dozens of times) and other disrupters are doing it too, and we are heading towards having only one agent per sale – which sounds efficient, but will sellers get full exposure?
Here’s a solution for those agents who insist on doing it, and a way to ease into a more-ethical era (hopefully):
DON’T PUT THEM IN THE MLS – EVER.
For agents who say that they have to input their listings per the rules, give me a break. You already broke all the other rules, don’t go holy roller on me now.
Here are the benefits of not inputting your off-market sales onto the MLS:
How bad is it? An agent who sells 100+ homes per year recently told me that half of their listings sell before MLS-input!
Did you have special circumstances that required an off-market sale, and you insist on MLS input? No problem – mention the special circumstances in the remarks so others don’t jump to their own conclusions. But special circumstances are rare – most common and unsuspecting residential home sellers deserve open-market exposure.
We’d like to believe that realtors are ethical – heck, we have a Code of Ethics! But when tempted to make a quick and sexy off-market deal, most agents can’t resist, even if it’s not in their sellers’ best interest. I’m convinced that the vast majority of agents don’t even know the difference.
It’s been an old wives tale that listing agents can’t disclose to a buyer’s agent the price and terms of competing offers. I found this at the N.A.R. website:
Real estate brokers may, unless prohibited by law or regulation, “shop” offers. Therefore, REALTORS® assisting purchasers in formulating purchase offers should advise those purchasers it is possible that the existence, terms, and conditions of any offer they make may be disclosed to other purchasers by sellers or by sellers’ representatives except where such disclosure is prohibited by law or regulation.Link to NAR website
Competing buyers are more likely to respond favorably if you give them a number to shoot at. Sharing the price and terms of other offers is a way to create a slow-motion auction effect, which benefits both sides. Buyers gain some transparency, and sellers get top dollar.
This is the fourth installment of my essay on the future of real estate sales. I’ll send this along to Brad Inman, who is gathering thoughts for a leadership conference at the end of March, so they have my perspective from the street.
The unconscious desperation among agents is ripping apart the formal agreement between brokers to share listings. The environment is going the way of commercial brokers, where exposing listings to other agents is a last resort.
We see it happening – there is the occasional article – but without vigorous intervention by realtors themselves, the MLS will slowly disintegrate and be picked apart by outsiders.
Sadly, the sharing of listings is what is best for sellers, buyers, AND realtors, but the greed and desperation among agents gets in the way.
What Can Be Done? What Are The Choices?
We can hope that somebody will find an answer. But it would have to include ways to eliminate agent shenanigans, invigorate consumers, and be a forward-thinking solution that benefits all.
The inquiry might start with creating a national MLS, or electing a real estate czar, or encouraging agents to keep their word and quit cheating their own customers out of what’s best.
But what if a thing was the answer?
The solution is LIVE AUCTIONS.
We can easily incorporate them into our regular business as the process to select the winning bidder. All other selection processes used today are subject to the listing agent tilting the table – with a live auction, all participants will be watching, and able to determine the actual winning bidder.
Could there be shill bidders who run up the price? Yes, but let’s insist that every buyer is represented by a realtor – that way, at least the agent’s reputation is on the line.
Live auctions would keep listing agents and buyer-agents employed, though the fee structure may be in flux. But our commissions are already under attack, so let’s take a chance that consumers will agree to pay a reasonable fee for these live auctions, and the other additional benefits provided by realtors.
A live auction doesn’t have to be a showy, champagne-filled soiree with a fast-talking auctioneer. They can be as simple as gathering the buyers around the living room, in a rather informal setting.
I am offering the live-auction strategy to my sellers as the fairest and most effective way to select a buyer, and let the full transparency be the best way to reach top-dollar.
Here’s an example – catch the winning agent’s comments at the 9-minute mark:
When you find the right home, don’t lose it. Get Good Help!
NAHB regularly conducts national polls of American adults and home buyers in order to understand new trends and preferences in the housing market. This is the third in a series of posts highlighting poll results, as presented during the 2018 International Builders’ Show in Orlando, FL. See previous posts on tiny homes and driverless cars.
A recent poll revealed that most prospective home buyers actively involved in the search for a home have been looking for a significant amount of time. In fact, 61% have been trying to find a home to buy for three months or more, while the other 39% have been looking for less than three months.
The natural follow-up question to those who have been unable to find a home after searching for three months or longer is why?
Forty-two percent say they ‘can’t find a home at a price I can afford,’ 36% ‘can’t find a home with the features I want,’ 34% ‘can’t find a home in the neighborhood I want,’ and 27% were able to overcome all these obstacles but ‘continue to get outbid whenever I make an offer.’
This result shows there are several important reasons why prospective buyers haven’t been able to pull the trigger, but the most important one is lack of affordability – not being able to find a home at a price point they can afford.Link to Article
Another reason we should sell homes by live auctions…..Hat tip SM:
A local developer and prominent real estate agency conspired to prey on Chinese nationals and inflate luxury home prices on the Eastside for their own profit, according to a lawsuit filed in Seattle on Thursday.
Two plaintiffs who bought adjacent newly built homes in Kirkland allege that their broker at Realogics Sotheby’s International Realty was actually working on behalf of the builder selling the homes.
Jie “Gabby” Jiao and the married couple Maoqi Zhang and Wei Fan hired Realogics Sotheby’s broker Connie Blumenthal to buy their first homes in the United States in spring 2015.
Realogics has aggressively targeted luxury homebuyers in China and is one of the top brokerages for foreign buyers in King County, and Blumenthal has a glitzy website where she boasts her connections in Hong Kong and million-dollar home sales locally. The company and Blumenthal call the claims “baseless.”
Both buyers relied heavily on the expertise of Realogics Sotheby’s and Blumenthal to understand the local market. They were told there were multiple offers on the table and that they needed to bid more than $2 million each to buy the homes, west of Big Finn Hill Park, the lawsuit says.
But when they arrived in the area after the deals closed, they discovered the homes weren’t as promised, and later found out there was no evidence that other buyers were interested in the homes — suggesting they had badly overpaid based on their agent’s advice, the suit says.
One of the buyers, Jiao, was so dissatisfied with the home’s condition — among other things, it did not have the promised backyard or bedroom lake views — that she put the house back on the market. Even with her new broker aggressively marketing the home and offering a free Mercedes to a potential buyer, she wound up selling it for $1.67 million last June — a $338,000 loss over a two-year period, despite the region’s red-hot real estate market.
The other buyer’s home is assessed at $1.46 million, or about $745,000 less than the couple paid.
The Chinese nationals’ attorney, Dave von Beck of Seattle, said he found “what looks like collusion” between Blumenthal and the seller of the home, Alex Dudko of homebuilder Unique Design & Construction Co.
After issuing subpoenas in discovery, according to the suit, the attorney found emails and check stubs showing Blumenthal — the buyers’ agent — was actually working directly with Dudko, the seller, at the time of the sale.
One check showed Dudko paid Blumenthal $20,000 after the sales for “services,” according to the suit. The suit calls the payment a “kickback” for Blumenthal bringing the buyers to the developer.
In an email to Dudko around the time one of the sales closed, Blumenthal referred to a “bonus just between you and I.”
“Let’s meet for dinner and margarita’s again when I get back!” Blumenthal wrote to Dudko. “I need a new handbag :)”
Read full article here:
This start-up has the right ingredients, but their auctions do have a reserve amount and no buyer-agent commissions, which cuts out other agents. They say “No Double Ending’, but when the buyers are unrepresented it puts the listing agent in an agency position – if the buyers ask a question, and the agent replies, an agency relationship has been created.
Every start-up wants to beat out realtors, and think that the consumers will trust their faceless, unproven venture instead:
TORONTO, Oct. 18, 2017 — There is a new way to buy and sell real estate in Ontario. With today’s official launch of On The Block Realty, the uncertain and often frustrating process of trying to navigate the home market has taken an innovative step forward. This brand new real estate brokerage based in Toronto, has opened its doors to the public, offering new unique approaches to the industry.
Chief among these advancements is the development of a cutting edge online auction platform that is aimed at bringing much needed transparency to buyers and sellers. The home buying process has been protected by silent bids in many situations, leaving buyers confused about what price to pay, and sellers concerned that some buyers may not have offered their best price. Inspired by the successful practice of real estate auctions in countries like Australia and the UK, this new system offers an exciting alternative for sellers who want to be certain they have maximized every bid from prospective buyers. It also ensures that every buyer has an equal opportunity to buy without any secrecy guarding the process.
“This isn’t about changing or fixing anything, it’s about evolving,” says CEO Daniel Steinfeld. He adds, “People deserve a choice when they make the biggest financial decision of their life. They also deserve clarity about every aspect of the transaction. We provide that.”
While the auction platform is the most distinguishing feature of this premium brokerage, there are several other features that the company believes will set it apart from the traditional brokerages in Ontario.
There is a ‘No Double Ending’ policy that ensures both sides of a transaction are never represented by the same Realtor. President and Broker of Record Katie Steinfeld says, “It is impossible to fathom that people with perfectly opposite financial objectives could have their best interest adequately represented by the same person.” She continues, “This is especially so when that individual stands to make more money by being on both sides of the transaction.” While the Ontario government and real estate industry have diverted from the point of protecting the consumer’s best interest, On The Block has done what makes the most sense – disallow the concept from their business model.
Prospective buyers without representation can still fully participate in a purchase or bidding process, but will not have a client relationship with On The Block – and if they choose to purchase without representation, there is no additional commission payable by either the buyer or the seller. “Buyers are entitled to an understanding of how commissions work. Just because it is widely positioned that the sellers ‘pay’ commissions, that cost is directly coming out of the sale proceeds, and ultimately a cost to the buyer,” Mrs. Steinfeld explains. On The Block’s Transparent Commission Policy explains that buyers should only pay for the service they receive, and so purchasing without representation shouldn’t cost them the extra 2.5% that often get baked into the purchase price.
Beyond the increase in transparency, the company provides a first of its kind ‘all inclusive’ approach to selling a home. One of the most unique included features is that homeowners are given a week in a partner hotel during the selling process to take away the stresses of cleaning and constant vacating that come with showings of the property. This is in addition to perks including professional photography, home inspections, and one of a kind custom signage for every property. “We are trying to sell a home, not ourselves,” Mr. Steinfeld says. “The high end signage is the largest legally allowed, and it is completely focused on the property it is trying to sell, not the brokerage or the name of the sales representative.”
Interested sellers are invited to use the platform at an introductory rate that includes all the bells and whistles, but costs less than half of what traditional Realtors charge.
It has been well documented that the real estate market could use a new approach. Perhaps this is the big change everyone has been waiting for.
About On The Block
On The Block is a premium real estate brokerage and auction house offering prospective home sellers the option to sell by auction or traditionally. As platforms like Uber and Airbnb have disrupted their spaces, On The Block is positioned to challenge a real estate process that for too long hasn’t seen significant change. With home prices continuing to fluctuate widely, and affordability diminishing, it’s more important than ever to give people some choice and power in the biggest selling and purchasing decisions of their lives.