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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Category Archive: ‘Listing Agent Practices’

Listing Agent’s Fiduciary Duty

In hopes of finding some legal clarity on the listing agents who practice the Coming Soons and Sold Before Processings, I came across this example at the DRE website – we see these happen regularly:

The requirements of law governing the relationship between agent and principal is to the effect that the agent cannot be allowed to profit at the expense of the agent’s principal, no matter whether the result is reached by misrepresentation, concealment or other fraudulent device.

In the case of Rempel v. Kells the court held that an agent obtaining profits by fraudulent conduct and concealment from the principal is not even entitled to recover expenses incurred by the agent in connection with the transaction. The duty of a real estate broker to disclose material facts known by him to the seller employing him was again confirmed in the appellate court case, Jorgensen v. Beach ‘n’ Bay Realty, Inc., (1981) (125 Cal. App. 3d 155)

In Jorgensen, the listing broker presented an offer to his seller that was only about 7 percent less than the listing price. The broker presented the offer on behalf of a speculator for whom the broker hoped to act in future transactions. When the broker presented the offer, he informed the seller that he was also acting on behalf of the offeror and was therefore a dual agent in the transaction.

The seller wished to counter offer on the price, but the broker recommended that the seller not do so. The seller followed this recommendation. The sale was consummated. Shortly thereafter the purchaser resold the property through the broker at a 13.5 percent profit.

In reversing a nonsuit for the broker, the appellate court held that the broker did not fully discharge his fiduciary obligation to the seller by simply disclosing that he was acting as a dual agent in the transaction.

It was the broker’s duty to disclose all material facts known to him which might have affected the seller’s decision to accept the offer. The court suggested that the facts known to the broker which might have affected the seller’s decision included (l) the fact that the buyer was acquiring the property for investment purposes and (2) the fact that the broker had a substantial personal stake in negotiating a bargain purchase for the buyer. (Field v. Century 21 Klowden-Forness Realty (1998) 63 Cal.App.4th 18).

Link to DRE (pages 182-183)

Posted by on Jun 21, 2018 in Ethics, Jim's Take on the Market, Listing Agent Practices | 3 comments

Tips for Home Sellers

Are you thinking of selling your home?

If you’re in a hurry, just contact me and we can get started right away.

If you prefer to conduct a full investigation and make an educated decision, great – know the difference between honest salespeople and the order-takers or sandbaggers who are intent on putting you together.

Topics For Listing-Agent Interviews:

  1. Coming Soon – You’ll be told that this campaign is to generate initial buzz and anticipation, but that wears off in 2-3 days so make sure you are on the open market quickly thereafter.  Ask whether there will be showings during the campaign, and don’t accept an offer until you have seen your house listed on the MLS for 2-4 days.
  2. Database of Waiting Buyers – Great, bring them over once the home is on the MLS – not before.
  3. Sold Before Processing – These days agents are candid about their history of selling homes before putting them on the open market – ask if they do it, and if they do, how do they justify that when they have a fiduciary duty to their sellers.
  4. Handling the Inbound Advertising Calls – Most listing agents have assistants and trainees taking the calls. How good are they? Do they meet the caller at the property, or do they hand off to another assistant or trainee?
  5. Setting Up Showings of Your Home – Everyone from Redfin to the biggest agents are using a neutral third party called Showing Suite to make the appointments to show your home. While it does sound efficient, it removes any chance of gleaning vital information from the buyer’s agent about the qualifications and motivations of each buyer.  As a result, you will have unqualified people inside your home while you wait at Starbucks.
  6. Showing Your Home – Does your listing agent insist upon accompanying all showings?  Do they do it themselves, or do they send an assistant or trainee, and do either add value?  The good buyer agents aren’t crazy about having to work around the assistant’s schedule.
  7. Open Houses – Are top-notch professional salespeople conducting an open house in order to build additional urgency in buyers and, thus, sell your home for more money?  Or are they there to pick up leads?  You know by their visitor sign-in policy – especially if they use a slick I-pad system and refuse entry until visitors comply.
  8. Advertising – Internet advertising is the rage, especially on Facebook. Are they advertising your house for sale, and really pushing the product?
  9. Photos and Video – Real estate photographers are everywhere, so having pro photos are expected today. Drone shots that don’t identify the property aren’t helpful, and video presentations with audio that sells the property are much better than those with elevator music. Some listing agent refuse to do videos, and think photos sewn together are the same thing – they are missing an opportunity.  In addition, if you look at their previous listings and see photos with for-sale signs in front of the house, then the agent is trying to sell houses before they do the photos, which is backwards.
  10. Home Improvements/Staging – Do they have quality recommendations off the top of their head?
  11. Suggested List Price – Can the listing agent make a compelling case to justify your home’s value?  If they can convince you, then they are well on their way to convincing the buyers and appraisers too.
  12. Recent Sales History – Have they sold at least once house per month over the last year?  It’s nice but not required that they have sold houses like yours, because good listing agents can employ quality sales skills to sell any home.  Ask about recent problems that their expertise has solved.

The deceit around the Coming Soon campaigns is toughest on the out-of-area sellers – it’s harder to keep a close eye on what’s really happening.

Two recent examples:

A. The listing agent had his Coming Soon sign in place for over two months, but sure enough, when it was finally entered into the MLS, it was sold before processing.  The rule is to input the listing within 48 hours, not two months.

B. Another listing agent who couldn’t sell the house for three months cancels the listing on the MLS, and then puts her Coming Soon sign back out for ten days before re-inputting back on the MLS.  She refreshed her Coming Soon!

I promise to uphold my fiduciary duty and get you the best deal possible!

From 2006:

Posted by on Jun 18, 2018 in Jim's Take on the Market, Listing Agent Practices, Open House, Realtor | 2 comments

More on Pocket Listings

The standard knee-jerk response about pocket listings is to insist that some sellers don’t want to be on the open market for personal reasons, and that’s fine. In reality, those should be limited to major Hollywood icons who are unsure of how much their star-power adds to the price of a home, AND those who are flat-out bamboozling the buyer – like these sellers, who just sold this property off-market for $11,000,000. The buyer’s agent has been in the business for two years and this is his only sale ever on his Zillow profile!

The sellers paid $7,195,000 for it 8 months ago after 1+ years on market:

If the sellers are fully aware that they are engaging in an off-market deal, then fine. But most are being duped into thinking they are on the open market, but then all of a sudden – whiz, bang, boom, whoosh – and there is an offer on the table that is good enough to get them on their way.

It moves so fast that they never realize they weren’t on the open market.

Posted by on Jun 7, 2018 in Ethics, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training | 5 comments

FTC and DOJ Realtor Workshop

The FTC and DOJ conducted a workshop this week about the competitiveness in real estate.  There hasn’t been much press coverage, but Rob has summed up the bulk of it here:

Link to Rob’s Blog

The actual proceedings can be seen here on the FTC Facebook page:

Link to FTC FB

In San Diego County, you can’t say there isn’t enough competition.

There are around 20,000 realtors, and last month we only sold 3,288 houses and condos!  You can list your home for sale on the MLS for as little as $95, and every agent offers their own service/commission package for the consumers who are willing to shop around.

The main beefs:

  1. Commissions aren’t disclosed.  The realtor community will fight hard to keep the actual amount of our commissions private, but it’s not that big of a deal.  The buyer-agent commission is disclosed in every MLS listing, so it’s just the seller-side – which is disclosed, and agreed to, by the most important person – the seller!  But if they were disclosed to the general public, we’d probably find that there isn’t as much difference between traditional and discount agents as we thought.
  2. Commissions haven’t changed with higher pricing. An ivory-tower professor ranted on and on about this topic, and cited two ancient studies of other industries that weren’t applicable. She needs to do a current study of actual commissions taken from the closing statements for accurate comparisons.
  3. Decouple the commissions, and have the buyers pay their own agent.  While this sounds like a great way to lower the buyer-side commission in theory, it ignores two critical facts.  A) Sellers are offering a reward, or bounty, to buyer-agents to sell their home, and should have every right to do that, and B) the likelihood of an agent being able to steer a buyer towards a home just because of a higher commission is extremely remote.  If the FTC didn’t agree, then publicly displaying the buyer-side commission could help, and allowing rebates pretty much covers it – no other change needed.

What wasn’t covered:

A. What you get for the money.  If the FTC and DOJ wanted to impose one thing to help the consumer, it would be requiring that every agent publish the exact services they provide for the money, and their actual recent experience in selling homes.  Realtors have fought every attempt at publishing the sales history of individual agents, but have somehow allowed Zillow to do it openly.  I think it’s time that consumers know the truth.

B. Enforcing the rules.  With no enforcement, there are no rules.  The FTC and DOJ could at least publish their opinions on pocket listings so agents know what is legal, and what’s not.

A couple of people mentioned that they should do another workshop with actual realtors working the street.  I’m available!

Posted by on Jun 7, 2018 in Ethics, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtors Talking Shop | 0 comments

Rules for Coming Soons

Last week I mentioned the problems with agents selling houses before inputting their listing onto the MLS (link here).  Agents are so accustomed to doing it that there isn’t much hope it will change, at least not until an outsider puts an end to it (district attorney or disrupter).

The listings that are first exposed as ‘Coming Soon’ suffer a similar fate.

Zillow has legitimized the practice with their whole-hearted endorsement, yet the listings are vague and unclear, except for the On Market date.  But even that doesn’t have any rules, and agents regularly ignore their own declaration and never put them on the open market at all (probably because they found a buyer from their Coming Soon campaign), or delay for a few extra days in hopes of a big pay off.

For these agents, the MLS-input is a last resort.

Rarely do the listing agents who offer a property as ‘coming-soon’ have a specific strategy, and they tend to be vague about showings and offers.

What can be done?

If the ‘Coming Soon’ had more parameters, it would help.  Rather than just a future on-market date, let’s add two other questions:

1) Are you showing the home before the on-market date?
2) Are you entertaining offers before the on-market date?

Just those two questions would not only give buyers and their agents direction on what to expect, but also it would create some accountability.  Because there are no rules currently, it’s anything goes, which isn’t good for buyers or sellers.

Are there clues for detecting the listing agents who do this stuff?  The trail of evidence starts with their photos of the front exteriors of their listings – it is against the MLS rules to include a photo with your for-sale sign, so those who insist get their sign fuzzed out by the MLS police:

Obviously, the photo-taking happens before MLS-input, so if they already have the sign in the yard for their photo, you know they have been shopping for buyers for days, if not weeks, prior to MLS-input.

But most agents are happy to tell you that they will not only conduct a ‘Coming-Soon’ campaign, but they also have a their database of ready buyers, and an office full of productive agents who have their buyers too – all of which will be exhausted before they put your home on the MLS.

What is best for the sellers – and buyers too – is for everyone to engage at the same time, via the MLS, for maximum urgency.

Posted by on Jun 4, 2018 in Jim's Take on the Market, Listing Agent Practices, Realtor, Why You Should List With Jim, Zillow | 4 comments

Zillow’s First Home Purchase

They paid $410,000 and are listing for $425,000? Are they expecting a bidding war?  By the way, OpenDoor has 300 listings in Phoenix already!

Hat tip to daytrip for sending this in – an excerpt:

Noel Levine, a freelance IT consultant and self-described geek, said he looked into other online services like OfferPad and OpenDoor, which the new Zillow program competes against. He was thinking about listing the house with a broker when he saw an article about the Zillow Instant Offers expansion in the local newspaper. Zillow was able to accommodate the quick turnaround. The deal started with a request for an offer on May 3 and closed 15 days later, at a purchase price of $410,000.

“So in two weeks I went from having a house to put on the market to being out of the house with money in the bank,” Levine wrote in a thank you note to Zillow that he shared with GeekWire. “It spared me from having to go thru the trials and tribulations of wondering how many showings it was getting, then wondering if I should accept an offer, to dealing with the inspection deductions to worrying about what could go wrong with the closing.”

The home is now listed on Zillow with a priced at $425,000 (the Zestimate is $414,233). It boasts “real wood flooring, travertine tile, and stacked stone accents,” according to the listing. The company bets that buyers will love the “cozy gas fireplace” and “master retreat.”

Link to Full Article

Posted by on May 24, 2018 in ibuyer, Jim's Take on the Market, Listing Agent Practices, Thinking of Buying?, Thinking of Selling?, Zillow | 8 comments

The Trojan Horse of Real Estate Sales

What never gets mentioned is that every realtor has signed an agreement to share their listings with one another.  This is how realtors are destroying the industry from within – because we foster the illusion of having a cooperative MLS but are happy to deprive our own sellers of open-market exposure in hopes of making two commissions. 

The practice is so common that I don’t think realtors give a second thought to upholding their fiduciary duty to their own client, the seller:

Pacific Union International, California’s second-largest residential real estate broker by volume, is launching a new service this week that will give the public a peek at its “off-MLS listings,” meaning homes for sale that aren’t on a Multiple Listing Service.

It’s the latest in a growing number of ways home sellers can test the market — and maybe get an offer — before embarking on a full-on marketing campaign.

Putting a home on the MLS is usually the best way to get top dollar because it provides the greatest possible exposure. But in a red-hot market, some sellers figure they can bypass the MLS — and the real estate websites that repost their listings for the whole world to see.

Currently, agents circulate these “off-MLS” or “pocket” listings inside their firm and with other agents through Facebook groups or email lists. Some share them with groups such as Top Agent Network or Marin Platinum, which restrict their membership to high-volume agents.

Instead of holding a public open house — with strangers and neighbors traipsing through — agents arrange private showings.

Pacific Union estimates that 20 percent of its home sales in the Bay Area and 30 percent in Los Angeles last year closed without appearing on the MLS.

Mark McLaughlin, Pacific Union CEO, says Private View will help buyers and sellers by giving greater access to his firm’s off-MLS listings: “We are taking secrets in our filing cabinet and exposing them to the public.” He agreed that the MLS provides “maximum exposure,” but for clients who don’t want that, this is “an incredible” alternative.

“Once we get critical mass, I think more sellers will be part of this,” Segal said.

In a market starved for inventory, that may not be welcome news.

Pocket listings have always been used, mainly by celebrities and people selling extravagant homes that only a few could afford. But their use in California has grown since 2013, as the housing market rebounded and bidding wars broke out.

“As inventory goes down, off-MLS practices go up,” said Jim Harrison, president and CEO of MLSListings, the listing service for Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties.

He estimates that 21.6 percent of all homes sold in those counties in the first quarter did not hit the MLS before they closed. That compares with 12.6 percent in the first quarter of 2012. (Many agents enter a sale into the MLS after it has closed to help establish comparable prices for an area).

The California Association of Realtors discourages pocket listings. In a 2013 press release, it said most sellers want the highest possible price from a well-qualified buyer, and the best way to get that, the association said, is to put the home into the MLS.

Most Multiple Listing Services are owned by local Realtors associations. Agents who join an MLS generally must post homes on the MLS within a few days of signing a listing agreement, unless the seller signs a waiver.

Every member of an MLS has access to those listings. They also go out to real estate websites such as Zillow and Redfin.

Pocket listings can lead to ethical, antitrust and fair-housing issues, the state Realtors association said in 2013.

Sellers typically pay a commission to their agent, who shares the commission with the buyer’s agent. In pocket listings, it’s easier for agents to keep the entire commission to themselves, or within their brokerage firm or a small network of outside agents.

Agents say there are many reasons to keep a home off the MLS, at least temporarily.

“My preferred way is to market heavily off-market for a week or two, and then go onto the MLS,” said Cathy Youngling, an agent with Paragon Real Estate Group of San Francisco. That way “I have built a level of excitement and enthusiasm” before the “time on market” clock starts ticking.

Link to Full Article

Posted by on May 24, 2018 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop | 12 comments

Shopping Offers Around

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.

Posted by on May 3, 2018 in Auctions, Bidding Wars, Jim's Take on the Market, Listing Agent Practices | 1 comment

Zillow Crowds the Field

Whoever spends the most money on advertising will win, and Zillow spends around $100,000,000 per year.  Who can keep up?  In the video he says that 90% of the home sellers chose to hire an agent, rather than sell to Zillow:

Nearly one year ago, Zillow shook up the real estate industry when it announced that it was getting into the home selling business by launching “Zillow Instant Offers.”

In the program, homeowners looking to sell their home in the test markets of Las Vegas and Orlando are able to get cash offers for their home from selected investors interested in buying it, all within Zillow’s platform.

As it turns out, that was just the beginning.

Zillow announced Thursday that it will begin buying and selling homes directly to and from homeowners.

To repeat, Zillow itself will soon be buying homes directly from sellers, then turning around and reselling them.

According to Zillow, the program will start small and test in two markets, Las Vegas and Phoenix.

But the program represents a huge change in the business model for Zillow. Back in 2015, Zillow CEO Spencer Rascoff said that the company views itself as a media company, not a real estate company.

“We sell ads, not houses,” Rascoff said at the time. “We’re all about providing consumers with access to information and then connecting them with local professionals. And we do a great job of giving those local professional high-quality lead, they’ll covert those leads to at a high rate and then want more media impressions from us. So we’re not actually in the transaction, we’re in the media business.”

But that’s not the case anymore.

Now, Zillow sells ads and houses.

According to Zillow, its homebuying program will roll out “this spring” in Phoenix and Las Vegas.

The company said that home sellers in those markets will be able to compare an agent’s comparative market analysis to offers directly from Zillow or from other investors.

Zillow says that it when it buys a home, it will make the “necessary repairs and updates” and list the home “as quickly as possible.”

Now, what appears to make Zillow’s direct buying program different from companies like Opendoor and OfferPad is that it does not cut real estate agents out of the process.

According to Zillow, a local agent will represent Zillow in the purchase and sale of each home, which will enable agents to earn commission on the purchase and sale.

Link to Article

Zillow interview from Mo Moghari on Vimeo.

Posted by on Apr 12, 2018 in ibuyer, Jim's Take on the Market, Listing Agent Practices, Zillow | 3 comments