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Category Archive: ‘Realtor Training’

Auction Questions

David from Louisiana sent this in:

Jim,

I just watched your first attempt at the auction and must say that you did a fine job as the auctioneer. I have been a real estate auctioneer/realtor for 30+ years and have often recommended an auction to fellow realtors in high demand situations such as yours. Of course, it usually falls on deaf ears as the realtors usually feel that they don’t need the service nor do they want to share the fee.

I hope you don’t mind the questions but I have been trying to work with realtors for many years and it seems to be a constant struggle.

I’m curious about what made you suddenly decide to utilize an auction when you could have easily achieved more than the asking price without it?

JtR:  Because there were multiple people at the open house that said they would be interested in purchasing the house, I thought this would be the best way to determine the winner fairly, and create maximum urgency.  The agents involved were willing, and so was the seller, so it worked out.  We did close escrow with the winning bidder at the price determined by the open bidding.

What was the seller’s opinion when you told them you were having an auction?

JtR: She was motivated to sell, so that made the difference.  Sellers who aren’t that motivated are suspicious of selling too quickly, thinking that this is like most jobs in the world where you work hard for weeks or months to achieve the desired result at the end.

But selling real estate in this low-supply, high-demand environment is the exact opposite – you stand the best chance of selling for top dollar in the beginning when the property is a hot new offering, and has max urgency. Buyers think something must be wrong with houses that aren’t selling in a hot market.

Did you consider actually marketing the property as an auction for a longer period of time and possible having more bidders?

JtR: No, because the highly-motivated buyers are there first.  There could have been other people interested later, but if they aren’t interested enough to come to the open house, then they probably weren’t willing to pay 4% or more over list price.  Yes, there could always be two in the bush, but our environment has trained buyers to race to hot new listings that might be a perfect match for them.  Not only will they be the most likely to pay more than others, but they are more likely to close escrow too.

I consider the quality/suitability of the property too.  This was a 1,541sf two-story house with a steep slope behind, so it wasn’t for everyone.  There were 3x as many people who didn’t bid.  Sellers and listing agents should consider how many people who came and didn’t offer.

Will you consider using the auction method in the future?

JtR: Absolutely, it is the best way to achieve top-dollar sales.  The animal spirits are driven when competing with your opponent eye-to-eye.

But auctions aren’t commonplace yet, so when I have multiple offers on a listing, I create a similar experience by pitting bidders against each other to increase the price.  I tell them the price to beat, which nobody does. Realtors want you to think it is better to bid blindly, but buyers are much more likely to go higher if they have a number to beat.  I take advantage of the competitive spirit, which you don’t have with blind bids.

For those who might think an auction format would only work for lower-priced properties, let’s note that there have been three sales in Rancho Santa Fe that utilized the no-reserve auction process, and closed for more than $10,000,000.

Those three are the ONLY sales over $10 million in the last five years in the Ranch, and there are 30 for sale today.  Let’s give auctions a try!

Of course, I would be happy to answer any questions that you may have.

Thanks, David

JtR: David, if a trusted name-brand company brought a slick and easy auction process to home sales and advertised it properly, do you think they could succeed?  Do you think they could change everything, and potentially eliminate realtors as we know them today?

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Posted by on Feb 21, 2017 in Auctions, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop, Why You Should List With Jim | 6 comments

Ethics Violation

For the first time ever, I’m going to file a complaint against another realtor.  In this case, the listing agent discounted her commission so her buyer would win, even though my all-cash buyer had a higher offer.

It is in the vaunted Realtor Code of Ethics that any different commission deal needs to be disclosed to the buyer-agents:

7.22 Dual or Variable Rate Commission Arrangements. The existence of a dual or variable commission arrangement shall be disclosed by the listing broker by a key, code or symbol as required by the MLS. A dual or variable rate commission arrangement is one in which the seller or owner agrees to pay a specified commission if the property is sold by the listing broker without assistance and a different commission if the sale results through the efforts of a cooperating broker, or one in which the seller or owner agrees to pay a specified commission if the property is sold by the listing broker either with or without the assistance of a cooperating broker and a different commission if the sale results through the efforts of a seller or owner. The listing broker shall, in response to inquiries from potential cooperating brokers, disclose the differential that would result in either a cooperative transaction or, alternatively, in a sale that results through the efforts of the seller or owner. If the cooperating broker is representing a buyer or tenant, the cooperating broker must then disclose such information to his or her client before the client makes an offer to purchase or lease.

Of course, when taking the listing most agents don’t think they are going to discount their commission to screw another agent out of a deal, but once they get into the heat of battle, they lose their mind and forget.

Or they never knew it was against the rules.

The maximum penalty is a letter in the agent’s file for six months, so there isn’t a big deterrent to being unethical.  They say that the reason the MLS exists is to ensure cooperation and compliance between agents, which sounds good – right up until money is on the line.

I wonder how many agents have read the Code of Ethics?

Posted by on Feb 10, 2017 in Ethics, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training | 20 comments

Realtors and Robots

By now we have all heard how robots will be supplanting humans and taking everyone’s job in the near future.  What about realtors?

Rich Barton had thoughts on the topic this week:

NEW YORK — Robots may be taking over the world. But they won’t eliminate real estate agents — at least not anytime soon.

That’s the message from Zillow co-founder Rich Barton, whose 10-year-old Seattle company transformed the real estate business by unlocking massive amounts of data about individual homes. Could artificial intelligence — AI-powered robot agents — be the next wave in real estate?

“I choose to believe that all (artificial intelligence) is an enhancement, not a displacement. Just pick your industry,” said Barton, speaking at the Inman Connect real estate conference in New York this week. “We do like to see the end of the world in every new technology that emerges, but, in fact, the truth is every new technology that has emerged has enhanced humanity, and created new kinds of jobs that are much better and safer than the factory jobs or whatever jobs were being displaced.”

http://www.geekwire.com/2017/robots-real-estate-theres-nothing-see-zillow-co-founder-says-agent-jobs-safe/

He chooses to believe it when he is speaking in front of a large group of realtors and his Zillow is king of the hill.  We’ll see what he says once the Broker Public Portal is launched, and realtors try to deny Zillow access to listings, which is inevitable – the only other choice to compete with Zillow is to spend the same $100 million on advertising, which we’re not going to do.

My guess is that Zillow will develop their own AI, or buy a company that does it, and then sell it to their top-spending agents.  We’ll have a realtor civil war – Zillow Teams (Zillow & big-spending realtor teams) vs. BPP/Big Franchises.

The big-box franchises will have to side with the BPP in order to keep their lower-producing-agents-with-the-most-favorable-commission-splits in business.

But I digress.

Would it be so bad if robots replaced realtors?

For the vast majority of old-school agents, the job of being a realtor is to properly complete a fill-in-the-blanks contract.  Those who are proficient at it then call themselves ‘great negotiators’.

This week I saw a newer house that has been on the market for months, and from the photos, description, and price, there wasn’t an obvious reason why it wasn’t selling.  I called the agent – she didn’t answer – so I left a detailed message asking questions about its salability.  The next day she sent me a text that said the house was still for sale, on lockbox, and if I showed it, to lock all the doors when I left.  All of her comments were stated clearly in the MLS – her only attempt at selling her listing was to regurgitate what was already obvious.

A robot could have done it better – the robot could have at least responded within a minute with the same information, instead of the next day.

I know it’s demanding to expect realtors to process actual sales skills, but we’re not going to have much choice in the future – agents are going to need better skills to survive.  Filling out forms isn’t enough any more – a robot could do that, and frankly, robots might be an upgrade.

When you list with me, you can count on me to properly engage with other realtors, and give them several reasons why they should sell your house.

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Posted by on Jan 22, 2017 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, The Future | 2 comments

The Crux

Home sales that aren’t a result of a bidding war usually have some give and take in price negotiations.  It has been a seller’s market since 2009 around here, and the trend of the sellers getting what they want is baked in the cake by now.

Will it change in 2017?

Sellers want their price or close, and believe they deserve it.  Almost all of them have their own hand-selected comps to prove they are right, and will wear out the market for months or years before they believe otherwise.

Will buyers dig in, and walk away from deals over the last 1% to 3%?

When most of the sellers have been long-time owners and have loads of equity, it seems ridiculous that a seller would hold out for an extra $10,000 or $20,000 when he already has $500,000+ coming. But it happens all the time.

The listing agents are so used to winning – and used to getting beat up when they are on the buyers’ side – that they don’t think much about changes in the selling environment.  And if it’s a new listing, they are getting enough calls that their ego is brimming.

This is where the 2017 market will be made – will buyers walk away when sellers counter over $10,000 or $20,000?  If they do, will sellers give?

Sellers aren’t going to give, so if buyers are willing to walk, then we will have the stagnant market stare-down.

My guess?

If it happens, it won’t be until June.  By then, there will be enough OPTs starting to pile up, and the buyers who are still looking will be those who missed out on the other houses that were snatched up by the frenzied buyers who let the seller win the extra 1% to 3%.

Posted by on Dec 21, 2016 in Jim's Take on the Market, Listing Agent Practices, Realtor Training | 1 comment

Property Descriptions

The MLS remarks are a personal pet peeve, but touchy.  I once had sellers object to what I thought was a more-crafty description, and they insisted that it sounded more like the rest. I’m glad the author included ‘boasts’ – see link at bottom:

When listing your home for sale, the goal is to generate interest and capture the attention of discerning buyers. Beyond high-quality photos and a competitive listing price, a property description can go a long way in attracting potential homeowners. To make homes stand out, agents and sellers pepper their listings with attention-grabbing buzzwords — and understandably so. “When you’re writing for marketing materials, you’re going to have to use these kind of descriptors, because otherwise the copy is bland,” explains Bruce Withey, marketing director of the Steven Cohen Team of Keller Williams Realty in Boston, MA.

So, how can you effectively use these ubiquitous popular real estate terms? For one, be wary of overuse. “A lot of agents will be inspired by other people’s descriptions, which means there’s a lot of carry-over from one property description to the other,” says real estate agent Aaron Floyd. “Buyers are seeing the same words used over and over again.” Second, be wary of the misuse of certain descriptive words. When these labels are used ad nauseam or incorrectly, they can actually hurt your home’s chance at a sale.

Below are four terms that won’t necessarily help sell your home — and some expert insight on how to make your listing more powerful.

Read full article here (and 81 comments!):

https://www.trulia.com/blog/avoid-these-terms-house-descriptions/#sthash.oLyTJHXr.dpuf

Posted by on Dec 20, 2016 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training | 0 comments

Most Realtors Don’t Sell

failure-rate

There are 80,000 realtors in CRMLS – Art Carter is the CEO. 

Here’s what he had to say about agent productivity:

But many of the MLS’s 14,000 or so member firms have no listings, he added. The vast majority of the firms are one-man offices.

“Typically, only about 48 percent of our members in any four quarters participate on one side of a deal,” Carter said.

“Historically since I’ve been here at CRMLS, that has been about the average.”

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Posted by on Dec 4, 2016 in Jim's Take on the Market, Realtor, Realtor Training, Realtors Talking Shop | 0 comments

Flippant

t-day

I agree with the author about answering questions casually – agents look like idiots when they make a flippant remarks about work. The condition of the ‘market’ is relative to your own personal situation – it could be good or bad.

http://www.bestrealestateblog.com/6-things-shouldnt-ask-real-estate-agent-thanksgiving-dinner

#5 “How’s the market?”

This is too broad of a question.

The market is never entirely good, bad, or somewhere in between. It’s always good for some people, bad for others. How the market is depends entirely upon you and your needs and circumstances.

Not a bad question really. But it certainly isn’t one that an agent can or should just answer flippantly. So if you ask it, maybe you should be prepared to get into your specific scenario so they can accurately answer it.

Too many people get flippant answers from agents and base their perspective on the real estate market, and overall economy, on off-handed answers to questions like this.

Posted by on Nov 22, 2016 in Jim's Take on the Market, Realtor, Realtor Training, Realtors Talking Shop | 0 comments

Dual Agency Case

cz

On the surface, this case seems unusual – the seller’s agent owes both the buyer and seller a fiduciary duty if the buyer’s agent works at the same brokerage.  It’s because the agents are working on behalf of the broker – hopefully this will cause better broker supervision of dual agency cases.

The big kahuna of cases will be when a class-action suit is filed against a brokerage for all of the ‘Sold Before Processing’ sales, where the sellers didn’t get open-market exposure.

http://www.sfchronicle.com/business/networth/article/California-high-court-decision-favors-real-estate-10629057.php

In a closely watched case involving dual agency, the California Supreme Court ruled unanimously Monday that a real estate agent representing the seller of a property owes a fiduciary duty to both the seller and the buyer if the buyer’s agent works for the same brokerage firm.

The case involved the sale of a luxury home overlooking the Pacific Ocean in Malibu where the square footage was in dispute. The buyer and seller were represented by agents from different Coldwell Banker offices.

Under California law, a broker may act as a dual agent for both the seller and the buyer in a real estate transaction, provided both parties consent to the arrangement after full disclosure that the broker owes a fiduciary duty to both.

What was at dispute in the case was whether that duty extends to “associate licensees,” who are the individual agents/salespeople who operate under that broker’s license. The court ruled 7-0 that it does.

Read full article here:

http://www.sfchronicle.com/business/networth/article/California-high-court-decision-favors-real-estate-10629057.php

Posted by on Nov 22, 2016 in Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop | 2 comments