by Jim the Realtor | Jul 13, 2014 | Commission War, Jim's Take on the Market, Listing Agent Practices |
Tragedy helps us better appreciate the good things in life.
One great thing is the challenge of selling real estate, which is undergoing an evolution right before our eyes. Agents themselves are contributing, and we could end up undermining – or imploding – the current system ourselves.
A reader brought up the $100 listing model, where the agent accepts $100 as his fee to advertise a home on the MLS – and then the seller has to fend for himself to figure our the rest.
This week I’ve seen two other twists, and both were a hybrid commission model where the home’s listing is inputted into the MLS, but no commission offered to the buyer’s agent.
This is single-agency in disguise.
While it is possible that outside buyer’s agents will negotiate a commission with the seller and/or buyer, it’s more likely that they will be discouraged.
Meanwhile, the MLS exposure populates all the real estate portals – and these listing agents are hoping that internet buyers will contact them directly. The agent gets paid their pre-arranged fee, and buyer is, in effect, unrepresented.
It sounds like a great new way to save on the commission. But if buyer agents are discouraged, how do you know if you got top dollar?
The highly motivated buyers – the ones who pay top dollar – want and need the help of a buyer’s agent. When a new listing pops up, some buyers aren’t going to burn their agent. The resulting pool of motivated buyers is diminished.
Offering to pay all agents a specific commission amount (bounty) to sell the home is the most effective way to cause a top-dollar sale. Listing agents who offer zero commission are NOT doing their sellers a favor.
The MLS rules prevent a listing agent from offering zero commission, unless it is an open listing. My friend at Sandicor sent me this five years ago:
Entry Only, Open Listings. The law supersedes the rules for Open Listings and commissions in the MLS. The California Civil Code Section 1087 states the following:
1087. A multiple listing service is a facility of cooperation of agents and appraisers, operating through an intermediary which does not itself act as an agent or appraiser, through which agents establish express or implied legal relationships with respect to listed properties, or which may be used by agents and appraisers, pursuant to the rules of the service, to prepare market evaluations and appraisals of real property.
If an open listing is placed in the multiple listing service, the total compensation that the owner is to pay shall go to the selling agent who procures an enforceable offer from a ready, able, and willing buyer on the terms accepted by the owner. An open listing need specify no compensation to the selling agent, but may state that the compensation is to be negotiated between the selling agent and the owner.
This only applies to Open Listings and is not relevant for Exclusive Right and Exclusive Agency Listing contracts.
But do these listing agents disclose to their seller that it is in their best interest to appeal to all buyers and agents? It’s on the form now, but nobody reads it. Will sellers see past the ‘commission-saving’ pitch and notice that the plan discourages the very buyer-agents you want selling the home – the ones with highly motivated buyers who pay top dollar.
Don’t get me wrong, I still think we are heading towards single agency. But it should be one of the commission options, not the only. We really need an auction format to weed out the agent-shenanigans, and enforce transparency.
In the meantime, maybe it will go the other way? See below:
The commission war will continue, but one thing won’t change.
If the price isn’t right, it’s not going to sell!
by Jim the Realtor | Jul 11, 2014 | Richard Morgan |
Richard and Zake
****************
We have been in the midst of a terrible tragedy over the last few weeks.
The unexpected tragedies are the worst, and when they happen to the nicest people who are committed to doing the right things, then it is even more devastating.
Richard Morgan (my valued friend and fellow realtor at Klinge Realty for the last five years), and his wife Anneliese, have devoted their lives to raising their 21-year old son Zake Morgan the right way, and it showed.
It is very sad to report that unfortunately a few weeks ago, while enjoying his junior year of college in South America, Zake passed away while swimming in the hostel’s pool with friends.
Over 200 people attended Zake’s Celebration of Life yesterday, and half of them were those who knew Zake from school. Kid after kid spoke about the warmth and depth of the friendship they had with Zake – he was beloved.
He had a great outlook on life, and everyone loved him – check out the comments and pics by clicking on the “Posts to Page” in the left-hand column:
https://www.facebook.com/home.php#!/pages/Zake-Morgan-Memorial-Page/290839331040884
Those who would like to send a private message to Richard and Anneliese can email them here: richard@klingerealty.com
They intend to set up a scholarship fund in Zake ‘s name at his alma mater, San Dieguito Academy. Anyone who would like to donate, please click below – any amount would be appreciated:
http://www.gofundme.com/akosj4
Most of all, let’s appreciate how delicate life can be, and hug those around you a little tighter.
by Jim the Realtor | Jul 11, 2014 | Listing Agent Practices, The Future |
Another attempt to corral the off-market pocket listings into a profitable venture – this by grouping the top producers together into their own MLS Club:
http://www.bloomberg.com/news/2014-07-10/pssst-wanna-sell-your-house-can-you-keep-a-secret-.html
An excerpt:
Wall Street traders aren’t the only ones who like to circumvent the conventional marketplace. Real estate agents are increasingly pitching sellers on their version of secretive dark pool trading: Skip the multiple listing service (MLS) and let the agent market the home privately.
Privately can mean everything from an agent bringing in a buyer and collecting the entire commission (typically 6 percent) rather than splitting it with a buyer’s agent. Or it can mean posting a Coming Soon sign on a property before listing it on the MLS. Then there’s the growing number of private agent clubs, closed networks of agents who deal among themselves, often using “pocket listings,” or homes they have yet to — and may never — post to the MLS.
No national data exist on the percentage of residential transactions happening off the MLS. Two small surveys that looked at transactions in a few counties — one focused on California, one multi-state — put it at more than 20 percent of sales. Steve Murray, president of RealTrends, a real estate consulting and data company, says he sees more private agent networks popping up, and expects them to become a bigger presence.
“Twenty percent of agents do 80 percent of the business, so why wouldn’t the big agents want to work just amongst themselves?” he asks.
That’s the pitch for Top Agent Network, which accepts only agents who are among their region’s top 10 percent in revenue generation. It runs 30 chapters of private agent-to-agent online communities in seven states, including California, Massachusetts and Illinois.
Members are part of a closed email loop and have access to online listings and a database on which only they can post and search. Founder David Faudman says he has 4,300 members and expects steep growth as the trend grows. He says the networks are a complement to the wider net of the MLS.
“You can bet your boots that in this market where a listing is as good as cash, some agents are looking to use that as a way to double their income,” says Murray.
Read the full story here:
http://www.bloomberg.com/news/2014-07-10/pssst-wanna-sell-your-house-can-you-keep-a-secret-.html
by Jim the Realtor | Jul 10, 2014 | Interest Rates/Loan Limits, Jim's Take on the Market |
The Fed is going to stop buying bonds in October – that should give the national media some more fodder to kick around during the dog days of summer!
They will be suggesting that mortgage rates will be rising soon!
A few thoughts:
1. The last time the Fed halted their QE a couple of years ago, mortgage rates went DOWN, due to private investment picking up the slack.
2. Other factors have an effect on rates. A good example is today’s news about Portugal which sent our 10-year treasury yields to 6-week lows:
3. Wars and elections tend to keep rates down – and both are brewing.
What will it mean for real estate? Rates could certainly rise, and if they get close to 5% we can probably expect to pack it in until springtime. Buyers will appreciate the break, and sellers aren’t that motivated anyway.
If rates stay where they are today (or maybe drop a little?), we could see a vibrant 3rd quarter and buyers feel a press to get ‘er done before rates potentially go up. I don’t think rates will go up much if at all – the range has been pretty solid the last couple of months.
This is where I get my mortgage news:
http://www.mortgagenewsdaily.com/
Their ‘Daily Mortgage Rate Survey’ shows the zero-points rate, and yesterday’s was 4.18% – which is great. Let’s see where it goes!
What do you think will happen to rates?
by Jim the Realtor | Jul 9, 2014 | Wednesday Rock Blogging |
An emotional tribute about a friend gone too soon:
by Jim the Realtor | Jul 9, 2014 | Local Flavor |
Thanks to daytrip for sending in this great undersea video adventure with the school of anchovy in La Jolla yesterday:
by Jim the Realtor | Jul 9, 2014 | The Future
More people talking about change should expedite the process – though the realtor quotes in here are a little disappointing:
http://mashable.com/2014/07/09/big-data-real-estate/
Real estate has traditionally been a game won or lost based on old-fashioned networking and shoe-leather style hard work — deeply dependent on timing, detecting trends and more than a little bit of luck.
It may not be that way for much longer, however. Big data is changing the way real-estate professionals, buyers, sellers — and even banks — think about transactions involving property.
On one hand, companies promoting services that plug consumers into big data real estate info are heralding a future of better education and insight. On the other hand, real estate professionals are questioning whether big data algorithms can replace the human-wisdom side of property sales. Other players have points of view on the changes underway as well.
Analyzing enormous swathes of information — much of it aggregated from disparate places and formats — big data proposes that accessing the patterns locked up in a myriad of real-estate info could remake the game.
And so, let’s look at five key facets — the people, organizations and trends — of real estate’s ongoing big data evolution.
Read full article here:
http://mashable.com/2014/07/09/big-data-real-estate/
by Jim the Realtor | Jul 9, 2014 | Market Conditions |
For those wondering about the factors that have kept the market rolling, consider this article from the latimes.com – hat tip to daytrip:
http://www.latimes.com/business/realestate/la-fi-mo-foreign-homebuying-surges-20140708-story.html
Real estate sales to foreign buyers and new immigrants surged to new highs in the last year, according to a study released Tuesday by the National Assn. of Realtors, with the Southland being a prime destination.
Overseas buyers and newcomers to the U.S. accounted for $92 billion in home sales in the 12 months ending in March, NAR said. That’s up 35% from the prior 12-month period, and higher than the previous record of $82.5 billion set in 2012. These buyers made up roughly 7% of all U.S. home sales, by dollar value.
The increase was fueled by a 50% jump in activity from Chinese buyers, who bought $22 billion worth of U.S. real estate last year. Experts say many Chinese buyers see U.S. real estate as a better investment opportunity than is often available in China, and in some cases as a safe haven for cash. Many also buy homes here to put their children in U.S. schools.
And Chinese buyers, in particular, have an eye for Southern California. Los Angeles and Irvine were two of their top three destinations, according to the survey, with San Francisco ranking second. Chinese buyers have long been a factor in some parts of Southern California, particularly the San Gabriel Valley; as more come here, they’re spreading to new areas as well.
Los Angeles is the top choice for buyers of several other nationalities, too, according to data tracking searches of Realtor.com. Buyers from India, the United Kingdom, Australia, Ireland and Russia were also most likely to search here. For Mexican buyers, San Diego was the top choice.
The Realtors Assn. said it expects foreign interest in U.S. real estate will continue to grow as the economy grows ever more global.
“We live in an international marketplace, so while all real estate is local, that does not mean that all property buyers are,” said NAR president Steve Brown. “Foreign buyers are being enticed to U.S. real estate because of what they recognize as attractive prices, economic stability and an incredible opportunity for investment in their future.”
by Jim the Realtor | Jul 8, 2014 | Bubbleinfo TV, Jim's Take on the Market, Realtors Talking Shop
A few thoughts from Doug Harwood on the current market conditions:
by Jim the Realtor | Jul 8, 2014 | Jim's Take on the Market |
Zillow is poised to take over the home-selling business, and it seems to be just a matter of time. All they did was to produce a dynamic website that gives the viewer all the vital information about a property, and then advertise it.
Our local MLS was recently revamped, and you’d think the new version might be similar to Zillow. After all, Zillow has trained the consumer on what data the internet can provide, and they now have 82 million unique users monthly. Shouldn’t any MLS provide something similar?
Our MLS has a public side: https://www.sandicormls.com/ but the first property I looked up still shows as an active listing, even though it was withdrawn from the MLS on July 2nd. Whoops…..consumers know they can get more accurate data elsewhere.
Agents can email listings directly from the MLS too – except we’re sending them to the same consumers who are already hooked on Zillow and other websites to provide all the pertinent data.
Beyond the basic data, how does our new MLS compare to Zillow?
| Items on Listing’s Front Page |
Zillow |
SD MLS |
| Home’s approx value |
Yes |
No |
| Listing history |
Yes |
No |
| Previous sale price/date |
Yes |
No |
| Nearby homes for sale |
Yes |
No |
| Recent sales nearby |
Yes |
No |
| Agent’s 5-Star rating |
Yes |
No |
| Agent’s testimonials |
Yes |
No |
| Agent’s recent sales |
Yes |
No |
| Agent name in remarks |
Yes |
No |
| Agent’s phone in remarks |
Yes |
No |
| Youtube tours in remarks |
Yes |
No |
| Schools assigned |
Yes |
No |
| School rankings |
Yes |
No |
| Map |
Yes |
Yes |
| Open house schedule |
Yes |
No |
| Monthly payments |
Yes |
No |
| Home expenses |
Yes |
No |
| Room sizes |
No |
Yes |
| Local forecasts |
Yes |
No |
| Historical trends |
Yes |
No |
If you need room sizes, then the MLS is for you. Otherwise, Zillow is the superior website – and it’s not close.
Some of the data is withheld from MLS listings due to rules. For example, listing agents can’t advertise their open houses in the remarks to protect the buyer agents from worrying about their client might go direct to the listing agent. But Zillow doesn’t mind – they allow open house info in the remarks AND they show the open house schedule underneath – which is great for buyers and sellers.
Our MLS had their last gasp at trying to compete with Zillow, but there is no comparison. Zillow gives consumers what they want – a thorough review of the important property data – and agents need to adapt.
All Zillow needs to do now is to create a sweet little agent-matching website for consumers. Home Depot has a good prototype with www.redbeacon.com and if/when Zillow creates one like it to help consumers select a good realtor, then they will own us.
