“hiring the right (listing) agent also lets buyers know you are serious about selling.”
It’s true, and every decision a seller makes is telegraphing their motivation to sell.
What are buyers hoping to figure out?
Is the list price in the right ballpark?
Do the photos make a good first impression?
Will the listing agent be helpful or a barrier to sale?
It is going to be more critical than ever to hire a great listing agent. Buyers will be deciding if they are going to hire their own buyer-agent, or go direct to the listing agent unrepresented (if they are assuming that going direct will make a difference in winning the property).
How are buyers going to figure it out?
1. If the buyers and/or their buyer-agent have been around for a while, they will recognize the successful listing agents – they have seen their signs around, and have probably seen some of their advertising too. Buyers will have a feel for the pricing accuracy of the listing agents they recognize. Sellers should hire the agents who have a good reputation among those in the buyer pool because buyers and buyer-agents want to work with a listing agent who is transparent and someone they feel good about.
2. But buyers aren’t going to bank on what they think might be a good reputation. In 2024, every buyer is going to check out the agents online. Listing agents with a good track record of sales on Zillow will help put the buyers’ fears at rest. The agents with 12 sales per year have something good to offer in this challenging environment.
Example: I mentioned the 5-offer bidding war last week. I look up the sales of the listing agent every time, and in this case she had six sales in the last 12 months. I knew right then that it would be trouble trying to win it, and after 2-3 days of not delivering the highest-and-best counter that she promised, I knew we were toast (she sold it to a neighbor instead).
The sales history on Zillow is the most revealing data point about any agent.
3. Some listing agents have a reputation for pricing high, and letting it ride. Check how long their listings take to sell – it will tell you a lot about the price accuracy of this new listing they are offering.
4. How is the listing agent going to handle unrepresented buyers? Call them on the phone and ask. Just getting the listing agent on the phone is a miracle these days, so if you get them to answer, you might have a good one.
I guarantee this – every agent will struggle with the ‘unrepresented buyer’ question for months to come. Many already refuse to do dual agency, and an unrepresented buyer is similar so some listing agents won’t have any solution, other than, ‘go find a buyer-agent and pay them’. The other agents who get giddy about ‘unrepresentation’ probably just want to take advantage of the situation. A good listing agent would cover a few of the good and bad points.
5. Is the seller offering concessions? How much? How your listing agent handles these two questions will determine if the buyers will have their own representation, or if you and the listing agent want to take a chance on unrepresentation being a viable solution when everyone in the realtor universe is throwing mountains of disclaimers at you.
Any listing agent who declares that the seller is offering a 2.5% concession will have a parade of buyers through the house. Not only does it fix the buyer’s representation issue, but it also tells them that the listing agent gets it about creating a win-win for all.
These are some of the biggest concerns for buyers, so sellers should hire their listing agent in direct relation to how well they handle these points above! Get Good Help!
The buyers paid $4,137,000, and financed $2,689,000, which at 7% will be around $17,890 per month. Add around $4,000 per month for property taxes and $1,000 for insurance and it totals $22,890 per month.
We see on every listing in America that once a home hits the MLS, Zillow revises their zestimate to within a couple of dollars of the list price. That alone is shady and should be illegal, given how consumers have come to rely on them as the truth.
How close are they when homes are off-market?
The pre-market zestimates on our recent listings range from being as much as $550,400 UNDER the actual sales price, to being $815,000 OVER the sales price.
The scariest part is that sometimes they are close to being right!
Which is which? How do you know how accurate your zestimate is?
We should stop saying that commissions are negotiable and say it correctly. Every agent has their own commission rate – some agents charge more, and some charge less, and it usually depends on their skill set.
Are you going to hire a less-experienced agent who isn’t as good on pricing, just to save a point because you trust your zestimate? Yikes!
In mid-August, the new rule takes effect that NO buyer-agent commissions will be advertised on the MLS. Technically, sellers paying commissions to the buyer-agents will still be allowed for now – they just have to be negotiated outside of the MLS. There will be attempts to circumvent the new rule (see above), but sellers are going to think that they don’t need to pay anything.
I think we can expect seller-paid commissions to the buyer-agents to dwindle down to zero in the next 6-12 months. The DOJ has not insisted on this yet, but their attorney said the other day that they want the commissions decoupled, so it’s coming.
What’s next?
Buyers need to start getting used to the idea of paying for their agent.
Buyers will be required to hire a buyer-agent in writing to see homes, an idea that doesn’t sound great to anyone. Buyers don’t think they need an agent when they have Zillow at their fingertips, and agents will struggle to convince you that you need sign any agreement when you’re just looking.
I don’t want to be at your beck and call for the next 6-12 months and have to show you homes that I know you aren’t going to buy. But because we have a contractual agreement, you’ll be thinking……”hey, we hired you to be our agent, so snap to it.”
My Proposal:
You monitor Zillow via auto-notifications, and go to open houses all you want. You will be peppered by agents wanting you to sign an exclusive agreement for a year or two with the promise of showing you off-market deals that you won’t see on Zillow.
If you can resist that shady ploy, then when you finally find “the house” online, then I’ll get it for you. We will sign the agreement when I show you the house, and the agreement will be for this house only.
You’ll pay me 2% at close of escrow, with this guarantee:
If I don’t get you the house, you don’t have to pay me anything.
I’ll be the real estate gunslinger who will take care of business for you!
While management believes that buyer-agents will adapt and the implementation of the buyer-broker agreement will happen over the next few months, I have my doubts. It’s more likely that buyers will resist paying 2% to 3% to their agent, unless they are convinced that they can Get Good Help.
Without having to commit to paying anything to buyer-agents up front, sellers will choose to pay less or zero once an offer is submitted, and their listing agents will just let it go and just be thankful that they will be getting paid.
Buyer-agents will either have to accept the peanuts the sellers will be paying (0.5% to 1.5%), and/or talk their buyers into paying the rest. Or they will ‘retire’, which sounds groovy to the agents who are 50+.
Left in the rubble will be home buyers who are mastering the matterports, and listing agents who desperately want buyers to come to them direct.
The form above will be the gateway drug to the future.
It will be used as a defense mechanism by listing agents who resist giving any of their commission to the buyers (who are thinking they deserve a bonus for coming direct).
“Yes, come direct to the listing agent so you don’t have to pay a commission”, and once you get here then sign this form and be unrepresented. Everyone saves!
If commissions are less, agents will want to do less. For those agents who already don’t do much, it will be a struggle – but they will find a way!
They aren’t going to step up and justify why every buyer deserves good representation.
Instead, they will do nothing for you. Sign the form above and good luck getting to the finish line!
In a marketplace where the stakes are rising every day, there will be a growing trend of getting less help – and virtually no Good Help available unless buyers want to pay for it themselves.
‘What are you going to do about these buyer-broker agreements?’
I told Donna yesterday that I’m probably not going to do them, at least not much. Oh, but you have to do them! Yeah, I know, but it probably means that I won’t work with buyers as much.
This guy gets into the details on what the NAR settlement terms actually mean:
This allows buyers to choose to have a transactional relationship where the Realtor® assists in property viewing without representing the buyer’s interests as an agent. The agreement can be as brief as the buyer wishes, possibly just covering a single day of home viewings or a specific number of properties, without further obligations.
But I don’t want to drive you around for a single day for free. I want to sell you a house!
But buyers aren’t thinking about buying a house today. Why? Because they haven’t found the perfect one yet, and they have an urge just to keep watching Zillow until the ‘right’ house pops up. Ask any buyer and they will tell you, “I’ll know it when I see it”.
That’s when I want to be there.
Especially when most buyers think they don’t need me until then anyway.
I think there will be a few professional gunslingers who have the reputation of being the guy you call when you absolutely, positively need to buy that house.
In the meantime, buyers will stay close to their search engine, utilize the matterport tours extensively, and go to an occasional open house.
When they find the ‘right’ house, they will call me, or just go through the listing agent.
Every buyer will be required to hire a buyer’s agent at some point. Get Good Help!
The commission lawsuits and action by the DOJ will cause buyers to wonder if they need to pay for representation, and what do they get if they do.
It will also be a function of how much it costs. If the service was free, everyone would do it.
It’s been like that in the past, but it also caused buyers to be a little too casual about who they selected, and they tended to just grab someone – which doesn’t always bode well.
If the fee was 1% at closing, you’d probably do it – if you liked them.
If the fee was 1.5% to 2.0% and the terms were clean and non-exclusive plus the agent made a really good case why he’s worth it, then yeah, maybe.
If the fee was 2.5% to 3%, there would need to be some guarantees or real promise that you would get exactly what you wanted, and be very impressed with the service too.
Buyers will be able to include in their purchase offer that the seller pays all or part of the buyer-agent commission. But there won’t be any promises about what a seller might pay – if anything. So buyers should be prepared to pay the entire amount to their agent, as agreed up front.
What should buyers expect? What are the skills that good buyer-agents possess and implement on behalf of their buyers? Here is my quick list:
Overall analysis of general market conditions
Video /audio tours of prospective homes for sale
Pinpoint Home-Value Analyses
Measure up the sellers and listing agents
Winning-price predictions
Offer Strategies
Bidding-War Management
Contingent offers that win
Tough and detailed inspections with free quotes on repairs/improvements
Expert deal management
Foreclosure hunting
Bridge-loan financing
Off-market homes for sale
Sniff out any shenanigans
See the new listings in person every week.
There are also the 132 things agents do for buyers linked here, but the real problem is demonstrating the skills. How will buyers know what they need? How will agents show them what they have to offer?
When you go to the car dealer, they let you take the car for a drive around the block. How can you do that with a buyer-agent?
It would be fruitful for agents to have a blog where they demonstrate how they work, and provide evidence of their results. But that may be asking too much of agents.
We do free consultations for sellers. Let’s do them for buyers too.
Buyer-agents should offer their list of services AND be willing to meet any prospective clients-to-be at a home for sale so agents can show them what they do. A tour of a house to point out the positives and negatives will give the potential buyers a great sense of the agent’s expertise.
Agents – let’s make the free consultation at a home for sale part of the effort to assist buyers. Besides, you want to get a sense of whether you want to work with these buyers too.
Before you get married, you should have at least one date!
What do you look for when you meet your potential realtor at a home for sale to see what they have to offer? If they add to the experience something you didn’t know, then you’re on the right track – ask questions! If they say, “Here’s the kitchen”, it is an automatic disqualification – just run to your car!
Some might be thinking, “Yeah Jim, you’re such a big talker, what do you got?”
I had three buyer sales in the same time period. Here’s how they turned out:
My first job is to gather information to help determine my chances of making a deal. It starts with the listing agent – what can I expect from them? What is their level of expertise? In this case, it was her first listing in three years and the subject property was her grandparents’ house – and her mom was the trustee.
Oh boy.
Because I have experience in the neighborhood, I knew there were more than one neighbor nearby with deep pockets. The south end of Los Robles is the best block in Terramar after the oceanfront properties because it’s not heavily traveled, and if you can see past the neighbor behind, you have a straight shot to the ocean over the state beach which is only 200 feet away. Sales in this stretch are rare, but I’ve had three of them and I knew it was going to be hot. The last sale on this block was in 2019, which was light years ago.
In addition, my listing on El Arbol, priced at $2,499,000, was marked ‘in escrow’ in the MLS when this new listing hit the market. Even though it is only one block east, El Arbol is considered an inferior location because it’s down the hill so there isn’t any ocean-view potential and the railroad tracks are closer. The remodeling efforts on the street are far less than on Los Robles.
So when the new listing went live, their $2,150,000 list price looked very attractive.
The listing agent conducted an open house on the first weekend, which allowed my buyers to build some rapport with her too – which usually helps the cause, especially with the agents who want to feel good. We all knew this was a huge deal money-wise, but more importantly, it was going to be very personal too.
My common advice – wait as long as possible to make an offer. We waited until Monday to make a full-price offer, because the agent told me there was the usual clamoring from other agents, buyers, and neighbors early on, and we figured that nothing was going to happen over the weekend.
My listing was going to close a week later for $2,440,000, so I wanted to get this one into escrow!
The listing agent kicked around our full-price offer for two days and kept telling me that there were other offers, and threats of more pouring in. But I gently convinced her that we would be the best candidates, and guided her to make the right decision. As what usually happens, the agent got so caught up in hammering us on minor details that they forget the big picture.
They countered our offer only for three weeks of free rent and removed the requested termite clearance. Boldly, we counter for a shorter rentback period but I had already had verbal agreement from the listing agent that it would be acceptable.
Back in the day, I used to be more pushy, but it’s such a seller’s market and agents get offended so easily that the softer make-a-friend approach has been more effective – which I learned from Donna! She then took over and did a great job in gathering evidence and convinced them to give us a credit for $14,500 in lieu of repairs even though the agent said she had a back-up offer from a neighbor.
We could have panicked and thrown more money at them early on, but it wouldn’t have done any good because they weren’t ready to deal yet. The timing is crucial, and you have to know when to make the deal – and my constant good-natured rapport building made a difference along the way.
We closed on time for full price.
Since then, my listing on El Arbol did close successfully for $2,440,000, I listed the vacant lot on Carlsbad Blvd. for $1,999,000 and it went pending in 11 days, and then this new listing of a smaller and much more inferior property (I’ve seen it before) on El Arbol popped up yesterday, priced at $2,249,999.
I think my buyers did pretty good!
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The next sale was the ultimate example of taking advantage of the camaraderie between agents.
The only thing harder to sell than a realtor’s own home is the long-time residence of an appraiser – because they really know what’s it’s worth, dang it! In this case, the homeowner had been an appraiser for 40 years. Could anyone convince him that his price isn’t right?
They listed this 80s-built single level for $1,097,000, and while the kitchen and baths had been redone, it was a while back and they probably need it again. It is on a half-acre lot with fruit trees, it had vinyl windows and a smattering of other minor improvements. But the roof was shot, and we knew it would be a project to get it up to my buyers’ satisfaction.
We offered $1,000,000.
We really wanted to offer less than that, but we agreed that anything with a 9-handle would surely offend the appraiser-owner. Let’s offer an even $1 million and hope to stick to it as close as possible.
I had sold a previous listing with this agent a couple of years ago, and she remembered us fondly. We discussed her family, her recent sales, her thoughts on this house, etc. Basically, I let her air it out for 15-20 minutes and what woman doesn’t like that?
We both agreed that the house needed work, and any other buyers would make her life miserable. We made our offer on December 11th, and I promised to close by the end of the month (house was vacant).
She told the sellers to sign my offer, and they did.
Then Donna went to work and got another $30,000 out of them for repairs and credits. We closed for $1,000,000 on the last day of the year, though it is still marked pending here.
Listing agents want to have smooth sailing during the escrow period, and that’s taken into account when they anoint the winner accept an offer. Because we had such a good experience previously, the listing agent want to do business with us again – and she gave us a good deal too.
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My buyers of this newer house in University City had been looking for years. They didn’t have any kids when I first met them, and now they have two!
Though it was listed with a Compass agent, I knew not to expect ANY love just because I’m a Compass agent too (I think they should be some Compass love, but that’s another story). Of course, he was happy to tell me about all the clamoring there too, and that he had four offers.
I ask listing agents, “What will it take to buy this house today?” and it’s amazing what you will hear. Usually it’s a bunch of stuttering vague stuff, but in this case, he told me a very specific fact that made me think that I had a leg up on the competition – and it had nothing to do with Compass.
It was listed for $2,050,000, and we offered $2,000,000 financed….and they took it without countering.
Then Donna got an additional $19,000 in repairs and credits. It is closing today.
P.S. The value was tough to comp because the UC houses are typically so much older and goofy inside. This house was completely torn down and rebuilt in 2005, and compared to what 3,426sf will cost you in Carmel Valley, we thought it was a heck of a deal for a newer home at our sold price of $2,000,000, or $584/sf – even compared to the UC homes:
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I’m the first one to tell you how hard it is being a buyer’s agent today – and I cover it regularly here. But I’m still going to fight like heck for my buyers, and get them the best deal possible.
Plus, I come from the school that is is better to NOT buy, then to overpay. I think that thought has drifted away and now it’s fine if buyers want to pay too much because it’s only money.
I mentioned this dilemma a few months ago and the C.A.R issued clarification in October. While the contract generally tends to be seller-friendly and of course it protects realtors at all costs, this is an advantage for buyers:
Sometimes during the course of the transaction, a buyer may need to assign all or a portion of their interest in the contract. This could mean swapping out one buyer for another (a total assignment) or it could mean adding an additional buyer to the existing one (a partial assignment) or it could mean deleting a buyer or replacing buyer(s) with at least one original buyer remaining (other assignment). In each case, buyers under the Residential Purchase Agreement (C.A.R. Form RPA) have a limited right to assign their interest in the contract as long as they follow the appropriate procedures.
Right to Assign under Paragraph 23 of the RPA
Paragraph 23 of the RPA lays out the procedure for an assignment to take place. If the buyer is assigning all of their interest to either 1) their own trust or 2) any wholly-owned entity of buyer’s that is in existence at the time, then the buyer has the right to make the assignment and does not need seller’s consent.
In any other circumstance, buyer may not assign the contract without first getting the separate written consent of the seller to the specified assignee. The seller’s consent, notably, cannot be unreasonably withheld.
When making an assignment request, the buyer must:
• Disclose the name of the assignee
• Disclose the amount of any monetary consideration between buyer and assignee
• Provide assignee with all documents relating to the transaction
• Ensure that assignee will provide a letter from assignee’s lender that assignee is prequalified or preapproved as specified in the RPA
If the buyer does not deliver the assignment request and satisfy the above requirements within 17 Days after Acceptance (or whatever time is specified in RPA Paragraph 3K) then the seller’s withholding of consent to the assignment shall be deemed reasonable.
On the AOAA form, the buyer has to declare the amount of the payment involved:
Hopefully the hubbub about realtors’ pay will cause consumers to investigate agents more thoroughly, which I’ve been encouraging for a while. Here’s one of my blog posts from 2009 – check the comment section too:
by Jim the Realtor | Jul 24, 2009 | Thinking of Buying? | 34 comments
Most buyers struggle to find a quality realtor to assist them in buying a house, and it’s the realtors’ fault. The national, state, and local associations are so adamant about protecting the new agents and giving everyone an equal chance, that they provide no help whatsoever to the general public.
Their message? When trying to find good help, you’re on your own.
So how do you get what you need?
Everyone tells you to ask around, get referrals from friends, go to open houses, go with a big company, go with a small company, new agent, old agent, kickbacks, etc., that it probably doesn’t matter where you get a realtor, what matters is how to evaluate them.
Here are my things to look for when evaluating a realtor’s ability to help you buy a house:
1. ASK ABOUT THEIR RECENT TRACK RECORD OF SALES – Let’s cut to the chase, shall we?
Has the agent been able to successfully guide others to the finish line this year? The best answer is 1-2 closings per month, if you want an agent who delivers personal service. Any agent who sells four or more per month is slamming people into houses, and those at zero, well let’s face it, they don’t have anything of value to add to the equation. Get a testimonial from a past client, and/or at look at the sales they’ve done and judge them to see if they were good deals. (I’ve assisted 10 buyers with closing their sale this year).
These current market conditions are unlike any seen before. If your agent has been closing some buyer transactions this year, they must have something of value to share. Here’s what to look for:
2. ASK THEM, “WHAT/WHERE ARE TODAY’S HOT BUYS? How they answer that will tell you just about everything you need to know. If they give you a smart-aleck answer, they probably aren’t the right agent for you, only because they aren’t in the game. If they can name one, at least they are looking at properties, and those are agents who can provide value – ideally your buyer’s agent is previewing property every day, in person.
3. THEY SHOULD ASK YOU QUALIFYING QUESTIONS – If they jump in the car without asking questions, their time must not be too value to them, and this isn’t a business where wasting a lot of your time makes for good quality realtors.
4. THEY SHOULD KNOW ABOUT FINANCING – I guess it’s alright if they just hook you up with their lender to get pre-qualified, but if they can ask/answer the qualifying questions themselves, it might help when it comes time to structure an offer.
5. HAVE THEM SHOW YOU SOME HOUSES – Go in their car, and if they don’t need a map to get around, you’ve found an experienced veteran. It’s not guaranteed that they can help, nor is it required, but it’s a good indicator. If they are pointing out specific sales/listings along the way (theirs or others), then they know the comps too, which is another great indicator.
6. EVALUATING THE PROPERTY’S CONDITION – They don’t have to be a general contractor, but they should be able to educate you about the property’s condition. If all they do is point out that “This is the living room”, they’re not going to have much to offer in terms of added value, unless you don’t know what a living room is.
7. HAVE A VENDOR’S LIST – Successful agents know professionals to call to fix stuff – the more thorough the list, the more problems they have encountered.
8. DO THEY CHARGE FOR THEIR SERVICE? – Ask about “transaction fees”, “processing fees”, or “compliance fees”. These are junk fees used to pad their bottom line, and are not required.
9. DO THEY INSIST ON HAVING YOU SIGN A BUYER-BROKER AGREEMENT? – Pass on those, unless you got married after having one conversation too.
10. “FORECLOSURE SPECIALIST” – Be very leery – we are all foreclosure specialists now. Any agent who tries to make it sound like they have some special “foreclosure ability” is blowing smoke, unless they are listing REOs and not putting them on the open market. If they don’t mind breaching their fiduciary duty to their bank-seller, they’ll sell you down the river in a heartbeat.
11. SHORT SALES – I personally see 2-3 short sales every day that have already found their buyer before MLS input, and it is VERY frustrating. These agents don’t care about their own reputation amongst their peers, and that alone should make you wonder.
12. OFF-THE-GRID – Ask about what agents can do to find properties that aren’t on the regular websites. Any positive response would be a good indicator, and any examples of closing one would be even better.
If they can get through those questions and you still like them, you found a good agent!
NEW AGENTS – A new agent’s zeal and availability can really help buyers who don’t have the time or willingness to search for properties themselves. Want somebody to do the legwork for you? Put a new, hungry agent on it, but there may be some struggle clinching the deal if there are competing offers.
OUT-OF-COUNTY AGENTS – You’ll be doing all the work yourself, so your own proficiency in being a realtor needs to be up to par.
RELATIVES – Many deals crash and burn, and hearts are broken over houses. Want a relative to help you? Make sure that you’ll accept never wanting to talk to them if they cost you the right house, at the right price.
“GREAT TIME TO BUY” – If you hear that catchy phrase, just walk away.
The inventory of quality homes at good prices is EXTREMELY LOW, causing the buying experience to be full of frustration and disappointment. You can look for weeks or months without seeing anything attractive, so I don’t know why any agent would call that a great time.
REALTOR TEAMS – No problem, but don’t interview the big dog and then get passed off to the assistant without asking the same questions. You want to be clear about who is helping you, and what you can count on. In my case, I may have Richard or another KR realtor help me on occasion, but I’m still the main person in charge, and am responsible for your success.
