Benefit #3 of Using a Real Estate Agent

Benefit #3: Your Real Estate Agent is an Expert on the Entire Transaction

A good real estate agent will have gone through hundreds of real estate transactions and should know purchase agreement contracts and addenda inside and out. If you’d ever looked at a real estate terms dictionary you were probably overwhelmed. The purchase agreements are so wordy and lengthy that it is a daunting task to read through it. It’s even tougher to understand it.

Misunderstanding a clause or a “subject-to” can end up costing you thousands of dollars – there goes your savings on commissions by not using an agent. Although most home buyers are not looking to pull a fast one on you this kind of things happen all the time. Seasoned real estate investors will include language in purchase agreements that protect them by decreasing their liability and your chances of collecting the earnest money should they pull out of the transaction. Investors typically will not be looking to take advantage of you, but are protecting themselves at your expense.

Here is a brief example of one of these situations in which you as a seller may miss something on the contract that a real estate agent would spot on a heart beat.
A normal transaction will have a closing date at which funds are transferred, commissions are paid, and ownership changes hand. Most contracts state that possession takes place the day of closing but may have clauses that specify and outcome should the owner of the house be unable to vacate in time. A buyer can specify on the contract that the seller will pay a per Diem of $100 per day from closing until the time he or she vacates the property and allows the buyer to move in. The buyer can further protect himself by including some verbiage stating that if he cannot close on time due to financing problems that the closing date be moved or even that the contract becomes null. As you can see this contract would be very beneficial for the buyer but very dangerous for the seller. Although this type of clause on a purchase agreement is not difficult to understand most people may miss it. A real estate agent knows what things to look for and will alert you of any situations which may be detrimental to you as a seller.
If you sell your house on your own, or if you buy your house without an agent make sure you read the entire contract. It’s long and boring (believe me) but 2 hours of torture can save you thousands of dollars.

The Housing Ecologist

Benefit #2 of Using a Real Estate Agent

Benefit #2: A Real Estate Agent Will Provide Constructive Criticism

This advantage of using a real estate agent is not always a given. You need to ask your real estate agent to give you an honest opinion of what needs to be done to your house to get in selling condition. This goes beyond the obvious – fixing the gate, painting walls, replacing doors with holes, etc. I’m talking about things we would not notice, things such as excessive clutter. Maybe there are way too many pictures on the wall which may make a room appear smaller, or the kitchen counter is full of really nice appliances that give the sense of ‘no counter space’. In our own eyes some things can be OK or even appealing, but you have to remember you need to make the home appealing to prospective buyers, not to yourself.

When you list your home as a for sale by owner you don’t have this outside set of eyes to provide this valuable input. If you go with FSBO make sure you ask a neighbor, friend, relative or colleague to do this for you. Make sure you ask for an honest opinion and make sure you are not offended by the feedback. Many real estate agents don’t mention things that need to be improved, moved or removed simply because the last think they want to do is to offend their customers.

A seasoned real estate agent will also make you aware of things that will come up as “defective” on a home inspection. When a buyer makes an offer and proceeds to do a home inspection things will come up, every home inspector will find something, even in a brand new house. If you can take care of the little things – fixing screens, fixing a leaky faucet, repairing a receptacle, etc. – you will minimize the amount of things “wrong” with your house. A buyer may be turned off if he or she hears a home inspector go on and on and on about all the things that are sub-standard with the house. Real estate agents should be with their customers during the home inspections so they know all the things that turn up. Your agent should have sold several houses and should have this experience.

Remember to ask an outside party for an opinion on the showing condition of your house, it is well worth it.

The Housing Ecologist

Benefit #1 of Using a Real Estate Agent

Benefit #1: A Good Real Estate Agent Will Professionally Market Your Home

As with almost any service that is professionally available you go to a real estate agent to help you do a much better job than you can do yourself. Some people spend 2 hours changing their own oil at a cost of $10 for oil and a new filter instead of spending $20 at a Quick Lube. Depending on how much their time is worth this may be a cost savings. For people that don’t have the inclination or the time to do this themselves it is way more cost effective to go down to the local mechanic shop to have it done. It is not that much different when it comes to selling your home.

When you list your home through a real estate agent he or she will quickly enter it into the MLS (Multiple Listing Service) and place it into their own company website. A lot of what the agent will do is behind the scenes yet it is very important. Things like phone calls to potential buyers, arranging and marketing open houses, follow up with open house visitor, fielding phone calls and web inquiries, web postings, and other methods to market and promote your property.
Agents will create a marketing plan to get your home sold. Specific methods will vary depending on which real estate agent and which real estate company you pick, but overall a good real estate agent will do all the work for you.

If you decide to go it alone you will have to do most of this work. Some companies that offer help kits to sell your house on your own can do a lot, but you will still have most of the work to do yourself. It is my firm belief that a good real estate agent will save you, not cost you, money.
If you think otherwise I would love to read your comment and your reasons. Thanks for reading. Have a great day.

The Housing Ecologist

Book Recommendations

If you are interested in Real Estate you probably know that there are thousands of books available on the subject. Choosing one that is really worth spending the time to read is not an easy task. I will be making posts with some recommendations. I will give my opinion of the book and how it has helped me.

It will be great if readers can also post their comments on the book mentioned in the post.

Today's recommendation: The Cashflow Quadrant by Robert T. Kiyosaki

As stated in Amazon's website "The Cashflow Quadrant is the follow-up guide to finding the financial fast track that best works for you. It reveals the strategies necessary for moving beyond just job security to greater financial security by generating wealth from four selective financial quadrants."

"Born and raised in Hawaii, Robert T. Kiyosaki co-founded an international education company that operated in seven countries, teaching business to tens of thousands of graduates. Now retired, Robert does what he enjoys most...investing. Concerned about the growing gap between the haves and have nots, Robert created the board game CASHFLOW, which teaches the game of money, here before only known by the rich.
Sharon L. Lechter is a wife and mother of three, CPA, consultant to the toy and publishing industries and business owner. As co-author of RICH DAD, POOR DAD and THE CASHFLOW QUADRANT, she now focuses her efforts in helping to create educational tools for anyone interested in bettering their own financial education."

This books makes a clear distinction between assets and liabilities. I was under the impression that my personal residence was an asset. However, it is a liability! It is a liability because I pay to live in it, it does not make money for me. A real asset will generate cash flow for you. If you own a rental property then that is an asset. The book also explains how people can be employees, self-employed, business owners, and investors. Most people fall under the first two categories, the goal is to be on the third and fourth.

This book is a favorite of mine. I have become a Robert Kiyosaki fan and I'm partial to his teachings. They have worked well for me. I hope to hear your comments on this book.

Thanks.

The Housing Ecologist

Benefit #4 of For Sale By Owner

Benefit #4: No Contract

The fourth and final benefit (on our discussion) of selling your house FSBO instead of using a real estate agents is that there is no listing contract. When you hire a real estate agent to sell your home you typically sign a 3 or 6-month listing contract. During this time you cannot cancel the listing or sell by owner. You have to wait until the contract expires.

The real problem is not that you would get an offer that asks you to sell without a real estate agent. The problem of having a contract is if you have an agent who is doing a terrible job of promoting your property. You cannot simply fire the agent and hire someone else, you have to stay for the duration of the contract.

Many people sign the contract without reading it. It would be fair to ask the listing agent to include a performance clause in the contract. In other words, if the real estate agent is not getting the traffic he or she promised you can cancel the contract. Make sure that if you list your home with an agent that there is a way for you to get out of the contract for legitimate reasons. Now, if you want to change simply because your brother-in-law just got his license and you want to throw him a bone that is not going to work.

When using services such as ForSaleByOwner.com you can decide to pay a one time fee and keep the services as long as you want or pay a monthly. However, you can opt to hire a real estate agent at any time if you feel like you are not able to properly promote your house.

The following posting will begin explaining the benefits of listing your house through a real estate agent.

The Housing Ecologist

Benefit #3 of For Sale By Owner

Benefit #3: Marketing Assistance Available for FSBO

One of the greatest advantages of using a real estate agent to list and sell your house is that they are expert marketers, at least the good ones. In the past, owners that listed their house on their own probably advertised with only a sign in their yard. Or, if they were fancy, would place an ad on the local newspaper. Nowadays, companies such as http://www.dpbolvw.net/click-3739233-10429757 and http://www.fsbolocal.com/ offer outstanding marketing assistance. These companies charge an fee upfront which is typically $300 or less. This fee is not based on the sale price, it is a standard fee whether your house is listed for $15,000 or $500,000.

If you decide to sell your home on ForSaleByOwner.com you will find out that you can choose from these plans:

1. Monthly $80.95 (every 30 days)
2. $179 Basic (One-time fee)
3. $229 Basic Plus (One-time fee)
4. $319 Premium (One-time fee)
5. $539 Silver (One-time fee)
6. $629 Gold (One-time fee)

To learn the details on each you can visit http://www.forsalebyowner.com/

This particular service also gives you a darn good guarantee. If you do not sell your home and later hire a real estate agent who is able to sell your home, you get a full refund for the fee paid up front.
In today’s world just about everyone looking for a house, even those using a real estate agent, will search listing on the web. Many will pick out homes and send the list to their agent to set up the showings. So the most important item is to have your property listed on-line through as many services as possible. If your home is not online it is very likely that the only showings you get are from people that have driven by your house.

These online services will help your marketing by providing the following aids. What you get depends on the plan you choose to pay for.

1. Home selling workbook
2. Upload of pictures to website
3. Printable property fliers
4. Property pricing reports
5. Yard sign kit
6. Access to consultation line
7. Photo slide show and video online
8. Showcase on Realtor.com

Although these online services are great you are still responsible to insure that the marketing is as good as it can be. If used properly these services can be exceptional and save you thousands. Good luck selling your house.

The Housing Ecologist

Benefit #2 of For Sale By Owner

Benefit #2 of FSBO: Save Thousands on Real Estate Commissions

The single biggest reason why people list their properties on their own (For Sale By Owner) is to save money by not having to pay a real estate agent’s commission. In most states it is typical for the seller to pay the commissions of the seller’s and buyer’s agent. What is interesting, and not many people realize, is that the buyer is the one that actually pays the commissions. More precisely the buyer is the one that funds the commissions. Real estate agents will sit down with their customers and come up with a pricing strategy based on a market analysis of comparable properties (CMA) which have sold and/or are for sale. They also work in their commission into that figure. When a party buys a house the money he pays towards it is what funds the commissions.


So how much can be saved by selling as FSBO? According to National Association of Realtors (NAR) the median price of a single family homes sold in the US during the third quarter of 2009 was $177,900. By selling without a real estate agent the seller would save 6% of this number which equals $10,674! Not bad at all.


It seems like a no-brainer. But it is not as black and white as you might think. Many people believe, me included, that a good real estate agent can sell your house for more money and quicker that you could on your own. It is not uncommon for seller to list their homes as FSBOs for a few months and later hire a real estate agent because they were unable to sell. I have not been able to find any data on what percentage of FSBOs don’t sell and then sell through a real estate agency, but I expect this to be a pretty high number. What’s more interesting is that after an owner decides to go with the services of a professional the listing price increase. Kind of crazy to raise the price after the house has not been selling, right? Not really. The price is raised to cover real estate commissions. The higher quality marketing that comes with hiring an agent is what is expected to attract a buyer that will pay that sum.


In order to take advantage of this great benefit of FSBO you, as a seller, need to be an excellent marketer of your property. Using the help of companies such as ForSaleByOwner.com, ByOwner.com, and FSBOLocal.com you can get a good jump start in promoting and marketing your property. I highly recommend that if you take the FSBO route that you use one of these services. They typically involved a one-time fee or a monthly fee for listing your house, but it comes with many benefits. Some companies will actually refund any fees paid if you cannot sell your house on your own and then it sells through a real estate agent.


So remember, you can save thousands, but YOU have to do the work. You cannot just sit and expect the house to sell on its own.


Thanks for your comments.


The Housing Ecologist

Benefit #1 of For Sale By Owner

Benefit #1: You are the negotiator

As I mentioned on my previous post, the most important benefit of selling a house on your own is that you talk to the potential buyer directly. Some sellers will accept buyers who are working with agents since they still save 3% by only paying a buyer’s agent commission. The buyer’s agent may or may not want this direct contact. They may not want it because they lose some degree of control over the transaction. Why do I think think talking to the other party is so important? Please keep reading.

When I bought my first house I was glad that my real estate agent did all the “negotiating” on my behalf. I was literally scared to death to meet the sellers,which by the way I thought I had to. I felt that once I met them I would not be able to offer them less for their house than what they were asking. Silly me, right? Now that I am an investor I’m yet to buy a FSBO (for sale by owner) since all my properties have been forclosures. However, I have talked to several owners that have listed their homes on their own and it is amazing how much information they will give you. I had a lady down the street tell me: “We’ve had a lot of showings but not a single offer yet. We bought it for $130,000 so we’ll probably reduce the price to $145,000 within a week or two. Our loan balance is about $117,000 right now.” They had it listed for $153,500 and it was priced according to recent comparable sales. It had been in the market for maybe 6 weeks. If I was dealing with a real estate agent I would have never been able to get this information. I knew that they had to get at least $117,000 to cover their mortgage. The lady also told me that they were eager to move since they wanted to be close to family. They had recently sold a restaurant they owned and were basically unemployed.
Had I made an offer it probably would have been in the $120,000’s an not in the $140,000 had I not had this information. In my case I needed to purchase this home for about $127,000 to be able to make it cash flow as a rental. I had a better option at the time so I didn’t make this

offer.

Now, this was an advantage to me as a buyer. However, the seller can also learn similar information from the buyer. He or she may learn what the buyer’s situation is. Maybe the buyer cannot afford the house because the bank will not lend them enough money to buy it. If this is the case and the seller has enough equity maybe the seller can hold a second mortage. For example, the seller wants $150,000 for the house. His mortgage balance is $80,000. The bank will only lend $100,000 to the buyer. The seller can take the $100,000 from the buyer. $80,000 pays off his loan and the $20,000 is a downpayment. He then creates a real estate note for the remaining $50,000. More on private notes on a later post.

The benefit of face to face interaction between buyer and seller is that you can negotiate things other than price. You can negotiate terms. You can negotiate possesion. You can negotiate the down payment. Maybe the owner of the house is willing to take the buyer’s SUV as a downpayment. Personal interaction develops relationships that can make the transaction a win-win. In order to really benefit from this you’ll need to be willing to ask the questions. Keep in mind that you want to sell and the other party wants to buy, so the parties can help one another to achieve their goal.

Thanks,

The Housing Ecologist

Real Estate Agent or For Sale By Owner?

This is one of the most searched topics on the web when it comes to selling a house. Unless you have owned your home for several years you can expect to sell your home for less than what you paid for it. The current housing market is still struggling, and many people are bypassing the services of real estate agents in attempts to save money on real estate commissions. The value of your home, or actually the selling price, will determine how much you actually save. If your house sells for $200,000 a 6% commission (typical for many states) you will save $12,000! Or…will you? Below I share the benefits of both options, using a real estate agent and going for sale by owner. I will expand on each specific benefit on later posts to this blog since each point is a good conversation topic.

The Benefits of For Sale By Owner:

1. The most important benefit of selling your house on your own is that you negotiate directly with the potential buyer. When you have to talk to your agent who then talks to the other agent who then talks to the potential buyer much can be lost in translation. This also creates a very adversarial relationship between you and the potential buyer. You never know what the buyers really need and they never know why you are selling. 99% of the time the negotiation is strictly price!

2. Great opportunity to increase your net profit by avoiding or reducing real estate commissions.

3. Ability to market your property through companies such as ForSaleByOwner.com and FSBOLocal.com. This services cost very little and allow you to market your properties in similar ways as a real estate agent would. These services offer training materials and phone support as well.

4. No contract – you can decide to pay for a service such as that offered in by companies such as FSBO Local or For Sale By Owner on a monthly basis or with a one time fee. If you're buying or selling real estate, you owe it to yourself to click here! There are no 3 or 6-month contracts like those typical with real estate agencies.

The Benefits of Using a Good Real Estate Agent:
(These comments are based on selecting a top-performing real estate agent)

1. The most important benefit is marketing. A good real estate agent will market you house, schedule showings and open houses, print and mail marketing material to people who are actually looking to buy a house.

2. Constructive criticism – we all tend to show our house in a condition we feel is desirable, but this is not the best way. A good agent will provide constructive criticism and will advise on how to arrange your home in order to increase its appeal. I recently visited a home which was being sold by its owner. The house was beautiful and immaculate. It was full, VERY FULL, of antiques. If you were into antiques this might have sold the house; however, most people are not and the clutter actually hid the house’s best features.

3. A real estate agent is an expert on the entire process of selling a house. This includes listing the property, reviewing offers, selecting a title company, reviewing addendums and “subject to’s”, coordinating closing details, scheduling inspections, surveys, and other items pertinent to the transaction. He or she will insure that things go according to plan and will help you close on time.

4. Pricing your house to sell – real estate agents provide a comparative market analysis to come up with a selling price. Simply pricing your home $1,000 less than the house down the street will not sell your house first. If it does sell first it may be because you listed it cheap. Agents will also discuss your needs and will price the house taking into consideration their commission.

5. Information on what’s selling now – agents that are familiar with your neighborhood and surrounding areas know what’s selling. They are in tune with what features drive attention and what is in demand. They can also help you increase the value of your home with updates that will cost little to no money.

The advantages of one are the disadvantages of the other. So it’s not worth repeating at this point. I will cover each point in detail in the coming days. In the meantime feel free to post your comments, experiences or other information you know would be helpful to other.

Thanks,

The Housing Ecologist

Welcome to The Housing Ecologist Blog

Hello Everybody!



Welcome to my blog. I am the Housing Ecologist. My goal is that this blog can provide useful real estate related information to the readers. As we go forward I will be posting topics of interest pertaining to real estate. Some topics ideas are: buying vs renting, leasing vs renting, selling your house on your own or hiring a real estate agent. I will also be discussing current real estate news and how it can affect our decision to buy, sell or rent real estate.



I would like readers to post their comments to my posting and share their own experiences. It is my desire that this blog becomes a place were people can learn from each other in order to make better and more educated financial decisions when it comes to real estate. I have been a real estate investor for a few years now and I'm still learning, so I expect to benefit from readers' comments as well.





As I get started with this first post I want to give credit to Mr. Barney Zick for the name "Housing Ecologist." I attended one of his seminars on Real Estate Strategies and he made a comment that really stuck. He said that he didn't really like the title "slumlord" which many of us are saddled with. He preferred to be called a "housing ecologist". Although this was a simply a way to throw some humor into the lecture (which he was excellent at by the way) it can actually be very true.



I own several rental properties and in my talks with potential tenants they always bring up horror stories about their previous landlords. They tell me all the bad things about them and all the empty promises they made about repairs - obviously this is how they justify not paying rent since I'll call for references. However, this happens all the time. There are some great investors who can pick up bargain properties, fix them up an turn them into income producing properties. The problem is that they are great investors but lousy landlords. They do not take care of their properties, neglect their tenants, their houses get trashed and then they truly become slumlords.



On the other hand. I believe that if you take a distressed property, fix it up and make it a nice and SAFE place for a family, and properly maintain it you truly are a housing ecologist. Although you are in this for a profit you allow a family to rent a home that meets the standards you would set for your own residence.



It would be an honor if you decide to follow this blog and share your comments. I hope you enjoy this blog.



Thanks,



The Housing Ecologist