Real Estate … in a Nutshell

Why are most agents reluctant to explain representation to customers when they first meet? I’m not suggesting that you launch into “agency” while you are shaking hands, but too many agents wait until just before writing an offer to ask their customers to sign and date the Working with Real Estate Agents brochure and an Exclusive Buyer Agency Agreement.

My guess is that agents avoid “the talk” because they are afraid they will scare away the buyers and lose business. Unfortunately, almost all agency disputes occur between the handshake and writing the offer.

Let’s face it, when buyers are left to imagine how our industry works they assume that money can be saved by going straight to the seller or listing agent. If they do it once, that pattern will continue until some agent finally explains how our business really works.

The reason for having a “Working with Real Estate Agents” brochure is to protect consumers by letting them know who represents whom, how agents get paid, and what responsibilities agents should perform for their buyers or sellers.

Customers don’t have to understand every facet of agency to get started, just the basics. For example, “All listing agents work for their sellers.” Next, “All agents work for sellers until the buyer finally decides to contract with an agent for his or her own representation.”

Surprisingly, most buyers do not know how agents are paid, so during the first conversation it is a good idea to let them know that “the commission for properties listed in the MLS is paid by the seller to the listing firm and the listing firm in turn agrees to share part of that commission with the firm that brings the buyer.” Each firm then pays their respective agents out of its share.”

With just this small amount of information, buyers know that no one is working for them until they have an agreement, and that buyers do not usually have to pay a commission to have representation. Now it is a matter of them getting to know some agent well enough to establish rapport, confidence and trust to sign a written agreement.

Once the basic idea of agency has been presented and the WWREA brochure has been given to the customers to take home, they will be ready for a more in-depth explanation that will include dual agency, designated agency and other topics such as going without you to open houses and new neighborhood developments.

At our office, we expect agents to present the Working With Real Estate Agents brochure at the first substantive meeting and to have buyers sign an Exclusive Buyer Agency Agreement before going out for a second time to look at properties. This allows the agent and customer time to decide if they really want to work with each other. If your company policy allows an oral agreement prior to a written one, you should understand that an oral agreement obligates you to the buyer, but not necessarily the other way around.

Your value comes from you knowledge of the inventory, neighborhoods, market pricing, and your skill in weighing market value, negotiating a contract, recognizing quality construction, and sharing your contacts for services. You are giving away a ½ day of your time, valuable advice, and the wear and tear on your car to see if you and the buyer will make a good team. If after a day together the buyers are unable to decide whether you bring enough to the table to warrant the agreement, decide whether to continue or opt for a limited agreement.

If the buyer has reservations, consider narrowing the scope of the service by curtailing the geographic area (county, neighborhood, specific properties); the duration of the agreement (day, week, a month); or simply provide a written easy exit clause.

Many agents assume that buyer representation guarantees that you will be paid by the listing company, but the listing company shares its commission based upon procuring cause. A buyer agency agreement does not cover you for buyer activities before a written agreement is in place. So when agency is delayed, the opportunity for procuring cause to rule in favor of another agent is much higher.

Whenever you interview a prospective buyer who has been looking, be sure to ask these two important questions:

1. Have you signed a buyer agency agreement with another agent?
2. Have you seen any properties with another agent in past month?

Written by Bob Jamieson

Managing Broker with Peak Swirles & Cavallito Properties

“We want to be your next choice”

Surprise! The buyer’s home inspector discovered an abandoned fuel tank on your seller’s property buried about three feet away from the home’s foundation and next to the steps leading down to the basement. The buyers’ repair request asks that the tank be removed and they receive written assurance that everything is okay.

Your sellers are upset because they were never made aware of the tank when they bought the house 5 years ago and they don’t want to pay for an expensive clean-up. What advice would you give them?

Since they are required to amend their NC Property Disclosure to disclose the tank, nothing will be gained by putting off the problem until another buyer comes along, so they should begin the process by hiring a contractor experienced with this kind of work.

The contractor will take over the project and explain to the owners every step that needs to be done to resolve the issue.  Agents should have a list of at least three firms that they know are reliable and experienced in this work and who can provide the needed documentation to put the buyers at ease.

According to Chris Boshoff with Cohesion Inc. it is usually less expensive to remove, test and dispose of the tank than to handle the closure in place. In those rare cases when the tank is actually buried beneath the structure, the contractor might tell you they recommend in place closure.

If you are about to list a home that is old enough to have been heated by fuel oil, ask the current owner if they know whether an oil furnace was ever installed. If they say yes, ask if they have any reports or certifications that the tank was removed.

If they do not know, you should recommend that a tank removal firm do a “virtual” check of offsite records then do an on-site survey to determine if a buried tank still remains. There are also contractors with ground penetrating radar equipment that can locate an abandoned tank if such a search is needed.

Tanks were often buried relatively close to the home’s foundation and close to where the furnace was located. Experienced contractors are more apt to find them than homeowners because they know where to look.

Once found, the tank is emptied of any residual product, and dirt around the tank is removed. The tank is hoisted by machine and loaded on a truck for off site disposal and the cavity is inspected for fuel stains and odor. Soil samples are taken and sent to a state certified lab for analysis to see if the threshold for contamination is surpassed.

If the soil sample shows no contamination or is below the threshold, no clean-up is required and the hole can be filled. The owner must pay for the tank removal work such as excavation, fill, testing, disposal and landscaping which is quoted up front to the homeowner.

If the soil sample shows contamination above the threshold level, the contractor must remove the contaminated soil according to state requirements.  It is important that the owner receive documentation from the contractor in the form of a closure report, test results and certification from the regulatory agency that no further action is require. This information should also be reproduced and passed along to the eventual buyer.

There are commercial oil spill clean-up costs that are quite high, and these stories often frighten homeowners into refusing or delaying oil tank removal. In North Carolina there is a Leaking Petroleum UST Cleanup Fund that is managed by the state to pay homeowners 100% of the clean-up costs (but not the cost of physically removing the tank). While the amount of money in the fund fluctuates from time to time, reimbursement is mandated by law. The timeliness of reimbursement can vary from one month or longer.

Many vendors will wait for payment until the fund reimburses the homeowner. It is important for the homeowner and the contractor to have a clear written understanding of this arrangement before the owner hires the contractor.

Here are some other points you should know:

• Residential underground fuel tanks are not regulated by North Carolina and are not required to be removed. However, there is a risk to the current property owner that passes to the new owner at settlement. That is why most buyers ask sellers to remove the tank and risk before closing.
• So how does a regulatory agency get involved? If and when the tank leaks a petroleum product into the ground the law prohibiting such a discharge (into groundwater) is violated and it initiates a regulatory response.
• Why do these tanks leak? When steel tanks are buried, the combination of the metal tank, metals in the soil and chemical make-up of the groundwater causes a corrosive environment than deteriorates the tank.
• Leaking tanks are also detected because of vapors released from product that has infiltrated basements, wells and sewer lines. These incidents often require more intensive clean-up and involve greater expense.
• Unless the owner is certain that no underground tank is on the property, it is wise to check “no representation” or disclaim any knowledge of a tank on the property.
• If the tank was last used before November 8, 1984, the owner at that time is still considered the tank owner even if not the current owner of the property. If the tank was last used after that date, then the current owners of the property are considered the tank owners even if they never used it.

.Written by Bob Jamieson, Managing Broker with Peak Swirles & Cavallito Properties

“We want to be your next choice”

Sometimes you come across someone’s work that is so on target that you pass it along. Deborah Arends delivers the words that can pierce the most hard-headed seller. If you like how Deborah communicates with her clients, why not show her your appreciation by adding her name to your “Great Agents in Far Away Places” list. Refer friends and clients relocating to Seattle Washington to Deborah Arends.

Properties that are selling:

• Are extremely well priced … now is not the time to “try for a little more money.”
• Are selling for an average of 96% of list price! If you are overpriced you will be overlooked.
• Start with the right price. You can always “come down in price” later, but you can never recapture the excitement of a new listing, or the parade of buyers who passed you by.
• Must be in fabulous “show” condition or else priced accordingly.
• Have sellers that are committed to selling, not just testing the market.
• If you are thinking you will “try out” selling and rent the property if you are unsuccessful,  save yourself time and money by renting the property to begin with.
• Have sellers willing to work with the buyers … sales price, closing costs, terms.
• Have sellers and an agent willing to listen to the market … In our active market, a well exposed property that has not sold in 30 days is over-priced and needs a price adjustment.
• Have sellers who recognize that they cannot get as much for their property as they could have in the past, but  remind them that they can also buy their next property at a price lower than they could have in the past. Keep them in the present.
• Have a listing agent with extensive market knowledge, an aggressive marketing program and who does not “sugar coat” what needs to be done to get a property sold.

Properties sell, but not necessarily at the price the seller would like to get. Ask them what is most important … achieving a certain price or getting the property sold. Sometimes the two run counter to one another.

Article written by Deborah Arends of Deborah Arends & Associates
Seattle Washington 206-779-4404 deboraharendsseattle@gmail.com

Provided by Bob Jamieson, CRM, CRS
Peak Swirles & Cavallito Properties

“We want to be your next choice”

When you commit to payback a loan over the next 15 or 30 years you should know exactly what you are getting for your money. A survey is the best way to do that. Too often buyers don’t see the value in a survey, especially when they hear that their lender does not require one for title insurance.

Lenders don’t need a survey for “their” title insurance because they only have to protect the amount of the loan. Lenders have an umbrella policy that is calculated for all of the properties in their portfolio. Your down payment, mortgage insurance and monthly payments reduce their risks over time.

Buyers’ risks can be far greater. The lender’s policy covers just the lender, not the Buyer. Buyers need their own separate policy, and its coverage will be limited without a survey. In addition to monetary risk, you might be prevented from making a future addition, or you might net far less from a future sale than expected, or you could even become entangled in a long drawn out lawsuit with a neighbor.

Here are 8 good reasons why buyers need a survey:

Boundaries

When the boundary stakes are flagged, you gain a true picture of the land you are about to purchase, not what you assumed you were buying because of clues taken from fences, hedges and utility boxes. When flags are in place it is clear whether the neighbors’ fence is encroaching on the property. Prior to closing you have the leverage with sellers to correct these problems, but as soon as you close their headaches become yours.

Area

When the area is calculated and written on the survey, you can see that instead of the 10 acres as listed, you are only getting 8 acres, and 2 of them are wetlands. Even smaller parcels can have restrictions that can disrupt your plans to add a pool, another garage or screened porch due to a setback or limitation on impervious surface.

Existing and Future Improvements

You not only need to know where the current house, deck/porches, driveway and outbuildings are located, but you should know the total amount of impervious surface that they take up, especially if your lot is near a stream or lake. If you want to add an additional garage bay or an in-ground pool, you might already be at your maximum percentage of allowable coverage.

Easements and Right of Ways

Some easements are obvious, but most are not. Drainage easements often look like part of the landscape and sewers and water lines are buried out of sight. Paved streets and sidewalks are easy, but right of ways and natural buffers are not. Assumptions about right of way width and how they are determined need to be marked on your plat.

Zoning, Setbacks and Permits:

The precise zoning classification affects not only how property may be used, but also the setback requirements specific to that classification. Any future improvements could be severely limited or denied by not knowing the exact setbacks. Other limiting factors in rural neighborhoods can be a septic field (and replacement field) and well location, both with their health related setbacks. Ask for septic and well permits from the owner or local health department..

Neighborhood Common areas:

Sometimes neighborhood associations have  common areas that are not always easy to identify, like walking trails, drainage easements, dedicated easements for a sidewalk or bike trail that might run across or alongside of your property. Some large tracts have bridle trail rights, ask for covenants and restrictions.

Elevations:

It is important to know if any part of your property lies within the 100 year flood elevation. Some flood prone areas appear just like the high ground areas … until a major storm occurs. Often lenders require you to purchase flood insurance to protect the residence even if the flood line just touches a far corner of the lot. If you can prove with a FEMA flood elevation certificate that all parts of the structure are outside this area you can request an exemption. Having the elevations drawn on the survey adds cost, but could be worth it if you are planning projects that would benefit from knowing the grade of the land … like water features, pool, steep driveway or drainage project.

Vegetation:

Some home owner associations require an inventory of all trees of a certain diameter that exist outside of the footprint of the house and driveway in order to maintain the vegetative character of the neighborhood. This work is time consuming and adds substantially to the cost of the survey but required by some architectural review committees for future projects.

Condominiums:

No survey is needed for this form of ownership since your unit is defined within the scheme of the master plan of the development.

Keep in mind that a survey can affect an Owner or Homeowner Title Insurance policy. To obtain full title insurance, you should obtain an ALTA Survey which will cost more, but provides the most risk reduction. If you are just refinancing your property, a survey affidavit will suffice.

Just as important as title insurance is a walk of the property with a survey in hand before your due diligence period expires to make sure that what is on the land is also on your plat, and what is on the plat is fully understood.

You’ve heard the warning to beware of a “pig in a poke” That translates to “Look in your bag to see if you got what you paid for”. If you’ve ever checked your $5 fast food order, don’t you think it  wise to do the same for the property you are buying?

Written by Bob Jamieson, Managing Broker with Peak Swirles & Cavallito

“We want to be your next choice”

I have owned five Dell computers during my real estate career and I don’t regret it one kilobyte. As a matter of fact, I never had a choice in the matter since most multiple listing services discouraged anything other than PCs.

That is about to change in a major way in the Triangle, as Apple is about to gain equal footing in our MLS. Converging at the same time is Verizon’s dominance in the 4G network, along with their recent addition of Apple products in their stores … the flood gate is open for a major change.

If I were a new agent entering real estate today it would be a no-brainer to purchase an I-phone now and eventually add an I-Pad or lightweight laptop as soon as I could swing it financially.

The rationale is simple. We are a mobile industry that needs reliable and easy to use tools for communicating with our clients. Apple products are intuitive to use and benefit from leading edge design. As soon as I am eligible for a trade up, I will be turning  in my Droid for a new I-Phone.

I am not a techie with 100s of Apps on my phone and hours of experience to back-up my opinion about which Apps work best. On the contrary, I must rely on specialist in the field to try out, rate and recommend which Apps might work best for me.

Actually, Inman News has already done this for us. Just click on Smartphone Apps , or go to www.inman.com/reports/mobile-apps  for the easiest way to review the Top 100 Smartphone Apps for Real Estate professionals. Each App is described, rated by users, and can be ordered with a click.

But before you go there, let me suggest a number of categories for Apps that might work well for your business:

If you only have one business related App on your phone, it should be TriangleMLS. This will enable you access your MLS just as if you were sitting in your office. It also gives you access to the Centralized Showing Service so you can arrange or cancel showings online while out with clients.

To avoid embarrassment in front of your clients, you might want to have Apps on your phone that customers are likely to have on theirs. Realtor.com App is important because you can receive a lead from one of your profiled listings while you are mobile. Zillow.com locates homes for sale and rent (in case you a chauffeuring a relocation client around), and it provides valuations called “zestimates” that are important to know before you arrive for a listing presentation. Trulia.com is similar to Zillow but also posts open houses. 

If you have clients who are hell-bent on foreclosures you should definitely have one of the several foreclosure Apps installed. If you work with investors (often cash buyers) you will want to have an investment analysis App. Do you ever work with International clients relocating to the Triangle? If so, consider the Spanish Real Estate Dictionary. The following Apps enable you to prospect for leads: ForSaleByOwner, CraigsListPro and OpenHomePro.  

Some Apps are useful while you are out showing property such as one for weather conditions or a GPS App like Latitude when MLS directions say turn right when they meant left. For math challenged agents, get a financial App like HomesMortgageCalculator so you can retire your calculator from service. When you  measure your next listing, try My Measures & Dimensions.

Do you ever show property to strange folks? Glympse will trace your path so that your whereabouts are known at all times. Caution: Don’t get this App if you frequent bars on the way back to the office. And if you are going to pay $5.00+ a month for phone insurance why not get WheresMyDroid.com for the days you leave your cell at McDonalds or Starbucks. Some of you are wondering what good this does if the App is on your lost phone … don’t worry, it works.

Some Apps work much better on a tablet simply because of the larger screen. Camera+  and Photosynth are two a good photographic apps that work well on both devices. Forms are easier for clients to read and digitally sign using Zipforms Mobile Solutions and Docusign. What if you could use your I-Pad as a phone? Check out Talkatone. 

Smartphones  and tablets are similar to computers with vulnerability to viruses and spam just like your laptop. Mobile Defense or Lookout provide reliable mobile security. Other worthwhile Apps are Zite which collects articles that match your interests, and Keynote which is a presentation tool for I-Pads similar to PowerPoint.

One App that I think will save all of us a lot of time is Dragon that will recognize your voice and convert it to text quite accurately … we’ll no longer need keypads or  fingers. Skype (FaceTime) will also play a bigger role in connecting you with out-of-town clients as you go over home inspections, HUD statements, and other forms. Dropbox can give you cloud service that allows you to synch  your computers, smartphone and tablet when handling pictures, files, etc. and can save you so much time and effort. 

My last suggestion is that you add one or two Apps at a time and take an hour or two to master them (or else delete them) before adding others. You are better off with 10 Apps that make your job easier, than 50 that you never find time to learn.

By Bob Jamieson, Managing Broker for Peak Swirles & Cavallito Properties

“We want to be your next choice”

Your choice ultimately comes down to which smartphones are available from cellular providers in your market area. A few devices are offered in slightly different versions by varying cellular providers; others are offered exclusively by one carrier.

A major factor this year is whether your carrier provides 4G coverage in the Triangle area. Both Verizon and A T & T do, but Sprint and T-Mobile are limited. Verizon is far ahead of  A T & T in providing 4G coverage across the United States, so if you travel a lot or have a second home someplace else, google “4G cellphone coverage map” to determine your preferred carrier.

We don’t always get what we deserve, but we always get what we negotiate. As children we learned to be persistent and determined and when that didn’t work we resorted to tears, shouting, limp body collapses, flailing of arms, random kicking, and words we heard our parents use.

Eventually our parents learned how to manage our emotional outbursts with a bribe, by giving in, standing us in the corner or when all else failed, through corporal punishment.

As agents, we negotiate throughout our career from the day we join our first company to when we decide to make a change; or argue for a higher split; or defend a client’s request to reduce commission. We negotiate for our clients on price and terms for a contract, or repairs and due diligence and escrow money.

Here are some suggestions that will enable you to become a better negotiator and also help you and your client with the bottom line.

Be prepared. The most informed party will be able to visualize and articulate the most acceptable terms of any agreement. This is where technology can help you research the circumstances and facts that are critical to a good solution. Check market trends, tax records, showing reports, and pricing history so you can hone in on a realistic meeting of the minds.

Discover the True Picture. The party that best understands the situation affecting everyone involved will recognize the best solution first. Most of us focus on “our” position and doggedly defend it. That results in being blind to the driving forces of the other party. Ask the other agent questions as if you are peeling an onion … probe one layer at a time until you are certain that you have a clear picture of the stakes involved.

Don’t Undercut Your Client. It is you fiduciary responsibility to represent your client’s position in the best light even if you disagree. Make your recommendations to your clients until they make their decision, then put on you negotiating face and present their position without apology or reservation.

The Balance of Power.  Frame your strategy within the existing market trend of that neighborhood. If the absorption rate is greater than 6 months, the Buyers have more power in calling the shots, but when the rate is less than 6 months the Sellers’ position gets stronger. Overall, they Buyers have the additional power to walk away and start over with any house in the MLS, while the Sellers are wedded to a single property.

Avoid the Fray. Sometimes the two parties may think they have come to an impasse, and turn to their agents to offer up commission to bridge the gap. One of our agents joked that she would have her attorney write-up a two-week time-share in exchange for her commission so her family could vacation at the property each year. Both parties got the message, and resumed their negotiations once they realized that no relief was coming from the agents.

The More at Stake.  If your Buyers are in love with a property, your negotiating power is severely weakened. If your Sellers must sell to close on another house, your negotiating position is diminished. Be careful to adjust your approach to the situation of your clients. Never risk someone else’s dreams with an outcome they might regret later.

Let Time Work For You. Once the Buyer decides to pull the trigger the offer should be immediately delivered. When there is no reason to delay, move quickly. Make your clients aware that time can cut both ways when setting ultimatums and deadlines. For example, the Buyer might want to force a timely response by using time is of essence, without being aware that he just gave the Seller an easy escape clause. A delay in response can sometimes reverse the balance of power when the other party becomes too confident that they are calling the shots. However, the overall rule is that the more time that passes, the more likely the deal will fall apart. People eventually grow weary of the stress and emotions of negotiations, and one party may decide to disengage.

 Keep the Big Picture in Sight. No one likes to feel they have been slighted or taken advantage of, and no one enjoys the idea that they lost the game. So when someone on your side digs in their heels and says “take it or leave it”, you should remind them of their ultimate goal of starting their new job or enrolling their child in the magnet school down the street.

By Bob Jamieson,

Managing Broker for Peak Swirles and Cavallito Properties

“We want to be your next choice”