Last week, I criticized the practice of some agents who hide potentially important information from buyers by putting it in the secret “agent’s only” section of the MLS called “private remarks.” I stand by that post: if it is important enough for the buyer’s agent (and would not cause embarrassment or a security risk) I really think it should be disclosed to all.

This week, we shall travel a slightly different road – the agents who are honest, and sometimes brutally so. I recently came across a closed listing on the MLS that had some rather fascinating private remarks. Intrigued, I read the whole listing, and was surprised to see this in the public section:

“If you want to go through hell, try presenting an offer and closing it. . .. and if you have to ask for an extension, just cancel while you have a chance.”

(I won’t embarrass the listing agent by identifying them here, but if you really want to, you can go ahead and Google that remark and you will likely come up with it on your own.)

What were they thinking?
I can only surmise that the listing agent was having a very difficult a time with their client getting a deal done on this property and put this up in frustration. While I can certainly commiserate with the agent, I don’t think this sends the right message to anyone involved: the buyer, the buyer’s agent, or most certainly, the seller (likely an institution that the seller’s agent wagered would never bother to read the MLS.)

Here’s another one: From a current listing

“TLC required. Property must be purchased in AS-IS condition and buyer will assume all rent controls ordinance placed on both properties. Neither Bank nor seller will pay for any repairs or inspections or termites on this property. Must submit offers without seeing the home.”

While this listing was not openly dismissive of the seller, I just love that the last part – and the invitation to go ahead and buy a pig in a poke. Maybe you’ll get lucky. On the other hand, maybe there’s a reason why the seller/Bank won’t pay for any repairs. You decide.

Who says real estate agents are dry? They can be quite funny sometimes.

Photo: Jason Rogers, via Flickr (CC license)

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Honestly, I’m Not Making This Up: MLS Rants

I believe most people, and even most Realtors, are fundamentally honest. Not only are there moral reasons for telling the truth, but these days, given the number of lawsuits that arise from real estate transactions gone wrong, it is simply good business to be honest. Thus, I am continually amazed by what I find under the secret “agent’s” section of the MLS called the “private remarks.” What, you didn’t know that there was a secret “agent’s” section of the MLS? Well, there is, and it is a repository for all kinds of information that, for whatever reason, the listing agent thought the buyer’s agent should know about the property but did not want to reveal to the general public.

Sometimes there are legitimate reasons for keeping information from every member of the unwashed public that is browsing Realtor.com or some other site. Perhaps the old lady who lives in the house keeps a lot of cats, and you need to call in advance to make sure they are put out before a showing. You should not advertise that fact – some burglars might take advantage of it. Same for the code to the lock box. So it is fair enough to keep that kind of information in the private remarks.

But, I frequently find information that is material (i.e., significant) to the value of the property being offered hidden in the agent’s section of the MLS. Thus, anyone without access to the secret part of the MLS (i.e., who did not have a full MLS subscription or did not have their own agent reading the full description of the property) would be blissfully ignorant of the disclosures made in the secret section. Thus, any offer presented to the listing agent (without the benefit of this information) would not be able to price in the information in the opening offer. While I would presume that the listing agent in a double-agency situation (i.e., representing the buyer and the seller at the same time) would eventually get around to disclosing the material information listed on the secret part of the MLS, it still strikes me as unfair that such information is not disclosed from the outset, so that the potential buyer can decide whether the property is one that meets his or her criteria before making an offer and investing time in the property.

A classic example of this is the agent that puts “total fixer” in the private remarks, but does not disclose that elsewhere in the listing. I’m sorry, but this is the kind of tactic which gives Realtors a bad name. If a client comes to me and is interested in a listing (but not a fixer) and then I have to inform them that the property that looks like a creampuff on the MLS is, in fact, a total fixer, then I have to the be the one to explain why the listing agent thought that the information should be kept from the potential buyer.

I saw one property listed on the MLS which seemed like a great deal from the public section. The private remarks, however, were another story entirely. The private remarks disclosed a sorry tale involving numerous building code citations and even had a long letter from the city attorney to the property owner (by that point, a bank) detailing the serious and possibly irremediable defects in the property. By the time I was done reading it, the property seemed to be a tear down from any reasonable perspective, and not much of a bargain.

The bottom line is that the MLS should be a tool to exchange pertinent information about properties offered for sale – not a tool to “hide the ball” from the unwary and unrepresented potential buyer. But, agents persist in these tactics: as Mark Twain cynically revised the old proverb, “honesty is the best policy – when there is money in it.”

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Sex, Lies and the MLS: Why What You See is Not Always What You Get

Last week, my BiggerPockets.com blog article discussed the pros and cons of “Getting Your Real Estate License”…

With that post in mind, I wanted to throw out some additional thoughts for those people who want to or plan to get their license to buy/sell their own properties. While the logistical parts of being a real estate agent are pretty simple and can be accomplished by anyone who can do paperwork, follow some basic rules and regulations, etc, there are some aspects of being a great agent that require some not-so-common skills.

For those considering their license, I just wanted to take a few minutes to touch on some of those other aspects of being a great agent, and how to tackle those areas if you don’t personally have the skills…

Communicate, Communicate, Communicate

The number one skill of a great agent is the ability to communicate effectively and to make the agent/buyer on the other side of the transaction feel comfortable and appreciated.

As a buyer myself (and having my wife as our agent), we’ve had other agents that have failed to return our phone calls, agents who don’t keep us updated as to the status of a transaction, and even agents who don’t bother to respond to an offer we’ve submitted! These are agents that I will go out of my way not to work with in the future, and especially in a market like this (a buyer’s market), not communicating with your buyers or your buyer’s agent is likely to lose you lots of business.

Just the other day, we had an agent who thanked us for answering the phone over the weekend to give him more information about one of our properties. It never even occurred to us that some agents wouldn’t answer EVERY phone call immediately, but apparently there are plenty who don’t.

If you’re not a strong communicator, and you don’t think you can build these skills, let me suggest that you hire a good agent to sell your houses instead of trying to do it yourself.

Make Every Showing Perfect

I can’t tell you the number of times we’ve called a listing agent to inquire about seeing one of their properties, having them tell us to go see it, and upon arriving at the property, it’s clear that the agent hasn’t been there in a long time. Maybe the key is missing from the lockbox; maybe there are no flyers left; maybe there are light-bulbs burned out in dark areas of the house; etc.

When you sell a property, you must strive to treat EVERY showing as if it’s for the eventual buyer. When we sell a house, we ask in the listing that the agent call 30 minutes before showing the property. Then, when an agent calls, we have time to have one of our employees drive over to the property, turn on all the lights, open the mini-blinds, ensure that the staging is perfect, ensure the air fresheners are filled, ensure that there is no debris in the driveway, ensure that there are flyers, ensure that the flowers look fresh, etc. This is so ingrained in the way we do things that I couldn’t imagine not doing it (I cringe every time an agent calls from the driveway of a property, not giving us time to prepare).

And while this is completely natural for us, it’s completely the opposite of pretty much every other agent we work with. If you’re going to list your houses, be prepared to make every showing perfect, even if you have to hire someone to run over to your houses before a showing to get it ready for you.

Be A Strong Marketer

For many investors, this is perhaps the most difficult aspect of also being a great real estate agent. Selling houses isn’t just about sticking some text on the MLS . . . it’s about marketing your properties and yourself.

For example, here are just a few of the things we (okay, not really “we,” but my wife) do to entice buyers to visit our properties and to put in offers:

• Pictures: If you want people to visit your property, you need to entice them with great pictures. That means making small spaces look big, making awkward areas look enticing, and making “ugly” features of your properties seem appealing. Pictures should make buyers say, “I have to see that property before someone one buys it!” If you don’t know how to take great pictures, invest in a photography course, and just as importantly, invest in a copy of Photoshop. Being able to manipulate things like brightness, color and contrast in your photos can make the difference between drab and fab (did I really just say that? ). If you need to take a course in photography and/or Photoshop, I’m willing to bet you’d find it to be a great investment.
• Flyers: Many of your potential buyers will see the exterior of your house and then grab a flyer from the flyer box. If that flyer doesn’t entice them to call you (or their Realtor) for a showing, you’re in trouble. Likewise, after a potential buyer has seen your property, they should have an appealing flyer to take home to show others who may be contributing to the decision of whether to make an offer or not. If you don’t have the skills to design your own flyer from scratch, invest in a good template, or hire a good designer to build you template.
• Virtual Tours: I was surprised to find that many buyers will base their decision on whether to look at a house on the virtual tour. Personally, I don’t look at virtual tours, but many buyers do…especially when they’re trying to narrow down their list of houses to see with their Realtor. There are some very basic tools available to create virtual tours; learn to use them, and make sure you post a tour with every MLS listing.

Have People/Networking Skills

Good agents have large networks of contacts that they can leverage to find buyers, sellers, investors, partners, etc. They build these networks through good-old-fashioned networking — attending real estate meetings, introducing themselves at parties, talking to neighbors at the properties, etc. And through these networks, they can get can their houses sold much more quickly than those agents who just put a listing on the MLS and wait.

Not every investor is a “people person,” so for some, doing this part of an agent’s job might be difficult (personally, I’m not very good at it). If that’s the case, consider partnering with another agent to help with your marketing and selling. It might mean splitting your commission(s), but it also may be well worth it when it comes to moving your houses quickly.

Photo: A.M. Kuchling

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Traits of a Great Real Estate Agent

Do you think of yourself as a sales professional? From what I’ve seen, most Realtors do not. It’s ironic, don’t you think? Even our license says “salesperson”, unless you’re a broker of course. Still, most Realtors I talk to avoid sales like the plague. Most of us think of selling as a bad, bad, dirty thing. How do you feel about this?

Do you feel using sales tactics to get a client to the closing table is wrong? My argument is that selling is the right thing to do. We should not only be proud that we’re in sales, we should embrace it, study sales techniques and become the best sales professionals we can. What do you think?

Do you want to make a living in real estate? Then you have to sell! Does this make sense?

The Problem with Avoiding Sales

If we need to make sales in order to make a living (this is no secret in real estate!), then why do so many real estate professionals skirt the issue and say they’re not salespeople? I hear Realtors say that they’re “just here to help their clients”. They’re “just here to give them the information”. They’re “just here to help them overcome any issues they have in buying their home”. These are all nice things, but I have to argue that it’s a sellout to be in real estate and claim that you’re not a salesperson.

I’d go one step further and submit that it’s UNETHICAL to be out there doing deals and NOT consider yourself a salesperson! Why would I make such a claim? Because people trust you to guide them and work in their best interest. They trust you to know better, because the client often doesn’t know better. Our clients need us. What does that mean? It means a number of things, but it includes a responsibility to SELL…when it’s called for. We have a responsibility to close the deal when that’s the right thing to do.

I’ve seen it again and again out in the field. Realtors kill deals. If you’ve been in real estate for any length of time, you know what I’m talking about. The agent on the other side of the transaction blows an item on the inspection report completely out of proportion and tells their buyer to ask for a bunch of unreasonable concessions as a condition of moving forward. It’s not in the best interest of the client. They’re already getting a great price. If they didn’t want the dang house, why did they make an offer?

This is an all-to-common example of a Realtor allowing their client to walk all over them. They’re allowing a client’s insecurities to dominate the negotiation. Instead of educating, instead of CLOSING, instead of SELLING the deal, the other agent becomes a doormat and wrecks a perfectly good transaction. All because they either don’t want to be a salesman (i.e. pushy), or because they just don’t belong in this business to begin with!

Yes, salesmanship is stigmatized. We have to deal. We have to be the ones to educate our clients and show them we know what we’re doing, that we know what we’re talking about. We have to establish TRUST and go for the close when it’s the right thing to do. A trained and practiced sales professional knows when that is. A Realtor who is afraid to call themselves a salesman doesn’t aggressively pursue sales training. They don’t practice scripts. They don’t learn to overcome objections and guide a consumer from “point A” to “point B”. Sales skills are a responsibility. That’s true. It’s possible to abuse any skill. But without the skill to begin with, you also cannot use it for good!

Why Sales Training Should be an Ethics Requirement

We all have CE requirements. In depth sales training should be part of the course as well. Knowing how to sell does not mean ALWAYS going for the close, no matter what. Knowing how to sell means more than knowing HOW to close. It also means knowing WHEN to close. It also means knowing how to interview a client and determine their needs and desires. It means knowing how to qualify clients and work with people who can and should buy, as opposed to just working with basically everyone that walks in the door.

Working with every client you can get your hands on is a favored tactic of professionals who don’t know how to sell. This is destructive, because it inevitably puts clients in your car (and eventually at the closing table) who shouldn’t be there. You do bad deals, because you don’t know how to qualify. It’s ironic, isn’t it? Because we avoid salesmanship in an effort to be more human and helpful, and what happens instead is that we just end up doing bad deals anyway.

Sales training teaches you to qualify. This means you’ll always work with qualified and legitimate clients who can and should buy. This is a good thing! It means you’ll do solid deals. It also means you’ll waste a lot less time, because you’ll only be working deals that can and should close.

Sales training also teaches you to prospect, another thing abhorred by most Realtors! We avoid prospecting like the plague, because we don’t want to come off as a salesman. We don’t want to be pushy! Understandable. The thing is, when prospecting is done well, it’s not pushy! In fact, it’s a natural healthy activity that generates a strong pipeline of sales leads. How does this affect your business? It makes it so that when you get a bad client, or when you become aware that someone has an issue or legitimate reason they shouldn’t be buying, you have no problem or reservations at all cutting them loose. You’re cool with letting the deal go for two reasons. One, it’s the right thing to do. Two, you have a million other clients to work with. A trained and practiced sales professional knows how to build this pipeline. A Realtor who avoids sales like the plague in most cases doesn’t have a strong pipeline, because they don’t prospect aggressively.

Being clingy and trying to close a deal that shouldn’t be done is, oddly enough, not something a well-trained sales professional does. But most of us think differently, don’t we? Most of us think sales means being forceful and working against the best interest of a client. That’s not it at all. It’s why I’m so compelled to share these ideas, because as Realtors, we’re in a sales profession, yet the stigma of sales has reached deep into this industry, and the misunderstanding of what sales is and isn’t has literally ravaged the real estate business. A Realtor with a strong sales-based approach doesn’t have time or the inclination at all to do deals that shouldn’t be done. They cut those clients loose and move on.

The Responsibility to Sell

Are you good at what you do? Do you truly offer a significant value to your clients? If not, then you should step back and GET good, or you should get out of the business. If you’re not awesome, you shouldn’t be helping clients with such a huge transaction. You have no business being in real estate if you’re not serious about being great. It’s a massive purchase for someone, the transaction CAN be screwed up, and it’s wrong to put yourself in the middle of a deal like this if you’re not in it to win.

If you ARE great, then you have the RESPONSIBILITY to sell and close as many deals as you possibly can. Why? Because if you don’t close them, then some fool who has no business being in real estate will end up being that person’s agent. You don’t want that, do you?

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Are You in Sales (psst, the Answer is YES!)?

1. Loopnet.com – Loopnet is probably the largest and most well-known commercial real estate listing site. They claim to have over 630,000 active commercial real estate listings on their website. It costs $24.95 a month for visitors to have access to all of the property listings. The free membership for visitors allows full search capability, however, only a limited number of results are shown.
2. Realup.com – Realup is brand new to the market and officially launched on May 17, 2009. It appears that all of the memberships for both buyers and sellers are free. The website says that “our property listings are charged based on a pay-per-results pricing model, setting us apart from our competitors and providing the greatest value to our partners and clients.” So, they are basically charging for the traffic or leads that your listing generates. This sounds good in principle but from my experience the technology for these “pay for the lead” type of systems is usually too weak to determine what a valuable lead is.
3. Costar.com – Costar offers the ability to search for all commercial property types. Basic listings are free for real estate professionals and property owners. It costs $24.95 a month for visitors to have access to all of the property listings. The free membership for visitors allows full search capability, however, only a limited number of results are shown. They offer information on “space available for lease, comparable sales information, tenant information, properties for sale, property information for clients’ web sites, industry professional directory, analytic information, data integration, property advertising and industry news–throughout the United States as well as in the United Kingdom and France.”
4. CIMLS.com – What makes CIMLS different than many other similar sites is the fact that visitors can search listings for free while realtors and property owners can also post their listings for free. Realtors and property owners have the option to upgrade to a Gold account for added exposure. The Gold account costs $14.00 a month for the first month and $20.00 a month for every month thereafter.

Photo Credit: quinet

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Where to Search for Commercial Real Estate Online

Do great rates and great service fail to impress you? Well you are not alone. We are in a time where you need to find out who can create value with their services and ideas. And what I mean by value is, attracting customers. A good number of investors plan to sell their property at some point and awareness of loan programs can help your potential sell.

Here are a few loans of value over the last few years:

• 100% purchase, non-owner, stated income, interest only
• 1% pay option ARM
• 100% cash out refinance
• 100% Jumbo Loans

There is great debate on whether these loans are good loans, but few can argue these loan did attract customers for Realtors, Builders, and Mortgage Companies.

What are the next generation of loans to attract customers?

• 3-2-1 buy-down
• PITI Abatement
• FHA/VA
• My Community
• Credit Repair

One might say that 2008 is the year of government backed mortgages. All the loans high lighted above are directly tied to the government through Fannie Mae, Freddie Mac or FHA/VA. Unfortunately the line is drawn right at $417,000 and some high cost areas have limits as high as $729,750.

3-2-1 Buydown
Sellers and Builders can use a temporary 3-2-1 and 2-1 interest-rate buy-downs as a sales incentive. In a 3-2-1 buy-down, the interest rate is reduced by 3 percent the first year, 2 percent the second year, and 1 percent the third year. A 2-1 buy-down lasts for two years, with a 2 percent reduction the first year and a 1 percent the second.

The 3-2-1 Mortgage Buydown

• This is a 30-year fully amortized mortgage.
• The interest rate increases 1% every year for the first three years.
• Then the interest rate is fixed for the remaining term.

Here is how it works. Your loan balance is $375,000 and the interest rate is fixed at 6.5% for 30 years. The seller incentive could buy down the interest rate by paying a lump sum of $16,764.

1. First-year interest rate is 3.5%, payable $1,684 per month.
2. Second-year interest rate is 4.5%, payable $1,900 per month.
3. Third-year interest rate is 5.5%, payable $2,129 per month.
4. Years four through 30, interest rate is 6.5%, payable $2,370 per month.

• First-year savings (as compared to $2,370 per month) is $686 per month or $8236.
• Second-year savings (as compared to $2,370 per month) is $470 per month or $5642.
• Third-year savings (as compared to $2,370 per month) is $241 per month or $2,892.

Add up the annual savings: $8,236 + $5,642 + $2,892 = $16,770. Therefore, it costs $16,764 to buy down the interest rate and payments for three full years. It costs approximately 4.5% of the loan amount to buydown.

Benefits of 3-2-1 Mortgage Buydown

• The borrower qualifies for this loan at the 3.5% interest rate and payment amount of $1,684 versus the real rate of 6.5% and the payment of $2,370.
• Instead of the payment jumping all at once, it goes up in smaller increments, about $200 each year, for the first three years.
• It keeps payments low for 36 months for borrowers whose income is expected to later increase. Perhaps a spouse is returning to work after a hiatus or a person expects to graduate and land a higher paying job with that newly earned degree.

The 2-1 Buydown Mortgage

• This is a 30-year fully amortized mortgage.
• The interest rate increases 1% every year for the first two years.
• Then the interest rate is fixed for the remaining term.

Here is how it works. Say your loan balance is $350,000 and the interest rate is fixed at 6.5% for 30 years. The seller’s incentive could buy down the interest rate by paying a lump sum of $8,063.

1. First-year interest rate is 4.5%, payable $1,773 per month.
2. Second-year interest rate is 5.5%, payable $1,987 per month.
3. Years three through 30, interest rate is 6.5%, payable $2,212 per month.

• First-year savings (as compared to $2,212 per month) is $439 per month or $5,268.
• Second-year savings (as compared to $2,212 per month) is $225 per month or $2,700.

Add up the annual savings: $5,268 + $2,700 = $7,968. Therefore, it costs $7,968 to buy down the interest rate and payments for two full years.

This loan program can help more individuals qualify from and income documentation stand point.

PITI Abatement
What is PITI Abatement?

• An incentive to the buyer to have the first 6 months of the mortgage paid by the seller.
• PITI Abatement program is a product designed specifically for home-buyers. You can give a 6% Seller Contribution that can be used for Principle, Interest , Taxes and Insurance payments.

What are the General Guidelines?

• Loan amounts up to $417,000
• Up to 100% of the purchase price (5% reduction for declining markets)
• Minimum score of 575
• Fixed Rates and ARMs
• Interest Only is available
• Income limitations may apply
• Closing costs can be paid by seller too
• No prepay penalty

What is the Realtor marketing element?

• 6 MONTHS PAID!
• BUY THIS HOME AND I WILL PAY YOUR FIRST 6 PAYMENTS
• 6 MONTH PAID MORTGAGE INCENTIVE
• BUY MY HOME AND I PAY CLOSING COST AND 6 PAYMENTS

FHA Loans

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.

• Low down payments
• Low closing costs
• Easy credit qualifying

Benefits for your buyer·
Your down payment can be as low as 3% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.

FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs – all in one loan. Sellers and investors should be aware that FHA requires 90 days of season ownership of a seller in orders for a buyer to use a FHA loan.

What is the Realtor marketing element?

• FHA can provide 100% Financing when combined with gift, grant or down payment assistance program
• One loan with low fixed rate

  My Community Mortgage

  What is My Community Mortgage?

  • A conforming affordable housing program offering high loan-to-value/combined loan-to-value financing for income-eligible borrowers
  • Government backed mortgage program

  What are the General Guidelines?

  • Loan amounts up to $417,000
  • Up to 100% of the purchase price (5% reduction for declining markets)
  • Minimum score of 575
  • Fixed Rates and ARMs
  • Interest Only is available
  • Income limitations may apply
  • Closing costs can be paid by seller too
  • No prepay penalty
  • Allows “roommate rent” for income qualification

  What is the Realtor marketing element?

  • Automated underwriting = more approvals
  • Government backed loans available
  • Let us pay your closing costs

  Having all the tools to properly sell your property can be critical.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Mortgages That Attract Homebuyers

Good news, bad news time for real estate and the general economy this week.

The bad is, I am afraid, very bad, indeed.

Prices for single-family homes took a nose dive in the first quarter of 2008…down an enormous 14.1 percent from the year before.

Standard & Poor’s/Case Shiller report, according to Reuters, says this is at “a pace five times faster than the last housing recession.”

The chairman of S&P’s index committee tells the wire service, “There are very few silver linings that one can see in the data.”

You think?

And now, says the New York Times, the housing mortgage mess has spilled over into the auto industry in a very big way. Mostly because many people can’t borrow against their mortgage now.

Want proof?

Shares of General Motors Tuesday slid to a 27 year low!

Okay, now some good news…for consumers but maybe not so good for bricks-and-mortar brokers.

The U.S. Justice Department has just reached a deal with the National Association of Realtors in an anti-trust case.

Says the New York Times on its website, “government officials said (the deal) should spur competition among brokers and ultimately bring down hefty sales commissions.”

Told you this may not be such good news for brokers…though it is for consumers and, in particular, for Internet real estate brokers.

Under the terms of this settlement–the case goes back to 2005–Internet brokers will be able to use the multiple listing services that are used by other brokers and which were sometimes denied them.

A judge still must approve all this, of course.

Here comes the good news, bad news thing again—one expert predicts this deal will eventually result in a reduction of sales commissions of as much as 50 percent! Good for consumers, bad for some brokers.

The Times quotes one business professor as saying, “It’s pretty clear that there was an enormous amount of discrimination against brokers who were trying to use innovative business models. There are lots of entrepreneurs who have been looking for a green light in the form of this order to begin offering discounted rates. It has the potential to be a big step forward for consumers.”

Could this be the spark needed to breathe new life into the real estate market? (yes, I know there are really several markets depending upon where you live, but, in general, the real estate market nationwide is not doing all that well!)

I doubt it. Too many other things need fixing, too.

Having said that, anything that means lower rates for home buyers is bound to, over time, help improve the dismal picture we now have, and that has to be good news no matter how you look at it!

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Good News, Bad News: Home Prices Fall Off A Cliff; Big AntiTrust Case May Help Home Buyers

Need an incentive to help move a home?

The answer is PITI Abatment. Do not let the financial jargon scare you. For years production builders have used this incentive to move inventory. Now every seller/investor has the opportunity to participate.

What is PITI Abatement?

• An incentive to the buyer to have the first 6 months of the mortgage paid by the seller/investor.
• PITI Abatement program is a product designed specifically for home-buyers. You can give a 6% Seller Contribution that can be used for Principle, Interest, Taxes and Insurance payments.

What are the General Guidelines?

• Loan amounts up to $417,000
• Up to 100% of the purchase price in some markets
• Minimum score of 575
• Fixed Rates and ARMs
• Interest Only is available
• Income limitations may apply
• Closing costs can be paid by seller too
• No prepay penalty

What is the Realtor or Investor marketing element?

• 6 MONTHS PAID!
• BUY THIS HOME AND I WILL PAY YOUR FIRST 6 PAYMENTS
• 6 MONTH PAID MORTGAGE INCENTIVE
• BUY MY HOME AND I PAY CLOSING COST AND 6 PAYMENTS

In today’s real estate market investors need all the help they can get. With increased inventory in just about every market place, realtors and investors need to use unconventional tools to create benefits for their potential buyers. I have seen cars, furniture, pools, and televisions given away. But those items can be difficult to include in the average investor transaction. Giving away 6 months of payments can create separation from the other sellers in your market place.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Selling a Home???? Make your buyers first 6 months payments!

I recently came across an article that put something so well and so clearly that I really don’t think I could improve upon it. Everyone interested in real estate investing would do well to check it out.

In “Why Do You Still Need an Agent to Sell Your Home?” author Douglas Gantenbein makes an excellent case for the thing I am most passionate about: homeowners getting the power back in their real estate transactions (i.e., selling their own homes).

Written all the way back in 2004, this article cited the then-statistic that “Americans will spend about $1.14 trillion buying 6 million homes this year-both [setting] records.” And of that $1.14 trillion, Gantenbein writes, an enormous chunk would go to realtors. Is this fair?

Here are some highlights from the article:

1. Realtor work doesn’t equate with realtor commission.

   “And what do Americans receive in exchange for that commission, which can total up to $24,000 on a $400,000 home? In many cases, not much. A realtor’s license can be had after as little as 50 or 60 hours of training (the person who cuts your hair probably has 1,000 hours or more).”

2. Realtors seldom work in your best interest.

I was flipping through Freakonomics recently and remembered this little anecdote from one of the authors’ real experience:

“K. wanted to buy a house that was listed at $469,000. He was prepared to offer $450,000 but he first called the seller’s agent and asked her to name the lowest price that she thought the homeowner might accept. The agent promptly scolded K. ‘You ought to be ashamed of yourself,’ she said. ‘That is clearly a violation of real-estate ethics.’

K. apologized. The conversation turned to other, more mundane things. After ten minutes, as the conversation was ending, the agent told K., ‘Let me say one last thing. My client is willing to sell the house for a lot less than you think.’

Based on this conversation, K. then offered $425,000 for the house instead of the $450,000 he had planned to offer. In the end, the seller accepted $430,000. Thanks to his own agent’s intervention, the seller lost at least $20,000. The agent, meanwhile, only lost $300-a small price to pay to ensure that she would quickly and easily lock up the sale, which netted her a commission of $6,450.

So a big part of the real-estate agent’s job, it would seem, is to persuade the homeowner to sell for less than he would like while at the same time letting the homeowner know that a house can be bought for less than its listing price.”

3. The NAR is an exclusive group that doesn’t want to give up dominance.

“Overall, the NAR has ensured that nearly all residential real-estate transactions still are conducted between two agents in cahoots. And they’re largely responsible for keeping commissions close to that 6 percent level when any normal law of competition would suggest they’d be lower.”

4. Therefore, FSBO has a lot to offer, in my opinion.

Using a quality FSBO company like Buy Owner puts the power back in the hands of the investor. It’s definitely a smart decision for savvy investors.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Why You Don’t Need a Realtor

If you’re selling your home by owner, you’re probably very familiar with all the reasons for doing so: no commissions, more control, less stress. Obviously the real bottom line is simple: more money for you.

So let’s just assume that when you’re selling by owner, it means that you want to make/save as much money as possible. Following that line of thought, you might not see any reason for using a FSBO company, one of those help-you-sell types that you can purchase marketing through. You might be perfectly content to stick a sign in the front yard and wait.

Well, in today’s buyers’ market, wait you will.

Here’s my solution: use a FSBO company.

You may be thinking, doesn’t this contradict the whole point of selling on your own? If I use a company, shouldn’t I just use a realtor? Well, no. FSBO companies counteract the primary problem of selling by yourself: they bring you buyers and create professional advertising.

If you decide tomorrow to sell your house and you buy a red and white sign at the hardware store and put it in the yard, only the people who drive by your home will know it’s for sale. This is a start, and it’s good, but you want to cast your net a little wider. You want to reach as many people as possible so you can find THE buyer—the one who’s going to pay you what your home is worth, in the shortest amount of time.

FSBO companies usually offer advertisements with their websites, magazines or other marketing tools. They build their business around reaching consumers and bringing them to your property. This is very, very important.

Plus, you’re still saving thousands of dollars: compared to a 6% commission, a one-time fee for advertising/buyer-gathering is always a better deal! Personally, I’ve been very satisfied with Buy Owner, after using several other companies. BO is the only company that left me with no complaints. Do some research and determine which company’s best for you. (Ask me about any one of them! Odds are, I know about it, if I haven’t used it myself!)

Selling a property is important—so important, in fact, that you want to do it right. Consider a FSBO company. You’ll be glad you did.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Using a Homes For Sale By Owner (FSBO) Company

Your favorite farmer’s market. The blanket you bought at the craft show. The discount you found by going through the company directly. What do these things have in common? No middle men.

Today, middle men are everywhere. Some are good: the grocery store, the post office, the restaurant. But some are purely optional; in fact, I’d say they’re largely unnecessary. Consider these two examples of industries that make their money on connecting:

Middle Man #1: Travel Agent
I don’t know about you, but I have the ability to research online, call hotels, ask around for discounts, etc. Last month, I visited a friend on the East Coast and booked my plane ticket and accommodations through an online provider—I think it was Travelocity or Expedia. This allowed me to save the most money, at the most benefit to myself. Imagine if I’d used a travel agent: less control, more money lost.

Middle Man #2: Staffing Agency
How did you find your current job? Did you go through a head-hunting firm? You might’ve, and that’s fine. But you also might’ve been like thousands of other job-hunters who didn’t want to get paid less than the company could afford by inserting a middle man. You might’ve looked online at places like Careerbuilder and Monster and Craigslist and applied, interviewed and landed your position.

What each of these agencies has in common with a real estate agent is this: they are middle men. They find hotels, and they find travelers; they find jobs, and they find job-seekers. Or, in real estate, they find sellers, and they find buyers (imagine if the travel agency or the staffing firm similarly took a solid 6% of the sale, too!!). In return, they take a BIG chunk of the deal home with them. No tangible product provided—just their “connections.”

For a long time, real estate companies have been telling us that we need them, that we have to have a real estate agent in order to find the home or to sell the home. In reality though, all you need is a buyer and a seller. An agent is ONE way to find a buyer, not the only way and, in my opinion, certainly not the best. Using an agent means less money for you, and that’s never a good alternative.

If I take the analogy one step further, it’s a perfect illustration of why companies like Buy Owner are so helpful. They’re the Travelocity or the Careerbuilder of real estate. Much less cost and much more control for you.

Before hiring a realtor to list your home, consider trying your hand at finding buyers on your own, eliminating the middle man. You are fully qualified.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Real Estate Agent = Middle Man

The agentBOOST website concentrates on connecting buyers and sellers of real estate to agents in their area. The agentBOOST homepage claims that it is “a better way to find a real estate agent.” According to the site, there are three steps to finding an agent:

1. Our users tell us about the properties they are planning to buy or sell.
2. Agents have five days to bid on the opportunity to help with the transaction.
3. Users are free to interview and hire any of the agents who placed a bid.

By using their service, this startup company claims that buyers and sellers will save money and real estate agents will increase their sales. The Registration is quick and easy. A password is sent to the user’s email immediately after filling out the form. Once you have a username and password, a client is able to add a property to their profile to buy or sell. There are several fields for the user to complete including property type, number of bedrooms, number of bathrooms, minimum price, maximum price, preapproved, and under contract.

The site claims that users will typically get bids from real estate agents that are below the “standard” 3% charged by full-service companies. I am excited by this premise, as I am a huge fan of reducing agent commissions! Does an agent who sells the average priced home in Los Angeles of $565,000 really deserve over $16,000 for their efforts? NOT A CHANCE! If agentBOOST is successful in reaching mass saturation and bidding for commissions becomes a thing of the future, I think the consumer will be more then better off! I’m sure this is not something that established agents would like to see succeed, but I think it may also give new agents the opportunity to compete in some markets. I wish there was a service like this when I was starting out as an agent (back in the day).

As I don’t have any property for sale, nor am I seeking a property to purchase, I cannot vouch for the site’s success in linking buyers and sellers up with agents, but there are other features to discuss . . . Design-wise, the site is very clean and uncluttered. It is visually appealing and there are no ads that I could find. As I mentioned earlier, I think the site is focused on the average home buyer or seller and newer real estate agents or those less motivated by overpriced commissions.

I certainly think that this is a site worth watching and hope it, can help bring real estate agent commissions back to planet earth.

If you’re selling your home, check out agentBOOST for sure!

Note: This is a paid review. We get quite a few requests per week and are selective in our reviews. These reviews will be blunt, but fair. If you’re interested in a review from this PR5 blog, purchase a review from ReviewMe.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

ReviewMe: agentBOOST Can Save Real Estate Buyer’s & Seller’s Commissions