Dual Agents…Why you should avoid it.

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It seems like I have recently had many conversations with clients and other realtors about dual agent scenarios. Although my stance on it is likely an unpopular one amongst my agent friends, it comes up all too often and should be addressed.

What is a dual agent? According the TREC website (https://www.texasrealestate.com/for-texas-realtors/legal-faqs/category/intermediary), a dual agent is a broker who represents two parties at the same time in accordance with common law obligations and duties.

Basically, a dual agent is when a realtor is representing both the buyer and the seller in the same transaction. In this scenario, the seller is paying the full 6% in commissions to their realtor since they are working for both sides. This is assuming that the seller and agent are following the traditional structure of real estate commissions. (To better understand my commission structure, read about it here.)

My broker taught me early on in my real estate career that being a dual agent is never a good idea. No matter what the commission might be. It all boils down to your obligation to represent your client with their best interest as your priority. I don’t see how this is possible if you are representing both the buyer and seller.

Here are two obvious examples:

1. Agreeing on a sales price during the initial contract negotiations. As a seller’s agent, you likely know before even listing the property your client’s bottom line. Of course, we know that number is fluid and will often change over time and based on their situation. Advising your buyer about fair market value should be based on comparable, recently sold properties. It should not be based on your knowledge of what a seller will or will not accept. This situation could easily result in a seller not getting as much for their property as a buyer was willing to pay. It could also result in the buyer paying a higher price than they really had to because of what they were told it would take to get the deal done. Neither of these scenarios keep BOTH parties best interest in mind.

2. Further negotiations based on inspections. In representing a buyer, it is my responsibility as their agent to help them navigate through the inspection process and evaluate the existing condition of the home. Plumbing is a prime example. I always suggest my buyers pay for an extra plumbing test if the home is older with cast iron pipes. A $300 pipe test can easily reveal a $10-$20K need for new plumbing. As a seller’s agent, of course, it is not my responsibility to give any guidance to the other party during their inspection period. How can you possibly be providing BOTH sides with ethical representation during the inspection period?

I have been in the situation a few times where I have met a couple at an Open House and they have asked me about representing them in putting an offer on that property. I have always responded that representing both sides is not something I am comfortable with but I would love to refer them to some other wonderful agents. It is easy to get wrapped up wanting that full 6% commission, but it is truly not worth it. Getting a referral fee is more than enough compensation for avoiding a situation that can easily turn ugly.

Moral of the story is simple….don’t use a dual agent if you expect your realtor to truly keep your best interest at heart.

 

2012 Recap

2012

2012 blew me away when it came to my job. Almost 3 years ago, I took a huge risk and a major pay cut to quit my job and start working as David’s assistant at New Leaf. Never in my wildest dreams did I think I would work so hard, be part of such an amazing company, and love my job as much as I do. The chance I took has paid off in more ways than I can count.

The real estate market here in Houston was insane in 2012….not just for us at New Leaf but for all buyers and seller across Houston. Here is a look back at some of our highlights from the year:

– Completed over 60 transactions between representing buyers and sellers
– Those 60 transactions came out to over $45 million in sales
– Dealt with multiple offer situations on over half of our transactions (you can’t just throw together an offer and send it over these days, there are tricks to the trade)
– Sold a house through a Facebook post so I never had to list it on HAR
– Lowest mortgage rates in HISTORY
– Created this blog
– Completed over $10 million in NON-MLS sales (meaning we represented either buyers or sellers on homes that were never listed on HAR)
– Lots, New Construction, Condos, Townhomes, and Single Family resale…sold it all
– Represented buyers or sellers in River Oaks, West U, Memorial, Spring Valley, Braes Heights, Old Braeswood, Southampton, Southgate, Heights, Shady Acres, Timbergrove, Memorial West….not to mention in Austin, Galveston, and Lake Livingston….just to name a few
– Still awaiting the results, but we expect that David will be ranked within the top 5 realtors in Houston according to the Houston Business Journal

And to save the best for last, we were able to offer our clients over $750,000 in savings this past year. Houstonians are more real estate savvy then ever these days and they are demanding a business model that rewards them for their efforts. If you STILL don’t know what I am referring to, check it out here.

This business is a constant roller coast. Looking back over what we accomplished this past year makes me feel really thankful and blessed to be in this “housepeeping” industry we can real estate. It really is a neat experience to work with people as they sell their home or to help people find a place to become their new home. It’s an exciting and stressful time in people’s life and I hope that my role in the process provides them with knowledge, comfort, and guidance. I am super excited to see what opportunities 2013 has to offer me as I keeping working alongside David while continuing to building my own book of business. Thank you for visiting my small section of cyber space. I wish you all a happy and healthy year!

How to: Win a bidding war.

I have been neglecting my blog lately because I have been so busy. The market has been insane lately here in Houston, which is a great problem to have as a realtor. In the past three weeks we have put 9 homes under contract, totaling in over $7 million in escrow right now. If I had the time, I would calculate how much money we are saving our clients in commission rebates, but time is precious and I don’t have that luxury right now. It would be a LOT though.

 This crazy selling environment has led me to write this post. In the past few weeks we have been on both sides of multiple offer situations. I want to give buyers some tips on how to present a strong offer in the event that there are multiple offers being presented on a particular property. If you are a seller right now, pay attention to this as well. It’s not ALL about list price.

 1.       Price – Ok so I just said it’s not all about price, but let’s be real here. Price is going to be the first thing a seller looks at. In the event that a home just came on the market and there are multiple offers, you need to offer list price or above. Yes, or ABOVE. With that said, please listen to your realtor and carefully review the comps that are available. If you are uncomfortable paying list price or above because you don’t think the value is there then offer what you feel is appropriate. Just don’t get super emotional about it and try to outbid everyone else. If it goes for a price higher than your feel is appropriate, let this one pass.

2.       Close Date – Your realtor needs to speak with the listing agent and get the seller’s “story”. Find out their time frame on moving out and what their ideal close date would be. If the seller has already purchased a new home and can close as soon as possible, then take that into consideration. If the sellers are building a home and it won’t be completed for two months, take that into consideration as well. To the best of your ability, make the close date appealing to them and make sure your realtor relays that you are trying to accommodate them…”My clients are allowing the sellers to lease back the property for two months while their new home is being completed”.

***From the seller’s perspective – Let it be known when you want to close! People will bend over backwards to make that happen right now if they really want your house.

3.       Option Money – This is a fee that is given to the seller from the buyer and is non-refundable. You are basically paying for the right to take this house off the market while you inspect it and make sure you really want to move forward. Present a large option fee knowing that if you back out you will lose this money. Typically on a $500K home, a buyer might offer $150-$200 as an option fee. In this scenario, I would suggest increasing that to $600-$700 to show the seller you are serious about this purchase.

4.       Earnest Money – The earnest money is refundable if you terminate the contract within your option period. Make this a high number too! A typical earnest money check would be for 1% of the price of the home. Increase it to show you are a serious buyer.

5.       Option Period – The option period is typically anywhere from 7-14 days. This is the time in which you get the home inspected and have the undeniable right to terminate the contract for any reason. Keep this number as low as possible.

***From the seller’s perspective – The option period is a time when your home is basically taken off the market to other potential buyers. In the event that your buyers terminate the contract, wouldn’t you rather they do it after 7 days versus 14 days?

6.       Non-realty Items – These are items that are not fixtures to the home. So for example, refrigerators, curtains, washer/dryers. Have your realtor ask what your sellers plan to leave behind. If the listing agent says the sellers plan to take their refrigerator, then don’t present an offer asking for it.

7.       Warm fuzzies – Make sure your realtor presents a nice, strong cover letter with your offer. Let it be known to the sellers why you love their home so much…it is very well maintained, decorated beautifully, on the exact block I have always want to live on, I can’t wait to raise a family here, blah blah blah. Give some information about yourselves…we are native Houstonians and got married two years ago, blah blah. People want to feel GOOD about who is buying their home. They love their home and don’t want to think some jerks are buying it.

The takeaway for sellers- don’t JUST look at the list price. There are other to items to consider if you get mutliple offers on your home.

 I know this is a lot of information and it isn’t always possible to adjust everything into a perfect scenario for a seller. But if you really want that house, I would take all these tips into serious consideration. It’s crazy out there right now so stay on your toes if you are a buyer and looking in areas like West U, the Heights, Memorial, Spring Valley, Wilchester, Montrose, and Southgate. And lastly, TRY not to get your panties into a wad. Keep your wits about you, another home will come along, and trust your realtor. Unless you don’t trust your realtor – then call me!

Three homes. Twelve offers.

 

 

 

 

 

 

 

 

 

 

 

 

Last Monday, we listed a home in Afton Village. It was last Friday’s Peep of the Week. This weekend we received two offers on it.

Last Tuesday, we listed a Heights bungalow. This weekend we received six offers on it.

We placed an offer on a newly listed home in Wilchester for one of our clients. Our offer was one of four offers and was not accepted.

The Houston housing market is seriously crazy right now. Interests rates are so low and thankfully the Houston economy has remained relatively strong. This is a sellers paradise but can be quite frustrating as a buyer. Here are a few tips for both buyers and sellers when you are dealing with a multiple offer situation.

Sellers

1. Don’t be discouraged if a buyer doesn’t want to participate in a multiple offer situation.
2. Don’t just look at the offer price. Take into consideration the entire offer…option period, financing addendum, seller concessions, etc.
3. Google the buyer’s names. It’s fun to play detective and often times you get a sense for where they are coming from if you can learn a little about them.

Buyers

1. Try to avoid a biding war. Another house will come along, I promise.
2. Try to keep your emotions in check. It is not worth overpaying for a home.
3. Write a letter to your potential sellers explaining who you are and why you love their home so much. Have your agent present it with the offer. People love to hear warm fuzzies about their home.
4. Increase and decrease the little things. Increasing your option fee and/or lowering your option period might be very attractive to the seller. Talk to your lender and figure out the minimum amount of time it will take to lock in your financing. Sometimes the little things add up to a stronger offer than just the dollar amount.

Leave it to twelve offers to suck your weekend dry! It is an exciting (and stressful) time to be a buyer or seller. I hope you all have a great week!

I Heart Houston

I often take living in Houston for granted. I’m sure I’m not the first person to ever say something like, “I am so sick of living here. There’s nothing to do. I’d love a change of scenery.” Other than four years of college (Sic ‘Em Bears!) and a few years living in Dallas, I have lived in Houston my entire life. Probably my favorite thing to do is travel and explore new places so it doesn’t surprise me that I get bored with my surrounds.

On the flip side, being a native Houstonian makes my job as a realtor a lot easier. Often times my job also makes me realize that Houston is a really awesome place to live. A recent client experience renewed my love for my hometown city.

My client’s company relocated to Houston from Savannah, Georgia. They were a younger couple and knew nothing about Houston. I spent three full days with them looking for a one year rental property. We covered the entire city and as I chauffeured them from property to property, I described each neighborhood. Being a native Houstonian, I could tell them at least a 30 year history of each little area and how it has changed over the years. I probably gave them more information than they ever cared to know, including but not limited to the following….

Free booze & bbq? Yes please!

Of course, I couldn’t leave out all the other things that make Houston an incredible city….The Theater District, Galveston, Discovery Green, Memorial Park, all that is Montrose, our best golf courses, the amazing suburb communities that surround the greater city, our school systems, Kemah boardwalk, Sam Houston Racetrack, Bayou Bend, NASA….the list can literally go on and on!

It’s times like these, when I was literally driving my clients around in circles but they had no clue, that I remember what a special place Houston is to me. It is the ultimate melting pot of people, cultures, and experiences. So when I am broke and cannot afford to take an exotic vacation, I will try to remember this post. I’ll hop in the car and venture over to Ninfa’s on Navigation or to Phoenicia Specialty Foods and pretend I am somewhere else for a while.

Houston, I owe you an apology. Thanks for all you offer and for allowing me to call you home.

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