Melissa Loughridge Savenko

Hmmm.....this is a tough one. I think it depends on your personal temperament and preferences.

For those of you who don't know what I'm talking about, here's the overview. A Listing Agreement is the document between a Seller and a listing brokerage that governs the terms of the marketing and sale arrangement for a seller's home. The Listing Agreement is a binding contract. Basically, the listing brokerage, NOT the agent, contracts with a seller to sell his or her home at a set price, under set terms, with specified compensation to the broker.

[NOTE: Emphasis added because I think there is a common misconception that the Listing Agreement is between a specific individual agent and a seller. It's not. Even though the agent is retained to represent the seller, the Listing Agreement is with the brokerage. The agent who represents the seller does get paid out of the listing commission, but the broker and the listing agent "split" the commission on some pre-determined percentage basis, anywhere from 50%-50% broker-agent, to 5%-95% broker-agent, depending on the brokerage.]

One of the standard terms of the Listing Agreement is the length of the listing. A listing will run from X date to Y date. If the listing is not renewed for some reason, or if it is not "released" before the end of the listing term, it will just run out, and the property will show up in the Multiple Listing Service database ("MLS") as "expired."

Some agents "prospect" expired listings. In other words, the minute a desirable property "pops" as expired in MLS, meaning the term of the Listing Agreement between seller and brokerage has run, these agents start calling (if the seller is not on the Federal "Do Not Call" list), e-mailing, mailing, stopping by, with all kinds of promotional materials and pitches as to how and why they could do a better job promoting and selling the property than the previous agent. It's not cold-calling, when an agent calls property owners that do not have their homes on the market to see if they would be interested in selling their home. When you prospect expired listings, you know the seller wants to sell the property, and so far the property hasn't sold.

So, is there anything unethical about an agent "prospecting" expired listings? Nope, not if you're following the appropriate rules and in compliance with the "Do Not Call" list and anti-e-mail spam requirements. But......

I always have a "but." Here it is. But, I personally find prospecting expired listings a little....untoward. Or, to use my grandmother's dirtiest word...tacky. It just takes me back to those negative stereotypes so many people have about the real estate industry generally, with that sense of huckster-ism and cheesy salesmanship. It's the idea of the salesperson versus the agent again.

Now I will admit, I have on three or four occasions, early in my real estate career, sent half-hearted letters to expired listings in areas that I felt familiar with and confident about. But it always made me feel slightly uncomfortable.

And I will say, with resounding fervor, that I find prospecting your own professional colleagues and co-workers expired listings beyond tacky. The first time I ever experienced this the seller and I had consciously agreed to let the Listing Agreement expire, with the property to come back on the market several weeks later, after a holiday season. The agent was not someone I worked with frequently or often, but certainly someone I knew. I recognize that each real estate agent is an independent contractor and that you have no ethical or personal obligations to anyone that merely shares office space and overhead with you. But come on, people! Have you no shame?

NOTE: Going on a listing appointment for a colleague's listing, if you have been directly solicited by that colleague's client for a listing presentation - with no little "nod, nod, wink, wink" hints from you - is a completely different ball of wax, IMHO. In that situation, the CLIENT initiates the contact. That's fair, although I do think as a professional courtesy there are certain ways for both that dissatisfied client, and the solicited agent, to handle the situation. See my thoughts on the right way to fire your Realtor.

So, is prospecting expired listings a "do" or a "don't?" I've decided for me it's a "don't." That doesn't make me better than agents who do prospect expireds. It just means temperamentally it doesn't work for me. Everyone has to make their own decisions about how they want to build or grow their business. I've decided I want clients, both buyers and sellers, to come to me because they recognize that I have a particular expertise and an extra set of skills that most real estate agents do not have. I want clients who want the benefit of my legal background, or my experience with historic properties, or my familiarity with City of Richmond neighborhoods. So I'm going to have to build my reputation deal-by-deal and let people come to me based on word of mouth. I want a referral-driven business and repeat clients. Harder, and slower, perhaps, than sending out 5,000 mailers and getting a 2% response rate from a bunch of strangers. And perhaps harder, and slower, than calling every expired listing that pops in MLS. But ultimately, my approach is a better business model for ME.

So, there is no right answer. It's just what works for you. But I do think we would all do ourselves and our industry a favor if we treated one another with professional courtesy and applied the Golden Rule whenever we were soliciting new business, be they expired listings or otherwise.

Well, this just came across my e-mail and I thought it was valuable enough to post ASAP. Download Refinance_Savings_Chart

It's a pretty chart showing payments if an individual refinanced their existing mortgage. A few notes:

• The chart shows only principal + interest ("P+I"), so to figure out your TOTAL payment you need to add your homeowners' insurance payment and your real estate taxes, to get your "PITI" (principal, interest, taxes, insurance) payment;
• Real estate taxes on a property can be calculated by going to the website of the locality in which the property is located, taking the annual real estate tax amount and dividing it by 12, then adding 1/12th of the total annual tax bill to the monthly P+I payment;
• Homeowner's insurance is also an annual bill, so take that number and divide it by 12, add 1/12th to the P+I+T (real estate tax) payment to get your total PITI, which is your out-of-pocket monthly expense;
• If you do not have any idea what homeowner's insurance will run you, and you don't have time to get a general quote from an insurance agent, I use $1,200 annually, or $100/month, as a pretty good rule of thumb for the typical buyer; and
• The chart works for someone looking to buy a home also, not only refinancing.

Hope it helps!

Okay, so I just got lazy. Google "Young and the Restless" and Richmond, Virginia and the report on the creative class popped right up. Here it is. Looks like the focus groups were conducted in March 2004. I'm not sure when the report itself was generated, I just know I went to the kickoff party at Main Street Station.

Pretty interesting stuff. And the "El Camino" quote is on Page 17. Love it.

HYPE Vision: If We Ran Richmond - Play King or Queen for a Day

HYPE ("Helping Young Professionals Engage," or on more than one occasion I've heard it revised tongue-in-cheekily as "Helping Young Professionals GET Engaged") is hosting an event on January 21 from 5:30 p.m. until 7:30 at Toad's Place called "HYPE Vision: If We Ran Richmond." I'm pretty sure the "We" refers to "Young Professionals." [ASIDE: I enclose "Young Professionals" in apostrophes merely because I am getting to that point where I'm wondering if my biological age disqualifies me from participation in anything calling on one to be young. Sigh. But enough of my mid-life crisis. Moving on....]

The e-flyer describes the event as follows:

If you ran Richmond, what would you change? If you ran Richmond, what would you celebrate? Join us at Toad's Place to help form our collective vision of Richmond.

Admission is $10 and gets you in, one drink, and discounts on drinks for the remainder of the event. I'm guessing the ultimate objective is to come up with a plan outlining how "Young Professionals" would run Richmond, sort of a la the charrettes that gave us the Downtown Master Plan.

Does anyone else remember a regional "visioning" process several years ago that was managed by the Greater Richmond Chamber, which produced a report called "The Young and The Restless?" It was modeled on Richard Florida's theories from "Flight of the Creative Class," a super-interesting book on what makes successful cities. Here's a May 2002 article summarizing his theories. Short version: Cities like Boulder, Portland, and Austin are successful because they are retaining their young, hip, highly educated professional class and attracting newcomers as well.

The HYPE event = shades of deja vu for me here. I wonder what happened to that "Young and the Restless" report? I thought it was REALLY interesting. I just remember one person's quoted statement that if Richmond could be a car, it would be an El Camino, because it didn't know what it wanted to be. That has stuck with me, I thought it was so clever.

If anyone can track down the link for the report, or the report in hard copy, I'd be happy to post it here. I have to say I think I can identify the sure sign that Richmond is (becoming?) cool and hip and trendy, and retaining the creative class. Others might view this development as one of the seven signs of the apocalypse. My theory: Coolness and success = direct proportion to the proliferation of tattoo parlors. Just one woman's theory, but I'm stickin' with it.

Well, I listed this a blog topic to come in my most recent posting. While the outcome for me wasn't what I had hoped, I think it's a good road map for the "dos" and "don'ts" of dumping your real estate agent.

Background is as follows: A year or so ago, I was approached by a friend to list his home. Single professional guy with the standard single guy decor - giant TV, lots of electronics, not so much fluffy, pretty stuff. It's a really nice house, and all the "hard stuff" - roof, electrical, etc. - was either done or very well maintained. I hooked him up with a painter and a stager, and we put the house on the market after painting the interior, re-arranging the furniture, and staging. The house looked great, and he was actually my best client ever in terms of keeping it straight.

My mistake: I priced the house too high initially. While I think my comparables at the time supported the price, we started on the high end of the listing price range I suggested. I think part of my recommendation to start high was because I wanted to maximize his profit, to do well for him. So that professional recommendation was influenced by the friendship.

There were some inherent obstacles that I identified, even after the painting and staging. One was the lack of a second full bath. The other was the size and appearance of the rear yard. While I tried to mitigate those two issues, both in the marketing strategy and in the pricing, they were what they were.

We got traffic. There were some price drops. But no firm offers. There were things I suggested that I think would have helped, that he didn't want to do. Fair enough. Eventually, we let the listing expire, with the understanding that we would revisit the sale after the Thanksgiving/Christmas/New Year's holiday.

Well, after Christmas, he told me that (i) he DID want to put his house back on the market; and (ii) he was going to talk to other agents about the possibility of listing his home. He asked me to give me my "best offer" on listing commission and to address any changes or recommendations that I would make to market his home. He contacted other agents, including one in my office. Ultimately, we spoke this past Thursday, and he told me he has decided to use the agent from my office, and to list his house at a substantially reduced list price ($20,000 price reduction from where we had last been).

What is the point of the story? Well, I think this client, and the agent he ultimately selected, did things the "right" way. He was up front and honest about his intentions. He wanted second, and perhaps even third, opinions. As far as the agent's behavior goes, she told me herself during the "competition" process that my friend and former client had contacted her and she was making a listing presentation to him. There was no back-dooring or dirty pool. It was just a client soliciting information and making an informed decision about how he wanted to proceed, and with whom.

The conclusion: He decided to use the agent from my office. He called me, explained his decision, I told him I understood, and I wished him luck with the sale.

My reaction: It's certainly disappointing. It's never easy to have a client, and especially when that client is a friend, tell you they are going to hire someone else over you. But there was some relief, as well. I've come to the conclusion that for me, personally, I don't think I want to list a friend's home myself, as the sole listing agent. Selling a home can be a stressful experience, especially in a difficult market. My friendships are far more important to me than a $10,000 commission.

BUT - there is always a "but," isn't there? - I DO wish that client would use me to buy his next home, and I told him as much. I'm going to address this topic in more detail in a separate post, but I think working on the "buy" side with a friend or family member is fundamentally different than working on the "sell" side. A few brief reasons why I believe that:

• Selling a house, especially in this market, is extremely stressful. The listing agent has to be objective and sometimes tell the client things they don't want to hear. This may be better accomplished when the seller/agent relationship is purely professional.
• On the other hand, finding the home to buy is F-U-N, FUN! While there can be stresses in any transaction, I really believe finding the house is the easy part.
• If you are representing a friend/buyer, you should know them well enough to know what it is they want, even if they can't necessarily articulate it. There isn't the learning curve on "wants," "needs," and "must haves" that I suspect there must be with the stranger-agent.
• Friends will work harder for their friends in many ways. You don't want to disappoint your buddy.

But ultimately whether he "splits" his representation with a separate listing agent and a separate buying agent will be up to him. While having him pick me as his buyer's agent would be nice, especially since I could make up the hard costs I'm already in the hole on from the failed listing representation, I'm sure we'll be fine, whatever his decision. I respect the way he handled it, I respect the way the new listing agent handled it, and at the end of the day, as the Donald would say, "it's not personal, it's business."

I think it all comes down to the Golden Rule - treat others as you would like to be treated. With that principle in mind, it's almost impossible to go wrong.