Renee Porsia

For Sale By Owner Vs. Realtor... The Age Old Question

Posted by Renee Porsia under For Buyers, For Sellers, For Realty Professionals, General Information, RE/MAX, selling, buying, Renee Porsia, NAR, Philadelphia Market Statistics, Loans, Prices

Numbers do not lie: Homes sold with the help of a real estate professional in 2006 sold on average for 32 percent more than FSBO sales.

The median FSBO selling price in 2006 was $187,200, compared with $247,000 for agent-assisted transactions. That's $59,800 dollars more in the seller's pocket using a real estate professional (according to realtor.org). And after the sale many FSBOs said they wouldn't attempt to sell on their own again. In fact 18 percent of FSBO sellers indicated that preparing the home for sale was the most difficult task when selling without the assistance of an agent, followed closely by understanding and performing paperwork (16 percent) and selling within their desired time frame (15 percent) according to realtor.com.

Given those facts, one would ponder at why a home owner would want to go it alone? Well, you can't blame a person for trying. There are plenty of successful FSBOs. The question is did they get what their home was worth?

A very important question I have is did they know how to negotiate the sale without being emotional? When selling anything, once you get emotional you lose! And, lets face it, negotiating the sale price is the most important part of the transaction.

In addition to everything else, a For Sale By Owner has to be concerned with safety. Now, there are some who will say that is just a Realtor's scare tactic. Well, I can assure you that a person's over all safety is definitely not a scare tactic. A For Sale By Owner basically gets a for sale sign and then places an ad in the local newspaper and then opens their door to every stranger in the area and beyond. We are taught as children NOT to talk to strangers but then when we get older and own a home, that very important piece of advice goes right out the window. Opening your door to someone you know nothing about is not safe for anyone not just For Sale By Owners. So, to the nay sayers, I say no amount of money is worth risking you or your family's safety.

A Realtor eats, sleeps and breaths real estate. So, naturally we know so much more about selling a home than the average home owner. Sure, some will argue that the home owner knows their home better than a Realtor and that is true but the realtor is not selling memories. Realtors are selling property.

I am a Realtor so obviously I passionately believe that my services are invaluable because I know what I do for my clients.

Given the numbers, if a Realtor can sell a home for 32 percent more than a For Sale By Owner that in itself is a huge reason to use a Realtor? After all, isn't the sole purpose of a For Sale By Owner not using a Realtor to make more money? Then by not using one, isn't that a contradiction in thinking?

A Realtor or at least this Realtor screens all buyers prior to working with them. I am very adamant about not running to a property to meet with a buyer for the first time. It's not safe or smart. I certainly am not going to preach to a For Sale By Owner to not let strangers into their home and then myself go meet a perfect stranger. I practice what I preach! By screening buyers prior to working with them, I am able to get their name, address, social security number their financial situation, employer, bank accounts and other pertinent facts. What all of that establishes is whether or not the buyer is in the position to purchase a home which is ultimate goal. If a buyer refuses to meet with me prior to me showing him/her homes then I will not work with them.

A Realtor negotiates the sale price without emotion. For a second think about how you feel when someone says to you "I'll give you $200k." What would your response be standing at the front door of your home that you are selling? Would you feel uncomfortable? Would you say $200k? The price is $280k. Would you tell them to go pound sand? Would you feel angry? Well, when a buyer agent brings an offer to me on a home that is realistically priced right that is just way off, I don't get angry, feel uncomfortable or tell the agent to go pound sand. I take the offer to my seller and consult with them. Then I go back to the buyer agent and I am firm, confident and professional. I am focused and I fight for my client. Negotiation is the most important part of my job and its the hardest but I am good at it.

There are so many other reasons a home owner should hire a Realtor and I would love to discuss those reasons with anyone who cares to contact me or feel free to comment on this blog post.

So, to answer the age old question, For Sale By Owner vs. Realtor, the answer is easy. Realtor!

Thanks to realtor.org for their contribution to my blog.

Posted by Renee Porsia under For Buyers, For Realty Professionals, General Information, RE/MAX, selling, buying, Renee Porsia, NAR

Today I wanted to talk about what a Buyer Broker Agreement is, why it is used, why a buyer should sign one and what happens when a buyer refuses to sign one.

A Buyer Broker Agreement is a legal document that establishes the relationship between a buyer and a Realtor. It lays out how long the buyer agent will work for the buyer "client" (more on client vs. consumer later) and what the buyer agent will do for the buyer "client" and how the buyer agent will be paid.

Why is a Buyer Broker Agreement used? A Buyer Broker Agreement is used when a buyer wants to work with a Realtor. It's really no different than signing a listing agreement when a seller wants to sell their home and they hire a Realtor. A seller hires a Realtor to represent them in the transaction and to protect their best interests and now a buyer has that same option.

Why a buyer should sign a Buyer Broker Agreement is simple. Does the buyer want to be a "client" or a "customer?" If a buyer refuses to sign a Buyer Broker Agreement then that buyer is NOT a "client" of that Realtor but instead is just a "customer." :

Are you a buyer-customer or a buyer-client? Services will vary, depending on your agency status* (if you do not sign a Buyer Broker Agreement)

If you are a CUSTOMER (no agency relationship),an agent will:

Maintain loyalty to the seller's need

Tell the seller all that they know about you

Keep information about the seller confidential

Focus on the seller-client's property

Provide just the material facts

Only provide price information that supports the seller's listing price

Protect the seller

Negotiate on behalf of the seller

Attempt to solve problems to the seller's advantage and satisfaction

If you are a CLIENT (agency relationship), your agent will:

Pay full attention to your needs

Tell you all that they know about the seller

Keep information about you confidential,

Focus on choices that satisfy your needs

Provide material facts as well as professional advice

Provide price counseling based on comparable properties and their professional insights,

Protect and guide you

Negotiate on your behalf

Attempt to solve problems to your advantage and satisfaction

So, you can clearly see the difference between being a "client" buyer or a "customer" buyer.

* This chart is for general illustration purposes only. Agency laws vary by state; and specific terms of individual agency contracts will vary from one agent to another.

You may not know if you're a customer or a client.

Depending on the laws in your state, you may find yourself working with someone who is actually negotiating for the seller, not you the buyer. The best way to be certain your interests are being considered and protected is to sign a buyer agency agreement with a trained buyer's rep, which clearly establishes client-level services and spells out what services you can depend upon.

Some questions you should ask your Buyer Agent:

Do you represent buyers, sellers or both?

What services are provided to (or excluded from) me, based on my status as a buyer-customer or buyer-client?

When does representation begin? When does it conclude?

If I'm not ready to commit to your normal term, can you offer me a one-day buyer agency agreement or a 24-hour opt-out clause?

How is dual agency addressed in your firm?

You can now clearly see the benefits to working with your very own Buyer Agent. Why wouldn't any buyer want to be a "client" rather than a "customer?"

Finally, the way the buyer agent gets paid will also be determined by the buyer and buyer's agent and will be specified in the Buyer Broker Agreement. Normally, the buyer agent is paid at settlement and comes out of the fee for service or commission paid by the seller. The buyer could also pay his/her buyer agent a flat fee or by the hour. Make sure to discuss your buyer agent's fee and then put it into the Buyer Broker Agreement.

You may still have questions about Buyer Agency and that is to be expected. There are many Realtors who do not know the difference between a "client" or a "customer." I would be happy to answer any other questions you may have. Feel free to e-mail me or call me.

I hope you find my blog on Buyer Agency educational.

My thanks to REBAC.net for providing information to my blog.

Posted by Renee Porsia under For Buyers, For Sellers, For Realty Professionals, General Information, RE/MAX, selling, buying, Renee Porsia, NAR, Philadelphia Market Statistics

I can't tell you how many times I called a listing agent to tell them I was going to be writing an offer for my buyer on one of their listings and heard "how much is it" or "I'm expecting 2 offers" or my personal favorite "It better be good because I have 2 other offers."

First of all, expecting offers isn't "having" offers. Also, lets remember that it's not the listing agent's home and therefore the listing agent shouldn't be making comments like "it better be good because I have two other offers." It makes the agent look bad. What they should be saying is "Great, the more the merrier."

The agent was hired to obtain offers not to discourage offers and by making those comments, they could wind up costing their seller a very good, strong offer and in this market, offers are hard to come by.

How could those statments ruin a good offer? Well, by making those statements to the buyer agent, the buyer agent will go back and tell their client exactly what the listing agent said and therefore the buyer could wind up backing off on their offer because they do not want to wind up getting into a possible bidding war or feel that his/her offer might not be high enough to compete with those "other" offers.

Don't get me wrong, there are ways of calling an agent's bluff when they say they have other offers and I have no problem calling them on it when they make those comments to me.

So, how can a buyer agent call a the bluff of a listing agent you ask? Well, there is my all time favorite weapon called an "Escalation Clause." Essentially the Escalation Clause can be thought of in the context of plaing poker and showing your hand. Basically, the clause says that the buyer will increase his/her offer in little increments of whatever the buyer chooses but not to go over a certain price if the listing agent has another offer that is the same as the buyer's or higher. So, for example if the listing agent has another offer of $200,000 and the buyer's offer is $200,000. With the Escalation Clause the buyer's offer would increase in increments of $500.00 which will increase the buyer's offer to $200,500 but not to go over the offering price of $210,000. Many Realtors are unaware of the Escalation Clause and many do not understand it. I however like to use it when absolutely necessary.

So, you may be saying "what if the listing agent just says they have another offer. How can the buyer be certain there really is one?" Well, the Escalation Clause states that the buyer has the right to see that other "offer" or "offers." How great is that??

Another way the listing agent could ruin a good offer for their seller is to take offense to the Escalation Clause written into the Agreement of Sale on behalf of the buyer which by the way, was written into the Agreement of Sale by the buyer agent in order to "PROTECT" his/her buyer from the listing agent's statments about having other offers. The listing agent in essence gets angry that the buyer agent called their bluff for simply doing their job.

I am not saying every Realtor behaves this way but there are many who do. What they fail to realize is that their comments can hurt their seller and that is not why they were hired.

To ensure the Realtor doesn't ruin ANY offers for their client, the Realtor should practice self-control,discipline, professionalism and tact. They should also keep in mind that every offer no matter how large the sale price or how little the sale price its not for them to decide which offer is the best offer for their client. Every offer should be presented no matter what.

To make certain your Realtor doesn't say the wrong thing and wind up discouraging buyers from writing offers on your home, be sure to set the rules right up front when you hire him/her. You can tell them not to say anything to the buyer agent that could be taken the wrong way. You can tell them you want them to encourage buyer agents to bring offers not to discourage them and put it right into your listing agreement what you expect from your Realtor.

This is your home and you deserve the right to decline, counter or accept all offers.