Ron Trzcinski

Buyer Agency Protocol

Recently, I heard a question asked from a Buyer about Buyer Agency Protocol. The particular Buyer had been working with a Real Estate Agent for about a month, but without a Buyer Agency Agreement. Eventually, the Buyer found a house on his own and worked directly with the Seller to write the contract. The Agent was not involved.

Afterwards, the Buyer posed the question: "What is Realtor protocol in this type of situation, because I want to be fair?"

In that month, prior to the Buyer going out on his own, the Agent had done copious amounts of work for him. Naturally, the Buyer did not want to take advantage of this Agent.

So, Mister Buyer are you willing to pay that Agent 3% of the purchase price for that deal that you made without him. Not likely. In actuality, it is more likely that you are thinking of paying him a couple hundred dollars, if that.

Let me see if I can determine how this works.

• I have a mortgage. I will call them and ask what is protocol. Can I stop paying my mortgage? Oh, that's right; that has already been answered. Look at all of the Foreclosures and Short Sales.
• I have a credit card that I have been using. I will call and ask if I need to pay the balance. Oh, I can declare bankruptcy and not pay any of it.
• If I go to the emergency room, do I need to pay for the medical service?
• . . . .
• Can I use a Real Estate Agent for nothing?!!

Some Agents are okay with this scenario. "Oh gosh; don't worry about it; just send me referrals."

"Darn right I will send you referrals; you are the cheapest guy in town."

But now I ask, should his question have been reworded. Perhaps to something like "What is Buyer protocol . . . ?"

Should a Buyer pay for the services that he receives, for any service or product, or should he expect that everything should be free? "Let's spread the wealth around", the wealth which will not exist if everyone thinks that they are entitled to everything regardless of what it costs.

That's it for now.

The Vacant Lot

It was a listing of mine, this vacant lot of about 1.5 acres. The area was developing and it was becoming feasible to build on the lot, which was previously in a rural area without sewer systems. The lot did not pass a perc test, but with new development in the area, public water and sewerage systems were becoming available.

The adjacent lots to the right and to the left, which were of a similar size, already had houses, but up to this point these property opwners also had the benefit of an open lot being next to them. These were the first people that I approached about purchasing the property. They both declined the offer, afterall, they already had the benefit of the lot without having to purchase it.

So I opened up the marketing to the broad MLS market and beyond.

There was plenty of interest, but also plenty of discouragement from the adjacent neighbors.

Here is some of what happened.

• The back portion of the lot was a bit overgrown with sticker bushes, but was passable. Nonetheless, I came prepared with gloves so that I could push the stickers aside as we made our way to the back of the lot. I got there before my clients and fortunately so. I was out of my car for about a minute when the neighbors unleashed their pit bull, which decided to charge right for me. I could do nothing but hold my ground. You have heard how dogs can sense fear; well, I gave a stance of bravado. Remember, I had my gloves on. Keep coming pooch, you're going down. Apparently they can sense more than fear as he wussed out about half way to me and headed back to his house. Whew! That was a close one.
• On another visit, the other neighbor decided to get into the act. This neighbor's lawn was neatly trimmed, but for some reason, he thought that he should crank up the tractor. It seemed that he thought that the area that formed a circle around my car was what needed some extra trimming. This required a different tact than the pit bull. I got out of the car and got his attention. He stopped and we had a cordial conversation. This calmed him down. It seems that his heart was not really into this bullying stuff.
• The next showing came and neighbor number one was at it again. The pit bull didn't do the job, so weapon number two was unleashed. Little Naked Billy came out of the house and started dancing all around the lot. That's right, a 4 year old boy with no clothes. This was more comical than intimidating. Eventually Little Naked Billy went back into the house. Perhaps he stepped on a sticker or two.
• The next showing came and the neighbors were not out of weapons. Out came Spittin' Marge, an eleven year old or so girl, who started spitting in my direction. Actually, I could not believe it. When I left the showing, I circled back just to see if she was a chronic spitter or whether she was really targetting me. There she was at the end of the driveway spitting in my direction once again. Although disgusting, it, too, was rather amusing.

Eventually, the lot sold and the new owners put up a new house. I have not heard any horror stories, so I guess they must have been accepted.

Always Think Marketing

I know of a family with two children. I remember the father indicating that the younger of his children, his son, was not as smart as his daughter. It was just idle talk, but it was mentioned at a family gathering. In the future from that time, I heard the grandmother of that child mention that she did not know if he was going to be able to do well in college. I asked her why, but she could not give me a good reason. In actuality, there was no good reason. This boy went to a private high ranking academic high school, played sports, and participated in several other extracurricular activites, while maintaining a high B average. In fact, he did go to college and he did very well. But the seed of doubt had been unwittingly planted long ago. On the other hand, I have seen parents who never say anything negative about their children. They do not necessarily constantly brag, for that would be annoying, but they create an aura about a child that would make everyone expect great things from that child.

Are you in the market to sell your house? No. That's okay. Act like you are.

Are there certain houses that you drive past on a regular basis and just admire them even if they are not on the market?

What is it about these houses?

Perhaps it always has beautiful colorful flowers neatly adorning the front yard. It may be that the lawn, bushes, plants, and trees are always neatly manicured. It could be that it has a well thought out color scheme for its siding, shutters, trim, and such. Maybe this house is never in a state of disrepair.

Whatever it is that makes us like this house, we would agree that it is in top showing condition to be on the market for sale.

If we were looking for a house to buy, this would be the type of house that would have us sold at the first impression. We would be excited the moment that we pulled up for a showing appointment.

If an agent told a Buyer about this house, the Buyer may say that they were familiar with that place. There may be a thousand houses in the neighborhood, but the Buyer would know which one you mean. Excitement would be stirring before they even got to the house. They would tell you "I have always loved that house."

The house may be similar in style and size to other homes in the area, but it always stood out, because the owners always kept it in showing condition. It had an aura about it that the other homes did not have.

Do you ever wonder why every once in a while you will see a house that sold for much more than similar homes? The size, style, amenities, age and so on do not give you the answer and so you just wonder. Did they simply pay too much? Or is this that house that has always been the envy of the neighborhood?

It may be easier said than done to keep a house in this type of condition. But think about it. This is the house that stood head and shoulders above the rest. It was no contest that this was the house that you wanted. And, you were willing to pay more for this house because you thought that it deserved it.

Yes, it may take a little extra effort to keep your house like this, but it pays for itself in the long run. Your house will sell faster and for more money. Plus, you will be able to continue living not just in your house, but in your dream house.

So, always think marketing.

Buy that House: Negotiating Price and Days on Market

I met a potenial Buyer the other day. The type of home that he was seeking was very similar to one that I was going to be listing. I told him about this house, which was going to be coming on the market in about 30 days and for which the Sellers were going to be asking $300,000.

He said that he knew of the house and wanted to put in an offer today.

I told him that the Sellers would be thrilled. I suggested that we go to my office, write up the offer for $330,000, and get it to them today.

He was puzzled. I thought that you said that they were going to be asking $300,000.

That's right. They would be asking $300,000 in 30 days from now. But right now the number of days on market is minus 30 so they are, of course, going to ask for more than the amount for which they would be listing it. They will be asking for an extra $1,000 per day.

Huh? I don't understand.

I asked him if he had seen the house priced at $300,000 but after it had been on the market for 6 months, whether he would offer them full price. He responded that naturally he would offer less if it had been on the market for that long; the Sellers must be desperate by that time.

Well, so you understand why they are asking for more at this time. You must be the desperate one.

He was still not convinced, because he thought that they would be willing to accept $300,000.

Yes, he had a point, but why would that point not apply after 6 months? In either case, they wanted $300,000.

What do you think about using days on market in negotiating a price?

Is too much emphasis put on this statistic? Is their a formula for how to apply DOM to lowering (raising) the price?

Let's take the example above. How much should DOM count towards lowering the price after 6 months? Or, is this the wrong question to be asking?

Would it be reasonable to ask $60,000 less for this period of time on the market? What if the house is overpriced by $75,000? Just accounting for DOM when the house is incorrectly priced, high or low, misses the much more important statistic of value.

If two identical properties are placed on the market for the same price, but one of them is on the market for 6 months prior to the other, then if it is okay to offer much less for the longer DOM house would not that imply that the other house is also worth less? If it did not imply this, then the newer on the market property should ask for a higher price.

Typically, if a property is not selling, it is because the price is too high. If this is the case, then it is not DOM that is the reason for a lower than asking price offer, but rather, the fact that the house is overpriced.

While, it is typically too high a price that allows a property to stay on the market for extended periods of time, this is not always the case. For example, one may have put a house on the market prior to the property being ready. Maybe it needed cosmetic work, which until done, turned off all prospective Buyers, but once completed, made the property very desireable. Or maybe there was insufficient marketing as would be the case with a FSBO, in which case price would not have been the issue.

Days on market should be considered in determining price, but only as one part of an overall evaluation of all factors which are available for determining a reasonable offer.

Sell That House: Showing Instructions

Yes, it's the all important showing instructions.

Here is how it works. You are given a number to call and after you tell them who you are and when you want to see the property, they give you the instructions for showing the property.

It may go something like this:

• Can you come at a different time?
  • I thought that it was vacant.
  • Or, it is occuppied, but the owner will be out and does not want you to use the lockbox.
  • Or, can you come between 1:00 and 1:15? Do we have to look at the whole place within those 15 minutes or should we just drive by and take a picture?

• There is a key in the lockbox. The key is for the front door, but the lockbox is located on the back door.
  • Let me guess. The code for the lock box is "OSN" or "USA". It is so hard to reset those codes. Thank goodness for the electronic lock boxes. If only I could remember to update my access card.
  • At least, this is better than driving across town to get the key from the agent's office.
  • Why is the lock box on the back door? Do the owners not want anyone to know that the house is for sale; is it a secret, which, of course, would explain the for sale sign on the front lawn?
  • Or, do they not want anyone to know that the house is vacant? Of course, you really feel stupid, when you enter this "vacant" house and find the family having supper at the dining room table and giving you a frozen stare like you have come to chop them to pieces. "I had an appointment to show your house" you sheepishly state.
  • I do not know if the dining room experience or finding someone sleeping in each of the 4 bedrooms is worse.
  • Always knock first, even on a supposed vacant house.

• The house has an alarm. Once you enter the house, go through the foyer, through the living room, and then into the dining room where you will see the alarm panel. Just punch in the code "1234" and then hit "OFF".
  • Why is the alarm panel on the other end of the house? You could have just let me come in through the back door.
  • "Okay, I am in the dining room; Where is the alarm panel? Oh there it is on the opposite wall."
  • Why does the alarm keep beeping? Wasn't that the code to disarm it?
  • When you leave, just enter the code again, punch "ON", and you will then have 10 seconds to get out of the house. "Okay, everybody get outside, make sure I have a clear path to run out of here, and where is the light switch so I can quickly turn it off." Of course, the light switch is in the kitchen so you have to commit the exit path to memory as you try not to trip over the coffee table on your way out.

• The key to the garage and the key to the shed are in the kitchen.
  • Oh, here are some keys hanging on the kitchen wall. Now, which one of these 20 keys opens the garage.

• Do not let the cat out.
  • Thank you for the warning. Maybe I will stay outside instead of go in and start sneezing for the rest of the appointments.
  • And, how am I supposed to keep an animal from getting out if it wants to get out? The house is dark, the cat is right at the door ready to make a break for it, and I am supposed to stop it.
  • Has the cat been declawed or is it an attack cat?

• Do not worry about the dog. It is friendly and his name is "Big Buck" or he is locked in a cage in the basement.
  • Are you sure that he can not eat his way out of that cage I wonder as I hear him growling and snarling and moving the cage around?

• Keep the light on in the back of the basement, in the garage, and the back yard security light. Make sure the other lights are out.
  • Okay, and should I make sure that the iron and the toaster are unplugged as well?
  • And, what should I do with the other lights that were on when I got there? Is this a test to see if I have worthy Buyers or not?

• Be extra careful walking on the second floor; it is very weak. The owners are going to fix that before settlement.
  • Should I be wearing a hard hat?
  • Could not they have fixed the place before they put it on the market?

• Do not go into the den on the first floor.
  • I thought I was making an appointment to see the property, not to not see it.
  • Does that room not come with the house?

• More and more odd requirements could be part of the instructions.

If you really want to sell your property, then you can not be ridiculous in your requirements for the potential buyers who want to see it.

Have it ready for market and easy to show. It should be as easy to show and as enticing to buy as the vehicles in a new car show room.