Pat Savani

Unconditional Offer of Compensation offered in MRIS

The selling coop broker, as a result of anti-trust laws, is not allowed to know the terms of the listing broker's commission arrangement with the seller. That's why MLS only displays the portion being offered cooperative compensation. The selling agent doesn't know what the listing agent is collecting or retaining for their portion of the compensation, they only know what is being offered to the selling agency.

Short sales and bank owned properties have put a lot of stress in the real estate marketplace. Trying to negotiate an acceptable sale price on a short sale is very frustrating and that is an understatement. I visualize a room with no windows, a desk piled high with files and some poor soul with a visor on trying to understand contract offers written from every state in the union. A short sale listing can languish on the market; finally get an offer and then the buyer, seller and their agents may wait weeks for the third party lender to respond to the offer.

Both agents spend an inordinate amount of time negotiating, price, terms and property condition and are then rewarded with the third party demanding a reduction in the real estate fee as a condition of offer acceptance in an attempt to reduce their loss.

The selling agent when they show the property accepts the offer of compensation offered. They show the property and then present an offer from the buyer. Once an offer is tendered the NAR Code of Ethics the offer of compensation cannot be modified as a condition of offer acceptance. The offer of compensation is unconditional. The agencies can mutually decide to change the compensation but not as a mandate as a condition of contract acceptance.

The listing broker when confronted by the third party often expects the selling broker to share in any reduction in compensation. This request can be made but not demanded. I find the easiest way to explain it is to reduce it to the ridiculous.

If the third party demanded that the real estate fee be reduced to zero would that be acceptable? No. If the expenses of sale can't be met with that offer's net then it should not be accepted. The individual with the visor isn't throwing in their weeks pay to make it work. Taking a hard line can be difficult. The most motivated person in the transaction will usually make the necessary concession. The market sets the price and terms. What some one needs, does not set market value. I have never had either a buyer or seller ask "please, please tell me what does the other party need so I can be sure I will make them happy."

A renegotiation of the employment contract (listing) is between the seller, the third party and the listing agency. The selling broker has been given an offer of cooperation and if offered an unconditional offer of compensation that has been offered and that is not in the negotiation unless they decide to participate.

As the market continues to improve the $8000.00 tax credit is getting the attention it deserves. The real estate community has been beating the drum and getting the word out. The program although not perfect is appealing to the prospective first time home buyer.

Don't let this opportunity slip past you or some one you know go to http://www.federalhousingtaxcredit.com/ to see who qualifies.

• This is not a loan it is a real credit!
• Parent homeowners can assist children in their purchase.
• If you haven't owed a primary residence in the past 3 years you qualify.
• You can amend your 2008 return to get the money now.

It's disappointing that our legislatures did not take advantage with the provision to advance the tax credit to the buyer to be used at the time of acquisition.

The provision-

•· Allows state housing finance agencies to help buyers at closing by advancing the credit as a loan using proceeds from tax-exempt bonds.

Having access to the credit early would open the opportunity to many more buyers.

In the MRIS service area of Maryland, DC, Northern Virginia and Southern PA, the market continues to show strong buyer interest. Sales for the last 3month average are up 16.7% and inventory continues to be down, last 3month average 21.5%.

The consumer is still very price sensitive in spite of affordability index in our market area being at 154%.

Open house activity is reflecting the consumers' selectivity.

They view properties on the Internet, and then decide which properties they will visit based on price and value. Two properties in close proximity will get very different traffic based on how they are priced. Buyers are not driving around searching for random open houses to visit; they are selectively identifying properties they have already culled through on the Internet.

Open house traffic has been good on well priced properties. Agents report consistently that the majority of their traffic is a result of open houses posted on the Internet.

As the make heats up with buyers, investors are re- engaging too. Many investors recognize that moving some money into real estate and out of equities make sense.

Why?

1. Great prices and low rates

2. It is a tangible asset that won't file bankruptcy

3. Won't embezzle

4. Isn't a Ponzi scheme

5. It's sticks and bricks

6. And best yet someone else is paying off the debt!

Investment property has its challenges but in today's economy having investments outside of the equity market makes sense.

I heard a talking head on a cable news station yesterday say "there has never been a better time to buy a home." The business host went on to say that rates and prices are great and it is an opportunity that the consumer should not miss. He also said that housing will lead the economy out of this recession and he projected that the housing market would just keep improving with a vibrant fall market and the potential for a red hot spring in 2011.

Great prices and low interest rates make it the perfect time to buy real estate.

Seller Appeasement advertising is a disservice to everyone. That’s an ad that is placed in the newspaper to make the seller feel good but really doesn’t get results.

In my last Blog I focused on the challenge that the newspaper industry has in identifying a new delivery system for the daily news. Their revenue is down because advertisers are not getting the results they need from newspaper advertising.

The ability to search for products and services on the Internet has made newspaper ads literally yesterday’s news.

In today’s economy you cannot spend money on ads that don’t produce results. You also need the information to be current, compelling, available on demand everywhere a potential prospect is looking.

In 2002 the consumer placed newspapers as their number 2 source with the Internet being number 3. In 2008 newspaper didn’t make the top 5 and the Internet was number 1.

Top 5 sources for the consumer in 2008 according to NAR-

1. The Internet

2. Real Estate Agents

3. Yards Signs

4. Open Houses

5. Real Estate magazines

When making marketing decisions the Internet is the obvious choice.