Exclusively Buyers Realty

Real Estate Representation de-Mystified?

2011-11-05T08:06:00.000-07:00

For the most part when Buyers start to look for a property to buy they don’t think about who they are going to be working with, they pretty much assume all Realtors© are the same, an assumption that could cost them cash.

To set the stage we need to define what an “agent” is. An agent is defined as a person or business authorized to act on another’s behalf. A real estate agent is a person who works for you to effect a successful real estate purchase.

Unfortunately when it comes to who represents you – the Buyer – in the purchase process State laws and regulations are not uniform; rather a mishmash of methods to avoid litigation and ensure the most profit for real estate franchises and brokerages.

For years a form of buyer representation known as sub-agency was widely practiced. Many multiple listing services required that the brokers listing property in their service offer compensation to “co-operating” brokers only if the co-operating broker acted as a “sub-agent” of the listing broker. What that meant was that buyers were not really represented. The agent they thought was working for them had a contract with the seller to get the seller the best price for the property since as a “sub-agent” they were working under the direction of the listing agent.

Sub-agency proved a legal nightmare so in the early 90’s ways were sought to allow real estate brokerages to keep the commissions from both sides of the transaction and avoid getting sued for misrepresenting who was working for whom.

The result is a host of “relationships”; from dual agency – where one “agent” works for both parties in the transaction to “non-agency” relationships (Transaction Brokers) which does away with agency relationships altogether. Even though the National Association of Realtors© has never endorsed transaction brokerage, Florida and 24 other states allow Realtors© to act simply as “facilitators”, providing services to Buyers without representing them as their agent.

In Florida it is assumed that all real estate sales associates are acting as Transaction Brokers (non-agency). Florida law changed in 2006 and with that change sales associates do not have to provide consumers with disclosures letting them know that they are working as non-agents (Transaction Brokers).

Interestingly according to a survey conducted by the National Association of Realtors© only 10% of Realtors© said they practiced Exclusive Buyer Agency; working exclusively in the Buyer’s interest.

For a more in-depth discussion visit this Inman News story.

Attention Baby Boomers, we are getting ready to Land!

2011-01-21T07:59:00.000-08:00

When you consider life after the 9-5, the commute, the office politics perhaps you dream of sleeping in every day, not getting out of your pj’s until noon and just piddling around the house for the rest of the day. Ah, sounds like heaven – for a month. . . maybe!

Baby Boomers are not a passive generation so planning a passive retirement does not seem in synch with all that we know about Boomers. They have been the movers and shakers - trend makers for a long time; don’t think that is going to change. Therefore it is essential to look at what you want to do with those well earned years ahead and where.

Location, location, location has always been the mantra of real estate. Why you buy a second home is important but perhaps not as important as WHERE you buy your second home. You should work with your buyer’s agent to investigate the communities you are considering. There should be things that make sense for you on a financial, physical, emotional and yes, even spiritual level.

The financial side is obvious; you need to consider the cost of living of the area. That not only means investigating how much it will cost to purchase groceries and gas, but are there opportunities for jobs? Yes, jobs! Most boomers will not want to completely exit the work force (or won’t be able to) so you should look at sources of potential employment for something you may want to do (a dream you have never tried because of responsibilities) or something you already know how to do.

Physical considerations are also obvious; will the weather/climate support all the activities you plan on trying now that you have the time. Are there parks and recreational areas nearby that will satisfy your yen to try out tai chi or yoga? A shopaholic, make sure there are plenty of malls close by… you get the idea!

Emotional level may be a little harder to pin down, since it is very individual. Perhaps you want to go back to college, or get better at sailing, maybe volunteer work is something you have always wanted to do but never had the time. To stay vital this area also needs “exercise”.

Spiritual health is also very personal; investigating your new destination for outlets that will nourish you spiritually should not be overlooked.

Making good choices on where you land for the next phase of your life entails exploring all the aspects, get help at the start of the process so you can kick back and really enjoy the rest of the ride!

Buying a Second Home?

2011-01-17T11:31:00.000-08:00

With the real estate market in the dumpster there are some terrific opportunities for second home buyers. Other than the possible tax benefits some other good reasons include:

Building equity using an alternative source. Yes prices are down all over but that also means homes are affordable that will appreciate again once the market returns. Homes that are located in desirable locations, especially waterfront properties, will always be well….desirable! With the stock market ups and downs being controlled by large investment computers, real estate still looks like a smart investment for the individual investor.

Test drive a retirement location before you retire. Maybe your lifelong retirement dream has always been to live on/near a world class golf course. Purchasing a second home before you really need to live the dream might just save you a lot of disappointment. If you find the reality of your dream lifestyle does not work for you, purchasing the home before you retire can allow you to build equity (see above) so you can move on to your true dream.

Gently loosen the ties that bind. One of the hardest things about moving after you retire is leaving behind all you have built in your current home (family memories). This is not a bad thing and staying put after you retire may just be the right decision for you. But if you have a dream you would like to realize (see above) then having a second home where your family spends time together before you make that big change will give you the opportunity to build new attachments and memories in your next home.

Legacy building. It is a rare parent who does not want to leave a legacy for their children. Money is nice - but does not have the special value of a home where you spent time together building family stories. A second home can be a wonderful memory filled gift you leave for your children to enjoy with their children as well.

Buying a second home is not for everyone, but if you are well positioned and considering the idea, these benefits can help make that decision a little easier.

The New FAHP (Florida Affordable Home Program)

2011-01-10T08:23:00.000-08:00

Okay, I am sure by now you have all heard of the HAFA (Home Affordable Foreclosure Alternative) program and HAMP (Home Affordable Modification Program) But I bet you have not heard of “FAHP” – Florida Affordable Home Program. It is a brand new “program” that has happened by accident (hmmm?) through the failure of the other programs. As many news pundits have pointed out these Government programs have not been stellar in providing the much needed relief they were supposed to. That, unfortunately, has led to downward spiraling home prices, stalled short sales and a slew of foreclosed homes in Florida.

“FAHP” is for buyers looking for an affordable new home, a second home, or just a place to escape the crazy winter weather!

Sound like it will work for you? Consider these numbers, home prices are now at the levels they were at in 2003 (and in some areas of Florida prices not seen since the late 90’s) but mortgage rates are at 2010 levels (4.8%-5.25%), not at the 2003 rates (5.8%-6.5%) so you will realize the additional savings of historically low mortgage rates AND low home prices. And what a selection! Want a condo/townhouse? There are 9,216 available right now in the Tampa area. Single family home – you can probably find something you will like in the inventory of 20,035 that are available to choose from -and that's just the Tampa area!

Even if you are looking from an investment point of view and do not plan to use your new Florida retreat right away think of this information from Hotpads.com; economic uncertainly and a growing number of people losing homes to foreclosure in 2010 drove rent rates up as prices for homes for sale dropped. Median rents in Florida between January and December 2010 were up 17%.

Florida homes ARE affordable for buyers who are ready and able to go, but one catch (isn't there always a catch?) prices have started to go up in the many Florida areas. In Tampa, for example, home prices have increased 2.2% from December 2009 to December 2010 and the inventory of available homes has dropped from a 10.9 month supply in December 2009 to an 8.2 month supply in December 2010. This bargain basement sale will not last forever. Your Buyer’s Agent is a good resource to determine if this “FAHP” program is right for you!

Newest Thrill Ride – US Housing Market

2011-01-07T10:42:00.000-08:00

All sorts of reports are coming out regarding how the housing market performed at the end of 2010. After reading some of the numbers I wonder if we can somehow get a major theme park to turn the whole thing into a new thrill ride…. a hair raising roller coaster through a really long, dark tunnel.

It can be a challenging ride for Buyer Agents who do this every day - making sense of the constant stream of housing data; for instance if you were to look at the latest Core Logic HPI (Home Price Index) report it shows that IDAHO took the biggest hit in September 2010 with prices dropping 14%! You do see the typical bad performers in the ranks, but at less scary numbers than had been seen earlier in the year, New Mexico at 7.5% and Florida at 7.4%. And then the real kicker, California had a price increase – not much mind you, 0.86% but still an up tick… as the coaster swoops across the Country you never know where the dips and rises will be!

But if you look at other reports you get a different kind of thrill. The S&P/Case-Shiller Home Price Indices for Sept/October released in late December show that the San Diego metropolitan area had a decrease in home prices of 1.5%, and that San Francisco dropped 1.9%. Case-Shiller does not even consider Idaho. Which report is correct? Both, all, none?

So what kind of ride can you expect when you get on this new “attraction”, that’s just it, you cannot know. If you spend you time trying to determine if your area has hit bottom by using national reports based on statistical metropolitan areas, or some other regional housing average, you will probably make yourself crazy as the coaster zigs while you are trying to zag.

Real estate is local - has always been local, and even though technology has made it easier than ever to research home buying it is still smart to have your Buyer’s Agent help evaluate if now is really the best time to buy in your area.

Why Specialize as an Exclusive Buyer Agent?

2010-12-06T12:17:00.000-08:00

"A more natural relationship for Home Buyers"

According to the National Association of Realtors® publication 'Agency - Choices, Challenges, and Opportunities', Exclusive Buyer Agency is: "The practice of representing only buyers and never sellers in a transaction. The company never lists a seller's property and thus never has a seller as a client.

This publication goes on to say that Exclusive Buyer Agency "Promotes a more natural relationship for agents working with buyers". In talking about an agent who tries to offer both seller agency and buyer agency it states "The buyer and seller do not have the full range of representation" Any agent who lists properties for sale is used to representing sellers and has a legal commitment to protect the sellers interest. The agent must get the highest price possible for the property.

Home Ownership 101

2010-03-06T12:00:00.000-08:00

Real Estate – 382,000,000

Home Buying – 65,000,000

Foreclosures – 32,500,000

These are the Google results when searching on these key words; the real estate market may be down, but certainly not “out” of our collective psyche.

Let’s face it we are all just a little obsessed with real estate. While the bubble was inflating we watched with joy and anxiety as the market values went up and up and up. Then we assumed the fetal position when our property house of cards collapsed. But whether up or down real estate remains vital to many if not most of us.

The idea of home ownership has taken a bit of a beating in the last few years but many Americans are willing to do the work required to buy a home, because it is still important - a 1995 Urban Policy brief by HUD made this assessment of home ownership:

“The desire for homeownership is deeply rooted in the American psyche.Owning a home embodies the promise of individual autonomy and of material and spiritual well-being that many people sought in coming to this country. In addition to its functional importance and economic value, homeownership has traditionally conveyed social status and political standing. It is even thought to promote thrift, stability,neighborliness, and other individual and civic virtues.”

So it is not surprising that even with all of the bad news we get each day regarding the housing market we continue to look, to dream and yes - buy homes. The mantra has been that mortgage rates are low and the first time buyer credit and the huge inventory of foreclosed homes has kept the market going, but I think the real reason that things will “get better” is that Americans love owning their own space; it is our piece of the dream.

Valentine’s Day message for Short Sale Sellers

2010-02-11T07:44:00.000-08:00

I work exclusively with buyers, so as such it may seem odd that I am sending a Valentine's Day message out to sellers, but in real estate there are always two sides to the deal, two sides to the story.

Invariably while working with buyers I have to show them a short sale property or two or more since right now the inventory of homes is flush with short sales. Foreclosures are actually rare because they come and go off the market very quickly; short sales languish. Many of my buyers ask me in an honestly surprised way how these short sale sellers could get into this terrible situation. Of course every story is a little different but most short sale sellers are there because something went really really wrong in their lives. Perhaps illness, job loss, reduction in hours, investment losses, lots and lots of reasons but all leading back to the same place, a place that feels and looks like failure.

Let’s flash back a few years, back to the early 60s. The economy in the US was booming. The children of that time are not called boomers without reason! Business was expanding, people wanted bigger homes for their bigger families, they were moving to a new place, the “suburbs”. Track houses ruled. I was part of that history. In the early 60s my father decided that all of his children deserved bedrooms, so we moved to a much larger home. We all had our own bedrooms in a new home in a new development in the “burbs”. My Dad was commuting two hours each way each day so his family could have it better than he did. But things changed as we started to approach the 70s; war expenses, too much debt, recession loomed. My Father lost his job, we lost our home, he filed for bankruptcy. My Father never really recovered from the shame of that failure, even though he went on to re-establish himself and our family, the scar of that “failure” was always with him.

Flash forward to 2010, the US economy is reeling from some pretty devastating blows after a very frothy “boom”. I don’t need to list them since we are all living with them every day, but the end result is that many people are in trouble. Short sales are just one facet of the harsh life changes that this economic downturn has created in our lives. I truly do not believe that the majority of people struggling with foreclosure, with short sales are there because they want to be. As a people Americans do not like to fail, it is just not part of our national psyche. So this Valentine’s day I would like to ask that we look at the people and not the event. Can we all be a little more sympathetic to those short sale “deadbeats” – most of them really do not want to be there.

Year End Housing Sales, Good News or Bad?

2010-01-25T10:18:00.000-08:00

Reuters has reported today that sales of pre-owned homes in the US fell dramatically in December after the deadline for the first home buyer credit expired. The media moguls tend to see this as bad news, and on one level, it is. But when viewed from the home buyer’s perspective this could be viewed as good news, very good news.

As we neared the end of last year, before the home buyer tax credit had been extended, buyers in many regions of the US were seeing something surprising, bidding wars. Most buyers have heard that we are in a “buyers market” for the last couple of years, so to find fierce competition when submitting a contract was shocking. Part of the cause was that the first time home buyer credit did push a lot of fence- sitting buyers into action; they did not want to miss out. Also the pool of homes that are readily available, those that are not short sales, is not large. Sellers who were not in trouble, who could close quickly were seeing multiple offers - a real turn around.

Today’s Reuters news however will cause some anxiety among home sellers and perhaps will give home buyers a slight edge, but only for a short time. As we approach the expiration of the second, and probably last, home buyer tax credit on April 30th the buyer pace will accelerate once again, as it did in at the end of 2009. So for a very small window of time buyers will have an advantage in price negotiation when buying a new home. Talk with your Exclusive Buyer Agent to get the most up-to-date information on the home buying market and to get help in creating your best buying strategy for 2010.

Home Buying – Doing it Right

2010-01-22T09:00:00.000-08:00

Okay you are ready, you have spent months on the internet and have found “the” home to buy. You contact the listing agent through their internet form, you get a callback from the listing agent and you are off and running! The next thing you know you are in the listing agent’s car or their buyer agent’s car, looking at the home you requested and probably a few others that the office has in inventory. Perhaps the agent has asked you about bedrooms, baths, and most definitely will want to know if you have your financing in order, but that will probably be it. Rarely will you meet at an office prior to viewing the listings; the key is to get you in shopping mode!

Contrast this scenario with a buyer working with an Exclusive Buyer Agent. First of all you have to work to find one. Since Exclusive Buyer Agents use a different business model than traditional real estate, it will not be easy. They do not have listing sites to grab your attention. You will not find them on Realtor.com, or Zillow.com, or Tulia.com because these sites showcase listing agents and their home listings. If you want to find an Exclusive Buyer Agent you need to search a little deeper. A good place to start is the National Association of Exclusive Buyer Agents or sites that offer lists of Exclusive Buyer agents.

The extra work will pay off. Money Magazine noted that “A study by U.S. Sprint found 233 relocating Sprint employees who hired buyer brokers paid an average of 91% of a home's list price. People who used traditional agents typically pay about 96% of a home's list price. On a house priced at $150,000, that's a difference of $7500."

Exclusive Buyer Agents (EBAs) work for buyer brokerages. Buyer brokerages do not work with sellers, and have zero listings to sell. EBAs will take the time to do a buyer interview prior to viewing homes, they will discuss preferred home styles, types of area amenities, commute times, what special features you want in your new home, and discuss financing options; in short they will work for the buyer to make sure they get all the important information and advice before looking at a home. EBAs want to make sure the home buyer buys a home and is not sold a home!

Marketing Expert versus Buyer Advocate

2010-01-20T05:44:00.000-08:00

When home buyers start to look for a home more than 87% start on the internet. This is a great place to begin checking out available homes, home prices, and financing options. For the most part however the sites that home buyers will see are basically marketing sites. Realtors that sell homes, listing agents, do a lot of marketing. That is their primary job – to sell their client’s product – the seller’s home. To do this sales agents will take photos of the home, write descriptions of the product, create flyers, send out post cards, purchase advertising space in print media, create websites to display their listings, buy TV and radio ads; all marketing tactics. Listing agents also market themselves, they want the seller to believe that they have the best tools to get their home sold and they want the buyer to believe they are the best person to represent them in the home purchase. So from the very start buyers are being marketed to, being “sold” that the listing agent is the best agent to help them find a new home.

A home purchase is probably the most complicated purchase people will make in their lifetime. Is a marketing expert the best person to guide a home buyer through the process?

Exclusive Buyer agents (EBA’s) work differently than other real estate professionals. EBA’s do not work with sellers; they do not have a product to “market”. Their business focus is on service to the buyer, exclusively. What they do offer is advice, advocacy and fiduciary duty. EBA’s will work with a buyer to find a home using all of the available tools; sorting through the marketing websites, MLS, for sale by owner properties, what ever is necessary in order to advise the buyer on what would be the best possible home purchase. Because the EBA works for the buyer, not with the buyer, the EBA is the buyer’s advocate during the entire real estate sale process.

Exclusive Buyer Agents believe that buyers need advocates and advisors, not marketing experts when they are looking to buy a new home.

Why an Exclusive Buyers Agent - Why Now?

2010-01-16T08:44:00.000-08:00

The past year in the real estate market has been memorable; short sales, foreclosures, price drops, home buyer credits, mortgage rule changes, and on and on… makes you dizzy just trying to stay on top off all the information. So you ask yourself, why would I need an exclusive buyer’s agent – there are plenty of properties out there and plenty of real estate agents to go along with those property listings. Why go to the extra step to find an agent that is “exclusive”, that will work just for me; don’t all real estate agents provide the same “stuff”??

Yes and no. For instance, short sales are probably the bulk of the real estate inventory in many markets and a listing agent who has a large portfolio of short sale property listings is a busy person - so much so you may not be able to get them when you call on a property sign. The short sale process is extremely paperwork intensive for the listing agent, even if they have hired a company or attorney to help them; they still need to prepare a substantial package of information to submit to get the process rolling. This does not leave them a lot of time to give to a potential buyer. Since they are supposed to be representing the seller’s interest, because they signed a contract with the seller to help them through this challenging process, it is hard for them to be completely arm’s length and work with both seller and buyer at the same time. The listing agent has a lot of time invested in the seller’s issues. So as a buyer hiring your own exclusive agent, one that works only for you, makes a lot of sense. Your exclusive buyer agent will write a contract that protects you, will monitor all the important deadlines; will give you encouragement when the going gets crazy. Short sales are going to be with us for a long time, so if buyers want to take advantage of the short sale market, it only makes sense that they have an agent working in their behalf, and not the seller’s.

Profit Is Made When You Purchase

2010-01-08T09:30:00.000-08:00

Have you heard of the old property buying adage, “the day you make your profit is the day you buy”? Most home buyers do not think about the profit their home can make them when buying; all they can focus on is the large chunk of change they are laying out in the form of down payments, closing costs and mortgages. But it pays for a buyer to look into the future. Perhaps you feel this is your “forever” home, that you will never be moving, but one thing recent history has certainly taught us… things change.

Home buyers today need to plan for the future and that means thinking about the eventual resale of their new home. The most important key is to buy it right. That will mean doing your homework looking at today’s market and forecasting out to see what kind of appreciation you can expect. Not an exact science since there are tons of variables, but having an exclusive buyer agent working for you can help. When you hire your own buyer agent they will help you not only navigate your new home purchase, they will also help you look forward to the time when you will be selling. If you get the right deal on the front end, you will make money on the back-end. But you need an agent who is working for you, not the seller.

I was chatting with a neighbor recently. She purchased her home at the end of 2008. It was a bank owned sale and she used the listing agent to represent her. She ended up paying $200 more than the asking price. I knew this property, there was no bidding war going on and had been on the market for over 100 days; I had even advised my buyer client to come in 12% below asking since the market trends all pointed to price drops. My client opted for another property that better fit his needs, but my new neighbor bought this home over asking price during the downward slide of the market. Because she did not have someone in her corner she paid too much. When she goes to sell she will not realize the profit she could have made by buying right. The message – the agent you choose to work for you IS important. An agent listing a home is working for the seller; an exclusive buyer agent is working exclusively for you.

A'm I Crazy or What ?

2009-12-18T12:55:00.000-08:00

An article from a Realtor in Phoenix was trying to convince Buyers that working with a Dual Agent was OK. After a full page of rationalizations it all boiled down to this....

A Dual Agent or Transaction Broker was ok to use because both Buyer and Seller would be on “Equal Footing”. Neither Buyer nor Seller would get representation.

Well my question to this guy, that I suspect works for one of the Big Listing Agencies is.... Can you really find Buyers that will pay 3% for NO REPRESENTATION at all ? You mean, if given the choice, they would give the moneys set aside by the Seller for them to have their own representation…to an agent that can’t represent their best interest ?

Doubling ones commission and not having to look out for your clients saves a lot of work....but gives the big Listing Brokerages a lousy repartition with both the Buyer and Seller.

What HUD.gov say's about Realtor Representation

2009-12-18T06:19:00.000-08:00

Here's what HUD says, "It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you."

Because 98% of all Real Estate Brokerages are Seller orientated, that is they sign a contract with the Seller, they can not provide Buyers Fiduciary Representation. Fiduciary Representation means Full Disclosure, Complete Confidentiality, seeing ALL properties meeting your requirements and putting the Buyers Best Interest First.

An Exclusive Buyer Agent can be found at brokerages that do NOT contract with Sellers. These Exclusively Buyers Brokerages never list properties for sale and work directly for the Buyer, usually on a Flat-Fee basis with the Buyer Agent commission going directly to the Buyer at closing.

A directory of Exclusive Buyer Agents in the US can be found at ExclusiveBuyerAgent.US or ExclusivelyBuyersRealty.com