Tag Archives: advice

Woohoo!! Merv's got it DOWN!!

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[photopress:sc.jpg,thumb,alignright]At first glance it might appear that Greg Swan and I are like-minded when it comes to commission issues. but not so. Greg and I do agree that the buyer should not be led around thinking they are getting a free ride compliments of the seller, and we are both part of a growing minority in that regard. We do in many ways lead the cause of buyers controlling their side of the fence, though sometimes Greg goes a little over the net on that one.

But Merv has got it DOWN!!! Agents like Merv and I are running the test cases that will prove to be the real answer to all of this. No One Size Fits All commissions. A range of prices for various scenarios. A range of prices based on a collaborative effort of determining the client’s needs…a collaboration between the agent and the consumer.

Merv, I am totally with you on this one, and I too have case studies, though by and large, and specifically as to commission negotiations, I was not planning to unveil mine until Jaunary 2007. You GO BOY! Woohoo! The agent and the client TOGETHER determine the services and advices that the client both wants and needs. The agent cannot participate in the consumer cutting themselves short of what they need, to be successful in the client’s goals. Nor should the agent build everything around a total package of high fee services, that always leads to a win for the agent, by including more than the client needs.

For instance, just closed one where the buyer represented himself, after first trying a “full service”/full fee agent. The seller and I gave the buyer the FULL 3% buyer agent fee. Buyer just moved into his new home and is thrilled! Seller is happy and has moved on, after unsuccessfully trying a full stripped down mls only version, before hiring me. Total fees paid in that transaction – 2%. In another instance, on a different property, a buyer called and said she was going to represent herself. I asked her a few questions and she knew absolutely nothing about what I was talking about and was missing several key details needed to represent herself. Seller and I said NO, you can’t represent yourself, you just don’t have the background of knowledge needed, in this particular case, on this particular property. Total fees paid in that transaction (different fully represented first time buyer) – 6% split 3% to me and 3% to buyer’s agent. Portion of my fee used to make repairs to property. I made more on the one where the seller paid 2%, than I did on the one where the seller paid 6%. So much for percentages…they are truly irrelevant.

The agent needs to be involved in determining whether or not the buyer or seller’s wants and choices, fits the consumer’s objectives AND abilities. The consumer in turn has to be realistic about what they can do themselves, and what they can’t do themselves. It’s a collaboration with neither party “dictating” to the other.

THIS is the model of the future. Just as you can hire an attorney to fully represent you, or to partially represent you to save some money, you should also be able to hire a real estate agent to fully represent you or to partially represent you. But no attorney is going to get into the middle of partial representation unless he makes the judgment call that the client is fully capable of handling a portion of the duties. No agent should hand over responsibility to someone without making the judgment call that they know what they are doing, with regard to the services selected and not selected.

A buyer who assumes responsibility for selection of property, via the internet or other means, should not pay the same fee as one who needs agent advices. A buyer who just can’t assume full responsibility for all lender issues, should not pay the same fee as one who needs no assistance with the lending issues whatsoever. A seller who has everything ready when you walk in the door, should not pay the same as someone who needs the agent to help with getting the property ready for market. A seller who can’t read the contract, should not be able to purchase a service that says “all offers to be submitted to the seller direct”, nor should an attorney/owner pay a real estate agent to explain a contract.

No one size fits all commission! No trading in one “one size fits all” for another “one size fits all”! That’s where Greg and I part ways. I love that Merv…and Pam. Get Merv’s blog on your MUST READ list today!

The Day After

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[photopress:Ardell_attica.jpg,thumb,alignright]Choosing some lofty goals. You don’t climb a mountain, simply because “it is there”. You climb a mountain to get the strength of conviction needed to move mountains “The Day After”.

Taking the necessary steps to make changes that benefit both consumers and the industry at large, so others have a working model to follow, is my lofty goal. Telling everyone how I really feel is not about telling everyone how I feel. It’s about targeting some of the ways I can improve the system, one step at a time.

Climbing a mountain (See Quote #19) is of no use whatsoever, if you don’t do something differently the day after, and the day after that, and the day after that. When you run out of steam, or feel like you’ve hit a brick wall, or simply lose the courage to proceed…you find another mountain to climb and start the process again and again. C’est la vie for those who choose for it to be so…or not.

1) Every buyer should know the cash amount they need to bring to closing before they make an offer to purchase and not “after the loan docs come in”. We can change that in 5 seconds. I am changing that today.

2) There should be a training class for agents, that is actually a training class for agents. I need 10 agents to volunteer as guinea pigs for the class, so I can structure the curriculum. I’m hoping Seattle Eric will be one of the ten to volunteer, but he is the only “new agent, used to be investor”, that will be permitted in the class of 10, for “balance” purposes. Eric, agents should never be caricatures…too many are.

3) I decided to run for Club President of my Toastmaster’s International Club at next election in 8-10 weeks.

4) I’m giving my second speech on “Three Simple Steps to Effectively Managing Your Life” tomorrow night, and will continue to give that same speech, until I perfect the handouts to the point where everyone in the room “gets it”.

I’d like to have eight “lofty” goals, and add one every time I accomplish one. So if anyone out there has any suggestions for Changing the World one step at a time, I’ll consider picking the next 4 from your suggestions.

I need 4 more by Monday, so your thoughts appreciated.

Top Down – Bottom Up

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I was helping an agent with a listing that hasn’t sold yet, and one of the simple, yet dramatically effective things I did was rearrange the blind openings. This is particularly important for view property and any property where cars or the street show when you raise the blinds from the bottom up.

If you see two sets of strings, one on the right and one on the left, this usually means they are “Top Down-Bottom Up” blinds. This type of window treatment allows you to cover the low portion of cars going by, but let in light and sky and sometimes tree tops from the top view.

They are great for view property if the windows are low and tall, because they allow you to enjoy the view from the inside without the neighbors seeing you in your boxers 🙂

More Bed Hopping with the Competition

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  1. Matt Goyer, of Urbnlivn fame, just accepted a position at Redfin. I wonder if he’ll keep up urbnlivn, or quit in favor of the Redfin blog like Rob. Just reading that article about Rob reminds me how much things have changed in the past six months…
  2. Anthony Allan put together a nice post on five steps to Realtor nirvana.
  3. Tim shows the Seattle Bubble is more popular than Rain City Guide! And wants a front-page link from RCG in the same post! I like Merv’s approach to giving site stats better (i.e. keep me out of it!) 🙂
  4. Meanwhile, the classic over-achiever (who happens to be a damn good writer) follows Tim’s lead today and shows me up by taking my idea (list of 10) and doing it better…
  5. Niki let me know about the massive updates that he just unrolled at HomeThinking. He’s got a pretty comprehensive database of sold listings and my understanding is that he is attempting to get people to review agents for as many transactions as possible. It might sound unintuitive for agents to support a site that allows users to comment on them, but Nike (and Mike of Altos Research) seem convinced. Niki also mentioned a bunch of interesting features including a GeoRSS feed of his data so that it can be syndicated far and wide.
  6. I also noticed that HomeThinking is syndicating Real Time Pricing Trends from Altos Research in selected markets. Here’s their chart for Seattle:

    7. Prices for SEATTLE

  7. Osman writes about an interesting “green” development in Aurora, CO that would “encompass nearly 3,000 housing units, 1.7 million SQFT of retail, and 2.8 million SQFT of office space” if fully built out!
  8. Remembering Katrina.
  9. Google now allows you to download and print out old books that they’ve scanned from some of the nations largest libraries. Very cool. Not only that, but they recently introduced a news archive search that has scanned 200 years worth of news. Wow!
  10. Not only is Noah is off enjoying a trip in Europe at this moment, but he should be officially mawwied by now. Congratulations!

Agents & Loan Officers to communicate regarding seller-paid closing costs

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(Editor’s note, Tim jumped the gun and posted this article by his wife, Lynlee, before I had a chance to set her up as an author. As soon as I have it set-up, I’ll give her the proper introduction.)

I’m writing this because of numerous problems I have encountered in regards to seller paid closing costs. It has been a trend for buyers to increase the purchase price in exchange for sellers paying buyers’ closing costs by the amount of the price increase. For example, we commonly have transactions where the buyer offers $10,000 more than the listing price and the seller will pay up to $10,000 of the buyer’s closing costs.The financing addendums used in our area specifically indicate that the seller credit may be applied only towards actual closing costs/pre-paids (interest,taxes, HO Dues, etc). The problems that we have encountered occur when the closing costs are less than the amount the seller agreed to contribute.For example, if the seller agreed to pay up to $10K, and the closing costs only come to $8K, then the buyer is looking to get the difference in some manner. Buyers get extremely upset at their agents when they have increased the purchase price by $10K and they are only receiving a credit of $8K. Again, the seller can only pay the actual closing costs.

Suggestions to avoid this problem and reduce obvious tension created by having escrow call the parties involved at the very last minute (which by the way, is usually the day or two before closing):

  • Have the buyer get a good faith estimate from their loan officer BEFORE determining what the seller credit should be.
  • Agents, MAKE CERTAIN that the loan officer knows the amount of the seller credit. If the seller credit will exceed the closing costs, have the difference applied towards a loan discount fee to buy down the interest rate. THIS SHOULD BE DONE WELL IN ADVANCE OF CLOSING DOCS SENT TO ESCROW. (I know many escrow folks may thank us for saying this) 🙂
  • The difference CANNOT be used to reduce the purchase price. This would require the loan to go through underwriting again.
  • Agents need to understand the ramifications of increasing the sales price and having the seller pay for buyer closing costs that may not meet the intent of the parties.

When this problem occurs the common knee-jerk response by the agents to escrow is “why didn’t I hear about this sooner.” Escrow’s response is typically, “we agree.” 🙂

It is always better to “anticipate” problems that can occur and work through issues including being receptive to suggestions by your loan officers and other real estate professionals rather than being “reactionary” when one is in a pickle that is entirely avoidable.

Note: This is general in context and is written primarily for Washington State

10 things I learned from my stats tonight

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It’s been a long while since I posted about traffic on RCG. Two reasons come to mind… One, I’ve been swamped in starting my new job and never got around to updating my excel sheet and two, I knew we weren’t seeing much growth, so what’s the point 🙂

However, I took a little time out tonight to play around with RCG stats and I was actually surprised (in a good way!).

First I’ll give two charts and then I’ll explain what I learned from my research. The first chart looks at visitors and the search engines that they are coming from, while the second chart compares the growth in unique visitors to the total visitors to give an idea of how many people are returning to the site on a regular basis…

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  1. While traffic may not be growing exponentially any more, we’re still gaining new unique visitors at a relatively healthy clip. (If you take out all the Zillow-hype related traffic in February of this year, then the chart would look a lot more like exponential growth! 🙂 )
  2. Google provides a majority of our unique visitors (almost 15K hits last month alone) and far outweighs any other traffic source (it is all organic traffic as I don’t spend any money on AdSense).
  3. MSN and Yahoo still have not figured out how to parse through the glut of Seattle real estate content in order to drive more traffic to RCG! 🙂
  4. The ratio of total visitors to unique visitors has always hovered between 3.0 and 4.0. This tells me a fair number of people continue to return to RCG and it increases as we attract more unique visitors. It also tells me we haven’t found the viral “secret sauce” that causes either a ton of unique visitors (who could care less about a majority of our content) or a super sticky feature that causes new visitors to come back at a higher rate.
  5. 61% are using Internet Explorer, 23% are using Firefox. The rest go using “Unknown” (8%), Safari (4%), and others…
  6. The top 10 search phrases (like [Seattle Real Estate] and [real estate blog] account for a combined 7.2 of all search engine traffic. The other 92.8% of search engine traffic comes from more obscure phrases. (Think Long Tail!)
  7. Traffic is highest around lunch (between 11am and 2pm).
  8. Mondays get hit the hardest while Saturdays are the slowest days on RCG.
  9. Seattle Bubble (404 hits), Ardell (399), and Bloodhound (384) are the three blogs that sent the most traffic to RCG in August!
  10. Google analytics tells me that of all the unique visitors in August, 1,333 had been to RCG more than 200 times!!! (4,710 unique visitors have been to the site over 25 times).

EAL vs. ESL

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[photopress:it.jpg,thumb,alignright] This comes under the category of “You learn something new every day.” Over the years I have found that I generally have a much higher percentage of clients who moved here from other countries, or whose parents moved here from other countries, than some of my peers. I was at a client’s house over the weekend (helping to strip wallpaper, which I am very good at doing) and everyone at the house was speaking both English and Romanian, except me of course 🙂

One of the guests taught me a new term, that was more politically correct, and I was at once converted! I asked if ESL, English Second Language, was an appropriate term or offensive in any way. My sister had taught me ESL, since she has a fairly high percentage of students that are ESL the same as I have a fairly high percentage in my field. Prior to that I was using “The English is not my first language crowd”, so ESL was definitely an upgrade.

A lovely young lady advised that her husband preferred EAL, and that it was more politically correct. Of course! How American of me to suggest that English was someone’s SECOND language, when in fact, it could be their FIFTH language. My friends from Bulgaria speak at least six languages. So EAL, English ADDITIONAL Language, is clearly more appropriate for most people from other countries.

I am a 2nd generation American, which may be the reason why I have a high percentage of clients that are Indian, Filipino, Romanian, Italian, Korean, Chinese, and others over the years. Not because I speak their language, which I do not, but because I understand that different cultures have different ideas with regard to home ownership.

I remember back to 1990, my very first year in the business. I had a client who was a young man from Russia. It was apparent to me, though he did not come right out and say it, that he didn’t have an accurate perception of what was included in the sale, and what was not included. Now many of my clients have some questions in that regard, but for this client the entire idea of owning a property was somewhat “foreign” to him.

I literally walked around and touched practically every item. He was in fact quite pleased to learn that the kitchen cabinets would be staying as well as the stove. He was a little confused about why the wall to wall carpeting was going to stay, but the area rug would not be there after the owner moved out. And when it came down to the mirror in the living room leaving because it was hanging like a picture, but the “mirror” in the bathroom WAS staying because it was a recessed, built-in, medicine cabinet, he just shook his head and took my word for it 🙂

This brings up a point that a recent commenter raised. He said he sometimes has to read my writings twice to “get” what I am talking about. In almost every real estate transaction a client has to trust that the agent is correct, rather than totally understand everything involved in the transaction. For persons who speak English as an additional language, who have not been involved in home ownership issues for most of their lives, being able to trust the judgment of the agent is even more important than almost anything else. Trust becomes the all important factor in the relationship.

Even if they do not understand all of the details and the “whys”, if they trust the person at the helm, life becomes a whole lot easier for them. Being able to focus primarily on which home they want, as opposed to each and every detail of the process, can be quite a relief for anyone, but especially for EAL clients.

"Carpet" Credits, et al

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[photopress:w.jpg,thumb,alignright]We are at that time of year when houses are not selling like hotcakes. So we are back to that age old question, “Can’t I just offer a credit?”

Often agents will tell sellers that they need to remove wallpaper, paint rooms or put in new carpet. A common response from a seller is “Can’t I just offer the buyer a credit?” The short answer is NO. The long answer is, if you offer $2,000 as a credit to the buyer to remove that ugly wallpaper, the buyer will offer you less after having seen the wallpaper AND they will take your $2,000 on top of that as well.

So yes, you can offer the buyer $2,000 and he will happily take it. But he will still take $10,000 off the price of the house, because he hates the wallpaper.

Addiction to technology can be damaging to your mental health

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Yesterday’s list of ten stories was fun to write… So in cleaning out the 400+ unread stories that had accumulated in my feed reader, I came up with these ten stories for today:

  1. I’ve had countless people ask me about how to set up a wordpress blog, so I was glad to see Matt point out that CNet now has a video that details the steps of setting up a WP blog. It’s a simple video, but that is appropriate since the instillation of WP is simple. However, if terms like “FTP”, “domain” and “web host” don’t mean anything to you, then skip over this video and go straight for a hosted blog like blogger or wordpress.com.
  2. Technology bloggers are so much more advanced in their blogging problems that they have to worry about things like the Echo Chamber. Since linking is still a novel enough concept in real estate, this is not really an issue within the real estate blogosphere. None the less, advice like “say something original once a day” is good stuff that we could all benefit from.
  3. I include the next article only for the last paragraph: ‘Employers provide programmes to help workers with chemical or substance addictions. ‘Addiction to technology can be equally damaging to a worker’s mental health’. (It’s one thirty in the morning as I type this, I obviously need help.)
  4. In an effort to separate addiction from hype, Seth Godin reminds us that “just because people know who you are doesn’t mean they’re going to buy what you sell… the best way to succeed is to have a really great product.”
  5. In relation to real estate technology, I can’t imagine why anyone with $17M would think that Reply.com is a good idea… How do they justify the business model that they are going to allow anyone to make an offer on any house? From their CEO: “every home in the country is for sale – for the right price!” The idea seems like a fun exercise for a graduate level economics course, but an actual product??? I don’t get it. Please feel free to let me know in the comments if I’m missing something…
  6. Also, Joel points out that Reply’s product is not likely to make Glenn very happy since he’s working on a similar service and even taken a patent out.
  7. More web technology that seems misguided to me: I can think of plenty of people who are in search of a good blog, but I can’t think of any other blogs that are in search of a good blogger…
  8. And then sometimes, people take misguided to such a different level that I start to doubt my own sanity. How smart do you have to be to refuse $1M? (Really! What does he know that I don’t???)
  9. Barely on topic… There is an interesting house that was recently (re)listed in the NWMLS. Turns out the owners were not doing a good job showing the house from 1000 miles away, so they took it off the market while they reorganized their efforts. During that time, a friendly conversation on staging turned into a full-on listing for one RCG contributor. So far, the owners have been blown away by the difference that this one woman can make in preparing a listing for sale. If you saw the place before, please considering checking it out again because the changes are phenomenal. A neighbor said she barely recognized the inside of the house.
  10. On a related technology note, I found out that the previous listing was “live” again because it showed up in my feed reader based on a listing feed I created for my zip code from Robbie’s fantastic Zearch tool. Anyone in the Puget Sound area can use this tool to be easily updated every time a new listing shows up in their zip code, city, neighborhood, etc.

UPDATE: After playing with the service, Joel goes so far as to give Reply.com the 3-finger salute.

Realtor APB: How to lose clients

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In the Aug. 13th blog missive at Bloodhound Blog, Greg Swann discusses his recent experience with a client who he successfully helped with finding a new home. The twist was that the buyers he was working with had been working with another agent. As you can imagine, the other agent was frustrated and angry that they lost out on a sale. Find out how the other agent reacted by reading the story.

A few months ago I came across an excellent article in USA Today called “The waiter rule.” I shared it with all the professionals we work with. Several CEO’s of Fortune 500 companies were profiled in the article. The CEO’s would take a potential new hire (for an executive or management position) to lunch or dinner. The CEO’s would see how the recruit treated wait staff. The results were interesting and revealing. How you treat others (co-workers, support staff, allied professionals) in business relationships, however difficult or stressful, speaks volumes about your character and leadership in business.

One recent example played out in front of my wife who was signing a client. The client had questions regarding the transaction and called their loan officer. Everyone knows that if a cell phone is turned up loud enough you can hear the conversation loud and clear.

Unfortunately, for the loan officer, my wife heard every word: “…escrow does not know what the #%! they are talking about.” Not only did the comment embarrass the client, but it made us evaluate the working relationships we have with everyone we work with. Ouch.

Situational Values: How do you stack up?

Bill Swanson, CEO of Raytheon Corp. has this to say:

“Watch out for people who have situational value system, who can turn the charm on and off depending upon the status of the person they are interacting with. Be especially wary of those who are rude to people perceived to be in subordinate roles.”