As with any occupation, there are ‘insider tips’ in real estate. Exactly what are these little-discussed pointers and how can they benefit non-Realtors? In this edition of the Oregon Real Estate Podcast, we’ll briefly note why this little-known information can be so important, then we’ll get to these 5 little known ‘insider tips.’
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Real Estate Confidential
As with any occupation, there are ‘insider tips’ in real estate. Exactly what are these little-discussed pointers and how can they benefit non-Realtors? Ask a dozen real estate agents and you’re likely to get a dozen different answers. Yet the perspective that follows provides insight into what are often little-known facets of residential real estate, whether you’re buying or selling. We’ll first briefly note why this little-known information can be so important, then we’ll get to these 5 little known ‘insider tips.’ And since most real estate agents are Realtors, both terms will be used interchangeably here.
Keep Your Quiver Well-Armed
Knowledge is power and in the hands of a trusted real estate professional, such power can be tremendously beneficial. For example, it’s helpful whether you need correct information to price your property right, or entrust transaction details to an agent while away when your home is for sale, or get solid recommendations for a truly good inspection, repair or mortgage firm. The ability to reliably depend upon a trusted Realtor to look out for your best interests regarding one of your most valued investments is a very good ‘arrow’ indeed to have in your ‘quiver.’ Having navigated ample real estate terrain, real estate agents are understandably ‘go to’ sources for good reason.
On The Move
It’s difficult to be an expert on everything. As a result, consumers can feel vulnerable or even taken advantage of, given the sheer volume of knowledge needed to buy or sell real estate. Since Americans move on average about every half dozen years, it’s easy to get ‘rusty’ and not know what to be especially aware of when buying or selling a home. With that in mind, here are 5 ‘insider’ Realtor tips you may not have considered.
1. Having A ‘Double Agent’ Can Be A Good Thing
Few buyers and sellers think much about what is sometimes called ‘dual agency.’ This is when the listing (seller’s) Realtor also represents the buyer. There are possible pitfalls but also advantages to dual agency or working with a ‘double agent.’ But let us first be clear: Any potential benefits of dual agency go out the window if an agent is either dishonest, or doesn’t stay within clear ethical boundaries.
Why would buyers want to work with a dual agent? First, no agent is likely to know a property better than the listing agent, (the seller’s Realtor). Second, the listing agent is also likely to have a relationship, or at least some rapport with the seller. While this isn’t typically enough to get a poor offer accepted, having an agent who knows the seller could help a buyer ‘put their best foot forward’ in a competitive offer situation. Third, because offers are routed specifically through the listing (seller’s) Realtor, no offers usually come in that the seller’s agent is unaware of. For buyers, having a ‘heads up’ of other offer activity can also be useful.
Sellers can also benefit from dual agency by having their agent represent property details directly to the buyer with one less person in the communication loop, while also possibly having a clear understanding with the listing Realtor of what they will accept in a transaction. Because the listing (seller’s) agent understands the seller’s needs, those needs may sometimes be better communicated to buyers represented by the same agent. So while there are possible downsides to dual agency, there can also be real advantages.
2. Realtors Can Calculate Their Paycheck by Viewing a Property Listing Sheet
That’s right, virtually every property listed by a real estate agent in our region shows exactly what will be paid to the Realtor (and their real estate firm) whose buyer purchases it. So before an agent even shows a home, he or she can determine what they’ll be paid for selling it.
Commissions are typically ‘split’ between Realtors and their offices, so a buyer’s agent will usually get a portion of the commission shown in the multiple listing system. That figure is sometimes called the ‘buyer’s agent commission’ or BAC and can have dramatic implications.
That’s because real estate agents are salespeople and if they do not deem the promised commission as competitive, sellers may not see the same level of enthusiasm or showing response to their property. The point of a multiple listing system is to promote homes to buyers and their Realtors. Offering what’s considered a sub-standard commission to the buyer’s agent can tend to subvert the whole concept of attracting interest to sell it.
3. Inventory Matters: The Market See-Saw
Just as Realtors will help clients gain perspective by encouraging sellers to ‘put on their buyer’s hat’ and ask buyers to ‘put on their seller’s hat,’ now let’s ‘put on our Realtor’s hat.’
Assume there are few buyers and lots and lots of homes for sale, so buyers are in demand. What do some savvy real estate agents do? If it is a ‘buyer’s market,’ their work skews more toward representing buyers, the ones with considerable power in the situation. Conversely, if there are instead few homes for sale, this means ‘listings are hot’ to agents and therefore having more property inventory listed may be considered a path to better income. As a result, some focused Realtors ‘jump ship,’ from predominantly working with buyers to sellers, or vice-versa, depending on the market.
Given such changing market dynamics, expert agents also routinely educate their clients on what to expect, depending on the market they’re in. For example, being a seller in buyer’s market, or a buyer in a seller’s market can require more patience than when you have the market ‘on your side.’ Here’s a helpful article and podcast on buyer’s and seller’s markets.
4. Research is Key & How Sites Like Zillow Can Be Wildly Inaccurate
A recent news article illustrates just how inaccurate online home estimate websites can be. The head of Zillow reportedly sold his home for approximately 40% less than the Zillow estimate, or Zestimate. This is one reason why some Realtors roll their eyes when online home value estimates are mentioned. In accurately setting a selling price, it’s important to let your agent research truly comparable properties. Would you really expect similarly accurate results from a doctor who physically examines you, compared to a computer-generated exam?
For sellers, this frequently means closely noting key differences between your property, competing homes for sale and those that have actually sold. Location matters, living space matters and so does condition. And especially if your home is likely to attract more experienced ‘second’ or ‘third time’ buyers, expect they’ll do their research and haven’t just fallen off a turnip truck. If possible, drive by properties deemed truly comparable and ask your Realtor questions if you don’t understand why your home is valued differently than you expect.
It’s normal for sellers to believe that their property is ‘the best,’ or worth the most in the area. The problem is not only convincing buyers, but if a bank is involved, convincing the lender-required appraiser, too. As part of that, it’s especially helpful to compare key specifics on home sales that are recent, local and truly comparable. Then if there are any significant differences between your home and sold comparable properties, they can at least be be more accurately adjusted for.
Otherwise, if your property has not sold by the time you exceed the average market time for your area and home type, buyers may begin to wonder ‘What’s wrong with it?’ and ‘Why hasn’t it sold?’ They may even wonder if there is a crime problem, when maybe your neighborhood is the safest one around. There’s one other reason to consider pricing correctly using truly comparable properties, as we next examine the concept of ‘property history.’
5. Every Property Has a History
Believe it or not, there is a viewable history for any property entered into local Realtor multiple listing systems. With the touch of a button, a Realtor can know how long the property has been on the market, if it has ever expired unsold (suggesting it was overpriced), if there have been price adjustments, a ‘sale-fail,’ or even if any property listing data has been changed.
Among properties that have not been on the market for some time, a resourceful agent can use tax records and other data to determine what was paid for the home or if it has been refinanced, among other information. This kind of research can raise questions. Was the shop built with permits? Is the current use compliant with zoning regulations? You get the idea.
So if your property has been on the market significantly longer than other similar homes that have sold, expect buyer reluctance. It’s difficult to fool an agent who does their research and expert Realtors commonly provide buyers with property history even before touring it. What this underscores is that it’s usually best to price where buyers will buy and where appraisers can appraise. Otherwise, expect few offers or the dreaded ‘sale-fail.’
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