Category: real estate agent

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Home buyer’s privacy

Buyer InformationIn a time when there is increasing concerned about personal privacy, maybe it’s time for local Realtor® associations (such as the Greater Capital Area Association of Realtors®) to retire the Buyer’s Financial Information Sheet, or at least make major revisions to the form. The Buyer’s Financial Information Sheet is an invitation for abuse and misuse by those who may otherwise be well intentioned.

Sure, privacy laws have been recently enacted that prescribe protocols on the handling and disposal of sensitive personal information. However, there are no provisions to ensure that real estate brokers, agents, and those who have access to the personal data follow such precautions.

If you ask a real estate broker about the origination of the Buyer’s Financial Information Sheet, they might explain how agents needed a means to pre-qualify buyers in a time when loan officers’ pre-qualification letters had little meaning on their own. The tradition of a completed form portrays the buyer’s ability to purchase a home. Legal minds might go further to explain that the form may provide additional recourse for the home seller in case the buyer provides misleading and/or false information, and/or omits relevant information about their financial standing.

Today, many home buyers are pushing back (and rightly so) at the request to provide an abundance of specific financial and personal information to their agents, listing agents and sellers. For many home buyers, the resistance to sharing personal and financial information is not only because of discretion, but mainly because they feel the sharing of the information is redundant and ineffectual. Many home buyers have already provided similar (if not more) information to their loan officer so as to be issued a pre-qualification letter. Additional concerns include the use of buyer financial information to during contract negotiations.

Times change, and it’s time to take home buyer financial information out of the hands of real estate agents. The argument that sellers want to see the buyer’s ability to purchase is antiquated. Today, mortgage originators are licensed and take seriously approvals that are issued because consumers may have recourse; the loan officer usually performs a minimal level of due diligence.

Mortgage originators are required to undergo a federal and state criminal background checks for licensing. Additionally, lenders offer training on managing and disposing sensitive personal information; many lenders offer secure means of electronic transmission of sensitive data. Chances are that the agents involved in your transaction did not undergo a recent background check, much less the seller. But if you are asked to complete said form, you are expected to trust those who may handle and view it.

Additional problems that can occur when presented with the Buyer’s Financial Information Sheet include the compulsion by listing agents and home sellers to underwrite the buyer’s mortgage; they may indulge in deciding whether or not the buyer is mortgage worthy when they may be unqualified to do so. Additionally, listing agents and sellers are tempted to use the buyer’s financial information in negotiations; misguided sellers may regrettably lose a deal when they are told to hold out for a higher price from a buyer who may walk away from negotiation.

Protect home buyers and sellers: retire or change the Buyer’s Financial Information Sheet. Cash buyers can still provide proof of funds to purchase, while other buyers can provide a lender’s letter along with a “Buyer’s Financial Affidavit” that certifies that all information provided to their lender is accurate.

Original published at https://dankrell.com/blog/2013/08/21/home-buyers-privacy-an-argument-to-retire-the-financial-information-sheet/

By Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright ©2013 Dan Krell.

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The next real estate technology breakthrough

by Dan Krell © 2013
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Real estate predictionsBesides face to face meetings, the telephone was the only way real estate agents could communicate with their clients up until about 1990.  By the mid 1990’s the fax machine was a fixture in every real estate office and was a major method to send home listings and contract addenda to clients.  By the housing boom in 2004, large numbers of home buyers turned to the internet to get the latest home listings before other buyers; and during that time, many real estate brokers and agents were taking to the internet finding rudimentary uses for email marketing.

Much like the advances in previous technologies that made the “business” of real estate easier, current advances also seek to make the process increasingly convenient and efficient.  Before the internet was widely used, the increasing abilities of fax transmissions made communication faster and more accurate.  And even though there has not been a major technological advent since the internet, the internet experience has much improved due to the exponential advances in computing power as well as widespread wi-fi access and increasing bandwidth.

Ten years ago, most home buyers and sellers used their desktop computer to access the internet; mobile computing was somewhat in its infancy.  Advances in mobile technologies, including smart phones, have untethered home buyers and sellers; they now have access to real estate information at their finger tips any time of day, wherever there is a signal.  Additionally, real estate websites can now send listing alerts via text messages.   Technically known as “short messaging service” or sms, texting is not only allowing  the “set and forget” convenience of the home search, but allows anyone to communicate contract details and showing instructions with minimal effort.

The internet as a platform has really changed the home buying and selling experience.  Home buyers and sellers don’t have to wait for their agent to send listing information; and because they don’t have to meet with their agents to sign documents, fax machines have basically become obsolete.

Electronic signing is a technology that is becoming increasingly popular, especially for those who have busy schedules.  The technology allows a person to review and electronically sign a document it via the internet.   Too bad for Fed-Ex, as e-signing has all but eliminated the need to send packages of documents to be signed; most notably, the use of electronic signatures has made the process easier for international home buyers and sellers.

It might seem as if technology is not only allowing consumers to conduct the business of real estate with increasing convenience and efficiency, but also lessening the reliance on real estate professionals.  Ten years ago, most home buyers relied solely on their real estate agent for home listings.  Today, however, a majority of home buyers search the internet for home listings and public information.

However, as information is increasingly available, real estate professionals have become even more relied upon to decipher and provide perspective to the information that consumers are accessing.  A real estate agent’s role is continually changing from the information “gate-keeper” to information analyst.

So, I don’t expect real estate agents to be replaced by androids or Star-Trekesque holo-decks in ten years time; however, new technologies will continue to make the home buying and selling process easier and increasingly efficient.  But, who knows, maybe one day the holo-deck could allow buyers and sellers, who are thousands of miles apart, to attend settlement together.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 17, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Your real estate agent’s experience is more important than you know

by Dan Krell © 2013
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Why your real estate agent’s experience is more important than you think:

Real Estate AgentsThe National Association of Realtors (realtor.org) publishes an annual profile of home buyers and sellers that includes data and descriptions about how consumers go about choosing a real estate agent.  There are obviously many factors that are involved in the choice, but it is striking that an agent’s experience is not a major reason for their hire; it seems as if most buyers and sellers hire an agent who was referred by someone the consumer knew, and that many buyers and sellers did not talk to more than one agent.

Even though experience is not heavily weighted in agent choice, it may be one intangible that should be considered when you choose your real estate agent.  A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the intuitive notion that an experienced agent can yield a better result than an inexperienced agent.

They concluded that hiring a “veteran” agent will have a positive effect on your home sale.  The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.  Data collected from their sample indicated that rookie agents sold homes for about 10% less than experienced agents, which according to their sample data yielded an average net difference of $18,000 (the average list price was $201,297).  Homes listed by “veteran” agents sell about 32% faster than inexperienced agents.  And, experienced agents are more likely to expedite the transaction to completion.

One possible explanation provided by the researchers is that the experienced agents are more likely to list higher quality property that typically sells faster and for more money.  Although they concede that they cannot substantiate this rationalization by this study, they suggest that veteran agents are more successful in obtaining luxury real estate and new home listings.

Real Estate AgentA more likely reason for differences between rookie and veteran agents is the mindset brought forward to the business of real estate.  The investigators discuss how those who consider selling real estate their career are more successful and have better outcomes for their clients than those who do not.  They also suggest that those who consider themselves as “part-time” agents are less likely to achieve as high of a result in their transaction as the full time counterpart; they contend that successful veteran agents are dedicated and devoted to their career.

Other possible reasons for their conclusions (but not discussed in the study) are that veteran real estate agents are more acquainted with the nuances of the housing market and have an increased ability to engage the parties in the transaction.  Full time agents are invested in being aware of listing and sale activity in their respective markets, and network with other agents to compare notes.  Additionally, experienced agents may have developed the ability to easily connect with home buyers and sellers; as well as have greater capacity to understand the specific needs of buyers and sellers – thus facilitating a smoother and successful transaction.

The business of real estate is increasingly complex and difficult.  Rapidly changing demands on home buyers and sellers can be challenging and frustrating for those in the market.  Your agent’s experience, both general and specialized, could make the difference in your success.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 8, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Hire a real estate agent

hore a real estate agentWhy should you hire a real estate agent? Home buying and selling without an agent is not for everyone.

A somewhat prophetic Howard Schneider proclaimed in a 1995 article “For Better or for Worse” (published in Mortgage Banking; 56(1), 110) that a combination of technology and industry consolidation would drastically change the real estate landscape by the end of the 1990’s.

Schneider discussed technology changing the relationship between Realtors® and consumers such that through the development of technology, home sellers and buyers would be able to interact without the use of a real estate agent. He quoted John Moore, then president and CEO of Genesis Relocation Services, “If you can get the word out about your property efficiently to the mass market, you can avoid paying the full brokerage commission…” and “…within five years, most homes will be able to see listings around the country on interactive T.V.”

What Schneider described actually happened,  and is now called “the internet.” The growth of the internet during the first decade of the 21st century allowed home buyers and sellers to interact with each other like no other time. The technology was a boon for those who decided to go it alone, and not hire a real estate agent.

Of course the internet was only a piece to the larger puzzle of the early 2000’s. It seems that for a very brief time, just placing a sign in the yard was enough to spread the word of your home sale.  Deciding price, financing, and closing all seemed to be a “no-brainer.” But five years after the housing boom, it’s evident that not everyone can sell real estate “by owner.” Many moved back to hire a real estate agent.

One of the top reasons for selling or buying a home without a real estate agent is the perception of saving money. People who decide to sell without an agent don’t see the value of hiring an agent; while some buyers who decide to buy without an agent believe they can reduce their sale price by the commission amount.

Although hiring an agent may not be a god fit for some, many value what an agent can bring to the transaction. Real estate agents are housing-market experts; besides knowing neighborhood trends, they can provide detailed market analyses to assist in formulating a listing or sale price for home sellers or buyers. Agents facilitate offers, transactions, and negotiation. They are up to date on legislation affecting home buyers and sellers; agents know the seller’s/buyer’s obligations, including compulsory disclosures and forms. And of course, there is the time aspect (how much is your time worth?).

Reasons to hire a real estate agent

Talented real estate agents are sales and marketing specialists. These agents know how to interpret home sale data to determine a price, and the best times to list/buy your home. Additionally, they know how to prepare and present your home to prospective home buyers and promote it to grab home buyers’ attention.

Getting back to Schneider’s article, he concluded that regardless of technological advances and the inclination toward mergers to an increasingly centralized industry with few big players. It’s ultimately about nearby professionals who have the knowledge of the local market. It’s basically who can personally assist you through your transaction. Personal attention cannot be under-emphasized, especially when the transaction is demanding or emotionally charged.

Are you better off without a real estate agent? You might think that technology has made it easier for you to go it alone; but, if you want a relatively smooth transaction with little drama – hire a professional.

Original located at https://dankrell.com/blog/2013/01/24/thinking-of-buying-or-selling-a-home-without-an-agent-hire-a-professsional/

by Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Debunking myths about foreclosures, timing the housing market, and hiring the “big name” agent

by Dan Krell ©2012
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Debunking common real estate myths.

real estate myths debunkingAs a real estate agent, I often encounter people who talk about common and persistent real estate myths.  In recent years, these few seem to be among the top myths:

Myth #1: “If you wait until the market bottoms out, you’ll get the best deal”
Counter point: “People trying to time the market may find in hindsight that they will have reacted either too soon or too late.”

Anderson & Harris, in their reveling study Timing the market: You don’t have to be perfect (Real Estate Issues 35, (3) (10): 42-42-50) indicated that you don’t have to be perfect when timing your purchase and sale of a home.  They suggested that you could do just as well to aim your sale during market peaks and your purchase during market lows; however, they conceded that you would most likely know in hindsight when the market is at a peak or low.

Their results demonstrated that the typical “buy and hold strategy” over a thirty year period results in an annualized return of 8.18%; however, buying when a recession has ended with a predetermined sale period yields a wide range of return that ranged from 13.38% to 1.42% annualized total return.

Myth #2: “Buying a distressed home will result in a good purchase.”
Counter point: “There is inherent risk when purchasing distressed homes.”

There is inherent risk when purchasing distressed homes, regardless if they are foreclosures, bank owned homes, or even short sales.  Although short sales are often occupied, foreclosures and bank owned homes are often vacant for many months; these homes are often sold “as-is; where is” meaning you are purchasing the home regardless of the condition of the home.

Besides the purchase and anticipated fix up costs, unanticipated repairs and expenses are often encountered.  However without risk, there is no reward; due diligence, conducting inspections, and hiring the proper representation may reduce the risk and make your purchase a positive experience.

Myth #3: “The ‘big name’ agent with the most home buyers will sell my home quickest and for top dollar.”
Counter point: “Home buyers typically search for homes by characteristics and location, rather than searching for homes sold by individual agents or brokers.”

real estate myths debunkingI have never had a home buyer tell me they want to see (or buy) a home because it is listed by a particular agent or broker.  Rather, home buyers typically search homes by price, physical characteristics, amenities, and/or location.  Home buyers will view your home if it matches their search criteria, regardless of who listed your home.

When interviewing listing agents, look beyond the sales pitch to list your home, and ask for real data and sources to back up claims.  Agents will often not discuss the homes they could not sell; asking about the homes that did not sell as well as the reasons behind the non-sale may be more revealing than flatly accepting claims made by the agent.  Asking for references of satisfied clients of homes that sold as well as homes that did not sell is useful to not only get a recommendation, but also understand how the agent conducts business.  Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Protected by Copyscape Web Plagiarism Detector

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of July 23 , 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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