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:

The 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.

A 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.

March 13, 2013November 23, 2021

Pricing your home to sell 2013

by Dan Krell
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DanKrell.com
© 2013

It has been a while since home sellers have felt optimism about the housing market. Although many would be home sellers continue to wait before jumping into the market; a combination of inventory shortages and reports of appreciating home prices are making some home sellers push the limits of home pricing.

Consideration for an appropriate list price is vital in any market. However, regardless of current market conditions, setting the right list price today could prove challenging. If your home sells quickly, you might feel as if you priced the home too low; while setting the price to high could make your home languish in an otherwise active real estate market.

Since the home seller decides on the list price, you might be tempted to use the most recent neighborhood sale or list price as a guide for your home sale. However, without deeply examining these comparables, this methodology may result in over or under pricing your home.

As public information is widely available on the internet, you might find yourself searching the ‘net for recent neighborhood sales to assist you in making a decision on a list/sale price. However, public records usually post dates of deed transfers as recorded in the courthouse, which are usually after the actual closing (sometimes several months or more). Additionally, public record home descriptions can sometimes contain incorrect or outdated data on home interiors and living area. Relying solely on data found on the internet could make you miss out on more recent and significant sale comps –again possibly leading you to under/over price your home.

For relevant comparables, ask your real estate agent to prepare a market analysis based on comps found in the local MLS (which contains real-time data). Although the market analysis is not an appraisal, its purpose is to assist home buyers and sellers in deciding on a list/sale price. An experienced agent preparing a market analysis will search for comparables that are most similar to your home by considering home factors such as: location, type, style, size, age, condition, interior amenities, exterior amenities, room count, basement, updates, etc.

Additionally, since the comparables used in the market analysis are as analogous to your home as possible, finding recent comps within your neighborhood are ideal not only because of the proximity to your home, but also because homes within the same subdivisions usually have many similarities (including age, style, lot size, upgrades, additions, as well as functional obsolescence).

Even though many home sellers are optimistic about home prices, you could still encounter appraisal issues. Appraisals are opinions of value by an independent party typically requested by lenders to verify the home’s market value in underwriting a home buyer’s mortgage application. And although appraisers use a standard methodology to derive a market value, some appraisers may exercise caution and seek the conservative value in ensuring the appraisal meets the loan guidelines. Issues can also arise when the assigned appraiser is unfamiliar with your neighborhood and surrounding area.

Pricing a home to sell has been described as a skill by some and an art form by others. Deciding on an appropriate list price not only establishes buyers’ expectations for an offer, it can also set the tone for a smooth sale or a bumpy protracted ride in the marketplace.

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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 March 11, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

January 17, 2013December 2, 2020

Prepare your home for a sale

by Dan Krell
DanKrell.com
© 2013

It may be an exciting year, especially if you’re planning to sell your home. If you’re like most home sellers, you’ve got some work to do to prepare your home before it goes on the market. So, let’s get to it…

One of the most important things to do before you list your home is to declutter. Decluttering can be an overwhelming endeavor because of a commonly held misconception that the goal is to make your home immaculate. Rather, the underlying principle to decluttering is to remove items from rooms to give a more spacious feel; you decide what items get thrown out, donated, or kept in storage. So as not to get overwhelmed, plan the decluttering; rather than trying to complete the activity in one weekend, try decluttering one room (or even one part of a room) per day.

After the decluttering, you’re often left with items that need to be thrown out. However, some items require precautions and/or special disposal: some items may need to be recycled; some may need special handling; while some may need to be hauled to a processing facility. The county or municipality may offer special pick up for some items that cannot be disposed of by the regular trash collection. If you’re unsure about the disposal of certain items, call your local “Department of Waste Services,” (like my local Montgomery County Division of Solid Waste Services) which can offer guidance and information for local disposal/recycle procedures, facility locations and hours.

“Neutralize” your home to provide a vision to home buyers how they can live in the home. Although you’ve spent years giving your home a personal touch; items such as trophies, awards, diplomas, family and personal photos should be removed because they can distract home buyers’ attention from the home itself.

Home buyers should feel at ease when viewing your home. Having too much and/or over-sized furniture can make an otherwise large room feel cramped. Eclectic furniture collections and furniture that is wrongly placed can not only make a room look awkward, but can also give people an unsettling feeling.

Does your home need staging? Home staging is a way to create a “vision” for home buyers by adding a modern flair. Some home sellers stage every room, while some only stage featured rooms to be focal points of the home. Although home staging can be expensive, it doesn’t have to be. Sometimes having an extra lamp or removing a painting from a wall can make the difference between shabby and chic. If your furniture is out of date or in poor condition, consider a short term furniture rental for that featured room.

Although we’ve talked about your home’s interior – don’t neglect the exterior of your home. Home buyers’ initial opinions are created as they approach your home; no matter how nice your home looks on the inside, it may not matter if home buyers never make it inside. Simple landscaping can make a lawn appear “manicured.” Make sure that the home’s siding is clean and in good condition.

Your real estate agent should be able to provide guidance to prepare your home for sale. If home staging is a goal, many agents either work with a home stager or have been certified for home staging. You can also research home staging by visiting The International Association of Home Staging Professionals website (IAHSP.com).

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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.

November 8, 2012November 23, 2021

Consider rescheduling closing instead of a post-settlement occupancy

Home sellers and buyers look forward to closing day, when the deed to the home transfers; and in a perfect world, everyone moves on with their life. However, there are times when the seller asks to stay in the home after settlement. Ideally, a post-settlement occupancy can be avoided by adjusting the settlement date to accommodate the extra days needed to stay in the home. But alas, the world is not perfect and sometimes a post-settlement occupancy is quickly arranged. Whether you’re the home seller or the buyer, make certain you understand the post-settlement occupancy agreement: what you’re getting into, as well as your risk and liability.

Typically, when someone “rents” a home, a standard lease is used; but since the post-settlement duration is usually very short, the post-settlement occupancy agreement is mistakenly an afterthought to the home sales contract. Here in Maryland, there may be various forms that are specifically used in a particular region for this purpose; such as the one that is used here locally. Just like the sales contract, the post-settlement occupancy agreement contains terms and conditions, including duration and fee collected.

Additionally, a deposit is collected in case there are damages to the home during the post-settlement occupancy. The buyer usually has a walkthrough prior to the settlement, as well as at the end of the post-settlement occupancy to ensure that there is no damage and the home is conveyed in the condition that is expected.

Unfortunately, the risk of loss and liability to the home during a post-settlement occupancy can be vague. Even if the post-settlement occupancy agreement specifies who is responsible for such loss, there may be additional considerations.

It is usually expected that the seller repair any damage they caused during their post-settlement occupancy. But what about damage or loss caused by a fire or an extreme weather event (such as a tornado or a hurricane)?

Even if the post-settlement occupancy agreement is specific about risk of loss and liability, your insurance company might have a different view of risk of loss and liability in a post-settlement occupancy arrangement. Any insurance carried by the home seller may limit or exclude coverage from such damage/loss that occurs during the post-settlement occupancy. Furthermore, the buyer’s home owner’s policy may have exclusions and/or limitations for coverage if the home is vacant or occupied by anyone other than the policy holder. Consult with your insurance company.

Another consideration is that the buyer’s mortgage company may have restrictions about a post-settlement occupancy. The mortgage note may specify that the home be “owner occupied;” which means that the home is not to be rented. A post-settlement occupancy by the seller may infringe on the terms and conditions of the mortgage note. Consult with your mortgage company.

Even if your real estate agent is able to explain the post-settlement occupancy agreement to you, there are considerations other than what is written on the form – you should consult with your attorney before entering into such an agreement.

Due diligence is required before entering into a post-settlement occupancy agreement. Consult with your agent about rescheduling settlement, if possible. Additionally, consult your attorney, insurance agent, as well as your mortgage company to make certain you understand the terms and conditions of the agreement, as well as your liability and risk of loss.

Original published at https://dankrell.com/blog/2012/11/08/consider-rescheduling-closing-instead-of-a-post-settlement-occupancy/

By Dan Krell

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 © 2012 Dan Krell.
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May 2, 2012September 29, 2019

Non-hardship short sales on the rise

by Dan Krell ©2012
DanKrell.com

A March 2012 Housing Wire piece (housingwire.com) indicated that CoreLogic recently reported that there were 11.1 million home owners who owed more on their mortgages than what their home is worth, which roughly translates to 22.8% of all mortgages being underwater. At one time, most home sellers applying for a short sale were experiencing hardships and foreclosure. However, as the housing market continues to recover- an increasing number of short sale listings are from sellers who are current on their mortgage and are not experiencing hardships.

For home owners who are experiencing financial difficulty, there are a number of options available to keep your home; however often a last resort- the short sale is one alternative to losing your home to foreclosure. However, home owners who need to sell their homes (because of a job transfer, divorce, or other reason), but are not otherwise experiencing a financial difficulty nor hardship, are also turning to the short sale process because of depressed home sale prices.

Although short sale horror stories still circulate, much has changed and many lenders have attempted to “streamline” their short sale process. Still, this has not prevented Congress from attempting to force lenders to provide speedy short sale decisions. In 2010, H.R. 6133 H.R.: Prompt Decision for Qualification of Short Sale Act of 2010 was introduced to require a 45 day response from lenders, however it “died” in committee. A recent form of this legislation was introduced in 2011 (H.R. 1498: Prompt Decision for Qualification of Short Sale Act of 2011), but GovTrack (govtrack.us) gives the bill an 8% chance of becoming law. Another bill, S. 2120: Prompt Notification of Short Sales Act, was introduced in February; GovTrack gives that a 2% chance of being enacted.

Beware of the circulated “wisdom” regarding short sales, because it is not always reliable or accurate (e.g., hardships and delinquencies). If your home has negative equity (underwater) and you want to sell, consult with an attorney; there are financial and legal issues that may affect you presently and in the future. The short sale process may seem straightforward, but it can get complicated quickly (especially if there are multiple mortgages involved). Many experienced short sale agents work in tandem with attorneys to make the process much smoother than otherwise would be expected.

If you’re an underwater home seller, but have assets and are not experiencing a hardship, your attorney can advise you on the short sale process. The issue pertaining to a successful short sale is not always about the seller’s financial status; but rather, a short sale is more about the amount the lender will accept as payoff for the existing mortgage. Yes, the lender will collect your financial information to use in their short sale determination; but a skilled negotiator may be able to reduce the overall mortgage payoff (even if you have to bring funds to closing).

Finally, an attorney is the only person who can provide you legal advice. Real estate agents advising you to stop making payments on your mortgage or to “fudge” your short sale application could be putting you in a precarious position: your credit can be affected, or your home can go to foreclosure when payments are stopped; providing false or misleading information to your lender is fraud (lenders and law enforcement are working together to stop short sale fraud).

Additional information about short sales:
Short sale is an option
Don’t be pushed into a short sale
House bill proposes 45 day lender response on short sale
Mortgage fraud on the rise

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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 April 30, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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