Real estate confessions

“How Working with a Real Estate Agent Benefits You” from rsimedia.com

When asked about their real estate agent, consumers logically list characteristics such as savvy, sharp, and knowledgeable.  Some may even describe their agent as efficient, or someone who made the process easy for them.  These descriptions usually attest to the agent’s business acumen and typically focus on the agent’s ability to market a home and/or negotiate a contract.  However, one trait that is often overlooked is “authenticity.”

And it’s not just in the real estate industry.  Authenticity just isn’t the trait that most seem to care about in a sales person.  The reason may seem obvious; for most consumers and salespeople, it’s about money.  So what role, you may be asking, does authenticity have in real estate sales?

In a recent article, Don Kottick wrote about the need for authentic leaders in the real estate industry (8 examples of authentic leadership in real estate; inman.com; March 17, 2015).  Kottick talked about authentic leaders as creating their “legitimacy” through honest relationships.  These are individuals who “remain true to themselves;” they are positive, truthful, empathetic, “introspective and aware of their own strengths and weaknesses.”  Kottick reminds us that authenticity doesn’t come from what’s learned at business school, but what is gained through life’s journey.

Keeping that in mind, we agents are in an advantaged position.  As real estate transactions tend to be associated with life events, we often experience these events as well; sharing in the promise of a new family, the joy of a new baby, the sadness of the loss of a loved one, and even the ambivalence of a divorce.  And we spend a good amount of time with our clients, regardless if it is in person and/or on the phone.  We become acquainted with who our clients are; we learn their vulnerabilities, and sometimes (whether they know it or not) we also become aware of their “dirty laundry.”  Being in such a position, we become trusted advisers if not treated as part of the family (at least for the duration of the transaction).

The nature of the real estate transaction, and our involvement with our clients, places us (real estate agents) in a fiduciary role.  Regardless of our feelings (positive or negative) toward our clients, or our personal and financial situation – we are to look out for our clients’ best interests.  Unfortunately, many in the industry have forgotten that.

Similar issues about agent competency and ethics were discussed last year in The National Association of Realtors® DANGER report.  And although concerns about agent competency and ethics have been discussed for years, the media glommed onto such quotes as “the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents…” as if to say “we told you so.”  But the truth is that competency does not guarantee ethical behavior, and vice versa.  Additionally, competency and ethics do not assure a positive buying and selling experience for the consumer.  The answers, like the issues, are complex; and advancement in the subject is debatable.

Don Kottick’s point, that authenticity is a foundation upon which agent competency and ethics is built upon, is overlooked by many industry leaders, brokers, office managers and agents.  Considering authenticity, competence, and ethics together may not only facilitate an environment that creates a meaningful transaction for the agent and consumer; it may also be a response to treating consumers fairly, and putting clients’ best interests first.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Bait and switch tactics by real estate agents

houseThe Federal Trade Commission (FTC.gov) states in its Advertising FAQ’s: A Guide for Small Business, “It’s illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price…”, when describing “bait and switch” advertising.

The term “bait and switch” is sometimes bandied about by disgruntled consumers, when referring to their encounters with real estate agents. Although the scenarios depicted by the annoyed consumers require legal scrutiny to determine if the situations meet the definition of bait and switch as described by the FTC, it makes you wonder about what some agents are doing and/or saying to get business.

Bait and switch complaints are often about homes that are advertised for rent or sale, but are found to be off market after calling agent. These listings are often the result of listing syndication gone awry; or worse, “scraped” listing information (Internet scraping is when website data is taken and collected, often without authorization) reposted by an unauthorized website to attract traffic away from the website of origin.

Scraped listing information can float around cyberspace for months or years after a home has sold. Although there has always been an element of out of date listing information found on the internet; sham listings and unauthorized postings of listings used to lure consumers, are frequently cited by both consumers and agents because the information is often misleading or incorrect. And although some responsibility may be placed on the workings of the internet; some real estate agents may be to blame for using questionable advertising practices to get their phone ringing to attract home buyers. Such practices include: advertising other agents’ listings as their own, or advertising homes that are off the market.

The MLS syndicates and distributes home listing information across the internet to authorized websites, and updates the listings to maintain accuracy and integrity of the MLS. Although the internet seemed to coalesce for a brief time to present reliable home listings and other real estate information, while deterring scammers and rogue websites; the recent surge in home sales and other economics may be responsible for a return to a “wild west” atmosphere in cyberspace. This year’s reshuffling of MLS data access to major real estate portals, forcing some sites to find missing information elsewhere, is likely to have added some confusion.

Home buyers aren’t the only ones complaining; as some home sellers have similar complaints, saying they’ve been misled. Sometimes the complaint is that their agent “promised” a high sale price, only to be coerced to reduce the price at a later time; or the agent over-promised services that were never delivered.

It must be said that many buyer and seller complaints stem from their dissatisfaction, rather than an actual breach of ethics; and yet many legitimate ethical breaches go unreported. Regardless, it is unfortunate that some real estate agents resort to questionable sales tactics to attract buyers and sellers; and either learn the tactics from real estate trainers, and/or develop them on their own and share with other agents. Even though a Realtors® Code of Ethics exists to guide professional behavior and business practices, some have a “catch me if you can” attitude.

Due diligence, on your part, can make your home buying or selling experience increasingly trouble free and more enjoyable.

Original published at https://dankrell.com/blog/2015/07/23/bait-and-switch-tactics-by-real-estate-agents/

By Dan Krell

Copyright © 2015

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Real estate changed by internet

real estate changed

The National Association of Realtors® annual Profile of Home Buyers and Sellers is characterized as being a survey of home buyers and sellers that reveals “demographics, housing characteristics and the experience of consumers in the housing market, including the role that real estate professionals play in home sales transactions (nar.realtor). The release of the Highlights of the 2014 Profile of Home buyers and Sellers on November 3rd by NAR provides insight into home buyer and seller behavior. I compare a small sample of data from three Profiles that demonstrates how real estate changed. Some things have changed, and some things have stayed the same.

The recent lack of first time home buyer participation is one of the issues that experts point to as holding back a full housing recovery, and has been highlighted by the 2014 Profile of Home buyers and Sellers. Only thirty-three percent of home buyers surveyed in 2014 were first time buyers, which the NAR points out as being below the “historical norm of forty percent among primary residence buyers.” Compared to 2003, NAR reported that forty percent of home buyers were first time home buyers. However, fifty percent of home buyers reported being first time buyers during 2010, which is most likely due to the first time home buyer tax credit that was offered at the time to stimulate home sales.

The 2014 survey revealed that home buyers searched on average for 10 weeks and viewed 10 homes; which is reduced from the 12 week average search indicated the year prior. The 2010 report also indicated a 12 week average search, looking at an average of 12 homes. But these home search stats are a far cry from the 8 week average search time viewing 10 homes reported in 2003.

As you might have expected, home buyer use of the internet has grown. In the 2014 survey, ninety-two percent of buyers reported using the internet in some way in the process. The first step for forty-three percent of home buyers was to look at properties online; while only twelve percent of home buyers initially used the internet for information about the home buying process. The use of mobile applications has significantly increased as technology allowed; fifty percent of buyers reported using mobile websites or applications. Compare this to 2010, when about ninety percent of home buyers reported using the internet; and in 2003 when only forty-two percent of home buyers reported searching for homes online.

Rather than eliminating real estate agents, the internet has changed the relationship between agents, buyers and sellers. Ninety-eight percent of buyers in 2014, who used an agent, viewed them as being a useful source of information. Eighty eight percent of surveyed buyers indicated they used an agent to purchase their home, compared to eighty-one percent in 2010, and eighty-six in 2003.

Ninety-one percent of surveyed sellers in 2014 reported their homes were listed on the MLS, but eighty-eight percent had assistance from real estate agents. Only nine percent of surveyed sellers sold “by-owner.” The 2010 seller stats are consistent with the 2014 Profile; while the 2003 survey indicated eighty-three percent of home sellers used an agent’s assistance to sell their home.

There are differences between buyers and sellers also.  Among the differences in how they choose their agent: the 2014 survey indicated that forty-four percent of home buyers, compared to thirty-eight percent of home sellers, found their agent by a referral through a friend or family.

Original located at https://dankrell.com/blog/2014/11/06/how-home-buyer-and-sellers-have-changed-and-remained-the-same/

By Dan Krell
© 2014

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Sequestration will affect real estate and housing markets

by Dan Krell
DanKrell.com
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Housing and Sequestraion(Dan Krell © 2013) Remember the “Fiscal Cliff?” Well, after a two month hiatus, sequestration concerns are again entering (if not intrusively) the minds of those who may be affected. And, if you remain indifferent on the matter, you might consider the local economic effect from looming government budget cuts that may begin on March 1st.

On February 14th, HUD Secretary Shaun Donovan provided written testimony to the “Hearing before the Senate Committee on Appropriations on The Impacts of Sequestration” (HUD.gov). Secretary Donovan outlined what he described as the “harmful effects of Sequestration” to not only at-risk populations, but families, communities, and the economy at large, as he concluded, “…Sequestration is just such a self-inflicted wound that would have devastating effects on our economy and on people across the nation.”

As a result, HUD counseling would be limited. According to Secretary Donovan, about 75,000 families would not be able to receive the critical counseling services that include pre-purchase counseling, and foreclosure prevention counseling. According to the Secretary: “…This counseling is crucial for middle class and other families who have been harmed by the housing crisis from which we are still recovering, and are trying to prevent foreclosure, refinance their mortgages, avoid housing scams, and find quality, affordable housing. Studies show that housing counseling plays a crucial role in those 3 efforts. Distressed households who receive counseling are more likely to avoid foreclosure, while families who receive counseling before they purchase a home are less likely to become delinquent on their mortgages.”

FHA has been the workhorse to stabilize the housing market as well as providing the means for affordable home purchases. Those directly affected by sequestration would be home buyers and home owners who are applying for FHA mortgages; as well as those seeking assistance through HAMP and HAFA. In written testimony, Secretary Donovan stated that “…furloughs or other personnel actions may well be required to comply with cuts mandated by sequestration.” As a result, “…The public will suffer as the agency is simply less able to provide information and services in a wide range of areas, such as FHA mortgage insurance and sale of FHA-owned properties.”

Another concern is the possibility of a sharp increase in interest rates. Up until now, home buyers (and those refinancing) have had the benefit of historically low mortgage interest rates. Low mortgage interest rates are one of the reasons why home affordability is also at historic levels. A sharp rise in interest rates combined with FHA mortgage delays could shock the housing and real estate market. The result could be housing activity similar to what we experienced immediately after the financial crisis. Granted, the shock would probably not be as prolonged as what occurred in 2008-2009, but nonetheless significant.

In a region that has been relatively unaffected by unemployment and economic issues due to a strong government workforce, sequestration could essentially put a damper on the local housing recovery. Home buyer activity has already been affected, as those who are concerned about sequestration have either put their home purchase plans on hold, or have changed their housing plans altogether. And of course, over time, the changes to consumer behavior would trickle down to various sectors of the economy.

But don’t worry, although sequestration is set to begin March 1st, budget cuts won’t occur all at once. Unless Congress acts on the matter, you might not immediately feel its effects.

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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 February 18, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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.