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Sellers - Real Estate Listings

Real estate companies and their agents aggressively seek property listings.  Most companies use considerable amounts of institutional advertising (radio, TV, and print ads not advertising specific properties) which is directed toward securing property listings.  Some institutional advertising is directed toward obtaining buyers.  No such advertising attempts to actually or specifically sell any particular property. The seller’s excessive commission dollars pay for this advertising.

Listing Presentations and Market Evaluations are quite often not what they seem.  Your initial contacts with real estate agents are usually to view a Listing Presentation and secure a Market Evaluation of your home.  Listing Presentations take every form imaginable from None to a 2-3 hour Song and Dance Routine complete with smoke and mirrors and bells and whistles (don't allow a dog and pony show into your home).  In some cases, a clown suit would be appropriate!  Some agents are so professionally prepared they could or perhaps should sell tickets to their performances.  You must realize that there is often a big difference between performance and practice!  Perhaps the biggest problem is knowing the difference between a Competitive Market Analysis and a Comparative Market Analysis.  You always want a Comparative Market Analysis, many agents only want to give you a Competitive Market Analysis.  The Comparative will tell you what your house is worth based upon comparatives of similar properties in the general area.  A Competitive will tell you how badly the agent wants your property listing ... it compares your house to houses all over the map in an effort to give you a price high enough to secure your listing (often with little relation to the true value).  The Competitive Market Analysis will cost you!

Agent, agent, agent, who is my agent.  It is imperative that you find out if your agent is licensed (in Indiana, every licensed agent is required by law to have a pocket card license at all times).  www.in.gov/pla. You then need to find out who will handle the listing of your property, who will handle the advertising and the marketing, who will set up the appointments, who will provide showing feedback, who will handle the potential Purchase Agreements, who will handle the monitoring and follow through on the transaction in process and who will attend the closing of the transaction.  If you don't ask, they won't tell.  You may be surprised at the answers.  Someone needs to put an "I" in Team somewhere.  Many 'teams' are nothing more than excuses for inaction, inability and a failure to properly market and sell your home.  If the licensed agent, the "I" in Team, is not performing the functions of a licensed agent with your home, perhaps they are being paid too much for their services.  Please note that there is an 'I' in Professional and there is an 'I" in Business.  Real Estate really is a Professional Business for Experienced Business Professionals!

Signs, signs, everywhere a sign!  The true and most visible measure of an honest, law-abiding real estate agent is his or her use of signs.  Communities have laws regarding real estate signs. Nearly all communities allow a For Sale sign on the street sides of a property.  Most condominium communities only allow a sign on the inside of one window.  Most communities outlaw directional signs on street corners except during specific periods for the purpose of Open Houses.  The Metropolitan Indianapolis Board of Realtors sells these illegal directional signs.  Dishonest agents ignore the sign laws about the same as they ignore speed limit signs in school zones (I hope they don't run over my grandchild).  Occasionally, these agents do receive fines from the enforcement agencies ... just not often enough!  One should not ever do business with a dishonest agent.

Real estate business models have changed dramatically over the last several years.  Many models are now based on so-called ‘one stop shopping’ with each stop or step designed to increase the profitability of the real estate company.  Many of these 'one stop shopping companies violate Federal RESPA laws.  In the past, companies were pretty much standing alone as independent or franchised businesses, offering and excelling in one service, that being real estate marketing and sales.  Some have now added title companies, mortgage companies, appraisal companies, inspection companies, insurance companies, home repair companies and even furniture companies to the mix.  In the past, every individual business competed against every other business in the specific field.  Not any more!  The checks and balances of the business are gone!  Profits are increasing, at your expense!  Ethics problems and subsequent violations of RESPA laws have contributed considerably to the sub-prime mortgage scandal ... surprise! surprise!

In many cases, ‘one stop shopping’ costs the uninformed consumer resulting from non-competitive pricing for services. Some companies own or have a financial interests in the companies that provide every service along the way.  The real estate company, the mortgage company, the appraisal company, the inspection company, the title company, the insurance company and even the surveyor may be owned or be a part of a financial association conglomerate.  No competition!  In general, the use of ‘one stop shopping’ will cost you money!  Effective January 1, 2010, RESPA is being revised in an effort to help the consumer truly determine who provides the BEST mortgage.  Why the delay, ask your Realtor, your Builder, Your Mortgage Company ... their actions delayed the process for over 3 years ...

You probably have checked out new construction.  Some builders now own the construction company, the appraisal company, the real estate company, the mortgage company, the insurance company and the title company.  The novice new home buyer doesn’t think twice about the deal.  They don’t question whether another appraisal company would reach the same appraised value, they don’t question whether another mortgage company would make the same loan, and they don’t even know what a title company is.  They don't question that many guaranteed sale programs result in a higher purchase price on the new home and considerably more costs on the sale of the existing home.  They just move blindly forward.  They just don’t think!  They don’t think that it might be of benefit to have an experienced independent real estate agent working for them.  And they don’t even think enough about the deal to hire a reputable home inspector to make sure they are getting a properly constructed new home!  When it comes time to sell that home, they always fail to deduct the cost of financing and closing costs from the purchase price to determine the actual purchase price.  Some even add on the costs of the 'free' basement or free fireplace or other free upgrades.  NOTHING is or was ever FREE.  Every cost was built into the price the buyer paid for the home.  It takes, on average, 5-7 years to break even and 7-9 years to appreciate enough to actually realize a small profit after expenses of sale on new construction.   If foreclosures begin to appear in the neighborhood, appreciation could actually STOP or even fall into NEGATIVE territory.  It was your money, and you did it your way!  We hope you are happy!!  Are you a member of the Sub-Prime Victims Club ... sorry, you did not call us.  Visit www.NewHomesCashRebates.com today.

The BIG Real Estate Company says that ‘discount brokers’ are bad, yet most discount their fees and definitely discount their services.  The major question really is, considering that real estate fees are always negotiable, who is right?  Is the so-called discount broker right and the other companies just exorbitant in charging whatever they can get away with?  Perhaps!  You need to understand what the real estate company will do for you, what they will actually charge you to do the job and then demand it in writing in the Listing Contract!  Many agents and companies will not ever put their promises and conversations in writing.

Real Estate companies promote Virtual Tours.  Some provide the Tour free of charge, others charge for it in advance.  Virtual Tours are very nice and show considerable detail of the interior and exterior of your house.  Prospective purchasers and burglars alike view these Tours!  The benefit to prospective purchasers is questionable.  The benefit to prospective burglars is not.

There are companies that List and Sell houses, companies that only List houses, and companies that only Sell houses.  There are companies that do not List or Sell, they just advertise the property for you.  There are companies that provide “full service”, modified levels of service, no service and “reverse service” where you do all the work and they get paid well for your efforts.  There are companies that charge very high commissions, moderate commissions, blended commissions and no commissions.  There are companies that charge commissions and fees.  There are companies that just charge fees.  There are companies that make a lot of promises and fail to put anything in writing.  And then there are Lead Generating companies that do little or nothing and cause your costs to increase without your knowledge.  How do you decide what to do and where to go from here?  There are companies that violate Indiana Law everyday!  Use your brain, THINK!  THINK ABOUT WHAT YOU ARE DOING ... THINK ABOUT HOW CHEAP IS CHEAP ... THINK ABOUT WHAT IT WILL COST YOU IN THE LONG RUN!  THINK!  THINK!  THINK!  It Is Your Money!  Poof!  Wrong Decision!  Now It Is Gone!

Full Service, Full Commission:  This is rather self-explanatory.  This type of company typically states that they provide full real estate services and will seldom discuss the commission (unless you ask).  They elaborate quite extensively on how great they are, how big they are and what they are going to do for you, but very few will actually put their specific services in writing.  Some offer extra benefits, discounts on services and/or “freebies”, trying to offset complaints and commentaries about their full service commission fees.  (They typically make additional profit from the referral fees that they secure from the contractors who actually provide the extra benefits and discounts on services).  These companies represent the old line type of real estate company.  Today, they are dominant in the industry.

Modified Service, Modified Commission:  This type of company typically states that they provide full real estate services.  The initial approach is much like that of the Full Service, Full Commission company as described above.  They will typically describe a full service scenario and then initiate a negotiation phase where they agree to provide their services for a (pre-planned) reduced commission fee to secure your agreement to list your property …often a good portion of those services that they described in the initial presentation are reduced or eliminated as the commission fee is reduced.  (Some folks call this practice Bait and Switch).  This type of company should be more up front in specifically what they will do for you and what commission structure they will use.  After considerable verbalizing, they, too, seldom put it in writing.  You will find out later that certain services just are not included with the commission fee plan that you negotiated.  You must get it in writing.

Hybrid Services, Blended Commission/Fee:  This type of company appears to be the ‘new breed’.  They have been around in the market place for some time now and are continually tuning their services (usually using variations of a Menu of Services).  Advance fees for initial services are becoming commonplace.  Commissions are being adjusted or reduced based upon the amount of service you feel that you will need.  The reduced commission fee allows the seller more room for negotiation in the selling price and often shortens marketing time.  These companies operate with smaller, well trained agent staffs.  They are growing rapidly in significance throughout the country.  Most companies of this type really don’t want to waste time and effort to work with anyone who is not really sincere in selling the property … the advance fee usually limits those people and causes them to seek out other companies.  Visit www.e-IndyRealty.com for the best example we can offer.  Some of the Modified Service, Modified Commission agents are attempting to appear like a Hybrid company … check them out fully before proceeding.    

Some Service, Flat Fee:   This type of company typically states that they can provide full real estate services but "will sell your house for a flat fee".  They use the Flat Fee promotion to get into your house and to list your house ... usually as a For Sale By Owner.  If it doesn't sell within a short time, they then make frequent contacts to convince you that you really need to modify your contract to shift your marketing into the BLC/MLS System (some folks call this practice Bait and Switch).  Some companies just add on the co-brokerage fee and put the property into the BLC/MLS System.  Some companies eliminate the Flat Fee portion of the program and use a commission based program.  This type of company should be very up front in specifically what they will do for you and what commission structure they will use.  After considerable verbalizing, they, too, seldom put it in writing.  You must get it in writing.

No Service, Flat Fee:  This type of company is always quite interesting.  Some secure prospects using illegal unlicensed personnel and illegal telemarketers.  Very little service description and/or very little, if any, service at all other than a yard sign and a fax number to fax all of the offers you are going to send to them for their broker to review.  We underline all because these companies infer that by using their services (?) you will get multiple offers and you can just pick and choose the best one, rather than counter a specific proposal.  Most Sellers, if they get an offer at all, get only one and perhaps two offers before being able to negotiate a mutually acceptable offer.  Sometimes, they will provide a web site address that will advertise your property (if the prospective buyer can find it).  They, too, seldom put it in writing.  Check to make sure that their ‘agents’ are actually agents licensed by the State.  Many are not agents at all; always ask to see their pocket license card.  Some of these companies do not have Buyer Agents and as such, cannot legally advise or represent buyers.  Personally, we recommend that you deal with companies that offer seller agency, buyer agency and limited agency (see below).  

Flat Fee for MLS Insertion – MLS Only:  A unique offering with growing success.  This basic program is often an initial service offered by an experienced Real Estate Consultant.  Additional services may be added on for additional cost, of course.  The real key in this service relates to Broker functions, duties and performance relative to the laws of the State Real Estate Commission. The listing agent handles offers as with any other type of full service listing.   Add on services can further provide assistance as needed to the Seller.  Watch out for unqualified and ill-equipped agents trying to offer this service.  If the Seller must work directly with the Buyer Agent, the Listing IS NOT PERMITTED IN MIBOR.com or REALTOR.com.  A good, well qualified Broker will offer listing services pursuant to the laws of the State Real Estate Commission ... see www.TheRealEstateExpress.com.  

Flat Fee for MLS Insertion – MLS Only - The Down Side:  A very unique offering with growing success among a clientele who just doesn't have a clue about the real estate business, the state real estate licensing law as well as general business practices and ethics.  This basic program is all that the provider is apparently capable of providing.  The real key in this (lack of) service relates to the Broker functions, duties and performance that the provider is not providing and, in effect, is trying to impose upon the Buyer Agent..  Ask yourself, if you were a real estate agent and were showing homes to your prospective buyer, would you show a home where there was really no qualified agent to handle the seller’s side … meaning that you would, in effect, handle both sides for the same buyer agent fee which, in itself, is often reduced.  Watch out for unqualified and ill-equipped agents offering this service ... these listings are not permitted in MIBOR.com or Realtor.com.   A good, well qualified Buyer Agent should not and typically will not handle the seller side of the transaction without getting paid for that service.  The Buyer Agent should have developed a payment structure form that will accompany the offer to purchase to the Seller stating in advance the additional dollar fee to the Buyer Agent for providing the service to the Seller.

Consulting Companies:  Another ‘new breed’, this type of company has totally unbundled their services and typically charge a fee for each individual service.  Complete unbundling of services is not possible according  to the laws of the State Real Estate Commission.  You can select exactly what services you feel will be necessary to market and sell your house within the framework of the Law, adding additional services as you feel that you need them.  Most consultants will put it in writing without even asking.  Most consultants charge fees in advance.  Fees charged in advance are typically much more reasonable than fees charged after the service has been performed.  Some offer for sale by owner types of services.  Some operate within the framework of the Hybrid Services, Blended Commission/Fee organization.  If you are truly sincere about selling your house and about selling your house for a reasonable price, this is perhaps your best money-saving choice!  Visit www.TheRealEstateExpress.com.

Internet Advertising, No Service, Flat Fee.  This type of company seems to be gaining apparent acceptance into the market place because they offer what appears to be a valuable service for very little expenditure; however, the results are questionable.  Remember the 'Yugo' ... lots of folks spent lots of money for absolutely nothing of benefit.  Many people can’t find the typical web site (how many contacts would you get if you put a flyer on the back of your bathroom door).  Some, realizing that they cannot fulfill the full spectrum of services required to actually process and close the transaction for sale, establish a connection with a local agent to handle all of the offers that you will receive including the technical questions and processing and closing requirements (for an extra fee of course).  Suddenly, a commission fee appears and the flat fee increases disproportionately.  More often, they are establishing a relationship with an agent would will put the property into the MLS similar to the Flat Fee For Insertion model discussed above.  Often, the Flat Fee MLS model is a violation of the law as well as the rules and regulations of the BLC/MLS System.  One method of checking on the activities of this type of company is to make contact with random sellers showing on the web site to find out when they actually put their property on the web site and ask if they ever actually sold their property and would they use the service again.  Ask if they have since listed the property with another company and why the property is still showing on the previous web site.  And finally, ask if they are still on the market for sale or have they taken the property off the market.  Another method of checking on the activities of this type of company is to make contact with the local Board of Realtors and several member Brokers.

Exclusive Right To Sell versus Exclusive Agency models are quite different.  Exclusive Right to Sell gives the brokerage that you have contractually agreed to work for you to market and sell your property  for a particular commission and/or fee and to pay a particular commission fee to a co-broker who provides the buyer for your property.  Exclusive Agency allows you to contact the prospective Buyer directly after a Real Estate Agent has taken the time and the effort to show your home in the course of their business  and then approach the Buyer with the deal of a lifetime ... buy from me direct and there is no commission.  Honesty or Dishonesty becomes a very important question!  It is the opinion of the writer that abuse of Exclusive Agency will lead to legal action ... can a Seller win a criminal prosecution for FRAUD!

Whatever you decide to do, you should be able to secure a written agreement from any reputable agent and their company that you agree to hire to do precisely what they say will do for you in writing and at least do the following:

As the provider of listing services for your home, your agent should agree to …

Use the correct address number

Use the correct address name

Use the correct spelling of the address name

Provide the correct map co-ordinates to facilitate locating your home by prospects and/or agents

Provide proper directions to facilitate locating your home by prospects and/or agents

Provide the correct legal description from your township assessor

Provide the correct real estate tax information from your township assessor

Provide the correct square footage from your township assessor

Provide the correct the number of rooms

Provide the correct number of bedrooms

Provide the correct number of baths

Provide the correct room size measurements – no guesses

Provide the correct heating and cooling system descriptions

Provide the correct water, sewer and cable system descriptions

Provide the correct school system information                                                          

Place the property in the correct MLS Area when authorized and verify that the information is correct

Insure that quality pictures are taken and displayed in the property listing

Develop an appropriate property description for marketing … limited, incomplete and misleading descriptions defeat attempts at marketing your property

(You may think that the above information is a JOKE, but it is actually a list of individual problems identified by reviewing a number of listings on the Metropolitan Indianapolis Board of Realtors BLC/MLS System ... no wonder some houses just don't ever sell!)

You must get a Guarantee that the office manager personally will review each property listing to insure correctness of the detail.  Correct information will enhance the marketing of your property.  Incorrect information may well prevent the sale of your property.

And, the agent should agree to  …

Present the appropriate and true market information (comparative versus competitive market analysis) to allow you to determine the best marketing price for your home (and keep you up to date regarding new listings and solds throughout the term of your contract).

Not bid up the listing price recommendation just to get the listing of the property

Not use poor quality or poorly designed signage to market your property

Not use unlicensed ‘agents’, secretaries or other such personnel to market or show your property.

One might also question advertising practices.  The law requires that the company name and contact number be in every ad, without question.  Some agents advertise only their personal phone number, others a phone number and a first name … are they embarrassed about your property or perhaps the company that they work for or perhaps they feel it somehow advantageous to just violate the law.  What is the benefit of dealing with a dishonest real estate agent?

Builders advertising practices are not regulated so they can do anything they want because their people are employees and not agents.  They do run blind ads, phone number ads, phone number and first name ads, etc.  They feel they have something to gain by not telling the prospect who they are … who knows, maybe they do!

A Lease-option to Purchase offers some pitfalls and pratfalls and some winners too!  Most real estate agents don't encourage lease-options because often only a part of the commission is paid up-front, with the balance being paid when the option is exercised if it is exercised months or years later.

What is a lease-option anyway?  A lease with option to purchase is a real estate sales and finance method. It is a lease for a fixed term such as 12 or 24 months, sometimes longer, with an option for the tenant to buy the home at an agreed option price.

The lease-option owner-seller is obligated to sell at the option price but the tenant-buyer is not obligated to buy. However, when a lease-purchase is used, the buyer is obligated to purchase at the end of the rental period.

A unique lease-option and lease-purchase feature is the rent credit.  The tenant usually pays top rent for the residence. But a portion is credited toward the purchase price if the buyer decides to exercise the purchase option.

For example, on an example lease-option, the house rents for $1,500 per month with a 33 percent, $500 monthly rent credit when the option is exercised. If the tenant elects not to purchase, the rent credit is lost. Needless to say, the rent credit loss is a very strong Incentive for the tenant to buy.

The primary lease-option advantages for home sellers include:

Whether a local home sale market is weak or strong, there are always more potential lease-option buyers than sellers. A lease-option usually solves a home seller's problem of getting enough monthly income to pay the mortgage payment and other expenses. Also, the seller receives the tenant-buyer's nonrefundable option money, typically several thousand dollars.

Lease-option home buyers are usually acceptable to a top dollar option price for the house. This option price is usually the home's market value at the time of entering into the lease-option.

If the market value goes up during the lease-option term, the buyer will benefit. If market value drops, the tenant often exercises the option because of the rent credit feature.

Lease-option tenants usually take excellent care of the home because they plan someday to own it.

As a lease-option landlord, one will find that tenants will pay 10 to 20 percent higher than market rent. Typically, the tenant considers the monthly rent to be a bargain (i.e. $1,000 plus $500 in a rent credit "down payment forced savings account”).  The lease-option landlord will view that as $1,500 monthly rental income!

During the lease-option term, the seller enjoys tax deductions for the mortgage interest, property taxes and depreciation. If a tenant complains about the lack of tax benefits, a reminder of the rent credit benefits usually more than compensates.

Proceeding from a Purchase Agreement through to the Closing can be very smooth or very bumpy.  The Seller usually selects the Title Company and the Title Company should review and control the transaction through the various stages all the way through the actual Closing.  Your agent or consultant should and you may want to establish a personal contact at the Title Company to talk to the contact frequently to insure that the steps of the transaction are proceeding properly.  Concerns are prompt issuance of the title work and resolving of any problems that may be therein, the survey and identification of any problems that may exist, the Seller’s first and second mortgage company payoffs, your mortgage company processing, and the merging of the necessary data into the final form for the Closing.  Watch out for a company that assigns this extremely important function to an internal secretary or out sources it to someone else.

Watch out for the BLC/MLS Service Fee.  This is an undisclosed fee charged by some real estate companies to physically enter the Seller’s property information into the real estate agent’s MLS Service.  These exorbitant fees range from $195.00 to $595.00 and are often charged by the real estate company to the agent who then attempts to charge it to the Seller.  You should REFUSE to pay it ... you have no legal obligation to pay it!

Watch out for the Transaction Processing Fee.  This is a fee charged by some real estate companies to the Seller for the processing of the closing of the sale through the real estate agent’s office.  These fees also range between $195.00 and $395.00 and often magically appear on the Closing Statement at the Closing without disclosure or comment.  Some Real Estate Brokerages add this type of junk fee to the Seller which is potentially a violation of RESPA (Federal Real Estate Settlement Procedures Act) .  You do not have to pay any undisclosed fees … just walk away from the transaction.  The Brokerage or Agent will typically waive the fee under pressure. 

When your property sale closes, ask your agent to send you a copy of the Closed Sale print-out from the BLC/MLS System.  You should insure that the detail was posted properly.  Some agents will post the days on the market incorrectly.  Some agents will post the selling price incorrectly.  Some agents will just not post any closing costs that you actually paid on behalf of the buyer.  Some agents will post your listing from Pending Status to Withdrawn Status rather than post the actual selling price.  Some agents will even withdraw your property from the System the day of the excepted offer, put it back in as a new listing, wait two days, post it as pending and then advertise that they sold your property in TWO days!  These violations of the BLC/MLS System Rules and Regulations are often done to distort the agent's true track record in an effort to enhance potential marketing of their services in the future.

And if it doesn't sell,  your agent will most likely want to renew the listing for another term .  If you are satisfied with the services, you should do so.  If you are not, you should definitely seek proposals from other agents before making your decision.  You should keep a wary eye on your agent if your Listing Contract Expiration Date in the BLC/MLS System mysteriously changes to a future date without your authorization.  You should also keep a wary eye on your agent if your Listing Contact is Withdrawn in the BLC/MLS System without your knowledge.  Both of these events are illegal and are violations of Indiana Law.  Both actions are used to prevent other agents from knowing that your Listing Contract has expired.  Both of these events occur more that they should.  Watch out for these Bad Apples ... they give the business a bad name!

A Listing or Buying Agent that does not appear for a Closing is violating Indiana Law and should be prosecuted accordingly!