“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” Mark Twain.
Actually, with real estate, what you don’t know can get you into trouble too.
2024 – The New Reality starts NOW
National News
On Friday March 15, 2024, the National Association of Realtors (NAR) announced that they entered into a settlement regarding Cooperative Compensation (Sellers paying a real estate commission for the Buyer’s Agent). In the days since, this story has become national news. I have been a real estate agent since 1995 and at that time Buyer Representation on home sales was fairly new. Many states had just passed what we refer to as BRRETA (Brokerage Relationships in Real Estate Transactions Act) in response to a public outcry to try and level the playing field for the buying consumers in home purchases. Now 30 years later, the Sellers have had their day in court. All the while, millions of people have made moves they wanted to make and enjoyed countless hours of expert advice from real estate professionals who knew the process and how to avoid the pitfalls.
Are all real estate agents great and honest and worth the money they are paid? No, but the same could be said for every industry. Only time will tell how these legal decisions will affect the way homes are bought and sold AND how agents are compensated. One immediate consequence is a loss of transparency – Listing Agents will no longer be able to see what compensation other listed properties are offering to Buyers’ Agents. That means, we as Listing Agents will have to use historical market trends to try and predict future results. Like it or not, incentives and concessions factor into the success of getting homes sold in the open market. Selling your home just got harder.
Buying a house was already a challenge
Change will bring uncertainty in the short term and there are always unintended consequences when things like this unfold. When I heard about the NAR settlement, my immediate reaction was that buyers and the most vulnerable agents were going to bear the brunt of this legal battle. Prices are high; supply is low. People with low interest rates are staying put. The supply and demand market forces under the backdrop of inflation and the ebb and flow of our nation’s economy are not making housing options more affordable. Its a challenge! So what can you do if you want to move right now? Take action.
What’s at stake here
One of your largest assets, where you live and your lifestyle
After 28 years of real estate sales, negotiations, inspections, repairs and conversations I can confidently say that mistakes in these trenches can be costly. And yet, many of the pitfalls can be avoided if you know what you are doing. The challenge? People only play the role of Home Seller or Home Buyer once every 10 years on average and even then, they probably had a real estate agent managing the process for them. From pricing to handling inspection issues, the cost of mistakes can easily exceed the savings of not hiring a real estate agent when you run the math. Price Reductions are just one example on the Seller side if you miss the mark and have to start chasing the market.
The phrase “You don’t know what you don’t know” is so true here. While it’s possible for everything to go right on a sale, that rarely happens. If it does, congrats – you hit the real estate lottery. My experience is that something almost always comes up so we don’t rest until a few days after closing when all the dust has settled.
Home Sellers
You get to choose how you are going to play this. Options range from Full Service to Limited Service models and fees range accordingly. As a Seller, you will now have to choose up front how your property will be marketed to the most qualified buyers by stating openly in the listing agreement whether or not you will be offering compensation for their agent. The active buyers will then weigh their choices and make their decisions.
Our goal has always been FULL SERVICE to mobilize the maximum qualified buyer pool for our Sellers so that the above goals can be achieved. That approach can be viewed in the link below.
Our fee for the services we provide is 3.0% of the final Sale Price at closing – paid at closing. No closing – no compensation. We front the time, expense and expertise… It’s risky. Our 3.0% is shown below in the example listing agreement. Beyond that, I can answer questions about trends along with potential benefits and risks – but the choice is up to the Seller as to how to structure the way buyer agents are treated. Are commissions negotiable? Yes. Will every agent negotiate their fee structure? No.
The typical goals for most Sellers are:
- Get the highest price,
- with the best terms and timing,
- for the least hassle.
>> Click here to view Our Selling Process <<
Here are some pitfalls to avoid as a Seller (in no particular order):
- FALSE START – Putting your home on the market is going to feel way more out of control than most people are used to being. No one can control over how many qualifed buyers there are for what you have and what those buyers are willing to pay for it in today’s market. You will know in two weeks whether the combination of marketing, condition and price make sense to the buyers.
- OVER PRICING – It is so easy to misinterpret the recent sales and over-price your home causing you to miss the market. I have rarely found pricing a property in the Atlanta market to be easy. The square footage data is so unreliable that finding accurate numbers is a scavenger hunt even as a professional. Many times we will obtain a pre-listing appraisal from a local appraiser well versed in the specific price range and neighborhood.
- STAGING – Sellers often underestimate what is needed for their property to compete against the other homes on the market. When you sell your home, it is entering a beauty contest. Your competition is other sellers and their properties and how much effort they spent to make their home the most attractive of the options. We use a stager on almost every home we list to make sure there are no surprises when we are in front of the judges (Buyers).
- TRANSPARENCY – Online resources like Zillow, Redfin and Trulia were created to attract buyers and then sell them as leads to real estate agents (or advertisers). As a Seller, your home gets exposure to the buyer pool but that comes with a trade-off. When you hit the market, your days on market, your views and any price changes are on display for everyone to see.
- DEFERRED MAINTENANCE – Deferred maintenance starts you off on the wrong foot as a Seller. It sours the first impression even if we get fantastic photos that hide it online. Having to chase down estimates for issues discovered by the buyer’s inspector is a huge stressor given the usual time constraints of Due Diligence. If the issues involve structural concerns, moisture or mold, the magnitude to resolve that can run into the tens of thousands of dollars. Time pressure just exacerbates the issues.
- COMMUNICATION – Communication is paramount in real estate sales. Whether it is full disclosure about issues on the front end or lack of a timely response during the process, missteps undermine your ability to maximize the sale price. Egos can also flare up as people make up stories about the other party and what they are trying to do. Our goal is to act as the buffer to help things flow as smoothly as possible.
- NEGOTIATIONS – If you do not negotiate for a living or regularly as a part of your life, you will probably be at a disadvantage when it comes to selling your house. Having a seasoned agent act as a buffer and coach is crucial. I refer to this part of the process as “information trading”. Sometimes, what you don’t say matters as much as what you do say. There are a thousand little nuances and moments during a transaction where things can tilt in your favor. All those little things add up to an easier time for and better outcome for you.
- CONTRACTS AND PAPERWORK – Most of life is not lived under the pressure of a written contract but home sales are. We have 28 years of experience with Georgia residential real estate contracts and will be there every step of the way too make sure you know what is coming next and don’t miss any deadlines. We are very familiar with the contract language will work to tilt things in your favor as a seller when possible. The reality is that most people do not work with real estate contracts often enough to even know what is typically seen or expected in various situations. That is where we can help!
- FRAUD AND VETTING – We are on high alert for unqualified and nefarious buyers. Getting caught up in a scam or fraud situation can be a nightmare. Our goal is to help you avoid becoming a victim of the types of fraud that happen specifically in real estate transactions.
Should you offer Cooperative Compensation to the Buyer’s Agent?
That is 100% your call. Offering Cooperative Compensation to Buyer’s Agents is only one of the strategies available to try and maximize the number of buyers who will view your home. It is understandable to pause at the thought of paying an agent to negotiate against you, but there are some advantages to you as the seller to having an agent on the buyer side. That agent will manage their client and probably:
- Reduce the unpredictability due to ignorance of the process, contractual obligations and consequences.
- Handle the access for all events the buyer needs to have happen for their Due Diligence.
- Help problem solve and bridge differences; find contractors as needed and provide access
- Advise the buyer to control spending during the loan approval window.
- Maintain timely communication
- Help us last minute emergences and unnecessary delays.
- Reminding the buyer of last minute details (like wiring their funds early) and where to go for closing
Home Buyers
It is not as easy as it used to be. You have to decide UP FRONT what kind of representation you want and how to pay for it.
The typical goals for most buyers are:
- Secure the property that best suits your needs,
- at the best price possible
- while inheriting as few resale issues as possible.
Our goal has always been to thoroughly prepare our Buyers to objectively weigh the options so the above goals can be achieved. However, that can only happen if we compensated fairly for the services we provide.
Some pitfalls to avoid as the Buyer (in no particular order):
- Underestimating the importance of getting your financing squared away up front. This one is all or nothing. You are either going to be attractive to the sellers as a solid buyer and maintain control OR you are going to be written off by a seller as not serious and have to win them over on two fronts – both on price and financial capability.
- Underestimating (or not even being aware of) the speed and urgency needed to win in hot neighborhood pockets.
- Getting so focused on things you can change that you overlook things that can’t be changed. We maintain a list of nearly 70 things that affect the value and resellability of a home, townhouse or condo. This list was compiled from over 28 years of feedback from buyers on our listings and while showing properties. Our goal for our buying clients is to make sure they inherit as few resale issues as possible OR get an appropriate discount if they chose to move forward in spite of one. Eyes wide open is our policy. Sorry, I am not able to share our proprietary list here – it’s reserved for our clients.
- Not factoring in significant neighborhood street preferences that you are not aware of when comparing list prices.
- Listening to the wrong people for this weighty decision (people who are not homeowners, people who don’t know the market or the area, people who are always negative about everything )
- Underestimating the effort it takes to abide by a written contract; possibly missing deadlines and forfeiting some of your rights. Even if you do put forth the extra effort, you could still accidentally overlook crucial terms without you own agent and sign off on contract language that may not be in your favor as a buyer. The reality is that most people do not work with real estate contracts often enough to even know what is typically seen or expected in various situations.
- Becoming a victim of the types of fraud that happen specifically in real estate transactions.
Next Steps
Hire a Proven Professional to guide you – this needs to go right the first time regardless of which side you are on.
Someone who:
- Considers working with you as a long-term relationship rather than a transaction relationship
- Accepts the Most Responsibility versus assuming the Least Responsibility
- Interprets and Advises on data rather than just Reporting data and information
- Anticipates Needs rather than Reacting to Requests
- Focuses on Outcomes rather than Tasks
- Educates and Guides rather than Tells and Sells
- Becomes Irreplaceable rather than Expendable
- Highly Paid rather than Minimally Paid
- Worth every penny!
