Archive for January, 2011

St. Augustine Homes for Sale: Will a Reduced Commission Rate Hurt My House Sale?

Monday, January 31st, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

Will a reduced commission rate hurt my home sale?

First of all, what is commission and what is it not.

You will love commission when it is working for you.

You will love commission when it is working for you.

There is no “set” commission: rates are negotiated between the seller and the agent.  Typically half of the commission goes to the “buy” side (the agent that finds the buyer), and the other half goes to the “sell” side (the agent that lists and advertises the house for sale).  

On some occassions more than half (or less than half) of the total commission goes to one of the sides as an extra incentive to sell the property.

Make no mistake, commission is a financial incentive.  It’s what drives an agent to sort through all the buyer candidates to try and find that needle in the haystack that will buy your house.  And it’s what drives your listing agent to work to sell your house.

And in Florida commission is considered an offer of employment.  In other words, no agent is legally, honorably or ethically obliagated to accept the terms of your employment (i.e., bringing a buyer to your home) if it doesn’t make business sense. 

In other words, no agent is obligated to show your house if the commission doesn’t pay the bills.

So that gets back to the original question…will a reduced rate hurt my house sale?

As a general rule, someone who pays more gets better service, just like anything else.  But even if you were to offer high commission rate, it still can’t/won’t sell your overpriced home.  Nor will an ad on the Superbowl.  Price, condition and location sell homes and in that order.

To define “low” commission you have to look at the individual market.  My informal observation as an agent in St. Augustine the past 10 years is that if you run under 2.5%  for the “buy” side you will hurt your chances of a sale.  So if you negotiate a 4.0% with your agent you should insist that 2.5% goes to the buy side, otherwise, in my opinion, there’s no point in putting it on the market.  

On the other side, you may negotiate a 7.0% total commission with your agent.  In this case you could offer 3.5% to each side, or even an uneven 3%/4% split to provide greater incentive to one of the sides.  

For example, you may offer the 4% to the listing side instead of the buy side.  The reason: if it’s an especially tricky sale, or if it’s a home type or price range that has a demonstrated days-on-market of over a year, the 4% will keep your agent continually motivated for the long haul (which is what you want). 

There was even a time (2007-mid 2009) when a higher commission would actually “create” a sale (hundreds of Realtors were going out of business and those trying to hang on were grabbing at the higher rates).  As things stabilized Realtors started focusing on creating more total sales instead of the highest commission per sale.

Plus as a bonus, I’ve also observed that when a commission gets above 3% it will do a lot to hold a deal together after the contract is signed.  A lot of the shenanigans that some agents pull get put to rest when there’s a few extra bucks on the line. 

There is another thing to consider: commission splits within a company.  When an agent earns a commission they then split that with their brokerage.  Some companies take 50% or more of an agents earnings, thus the agent is focused by need on homes at the higher rates.  For the agents with the better splits, the more likely it makes business sense to show a home with a lower commission. 

So to put it in a nutshell: as long as your home is priced right for its condition and location, a lower commission won’t hurt the sale, but a higher commission will help it in the sense that the listing agent will be a bit more motivated to stick with it and a high commission on its own can actually hold a deal together after the contract is signed.

Selling St. Augustine Homes: Do Open Houses Work?

Friday, January 28th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

Do open houses work?

It’s a lot like that old question about cigarettes…”Do they kill you?  Yes, but not reliably.”

Holding an Open House will not help or hurt your chances.

Holding an Open House will not help or hurt your chances.

There’s a second thing as well: who do they actually work for?  We’ll get to that before I finish.

St. Augustine has never been a great market for re-sale open house.  When I was a wee agent back in the quiet, peaceful days before the real estate boom and bust, an experienced agent told me this about open houses: “if the sun is out in St. Augustine, you aren’t going to get anybody.”

Which is mostly true.  If it was a nice day on a weekend it was rare if anyone would show up (where would you rather be…at the beach or looking at houses?).  I learned to game the system a bit by holding beach condo open houses at 8:30 am…the rationale was that all the vacationers in town for the weekend would be up and moving at that time and wouldn’t be at the beach yet…it worked sometimes.

But even during the boom, when there were two buyers for every home available the traffic still wasn’t that fantastic, and you would still routinely get shut out. 

Open houses are good for consumers from the standpoint that they can touch and feel a house.  The bad thing for sellers and real estate agencies is that they are also full of liabilities…right now data and identity theft are the big issues.

And whom do open houses actually work for?  

Most agents “try to sell the apple the customer wanted,” in other words, the agent will try and sell the open house the buyer walked into.  But agents know that something like only 2 out of every 100 open houses sell.  So the idea is really to make contacts with buyers in the market, and sell them something else.  The second reason agents hold open houses is to appease a diffucult seller, “show them they’re trying to do something,” even though there only a next-to-nil chance of traffic much less a sale.

The only time I really push an open house as a viable way to sell is when there’s a lot of new construction going on around it.  New construction model homes do bring in a lot of traffic, so if you live in a neighborhood where there is a model you can poach the traffic and sometimes sell the home.  Recently however, due to the bust market, the re-sales were much less competitive in price with the models. 

And there are some specialty properties (historic, very high end, etc.) that have such a short and specific buyer pool that actually having an “invitation only” VIP open house might be a viable way to sell.

But at least as far as the rest of St. Augustine goes, having an open house will not help or hurt the sale of a home.

Is There Really a Difference Between Experienced Agents and Newer Agents?

Wednesday, January 26th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

 Is there really a difference between experienced real estate agents and newer real estate agents?

This is a bit of a loaded question.

The straight answer is, “Yes there is.” 

Real estate is an experienced-based business…you can’t teach it in books, you can’t even teach it in anecdotes, you just have to go through it and survive. 

Youth or Experience?

Youth or Experience?

What makes real estate different is that the problems we face in the typical real estate transaction are “people created.”  In other words, so-and-so won’t get their paperwork in so the financing can proceed in a timely manner.  Or, the seller decides appropos of nothing that he needs an extra three days past closing to stay in the house…or he won’t close.  Or, the appraisal comes in too low and no one wants to compromise.  In other words, and I’m going to use a technical term here, bullsh*t problems. 

On the rare occassion that a house actually creates the problem…something unexpected pops up in an inspection, for example…the “people problems” spin off that.

So, as an good agent, the experience you accumulate helps you handle the endless issues that crop up from people problems, and still get to a closing that both the buyer and the seller are happy with.

Then why would you work with a new agent?

Because a new agent, a good new agent, will exhibit a lot of the same qualities that good experienced real estate agents already possess.  They will understand at the heart of every problem is a customer who wants to feel they’ve been treated with respect and dignity.  A new agent is also typically eager to establish themselves, and will give an effort that is typically over and above someone’s expectations.   In my years as a manager the best new agents are the ones that say, “Just get out of my way and let me go sell something.”  And they will, and they’ll do it well…legally, honorably and ethically with a positive outcome for their customer.

“Being a newer agent myself, its not about everything that you KNOW, its about how hard you will work to make any transaction go smoothly,” said Brook Hengst, a Realtor from Highland Ranch, Colorado, in a recent online post.  “I have found that newer agents can sometimes be more up-to-date on new contracts as well as new technology that can directly benefit a buyer or seller…[and] just because someone has been in the business for a while, does not mean that they know what they are doing, or are any good at working with PEOPLE.”

Well said.

I’m in Town from Canada, Can I Buy Property Here in Florida?

Monday, January 24th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

St. Augustine Team Realty's International Buyers Page

St. Augustine Team Realty's International Buyers Page

Yes you can. 

That begs the question, “How much will I actually get to use the property?” 

Here’s the answer, lifted directly from the International Buyers page at the St. Augustine Team Realty website.

Immigration law allows a foreign nationals in the U.S. to stay between 90 to 180 days at a time, and if you don’t require a visa for the first 90 days you will need a visa if you plan to stay longer. If you want to stay longer than 180 days you will have to apply for an extended stay visa.

There are many different types of extended stat visas. Some visas allow you to stay in the U.S. for many years, some for just short periods. Some visas cover your spouse and children, some do not. Some visas require a long wait, some can be had in a few months. Some visas are employment based, some are family based. We can put you in touch with qaulified U.S. Immigration attorneys to help you find your best option if you wish .

A type of visa called the EB-5 (Regional Center) “Green Card” may be attractive to you if you wish for you, your spouse and your children age 21 and under to reside in the U.S. year-round. It requires a $500,000 USD investment in a specific “regional center,” plus as much as another $75,000 USD – $100,000 in set up costs. The benefit versus the traditional EB-5 visa is that you can live anywhere in the U.S. and you don’t have to work in the business…in fact you don’t have to work at all.

The next item is taxes.

If you stay in the United States for more than 182 days in three years, you may be subject to federal income tax. If this is the case you will have to apply to the Internal Revenue Service (IRS) (the tax division of the U.S. government) for an Individual Taxpayer Identification Number (ITIN) for tax witholding. Notice we say “witholding”…you may not have any tax due at all, but the government wants you to put some money aside just in case. 

You will also need an ITIN if you plan on renting your property.

Let’s say you plan to rent your property as soon as you buy it…in that case you will need an ITIN right away.

You do not need an ITIN to BUY property, just to SELL or RENT the property you own.

You will also pay yearly property taxes.

The tax formula is not especially complex, and changes in taxes year to year are typically predictable. Commercial (business) properties are typically taxed at a higher rate than homes are, and second homes or vacation homes are typically taxed a little higher than homes used for permanent (homestead) residents. 

To find out more visit our International Buyers page at: http://www.staugustineteamrealty.com/InternationalBuyers.html

 

Buying in St. Augustine: Now that I am Under Contract, What Will Keep Me From Getting the House?

Friday, January 21st, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

You are the biggest obstacle when buying a home.Now that I am under contract, what will keep me from getting the house?

There is a famous quote: “We have met the enemy and he is us.”*  It applies here.

The biggest obstacle to you not getting the house after getting the home under contract is…drumroll please…you.

You: may not qualify for the mortgage.

You: may get cold feet.

You: may want something late in the contract and the seller won’t give it, so you cut off your nose to spite your face.

You: may open a line of credit it or buy a car at the same time you’re trying to buy the house, which changes your credit ratios and kills your financing.

You: are told that your offer on a short sale will take 6 months or more to work out, and after being told this, you bail out after 30 days.

Here’s where other factors could come into play keeping you from getting the house.

Inspections reveal the roof needs replaced…you can’t get the loan if the roof isn’t fixed and neither you or the seller have the money to do it.

The mortgage broker you hooked up with is shady…he tells you can buy a house with no established  credit and no cash in the bank.  Guess what?  He thinks he can sneak it through…only this time he can’t.

It’s a short sale and the bank comes back with a different price, or rejects your price, and you don’t counter.

The seller gets cold feet.  It’s very rare, but it happens.

The appraisal comes in low…and you are unable to work out a compromise with the seller.

As you can see, the only true thing that is out of your control is if the seller gets cold feet.

The inspiration for this post is from an Active Rain post by Ripon and Tracy, California, Realtor Christina O’Neal.

*Walt Kelly, illustrator of the comic Pogo was the author of this famous quote.

Fair Housing: Know Your Rights When It Comes to Buying!

Monday, January 17th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

Know your rights!  In honor of Martin Luther King Day here is a list of federal laws relating to civil rights and housing taken directly from HUD.  Have a great holiday!martin-luther-king-jr-right

Fair Housing Act
Title VIII of the Civil Rights Act of 1968 (Fair Housing Act), as amended, prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). More on the Fair Housing Act.

  
Title VI of the Civil Rights Act of 1964

Title VI prohibits discrimination on the basis of race, color, or national origin in programs and activities receiving federal financial
assistance.

Section 504 of the Rehabilitation Act of 1973
Section 504 prohibits discrimination based on disability in any program or activity receiving federal financial assistance.

Section 109 of Title I of the Housing and Community Development Act of 1974
Section 109 prohibits discrimination on the basis of race, color, national origin, sex or religion in programs and activities receiving financial assistance from HUD’s Community Development and Block Grant Program.

Title II of the Americans with Disabilities Act of 1990
Title II prohibits discrimination based on disability in programs, services, and activities provided or made available by public entities. HUD enforces Title II when it relates to state and local public housing, housing assistance and housing referrals.

Architectural Barriers Act of 1968
The Architectural Barriers Act requires that buildings and facilities designed, constructed, altered, or leased with certain federal funds after September 1969 must be accessible to and useable by handicapped persons.

Age Discrimination Act of 1975
The Age Discrimination Act prohibits discrimination on the basis of age in programs or activities receiving federal financial assistance.

Title IX of the Education Amendments Act of 1972
Title IX prohibits discrimination on the basis of sex in education programs or activities that receive federal financial assistance.
 
 
 
 
 

 

January Listings: Portion of the Gross Proceeds will go to Big Brothers/Big Sisters!

Friday, January 14th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

Extended from December: This January, St. Augustine Team Realty will donate 5% of its gross commission from the sales of listings taken this month to Big Brothers/Big Sisters, which provides mentoring, friendship, and positive roll models for local children. Call us today at (904) 825-0099 to get started!

Help us Support Big Brothers/Big Sisters!

Help us Support Big Brothers/Big Sisters!

Home Prices Nationwide are Falling…How Much Farther are Home Prices Expected to Fall in St. Augustine?

Wednesday, January 12th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

How much are home prices expected to fall in St. Augustine?

Want to know where the best place to find a bargain is?

Well, home prices aren’t falling in St. Augustine…as we’ve been reporting here since August single-family homes in St. Augustine are appreciating at 3%.

Condos may fall further in price so that’s the place to bargain hunt (see monthly market report video below).  There has been so much investor buying in the low ranges the average sale price has dropped 22% since last year.  The monthly market report we just did for January will tell you what the best bargain hunting ranges are.  Or visit our website for the last several St. Augustine Real Estate Market Reports.

Should I Go to Real Estate School Now?

Monday, January 10th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

Should I go to real estate school now?

Go to real estate school? Do you feel lucky?

Go to real estate school? Do you feel lucky?

Gosh, tough question.  One best answered by Dirty Harry I think, “Do you feel lucky…well do you, punk?” 

In my market, as in a lot of markets I suppose, there are too many Realtors for the amount of listings and sales available…at least insofar as that means everyone makes a decent living.  This means the competition for new business is fierce everyday, all week long.  New agents push out the agents that lose the will to fight for the business, or never had the will to begin with.

“Fighting” in a Realtor’s world means prospecting.  That means most of our day revolves around the sole purpose of finding new business from customers both new and old.

In the meantime there’s the actual work of real estate that requires you be proficient at contracts, deadlines and all the sorts of diplomatic work that it takes to put a deal together and hold it together until the end.  And in the end, if you are successful, you go right back to the ranks of the “unemployed,” looking for a new deal to build.

If real estate were easy you could just go online and buy a house.  And you could, too…if it weren’t for the people that buy and sell the houses complicating things. 

A home sale is often the biggest money transaction in a person’s life and some buyers and sellers (and agents occasionally) think this is their one shot in life to act like Donald Trump.  They are illogical, they do things out of spite, they do not honor promises, they yell and scream…you name it.  But thank God they do, because this is why we need Realtors.  To calm inflated egos, to get the customers to do what’s best for the sale, to take care of the issues when promises are not kept…this is why we have jobs.

By now one last thing should be apparent…you need to have an incredible amount of energy to do this.

So if you feel like you’ve got the people skills to work a deal through, and the energy level to work through egos day after day, and the tenacity to prospect morning noon and night I invite you to join the business.

How Can the Bank Raise the Asking Price in a Short Sale?

Friday, January 7th, 2011

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Join us on Facebook.

How can the bank raise the asking price in a short sale?

Duh, because they own the mortgage.  Because maybe their net would be better at a higher price than the seller is offering it at.

The bank can raise the asking price on a short sale.

The bank can raise the asking price on a short sale.

The seller owns the home and sets the price to try and sell it, but it is the bank that’s on the hook for the loss.  So the bank has to look at the price and see if it will bring an acceptable net. 

“Short Sales are anything but typical,” said Grants Pass, Oregon, Broker Sharon Vest in a recent online post. “Just remember, the bank or lender is under NO OBLIGATION to approve the price and in many cases they prefer to simply go to foreclosure rather than sell short, especially if there is mortgage insurance or any other funds available to subsidize the payments.”

The thing is, you can’t be worried about what the bank thinks the best price is, or what the seller thinks the best price is.  Instead, you have to be worried about what the best price for the HOME is.  If you’re getting a good deal on a property and the bank raises the price $5000 and it’s still a good deal…take it, and quit whining.