1. "Your open house is really a
party for me."Hire
a real estate broker to sell your home and one of the first things he'll likely
suggest is hosting an open house, so potential buyers can casually check out
your property on a weekend afternoon. While open houses are promoted as a great
way of finding a buyer.
Having an open house serves another
important purpose - for the broker. It gives him a database of clients, At open
houses, you get all kinds of people walking in. Some are [trying] to see how
much they should sell their own places for; others just want to get a look at
what's out there. All are perfect pickings for a broker looking to increase his
roster of buyers and sellers. The broker is devoting a couple hours of a
weekend. He won't do that unless it helps him in a big way.
2. "My fees are negotiable."Brokers like to make it sound as if
their fees are engraved in stone, but that's rarely the case - especially in a
brisk market, when brokers fiercely compete for properties they can unload
fast. Sometimes the brokers lowered their fee by a full percentage point
because there was so much demand for good properties that he needed leverage.
The sellers should shop around for broker's fees. It suggests their negotiating
tactics: If somebody's willing to commit to sell one place and buying another,
they give a discount. If you're in a particularly desirable neighborhood with a
house that will bring a lot of traffic that can be used, because the broker
will use the flow of people to get potential customers. And with some brokers,
all you need to do is ask and they'll lower the commission.
3. "Think you've had no offers?
Actually, there've been several."Legally,
the broker you hire to sell your home is obligated to tell you about all offers
that come in. In reality, some don't. Perhaps he thinks the offer is
insultingly low for you, but more likely, the broker thinks it's too low for
his own purposes. He wants to hold out for a bigger commission, Or else there's
an outside broker (or "co-broker") circling your house, and the
primary broker is waiting for one of his own clients to make an offer so that
he can keep his full commission..
You must be clear with your broker that
you want to be informed of all offers, otherwise, you may be leaving him to
make decisions that you should be making. Check the listing agreement drawn up
when you hire the broker; if the promise to disclose all offers isn't listed
explicitly, insist that it be added.
4. "I talk about you behind your
back."You
spot your dream house as you're driving through a neighborhood and call the
broker listed on the For Sale sign. That's how a lot of buyers stumble on a
broker - who, in turn, happily shows you other houses, asking about your needs,
laughing at your jokes. It's easy to get loose-lipped and forget whom you're
dealing with: someone else's agent. Brokers are obligated to provide their sellers with any information that can help them to get the best prices for
their homes, If you tell the broker that you're willing to pay Rs.5,00,000 but
want to offer Rs.4,50,000, they'll pass that on to the seller. They have to.
Also, some brokerage companies
encourage prospective buyers to get preapproved for loans. While that can make
a buyer more attractive to a lender, it also tells a broker whether a buyer can
afford a Rs.6,00,000 house when he's trying to haggle on a Rs.4,00,000
property. When somebody asks for a preapproval, find out who they're
representing. Such details can
short-circuit your negotiating leverage. If they represent a seller - or
someone in their office does - they shouldn't have it. The broker may tell you
that he will be impartial, but how can he be?
5. "Sometimes I forget whose side
I'm on."The
past 10 years have seen the proliferation of the buyer broker; agents who are
supposed to work strictly in the buyer's interest, helping him get a fair price
on a home as well as avoid pitfalls along the way. Unfortunately, things don't
always unfold so nicely. While buyers may think they're getting a broker who
isn't commission-hungry, many buyer agents are just that: They usually get about
3%, the same amount any broker typically earns when he gets involved with
another agent's listing. Buyer brokers are sometimes too focused on closing the
sale and getting that commission, so it's often in their best interest to see
you pay as high a price as possible.
Even worse, some brokers who call
themselves buyer advocates are actually working for companies that also
represent sellers. Brokerages offer bonuses to buyer agents if they sell an
in-house listing.. A good way to get a broker who has no such conflicts of
interest.
6. "I know zilch about
zoning."Real
estate agents love to suggest big ideas to prospective buyers - say, removing
trees to enhance a view, or even squeezing a rental unit out of a roomy garage
- meant to happen once the deal is done and they're out of the picture. We had
a client who bought a dilapidated house with a beautiful piece of property. The
broker told him that he could fix the house up however he wanted, insisting
that this was a sleepy little town where nobody would care what he did. He put
up a Rs.75,000 shed in his backyard, pulled down trees, filled in some of the
marshland. Now the town is making him put things back because of environmental
zoning regulations. The lesson: Before you buy into your broker's creative
thinking, check with your local zoning commission.
7. "I won't let termites - or
pesky inspectors - kill a deal."If
a broker is selling a house, you figure he knows the place pretty intimately -
after all, he talks a good game about the new kitchen, the big closets, the
heated garage. What you need to worry about, though, are the home's features
that he keeps to himself. We have had cases where brokers have been deceptive about termites and flood
damage.
You'd figure that the home inspector,
who comes to check out the place before you close the sale, might notice those
things. And he will - if he's not in cahoots with the broker. Realtors give potential homebuyers lists of home inspectors. Those are people who will
rubber-stamp the house in return for repeat business. As one who works outside
those lists, says that he sometimes butts heads with overly controlling
brokers. One time I had a broker tell me that unless I told him the results of
my inspection - which is confidential between myself and my client - he
wouldn't let me get up on the roof. I got out my ladder and told him that
unless he was big enough to stop me, I was going up there. He wasn't big
enough.
8. "I'm not a lawyer, but I play
one in your house."Most
states strictly regulate the contracts used in real estate transactions,
stipulating the use of boilerplate agreements that offer little room for
creativity - but some brokers can't keep their clause-adding instincts in
check. I see brokers pushing the envelope all the time with amendments and addenda.
They draft language that can have consequences without really understanding it
- but they want to keep the sale going.
For example, it's fairly common for a
transaction to close on one day but possession doesn't happen until a later
date, in which case the buyer rents the house back to the seller for those
days. The issues of responsibility for the house require more than a couple
lines from the broker's pen. If a clause is worded improperly, you as the buyer
could end up liable for damage done by your "rental tenant." Same
goes for purchases of non-real-estate items (such as patio furniture) and owner
carry back (in which the seller provides some of the financing). In both cases
payment terms might not get spelled out clearly, and can result in one party
taking advantage of the other. Whether you're the buyer or the seller, it's
worth the legal fees to get the offer contract reviewed by your lawyer before
you sign.
9. "My Web site is a dead
end."Considering
that over 50% of house hunters look on the Web, according to the National
Association of Realtors, sellers might assume that using a broker with a site
can help make a sale happen. But some brokers' sites are better than others,
and you need to look beyond a well-designed home page to figure that out.
One common flaw: posting houses that
sold long ago. While the mistake can be simple negligence, others think that
it's a bait-and-switch-style ploy. It brings people in, but it gets them upset
when they find out that the property's gone. If a broker has to advertise
properties that are already sold, it tells you that he doesn't have enough
inventory to keep his roster of houses full.
Aside from checking up on a site's
prominently placed listings, prospective sellers should also make sure that a
site is easy to navigate. You want to use a broker who keeps himself relatively
high on the search engines, he pays a Webmaster to make sure this happens for
his site, which is linked with Realtor.com, Yahoo! and the Re/max site. One of
the big things a broker should have on his site is community information, which
attracts people who are thinking of moving to the community.
10. "You may not need me at
all."Brokers
like to create a lot of mystique about selling homes, insisting that the
process is complicated and best left to professionals with multiple listings
and loads of house hunters. Not so, say homeowners who have sold their homes
themselves about 20 to 30% do so each year. The properly priced and advertised,
a house sells itself, adding that
sellers should plant a yard sign and post online ads with local sites aligned
with print publications (call current advertisers to see if the given site is
effective). After all, when it comes to the inevitable negotiations between
buyers and sellers, Supple figures that brokers and their commissions get in
the way: Usually, the haggling occurs over a petty difference, and that is,
more or less, the broker's cut of the sale price. You don't need him.
Just be sure you price your home well.
The way most self-sellers hurt themselves, is in setting either an unreasonably
high or tragically low asking price. Hire an independent appraiser, and he will
tell you the parameters of what to charge. In a strong market with low interest
rates, the asking price can be 10 or 15% above what the appraiser thinks it
will go for; in a weak market it might be wise to price at or below the
appraisal.
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