Dec. 22, 2006: Cutting out the middle man in a real estate sale might cost you
I've talked about disintermediation before, and surely it will come up again. Disintermediation in real estate is the idea that buyers and sellers can eliminate the middle man -- in this case the Realtors -- and deal with each other directly.
The belief is that the Internet will provide information formerly "hoarded" by Realtors so that real estate transactions will become as simple as buying stocks or airline tickets online.
The information that is supposed to make this happen is the Multiple Listing Service, and that's something we can talk about another day. For now it is sufficient to make plain that MLS listings are very far from being the most important information in the sale of a home. The simple fact is that, because I do this job every day, I can do a much better job than an unrepresented buyer or seller, much as you can do your job better than I could.
Want proof? Let's go buy a house.
We're out showing homes with our party and they settle on one they like. Because it's a buyer's market, and because the buyers aren't very well prepared, we don't write a contract right away.
What's the best day to write an offer? Tuesday, in principle, but the absolute best day is the first Tuesday after the first of the month. The buyers have never given this a second thought, but it's our job to know.
We'll send the buyers to a lender we know and trust. Why? Because, although they have good credit and good incomes, they have no cash. Our lender can write a fast 80/20 loan with very low closing costs. Say what? That's an 80 percent first mortgage, a 20 percent second mortgage with no private mortgage insurance -- all without costly junk fees.
When we finally write the offer, we'll recommend a structure like this: List price, less 5 percent, with an additional 3 percent coming back to the buyers as closing costs.
Are we done yet? Not even close, but we're done for now. Come back next week to find out how we'll structure the rest of this offer.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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Am I link-baiting? You bet. The quid pro quo is free content for your site that pulls eyeballs and excites interest.<a href="http://www.bloodhoundrealty.com/" target="_blank"> Phoenix Realtor Greg Swann</a> suggested I share this with you:
