Category: Ask the Broker (page 3 of 6)

by Russell Shaw

Mega-Producing Realtor

Author website

Lin Savage wrote:

I am evaluating a proposal from a realtor to sell my current home and
represent me in buying a new home (all in Texas). I would like some assistance in clearly understanding the commission structure as I consider her proposal.In the “right to sell” doc that she gave me, it says that I will pay her 6% of the sales price, and then says that she will offer 3% to the buyer’s broker.Later in the doc, it says she will charge a 4% commission if she represents me on the purchase of my new home (which I intend to do) assuming she is paid a 3% commission from the new home seller. She also says that if one of her subagents represents the buyer of my current home, that she will reduce the commission by .5%.

I read your comments about the buyer always paying … I’m trying to follow the money trail to see if this arrangement makes sense for me, and find myself going in circles. Can you explain this to me? Thank you!

Lin,

It looks to me like the total maximum amount you would be paying as a seller is 6% of the sales price of your current home. The 3% she would offer to the other agent is not in addition to the 6% but is money your agent would pay to someone else, who was representing the buyer. If I am correctly understanding what you have written, the 4% would become the maximum (instead of the 6%) if you also purchase your new home through that same agent. And if your agent (or one of her staff of agents) can successfully sell the house themselves (without having to pay a 3% co-broke fee to an outside agent) she will reduce the commission by a half a percent.

If I’m doing the math correctly – and if I were you, I would clarify each of these points directly with that agent prior to signing anything – if her team sells your home and you buy a house through them, the most you would pay is 3.5% and if Read more

by Russell Shaw

Mega-Producing Realtor

Author website

Nicole writes:

We have a great, 6 bedroom house in Gilbert. I’ve found a “perfect” (floorplan and upgrade-wise), new-build in Mesa with more square footage and a marginally bigger lot. We figure we could sell our house for perhaps over the price of the new place. My husband is hesitant because he thinks our current house will not sell in this slowed housing market. I say now is the time to move up. What do you think? -Nicole

Based on the facts presented, I think that I am going to agree with your husband.

Are interest rates (historically speaking) quite low? Yes. If one was going to buy a home in the near future in the Phoenix area, would now be better than later? Again, yes. But part of your question includes the concept of selling your present home for a price equal to or greater than what the new home would cost. Unless you planned on paying MORE per month or more out of pocket it does not look like you can make the move at this time. The data you’ve provided is quite limited but you have also included that you like the new home more than you like your present home. So … it looks like the price range you are thinking your present home will actually sell in is not correct. If the new home is somehow “better” than the one you are in then it will sell for more than the house you are in now. The only way this would not be true is if you are making a significant trade down in the quality of the neighborhood. This does not even take into account that your closing costs, buying and selling with commission will be at least 10%. Which would mean that if your current home was worth the same price as the house you were buying you would still need to come up that amount in cash or wind up with a loan that was at least 10% more than the one you have now.

I’m not trying to stop you from getting what you want, just Read more

by Doug Quance

Associate Broker

Author website

We (my fiance and I) put in an offer on a condo priced way below market, and the seller would like to take us up on the offer. However his agent is absent, disappeared w/o a trace.

The seller is bound by contract to his listing agent. Since our agent and the seller have been unable to get in touch with the sellers agent, the seller is only hesitant because he has to pay the commission to an absentee agent.

Is there anything that we can do to move forward?

Yes. Write an offer, and ask your agent to submit it – to the listing agent’s broker.

The fact that the listing agent can’t be found is really not an issue. It’s a nuisance… and we deal with nuisances all the time… but it’s not an issue.

The listing is actually an agreement between the seller and the listing broker – not the listing agent. The broker will either handle it personally… or s/he will delegate the duty to an agent in the brokerage.

The issue of whether or not the seller must pay a commission is really of little concern to you. You want to buy a house – the sellers want to sell a house – and that’s all that really matters.

by Jeff Brown

Real Estate Investments Broker

Author website

Fred asks:

I can not be at the closing to sell my home, due to distance. Is
this an acceptable plan? What risk? I am told I need to sign the
deed, early, in order to settle. I need to sell the house, but can I
miss the closing & do so with complete confidence that this will no
cause me problems later?

Having been licensed since Nixon was in office, escrow closings aren’t foreign to me. I have no clue how many closed escrows I have under my belt. I had a better chance of guessing how many jelly beans were in the huge glass jar at the drug store when I was a little kid.

I have yet to attend my first one. When we first started doing business in Idaho, the agents we hired for our team asked us how we were going to attend all the closings. After seeing our glazed-over RCA dog look for a few seconds, they figured we had no idea what they were talking about. Idaho is an escrow state.

Having spent my entire career in California which is also an escrow state, sitting around a big ‘closing’ table wrangling over details just hasn’t been part of my professional experience. As a young man entering the business as a blank slate, my mentors taught me the successful closing of an escrow was dependant upon all of the professionals involved doing the job for which they were hired. I’ve trained my successor, my son Josh, the same way. If those pros aren’t up to the task, you can find yourself isolated and adrift.

By the way Fred, signing the deed ‘early’ is SOP in an escrow state. The escrow will hold it and record it only when the entire contractual agreement has been satisfied. When signing, don’t forget it needs to be in the presence of a notary public who will attach her ‘okey dokey’ to the document.

If your home is being sold in what we Left Coasters call an ‘attorney state’, I can only tell you what I’ve done in those transactions. I’ll save that for later.

If it’s Read more

by Doug Quance

Associate Broker

Author website

After moving to the area and looking around at properties for a while, I saw one place I was interested in and contacted the seller’s agent directly. She agreed to show me the property, and since she was located out of town encouraged me to find a local agent who could show me more things in the area. After looking for a while with another agent and not finding much that I was interested in, I told him about this place that I had already seen and we went and looked at it together.

My question:
-Is there any reason that my agent would like me to buy another property instead of this one? Is the sellers agent entitled to more of the commission? I get the impression that he was hesitant to show me this property again and that he is trying to steer me toward other places.

-Also, would it be unreasonable to ask that he reduce his commission since I was the one that found this place?

You have a small predicament here that I’ll try to explain.

The listing agent who showed you the first property did so in the interest of selling her listing… but not to pick you up as a client, as you are geographically undesirable… hence why she recommended you find a local agent who could show you more listings.

When she showed you the property, she became the procuring cause of your interest in purchasing the property… and as such, she might try to deny a commission to the subsequent agent who has been showing you properties that you don’t want to buy.

The reason why this subsequent agent is hesitant to show you that property again is that he fears he will not get paid to represent you… which may happen should he write an offer and take you through to closing.

If I were the listing agent, I would pay the new agent… and so would Bloodhound Broker Greg Swann, as well as many other brokers. Ultimately, we want our listings sold, and many Read more

by Kris Berg

Realtor, Associate Broker

Author website

I’m wondering if (my) house should be listed now or should we wait until the middle of January? I’ve heard that it’s better to wait until after the holidays.

We are often asked this question this time of year. The prevailing sentiment among sellers is that Spring is always the best time to sell. This perception is based on the fact that Spring and Summer months generally enjoy a more active real estate market and more recorded sales, with January marking the seasonal turning point. But while more homes sell during this time of year due to heightened buyer activity, there also exist a much greater number of homes offered for sale: More buyers and more competition among listings.

I personally never suggest that someone wait until January to offer their home for sale, Sure, the buyer pool is somewhat diminished during the holiday season, but it is really a quality versus quantity issue. We all know first hand what a valuable commodity our discretionary time is this time of year. Most if not all of the casual home shoppers are busy with other commitments, leaving only the truly serious buyers out there looking. And, what better time to make a purchase which is hugely emotional than during the season where thoughts of family, hearth and home are forefront in our minds and visions of sugarplums are dancing in our heads? Speaking from my experience only, December is consistently one of my busiest real estate months (second only to July).

As a final thought, the “correcting” real estate market that we are currently facing further supports my argument for not waiting until after the new year. Seasonal factors are only important in the context of all other factors being relatively equal. If prices continue to decline (as many, many believe they will), there is no time like the present.