Why I Practice Transparent Real Estate

I have long practiced what I call “transparent real estate”.

I reveal everything (good and bad) to my clients so they can “see through” their transaction with full disclosure and all facts on the table.

If you asked my clients, they would say that I am more of an advisor and educator than the traditional Realtor® who’s focused upon “closing the sale” or “getting the listing”.

In other words, I don’t talk anyone into doing anything!

If anything, I do the exact opposite and advise my clients to carefully consider potential drawbacks.

It’s a lot easier to work with people who are motivated and capable than it is to spend my time trying to convince (“close”) unmotivated prospects to act.

My clients hear both the positive and negative aspects of their proposed transaction from me without enduring the usual sales persuasion tactics.

If challenges arise during the course of the transaction, I share my concerns with them instead of concealing problems and pretending that everything is just fine.

It’s liberating to tell my clients the truth, educate and advise them, and then leave the decisions up to them because it removes the burden of persuasion from me.

Perhaps best of all, it allows me to face myself in the mirror without wondering if my clients will figure out the truth before closing.

The proper role of the professional real estate agent is to educate, inform, and selflessly advise their clients; not “close the deal” for their own best interests!

Allowing my clients to “own” their own decisions also relieves me of the burden of convincing them and keeping them pumped up until closing.

And, it tends to result in a very high percentage of closings vs. sales falling through.

It also allows me to work almost exclusively with referred and repeat clients!

 

How Boise Homes Get (un)Sold

I noticed a newly-installed SOLD sign rider on a home in a local neighborhood a week or so ago.

Then, a couple of days later, the SOLD rider was gone.

Obviously, the sellers thought they had sold their home, only to learn a few days later that they were still the proud owners.

While I don’t know the details of this particular transaction, it caused me to reflect upon what can go wrong in a transaction after a seller has accepted an offer.

Here are some possibilities:

Financing

It’s beyond me why anyone would make an offer on a home without first obtaining pre-approved financing, but it happens all the time.

Perhaps the buyer learned, after the seller accepted their offer, that they couldn’t get their financing after all?

Home Inspection Results

Most homes are sold contingent upon satisfactory results of a home inspection.

Perhaps the home inspection revealed issues that couldn’t be mutually resolved between the buyer and seller?

Buyer’s Remorse

People buy homes on emotion and it’s sometimes amazing how rapidly the thrill is gone after the buyers realize they have made a sudden, major decision.

We call that “buyer’s remorse”.

The bottom line?

Anything can happen in a real estate transaction.

It’s good to remember that a home isn’t truly sold until escrow closes.

 

Million Dollar Club = Real Estate’s Food Stamp Program

I smile every time I see a real estate agent bragging that they’re in the Million Dollar Club.

For way too long, real estate agents have obsessed over their “sales volume”, as though it was a big deal to sell a million dollars’ worth of homes.

Last time I checked, Albertson’s wasn’t accepting real estate sales volume at the checkout counter.

They wanted real money.

Fact is, membership in the Million Dollar Club is real estate’s equivalent of qualifying for food stamps.

Here’s why:

Most real estate transactions include a listing agent and a buyer’s agent.

If the transaction includes a 6% commission, that means each agent will receive a commission equal to 3% of the sales price.

One million in sales X 3% = $30,000 gross commission.

But, that’s not the end of it.

That $30,000 gross commission is then typically split with the agent’s broker.

It’s not uncommon for some agents to give up 40-50% of that $30,000 commission to their broker.

Let’s be generous and say that the agent is on a 60/40 split with their broker.

That results in $18,000 for the agent.

Then, there are agent expenses to consider.

Expenses like a car payment, annual dues, errors and omissions insurance, MLS fees, office fees, transaction fees, signs, websites, cell phone, etc.

The bottom line?

An agent who closes only one million in sales is living way below U.S. the poverty level.

All of which is why real estate agents should remove those embarrassing Million Dollar Club license frames from their cars.

 

Choosing A Listing Agent: Open Houses

Choosing your listing agent isn’t as easy as it looks.

I see sellers make a lot of mistakes when they choose their listing agent.

One mistake is listing with an agent who promises to hold your home open every weekend.

The simple truth is that an open house rarely sells the house being held open!

Very few (it’s something like 1%) of all homes are sold as a direct result of an open house.

Buyers who are cruising around, on their own without a buyer’s agents, are usually not serious buyers.

They’re lookers!

They’re out looking around, early in the home buying process, trying to figure out if and when they may buy something.

They may also have a home to sell before they can buy, which means they are not legitimate buyers at this time.

Most have not met with a lender and been pre-approved for financing.

And, if they’re not accompanied by their buyer’s agent, they probably don’t understand the current realities of the Boise real estate market.

They also may not even be buyers in any sense of the word.

They may be a nosy neighbor, looking for decorating ideas, or worse yet ~ thieves looking for loose jewelry, prescription drugs, guns, or exposed financial documents with account numbers, etc.

Agents are actually encouraged to check for unlocked windows and doors at the end of an open house to prevent open house visitors from returning later and looting the home.

Do you really want total strangers roaming through your home, unaccompanied, looking in your closets and drawers?

The real reason a listing agent will promise to hold open houses is that they want to use your home as “bait” so they can meet potential buyers.

Most open house visitors who meet an agent they like end up buying another house from the agent they meet at an open house.

Real buyers work with a buyer’s agent, have pre-approved financing, and rely upon their agent to find suitable homes and show them by appointment.

The exception to the above is new home open houses.

Subdivisions with several new homes for sale within close proximity are a viable option for open houses.

 

New Water Heaters Will Soon Cost More

I’ll bet you’ve never heard of the NAECA, right?

NAECA is the acronym for the National Appliance Energy Conservation Act, which includes requirements for higher Energy Factor (EF) ratings on all residential gas, electric, oil, and tankless gas water heaters.

These new EF requirements will become effective April 16, 2015.

The bottom line?

New water heaters are going to cost more after April 16th ~ a lot more, in some instances.

To achieve higher EF ratings, new water heaters will be larger to accommodate additional insulation and other components.

That means some new water heaters will not fit into existing water heater spaces, requiring costly relocation and additional plumbing.

The new EF standards should decrease operating costs, but will likely increase maintenance costs for some new models due to their more complex design and integration of electronics, blowers, fans, condensers, etc.

Additional complexities of the new water heaters will also make it more difficult for do-it-yourself installations and require the services of licensed plumbing contractors.

We can also expect plumbing contractors to charge more to install these new water heaters because they will be larger and heavier, often requiring a two-person crew for installation.

Finally, new home builders will be including the additional cost of these new water heaters in their prices.

If you want to replace your current water heater before the April 16th deadline, you should check with local suppliers now because some current design waters are already in short supply.

For more information, check out this Bradford-White webinar.