by Jim the Realtor | Jan 22, 2024 | Realtor, Realtor Training
I try not to double up the content here, and this was only linked in a previous blog post so I’m not sure how many readers saw this previously. But it is noteworthy!
https://consumerfed.org/reports/a-surfeit-of-real-estate-agents-3-abundant-jobs-inadequate-mentorship-and-few-sales/
This third report on a surfeit of agents focuses on the role of real estate companies in the creation of the glut and related incompetence of many agents.
Our analysis of the sales experience of 2000 representative agents from large companies in five different areas revealed that there is an even greater surfeit than we and many others had imagined. Nearly one-half (49%) of these agents had none or only one sale in the previous year while nearly three-quarters (70%) had five sales or fewer. Almost all of these agents hold another steadier job or are retired. For most agents, the residential real estate industry is truly a part-time business. Yet despite this agent glut, many large companies keep recruiting new agents, often regardless of agent qualifications. They do so largely because of four factors – high agent turnover rate, new agent sales to friends and family members, fees paid by these agents, and limited liability for these agents since they are independent contractors. For these same reasons, many companies continue an association with agents even when the agents routinely sell only one or no properties a year.
The surfeit of agents ensures that many will not be able to receive adequate personal training and mentorship. One agent reported that a managing agent had been assigned responsibility for more than 100 agents. Large companies do make available on-line training but many agents report that what new agents really need is experience working with a veteran agent and close supervision by a broker while they are selling properties. That close supervision is not required by most states. Of the 50 states (and DC) we examined, only seven require closer supervision of new agents than more experienced ones. Furthermore, that close supervision is often not clearly defined, and we have seen little evidence that state regulators have focused on the issue.
Consequently, some companies and agencies feel permitted to adopt a “sink or swim” approach to their new agents that certainly is not to the benefit of their consumer clients. There are roles for states, the National Association of Realtors, and individual companies and agencies in addressing this issue. State legislatures should require close broker supervision of inexperienced agents beyond checking paperwork. Colorado, Illinois, and Montana not only require closer supervision but define what this supervision entails. States should also follow the lead of those states, a small minority, that require agents to receive post-licensing education on the practicalities of selling property. Moreover, regulators should intervene when the complaints they receive show evidence of inadequate training and supervision.
The National Association of Realtors (NAR) could play a role differentiating inexperienced sales agents from full-time professionals by raising the standards of earning Realtor status. Today, few consumers understand or are influenced by this status. If NAR were, for example, to require more experience and competence from Realtors then publicize this difference, consumers would more likely hire these agents. These requirements could include, for instance, selling more than five properties in the previous year and initially passing a new exam on the practicalities of selling property.
Many companies and agencies take seriously the training of new agents, yet many do not. The latter should recognize that heightened consumer awareness of industry practices resulting from class action litigation is likely to encourage more informed selection of agents. The industry should also recognize that increasing the number of agents does not appreciably affect home sales but does reduce the average income of individual agents and brokers. Companies and agencies should value full-time professional agents and brokers more highly than part-time sales agents who are engaged in other occupations.
The glut of agents and the inadequate training and experience of many has an important implication for consumers. Both home sellers and buyers should choose their agents carefully. These consumers should pay particular attention to the number of recent sales and client evaluations of the agents considered. Both Zillow and Realtor.com list this information about many agents, and this information tends to be more objective than that offered by referral agencies. Consumers should be wary of agents without an informative listing on either website. Friends and family members who have recently sold or purchased a home can also be consulted, yet consumers should also use Zillow and Realtor.com to supplement the information these individuals provide.
Click here for the full report:
https://consumerfed.org/reports/a-surfeit-of-real-estate-agents-3-abundant-jobs-inadequate-mentorship-and-few-sales/
by Jim the Realtor | Jan 6, 2024 | Realtor, Realtors Talking Shop |
Sellers can decide their price in the beginning, and I’ll take the rest:
A net listing is used only with sellers, not buyers. It is structured as either an open or an exclusive type of listing. The net listing is distinguishable from all other listing arrangements due to the way a broker’s compensation is calculated.
In a net listing, the broker’s fee is not based on a percentage of the selling price.
Instead, the seller’s net sales price (excluding broker fees and closing costs) to be received by the seller on closing is stated in the listing agreement. The broker’s fee equals whatever amount the buyer pays in excess of the seller’s net figure and closing costs.
However, the broker discloses to the seller the full sales price paid by the buyer and the amount of the broker’s residual fee before the seller accepts an offer on a net listing. Failure to disclose to the client the benefits the broker receives on any transaction leads to loss of the entire fee. [Calif. Business and Professions Code §10176(g)]
For example, if the seller enters into a net listing agreement with a broker for a net sales price of $500,000, the broker will not receive a fee if the seller accepts an offer selling the property for $500,000 or less.
On the other hand, if the property sells for $575,000, the broker’s fee is $75,000, minus the seller’s other transaction costs.
Net listings tend to be unpopular with the Department of Real Estate (DRE) and consumer protection organizations, and have been outlawed in some states, but not California.
Net listings are particularly prone to claims from buyers and sellers that the broker has been involved in misrepresentations and unfair dealings. These claims are generally based on an improper valuation of the property at the time of the listing or a failure to disclose the fee received by the broker when the property sells.
If the seller thinks the broker’s fee is excessive, the seller is likely to complain they were improperly advised about the property’s fair market value (FMV) when employing the broker.
Thus, net listings are used sparingly, if at all. If a net listing is used, sale documentation is to include complete disclosures stating:
- the property’s value;
- the price paid by a buyer; and
- the resulting fee amount.
Link to Article
by Jim the Realtor | Dec 22, 2023 | 2024, Commission Lawsuit, Realtor, Realtor Post-Frenzy Playbook, The Future, Why You Should List With Jim, Zillow |
The gradual phasing out of buyer-agents is underway, and it shouldn’t be long now.
Zillow’s new format features the listing agent’s phone number under the main photo!
The three-headed agent display was removed and now when a reader clicks on the right side for Request a tour or Contact agent, they are linked to the Zillow call center instead. There they get processed/qualified on the phone by Zillow employees, sent to Zillow Mortgage, and then get assigned to an agent who is paying big money to Zillow for the privledge.
Buyers will figure it out pretty quick. By clicking on the right side, you get a 3rd party agent who isn’t the listing agent and has never been to the home. With the listing agent’s phone number now prominently displayed, it is inevitable that buyers will call the listing agent next time.
If they need a prompt, they will get one when they start clicking on the photos – which every viewer does immediately. This is what they will see now:
Yep – the listing agent is in the upper-left corner of every photo!
https://www.zillow.com/homedetails/2533-Camulos-St-San-Diego-CA-92107/16966353_zpid/
With the threat of buyers having to pay a buyer-agent a hefty commission out of pocket, it will be irresistible for them to contact the listing agent to see what they have to offer – in hopes of avoiding a separate payment due to a buyer-agent. The listing agents will be happy to oblige because they will already have their full fee packed into the listing side.
By the time the realtor lawsuits get resolved, it will be too late – there won’t be any need for a buyer-agent.
Zillow is offering a full marketing package to listing agents too.
Package Includes:
-
- Listing Placement Boost on Zillow
- HD Photography
- Aerial Photography
- Social Media Reel
- 3D Tour
- “NEW” AI Generated Interactive Floor Plan
- Listing Website
- Enhanced Listing Agent Branding
- Capture New Leads From Your Zillow Profile
The Listing Placement Boost on Zillow?
Listing agents who purchase a marketing package will have their new listings displayed first in the home’s area for seven days – a very nice feature for agents looking to capture buyers for their listings.
While the rest of the industry was grumbling about lawsuits over the last few months, Zillow created a new format that will solve everything. But nobody knows what fee the listing agent charges because it is never disclosed to anyone but the seller – the person who just wants to hurry up and get their money.
by Jim the Realtor | Dec 20, 2023 | About the author, Realtor, Zillow
What is the best thing a consumer can do to prepare for the 2024 selling season?
Get Good Help!
To check an agent’s qualifications, go to Zillow and click on the Agent Finder at the top of their page. Zillow wants you to use one of the agents they display prominently, but all you know about them is that those agents pay the most money to be featured there.
If you have a realtor you are investigating, you’ve probably checked their business website – and noticed how they all tend to look the same. It’s why Zillow is the reliable go-to website, because they are pulling the sales data directly from the MLS so agents can’t manipulate it.
What are you looking for?
You want to hire an experienced agent who has a well-honed set of sales skills. An agent who has proven history of getting a variety of people to the finish line. An agent who can handle anything that happens, and still deliver a smooth and easy experience for you.
Things to Consider:
- A well-qualified agent should be closing at least one sale per month.
- Agents who represent sellers and buyers have a better grasp of the big picture.
- Those who successfully work a larger area have sales skills that travel.
- The agent reviews is where you can find out who is doing the actual work.
- There are agents who get 5.0 on every review, so don’t settle for less.
- Years of experience isn’t as important as number of sales in the last 12 months.
Everyone is in a hurry and wants to grab and go. But if there was ever a time to patiently investigate the choices, it’s when you’re making one of the most critical decisions of your life.
Get Good Help!
by Jim the Realtor | Nov 28, 2023 | Realtor, Why You Should List With Jim
He doesn’t mention that we don’t get paid up front, we don’t get paid along the way, and we only get paid if we successfully close the sale – which in this day and age is harder than ever.
by Jim the Realtor | Nov 27, 2023 | Realtor, Realtor Training |
If your listing doesn’t sell, or your listing agent withdraws it and then ‘refreshes’ it by inputting it a second time into the MLS, don’t be surprised if your phone starts ringing around 7am the next morning – and ring non-stop for hours, days, and weeks.
Did you know that those solicitations are prohibited?
While the listing agents might get a little frosty, they probably won’t do anything about it. Of course, there isn’t any MLS police either, so these solicitations run unabated – you will literally get dozens of calls and mailers, plus agents knocking on your door.
If lawyers want to chase around realtors for all the scummy things that happen, they will be busy!
by Jim the Realtor | Nov 26, 2023 | Realtor, Tips, Advice & Links, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim
Hopefully the hubbub about realtors’ pay will cause consumers to investigate agents more thoroughly, which I’ve been encouraging for a while. Here’s one of my blog posts from 2009 – check the comment section too:
by Jim the Realtor | Jul 24, 2009 | Thinking of Buying? |
Most buyers struggle to find a quality realtor to assist them in buying a house, and it’s the realtors’ fault. The national, state, and local associations are so adamant about protecting the new agents and giving everyone an equal chance, that they provide no help whatsoever to the general public.
Their message? When trying to find good help, you’re on your own.
So how do you get what you need?
Everyone tells you to ask around, get referrals from friends, go to open houses, go with a big company, go with a small company, new agent, old agent, kickbacks, etc., that it probably doesn’t matter where you get a realtor, what matters is how to evaluate them.
Here are my things to look for when evaluating a realtor’s ability to help you buy a house:
1. ASK ABOUT THEIR RECENT TRACK RECORD OF SALES – Let’s cut to the chase, shall we?
Has the agent been able to successfully guide others to the finish line this year? The best answer is 1-2 closings per month, if you want an agent who delivers personal service. Any agent who sells four or more per month is slamming people into houses, and those at zero, well let’s face it, they don’t have anything of value to add to the equation. Get a testimonial from a past client, and/or at look at the sales they’ve done and judge them to see if they were good deals. (I’ve assisted 10 buyers with closing their sale this year).
These current market conditions are unlike any seen before. If your agent has been closing some buyer transactions this year, they must have something of value to share. Here’s what to look for:
2. ASK THEM, “WHAT/WHERE ARE TODAY’S HOT BUYS? How they answer that will tell you just about everything you need to know. If they give you a smart-aleck answer, they probably aren’t the right agent for you, only because they aren’t in the game. If they can name one, at least they are looking at properties, and those are agents who can provide value – ideally your buyer’s agent is previewing property every day, in person.
3. THEY SHOULD ASK YOU QUALIFYING QUESTIONS – If they jump in the car without asking questions, their time must not be too value to them, and this isn’t a business where wasting a lot of your time makes for good quality realtors.
4. THEY SHOULD KNOW ABOUT FINANCING – I guess it’s alright if they just hook you up with their lender to get pre-qualified, but if they can ask/answer the qualifying questions themselves, it might help when it comes time to structure an offer.
5. HAVE THEM SHOW YOU SOME HOUSES – Go in their car, and if they don’t need a map to get around, you’ve found an experienced veteran. It’s not guaranteed that they can help, nor is it required, but it’s a good indicator. If they are pointing out specific sales/listings along the way (theirs or others), then they know the comps too, which is another great indicator.
6. EVALUATING THE PROPERTY’S CONDITION – They don’t have to be a general contractor, but they should be able to educate you about the property’s condition. If all they do is point out that “This is the living room”, they’re not going to have much to offer in terms of added value, unless you don’t know what a living room is.
7. HAVE A VENDOR’S LIST – Successful agents know professionals to call to fix stuff – the more thorough the list, the more problems they have encountered.
8. DO THEY CHARGE FOR THEIR SERVICE? – Ask about “transaction fees”, “processing fees”, or “compliance fees”. These are junk fees used to pad their bottom line, and are not required.
9. DO THEY INSIST ON HAVING YOU SIGN A BUYER-BROKER AGREEMENT? – Pass on those, unless you got married after having one conversation too.
10. “FORECLOSURE SPECIALIST” – Be very leery – we are all foreclosure specialists now. Any agent who tries to make it sound like they have some special “foreclosure ability” is blowing smoke, unless they are listing REOs and not putting them on the open market. If they don’t mind breaching their fiduciary duty to their bank-seller, they’ll sell you down the river in a heartbeat.
11. SHORT SALES – I personally see 2-3 short sales every day that have already found their buyer before MLS input, and it is VERY frustrating. These agents don’t care about their own reputation amongst their peers, and that alone should make you wonder.
12. OFF-THE-GRID – Ask about what agents can do to find properties that aren’t on the regular websites. Any positive response would be a good indicator, and any examples of closing one would be even better.
If they can get through those questions and you still like them, you found a good agent!
NEW AGENTS – A new agent’s zeal and availability can really help buyers who don’t have the time or willingness to search for properties themselves. Want somebody to do the legwork for you? Put a new, hungry agent on it, but there may be some struggle clinching the deal if there are competing offers.
OUT-OF-COUNTY AGENTS – You’ll be doing all the work yourself, so your own proficiency in being a realtor needs to be up to par.
RELATIVES – Many deals crash and burn, and hearts are broken over houses. Want a relative to help you? Make sure that you’ll accept never wanting to talk to them if they cost you the right house, at the right price.
“GREAT TIME TO BUY” – If you hear that catchy phrase, just walk away.
The inventory of quality homes at good prices is EXTREMELY LOW, causing the buying experience to be full of frustration and disappointment. You can look for weeks or months without seeing anything attractive, so I don’t know why any agent would call that a great time.
REALTOR TEAMS – No problem, but don’t interview the big dog and then get passed off to the assistant without asking the same questions. You want to be clear about who is helping you, and what you can count on. In my case, I may have Richard or another KR realtor help me on occasion, but I’m still the main person in charge, and am responsible for your success.
by Jim the Realtor | Nov 24, 2023 | Realtor, Tips, Advice & Links |
“Curb Appeal” = The art of making your house look so good from the outside that potential buyers forget they can’t afford it.
“Cozy” = It means you can touch both walls at the same time.
“Open Floor Plan” = Good luck finding a place to hide from your family.
“Ocean View” = You might see water if you stand on your tiptoes and squint really hard.
“Panoramic Ocean View” = Less squinting needed.
“Low-Maintenance Yard” = Prepare to embrace the beauty of gravel and succulents. Your dog will hate it.
“Charming” = The real estate version of “it has a great personality.”
“Improved Pricing” = It’s less of a ripoff now.
“Off-Market” = Everyone has passed on it already.
“Seller Will Carry” = No bank will touch this.
“Bring All Offers” = My seller is nuts, so lowball me.
“Perfect For 1031” = Perfect if you want to overpay.
“Trophy Property” = Overpriced.
“Generational Property” = Way overpriced.
“Call For Price” = We’re embarrassed to publish it.
“Distressed” = Not distressed.
“For Sale By Owner” = For sale by ego.
“Below Replacement Cost” = Meaningless filler words.
“Leasehold Interest” = You’re not buying real estate.
“Fixer-Upper” = A polite term for a house that’s about to be condemned.
“Needs some love” = You might need therapy after seeing the kitchen.
“Rustic Charm” = No Wi-Fi, but plenty of cobwebs to keep you company.
“Open Concept” = No place to hide your junk.
“Vintage Decor” = Previous owners thought you’d enjoy their 1970s design choices as a timeless gift.
“Quaint Neighborhood” = The only exciting thing that happens is the occasional squirrel chase.
“Up-and-Coming Area” = It’s not great now, but just wait until someone opens an artisanal kombucha shop.
by Jim the Realtor | Nov 22, 2023 | Realtor, Realtor Post-Frenzy Playbook, Realtor Training, Realtors Talking Shop
One more blog post about the coming changes to the realtor environment.
Regardless of how the commission lawsuits are resolved, there will be a push – and possibly a mandate – for buyers to pay their agent directly. Agents will want buyers to sign an agreement to that effect.
Above is a copy of the verbiage on page one of the standard agreement.
If a buyer agrees and signs this form, and then finds a home on his own, he can ‘cancel this agreement by giving written notice to the other’. But only as long as THE BOXES CIRCLED IN RED AREN’T CHECKED.
Will buyers read the agreement before signing, and be reluctant to check the two boxes?
Otherwise the form is reasonable, with the agent being covered for any properties they recommend to the buyer with analysis (paragraph B1).
All that matters is whether the agent will insist on the two red-circled boxes being checked. I think a buyer will pause at agreeing to exclusive representation, but non-exclusive should be acceptable.
I doubt that I’ll use the form at all, unless Compass requires it. Why bother if you can cancel any time?
Happy Thanksgiving!
by Jim the Realtor | Nov 19, 2023 | 2024, Realtor, Realtor Post-Frenzy Playbook, Realtor Training, Realtors Talking Shop |
Hopefully NAR is busy in settlement talks right now, because they just don’t seem to get it, or they have trouble putting it on paper. These are their latest explanations:
https://realestatecommissionfacts.com/
However, there might be hope for settling the case:
Regarding the possibility of a settlement in the case, Katie Johnson, NAR’s chief legal officer said, “For NAR, settlement has always been an option.”
If NAR were to settle it would look for two outcomes, according to Johnson:
1. That homebuyers will continue to be able to access and afford buyer representation, and
2. That all liability from the suit’s claims is eliminated for NAR’s members, associations and MLSs.
“Settlements are always an option if we can achieve those objectives,” Johnson said.
Lesley Muchow, the NAR Deputy General Counsel & Vice President of Legal Affairs and Antitrust Compliance also advised agents to stress that commissions are negotiable. In that vein, she urged NAR members to leave compensation fields blank on forms rather than pre-filling them out — a phenomenon multiple plaintiffs emphasized in their testimony during the Sitzer | Burnett trial.
“Those are conversations you need to have with the consumer,” Muchow said.
“There’s no set amount. Sellers can decide and it’s on the Realtor to educate the seller as to why they might want to elect to make an offer of compensation and how that will work to their benefit in the transaction.”
“A Realtor should never suggest to a seller that if they do not make a certain amount of an offer of compensation that other Realtors will steer buyers away from their property,” she added.
Johnson ended by stressing that NAR’s current legal situation represents an opportunity.
“An opportunity to differentiate yourself from others – from your competitors and colleagues in your area – and an opportunity to improve your practices. An opportunity to think creatively and do things differently, using this delta, this point in time, as a launch pad for innovation.”
