What is a Buyer’s Representation Agreement Anyway?

What is a Buyer’s Representation Agreement Anyway?

  You are in the market for a house. You find a Realtor. They are a family friend, or a referral from a friend, or you found them on the internet. You meet with them and they ask you to sign a contract to represent you. Wait, you haven’t even found a house. What is a Buyer’s Representation Agreement anyway? What does it mean, and should you sign it? First let’s look at the different types of Buyer representation agreements. (Disclaimer: This is for the State of Tennessee. You will want to check with your state to find out what types they use.) There are two main types with two sub-types. There are Exclusive and Non-Exclusive as well as Buyer Agency and Designated Agency. Exclusive Buyer’s Representation Agreement: This is an agreement that says the agent or company is the only agent or company that has the right to represent the buyer in a residential real estate transaction. Non-exclusive Buyer’s Representation Agreement: This agreement allows a Buyer to hire more than one agent or company to represent them in a residential real estate transaction. Buyer Agency: Under this type of Buyer’s Representation Agreement, the entire real estate company technically represent the Buyer. Designated Agency: This type of Buyer’s Representation Agreement will designate one agent in a company to represent the Buyer. Why would you sign them? Exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: A Buyer has one agent or one company working for them. Some buyers may think they will get more results if they hire more than one agent. In my experience, agents/companies tend to work harder for the buyers that are working with them exclusively. This type of agreement obligates both parties to each other which typically forms a loyalty from day one and will cause an agent/company to put every effort into finding the perfect property for the buyer, knowing that if/when they do, they will get paid. Non-exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: Some investors decide that this is the best agreement to sign because agents/companies may have access to different off-market properties. This may be true for some, however, my opinion is that a buyer will typically get the best service if the agent/company knows they have their client’s loyalty. Should you sign it? In the state of Tennessee, in order for an agent/company to work for you, there must be a written agreement, so, yes, you should sign it. However, the fact that you sign it, doesn’t mean you are stuck if the agent/company does not perform their duties. Either party may terminate the agreement. If you don’t feel you are receiving the best service, speak to the agent/company. If...

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Should I Have an Open House?

Should I Have an Open House?

When people sell their house, a lot of Sellers think they have to do an open house for it to sell. Others pause and ask, “should I have an open house?” Well, it depends on who you ask. There is the real estate agent perspective and the Seller perspective. Both say, “yes” and both say, “no.” Here’s why. Real estate agents who say, “YES”: Know the property is in a high-traffic location and could produce a Buyer. However, not necessarily a Buyer for this property. Some real estate agents use open houses to pick up new Buyer leads for their business. When marketed well, a real estate agent can produce many leads from one open house. Want to make sure they are doing everything their client feels is necessary to sell the house even if they know it’s unlikely they will get attendees or find the Buyer from an open house. May just want to catch up on their reading or paperwork for a couple of hours while they wait for visitors. Sellers who say, “YES”: Just assume you must do an open house as part of the marketing plan. Feel that their property has the potential to get a lot of traffic and think they may get an interested prospect walk through. Want their real estate agent to do as much as possible to sell their house and feel that an open house is a good way to do that. Real estate agents that say, “No”: Feel that the property is not in a high traffic area and they won’t get many, if any, prospects, except for, perhaps, “nosey neighbors.” Are concerned to hold an open house due to liability of the Seller’s personal belongings or due to personal safety. Sellers who say, “No”: Don’t want random strangers walking through their home without ample supervision. Feel their agent does outstanding marketing outside of open houses and feel that their house would not be a good candidate for selling during an open house. Some Sellers of unique or high-end properties feel that their property is best marketed via word of mouth, print, and online and then having the prospective Buyer set up a private showing. So, should you have an open house? As you can see, there are good reasons to do open houses and then there are good reasons not to do open houses. It really depends on the Seller and the Real Estate Agent and making sure they are on the same page in their ideas and opinions of...

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It’s Fall Y’all!

It’s Fall Y’all!

  You can feel it, finally. The crisp air in the morning and the cooler temperatures at night. Pumpkins on porches, pumpkin desserts, and pumpkin spice in your coffee. Fake spiderwebs that I think are just an excuse to not clean the real ones. Ghosts and skeletons hanging in trees, haunted houses, hayrides and corn mazes. It’s Fall Y’all! With the change of season comes a change of market. Some people would never dream of selling their house anytime but Spring, but let me give you some reasons why you may decide now is the time, and what you need to do if you pull the trigger. 1. It isn’t so hot. I must say, it isn’t such a pleasant experience to show Buyers houses in the heat of summer in the South. You get in a hot car, burn yourself on the seatbelt and leave sweat marks on the seat. You turn on the A/C and get hot air blowing around the cabin. It cools down about the time you are at your next stop and then you step out into the humid heat. You want to look at the outside but you are already sweating profusely. The lock sticks and you struggle to get the door open to get into the cool house. There is a sense of relief once you step inside but the only thing you can think is, “Do you think they’d notice if I took a shower?” Looking in the attic and the crawl space is not something you will want to spend much time doing because of heat and possible critters. So, heat can put a negative feeling in a Buyer’s head about a house that they normally would have given a second look. 2. The kids are back in school. If Buyers have children, it is not necessarily “fun” to take them to see houses. For one thing, they can be emotional over not wanting to move. Secondly, they get bored. They get into things. They want a snack. They need to pee. They want your attention. They want to go outside. Or, they love every house they see and they don’t want to leave any of them. Either way, it can detract the parents from really getting a good look at the house and seeing what they need to. You might not be able to make the best decision or you may miss some things because the kids are around. 3. Colors are beautiful. If the leaves are changing colors, nature has done decorating for you. Oranges, reds, and yellows can add a warm, welcoming feel to a home. Feel free to use pumpkins and fall flowers to decorate but make...

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New Kid in Town

New Kid in Town

  What if someone would buy a house for you? With cash. Let you move into it, and then you could buy it from them at the same price and terms as they bought it? Too good to be true? Actually, it’s not. There’s a new kid in town and their name is Ribbon. Ribbon is backed by venture capitalists who wanted in the real estate game. Ribbon saw a gap in needs that were not being met and created a solution. There are plenty of iBuyer-type programs. Those are the programs that will give you an offer on your current home. Typically, the offer is quite a bit less than market value and they charge you fees of, up to around 12% in order to not sell the traditional way. That is certainly one way to go about selling your current home but what if you know it will sell, you just need a bit more time? What if you need to do some painting or some improvements to the house that will be so much easier if you don’t live there? What if you really want to go ahead and move into that new house now so the kids can get settled into school? But wait – you need the money you are going to make from the sale of your current house in order to buy that house. Darn it. You could get a bridge loan, but that takes time and you really don’t want to deal with all the paperwork. Moving into an apartment until you sell the house is an option but that means you are moving twice and that’s not ideal. Staying with friends or family is not really a great solution since you would be inconveniencing them and most of your stuff would be in storage. You could take that lowball offer from Zillow or Opendoor but you need more than what you would net from that for the down payment on your new house. In walks Ribbon. Ribbon will buy the new house for you – with cash! The only contingency in the contract will be inspection. This not only makes your offer better, but they can close within a couple of weeks and you can move in. You will pay rent – just to cover their costs – and you will have 6 months to sell your house and buy the new house back from them at the same terms. Unlike the steep fees that some of the other companies charge, Ribbon charges 1.95% of the purchase price of the new house. Just like the other companies, not all houses will qualify, but it is another great option to explore....

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Trust

Trust

  Trust is an interesting thing. It is free to give, but costly if lost. If it is broken, it may never be repaired and sometimes, trust is irreplaceable. A friend told our secret. A colleague got the promotion by taking credit for our hard work. A contractor stole from us. A parent didn’t do what they said they would do. Words. An action. We’ve all had our trust betrayed somehow. It is disappointing. It hurts. What do you do when that trust is broken in a real estate transaction? Let’s take a look. You own a house that had some storm damage on the roof. You were able to get your insurance to pay out on a claim. You weren’t having any major leaks so you did a quick fox and used the rest of the money for some other improvements you’ve been wanting to make. Fast forward a year. You are selling the house. You’ve disclosed a few things you knew might come up but your house is in pretty good shape, overall, and it’s a hot market so it should sell fast. You receive two full price offers right away. Well that was easy! You decide on the one that had the best terms and moved forward. As suspected, a few things came up on inspection but no big deal. There was a question about some shingles on the roof but the inspector said it looked like there had been a repair and there were no active leaks. Then you get a call from your agent. He asks some more detailed questions about the roof and you start to get nervous. Apparently the Buyer was shopping for insurance for their “new home” and the agent pulled a CLUE report on your house. “A what?,” you think. It stands for Comprehensive Loss Underwriting Exchange. In layman’s terms, it’s a record of insurance losses. Remember that claim you filed? Remember that money you received? There’s a record of it. So, the Buyer knows you were paid for an entire new roof to the tune of $6500.00. That money is long gone and the old roof is still there. The buyer demands a new roof. You can’t deliver. You lose the buyer. Well, that’s OK, just go back to the other buyer, right? Not so fast. Now there is a disclosure issue. You have to (or should) tell that other buyer the situation. If you don’t, your agent should. They will probably want a new roof too, or a reduction in the sales price, or they may not trust you now and wonder what else you aren’t telling them. When you do something to lose trust, you could it...

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HELP! My House Isn’t Selling

HELP! My House Isn’t Selling

  Every once in a while I get a panicked call from a Seller asking what we can do because their house isn’t selling. I take a lot of things into consideration. Of course, location, price, and condition are the three major reasons why a house isn’t selling. If those three are good, I ask deeper questions. If it’s my listing, I have the answers to most of these. If it’s not my listing, I want to know these things. Is the house listed in the local MLS and all the major online “real estate” websites? In the rare case that a Seller is trying to be on the “DL”, this can have a major effect on how many people see the property. Also, some real estate offices do not allow their company listings to automatically be uploaded to Zillow and its affiliates. Like it or not, the more sites that the property is on, the more chance it will be seen and sold. Is the information accurate? I had a past client call me recently. Her parent’s house was listed with a family friend but it was not getting any showings. She wanted to see if I would take a look at the listing and give my feedback. Right away I knew why there hadn’t been any showings recently. There had been a price “reduction” a few weeks prior but what should have been a reduction to $1,200,000.00 was typed in as $12,000,000.00. The house didn’t warrant twelve million dollars and there certainly are a lot less buyers in the market for that price home. Be a second set of eyes for your agent. We all make mistakes. I send the listing to my clients and ask them to look it over. You know the property better than your agent. They may have not included a quality or feature that you feel is very important. I’m not saying do their job for them, but it is a team effort to get a house sold so don’t be shy about making suggestions or asking them to make changes. Are the photographs of professional quality? I have seen hundreds, possibly thousands, of house photos that are taken with a poor quality camera. They often have people or animals in them, or the agent’s image in the mirror. The angles are bad. The color is terrible. And a lot of times, they showcase things that should not be highlighted. Make sure the photos are great quality. As a Seller, make sure the house is as “picture perfect” as possible. Are you allowing showings? If there are too many restrictions or the showing requests are consistently being denied, you have a lot...

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