4 reasons why you shouldn't sell your house as a pocket listing

As the market gets more and more competitive due to lack of inventory, we are hearing of more and more "pocket listings" being talked about.  What is a pocket listing?  A pocket listing is when a seller tells one or more agents that he would be willing to sell his property if they find him a buyer.  The agents keep the listing in their "pocket" and only pass on the info to their limited group of buyers. They do not put the listing in the MLS (The Multiple Listing Service).  Also, when the agent brings the buyer to the seller, the agent can then "double end" the deal and represent BOTH the buyer and the seller, thus getting paid both sides of the commission.

What's wrong with that, you may ask?  Well there are several issues...

#1. You are actually LIMITING the exposure that your listing is going to get.
We Realtors use The MLS as our "holy bible" for accurate Real Estate information.  The MLS spiders out its member's listings ( Realtors are the members) to all of the different Real Estate websites.  The original source of the listings you see on Zillow, Redfin, etc. all come from the MLS.  With over 98% of buyers shopping online, why wouldn't you want the world to see what you have for sale?

#2. You will sell your property for a LOWER price.  GUARANTEED.
This point is related to my first point.  Property prices are based on supply and demand.  The lower the supply, the higher the demand, the higher the price.  Sell your home as a pocket, and you remove or reduce the demand (by limiting exposure), so naturally, you get a lower sales price.  Why?  See #3

#3. People are naturally competitive.
When you expose your property through the MLS, (assuming you market it correctly as far as price and presentation...a topic for another day), you get multiple people showing up for your open house.  For my open houses, I usually have a line up just before we open the doors. Additionally, I usually have at least 5 groups of people in a property at once (sometimes I have as many as 20 groups in a property at the same time).  When buyers see other buyers looking at the house that they want, they start elbowing their partner and whispering that they MUST get their offer in asap.  A multiple offer situation is in the seller's best interest. Not only does it drive up the price, but it also gives the listing agent the opportunity to negotiate THE BEST possible terms for the seller.  We can then choose from the top offers.

#4. Who is representing you Mr. Seller?
Almost all pocket listing transactions have the same agent representing both the buyer and the seller. Although it is legal for the same agent/brokerage to represent the buyer and the seller in a transaction, it takes a very unique type of agent to be able to handle the transaction fairly and well.  In my opinion, it is a very difficult position to be in (as an agent) as you could be negotiating credits for repairs,or other deal points as the transaction progresses.

So who benefits when a house is sold as a pocket listing?  In my opinion, the main beneficiary is the Agent who gets to receive both sides of the commission.  Yes, I said it.  And yes, I am an agent.  But I am not that kind of Agent.  

Is there ANY benefit to the seller?
As far as I can see, the only benefit is that the seller won't have a sign on their lawn and their neighbours won't know that they are selling their house. (But maybe the neighbours have a friend from out of town that wants to live in the neighbourhood?? See #1 above)   Do you think that this benefit is worth potentially losing thousands of dollars in sales price?

Frankly, I would much rather represent my Seller to the best of my ability and have the SELLER get a HIGHER sales price.  That is not to say that I have not been in a situation where representing both sides on a transaction has not fallen in my lap.  When that rare situation takes place (twice in the past 10 years), there is a very specific protocol to put into place, so that everyone is protected.  When my sellers hire me, they are trusting me with one of the biggest assets they will likely ever have in their lifetime.  I take that responsibility VERY seriously.  Doing a great job for my clients is the most important thing to me.  If you take that approach to your job and your clients, the money and success will follow.

Want to discuss this topic? Feel free to call me at 310-963-7384.

Warm Regards,
Revi Mendelsohn, Realtor
Rodeo Realty  

BHGLAAR Professional Standards Committee and a reminder about disclosures

Yesterday I spent the entire day at the Beverly Hills/Greater Los Angeles Board of Realtors for my 3rd annual Professional Standards Training.  My position as a panel arbitrator is a volunteer role, and I wouldn't trade it for anything.  A handful of times a year, I am called to spend the day in a conference room with 4 of my colleagues (fellow Realtors), along with a complainant, a respondent and each parties' attorneys (should they choose to retain one).  The cases that we hear are very interesting and usually involve 2 Realtors, but sometimes they involve a Realtor and a member of the public (a buyer or seller).  I have listened to and given my opinion on cases that involve up to several hundred thousand dollars in commissions, although most cases run in the 10's of thousands of dollars.  We also listen and decide on cases pertaining to Ethics violations pertaining to the Realtor's code of Ethics.  What's great about the annual training is that we spend the day in a room filled with 35 other like minded Realtors who also believe that if we keep doing things in the right way, and continue to hold ourselves to a higher standard when practicing Real Estate, that we can only help push others up to that standard.  The meeting also gives us an opportunity to discuss some of our current marketplace challenges and to help each other by sharing information.  One of the subjects that came up in today's meeting was disclosures.  I remembered having written a blog post about disclosures about 4 years ago called "Dear Seller, disclosures are your best friend" and I thought it would be a good time to repost the link to the article.  Of course there were lots of other interesting things that we discussed as well, but I'll have to get to those next time.

Until then, should you have any real estate questions or comments, please feel free to send me an email or call me on my cell.  ReviMendelsohn@gmail.com 310-963-7384.

Revi  
    

2 places to live is better than none

The other day a friend mentioned how she feels at home in both LA and New York.  It got me thinking about how I often say that having 2 places to live is better than NONE.

What exactly am I talking about?  Well, when you are "in escrow", or "under contract" to purchase your next home, how do you know when you should give notice to your current landlord, or when to get rid of the place that you are living in right now?  The tendency is usually to give notice "right away".  I always caution my clients to wait until we are further along in the transaction and if they can, to wait until all contingencies are removed.  I also ask them to check in with me before they give their notice so that I can assess the place we are at in the transaction and advise them to act accordingly.  Ideally, if you can wait until loan docs are signed, you will be doing yourself a favor.  Most people dislike the idea of paying for 2 properties at the same time (i.e. rent on the old place and mortgage on the new place).   The problem with giving your notice too early is that you could end up with NO PLACE to live!  Will some money be unnecessarily spent in the process? Yes, in a way, you are paying for two places and you will only be living in one.  But.....the peace of mind of knowing you have a place to live is well worth it.  Also, consider having the cover the cost of moving twice should your purchase be delayed.  This year I closed 2 complicated transactions where the buyer's original loan did not go through.  We had to start over with a new lender.  Thankfully we were able to make arrangements for both clients so that they had a place to stay.  In one case, the sellers allowed the buyer to move in as a tenant while we waited for the buyer's loan to close.  Working with an experienced agent who has handled many types of transactions will ensure that the often stressful process of buying and selling will go through as smoothly as possible.

Got a Real Estate question for Revi?  Email me at Revimendelsohn@gmail.com and I will get right back to you!        

A love letter to my job selling Real Estate

When was the last time you worked with someone who loved their job?

If you ask my clients that, they will tell you that it was when they last worked with me.  That's right, I love my job and I want the world to know!

I live and breathe Real Estate.  Each transaction is like an unopened gift filled with surprises and challenges to be taken on.  No two transactions are alike.  I pride myself on my solution oriented approach to this business.  I can't remember a transaction where the agent on the other side didn't  thank me for the way I do business and tell me that he/she wished all agents approached their work the way I do.  I can work with the nastiest of agents (let's be honest, there are some people that hate their job) and turn them into a friend by the end of the deal.  I live for moments like that!  I also live for the phone call I get to make letting my clients know that their home just sold, or that I am on my way to deliver the keys to their new home.  I have developed a proven approach to buying and selling that is based in psychology and human behavior.  I can even get you to laugh just when you thought the world was going to end.  Why not have some fun during this (temporarily) stressful time of buying or selling your home?     

My clients know that they can reach me just about any time of the day or week, and I would not change any of that for the world.  This job gives me energy and fuels my soul.  All that, AND I get paid to do it!  Imagine that!

This year has started off with a bang with 6 deals closed already! I am looking for my next batch of clients who would like to be treated like they are my only client.  Would you like to have someone handle your transaction as if they were buying or selling your property like it was their own?  If so, call me and let me show you what it is like to have a top selling, competent, customer service obsessed Realtor on your side. 
Do you want to see what others are saying about me? Click here and go to the testimonials page.  Would you like to speak to one or more of my clients?  Let me know and I will connect you.        

What buyers like most about their Realtors.....

Home Improvements that pay you back....

Thinking about hiring a Real Estate Attorney instead of a Real Estate Agent to buy or sell your house?

Recently a friend of mine asked me if it was better to use a Real Estate Attorney instead of a Real Estate Agent. What came to mind was an interesting transaction that I handled back in 2007. If you enjoy Real Estate stories and details, read on, if not, skip down a couple of paragraphs.

It was a pretty unusual situation. The occupant of the home no longer owned the home as it had been foreclosed upon. The bank sold the home (sight unseen, and uninspected) to 2 cash investors. The investors were trying to evict the occupant so that they could take over the home that they now owned, fix it up and re-sell it. The occupant was a terminally ill man who happened to have a wealthy friend that owed him a favour (and who was part of an institution). The wealthy friend agreed to purchase the home back from the investors for cash. This is the point at which I was brought into the transaction. We had 14 days to close the deal before the investors would throw the occupant (and his 7 exotic birds) out onto the street. The investors knew that the occupant was in a very bad place, and they took advantage of the situation by demanding a price of $300,000 OVER what they paid at the auction. But that is another story... Anyways, one of the investors was a newly licensed Real Estate Agent (His mother had been a veteran in the business). He was also an attorney.

We agreed to meet at my office in Beverly Hills. I arrive and the investor produces a hand written contract that he wants my client to sign. I explain to him that we have existing "boiler-plate" forms that have been carefully created (and updated) by the California Association of Realtors (CAR). Besides the fact that as the buyer, we can produce our own Purchase Agreement. The investor (who was admittedly suffering from anger management issues) went through the roof. He had a little tantrum and insisted that we do things his way and that he had spent days crafting this document. After he wore himself out, I provided him with the correct document and explained that I would be handling the rest of the paperwork going forward. He left in a huff. As an aside, later that day I received a bouquet of beautiful flowers along with an apology note from him. Ha.

On the buyer other side of the transaction, an attorney was brought in to represent the institution that was buying the property (along with myself as their agent). Long story short, the institution went over the agreed upon contracts and vetted the deal. In the end the use of attorneys caused many hours of extra work, including meetings, conference calls, and the need to explain documents multiple times. The use of attorneys cost the buyer an extra $10,000 in fees. None of the issues/concerns that the attorneys brought up were justified and at the end of the day, we closed in 13 days. I worked around the clock as the buyer from the institution lived overseas, and I had to work on her schedule.

In my opinion, attorneys are hired to work out scenarios and "what ifs". In a situation where there is an organized process everything gets worked out naturally, provided that you have a qualified and professional Real Estate agent working for you. Lastly, we Realtors only deal in buying and selling property. It is our specialty. If you hire an attorney to do the job of an agent, it is overkill and more unnecessary work will have get done. I have seen a few deals implode with the use of an attorney in place of a Real Estate Agent. The attorney attempts to reinvent the wheel, although the wheel is already in place and working well. Most Real Estate attorneys that I have come across are not actually familiar with the ins and outs of the residential buy and sell process. They specialize in practicing Real Estate Law and are usually litigators. The approach that I have seen is that they typically come at the other side of the transaction in a combative manner, causing the other side to have to take a defensive position. In my opinion, buying and selling of property should be approached in a manner where both sides work together to achieve a result that is satisfactory to all. There is definitely a time an place for the use of Real Estate attorneys, such as when a dispute arises, or when you need to evict a tenant. If you are going to buy or sell, your first stop should definitely be to speak with a licensed Real Estate Agent.