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
Showing posts with label los angeles real estate. Show all posts
Showing posts with label los angeles real estate. Show all posts
Monday, June 16, 2014
Sunday, February 16, 2014
Monday, January 20, 2014
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.
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.
Sunday, December 15, 2013
Tuesday, March 12, 2013
Thinking of Selling? Before you do, READ THIS.....
A couple of weeks ago I came across a listing for a home that I have seen exchange hands several times over the years. I looked up the listing and could not believe what I saw. I decided to put together a list of things that you must do when selling your home.
1. Market your listing with at least 10-15 pictures of your home.
This listing had one exterior shot. ONE? In today's technologically advanced market? As a Realtor, we must stay on top of the latest technological advancements, or we run the risk that our clients will think we are dinosaurs. Also, if you limit the photos shown, the average buyers jumps straight to the conclusion that the inside of the house is awful. If the home is not yet ready to photograph, wait until it is before you add your listing to the world wide web. Over 90% of buyers shop online these days. We must give them something to look at and to fall in love with. The only way to sell a house is to get people to walk through the door. If the listing is not enticing enough for them to stop what they are doing, get in their car and come look at the house, then you will not be able to sell your home.
2. Timing your listing launch and open houses.
Time your open house in such a way that it is about 3 days after the launch of your listing. The first open house for the property in question, is not for another 3 days. However, the property has been on the market for 6 days already. That is 9 days on market (DOM) with no showings! You should definitely have some time between list date and first open house (this gives the listing a chance to get some exposure, but 9 days is way too long). If the house is not ready to show, see point number 1 above.
3. Allow your agent to show your home on his/her own.
The listing says that the Owner or agent will show property. The owner was at the broker's open house and at every open house. I am going to guess that he was at all private showings too. I don't care what anyone says, but the owner should almost NEVER show their own home. There are ways to position and market things that only a Realtor will know how to do. The owner is almost always very emotionally attached to their home and you don't want that type of presentation made to a potential buyer. Can you imagine if the seller and the buyer rub each other the wrong way and that is what kills the potential deal? Sure, they could love each other, but the chances of things going south are very good. We always keep the buyer and seller apart until the deal is just about done. Some times, they never meet.
4. Hire the agent that is best and most qualified to sell your home.
Do not hire someone JUST because you are related to them. In this case, the seller made a point of letting me know that his cousin was his Realtor. Hire someone because they are qualified for the job, they love what they do, and you like them as a person. Real Estate transactions are very tedious and complex. You will spend many hours with your Realtor. If you like them as a person, things will be that much easier. The same goes for discounted services. If the listing agent's fee is discounted below what everyone else is charging, then the service is likely discounted too. If you hire a Realtor, it is because you do not have the inclination, interest, capability or time to represent yourself in your home sale. What is it that they say about attorney representing themselves???
Let the professional that you selected do what they are hired to do for you. Stay on top of the market and educate yourself. Does what the Realtor says make sense? Have you spoken to their past clients to see if they endorse that agent? What is their typical number of Days on Market before an offer is procured?
These 4 things were what I noticed within 30 seconds of looking up the listing online. There may be others, but these were the things that I noticed first. By the way, the house did end up going into escrow, albeit after 20 days on the market. In the seller's market that we are in, most homes, if marketed and priced well, sell within the first 5 days on the market. Some go on day 2! This home ended up selling for $200,000 UNDER the asking price.
Want to talk about this blog post or any other Real Estate matter? Feel free to call or email me at 310-963-7384 or Revi@ReviMendelsohn.com .
1. Market your listing with at least 10-15 pictures of your home.
This listing had one exterior shot. ONE? In today's technologically advanced market? As a Realtor, we must stay on top of the latest technological advancements, or we run the risk that our clients will think we are dinosaurs. Also, if you limit the photos shown, the average buyers jumps straight to the conclusion that the inside of the house is awful. If the home is not yet ready to photograph, wait until it is before you add your listing to the world wide web. Over 90% of buyers shop online these days. We must give them something to look at and to fall in love with. The only way to sell a house is to get people to walk through the door. If the listing is not enticing enough for them to stop what they are doing, get in their car and come look at the house, then you will not be able to sell your home.
2. Timing your listing launch and open houses.
Time your open house in such a way that it is about 3 days after the launch of your listing. The first open house for the property in question, is not for another 3 days. However, the property has been on the market for 6 days already. That is 9 days on market (DOM) with no showings! You should definitely have some time between list date and first open house (this gives the listing a chance to get some exposure, but 9 days is way too long). If the house is not ready to show, see point number 1 above.
3. Allow your agent to show your home on his/her own.
The listing says that the Owner or agent will show property. The owner was at the broker's open house and at every open house. I am going to guess that he was at all private showings too. I don't care what anyone says, but the owner should almost NEVER show their own home. There are ways to position and market things that only a Realtor will know how to do. The owner is almost always very emotionally attached to their home and you don't want that type of presentation made to a potential buyer. Can you imagine if the seller and the buyer rub each other the wrong way and that is what kills the potential deal? Sure, they could love each other, but the chances of things going south are very good. We always keep the buyer and seller apart until the deal is just about done. Some times, they never meet.
4. Hire the agent that is best and most qualified to sell your home.
Do not hire someone JUST because you are related to them. In this case, the seller made a point of letting me know that his cousin was his Realtor. Hire someone because they are qualified for the job, they love what they do, and you like them as a person. Real Estate transactions are very tedious and complex. You will spend many hours with your Realtor. If you like them as a person, things will be that much easier. The same goes for discounted services. If the listing agent's fee is discounted below what everyone else is charging, then the service is likely discounted too. If you hire a Realtor, it is because you do not have the inclination, interest, capability or time to represent yourself in your home sale. What is it that they say about attorney representing themselves???
Let the professional that you selected do what they are hired to do for you. Stay on top of the market and educate yourself. Does what the Realtor says make sense? Have you spoken to their past clients to see if they endorse that agent? What is their typical number of Days on Market before an offer is procured?
These 4 things were what I noticed within 30 seconds of looking up the listing online. There may be others, but these were the things that I noticed first. By the way, the house did end up going into escrow, albeit after 20 days on the market. In the seller's market that we are in, most homes, if marketed and priced well, sell within the first 5 days on the market. Some go on day 2! This home ended up selling for $200,000 UNDER the asking price.
Want to talk about this blog post or any other Real Estate matter? Feel free to call or email me at 310-963-7384 or Revi@ReviMendelsohn.com .
Wednesday, January 16, 2013
Wednesday, January 11, 2012
How did 2011 compare to 2010 in Real Estate?
People often ask me how things are in Real Estate. When I tell them that things are great, they look at me doubtfully. It is so interesting to me, to find out how people get their Real Estate info. It seems to me that everyone has a friend who is a realtor or that someone they know has not been able to sell their house. (tell them to call me!) Why do people prefer to only listen to the bad out there? Frankly, last year was a
Friday, October 14, 2011
Following my passion and selling Real Estate, one and the same?
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on.” Steve Jobs Stanford Commencement address June 12, 2005.
That is how I feel about Real Estate. It is truly a culmination of the best
Friday, April 30, 2010
Dear Seller, Disclosures are your best friend....
Selling your home can be scary. Sellers often ask themselves "What should I disclose to the buyer? Should I tell them that my Aunt Bea died in the house? What about that toilet that backs up twice a year? Or what about the mangy dog next door that is always barking?"
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