Jeff Jacobs - page 18

Brokerages have costs, for offices, and providing online presence. It’s a high over head cost that some other Brokerages cut to offer services for a discount, or the new thing is to rebate money at closing. All Brokerages try to present the idea that a Real Estate transaction is complicated, which it is, but once the Principals are in place the transaction itself is kind of automatic.

Agents can hire a transaction coordinator, or many Brokerages offer a transaction coordinator for a fee. The cost is low, because the coordinator gets paid on volume. You can look up mortgage Brokerages that operate on the same principle. A second part of the equation is a virtual assistant who does the little things to keep the transaction moving along.

Total cost for services that are contracted out is about $1000, maybe $2000. If you include the escrow, Purchase, and Sale Agreement a Real Estate transaction could cost as much as $4000 for both sides, total.

So this idea of paying a 6% commission is pretty high. That’s $12000 for a $200K transaction.

On this blog we have talked about why people pay the commissions, and justified the idea of paying a full Brokerage commission. What I have never done is present the realities that the Real Estate industry is loaded with scammers. Online Brokerages are my biggest target for presenting the fact people pay way too much for very little that an Online Brokerages gives them. If you aren’t paying for Real Estate experience, know how, or insider information then why pay the high fees?

Most cities are having more apartment construction projects. There is a demand for housing, and buyers are a little concerned about entering into a 30 year mortgage commitment. There are many buyers squabbling over a low inventory of properties for sale, but sales of low end rental type properties are brisk.

I have always advocated home ownership until now. It just so happens that this housing market crash came at a time when I was in my 50s and have very little need of a house to call my own. I can rent, save, and travel. Some young couples may still have a future of kids, dogs, schools, and family, but many are increasingly interested in saving money in more secure investments.

The family home has traditionally always been a secure part of a portfolio. Recently that idea has been questionable. My personal opinion is that the cost of housing will continue to decline. There are many ways to build a community with density, just like most city planners have promised. In keeping with that, as long as you would consider a town home of condo, the idea of an apartment isn’t too far off, especially if your town home, or condo is going down in price.

Procuring Cause is a Real Estate term. Rebate Brokers have thrown the term around a lot because they write up offers, then give a rebate of the commission. In some cases, other agents have shown the buyer houses, some times several houses, helped line up a mortgage, and worked with the buyer until the buyer finds a house they want to make an offer on. The buyer, in some cases, has gone to the rebate broker after spending hours working with a full commission agent. When the buyer, under these circumstances, writes the offer with the rebate broker, the other agent can, in some cases, claim the commission.

There are things an agent can do to protect themselves, like having a Buyer’s Agency Agreement, but many buyers want to keep their options open, so they are reluctant to sign a Buyer’s Agency Agreement. There are pros, and cons to having an Agreement, but that is an article for another time. The fact is many agents are wiser now than when rebate Brokerage was a new idea.

Rebate Brokers have also cautioned buyers about Procuring Cause, that’s how the subject came up.

It’s a complicated process to claim a commission. It’s done by arbitration, and usually is done between the Brokers. The buyer can do what ever they want. The buyer isn’t obligated, legally, to write up an offer with the agent who showed them a property. Just because some one is there doesn’t mean they are contributing to the buying process. The other thing that is very true is that most buyers use online searches, and so the Brokerages that provide those services should probably claim procuring cause.

This article is just a caution to make buyers aware that there is this issue, but it is a minor part of the home buying process.

From time to time I forget to mention some of the best Real Estate agents in Seattle. Today I ran into Cathy Cowan who I haven’t seen in about two years. She’s been busy helping clients who are referred to her.

She admits she is low key, but diligent, as well as honest. People refer to her, other agents refer clients to her. She has a wealth of experience for multi million dollar homes to helping to sell a town home for a professional couple who has been transferred to another state.

Offering that range gives agents an advantage. I first met Cathy when she partnered with another agent to sell a view property that had some quirks. She took the lead in all of the preparation, and marketing, because she had a feel for the clientele who would be making an offer. The property got offers that Cathy fielded beautifully.

It’s grace under pressure that can get some properties the best price, or get a buyer a better price than a less skilled agent can.

– David Losh

We have a low tech remodel company. Nothing is fancy, everything is functional. It hasn’t done too much in the past three years, but we still prepare properties for sale. In the past we did kitchens, bathrooms, and basements. I have a $10K rule that if you are spending more than that you’re wasting money. You’d be surprised what you can get done.

Yesterday I was in a home that is the middle of a $120K remodel. It’s beautiful. They did everything. What I have been wondering is if there will ever be a return on this obvious investment.

This isn’t the first time in the past two years that I’ve wondered about remodels that made sense five years ago. In the past there was a set of rules about if you invested in a bathroom you could expect a return. Now I look at adding a bath room may get a return, but pretty much maintaining what you’ve got makes more sense. Maybe a new tub surround, or vanity, but gutting a place doesn’t seem to pencil.

The same with the kitchen. No one is going to pay for some one else’s vision of a gourmet kitchen. You can do it for yourself, and that is getting to be more popular, but you have to figure it’s a loss.

Even flippers are starting to cut corners on what they spend, except on system upgrades. Plumbing, and electrical are pretty safe bets for resale. It’s not so much profitable, but buyers are getting pretty savvy about big ticket expenses.

The property at 5656 36th Avenue SW http://www.redfin.com/WA/Seattle/5656-36th-Ave-SW-98126/home/470556 has been on the market for 254 days. It is the best property I have seen in a very long time. It is dated, and has aluminum siding, but you can tell the people who had it build had money.

It sits up off the street with South West exposure. The listing agent makes a lot about the view, but the value is in the structure. When you jump on the second floor it feels like concrete. The foundation may have been added later because it is thick and has structure that for 1940 construction would have been ahead of it’s time. The aluminum siding I would bet is covering the original siding that must be in pretty good shape, because that siding would only have been exposed for about 20 years.

Yes the kitchen, and bath could be remodeled, or they could be refurbished. The bath room looks to be in good shape. I would add a bath to the second floor. I’m sure the structure can handle it.

For $450K this seems like a great place to hold onto. It might even take an offer. It is an estate sale. To me though I can see it selling again for more than this asking price. It may just need a little more love.

I have discussions about Real Estate Agents a lot. Everybody has an opinion about Real Estate Agents, and the consensus is usually that Real Estate Agents are bad, and the commissions they charge are outrageous.

The Real Estate commission is always negotiable, but most Brokerages hold the line at full commission pricing. There are desk fee Brokerages that allow agents to have more latitude in what they charge. The fact, however is that Brokerages bring stability to the Real Estate industry, and it is a multi billion dollar industry.

Let me start by saying that the Real Estate commission is the cost of doing business. No matter how much time you spend on the internet doing “research” it will never compare to the time an agent spends building a viable commission based Real Estate business model.

You need some one who has been in business, just on a commission basis, for three years. That person should have at least twenty to thirty successful Real Estate closings. Because you pay the same, in most cases, for full commission brokerage, you should probably ask people with more experience to help you.

This is where it gets tricky. Most high performance agents are picky about the clients they work with. If you go in with an attitude that these people should be nice to you because you pay them, and they work for you, you probably won’t get far. Most Top Producers also invest, and have an income stream. They are there to help you. They are in business for an extended period so they want you to be happy.

It’s good for you to be informed, but at some point it’s also good to trust another person to help you make the decisions.