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By Tara-Nicholle Nelson | Broker in San Francisco, CA

5 Real Estate Rules of Thumb: Fact or Fiction?

We humans have a natural craving to simplify the complex. This same instinct, which explains why legends, films and fairytales from every culture tend to boil down to heroes vs. villains, also explains why so many buyers and sellers desperately seek rules of thumb for making the often scary, rarely simple decisions they face.

Reality check: your real estate transaction is not a children’s story. Grown-up life is complicated, as are money matters and relationships. Since real estate involves all three (being a grown up, money and relationships), smart buyers and sellers should cast a suspicious eye at super simple real estate rules of thumb. 

Let’s take a handful of the most persistent ones head on, and decipher which of them are fact, and which are fiction.

Rule of Thumb #1:
Location, location, location.  
Fact or Fiction: Fact.
One of the elemental truths of real estate is that almost everything can be changed about a home - except its location. By the same token, location is essential to our ability to afford and enjoy living in a place, given that it impacts everything from:
where our children go to school (and whether or not we have to pay for it), 
how much time and money we spend getting to and from work, 
our safety, 
the beauty, quiet and convenience of our surroundings and 
the recreational, shopping and cultural options which do - or don’t - become part of our daily lives. 

Location impacts whether you hear train tracks or birdsong in the morning, whether your neighbors bring you cookies or bring you drama when you move in - it can even impact your career and job prospects. The deep, numerous impacts of where we live on our experience of a home, in turn, give location a powerful role in driving whether we can resell our homes - and for how much.

The critical importance of location is one real estate rule of thumb that grows more true over time. However, the specifics of what makes a location desirable have and continue to evolve rapidly. For example, urban homes with super-short commutes to bustling job centers have grown more and more interesting to buyers as their prices have come down and gas prices have gone up.

Rule of Thumb #2:
It costs more to buy than to rent your home.  
Fact or Fiction: Depends on where you live.
Just today, Trulia released its latest Rent vs. Buy study, showing that in 98 percent of American cities, it's actually less expensive to buy a home than it is to rent!  Of course, the type of home you might want to buy could be more pricey than what you’d be satisfied living in as a rental, and buying a home requires an upfront chunk of dough (i.e., down payment and closing costs) that renters don’t have to come up with. 

But the age-old would-be buyer objecion that “I can’t afford to buy a home” is now frequently shattered by the reality that when you take all things into account, buying a home at today’s prices and interest rates can actually cost the same or less than renting at today’s relatively high rental costs in many areas. 

That said, if you live in San Francisco or New York City, chances are good that it does actually cost more to buy than to rent. But if you live elsewhere, it behooves you to actually do the math, factor in the massive tax advantages of homeownership and see which is truly more expensive for you.  And make sure your decision accounts for the massive opportunity costs you might incur if you don’t take advantage of today’s prices and rates to buy a home of your own and start building equity - something you can simply never do as a tenant.  

Rule of Thumb #3:
List it high, to give yourself bargaining room.  
Fact or Fiction: Fiction.
The fact of this matter is that if you are selling a home in a strong buyer’s market, your competition is steep. The home that presents the best value for the price is the one that is the most likely to sell. Listing your home higher than what you know it’s worth is a surefire way to alienate that relatively rare specimen: a qualified buyer with a sense of urgency who might otherwise be interested in making an offer on your home. Smart buyers who are ready to leap off the fence into homeownership do their research, and may have seen dozens - even hundreds of online listings before they make an offer.  If your home is overpriced, chances are good that they’ll pass your home up, even if they like it, waiting for you to get a clue and cut the price. 

There are simply too many other great homes at great prices on the market. Overpriced listings are much more likely to be a source of prolonged stress and handwringing to their owners than a source of successful sales. 

If you're tempted to list your home high, there’s something else you need to be aware of: the sweet spot phenomenon. Homes that are listed too high sometimes go through one, maybe even several, price cuts before they hit a sweet spot - the price at which buyers are drawn to the value like moths to a flame, sometimes even generating multiple offers over the discounted price (but below the original list price).  Here’s some good news: you don’t have to wait months and months and go through the agony of showing upon showing and price cut upon price cut to get your home’s list price to the sweet spot where it sells.  

Work with a local agent who has a strong, recent track record of selling homes, quickly and at or near their list prices, in your area. Then, trust their pricing advice. (You might find it easier to trust them if you select your agent after speaking with several.) It’s the most efficient way to leverage local market expertise to get to your home’s pricing sweet spot, quickly and with minimum drama.

Rule of Thumb #4:
Always offer 10% below the asking price.  
Fact or Fiction: 100% baloney. I mean, fiction.
Few decisions in real estate are so nerve-wracking as that of how much to offer for a home. These days, we search online for comparables, try to suss out their similarities and differences between those homes and our target property, run some more numbers - there might even be a spreadsheet or two involved. We ask our agent to talk with the listing agent, get a feel for the seller’s motivation level and figure out whether there are any other offers, then try to factor the competition level and any credits or bank involvement into our thinking. We touch base (again!) with our mortgage broker to understand how rates have changed since our last conversation and exactly what the monthly payment will be if we offer X or Y or Z.

And at the end of all that, buyers often still feel like the final decision about exactly how many dollars and cents to offer for their home amounts to something like licking their finger, sticking it into the wind, and just picking a number.  And that just seems wrong, for a decision so important.

So it’s no wonder that one of the most frequently asked questions I personally receive is the request for the perfect rule of thumb of how much below asking a buyer should offer, given today’s market dynamics. My answer is now what it always has been and will be: sorry folks - move along - no rule of thumb to see here.

Every state, county, city and neighborhood has a different dynamic - as does every listing. Every seller, bank or individual, has its own particular motivations, situational constraints or influences (like how much they owe on the home, or the need to split proceeds between divorcing or sibling co-owners) and thought processes. If the seller feels they listed the place at an uber-low price, they might respond very differently to a particular offer than a seller who gets the same offer, but felt like they were building cushion into the list price.  If the home is in a neighborhood where most homes sell for more than the asking price, or the property has multiple buyers vyying for it, even a full-price offer might get laughed at.

Long story short - the specifics of each listing’s situation absolutely must be taken into account when deciding how much to offer, along with the comparable sales data and the buyer’s own (a) financial concerns and (b) motivation level for getting the home.

Rule of Thumb #5:
Listing your home as a FSBO will save you some dough.  
Fact or Fiction: Fiction (with the occasional exception).
I know some will argue this point, but the data is unequivocal: homes listed for sale by owner (FSBO) simply sell for less than similar homes listed by agents. From my own observations, I’d also argue that FSBO listings often simply don’t sell at all, and many end up listed by an agent after wasting months and months of the seller’s time.

The fact is, listing your home for sale by owner might save you the commission you would otherwise have paid to a listing agent. But the FSBO sellers who are successful generally do offer to pay the buyer’s broker’s commission, so the prospect of saving the full 5 or 6 percent agent commissions is more realistically the prospect of saving 2.5 or 3 percent. 

Beyond that, the smartest FSBO sellers also often end up:
  • paying a limited service broker to list the property on MLS, 
  • paying for professional staging or investing in some level of property preparation, even if they do the labor themselves, and
  • paying for an attorney to assist them with the disclosures and contracts involved in the sale -- 
all services that are frequently included in an agent’s services.  And even those FSBO sellers still forgo the objective pricing advice and marketing expertise that a good, local listing agent would bring to the table, all included in the commission. 

Fact is, many sellers who don’t hire an agent, but do cobble together a similar level of professional services and account for their own time spent on a FSBO listing, soon see that they’re not actually saving much money at all. And even those who think they can save soon see that there’s no savings if the house doesn’t sell - a common fate of FSBO’s on today’s market.

Sellers who already have in hand a buyer who is ready, willing and qualified to buy their home are the best suited for selling by owner, with the help of legal, title and escrow professionals, in my opinion. Most others should at least talk to several agents, discuss whether there’s any flexibility on commissions and be honest with themselves about what the prospect of marketing, preparing and selling the home DIY would really look like, before assuming that they’ll save a ton of dough by listing it FSBO.

All:
 What real estate rules of thumb have you heard?  Did any work for you, or prove to be completely off-base?  Do tell!

P.S. - You should follow Trulia and Tara on Facebook!     

Comments

By Mike Harding,  Wed Mar 21 2012, 22:28
I am not sure if it is a rule of thumb but it does fall into the category of completely off base is “well since it is a bank owned property, the bank probably just wants to get it off the books; so we want to write a low ball offer”
By Rachel Cheeney,  Thu Mar 22 2012, 10:19
For sellers, I'm all about "sweet spot" pricing (way too many potential disappointments are lingering out there when there's blue-sky involved). And buyers (you know who you are..) who know the value and competition of the home they're writing on and STILL low-ball the offer until forced into a "highest and best" situation, or lose out all together by someone a bit more serious (and dare I say savvy?).
By Ann Griffin,  Thu Mar 22 2012, 10:28
Nice article, Tara-Nicholle.
By Narinder Singh,  Thu Mar 22 2012, 10:30
Tara great article like always.
By Dave,  Thu Mar 22 2012, 10:30
In the past couple of years, I have made dealS with the ownerS in person, shook hands, agreed on price and terms, and had the real estate agent blow the deal out of the water. A real estate agent's priorities are:
1. Get paid the commission at closing, and 2. Prevent damage to the comps for the area. The property can go into foreclosure and the owner into bankruptcy with less damage to the real estate commerce in the area than to write up a No-money-down, Owner-carry deal. I was a licensed real estate agent for a couple of years a long time ago, and for that reason I avoid MLS listed properties. A person with enough smarts to earn the money to buy a house is smart enough to figure out how to get a closing agent at the title company, assemble some documents, and record some papers down at the county. The notion that someone should pay somebody as much money as they paid on the principle of their mortgage in the first 2 or 3 years of mortgage payments for shuffling some papers and making some phone calls to get somebody else to do all that anyway because they are incompetent is probably often true, but it is not universal.
By Dan Foreman,  Thu Mar 22 2012, 10:35
Agents get a ballpark idea of what, say, a 2 bedroom has sold for in your neighborhood and advise clients to ask for that sale price for your 2 bedroom. But they don't compare features and renovations. Or the fact that people sell for different reasons.
By Gillatine2,  Thu Mar 22 2012, 10:43
Interesting article, but I'm always skeptical of clear cut answers. There are always exceptions and loop holes. I think the best rule is to treat each sale or buy as if it were your first. Homeowners should never take anything for granted as well as prospective buyers. The best approach and fact is to be as thorough and prepared as possible (do your homework) before buying or selling.
By Nancy Johnson,  Thu Mar 22 2012, 10:53
This is a good site for customers.
By commercial appraiser,  Thu Mar 22 2012, 10:57
Spoken like a true salesperson.
By Don Coughlin, J.D.,  Thu Mar 22 2012, 10:57
I've been listing and selling real estate for 20+ years and my priority has always been get the best deal I can for my buyer or seller while making the transaction as smooth as possible for them (that can mean pretty bumpy for me and a 24/7 availabilty). All of my business is from word of mouth referrals from happy clients. There's a lot more to it than making a few phone calls and shufflng a few papers around. If it were that easy everybody would be doing it!
By Mjmies,  Thu Mar 22 2012, 11:10
I'm considering FSBO rather than listing with an agent. What are some good sites that allow FSBO listings? This one here doesn't.
By Gina Mcglashen,  Thu Mar 22 2012, 11:12
This is definitely a pro- agent article. Commissions vary from state to state, but if I am going to pay someone well over a thousand dollars ( at the least) to sell my home, I expect more than paper shuffling and showing up at closing.I expect an agent to contact me when a prospective property is available, be prepared with answers concerning the property itself, and have all the information about the property regarding taxes, available lending or any other pertinent information. Property taxes to me, is an important factor,and for an agent to tell me it varies and the reselling of the property changes the tax rate is not good enough.They can not find out if a home sells at market value what the estimated tax will be within the year it is sold? I really hate those kind of surprises. What is the average cost of utilities in the home may not be at the top of your list, but when a home has a dual heat pump and it is an older structure...ask, and expect an answer. How many times has this home been bought and sold? If an agent can not get these kind of answers for you and other answers that may concern you personally, sell the home yourself, pay the lawyer and be prepared to get information that is usually publicly available Remember,.In most cases it is the agent that wants to sell a property more than you want to buy , and it his business to create that "want" element.
By Harry Tomlinson,  Thu Mar 22 2012, 11:15
Dave,

Being a real estate agent for a couple of years, a long time ago, isn't the same as being an RE agent today. There is a lot more to it than "shuffling some papers", and making "some phone calls". Organizing a myriad of disclosures, inspections and their reports, offers and counter-offers, acquiring signatures, and trying to keep your client happy and informed takes a considerable amount of time for each deal and can be quite stressful. It takes knowledge, physcology and a "can do" attitude to do it today.
Also, the costs to be an RE agent in good standing, today, are substanstial. National Association dues, local and state association dues, MLS dues, lock box fees, E&O insurance, continuning educations costs, advertising both listings and yourself, and taking classes to keep up to date, add up. Then, of course, there are liability concerns.
And much of what Tara had to say about not coming out ahead when doing your own sale is true. A buyer will almost always ask that a FSBO seller discount the price for what would have been the commission amount, because the seller supposedly doesn't have to pay a commission.
Private citizens don't repair their own appliances, draw their own wills, don't diagnose their own health status, etc. They leave it to the professionals who know what they are doing. I submit the same applies to Real Estate. Leave it to the professionals.

Harry
By Janice,  Thu Mar 22 2012, 11:17
Thank you I had a location in mind, but considered changing zip code area for better housing, but now I see Location is most important and everything that I need in is the area I need thank you and have a bless day you have saved me me gas a headaches
By Jon Williams,  Thu Mar 22 2012, 11:21
"...the data is unequivocal: homes listed for sale by owner (FSBO) simply sell for less than similar homes listed by agents." Where is this data?
By Nirmala Caraballo,  Thu Mar 22 2012, 11:22
Well said. As with all things. Real estate is not a cookie cutter issue the same with most things in our life. Each transaction will be different. I have had clients that insisted on purchasing a home for a certain price on in a specific area and then change their mind. As with most things buyers and sellers have to figure what works best for them in their life and go from them.
By Elaine Lane,  Thu Mar 22 2012, 11:26
A lot of trashing real estate agents in the comments above. It is possible for a person to FSBO and handle their own transaction, but like the old say goes, a lawyer who represents himself has a fool for a client. Same goes for a real estate transaction. We are highly trained and educated constantly. We don't take a stab an offer price, but our recommendations have to be in a price range and the buyer has to make the decision. They should also listen to our advise pertaining to the particular transaction because we are right more times than not. The average person enters into a real estate transaction once every 5-7 years. We do this all day long every day of the week. Don't you think we might just have some expertise?
By Nicole Callender,  Thu Mar 22 2012, 11:28
I am an agent and deal with many For Sale By Owners who believe that the transaction is as simple as putting a sign in the yard and waiting for the calls? How do they weed out the lookers from the buyers? What if there is a problem with the transaction? An issue with the title? How long will they take the home off the market before the "buyer" bails. I have heard some horror stories from people who bought or sold without an agent to save money. Certainly there are some people who have handled the transactions on their own without issues but many more underestimate the time and costs involved and end up paying more than it would cost to let an agent handle it. As in every industry there are some bad agents out there but no one ever gives credit to the ones who provide excellent customer service and care more about the customer than adding twenty bucks to their commission.
By Joanne Bernardini,  Thu Mar 22 2012, 11:36
When you consider what a FSBO owner will pay for his advertising, Lawyer, MLS Fee and then having to take time off during the work week to show his home, they would be better off letting a real estate agent do the work, get them a higher price and prequalified buyers that won't waste their time!
By Jeff Shook,  Thu Mar 22 2012, 11:36
There are 2 camps the FSBO folks and folks that have had success with a Realtor. I'm a lender, I see a ton of transactions, from my point of view a seller is going to get a REALISTIC assesment of what's happening in the market place from a Realtor that is full time and doing transactions. The seller can take the advice and price their home accordingly with commissions in mind, the success rate of having a Realtor is proven to be a faster smoother transaction for the seller. Many do lead capture and follow up that most homeowners aren't prepared to do or handle. The entire transaction start to finish is like a mathematical algorithm, one thing changes everything. Unless you do this for a living sellers will usually end up wasting time and house payments interest waiting for the perfect buyer going FSBO. Its still a buyers market, get a pro and evaluate the real story and then figure out if the dollars make sense to you. We're in the spring market and buyers are out there, if your positioned and marketed correctly now is the best time to sell!!!!
By Lisa Aguilera,  Thu Mar 22 2012, 11:38
Definitely agree with all of these points. #4 is one of the hot topics in our California Central Valley Real Estate market. Tracy and Mountain House are hot areas with multiple offers coming in on just about every property in the first 24 hours on the market. I keep telling my clients that the deal right now is having an offer accepted, not the lowest price. There are too many people competing for the limited inventory.
By Wes Black,  Thu Mar 22 2012, 11:40
This is a very thorough overview. Thank you Tara for keeping us educated.
By Debbie Taylor, CRS, CIAS, CDPE, REALTOR,  Thu Mar 22 2012, 11:41
I agree with all points, too many people competing for limited inventory!
By Laurie Kelly,  Thu Mar 22 2012, 11:44
Well said, Harry! Most of the public does not realize what the Real Estate Agent does behind the scenes. One very important thing we do behind the scenes involves constant communication with the mortgage co.,inspectors, appraisers, closing co. and others involved in the transaction to ensure it closes in a timely manner for everyone's benefit. Most also think that we get all of the commission on the transaction. For example, a 6% commission gets divided in half (3% to listing side, 3% to buyer's side), then the agent gets paid a "split" from the Real Estate Broker based on what they negotiated when brought on board. We work very hard for our money!
By Miltongalfas,  Thu Mar 22 2012, 11:44
Truth is the uneducated Real Estate Agents are extremely overpaid. They reccomend prices but if they really knew what the price should be then they would not be a salesperson. It is regrettable that real estate has tripled in price and commisions have too. It is not worth $18,000 to sell a $300k house. They should work on a sliding scale like %3 under $150k and %2 after that. That would be fair. but 6% for the same number of hours work as when the house price was 1/3rd the cost is a very damaging raise in income. If you do not believe me then why are we in this mess right now?
By Josey Cabaj,  Thu Mar 22 2012, 11:50
Good Points! Shows how valuable a good realtor can be!
By Virginia Lawson,  Thu Mar 22 2012, 12:01
As a former RE agent, I will attempt to sell my home on my own BUT only to a buyer with a Buyer's agen to whom I will gladly pay a commission, even .5 above the going rate. I'm in a good area (University, but not too close!) and will low ball the price after seeing the comps.

I'd say, interview several agents get recommendations from friends and neighbors
By Scott B,  Thu Mar 22 2012, 12:01
It seems that in light of the housing bubble and subsequent recession, there should be some "rule of thumb" attention focused on afforability. Of course, ultimately housing affordability is subject to a person's specific budget, but some rule of thumb boundaries likely could have spared some grief. For example: limit the house price to a certain multiple of your annual income (say, 3x, depending on the prevailing mortage rate), or limit your monthly house payments (PITI) to a percentage of your monthly income (say 30%; mortgage lenders should be doing this for you in the loan approval process, but it is good for the buyer to understand what number may be right for them).
By Drew Klofta,  Thu Mar 22 2012, 12:07
I have sold the last 4 homes by owner. As long as you are not in a big hurry, it will sell. There are obviously some
marketing technics, like de-clutter and curb appeal. One home I sold, a realitor appraised at 179k, then I sold 2 months later (fsbo) for 210k. No doubt, you need to do some home work. Comps are important when pricing. The title company actually does most the financials, pro-rating taxes, fees. You still have to settle with buyer on the agreed upon price. So I say, go for it.
By Birdwatcher,  Thu Mar 22 2012, 12:17
I have the greatest respect for those real estate agents who are truly professional. Unfortunately, there are many in the field who are considerably less than that. I think the greatest challenge to a homeowner who wants to sell is separating the two in order to find the able agent. Incredibly, even ostensible references do not always guarantee a good representation. As usual, experience is the best teacher.
By Ellisaana,  Thu Mar 22 2012, 12:33
The real estate professionals will tell you that going FSBO is a bad idea.
If selling FSBO at an advantage is an exception, it has been the exception for us, not once but 3 times.
Selling a home is all about the right prep and doing your homework. My husband sold 2 different houses FSBO, both sold in less than a month and he got top price for each. The secret? First, he ran his own comps and knew the neighborhood, so he set a correct price. Second, the houses showed better than the competition, because they were empty, spotlessly clean and freshly painted in understated pale colors. One buyer remarked, "At least it isn't that awful real-estate white. We can move our furniture in and start living here right away."
The third house was one my siblings and I just sold. Its sale prove point one.
Nothing trumps location.
Our mom's house was an end unit one-level townhouse in a small adult community in a small town in Virginia. After she died, we cleaned the house and decided to have a walk-through estate sale to sell the contents. We put a free ad in the local paper for the sale, "everything goes, including the house." We planned to put a 'for sale' sign on the garage door. Instead, the sign we posted said 'house sold.'
By the night before the estate sale, we had already received 3 offers for the house, all of the offers were at or above our asking price. On the morning of the sale, the offer we accepted was from a seller who had been pre-approved by her lender. The sale price was slightly above assessment, but she wanted the house so badly, she made up the difference. Our attorney handled the home sale and the estate settlement.
By Mark Forror,  Thu Mar 22 2012, 12:35
Good article, Tara. Whenever a rule of thumb starts with an absolute such as "always" or "never," you already know it is not true. Nothing in real estate is black and white. I see buyers trying to low ball REOs and short sales, which is always amusing, unless I'm representing them. @Drew Klofta: I'm happy you have had success selling homes as a FSBO, but you are the tiny minority. Fewer than 12% of FSBOs ever sell, and that's in a strong market. I have seen many, many FSBO sellers make terrible mistakes in marketing, and in almost nine years of practice, not once have I seen a FSBO seller make all the required disclosures. That 2% you're saving today may end up costing you 20% tomorrow if you are sued. Right now, in our region of Virginia, owning is definitely cheaper than renting. Two reasons for this: Buyers buying now are buying at prices that are the lowest they've been since 1999. Most landlords who are renting are doing so because they are upside down. They have to have a high rental price just to cover their high mortgage payments. In addition, with all the foreclosures in our area, there is fierce competition for rentals, which has really driven up rental prices.
By Andrea Brooks,  Thu Mar 22 2012, 12:41
Let's just say there are a lot of things I CAN do but DON"T do because 1. ) I don't do them often enough so I make expensive mistakes and take too long and 2.) I know I won't get the results I want.

For example, a couple of years ago we decided stain our cedar fence ourselves because we were sure it would be waaay cheaper than hiring it out. Well guess what...we didn't have all the equipment we needed so we had to buy that, didn't know that we needed to power wash first, didn't know the best type of stain to buy and didn't know the most suitable color to use. There were lots of sites online offering advice but we weren't sure if it necessarily applied to our specific situation so we just guessed for the most part. Of course we made a horrible mess of it all and wound up hiring a fence staining company. How embarrassing to realize that it would have been a lot cheaper to use them in the first place. Less in fact, than what we'd already spent on DIY material. Surely you see the parallel...

Realtors play an indispensible role when one is buying or selling a home - I've saved my clients thousands of dollars and hours of time and heartache by providing professional guidance and support. No one has ever once said I was an expensive, useless part of their home sale.
By Kathy Beata,  Thu Mar 22 2012, 12:44
Great Article. After reading some of the comments from the public, I find it quite alarming. Those who think agents are not worth their hard earned time, I can't believe it. The real problem I see with FSBO's are that they could care less about the neighborhood. They sell to anyone at any price they can get. 9 times out of 10 the buyers become sellers in a short while and are forced into a short sale or bankcruptcy because they were not screened properly. I have been a realtor sincce 1998 and a broker/owner for nearly 5 years. I can proudly say not anyone I sold a home to has gone into jeopardy from the loan oe the home value.
By Daniel,  Thu Mar 22 2012, 12:45
I agree birdwatcher. I was taken by a Rose and Womble agent in Virginia Beach. He left town, but the agency was only about protecting themselves. Lawyers to fight them were nearly impossible to find since so many of them are on their payroll so they "can't take the case"!
By Mark Forror,  Thu Mar 22 2012, 12:46
I'm seeing a lot of people putting forth anecdotal evidence that "we have sold our homes as a FSBO successfully several times." What these people are forgetting is that real estate is cyclical. WHEN you sell is extremely important. I guarantee you that those people who successfully sold as FSBOs did so in a strong seller's market or a normal market. If they sold in a buyer's market there is NO WAY they could sell it on their own.
By Leanne Finlay,  Thu Mar 22 2012, 12:47
Nothing can replace good advice from a competent, experienced agent. There is no reason to be working with an agent that is unsure, unskilled or untrained.

For those who think it's better to 'go it alone', I'd love to have you interview the myriad of sellers I have worked with over the years who have been referred to me after everything went wrong with a buyer/seller transaction with no real estate professional involved.

Certainly some people can get their homes sold without an agent, but oh boy, would I prefer that people selling be very cautious in the process.

There are a great many very skilled agents. Ask your friends, family or even your employer for personal referrals. Interview 2 or 3 agents, if you're not comfortable, interview a couple more.

Tara's article brings up very valid points, and brought a good discussion forward.
By Yeah Right,  Thu Mar 22 2012, 12:47
Can you rely on a broker's advice? Fact or fiction? FICTION!! A broker does not have your best interest at heart. Don't rely on a broker's advice. Do you own due diligence. When it comes to buy versus rent, try this: http://www.clevelandfed.org/research/data/rentvsbuy/index.cfm
By Donna Ware,  Thu Mar 22 2012, 12:55
these all good points. if you are a buyer Do YOUR HOMEWORK know you agents credentials, if your agents recommends or refers someone to you in the buying process DO YOUR HOMEWORK. RE agents are trying to make a living like everyone else. Buying or selling know figures and worth by checking it out for yourself first.
Than ask question if you are not hearing fairness from an agent move to the next. I just purchased a home in a well sought after neighborhood. Asking price was $23,000.00 more than what I wanted to spend. Agent step in gave them my offer, they counter offered, I told the builder call me when he was ready to take my offer. she did her realitor stuff. They came back and excepted my offer. Several of the houses in that area are selling way more than mines (new construction.) I am happy with my realitor she did get me the best deal. taking in to consideration closing, PMI, down payments She worked all thoes things out. At the end of the day I walked away a happy camper. My house has been appraised way above what I paid for it.
By Mark Forror,  Thu Mar 22 2012, 13:12
Like Kathy Beata, I'm rather troubled by the general public's view of real estate agents. I think these suspicions about us come from an erroneous belief that agents "control the market." Not only is this wrong, and virtually impossible, but it would be a violation of antitrust laws if it were true. Agents come up with a price range for a listing based on recent solds. So these suggested price ranges are based on houses that have already sold. Agents are paid based on the sales price of the home. Why would we drive down prices, even if it were possible? Think about it for a minute: Real estate agents have taken a huge hit in income because prices in some areas of Virginia have declined by as much as 70%. Virtually all of them are homeowners and have taken a huge hit in value on their own homes on top of it. I have saved many people's homes from foreclosure because they came to me rather than listening to their friends. A woman who lost two homes listened to a friend who told her to "just walk away." She is now facing two bank judgments, each in the six figure range. Her chances of ever owning a home again are very small. If she had come to me, I could have gotten her out from under, stopped the foreclosures and maybe even gotten her a little extra money. I have done this many, many times for clients who needed help. Tell me that real estate agents aren't worth every penny they are paid in a situation like that. People also don't generally know that most of their closing costs, including their agent's commissions, may be tax deductible in the first year. The IRS allows this. Instead of complaining about how much you are paying them, why don't you use your agent's commission to get a huge tax refund at the end of the year? This is what smart people do.
By Loony,  Thu Mar 22 2012, 13:27
Sold 2 homes without agent, bought 2 homes without agents. Figured I'll give an agent a shot when we put our eyes on the 3rd house (shortsale), bad move. 20 years experience, blah, blah, blah, total screw up, not proactive, not pushy, bunch of excuses. Hired an attorney, ended up dealing directly with the bank, worked out a deal, closed....oh yeah fired the agent 2 days before closing. Saved 21K in comission fees!!
Do your homework and avoid the agents as much as possible, or at least read what you are signing.
By Magda,  Thu Mar 22 2012, 13:45
I tried buying a house that was a FSBO a couple years ago and never again! The seller was very unreasonable. She refused to negotiate and even after offering her full price she wanted to rent the house after closing without a lease agreement! I told her to keep her house and two years later that house still hasn't sold! I on the other hand am buying another house for the same price with the use of an agent. The whole experience turned me off to FSBO homes that I refuse to even consider them anymore for fear of dealing with unreasonable homeowners.
By Megan Lake,  Thu Mar 22 2012, 13:56
Thumbs up, Tara for a refreshingly realistic outlook on the real estate market, today! As a real estate expert in South Florida I find I service my clients with an honest and upfront approach to buying or selling a home which serves them best! Your advice on buying in the right location, pricing correctly, offer "rules", renting vs. owning - in the right situation, and FSBO are spot on and not always easy to hear, but necessary to get the end result the clients want. I would not be doing my job if I did not bring this kind of information to their attention. I find in the end that 99.9% of my clients are more educated and make better decisions for them and their futures.

One "Thumbs Up" I'd like to elaborate on is the FSBO - this is a strategy of the past! Gone are the days when inventory was so low and prices soared that a home could be sold without the assistance of a real estate professtional. I recently contacted a FSBO property and negotiated a commission for selling their home. During the process, I coached the seller's on how to sell their property, protect themselves, and ultimately get the buyer to the closing table. The seller's did not end up saving money and instead had listed their property $20,000 dollars under the appraisal value. Next time, they will use an agent. During the transaction, I explained that there are typically 188 tasks involved with selling a home. It is a full time job. Most sellers have full time jobs or have childrent to take care of, so they can't devote the time necessary to cover all the bases. Also, selling your own home is an emotional roller coaster - after all it is the purchase nearest and deares to our hearts, so letting it go can be hard. A real estate professional can guide and assit sellers with ease and allow the process to be a positive one! This subject does get a little tricky, so I advise if you are thinking of selling - talk to an agent and explain what you are thinking - if he/she is right for the job then it will be a good fit and your home will get SOLD!
By J R,  Thu Mar 22 2012, 14:20
"Agents get a ballpark idea of what, say, a 2 bedroom has sold for in your neighborhood and advise clients to ask for that sale price for your 2 bedroom. But they don't compare features and renovations. Or the fact that people sell for different reasons."

Fact is, the bank doesn't care what upgrades a house has. When it comes time for an appraisal, they add very little for a mint home. Unless a home is a complete wreck, it's your comp. As for taking into account that people sell for different reasons. . . . LOL, that is the BIGGEST buyer myth I hear. Trust me, I've never spoken to a seller who said "I'm DESPERATE, I need to sell, I can't afford it, just sell it FAST!". The fact is, the people who are the most underwater or the most behind in their payments are the ones asking the most inflated prices. I wish I had a dime for every time a seller said to me "I'm not like other sellers, you know. . . I don't HAVE to sell, I can wait." Just about every single one of them tells me that.
By Sushi,  Thu Mar 22 2012, 14:24
From my experience, I feel both sides are right. Having an agent can be a good asset but it some cases they do not deserve the 20K commission collected. It boils down to finding a knowledgeable agent who will work hard for your interest. Any good tips on how to interview and select a good agent?

That part was hit or miss for me and I had to try them out few weeks to know, but I rather work w/ a good agent from the beginning. It never pleasant to have to part w/ an agent. I dont seem to have an eye to distinguish the good from bad as some of my agents (who I thought were good and recommended by friends) didn't provide much value at all besides driving me around and open the lockbox.
By J R,  Thu Mar 22 2012, 15:04
Sushi, talk to their former clients, or get referrals from your friends. And be honest with them if think they're not doing what you want, or doing anything at all, TELL THEM.
By Megan Lake,  Thu Mar 22 2012, 15:17
@sushi-- the commission structure is based on the sales price and experienced agents earn their pay. In order to find a good agent there are a few things to note... Hire an agent who works full time and has 5+ years experience in the location which you are looking to buy/sell. Interview agents to get a sense of how they do business and see if their style matches your style - you will be dealing with them a lot during the buying process. Next, look for referrals for the agent from friends and colleagues in your area. Settle on an agent who will go above and beyond to meet your expectations and satisfy your goals!
By tdavis10550,  Thu Mar 22 2012, 15:22
In my view the truth is somewhere in the middle. Agent , Brokers , Buyers and Sellers are not equal. They like people you work with on a daily basis are all over the map when it comes to abilities, skills and their being able to earn their commission or reasonably price and sell a property. I have been in 3 of the 4 positions and don't see anything that complicated. Yeah Harry believe it or not your list of what agents do has not really changed that much although prices of homes has, even with the recent draw backs most of us have experienced. My advice to sellers and buyers would be consider the source in what ever you do. If the person giving advice has something to gain its most likely slanted in the direction they are standing closest to. Just like doing your taxes its not that difficult. I would think most title companies would also help a seller considerably if they needed it. They are experts also and deal with legal transactions every day. In reality they deal with most of the paperwork anyway. Know your own limits, get some references and check them out if your going to get someone else (Agent) to do the ground work for you. Good luck and try to keep your emotions out of the transaction.
By Leianne Messina-Brown,  Thu Mar 22 2012, 15:23
I agree with LOCATION, LOCATION but what I think should also be emphasized and buyers should take note when they purchase a property is LOT, LOT, LOT. If you've taken note, a lot of the foreclosed properties or builder "enclaves" that have gone into bankruptcy are new homes on zero lot lines, no backyards (kids, dogs, relaxation). Most human beings want a nice, USEABLE yard, it doesn't have to be huge but unless you like true city living, most homeowners like a little personal space, I cringe when I see these "nice" homes on top of each other. I don't want to be stuck inside my "beautiful custom home" simply because I have no outdoor space to enjoy. It seems the builders are more concerned about squeezing out the maximum amount of homes in the smallest amount of space and now those "master planned communities" have become ghost towns. You see them all over FL & NV.
By Trish,  Thu Mar 22 2012, 15:36
why is it that so many realtors discourage you from buying a foreclosed home. If they are so hard to buy how is the bank going to get rid of them. They only have an 8 year supply.
By Igor - Realtor, Broker,  Thu Mar 22 2012, 15:54
There is one big disconnect going on between the various sides in this discussion.

While the Florida market might be a buyer's market, where it may be extremely difficult to sell FSBO, there are markets around the country such as my own in the SF Bay Area, where it is not at all difficult, AS LONG AS you list the home on MLS. Our inventory is half of what it was same time last year, and our number of buyers are doubled.

Now this doesn't mean that FSBO is the way to go, since with anything there is a tradeoff. What you may gain in a 2.5% commission savings, you will lose in your time, your energy, and the risk of potential law suits from underdisclosure.

That being said, as an agent, I think FSBO makes a lot of sense for CERTAIN home owners in CERTAIN market conditions.

On the flip side, did you guys see the article where the founder of the For Sale By Owner site, sold his home with an agent paying 6% commission after not being able to sell it on his own :-) http://www.dailymail.co.uk/news/article-2022112/For-Sale-By-Owner-founder-sells-home--using-real-estate-broker.html When interviewed, he claimed it was an "agent controlled" part of town ... which is another concept I find hillarious.

I wish I controlled parts of town ;-)


Anyways, if you want to do a FSBO, do your research, because it is in certain cases the right move. In most other cases the risks outweigh the potential benefit of saving money.
By Nigel Hanbury,  Thu Mar 22 2012, 17:06
I am in my fifties and live and work in the Uk and love the USA and American way. I have just purchased a modest house in Henando and await it closing.
did not want to be near Disney and the purchase is a normal family largely American populated area with separate block homes with pools on 50% of them it has an 800 sq ft lot.. I started looking five years ago when I had no money. 2006 seemed the high price time with sales there as the UK. I purchased on the internet a fortnight ago and used listing book and trulia ect. With a few visits to the states only, I looked all over Florida and would have considered anything to buy. In the end by looking in one or two counties only and speaking to several agents that were willing to help gradually I felt comfortable buying from my front room with no visit at all. When looking after seeing anything I liked, my first thing would be to check the crime around the house. If a red solid area was there with lots of serious incidents I would just move on.

In my price range $60 to $75k nothing is perfect but some way better than others. Agents have varied a lot. Some agents have been really helpful and friendly regardless of whether they make a sale.

One comment I would make is that I have in effect had a buying agent who has had to deal with the selling agent. This was a little awkward at first. This system seemed to waste a lot of time with communications having to be done through my agent and no direct contact encouraged at all for me. I accept that the loyalty is different for each now. Although everything is fine and is proceeding with everyone happy I would comment as following.
Someone from outside the US might ask what seem to be difficult questions or ones that may not have needed asking if it were a native buying. So please give a bit of slack to us. My real point is that by asking the seller agents certain things like "who are the utilities with" "any disputes or problems with neighbors" " do no fences matter with the boundaries" many of the questions are just for reassurance from a stranger like me. The questions are asked not to try and trap the seller but rather help the sale along if answered properly and clearly. The title company people Tropical have been brilliant and really helpful and fast with all figures clearly shown well before being needed.
My house was priced at a reasonable price for area but from Christmas had gone from $100,000 odd down to $75k in big steps. With someone having to move it was sold with an offer of just under 70k with all of us happy.

One thing for agents. Many have said in the last month that more buyers are after each house which I do believe.
This includes short sales and bank with offers often above asking price. I felt a certain pressure in last weeks with feeling that if I did not buy now it might get harder to get a house at a decent price. I was glad no one was thrown out of the house I purchased and I feel for Americans and others losing their homes.
Last point.

Many agents never answered the phone or returned e mails and lost a real cash buyer without knowing it.
General point. Both in UK and the USA My many* recent letters and e mails sent to request a mortgage with a third deposit with only average credit score get no response at! I would have considered another property to rent out.

This really surprised me more than anything else???? regards to all Nig UK

PS The internet is fantastic, best thing in my lifetime OH and the moon landing.
By Victoria,  Thu Mar 22 2012, 17:37
Others here have likely ignored Mjmies question asking where to find a site for selling by FSBO, likely because the question is so obvious. Mjmies, have you tried fsbo.com??? Also noticed is that almost two months ago you inquired about how to link your home to Trulia? I am not a real estate agent, but you have missed two months of having your home in the MLS, valuable months if you really want to sell your home.

I believe that most buyers, although it is human nature to want something for less, feel safer, more secure in the process of a purchase if it is not a FSBO. Of course, if you don't have an experienced, seasoned agent, there are things that can be overlooked for the buyer, and that did happen with the last home I purchased. In that case, neither the Seller nor the Buyer had good agents. This house sat on the market for a year while in front of the house was the sign and a black and white picture of what was sitting in front of the prospect in real life in color. Not a single photo of the interior of the home, and the best selling feature of all, the view, was mentioned briefly in the description but no color photos, and the view could not be seen from the street. I was shocked when I walked in the door and fell in love with the privacy and the view. Next thing I noticed at the closing table was the one percent higher rate the agent charged the buyer. Either he didn't read it before he signed the listing agreement or in that long year, he simply forgot. When he questioned her at the table about that higher percentage, she stated in front of all of us that ALL of the homes in this area were charged that percentage, that no one really liked to come here to sell. (It's about 5 miles out of the city limits). After the closing, I looked at the comps over the last 6 months, because this agent was already slack, to me, and I hadn't hired her. I just wanted to see if she was telling the truth. NO, every single home sold in the past months had the same percentage fee that is typical. So, she pulled one on him plus didn't market his home, just let it sit here with not marketing it properly. Then, my agent, a new one, didn't bother to make sure I was protected. There was not a termite letter. The home inspection was done by the same inspector the Seller used only a little over a year before. Unfortunately, it took months for us to discover things he had not listed, windows that were out of square, would not stay open, some would not stay closed, inspection of the roof done from the deck (we had to replace a rotted place ,this man did not get up on the roof for the inspection, but we didn't discover this bad place for over a year. We had no leaks, so it was there all the time. Nothing was disclosed about a leak in the downstairs bath that had damaged the wall and cabinet that a good wood filler and paint had camouflaged, something we would not see until much later. It is hard to see a lot of things like this, so to me it is up to the agent to be sure they are getting a professional who will find these potential problems and not use someone the Seller knew. I didn't find out about this connection until a long time later.

If you think these are problems, consider both the Seller and the Buyer had representation. This should make people think really hard about trusting just the owner and yourself to know that all has been done properly....but it also should make you realize you must find a trusted, experienced agent. Of course, every agent is new at some point. In that situation, I, as a non-agent, highly recommend using, if newer, an agent who has partnered with one who has an excellent reputation. As much as I would love to save that commission, I would never give myself enough credit to assume I could do it on my own. Yes, there are situations where with the help of a good real estate attorney, you might do it, but you still are going to pay, so why not just let them take care of it for you...but do some background work yourself to be sure you are getting a good agent and a completely honest home inspector. Oh, yes, mine had his inspection done up very professionally with all the pictures in his nice binder, but
that was all he did that was professional. If I had to guess, and this is pure speculation, I would venture to guess this inspector saw these things in the home when he first inspected it less than two years before, either assumed they were taken care of or was paid to overlook them. Thus. even though not a FSBO, this home didn't have a good sellers agent, nor a good buyers agent nor a good inspector. BUT, I still would not sell FSBO or buy FSBO, for I do feel this happens, but it does not happen in a high percentage of sales. Perhaps I could have come back on them in some way, but I felt by the time we found these things, it simply was too late to try. I had learned since that time about the real estate agent and her other "doings" meaning her interests were divided. My young selling agent was no longer in real estate, BUT the home inspector is, and you can be sure I would never use or recommend him. WOM, especially in a town the size of Aiken, proves to be very effective. I'm still in the home some 10 years and $24,000 poorer in repairs, although I do have a roof that is not rotten, a bathroom with a floor that is no longer wet for so long that it actually crumbled after it dried. Too much in it now to sell it with the value having dropped due to the economy. Good thing I love my privacy and the view :-)
By Jack Watson,  Thu Mar 22 2012, 17:56
I have been investing in Real Estate for 30+ years and decided long ago that an agressive RE agent is the best way to buy and sell. FSBO homes that I have looked into have usually been overpriced for the market and someone that is actively working with a RE agent is not going to be shown the FSBO homes in the area.. Tara seems fairly accurate on all 5 points, in my opinion. I am amazed that more people are not buying and renting out homes and apartments...in this economy there are lots of bargains.
By Jackie Dae,  Thu Mar 22 2012, 18:54
Interesting reading these various points of view! As a former Realtor and soon to be seller of a home I find myself trying to decide if I want to FSBO it or list it! Before you active Realtors get mad at me, I have no problem paying a commission! My concern is liability. I have an in-ground deep pool and my fear that a gate may get left open thus opening me up to a lawsuit if someone's child drowns. I'll probably list it and padlock the gates just for my peace of mind :-) On a different subject: Any Realtors on here work in Prescott Valley? I'll be there in about 2 weeks and need a Realtor!
By Efmallinson,  Thu Mar 22 2012, 20:02
Hi, I'm a licensed RE broker in the Philippines; it's interesting to read different viewpoints regarding real estate in the US. I have a high respect for professionals who do their jobs putting the customers' needs and interests above all. We pay CPAs, lawyers, doctors and other professionals, yes? So, I think that finding and working with professional RE agents who walk extra miles for buyers, giving factual and honest answers and contribute significantly on the transaction, deserve to have commissions if they work hard for their money. I think buying a home would be the biggest investment we'll do in our life, it's not a straight-forward transaction, I will leave it to professionals along with the involvement of lawyers. I also look at economic savings, not only the accounting savings; I may save money not using professionals but the opportunity costs maybe higher. On a different note, I flew to CA last July 2011 to buy a home in cash but the RE agent didn't even put my offer forward to the seller because she wanted me to offer higher, which turned me off and made me suspicious. There I was, a hot buyer with $180K cash to dispose and can do the payment via online transfers after all due diligence activities, but the RE agent can't be asked to inform the seller on my offer (selling price was $195K) and she couldn't even answer any of my questions such as schools, annual real estate tax and other legal matters!! These type of RE agents give professional ones a bad name!!
By Michael Musgrove,  Thu Mar 22 2012, 20:27
"We humans have a natural craving to simplify the complex."
Actually, I think we as humans have a natural craving to complicate the simple.
By John Crowe,  Thu Mar 22 2012, 21:12
Tough lessons learned by many buyers and sellers subscribing to the myths.
By Sushi,  Thu Mar 22 2012, 22:31
@Megan, thanks for the tips. What is the way to know if an agent works in the area we are targeting? I always thought agents dont choose their customers and the customers chose the areas. Thus agents have to work all over different areas and might not specialize in any.
When I interview agents, they are RE professional and far more knowledgeable than I am, thus they all sound great. and hard to filter out. But when we visit homes, I felt they are often unprepared and don't really know the neighborhood. Is it reasonable to expect the agent to answer questions like, how good are school in this neighborhood, what are the pros and cons of this neighborhood?
By Sukh Sagar,  Thu Mar 22 2012, 23:28
Unless half the world population is wiped out I don't think Americans will ever buy a cheaper property than what it is today.
Now not many buildings are coming up and land is hardly subdivided for housing.This in six years or will create
massive demand and properties that are sold like onions and potatoes today will hardly be affordable.Either buying or renting.Keep this article and prove me wrong in some years time.America has one very big problem and that is property taxes are extremely high and does not match market value thus making many properties unaffordable.Sagar
By Helen Oliveri,  Fri Mar 23 2012, 06:46
Great post Tara, and all very true examples.
By Darren Wilson,  Fri Mar 23 2012, 07:21
Regarding Rent vs. Buy

I am a landlord in Tampa, a city with one of the higher ratios of rent to. buy costs, and I am not sure I agree that renting is more expensive than buying (for most people). It's certainly not for those who want to rent middle to higher end homes.

If you are looking at cost of mortgage, taxes, insurance vs straight rent, then of course that may be less outlay per month than rent.

But tenants don't pay for most maintenance, cause wear and tear or damage they aren't responsible for, don't pay bills on a house when it is emtpy, and don't have a thirty year underwater liability hanging around their necks, preventing them from moving to a better job, better house, cheaper rent, etc.

What is the value of that? Before you discount it, count the number of people in foreclosure and the number of resulting bankruptcies, divorces, even suicides which could be traced to the collapse in housing values. Buying a home can literally trap you in the same place for years.

Renters have not really had to experience any of the fallout of this. And if their landlord went into foreclosure, they could just move out. There are plenty of homes for rent and rents are down a little despite what you read in the press.

I've got several homes rented and manage several more. There is a small return on investment in these, and we don't count on any real appreciation for years to come (real means compared with cost of inflation; it does me no good if my house doubles in value but the dollar's buying power is halved). But as far as who is getting the best deal? I think the renters who are doing best are those renting nice homes where the owners are underwater and negatively cashflowing (and that is a lot of them), but too financially well off to short sale or walk away. Some of these folks are renting at far less than owning, even at today's prices.

Don't get me wrong - I would love to see everyone start buying homes again "as investments" - it would benefit me.

But as far as renting versus buying? You are better off with Apple and Google stock and being able to move to Austin for that more promising job when your lease is up.
By Jennifer Evans,  Fri Mar 23 2012, 22:27
In answer to the FSBO questions: as quoted from Economist Commentaries, by Jed Smith, Managing Director, Quantitative Research, October 7, 2011:

"In 2010 for an arms-length sale, the median sale price through a Realtor was $200,000 for new and existing homes combined, according to NAR's Profile of Home Buyers and Sellers 2010. The comparable FSBO price was $155,700. Avoiding the commission results in a sales price that is 28% lower-- {Makes that 6% sales commission seem worth it, doesn't it with a 22% net gain?}

'ForSaleByOwner' is correct that FSBO's sell faster--but they neglect to mention that the faster sale is caused by significant under-pricing of the property, something a Realtor knows to avoid.

And of course FSBO's do actually sell closer to asking price--because the asking price is set significantly below market....

In fact, many FSBO properties are eventually listed with realtors in order to get them sold. Unfortunately, by that time, the properties are 'shopworn' and stale. Typically a realtor can get a better price than a FSBO, but the price is generally less than what could have been obtained if the seller had initially listed with a realtor." [End quote].

On the flip side, a great many FSBO's don't sell at all as they are often overpriced and underadvertised. I've known of many buyers who thought they were getting a great deal by avoiding commission that actually paid far too much for a FSBO home, because they didn't do the proper research. They are very sad people when it comes time to sell the home they paid too much for :(

As in every profession (doctors, mechanics, accountants, etc...), some people are competent, honest, and genuinely enjoy helping people, and some are not so good, lack integrity, and don't care about their client's best interests. Do your research, ask around, and interview several realtors until you find one you trust. The experience, knowledge, and expertise a good realtor brings is worth much more than any typical commission costs.
By roachm21,  Sat Mar 24 2012, 07:09
I have an agent. He is ok. I found the house we are closing on, on my own. I did ask my real estate agent to set up the initial viewing and he has helped me with setting up the inspections. What if at all any flexibility do have on his commission?
By Brenda Feria,  Sat Mar 24 2012, 08:00
If there is one thing true in real estate, it is that there is no rule of thumb. That being said, I do agree with your blog. Thanks for always contributing.
By Donald James,  Sat Mar 24 2012, 08:29
Thanks Tara. The rules they are a-changing! Thank you again for a great blog!
By Deemw1,  Sat Mar 24 2012, 10:09
i am a prequalified buyer and love having an agent. she does all the homework, the mapping , the talking to agents and community reps and i dont have to take the time and hassle out of my busy day to bother. I go online once a week and pick out properties i like on trulia and most re shortsales in tampa that are well priced. Im glad i dont have to deal with others emotions and issues relating to the homes. Plus MLS has details she makes chart and grapgs on each home---the seller is paying for her actually but i would even if the seller wasnt. I just put an offer over full price in on a home since a well priced home gets several offers in the first few days here
By Robin Ruth,  Sat Mar 24 2012, 10:43
The most important "Rule of Thumb" in any real estate market today, whether doing a FSBO or using a Professional Real Estate Agent, is that every single transaction will always be different. This applies to a simple purchase, a foreclosed home or purchasing a short sale home. If you are thinking of buying a home or selling your home you really need to do your research and know your particular area. There are many who are not professional real estate agents who will successfully sell their home for a good price because they understand everything that it takes to get the home sold and are willing to put forth the effort. Others really aren't sure where to start, how to understand the comps they are looking up or how to effectively market their home, or maybe they are simply too busy to deal with all these matters. For the latter individual I highly recommend hiring a Professional. For the others I wish you the best! Either way, seller or buyer, FSBO or Professional, make sure you keep an open mind about the home in question because outside of location there are no rules!
By Apae,  Sat Mar 24 2012, 10:46
As a multiple time home buyer and seller, I've seen many sides of this. I've successfully sold homes on my own, and I've had the pleasure of working with good Realtors and the expensive misfortune of BAAADDD ones. Based on personal experience and research, this is another one of those areas where the 80/20 rule applies. The hard part is that most home sellers and buyers don't really know how to find that good 20% and the 80% expect to get paid the same $18,000 to sell your $300,000 home. There is a reason that a recent study shows that less than 5% of Americans trust RE agents. When agents bring you offers and show you houses, but when you ask "what do you as the expert advise?" and they say back "I don't really have any advice," then I'd say they are way over paid. Too many agents tell sellers to "go low" because of the terrible market/competition/inventory, but then would tell same people on buying side, "oh, you can't expect a deal in today's marketplace, must offer asking, etc."
By the same token, an agent who really listens to their client and then ACTIVELY works to find the best solution for those needs/unique situation is worth every penny in saved time and frustration. For sellers, I suggest shorter contracts so that when an agent doesn't do all that marketing and active work promised on your listing or brings you continued non matches, you can go find one of the 20% who earn it. They'll argue they have to have that much time to sell it, but if more than average days on market in your area, why is that if they are going to do so much and priced your home right? Bail, and go to an agent that listens, solves problems and is willing to give solid advice rather than being a passive money collector/simply coordinator of admin.
By Dr Michael Okolo-1,  Sat Mar 24 2012, 11:20
Great job Tara. I hope 10% of Agents or more are educated like you. It will help the Real Estate profession. Just like most professions, very few are educated. Applied knowledge is real education.

Dr. Okolo-1, Pikesville, MD
By Michael Huffman -,  Sat Mar 24 2012, 12:22
Agree with #3, listing high ends up costing sellers in the long run because they miss the prime selling time. The more buyers that come in the door, the more likely you will sell the home. I personally prefer to price aggressively and stand firm on negotiations. You’re more likely to receive multiple offers when priced properly which usually produces a higher price in the end anyway.
By DeeDee Riley,  Sat Mar 24 2012, 15:44
Great post Tara, as usual and as one might expect lots of commentary pro and against. As mentioned, for those that have sold FSBO's in the past, the real estate market is constantly changing, as agents we keep up with these changes by helping buyers and sellers on a regular basis. I can say that the myth we all make a ton of money is defintely fiction.

Location is by far the most important factor in all real estate and those things mentioned here - the rental factor, whether the area is in a buyer's or seller's market, being able to sell it quickly and easily as a FSBO, etc.
By Scott Nowling,  Sun Mar 25 2012, 19:58
#2 above hasn't been addressed too frequently. If the past 5 years have taught us anything, it's that renting vs buying is not only an after-tax cash flow decision, it's ultimately about appreciation or depreciation of the underlying asset. If the market turns around, buying will almost be universally cheaper. Conversely, if the slide in the market continues, buying could be the most costly. Saving $300/month vs renting looks foolish if you're losing $10,000/year in home value. That said, I believe the market stabilizes and turns from here.
By Jennifer Ratcliff,  Mon Mar 26 2012, 02:40
#3 is always one that has to be addressed with Sellers.
By Vicki Coolidge,  Wed Mar 28 2012, 08:06
Great post Tara! I think you are right on the money on all your points.
By Bashkii,  Mon Apr 2 2012, 21:11
I totally agree with Sagar:
""America has one very big problem and that is property taxes are extremely high and does not match market value thus making many properties unaffordable. Sagar""
By Theresa Suslov,  Fri Apr 6 2012, 15:56
I was a real estate for less than a year. It is not an easy job, and I've come to respect agents - good agents that is.
By Sean,  Sun Apr 15 2012, 17:00
#1 is super true, there is nothing better for resale value than location. As we've all heard before, god isn't making any more land!

Sean - http://calgarypropertylink.ca
By Roncpulliam,  Thu Dec 27 2012, 16:29
Buyers are liars & sellers never tell the truth........in general is this true or false ?
By Jim Cramer,  Thu Dec 27 2012, 19:29
Great List - # 1 still holds true!

Thanks, Tara
By Voices Member,  Mon May 20 2013, 15:36
Every article that you write is excellent, Tara! Great job! Your synopsis of #3 is excellent!

David | http://www.atlantacommunities.com/
By Voices Member,  Tue Jul 9 2013, 11:15
Hahaha! Rules of thumb are so important in real estate. Great work, Tara! :)

David | http://www.battleborninjurylawyers.com/practice-areas/trucking-accidents
By Roy Bush,  Sun Jul 21 2013, 11:16
I had a buyer that wanted to buy a home in Arizona, but he had a Chapter 7 bankruptcy 7 months ago. I introduced a loan program at http://www.cfsflex.com, they allow a mortgage after a foreclosure, short sale, or bankruptcy. There is only a six month waiting period. This is perfect for individuals looking to become homeowners again.
By Voices Member,  Tue Aug 27 2013, 15:31
I love visiting articles like this because they not only offer great reading material but they offer a great venue for communication. I am a hamilton family dentist so this is pretty cool! :)

David | http://www.hamiltondentist.ca/childrens_program.html
By Michelle Courtney Defiore,  Tue Aug 27 2013, 19:41
It's more like tips for newbies on the real estate market. Well, rules of thumb are great and it helps you understand what's in and what's not. People who are planning to enter the real estate industry should know about this.

http://www.rwebay.com.au/1021261/
By Voices Member,  Thu Aug 29 2013, 15:09
Rules of thumb aren't dumb, especially if you are a bum. Thank you for the great article, Tara! :)

David | http://www.ushomewindows.com/replacement-windows-ma/
By Voices Member,  Thu Aug 29 2013, 15:19
I love seeing this type of article from you, Tara! Keep up the amazing work- I am very impressed! :)

David | http://www.quainted.com/products
By f2farhad,  Fri Dec 6 2013, 13:56
I should add here the I have sold my properties using " For Sale By Owner" and save big time on commission , it really depends how you approach it
By Grayflutes,  Fri Jan 3 2014, 19:54
I've bought quite a few houses and tried a LOT of realtors. My experience with realtors has changed dramatically over the years. In the last 10 years it seems that realtors are often not "full time" and also do not want to show houses unless you've pre-qualified, have done the leg work, found the house and are ready to sign. With that said, the last house that I bought that I used a realtor for was, well... TERRIFIC! I did not need to move - I was happily renting - but wanted to own IF there was a house that had EVERYTHING I wanted. I gave her a list and told her that I was not interested in buying the biggest house I could afford. She then sat down with me for about an hour and got to know me and my daughter. She told me about a new house that had everything on my list, but I didn't want a new house and it was a little too small, so she showed me a LOT of houses. She finally convinced me to spend 20 minutes just looking at the house she'd suggested. I LOVED it.

This lady's business is people. I was not merely a paycheck for her. She never once showed me a house that was more than I wanted to pay just because I qualified. She knew the city better than me, she took the time to get to know my priorities and she presented me with choices I wanted. THAT is a realtor that is worth her weight in gold. We're still friends. I love ya, Yolie!
By bramptonfarm@yahoo.com,  Wed Feb 5 2014, 19:50
I AM VERY IMPRESAD I LIKE TO SING IN TO
By Patrick,  Sun Mar 2 2014, 10:41
I would say another rule of thumb I abided by was working with a knowledgeable and connected agent can help you buy homes you desire at the right price. From my experience, this may or may not be true. My first home I bought after looking online, ultimately using an agent my friend referred me to. Lost the home even though bid was competitive. Second time, I ended up finding an agent from http://www.Upnest.com, and they matched me with a great agent that helped close the deal.

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