For those of you that list using one of these services; which one do you use and why?
Maybe this will help
43- Real Estate Agents
There are two types of real estate agents. The agent who represents the buying side, referred to as a Selling agent and the agent who represents the seller, referred to as a listing agent. Even agents get this mixed up so if you are confused don’t worry about it.
Let me first state that I am a Licensed California Broker and member of the National Associations Realtors Association. With that said I would not buy property listed in the MLS (Multiple Listing service) unless the listing price was sixty-five percent of appraised value or less. Here is the problem; properties listed by real estate agent tend to require both cash and credit to purchase. Both of which I do not like using when buying real estate. And although I could write low ball offers on properties in hopes that the seller would say yes I know from experience that if I used the money paid to the agents as commission for my own advertising I would have a much greater return. That being said, in a time when the REO (real estate offered) market has a high amount of inventory and is selling that inventory at greatly reduced prices then the MLS would be a great source for undervalued bank owned property. Also know that if a REO is on the market more than five days without multiple offers it probably isn’t a good deal. Good deals tend to be gobbled up by real estate agents in the listing office the first few days or by clients of the listing agent.
If you do plan on writing offers on properties listed in the MLS request to your agent that they request to the listing agent that they be present to present the offer to the seller. As long as the agents are Realtor members the listing agent must allow the selling agent the right to present the offer to the seller unless the seller has requested them not to.
When I resell property I always list the house in the MLS. Here is why. The highest and best use of your time is to constantly be making offers to buy houses at an equity value of 30 percent or more. Therefore if a good agent charges six percent to sell list your house, and causes it to sell, if you sold your house yourself then you would be losing twenty-four percent, besides there are over one million of real estate agents country wide. There is no possible way you can compete with their mass. Not to mention the fact that your house will be displayed on the MLS it is also displayed on hundreds of local, state and national websites.
When wanting to hire, or locate an agent to hire, there is a little trick you can use to find the right agent to use. Call your escrow company and ask for the sales manager. This may take a couple of telephone calls as these are extremely busy people, so don’t give up. When you finally do reach the sales manager, ask him, or her, to assign you a sales representative. Most of these representatives are very beautiful and friendly people, willing to do almost anything that is legal to earn your business.
Once you have a sales representative assigned to you, ask him, or her, for a list of the top five agents in town who understand real estate investment strategies and are the “Top Producers”. Interview them for the job of selling your property. The key here is that most “Top Producers” are listing agents and have a handful of selling agents who work underneath them. There are two distinct mind frames between listing agents and those agents who like to put buyers in their cars to drive them all over town and look at houses hoping they will buy a house. The “Top Producing” listing agent’s goal is to double end the transaction, thus making the entire commission. Also, these “Top Producers” have a fairly large advertising budget, which means your property will be advertised more than if you had hired the “Normal” agent. If you are going to pay the same, you might as well hire the best.
These “Top Producers” have also established a reputation for their abilities and have earned the respect of the real estate agent community for “getting the job done”, something that a less seasoned or new agent will not have. I guarantee that an agent’s reputation will either hinder, or help, you in selling your houses.
These “Top Producers” will not lie or over-price the property, whereas a new agent might due to his, or her, need for business or lack of experience. It isn’t uncommon for a new agent to over-price a listing to justify his, or her, commission to a seller and have that listing sit on the market. Although you are trained to guide him, or her, to list your property for the correct amount, this inexperienced agent has already over-priced homes so much that unfortunately his, or her, peers will not show your listings as often.
One more note, arrange to have the selling agent receive a greater portion of the commission. Most commissions are split equally between the listing and selling sides. However, it is your option and you should request a different split. I would suggest at the very least that you pay to the selling agent 3.5% commission and 2.5% to the listing agent. The reason that you will benefit by a higher selling side commission is the selling agent may be more inclined to recommend your property to his, or her, buyer when everything about the property is equal to another property where the commission is less. Let’s face it pricing concessions sell property.
Real Estate Commission Split Guide
3.5% to 4% to the Selling Agent
2.5% to 2% to the Listing Agent
You may also want to consider offering a “Close on Time” and “Full Offer” bonus to the selling agent if escrow closes according to the contract and the contract is for listing price. I suggest an extra $750.00. The extra $750.00 paid is a great enhancement and will put money in your checking account faster.
When you pick the agent that you are going to be doing business with I would want them to be a “Top 10 Producer”. Here is why.
• They can afford you.
• They have the infrastructure necessary to do multiple deals efficiently and without procrastination.
• They have access to and they do a ton of advertising which you could piggy back on… They typically buy full page ads and can sell/give you a small corner to promote your business, not to mention that they can advertise your resells more than by just using the MLS alone.
• They always want to double end the transaction, which means you have buyers agents “Pushing” your property.
• They know the difference between escrows started and escrows closed. Most new agents don’t.
• They are a source of funds when you need them for a concurrent close… The top ten typically make a 1,000,000 a year in earned commissions and most are extremely frugal. Having someone attached to the outcome is very nice.
• The perks they receive from the vendors will reduce your costs… i.e. free inspections, quick turnaround time etc.
• They won’t steal your deals or steal your business model. They are happy right where they are.
• They tend to see the big picture more.
• THE MOST IMPORTANT QUALITY; they have a reputation for getting the job done. Other agents know this and know when they enter a deal it will close. No BS
I have found that there are factors or characteristics that I want my agent to have, they are.
• Can the Agent do the Job at hand?
• Will they reduce their commission on the listing side and offer more to the Selling side?
• Will the field my referrals aggressively?
• Will they feed me the Expired list so we can co-market?
• Are they one of the Top Agent in their field? I would want top 10?
• Is their advertising Budget large enough to consistently run Ads?
• Are they respected amongst their peers and looked at as a “Gets the job done” Agent?
• Are they willing to and do they understand Investors Strategy?
• Do they have sufficient Buyers agent employed to double the transaction?
• Are their vendors willing to service my needs as aggressively as theirs?
One more caution, although I have owned a flat fee listing company it is not my recommendation that you use this type of service during all market cycles.
When it’s a seller’s market it is, at times, acceptable to use a flat fee or “pay for service” company. For example, you could use companies like HelpUSell, Assist2Sell, or the online companies such as Forsalebyowner.com. During the seller’s market, the demand on real estate is so great and inventory extremely diminished that a selling agent will show and sell these listings. Believe me they would rather not. However, they do understand supply and demand economics.
While these services may work well during a seller’s market, it’s not such a good idea to use them during a buyer’s market. Selling agents are less likely to show a flat fee listing because of the type of listing agreement these companies use. In California there are three types of listing agreements, “open-ended” listing agreements, “exclusive agency” listing agreements and “exclusive authorization and right to sell” listing agreements.
Open ended Listing agreement
An open-ended listing allows an investor to sell a property themselves. However, he, or she, could also hire a single or multiple agents to list and sell the property. Note: the MLS only allows a single entry by one agent.
Whichever buyer the investor accepts the offer from, that buyer’s agent is the only agent the investor is obligated to pay the commission to. The key advantage is that the investor is typically only paying half of the “standard” listing fee plus the flat fee, which is around $500.00. (The $500.00 is typically due at MLS listing input.) The reason is because the investor is unrepresented. Only the buyer has representation. However, if the investor finds the buyer themselves, the investor will not owe anybody a commission.
Exclusive agency Listing agreement
An exclusive agency listing is somewhat similar to an open listing with one major difference. That difference is if the broker, hired by the Investor, sells the property to an able buyer and the investor accepts the offer from said buyer, then the broker will represent the investor as well.
Thus, the Investor is obligated to pay the entire commission, both to the selling and listing sides.
Under this agreement, the broker may also cooperate with other agents and if the investor accepts an offer from a buyer represented by another agent then the investor is still obligated to pay both sides commissions.
Exclusive authorization and right to sell
An exclusive authorization and right-to-sell listing is the most commonly utilized listing agreement. It gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and selling broker fees. The owner cannot sell the property himself, or herself, without paying a commission, unless an exception is noted in the contract.
As you can see, an open ended listing agreement, the type flat fee or “pay for service” companies use, doesn’t afford the investor representation and because of this the selling agent inherently understands that they are going to have to do “More Work” then normal. Their broker is going to require them to produce the same disclosures that the listings agent would typically produce without compensation.
More words of caution, if you are not familiar with the disclosures or how an escrow works and are not at the very least “comfortable” selling your own property, then by all means hire a full service real estate company.
One last thing about using an agent to advertise your home on the MLS. Each time you list a property, have the agent send to you a printout of the listing and confirm that the information is correct. It is not that the agent is lazy or doesn’t follow up and follow through it is that you know your property better than they do so make a habit of confirming the information displayed.
WOW Michael.
Your amazing???
You take time to write these posts…whenever you did…
I read them months later…and Bang!!!you enlighten so many people…I goggled your name…Are you an author also???I really respect you …God give to those who help others…man …you give…God is good…Thanks Michael. Be Blessed always…
Coltrane…
It’s All Good Properties, LLC
Love the flat fee mls service. There should be many brokerages or realtors in your area that offer this service. We use them on all of our deals and save half the commissions.
Worth its weight in gold
Nate-WI
I ended up googling it and looking at about a dozen different ones and compared their services. They really range in price, what the offer, and even MLS access by region. From the conversations I had, I think these are the key:
- Price - I paid $275
- Listing Length - usually 3-6 months
- Region - Must be applicable to your regional or state MLS system
- Aggregation - Make sure that you listing is also aggregated to all the other 3rd party sites like Trulia, Realtor.com etc.
Also, in my area when the broker inputs your listing, they have to check a box marked “Flat Fee Listing” so other agents can see that this is not a full listing. I was told by another agent, that many buyers agents will avoid showing these homes, because they are trying prevent the proliferation of self listings…
I would not worry about the buyers agent not wanting to show the house because of the flat fee service. As long as they are getting there 3% that is all they care about. I hope that real estate agents go the way of travel agents very soon. Getting 3-6% for what they do (drive people around and submit contracts) is WWWWAAAYYY too much money for the actual work that they put in. I mean is there really anymore work that goes into selling a 300K house than there is selling a 100K house?? Nope. But as the seller it will cost you an extra 12K. Total scam.
Flat fee service is the way to go. Here in Texas we have some that even provide you with a showing service in their fee.