What Makes A Good Real Estate Agent?

Finding a good real estate agent who you trust and who is knowledgeable about a particular neighborhood or area is important when buying or selling real estate. A local real estate agent is familiar with the properties in that agent’s area. Choosing a company that has name recognition in the area is also important. There are usually a couple dominate brokerage agencies in most areas.

The difference between an average and above average agent is the above average agent makes a point of seeing all the new listings in the area and also makes relationships with for sale by owners. The agent will preview properties for buyers and also keep track of properties that are in competition with their own client’s listings. Being able to discuss and compare the different homes on the market and their features in order to overcome buyer’s objections and help sellers price their homes is what makes a great agent.

Real Estate BarCamp 2010 © by Nick Bastian Tempe, AZ

Agents also meet other buyers when they conduct open houses so that they always have a pool of buyers who are ready and able to purchase homes in the area when a new listing comes up. An agent who is on top of the market in their area is always one of the first agents to show a home when it hits the market. The best agents network with other agents in their company and with other brokerage firms to share information and help sell each other’s properties. Being able to match buyer’s needs with the inventory in the neighborhood and being able to price homes to sell is what sets good agents apart from the rest.

Choosing a Good Real Estate Agent

One of the best ways of selecting an agent is through a referral from a friend or family member. Or if you have had a positive experience with an agent in the past, you may want to contact use them again. Data taken from the NAR shows that 39% of sellers rely on a referral to choose their agents, while 22% of buyers used a Realtor that they had a used before. Out of sellers, 16% interviewed at least two agents and 18% spoke with three or more agents before making their decisions.

Other places to find a real estate agent include the local newspaper, Sunday open houses, driving around the neighborhood looking for signs, walking into the local real estate office, searching the Internet and using employer relocation company services.

Qualities of a Good Agent

  • Knowledge of the local market and market trends.
  • Does their own showings or uses an assistant.
  • Uses the latest technology.
  • Holds professional designations and specialties. What this means is the agent has taken extra education and training.
  • What type of technology do they use?
  • What professional designations or specialties do they hold? This means they have taken additional training.
  • Are they members of the National Association of Realtors? NAR members are held to a higher standard and a code of ethics.

When you have a good real estate agent, they are always putting their client’s needs before their own. A good negotiator is crucial and someone who is outgoing, social, has a great reputation and works for a reputable company are other characteristics to look for when choosing an agent. Also being able to overcome obstacles that may arise and being a good problem solver is a must.

Having the right agent representing you can make a huge difference in your real estate transaction experience. A good real estate agent will help save you money and time and make sure your real estate experience is a positive one. Above all, it is important to choose someone that you like and trust because you will probably be working together for at least a few months. If you feel confident that you can rely on your agent’s advice and that the agent is providing you with current information about market conditions, new listings, comparable homes that have sold and real estate trends in your area, then you know you have chosen the right person for your real estate needs.

The Single Biggest Mistake That Real Estate Agents Make

The single biggest mistake that real estate agents make has the potential to ruin their reputation and their business. The funny thing is that they probably don’t even know they are doing it. The reason they don’t see it is that they are looking at their business wrong, and as a result they are missing a bunch of business (and a chunk of money).

What I’d like to do is be open and honest about the mistakes I see real estate agents in my local area making. First, a couple of caveats: I’m no agent, realtor or broker. I don’t work with any companies in the industry and am a commentator on it. I’m writing from the perspective of a client, and want to share my experiences in the hope that what I see happening to the detriment to the local market stops.

Price Drop Ahead © by gtquast

The biggest mistake that real estate professionals make
One of the biggest errors that I see time and time again jumps out at me almost every time I see real estate marketing material. The irony is that the mistake is almost always made in an attempt to make more money for the listing agent – but it achieves the reverse. Instead of making sales, potential property buyers are actually driven away from anything that the agency has to offer.

I’m talking about price. The listing price is everything, a very important number. Let’s be clear though that this price is not altogether linked to the actual value of the property. The listing price is something different, but that’s for another article.

With the reduction of property values, inventories are lower and sellers who are actually in the market now really want to sell. So putting properties on the market at prices which don’t reflect the drop in values is completely counter-productive. It’s not half obvious either, as properties listed by other agencies in the area are listed at obviously lower prices, which are realistic and reflect current values.

Higher listing prices drives business away
As a potential buyer I will do everything I can to avoid an agent who has high listing prices. I’m not saying that I want bargain prices, everyone knows that the final price paid for the property will be subject to negotiation. What I want to see when I see a property listed is a price that reflects a fair appraisal – not a generous appraisal designed to make the seller happy to list with that particular agent.

Real estate agents need to think carefully when coming up with a listing price. Remember that that you want to attract buyers, sell properties and earn commissions – that’s your core business. If you do this well and efficiently then you will earn more referral business, make more money and have a successful business.

If, however, you choose to list properties at inflated prices that do not reflect the fair current market value, but rather a wishful thinking type figure – you’re doing yourself a dis-service. Be honest with your clients, the people that list with you. Tell them the truth about current market conditions and the list price that will attract potential buyers.

Finally, remember that every listing is a reflection of your business, your morals, and your skills. If your listings don’t reflect positively on your business, your business will suffer. Simple really isn’t it?

2 Key Tips for Creative Marketing in Real Estate

Creative marketing is not something you see too much in the real estate business – at least not in my experience. The reliance has always been on the tried tested and true method of hammering a sign in the front lawn of a property and wait for a phone call from an interested buyer. With the significant change in the real estate marketplace though, things have changed in the way that agents are marketing their properties too.

The general stereotype of the intrusive real estate professional who pushes the hard sell and wants all of your contact details so that they can badger you about your intentions is not accurate. At least not all the time. Sure there are some annoying agents who are pushy and cross the line, but there’s a bad one or two in every bunch, that’s business. The trick is to separate the wheat from the chaff and find a true professional who not only knows what they’re talking about, but who walks the walk and talks the talk.

Frame of mind © by kevin dooley

Think outside the box

A good way to recognise an imaginative real estate agent is by how they do their marketing. As he passed the proverbial torch to me, Jonathan was telling me about Carra Riley and her creative marketing efforts. In order to attract a bit of a buzz around a land release she was selling, Carra threw in a very interesting incentive to buyers- a red Ferrari. This seemed to me to be a little gimmicky at first – but the more I thought about it, the better the idea seemed. First, a red Ferrari is very rarely gimmicky – especially when it is given away. Second, it is a genuine incentive for real people to buy real land and grab a real bonus. It takes more than a ‘reduced sale price’ to get people interested these days.

It’s obvious that real estate is a little slow at the moment – and it is in times like this that creative marketing efforts usually come to the fore. ‘New low price’ will only get you so far in this market, and this sort of pitch is (to be absolutely honest) is old and lazy. Agents and brokers out there need to do something different to attract attention in the marketplace.

Be professional and approachable

Many professionals will tell you that the best form of marketing is word of mouth – it’s been that way for a long time and it’s still true today. If you have a good name in your industry, then people will not only come to you more often to do business, but because of the way they have found you, they will trust you more. This is a kind of vicarious trust. You are recommended by someone whose opinion they trust enough to seek it out – and you are the result of that query – that’s a very solid start to a business relationship.

How do you get business through word of mouth? It’s simple – be approachable and professional. Have standards and stick to them. Over time (it’s not instant, it takes a little time to build this type of a reputation) you will build a name for yourself as a decent human being as well as a good real estate professional. Do it well and people will recommend you to friends and family without even being asked. If you are patient, respectful and professional, you will do well in real estate.

If you are looking only for the sale and don’t focus on the relationship, then your business will fail. It may take a little while, particularly if you’re especially slick, but it’ll happen. Creative marketing in the real estate business is an absolute must, and it begins and ends with the listing agent.

Why ‘Setup’ Properties Erode Consumer Confidence

Earlier, I read an article by Kenneth Harney about ‘setup’ properties or ‘pinball’ homes that I felt compelled to write a response to. I found the article through Barry Cunningham, who posted a link to it over on Google+ (thanks Barry). The original article I read can be found here on the LA times site, and here if you prefer the Boston Herald. Although I promptly shared the article I still don’t feel that I said enough about this practice, there’s more to get off my chest.

Along with all the talk about what’s happening with property prices, and when values will start to go up again, there’s a real need to infuse some confidence in the industry in order for it to properly recover. IF the industry is to kick off again, we need people to buy houses – and not just investors and other businesses either – but actual home owners, owner occupiers. These buyers are the real key to the housing market, and they are the true barometer of where the industry is in terms of its recovery or otherwise.

Display Lounge © by mikecogh

So when I read about agents who have a property listed at an unrealistic price, and then use it to make the prices of other homes in the area seem reasonable (or even low), it smacks of bad business practice. It’s bad because it’s dishonest. It’s dishonest to the owner of the ‘setup’ property, to the prospective buyers, and the owners of other properties in the area. For the industry to regain its reputation and success, this practice must stop.

What matters here is the conduct of the agent. It’s the need for real estate professionals to look beyond the immediate sale, and take a longer term view of their profession, of their industry. They need to be prepared to do the morally correct thing and assign the correct price to start with. Naturally there will always be difficult clients who will insist on an over-inflated listing price – but that is their issue, not the agent’s. Why accept the listing to begin with if you are not going to try and sell it? If the plan is to use the property to hold up as a property not to buy, are you really fulfilling your obligations to the owner of that property?

I would really like to see listing agents be more careful in what properties they list – and the prices at which they are listed. Consumer confidence is a fickle thing, and is what will drive any recovery in the future. Using one over-priced property as a ‘pinball’ property in order to sell others in the neighbourhood at a similar price is not only unprofessional – it may also go against your obligations as an agent, depending on the jurisdiction. This practice is most certainly morally wrong – and is damaging to the industry as a whole.

6 Key Tips To Help You Sell Your Property Quickly

When we sell a property, we generally go through an agent, but it’s best not to rely on the agent to make all the decisions. It’s important to take control and make the necessary changes to ensure a quick sale. There are some things that you can do to help sell your property quickly – and not all of them can be done by an agent. Remember that your realtor is busy, and you are one of many property owners whose properties they are showing to prospective buyers. Take the initiative!

6 key points to help you sell your property quickly
Frankford, Delaware © by Lee Cannon

Research your local market

It still surprises me to find that many owners don’t research the local market beyond listening to property related rumours. When you are selling a property, take a look at what similar properties are also for sale in the same area, and for the same rice. Doing this will allow you to see what you are in competition with in terms of other properties in the same area and price bracket – and more importantly should also indicate areas in which you can improve your property to help get a sale quickly. What do the other properties in the same price range offer that you don’t?

Look at your property from a buyer’s perspective

While not an easy thing to do (and you may want to enlist the help of an impartial friend or random passer-by), this is crucial. Ideally your listing agent will do this, but sometimesit helps to hear it from someone else. So, do a walkthrough of your property with the person as a prospective buyer, and then ask for their honest opinion. It can be hard to really see problem areas with a property when you are emotionally attached to it, so a fresh look can underline areas for improvement.

Co-operate with your realtor

Since you have the property on the market, I assume that you actually want it to sell, right? To do that you need the listing agent to do their job – and that means providing access to the property whenever possible (within reason). We’ve seen many possible sales fall through because the agent could not get the owner to agree to a showing.

Commit to making improvements to the property

This ties in to the first two points, and really involves making the improvements to the propety that those steps identified as being desirable. They may be minor changes, such as replacing light fittings, or more substantial ones, like repainting, or installing a new kitchen or bathroom. Whatever improvements you make, you are improving the chances of a sale going through… but remember to be a little conservative and not over capitalize.

Staging is a winning proposition

There’s a very good reason that home staging is such a popular part of the modern real estate industry – it works! By getting rid of tired old furniture that just doesn’t fit a space, you are opening up your property for a better look, and more offers. Professional stagers do everything for you – the whole property made picture perfect to really improve your sales chances; but you can take a few tips to staging a home and do it yourself if you are a little disciplined.

Be open to offers

This is a very important point that a good many property owners fail in. While it is great to achieve your asking price, it is rare to do so. As a result, you need to be open to offers. A lot of owners will say that they ae – but in the same breath say “but I won’t go a cent under $X’. Really, that’s shooting yourself in the foot. In a buyer’s market you need to be flexible, and if I need to decide whether to accept an offer for $1,000 or so below my psychological minimum sale price, or to have the property sit on the market for another six months or more, I know what I’d choose.

As a property owner, selling real estate isn’t that hard – provided you are honest with yourself about your property and you trust the realtor you’ve assigned. These are just six quick tips to help you sell your property quicker – they are simple steps to take, but unfortunately so many owners miss out on selling quickly because they don’t do those simple things.

Do you have any tips to sell a property quickly? We’d love to hear them!

There Is Never A Right Time To Buy: Stop Fence Sitting!

There’s a bunch of chatter around about how the real estate market is rebounding, and how there has never been a better time to buy, but it’s misguided. What investors need to pay attention to is not whether it’s the right time to buy, or what the market is going to do; but rather what works in today’s market. Once you have been able to identify what is working, then you can incorporate that into a brand new investment business plan or adjust your old one and get going.

What I do like about the discussion of whether it is the right time to buy is the desire to take action, to get moving and get into the market again. That bodes well for the confidence in the industry generally, though it also indicates a bit of uncertainty. This is where the fence sitting comes into play.

IMG_0347 © by Eddie Awad

Why there is never a ‘right time’ to buy real estate

The perfect time to buy real estate will be different for a whole range of different people. To start with, there is no real point at which the real estate market bottoms out and prices start heading north again. Or rather, there is – but it’s not apparent when that is until we can sit back with a nice drink and say ‘Ahhh yes, that was it’ and then remark on how we missed it/made it.

If you have a solid real estate investment business plan then you will not need to worry about what the market is doing from day to day, because you have a solidly mapped out business plan that you adhere to. So that’s the first thing there is to say about the ‘right time’ to buy.

Secondly, the ‘right time’ to buy may well not be the same for you as it is for me. I might have very little capital to outlay and be reluctant to source too much finance as being too leveraged is not in my business plan. The next person though have be looking for cash flow properties and has planned to access finance wherever it is required – and has the team on board to make it happen.

You see, it’s the different styles of investing in real estate that will dictate the circumstances in which you will buy. You can’t let the market dictate your business decisions, or you will end up owning real estate you don’t want in areas you should not have bought. Establish and stick to your business plan and you won’t just be happier and more successful, you will always be in control, and know the best time and place to buy real estate properties that suit you and your purposes.

Property Renovators: Don’t Forget That The Garden Needs Attention Too

When you’re renovating a property, it’s easy to pay attention to the bathroom and kitchen – but the gardens are often a missed opportunity. Think about it – you’re a potential buyer driving up to a property which has been advertised as being renovated, but you see a house bordered by a garden that obviously needs some care and attention. I will always keep driving. It’s like displaying the most beautiful roses in a vase along with a bouquet of thistles – the effect is lost.

Whether you’re a professional real estate investor flipping houses for profits, or doing up an old property for re-sale as a kind of hobby, ignore the garden at your peril. The old adage around first impressions leave a lasting impression is true – especially for real estate. If first impressions don’t impress at all, then buyers and prospective tenants alike will keep on walking and take their money with them.

Suburban Garden Grass © by IainBuchanan

Simple, cheap and quick ways to do up a garden

Like a good real estate enthusiast and home owner (combined) you will want to add as much value as possible to the property while spending as little money as possible. Traditionally, we’ve been willing to spend money on new furnishings inside our homes, like upgrading kitchens and bathrooms – and we’ve even come to realise that even minor, more cosmetic changes make a huge difference.

Things like painting the walls, adding a little colour, changing light fittings and door handles all have a definite effect on improving the impression that the property makes. In the past, home makeovers have really started at the front door. We’d like to extend that starting point a little further to the property’s perimeter – the garden.

Firstly – get the lawn and weeds under control. This may involve ripping up ordinary grass and replacing it with a nice, healthy lawn with colour and vitality. If you have time, then sowing grass seeds are cheaper, but require a fair amount of care and time. Alternatively, you can roll out some turf and water it in for instant wow factor. Pull weeds out of garden beds and prune trees and shrubs to finish off this task. Now step back and admire the immediate improvement to the property.

Second – take a good long hard look at the boundaries of the property. Is there any fencing – and if so, what condition is it in? Most fencing could do with replacing – or at the very least, some patching up or painting, depending on the style of fencing. If you have a wooden fence, a coat of paint will do wonders. Before you get all enthusiastic and tear down fencing between properties – it’s best to check with both local authorities and neighbours to make sure that you don’t do anything drastic.

Third – lighting and paving are in the accessories department of garden makeovers. While not every part of the garden will need lighting (the front will not necessarily need any, but it can be nice in the back) – some paving is always a nice feature in a garden. Whether as a paved section of the garden, or as a a walkway with paving stones, they can really add a nice touch to a re-done garden.

These garden ideas will not cost the earth to implement, but they will add value to your property, and draw in prospective buyers or tenants. Your investment property is not just the house, it includes the area of land on which the building stands. If you can do a few simple things to improve the first impression of the front yard, then you will also draw in more prospective buyers so you can impress them with your interior makeover.

Don’t be one of those real estate investors that owns a beautiful rose surrounded by a field of thistles – it doesn’t make any sense!

Vital Points To Include In A Hardship Letter For Short Sale

Writing a hardship letter for short sale purposes is not an easy thing – but here’s a few vital points to include to make it a little easier. If you do find yourself in the position where you are considering a short sale, then you will know how you got there, the ins and outs and the highs and lows – this is basically what your hardship letter will contain. It needs to be a summary of the problem, explained to the lender in simple terms – but not too simply either.

A good way of getting the balance right is by considering your situation in a few simple ways: the why, how, and solution. This will not be a pleasant task, but it is very important to do this right. Remember that by providing an honest and complete account of your situation on your hardship letter for short sale, you are increasing the chances of your lender agreeing to your proposal.

727 Hemmingway Court, Tracy CA Short Sale © by Realtor Susan

Three key points for a hardship letter for short sale

The why part should start with telling the lender how you cam to be in this situation to start with. Is it because of death, disability, employment or divorce perhaps? These are common issues which lead to people finding themselves in the position where they need a short sale to get themselves out of a tight spot. Include dates of significant events if possible to give the lender a good picture of the timeline of the issues.

Next comes the how part of your story – and possibly the most important. This is the bridging section in which you have the opportunity to tell the lender how you reacted to the problems, and how despite all that you still found yourself in the position where you need a short sale to fix the situation. What the lender wants to see here is how you have been proactive, and taken action by doing things like selling assets, having yard sales, taking on extra work for example.

The last part of the hardship letter covers the solution as you see it. This will cover things that have not happened yet – and is your opportunity to put forward a proposal to your lender of what you would like to see happen. If the source of the problem is more permanent in nature, then a short sale will be a good option for both you and the lender. However if the issues are more temporary then the lender may wish to steer you more in the direction of a loan modification.

The hardship letter for short sales is your opportunity to be heard. Lay it all out there and tell your story in a clear manner. If you keep the above elements in mind you will be able to write your own hardship letter for a short sale without too many difficulties or further stresses.

If you feel I’ve missed anything here or have your own tale to tell, let me know!

The Real Estate Industry Looks Up – prices rebound

It was with no small amount of joy that I read this piece on the Calculated Risk website. It looks like I am not alone in my view that the 2012 outlook for real estate is a good one.

While the discussion in that article is primarily around the discussion of the ‘two bottoms’, the general theme of the article is that the industry is heading for a turnaround right about now. When we are talking about housing starts and new home sales, the indications are that they have already started to rebound. Although having said that, I recently wrote about first home buyers competing with investors for foreclosures and short sales. While this will continue to be the case in the near future, it’s not a permanent change in the real estate scenery.

So that’s the first of the two bottoms that Calculated Risk speaks of – the second being house prices. They project that these will officially bottom out in March 2012. That’s pretty specific. I’m not sure I’ll be that specific. Instead, I’ll err on the side of caution and say that by June real estate prices will have turned around.

Here’s a lovely graph (courtesy of Calculated Risk) that perfectly illustrates the level of housing prices historically – and also shows that the price bottom is behind us (so to speak).

What makes me so bullish about this turnaround? Well – first of all, the recent drop in the unemployment rate is a very good sign that things are improving for people on the ground. Sure, it’s just one release of data – but it backs up the predictions and is supported by other economic indicators.

Second – there is a buzz about the lack of inventory. What this means is that there is a bunch of real estate agents with few listings. This lack of supply means that what is on the market will go for higher prices, which will then mean that more people will list their properties. It’s a classic supply and demand scenario.

So my message to investors is that the end is in sight – pick your bargains while you can because prices are about to rise. That means call your lenders people, traditional, private mortgages – whatever it takes to land those great deals before the prices start their rise again. To those who are thinking of selling their family home – hold off if you can – it’ll be well worth your while.

Last but not least, to the people who are in the market for their first real estate purchase, sort yourselves out, find a property that fits your criteria and get into the market. There simply has not been a better time to buy real estate in a generation.

What Are The Tax Consequences Of Short Sale

There are definite tax consequences of short sale and foreclosure by lenders for distressed property owners. Many people have been experiencing the loss of equity in their homes as a result of the decline of home values the past few years. Some have even made the decision to walk away from their homes even if they can afford the payments because they know they cannot recoup their equity loss. The lender ends up writing off the losses and selling the property at a foreclosure sale or buying it back and offering it for resale as a REO. When mortgage debt is forgiven, it is considered reportable income. However, there are exceptions to this rule.

Exceptions

tax consequences of short sale
P0006376 © by Realtor Susan

One such exception is for taxpayers that receive debt forgiveness on their primary residence from a short sale or foreclosure.Under The Mortgage Debt Relief Act of 2007, taxpayers are discharged from debt and do not face tax consequences of short sale involving debt forgiveness on their principal residence or a mortgage modification. This relief applies for tax years 2007 through December 31, 2012 for up to $2 million dollars in forgiven debt and $1 million for tax payers filing separately.

Prior to enactment of the Act, the debt forgiveness would have been treated as taxable income. It has not been determined at this time whether the Act will be extended or just expire at the end of 2012.You can find more information about debt relief and The Mortgage Debt Relief Act of 2007 by visiting the IRS’s website at http://www.irs.gov/individuals/article/0,,id=179414,00.html.

Another exception to the rule is when you file bankruptcy. Debts that are discharged through bankruptcy are not considered taxable income. However, the decision to file bankruptcy is used as a last resort and should not be taken lightly. It is best to speak with a bankruptcy attorney if you are contemplating filing for bankruptcy.

Certain farm debts are not considered taxable income either. For instance, if you incurred debt as a result of operating a farm and more than half your income for three year’s prior was from farming, if your loan was cancelled, you will not have to pay taxes on the debt forgiveness.

 

Commercial or Investment Property Tax Consequences of Short Sale

However, if you own commercial property, other investment property or a second home or vacation home, you may be subject to paying tax on the forgiveness of the debt in a short sale situation, mortgage modification or foreclosure. The lender is required by law to report the amount of debt forgiveness to the IRS if the amount exceeds $600 by giving you a Form 1099-C, Cancellation of Debt. So if you purchased a property for $200,000 and sold it for $100,000, and owed $50,000 to the lender, the $50,000 in debt forgiveness may be subject to federal income taxes.

Before you decide to sell your property with a short sale or obtain a mortgage modification, you should consult with your tax advisor. You could also be subject to a deficiency judgment against you by the lender for the difference between the sale proceeds and what you owe on the loan balance. To avoid a deficiency judgment, you should negotiate with the lender that the sale proceeds satisfy your mortgage debt.  Not all states allow deficiency judgments. It is a good idea to check with your attorney.

Tax consequences of short sale aside, a short sale may also affect your credit score if you were delinquent in making your payments prior to the property being sold as a short sale. Short sale is a solution for distressed homeowners, but you consider the tax consequences and how it will impact other aspects of your life before you decide to sell your home with a short or walk away from your home.