Why do realtors always say to me “Are you working with an agent?” It’s none of their business.

Two reasons. One is business ethics- we don’t want to “steal” clients from other agents. 

The other reason is they are trying to find out if there is a whisper of a chance that they might actually get paid from working with you….  if you are working with another agent, working with you is only a “labor of love.”

Here’s a BIG real estate secret most people don’t know– Real estate agents spend most of their time working for free.  In fact, we are often paying a lot of expenses to be able to “work for free!”

The Real Deal:  Most real estate agents are straight commission people.  The only time we receive money for our work is when a real estate transaction closes.   

That’s it. 

The rest of the time we’re working for free.

Of course, since we’re living in a real world with bills to pay, we are motivated to work for free as smart as possible.  Spending hours and hours working for a person who already has a real estate agent may not be the best choice towards eventually bringing dollars in the door.

So, actually, it is their business when realtors ask that common question (at least, they hope….).

How do real estate commissions work?

Commissions are paid by the seller, not the buyer.

The commission amount can vary; enforcing a set amount is known as “price-fixing” and is illegal. 

A common commission rate in the Temecula area is 5–6%.

Using a 6% commission as an example, 3% is the common percentage that goes to the buyer’s agent; the remaining 3% goes to the selling agent. 

Actually, these amounts go to the agent’s broker.  If you were at a closing, you’d notice that the final commission check would not be in your agent’s name, but in their brokers name (i.e., Century 21 Wright).

These real estate agents will receive only a portion of that 3% amount. 

Depending on the brokerage they work for, they will get a “commission split,” which could be 50/50 %, 60/40%, 70/30%, or 80/20%, with part of this percentage going to their company the broker. 

There are some realtors who get 100% of the 3% commission. These realtors pay for all their business expenses, with significant monthly fees that go to their broker.

The Real Deal:   So…. the bottom line is- your real estate agent isn’t getting rich with all of the listed commission, and retiring to Tahiti.

Understanding the 4 Kinds of Buyers

Waiting for your home to sell can be frustrating.  “What’s happening?” you wonder.  “Buyers come through…. why aren’t we getting more offers?”

Realtors understand there are four kinds of buyers cruising the marketplace.  (For this discussion’s sake, lets assume we are talking only about qualified buyers- those who could afford to buy if they chose.) 

Here’s a brief description of each kind:

1.  Just Lookins’- A favorite saying is “I’d be ready if…”  Some of these people never buy- they’re the eternal window-shoppers of homes on the market.   They’re simply curious how other people live (and decorate!). 
Others are extremely fussy and looking for the ‘perfect’ home…. if your home is fortunate enough to meet all their criteria, you might have a winner.

2. Bargainhunters- These buyers are looking for the bargain-basement winner.  Their saying is often “Let’s make a deal…. that works for me.”  Their gain is usually your loss.

3. Relo-Rushers- “The heat is on….”  Stress is a big component in these buyer’s lives.  A new job, a new home to buy, an existing home to sell…. and never enough time to get it all done.  And then there’s the worries about making the move, getting the kids in a good school, making a big change in life….. 
Relo-Rushers don’t have time to mess around.  They usually work with a Realtor, who can handle the many overwhelming details.  They want to get in, look around, make a deal, and get things done– fast.

4. Change of Lifer’s- “I want a change” is a frequent saying.  These buyers are upsizing, downsizing, resizing, or having a personal change in circumstances.  They can be apprehensive about their change in life, or charging full steam ahead.  Many times they’re not exactly sure what they want. Once their mind is made up, decisions can come quick.

FSBO- Is It For You?

What makes a Perfect “For Sale By Owner” Candidate?

• Homeowner understands the real estate market- has knowledge of home values, legal obligations, disclosure needs and procedures, contract knowledge and processes, and financing options.

• Knows a reliable real estate attorney, home inspector, termite inspector, gas line warranty inspector, lender, title company and other real estate support contacts.

• Time is not a factor:  Has plenty of time before home needs to be sold.  Has time to research property values of comparable homes.

• Understands the need to invest in advertising of their home.  Knows what type of advertising is effective.

• Home is located in a well-travelled area for better viewing.

• Is comfortable with showing other people their home.  Can deal with criticism of home features and flaws.

• Is good at negotiating, and patient working with people.

• Understands that many buyers will view their selling price as their asking price minus a realtor’s commission.

• Knows how to pre-qualify buyers, and can assist with buyer financing.

• Understands the advantage of offering a commission to a realtor with a qualified buyer.  Also understands that some realtors will not work with them.

HomeSeller’s Checklist

o Decide to sell your home.  Determine if you will be using a Realtor or selling it yourself.  Factors to consider:  your time frame/ urgency, familiarity with the real estate process and legal obligations, your comfort level with showing your home and negotiating, the costs of advertising and marketing your property.

o Select a Realtor.  Find someone you are comfortable with and who communicates clearly.

o Prepare your home for the market.  Your competition just became all the other people who are selling their homes!  Your goal is to find a qualified buyer who selects your home over all the others.  Now’s the time to put your best foot forward.

o Determine the listing price of your home.  Your realtor can offer detailed advice and research.

o Sign a Listing Agreement with your chosen Realtor.

o Listen to your Realtor’s thoughts about improving the sale-ability of your home.

o The ‘For Sale’ sign goes up and a lockbox is installed.

o Prepare for home showings and open houses.  (Tip: Take your pets and leave during these times; buyers like to feel comfortable examining a home.)

o Wait.  This is one of the stressful times…. ask for your realtor to keep you updated.

o Prepare for the offer on your home.  Are they pre-approved? Is there a contingency?  What would you negotiate to close the deal?- all factors to consider.

o Consider your prospective buyer’s offer.

o Accept, reject, or counter with another offer.  Remember with any counteroffer proposed or given that the previous offer is null and void.

o Once you accept the buyer’s offer, prepare for property inspections.  Typical inspections are for general property, septic, well, gas lines, and for termites.  Additional inspections could include radon, lead, or mold.  If issues arise, the buyer will propose a remedy to unsatisfactory conditions.  Be prepared to negotiate.

o Prepare for your move.  There’s moving arrangements, change of address, (notify the post office, publications, magazines, friends, family, and bill senders), and the transfer and setup of utilities (including gas, electric, telephone, water, garbage, and cable).

o Go to the closing.  Sign many documents.  Get your money.

Easy Preparation Tips For Your Open House

• Place your ad in the local and city newspapers the week before for the Sunday edition.  Thursday is usually the deadline date for Sunday insertion.

• Choose convenient afternoon hours.  A time frame of 2-3 hours is best.  Check the local events calendar to be sure your date doesn’t conflict with another event: example- Super Bowl Sunday, local high school final sports events, etc.

• Do most of the major house preparation the weekend before.  Now’s the time to look at your house with a critical outsider’s eye.  Are there muddy paw prints on the front door?  Is the door handle on the bedroom door loose and rattling?  Are there dust bunnies built up behindthe living room chair?  Your visitors will notice these things. 

Trim bushes, wipe the smudges off the walls, pick up the yard, de-dust the furniture, and generally make things tidy.

• Go through your home, outdoors, basement, and garage and de-clutter.  Put loose things in boxes or baskets, put away excessive decorations (the cleaner looking, the better), straighten things in drawers and cupboards to look orderly.  Excessive clutter translates to potential home buyers as not caring; they will worry whether you’ve thoroughly cared for the home  maintenance.

• Have a home flyer available for potential home buyers with features of the home.

• Turn on all available lights, even if it’s a sunny day.  You want your potential home buyers to remember your home as light and bright.

• Music playing in the background can be a nice touch. 

• Other options to consider are candles burning (keep them in a place where they won’t be bumped), offering your home visitors refreshments, or baking food prior to the open house to take advantage of the inviting smell. 

Appeal to your visitor’s senses.  Your goal is to have them leave with a warm, positive feeling.

Mold in Your Home

Recent reports of multi-million dollar lawsuits settlements, horror stories of “toxic mold” and people getting sick from mold have everyone jittery. 

Insurance companies are quietly sending out insurance riders eliminating future claims due to mold or water damage. Some companies are refusing to approve any new policy on a home with a previous water damage claim (which can be quite a shock for the new buyer!)  Buyers are bolting if they see anything that looks black, without asking questions (mold? mildew? dirt?). 

Have we suddenly been invaded by evil microbes, bent on total destruction? Not exactly. 

Mold has been around forever, in thousands of shapes and forms.  It’s as common as air and earth (in fact, both will most likely have mold spores in them).  The one type of mold that has gathered so much publicity is actually rare. 

Stachybotrys Chartarum is known as black mold, even though Stachybotrys isn’t always black, and there are many other types of mold that are also black in color (go figure). The goal is eliminate mold in the home, which in theory (and usually in function) is simple–eliminate the moisture, and the mold cannot live.

The Powers of Three–Don’t Let Them Be…

For mold infestation, you need three things:
1. Mold spores (easy to find, since they’re everywhere)
2. Porous, organic materials (drywall, paper insulation, carpeting, wood… parts of your home)
3. Moisture (leaky faucets, sweating pipes, poor or blocked foundation drainage, bathroom ceiling fans that are vented into the attic and not outside, a dryer vent that blows into an enclosed area, etc.) Eliminate the moisture, and the mold problem is also eliminated. Plain and simple.

Now, let’s say you have a moldy area, and you’ve removed the water issue… Here are a few tips for permanent cleanup:

• Small moldy areas (less than 10 feet) can be cleaned by scrubbing the area with hot, soapy water, then disinfected with a cup of bleach mixed with a gallon of water.

• If you’re sensitive to mold, use gloves, protective clothing and a mask to prevent the inhalation of excessive mold spores. 

 Remove moldy materials such as carpet, drywall, wood, etc. and replace with new materials after cleaning and disinfection.

• If the area is in a crawl space, line the gravel or dirt with heavy-duty plastic to prevent ground moisture from rising.

• For dark areas in bathtub or on shower caulking, spray a commercial mildew remover on the areas as needed.

• Make sure your furnace and air conditioner condensation lines, dryer vents, stove fans, and bathroom ceiling fans are all directed to areas outside the home.  Problems have occurred in the past in attics and crawl spaces with improper installation.

• Immediately fix any cracked or loose tiles in the shower or tub area.  Moisture will get

Why “I haven’t got a CLUE” Can Affect the Sale of Your Home

A CLUE (Comprehensive Loss Underwriting Exchange) Report is used by insurance companies to determine the insurability of your home you want to purchase, and the rates that will be charged.

The company that collects the data and prepares this report is called Choicepoint.  This company has been collecting data for over a decade of detailed claims information on all properties and individuals, including both claims inquiries, and actual claims.  This information is used to calculate possible future claims.

If there have been a lot of claims or inquiries on a property, an insurer may refuse to issue an insurance policy, or offer rates so prohibitive that the buyer could decide not to buy.

Seller Tip:  It’s not just the actual claims, it’s the inquiries about possible claims that are noted as well.  A lot of inquiries can throw up a red flag.

If you’re selling a property, as a seller you can proactively determine if there are any issues by ordering a CLUE on their property here.  

How this could help a seller complete the sale of their home:

1. If you have a good report, have a copy available for buyers- it’s one more good reason they should buy your home

2. These reports can contain errors (as credit reports often do).  Knowing about them, and correcting them up front, can save a sale.

Buyers and Insurance Scores

In the 1990’s most insurance companies adopted the use of an insurance score for individuals.  This insurance score is determined to a large degree by a person’s credit score.  A good credit score = a good insurance score, which will result in lower insurance premiums.

When you purchase a home, your insurance score and the CLUE report data will determine the premium for your homeowners insurance.