Posted on September 26, 2018 by shawn_manwaring
There is much to consider in order to receive the best value from your choice of real estate broker. The seller pays the real estate commission (REC) on about 99% of all residential transactions. Conversely when the buyer purchases the home, they are providing funds to the seller which are used to pay off any liens, cover all closing costs (including the REC), and then walk away with their equity and potential profit. That is the long and short of it to a real estate transaction. When you find yourself in this position it’s important to ask yourself are you getting what you pay for?
Typically, professionals in the real estate industry work on a commission basis, meaning it is only when they are successful in assisting the buyer and seller in reaching the closing table that they receive compensation for their efforts. As a buyer’s agent it doesn’t matter if they showed 3 homes or 103 homes or if they submitted 1 offer or if it took 21 offers before successfully placing a home under contract. And for the seller’s agent, it will not matter if the home sells in 2 days or if it takes over a year to sell. Just because a seller accepts an offer, it does not mean the transaction automatically will see the closing table. Nearly 30% of all homes that go under contract (an accepted offer), will fall through and then be re-entered as back on the market, losing the momentum of being “new” to the market. It may be more of a seller’s market today but once a property is under contract, much of the conditions of that contract favor or shift to the buyer. With that being said, are you getting what you paid for?
Why are contracts falling apart before closing? There are 4 primary reasons (or contingencies) in a contract that allows a buyer to diligently investigate and protect their interest.
- Financing – It has become imperative to get pre-approved for a mortgage suited to these needs and prior to making an offer. The contract should protect against the buyers being denied the loan or against unsatisfactory loan terms
- Appraisal – The contract is likely contingent upon the appraisal value being consistent with the contract price.
- Inspection – The buyer should have the right to any inspection(s) they desire to get comfortable with the condition of the home. This contingency can be the most challenging for both parties. The inspector is hired to discover defects that may adversely affect the function or safety of the home (not aesthetically). Most homes are not perfect. This typically sets the stage for both parties to agree on a repair, replacement, or a credit to address any issues.
- YOUR REALTOR – The above contingencies get all the attention, however the realtors in the transaction can make or break almost any deal. From submitting the offer itself, to communicating with the other broker (listing or selling), to meeting almost 30 contract dates & deadlines, to working with lenders and title professionals. Realtors are also generally responsible for helping to orchestrate the transaction and managing an array of expectations to arrive at a successful closing.
Experience does matter. Excellent communication between all parties can be crucial. Creating appropriate expectations can only help you move forward with confidence and cushion you from disappointment or unnecessary anxiety. Not everyone with a real estate license is good at this! Whether you are a buyer or seller, I suggest talking to two or three people, or until you are satisfied that you have found the best people to represent your interests. Of course I am partial and would say contact Shawn Manwaring if you are in the Colorado real estate market but I will let you make that decision. Regardless you still need to ask yourself the ultimate question of: are you getting what you pay for?
A few good suggestions to find the right realtor:
- Retain a realtor who places a high value on your relationship by taking the time to understand your real estate needs and interests
- Select a realtor who views being in real estate as a career…not a job. Their knowledge of market conditions may depend on if they are invested long term vs. short term (i.e. not in it to make a quick sale)
- Shift your focus from mere cost to who can provide the best result. Who can procure you the best net amount as a seller? And who do you believe will represent you and produce an optimal outcome? It is probably not the one who easily discounts their own commission. A true professional will know how to earn you the most money and at the same time be able to avert unnecessary problems. Who do you believe can market and bring the highest level of qualified buyers through your home? That alone is likely to yield the best price for your home.
A respected designer once explained what I consider to be a very interesting consumer dynamic. She said there are 3 elements to almost any vendor or contractor. There is service, quality and price. You can almost always get two of those components, and almost never get all three. However, in the real estate industry, if you substitute value for price…you can have it all and finally answer the question accurately of are you getting what you pay for?
When you are in the real estate market of Colorado and you need a realtor on your side, contact Shawn Manwaring: