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There s an overwhelming feeling of satisfaction when everyone moves away from the negotiating table, shaking hands and saying, That sounds fair enough.
I was reading an article written by Greg Swann over at the other day, in which he relates where the builder offered him an 8% commission. He took it, kept 2% of it for the fair value of his client services and gave the remaining 6% to his buyer client.
Contrary to popular belief that there is no way to determine what is fair and what is not fair , I find the point of fair to be fairly obvious . For many years the concept of win-win has been touted as the primary goal of negotiations. However, many will turn that thinking into throwing someone a bone to make them feel like they won something .
There s a huge difference between striking a fair bargain and creating a win-win scenario. Quite some time ago, my partner Kim and I tried to establish an entire company based on the concept of no carved in stone ideas of what we, or any of our agents, would charge our clients. We wanted everyone to do as we did, and as Greg did above, and know the fair point for each case.
But apparently it is not very easy for most people to be offered 8% and only keep a quarter of that, because it is the fair and right thing to do.
That is why I fight against the word discount . Agents could only understand that they might have to discount to get someone s business.
But they couldn t get their brain around the concept of determining a fair value for their services.
They would say, You mean I am supposed to give something back if the amount offered is more than I think it should be, without being asked to do that? We would talk and talk, but most could not understand the concept, of not taking all they could possibly get.
Some think I am as crazy as to be holding out for both clients and agents, who understand the point of fairness. To be wandering in the dark with a lamp looking for not one, but many, honest men. Stories like Greg s give me hope.
Every day, as I strike one fair bargain after another with clients, I prove the point that fair enough is an achievable concept.
Now if I could just find a dozen or so agents, close enough geographically to be my peers in this quest, the battle will not have been won , but at least started, and moving in the right direction. Those I find like me; have companies like ours.
Setting up shop as a Mom and Pop or a one man show.
It is time for us to set up a company together, where all involved are of like mindedness. To break away from the status quo that says Take as much as you can possibly get, for as long as it lasts .
There may be a sucker born every minute , but all it will take to turn a sucker into a man who gets a fair shake, is the rest of the world being willing to give him a fair shake.
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The real estate transaction, like a pregnancy, breaks down into Trimesters. Also, as in a pregnancy, the
first trimester is the most disruptive to the buyer s daily schedule, the second trimester becomes more relaxed and the last trimester involves a final, and sometimes (but not always) intense event, the net result of the intense event being life changing!
Just as the body goes through many changes in the first trimester of a pregnancy, that can leave a woman feeling absolutely nauseous most of the time, the first trimester of a real estate transaction can leave a buyer s head spinning. In succession, and sometimes simultaneously, many things transpire at the beginning and need to be completed about 1/3 of the way through the time frame.
The offer is made, negotiated and accepted.
The buyer applies for their mortgage, supplying all documents needed to process the loan.
The home inspector is selected, appointment made and results negotiated.
The appraiser goes out to check that the sale price represents a good value for the lender.
All parties receive, complete and return escrow instruction paperwork for the closing agent.
In a 30 day escrow, almost everything the buyer needs to do is completed in the first ten days, sometimes all at once. It can leave a buyer with their head spinning, dizzy and sometimes nauseous in that first ten days, the same as a pregnant woman in her first trimester.
Also like in a pregnancy, the second trimester should be the easiest. It s as if everything has settled in and a full 1/3 of the total time is a respite between the first trimester and the last trimester.
The third trimester starts off with a bit of worry that leaves you feeling tired and ready for all this to be OVER!
Is everything done? Did I do everything I need to do so that the final event is successful? Am I packed?
Am I ready for all this?
Just as a woman heads off to the hospital for the final event, at the end of the third trimester, a buyer heads off to the closing agent s office to complete the final paperwork that results in their owning a new home. Some people are in and out with no major pain, while others seem to agonize and sweat and take forever to get all of those documents signed properly.
The end result of both is a joyous event. A new baby! A new home!
Three trimesters, the first the most world shaking and the second the easiest and the third the most eventful!
The good news is, unlike a pregnancy, where each trimester lasts 3 months, most trimesters of a real estate transaction last only 10 days. 3 x 10 = 30 day escrow.
Now that I have started a Guess That Album Cover Contest, I need to point out that I am clearly NOT the one selecting these covers. My partner, Kim Harris, is the original founder of Easy Street Records. The two remaining stores are owned by his Stepson from his 23 year, now defunct, marriage, Matt.
From his early days at the store on Bel Red Road in Bellevue, he assisted with the origin of Queensryche, originally started by a fellow and his brother from Redmond High School who hung out at the store. Kim spent many years managing that band and others, mostly heavy metal, and interacting with some now very famous groups of that era in large venue, multi-band, concerts.
He also taught The History of Rock and Roll at The University of Washington (U-Dub) and knows just about everything there is to know, backward (from Muddy Waters and the like) and forward on that topic, as well as many other music topics.
He picks the covers for the contest...
just giving credit where credit is due...
he is also my Broker, my real estate partner and my life partner. We may get married some day..
.or not. Jury s still out on that one :-) We were both married for a very long time, he twice and me once, so we re not rushing back into marriage at this point.
Many in our industry know that his ex-wife (a local Realtor) married his brother...
by my Italian standards a bit sacrilegious :-) LOL.
All of our clients enjoy our team concept ,and we are pretty much inseparable from morning till night. Some clients are surprised at first that I have a partner , so I thought it would be a good idea to mention him in my blog so people aren t as surprised when they first meet he and I together.
The new Guess that Album is a bit tougher than the first. I ll add more clues if it goes more than a few days with no guesses. There is a huge clue in the photo itself BTW.
A client and I spent the evening from 7 p.m. to almost 10 going to and walking around a neighborhood with fabulous views that is still reasonably priced here on the Eastside.
If you know a neighborhood where you might like to live, but there is nothing for sale, or nothing for sale that interests you, it may be a good idea to walk the neighborhood and write down the homes you would be interested in buying.
It was a lovely evening, good exercise, and I now have a list of homes to target to find the people who may be interested in selling. Wish us luck!
Of course I can t tell you the neighborhood until we find the house for the client. But this is another way to find your Dream Home if it just isn t for sale at the moment.
And of course, the photo is the New Guess That Album Cover.
First person to guess it here by commenting on this blog, gets a prize. I also post it and the first person to guess it there wins a prize as well. Good Luck!
Winners must be two separate people. No fair to have a husband and a wife be two winners.
Based on my observations of actual homes on market, I think the OVERSUPPLY in the $1.
5 million to $1.75 million is being created simply because some people who should be in the category below $1.25M to $1.
50M) are overpriced, which is throwing off the stats. If you add these two categories together there is *No real OVERSUPPLY under $2 Million.
That is the true purpose of running stats in this manner.
We can see from these stats, that some owners priced at $1.5 or slightly higher need to reduce their prices below $1.5 for the market to be entirely in balance under $2 million.
At the very high end you will always have more sellers than buyers, because over a certain price people will prefer to buy tear downs and build their own homes, before buying someone else s $Five Million Dollar home. Same as new car vs. used car.
*Note that I have used the same method so that duplications are standardized, though not eradicated. An agent will sometimes show a property as being in two different areas even though a property technically cannot exist in two places at the same time. For instance, a property in Juanita might show as both Juanita (area 600) and Kirkland (area 560) since Juanita is in Kirkland.
Also, since I compile the stats using $3 mil to $4 mil and then $2 mil to $3 mil, a property at exactly $3mil would show in both categories. Since we are looking for the up and down trends, these built in duplications should not affect the assumptions made generally from the stats.
I decided to go with YTD on the solds rather than 6 mos so when we are finished at year end, we have true 2006 figures.
In the original post I went a true 6 mos back into December of 2005. As of today YTD would be a tad over 6 mos.
These are for all of King County compiled via NWMLS by hand.
Not by using the mls stat feature. I do a preview count of every single sub-segment noted, which involves 32 separate and distinct searches. The mls will only go up to 250, so as the number grows in the sold between $1 mil and $1.
25 mil, I need to break out into two categories of less than 250 homes.
**Of special note, the solds in the original post for 4 to 5 mil were obviously out of whack, so I edited the original post to change 22 sold to ? sold.
Since only 8 have sold YTD, that number must have included all statuses for that category or else there were a lot of them at year end of 2005. Let s track it forward from 8 and disregard the original 22.
As with all stats, there are many ways to compile them.
As long as we stay with apples to apples, we are safe as long as we are tracking the trend and not being anal about the actual houses involved. To remove the duplications for purity sake, would not be worth the time spent viewing each and every property to remove them.
, I have been experimenting with negotiating and/or simply giving back a portion of the buyer agent commission since February of this year.
I had a very interesting call from an agent wanting to explore this concept. It was great tossing this around for an hour or so with another real estate professional. Most agents don t want to talk about the buyer having any say in the real estate commission.
It s convenient to say that the seller pays the commission. The agent who called me asked if I felt the buyer paid the whole commission. I responded that from a real estate professional s standpoint, the best way to think about commissions is to apply the wisdom of Solomon and keep the issues and the commission separated.
When you are the buyer s agent you don t know or care what the listing agent is being paid. So leave that between the seller and the seller s agent..
Look at your buyer client as if he is the one paying you whatever you will receive at the end, and treat the buyer accordingly. That is the only way to treat people as you should and never favor the seller when you are representing a buyer.
The seller pays the listing agent and the buyer pays the buyer s agent.
He asked how I determine a fair fee as you don t know how difficult the transaction will be when you first meet the buyer. I asked him how he sets a fee with the seller up front, not knowing how long it will take to sell the house? Apply the same logic to a buyer.
The more we negotiate the fee with buyers, the better we get at evaluating a fair price up front, the same as we have always done with sellers.
In the first transactions, and in most transactions of $300,000 or less, I simply credit the buyer at the end with what I feel is representative of an overpayment to me. This surprises them and makes them happy.
At the lowest sale prices, under $200,000, I do not usually give a rebate. For buyers who approach me wanting to purchase over $500,000, I offer the buyer agent fee negotiation up front after I interview them.
A buyer doesn t have to ask for a fee reduction with me.
As I experiment with different price and different methods of fee negotiation, it gets easier and I get better at it. So far all of the clients have been happy with the result.
I wish more agents would discuss the issue so that we would all get better at treating buyer clients with the same dignity and respect with which we treat seller clients.
Telling buyers your service is free is insulting to their intelligence. It s more like saying It s none of your business what I am getting paid to represent you . Clearly no one believes that it is none of their business.
With Buyer Agent Fees getting higher and higher with even builders offering 4% Commissions or $5,000 bonuses to selling agent , we as an industry need to agree that the buyer does have some say in the matter. Or we simply have to offer the excessive amount back to the buyer, without the buyer having to ask for it. We are not mercenaries bringing lambs to the slaughter who encourage buyers to purchase the house that offers us the most money.
..we can t be that.
..and yet, unfortunately, most just don t see it that way.
..yet.
Name the obscure back jacket of the album cover shown above and win a prize.
Snohomish County had 3,483 detached homes on the market last month, up from 2,747 a year earlier and 3,255 in May. In Pierce County, 5,098 single-family homes were available last month, up 1,634 from last June and 381 from May.
Mercer Island s median single-family home price is $998,250 mdash; making it the county s second-most-expensive area. In Pierce County, 5,098 single-family homes were available last month, up 1,634 from last June and 381 from May. Snohomish County had 3,483 detached homes on the market last month, up from 2,747 a year earlier and 3,255 in May.
King County reported 6,489 single-family homes for sale. That s an increase of 951 from June 2005 and 462 from May. Others in the top five are West Bellevue (median of $1.
187 million), Queen Anne/Magnolia ($699,950), South Bellevue ($635,500) and Redmond/Carnation ($599,950). One of the main reasons I find this most interesting is we know sales are down, but the above dispells the myth that sales are down because inventory is down, meaning you can t sell more if more are not for sale. The above stats say that there are in fact MORE for sale, not less.
I will have to hand count the second quarter and compare that to the first quarter of this year and the second quarter of last year, to fully answer this question.
Stay tuned..
.I ll try to report those stats by the end of the week.
Keywords: Album Cover, Buyer Agent, Pierce County, King County, New Guess, New Home
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