How do you handle a contract with a "non-standard" addendum?

August Market Update

As we enter the second half of 2018, I wanted to share with you my perspective on a few key economic metrics and how they are affecting home buyers and sellers in today’s real estate market.

Mortgage interest. Rates are edging up, and many in the industry expect average mortgage rates around 5 percent in the near future. If you are in the market to buy a house, remember that interest charges have been much higher (up to the high teens in the early 1980s) and 5 percent is still historically low.

·         Why it matters: Buyers’ purchasing power diminishes when borrowing costs rise. With an ongoing shortage of homes on the market, it can take a while to find the right place to buy. Additionally, home prices are on the rise. If you are actively looking, working with a real estate professional (like me) and my mortgage partners can help expedite the process and potentially save you money.

Builder confidence. New homes sell quickly, with residences in the first-time-buyer range selling in the least amount of time. The National Association of Home Builders’ monthly survey of builder confidence was unchanged in July, at 68. Anything over 50 is favorable for growth.

·         Why it matters: Inventory levels are low and we need more homes to sell, so we generally view sentiment levels this high as a good thing. Will a new tariff structure compound issues that are squeezing builders’ margins, such as lumber and steel costs? It remains to be seen, but my team at Long & Foster and I will continue to track this important metric and keep you updated.

GDP. Real GDP is expected to end the year at 3 percent growth. In the second quarter, it rose by 4.1 percent, compared to 2.2 percent in the first quarter. This is the strongest growth in years.

·         Why it matters: Consumer spending is fueling expansion; people spend money when they feel confident and have more to spend. Unemployment is at 3.9 percent which is at its lowest in years, so more people have incomes. Private-sector employers are also on a 101-month hiring streak.

Consumer confidence. Sentiment rose slightly in July, showing fairly strong optimism.

·         Why it matters: Consumers report strong confidence levels when they are secure in their jobs and feel optimistic their situations are improving. This metric bodes well for the housing market, because making the biggest purchase of your life requires a sense of security in your financial future. Another number we are watching is the National Association of Realtors’ affordability index, which has declined to 134.8 in June from 162.4 in January. This essentially says a family with the average income can afford an average-priced home – for now. In our current low-supply, high-demand environment, buyers in more expensive areas could eventually be priced out if current trends continue.

As you can see, conditions are favorable for buyers and sellers in today’s real estate market. A professional Realtor like me, can help you get the most for your property if selling, and find your perfect place to call home if you are looking to buy. 

Reach out to me any time to discuss your situation further or get a free analysis of your home’s potential market value.

I look forward to hearing from you!

"Oh by the way… I’m never too busy for any of your referrals"!

August Home Maintenance Checklist

August generally brings the hottest time of the year. Despite the warm weather, there always seems to be plenty to do in the garden this month. Whether you’ve planted a large plot of fruit and vegetables or just have a simple flower garden, August is the time to enjoy its bounty. With this month’s checklist, you can take care of your garden and be back to enjoying your barbecues and pool trips in no time.

Prune: Clear dead twigs and branches to make room for new growth. Trim perennials that have finished blooming down to four inches in height and divide groups of plants, such as irises, that are overcrowded, and plant the extras elsewhere.

Water Wisely: Prevent mildew by watering during the cool early morning, when roots can absorb water but excess moisture will evaporate as the day warms.

Mowing Tips: Set your lawn mower blade on the highest setting. Taller grass grows deeper roots, provides shade to the soil and prevents weeds from germinating. Don’t worry if parts of your lawn turn brown this time of year – it usually bounces back in a few days with ample water.

Control Weeds: Pull weeds for a few minutes each day to keep them from competing with your plants for water and nutrients. You’ll also avoid having to spend a few hours later removing overgrown weeds.

Prevent Insects: Eliminate standing water that has collected in empty flower pots or other containers as they can be a breeding ground for mosquitos. Wasps become more aggressive in late summer, so if you see a wasp nest, you’ll want to spray it as soon as possible.

Don’t forget to take pictures or make notes of plants you like while they are all at the peak of their growth.

Stay cool – enjoy your garden and the simple pleasures of summer this month.

_______________________________________________________________________________________

Let me know if I can refer any of my top rated contractors… these are people I trust!

30+ years’ experience in The Triangle Area Real Estate Industry

“I’m Never Too Busy for Any of Your Referrals”

Eddie Brown

919-417-9908

eddie@eddiebrown.com

How To Create an Arcadian and Stress-Free Experience For Your Clients

When working with Buyers and Sellers you want to keep the experience you provide exciting yet stress-free…. Impossible you say?  Try these tips to help keep you and your clients in a state of ZEN.

ZEN (Wikipedia): sometimes used to refer to an individual who teaches or practices, usually implying longtime study and subsequent authorization to teach and transmit the tradition themselves.

So what does it take to become a ZEN Master in Real Estate? Well the first step is to know what causes the most stress in a transaction and eliminate it. For 92% of homebuyers the thing they fear most about purchasing a home is the mortgage process… some have even compared it to having a “financial colonoscopy”!

As real estate professional we coach and council our clients through a very emotional, and sometimes stressful, period of their lives. What can we do to change stress into a new level of excitement?

#1. Be a great listener and find them the perfect house:

I know you’ve heard the old axiom of “buyers are liars and sellers are too”… but I feel this saying was created by a poor listener with even worse questioning techniques. Asking the right questions, and listening with intent, will educate you to helping your buyer clients find their dream home. What are their non-negotiable items or “must haves”? Big back yard, garages, first level bedrooms, etc an all be on a must have list… our job is to make sure the must haves are realistic. If a buyer wants a 5 bedroom home, with 3 garages, a 2 acre lot with an in-ground pool all for $175,000, they may have to adjust their must haves to their budget.

Also set expectations for current market conditions, if they know what to expect and all the steps of the process beforehand, the stress melts away and the excitement takes hold.

#2. If a loan is needed, make sure the clients know their credit limitations before you start showing homes:

Most clients will have access to checking their credit score before sitting down with a lender. It might be a stress reliever to have them get their scores prior to meeting with your preferred lender. But warn them the scores they see on some reporting sites might be higher than those the lender will use for qualification. Make sure their score resource pulls from all three bureaus for the most accurate picture of credit worthiness.

If there are credit issues or disputes it is better to know before an offer is written so they will have the time to correct or repair the credit. This will help minimize any unnecessary surprises or delays at the lenders office.

#3. Justify income, cash deposits, and gifts:

Any large sums of money deposited into a buyers account 60 days prior to closing has to be verified through written documentation. The banks have to protect themselves against a buyer borrowing money from other sources for down payment and closing cost expenses. If a family member gifts $5000 to the buyers, a gift letter stating is does not have to be repaid will be required

Self-employed or complex income buyers will also have more hoops to jump through to get a mortgage. Knowing this upfront and explaining and educating the buyer to the process will take the stress level down a few notches as well.

Make sure you are referring your clients to a local qualified and professional lender who fully understands the complex financial profiles of today’s buyers.

#4. Manage Emotions:

Emotions can induce clients into making poor decisions which can affect them for years to come. Building a client’s confidence and situational awareness can help in clearing the transactional fog which sometimes surrounds the buying or selling process.

By first making sure a client is properly educated to the entire process they are about to enter, and though constant communication, you will help keep emotions at bay. Reducing stress is all about the prep work you do with your clients before starting the process. It will mean less sleepless nights and panic attacks for your clients, and a calm and Zen-like closing for you!

For more information on 1-on-1 Realtor Rescue Coaching visit www.RealtorRescue.biz

Is the MLS co-broker fee owed if the seller terminates the contract?

Release Date: 07/19/2018 Will Martin, Martin & Gifford, 



QUESTION: I helped a buyer client put an MLS listing under contract. Just before closing, the listing agent called me to say that the seller had decided not to sell the property. The seller has offered to reimburse the buyer her Due Diligence Fee and all of her Due Diligence Costs, and although she is upset, the buyer is likely to accept the seller’s offer rather than seek specific performance of the contract. My question to you is whether I am entitled to the fee that the listing agent offered in MLS? I think I did my job!


ANSWER: When an MLS participant lists a property in MLS, he or she makes a blanket offer of compensation to all other MLS participants. Entitlement to the compensation is determined by the cooperating broker’s performance as the “procuring cause” of the sale or lease. So what exactly does the phrase “procuring cause” mean? According to NAR policy, procuring cause in broker to broker disputes is defined as an “uninterrupted series of causal events which results in the successful transaction.” The phrase “successful transaction” is defined as “a sale that closes or a lease that is executed.” We agree that you did your job, but unfortunately, if the transaction doesn’t close, a cooperating broker in a situation like yours simply does not have a contractual claim to the cooperative compensation offered by the listing firm.

Having said the foregoing, we offer the following additional thoughts. First of all, the listing firm may well be entitled to recover its fee from the seller according to the terms of the Exclusive Right to Sell Listing Agreement (form 101). If the listing firm receives all or part of its fee from the seller, would it then be obligated to pay you the cooperative compensation offered in MLS? It may be argued that since the transaction never closed, you still don’t have a contractual basis to recover the cooperative compensation from the listing agent according to MLS rules. However, your firm may have an “unjust enrichment” claim to the offered compensation, on the theory that it would be unjust to allow the listing firm to retain the entire fee at the expense of your firm, since it was the efforts of your firm in procuring a ready, willing and able buyer that triggered the listing firm’s entitlement to its fee in the first place.

Secondly, your firm may possibly have a claim to your fee against the seller as a so-called third-party beneficiary of the listing agreement. To establish a claim based on the third party beneficiary doctrine, you would have to prove that the listing agreement was valid and enforceable, and that it was entered into for your firm’s direct, and not incidental, benefit. Form 101 specifically authorizes the listing firm to cooperate with and compensate other brokers and specifies the amount of compensation that will be offered. Although your firm is of course not identified by name in the listing agreement, it could be argued that your firm is one of a class of persons for whose benefit the listing contract was made.

The claims described above are novel claims as applied to the facts of your situation and would be handled through the court system rather than the arbitration facilities of an association of REALTORS®. We would strongly recommend that you speak with an attorney before you consider pursuing either of them.

NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice. © Copyright 2018. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

Can You Justify Your Commission When Asked to do so?

Use your Expertise to Justify the Commission You Charge

Everyone wants to feel appreciated, but your clients need to see the value in what you bring to their real estate transaction. 

Remember: It is really is ALL ABOUT THEM!

You don’t want to come off as self-important, but you do want to educate customers about what it is that you do, and most importantly why you are worth what you charge to coach them through the sale.

So what are the reasons YOU are worth the commission? And what will you say when a sellers says… “I’ll consider using you to list my home if you will reduce your commission”?

What are you going to say?  The dazzling response of... “well… uhmmm” just isn’t going to get your point across. You have to be prepared to answer the hard questions:

#1. You have access to better information to assess the property’s value. A full time REALTOR’s intimate knowledge of the local market is priceless information. This is the first place you will earn your commission. A 1% decrease in commission on a $300,000 home is $3,000, but a $10,000 low miscalculation in pricing is a $7,000 gain!

#2. You know what makes homes sell and what buyers are looking for. You have a keen eye for the small changes in staging, paint colors, and needed repairs to bring maximum return for the seller prior to placing a property active on the market. You are skilled in portraying a storyboard with photos and room descriptions to highlight the attributes and attract internet shopping buyers.

You can market to agents with buyers who are actively looking in your area, and you may have have a full service relocation arm of your firm which is constantly bringing new buyers into our area. You will only market your listings to qualified buyers, and all showings will be secured through a ShowingTime Service, where you will know every time a showing occurs and feedback can be sent directly to the sellers phone via email or text.

#3. You understand the appraisal process. Many consumers don’t even understand why an appraisal is done on a home when it is being purchased. Federal rules now prohibit many forms of communication between the appraiser and the buyer, seller, and agents. A full-time knowledgeable REALTOR can give an appraiser “legal” supporting data to keep the appraisal up and in line with the contract price.

#4. You are a professional negotiator. Being able to negotiate your commission is the first indication to a seller of how good you are. Saving a seller $5-10,000 through proper negotiation skills will more than recover the commission reduction the seller is asking for. Also if they use you as their Buyer Agent, your mad skills in negotiating will save them money there as well!

#5. You do most of the thinking for your clients. You can supply peace of mind by handling the most taxing parts of the transaction for them. Your client’s won’t have to tax their brains to take the time to learn the ins and outs of the selling process because you already have the knowledge. They can focus on the bottom line while you engage with those who want to take a piece of it.

#6. You are properly trained. It’s impossible to do what you do, and at the skill level you perform without the proper training required to understand the nuances of the real estate industry. Not only are you properly educated, licensed, trained, coached, and managed to properly assist seller and buyers, but you are required to take regular continuing education classes to keep your skills in-line with current market trends. And in addition because you are a full-time REALTOR you have the years of experience to help your clients through even the toughest transaction.

The REALTOR Brand has been around for over 100 years, and you are carrying on a legacy of professional and exemplary service. You are backed by an industry with leaders who lobby for better training, private property rights, and laws which protect the consumer from fraud. So when you are asked the question… “will you reduce your commission” you can proudly and with confidence say “ NO, But let me tell you why”.

4 old school tricks to ignite your business the last half of 2018….

OK…. OK…..OK, I know we are in the world of Technology, Apps, Social Media, and Smart Phones…  But Hey, Back in the day it was old school baby! Thermal paper fax machines, MLS Books…. (YES BOOKS made out of paper and you actually had to turn the pages…by hand), The pink “while you were out” message slips (that’s right, no voice mail), and bag phones the size of an allowable carry-on. And to the surprise of many, some of the prospecting methods we used to look for new business can and does still work today.

Here are a few tried and true methods to add more digits to your income by the end of the year.

Expired and Withdrawn listings: Yes they do still exist even in a robust market. I suggest selecting a target area where you want to obtain listings and start by pulling expired and withdrawn from the MLS every morning. Print a copy of the listing and write a hand written note asking if they still want to sell, and suggesting a meeting so you can help them discover why it didn’t sell with the first agent.  Go by the house, knock on the door, and if they answer turn on the professional charm, if no answer… leave the note, MLS sheet and a business card.

Geographical Farming: This was the one thing I got the most listings from, (other than personal referrals)… Pick an area, gather data, design a newsletter, and Voila!… you immediately become the neighborhood expert. It is much easier these days to compile the data you need, and then on-line design a newsletter than it was in 1988… so why aren’t you doing it?   

FSBO’s:  Arrrrg! They know it all… and are the most difficult sellers to work with right? Not really… if you approach them the right way. Always open with “ My goal is to help you get your house sold” … help them with suggestions for staging and pricing, but also let them know their home is only active on the market when they are there to show it. With you it is active 24-7. Put them on a frequent drip campaign and call them often to check in, plus keep them in mind for your buyers. BONUS TIP: Even if you don’t get their listing you my gain their confidence so they will use for for their next purchase!

Face to Face:  YES this is the ultimate old school prospecting method… no texts, no email, no Instagram or FaceBook. Just old fashion eye to eye, relationship building conversation. Lunches, coffee breaks, drinks, card games, bowling, fishing, golf, dinner clubs, pool leagues, hunting clubs, book clubs, knitting groups, church groups, volunteering, or anything you like to do things…. Just get out there and mingle, make new friends, rekindle old relationships, and always let them know you are never too busy for any of their referrals!

Last but not least…. Work your book of business till it bleeds referrals! Your friends and family, and past clients all love you, but if you don’t remind them how important they are to your success they forget. These 3 groups (friends, family, past clients) should become your #1 source for new business… if it’s not, you are missing thousands of dollars in lost opportunity every year.

So there you have it… 4 “old school” prospecting techniques for today’s high tech market!

For more info on Realtor Rescue Coaching Programs go to www.RealtorRescue.biz