You've decided you want to save money by using a flat fee or limited service MLS listing when you sell your home? You know you can handle some of the work of showing your home to private buyers and negotiating your own deal. So how do you decide which company to use? What are the differences? Does it really matter?
First, let's make sure we're clear on what a flat fee listing is. Flat fee MLS, in concept, has been around since at least the early 1990s. Generally, a licensed real estate broker contracts with a seller to provide a package of services or selected "a la carte" services for a flat fee rather than a "commission" or percentage of the sale price. Typically, the flat fee applies only to the listing side of the transaction, and the seller must agree to offer a buyer's broker a percentage commission. The buyer's broker commission is usually advertised to brokers so that they will show and sell the home. In the majority of cases, the house will be sold to a buyer represented by a broker.
A flat fee listing broker unbundles the services that a traditional full service broker would or should provide, and provides a limited number of services. The key service is listing the property on the local or regional multiple listing service (MLS). The MLS is a private database accessible to only member brokers, and is almost the singular source used by buyer agents to locate properties for their buyer clients. Having your home listed on the MLS means fishing in the "big lake" versus the small pond of For Sale By Owner (FSBO) buyers looking on FSBO listing sites, Craigslist, and other public portals. In addition, MLS listing data is automatically syndicated to hundreds of public portals where home buyers shop directly; Zillow, Trulia, REALTOR.com, homefinder.com, homes. com and usually all of the local firm websites.
How to choose? Beyond whether they can simply input listing information on the MLS, there is much more to consider in choosing about a Flat Fee MLS listing service.
1. Is the company local?
2. Is the company a brokerage, or simply an online service that subcontracts with a broker?
3.. Does the broker visit your home and meet with you personally?
4. Is the company respected by other local brokers?
5. What is included in your package? Forms? guidance? lock box? yard sign? showing services?
6. Does the company represent buyers too? Or will they only represent you?
7. Will there be a licensed broker available if you need additional help?
Real estate is LOCAL, and your flat fee broker should be too. There are national websites offering flat fee MLS listings, but the actual MLS systems are local member only sites. National firms have to subcontract with local brokers to input their listings. Because the local broker is only getting a cut of the low fee paid to the national site, they will do the bare minimum necessary to get the listing data into the system. In real estate, the minimum can be dangerous, and potentially expensive in the long run. If the advertised information on the MLS is not correct, both broker and seller are liable for the misrepresentation or omission of facts. And, the lawsuits can be expensive! So, choose local only. Trying to save pennies here can cost tens or hundreds of thousands!
Hire a Broker Directly. Make sure that you are hiring the broker directly, and not a subcontractor.
Make sure the broker will visit on site at your property. A good broker would never list a home "from a distance". License laws in every state require a broker to represent facts about each property they put on the MLS. They must verify the square footage, legal bedrooms, sewage & water systems, HOA information, street maintenance, legal access, liens & ownership, and much more to assure that the advertised information is accurate. Any broker who does not do all of this risks license revocation AND places themselves and you at risk of litigation.
Talk to experienced brokers in your area about the local flat fee MLS providers. While traditional full service brokers may not love flat fee brokers, they must work with them to bring buyers and sellers together. Tell them you are not going to list full service and ARE going to list flat fee. Then ask the experienced full service broker which flat fee firm they would choose if they were in your position. Reputation is everything. If local buyer's agents don't respect your flat fee broker and won't show and sell their listings, you will shoot yourself in the foot by choosing that company.
State "agency" laws vary, but you want an exclusive seller's agent where available. In many states, it is legal and common practice for one firm or even one broker to handle both sides of a transaction. This sounds crazy to most people outside the real estate industry. Some firms also use flat fee listings as "loss leaders" to lure buyers into their firm. Ask your local flat fee MLS provider if their firm also works with buyers... and if they will potentially also work with the buyer of your house. In that scenario, the broker cannot "advise" either of you.
No two flat fee services are alike! It's critical to ask what is included in your package and if additional help is available if you need it. It will be hard to compare services "apples to apples" as every service is different. It's not always about the price, it's about the quality of service. If you are going to pay $200-$400 for someone to throw your listing up on the MLS and then disown it, you are not getting a bargain. You are being left out to dry.
Ask these 10 questions:
1. Will you answer broker's questions about my home?
2. Will you answer questions from buyers?
3. Will you provide current state disclosure and contract forms?
4. Will you provide guidance about preparing my home for sale & staging?
5. Will you provide guidance on pricing our home or property?
6. Will you present and explain any offers to me?
7. Do you provide the same kind of lockbox that full service brokers are used to?
8. Do you provide a sturdy yard sign?
9. How will brokers schedule showings for our home?
10. Are you available if we need more help along the way and want to add on services?
Sometimes you get what you pay for. Flat fee listings are a great way to save thousands of dollars in commissions. But with flat fee MLS providers, you don't want the cheapest, you want your area's best!
Friday, April 1, 2016
Saturday, October 31, 2015
Double Double OIL and Trouble!
Underground storage tanks... The mere mention makes my stomach jump!
Like many brokers working in areas with lots of old housing stock, I've seen some crazy situations with residential underground oil fuel tanks. This year has been no exception!
Scenario 1; Nice 70 year old lady inherits a rental house in an old established City neighborhood after the death of her husband. It's a brick rancher from the 1950s and has been heated with fuel oil since built. She's planning to sell and thinks this old oil furnace and oil heat could be a deterrent. So, she calls an HVAC contractor and buys a new natural gas system. They come and install the new furnace and tell her they are also going to "abandon" the old oil tank. Seems all is well, right? I list the house and I'm happy to tell potential buyers that this is taken care of. One rainy fall night I get THE frantic phone call. My seller is standing outside of said house in the rain with the fire department and the emergency response team. The story? The aforementioned contractor apparently hired Abbott & Costello to abandon the old oil tank. While they were supposed to remove all of the oil from the tank before "closing" it, they apparently "thought" they could do that from the oil fill line inside the house which is 4-6 inches above the actual floor of the tank so that heat systems are protected from the "sludge" that forms at the bottom of the tank. Draining from the fill line empties the tank down to just that level...leaving 4-6" of oil sludge at the bottom. Abbott, or maybe Costello, then dug down to the tank and cut open a hole in the top to fill with sand. After filling, they weren't really prepared to properly seal the hole, so they just set the cut piece on top of the sand filled tank and covered it with soil and grass seed. All done! And then the rains came... The old tank sat just below the drip line of the house and the gutters were clogged with leaves and overflowing... onto the old tank location. The ground saturated... the tank flooded... the oil sludge floated right up through the sand to the top of the tank... and right on out to grass and then right on down the hill in front of the house. Neighbors were frantic when they called 911 about the big oil slick running down the yard toward the street from the house on the hill. Fast forward 2 months. My seller has been forced to hire a clean up team to remove all contaminated soil at the cost of $12,000. The tank also had to be removed and the soil tested below. It was positive, so they have to remove more soil and test again. Tests are still positive, but the equipment on site can't go deeper than 12 feet. My seller and her environmental mitigation contractor are authorized NCDENR to stop digging, put in clean soil and begin the process of recording a Notice of Residual Petroleum (NRP) on the deed for her home and notifying all of the neighboring properties of same. In the end, my seller has fronted close to $20,000 for this whole process. She goes after the HVAC contractor, and he ponies up just $4000. She files for reimbursement by the state's underground storage tank fund (and 18 months later receives close to $12,000 back from the fund). She is out $4000. She finally sold the house in deep winter for considerably less than originally hoped. But, the selling season was over... and there was a NRP notice on the deed... and she was worn out!
Scenario 2: Another elderly couple owns a home on city water and sewer. Back in the day (+/- 20 years ago), they had oil heat replaced by a gas furnace. The oil tank was close the house and inside of a concrete slab, so they just sort of "left it" after the oil ran out. Then, they build a sunroom addition... on top of that old slab. Fast forward 20 years and I list their house. I warn them about that oil tank and tell them they need to disclose it. A potential buyer requires that it be properly abandoned. They have to cut out the floor of their addition, drain the tank through the sunroom, fill it with concrete and then repair the floor. The only other option is to tear down the addition and remove the tank with heavy equipment.
Scenario 3: Nice couple heating with oil and the tank is close to their house (trend here!). One day they smell oil. After extensive visits, digging, etc, it is learned that their oil tank has sprung a leak. It has saturated the ground, and then kept going to saturate the block of the foundation and then right into the basement slab. Ultimately, they have to cut out a large section of basement slab and replace it, along with a large section of foundation wall. Of course, they have to haul away all of that contaminated concrete and many loads of dirt and then bring in new dirt. Final cost? $60,000. Surely they would be covered by homeowner's insurance? NO - there's an exemption in most policies. They are able to file for partial reimbursement with the State's underground storage tank fund, but it covers only 1/5th of their expense.
Where else have we seen these tanks? I've had one in a huge set of concrete steps leading to stone house's front door. I've seen one in a concrete slab front porch.
Moral of the story? If you have an underground storage tank, deal with it now regardless of the hassle!
Like many brokers working in areas with lots of old housing stock, I've seen some crazy situations with residential underground oil fuel tanks. This year has been no exception!
Scenario 1; Nice 70 year old lady inherits a rental house in an old established City neighborhood after the death of her husband. It's a brick rancher from the 1950s and has been heated with fuel oil since built. She's planning to sell and thinks this old oil furnace and oil heat could be a deterrent. So, she calls an HVAC contractor and buys a new natural gas system. They come and install the new furnace and tell her they are also going to "abandon" the old oil tank. Seems all is well, right? I list the house and I'm happy to tell potential buyers that this is taken care of. One rainy fall night I get THE frantic phone call. My seller is standing outside of said house in the rain with the fire department and the emergency response team. The story? The aforementioned contractor apparently hired Abbott & Costello to abandon the old oil tank. While they were supposed to remove all of the oil from the tank before "closing" it, they apparently "thought" they could do that from the oil fill line inside the house which is 4-6 inches above the actual floor of the tank so that heat systems are protected from the "sludge" that forms at the bottom of the tank. Draining from the fill line empties the tank down to just that level...leaving 4-6" of oil sludge at the bottom. Abbott, or maybe Costello, then dug down to the tank and cut open a hole in the top to fill with sand. After filling, they weren't really prepared to properly seal the hole, so they just set the cut piece on top of the sand filled tank and covered it with soil and grass seed. All done! And then the rains came... The old tank sat just below the drip line of the house and the gutters were clogged with leaves and overflowing... onto the old tank location. The ground saturated... the tank flooded... the oil sludge floated right up through the sand to the top of the tank... and right on out to grass and then right on down the hill in front of the house. Neighbors were frantic when they called 911 about the big oil slick running down the yard toward the street from the house on the hill. Fast forward 2 months. My seller has been forced to hire a clean up team to remove all contaminated soil at the cost of $12,000. The tank also had to be removed and the soil tested below. It was positive, so they have to remove more soil and test again. Tests are still positive, but the equipment on site can't go deeper than 12 feet. My seller and her environmental mitigation contractor are authorized NCDENR to stop digging, put in clean soil and begin the process of recording a Notice of Residual Petroleum (NRP) on the deed for her home and notifying all of the neighboring properties of same. In the end, my seller has fronted close to $20,000 for this whole process. She goes after the HVAC contractor, and he ponies up just $4000. She files for reimbursement by the state's underground storage tank fund (and 18 months later receives close to $12,000 back from the fund). She is out $4000. She finally sold the house in deep winter for considerably less than originally hoped. But, the selling season was over... and there was a NRP notice on the deed... and she was worn out!
Scenario 2: Another elderly couple owns a home on city water and sewer. Back in the day (+/- 20 years ago), they had oil heat replaced by a gas furnace. The oil tank was close the house and inside of a concrete slab, so they just sort of "left it" after the oil ran out. Then, they build a sunroom addition... on top of that old slab. Fast forward 20 years and I list their house. I warn them about that oil tank and tell them they need to disclose it. A potential buyer requires that it be properly abandoned. They have to cut out the floor of their addition, drain the tank through the sunroom, fill it with concrete and then repair the floor. The only other option is to tear down the addition and remove the tank with heavy equipment.
Scenario 3: Nice couple heating with oil and the tank is close to their house (trend here!). One day they smell oil. After extensive visits, digging, etc, it is learned that their oil tank has sprung a leak. It has saturated the ground, and then kept going to saturate the block of the foundation and then right into the basement slab. Ultimately, they have to cut out a large section of basement slab and replace it, along with a large section of foundation wall. Of course, they have to haul away all of that contaminated concrete and many loads of dirt and then bring in new dirt. Final cost? $60,000. Surely they would be covered by homeowner's insurance? NO - there's an exemption in most policies. They are able to file for partial reimbursement with the State's underground storage tank fund, but it covers only 1/5th of their expense.
Where else have we seen these tanks? I've had one in a huge set of concrete steps leading to stone house's front door. I've seen one in a concrete slab front porch.
Moral of the story? If you have an underground storage tank, deal with it now regardless of the hassle!
Wednesday, July 8, 2015
The Shiny Penny Replaces the "Fixer Upper" For Millenial Buyers
The Shiny Penny replaces the Fixer Upper
In today's real estate market, buyer tastes and priorities are different than those of past buyer generations. The old mantra has always been, "location, location, location". While location reigns as King in real estate, it has a new queen. Most current buyers second priority after location, or perhaps tied as a top priority, is condition. "The shiny penny" has become an expectation of today's homebuyer. What's this? It's the house with everything in tip top condition and with a shine!
Back in the "old days", many buyers looked for "fixer uppers" to invest their sweat equity and build real equity. Now, while a few handy folks remain, the vast majority of buyers are looking for "move in ready" homes. They want to buy the house, unload the moving truck, and start living. They don't want to buy the house, tear out the kitchen, remodel the bath, or spend every night at Lowes or Home Depot. Priorities change with each generation. Generation "Y"and Millenials are more interested in current quality of life, dining, and living life to the fullest today. They are, as generations, less interested in building wealth via drawn out "do it yourself" projects. While they are willing to hire people to do work for them, this takes time, focus and additional money. The easiest answer is to buy new construction or to search for the "shiny penny" where someone else has done all the work and invested their time. Sellers of older generations MUST accept this and adapt.
At least once a week, I hear one of the following;
"We will give them an allowance to replace..."(the worn carpet, the dated appliances, old hvac, etc)
"We will let them pick out their own paint and replace our special colors...."(purple passion, pumpkin orange, radical red, etc)
"We don't mind buying a house that needs work, so we're sure we can find someone who is willing to do a little work".
All I can say is this, "Wake up"! Today's buyers are different. Forgive my sweeping stereotype, but younger generations are not so handy overall. They have been raised in an era of technology where their fingers are used for typing, not for prying wallpaper off unprimed sheetrock. In many cases, hanging their photos will be a challenge, much less attempt replacing a faucet or painting. And, because they would prefer to explore the latest brewpub or performance art, they don't want the hassle of trying to find a good contractor and overseeing a remodel. It's not their "thing", and older generation sellers who recognize this have a huge advantage over those who stick their heads in the proverbial sand!
So, how do you make your house a "shiny penny"? We'll explore that in our next post.
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