Foreclosures and Short-Sales: Don’t Believe the Hype!

Every now and then a prospective client approaches me and tells me they want to buy a short-sale or foreclosure.  This has happened enough times that I am dedicating an entire blog post to it.  I understand why these clients think they want to buy a short-sale or foreclosure – buy a property under market value and score a deal! Sounds great, right?  Well, I have news for you.  That isn’t necessarily the case.  Purchasing a foreclosure or short-sale is not some flawless, guaranteed scheme for making money or capturing value.  I think there are two culprits creating this common misperception: misleading marketing and unexpected costs.  I am not saying that you should not buy a short-sale or foreclosure.  I have written hundreds of offers on foreclosures for prospective buyers, and I even bought one myself; however, a prospective buyer should be armed with the right information ...

Real Estate Commissions and Procuring Cause

I.How Real Estate Commissions Work

This post comes at the suggestion of my wife.  Until she met me, she apparently had no idea how real estate commissions worked.  I, on the other hand, grew up around this stuff.  My dad has owned a real estate brokerage in Maryland since the late 1970’s, so I probably understand it too well for my own good. This leads me to assume it is all common knowledge, but as in most cases, my wife is probably right. 

While there are always exceptions, real estate commissions generally work in the following manner.  A seller lists a property for sale with a listing broker.  If the property sells while listed, the listing broker will earn a commission for providing brokerage services to the seller.  The listing broker may choose to offer a cooperating buyer-broker a portion of the listing commission.   If the cooperating buyer-broker is successful in bringing a buyer ...

As covered in a previous blog post, all MLS listings are now online.  Except for some private information, consumers are privy to the same information as agents.  This fundamentally changes the role of a real estate broker.  Real estate brokers are no longer the sole conduit of marketplace information.  In the pre-internet days, brokers had to go to a brick and mortar real estate office and open a book with actual paper to see what listings were available.  Finding a listing in the book did not guarantee there were pictures of a particular property, so agents routinely made trips to preview properties for clients and to make sure they fit certain parameters.  Agents still had to show properties to clients, and only then would the client decide whether it was right for them.  In the pre-internet days, real estate brokers were the vehicle that drove home sales.  If an agent put in the time and effort, he or she could become a market expert.  Brokers ...

"Correct or not, consumers have confidence in the big brand name.”

(http://www.washingtonpost.com/wp-dyn/content/article/2010/01/07/AR2010010703825.html)

The above quote is from Art Bartlett, the Founder of Century 21 Real Estate and the Godfather of real estate franchising.  I think the first three words are the most important.  Mr. Bartlett does not seem to provide the best endorsement for choosing a big brand real estate brokerage.   If that was his intent, wouldn’t he say so?  Shouldn’t a quote about the most successful real estate franchise model EVER be about helping consumers?  I think Mr. Bartlett was probably an awesome guy, but his model doesn’t seem to help buyers and sellers make the best decisions.  It likely helps big brand brokerages attract consumers, but that’s about it.  It should be noted he made this comment AFTER he sold the entire Century 21 brand.  At least he was honest. 

Taking things ...

Which website has the best real estate search engine with the most “exclusive” listings and “top rated” properties?  Well, the short answer is all of them.  They all have the SAME listings, even the bad listings.  Really, they all have the same information in different formats.  Sadly, many are attempts to confuse or sway the consumer.

Huh?  So here is how it works.  Real Estate brokers upload listings into the MLS (Multiple Listing Service).  The MLS is a service that allows agents to search for available properties.  The MLS is then disseminated to hundreds of paying websites through IDX (Internet Data Exchange).  The agents are privy to private information (think: seller contact info) on the MLS, but most of the listing is public, especially the important stuff like price, pictures, location, etc.  The websites then display all of the listings in different formats.  It is really that simple.

The listings ...