Individual Realty Agent, Not Size of Office, Key to Selling Property
QUESTION: When we bought our home about four years ago, the agent, who did a fine job for us, worked for a large brokerage firm that has more than 100 salespeople in one office. Now that salesman has become a broker and has a small brokerage office with five or six salespeople.
Although I didn’t like the large impersonal office with the nationally known franchise name, I have the feeling the large office will do a better job selling our home than a small brokerage office. Do you recommend listing with a large or small real estate office?
ANSWER: The size of the real estate brokerage office that handles your listing has no effect on the sale of your home. Also, whether the office has a famous franchised name is immaterial.
What is important is the ability and success record of the individual agent with whom you list your home for sale. For example, if I ever sell my home, I will list it with the agent who sells the most homes in my area because I know she is extremely successful and specializes in selling houses in my vicinity.
Although I am a real estate broker, over the years I have made it my policy to always list my properties with realtors (except when I sell to my tenants) because it is difficult to be objective selling your own property. I have dealt with large and small brokerage offices, but have found size makes no difference. I have listed with one-person offices and once I listed with a 60-person office. Also, it makes no difference if the office is franchised or independent. All of the sales turned out very successfully.
Don’t Be Misled by Realty Agent’s Opinion
Q: We are uncertain if we should buy a home in a fairly new area that is developing rapidly. However, the realty agents assure us the town will soon solve its traffic and school problems. The home prices are bargains because the area is so far from the city. Do you think we should take a chance?
A: Be careful about opinions by real estate agents. There is no guarantee the forecasts of the agents will be correct. Realty agents are not liable if their opinions turn out not to be true.
For example, I recall about 20 years ago being told by realty agents that a slum area near my home was improving rapidly and I should buy houses there before it was too late. Today that area is still a slum. In fact, it’s worse today than when I originally considered investing there.
However, if a realty agent states a fact, such as that new roads and schools have been approved for the area, but it is not true, the agent would be liable for any factual misstatements.
Check Auctioneer’s Record Before Hiring
Q: Our home has been listed for sale more than six months. The realtor did a good job trying to sell it, but it is a unique home in a rural location, so it doesn’t appeal to most buyers. However, an auctioneer contacted us about auctioning our home. At first I didn’t like the idea, but the more I think about it the more I like it. What do you think?
A: Auctions of homes are not very common except for distress properties. My opinion is that an auction cheapens a home. However, the traditional way of selling your home hasn’t worked, so you don’t have much to lose by holding an auction.
I recommend that you check the auctioneer’s success record very carefully. Ask for names of his previous home sellers and phone them to learn if they were satisfied and if they would hire him again.
Get Familiar With Agent’s Track Record
Q: We plan to sell our home in a few months and are looking for a good agent to list it. We were not happy with the agent who sold our home to us about four years ago and do not know any other local agents. However, there are several discount brokers who charge less than the going rate, but we would have to show the house to prospective buyers and hold weekend open houses. Do you think this is a good way to save on the sales commission?
A: I suggest you interview several realty agents, both full-service and discount, before deciding. Listen to their listing presentations, which should include a written competitive market analysis form showing recent sales prices of similar nearby homes and asking prices of neighborhood homes now listed for sale (your competition). Ask lots of questions about their services, fees and anything else you want to know.
But before listing your home with any agent, phone their client references of previous sellers to ask: “Were you satisfied with this agent and would you list your home for sale with the same agent again?” You will soon know which agent should get your listing.
Never Too Young or Old to Buy Property
Q: My son, age 19, is a carpenter. I thought he made a big mistake by not going to college, but he got an excellent job with a property management company and they have more work than he can handle. It is rather embarrassing, but he makes more money than his father. Last year, my son managed to save about $20,000, and he wants to buy a “starter house.” Don’t you think he should wait until he is older and ready to settle down?
A: I wish I had started buying real estate when I was 19. (I was an elderly 26 when I bought my first property.) Please don’t discourage your son. He seems to be very ambitious and should become very successful. Do everything you can to encourage him. A person is never too young (or too old) to buy profitable real estate.
Your son’s special talent for carpentry means he can earn unlimited profits by acquiring run-down but sound, well-located homes and then fixing them either for resale profit or as a personal residence.
You should be very proud of your son’s ability and his obtaining a good, high-paying job. I hope your husband can handle the fact that your son earns more than his father. Please do everything you can to help your son buy his first home.
New-Home Warranty Should Be Disclosed
Q: We are considering buying a new home in a subdivision. The builder has a questionable reputation as there have been several class-action lawsuits against him reported in the newspapers. However, his latest project seems to be very successful. The area we are looking at is in Phase 3 of the development. We have talked to friends who live in the builder’s earlier houses in this large project and they are very pleased. Perhaps he has reformed. We asked what type of warranty is provided with the houses and the salesman said, “there is the standard 10-year warranty.” When I asked for a copy, he said we will get it with our closing papers. In other words, he refuses to show it to us before we buy. What do you think of this?
A: The few builders like that give the reputable home builders nightmares. There is no reason a home builder should not show you the warranty that comes with the home.
The best builders provide a 10-year warranty policy from an independent third-party company, such as the well-known HOW (Home Owner’s Warranty Corp.). Only quality builders can obtain such policies for their buyers. I would be very cautious about buying from a home builder who does not offer a third-party, 10-year warranty policy.
Look at Bright Side of Condemnation
Q: I own an apartment building that adjoins a new highway project. I have mixed emotions because I will make a huge profit when my building is condemned. However, I feel sorry for my tenants who will get only small relocation payments from the state. As my profit will be over $300,000, how can I best avoid tax?
A: Internal Revenue Code section 1033 allows you two years to acquire replacement “similar use” property of equal or greater cost, so you can defer tax on your profit. Please consult your real estate adviser for details of this tax law.
What Yield Should Home Seller Expect?
Q: Our home is listed for sale. The realty agent suggested that we might like to carry back a $25,000 second mortgage since our VA first mortgage is assumable by the buyer. She suggests a 10% interest rate. Do you think this is about right?
A: You might be able to get a higher yield, perhaps 11% or 12% interest. Or you could make the loan an adjustable interest rate tied to the cost of funds index and adjusted every year. Frankly, a 10% interest rate is a little low in today’s market.
Travel to Hawaii May Be Deductible
Q: I am considering buying a condominium in Hawaii as an investment. I would not occupy it and would turn it over to a realtor for rental to tenants. Can I deduct my travel expenses to check up on the condo several times a year?
A: The IRS has established no limit on the amount of deductible travel expenses to inspect and supervise your real estate investments. Annual or semiannual travel expenses would probably be acceptable. However, if you also spend time in Hawaii on vacation then you must apportion your travel expenses between pleasure and business. Please consult your tax adviser for details.
