Tenant occupied

There comes a time (or two-hundred) in the life of every listing agent when they are asked to list a home, condo, or townhouse that is occupied by a tenant paying rent to live there. Many that rent a property owned by a person, versus an investor or management company, know that at some point the owner may choose to sell and they will have to move out once the lease concludes or upon receiving proper notice; however, once in a while an agent encounters a tenant that appears to have no intention of moving out. Ever. And this can contribute to a variety of complications and challenges when it comes to completing a sale of the property

On the purchase side of the equation, a buyer and their agent may be mindful of certain red flags that hint to potential purchase difficulties regarding these situations down the road. They should not ignore them, but rather they should address them directly if a buyer is interested in such a place.

tenants

That awkward question

Realtors are advised to ask buyers if they are currently working with an agent before pursuing them as a client. This can help to avoid the kind of conflict that comes with learning that the buyer a realtor thought was working with them exclusively is really playing the field and going on showings with other agents – probably without having any negative or deceitful intent (some might, but I choose to believe that is not typically the case), but because they are learning the process as they go and rely on an agent to guide and educate them.

If a buyer discloses this information outright, upon being asked, then I would think most agents would be respectful of their candor, and thankful for it as well. If a realtor asks a buyer if they are working with another agent and the buyer says “yes” then the realtor (should) know to back off and politely advise the buyer to work through the agent they have chosen, unless they decide it is not working out and both parties agree to part ways. However, if the buyer says “no” when in truth they are working with one or more other agents it can cause interpersonal, ethical, and perhaps even legal problems down the line.

That said, the responsibility to ask the question falls on the agent in terms of broaching the topic. Asking the question, and receiving an answer, provides the agent with the information needed to determine how to handle the situation, because many buyers simply do not know how the process works, or what problems some actions could cause down the line, and so they may not proactively offer the information as they do not know it is important. Most buyers are likely not trying to hide it at all; they just do not know it is critical for the agent to have that knowledge.

While asking the question during the first interaction may feel awkward or uncomfortable, it is essential, and gives the agent an opportunity to offer the buyer an explanation as to why they asked the question to help them better understand the complicated mechanics of home sales. This may also open the door to further discussions about the buying process and the buyer’s needs if it turns out the buyer is not working with another agent.

On the realtor side of the equation, it helps agents preserve relationships with other agents in the industry by respecting existing agency relationships other agents may have with one or more buyers. This is important because many agents encounter ones they have worked with before on numerous occasions – especially in smaller markets like Litchfield or Merrimack, New Hampshire – where specific agents do a lot of business in those towns. Negotiating with an agent that feels another agent has been unethical or has behaved in an unpleasant, or dishonest, manner in the past becomes exceptionally difficult and can impede a sale, or make one much harder than it has to be due to hostility or distrust among the agents. This is always best to avoid so that negotiations are focused on the best interests of the clients and not the agents.

not exclusive

And then…

not exclusive part 2

 

Real estate agent in some top ten most stressful job lists

I want to write about a misconception people who are not in the real estate business often have about the nature of the role of realtor or real estate agent. I can count on both hands a minimum of two dozen times when a person has expressed to me how lucky I am to have a job that is so easy and flexible. These assumptions used to baffle me, but after pondering this notion for some time I now realize why this career path appears this way to those working in other professions.

Before I present some realities about working as a real estate agent, I want to say that despite the information I am about to share I feel this career is right for me because it satisfies my need to help others in a meaningful way. For instance, I help buyers find the home they want – within the confines of their budget and at the best value possible. I find working with buyers enjoyable because I know that if I do my job right, barring any problems or issues I cannot detect and an inspector does not detect that do cause the deal to fall through for reasons beyond the agent’s control, then I get this sense of satisfaction that I have helped them reach a major milestone in their life – whether they are first time home buyers, second time home buyers, or have purchased many homes. I also love working with Veterans and have done so many times. It is a somewhat different process and so I know that with the experience I have, I can help active and inactive military personnel navigate the process much better than agents that do not.

I enjoy sellers because I treat the relationship like a partnership and so when obstacles arise we work together to resolve them, and I do everything on my end (that is legally and ethically within my power) to do to help them. But perhaps most importantly, I listen to their concerns, ideas, and input instead of forcing a decision upon them.

Reaching the closing table and finalizing a purchase and/or sale marks the end of an often emotional, stressful, exciting, and sometimes unpredictable time span that may last a month or much longer, depending on the circumstances and myriad factors. This is true for the buyers, sellers, and the agents. There is a great deal of stress and uncertainty involved and this can bring out the worst in any person at times. Understanding this can become the key to making it all the way to the end.

That said, I had a friend say to me one day “Hey, I came across this article that said being a real estate agent is one of the most stressful jobs a person can have? Is that true?” I thought about it for a moment, and the ups and downs I have been through in my career – particularly the first year which was especially difficult – and I responded something to the effect that while it can at times become tremendously stressful, it can be at times exceptionally satisfying and rewarding.

I am speaking only for myself, of course, but based on what other agents have told me I know that many in the business remain in it despite the stress, but I believe there are categories of reasons as to why agents remain in the business (especially successful ones), such as: the incredible feeling service-oriented agents get when they get the the closing table, the money (not everyone is in it for the money, because you must spend a lot of money to remain licensed and busy with clients, but for some agents it is all about the bottom line), or the rush they get from winning listings, negotiating contracts successfully, getting paid, and potentially becoming known among one or more communities as a prominent agent.

Getting back to the belief some have that the job is among the top ten stressful jobs (and not all web sources share this opinion), I thought to myself that while I do know the job can at times be very stressful, it is not really fair to compare it to jobs like law enforcement, corrections, those working for fire departments, and many others where people actually put their lives on the line for others or shape the lives of other people, such as teachers and professors – to name a few. Not even close. Those jobs are beyond stressful and they are also absolutely critical, and so I  had to spend some time thinking about how and why the career of real estate agent has made the top ten list on so many different sites. After much thought, I did come up with some answers and realizations about the job that do support a high ranking. Perhaps not in the top ten, but top twenty for sure.

Many people that do not work in real estate, or have not been involved in a transaction for a period of time, do not know how much is involved in the process. Putting a home on the market and selling it is the obvious goal in the mind of sellers. Finding, negotiating, and purchasing the right home for one or more people’s specific needs is the primary goal of the buyer/s. However, there are other sub-processes and happenings that may bring about much anxiety and stress on the part of all parties (of which there are many, including: the buyer/s, the seller/s, the agent or agents, the title or attorney company, a lender if needed, an appraiser if applicable, and an inspector – to name the most commonly included parties, as well as the inclusion of the friends and family members of buyers or sellers that like to view the property and give input). All of the moving parts that are either visible to all parties, and invisible to some, must all come together in just the right way for a closing on a home to occur. Unfortunately, with that many people involved there are plenty of opportunities for challenges and difficulties to arise, but this does not mean the purchase or sale will not make it to closing. Quite the opposite if one is working with a good agent and communication is clear and frequent. Even when agents are 110% on top of their game there are some factors they cannot see or control, or can see but have little to no ability to resolve.

Regardless, in difficult situations I push forward anyway and no matter how bleak a situation seems with regard to a problem with a purchase or sale I think hard about any and all possible solutions. I am an out of the box thinker – a person that does not really believe it when other say something is impossible or a lost cause. I am a persistent person, with an instinct for advocating strongly on behalf of those I am working with. The majority of the time these efforts pay off and the purchase or sale is completed. Once in a while, though not often, a problem or obstacle arises I cannot remedy due to reasons beyond my control (underwriters not approving financing near the end, etc.).

When I sit at a closing table after one of the kinds of sales that have proven very difficult, and realize that despite everything that has happened and I have managed to work with all the parties to keep it all together, allowing  my clients to make it all the way to the end, it serves as a reminder that the stress was (and remains) worth it. This belief is further etched into my brain when a buyer or seller expresses their gratitude or finds themselves compelled to write a nice review about me online, say thank you, or even give my name to others as a referral.

The above are signs to me that I am in the right career. They tell me I am doing my job right, or at minimum to the absolute best of my ability. I have even had agents  on the other side of a difficult deal give or send me thank you cards because they know how hard the fight can be on either side and while they are technically on the opposing side of the sale, the reality is we all have the same goal and that is to get to closing with those involved and leave them feeling as good about it as possible, despite trauma that may have occurred from obstacles, delays, or challenges, experienced during the process.

But is this job extremely stressful? Yes. To back up the claim, I will provide just a few of the sites I came across after I dispel a few (but not all) myths about work in real estate. These are ones I have personally encountered and stand out in my mind as I am writing this.

Myth 1: Real estate is all about “business”and it is not “personal”.

False. Buying or selling a house is stressful, but necessary because people need and want a place to live. People may say it is “business, not personal”, but nothing could be further from the truth. When a person or couple go through the process of buying a home they are looking for a safe haven that matches their needs to the degree possible given location, financial status, and other factors. Sometimes it is a single buyer looking for a place of their own to own and build equity. Other times it is a couple or a family looking for a place to call “home”. The bottom line is the purchase or sale of a home is directed correlated with person or families needs, goals, and dreams.

The process is personal for sellers too. These are people that have likely lived in and made memories in the home they are selling: both good and bad. Some have had and raised their children in the home they are selling, while others bought it with that plan in mind. This is one of many reasons why sellers may be inclined to sometimes price their home too high. They are factoring in sentimental value – that while does not justify a price point that is exceptionally above its market value – it must be understood and respectfully acknowledged by agents and buyers, or else the sellers are very unlikely to change their stance on the value if an offer is made in a manner that offends the seller/s. Some of these homes do not sell, but when parties remain respectful it is more likely that a seller will come down in price, within reason.

Myth 2: All purchases and sales should be smooth and without obstacles if an agent is competent and professional.

False. This is only true if the agent demonstrates signs of incompetence, and/or the obstacles are stemming from sources they may have some degree of control over. It is also false if such an agent is not taking the needs of their client/s seriously, and really listening to what it is they need. Not being responsive, without explanation, is another sign the agent is contributing to the sale falling apart, or persistent problems throughout because it may mean they are not paying attention to deadlines, acting proactively, or working hard to find solutions to issues that arise. However, if the opposite is true and there are many obstacles, but it is evident the agent is working diligently on a buyer or seller’s behalf, then one must understand it is a complex process. Anything can and does happen.

Myth: The job is flexible.

False. This is a common misconception I hear all the time. Agents that treat their work like a business and a career, versus a hobby, are always “on” and ready to work. These agents spend years trying to find a  work/life balance and still work hard enough to earn a reasonable amount of money.

As discussed in another blog post, commissions are structured in such a way that the check given to the agent as closing does not reflect their net income due to reasons such as: broker commission splits (depending on how the company handles that), possible franchise fees, self employment tax, no retirement plan through the broker, no health insurance unless the realtor buys it on their own or has a spouse with one through their own job, referral fees to other brokers or agents that gave the agent the client, costs spent to market properties or assist buyers with showings, and the list goes on. If a buyer calls an agent at 7pm at night and the agent chooses to answer the phone, the buyer might say “There is a house that just came and I want to see it tomorrow morning if possible because I don’t want to risk losing it to another buyer”. Agents each have their own way of handling these situations, but needless to say there are consequences and implications associated with whatever way the agent chooses to respond, or not respond. There is not always a right or wrong response either. Sometimes it has to be considered on a case-by-case basis.

Myth: Few, if any at all, purchases or sales are without some bumps in the road.

The business of selling homes is unpredictable and there are specific milestones that may be especially hard to get beyond. Communication between agents and clients is essential from the beginning. Agents must prepare their clients in a realistic fashion – not in an effort to scare them off, but in an effort to reduce the stress the client feels if they do encounter a bump or ten in the road.

If an agent is going into a listing appointment promising to sell quickly, promising to sell at a higher than market value price, and promising a painless transaction then they may win the listing, but the odds the process will play out that way are extremely low and they know this if they are experienced. Instead, I personally prepare buyers and sellers ahead of time about what they may expect. I do not do it in a way that frightens them, but rather establishes appropriate expectations right from the start. This is helpful because if a problem does arise, the buyer or seller may still experience stress, but they are not caught completely off guard. I also encourage my clients to ask questions, give input, or express concerns as they come up so they do not fester as many are easily addressed. I cannot emphasize this enough: communication is key.

Myth: I have had people say to me on occasion, “You are so lucky to have such an easy job! All you have to do is show houses or put them on websites and they just sell”.

Let me respond clearly on this one.

No.

The showings are relatively easy, though an agent needs to carefully manage time, coordinate multiple showings (and if you have four or five in a row this can be a challenge and a half to make all the appointments on time), be on the look out for problems or red flags at a home showing, research the property and its history ahead of time, and other work that would double the word count of this article f I listed it all. However, showings are enjoyable to me and I love seeing homes so I agree with the idea that this is one of the easier parts of the job. It is the negotiations, getting a house under agreement, getting past inspection, getting past appraisal, getting lenders that are reliable and return calls (some are reliable and some are not; just like real estate agents and other human beings in general), getting the loan commitment letter on time, meeting all deadlines on time, talking people off the ledge when something happens and they panic, and getting the final numbers for the buyers and sellers within the legally required time frame (or it causes a delay in the closing) that can be the hardest parts of the job.

Please know that there are other common and varied causes of stress to agents including: entering homes or coming into contact constantly with strangers that could potentially harm, rob, or murder an agent, the experience of frequent rejection that happens a lot during an agent’s earlier years in the business (it is the nature of the business since it is exceptionally competitive profession and agents have to learn to let the rejection go and move on), not knowing when the next pay check is coming in since a home has to close for an agent to get paid, regardless of the fact the agent still has bills to pay (and dues, insurance, taxes, fees, gasoline, and marketing expenses), and helping clients through the emotional roller coaster of making such a major change and transition in their life.

There are more, but for now I will leave you with links to websites that include the role of real estate agent/realtor as among the top ten most stressful jobs. Some give additional insight into the realities of this job and why it can cause such stress.

Realtor Magazine’s “Top 10 Most Stressful Jobs”

Forbes’ 2011 list of “What are the Most Stressful Occupations”

Realty Times reasons “Why Real Estate Agent is on the top ten list of most stressful jobs”

HSH’s article “Real estate agent: The job can be a killer”

Active Rain’s “10 Most Stressful Job” and it has a slideshow for those just looking to get the gist of the list.

Home financing and other burning rings of fire

If you are embarking on the process of purchasing your first home, or already have a home and are buying another, then you are acutely aware that getting financing is a challenging, confusing, and sometimes frustrating process. As you reach the end stage you may find yourself waiting with baited breath for the lender to provide your agent with the loan commitment letter stating you have made it through underwriting. Until that time you might find yourself living in a semi-constant state of fear and uncertainty about whether or not the wizard behind the curtain – also known as the underwriter – will grant you the power to become a Homeowner.

Just know that you are not alone. Many have gone through the same thing and lived to tell about it. You can too.

underwriter

 

 

Did they like the house or not?

confusing layout smallIn real estate, most agents are expected to provide feedback to the listing agent after showing a property to their buyer/s. On the face of it the concept of giving and receiving this feedback sounds reasonable and practical. If ten buyers see a home and seven of those buyers make a negative comment about the lawn needing to be mowed then it is safe for the sellers to assume this is something they need to address. In all likelihood their realtor told them that the foot high grass in the front yard – complete with weird weeds no one can identify – would not go over well with buyers, but perhaps the seller just needed a second or seventh opinion on the matter before they would agree to take the advice. It happens. Life goes on and the problem gets solved. Or not.

However, feedback sometimes comes with some very specific drawbacks. One such drawback is that it is not unusual for realtors to give feedback that includes issues with the house that the seller cannot easily or even conceivably change. An example of this is a realtor that writes on the feedback form, “The house is nice, but my buyers need five bedrooms instead of three.” This is not helpful feedback to the seller or to the listing agent. And it prompts questions like: Why is the buyer looking at a three bedroom house when they really need five bedrooms? Why is their agent taking them to see houses without the appropriate number of bedrooms? Only the realtor and his or her buyers know the answers to these questions. Meanwhile, the seller may have been copied on the feedback and now they are angry they had to clean their house, leave at 6:30 p.m., and walk their dog around the block for forty-five minutes. In the rain, where they were almost attacked by a power hungry and overly aggressive Chihuahua. And so now the sellers are upset for good reason. Who wouldn’t be irritated/angry/infuriated over something like that?

Then there is feedback that is extremely ambiguous and difficult to decode. For example, an agent took her buyers to do a second showing on one of my listings a while back. When asked how it went she remarked that it “went well”, but then pointed out things the buyers did not like about the house. To a listing agent words like “went well” imply there is possibly further interest in the home. However, when these words are immediately followed with only critical feedback it sends an entirely different message, albeit a confusing one. The listing agent is then left to wonder if maybe the showing really did not go all that well at all. Maybe, just maybe, the second showing was a total bust and the agent for the buyers cannot gather the courage to say that outright. Then, when the listing agent asks for clarification, the agent for the buyers may stop responding to texts, calls, and/or emails entirely. This is how a lot of people in the technology age handle conflict. They simply ignore it and pretend they did not get those two emails, one voicemail message, five texts, one message via social media, and a facetime request.

Upon realizing that the listing agent is not going to get specific answers regarding the showing, he or she is then left with this strange, contradictory feedback to take back to their sellers. The sellers will inevitably ask questions like, “Oh…okay…so are they going to make an offer?” And, “If the showing went well then does it mean they like the house but are not sure if they want to make an offer yet?” Or, “I don’t really understand what this even means…What are they saying exactly?” All of this could have been avoided if the agent for the buyers just admitted the house was not right for their clients.

Another type of feedback worth mentioning occurs when the agent that showed a place to her buyers does not want to hurt anyone’s feelings, but also does not want to ignore all feedback requests from the listing agent (or an automated showing service that sends these requests on behalf of the agent). This kind of feedback is not optimal, but it is definitely preferable to ambiguous and/or contradictory feedback because it answers the question as to whether or not the buyers have any further interest in the home. They do not and now the seller knows this after reading or hearing the feedback. The main problem with this feedback, however,  is that it does not shed any light on what the sellers could do to make the home more appealing since it refers to aspects of the home the seller probably cannot change – or at least not easily. Examples of this feedback include:

“My buyers do not like the layout.” An alternative to this one is, “The layout will just not work for my buyers.”

“The footprint is weird.” Or they say, “The buyers don’t like the way the house sits on the lot.”

“My buyers are just barely starting their home search and this is only the twenty-third house they have seen, and so they really want to see everything on the market before they make an offer on a house. And when I say they want to see everything, this includes every new listing that comes on the market with each passing day. Do you have any other listings coming on the market in the next twelve months in this price range that I may show my buyers? I suspect I will be assisting them in their home search for many years to come and I like to plan ahead when possible.”

Again, the above types are preferable to others because 1) it is feedback and the sellers want to know what the buyers thought of their home – or at least they think they do, and 2) it leaves minimal questions about whether or not the sellers should sit on pins and needles, with their phone in hand, waiting for an offer from said buyers that is highly unlikely to come.

At some point in the future I will revisit this topic and discuss other kinds of feedback, such as:

  1. Feedback that upsets or offends the sellers
  2. Feedback that does not seem to apply to the house at all, leaving the listing agent to wonder if the agent for the buyer/s mixed up two homes they showed and is giving feedback on a totally different house
  3. Feedback that is not helpful because it recommends the sellers do things to or with the house that would cost more money than the house is already worth
  4. Other feedback that is so bizarre it is hard to categorize, and probably deserves its very only post

Price “improvement”

I have noticed that more and more listing agents are using the phrase “price improvement” in place of the more traditional ones like “price reduction” and “price adjustment”. As you have probably learned by now realtors love euphemisms and cryptic descriptions so it seems logical that these preferences would find their way into some of the fairly straight forward aspects of residential real estate sales.

What does it all mean though? Is there really a difference between a price reduction, adjustment, and improvement? Perhaps. Perhaps not. No matter what words are used to describe a change in the price it all amounts to the same thing: the seller/s are now willing to part with the property at a lower price (not $20,000 under the new and “improved” price, mind you, but that’s a topic for another day). Regardless, it likely will not come as a surprise that this is not always how buyers interpret the decision. Buyers may assume the “improvement” means any or none of the following:

  1. The sellers are desperate to sell.
  2. There is something terribly wrong with the property, aside from the price originally being higher than buyers in the market were willing to pay.
  3. The sellers are probably willing to “give the house away” and accept unnaturally low offers that make cash only foreclosures seem as though they are being sold at premium prices by comparison.

More often than not though, a price reduction/improvement/adjustment really just means the biggest problem impeding the sale of the home is that it was originally priced too high for that particular market when taking into account its condition, location, updates (or lack of them), need for repairs, size, price point, financing options, etc. If you see that a giant sinkhole has opened up in the yard just prior to the “improvement” then you have your answer as to why the price has changed. However, if you see a listing that has been reduced by quite a lot and you cannot pinpoint any obvious reasons for it during showings, in the property disclosures, within the deed, or through the inspection of other sources of information about the property then there is a good chance the above is true. It was simply priced too high to begin with.

sinkhole