Don't go blindfolded to the bargaining table.

Everyone knows realtors earn commissions for the homes they sell, but many people don't realize who pays them and how the final amount is determined.
When a seller enters into a listing agreement to sell their home through a real estate broker, the listing agreement spells out how much compensation will be paid by the seller to the listing broker upon a successful close of escrow. This is one of the costs of selling a home.
The listing agreement also spells out how much of that total compensation will be shared with another broker whose agent brings the buyer. If the buyer is represented by their own agent, the buyer's agent will receive the compensation published in the MLS listing that was agreed upon by the seller and the listing broker.
If the listing broker represents the buyer, unless otherwise agreed to at the time of the listing, the listing broker will receive the full compensation and will not have to share it with another agent.
The listing agent has a responsibility to look out for the seller's best interest and bring them the highest possible sales price. A buyer should also have someone looking out for his best interest to negotiate the best possible price, terms and conditions on his behalf.
Many buyers don't know that the services of a professional realtor are free to them. In order for a buyer's agent to earn a commission they must meet prospective buyers, build a relationship with them and must do a good job to earn their trust. Buyers should have the confidence in their agent to negotiate a successful contract on their behalf and look out for their best interests throughout the transaction.
In California, what is referred to as "dual agency" is perfectly legal. The listing broker can first represent the seller, and then if a buyer comes along, that same agent can represent the buyer too. Although legal, it is a slippery slope when it comes to whose best interest is really being considered and sometimes it may not be easy to differentiate because everyone involved has a different perspective.
There are some people that believe they will get a "better deal" buying directly through the listing agent because the seller won't have to pay the buyers agent commission. Remember, the seller has agreed to pay a commission to the listing broker, irrespective of agency relationships. The listing broker may or may not reduce his commission, and he may or may not reduce the sales price by that amount, and he may or may not disclose seller's true bottom line. A lot depends on the integrity and honesty of the listing agent. Buyers are leaving a lot of grey areas wide open.
Finding a home is only one step in the entire home buying process. Why not take time to also search out a good realtor? After finding an agent that fits, stick with him and let him not only help find a home and look out for your best interest at the bargaining table.
But don't give the agent blind trust. Ask questions, conduct investigations, and seek out all of the information before making any major decision.

25 Questions to Ask a Realtor

25 Questions to Ask a Realtor Before Signing ANY Listing Agreement.

In a random survey, statistics revealed 82% of people who bought or sold a home had a miserable experience (Real Estate Marketing University, 1999) blaming it mainly on their real estate agent. Are you getting your money's worth from your real estate agent?

Here are some key questions to ask when interviewing Realtors:

1. Do you have a Marketing Plan tailored specifically to my home?
2. How familiar are you with my neighborhood and community?
3. I realize by default of all local associations, my home will be posted on several national websites (i.e. Realtor.com) and the MLS with just one picture. Are you going to be posting additional digital pictures along with a detailed description concerning the home?
4. I know that over 80% of homebuyers first see a home on the internet. Do you have a specific internet marketing plan?
5. Will a virtual tour be conducted and posted on the web?
6. Are you a one-person operation or do have a team that works with you?
7. Will you be providing prospective purchasers or their agents a detailed marketing flyer to include: interior and exterior features; many color photographs; a vicinity map; distances to schools and other local landmarks; and financing options?
8. Will you hold an open house EVERY WEEKEND until my home is sold?
9. What systems do you have in place that will keep you in constant contact with me during the listing and the transaction?
10. Do you have a system for following up on all Agent showings, all open house visits and all sign and ad calls?
11. Are you fully automated with your own lap-top computer, digital camera, FAX machine, copier, pager, voice mail, cell phone, scanner, contracts software, etc.?
12. What is the average market time in my area?
13. What has sold and what is currently on the market that my home will be competing against?
14. How will you help me determine the best sales price that will bring me the greatest return, in the shortest amount of time, with the best terms and conditions and no hassles?
15. How experienced are you in negotiations? Can I see your track record?
16. Are you going to be tenacious in dealings with others on my behalf? Will you be looking out for my best interest?
17. Do you hold any degrees or what is your highest level of education completed?
18. Are you a full-time professional real estate consultant or just a part-time sales agent?
19. How long have you been in the business and how many transactions have you closed?
20. Do you have a split with your broker or are you a 100% agent? If you have a split, why aren't you 100%?
21. How much of your time is dedicated to "prospecting" or "cold calling"?
22. How much of your business is from past customers or referrals?
23. Will you be providing me with a list of your most recent customers to verify your capabilities?
24. Have you ever had a grievance or complaint lodged against you with your local association or the State real estate department?
25. Can we cancel the listing at anytime WITH NO QUESTIONS ASKED, if we are unhappy?

How Sellers Price Their Homes

How Much Should I Offer? We're often asked by our clients, "How much under the listing price should we offer?" This is an excellent question. The answer is difficult.

The main reason we emphasize the education phase of looking at homes is because that is the best way for you to know value. When you review and study 20-60 (or more!) listings, then drive by 10-30 and look at 5-20, you will recognize the "Hot Listings." You'll also recognize the "dogs."

Sellers price their homes differently for 4 basic reasons:

1. Ridiculously Overpriced!
These sellers have listened to a real estate agent over-inflate the value of their home in an effort to obtain a listing. There is a natural tendency on the part of sellers to list with the real estate agent who gives them the highest promise. There is a tendency by some real estate agents to give the seller a high "value" in an effort to obtain the listing.

Or, especially in this area, the Sellers simply owe too much on the home and can't afford to sell for any less. However, that's not your problem!

These homes can be 10-20% overpriced. These sellers may need a "dose of reality" for a few months before they begin to realize that their home is way overpriced as compared to others in the area.

The longer an overpriced home is for sale, the more likely we can get the seller to face reality and sell at a fair price, if they are able. They may just have to take it off the market or worse do a short sale.

2. A Little Overpriced!
These sellers fall into 2 categories:
• Those that feel their home is worth every penny of their asking price.
• Those that want to leave a little "negotiating" room.

These homes can be 4-10% overpriced. Perhaps 75% of all homes for sale are priced in this range.

3. Priced At Fair Market Value
These sellers have carefully and realistically studied other homes for sale. They have priced their homes very competitively. These homes usually sell faster at or very near the listed price.

4. Priced Below Fair Market Value
These homes are priced below value. Perhaps the seller wants a fast sale. Perhaps the real estate agent recommended too low of a price. These homes usually sell within 7-10 days, at or above the listed price. There are usually competing offers.

So, you can see that it's not an easy answer. Numbers aren't just pulled out of the air. Many buyers just want to offer low because they feel that that's what the market is. Well, in some cases, if the property is overpriced - based on sales comparables, condition, location, and other factors - then offering low may be a good way to open negotiations. However, some propertites are priced at or near market and you don't want to offend the seller or kill any chance of real negotiations by offering too low.

Even by carefully studying homes for sale, it's difficult to establish Fair Market Value. If you're obtaining a new home loan, you'll be protected by the Professional Bank Appraisal. Home lenders want to make sure that you don't over-pay for a home. If the home does not meet value in the eyes of the bank appraiser, you'll be informed. At that time, we can re-negotiate the sale price or void the agreement and refund your earnest money deposit.

As a Realtor, my job is to ensure that you have the tools and information you need to make an informed decision. I will provide you with a broad rannge of sales comparables and we will evaluate together all of the factors that create value in a property. I'll help you prepare the offer with your price, terms and conditions. Then we'll present it to the seller on your behalf and try our best to get it accepted at your price and terms!