Andrew Wetzel's Musings

November 15, 2019

49 Things a Listing Agent Should NOT Do, Even If Their Client Accepts Them

Real Estate agents are licensed by the state.  I am in Pennsylvania.  Once approved to represent or “work for” clients, they are bound by RELRA, our Real Estate Licensing and Registration Act, which is enforced by the state Real Estate Commission.  If an agent becomes a REALTOR, which means they belong to national, state and local REALTOR Associations, they are bound by a Code of Ethics which is very similar to RELRA although enforcement is handled through a local Association in most cases.

Once a REALTOR is “hired” to represent a seller-client they owe them certain “fiduciary duties” which are spelled out in the rules and regulations.  They should review and discuss them with their seller-client to ensure that they are committed to working together.  Here is a list of things NOT to do even if the seller-client asks you to do them or if they accept your doing them.  Most of this list comes from real-life examples, fortunately not my own.  I have been mediating seller-buyer and client-agent disputes since 2002.  In addition, I have served on all levels of our Association’s Professional Standards Committee which means I have heard, reviewed, evaluated and resolved many ethics complaints.  As I like to say when I teach ethics to my fellow agents, you can’t make this stuff up.

Here are some examples of what NOT to do when representing an owner selling Real Estate:

  • Do not ask if they are working with another agent or if they have spoken to any other agents;
  • Do not look in the MLS to see their property history or if they own other properties you think you might help them sell. Trust that they own any properties you are discussing;
  • Do not spend a lot of time preparing for the listing conversation. Personality wins every time;
  • Do not clarify what the seller is looking for in terms of their “wants” and “needs”;
  • Do not ask their reason for selling or ask if you can help them identify their next home;
  • If they are planning to buy another property, do not discuss getting them pre-qualified;
  • Do not ask if they know of anyone who has expressed interest in buying their property;
  • Do not ask if they know anyone else looking to sell or buy;
  • Do not ask if the seller can pay off any liens so that they can transfer ownership;
  • Do not explain the selling process, your respective “roles”, your fee and how you earn it;
  • Do not discuss how pricing correlates with location, features, condition and their competition;
  • Do not tell them what you are going to do for them or why they should hire you;
  • Do not review the Consumer Notice with them or ask them to sign it. In fact, do not discuss or document your “business relationship” with them or explain your “fiduciary duties” to them.  If “dual agency” becomes a possibility, you can always discuss it later;
  • Assume you know what is best for them and let them assume you know what you are doing;
  • Do not discuss their local market or a potential “range of values” for an asking or selling price;
  • Do not discuss their potential proceeds or their cost of selling. You can always do that later;
  • Do not ask them to repair or update anything even if you think a buyer, an inspector, an appraiser or a local codes enforcement officer might require repairs later. Everyone likes surprises, don’t they?;
  • Do not discuss how you will market their property;
  • Do not discuss what their options are if the market does not respond favorably to their property;
  • Do not discuss any personal property they may want to include, exclude or make negotiable;
  • Do not explain different financing alternatives, the appraisal process or what a “seller assist” is;
  • Do not sign a listing contract, if at all, until they are ready for showings. If something comes up, you can always figure it out later;
  • Do not tell them that the length or term of the contract and your fee are negotiable by law;
  • Do not explain how “cooperation” with other Real Estate agents works or how your fee can be used to help attract showings and offers. In fact, do not offer a market-driven coop fee or spend too much time preparing the MLS entry as you may really want to sell the property yourself;
  • Do not discuss how your fee is earned or what may happen if they fail to do what is required to complete a sale;
  • Do not explain how the “protection period” works;
  • Do not discuss scheduling showings and how important they are or tell them that some agents arrive late without rescheduling or fail to show up at all;
  • Do not tell them that “feedback” is old-fashioned and that most agents will not respond when asked;
  • Do not use an appointment center: make buyer agents call you for showings and then do not return their calls promptly.  Perhaps make sure their buyers are “qualified” to save time;
  • Do not explain how deposit money is handled if a sale falls through;
  • Do not discuss how you will handle inquiries about “other interest”, the existence of other offers or how you will handle inquiries and offers after a purchase agreement has been signed;
  • Do not discuss the law regarding the property and lead disclosures and do not review them before you upload them to the MLS. Perhaps you will not upload them until agents call you to request them;
  • Do not discuss home warranties or offer sellers an opportunity to include one with a sale;
  • Do not tell them that they cannot refuse to sell to people who aren’t like them;
  • Do not offer advice for preparing their home for sale and for showings;
  • Do not show them a copy of their MLS printout. Do you really need good pictures or a “remarks” section for buyers to evaluate the property?  Do you really need to show all of the features?;
  • Do not explain the Agreement of Sale to them. If fact, make sure all of the paperwork is done electronically so that you can save them time by not having to meet with you in person;
  • Do not discuss a negotiating strategy, especially if you have “multiple offers”, or ask what is important for them when comparing offers;
  • Do not discuss what may happen from the time an offer is signed through settlement;
  • Do not explain the contingencies in the Agreement of Sale, especially the inspections and municipal requirements, if any, or what could possibly go wrong;
  • Do not ask the buyer’s agent to attend inspections and be accountable for providing access;
  • Do not stay on top of the timeframes in the Agreement of Sale or provide ongoing updates;
  • Do not explain the mediation clause or what it means should a problem arise;
  • Do not tell them to maintain property insurance until a sale is completed;
  • Do not discuss any concerns that a buyer, an inspector or an appraiser might have which could affect the selling price or the seller’s proceeds and possibly end the sale unsuccessfully;
  • Do not document changes to any contracts or provide them with copies of everything they sign;
  • Do not promote or protect their interests above yours. Assume that “confidentiality” is not important if it gets in your way.  The acronym, OLD CAR, which describes our “fiduciary duties”, only makes you remember the first car you ever owned;
  • Do not suggest they contact a professional, such as a lawyer, when they have any questions;
  • Do not stay in touch after a sale! After all, they will remember your spectacular performance, won’t they?

Of course, this list is really intended to show you most of what we are expected to do, even if actual performance may vary from one agent to another.  Our “fiduciary duties” require that we obey your lawful instructions, be loyal to you, disclose what we know, keep your business confidential, account for any monies we handle and that we provide reasonable care and due diligence to you.  There is so much more to working for sellers and buyers than simply doing the paperwork.  Even if you have sold or bought Real Estate before, we have knowledge and insight gained through experience, training and education.  We are expected to protect and promote your interests throughout the process and to be knowledgeable and competent in what we do.  Our clients have the right to expect nothing less.

When it comes to selling what is typically a person’s largest asset:

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!

Bright MLS October 2019 Housing Report

Bright MLS has released their Residential Market Statistics for single family homes through October  2019.  In today’s podcast I will discuss YTD results for Delaware County Pennsylvania.  If you would like information about this or any other County in the Delaware Valley, please contact me.

The report compares the current results to one-year ago, same time period.  As with all Real Estate statistics, two things are true.  First, the performance within individual zip-codes can and will vary significantly from the overall County.  Real Estate is local and results can vary from neighborhood to neighborhood and even block to block.  There is no such thing as a “national” Real Estate market so, whether you may be looking to buy or sell, please contact me for details about your areas of interest.  I can provide current information and keep you informed about the evolving market.  Deciding whether it is the right time to sell or buy is a personal decision typically involving a number of variables.  I can provide the knowledge and insight to help you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data is stale.  While a sale may be settled or closed today, the real question is when was the offer negotiated?  Typically sales take 45 to 60 days to close so the market today may be different.  Up-to-date information is important!

As far as the statistics, there were 8084 units listed through October compared to 7996 last year with end-of -month inventory levels of 1356 compared to 2323 with a monthly supply of inventory or MSI of 2.3 compared to 4.3.  So far 5890 properties have been settled with an average “selling price” of $290,903 and a “median” selling price, meaning that half of the sales were higher and half were lower, of $225,700 compared to 5997 settled last year, same time period, at an average price of $273,081 and a median selling price of $210,000.  The year-to-year change in settled properties is down 1.8% while the average selling price is up 6.5%.  The DOM or “days on the market” for settled properties was 41 days compared to 51 one year ago.  The MSI suggests a seller’s market overall with 3-month supply of available inventory generally considered a “balanced market”.  The underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County.

We can debate whether averages or medians are more important but what really matters is how your property or one that interests you compares to those appraised and settled with similar location, features and condition.  Appraisers rely on nearby settled properties so average or median pricing loses some validity but may provide insight for both the short term and the long term.

What about the properties that did not sell?  Many came off the market and remain unavailable.  Houses may get showings without generating offers unless buyers think they are priced within the range of their perceived “worth”.  Most property listings whose contracts are canceled or allowed to expire have asking prices considered high for their market and/ or they were poorly marketed, meaning that some buyers and agents may not have even known that a house was available to purchase.  Of course this may well depend on the ratio of buyer and sellers so there is more to this than raw statistics.  If a market has a lot of inventory, some buyers may not be willing to look at houses priced high compared to the rest of the market.  While sellers may be open to negotiating their price, many never get the chance.  I will happy to discuss specifics with you.

The overall economy is doing well with some adjustments here and there.  Statistics aside, what are you planning to do?  Real Estate is generally a long-term investment unless you are looking to fix and flip it or planning to move within a short period of time.  There are opportunities out there.  As with the stock market, it is very difficult to pick the best time to make a move.  All you can do is get the best available information, determine what is in your best interests and then start the process.  I am a phone call or email away and getting started is easy once you take action.

There is no time for inexperience, empty promises or false expectations!

HIRE WISELY:  We are not all the same!

November 2, 2019

Bright MLS Listing Statuses and What They Mean

There are two primary tools used for conveying property information for buying and selling Real Estate.  While there are literally hundreds of possible ways to communicate this information, except for specific market segments which may use or need a different approach, all but the top two pale in comparison as far as efficiency and effectiveness.  Real Estate agents are the “match makers” bringing sellers and buyers together:  we participate in over 91% of Real Estate transactions.

By efficiency I mean having the ability to mass market information as quickly as possible.  Marketing means exposure and exposure should ensure that a seller achieve the highest possible selling price in a reasonable amount of time.  Whether the value the market attaches to a property meets the seller’s expectations or not is another story.  The fact is that Real Estate needs to be exposed to the mass market, properties have to be available to be shown to prospective buyers and sellers need to believe that the value they are offered has not been negatively impacted by poor or limited exposure.  Sellers are either motivated by time or money so some may be willing to settle for less if they sell quickly.

By effective I mean that prospective buyers and their agents must be able to readily identify all of the options which meet the buyer’s wants and needs.  Buyers need to be able to believe that they are getting the best value for their dollar by being able to compare what is available for purchase and to compare what is available with what has been sold as far as location, features, condition and price.  The concept of “data integrity” means that information is uploaded accurately so that it can be identified by people searching for it.  Of course, listing agents and mortgage appraisers need to rely on the information as well.  No one benefits from inefficient or ineffective means of conveying Real Estate information.

So, what are the two tools?  They are the multiple listing service and the Internet.  Agents use the MLS to research the market, to offer their listings to the masses and to attach a “range of values” to what they are hired to sell as listing or buying agents.  While often not a direct link, generally what is uploaded to the MLS is “syndicated” to the third-party public-facing websites on the Internet.  While information can be placed on the Internet beyond what the MLS offers or without any placement in the MLS, the Internet has its own limitations.  For example, while it provides lots of data and information, it is a static medium which cannot provide the knowledge and insight an agent can.  It also cannot provide up-to-the-minute access to property listings or information about recently settled properties.  As an example, most people understand that the “valuation” models provided by Internet sites are unreliable even if they do not know that the lack of real-time information is a major reason for that.

My point is not to compare the two media although there are significant differences.  The public should not assume that they can “shop online” for property and Real Estate information, delay contacting an experienced, trained, educated and knowledgeable professional and still expect the best possible outcome.  Buying and selling Real Estate are too important and too many are ill-equipped for the process and the decisions that typically will follow.  Both media, while different, need to rely on “data integrity”, meaning that anyone who finds “information” on either platform should be able to trust that it is valid and that is the problem.

One major point of focus is the “listing status” of the property so I will discuss the different MLS statuses and give a brief description.  It has been my experience that some agents and many consumers do not clearly understand what these terms mean.  Misinformation can be costly given that the sale or purchase of Real Estate is typically the most expensive financial transaction a consumer will make.  The cost of mistakes can be high with little chance to recover lost opportunity.  Now, the statuses.

Active:  means that a property is available for showings and for purchase.  This seems simple enough but Bright has a 3-business day rule meaning that status changes, including price changes, must be reported within 3 business days with the date of the “change” counting as day #1.  Good agents will verify the listing status before showing a property or writing an offer.  Failure to comply with the rule may violate rules and regulations;

Active Under Contract:  means that there is an executed purchase agreement but the property is still available for showings.  The real question is why?  Does the seller have the right to terminate the existing contract or are they just looking for “back-up” offers in case something happens?  Whichever is the case should be obvious.  Good agents will ask questions.  The key point here is that showings must be allowed;

Canceled:  means that the listing contract has been canceled;

Closed:  also called “settled”, means that the sale or lease has been finalized;

Coming Soon:  means that the property is not available for showings but listing agents must respond to inquiries whether the property is the MLS or not.  This is a current “hot topic” which is still evolving;

Expired:  means that the listing contract term has run out without a sale;

Temporarily Off Market:  means that showings have been stopped and will resume at some point.  There are no showings but offers can be submitted;

Pending:  means that the property is “under contract” or sold but not settled.  No further showings will be scheduled;

Withdrawn:  means that the marketing has stopped but the listing contract still binds the seller to the listing broker.  The seller may still be interested in receiving offers but there are now showings.

Agents and the public must understand what the different statuses mean and agents must use them properly.  Few things frustrate a prospective buyer more than feeling that they are being excluded from a property especially if they think that the listing agent is the cause.  Our REALTOR Code of Ethics requires that we protect and promote the interests of our client and be honest with the public.  Failure to do either can and has hurt how we are perceived.  Sellers and buyers should feel comfortable asking questions about the process and deserve to be given honest and complete answers.

There is no time for inexperience, empty promises or false expectations!

 HIRE WISELY:  We are not all the same!

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