A bold new service that goes where no other brokerage firm has gone before! Revolutionizing the industry and furthering transparency! Further showing why Frank won Inman New’s 2009 Innovator of the Year award, video).
Times are tough! Our firm, Frankly Real Estate Inc, is finding that we are losing more and more listing appointments. Whether it be sellers looking to do it themselves FSBO (see post Save $20k? Selling By Owner) or just picking cheaper, more local or more knowledgeable alternatives. We know we are great, but not everyone else is agreeing with us.
So we had to look forward to a new revenue model. At least to help us cover the loss in gas and time wasted.
The idea came from a recent real estate class. The question was:
What happens if an agent meets with a seller and finds out secret details of that home for sale?And then if that agent is not hired, but they have a buyer that wants to buy that home. Can they share the seller’s secrets? To whom is the fiduciary duty?
Turns out the Fiduciary Duty is 100% to the buyer client (assuming they are a signed client with an Exclusive Buyer Agency Agreement, don’t miss that blog post!)
So that got me thinking. That data on the seller… that is damn valuable.
An agent that loses a listing might have this data, and could sell it at auction on LostListings.com, such as:
When a new listing is hitting in a hot neighborhood. Value= $300-$5,000
Information about a patched up leaky roof. Value= $200-$2,000
Almost broken furnace. Value=$5,000
Information about a rodent, radon, oil leak problem. Value=$500-$25,000
Foundation crack being covered up or hidden. Value= $30,000
The Seller’s desire to sell quickly to avoid foreclosure and willingness to take $25,000 under market value! Value= $25,000
What would you pay for information on a hidden $30,000 defect?
Now on LostListings.com, unsuccessful listing agents can sell their acquired information at auction to either buyers directly, or to buyer’s agents.
This is currently only in the DC area, and soon we plan on launching a Kickstarter campaign to raise $350,000 to launch this idea nationwide. Will you join us?
I hope you will watch the video and check out LostListings.com . If you find it as revolutionary as I do, please leave a comment below on whether you think this is brilliant, won’t work, might be unethical, will work, etc. Let’s start a conversation. For comments go to: Blog.FranklyRealty.com, to also see what others have to say! And make sure to subscribe to this blog (upper right corner).
Oh and share this with friends! Tweet it, Facebook Like it, snail mail it to your relatives if you need to!
Update 11:05AM: While I am all for negative comments, please make sure you at least make a quick visit LostListings.com before completely passing judgment.
More and more I am seeing the technique of purposefully underpricing a listing in order to create an artificial bidding war. It is a very tempting pitch from your listing agent, but don’t fall for it! They may want you to underprice in order to sell your home quickly and to move on. Their goal might not be to net you the highest amount. And it doesn’t work, in my opinion.
Example (ass described in the video)
Listing 1, our listing. $429,000, sold for $432,600 or 101% of list.
Listing 2, not ours. $399,000, sold for $433,000 or 108% of list
One might initially think listing 2 did better. However, #2 was listed a month after #1 went Under Contract fast (so they should know that it went near full price, and newer listings in an up market tend to ask for about $2,500 more). Listing #2 was nearly identical, but two floors higher plus a fireplace. Two floors is about $6,000 in value, a fireplace, maybe $2k. Yet they only got $400 more on a place worth $8,000 more. The result of underpricing to create a bidding war… a loss of $7,600-$10,000 in value. Oops!
Why doesn’t it work? Bidding War Exhaustion ™, is what I call it (see Video at minute 4) . Buyers have a mental block for going over a certain % above list. Even though I frequently tell buyers to ignore the list price. Why take guidance from the listing agent who might not have a clue about the area.
IGNORE LIST PRICE! (sometimes)
I would rather you bid up a place $10k over list on $20k underpriced home then bid down $50k on a home that is overpriced by $80k. And for those of you that say “Oh no way man, I’m not getting involved in a bidding war”you REALLY need to talk to me. If you don’t want to buy this year because you think it is a bubble 2.0, that is fine, I wont argue (don’t miss the blog post “Lose $40,000″ the moment you buy a $500k home).
But if you are going to buy in the near future, that approach may cost you money. What, you are going to do? Wait until the NEXT house hits for $10k OVER the post bidding war price of the one you lost? Well that one will get bid up too, and you might be $25k worse off.
- Don’t overprice and allow for wiggle room. You will end up with a stale listing, low ballers and price drops into an endless pit.
- Don’t underprice. A bidding war might work, but I don’t believe you will get higher than if you priced properly and went up from there. Also underpriced homes really tick off buyers and the agent, and you don’t want a ticked off buyer on the other side of the table. Forcing people to buy, rarely works (but was necessary when I got a properly priced $499k place bid up to $601k in the Bubble 1.0).
- It almost always takes at least 2 buyers to sell a home. One to low ball and one to get the other off the fence.
- Don’t believe ads that guarantee a bidding war or show stats that on their face might seem impressive. When in doubt, send them to me. If it is the real deal, I will tell you and probably recommend you go with them!
(more bidding war tips for sellers and a video here)
Thanks! Don’t forget to subscribe to this blog (upper right corner of Blog.FranklyRealty.com) and get sneakpeaks on future blogs by watching and subscribing to www.youtube.com/FranklyRealty I now tend to start with a video blog and follow with a written post.
And comment! The last post got tons of direct emails. Instead ask your questions here and your comments. Even if there are short. A blogger loves a conversation.
Written ghostwriter-free by: Frank LLosa Esq. who is never too busy for you, just email me.
Many Realtor blog posts will say “BUY NOW!!”, or “Interest rates can’t get lower!” Over here we first say DON’T BUY, ASK WHY (since 2006 when I had hair).Which means, let’s first figure out if buying is right for you, and THEN move forward. No “don’t want money on rent” B.S. Heck Rent is CHEAPER!!
Did you know the moment you buy a home, you lose 8% equity! For those of you that put down 10%, that is an 80% loss in your investment overnight, or with a stroke of a pen (actually hundreds of strokes, those damn stacks of closing paper).
Everyone has heard about the “Drive a new car off the lot” effect. Well this is the same. (on the flip side, most car values keep going downhill.)
I’m not trying to scare you, but just put into perspective how real and huge an investment this is. You better get it right, and have the right representation (subtle plug?? Contact us 3-6 months before you think you are ready! This ain’t a checkout in Target.). Did your mom’s friend’s agent warn you about this? Or that “great deal” agent? Probably not.
One of my first qualifying questions is “HOW LONG DO YOU PLAN ON LIVING IN (more…)
But this video is from the perspective of the SELLER who might find themselves selling in this Hot Market.
The first instinct is to think one’s house is “easy” to sell. It actually becomes kinda a joke because we hear it so frequently. Everyone thinks their home will be an easy one. Yet it never is.
Especially now that there are bidding wars and it is a seller’s market (meaning sellers have more power now). Heck, why not just throw it up on the MLS (see Throw Up Listings, from 2007, but still applies) since it “sells itself.”
I wish it was that easy. Or maybe I don’t because then I might be out of a job.
Our goal is to get you the highest NET possible. That includes being aware of what you are paying in commission and your alternative options (but heck why go anywhere else). We respect your (more…)
3 FranklyMLS tips and a major update that things are changingand how one user thought we were too busy for them!!
First, Just The Tips!
Tip 1) Add a Favorite
When you click on the in either the spreadsheet mode of the single page featuring a property, you will get hyper updated alerts on changes to this home. Including any price drop, remarks change, more photos, added 3rd party comment, agent sneezing, under contract or even the final SOLD price. An awesome tool that so few utilize.The default is daily email change alerts, but in this market you might want to opt for the alerts as fast as 15 minutes after the change is made (ask us how).
Tip 2) Save a Search!
Again, seems obvious (at least to me) but 80% of the users don’t have a saved search set up properly. Assuming you are logged in, after you conduct a search, press the Save Current Search button in the middle of the screen. This will send you all new listings, price drops and sold prices for everything in your search area and criteria. NO need to obsess and check the site several times a day. Sit back and relax. Also the emails are VERY cell phone friendly with a direct link to the mobile version of the listing.
Ok. You hear about all of these bidding wars and low inventory. Yet your home still sits after 90 or 120 days. Is it the agent’s poor marketing? Is it the lack of follow up?
Did your agent agree to your “hurry up” and get the listing up and thus result in a “Throw Up Listing” that takes longer to sell? (we recently refused/lost a listing because we refused to put up garbage that would hurt the client)
Or did they win you by telling you your house will be on 600 websites! (as if that isn’t the default nowadays, but sounds great!!)
Or you just never hit this blog to get non-boilerplate Listing Advice.
Or maybe it is partly your fault for the home being overpriced? You demanded a price that in your gut felt right? Or they gave you no guidance and said yes to every command. (President’s shouldn’t have “yes men” around them, and you shouldn’t hire a “yes man” agent, hum that sounds like a solo blog post, make sure you subscribe today!)
Perhaps, but has the agent done their part and shown you EACH home that has gone under contract or sold nearby since the day you listed? And have they contacted EACH buyers agent and asked them “I see you bought, xyz, would you mind telling me why you passed on our house?”
My guess, very unlikely. Why? Because that stuff takes time.
So you want to fire them once the listing agreement expires.
A “Back-Up Offer” is an offer that is submitted when a home is already Under Contract (as seen on FranklyMLS with the strikeout line) with another buyer. (sidenote: this post kinda conflicts with my “this home is not available” post on the FranklyMLS blog, feel free to call me out on it).
If the seller signs it, it becomes the “Back-Up Contract.”
Does it happen often?
Sure. My guess is 10-20% of deals. Especially in the first week of being UC. I once had a listing with 4 contracts that fell out!
How does one put in a back up offer?
The second potential buyer will submit, preferably with their buyer’s agent (which should be an exclusive agent), a regular 20+ official contract with an addendum that outlines the details of the “back up offer.” This offer becomes ratified when it is signed by both parties. Then, in the event that the first contract does not perform, then the back-up offer immediately becomes the “primary contract”.
Disclaimer: Do not believe the post title, it is a hyper exaggeration. Your results may come in under $1,000,000 in savings.
But why save Trillions, when you can save Billions?
Ok maybe a bit much, but quote is the cliff notes:“FranklyRealty.com got me more money than I ever would have imagined.” Why exaggerate when you got that?
With all those compelling options buyers and sellers have today, I think I need to go into more detail explaining exactly how a great agent can help you NET more and more importantly win a home when inventory is tight.
This client is the perfect candidate to explain exactly what we do. A year ago his approach to real estate was typical “I’m smart” (oftentimes a lawyer or professional) and “I will go For Sale By Owner, FSBO, tosave money selling and I’ll be really smart and I will use a rebater tosave on buying.”
But then he got educated. Read almost every blog post in this Blog and became a convert (ie. even smarter than smart). He took the leap and used Frankly Real Estate and is here to share his experience with others considering FSBO, Rebating or your mom’s friendly Realtor (which is an upcoming post, so make sure to subscribe!). Don’t get me wrong, I am not knocking going solo via FSBO (see best post ever on “saving” $20,000 via FSBO) or Rebaters.
Heck, my long standing moto has been “I used to rebate, but then I got good”.
P.S. What do you all think about an informal (rsvp required) home buying seminar for repeat or 1st time home buyers in the $500-$1.3M range (too many seminars out there for the $100-$300k range buyer). I thought the concept was cheesy, but was like “actually it could be pretty cool.” You in?
p.s.s. Did you see my tweet on how my HGTV stars/clients are selling their Arlington home 3 years later? Here is the listing: AR7949281 it looks amazing.
This post may self destruct, for it tells too much! Yep, I might remove this post after my 1,000 subscribers get it in their inbox (are you signed up, do so in the upper right). Hopefully the competition doesn’t get to it. (I have already had one request to take it down)
So you have probably read newspaper articles about bidding wars on homes for sale in the Maryland, DC and Northern Virginia area. Especially houses in Arlington Virginia.
The inventory is tight and people are off to the races. Sometimes 5 offers, sometimes more.
This site is mostly about buying and selling real estate in Virginia, MD and DC, but most don’t realize that I also like to take an active role with the lending process. Kinda spot checking to make sure things look right and bringing up “oh, I hadn’t thought of that, type stuff.” Those little things can make a $15,000 difference. Does your agent do that?? (again, why you shouldn’t hire a buyer or listing agent based on bullet points, but instead based on a brain)
Anyhow, today I wanted to discuss something that came up with a blog reader via my online chat (see right column). He was heading down the path of a 10% mortgage, even though he had more cash. He wanted to be “conservative” and have a cushion.
(sidenote: I love that word. I once used it on a brother of a friend of mine. He was telling stories about his life that nobody believed. I said respectfully that what he was saying was awesome, but so awesome that it was Un-Believe-able to my mind. Beyond my ability to
comprehend. But in a “if it is true, you are a God” complimentary way.)
This buyer trick is like that. Maybe this will start to explain to you what a great thinking agent can do for you. Give you that leg up. None of this comparing agents by the length of their bullet point list of offerings. (see video on not picking a listing agent by comparing bullet point lists)
What if I told you, you could get systematically alerts for new listings BEFORE THEY HIT THE MLS (more…)
FranklyRealty.com is on fire, adding 5 full time agents (noticed I didn’t say “new,” we don’t take new agents) in the Va, DC and MD areas.
But also the agents are on fire.
I periodically do a search on the search bar of FranklyMLS.com for our company name: FranklyRealty.com. This lets you see in 1 click all of our Active and Under Contract (crossed out= UC) listings. Just one measure of how we are doing.
FPP stands for Frankly Price Predictor and it is the coolest new feature on FranklyMLS.com. So cool, it is patent pending.
The goal of FPP is to predict a home’s closing price, IF IT SOLD TODAY. Disclaimer: Please do NOT take it seriously.Consider it more like a TOY (at least for now).
FPP uses historic listing data (see below) to predict the price. It is NOT an AVM (which uses tax data and home data). Try a search for Arlington Condos.
An “AVM” is an Automated Valuation Model. The focus is on“value,” and it is for every home, listed or not.
Tools like Zillow’s Zestimate and Cyberhomes, use public data and recent sales. Many consider them wildly inaccurate. But heck, it makes for GREAT marketing! (Hats off to the Zillow team!). How “accurate” are they? In a Zillow report, the DC area is one of their most “accurate” areas, yet not even 50% of homes close within 5% of the Zestimate. So over 50% of $500k homes are off by over $25k!
Are Zestimates better than tax data, sure! Will we still show Zestimates on FranklyMLS? Sure. The more data the better, right? Is it better than a Realtor combing through comps, heck no (and they disclose that it is not a Realtor replacement).
How is FPP different than all those other “AVMs” or Automated Valuation Models are “value” estimators? (more…)
I called it in 2007 when I said that those $60-90 “processing fees” were illegal “kickbacks” that Realtors and Brokers got for pushing Home Warranty companies. (see 2007 post).
My exact words in 2007 in case you missed it: “I wouldn’t be surprised if soon there is a class action lawsuit that will come after these firms and the Realtors that are colludingto the detriment of their client.”
Well it finally happened. Of course the defendant doesn’t agree with or accept any responsibility. Here is the website announcing the class action settlement. It is against AHS, the #1 home warranty company. The period is from May 2007 to Dec 2010. AHS was selling home warranties for $400 and giving the recommending broker $60 to $90 in “admin fees.”
Why does this matter? Kickbacks are illegal under RESPA (google it).
And in case you missed it, our “Excellence Comes Standard” ™ client bill of rights #4 has always been, “No Home Warranty Kickbacks.” I know many might say “Duh, of course my agent should not be getting bribed,” but your Duh is not reality and yes agents get excited over $60. And yes it is only $60, but I think it signals a deeper problem of disclosure and fiduciary duty.
“Are you working on my behalf of not!” $60 here and… $10,000 there when your agent throws you under the bus, without authorization, and tells the other agent you are willing to pay more. And don’t think I don’t see this a fair amount. (ie sucky agents)
(Focus Frank, focus) The settlement calls for about a $45 to $60 refund.
Here is the tricky part. The settlement says those that qualify are “settlement class member’s purchase of the home service contract.” [sic] And supposedly people are getting letters from AHS telling them that they may qualify. But where are those letters likely to go to? To the home being warrantied! Who most likely bought the warranty? The seller! Ha. The seller’s contact information is usually nowhere on the application to purchase the warranty. So how do THEY get paid. I know, kinda boring and academic, but interesting to me.
What now? What is the latest trick or workaround?
Now the warranty firms (some stopped the practice) actually have the agent “do something” so it won’t be considered an illegal kickback. Not sure exactly what is done (if you know, add it to the comments). Probably it will entail having the agent walk around the house and check off boxes.
In case you missed it, a couple weeks ago FranklyRealty.com was featured in the season premiere of HGTV’s !
I had a great time with TJ and Stephanie. Thank you guys for being a great sport.
It took 9 months to find their home, and it was well worth the wait!
During that 9 months I also took some “behind the scenes” video with a point and shoot video camera. And since the show is supposed to be a behind the scenes view of buying a house, I called my own video a “behind the scenes, of behind the scenes.” (insert 3rd party laugh if you didn’t find that funny).
I hope to compile 9 months of outings and live negotiations into a mini webisode. It will be raw and informal, but hopefully you can really see more about how I work.
Are 6% Realtor commissions “customary” or “prevailing,” or the “average?” (hint=no). Do you get what you pay for? (hint=oftentimes no) This post is long but it uncovers the unspeakable… COMMISSIONS!
Why does it matter? Because on a $500,000 home each percent is $5,000! Any ignorance about commissions may lead to a royal ripoff. The trick is that less commission isn’t always more “savings”, but the flipside is also true, because a higher commission isn’t always followed with better performance. Knowledge is power.
Background: Ever wonder why there are nearly no Realtor blogs discussing commission structures openly? (probably not, but for the other 3 of you…) It all has to do with an AntiTrust price fixing case against a few Realtor brokers decades ago. (I just covered it in my AntiTrust Law class, this is my last semester at AU! for those that are curious followers.)
These brokers got together for a dinner at Congressional County Club in MD. The organizer was F0LEY, the then President of the Local Board of Realtors. He got up and said he was changing his firms rates to 7% from 6%. (insert tons of details here).
His excuse was the market was horrible and tons of homes were listing, but nothing was selling, so they were in dire straits. Ultimately, several were found guilty of conspiracy to raise commission rates in violation of the Sherman Act, an Antitrust law.
Fast forward 30 years, the Realtor community is still terrorized and instructed to NOT TALK ABOUT COMMISSIONS publicly with other agents. And to even get up and leave a room if somebody talks commissions. I have seen it, it is pretty funny when the word commission is mentioned and everyone freaks out and becomes a lawyer “You can’t talk about that!”
It got so bad that the Virginia Assoc. of Realtors’ legal counsel didn’t want to say “6% commissions” when teaching agents, so he referenced a number of hypothetical “chickens” instead of using actual percentages. He happened to use the number 600 chickens. Hum, if that isn’t a wink wink to the number 6, then I don’t know what is. (see Blog post on topic or video see minute 11:20) Gimme a break.
In my opinion, in the end, this chill effect & gag order has the opposite result. Instead of colluding to increase prices, the new silence solidifies what the consumers (and press) think is the “Normal” Realtor Commission. And the press make it worse with headlines like: “Chipping Away At Realtors’ Six Percent” (link). Or Wikipedia’s “The median real estate commission charged… 6%”. This is WRONG. (more…)
Scared of hiring a smaller Virginia, DC or Maryland real estate firm?
For those of you that might be thinking“What or who is Frankly Realty?”and are
scared to pick a firm that only uses experienced full-time agents (go ahead, crank call any firm and say you want to start in a week as a part-timer and see how excited they get!”), this testimonial is a must read.
Background: This seller had experience selling several properties using “long standing, reputable firms.” But her latest home was listed unsuccessfully by 2 big brand agents for over 300 days.
Then Frankly Realty agent Cathy Poungmalai got the listing. Cathy suggested and helped with light rehab,staged it, used amazing photos (with a main photo collage) and several other techniques leading to “never a shortage of buyers,” 4 offers and this unsolicited testimonial.
Here are the testimonial highlights:
“We’[v]e always used long standing, reputable firms”