Attn. Market Timers! The EXACT Best Day to Buy!

Frankly, the #1 questions I get are market timing questions like: “Have we hit bottom?” and “Is NOW the time to buy?” Well, after months of thinking and market analysis I’ve discovered the EXACT time you should buy, down to the DAY!

So you no longer believe the “Buy Now!” campaign from the National Association of Realtors. Especially since The New York Times quotes the former Chief Economist David Lereah as acknowledging he had gotten it wrong (more…)

• 4
• September
• 2007

• 37 »

Builder Tricks Part 3! Independent Appraisals & Fiduciary Duty

Frankly, builders are in a heap of trouble with excess inventory! (Just take a glance at Brian Brady’s mortgage blog for more details.)

So with this trouble comes questionable practices in order to unload properties. Get a Realtor (the price is built into the condo, you won’t get a better deal without one) to represent YOUR best interest.

I already called out one Arlington Condo builder (more…)

• 22
• August
• 2007

• 15 »

“Round Robin” Buying System. Unearthing The Desperate Seller.

Frankly, buyers say they want a good deal, but oftentimes they aren’t willing to go through the emotional roller coaster the buying process can put them through. A good Realtor will try to shelter the buyer from stress, but inevitably it is up to the seller and their threshold for being aggressive.

For the most part I don’t really believe in the idea of a “Good Deal” (more…)

• 21
• August
• 2007

• 22 »

THROW-UP listings. Do it “RIGHT,” Not “RIGHT NOW!”

Ever heard the phrase “Hurry up and wait”?

How about the bastard cousin: “If you hurry up, expect to wait.”? Not as catchy?

Anyhow, the fastest way to sell a house is to slooooooow doooooooown and do it right from the beginning. A rushed job will NET you less and take 3 times longer (more…)

• 21
• July
• 2007

• 42 »

Builder: Guaranteed Lowest Price* WITHOUT THE ASTERISK

The first builder I noticed offering “Pricing Guarantees” was The Park At Courthouse. I thought the idea was brilliant. A promotional plan that would give buyer’s some security in their preconstruction purchase, in case prices dropped.

So in theory, if you bought a place for $400,000 and a few months later, that exact or similar unit dropped to $390,000, you would get (more…)

• 17
• June
• 2007

• 17 »

Subprime Loan or Nothing? Pick Nothing!

A subprime loan is a loan given to people with low credit scores. Those loans are either:

1) At a much higher interest rate, or
2) With closing costs and/or points through the roof.

1. Either way it is highway (more…)

• 7
• June
• 2007

• 22 »

60 Minutes: Redfin Saves $27,000 vs FranklyRealty.com Client Saves $152,000!

Last week 3 people texted me (or would that be “text me”)
saying “Turn on 60 minutes,” yet I missed it! (see it)

America was lured in by the… 20 year long regurgitated story “Attack on the 6% Realtors” and comments about “saving thousands.”

After watching such a biased infomercial, of course Redfin seems like a no-brainer. Well my blog readers have a brain (more…)

• 24
• May
• 2007

• 25 »

Bidding Wars? It’s The Staging Stupid!!

First of all, a shout out to Megan (FranklyRealty.com Realtor) for her most recent bidding war in Old Town Alexandria. Sold in 3 days, $13k over list. Photos at 1322Princess.com. One key to her success… Staging! (see bottom for before & after photos)

So, a buddy of mine in Chicago wanted to sell his place and he wanted my help deciding the best route to get the highest net.

He, like almost every person (more…)

• 1
• May
• 2007

• 38 »

Go FSBO! Save $20,000! Realtor Tells All!!

• 29
• April
• 2007

• 55 »

“Buyer’s Market?” No Such Thing As a “Good Deal”

Some Realtors think their job is to make client’s feel all warm and fuzzy by making the buyer think that they got a “Good Deal.” Kind of like how almost everyone who buys a car walks out thinking that they got a steal of a deal!

I don’t believe in this. I am not hired to be a comforter. I’m hired to get the most suitable property at the best price possible, and to do so aggressively, if that is what the client requests (more…)

• 12
• April
• 2007

• 16 »

Excellence Comes Standard. Frankly Client Bill of Rights, From The Real Estate Gadfly

“Gadfly,” 1) a person who upsets the status quo by stimulating innovation by proving an irritant. 2) any of various flies, like a horsefly, that bite or annoy livestock.

First JetBlue left customers on the runway for 10 hours. After this disaster they came out with a JetBlue Bill of Rights.

Then a class action lawsuit was brought against C0ldwell Banker (Article) for violating RESPA laws for steering clients to profit-sharing “partners.”

Before there is a further disastrous out lash from consumers against Realtors, we must adopt a new standard. All shadiness needs to be removed from the industry and excellence should come standard.

FranklyRealty.com will start in Virginia, DC, MD and I envision shortly other firms will subscribe to the “Frankly Client Bill of Rights” throughout the country. This is not trademarked, go ahead copy me. You’d be an idiot not to.

Who will join us? Who runs a real estate firm that is willing to follow our lead and offer a new elite level of service and disclosure?

While I’m honored to be the first to come out with this, I’m also embarrassed at the same time that this isn’t already the default. Consumers might read this and say “d’uh, seems obvious,” I agree! But why is it that not one real estate firm in America subscribe to this? YET!

Introducing the Frankly Client Bill of Rights:

#1 No ABA’s, Affiliated Business Arrangements

We make our money on the commission, we don’t need to make a few hundred bucks steering you. No “One Stop Shopping” filled with partners filling our pockets. (blog on ABAs)

#2 No Admin Fees

These $200-$400 junk fees were invented by large real estate firms for both the buy and sell side. No more having clients sign confusing disclosures unknowingly. We don’t charge them, never have. (blog on Admin Fees)

#3 No Dual Agency

Dual Agency is ILLEGAL in some states. I wonder why? Dual Agency is when there is only one Realtor between a buyer and seller. A Dual Agency Realtor can not help both sides. So legally they are not allowed to represent EITHER SIDE, and instead “represent the contract” only. That makes the agent a mere worthless paper pusher. We don’t do that. We will only represent our client, the buyer OR seller. In the case where a buyer comes without an agent, they will be an “unrepresented buyer” (like a FSBO) and will sign a disclosure saying who we work for. (new blog soon)

#4 No TELLING you what to pay

We won’t tell you what to pay for a place. Ever! We won’t even answer the “What if you were me” question, since… We aren’t you! It is your money, and your risk tolerance. Instead of telling you a price, we will go over a ton of data to consider and conclude with our “VEGAS ODDS SYSTEM” on what the other side MIGHT do and separate it into three categories: Accept, Counter or Walk. Ultimately you decide how aggressive you want to be. (No “selling” blog)

#5 No Home Warranty Insurance Kickbacks

Even though it is illegal to receive a commission for selling insurance (unless you are a licensed insurance dealer), the Home Warranty companies have figured out a way to give agents and firms an “admin fee” of $60 to sell their goods. Why bother? We won’t accept that commission as we feel that is illegal. Instead we will pass that “admin fee” to the buyer/seller. This might seem like a small amount, but the principle is what matters. Again we make our money on the commission, we don’t need to upsell you to make another $60.

#6 No Buyer Agent Bonuses/Bribes

We outline our compensation up front in our Exclusive Buyer Agency Agreement (Don’t Sign Them Yet blog). If there is a bonus to the buyer agent, the buyer gets that in a form of a rebate on the HUD1. We can’t be bribed to push you into a particular listing. (blog on 10% agent bribes)

#7 30 Photos & Custom Domain Name Website Per Listing

It boggles my mind when a $900,000 listing posts 3 photos taken with a camera phone (see Sucky Agents) and then wonders why it didn’t sell for 200 days. And this is from a “Top 3” large company, not a “discounter.” They even allow agents to check a default button to allow the MLS to dispatch a high school photographer to take a free exterior shot. I call this the free drive-by shooting option.

Simple new requirement: Each listing must have at least 20 photos taken with a 22mm wide angle camera (like the v570) or from a professional photographer.

Each listing will also have their own domain name. No need to point prospects to “HugeRealEstateCompany.com” just to get lost looking at another 10,000 homes. Instead prospects can go directly to the photos of the listing with their own domain like: 2001OdysseyUNIT X.com

#8 Professional Staging

We won’t list a house unless we can make it look better than a model home. Why? It works. It gets you more money and the house sells faster. (See Bidding War blog). Just yesterday we got 3 offers in 3 days for $20k over what other Realtors said would be the seller’s top price (referrals available).

#9 You’re High Tech, We’re High Tech

How about 100% paperless transactions from start to close? No unnecessary “meeting to sign” papers or trips to Kinkos. We also use instant messaging, cell text messaging and of course email… from our phone. Prefer paper? We can do that too.

Thank you for following Blog.FranklyRealty.com as we recalibrate the real estate industry! Sign up via for updates or email this to a friend.

Are you a buyer or seller? Print this out, have your Realtor sign the Frankly Client Bill of Rights? (Tell me how it goes)

Are you a Realtor with another firm that can’t promise the above? Then switch or start your own, maybe I’ll even help you!

Thanks for all the comments, keep em coming. And if you like this blog, please pass it on! Oh and tell me if you find typos, I don’t like looking dumb.

Written by Frank Borges LLosa- The Real Estate Gadfly

Virginia Broker/ Owner FranklyRealty.com

Blog.FranklyRealty.com Featured in BusinessWeek, CNBC, WSJ etc.

p.s. #10 As with JetBlue, we also promise not to leave you on the runway for 10 hours.

• 6
• March
• 2007

• 48 »

Realtor Rebates. Free Money or Expensive Savings?

This blog is supposed to be about the inside scoop on real estate right?

Well lets talk about a huge hush hush: Realtor Rebates!

Wow, I said it, and I put it in writing. A non-Rebate firm educating their customers (more…)

• 6
• February
• 2007

• 56 »

$395 Realty Firm's "Admin Fee": Junk or Legit? (Update: Now called “Additional Commission”)

Update 3/2011: Admin fees are now being called “Additional Commissions” after a few lost class action suits against “admin fees.”

Somebody must be reading this (actually 60 people a day) since this GREAT question came in.

Q. My listing agent is taking commission plus a $395 administrative fee. What is the administrative fee all about?

Great question! Why didn’t I think of that?
First of all I don’t know what you mean by “taking.” If you are telling me that you signed a listing agreement for a certain percentage and the $395 was NOT mentioned in there, and suddenly you are expected to pay it at the closing, I think your exact words should be “over my dead body.”

Shameless plug: FranklyRealty.com has never charged an Administrative fee. I just never understood what it was. It is a junk fee, but allowed if you agree to it.

What is an administrative fee?

It is a fee that is supposed to cover “the cost of paper and tools, etc.” Um, but don’t they also get a BIG chunk of the commission too? Yes, so it is a fluff fee to increase revenue. A fee that is easy to slip past the client that might not know better, so why not charge it?

• Thank God you have this Blog to get the inside scoop.
  Shameless plug #2 If you are smart, you’ll sign up for future blogs to be emailed to you (at the bottom). I apologize for all these plugs on this particular blog, and I know blogs aren’t supposed to be self promotional, but when 70% of the competition does shady stuff like this, I just can’t contain myself.)

How do they get away with this fee 70% of the time?

While everyone knows there is competition for which agent you pick, there is another round of competition that you might not know about. It is the competition amongst brokerage firms to get the top producing agents to work for them. Different firms have different split structures. Some start with 50% going to the firm and 50% going to the agent (and they need an admin on top of that, give me a break!). And this 50/50 split is for deals that the agent finds on their own! It drops even more if the firm gave them the deals. And it cuts in HALF for the first couple of deals since a mentor gets a portion. Yes, a new agent can get as low as 20% of the commission, I saw it in real life. A friend/new Realtor walked out with a $2,100 check on a $10,000 commission that she brought to the firm. And you all thought we had it easy!!

So one way firms lure agents in is with more competitive splits. Some firms recruit newbies at 50% splits, and some take experienced agents and only charge 5%, plus “desk fees.” But wait. They have to make money somehow.

So many firms started with “admin” fees to subsidize the brokers (because the agents wanted higher splits) and now they also do it with ABA’s (see Blog: “Affiliated Business” or Illegal Kickbacks?) So one could say that the brokerages didn’t need to charge that if the agent split was lower and more profitable. So while the agent pitches it as “oh the broker charges that, I can’t do anything about it,” they in the meantime are charged less by the broker. So indirectly that admin fee goes to the agent, in the form of lower fees to them. Have I confused you yet?

Here is how the conversation probably started:
• Agent: Dear Broker, I need a better split.
• Broker: But I’m not making enough money at this rate.
• Agent: Do better or I will leave.
• Broker: Hold on, I’ll give you a better split but you will have to pass on a $395 fee to your clients that would go directly to us.
• Agent: Deal! Where do I sign?
• Agent to Client: Oh, that Admin fee is for the broker to cover costs of doing business.
• Client: Um, ok.
• Client’s friend: You should have read Blog.FranklyRealty.com

How common is the Admin Fee and where should I look for it?

I spoke to 2 closing companies. Both agreed that the range was from $195 to $395 and they were on 70% of closings, and they were on both the listing side AND the buying side. I had never seen them on the buying agent side, news to me. Heck, maybe I should start charging this!

What can you do?

• Net everything out. If your listing agent is charging x% plus $395, add it up. And question it to see their recorded pitch.
• If you never signed anything allowing that fee, make the agent eat it. This is like a lender giving you a good faith estimate and suddenly adding an admin fee.
• It is up to you if you wish to ask for the fee to be waived if it WAS disclosed. I go back and forth on the ethics behind this since you DID agree to it. But maybe you were tricked into it? One closing company told me that 10% of agents eat this fee since some are embarrassed by the fee and sometimes because a customer won’t pay it.
• Pick a firm that doesn’t nickel and dime you. If they are pulling this fast one on you, what else are they pulling?

Again, they might say, “it is for the cost of paper and tools, etc.” Your response is, “Out of this $10,000 commission, don’t they already get a large portion? I won’t pay that fee.”

Good luck and let me know how it goes!

– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily.

Videos at YouTube.FranklyRealty.com

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• 5
• February
• 2007

• 43 »

Beware: New Constructions Illegally Not Disclosing Seller Subsidies

(Thank you to MRIS for warning agents about illegal MLS fudging, perhaps due to BusinessWeek’s story that referred to my blog. More at the end)*

Now I have reported to MRIS another violation.
Lets see what they do about it.

New Construction Fudging the Reporting of Seller Subsidy… how conveeee….enient.

Before I get started on tricks that the builders are using to unload inventory, did you know that it doesn’t cost you anything to have a Realtor represent you? The cost is the same to the buyer, oftentimes the on-site sales agent gets the double commission. Sometimes a “free” buyer agent can save you even more, even if you think you already squeezed $100k out of them, who cares, if your buyer agent knows they recently dropped a place $200k around the corner. Price drops are relative, and a good Realtor can help protect you. See I Need A Buyer’s Agent! But For My Car.

So back to builder fudging. On the MLS, when a listing closes a Realtor must enter in the closed price. This can easily be verified by the tax records once it comes out. A Realtor is also required to post the seller subsidy amount. The “seller subsidy” is the “cash back to buyer” or “cash toward closing costs” and it is a marketing scheme to make a listing look more favorable, even though I tell my buyers to ignore them and just to net everything out. A $515k place with $15k back should be viewed as a $500k. Don’t let that marketing confuse you.

• Damn side note: I once had a listing for $325,000 and an agent said “but the developer is offering an amazing $15,000 in incentives, will you match that?” The builder’s price was $350,000. I said “Sure. I’ll double it! I’ll give you $30,000 back with a price of $355,000, Deal?” So make sure you NET everything out!

Anyhow, the builders are in a bad situation right now. Especially Arlington County condos in Virignia. They have already sold a ton of units at a great price, but they need to sell the rest of their inventory without pissing off the current owners and people under contract.

So how do they do this?
Well one way is through fudging the “seller subsidy”. If a place is $600,000 and they want to drop the price to $580,000, they will instead give $20,000 worth of “seller subsidies” or “cash back.” Effectively the sale is $580,000, but it gets recorded in the tax records as $600,000 (which is fine). The part that is not fine is they are leaving off the subsidy information on the MLS. Insert Dr. Evil’s voice: How convenient!

How do I know they are fudging the MLS?

• The graph to the left shows one builder’s last 40 sales. Not one included a seller subsidy. Meanwhile I have been in their sales office. As with EVERY builder, they give huge seller subsidies. Yet not one is posted here, as required by the MLS.
• The box on the right side of the graph are 50 Arlington Condos sold in 2006. About 40% have seller subsidies.

Why does seller subsidy disclosure matter?
If you are considering buying a $500k condo in Arlington, you will look at the past sales as one of a dozen metrics to value a home (I wish I could show all my tricks on pricing and offering on homes, but the competition might be reading this, email me if you want a sample). If the builder just sold a nearly exact unit for $500,000 and recorded no subsidy, you might actually consider buying the unit near $500k. However, if you knew that there was $20,000 cash back, and the net price was actually $480,000, that is basically a Honda Civic value of information ($20k).

So in conclusion, make sure your buyer agent knows the market well and knows about tricks like those and other listing agent tricks that could cost you $20,000.

For all those super smart people that think like my Mom (read Mom Blog on not trusting Realtors) did “I don’t need no stinking buyer agent,” this stuff happens all the time. (shameless plug here: sign up to get emails of new blogs, the sign up box is at the bottom)

And you all think all we do is push paper and get you to buy quickly?

– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.

Videos at YouTube.FranklyRealty.com

*Thank you to MRIS continued: I would like to thank MRIS for warning agents about MLS fudging.(the local MLS system) for posting a bulletin board on Matrix (the back end Realtor system) warning listing agents that Data MLS fudging is illegal and will not be tolerated. I believe my MLS Data fudging Blog (Part 1 and Part 2) and the resulting Business Week article probably lit a fire under them. While I wanted to copy and paste that notice, it wa
s gone after 24 hours. Oh well. Update: I found the link to the notice.

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• 3
• February
• 2007

• 7 »

Beware: "Affiliated Business" or Illegal Kickbacks?

Walks like a Duck, talks like a Duck…
There is a booming new business that consumers deserve to fully understand. It is called an “Affiliated Business Arrangement” or ABA. A new stream of income for some Realtors. You deserve full disclosure and whether your Realtor is getting an indirect kickback from his “recommended partners”

“Affiliated” businesses. Are they a Godsend, barely legal, just plain illegal, or just unethical?

FIRST OF ALL LETS DEFINE RESPA? (The law designed to stop kickbacks)

• “RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services.” Respa website.

Could a Realtor that is in “partnership” with a Title company, please help me understand why it is ok to skirt around this law? More frequently I am finding large real estate companies (and the agents) “partnering” with settlement companies and doing so in a manner that technically gets them around the kickback laws.

One Real Estate company even uses the loophole as a recruiting technique:

• “Mortgage and Title Income . We share income with our agents under a RESPA compliant platform. As the leader in this field we have developed the only legal way to offer you this additional income.”

Yippee!!! Translation: “We are smart, cunning and sneaky enough to have figured out a loophole to get around the basic intent of the law… at least for now or until we get caught.”

Another website lists the following reason for agents to join their Real Estate company:

• “Does the company own affiliated businesses? Do the agents share in this?”

But I thought the earlier company was the only one that knew how to do it legally?

RATS!

So the law was designed to stop Real Estate Agents from getting a $100 or $300 incentive to drive business to a particular Title company. Yet that doesn’t stop the “brilliant” realty firms that found a loophole around this.

This is one of the loopholes as I barely understand it:

• The agent becomes a tiny % part owner in the settlement company’s newly formed subsidiary LLC . I don’t have the exact details, but this part ownership is a legal way for them to get an indirect kickback, since revenue can’t go to agents unless they happen to own part of the company. So while they don’t get directly $300 per deal, they get a year end revenue share that is somehow tied to the # of closings with that company. One Realtor said it isn’t tied to that, but I would have to see details before I believed that an agent would be allowed to own a part of 1 title company, while sending ALL your business to another
• And once the new year hits, a newly formed LLC is created to bring on new agents.
  

So please, agents that are part of these big companies, please help me understand how you rationalize this. While some of you might say that you have the client sign a disclosure form, how many of you with a straight face can tell me that your client “gets” that you are making $300 off them if they go with a particular company? As if we don’t make enough money on the deal, we need to bilk them for a couple hundred more bucks?

Most buyers sign that disclosure because:

• They think it is normal and are already signing 20 documents
• They feel pressured into it or confused
• They can’t read between the lines that say: “Your Realtor makes $300 if you use XYZ”
• They have no other alternatives.

Instead of the intent of the disclosure which is to let people understand that they have a choice and that their agent makes money if you sign that paper. Note that it used to be more common for the firm to make money, and not the agent. Now firms are sharing that money back with the agents as a recruiting technique.

What can you do? (I’m not one to bitch about something and not give suggested remedies)

1. Avoid the companies that have these ABAs. If they do shady things like this, what else are they going to do that is shady? (see blog on Shady 10% Buyer Agent Bonuses or the blog “Don’t Trust Realtors that Sell You on Buying“)
2. Demand that the Realtor put in writing exactly how much they are getting (once you get that in writing, send it to me to review)
3. Ask the Realtor how he can justify this bonus/kickback/revenue share if he already agreed in another contract that a) he was making X% and b) working for you, the buyer.
4. Demand that bonus in the form of a Rebate back to the buyer.
5. If he won’t rebate his bonus, use another settlement company.

Aren’t you just jealous that you don’t have these partnerships?
No. I could easily get them and I have been offered them.

The conversation goes like this (but with a lender),

• Lender: “Let us be your in house lender and you can get 35% of the revenue”,
• I say: “Um, don’t you have to make a living and won’t that fee have to be passed on to the client?”
• Lender: “No, I’ll give them a great rate and you make $500”
• I say: “So why don’t I just pass on the kickback and you give the savings to the customer?”
• Lender: “Ok, lets do it!”
• I say: “No thanks, I don’t trust kickbacks, so how can I trust that you wouldn’t just charge $500 more (which is REALLY easy to do with loans as the fees can be hidden in a dozen places including a slightly higher rate)

Ok some Realtors getting revenue sharing might say “but the price is the same everywhere,” don’t believe your own BS. In the long term this is price fixing, limiting choices and a RESPA violation. When you limit competition through Realtor bribes, the consumer is hurt.

If an agent isn’t sharing reve
nue, but the firm has an ABA? Still watch out!

Ok some real estate companies won’t pay the agents a cut (they claim it is not legal, how convenient), but instead of rewards, they punish. They shun the Realtor if they don’t use their ABA partner. One large NoVa company stripped a top agent of her “#1 in office” title for not using the Affiliated Partners on her deals. How is that in the best interest of the client? So even if a Realtor doesn’t get paid, you have to wonder what it in it for them to push the ABA.

I wouldn’t be surprised if soon there is a class action lawsuit that will come after these firms and the Realtors that are colluding to the detriment of their client.

Are you ok with the “one stop shop”, even if the price is the same to you and your Realtor gets a bonus?

Oh and don’t get me started about $400 Home Warranties that frequently result in a $70 bonus to the company, and oftentimes passed back to an agent. Note that insurance can only be sold through licensed insurance dealers. Yet these 15% bribes are called “admin fees.” If an agent is selling you on a warranty, ask if he or the firm makes a cut on your sale, and ask for that bonus back.

If you have questions about something that seems shady, ask me, I’ll give you the inside scoop.

– Frank Borges LL0SA – Broker FranklyRealty.com

If you like these topics, subscribe to get a spam-free digest of new postings: spam free Preview Please email me any typos!

• 30
• January
• 2007

• 28 »

"Don't Buy"? A Marketing Ploy? "I'm On To You Frank!"

A close friend of mine and fellow Realtor today said to me that he was “on to” me.

Busted!
He said my blog seemed predominantly slanted toward telling people NOT to buy and that I must be using reverse psychology to trick people into BUYING MORE in order to become insanely rich! He went on to say that there was no way I really ever talked people OUT of buying, as that would be crazy, and I’d become poor quickly.

Is he right? Yes. But for which part?

Yes “Don’t Buy, Ask Why” is a marketing ploy. You got me!

Why do I do it? The public has been brainwashed with the honors, riches and glories associated with home ownership. Some of the myths are decades old (when it was true) yet still regurgitated today, like “Stop throwing money out the window on rent” or “Making your landlord rich.” or “I need the tax break.” (Read: Buying Myths) 99% of Realtor websites give you this sales pitch hoopla, when in fact , when you run the numbers it might not be better to buy for you.

The purpose of this series of blogs is to debate you. Play devil’s advocate for you. Challenge your reasons and make sure that you understand how huge of an undertaking this is and make sure it is the right choice for you. Rather then selling you on buying, I question your reasons. If in the end you have good reasons and you still want to buy, great! I’ll be there ready to help you. Heck if you have dumb reasons and you still want to buy, I suppose I’ll still help you get the best deal possible.

(Side note: Just recently a buddy told me he was certain this was the bottom of the housing decline, and he wanted to buy a 2nd house. He had already lost $30k on one house that I warned him not to buy. I warned him about the risks and how he was essentially doubling down Vegas-style. But he is certain and wants to proceed. This same guy also buys penny stocks on tips from the internet. I love you buddy, but I’m sorry, that is gambling, not investing.)

No, I don’t talk people out of buying, but sometimes I help talk themselves out of buying.

I rarely, if ever, tell somebody flat out, “You should not buy.” Who am I to tell them what to do? Who am I to predict the market (Read: Stockbrokers Can’t Predict Stocks, Realtors Can’t Either!). I don’t know their risk tolerance, their investment goals, their long-terms goals.

What I do see too frequently is people buying for the wrong reasons or thinking Real Estate is a sure thing (this debate was harder 2 years ago when I gave out shirts saying “I just bought during the housing bubble” as featured in the WSJ)

Here are a few real life examples of people that did NOT buy after a chat with me:

1. Chris, Arlington Va. He was fine renting but was looking to buy because it just seemed like the right thing to do. He had saved $50k and wanted to invest it in real estate while living in his new home. Kill two birds with one stone. Oh, and the tax savings. We went over the numbers and his overall plan.
   It turns out that he owned a great business, two profitable stores and was saving up to open another store. I then explained that he was lucky in that most people buy a house in part because they don’t have alternative investment options. They invest in stocks or CDs.
   He on the other hand had what is called an “opportunity cost” that he needed to consider. If he bought this house, how long would that delay opening another 1 or 2 stores and ultimately would it make him less money? Even if the house went up he would do better investing in his stores. He decided NOT to buy. In this case the housing market dropped $100k in the neighborhood that he liked, so not only did he save $100k, he had that money liquid so he could invest it in more stores for a larger return.

2. Stephanie Oakton Va. She called me to help her buy a $450k house. The same ole tax reasons I always hear. A friendly Realtor had given her a company issued flyer on why she NEEDED to buy and buy fast! “Renting was stupid.”
   It turns out that she was fairly certain that she would be moving out west in 18 months. I ran the numbers for her. I first showed her that even after the tax savings, it still was cheaper to rent and then after those darn Realtor fees and closing costs, the market would have to rise by XYZ just to break even, let along the risks of the market staying flat or going down, (Read. I’m Upside Down, What Should I Do”). In the end she rented. 18 months later the house she liked has since dropped $50k in value and after Realtor fees she would have been wiped out. Meanwhile the Realtor telling her to buy would have been on her second trip to Tahiti with that commission by now.

3. Sue Fairfax Va. She wanted to meet me for lunch to discuss buying a new construction as an investment. I said I would join her, but that she would have to buy me lunch since most likely I would be talking her OUT of buying. Her goal was to get rich like 3 of her friends who sold a place for $350k that they bought for $250k a year earlier. Since she was going overseas for a year, she would come back to these riches. I then burst her bubble and told her that the olden days of builders offering deep discounts (20% off) coupled with a market appreciating 10-15% were long gone. When you hear about taxi drivers chipping in their life savings to buy a new construction, you know “the gig is up” (that was my quote in a WSJ Dec 05). She didn’t buy, I got a free lunch.
   The project she liked is now selling for $50k lower a year later. Even if the market was going up, her expectations were that it was a “sure thing” when really it was more like gambling in Vegas.

Those are just a few of the many examples of people buying for the wrong reasons.

How are you not poor?

You know what they say… “You catch more flies with honey than you do with vinegar.”, albeit a cute phrase, it isn’t relevant here. Instead, I figure for ever person that I help walk through making the decision NOT to buy, they hopefully in return will recommend me to 3 or 4 other friends looking for a Realtor that won’t pressure them into buying. Ultimately buying will be right for one of their referrals down the road and they will buy and that will make me rich!

So to my buddy that figured out my marketing ploy, how do you like my plan now?

Shameless plug coming, beware… To recap, our approach is less as a salesperson trying to talk you into buying and into a commission but more of a consultant role helping show you the pros and cons to make sure buying is right for you. Follow what my mother taught me: Don’t Trust Realtors That “Sell” You On Buying End plug.

I hope you enjoyed this post, if you wish, you can sign up for occasional spam-free emails of my new blog posts. The sign up box is on the right of the page. Also I encourage you to send this blog to friends that are considering buying and leave comments.

Also leave comments if anything on this blog has led you to think twice about buying.

Can I talk you out of buying a house today? Call me (actually email is best, click over to FranklyRealty.com).

– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Featured in BusinessWeek, WSJ, NY Times, CNBC, Washington Post etc

Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes

• 24
• January
• 2007

• 7 »

Sucky Listing Agents. I Vent.

Ok, I’ve had it! Yes, many Listing agents suck! I’ve said it. Off my chest, what a relief.

On the one hand I’m pissed because their laziness adds to my workload 3 fold.
But then on the other hand their suckatude (level of suckiness) makes me look better I guess.

Ok, what am I ranting about?

Here is one example: I just got a reply email from a listing agent selling a $1.5M home in Virginia. I have a client looking to buy a home that is specifically on a golf course backing to one of the holes. Max price is $4M (yes I dropped that irrelevant piece of information just to impress you).

You would think it would be easy for me to find with all my tools. Just do a Matrix search (back end Realtor search) for View= Golf Course. Problem is, if the listing agent doesn’t check that box, then it won’t magically appear in my search. That agent was either too lazy or too inexperienced (did I say the listing was $1.5M!) and doesn’t know how to fill out a simple MLS listing.

And it doesn’t end there.

He had only one photo on the listing! You are selling a $1.5M place? I even got ticked off enough that couldn’t hold back and I had to ask him directly:

• “I gotta say, that a house like that with no photo on the MLS, you are doing a TON of harm to your clients. I almost didn’t write because of the lack of photos. Can you help me understand why some agents don’t use photos? I don’t get it. It only costs $12 through keystone [our MLS].”

His reply was:

• “I do not understand your e-mail. There is a picture on MLS listing and further information on our website.”

Um. Thank you for lowering the bar so much that I look like Javier Sotomayor (the world record holding high jumper, A Cuban like me). Yes there was one photo, I meant why did you have only one photo! Not only was it a pain to go to his website and find the listing (that is why the MLS was invented so that all the info could be in one place), it still only had one photo. that is what you call “more information?”

I once had to hire somebody to drive 2 hours to take photos of a $5m mansion because the listing agent only had like 4 photos. He took 100. Actually I do that for every home that I see with a client, I take about 100 photos and I make an online mini album for them to remember each listing. Does your buyer agent do that? And I digress… Back to sucky listing agents…

The secret about MLS photos

If a Realtor is too lazy to take one photo, for free they can have the MLS take one. This entails the MLS paying a high school photographer to literally do a drive by shooting. They slow down the car and grab a shot and hurry on to the next house, a drive by shooting. You can tell if your Realtor opted for that if the full MLS listing says “Photo Option: VIC Exterior Only”

And then to upload 6 photos it costs a whooping $6, and the super rich will splurge and pay $12 for 20 photos!

That isn’t the end.

How frequently does this occur? I did a sample search in my building.

8 active listings:
* 4 had no photo at all, not even the free drive by.
* 3 had the free one drive by photo
* 1, only 1 spent $12 and uploaded 6 photos
(full disclosure: The stats aren’t ever this bad, this is unusual. I’ll get you full stats later)

No wonder some were over 260 days on the market. Yeah the market is slow, but having no photos doesn’t help. And one even offered a special $5,000 extra bonus for the agent? Why not have your client save $5,000 and market it well, no, that would be asking too much, how about just not suck.

SOON I WILL POST HERE THE % of homes in ALL of Arlington with and without photos.

What about Virtual Tours? I guess they are ok, but I don’t like them personally. They tend to crash my computer and some annoyingly force you to watch the “tour” with romantic zooming in and rainbow transitions with Celine Dion in the background, to add to the mood. Just give me 20 photos, so I can click on the next listing. I’m busy, lets get on with it. Is it that so tough?

When picking an agent, ignore the 4 inch binder that costs $250 to produce and is standard issue from their office (including a group shot of 100 agents, as if that somehow will help sell your house) to win your business. That binder won’t sell your listing. Ask him right there in real time to pull up their last 2 listings. See if he ordered the free drive by photographer service. See how many photos they have posted (and he better not trick you into showing you photos on their website or firm website, that is hogwash, nobody will see it, make sure it was on the MLS and that they paid the $12). And then take that binder and keep it in your car trunk. They work great when you need something heavy to put under your tire after parking on a steep hill in the winter.

Oh and if any of my competition is listening, when you put up a listing, you might want to have your photos ready and upload them that night. Why? Well the following morning will be your most important listing day? Why? Because your new listing is sent automatically (not spammed) to a ton of people that specifically signed up for email alerts in your listing’s area. If you put in your photos a day or two later, guess what? Your NEW and exciting new listing will have “photo coming soon” and will oftentimes be trashed.

Also did you know that a listing with multiple photos gets seen exactly 6 times more frequently online? I hate stats, but I believe these. Who wants to waste hours at work surfing and looking at houses if there are any photos?

So my main issue is a lack of photos on the MLS, secondly I have issues with an agent that won’t fill out important details on the MLS. Those two might not seem like major things, but they are early indicators to future problems and other laziness.

How hard is that agent going to fight to get you that last $10,000 if they can’t do something as simple as market your property with multiple photos?

Update: You need to see Norm Fisher’s blog about “The Unbelievably Bad Real Estate Photography Hall of Fame and the virtual tour!

– Written by Frank Borges LL0SA-

• 19
• January
• 2007

• 25 »

Listing Case Study: Bidding War! Market Turn Around? Or Good Agent?

What is going on here?
A bidding war in the dead of Winter? (slight exaggeration, it actually closed in Dec, but was under contract in mid Nov). Is it possible in this market to have had 3 written bona fide offers that were bid above list price,

even after those confusing seller concessions? Is this the tipping point and the start of a major market recover? Or was this an isolated incident involving a great agent and his professional stager?

In this blog I will expose exactly how this was done. None of the regurgitated “How to sell your home” articles that Realtors get added to their website as part of their $299/yr internet website package.

Some of you will take this information and try to sell your home yourself (which is a pretty hilarious blog in and of itself), and others will use it to kick their Realtor into shape. Not a problem, but the smart ones will just call me (or email). Oh and I guess some Realtors might read this too and use these techniques. I say, no need to compete, just join me, I have to have more up my sleeve than just this, right?).

A Listing Case Study: (Do not try this at home, or expect it from your current Realtor)

Property: Fairfax Condo

Hurdles:

1. The place was a wreck.
   (Sorry C&C, I love you all but it needed work, and I think you’d agree). For example they got a $3,000 carpet allowance when they bought the place… but they didn’t change the carpet. I have to ask permission before I can link to the entire album, but here are a couple BEFORE PHOTOS:
2. Competition! There were 4 other units in the community for sale, some for 100 days. One of the units had the exact same floorplan!
3. Pricing. Picking a price was very tough. There was a ton of data that was all over the place. Believe it or not, I tend to not come to a price until AFTER I’m hired. Why? I don’t do the typical interview of several listing agents, all of which come in with a suggested price. I learned from my mother’s mistakes growing up, she always picked the agent with the highest suggested price, it never worked out well. Now that I’m in the business, I found out that frequently novice agents recommend a high price, just to get the listing, knowing that eventually you will drop your price and they will get paid, oftentimes resulting in you getting several thousand less. Instead I work WITH the client on pricing, and they ultimately decide what to do.

4. Market slowdown AND heading into the winter.
   This wasn’t easy, we had a race against the clock, the holidays. We could wait until spring, but who knows where prices would fall (or raise) to.

The Strategy.

1. Staging, Staging, Staging.
   I brought in my professionally licensed Stager. (This should be a separate blog) She was amazing. Not only did she stage the place to look like a model new home, she guided a team of workers to renovate the place. New hardwood floors to have that unique pop unlike the competition, granite countertops , (the premium stuff, not the cheap stuff that the other unit had) new appliances, new carpet in the bedroom. All for about $10,000.

   In this market place, your house has to be remarkable. There is a reason that new home builders have amazing model homes… it makes things sell. So many listings out there are dumps inside. Buyer just don’t have good imagination. You can’t just say “$5,000 allowance for carpet,” it doesn’t work. For one, buyer’s will be off in their estimations by 100%. So a $3k carpet, in their mind will be $6k. New kitchen will be $10k instead of $5k etc etc. Staging was done by Staging by Patricia

   

2. Pricing. We came up with $280,000. I actually INCREASED the price by $5k at the last moment. It just looked soooo good. I had spreadsheets that showed ratios comparing recently sold units to what they sold for 3 years ago (when my client bought mine) and looked at the current actives. This wasn’t a case of “Oh he just listed it low to sell fast.” Actually I was scared that the house would NOT appraise, as in too high!

3. Photos, photos, photos.
   Did you know that it costs a Realtor $12 to post 20 photos? Yet maybe 20% of Realtors do so. And as a buyer, you know you love looking at everything! The good, the bad, everything. The more you see the more compelled you will be to see it person. Versus what? Make the place a mystery and compel people to come for a visit? Wishful thinking.
   Anyhow, the photos rocked if I may say so myself. As a former professional photographer, you can’t get this from a regular digital camera.(side note, did you see my photo was on the cover of USA Today’s travel section last week?)
   Also the main photo was a collage. I did this because a) it tells people that this link will have more photos b) some home search websites only show the first image.
4. Domain name with more photos: I bought a www.555streetname.com and linked it to a photo album with even more photos. Check out the photos here.
5. Typical Washington Post ads (small, bigger isnt’ better) and Craigslist ads. No rocket science here.
6. Agent Follow up.
   An oh-so-important variable that is oftentimes overlooked. You have to contact each and e
   very visitor to get their feedback. I do this online by tracking the lockbox reports. I email them to get feedback so my client has in writing the agent’s thoughts. Usually this is not a negotiation, just honest feedback on what they liked and disliked.

The outcome

1. Not much traffic!
   The market was slow, maybe only 5 real buyers saw it and 5 lookers.
2. But Everyone LOVED it.
   The feedback was amazing, but it still wasn’t selling. A few people expressed a strong interest but nobody was willing to make the first leap to write. In this marketplace, there ARE buyers, but they are scared and kick the tires longer.
   “Let me know if you get an offer”, is what I kept on hearing. They all loved it, but nobody was taking the final step to make an offer.
3. Finally I get one offer.
   After letting everyone know that everybody else loved the place and that everyone was “about” to write (which was true, I don’t lie or fib on this stuff), one person finally wrote.
4. Dial for Dollars.
   This is what any good agent should do when they get an offer. They let EVERY remotely interested party know that an offer has hit? Is that ethical? Um, why not, I represent the seller and my job is to fight to get him that last $5k- $15k, and this is one way to do it. Would an agent that gives you a low commission rate do this? What to make an extra $50? Maybe, if so… hire him! This step can almost double the work for the agent, and for only a couple hundred dollars more in commission it isn’t worth it for most. I do it to a) help make you that last $10k and b) hope that you will tell your friends about it.
5. 2 more offers.
   Step 4 worked and I was able to receive a total of 3 offers and with great terms such as a flexible closing date so the sellers could find a home (without a formal home purchase contingency)
6. Bidding war after 14 days!
   In the olden days, a bidding war only occurs within the first week. Here we were on day 14 with a bidding war in a dead market. I don’t think the agents even believed me.

SOLD! 14 Days, 3 Written Offers, Above List!
Ultimately I was able to get the sellers $15,000 over one of the offers and a net that was a few thousand above the already stretched ($5,000 was added at the last second) sales price and a 2nd offer that escalated over list (I’m talking net sales price, even after the seller subsidy).

While I’d like to go into the details on their purchase, that stuff wold reveal secrets that I don’t want the other side to know about. It took a few weeks to negotiate and that was also a tough one, but they got an amazing price $45k below list (which shouldn’t be a metric since I’d rather you get a place for full list price on an aggressively priced house than save $50k on a place overpriced by $100k).

– Written by Frank Borges LL0SA- Va Broker/Owner FranklyRealty.com
703.827.4OO6 Like this? Sign up for more!

• 17
• January
• 2007

• 5 »

I Need A Buyer's Agent! But For My Car.?

So I want to buy a new car. I want a convertible Saab, used of course. Somewhere between 2004 and 2006.
I have been pretty dead set on it for about 6 months now. I even have the financial means to buy it.
Why won’t I buy one? Just because I hate the process! How silly is that?There are several out there through dealers, but when I go into the dealership, I don’t get a warm and fuzzy welcome. I instead get a salesperson. I see him in a similar light as most consumers see Realtors. I don’t trust him.

In part because of my background in Real Estate, I know that there is a ton of insider knowledge (which I try to expose in this blog) that I don’t have. AND I DON’T LIKE IT! I know he looks at me like a chum, and oftentimes his bonus will be directly attached to how high a price he can get from me (I could be wrong about their compensation, but that is my perception, probably from a friend that worked in used cars 5 years ago). I’m even at a point in my life where I don’t mind people making money, I just don’t like not knowing what they are making and I don’t want to be the sucker that overpays.

I wish I had a buyer’s agent… for cars.

• Somebody that I could pay (wouldn’t it be great if the seller paid… nah, not really, it all ultimately comes out of my checkbook one way or another).
• Somebody that has the insider information and can help me get the best deal.
• Somebody with the insider connections and the know how.
  I might be a brilliant lawyer (I’m not) or a genius doctor (I’m not), but without doing it day in and day out, I am at a disadvantage, no matter how smart I am, or even worse, how smart I think I am.

I know there are car buying guides and websites, but still, I want more of an inside scoop? Carmax? Maybe. I understand their prices are fixed, but then I heard they aren’t the best deal.Kelly Blue Book? Yeah right, a book created BY the car industry based on numbers that are submitted by the dealerships, with no proof. Sound familiar? Every dealer is suddenly selling “below Kelly BB”? How can this possibly be? Who is selling way above KBB in order to allow so many to pay under KBB? I don’t trust it.

So I did it! I hired a Used Car Buyer Agent.

A client of mine is a Saab enthusiast and he bought his car through an auction via an agent that he trusted, and a friend had used. He got a great deal and highly recommended him to me. No, a really good deal, not the “good deal” that every dealership brainwashes you into thinking that you got when you pushed them down $2,000.

But, do I have a car yet? No. Why? In part because my agent isn’t good. For one he doesn’t use email (and probably not the internet, so I won’t be worried that he will read this), and my phone calls get left with his nice wife. A ton of other reasons, but it hasn’t been an experience that I could recommend to others… yet. I’m still hopeful. I think I will call him yet again today.

Unshamelessly blatant non-subliminal plug: The above is an actual true story. Yes it is meant to highlight why you should have a great buyer’s agent for a house, and not just somebody that your mother plays cards with, or happened to be sitting at an open house. A buyer’s agent shouldn’t just be a pencil pusher. Not only do you need somebody that will fight for you, you need somebody that is responsive. And somebody that won’t talk/push you into buying. Instead he will show you all the options and give you the pros and cons for you to make the final decision. You all are lucky because you have that option, meanwhile I’m Saab-less. End plug.

Does anybody know a good buyer’s agent for cars?

Update: Posting coming soon about the Exclusive Buyer Agency Agreement, whether to sign it or not.

– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6

Please report any typos.
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, Realtor

• 17
• January
• 2007

• 6 »

"An American Hero?"- Gosh, Thanks.

(photo disclaimer: I borrowed that jacket, since I don’t have one, and I was wearing shorts)
Ok, I know this is a little overkill, even for me. Maybe give me some humility points for holding off on reposting this for a week? Sorry, ultimately I just couldn’t contain myself. What is Frank shy about? Well, I was called “An American Hero” by a reporter who felt mislead into a real estate transaction and is sick of Realtors constantly using propaganda saying how the market is always flawless. So his blog was titled “An American Hero” for being a Realtor that tells it like it is, even if it is ugly (most of the blog highlights the ugly, I figure you can get the positive balance elsewhere).

J0NATHAN V. LAST the Online editor at The Weekly Standard (also writes for the Post, WSJ, Washington Times)

• An American Hero

  Some Galley Friends are aware of my slight misgivings about Realtors. But now I’ve found Frank Borges Llosa–a D.C. area anti-Realtor.

  How great is Frank? If you go by his blog, he seems to know his stuff. And his mission statement seems to be along the lines of Are you sure you really want to buy that place?

  But it gets even hotter–like this long post taking on the National Association of Realtors for their “It’s a great time to buy or sell a home” campaign. (Only Realtors could figure out how to work the square root of -1 into market economics.)

  Here’s Frank on why not to trust the NAR. Here he is on how leverage increases the buyer’s risks. Here he is on how Realtors fudge MLS data.

  Go read it all.

Thanks Jonathan!

Sometimes I wonder if anybody is out there reading this. This will help motivate me. And if you all like the message, make sure to post comments (50 so far) and sign up using Feedblitz (right-hand side of screen) to get daily email summarizes of my postings. No spam, just blogs.

Also, Dear Billy (my best friend, a marine who has been to Iraq twice)
Thanks for your service, I appreciate it. You really are An American Hero (I’m just a dumb Realtor after all).

– Written by Frank Borges LL0SA– Broker/Owner FranklyRealty.com
703-827-4OO6

Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, DC Realty, Realtor

• 17
• January
• 2007

• 5 »