Buyer Agent Article - San Francisco Chronicle

Newspaper article in San Francisco on using a buyer agent. Too bad they didn't educate people more about the difference between a buyer agent and an exclusive buyer agent...

There is a nice valid point here about traditional agents:

"Buyers should keep in mind, however, that because the agent receives a commission only when the deal is done, there is an incentive to close a sale - possibly at a higher price to earn a bigger commission - even when it might not be in the buyer's best interest. To get around this conflict, some buyer's agents work for a flat fee."

The other way around this is via use of retainer agreements - where the retainer is reimbursed to the buyer at closing - but if the buyer doesn't buy anything - the agent still gets compensated for their time. In addition - this doesn't happen when an Exclusive Buyer Agent structures their compensation where they have a flat fee - plus perhaps the addition of an incentive plan. IE - make less when the buyer's price goes up - and a little more when the buyer's price goes down.

Some exclusive buyer agents structure their compensation to be aligned with the buyers interests. (We do for example - if our buyer client chooses that) When the buyer's price goes down - the agent can make a little more - and when the buyer's price goes up - the agent makes less.

The tendency of a traditional buyer agent can be to get the buyer to come up to get the deal done since it is easier and less time consuming than getting the seller to come down in price. Since many of them don't work on retainer - they only get paid if a deal gets done. The buyer is none-the-wiser that they could have perhaps gotten the house for 20k less if their agent had taken a few more days in negotiation and really worked over the seller - with everything they had. But time is money to the agent - it is easier to just "make a deal" - which really isn't in the buyer's best interests...

When an agent's incentives are aligned with the buyer's incentives - that is when you see them work their butt off to get the best possible price for the buyer. There is no substitute for an experienced, professional negotiator. Many traditional agents are poor negotiators unfortunately...

A good negotiator is worth their weight in gold.
Exclusive Buyer Agents are specialists - always working for the buyer - never on the seller's side.

A "buyer agent" may spend 95% of their time listing property for sale - and only calling themselves a buyer agent when they are working with the buyer. Their main priority is their seller clients - and they don't have much experience working with buyers. But of course - the buyer hears "buyer agent" and they think differently...

Unfortunately - the public is in the dark about the existence of Exclusive Buyer Agents. Only two states (Ohio and California) disclose their existence to the people in their State. The other state Real Estate Associations are too controlled by the mega-brokerages to be willing to disclose this consumer option...

About Short Sales...

If you are in the market to buy a home, or if you are selling a home - you have no doubt heard the term "Short Sale".

If a seller owes more on the property than what it is worth - a short sale is one option. A seller in this situation needs the lender to accept a "short" loan payoff, or in other words accept less than the full amount due on the loan.

So how does that effect you - the buyer? A short sale require the lender to agree to the reduced pay off. Therefore, when you negotiate on a short sale, you are negotiating with two parties:

1. The seller who owns the property
2. The lender who holds the loan.

You need the approval of both parties to get your offer accepted - so the process can be long and tedious.

It is important to make sure the seller has received preliminary approval from the lender, because if the lender does not agree to the terms you will have no contract.

We question the seller and/or the seller's agent to make sure the process is in place, and that the bank will cooperate. This process requires the seller to submit documentation to the lender demonstrating hardship, along with evidence that the market value is less than the outstanding loan.

It can be a long, drawn out, and ultimately aggravating experience. Often, you are dealing with layers of bureaucracy, and this can slow the process down.

You want to make sure that you have interest rate protection during this process. In a normal transaction, buyers will typically lock in interest rates for 30 to 60 days. That may not be enough time for a short sale, and you want to avoid being 45 or 60 days into the sale only to find out that your rate lock expired, and your interest rate just went up 1/4%.

We usually include in the purchase agreement a time frame for lender approval, with a clause that gives the buyer the right to cancel the transaction if the lender does not approve the sale after a certain period of time. In this way - our buyer client is free to pursue other properties if the lender is dragging their feet.

There can sometimes be issues at closing - if the owner is still living in the home. Often times, sellers in this situation are angry and frustrated, and on occasion can damage the property, remove appliances, fail to maintain the landscaping, leave the property dirty and full of debris, or take other actions that will cost you money.

We protect you with a walk through prior to closing - and if the seller is still there - we would make certain demands (depending on the situation) at the closing table to compensate you.

Since the seller theoretically has no money, any issues at close typically have to be negotiated with the bank.

Lenders like to sell properties "as is" in these situations, as they do not want to get into negotiations over property repairs. This is okay, if you have a good inspection - and know what you are dealing with (or not.) We will cancel the contract for you - if the inspections uncovers issues with the property that you don't want to deal with.

We can certainly request that the bank resolve certain issues. They are under no obligation to do so, but if the request is reasonable and it makes business sense for the bank to agree, they usually will.

Short sales can be fairly straightforward, or very complicated. This depends on the stance of the lender. Some banks are much easier to deal with than others when it comes to short sales.

As always, you should seek out an experienced, professional Exclusive Buyer Agent to help you navigate these waters.

Countrywide Exec's go on a Skiing Trip

This seems a bit over the top" for Countrywide exec's to go on a skiing trip etc. with their financial problems A little extravagant - especially in light of public perception and their performance - don't you think?

Good News - The Illinois Association of Realtors is opposing state legislation that seeks to restrict cash rebates to home buyers

The Illinois Association of Realtors is opposing state legislation that seeks to restrict cash rebates and other rewards offered by real estate professionals to unlicensed persons who engage in real estate transactions.

Thankfully - our state association is a bit more advanced in their thinking in some areas - than other state associations such as Wisconsin - which is back in the stone age with it's rules that really put a buyer at a disadvantage most of the time.

The U.S. Department of Justice has taken legal action in other states to undo restrictions that prevent real estate agents and brokers from rebating a portion of the money they receive in a home sale to consumers.

Unfortunately - flying in the face of the DOJ and what is best for the consumer - Illinois state Rep. Robert S. Molaro, D-Chicago, in House Bill 4313 - seeks to amend the state's Real Estate License Law Act of 2000 to state that "no licensee shall give or pay cash rebates, cash gifts or cash prizes to an unlicensed person who is a party to a contract to buy or sell real estate."

When our clients have a buyer brokerage agreement with us - anything extra in a commission payout by the listing firm goes to our buyer client. In this way - we can ensure totally unbiased home showing in relation to the payout.

Traditional agents could potentially have biases in pushing a higher commission payout properties, on their buyer client - all else being equal. Why? Because the agent (split w/their broker from the broker) may get 4% vs. 2.5% for example.

The Illinois Association of Realtors (IAR) was mostly opposed to the bill because they felt that it put Realtors at a disadvantage as compared to builders - who were excluded from the proposed rules.....

The IAR legal counsel stated: "We think it may put some of our members at a disadvantage because it only applies to licensees," he said, as it would allow builders and developers to offer rebates and other cash rewards to consumers that Realtors, as real estate licensees, could not offer.

The IAR STILL does not allow consumers in Illinois to learn about the existance of their option for Exclusive Buyer Brokerage representation in the State's Consumer Disclosure Brochure - claiming that Exclusive Buyer Brokerage is a "business model" - falling under buyer agency. Nothing could be further from the truth.

Use of a buyer agent (they and their company list property for sale) has significantly different implications for a buyer as compared to using an Exclusive Buyer Agent (they and their company never list property for sale / represent sellers.)

Buyer agents are "designated agents" (which is dual agency in sheep's clothing) that can still get in dual agency situations in Illinois if their broker allows it - whereas - every agent in an Exclusive Buyer Brokerage can be behind all of the brokerage's clients. They are not a designated agent - but rather a true agent for the buyer. Buyers have no chance of Dual Agency conflicts of interest using an Exclusive Buyer Agent in Illinois - because EBA's never represent sellers.

Unfortunately - the only State Associations making the public aware of Exclusive Buyer Agency as an option are Ohio and California.

In any case - regarding the main topic of this post.....the bill, introduced Jan. 9, was assigned to a committee on Feb. 13 and a staff member for Molaro said it will not likely be heard in committee this week. The good news is - because of this - from a practical standpoint - the bill might be dead since state sessions are short.

Toll Brothers Co-Founder's Daughter Walks Away From Buying a Toll Brothers Home

Ok - I've heard of people walking away from the purchase of their new construction property - but this one is pretty funny.

Wendy Topkis - the daughter of Vice Chairman and co-founder Bruce Toll of Toll Brothers - informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase.

Toll Brothers said it intends to pursue its rights under the agreement of sale.

Toll Brothers said expects a 22 percent decline in home-building revenue for its first fiscal quarter, ending Jan. 31st.

I wonder how hard they will hold Wendy's feet to the fire.....

Locally - sales at Toll Brothers Hawthorn Woods Country Club has been slower than expected - and they are dealing with re-sale units in that same complex - competiting with their new construction.

I live just up the road from there - in what I consider to be a much better development (more unique and better built custom-built homes and a beautiful lake) - and in any case - I created a real golf green in my backyard.... complete with sand traps and water hazard.... :-) So - I can golf for free anytime I want :-)

Interesting in purchasing a home in Hawthorn Woods Country Club? DON'T SIGN IN WITHOUT AN AGENT! Obtain representation first. Builders will not pay out their commission if you want to be represented by a professional after you sign in alone. They love it when you do that - because you'll have no one on your side - fighting for your best interests.

If you are thinking about purchasing a home in Hawthorn Woods Country Club - as professional negotiators (We are Exclusive Buyer Agents - never representing sellers or builders - so we are always on YOUR side) - we'll help get you a much better deal than you'd ever be able to get on your own. Feel free to contact us for more information.

Are you 55 and older in Lake County Illinois & want to retire in Lake County?

You may want to consider 55 and older retirement communities. They offer you a no-maintenance lifestyle - giving you more free time. For example - Dell Webb Grand Dominion located off of Route 176 in Mundelein is a fairly new development. Pre-opening pricing is already gone - though we can help you negotiate a similar deal if you work through us.

When touring there with clients - unfortuantely - we still see many people signing in without any representation. Unknown to most consumers - you lose your ability to have representation on properties you tour on your own. (unless you want to pay a rep what the builder normally would have paid out)

The builder doesn't pay out their typical 3% once you sign in on your own - and they don't discount the property by that for you either. You don't have an expert negotiator on your side at that point. Reps at communities such as Del Webb or other new construction developments start salivating when people sign in on their own.

The Dell Webb Grand Dominion development pricing starts at $277,500 for a 1.197 sq ft Fairlawn model, and goes up to $491,000 for a 2,833 sq foot Rosemor model with a 3 car garage. There are 12 single family ranch floorplans that are available.

The monthly assessments range from $152/month to $178/month for "The Estate Series" Landscape care, snow removal (after more than two inches of snow), seal coating every other year, use of the recreational facilities incluidng the fitness center, bocce ball courts, tennis courts, indoor and outdoor swimming pools and spa are included for a maximum of two residents per household.

Dell Webb Grand Dominion has some golf deals worked out with Steeple Chase Golf Club as well.

All in all - the development can be appealing to those who want to retire and not do it down south.

If you want to go to the southern part of the US or Mexico to retire - contact us - as we know of some very nice places to retire - and agents who can help you through the process.

If you are considering Dell Webb Grand Dominion - please please please - for your own sake - have representation.

Give us a call - and you'll save thousands - and most likely - tens of thousands of dollars when you purchase into Dell Webb Grand Dominion. Our office is located right around the corner from the development. Call us at 847-566-7558 for more information.