Internet Resources and advice

NYTimes.com Technology section has an excellent series of articlesabout internet resources for homebuyers and sellers. These articles focus on the new internet tools available; there is a wealth of good advice for anyone involved in the purchase and sale of real estate. I strongly recommend you visit the site to add some valuable insight to your buying or selling experience. NYTimes.com in general is an excellent resource; I read and refer to it often (in case you hadn’t noticed!).

One of the articles (linked below) is “Location, Location, Location. Research, Research.” This article gives an overview of internet resources and some advice. I disagreed with some of the advice and wrote an email to the editor.

Here is the text of my email:

“Hello,

I consider NYTimes.com a valuable and authoritative resource. I refer clients, business associates, friends, and family to your site on average of thirty to forty times a week verbally , on internet postings and in my business blog.

I found the article “Location, location, location. Research, research,” to be informative but flawed in a few ways.

I am a Mortgage Banker with sixteen years experience in the New York metro marketplace. My comments are specific to that area.

I have discovered when participating in conversations at the Craigslist Housing Forum (a valuable resource not mentioned in your article) real estate situations can be so localized and market-specific as to make even the most fundamental “general” advice useless. While NYTimes.com is writing for a national readership, it might be useful to mention this dilemma prominently in your articles.

The article advises Buyers and Sellers on two very specific situations; as a Mortgage Banker working closely with my Buyer-clients, I must disagree with your recommendations. In my opinion, the advice provided does not synch with real-world conditions.

BUYERS: I always recommend engineer inspections to my clients. I am reluctant to proceed on any mortgage application where the buyer has not committed to this most important protection. Your article states that buyers have let this behavior slip due to a frenzied market. Yet, there are many real estate, legal and mortgage professionals like me who would not allow that. When the inspection report is in hand, you recommend asking for cash-for-repair concessions from the Seller, “as much as you want.” While this works wonderfully in a full-on “Buyer’s market,” this is a flawed strategy in the current climate. There is no lack of Buyers in the NY Metro market. A Seller who is pushed aggressively for concessions is likely to send a Buyer packing, regardless the price offered. The reason is simple: a Buyer who makes the Seller’s life difficult from the beginning is a potential troublemaker through the entire purchase/closing process. The Seller may well ask, “If they’re this fussy today, what are they going to be like three weeks from now before and during the closing?” A Seller wants to get to closing quickly and with the least drama possible.

This doesn’t mean Buyers shouldn’t ask; I say only the method and expectation of outcome should be treated with more caution and optimism than simply, “…ask(ing) politely.”

It’s best for a Buyer’s attorney (in New York we use attorneys for contracts and closings) to handle these requests directly with the Seller’s attorney. This is a delicate negotiation. Further, on Long Island, Brooklyn and Queens, we are not seeing a disappearance of the “sold as-is listings,” as stated in your article. MLS listings and contracts of sale state, “Property is being sold in as is condition.”

Finally, a Buyer has no knowledge if there are other offers on a property or not.

SELLERS: The article suggests Sellers would gain more value researching local comparables instead of increasing commissions to Buyer’s agents. Research of market values should be a given for any Seller, not a substitute for other important activities. Regarding the commissions paid to listing and buyer’s agents, after sixteen years in the business I can state with complete confidence that you “get what you pay for.” I admire new and different efforts to sell real estate. The new Seller’s assistance flat-fee and no-commission business models are worthy attempts to market from a different perspective. In many real market situations, unfortunately, these business models provide a disservice to both Sellers and Buyers.

My wife, Lorraine, is a Realtor with a Century 21 office. We work together; I prequalify and refer buyers to her, she shows and sells them homes. When researching properties on MLS, she will go right past properties that list a commission less than 2% for Buyer’s agents. It’s just not worth her time in real dollars to work for 1 or 1.5%. She is paid a portion of that commission: her broker takes his part after paying a franchise fee to Century 21. For a commissioned salesperson, time is money; time invested does not guarantee a payday. “Buyers are liars,” is an old adage amongst Realtors. Buyers are notoriously fickle. In a perfect world where buyers a) returned calls, b) showed up on time for appointments, c) made honest representations of likes and dislikes, and d) never stood up agents for appointments, then a lower commission would be satisfactory compensation. Heck, you’d probably have real estate agents working on salary because of the “certainty,” of the sale. But the agent’s real-world experience is filled with wasted time and uncompensated efforts. Agents take this into consideration when deciding how much money they are willing to work for.

My wife’s recent and first experience with a 1.5% commission would discourage any other new agent (she’s had her license just a year). She sold a cute $329,000 starter home on Long Island to one of my clients. Our Buyer was a pleasure to work with. The Seller and their listing agent and attorneys were impossible to work with. All the trouble occurred on the other side of the table, both during the escrow period and the closing. The listing agent (who earned a 4.5% commission) was especially difficult to work with, if you could even get him to return a call or email. Lorraine wound up doing all the contact work with the Seller for home inspections, contract-signing, appraisal and closing. The listing agent is responsible for these activities. Had my wife been a new agent (the only kind who will work for such a low commission, in my opinion) she might very well have given up on a real estate career considering how little money was earned in relation to the amount of work required to close the transaction. Lorraine had the benefit of the excellent broker she works for and me to guide and encourage her.

In conclusion, I realize the difficulty of presenting general information to a national readership. But this difficult is aggravated by making bold statements that ignore the realities of local market conditions. Care must be taken first to verify then compare and contrast these local trends. NYTimes.com can then present different perspectives and advice as a local “seasoning,” for a national readership.”

Location Research