Frequently Asked Questions
Q: Just the other day a new friend asked me a questions probably many of you also ask yourselves: In this market of such prices going up in leaps and bounds, why shouldn't Realtors lower their commission percentage?
A: That's actually an excellent question! First let's examine why housing prices have risen:
1. Supply and Demand. There's a greater demand for housing these days and one of the things that puts a strain on the housing supply is the changing face of today's family - including divorce. In years past (admittedly maybe long past) two or more generations of a family might live in the same household. One way of handling housing for a newly married couple or an elderly member of the family was to have them included in the family structure of other relatives. They moved in with children, or cousins, or siblings and soon were blended into the family as important members of that family with duties to perform that made them feel needed and that, in fact, relieved the burden of responsibility on everyone else in the household.
Now everyone wants their own home including divorced parents who seem to feel they must each recreate the home of the other parent. Think about it. two adults frequently own a total of 6-8 bedrooms, 4 or more bathrooms, 2 kitchens, 2 dining rooms and space for 4 cars - all so each child of divorced parents can have "their own room". Consequently, there are twice the homes being sold to/for these divorced families.
2. The Rising Cost of Building Materials. I'm sure you've heard in the last 2 years during this housing boom that the price of building materials has gone sky high. I'm told plywood and particle board have risen incredibly during that period. Next time you go past a construction site, look at the amount of plywood and particle board being used in new homes.
Of course when the price of new homes goes up, so does the price of previously owned homes. When appraisals are done on houses, the appraiser finds comparative homes using criteria based on the number of bedrooms, bathrooms, etc. To my knowledge there is no price differential for the year a house was built.
3. The Rising Cost of Petroleum-based Products. It's no secret that the rising costs of petroleum-based products hold us all hostage.
When most people think about petroleum-based products they automatically think about gasoline. Well, that's certainly a part of it but it goes even further than you would think. the cost of heating fuel, the fuel to run the generators that generate electricity, the cost of plastics, vinyl siding, fiberglass shingles, packaging, shipping materials, etc. These costs affect us all.
Now let's talk about how these rising prices affect the job a Realtor does for his/her client:
1. The price of advertising goes up because of this increase - the cost of printing and of getting the newspaper/magazine to your door goes up. Here's the particulars on my last News Journal newspaper ad:
One of the properties I advertised 5 times with a display ad this size was taken off the market because the owners decided not to sell.
2. Can you imagine being a Realtor and having to fill up your gas tank not once but TWICE a week at $1.89/gallon? Then, consider that we often take each Buyer to see 10- 20 homes and though many do eventually buy, some never make a purchase.
3. And keep in mind, Realtors only get paid when they bring a property to settlement.
Can you imagine having your boss say at the end of a work week, "Well, you've done a good job this week doing everything I told you I wanted done but it just wasn't good enough to be paid for. Let's see how next week goes".
I love the profession I've chosen. I know that there will be slow months when I have few or no homes that go to settlement. I don't rush or pressure my clients, however, to suit my own financial situation. But please don't think rising housing costs only affect the buyers. The reasons for the rising housing costs affect the lives of all of us.
A good Realtor doesn't consider themselves when helping a client Buyer or Seller make decisions about their housing situation. And a good Realtor knows that a bad business months doesn't mean you can cut corners on your expenses. we actually drive more and advertise more during our slow times.
Q & A Forum
Q: I understand the concept of "Dual Agency" but what if the Realtor I've hired to sell my home also finds the Buyer. Then who's representing who?
_____________________________________________________M.M. - Newark
A: Dear M.M. - This is an excellent question about a potentially confusing situation. but it has a simple answer: Your agent will ALWAYS represent you, the Seller.
In real estate there are Clients and Customers. My "Client" is the person who's best interests I am representing; the person/s to whom I have a fiduciary duty. My "Customer" is a person with whom I have no agreement of representation, to whom I have no fiduciary duty. As an ethical professional, I am obligated to be honest and fair with/to everyone involved in the transaction but my duty and confidentiality ALWAYS goes to my Client.
I have brokered several transactions where I brought the Buyers (customers) to the Sellers (clients) and in each case, all has gone well. Of course, I made very sure to disclose and explain my relationship with each party through the document entitled "Whom Real Estate Agents Represent" and to treat each party with honesty and fairness.
Make sure you understand the relationships involved in each transaction and that you feel comfortable with those relationships. If you don't feel comfortable for any reason, discuss the situation with your Realtor before signing a contract.
Q: Lauren - I'm confused about the home inspection process. As a Seller, am I obligated to fix everything the Buyer wants repaired? After all, they knew this wasn't a new house when they first looked at it.
______________________________________________L.G. - Port Deposit area
A: Dear L.G. - In Maryland, and using the MAR (Maryland Realtors Association) contract, you're not actually "obligated" to do any repairs at all. Although there are a couple of different Home Inspection Addendums that your Buyer's agent may have used in your contract, all addendums provide for a period of time during which the Sellers can decide if/which repairs they are willing to make. As Sellers, you can choose to do all of the requested repairs, some of them or none of them.
How many of the repairs you do depends on three things. 1) Are the requested repairs necessary to the health/safety of the Buyer's and/or serious quality issues? 2) Was the purchase price offered at or near the original list price? 3) How eager are you to go forward with the sale?
Of course, if you're home hasn't been seen a lot during the listing process or if your home is not as desirable as some because of location or condition, for instance, then you may want to make all or most of any reasonable repair requests. If your home is in basically good condition, is in a desirable location and has had several interested parties, you may want to deny some of the more frivolous repairs requested and take your chances that the Buyers will go forward with the purchase anyway.
Either way, whether you're on the Buyer's or Seller's side of a transaction, you should have an licensed Realtor on your side; someone who can act as an experienced negotiator. You don't always get what you want from every negotiation but you'll have a much better chance of having the transaction work smoothly for all parties if you remove the emotionalism from the mix by having a third party negotiator involved.
If you have a real estate question of any kind, please call us or e-mail your question to: firstname.lastname@example.org and we'll feature it in our next Question & Answer Forum.