How to Stop Agents from Behaving Badly at Your Expense

If you’re considering selling your home, you’ve probably also been thinking about how to go about finding the right real estate agent to help.

Choosing precisely the right real estate representation makes a bigger difference than you might ever imagine. So where does one begin?

DEFINING A TOP AGENT

REALTORS banter around the term “Top Agent” quite loosely—Top 1%, Top 10%, etc. They earn that title for dollar volume in sales—not any independent measurement of the quality of their work or survey from past clients. In the Bay Area, most agents surpass any threshold for earning the Top award distinction due to the median sales prices—not the they are any better than their colleagues in Kansas who need to sell 10 times the number of homes to garner that distinction.

Discard any idea of using on-line companies that recommend agents or say they will “find” you a perfect match. These are nothing more than companies extorting money from agents to be in their directory. They are not recommending the best agents, but rather the ones willing to pay to be recommended.

YELP tends to do the same thing. Although the reviews are organic in nature, agents must pay to be listed at the top of the search, even though they are often far from top agents.

Agents with the most listings or yard signs in a neighborhood are also not necessarily the agent doing the best job, they’re just getting the most attention.

Doing a native on-line search is more time consuming, but it will yield you the best results. Search for local agents that have been in the business long enough to have learned the ropes at someone else’s expense. Any real training of agents happens in the field, not the classroom. Look for examples of their work product on their own web sites—video tours, photos, and descriptive informational pieces.

THE MEET

Once you’ve found an agent you’d like to meet with, reach out and set up an initial meeting. Don’t call three of four agents all at once. It takes hours to prepare for a meeting and you’re wasting agents’ valuable time.

If you’re not happy with the first agent you meet, by all means contact another.

No two REALTORS are the same and each one acts essentially as their own independent contractor. They develop a business plan on their own and so you’re really hiring the agent, not the company they work for.

Are their differences in the companies’ agents work for? Sure, but far less important than the agents you’re hiring.  Most agents will focus on how big (or small) their company is—how much “market share” and how much “technology” they have but how does that really benefit you?

The fact is most agents are capable of selling your home in this seller’s market, but the service they offer and the attention to detail and marketing varies greatly.

With that invariably comes differing degrees of success and results.

SELECTING AN AGENT—WHAT QUESTIONS TO ASK

These are the questions most sellers are prepared to ask:

  • How much do you charge?
  • What do you think my home is worth?

More detailed sellers might throw in a few more:

  • How long have you been in business?
  • In what cities do you specialize?
  • Do you work with mostly sellers, or buyers?
  • Do you have referrals with whom we may speak?

And that’s pretty much the extent of most sellers’ questions. The two which paradoxically seem to carry the most weight are two sellers always ask—how much is my home worth and what do you charge. These are two very important questions, but they should have little to do with choosing an agent. You can always find a discount agent to sell your home and you will most certainly get cut rate service and results as well.

The price the agent tells you your home is worth should also have little to do with whether you hire them. You get to pick the asking price for your home and if you’ve watched sales in your neighborhood, you probably have a pretty good idea at what price homes are selling.

Be careful not to decide on your agent based solely on the highest estimated sale price you hear, since that agent may not know your market or could be trying to “buy” your listing—meaning they are trying to get you to list with them under the pretense that they can magically get more for your home just by asking for it. Unfortunately, it just doesn’t work that way.

Buyers choose the price they are willing to pay for your home—not you as a seller or your agent!

We’ve heard sellers say, “We’re going to hire the REALTOR that sold our friends house—they said that they liked him and felt that he did a good job.”

And perhaps they did do a good job, but then again maybe the seller just thought because they received multiple offers well over the asking price that they must have done a good job. But could they have done better? 

THE MOST IMPORTANT QUESTION

Results. Before you’d consider having any important surgery done, wouldn’t you like to know what your Doctor’s survival rate is for his patients? How many operations has she performed? How much they charge would probably be the least of your concerns, so long as you survive to pay the bill.

Wouldn’t it be nice before booking a flight to know how long the pilot has been flying and how many hours they’ve logged?

Any agent can proclaim to be the best, or sell their listings for more in a shorter period of time, but you need to ask for proof. 

IT DOESN’T GET UGLIER THAN THIS

These sellers probably thought their agent did a good job as well. After all, they received $126,000 over asking!

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When the sellers hired these agents, they no doubt never expected this shoddy work product would be what they received—and we can all but guarantee that it’s not what was promised.

This is what is referred to as a Moral Hazard—wherein under the contractual protection of a listing agreement an agent takes advantage of their client—promising one thing and doing another.

But as bad as the photo of the home on its side may be, the agents went on to boast in the private comments (in red) to all agents, that had they waited to hear offers, they would have received three more—and one back-up offer was for $25,000 more than the early offer they may have steered their seller into accepting. To add insult to injury, when they went back into the listing to amend the comments with self-aggrandized accolades once it closed, they still never took the time to fix the photo. So great job Dino!

This may be a gross example of agents taking advantage of a seller, but many agents are guilty of taking the path of least resistance, (e.g. work), to get paid.

We can’t count how many times we’ve represented a buyer, delivered an offer only to receive a call late at night that the seller accepted a different offer. Many times, if the agent had reached out to us, our buyers would have stepped up in price and the seller would have received even more for their home.

We often download disclosures for our buyers which is an indication that we have a very interested party. An offer date is set and we rarely if ever receive a call from the listing agents asking if our buyers are interested in making an offer, and if not, why.

BROKER TOUR, OPEN HOUSES & ADVERSE SELECTION

Agents will probably tell you that they will hold open your home for all agents to view on a special day referred to as “Broker Tour Day”. They may even tell you that they will serve food to attract the masses. And unless you ask if they will be present—they usually won’t. Agent Teams that have someone different for every aspect of the job are especially guilty of this. Many times, they don’t even go that far—they have a vendor such as a mortgage company hold open the home so they don’t have to bother being present. Other times we’ve seen the “Catered Broker Tour Lunch” promised to the seller relegated to a tray of stale sandwiches on a counter with the agent nowhere to be found. Being present at an open house is critical to answer other agents’ questions about the home. 

Unfortunately, these breaches in moral behavior are more common than not.

YOU CAN DO BETTER

Do your homework. Research agents organically on-line to see what work product they are capable of and delivering. Then, be armed with the best questions most agents are ill prepared to answer.

If you’re interested in receiving a list of questions every seller should be asking, we’d be glad to deliver 35 of the best questions when we meet in-person for our initial visit.

Here’s a preview…

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

WHAT PROPOSITION 19 MEANS FOR YOU, WHETHER YOU OWN A HOME OR NOT…

Remember all of those propositions on the November ballot? Number 19 won, and might prove to be your winning number as well…

Some background

Prop. 13 set initial tax assessments on property values beginning in 1978.   

Ad valorem property taxes are currently limited to one percent of a property’s assessed value, plus any voter-approved local taxes such as school or library bonds. Annual increases are limited thereafter to a two percent increase on the property’s compounded value a year.  

When a home is sold, the property is reassessed at its current market value. The market value of most properties grows faster than two percent per year, leaving many properties taxed at a value below market price.  

How does Proposition 19 change the rules on tax basis portability? 

Prop 19 allows a homeowner who is 55 years of age or older, severely disabled or whose home has been substantially damaged by wildfire or natural disaster to transfer the taxable value of their primary residence to: a) a replacement primary residence anywhere in the state, b) regardless of the value of the replacement primary residence (but with adjustments if replacement has a greater value), c) within two years of the sale and d) up to three times (or as often as needed for those whose houses were destroyed by fire).

Retired couple moving their tax base

The prior rule limited this exemption to a one-time transfer within the same county (Prop 60) or between certain counties (Prop 90) and only if the replacement property was of “equal or lesser value.” 

When does the tax basis portability portion of Prop 19 take effect? 

April 1, 2021 

If the replacement property is of equal or lesser value, does the tax basis of the replacement property change?

No. The taxable value of the original property may be transferred and become the taxable value of the new one. 

If the replacement property is of greater value, how is the new taxable value calculated? 

The new taxable value is calculated by adding the difference between the full cash value of the replacement property and the original property to the original taxable value. For example, if a seller of an original property has a $300,000 taxable value and a full cash value of $1M and then buys a replacement property for $1.5M, the taxable value of the replacement property would be $800,000. 

Can a replacement property be purchased prior to the original primary residence being sold? 

Yes. This is how the current rule under Prop 60 works, and Prop 19 uses nearly identical language. 

How does Prop 19 affect the rules on intergenerational transfers to children or grandchildren? 

It limits the exemption to those properties where the primary residence continues to be used as a family home by the child or grandchild transferee. If so, the taxable value will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis. 

Not a fan of math? Lawyer’s Title now has a handy on-line calculator to estimate the benefit of carrying your property tax.

If the property is more than $1M over the original tax basis, what is the new taxable basis? 

The new taxable basis will be the assessed value of the property at time of transfer minus $1M. 

When do these new rules on intergenerational transfers apply?

February 16, 2021. 

Where may a claim to transfer a tax basis be made? 

Claims may be made with forms provided by the local county assessor’s office

What if I don’t yet own a home—how will this help me?

Young Couple Dreaming of buying a home

The thinking goes like this. Most people who live in homes they’ve owned for many years, could not afford to buy the home where they currently reside, let alone afford the new property taxes. 

For example, if one owns a home purchased in 1987 for $150,000, their property tax payment would have started at around $1,875 a year. Thirty years later, assuming the worst case scenario that the property was reassessed at the maximum 2% each year, their property tax would increase to a minuscule $3,850 per year.

To purchase that same home 30 years later, using the S.F. Metropolitan Statistical Area (MSA) data provided by Case-Shiller, which shows an increase in value of 1836% during that time, our $150,000 house would now cost ~$2,754,000, with an annual property tax bill of ~$34,425.00.

It’s rather easy to see why a long-term homeowner would be reticent to make a move.

That could all change. 

Homeowners, who prior to proposition 19 were likely to stay in place to preserve their low tax base, may now take that base with them, along with their substantial realized equity, to any county in California, opening-up a myriad of retirement opportunities previously unavailable.

This is where future home buyers could benefit. As more homeowners realize the opportunities found in prop 19, they can now seek more affordable areas to live. This of course could be a boon for new home buyers, as housing inventory will increase, lessening the frustration of bidding wars, and bringing some equilibrium to the market.

If you are a long-term homeowner who wants to take advantage of this opportunity, be sure and contact your tax or legal professional for advice on protecting your options— and be sure to contact us should you decide to make a move.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 25 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine are ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook at https://www.facebook.com/Morganhomes and on Twitter @ https://twitter.com/morganhomes

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Real Estate Bidding–Are you a Bidder’s Fool?

As part of our Real Estate REVEALED series we answer another Frequently Unasked Question Unasked3 in our latest Podcast—how do you know when a home is priced right? In addition to this latest Podcast, we’ve added a web page that makes finding the entire series of archive issues in one place.

 

Podcasts

Drew & Christine Morgan

"Helping People Make Good Decisions"sm

(650) 508-1441

Click the mic for the web version of this page.

Thanks for visiting our Podcasts. Each week we offer a housing market update podcast on our blog at BeautifulMountainBlog.org as well as our series titled "Frequently Unasked Questions" where we tackle questions buyers and sellers should be asking but frequently aren't, and "Real Estate Revealed" where we discuss industry insider information. Enjoy and don't forget you can subscribe to our podcast stream to be automatically updated with any new releases by clicking on the orange RSS icon.

Pitfalls of Dual Agency

The Big Broker Myth

Staging your home for sale

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Note: For detailed market discussion visit our blog at:

BeautifulMountainBlog.org

Drew and Christine Morgan

(650) 508-1441

dmorgan@morganhomes.com

"Helping People Make Good Decisions"sm

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