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Planning on Buying or Selling? Find a Local Realtor

Tensions can run high in both the selling and buying of real estate. After all, there is a lot of money and emotion involved! There are also time pressures and numerous privacy issues to deal with. The sale and purchase of real estate can be a lengthy process involving numerous professionals from many fields.

The Real Estate Center at Texas A&M University asked 3,000 Texas home buyers to describe their recent purchase, about 400 replied. Their responses showed how stressful buying a home can be, for buyers and sellers. The Realtors and attorneys who try to keep all tensions at bay in order to complete the transaction also feel the burdens of stress!

"The process is grueling in the best of circumstances, and the severe buyers' market of recent times only increased the stress," says Dr. Jack C. Harris, Center research economist. "In conjunction with Lawyers Title Company, the Real Estate Center asked recent home buyers about their buying experience and what changes they think would make the process more buyer friendly."

The final question on the survey was, "If you could change anything about the home buying process, what would that be?" Almost a third answered the question, and most of them expressed dissatisfaction about some phase of the process.

Understandably some of the complaints were about circumstances beyond anyone's control. This included high prices, interest rates, the lack of listings in a specific area, where they wanted to buy, etc.

However, all of us Real Estate Professionals can learn much from some of the things that WE can, and should, do something about. Many of the folks surveyed felt that the Realtor did not perform up to their expectations. They were especially miffed when the Realtor assumed too much, that they understood what was going on, and didn't keep them well enough informed. In such a pressure cooker of financial and time constraints, the unfamiliar territory of buying and selling a property can be nerve wracking!

Many buyers and sellers need to be reassured and comforted. It is sometimes hard for the Realtor to know which of the dozens or even hundreds of people they are working with at one time need the most attention. Some of the Realtors' clients felt the agent did not take enough time with them. This was true even for some buyers who had a Buyer's Agent under contract to work on their behalf alone.



Realtors should alert and educate their clients, whether they be sellers or buyers, to the complexities and details of the real estate transaction. Some buyers feel that they are rushed through the looking, choosing, buying and settling process, and sometimes they are.

More and more buyers, especially the most savvy ones, are using Buyer's Agents. When there is a Buyer's Agency Agreement signed, most buyers expect far more service. Some feel that they don't always get it. In fact, according to the survey, 70% of those who had a Buyer's Agent wanted even more care, concern and service from their agent than they felt they had received.

The sellers, too, felt they had received too little service, care and attention in many cases, for the commission involved. Some seller's felt that the selling agent was not responsive enough to them, that calls were not returned promptly enough, or that not enough assurance, information, concern and communication was forthcoming from their agent.

Even though it is legally the seller who pays the Real Estate commission, it is really part of the overall transaction. Many buyers feel that they are the ones who are really paying that commission. They feel that the several thousand dollar commission is just tacked onto the selling price by the seller and thus it is they, the buyer, who is ultimately paying more for the property than they should! Buyers often feel that sellers inflate home prices to recover the cost of the commission.

Some purchasers want more contact with the sellers of the property; before, during and after they decide on the property and place a contract on it. Many wanted to develop a relationship with the seller of the property and have direct communication with them between the time of the contract and the settlement. Some felt that an agreement would have been more easily arrived at if the sellers and buyers could have hammered out details in person.

Other buyers had met with the sellers and considered that it had been the biggest error of the entire process. Most folks felt that the insulation of the Realtor(s), keeping the sellers and buyers apart and in communication only via written offers and changes to the contract was appropriate as it gave them the advantage of advice and discussion with their Realtor and time to think and discuss things before responding.
A huge part of the work and value that a Realtor or all the Realtors involved bring to the transaction is the mediation, conflict resolution, refereeing and monitoring of communications between buyer and seller. Often that is a huge and difficult task. Sometimes it is just too monumental to achieve satisfaction on the part of their client. Often it is those clients who are most difficult to work with that are the least satisfied with their Realtor. That is all part of the job we do. We do our best, from our own viewpoint, we try to satisfy the personality of our clients, and usually that is well appreciated!

After all, the natural flavor of a buying and selling transaction is adversarial. The Realtor is like a Gladiator in most cases; going to battle, in an honorable way and according to the rules, on behalf of their backer -- their client. There are many behind-the-scenes conflicts on behalf of clients that never are divulged and shouldn't be. It is the duty of the Realtor to put all parts of the transaction in the best, although truthful, light possible. A Realtor who transfers the natural adversarial animosities between buyer and seller does a disservice to his client no matter which side of the transaction is being represented.
Most buyers and sellers comments on the survey evidenced the importance and value of the agent in the transaction process. However, it is important that all of us Real Estate professionals (especially realtors) learn from our buyers and sellers, especially to responses they give about our profession when they are being surveyed on our service.

From the survey results of the Texas A&M University, Realtor(s )are well advised to learn that respondents praised especially helpful agents. It is reasonable to assume the majority who wrote nothing when asked to comment on any dissatisfaction, on this anonymous survey, were well satisfied with the service they received from their Realtor(s).

"We had a great experience," wrote one buyer. "The agent made all the difference. She kept us well informed almost daily. This was so important to us." While a majority of survey respondents had no comment regarding agents, 85% said they would use or recommend the agent again.

According to the survey report, complaints about the complexity of the home buying process fell into one of three categories: too complicated, too time-consuming or too costly. Many felt the process involved too much paperwork. Undoubtedly, they were reacting to the numerous, lengthy legal forms they had to sign before, during and after the contracting of the property as well as the seemingly almost unconfrontable stack of documents requiring a signature at closing.
It can take a terrific amount of time to find and buy a home. We often work with buyers for months seeking the right home. Some of them we've been working with, staying in touch with, and showing properties to -- for years. Those with some particular interests may find that a "possible" choice for them might only come on the market once in a great while! It is not an easy or comfortable situation for anyone involved, but the finding and buying or selling of a home or property can be made a MUCH more comfortable process with open, full and honest communication between the agent and the client at all times.

Many of our sellers would like us to find a buyer in a week or less for their property. Interestingly enough, it is often the property that is most difficult to find a buyer for that has the most impatient seller.
Even after a property is chosen by a buyer, there is a lot of time and work still needed from all those involved. The time, the continued negotiations, the inspections, reports, and evaluations needed, all the calls and appointments that need to be made on behalf of all parties involved almost always take far more time than anyone not directly involved can realize. This is usually frustrating to everyone. The sellers as well as the buyers often feel they are stuck in quicksand, unable to move or do anything without sinking further into the mire. At the same time -- that same quicksand of details required to complete the transaction seems at times to be filled with alligators ready to bite and take them down anyway. In some ways, that is all too true. And, it is the duty of all the Realtors involved to keep our clients and customers as comfortable as possible during these trying times of details and difficulties.

The Realtor usually spends a good deal of time trying to manage the lender(s) and get the money required to bring the deal to closing. Often this is the most difficult part of the transaction, even when the buyers and sellers are easy to work with. Usually, the first contact with a lender is all roses and sunshine. All too often however, the clouds and thorns of problems are soon evident. Realtors are often fully employed trying to get all the requirements fulfilled for the lender and the purchaser and when those are complete we work to make certain the promised funds are still available, approved and ready for closing, ON TIME.

At the closing, there is another 2% to 3% or, in some few cases, even more of the purchase price involved at closing for each the buyer and the seller. The long list of expensive items often seems too costly to both the buyer and the seller. Some folks find this irritating and feel it to be unfair. Some wonder why there are so many fees and services that find their way to the settlement table and may wonder if the fees and services were even necessary.

The myriad details involved with the finding, selecting, negotiating, contracting and transferring of ownership and funds at final settlement is time consuming, detailed, and often challenging.

People are accustomed to buying most things instantaneously and getting instant gratification for their decisions. Especially for those of us who use the Internet a lot. In a recent survey it was shown that most people who purchase via the Internet want the purchase delivered to them via overnight service. MOST buyers do not appreciate the legal complexities of taking title to real estate. They most often, simply do not understand why it should be so complicated to buy a piece of land or a home, nor do they understand the complexities of getting them approved for the best rate and terms in the mortgage obligation -- even if they have done it before.

The real estate industry has made great and consistent accomplishments in speeding up the entire buying process; from searching via the Web to getting mortgage approvals in sometimes an hour. Even title searches, lien searches, judgment searches and the typing of the dozens of pages of legal documentation has been streamlined with modern devices and techniques. However, there is another bundle of issues that slow the process while the aforementioned have sped it up. The litigious society we live in, the relatively recent and growing list of written disclosure requirements and legal contingencies have adversely affected the time and ease involved. It has limited the progress and speed of the individual parts of the transaction steps at nearly every point.

We, as Real Estate Professionals should, in fact we must, pay special attention and take special care in helping buyers and sellers understand what is going on at each step of the selling and purchasing process. We need to make it clear why the various expenses incurred at closing are ordinary and necessary. We need to alert our clients and customers to the potential consequences of each place where they can be financially and legally harmed or put at risk by cutting corners. We do our best!
Based on every available survey, it is evident that the Internet is growing and soon to be of utmost importance to buyers searching for a home. A review of 37 major search engines showed that Real Estate related searching and use was the third major use of the Internet, world wide. In America, it was second except for a temporary flurry of interest in searching for information on digital cameras which barely put it in third place here also.

The Internet is, however, not the only factor in the overall search. At price ranges of $300,000 and more; about 90% of the first contacts are to a Realtor with an attractive, informative, workable and fast acting Web site. As the price of the home descends, the percentage of buyers using the Web decreases. For homes under $100,000, only about 25% of our personal response is a result of our Web site presence and expertise.
Simultaneously, fewer Realtors instead of more, are finding the Web useful according to our recent survey. The reason is obvious to some of us; most users want sites to be far more informative, more private, and want the sites to have a lot more content. They want more pictures, better descriptions, related sales, crime reports, etc. Some of these things are not even available yet for our market area but the buyers still want them. People would like to rule out those homes they are not interested in before they even contact a Realtor in most cases -- especially for the more expensive properties.

Users want the sites to come up faster and to be more intuitive of their interests and needs. People are also reluctant to show what they don't know as it makes them feel vulnerable. Thus we try to have lots of data on our site so the sellers and buyers can educate themselves before they contact a Realtor.

Some clients seem to realize and appreciate that Realtors are also dependent on other professionals to make the home buying transaction go more safely, more legally proper and in all ways more smoothly. Buyers do expect the agent to keep them informed about progress and to effectively, quickly and professionally handle any obstacles to their goals and purposes in the transaction.

The entire process of selling and or buying a property, especially a home, can be nerve wracking and full of tension for everyone concerned. Some problems are unavoidable, some are unpredictable, some are created out of nothing by some party to the transaction. Many problems can be resolved or avoided if the sales agent provides information, reassurance and support to the buyer.

In the final analysis, it is up to you, the buyer or the seller to be the "squeaky wheel in need of oil" and call, write, e-mail and otherwise let your Realtor know immediately when you feel needy of more communication, care, solace or help. Our job is about 98% invisible to our customers and clients. Even when we tell everyone what we are doing, it is almost always hard for them to believe the time it takes for what seems, to them, a simple task. We usually have a few dozen customers and clients at any one time that we are trying to service as if they were the only person in our professional lives.

By:
Sean McAlister

In a recent report for homebuyers, all signs suggest that their time is now. In many parts of the country, sellers have finally gotten the message by now, and homebuyers must take the hint. Real estate experts say a switch in the psychology of the housing market has helped buyers to see the silver lining around the market's storm clouds and usher in the fine shopping weather. Two years of stormy real estate markets appear to have created an ideal climate for bargain-minded house hunters who know where to look.

David Lereah, the chief economist for the National Association of Realtors, said that "we are now in a solid buyer's market," also added "It has been a seller's market for many years, but now we are seeing people across the country making deals and bringing prices down."

"What happened was, investors pulled out in droves, and the housing markets went dead," comments Lereah, "When the investors stopped buying, regular buyers got scared." A loss of confidence on the part of real estate investors triggered the psychological switch, he says.

"Now they are making deals," Lereah says, speaking about the dearth of buyers, sellers eventually realized they would have to make concessions on their sale prices.

Mickey Levy, the chief economist for the Bank of America, points out that the market is also suffering from an oversupply of homes created by an overzealous home-builder community. If the downturn was simply a product of a short-term panic, things would likely be back to normal by now.

He says that "While demand is picking up, there is still that large supply overhang," and added "And while the numbers are starting to come up for sales, prices still have a bit to drift before they start rebounding." With a listless housing market, savvy buyers in many markets across the U.S. are finding themselves in the best position they have been in for nearly a decade when it comes to price negotiations.

Levy does warn, however, that not all sellers are in a dealing mood. He also said that "Even though existing-home prices are basically flattish on a national level, I would issue a bit of caution with that number," following up with "Housing is inherently a local market, and national numbers are notorious for not offering an accurate snapshot of what is happening in a particular market.

"On the whole, Levy says to expect prices, on average, to drift slightly lower as a function of clearing out excess inventory. And inventory is the key. So, while prices in Southern California and parts of Florida may be down significantly, other markets may still be enjoying healthy price gains.

SOMETIMES VOLATILITY FEELS good, as demonstrated by Friday's market rally, but by its very nature, what volatility giveth it will also taketh away.

The latest gains, fueled by the Federal Reserve's surprise move to knock a half percentage point off the discount rate that it charges banks for loans, are a welcome relief for the ravaged market. Enjoy it while it lasts. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the "investor fear gauge," tumbled early Friday to near 25 before bouncing back to 29.99 by the end of trading, still miles above its 52-week low of 9.39. There's little reason to think volatility will abate anytime soon.

Tobias Levkovich, Citigroup's chief U.S. equity strategist, wrote Thursday that although investors like to think a fed-funds rate cut will dampen volatility, he believes it would only be helpful if economic conditions don't break down further.

"As a reminder, the surprise Fed rate cut in January 2001 did little to turn the tide, even though it provided some very short-term relief, since the capital spending driven economy faltered and earnings collapsed," Levkovich wrote. "Thus, a Fed rate cut without some willingness to lend money to small business and consumers would equally end up being in vain." The rate-setting Federal Open Market Committee is scheduled to meet next on Sept. 18.

MORE ON STOCKS FROM SMARTMONEY.COM

Dow Correction Serves Up Big-Cap Bargains When Less Is More Woes Widen as Countrywide Forced to Tap Credit Line
And as horrible as August has been, historically September is the worst time of the year for average monthly performance. It would be entirely in this market's character to follow Friday's euphoria with another fire sale next week or next month.

The Dow was down 10%, albeit briefly, on Thursday from its all-time closing high of 14000 set on July 19. And even with Friday's rally the industrials are off 1,000 points in a month. In light of recent extreme volatility the Dow appears likely to re-test those lows again soon.

Be fearful when others are greedy, Warren Buffett has said, and greedy when others are fearful. The next time the Dow flirts with 12600, the dreaded, official 10% correction, there are sectors to grab greedily and some of which to remain fearful. (See "Dogs and Diamonds of the Dow" sidebar.)

Firmly on the buy side are some of the Dow's technology stocks. "They're just being indiscriminately sold now and are creating some real bargains," says Art Hogan, chief market strategist at Jefferies & Co.
As growth stocks, tech tends to outperform later in the market up-cycle and this one is rapidly approaching six years. Furthermore, tech stocks with diversified global revenue streams — meaning they're not solely at the mercy of the U.S. economy and consumer — offer the best bets. Surging demand for PCs helped Dow component Hewlett-Packard (HPQ: 47.15, +1.10, +2.4%) report better-than-expected earnings after Thursday's bell. The company also raised its outlook. Just as important, H-P has robust free cash flow and little debt — key considerations in this tight credit environment. And its forward P/E offers a discount to the broader market.

In much the same vein, Microsoft (MSFT: 28.25, +0.44, +1.6%) trades at a discount to the S&P 500 and has no debt. Intel (INTC: 23.70, +0.60, +2.6%) looks attractively underleveraged, but it's forward P/E offers a premium to the broader market. International Business Machines (IBM: 110.90, +1.21, +1.1%) trades at a deep discount to the market, but carries a lot of debt.

After tech, the most promising stocks are to be found in energy, a key overweight sector at Citigroup. "With powerful cash flow, the energy sector is not likely to be burdened with debt and our proprietary valuation work is very supportive for integrated oil and gas names," Levkovich wrote Thursday.
True, Dow component Exxon Mobil (XOM: 84.14, +3.47, +4.3%) is highly leveraged, but it also generated more than $36 billion in free cash in the trailing 12 months. Meanwhile, it's forward P/E offers discounts of about 20% and 15% to the broader market and its own five-year average, respectively.

On the other side of the ledger are the financials. They stand to continue to sell off despite seemingly attractive valuations. "I'm not a real fan of the financials here," says Ed Yardeni, president and chief investment strategist of Yardeni Research. "I think they're going to continue to be distressed and be a source of unhappy news and I think earnings comparisons are going to be tough."

Sometimes stocks are cheap for a reason, and with so much uncertainty as to where the next subprime landmines lay, the risks appear to outweigh the rewards. Remember, the equity markets, trading on emotion rather than deliberation, are the tail. The credit markets are the dog. That puts Dow components American Express (AXP: 58.89, +0.72, +1.2%), Citigroup (C: 48.81, +1.26, +2.7%) and JP Morgan Chase (JPM: 47.01, +1.54, +3.4%) off the buy-on-the-next-dip list, despite deeply discounted forward P/Es. Insurer American International Group (AIG: 65.96, +2.01, +3.1%) offers financial services, as does conglomerate General Electric (GE: 38.45, +1.25, +3.4%). Be wary there, too.

It takes a steely tolerance for risk to buy when everyone else is selling. But that, of course, is when the best opportunities present themselves. "I think that 12 months from now we'll look at some stock prices that we're seeing quoted these days and say that was really a buying opportunity," says Jefferies' Hogan. "It's just very difficult for the average investors to catch those falling knives."

For most folks, finding ways to keep their money growing, and doing so in a safe way, is a mind-boggling process. Investing in real estate is an option most would take a second glance, considering the way property market values are going up today.

However, a lot of think that the path to success in real estate is in buying a handful of rental properties, leasing them out for 20 or so years, and then retire rich with millions in equity and a large, fat cash flow to sustain you till retirement. That notion is however quite true; in 30 years probably, the mortgages on the properties will have been paid off, the said property will have at least doubled or tripled in value, and the rents will be substantially higher than today.

The only one problem with that notion is that you have bills and financial needs today and while achieving a healthy cash flow in 20 years or so is a nice idea, it still doesn't solve today's cash flow concerns. You need to solve today's cash flow problems before worrying about creating long term wealth. If you are like the average American, probably your biggest concern is security.

That is the main reason why so many people today keep working at jobs that they absolutely don't like; because they can't let go of the security that a regular paycheck gives. By investing in good real estate deals, one has the chance of getting good yields in the future, and putting their hard-earned money on good pieces of property could help increase their savings in the long-term.

Investing in real estate has been a usually safe and respectably good investment choice over the last decades. With the housing and property market booming over the last several years, people have seen wonderful rate of returns in their real estate portfolio.

Because of all this, real estate looks to be a safe, secure investment. We constantly hear stories of people making ridiculous returns on their investments; however, what we don't hear is how many people have lost their shirts playing the same game. Real estate investing can be a terribly risky one unless you are well informed of the market's movement and indicators.

Real Estate as a tangible investment

One main reason why many people prefer to invest in real estate over equity markets is that real estate is tangible. You can touch it. If you own shares of a certain company or startup tech firm, the best that you can get is a quote on your screen. It's like being able to drive to a house and say that you own it. It makes you feel more secure. I feel like I have more control when I can reach out and touch something physical.
Less risks, greater returns in real estate investing.

When done properly, one can achieve greater better returns in real estate than on investing in the stock market, without additional risk. In fact, I would argue that you can achieve better returns with less risk. Try getting insurance on your stock portfolio. It will never happen because insurance companies know that real estate is a much safer investment.

Real estate Isn't rocket science

According to investment experts, the greatest advantage of plunking your cash on real estate investments is that you don't have to be a George Soros to make good money in this field. Whenever you try to make money, say for example, in the stock market, you need to understand the technical and fundamental techniques of yields, net asset values and such.

You need to get a firm grasp of stuff like inventory turnover, daily sales ratios, etc. In real estate, it is a much simpler, uncomplicated process. If you have a good real estate broker and you do have basic understanding of a basic financial sheet, then you are all set. A good real estate broker can help you in dealing with all the aspects of land and property investment.