Real Estate

Business Structure, Management, and Challenges

The national chain “Jack and Jill’s Sporting Goods” has sold my partner and I an agreement to open a franchised branch in or near Rockford, Illinois for the sum of five thousand dollars. The franchisor is allowing us to pay for that over a two-year period without interest. We are responsible for obtaining a building, either by purchasing or leasing. We must stock the store with at least 75 percent of their endorsed brands of merchandise. We have to pay a premium of five percent over cost with all chain-endorsed wares as a royalty fee. Both of us must complete a one-week training seminar at their headquarters in Portland, Oregon.

We have found building that we may possibly purchase in Machesney Park, Illinois. Re-Max has a listing for a vacant retail store that will be adequate for a sporting goods store and is in a prime location. It is near an intersection of two state highways, just north of Rockford and is only a few miles from Interstate 90. It is located near Menards, Kohl’s, and many national chain retailers and national chain restaurants. It is 9891 square feet and has a price of 1.35 million dollars (www.loopnet.com).

Between my business partner and me, we can put a down payment of thirty percent without depleting all of our assets. Both of our spouses are working and neither of us is dependent on income from this business. We feel that buying the building will be a great investment that will increase in value and we will have more to show for our money besides a box full of rent receipts.

The corporate leaders are well aware of what it takes a business to succeed and what causes most business owners to fail. During the week of training and orientation in Portland, the corporate trainers covered all of the mandatory policies and guidelines as well as how to succeed as “Jack and Jill’s Sporting Goods” Franchisees.

Managerial incompetence or lack of experience is very detrimental to the way a business conducts business (Ebert  amp; Griffin, 2007). It is the duty of managers to schedule the workers around the operations of the business so that there is plenty of staff on hand to handle the workload but not more than is necessary as well. The franchisor has provided training DVDs that clearly demonstrates every aspect of running a sporting goods store competently. Every manager will be required to watch the appropriate training videos and pass a competency test before he or she begins actual work in the store.

The owners of the sporting goods store branch (the franchisees) will be a role model for their managers. They will monitor their managers and link great performance with appropriate rewards, including pay increases and promotions. The managers will know what their duties are, and what the consequences will be, whether they perform competently or otherwise (Baldoni, 2008).

Many businesses flounder or even fail because the business owners do not spend enough time working the business and taking care of problems that arise. Besides the regular functions of operating the store, which is the purpose of hiring managers and employees, business owners have other tasks to perform, such as marketing. Perhaps local television stations, radios, and newspapers may report about the business opening up for business. The owners may need to compare costs of advertising through different avenues of media or have fliers made. When business owners are an integral part of the business, they tell the managers and employees that they care about the business (Poyoh, n.d.).

It is important to have a commitment in writing between partners how much time and effort each will spend towards the operation of the business. Each partner must be willing to devote their time working with the management, employees, and customers. There is a lot of capital and other resources at stake and this business needs to have a priority with each partner.

Some businesses fail to utilize strong control systems, meaning the owners do not prioritize business procedures. Many problems start out small, but when not dealt with, the problems get bigger and create additional problems. Sometimes, business owners are so anxious to have any business, so they extend credit or accept checks without a check reader system (Ebert  amp; Griffin, 2007). I am currently working as a marketing consultant and the client I am currently helping is a good example of this problem. He has approximately $750 worth of bad checks. He will most likely recover from his current financial strain that he is experiencing, but he is now considering getting a check reader and a credit and debit card machine.

Business owners need to monitor and understand customer buying trends and habits. While some things are obvious, such as not stocking up on skiing equipment in May, shifts in buying patterns may not appear so obvious, so a business owner may want to consider purchasing software that helps track how merchandise is moving. If a business owner orders merchandise once a week and the store runs out of a particular product regularly, managers may increase the quantity of the order. A business owner has to actively participate and be the control that the business needs (Ebert  amp; Griffin, 2007). Moving a display rack of more popular item(s) further away from the checkout register will expose a customer to more merchandise.

Many businesses “bleed to death,” meaning there is not enough money to pay the bills. Business owners can save a lot of money by hiring enough employees, which will allow adequate staff to operate the store without paying time and a half for over-time. Business owners should have enough capital to pay the overhead for six months to a year (Ebert  amp; Griffin, 2007). The economy is always going to be cycling and it would be prudent to start a business sometime after the beginning of an upward trend. During the years when the economy is doing well, business owners should add to their capital base by twenty percent or more of their profits.

Besides four main causes of failure, there are four reasons why entrepreneurs succeed. Business owners are dedicated and work hard. When problems occur, successful people work extra hard, doing their regular work plus the extra work required to overcome any obstacles or problems. Smart business owners are continuously analyzing market trends and are prepared to have the products that their customers want, on the shelves of their store. Individuals going into business with a partner select a partner with similar goals and ideals but different and complimentary abilities so that they can benefit from having each other on their team. The textbook refers to luck and maybe that is what some people seem to have. Someone once said that luck is what you get after you did everything else, i.e. work. (Ebert  amp; Griffin, 2007).

Teenage Entrepreneur: The Basics and Benefits of Hiring an Intern/Independent Contractor

If hiring an employee doesn’t seem to be as interesting or beneficial to you, you may want to consider hiring an Intern or an independent contractor. An independent contractor is a person who differs from an employee because they work for different companies.

Hiring an independent contractor has its benefits too. If you hire an independent contractor, you will stay pay them like you pay an employee. They will charge you an hourly rate; however, you don’t have to pay the worker’s entire insurance fee, and all the permits that are required. (Check up with your state to see what the requirements are for hiring an independent contractor) By hiring an independent contractor, you can save a lot of fees. Also, you only need to hire the independent contractor when you need a work to be done. It’s not permanent. Last but not least, if you find that the independent contractor’s work is not up to your standards, you do not have to hire them again next time.

However, the IRS can be very picky on what is considered an independent contractor. For a person to be considered as an independent contractor, they need to work for other companies, set their own hours, already has the experience in the work, and can’t be fired.

If you have the experience, but don’t have the money for hiring an employee, you may want to consider hiring an Intern. Usually, Interns work voluntarily meaning that you will not have to pay them because Interns are looking for experience. It’s a great deal if you don’t have the money but need the help, and have the experience. You may have to walk your Intern through what they are required to do, and the processes of it.

Getting an intern can be quite difficult though. The position that you are offering must be a skill that they can learn, and experience that they can use in the future for their career. The best way to search out an Intern is by going through the school department that teaches the skill to the students. Most of the time, you’ll find a student who is interested in donating their time to help with the work. After the whole ordeal though, you will have to write up a couple of reference letters, and may also have to be a reference. It’s a bit of job, but definitely well worth it!

Getting someone else to help you with your company other than an employee can benefit your company greatly. The more help you get, the more you can shape your company to success. You may not need an employee but you will need help for sure!

What’s Really Behind Real Estate Investment Seminars

Seminar

Real estate investment seminars are not really something for the serious real estate investor. Indeed, real estate investment seminars are not anything that anyone who wants to know the reality of real estate investment knowledge or strategy should ever pay attention to or attend. Just when you think that all of the fakers and frauds who are involved in shady real estate “advice” have been forced to get out of the country so they can’t be prosecuted or been forced to file bankruptcy, a new wave of real estate investment seminars makes its way onto the lecture circuit and is advertised all over the Net and television.

Sometimes you come across the old bad guys with a new rip-off technique, sometimes it’s some new “program” altogether. However, even the new real estate investment seminar programs are just old hat, or old trick-ships in new bottles. It’s hard to open a newspaper, either in print or online, without coming across some screaming marketing copy about a real estate investment seminar coming soon to a space near you. “Buy Real Estate and Get a Rebate!” “You Can Buy Homes for 37% Under Their Market Value!” “Live The Lifestyle of the Rich Through Buying Foreclosures!” It goes on and on and on, telling the old, old story…zzzzz…

 

An authentic real estate investor knows that there is no way that any lender is allowing any buyer to walk away from the closing table with money put back in his pocket. Real estate investors know that real estate agents are not going to sell you a home that is massively undervalued; they would put those kinds of homes into their own real estate investment portfolios instead, and never tell a soul. And when it comes to the tricky and highly government-regulated business of buying foreclosures, you had better act within the constraints of a squeaky-clean choir boy or else you are going to lose everything…and that includes the clothes on your back.

 

Those who put on these “seminars” are the kind who prey upon the weak-willed, the avaricious, and the fearful. But it is sad but true that these can be definitions of the traits of the vast majority of human beings, even if these are not usually their predominant traits. The seminar-speakers make wild promises to make themselves seem as if they could set you free from financial worry, and what’s more do so with a pretty easy process. They are trying to get you to feel that you have to buy their DVDs, CDs, computer software, or that you can download for such a “low cost” compared to what you are going to gain. But the reality is that most of what they try to sell you on is not any kind of knowledge at all, it’s mostly stuff that is illegal–which is why most people are not following these procedures! Do not let these frauds make a fool out of you or put you in the poorhouse. Just walk away from these real estate investment seminars altogether.

Five Ways to Make Sure You Have a Fair Appraisal on Your House

Money

An appraisal of a house is one of the most important things a lender will look at when deciding to commit to finance or re-finance a property loan. One item that many homeowners do not understand is that the appraiser works for the lender. By law, appraisers have an obligation to bring the lender a value that is fair and reasonable in the market the house is in.

Many times lenders make the homeowner or prospective borrower pay for the appraisal at the time of the inspection. Even though the consumer pays for the appraisal, the appraisal belongs solely to the lender. If the consumer decides to go to another lender for a loan, they may have to pay another appraisal fee even if the same appraiser does the appraisal. This is based on a federal law. So make sure you are going to get your loan with the lender before paying the fee to the appraiser.

 

Here are five things that the home owner can do increase the chances that the appraisal is fair.

 

1) If you have requested a loan and the appraiser for the bank or loan agency requests to inspect the interior of the house, make an appointment and let the appraiser inspect the house. Clean and straighten the house before the appraiser gets there.

 

2) If you have any prior appraisals of the home, have a copy ready for the appraiser to look at or take back to the office.

 

3) The appraiser is not a home inspector, but will look in every room of the home. The appraiser may also check the attic, basement, crawl space and any out buildings. Make sure doors and entrances are not blocked.

 

4) Point out to the appraiser any upgrades or renovations that have been made to the home in recent years. Personal property such as appliances, above-ground pools and furniture are not included in appraisals. Instead, the appraiser will want to know about a new air conditioning unit, roof or other major repair.

 

5) Leave the appraiser alone as the inspection is performed. The appraiser cannot tell you what the home is worth, as that information can only be given to the lender. The appraisal report will be sent to the lender, and you may be able to get the appraisal information from your lender.

 

If the lender calls you and tells you that the loan cannot be made because the appraisal came in too low, ask the lender if you can pay for another appraisal. Since an appraisal is an opinion of value, one appraiser may think the house is worth more than another.

 

In North Carolina if a home buyer, seller or lender has a problem with the way an appraisal is done they can complain to the NC Appraisal Board which has authority over the rules that govern appraisers.

 

An appraisal will not identify issues related to the land and building; it will only attempt to determine the fair market value of the property.

How to Keep Your Real Estate License Active in a Slump Market and Still Earn Commissions.

Slump Market

The Real Estate market has recently taken a down turn in some major cities across America and have sent a lot of up and coming Real Estate agents running back to their “day jobs”. In my recent research for additional real estate prospects, I have found that the Real Estate industry has a number of other opportunities to offer a licensee who would like to keep their real estate license active and still earn commissions without jeopardizing all of their hard work that they put into the business. Here are a few suggestions on how to keep your real estate license active and still be able to earn commissions.

Real Estate Agent Referral Programs

 

Real estate referral programs have been around for quite some time, however referral programs exclusively for real estate agents has recently been developed into a very lucrative and much needed vehicle for agents who do not want to actively participate in selling real estate. A Realtor Referral program is a program that accepts licensed real estate agents who refer family, friends and/or associates to purchase or sell real estate transactions within the network. Once the agent is accepted into a referral program, that agent is not allowed to participate in the selling and/or the buying process of any transaction but receives a referral fee (percentage) on any closed deal. I especially like the referral program option because as an agent, you do not have to pay Multiple Listing Service (MLS) fees and Association dues however there are some referral programs that require a membership fee. Real Estate Agent referral programs have to be sponsored by a broker in your state therefore research local real estate agencies in your area who sponsor referral programs, such as the TexasAgentNetwork, an affiliate with Century 21 Mike Bowman and The Referral Center, who affiliates with various states around the country.

 

Why Not Take on Rental Clients

 

There are a number of real estate agencies that cater strictly to rental clients and are consistently busy all year round. I found that when I was selling real estate full time, there was always a need for rental property. A lot of the clients I solicited were not ready for a number of reasons to actually buy property but they had to have a place to stay. Therefore, taking on renters and finding them that perfect short-term or long term rental property was one of my biggest moneymakers. If you are currently working with a broker, ask about their rental property division or start to research other agencies and apartment locator services. The commission is based on a percentage of the rent once the client has signed the lease and paid their deposit. Taking on rental clients is a pretty decent part time gig especially if you want to sit back and wait for the real estate market to warm up again.

 

Become a Part-time Real Estate Associate

 

On the flip side of the real estate market, there are still some real estate agents who are making a decent living and beating the odds of the market. However, I found that these agents have been in real estate well over 10 -15 years and have paid their dues (literally) by networking and developing partnerships during their tenure. The real estate market is very competitive so I found that viable and qualified clients are more likely to go with the tenure real estate agent than take their chances with a newbie. Therefore, these hot shot real estate agents are busy and still have to hold open houses, conduct phone calls, home showings etc. and they cannot do it alone. If you want to stay abreast on the real estate market and still make some money, solicit one of the hottest real estate agents in your area to find out if they need help in managing their client base. Even if it is sitting at open houses or pre-qualifying clients in your spare time you will be able to keep your real estate skills sharp and still earn a percentage out of the deal.

 

Real estate is a tough field but it can also be exciting, rewarding and a great industry to meet a lot of interesting people, therefore do not let all that hard work go to waste. Start checking out some of the other opportunities that the real estate industry has to offer.

Flipping Houses: Five Tips for Greater Profit

Profit

There are many ways in which one can invest in real estate these days. Very few however, have gotten quite the press recently that flipping houses for profit as a real estate investment has received. With all the media attention we are seeing a growing number of would be real estate investors branch out into the world of flipping houses in hopes of quick and hefty profits.

With so many people getting into the game there are a few things you should keep in mind when it comes to flipping houses as a form of real estate investing that will keep you ahead of the curve. The most important thing to keep in mind however when making any sort of investment, real estate or otherwise is that there are no absolutes and there are no guarantees. Real estate has made and lost fortunes over the years and it is a fickle market. You need to be aware from the very beginning that if your plan is flipping houses for profit, you are taking a risk.

 

1) Have a plan. So many people go about this literally flying by the seats of their pants. Flipping houses is a serious investment and should be treated with the seriousness of the money that is on the line. You need to have a plan of action that is detailed, achievable, and well thought out.

 

2) Set daily goals. In most instances when flipping houses, there is a great deal of work that must be done in order to take a property from dud to diamond among real estate. For this reason you should set daily goals to keep you on target for completing your project one time. Every day that the house is not on the market is a day that you are definitely losing money in the investment. You need to make your daily goals aggressive but achievable and you need to hold yourself accountable when you find you are getting behind. In many cases it will cost less to hire someone to help get you back on track than you will lose by getting too far behind.

 

3) Know when to hire a pro. Check with local regulations and building codes to make sure that the work you are planning to do yourself doesn’t require a professional to either perform the work or an inspection on the work you’ve done yourself. Additionally, I have yet to meet anyone who is good at everything. It is better in some cases if you do not know what you are doing to pay to have a professional get it right the first time rather than waste time and money trying to muddle through yourself.

 

4) Stick to your budget. This is the one that most who are flipping houses for the first time fail to achieve. It is difficult to anticipate everything you will need during the process of your real estate investment. It is very important that you keep up with the bottom line each and every day in order to make sure you aren’t going far over budget and potentially placing your project in the red.

 

5) Don’t make it personal. This would be where far too many who are flipping houses end up going over budget. Do not get caught up creating a home where you would want to live. Create a home that will appeal to your target market and do not use upgrades that the market will not support. There is no point in putting top of the line stainless appliances and granite countertops in a home for a lower middle class family. You will not make enough return on the investment to make it worthwhile because the market can’t afford the upgrade.

 

While there are many details that go into a successful real estate investment, particularly one that involves flipping houses, the five steps mentioned above will give you a competitive edge. Flipping houses isn’t the only way in which to invest in real estate but it is one of the best ways to turn a hefty profit in a matter of months if you hit the right market at the right time.

Real Estate Tip: Know Your Documents

Docs

When you sit down at the table to sign your mortgage papers, that big stack can be intimidating. I’m a notary signing agent, and I see the hesitancy in people’s eyes. “I’m signing my life away,” they often say with a sigh.

Don’t be distressed. If you know what you’re signing, you can get through the pile faster and feel better about what you are doing. Here is a guide to some of the more common documents you will find when you purchase or refinance a home.

 

MORTGAGE

 

This is the main document, and it is usually 8 to 15 pages long. You don’t need to read every word, but you should know what it means. You will probably initial most of the documents before signing at the end. This document is one of several that will be notarized.

 

The mortgage states that you are taking control of the property, and if you default on the loan, the property will go back to the bank. You also agree to occupy the home and to carry insurance.

 

NOTE

 

Here is where to find your interest rate. This document is usually three pages long, and it lays out the terms of your loan. When you sign the note, you promise to pay the loan back.

 

HUD-1 SETTLEMENT STATEMENT

 

This is a big grid with lots of numbers on it. This document is important, because it contains all of your closing costs. It also details which debts will be paid off by the loan. If you need to pay money at the signing, you can find the amount on line 1601.

 

RIGHT TO CANCEL

 

In some states, you have the right to cancel the loan within three days. This is another reason why you can go ahead and sign the documents without worrying about every little word. You could have four days to cancel if there is a Sunday during that time (the recission period).

 

TRUTH-IN-LENDING DISCLOSURE

 

This is a breakdown of all of the payments you will be making. It usually contains a page explaining some of the terminology.

 

PRIVACY POLICY

 

This document details how the loan company will (or won’t) share your personal information.

 

UNIFORM RESIDENTIAL LOAN APPLICATION

 

This contains all of the information from your loan application. It details your employment, income and debts.

 

NAME/SIGNATURE AFFIDAVIT

 

This is a document that verifies your name and signature. If you have any other aliases, you would list them here.

 

TITLE AFFIDAVIT

 

This document verifies that you are the true and rightful owner of the home. It also lists any liens or improvements on the property.

 

LIMITED POWER OF ATTORNEY

 

This document simply states that the bank can correct any typographical errors without having to re-draw new documents. Don’t worry – they aren’t allowed to use this document to change anything important.

 

These are the main documents. There are several more, but knowing the basics should give you some peace of mind.

Road Appeal: The Key to Selling Your Real Estate Quickly

Home

When it comes to selling real estate, most people assume the first impression hits prospective buyers when they enter the house. They’re wrong. That’s the second impression. The first impression comes much sooner and learning about a little concept called road appeal will help you as an agent or seller move your real estate properties quickly.

Road appeal is just what it sounds like – how your house looks when prospective buyers drive by. There are some very basic, but often overlooked, elements to increasing your property’s real estate road appeal.

 

Remember, some buyers are not good at viewing a piece of property for its potential if it already has a lot of pieces filled in. Make your real estate property a canvas so your prospective buyers can imagine their lives in it. If they like what they see when they imagine themselves enjoying your yard, they will buy it.

 

If that first impression is of a cluttered, trashy yard, they will subconsciously view the rest of the house that way, no matter how clean and neat.

 

First, give everything a trim. The yard should be neat and well groomed. It does not have to look like the Biltmore Estates, but the grass should be mowed, hedges pruned, large clumps of weeds pulled. All the basic yard grooming things you should do, but might not think of as priorities.

 

Next, consider pressure washing your house and driveway. Years of dirt and grime can make a house seem old and dingy. Pressure washing removes all that build-up for a clean glow. A few paint touch-ups on the porch or gables is also a good idea. Any repairs you’ve been putting off? Go ahead and fix that creaky step, rotten banister rail, or missing rail post. It may seem silly since you won’t get to enjoy the repairs. But the impression of a needed $10 repair can kill a prospective buyer’s interest.

 

Now, step back and take an honest look at your house from the road. Imagine you are a prospective real estate buyer. What do you see? As a parent, you’re used to seeing your kids toys scattered around, but as a buyer all those balls, bats and Tonka trucks clutter the yard. The trampoline, which the kids never use, makes the yard look small. And those adorable pink flamingos suddenly seem a little, well, . . . tacky. Those big, Miami green planters your wife loves? Also tacky. Be honest with yourself about the decorative elements of your yard and make an effort to keep them appealing to the widest audience possible.

 

Believe it or not, one of the things real estate agents have to do frequently is ask their clients to remove junky cards, furniture and trash from their front yards. Many families overlook the trashy elements of their yards if they do not spend much time there.

 

Another key element to road appeal is to remember your location. If you are in the country, the first impression should fit that setting. If your home a log cabin? Keep the yard and patio furniture in tune with that theme. If you have a house in a subdivision, follow all the subdivision codes.

 

Finally, remember is that keeping the yard free of toys and debris is not just important when you have an appointment to show the house. Prospective buyers may drive by your home at any time, with or without a real estate agent. In fact, prospective buyers often drive by a property many times before even contacting their real estate agent.

Buying a House: Working with a Real Estate Agent

Buy House

If you are in the market to purchase a new home, a real estate agent can be an invaluable help to you.

Several years ago I was in real estate sales, but quit for health reasons. Following is my perspective on working with a real estate agent.

 

If you are like many buyers, you will start your search by reading the classified ads and going to open houses. This is a great way to get familiar with the market. Once your search becomes more focused a good real estate agent can be a big help and tremendous time saver.

 

There are many ways to find a real estate agent. Once people know you are looking for a house, you will probably get referrals, which may be good or not-so -good. A great way to find a agent is to go to an open house in the area that you want to buy in. Agents know that the likelihood that the right buyer will happen into an open house is rare. Agents who are showing open houses are frequently interested in finding buyers to work with.

 

There are certain agents who do not like to work with buyers, because buyers are time consuming. I used to work in an office where agents refused to show buyers more than three houses. If you think you want to look at more than three houses, you probably don’t want one of those agents.

 

There are lots of agents, who aren’t as focused on spending their time getting listings, who will be happy to spend time with you, and help you find the perfect home. Agents who are overloaded with clients may not take the time with you that you deserve. Agents who have been in the business for over a year and are familiar with the market are often excellent at spending the time necessary to help buyers find homes.

 

You should be aware that most real estate agents work on straight commission. When they take you out in their cars they investing their time in you, as well as the expenses occurred in driving their car. The reason that you should know this is that you should respect their time. Make appointments with them in advance so they can schedule their time. Don’t just drop in on them and expect them to drop everything and show you houses. It takes time for the agent to make arrangements to show properties.

 

Some customers think they will get a better deal by working with several agents or contacting the listing agents directly. This isn’t the case, because all of the agents have access to the same inventory of houses. If you are curious about a house that is listed, ask the agent you are working with about it.

 

Buyers that attempt to work with more that one agent get a reputation as tire kickers.. The risk of that is that agents won’t invest their time in you if they know that you are not loyal. It’s amazing how fast word can get around that customers are working with more than one agent.

 

This is not to say that if you feel that an agent is not giving you good service that you have to stick with them. You have the right to switch agents. Just don’t try to work with multiple agents at the same time. It’s confusing to you and not fair to them.

 

Once you have found an agent that you feel you can have a good working relationship with, the agent will spend time helping to define what you are looking for. It’s at this point that you will probably talk about what you would like to have and what you can afford. The agent will also prequalify you or have you talk to a mortgage loan officer directly. Mortgage lenders have relationships with real estate agents and will spend a short time asking you the necessary questions and ask to run a short credit check. The credit check is important, so that your agent knows that you are working with the right price bracket.

 

Once you know what price range you will be looking in, you can discuss with the agent what kind of house that will buy in the market. It’s important to be realistic here. Talk with the agent about the size of house you need, he style you like and the location you prefer. You can start with what you need,such as: I need a three bedroom house with a living room, kitchen and bath. Then you can talk about features you don’t need, but would like to have, such as a full basement and workshop. You get the idea. The agent will help you get as much house as you can for your budget. Communicate with the agent about what you really want.

 

Real estate agents invest a lot of time in knowing the market. Once you have a relationship with an agent, they will constantly be on the lookout for new listings that just might be your perfect new home. This is where loyalty to an agent pays off. When the agent is out looking at new listings, you want to be the first person they are thinking of and the first person they call when a great new listing comes on the market.

 

Real Estate agents are hired by the seller, the person who lists the property. Their commission in paid by the seller, out of the proceeds of the sale. therefore the seller is considered the client, while the buyer is considered the customer. It;s a fine line of distinction, but one you should be aware of. Technically both agents in a transaction work for the seller, but have obligation to be ethical and honest with you.

 

When you find the perfect house, the real estate agent you are working with will help you write the offer. the agent will probably ask for an earnest money deposit. The agent will then present your offer to the seller and the listing agent. Chances are that there will be some negotiation of price and terms. Hopefully an agreement will be reached. During the following loan approval process, the agent will continue to help the process along and make sure that details are taken care of. Both real estate agents usually attend the real estate closing.

 

You can enjoy a good relationship with the real estate agent who helps you in finding and purchasing a new home.

Selling Your House — “For Sale by Owner” — is it Right for You?

So you’ve decided to sell your house. There are many things to do now, and one of them is to decide if you are going to use a real estate agent or go the “For Sale By Owner” route to sell your house.

Naturally, the most attractive thing about selling your house without an agent or broker is that you save the commission you would normally pay to the agent. This amount can vary, but often runs around 6% of the price at which you sell your house. With a $100,000 house, that’s $6,000! In your area of the country the average real estate agent commission may be slightly above or below this amount. Also, depending on the market, you may find an agent who is willing to negotiate a lower commission to sell your house.

 

What Does The Real Estate Agent Do To Sell Your House That You Can’t Do With “For Sale By Owner”?

 

So what does he do for his commission? Plenty. In addition to trying to sell your house to potential buyers, he also advertises it to other agents. This one fact alone is what usually makes the sale. He lists it in the Multiple Listing Service, and often spends time and money specifically to market your home to other agents.

 

What’s The Multiple Listing Service? How Can It Help To Sell Your House?

 

Most agents belong to the Multiple Listing Service, and they find houses for their buyers through this service. Your agent will list your house in this database, along with a detailed description. Here’s a common scenario of how the Multiple Listing Service works to sell your house:

 

A prospective buyer calls an agent on a house he may have advertised in the paper. The agent sits down with the person looking to buy, and asks him what all he is looking for in a house. They discuss price range, what they want in a house, what area of town they want to live in, etc. Then the agent consults the Multiple Listing Service to find houses which fit the home-seeker’s interests. The original house which the prospect called on may or may not be the one he buys. In fact, according to RealEstateABC.com only about 10% of “For Sale By Owner” homes sell successfully, and this is one reason why.

 

What does this mean to you?

 

When an agent lists your house in the Multiple Listing Service, all the agents in your city are now trying to sell your house. If you decide to sell it “For Sale By Owner”, you may not be able to list it in the Multiple Listing Service.

 

So, when selling your house “For Sale By Owner”, you need to be able to find prospects to buy it on your own. Every agent in the city will not be helping you to sell it. And you need to be able to catch one of those small percentage of people who buy the same house they called on from an ad.

 

Where can you find prospects when your house is “For Sale By Owner”?

 

Lots of places…

 

Your Job — Many people find a new house through someone they know at their work. Also, if you work for a company with multiple locations, they may be moving new employees into your area who are looking to buy a house. Depending on what business you are in, you may also have business customers who may be interested in buying a house.

 

Your Family — Perhaps a family member would like your house. Let them all know you are selling it.

 

Your Friends — Let them all know. Even if they don’t want your house, they may have friends or relatives who are looking for a house just like yours.

 

Newspapers — Advertise in every paper for your area, even the small community papers.

 

Websites — There are now “For Sale By Owner” websites all over the Net. Do a search for some with listings in your area, and list your home. The most popular “For Sale By Owner” website is ForSaleByOwner.com. They offer many benefits to help you sell your house, along with listing it for you!

 

Your Neighborhood — Print up flyers and distribute them to all of your neighbors. They may be looking to switch houses, or have friends or relatives who may be interested.

 

“For Sale By Owner” — Some Other Things To Consider

 

Lower Offers When Your House Is “For Sale By Owner”

 

When you want to sell your house the “For Sale By Owner” way, you may have many people simply cut off the typical agent commission in their offer to buy. They know that you do not have to pay an agent, so they lower their offer. If you accept an offer such as this, then all your hard work and effort does not save you anything at all! So sharpen your negotiating skills to sell your house at the best price!

 

“For Sale By Owner” — Extra Legal Costs

 

“For Sale By Owner” also means that you will probably need to hire a real estate attorney. You’ll need to consult with him about your legal responsibilities, and to provide the proper paperwork. If you are using an agent, he can usually guide you through the proper steps without additional charges. So to whatever you save in agent commission, you need to remember to add back in these attorney fees to see your real savings.

 

“For Sale By Owner” May Take Longer

 

Since you are the only one promoting, it may take longer to sell your house because there are less people looking at it.

 

So is “For Sale By Owner” right for you? In making your decision, be sure to take the above circumstances into account. Do you have the time to sell your house? Do you have up-front money for advertising and for an attorney? Do you have the negotiating skills to make a successful sale? If you answered, “Yes” to these questions, then “For Sale By Owner” may get you an extra few thousand dollars when you sell your house!