I Do Not Practice – I Am Good!

November 15, 2011

MultiCultural Realty Buying A Home, MultiCultural, Real Estate Agents, Uncategorized , , , , , Leave a comment

MultiCultural Realty is now Dakota Scott Realty.  Still me, Michael Harrell, broker and owner, doing my one-man real estate brokerage.  That allows me to focus my time and attention on my clients, not on managing other agents.  So I guess you’d have to say I have a real estate practice.

That reminds me of a story my brother once told me about a fellow who came into his business in California.  My brother didn’t recognize the fellow as a regular customer, so he greeted him and struck up a conversation.  The fellow spoke good English, but with a heavy accent, and English was obviously not his first language.  During their conversation my brother asked the fellow what he did – he said he was a doctor of some sort.  My brother said, “oh, do you have a practice?” to which the fellow immediately responded, “I do not practice.  I am good!”

Well, after over 20 years in real estate, I hope I am not practicing, I do think I am good, but I’ll be the first to say that I’m constantly learning – every day.  This business is not dull and boring; changes happen on a daily basis.

My job, and the value I bring to you as a client, is to keep up on those changes and help you navigate the home buying or home selling process successfully.  Being a sole practitioner and not an office manager allows me to give you the highest level of service possible, which, I believe, is what you are looking for in a real estate broker.

Who’s Going To Pay Your Realtor?

March 10, 2011

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You are. But, but … I don’t have any money, you say.  Sure you do.  You have lots of money – you have down payment money and you have the ability to get a 30-year mortgage.  But, but … that’s for the house I want to buy, not for my Realtor.  Actually, some of it is for your Realtor.

How do Realtors get paid?

When a Seller lists his home for sale with a Listing Broker, the Seller and Broker negotiate a listing fee (commission).  The total listing fee is used to compensate both the Listing Broker and the broker who works for the Buyer (the Buyer’s Broker).  After the transaction closes, the Listing Broker sends a portion of the total listing commission to the Buyer’s Broker as compensation for their work in the transaction.

There is no law that governs the amount of compensation paid to a Buyer’s Broker.  It is determined by each Listing Broker and their client, the Seller.  The compensation for the Buyer’s Broker (also a commission) is called the “Cooperating Broker Compensation” and it is advertised in the home’s listing information in the RMLS database.

So let’s summarize:

Point #1 – The Buyer’s Broker gets compensated by the Listing Broker, who gets paid by the Seller.  Minnesota Law is perfectly comfortable with this compensation arrangement.  It does not create any conflict of interest on the part of a Buyer’s Broker.

Point #2 – The amount of compensation that the Buyer’s Broker gets is determined by the Listing Broker and the Seller.  The Buyer’s Broker does not have any say in how much compensation they will get.

Point #3 – Follow the money: the Buyer’s Broker gets compensated by the Listing Broker, who gets paid by the Seller.  Where does the seller get their money?  From the Buyer!  So the Buyer’s money is used to compensate the Buyer’s Broker.

Okay, what about your Agent who helped you buy your home – how does he get paid?  The Agent who helped you buy your home is a Buyer’s Agent and he works for a Broker – specifically, he works for the Buyer’s Broker who was compensated by the Listing Broker.  The Buyer’s Broker and your Agent divide that compensation.  Your Agent gets some and the Buyer’s Broker keeps some.  So in the end, your Buyer’s Agent gets paid by the Buyer’s Broker, who gets compensated by the Listing Broker, who gets paid by the Seller, who gets their money from YOU.

In a rather indirect way, you compensate your agent.  But no matter how indirect this process may be, the Law recognizes that it’s your money that pays your Agent, and because of that your Buyer’s Agent is required – by Law – to disclose to you how much compensation his Broker will get when you buy a home.  And he is required to disclose this to you before you write a purchase agreement for a home.

Your Agent’s compensation is in the price of the home you buy.  So every month for the next 30 years, every time you pay your mortgage payment, a little bit of that payment goes toward paying your Agent.  So you should expect to get 360 “Thank You” cards from your Agent!

Just Exactly What Is The MLS?

March 9, 2011

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The Regional Multiple Listing Service (RMLS) is a way that competing real estate companies share their inventories and conduct business with each other.  If a homeowner wants their home listed for sale on the RMLS they must contract for that service with a real
estate company.  That’s how real estate companies come to have “listings”.  When a home is listed for sale on the RMLS by one real estate company, it is immediately available to all real estate companies.  The RMLS then, is a huge database of homes for sale, homes that have sold, and homes that were for sale but did not sell.  The RMLS database is often just called the “MLS.”

There are two “layers” to the MLS.  A Member-layer for Realtors and a Public-layer.  Realtors can search the RMLS database using a broader array of search criteria than what’s available to the public.  And the information retrieved by Realtors is more detailed and more in depth than the information available to the public.

The Public-layer is created by real estate companies that have websites with “home search” functions.  They offer this “home search” service in an effort to capture the attention of potential customers.  On these websites the public can search for homes in the full MLS database.

It’s a great system.  It benefits sellers, buyers, listing brokers, and Buyer’s Brokers like me.  It allows listing brokers to put their inventory out there for any and all buyers to have access to.  As a buyer, you don’t have to contact each and every listing broker.  Instead, you can work with your Buyer’s Broker and still have access to the entire database of homes for sale on the MLS.

Where do I find the homes I show you? Once I know what you’re looking for, I enter those search criteria into the MLS database.  That gives me a list of homes – sometimes a list that’s too long to be practical.  So I’ll click through those homes and remove the ones that I absolutely know won’t work for you.  That will leave me with a little shorter list of homes.  Then I usually go take a look at those homes and check them out and select the best ones for you to see.

Should you search or should I search? I always search the RMLS database to find homes for my clients.  But if you want to search on a website also, that’s okay.  If you see a home that interests you or one that you want more information about, all you have to do is tell me the address (house number and street name) or the MLS Number.  Then I’ll look up the listing and be able to give you all the details about the home.

Can you find the same homes on the internet that I find in the RMLS database? Theoretically you should be able to find the very same homes when you search a public website as when I search the RMLS database.  But I can use more precise search criteria which often allows me to find more homes and better homes than my clients find through their searches.

Can you find homes that I can’t find? The website that you search gets all of its information from the RMLS.  So there is no way that you can find a home that I can’t find when I search the RMLS database.

Is it possible for me to miss a good home? Like any database, the information that is put into it governs the information that you get out of it.  So if listing agents correctly enter the information about their listings, then neither you nor I should miss any good homes when we search.

Is the information on the MLS absolutely correct?  NO! In fact, much of the information on the MLS is not accurate.  The address and the price are correct.  But the rest of the information needs to be verified by me, your Buyer’s Broker, and by you as well.  The MLS information points us in the right direction but it is definitely not the final word.  The only way to know for sure what a home is like is to actually go to that home and inspect it firsthand.

This Home Is Too Small – I Really Like It!

August 24, 2010

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Many of my clients learned English after they immigrated here to the United States.  Most of them took ESL classes and got good enough to where they could go out and interact with the general public (at work, shopping, etc.) which in turn helped them learn even more English.  Some of my foreign-born clients speak English very well and some still struggle with vocabulary, grammar, and of course, with their accents.  For several years I taught ESL at CLUES and at Neighborhood House – I know how hard it can be to learn English as an adult.

When I’m talking with someone who learned English as a second (or third or fourth) language I try to make sure I don’t use jargon words or colloquialisms.  But inevitably something gets lost in translation.  Whenever my client seems confused about something I can usually trace it back to something I said during one of our conversations.

Likewise, when I’m talking with one of my clients who learned English later in life, I’ve learned to listen closely to their words as well as to the context of their statements and questions.  But I’ve had to teach myself not to take their words too literally.  If I do, I might misinterpret what they are really saying and end up showing them homes they don’t like or not showing them homes they might like.  Here’s an example:

The word:  Too    “Too” is an adverb that typically means in addition (I want the peach pie and the ice cream, too) or excessive (the shelf is too high, I can’t reach it).  Sometimes, the word “too” also means “very”, such as “He doesn’t seem too (very) interested in working today.”  For some reason, several of my clients use the word “too” to mean “very” even when they really mean to say “a lot” or “extremely”  For instance, they might say, “this is too big” when referring to a kitchen that is very big.  Now I’m a literalist.  When someone says something to me, I take their words at face value.  So the first few times I heard my clients say, “This is too big” or “This is too small” or “This is too whatever” I took it to mean that they were telling me the thing in question was excessive.  Usually, when we say something is “too – big, small, cold, hot – whatever” we are also implying that we would prefer the opposite.  If I say, “The shelf is too high” I’m implying that I’d prefer the shelf to be lower.  So when my clients would say, “This is too big” I inferred they wanted something smaller.  I was wrong.  They were really saying, “This is very big” and they often were quite pleased with that feature.  But I didn’t understand that and it was too late.  I adjusted what homes I showed them and made sure I didn’t show them any more homes with that excessive feature.  Can you see where this little misunderstanding took me in a very wrong direction?

Now when I hear my clients say, “this is too …” I take a second look at them to remind myself where and when they learned English.  Then I know if they want less or the opposite, or if they are really excited about what they are seeing!  Keeps me on my toes!

The one use of the word “Too” all my clients get right is when they state, “This home costs too much.”

Goofy Things Real Estate Agents Say

August 24, 2010

MultiCultural Realty Buying A Home, First Time Buyer, Uncategorized , Leave a comment

I’m looking at a listing on MLS right now – the price was reduced and the listing agent claims “Just Reduced to Below Market”.  The new price on August 23 for this townhome is $175K.  The previous list price was $180K and the original list price back in February was $215K.  Based upon the new price and the agent’s comments, the agent is claiming that $180K was at or above market value, and now the new price of $175K is below market value.  If the townhome were to sell now, at some price at or below $175K, the agent and seller will apparently believe they sold the unit for less than market value.  Actually, it will have sold for exactly market value.

Up to now this townhome has been priced ABOVE market value.  The evidence of that is that no one bought it.  It has been in the market place for over 7 months and has had plenty of time to test the market. If it were to sell now, for whatever price, that price will be the market value for this townhome unit.  The problem the agent and the seller are up against is that they have not found the market value yet.  They’ve been trying, the price has been reduced 7 times in as many months.  Maybe they’re there now – maybe not.  We’ll have to wait and see if it’s AT market value.  But one thing we know for sure is that the new current price is not BELOW market value.  It’ll never be below market value because no matter what price the townhome ultimately sells for, that price is the market value.

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