Commissions

When is a Realtors commission to high?

What if this question were in reverse, when is a Realtors commission to low?

In the last five years Connecticut, New York and New Jersey home sellers enjoyed the low commissions paid to one Realty franchise offering 1&2 percent commissions leaving the seller with more money in their pocket; or did it? Research has shown by lowering a commission rate, in effect lowers the standards of care one would receive, makes sense - you get what you pay for in this world. Other research has shown that agencies who offer out fewer commissions to the buying side end up reducing the price of their listings as well, or not selling at all. The truth is; everyone wants to save a buck every where you look, however, know where to save and where to spend.

The Simple Truth, selling your home is personal and emotional but most of all, it's a business transaction not a garage sale. Always look for the agent (not just offering) but who can back up what they offer. Below is a recent News Day article.

Foxtons may file for bankruptcy
BY JAMES BERNSTEIN September 27, 2007

Foxtons, the one-time 800-pound gorilla of the 2 percent marketplace in the New York metropolitan area, said it may file for bankruptcy and close its business, explaining it "can't stand in the way of a hurricane" that has come about as a result of the decline in the home mortgage industry. The current home mortgage situation only affected 5% of the buying population. The remaining 95% see homes as over priced today -simple - markets adjust

The New Jersey-based company, which once rocked the real-estate industry by selling homes for as little as 2 percent commission compared to commissions of up to 6 percent at other brokers said in an announcement that it is "releasing" 350 of its 380 employees "and may be filing for bankruptcy protection in order to close the business in an orderly fashion." At least six Foxtons agents handle Long Island listings. Only one could be reached, but declined to comment.

No one answered the phone at the company's headquarters Thursday morning.
In a statement, John Blomquist, Foxtons senior vice president and general counsel, said the company had been "well run, very efficient" and had "a great team that has pioneered a new model in the real estate business -- a model which has proven itself and, we believe, will have lasting influence on our sector." The sad truth is while it may have been a dollar saving great idea for home sellers, again, you get what you pay for in this world. I hate to make this statement but, a well run very efficient company would answer the phone -sorry I had to put that in - everyone has to eat crow once in a while

But, he added, "The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern." a company company simply can't survive on a 1% return

"We understand the impact of the action we are taking, but there comes a point where you can't stand in the way of a hurricane, and it is a property hurricane we are facing."

The company's announcement said that it has some 4,400 current listings -- including 314 on Long Island and that it plans to "preserve the value of these listings to minimize customer disruption and to dedicate the anticipated revenues to pay creditors." LISTEN CLOSE HERE, There is no agent representing you, just an agency somewhere very far away.

When contacted on Thursday, Long Islanders whose homes are listed with Foxtons said they were not aware of the trouble. "I didn't hear they were closing," said Laurna Blackwood of Amityville, who has had her home listed with Foxtons for about a month. "Why wouldn't they say, 'We're going out of business'? I'm wondering whether I should call them." Hhmm read back a couple of paragraphs

April Terk, Blackwood's Foxtons representative, could not be reached for comm ent. On the voice mail of her cell phone, she said, "Foxtons is no longer in business," and asked callers to contact her directly by e-mail.

Beth Marten, who heads Home Buyer's Resource Center, a real estate agency in Baldwin that represents home buyers, said she was not surprised to learn that Foxtons announced it is filing for bankruptcy and may go out of business altogether.

"I predicted this would happen a year and change ago," Marten said.

Marten said the fees Foxtons paid brokers which she said at times was as low as 1 percent to 1 1/2 percent did not entice independent brokers or brokers who worked for other agencies to show homes listed by Foxtons.

"I saw them finally go up to 2 percent, but their listings were languishing," Marten said. "The broker was only going to get 1 or 2 percent. There wasn't a lot of interest in showing their houses."

She said also that she did not believe Foxtons hired the best-quality brokers. "They were questionable," Marten said, explaining that they priced the homes they were selling at levels that were higher than the market would allow. "They just didn't have a clue," Marten said. "I don't think other brokers are going to miss them (Foxtons) at all."

Robert Campbell, a professor of real estate finance at Hofstra University, said the low-price agency may have been "under-pricing" its services and working in "narrow" financial margins, a move that could have hurt the company in the weaker market.

Campbell added that sellers in a struggling market also want an agency to devote more time and resources to selling their home, something he said Foxtons could not do with such low co mm commission rates.

Foxtons' Web site said the agency opened for business in March 2000 in North America , and in the early years had more than 1,000 employees and more than 10,000 homes for sale.

Foxtons created a huge advertising splash, spending close to $12 million a year on television, radio and billboard ads. It even used buses, bus shelters and subway platform ads to attract customers.

1:11 PM - Oct. 2, 2007 - comments {0} - post comment
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what to ask your agent

10 Questions to Ask Your Realtor about Buying a House

1. Are you a full-time professional Realtor®? How long have you worked full time in real estate? How long have you been representing buyers? What professional designations do you have? Knowing whether or not your agent practices full time can help you determine potential scheduling conflicts and his or her commitment to your transaction. As with any profession, the number of years a person has been in the business does not necessarily reflect the level of service you can expect, but it is a good starting point for your discussion. The same issue can apply to professional designations.

2. Do you have a personal assistant, team or staff to handle different parts of the purchase? What are their names and how will each of them help me in my transaction? How do I communicate with them? It is not uncommon for agents who sell a lot of houses to hire people to work with them. They typically work on a referral basis, and, as their businesses grow, they must be able to deliver the same or higher quality service to more people. You may want to know who on the team will take part in your transaction, and what role each person will play. You may even want to meet the other team members before you decide to work with the team. If you have a question about fees on your closing statement, who would handle that? Who will show up to your closing?

3. Do you have a Website that will provide me with useful information? Can I have your URL address? http://www.superiorhomeliving.com. Who responds to emails and how quickly? What's your email address? Many home buyers prefer to search on line for homes because it's available 24 hours a day and you can do it in the privacy of your own home. By searching your real estate agent's Website you will get a clear picture of how much work you would be able to accomplish on line.

4. Will you show me properties from other companies' listings? Some real estate companies do offer their buyers' agents a higher commission if they are able to sell "in-house" listings. In such circumstances, there can be added incentive to limit the range of homes you are shown. This may impact your home search and how much your buyer agent's fee will be.

5. Will you represent me or will you represent the seller? May I have that in writing? How will you represent me, and what is the direct benefit of having you represent me? The goal here is to ascertain to whom the real estate agent has legal fiduciary obligation, which may vary from state to state or even locale to locale. In the past, agents always worked for sellers. Then the listing broker was responsible for paying the agent or sub-agent that brought a suitable buyer for the home. And even though the buyer worked 'with' an agent, the agent still represented and owed their fiduciary duty to the seller. Dual agency is where the buyer decides to have the listing agent prepare the offer for him. If you are a knowledgeable buyer, you may choose to do this, but only with full disclosure to all parties. In some states it also affects the broker's/agent's fiduciary responsibilities to the seller. Although seller agencies still exists in certain areas, agents today almost always have a sense of moral obligation to buyers. Find out what is common in your area and understand what kind of agent you have before you begin to work with them.

6. How will you get paid? How are your fees structured? May I have that in writing? In many areas, the seller pays all agent commissions. Sometimes, agents will have other small fees, such as administrative or special service fees, that are charged to clients, regardless of whether they are buying or selling. Be aware of the big picture before you sign any agreements. Ask for an estimate of buyer costs from any agent you contemplate employing.

7. What distinguishes you from other real estate agents? What is your negotiating style and how does it differ from others? What geographic areas do you specialize in? Each agent has unique methods of overcoming obstacles and negotiating deals. The most important thing is to make sure your agent is an effective advocate for you.

8. Will you give me names of past clients? Interviewing an agent can be similar to interviewing someone to work in your office. Contacting references can be a reliable way for you to understand how he or she works, and whether or not this style is compatible with your own.

9. Do you have a performance guarantee? If I am not satisfied with your performance, can I terminate our Buyer Agency Agreement? In the heavily regulated world of real estate, it can be difficult for an agent to offer a performance guarantee. If your agent does not have a guarantee, it does not mean they are not committed to high standards. Typically, he or she will verbally outline what you can expect from their performance. Keller Williams® Realty understands the importance of win-win business relationships: the agent does not benefit if the client does not also benefit.

10. How will you keep in contact with me during the buying process? Some agents may email, fax or call you daily to tell you about properties that meet your criteria, while others will keep in touch weekly. Asking this question can help you to reconcile your needs with your agent's systems.

12:00 PM - Sep. 7, 2007 - comments {0} - post comment
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