| The Case of An Investor From New York Saul Santos, an investor from New York was looking in the Houston market for a residential property to buy as investment property. Mr. Santos contacted a local real estate agent. The agent was offering a minimum of a 2% cash payout to the buyers of brand new homes in the form of a commission rebate. The New York investor had already done some research into a successful Master Planned Community to the north of Houston. During their conversation the agent explained that he would represent the buyer, review and accompany him to the signing of the contract, pay for a final inspection by an independent TREC / IRC inspector and do whatever was necessary to help get the transaction to closing. The agent also promised to be available to have his brain picked or tap his extensive local resources. The research, the driving, and property viewing was basically up to the buyer. |
|
|
How Can the Realtor Give So Much Back Stuart Scholer, a Realtor with Houston Associates, was offering Mr. Santos full representation with ”limited service” concerning the Home Search. That’s how the buyer would earn the majority of the commission paid to Mr. Scholer. For his time and trouble the Buyer would receive 66% of all commissions received by the Realtor and if there was a BTSA (bonus to selling agent) received, the buyer would receive 80% of that amount. Ready to buy, and armed with an e-mailed list of “inventory homes that offered BTSA’s (supplied by Stuart) and a fist full of the agent’s business cards, the investor flew to Houston, rented a car and spent the next day looking at New Homes in the community he favored. The next morning Buyer Santos and Realtor Stuart met for about an hour discussing a certain property and negotiating strategies. About 7 hours later Santos called to announce that he got an additional price reduction along with the closing contribution that was being offered. Getting Back What You Deserve The property was an “inventory home” priced at 251K, already reduced from 279K. There was also a BTSA which was applied to reduce the purchase price of the home to 247K. Before closing the property an inspection was performed as promised and several defects and deficiencies were found and promptly remedied by the Builder. Seventy two hours after the closing the Realtor wrote a check for directly to the buyer. All was legal, ethical, nothing “under the table”, and no violation of lender rules or prohibitions. After paying for the final inspection and a transaction fee to his “100% Commission Broker” the Agent made . The Agent was happy. He made a sale he would not have otherwise made as a “full service” Realtor. The whole transaction cost a minimum of work and time, the most of which was spent on guiding Mr. Santos in negotiating strategies and how to more favorably finance the purchase. Stuart Scholer is also a licensed loan officer, although he did not have a hand in originating or writing the loan. The Buyer was extremely happy. He got the best of deals on a “loaded” inventory home, had cash left over after paying airfare, hotel, car rental and other costs. Within forty days of closing, his new house was occupied with a tenant on a two year contract! Who Knows Best? Are consumers smart enough? Do they have the available resources and sophistication to do some of their own footwork in the search of their real estate purchase? And if they are willing to do this work and spend their own time and resources doing the search, should they and can they be paid for it? The U.S.Justice Department has been rattling the cages of some of the most powerful Realtor® Associations on both the national and state level lately because of disagreements of whether a consumer can receive a discount or a cash rebate from the Realtor with whom they are working in exchange for less services. The Federal Trade Commission has warned several state’s Attorneys Generals and real estate regulating agencies that certain existing and/or pending rules and laws governing or prohibiting “discount services” and real estate agent’s “commission rebates” to buyers and sellers run against what the Feds see as “favorable trends” for the consumer. The powerful Realtor's organizations, many of which are dominated by the larger national franchise brokerage firms and wield considerable political clout, claim to be protecting consumers from their lack of knowledge of the real estate markets and the procedures and processes involved in real estate transactions. Latest research shows that many consumers, although recognizing the need of the assistance of a Realtor, want to have, and are taking the lead in the research of the home and neighborhood where they are going to live. For the great majority of these consumers the, first step is the internet. There are countless websites that will direct a prospective homebuyer to communities, builders, school districts, maps, lenders, real estate brokers, inspectors, taxing authorities, title companies, and the list goes on. The information is abundant, easy to find, and generally reliable. Some of the local Realtor® association websites such as www.HAR.com (Houston Association of Realtors) are excellent resources for consumers and are ideal to begin any home search. By the time Joe Homebuyer calls a Realtor he already knows the community, schools, taxing authorities, and price per square foot of the house he wants to buy. Market forces are generating many changes for both consumers and practitioners in the real estate industry. The old ways of dominance of both buyers and sellers by a few large realty companies are being challenged and threatened by many fast moving trends in the market place. The internet offers a flood of information to anyone and everyone looking for it. Choices in marketing, representation, and commission scales are being offered as never before. These choices can result in substantial savings for the consumer that is willing to be more involved or flexible in how the transaction is executed. The consumer that needs to be taken by the hand and pulled and pushed through all the hoops of home buying or selling will probably need and want full service brokerage and there are plenty of these out there. The past has shown that market forces, when allowed to function in a fair and minimally regulated environment create opportunities for efficient and true market places, and minimize opportunities for abuse of consumers or manipulation of markets. The abundance of choice of service levels and price (commissions) for representation and marketing will always favor the consumer and maintain a more stable and true marketplace. Stuart B.Scholer holds a Texas Real Estate Salesperson License with the independent brokerage office of HOUSTON ASSOCIATES. He is a “Discounter” representing buyers and sellers in principally residential markets. Stuart is an advocate of free and fair markets and a firm believer that Realtors don’t “sell” houses, Sellers do!
Stuart Scholer is a Realtor with Houston Associates. Member of NAR, TAR and HAR |
|
