You as a buyer can rely on the agents ability to find properties for you to make offers on, or you could start looking on your own.

A commercial Real Estate agent picked a neighborhood, drove it, and selected five properties that suited his criteria. He gave the list to a local agent, and told him to keep him updated on the status. These properties weren’t on the market, so the agent contacted each of the five to see if they had an interest in selling. One property did contact another agent who listed the property then contacted the agent who had approached the seller.

These are things that actually happen in a Real Estate market between more sophisticated buyers, and sellers. There is no reason for any buyer to be intimidated in today’s market place in just making an offer. That is what Real Estate is all about; two people who come to a mutual agreement on the terms to buy, or sell a property.

At this time it is hard to say where it all will end, but for sure the price of residential Real Estate is very high. Just because your monthly payment, with these historically low interest rates, is comparable to rents doesn’t make this a good time to commit to this much debt, unless you intend to pay it off, quickly.

I’m like a broken record about what you buy, and how you buy it.

Today you have to park your emotions at the door, and think like an investor. The market place is over priced, but there are things you can do to build equity, if you buy right, and buy smart.

Make a business plan for a property well below your ability to pay. Think about cashing out a property before you think about the perfect family home. Think about spending more time in the field, and less time checking your computer. Get a good agent who is out working every day.

Think, that the equity in your home is much more important having a house like the one you grew up in.

Park the emotions at the door, save that for the kids. Real Estate is a business.

That led to what some in the Real Estate industry called a feeding frenzy. Multiple offers were the rule for about six weeks this year. Inventory was very low in Seattle, and across King County for that matter. The Northwest Multiple Listing service showed about 4000 homes for sale compared to about 7000 homes for sale last year.

What struck me is that in December, and the early part of January, people were complaining about the quality of the properties listed for sale. In March, and April all those houses were sold. In some cases people were in bidding wars for stale inventory.

Now that we are at the end of April you can see more houses coming on the market with fewer buyers rushing in to snap them up. As we go through the summer it looks like to me we will hear how there is nothing decent for sale, and in August we will see price reductions, once again.

Agents can hire a transaction coordinator, or many Brokerages offer a transaction coordinator for a fee. The cost is low, because the coordinator gets paid on volume. You can look up mortgage Brokerages that operate on the same principle. A second part of the equation is a virtual assistant who does the little things to keep the transaction moving along.

Total cost for services that are contracted out is about $1000, maybe $2000. If you include the escrow, Purchase, and Sale Agreement a Real Estate transaction could cost as much as $4000 for both sides, total.

So this idea of paying a 6% commission is pretty high. That’s $12000 for a $200K transaction.

On this blog we have talked about why people pay the commissions, and justified the idea of paying a full Brokerage commission. What I have never done is present the realities that the Real Estate industry is loaded with scammers. Online Brokerages are my biggest target for presenting the fact people pay way too much for very little that an Online Brokerages gives them. If you aren’t paying for Real Estate experience, know how, or insider information then why pay the high fees?

I have always advocated home ownership until now. It just so happens that this housing market crash came at a time when I was in my 50s and have very little need of a house to call my own. I can rent, save, and travel. Some young couples may still have a future of kids, dogs, schools, and family, but many are increasingly interested in saving money in more secure investments.

The family home has traditionally always been a secure part of a portfolio. Recently that idea has been questionable. My personal opinion is that the cost of housing will continue to decline. There are many ways to build a community with density, just like most city planners have promised. In keeping with that, as long as you would consider a town home of condo, the idea of an apartment isn’t too far off, especially if your town home, or condo is going down in price.

There are things an agent can do to protect themselves, like having a Buyer’s Agency Agreement, but many buyers want to keep their options open, so they are reluctant to sign a Buyer’s Agency Agreement. There are pros, and cons to having an Agreement, but that is an article for another time. The fact is many agents are wiser now than when rebate Brokerage was a new idea.

Rebate Brokers have also cautioned buyers about Procuring Cause, that’s how the subject came up.

It’s a complicated process to claim a commission. It’s done by arbitration, and usually is done between the Brokers. The buyer can do what ever they want. The buyer isn’t obligated, legally, to write up an offer with the agent who showed them a property. Just because some one is there doesn’t mean they are contributing to the buying process. The other thing that is very true is that most buyers use online searches, and so the Brokerages that provide those services should probably claim procuring cause.

This article is just a caution to make buyers aware that there is this issue, but it is a minor part of the home buying process.

OK, it’s a good price, in a good location, in good shape, so why is it sitting there. I asked where the electrical box was, and the agent, who has had the listing for a month looked confused. I asked because the original Square D electrical box had been converted to a junction box.

Now I had already spent enough time in the house, and the agent was there talking with another guy. I seemed to be intruding even though the agent, and I know each other.

So I came home, and looked at the listing on the North West Multiple Listing Service. Holy Cow, it was one of those things that described the other flaky buyer who had backed out. The original listing was intact, but just an agent comment. The picture at least could have been changed.

I think an agent should know all about the house. The cards sitting in the hall way looked bad. It looked as though a whole stack of agents had given the property a pass, for no reason, and surely no explanation to a potential buyer. The house smelled, and an agent, and especially one in the business for as long as this one, would have an air freshener.

It’s a good listing, a good purchase for some one, and some one will buy it. I just think it could have been presented today with more feeling.

I was researching some properties today, mainly getting a sense of how much of the market is short sales, and bank owned properties. The below $350K price range is mostly short sales here in Seattle. In Everett, and Burien the price point of short sales is lower, and in the $200K range. Many of the out lying areas show short sales in the $100K range, but those are for properties that sold for $200k in 2007. That’s where the big price drop statistics come from.

My next search, in Seattle, was in the $350K to $500K range. To my surprise I was finding new listing with comments that offers would be reviewed at some later date. Some listings were to be viewed over this week end, with offers to be submitted on Sunday evening. We haven’t seen that in a while, but it is a standard trick to generate interest.

The same warning should be taken now, as it has been given in the past ten years. The buyer never wins in a multiple offer situation. No matter how good the property looks, there is something wrong with a tactic that creates hype. Make an offer if you want, there is no rush, and even make a low offer. Chances are that in a contrived hysteria the offer that gets accepted will be from some one who is responding to pressure. The chances are very good that the buyer will back out.

Just wait it out, there is something better out there.

Now that property prices are falling again the commission is an even bigger topic of conversation. People are stuck, having less equity in a home makes it harder to sign up for a fee that takes away 6% of the purchase price.

In commercial Real Estate the commissions can be between 5% and 10%. It depends on the price, and difficulty, but all commissions are negotiable.

I used to charge 3% as a Buyer’s Agent, and if you bought through me it was 1% for me to list the property. In order to sell I could charge 1% if you did what I asked. If the property was in good condition, it photographed well, and it was priced well I had no problem listing for 1%.

In my opinion working with a buyer is harder because there are so many variables. The second part about that is that you have to buy well in order to have any value in a property. There have been times when a transaction was so easy that I only charged a fee to get the property closed, and pay my expenses. Some times I would refer the client to an attorney who could handle legal issues, and I was only paid a fee for the referral, usually about $200.

You can get a Real Estate transaction closed through an attorney for as low as about $1200, to $1600 including escrow fees. The agent is paid, we hope, based on the expertise they bring to the transaction.

The Multiple Listing Service stored data in a central location. The company that handled the data for the Northwest Multiple Listing Service was called Moore Data. I bought a software program from them to do Comparative Market Analysis. It worked great. It made a nice presentation at a time before it became a common tool.

With the program I was also able to share information with other people on line, through e-mails. The e-mail system quickly became a common Real Estate practice. The Real Estate agent would e-mail clients a list of properties. Soon after our Multiple Listing Service began offering an online version of the data base Real Estate agents use.

John L Scott was the first Brokerage that I recall who invested in the technology of online searches in conjunction with Microsoft. Windermere seemed to be dragging their feet. Coldwell banker made the most significant strides nationally.

Then a company called Zillow began the ambitious project of a national data base for Real Estate. Governments had converted sales data to an online system from microfiche. It opened up a whole new world of analysis of tax data.

The next question is, if all of this information was available how did Real Estate prices get so high?