Why Would You Want a Realtor that Represents the Other Party Too?

It’s been awhile since I blogged about what’s called in the industry as…Double Ending. This is when the Listing Agent also represents the Buyer, thus getting the entire commission rather than needing to split it with another agent.

If you’ve read my blog for awhile you probably know that I don’t believe that one agent that represents both the Buyer and Seller is a good idea for either party.

If real estate agents represent both the Buyer and Seller, they are not supposed to help one side more than the other. So, at best you will have someone working for you at 50% vs. 100% which each party would get if they had their own representation. Plus, why would you ever tell someone any thoughts about the property or what your personal finances are that is also representing the party you are in negotiations with?

So, why do people still do this??? There is cases where it does make sense, such as doing a sale within the family or where you already have lawyers where all you need is the paperwork piece to be done by a Realtor. But, in most cases I think it’s because the Buyer thinks they are getting something more if they go to a Listing Agent, rather than having a Buyers Agent represent them.

Here are some things I hear Buyers mention that are not accurate:

1) The Listing Agent knows more about the property than anyone else
You would think that a Listing Agent would know more about a property but what most agents find out is what they need to know to put on the MLS listing. With sites like SloCountyHomes.com now displaying the details of listings, most Internet Home Buyers now know as much about a property than most Listing Agents. The other advantage a Listing Agent may have is that they’ve been in the property. Well, this is something that a Buyer can do too once they narrow down their choices and preview homes.

I had a Million Dollar listing I had a few years ago up in See Canyon. The homeowners brought me in when their other Broker wasn’t able to bring in an offer in 6 months and the owners let the listing expire, then hired me. The first thing I did was to walk the entire property (about 2 acres) with the homeowners and asked questions. There comment to me was that the other agent had the listing for 6 months and they never walked the property and had been in the home only a few times. (And yes, I was able to sell the property for them!)

With so many people getting real estate licenses over the past few years, a lot of homes are listed with an agent that the homeowners know. I see a number of properties listed by agents that don’t even work in the area. I would bet that a good Buyers agent would know lots more about the neighborhood and the home for sale than these Listing Agents.

With REOs, I think it’s even worse. There is no homeowner to ask questions of so all the Listing Agent will know is that they’ve seen at the home or info retrieved off the tax records.

2) Buyers think they will get a better deal if they buy using the Listing Agent
I guess the thought here is that the Listing Agent will take a lower commission since they are not needing to split it with anyone. I highly doubt that many agents these days are open to reducing their commission.

Plus, you need to think about the motivation of the real estate agent in a Double Ending situation. They know that if they don’t make the deal happen, that Buyer will go find another property and work with that Listing Agent so they will lose out on the Double End. What do you think is their priority then; 1) getting the Buyer a good deal or 2) pushing to get the Buyer to accept the Sellers offer? I highly doubt that a Buyer that can get the agent to lower their commission 1% and receive that in a lower sale price will get a better deal than a good Buyers agent negotiating 100% on the Buyers behalf, especially in today’s market. There are times when you the best business decision may to be to walk from a deal which is advice you aren’t going to get from an Listings Agent with a chance to Double End the deal.

To me it’s quite simple, if I was entering into a business transaction (especially one that was the amount we’re talking for real estate) I would want someone that was 100% on my side, not 50% which is the best you’re going to get. This is true for both the Buyer AND Seller. If I was the Seller, I would put in the Listing Agreement that the Listing Agent was NOT allowed to represent the Buyer too.

p.s. I have never Double Ended a deal. I have always brought in an agent to represent the Buyer when I was the Listing Agent. Not only do I think it’s the right thing to do for both clients but I also don’t want to take the added risk of being sued if one party thinks they were not represented equally.

Ryan Baker’s Mortgage Blog

Ryan’s Mortgage Blog:
So I guess a few banks have had some hard times recently (sense the sarcasm). These hard times have left some deals on table for private investors and hedge funds to come and swoop up and try their luck at the mortgage game.

Several hedge funds, private equity groups and private investors have bought tens of thousands of distressed loans and foreclosed properties around the country. They plan to profit from the banks loss. They are buying them from Wall Street investment banks that are in trouble and are looking to rid themselves of their problem mortgages. These new investors claim they are “easier to deal with” than banks. They buy the loan at enough of a discount so they can be flexible when helping distressed customers, while still making a profit.

This game isn’t as easy as it sounds since nearly half of the loans these groups purchase aren’t salvageable and go into foreclosure. After foreclosure the group has to try and sell the home and hope they make most of their money back on the deal. It is all a numbers game for them, but the good news is they want you to keep your house so they don’t have to deal with selling it.

Feel free to ask me any mortgage related questions; I can be reached at RBaker@PeregrineLending.com

MLS Numbers

If you’ve been searching for homes, you are probably familiar with the MLS# that is assigned to a listing. You can get an idea how long a listing has been on the market by looking at the MLS#. This isn’t a 100% accurate method as some listings have transferred brokers or taken off the market and then relisted which results in a new MLS#.

I looked at the MLS #’s being assigned on the first of the month in 2008. Here’s a table that you can use if you are interested in getting an idea on how long a listing has been on the market.

January 1 – MLS #138,000
February 1 – 139,000
March 1 – 140,100
April 1 – 141,350
May 1 – 142,600
June 1 – 143,750
July 1 – 144,900

You might find this useful as you search the following reports:

Price Changes

REO Listings

Short Sale Listings

You can see the current MLS # being assigned listings by going to the New Listings report.

I also have yet another listings report for you to use. This one displays the listings that have gone “Off Market”. Unfortuantely, with this public report I’m unable to display what the reason the propery went “off market”. The possiblities are 1) Pending Sale, 2) Expired, or 3) Cancelled/withdrawn. I thought this report would be useful if you’ve been looking at a particular home (and know it’s MLS #) and no longer found it when you used a MLS Search and wondered why. You can view the Off Market report here As with the Price Changes report, it is still building the 7 days of info.

Median Home Prices – First Half 2008

Median home prices seems to be what a lot of people look at to see what’s going on in a particular market. For those cities that have a lot like homes and a quantity of sales that can be a good data sample, tracking median home prices does tell a story. But here on the Central Coast, most cities have a wide variety of homes where how many higher-end homes selling (or not selling) in a particular month may really impact the median home price, especially for the cities that really don’t have a large number of sales these days.

Today’s Tribune is a good example of how one interprets monthly median home prices and other market data to try to tell a story. On the front page, the headline was “Local housing hit by a host of bad news” with the byline “Buyers eye foreclosures, leaving newly built home sales in June and median home prices in decline”. The article then talks about new homes in SLO County dropping 67% as compared to June 2007. Since the Trib didn’t provide what happened in previous months we really don’t know if the June-to-June comparison is that meaningful since June 07 could have had a “blip” of above average sales for that month or June 08 may have had a slower month than previous months.

The other piece missing from the Tribune article is the new home data. How many new homes were sold in June in SLO County?? In the 4th paragraph, they do mention that 240 new and existing home sales occurred. I ran June sold numbers in the MLS and found 219 Solds in June, with 12 of those being new construction. So, that says that 33 of June’s sales were new homes or 13.75% of total sales (most new sales don’t go through the MLS). That seems like a small percentage of total sales to focus the story around but I guess the 67% decline figure was a better attention grabber.

The article then went on to talk about foreclosures which the article even stated was 16% of June’s sales compared with 42% for the State average. According to the data I track, foreclosures in SLO County have been around 28% so the 16% would be a significant drop in foreclosure sold percentage to total home sales but the article fails to mention anything about trends, nor even discuss why SLO County is so much lower than the state average.

My last criticism on the Tribune article is about the graph they included to go along with the story that shows an INCREASE in median home prices over last month. Seems that sends a different message than the article it is meant to complement. You can see the graph here or read the full Trib article here

But the Tribune isn’t alone in using monthly median home price data in a story. The Wall Street Journal just posted an article using median home price info from the Calif Association of Realtors. This is a story on what the graph the Trib printed shows. They report that “Statewide, the 10 cities with the greatest median home price increases in June 2008 compared with the same period a year ago were: Manhattan Beach, 49.4 percent; Cupertino, 33.3 percent; San Luis Obispo, 11.4 percent; Los Gatos, 3 percent; San Carlos, 1.5 percent; Sunnyvale, 1.4 percent; Ridgecrest, 1.4 percent; Campbell, 1.3 percent; Temple City, 0.9 percent; San Rafael, 0.8 percent.” Read the entire article here Are readers supposed to think that SLO County market has hit bottom and now on its way back up??

I try to provide multiple data points to try to show what is going on in the market. For median home prices, I calculate them on a quarterly and 6-month data sample to try to see trends as I know monthly median home price calculations fluctuate so much. Also, tracking inventory, number of price changes per month, foreclosure percentages, mortgage rates, etc. are all data that I would use to try to understand what’s going on out there.

I did just calculate median home prices for the first half of 2008 and have updated the median home price page on http://www.slowatch.com/. Below is a comparison summary with first half of 2007. To me, this provides a better gauge on what the market has done in the past year. What I’m really looking for is the indicators that the market has hit bottom and that won’t come from only looking at median home price comparison data from a year ago.

Median Home Prices (First Half 2007 vs. First Half 2008)

Percent Change
Arroyo Grande Homes -16.67%
Atascadero Homes -25.98%
Cambria Homes -4.29%
Cayucos Homes +15.77%
Grover Beach Homes -9.05%
Los Osos Homes -4.22%
Morro Bay Homes -7.42%
Nipomo Homes -9.69%
Oceano Homes -11.79%
Paso Robles Homes -20.00%
Pismo Beach Homes -3.60%
San Luis Obispo Homes -2.34%
Santa Maria Homes -33.33%

Median Home Price Comparison – 2008

I ran the reports for the 2nd Quarter (April-June). If you go to http://www.slowatch.com/ you can click on “Sold Report” under City Stats to see the individual city details.

Below is the median home price between the second and first quarter of this year. These are from the median home price page on SloWatch.

Q2 2008
4/01 – 6/30
Q1 2008
1/01 – 1/31
Arroyo Grande Homes $546,250 $585,000
Atascadero Homes $368,781 $437,500
Cambria Homes $625,000 $680,000
Cayucos Homes $925,000 $900,000
Grover Beach Homes $431,875 $452,500
Los Osos Homes $419,900 $634,500
Morro Bay Homes $625,000 $480,000
Nipomo Homes $489,500 $521,500
Oceano Homes $386,950 $353,450
Paso Robles Homes $372,000 $396,500
Pismo Beach Homes $769,500 $670,000
San Luis Obispo Condos $365,000 $380,000
San Luis Obispo Homes $657,500 $625,000
Santa Maria Condos $166,000 $200,200
Santa Maria Homes $249,990 $288,750