Don't Get Burned In Victoria's Hot Real Estate Market
There is a lot of hype about the real estate market in Victoria. There is also a lot of turbidity. It’s frustrating for buyers who cannot win at the game of musical chairs and show up too late or with too little money in their pockets. It’s also no cake walk for sellers. With the market activity, all of the sharks are circling. Real estate agents are raking in the cash. If the market were more sluggish or the selling cycle more drawn out, the dollars wouldn’t be there. The fires would die down. That’s no fun for the agents, so the feeding cycle is being fed with new listings and hype about fast cash. But this is not about the big picture. This is about you, your home and your financial future. The key is to not get burned when you sell your house in Victoria or the CRD.
Search For A Real Estate Agent
Get a referral from people in your boat. If you are selling your home, find people who have recently gone through a similar experience to what you are facing. Similar property, similar price point, etc.. Ask if their real estate agent is someone they would recommend. The big metric is performance. Did they sell for as much as you wanted? Second to that: likeability. If they rub you the wrong way, you may not be able to get a dialogue worked out. Third: the red M&M test. In an interaction with them, ask for a follow-up via email on some particular minor point that isn’t frivolous or off-base (eg. a list of comparable properties to yours). If they don’t follow up, they’re not detail oriented. The winner of your search is going to be pocketing $5 - 20k. Have you handed anyone else $5k recently? Make sure you feel good about it, or it will gnaw at you.
The MLS AgreementWhen it comes to the listing agreement make sure it works for you. You can amend any contract before signing it and if it’s not acceptable to all parties, then it won’t be signed and entered into.
- Take out clauses 5 a) ii)i and 10b from the contract; and alter clause 5b to fit. These clauses are what real estate agents love. They allow them to close the first offer that is at or above asking price. A sloppy agent who doesn't know his own contracts; or doesn't care about the well being of his clients, will leave these clauses intact. For an agent desperate to close deals fast, those clauses are their gravy. Without these clauses in force, you can choose when you sell, how much and to whom.
- Don’t sign the agreement until you get a lawyer to review it. Really. The agent will want this to be as speedy as possible-- the prep, the signing, the selling. Their goals will usually run counter to your own goals.
- Make the duration of the agreement short. They may argue for five months. If they can’t sell your house in a month, either they’re a dud, or your house is a dud. You’ve got your house, you can dump your agent. Don’t sign an agreement for more than two months of representation. If they baulk, fire them before you hire them. Those boxes for the dates are blank for a reason.
- “What’s standard” doesn’t enter into the picture. This is your sale, your deal and they work for you. Don’t let them dictate terms.
Question Strategic Changes
We agreed to list mid-week, have an open house on two days, then review offers. That would allow for offers that could compete against each other. The agent changed it: he wanted first-come-first-serve, and push the listing to start on the Friday before the open houses. With that clause 10B intact, first-come-first-serve was ringing a dinner bell. The first person who could write a cheque, got the place. No bidding war. No capacity for us to say, “no.” Our strategy got dismantled out from under us. At the first sign of a strategic left turn, I needed to fire my agent. I didn’t and that really cost me.
Conditions Are Your Trap Door
You are supposed to sell your home when all of the conditions are met: price, possession date, and the usuals (home inspection, financing, and the like). If they are not met, a deal can quietly die. If an offer has a condition, you can reject the offer on those grounds. Our agent had us do a home inspection on our dime before the house went on the market. It uncovered a few gotchas that we fixed before the listing. With that condition met, it meant we got rid of one obstacle for our buyers, but also one for ourselves. You want your place sold, but you don’t want to be boxed in if you need a trap door.
Fire Your Agent
Never buy a meat rabbit that you couldn’t slaughter. Don’t get a real estate agent who is your friend-- even your acquaintance. An agent of a friend is as close as things should get. They're are a dime a dozen. There are lots of bad ones. Don’t commit to an agent like they’re your family. If you ever have a problem with their conduct or performance, fire them. If they give you a bad deal, shoot the messenger and fire them as per the contract. There is a lot of incentive for you to get top dollar for your home, but for every $1000 your house price bumps up, an agent gets something like a $10 bump in their wallet. It’s just not worth it for them to try hard. The only motivation that is going to work is fear. Fear and capitalism. A capitalist will sell you the rope you’re going to hang them with. Fear of starving or being fired will motivate an agent. Agents will often put in lots of service sweeteners (photos, write-ups, etc.) to great the illusion of value. If you fire them, it's not impossible for them to hand you the bill of the work involved. Be forewarned that could happen.
Capitalism will keep a supply of agents available when you push the ejection button. It does mean a number of resets on your real estate work, but it’s better to have a new agent than a bad agent.
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