Pop Quiz

| Wednesday, August 24th, 2011 | No Comments »

The more I work in real estate the more I learn. Actually the more I work in real estate the more I learn what people need to learn. Did I lose you yet? I have come to the conclusion that there are two aspects of real estate that I find most people either don’t know or aren’t entirely sure about. They are: bank owned properties vs. short sales and listing agent vs. selling agent.

Bank owned properties vs. short sales: A lot of folks think they are one in the same. Nope. Pretty different and here’s why. Short sales (or preforeclosures) are homes that are being sold for less than what is owed on the mortgage. The owner may or may not still be living in the home and the home may or may not be in good condition. Short sales are often priced low to entice offers because without an offer, a short sale is stagnant and runs the risk of foreclosure if too many months of missed payments go by. There are 2 problems with short sales. The first is that the list price is not necessarily the price the bank is willing to accept. The second is that there could be a long wait from the time the offer is submitted to the time the bank responds. And not long as in weeks but long as in months. When the bank finally does respond they may either accept the offer, raise the price or decide that foreclosing on the home is a better option. Bank owned homes have already gone through the foreclosure process and are owned by the bank. They are vacant and may or may not be in good condition. The price is still usually low but the list price is ultimately is the price the bank is willing to accept although there is sometimes room for negotiating a lower price. There is no lengthy wait time and other than having to use the bank’s forms to write the offer, they typically proceed like a normal sale. That’s bank owned vs. short sales in a nutshell.

Listing agent vs. selling agent: It still surprises me how many consumers don’t realize there are two agents in a transaction or that there is a difference between the two. Ok, let’s review. The listing agent is the agent that lists the property for sale; they represent the seller and their name is on the sign in the yard. The selling agent brings in the buyer to purchase the property; they represent the buyer only. The commission is split between the two agents. Can you use one agent for both? Yes, but think of it this way: can one agent have the best interest of the seller AND the buyer in mind? Impossible but it does happen. So if you are a buyer, don’t call the name on the sign (unless its mine!) Instead, get your own agent (me) to represent you! And just so you are all clear, a listing agent can also be called a “seller’s” agent and a selling agent can also be called a “buyer’s” agent.

Now that you’re all up to speed, take out your number 2 pencils and let’s begin the quiz…

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