Can you find homes that are not on the MLS?
Yes. About 20% of local sales never hit the MLS. Experienced agents know how to find properties that may be off market, or equally important, how to uncover potential sellers and create a buying opportunity.
After I discuss the goals of prospective buyers and I will identify specific homes or neighborhoods that match their dreams. I'll send out direct mail to owners, knock on doors, talk to neighbors, email my past clients, communicate with other agents, monitor various trade websites, bike or walk around neighborhoods watching for indications of a move, talk with various service people or contractors, etc.
Most Sellers in the Bay Area have observed that an experienced agent will obtain a higher selling price, and more importantly, a higher net profit. Proper marketing, advertising and promotion will attract more qualified buyers, and especially motivated agents, than a For Sale By Owner yard sign or Craigslist posting.
Is it legal to buy homes that were never on the MLS?
Yes! Buyers and Sellers must comply with state and local property ordinances as well as consumer protections. Equally important, licensed agents will require proper disclosures and standards of care to protect their clients. Banks, insurers and title firms will also require compliance.
One key advantage for agents is that membership in the MLS establishes a legal agreement to abide by the promoted real estate commission, but this can be addressed in a contract. Buying a "For Sale By Owner" house has additional liability for agents to comply with consumer protection laws, but it can be done with proper caution.
As a buyer, should I work with the Sellers' agent to get the best deal?
Why do you think you'll get the "best deal" and not the other party? When a problem arises who represents you? Would you ask the same attorney to represent you and the other party in a business deal?
In good conscience I could never represent both parties in a housing transaction. I have had the pleasure of knowing, liking and respecting both parties in a housing transaction, but I had a fiduciary responsibility to only one party, my client. My perspective is filtered through the experience as cofounder of a company that supported expert witness testimony for multi-billion dollar patent litigation.
If you uncover an off-market property which party do you represent?
I prefer to represent the first party I meet. I'm working on your behalf. I refer the other party to another agent who also treats clients as a fiduciary. It's similar to two attorneys who regularly face off and respect each other's integrity in representing their client. Fortunately, buying a home is rarely a contentious transaction, but we are dealing with people's life savings and, in most cases, their most valuable financial asset.
How are real estate agents paid? What is the business model?
Nearly all residential real estate agents in the US are commission-based independent contractors, not salaried employees. Agents are required to operate through a licensed real estate brokerage that must comply with many laws, especially consumer protection. In California one must have a current California real estate license or law degree to be compensated for selling property.
We are paid a commission that is generally percentage of the value of the house. The Sellers typically agree to pay the commission at close of escrow - when the home legally has changed ownership.
In the San Francisco Bay Area the total commission is generally 5-7%. The commission is usually split 50/50 between the Sellers' broker and the Buyers' broker. It's common to see a 5% total commission and 2.5% to each broker. The broker keeps a portion of the commission and pays the balance to the agent. Usually a client only deals with the agent, not the broker.
The agent's commission is then used to run their business: license fees, memberships in MLS and trade associations, advertising, marketing, communications, technology, transportation, professional attire, etc. In the end an agent will earn between 1.5-2% of the sale price and pay out about 25-33% in business costs.
Since the agent is working for free for a client for weeks, months or sometimes years, the relationship is built upon trust, integrity and professional behavior. The best agents build their success upon referrals from past clients. Satisfied clients are literally golden.
I welcome the opportunity to earn your business. Text, call or email me now and we'll get started.
