Listing A Home For Sale Frequently Asked Questions
What is MLS? Are you in
it? Commissions, Fees, and Payments:
What is the
commission? Everyone charges 6%,right?
I just want to be
in MLS. How much will that cost?
Will you be there
for every showing? After all, we're paying you to sell the house. MLS stands for Multiple Listing System. MLS is a cooperative system for making the listings of each Participating Broker available for showing and sale by any other Participating Broker. When a listing is submitted to MLS it carries with it the listing Broker's "Promise to Pay" a specified "Co-op Fee" or compensation to any Participating Broker providing a Buyer for the listing. MLS is probably the single most effective marketing tool available to Realtors today. The Michael Group is a member in good standing of the Dallas Association of RealtorsŪ Multiple Listing System. If your office isn't close by, how can you sell our house? Easy. We are living in the electronic age. Listings are maintained "on-line" in computer databases so that anyone anywhere has access to them. Contracts are submitted and responded to by fax or email. Brokers, clients and customers communicate by telephone whether across town or across the street. Most listings are "shown" to the Buyer by the Buyer's Agent who represents them. There simply isn't a need for today's Listing Agent to be located "just down the street" as might have been the case in the past. What is the difference between a RealtorŪ, a Broker, and an Salesman? RealtorsŪ are licensed real estate professionals who are members of the National Association of RealtorsŪ and its local affiliate Associations. RealtorsŪ agree by their membership to be governed by a strict Code of Ethics and Professional Standards in all their professional activities. A real estate Broker or Salesman (either of which are often referred to as Agents) may or may not be a RealtorŪ. It is important to note that the RealtorŪ Code of Ethics often holds the RealtorŪ to an even higher standard than that which may be required by applicable state real estate license law. Brokers in Texas are those persons who are licensed by the state to operate a real estate business, to sell, exchange, lease, or purchase real estate and to provide other defined real estate services for others (the public) and to charge a fee or commission for any such activities and services. To obtain licensure as a Broker one must meet certain educational requirements, have worked at least two years as a licensed Salesman, pass a written Broker's license examination and participate in regular continuing education. * Salesman in Texas are also persons licensed by the state to sell, exchange, lease or purchase real estate or provide other defined real estate services for others. However, a Salesman must be associated with (sponsored by) a Texas-licensed real estate Broker and work under that Broker's supervision for all such acts. A Salesman may not accept commissions or fees for services from anyone other than his sponsoring Broker. A Salesman must also meet certain educational requirements, pass the Salesman's license examination and participate in regular continuing education. * * Note: These definitions are intended to be generally descriptive and accurate but may not be complete and comprehensive. For a complete and comprehensive definition of terms please consult the Texas Real Estate License Act and the Rules of The Texas Real Estate Commission (TREC). Is an Agent the same as a Salesman? The term Agent is defined as someone who is authorized to act for or on behalf of and in the best interest of another person (his Principal) and who places the interests of his Principal above his own. In real estate the term Agent generally refers to any licensed person who is working with or representing someone in a real estate transaction regardless of whether that licensed person is a Broker or Salesman. Agents are Employees of the Broker, Right? No, in most cases they are not. Most Agents (Salesmen) are not employees of the Broker but work as Independent Contractors. Even though they may maintain a desk or office at the Broker's place of business and use the Broker's company name they are normally not employees in the conventional sense. They are Independent Contractors. A Buyer's Agent is a licensed real estate Broker (or his authorized Salesman) who has agreed to represent another person (the Buyer) in a real estate transaction. That Buyer is then the Broker's "Client", to whom the Broker owes certain Fiduciary Duties. (See "What is a Client?" below.) In Texas, a Buyer's Agent may have either a written or verbal agency agreement with his Principal. For more details on home buying and Buyer Agency visit the Buyer's Page. A Listing Agent is a licensed real estate Broker (or his authorized Salesman) who has agreed to represent another person (the Seller) in a real estate transaction. That Seller is then the Broker's "Client", to whom the Broker owes certain Fiduciary Duties. (See "What is a Client?" below.) In Texas, a real estate Listing must be in writing to comply with Texas law as promulgated by the Texas Real Estate Commission. A Sub-Agent is any licensed Broker (or his authorized Salesman) who is assisting a Customer in the purchase or lease of real estate listed by another licensed Broker and for which compensation is offered by that listing Broker. In Texas, a person shopping for real estate would generally be considered to be a Customer and the Agent assisting him would be considered either an Agent of the Seller or a Sub-Agent of the Seller. Unless prior Representation (as a Buyer's Agent) had been established, either in writing or otherwise, the Broker owes no Fiduciary Duties (See "What is a Client?" below) to a Customer. However, certain Responsibilities for Honesty, Fairness, Accounting and Reasonable Care do apply. A Client is any person being represented by a Realtor (Broker) pursuant to either a Listing Agreement or a Buyer Representation Agreement. A Client is owed certain Fiduciary Duties by the Realtor (Broker). Those duties include: Undivided Loyalty; Obedience; Reasonable Care and Diligence; Confidentiality; Full Disclosure; Accounting and other Duties as may be required by applicable law. In addition, a Client may also expect: Honesty, Fairness, Disclosure of Material Facts, Objective Evaluation, Negotiation Counseling and Assistance, and Price Counseling. Commissions, Fees, and Payments: What is the commission? Everyone charges 6%, right? No, absolutely not. There is no fixed commission rate or structure. That would be illegal. Each Broker is free to set the fees charged by his or her firm. And, Brokers may set or negotiate different fees for different levels or types of services. Fees or commissions in the industry have traditionally followed the concept of that the Broker is paid only at closing based upon an agreed percentage of the sales price. In Dallas that fee has often been at or near 6%. Today, however, many Brokers are offering discounts, incentives, and other options and payment plans to meet the varying needs of today's home Sellers. The time is past where "one size fits all". Does The Michael Group offer a Discount? Yes, we do offer some serious discounts. Depending upon your needs for service we have several listing plans that may save you money. What is meant by commission splitting?Commission splitting or sharing is a concept of cooperation which facilitates maximum efficiency in the real estate market. When a Broker lists a property and enters it into the Multiple Listing System the property becomes available for any other MLS Broker or Agent ("Selling Agent") to show and sell. The MLS agreement is such that when the property is sold by any "Selling Agent" the listing Broker compensates that "Selling Agent" ** for their participation in the sale by paying them a stated "Co-op Fee". Obviously, if the Selling Agents didn't get paid they would have no incentive to show and sell listed properties. The listing Broker pays this "Co-op Fee" out of the fee he collects from the Seller for listing the property. The Seller only pays one party, the listing Broker. ** Actually, the payment is made to the Broker of the "Selling Agent". What is a "Co-op Fee"? Is it a fixed fee? The "Co-op Fee" is the amount that the listing Broker enters into MLS that he is willing to pay any cooperating Broker or Agent, e.g., the "Selling Agent", for bringing in the Buyer and getting the property sold. "Co-op Fees" are traditionally a percentage of sales price and are paid at closing. However, just as the listing fee is not fixed neither is the amount or payment terms of the "Co-op Fee" fixed. The "Co-op Fee" is whatever the listing Broker chooses for it to be. The traditional arrangement is that the listing Broker provides one half of the total listing fee as a "Co-op Fee" to the "Selling Agent". What if I don't want to include a "Co-op Fee" for my listing? The "Co-op Fee" is what makes MLS work. If Sellers and their Brokers did not offer some compensation to "Selling Agents" then the system would probably cease to function . . . read that as: homes wouldn't sell. Now, that's not to say that the amount of "Co-op Fee" can't be more or less than typical or that bonuses and other incentives can't be offered. Additionally, the payment of the "Co-op Fee" can be restricted to "Buyer's Agents" only (excluding sub-Agents), a policy considered a "risk reduction" strategy for the Seller and Listing Broker. The long and the short of it is that if you want your property in MLS then a "Co-op Fee" is necessary in order for there to be a successful result. Why can't the Buyer pay his "Buyer's Agent"? Why should I pay him? Actually, the Buyer can pay his own Agent. It is just not the norm today in Dallas. In fact, the Buyer Representation Contracts (the listing contract for the Buyer) used by most RealtorsŪ provide that the Buyer will pay their Agent in any instance where the Seller does not pay. A better way to look at this is on the basis of "transaction costs". Simply put, RealtorŪ fees and commissions, similar to title, survey, mortgage and other fees, are an integral part of making the real estate "transaction" happen. As a part of the "transaction", these necessary costs, fees and commissions are "reflected" in the market price for the property. If these fees did not exist at all then the market prices for real estate would be correspondingly lower. In summary, the fact that the commission might show up on the Seller's side of the closing statement rather than the Buyer's side should not be of concern so long as the end result (the sale) is accomplished. You guys are making a killing. Why do RealtorsŪ charge so much? If you took the amount of money a Realtor makes on a given transaction and translated it into dollars per hour worked you might be surprised. Like it or not, a very considerable amount of time and hard work by the RealtorŪ goes into every real estate transaction. In most cases, the consumer (Buyer or Seller) doesn't see or realize most of what their Agent does for them. So, a general misconception persists among the home buying and selling public that RealtorsŪ are all getting rich at their expense. Fact is, the average RealtorŪ in the U.S. earns only about $20,000 per year according to National Association of RealtorsŪ statistics. Some make a lot more, some make less, and there is the part-timer factor but the average income is quite low. Surprisingly then, there are currently some 730,000 member of NAR nationwide while studies and statistics show that there is a need for only about half of that number. Why so many? First, it is quite easy to obtain a real estate salesman license. Second, just like the general public, new people entering the business mistakenly think it is so easy and so financially rewarding. The reality is that if there weren't so many RealtorsŪ chasing so little business then commissions and fees would be higher than they now are. Consumers of RealtorŪ services actually get a great deal for their dollar. How do Agents get paid, anyway? By the Broker? In Texas, as in most states, only a licensed Broker may enter into a real estate listing contract with a client and / or be paid by a client for providing real estate services. Brokers in turn pay their salespeople (commonly known as Agents) a portion of the commission or fee received from the client. Depending upon the arrangement between the Broker and Agent (salesperson) , an Agent may get as little as 40 or 50% to as much as 100% of the total commission paid to the Broker. It is also important to understand that virtually every Agent (salesperson) working under a Broker is not an "Employee" but an "Independent Contractor". This distinction means that out of his share of the commission (the 40 or 50% or whatever) the Agent (salesperson) must pay all of his own business expenses, e.g., car, gasoline, marketing materials, insurance. My sister works at a mortgage company and might find me a Buyer. Can you pay her a commission? Absolutely Not! In Texas, and in most other states, it is illegal to pay anyone a commission or "finders fee" unless that person is also licensed as a Broker by The Texas Real Estate Commission. It would be great if your sister can suggest or refer a Buyer for your home as a favor to you. However, don't forget that even after a potential Buyer is identified there is still a considerable amount of work to be done on the part of your listing Agent to complete the actual sale and closing for you. I just want to be in MLS. How much will that cost? As a part of listing your property for sale with a Realtor you may be listed in MLS if that is provided for in your listing contract. Since MLS is the foremost marketing tool available today it does make sense that you would want your RealtorŪ to provide your property with an MLS listing. However, MLS is only part of the RealtorŪ provided services needed to complete the sale of your property. The Michael Group offers two listing plans that include MLS. Click Here for more information. Commissions are only paid at closing, right? In the traditional arrangement that is correct. It has been customary that property was listed for sale at no cost to the Seller (or Buyer) until ultimately a sale and closing occurred at which time a commission was paid. Similarly, if the property did not sell then no payment was due. Today, however, more and more Sellers (and Buyers) are opting for other compensation arrangements for their Realtors. Plans include, but are not limited to retainer fees, up front fees, flat fees, hourly fees, and hybrid plans which might include an up front fee plus a commission at closing. For information on Listing Plans offered Click Here. Why would I want to pay you anything Up Front? Simple. You'll save a lot of money in the long run. One of the reason that Broker's fees are at the level they are is that the Broker has traditionally taken on all the risk. If the home or property did not sell in the agreed time frame the Broker did not get paid anything no matter how much work was put in or how much expense was incurred (by the Broker) along the way. Since it is estimated that some 40% of all listed homes do not sell during the listing period there has obviously been a lot of waste in the system. If the home Seller is willing to reduce that risk to the Broker by paying a portion of the costs "Up Front" then the Seller's overall cost should be lower. The Michael Group recognizes this principle of sharing the risk and the cost savings and offers two listing plans designed to do just that. Click Here for more info. We already have a Buyer? Can we get a discount? Absolutely! Less work and time expended on the sale of your home by the Broker should result in less cost for you, not more profit for the Broker. The Michael Group recognizes this principle and offers a basic listing plan tailored specifically to the "For Sale By Owners" - Sellers who already have identified a Buyer, and Sellers who just want to do a lot of the work themselves. Such Sellers are willing to give up (or don't need) some of the "bells & whistles". But, they still get the professional expertise, experience, guidance and knowledge of the details that are needed to get the job completed correctly. Click Here for more details on this plan. How long do I have to sign up for? Traditionally, Brokers taking all the risk in return for a full commission paid at closing wanted and deserved a listing contract of at least six months in length. This time was essential since market conditions vary and overpriced properties and those with other negative attributes often take much longer to sell than others. The Michael Group offers some listing plans that do NOT require an arbitrary minimum listing term. In those plans the Seller can choose the length of listing period and may terminate or extend the listing upon 10 days written notice. Note: To comply with applicable state law every listing agreement must have a specified starting date and a specified termination date. Do I have to have a lockbox (key box) on my house? No you don't. But, do you really want to sell your house? If so, a lockbox or key box is highly recommended. Buyers and their Agents shop for homes at their convenience, not yours. Often, they only have one part of one day that they will be able to be in your area to look at your home. The more restrictions placed upon the showing of your home the less likely it is that the right Buyers will see it when they need to. The home needs to be available for showings at all reasonable times, whether you are at work, out of town, on vacation, or just went to the store for an hour or two. No, this doesn't mean available at night or after you have gone to bed either. Showing are scheduled only during daylight or very early evening hours under most circumstances. What kind of a contract do I have to sign? The Michael Group utilizes a standard listing contract provided by the Texas Association of RealtorsŪ for use by all member RealtorsŪ. It is designed to be comprehensive but straightforward and easy to understand while complying with all applicable regulations and law. Special addenda or provisions are incorporated where needed to define special terms unique to the The Michael Group listing plan you choose. What if I change my mind about selling after I'm listed a few weeks? Depending upon the listing plan you choose you may terminate your listing with ten (10) days written notice. However, please carefully consider your need and motivation to sell before putting either The Michael Group or yourself to the trouble of placing your home on the market in the first place. Will you be there for every showing? After all, we're paying you to sell the house. No. Most, if not all, showings on your home will be done by other RealtorsŪ not affiliated with The Michael Group. This is not unusual. It is the norm in the Dallas market today. Among other factors this is largely due to the effectiveness of the MLS as a promotional tool for selling your home. The job of any listing Agent is to properly market your home so that it can by found by Buyers and their Buyer's Agent. At the same time your listing Agent must professionally and competently protect your interests throughout the marketing / selling / contracting / closing process. We want lots of advertising. What will you do? The most effective advertising for selling most Dallas homes consists of: 1. The yard sign, and 2. The MLS. That's all. Media and print advertising are highly overrated and are most effective for their role in promoting the listing Broker and/or Agent, not the home being sold. The Michael Group reserves the right to advertise or not advertise as deemed necessary and cost effective. However, if newspaper or other advertising is critical to your perception of an active marketing plan it can be provided for you at added cost. I love open houses. Can mine be open every weekend? Sure. You can personally hold your house open to the public at any time you see fit. After all, it is your house, isn't it? All The Michael Group requires is that you keep an attendance record of all visitors (including phone numbers and addresses) and provide us a copy of that list after each open house for follow-up up purposes. CAUTION: Recent studies by The Real Estate Center at Texas A&M University have shown that open houses provide limited, if any, benefit in getting homes sold. There are also significant risks in letting the general public have access to your home. The Michael Group does not recommend and, as a general rule, does not hold open houses. We need some advice on how to fix up the house for sale. Can you help? No Problem. A meeting at your property is required to complete the listing contract. After you are listed, recommendations will be provided as to what might be beneficial in the way of updating or repairs. If the work will take some time, actual marketing of the home will be delayed until everything has been completed. However, the listing must begin at the time of meeting (listing appointment). I don't want to fix up my house but I want top dollar. Can you get it? If the property needs obvious cosmetic updating or general repairs the answer is: Probably Not. The reason is simple. Buyers attribute value to a home based upon factors that they can see or perceive. If it is obvious to Buyers that the home needs work to bring it "up to snuff" they will be unlikely to pay the same price they would pay for another similar home that had no deficits. In fact, it is highly unlikely that you will get any offers at all, even a "lowball" one. My house has major problems. Do I have to fix them to sell? Probably so. It is always possible to sell a property "As Is". The problem is that with residential real estate most Buyers are going to finance their purchase. Lenders will usually not lend money on a property that has major defects (such as foundation problems or roof problems). So, unless you only sell to a Buyer that has the actual cash you have a problem. There are ways to deal with many situations. Please call or E-mail with the details of your situation. I can't afford to fix up my house to sell it. What do I do? Three possible choices: 1. Sell it "as is" at a reasonable price that reflects the work needed. 2. Arrange with your contractor to do the work but extend payment till closing. 3. Scope out the needed work carefully and price the home "subject to the work being done". Then, complete the work just before closing (see #2.). Of the three, probably the best and least risky approach is choice #1, especially if the market is relatively strong. Call or E-mail to discuss your specific situation. We plan to buy another house. Can both closings to be the same day? This can often be done but cannot be guaranteed. Normally, you are best served by using the same Broker or Agent that is listing your home to help you find the new home to buy. This makes it much easier to coordinate simultaneous events. It also helps if you have clearly defined the basic parameters of the new home (price range, neighborhood or subdivision, "must have" versus "nice to have" features, etc.) before you list your old home for sale. Call or E-mail for more details. |