Watch video from Tony Moon, The Real Estate Heretic.
Buying a Jersey Shore home, the dream of many. You saved for the day when you’ll start your search for that home along the coast.
Buying a vacation home in Ventnor, Margate or Longport could be an excellent investment. Plenty of upsides if you proceed carefully. But beware those land mines. Here’s a few of them:
At the top of our list…. is something called ‘dual agency’. This is where one real estate agent represents both the seller and buyer. An issue so controversial, the practice is banned in 8 states.
Dual Agency: Real Estate agent or brokerage attempts to fairly represent both the seller and buyer, at the same time, in the same transaction.
Does your Real Estate agent represent you exclusively, or do they represent the other party too? Is this an obvious conflict of interest? Many believe it’s much too risky to have one agent represent both sides of a real estate transaction.
In the market to buy a Downbeach home? Find an agent that will act ONLY in your best interest. Not the seller’s. In this situation, your ‘buyers agent’ will help you search for ALL available properties ….. not just the properties they (or their broker’s office) has under a listings contract.
Double Dipping, also known as ‘double-ending’ the deal.
Top Tips for Downbeach Vacation Home Buyers and Sellers.
Where is Dual Agency is Illegal?
Alaska: Alaska statute (Designated agency OK when disclosed)
Colorado: Colorado Dept of Regulatory Agencies
Florida: Florida statute
Maryland: Maryland statute (Designated agency OK when disclosed)
Texas: Real Estate License Act (Agents OK to act as intermediary)
Vermont: Administrative Rules Vermont Real Estate Commission (Designated agency OK when disclosed)
Wyoming: Real Estate License Act (Designated agency OK when disclosed)
READ MORE > In Dual Agency, Clients Often Suffer.
When one person serves both the buyer and seller, the potential for conflict of interest is obvious. No matter what precautions you take.
A dual agent has a strong incentive to favor the seller. The higher the sale price, the higher the commission. Buyer gets hurt.
Dual agency: one agent represents both sides of deal. You could end up paying two commissions….. to one agent.
AGENT STILL USING OLD TACTICS. So-called ‘successful’ agents are too busy to market your home properly. Many still employ tactics no longer effective. Newspaper and other print readership is down well over 50% from just a few years ago.
Open houses are not as effectiveness as they used to be..
Statistically, less than 2% of homes get sold via an open house.
Even though open houses are rarely successful, a listing agent can market themselves to those who visit. Grabbing a new client. They use the open house to attract more buying clients.
INFLATED SALES PRICE TO WIN YOUR BUSINESS. When hiring a agent to sell your home, some will inflate the sales price in order to get your business, and become the listing agent.
Some real estate agents will “buy a listing” by suggesting a list price much higher than market value.
It’s always best to price the property properly, right out of the gate. Too often, the seller’s agent will set an unrealistic sales price to impress the client and land the listing. This only serves to have your property sit on the market for far too long.
When the agent finally reduces the price to a more realistic number, the property may look suspect.
AGENT NOT SHOWING YOU ALL LISTINGS. EVEN FSBO’s. Steer the buyer in the direction of preferred properties, or in-house properties.
Some unscrupulous agents may avoid showing you a competitor’s listing. They also may keep you away from FSBO, for sale by owner. properties.
THE STIFF ARM: This is when an unethical agent places a roadblock in front of competing agents. The agent will purposely throttle offers. Why would they filter out interested buyers? Answer: Seller’s agent would prefer to sell the home at lower price to a buyer ‘in-house’. This is good for the agent, but bad for home seller.
AGENT GUARANTEE. Not happy with your agent? Home sitting on the market too long? A professional agent should release you from the listing agreement prior to contract expiration. Make sure to ask about it before you sign any agreements.
Survey: Americans without previous buying and selling experience (68%) and the majority of Americans with buying or selling experience (56%) didn’t know what a “typical” commission fee was.
Average real estate agent commission fee is typically between 5% and 6%. The higher the home price, the more likely an agent would take less in commission. Ex: for home $1mil+, some agents would gladly discount commissions to as low as 3-4%. But they’ll NEVER publicly disclose that.