[photopress:cards.jpg,thumb,alignright]The other day when I wrote this article regarding “THE” Valuation Tool, I was talking about the one in my head.

When training new agents I give these instructions.  Go to Broker’s Open Houses and Sunday Open Houses and vacant properties.  Keep a three ring binder and put a printout of each property you visit in the binder.  As you go through each property DON’T write down how you “feel” about the house and it’s asthetics (it takes a while to break that habit, BTW).

Answer these three questions at each house and write your answers on the printout in your binder:

Will it sell? 

When will it sell?

Will they need to have a price reduction before it sells?

You don’t have to be an agent to practice the art of valuing homes or to perfect the “Valuation Tool” in your head.  You just have to remember to step away from the computer at least 30% of the time.  Data only goes so far.  You have to stand on the land and walk through the house to truly establish the basis for valuation.

I chose “a house of cards” for the photo here, and this particular mish-mash of card formations, in the hopes that “a picture speaks a thousand words”.  The big tower of cards, when valuing real estate, is somewhat interdepending on the smaller tower, and the ones scattered around the table are also somewhat dependent on the cards as a whole.  If you can buy this house with a view in Kirkland for X than this house in Woodinville can’t be Y and this condo in Redmond can’t be T.  Everything values off everything else, until it doesn’t.  These are called market areas. 

Sultan’s values are not dependent on downtown Bellevue.  Shoreline’s values are not dependent on Federal Way.  King County, for valuation purposes, is not a “market segment”.  Market segments are created by buyer consumers and not sellers or agents.  If enough buyers are ready to pay X here vs. X there, than that becomes market value.  If no buyers consider Federal Way vs. Redmond, than those two areas are not interdependent as to value.

I tell the agents that when they look at their binder and their answers are 75% correct, they should throw a party.  I also tell them to NEVER, EVER give up the binder until they can do those calculations on “auto-pilot” in their head.

So why the big Herbal Essence YES!!!!!!!!!!!!!?

I took an agent out to do this exercise on Sunday.  I walked through one property listed at just under $1.6 million.  I said this will be gone by Friday.  Today is Friday.  SOLD STRIP IS UP!  The one I said wouldn’t sell is not sold.  The one I was iffy about…have to go check that one, but I don’t think it will be sold until after the 20th, if then, so I’ll go check it at month end.  I expect it to be sold by month end.  I gave the listing agent a couple of things to do so it would sell by month end, I’ll go back and see if it’s sold.  If it isn’t sold, I’ll go see if they did the few little things I told them to do.  Price was right.  Shouldn’t need a price reduction.  Just a couple of showing condition tweaks.  Without those tweaks it could sell for $150,000 less.  We’ll see what happens.

It is a fabulous exercise to predict and stay on top of home values.  Anyone can do it.  You don’t have to be an agent and it’s great fun.  I highly recommend it for anyone considering buying or selling property in the next three years.  Get started now.  It takes some longer than others, but it’s aways a fabulous undertaking for anyone interested in property valuations.

“I was told at work that if I see even ONE house with an agent, that agent becomes MY agent.”

It’s a scary thought that seeing one single house with an agent, locks you into some kind of long term unwritten contract with that agent. I have heard the quoted statement more than once from my clients, so to keep this article as short as possible, I’m going to answer it with examples. The underlying principles involved can be addressed by responding to questions in the comment portion.

Example #1:

Buyer Consumer passes by a house for sale, pulls out their cell phone and calls the number on the sign and asks to see the house. Agent who answers the phone says I’m two minutes away, if you wait there I’ll show it to you. Buyer sees house and decides to make an offer, but doesn’t like the agent who showed up and intends to leave and submit an offer through an agent who is NOT the agent who showed them the house. Can they do that?

Clearly a consumer cannot be forced to use an agent they don’t like or know. The question is not what the buyer can or cannot do as their next step. The question is can the agent who they choose to write the offer and represent them end up not getting paid? More to the point, can the agent who gets paid be required to give the money back months after it closes? That answer to both of those questions is yes.

Buyer can choose their agent always, buyer can’t guarantee that the agent will get paid for their efforts in most cases.

Example #2

Buyer Consumer calls phone number in an ad and asks to see the property in the ad. Agent shows up and shows them the house and they want to make an offer.

Example #3

Buyer consumer goes into an Open House, likes it, wants to make an offer.

Example #4

Buyer consumer looks at houses on several separate occasions with an agent. They find house they like and ask the agent several questions. Buyer not satisfied with answers regarding advices at this point and decides to find a different agent to make an offer.

Example #5

Buyer consumer sees that they can get a “rebate” if they use a certain agent to write the offer. They thank the agent, who they liked very much, but decide to use a different agent in order to get “cash back at closing”.

These are all real life every day examples of what happens out in the real world. So let’s get back to the original statement. “I was told at work that when I see a house with an agent…that agent becomes my agent.”

The people who quoted that statement seemed to think that the agent who showed that one house became “their” agent, even if they didn’t want to buy THAT house. So the simple answer to those people is NO. If you see a house with an agent, that agent does not become your agent long term when you decide to buy a different house. UNLESS you signed a Buyer Agency Agreement with that agent in order to see that house.

Never sign a Buyer Agency Agreement just to see one house (or make an offer on one house) with someone you are not choosing to be your agent long term. I would think that is obvious, but for what it’s worth I’ll say it again. NEVER sign a buyer agency agreement with someone you are not selecting to be your agent into the future.

Once you DO, IF you do, sign a Buyer Agency agreement in order to see a house or make an offer, understand that piece of paper could come back to bite you in the butt, when you least expect it, many months later.

If you do not sign a Buyer Agency Agreement you have the freedom to choose your agent at ANY time. What you can’t decide is whether or not that agent will be paid. But there is no rule for consumers that says they are not free to choose their own agent, as long as the agent is willing to risk not getting paid.