Real Estate Investing

Several months ago, I piled in a car with other agens for our weekly “caravan” of homes.  During the caravan, agents drive from house to house looking at new listings.  We check out notes and try to consider whether the new listings will work for any of our buyers.  Sometimes they do, many times they do not.  At one listing, the home felt overpriced for the neighborhood. 

I commented that it was very highly priced compared to one I sold up the street six months earlier.  Other agents said the paneling made the house dark and it felt small.  One said it smelled funny.

The next week at our meeting, the listing agent told us something that made our hearts stop.  The seller had secretly placed a tape recorder on top of the refrigerator so he could hear the “true feedback” about what the agents thought of the house.  He didn’t want the listing agent to pull any punches.

I was mortified because I’m not always positive when I tour homes.  I try to be, but when the smell of dog urine is overwhelming… well… I say so.  Thankfully that time I just compared the price to one up the street, so it was a factual comment and not opinion-based. 

Then I read that an agent in Connecticut has been accused of taking food from her listings, along with spare change.  Wow.  She proclaims her innocence, but wouldn’t a Teddy Cam or a Nanny Cam be a more logical step to take than so you’ll have proof and not just accusation?  I remember several years ago an agent from a well-known national company was caught stealing lamps out of a home he listed.  He was a multi-million dollar agent, too!

I have never understood how anyone who steals anything ever thinks they can get away with it.  Maybe I’m just naive to the dark side of human nature - or it could be guilt reflex - but it’s just incredible to me that people would have the gall to pilfer, plunder, and be deceitful.

Thankfully most agents are honest to a fault.  To carry the title “Realtor” we follow a very strict code of ethics designed to both protect and serve a customer and client, but to also treat other agents professionally and fairly.  The vast majority of Realtors take the code of ethics to heart, so perhaps a question you should ask your potential real estate agent is whether they’re just an agent or a Realtor.

Every single day in real estate there are new challenges to address.  If it’s not problems from a home inspection, it could be appraiser issues, dealing with another agent who is either uneducated or overly prideful, or a myriad of other situations.

Today I talked with another agent who told me he received an upsetting phone call from a buyer’s agent he worked with over a year ago.   Last year, the transaction went smoothly from contract to close.  But there was a little item - a hidden glitch if you will - that has reared its ugly head.

The buyer’s agent said the storage building in the back yard had not been paid off, as promised in the contract by the seller.  Now, the company that financed the little shed is in the process of repossession and showed up this week with a truck to haul it away.   I think you could put “Shed Repo Man” in the top 10 list of jobs I do not want.

What is the liability for the agent?  None.  The liability lays with the former homeowner (seller) who in the contract agreed to pay off any liens or leased items prior to closing.  As agents, we review the property condition disclosure form to see if the “YES” is checked for the item that states, “Is any system, equipment or part of the property being leased?”  (This does include a lease purchase agreement for a storage building!).  In the actual contract for the purchase and sale of a home, it specifically outlines who is to pay for leased items prior to closing.

So the seller from a year ago could clearly face some litigation.  Of course, I’m NOT an attorney so can’t say for sure how it would all play out.  I just know if I was to sell, I’d make sure everything that was to remain with the property would paid so it wouldn’t come back to bite me later.

A brilliant, funny, dynamic, amazing agent left our company several months ago.  Amy had earned her broker’s license, so was offered the opportunity to be the managing broker of her own office funded by outside investors.  Her business had dropped significantly while at my company - largely due to the sickly housing market - and she needed to find a stable source of income for her family.  Some investors offered her a broker position so she was paid a regular salary on top of the commissions she earned as a result of her sales.

Amy just stopped by for a visit and I bombarded her with questions about starting a new company.  My cup must be half empty today because I asked her if this is a BAD time to open a new office rather than whether it’s a good time.  Her answer surprised me,

“It’s not as risky now because business is slower, so there’s less to lose.  And I did ask myself, ‘What have I got to lose?  Why not?’”

Amy further explained that the challenge wasn’t in taking the risk, it’s getting a real estate approved office space before you can open.  She said it was difficult to get the letter from zoning saying it’s okay to have office in that location.  Then once you have that, you have to take care of everything including:  signage, obtaining a business license, have your insurance in place, ordering a phone, internet, and all your basic requirements needed to run a business.  And then you have to get furniture!!

Hoo Boy Online gives some tips about opening your own office,

Rent and start up equipment are required if you decide to open your own real estate office, and business education real estate grants can help with this. The cost of starting a new business may be more costly than you originally imagined. Starting your own agency is possible once you have been licensed. Providing you have enough money to tide through the start up phase, you will be able to concentrate on selling real estate and building a successful business that will continue to grow.

A common misconception is that you can get your real estate license and immediately open your own company.  In Tennessee that’s not true.  You must be an affiliate broker - similar to an apprentice-type situation - for a minimum of three years before taking classes and testing to be a managing broker.  You also have to earn many hours of continuing education (I believe it’s a minimum of 120 hours).  I’ve heard the state test if pretty daunting, but have never struck out on my own to conquer it.

There is some online information available about starting your own real estate brokerage firm, including this from Realtor.com.  But we’d be very interested if any readers have done this and can share their own experiences!

Photo from Luxury Home Digest.