FAQs Every Home Seller Should Read Before Hiring a Real Estate Agent

efore you hire a real estate agent, read the answers to your most important questions.

Will a property I sell myself be at a competitive disadvantage compared to properties sold by real estate agents?

No-and in many ways, you’ll have an advantage. First of all, today’s buyers find their homes on the Internet on their own time. If they like your home, they’re going to contact you no matter what-and the odds are good that they’ll be happier dealing with you than with an agent. It is no secret that a huge number of homes are not selling and expire before the agent ever gets the home sold. Do a Google search and you’ll see the amount of training material the real estate industry offers to teach their agents how to persuade sellers to renew their listings for a year. There is no magic in what a real estate agent does.

To give you an example of the advantages of selling your home yourself, think about signs. When you list with an agent, they get to place a mini billboard in your yard that includes a tiny bit of advertising for your home and a huge amount of advertising for their company. The whole industry should have moved on to customized signs a long time ago-but they haven’t. You’ll have a significant advantage by tailoring your on-the-ground marketing plan to your home, including your FOR SALE sign.

Do homes sell for more when listed with a real estate agent?

That’s what the National Association of Realtors funded by real estate agents says, but there’s no independent data to support their statistics. If a real estate agent tells you they can get you more money for your home, ask them to bring you a buyer; if they can’t, they need to leave you alone to sell your house. Far too many listings handled by agents expire, unsold.

An agent’s opinion is not going to get your home sold. It’s easy for people to make guesses and conjectures, but to win in today’s market, you have to deal with hard facts.

How much time and effort is this really going to take?

It takes about as much time to sell your house as it takes to plan a long vacation. The marketing side requires the most time up front, but once you’ve gathered your facts, it shouldn’t take you more than a few hours to get your marketing plan started. You’d have to gather that same information for an agent, if you used one. And the process has been streamlined for you on sites like simpleandsold.com.

If you’re skeptical, take the amount you’d pay in commission to a real estate agent and divide it by the number of hours it takes to plan a vacation. The result should help you see that time you put into selling your house will be time well spent.

A real estate agent told me it would be dangerous to sell my own home, since I’d be letting strangers in my house all the time. Should I be worried?

Unfortunately, you’re going to have to let strangers in your home to sell it. But you would have to do this with or without a real estate agent, so this is almost a moot point. Remember that you can open your home any way you want: you can take down information for safety purposes; you can schedule your viewing appointments so that you won’t be alone in the house; and you have the right to stop the process if you ever become uncomfortable with a person’s presence. This is something even real estate agents face.

Do I need to use a Multiple Listing Service (MLS) to get the exposure I need for my home?

First, you should understand what MLS is. It was not designed as a marketing venue for homes; rather, it’s a simple way for brokers to negotiate compensation with each other, so that Real Estate Agent A can tell Real Estate Agent B, “Sell my listing and I will pay you X.” Period.

My local MLS, which was named #1 in the country, is still way behind the times. It allows me to upload approximately eight tiny (two-by-two-inch) pictures and about three sentences of description. I’m not even allowed to link to anything. How is that a viable marketing tool?

Look at Zillow, Trulia, and Yahoo! Real Estate and you’ll see how much the MLS has been eclipsed. It’s become just an outdated method for real estate agents to protect their turf. Some systems are not even Mac compatible.

With Simple and Sold, you can put your home up for viewing on hundreds of websites, and you can add up to thirty-six large, high-definition photos in your listing. You can have paragraphs of description about your home. You can attach listing brochures and other files, which interested buyers can view online or download. You can add background music or a voice-over about your property’s features; you can provide links to area schools and anything else you want.

What is the NAR?

NAR stands for the National Association of Realtors, the lobbying group listed at #4 on opensecrets.org’s list of political heavy hitters. It’s the organization about which Joe Nocera of the New York Times once wrote: “You have to wonder sometimes what they’re smoking over there at the National Association of Realtors.”

According to Bloodhound Realty Blog, The NAR has stayed under the radar while doing a monstrous amount of damage to the economy, the housing market, and most importantly, the consumer. Bloodhound Realty Blog states (this blog does a great job of exposing the NAR), “It was the NAR that lobbied for each law and rule change that resulted in the housing boom, the sub-prime lending catastrophe, the wanton bundling of fraudulent loans, the ongoing subsidization of the secondary mortgage market, etc. The villain behind all the villains in the collapse of the American economy is the National Association of Realtors.”

“The real estate licensing laws, written in their original form by the NAR, exist to limit competition in real estate brokerage, eliminating alternative sources of real estate brokerage to artificially sustain higher commissions for NAR brokers”

John Crudele of the New York Post recently stated: “The real estate industry lives by the motto: “location, location, location.” Next week it’ll be known for “deception, deception, deception.” People want the truth and the NAR is deceiving the public all to save the sacred real estate commission. Crudele also reports: “The National Association of Realtors admitted that it has been reporting bad figures on sales… Jeez! Tell the truth!… The Realtors aren’t doing the country any favors by sugar-coating their stats… and the people at NAR don’t seem to be bothered by the practice.”

Don’t most people trust real estate agents to get them the best deal?

Unfortunately, people don’t trust them. In the most recent Gallup poll, they ranked lower than bankers but higher than congressmen in terms of ethics.

In all fairness, it’s not the behavior of real estate agents that has been unethical; it’s the way their organization, the NAR, has worked to block their competition. As I see it, and as most Americans see it, competition is for the competent. You own your home, so you should have the choice to sell it any way you choose.

The NAR got a public slap on the wrist in 2008 from the Justice Department when the organization tried to stop real estate agents without a physical office from participating in MLS. The Justice Department had to sue the NAR to allow mobile, internet-based brokers-the kind who operate from laptops and Starbucks instead of fancy offices-to practice their trade.

I think the NAR should be ashamed of making taxpayers pay for this lawsuit, which (in the words of the DOJ itself) “requires NAR to allow Internet-based residential real estate brokers to compete with traditional brokers.” The Department said the settlement would enhance competition in the real estate brokerage industry, giving consumers more choice, better service, and lower commission rates. NAR is now bound by a ten-year settlement to ensure that it continues to abide by the requirements of the agreement.

But don’t Realtors operate under a Code of Ethics?

Ironically, the NAR emphasizes a “Code of Ethics” for all its members-but at the same time, they have been called on the carpet for deceptive statistics on homes sales.

In my opinion, anyone who needs an organization to tell them how to be

Types Of Real Estate Investor Websites – What Should You Choose?

One of the basic questions you have to answer when you get a real estate investing website is “How do I get my website configured to get the best results?”

There are many business models in real estate investing – buying houses, buying notes, short sales, fixing and flipping, wholesaling. And a lot more. Or your business can be a combination of different business models.

Your website must be easily adaptable to suit your business needs to achieve maximum profitability. Here are a few popular business models in real estate investing:

Real estate investing business models

1) Buying Houses
This is the most popular business model. Most real estate investors buy houses. The basis of most real estate investing businesses is buying houses.

Buying houses can include buying them in retail, cash or terms.

2) Selling Houses
Almost everyone who buys houses also sells them. Just like buying houses, you could be selling them on retail or terms, such as lease options.

3) Wholesaling
Most people call wholesaling “flipping houses”. In this case, you locate houses in distress that need repair. And you get a big discount when you buy these houses. You then sell it to another property investor who fixes it up and sells it or rents it.

You end up making a little money from just a little effort. You can flip houses without ever having to own them.

In real estate investing, wholesaling is the fastest way to generate a healthy cash flow while spending little to no money. A few hundred dollars is sometimes all you need to make a deal happen.

4) Renting
Another popular business model is to buy houses, fix them, then put tenants for positive cash flow.

5) Buying notes
Other investors specialize on buying and selling notes. Essentially by owning a note, you become the lender and do not have to own the property.

6) Commercial real estate
This covers a wide variety of approaches, such as apartments, shopping centers, land and so on.

Some real estate investors combine both commercial and residential estate. Residential real estate involves residential houses, whereas commercial property does not include residential single family houses.

7) Other business models
When you are investing in real estate, you sometimes find yourself having to be involved in other aspects of the business that are not really separate business models.

i) Private money
When investing in real estate, sometimes you need to look for private money investors to finance your deals.

For this reason you have to actively look for private money investors to finance these deals.

ii) Short sales
As part of real estate investing, you sometimes find yourself negotiating with lenders to accept less than what is owed on the property. This process is called short sale and forms a part of most property investors businesses.

iii) Loan modification
Loan modification has become popular in the recent years. Lots of investors are also licensed agents and mortgage brokers.

So what types of websites for real estate investing are there on the market?

First of all, when shopping for a real estate investor website, it is important to choose a website that is flexible enough to be adapted to suit your individual needs. Changes like that should not cost you any money.

In other words, the website you choose must be able to accommodate your changing business needs and models. So you will not have to buy another website if your business model changes in future.

Interactive real estate investor websites
These websites are fully adaptable and offer complete customization and adaptability capabilities. Changing a business model can be done with one click of the mouse.

If none of the default business models suits your needs, you can then adapt it to suit your individual needs.

The following business models are allowed by interactive investor websites

1) Websites for buying houses
These websites come equipped with everything you need to buy houses. You are presented to motivated sellers as the most credible person to buy their houses.

As a result, you get leads that are fully pre-negotiated and pre-screened for you.

You will only need a few minutes to decide if this is a deal or not, and follow up or let it go as needed. You can then make offers right from the virtual back office and control the closing process from your back office.

2) Websites for selling houses
This website comes completely equipped with all the features you need to sell your houses quickly. You simply list your houses from the virtual back office and manage the whole process from there.

It also allows potential buyers to join your buyers list as they view your properties. One of the most valuable assets when selling houses is a buyers list. A simple email to your buyers list can get you a buyer the same day.

Of course, they also come integrated with social media so that people can recommend your properties to their friends through Facebook, Google+, Twitter, etc.

These websites are also adaptable for renting houses, lease to own, and so on.

3) Websites for wholesaling houses
This website is equipped for the real estate investor that wholesales houses.
Social media and buyers lists also come integrated on these websites.

4) Websites for seeking private money
You can choose this business model with a single click from the virtual back office. This automatically changes to a website for attracting private money investors.

5) Websites for buying notes
You can also convert your website for buying notes. It comes fully equipped with this capability.

6) Websites for investing in apartments
You can quickly adapt your website for investing in apartments with just a few clicks.

Should you combine business models in your website?
I once had a real estate teacher whose website contained everything she did – teaching, buying houses, selling houses, wholesaling, renting, offering hard money and seeking private money investors.

She said it worked fine for her needs.

My next guru strongly emphasized that you should never mix buying houses, selling houses or seeking private money. You must separate these business models.

I personally do not support mixing business models on the same website. This once cost me a deal worth over $10,000 because I had listed a wholesale deal on my website for buying houses. I had provided my business card with my website to a motivated seller. Since my intention was to wholesale the deal, I listed it on my website and sent it to my buyers list.

I quickly got a cash buyer for it, and he wired money to the closing title company. When the seller saw what I was making from her house, she refused to go to closing. If I had kept the business models separate, I could not have lost this deal.

Must you have more than one website for your real estate business?
If you need to separate your business models on separate websites, then you must buy more than one website.

You can get away with having only one website if your needs can be accommodated by having different business models on the same website. Interactive real estate investor websites do not offer any limitations as to how you can adapt your website. You can accommodate multiple business models if you choose, or have each website for each business model.

The choice for type of website you choose really depends on you and if your business models can conflict with each other if you use one website for them.

Interactive real estate investor websites offer a broad range of choices f

The Top 5 Key Benefits ofThe Top 5 Key Benefits of Purchasing and Owning Investment Real Estate and Owning Investment Real Estate

So… You may ask yourself, why should you buy or invest in real estate in the First Place? Because it’s the IDEAL investment! Let’s take a moment to address the reasons why people should have investment real estate in the first place. The easiest answer is a well-known acronym that addresses the key benefits for all investment real estate. Put simply, Investment Real Estate is an IDEAL investment. The IDEAL stands for:

• I – Income
• D – Depreciation
• E – Expenses
• A – Appreciation
• L – Leverage

Real estate is the IDEAL investment compared to all others. I’ll explain each benefit in depth.

The “I” in IDEAL stands for Income. (a.k.a. positive cash flow) Does it even generate income? Your investment property should be generating income from rents received each month. Of course, there will be months where you may experience a vacancy, but for the most part your investment will be producing an income. Be careful because many times beginning investors exaggerate their assumptions and don’t take into account all potential costs. The investor should know going into the purchase that the property will COST money each month (otherwise known as negative cash flow). This scenario, although not ideal, may be OK, only in specific instances that we will discuss later. It boils down to the risk tolerance and ability for the owner to fund and pay for a negative producing asset. In the boom years of real estate, prices were sky high and the rents didn’t increase proportionately with many residential real estate investment properties. Many naïve investors purchased properties with the assumption that the appreciation in prices would more than compensate for the fact that the high balance mortgage would be a significant negative impact on the funds each month. Be aware of this and do your best to forecast a positive cash flow scenario, so that you can actually realize the INCOME part of the IDEAL equation.

Often times, it may require a higher down payment (therefore lesser amount being mortgaged) so that your cash flow is acceptable each month. Ideally, you eventually pay off the mortgage so there is no question that cash flow will be coming in each month, and substantially so. This ought to be a vital component to one’s retirement plan. Do this a few times and you won’t have to worry about money later on down the road, which is the main goal as well as the reward for taking the risk in purchasing investment property in the first place.

The “D” in IDEAL Stands for Depreciation. With investment real estate, you are able to utilize its depreciation for your own tax benefit. What is depreciation anyway? It’s a non-cost accounting method to take into account the overall financial burden incurred through real estate investment. Look at this another way, when you buy a brand new car, the minute you drive off the lot, that car has depreciated in value. When it comes to your investment real estate property, the IRS allows you to deduct this amount yearly against your taxes. Please note: I am not a tax professional, so this is not meant to be a lesson in taxation policy or to be construed as tax advice.

With that said, the depreciation of a real estate investment property is determined by the overall value of the structure of the property and the length of time (recovery period based on the property type-either residential or commercial). If you have ever gotten a property tax bill, they usually break your property’s assessed value into two categories: one for the value of the land, and the other for the value of the structure. Both of these values added up equals your total “basis” for property taxation. When it comes to depreciation, you can deduct against your taxes on the original base value of the structure only; the IRS doesn’t allow you to depreciate land value (because land is typically only APPRECIATING). Just like your new car driving off the lot, it’s the structure on the property that is getting less and less valuable every year as its effective age gets older and older. And you can use this to your tax advantage.

The best example of the benefit regarding this concept is through depreciation, you can actually turn a property that creates a positive cash flow into one that shows a loss (on paper) when dealing with taxes and the IRS. And by doing so, that (paper) loss is deductible against your income for tax purposes. Therefore, it’s a great benefit for people that are specifically looking for a “tax-shelter” of sorts for their real estate investments.

For example, and without getting too technical, assume that you are able to depreciate $15,000 a year from a $500,000 residential investment property that you own. Let’s say that you are cash-flowing $1,000 a month (meaning that after all expenses, you are net-positive $1000 each month), so you have $12,000 total annual income for the year from this property’s rental income. Although you took in $12,000, you can show through your accountancy with the depreciation of the investment real estate that you actually lost $3,000 on paper, which is used against any income taxes that you may owe. From the standpoint of IRS, this property realized a loss of $3,000 after the “expense” of the $15,000 depreciation amount was taken into account. Not only are there no taxes due on that rental income, you can utilize the paper loss of $3,000 against your other regular taxable income from your day-job. Investment property at higher price points will have proportionally higher tax-shelter qualities. Investors use this to their benefit in being able to deduct as much against their taxable amount owed each year through the benefit of depreciation with their underlying real estate investment.

Although this is a vastly important benefit to owning investment real estate, the subject is not well understood. Because depreciation is a somewhat complicated tax subject, the above explanation was meant to be cursory in nature. When it comes to issues involving taxes and depreciation, make sure you have a tax professional that can advise you appropriately so you know where you stand.

The “E” in IDEAL is for Expenses – Generally, all expenses incurred relating to the property are deductible when it comes to your investment property. The cost for utilities, the cost for insurance, the mortgage, and the interest and property taxes you pay. If you use a property manager or if you’re repairing or improving the property itself, all of this is deductible. Real estate investment comes with a lot of expenses, duties, and responsibilities to ensure the investment property itself performs to its highest capability. Because of this, contemporary tax law generally allows that all of these related expenses are deductible to the benefit of the investment real estate landowner. If you were to ever take a loss, or purposefully took a loss on a business investment or investment property, that loss (expense) can carry over for multiple years against your income taxes. For some people, this is an aggressive and technical strategy. Yet it’s another potential benefit of investment real estate.

The “A” in IDEAL is for Appreciation – Appreciation means the growth of value of the underlying investment. It’s one of the main reasons that we invest in the first place, and it’s a powerful way to grow your net worth. Many homes in the city of San Francisco are several million dollars in today’s market, but back in the 1960s, the same property was worth about the cost of the car you are currently driving (probably even less!). Throughout the years, the area became more popular and the demand that ensued caused the real estate prices in the city to grow exponentially compared to where they were a few decades ago. People that were lucky enough to recognize this, or who were just in the right place at the right time and continued to live in their home have realized an investment return in the 1000′s of percent. Now that’s what appreciation is all about. What other investment can make you this kind of return without drastically increased risk? The best part about investment real estate is that someone is paying you to live in your property, paying off your mortgage, and creating an income (positive cash flow) to you each month along the way throughout your course of ownership.

The “L” in IDEAL stands for Leverage – A lot of people refer to this as “OPM” (other people’s money). This is when you are using a small amount of your money to control a much more expensive asset. You are essentially leveraging your down payment and gaining control of an asset that you would normally not be able to purchase without the loan itself. Leverage is much more acceptable in the real estate world and inherently less risky than leverage in the stock world (where this is done through means of options or buying “on Margin”). Leverage is common in real estate. Otherwise, people would only buy property when they had 100% of the cash to do so. Over a third of all purchase transactions are all-cash transactions as our recovery continues. Still, about 2/3 of all purchases are done with some level of financing, so the majority of buyers in the market enjoy the power that leverage can offer when it comes to investment real estate.

For example, if a real estate investor was to buy a house that costs $100,000 with 10% down payment, they are leveraging the remaining 90% through the use of the associated mortgage. Let’s say the local market improves by 20% over the next year, and therefore the actual property is now worth $120,000. When it comes to leverage, from the standpoint of this property, its value increased by 20%. But compared to the investor’s actual down payment (the “skin in the game”) of $10,000- this increase in property value of 20% really means the investor doubled their return on the investment actually made-also known as the “cash on cash” return. In this case, that is 200%-because the $10,000 is now responsible and entitled to a $20,000 increase in overall value and the overall potential profit.

Although leverage is considered a benefit, like everything else, there can always be too much of a good thing. In 2007, when the real estate market took a turn for the worst, many investors were over-leveraged and fared the worst. They could not weather the storm of a correcting economy. Exercising caution with every investment made will help to ensure that you can purchase, retain, pay-off debt, and grow your wealth from the investment decisions made as opposed to being at the mercy and whim of the overall market fluctuations. Surely there will be future booms and busts as the past would dictate as we continue to move forward. More planning and preparing while building net worth will help prevent getting bruised and battered by the side effects of whatever market we find ourselves in.

Many people think that investment real estate is only about cash flow and appreciation, but it’s so much more than that. As mentioned above, you can realize several benefits through each real estate investment property you purchase. The challenge is to maximize the benefits through every investment.

Furthermore, the IDEAL acronym is not just a reminder of the benefits of investment real estate; it’s also here to serve as a guide for every investment property you will consider purchasing in the future. Any property you purchase should conform to all of the letters that represent the IDEAL acronym. The underlying property should have a good reason for not fitting all the guidelines. And in almost every case, if there is an investment you are considering that doesn’t hit all the guidelines, by most accounts you should probably PASS on it!

Take for example a story of my own, regarding a property that I purchased early on in my real estate career. To this day, it’s the biggest investment mistake that I’ve made, and it’s precisely because I didn’t follow the IDEAL guidelines that you are reading and learning about now. I was naïve and my experience was not yet fully developed. The property I purchased was a vacant lot in a gated community development. The property already had an HOA (a monthly maintenance fee) because of the nice amenity facilities that were built for it, and in anticipation of would-be-built homes. There were high expectations for the future appreciation potential-but then the market turned for the worse as we headed into the great recession that lasted from 2007-2012. Can you see what parts of the IDEAL guidelines I missed on completely?

Let’s start with “I”. The vacant lot made no income! Sometimes this can be acceptable, if the deal is something that cannot be missed. But for the most part this deal was nothing special. In all honesty, I’ve considered selling the trees that are currently on the vacant lot to the local wood mill for some actual income, or putting up a camping spot ad on the local Craigslist; but unfortunately the lumber isn’t worth enough and there are better spots to camp! My expectations and desire for price appreciation blocked the rational and logical questions that needed to be asked. So, when it came to the income aspect of the IDEAL guidelines for a real estate investment, I paid no attention to it. And I paid the price for my hubris. Furthermore, this investment failed to realize the benefit of depreciation as you cannot depreciate land! So, we are zero for two so far, with the IDEAL guideline to real estate investing. All I can do is hope the land appreciates to a point where it can be sold one day. Let’s call it an expensive learning lesson. You too will have these “learning lessons”; just try to have as few of them