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What Details Should Be On a Real Estate Listing?

What Details Should Be On a Real Estate Listing?

Price and Terms of Sale:
In most situations, the pricing of a property is determined by the input of three people or groups, the appraiser, the real estate agent (if their is one), and the seller.  The appraiser is usually commissioned before a property goes on the market to determine the fair market value of the property, which typically determines the baseline for the price that the property will be sold at.  
Depending on the property, there are other forms of appraisal as well; in commercial property, there are special appraisals called income capitalization appraisals, which generally determine not only the worth of the property, but also its potential to generate income over an extended period of time.  
Multiple Listing Service: 
A multiple listing service does not necessarily mean the same as a multiple agency listing (which rarely ever happen in the real estate industry due to the potential for a conflict of interest and the encouragement of unethical, competitive behavior between multiple agents or agencies).  Multiple listing service is essentially as the name implies,  a service that either allows listings from multiple sources or takes a listing from an owner (selling their property without representation) or an agency and places it under multiple listings.  While they have always been around in some form, most commonly for apartment rentals or sales, the number of potential multiple listing services have exploded in the last ten years with the rise in prominence of the Internet in the real estate landscape.
Agency and Salesperson:

Most real estate agents or realtors, unless they specialize in high end real estate, rarely operate on their own, and can generally be found to be part of a larger organization, or real estate agency.  The simple reason for this is financial.  Most agents generally only make a few sales or purchases per year, and receive only a few thousand dollars on each sale after expenditures (not to mention taxes).  
While in a very good year this could provide enough to live on, rarely does it provide enough for an individual agent to form the infrastructure and resources necessary to sustain a business (such as an office, or an assistant) Therefore, most agents find it economically feasible to be part of a larger agency, where they share part of their commission goes with the agency for maintenance of office space and other services, not to mention, ideally, profit.  

Learn About Different Real Estate Listings

Learn About Different Real Estate Listings

There are numerous forms of real estate listings available to an individual selling their property, all of which entail differing degrees of obligation and compensation on the part of the seller and any relevant agents or brokers. Method of listing is often the most important tactic used in selling real estate, as it is equivalent to advertising a product, with the product in this case, being the property.

The two key forms of listing are always entirely dependent on the manner in which one decides to sell their property, and is usually directly determinate to what part the seller desires for the real estate agent to play in the process. The two major forms of listing, with rare variation, are the open listing and the exclusive agency listing.

Open listings generally occur in a “for sale by owner” situation (FSBO), where an individual selling their property has decided to forgo the inclusion of a real estate agent, and opts instead  It is entirely legal for an individual to act as an estate agent for their own real estate (the law in most states mandates a realtor’s license only when someone intends to represent another seller’s property.) While these situations are comparatively rare, they can be beneficial to individuals who want to sell their home and retain as much of the proceeds as possible-since by foregoing the use of a real estate agent the seller can save what is typically a five percent commission on the sale.

However, this means that the seller is ultimately responsible for all aspects of the sale, including negotiation of the sale price, performing background checks on potential buyers, and determining whether they have the means to actually purchase the property, and then seeing to it that all forms of transaction details, such as the appraisal and the inspection are completed.  Also, it is often likely that the seller, especially in negotiating or attempting to close a sale, will often still have to deal with an agent on the buyer’s side. Also, unless the buyer is also self-represented, the seller will still have to part with at least a partial commission to the buyer’s agent, though it would in theory, be only half of what it would be if the individual was selling through their own agent.

The primary tool of the FSBO  Open listings are also generally disliked by full service real estate agencies, and there have been anecdotal instances where agents will refuse to show open listing homes to their clients, for a variety of reasons, including professional loyalty, and the perception that an “amateur” seller will be difficult to agree with.

Exclusive agency listings occur when a seller opts to use a real estate agent to sell their property. 

Multiple agency listings almost never happen, and are typically forbidden under real estate law as it restricts the potential for unethical behavior on agents placed in direct competition with one another. Though an exclusive agency listing provides an agent/agency with exclusive right to sell, the agreements are usually not difficult to break if the seller feels will be better represented elsewhere (or instead prefers to go with an open listing).  Usually real estate agents simply want to be in a mutually beneficial relationship, often for the very practical reason of protecting their reputation and preventing any charges of ethical misconduct on their part.

Deciding which listing is the correct one is important decision for a seller.  If the seller wants to make sure that the sale is executed exactly to their needs and specifications, wants to keep more of the overall proceeds of a sale, and does not mind the extra work and effort, that they may find “for sale by owner” and open listings right for them.  In either case, the final decision in nearly all situations, remains with the seller. If you need legal advice and assistance, contact real estate lawyers.

Understanding the Price and Terms of Sale

Understanding the Price and Terms of Sale

In most situations, the pricing of a property is determined by the input of three people or groups:the appraiser, the real estate agent (if their is one), and the seller. The appraiser is usually commissioned before a property goes on the market to determine the fair market value of the property. Such a value, typically determines the baseline for the price that the property will be sold at.  
Depending on the property, there are other forms of appraisal as well; in commercial property, there are special appraisals called income capitalization appraisals, which generally determine not only the worth of the property, but also its potential to generate income over an extended period of time.
The appraisal and market value of the property provides data that is then used by the seller, usually under the advice of an agent, to determine how to price the property.  In some instances, an appraisal can indicate that there are aspects of the property (such a building condition or repair requirements) that are effecting the value of the property, at which point in can be the decision of the seller to decide to forgo extra expense to restore or improve the asset. If they do make improvements, they may have the property reappraised in hopes of obtaining a better figure.  
Usually a seller and their agent will decide to sell a property well above its fair market value, in order to obtain the maximum profit possible, and allow for some leeway if the asking price needs to be adjusted (many homes rarely go for their asking price, and are nearly always sell for less).  Most agents recommend to sellers they represent that they generally have a “real” price and an asking price, with the real price being the one they will accept and the asking price (always much higher), being the one they would desire. 
The asking price is always negotiable, but the real price is usually the one that should not be undermined.  Generally speaking, both prices are above market value, as market value is viewed as the point where one can sell a property at a profit. The perception is that selling below market value is selling at a loss.  
The property price is generally negotiated by the individuals representing the buyer or seller (either agents for each party or the buyer or seller themselves). Once a price is agreed, the two parties must still negotiate the terms of sale. While there are particularities that can vary from agreement to agreement, the general points that are included with the terms of sale for any property do not waver. 
The seller forgoes all future rights to and use of  the property, promises that the property will be in the agreed upon condition at the time of transfer, and guarantees that individual selling the property has the full right to do so. There are other particulars that can be worked into terms of sale, especially when a buyer and seller agree to improvements in the property that must be completed before a property can be transferred. 
The final terms of sale always take the form of a legally binding agreement, generally processed by attorneys, with the property due to be transferred on pre-agreed closing date.  At that time, all aspects of the sale are to be completed, and all funds used in the purchase of the property are to transferred to the seller, at which point the deed and title of the property are transferred to the new owner.

How An Agent Makes Money from Real Estate Commission

How An Agent Makes Money from Real Estate Commission

A seller is obligated to provide a commission to any individual agent involved in the transaction of their property-whether they are the agent assigned to selling the property, or the agent representing the buyer of the property. When working under the assumption that most commissions are generally between 3-5 percent of the purchase price of the property, a seller should always work consider that they could part with up to 10 percent of the proceeds of their sale in commission to agents (provided both parties are using agents).  
While ten percent of property’s price can appear to be an exorbitant amount (if one works under the assumption that most properties sell for hundreds of thousands of dollars), the fact is that a commission usually serves as an agent’s return on what has always been a somewhat risky proposition. 
When an agent or agency agrees to represent a seller and their property, the only thing they are guaranteed is the exclusive right to sell the property. They then undertake, at their own expense, the advertising and marketing of the property-not to mention expend the time on the process without any guarantee of compensation until the property is sold.  This means that the agent or agency undertakes the agreement with the hope that the property will sell, because if it does not, and the seller ultimately opts to got with another agent, the original agent foregos both time and money. 
Most individual agents rarely take on more than a few properties at a time; the process of selling is proportional to the demand of the property in question. The typical process is usually tedious,  for an agent, often escorts their clients, to various properties as they make their decision on which piece of real estate they would like to purchase. Therefore, an agency commission on either end, is usually the return on months, even years of an agent’s time, effort, and resources.  
There is no true industry standard regarding commissions; they are generally considered negotiable. However, as stated, an exclusive right to sell always represents a risk on the part of the agent or agency, and therefore if one does try to negotiate a commission down, one must be sure that the property being sold or being purchased is ultimately worth the agent’s consideration.  
Therefore, an agent or agency will usually only entertain a decreased commission if the potential return on a property can be great (in other words, if it is going for a high enough price that even a reduced commission can yield a substantial return. If the demand is strong enough that they can turn it over quickly (thus they need to spend a minimum of time or resources to its sale), or in the case of representing a buyer, they are of the understanding that the buyer would like to spend enough that there can again be a potentially higher return. 
Unless the property being sold or purchased fits these or other very specialized circumstances, it is rarely advised by industry professionals to try to negotiate a commission down.