Thursday, December 08, 2005

Understanding Agency Relationships Between Real Estate Clients and Customers

You'd probably wonder what agency relationships might have to do with you, regarding buying or selling real estate. Most people are unaware of the importance of these types of relationships, unless they do a lot of buying and selling of real estate and have become educated in the importance of knowing what side your agent is on. Yours or theirs?

In a traditional real estate setting here in Michigan (especially up here in the more northern areas), most agents are representing the seller and NOT the buyer. That's right! When you walk into a traditional real estate office, in most cases that agent is working for the seller, even if the house is listed by another real estate company.

There have been many changes over the course of the last several years which have often made agency relationships even more confusing, but in most respects it has been an improvement, causing a change for the better. Of course, in my opinion, there is still room for improvement and clarification on this subject. Even many real estate agents are confused about this issue. I see it time and time again when talking with other agents in classes that I've attended. It's amazing how often this subject comes up in real estate classes.

Let me take a moment to explain of differences in agency relationships and how they may affect you in a real estate transaction.

In a traditional setting, an agent represents the seller or is a sub agent for the seller. In this setting, when a home is listed by a real estate company, that company automatically represents that seller, because they have a signed exclusive right to sell contract with that party. That company and it's agents have the fiduciary responsibility to represent the best interests of that seller. However, a sub agent to a seller is an agent who is representing a seller that has their real estate listed by another real estate company. These agents have the same fiduciary responsibility to a seller, that the listing company does.

When a buyer is working with a sellers agent, it is important to keep personal information that they'd like to keep confidential to themselves. For instance, maybe a buyer wouldn't want to share the total amount they are approved for at the bank, or what their top line price is for a home they are interested in purchasing. If they disclose this information to a "Sellers Agent" that agent has the fiduciary responsibility to share that type of information with that seller. A sellers agent is limited to what services they can provide to a buyer.

So, how does a buyer protect themselves? Hire a Buyers Agent of course!

This is still a fairly new practice in the Northern Mid-Michigan areas and to some "Old School" real estate companies, not fully understood because of lack of education or the need to stick with "the old way of doing things".

A buyers agent has the fiduciary responsibility to represent the buyer in a real estate transaction. A buyer will then enter into a contract with that Buyers Agent. To make is better understood, it almost like listing a person, instead of a house. The buyer agrees that they will work with that buyers agent only, as outlined in their contract agreement. This agreement can last from a few days to several months or years, depending on what the buyer and agent agree on. The agent and client will also agree on the geographic areas that this agreement covers. For instance, an agent in Gladwin many not want to represent the buyer in a transaction in Detroit. So it is wise to outline these areas in the contract. (For example: the buyer and agent agree that the contract only pertains to Gladwin and Clare Counties). That way, a buyer could do other real estate transactions through other agencies in parts of the state that are not mentioned in the contract. This MUST be clear in the contract unless a buyer wants their agent to represent them for the entire state of Michigan.

The advantages of using a buyers agent are great.

Services that are provided to a Buyer-Client are as follows:

Pays full attention to the Buyer's Needs.
Tell the buyer all that is learned about the seller.
Focuses on expanding the range of choices to satisfy the buyer's needs.
Find the best property for the client.
Promote the buyer's search.
First opportunity to view new listings.
All properties are available and viewable, and the sales price is negotiable.
Give advice with FACTS. Educate the buyer.
Compare competing properties.
Negotiate on behalf of the buyer.
Strengthen the buyer-client's negotiating position.
Share all known information about the seller.
Provide price counseling for the buyer-client.
Negotiate approved purchase agreement to safeguard buyer-clients.
Suggest financing alternatives that may be to the buyer's best interest.
Continue services to the buyer-client during negotiations.
Attempt to solve problems to the buyer-client's satisfaction.

Confused yet? There's more!

Now, just when you thought you were understanding things a little better, we throw Designated Agency into the mix! This is also fairly new for the entire state of Michigan. A few offices in this area currently practice this type of agency, but most stick with the more traditional Sellers and Buyers agency relationships.

A Designated Agent is the party selected to represent a principle/client in a designated agency office. Designated agency has been legislatively created in many states, allowing the management of a brokerage to establish a office policy, whereby the managing broker appoints or designates a licencee associated with that brokerage to act as an exclusive agent of a principle/client, buyer or seller. No other licencee in the brokerage has an agency relationship to represent that principle/client.

Ok... so what the heck does that mean? Basically, an office will choose to be a designated agency or traditional agency office. They can't do both, (meaning that they can't use traditional agency mixed with designated within a brokerage). When a agent is assigned to a buyer or a seller client, that party's information remains confidential between that agent, the broker and that client only. Other agents within that brokerage will not have access to the clients information, nor will they be representing that client in any way.

Another way to clarify that is, in a traditional office, the client is represented by the entire brokerage, weather they are a buyer or a seller. In a designated office, the client is only represented by the assigned agent and the broker.

I know! This even leaves some real estate agent's heads spinning! It can be confusing. The best way to find out how you will be represented, is to ask the agent you are going to be working with and have them define their office policies regarding agency relationships.

Written by - Ivie Baker (Kehoe Realty Inc.)

Wednesday, October 26, 2005

Buyers - Why should you use a buyers agent?

What is an Accredited Buyers Representative?
The Accredited Buyer Representative (ABR®) designation is the benchmark of excellence in buyer representation.

What is the difference between a Buyers Agent verses an Accredited Buyers Representative?
Any licenced real estate agent can represent a buyer, with the permission of his/her office Broker. However, if they have not taken the special classes on Buyers Agency, they may no know how to represent the buyer in the best way possible. An Accredited Buyers Rep has gone through special training to learn how to better represent the needs of a buyer to benefit the buyers best interests. The buyer's representative works for, and owes fiduciary responsibilities to, the buyer and has buyer's best interests in mind throughout the entire real estate process.

To find out more about Accredited Buyers Agency, visit

Why should you use an Accredited Buyers Representative?
Unless you have a contract with the real estate agent to represent your best interests, they are automatically
working as a sub-agent for the seller. That means that the agent is negotiating for the benefit of the seller and, not YOU, the Buyer. Any confidential information that you share with that agent, may be passed onto the buyer. In turn, this my hurt your chances in getting the best deal on a purchase.

If you hire a Buyers Agent (preferably an Accredited Buyers Rep), she/he owes a fiduciary responsibilty to YOU, the Buyer. Your Buyers Agent will be negotiating for your benefit and not the seller's. Confidenital information cannot be passed onto the seller by the Buyers Agent.

Monday, October 10, 2005

Real Estate Rentals: A Passive Investment Technique

Real estate can be a great way to make a turn-key investment in property, but you need to go in with your eyes open. Otherwise, you could end up losing your nest egg.

To invest in real estate, you need to have a rainy day fund. Things happen - you're the landlord now, and you'll have to pay if something goes wrong. If you need to fix the walls, the plumbing, or pay for flea control, you'll want to have some money set aside. If you're handy, you can cut these costs down, but you can't eliminate them entirely.

You also need to make sure you're not paying too much. Don't buy in a super-expensive area - go for something in an "up and coming" place where you can get a good deal and watch property values rise in the future. If you get locked into a real estate bubble, you may not make your investment back. You need a place where your rental income will cover the mortgage with a cushion for emergencies.

Also, make sure to trust the company that is handling the property for you. Property management can be a great deal - it saves you from all of the hassle. But don't just go with any random, fly by night company. Call reputable realtors and ask their opinion about companies in your area. They can probably give you a good referral, and it'll be worth your time if you can find someone who will manage it well - after all, you're dependant on them to make sure your property is filled with tenants.

About the Author
Teve Torbes is an expert owner of a
flea control site, who knows a whole lot about flea bites. He has also created a valuable inflatable air mattress site.

Sunday, October 02, 2005

Sugar Springs Web Site

A new slide show was just added to
Find out what Sugar Springs has to offer you!

A private community in the heart of Michigan. This planned community covers approximately 4000prime acres in the northern part of Gladwin County. This beautiful and active community boasts some of the nicest homes and lakes in the area. Lake Lancer and Lake Lancelot cover approximately 1000 acres and have 15 private beach clubs for association members only.Sugar Springs is an active community with a host of activities and recreational events occuring thoughout the year. You'll find everything from golf events, Ice Cream Social, huge 4th of July Fire Works Display, Arts & Crafts Show, Pig Roast and many other activities. You'll never be bored in Sugar Springs unless you want to be!

Just some of the ammenities: * 18-Hole Championship Golf Course * Fully Staffed Pro-Shop * Club House & Lounge * Two Lakes (Lake Lancer & Lake Lancelot) * Fifteen Beach Clubs * Activity Building * Olympic Size Indoor Swimming Pool * Tennis and Basketball Courts * Cross Country Skiing Trails * Sledding Hills * Campground & Chalet * Grass Air Strip

Thursday, September 01, 2005

Waterfront Sales - Gladwin County - Jan 1 to Sept 1, 2005

Waterfront sales seem to be the big thing this year. Out of the 266 homes sold in Gladwin County since January 1, 2005 to Sept 1, 2005, 85 of these homes were waterfront. 61 of these homes were located on all sports lakes (according to the MLS stats). 13 of these homes were listed under Riverfront, (with some of these homes on riverfront, boatable to lakes).

Out of the more popular lakes in Gladwin County, here are the numbers for these lakes:

Secord Lake: 17 Sales ($100,000 to $291,000)
Wixom Lake: 27 Sales ($80,000 to $395,000)
Smallwood: 7 Sales ($57,000 to $168,500)
Wiggins Lake: 8 Sales ($72,000 to $235,000)
Lake Lancer: 4 Sales ($275,000 to $430,000)
Lake Lancelot: 3 Sales ($225,000 to $360,000)
Indian Lake: 1 Sale ($137,500)
Ross Lake: 1 Sales ($60,000)

Elk Lake: 0 Sales
Pratt Lake: 0 Sales

Currently, as of September 1, 2005 there are 225 waterfront homes for sale. 175 of these homes are on all sports lakes with prices ranges from $69,900 to $639,000.

Fall is just around the corner. It's a buyer's market right now and a great time to look for a waterfront home or cottage to buy, before winter sets in.

Written by: Ivie K. Baker

Friday, June 03, 2005

Clare & Gladwin County Acreage Sales

Clare and Gladwin county acreage sales are off to a great start! Since January 1, 2005 there have been a total of 40 sales of 5 plus acre parcels. Fifteen sales were parcels of 5 to 9.6 acres, eight sales were 10 acre parcels, three were 13 to 18 acres, five sales were 24 to 40 acres, seven sales were 41 to 80 acres and one sale was an 130 acre parcel.

Sales are looking up for vacant land through 2005. The heaviest sales are expected towards mid or late summer, all the way into early November.

Sunday, May 15, 2005

Real estate trends for Spring and Summer of 2005

I don't know if all real estate agents in the Gladwin County area are experiencing the same trends as I am this year, but I've been seeing a trend towards more buyers purchasing vacant land in 2005. I've notice that approximately 2/3 of my sales from January 1st to May 15th, 2005, have been vacant acreage or waterfront lots.

I'm finding that most of the buyers are individuals or families from the down state area, looking to build in the future or invest in some hunting land. As for local buyers, it seems that sales for year round homes have been starting out slow, despite the continuing low mortgage interest rates.

Things are still looking up for waterfront homes and cottage sales, this year. I've had many inquiries, requesting information on waterfronts this past winter and into this spring. I've had several buyers starting their searches while the lakes were still frozen this year. Pending the unusual weather, I'm expecting a busy spring and summer once the weather breaks.

~ Ivie Baker

Wednesday, January 19, 2005

Your Debt Ratio

What is your debt to income ratio?

Every time you apply for a credit or a loan, the lender must determine your debt to income ratio. This measures what percentage of your gross monthly income (everything before taxes are deducted) that goes towards paying off your debts. The debt to income ratio formula varies slightly according to the type of creditor or lending institution that you're dealing with. Your credit card company for example might accept a higher ratio as long as you make all of your payments on time.

Mortgages on the other hand are large, long term debts. In this case, most lenders will want to make sure that you are at the lower end of their debt to income ratio threshold. So, how does one go about calculating this important number? The easiest way is to divide the total of your monthly payments by your gross monthly income. For example, if your total debt payments are $500 with a $2000 per month paycheck, your debt to income ratio is 500/2000 = .25 or 25%.

So what does that number mean?

In general, the lower your debt to income ratio, the better. It shows that you have fewer obligations and are more likely to keep up all of your existing payments. A generally recommended ratio is 15%. All of your car loans, credit card payments, student loans and more should stay at 15% or less. Mortgage companies are looking for customers whose housing costs will probably be around 30% of their household income. This does not mean that you will be turned down for a home loan if you are at 40% or even 50%.

Clean credit beats DIR?

If you are very young and upwardly mobile, or live in New York City for example, it is possible that your debt to income ratio will always be above the recommended threshold. Most mortgage financing institutions will work with you to provide an appropriate loan product or an interest rate that will qualify you for a home loan. The cleaner your credit, they more flexible mortgage lenders will be when considering your entire financial profile. A large debt load with a consistent payment history can be better than a small debt to income ratio with an imperfect or poor credit history.

Do your homework and keep an eye on spending habits. In addition, use a good online mortgage calculator to ensure that you won't trade your future home ownership dreams for impulse purchases and credit card debt.