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Renting

Flat Fee in vermontbiz.com

From yesterday's (04/13/12) vermontbiz.com

According to analysis of the MLS (Multiple Listing Service), real estate sales in Vermont increased by slightly over 10 percent in the first quarter of 2012. Compared to last year, MLS data for 2012 shows 955 sales while the first quarter of 2011 saw total sales of 867. This increase can be attributed to increased buyer confidence that the housing market is starting to return to equilibrium after 2008s Great Recession.

While we still arent seeing the same level of confidence that we did in 2006 or 2007, it is greater now than at any point during the prior four years, said Rob Foley, owner of Flat Fee Real Estate in Burlington. MLS data shows that Chittenden County experienced an increase from 224 sales in the first quarter of 2011 to 243 sales in the first quarter of 2012, and the median home price increased by $1,000.

While experts warn that the national housing market could suffer another blow from the shadow market of foreclosures (proceedings that banks have been delaying until the robo-signing litigation is completed), Foley believes that the Vermont market will be largely unaffected, and will continue its recovery. The Vermont market is more stable, and in better health, than national markets. Our state sees less speculative housing activity, lending practices are more conservative, and inventory tends to track carefully to primary home ownership demand, all of which lead me to expect a continued recovery of Vermont home prices.

Renting to Own

Flat Fee's Rob Foley quoted in Pittsburgh Post Gazette story regarding "lease to own".

Comments

  1. Oscar on

    People buy life insurance, usllauy in trust so it doesn't also get included in the estate, in order to pay estate taxes. That's about 97% of what you need to know. Outside of that you just need to look around for the specific information you're looking for. Was this answer helpful?

    Benefits and Pitfalls of "Rent to Own"

    Leasing to own or more commonly known as "rent to own" is in essence the "layaway" of real estate. However, unlike setting aside consumer goods, renting real estate to eventually own presents a number of practical and legal challenges not found with consumer goods.

    In the rent to own situation, the buyer and seller typically enter into a purchase and sale contract that stipulates the buyer shall be entitled to pre-closing occupancy of the home. One major difference between the rent to own contract and your standard purchase and sale contract is that the seller will likely require a much larger good faith deposit from the buyer. The reason for a larger deposit is that the seller is being asked to bear greater risk than in the normal context because of the longer duration between the execution of the contract and the closing.

    In addition to a purchase and sale agreement between the parties, the buyer and seller typically enter into a lease agreement. The creation of the landlord-tenant relationship between buyer and seller is the second major difference between the rent to own contract and the standard purchase and sale contract. It is this difference that creates the greatest practical and legal challenges.

    From a practical perspective, the buyer essentially gets to take a long term "test drive" of the home that they are supposed to purchase. The buyer may discover after living in the home for a time that they really don't care for the home or there are particular issues that they just rather not address as the eventual owners. Unlike most buyers that may suffer slight buyer remorse, a buyer that rents prior to owning can suffer from tremendous buyer remorse. If this happens then it is likely that both the landlord-tenant relationship will deteriorate and so to will the buyer-seller relationship between the parties.

    From a legal perspective, the rent to own situation can lead to unusual situations not found in your normal purchase and sale. For instance, if the buyer and seller in a non-rent to own situation disagree, the two parties can simply part ways. In the rent to own, this is not possible. If a dispute arises in the rent to own situation, given the legal protections of tenants under most state laws, then the seller will need to begin an eviction to terminate their relationship.

    While there are negative implications in the rent to own scenario, there are of course benefits. This type of situation is particularly beneficial where the seller has already moved because they get a party to occupy the property and cover the carrying costs while knowing that in most circumstances they will eventually be selling the property to their tenant.

     

    If you're still curious about rent-to-own, or have any other questions for Flat Fee or Rob Foley, contact us here.

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    Exploring the Radon Issue

    Earlier this week one of the principal real estate brokers of the largest firm in Burlington suggested that my company's Radon Addendum "incorrectly states that 2 pCi/L is the US EPA recommended acceptable level for radon. The actual level recommended by the US EPA is 4.0 pCi/L."

    I would understand if a junior agent made such a comment but for a principal of the largest local firm to make such a statement stunned me. Here is language directly from the EPA's website: "EPA recommends that Americans consider fixing their homes when the radon level is between 2 pCi/L and 4 pCi/L."

    Clearly the EPA does not think that 4pCi/L is an acceptable radon level and our Radon Addendum correctly states the EPA's position.

    I urge all real estate professionals to educate themselves so that they know of what they speak. To learn more about EPA's radon regulations, click here.

    If you still have questions about radon or any other housing regulations, contact us here.

    Comments

    1. Concerned on

      From the EPA Radon Site: EPA Recommends Test your home for radon — it's easy and inexpensive. Fix your home if your radon level is 4 picocuries per liter, or pCi/L, or higher. Radon levels less than 4 pCi/L still pose a risk, and in many cases may be reduced.
      • Jacqueline on

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        • John on

          Is smoking that bad for you? Is there a "science-settled" link beewten smoking and cancer?I have been a smoker for about 25 years. No cancer. My pulse and BP are the same as they were when I was a teenager and have never varied in my life.My grandfather was a heavy smoker all of his life. He died after his 90th birthday ... not cancer.I'm not saying that smoking doesn't cause cancer. I'm just not convinced that it does either. Seriously - when did any government agency present anything other than their declaration that they have determined an industry (a big one) was bad for you and should be heavily taxed and regulated?

          The Zillow Effect

          While the internet has made the process of buying and selling homes much more efficient, there have been a few drawbacks associated with the ability of buyers and sellers to easily access volumes of property information online.

          One notable drawback has been what I refer to as the "Zillow Effect".

          Zillow is a popular website that allows buyers and sellers to look up listings of homes and then determine an estimate of the home's value. Zillow, like other desktop appraisal software, bases its values on recent sales from databases of public information.

          Zillow is very good at giving broad general estimates of value. However, Zillow does a poor job of providing a detailed analysis of value based upon a particular home.

          Zillow does not have the ability to judge the interior quality of a home. It also has no way of knowing whether the home has large items of deferred maintenance or needs immediate repairs. As such, Zillow's estimate of value can be off by more than 10% in many cases.

          The problem with sites like Zillow is that sellers have started relying upon the values provided as the absolute accurate fair market value for their home. In many cases, the estimate provided by Zillow creates unrealistic expectations for sellers. This unrealistic expectation of value and sales price is the "Zillow Effect".

          Sellers need to understand that Zillow is a great tool for getting a general sense of the market but a poor tool for determining exact value for a home. Zillow is simply processing readily available public data of sales. It does not process the quality of individual homes. As a result, sellers need to take Zillow's estimates with a grain of salt and need to understand the other market factors that drive prices.

          At Flat Fee we do things different. We send real people to our properties and use our real estate expert's opinions toappraiseproperties. If you're tired of automated everything, try a company that is, too. Contact us or visit our website to learn more about Flat Fee and how we do business.

          Comments

          1. Tba on

            Great little article, but it also goes both ways. So much of a house or property are the intangables. For example if you border govt. land, a huge private estate, or a park where no one can build and it provides shelter and other things for you, if your house is well situated in regards to other neighboring houses, the view, valley or hill, weather patterns, etc One thing that is obvious is home structure. Build it like a football team, with a strong offensive line ie foundation. If you have that and of course a sick location, forget the NYSE, RE is the way to go IMHO. Good luck.
            • Sao Truc on

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              Monopolies and Lobbyists

              Have you ever wondered how the oil industry has been able to maintain its monopoly of selling gasoline in the United States when advances in technology have led to cheaper and more efficient alternatives? Not only are the alternatives cheaper and more efficient, the overwhelming majority of Americans support these alternatives because they have grown sick of being forced to use only one form of fuel for decade after decade.

              Despite overwhelming support for cheaper and more efficient alternatives, oil companies have been making greater profits than ever before thanks in large part to the rises in gasoline prices. You would have thought that with cheaper and more efficient alternatives available that the prices would have come down rather than go up. In my opinion only one thing can explain this continued dominance, it is efforts by oil industry lobbyists to intimidate the competition and discredit their alternative models.

              It is unfortunate in this Country that there are business groups that still support monopolies such as the one that the oil industry continues to maintain. Instead of lobbying for policies that protect their monopoly, the oil lobbyists should explain to the American people why oil is better than the alternative models. Unfortunately, the oil lobbyists cannot do that because they know the alternatives are better and that the public desires the alternative fuels more than oil.

              Because they cannot convince the public that oil is better, they instead focus on efforts to discredit the alternative forms of energy. For instance, for years the technology has been available to have hydrogen fueled cars. Despite public demand, efforts have been slow to develop and provide this technology to the public in part because the oil industry has engaged in a campaign to discredit hydrogen fuel. The oil industry has created the perception that hydrogen fuel is volatile and thus unsafe for the public. In essence, the oil industry has portrayed itself as the proven historic safer model.

              I believe that any group that must rely upon lobbyists to discredit the competition should be ashamed of themselves. Instilling fear and discrediting cheaper and more efficient models offends the principles of our American economic model. America has progressed thanks to healthy business competition and if groups are allowed to stifle that competition, it will harm our economy and our ability to improve as a Country.

              At Flat Fee, we think outside the typical realty box. We are about our community and the environment in which we live. If you want a sociallyconsciousrealtor, contact Flat Fee.

              "My Way or The Highway"

              It always amazes me when someone says to me, "well, that is not the way we do it here." The implication, of course, is that their way is correct and my way is incorrect.

              While I can respect a person who believes their method is the correct way, people who say, "well, that is not the way we do it here" typically do not respect any other point of view or methodology for doing something.They are basically saying, "it is my way or the highway."

              If people never challenged conventional thinking or methodologies then there would never be any progress.It is important to always look to see if there are more efficient or effective methods for doing something.That is how progress occurs.

              The real estate industry, more than most, seems to be filled with individuals who take the "my way or the highway approach.As a result, the industry seems to cater less to what the public wants and more to what they think is best.

              If the "my way or the highway folks put aside their ego for a moment and listened to the public they would hear that some of the conventional thinking is outdated and that the public wants better methodologies implemented.Here are some examples:

              1. Compensation - The public is tired of the 6% conventional compensation model. They think that real estate agents are overcompensated for the services provided. They believe that advances in technology should have led to a reduction in the conventional rate.The public wants the industry to develop a more equitable compensation model that rewards the services provided based upon the time spent by the agent providing advice, not based upon the ultimate sales price of the home.

              2. Scheduling Appointments - Sellers do not want to receive calls from other real estate agents regarding scheduling showings of their homes. Sellers believe that one of the duties of their agent is to be an intermediary for them and to coordinate the scheduling of all showings.They believe agents who do not provide scheduling coordination are lazy.Despite this perception, firms continue utilizing this methodology.

              3. Assisted Showings - Buyers that hire their own agent for buyer representation do not want seller agents present during a showing.When you speak to buyers after a showing where the seller's agent was present, an overwhelming majority say that the seller's agent made them feel uncomfortable.In thebuyers opinion, they hired their own agent so that they did not have to deal with the seller's agent. Again, the public believes that one of the roles of an agent is to be a true intermediary alleviating the need for them to work directly with the seller or the seller's agent.

              4. Electronic Lockboxes - The public wants agents to utilize the most recent technology to ensure that access to their home is monitored to the best of the agent's ability.Many agents currently utilize electronic lockboxes which can only be opened by digitally encrypted keys.The keys and boxes create a permanent digital record so that the owner knows who accessed their home and when.Despite this technology being available, many agents in Vermont do not utilize it. In fact, because so many showings are done after regular business hours, many agents will leave the keys in an envelope at their office dropbox or at the property itself without ever seeing who is taking the keys.

              5. Closing Coordinators - The public expects that if they are purchasing a property, their agent will be the primary contact throughout and that one of the duties of their agent will be to coordinate the closing.Instead of listening to the public, most firms have a "closing coordinator."These coordinators are typically salaried employees.In some cases they are paid per closing.In either event, if the firm did not utilize a third party closing coordinator then presumably they could charge the client less.Thus, not only does the public not want to have to communicate with a third party, but the methodology is inefficient from an economic standpoint as well.

              6. Print Ads of Listings - The public does not want to see print ads of listings anymore. In our environmentally conscious society and given the fact that all buyers are looking online these days, the public views print ads of listings as a waste of paper and resources. The public would much prefer that firms utilize the internet and spend resources there rather than waste paper.

              7. Pictures on Business Cards - Only would an industry run by "my way or the highway folks still believe that a picture on a business card is a good idea.I cannot think of any other industry where people still include a picture of themselves on their card.I don't think any business card designer today would suggest putting a picture on your card primarily because the public does not want to see pictures on business cards.

              8. Luxury Cars and Vanity Plates - More than any other industry, in real estate there is a perceived need to drive the most expensive car possible.In many cases, agents cannot afford to drive a luxury car but do so anyway.The theory is that the public will equate an agent's track record for successful transactions with the type of car being driven.There also seems to be a theory that a vanity plate on the luxury car adds to that perception.In this day and age, the public does not want their agent to drive a car they cannot afford.The public wants agents to be themselves and drive the car that is right for them.The public is very good at picking up on facades and when they do the person putting up the facade loses credibility.

              9.Buying Listings - There is a practice in the real estate industry known as "buying listings."This is the practice where an agent will tell a seller that their home is worth more than it is simply to secure the listing.The agent will overprice the home initially to get the listing and then when it does not sell, the agent convinces the seller to reduce the price.While this practice is unethical, it happens more than anyone likes to admit.The problem with the practice is that it not only does a disservice to the particular seller, it does a disservice to the public.It hampers the ability of the public to get a sense of the true market value of properties.

              10.Commission Outside the Transaction - The real estate industry is peculiar in many ways, but one in particular is that its participants view their compensation as somehow distinct and separate from the transaction in which they participate.For instance, say that a buyer offers a seller $196,000 for their home. And let's say the seller won't sell for less than $198,000.Assume for a moment the seller's agent is the only agent involved in the transaction and stands to make a 6% commission should the parties come to an agreement and the sale occurs.Instead of reducing their commission from $11,760 to $9,760, the agent will risk losing the sale by telling the buyer they need to increase their offer to $198,000.If the buyer refuses, the agent will let the deal die rather than giving up $2,000.From the public's perspective the commission is integral to the transaction.It is the largest transactional fee to either side and it has the potential to bring deals together.

              At Flat Fee, we do things differently. We work with you to meet your real estate needs. We want what's best for you. We're here to change the way people think of real estate. If you're ready for a forward thinking real estate company, contact us.

              Why Do Agents Double Dip?

              While many of you may think that this article refers to the classic Seinfeld episode where George Costanza dips a chip, bites it and dips again, it is not. It is however about something equally ridiculous: real estate agents double charging their clients.

              The typical commission in a real estate transaction in Vermont is 6% of the sales price (I think it is well documented in this blog and on our website www.flatfeevt.com that this amount is excessive so I will refrain from commenting on that aspect in this blog). Typically the listing agent will split the commission equally between themselves and the buyer's agent. Thus, in a typical transaction the seller pays a 3% commission to their agent and a 3% commission to the buyer's agent.

              The ridiculousness comes when the buyer is unrepresented. Instead of doing the decent thing and reducing the overall commission to 3%, the seller's agent will insist upon keeping both their 3% commission as well as the buyer's 3% commission. Thus, the agent gets paid twice for a total commission of 6%.

              How can these agents possibly justify this "double dip"?

              Some agents will attempt to justify this "double dip" by suggesting that the transaction will require twice as much time. This is absurd. The transaction may require a couple of extra minutes or possibly an hour, but certainly nowhere near double the amount of time. The amount of work certainly does not justify insisting upon a double payment.

              At Flat Fee Real Estate we learned from Seinfeld and do not double dip. We believe other firms should follow. To learn more about how Flat Fee works, click here. Still have questions? Contact us any time of day.

              Real Estate Agent Pay - Chittenden County

              The average Vermont family make $51,200 per year. What do you think real estate agents make?

              According to data from the MLS and based upon the traditional 6% commission model charged by other firms, the top 5 agents in Chittenden County so far this year (January to July 22nd) have made between $292,000 and $587,000. Thus, they are on pace to make between $600,000 and $1,000,000 this year alone.

              It is remarkable during the worst recession in history that real estate agents in a small community like Chittenden County can make in excess of $500,000 per year, much less $1,000,000 per year, and continue to get away with it.

              We believe the public should demand fairer compensation models from real estate agents. We believe that our flat fee model represents a fairer compensation model and keeps our compensation much more in line with average Vermont incomes.

              Thank you.

              Comments

              1. rfoley on

                Thank you for your comment. Our model is doing quite well. Thank you for asking. Our sales volume has been growing by approximately 100% annually since our inception. In regards to skills and knowledge base, I used to be a real estate lawyer. I also have bought and sold for myself over 20 times. I now own over 60 units with approximately 180 tenants. Additionally, I own a property management company that manages over an additional 300 units. In regards to clients suffering, you can read the testimonials on our website. Our clients do not suffer. They are grateful that someone has finally offered an alternative to the overcharging model of 6%. On average our clients save between $5,000 and $12,000. In regards to marketing, we probably spent more per client than any firm in Vermont. I assume you are not in Vermont otherwise you would know that we run tv ads and our one of the primary sponsors at the largest athletic events in the State. However, I digress to the real point. Rather than attacking our model, I think agents that charge 6% need to begin justifying their rates. We can justify ours. How do you justify charging 6%? (3% to the seller's agent and 3% to the buyer's agent). Most agents try to cry poverty when asked to justify their rates. They will tell sellers that "I only make 1% after I pay my firm and they pay their national franchise fees". If that is the case then the overhead in your model is too high. Just like any business with high overhead, it is doomed to fail. You need to reduce your overhead, as we have, so that you can reduce your rates. We are a full service company. We simply charge a fair rate and that is why the market has embraced the model so quickly and wholeheartedly. We look forward to helping more and more people realize that they do not need to pay 6% to get high quality real estate services. Thank you again for your comment.
                • Derek Gilbert on

                  To all the seller's reading this Realtors typically make 3% of a sale. 1% goes to the broker. 1% goes to taxes, fee's, admin, & marketing, 1% actually goes to the broker. If the genius that posted this blog is trying to get your business how much do they spend on selling your home. Like any successful business there is always a 95/5 rule. 5% of the agents perform 95% of the business because they are good at what they do. Ask this company to show you their books and business volume. It's probably crap. Good luck trying to discount your service because you don't have the skill to do it any other way. In the long run the client suffers. There is a reason why the founding CEO of helpusell sold his house with a full service company. The model is a failure.
                  • ebay misspelled on

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