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What are the options for buying or selling houses these days?

I see that WALAW has an entirely new model that seems very cool. I had heard of RedFin before. There is also the whole foreclosure thing which I don't really understand (bidding?).

Anyway, it seems like the traditional model of two real estate agents "representing" buyer and seller and then splitting a large commission is at last starting to be challenged with alternative models.

It would be helpful to know what those models are, how to access them and how they differ. Big question I know but perhaps a summary or reference to find out would be possible.

Thanks a lot.

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  • Walaw_logo_small_small
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    Business

    As an initial matter I'll give a little insight into foreclosures. When a loan is foreclosed, the property is sold at public auction. Bidding at a foreclosure auction is risky because there is a lot unknown about the property -- like what the inside looks like! -- and there are none of the mechanisms for protecting the buyer that are standard in a typical, MLS-listed sale. Given property values, the lender is usually the high bidder at these auctions such that the bank "takes back" the house. That house is then listed for sale by the bank on the MLS as an "REO" property. As a general rule, brokers are not involved in bidding at a foreclosure auction.

    With that out of the way, yes, WaLaw is at the forefront of working to move beyond the archaic practice of compensating buyer's agents by commission by commission paid by the seller. Quite simply the current model is flawed in two major respects. 

    First, real estate agents were, for the first 100 years or so of their existence, "salespeople" who "sold" real estate.  To this day, the agent who represents a buyer in a transaction is known as the "selling agent" and a house is "sold by" the agent representing the buyer.  The law imposes fairly limited obligations on agents in regards to their legal duties to their clients.  And remember that the agent is paid only upon closing, giving the agent a powerful personal incentive to see that the deal closes.  But buyers don't hire an agent because they need to be "sold" a home.  They need somebody who willl look out for their interests, period.  In other words, they need somebody like a lawyer, a professional devoted entirely to the interests of the client with substantial legal obligations to protect the client's interests at all costs.

    Second, the buyer's agent is not paid by the buyer.  This essentially insulates the agent's commission from any sort of downward market pressure.  There is little incentive -- certainly no obvious incentive -- for a buyer to negotiate a lower commission with an agent.  This disconnect between the service provided and the fee paid is terrible for consumers because it keeps agent fees higher than if they were subjected to market forces.  Indeed, the Dept. of Justice recognizes that commission rebates are, in the current system, in the consumer's interest because it's the only way to put any downward pressure on fees charged to consumers. 

    Now back to alternatives to the "traditional" real estate agent.  You hit the two biggest players, Redfin and WaLaw.  Redfin is at the forefront of seeking to modify the existing broker model to better suit the needs of consumers, including commisison rebates.  Redfin also pays its agents a salary and bonuses based on client satisfaction.  This helps to better align the interests of the buyer with the interests of the agent.  Findwell is another example of this type of "modern" brokerage.

    WaLaw, sadly, is not yet as big as Redfin.  :-(  But we have big dreams!  We believe that, since a buyer is best served by a professional like a lawyer, then buyers should be represented by -- you guessed it -- lawyers!  As lawyers, we have very serious and substantial obligations to our clients that far exceed the legal obligations of an agent.  Plus, this is a legal transaction forth hundreds of thousands of dollars.  Prudence dictates you have an attorney on board.  Moreover, we are paid our flat fee directly by our client, and we rebate the full commission we earn as the buyer's agent.  This further insures that we are looking out for the buyer, not ourselves or the seller.

    Finally, there are other small brokerages out there who are also trying to change the world for the better, such as RT Brokerage.  CEO Louis Herrera has long championed "fee for service" agent services where the client pays on an hourly basis only for the services needed.  That said, I am unaware of any other lawyers who embrace their role as lawyers PLUS provide agent services.  There are many brokers out there who are also lawyers, but typically they are the client's agent only and not the client's lawyer, thus seriously diluting the lawyer's obligations to the client.

    Check these alternatives, and don't be shy about trolling the internet looking for others.  When you take on a powerful, long-standing, and entrenched status quo, its not always easy to get the word out.  But if you make the effort, you will probably find an alternative model that is right for you, and you'll save significant money.

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  • Fairplaymarkonly-rgb-_web_-big_small
    Reputation: 1
    Business

    Foreclosures, Short Sales, and REOs are great opportunities right now because of real estate market. It's unfortunate that so many people have suffered and lost their homes, but the longer distressed properties are on the market, the worse it is for traditional real estate. Companies like Fairplay (fairplay.com) specialize in handling distressed property buying for people.

    The big issue with foreclosures is that you have to have cash on hand at the auction in order to get a property, and you have to buy "as is." Fairplay will provide a "bridge loan" to acquire the property, then you can refinance it with a traditional home loan. Fairplay also researches each foreclosure property before it goes to auction, driving by, taking photos, and talking to the people living there, if possible. Fairplay has a list of all the houses going to auction each week, along with condition reports, which you can access on their web site.

    <iframe width="560" height="349" src="http://www.youtube.com/embed/9kaIoHbKg9U" frameborder="0" allowfullscreen></iframe>

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  • Robins_photos_small
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    Business

    I'm happy to agree with you in saying that alternative real estate companies, such as CMESELL.com, are challenging the "traditional" real estate models!

    CMESELL.com provides our customers/sellers with all the tools they need to get their houses, condos and properties SOLD - yet we don't charge a real estate commission for our services. We have a one-time flat fee of $495 to market and advertise your real estate until it's SOLD!

    AND we only work with sellers! Because we refer all potential buyers directly to our seller customers.

    We provide unparalleled exposure for your house or property on the Internet, where we know 87% of buyers are looking for their next real estate purchase. Also, we provide all the tools (Purchase & Sales Agreement forms, as well as seller required forms, professional signage, flyer box, flyers and even support in the form of questions answered via phone or e-mail).

    Our goal is to help sellers get as many buyers as possible knowing about their house! You should check out our web site at www.cmesell.com. Click on the "Get Started Now" link to see how simple it is to use our services.

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