March, 2008
Myth: I’ll get the best deal on a Fredericksburg home if I call the agent listed on the For Sale sign.
This is a myth that I have heard prospective buyers communicate many times over the years. It is also a myth that is completely unfounded. In fact, the truth is that in many cases, the buyer will actually pay more for a home if they call the agent listed on the sign. Let me illustrate this point.
I now have a buyer client who recently decided she wanted to purchase a home in the Fredericksburg real estate market. She saw a home she liked and called the agent listed on the sign. An appointment was scheduled, and the buyer decided she liked the property. The home had a list price of $119,000. The buyer admittedly knew nothing about the true value of the home, and was prepared to pay the full list price.
She went home, made some calls to a lender, and discussed the home with family and friends. Someone suggested to her that she should have the representation of her own Realtor. This person was wise enough to know that the agent listed on the sign was legally responsible to represent the seller – not the buyer.
So, the buyer called me. We discussed the situation, and she noted that she had not signed any documents with the listing agent, and that she did not want to be in a situation without her own separate representation.
I then contacted the listing agent, and notified her that this buyer did not want to enter this transaction in a dual agency situation. I asked the agent if I could show the property to the buyer, and informed her that she was now represented by my team. The agent understood and agreed to allow me to show this buyer the property.
Once I conducted the research and viewed the property, it was readily apparent the market value of this home did not exceed $100,000 – on it’s best day. But, the day before, the buyer was convinced she need to pay almost $20,000 more for the home – and was prepared to do so. Calling the agent listed on the sign nearly cost her a minimum of $20,000 more.
Calling the listing agent on the sign is a terrible investment strategy. This buyer would have paid at least 17% more than the home was worth. In the Fredericksburg real estate market, that is just beginning to even hint at recovery, that 17% would take a long time to recoup.
There are four terms that a buyer looking for homes in Fredericksburg and the surrounding counties should understand:
- Seller representation – by default, when an agent lists a property they assume a legal and fiduciary responsibility to the seller, and the seller alone. One of the primary reasons sellers choose the agent they do, is because they believe the agent will work to get the highest price possible for their home.
- Buyer representation – an agent who represents the buyer, and the buyer alone. There is a legal and fiduciary responsibility to the buyer only. The agent should perform diligence in understanding the buyer’s situation, and work to find the best home, negotiate the best price, terms and conditions.
- Dual agency representation – this is a situation where the listing agent also represents the buyer of the property. There are many schools of thought on this issue. My personal opinion is that it can almost never be done, without the best interests of one party being at least somewhat compromised.
- Designated representation – The listing agent and the buyer’s agent both work for the same brokerage, but each have legal and fiduciary responsibilities to their own respective clients. I perceive no issues with designated representation.
I have never participated in a dual agency transaction, where I alone represented the seller and the buyer. Primarily because I have never wanted any of my clients to question my dedication to them and representing their best interests.
When I represent a seller, I am working to GET every single penny for that home that I possibly can. When I represent a buyer, I am working to KEEP every single penny in my buyer’s pocket that I possibly can. The two positions, in my mind, simply cannot be married.
So, if you are selling a home in Fredericksburg, or surrounding area, choose a listing agent who will only represent you. If you are buying a home in Fredericksburg, or surrounding area, choose a buyer’s agent who will represent only you.
Note: After writing this, I found an article written by Ardell DellaLoggia on Rain City Guide, that addresses a bit of a similar situation.
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Community Name: Park Ridge – Park Ridge
Market Category: Stafford Real Estate
Single Family Homes in Park Ridge
The data contained with parentheses reflects the change in the data since the last reporting period in March, 2008.
Park Ridge Homes For Sale: 17
Average Price: $359,346 (-$6,000)
Average Days on Market: 98 (-5 days)
Park Ridge Homes Under Contract: 6
Average Price: $334,517 (+$26,000)
Average Days on Market: 161 (+50 days)
Park Ridge Homes Sold Last 30 days: 4
Average Price: $314,591 (-$32,000)
Average Days on Market: 20 (-90 days)
Park Ridge Real Estate Absorption Rate: 5.75 months worth of home inventory at current rate of sale. This reflects an increase of .75 months worth of inventory in Park Ridge.
Click here to begin your Stafford Real Estate home search. This link also searchs surrounding counties as well.
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Community Name: Lee’s Hill North Communities and Lee’s Hill South Communities
Market Category: Spotsylvania Virginia Real Estate
Single Family Homes in Lee’s Hill North and Lee’s Hill South
Lee’s Hill Homes For Sale: 26
Average Price: $398,444
Average Days on Market: 133
Lee’s Hill Homes Under Contract: 4
Average Price: $345,163
Average Days on Market: 158
Lee’s Hill Homes Sold Last 30 days: 1
Average Price: $275,000
Average Days on Market: 25
Homes in Lee’s Hill Absorption Rate: 30 months worth of home inventory at current rate of sale.
For the purpose of this article, the following communities were used in gathering statistical data: Lee’s Hill, Lee’s Hill South, Lee’s Hill North, The Greens at Lee’s Hill, The Hamlet of Inverness, Troon North at Lee’s Hill, Gleneagles at Lee’s Hill, Turnberry Village, Grandstaff North, Watford Village, Colechester Village, The Fairways, Dominion Forest, and Stonehaven.
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A National Association of Realtors television advertisement yesterday stated that, on average, home prices double every ten years. I am certain there are some pockets of the country where that doesn’t hold true. However, my personal experience supports this statement.
The first home I ever purchased was in Coweta County Georgia. We bought that home in 1991 for $66,500. That home is on the market today for $239,000 – almost 4 times what I paid for it 17 years ago.
The home that we own down in the Caroline County real estate market was purchased in 1995 for $81,500. The current market value of that home is approximately $160,000. That is double what we paid for it 13 years ago, even after the market has slid backwards substantially. Had we sold it in 2005, it would have easily sold for $200,000. I have run countless statistics on homes in Fredericksburg, Virginia – and have found the statement to hold true here as well.
Despite what many people would say today, real estate is still a solid, and lucrative investment. Like all investment vehicles though, you must invest wisely. I am happy to see that many buyers are stepping back into the market, because I believe this is an extremely good time to buy a home – prices are way down, interest rates are quite low, and inventory is high.
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Took a few hours with the family after work yesterday to head up into D.C. to take in the Cherry Blossoms. There were some beautiful views among the lumbering sea of people. It was CROWDED, but we had a great time nonetheless.
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Community Name: Presidential Lakes
Market Category: King George Virginia Real Estate
Single Family Homes in Presidential Lakes
Presidential Lakes Homes For Sale: 39
Average Price: $295,091
Average Days on Market: 186
Click here to see our page featuring Homes For Sale in Presidential Lakes
Presidential Lakes Homes Under Contract: 10
Average Price: $260,265
Average Days on Market: 184
Presidential Lakes Homes Sold Last 30 days: 6
Average Price: $277,426
Average Days on Market: 105
Homes in Presidential Lakes Absorption Rate: 8.2 months worth of home inventory at current rate of sale. This is a 9.8 month decrease in housing inventory in this community.
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Let me preface this article with this fact; there are several pieces of information pertinent to the described conversation that I do not have. With that said, my Husband and I were sitting in Starbucks having a cup of coffee this morning, and overheard a very interesting conversation.
I am typically uncomfortable with the close quarters inside most Starbucks facilities, but it was a little too chilly to sit outside. So, we found ourselves sitting inside, at a table near two young gentleman who were discussing a Fredericksburg real estate transaction.
As I overhead the conversation, I found myself in a bit of a quandary as to which side I felt had the most credibiity. The Realtor was obviously not happy with the decision his client had made in regards to his house choice. The client had decisively made a decision, and was not heeding the advice of his Realtor. The Realtor tried steadfastly to convince his client that his decision was a bad choice, by discussing the pros and cons of buying a foreclosure home vs. buying a new home. The Realtor went on to explain his pay structure, and let him know that to make that deal happen, he (the Realtor) would have to take a cut on his commission.
At this point, it was very difficult for my husband and I, as mortgage professionals, to not jump into the conversation. See, we could have offered a point of view for both gentleman to support their case, but more importantly I was very thankful that we work with the team of Realtors that we do. This Realtor was not listening to his client’s needs and plan for the future, and the client just did not follow the Realtor’s justifications.
They parted company with the Realtor telling the client to ride by the house one more time, and he would call him this evening for his final answer. I desperately wanted to hand this buyer a business card for the “Greatest Realtor in Fredericksburg,” but instead, I just quietly minded my own business, and enjoyed the humorous conversation.
Click here to Get Pre-Approved for a Mortgage or Begin Your Home Search.
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Community Name: Lake Wilderness
Market Category: Spotsylvania Virginia Real Estate
Single Family Homes in Lake Wilderness
Lake Wilderness Homes For Sale: 43
Average Price: $285,597
Average Days on Market: 188
Lake Wilderness Homes Under Contract: 8
Average Price: $258,694
Average Days on Market: 150
Lake Wilderness Homes Sold Last 30 days: 4
Average Price: $254,528
Average Days on Market: 47
Homes in Lake Wilderness Absorption Rate: 12.8 months worth of home inventory at current rate of sale. That is a reduction of 3.5 months of inventory from the last month.
Click here to see Homes For Sale in Lake Wilderness
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Yesterday was an interesting day of looking at foreclosure homes near Quantico. The first eye opener of the day, was a home that had obviously been occupied by way too many people at the same time. My best guess is that a minimum of 12 people had lived in a relatively small three bedroom home. That is based on several things, but included in the list was the copious amount of beer bottles, and bottle caps that “decorated” the front lawn.
Then, in the shed behind the home, there was evidence that we had found the “smoking section.” The product being smoked was not one you can buy at your local 7-11 – at least not legally.
Then we move on to a little gem that was built around 1960, and it looked like it had promise as we pulled up in the driveway. Inside however, the home has been “remodeled.” There was an addition on the back of the home (I am pretty sure there was no permit obtained) and the kitchen had been relocated to the basement. There was no wiring in the addition – with the exception of the extension cord dropped down through the acoustic ceiling.
Addition on back of home
BUT, the roof of the addition made for a nice deck – or so somebody thought.
The surface was roofing material, not so pleasant, but they did install a railing. The railing was bolted to the frame of the addition’s roof, and would possibly hold up to the weight of a Chihuahua – but not much else.
This home had a lot of negative issues, but it did have a nice backyard.
Not all foreclosure homes in the Fredericksburg real estate market are like this. But, this home does highlight some of the potential concerns for first time home buyers, who are considering buying a foreclosure property. Most foreclosures are sold “as is” with little, or often nothing in the way of inspections and protection for the buyer. Be very, very cautious and diligent if your first home is a foreclosure home in Fredericksburg, or the surrounding counties.
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There is a contest going on in the real estate industry right now called “The World’s Greatest Real Estate Agent.” But, the best wisdom says that real estate is local, and I agree. To that end, I would like to introduce Fredericksburg’s Greatest Real Estate Agent – at least for this week.
This is my son Logan, who is on spring break this week. He wanted to hang out and work with Dad this week, and so he has, because my buyers were very agreeable. A couple of days ago, while showing a listing in Woodbridge, I was looking all around the house for the lockbox that the listing agent had camouflaged. My partner, Logan found it for me, and we were able to get inside the home.
He also works cheap. The only split he was interested in was his happy meal from McDonald’sonce we finished showing homes. Unfortunately, today was his last day to work with my team for awhile, because he has to go back to school next week 
and I will miss him. I am grateful to have experienced working in the Fredericksburg real estate market this week, with Fredericksburg’s Greatest Real Estate Agent.
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