PROFILE
He is an investment counselor and marketing rep for a national investment and retirement planning firm. He holds a Series 7 securities license and counsels customers on investment strategies, retirement plans and market investments.
Reason for NOT choosing a buyer's agent: he stated that the home-buying process was "easy"; something he could do on his own without assistance.
ACTIONS
He bought a 94-year old Lakewood rental from an investor for 3% over the average price for homes of the same type on the same street. His purchase price was $13,400 higher than the tax-appraised value of the property.
He purchased the property in just 12 days of the listing date for 97% of asking price when the average market time was 79 days, and the average purchase price was 96% of asking price.
The house has no air conditioning (6 of 7 in this market do).
He bought the house from an inexperienced sales agent whom he met at open house. The Selling Agent’s brokerage firm office also listed the property and represented the Seller. Accordingly, he paid over $7,000 in brokerage fees, included in his purchase price, yet received no representation as the buyer.
He selected a mortgage broker "friend" who quoted him a loan with rates, fees and costs in excess of $2,000 greater than the mortgage loan program I had recommended.
RESULTS
On his purchase date his entire investment was consumed by financing and closing costs so that, even after reflecting his down payment, he was left with zero equity.
Over the years he invested in new vinyl siding, new carpeting and an electrical upgrade yet realized zero return on investment for these items upon resale.
He held the property for six years; then sold it for 3¼% gross annual appreciation (2% net cash appreciation) in a market that had been consistently earning 4%-5% annually.
CONCLUSION
He was right – that was easy!
Case-2: Wow!
Client Profile: First-time buyers; both college graduates.
Reason FOR choosing an exclusive buyer’s agent (me): recommended by their Certified Financial Planner. Wanted a trusted advisor to assist in their home investment.
RESULTS:
My clients closed on their home in December, 1997. We achieved $ 8,947 savings in the transaction. They were happy and content until Mr. Client was notified by his employer that he would be transferred out of town by the end of 1998. Most homeowner’s would be concerned about losing their home equity, having held the home for less than a year. However, my clients had such a great property, at a low basis, they were able to sell their home in December, 1998 in just 6 days for a gross profit of $24,500! That’s a 17% gross annual return on investment in just 12 months -- at a time when the average appreciation in the same market was just 4%.
Case-3: Uh-oh...better call Joe!
Prospect Profile: He is a college graduate, with law a degree. An attorney specializing in financial investments, he is a senior executive in a national financial planning and investment consulting firm. They have purchased and sold many personal residences in the past, due to job relocation.
Reason for NOT choosing an exclusive buyer’s agent: Found a For Sale By Owner (FSBO) on their own; bought on impulse on their first visit at Open House; was led to believe by the Seller that there was other interested parties wanting to bid; assumed that since he is an attorney, he could handle the transaction.
RESULTS:
Bought November, 1997 for $170,000. Sold September, 1998 for $171,000, less $10,550 brokerage fees and estimated $2,000 closing costs. Net loss in just 10 months exceeded $11,000!
Case-4: Uh-oh...better call Joe!
Prospect Profile: He is a college graduate and CPA. She is a college graduate and CPA. He is a senior executive for an international oil company. He has purchased and sold many personal residences over the past 20 years, mainly due to job relocation.
Reason for NOT choosing an exclusive buyer’s agent: Did not understand the value of an exclusive representative; assumed that all transactions are the same, that the outcome is the same, regardless of representation; basically, just followed the crowd.
RESULTS:
Bought their home in May, 1995 for a whopping $135,000 LESS than the asking price! What a deal!
At that time the home had been on the market for more than a year. About four years later they were notified by his employer that he would once again have to relocate to another state. In March, 1999 they listed their home for $85,000 over their original purchase price. After 112 days on market, and a $51,000 price reduction, the listing expired without a sale (during the record buying frenzy of Spring 1999).
Finally, after nine months on the market the property sold for $39,000 LESS than the original purchase price just four years prior. This reflects a DEPRECIATED value of 2% annually, as compared to comparable annual market APPRECIATION of 8% for the same period. Including estimated selling expenses and closing costs, their total loss is approximately $90,000! What a deal!
(All financial information cited above is public record. Source: Multiple Listing Service.)
