Real Estate Rentals & Broker Fees
I’ve been handling a lot of rental transactions lately and one thing I always ask before getting started is “Have you rented a home through a broker in the past?” This seemingly innocuous question seems to drive responses from a simple “Yes” to a “No, why, do I have to pay for something?!”
As a renter myself, I know what it’s like to try to find a decent rental these days. Either they end up being overpriced or in a bad area or just don’t exist. In the suburbs especially, a good rental is very hard to find. You could rent in an apartment community but then you’re stuck with single level living and possibly less than desirable neighbors. The barrier for entry for apartments is significantly lower than, say, owning a home where you need a substantial down payment to buy the home. More often than not a homeowner will use a real estate broker to market and find a renter for their home.
The great thing about privately owned rentals is that you are more likely to find a home in a community of homeowners who take pride in ownership and want to maintain the quality of the neighborhood to improve their resale value should they need to sell. This is the key difference between apartment buildings and owning or renting a home owned privately.
This brings me to the golden egg of rentals: rentals available through real estate brokers. When a broker takes over the process of marketing the rental, finding and qualifying a tenant and, finally, getting a good tenant into the home it takes a lot of time. And money.
The issue that most first time broker rental clients seem to have is reasoning the cost of paying a broker fee to move into one of these rentals. I’m a firm believer that this is due to the fact that there is no consistency in the cost of renting through a broker. In the suburbs of New York City the tenant is expected to pay the brokers involved in a rental transaction a fee in the amount of one month’s rent in addition to other expenses associated with the initial rental. In Manhattan the tenant could be expected to pay 10% or more in commissions to obtain a rental. And then there are instances around the country where the would-be landlord pays for all broker fees.
Confusion aside, I think it should be noted that broker rentals are an option. You’re not required to find rentals through a broker but there are benefits to doing so such as:
- The homeowner is verified and brokers go through the motions of learning more about the home, marketing the property and handling the pricing and negotiations for the home. Most for rent by owner or craigslist ads aren’t going to give you the insight on pricing that a broker would. Further, with the recent increase in rental scams on sites like craigslist, finding a rental through a broker can be a more secure experience.
- A broker will sort and analyze the rentals in their MLS and then send you the homes that meet your needs.
- Rental brokers have experience with different condominium communities and may have seen the property in question in the past. This will give you greater insight into each rental and save you time when looking for your next place.
But, as I mentioned, broker rentals aren’t your only option. You can still search for rentals using more DIY methods like craigslist. We also have a list of apartment communities with no broker fees here. You won’t have the professional oversight or potential negotiation power that you would get with a real estate broker but that’s why you’re paying for the broker in the first place.
First Time Buyer in Newburgh Q&A
I received an outstanding list of questions from first time buyers David & Jamie and thought I would republish my answers here. You can send any questions you have to jf -at- housemeetsowner.com (replace the -at- with @ and no spaces) to be posted in future Q&A’s on the blog.
1) Do you have rent to own homes? - Yes, rent to own homes are available in the area though they vary greatly in style and price.
2) What does a two bedroom/2 bathroom cost generally? - Depends on what you’re looking for. Newly built 2 bedroom, 2 bathroom condos can be found in the mid-$200,000s whereas older two bedroom condos can be seen as low as $140,000 and up. Single family homes tend to be a bit more expensive and you’re likely to find two bedroom single family homes starting in the high end price range of 2 bedroom new construction condos.
3) I guess it depends on the size of the house but typically how spacious is the back yard? - Each home varies. I’ve seen 3,000 sqft homes on quarter acre lots and 2,000 sqft homes on 10 acres. In the Newburgh area you are most likely going to find lots between half an acre to one acre.
4) Why should we buy instead of renting? - Two big reasons: tax benefits and you’re paying to own something rather than rent. Right now first time buyers get up to $8,000 tax credit on their 2009 income tax if they purchase before November 2009. In addition, you can usually write off interest and other home ownership costs as tax deductions. Consulting with a tax/accounting professional is the best way to discover all the financial benefits of home ownership.
5) Can we become home buyers if, only hypothetically, we’ve had bad credit and don’t have much for a down payment? - It’s significantly more challenging to obtain credit and a mortgage in today’s economy but it’s not impossible. Depending on how high your credit score is you may be eligible for an FHA loan. A mortgage professional will give you all of your options based on your credit and down payment abilities. FHA loans only require 3.5% down.
6) How much money will we have to come up with as a down payment? - Depending on the loan type you are approved for it can range from 3.5% to 20%.
7) Should we use a Real Estate Agent? How do we get one? - I always strongly encourage home buyers and sellers to use the services of a real estate professional before transacting real estate. There are many benefits to using an experienced REALTOR® which vary depending on what side of the transaction you are on. For the sake of argument let’s say you’re on the buying side. A buyer’s agent will help educate you about the buying process, what to expect as you go through the transaction, negotiate on your behalf and most importantly, guide you through the local market to find the perfect home for you.
I know it sounds a little cheeky to say you’ll find the “perfect” home but having a buyer agent can really save you a ton of time and money. Keep in mind that most buyer agents have their finger on the pulse of the market and are very knowledgeable of new communities, neighborhoods that fit the lifestyle you are looking for and market activity in local areas. Since the agent is hopefully practicing real estate as their full time profession they will have the knowledge and experience that could take you many months to learn on your own.
As for finding an agent, you just did. 
8 ) How do we choose the best loan program for us? - A mortgage professional will be able to give you all of the options available to you based on your credit score and down payment amount. Your local credit union, bank and even national brands like Bank of America all have mortgage professionals who will gladly assist you. I would also recommend reading Carolyn Warren’s book titled Mortgage Ripoffs and Money Savers which will give you an insider’s look at how loans are created and what each loan means to you.
9) What happens if interest rates decrease and we have a fixed rate loan? - A fixed rate loan is locked in at a set rate shortly before closing. If you are locked in to 5.00% and rates drop to 3.00% (not too likely) then you could either refinance to a lower fixed rate or continue paying your current loan.
10) Are there special mortgage rates for first time home buyers like us? - You will most often find first time home buyer programs like SONYMA available to help home buyers purchase their first home. Whether these programs have special rates would depend on the program itself. Contacting a mortgage professional is the best way to learn more about these programs.
11) Like everyone we dread taxes. However, what steps could we take to lower our Home Owner’s Insurance cost? - Your taxes and homeowner’s insurance are two separate entities and costs. The best way to get lower taxes is to purchase a home under condominium ownership. This type of ownership is taxed differently than single family homes and typically offers lower taxes. On the flip side you may have to pay a homeowner’s associate fee for community services in a condominium complex. The combined cost of the HOA and taxes can sometimes be equal or greater than taxes on a single family home.
You can also apply for the New York State STAR program which will reduce your taxes and is available to any homeowner living in their home full time. You can learn more about taxes by speaking with your accountant or tax professional. As for property insurance for your home you can get multiple quotes from insurance companies and choose what fits your needs best. Condominium insurance is sometimes lower because you are only paying to insure the home from wall-to-wall as opposed to single family insurance which covers the exterior of the home and structure.
12) What makes up closing costs? - This is another great question for a mortgage professional but I can give you a very brief summary (not all inclusive). Your closing costs will be made up of costs to originate your loan, property taxes and other costs associated with purchasing a particular home that must be paid upfront.
13) FORBES MAGAZINE estimates that within ten years or less Newburgh, NY will be the toast of the town. How diversified is this lovely community in terms of ethnicity, cultural & sporting activities, community politics(D vs. R), religion, international cuisines, etc.? - Newburgh has seen a revival of sorts over the past 10 years that led to the creation of the thriving waterfront area of restaurants, art house cinema and other sophisticated fare. The area has continued towards its goal of becoming a jewel on the Hudson with new developments like the expansion of SUNY Orange and a new residential development near Liberty St. You can learn more about Newburgh’s statistics by visiting http://www.city-data.com/city/Newburgh-New-York.html.
14) Is there dependable public transportation or does one have to have their own wheels to survive? - Newburgh is primarily a car town and city so owning a car is essential to living in the area. Alternatively, if you don’t travel too often there are a growing number of taxi services in the area and mass transit to New York City in Beacon, Salisbury-Mills Cornwall and just outside of the City of Newburgh.
You can post any questions or thoughts you may have in the comments below!
Now Is A Great Time To Buy! Buy Now!
Image Credit: TheTruthAbout
I say that half jokingly ! 
I was talking to Marc Davison on Twitter about his distaste for NAR’s extreme overuse of the “Now is a great time to buy!” recently and it made me think about it. Marc’s position was that they were saying the same thing four years ago and NAR is losing credibility (what little they have) for saying it during a turbulent housing market.
I actually agree with Marc’s point 100% but NAR is right too. Four years ago it was a great time to buy because interest rates were low and homes were appreciating at an unprecedented level. It seemed like the smartest investment on earth.
Now during a depressed market it’s a great time to buy because rates are lower than they’ve ever been and prices have plunged making homes extremely affordable.
I think the issue is that using a vague statement like “Now is a great time to buy!” can be misleading. If NAR wants to regain credibility they should say WHY now is a great time to buy.
For example:
“Now is a great time to buy a new home because inventory is high and builders are offering unheard of incentives.”
“Now is a great time to buy because homes around the country are rapidly appreciating.”
Consumers are looking for authenticity at a time when corporations and industry associations are being seen as villains. Providing some dose of reality and truth in their ads as opposed to blasting an overly chummy message repeatedly is the only way NAR’s ad campaigns can begin to build credibility with consumers again.
Top 10 Reasons You’re Not Being Followed Back on Twitter
When you follow someone they often want to reciprocate the follow by learning more about who you are. After all, you’re interested in them and maybe they could be interested in you. Because Twitter is open to interpretation on how it should be used to your benefit I’ve picked up on the ways I think others misuse it. Here are ten reasons why people aren’t following you back on Twitter:
1. You don’t have enough updates. - Typically the first sign of a spammer, having only a few updates (especially all in one day) makes it hard for people to gauge what kind of person you are. Are you interesting? Are you worth following? One update that says “college apps” or “sunny day today” won’t convince the masses that you have something to contribute.
2. You tweet too many links. - A pet peeve of mine and many others, posting too many tweets linking to something off Twitter can give others the impression that you have nothing unique to say. People follow you on Twitter to hear what YOU have to say.
3. Your tweets are mostly inspirational quotes. - All aboard! Twitter’s 140 character limit seems ripe for quote abuse. The number of Tweeters hopping on the inspirational quote train is staggering. If I want to be inspired by a quote I’ll google inspirational quotes. Live by these words: You offer zero value if you just tweet quotes from other people.
4. You are only promoting your business and everyone can tell. - I don’t mind it when someone promotes their business on Twitter when appropriate. I selectively pimp my real estate projects, Darren Rowse tweets his blog articles and so on. But if you overdo your Twitter page with outlandish get rich blogging or SEO guru crap no one is going to listen to what you have to say. Loud backgrounds/tweets are like loud words and no one likes being yelled at. Especially when it’s a sales pitch!
5. Your username sounds like a company. - An almost instantaneous decision not to follow someone happens when I get a follow notification from someone with the username of a company. This is even more true when it’s a company I’ve never heard of or done business with. Unless you’re @mailchimp showcasing cool uses for email marketing or @comcastcares following me to help solve my cable problem I’m not likely to be interested in what your company is all about.
6. You ARE a spammer. - This really should go without saying but people aren’t stupid. We know when we see spam on Twitter (lately the GirlNameDateofBirth username types). You’re wasting your time, no one cares.
7. Your bio is empty. - This rings true with new users more than established tweeters but knowing who you are and what you’re about is a big deal to other Twitter users. Fill out your bio with truthful details about who you are and people are more likely to take an interest in you. By the way, “Follow me to learn how to make…” is not a good way to make a name for yourself on Twitter. Just sayin’.
8. Your following/follower count is unbalanced. - Nothing says self-interest more than the guy/gal following 30,000 people and being followed by 8. I don’t endorse monitoring your following/follower ratio constantly but your count also shouldn’t look like a cliff when compared.
9. You don’t have an avatar. - Another signature of spammers and shady types, no avatar makes it look like you are new to the service or have something to hide. You don’t need a Paul Wall grille shot but having an avatar matters. Go get one!
10. Your tweets are overly negative. - Much to the chagrin of pessimists everywhere, tweeting the bad side of things isn’t exactly going to brighten someone else’s day when they read your tweets. Bad stuff happens but your Dottie Downer tweets shouldn’t outnumber the funny/positive things you have to say. I’m guilty of over tweeting the negative myself so I sometimes opt not to tweet at all.
Twitter is like a giant conversation and everyone has something to contribute. Using the tips above you can increase your chances of finding and engaging other Twitter users who like what you have to offer. And yes, that’s good for business too.
Image Credit: Noël Zia Lee
Did I miss anything? Add your tips in the comments below!
A Really Goode Job, Social Media Exposure and a 4.6x ROI
Unless you’ve been living under a rock (most of which now come with wi-fi standard) you’ve heard about “A Really Goode Job“. The job is simple: Taste the wines and live the lifestyle befitting a connoisseur in the picturesque Sonoma County, California. Blog and tweet about Murphy-Goode wines/the lifestyle and Murphy-Goode will pay you $10,000/month for six months. They’ll even throw in free luxury accommodations at the winery while you earn ten large each month.
Crazy, right? Well not exactly. Let’s look at this from a social media exposure perspective: As soon as the big players in social media like Mashable and Luxist broke news of the job it blew up on Twitter and across blogs everywhere. Hundreds, if not thousands, of one way backlinks? Check. Everyone talking about Murphy-Goode wines? Check.
Now for the 3x ROI — Murphy-Goode is going to select one lucky contestant and pay them $60,000 over six months + accommodations. Before they pick someone they’re going to interview up to 5,000 video applicants. Think about that.
Let’s say 5,000 people decide to buy Murphy-Goode wines for their video (because it’ll give them an extra “edge”) and say another 2,000 people are just curious to try the wines they’re reading about. Average individual wine purchase: $40 ($19/bottle x 2). That’s $280,000! Not a bad ROI for a low cost marketing campaign.
If you’re interested in pursuing the job op you can check out the official site.
Four Real Estate Video Pioneers to Watch
Real estate video, when done right, can be amazing and offer insight into a property or place that might have otherwise been lost in photos. These four real estate video pioneers from all over North America have raised the bar on what an independent agent is capable of.
1. Mike Lefebvre - Greater Boston Area, MA Real Estate Agent
Mike Lefebvre gained national attention with his entry and subsequent win for the Century 21 video competition held in 2008. By crafting a story of intrigue while folding in the details of his listing, Lefebvre was able to sell his listing quickly. With all of the press there is no doubt Mike was busy listing many more homes after his video victory. Check out the prize winning video below:
You can see more of Mike Lefebvre’s videos on his website. Mike is also on Twitter.
2. Robin Greenbaum - New York, NY Real Estate Agent
I’ve touched on the price of artifice (inspired by Rob Hahn’s entry of the same name), or the cost of creating professional quality videos, in the past. For most brokerages and agents it’s next to impossible to mix professional video values with the authenticity of “amateur” video hosts. Such a limitation doesn’t exist for Robin Greenbaum who manages to successfully blend the two into a cohesive, enjoyable video tour of one of her listings. Here’s one of Robin’s listing videos that breaks the mold:
Robin can be reached on Twitter.
3. Rick & Ines Hegedus-Garcia - Miami, FL Real Estate Team
This Miami real estate team has taken Miami’s sexy lifestyle and shared it with the world through blogging and online videos. In the video below Ines describes one of her favorite Miami restaurants and reviews their Mojitos. What’s more Miami than mojitos? The video is successful for two reasons. First, it gives home buyers a peek at the Miami lifestyle they would enjoy if they moved to the Miami area. Second, it showcases Ines’ personality and, should the viewer want to buy a home in the area, will build rapport and make them feel like they already know Ines.
Ines is reachable via Twitter.
4. Kye Grace - Vancouver Real Estate Specialist
Kye Grace set a new innovation milestone in real estate video with his 72 hour open house. Grace was able to garner international media attention, exposure for his listing (which sold shortly after the open house) and establish himself as an internet marketing specialist. In addition to the 72 hour open house, Kye is also well known for his popular Propertyegg.tv online show where Kye and special guests discuss real estate related topics.
Catch the latest news from Kye Grace by following him on Twitter.
If you’re new to real estate video or don’t know where to begin you could start by checking out how each of the pioneers above are carving their own path in the field. Don’t be afraid to go out there and experiment with different show formats, video hosting styles and topics. As you can see above, each video has its own standout features that make them fun to watch.
Are there other real estate video pioneers you would like to see mentioned? Leave me a comment below or get in touch with me on Twitter and I’ll gladly update the list.
Orange County New York FHA Approved Condominium Communities
If you are thinking about buying a home then you know finding reasonable financing can be a daunting task these days, especially for condominiums. One loan type that is still readily available for this home type is the FHA loan. FHA loans are federally insured loans that enable home buyers to purchase a home with as little as 3.5% down. The following condominium communities in Orange County, NY are all FHA approved meaning you can buy a home in one of the neighborhoods listed below with 3.5% down.
Each community has been listed under the Town/Village/City where its located.
Cornwall, NY
Brookside at Cornwall
Harriman Hill at Cornwall
Middletown, NY
Kingsway Condominiums
Monroe, NY
Pine Ridge
Van Buren Condominiums
Windridge I, II, III
Newburgh, NY
Brighton Green (New Construction)
New Windsor, NY
Butter Hill at New Windsor
Plum Point on Hudson
Washington Green
Windshire Condominiums
Windsor Crest
Tuxedo, NY
Tuxedo Heights
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Have questions or would like more information on the communities above? Leave us a comment below!
The Price of Artifice
Real estate/marketing blogger Rob Hahn wrote a piece last week on the price of artifice or, in other words, the cost of doing professional broadcast quality production video for your online audience. In his entry, Rob basically denounced trying to build super high quality, production level video entries on your own because they almost always fall flat and suggests using your personality to create an authentic, albeit amateurish, video.
This past weekend I did a fair number tearing a new a** into big box brokerages (national brands) and their excessive cutbacks on services to agents. Now let’s fast forward to a new YouTube video by Keller Williams International a.k.a. Keller Williams corporate.
As Rob Hahn covered in his entry, trying to play with the big boys and girls of professional media requires flawless planning and execution. The following “professional” Keller Williams International video falls flat on all counts. Let’s have a look:
So what went wrong with this video? I’ll do it in bullet points:
- The “news anchors” are sitting too close together leaving far too much empty space on either side of them.
- They are trying to mimic a news broadcasting studio but it comes off as a cheap promotion. Elementary production values.
- The transition graphics like “Facts & Stats” are poorly done and look amateurish.
- Suman Olney looks like she’s reading from cue cards or a script. In fact, it’s pretty obvious they all are.
- The jumps between anchormen and guests are rushed with some instances having their voices overlap with the guest speakers.
- When the videos are framed within the video it wastes space and looks amateur.
Oh, then there is this:
With a disclaimer that long, which is basically telling you they aren’t responsible for what they just told you and to use it at your own risk, where’s the credibility factor? Do nightly news runs prop up a huge disclaimer claiming that their reports may have inaccuracies or may be incomplete?
If you want credibility and respect from consumers then you need to:
- Stop treating them like they’re idiots. People watch the news and aren’t going to believe your overly rosy housing market picture when they see a more subdued outlook on housing from established media authorities.
- Stop pushing your own agenda so hard. It’s painfully obvious.
- Either spend the big bucks for proper production values befitting an international corporation or don’t bother at all. Half-assed work makes everyone associated with Keller Williams look bad.
Have Big Box Brokerages Lost Their Allure?
Are big brokerages still worth the monthly fees and commission sharing? Jolenta Averill, a Madison Wisconsin real estate broker, recently wrote about her decision to leave a big broker to fly solo as an independent broker and strikes on a few sore points for me. Among them, desk/service fees that are charged monthly in addition to the cost of being affiliated with the broker in the first place. We’re talking commission splits with 30% to as much as 80% of an agent’s commissions going to the brokerage company in exchange for all the services a brokerage offers.
The problem is that these big box brokerages are continuing to cut services offered to agents all the while maintaining the same outrageous commission split they’ve been pulling for the past 20 years. The big names will tell you this: You pay for the brand. After all, when you’re first starting out it’s easier to affiliate yourself with a RE/MAX or Keller Williams or Weichert since the branding is familiar and you don’t have experience to fall back on when offering your services to buyers and sellers.
But a new tide is rising. Now we have Redfin paving a path towards lower cost real estate services and companies like ZipRealty entering the top 10 real estate brokerages by sales volume and transaction sides for 2008. So is the big box branding really helping you stay ahead when lower cost brokerages can better compete on price because they don’t have as much overhead?
Well, there’s always all the services provided to you by the brand name brokerages right? Not so fast. Jolenta’s entry goes into the stripping down of services happening at offices across the country and I’ve seen it myself. It used to be that your brokerage would pay for lockboxes and advertising for your listings, your business cards and signs and even give you buyers and sellers to work with. But rarely (never) does that happen anymore.
For example, the Keller Williams office I’m affiliated with doesn’t pay for lockboxes, advertising, business cards, signs or give me buyers/sellers to work with. Their existing website also sucks miserably which they know about because I’ve told them at least 30 times. We get hit with a monthly fee to cover desk fees (there are no desks in the office), copier costs and other in-office expenses. The cost of submitting listings to the MLS ($7/each) is also passed on to each individual agent which can sometimes make my monthly fee go from $50/month to $400.
So you might be wondering why I stay? Two reasons. First, I like having an office building to meet buyer clients in. When I worked for an online brokerage I would meet clients in Starbucks or some other type of cafe which never really worked as well as I would have liked. Second, I have people. I know the front desk staff that answers all of my calls, handle my listing appointment requests (no agents on uptime answering phones) and I like not having to wait a week for a commission check to be processed and sent back.
But those benefits can be outsourced and conference rooms can be rented. That’s a scary thought. It’s a scary thought for all of those brokerages/managers out there working their agents for fees and low commission splits banking on the hope that their best agents won’t leave because they’re too settled in or unable to run their own brokerage. It’s an even scarier thought when you mix in an online brokerage like ZipRealty or Redfin that can give the same agent similar branding and help them compete in a saturated market at a lower cost.
It’s not just about branding anymore.
RE/MAX Real Estate Wants to Kick Your Ass
A recent Forbes.com article highlighted housing as one of the best things to purchase during this painfully slow recession we’re all coping with right now. While I tend to agree that now is the best time to get a stellar deal on a new home, RE/MAX Real Estate has taken it a step further. They want to kick your ass for not buying a home right now… well, sort of. Check out the video below:
Nice, eh?
My name is Joshua Ferris and I'm an Associate Real Estate Broker with Keller Williams Realty in Central Valley, NY. I have worked with some of the largest home builders in the United States to market and sell their homes. My past and current clients include K. Hovnanian Homes and Pulte Homes.
This blog serves as my megaphone on the world of real estate, technology and internet/business marketing.
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All content © Copyright 2009 HouseMeetsOwner.com/Joshua Ferris, Associate Real Estate Broker with Keller Williams Realty unless otherwise noted.