Frequently Asked Questions
The information provided below pertains to real estate transactions in Virginia.
Can I sell my own home without a real estate agent?
Short answer is “yes”. Although, with the extent of contractual and legal matters, negotiation aspects, the involvement of multiple entities, real estate transactions are complex. All parties have to meet several legal requirements, and non-compliance can lead to significant risks of loss of money, loss of contracts, law suits, and more problems. Some people are attracted to the possibility of saving the cost of brokerage commissions. Another option is to have an agent provide “limited services” at a lower cost that can include listing the property in the MLS so the seller’s property is still widely advertised. Yet, consider the representation services that an agent can provide: Education and guidance, assist with preparing homes for sale, advertising strategies, professional photography services, negotiations with other agents, coordination of services by the many entities involved (settlement firms, inspectors, lenders, appraisers, HOA/Condo Associations, home repair contractors, et al), evaluations of homes for buyers, insight into zoning and other laws, and much much more.
How are prices determined?
Identifying a sales price (fair market value) is one of the most misunderstood components of real estate transactions. Many people look at sales prices of homes in their neighborhoods and believe that equates to a fair price for their homes. This is not an accurate approach because most homes have differences and those differences have different values. Identifying a fair market value for a property considers many things:
- Sales prices of recently sold nearby comparable homes. This usually means a home that sold within the past few months in the same neighborhood and is a very similar home.
- Size, number of rooms, style, age of the home
- Material condition, recent upgrades and additions. Age and condition of systems (HVAC, water heater, etc.).
- Utility (extent of ability to use the property). Easements, protected land, flood zone.
- Location and geography
- Type of ownership
- Existence of HOA or Condo Association and amount of dues
- Income potential for investment properties
- Buyer demand, quantity and nature of offers
- Market trends
- This is a partial list. There will be more details considered specific for each property.
Does Veteran Realty work with first-time home buyers?
Yes. If you previously owned a home, you may still be considered a first-time home buyer. That’s right. “First-time home buyer” is defined as a person who has not owned a home in the past 3 years. This term is used by lenders and Government entities to determine eligibility for home buying assistance. Ensure your agent is knowledgeable of first-time home buyer support services.
Can I list my home in the MLS without having a real estate agent?
Sellers can receive “limited services” from a real estate agent that can include listing the property in MLS for a nominal fee. MLS is used by real estate agents across the country to list properties for sale or rent, and to identify properties for buyers and tenants. Some people who want to sell their own properties, often referred to as For Sale By Owner, select this service because advertising in MLS can greatly increase promotion to prospective buyers. Technically, a real estate agent is still involved because only they can list properties in MLS, yet sellers can still manage their own contract preparation, negotiate with buyer agents, coordinate contractor and inspector services, manage buyer visits (showings), verify buyer loan eligibility and loan application status with the lender, oversee compliance with state law requirements, etc.
How much are real estate agent commissions?
Commissions are negotiable between clients and agents, and they always have been. They can vary depending on the extent of services provided or by other factors. Typically the commission is specified as a percentage of the contract price, yet the commission can also be specified as a flat fee. Sellers can also decide whether or not to consider providing for the seller’s agent to share a portion of the commission to the buyer’s agent. A seller agent sharing a portion of their commission with the buyer agent can be an incentive for buyers to consider the seller’s home since the brokerage commission comes from the proceeds of the sale vice as an additional out-of-pocket cost by the buyer. The amount of the commission provided to the seller’s agent that will be shared with the buyer’s agent is an amount approved by the seller. Prices of homes consider the cost of commissions, so sellers should not feel disadvantaged by the buyer agent’s commission coming from the sale proceeds. These proceeds come from the buyers buying the property anyway. Buyers can fairly expect sellers to lower their sales price when the sellers do not agree to the seller agent sharing the commission to cover the buyer agent’s commission.
When deciding the amount of a commission to be shared by seller agents with buyer agents, consider that the VA does not permit buyers to incur buyer agent commissions when they use VA loans. This means that a large number of buyers may not consider the seller’s home because they are relying on the standard commission sharing approach for their agents to be compensated. Also, buyers may not have the funds to cover this expense along with other closing costs and have the funds that their lender requires for a down payment. This means the buyer may not be approved for the home loan.
Buyer agents can seek compensation from buyers, other than from buyers using VA loans. This may likely occur when a seller does not approve the sharing of their agent’s commission with buyer agents.
Can I terminate my Representation Agreement or Listing Agreement?
Yes. Clients may terminate their Agreements by providing Notice to the brokerage. Representation Agreements (for buyers) and Listing Agreements (for sellers) are actually executed between clients and the brokerage. The agent involved is not a signatory, yet is “designated” as the agent to work with the client. Brokerages should provide the client with a Release to provide clients with a record of the termination of the Agreement.
With Agreements being executed between clients and the brokerage, vice between clients and an agent, clients may be well served by asking the brokerage to designate an alternate agent to assist. Although the news may be unpleasant, brokerages will be interested in the performance of agents so they can continuously improve the services to their clients.