In the SF Chronicle column known as “Surreal Estate”, on 7/22/07(http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/07/20/carollloyd.DTL)
the author, Carol Lloyd, asked the very important question: “But can’t there be a happy medium between high-commission professionals and bootstrap DIY?”

Then she cites:

“Next week: Red Fin, FSBO.com, and Help U Sell: The changing terrain of minimum service agents and customer rebates.”

The happy medium she seeks is NOT The Redfin, FSBO.com or Help U Sell models. These require a great deal of involvement from the seller (i.e. holding their own open houses), or in Help U Sell’s case, only saving a seller money if the property stays off the MLS, thus greatly limiting its exposure. If paying a traditional realtor 6% is one extreme, then these models are only a step above the other extreme, total do-it-yourself.

The true middle ground is offered by a company such as mine: Realty Advocates. Based in Oakland, but servicing most of the East Bay and San Francisco, we offer a genuine middle ground between the 6%ers and the DIY. We provide the highest degree of service and professionalism while simply charging less in commissions (typically 3.5%-4.5%) Ours is a 21 year track record of success.

Brett Weinstein

While the current home sale market is considerably cooler than in the recent past, there still remain many pockets of under-supply and over-demand. North Berkeley is a good example, where homes are still receiving multiple offers and large overbids. When a house for sale is vacant, one of the ways buyers make their offers more competitive, aside from price, is to have the property “pre-inspected” by a professional home inspector, with the idea to make an offer without an inspection contingency. While it can seem very attractive to a seller to receive a non-inspection contingent offer, there are larger issues at stake that make me recommend to my sellers that I expressly prohibit a buyer from pre-inspecting.

What’s wrong with allowing pre-inspections? It’s not really fair, for one thing. In effect, the seller is asking buyers to spend somewhere $500-$700 for an inspection on the speculation that their offer will be accepted. Well, only one offer will be accepted, leaving every other buyer with a useless report and a lighter pocket. Now repeat this process several times with several properties and you can see how a buyer might get more than a bit annoyed. So even when the buyer finally does get into contract, he is predisposed to being unhappy. This is usually not a good recipe for living happily ever after.

For another thing, allowing pre-inspections creates a logistical pain-in-the-ass. There have been many occasions where several groups of buyers, their agents, and their inspectors are all at the house at the same time. I can assure you, the only people happy with this scenario are the inspectors.

The remedy of all this is simple: allowing for a few possible exceptions (major fixer uppers, for instance), listing agents should prohibit buyer pre-inspections. Assure buyer’s agents that a reasonable inspection contingency period in an offer will not be held against them. This way, buyers can compete strictly on price and other terms.

This isn’t just touchy-feely stuff. It is my experience that when a buyer feels fairly treated, they will offer more.

The listing practice of not allowing buyer pre-inspections should go hand-in-hand with the seller providing a very good disclosure package. I’ll discuss this in my next posting.

Written by Brett Weinstein