Should I Be Represented By A Realtor®?

Here’s a recent, true story. A friend of mine, let’s call him Jim, had been very casually looking for a home. I had done some searches for him and even showed him a couple of homes, but he and his wife were in no hurry. The plan was that they might like to downsize, so if they bought a house they would rent it out until they were ready to move in a few years. A little over a month ago they were out for a Sunday drive and saw a perfect house – and there was an ‘open house’ being conducted. They absolutely fell in love with this house.

Jim is a mechanic and the house didn’t have a garage, but the lot was big enough to accommodate a garage, according to the listing agent. They walked out to where the lot (supposedly) ended, and promptly wrote an offer which was accepted. The listing agent did ask Jim if he was working with a Realtor®, and Jim did think about me, but he thought that he could get a commission discount by going through the listing agent – after all she was going to get the whole thing – no split with another agent. Well, as you might guess, that didn’t happen.

The process continued, and literally at the closing table, Jim and his wife found out that the lot dimensions explained to him were incorrect. In fact, the lot ended about 8 feet from the side of his house. No room for a garage. The sellers were unaware of their agent’s lot line representation to Jim and his wife. It might have been an innocent mistake by the agent, or that she was excited with having a ‘live’ buyer in this slower market and didn’t take time to make sure that the info was correct.

Jim is a good guy. He and his wife just loved the house anyway and didn’t want to mess up the plans of the sellers, so they went through with the closing and bought the house.

He called me the next day to ask if he had recourse. Of course he had a number of options to pursue, all of which would cost him in time, energy and legal fees. He decided to negotiate with a neighbor to buy enough of the adjacent lot so he could build the garage.

Jim is like the rest of us. We all need to make our money stretch. In this case, he thought he could save on the purchase price by getting the listing agent to kick in part of her commission. Of course, that never happened. But more importantly, he was working with an agent who had fiduciary responsibilities to the sellers, not to him and his wife.

If he had been working with a Realtor serving him as a Buyer’s Representative, that agent would have verified all of the details of the listing, reviewed the title work, and made sure that the seller provided a survey. If there were discrepancies, Jim would have had an ‘out’ in the contract, or at least we could have re-negotiated the purchase price. In this case he will pay more because he has to buy land from the neighbor.

I would certainly represent myself in a Real Estate transaction with the knowledge, experience and skill that I have obtained in my field, but I wouldn’t attempt to make a major mechanical repair on any of the family vehicles. Real Estate transactions can be very complicated, and while some transactions are conducted without the aid of a Real Estate professional, my belief is that they will go smoother, be less stressful, and you’ll have fewer surprises than if you try to do it on your own.

Jim did tell me that he will always be represented in future Real Estate transactions, but it was a tough - and expensive way to find that out.

2005 Livingston County Vacant Land Sales

Land sales, as reported through the multilist system, were down about 17% from 2004. But that doesn't mean that it was necessarily a sluggish year. Overall, there were 417 pieces of land reported sold. That does not account for private sales (For Sale By Owner), and not all production builders report every sale through the multilist.



The above chart represents a breakdown by parcel size, days on the market (DOM) and sale price. It's interesting to see that the smaller lots (under 2 acres) sold at a higher median price than the next larger grouping (2 to 4.9 acres). Further examination shows that 40% of the under-2 acre pieces had a curbed street - which means they were in a development - either a site condominium project or a planned unit development.

It's not unusual to see these lots go for a premium price for their size since the developer has put in a hard road, curbs, and sometimes sidewalks, too. They often have underground utilities, and may be connected to a local sewer district if the density is high. All of these amenities cost the developer, and those costs are passed on to the consumer. These lots are often less than a half-acre in size, creating a denser community.

The sold data gives us an average of 34.75 sales per month for 2005. If you compare that to land that is currently offered for sale, we have 1,370 lots available in all sizes. If they were all priced properly (priced realistically to sell), there would be a 39 month supply (1,370 lots divided by 34.75 sales/month). But we know that not every piece of vacant land - as with houses, cars, or anything else - is priced realistically.

The 'Days On The Market' are much larger for currently listed parcels than those of the sold properties. Since those are average figures, it indicates that some land has been listed for a lengthy amount of time.

There are so many factors that influence the final market value of vacant land. In some ways, it is more difficult to price properly than a home. If you're considering buying or selling vacant land it's important that you work with a Realtor who knows what these factors are, and how much or little they contribute to the final value of land.

There is a constant and continued interest from consumers searching for land on which to build homes. Modular homes are especially popular. Smaller, non-production builders area also on the lookout for a nice piece of land, as well.

I get many, many calls every month from people who have newer, larger, beautiful manufactured homes, too. They are getting squeezed by lot rent increases and want to find land where they know the amount of their monthly payment. Unfortunately, this requires a lot of work as some Townships have specific areas zoned for this type of home, or there are private deed restrictions preventing their placement.

If you're considering a land sale in my market area, I'd like very much to go over the many items that affect the marketing price. If you're a purchaser, I'd also like to work with you, but in any case make sure that you find a knowledgeable, local Realtor. There are too many nuances that are missed if both you and your agent aren't from the immediate area. I work with consumers and builders on vacant land acquisition and sales. Feel free to call or email with any questions that you might want answered.