REAL ESTATE AGENT / DEFINITIONS

Joe Stephenson REALTOR®

Expert in real estate dynamics and dedicated to guiding clients through the complexities of property transactions with clarity and fairness.

Definition

An agent might use the assistance of other agents, who are called subagents. They assist a real estate agent. The subagent is also an agent of the principal. Certain agency relationships are considered fiduciary, meaning they are relationships involving great trust and confidence between the principal and the agent, and the agent must act with high standards of care.

Real Life Example

This is a dedicated real estate subagent who found a unique niche within the real estate process.

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Role and Responsibilities of a Sub-Agent

A sub-agent's primary duty is to find potential buyers and negotiate on behalf of the seller.

They must adhere to all legal and ethical standards of the real estate industry, including fiduciary duties to the seller.

• The sub-agent finds prospective buyers for the property.
• They negotiate offers to ensure the best price for the seller.
• Sub-agents owe fiduciary duties to the seller, such as reasonable care and confidentiality

Examples of a Sub-Agent

Sub-agents are often found in larger brokerage firms or in situations where the listing broker needs assistance in managing multiple listings.

They work closely with other real estate agents to ensure a smooth real estate transaction.

• Sub-agents can be found in large brokerage firms, assisting with multiple listings.
• They work closely with listing agents and other real estate agents.
• They help facilitate smooth real estate transactions.

What Does a Subagent Do?

Sub-agents play a critical role in the home buying process.

They help market the property, arrange viewings for interested buyers, and handle negotiations with prospective buyers.

• Sub-agents market the property to attract potential buyers.
• They arrange property viewings for interested buyers.
• They negotiate with prospective buyers to secure the best deal for the seller.

Differences Between Sub-agents, Buyer's Agents, and a Listing Broker

A sub-agent represents the seller's interest, while a buyer's agent represents the buyer.

The listing broker is the agent representing the seller and has the authority to designate sub-agents.

• Sub-agents represent the seller.
• Buyer's agents represent the buyer.
• The listing broker represents the seller and can designate sub-agents.

Sub-Agent Limitations

Sub-agents cannot represent the buyer's best interests as their fiduciary duty is to the seller.

They are also limited by state laws and regulations governing agency relationships in real estate.

• Sub-agents cannot represent the buyer's best interests.
• They are bound by state laws and regulations.
• Their fiduciary duties are to the seller.

Potential Disadvantages for Buyers in the Sub-Agency Model

In the sub-agency model, the buyer does not have an agent advocating for their best interests.

This could lead to issues in negotiating offers or understanding the home buying process.

• The buyer does not have a dedicated representative in the sub-agency model.
• Buyers may face challenges in negotiation and understanding the real estate proces
• There may be potential conflicts of interest in this model.

FAQs

Are sub-agents different from real estate agents?

Yes, sub-agents are real estate agents who represent the seller's interests, not the buyer's.

How is a sub-agent different from a buyer's agent?

A sub-agent represents the seller, while a buyer's agent represents the buyer's interests.

What is the most significant disadvantage of sub-agency in real estate?

The most significant disadvantage of sub-agency is that the buyer does not have a dedicated agent advocating for their best interests.

Important Facts About Sub-Agents in Real Estate Transactions

In the realm of real estate transactions, understanding the roles of different agents is crucial. A sub-agent is essentially a seller's agent who works under a listing agent or a real estate broker.

They assist in selling properties by finding interested buyers and owe fiduciary duties to the seller.

This means they must act in the best interest of the seller, not the buyer.

However, they must equally respect confidential information from both the buyer and the seller.

The agency relationship between a sub-agent and the seller is typically established through the listing agent or broker called upon by the seller.

In some cases, a brokerage firm may have both seller's agents and buyer's agents.

When a buyer's agent agrees to show a property listed by the seller's agent, a designated agency relationship is formed.

Most buyers prefer having their own buyer's representative to protect their own interests.

This representative, also known as a buyer's agent, helps prospective buyers navigate home buying transactions.

These agents owe fiduciary duties to the buyers and must always act in their best interest, unlike sub-agents or seller's agents.

Some regions have abolished sub-agency due to issues of vicarious liability and potential legal trouble.

In such a case, exclusive agreements between buyers and their agents or sellers and their agents are encouraged.

These exclusive agreements ensure that the interests of each party are protected, and there is clear representation in each transaction.

Remember, it's essential for all parties involved in a real estate transaction to understand their relationships and responsibilities to avoid confusion and potential disputes.

How to Get Setup with a Sub-Agent in Real Estate

To get started with a sub-agent in real estate, the first step is to find an experienced local agent.

This agent should understand fiduciary duties and be committed to protecting your fiduciary interests.

Be cautious of any signs of a bad agent, such as lack of responsiveness or poor knowledge of the local market.

Once you have found an agent, discuss the concept of sub-agency.

The subagent's primary duty is to the home seller, but they must also treat all parties fairly. It's essential to understand this point as it can often be overlooked.

Then, decide on how the subagent will operate.

This should be in writing to avoid any misunderstandings later. Make sure you give your written consent to the arrangement.

Remember, even though the subagent owes their primary loyalty to the seller, they are still obligated to treat you, the buyer, fairly.

Next, negotiate the commission split.

Sub-agents typically earn a portion of the commission that the selling agent receives from the home seller.

As a prospective buyer, this shouldn't affect you directly, but it's good to know how your agent is compensated.

It's important to note that the subagent can be held responsible for their actions by either the buyer or the seller.

So, if you feel your interests are not being adequately represented, you may have recourse.

A good agent will play hardball when necessary, but always in a way that respects the interests of all parties involved.

Finally, remember that the subagent owes fiduciary duties to the seller, but must treat the interested buyer honestly and fairly.

This balance can be tricky to maintain, so choose your sub-agent carefully to ensure a smooth and successful real estate transaction.

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REAL ESTATE AGENT / DEFINITIONS

Distressed properties often come up as a topic of interest. But what are distressed properties?

By: Joe Stephenson REALTOR®

Table of Contents

1. What is a Distressed Property
2. Common Signs
3. Examples
4. Pros and Cons of Buying
5. Tips
6. How to Find a Distressed Property
7. FAQs
8. Real Estate Investors
9. Contact

Definition

Distressed properties are homes or buildings that are in poor condition or whose owners cannot keep up with their mortgage payments.

They can be a goldmine for real estate investors looking for properties below market value.

Common Signs of Distressed Properties

How can you identify a distressed property? Here are some tell-tale signs.

• Neglected Maintenance – Look for broken windows, peeling exterior paint, or a neglected yard.
• Multiple Notices – Often, the current owner may receive multiple notices from the bank due to delinquent mortgage payments.
• Legal Notices – In some cases, you might see legal notices posted on the door or windows.

Examples

Distressed properties come in various forms.

• Foreclosed Homes – These are properties where the homeowner couldn’t make their monthly mortgage payments.
• Short Sales – Here, the homeowner owes more on their mortgage than the home’s current market value.
• REO Properties – Real Estate Owned (REO) properties are bank owned properties that didn’t sell at a foreclosure auction.

Pros and Cons of Buying a Distressed Property

Buying distressed properties isn’t for everyone. Here are some pros and cons to consider.

Pros

• Lower Price – Distressed properties often sell for less than their market value, increasing potential profit margins.
• Less Competition – There may be fewer buyers in the market for distressed homes.
• Potential for High Returns – With necessary repairs and upgrades, these homes can be resold at a higher price.

Cons

• Need for Repairs – Most distressed properties require serious repairs.
• Purchasing Delays – The foreclosure process or short sale negotiations can take longer than a regular home sale.
• As-Is Sale – Most distressed properties are sold “as is,” meaning the buyer purchases the property in its current condition.

Tips For Buying Distressed Real Estate

If you’re considering buying a distressed property, keep these tips in mind.

• Get an Inspection – Always have a home inspection before buying to identify any potential issues.
• Work with a Real Estate Agent – A real estate agent experienced in distressed property sales can guide you through the process.
• Be Patient – The process of buying distressed properties can take longer than other real estate transactions.

How to Find Distressed Properties

Finding distressed properties requires a bit more legwork. Here are some methods:

• Foreclosure Auctions – Attend local foreclosure auctions.
• Short Sales – Contact real estate agents who specialize in short sales.
• Online Searches – Search online for bank-owned REOs or properties with delinquent mortgage payments.
• MLS Listings – Check the Multiple Listing Service (MLS) for distressed properties.
• Tax Sales – Look for properties with unpaid property taxes.

Every county or city should have a resource like this on their website – https://www.jocogov.org/department/treasury-taxation-and-vehicles/property-tax/tax-foreclosure

Look for these types of websites to find tax foreclosures. Contact us to learn more about how to identify these types of properties.

FAQs

What Are The Risks Of Buying Distressed Properties?

Buying distressed properties does come with risks, including unexpected repair costs, purchasing delays, and potential issues with the title.

What Does Buying A Property As-Is Mean?

Buying a property “as is” means you’re purchasing the property in its current condition, without any guarantees from the seller about its condition or functionality.

If It’s So Risky, Why Do People Buy Distressed Properties?

Despite the risks, many investors buy distressed properties because they offer the potential for high returns. They are often sold below their market value, providing an opportunity to renovate and resell them at a profit.

While buying distressed properties can be risky, it can also be a lucrative venture for savvy real estate investors.

By understanding what to look for and how to navigate the process, you can potentially find a great investment property.

Real Estate Investors

Real estate investors often seek out distressed properties as a part of their investment strategy.

Distressed homes, including REO (Real Estate Owned) properties and those in pre-foreclosure, can offer significant benefits both for the buyer and the county.

From an investor’s perspective, these properties are typically priced below market value due to the seller’s motivation to avoid foreclosure, allowing the buyer to save money on the purchase.

This lower cost can make the prospect of buying, renovating, and reselling these homes – often termed “fixer-uppers” – more profitable.

For the county, selling distressed properties helps recover unpaid property taxes, reducing tax delinquencies.

Additionally, revitalizing these properties can enhance neighborhood property values and reduce blight.

If you’re interested in investing in distressed properties, here are some steps to get started.

• Public Records – Check public records for default notices and tax liens. These documents can help identify distressed properties.
• Foreclosure Sales – Attend local foreclosure sales where many distressed properties are auctioned off.
• Networking with Other Investors – Join real estate investing groups or forums to learn from other investors’ experiences.
• Probate Court – Properties inherited through probate court can often be purchased below market value.
• Engage with Motivated Sellers – Homeowners looking to sell quickly to avoid foreclosure can be a good source of potential investments.
• Big Banks – Banks often have a list of REO properties that they own due to unsuccessful foreclosure auctions

While distressed properties can provide significant opportunities for profit, the closing process can be complex and requires careful due diligence.

Ensure you understand all legal and financial implications before purchasing a foreclosed home or any property on the open market.

Contact Joe. Join Our Newsletter.

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Joe Stephenson is a dedicated real estate professional with a wealth of knowledge in dealing with various property types, including distressed homes and REO properties.

His experience spans across resale and new construction, making him a valuable resource for those navigating the complex world of real estate.

Whether you’re seeking to purchase a bank-owned property, sell a distressed house, or explore pre-foreclosure options, Joe’s expertise can guide you through every step of the process.

He has successfully managed many distressed sales and understands the intricacies involved in handling neglected properties.

With Joe, you can be confident that your interests as distressed owners will be well-represented.

If you’re interested in exploring more about distressed properties or want to stay updated on the latest trends in the real estate market, consider joining our newsletter today.

Let Joe Stephenson help you turn a challenging real estate situation into a profitable opportunity.

REAL ESTATE AGENT / DEFINITIONS

Real Examples for 2024

By: Joe Stephenson REALTOR®

Table of Contents

1. What are Pocket Listings?
2. Examples
3. Pro’s and Cons
4. How Pocket Listings Work
5. MLS Listings vs. Pocket
6. Newsletter

Definition

A pocket listing is an exclusive real estate listing that isn’t publicly advertised on the Multiple Listing Service (MLS).

Instead, real estate agents and brokers market these properties through private channels to potential buyers within their personal network or to other real estate professionals.

Examples of Pocket Listings

Consider a high-profile celebrity who wants to keep their home sale hush-hush to avoid unwanted attention.

They might choose a pocket listing to maintain privacy.

Or, a seller might test the market with a pocket listing before deciding on a realistic selling price.

Pocket listings exist as an option for people who wish to work with listing agents to find home buyers in a different, usually more private, way.

I for one know how challenging it is to get real estate listings, especially if you are just starting out.

So learning as much as you can will help you.

Pros and Cons for Sellers and Buyers

For the seller, the advantages of a pocket listing include privacy, control over who sees the property, potential to generate interest through exclusivity, and the ability to test the waters before setting an asking price.

However, the cons include limited exposure, which could lead to a lower price due to less competition, and a longer time on the market.

On the other hand, buyers of pocket listings have the benefit of fewer people bidding on the property, potentially securing it at a lower price.

They also get access to exclusive real estate not available on the open market.

The disadvantages include a smaller pool of properties to choose from and the lack of transparency regarding price history and comparable sales.

Why Sellers Might Use Pocket Listings

Sellers might use pocket listings for various reasons.

Privacy is a significant factor, especially for public figures or sellers who wish to keep their sale private.

Additionally, pocket listings allow sellers to bypass the high-pressure environment of bidding wars that can occur with publicly listed properties.

How Pocket Listings Work

In a pocket listing, the seller signs a listing agreement with a real estate agent, but instead of the property being listed on the MLS, the details are kept ‘in the pocket’ of the listing agent.

The agent then markets the property discreetly—through word of mouth or private connections—to other agents or prospective buyers.

Advantages and Disadvantages of a Pocket Listing

While pocket listings can provide privacy and exclusivity, they also raise concerns about fairness and transparency.

They limit the pool of potential buyers, which could result in a lower selling price for the seller.

For the buyer, the private nature of these transactions can make it difficult to determine if they’re getting a fair deal.

Pocket Listings And The Real Estate Market

Pocket listings are not as common as MLS listings—only a small percentage of homes sold nationwide are off-market listings.

They do play a role in the real estate industry, especially in high-end markets where privacy and exclusivity are valued.

How MLS Listings Compare to Off-Market Listings

MLS listings provide maximum exposure to a property by making it visible to all real estate agents and potential buyers searching the database.

In contrast, off-market listings are only accessible to a select few, limiting their visibility but offering a more targeted approach.

How To Find Pocket Listings

Finding pocket listings requires networking with real estate professionals who often deal with such listings.

You can also work with a real estate agent who has access to these types of listings or use platforms that specialize in off-market properties.

What is the Pocket Listing Policy for Real Estate Agents?

The National Association of Realtors (NAR) has a “Clear Cooperation Policy” that requires its members to list any property they market on the MLS within one business day.

However, this policy does not apply to office exclusive listings, which are marketed without the help of other agents.

While pocket listings may not be suitable for everyone, they can be a viable option for those prioritizing privacy or seeking unique properties.

As with any real estate transaction, it’s essential to work with trusted industry professionals to guide you through the process.

Why it is Important to Learn About Pocket Listings as a Real Estate Agent

As a real estate agent, understanding pocket listings can significantly enhance your ability to serve both the buyer and seller effectively.

An off-market listing or private listing are a unique segment of the real estate market that require a different approach compared to traditional MLS listings. Knowledge about pocket listings can help you.

• Cater to home sellers who value privacy and prefer to avoid the public exposure of an MLS listing.
• Provide options to certain buyers who are looking for exclusive properties not available to the general walk-in traffic.
• Collaborate with other real estate agents and brokers to share information about off-market listings, thereby broadening the range of properties available to your clients.
• Navigate the complexities of pocket listings, such as ensuring accurate sense of property value based on square footage and other factors, which might not be readily available like in an MLS database.
• Better manage the home buying process by preparing buyers for potential bidding wars and educating sellers about the trade-offs between exposure and privacy.
• Uphold professional standards by adhering to guidelines set by real estate standards organizations regarding pocket listings.

By familiarizing yourself with pocket listings, you can position yourself as a versatile and knowledgeable agent capable of meeting diverse client needs. I find that real estate brokers love that.

Whether working as a solo agent or part of a team, this knowledge can give you an edge in today’s competitive real estate landscape.

Join our Newsletter to Learn More About Real Estate from Joe Stephenson

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We’ll keep you updated on everything from how to negotiate seller concessions to understanding the nuances of the local market.

Sign up today to start your journey towards becoming a more informed home buyer or seller.

REAL ESTATE AGENT / DEFINITIONS

Definition And Tips For Homeowners

By: Joe Stephenson REALTOR®

Table of Contents

1. What is an Easement?
2. Real Life Examples
3. Types of Easements
4. What Should I Do if I’m Buying a Property With an Easement?

Definition

A right to utilize another person’s property for a particular objective, such as establishing a right-of-way or installing utilities, is termed an easement. It represents a non-possessory or intangible interest in real estate, as it doesn’t confer any ownership or occupancy rights.

Easement Diagram

1). Lot C has an easement by necessity across Lot B

2). The public has an easement right over Lot A to the lake.

3). A utility easement in gross crosses Lots A, B, and C

Common easement types

Common easement types include utility easements, private easements, conservation easements, and right-of-way easements.

Easement in gross

An easement in gross benefits a particular individual or entity, rather than a neighboring property.

Easement by prescription

An easement by prescription is another term for a prescriptive easement.

Light and Air Easements

Light and air easements are a type of nonpossessory interest in real property. They grant the right to access light or air from a property owned by another person. For instance, a building owner might purchase a light and air easement from neighboring properties to ensure that their building will continue to receive sufficient light and air, even if new structures are built next door. This can be particularly crucial in densely populated urban areas where high-rise buildings are common. These easements can significantly impact the value and development potential of a property.

Emergency Access Easements

Emergency access easements, also known as fire or police easements, are granted to public authorities or first responders to allow them access to private property in case of an emergency. This can include the need for an ambulance to drive across private land to reach a patient more quickly, or a fire truck needing access to combat a forest fire. In some cases, these easements may also be used for routine patrol by law enforcement agencies. The owner of the property cannot obstruct these easements and must allow access when necessary.

Drainage Easements

Drainage easements are commonly used where water from higher ground naturally flows across a lower piece of land. The owner of the upper parcel may have a drainage easement allowing them to direct water (such as rainwater or melted snow) onto or across the lower parcel. This can prevent waterlogging or erosion on the upper parcel. Conversely, the lower parcel’s owner may hold an easement allowing them to drain water onto the upper parcel. These easements can be critical in maintaining the health and integrity of both properties, especially in areas prone to heavy rainfall or snowfall.

Private Easements

Private easements are a type of easement that grants specific rights to a particular individual or entity, rather than to the general public or a large group of people. These are often created through express agreements between property owners. For example, a homeowner might grant a private easement to their neighbor, allowing them to use a portion of their property for driveway access. The rules and regulations of private easements are typically outlined in the easement agreement itself.

Conservation Easements

Conservation easements are legal agreements between a landowner and a land trust or government agency that restrict the use of a property to protect its conservation values. They’re commonly used to preserve natural or man-made features like forests, wildlife habitats, or historic buildings. Once in place, these easements restrict activities like development and subdivision, while allowing the land to be used for purposes consistent with conservation, such as agriculture or outdoor recreation. The specifics of what is and isn’t allowed under a conservation easement will depend on the terms of the individual agreement.

Right-of-Way Easements

Right-of-way easements, often associated with roads and utilities, give certain parties the right to travel over another’s property to reach a specific destination. This can include public access routes, such as hiking trails, as well as utility lines for services like electricity, water, or internet. These easements are usually created through an agreement between the property owner and the party requiring access, with the terms outlining who can use the easement, for what purpose, and any maintenance responsibilities.

Prescriptive Easement vs Adverse Possession

The distinction between a prescriptive easement and adverse possession lies in the rights they confer. While a prescriptive easement simply bestows upon an individual the privilege to utilize the property, adverse possession can eventually result in the individual becoming the legal owner of that property.

How can I prevent someone from acquiring a prescriptive easement to my property?

To prevent someone from acquiring a prescriptive easement to your property, you can make it clear that their use of your land is with your permission. This can prevent their use from being considered “hostile,” a requirement for prescriptive easements.

What’s an easement appurtenant?

An easement appurtenant is a type of easement that benefits an adjacent property. This could be something like a right-of-way through your land to provide access to the neighboring property.

Prescriptive easements

Prescriptive easements are acquired when someone uses a part of your property without your permission for a certain period of time.

Utility easements

Utility easements allow utility companies to use a portion of a property for their equipment.

Real Life Examples of Easements

In the bustling city of Easement Heights, various types of property easements are woven into the urban fabric. Let’s explore some illustrative examples:

1. Express Easement: Consider Mr. Williams, a property owner whose private property borders a public school. The school, as the easement holder, has an express easement inscribed in the property deed. This agreement allows them to use a portion of Mr. Williams’ land as a path for students – a clear example of property access on someone else’s property.
2. Implied Easement: Next, there’s Mrs. Baker, who enjoys a beautiful ocean view from her patio. The previous owner had an unwritten agreement with the neighboring property owner, Mr. Lee, that they would not build anything obstructing this view. Even though it’s not officially documented, this implied easement continues to provide Mrs. Baker with an unobstructed vista.
3. Private Easement: Down the lane, Mr. Rodriguez’s home is hidden behind Ms. Chen’s property. To access his home, he uses a private easement through Ms. Chen’s driveway. His property is the dominant estate, benefiting from this easement, while Ms. Chen’s property is the servient estate, bearing the burden of this arrangement.
4. Affirmative Easement: On the edge of the city, the local utility company has an affirmative easement to maintain power lines that cross over Mrs. Patel’s spacious backyard. This easement allows them to perform necessary work on a person’s land without transferring any ownership interest.
5. Negative Easement and Historic Preservation Easement: At the heart of Easement Heights stands a historic building owned by the Anderson family. They granted a negative easement and a historic preservation easement to the local historical society. This ensures that even after a property sale, future owners cannot alter the building’s exterior, preserving its historic integrity.

Through these examples, the definition of easement comes to life. It’s clear that property easements play a vital role in balancing the rights and interests of property owners, easement holders, and the community at large. Whether it’s an express, implied, private, affirmative, negative, or historic preservation easement, each serves a distinct purpose in the complex landscape of property rights and access.

What To Do If A Home You’re Buying Has An Easement

If you’re considering buying a home with an easement, it’s important to understand the terms of the easement and how it might affect your use of the property. It can be a good idea to consult with a real estate attorney before making a decision.

Should I buy a property with an easement?

Buying a property with an easement depends on the terms of the easement and how it affects the property. It’s advisable to understand the details of the easement before making a decision.

Should you buy a home with an easement?

Whether you should buy a home with an easement depends on the type of easement and how it impacts the use of the property. You may want to consult with a real estate professional or attorney to understand the implications.

How To Create An Easement

Creating an easement typically involves drafting a legal document that outlines the terms of the easement and having it signed by both parties.

Categories Of Easements

Easements can be categorized into several types such as utility, private, conservation, and right-of-way easements.

How to create, or remove, a property easement

Creating or removing an easement usually requires a legal agreement between the property owner and the party that holds the easement.

Will an easement impact my property value?

The impact of an easement on your property value can vary. Some easements may have little impact, while others could potentially decrease your property value.