Three Things to Consider Before Relocating to a New Area

If you have been researching information about the relocation process online, in almost every article, you will read about how very stressful it can be. It is reasonable to say that one will most likely experience some degree of culture shock, because lifestyles can vary dramatically between states, including the cost of living. Here are three things to consider for eliminating the anxiety of relocation:

1. Take some time to visit the area you are considering.

A little familiarity will go a long way, when it comes to knowing whether or not the area will suit your taste and lifestyle. Planning a vacation to the new area is the ideal way to experience the area and what it has to offer. Brochures and pamphlets can only do so much. If your move is job related, you will likely have a few home-hunting trips paid for. However, don’t use this time to get familiar, as you will likely be under some kind of pressure to find a place. Instead, it would be better visit the new area outside of this paid house-hunting time, so you can relax while you see the sights, and all that the area has to offer. By doing this, you will establish a degree of familiarity that will ease any potential “culture shock” when relocating to a new state, and your planning will also benefit from the insight you gain from your visit.

2. Research and plan your move well in advance.

If you can help it, put time on your side. The more time you have to plan your move, the better your plans will be, and the better your move will turn out. There are many resources on the Internet that will help make your plans as solid as possible. For example, MyDreamLocale.com has area reports that tell you about an area’s cost of living, schools, crime reports, etc. It will also let you do area comparisons, which is always good when deciding where to move. Another resource you can find on the Internet is a move planner. Moving.com has a free move planner that you can use, along with other resources on their site, to help you plan a painless relocation.

3. Find an Exclusive Buyer’s Broker or Agent in the new area.

When you have done your research, visited the new area, and you have invested enough time into your planning—you are now ready to find an Exclusive Buyer’s Broker or Agent, if you did not find one already during your initial visit to the new area.

An exclusive buyer’s broker or agent is one who works for a real estate company that does not take listings. Exclusive Buyer Agency is the purest form of buyer representation. It helps buyers completely avoid Dual Agency—which is a conflict of interest. More and more buyers are realizing that they can get caught in a dual agency situation in one of two ways: (a) When the same broker or agent represents both buyer and seller in the same transaction, or (b) when two different agents, one representing seller and the other representing the buyer, works in the same transaction for the same real estate company—their company becomes the Dual Agent.

The best thing for consumers is for them to have their own real estate representatives, separate and apart from the other side in order to completely avoid dual agency, and not giving consent when asked to give it. As a consumer, you should stand firm when it comes to protecting your interests, and being clear about who is working for you is one of the best ways you can ensure that they are protected.

Lastly, if your relocation is job-related, you should be clear on whether or not you will be able to choose your own real estate agent. If not, you should make an effort to negotiate with your employer to, at least, help you avoid dual agency by asking your employer to instruct their relocation company to assign an Exclusive Buyer's Agent to represent you in the purchase of your home in the new area.

How to tell if an income property is over-priced:

Investing in real estate is riskier than investing in a Certificate of Deposit, so why would an investor be satisfied with buying income property at a 3%, 4%, or even a 5% cap rate?

Real estate investment opportunities that pencil out to low cap rates like these are overpriced, because investors can earn the same rates of return in a safer investment vehicle. Investments should earn more of a return for assuming the increased risks associated with real estate investments.

With a high-yielding CD account, money can earn between 4 – 5%, safely without lifting a finger. With real estate investments, an investor assumes more work, more risk, and therefore, warrants more of a return on money invested. This assumption is practical, and makes sense from an investor's perspective.

Experienced investors of all types know that with increased risk, they can (and should) expect more of a return on their invested money. You know you are looking at an overpriced income property, if it pencils out to a cap rate of 3 – 5%. Buying properties with low cap rates like this does not make sense, because an investor can earn these rates in a safer high-yielding CD account.

CD rates as of 12/09/2006 (source cited from bankrate.com, for informational reference only.)

TYPE
TODAY
+/-
LAST WEEK

6 month CD

4.64%
4.66%
1 yr CD

4.83%
4.86%
5 yr CD

4.70%
4.72%
1 yr IRA CD

4.64%
4.66%
5 yr IRA CD

4.59%
4.60%

Smart investors compensate themselves for the added risks they assume by establishing higher performance expectations for riskier investments, including real estate.

Buying overpriced income properties does not make much financial sense. Properties that produce cap rates under 5% is overpriced, in all honesty, because you can make these kinds of returns in a safer CD investment. Risk and reward go hand in hand.

Complacent Bureaucracy In Washington State!

Dear real estate consumers of Washington State:

We cannot depend on state agencies to do their job of protecting our freedom of choice. Our state Attorney General’s office is under the impression that some "exclusive dealing" agreements have pro-competitive benefits.

I fervently disagree.

It was disturbing to read the following statement from Jonathan A. Mark, an Assistant Attorney General at the Office of the Attorney General Of Washington State.


"While exclusive dealing can, under a particular set of circumstances, give rise to antitrust concerns, it is not presumptively illegal to enter into exclusive dealing contracts. In fact, antitrust law recognizes that, in many circumstances, exclusive dealing contracts can have significant procompetitive benefits. Consequently, exclusive dealings
are not disfavored under the law and generally constitute an antitrust violation only when it lessens or substantially forecloses competition in a particular market."

The truth of the matter is that Seattle.com lists:

1. Thirty-three businesses under "Dining"

2. Twelve businesses under "Hotels"

3. Eight businesses under "Attractions"

4. Thirteen Seattle travel guides under "Visiting"

5. Fifty-two businesses under "Nightlife"

Yet under their "real estate" category they exclusively refer all inquiries to only ONE company for an entire region.

This does not make any sense. I know that there are several other exclusive buyer agencies, aside from our own, that operate in the Puget Sound region of Western Washington. Below are some of them:

Amiad & Associates, Exclusive Buyers Agency - Vashon Island
www.vashonislandrealestate.com


The Buyer's Agent, Dream Drafters Realty - Seattle, Bellevue, Everett

www.dreamdrafters.com


Abbey Realty Exclusive Buyer Representative - Ft. Lewis area www.richgrow.com


Buyer's Data Realty - Exclusive Buyer Brokerage - Whidbey and Camano Islands
www.buyersdata.com

These companies only work with buyers.


This was my response to Mr. Mark's disturbing statement:

"Dear Jonathan A. Mark,

Your lack of concern is disturbing. Misconstruing the term "exclusive dealings" does not absolve your responsibilty of protecting consumer choice and preserving free competitive enterprise for all businesses.

You have failed Washington State consumers and the small businesses who have a right to a free and competitive marketplace. Your complacency is a disservice to the people you are charged with serving.

I have full faith that consumers would disagree with your office that exclusive dealings has any procompetitive benefits to them, as it diminishes their Right to freedom of choice. We shall let the people decide for themselves."

Final Note:

Please know, that despite bureaucratic complacency, you CAN protect your Freedom of Choice and neutralize biased referral sources by doing your own research, developing your own hiring process, and setting up interviews with a few good companies on your own. Only then will your freedom of choice be preserved, and the power taken away from those who do not respect it.

Buyer Beware: NWMLS Form 41A "Buyer Agency Agreement"

This is a boiler plate form commonly used by most members of the NWMLS. This includes most real estate professionals in the Greater Puget Sound. I do not like NWMLS Form 41A, specifically, the second clause because it asks the buyer to consent to dual agency. Why would a buyer agree to such a thing, when hundreds of thousands of dollars are at stake? Real estate is not a small ticket item. Real estate is a significant purchase with no room for imposed risks, such as, those risks imposed by Form 41A. Dual agency is a conflict of interest that should be avoided.

Here is the language contained in clause #2 of NWMLS 41A:

“Buyer agrees that if Broker locates a property that is listed by one of Broker’s salespersons other than Agent, then Buyer consents to Broker acting as a dual agent. Buyer further agrees that if Broker locates a property listed by Agent then Buyer consents to Agent and Broker acting as dual agents.”

It is unwise for buyers to consent to dual agency in any sense, because it is a conflict of interest. A well-informed buyer would be wise to draw a line through this language.

Our company does not use this form.

Does Agency Really Matter?

Buyers are best served by exclusive buyer agents and brokers. These dedicated buyer advocates do not take listings. They help buyers avoid Dual Agency, which is a conflict of interest. For example, a buyer finds a property listed with their agent’s company, the property is listed with a different agent within the same company, the company becomes a Dual Agent.

Dual agency becomes a problem when issues arise between buyer and seller. The company cannot fully go to bat for either side, because dual agents are required by law to remain neutral to both parties. Since problems can and do arise between buyers and sellers, it is better for buyers to eliminate the possiblity of such conflicts of interest before stepping into the market. Engaging the services of an experienced exclusive buyer’s agent is a good way for buyers to avoid dual agency and its inherent risks.

As the general public becomes more aware of these risks, we will see more buyers come to know and understand the value of buyer agency agreements; especially, exclusive buyer agency agreements, which is used to engage the services of an exclusive buyer agent (EBA).