By Paul Samuels
Real Estate Q&A

Editor’s note: This is a new question-and-answer column on the Charleston real estate market from the perspective of both real estate agents and the Lowcountry’s buyers and sellers.

Q: I am a new real estate agent and I have heard that joining a team of agents is a better way to start out in a very complicated, competitive business. What are your thoughts?

A: Although most agents still work alone, the team approach is gaining in popularity for good reason. There are many benefits both for the agents and the clients.

A real estate team is usually made up of a lead agent who serves as an experienced leader for the group, one or more buyer’s representatives, one or more listing representatives, a closing coordinator and perhaps a marketing coordinator, although the closing coordinator and marketing coordinator aren’t always agents. Buyer’s rep is a particularly attractive position for a new agent.

Consider the advantages:

• The marketing coordinator writes the ads each week.

• The lead agent usually pays for most of the advertising.

• The closing coordinator is in charge of the details of closing a contract.

• The lead agent will feed you leads, negotiate deals and write up contracts.

• If you have a problem or question, your team members are there to help you; the team is there to support you, not compete with you. Each member works together for one cause.

If you become a buyer’s representative, you’ll reply to ad calls and show houses. Once your clients decide on a house, you’ll hand them off to the lead agent for contract negotiation. By limiting your scope, you’ll quickly gain experience in handling buyers and you’ll also learn the market.

One reason you’ll learn so much faster is that you’ll have many more clients than if you try to go it alone. A good lead agent will have a formidable marketing plan that generates good leads each week. Most new agents can’t possibly hope to compete with that.

Once you’ve gained enough experience, you might want to move into a listing rep position. Again, you’ll be able to concentrate on a single aspect of the business and learn it at a much quicker pace.

Selecting the right person to work with is critical. Financially, you want to work with a top agent who generates a lot of leads. It’s also important to choose an agent who is a good, patient teacher, who is going to help you learn as much as you can about the business and who cares about your success.

Gauging the market

Q: We have heard a lot about buyers and sellers markets, but I am not sure I understand what those terms mean regarding real estate. Could you explain the differences?

A: The type of market is basically a question of supply and demand: How many homes are available in the marketplace and how many buyers are available to buy them?

The supply of inventory is determined by dividing the number of homes on the market in a given month by the number of houses sold that same month. For example, if 6,000 houses are on the market and 2,000 of them sell in October, that means there is a three-month supply of homes. If no other houses come on the market and homes continue to sell at the current rate, all the houses will be sold within three months.

Many experts say that if you have a three- to six-month inventory, you have a buyers market, but I tend to lean more toward the six-month figure as a buyers market.

Recognize that whether or not it is a buyers or sellers market is not determined by interest rates or the high price of houses.

Some characteristics of a sellers market are:

• A booming local economy, with businesses hiring and new companies opening.

• A low existing housing inventory, meaning there is not enough supply to meet demand.

• Builders not producing enough homes to fill the demand.

• Home sales prices escalating. The national average has been in the 5% to 7% range. A sellers market could create double-digit increases in price, and some communities have doubled in price in just a year or two.

• Buyer contracts come in with no contingencies. Buyers no longer offer under list price or want to negotiate. All they want is the house.

• Sellers aren’t asked to assist buyers in the transactions by settling for a lower price or paying closing costs. Buyers come to the table without any help from the seller.

• High down payments are normal.

• Appraisals are waived because of the high down payment. There is enough equity to ease the risk factor for most lenders.

Some characteristics of a buyers market are:

• More job loss than job growth. There is no longer enough demand to support the existing supply.

• More houses appear on the market as people move out of town to find jobs elsewhere. Builders who had been building heavily are now stuck with spec homes they can’t sell.

• Foreclosures increase because the local job market softens. This creates a market with investors moving in to find “the deals.”

• Home prices begin to depreciate, causing some homeowners to owe more than the house is worth.

• Sellers begin coming to closings still owing money. Some sellers will negotiate with their lender to return the property back to the lender instead of filing foreclosure.

• A first-time buyers market is created as high prices drop to a level where renters can afford to purchase. The use of low- or no-down payment mortgages becomes fashionable in the market.

• Seller assistance increases. Accepting below list price on a house or offering closing cost assistance becomes the norm.

So, is it a buyers market or a sellers market in the Lowcountry today? Let me share a personal experience.

My family moved from Point Pleasant to Charleston National, both in Mount Pleasant, in June of 2005. I received a contract for my home within minutes of the “For Sale” sign going up in the yard. There were no other homes on the market in our neighborhood at the time.

We wanted to move to Charleston National since our teenagers would be attending Wando High School. For days, my wife and I looked for the right place. One afternoon, my wife drove by just as a seller was putting his “For Sale” sign in the yard. We signed a contract the next day. It was certainly a seller’s market.

Currently, there are 39 homes are on the market in Charleston National and six in Point Pleasant, making it a very strong buyers market, and a perfect time to contact your local real estate agent to find your “home sweet home.”

Q: I am a real estate agent and my spouse tells me that I need an assistant. How do I determine that I need an assistant, and just what do they do?

A: This is common when an agent becomes successful; it depends on your sales volume and how much free time you would like to have.

Some professionals say that when you reach 25 to 35 sides (a listing is one side of a transaction and a sale is second side), you will need an assistant. You will start to have a problem keeping up with your transactions and promotion management. But remember; once you hire someone you also become a manager.

The National Association of Realtors has some suggestions for determining whether you need an assistant.

Calculate whether your sales volume has peaked or leveled off.

Determine if there are goals that you have not been able to accomplish. If you’re unable to eliminate busywork, reduce the hours you work, prospect more or get more involved in your community, it may be time to get an assistant.

Keep track of all your activities for a week to determine if there are things that an assistant can do instead.

Calculate what your time is worth per hour and compare it to what you might pay a personal assistant. When calculating the cost of an employee, keep in mind that you need to pay your assistant’s salary and FICA, the employer’s Social Security contribution, Medicare contribution, and federal unemployment tax. These payments can add 10% or more to the total salary.

There are 41,000 real estate licensees in South Carolina, and over 8,000 real estate offices. This is a very competitive industry and there is a lot of pressure on you to provide better service than your competitors. But with so many other tasks to manage, from writing ads to handling paperwork, how can you find the time?

To make more money you need to focus on selling and prospecting and let the day-to-day business tasks be handled professionally by someone else.

Here are some tasks a personal assistant can do:

• Process new listings and enter them in the MLS;

• Photograph listings;

• Send mailings to past clients or prospects;

• Manage closing paperwork;

• Schedule listing presentations, closings and appointments;

• Order inspections;

• Place and track advertising of listings;

• Write ads;

• Send progress reports to sellers;

• Prepare closing files;

• Check MLS for expired listings; and

• Check newspapers for “for sale by owner” listings.

Paul Samuels is the owner and president of Fortune Academy Charleston. He has been a real estate broker in South Carolina since 1980 and is an Accredited Buyer’s Representative and an Accredited Real Estate Professional. Send your questions to fortuneacademy@comcast.net.

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