Colorado Springs Real Estate Connection

Colorado Springs Real Estate Definitions : Short Sale

The Difference Between Exclusive Right to Sell and Exclusive Agency [Colorado]

The biggest confusion that I see, as a Colorado Springs real estate agent, is understanding the difference between an Exclusive Right to Sell and Exclusive Agency, both by home sellers AND other agents.

There are 4 ways that a home seller in Colorado could choose to sell their home:

Exclusive Right to Sell with an agent
Exclusive Agency with an agent
Open Listing with multiple agents/offices
For Sale By Owner with NO agent

An open listing is basically an agreement between the home seller and multiple agents to get their home sold. Whoever sells it first, gets the commission. The major issue with this is that a property can only be active in the MLS with one agent at a time, so there is no incentive for the 2nd or 3rd agent to even enter into such agreement.

If you decide to sell For Sale By Owner you are opting to sell your home without the assistance of an agent. (Hint: most home buyers DO work with agents, so co-op’ing something to a Buyer Agent would definitely get you more buyer traffic, and a better chance at selling.)

Now, the first two listing agreements are the most common and also the most misunderstood:

Exclusive Right to Sell

An Exclusive Right to Sell agreement is when a home seller signs an “exclusive” agreement with an agent. The agent represents the interests of the home seller and gets paid the agreed upon commission at time of successful close, regardless of the source of the Buyer.

In most cases, the home seller agrees to pay the listing agent X% commission*. If the Buyer is represented by another agent, then that X% commission is split between the listing agent and the Buyer Agent.

*Note: Commissions are always negotiable and are decided between the agent and client at time of signed listing agreement.

This is the most common form of listing agreement in Colorado, as it takes most of the marketing, negotiating, selling and closing responsibility OFF the homeowner.

Exclusive Agency

An Exclusive Agency Listing Addendum is used when the listing agent agrees to EXCLUDE the home seller from the “source” of the Buyer. Basically, if the home seller is the one who finds and secures the home buyer, the listing agent will not get paid.

Per the Exclusive Brokerage Listing Addendum:

“This Seller Listing Contract does not apply to a Sale of the Property to a buyer procured solely by Seller without the assistance of Broker or any other person (Seller Sale).”

This addendum is usually used with former FSBO home sellers who may already have a few potential home buyers interested in the home before they listed with an agent. Or, when a home seller has the potential to sell it to a friend or family member, but lists with an agent “just in case” that buyer doesn’t work out.

Hopefully these explanations will clear things up next time YOU enter into a listing agreement.

For more information on listing your Colorado Springs home with a Realtor®, contact us today: 719.434.7525

Posted on July 10th, 2009 by Mariana Wagner

Simple Colorado Springs Real Estate Definitions: FICO

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There is a lot of potentially confusing terminology in the business of Colorado Springs real estate. Here is a great explanation of a term we hear often: FICO

The basis of most mortgage lending is credit scoring. In general, the higher a person’s credit score, the lower his offered mortgage interest rate.

Despite the many credit scoring models in use today, however, just 3 are relevant to American homeowners:

The Equifax BEACON^® score
The Experian Fair Isaac Risk Model
The TransUnion EMPIRICA^®

Generically, these scoring models generate what are commonly known as “FICO” scores.

FICO scores are measurements of probability. The higher a person’s credit score, by definition, the less likely a person is to default on his home loan. This is one reason why credit scoring has added importance lately — mortgage lenders are very careful about what they’re lending and to whom.

Notably, minimum FICO thresholds have been added to all types of mortgage loans.

FICO scoring has 5 main components as listed above. Payment history and credit capacity are two of the largest pieces, but a myriad of other factors contribute to a credit score, too. For example, the longer your reported history of managing credit, the more favorably your credit score will respond.

The myFICO.com website does a terrific job with credit education, explaining in plain language the ins-and-out of credit scoring and ways to boost your score. It also makes a free, 20-page PDF available for download.

Whether you’re a homeowner or lifetime renter — consider it required reading.

[Information provided to the Colorado Springs Real Estate Connection courtesey of the mortgage and real estate professionals at Bring the Blog.]

Posted on April 6th, 2009 by Mariana Wagner

Today in the Colorado Springs Real Estate Market [VIDEO]

Colorado Springs Real Estate Definitions: Days on Market

When does the Colorado Springs MLS "Days on Market" clock start and stop?

The "Days on Market" clock starts ticking the minute a home is entered into the Colorado Springs MLS system. If a contract is accepted, the listing agent will mark the property as either:

UC: Under Contract but Still Showing. This usually means that the contract is not solid, or they are awaiting inspections. The "Days on Market" clock continues to count days when a property is marked UC.

P: Pending. This means that the property is under contract and set to close. The "Days on Market" clock stops ticking the day the property is marked "P".

Once a home for sale in Colorado Springs SELLS, the agent will mark it in the MLS as "S" for Sold and supply a date that it sold. The MLS will count all the days that it was on the market from the first day it was entered to the day it was marked as "P" (pending) or the date it closed – if the "P" was never used.

What if a sales contract does not wind up closing?

If a home goes under contract and is marked as "P" (pending) in the MLS, but the deal winds up not going through, the listing agent will re-mark the home as "A" – Active. The Colorado Springs will retro-act all the days that it was listed as "P" (pending) to give a better picture of how long the home has been for sale.

When does the "Days on Market" Clock re-start?

If a property has been Sold, Expired or the listing contract has been cancelled for more than 30 days, the "Days on Market" clock will fall back to zero. This 30 day rule is designed to keep agents from removing and re-entering properties to (fraudulently) show a lower "days on market" number.

However, if a property has just been withdrawn "W" from the Colorado Springs MLS (meaning, the listing contract was not cancelled), the "Days on Market" clock will continue to run. Homes for sale can be just withdrawn from teh MLS for a variety of reasons. The most common reasons I have heard are a family illness where the home will not be shown until the family member recovers, the homeowners are repainting or doing major fix-ups that would make showings difficult, or they are moving out and want a week or so of no showings.

In any case, the Colorado Springs MLS keeps detailed records of all activity, regarding "days on market". So, if you are ever interested in knowing how long a property was on the market either recently or in the past, you can.