Hamptons Real Estate: Selling Season In Full Swing
For sale signs like this are everywhere in the Hamptons this time of year. (Photo: iStockphoto.com)
It's that time of year again in the Hamptons and the East End of Long Island. The trees will soon sprout their leaves, the snow birds will be returning, and the summer people will be arriving, the congestion that they bring tolerated for the contribution they make to our economy.
It is also the time of the year when real estate "for sale" signs sprout up before our fall crops do. Every business has a season. For real estate in the Hamptons it is mainly April through October. Soon the surge of sales will begin.
This next series of articles will attempt to provide advice to sellers and buyers which may shed some light on the process of selling and buying. The first article will focus on the seller.
There are three types of employment contracts that a seller may enter into with a real estate broker: an exclusive right to sell, an exclusive agency, and an open listing.
With an exclusive right to sell, the brokerage firm that the seller lists the property with is entitled to a commission if that firm sells property, if another brokerage firm sells it, or if the seller sells it. This is the type of listing that gives the broker the most incentive because regardless of who sells it, that firm knows it will be entitled to compensation for the time and money it spends marketing the property and engaging the cooperation of other brokers with whom they will share the commission.
With an exclusive agency, the seller has the right to sell the property without owing a commission to the brokerage firm they list the property with unless it is to a buyer who was shown to the property by that brokerage firm or any other brokerage firm. Brokers will typically avoid this type of listing because they and any other brokers whose cooperation they engage could all be working for nothing. They could be competing not only with each other but also the owner of the property.
With an open listing, the owner may sell the property without owing a commission to any broker unless the buyer was shown the property by a broker, and would owe a commission only to the broker who sells the property. This type of listing agreement provides brokers with the least incentive. There is also the potential of vicarious liability for sellers who enter into open listing agreements with a number of real estate brokerage firms rather than an exclusive agent.
A seller can also avoid problematic issues that could affect the sale of the property by having available copies of certificates of occupancy, real estate tax statements, surveys, covenants and restrictions, utility costs, and any other documents related to the property.
I also think it is advisable to decide which attorney you might use to represent you in the sale and consult with the attorney before putting the property on the market. This can help you avoid later problems that could adversely affect the selling experience.
The second article posted next week will address issues that focus on the buyer.
John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com