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Before You Make An Offer: Talk, Walk, Balk or Caulk

Brian Copeland — Mon, 11 Jul 2011 12:33:00 GMT

Finding the home is the fun part. Once the home is selected, preparing yourself for the negotiations, victories and disappointments is the tough part. When you're entering this process, it's important you remember a few tips.

1. Know you're talking points.

The REALTOR® you have chosen to work with you through this process needs to have talking points about your offer. First, you must justify the price. This can be done in one of three ways. He can price it based off recent comparable closings and show the seller and seller's agent the justification based off of neighborhood history. He can price it based off absorption (or supply/demand model) and communicate holding costs the seller will incur if they hold onto the home for six, ten, fourteen, etc. months. Finally, he can price it based on depreciation. Many markets have seen a drop in prices. If the seller bought his home between 2002-2008, the depreciation model can certainly open their eyes to the market.

2. Know you're walking points.

In negotiations you're working on coming to an agreement on price and terms. Focus on one heavily, price OR terms. Price will likely be the walking point for you; so, don't sweat the smaller stuff like home warranties, closing expenses and possession date immediately. Get on the price train early in negotiations. If you see the price isn't going in the direction you want, start working on the terms that could work for you. If you can't get the price that you want and that is within the market price, be ready to walk.

3. Know you're balking points.

Pick your battles. Once you're in the escrow process, always ask yourself this question...is this situation an "emergency" or an "inconvenience." You might find a lot of heated moments with your lender, agent, inspector, escrow officer, etc. Knowing that most situations are fixable with a little time, effort and knowledge will help you keep stress low. Most issues are truly inconveniences. The emergencies in this world are very few, and in my hundreds of closings, I have only encountered one emergency. It's fine to balk, but breathe prior!

4. Know you're caulking points.

No house is ever perfect. Typically, you need to be aware of the high cost items for repair in the property disclosures and inspection time. Watch for electrical, structural, HVAC and roofing issues. Those typically cost the most money and you'll want to be prepared for that negotiation with the seller. Don't look at the small items on the inspection and nickel/dime those. The seller may bulk all those together and negotiate you out of a major fix. Instead, use the rule of threes. Focus on the three inspection issues that could cost you the most money and focus on them. Sometimes you just need a little caulk!

What if the House Doesn't "Appraise Out"?

Leslie Ebersole — Thu, 30 Jun 2011 12:23:00 GMT

Whether you are a home buyer or a seller, there are many opportunities for a home sale to get tripped up...if not thrown off a cliff. Unless you are in one of the few places in the country not troubled by the multi-year drop in home values, a buyer and seller could agree to a purchase price and yet the house doesn't "appraise out". This means that the appraised value doesn't equal or exceed the contract price....so the buyer can't get a loan with the down payment he was expecting. What does this mean, and what can be done about it?

Let's say that Susie Seller has her house on the market. Susie bought the house for $360,000 in 2005. Since then, Susie has remodeled the kitchen, added a new deck, painted all the rooms and refinished the hardwood floors. Susie believes that she has over $50,000 invested in the home since she purchased it but she will sell at a loss because she had a great new job in another state.

In Susie's community home values have dropped 30% since 2005, right in line with national averages. Homes similar to Susie's are selling for about $250,000. But since Susie paid over $50,000 for her remodeling and updating projects, she feels confident that her home is worth at least $300,000. Susie lists her home for $310,000.

After a few months on the market, an offer comes in from Bill the Buyer for $275,000. Bill's agent says that based on market conditions and sold comparables the $275,000 represents the fair market value of $250,000 plus 50% "credit" for Susie's improvements and upgrades. Eventually, Bill and Susie agree to a contract price of $290,000.

After home inspection and negotiating various repairs, the appraisal is ordered by Bill's lender. Unfortunately the appraiser sets the appraised value at $270,000, so the house didn't "appraise out". Bill and Susie are both very frustrated by this, How can they agree on a sale but the appraiser can "kill the deal"?

A home appraiser is an independent contractor who is hired by a lender to establish the fair market value of the home. He looks at closed sales of similar houses, usually in the same neighborhood and within the past 90 days. He adds or subtracts the value of major differences like the number of bedrooms or the size of the lot.

Despite what people might hear on TV shows, many home improvement projects do not add much value to a home market. The new granite counter tops or refinished floors might be the reason the buyer chooses one house over another, but the appraisers usually cannot give full value for the cost of improvement. A new roof does not add $15,000 to the value of a home, because that new roof was required for the home to simply maintain it's value. Costly faucets, expensive counter tops, and elaborate paint finishes are nice, but an appraiser cannot assign much value for them. A finished basement might have cost the home owner $30,000 or more, but the appraiser doesn't give credit for elaborate trim work and a home theater system.

Back to Bill and Susie.

Bill was planning to put down 20% and lender will provide a conventional loan of 80% of appraised value for his purchase. On a contract price of $290,000. Bill would put down $58,000 and finance $232,000. But with an appraisal value of $270,000, the lender will only finance $216,000. So Bill would have to add $16,000, for a total of $74,000, in order to purchase the house with a conventional loan.

Bill's loan officer explains that he is trying to protect Bill from over-paying for a home. The bank must protect both it's shareholders and Bill from borrowing more than the house is worth. Bill's loan officer cannot contact the bank's underwriters directly to persuade them to change the appraisal value, as this is a violation of federal law, but they can submit additional data to be considered.

Bill's real estate agent might review the appraisal and verify whether the appraiser has the facts correct. If the appraiser mis-counted the bathrooms, or didn't have the square footage right, the bank's underwriter might adjust the appraisal to reflect the correct data. Susie's real estate agent can submit additional comparable sales for the bank's underwriters to consider, especially if a new sale closes right after the appraisal is done.

If the underwriter holds the the appraisal value, then Bill and Susie have some decisions to make. Susie has to realize that she has a committed buyer who has already invested in the home inspection and appraisal. Susie also needs to understand that the appraisal is likely an accurate reflection of market conditions, so unless she wants to wait for a cash buyer, she should probably work with the one she has.

Bill needs to decide how much this home is worth to him, regardless of appraised value and the down payment required. He might decide that the improvements are worth more than the extra $16,000 he needs to contribute to the down payment.

The agents (or attorneys) will usually try and negotiate a new purchase price between the buyer and seller when a house appraises below the contract price. A common solution is to "split the difference", so in this case Bill would add an extra $8,000 to his down payment and Susie would agree to sell the house for $282,000 instead of the $290,000 she originally agreed to.

In a tough market, flexibility and patience might get a house sold, even if the house doesn't exactly appraise out.

Image licensed from istockphoto.com

Leasing a Home? If It Sounds to Good to be True...

Tom Branch, CDPE, SFR — Wed, 29 Jun 2011 10:35:00 GMT

My phone has been ringing off the hook the past few days. Usually that's a good thing but not in this case.

It appears the scammers have started preying on people looking to lease homes in the Dallas Fort Worth area again. Gina and I reported on a similar scam last year in a story titled, “Online Rental Scam Targets Real Estate Listings” aired on KDAF-33 in Dallas.

The scammer finds an active real estate lease listing and the name of the property owner (usually available in online public records). The scammer then builds an email address at one of the large email sites that looks like it belongs to the owner. Next the scammer copies the real listing including all the photos and posts it at a highly reduced price on one or more of the by-owner type of websites.

In my recent case, the property is listed at $1250 and they listed it for $700 all bills paid! When a potential tenant responds to the advertisement, they get an email back explaining that the owner is overseas doing “Gods” work and to complete an application for his review. If the tenant asks to see the property, the tenant is told that the owner took the keys on the missionary trip. The tenant is then asked to drive by and look at the outside of the home.

Once the application is submitted, the scammer tells the tenant to wire the deposit to him via Western Union and that he will make arrangements to get the lease and keys to the tenant. Of course, the lease never comes, the tenant is out the deposit, and has become a victim!

There are a number of ways to avoid becoming a victim. Many properties are listed with real estate professionals and show up on the large MLS-feed websites such as realtor.com, real estate brokerage websites, and many agent websites. You can usually work with a real estate professional and often times the agent’s fee is paid by the owner of the property. If you decide to work with an owner directly, always try to meet in-person at a public place and never, never, never wire money to an unknown party.

The old adage comes to mind, “If it sounds to good to be true, it usually is…”

Photo: Licensed by Author from iStockPhoto

Getting an "Assist" When Purchasing is a Viable Option, Usually

Maya Paveza — Tue, 28 Jun 2011 12:17:00 GMT

When it comes to real estate, cash hasn’t always been “king”, credit once was.

Once upon a time, in a nearby land, not so long ago, you could purchase a house with nearly no money down. In this fantasy land there existed home loans with perks like 103% loan to value, or 80/20 split loans. The lenders were throwing money around, and property values were on the rise. We all know where that got the real estate market and the economy. Today? It is a rather different story.

You are ready to buy a new home, you've saved up your money and diligently kept your credit in the good standing. Do you have enough cash to qualify? That is one of the first and most essential factors to qualify in today’s real estate market. No longer is money down a matter of what program you choose to use to borrow for a home purchase, you have to have some of your own money in the game.

But what if you want to keep some of that in your pocket? There are a few ways to do this. Consider that a mortgage is one of the lowest interest rates available and the least expensive way to borrow your own money. Borrow your own money? How does that work?

Borrowing Your Own Money

Depending on what part of the country you live in Sellers or Settlement Assistance may be common, or it might not be something you have ever heard of. Essentially you are borrowing your own money, by building a credit toward closing costs, mortgage points, and other related fees into your purchase offer. Most lenders permit up to a 3% assistance request on loans, it will usually state what amount you may request in your pre-approval letter. Some products allow as much as a 6% assistance, but this is a much more difficult amount to negotiate depending on the property price point.

Here is how it works. If you are purchasing a $300,000 property, and ask for a 3% sellers assist here are how the numbers might look.

Purchase price: $300,000
Escrow Deposit: $5,000
Closing Costs (including down payment): $35,000
Sellers Assist: $9,000
At closing you already have $5,000 toward your $35,000 total cash required to close. Then on the settlement sheet there is a credit of $9,000 from the Seller side to the Buyer side, this offsets the cash required at closing and puts you at $21,000. So $35,000 - $5,000 - $9,000 = $21,000. Rather simple math and my numbers are in no way real numbers, so do check with your lender, real estate agent and closing representative for an accurate depiction of how this would work for you.

You are keeping your own $9,000 in the bank for a rainy day, a new heater, a new dishwasher, or other things. Perhaps even investing in higher yield products to allow your money to grow. It is a smarter way to purchase for many.

There are some up sides and some down sides to asking for a Sellers assist. Some key points to remember:

Cash is king, keeping it in your bank is even more important these days. With the uncertainty of whether you can get a home equity loan in the future, it is often wise to consider borrowing the highest percentage you can in your initial purchase and keeping your liquid assets available. Asking for a sellers assist is another way to do this.
Asking for an assist can weaken your negotiating position. Weigh you options carefully here – would you rather negotiate and pay less for the house, or would you rather get an assist and keep money in your pocket? I advise my clients that by asking for an assist you truly do weaken your negotiating position on a purchase, if you NEED the money be prepared to pay the price.
Will the property appraise? We used to be able to add an assist on top of a purchase price, but gone are the days of certainty that a property will appraise. You need to be realistic and consider your options. Seek advice from your real estate agent and look at the comparables carefully. Sellers need to be realistic about this as well.
Overages are usually not allowed. If you ask for 6% and it isn’t used completely toward your purchase you might end up giving money back to the Seller, unless you are feeling charitable you might want to work the numbers ahead of time to determine the amount you can use and will be able to be utilized. You can’t walk away with cash at closing as people used to be able to back in the “good old days”.
It can put you at a disadvantage in a multiple offer situation. It does happen, and a lot more frequently than you might imagine, you submit an offer to purchase and a few others do at the same time. It isn’t always about price when a seller determines the value of an offer, so keep the bottom line and the type of loan in mind when you are trying to play the “winning offer” game.
It isn’t only for first time buyers. Anyone can ask for an assist on a real estate purchases. Checking with your lender is important – even with a cash purchase you can do it as well.

I often advise my clients to take this option under careful consideration, part of that process is discussing what is more important to them – the price they purchase the home for, or whether they keep cash in their pocket. You also don’t need to ask for a percentage, you can ask for a set amount of money.

There are a lot more considerations when you are looking at whether to ask for an assist. The best advisement you can get is from your real estate agent or your lender who are familiar with your loan choice, your local market, and the current conditions for lending.

Photo Credit: Courtesy of Maya Paveza

Curb Appeal Matters

Jay Thompson — Mon, 27 Jun 2011 08:27:00 GMT

Your real estate agent may present to you all sorts of whiz-bang ways to market your home for sale. The Internet, for example, is a fantastic way to get your home in front of potential buyers. There are QR codes, those goofy looking bar codes that are popping up on real estate for sale signs. Number to text to get more information. Virtual tours. Video. The list goes on.

But you know what is still the most important thing to have in order for your home to sell?

Curb appeal.

Yep, good old-fashioned curb appeal. The instant impression your home gives when a buyer pulls up and gets out of the car.

The last thing you want is for a potential buyer to say, "Ugh, needs paint" or "Geez, look at the weeds". What you really want a buyer to say before the car even stops is, "Wow! I can't wait to see what it looks like on the inside!"

Here are five things you can do to increase your home's curb appeal

Paint. Nothing looks better than a freshly painted home. Conversely, nothing will put off a buyer faster than seeing faded, peeling paint. Think neutral colors. Now is not the time to splash that bright magenta paint across the entry way. Be sure to check with your home owners association if you have one. Many have approved palettes and very specific rules about what colors and combinations you can use for exterior paint. When it comes to getting the most out of your dollar, paint is way up the list of things you can do to improve your home.
Landscaping. While it seems obvious, it is critical to not only ensure your lawn is weed free, but also to ensure it stays weed free for the entire time your home is on the market. Water the lawn, cut the grass, pull the weeds. If you aren't living in the home while it is for sale, you'll have to get someone to take care of the landscaping in your absence. Perhaps a neighbor could be bribed. If not, call a landscaping company. In many large markets there are landscapers that have "home for sale" packages. If the season is right, spruce up the landscaping with some fresh flowers. You might think a buyer would just overlook tall grass and weeds, knowing it would only take a short time to clean the yard up. They'll overlook it alright -- meaning they'll overlook your home and move right on to the next one.
Wash the windows. Now here is a job no one likes. When is the last time you washed the windows in your home? Yeah, I thought so. You might be amazed at how dirty they are. Not only will washing the windows (and screens) make your home stand out, it will also let more light into the home -- and light, particularly natural light, is a home sellers friend. This is a job that can be hired out, or just rent yourself a power washer, it makes the job much easier and almost fun. And that power washer comes in handy for our next tip...
Clean the driveway and sidewalks. At a bare minimum, sweep the driveway and sidewalks around your home. Might as well hit the front and back porch while you are at it. Driveways in particular pick up a lot of dirt and grime, especially if you park your care in the driveway. A power washer does wonders. Use a little good old fashioned car wash soap and that's often enough to make your driveway and sidewalks shine. There are also various types of concrete cleaners out there for tough stains.
Help your neighbors help you. Whoever buys your house isn't just buying your home, they are buying into a neighborhood. If you happen to live next door to the guy whose front lawn looks like a used appliance dump or someone whose definition of "natural landscaping" means never mowing or weeding, that can be a huge turnoff to potential buyers. This isn't an easy problem to address. Hopefully you're friends with your neighbors and can just have a civil conversation with them if their yard is in disrepair. Offer to pay for your landscaper do a "one time cleanup" on their yard. Many times that's all it takes to kick the neighbor into gear to maintain their yard. It's not worth getting into a heated argument though, so go easy on this tip if you have any hesitations.

These are pretty simple tips, easy to do or relatively inexpensive to pay for and can go a long way toward making your home stand out in a sea of sameness. Great marketing can bring buyers to your home, but there isn't any marketing out there that can make your home appealing to those standing there looking at it, and contemplating living there.

Photo: PhoenixREguy. Creative Commons 2.0

Honesty & Good Communication are Critical in Real Estate

Jason Crouch — Fri, 24 Jun 2011 10:59:00 GMT

I've been selling homes in the Austin, Texas area since 1997, and I've handled almost every kind of conceivable transaction, from $50,000 condos to $4 million homes. As such, I've also been exposed to a wide variety of clientele and a dizzying array of agents as well.

One of the things I've always held as a cornerstone for my own business is integrity. Without integrity and honest dealings, it's tough to make it in our business long-term. Granted, I've seen a few veteran agents who manage to make it despite their dishonest ways, but these are rare indeed, and even more rare now with the advent of service review websites like Yelp!.

Communication is a two-way street, though. It's important to be honest if you're looking to buy or sell a home. I promise you that it will save everyone involved a lot of grief.

I had a sale that was almost derailed recently by a home builder salesperson who chose not to be fully forthcoming with information that probably wouldn't have affected the deal at all if it had been mentioned upfront. My client found it disconcerting that it wasn't simply discussed, because it gave the impression that they were trying to hide something. As it turns out, it was a simple mistake in judgement on his part, but it left a bad taste for us.

Any agent who has been around for a few years can regale you with stories of clients that have lied or misled them, or who have been ridiculously disloyal. Unfortunately, this can make anyone a little gun-shy, so we might be a bit more guarded with our time or efforts after that.

As you can see, communication and honesty are important issues in our industry. One of the most crucial lines of communication is between agents during negotiations and, later, during the contract period itself. If an agent sends the wrong message on your behalf, it can be disastrous and it could result in the loss of the transaction (which could be your dream home!). It's a difficult process to repair breakdowns in communication after they've occurred, so you're best served to find an agent who is also solid in his/her communication skills.

Food for thought when you're evaluating agents:

Can he compose an email without grammatical or spelling errors?
Does she sound uneducated or brusque on the phone? This won't improve.
Have you had any trouble understanding your potential agent's instructions or explanations?
Does he return your calls or emails in a timely manner (i.e. not days later)?

These are the types of problem areas that can cause an otherwise uneventful sale or purchase into a nightmare for you. I realize that sounds blunt, but it's the truth. Give some sincere consideration to how well your potential agent handles themself, since this person will be your sole representative in most cases until you go to the closing table.

Thanks for reading!

Photo: krossbow Creative Commons 2.0

Dear Sellers: We Love Our Pets...But We Don't Like Yours

Leslie Ebersole — Thu, 23 Jun 2011 14:39:00 GMT

People who are shopping for a new home sometimes ask to see houses with things they think they want, but then object when they see it. Pets are a perfect example of this conundrum.

Americans love their pets. About 75 million dogs and 85 million cats live in the 65% of our households. Lots of people shopping for a house already have pets or say they want pets -- but they also say they don't want to live with the smells, dirt and damage caused by another family's pet.

At a minimum, pet "stuff" can be problematic. We ask our home sellers to make the bowls, beds, toys, cages and leashes as unobtrusive as possible. Since those pet accessories are usually on the floor, they can be a distraction from viewing the beauty of the floor or size of the room. Not to mention a major hazard to walking. Remember, buyers are not familiar with your home and are not always watching their every step.

Dogs: Man's Best Friend

Many people buying their piece of the American dream envision having a dog or two. They dream of their future offspring happily rolling in soft, green grass with a gentle yellow Labrador. But when you show them properties with yards that currently are home to dogs, they strongly object to picking their way through torn up turf decorated with dog droppings. Sellers with dogs need to clean their yards every day and, if possible, right before each showing.

Lawns can be discolored by dog poop and urine. It's pretty funny when a home seller reseeds just the bare patches, because the seed type never is the same as what is growing, so the lawn has bright green dots scattered around. If the lawn has brown spots, a urine neutralization product should be applied first, and then seeds should be scattered in big areas around the brown spots so they're not so noticeable. Holes dug into gardens need to be filled and garden beds should to be freshly mulched. Fences should be repaired so that they look sturdy and not dangerous to pets or the new buyers.

Floors can take a beating when there are large dogs in the home. Hardwood floors might need screening or even refinishing before listing the home. If you are worried about the floors being damaged again while the house is on the market, then have a contractor refinish a small area the dogs don't use. This will show the buyers what the floors will look like when they are cleaned up right before or after closing. Carpets in houses can get pretty smelly in areas that dogs sleep and play. People who live with dogs usually don't notice the smells, so sellers should ask non-household members for honest feedback. Strong smells should be professionally treated, not just masked with air freshener.

Finally, if at all possible, dogs should be removed from a house for a showing. Many real estate agents will not enter a house with a loose dog, no matter how small or seemingly gentle. Dogs are genetically tuned to guard their territory, so if the dog perceives a threat from a stranger during a showing, the consequences can be severe. Shutting a dog into the basement, laundry room or back yard is counter-productive to the showing, because buyers want to see the whole property.

Cats: Furry, Sweet, Quiet

Cats are good pets because they are usually unobtrusive and undemanding. But I'll wager that more home sales are endangered by cats then dogs. Many cats and their owners are scrupulous about keeping the house perfectly fresh and clean. But non-cat people can react pretty negatively to houses that have cats in them. Cats aren't usually as physically hard on a house as a dog, but they can damage floors and walls with spraying and scratching.

Even if cleaned every day, litter boxes develop a lingering odor that builds up in the plastic. I suggest that people buy new litter boxes at the beginning of a listing and replace them regularly during the time of the listing. A covered litter box will contain litter that gets scattered.

More people believe they are allergic to cats, and will almost reflexively proclaim an itchy nose when then go into a house with cats. A seller could offer a professional home and carpet cleaning with the sale of the home to alleviate concerns of allergens being left behind.

Birds, Rodents, Snakes, Bugs......?

I'll be honest, I don't know much about birds. But once or twice I have shown houses that had birds loose in the house. It's reasonable to assume that birds aren't potty trained, so if they are flying about the house, I assume they are also eliminating about the house. And I would never want to be responsible for a bird getting out through an open door....so, please, keep them in a cage for showings.

Furry things that live in cages can be downright stinky. I have smelled guinea pig cages that are stinkier than a hog farm. The shavings or bedding need to be perfectly fresh and the cage kept out of the way or even taken to a friends while the house is listed.

Snakes and lizards and such.....well, keep whatever they live in clean and secure. You're inviting strangers into the house, and even the best-intentioned agent may not be able to keep an eye all members of a family during a showing. Think about a locking lid, or at least one with a secure clasp that would be hard for little fingers to easily undo.

Pets themselves can be anything from a charming accompaniment to a showing to a downright danger to an agent and buyer. Home sellers need to remember that they are likely to be liable for any harm done by a pet to someone visiting the property. Keeping pets and buyers apart is the safest plan.

I love pets...I have 2 cats and 2 dogs, and I love them all. But as a REALTOR®, I know that selling a home with pets is a challenge that a home seller needs to manage to keep it from becoming a barrier to getting the home sold.

Images licensed from istockphoto.com

What’s The Easiest Solution When Behind on a Mortgage?

Tom Branch, CDPE, SFR — Wed, 22 Jun 2011 05:05:00 GMT

I met with potential short sale sellers this week. The couple purchased their home with a VA, no money down mortgage several years ago and then refinanced the mortgage in 2009 adding thousands of dollars to the existing note. While they were able to lower their interest rate, it would take years to recover the cost of the refinance.

Now the couple finds themselves in the middle of a divorce and need to sell the home. While the market has held steady for the past couple of years, there has been little appreciation in the value of their home. The subdivision is still being developed so they also have to compete with new home construction.

Combine the divorce, little appreciation, new construction, and a refinance adding tens of thousands of dollars to the mortgage and you have distressed homeowners.

We discussed several options including selling the home bringing about $30k to closing, a short sale, a deed-in-lieu, and foreclosure. They don’t have the money to bring to closing and they don’t want to damage their credit. At this point they’re 30 days behind on the mortgage so the damage has already begun. “What’s the easiest path?” they asked. I answered, “Do nothing and the home will go into foreclosure in another 60 to 90 days.”

After some thought, they agreed to go forward with the short sale of the home. While this is not the easiest solution for the homeowners or their agent, it likely does less damage to their credit and their long-term financial picture.

The good news is these homeowners reached out to me early enough where I can help them with a short sale and keep this home out of foreclosure. If you’re having problems paying your mortgage, reach out to your lender or real estate professional. Help is available! You don’t have to use the easy solution and let the home go into foreclosure.

Respect and Love for Aluminum Wiring: What Do You Don't Know About Aluminum Wiring Could Hurt You

Maya Paveza — Tue, 21 Jun 2011 18:28:00 GMT

We bought our house in 1999. I did not know a thing about aluminum wiring. I didn’t know to even have a second thought about it. The home passed inspection (albeit our inspector couldn’t find one of the attic access panels, missed a leaking oil tank and the half-flight of steps to the basement slid out from under my husband the day after closing) and we went to closing. I have been obsessed with upgrading electric outlets and switches since I was in high school when I would shut off breakers (when I thought of it) and replace the ones at my Parents house. I began a process of replacing them at our home.

Fast forward to an early February morning in 2002, I needed to iron a shirt before my first closing as a Delaware agent; I unplugged a fan which had been shut off to plug in an iron. As I pulled the plug I heard a distinct hiss, then I saw a streak of blue going around the outlet plate cover a few times. I freaked out, my Husband was out of town on business, it was 7:30am, and I didn’t know what to do. I called my neighbor who was an Electrical Engineer and asked him what to do. He instructed me to turn off the breaker and he would come right over. By 9:30 that night Dale and Linda Davis of CMI Electric in Newark, Delaware were sitting at my dining room table reviewing the problem we had and explaining options. Linda and Dale had insisted upon coming on their own time because of the potential danger. They are still friends of mine.

Last Month while I was waiting to get a flight back from speaking at a conference in Florida, I got an photo message on my phone from my husband. A nearby home was fully engulfed in flames, I couldn’t believe it. The house suffered over $250,000 in damages. Everyone assumed it was the aluminum wiring, the cause is yet to be determined. In my neighborhood of 356 homes, all of which were built with aluminum wiring, this is not the only fire we have seen over the years. I am very passionate about educating my clients about the realities of aluminum wiring and that you can live safely with it in your home.

Aluminum wiring itself is safe, in fact it is fairly standard in most circuit panels in homes in the 220 volt connections. In the 1960’s and 1970’s many US homes were built with aluminum wiring, as a less expensive alternative to copper wiring. The problem was not immediately apparent, but as time goes by and aluminum wiring was connected to copper switches, outlets, and light fixtures, the problem became more apparent. Aluminum contracts and expands at a different rate than copper does. As the wires separate the possibility for arching begins to become a hazard. In 2011 consider a 50 year old house, with insulation, wood framing and aluminum connections not checked might be ripe for.

People get a little too dramatic about the overall risks of aluminum wiring, and if people spend the time to educate themselves they will very easily learn there are simple options to help keep them, and their home, safe.

The first and best option, have a Master electrician inspect your potential new home. Determine what kind of wiring you have and the condition of it. Look for a company that works with aluminum wiring. This should be done at the time of your home inspection.
Understand that aluminum wiring has specific switches and outlet plates that are designed for it, they are most often brown colored switches and outlets. Now brown might be in style in a babies room combined with blue paint, but most people dislike the brown of the switches or outlets. Forget vanity, safety is far more important.
Check the connections at least once a year! Whether or not you have had a process to “pigtail” the aluminum to copper, you will want to check each light switch, outlet and light fixture in your home at least once per year. It isn’t worth the risk of a fire. In fact, even if you don’t have aluminum it is worth checking all those electrical connections in any home.
Consider COPALUM as an option. In 2002 CMI Electric installed the COPALUM system in my house on every outlet, switch and electrical connection they could find (including the doorbell). The cost has gone up significantly but the cost to save a life or your home isn’t even a second thought. I watched them do this, basically it is regarded as a permanent “pigtail”, with a special machine they meld the copper and aluminum together under 1.5 tons of pressure, then a plastic protector covers the connection. It is supposed to be maintenance free, but I have had a few that have come loose and needed replacement, CMI comes out each time and takes care of it at a minimal cost.

Other solutions are available that are more affordable, and there are a lot of great resources online to help you find them. I found a lot of information on aluminum wiring when I searched it, here are some of the links:

WikiPedia- Aluminum Wiring – This has a lot of information on conductivity, solutions, history and more.
The US Consumer Product Safety Commission has a great site on Aluminum Wiring; I recommend it as required reading to any and all home owners.
InspectApedia.com offers a lot of information on home inspections and systems, including a very comprehensive section on aluminum wiring. Worth a scan and a book mark.

I think this direct quote from the CPSC.org website is a great one, and poignant:

“The U.S. Consumer Product Safety Commission (CPSC) staff and other government officials have investigated numerous hazardous incidents and fires throughout the nation involving aluminum branch circuit wiring. A national survey conducted by Franklin Research Institute for CPSC showed that homes built before 1972, and wired with aluminum, are 55 times more likely to have one or more wire connections at outlets reach “Fire Hazard Conditions” than homes wired with copper. That survey encompassed only the wire connections at outlets. It did not address other types of aluminum wire connections and splices in homes that are also prone to fail. No information was developed for aluminum-wired homes built after 1972.

The fire hazard investigated by CPSC occurs at connections with aluminum wire, including receptacles or switches and junction boxes; or the hazards occur with major appliances, including dishwashers or furnaces, for example. There are several deterioration processes in aluminum wire connections that cause increased resistance to the flow of electric current, resulting in damage that is cumulative in effect. That increased resistance causes overheating, sometimes at hazardous levels, when current is flowing in the circuit.”

You can purchase that home with aluminum wiring, as long as you understand the procedures for proper care and maintenance. Electrical wiring of any sort should always be monitored and properly maintained. A relationship with a good electrician is essential for any and all homeowners. Ask your real estate professional to guide you in the inspection process and the selection of a qualified inspector. Remember, they deal with home sales everyday and you should rely upon and trust your agent to help you in your decision making process.

Photo: By Photojock, Courtesy of MorgueFile.com

The Good, the Bad and The Ugly About Neighbors

Debe Maxwell — Mon, 20 Jun 2011 16:08:00 GMT

The Good, the Bad and The Ugly About Neighbors

Bad neighbors are no laughing matter. Whether you're living minutes from a land fill, within close proximity of a registered sex offender or living beside the neighbor with an eye-sore-of-a-yard, your home values can be reduced by as much as 15% when you find yourself amidst 'bad' neighbors.

How ‘bad’ is that bad neighbor and what exacly defines a 'bad' neighbor? Definitions vary by person and by area but, most real estate professionals believe that a bad neighbor is simply one who has virtually no consideration for the rest of the neighborhood.

From poor exterior maintenance of the home (landscaping, painting, roof, and/or general upkeep) to one who hosts loud parties or owns unleased or noisy dogs, a bad neighbor may not seem all that bad when one considers the business or government entities, whose very existence can and will most likely de-value your property.

Let's discuss the 'government entities' today. Just how much can these bad neighbors reduce the value of your property? Who are these 'bad neighbors' that can have such a detrimental effect on your home's value?

Power plants located within two miles of your home can reduce your home's value by 4-7%, according to a study from the University of California at Berkeley. Check for addresses of nuclear power plants in your area or view clickable state information.
Sex offenders living within 1/10 of a mile from your home can reduce your values by 9% and take approximately 10% longer to sell, according to a study from Longwood University's College of Business & Economics. How do you find out if there is a registered sex offender near you? Visit the government's National Sex Offender public website.
Living within 2 miles of a Superfund site (landfill), according to Robert A. Simons, an urban planning professor at Cleveland State University, your home’s value could decline as much as 15%. To locate landfills in America, visit ZeroWasteAmerica.org.

Foreclosed homes within 250 feet of your home can be the single largest factor affecting the local home values. MIT (Massachusetts Institute of Technology) concluded in a recent study, a neighbor’s foreclosed home can reduce your value by an average of 27%.

What can you do about your bad neighbors? Power plant locations, nearby sex offenders and landfill locations are 'bad neighbors' that you can do very little about unless the law has been broken by these entities. However, as a home buyer, you can do your due diligence; investigate your neighbors prior to your purchase. If you're already a homeowner, your options are limited. You can file a grievance with your local government, requesting the 'bad neighbor' be reviewed.

The best 'offense' is a good 'defense' so, be sure to perform your due diligence prior to purchasing a home. Check the sites listed above for sex offenders, landfills and power plants. Also have your REALTOR® calculate the ratio of foreclosed homes in the community compared to other communities. Yes, you may be getting a fantastic 'deal' on a foreclosed home but, your foreclosure purchase is going to affect your neighbor's sale and the snowballing will continue to de-value the homes in the community in general, including your own new home. Buyer Beware: Your 'great deal' may not be as good as you thought!

Images licensed from iclipart.com

How Agents Get Paid - Some Consumer Food for Thought

Jason Crouch — Fri, 17 Jun 2011 15:19:00 GMT

Although many veteran home buyers and sellers are well aware of how compensation works in the world of real estate, I am occasionally reminded that not everyone understands exactly how we are paid. In order to explain this, it may be helpful to think of every real estate agent you encounter as a small-business owner, especially since this is the truth. All agents are self-employed independent contractors. (Actually, there's a very small percentage of agents who are employees, but that is rare to find, and not the focus of this post.)

Having been self-employed myself since 1996, I can attest to the importance of spending my time wisely. If I have a client who has expressed a desire to work with multiple agents before deciding to enlist me, I tend to move on, since that is more likely to turn into a few hours of wasted effort. Even though I'm confident in my abilities, I don't like the idea of spending half a day (or more) with someone who plans to meet with another agent tomorrow. To clarify this, it's sometimes expected that we will compete for listings, but that usually doesn't require nearly as much time or effort on the front end as showing homes.

Loyalty is important, and it's a two-way street. I expect my clients to be loyal, and I work hard on their behalf. Thankfully, it's been a long time since I was burned by disloyalty, but those "learning experiences" tend to leave a scar. I trust most people that I encounter, but probably not as much as I used to, if I'm being honest.

In order for me or any agent to get paid, a sale must be closed and funded (i.e. fully finalized). We don't get a dime unless this happens. I've dealt with a few potential clients in the past who have had no compunction about spending countless hours of precious time, only to decide on a whim to buy a home directly from a builder without including us in any way. This is not a sour grapes complaint on my part - it's also not a smart move for the home buyer. At least in Austin, reputable builders will not discount their prices if you don't have an agent on the transaction, nor will it cost you anything addtional to have representation. I have explained this concept to countless buyers, but it's always worth mentioning again.

Straight commission sales are just that. We aren't paid by the hour, or by the showing, or by how many miles we drive. We are paid a commission when the sale is completed.

As an additional consideration, most agents have to split their commission with the company as well, so they aren't taking home 100% of the money. Often, it's 50-70% instead. When you add in some of the typical expenses involved with doing our job well, including gas at today's prices, marketing expenses, phone, and more, you start to see that it's not as easy and/or lucrative as it might have appeared. However, it's also one of the few industries wherein there's no ceiling on earnings, which is what makes it exciting. I've had months in this business during which I've made more money than many of my friends make in an entire year. Conversely, I've had stretches of 2-3 months when I had zero income. It's a roller coaster, to be sure, but we're adaptable.

So, I suppose my overarching point is this: When you spend time with a real estate agent, consider that their time is valuable, as is yours. If you don't like him/her, move on quickly rather than dragging it out. If you feel good about things, stick with that agent through thick and thin. We're always willing to work hard for loyal clients. After your sale, assuming things went well, be on the lookout for friends, family members, and co-workers that you can send to your agent. Referrals are the essence of success in our business.

Thanks for reading!

Photo: Krystn Palmer Photography Creative Commons 2.0

Thoughts on Being the Second (or Third) Agent

Leslie Ebersole — Thu, 16 Jun 2011 18:11:00 GMT

An old snippet of REALTOR® wisdom is that you want to be the first love, the second wife and the third agent. Never is this more true than when long market times and fussy buyers provoke sellers into wondering if a new agent could do a better job.

When a client is aggravated by his agent, even the slightest mishaps are seen as disasters. The brochure box that was left empty for a day, the blinds that weren't closed after a showing, or the insulting feedback from another agent........these little annoyances can build up until a seller feels compelled to start calling other agents. And so the calls come in.....

Caller: I wonder if you can tell me about what's happening in the market in St. Charles?

Me: it's a tough market but attractively presented and well-priced homes are selling every day. Are you thinking of buying or selling a home here in St. Charles?

Caller: That's just what I told my wife. Houses are selling every day and ours isn't one of them! We live at 678 Elm Street and my house has been listed for 8 months and we haven't had a showing in 3 months. There hasn't been any marketing and we never hear from the agent. We want to talk to a few other agents. When can you come over?

I interview the client over the phone before I will agree to meet with him. I check the multiple listing service to see the photos, the price and who the current agent is. I will not hop in the car and rush over with unrealistic promises to make it all better. Frankly, I don't want to spend a great deal of time on a preparing a detailed market analysis and marketing plan only to have the seller hand it over to his current agent and say "do this". And if the seller is aggressively bad-mouthing the other agent, I think very carefully before I get myself into a situation that isn't good for me or my business.

I want to know if the seller has already reviewed his concerns with his current agent. Sometimes it's a simple lack of communication that can be addressed by a face to face meeting. Or maybe the agent has had some personal problems that are distracting him so his broker needs to get involved. Most brokers have a "service guarantee" in their listing agreement that asks for 24 hours to resolve any problems before the agreement can be canceled. I usually suggest that the seller call the managing broker of the agent's office. The broker may be able to help troubleshoot the problems and get the listing back on track.

But sometimes it's clear that the agent or brokerage isn't doing a good job. If the photos are poor quality, if the home hasn't been staged, or the home isn't attractively presented in all the places it should be on the internet, then I know that a new broker might be able to make a difference. If it sounds like the relationship is probably not fixable, then I will visit with the client and discuss what we will do to sell the house. I will not analyze or critique what the other broker has or hasn't done.

So often the problem is that the seller hasn't made the transition to thinking of the house as a product on the market. I try to explain that the goal of marketing is to attract a buyer who can begin to see the house as their home. It's no longer the seller's home that the buyer needs to somehow fit into, but a house that a buyer can see making into their home.

I explain that the goal of a real estate agent is to bring a house to market so that it appeals to the widest possible range of buyers, at a price that is reasonable compared to the other choices on the market. The home has to be clean and neat, free of unpleasant smells, and easy to show. If the seller balks at these basic ideas, I might quickly decide that I can't help him and end the meeting. But if the seller seems motivated and is complying with the basic of selling a home, then I will present a marketing program and a competitive analysis.

The price and condition are almost always issues when the home is just sitting. The seller always feels insulted that no one recognizes the value that his home offers. He always proclaim that the house is well-maintained and he brings out a long list of repairs and improvements that have been made over the years. Unfortunately, these are usually maintenance items. When you are selling a thirty year old house, you don't get credit for spending money on a roof, air conditioners, new windows or window blinds. Those are costs that were incurred simply to keep the home livable. Even homes that are only twenty years old may need significant updating. Kitchens, bathrooms and flooring the most noticeable upgrades that a buyer will consider when deciding which house to purchase. If the updates aren't done -- compared to the competitive choices -- then the price must reflect that.

"My house is a product on the market. At what price will someone offer me money for the house?". This is how successful sellers have to think in this market. To sell, you need to be the best choice available on the market that a buyer can make. No one is going to overpay for a house in an under-priced market.

If the seller hasn't heard the tough news from his current agent, he can be very frustrated to learn that he has wasted time without being truly ready for being on the market. The most important service a REALTOR® can provide for a seller is to tell the truth, because without solving the problems with the condition of house and the price, no amount of snappy new marketing in the world will get a house sold with a new agent.

images licensed from istockphoto.com

Will a Short Sale Affect my Credit Score?

Tom Branch, CDPE, SFR — Wed, 15 Jun 2011 06:23:00 GMT

We get this question a lot from distressed homeowners. So much emphasis in America is put on the credit score. That score drives your ability to make major purchases, like a home or a car, if you need a loan to do so. It will also determine what your interest rate will be on those loans.

Your credit score is one thing used to approve or deny any credit card applications and what your annual percentage rate will be. Believe it or not, your score even affects how much you pay for homeowner’s insurance. It almost feels like we’re being labeled and judged based on our credit scores.

Like it or not, Americans are overextended. We use credit freely to obtain the material things we want, to travel to our favorite vacation spots, and to see our favorite entertainers perform. Oftentimes it seems like instant gratification just isn’t fast enough. As a result, we are a debt-ridden society.

So the question is a fair one. “What will a short sale do to my all-important credit score?”

Truth of the matter is that each seller’s score will be affected differently based on the actions taken up to and during the short sale process. The short sale itself will not have a tremendous adverse effect on your credit score. The short sale will show up on a credit report as a loan that was settled for less than what was owed, but paid in full per the settlement terms.

What will adversely affect your credit score is if you stopped paying your mortgage during the process or paid it more than 30 days late. This will show up just as if you were late paying a credit card bill or your car note. Late payments, especially if you’re repeatedly paying more than 30 days late (commonly referred to as rolling 30s), will lower your credit score. No doubt about it.

While your credit score is important, a properly negotiated short sale can avoid deficiency judgments and the long-term impact of a foreclosure.

Photos: Licensed by Author from iStockPhoto

Are You Listening To Your Agents Advice?

Maya Paveza — Tue, 14 Jun 2011 14:00:00 GMT

I am a real estate agent because I love helping people make their dreams come true. I enjoy sharing my experience and knowledge in transacting real estate with my clients; I sell houses everyday – often multiple times a day. The average consumer will buy or sell a home every 5-7 years, so when it comes to the process and interaction a real estate agent offers great value.

When we all work together the process is smooth and easy, usually. When a Buyer is being pulled in too many directions, it can become a problematic situation in a real estate transaction. In my experience 99% of the time a client, and their family, understand the process and respect the expertise of their agent, but when people don’t trust people and carry that to the table, it can cause huge problems.

One of the most difficult concepts in a real estate transaction is to understand that communications can get contentious. When you are playing a game of “telephone” with relayed information between buyer’s agent and listing agent, it can become extremely caustic. It‘s essential for Agents to help their client understand the potential pitfalls of the process, including the psychology of a real estate transaction. It really can be a poker game, and a slight miscommunication can result in a situation that could be detrimental to all.

I try to remind all my clients of the following points to remember when we are going through the purchase or sale:

You hired a real estate broker for a reason. We are the professionals, licensed, trained, educated, and qualified to help you in your real estate transaction. We do it every single day, not just once every 5-7 years. If you aren’t sure if you can work with your agent, interview a few before you sign a contract, ask friends, and above all else communicate openly and candidly with your agent what your expectations are, they work for you.
It’s all about psychology and nuance. A negotiation can be simple, a negotiation can be complex, and a negotiation can be ugly when people don’t understand the nuances of the transaction. Remember that when we don’t know people we assign personalities; often those assigned personalities don’t match the parties involved. Be careful about getting too emotionally involved, people are too quick to cut off their nose to spite their face.
Less is often more. Sometimes things go awry. An Agent misreads the contracts, refuses access during the due diligence process of inspections, or something else to inflame a client. When this occurs a matter-of-fact response is best, keep any written documents simple and straight to the point. Inciting a situation is never a good idea at this point; try to get things back on track being as positive as possible.
If it keeps happening, try to find the common denominator. If you have the same problem occurring over and over as you try to sell your home or buy a home. Issues in negotiations, problems with communications, it might be time to be really introspective and ask if the problem might exist with your buying strategy.
Be positive. Keep a positive attitude, don’t become emotionally attached to a house (if you can avoid it), and work hard to listen to the advice of your agent. They are not just pulling information out of thin air, they are working to help you and protect you.

A real estate transaction is extremely complicated, try to make it as simple as possible by trusting the expert who is representing you, not seeking outside counsel from agent friends. Trust that your agent REALLY knows the market, and take a deep breath before you get too emotional. It never benefits anyone to allow a small miscommunication to grow into a massive cancer that will consume all good will. Step back, find a new perspective and get back on track. Your goal is to buy or sell a house, not end up in litigation.

Photo: Images_of_money Creative Commons 2.0

7 Ways to Add Bling To Your Home To Help It Sell

Brian Copeland — Mon, 13 Jun 2011 05:37:00 GMT

In the sea of homes on the market, every tiny change you can make to your property that sets it above the competition matters more than ever. Many times, we automatically think that we have to sink thousands of dollars into a home to make it rise above. Here are a few things you might consider doing to improve your home's showing bling.

1. Kitchen pulls. Many homes built in the 70s, 80s and 90s simply have horrid cabinet hardware. Simply investing $80-$200 in sleek, current pulls can add that extra oomph to your cabinets.

2. Faucets. A great faucet can make or break a kitchen or bathroom. Don't be afraid to go industrial meets gourmet in your kitchen faucet choice.

3. De-brassing. Brass had its day. Consider changing out those faucets, door handles, hinges and pulls to oil-rubbed bronze or chrome.

4. Revive the vintage. Newell posts and mantels are a perfect place to make a huge statement. Take a trip to your local salvage store and don't be afraid go a bit shabby chic.

5. Grates and grills. Take two major rooms in your home, the two where you think the biggest impression can be made, and invest in new floor grates and grills. Likely, this will only require changing out four to six of them and can make a subtle classy update for a under $200.

6. Go bold on the door. One of my recent buyers commented that they would buy the first house they see with a red door. A fresh coat of vibrant paint makes an amazing first impression. Consider reds, greens and oranges for that extra pop.

7. Foyer and dining fixtures. Most homebuyers spend major bucks (especially on new builds) on the light fixtures in the foyer and dining room. These are two spaces you cannot ignore when auditing your home for sale. If you are underwhelmed with your entry and dining lighting, you're home-lookers will be, too.

So here are 7 ways you can add a little bling to your home to help it sell.

Crossing the Finish Line

Jason Crouch — Fri, 10 Jun 2011 05:29:00 GMT

Part of my job as a real estate broker involves being a good listener, and a good counselor, not only for the agents who work for our company, but for my clients. This past week, I used an analogy that I wasn't sure would help a home buyer who was stressed out. It turned out that it was the very best thing I could have told him.

My buyer (who has become my friend, too) called me for encouragement, because the lender was requesting yet another piece of evidence that would demonstrate that he could qualify for the loan. This is pretty much just the way things go with modern financing. Loans are much tougher to secure than they were a few years ago, and loan underwriters sometimes seem to be a bit sadistic with their timing and with the amazing variety of information that they often request.

Here's what I told my friend, and I'll admit that this is not verbatim, but it's close:

"Well, I understand how you feel. I know that it's a pain, especially when you think you're finished and they need one more thing, and yet another piece of paper. I know that you've gone through childbirth with your wife, and the loan process is kinda similar in one way. Namely, it's always the worst right near the end. The fact that you feel uncomfortable means that it's almost over, and soon you will have your new house. I promise you that the lender won't be moving in with you, so you only have to deal with this a few more days."

I waited to see what response this would garner. Thankfully, he said that it was exactly what he needed to hear. As a bonus for me and my ego, he added, "I knew that you would say something like this to help. I feel a lot better."

Before I was a father of four, I probably would have used a sports analogy in this case, such as crossing the finish line or being on the one-yard line in a football game. Any of these are accurate under different circumstances, but labor pains seemed to most closely equate with this particular transaction.

My friend closed on his house today, and despite a couple of extra challenges (hurdles?) that were thrown at him this morning, he got his keys this afternoon and he will be sleeping in his new house tonight.

The lesson here is twofold:

The mortgage process is more difficult today than it used to be, and perhaps harder than ever
Although it's challenging, it won't last forever.

The bottom line is this: If you've found the perfect home, don't get discouraged by the loan process. Yes, it's hard. You aren't being singled out, though. It's tough for everyone. Persist. You may be surprised or dismayed by small delays, or by odd requests for information, but it will probably all be worth it in the end.

Part of your agent's job is to keep things in perspective and provide moral support when the going gets a little rough. Your mortgage contact should be able to do this as well. Our "bedside manner" can make or break a deal.

Thanks for reading, and good luck with your purchase!

Photo: jayneandd Creative Commons 2.0

Realistic Expectations for a Home Inspection

Leslie Ebersole — Thu, 09 Jun 2011 18:20:00 GMT

Finally, your offer to purchase your dream home has been accepted. At each home you considered, you carefully analyzed the pluses and minuses. Like many people, you looked at new construction and re-sale homes. And while no home is perfect, your REALTOR® assured you that any problems with the home will be discovered during the home inspection.

Just like every mother has a labor and delivery story, as a home shopper you heard many horror stories about problems that weren't found during home inspection. Sometimes those problems were as minor as a missing toilet paper holder, while other times they were severe as a furnace that didn't work the first winter. So you are warned to be cautious and skeptical by friends and family who don't want you to make an expensive mistake.

So some home buyers expect that the home inspection will identify every single problem and that the seller will fix all problems. But this isn't quite the case. For the purpose of purchasing a home, the home inspection is supposed to identify defects in the major mechanical and structural elements of the home.

Not all problems noted by a home inspector are defects. Here are some items noted during recent home inspection that are NOT defects:

Doors that lightly brush on newly installed carpets
Marks on walls
Carpet that appears to be fraying where the seams were joined
Cold air register grills installed up side down
A cracked tile in a shower
Gutters that are full of leaves
A curtain rod that is separating from the wall
Torn patio screen
Missing cord to wood blinds
A cracked shelf in a refrigerator shelf
A driveway that needs to be resealed

All of these are problems, but they are not major defects. Houses, especially houses that have been lived in, have flaws that require routine maintenance. All of the items marked above should be repaired, but are not necessarily defects in the functioning of the house. Not to repair them, like leaving clogged gutters, might become a problem for making sure the roof wasn't compromised with moisture.

Real estate agents and attorneys can make a buyer develop unrealistic expectations when they proclaim "it's a buyer's market". A home inspection report can be so “comprehensive” (overly detailed?) that a buyer can frightened into believing that all problems must be fixed prior to closing. If you, as a buyer, have realistic expectations for what the seller can or should fix, the final steps in purchasing the home should go more smoothly.

In many states buyers should be aware that the time spent negotiating repair items is called a contingency period. For example, in my state of Illinois, during the home inspection contingency period, either side can easily cancel the contract. As soon as a buyer asks for an extension or any item to be repaired, the seller can cancel the contract and re-list the house, or maybe accept another offer that has come in.

Here are some of the main issues that should be addressed by a home seller if found during an inspection:

Any environmental hazard, such as radon. asbestos, soil contamination, mold or gas leaks
Any malfunction in the heating and cooling systems. But just because a furnace is old. doesn't mean that it is malfunctioning
Clear evidence of structural problems such as a cracked foundation or rotted wood in a staircase
Plumbing issues such as toilets that don't flush or faucets that are not working
Electrical system problems such as an overloaded service box

There are many grey areas of what might be addressed during an inspection. Many home inspectors have worked in home building trades. A contractor who built homes in past few years may know current building codes. But if the questionable component of the house was to code when it was built, it may not need to be brought up to current code. For example, we now know that bathroom fans should be vented to the outside of the home to keep moisture from building up and causing mold to grow. But a home that was built in1980 may have been to code at that time if the bathroom fans were vented into the attic. A home inspector might recommend this be changed as an improvement to the house. But it is not necessarily required for the sale of the house as a defect.

I always recommend that a buyer have a professional home inspection and would insist on a signed waiver if it was declined. I would never suggest that a buyer close on a house that requires repairs beyond the buyer’s resources. The home inspection is intended to make sure that a buyer know about problems, issues and defects in a home so that they are not taking on more than they expected.

Note: I am a licensed REALTOR® in Illinois, so these observations are made based on my experience and our state laws. Please consult with local professionals for the requirements for home inspections in your area.

Image licensed from istock photo.com

A Cooperative Seller is Essential in a Short Sale

Tom Branch, CDPE, SFR — Wed, 08 Jun 2011 08:19:00 GMT

I lost two short sale listings to foreclosure yesterday. They did not go into foreclosure because I did not get the sales approved nor was it the fault of the buyers. The seller was at fault.

He traveled to Mexico for almost three weeks and never let me know he was going to be away with no access to email, faxes, or cell service.

I had one of the sales approved and ready to close. The investor has given us an extension to close the sale and their policy is not to approve a second extension. The sale failed to close and the lender foreclosed.

The second sale needed a document signed and Notarized so the lender could process the short sale package. Once again, I was not able to find the seller and the lender did not have time to process the paperwork with the investor once the seller arrived back in the country. Another foreclosure.

I think the days of short sales lingering for months are coming to an end. I had dinner with an executive for one of the big four banks last week. While they do like completing short sales, they are not going to let them drag out for months any longer. He told me they will foreclose and move the asset off of their books.

If you’re a seller working on a short sale, you need to keep your agent informed about absences and you need to complete any requests in a prompt manner. Remember, your agent is trying to help you to avoid foreclosure but he cannot do it by himself. It takes the cooperation of all parties to get a short sale closed.

Photos: Licensed by Author from iStockPhoto

Communication is a Two Way Street

Maya Paveza — Tue, 07 Jun 2011 15:24:00 GMT

In real estate everything is about communication, but as in life – people are often afraid to communicate what they really want. To have a successful real estate experience it is essential to be confident and comfortable in your relationship with your agent to be clear on your needs and expectations.

More often than not when a buyer “disappears” it is a result of some problem in communication, a misunderstanding, or some other way in which expectations were not met. The problem is that far too often people don’t communicate their expectations to their agent.

Part of the first meeting with your real estate agent should be a discussion about expectations, procedure and communications. There are many kinds of expectations in an agency relationship, as well as obligations, but I will touch on just a few of the most important expectations that a buyer, and an agent, need to share with each other.

Communication. Tell your agent how you prefer to be communicated with, and the frequency. If you prefer text messages, make sure you clearly convey that, if you prefer email or phone calls make that clear. What frequency do you want? Only when there is a must see house but otherwise keep the automated searches running? Or do you want a daily check-in on the market conditions? You also need to understand what your agents expectations of you are, do they expect you to open and review all listings sent to you? To have you check a property out by driving by it or on Google street view prior to demanding to go see it “right now”!
Mutual respect. You are preparing to make the largest purchase of your life, and your agent respects and understands that. They dedicate their life to helping people in that exact process on a daily basis, often more than once a day. They are true professionals. They respect and understand how you feel, the psychology of the process and can often tell you how you will feel before you get “buyer’s remorse” and run screaming from the room. In the same regard you have to also respect that your agent may have many clients, and a very tight schedule, not to mention a personal life or family. There is nothing like a demanding phone ringing and ringing while you are trying to help another client, or have dinner with your family. You need to respect your agents expertise and the agent needs to respect your needs.
Chemistry does matter. People don’t always connect, they don’t always get along, and sometimes we just rub each other the wrong way. It is better to acknowledge a fact like that and move forward than to have a contentious business relationship. A good agent will know when it is time to offer to refer you to someone else. Cut the niceties and get on with business, this is a business transaction.
We are all only human. Sometimes we say the wrong thing, I am well known for putting my foot in my mouth, these are the times that a client must say something to their agent. This isn’t about a friendship, it isn’t about being each others best pals, it is about purchasing a home and relying on a well qualified professional. As a real estate professional we all strive to be the best we can be, and when we have those moments when we are not, letting us know how we might be failing to meet your expectations is important. You can’t improve if you don’t know what you are doing wrong.

There are a lot of things a real estate agent can help you with, but there are many other things they cannot. Be sure to clearly understand the limitations that the federal, state, and local laws put upon your agent (Check out the Federal Fair Housing Guidelines for one), and what the REALTOR Code of Ethics does as well.

It isn’t that we don’t want to tell you about the census information or the crime statistics in an area, it is that we are not allowed to – we can only point you to the resources so you may do research and form your own opinion. When we hand you that Fair Housing brochure it isn’t so it can decorate the floor of your car, it is so you can understand our professional limitations. Sometimes communication is silent, with only a thin tri-fold brochure to bring you the message.

Avoid the drama that can result from a miscommunication. Be clear, be decisive, and listen to your agent when they advise you on conditions. We do have experience and if we tell you “You might lose the house if you don’t step up in the negotiations”, they aren’t trying to up sell you, they are trying to avoid the phone call I had to make three times last weekend to tell a client they lost the house of their dreams.

Confidence in yourself and in your real estate agent will help you avoid any pitfalls and problems. Trust your instincts, you chose that real estate agent for a reason, not be sure to tell them what they need to know to best serve your needs.

5 Things You Must do at your Final Walk-Through

Daniel Rothamel — Mon, 06 Jun 2011 15:15:00 GMT

Buying a home can be a very exciting experience. With all that excitement, it is sometimes easy to overlook little things that can make a big difference in the overall outcome of your home-buying transaction. One of the aspects of the transaction process that is critical is the final walk-through. Knowing what to do at your final walk-through can help ensure a smooth final stretch for your transaction and give you piece of mind when you finally sit down at the closing table.

What is the final walk-through?

The final walk-through is one of the last parts of the transaction process. Just before you proceed to the closing table, you will need to conduct a final walk-through of the house you are buying to make sure that the home is in the condition it should be in, and that all the provisions of the contract have been met.

The final walk-through is your final chance to raise any issues with the house before you proceed with the closing. DON'T SKIP THE FINAL WALK-THROUGH! Some people just assume that the home is the way it should be, and they choose not to do a final walk-through so that they can save time. This can be a major mistake. If you skip a final walk-through and then proceed with closing, there might not be anything you can do after the closing if there is something wrong with the house when you take possession.

Because the final walk-through is so important, there are things you need to make sure you do to make sure that you are getting the maximum benefit from your walk-through. Here are 5 things you MUST do at your final walk-through:

1. Schedule the walk-through as close to the closing as possible. Since your walk-through is the last thing you will do before signing paperwork and taking possession of your new home, you want to make sure that you do it as close to your closing time as possible. Why? Because once you leave that house, you are essentially agreeing to the home in the condition in which you saw it at the walk-through. The closer you are to signing your paperwork and taking possession, the less time there is for something unexpected to happen. Unexpected things are not usually good during closings, so try to eliminate that possibility as much as possible by doing the final walk-through as close to your closing time as possible. Sometimes, your schedule may not permit this, and there will be time or even a day between walk-through and closing. That should be ok, but just try for as close to your closing as you possibly can get.

2. Give yourself enough time to conduct a thorough walk-through. So, you want to be as close to closing as possible, but you also want to give yourself time to actually do a thorough walk-through. Our suggestion is to give yourself about an hour between the time you open the door, and the time you have to leave to get to your closing. This should give you enough time to go through items 3-5 on this list, and address any potential problems. If you think you may need more time, based on issues that came up during negotiations, that's fine. Just make sure you allow yourself the time you need. On that note, don't let the seller rush you or dictate the time you have. The walk-through time is yours, and it is part of the contract, so take the time you need.

3. Check for personal property. Often, there is some personal property that conveys with the sale. Could be appliances, window dressings, shelving, or just about anything. This personal property would have been explicitly mentioned in the contract. If personal property is included, make sure that it has been left in the house, and that it has been left in the condition specified in the contract. Also, you'll want to check for any personal property that the sellers might have accidentally left behind. If you find anything that isn't supposed to be in the house, let the seller know. If they might have forgotten it, they will appreciate you letting them know. If you find out that they left it for you to have, consider it a bonus.

4. Re-check home inspection items. If you conducted a home inspection as part of the transaction, you'll want to make sure that any items that you negotiated during the home inspection were addressed in the specified manner. It is a good idea to have the contract and addenda with you during the walk-through so that you can make sure that items were corrected in the manner specified in the contract. Go through each item one by one. If something seems amiss, call the listing agent and address the situation while you are at the house. That gives you the best chance of getting things resolved without causing a delay in closing.

5. Run the house through its paces. Aside from the home inspection items, you'll need to make sure that everything is still working the way it was the last time you were in the house. Once again, this is your last chance to address anything, so make sure you check all the major systems in the house. Turn on all the faucets to check for leaks, make sure the HVAC is working properly, turn on the stove and the oven, open, close, and lock all the windows and doors. Just make sure that nothing has changed since the last time you were in the house. You're not conducting another home inspection, but you should make sure things are in order. In fact, many home inspectors will agree to attend your final walk-through for an additional fee, just to do a quick re-check of the house.

A thorough final walk-through provides peace of mind

If you follow the five tips we've outlined above, it will help ensure that you are conducting a thorough walk-through. Conducting a thorough final walk-through will help put your mind at ease when you sit down at the closing table. You'll know that the house you are buying is in a condition that is acceptable to you, and you'll reduce the possibility of surprises after you take possession. Sure, you can never guarantee that nothing will happen and no surprises will crop up, but conducting the most thorough walk-through you can will give you peace of mind knowing that you have done everything you can, and help make the transaction a much more enjoyable and less stressful process.

Image Morguefile

Looking to Sell Your Home? Make it "Remarkable"

Jason Crouch — Fri, 03 Jun 2011 11:53:00 GMT

As a real estate broker, I deal with home buyers and sellers on a regular basis. As a listing agent, one of the challenges I face is writing a compelling description for every house that I list. Our particular MLS system in Austin allows us exactly 510 characters for this. On some homes, I find myself struggling to edit the text to fit the allowable space. But on many homes, I am left with ample space and very little to say.

You have to make your home remarkable, and by "remarkable" I mean, "easy to write remarks about".

There are two elements when you're painting a picture of your home, namely, photos and text. Truly, the MLS remarks and description often make the difference in whether or not someone decides to come look at your home. If you're in an area with lots of houses for sale, agents and buyers will both make an effort to cull their lists to a manageable number for showings. If there are 50 homes that are similar to yours in the market, most people won't view more than 10-15 of those before making a decision. It's important that your home makes the cut.

After you have listed your home, ask your agent to send you a copy of the MLS listing so that you can see it yourself. Make sure the photos look good and present your home in the best possible light (literally). Then, read the description and see if it excites you. If you can add anything or edit this to make it more appealing, make the suggestion to your agent. I am always open to this, since the seller is the one who really understands what makes the home special.

Here are a few extras to include, if space permits:

Proximity to schools, shopping, major employers, or major thoroughfares
The use of any rooms that may not be obvious to buyers who view your home
Any newly installed stuff (carpet, paint, roof, water heater, etc.).
Reasons that you bought the home in the first place

Another method I've seen used to great effect here in our market is the "silent agent", which is basically just a nice set of cards that call attention to specific features in the house. You can get nice index cards and use them this way. Examples would be to point out hidden storage areas, or alternate uses for rooms that are furnished.

As a general statement, before you take the time to put your home on the market, make a list of special features that you want to see highlighted in any marketing efforts. This will help both you and your agent to put things in perspective.

I still see MLS descriptions that are empty, or (perhaps even worse) those that read like this in their entirety:

"Motivated seller! Home is nice with 3 bedrooms and 2 full bathrooms. Convenient. Call with questions."

Here's a real-life example from a new listing of mine, which may help to illustrate the possibilities:

"Perfect location in esteemed Stone Canyon*Excellently maintained one-story home* Open plan w/tons of natural light*Tile & laminate floors throughout*Plantation blinds*4 BRs or 3+ office,exercise,or media*Park-like backyard(easy to maintain w/extensive native plants & full sprinklers)*Steps from Fern Bluff Elementary(Blue Ribbon & among the most coveted in Austin),parks(tennis, swimming, basketball),RR Hospital, & Williamson Co Trail!*Lakeline & La Frontera shopping,Dell,IBM,& major roads are also close."

Which one makes you want to see the home?

Thanks for reading!

Photo: lowjumpingfrog Creative Commons 2.0

Why Can't I Find A Rental Agent?!

Brian Copeland — Thu, 02 Jun 2011 07:43:00 GMT

The market has indeed shifted and many dwellers have made the decision to rent instead of buying a home. Now, I'm not one of your stereotypical agents who will say you should never rent. I believe that renting is often the best option for many prospective buyers; however, I'm sure many of you have had a difficult time finding someone to work with you on finding a rental. So, why is that?

In certain markets, there are several contributing factors that make it tough for agents to work with renters.

Error and Omission Insurance Requirements: In many markets, agents are required to carry a type of insurance. The insurance isn't cheap for the return that often comes with this territory. You'll want to make sure that if you do find a rental agent that she carries the proper insurance in case something goes awry.

Broker Restrictions: Remember. The vast majority of agents work for a broker who makes the rules and calls many of the shots. Many are classified as Independent Contractors with an Independent Contractor Agreement (ICA). Some brokerage firms do not allow their agents to work with renters.

Profitability: This statement isn't a fully generalizable, but most tenant rental agents make very little on a transaction. Many multiple listing services offer $100 to $250 per lease signed. Let's say an agent drives a renter to 10 places over a two day period. With an average of 100 miles driven in those two days, you're looking at about $20 in gas. Then, when you factor in an hourly rate of just $20 an hour with minimum hours spent, that's $200. When you add in the pre-work for searching, setting up and the lease time, many agents are operating in the red taking on one renter. The argument stands that those renters could likely turn into future buyers, but few statistics are in place to quantify the risk.

As a renter searching for a place outside of the apartment realm, your best bet (as cliché as it is) is Craigslist. Renter beware here, but for the most part, many of the ads are legitimate. Another option is to find the dominant landlord-representing agent and ask them if they have a key check out program for their own listings. They won't necessarily have the time to show the properties individually or to show you other agents' listings, but they may have a program set up with their sellers for some self-service help in looking.

I hope these tips help those looking for a rental home to have an easier time!

When It Comes To Foreclosures, Time Is Not On Your Side

Tom Branch, CDPE, SFR — Wed, 01 Jun 2011 09:02:00 GMT

I was out working with an out-of-state buyer over the holiday weekend. He is a doctor relocating to Dallas and only had a few days to find a place to live. I ruled out short sales as my client did not want to wait the 60 to 90 days it would take to get the short sale approved by the lender and closed.

We focused our search on uptown condos. We spent Saturday on the road and went back out on Sunday for second showings. He fell in love with a high-rise unit in the heart of uptown. It offered all the amenities he wanted and a great view of downtown Dallas.

We wrote up an offer and sent it in to the listing agent on Monday. Tuesday came and I received a call from the listing agent. She informed me that the condo was now a short sale.

Since this had not been disclosed in the MLS, I asked her to explain what was going on. Apparently the condo is scheduled for foreclosure on June 7^th and the seller never bothered to tell his agent.

My buyer and I discussed it and he decided to move forward with it. He loved the unit and would find a place to live while we worked the short sale. The proper paperwork was submitted. Within a few hours, we received another call from the listing agent. The bank would only accept a cash offer closing in the next 7 days!

My buyer is well qualified for a mortgage but is not able to pay cash and close in less than a week. Sadly, the unit will be foreclosed on next week. I’m going to watch and see if the bank lists the unit later this month and my client will try to purchase it as a foreclosure.

The sad part is the entire situation may have been avoidable. If I’ve said it once, I’ve said it a thousand times—if you are behind on your mortgage payments, reach out and speak with someone. Time is not on your side.

Photos: Short Sale - Licensed by Author from iStockPhoto | Downtown Dallas View - Used with Permission

Is It Safe to Talk Here? It Might Not Be. Nanny Cam? Nope, Buyer Cam!

Maya Paveza — Tue, 31 May 2011 12:04:00 GMT

An interesting story came to my attention this past weekend that has had me thinking, a lot, about the impact it might have on our industry, and definitely on how I show houses and what my Buyer clients and I discuss within the walls of those houses.

On Saturday an Agent showed a house to a Buyer client, the Agent had a full day of clients and showings from mid-morning to late-evening, every hour accounted for. That night around 11:00pm the Agent received a phone call from a Seller accusing them of reading their “personal” documents. The Seller had set up video surveillance in their kitchen and claimed the Agent had gone into a cabinet and reviewed her private papers. Upon further review it was not the accused Agent, but another one who had done so.

The Agent was surprised that they had been videotaped without their knowledge, but would never invade someone’s privacy like that. This is an Agent who is well known in their market for their professionalism, ethical behavior, and impeccable reputation. This individual is also in great standing with the local REALTOR® Board and their position on the Professional Standards committee (which hears all consumer complaints or Agent complaints against REALTOR® members, the same committee decides the outcome of all cases). When I thought more about this instance I found the impact upon the prospective buyers to be the one I was most bothered by.

A seller is never required to leave their own home for a buyer appointment. In my market the Seller signs a listing agreement with their broker agreeing to allow a lockbox and warning of the risks. I personally tell my clients to always remove valuables, medications and any documents they wouldn’t want someone to see. I have also begun telling my sellers to take the computer power cord with them (if a desktop) or the keyboard and mouse. Maybe it is overkill but a buyer once did open files on my client’s computer. The feeling of betrayal and violation is quite difficult to deal with.

It Happens in the Kitchen

The most powerful conversations with any Buyer in a house they have interest in tend to occur in the kitchen. That has been my experience, for whatever reason the layout of most kitchens make them comfortable to stand around and discuss interest, comparables, offer prices and other details that a prospective buyer would not want to disclose to a seller.

Why not? You wouldn’t want to show your hand of cards when playing poker and a real estate negotiation can be a lot like a game of poker. Often you know what you are willing to pay for a property, but want to get a better price, so you start low and hope to end low. The Seller on the other hand also has a number in mind, and will try to get the Buyer up higher. Essentially both sides have hands to play and are holding their cards tightly to their respective chests with the confidence and advice of their experts and legal Agents. The nature of an agency relationship provides complete and total confidence in what you disclose to your Agent.

Video, or even audio surveillance adds a new twist to the possibilities of a real estate transaction. Forgetting about whatever local, state or federal laws might be involved, the fact that a homeowner COULD be recording your visit to a home with your Agent is something we should consider at all times. It has made me rethink how I talk with my clients at a property of interest, and I want to share those rules with you.

Don’t be “overly excited” about a property. I used to warn buyers to “curb your enthusiasm” when a seller was around, or other agents. Real estate is all about psychology, if you seem too cool, collected and disinterested then you couldn’t possibly be too emotionally involved in a house. It does happen, we connect with a house and know we want it, but if you tip your hat then you weaken your position for negotiations. Now we have to watch what we say and how we act even when a seller is NOT around.
Don’t discuss price, interest, or anything more than the actual quality of the finishes or house while in the house. It isn’t ideal not to be able to discuss these things when you are looking at a house but apparently that might be advisable at this point.
Make a list of questions or details about a property that you wish to discuss with your Agent and save those for when you step outside of the house. The likelihood that there will be good surveillance outside is much lower, but don’t stand too close to the house.

It seems to be taking it from a position of paranoia and that is a shame, but when you are talking about the largest purchase most people make in their life, privacy and the sanctity of the Agency relationship needs to be protected at all costs.

In this particular case I think the seller should probably have remained at the property for all showings. It isn’t the best choice for a seller to remain at their home during showings. Many buyers feel uncomfortable in a home when the current homeowner is there, making it more difficult for the prospective buyer to emotionally attach to the house. But, of course, it is the homeowners choice as to how they wish to proceed with the sale of their home.

Caveat Emptor

Buyer beware, you might not have the privacy you expect when you enter into a prospective new home. Use caution and wait to talk to your Agent until you leave the premises. It is a shame to think that way but to me it is even more shameful not to disclose that a property might be under surveillance, but what do I know – I am only a real estate agent, not a lawyer.

Be prudent, be smart and you will find you might end up saving tens of thousands of dollars.

Photo Courtesy of Morguefile

Will Gas Prices Drive You To A New Pad?

Brian Copeland — Mon, 30 May 2011 19:19:00 GMT

I hate the gas prices just as much as you do, but I have to wonder how the prices will drive buyers to consider moving closer to work. In Nashville, for example, the vast majority of the jobs are in the metropolitan area. When gas prices were below $2.50 and housing was selling like hotcakes in the mid 2000s, commuting from a 'burb wasn't an issue. Now, I literally picked a new gym based off the proximity to my home. I'm paying $10 more a month, but it calculates out to a savings of over $30 a month by staying close.

A girlfriend of mine, took a $2 an hour pay cut to transfer to another office closer to her home. In the grand scheme, however, she is saving over $600 a month in gas. As a homebuyer you have to take into consideration the full economics of the home you choose. Let's do the math.

Say you're buying a $200,000 home 30 miles from your office. It's costing you $50,000 less for the home thanks to its location. That payment (according to Tree's calculators) will run you about $1200/month as opposed to the $1500/month of the $250,000 city home. That's a annual savings of $3600.

Now, let's do that gas calculations. Based on the current national average of $3.84 a gallon and the average fuel economy of 20 miles to the gallon, the savings become a lot less if you live five or less miles from work. You'll spend roughly $57.60 on gas each week for a total annual gas bill of $2995.20. Traveling the lesser amount means you're spending around $9.60 each week totally $499.20, annually. Living 30 miles from work will cost you an additional $2,496 which gives you an annual savings of $1,104 in fuel alone. When you factor in the extra hour of driving each day with your hourly rate of $21.35 (Bureau of Labor Statistics), you're losing an additional $5,550, annually.

Now, you've saved $3600 in your annual budget for a mortgage, but you've actually cost yourself an additional $4,446 for deciding to commute the distance. Now, are you certain you want to drive that far to work every day to save money on the mortgage?

Photo courtesy of Morguefile