Mark

Understanding Short Sales

The other day I came across the results of a 2010 Fannie Mae National Housing Survey summarizing how people feel about the current real estate market. While there were many interesting observations, none hit me more powerfully than the question about what a buyer thinks are the major reasons to purchase a home.

The single most important reason people gave was that it was a good place to raise children (80%). Reason two was that a home was a place their family could feel safe (79%), and reason three was that they could have control of their personal space (71%).

Over the past several years, it seemed that a house was something that many saw as a commodity; something that was expected to create instant wealth. Some even saw it as an ATM machine where they could withdraw large sums of money every year. But these survey findings reinforce that we, as a society, are getting back to understanding the true significance of a house…we realize, once again, that the highest value of a house is as a home.

As summer begins and quality time with family, friends and neighbors kicks into high gear, take a moment to enjoy watching the kids play basketball in the backyard or laughing with everyone as stories are shared while sitting on the deck after dinner.

Simply enjoy your house as a home — because your home is where a lifetime of memories are created!

Joe

Top 10 Agent Protocol Tips - Rules for Working With Agents

By Elizabeth Weintraub, About.com Guide

One of my clients knows how to safely remove a brain tumor from the base of her patient’s neck, but she doesn’t have a clue about real estate agent protocol. Nor does she understand why some listing agents have yelled at her.

In her mind, she hasn’t done anything wrong. She is only trying to find out information about a house for sale.

It’s not that difficult once you know a few simple rules. Here are protocols you can use while shopping for a home that will keep you out of hot water:

1. Understand Agents Work on Commission
• Very few real estate agents work on salary.
• Most real estate agents are paid commission. If an agent does not close a transaction, she does not get paid.
• Agents are not public servants and do not work for free. Do not ask an agent to work for you if you intend to cut the agent out of your deal.

2. Keep Appointments & Be On Time
• Be respectful, use common courtesy and don’t expect an agent to drop what she is doing to run out to show you a home. You are probably not that agent’s only prospect / client. And if you are, lord help you.
• Do not make an appointment with an agent and then forget to show up.
• If you are going to be late, call and let your agent know when you expect to arrive.

3. Choose A Real Estate Agent
• Decide whether you want to work without representation: dealing directly with listing agents, or if you want to hire your own agent.
• If you decide to hire your own agent, interview agents to find an agent with whom you are comfortable.
• If you are interviewing agents, let each agent know you are in the interview stage.
• Never, never, never interview two different agents from the same company. Trust me, don’t do it.

4. Do Not Call The Listing Agent if You Are Working With a Buying Agent
• Listing agents work for the seller, not the buyer. If you hire the listing agent to represent you, that agent will now be working under dual agency.
• If listing agents show you the property, the listing agent will expect to represent you.
• Listing agents do not want to do the buying agent’s job. Let your buyer’s agent do her job.

5. Practice Open House Protocol
• Ask your agent if it’s considered proper for you to attend open houses alone. In some areas, it is frowned upon to go to open houses unescorted.
• Hand your agent’s business card to the agent hosting the open house. Sometimes this agent will be the listing agent, but often it is an agent also looking for unrepresented buyers. Announcing you are represented protects you.
• Do not ask the open house host questions about the seller or the seller’s motivation. Let your agent ask those questions for you.

6. Sign a Buyer’s Broker Agreement with a Buying Agent
• Expect to sign a buyer’s broker agreement. It creates a relationship between you and the agent, and explains the agent’s duties to you and vice versa.
• Ask about the difference between an Exclusive and Non-Exclusive Buyer’s Broker Agreement.
• If you’re not ready to sign a buyer’s broker, do not ask that agent to show you homes. Otherwise, procuring cause may pop up.
• Ask your agent if she will release you from the contract if you become dissatisfied. If she refuses, hire somebody else.

7. Always Ask For and Sign an Agency Agreement
• By law, agents are required to give buyers an Agency Disclosure.
• Signing an agency disclosure is your proof of receipt. It is solely a disclosure. It is not an agreement to agency. Read it.
• The best and most practiced type of agency is the single agency. This mean you are represented by your own agent who owes you a fiduciary responsibility.

8. Make Your Expectations Known
• If you expect your agent to pick you up at your front door and drive you home after showing homes, tell her. Many will provide that service. If not, they will ask you to meet at the office.
• Let your agent know how you want her to communicate with you and how often. Do you want phone calls, e-mails, text messages, IM’s or all of the above?
• Set realistic goals and a time frame to find your home. Ask your agent how you can help by supplying feedback.
• If you are displeased, say so.

9. Do Not Sign Forms You Do Not Understand
• Do not feel silly for asking your agent to explain a form to you. It is her job. Many forms are second nature to agents but not to you, so ask for explanations until you are satisfied you understand.
• Do not sign forms titled Consent To Represent More Than One Buyer. This is never in your best interest. Find another agent if this happens.
• Realize agents are not lawyers and cannot interpret law.

10. Be Ready To Buy
• If you aren’t ready to buy, you don’t need a real estate agent. You can go to open houses by yourself; call listing agents for showings — but be honest, say you are “only shopping”; look at homes online; but don’t waste an agent’s time if you aren’t ready to act.
• If possible, hire a babysitter to care for children who are too young to stay out all morning or afternoon touring homes.
• Bring your checkbook. You’ll need it to write an offer because an earnest money deposit may be required to accompany your purchase offer.

Your agent should be your one and only source for information about the policy and procedure in the real estate transaction. It’s normal to get opinions about the neighborhood and schools from others, but when it comes to questions about the contract, comparable sales, and pricing, stick with your agent. Remember that the agent is involved in Real Estate on a daily basis; taking advice from anyone outside of the business could work against you in the long run.

Not too long ago, consumers had little access to details about homes for sale. Today, anyone can tap into this information. Real estate may be more transparent, but buyers and sellers still aren’t necessarily privy to everything. There are some things real estate agents can’t legally disclose, and others they don’t want to.

Here are five things a real estate agent may not tell a seller.

1. The agent and the broker may hold you to the listing agreement. In spite of what real estate agents may say, getting out of a listing agreement isn’t a slam dunk. ”Sometimes the agent doesn’t perform and you can’t make a change if you are tied to a listing agreement. It’s important for the seller to put in some kind of a clause that lets them out of the listing agreement. Some companies will (still) ask you to reimburse their marketing expenses,” or assign you to a different agent, says Patricia Kennedy, an agent with Evers & Co. in Washington, D.C., who puts a clause into her agreements saying either she or the seller can terminate the agreement by giving the other a written notice.

2. You may have trouble selling your house because it has an odor, the front door sticks or your barking dog is a distraction. Straight talk is difficult for some agents, especially in a market where every listing is precious and they don’t want to offend a seller. Odors are a particular problem. Home owners are usually unaware of them but they leave an indelible impression.

3. The list price they suggest isn’t realistic and they will be back in a couple of weeks asking for a price reduction. Studies show most sellers don’t believe the downturn has affected their own home, so it’s easy to be swayed by the highest price. Don’t forget that in the end, it’s the appraiser for the buyer’s lender who establishes value and that’s the challenge of today’s market, cautions Mark Nash, a Chicago real estate broker and author of several books including ”101 Tips for Buying and Selling a Home.”

4. How well they play with others. Real estate deals depend on cooperation. An agent who doesn’t return phone calls, isn’t connected with the local real estate community or has a reputation for being difficult isn’t going to have other agents rushing to show that rival’s listings. Experts suggest interviewing at least three agents before listing your property. Mention to each the names of the others you are meeting. A negative reaction or barrage of disparaging comments could be a red flag. Steer clear of that agent, recommends Nash.

5. How your agent splits the sales commissions with the buyer’s agent can affect the sale. A 50/50 or 45/55 split is customary, but it really depends on local practices. If your agent offers a cooperating agent a split significantly below the going rate, buyers’ agents may be less inclined to show your home. The same holds true if the original commission is so low there is little left to offer the buyer’s agent.

–On the flip side, here are five things buyers may not know:

1. The agent working with you might legally be representing the seller unless you have signed a buyer representation agreement. An agent who is listing a home and is also working directly with the buyer must disclose this to both parties and is considered a dual agent. Expect an agent you plan to work with to explain agency relationships at the earliest meeting and to offer you a choice of how you want to work with them.

2. The documents you sign when making an offer may also be the purchase and sale agreement. In some states the offer to purchase is actually the purchase and sale agreement. In others it is just an offer to purchase and the actual agreement is signed later. Usually when you’re ready to make an offer, there is a rush and the focus is on price and contingencies rather than the actual document. It is most important to understand how the earnest money will be held and under what circumstances it would be returned.

3. The home you want to bid on is in a high crime area or isn’t considered in a family neighborhood. By law, real estate agents can’t define neighborhoods, crime rates or schools. Fair Housing laws restrict the type of information agents can give to prospective purchasers to prevent the potential of an agent steering them toward, or away from, a specific property.

The agent also may not know that the house is a short sale, which means the seller’s lender has to agree to accept a price below the mortgage balance. If a property isn’t flagged as a short sale, the buyer’s agent may not know this when an offer is presented. Be prepared to allow a longer time to close.

4. The final walk through isn’t just a formality. Allow ample time to go over the property. Water heaters can leak or an appliance can break within a day of closing. This might be the rare exception, but anyone who has had this experience will tell you to be on the lookout for any indications that appliances as well as heating and cooling systems may not be working. Make sure doors and windows operate and that the property hasn’t been damaged during the move out and that all the agreed upon items remain.

5. All things related to homeowners associations (HOA). Although most states require HOA bylaws to be presented to buyers, agents sometimes aren’t aware that an association exists, particularly in older neighborhoods, so be sure to inquire. Also pay attention to restrictions that might be important to you, such as those regarding pets, vehicles (some associations require that campers or boats be parked out of sight of the street), clotheslines or potential alternations to the home. Some, particularly condominiums, may require new owners to pay a fee or assessment. For condos, pay particular attention to how well the building is run and exercise due diligence investigating the financial health of the association.

Walk across the street to view your home. Remember to think like a buyer. Does the roof look good, are there any sags? If your roof just looks dirty there are companies that will clean roofs with a special detergent that continues to clean every time it rains. If it looks worn or sagging call a roofer (we have companies we recommend) to inspect it. You may as well know now if it will become an issue to a buyer.

Is your siding clean and free of mildew and mold? If not, a power washing can do wonders. Is your landscaping over grown and covering windows or attaching itself to your house? If so, cut it back. In some cases you may need to pull out over grown bushes and replace with new smaller ones.

Make sure your front door and steps and/or porch are clean. The front door should be shiny and clean and fresh. Storm doors should have screens without holes and glass without fingerprints. Get rid of those pesky spider webs. Add a pot of flowers or evergreens if winter time.

Of course the grass should be cut regularly and clippings bagged and taken away. Weeds should be pulled and fresh mulch added to all beds. Deck should be power washed (sanded if a lot of splinters) rotted boards should be replaced and stained to match.

All this seems like commons sense things to do. However, some sellers get overwhelmed and cut corners. If you cut corners in your preparation it will cut into your profit.

Happy Cleaning.

As always, feel free to call me to discuss your particular situation.

Next week’s Blog will talk about freshening up the exterior

of your home.

Now you can see your walls and trim. If you have strong or out of date colors or wallpaper it is best to neutralize.  This does not necessarily mean white walls.  A soft cream or linen color or even a light taupe will highlight your furnishings.  A neutral color is most likely to please a buyer since most buyers do not want to have to paint or redecorate because of the busy lifestyles we all lead today.  The trim should be painted a crisp white.  If it is already white, dust and clean and re-caulk along stairs.

You are now making progress towards getting the best price for your home without spending a lot of money.

Next week Blog # 3 will include the least expensive and easiest “get you home ready” tip.

Always feel free to call me to discuss getting your home ready in more detail.