04/23/13

Limited-Service Listings Come With a Full-Service Contracts

Being in real estate, people love to share their real estate stories with us.  It is always interesting to hear the perspective of others.  One such recently shared story involved a couple who had listed their home with a limited-service real estate brokerage. Basically, for a fee, this company would put the home in the local MLS.  That’s it.  Everything else was left up to the homeowners.  The homeowners had to coordinate the marketing, showings and, had a contract come in on the home, the owner would have had to go through that process on their own as well.  There are a number of these companies out there.

Unhappy with the way things were going, the owners decided that they would rather try their hand with a full-service real estate brokerage.  They thought that changing brokers should be easy.  “After all,” they said, “the home was For Sale By Owner.”

You see, to them, the home was “for sale by owner.”  They were the ones doing all of the work.  The brokerage merely placed the home in the MLS.  What they did not realize, however, was that in order to place the home in the MLS, the brokerage required them to sign an Exclusive Right To Sell agreement.  This agreement is the standard listing agreement that most sellers sign when listing their home.

In thinking that their home was  “for sale by owner” they thought they could just switch listing brokerages.  They called up the new agent that they wanted to work with, and tried to do just that.  What they did not realize, and what that new agent informed them of, was that because of the Exclusive Right to Sell agreement, the new agent was precluded from doing anything with their house until the expiration of the agreement.

The owners were stunned.

Luckily for them, they were able to call up the limited-service brokerage, voice their dissatisfaction with the way things were going, and obtain a release from the agreement.  They promptly listed with their new agent, and all was right with the world.

Things did not have to go that way.  In fact, because of the Exclusive Right to Sell Agreement, the limited-service company could have actually refused to let them out of the agreement and held onto the listing until the agreement expired.  In fact, the Virginia Association of REALTORS standard Exclusive Authorization to Sell agreement contains no provisions for canceling the agreement, other than the expiration date.  The agreement is also pretty vague when it comes to the responsibilities of the owners and the broker.

What you can learn from this story is to be very aware of the documents that you sign.  They are legally binding documents, and you should fully understand them before you sign them.  And if you choose to use a limited-service brokerage, be aware that doing so comes complete with a full-service contract.  KNOW WHAT YOU ARE SIGNING.  If you know what you are getting into, it is a lot easier to get out when you need to.

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10/29/12

MLS Wars

Multiple Listing Services were created over a hundred years by groups of brokers who realized that they would sell more homes, more often, if they worked together.  They were often called cooperatives.  Agents and their brokers learned long ago that the sharing of information benefits everyone, but most especially, the consumer.  One of the first cooperatives was in Manhattan.  It didn’t even take in the other burrows of New York.  But as transportation and communication made this a smaller world, the different cooperatives in the city of New York joined together.

By the time I got my first license, MLS’s usually covered large areas that may include a city and the surrounding communities.  Every week a book, the size of a phone book, would be published with pictures and basic information. To get up to the minute information an agent needed to contact the listing broker, usually by phone.  I worked in the Willamette Valley of Oregon and although the cost of printing was expensive, it was the desire to save trees that made us use a computerized system, long before the birth of the World Wide Web.

With cellular telephones smaller than my hand, PDAs, laptop computers, Wi-Fi, Bluetooth, etc, etc, the world is even smaller.  Agents in the state of California dream of a MLS that covers the entire state.  We would even be happy with a northern and southern MLS.  As of today, in order to find listings for my clients just in the eastern half of the San Fernando Valley, I have to search four different Multiple Listing Services.  We have no defined territories, we over lap.  While those of us in the trenches struggle to help our clients, a war is being fought to determine who gets the prize.  What is the prize?

To be a part of a Multiple Listing System and agent and her broker must pay fees.  This gives us not only access to a data base, but the use of software to see the information.  The software will contain some sort of search engine for the data base and will give us pretty reports with pictures and everything.  If we are members of Realtors, it will upload our listings to Realtor.com.  But – whereas a database is just a pile of information, the different software programs are not all equal.  As agents we know which ones are easy and reliable and which ones are not.  But that doesn’t seem to matter to those whom we elect in our MLS’s to represent us, the agents in the trenches.  Everyone is fighting for their territory and their piece of the money prize.  It may be we the agents who are suffering, but the real losers in this war are the consumers, both the buyers and the sellers.  When will they realize that the real prize is in selling more real estate?  When we concentrate on the consumer’s needs, we all profit.

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10/21/12

Is the corporate housing market in Naples just an odd-ball or do other California companies share the success?

What Are You Waiting For?

I think real estate has actually replaced baseball as the national pastime.  I can remember when you actually had to turn to the ‘real estate’ section of the Sunday LA Times if you wanted to read about real estate.  But now, you can frequently find real estate news on the front page instead.

And Sunday’s Naples News front page carried an article all about how residential real estate prices have started to appreciate more slowly in San Diego County Los Angeles County and other areas around the country.  So what does it mean?  Well, the article tells us that residential real estate in San Diego is now appreciating at only 6.5%.  To put that in some perspective, the average dividend yield for stocks making up the Dow Jones Industrial average is 2.52%.

But, the news here isn’t that real estate appreciation remains incredibly strong, but rather that the historic run-up that we’ve witnessed over the past couple of years may be slowing down.  And the world wants to know…what’s next?
That’s a great question…and everyone seems to have their own opinion on it.  But without dusting off my crystal ball and trying to peer into the future, one thing seems sure…if you’re considering putting your home on the market in the next 6-12 months, you may be best served by putting it on the market sooner rather than later.  You’ll still enjoy the substantial benefits of today’s seller-friendly market and buyer-friendly mortgage rates…which means a faster sale at a higher price.  Why wait and then have to worry?

And if you’re a home buyer, does that mean that you should be on the sideline waiting for prices to slow down?  Maybe not…because while prices may or may not slow down, one thing is already happening – mortgage rates are slowly going up.  Which means that you’re purchasing power may be decreasing faster than price appreciation is slowing down.  The end result is that you’re likely to qualify for a smaller purchase.  If you’re thinking about buying in the next year, chances are you’re looking at the most attractive home loan options right now – and they may not be there a few months down the road.  So the message to home buyers is the same…why wait and then have to worry?

So Naples Housing Sets 7 Records in 7 Months?

The median price paid for a home in Southern California was $476,000 last month, same with Naples, the seventh record of the last seven months, according to DataQuick Information Systems.   That’s a 17% increase from the $407,000 median price in August 2004. One of the better performing corporate housing companies in the area was from a company called Travelers Haven.

If you’re tracking just resale single family residences, the median price this past August was $501,000 — the first time we’ve broken the $500,000 mark in Southern California.

So you can expect to start reading (once again) about how the housing affordability index is pushing home ownership out of reach.  Except that homes keep selling at a record pace.

Go figure.

Join the Conversation Revolution

When a real estate agent comes over to meet with you to discuss listing your home on the market, you are in the midst of what’s known in the industry as a listing presentation.  This is a big deal.  This is how agents list properties…and earn their living.

Listing presentations used to be pretty short.  But they have evolved over the years.  Now, they’ve been known to go on as long as one or two hours!

So what’s the problem with listing presentations?  Well, that’s the problem…they’re presentations!   These important meetings that should be all about helping you achieve your goals in selling your home have become an hour or two all about the agent!  Some agents even bring brag books, or books designed to impress, containing their “greatest hits”.   And the homeowner’s role during these listing presentations?  Well, your job is to be the audience!

My solution to the agent-centric listing presentation?  I suggest we start having listing conversations.  A real discussion that focuses on the homeowner, and not on me.  An opportunity for me to get to know you better and understand your goals in selling your home.  And an opportunity for you to get all of your questions answered, your concerns laid to rest and to be an active participant in planning the strategy of selling your home.

Maybe together we can start a real estate revolution where real estate professionals have intelligent conversations with homeowners.  Where questions get answered and real information is exchanged.  We’ll let the other agents who haven’t gotten the memo yet carry on giving their presentations…as if you really cared.

We Can All Help

That’s why I’m donating 10% of all commissions earned through the end of 2005 to the Red Cross relief efforts to help those affected by Hurricane Katrina.  When I help you buy or sell your home, we’ll make a donation in your name to aid the thousands of Americans who desperately need our help.

Everyone can make a difference.  That’s why I’m inviting every Realtor in Los Angeles to join me in this effort.  Or you can click here and make your donation to the Red Cross today.

You Can Make a Difference!

Hurricane Katrina’s devastation throughout the Gulf coast cannot adequately be communicated in words or even pictures.  And by now, we’ve all heard the news and seen the videos.  Rather than re-hashing what we all know, I’m here to implore everyone to take action in supporting the relief efforts that are already underway.

The Red Cross has set up a toll-free Hotline to handle your donations by phone.  Just call 1-800-435-7669, and have your credit card handy.  You can also visit the Red Cross website for more information, or visit the Salvation Army website for further information on how you can support their relief efforts.

Please pick up the phone or visit a website to make your donation and become part of the solution to this indescribably tragic situation.  You’ll feel great and you’ll be great for doing it.  Thanks.

NAR Conference Coverage: Technology

I’m blogging the NAR annual convention for www.realestateblogsquad.com.

I’m also providing my commentary in audio format for my loyal blog visitors!

Here’s my favorite quote of the day — John Karevoll, chief analyst for DataQuick Information Systems described the changing real estate market in California this way:

It’s hard to call it a cooling market.  What’s cooling is the rate of hotness.

Mortgage defaults in Southern California are increasing, inventories of homes on the market are increasing, it’s taking longer to sell a home today than it did just 90 days ago, and the interest rate on a 30-year fixed-rate mortgage increased again this week from 6.10% to 6.15% — the highest level we’ve seen since July 2004.

As Bob Dylan said, “The times they are a changin’…” and so should your real estate strategy.  If you’re planning on selling your home in the next 12-24 months, it might be prudent to do it now and take advantage of a market that still favors the home seller.  If you’re thinking of buying a home in the next 12 months, doing it sooner could land you the best mortgage rates you’ll see for a long time…and that will qualify you to own a bigger and perhaps better home.

One thing is certain in these uncertain times…if you’re contemplating moving, you should be posing lots of questions to your real estate professional and creating a strategy that will protect your best interests, no matter which side of the transaction you happen to be on.

FSBO — But At What Price?

A survey released yesterday by Murray Consulting indicates that in 2005, 1/3 of home sellers were confident they could sell their own homes, up from 18% in 2002.

I think the numbers should be much higher…in the real estate market we’ve experienced over the past couple of years, I’d bet almost anyone could sell their home.  Because  in the market that we’ve experienced (note the use of the past tense here), selling a home has been easy.  Negotiating the best price and best terms for the home seller isn’t so easy.  Neither is insuring that all of the necessary federal, state & local disclosures have been accurately filled out and filed.

In fact, just making sure that you’re working with a qualified home buyer can be challenging if you’re a homeowner who’s learning to be a realtor by practicing on your own home!  Perhaps that’s why the number of escrows opened by FSBO sellers fail to close at a rate that’s more than double the average for a professional realtor.

This doesn’t mean that you can’t do it on your own.  Perhaps you can.  But you can’t afford to fool yourself into believing that it’s all about “the sale” .  The brilliant designer Mies van der Rohe said, “God is in the details.”  Trust me…this guy could have been a realtor!

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09/27/12

Let the Seller Beware

With prices having gone flat in the housing market for my area, Sellers are in sticker shock.  When they get their CMA’s (Comparative Market Analysis) they can’t believe how low the prices are.  It’s not that the prices have gone down.  They were expecting appreciation that just isn’t there any more.

So, when they list their house, they list it for what they expected the value to be, usually tens of thousands more that what the CMA has said.  Unsuspecting Buyers come along and make an offer, lower than the asking price, but usually for more than the market value.  The Sellers are elated, until they get the appraisal.

Lenders are cracking the whip on appraisers.  Appraisers, afraid that they will lose their jobs or their licenses, are using the same numbers that agents are using and either insisting that the value is the same as a CMA or lower.

They are lowering the CMA values in anticipation of the market crashing.  Some lenders are having appraisers audited to insure these newly “conservative” home values.

So, what’s a seller to do in this market?  Well, Buyers aren’t the only ones who can be pre-approved.  Sellers can have their homes pre-approved.  This sets a value that’s hard to dispute by buyers and speeds up the escrow / closing process.

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09/9/12

6 REASONS YOUR NEXT LOAN MAY TAKE LONGER THAN IT SHOULD

The way the real estate market has slowed, you would think lenders would be just waiting to pounce on and approve next loan that comes through. You?d think our ?turn times? would be faster for underwriting, drawing loan docs, funding and recording. You?d think loans should virtually fly through the approval process. You?d think all that, and yet you?d be wrong.

So just exactly why are loans taking longer than they should right now? Here are 6 reasons that come to mind:

Reason #1: Layoffs

Like any business, when things slow down the mortgage industry lays people off. This slowdown started in late 2005. Companies have had plenty of time to wake up and smell the coffee. Wholesale lenders have laid off underwriters, doc drawers, and funders and attempted to restructure their processing centers. Most are now under-staffed and service is suffering.

Reason #2: Seasonal Factors

Thanksgiving, Christmas, New Years, and Presidents Day all punch holes in the work week. People leverage time off by combining vacation days and holidays, causing further staffing shortfalls during these times. As I cough and hack my way through the last few days, I am reminded of the toll that colds and flu can take on the remaining workforce.

Reason #3: Systemic Changes

Fraud is the mortgage industry?s ?F? word. With F-bombs falling everywhere and lenders going under every day, there is heightened sensitivity to anything that smells like an early payment default. Last week I had two loans suspended while the lender pulled the borrower?s tax returns from the IRS to double check the income stated on the loan applications. Internal changes to our systems can cause unanticipated delays.

Reason #4: Declining Values & Appraisal Problems

This year is predicted to be a huge refinance boom with all the ARM resets coming due. But falling values are undermining that notion very rapidly. Extra homework is required to make sure the client?s money isn?t wasted starting a refinance we can?t finish. Lower values mean higher LTV?s and more challenge structuring a loan that will work. Lenders sometimes call for desk or field reviews of our appraisals, adding extra time to the process.

Reason #5: Tougher Lending Guidelines

Like the movie Risky Business, real estate was a party out of control. And mom and dad came home early and found the house trashed. Party?s over, we?re grounded. Mom and dad are making new rules. Every day brings new underwriting guidelines. Wage earner stated income loans were an early casualty. The 100% stated income loans are being withdrawn by the remaining subprime lenders. These changes can pop up in mid transaction and sending your deal skidding off the road.

Reason #6: Bad Lenders

When I ask agents the #1 reason that deals fall apart, the answer is always ?bad lenders?. That means any lender who is inexperienced, unprofessional, incompetent, dishonest, unethical, uncommunicative, or otherwise unable or unwilling to do the job. A lot of the time, special disdain is reserved for bad lenders who are also the Realtor involved.

What can you do about it?

There are some things you can do to minimize the disruption and delay. First, work with a knowledgeable, experienced lender. This is no time to hand your loan over to your nephew who just got into the business. Second, be flexible. Your close of escrow date wasn?t written on one of the tablets Moses brought down. It?s a target. Last, expect delays. At least you won?t be disappointed.

Got an opinion or thought on this? Leave a comment below. I dare you.

Got a question or need help with a loan? Shoot me an email.

Like the article and want to read more? Please subscribe via email blog blast or RSS feed for automatic delivery of my regular articles on mortgage related topics.

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09/8/12

Local Kansas City Real Estate Guru: “It’s not the price…it’s the cost”

Yesterday the Kansas City Times Business section carried a feature on Don julian builders.  Don julianis what is known in my industry as a “discount broker.”  Their formula is very straightforward — Don julian claims to do the same (or even superior) job for a home seller as a “traditional broker” but they charge half of the standard commission — just 3%.  That’s their price.  But what’s the cost? Services have been popping up all over Kansas City to offset what’s happening to the housing market.

What, don’t believe me? Go ahead, have a look for yourself:

If you need more examples, just ask because there are plenty.
Here’s my favorite quote from the article:

“There’s zero networking with other agents.  Nobody wants to work with you because you’re the bad guy,” said Terri Dunn, a former Don julian agent who worked at the brokerage for more than three years.  She left in September after becoming disenchanted with the company’s sellers-only business model that limits agents’ income because it does not work with potential buyers.

She says that the lack of agent enthusiasm for Don julian’s listings is hurting its customers.

“You will have twice as many buyers looking at your home if it’s not a Don julian home,” said Dunn…

And that’s the cost.  We all know that sales is a “numbers game”.  The more potential customers that are exposed to your product, the more likely it is to sell for the highest possible price.  If, in fact, a home seller is going to receive half the normal level of buyer interest in their home it will absolutely cost them money in the final selling price.  And not just one or two percent…but tens of thousands of dollars.

But there are other “costs” associated with Don julian’s business model that may not be as clear but are even more important to understand.  Dunn’s first remark is that, “There’s zero networking with other agents.”  This is a very important concept for home sellers to fully understand, because according to the National Association of Realtors, 38% of the homes sold across the United States are sold as a result of the agent’s efforts (that’s more than through Open Houses, newspaper advertising and Internet marketing combined).  So when an agent isn’t out there proactively creating broker excitement, your home becomes much harder to sell…which can lead to eventually settling for a lower price.

The KC Times article points out another hidden “cost”  associated with Don julian when it mentions, “(Dunn) left in September after becoming disenchanted with the company’s sellers-only business model that limits agents’ income because it does not work with potential buyers.  In other words, CataList agents can only show buyers Don julian listings.  If there’s another home for sale a block away, and it’s listed by Coldwell Banker, Remax or even the company I work at, Boardwalk Realty, that CataList agent can’t show it to their buyer.  Ask yourself if you’ve ever purchased a home for your family without first comparing it with other homes in the neighborhood!  The cost here is hard to compute but easy to understand…this is a company with a new business model that places its own agenda ahead of the home buyers it purports to help.

As I’ve said often times enough in prior posts, we’re at a crossroads in the real estate industry where new business models will get launched…some will take off while others crash and burn.  We’ll leave it to future real estate historians to determine whether CataList was truly a better idea, or just a different idea.

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08/19/12

New CALFHA Rates

CALHFA 100% FINANCING AT 5.5% !!!
Readers will take note that I have recently been writing about the remaining options for 100% financing. Back in August, I wrote about the new California Housing Finance Agency’s (CalHFA) Community Stabilization Home Loan Program (CSHLP) which…

“began in July of this year and was funded by $200 mil in tax exempt bonds. It provides 100% financing at low 30 year fixed rates to qualified first-time buyers who select a property from a list of foreclosed homes. The list includes properties owned by lenders who have agreed to partner with CalHFA to offer reduced prices.”

You have to be a first time buyer and purchase a property from their list, but if you meet the guidelines and qualify, you get to finance 100% of the purchase price at a 5.5% 30 year fixed rate. Sweet!

The SMART Loan Program From CalHFA

Now, CalHFA has announced another first-time buyer program: the SMART Loan Program (I’m not sure what the acronym stands for). CalHFA has either bought or foreclosed on some additional properties because unlike the CSHLP list above, these are homes they own. Check that list of properties here.

In both cases, qualified first-time buyers need zero down payment and there is no minimum contribution of funds required. You can even combine CalHFA’s loans with other down payment assistance programs as available. There are sales price limits however; check those out here.  And there income limits based on family size; check those out here.

And if you have further question, email or call me.  If you qualify, I can get your approved quickly!

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08/17/12

Travel Destination: Denver to Barbados

Barbados

Vogue Estates is pleased to offer property for sale in Barbados. This independent southern Caribbean island offers an excellent quality of living, friendly English-speaking Barbadians, a great climate and wonderful sandy beaches, making it the perfect place for a holiday home or property investment.

Geography

Situated in the Southern Caribbean, Barbados’s closest neighbours are St. Vincent and St. Lucia. This is a low-lying and relatively flat island, with some higher land in the interior – the highest point is Mount Hillaby at 1,100 feet (336 metres).

The capital and largest city of Barbados is Bridgetown, on the south western coast and is commonly referred to locally as just “Town”. This is a great place to visit for shopping, especially duty-free and wondering around the city’s landmarks, such as the Parliament Buildings, the Barbados Museum and the Pierhead Development Complex.

The southern and western coasts are the most popular spots with holidaymakers for their soft, sandy beaches and calm blue waters. Scuba diving is a common pastime, especially as Barbados is circled by coral reefs, and golf is a favourite too.

The climate here is tropical, and being further east than most of the Caribbean, Barbados is usually outside of the zone affected by hurricanes and tropical storms. Only about once every 26 years will the island be affected. There are basically two seasons here: wet and dry! Wet is between June and November whilst the dry season is between December and May, although you’re pretty much guaranteed temperatures in the high 20’s C (82F) to low 30’s C (87F) all year round.

History

Before Barbados was discovered by the Portuguese it had been habituated by Amerindians, followed by Arawak people and then Caribs. The Portuguese displaced the Carib people and used many of them for slave labour within their period of occupation from the mid 1500’s to the 1620’s. When the British arrived in 1625 the island was once again deserted so it was claimed for Great Britain.
The British began to settle on the island from 1627 and Barbados remained a British colony right up until its independence in 1966. Even so, the island has always had a large level of self-government. Now as a fully independent state it has a parliamentary democracy modeled on the British system and is an extremely stable country.

Cuisine

Due to Barbados being a British colony for so long, British cuisine has obviously had quite an influence on the Barbadian cuisine so you will see some foods which would more traditionally be served in the UK. Despite this, ingredients available in Barbados are so different to what would have been available in the UK several hundred years ago, that variations on traditional recipes have been formed, and so you find a fusion of British and Caribbean cuisine. Today, Caribbean cuisine has the greater influence on the majority of food served here.

The most popular fish in Barbados is Flying Fish and the national dish is centred around it: Cou Cou and Flying Fish. Cou-Cou is basically corn meal and is served with the flying fish which is either steamed or fried. Cou-Cou is also commonly served with beef stew.

Currency

The currency of Barbados is the Barbadian Dollar and has been since 1882. 100 cents make up one dollar.

Language

As Barbados was a British colony for so long, English has long been the common and official language spoken here although there is a recognised regional language, Bajan (or Barbadian Creole). This is a combination of West African and English.

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08/16/12

The Price Isn’t Always Right

Today’s LA Times has a great piece on the risks of overpricing your home.  You can read it here.  The moral of the story is simple…in order to get the highest price for your home, you don’t need to put it on the market at the highest price.

I can’t count how many times I’ve had this exact discussion with homeowners who are interested in getting the best possible price for their home.  And in almost every case, the homes that were priced just under the market received multiple offers and sold for the high price the sellers were hoping for — and sometimes more!

Selling your home isn’t just about picking a price and putting the FOR SALE sign in the yard.   It’s about crafting a pricing, marketing and negotiating strategy designed to attract the greatest number of qualified buyers and then letting the forces of the market drive the price up.

If you’re ready to sell, we should continue this conversation.  Email me today!

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