I read the other day about an individual who had submitted an offer on a repo as had two other persons. He was upset because his realtor would not tell him how much the other offers were. (Unless the agent was a dual agent, she should have been able to disclose this IF SHE KNEW. This is a topic I will try to cover in another epistle.)
He felt there was a conflict of interest because he had called the listing company, talking with this lady who offered her services when she discovered he did not have an agent. She was not the listing agent. So, let's talk about Who does my agent love?
In Washington State, we are subject to the Law of Agency. As a less law is better law guy with a rebellious spirit, I admit to loving this law!
First, it is possible for me to write an offer without representing either of the parties. I am just providing the paperwork and filling it in. In this case, I facilitate and do what the warring parties tell me to do.
I might represent the Seller. We call this the listing agent. In this case I do his bidding and seek to get the highest possible price for the Seller and the best possible terms.
I might represent the Purchaser. We call this the selling agent. When I wear this hat, I try to get the lowest possible sales price with the most personal property and most favorable terms possible.
Sometimes, I represent both parties. We call this Dual Agency.
Confucius described this situation many centuries ago when he wisely observed "A man who straddles a fence gets a sore crotch." This really is the toughest situation of all. We really are trying to please two masters. Christ told us we would end up loving one and hating the other. I have not found that to be the case in this situation, but dual agents become more of a facilitator than a negotiator.
In many cases, this actually helps both parties as it removes a lot of confusion and miscommunication. Also, this is a situation where some agents might be a bit more willing to negotiate commission. For myself, I typically give up one percent--6% becomes 5%. This is always subject to how much work is involved, how much of a pain in the neck the clients have been and other variables. Some agents just do not negotiate.
Regardless of the representational relationship, agents often walk a fine line trying to meet their parties' needs to sell or buy without giving away too much information. Do not be surprised by agent appearances of wishy washiness. This is where the clues are hidden. Pay attention!
After all, the agents' jobs are to get their Sellers' property sold, their Buyers into a home and in the dual agency case, become a preacher and create a marriage between the Buyer and the Seller.
Just because two agents are in the same company, it does not mean they represent the same person. Usually, they do not.
Finally, the burning point of the law is, while I have a lot of options as to who I represent, I must disclose to the client what our representalional arrangement is. This is why this is a great law. It gives you freedom to do anything you need to do, but, protects the client because the client knows where he stands with you and can protect himself accordingly.
Monday, November 17, 2008
Sunday, November 2, 2008
Where's The Stinking Address!
Did you ever wonder what was up with real estate advertisements? What is the MATTER with these stupid agents? They do not put in the price, they do not put in the address, they leave this, that or the other obvious pieces of necessary information out of the ad.
Now, you have called on ten ads and NONE of the properties are in the area that interest you. NONE of the properties are what you want or you just had to leave messages! Your blood pressure is up to 200 over 180. (Good is about 130/80 or a bit less). What is wrong with these miserable agents?
As Pres Clinton says, "I feel your pain." But, there is a reason AND a solution to avoid the hassle.
Real estate agents pay for their ads out of their commissions. Generally, the company is not a participant in these costs. My advertising bill exceeds $20,000. per year and is only second to my salary (which I pay myself from my business.) I advertise for two reasons. First and foremost, I need to get my listing clients' properties sold. Second, I need to find buyers.
If I put all of the information about the property in the ad, I limit the responses to the very few people who might actually want that house. My business flourishes, even in bad times, because I pick up a healthy number of buyers who call on my ads. Sometimes they actually buy the listing they called on, but, usually not.
OK, OK, you do not care about my problems and you shouldn't. But, how can you avoid the frustration of calling a hundred agents to talk about 99 properties you could care less about?
Easy. Find an agent who works the area(s) or types of properties you might like. Get "married" to that agent and let him/her provide you with the information you need. He/she will be happy to provide you huge amounts of information on most homes. In this age of automation and computers, you can designate an area, price range and other details and receive, at least in my area, an email notification of every property that fits the criteria as soon as it is listed.
Does that mean you will not be reading ads and magazines anymore? Probably not, but, now, you just give a list of the ads to your agent and he will get you details on all of them. This is part of the service we do for our LOYAL clients. I often call half a dozen agents about their listings to service my clients.
In the meantime, I will continue to bait my hook with 2/3rd's of a juicy worm to try and draw as much interest as I can.
Now, you have called on ten ads and NONE of the properties are in the area that interest you. NONE of the properties are what you want or you just had to leave messages! Your blood pressure is up to 200 over 180. (Good is about 130/80 or a bit less). What is wrong with these miserable agents?
As Pres Clinton says, "I feel your pain." But, there is a reason AND a solution to avoid the hassle.
Real estate agents pay for their ads out of their commissions. Generally, the company is not a participant in these costs. My advertising bill exceeds $20,000. per year and is only second to my salary (which I pay myself from my business.) I advertise for two reasons. First and foremost, I need to get my listing clients' properties sold. Second, I need to find buyers.
If I put all of the information about the property in the ad, I limit the responses to the very few people who might actually want that house. My business flourishes, even in bad times, because I pick up a healthy number of buyers who call on my ads. Sometimes they actually buy the listing they called on, but, usually not.
OK, OK, you do not care about my problems and you shouldn't. But, how can you avoid the frustration of calling a hundred agents to talk about 99 properties you could care less about?
Easy. Find an agent who works the area(s) or types of properties you might like. Get "married" to that agent and let him/her provide you with the information you need. He/she will be happy to provide you huge amounts of information on most homes. In this age of automation and computers, you can designate an area, price range and other details and receive, at least in my area, an email notification of every property that fits the criteria as soon as it is listed.
Does that mean you will not be reading ads and magazines anymore? Probably not, but, now, you just give a list of the ads to your agent and he will get you details on all of them. This is part of the service we do for our LOYAL clients. I often call half a dozen agents about their listings to service my clients.
In the meantime, I will continue to bait my hook with 2/3rd's of a juicy worm to try and draw as much interest as I can.
Now I lay me down to sleep
This is always a depressing time of year for me. The sunny, warm days of summer are long gone. The days of working outside 'til 9 PM are a fond memory. The clock just sprang back and at 4:30 in the afternoon it is dark. I have not got my barn completely ready to accommodate working at night because there is no heat.
I sell real estate for a living and we know how that is going.
I love my plants and was happy to have day lilies blooming here until late October, a real abnormality. But, I got out my weed-whacker and whacked all of them down to the ground a week ago. A year's work and growth now just chopped up weeds.
To make things worse, it looks like the country is going to elect an abnormal number of democrats, and liberal democrats at that. My democrat friends are virtually in an ecstatic stupor.
I have bought a great sack cloth suit, some ashes and am looking for a public square where I can sit, throw the ashes over my head and moan.
My friend asked me to go to McMorris's victory party Tuesday night to watch the election, but, I declined. I told him I needed to be in a place where I could cry like a little girl as the returns come in.
But folks, the NEXT national election is only 4 years away! In a mere 51 days or so, the days will start getting longer. Six weeks after that, the tulips will start pushing up from the ground. Spring is not THAT far away.
My real estate year has been pretty good and I thank God for that.
Life is cyclical and today's mourning contains the seeds for tomorrow's joy. So, I will plant the seeds, gird my loins, thank God for the many blessings he gives. I will seek to look up, not down. I will persevere and with God's help un-funk.
Catch you on the rebound!
PS The older of my sons is here for a couple weeks from the middle east. My daughter is going to visit for the coming weekend and my youngest son's last college check is due in January. Life is great after all!
I sell real estate for a living and we know how that is going.
I love my plants and was happy to have day lilies blooming here until late October, a real abnormality. But, I got out my weed-whacker and whacked all of them down to the ground a week ago. A year's work and growth now just chopped up weeds.
To make things worse, it looks like the country is going to elect an abnormal number of democrats, and liberal democrats at that. My democrat friends are virtually in an ecstatic stupor.
I have bought a great sack cloth suit, some ashes and am looking for a public square where I can sit, throw the ashes over my head and moan.
My friend asked me to go to McMorris's victory party Tuesday night to watch the election, but, I declined. I told him I needed to be in a place where I could cry like a little girl as the returns come in.
But folks, the NEXT national election is only 4 years away! In a mere 51 days or so, the days will start getting longer. Six weeks after that, the tulips will start pushing up from the ground. Spring is not THAT far away.
My real estate year has been pretty good and I thank God for that.
Life is cyclical and today's mourning contains the seeds for tomorrow's joy. So, I will plant the seeds, gird my loins, thank God for the many blessings he gives. I will seek to look up, not down. I will persevere and with God's help un-funk.
Catch you on the rebound!
PS The older of my sons is here for a couple weeks from the middle east. My daughter is going to visit for the coming weekend and my youngest son's last college check is due in January. Life is great after all!
Thursday, October 30, 2008
Trailer full of confusion
Stick Built, Mobile Homes, Manufactured Homes, Modular Homes, Trailers, Site Built Homes.
Just what DO these words mean? That depends on who is asking or answering.
Stick and Site built homes generally means a home built on site by a builder using 2 x 6's, 8's, cement, rock, trusses and all the other thousands of pieces of stuff that go into a home. These homes will normally be the most desired, most expensive and most easily financed.
Mobile homes and trailers typically refer to, well, mobile homes and trailers! Let's get a bit more precise. If the "trailer" was built in 1976 or earlier, it was "Pre-HUD" and may have many more issues relating to the wiring, the construction and general condition. These homes are virtually impossible to finance without extraordinary interest rates.
Also, this term is used by older people who have not transitioned mentally from the cheaper homes made when they were young hot studs and studdess to the very expensive, finely engineered Manufactured homes of today.
Manufactured homes are Mobile homes and Trailers made in 1977 up to now. These homes, if set according to FHA standards, are easily financed by many lending institutions, although, the current pendulum swing has made the down payment requirements much higher.
For financing, the rules vary from year to year based on the mood of the financing establishment. Right now, that mood is a bit gloomy. Expect .5 to 1 percent add on fees for a Manufactured home over a Stick/Site built home. Construction of these homes is done in a factory and the home incorporates a metal frame into the building. This frame accepts an axle and the home comes in on its own wheels, is set on cement blocks or jack stands upon cement runners which function as the foundation. We will discuss setting in a separate blog.
Modular homes. It is obvious modular homes are manufactured homes, but, as far as banks are concerned, a modular home finances like a Stick/Site built home.
What is the difference between a modular and manufactured home? Easy! Both are made in a factory and driven to a different location and turned into a house. But, the modular home is constructed with a typical base plate, set on a truck bed, then a crane or other slide methods are used to remove the home from the truck and set it onto a standard home foundation.
It may look like a manufactured home, most of the construction is the same, it may be made at the same factory, but, the bank says "Dude! Have I got a deal for you! Construction costs are a bit higher than most manufactured homes by the time you get it set up. But, the cost difference may be mitigated by cheaper financing rates and lower down payments.
So, there you have it. A quick definition guide that works today, in the Spokane Washington area. Who knows what the terms will mean tomorrow, but, at least you have a general idea. Do not forget the other wrinkles, Panelized homes, Log home kits, Pre-fabed homes. Like anything in real estate, there are wrinkles on wrinkles, so do your homework.
Just what DO these words mean? That depends on who is asking or answering.
Stick and Site built homes generally means a home built on site by a builder using 2 x 6's, 8's, cement, rock, trusses and all the other thousands of pieces of stuff that go into a home. These homes will normally be the most desired, most expensive and most easily financed.
Mobile homes and trailers typically refer to, well, mobile homes and trailers! Let's get a bit more precise. If the "trailer" was built in 1976 or earlier, it was "Pre-HUD" and may have many more issues relating to the wiring, the construction and general condition. These homes are virtually impossible to finance without extraordinary interest rates.
Also, this term is used by older people who have not transitioned mentally from the cheaper homes made when they were young hot studs and studdess to the very expensive, finely engineered Manufactured homes of today.
Manufactured homes are Mobile homes and Trailers made in 1977 up to now. These homes, if set according to FHA standards, are easily financed by many lending institutions, although, the current pendulum swing has made the down payment requirements much higher.
For financing, the rules vary from year to year based on the mood of the financing establishment. Right now, that mood is a bit gloomy. Expect .5 to 1 percent add on fees for a Manufactured home over a Stick/Site built home. Construction of these homes is done in a factory and the home incorporates a metal frame into the building. This frame accepts an axle and the home comes in on its own wheels, is set on cement blocks or jack stands upon cement runners which function as the foundation. We will discuss setting in a separate blog.
Modular homes. It is obvious modular homes are manufactured homes, but, as far as banks are concerned, a modular home finances like a Stick/Site built home.
What is the difference between a modular and manufactured home? Easy! Both are made in a factory and driven to a different location and turned into a house. But, the modular home is constructed with a typical base plate, set on a truck bed, then a crane or other slide methods are used to remove the home from the truck and set it onto a standard home foundation.
It may look like a manufactured home, most of the construction is the same, it may be made at the same factory, but, the bank says "Dude! Have I got a deal for you! Construction costs are a bit higher than most manufactured homes by the time you get it set up. But, the cost difference may be mitigated by cheaper financing rates and lower down payments.
So, there you have it. A quick definition guide that works today, in the Spokane Washington area. Who knows what the terms will mean tomorrow, but, at least you have a general idea. Do not forget the other wrinkles, Panelized homes, Log home kits, Pre-fabed homes. Like anything in real estate, there are wrinkles on wrinkles, so do your homework.
Wednesday, October 29, 2008
Las Vegas money for Sellers
If you have great credit, you can still get a good home lone without any trouble. But, the 100 percent down loans are almost gone. FHA demands 3.5 percent down and conventional loans are 3-20 percent down. It is time to trot out Owner Financing again.
Owner Financing falls into two categories. First and second mortgages.
Owner Financing with a first mortgage usually requires a down payment of at least ten percent to cover costs. Most sellers want to take a trip, buy a car, or do something that costs money. Expect to come up with at least 15 percent and more likely 20 to 30 percent down. Sellers want to know if they must repossess the house, he will be able to fix any damage and be able to price the home a bit more aggressively if he has to resell it later.
Three other aspects regularly affect Owner Financing.
Expect a "balloon" payment. The loan is written with monthly payments based on a 30 year pay off. BUT, in 5 years, 10 years or some other designated time, you will be expected to pay off the entire loan.
Expect to pay higher interest. If the going rate is 6% then do not be surprised the seller wants 7.5 to 8.5 percent. You do save a lot of money on loan costs.
Expect and demand the loan be held by an escrow company. This is one of the best consumer products out there. The minimal costs of collecting, disbursing and keeping track of the monies is truly wonderful and safe for all concerned. I did one of these between parents and an adult child. I insisted they do this. Only way to go.
What Dangers lurk out there in the world of Owner Financing?
Two common ways of transferring property are "Real Estate Contracts" or "Deeds of Trust." The actual ins and outs are legal and beyond my understanding or licensing capabilities to explain. The old timers around here who LOVE to provide owner financing favor the Real Estate Contract method.
Make sure you can pay it off in full anytime without penalty. I saw one where the buyer had to pay 13,000 dollars in penalties to pre-pay 25,000 dollars of principal. It was all the interest due until the end of the loan.
Sellers, make sure the loan has a "Due on Sale" clause. You may want to let another buyer assume the loan, but, you do not want that to be the default.
Don't just set down with a good old boy and write it on a napkin--either sellers or buyers. Take the napkin to a real estate agent or real estate attorney and make sure it is done right. Better arguments before than after for everyone!
"Las Vegas Money for Sellers."
Sellers, if you take a SECOND mortgage to help a buyer qualify for a first mortgage down payment. Then, the buyer defaults and the home is repossessed, more than likely, there will not be enough money to pay anything against the second mortgage. That means that money just goes away, kinda like a mutual fund. You may be able to go after the buyer to try to recover it, but, it is probably not worth it (call a lawyer).
Therefore, a second mortgage is Las Vegas Money. If you can say "Thank you God" for every Penny you got paid by the first mortgage, and for every penny you get in monthly payments and if it repos and you do not get one payment on the second mortgage and can still say thank you God for what you got, do it because Second mortgages are just Las Vegas Money.
Owner Financing falls into two categories. First and second mortgages.
Owner Financing with a first mortgage usually requires a down payment of at least ten percent to cover costs. Most sellers want to take a trip, buy a car, or do something that costs money. Expect to come up with at least 15 percent and more likely 20 to 30 percent down. Sellers want to know if they must repossess the house, he will be able to fix any damage and be able to price the home a bit more aggressively if he has to resell it later.
Three other aspects regularly affect Owner Financing.
Expect a "balloon" payment. The loan is written with monthly payments based on a 30 year pay off. BUT, in 5 years, 10 years or some other designated time, you will be expected to pay off the entire loan.
Expect to pay higher interest. If the going rate is 6% then do not be surprised the seller wants 7.5 to 8.5 percent. You do save a lot of money on loan costs.
Expect and demand the loan be held by an escrow company. This is one of the best consumer products out there. The minimal costs of collecting, disbursing and keeping track of the monies is truly wonderful and safe for all concerned. I did one of these between parents and an adult child. I insisted they do this. Only way to go.
What Dangers lurk out there in the world of Owner Financing?
Two common ways of transferring property are "Real Estate Contracts" or "Deeds of Trust." The actual ins and outs are legal and beyond my understanding or licensing capabilities to explain. The old timers around here who LOVE to provide owner financing favor the Real Estate Contract method.
Make sure you can pay it off in full anytime without penalty. I saw one where the buyer had to pay 13,000 dollars in penalties to pre-pay 25,000 dollars of principal. It was all the interest due until the end of the loan.
Sellers, make sure the loan has a "Due on Sale" clause. You may want to let another buyer assume the loan, but, you do not want that to be the default.
Don't just set down with a good old boy and write it on a napkin--either sellers or buyers. Take the napkin to a real estate agent or real estate attorney and make sure it is done right. Better arguments before than after for everyone!
"Las Vegas Money for Sellers."
Sellers, if you take a SECOND mortgage to help a buyer qualify for a first mortgage down payment. Then, the buyer defaults and the home is repossessed, more than likely, there will not be enough money to pay anything against the second mortgage. That means that money just goes away, kinda like a mutual fund. You may be able to go after the buyer to try to recover it, but, it is probably not worth it (call a lawyer).
Therefore, a second mortgage is Las Vegas Money. If you can say "Thank you God" for every Penny you got paid by the first mortgage, and for every penny you get in monthly payments and if it repos and you do not get one payment on the second mortgage and can still say thank you God for what you got, do it because Second mortgages are just Las Vegas Money.
Saturday, October 25, 2008
Do FSBO'S pop or fizzle?
FSBO = For Sale By Owner. Does it make cents to sell your home yourself? Maybe, maybe not. Certainly the motivation is money. While there is no set percentage rate and there are as many potential plans as there are people, the Agent commission is one of the largest costs of a sale. For the purpose of this blog, let's say the commission is six percent. That is $12,000. on a $200,000. house. We could all do a lot with that much money. So, let's look at some general statements or consistent ideas about FSBO's and the pros and the cons of this route.
I hear sellers say, "I am going to FSBO it and keep the agent commission for myself." I hear buyer's say "I am going to buy a FSBO and knock all the commission off and get the house for $12,000. less than market." Which is correct? Either or a hybrid could be true. I have observed some FSBO's to be incredibly under priced. I have seen many more to be very much overpriced. In the end, it will come down to a negotiation and that will determine who benefits.
If you decide to sell your home by yourself, what are some of the problems. First is access to buyers. In most markets, 85 percent or more of the buyers are associated with an agent. A buyer, in our example, is a $6000.00 business asset to the agent. If you are not willing to cooperate with the agent, why should he release his buyer to you? He has spent hours, if not months; many thousands of dollars becoming educated regarding the practices, principals and quirks of the local real estate market. He has likely spent much time driving that buyer around showing him property. For the FSBO to expect the Agent to say, "Here is my buyer, have a nice life" is the same as for you to walk into the hardware store and say "Gee, this is a nice hammer. I appreciate it. See you later." Then leave without paying. Second. How familiar are you with local real estate law? Two obvious questions that are often missed by sellers acting on their own behalf are the Lead Based Paint addendum for 1978 and older homes and the Property Disclosure Form which is required in many states. Failure to use either could result in legal problems or fines. Third. Selling or buying a home is very emotional for most people. Agents earn their money by being the Emotional Dead Zone where the heat can dissipate without damage to either party--at least in theory. Sometimes, you are just too close to the situation to be rational. An agent may keep it together for you in these circumstances. Fourth, how do you price your home? How do you know how high or low it should be? Are you pricing your home too high so it will not sell? Are you pricing it too low? If so, you may be giving away the commission and assuming the work and stress of the sale yourself. Does that make sense? And finally, costs. The agent generally spends a lot of money advertising your property. You are going to assume that bill. Also, the Multiple Listing Service (MLS) gives you access to Realtor.com and all the local agents. This tool is the single biggest benefit to a seller. Without listing your home with a Realtor, you lose this benefit. Your house becomes much less visible. Visibility sells. That, after-all is your target.
What is the benefit of being a FSBO? You MIGHT keep a few more dollars in your pocket. Obviously in the hot, hot, hot markets where nothing is available, being a FSBO may make sense. Also, if there is just no money to pay those costs, it might make sense. In any case, it is probably worth your time and money to buy and hour or two of an Agent's time to get your home priced, find out what forms are necessary and get a general state of the market. A good agent may charge you $100-200 an hour. It is usually money well spent. Certainly, it makes sense to enlist the aid of the buyer's agents by paying a buyer's agent commission of half or slightly more of the typical commission in your area. Remember, it is not legal to set industry commission rates. Rates are always negotiable. That does not mean an agent has an obligation to accept your offer. What is reasonable to you may not be to the agent. So, in our example. Pay the buyer's agent 3 - 4 percent. He is doing the work of both agents because he has to deal with your emotions as well as his buyers' stress. Believe me, he earns his money.
In the end, 85 percent or more of FSBOs list their property. Personally, I am not offended by FSBOs. I have sold many of their homes, I have helped many more with forms, information and photos. After-all, many ultimately become my listing or I help the seller buy their next home. I built a 2000+ sq foot barn. Took me 7 years to do it. The front is 49.5 feet, the back is 50.2 ft. Sheet rock does not come together just perfectly at the corners. But, it works. I wanted to do it myself, I did it, I am happy with it, but, I will never build another myself. Do you really want to sell your home yourself?
PS: Do It Yourself Apendectomy kits available from MedicalSuppliesAreUs.com
I hear sellers say, "I am going to FSBO it and keep the agent commission for myself." I hear buyer's say "I am going to buy a FSBO and knock all the commission off and get the house for $12,000. less than market." Which is correct? Either or a hybrid could be true. I have observed some FSBO's to be incredibly under priced. I have seen many more to be very much overpriced. In the end, it will come down to a negotiation and that will determine who benefits.
If you decide to sell your home by yourself, what are some of the problems. First is access to buyers. In most markets, 85 percent or more of the buyers are associated with an agent. A buyer, in our example, is a $6000.00 business asset to the agent. If you are not willing to cooperate with the agent, why should he release his buyer to you? He has spent hours, if not months; many thousands of dollars becoming educated regarding the practices, principals and quirks of the local real estate market. He has likely spent much time driving that buyer around showing him property. For the FSBO to expect the Agent to say, "Here is my buyer, have a nice life" is the same as for you to walk into the hardware store and say "Gee, this is a nice hammer. I appreciate it. See you later." Then leave without paying. Second. How familiar are you with local real estate law? Two obvious questions that are often missed by sellers acting on their own behalf are the Lead Based Paint addendum for 1978 and older homes and the Property Disclosure Form which is required in many states. Failure to use either could result in legal problems or fines. Third. Selling or buying a home is very emotional for most people. Agents earn their money by being the Emotional Dead Zone where the heat can dissipate without damage to either party--at least in theory. Sometimes, you are just too close to the situation to be rational. An agent may keep it together for you in these circumstances. Fourth, how do you price your home? How do you know how high or low it should be? Are you pricing your home too high so it will not sell? Are you pricing it too low? If so, you may be giving away the commission and assuming the work and stress of the sale yourself. Does that make sense? And finally, costs. The agent generally spends a lot of money advertising your property. You are going to assume that bill. Also, the Multiple Listing Service (MLS) gives you access to Realtor.com and all the local agents. This tool is the single biggest benefit to a seller. Without listing your home with a Realtor, you lose this benefit. Your house becomes much less visible. Visibility sells. That, after-all is your target.
What is the benefit of being a FSBO? You MIGHT keep a few more dollars in your pocket. Obviously in the hot, hot, hot markets where nothing is available, being a FSBO may make sense. Also, if there is just no money to pay those costs, it might make sense. In any case, it is probably worth your time and money to buy and hour or two of an Agent's time to get your home priced, find out what forms are necessary and get a general state of the market. A good agent may charge you $100-200 an hour. It is usually money well spent. Certainly, it makes sense to enlist the aid of the buyer's agents by paying a buyer's agent commission of half or slightly more of the typical commission in your area. Remember, it is not legal to set industry commission rates. Rates are always negotiable. That does not mean an agent has an obligation to accept your offer. What is reasonable to you may not be to the agent. So, in our example. Pay the buyer's agent 3 - 4 percent. He is doing the work of both agents because he has to deal with your emotions as well as his buyers' stress. Believe me, he earns his money.
In the end, 85 percent or more of FSBOs list their property. Personally, I am not offended by FSBOs. I have sold many of their homes, I have helped many more with forms, information and photos. After-all, many ultimately become my listing or I help the seller buy their next home. I built a 2000+ sq foot barn. Took me 7 years to do it. The front is 49.5 feet, the back is 50.2 ft. Sheet rock does not come together just perfectly at the corners. But, it works. I wanted to do it myself, I did it, I am happy with it, but, I will never build another myself. Do you really want to sell your home yourself?
PS: Do It Yourself Apendectomy kits available from MedicalSuppliesAreUs.com
Monday, October 20, 2008
Has the real estate market turned into nacho cheese?
Day after day, I listen to the media bemoan the high numbers of homes being repossessed. As a Realtor, I know first hand we are in a tough market. So, it has been with some surprise I have found the repo market is not what the national media is saying it is. Not in Spokane, at any rate.
I know there are repos out there. I see an occasional repo when showing homes. I have friends who have listed a number of them over the past several months. Sadly, I have friends and acquaintances who are losing their homes or hanging on by their fingernails. Repos have not been a significant factor in my business, but I began paying closer attention because several long-term clients indicated they were ready to invest if I could find a screaming deal. Repos are a good place to start looking.
In recent years, most lenders have listed their repos with Realtors in order to get free advertising and to expand the market for their "used goods." I felt I could get the numbers together easily and that there must be hundreds of choices. So, where is our market here in eastern Washington?
To give you a yardstick, in May 2007, there were about three thousand homes listed in the Spokane area. The market was hot and multiple offers were common. Now, houses sit for months. Values have dropped 10-20 percent and in homes costing over half a million dollars, probably more. Currently, in the Spokane Multiple Listing Service (MLS,) there are 5,818 residential properties for sale. Of these, 603 are "pending," which means they are under contract and quickly (hopefully) moving towards closing. Another 310 are "contingent" waiting on inspection, sale of another home or some miscellaneous issue to come to pass. Clearly, we have a problem when our inventory has almost doubled in 18 months and new construction has almost stopped.
The burning question is, "How badly have we been hit by the repo plague?" Of almost six thousand active listings, only 112 are repos. HUD, a rare non-MLS user, has only three listed in Spokane County and one in the adjacent Stevens County. This is certainly not an epidemic. It is not significantly worse than in previous years and on a percentage basis, I would hazard a guess, far less. It seems to me, 12 years ago when I first moved here, there were far more repos and far fewer homes for sale. Also the cost of getting into the homes and making the payments was much, much less then.
What does this mean? I think, it tells us our Inland Empire real estate market is still strong. I believe it shows the majority of people are working hard to save their largest investment. I think it also tells us in this area our industry, both the lenders and the Realtors, have not been the scalawags the media has portrayed them to be. Finally, I truly believe this demonstrates the flexible programs we used to help people buy their homes were often not so bad after all.
My lender and I had a radio show for about a year. We often discussed some very creative lending programs, some we liked and some we did not, but, we noticed all were appropriate for some users, none were good for everyone. In the end, if we as real estate professionals work carefully with our lenders to put the right people in the right programs and keep our clients' well-being, not the transaction at hand, in the front of our faces, we will have a limited number of failures. That is ultimately our duty -- to take good care of our clients.
I know there are repos out there. I see an occasional repo when showing homes. I have friends who have listed a number of them over the past several months. Sadly, I have friends and acquaintances who are losing their homes or hanging on by their fingernails. Repos have not been a significant factor in my business, but I began paying closer attention because several long-term clients indicated they were ready to invest if I could find a screaming deal. Repos are a good place to start looking.
In recent years, most lenders have listed their repos with Realtors in order to get free advertising and to expand the market for their "used goods." I felt I could get the numbers together easily and that there must be hundreds of choices. So, where is our market here in eastern Washington?
To give you a yardstick, in May 2007, there were about three thousand homes listed in the Spokane area. The market was hot and multiple offers were common. Now, houses sit for months. Values have dropped 10-20 percent and in homes costing over half a million dollars, probably more. Currently, in the Spokane Multiple Listing Service (MLS,) there are 5,818 residential properties for sale. Of these, 603 are "pending," which means they are under contract and quickly (hopefully) moving towards closing. Another 310 are "contingent" waiting on inspection, sale of another home or some miscellaneous issue to come to pass. Clearly, we have a problem when our inventory has almost doubled in 18 months and new construction has almost stopped.
The burning question is, "How badly have we been hit by the repo plague?" Of almost six thousand active listings, only 112 are repos. HUD, a rare non-MLS user, has only three listed in Spokane County and one in the adjacent Stevens County. This is certainly not an epidemic. It is not significantly worse than in previous years and on a percentage basis, I would hazard a guess, far less. It seems to me, 12 years ago when I first moved here, there were far more repos and far fewer homes for sale. Also the cost of getting into the homes and making the payments was much, much less then.
What does this mean? I think, it tells us our Inland Empire real estate market is still strong. I believe it shows the majority of people are working hard to save their largest investment. I think it also tells us in this area our industry, both the lenders and the Realtors, have not been the scalawags the media has portrayed them to be. Finally, I truly believe this demonstrates the flexible programs we used to help people buy their homes were often not so bad after all.
My lender and I had a radio show for about a year. We often discussed some very creative lending programs, some we liked and some we did not, but, we noticed all were appropriate for some users, none were good for everyone. In the end, if we as real estate professionals work carefully with our lenders to put the right people in the right programs and keep our clients' well-being, not the transaction at hand, in the front of our faces, we will have a limited number of failures. That is ultimately our duty -- to take good care of our clients.
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