Tuesday, May 31, 2011

Many Homeowners are OK in their Homes

That’s right.There are many homeowners in this country are NOT losing their homes. They either own their properties free and clear or are making their payments on time. 

It’s hard for us to see this because we are in the business. If you are like me you live and breathe Real Estate. We talk to people all day long who are struggling and it’s very easy for us to forget that most Homeowners are living in and enjoying their homes.
From what I could find online there are approximately ****129,400,000 homes in the US. Depending on where you look only 7-10 mil of these are in some stage of default. That’s roughly 7%.

Approximately 93% of the Homeowners in this country are doing OK. That makes me feel good. How about you?

Note: I spent about an hour this morning pulling stats and data and there really are no numbers that agree. So for the purpose of this post I just used averages. If you want more precise figures then feel free to do your own research.

Monday, May 23, 2011

Real Estate Q&A - Closing Problems and Advice

My house recently went into escrow that was supposed to last 60 days. One week before closing we were notified by the real estate agent that the house did not appraise for the amount agreed upon in the sales contract. The buyers are refusing to obtain another mortgage company or another appraisal at my cost. Do they forfeit their 2500.00 that is in escrow to me, or is it a technicality and they get their money back?

First, look at your purchase contract. Most Realtors put deadlines in the contract during which certain things must occur, such as appraisal or loan approval. Review the contract to see if they lived up to those types of terms in the contract. Second, press to find out why it took 55 days to get an appraisal. This just seems wrong. Request the name and phone number of the appraiser so your agent can make inquiries.
You’re probably not being given the true reason for cancellation. 

Escrow normally cannot release the deposit money without the permission of both sides. Continue to press until you feel you are being given the real reasons for not closing the transaction.
Keep in mind that if you are asking for legal advice, that can only be obtained from a lawyer.

We were set to close and the seller now wants to set up new closing date. Can I get them to come down off the price of the house and anything else you think that would help me?

The seller may have had legitimate reasons or perhaps not. You can attempt to renegotiate the price if you choose to, and this can be looked at several ways. Once you make your offer to purchase the house at a lower price, this can be looked at as a new offer, which can nullify your original offer. 

Most likely, you are going to just have to decide whether you like the house enough to go ahead with the purchase.

The seller is unable to find a replacement property by the time the sixty day escrow closes. They have requested an extension of thirty days. If we do not agree to that extension, will we lose the appraisal fee, the home inspection fee, and our deposit?

You'll probably get your deposit back, minus a small cancellation fee. However, the appraisal and home inspection have been done and those guys don't work for free, so that money is gone. Since both the appraisal and home inspection were done for that specific property, if you choose not to extend and buy a different property you will have to pay those fees again. 

Do you want to extend and wait around another thirty days and find the seller still has not purchased something? Remember in your purchase contract that you had time conditions placed upon you. For example, it may have been two days to apply for a loan, seven days to review the disclosures, fourteen days to get a home inspection, and so on.

One hour before closing I signed an addendum to remove tires from the property. There were about 6 to 8tires that I had removed. Mysteriously, about 30 tires have appeared on the property. Am I responsible for their removal? I have witnesses that can state they were not on the property on settlement day.

It just goes to show you how crazy real estate can be, doesn't it?

Most real estate contracts detail exactly when you are to turn over possession of the property to the seller. Turning over possession usually occurs sometime after the transaction actually closes. Often this is three days after closing. If the tires showed up before the transfer of the property (as stated in the contract), you should probably remove the tires.

Friday, May 20, 2011

QRM: Missing the Forest for the Trees

well, this is a popular topic right now, and I found this great blog article by the NAR; with comments.

April 25, 2011 by NAR · 12 Comments
Filed under: Gary Thomas 
Do you know what the leading cause of foreclosure is?
Survey says:  Poor underwriting.

When a lender makes an unwise decision and gives a loan to a borrower with a poor credit history, that’s what leads to foreclosure.  This is what happened with “toxic” subprime loans that required little, and even worse, no verification.

I make this point because a rule in the Dodd-Frank financial reform bill is stipulating that borrowers must make a 20-percent or more down payment in order to be deemed a “qualified residential mortgage” (QRM).  If a mortgage isn’t labeled a QRM, then the lender must retain five percent of the loan risk.

If you’ve just taken a hard swallow, I’m with you.  This rule, if implemented, will have widespread effects on the housing industry, especially during a fragile market recovery.  And what’s worse, I think it’s missing the forest for the trees.

The data doesn’t show a link between down payment size and whether the loan performs well.  FHA and VA loans boast low default rates.  They also are the programs with the lowest minimum down payment requirements.

The QRM rule has good intentions.  It wants to incentivize lenders to stay away from risky loans.  I’m all for that.  No one wants to see the housing market and our nation’s economy hit the crisis levels we saw back in 2008.

But a 20-percent down payment stipulation will have one result—even tighter credit than we’re seeing today.  Borrowers will have an incredibly hard time getting a loan, and all for what?  To save America from more foreclosures?  Probably not.  Because the data shows lenders should make decisions based on the whole picture of a borrower, not just how much money they can lay on the table.

And how many of us have that kind of cash lying around?  The median cost of a home in Dallas, Texas, is about $160,000.  You’d have to come to the table with more than $32,000 in your pocket.  How many years would it take a family to save this much money living on an average salary of $40,000 a year?  And that’s just for Dallas.  What about consumers in high-cost areas such as California, New York, or Washington, D.C.?

Home ownership has built our nation and made it strong.  We can still protect consumers and our national economy if we move forward with wise laws that take into account the whole forest, not just individual trees.

A special thanks to Gary Thomas, 2011 NAR First Vice President for today's article.

Thursday, May 19, 2011

Help Keep The American Dream Alive - Say No to 20% Down Payment Reg

Could your clients afford a 20% down payment? Could you? 

Can you envision what your prospective client pool will look like if new regulations governing Qualified Residential Mortgages (QRM) take effect this year?

I just took action to ask Congress to help us get this proposed regulation changed. This QRM issue is very important to keeping the dream of home ownership alive in America and keeping our already struggling markets on the path to recovery.

I urge you to add your voice by sending this letters to your Senators and Representative today.

To take action on this issue, click on the link below:

If the text above does not appear as a link or it wraps across multiple lines, then copy and paste it into the address area of your browser.

Wednesday, May 18, 2011

20 Percent Rule Could Douse Any Housing Recovery

Regulators' mortgage proposal comes despite warnings from Congress.

By Sens. Kay Hagan, Johnny Isakson and Mary Landrieu
Special to the Charlotte Observer

Families are working hard to rebuild savings while the housing market remains unstable. Recent news from the Commerce Department shows that U.S. home builders continue to struggle despite signs of recovery in other segments of the economy. According to real estate data released last week, home prices in the first quarter of 2011 suffered their worst decline since 2008.

Yet banking regulators are dangerously close to issuing a rule that would put homes out of reach for many Americans and further cripple the fragile housing recovery.

More than a year ago, we worked together in a bipartisan effort to promote a sensible mortgage standard that would encourage sound underwriting and responsible lending. We introduced an amendment that exempted qualified residential mortgages from a requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act that would force originators to retain at least a 5 percent interest in loan pools, known as "risk retention," sold to investors.

It passed with overwhelming support. A rare coalition of consumer advocates and bankers embraced its objective: ensuring middle-class families can access sound, affordable mortgages.

But federal banking regulators last month proposed a 20 percent down payment requirement on QRMs. Regulators went for rigidity, rather than a balanced, flexible approach.

In contrast to our expressed intent - and despite repeated warnings from other members of Congress, consumer groups and bankers - regulators crafted a narrow definition that could unnecessarily slow the housing market recovery, increase costs to otherwise qualified homebuyers and dampen incentives for sound underwriting.

Putting homes out of reach
The 20 percent down payment requirement leaves millions of qualified potential homeowners with two grim alternatives: pay higher rates upfront for a mortgage that falls outside the regulators' proposed QRM standard or delay homeownership for a decade or more to save for an onerous down payment.

It is precisely this extreme outcome that we sought to avoid when we crafted the QRM provision.

It would take almost nine years for the typical American family to save enough for even a 10 percent down payment, according to 2009 data from the Center for Responsible Lending, and 14 years to save for a 20 percent down payment.

This punitive timeline needlessly postpones homeownership for responsible American families and lengthens the duration of our nation's housing woes. Homeowners lacking the 20 percent down payment could be charged excessive mortgage interest rates - perhaps as much as 3 additional percentage points.

These steep rates could put homes out of reach for families and drag down the nation's housing recovery.
A broad risk retention requirement might well deter certain practices that contributed to the financial crisis. But it is important that regulators also consider the significant costs to aspiring homeowners.

Studies have shown that when the sound underwriting features we included are applied to loans, lower down payment requirements have a negligible impact on default rates. But a rigid 20 percent down payment requirement could prevent 17 percent to 28 percent of American borrowers from qualifying for a QRM.
We cannot price millions of middle-class American families out of the housing market for an arbitrary and inconsequential default rate decrease. It is time for the regulators to go back to the drafting table.
Hagan, D-N.C., Isakson, R-Ga., and Landrieu, D-La., wrote this piece for Politico last week. It is reprinted with permission.

See article at: http://www.charlotteobserver.com/2011/05/17/2302131/20-percent-down-rule-could-douse.html#ixzz1Mhou4FRd

Tuesday, May 17, 2011

5 Ways to Deal with A Low Appraisal

Buying a home can be a difficult experience having to deal with the banks, other property owners, real estate agents and lawyers.

One of the most frustrating problems faced by home buyers is having a low appraisal. Consider this hypothetical situation: A home is listed for $425,000. The buyer offers $375,000 and then seller counters with $400,000, which both parties agree to accept. Before closing the deal, the bank makes an appraisal on the property, which says it is only worth $375,000, putting a cap on the amount of money that it is willing to loan. Due to the $25,000 difference in prices, the deal can fall through costing both the buyer and the seller time and frustration.

If you ever experience this scenario with a client, there are five things that you can do to help rectify the problem.

1. Dispute the Appraisal
Some mortgage brokers and banks depend on long distance appraisers to calculate home values. These individuals may not be familiar with the neighborhood and could be basing their appraisal off of old data. Speak with your realtor to make sure that the appraisal took into account the values of similar properties that are in the vicinity of the home that you want to purchase. Request a second appraisal and give the appraiser evidence that the home should be valued higher.

2. Contact Your Lender
If you are getting nowhere by speaking to the appraiser, who refuses to adjust the home’s value, speak to your mortgage broker and ask them to request an appraisal from another source. Sometimes banks and mortgage brokers will be willing to listen to you if you offer to pay for the costs or split the fees with the seller.
3. Negotiate with the Seller

If your efforts with your mortgage broker have stalled, think about renegotiating with the seller to reduce the price of the home. Present evidence to the seller that their asking price is too high by giving them data that shows that their asking price is higher than the price at which similar homes in the area are selling.

4. Find Another Lender
If the offer from your first mortgage broker seems low, you can try another lender. Many times these banks and mortgage brokerages are in competition with one another. If one does not want to lend you the money, chances are that another one will, although it may be at higher interest rates. You will have to persuade the seller to wait for you to get new financing and pay for another appraisal.

5. Pay the Difference
If worse comes to worse and you have you heart set on a particular house, pay the difference. From a mortgage prospective, paying a huge amount of difference does not make sense if you are planning to only live in the home for a few years. However, if you plan to spend the rest of your lifetime in the home, the difference in price may be negligible when spaced over the span of your lifetime – especially if you’re positively sure this is the home you want to grow old in.

Monday, May 16, 2011

Low Appraisal Woes

During the real estate boom, valuations rarely came in below what the offer price was on the home. Many cite overvaluations by appraisers as one of the multiple issues that the led to the most recent near-collapse of the housing market.

Appraisers, like, many housing/investment experts, believed that housing prices would continue to climb at the rates we saw during the height of the boom. Housing prices in several markets, especially the DC Metro area, have started to rise again. But, in most other areas, prices continue to fall.

Today, we're dealing with consequences of those overly-optimistic forecasts. In March 2011, USA Today reported that:

Ten percent of the nation's Realtors said they had sales canceled because appraisals came in below the prices buyers agreed to pay, according to a January survey by the National Association of Realtors. Another 15% said contracts were renegotiated after appraisals came in too low. Sellers dropped prices or buyers put up more cash.

A third of home builders said they had lost sales because of low appraisals, according to an August survey by the National Association of Home Builders. That was up from 26% in a 2009 survey.
I've had clients who've been up against the low appraisal problem, and many agents I work with have found themselves in the same boat. This is particularly frustrating for both buyers and sellers since (unless in a competitive situation), most buyers do tend to low-ball their offers -- sometimes well below the asking price. The problem, it seems, is lenders/appraisers attempting to protect themselves from the hazards of overvaluing properties (which creates more risk for them). Meanwhile, the buyers and sellers are left to pick up the pieces.

I don't see this problem going away anytime soon. So, we may as well work with the reality of the situation and properly prepare our clients.

Tune in Tomorrow.... we will talk about 5 ways to Deal with a Low Appraisal.

Thursday, May 12, 2011

Open House Etiquette for Buyers

Sundays, even Saturdays nowadays for real estate agents, entail sitting hours upon hours conducting open houses.  We do public open houses to allow prospective buyers to come view a home that is for sale. Believe you me we are all well aware that not every person through the door is a prospective buyer. It is oh so common to get the neighbors, someone looking for a “friend”, someone just driving by who followed the open house signs, a past client just to say a warm hello and yes even those that religiously go to all open houses even though we know they will never buy. You are all welcomed with opened arms but just follow a few guidelines.

1. Meet and Greet

The moment you walk through the door you should be cheerfully greeted by an agent.  Reciprocate that cheerfulness and say hello!  Please be aware that not every agent at every open house is the listing agent.  If you not sure don’t’ be afraid to ask. It is only going to help you if you know how the house is being represented.

2. Sign In

As you look the agent will politely ask you to sign in. Don’t worry we are not here to judge or to sell your information to third parties. It is only common courtesy that we know who we are talking to, and more importantly who the sellers are allowing to walk through their private home. Put the shoe on the other foot for a moment and if this was your house wouldn’t it be nice to know who has been walking through your home?
Please sign in with your real name and write something legible.  Once again you don’t have to worry; we are not working with the FBI and not conducting background checks. If you are working with a buyer broker let us know. We should ask you, but sometimes with all of the commotion we forget, so just remind us. You can do that by verbally informing us, writing their name down, or handing us their business card. We are not going to ignore you if you already have an agent. Remember, our ultimate job is to get the house sold! Grab a listing sheet as well. We spend a lot of time putting them together and trying to make them very resourceful for you.

3. Walk-thru

As you walk around the house know that it is perfectly fine to open doors, walk around the basement & pull down the attic stairs and take a look around. We want you to see the whole house. If you can’t locate the electrical box or find the access to the attic…ASK! There is no such thing as a stupid question. We are here to assist you.

4. Children

If you here to visit with your whole family that is excellent. The only thing we ask of you is that you watch your children. They are more than welcome at open houses but just keep an eye on them. The last thing we want is to have to let the sellers know that a child broke something of meaning or value. Bottom line, we love children and totally understand that it is important for them to like and approve of a new house too.


Once again, if you can’t locate something that you saw listed on the web or our listing sheets just ask! We are always happy to clarify something or show you some aspect of the house that interests you. If you like something about the house, whether it is a seller’s choice of wall color, or the remodeled kitchen, let us know. Sellers love to hear feedback, both positive and negative. It is very much appreciated and actually very helpful. If you have any questions about the town or anything else that comes to mind, ASK. We love nothing more than to share with you our knowledge. This is why we do what we do!

Bottom Line

Enjoy your time at every open house even if that particular house is not for you. Please be considerate and respectful of the sellers home and others walking around during the open house.  And don’t forget to ask, ask ask!!

Wednesday, May 11, 2011

Ten Selling Myths Uncovered

Agents: A great article to print and distribute to potential listing clients.

Selling a house can be a bit like having a baby — everyone gives you advice that may or may not be true for you. Here are ten myths uncovered:

1. Myth: You should always price your home high and gradually lower it if it doesn’t sell.
Truth: Pricing too high can be as bad as pricing too low.

You may think by listing high you can always accept a lower offer, but if you do, you’ll miss the buyers looking in the price range where your home should be. Offers may not even come in, because interested buyers are scared off by the price and won’t bother to look. By the time the listing price is corrected, you will have lost a large group of potential buyers. Your real estate agent will offer you a comparable market analysis. This is a document that compares your home to other similar homes in your area, with the goal of helping you to accurately assess your home’s true market value.

2. Myth: Minor repairs can wait until later. There are more important things to be done.
Truth: Minor repairs make your house more marketable, allowing you to maximize your return (or minimize loss) on the sale.
By and large, buyers are looking for an inviting home in move-in condition. Buyers who are willing to tackle the repairs after moving in automatically subtract the cost of needed fix-ups from the price they offer. You save nothing by putting off these items, and you may likely slow the sale of your home.

3. Myth: Once potential buyers see the inside of your home, curb appeal won’t matter.
Truth: Buyers probably won’t make it to the inside of the home if the outside of your home does not appeal to them.

Many buyers drive by a home before deciding whether or not to look inside. Your home’s exterior will have less than a minute to make a good first impression. Spruce up the lawn, trim shrubs and trees, and weed the garden. Clear the walkways and driveways of leaves and other debris. Repair gutters and eaves, touch up the exterior paint and repair or resurface cracked driveways and sidewalks. Place potted flowers out front, hang a wreath on the door and put out a pleasing welcome mat for added curb appeal.

4. Myth: Once potential buyers fall in love with the exterior look of your home, you put interior improvements on the back burner.
Truth: Buyers have no qualms about walking right out the front door within 60 seconds if the house doesn’t look like it could be theirs.

Remember that most buyers are looking for an inviting home in move-in condition. Spending a few thousand dollars for the right work on your home before you sell it, usually translates into a higher selling price and shorter marketing time. Your real estate agent will consult with you about the repairs and replacements that will benefit you most.

5. Myth: Your home must be every homebuyer’s dream home.
Truth: If you get carried away with repairs and replacements to your home, you may end up over-improving the house.
At some point, improvements that you make to your home can exceed what is customary for comparable homes in your area. For instance, there may not be another swimming pool in your entire subdivision. After spending $20,000 to install an in-ground swimming pool that you hope will lure buyers, you may find that it only raises the market value of your home by $10,000 because there are no other comparable properties to support the market value of the pool. As a rule of thumb, if your improvements push your home’s value higher than 20% above average neighboring home values, don’t expect to recoup the entire amount of improvements. Your real estate agent can advise you as to the scope of projects you might consider in preparing your house for sale.

6. Myth: Buyers are never swayed by sellers that offer creative financing options.
Truth: By offering flexibility in financing options, you may lure more prospective buyers.
You might consider offering seller financing, paying some of the buyer’s closing costs, including a one-year home warranty, or other buyer incentives. Your real estate agent, who has professional knowledge of local market activity, can help you decide what incentives, if any, to offer.

7. Myth: You are better off selling your home on your own, thus saving the commission you would have paid to a real estate agent.
Truth: Statistically, many sellers who attempt to sell their homes on their own cannot complete the sale without the service of a professional real estate agent.

Sellers who sell their home without a real estate agent often net less from the sale than sellers who use one. You visit a doctor when you’re sick and take your car to a mechanic when it needs repairs. It makes sense to contact a real estate professional when you are preparing to sell your biggest asset!

8. Myth: Good sellers should be available to guide prospective buyers through the home, giving the whole process a more personal touch.
Truth: Prospective buyers will feel more like the house could be theirs if the current owners are not there.

The presence of homeowners during a viewing can make buyers feel like they are intruding. They need to be able to visualize your house as their home, which can be difficult to do when they are acutely aware that it is still your home. Your real estate agent will be happy to look out for your home during open houses or showings.

9. Myth: Successful sellers insist that the terms of the sale happen their way or no way.
Truth: If you approach the sale of your home as the buyer’s adversary, you risk losing a perfectly solid buyer for no good reason.

Both you and the buyer have the same goal: for you to sell your home and for the buyer to buy it. Work with your real estate agent to approach negotiations positively and with a win-win frame of mind.

10. Myth: When you receive an offer, you should make the buyer wait. This gives you a better negotiating position.
Truth: You should reply immediately to an offer!

When a buyer makes an offer, that buyer is, at that moment in time, ready to buy your home. Moods can change, and you don’t want to lose the sale because buyers remorse set in and you stalled in replying.

Tuesday, May 10, 2011

How to Help a Frustrated FSBO Seller

Every Real Estate agent has had sellers that are currently going the FSBO route, and have decided that they can’t do it. Will you take them on as a seller and help them where they’re falling short? This happens all the time, so why is it that FSBO just doesn’t work for some people? And how do you handle that situation?

Here’s a little guide all about FSBO. I like how it gives you tips on how to get an FSBO-er as a client, without upsetting them too much where money is concerned.

Buying FSBO real estate, or houses for sale by owner, has its own particular problems and opportunities. Dealing with an uninformed seller who thought he knew enough to handle everything by himself can be frustrating, but it can also be very profitable if you are prepared. First you need to understand the FSBO seller.

People try to sell a house on their own for one primary reason: To save the sales commission.

Unfortunately for them, they usually underestimate the cost and complexity of going it alone. They'll often get frustrated and tired of the process, and be ready to drop the price and be done with it. If you help them solve their problems, your reward can be a good price on a good investment.

Just keep the following in mind:

1. A seller isn't an agent. You have to be more careful in what you say and ask. Avoid negative comments about the house. Like it or not, the truth is that it's difficult to get a good deal if the seller doesn't like you.

2. Sellers think they're being smart. If you encourage that belief, they'll be more open to your offer. If they have a good idea, tell them so. It's not unethical to make people feel good about themselves when negotiating.

3. FSBO real estate has often been on the market a long time. Seller's are usually tired of the process, and want it to be done. This means you'll get a better price if you are willing to close quickly and easily.

4. Seller's usually don't have a plan. They don't know where to close, where to buy a title policy, where to keep a good faith deposit, etc. Have simple solutions ready for all these problems. If you walk the seller through the process while letting him feel in control, you'll both be happier.

5. Skip over problems and return later. After a seller has invested more time with you in a negotiation, he'll be more inclined to give you what you want.

6. Sellers have often spent more than anticipated. Classified advertising and other costs have already eaten into their imagined extra FSBO profit. You may want to be generous in negotiating the many closing costs - as long as you get your price and/or terms.

Real estate professionals will tell you that most houses "for sale by owner" net the seller less than those sold by an agent. By the time a seller realizes this, it's often too late to recover his money and time spent. At this point, he usually just wants to get the thing sold as easily and quickly as possible. If you help sellers with that, you can get a good deal on FSBO real estate.

Monday, May 9, 2011

Silver Linings for Next Generation in Today's Housing Markets

If you’re a 20-something or even younger, your economic future is at best clouded. Your taxes will almost certainly be higher than today’s; your public services (schools, police, sanitation, defense, scientific research) will almost certainly be lower. Paying for old people, covering rising health-care costs, repairing dilapidated roads and servicing government pensions and the huge federal debt will squeeze take-home pay. Is there any hope for economic gains?

Well, yes — and from a surprising source. Housing. Say what?

Almost everyone considers the housing collapse a disaster, and it is. Since 2007, roughly 8 million homes have gone into foreclosure. Housing prices, according to the widely cited Case-Shiller index, are down about 33 percent from their 2006 peaks. They’re still falling, albeit at a slower pace. In some cities (Atlanta, Cleveland, Las Vegas, Detroit, Phoenix), they’re at or below 2000 levels. Home sales are stunted, and construction is a quarter of its previous peak. Housing’s implosion retards the economic recovery. Aside from unemployed carpenters and real estate agents, there’s much unsold lumber, carpet and appliances.

But housing’s troubles may have a silver lining. If you’re a homeowner, the steep fall in prices is calamitous. But if you’re a future buyer, it’s a godsend. What we’re seeing is a massive wealth transfer from today’s older homeowners to tomorrow’s younger homeowners.

Experts also contend, perhaps, that we are at a historic juncture. The relentless expansion of home size since World War II — encouraged by federal subsidies, including the mortgage-interest tax deduction — arguably resulted in many Americans being “over-housed.” Homes grew beyond what was “needed” or could even be enjoyed. The reason they kept expanding, Cornell economist Robert Frank has argued, was social competition. People want to be in the “best” neighborhoods with the “best” schools, and these neighborhoods have ever-larger homes. Somewhat smaller homes, Frank contends, won’t make people less happy. 

Read the full article on the Wall Street Journal site.

Thursday, May 5, 2011

Raleigh Area Real Estate Market Trends: 5/2/2011

Wednesday, May 4, 2011

Are You Using a Mechanical Lockbox, Putting Your Clients At Risk?

You hear the stories all the time – “The client saw the code the agent typed in and came back later on their own.” Who do you blame in this case? Who is at fault? Sure, if an agent admits to giving the code out you know who, but what if everyone claims innocence? The fault tends to fall back on the listing agent. Also, once someone has the code, they can go back and access the box as many times as they want with no record of their entry.

Sometimes you even hear, “They broke into the lockbox and got the key out!” Mechanical lockboxes are easy to break into. Just do a Google search! You’ll find tips, instructions, and even videos on breaking into the boxes and/or figuring out the code.
Why do you still use these lockboxes? Why do you keep putting your clients and their property at risk?
Protect your clients and their property with an Electronic Lockbox – they are more secure!
Electronic lockboxes created accountability for EVERY access to the lockbox. Electronic lockboxes strictly limit access to other agents or approved visitors who have gotten a lockbox key/card from the local MLS or Association/ Board of REALTORS®. The keys/cards require a code or PIN be entered by the owner in order to access the lockbox. Some electronic lockboxes also allow entry via a special code, but those codes change on a daily basis and can only be accessed by the listing agent.  

This means that the keys are protected from unauthorized visitors who otherwise might have gained access by seeing or overhearing the combination to a mechanical lockbox on a property.

Key missing? Check the last agent to access to the box. Item(s) missing? Check the last agent to access the box – maybe they know something, or maybe they never even saw anything similar to what is missing. You have a list of visitors to refer to in any situation.

Hopefully electronic lockboxes are already available in your area and you are already using them.  

If you aren’t using them, why not? Is it really worth the risk to your clients?
If electronic lockboxes aren’t available in your area, I recommend you to speak with your local Board/Association/MLS and urge them to look into bringing electronic lockboxes to their area. 

The increased security is worth the investment.

Thanks for reading!

Tuesday, May 3, 2011

What is Your Mortgage Exit Strategy?

Unless you have a long term fixed rate mortgage, you should develop an exit strategy.   An exit strategy is a well thought plan on how you’re going to leave your current mortgage.  Every time you board an airplane, the Stewardess reviews the “exit strategy”.   They’re not planning on an actual emergency landing, they are simply preparing you for a worse case scenario and informing you where the exits are and what you need to do in that event.

You should have a plan if your current mortgage is:
  • Any type of adjustable rate mortgage (ARMs)
  • Option ARMs (negative amortization a.k.a. deferred interest)
  • Any balloon mortgages
Having a plan (being prepared) does not mean waiting until you receive a notice from your mortgage company that your mortgage payment is hiking because your fixed period on your ARM is over. 

You need an exit strategy because once fixed period is over and your mortgage adjusts, odds are that your new mortgage payment will not be desirable or affordable.

You need to start developing your plan well in advance.    Here’s the first step... I recommend:
  1. Find the Note for your mortgage (deed of trust) and determine what your new rate may be using the worse case scenario.   If you have an ARM, you can figure this out by adding the first cap to your interest rate.   For example, if you currently have a 5/1 ARM with a note rate of 5% and the first adjustment rate cap is 5% (5/2/5 is a common cap structure), your new rate could be 10%.   If the first adjustment cap is 2% (2/2/6 is another possibility); your new rate could be 7%.   If your ARM has an interest only feature and will also be converting to amortized payments (some have longer interest only terms beyond the fixed rate period), you’re in for a double whammo if you’re keeping the mortgage.

There is a lot more to this story - if you have know of anyone who is in need of an exit strategy, (perhaps that client who couldn't sell their home and are now choosing to keep it for a while longer until the market corrects), please have them call me to discuss their situation.

Monday, May 2, 2011

Buyers Market - Not so Fast...

With falling home prices and higher inventories, most of the public views real estate as a “buyer’s market,” in which buyers hold more of the control and sellers will more eagerly accept lower offers just to sell.
Not so fast, say buyers and sellers. More buyers are finding the sellers in the driver’s seat.

Buyer Young Hammack gave up looking for homes for a while after being outbid on three properties in California. "It's a false buyer's market," Hammack says. "If you think prices are cheap, wait until you start putting offers in."

Many sellers may be unable or unwilling to lower their home prices
mostly because they may be underwater on their mortgage so buyers are increasingly finding lower offers than list price denied. Buyers, on the other hand, may be reluctant to agree to a deal if they don’t feel like they are getting it at a deep discount, industry insiders say.

Traditional buyers also are finding even buying a foreclosure can be difficult as they’re increasingly outbid by investors who are willing to pay cash.

"There's a shortage of attractive inventory," says Glenn Kelman, chief executive of Redfin Corp. "Customers just keep getting outbid on the houses that they want."

Real estate professional Steve Capen with Keller Williams Realty in St. Petersburg, Fla., says that the homes most in demand among buyers often don’t require much repair work and are located in good school districts and choice neighborhoods near transit hubs.

"What's selling is the cream of the crop, and they sell fast," Capen says. "If it's not cream of the crop, it's getting hammered."

Source: “Buyers' Market? Stressed Sellers Say Not So Fast,” The Wall Street Journal online (April 25, 2011)

What is your biggest challenge when listing a new home?