Monday, October 31, 2005

Going offline for a few weeks

I am going to be busy with a project during the month of November, sorry. I hope to post a few times but there are no guarantees at this point.

Go back though the archives if you need motivation. I know that I have linked to some great sites and articles in the last little while and that can keep you busy.

Have a great November!

Friday, October 28, 2005

Home Buyer Pitfalls - Watch out for these

1. SHOP FOR A HOME BEFORE YOU SHOP FOR A MORTGAGE. It's normal for prospective home buyers to get excited about buying a home. According to the National Association of Realtors, more than 70 percent of today's home buyers start their quest on the Internet, usually at

But that's the wrong place to start buying a home. The first step to a successful home purchase is for buyers to check their FICO (Fair, Isaac Corp.) credit scores to be certain a mortgage can be obtained.

The best spot I've found on the Internet to check my credit is It costs about $45 to review all three credit reports there from the three national credit bureaus, Equifax, Trans Union and Experian. The last time I checked, to my surprise, my FICO scores varied about 40 points among each of the three credit bureaus.

By checking credit reports at all three bureaus, there is time to correct any errors (reportedly, about 33 percent of credit reports contain mistakes) before applying for a mortgage.
Although you can now obtain your free credit reports from all three major companies at, or 877-322-8228, those reports are virtually worthless because they don't include FICO scores, which all major mortgage lenders now use.

Armed with your credit reports and FICO scores (anything above 700 practically assures you will get the lowest mortgage interest rate), it's time to shop for written mortgage pre-approval.
Although mortgage brokers can arrange such pre-approvals, be sure your pre-approval letter or certificate comes from a bank or mortgage broker. Disregard any "pre-qualification letter," which is worthless because it isn't a lender's written promise to grant you a home mortgage, subject to an appraisal.

2. RUSH TO BUY A HOUSE OR CONDO WITHOUT CAREFULLY RESEARCHING THE LOCAL MARKET. After you have your written mortgage pre-approval 30-day or 60-day letter or certificate from an actual lender, it's time to get serious about researching the local home market in your price range.

Although you might buy the first home you spot on the Internet, or at a weekend open house, that rarely happens. Most home buyers take several months before their purchase offer is accepted by a seller.

3. BUY A HOME WITHOUT YOUR OWN BUYER'S AGENT. Too many home buyers purchase with only the help of the seller's listing agent (called a "dual agent" when that person also represents the home buyer).

It costs home buyers no more to have their own "buyer's agent" representing the buyer's best interests.

Buyer's agents, in addition to showing listings of other agents from the local MLS (multiple listing service), can show prospective buyers the local "for sale by owner" (FSBO) homes. Smart FSBO sellers are only too happy to pay buyer's agents half of a normal sales commission, typically around 3 percent. This is a major advantage of working with a buyer's agent.
Any licensed real estate agent can be your buyer's agent to look out for your best interests (unless that agent works for the same brokerage, which also listed the property for sale; then dual agency or designated agent rules apply).

However, most home buyers find it wise not to sign an exclusive buyer's agent contract, just in case the agent turns out to be a dunce.

4. BUY A HOME WITH AN INCURABLE DEFECT. No house or condo is perfect. Each one has some defect. Even brand-new houses have problems (hopefully not significant).

After I became friends with a local building inspector a few years ago, he revealed to me some of the defects he routinely discovered in new homes. Unless the problem was dangerous or in violation of building codes, he explained he had to ignore the defects, which he knew would result in problems several years later.

Fortunately, most houses and condos don't have defects that are not tolerable. Serious problems, called "economic obsolescence" by appraisers, might include a bad floor plan, poor location (such as near high-voltage power lines or adjacent to the city dump), heavy street traffic, and lack of convenient parking.

5. DON'T INSIST ON A COMPARATIVE MARKET ANALYSIS (CMA) BEFORE MAKING A PURCHASE OFFER. This is a major mistake too many home buyers make, often resulting in overpaying for a home.

The CMA is the same document that the listing agent should have presented to the home seller before the asking price was determined. It includes recent sales prices of similar nearby homes, asking prices of comparable neighborhood homes now listed for sale, and asking prices of similar homes that didn't sell (usually because they were overpriced).
Only after reviewing the CMA, and discussing it with the buyer's agent, can a reasonable purchase price be offered.

6. FORGET TO INCLUDE THE TWO KEY CONTINGENCY CLAUSES. Especially in very competitive local home sales markets, some home buyers let their buyer's agents talk them out of protecting themselves with the two key contingency clauses.

"All cash, no contingency" is what every home seller wants to hear. But it isn't realistic or very smart for most home buyers.

Instead, smart home buyers include contingency clauses for (a) a satisfactory professional appraisal of the home for at least the purchase price, and (b) the buyer's approval of a professional inspector's report.

Additional customary local inspection contingencies might include termite (pest control) inspection, building code compliance, energy efficiency, and radon test.

SUMMARY: These six home buyer mistakes to avoid help protect buyers from making major, costly errors. Home buyers who protect themselves can feel confident of making a sound purchase, which they will enjoy for many years.

(For more information on Bob Bruss publications, visit his Real Estate Center).

Thursday, October 13, 2005

14 reasons not to sell your home yourself

Here is a list from Alan Read Chua, a Realtor in Toronto:

Occasionally, one can see "For Sale By Owner" signs, and some owners think that selling their own home will not only save them money, but believe they have an advantage over the sellers that have their home listed by a reputable Realtor©. Before you decide to take on this very important and legally complicated process…remember not even most Real Estate Lawyer’s recommend selling your own home yourself in today’s market. Here are a few of the reasons why:
1. You are limiting your exposure to potential buyers (less than 10% of what a good real estate broker will generate) which theoretically means your home will take ten to fifteen times longer to sell on the market.
2. The longer a home is on the market the lower the selling price is. Why? Because most buyers think that if the home has not sold after this long…there must be something wrong with the home.
3. The selling/buying process begins AFTER the buyer leaves your home. Most sellers think that all it takes is for someone to see their home, fall in love with the great decor… and the offer automatically will follow. Remember that the buying process begins after they leave your home. If a real estate agent does not represent the buyer, and they are looking on their own…they usually leave the home and start to talk themselves out of the buying process. If the buyer is represented by a real estate professional Realtors© are trained on how to overcome buyers remorse--a very common occurrence.
4. Because of the limited exposure you will very likely end up with a lower selling price. Remember, in order to generate the highest price possible for your home… selling means exposure. You need the maximum exposure possible, to generate the highest price possible.
5. Most buyers find it extremely awkward to negotiate or even to talk directly with sellers and therefore avoid FSBO properties.
6. Lack of negotiating experience and lack of pertinent information often will result in a lower selling price, or worse yet, a bungled contract and possible lawsuits.
7. The majority of qualified buyers are working with experienced real estate professionals.
8. Many serious buyers will pass by a FSBO home merely because they recognize that it is not in the real estate mainstream, this can some times make them wary.
9. As most local buyers now retain an experienced real estate sales person to represent them as their buyer-agency, you will probably be negotiating against an experienced professional.
10. Expected savings in broker's fees will also be greatly reduced if you offer a selling commission to entice real estate agents to bring potential buyers.
11. If you are planning to use a Lawyer to help you negotiate the offer, then your lawyer’s fees will be considerably higher.
12. Only real estate agents have access to the up-to-date market information. News reports cannot approach the timeliness or specificity available to agents. Further, real estate agents are involved in home sales much more frequently than the average homeowner is. This familiarity leads to a degree of expertise that provides an edge on negotiating and successful selling.
13. You only pay the commission to the real estate broker, if they successfully sell your home at the price you are happy with.
14. Accepting an offer is one thing, ensuring a safe and successful closing is quite another. Real estate transactions usually always have problems on closing. At times, expecting the Buyers and Sellers Lawyer’s to fight it out or resolve the problems, can sometimes mean the deal is lost.
This is the time that your experienced real estate professional, can be the most important. Your Realtor© can act as a great mediator. Lawyers MUST act only on their client’s instructions and are not paid to negotiate.

Monday, October 10, 2005

The Role of Your Realtor

When you bought your home, you probably used the services of a real estate agent.

You found that agent through a referral from a friend or family member, or through some sort of advertising or marketing. The agent helped you in many ways and eventually you found the house of your dreams, made an offer, closed the deal, and moved in.

For whatever reason, now it is time to sell your home and you need a real estate agent again. You may have been happy with that first agent and will contact him or maybe you don't even know what happened to him. Many home sellers, especially those selling their first home, tend to think all agents are similar to the one that helped them buy their home. This is not at all true. And if you take a peek inside a real estate office business you can see that. Most Realtors spend time doing three things. Networking, serving new and old customers and market research.

Although real estate agents can (and do) work with both buyers and sellers, most tend to concentrate more on one than the other. They specialize. When you bought your home, you probably worked with a "selling agent" – an agent that works mostly with buyers. Because of the nature of real estate advertising and marketing, the public’s main image of the real estate profession is that of the selling agent (buyer's agent).

As a result, many homeowners expect their listing agent to do the same things that a selling agent does – find someone to buy their home. After all, they do the things you would expect if they were searching for buyers. A sign goes up in the front yard. Ads are placed in the local newspaper and real estate magazines. Your agent holds an open house on the weekend. Your house is proudly displayed on the Internet.

But this is only "surface" marketing. More important activity occurs behind the scenes. After the "for sale" sign goes up and flyers are printed, your agent’s main job is to market your home to other agents, not to homebuyers.

There are some stats that usually suprise many people:

Only 3% of house buyers buy a house from an open house.
only 5% of For Sale By Owners sell their own home.
Almost every house sale is sold by a Realtor through the MLS system even with so many homes on MLS making it to the interent, and flyers everywhere, and showhomes open 24/7

Monday, October 03, 2005

Great Tips on Agency and Dual Agency when Selling a Home

Are you confused about who represents you in a real estate deal? Who is paying the commission? What rights do you have? Here is a great article with info that may answer all of your questions and more.

There is a relatively new and not always well understood practice in Real Estate sales; it is called Buyer Agency or Buyer's Agent. Until recently Realtors and agents usually represented the seller, in opposition to the buyer, during the real estate transaction. Even the real estate agent who drove you from home to home was not truly working on your behalf. By law, the agent was required to work on the seller's side in order to get the highest price and the best terms for the seller -- Period! Some agents still work this way.

In the last few years, first the law and now the practice of representation has changed. We have an entirely different set of options and agreements when we are buying real estate. These options were previously only available and utilized by large companies or wealthy individuals. In the past, the buyer would get a buyer's representative by paying a fee up front and usually by the hour, until the transaction was complete.

Twenty five years ago, as a personal agent for wealthy clients and companies, I charged and worked an average of 20 hours a week for $30 per hour, plus expenses, plus 10% of the transaction (or when I was the buyer's agent, a $2,000 retainer fee to start with and then $30 per hour and 10% of the amount below the listed price that I was able to obtain for my buyer. If there was financing involved I also was paid to find and obtain the best financing).

That has changed dramatically. As a buyer's agent, a signature on a buyer's agent contract from my buyer begins the transaction. Usually the same original commission fee that would have been paid by the seller is split and half goes to pay the buyer's agent. In some cases the selling agent does not set up any fee to the buyers agent, or a very reduced fee, such as those agencies that advertise 2% or 3% or 4% commissions to the sellers, etc. In that case the Buyer just picks up the missing commission and at settlement another 4% or 5% comes out of the transaction and goes to us as Buyer's Agent. In other words there is a guarantee from us that we are working ONLY for you the buyer and in exchange you guarantee us a commission of 5% - which is usually already taken care of, or at least part of it, in the seller's commission.

I can draw this division of fees out for you on paper if need be when we meet the first time. Bottom line; you don't pay any more and you get the absolute best representation.

The buyer's agency arrangement begins with the initial interview, continues through an initial selection of properties to investigate and view and then to contract negotiations. This culminates with the final settlement and transfer of funds for property. The buyer may choose to have an agent specifically committed to representing his best interests.

The great part for the buyer is that he/she gets the benefit of decades of experience and professional knowledge, all of our connections and reputation with those connections, and pays nothing until final close of transaction. Where else can you get the best possible professional service and pay nothing until it's complete and satisfactory. Will your doctor, lawyer, accountant, mason or carpenter do that... NO. We do, if you contract with us first. Otherwise we represent the seller at your expense! This is true of all Realtors by law. Which would you like?

Recently real estate laws in virtually every state are being rewritten to allow and suggest that the buyer have his own specific representative. If you are the buyer and have a buyer's agent, your agent will try to get you the best deal possible, even if that is NOT in the best interest of the seller.

Legally: "Buyer's Agency" is a relationship where the real estate agent is working FOR you with fiduciary responsibility (financial and legal responsibility). The agent is then legally bound to only the buyer and owes his entire loyalty and allegiance to the buyer alone.

In the past, and even most of the time today, all real estate agents and brokers represent the seller alone; to get the highest price for the seller. In fact seller's agents MAY NOT disclose fully all that they know about a property to the buyer as they seek the highest price. The relationship of a broker and agent is established in writing with the seller when the property is listed for sale in the "Listing Agreement".

In Delaware we are required to give each person we work with; buyer or seller; a written explanation regarding agency status. We have professionally written brochures that explain the "seller's agency" and it's opposite "buyer's agency". This agency disclosure must be explained, in writing, at the first significant contact of the agent with the buyer or seller.

Agents in our office talk with a great number of long-distance buyers over the phone. We must, when we finally meet in person, disclose and determine which position we will take with the person we are speaking with. Some agents work mostly as seller's agents; some work mostly as buyer's agents and some work as a dual agent (where we act as full representative to both buyer and seller). Regardless of the role the agent takes -- it should be fully and completely known by all agents, buyers and sellers involved -- and it should be in writing.

Let us now put this forward again:

Seller's Agent: has the full and complete and sole duty to obtain the best deal for the seller. The seller's agent is ONLY allowed to give the buyer material facts about the property. It is customary for a cooperating broker and agent to be a subagent to the seller's agency established by the brokerage that has the written contract with the seller to sell the property.
Buyer's Agent: has the full, complete and sole duty to obtain the best deal for the buyer. The buyer's agent may convey any and all information obtained in any fashion, including in depth investigations about the seller or the property.

Dual Agent: has to be legally and financially loyal to both parties. Dual agency occurs when a real estate agency is contracted to sell a home. That means they have the listing, and an agent from that same brokerage, working as a buyer's representative, shows that listing. Dual Agency must be disclosed and agreed to in writing by all parties. Some people feel that Dual Agency is potentially a conflict of interests. It can be unless the agent is fully honest to all parties and they are fully aware of and in agreement with that relationship. Here, the entire purpose of the dual agent is to get the best possible deal, in all it's components, for both the buyer and the seller.
There are, in general, two major personalities of buyer's agents. First is the agent who only and always represents buyers. The other is the agent who takes each transaction and each customer into account before making that decision. An agent who usually works as a buyer's agent, for instance, may NOT want to represent a particular buyer as that buyer's agent for one reason or another. The reason is usually one of some personality difference. As I put it, when speaking with a buyer whom I wish to represent "I will be your gladiator. I will do battle on your behalf, and at the expense of and against the interests of, the seller and the seller's agent."

The buyer's agent must still be honest, but he need not be fair. For instance, if the buyer's agent is able to find out that the seller is in big financial or personal trouble and that the seller has a small mortgage on the property or that there is some impending deadline for selling the property, then the buyer's agent will tell the buyer. Together they will use that information to get a great deal for the buyer at the seller's expense... it that is possible.

If I were a buyer, I would not even consider doing a real estate transaction without a buyer's agent to act on my behalf. I suggest that you are wise to do the same. If there are detailed and extensive negotiations that need to be done; such as unique and difficult terms that must be negotiated then (being the buyer) I'd ask that the buyer and the seller agree to have me as a dual agent. Whatever your choice, it should be in writing with your agent and must be known to all parties involved.

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Saturday, October 01, 2005

9 Tips to get started in the home selling process

1. Get Pre-Approved for a Home Loan
I've known sellers who signed a contract to sell their house before they knew if they were qualified to buy another. Either their financial circumstances had changed since their last purchase, and they could no longer qualify for a loan, or they weren't able to sell at a price that allowed them to buy the type of replacement house they wanted. They ended up renting or buying something that was far from ideal.

Before you decide to sell the house, get pre-approved by a lender you trust and research the housing market in the area where you wish to live so that you have a good idea how much it will take to buy a replacement.

How To Start ResearchingStart looking for two types of real estate: houses that seem to match the one you'd like to buy and houses that are similar to your current home.

Find homes in free For Sale publications, often available outside grocery and convenience stores.
Search the Internet for homes for sale in your area and read real estate ads in your local newspapers. You won't find house locations without making phone calls, but browsing the general market will get you off to a good start. And to compare for-sale homes to your own, learn how to Measure Residential Square Footage.

2. Check Your Mortgage Payoff
Call your lender to check the payoff for your current home mortgage. You'll need the figure to complete Step 6.

3. Determine How Much the House Is Worth
Determine your home's fair market value. Real estate agents will usually help you determine value as a courtesy, but you might take it a step further and order an appraisal.

4. Estimate Your Costs to Sell
Real estate commission if you use an agency to sell.
Advertising costs, signs, other fees if you plan to sell by owner. Attorney, closing agent and other professional fees.
Excise tax for the sale.
Prorated costs for your share of annual expenses, such as property taxes, home owner association fees, and fuel tank rentals. Any other fees typically paid by the seller in your area (surveys, inspections, etc.).
Real estate agents deal with transactions every day and can give you a very close estimate of seller closing costs.

5. Determine Your Costs to Acquire a New Home
Total your costs to acquire a new home: moving expenses, loan costs, downpayment, home inspections, title work and policy, paying for a new hazard insurance policy--all expenses related to buying a home. Your lender should give you a disclosure of estimated costs when you apply for pre-approval.

6. Calculate Your Estimated Proceeds
Deduct your mortgage payoff from your home's fair market value.
Deduct your costs to sell from the remainder to get an estimate of the proceeds you will be paid at closing.Will your closing proceeds cover your costs to acquire a new home? If not, do you have cash or other funding to make up the difference?

7.Make any repairsMake all needed repairs unless you want the house to be regarded as a fixer-upper. I'm not referring to cosmetic updates, but to items in need of repair. Anything that's obviously broken gives potential buyers a reason to submit a lower offer.
For a preview of several repair hot spots that worry buyers the most, read Passing Your Home Inspection.

8. Get the House Ready to Show
Most houses need at least a little spiffing up before they are shown to potential buyers. Great curb appeal, fresh paint indoors (and sometimes out), organized closets and cabinets, sparkling clean windows and appliances, and a clutter-free atmosphere are essential if you want the house to appeal to buyers.

9. Get Psyched Up to Let People In
If you're listing with a real estate agent, she'll no doubt ask you to leave when the house is shown. Why? Because lurking sellers make buyers nervous--they don't feel comfortable inspecting the house when they feel they are intruding.
Unless there's a real reason for it, don't ask your agent to be present for all showings. That's the kiss of death for showing activity. Other agents want privacy with their buyers and they don't usually have time to work around your agent's schedule.
Make the house accessible. That means it's always ready to show. Many agents won't bother showing a house that takes 24 hours to get into.