RichmondsBestHomes

May Review (Prelim)

2011-06-01T15:36:00.000-04:00

Preliminary numbers indicate 1126 new contracts for May 2011 versus 726 for May 0f 2010. This represents a 55% increase in sales over last year. The primary difference was the tax credit that pulled sales forward last year.

This is consistent with the leveling and stabilizing of the market, that I have been discussing this year. The year to date contracts are virtually identical for the first five months of 2011 versus 2010. And generally reflect a more normal seasonal curve rather than the tax credit distorted curve of the previous 2 years.

There are 2 areas of concern. First, an 8% decrease in average price per square foot that is probably caused more by the fact that we are selling an older home on average. Second, flat or fewer (will take several days to get all new contracts in MLS) new contracts for May versus April. Historically, new contracts accelerate through May reflected in fewer closings as the summer goes on. This would seem to indicate that sales slowed slightly ahead of schedule.

I’ll update in a few days when the information in the MLS is more complete.

April Market Update

2011-05-05T14:36:00.001-04:00

Pending Sales & Sales Success
In this market segment, Pending Sales for April are down by 23.36% to 1,165 versus April of last year at 1,520 that went under contract.

With 2,176 newly listed homes this month and 1,165 under contract, the sales success index of 53.54% for April decreased 0.74% versus last year’s index of 53.94% in 2010.

Average Prices
According to the April 2011 statistics, this market area has experienced some downward momentum with the decline of average prices at closing. Prices dipped 4.13% to $221,490 versus the previous year April at $231,022. This is a difference in price of $9,532.

New Listings & Months Supply of Inventory

New Listing in this area for the month of April yielded 2,176 available resale dwellings. This was a decline of 22.78% or 642 units in comparison to April 2010.

The total housing inventory at the end of April dipped by 14.56% to 7,634 existing homes available for sale. At an average of 791 closed sales per month over the last 12 months (May 2010 - April 2011), represented an unsold inventory index of 9.66 MSI for this market segment.
Reports produced and compiled by R E S T A T S I n c

The months supply of inventory is illustrative for planning purposes, but the current demand as ilustrated by new contracts above gives us just over a 6.5 month supply of inventory. this is a further indication that we are returning to a more normalized market.

March Market Update

2011-04-05T17:42:00.001-04:00

Months Supply of Inventory (MSI) Decreases
New Listing in this area for the month of March yielded 2,288 available resale dwellings. This was a decline of 19.29% or 547 units in comparison to March 2010.

The total housing inventory at the end of March dipped by 12.19% to 7,645 existing homes available for sale. At an average of 813 closed sales per month over the last 12 months (April 2010 - March 2011), represented an unsold inventory index of 9.40 MSI for this market segment.

Average Prices
According to the preliminary trends, this market area has experienced some downward momentum with the decline of Average Price this month. Prices dipped 4.60% in March 2011 to $197,786 versus the previous year at $207,327.

Sales Success for March 2011 is Positive
In this market segment, Pending Sales for March are down by 8.70% to 1,092 versus March of last year at 1,196 that went under contract. With 2,288 newly listed homes this month and 1,092 under contract, the sales success index of 47.73% for March advanced 13.13% versus last year’s index of 42.19% in 2010.Reports produced and compiled by R E S T A T S I n c.

Bottom of the Market?
Continued volatility, with some trends up and others down is consistent with being at or near the market bottom. The decrease in the number of homes sold was expected as the prior year had sales pulled into the period in order to take advntage of the tax credit.

Overall sales were up for the first quarter and if flat or up in the second quarter may finally be signalling that we have been to the bottom.

February Market Update

2011-03-04T13:41:00.002-05:00

Pending Sales & Sales Success
In the Central Virginia Multiple Listing Service, Pending Sales for February are up by 20.73% to 1,124 versus February of last year at 931 that went under contract. With 2,640 newly listed homes this month and 1,124 under contract, the sales success index of 42.58% for February advanced 27.54% versus last year’s index of 33.38% in 2010.

Average Prices
According to the February 2011 statistics, our market area has experienced some downward momentum with the decline of average prices at closing. Prices dipped 16.70% to $178,686 versus the previous year February at $214,496. This is a difference in price of $35,810.

Cautionary Note: This does not mean that the value of an average home went down. It is an indication that there are more buyers for lower priced homes.

New Listings & Months Supply of Inventory
New Listings in this area for the month of February yielded 2,640 available resale dwellings. This was a decline of 5.34% or 149 units in comparison to February 2010. The total housing inventory at the end of February dipped by 9.67% to 11,846 existing homes available for sale. At an average of 1,047 closed sales per month over the last 12 months (March 2010 - February 2011), represented an unsold inventory index of 11.32 Month Supply of Inventory for Central Virginia.

Bottom of the Market

Volatility is the norm for the bottom or top of the market. It is hard for prices and demand to reflect immediately on each other but we are seeing stronger demand and if it continues prices will go up. Reports of multiple offers are occurring more frequently. The only way to know for sure whether this is the bottom is to look back a year or two from now. At that time we will be saying; "I hit the bottom just right" or "I wish I had bought my house earlier and gotten more for my money."

Data Compiled From Central Virginia Regional MLS by RE Stats. on March 3 2011.

Week 5 Real Estate and relate news round-up

2011-02-05T13:58:00.000-05:00

The Census Bureau Speaks: What's going on with homeownership and vacancy

The Census Bureau released its quarterly report on residential vacancies and homeownership on January 31, 2011. The homeownership rate dropped .4% to 66.5%, its lowest level since 1998.

Home Buyers Kick Tires on a Rocky Road

Still, the traffic online, where I imagine most folks go before even heading to an open house, is an important sign, as we head into the Spring market.

Or maybe they’re not just kicking tires.

From this blog, yesterday: The 743 new contracts represents an increase of 4.8% over last year.

10 foreclosure hotspots

Las Vegas always wins the title for worst foreclosure rate in the country. But these 10 unexpected cities have the fastest-growing rates out of the 100 worst-hit places.

Here Comes the Sunbelt

In a little bit of a contrarian view to whats happening.

"Eighty million baby boomers are about to retire," went the argument. "They're not going to hang around in places like Chicago, New York, Boston and Pittsburgh all winter if they can help it.

Eliminating Mortgage Interest Deduction Would Raise Taxes for Middle-Class Families

liminating the deductions for mortgage interest and real estate taxes would raise taxes disproportionately for middle-class households and make the tax system less progressive, according to a new study from the National Association of Home Builders (NAHB).

January contracts up over last year

2011-02-04T15:49:00.000-05:00

The Richmond area saw an increase of 34 new contracts for single family homes in January of 2011 over 2010. The 743 new contracts represents an increase of 4.8% over last year.

Though there are details concerning pricing that we will not know until after they close, the average size of the homes appears to be approximately 100 square feet larger.

The price they were listed for is only $1,300 more than the closed sales from last year. Based on our list to sales price ratio, I would expect to see about a 3 - 3.5% decline in average prices. I expect the average price per square foot to come in about 4.5% less than for the same period last year.

What does this mixed bag of info mean? Maybe nothing. What I suspect is that the prices have caught up with (lower) demand, and we may be seeing what the bottom of the market looks like.

I would love to hear your thoughts.

Housing links for January 29

2011-01-29T08:53:00.002-05:00

A sampling of the articles that I read this week that pertain to homes in our area:

Locally we found that the value of real estate has gone down 3.3% in Chesterfield and 1.13% in Henrico according to reports in the Richmond Times Dispatch. Of course, they have been observing and working on those assessments for the year.

More positive local news came when it was reported that December unemployment was unchanged for Virginia. Richmond International is seeing increased traffic and 5 hotels received high honors from AAA.

One of the most encouraging pieces of data came from the commercial real estate sector. For housing to stabilize and our economy to improve, we will need an increase in jobs. We know that employers are announcing hiring to come, well they are also renting more space. This is also reflected nationally and the results are a growing GDP.

A new survey indicates that renters and owners agree that owning a home is still a smart decision. Meanwhile another survey indicates that affordability was a primary reason for buying a home in 2010.

Finally we have a brief guide comparing some home maintenance costs versus repair costs.

A tale of 3 foreclosed houses

2011-01-17T12:17:00.001-05:00

When will the banks get a clue?

This past week had me working with 3 buyers on purchases. In all 3 cases the houses were for sale by a bank.

House 1 Had been priced at $79,900 and recently reduced to $49,900. The house was in a state of extreme disrepair. Inside sheet rock had been destroyed and floors were disintegrating. There was an area that used to have kitchen appliances and cabinets, but they were gone now. areas of the ceiling were coming down and the floors were rolling. My client crawled under the house and counted 23 joists that would need to be replaced. In other words the house needs to come down, even though it was not that old.

The MLS for this house had a comment that it was a nice lot. Not sure why it was a nice lot. Not overly large, or small, but definitely overgrown. The overgrown weeds and bushes did serve to hide the railroad tracks that adjoined the property.

Conclusion $25,000 lot with a $30,000 demolition job, makes this $49,900 house approximately $55,000 overpriced.

House 2 was on the market for $79,900 in a very popular area. The house was definitely dated. but had a brick and vinyl exterior and floors and walls were all sound. The average to large flat yard was entirely fenced in the rear. All interior surfaces would need to be redone, and the kitchen and baths would need to be updated. Add in replacement windows, a little landscaping and the investment to make this house desirable, would be around $25,000.

This house was on the market for 2 days and garnered 10 or more offers resulting in a contract for more than list price and closing quickly because it is all cash.

More than likely the house will be renovated and placed back on the market for around a reasonable $170,000.

House 3 I already had under contract. My buyer had identified the house and neighborhood and it turned out to be on the market for $79,500. The house seemed to be appropriately priced, not a bargain and appraised for $82,000. The bank did not respond to the offer in a timely manner and then as a result of an even slower delivery by their agent to me and the purchaser was not really under contract until this past week.

What was remarkable in this instance, is that while there are apparently 11 similar homes on the market in the area of this sale, only 2 have gone under contract since we made this offer at the end of October. In spite of this, the bank’s asset manager was constantly wanting to “kill” the deal. He couldn’t sell the house for any more than my client was paying. He couldn’t sell it any sooner, and yet he wants to “kill” the deal because it is closing late because his company returned the “contract” late and delayed the mortgage process.

I wish I could say these are isolated instances but they seem to be happening more frequently. So whether they are overpriced, underpriced or trying to kill a legitimate deal in a competitive market the banks don’t appear to be helping their investors, customers or vendors.

A VERY Richmond Tradition

2010-12-24T09:36:00.000-05:00

Sure, there are folks everywhere that put up 10's or 100's of thousand of Christmas bulbs on their house, but Richmond has a tradition of tacky lights, ornaments and TOURS that goes back years (25+). Here are some pictures from a stop on the tour. You get a feel for the crowd, the effort and the 1.5+ million lights.

Crowds at The Phifers

Not your typical outside Christmas tree!

Honoring the nativity. They had several.

A room for Santas, elves, and other Christmas figures.

I couldn't resist this full moon shot the other night.

The tours run through December, and many of the houses are lit past new years. We had 14 people in a James Limousine tour and had a blast. Merry Christmas.

Better questions get better results

2010-11-16T17:31:00.003-05:00

REALTORS® all over the country know how tight things are. Statistics show that most are, well let’s just say, underemployed. This tends to make us sympathetic to the needs of clients that want to keep their costs down. However, sometimes the costs that are involved in buying a home should not be the focus.

The other day, I was asked what I consider to be the WRONG QUESTION by another REALTOR®. “Do you have a lower cost home inspector, that charges less than $250.00?” This REALTOR® had a client that was trying to save on the inspection. I get that. But the typical inspection in our area is $300.00 and up depending on scope of work, size of home and age of the home. The inspector I usually use would charge $350.00.

For $350.00 or more he starts at the roof and works his way down into the crawl space. He identifies current and likely future problems, gives an idea of the costs involved in fixing and or avoiding them and how to maintain the house. His analysis and documentation is such that if there is a problem, that my client decides needs to be addressed, the seller understands why we are asking.

Without the thorough analysis and documentation, one of three things will likely happen; problems will not be identified and will create bigger costs later, the seller will not understand the reasons for the requested repairs or credits and the contract will fall apart, or the purchaser will be alarmed and the contract will blow up. More simply put, a bad inspector can keep a purchaser from getting the house that was right for them without hidden costs.

I tend to think a BETTER QUESTION to a REALTOR® is, “Do you have an inspector that you would use to inspect a house that you are buying?”

November inventory summary

2010-11-08T14:54:00.000-05:00

This is a summary of homes in the Central Virginia MLS for the RVA and Tri-cities area

There are 8273 homes available in Henrico, Amelia, Chesterfield, Dinwiddie, Goochland, Hanover, Hopewell, New Kent, Petersburg, Powhatan, Colonial Heights, Prince George, Richmond

                Beds   Baths   SqFt          LP                LP/SqFt

High           11       10    16,248 $10,950,000      $899.25
Low             0         0        0               $1
Ave              3         2     2,151     $263,722         $116.92

Analyzing the risks may shock you!

2010-10-19T16:32:00.000-04:00

It’s hard to be optimistic when everybody is and has been saying how bad everything is. Now, many people are saying that the worst of the real estate crisis is behind us. I see some everyday saying that prices are picking up. I hope they are right. The most pessimistic projections that I have seen recently indicate that we may be in for another 10% decrease in home values.

That sounds pretty bad. However to better understand the risk, I ran 3 scenarios based on equivalent $200,000 homes with 20% down, each for a 5 year period.

Scenario 1 - the market is flat for the first 2 years and then starts to appreciate at about 3% a year.

Scenario 2 – the market declines 10% in the first 2 years and starts to appreciate in year 3 at 3% a year.

Scenario 3 – the market declines 10% for the first 2 years and starts to appreciate in year 3 at 3% a year, but the purchase is not made until the end of year 2 at the market bottom.

Before I give the results, let’s take a look at interest rates. We know that they are at a low point for our home buying lifetimes right now. The presumption is that they will go up. If the economy starts to grow and jobs pick up, we should see rate increases to keep bonds and mortgage backed securities attractive as investments. In addition the fed will have to increase rates to keep inflation in check.

These scenarios use a current interest rate of 5% since most don’t qualify for the near 4% rate that is being reported as I write this. The future rate for the purchase 2 years from now is still a low 6% or a 1% increase over current rates. (If that hasn’t happened, then the economy is likely not growing, jobs are still a problem and we have a lot more problems than if we bought or sold a house or held onto our money.)

So using these scenarios for comparison purposes, what we find is not surprising for scenario number one; we have a positive result with a net advantage based on appreciation and cost savings of about $22,000. Because of the initial loss of 10% in scenario number 2 we actually are only ahead about $1,000 after tax savings. The most surprise is actually generated by scenario number 3. When you calculate the lack of tax savings, and costs of renting for the first 2 years, versus buying at the reduced price with a 1% increase in interest rates. the result is a net loss of approximately $8,000.

Like most investments, for many of us, buying a home now is a better strategy than waiting. MARKETS CAN’T BE TIMED.

September sales

2010-10-05T07:17:00.000-04:00

This is a preliminary look at new contracts written during September and compared to contracts written in September 2009.

	Sales	Beds	Baths	Sq Feet	Price	Price/SF
Sep-10	823	3	2	2084	$228,877.00	$104.18
Sep-09	950	3	1	1923	$231,794.00	$118.17
Difference	-127	0	1	161	$2,917.00	$13.99

The sales decrease would be expected since September of 2009 was influenced by the original tax credit and September of 2010 had no tax credit. So, while many believe the market is continuing to crash, I believe this is a pretty good indicator of stabilizing sales. A few more months will tell the story much better.

There are a lot of people saying that prices have been going up, but keep in mind they are talking about median prices. Since the tax credit drew more first time buyers into the market, it would skew the numbers to a lower median.

I think the better indicator is the average cost per square foot, which is down approximately 12%. This number could be heavily influenced by the condition of distressed properties, which seem to be making up more and more of the market.

October inventory summary

2010-10-01T10:57:00.000-04:00

This is a summary of single family homes in the Central Virginia MLS for the RVA and Tri-cities area

There are 8448 homes available in Henrico, Amelia, Chesterfield, Dinwiddie, Goochland, Hanover, Hopewell, New Kent, Petersburg, Powhatan, Colonial Heights, Prince George, Richmond

	Beds	Baths	SQFt	Price	Price/SF
High	25	9	18248	$10,950,000	$899.25
Low	0	0	0	$1	$0.002
Ave	3	2	2161	$268040	$118.08

RICHMOND METRO

Paring the area down to Richmond Metro of Chesterfield, Goochland, Hanover, Henrico, Powhatan, Richmond

	Beds	Baths	SQFt	Price	Price/SF
High	10	9	16248	$4,495,000	$899.25
Low	0	0	0	$9,900	$6.21
Ave	3	2	2,209	$277,084	$120.16

TRI-CITIES

Includes Colonial Heights, Dinwiddie, Hopewell, Petersburg and Prince George

	Beds	Baths	SQFt	Price	Price/SF
High	25	10	14,00	$10,950,000	$782.14
Low	0	0	510	$1	$0.002
Ave	3	1	1,795	$194987	$100.91

Are we selling furniture now?

2010-09-23T17:49:00.000-04:00

We have all seen/heard the commercials, because every town seems to have a furniture store that wants us to know, “THERE WILL NEVER BE A BETTER TIME TO BUY FURNITURE.” “THIS WEEKEND ONLY, WE ARE CUTTING PRICES TO THE LOWEST THEY HAVE EVER BEEN.”

While driving to an appointment today, I heard a similar statement on mortgages and realized that mortgages and homes are being marketed the same way. I mean, hasn’t the mantra for both businesses been “prices are down”,” rates are down” and we know “this won’t last.” Isn’t it obvious by now that we don’t know how long it will last? (These economist study it all the time.)

We do know that rates are down and home prices are down, making it less expensive to buy a home.

We do know that inventory is up, and that means options.

We do know that the mortgage interest deduction currently saves money on taxes.

We do know that most people find a sort of satisfaction, from owning rather than renting.

We do know that there is a floor plan and style for every taste and if it’s not available someone will be willing to build it.

We do know that for most, multiple families in homes not really designed for that lifestyle, is a short term solution.

We do know that our population is growing. (I wonder, is the population growing faster since people have less money to spend on out of the house entertainment?)

There are lots of reasons to buy a home, but not because this is your last opportunity. Talk to a real estate professional that understands the reasons people buy homes and the drawbacks, and can make them clear to you. Make good real estate decisions.

For you real estate and mortgage professionals out there, just remember, we shouted that prices and rates were down last summer and it surely wouldn’t last. Well, we were right, they are lower now. Yet there were good reasons for many folks to have bought homes in the last year. By the way, don't forget, when we sell homes we do help funiture sales.

Be great and remember your comments are very much apprteciated.

Speaking of HUD

2010-09-16T00:24:00.001-04:00

HUD had a National “Real Estate Broker Webinar” this past week. In this webinar, they announced some significant changes to the way they will be doing business going forward and the plans for implementation.

Changes included:
• Longer period for owner occupants to bid on homes before investors may bid. 10 days to 30 days.
• Ability to list on any day of the week.
• A single national site for searching for HUD homes, that allows all consumers to see what all agents will see.
• Additional listing brokers creating additional marketing for many properties.
• Earnest money to be submitted with the contracts and made out to HUD.
• Changes to agent compensation.

These are overall thought to be good changes and many are long overdue. Unfortunately the announced time frame is already not being met, at least not in our area. This may cause some short term confusion, so make sure your agent (ALL HUD BIDS, MUST BE MADE BY A HUD REGISTERED AGENT WORKING FOR A HUD REGISTERED BROKER) is on top of the changes and their implentation.

I WANT THIS HOUSE FOR LESS!

2010-06-30T15:18:00.001-04:00

I was recently told that I needed to convince a seller, through their agent that a home was over-priced. When that is the case, I feel that I do a pretty good job of selling the right arguments. However, whether it is truly over-priced or not, chances are it will remain that way on the market.

Some observations from 14 years in real estate:
1. Sellers don't change their mind about the value of their home. They may acquiesce to the market, but if they do, they feel cheated.
2. Buyers don't change their mind about the value of the home they are buying. If they negotiate up, they almost always feel like they should have gotten it for less.
3. Most people buy for emotional reasons, logic takes a back seat.
4. Sellers have agents that usually study the market, and have an idea of the value of the home. Those agents are often proud and don't like to hear that they made a mistake.
5. Buyers that are represented, have agents that usually study the market and have an idea of the value of the home. Those agents are often proud and don't like to hear that they made a mistake.
6. Agents need to present information to their clients and let them make the decision.
7. Buyers that chase value, often find it.
8. Buyers that chase deals, in a market where there is competent representation on the other side, seldom find them.
9. Buyers that chase deals, often get no value.
10.REALTORS® subscribe to a code of ethics that includes “honesty” and “truth.” Most REALTORS® take it very seriously.

There are others, but the most important thing to remember when making an offer is that everyone has information and has come to their own conclusions based on their thought processes. Those thought processes are usually a mix of logic and emotion, and are often dominated by the emotional side of the equation.

I always welcome your comments.

Qualifying purchasers; Are they able?

2010-05-19T16:00:00.002-04:00

The credit challenged buyer. Though there are still some loan programs and remedies for less than perfect credit, not every buyer that may want to buy your home is going to be able to do so within the time period you want. Furthermore, since the rules are changing almost daily, there is a distinct possibility that a person with credit dings approved today, might not be approved tomorrow.

It is very important to have an understanding of the purchaser's ability to get financing for your home, before even accepting the terms of the contract. Then it is equally important to make sure that the buyer proceeds to get financing as soon as possible after the contract is written, to insure that you do not tie the home up with someone that ultimately can't purchase.

There are two sides to most issues, and this is no exception. Qualifying is best done by an objective professional third party. One who is experienced, stays on top of the changes and is reliable. Otherwise you risk alienating the buyer and losing the contract on a qualified prospect.

Qualifying Purchasers; Weeding out the dreamers

2010-05-17T15:50:00.001-04:00

You have enhanced and packaged the home for sale, price it with the best market price and exposed the house to all of the potential buyers. Now the buyers are starting to show up and it is time to qualify them or in other words to insure that you are dealing with the right people to sell your home.

This crucial step will insure that you don't tie yourself to the wrong person taking your home off the market prematurely and/or wasting your time and money.

The less than serious buyer

This person likes to feel important and is sometimes a dreamer. They appear interested in buying your home, but are really interested in a great deal, they will buy if it is under market, or includes some fantastically unique feature. Even with these conditions this is the type of buyer that will use anything possible to get out of the contract, when they get cold feet at a later date.

It is important that you qualify the potential buyer as being serious about buying a house. The buyer needs to have a genuine desire for buying a home or better yet a need, such as relocating from out of town. The buyer needs to also have a definite time frame for buying the home. Best of all the buyer needs to be serious about buying your home.

Expose your homes to the widest pool of buyers possible

2010-05-06T07:24:00.004-04:00

Market the home where buyers are. Internet (personal and company sites, listing sites, social media sites, advertising sites) agents, neighborhood, print

According to the National Association of REALTORS® 87-percent of home buyers use the Internet to search for homes. A Brokerage with a strong company internet presence is helpful, but any seller will need to utilize:
Listing sites such as Realtor.com, Zillow, and in Richmond, Richmond.com.
Social media sites, such as Twitter, Facebook, LinkedIn, Plaxo and others.
Advertising sites such as Craigslist.
Finally personal blogs and websites, such as this also add a chance to communicate with buyers.

To get the most benefit from each of these sights, requires taking advantage of what they have to offer. If 10 pictures can be uploaded, then 10 pictures should be uploaded except in special circumstances. If a virtual tour can be made available, then it should be linked appropriately. Descriptions that paint a clear view of the benefits of the home and contact information that is readily accessible are absolutely necessary to maximize these sites.

There are still other buyers out there and signs, for those in or canvassing neighborhoods, print, and direct communication with buyers and the agents that have pools of buyers will expose your home to the widest available buyer pool.

However you market your home, be prepared with a plan to tap into the largest buyer pool possible with the maximum market exposure.

Packaging your home for profit

2010-05-05T08:14:00.001-04:00

Before you put your home on the market it is important to take time to enhance and package the home for sale.

Once you have made the decision to put your home is on the market, it is important that you look at it as a product for sale. Like any other product the better it is packaged and positioned for the sale the more money and buyers it will attract.

It is critical to enhance the home, even though it may be great, because buyers buy with their emotions and their eyes, and we don't get a second chance to make a good first impression.

Unfortunately, most buyers don't take the time to do this properly. It is unfortunate, because not doing it properly, costs them extra aggravation and sometimes thousands of dollars. They don't do it properly because they feel comfortable there and think that others will also. However, many of these same people would take their car to the carwash to have it detailed before trying to sell it, because they know that properly preparing the car may bring a couple of hundred dollars extra.

To properly package the house, will absolutely require a fresh set of eyes. An objective third party (don't put your friends in the middle of this) will be able to give advise on what changes if any will appeal to a buyer. Someone with experience and knowledge of the market can transfer that knowledge to you so that you can minimize your costs and maximize your profit.

By utilizing reports, checklists, and experience, and when the stakes are really high, possibly multiple sources of outside expertise, you can enhance your home, investing a dollar and returning 3 dollars and sometimes much more.

Yes, this critical step may take some time and some money but in the long run may save much more of both.

So, what is the best price for your home?

2010-05-04T07:26:00.000-04:00

The answer to this question may be the key to the sale of your home. Price it right and you maximize the return on your investment and have a quicker, smoother sale. Price it incorrectly and you will most likely leave some of your money on the table or risk losing potential buyers.

There are three essential steps that are involved in determining what price to market your home for. First you must determine what the market is, second your place in the market, and third the market's direction within the current trends. Leaving out any of these steps, will likely lead to frustration and lost profits.

Step one - determine what the market is, by looking at what is available for sale and what is selling, what size, layout, number of rooms, neighborhoods, price ranges, how long on the market, what amenities, and then what is not selling. This will give you a broad view of the market and your competition, and likely clues as to where you will have to position your price to sell.

In step 2 you will need to zero in on your position within the market. You do this by taking the pool of homes that have recently sold that are similar to yours and making adjustments to their price based on comparisons of what they offer versus what your home offers. When your home offers something that the comparable home does not you add the value of that feature to the price that the other home sold for. In essence what you are saying is that if the other home had this item, it would have been able to sell for X number of dollars more. Conversely if the other home had a feature your home does not, you would subtract that from the sales price of the other home.

To properly make the price adjustment you will need a large pool of homes and then you can compare the value of an item by isolating the prices of homes with a difference in that feature. You can do this for any individual feature or group of features and will want to consider such things as differences in square feet, layout, number of rooms, number of beds and baths, quality of construction, maintenance of the home, the lot, location, school system, accessibility and the neighborhood and any other factor that can effect the salability of the home.

The final part of this step is to take the information about the similar homes apply the adjustments and determine what the market is willing to pay for your home, versus the competitive homes that are on the market now. You should now know whether you need to be priced lower or could sell for more because you have additional features, or will just have to wait until the competitive home is sold before yours will sell.

Step three is to make adjustments for the current trends in the market. The market is not static and may make significant corrections within a very short period of time. To determine the current trends, you will need comprehensive information on the current sales, available homes, and of historic sales versus available homes. The goal is to establish relationships between the number of homes, the number of sales, the sales prices, time on the market and then adjust those trends based on what is happening in the economy that will affect the curve.

Unfortunately, since most people don't gather actual data to determine where the current trend is, they are usually months and sometimes years off. This results in you having a home on the market that looks to be priced right, but doesn't sell.

Tips for selling your home. Part 1

2010-05-03T17:35:00.001-04:00

Tips for selling your home. Part 1

I had some recent discussions about marketing homes and what makes the difference between languishing on the market and selling, between getting top dollar or getting less than may be possible.

Ultimately, we have to remember that purchasers have expectations based on tons of information. It may have been possible in the past, to hope that they looked at your house and fell in love and bought it, but today they do that with a comprehensive look at the value and expectations based on not just friends, but TV shows, tax records, computer valuation models, Twitter, Facebook, countless blogs and more.

1) Price is always, always, always #1 in selling your home. Price it too high and nothing else matters.

I’m going to devote the blog to home marketing tips for a while with a lot more tips and a complete explanation of each, but perhaps the best thing to do is let this one sink in for a while.

I know, you heard about how important location is and then there is condition and curb appeal and all these other things that affect the value of your home, but since price will overcome any of these issues, we’ll look at how to price it tomorrow.

Clarifying the Tax Credit

2010-03-20T14:36:00.000-04:00

It’s no secret that I’m a big college basketball fan, and for me March Madness is the best sporting event, period.

The NCAA college basketball tournament draws many viewers and listeners making it ripe for advertising. This year the National Association of REALTORS® is running an advertising campaign pushing the merits of the Home buyer tax credit. Unfortunately there seems to be some confusion about the credit and the ads.

1) “Extended” does not mean another extension, it refers to the extension to April 30th for contracts that are closed by June 30th.
2) “Expanded” is referring to the expansion to people that have owned their home and lived in it for at least 5 consecutive years, who are now eligible for a tax credit of $6,500.
3) “Expansion” also is referring to the fact that there are more homebuyers eligible since the income limits were raised to incomes up to $125,000 for single tax payer and for married couples with incomes up to $225,000.
4) The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
5) The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.

These have come up as questions in the last couple of days, and I do advise that you consult a tax professional if you have questions or if they are on how to get the money from the IRS go to their site.

Comments, questions, experiences are always encouraged.

Borrowing gets a little tougher

2010-03-16T07:14:00.001-04:00

I’m not claiming the world is about to end. Nevertheless, news from lenders in the past week may be indications of some important trends in mortgage lending.

First, came word that the money allocated for rural housing, from USDA, was running out and new loans may not get funded. This is not unusual lately as it is one of the few 100% loans available. It is a red flag, to some because it comes earlier in the year than expected.

Next FHA announced that the FHA upfront mortgage insurance will be changing to 2.25% from 1.75% for all FHA loans where an FHA case number has not been assigned by April 2, 2010. This had been announced earlier without a definite time for implementation. The long and short of this requirement is that costs go up slightly, so if you can find a home between now and April, save a few bucks.

Bigger concern comes as the Fed winds down the purchase of mortgage backed securities, which may cause mortgage interest rates to go up. On the other hand, some good news; rates have come back down according to Bankrate.com and Freddie Mac.

Final analysis, the trends point to higher rates, more rules, less money available, so if you were thinking you may want to buy a home, now may be a better time than later.

The right house is the “deal”

2010-03-09T07:53:00.000-05:00

Everyone wants a “deal.” There are ads out there that make it seem easy to get a “deal.” Unfortunately, “deals” are hard work. You have to sift through a lot of homes and look for one that fits you, qualifies for a mortgage that you can obtain, and be ready to make quick decisions.

Consider the following:

Everyone would like to see a person that is handy and going to live in the home for a while, be able to purchase one and do just that. However, the banks risk is obviously greater, and they won’t make loans on homes that need more than minor work. There is, of course, the renovation loan (203K as an example) that is designed to help in this situation, but because of the extra risk involved to the bank, the credit score usually needs to be higher and the reserves greater in order to get this loan.

In addition to the credit issues, the bank also wants to make sure that the work is done meeting relatively high standards so that the “handy” home buyer can’t do the work themselves, but has to hire a contractor that will be paid on a draw. Often the very person that has the ability to renovate the home as a home owner, and theoretically get a “deal” is the last person that will.

Of course there are other ways to get “deals,” such as HUD homes, bank foreclosures, “short sales” and others. I’ll examine some of the issues with these later. In the meantime, know that the right real estate agent can guide you through the maze and that the “deal” is in finding a home that satisfies your needs at a price that is acceptable to you.

Comments and questions are always welcome,

John

$8,000 tax credits & Home Purchases

2010-03-07T22:56:00.000-05:00

Some facts about timing your home purchase.

1) The $8,000/$6,500 tax credit requires qualifying contracts to be ratified by April 30, 2010.
2) Not only must the buyer qualify for financing, the house must qualify for the mortgage as well.
3) Many homes currently in inventory in the Richmond area do not qualify for financing.
4) Currently in the Richmond area many homes are being offered as short sales.
5) Short sales are taking 45 days or more to get bank approval. 45 days from now will leave about a week to make an offer if the short sale is not approved.
6) Some of the best homes in our area are already getting multiple offers, costing time for those making insufficient offers.

The facts would seem to indicate that the sooner you start seriously looking for your new home, the more likely you are to be able to receive the tax credit. It’s available, you may as well get your share.

Do you know what you think you know?

2010-02-27T07:26:00.000-05:00

I overheard a comment at lunch today about prices. The specific comment was related to the price of soup and then how it was such a high profit item. Further it was stated that the soup was even more profitable than drinks at this price.

I used to show people how to make a profit from selling food and beverages, so I understand where this thought came from. It used to be that soup was largely made up of “leftovers.” The “leftovers” were factored into the costs of foods previously sold, and therefore they were “free” when going in soup. Roast beef leftover from a previous day added to vegetables create a vegetable beef soup, leftover broccoli added to milk, stock, and cheese turns into broccoli cheese soup etc.

However, not all places approached it this way, either using premium fresh ingredients or a canned or frozen version. The cost of this frozen version is often the highest food cost of all using fresh premium ingredients and having to pay for cold storage as well as shipping the extra weight of the water. In this case the soup itself cost anywhere from 40% to 55% of the price.

What does this have to do with real estate? It is an example of how things change and what we may think we know isn’t the way it is.

Take finance as an example. A couple of years ago, a mortgage company was looking at a policy change (a directive from FHA, VA Fannie Mae or Freddie Mac) about every other week. I’m hearing claims of 380 changes in 2009. That is more than one a day. As a matter of fact, that is on average, just under 2 per work day. This means the rules that were understood when an offer is made, may be different by the time the offer is negotiated and becomes a contract.

Along with finance the banks have also changed the way they market, handle and dispose of distressed properties such as short sales and foreclosures. Contracts and disclosures have changed, and more addendum templates are in place to handle some of the known issues.

Individual home owners and buyers are also looking at things differently. Sellers many times are bringing money to the table so that they can get even better deals on their move up purchases. Buyers are in the driver’s seat one week and the next the sellers have the upper hand due to the amount of suitable product available to meet deadlines like the tax credit. Builders are contracting to build homes and can’t get the financing from the bank to build them.

Marketing homes means new challenges as newspaper classifieds are being replaced by Craig’s List and more serious research is being done online before contacting an agent. More and more successful marketing campaigns are starting in “Social Media” such as Twitter and Facebook and then continued on the huge portals and company web sites.

It doesn’t matter whether you are buying your first home or your tenth home, the rules are constantly changing. We see buyers, sellers and even some agents, acting as if they know the rules because of what they have done in the past. Yet, today the issues are different for every transaction and what you think you know, may not be reality. The theme song of the time may be “Hand in the Pocket” by Alanis Morissette where she sings, “What it all boils down to is that no one’s got it figured out just yet.”

The changes to the market, changes to the rules, changes to attitudes and the confusion they cause, mean now more than ever it is essential to have professional representation. Sitting in a restaurant and eating soup that you think may have yielded a high profit to the operator, when they wonder why they have a low profit item like soup on the menu, doesn’t really hurt anyone. On the other hand, the current real estate market has potentially great rewards, but when mishandled and misunderstood can lead to shattered dreams and financial ruin.

In other words, the times demand an agent that is growing, learning, adapting, and as a result creating and leading to positive solutions in the most dynamic real estate environment, possibly ever.

I always apprecate comments,

John

Raising the Bar in Real Estate

2010-01-26T20:18:00.000-05:00

There has been a lot of discussion this month among REALTORS® about raising the bar for real estate agents. It started as a result of discussion about how real estate agents are viewed in the business world. It has continued with conversations held on Twitter, Facebook, Google Wave, blogs, conferences, phone calls and face to face discussions about how and what bar to raise.

There has been concern that agents will look bad, for the public nature of the discussion, something I obviously disagree with given where I have placed this particular post. It’s not that I’m not sensitive to the idea that we shouldn’t air our dirty laundry in front of everybody, It’s more a belief that it is out there and everyone needs to see that we are interested in cleaning it up. It is the public that has said their perception of us is low; it can’t hurt to have the public know that they have been heard and we are working to improve.

However, the question does persist, as to what we need to improve. Personally, I believe that a well trained, seasoned real estate agent can add value with negotiation skills, finance, construction & market knowledge, as well as marketing skills, area expertise and be a counselor, consultant and sounding board so that the consumer can make good real estate decisions.

On the other hand, I believe that as real estate agents, we operate in the middle of a semi-adversarial process where opposing parties have very different goals. This often leads to situations where one or both agents in a transaction may be perceived as a villain for not obtaining all the goals. In other words, if a party to the transaction believes they gave up more than they thought they were going to, they may like their agent and despise all others.

I believe that we must always strive to be better or raise the bar, and I will continue to take courses, read, attend meetings, study the market, talk to economists, talk to builders and developers, and study mortgage markets, real estate law and pass it on when I can. I would also really like to hear, from REALTORS® and CONSUMERS as to what services, what knowledge, what expertise, what educational standards, in other words, what bar should be raised.

Be great,

John

How many homes would you want to see?

2009-12-29T10:05:00.001-05:00

An interesting discussion was started this morning on Twitter between REALTORS® in Michigan and North Carolina, concerning how many homes should be shown to a client before they buy. This started after a tweet from Diane Rish with a link to an article about an uber picky home buyer that saw 298 homes over a 2. 5 year period.

I don’t believe many people would think that it should take that many homes or even a third of that to make a good decision. How many homes should a buyer see before buying? Is there a number that is to many? Can a buyer see to few homes?

Personally, I have had buyers see 1 home and buy it, and I knew they made a good decision. I’ve had others see dozens of homes and make what I was sure was a bad decision.

Diane got it right this morning; “It depends on the buyer.” Some buyers feel they need to see a lot of homes to make sure they are getting a good deal, others find a real estate agent and place their trust in them.

I used to pride myself in being able to show on average just 3 homes before we would write a contract. These days that is harder as more of the purchase decisions are motivated by finding “a deal.” In our market “deals” normally have issues and buyers need to make apples to oranges comparisons. Nevertheless, I still feel that if my buyers haven’t seen the right house after a dozen, I’m not doing my job correctly.

How about you, as a buyer how many homes do you want to see? As an agent how many do you think should be shown at a minimum? How many need to be shown before you feel like you have missed what the buyer wants?

Builders & REALTORS® like Oil & Vinegar

2009-12-03T16:54:00.000-05:00

The relationship between builders and real estate agents is always a little strained. Like oil and vinegar, left alone, they would stay separate. Having been on both sides of the fence I can certainly understand why. When a real estate agent brings a client to a builder, they feel as if they lose control of the transaction, and may have to wait an additional 5, 6 or more months to get paid.

The builder on the other hand, feels that they are being questioned by an amateur, at least in regards to building, and that there is little to no value added. In many cases the builder is paying for advertising directly and writing the contract, so why pay the commission? In some cases, the well intentioned real estate agent makes claims that the builder either has to honor or at a minimum address, costing money, time and goodwill.

In order for this economy to improve we need real estate in general and new construction specifically to have better sales. So how do we put these two groups together to harmoniously and beneficially increase value for the consumer? One suggestion would be to reach out to each other. While sales are slowed with seasonal declines, take the time for some outreach and educate real estate agents, about the process and difficulties with building. Educate them about how you price and why. I guarantee real estate agents are taking more courses and learning more than ever. Add your information to the knowledge base.

REALTORS® need to do likewise. How many new homes communities have you been in recently? Do you know their price points? Do you know what drives them? Do you understand the difference in quality between builders A & B? Do you understand construction well enough to not make claims as to potential changes? Do you understand that some builders should not be asked to make changes?

Just as important, have you taken the time to talk to site reps and builders about what is going on in the market. They want to hear from you.

If you have a question, whether you’re a buyer, builder, or a REALTOR® feel free to ask. If I don’t know the answer, I probably will know someone who does. Let’s maximize these opportunities so everyone gets what they want. We can mix the two and leave a better taste for everyone.

Be great! As always comment are welcome.

Will changes to FHA backed loans hurt housing sales?

2009-12-02T18:35:00.000-05:00

One of the most important tools allowing buyers to take housing inventory off the market is easily accessible money, low cost, low down payment loans. Now it appears that concerns about FHA reserves may derail a lot of plans to purchase by increasing the minimum amount required as a down payment, the mortgage insurance premiums, minimizing the seller paid contributions and possibly increasing credit score minimums.

Each of these steps that are being considered by HUD Secretary Shaun Donavan would “increase the skin in the game” and theoretically lead to less risk in the loans insured by FHA. The difficulty to any potential borrowers is that the money coming out of their pocket at closing and during the life of the loan will be greater, thereby reducing their buying power.

The initial implications are obvious; if you are planning to buy a home in the next few months, don’t wait or risk an increase in your overall costs. On the other hand this may lead to another temporary setback in housing marketability, so if you are a seller, make sure your house is priced right to draw a quick sale.

Some articles that explain what is going on:

CNN asks Should FHA home loans be more expensive?

Bloomberg claims FHA to Require Homebuyers to Put Up More Cash

From the LA Times Home buyers will have to lay out more cash for an FHA mortgage

Why do you do what you do?

2009-12-01T18:23:00.000-05:00

I’m a REALTOR® but the real question is why.

For me it has always been about helping other people be or do better. Sometimes that has been totally misunderstood, like the time Mr. Worley in 7th grade science class asked me if he could help and I responded no, could I help him. He understandably thought I was a smart ass.

In college, I wasn’t a great student, but I concluded those years trying to help a half a dozen others become better debaters. I know they learned from many, but I would like to think that I contributed.

When I was showing convenience stores how to essentially become restaurateurs, I know I helped create profits, jobs and some happy customers by improving the food and service.

So why did I get involved in residential real estate? Initially, because it was an opportunity to quit being on the road constantly, and from my observations of looking at homes in 4 states, a business that could use help. Working in the business for almost 14 years as an agent and as a marketing and sales manager for a builder, I have helped many people get the security, financial benefits, fulfillment, and shelter that works best for them. In the process, I know that I helped to create dozens of jobs, add value to land, and give back to the community.

Sometime in the last few years, I lost my way. You see, I do believe that there is never a bad time for some real estate to be bought or sold. However, for the last +/-5 years, that has not been true for most. I watched as prices went up too fast and many times questioned the appropriateness of decisions, particularly for buyers, in an unstable market. I watched as prices have come back down and entertained the same thoughts. Often I wondered whether I was questioning hard enough.

Which brings me to this; Today, December 1, 2009 I recommit myself to real estate. I make this commitment, because I know that there are opportunities for many folks that will enrich their lives if they make GOOD decisions. I make this commitment because somebody needs to be willing to ask the questions, even when it results in a non-sale. I make this commitment, because there are too many vacant houses dragging down the values of all and filling them will lead to improvements, jobs, and an improved community. I make this commitment, because too many people put their homes on the market and are inconvenienced when their house won’t possibly sell.

For the rest of this year, I will be writing about some of the tools that may help us fill or replace these homes and take advantage of the opportunities that exist, not just for a select few, but a large number of people. I would appreciate your comments and suggestions for tools to discuss.

Thanks,

John

PLAN NOW OR PAY LATER

2009-11-16T15:41:00.000-05:00

I just opened this page to write this post when one of my team called me to see if there was anything that could be done to help in a specific situation. Her phone was not working correctly last night and she has apparently missed out on a potential sale. She was of course upset, but this is the way the real estate business works. When you can’t or don’t answer your phone it is likely that a prospect moves on.

My post today is about other opportunities in real estate which may require action to make the most of them, specifically, the tax credit. I know what you are thinking, I’m a real estate agent and of course I’m going to say you need to rush, and there may be some truth to that.

However, as a real estate agent, I also know what just happened in October, when people who had put off the decision to buy their first home, were writing competing offers, and sellers were holding fast to their price even when there were no other offers. Right now, we are in a buyers market in our area at all price ranges. The advantage a buyer has over a seller is small at the lowest price ranges, but still a buyer’s advantage.

In the month of October I believe we were, and again will be in March and April, in a seller’s market. There will be competing offers and sellers holding fast to prices, knowing the tax credit will be lost if you turn them down.

It’s your decision, but isn’t it worth $6,500 to $8,000 to do a little planning or will you miss out when opportunity calls?

TIMING HOME PURCHASES

2009-11-07T00:39:00.002-05:00

Much has been said today of the first time homebuyer tax credit extension and expansion to current home owners. For details, I suggest this as the most complete. NAR

Zip Realty TV

Aside from the money, what does the tax credit mean to you and why worry about it now? The expectation is to keep the housing market moving in the right direction. After all, doesn’t it make sense that if you might buy a home in the next 18 months or so, that you do it while you can get the gift of a tax credit? Why would you leave that money on the table?

However, keep in mind that that “right direction” is more of what we are seeing in the lower price ranges, with competing offers, and fewer concessions on homes that may be gone before you see them.

Here are some additional reasons to think about the tax credit now:

New construction
For anyone that wants to build a home, it is important to understand that the process from contract to closing often takes in excess of six months. The actual construction is only a part of the time that goes into the process, with permitting and county inspections absorbing up to two months while customized plans, selections and title work easily can absorb another.

Contracts for a home to be built in time to take advantage of the tax credit need to be in place before the end of the year. That means there are about 45 days to choose a community, builder, lot and plan.

Buyers that must sell a home
No one can say how much time it will take to sell your home. Each situation is a little different. It’s hard to say how long sold homes have been on the market. Through a quirk in our MLS system those numbers are hard to come by, because “days on market” refers to the current listing period only.

We do know that there was approximately an 8 1/2 month supply of homes on the market at the end of last month, assuming last months rate of sales would continue. Even in the faster moving under $200,000 market, there is approximately a 6 month supply.

Even if you don’t want to be on the market during the holidays, now is the time to sit down with your REALTOR® and put together a plan. Waiting may cost the $6,500 tax credit.

Homes that will be financed
Interest rates are near historic lows. How long that will last is anybody’s guess. If we are indeed in a recovery, as it appears, some inflation is to be expected and that means higher interest rates.

Higher interest rates translate into decreased buying power for purchasers. For sellers higher rates mean fewer people can actually afford the home.

Only you can decide what is best for you and your situation, but now would be an excellent time for you to sit down with a REALTOR® so that you have all of the information to make a good real estate decision.

Market Stability?

2009-11-05T09:25:00.003-05:00

Much has been made of some recent reports that show increased housing sales for 8 straight months. There will be another report in about a month that shows 9 straight months. After the October numbers, I'm not sure what we will see, but more than likely an increase over last year, and a seasonal (and end of initial tax credit rush) decline from the previous month.

Let's not forget that the market has two parts, with everyone focused on the demand side of the equation, the supply side is often forgotten. The pundits are saying that there are more foreclosures to come on the market and we can be confident that there are, even if we don't have a good picture of the numbers. I would balance this with the sort of pent up demand waiting for good economic news or a feeling that the housing market has bottomed.

In other words, supply and demand work together to give the market stability. So what is happening on the supply side? The inventory of available homes is shrinking, in some markets very significantly. So while we are not totally there, we seem to be headed towards some stability.

Comparison of the major markets covered by Zip Realty. Chart

A recipe for your new home

2009-11-02T14:26:00.000-05:00

A question came up the other day concerning the practice of real estate agents sending out recipe post cards. I know the theory is to stay in touch and build a brand, but what is the brand? Why would you want to be in touch with someone who sends you recipes for things that you may never want to eat much less make. If you did decide to make something and had a problem, can that real estate agent help?

The real question should be how can this agent help you buy or sell a home? Have they shown that they are familiar with the market (real estate not food)? Are they in dozens of homes each month? Is there an indication that they are a professional? Can they negotiate? Can they discern your needs? Are they willing to work for you?

I’m sure you get all the unsolicited and irrelevant recipes you need from attorneys, bankers, accountants, doctors and dentists, so I’ll try to stick to information that impacts real estate.

So you want to buy a foreclosure

2009-10-28T19:11:00.003-04:00

Every one wants the best deal, and let's face it we hear all the time how foreclosures are the best deals. Some one thought we ought to know. Have fun:-)

Getting the best price on your new home

2009-10-26T19:30:00.003-04:00

The seller sets the list price of a house with the aid of their agent. In Richmond, VA this usually is very close to the selling price of the home, but not always.

The first step in the process of obtaining the best price is to learn about the values of homes and how different neighborhoods affect those values. This process starts with a broad exposure to homes in the market so you may judge value for yourself. Once you have an idea of the value of the market in general there will be an examination of current pricing trends and of the effect of the location of the home in a neighborhood.

The information above will allow you to determine the value of the home for yourself. Now is the time to consult a REALTOR® to see how the market is corresponding with the value you place on the home. To do this you need a comprehensive Comparitive Market Analysis. Much like an appraisal the CMA will let you know what other people are likely to be paying for the home and it may or may not agree with the list price.

If this is the home that you definitely want then the best price is the one that allows you to purchase it without giving away your money. Armed with the information on pricing above you will know what that number is so that you can negotiate for that amount.

Real Estate Agency

2009-10-24T12:31:00.000-04:00

This is a summary list of the duties owed the client in a real estate agency relationship.

Reasonable Skill and Care
Arriving at a reasonable purchase price and advising client of such
Affirmatively discovering material facts and disclosing them to the client
Investigating the material facts related to the sale.

Loyalty
The real estate agent must act in the best interest of the client

Obedience
Must follow the lawful instructions

Disclosure of all material facts
Examples but not limited to:
Relationships between agent and other parties
Existence of other offers
Status of earnest money
Seller's financial condition
Property's true worth
Commission split with other brokers

Confidentiality
Any discussions, facts, or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties.

Accounting in dealings
Reporting of where any money placed in the hands of broker is kept.
Copies of all documents pertaining to contract.

On the other hand when you are an unrepresented buyer, the agent only needs to be honest with you, disclose that they are working for the seller, and most importantly sell you the house.

Why have an agent?

2009-10-24T12:22:00.000-04:00

You probably know that not everyone wants to have a real estate agent, and that is perfectly o.k., as long as the decision is made knowingly.

In the example of a journey, I have taken minor trips to a place I haven't been before and simply let the local events and culture guide me, with the result being a good time. However buying a home is not a minor trip, it is more like a long journey, half way around the world, where the consequences of not planning or not having accurate information, could lead to many unpleasant surprises.

Lets take a moment and review, what the implications are for going through the process of buying a home with no or partial representation (customer) versus full representation (client).

CUSTOMERS are SOLD, CLIENTS are REPRESENTED.

Look at a scenario that occurs everyday. A buyer walks into an open house or a model home, they are greeted by an agent that quickly tries to establish some rapport. After the agent is able to establish rapport, they start to ask some probing questions, about what the buyer is looking for, and their ability to buy the house that the agent is selling. The questions will include such things as features, price range, mortgage qualifications and on and on.

Now it is the job of that agent to utilize the information they gather to sell the buyer the house, or one of the builder's houses with terms that are favorable to the seller. If the buyer has volunteered that they can afford the list price or more, and offers less than the list price, it is the legal responsibility of the agent to relay that information to the seller, so that the seller can negotiate price and terms favorable to themselves. On the other hand, if the seller is willing to take less than list price, it is the legal responsibility of the agent to withhold this information from the buyer.

Many times the buyer does not even know that this is occurring, because the seller's agent has established rapport and is working with the buyer to solve any problems that might prevent the buyer from purchasing the house.

Nevertheless, in this scenario, while the agent is working with the buyer, they are working for the seller and will represent their client's best interests, in this case selling a customer a home.

Picking a Buyer's Agent

2009-10-21T18:23:00.000-04:00

We discussed types of representation, and the reasons to have an agent, but how do you pick an agent to help?

Unfortunately, most people pick the agent that has a home for sale that they are interested in. Of course, that agent already has a relationship with the seller and a duty to sell the buyer the house.

The better way to pick an agent is based on 3 criteria, their skill, their integrity, and the strength of the services they will provide. In the example in the last post, we chose number 4 over number 3 because of that travel agent's ability to perform based on his skill and knowledge of the area, or in other words a stronger service than the local agent. The result an extraordinary experience.

Buying a Home…Why get help?

2009-10-21T10:08:00.001-04:00

You have already decided that you would like to purchase a home. So the next decisions concern the type of agency or representation you desire, and who you want to have an agency relationship with.

The first decision is agency and whether you want full or partial representation. In the first message we discussed the similarity in home buying decisions and those made in preparing for a journey.

A few years ago my wife and I took a trip to Australia. When we made the trip we had some choices to be made. 1) We could have just flown over and picked hotels and drifted around. 2) We could have done some research and selected and called hotels and other destinations from home. 3) We could have gone to a local agent that had some of the information, and let them book for us. 4) We selected an agent that was intimately familiar with the areas we were interested in and had them select an itinerary based on criteria we discussed with him, and then book it after we approved.

In the first example we would have had no representation. In the second instance we would have had partial representation. Finally, in the third and fourth instance we would have had full representation, which is what we chose. In the full representation model, the travel agent gave us information ahead of time so that we could make good decisions.

Home buying

2009-10-20T17:12:00.001-04:00

Buying a home is a lot like a long journey.
Before and during the journey, there are decisions that will impact everything that follows. Good decisions mean a journey that is rewarding both during the remainder of the journey, but also afterward in memories. Bad decisions could mean a disastrous trip that may even be aborted before it starts.

In purchasing a home, good decisions mean a smooth process for achieving your goals and the rewards that follow when living in your new home. A bad decision could mean not being able to purchase the home you desire, or quite possible any home at all.

There are literally dozens of decisions that you must be prepared to make. Some of the more common decisions concern:

Mortgages - which lender, which program, government backed, conventional, how much, how long, what rate…
Insurance - homeowners, homeowner warranties, title insurance, changes to life, health and disability insurance…
Terms - what's offered, what's needed, what's reasonable…
Offers - how to structure, how to present, what to include, what to avoid…
Closing - when, where, who does it…
Attorneys - should you use one, should you save the expense, what is their role, who is good, whom to avoid…
Agency - what type, what who to use…
Purchase price - how much, what is the home worth on the market, what is it worth to you, what is too much…
Earnest money – how much and what risk
Escrows – who holds
Moving companies – do it alone, use a local, national
Counter-offers - how to get what you need and want

Very few people make these decisions often enough to have a process developed for good decisions. That is why it is very important to start developing your plan now.