Some Agents Just Keep Bidding UP

Some agents get the listing by inflating the value of your house.

Or they may simply go along with “your” unrealistic price without objection. This is what’s known in the trade as “buying the listing.” The agent figures that you’ll eventually give up and give in and place a real price on your property. If you let this happen, it’s really your own fault.

Don’t be fooled! You need for your agent to be straight with you from the beginning. This means you should receive from every agent you interview a “supportable” opinion of value based on recently sold properties in your neighborhood; exactly what you would demand if you were a buyer. An honest agent will give you a “range” in which your house should sell.

If you price your house too aggressively high it will take longer to sell and you will probably will receive less in the end. If you take too long to reduce your price, your house can get stigmatized with prospective buyers wondering what’s wrong because your house has been on the market for so long.

In the end, ready, willing and able buyers  determine value … not sellers and not real estate agents. And sometimes it isn’t even the buyer who determines the price, but rather the mortgage company’s appraiser, who can come in and find a value for the property that is significantly different than the contract price.

Rather than pick an agent based on which one promises you the highest price, why not look at the agent’s marketing plan.  You want an agent who understands and “gets” your house.  I talk to my sellers about how I plan to tell the story of their home and to communicate that story to prospective buyers.  I believe that each property has special qualities that make it appealing to buyers.  In the case of a condo that I sold recently along Connecticut Avenue, the story was the old world elegance of the building and the condo itself. The website that I hosted for the property, www.2737devonshireplacenw.com, brought out that feeling in buyers and it sold within three days with a full price offer.  

Does the agent plan to make a video tour of your home?  We all are so conditioned to twenty second sound bites and visual stimulation! It only makes sense to put together a video tour of your home in order to hook buyers into the emotions of your home.

Don’t sell your home to the highest bidding realtor – Your home and you deserve better than that!

Tweet This Post

A recent survey by the National Association Realtors showed some surprising results in the attitude of recent homebuyers.

An eight-page questionnaire was sent out to over 100,000 consumers who had purchased a home between July 2008 and Jun 2009.  They were asked to rank the usefulness of certain information sources typically used by Realtors® to market homes.  When asked which information sources they found to be useful consumers ranked as follows: 

 Real estate agents 81%

The Internet 77%

Yard signs 42%

Open houses came out low in the ranks with 10% of buyers finding them to be very useful and 25% said that they were somewhat useful. 

But where are buyers actually finding the homes that they eventually buy? 

• 36% found their homes on the Internet
• 36% discovered the home from a real estate agent
• 12% from yard signs

 Only 4% of buyers said they found their homes via newspapers, home books, magazines and television.  

Many realtors still find open houses to be a good way to meet the public as well as an effective way to expose homes to buyers.  But according to this latest survey – consumers, apparently, do not agree.

Tweet This Post

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA). Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why: On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965.

Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly. Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

Tweet This Post

House or Heart?

Beginning Steps for First Time Home Buyers:  

You need to find out how much you can afford. Can you qualify for a loan? Do you have enough money saved for a down payment? What type of loan programs are out there? Which one is best for you?  Do you talk to a bank or a broker?

THE FIRST PIECE 

In order to figure how much you can afford you need to take a look at your income and expenses. Do you have enough left over at the end of the month to make a mortgage payment? If you’re renting you probably already have a certain amount of money budgeted.  How does that amount correlate to a mortgage payment for the size or type of home you want? There are mortgage calculators out there that will help you estimate how much you can spend.  

PLEASE BE CAUTIOUS HERE!

BEING HOUSE POOR IS NO FUN!

JUST BECAUSE THE BANK WILL LEND YOU THE MONEY  DOESN”T MEAN YOU SHOULD BORROW THAT MUCH. THINK ABOUT HOW THAT MORTGAGE PAYMENT WILL FIT IN YOUR BUDGET.

PIECE TWO

 The first thing in qualifying for a loan is your credit rating. Most lenders use the middle score to figure your credit rating. They get this figure by taking the credit score from all three credit reporting agencies and picking the middle one. If your credit score is too low, then you have some work to do before you go looking for that new home.

The second thing in qualifying for a loan is the ability to pay it back. So your debt-to-income (DTI) reflects whether you are a good risk or not. If your expenses are higher than your income, you need to lower those first.

THE THIRD PIECE

Look at your savings account. Do you have enough money saved for the down payment? If not, then you may need to consider down payment assistance or grants to help you. Or perhaps you may need to set up a savings plan to help you save for that down payment. FHA permits borrowers with good credit to get a mortgage with a down payment of only 3.5% of the total sales price.

THE FOURTH PIECE

Take the time to interview two or three loan officers and ask them lots of questions about the programs that they offer.  Ask them which program they recommend for you and why. It is definately a good idea for first time home buyers to be educated on the different types of loan programs out there to see which one is a good fit for you. There are programs that have low down payments, ones that are best for buying in suburban areas, ones that have low interest, and many more. It never hurts to be educated.   If you don’t know which loan officers to talk to, ask your realtor.  I always have several to recommend to my buyers – experienced and hard working lenders who are committed to making sure my buyers have a stress free transaction that closes on time.

THE FIFTH PIECE

 You will have to choose whom you’re going to use to get your mortgage. You may decide to choose the lender who gives you the best service, or the best program, or the lowest rate.  Shop around and know your options.  A good lender will save you money and a lower rate will save you thousands of dollars over the life of the loan.

Tweet This Post

Welcome to 6615 Hillandale Road

3 Bedrooms

Tweet This Post

Nine options when facing Foreclosure

1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.

 2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.

3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6. Partial Claim – A loan from the lender for a 2nd loan to include back payments, costs and fees.

7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.

8. Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.

9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.

Tweet This Post

Based on recent sales in the neighborhood, we agreed that the house was optimistically priced – i.e. overpriced.   My buyer decided to make an offer for the house that was approximately 8% less than the asking price but actually almost 1% MORE than the most recent sale that had taken place in the neighborhood.  We submitted the offer, with a letter from a lender saying that the buyer was financially well qualified and did not need to sell his home in order to purchase this new home.  The buyer asked for settlement to occur 90 days after settlement and asked for the seller to leave the Murphy bed that was attached to a wall in the basement bedroom. 

After waiting three days and being promised a response momentarily, the seller’s agent called to tell me that the seller was not going to respond at all because the offer was too far off.  The seller did not want to leave the Murphy bed, wanted an earlier settlement date, and was not willing to accept our offering price. I asked why the seller didn’t just say that the Murphy bed did not convey, name an earlier settlement date, and counter on the offering price.   The seller’s agent repeated that we were too far apart.

I confess that I was nonplussed that the seller wouldn’t counter at all. To my mind, we had made a very fair opening offer.  It was $5000 more than the most recent sale (and that house was updated with a new kitchen and baths) although the house for sale was 50 feet bigger than the one that had sold.  We had offered a non-contingent offer with a qualified buyer and a longer settlement date, picked out of respect for the seller’s age.  (The seller is moving from her home of 20 years into an independent living facility.)

After waiting two days, my client reopened the negotiations with a new offer.  The settlement date was changed to 60 days, the Murphy bed was struck from the initial offer and the offering price was left unchanged.  The buyer was not willing to counter his initial offer on price and bid against himself before the seller made a counter offer on price. 

Three days later, the seller countered.  The settlement date was cut down to 45 days and the price counter was about 2% less than the asking price.  The seller also asked for an increase in the earnest money and to shorten the time for the house inspection and the radon inspection.

My client is still hanging in there, so we countered again. The buyer was willing to settle on the seller’s requested date, increase the earnest money, and do the house inspection in a condensed time frame.  He also was prepared to make an offer that was very close to the top of his ability to pay. 

We talked about the nature of the seller’s personality and whether the seller would need another counter to be satisfied.  I thought that the seller had at least one more counter to give.  Therefore we made an offer that was slightly less than he was actually willing to pay so that the seller could make an additional counter.  

I will keep you posted on how it turns out.

There are several things to keep in mind when negotiating to buy a home in the DC area. 

1. Try not to go back and forth more than twice. Don’t annoy each other by prolonging the negotiations.
2.  Focus on the strengths of the offer – is it non-contingent? Is the buyer qualified?
3. Find out what is important to the seller and what is important to the buyer.
4. Don’t get lost in the minutiae of the offer.  You can counter on settlement date, price, terms.
5. It is important to keep talking and moving toward closure.
6. Eliminate each area of conflict one at a time, and focus on the ultimate goal of resolving the difference.

If you want to buy or sell a house in DC, Bethesda, or Chevy Chase, give Lise Howe a call. After years of negotiating for the US Government, she can negotiate a successful transaction for you too!

Tweet This Post

What Can You Expect from a Professional Home Inspection?

What Will the Inspector Inspect?

What can I expect from a professional home inspection is a question most buyers ask during the home buying process.  The job of a professional home inspector is to look over every major part of the home and prepare a report for the buyer’s use.  The usual components of a home inspection focus on the structural and mechanical properties of the home.  In the DC metro area, homes are sold either “in working order” or in “as is” condtion.  If the house is in “as is” condition, then the seller is putting the buyer on notice that the seller will not make any repairs to the property. Accordingly, the buyer should have a home inspection prior to buying the property to understand the condition of the property.  If the property is not being sold in “as is” condition, then the seller is saying that the heating, plumbing, electrical and appliances are all in “working order.”  If anything is not “in working order,” the seller will correct the defect by repairing the item.

For example, if the dishwasher leaks, it is clearly not working correctly.  A leaking dishwasher is covered by the property condition language of the contract, and as long as the house is not in “as is” condition, the seller must repair the leak.  However, a scratch in the dishwasher door does not affect the functionality of the dishwasher and so it is not covered by the working condition language of the contract  The buyer can ask for the scratch to be repaired under the house inspection contingency, but the seller is not required to repair it because the dishwasher is otherwise in condition.  

On the day of the inspection  it is very important to for the buyer be in attendance and to follow the inspector as the home inspection takes place.  That way when the home inspector finds a problem he can clearly explain the issue. In addition, the inspector will give the buyer helpful maintenance hints for the  new house and identify important parts of the house, such as the location of the main water valve or the hose bibs.  

SO WHAT IS COVERED BY THE HOME INSPECTION?

EXTERIOR home inspection items

•  foundation – holes, cracks
•  gutters and downspouts – gaps, sagging
•  siding – warping
•  paint – peeling, blistering
•  windows and doors  - cracks, loose caulk
•  roof – worn spots
•  chimney – loose bricks, stone; tilting
•  driveways, retaining walls, and walkways – sagging, cracks
•  land – proper water drainage

INTERIOR home inspection items:

•  general structure – soundness, rot
•  floors and stairs – squeaking shaking
•  plumbing system –  general condition, leaks, clogs
•  heating and cooling system – condition
•  electrical system – condition, proper grounding
•  insulation – thickness, efficiency
•  walls – cracks
•  kitchen – age and condition of appliances

Most inspectors also will note the presence of mold, if it is seen, and asbestos (which is frequently present in old floor tiles, some siding, and insulation around heating pipes.) However, a house inspector is not typically licensed as an environmental inspector.  If there is a concern about radon, mold or asbestos, then an additional inspection should be scheduled.

Similarly, a house inspector is not an electrician or a plumber. The house inspector is qualified to identify issues or defects, but will occasionally suggest that a “specialist” be called in. 

The Home Inspection Report will be used to create a Request for Repairs to be sent to the seller.  It is up to the buyer to decide which items from the home inspection will be asked to be repaired.  This is part of the continuing negotiation process between the buyer and the seller.  

TODAY BRONWYN AND I SPENT NEARLY 6 HOURS AT AN INSPECTION

Usually home inspections are shorter than that – more in order of 3 hours.  However, the property that was the subject of the marathon inspection was a property with a full rental unit in the basement – which required a double inspection.  Since the property that we inspected today was a “short sale,” it is being sold “as is,” and the seller will not make any repairs.  Short sales  frequently are “as is,” because the seller is typically very short on cash.  The inspection is particularly important in such a situation because the buyer really needs to know what he or she is buying.

I confess that I don’t follow the inspector around anymore. I have watched too many inspections through the years, heard the same inspector jokes, and learned the same tips about home maintenance. Now I being my laptop and hope for connectivity somewhere. However, if there is an issue, I am there to see it so that I can explain it to the listing agent.  If I am representing the seller, I always go to the end of the house inspection so that I can show the seller what the seller has identified and which repairs should be made where.

Lunch was definately fun with my client. During the house inspection, he was hungry so we quickly went to a nearby Jamaican restaurant, the Mango Cafe, for yummy jerk chicken. The rice and beans were VERY spicy, but it all was easily washed down with some ginger beer. So DELICIOUS!!

Tweet This Post

Jaguar Convertible or Jeep

I never got the Jaguar although I drove a Jeep for years, and since they both start with a “J” it seemed that I was almost there. I did end up selling million dollar houses, but that was after the market had tanked in 1989 and 1990, and I was selling them for $400,000 instead.  I didn’t develop a taste for bonbons though, but two out of three isn’t bad. 

I also discovered that there is a lot more to being a Realtor than just driving around in a pretty car and popping bonbons.  Some days my family doesn’t even have an idea of how I spent the day.  So…. I decided to start this diary to explain what a realtor does all day and to review how I spent the day.  I hope for you, the reader, it will be interesting and informative. For me, it should be a kind of accountability.  

With that sense of optimism, here it goes!

TODAY, October 27, 2009, is probably not a representative day to start a diary.  This morning I took my dog to the vet at Friendship Animal Hospital for a monthly shot because he has Addison’s Disease.  Who knew that standard poodles are predisposed to Addison’s? Fortunately the vet at Friendship over a year ago knew that.  Now we go to the vet every month which he loves because he gets treats there non-stop so he doesn’t misbehave, bark, or lunge at other dogs.

Poirot and my daughter, Lise Courtney

After the trip to the vet, I stopped at my office at Coldwell Banker on Wisconsin Avenue.  We are remodeling our office, which promises to be a new and incredibly exciting space. No more cubicles! They have been replaced with a lounge, zebra striped chairs, sofas, a coffee bar, and communal work tables.  Our manager, Darrin Friedman, promises that this will be Kinko’s meets Starbucks.  Since we have been living in chaos for the last two weeks, we will be happy to see the end results. 

I wanted to check my office, which was being painted “Hawaiian Blue” this morning.  Thanks to a suggestion by Bronwyn Mathis, my assistant, the two end walls were painted with white board or dry erase so that we can keep track of listings and sales in progress, make sure we are in contact with our clients on a regular basis, and monitor all appointments on a massive calendar.  Happily, the color is exactly what I wanted and the white board paint works.  (The outer office has a big blackboard for writing notes to each other, but I really prefer our white board! No chalk dust and it is so much brighter!)

My office is childishly signficant to me. Even though I was consistently a significant contributor to the bottom line of my previous real estate company- always in the top five in production and sales- I never had my own office.  Now that I am at Coldwell Banker, I have my own office, an assistant and a buyer’s agent.  As a team we are so much more productive – exponentially so – than I was as a single agent in my old company.  The happy Hawaiian blue walls and white board establish the style that I want the office and my team to project – warm, comfortable, welcoming, peaceful, and very productive.  With the white board, we will always be able to monitor productivity and the  positive direction in which we are moving.

Once I was wowed by how great my office was looking, I went to Herndon, Virginia with my buyer’s agent, Janet Rushford, to attend part of the REBarCampDC.   It is hard to explain exactly what REBarCamps are - a collection of realtors and vendors who believe that technology can make a signficant contribution to the real estate industry.  Janet and I attended a presentation on the use of video tours in real estate.  The consensus of the group was that video tours should be no longer than 3 minutes, although a second  and longer video tour can be posted along side the shorter one for anyone who is very interested in the listing or neighborhood.

Several people there reminded me of some tax attorneys I have known because of their delight in debating how many angels can dance on the head of a pin.  The people at REBarCamp sidetracked the presentation to a discussion of whether agents can post videos on line of other agents’ listings. I think that the end conclusion was that it depends on state law, and the NAR code.  It seemed to me that it is inappropriate for an agent to post another agent’s listing on the Internet without getting the listing agent’s consent.  Generally an agent is delighted to have another agent include photos and information about the listing on that agent’s website or blog, as long as the listing agent is clearly identified.  I still am not sure why we wasted five minutes in such a non-issue.

After this angels on the head of a pin discussion, Janet and I decided that the office was looking even better than before as a destination, so we left before the next presentation on the use of statistics in marketing. After a quick stop by the office to watch the paint dry, I pulled my laptop out of my bag to settle in for some real work.

Much of my day is spent in responding to emails and reaching out to new clients.  Today we received several inquiries from Homegain buyers and sellers which had to be answered with offers of our services, including a set of properties available that match the buyer’s criteria or a description of our marketing plan for the seller’s property.  Inquiries from buyers visiting my website www.homesinchevychasebethesda.com require that we set up a search for those buyers with daily notifications of new listings. 

A current client needed the name of a handyman, while a new contact that I hope will turn into a client needed a painter.  I shared the name of my handyman, Mike Sanepour, with first client, and called my painter, Pete, to make sure he was taking new business. 

In the meantime, Bronwyn  scheduled a house inspection for tomorrow and tried to track down a missing electrical permit.

Now it is 10 oclock  and I have finished studying high school chemistry for a test tomorrow that I fortunately will not be taking. I am going to end this first day’s effort so that I can respond to some more buyers on HomeGain. Hopefully there will be more business for me tomorrow!

Tweet This Post