November 24th, 2014
Thanksgiving is more than my favorite holiday. It reminds me that I have so much to be thankful for, because in our busy lives it is easy to forget to be thankful all the time. Like me, I hope you take some time off this week to be with those who are important in your life.
So this Thanksgiving, think of all those people in your life who enrich it, all the experiences and opportunities that make it beautiful, and the many blessings that you have every day. Thank you for being a part of my expression to the world through my writing – I appreciate all my readers because you give me a reason to write.
From my home to yours, I wish all of you a very happy Thanksgiving. May it be filled with love, laughter, lots of good food and most of all, peace.
November 21st, 2014
Today on Twitter a follower made a comment about the benefits of having a home pre-inspection prior to listing a property. There are some agents who recommend doing so and it can be a good idea. However there are also agents who would not recommend doing so because it could open up a can of worms for the seller. I thought it would be a good idea to look at the benefits and disadvantages of having a pre-inspection.
Issues with the Home that the Seller may not Know About Could be Revealed in a Pre-Inspection
Benefit: A pre-inpsection gives sellers an opportunity to repair/remedy any defects or problems that are discovered, in order to present a home to the buyers that has been well cared for and has no deferred maintenance. This means there will not likely be any surprises when the buyers have their inspection. Oftentimes inspectors discover issues of which the sellers were not aware. Most buyers will ask the seller to repair such issues or credit them through escrow so they can do so after closing, or even reduce the price because of any issues. A pre-inspection could eliminate any surprises, but keep in mind that the buyers still may have their own inspection (something I always recommend), and it is possible that their inspector may discover other items.
Disadvantage: There could be some major issues discovered that the sellers did not know of, that could cost a lot of money to fix. If the sellers do not have the funds or do not choose to repair such issues prior to sale, they now are aware of these problems, which means they must disclose them to buyers. Disclosure of know factors affecting the property is required by law. One could argue that no matter whether the buyers are told via disclosures that there is a problem, or whether they discover it themselves through a home inspection, they will still likely seek repairs or a credit, so it may not matter either way.
The one problem I see with having a pre-inspection is that if something major is discovered, meaning the seller has to disclose it, it could affect the value of the home (depending of course on the issue). For example, say there is a crack in the swimming pool, or the roof needs to be replaced. These could be costly issues to fix, and could detract from the value of the home. The seller can turn it into a positive and deduct the repair costs from the value right off the bat if aware of issues, OR if not aware of such issues and presented with a repair request by the sellers, it is possible the seller may be able to negotiate a price under full repair costs.
A Special Note About Termite Inspections
It is important to note that this month there will be a big change to the California Residential Purchase Agreement (RPA) regarding termite inspections. The current contract has an addendum called the Wood Destroying Pest Addedum (WPA), which normally specifies that the seller is responsible for Section 1 items – damage caused by pests. This would include dry rot on wood and fumigation, which could be costly. The new RPA eliminates the WPA, so it will now become a repair issue. This means that the buyer will be responsible for paying for a termite inspection, and any issues discovered will need to be negotiated with the seller, along with any other non-termite repair issues.
Keep in mind that a buyer can write something different into the contract, such as sellers are to pay up to a certain amount, if necessary, for any termite work discovered. If sellers have a termite inspection prior to listing and discover any issues, they can inform the buyer up front in disclosures so that the buyer can negotiate those repairs or decide what action to take. I will be suggesting to my sellers to have termite pre-inspections, as I feel it could eliminate potential problems. It also allows the seller to choose a reputable termite company.
I suggest always to discuss the above with your agent before listing your home so that you are aware of your rights and can make an informed decision.
November 18th, 2014
Every now and again something terrible happens to a real estate agent, reminding all of us just how dangerous our business can be. The tragic death of Arkansas agent Beverly Carter in late September, murdered by a potential client whom she met to show a home, made agents think about safety precautions. Similarly, I remember years ago an agent in the company I worked for was brutally attacked and raped at a vacant house – again, she was meeting a potential buyer there.
The nature of a real estate agent’s job means that sometimes he or she will need to meet unknown persons to show property, but there are ways to be safe and still do our job. Here are 9 precautions that every agent should utilize to keep as safe as possible.
1. Meet potential clients at your office or a neutral place. Meeting an unknown person at a home could be deadly. Suggest having the person meet you at the office and sit for a while to discuss the property/properties you will be viewing. If you feel uncomfortable at all trust your instincts, and do one of the following.
2. Tell someone your plans – addresses included, and identify the persons you are meeting. Provide the name of the person(s) you will be be with (see number 4 below)
3. Have another agent or other person go with you. This is always a great idea and probably one of the easiest ways to protect yourself. You can reciprocate when that person has a showing one day. Find someone in your office with whom you can team up. If that is not possible or if you work alone, you can find a showing buddy from another company, or a friend, neighbor or spouse.
4. Get a copy of the client’s driver’s license, and tell them it is office policy to protect agents (it should be – discuss with your broker). If you met them at your office this is easy to do. If not, snap a photo of it with your phone and send it to a colleague and someone close to you, along with the address where you will be and the time.
5. Have someone check in with you via cell phone – either by calling or texting. Make a plan as to how often someone should call to check up on you, and what that person is to do if you do not answer.
6. Always have your phone in your hand during showings. Pepper spray is another good idea.
7. Never walk in front of the client – hold open the doors and let them go first. Stand outside rooms while they wander in.
8. Do not include your photograph in advertising material – I know many agents feel they need to do so, but it is not a smart idea. Criminals can choose you based on what you look like, and then call to schedule an “appointment.” Better to be called because someone really is interested in a home, not because they like something about the way you look and want to harm you.
9. Trust your instincts. This is by far the most important bit of advice. If you feel uncomfortable at any time you need to either get out of there or find someone to join you.
November 11th, 2014
The final walkthrough is a necessity for buyers purchasing a home, but many buyers do not understand the purpose of the walkthrough and there are many important aspects to getting it completed correctly in order to protect their legal rights.
First of all, it is important to understand that the final walkthrough is NOT a contingency to the sale, so in other words if a buyer discovers something at the walkthrough and all contingencies have been released the buyer does not have the right to cancel the contract at that point – doing so may put the buyer in breach of contract.
The purpose of the final walkthrough is threefold:
1. Make sure the home is in the same condition as when the offer was made
2. Check to see that any negotiated repairs were completed as agreed
3. Make sure seller has completed any other obligations under the contract
Of course, it is possible that things will be discovered during the walkthrough that give the buyer certain rights against the seller. If this occurs, there are 2 things the buyer needs to do in order to preserve her legal rights against the seller after closing.
How to preserve your legal rights after close of escrow when issues are discovered at the walkthrough:
1. Indicate on the walkthrough form (which in California is called the Verification of Property Condition, or VP for short) specifically what the issue is (e.g. seller did not make __ repairs as specified in the contract).
2. Have an attorney write a “right to reserve” letter to the seller and his agent, specifically identifying the issue(s) that were neglected. An agent can do this as well, but since most agents are not attorneys the agent needs to make sure he or she does so correctly. The California Association of Realtors has a library with examples of these letters. Make sure the agent runs it by her broker for approval before submitting it.
If the buyer has completed the above steps then s/he will be able to pursue legal action against the seller after closing. Of course, the first things that should be done is for the agent to discuss any issues with the listing agent – many times the seller will simply take care of them. Make sure to still complete step 1 above just in case.
Buyers have many legal rights when purchasing property, especially in the state of California (a pro-buyer state). It is important for all buyers to understand each and every part of a real estate transaction, and how it will affect his or her rights. Staying legally protected is not hard if you start off with a smart and savvy real estate agent who can help steer you through the process from beginning to closing.
November 6th, 2014
People always say you can’t choose your neighbors, and for the most part this is correct. I suppose if you did want to choose your neighbors you could purchase a new construction home and have friends and family purchase on the same street. But the reality of that happening is of course slim. So when you buy a home you may try to meet as many neighbors as possible prior to signing off on all the paperwork, but of course you never truly know someone from just a meeting, so most of it is left to chance. The same is true of co-workers and bosses, and for real estate agents.
I have worked with many agents since I started in this business, and many of them have been pleasant and professional, kind and cooperative. That obviously makes the entire transaction process a much better experience for all involved, including my clients and myself. It is so wonderful to be able to work with someone who returns calls, stays on top of paperwork and is willing to go the extra mile as a representative for her own clients and also as a professional.
Of course, there are many agents in the real estate business who appear to be professional but are very difficult to work with. I have a collection of names in my head, based on past experiences, whom I hope never to work with again. Of course I can only control that outcome so much – if a client wants to buy a home and the listing agent is someone I dread working with I may be left with no options….So what is an agent to do when the agent on the other side is a pain in the neck?
Here are a few things I have learned over the years that agents can do when they are in those tricky situations, in order to try and ease any difficulties or challenges:
1. Set goals/intentions from the start. If I have to work with a difficult agent I will let the agent know from the start what I expect and how I would like to work together.. I will send an email identifying a time table of all the important dates and responsibilities – including my own – and provide all contact information. I will set my own expectations as to paperwork and the best way to communicate. If the person is not someone who is easy to talk to or hard to get a hold of, I will spell out the best way to communicate. I also find out right away if there is a transaction coordinator or assistant involved, and make sure to cc them on every communication.
2. Involve the agent’s broker and your own broker. If things are challenging I will always involve the agent’s broker. I am not shy and have called many brokers. Most of them are more than willing to step in and assist with deadlines and communication. In the case where the agent IS the broker, I lay it all on the line and tell the agent that s/he needs to cooperate and communicate. Usually this works, but if not then sometimes you have to be prepared to threaten to file a complaint (luckily I’ve not had to do this). If you are an agent working for a broker, it is important to involve YOUR broker right away as well. That is what s/he is there for, so don’t feel like you have to deal with difficult people on your own.
3. Put everything in writing. One of the first things I learned in law school is that you always have to have a paper trail. I ALWAYS put things in writing during a transaction. If I speak to the other agent over the phone or in person, I follow up with an email reviewing the conversation. If things go sour and there is a complaint filed (or even worse, a lawsuit) down the road, that paper trail will be your salvation. Save all emails in a file on your server.
4. Document all communications that are not in writing. Document all phone calls – it is easy to keep a running Word doc and add to it as needed. When the sale closes save everything on a CD or a file in your system.
5. Stay professional throughout, but stick only to the facts and keep things tight. No matter how much you may want to give a nasty agent a piece of your mind, remember that doing so only brings you down to their level. Instead, use your inner strength to remain professional. Keep communications short and to the point, and remember to document everything.
No one wants to work with a unprofessional or difficult person, but we all have to at some point. As I have taught my children, what is important is how we react to challenging situations. Losing our cool and getting upset won’t help our cause at all, nor is it healthy, so keep your chin up and stay professional and positive. You can always get out your frustrations by exercising.
October 29th, 2014
Not long ago someone commented that I have the ideal job, since I am able to take time off whenever I want and live a leisurely lifestyle. Good thing there wasn’t any liquid in my mouth at the time, as it likely would have spewed out all over the commentator (pardon the image). The misperception that real estate agents have “easy” jobs is not uncommon, since we do not have to punch a time card or physically sit behind a desk all day (although there are many days I do that…and nights too). But in reality working in the real estate industry is like riding a roller coaster, with the highs and lows, periods of being excessively busy and then dead, and periods where the paychecks are coming and then stop.
The career of a real estate agent has been glorified in these last few years by all the “reality” real estate television shows. Shows like Million Dollar Agent portray agents driving expensive cars, wearing high-end suits, spending long business lunches in top restaurants and listing (and quickly selling – with little negotiation I may add) million dollar plus properties. They really look like they are living the life!
Of course, those shows are heavily edited, not to mention scripted. You don’t see the nitty gritty – the money and time the agents spend on marketing the homes, the numerous showings, all the paperwork the agents need to handle, preparation for listing presentations and meetings, inspections and negotiations over things that may come up during escrow. So, if I knew absolutely nothing about the business I can see how it might look like an ideal career based upon the shows.
The truth is that this business is H-A-R-D. If you want to be successful, you have to work your tail off, and I know I work harder than many of my friends who have jobs in other fields. I can’t come home and escape my work, because it never stops. Most people who buy and sell homes expect me to be available after hours, when they are off work…and on weekends. Sure, I could decide not to answer my phone or work when I’m needed, but then I wouldn’t be successful. The key to my success is referral business, which I will only get if my clients feel I did a job that is beyond outstanding. Many of my clients have worked with other agents in the past, and the biggest compliment I get is when they tell me their experience with me, compared to the last agent, was like night and day. (To read more about what real estate agents do, read this article.)
Today I continued to work on a major issue that has arisen in a home sale that is in escrow. The time and energy I have spent on this issue is great, and it has been very stressful for all parties involved but we are finally making progress. This morning my client said to me, “I seriously don’t know how you do this!” Believe me, there are days when I ask myself that question, but ideally there are two things that keep me on the roller coaster:
1. I love my clients. I really do. Buying or selling a home is not only a big decision, but it is also an emotional one and it has legal ramifications. I feel good that I can offer advice and guidance to clients so that they can get through the process and feel great when it’s over. I love seeing them happy in the end, and that is my goal. It means I have to work hard to achieve the end result, but it also means that I end up with new friendships. I have met the most remarkable people working in this business, and it has been a pleasure to help them.
2. I have to keep making a difference in this industry. If you are a regular blog reader you know that I dish out frustration with the real estate industry and the lack of adequate training for agents. Sadly, there are a lot of agents who either don’t really care about their jobs, or do not realize that they need better training and skills to work in this industry. I know that my dedication and skills do make a difference, and if I can help improve this industry and the reputation it has, one client at a time, then I am making a difference. Like I always say, if you don’t like what you do, than do something else, because it shows. [As an aside, I have had other agents tell me they “hate” being agents…I wonder if their clients know that -?]
I think my ride on the real estate roller coaster will last for a while, and I hope that during that time I can make a difference in the lives of those I help, agents with whom I work, and the industry in general. If every other agent, or person working in any field, does the same then together we will make a big difference in the world.
October 22nd, 2014
The last few months have been very busy for the real estate market. Many areas seem to have corrected and although prices did rise through the summer it seems that now they have stabilized in many areas. The one thing that still seemed strong was demand, as buyers were still out there looking at homes and shopping. Until about a week ago.
I have noticed in the last week a drastic slow down in showings and phone calls, as well as new listings. When interest rates dipped under 4% last week I thought it would spur buyers and result in more pending properties, but that does not seem to be the case in my area. Here are some of the challenges that could be having an effect on the market:
Bond Market Collapse – Last week the bond market took a substantial nose dive. Did this create fear about the housing market? It is possible, but one has to consider that all markets are cyclical, and unless we are talking about a full blown economic crash it is doubtful that the one will affect the other.
Challenges in International Markets – There are still many European countries that are facing difficult economic times…could this create fear amongst US buyers? Possible, but again it is important to realize that our housing market just underwent a big correction and now is back on the track to normalcy, so fears about other markets outside of the US should not have an impact on whether or not a buyer purchases a home.
Time of Year – Typically the Fall-to-Winter housing market tends to be slower and include lower inventory. With the holidays and the end of the year many sellers choose not to list or take their active homes off the market. Many people are not thinking about purchasing homes at this time of year, except those who need to (and actually, if you can do it, it is a great time to sell…click here for more information)
Lack of Inventory – This definitely could be a reason why the market seems to be slowing. Summer did finally see an increase in inventory in many markets that had been in an inventory slump for a while, but there are fewer new listings now; this could be due to a variety of factors, most notably the time of year. Once the holidays have passed we should slowly start to see inventory creep up, as we head into the Spring and Summer.
Fear – There is still talk out there of a housing bubble, believe it or not. This could be creating fear amongst buyers, and in addition to any of the above categories could combine to make some think they’d better sit on the fence for a time and see what transpires. Personally and professionally, I do not agree with this viewpoint. I believe most markets HAVE stabilized, and that we have returned to a more “normal” housing market. I do not believe we will see more than a 3-5% annual price increase moving forward from year to year. Those who are in the market solely to make a profit won’t have much opportunity to do so, but conditions will be perfect for those who are purchasing with long term benefits in mind. There will always be issues and problems that could affect housing, BUT housing is still historically one of the most stable markets in which to invest.
The bottom line is that buyers need to feel comfortable when they are contemplating a home purchase. Sellers also need to feel comfortable in listing their home. Overpriced homes will not be sold in the current market; of course there are always exceptions, but in general we will not see this happen now or in the coming year, in my opinion.
The key for any buyer or seller is to get educated on the neighborhoods in which they are focusing their searches, and to really understand comparable values. Working with a skilled area agent is the first step in the right direction. Buying a home can feel scary, but in reality it should not be a difficult decision for those who understand the local market. Renting has been proven to be more expensive, but is also more risky -rents can be raised, leases can be terminated, and rental properties can be sold, leaving tenants to find another – which is no easy task.
October 17th, 2014
Most real estate agents who have been in the business a while know that not all termite companies are alike. My years in this industry have taught me a few things about termite inspection companies -
1. It is not uncommon to get reports with completely different findings from different companies
2. Although one company may find the same issues with a home as another, they may suggest different treatments and/or different prices
3. There does not seem to be any regulation in the industry when it comes to the cost of treatment
From a real estate agent’s perspective, the above facts can be very frustrating, especially when most buyer agents do not have any say in which company will perform the inspection, unless they request that in the contract and related paperwork.
One issue that has come up many times is the conflicting report scenario. Say the seller orders a termite inspection and findings indicate the home is infested and needs to be tented. For a second opinion, the seller then calls out another company and they say there is only infestation on some of the eaves, and it just needs to be replaced and treated with spray (not a tent). The seller is obligated to send both reports to you and your agent, but the seller can select which company will complete the work.
When a seller has two termite reports they are free to choose whichever company they want to do the work so long as that company will issue the clearance, with one exception: if the buyer writes into the contract that should a termite inspection reveal the home needs tenting it must be done.
It all comes down to who is responsible for the pest repairs. In California there is a California Association of Realtors (CAR) form called the Wood Destroying Pest Addendum. It specifies who is responsible – buyer or seller – for the termite inspection and any necessary repairs. It divides repairs into two categories. Section 1 reports damage caused directly by pests, such as the presence of live termites. Section 2 reports damage that is not related to actual infestation, such as wet wood that is the result of a leak under a sink. Typically most buyers’ agents check the boxes that assign section 1 responsibility to the seller and section 2 to the buyer.
One thing to keep in mind to ease any worry is that the company that issues a clearance will also provide a warranty, which usually is for one year and sometimes two. I highly recommend that the new owners call the company out before the warranty expires and have them do another inspection. This is a great way to prevent termite damage and protect yourself.
As for finding a reputable termite company, buyers can always have their agents specify which company they prefer the seller to use, or they can specify that the company be a mutually agreed upon company. This way the buyers can know that a reputable company is performing the work.
October 13th, 2014
If your home is on the market and there are no offers, it may be time to figure out why, and whether there is anything you can do to remedy the situation and get some offers rolling in. Let’s focus in on the key factors involved in selling a home – which could be reasons why your home is not selling.
1. Price: When homes do not sell, most people blame it on price. Oftentimes the assessment is correct, but don’t just jump to the conclusion that price is the culprit. Many markets these days will not support homes that are overpriced – buyers are too savvy and they have access to all the comparable properties at their fingertips.
If you have a reason to price your home above comps (amazing view, many upgrades, gorgeous yard, etc.) you need to market that so that it is justified in the eye of potential buyers. In today’s market it is always important to price your home appropriately – the first two weeks are the most important for marketing purposes.
2. Marketing: It is always important to create a marketing plan that will provide the most and best exposure for your home, and that plan should have a big online presence, as over 90% of buyers start their searches online. Find out how your agent intends to market your home, and have her/him explain why the chosen methods are best in helping get your home in front of as many potential buyers and their agents as is possible.
3. Local Market Conditions: This is one of the most important reasons a home may not be selling. It is important to truly understand what is going on in your local market – not only before you list your home but throughout the course of your marketing time, as things can change. Make sure you are working with an agent who is a local area expert – by that I mean someone who is in tune with what is occurring in your hyper-local market, and one who can keep her/his eye on any changes that could affect your sale. Some issues that could make a difference are homes that go into pending status, new listings, and listings that close escrow during your marketing time. The number of available similar properties will also be important to your plan.
4. Showing Condition: The way your home looks to potential buyer is very important – it is imperative to discuss with your agent what needs to be done before showings; sometimes it is hard to see our own homes from the perspective of one who has no emotions vested. Decluttering is a must, as is lighting and cleanliness. You may need to paint some rooms or plant some flowers – the idea is to make your home look its best. You should also have professional photography done before your home is listed.
5. Other Issues: If your home is priced well, properly marketed and shows well there could be other factors involved that make it challenging to sell your home. Some examples include negative views or issues (some I have dealt with in the past include power lines, freeway noise, neighboring buildings), and challenging floorplans or yard issues (such as size – too big, too small, etc). If you have an issues with your home that might be a challenge to a buyer, discuss that with your agent beforehand so you can take it into consideration when you price and market your home. Also, if you didn’t think you had any such issues but begin to hear comments from potential buyers, also discuss with your agent and make a plan for moving forward.
If all the above do not present any issues and your home is still not selling, chances are it is simply because the right buyer has not yet come along. Homes that are priced, marketed and shown in the best possible condition should eventually attract the right buyer. Make sure to discuss comparables with your agent throughout the marketing process, as properties may close escrow or list that may or may not have an affect on your sales price. It is also great to have your agent hold your home open on broker touring day, in order to get feedback on the home and all the factors above.
October 7th, 2014
I received an email from one of the preferred lenders with whom I work, telling me about a client of his who was having a difficult time deciding whether to purchase now or wait. She told him that her friends had advised her to wait to purchase, since home prices are high right now. He shared with her the report from CoreLogic that came out today, which details the rising market and demonstrates more than ever why now is a great time to buy.
CoreLogic, a leading data, analytics and global property information provider, reported this morning that home prices rose 6.4% year over year in August 2014 from August 2013. Furthermore, prices are expected to rise 5.2% between August 2014 and August 2015. According to the report, “this change represents 30 months of consecutive year-over-year increases in home prices nationally.”
The report predicts that home prices will increase .02% month over month from August 2014 to September 2015. California was named as one of the five states with the highest home appreciation value, at 9.2%. While the peak of appreciation is and will continue to slow down, the real estate market will balance out and future home buyers will have less pressure when it comes to affordability.
The data points to the fact that the market is still strong and now is a great time to buy. To sum it up, here are the reasons why buying now is smart:
1. Interest rates are still low
2. Prices are slowing down but still will continue to rise (albeit more slowly) moving forward
3. Many lenders are providing more products that will make it easier for buyers to get qualified, thus meeting the demand for loans
4. Inventory is still on the low side and market times in many areas are longer, but the majority of sellers need or want to sell so it is a great time to be a buyer.
To read the entire report click here.