Archive for March, 2016

How Much Commission Will You Charge to List My Home?

Thursday, March 31st, 2016

Today I received an email from a home seller who found me online and wanted to know how much commission I would charge to sell his home, without meeting me or having me see his home. I have had this question before, and it got me thinking. Many sellers want an answer before an agent even meets them or sees their home, and this is a bit challenging. Of course, commissions are negotiable – some agents will lower them and others will not, and some may even have a set low number they’ll provide before seeing your home or meeting you. images

While a low commission will save you money, here are some important points all home sellers should adhere to when selecting an agent:

1. Understand what the agent will do for you. Full service and partial service brokerages vary a great deal, so make sure you know what you are “getting” for the low commission an agent has proposed. Will your agent provide:

– Professional photography

– Custom color flyers

– Marketing – online, print, social media, etc.

– Showing tips and staging (if necessary), as well as referrals to service providers that may be needed

– Broker caravan tour

– Open houses (if desired)

– Take calls and show the property

– Vet potential buyers before accepting an offer

– Communicate with all parties involved in the sale – escrow, title, lender, buyer’s agent, inspectors, repair people

– Handle all paperwork, including disclosures, amendments, repair requests and contingencies

– Negotiate with the buyer – it is important to note that getting a contract accepted is only the beginning. There is still negotiating to be done (unless the buyer agreed to purchase as-is and has no contingencies). Many sales fall through because of a weak negotiator, so make sure your agent is going to be there to do so.

– Keep the buyer in the sale – this really is similar to the point above, but a little different. Sometimes a buyer may discover something that makes him/her uncomfortable, so it is important to have an agent who can think outside the proverbial box and lessen those anxieties.

2. Understand what the agent will NOT do for you. Make sure you have a clear idea of what will not be included in the commission – some low commission brokerages only list your home on the MLS and leave it at that. If you run into any negotiations – over price, repairs, etc. you need to have a strong negotiator on your side or the sale may fall a part. Make sure you know your agent’s role.

3. Understand YOUR role in the sale. Again, if you hire an agent who is pretty much just placing your home on the MLS, you need to understand it may be your responsibility to hold open houses, let agents in and schedule showings, and provide all required paperwork. Some people don’t mind doing these things, but others don’t have the time nor want to be bothered with them. Also, if during the course of the sale bumps arise in the road, it is important to have someone to rely on for advice. If your agent is not going to do so I strongly recommend having an attorney in your corner – of course this will cost you extra money so look into it first.

The bottom line is that pretty much everyone wants a “deal.” Since commissions are negotiable there is a good change sellers will find one if that is what they are looking for, but keep in mind that selling a home is a legal transaction, one for which there could be liability and potential lawsuits – even long after the home has been sold. Saving money is nice but when it comes to legalities personally I would rather know that I am protected in the best way possible, and if that means spending a bit more I wouldn’t mind – often in life you get what you pay for. You have to decide what you think is important.

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Real Estate Buyers and Sellers Beware: Internet Scam

Monday, March 28th, 2016

If you are a buyer, seller or real estate agent involved in a sale transaction, or may be in the future, please read this important warning from the Federal Trade Commission as posted by the National Association of Realtors (NAR):

“On March 18 the FTC Consumer Blog issued a post focused on hackers who have been breaking into some consumers’ and real estate professionals’ email accounts to get information about upcoming real estate transactions. After figuring out the closing dates, the hacker sends an email to the buyer, posing as the real estate professional or title company. The bogus email says there has been a last minute change to the wiring instructions, and tells the buyer to wire closing costs to a different account. But it’s the scammer’s account. If the buyer takes the bait, their bank account could be cleared out in a matter of minutes. Often, that’s money the buyer will never see again.” – NAR

To read the article in it’s entirety click here. The bottom line is that during the course of the transaction if you receive any emails asking you to wire money to escrow or the lender, you must contact the sender first and verify the account number prior to sending any wires. If you do not do so, you could lose the entire sum. PLEASE never wire money to anyone based on an email until you confirm the account number with the sender. It is too easy for hackers to get into accounts, as I am sure you may have seen before, and phishing is on the rise so protect yourself.

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Will Lack of Home Inventory Curtail Spring Selling Season? Buyers: Prepare

Thursday, March 24th, 2016

Many agents and home buyers are aware of the current shortage of homes for sale in many areas. In California there is currently a 4 month supply of homes, where 6 months is the norm and heading into the Spring it usually is higher. When desirable listings do come onto the market there is a rush of activity and often a quick sale. What will happen to the normally busy Spring selling season if inventory levels do not grow?

With interest rates still low and inventory levels down, it is more important than ever for buyers to be as prepared as possible to write a successful offer. Before buyers even start looking at homes, it is important to make sure to do the following:

1. Get preapproved. This is essential. You need to speak with a mortgage professional and get preapproved – not just prequalified – so that you know exactly how much of a loan you can afford and what you will need for a downpayment. There are different products out there so make sure you know which loans will work best for your circumstances. Talk to a qualified mortgage professional and get the preapproval letter before you start home shopping so you are ready to make an offer.

2. Find a good real estate agent. It is great to look at homes yourself online – in fact I always encourage doing so – but to have a skilled agent on your side provides you with an edge. Local area agents often hear of listings before they hit the market, or may even have “pocket” listings (contracted upcoming listings that are not yet on the MLS) themselves. Also, when a listing is on the MLS there may be important confidential agent remarks listed (that only MLS subscribers can see) that could help you prepare in writing an offer. Finally, some third party real estate sites do not list new properties immediately because they don’t sync directly with MLSs, so you may miss out on new listings that other buyers have already seen – even a day can make a difference in a tight inventory market.

3. Write the strongest offer possible. Depending on the circumstances you need to be ready to write the best “on-paper” offer possible, especially in situations where there are multiple offers on a property. Of course, you may not be able to compete with some things (for example, if another buyer is a cash buyer or offers over asking price when you are not qualified to do so), but it is still important to make the offer look as good as it can. This is another reason to have a strong agent on your side – she or he will advise you of the best tactics after assessing the situation, the comparable sold properties, the market and speaking with the listing agent. Your offer still may not be chosen, but there is a chance the one that is chosen could fall through, so you want to be the next best.

4. Be Ready! Make sure you are accessible by phone/text and email, and that you are able to view properties as soon as possible once they list. If a property lists on a Thursday and it looks like a home that meets all your criteria, waiting until the weekend to view it may increase the competition. Even in cases where the seller wants to wait the weekend to evaluate offers, getting yours in first could put you in a better position.

5. Keep an open mind. Check out homes that you may not necessarily find appealing on line, or may not be in your preferred neighborhood. Sometimes buyers reject seeing a listed property, only to later realize that it could have been a great home for them. Pictures can be deceiving, and for the right price a home that needed something to make it “perfect” – like a little updating, could be a great home for you at the right price. The same goes for a home outside of your desired neighborhood.

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The Importance of Homeowners Insurance for ALL Properties

Thursday, March 10th, 2016

Most homeowners have insurance, since in order to obtain a loan they have to have proof of home insurance. But what about a homeowner who owns a condominium that is used as income property? Do you need to have home insurance on that property? Insurance on single family homes can vary a great deal from insurance of attached homes where an HOA is involved, and homeowners need to clearly understand the policies and liabilities. th

Condo Insurance Coverage

There are 3 important insurance considerations when it comes to condo owners who rent out their properties:

1. HOA master insurance policies: Most HOAs have one of two types of insurance master policies – the majority I have seen are exterior coverage only, so the outside of the units are covered, usually including the roof and any decks, stucco, etc. Some have extended policies that cover more – make sure that you understand exactly what your HOA policy covers. These policies will cover damage from events like wind blown rain, fire, etc., but do not cover any personal belongings inside the home.

2. Liability insurance: If your HOA covers the exterior and you have tenants in the property, it is the responsibility of the tenants to obtain content coverage for their interior belongings and personal property. If they do not have such coverage and there is an issue that causes damage to their things that is not covered under the HOA master insurance policy – for example, say a pipe burst in the wall – you are not off the hook as a landlord/owner and could be sued. You can obtain liability insurance to cover yourself in such situations. Usually this can be done through your homeowners insurance policy on your primary residence, via an extension of the liability policy to your other (non-primary) property. Check with your insurance agent.

3. Tenant content coverage: As I mentioned above, tenants should obtain content coverage for their personal belongings.

4. Optional coverage: As a landlord-owner your insurance company can likely offer you other forms of insurance coverage to protect you in case of damage to the home, such as personal property coverage or optional replacement cost coverage (say there is a fire or flood and your appliances and flooring are damaged). It is important to talk to your insurance agent to determine what is available to you and which coverage is best for your protection.

Single Family Home Insurance Coverage

If you own a single family detached home it is a different scenario, even if you rent it out. You must have homeonwers insurance on the property in order to close escrow if you are obtaining a loan. If down the road you don’t pay your insurance policy, the insurance company is required to notify the lender in 30 days. The lender sends out a letter to the homeowner giving him/her 30 days to get insurance back up and running.

If the homeowner does not obtain insurance within the time frame after the letter is received, the lender can order a forced place insurance policy on the home and tack the balance onto the homeowner’s loan amount. This protects the lender should the home burn down or suffer from some other natural disaster or issue.

Sometimes the lender is not notified that the homeowner’s insurance policy has lapsed, due to faulty paperwork or failure of the insurance company to notify the lender for some other reason. This can create problems for both the lender and the homeowner if there is ever a problem with the property.

It is in your best interest as a homeowner to make sure your insurance policy covers you in the best way possible. If you own investment property that you rent out, or even a second home, make sure you understand how you are covered, especially when an HOA is involved. If you have a condo/townhome, make sure you are covered there as well, and look into liability insurance to prevent lawsuits. Make sure you have a smart, informative insurance agent who can help you decide which coverage is best for you.

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Beware: IRS Phone Scam!

Tuesday, March 1st, 2016

Beware!! There is a large scale phone scam going on right now and I was just a victim. Someone is calling “from the IRS” stating that you are being sued because you have not responded to certified letters that were sent to you regarding an audit. He had my name and address, and obviously my phone number. th

I kept asking questions and did not give out any personal information, and eventually the man became angry with me and told me I was being rude to a federal officer. I had to keep interrupting him because there was a lot of background noise and it was difficult to hear what he was saying. The next thing I know he said something to me that is too foul to repeat here. I then hung up.

I called my accountant and was told that many of their clients had received similar calls, and that eventually they ask for money to be sent to make the lawsuit go away. Of course I didn’t let it get that far. These calls are being made from numbers all over the US – mine “came from” Washington state, others have received calls from Virginia and other area codes. Obviously they are routing the calls but I have been told they likely originate overseas.

Here are some VERY important things to remember if you ever receive a call from the “IRS:”

1. The IRS does not call citizens. Period.

2. The IRS would NEVER ask you to send money even if you called them.

3. The IRS must notify you in writing via mail if you are being audited.

4. NEVER send money. Period.

5. Report any suspicious calls. If you are the victim of phone scam please contact the Federal Trade Commission at 877-382-4357 to report. My report was number 70 million plus – and that is just this year! You can also visit the FTC website for more information by clicking here. Please share this with everyone you know, especially the elderly as my accountant said many have been scared and have made payments.

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