Archive for the ‘Advice’ Category
Friday, March 10th, 2017
This seems to be the million dollar question right now as home buyers survey the lack of inventory and multiple offer situations present in many markets. A strong seller’s market and high prices make some buyers nervous. So is it better to buy now or wait?
There are a few very good reasons why now is the time to make that home purchase:
Interest rates are rising – We have already seen this happen and word is they will do so again this year, likely several times. This affects mortgage payments and down payments, so jumping in and securing that lower rate now could be smart. It is also important to note that some lenders are charging a lot more for interest rate lock extensions, so that is something to think about if you have a long escrow period or are pursuing a short sale.
Lack of inventory – Inventory in many markets is still very low – San Diego County included. Many buyers cannot find properties to purchase and when they do there are often multiple offers, especially in the $650,000 and under price range. Cash buyers are out in force as well in many lower range markets, making it even harder for first time home buyers. Being picky is getting more and more difficult – right now is a good time to be preapproved and ready to write an offer once you find a home that meets your criteria. See the home as soon as it comes on the market and submit your best offer right away.
Prices are not dropping as we head into the “busy season” – Lack of inventory is making it difficult as demand outpaces supply. Unless this changes we will not likely see price drops in the busy Spring and Summer months to come. The buyer who decides to wait this period out may find herself down the road with still low inventory and higher interest rates.
Here is an example: A house that currently sells for $766,000 with an interest rate of 4.75% and a 20% down payment would yield a payment of a little over $4000 a month. To get that same payment down the road with a home price drop to $727,000, assuming a higher 5.125% interest rate increase, the buyer would be losing $1585 over 3 years. So even if prices drop 5% and rates increase 3/8th of a percent, the buyer who purchases with a lower rate now will be ahead in the long run.
Uncertainty – Worry about the future and economy is still prevalent among home buyers. Uncertainty about taxes and home write offs, as well as the expected rise in interest rates, make some buyers hesitate to make big purchases. The real estate market, like any market, is cyclical. If you are buying a home with a long term commitment then it is a great time to do so, before there are more rate hikes.
Before you decide whether it is best for you to purchase now or wait, it is important to discuss your scenario with you accountant or financial adviser, an experienced real estate agent in your area and your mortgage professional. Information is power.
Monday, December 5th, 2016
I read an interesting fact today: 44% of consumers find the homebuying process scary or intimidating. That is a staggering number of people who are unsure of the process and need guidance. The good news is that today it is easy to make finding your next home a fun and positive experience.
Here is my advice on how to make the process not so scary:
Hire a great agent – Yes, there are many real estate professionals out there, and yes, some will make promises to the moon and back, maybe even tell you they will give you back some of their commission if you choose to work with them. But that does not make one a great agent. Here is what does: experience, local knowledge, intelligence, familiarity with the homebuying process, strong negotiation skills, great referrals.
Find a professional mortgage officer – This is another of those “must haves” when searching for a home that could either make or break a purchase. You need to find a great mortgage officer PRIOR to searching for homes. That person should have all of your data and necessary paperwork so he or she can issue a preapproval – this is important for two reasons: 1. it will tell you how much you can afford, and 2. You will have a higher chance of getting an offer accepted if you are preapproved.
Choosing a mortgage professional is similar to selecting a real estate agent – there are many who will talk the talk and even make promises, but you need to feel comfortable with that person – yes, it’s about getting a great loan but it’s also about making sure the lender can close your loan. If you do not know where to start it is often good to ask those you trust, including that great real estate agent!
Get educated and start your search way early -I tell ALL buyers that it is never too early to start getting ready to purchase a home. If you plan to buy in a year, two years that means you need to get educated and you should start now. Learn about different neighborhoods, their amenities, positives and negatives. If you have children look up local schools and see how they rate – talk to neighbors in potential areas you like and ask about the neighborhood, schools and anything else that may be important.
Most importantly, start looking at homes way before you are ready to buy! Most people hear this and ask me why, so I tell them that you will learn a lot about different areas, floorplans and so much more. When it does come time to buy you will know more about the areas in which you want (and don’t care) to focus, which will make the homebuying process way less scary! So get out there and visit open houses, schedule appointments with your agent and start learning.
It is also important to note that you can learn a lot about homes online – with so many informative real estate sites available at your fingertips you can learn about amenities and so much more.
Stay Organized: Use all the above tools to your advantage and create a folder so you can categorize those areas and even floorplans that have potential. If you are not planning to purchase immediately you will likely forget all the things you learn along the way.
Wednesday, November 16th, 2016
There is something important that all home buyers, sellers and agents need to be aware of and it is very easy to discover: making sure all parties on title have signed the listing agreement and the residential purchase contract (and of course all further documents that relate to the sale).
It is extremely important that all listing agents check the property deed prior to having sellers sign a listing agreement. It is not hard to do and takes only a call to the title representative. You cannot rely on what the seller(s) tell you, as they may not even realize that there is another person on title. Recently I sold a home on behalf of my buyer clients. I pulled up the tax records and saw there were 2 sellers named as owners. I drafted the offer with both names. Due to complicated circumstances one party was going to sell and the other was going to sign an interspousal deed transfer, but that was not signed yet. We got around it but it was a very strange situation and a bit risky.
Another home I sold recently had 3 sellers, but only 2 were named in the tax records; however the deed showed there was a third party on title (parent of one of the sellers). The listing agent was not aware of this and we had to get the third seller’s signatures on all paperwork after the contract was accepted. Luckily that third seller was cooperative – this may not always be the case.
If someone who is on title does not sign all paperwork then technically there is no contract, as the law states that all owners on title need to agree to a sale. You can imagine the legal repercussions down the road if things are done improperly! The good news is that the title company will catch this and it can be corrected, but not if the other person who has not signed decides to be uncooperative.
If you are an agent, this is something you should know, but believe it or not many agents have listing agreements signed without checking with their title department to assure that all parties on title sign the agreement. Similarly, buyers agents need to check the deed before writing offers to make sure this is the case. If you are a buyer or seller, you should ask your agent to make sure s/he has all the correct information at the time of listing or writing an offer.
Tuesday, July 12th, 2016
Recently I was contacted by home sellers who wanted to talk to me about their home sale – they were in escrow with another agent and were very unhappy. There were some legal issues and the agent was non-responsive and not representing them to the best of her ability. They had no idea that they may be able to fire the agent, so I thought it was a good idea to again share this tidbit with all the sellers and potential sellers out there – and also for buyers.
If you are a seller who is unhappy with your real estate agent, you may have the right to cancel your contract in the state of California if the agent is not adequately representing you. There are a few things to keep in mind though, as you make your decision:
1. Contractual Breach or Valid reason – If your agent is not representing you to the best of his/her abilities, your first step should be to contact the broker. You need to explain your concerns and desire to cease working with the agent. If you cannot agree to a mutual cancellation, you may need to prove that the agent is not performing her/his contractual duties or doing their due diligence (does not call you, does not explain paperwork or provide details on the sales process, etc.) or provide some other valid reason to cancel. Brokers may want to try to resolve the issue first, or may want to personally step in to make sure you are well cared for during the remaining time the contract is in effect. Check over your contract to make sure you understand specific duties and can show they are not being done.
2. Mutual consent – this is an easy way to cancel a contract with a broker/agent – say your circumstances have changed and you no longer will be moving – most brokers will allow a cancellation at that point (no one wants to market a home that will not sell).
3. Legal termination – if you have tried everything above and the broker/agent will not consent to a cancellation, you may need to seek a legal remedy to cancel your contract. Check your contract to see if there is a legal remedy specified therein, like mediation and arbitration. If not, seek the guidance of a real estate attorney.
There are some other things you need to keep in mind when considering canceling a contract with your broker/agent:
1. Agent may be entitled to commission for prior showings: If a buyer came along while the contract was in place and they make an offer after it has been canceled, the agent may have a right to a commission. You need to check the language on the listing agreement and see how long this period will be in effect. On the California Residential Listing Agreement this is a fill in the blank – most agents will write 30 days but make sure. This can apply to prospective buyers to whom the agent showed the property, or those who saw it with another agent.
2. Costs and Fees – Check your contract to make sure that you will not be liable for any costs and fees to the agent if you cancel the contract. Brokers or their agents would have to specify such in the agreement and most do not, but make sure you know if you will be liable for any.
3. Marketing materials will not convey. Any marketing materials procured by the broker – photographs, flyers, advertising, etc., are the property of the broker. If you start all over with another broker/agent you will have to start all over with marketing as well (unless the prior agent agrees to let you use their materials, but that is doubtful if you are firing them.
My best advice is to make sure when you are entering into these contracts that you have a way out if you are not happy with the service provided. I tell ALL my potential clients that they can fire me at any time, so long as they first communicate with me any unhappiness so I can try to rectify it. But I would never force a client to remain under contract terms if they are unhappy – I don’t want anyone to be unhappy because that not only makes me feel bad but also affects my business.
Thursday, February 18th, 2016
The concept of dual agency – where a listing broker also represents the buyer in a real estate purchase transaction – has been a subject of contention for a long time. Most listing agents dream of representing both the seller and buyer, as it leads to a bigger paycheck in the end. Of course there is a lot of paperwork both sides must sign to indicated that they are aware of the dual agency – this of course is designed to protect not only the parties to the transaction but also the agents and brokerages (hint hint: to try to prevent lawsuits).
Opponents to dual agency – and I happen to be one (in most cases) – argue that the listing agent’s first duty is to the seller, and that can hurt the buyer in the long run. Here are 3 reasons why buyers really should have separate representation when purchasing a home:
1. Allegiance to seller first: As a representative of a seller, an agent has a duty to uphold the sellers’ best interests. A buyers’ agent has the same duty to the buyer. If one agent represents both parties, you can see how this could be a big problem for one party – and the buyer is the one who usually gets the short end of the stick. For example, let’s say the seller tells the listing agent something about their situation that will affect the price or other aspect of the sale. The buyers’ agent’s job is to get the best price for the buyer, but the listing agent’s duty to the sellers (to not disclose confidential information that could affect price or other key components of a sale) clashes with the duty to the buyers – how can you get the best price for your buyers if you cannot tell them what you know on the seller side that could help them? Someone is getting left in the cold, and it is almost always the buyer.
2. Negotiations: The agent is often privy to certain information that will help in negotiations on behalf of the seller, such as the sellers’ bottom line price or other information that could assist in negotiating on their behalf. As mentioned above, this could detrimentally affect the buyers’ negotiating powers because the agent’s first duty is realistically to the seller. It is imperative that buyers have a representative who looks out for their best interests exclusively.
3. Agent Misunderstanding. As you can see, there are big problems in representing both parties. One of the biggest of all, unfortunately, is that many agents do not understand the legal ramifications of doing so. Many brokers do not oversee these sales closely enough, and the agents are left to handle them to the best of their abilities. This can and does lead to lawsuits down the road if the agent is not careful what s/he says or does, discloses or doesn’t disclose. You can see how it is the buyer who will suffer.
While I am a proponent of separate representation for the buyer and seller in a real estate transaction, there are situations where dual agency can actually be a benefit for all parties involved (commission alone should NEVER be a reason for an exception). One example is where the seller is financing part or all of the buyer’s purchase. The dual agent can be instrumental here in figuring out details. Of course, separate agents for each party can also do this. Some other situations do make sense at times, but the bottom line is that if you are a buyer you should have someone looking out for your best interests first and foremost. When you call a listing agent about a property their goal is to sell it. With a buyer’s agent that person’s goal should be to sell you the home that best meets your needs, with the ability to represent your interests exclusively.
If you are in the market to purchase a home or income property, strive to find an experienced and informative area agent to assist you – one who has strong negotiating powers and a keen sense of the legal aspects of the sale. If you do find yourself in a dual agency situation, make sure you involve the agent’s broker so that your best interests are not jeopardized.
Tuesday, January 5th, 2016
Recently a was faced with a situation involving one of my children and a person in a position of leadership. My child was engaged in an activity where there were many unhappy participants. The leader was informed and “reacted,” but unfortunately attitudes did not change and the group continued to become more unhappy.
In reviewing the situation I considered what I might have done differently had I been in that situation. Having been in leadership positions many times, I have learned that in order to be a true leader, such that you can create and maintain both cohesion and happiness with your team, you must practice the following:
1. Be proactive, not reactive. Proactive means that you need to think ahead. If you wait until a problem arises it often can be too late to get back to where you started. However, if you keep lines of communication open and follow the other steps below, you should be able to avoid big problems. Being reactive just upsets the troops and creates more of a divide, often making you the “bad guy.” Instead, you have to view each situation as a challenge and not a problem, and then find creative ways to resolve it.
2. Listen. We are all told at an early age that it is important to listen. But as technology has exploded and people have learned to get what they need quickly, many of us do not take the time to really listen. If you are a leader and do not listen to those you lead, then you are ineffective. Your group looks up to you and needs to know that you are on their side – they want to share concerns and they want you to help fix them…you are the LEADER so this is only logical! If you hear that people are unsatisfied, then you need to speak to them to find out why, and you need to listen and not judge. You may be part of the problem.
3. Be fair and consistent. To be an effective leader you must be fair – both in your decision-making process and in the way you treat group members. If you demote one member for something that is unbecoming of a group member, then you have to do the same with other members who do things that fall into that category. You need to make sure that all members KNOW what those no-nos are; of course I always suggest putting rules into writing at the start so members know what they must do as group members, and also what they should not do. Once you start being unfair, or reacting in different ways to members in similar situations, you lose respect. All great leaders have respect.
4. Reward often and always be a greeter. Every successful business owner I know rewards her/his employees for jobs well done. This does not have to be a monetary reward and can vary in different situations. If you are a coach of a sports team and your team won, or didn’t win, you need to tell them how proud you are of the hard work they did – if they lost you also need to also encourage them and provide plans of action so everyone can move forward with cohesion and excitement. When you arrive at practice each day you should say hello to them and ALWAYS start with a positive greeting. People need to feel recognized for hard work, and they respect you for doing so. Don’t take anyone for granted.
5. Provide encouragement – always. If you are a leader you must encourage your members. Period. No one will want to work with you if you don’t make them feel good about the hard work they are doing under your lead.
6. Assume responsibility for lack of cohesion and admit mistakes. If you group or team is not working together in a positive way, of if there is resentment or unhappiness from even one member, you as a leader must take responsibility. You can never assume that you are not the problem, even if you are not. As a leader you need to get to the bottom of the issue and provide solutions. If the mistake is yours, then admit it and provide solutions so it doesn’t happen again. Ignorance = disrespect.
7. Be positive. A positive leader encourages his team to be the same, which in turn leads to more productive and happy team members. Even in the face of problems you have to maintain and project a positive attitude.
Most of us are leaders and may not even realize it. Teachers, doctors, coaches and parents – to name a few – are all leaders, every day. The teachers, doctors and coaches who do not have respect are ineffective and should either make changes or find other careers. Parents need to have the respect of their children too – if they do not then they need to seek advice from professionals. Look at your leadership role as a chance to really make a difference in the lives of others…that is pretty powerful.
Monday, November 30th, 2015
Winter is a busy time of year for people – the holidays are here and there are so many things to accomplish before the end of the year. You may wonder how people think about real estate at such a busy time, but believe me they do! Many wonder whether it is a “good”time to buy or sell a home now, so here are some things to consider.
Buying a Home at the End of the Year
1. Less inventory to peruse. There is typically less inventory to see at this time of year, as busy homeowners focus on holidays and accordingly wait to sell or take their homes off the market.
2. Serious sellers could = lower prices. Those who do have their homes on the market need or want to sell, and are not deterred by the holidays and slower traffic. This is a great situation for buyers, as they may be able to negotiate better prices.
3. Less Competition. With fewer buyers out looking at homes it makes it a great time to be a buyer.
Selling a Home at the End of the Year
1. Less competition inventory. There are typically fewer homes on the market during the winter/holiday season, so it is a great time to market your home.
2. More serious buyers. Unlike summertime, when there seem to be a lot of “looky-loos,(especially if you live in a beautiful area like San Diego where there are a lot of summer tourists) ” buyers out looking at homes at this time of year tend to be more serious and ready to purchase.
Buying a Home in the Spring/Summer
Buyers who wait until Spring to start their home searches tend to encounter:
1.More inventory to choose from
2. More buyer traffic, which could mean more competition and multiple offer situations
3. Prices tend to be higher
4. Shorter market times, which means less time to really look around and make a decision.
Selling a Home in the Spring/Summer
1. More inventory on the market, thus more competition
2. Prices tend to be higher
3. A larger buyer pool
The best time for you purchase a home will depend on many things. Make sure also to check with your accountant to see if there are any benefits for you that could affect your purchase window. Whenever you decide to purchase, make sure you do your homework and contact an experienced agent to assist you. Happy shopping!
Thursday, October 1st, 2015
Have you ever thought about your experience buying clothing, and compared shopping at say Nordstrom, to shopping at a discount clothing store? Did you notice the service difference – sure, the Nordstrom employee works on commission, but that is actually a benefit to you if you need help finding the right outfits. He or she will go out on a limb to pick the perfect shirt, slacks, tie or accessories to make you look your best.
Selling a home is the same. I always tell potential sellers when I meet them to discuss listing their homes that ANYONE can list a home – it is not rocket science. The part time mom/real estate agent who only works weekends, the new “green” 18 year old agent with his first client, or the experienced agent – they all can do it. But you have to make sure to ask the right questions and get the right information to assure that you truly get the best representation.
You may have noticed agents in your area who might boast that they will list your home for less than the competition – some for say a 1% fee, and others for flat fees. While this may sound great to you as a seller, make sure you interview a seasoned listing agent and compare what you will get from each – you may be surprised.
Here are the things you need to ascertain as a potential seller to make sure that your home will be marketed properly and survive the escrow process in order to close:
1. Responsiveness – Many discount brokers will take your fee and put your home on the MLS, but that is where the buck stops. If you have questions or concerns you may find it hard to ever reach them, let alone have issues responded to. Even “big” agents who list many properties have this issue – there are several of them in my area and I have helped clients sell homes who had worked with them before and were unsatisfied with their lack of responsiveness. This is important to you as a seller, because you need an agent who is your partner and can communicate both effectively and continuously throughout the entire process from listing to closing.
2. Marketing – Does the agent’s marketing budget mirror the commission you are paying? In other words, if the agent is taking a lower fee, is this going to cause your marketing to be less than superb? I can tell you that I get a LOT of real estate information in my mailbox, and about 90% of it is junk – poor quality, bad images/non-professional photography, grammatically incorrect/spelling errors. The way your home looks to potential buyers is what will drive them to want to see it – it is a feeling and a lifestyle that you are selling, not just a house with walls.
3. Communication with other agents and parties: Your listing agent needs to be able to effectively communicate with other agents, loan officers, lenders, escrow and title representatives throughout the sales and escrow process. This includes following up with showings and alerting agents of potential buyers of any changes or new developments with the property. Problems always come up that need to be addressed in order to stick to the time frames identified in the contract – make sure your agent knows how to do so and is willing to stay in touch on a daily basis.
4. Negotiations – This is a big one. Your agent must be a strong negotiator. Unfortunately many real estate agents are not strong in this regard, and many contracts do not come to terms or fall apart after agreement. Negotiation skills are needed not just at the start when a contract is received, but throughout the entire escrow period. Getting an offer is just one part – keeping those buyers excited about their new home until closing is another issue.
5. Paperwork – if you work with a discount agent/brokerage, make sure that your agent explains how the paperwork will be handled. Real estate transactions contain a LOT of paperwork, and they are all LEGAL documents! There are many consequences to filling out paperwork incorrectly, including law suits years after your home sells. You need to make sure your agent knows how to properly handle the paperwork and how to coach you in filling it out correctly so as to avoid legal ramifications.
The bottom line is that you usually get what you pay for – like comparing Nordstrom quality and service vs. Walmart quality and lack of service. Unlike buying a shirt however, selling a home comes with many legalities. Make sure you are protected and find an agent that will work hard for you to keep you informed, compliant and safe.
Tuesday, September 15th, 2015
Negotiations are a part of many businesses, including real estate, and there is definitively an art/skill set used in negotiating on behalf of another person. No matter what type of situation or opponent you face, there are a few tips to help you be the best negotiator possible:
1. Leave your ego at the door. This is perhaps the one thing many people don’t remember when entering into negotiations. Titles and experience can be good to share with your opponent, but you have to know when to use them. Waiving them around to prove a point just makes the other person annoyed by you, which in turn may lose you points and leave with less than you wanted to accomplish.
For example, if you are negotiating repair requests in a real estate contract with the other agent, arguing that you have never seen such a situation in your “15 years of experience selling 200 homes” will just irritate – you are not going to score any points there. Instead, you can point to a situation that may have been similar in another sale and discuss how it worked for both the buyer and seller. This is a much better way to show not only your experience and a similar example, but also to provide resolution and be helpful at the same time, in a positive manner – a much better way toward a resolution.
2. Listen. Many of us go into negotiations with intentions of being good listeners, but as soon as someone mentions an opposing view we tend to get defensive. In law school we learned there is a time to listen and a time to argue your own points. Listening means really paying attention to what the other person is saying – they too are representing another person and are entrusted with the same job as you, to do their best for their client. Most importantly, do not interrupt the person; instead, take notes so you can address any points that need attention when it is your time to speak. Remember that listening is actually helpful to you in presenting opposing perspectives.
3. Validate. Everyone needs validation, and whether you agree with the points presented or not, it is important to validate FIRST, before jumping into counter points: “I understand that your client is concerned about X because it will cause financial duress. Here is how my client views X.” Then offer a solution.
4. Don’t be reactive. This goes hand in had with listening – if you react or explode once a counter point is made, you are digging your negotiating grave. Practice taking deep, slow breaths and controlling your defensive mechanism. There is always more than one side to every situation, so keep that in mind; if you ever want to come to resolution you need to keep your cool and play fair.
There are many other great skills to use in negotiations, but these 4 are very basic and important. A great way to practice them is to have a friend, spouse or family member play the opposing side. They can even make it difficult for you by sticking stubbornly to their side – see how you can make your points without using your ego, by listening, validating and not reacting.
Tuesday, August 25th, 2015
Lately it seems the great listings are commanding multiple offers, and selling quickly. For buyers who have been searching the market for some time this can be frustrating, as a good looking listing can often sell at a higher price and the buyer is forced to compete with many others, some who may be better qualified on paper. So what is a buyer to do?
Here are some great negotiation tactics that might help your offer be accepted:
1. Offer the best price you can. By this I do not mean the “highest” price. The best price, in comparison, means the one that will appraise and that you feel comfortable paying. If the home is the highest priced home in the neighborhood, you need to weigh the possibilities – for example, is it probable that other homes will improve in the near future? In order to really understand the value of a particular neighborhood you need to consult with an experienced real estate agent.
But, you say, what about the other buyers, who may be willing to pay more? If a seller is only after a number than there is a chance that such a buyer may outbid you. However, keep in mind that unless that buyer is paying cash there is a chance the home will not appraise at the contracted price. That is why is is important to make a strong offer in other respects. Even if your offer is not accepted there is a chance they may come back to you if the current contract does not close.
2. Shorten up time frames. Sellers want to know as soon as possible that the sale has a high chance of closing. In California, the buyer has 17 days to investigate and remove all contingencies but the loan; the loan contingency is 21 days. I would not suggest shortening the loan contingency unless your lender says that will be absolutely possible (however, with the new lender disclosure laws it may be impossible, so speak with your agent and lender first); removing the inspection contingency in a shorter time frame can be possible, so it is something to consider. You can also let the seller know that if your loan gets approved in fewer than 21 days you are happy to remove that contingency earlier.
3. Should you write a letter to the sellers? This is a controversial topic and really is one that needs to be decided with your agent. It used to be that buyers who wrote a great “here’s who we are!” letter had a higher chance of getting an offer accepted (assuming all other aspects were equally promising), because it made the buyers real people and played on seller emotions.
4. Multiple counter offer situations: If you receive a multiple counter offer you have to be prepared to accept the terms or put your best final offer forward. Again, it is not always about just price, so have your agent find out exactly what the seller is hoping for. If the seller is selling an investment property they likely are focused on numbers; if the sellers have lived in the home for some time there may be emotions involved, in which case you can alter your response.
Today there is controversy about such letters because many say if an offer is not accepted there is a chance it could be due to prejudice – without going into a long list here you can imagine the possibilities. Regardless, this is a decision you need to make with your agent. It really depends on the situation but I still believe there are ways to write these letters to cater them more to the home and less personal.
It is important to remember that every market and each home sale may be different and present a different set of circumstances. It is important to speak with your real estate agent and lender and find out specifically what you can do to provide the best opportunity to have your offer accepted.