If you are thinking of selling, refinancing, or just want to get an idea of what your home is worth, you have many options. Most people these days like to do things themselves, since there is so much information available at our fingertips online. There are also some great real estate sites and many local brokerage sites, so there are multiple ways to access the information. But you need to be careful, as what you get on some of those sites may be inaccurate, especially in today’s market.

Sites like Zillow and Trulia provide easy access to recent sales, and even provide estimates for the value of your home. Some things they may not take into consideration are:

1. The condition of your home and comparable sold properties

2. Upgrades

3. Additions – sometimes these take a long time to show up in the public records, which could alter the valuation of your home

4. Very recent sales (closed in the last few days)

5. Pending sales that are about to close escrow (as they will have an affect on your sales price should you decide to sell)

6. Whether or not your property is distressed or other recent sales were distressed

7. Inside knowledge about other homes that may have just gone into escrow or appraised

8. Other factors. There may be other factors that can affect your sales price, such as information displayed in the confidential remarks on sold properties (that only licensed agents can see) that provide details – for example, commissions may have been reduced, sellers may have reduced the sales price due to expensive necessary repairs, or other factors could have affected the sales price. Also, there may be information about construction in the surrounding area that can affect sales prices in the future (freeway extensions, plans for new shopping centers, Or there could be issues with the condition of the home that sold.

All of these details are important in analyzing your home and making sure you get the correct information. Thus it is very important that you consult a local area real estate broker or agent to provide you with a specific and detailed market analysis.

There are many things we can do ourselves these days online, but if you are considering selling make sure you get the right information so that you can make an informed decision. Real estate agents are there to help you, and I do not know of any who charge for a detailed market analysis. So find a skilled agent to assist you, and make sure you have all the pertinent information before making any major decisions.

Escalation clauses are becoming very popular again. Although controversial amongst those who work in the real estate field, they are not illegal nor prohibited. If you are a buyer or seller you should understand what they are and how they work…they could be a blessing or they could cost you in a big way.

An escalation clause allows a buyer presenting an offer to agree to pay a certain fixed amount higher than any other competing offers made on the property. Thus, the buyer has a huge advantage over other buyers. Usually there is a cap placed on the price overage.

Let’s look at an example. Say Mr. Seller puts his home on the market for $500,000. According to recent solds in the neighborhoods this is a fair price. He receives 3 offers, all for $500,000, and one with an escalation clause for $1,000 above any other bids, up to $510,000. Mr. Seller can either send out a multiple counter offer to all buyers, seeing if any of them will come up in price. If they do, the buyer with the escalation clause will still come in $1,000 higher, up to $510,000. If the comps do not support value over the $500,000 asking price, the only way any buyer getting a loan will be able to pay for this home is to agree to pay over appraised value, which many buyers will not or cannot do. Thus, the buyer with the escalation clause, who is presumptively willing to pay over appraised value, has an edge.

This sounds great for the buyer, who oftentimes cements his place as the winning bid in multiple offer situations. It also sounds great for the seller, who will undoubtedly sell his home over asking price. However, there are some major caveats when using these clauses, and you need to make sure you understand how they work in order to decide whether they are right for you.

Buyer Caveats

1. Place a limit on your bid. If you are going to utilize an escalation clause, it is important that you do put a cap on your price increase, for obvious reasons. Do not put yourself in a situation where you could be taken advantage of.

2. Understand possible consequences if your escalated offer is accepted. You need to make sure that you understand will happen if your offer is accepted. If you are obtaining a loan with 20% down, for example, you will have several options. You can include the higher contract price in your 80% loan amount, if possible. If not, you will need to be able to pay the cash difference. Similarly, if you do not include the increased price in your loan amount and the home doesn’t appraise, you will need to be able to pay the amount in cash over appraised value…unless you have a contingency in your contract giving you the right to cancel should the home not appraise – but this would make your escalated offer not very desirable to the seller and really defeats the purpose of an escalation clause.

3. Seller could use your offer to her advantage. Consider this: if you submit an offer with an escalation clause, it is possible the seller could use that to solicit higher offers, just by letting other potential buyers know there has been an offer presented with an escalation clause. This could be detrimental, so you have to decide whether you want to put yourself in that position. Also, how long does the seller have to contemplate your offer? You want to discuss this with your agent, and possibly limit the time the seller has to make a decision.

4. How do buyers really know there IS an escalation clause on a submitted offer? You need to be careful, because even if a listing agent informs you that there is an offer coming in with an escalation clause, you want to make sure any offer you present is one you can afford, and one that you can afford the increased price should the home not appraise at the price you are offering. In other words, if you know there is another offer with an escalation clause and thus decide to make your offer up to $10,000 over comparable market value, you have to be comfortable with the possibility that you will need to pay the $10,000 cash above appraisal value if the home does not appraise.

If you are a buyer who has been told there is an offer on the table with an escalation clause, you should have your agent obtain proof of this offer before presenting an offer. The listing agent can do so without disclosing the name of the other buyer or the price offered, by whiting out specific terms (name and price) and showing you the offer form.

5. Do not waive your contingencies. Make sure you keep your loan and inspection contingencies when using escalation clauses…you always want to make sure you know if there are any issues with the home that could cost you lots of money, and similarly you never want to waive your loan contingency (unless you happen to have enough cash to cover the purchase price in the event your loan does not go through.)

Seller Caveats

1. Escalation clauses may not be in the sellers’ best interests and could backfire. If you are a seller who has received an offer with an escalation clause, and other potential buyers know about this, it could ruin your chances of getting other offers. If the buyer with the escalation clause does not qualify or backs out for another reason, you could be left with accrued market time and no other offers.

Let’s understand this using the above example. Say buyer 1 presented the offer with the escalation clause; buyers 2 and 3 know this and also know it is highly unlikely the home will appraise beyond a certain number. Not knowing what buyer 1 offered, nor the terms of his escalation clause, they may simply decide it’s not worth it to present an offer at all under the circumstances. If you accept buyer 1′s offer and down the road the contract is canceled, you now have to start all over marketing your home, as you have no backup offers. You go back on the MLS with the accrued market time, potentially causing other buyers question why your home has not sold.

The important lesson here is to really understand how escalation clauses work, whether you are a buyer or a seller. Buyers need to be sure they can accept the terms should their escalated offer be selected. Buyers and sellers should talk to their agents and brokers to make sure using an escalation clause is in their best interests, and I also suggest consulting an attorney before doing so. Escalation clauses can be beneficial if you are careful.

Bank of America issued a notice recently to agents about the possibility of selling off loans in the middle of a short sale, which could drastically affect your short sale (and even cancel it last minute). It is very important that both homeowners and their agents understand what is happening, before listing a property for short sale.

As is customary, many lenders sell loans, even those that are delinquent – this is nothing new. But the fact that B of A sent out a notice about it is concerning, because of the timing that is mentioned for possible sales. The notice states that while in the midst of a short sale, borrowers’ loans may be sold to other servicers. If that happens, there is no guarantee that the pending short sale will close. Here are the steps by which this may happen (as spelled out in the notice):

•  Bank of America will send the homeowner a letter 15 days before the servicing transfer date.

•  Bank of America may call the agent to advise of the impacts to the short sale.

•  The new servicer will send a letter or statement advising the homeowner where to send payments.

The scary part is that B of A is giving itself an out – why would a lender approve a short sale, only to then sell the loan while the property is in escrow? This makes not sense whatsoever. B of A states, “Real estate professionals should advise homeowners that, similar to foreclosure, a servicing transfer is a risk that may occur at any time during the short sale process. This is why it is important to move as quickly as possible to facilitate the short sale.” Wow – if I have to tell this to potential short sellers, why would they want to risk a short sale? Why would a buyer want to risk making an offer, with the very real prospect of losing money and not closing? And why would I, as an agent, want to risk spending marketing dollars and time in selling the property? NO ONE WINS!

It seems to me here that B of A is trying to cover it’s behind, but this warning and the described act is contradictory to short sale approvals.

The solution here is this: if you have a B of A loan and are considering a short sale, you need to have your agent or negotiator discuss this with B of A before listing your home. I would ask to get something in writing that B of A will not sell the loan after the short sale has been approved and during the escrow period, up until the deadline that is provided in the approval letter. This applies whether you have a first or second loan with the bank. If B of A is not willing to do this, you can either take a risk or look into other options.

This move is a step in the wrong direction by B of A, and thus they remain on the top of my “lenders who are not cooperative” list. What a shame that this bank – Bank of AMERICA, for goodness sake, is not willing to truly help American homeowners. Maybe they ought to think about a name change.

Infographic printed with permission from the California Association of Realtors

[ey•juhnt]  noun  1. a person or business authorized to act on another’s behalf  (via Dictionary.com).

Those who have worked with a good real estate agent understand the value such an agent adds to the purchase or sale of a home. Sure, you can sell your home by yourself, and you can search for homes on your own as well, but the skills of a seasoned agent can help you through tricky situations, where a decision can make or break a sale. Let’s look at some of the things a good agent can offer a buyer or seller.

Experience. An agent’s experience with multiple issues can be helpful to a buyer or seller. These issues can include how to negotiate with a particular agent, trends in a certain neighborhood, advice in tough situations, staging and showing advice in a sale, and numerous other issues that an agent may have encountered during her career. All this experience is a benefit to a buyer or seller.

Advice. This goes hand in hand with experience. Agents know their hyper local market well. They understand trends in different areas and neighborhoods, and can compare and contrast a property  to recent comparable properties. This is helpful in deciding at what price to write or counter an offer – such knowledge can be critical in multiple offer situations, where there is a big price discrepancy, or other issues regarding the home  that could alter the value. A good agent’s advice could mean the difference between a sale and a cancelled contract.

Legal issue avoidance. Many people seem to forget that selling or buying a home involves legal paperwork, and can lead to lawsuits if the paperwork is not filled out properly, or if things are not handled correctly. A good agent will not only make sure that you are doing everything correctly to avoid litigation down the road, but will be able to offer advice and discuss options so that this type of situation does not become reality. Think of it as someone looking out for your best interests.

Getting you in the door first (literally). If you are a buyer and work with an agent who is really in touch with the local market, you have a big advantage. In the last year I have helped several clients purchase homes before they came on the MLS, all because I either knew about an upcoming listing or because I did research and found distressed sellers who were about to sell their homes. These sales worked out great for my clients, because they made offers before the properties hit the MLS, with no competition from other buyers. It is another plus of working with an agent who is on top of things.

All in all, it is important to have a trusting relationship with your real estate agent. You should be able to discuss things with your agent and be aware of the ramifications of your decisions throughout the sales process, whether you are buying or selling real estate. Listen to your agent’s advice before making a decision – agents work for you, and with your best interests in mind.

There are times in any business where one must laugh at some of the antics that go on behind the scenes, some of the unprofessional things others in the business do and say. We have all been there, no matter in which field you work….I am sure you can conjure up a few times you were left scratching your head over something a colleague did. The real estate industry is no exception, and in fact I think there is even more room for inexcusable behavior because most agents are independent contractors and do not have anyone looking over their shoulder most of the time.

Listing agents have been made fun of in other blogs for lack of proper grammar, spelling errors, and all kinds of other things. I have to admit despite my shock at the lack of editing, I do find these blogs humorous (albeit sadly so). But there are a few things that REALLY make me question some agents’ professional goals. Here are the top 5 on my list:

1.  Listing a property and being unresponsive. If you list a home, obviously the seller thought highly enough of you to give you the listing…so now you actually have to do some work! Placing a listing on the MLS is an open invitation to people to ask questions. If you are not going to make yourself available to do so, than what are you doing listing homes?! This is one of my biggest frustrations, and I have had to tell many clients, “the listing agent has not returned my calls/emails.” I had one agent just last month who didn’t respond to calls, emails and texts about a property for almost a week! My client finally then wrote an offer, only to be rejected because another had come in during the noncommunicative time. This is not right, folks.

2.  Copying information from similar listings without verification. As agents are aware, when a buyer purchases a home there is a period of due diligence, where the buyer conducts inspections and investigates the property to her/his satisfaction. However, when you are inputting a listing to the MLS, it is so important to get the information right. If you find another similar property in the neighborhood and merely copy that information into your listing, you could be providing false information to buyers. Even though they have time to discover this, doesn’t it make more sense to get it right from the start, so as to avoid wasting anyone’s time, including yours and your seller’s?

3.  Directing agents to a website to book an appointment. In this day and age we are so technologically savvy, and I love that, BUT…real estate is still and will always be a business about people. We are not selling widgets, we are selling more than just a home – we are selling a lifestyle. The more personable and friendly you are, the better it is for everyone. If you want to have your showings scheduled via a website, fine. But I have 2 caveats: make sure the website works properly, AND provide a phone number where the agent/consumer can reach a live individual with questions!

4.  Limiting the method of communication with the listing agent.  I agree that there are times when a quick question can be addressed via email, but there are times when I like to speak with the agent, so I can get a feel as to how the agent works and ask multiple questions, especially if the property is a distressed property. An agent should NEVER limit the means of communication between other agents who may have interested clients with valid questions, as this is doing a disservice to your sellers.

5.  Placing viewing restrictions on the property. I understand there are times when some viewing restrictions must be imposed, such as in the case of tenants, a family with a baby or very young children, unfriendly pets or perhaps a homeowner who works at night and sleeps during the day. But if you want to get the home sold you have to coach your clients about being as flexible as possible. Putting a home on the market and telling agents it is a “drive by only, then submit offer in order to view property” is plain ridiculous and a waste of everyone’s time. Similarly, if you do not plan on letting people in the home, for pete’s sake have your sellers fill out a Instruction to Exclude the Listing from the MLS until it is ready to be viewed, and then place it live! Do what you can do to make the property as accessible as possible.

The real estate industry is not only consumer-centric, but is based on good old-fashioned principles of cooperation. If you want to represent your sellers to the best of your abilities, you and your listing need to be as accessible as possible.

With the advent and growth of the internet, many tasks are much easier now – you can shop without leaving your home, place your dinner order before arriving at the restaurant, get all the information needed to write a paper without going to the library, and, according to some believers – get accurate property valuations in order to buy or sell a home without a Realtor.  Let’s look at the problem with this last part.

Online home valuation sites (like Zillow and Trulia, to name a few of the more popular ones) are more prevalent today, making home buyers and sellers feel as if they have access to the same information as Realtors. The misnomer is that this is very far from the case. Although there are times when the numbers provided are realistic, more often than not they are incorrect – sometimes by a few thousand dollars, or even as much as $20-50,000. Would you want to make an important decision on value based on a number that may be incorrect?

Realtors still play a very important role in home valuation. Working with a local, experienced agent who knows your area provides not only peace of mind, but information beyond just value. There are many facets involved with pricing a home, and while the starting point is always comparable sales, there are many other important things to consider that software cannot detect. For example, what if you have an oversized yard compared to your neighbors? A view? Multiple upgrades to your home? An addition? These are some of the things that a Realtor will take into consideration in determining value.

Comparable sold properties have likely been appraised before they sold – and appraisers are specifically trained to value homes, taking into consideration similarities and differences between properties. Realtors in turn use these comparable values and then tweak them, as do appraisers, when it comes to factors other than square footage or similar location, that can alter prices. Being a Realtor does not magically allow one to be skilled at this – it takes an in-depth knowledge of the business, the area and the market, as well as experience.

It is important to note that the same is true of rental values. While some sites that offer rental income information may be close or even spot-on, they are not always correct. If you need to obtain rental information I highly advise you to contact a skilled property management company in your area.

While obtaining information online is a good place to start to get an idea of your home’s value, deciding to forgo the expertise of an agent could end up costing you both money and time. There is a big difference between a computer valuation of a home and one completed by an expert. So, if you are thinking of selling your home, or if you are a buyer who is home shopping, please consult with an expert so that you are completely informed and able to make the right decisions.

Heading into the holidays can be a stressful time for most people, especially when you have a home to sell in the midst of all the celebrations. Many sellers take their homes off the market before the holidays to avoid the added stress, but this time of year can actually be a blessing for the home seller. There are some good reasons to keep marketing your home over the holidays.

1.  Less competition. Since so many sellers take their homes off the market you will have less competition. If your home shows well (holiday decor is ok and is expected at this time of year) and is priced well this could be a big benefit to you. There are buyers out there who need to find places to live over the holidays. If you are worried about showings when you are celebrating or have guests, simply have your agent ask for more notice in the MLS for showing times.

2.  Serious buyers. Buyers who are looking for homes over the holidays tend to be serious buyers, given the fact that they are looking for homes during the holiday season. With less inventory out there this makes it an ideal time for sellers.

3.  Highlight the warmth of your home. The holidays are a great time to really highlight the warmth of your home. As long as you don’t go overboard with decorations, gift clutter or holiday smells (like holiday candles), a little festivity can give your home a welcoming feel. Make sure not to block any ares where natural light comes into the home.

While selling your home over the holidays can prove to be a little bit of a hassle, if you designate showing times and keep your home in tip top showing shape, there is no reason you have to let it interfere with holiday enjoyment.

Short sales are part of the housing market and they will not be disappearing any time soon, yet many people still do not understand some of the short sale basics. Hopefully this will clear things up.

1. Do you have to be delinquent on your mortgage payments to short sale? No. This is a common misconception, but not a requirement, however there are some caveats. If you are current on your mortgage payments but have a medical hardship which can be documented, you can get a short sale approved. Other hardships – like divorce, job change – could also qualify. If you have more than one lien you’ll need to find out the policies of each lender. Some lenders are flexible and will approve short sales for other reasons, so don’t just stop paying your mortgage until you get expert advice.

2. Are you liable for the deficiency (difference between what the home sold for and what you owed on your mortgage(s)) with a short sale? It depends where the property is located. Some states allow lenders to pursue deficiency judgments, some do not. California does not allow lenders to go after this difference if it has agreed to a short sale (but not in the case of second homes and subsequent lien holders – unless they release their right to do so with language to this effect in the approval letter). Make sure to speak with an expert so you understand how you could be effected.

3. Can you short sale a second (non primary residence) home? Yes. The one thing to watch out for are subsequent liens on the property. If there is a second lien holder involved there could be a chance they could come after you for the deficiency, so you need to get expert advice before making any decisions. Most second lien holders will agree to put language protecting you from future litigation for the deficiency if your agent/negotiator asks for it.

4.  What is the difference between a short sale and a deed in lieu of foreclosure? A short sale is when you sell your home to a third party purchaser, by way of a real estate contract, for less than the amount owed on your mortgage, with the lender’s approval, and normally do not have to pay the fees and costs associated with the sale. A deed in lieu of foreclosure is when the bank agrees with you to take back the deed to your home, in exchange for a promise not to foreclose. Deeds in lieu are more rare than short sales, as banks would rather short sale the property to save money (although judging from the time it takes them to approve many deals you may have thought otherwise). It is important to note that a deed in lieu looks much like a foreclosure, and could have similar tax consequences – speak with your accountant and other professionals before considering any option.

Short sales can be a good way to avoid foreclosure, but can involve credit and tax consequences, as well as the potential for liability on the deficiency in some states. Before deciding to short sale your property make sure you understand all the options available to you so that you can make an informed decision. Most importantly, consult with your accountant and attorney no matter which option you choose; should you decide to short sale, you also should speak with Realtor who is highly knowledgeable about these sales.