Short Sales In Today's Market !

The market has picked up and more buyers are out looking for homes, my job is to help guide those buyers and homeowners who are selling their homes ! I want to touch base and give everyone a quick refresher on what a short sale is and what the process actually is, there are still quite a few leftover on the market and new ones coming onto the market.

What Kind Of Short Sales Are There On The Market ? 

• Approved Short Sales:  This is where the bank has already set a price that they are willing to take for the home.  These kinds tend to move a bit quicker since the "negotiations" have already taken place, unless you plan on submitting an offer below asking price.  These can usually close within 90 - 120 days after going to contract.  

• Un-Approved Short Sales: This is the less predictable short sale because not only has the bank not agreed to a price but more than likely the homeowners are still in the process of submitting all of their paperwork as well.  Normally in order to submit your offer to the bank you will need to provide them with contracts, which means you will need to use your down payment to get into contract.  

What Is The Process Of Purchasing A Short Sale ? 

1. Meeting with your buyers broker, deciding on your offering price based on the actual market value of the home.  Take the time to review how long it has been on the market, and for your own knowledge what the Lis Pendens is on the home.  
2. Presenting the offer to the homeowners, ideally they will accept the offer or counter.  You can sometimes ask the homeowners to do fixes or repairs as well, but your agent will advise you to if this will help or hurt your chances.  
3. Once you have an accepted offer from the homeowner, you will than go into contract on the home.  Your offer will now be submitted to the bank for their approval this is where the timeline becomes less predictable.  
4. The bank will send out their own appraiser to perform a BPO of the property.  This is where they  will go look at the condition of the home, and of the surrounding comparable homes.  This is why basing your offer on the current market value is key, if they see your offer is considerably less than it chances are they will not accept.  Remember the bank does not necessarily have to counter your offer they can simply reject and you will need to re-start the process to change your offer.  
5. Hopefully you will have gotten your offer accepted or successfully negotiated with counters to get the home for the price your comfortable with.  Your mortgage broker should have began your process of you obtaining your commitment so that all the attorneys can schedule the closing and get all of the necessary paperwork from the homeowners for their short sale to be complete for you to be able to close ! 

Truths & Myths Of Short Sales 

• Myth: The homeowners have defaulted on the house and have not paid there mortgage.
• Myth: Anyone can short sale their home if they owe more than it is worth.    
• Truth: The homeowners must have suffered some circumstance for no longer being able to afford their home, and are unable to make other arrangements with the bank.  

• Myth: You can offer the bank whatever you want, they would rather sell it than hold onto it! 
• Truth: The home may not be worth what the remaining mortgage is on the home, but on average the bank wants 96% of the market value of the home regardless of what they are owed. 

• Myth: You can use any company to list your homes as a short sale! 
• Truth: You can, but your home will not sell.  You need to hire an agent and company that has worked on and with banks on short sales in your area.  Only a knowledgeable agent will be able to properly handle a short sale, the reason their is a higher commission rate is because of the extensive additional work we must do.  

• Myth: Whatever is left in the home the bank will come and clean out before your closing.
• Truth: What you see is what you get, literally this unfortunately includes whatever leftover debris is left by the previous owners.  In the case where the homeowners are still in possession they will almost always take their belongings and properly dispose of what they are not taking with them. 

How Does A Seller Decide Which Offer To Accept ?

The market has definitely perked up this spring already and we are seeing more multiples offer than before.  With multiple offers on homes it has changed the dynamic of how buyers are and should be submitting offers.  Not every home with multiple offers will result in a bidding war, so I want to take the time and explain give you a quick overview on what factors of your offer will be taken into consideration by the seller.

Financing:

• Cash Deal: This has more than one benefit to the Seller, but normally the offer will be significantly lower than what the list price is because of the simplicity of the deal.  First it can close right after the title has cleared because there is no bank involved.  Second, it is usually in "Sold As Is" which means no work will be done to it.  The buyer is still permitted to do the home inspection but you will be much less likely to have anything repaired or replaced. 

• Conventional Loan: This refers to the terms, there will be a larger down payment with this loan and the appraisal might be a bit easier. Since there will be no PMI included in the mortgage payment it will increase what the buyer can afford by monthly payment.  From a sellers point of view the term itself is better because the buyer is putting down a large amount down of 20%.  

• FHA Loan: This again refers to the terms, with a smaller down payment this is often where we see buyers asking for a "Sellers Concession".  For a buyer with this loan there will be PMI that will need to be accounted for, and the appraisal must be handled carefully so that the loan to value comes in where it is needed to.  

• VA Loan: This is a tough sell for a Seller because the buyer does not have to put any money down.  When I have a buyer who is using a VA Loan I suggest still putting down the same amount as what would be due for an FHA Loan to show the Seller your commitment, and you can receive that money back after closing.  

Additional Financing Terms:

• Sellers Concessions: The easiest way to explain this term is it just like taking a cash advance from the mortgage to have your closing costs included.  There is 2 points of view for a seller with this.  First is if the home is going to appraise for $10,000 - $12,000 more why shouldn't they find a buyer willing to pay that.  Second is that what if the home does not appraise will their buyer still be able to purchase the home, or will the deal go bust! 

• Using Gifted Funds: This is something very common with first time buyers, they will count on "gifted funds" from friends or family.  Buyers must check the guidelines of the bank in which they are using about what amount of money can be gifted, and what information they will want and need from the "gifter".  Many times buyers think it can simply be written as "gifted" and that be it, but each bank works differently you should let your agent speak with your Mortgage Representative to be clear on those terms.  

Conditions: 

• Buyers With Homes To Sell: When a buyer has something they need to sell, it puts the seller at risk.  First the funds from the buyers are more than likely coming from proceeds of their sale.  This means that not only does the seller need  things go smoothly with their home, but they are dependent on an agent who is not working for them to push the other deal through quickly and smoothly.  Secondly, timing with this kind of sale is very important because the buyers will only have about a week window after one home closes to get into the other which puts the sellers in a position where the buyers timeline is much more important than theirs.  

• Buyers With Nothing To Sell: Obviously it is better because the sale is not dependent on any major factors aside from their homes appraisal going smoothly.  It also means that the timeline will have less in the way of deadlines aside from the normal mortgage commitment time which is usually between 30-45 days from contract.  

• Home Inspections: First let me say no matter what the case is, spend the time and money to get a home inspection no matter how many offers are on a property.  It is your way of knowing exactly what your getting yourself into, if you want to move quickly and don't want to spend the money ($500 - $750) at least have a licensed contractor check it out.  Depending on what repairs or replacement you want done, can change the mind of a seller on which offer to take.  If another offer comes in $5000 less they may go with it simply because of what conditions the offer is based on.  

The most important piece of advice I can give anyone who is starting their search is to make sure you have an agent who is working for you.  If the home is aggressively priced they should know it and be able to point you in a direction that will get you an accepted offer the quickest so that you don't lose out.  To see more about how to decide on what to offer, and what the process is look here. 

Setting The Price Of Your Home To Sell

I think it is that time again to write about the topic of what you should be using to determine the price of  your home, and what kind of pricing options you have !! This is extremely important because the more homes that go onto the market, the more competition you will have, you want to make sure your listing stands out and gets sold before we have another sudden rush of new inventory ! 

How Real Estate Agents Determine The Value Of Your Home 

All real estate agents should be bringing a Comparative Market Analysis of your home when they come to meet with you to list your home.  Real Estate Agents use a similar system to what the banks will be using to determine your value these are the main characteristics in importance order that you will want to be using.  

• Homes within 1-2 miles of your home that recently sold within the past 90-120 days.
• Homes of the same style (EX: Ranch, Hi Ranch, Cape, Expanded Cape) or similar square footage if there is a lack of comparable style homes.  You can not compare your home to one of an opposite style just because you think your home is just as good, the bank won't allow it.  
• Rarely will you see homes with the exact same amount of bedrooms, baths, or even property size this is where you need to adjust the comps accordingly.
• Take a look at what homes are currently on the market, and compare how your home stacks up to theirs, these homes are your competition.  

In my opinion, if you meet with an agent and they do not bring with them a Comparative Market Analysis than they are not putting in very much effort to help you sell your home since determining the price of your home is really the very first step before listing it.  I always say my job is not to list your home, but to get your home sold ! 

The 3 Styles Of Pricing Your Home 

• Overpriced Home - This type of pricing is not only a waste of your agents time but yours as well.  You are putting yourself behind and unnecessary roadblock, and guaranteeing you will be having the dreaded price adjustment talk sooner than later.  Many homeowners will say "But I am flexible, just bring me an offer!" - There is only one problem with that, and it is that we can not relay that to all of those buyers who aren't a- looking at homes $20,000 above their budget or b- tell those buyers who are in that range that you are flexible.  Remember most buyers find their home online, so presentation including price is a very important factor and we can not write on your listings that you are willing to hear all offers ! 

• Market Priced Home - This is an educated homeowner who has taken the time, and hopefully the advice of their real estate agent and is priced in the same area of those comparable of the recently sold homes.  This kind of pricing will get you showings, and hopefully an offer within 6 months of being listed.  As other homes sell their might be a need to adjust the price of your home to stay in line with what homes went from contract to sold once you were listed.

• Action Priced Home -  Before I explain, let me say this action price does NOT mean pricing the home as if you were giving it away.  When you use this style of pricing you first base it on the comparable homes in the area that sold, but your focus is shifted to those homes that are currently on the market (those that are priced at market value, not of those that are overpriced).  You look at your direct competition and price it anywhere from $8000 - $10,000 below that of your best competition.   Normally on a market priced home once you have received an offer that $8000 - $10,000 is the wiggle room of where you would accept an offer.  What you do by pricing it that bit lower is your drive much more traffic and increase your chance of multiple offers, almost every home that is "action priced" will sell for either the listed price of the home, or possibly more because you have increased the buyers perception of value !   

There are a few things you will also want to keep in mind when you are thinking about where you want to price your home.  The most important questions you should be thinking of when determining the list price of your home are 

1. How much will you need to be able to walk away from your home after the mortgage payoff, brokerage fees, attorneys fees, title transfer fees. If after you total these things up if what you would need to list it for is significantly higher than what your home is worth it is always better to leave it off the market until your in a position to sell rather than have it listed and sit on the market making buyers wonder once wrong with it.  The exception to this is when you are avoiding foreclosure by doing a short sale.  
2. How quickly do you need or want to move ? If you want to move quickly than your best option is to really have your home priced at the "action priced" point so that you can move things along without any delay and a guaranteed end in sight ! 
3. How many times has your home been listed, if your home did not sell chances are it was overpriced which means at the very least you must get in-line with the current market value of your home.  Re-listing it at the inflated price again is working against yourself and buyers will begin to disregard your home because "there must be something wrong with it", and not even the best agent can overcome that ! 

If you are interested in having a Comparative Market Analysis done on your home, please contact me directly.  I will be writing another blog that goes into the specifics between things that will add value to your home verse things that are more features of your home, which can affect the overall listing price of your home in an upcoming blog ! 

                                                                                      

What Is It Really Worth ?

WHAT DO YOU OFFER FOR THAT HOUSE!

Let me start off by saying it is YOUR choice what you offer, but you want to put in a strong offer, it requires research and analysis by your Realtor. This is why you must always work with a buyers broker, this is where you believing in there abilities and trust is important. 

A home is not always worth what it is listed for, but on the other hand if the listing Realtor is a reputable agent than the list price will normally be accurate to what the neighborhood and the home is worth.   A low offer is not always the way to go, make sure your offer is fair!

When pulling these comps your agent will try to get it as close to a match as possible but you will still need to tweak these comps accordingly.  Here are some key points to remember when your agent is going over these with you. 

NEW VS UPDATED

NEW appliances have never been used, this means normally you will have the paperwork for the warranties, and they have been put in within 6 months of the home being listed.   

UPDATED appliances have been used by the current homeowner or tenant, these updates have been done usually within 5 - 8 years of the home being put on the market.  So that updated kitchen could already be 5 years old. 

For a home that is able to boast that it has been completely remodeled, with everything new can add value of anywhere from 8% - 10% compared to other homes that are simply updated.  

MAIN RD VS BUSY RESIDENTIAL NEIGHBORHOOD

This is normally quite the debate, I could name many roads that I would consider main roads in a town but when a bank appraiser comes in will not agree, and therefore they will make no price adjustment. This is a time when trusting your Realtor and seeing the comparison is very important, especially if you are not from that specific area. 

Let me also say this, if a location does not work for you for any reason you should never feel pressured to still buy it from your Realtor, they should offer to show you homes in the same area away from your objection area.  Some examples of this can be homes that have busier traffic patterns, sumps, or simply the privacy aspect to your neighbors. 

This will be your home and you will be the one living there for the next 15 years not your Realtor. 

WHAT IS THE BASEMENT REALLY WORTH ?

Let's say someone has a fully finished basement, with no CO, well unfortunately it is worth nothing, because it is not legal.  For an average size home, with a finished basement with proper permits, the value is surprisingly low they may only raise the value by $5000.  

If your looking in an area that does not have basements you can not reduce the price of the home because of it lacking a basement, because all of the comps do not have them either.  This is often a surprise to those who are looking to live closer to the water, most homes will only have crawl-spaces not basements, and there is no reduction that would be considered reasonable. 

THE MAN THAT WAS GIVEN A HOUSE NOT JUST A ROOM   

The garage typically you will have atleast 1 in some cases 2, and in the rare occasions 3 or more. 

When this happens I call it "The man that was given a house", and I unfortunately have to break the news to them that yes I personally appreciate their 5 car garage, painted floors, and custom shelving, but that means nothing to the bank or a buyer it doesn't add anymore value than a nicely maintained 2 car garage. 

WHAT IS A FEATURE WORTH ?

Unfortunately I wish I could put a value on what a feature is worth, but it is practically impossible.  Every feature will have its pros and cons to an individual buyer.   Some features will be worth alot to a buyer, and others will be a drawback. 

My best advice to home-owners is keep in line with your neighborhood when it comes to features.   Do not go overboard because you can not guarantee you can re-coup the investment you made adding features, but you can be sure that your home has similar characteristics as your competition does, so that buyers will be comparing apples to apples so to speak.   

For many home-owners their features are not added initially to keep up with the neighborhood, but because they were personal wants and needs for the individual.  If you choose to upgrade your home extensively more so than your neighborhood calls for,  I advise you to stay as conservative as possible because it could be helpful or hurtful in a home that has been updated, and is not able to be categorized as new. 

Steps To Getting That Home Under Contract !

I wrote a blog about a year ago, about what to offer for a home when your using comparable homes to base your price on, but I am finding more and more buyers wanting to base their offer on strictly their opinion of what they think the home is worth.   Because of this I decided that it was time to write a blog explaining HOW you go about deciding on what your first initial offer on a home should be from the very first step !

Now, again if your buying the home through the listing agent unfortunately they may or may not go thru the trouble of doing this with you.  This is again another reason to use a buyers broker, this way you have your own agent to educate you on what a home is really worth ! If the home is overpriced the comps will show you that, and if it is action priced your agent will be able to clue you in so you don't lose the house because of a low offer that is quickly outbid.

Step 1 

• Once you have gone and viewed them home and decide you like it, take the time and go back a 2nd time - look through the house thoroughly to see if there are any items you have questions about, if there are 2 refrigerators than make sure it says there will be 2 in the listing, these are things that if overlooked can cause you stress and anxiety later on in the process.  You will get the chance to have a home inspection after you have gotten an accept offer prior to going to contract to look for any issues with the foundation, electrical, plumbing ect.

Step 2 

• Make sure that you have your pre-approval in order and your agent has a copy of it, make sure you also have the funds available that will be needed.  Check with your mortgage broker and review what your closing costs will approximately be.  The reason why is because IF you are going to need a seller concession (cash advance on your mortgage), you must let that be known to the seller upfront.  All of this paperwork will need to be sent out when you present your offer so have it ready for your agent prior to submitting your first offer ! 

Those first 2 steps should take you only 1-2 days to complete, this is something that is really 

very simple but I am seeing more and more buyers who are doing these things after 

they submit an offer and than have to scramble to figure it all out ! 

Step 3

• Go and meet with your Buyers Agent, in their office - yes I said in the office, Why ? Because you can't review comparable homes if your leaning on the trunk of a car ! Hopefully you and your agent have been discussing the value of homes in the area, so that you will at least have an idea of what the value is worth.  

• IF a home is priced at its fair market value than you can safely offer 7% less than what the listing price is, most homeowners & Realtor will want to not or recommend going less than 3% - 5%. 

• IF a home is priced above fair market value than you will want to start around 5% less of what the fair market value is NOT what the listing price is - these homeowner can take sometime to get an accepted offer and sometimes you may have to walk away for a week or 2 and let them sit with no offers in sight and than go back to them.  
• IF a home is priced below fair market value than you will not want to put in an offer quickly, and around 3% less than the listing price if you are really not comfortable paying the list price.  These homes are priced to sell which means they will more than likely get numerous offers if you go in extremely low it will be easy for another offer to be a better deal for the homeowner.  

Notice that all three categories refer back to FAIR MARKET VALUE, you must look

 at the comparable homes that have sold in detail to figure this out since very rarely will 

you find a home that is an exact match to the home your looking at ! 

Step 4 

• Hopefully the process of getting an accepted offer went smoothly, the moment you get a accepted offer you will want to get a home inspector into the home within a day or two of your accepted offer.  You should let your attorney know so they are expecting the contracts, can review them and have them in case the home inspection turns up items that need to be addressed & than properly put into the contracts if need be.  

Step 5 

• Your offer is accepted, home inspection is complete, and the only thing left to do is sign your name on the dotted line ! Don't leave much time between these things happening remember a homeowner can go with another offer even if yours is accepted, until you sign your name on the dotted line the house is not yours ! 

Steps 4 & 5 should be completed within about a week, the longer it 
takes for you to complete these items you are leaving a window for the
 homeowner to receive a better offer !

Next weeks blog will be specifically about what things in a home are worth when you are determining the fair market value of a home that is on the market.  

How To Handle Offers On An Overpriced Home !

Finding the right house for a buyer can be tough, not only on the clients but on the realtor as well. When you opt to use a Buyer Broker it can be a bit easier but sometimes the only thing standing between your and your new home can be a seller.

When you choose to use a Buyer Broker they may show you homes that are priced above your price range, and you may wonder why, isn't that a tease since you can't afford the price. Remember just because a home is listed at a certain price it does NOT mean it is worth what the homeowner may want for it! Sometimes an agent will not take the time to educate a homeowner about the current market prior to listing the home or they may opt to go with their gut on price, this makes it much harder on all involved but it does happen.

When it comes to a home that is over priced in any area the negotiations can go a few different directions but will always require patience and strategy when it comes to putting in an offer. You will of course want to review the comps in the area carefully with your Buyer Broker, because you will want to be confident in your price being fair. Putting in a offer below the market value will make negotiations much harder, because your leaving a bigger gap between what you want to buy it for and what they believe the home is worth. When your agent presents the initial offer that is when you will normally find out why the home has been priced higher than fair market value.

Once your agent has put in your initial offer that is when you will begin to be to strategize what kind of negotiation style you will use when it comes to how you will counter.

If the homeowner comes down to a significantly lower price point it is a sign that their agent is educating them about what their home is actually worth in the current market. You will want to do the same with your counter in order to show them that you are a serious buyer! If your only around $10,000 apart in price sometimes offering to split the difference between is fair and will sometimes get you an accepted offer ! Remember whether the home is over-priced or fair value your best way to get an accepted offer is to put yourself in the sellers shoes!

If the homeowners barely budges off their price, either their agent has attempted to educate them with no success or they simply think the home is worth more as well. The conversation between your Broker and the Listing agent will clear up which one is the case.

This is where things can require quite a bit of patience, sometimes your best bet is to back off of a seller and give them time to sit on the market, and see for themselves that no one will buy their home for that price. It is a risk when you do this, and you should only do this if you have tried presenting at least 2 reasonable offers and your still significantly far apart on price. By far apart I mean over $20,000 and if the seller has not given reasonable counter offers !!

You will also want to be sure your agent keeps in contact with the listing agent, you don't want to wait to see a price reduction on MLS because than you may find yourself in a bidding war because of other buyers looking at the new price ! You shouldn't stop looking at houses either while you are waiting out a seller. Many times I have buyers who look at quite a few other homes in the interim and it helps puts in perspective what their money can buy. You may decide that your willing to pay a bit more than you originally decided for a home, or you may find a better home !

Once the homeowner has had sometime sitting on the market you will than see if they really want to sell their home, or if they were just putting it out their to see what would happen.

Before you place another offer on the house schedule another showing with your broker to go and see it again, ideally when you know the homeowner is going to be home. You want them to know your still interested in their home in case there agent doesn't remind them of your previous offers !!

Make sure when you present your next offer don't skimp out make sure that your agent reminds them of all the details of your offer.  You may still need to do a bit of negotiating but again patience is key ! If the homeowner is still not being reasonable you may have to continue to wait it out, you may end up finding a better home but I'm always certain for every buyer is the perfect home !

Most people think the number one reason to use a Buyers Broker is so that you don't over pay for a house, but that is not actually the most important. It's not always about making sure you don't overpay but also about making sure you don't miss out on a home because of trying to under value someone's home. The best reason to find yourself a Buyer Broker that you trust is actually to make sure you don't miss out on a home that would be a great fit for you period.

What You Should Look At Before Extending Your Listing !

If your home has been on the market throughout the spring and summer the listing is likely to expire soon, but it may not be in your best interest to pull it off the market just yet.  Now I am not saying to stick with the broker that your using in order to keep it on the market if your not happy with your broker or you want to interview others than by all means do so.  

Anytime I take a listing that will be on the market during the fall/winter season I always let my clients know that business does not stop during these months but you will see less activity.  This is actually better for homeowners, you may not have the quantity of buyers but you will have a better quality of buyers.  If someone is out in snow and cold weather you can bet that they are serious buyers, they aren't just out in the cold for no reason.

Now if you listed during the "busy" season, take into consideration how hard did your broker work for you while he/she had your listing?

• Did you recieve feedback after your home was shown ? It is not always easy to get feedback from other Realtors or Buyers but it is our job to get it for you, a week is more than enough time for your Realtor to inform you of what they thought of the home.   

• How often did you review your market position ? The spring and summer months provide alot of inventory for buyers to choose from so keeping on top of your market is very important.  How often did you and your Realtor discuss your homes position compared to others that were on the market, and those that had come off ? 

• How many open houses did they do, and what was the status of those buyers ? Each Realtor has a different opinion on open houses, I personally think they are important because it gives your buyers an immediate way to see your home.  You should have discussed this with your Realtor before you listed, if you didn't I suggest you do so before extending your contract with them.  You can not be angry if there are none or not enough if you did not discuss what your expectations are.  

• Did you recieve any offers ? Not all offers are good offers, just because your home received an offer does not necessarily mean it was worth you taking.  Did your broker try to work that offer ? Just because someone offers is very low does not mean that this is all they are willing to give.  Sometimes you have to work an offer for quite sometime to make it worhtwhile, but you will never know unless you have someone who is willing to put in the time. 

Before you extend your contract with your Realtor you should take the time to review in detail all of these things regardless.  Pulling your home off the market isn't necessarily a good idea, even 2 or 3 months off the market doesn't change the fact you were trying to sell it. Thanks to technology it takes about a half a minute to find out how long someone has been trying to sell for and buyers do quite a bit of research on their own.  

There are a few things you will need to do if you plan on extending that you may not have thought of, it is not just about signing the report of change form, you will want to update your listing.

• Perhaps re-word the description sometimes less is more, if you have a lengthy description it may be too much or visa versa.  
• Update your pictures, the change of seasons will be upon us sooner than we would like to think so be ready to take updated pictures of your home so your listing doesn't look dated. 
• Update your show instructions with your Realtor, if you think you will need your agent to attend more showings discuss it so when those quality buyers want to see your home they can !

If your new to selling a home than you should refer to my blog which explains the common terms and paperwork that you will need to understand Click Here For Blog.

I will be writing another blog this week reviewing exactly what the difference is between a full service real estate agent, and what other brokerages will offer, I will link it to this blog once it is completed.

Why Should I Use A Real Estate Attorney ?

It is time for another blog directed for both the buyers and sellers at there whose home is either on the market, or are thinking about doing so.  The one thing everyone must be prepared to do is find an attorney that they like, and trust.  Don't just pull someone out of the phonebook, either ask your real estate agent for a referral to one that they have worked with before.  If you are a buyer, than you should be working with a buyers broker so your agent will be able to refer you to one as well.

Not all states require the use of attorneys during the purchase of a home, but even if you are buying a home out of state I always  recommend you use a attorney to protect yourself from entering into a contract that is not in your best interest.  That being said, it is time to get to the point of this blog which is why you should be using a REAL ESTATE ATTORNEY, notice those 2 words in the beginning says real estate.  There is a saying, you can only do one job well.  Attorneys can do many different things divorce, elder law, criminal law, family, ect.  and each one of these areas have its own set of rules and quirks.  Do not use an attorney who does not specifically work on real estate transactions, and I don't mean someone who does them whenever they are requested to.  You should be using someone who does it every single day, because you want this attorney to know absolutely everything they may need to to help you during this transaction.

I happen to be very lucky and we have quite a few attorneys who are on our preferred attorney list, and they have only earned a place there because 1.  They are real estate attorneys and 2. Our clients have told us what a wonderful experience they had working with them.  We do not add attorneys to our list and let them stay there just because, if we get complaints they are removed.  A common mistake is that people choose their attorney based on price, and I understand the concern over the money when your making such a large purchase but take into consideration that a good real estate attorney can cost anywhere from $800 - $1200 for the entire transaction, it is well worth it.  Plus many general practice attorneys will charge a higher rate, or even an hourly rate for your file so you will end up spending quite a bit more if there is even the smallest hiccup.

I have worked on some very hard deals, and the only reason they closed was because of the  options that the Real Estate Attorney offered to them, at the same time I have had attorneys almost kill a transaction over something completely avoidable just because they weren't aware of a simple resolution.  Sometimes after the bidding is done, and the attorneys are involved your agent will need to step back in and play the middle man, you should never feel pressured by your agent but understand they are trying to be the glue that keeps you on track to either buying or selling your home and that is what you hired us to do!

Let me give you an example of the difference in what COULD happen during a transaction where a Real Estate Attorney was not involved.

A deal is made and signed by both buyers and sellers. 
Seller agrees to close within 30 days on a cash deal, but the house will be sold as is.
Buyer agrees to close within that time frame, and agrees to the contingencies which go along with a cash transaction.

Attorneys are contacted and asked to send out the contracts to both parties.

Contracts come back and buyer is "requesting" home inspection with repairs to be made, and/or credits and adjustments.
 
You are always entitled to a home inspection but homes that are being sold as is, mean exactly that AS IS.  Non real estate attorneys will often overlook this and send out a standard contract, and it will start a un-needed disagreement.  This is something we commonly see with estate sales, short sales, and foreclosures.

The sellers opt to not sign into this contract because it does not meet the terms of the original agreement that was made, and the agent is not due to check in with the attorneys for another day or 2 and is not contacted regarding this hiccup.

Now if a real estate attorney a few things more than likely would have gone differently because

• The attorney would have taken specific notice to the terms/closing time and checked with his/her clients regarding what was being represented in the home and what was not. 
• The attorney would have been in direct communication with the agent which would have allowed the 3rd party mediator AKA The Realtor to review original terms of the transaction with his/her buyer eliminating the problem in a timely manner before it escalated.
• If the issue was something simply fixed this can sometimes be done via a verbal agreement that does not require money held in escrow.  

Please keep in mind this is just an example, sometimes transactions where non-real estate attorneys were used have gone thru with no issues at all BUT this is a big decision you are making.  Would you go to your general practitioner if you were having a heart attack ? No you would go to a emergency room, sure the GP might be able to help but what if it doesn't ? This may seem extreme, but you have no idea what it is like to see someone lose their dream home! 


There are 3 circumstances that you absolutely, positively must use a real estate attorney.

• Cash Deals: These deals can be tricky because they have very specific terms as far as what is being represented and your closing date.  

• Short Sale/Foreclosure: Banks are hard to deal with, and in this case it is who you are not only buying your house from, but it is also whose financing your loan.  There must be a direct line of communication to the banks, your lawyer needs to be educated on what these processes are.  

• Estate Sales:  This is where it gets tricky because there is usually more than one seller, it usually involves family members who are not familiar with the what is legal on the home and what is not, plus the condition is not always all that great.  It also comes down to how the home is titled and who needs to be present for the closing, and what paperwork is required.  

Now for those of you non-believers lets also look at another reason why you need to use a Real Estate Attorney, and it has nothing to do with the Attorney or his knowledge.  An attorneys staff is also important, they are usually the ones drawing up the contracts and who is contacting all the parties involved.  Keeping with the Dr analogy if you were having a heart attack, and the nurses assistant told you to just go home you would end up in quite the pickle but she may assume it was just a bit of heart-burn, even though she meant no harm it can cause a big problem for you! 

Cash Deals In Today's Market

I thought it was about time I took some time and wrote a blog about cash deals in today's market.  Interest rates are at a all time low still, but some buyers are still opting to buy their homes in cash figuring it will earn them interest quicker invested in a property than sitting in the bank.  If you are the buyer who has the ability to buy in cash you do have the upper hand on some other buyers, but not all.  This blog is for both the buyers, and for sellers to help both understand how a cash deal works, benefits of accepting a cash offer, but also how/why a seller may not be able to accept a cash offer.  

Presenting A Cash Offer

There are certain steps to presenting a cash offer that you may not ordinarily have to do, normally when you present an offer with a mortgage you would be presenting the offer with you mortgage pre-approval.  When you are doing a cash deal you will need to provide "Proof of Funds", this must be  recent, if your proof is 3 months or older you must get a new one.  Generally you can contact an agent at your bank and ask them to provide you with a letter, or even simply a copy of a recent bank statement with your bank account information hidden with only your name and available balance displayed.  

If you are purchasing your new home, with the cash from the sale of your current home than you must let this be known in the very beginning of negotiating.  Before you can place an offer, just like any other buyer you should be under contract on your current home.  

Benefits Of Cash Offers 

A seller may or may not prefer a cash offer because of the benefits it presents to them.  Not all homeowners are in a position to accept a lower cash offer because they may have a certain amount they need to "clear" on their home.  There are benefits that can make taking a lower cash offer vs a higher offer with a mortgage appealing to a homeowner.  

• No Bank Appraisals - This is pretty simple to understand, you do not need to worry at all about whether or not your home appraises because there is no bank involved which can sometimes be an obstacle.  

• No Loan Funding Contingencies - Whenever someone obtains a mortgage there are certain paperwork the bank will require from them, if they can't meet those requirements they will not be able to obtain the mortgage.  This can sometimes be avoided by using a good mortgage company but their are no guarantees, financial circumstances can change quickly and unexpectedly. 

• Home Inspections - Every buyer is entitled to a home inspection, but generally with cash deals the home is sold "as is", which means there will be no repairs or credits done to the home.   This is because generally homeowners are already accepting a lesser offer because of it being cash.  

• Faster Closing - It generally takes 60-90 days to go to closing on a home, the time frame is usually decided by how quickly a buyer can get the mortgage commitment, and close.  With no bank comes the benefit of being able to close at a time that is good for both the seller and the buyer.  

I have many homeowners ask me when is the best time to accept a cash offer vs waiting for a buyer with a mortgage pre-approval, unfortunately there is no set criteria but I can give you some pointers on when or why you should consider it.  

• If you need to move or relocate quickly, no one likes the idea of leaving there home vacant because of the risks and costs associated with it.  
• If you have your eye on another home that is on the market the benefit of having your home go to contract quickly will in turn mean you can put in a stronger offer for your new home.
• If the home is an estate sale it may need work, or you may not know the full history like the actually homeowner would.  Homes that need work will generally take longer to sell, which is why a cash offer allows you to move the home quickly reducing costs, as well as risks while giving you less responsibility after your home inspection report comes back.  

Always remember your Realtor should be advising you whether or not a cash deal is a good option for you, this goes for both buyers and sellers.  If you are the buyer placing a cash offer, my best advice is to make sure your Buyer Broker has helped you come up with a fair offer, remember there is a difference between a cash offer and a low offer ! For homeowners that have received a cash offer the process of deciding whether to accept it, or perhaps counter all depends on your home, situation, and the market for your immediate area. Your Realtor will be able to pull what cash sales have closed to help you make an educated decision about what is a fair offer for your home! 

Tips For Sellers During The Home Inspection Process

I have written a blog previously for buyers about home inspections, but over the passed few months I have found that the sellers are the ones needing more guidance when it comes to their homes inspection.  So this blog is going to be specifically only for those potential sellers out there !!

First lets talk about what you should do to help the process along !

Tips For Sellers Preparing For A Home Inspection 

• Move any smaller furniture that is blocking areas that the home inspector will need to get to (ex: outlets, electrical panels) 
• Clean out utility areas (ex: remove clothes from the washer/dryer) 
• Make sure all your bulbs are working, sounds silly but important (ex: attic, garage)
• Remove your pets to allow the inspectors to work thru the house without any distractions or potential issue
• THE MOST IMPORTANT TIP: LEAVE and let your real estate agent stay ! 

Tips For Sellers During The Home Inspection

• If you decide to stay during the home inspection try your best not to try and "explain" things in the house, something you may think is a big deal might not be and visa versa
• Do not try and cover up anything, the home inspectors are thorough and they will find whatever you may have tried to hide and than they will search more to make sure they didn't miss anything
• Do not negotiate on anything during the home inspection, again something that may be a red flag for you may not be for your buyers
• Keep your distance, do not hover over the home inspector stay available IF he has a question otherwise he is a professional allow him to do his job 
• Don't expect to have the report immediately the first person to get a copy of your homes inspection will be the potential buyer who than can share it with you 

Once the home inspection has occurred is where things may get tricky for a homeowner, this is your second round of negotiations which means the price of what your home sells for just might be changing again! 

The agreed upon price of your home before a home inspection 90% of the time is not the actual final price.  

If there are safety, structural, electric, plumbing issues in your home that is uncovered you will usually be given the option to either 

A: Fix It              or B:                  Give the buyers a credit so they can have it fixed once they take ownership.  

Common Items Needing Negotiations

• Underground Oil Tanks - These will require soil testing, filling or removing old tank, installation of new tank
• Asbestos - Not all asbestos is a hazard but a certified professional is the only one who can safely make that determination
• Wiring - Broken electric outlets, outdated service
• Safety Concerns - Raised pavement on walkways, decking
• Roofs - Older or damaged roofs 

Where Do The Home Inspectors Inspect ? 

There of course are times where if a house is priced well below market value that it will be referred to as "Sold As Is" this is what happens commonly frequently with Short Sales & Foreclosures which means the buyer should have the inspection to make sure they are not getting in over their heads, but should not expect any changes to be made to the contracts or the home.

If you are a homeowner there are some very important things you should remember BEFORE you begin negotiating those items that require repair or credits !

• If there is a significant issue you should try your best to negotiate thru it, because if one home inspector finds it chances are this will be an issue with any buyer 
• There are more homes than buyers, if you have a buyer do your best to keep your deal afloat by being fair and realistic 
• Just because something does not bother you, it does not mean that the buyer should feel the same as you do about an issue, just like you do not want to give your house away, a buyer does not want to over-pay for a home that requires work 
• If you can fix it cheaper than their estimate either A: Suggest getting more estimates B: Offer to fix it
• Trust your Realtor, they should have attended the home inspection, reviewed it and be able to help advise you on what is important

The first thing you should do before you start to negotiate is meet with your Realtor, discuss what showings your home has had since other brokers have become aware of your accepted offer - if you have not had anyone show the home because of that it means that their are no aggressive buyers looking to buy your home.  You should also review the inspection report with your Realtor, we are by no means professionals in the home inspection process, but we do know what we would look at if we were working as a buyers broker and what items could possibly be an issue.  

Most importantly always remember that you may not like to hear what we are telling you, but our jobs are not to tell you what you want to hear, it is to make sure you are informed and help you make good decisions during the process of selling your home !! 

What To Offer For That House?

Let's take a moment and touch on a subject not many Reatlors write blogs about, and that is

WHAT DO YOU OFFER FOR THAT HOUSE!

Let me start off by saying it is YOUR choice what you offer, but you want to put in a strong offer, it requires research and analysis by your Realtor. This is why you must always work with a buyers broker, this is where you believing in there abilites and trust is important. 

A home is not always worth what it is listed for, but on the other hand if the listing Realtor is a reputable agent than the list price will normally be accurate to what the neighborhood and the home is worth.   A low offer is not always the way to go, make sure your offer is fair!

In some towns, there are certain areas that only span a few block that the prices go up higher than other homes within the 1 mile radius that you would normally pull the comps for.  When this is the situation you need your Realtor to explain exactly what it is, sometimes it is simply that the area is more desirable, other times it is school district, or distance to certain amenities a town or village can offer. 

The lack of comps can sometimes cause confusion for the buyer because now you need to do quite a bit of math to add and subtract for the difference, because the comps will not match perfectly to the home they are comparing it to. 

When pulling these comps your agent will try to get it as close to a match as possible but you will still need to tweak these comps accordingly.  Here are some key points to remember when your agent is going over these with you. 

NEW VS UPDATED

NEW appliances have never been used, this means normally you will have the paperwork for the warranties, and they have been put in within 6 months of the home being listed.   

UPDATED appliances have been used by the current homeowner or tenant, these updates have been done usually within 5 - 8 years of the home being put on the market.  So that updated kitchen could already be 5 years old. 

Because of this even when a bank comes in, they will always add value to homes that are new/recently remodeled.  Because of the changes in energy efficiency from the type of insulation that is used to compared to previous years, appliances, and building material these homes have a higher value than a home that has just been updated over the years. 

For a home that is able to boast that it has been completely remodeled, with everything new can add value of anywhere from 8% - 10% compared to other homes that are simply updated.  This is something very important to keep in mind when you are comparing a remodeled home to comps that are not.  As a homeowner I agree that these homes are very much worth the extra money that you pay to own one, your value will rise much quicker, and your out of pocket costs to move in and maintain your home will be less than the average home-owner. 

MAIN RD VS BUSY RESIDENTIAL NEIGHBORHOOD

This is normally quite the debate, I could name many roads that I would consider main roads in a town but when a bank appraiser comes in will not agree, and therefore they will make no price adjustment. 

Location is the one thing you can not change about a home.  You must decide as a home-buyer if this location is right for you or not. 

Keep in mind that when you are putting in an offer, you can reduce your offer if you feel the home is over-priced based on the homes location, but be reasonable when you make this deduction.  This is a time when trusting your Realtor and seeing the comparison is very important, ecspecially if you are not from that specific area. 

Let me also say this, if a location does not work for you for any reason you should never feel pressured to still buy it from your Realtor, they should offer to show you homes in the same area away from your objection area.  Some examples of this can be homes that have busier traffic patterns, sumps, or simply the privacy aspect to your neighbors. 

This will be your home and you will be the one living there for the next 15 years not your Realtor. 

WHAT IS THE BASEMENT REALLY WORTH ?

To me personally they are priceless, to a bank appraiser they don't add any huge value because there are many variables that decide the value for you.   

Let's say someone has a fully finished basement, with no CO, well unfortunately it is worth nothing, because it is not legal. 

For an average size home, with a finished basement with proper permits, the value is suprisingly low, between $5000 and $8000. 

If your looking in an area that does not have basements you can not reduce the price of the home because of it lacking a basement, because all of the comps do not have them either.   

This is often a surprise to those who are looking to live closer to the water, most homes will only have crawl-spaces not basements, and there is no reduction that would be considered reasonable. 

THE MAN THAT WAS GIVEN A HOUSE NOT JUST A ROOM   

The garage typically you will have atleast 1 in some cases 2, and in the rare occassion 3 or more. 

When this happens I call it "The man that was given a house", and I unfortuntaly have to break the news to them that yes I personally appreciate their 5 car garage, painted floors, and custom shelving, but that means nothing to the bank and doesn't add anymore value than a nicely maintained 2 car garage. 

A garage that is over the top is not neccessarily considered a "value" when it is is extremely large, but it is considered a selling "feature" because this isn't something that the average buyer is looking for, but some will appreciate and want. 

Things like numbers of bedrooms, bathrooms, kitchens, living rooms, are what add that value to a home. 

HOW MUCH ARE THOSE EXTRA ROOMS WORTH ?

When it comes to pulling comps I would personally never recommend using homes that did have the same numbers of kitchens. 

Mainly because kitchens are really what sets a house apart, it can go from a 1 family to a duplex, legal 2 family, 2 family by renewalable permit, or mother daughter.  Also keep in mind if you look at a home, and you notice that 2nd kitchen but it is listed strictly as a single family dwelling, and the listing broker is not representing it as a kitchen than it is because it is not a legal kitchen which makes it worth $0! This is where again it will become a selling "feature", and can quite possible cause some red flags when it comes to obtaining a mortgage. 

As far as bedrooms, bathrooms, living rooms, and dens these do add value so you will increase or decrease this to the value of your comps. 

Personally I will add between $8000-$10,000 depending on the depicted size of the room for average size bedrooms, and dens.  If a home has a master suite which can include its own separate bath, walk-in closets, sitting rooms than obviously you would add more than $10,000.  

Bathrooms although they have value, are more valued by us than a bank.  Normally I try to stay as conservative as I can between $5000 - $8000.

This is also an area where the difference between NEW and UPDATED plays a huge factor, a home that has truly new kitchens and bathrooms are always worth top dollar as far as putting a number to them.  Most new homes come with granite counters, tile backsplash, stainless steel appliances, furniture styled vanities, hardwood floors, CAC, multi-zoned heating these become both a feature and a value. 

WHAT IS A FEATURE WORTH ?

Unfortunately I wish I could put a value on what a feature is worth, but it is practically impossible.  Every feature will have its pros and cons to an individual buyer.   Some features will be worth alot to a buyer, and others will be a drawback. 

My best advice to home-owners is keep in line with your neighborhood when it comes to features.   Do not go overboard because you can not gurantee you can re-coup the investment you made adding features, but you can be sure that your home has simliar characteristics as your competition does, so that buyers will be comparing apples to apples so to speak.   

If all the homes in your neighborhood have beautiful landscaping in the front, than I would suggest small upgrades to be sure you have similiar curb appeal.  If most homes have peeled back their carpeting to expose the hardwood floors beneath, when you put your home on the market either A- Remove the carpeting B- Make sure your agent expresses that their are hardwoods underneath the carpeting. 

For many home-owners their features are not added initially to keep up with the neighborhood, but because they were personal wants and needs for the individual.  If you choose to upgrade your home extensively more so than your neighborhood calls for,  I advise you to stay as conservative as possible because it could be helpful or hurtful in a  home that has been updated, and is not able to be categorized as new. 

 WHAT'S A FEATURE ? WHAT'S A VALUE ?

Features

• Pools, Heated Pools, Sauna's, Hot Tubs  
• 3 Car or more garage
• In Ground Sprinklers
• Brick Pavers
• Outdoor Lighting
• Solar Panels
• Elaborate Fencing, Gardens

Value

• New Renovations & New Construction  
• LEGAL Add Ons (Ex-Basement,Extentsions, Dormers)
• Waterfront/Waterview/Private Beach
• Bedrooms/Bathrooms
• Living Space
• Property Size