Archive for September, 2007
I’ve been working with buyers who have been trying to decide whether to make a “home sale contingency” offer on a property in Woodbridge VA or wait until they have a contract on their current house. This isn’t the first time I have had buyers who needed to make this decision.
It is a tough call to decide whether buyers should wait until they have a contract on their current home or go ahead and make an offer. Both scenarios have pros and cons. When everything in Northern Virginia was flying off the market it was nerve wracking to write a non-contingent contract, even when the buyers had a house to sell, but you were fairly sure that their home would sell just as fast as the home they wanted to buy. In a sellers market they wouldn’t accept a contingent contract for any reason because they knew another buyer was just around the corner.
However, in our current buyers market in Prince William County sellers might be more likely to consider a home sale contingency. For a seller accepting a contingent offer means that their home is technically off the market. Even though our local MLS system has a special code, shown as CONT/KO (contract with kick-out) most agents only search for properties listed as ACTIVE and so the CONT/KO properties are often overlooked which lowers the chance of a second offer coming in.
When I am working with buyers who wants to make an offer with a home sale contingency I make sure that they have their financing in order and that consider making an offer close to the list price (if it is on target) and that the contingency period is for a reasonable amount of time.
This is where the knowledge and negotiating skills of the agent representing you is critical in making sure that as a buyer you have a reasonable chance of getting the contingent offer accepted and that you are protected during the contingency period.
Talking through the risks of either choice is important before you make the final decision. Different buyers will make a different choice based on their circumstances. Working with an agent who is representing your best interests in either scenario is important to help you to better understand the current market conditions, talk through all of the options with your agent will help you make the best decision for your circumstances. Every deal is different and what was right for someone else might not be right for you.
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This great line from the movie Moonstruck is my response to those in real estate who are worried about how the disintermediation of information is going to change our jobs. Snap out of It!
My response is based on having gone through this experience in another industry. For 10+ years before becoming a Realtor® I was in charge of product strategy for three different administrative and academic computing companies. My primary projects were helping to design web based interfaces that would provide “self-service” capabilities for students and faculty to data that previously required an administrator to handle.
Take a step back in time if you will. If you are close to my age then you remember your first days on a college campus. You headed to a gym, filled out a schedule (in pencil), stood in the appropriate line and if you were lucky the punch cards for the courses you wanted were still available. If not you started over. Fast forward to today. Before a student ever sets foot on campus they have a login to the campus portal where they can get on line advising, register and pay for classes, buy tickets to any campus event, set up email and find out the assignments for the first weeks of classes. And that is just the start of what they can do. Are there still administrators and faculty on campus? You bet there are. Did they become obsolete as self service technologies became more prevalent? Absolutely not!
Roles changed and opportunities were created to get out from behind the desk and create value added services that could never be found on the computer. As Realtors® it is now our time to be able to showcase our value proposition to our customers. We were only taxi drivers because the buyers didn’t have access to the information they needed to be able to search for homes themselves. Our skills as contract negotiators, relationship managers and deal closers has long been overlooked because for the most part all our buyers ever saw was the back of our heads in a car all day.
Our industry has managed to keep itself locked behind closed doors far longer than most. The “new” technologies that are being introduced in our industry are only new to us. If you don’t articulate your value proposition loud and clear to your customers then you can bet that another Realtor who is two steps ahead of you will. Personally I don’t think the “new” systems that are coming are comprehensive enough. I’ve already starting designing both my ideal “Buyer Portal” and “Realtor® Portal”. Hmmmm, I wonder who would like to build it for me?
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In the market we currently have in the Northern Virginia it is likely you will have buyers that fall in love with a home that is listed as a “short sale.” In most cases there won’t be any problems with getting the property to the closing table. However the value of the business relationships that we develop as Realtors® can help immensely in keeping a “short sale” from becoming a nightmare for buyers.
Not all sellers in a short sale situation have been 100% upfront with their agent on how much they owe on the property. Perhaps it is out of embarrassment or maybe they think they can get away from the closing table without anyone knowing how much they actually owe. Even as a buyer’s agent checking the previous sales and tax records doesn’t give you an idea of what they may have done with their financing after the sale.
Recently I had buyer’s who were seriously considering writing an offer on a nice home in Alexandria. I spoke with the agent to clarify if the sellers had worked out everything with the bank and would they be able to come to the table with the money needed or have the appropriate letters from the bank that the amount owed would be written off. They assured me everything was taken care of.
After a couple of uneasy nights I decided to call one of the title companies that I work with on a regular basis and ask if they would do a pre-contract title search for me on the property. They readily agreed and what they found blew us away. The sellers had only told their agent about two loans-it turned out they had four loans on the property. Instead of being short 15K they were short 45K. Now it isn’t any of my business how they got themselves into this very unfortunate situation but it is my job to keep my buyers from walking blindly into this mess.I knew right away that this was a sale that would not go well. In fact we might have gotten 30 days down the road, completed and paid for a home inspection and who knows what else, if I hadn’t made the call to the title company before writing the contract. This is just another reason to keep your business relationships strong in our current market and why buyers should always have their own representation. It will save a lot potential headaches for agents and heartache for buyers when you find out the home you want to buy is in far worse financial condition than you know.
. In fact we might have gotten 30 days down the road, completed and paid for a home inspection and who knows what else, if I hadn’t made the call to the title company before writing the contract. This is just another reason to It will save a lot potential headaches for agents and heartache for buyers when you find out the home you want to buy is in far worse financial condition than you know.
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In Northern Virginia we have agents who specialize in REO properties. In some cases when I’ve called them to ask about a property I learn it is their only business. They have dozens of properties and in one case there is an agent with over 80 current active listings. Other agents have built relationships with asset managers and have both REO and regular listings. Having toured some of the REO properties for sale I can’t understand why most agents would want to jump into the REO business.
However, I also come across foreclosure properties which you wouldn’t be able to distinguish from any other listing if it wasn’t for the remarks in the MLS. They are clean, in good condition and show well. Some of them have never been lived in. Yet they are marketed by the agents the same way as the “sweat equity” properties. 
The information in the MLS is often rudimentary “WOW” doesn’t tell me much (is that good or bad WOW) and rarely any photos. . Trying to show these properties can be tricky and one time I waited for 3 days for an agent to call me back. Of course my buyer had moved on by then.
So it made me wonder. Do the asset managers that are placing these properties realize the differences between the properties? Would they have a better chance of moving inventory if they did a better job of marketing them? Perhaps they need to rethink how the assign properties to REO agents. Since most of these properties have been seen by multiple agents as part of the pre-foreclosure or BPO process they have to know they a marketable property. Pricing is still the number one priority but we all know that how you market a property and bring traffic to the door is also important.
As the asset managers continue to push these properties out to a select few agents as if they were part of a “mill” they may find they are short changing themselves in getting a home SOLD.
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Will the Fed Rate Cut Help Home Sales?
September 19th, 2007 Categories: Local Market Updates, Real Estate Ramblings
My immediate reaction to the announcement of the ½ point cut in the Federal is SO WHAT?
I think it is unreasonable to expect to see a major rush of buyers applying for new loans due to this cut. The people who will benefit immediately may be those who have adjustable rate mortgages that were ready to change. And I say maybe because just because the Feds have cut the rate doesn’t necessarily mean that your mortgage company will pass any savings on to you.
We all hope that this announcement will begin to stir positive press and better news for the local housing market. In the meantime if you know your rate is scheduled to adjust and you are struggling to make your payments now is the time to pick up the phone and make a call to your mortgage company. Don’t assume that this announcement is going to work in your favor. Be proactive. Your mortgage company would rather work with you than own your house!
Here is a quick run down from USA Today on the impact on the rate cut:
Credit cards. Most banks peg credit card rates to the prime rate, which fell to 7.75% after the Fed’s rate cut Tuesday. But you might not get a lower rate for one to three more billing cycles, depending on when and how often your bank resets rates.
Fixed-rate mortgages. Average rates fell to 6.31% last week, down from 6.74% in June. It’s hard to say if rates will fall further because fixed mortgage rates typically follow the 10-year Treasury note’s yield, which was unchanged Tuesday at 4.47%.
Adjustable-rate mortgages. About half of ARM rates follow the yields on short-term Treasuries, which fell Tuesday. The three-month T-bill yield, for example, fell to 3.94%. If your ARM is tied to Treasuries, your rate won’t rise as much as it would have if the Fed hadn’t cut rates. ARMs pegged to the London Interbank Offered Rate might not get much relief. Most subprime loans — higher-rate loans taken out by people with poor credit — are tied to LIBOR. LIBOR has remained high because many banks remain reluctant to lend. Those willing to lend demand higher rates to account for today’s risky credit markets.
Savings rates. Yields on money market mutual funds closely follow the fed funds rate and should fall half a percentage point in the next few weeks. Rates on bank CDs may fall less, because banks are bidding aggressively for consumer deposits.
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The lastest edition of Carnival of Real Estate has been posted on Ekday and my article titled Sticking My Hand in a Hornets Nest was selected as a Top 5 Real Estate blog post for the week. I’m sure Lauren will benefit from all of the knowledge she found in this weeks Top 5.
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If you want to get a group of Realtors® buzzing like a nest of angry hornets just say the word “discount” and see what happens. For the most part real estate agents are self employed business owners, even if they are associated with a large national brokerage they have the flexibility to determine what they will charge for their services. So when I see an agent touting their commission and fees as a “discount” I wonder two things; are they desperate for business and what won’t they do for you when you hire them to list and sell your home.
If you call an agent who has advertised their services as “discount” you need to determine what they think they are discounting from. Usually the answer will be from some imaginary commission rate that they think is standard. There is no standard commission rate. The law is very clear that brokerages can not conspire to set rates. An individual agent can determine what they consider fair business rates for their services but they can not tell the agent next door what rate they can set. So if an agent tells you the standard commission rate is “x” and mine is “y” then they aren’t giving it to you straight.
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Virginia’s Oldest Chartered City
September 14th, 2007 Categories: Focus on Prince William, Morning Coffee, Out and About
Morning coffee -quick tidbits for you to think about as you start your day
Most people think Old Town Alexandria is Virginia’s oldest charted town but they would be wrong. As you drive down Route 1 between Woodbridge and Quantico you pass through an area known as Dumfries. For many local folks it is an unforgettable area that often is referred to as “dumb-fries”.
However chartered one day before Old Town on May 11, 1749, Dumfries was a thriving cultural and commerce center in its time. Founded by Scottish merchants, the town had large tobacco warehouses and was the second largest port in the colonies only surpassed by Boston. Dumfries was also known as a cultural center with theaters, race tracks and artisans.
When historians talk about thriving port cities of the 1700’s they mention Boston, Charleston and Alexandria but not Dumfries. Perhaps part of the reason is because today there is no port. Try as hard as you would like but you won’t find any remnants of the port and in fact as you are driving on Route 1 you are actually driving where the port used to be. For reasons that are still unclear in the early nineteenth century silt began filling the port making it unusable.
There are plenty of new waterfront developments being built close to the Dumfries area in eastern Prince William County so perhaps in a 21st century way the town will regain some of the glory of the past.
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The Virginia Association of Realtors has it right. They have hired a new Director of Communications & New Media, Ben Martin and his hiring is a hopeful sign of the VAR embracing the brave new world of Web 2.0. Ben is reaching out to Realtor® Bloggers across the state to join together at the upcoming VAR Convention in Williamsburg.
I’m looking forward to joining in on the discussion and meeting fellow bloggers. Check out the information on the Bloggercon and if you are going to the VAR convention sign up to join what should be a great conversation about VAR’s future plans.
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Are you a homeowner facing foreclosure? If so you need to watch out for companies that are calling and writing you claiming that they can help you beat foreclosure. Unfortunately most of them are scams and they are looking for ways to try and make you part with what may be left of your savings.
With the evidence of foreclosure rising in our area, a recent MLS search in Prince William County alone showed over 600 detached homes that may be facing foreclosure or already in the foreclosure process, the scammers are working over time. How do they find out about the potential foreclosure? The easiest way is to read the Friday paper which lists pending trustee sales and courthouse auction notices. They also can subscribe to a number of on-line sources which post pre-foreclosure information provided by mortgage companies.
So what do you look out for?
Anyone who asks for an upfront fee
Contacts you only after your home is listed for foreclosure
Tells you to make your mortgage payments directly to them instead of your current mortgage company
Asks you to transfer the title to your property to another name
Offers to “buy” your equity and let you rent back your property
If you are facing the possibility of foreclosure the most important thing you need to do is contact your current mortgage company right away. They stand to lose money if you foreclose. As tough as it may be it is better to talk to your lender directly than wait for the sheriff to show up at your door with an eviction notice. More and more companies are working with homeowners in difficult situations look for alternatives to the foreclosure process. The mortgage company really doesn’t want your house back if it is at all possible to find another way.
For more information you can also check out this latest Publication by the Department of Housing and Urban Development.
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