Archive for the 'Real Estate Ramblings' Category
A while ago I penned a post Should I add Burglar to my Business Card after a round of issues with gaining access to a property. This week I discovered that other agents just leave the breaking and entering to their clients.
So here is the scenario. What would you have done?
My clients and I attempted to view a house that was #1 on our must see list. There were keys in the combination lockbox that worked one lock but not the other. Then I spied an electronic lockbox and discovered a different key inside. That key fit the backdoor locks but didn’t open the door. After all three of us tried to open the door with no success I put in a call to the agent (got VM) and we decided to head on to view other properties. When we didn’t get a return call from the agent we decided to call it a day and hopefully be able to see the property the following day.
On a whim, after grabbing a bite to eat my clients drove back by the property and saw someone coming out the front door. They stopped and said they had been by earlier with their agent but couldn’t get in. The agent said they couldn’t get in either with the keys but her client found an unlocked window, crawled in and came around and unlocked the door. The agent then handed my clients the keys and LEFT! Drove away, gone, bye-bye.
My clients called me and said “guess what we are in the house.” When they explained how they had gained entry I told them to leave. We figured out how they could lock the house for us to get back in and arranged to meet back at the property in an hour.
I don’t know if the other agent had tried the electronic lockbox so there might be a record of who it was but I’m shocked that an agent would just casually drop the keys to a property into two stranger’s hands and walk away without any concern whatsoever.
No matter how much my clients want to see a house I’m never going to resort to breaking and entering. I’m will never hand over keys to someone without an agent who just shows up at the door of a house no matter what their story. This agent can count themselves lucky that my clients did the right thing.
Combination lockboxes with the code in the MLS provide no way of tracking who has been in the property. This is eventually going to lead to a serious incident. Hopefully our local boards and the lenders who suggest the use of them will wise up and put a stop to the practice before it does.
| Discussion: 2 Comments »
How Did the Banks Get Agents to Shoulder the Load?
July 6th, 2008 Categories: Auctions & Foreclosures, Real Estate Ramblings
In Virginia when you sign a listing agreement with a seller it states that the “seller retains full responsibility for the property, including all utilities, maintenance, physical security and liability until title of the property is transferred to purchaser.” Seems simple enough or is it in today’s market?
When an agent goes to meet with a prospective seller to talk about listing their home it would never cross the sellers or our minds to suggest that we will have all of the utilities transferred to our name to make it easier for the owner. Nor would we agree to take on the responsibility for cleaning their home or keeping the yard mowed. However, every day lenders are asking agents to do this and agents are saying YES.
Why? We don’t own the property or have any financial interest in it and still agents are willingly taking on the financial burden just because the banks ask them to. Many agents I’ve talked to who handle a large numbers of foreclosures are shelling out thousands of dollars in expenses to maintain a property. In some cases reimbursements are slow and if work needs to be done they are required to call the lenders “preferred” contractor. If an emergency repair is needed and the preferred contractor isn’t available they risk not being reimbursed by the lender unless they can verify the gravity of the emergency.
On top of the out of pocket expenses, the listing agent often has to wait until the end of the transaction to find out if the lender is going to ask them to reduce their commission to help the lender meet their NET. How did this trend start? Was it one agent who said yes and then the banks began to play the other agents one against another for a cut of the business? Was it an entire brokerage that agreed to it and then everyone else had to follow suit?
If lenders require that the utilities be on (at minimum electricity should be on for safety reasons) then why don’t they set up corporate accounts with the major utility companies in the area where they have large pockets of foreclosures? Why don’t they have a direct 30 day billing cycle with their approved contractors? Why are they relying on agents to take on the accounting and financial burden of selling their properties for them?
The practice is contradictory to our own listing agreements and yet hundreds of agents across our area are willingly taking on the burden. It shouldn’t be a Realtors® responsibility to go into debt in order to sell a foreclosure listing. Wouldn’t it be better if ONE MILLION plus Realtors® would stand up and say “we’re mad as hell and aren’t going to take it anymore” and let the lenders take the responsibility of paying the bills on the properties they own?
| Discussion: 8 Comments »
This post strays from my usual posts geared to buyers and sellers in Northern Virginia. The information may be of interest to you as well but it is geared to other agents who may think that they have found a new niche in today’s market
I just finished reading the umpteenth blog on how real estate agents should be marketing themselves as short sale specialists in order to generate more business. As an agent who has successfully completed a few short sales and have a few more in the works it seemed this might be a good time for a reality check.
Going back over the call logs on my current short sale listings started me thinking of all of the other components connected to a short sale that an agent stepping into their first short sale may not consider.
Time spent gathering and reviewing the short sale package
Time on hold with the loss mitigation department
Time on the phone with the loss mitigation department
Time spent of the phone with the negotiator
Time spent of the phone with the appraiser/BPO agent
Time on the spent with agents answering questions
Time on the phone with buyers explaining a short sale
Time spent talking to buyer’s lenders
Time spent gathering HUD-1’s to go with offers
Time spent processing offers
Notice the list doesn’t include the normal tasks associated with a listing which are required in order to attract buyers. Those tasks need to be added on top of the time spent specifically on short sale tasks. Add on top of this the fact that lenders are notorious for slashing commissions at the end of the negotiations process and an agent working with a short sale may find that instead of making X commission they are only getting Y for all of the extra hours of work.
Considering the National Association of Realtors® shows that the average agent earns $35,000 per year, deciding to be a short sale specialist means an agent seriously needs to consider the old adage time is money. Agents, especially newer agents, who might be considering advertising themselves as a short sale specialists might first want to get out their calculators and figure out the value of their time. You may be surprised that the time it takes to finish a short sale transaction only leaves you enough to fill your car with gas and not much more.
| Discussion: 11 Comments »
Northern Virginia doesn’t have the worst traffic in the US but sometimes local and federal politics get in the way of making smart decisions about future road and railway expansions.
For months now there has been a debate in the area about whether to allow private enterprise the option to build HOT (high occupancy toll) lanes starting in Stafford County Virginia and coming north to Washington DC. Having just watched the extension of the metro rail system flounder, flop and die leaving the congestion in the Tysons Corner area to grow worse by the day, the idea of allowing unaccompanied drivers the opportunity for a $1.00 per mile to drive into DC on special lanes is well ludicrous.
Our current HOV (high occupancy vehicle) lanes work well for commuters who are smart enough to realize the value of car pools, van pools and bus rides. However every day as those drivers reach DC they run into the problem that anyone on the HOT lanes will face. Eventually you have to drive over the 14th Street Bridge and so far no one has included in their plan an expansion of the bridge. In London a drive into the city requires you to pay a congestion charge which was instituted to try and cut down on congestion and raise funds for public transportation. As far as I can tell if private enterprise is in charge of this operation then none of the money raised by tolls would actually benefit anyone else who has the smarts to use the HOV lanes, the metro system or VRE.
By creating another way for drivers in our area to bypass public transportation or car pool options government officials are overlooking the long term issues. If the congestion in the area is already creating a bottleneck getting into the city then how are the HOT lanes going to eliminate that problem? Wouldn’t more incentives for the use of public and mass transportation be a better idea? Wouldn’t figuring out more public transportation options be transportation official’s time? If private enterprise has millions to spend why not have them spend it on systems that will be beneficial to everyone and not just those who have the deep pockets of cash to bypass what we already offer in the area.
This is one of those situations where you have to have to say “what are they thinking?”
| Discussion: 1 Comment »
Home Equity-Is it Real or Is it Memorex?
December 9th, 2007 Categories: Real Estate Ramblings, Selling Thoughts
Yesterday while talking to a prospective client the discussion turned to the “equity” they had in their home. They had purchased their current home in Northern Virginia in 2002 and over the five years the value of their home has of course appreciated from their original purchase price.
They were however distraught that they had not sold their house last year when they could have walked away with $250,000 but now the best they could hope for might be $175,000. Since they are interested in buying a larger home the prospects of a higher mortgage due to the loss of equity was worrisome for this young family.
This isn’t the first time this conversation has happened over the last few months. With the value of homes in Northern Virginia having decreased over the last year there are many families thinking the same thing about their equity. It is interesting to listen to the rationalization of how much money they have lost by waiting to make the decision to move.
Of course the equity that they have “lost” isn’t real. It is the same concept that follows traders in the stock market. When you see the stock price is up you think of all of the money you have and when it is down you think of all the money you have lost. However until you sell you haven’t done either. It is all imaginary.
The good news for homeowners in Northern Virginia is that even though you may not have the same amount of equity that you had a year ago the price of the home you want to buy has also come down. As a result most likely the deal is a wash. Today’s equity will go as far as it did a year ago and in some cases it might even go farther depending on the neighborhood where you want to buy.
So don’t let the idea that you have lost money keep you from making the decision to sell your home. If it is the right time to make a move then let’s get to work to get your house on the market and SOLD. If it isn’t time to make a move don’t spend your days fretting over the latest housing reports. They don’t mean anything to you until you actually sell your home and are holding your HUD-1 in your hand.
| Discussion: 5 Comments »
Reading the latest edition of Money Magazine had me shaking my head. Consumers eveywhere are having a tough time knowing which set of data to believe when it comes to the market in their area and what was written in a leading magazine is just another example of why.
The first article titled “The Last of the Red Hot Markets” mentioned a few cities where the appreciation was still high for homeowners and sellers were in the drivers seat. One of the cities they mentioned was Grand Junction CO with a 14.3% appreciation rate. WOW the folks in Grand Junction must be jumping for joy!
But wait when you get to the article titled “The Outlook 2008″ there is Grand Junction CO mentioned again. Only this time the writer has indicated that there is a bleak outlook for the city and in fact shows a depreciation rate of 9.9%.
How can two articles in the same edition of a magazine be so far apart? What data were the two writers examining that would provide such a huge gap in values? Of course I don’t have the answer to the question for Grand Junction CO but I’ve fired off an email to Money Magazine to see what they have to say.
It just goes to show that there is little agreement among “experts” on what is happening in the market and that anyone looking to buy or sell a home needs to work with a local area expert instead of relying on data from national sources.
| Discussion: 2 Comments »
Watch Out Venice-Northern Virginia Heads to the Water
November 5th, 2007 Categories: Focus on Prince William, Real Estate Ramblings
Last week a new twist in Northern Virginia commuting was tested on the waters of the Potomac River. On a windy day with choppy waters a twin hulled catamaran made a run between Quantico and the Navy Yard in DC in 58 minutes. Now if you think that the average driving time along Route 1 or I-95 during rush hour can run close to 1.5 hours in good weather and no accidents the thought of a ferry ride in less than an hour can be enticing.
The proposed Potomac River Express will run between Harbor Station in Woodbridge (under development) and downtown DC still has a long way to go to become a reality. Harbor Station is a new planned development on 2500 acres in Prince William County which will feature a town center, golf course, office and residential space, a VRE station and the proposed Ferry Terminal.
This would be the first significant new option for commuters who live in Prince William or Stafford Counties in a long time. When you look at other cities in the US who successfully use the water as a commuting option the fact the Potomac River has been overlooked for so long is surprising. With the number of homeowners who have made the decision to move further south to find affordable housing it seems a logical next step to find other ways to bring them north to work.
The planning for the ferry will take additional time and in fact it may be at least 3 years before it can become a reality. Having tried twice to make the trip to Harbor Station and found the development to currently be the “road to nowhere” and with the current real estate slow down in Prince William County the progress of the ferry could be delayed even further.
Meanwhile across the river in Prince George’s County, National Harbor has purchased two new 99 passenger boats which will begin running next spring between National Harbor and Old Town Alexandria to start and into DC later in the year.
Let’s keep our fingers crossed that both of these ferry projects will be big winners for our region in the war against gridlock.
| Discussion: 4 Comments »
First Time Home Buyers and the 49 Page Addendum
October 25th, 2007 Categories: Real Estate Ramblings
I’m working with a great couple, first time buyers and newlyweds purchasing their new home in the Virginia Run subdivision in Fairfax County. We met a year ago at an open house and after looking at a few places last year they decided to wait until after their wedding to begin a serious search. Fast forward a year and lo and behold they found a home that will meet their needs for many years to come.
Of course buying your first home is scary enough but when you find the home you want and discover that it is owned by a relocation company the process gets even more complicated. In this case the complication is a 49 page contract addendum, all small print that needs to be signed and included with the already lengthy Virginia contract. Honestly it is 49 pages!
Fortunately the listing agent is fantastic to work with and despite both of us having out of town trips that coincided with this process we managed to put together a contract with only ONE minor issue that the relocation company asked us to revise. It shows why taking time to get to know the parties on the other side of the transaction important.
So many times in our business agents feel that they need to dominate and force a deal down your throat with threats. However, real estate is a business built on relationships, relationships with our clients, our lenders, our appraisers and most importantly our colleagues. Without the two of us putting our heads together to make this a win/win situation we would still be exchanging paperwork and everyone would be ready to rip their hair out. Instead she and I sat together and made sure that when the contract was presented that it had the best chance of being accepted by the relocation company.
In a market where we hear about the lack of cooperation among agents and deals falling through due to unrealistic expectations this contract has seemed like a breeze, despite that blooming 49 page addendum!
| Discussion: 2 Comments »
This could be a matter of semantics but it also could be the mindset that helped contribute to the unprecedented increase in the value of Northern Virginia real estate between the years 2001-2005.
A HOUSE is not the same as a HOME. A house is a place where you may hang your hat for a little while but you don’t buy it with the intention of every staying (or maybe ever moving in) for any length of time. It is purchased with the idea that there is money to be made. You use your 8-Ball to try and figure out the top of the market and then if you are lucky you SELL at the TOP. You most likely use a 100% ARM loan because you plan on being long gone before the loan adjusted or needed to be converted to a fixed rate loan.
This was the new mindset in the Northern Virginia real estate market for 4 spectacular years. Our area which has for the most part been fortunate to have steady housing appreciation or at the worst a flat line as we saw during the 90’s, is now feeling the effects of the change in home buyer behavior. So now the question buyers have to ask themselves is are they buying a HOUSE or are they buying a HOME?
In our current market if you are looking to buy a HOUSE then you need to sit back, take a deep breath and think seriously about what you are doing. Buying a HOUSE means you need to think about capitalization rates, federal recapture rates, appreciation of assets vs. bank rate of return, rental rates and much more.
If you are buying a HOME then you need to imagine yourself living in the property for 7-10 years, deciding whether the neighborhood is one that you can see yourself in for an extended period of time, know whether the loan you are getting is one that you can afford for a longer period of time and being prepared to understand that even though the housing market is still uncertain the history of Northern Virginia has proven that if you sit tight it does recover.
So don’t confuse a HOUSE with a HOME. It is always a great time to own a HOME. Now may not be a great time to buy a HOUSE.
| Discussion: 2 Comments »
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.
| Discussion: 3 Comments »