Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

Image via Wikipedia

jump to Part 2 of the series

If you have to ask that question then the answer is ‘yes’ your agent is probably lying to you. Notice I use the active ‘probably’?

In this series of articles you will learn:

• How to identify what is most important when choosing a Realtor.
• Why do I feel like a Deer in headlights?
• Learn if you chose a ‘Realtor’ or a’ Salesperson’
• What does Market price really mean to me?

There is a question every Realtor has been trained to use as an example to sell their service to a potential client. It goes something like this…

Seller/Buyer : “What is your commission on the sale?”

Realtor: “Well, my commission is one half of the whole – 6 or 7%”

Seller/Buyer: “Oh really? We only want to pay 5%”

Realtor: “If I were willing to give up MY money would you trust me with YOURS?  I am not willing to negotiate my commission”

Wow! The Seller/Buyer answer is a given.   “No  I wouldn’t trust you with my money”.  In sales you are supposed to get ‘yes’ answers… the psychological affect of this ‘no’ is actually an affirmation.  Makes sense, but doesn’t it make you want to grab the Pepto?

Let’s analyze the basis for the above exchange. The Seller/Buyer (S/B) is trying to get something from the Realtor and immediately the Realtor is trying to protect himself from them.  Could it be the S/B is trying to protect their self from the Realtor? Both are true and both are a natural human reaction when something is missing from the relationship. Trust.

This is a salesperson tactic using the ‘common sense approach’.  Politicians use it all the time.  When you are asked a question that you naturally say yes to, be cautious, you are working with a salesperson.   This should perk up your ears.  A salesperson wants yes answers for the psychological affect it will have in persuading you to make a decision that benefits them.  A Realtor will ask you questions that require more thoughtful answers.   Your thoughtful answers will create a working strategy the Realtor can use to help you get what you want.

If a Realtor feels it necessary to sell their services using psychological affirmation tactics, beware.   It is highly probable they have no inclination to do what it is you are hiring them to do.  That is…sell your home, strongly negotiating the price and terms that best suit your financial future and professionally manage the process the entire way.  This is not to mention the investment of time and resources the Realtor should be investing in marketing your home…not selling themselves!   Would you want someone that only focuses on themselves or someone who makes you their priority?

In a relationship where the Realtor is representing a Buyer there is no question of commission and the above scenario mentioned in Part 1 is meaningless. The Seller pays commission to both the selling agent and the listing agent 99.9% of the time

There are other Buyer:Realtor scenarios I will share in Parts 2 and 3.  Part 4 of this series is for experienced Sellers.   For now, I want to remind you that trust is the most important factor in the equation.

Related articles by Zemanta

• 10 Tips for Selling Your Home in the Sluggish Winter Months (usnews.com)
• Survey shows spike in 1st-time homebuyers (msnbc.msn.com)

Image via Wikipedia

During repairs users were restricted to cross the dam using a small cordoned off crossing that was not only unsightly, but down right dangerous at times.  Bikers who forgot they had brakes would jam down that part of the trail with reckless abandon.  Actually,  not unlike other parts of the steeper trails.   I can’t blame them – what fun to have the wind hitting you in the face at 40mph without leaving a measurable carbon footprint!

I know you have probably noticed that Lexington has been nearly dry for several months over the last year. Many locals have been nervous and the  talk of ‘drought’ has been escalated.    Can we just get some rain!  Well, after I run.

A safer trail,  a repaired dam and, hopefully,  the disappearance of  some nagging knee discomfort will allow me to monitor the rising water line during my trail run!  I hope to see you out there.

NBC The Dam Gushes

Related articles by Zemanta

• 14 Mile Morning Run (the17thman.typepad.com)
• When I run I Trip a lot (scienceblog.com)

Buying a short sale is like being a miner…A miner will dig and dig, for months, until they find gold right?  Buying a short sale can be very much like mining for gold.  You need to have a miner’s mindset and use better tools than the others.

“How many months is this going to take?”   This question is being asked with great regularity… too much really.   The answer…It depends on who has the mine.  Period.  If the Listing agent  (who has the mine or short sale) is not proactive then it doesn’t matter how hard your Realtor works or how high your offer is…you won’t find any gold.

Your Realtor is your mining pick.   They need to know how to qualify the listing agent’s knowledge, experience and ability or, at least, be willing to work to help the listing agent make progress with the bank who is ultimately going to approve the short sale and…shine the light on the gold.

A successful gold miner will have a map of the gold mine and know how to navigate it.   Your Realtor of choice will need to have a good map and understand the best way to navigate their way to the gold and extract it.   This map is developed through representing sellers AND buyers of  short sale properties, understanding all the pitfalls  and the best practices to avoid them.

More and more short sales will be coming to the market and,  the best homes and best buys available, will likely be short sales.   This is the market condition reality for the next year or longer according to Banking industry experts and Real Estate professionals based on market statistics and economic conditions.

The extremely low interest rates are bringing droves of buyers out and multiple offers on the best homes are the norm in San Jose as well as Los Gatos and all around Santa Clara County, for that matter.  Too many miners and not enough mines.  You can avoid having to compete with these buyers if you realize they are overlooking the opportunity in front of them.  The Short Sale properties.    Agents are avoiding them because they think  that most of them will never close.    Ahhaa!    The key!   Find other mines!  Be a good miner and have the sharpest pick!

Beware if you are selling your home or if you are an interested buyer.  This article published by the San Jose Mercury news tells a true story of a sad result of government intervention.

When David and Penny Mann decided it was time to move to a retirement community, their real estate agent told them that in this rough market, it could take months to sell their downtown San Jose Victorian. So they were thrilled to receive back-to-back offers in the first week, and they accepted the first offer of $560,000, from an enthusiastic young couple buying their first home.

“Things were sailing through,” said David Mann, a retired minister.

But just days before the sale was to close, an appraisal required by a new federal code came in $100,000 below the sale price, torpedoing the deal and sending the buyers and sellers into an emotional tailspin. It’s just one example of the turmoil this new rule-intended to prevent fraud-has caused: Appraisers say it is forcing many of them out of business while pushing up fees and derailing sales, all at a time when the real estate market can ill afford such problems.

The new rule, which took effect May 1, forbids brokers from hiring their own appraisers and requires intermediaries-called appraisal management companies-to choose them instead.

The change was intended to reduce the possibility that brokers and lenders would pressure appraisers to raise house values to match sale prices, regardless of the true value. It affects all loans backed by Fannie Mae and Freddie Mac.

The rule meant the Manns’ first appraisal, which came in at the full sales price and was conducted before the rule took effect, was invalid, and they needed a new one. The second appraiser, based in Oakland and sent by an appraisal management company, told the Manns’ agent he had never worked in San Jose. When his appraisal came in $100,000 below the offer price, the lender wouldn’t approve the buyers’ loan.

“That’s when the drama began,” Mann said. “There is something so wrong in all this,” said Georgie Huff, president of Capital Properties in downtown San Jose, who represented the Manns. “And a lot of qualified buyers and sellers are being victimized.”

No one is tracking the precise results of the new rule, but Bill Hillestad, strategic director of Think Big Work Small, which provides resources for the real estate industry and is pushing to have the rule repealed, says his research offers some clues.

In his online poll of industry professionals, about two-thirds of respondents said they had had at least one appraisal come in under the purchase price since the new rules took effect, with the average difference being more than $13,000. And 90% of respondents said they had lost at least one transaction.

Hillestad said the code has the potential to kill the country’s budding real estate recovery by depressing prices even more than the foreclosure crisis. If willing sellers and buyers agree on a price, the appraisal shouldn’t scuttle the deal, he said.

“We are exactly the kind of sale which our country needs in order to begin getting housing sales moving again,” Penny Mann wrote in a letter to the lender for the couple who wanted to buy their home. As David Mann put it, the deal he struck “was a new stake in the ground to revive this neighborhood.”

The new rule, called the Home Valuation Code of Conduct, is part of the settlement of a lawsuit filed by New York State Attorney General Andrew Cuomo, who had accused Washington Mutual of pressuring appraisers to inflate home values.

Accurate appraisals are necessary to prevent fraud in home sales and to protect lenders in case a loan holder defaults and the property has to be sold. Washington Mutual, however, was accused of inflating values to make more money on higher-priced loans.

While the intent was noble, the policy has had devastating consequences for some appraisers, many of whom have signed a petition (www.hvccpetition.com) to try to repeal the rule-a cause taken up by U.S. Rep. Gary Miller, a Southern California Republican who is co-sponsoring legislation asking for an 18-month moratorium.

A Santa Cruz appraiser who used to have about 10 jobs a month says she is now lucky to get just one, as the management companies change the way work is doled out. And instead of being paid between $350 and $500, she might get just $200. The management company pockets the difference. “I’m sure there were a lot of crooked appraisals. But to put every appraiser basically out of business is not OK,” said the appraiser, who didn’t want her name used for fear that she would jeopardize future work. “After having my business for 20 years, I’m about to lose my house.”

Qing Jiang, a San Jose appraiser, said the new rule is also having a chilling effect as appraisers, “to protect themselves, to avoid being accused of pushing values up, are putting the value at the lower end. This will push the housing values down and have a huge effect.”

For traditional home sellers like the Manns-both retired clergy with the United Church of Christ-the rule nearly cost them their retirement. The couple were waiting to take a tour of their new Southern California bungalow, near their children and grandchildren, when their agent called with the news that the deal was unraveling because of the second appraisal. “We postponed the tour for an hour,” Mann said, “and went to a neighborhood park and cried.”

The intentions of the HVCC rule have hurt more than helped and already struggling San Jose Real Estate market.

The buyers were equally devastated when their loan company balked at funding their mortgage. They had spent months looking for the perfect house, walking through at least 40 and viewing hundreds more online.

The Manns’ century-old Victorian was ideal for Michael Schlemmer, a lawyer. So the young lawyer was undeterred. “I’m an educated person. I’ve lived in the Bay Area my whole life,” he said. “I had no question it was worth $560,000-plus. Neither did my agent or the mortgage broker or the first appraiser who approved it.” Nor, as it turned out, did a third appraiser. After Huff insisted the management company send someone with a 408 area code, the value came in at the sales price. Early this month, after weeks of hand-wringing, the deal closed.

This is only one of the many pitfalls in this new market that we are having to overcome.   What challenges have you experienced?

San Jose Mercury News article

Related articles by Zemanta

• Fannie Mae – Electronic Appraisal Delivery UPDATE – MISMO XML Standard (appraisalnewsonline.typepad.com)
• Appraisal Practices Board (APB) to Commence Work in July 2010 – New Independent Board (appraisalnewsonline.typepad.com)
• What Should the Good Appraiser Do When the FBI or Any Law Enforcement Officer Calls? (appraisalnewsonline.typepad.com)
• Appraisals holding back housing, economist says (lansner.freedomblogging.com)

Are you a homeowner planning on moving up to a bigger or more expensive home? Here’s a guide for planning the transition in today’s foreclosure heavy market.

Figure out how much your current home is likely to sell for.
Have your real estate professional conduct a comparative market analysis. “Be realistic about pricing the home so it moves quickly,” adds Sandy Guralnik, a broker with Coldwell Banker United in Charlotte, N.C. This will help you avoid a long gap between when you buy your new home and sell your old one.

Consider the market.
If you have only been in the home two or three years and made little or no down payment, you probably do not have have enough equity to sell at a profit in today’s soft market. You might even owe more on the mortgage than the home is worth.  This is far to common in the current foreclosure heavy market.  On the other hand, if your home has appreciated well, it might be easier to move up to a bigger and better home than ever before!  Especially in Cambrian Park, Los Gatos, and Saratoga.  Cupertino has consistantly bucked the market recently.

Consider your finances.
Your overall debt picture is important if you plan to move into a larger, more expensive home. In addition to a higher mortgage, you’ll likely have higher utility, insurance and property taxes as well. If you owe money on a home equity loan, you’ll have to pay that back when you sell the home, which will eat into your profit.

Get preapproved by a reputable lender.
The lender will tell you how much money they’re willing to lend you, which will tell you how much house you can afford. Then, figure out how much you’re comfortable spending. The two numbers are not necessarily the same.  Your comfort zone should be your guide here.

Determine your long-term housing needs.
Will you be starting or expanding your family in a few years? Will the larger home be as teen-friendly as it is toddler-friendly? Is there a place for a home office if one of you eventually works from home?  With the many economy issues this should play a large part in your decision process.   Not to speak of the inventory that is available today.

Be realistic.
Most people will not be able to move up from a starter home into their dream home. It’s a long-term process that occurs over several moves, says Debbie Wong, a certified residential specialist with Prudential California Realty in San Mateo, Calif. Plus, it’s harder to qualify for a loan if the jump in monthly payments is too big, she says. Not to speak of all the hoops many lenders are expecting you to jump through now.

Preview properties in your target price range and location.
Most importantly does that “Super Foreclosure Deal” really translate into a home. Look to see whether the homes match your trade-up goals.

Get your home on the market.
Moving up will go more smoothly if you are able to sell your home before trying to buy another. For one thing, many Sellers are leery of contracts in which the sale is contingent on the Buyer selling their current home. Foreclosures are held by Banks that are not willing to diminish there pool of potential buyers.  If they accept your offer they will be required to place the home on a pending status and other buyers will be considering it. Finances also are an issue.   Bridge loans to carry you from your current home to the next are almost impossible to get today.

Determine the best time for your move.
If you want to move in the summertime, start your other preparations early enough to meet that goal.

Wow,  it’s 98 degrees out!  The number of sales for the month of April for Santa Clara County are also hot and very encouraging.    It is obvious our market is stabilizing,  finally!  Or is it?  Could this just be a spike that will pop this little bubble?

If  I were a gambling man, I would bet that the heat today might keep (some) buyers away.  Nah!  Didn’t apply yesterday.

Yesterday,   Saturday,  there were so many agents and clients showing/viewing property that parking in front of many listings was hard to find.     Several new home listings, a few my clients found worth pursuing, were already looking at multiple offers.

The average days on market for the County was down by almost 30 days.     We were looking at 125+days and now we are seeing 108 days.   The average sales/listing price percentage is up to 96% and has held consistently here for a couple of months now.

I wonder if I should buy that 30,000sq ft home now.  It;s only $64mil.  Maybe after Ice Cream!

While searching for a particular single family home for a recent buyer client, looking for REO’s (bank owned properties) (foreclosure to be specific), I kept getting the same results….good relative data that was current and up to date in the right communities.   In the meantime,  my new client forwarded a handful of MLS numbers and excitedly asked  “Can we see these foreclosure homes this afternoon?”   Funny thing was… They were no longer available.  One had a  pending sold status another was no longer on the market and the last one…I could not even find.

Frustrated, I asked my client where did you find these listings?   The answer was disappointing…another website.  I won’t share which one as I have found the data there to be poorly arranged and not current by any standards.   Figures!   I asked “Why would you go to another website to find a home when I have been sending you the most recent daily updates?”   I got another “figures” answer. …”I saw it on the web and they advertised on the TV news”.    Oh Gosh!  Not the web monkeys!

Many new websites and data exchanges have been popping up lately.  The problem with these other sites is that their data is third party.   They are built by web masters to capture leads that are then sold to the uninformed Real Estate agent looking for new business. These sites load from the same place your search is sourced from.  The one you set it up with your Realtor whom you probaly hired to find you the best home at the best price available.

Unfortunately, the web architecture does not have a true update process programmed in.  This allows for information to become old and irrelevant.    Much of the information is derived from Title records too.  If someone refinances their mortgage it will report it as a sale when it is “far from that”.   If you thought a home sold for $250,000 which was actullay in a million dollar neighborhood…good chance it did not REALLY sell.    Then there is the home that is $300,000 under market price….it actually sold 2 years ago!

In short,  all the homes available for sale were right here at their finger tips.   The data derived from this search tool is current, changes are updated by the minute and there is the capability to have any new results, based on the home search criteria, emailed directly to them.

The map search is the Best home search tool for many buyers.  This allows you to draw a line around a neighborhood and see only those results without being overwhelmed with a zip code search that will, invariably, return homes not anywhere near your desired neighborhood.   San Jose is rich in investors and fast, filtered results are paramount in being the first to find the best buys.

I hope I remember, the next time a meet a new client,  to share with them the dynamic web source for home buyers is right here.   Santa Clara County, Los Gatos, Cambrian, Blossom Valley, East Hills, Silver Creek, Milpitas, Fremont and Campbell etc… are included.   Cities in Merced, Stanislaus, Alameda and San Joaquin County are participating in the results found in this too.

Maybe I should post a bulletin on TV!

“I want to remodel now however, the market is so soft will I waste my money?”   That depends on the property value and what your LTV (loan to value) actually is.   Consider this news from NAHB.  The residential remodeling market declined further during the final quarter of 2008, according to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI). The current market conditions indicator slid to 27.7, from 33.5 in the previous quarter. Future expectations of remodeling work plummeted to 19.6, from 27.7 in the third quarter. Both these indices descended to historic lows since the start of the RMI in 2001.

Wow!  If you have a low LTV and plan to be in your home fro a few more years maybe a small re-do would be of value now.  I bet some contractors are ready to get any job to keep some cash flow and stay relevant.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving. The RMI has been running below 50 since the final quarter of 2005, following decreasing remodeling expenditures since that time.

“During the last quarter many remodelers were asking if their phones were still working because they received virtually no calls for work,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, a remodeler from Tucson, Ariz. “The jobs we are getting are for smaller projects and necessary home maintenance.”

 Yep, it is time to make the call.

Nationally, market conditions for major additions and alterations shrank to 20.2 (from 29.4 in the third quarter), while minor additions and alterations conditions slowed to 33.5 (from 38.51). Maintenance and repair dropped to 27.6 from 30.9 in the previous quarter. Overall, major additions and other large remodeling jobs have experienced a greater decline than smaller remodels and maintenance.

“Remodelers suggest that the huge decline in consumer confidence, volatility of the stock market, and uncertainty about the future of the economy have made homeowners delay remodeling decisions,” said NAHB Chief Economist David Crowe. “These anxieties are causing consumers to wait and see if conditions improve before they are willing to commit to home improvement spending.”

All measures for future expectations in the remodeling market (calls for bids, amount of work committed for next three months, backlog of remodeling jobs, and appointments for proposals) dropped. Current market expectations slipped in all regions during the fourth quarter, with the Northeast declining to 24.9 (from 32.9 in the third quarter), the South 30.7 (from 31.5), the Midwest to 28.0 (from 36.2), and the West to 25.0 (from 36.1).

 Ok!  So, If you bought a REO (foreclosure) you know you bought at a super price probably very near the bottom, and you can see yourself living in your home for a few years then it is definetly time to take advantage of the soft remodel market and get your bids.  Good Luck ….and remember I am always a great source for tips.

Heads Should Roll not “Bank Roll”

Bailout plan?   Now even smaller regional banks want in…What next?  Will I be able to defer my car payment or get the government, or more accurately, fellow tax payers to make my car payment?

Well, I know I am being sarcastic but, really, this program seems to be unnecessary.  Have you ever played organized sports?   If you did,  remember if you did not perform you were benched or simply cut from the team?

I don’t remember anyone giving me their statistics, so I could stay in the game.  I believe that same philosophy should apply to financial institutions that are not performing.

Let the market take care of itself.   Similar to the animal kingdom..the strong will survive.  Sometimes it is not really strength that allows them to survive it’s the animal’s instincts.   Don’t these people, we trust our money with, have instincts…Oh,  or maybe some ethical compassion?

This whole failure is based on the repackaging of  Real Estate investment vehicles, to the degree, no one can even tell what it is.   What it called? A CBO?.   Most economists can’t even tell you what a CBO contains.  Not only that but, the agencies grading these investments,  were hired by the packager/holders.

Conflict of interest or what?!  How can an investment, rated by these agencies as AAA  (the highest of grades), be worthless to the extent that we have to bail these guys out?  I hope some heads roll after the election….

I understand that some families bought homes that they really could afford and simply find themselves in a bind.  I am not heartless!  They should get some help.

The problem is how to help those families and not bailout banks that failed to protect the interests of their investors in the process.   I believe solutions have been poorly explored, due to political expediency and C.Y.A.  Now we are all paying the price.

I am not done talking about this…I just need to stop to put my fingers under water and put out the fire!  You can take it from here.

What do you think about Banks getting a bailout while homeowners suffer?