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

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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.

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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

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650,000

That number represents 20% of eligible homeowners at least 60 days behind in their payments, according to the Treasury report. This is up from 16% a month earlier.

Despite the progress, housing counselors say the number of people falling into foreclosure vastly exceeds the ranks getting assistance. The number of filings hit a record high of 937,840 in the third quarter, according to RealtyTrac, an online marketer of foreclosed homes. That’s a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

The $75 billion Obama plan is “lagging behind the massive number of foreclosures that continue to pile up,” said John Taylor, head of the National Community Reinvestment Coalition.

But administration officials have said that the program, which was projected to help up to 4 million homeowners, is on track.  On Track?  Which track?  Becsude, if it”s the ‘railroad’ track..we are in REAL trouble.

The above excerpt is from CNNMoney‘s reporting and I have to say I don’t believe the Loan Mod scammers are going to go away soon enough for this to get markedly different anytime soon.

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The Governor of California, Arnold Shwartzenegger recently signed legislation to stop scammers from taking the money of troubled Homeowners and consumers who are looking to mitigate the damage the California economy is wreaking on them.

The California Bar Journal posted the names of some of the culprits and the results of their investigation from the task force created last March.  In this article it makes it clear that Safe Haven may be the most prolific violator of citizens rights.

I wouldn’t profess to be an expert in the world of Loan Modifications and forbearance’s however,  I believe my 16 year old son could do a better job!   What is it with these creeps!

A law is something creeps will simply find a way around.  This may not be the absolute end.

Do you know anyone who has been victimized by a scammer?  Together we can reduce their effectiveness.

By signing the new bill, President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion ..You may HAVE to pay it back!  Read On.

Who is Eligible

-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

-For married couples filing a joint return, the combined income limit is $225,000.

-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, Short Sale and foreclosures provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).

-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).

-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

So remember,  This is not for the short term buyer looking to make a buck.  It will be need to be repaid, upon the sale or transfer of title, at any time during the first 3 years.

Have you ever heard the term ‘a wet signature’?

Banks often want to see documents with the original signature called ‘a wet signature’  Often asked for when a notary was not required to witness the signature.    I have been using the Uniball 207 Gel Pen for over 5 years just for the slightly different color of the “ink”.  I had no idea it held a secrtet!!!!

The bank where you have a checking account..LOVES… this video.

Disappearing Ink Video

I usually go through several bubble packs a year.  You can probably get by with just a couple of these beauties!

I have no connection with the manufacturer or distributors..just wanted to give a consumer tip!

It’s a no brainer that housing and jobs are interrelated.  Fix housing and jobs will follow in service sectors and and the manufacturing of products we need at home.

I believe only one thing is going to get our  economy moving again..Housing. We got here because Real Estate based derivatives failed to produce gains. Right?  No money, no growth and no jobs.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September 2009, rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

We got here because Real Estate based derivatives failed to produce gains.   Well, then why doesn’t the government focus more on housing strategies? Obviously, it has been very effective!

This quote proves my point…

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

What if  the Obama administration created another tax benefit for ALL buyers?  Better yet,  produce better guidelines that all banks must use to implement procedures that fast track short sales.  Oh, Oh, Oh I know!   LOAN MODS!!!!!  What happened to all the promises there?    Fix Housing-Fix America!

Even renters could see a benefit.   Consider an apartment owner who would not feel the need to raise rents to their max if he could only get a small loan mod.   Do you think you would be a ‘consumer’ again if you could get a loan mod?   I bet your answer is ” YEP”!  That new TV or new Dining Room table would become affordable for you and that only creates more jobs! Right?

So many sectors of the economy are dependent on housing that it is a big ‘no brainer’  that housing should be the focus.

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You want the Short Sale approved by the Jr. Lien Holder?  It can be like a Birthday Party!

Invite the Jr. Lien Holder to the Birthday Party if you want the Short Sale approved.

Remember when you were a kid and went to  birthday parties and the Cake never seemed to be divided exactly even?    If you saw Johnny get a bigger piece you wanted a bigger piece.  The Jr. Lien Holder has the same reaction.

The Jr. Lien Holder knows  the HUD1 only allocates to them what the First Lien Holder is willing to serve.   All the so called ‘experts’ say they have no recourse.    This is wrong in many cases!  You must persuade them to accept what the First is offering or find alternatives.  They may want the corner piece.  Not only is this important to know and execute, there is the question of the second position.  Is it a purchase money loan or HELOC (Home Equity Line of Credit)?

If the second mortgage is a purchase money loan, loan used as purchase money at the time of the purchase, then there really is no recourse… IF you do not fall prey to their tactics.    But Wait! Is the Second mortgage a HELOC?

In the case of a HELOC their recourse is to leave open the option of  a Deficiency Judgement against you.  It is important to know the law in your State regarding DJs.  Your Realtor and Attorney will know this.

I recently found one of my clients was being led into foreclosure by the HELOC second holder.     Not only was there a so called  “Short Sale Expediting Company” involved there were 2 different lending institutions involved and the cake was not going to be divided evenly.   Birthday parties are always more fun if everyone feels they are getting their fair share of the Birthday Cake.  Actually, the SSEC was not doing anything for my new client.   They had not even tried to cut the cake.    I became involved and quickly learned the Jr. Lien Holder wanted MORE ( Really?) and was not going to settle for what the First was willing to offer.  I found that the Jr. Lien Holder would allow items to paid outside of escrow (POC).   It became obvious they only wanted to see contributions.  They were not necessarily concerned with the size of their slice of cake anymore.  The were more interested in the size of the other pieces.   Guess they didn’t like butter cream either.

Short Sales with 2 or 3 different lenders, in most cases, have a HELOC  in Santa Clara County.  How can you convince them that their piece of cake is satisfactory?    Talk with an accomplished Realtor and an Attorney if you find this is your situation.   Often, you can find a Realtor and Attorney who have a successful record of executed Short Sales and negotiated strongly with HELOC lenders.

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The Debt Relief act of 2007 has been revised and every Seller considering a short sale better brush up!  Tax  Software has yet to be updated and one needs to get the new form 982 from the IRS or Post Office.  Those extensions are due!!!!

From the official IRS website:

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home ( Box 7).

Note: Legislation enacted in October 2008 extended this relief through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012.

Following  very active home sales for nearly 60 days creates a problem for everyone!   What is a market price now?   Is it a Seller’s market or a Buyer’s market.    Well,  it sure is a market of change in all areas of Santa Clara County according to market statistics. Consider these 10 facts…

1. A spike in local sales activity. A spike refers to a significant rise in the number of home sales (or values) in a local market area, which generally is measured month to month. A spike does not necessarily mean continued growth, i.e. it could be a one month phenomenon.

2. Higher asking and selling prices vs. appraisal value opinions for residential properties. Appraisers study the markets; they do not make the markets. When the data shows higher sale prices in comparable properties market value opinions will increase proportionally. Appraisers seek evidence of value but do not create the value. In time periods with low activity, evidence of any kind is difficult to find.

3. More activity at open houses. Open houses with five to eight attendees is considered average,  so a dozen or more people attending, like we are seeing in Los Gatos and Cupertino,  open houses means buyer interest is picking up. Also, the mood of the attendees is important. Are they optimist and upbeat? Buyers interest alone does not always translate to effective purchasing power. If the number of buyers in the market increases but they do not have requisite down payments, the sales may still not occur.

4. Shorter marketing times. In some markets like  Downtown San Jose, houses have been up for sale for more than a year. In most balanced residential markets, properties that are priced competitively will typically sell in less than six months. If the Days On Market (DOM) is shortening, many practitioners will read an improvement in the market.

5. Reduced number of foreclosures and short sales. A reduction in these transactions commonly signals a more balanced market. This has become very evident in the  Cambrian area.  If lenders are reluctant to foreclose because of an oversupply of inventory, they may choose to wait to repossess the properties, which could allow a spike in the number of foreclosures later despite a better market condition.

6. Stabilized employment. Stable or increasing employment rates provide the necessary confidence for potential buyers to invest in a home. Since most buyers rely on borrowed funds to make real estate purchases and borrowing money usually requires a source of repayment and that usually means jobs, an increase in this basic need, will enable more real estate sales.

7. Fewer buyer incentives and seller concessions. Seller-paid incentives or concessions are a sign of seller motivation. If there are fewer builders offering “free” upgrades and fewer sellers sweetening the deal with big screen TVs, it may be a sign of lessening supply and therefore a better market.  The First Time Buyer Tax Credit is helping here a bunch!

8. New construction starts. Most builders are quite attune to their markets and will not build new homes without a corresponding contract for sale or a perceived increase in demand. An increase in the number of building permits usually indicates higher demand and higher prices. If residential properties are selling for 25% less than they cost to build, only a few new homes will be built. It would be prudent to buy an existing home rather than build a new one for a much higher price.

9. “Move-up” buyers entering the market. More buyers willing to move to a larger or superior quality home indicates a healthy market. The lack of buyers at the lower end of the price range will have a chain reaction throughout the market. If a buyer for a high priced home has a lower priced home to sell first, the sale of the higher priced home may have to occur before the higher priced one can sell.

10. Apartments advertising renter specials - fewer renters in the market may indicate more people are moving into owner occupied homes or it could indicate a reduction in population. Lower population will cause an oversupply of housing which will oftentimes permeate throughout several markets.