Doh! You Missed Out on a Great House…

If you are thinking about buying a house any time soon, please keep “speed” in mind. No, I am not talking about drugs. By “speed” I mean your ability to react quickly if you happen to come across the house of your dreams. Here are two perfect scenarios where you will almost always lose out:

1. You have a house to sell that is not yet on the market, and you can’t afford to carry two mortgages at once.

2. You go open housing on the weekend and are not actively working with a real estate agent.

In the past two weekends I have seen this happen twice to two different couples. In the first scenario, the couple had just started thinking about moving into a larger home. So they went open housing on Sunday. And they fell in love with a house that is in perfect condition. The sellers of the house want nothing to do with a Hubbard clause, where the buyer has to sell their house before they can actually buy. The potential buyers now have to get their current home on the market pronto and hope that they can secure an offer before someone else comes in and has an offer accepted on their dream home. Chances of this happening are slim to none and, as they say, Slim just left town…

In the second scenario, the buyers were actually working with a real estate agent, just not very actively. They also went to an open house and fell in love with a house. But then they waited 2 days to contact their agent to let them know about it. Unfortunately in the meantime, another offer was accepted on the house. They missed out by about an hour. I am not kidding. And now they are very disappointed.

There are a few morals to these stories.
1. If you are in either of the two categories above and cannot deal with disappointment, please don’t go to open houses on Sundays.

2. If you think you have one iota of interest in a house and are working with an agent, call them immediately. They will go look at the house with you and help you understand if it’s really for you. And if it is, they should be able to help you react quickly enough to at least stand a chance of putting in an offer.

3. If you own a house, think you want to move, and cannot afford to carry two mortgages, at least put your house on the market with the contingency “Sale contingent upon seller finding acceptable housing.” This at least throws your hat in the ring. Otherwise you are just sitting on the sidelines with no real chance.

Hopefully this helps because it’s painful to see disappointed buyers doing “Shoulda, Woulda, Coulda”…

Great Idea! Let's Commit Mortgage Fraud!

I had an agent, “Pat,” contact me this week about one of my listings. Pat’s clients were interested in the house and considering putting in an offer. Pat proceed to ask me how “creative” my clients were. Being left-handed, I’m always open to creativity, so I asked for an explanation of what they had in mind.

Pat gave me some details about how the contract would be structured and then mentioned that the buyers would be looking for my client to cut them a check outside of closing in order to cover repairs on the house. The buyers were short on cash. I told Pat that they were welcome to submit an offer and we would review it. But something just didn’t seem right about Pat’s “creative” deal. Shouldn’t everything should be handled by the closing attorneys and documented on the HUD sheet?

When I got off the phone with Pat, I called a trusted mortgage broker that I use. After explaining the situation, he confirmed that what the agent was suggesting was indeed mortgage fraud. Any payments, credits, etc. need to be called out on the HUD so that the mortgage company knows about them. Anything done outside of closing is illegal because it implies that the house is not really worth the value that the mortgage company is loaning against.

The mortgage broker suggested that Pat might not know that the deal would be illegal. I pointed out the fact that the agent had been in real estate for 15 years, so I was fairly certain that Pat did know that their suggestion was questionable, at best.

The sad part about this situation is that there is likely a way to structure a mortgage so that Pat’s clients can afford the house, legally. If we do actually receive this offer I will be going back to my trusted mortgage person to determine how the deal can be funded so that they can buy the house, and no one is committing fraud.

It’s frustrating to see that this knucklehead is willing to risk their real estate license by playing these games. And how is it ever in your client’s best interests to suggest something illegal to them?

What's All This Junk?

So you get to the final walk-through and the house isn’t in broom clean condition. This is actually more common than you would think. Sometimes sellers purposely leave belongings behind, sometimes it’s just a mistake. With my personal residence, we did the final walk-through and everything appeared to be removed. Two weeks later we were investigating the dark corners of the attic and found a sad dresser that had been collecting dust for many, many years. We bought the house from a relocation company and they didn’t want anything to do with it. The dresser remains in the dark corner today.

Here’s an interesting article from the New York Times real estate section that discusses what renters and sellers leave behind. Sometimes you can apparently luck out with a flat screen tv and a bottle of wine! Good luck!

But My House is Worth More…

My in-laws, who currently live in VT, recently purchased a new primary residence in VT. Now they need to sell their current primary residence. They had a very reputable local Realtor come in to give them a suggested list price. The price came back as $X, which they seemed happy with. I offered that they might want to get another opinion, just to be sure that the price was realistic. So they had another reputable local Realtor come in. The second Realtor suggested $X + 3%. Of course they were happier with the second opinion because it could end up netting them more equity in the end. However, their logic was “We want to list with the second Realtor because she wants to sell our house for $X + 3%. But we also think that we really want to list it at $X + 6%.”

There are a few issues with this logic. First, any Realtor would want to sell your house for the highest price possible. Our compensation is driven by the eventual sales price. In this example, the second Realtor didn’t want to sell the house for more, it was simply her opinion that the market value of the house was 3% more than the opinion of the first Realtor. You see, when Realtors provide pricing recommendations, that’s all it is, an opinion. Now, hopefully it’s an educated opinion. The Realtor should always pull relevant comparable home sales and do a pricing analysis based on the current market, condition of the home, and location of the home. But it’s still an opinion. We have no crystal ball that will tell us exactly what the Market Value (sales price at that exact point in time) will be. So, in my in-laws case, they simply had 2 Realtors with 2 slightly different opinions. This happens all the time. Luckily the pricing suggestion was only 3% different. If you have a case where the opinion is different by 10% or more, you may have the case of an agent trying to buy the listing. Always get a third opinion if that happens. At least two of the agents should be close on their price recommendations. Go with one of them.

The other issue is the desire to price the house at $X + 6%. My in-laws were originally happy with the suggestion of $X. Then they get the suggestion of $X + 3% and suddenly they think the house might be worth $X + 6%. If there is one thing I hate, it’s an overpriced house. They don’t sell. They sell other homes of similar size and quality that are more realistically priced. They waste valuable marketing time and dollars. Agents won’t show them. They become stagnant, and then no one wants them. The sellers carrying costs grow. The agent gets a bad reputation for “buying” listings. The seller most likely will end up dropping the price, only to have lost potential buyers because they moved on to houses that were priced correctly from the beginning. Really, it just becomes an ugly situation for everyone involved.

At this point my in-laws haven’t yet listed their house. They are still deciding on an asking price. Hopefully they will choose a price that is realistic and not too out of the ballpark. Father’s Day won’t be too pleasant if they are still holding 2 houses…

Fluffy and Benji Live Here Too…

Did you know that in 2006, 73% of all US households owned a dog or cat? We sure do love our four legged companions.

But how do you minimize the impact of your beloved fluffball when you’re trying to sell your home?

First, you want to make sure that you either remove your pets from the home for all showings, or have them crated with a “Do Not Disturb” sign. You never know how your pet will react with strangers in the home, and I’ve seen more than one agent running after an indoor cat that escaped during a showing. Always try to minimize your pet’s presence so the buyer can focus on the home and not your cute Labrador.

Next, get rid of the smelly stuff. This means constantly cleaning litter boxes, removing stains from carpets, and using natural cleansers to remove odors. Nothing is worse than walking into a potpurri-filled home that’s trying to mask pet odor. It immediately raises a concern with the buyer and they wonder what else you’re trying to cover up.

Finally, get rid of the toys. No one wants to look at slimy tennis balls, cat towers, and half-chewed fake mice. Gather up the sources of amusement and put them in a covered basket. You’ll still have easy access to them, but buyers won’t have to look at your pet’s dirty laundry, so to speak.

If you follow these simple steps, you’ll minimize the impact your pets may have on your home sale and keep them in a secure state of mind during this time of transition. Woof!