Real Estate Snippets

Fiduciary

Come on, now.  Don't tune me out for using big words!  A fiduciary, that's what I am.  Yup.  And I was a fiduciary for a few years before I realized how important and serious a role it is.  So, here's my plunge into agency.  Brace yourself!

A fiduciary is someone chosen by a "principal" to do business on their behalf with a third party.  In the real estate world, the fiduciary is the real estate brokerage and its agents that you (the principal) hire to act on your behalf to sell your home to a buyer (third party) or to find a home for you to purchase from a seller (third party).   The fiduciary or agent acts in your best interests to negotiate the best terms and price for you.  The key words are "on your behalf".  That means the real estate agent you hire has to keep your best interests in mind (not their own) at all times in the transaction.  A good agent works very hard to remember this.

Fiduciary is a legally defined role.  That is why states license real estate agents.  As I've said before, they are very different from salespeople.  A real estate agent is required by law to give the following duties to their clients:

• Loyalty - act only in the clients' best interest
• Obedience - carry out the clients' lawful instructions
• Disclosure - tell the client everything the agent knows about the physical condition of the property or other material facts that would impact the client's use and enjoyment of the property
• Confidentiality - "mum's the word" when it comes to telling anything personal about the client including how much you can afford to spend, where you work, your marital status, etc., unless the agent has permission in writing
• Reasonable Care - perform the fiduciary duties carefully and thoughtfully for the client's advantage
• Accounting - Keep a paper trail of any money or property received from the client

Books have been written on fiduciary duties and agency, and agents argue extensively about agency.  I'm not going to go on and on in this post, but there's more to come in the future.  Be forewarned!  I've gotten on my soap box and I'm not likely to come down so soon!

Neighborliness

When I was shopping for a home, I never considered the neighbors.  I just wanted to find "the house".  Neighbors were not part of the shopping equation.  Occasionally they should be!

Our first homeownership experience with neighbors was probably the worst.  We had a 40 foot wide lot.  Yes, 40 feet with a house in the middle of it!  That put our house 5 feet from the property line.  That's mighty close if your neighbor is not friendly or is protective of their space. 

Our first clue should have been the white picket fence on THAT side of the house, but we thought it was for decoration.  We met the husband and adult son and they were both wonderful people.  We didn't meet the wife until a year after we moved in.  She was civil but unfriendly. 

The fence was on the property line with almost 2 feet of grass between the fence and our 18 inch sidewalk.  I thought the 2 feet of grass was an ideal place to plant a flower garden and a couple tomato plants.  It would look great against the fence and would prevent our having to trim the fence and hit it often with the mower.  I would weed my perennial garden and the fence alike.  Tulips went in, daffodils, hyacinths, daisies, black eyed Susans, those purple spiky things I can never remember, some glads, and later the mums.  The little tomato plants thrived and grew in the late spring.  I was looking forward to the garden's bounty.

Occasionally as the summer progressed, I would notice a branch of one of the flowers was broken off and had fallen.  I thought animals had been after them.  But in late July when the tomatoes had bushed out and were full of various sizes of fruit, I came out to find the entire row of tomatoes had been pulled up and dropped on the sidewalk.  I couldn't figure out what had happened until the neighbor from the other side came out to tell her juicy story.  The owner of the white picket fence was the destroyer of my plants!  She had methodically pulled each plant that touched her fence!  I was floored.  I was appalled!  I moved my garden!

Technology Turmoil

Our technology age has certainly changed the way we do business and communicate.  I'm absolutely lost without my computer and e-mail.  It's probably part of the McDonald's generation.  Instant gratification at work. 

More and more I'm depending on e-mail for communication with clients as well.  Imagine my dismay when real estate agents within my network, one from Columbus, Ohio, and one from Kentucky informed me that e-mails they sent to me were bouncing back to them!  I was appalled.  What if this is happening when clients are trying to contact me?    In the same time span several e-mails sent to my brother (same address auto-fills for him each time I write) bounced back to me.  An e-mail from a mortgage company to me also bounced.  What was going on?

Well, once again I found myself on the phone with my internet service provider:  Comcast.  Comcast has changed their e-mail policies.  E-mails that come from "dynamic IPs (internet service provider)" are no longer accepted by Comcast.  Huh?  Once again technology has slapped me up the side of the head.  What is a "dynamic IP"?  Never heard of it.  Not yet satisfied, I questioned on.  A dynamic IP is one that changes every so often.  The IP has a number assigned to it and when that number is programmed to change because of security reasons or to prevent tracking the origin of spam, it is called "dynamic".  Comcast is blocking dynamic IPs to prevent customers from receiving SPAM.  I lodge a complaint.  Please, let me choose which e-mail is spam!  Don't just randomly choose some IPs to block!  The mortgage company that was blocked is certainly not a spammer and neither are the two REALTORS that couldn't get through to me.  My protest fell on deaf ears.  The solution according to Comcast is to get the SENDERS of the e-mail to call their IPs and have them work a way around the dynamic IPs.  Yea, right. 

The mystery of the e-mail to my brother bouncing is even worse.  It goes through without my signature line!  Go figure.

Upside Down Financing

I recently met with a couple who wanted to sell their house but could not list it.  Why?  Because a year ago they had refinanced for $20,000 more than any house in their neighborhood had sold for and the appraisal had valued their home at $50,000 more than any house in their neighborhood had sold for.  Susan Pruden's blog talks about this phenomena when she described 9 mistakes sellers should avoid.  She graciously does not call this fraud.  I am more skeptical and wonder if this practice is legal.  Since I am not an appraiser, I do not know the appraisal regulations, but valuing a house for 25% more than it's market value is scary.  Professionals in the industry are noticing this more frequently.  Sellers are literally upside down when they're caught in this dilemma.  Some will say, "Well, they got their equity out and spent it so now they have to stay in the house until it reaches a high enough value to sell."  Others cry fraud and in reality, this scenario is currently being investigated in the mortgage industry.  But, conjecture does not solve this sellers problem.

We spent some time discussing possible solutions.  They could rent the house until it reaches a market value high enough to sell it.  They could let it go into foreclosure.  They could add bedrooms and a basement family room to increase the value.  They could continue to live there until it appreciates.  None of the scenarios is perfect, but helping to generate solutions is an important part of my job.  I may not get the sale today, but I will certainly get referrals and the listing in several years.  Most importantly for me, this is the part of my job I like.  Problem solving with people who don't think they have options is very rewarding. 

As I shook hands to leave, this couple thanked me for my time and said the other agent spent 5 minutes and left because there was nothing he could do for them.  I hadn't known there was another agent.  I guess Susan Pruden's mistake #9 covers the other agent in this couple's experience.

Preparing Your House for Sale II

I didn't feel like cleaning any more tonight, but I promised, so here goes.

Once the main areas of your house are spotless, the basement, garage, storage areas, and closets need to be addressed.  To make closets look bigger, pack away off season clothing and/or donate unused items to your local thrift store or charity.  Straighten and organize shelves and items on the floor.  If you choose to paint closets, paint them white as they will not have to be repainted when the adjoining room walls are changed.

An unfinished basement can actually be set-up like living space to show it to its best advantage.  If you have old furniture piled in a corner or end of your basement, consider buying an inexpensive area rug and arranging the furniture as a sitting area/family room or set up a table and chairs as a game area.   If the basement floor and walls are raw cement and block, they can be painted to brighten and finish the area.  It's amazing how drastically an old cellar changes with a gray painted floor and off white walls.  Even packing stored items and stacking them neatly against one wall, will show the basement to its best advantage.  Keep dirty laundry in baskets rather than strewn around the laundry room floor.  Empty litter boxes and clean pet kennels or cages.

Garages are every person's challenge to make clean and neat.  Again, sometimes it just takes an afternoon sorting tools into their respective drawers and sweeping the floors.  An organized work area gives the potential buyer the impression that the seller is a person who cares about home maintenance and wouldn't "let things go unfixed."

And finally, the last thing that doesn't cost a lot of money but makes a huge impact on prospective buyers is the yard.  Trim the bushes.  Weed the garden.  Pull the dandelions.  Remove weeds from the sidewalk cracks.  Trim the grass back from the sidewalk and driveway edges.  Rake the leaves.  Pick up debris.  Replant grass seed in weak or dead spots.  Pick up what Rover left behind.  And if you choose, plant flowers or put out planters of flowers that you can take with you.

The next steps require some financial input.  Repair torn screens and broken windows.  Paint the house trim if needed.  Make sure the front door and storm door are freshly painted or cleanly scrubbed.  Make sure the door lock works easily so buyers can get in!  Go through your house and make a list of little deferred maintenance items.  Prioritize which ones you will repair and make the repairs.  Some people are handy and can do the repairs themselves.  Others have to hire the work to be done. 

Look at the cosmetics of your house critically.  Would "peel and stick" tile in the bathrooms or kitchen update the decor?  Would fresh paint help?  How would the rooms show if you rearranged the furniture or packed away some of your collections?  Is there a spot on the carpet that needs to be addressed by professionals?  All of these questions are things to discuss with your agent.  Consider that putting your house's best foot forward will make it stand out in the buyers' eyes.  In a buyers' market, that is the sellers' goal:  Make my house be the one the buyer remembers and wants to buy!

Preparing Your House for Sale

Before I was a real estate agent, I remember friends who were listing their homes for sale complaining about changes their agent wanted them to make to prepare their house for sale.  I didn't understand then how important this preparation is to the sale of a house.  In a buyers' market it is even more important because buyers have lots of houses from which to choose.  Sellers have to do the most they can to make their house the most attractive choice.

The least expensive improvements sellers can make is to clean EVERYTHING.  And when I say everything, I mean everything.  Countless times I have had buyer clients turn away from a house for reasons they couldn't verbalize.  What I observed in many of these houses are dirty switch plate covers, unwashed windows, water faucets that didn't shine, toothpaste spit in the sink, grease around the cabinet handles, smoke stained walls, etc.  Many of these homes are picked up and have the right floor plan, but the little things make an impact that the buyers are not even aware of.  It's the difference between buying a shirt that just came on the rack and one that has been on the rack for a year and is starting to show grimy spots.

So, if you're thinking of selling your home, get out the elbow grease, scrub bucket and start cleaning.  When you do the windows, make sure to clean the area between the inner window and the storm (window pocket), the window frame, and any window covering like blinds or drapes.  (Sometimes draperies close in the room and need to be removed for best showing appeal.  Ask your agent their opinion.) 

Next move to all of the lights.  This entails removing the shades (wash glass shades) and washing the bulbs as well as the lamp itself.  Dust and smoke reduce the amount of light given off by the fixture.  Wash all the switch plate covers and outlet covers.  Replace any that are cracked or broken.   Wash all the frames and glass on picture frames.  Wash or paint walls and ceilings.  A neutral color is recommended although my house sold with rich cranberry living room walls (The wall color was balanced by newly refinished natural color wood floors.).  Get the carpets shampooed.  Repeat this process in every room in the house.

In the bathroom, remove soap scum with a product like "The Works" for tub and tile.  A gas mask and gloves may be recommended as this is a potent product!  Repair any discolored caulk around the tub or sink.  Wipe the faucets with a dry rag to make them sparkle.  Wash the shower curtain and install a fresh liner.  Don't forget the lights, bulbs, mirrors, clock, linen closet shelves, sink base, etc.  Clean it all and wipe it dry to make it shine.

The same applies to the kitchen.  Empty your cabinets and sweep out the dust, flour, sugar, cereal, etc., that may have escaped their containers.  Scrub the shelves, back and side walls of the cabinets and both sides of the doors.  Particularly check around the door handles where body oils tend to build up and leave a residue.  TSP (local hardware stores have it) will remove the body oils but also may remove the finish so test it in an inconspicuous place first.  Again, use gloves as TSP feels like lotion in the water and the next day layers of skin will peel from your hands if they're unprotected!  How do I know this, you ask?  Been there and done that, more than once!  Cut a lemon and put it through your disposal.  Pull out the stove and frig and clean under both and inside both as well.  Don't forget the stove drawer and under the burners if the stove top lifts!

All this cleaning has made me weary so tomorrow will have more cost effective hints for getting your house ready!

Oh, No! Not Emotions Again!

One last post and I promise a hiatus from emotions involved in buying and selling! 

The sequel to our good-byes to the old house was the hello to the new.  We had bought a lovely (only in our eyes!) old painted lady that needed paint and lots of it!  For those not familiar with the painted lady, many of the grand old Victorian homes have been dubbed "painted ladies" because of their wild color schemes.  Each Victorian needs a minimum of 5 colors to be true to its Victorian roots.  But I digress.

Hubby and I were homeless for 8 days.  On moving day we were all excited.  Our son was relieved because we would finally be gone from his spare bedroom, and we were anxious to be in our own bed for a change.

We took the keys, opened the door, and my immediate thought was, "Where do I begin?" followed by "Did we do the right thing?"  Unlike most sales, our new house was filled with the former owner's entire house of possessions and it had been rented to 4 late teen, early 20 year old men for almost 2 years.  It was filthy and it wasn't mine.  This house did not belong to me yet.  Our son voiced my chagrin, "What did you get yourself into Mom?"  At that point I was questioning as well.  The seller's entire house had to be packed up before I could begin unpacking my things.  The madness began.  Fatigue and aches set in.  Chaos ruled.  And I had to pretend to be a real estate agent at the same time!

It wasn't until 3 months later when the seller's stored possessions were gone and our own things were placed about the house, that we spent our first Christmas in our new home.  Did you notice the change in term?  By Christmas this house had become our home.  One of our kids shared this insight.  "You know when our old house was empty, its soul was gone.  I realized when you moved that it's what we put into the house that makes it a home.  We're starting to build memories here.  This will be the only house the grandkids remember when they reminisce about Gamma & Pappa's house." 

(c) Bonnie Erickson 2006

The Emotional Value of a House

My husband and I recently sold the home our children remember as their anchor for many family memories.  All of our children are adults with lives of their own now, and my honey and I thought it was time for us to "get a life"!  So the family homestead went on the market.  We were surprised at our adult children's reactions.  The youngest, who had been there from her tenderest years, applauded our action.  The two older ones, a daughter and son, reacted differently and questioned why we would want to move on. 

We spent the last evening in our empty house having a picnic on the bare dining room floor with the entire family:  3 adult children, hubby and I, one son-in-law, one grandson, one grand-dog, one grand-cat, paper plates, plastic silverware, and a towel to clean the potential mess.  We talked about the memories and our conversation bounced off the empty walls in echoes, just like our memories were echoes of the past.  Each child took some time alone in the house saying their respective good-byes.  One had tears.  One walked through the whole house touching the walls and whispering, "Good-bye, sweet friend.  Treat your new owners with the same love we felt here."  One seemed unaffected. 

When all had left, I was alone in the place that had housed much pain and joy.  Eighteen years of an abundant life full of everything life had to offer.  Sweet memories, even the painful ones, because we survived.  So, I too, walked the house saying good-bye.  I checked to make sure all cabinets, cupboards and closets were empty, that nothing was askew.  I locked the door and walked for the last time past my neatly trimmed hedge through the perennial garden and around to the backyard to bid farewell to my 11 giant oak trees who had sheltered us so many years.  As I rounded the corner I realized the rope swing in our oak tree was missing.  Someone had obviously stolen it in the hubbub of our move and I hadn't noticed.  The buyers had no children so it was not an issue, but I was puzzled why someone would take the swing.

The day after our closing, during our homeless time, I shared with the kids about the missing swing.  Our two daughters, who seemed most affected by the move. promptly informed me that our adult son had cut it down.  He had climbed the tree the last night while the girls were crying in the house, cut the rope and threw the swing in his car.  He wanted to keep it to put in the tree at our farm.  I wondered at the different way each of us had said our farewells, and realized that a house has the most value when it is a home.

Buying Is Emotional II

During our last sellers' market which I have dubbed the "feeding frenzy", it was difficult for buyers and their agents.  Almost every house  had multiple offers presented.  Buyers would get their hopes up only to have them shattered like safety glass.  When I conveyed the bad news in person, I could almost see the figurine of my client splintering away.  My job description:  creative problem solver and grief counselor! 

Buyers and I would find their dream house only to be outbid or rejected for some other reason.  Two problems existed.  We couldn't know how much the winning offer was until the house closed some 4-6 weeks later so we had no idea how much we lost by.  The second problem was that many buyers couldn't afford to outbid their competitors.  Some buyers didn't care how much they paid and the offers were sometimes more than 10% over the list price.  They just WANTED THE HOUSE! 

The first year of the feeding frenzy caught us all unawares.  Agents were worried the high bids would be a loss if the market righted itself the following year.  Agents knew their clients needed a house, but did we dare counsel our clients to overbid as much as was needed to win?  Buyers were scared they'd never get a house!  I finally realized that there IS a price that can be paid for "just wanting the house".  It doesn't matter what the house is worth.  What matters is getting it.  This principle didn't apply to all buyers but it definitely did with some.  I carefully went over the pros and cons of the offers made during this time.  Some people chose to buy at any price because it was the right house.  Others were more conservative and wanted to test the market a little more.  One of the key questions asked by many agents during this time was, "If we make this offer and you lose by $xxx, are you going to be devastated?"  If the answer was yes, they discussed how high they really wanted to go.  If the answer was no, they presented what they wrote.

Agents knew there was always another house that most often was a better house for their buyers, but the buyers didn't have this experiential base to go by.  The normal excitement of the shopping experience sometimes became one of hopeful despair.

Buying Is Emotional

A very critical component of buying or selling a house is that the house is, and will become, a home.  When I meet with first time buyers, I joke with them about how buying a house is an emotional decision.  In reality, it's not a joke.  Agents sit with buyers time and time again who have their criteria clearly defined.  It might be a 2 story Colonial with 4 bedrooms and 2 baths up and they end up buying a sprawling one level home.  Why?  Because it reminded them of "Grandma's house" or the house they grew up in.  Sometimes, the buyer can't even figure out why they like this house.  They just know it feels right!

Many times I have seen a "deer in the headlights" gleam when buyers enter a house and I know this is the one.  The buyers know the instant they walk in the door.  They spend the rest of the showing time creating reasons why they like this house.  What does it boil down to?  Different things for different people.  Sometimes it's a Jacuzzi tub in the master bath which they will rarely use, but signifies success in their minds.  Sometimes it's a nursery next to the owners' suite that's ready for their new little one.  A yard for gardeners, a flower bed in full bloom, the white picket fence, lilacs in the spring . . . It all means something emotionally to sellers and buyers.  The key is getting the buyers into the home who respond to the triggers that the sellers did when they bought their home.

More about emotional buying tomorrow!