Real Estate Snippets

Talking Myself Out of a Job

There are days when my paycheck is lessened because my integrity is high.  I spent a couple hours last week with a prospective seller client who was a referral from another agent.  The purpose of my visit was to give her staging tips for preparing her house for sale.  I knew she was interviewing other agents as well, but there's always the chance of getting the listing AND I enjoy meeting people and seeing their homes.  As we toured her house and created a list of things to do, I was surprised to find she owned the house outright . . . no mortgage.  She wanted to move from this larger home to a smaller more manageable place for just herself.  She currently had two "roomers" and still had too much room to bounce around in the house.

One of the questions she asked was whether I thought it was a good idea for her to keep this house (5 bedrooms, 2 baths) as a rental property and buy another smaller one just for herself.  This was surprise number two.  Many sellers don't even consider this option.  Quite honestly I told her that I was going to talk myself out of her listing with my answer.  Her house was free and clear which meant she could mortgage enough funds from this property to have a healthy downpayment for her next house and still have a big cashflow from renting her current home.  If she chose to leverage her current home with a higher mortgage, she still would be able to collect the rent to pay the expenses of the mortgage and upkeep on the current house.

We talked about the pros and cons of renting a property that had once been your home.  It's hard enough to sell a "home" to someone who will love it like you did, but renting it and watching the damage and lack of care from tenants can be troublesome to some owners.  One has to detach from the home in order to successfully rent it out.  We discussed how different personalities find it harder to do tenant management and in those cases it's a good idea to hire a management company.  We talked about vacancy stress, tenant screening, taxes, and building wealth.

On my way home, I laughed at myself.  Integrity and honesty are high moral values for me.  Once again I had found those two values talking myself out of a job!  It wasn't the first time, nor will it be the last.  For me my "fiduciary" or agency responsibility of putting the client's interests above my own is extremely important, and on occasion it's in the clients' best interest not to buy or sell their home.

Sell First

It's definitely a buyers' market in the Twin Cities (Minnesota).  Because of this, many sellers are skittish about accepting offers contingent on the sale of the buyers' house.  This kind of "contingency" allows the buyer to back out of the purchase and still get their money back if their house does not sell.  Likewise, the seller can call for the buyer to remove the contingency at any time and, if the buyer cannot prove they can buy without selling or provide a purchase agreement from a buyer of their house, the seller can cancel the purchase agreement.

The reticence of sellers to accept contingent offers is pressuring buyers to sell their home before they go house shopping.  There are a couple reasons for this:

• It puts the buyer in a stronger negotiating position when they make an offer for their new house.
• The buyer knows for sure how much money they will have from the sale of their house to put into the purchase of the new one.

Similarly there are reasons why buyers don't want to sell first:

• Selling first puts a time limit on their shopping for a home.
• They don't want to be homeless.
• Buyers don't want to compromise their new house criteria because of pressure not to be homeless.

The solution to the problem varies with each situation.  In a buyers' market, however, there are a lot of houses available to choose from.  The chances of not finding something that meets the buyers' criteria is slim.  But if the worst case scenario happened, what would be the solution?  Put your entire household in storage and live in temporary housing or with friends or relatives for a short time.  Having done that myself, I know it's not the easiest scenario, but it accomplishes the purpose of finding a new place that fits your needs.

If one chooses to present a contingent offer, it puts a different kind of pressure on the buyer.  Some consequences:

• Compromise on price.
• Get so focused on selling the house that the family is disrupted.Emotional stress as a result of not meeting the sale deadline or having someone else "bump" your offer.
• Truly be motivated to buy, not just window shop.

I'm often asked what to do.  My personal solution would be to sell first, but that is my solution.  It meets my level of tolerance, not my clients.  As a result, the decision ultimately is yours after considering the repercussions of each choice.  Like so much in real estate, there are many "right" answers.

Home Expo Aftermath

Our company's participation in the Home Expo is now a memory.  For those who didn't go or hadn't read my website, we rented a booth at the Home Expo and installed a dunk tank.  The dunk tank was for the loan officers.  "Every loan at The Money Matrix is a slam dunk," or "Dunk your loan officer".  The kids loved it and there were quite a few good pitchers in the crowd.

The participants got together today and discussed the impact of the show on marketing.  Like so much that's done in marketing, it doesn't stand alone nor does it produce immediate results.  The only marketing that ever seems to produce immediately is phone calling and that's a bit tricky these days.  However, our booth was photographed by two local papers and was to be placed on the website.  That's a lot of free publicicity for one weekend!

Our general consensus was that our dunk tank was a grand success.  It was also a grand amount of work.  One location had no hot water and we were in a tent in early April (cold still in Minnesota) so the poor guys that were dunked nearly froze to death.  The second location had hot water and a building so the guys fell into a hot tub every time they were dunked.  The irony was that as we called people who asked to be called, they didn't remember our name.  However, the instant we mentioned the dunk tank, they knew who we were.  We still have the drawing to do on Friday for the junior size Redcat 4 wheeler.  My husband wants to win and since there were no rules about relatives of employees, he signed up.

While I was at the show, I truly wondered about my sanity.  Real estate agents are notoriously hard to confine in one spot for too many hours at a time.  Additionally, it was a lot of time, a lot of energy to speak with a series of strangers, and will be a lot of work with the follow-up.  Will I do it again?  Probably.  Will it be any easier?  Probably not. 

Disclosures

The mantra for the seller could be "disclose, disclose, disclose".  Some ask my advise about disclosure.  My thought is that the more that is disclosed of what you KNOW to be true, the better off you are after your property is sold and you have moved.  Why?  Because any item that is disclosed in writing prior to the sale alerts the buyer to the condition and gives them the opportunity to reject that condition and move on or to continue with the purchase of the home.

In Minnesota we have several seller disclosure forms that are required.  There is a methamphetamine disclosure; a 5 page seller's disclosure about the general condition of the property; a well disclosure; a septic disclosure; and the federal lead paint disclosure for all houses built before 1978.   The "meth" disclosure is new.  I laugh at the legal size single spaced document that could be boiled down to 2 paragraphs:  the seller does know of meth production in the house, OR the seller does not know of meth production.  Now tell me what self respecting producer of meth in a house for sale would disclose such a fact?  If I was a crook, I certainly wouldn't have the scruples to be honest about how I'm breaking the law!   There is a section on the 5 page seller's disclosure that succinctly asks to check whether the seller is aware, or not aware of, meth production in the house.  If this simple paragraph is on the seller's disclosure, why fill out both forms?  Redundant?  You betcha!

Another amusing thing is also on the seller's disclosure.  Page 5 attempts to delineate what does, and does not, have to be disclosed.  Did you know that as long as you give the prospective buyer the info on how to check for a predatory offender, that the seller has no obligation to reveal that info?  Now to me that would be a material fact that would definitely affect my ability to quietly enjoy the house!  Other things not required to be disclosed are that a death occurred in the property from suicide, accident, or natural causes.  For some cultures and belief systems this is also a very important deterrent to quiet enjoyment of the property.  The other category that is not required to be disclosed is the perception of paranormal activity (ghosts)!  Note that the words used are "perceived paranormal" which implies it's all in one's mind.  Secondly, whether I believe in ghosts or not, I would not want to buy a house that someone said had ghosts in it.  That would be just too freaky.   It's there in black and white on the disclosure that when there is a ghost in the house, one is not required to disclose that fact.  I'll pass on that one for sure!

Sabbatical

I missed a couple days in posting and went from number 11 on blogtopsites to number 43.  Since my goal in life is not to be number one on a blog directory, I'm not too worried.

I am pretty thrilled that the house with the dragon has gone on the market.  This one is a gem.  The house across the street and up a couple doors sold in 5 days for close to $1,000,000 (Yes, it was bigger, but it's still location, location, location.).  In case you're not used to the zeros, in words that's "close to one million"!  That makes the dragon's lair a bargain at $530,000.  For those who missed some of my first posts about the dragon, you can read them by clicking here.  The dragon's picture is here.  And the pictures I posted of spring flowers were in the perennial gardens of this home as well.  It's unusual to find a home like this that has retained the old character and charm but upgraded the kitchen and bath to modern standards.  We'll be hosting a broker's open on May 2 from 11:00 AM to 2:00 PM so the dragon and I will whisper sweet nothings to each other if it's not too busy.  I might even drag out my heels and a skirt for the occasion!

The rest of my weekend was spent manning a dunk tank at the home show in Blaine.  If you didn't get a chance to stop by and say "hi" or to dunk a loan officer, you'll have to come by for the next show.  A few clients did use the tickets we sent out and got re-acquainted.  The best part of the show was watching the little kids when the loan officer fell in the tank.  They would watch the person blow bubbles underwater and get to giggling with the sheer abandon that only little kids have.

Revisiting Houses

You know you've been in real estate too long when you start showing the same houses again.

A particularly quirky example of this happened a couple years ago.  A new investor asked if I would find homes that were in bad shape for him to buy, fix and resell.  I was delighted.  This particular request was a specialty I could perform that many agents could not.  I searched and scheduled about 15 houses for our first tour.  Secretly I was looking forward to the shock he would experience when he saw how rough some of the houses would be.  Much to my dismay, the first 6 houses had been "swamped out" (A term I used to describe removing all the debris from the home prior to listing it.).  The seventh house, however, met my expectations.  The lock box was opened; the key inserted. The door seemed stuck so I shouldered it a bit.  The door was stuck on debris.  A bubble of laughter escaped from me as I told my client this is what I had expected to find all day.  We stepped into mountains of filth and debris.  No one had used a scoop shovel in this house!  It was a mess and it smelled. . . but I mentally put it on the "keeper" list.  It didn't make his cut, however.

Four years later I had long since forgotten the address of that cute little bungalow.  A close friend asked for a house in the Como neighborhood.  She was single and didn't think she could afford the high end prices, but we went shopping anyway.  Imagine my surprise when I drove up to the house the investor had previously rejected.  Hesitance flowed through my thoughts as I once again unlocked the front door, pushed the door open, and . . . was pleasantly surprised.  Whoever had done the rehab work years earlier had done a very nice job.  The carpets were newer; the paint was cheerful; the whole place was clean.  What a relief!  My friend chose this house and occasionally I visit.  Reminiscing about how very bad that little house had once been reinforces for me how loving care can restore and renew a home.

Fair Housing

A discussion on a real estate forum once caused me to research how fair housing is applied differently to buyers and sellers of real estate.  The question initially was about "steering".  Steering is a term that describes the practice of guiding a buyer to a certain neighborhood based on criteria other than the clients' choices.  In the early years of real estate, some agents would choose to only show houses in certain neighborhoods to clients of specific races.  Other races would be "steered" to other neighborhoods.  This was not at the client's choice, but a purposeful decision made by these unethical agents.  This practice precipitated some of the fair housing laws that are enforced today.

The question presented to the real estate forum was whether it was okay to take a client to a neighborhood that they defined, i.e., a racially mixed couple might request to be in an ethnically diverse neighborhood.  I had been taught that I could not tell a client which neighborhood was composed of which races, etc.  I had felt this practice was a disservice to my buyer clients because I was not giving them what they were requesting.   If the client asked to be within 1 mile of a certain school or other point of interest, that was okay, but showing houses to a client based on their request to be near any of the protected classes of people, was off limits.  The arguments among the professionals on the forum went back and forth.  The fur was really flying over this topic.

Two important points were addressed:

• The choice of area had to be the client/s'.
• The definition of the neighborhood had to be measurable, i.e., based on census demographics or police statistics.

The arguments for each position caused me to review the Minnesota Association of REALTORS buyer representation contract and the exclusive right to sell contract.  The buyer's contract lacks a statement  about the fair housing laws.  However, the seller's contract very clearly states that the seller "shall not refuse to sell, or discriminate in the terms, conditions or privileges of sale, to any person due to his/her race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, handicap (whether physical or mental), sexual orientation or family status."

Hmmmm.  There obviously is a reason why that paragraph is on the sellers' contract but not the buyers'.  The reason is exactly what was being argued on the forum.  The buyer has the right to buy wherever the buyer wants regardless of anyone else's opinion.  They can choose to stay away from, or to buy in, an area populated with people like themselves.  The buyer can choose to discriminate by staying away from an area.  No one can force a buyer to buy in an area they don't want.  The key is it has to be the buyer's choice, not the agent's.

Search for Listings

The MLS is an elusive bird.  The consumer thinks when they log on to a real estate company's website they are searching the MLS directly, but that's not the case.  Only members of the MLS can search the "real" MLS.  The only reason the consumer can see properties online is because real estate agents wanted to provide this service for their clients.   The real estate brokers formed a cooperative endeavor called broker reciprocity which allows all participants to publish all the other companies' listings.

The public has limitations as to what they can view through the broker reciprocity sites.  For instance, a former client called today asking for assistance to find a property.  She had searched all over what she thought was the "MLS" trying to find a home in Taylors Falls.  I logged in (password required for MLS members) and did my search.  Voila!  There was the property.  The reason she could not find it was because the property was no longer "active" or available for sale.  The seller had accepted a purchase agreement and as a result the property's status was "pending" (waiting for the closing).  When the public searches the broker reciprocity sites, they only get to see active listings.  Properties that are expired, canceled, sold or pending are not available for public viewing.  Those can only be obtained through a real estate agent or other member of the MLS.

So now that I've gone far afield with explaining online searches for properties, I'll get to the real point of my comments today.  I've added a link in the right side bar under "Twin Cities Homes" which will allow you to access as much of the MLS as is allowed through broker reciprocity.  The particular company I use for this service updates every 15 minutes.  You can tell by checking the time stamp on the search page.  If you check my websites, you'll find the same search available to you through those sites as well.  Happy hunting!  Or is it "Happy Snooping"!?

Tax Day

Taxes are due tonight at midnight.  I wonder if there will be a line outside the main post offices again?  I drove in that line one year when I first started real estate and was shocked at the number of people lined up to drop their taxes off at midnight.  It was quite fascinating.  Postal employees were at the curb and between each lane with big bins to collect the "mail" as the cars drove by.  Police officers were present to direct traffic.  It was almost like going to a big football game.  I half expected the concessions guy to appear.  Having been in that line just once, I believe the statistics I heard today:  26% of people wait until the last minute to file their tax returns.  I wonder if that includes those who file online?  For those under the gun, there are only 2 hours and 28 minutes left to the deadline.

Cabin Fever Cures

People who chill easily cannot understand why anyone would live in Minnesota.  What is the attraction?  For me the seasonal changes are an important part of our climate.  Would I appreciate the lushness of summer if it didn't contrast with the starkness of winter?  It's like recovering from an extended illness.  Until we've been sick, we don't always appreciate our health.  Similarly when a Minnesotan develops a really bad case of cabin fever and thinks the winter will never end, the snow miraculously melts and this is what pops up!  Click on the images to enlarge them.