Buyer Beware!!! – $8,000 Tax Credit?

UPDATE: signed and passed 2/17 at $8,000. See more details here.

Original post below does not indicate the change to “must not have owned a home during the last 3 years” which was added to the final bill before it was passed.

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If you are currently in the process of buying a house, be aware that there is a $15,000  ($8,000) Tax Credit in the new stimulus bill which may, or may not, pass tonight. Then it has to be signed, hopefully by President’s Day they are saying.  Then we have to watch the effective date closely “for homes closed on or after ?” Likely that will be on or after the day the bill is signed, which presumably will be some time during the month of February.

Just a day or so ago an RCG reader asked if she could take the old credit on this return, and she bought ONE DAY too early to get the credit!  Aaaargh…you don’t want that to be you, especially since this credit in this stimulus package is not a loan and is doubled (as of last night) to $15,000 as it stands right now!

That’s a lot of moolah to forfeit by closing one day too early!

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There are a lot of discussions all over the internet, the news and Twitter about the pros and cons of this, but very few warning buyers who are currently in escrow or looking at houses today!  Watch this closely, and sellers should be prepared to move the close date a day or two, if needed.  NO ONE wants to be responsible for a buyer losing out on a $15,000 (an $8,000) credit!

This is like every SELLER getting a $15,000 (an $8,000) price reduction, complements of Uncle Sam and President Obama!  Big NEWS for both buyers AND sellers of homes. Watch the news VERY closely in the coming days.

"Over-priced" Houses That Don't Sell

As I wander through the various message boards, I often read about people’s frustration regarding “over-priced houses that can’t possibly sell”.  To a buyer who likes the house, and is waiting for the price to be within reason, this can be very frustrating.

What they fail to understand is that every house that is for sale, is not necessarily going to be sold by the current owner. 

1) Divorce – Often in a divorce, one of the spouses is offered an option to buy out the other spouse.  In a market like this one, sometimes the agreed upon price must be tested.  Say the spouse who is leaving wants the buyout price to be $600,000. Let’s say they bought it for $400,000 and put $100,000 worth of improvements into it.   They put it on market for $$599,000 and keep reducing the price to $519,000.  Then it goes off market (this is a real case) and it never comes back on market.

Meanwhile, a buyer has been watching it, who wanted to buy it for $485,000.  He’s been watching it for 7 months.  He feels “used” and frustrated that it went off market before it hit an asking price of $499,950 .

Once the value was proven to be $400,000 plus $100,000 at best, the two spouses agree on the “buyout” amount, and one of them gets to stay in it.  It was only ON MARKET to prove to one of the spouses that the price of $600,000 was unrealistic.

2) Passive Aggressive – saying YES and meaning NO.  Husband and wife have a fight and the wife calls an agent to list the house, planning to get a divorce when the house sells.  Husband signs the listing paperwork at a price at which he knows it won’t sell.  He appears to be cooperating with the sale, and blames the market for the wife’s failed plans 🙂  They make up at some point, take the house off the market, and live “happily” ever after…until the next fight.

3) “Mom, you HAVE TO move” – Well meaning children tell Mom she’s too old to live in that big house all by herself.  She’s tired of hearing it, and agrees to put the house up for sale.  High price and awkward showing instructions.  “Can only be shown with listing agent present’ or “Can only be shown on weekdays from 10 a.m. to 4 p.m. and not on weekends”.

Sometimes these homes are on market from April through October, every year, year after year, with the price increasing every year.  Kids wonder why Mom’s house won’t sell, but they stop bugging her about her need to sell it.

4) Short Sale – Bank approves a sale price of $450,000.  House sits on market at $450,000.  No offers.  Owner can’t lower it below what bank has indicated they will take.  Bank won’t reduce the amount they will take, because they have an appraisal at $450,000.  House sits on market until someone buys it at foreclosure.  Some owners keep reducing it every couple of weeks, but mls says they can’t offer it at a “fake” price not ratified by the Bank…big Catch 22.

So when you look at the inventory of homes for sale, understand that they will not all be reduced to a price at which they will sell.  Often you will not get the real story about the seller’s motivation.

Warning to Thurston County agents – and this goes for FSBO folks too…

February 25, 2008. The NWMLS has received information (Thurston County area) concerning a male individual who looked at homes with an agent — all of the information he provided about himself and his employment was false. He claims to be a buyer’s consultant with the Federal Government, a PhD in Physics, his wife a professor at the University of Washington and they live in Medina, WA. None of the information he provided, except his name, is correct.

The individual is a currently registered, Level 3 Sex Offender, male, about 54, white, 5’11″, about 220 pounds, gray/red hair, tattoos on each arm and may have a beard.

Other than providing false information during the preview of two homes, the individual did not demonstrate inappropriate behavior. Showing agent did not allow herself to be placed in a perilous situation. Individual has previously been a home inspector and appears to be familiar with the real estate industry.

Please be careful! If this man contacts you, contact your local authority.

This posting from the NWMLS came out a few days ago but I was out of town and didn’t see it till today. You can never be too safe when selling your home or acting as an agent to help someone buy or sell a house, so do be careful if you are contacted by a person matching this description.

Safety can't be stressed enough for agents and sellers of property….

Safety is always a concern of mine for both me, my team, and my clients. Oddly enough, agents work in a profession where we and our clients are frequently targeted for a variety of opportunistic crimes such as burglary, assault, rape, and murder. Recently, notices went out from our local MLS letting agents know that a strange man was attempting to lure female agents to vacant properties. I’m pasting in the full content of that original notice. There has been an update on the MLS site since then that actually has a photo available of this potentially dangerous person.

“February 6, 2008. NWMLS has recently received reports of potential dangerous situations regarding a man attempting to lure women agents to homes.

A man named Christopher Heath (from Vermont) is trying to get female agents out to vacant properties. Most of the properties he is interested in are vacant and secluded. He has been arranging to meet with several agents in the area (Duvall, Monroe, Kent).

Heath claims to be relocating here to work at the Fire Academy in North Bend. He claims to be a widower, retired firefighter, cash buyer searching for rural setting with room and privacy for the 2 search-and-rescue dogs he has for his job here with the Seattle Fire Department.

He originally was looking for a house priced between $400,000 and $600,000. He later changed the price to a million, saying it was going to be a cash deal and that the money would be wired from Merrill Lynch.

One agent was feeling uncomfortable with the situation and began a background check. The Fire Academy has never heard of him. He had called from a New York phone number so she did a reverse search — it was a doctor’s cell phone # — when she called the number the next day it had been cancelled.

A 2nd agent called the number she had been given in Vermont and spoke to his wife (he claimed to be a widower). She said there are about 10 different female real estate agents leaving him messages and she found many Seattle area agents on his home computer. According to his wife, he was in the middle of taking out a home equity loan on his wife’s (of 4 months) home. His wife just happened to be home and saw the appraiser measuring her home – a 30-acre horse ranch in Vermont.

Another agent arranged to meet with him today (February 6). She told him by voice mail and email that they would be meeting at her office to introduce themselves in person and to go over their tour and initial real estate paper work. She told him it was their company policy to meet new clients at their office, introduce them to their office manager and to make a copy of their driver’s license. She has not heard from him since.

His wife believes he is now in New York heading to Washington.

The situation has been reported to the police.

Please be careful! If this man contacts you, contact your local authority.”

Making this seem even more important to bring to public attention was news that RE/MAX agents received yesterday of a murdered colleague in Canada. The same type of tactic used by this guy noted above was used to lure a 24-year old agent to a vacant home where she was then stabbed to death. Purportedly, she had expressed concerns about going out to this viewing for a variety of reasons based on the calls she received asking for the showing. I wish she’d listened to her gut and not gone but we can’t change what happened now, but I can certainly put out a warning to others in hopes that they’ll escape a similar fate in the future.

When it comes to sellers, I also speak strongly about safety measures. Just because a sign is in your front yard doesn’t mean you need to open the door to just anyone because they ask. Follow all the same security procedures you would if the house wasn’t on the market. If someone comes to the door, ask them to set up an appointment with their agent, or your own agent so that there is a layer of qualifying put in place. If you happen to be home and an agent comes to your door, to make sure they really are an agent make sure they first check in with the keybox. Only agents have the products available to them to open these boxes. The key boxes are geared specifically to capture electronic data so that the people going in and out of your home can be monitored, plus it allows for follow up and feedback, also necessary for the agent selling your home to do their job most effectively. This came up recently when a client had stayed home with a sick child. A bunch of agents came over and went through the house without logging in to the keybox. I told her that in the future she should have every single agent log in before allowing them into her home.

Having an open house potentially puts your belongings at risk so if you have anything of value – whether it’s monetary or personal in nature – put it away. Medicines in your cabinet? Put them where they can’t be picked up by snooping people or those there to see if they can pick up their “fix”. Sometimes it can seem entirely benign to have an open house but what you’re doing is inviting complete strangers in, who haven’t been qualified by anyone specific much less a lender and/or agent, who will come traipsing through your home. Even if people are asked to sign in they will oftentimes put down false information because they want to remain anonymous. I’m not saying “don’t do it” at all, but rather think about safety measures that can keep you, your family, and your belongings safe throughout the sale.

A Seller's Guide to FHA

FHA insured mortgages have received a stigma in past years for creating a challenging transaction.  Sellers seem to prefer conventional financing, even subprime financing, over an offer with an approved FHA buyer.   

The Federal Housing Administration was established in the 1930s following the Great Depression.   These innovative low down payment loans were intended to help more people become home owners with intentions of creating more stability in neighborhoods.  FHA insured mortgages are woven into American history.

Here are some reasons you,as a Seller, should consider an offer with FHA financing.

  • Preapproved FHA buyers are full documentation loans.  These buyers have been scrutinized and have provided income and asset documentation in order to have a true preapproval.  
  • FHA mortgages are not going to “disappear

Bribery to Work with the Builder’s Preferred Lender

When ever I’m working with a home buyer who may be considering new construction, I know I might lose them to the builder’s in house lender.   Often times the builder will offer an enticing credit to the buyer’s closing costs only if they obtain their financing from the builder’s preferred lender.   

How can having a Loan Originator (in this case, they are a retail sales mortgage person, or what ever Jillayne refers to them as  🙂  since they wait to be fed from the builder, often sitting at the construction site) who’s livelihood is supported by the Seller (i.e. the Builder) be in the Buyer’s best interest?    Who is looking out for whom?  How do you know the Loan Originator will not disclose the Buyer’s private information to the Builder if pressed?

Enough of my questions…here are some of my recent dealings with the Builder credit when working with the preferred lender.

The builder offered a $4000 closing costs credit when working with their lender.   After reviewing the builder’s lender (BL) good faith estimate (GFE), it was easy to see how they were doing this.    The rate being quoted for a 30 year fixed was 6.125% at a 1% origination and a 0.125% discount.   The actual current 30 year fixed rate that I would have quoted on that day was 5.875%.   The BL was getting over 1 point (over $2000) on the backend of the transaction.   Since the BL is a bank, the $2000 on the back did not show on the GFE.   My client did not have the Truth in Lending to provide me, so I don’t know if there was additional padding with any prepayment penalties to credit the lender.   If not, I am certain that the builder just increased his sales price by $2000 to fund the difference of the “buyer closing costs

Our 100 Year Old Seller Closes Escrow Today

[photopress:tudor.jpg,thumb,alignright]Some of you will remember this photo from Halloween when I was trying to do a “night shot” and it came out a bit “spooky” with the moon glowing ominously in the background.  I know Galen will.  Now that I know you are a photographer at gallery level quality, Galen, I’ll be listening more closely when you tell me what to do.  Not my forte…as you well know 🙂

There’s a first time for everything, as they say, and this was my first ever experience with a 100 year old client.  Even back in my Trust and Estate days when many of my clients were deceased, and the living ones were pretty old, I never had a 100 year old client before now.

The house was also so old, no one knew how old it was!  It was built before 1900 when King County started keeping records.  Title Company figured it was built some time between 1888 and 1900, so we know this owner was not the original owner, he was too young at only 100 years old 🙂  I’m sure he just loves being too young for something.

The lovely story of this real estate relationship, is really about his daughters, and specifically the one who had the responsibility of P/A for the sale.  In between going all the way across the ferry to take Dad to the doctor, and back to take her husband and his oxygen to his doctor and with her most everywhere, and the sister that fell off her patio while gardening in Denny Blaine to the doctor with her walker…  Holding communion services at her home, for the invalid…  We prayed and held our breath on this one to the very end…which is today.

The buyers are very, very happy to have this lovely grand old home, and are trying to get more info on exactly when this house was really built.  So if anyone knows where we might find more research about homes in the Mt. Baker/Leschi area, that were built prior to 1900, please give us a heads up.

It’s a good day…and all’s well that ends well.

 

Zillow's Free Advertising – A Consumer Perspective

[photopress:warning.jpg,thumb,alignright] Before everyone jumps into the pool, every agent and owner must “LOOK before they LEAP”.

The Zillow Zestimate WILL appear, of course, in the same space as your “Property For Sale” listing. The printed data is also picking up the erroneous square footage info and number of bedrooms and baths from the tax records. So far it would appear that the owner can edit this data, but not the agent for the owner. Still playing with that.

Clearly, no agent should be listing a home where the Zestimate is less than the Asking Price, without first consulting with the owner, as I did last night BEFORE 9 p.m., having seen the proto-type last week. I am not particularly alarmed by this variance, but clearly the Zestimate being higher, rather than lower, would be a PLUS! 🙂 Attempting to turn a blind eye to the Zestimate, by not posting your home for sale there is no answer. Not here in the Seattle area where 82% of the buying public is likely to have seen the Zestimate, whether you invite them to do so or not. Seattle PI: “The company’s internal numbers (Zillow’s) indicate that 3.2 million people visited the site in November and that 82 percent of all homes in King County (WA) have been viewed on Zillow in the last 10 months.”

It is quite possible that the whole valuation process will pull in the direction of Zestimates, particularly in areas like ours with so many tech savvy buyers. In fact, I am already seeing a move in that direction for many properties on market and ones sold recently.

Whether or not you choose to post your home for sale on Zillow.com, these are issues facing everyone involved in real estate transactions. Buyers are making offers with the Zestimate price. Sellers and Agent’s for sellers will need to learn how to calculate the variance with some level of credible accuracy.

One of the reason’s David G. and Jeff, of Zillow, my parter Kim and I, met last week to review the new product, was to view first hand some of these potential pitfalls. While I did notice the Zestimate vs. Sale Price issue, the square footage discrepancy did not pop out at me during the presentation.

“Supporting New Business Models” and being an “Agent for Change” requires that someone jump in first to test the waters and assist with these little blips from the getgo, and not without the owner’s permission to do so.

To Galen, who notes that it is difficult to simply load up listings en masse, perhaps this is fair warning that adding a home for sale should NOT be done en masse. Every agent and every owner must consider the potential consequences of showing the Zestimate price side by side against their Asking Price, and be prepared to justify the basis for the differences between the two with regard to square footage, number of bedrooms and bathrooms, finished vs. unfinished space, etc. and price.

This “FREE ADVERTISING” and the info contained “in the AD” is not entirely editable by the owner and the owner’s agent…so far anyway. I’m still working on it. Not a small matter, and one that must be addressed rather quickly if Zillow’s erroneous data is going to show side by side the owner’s “corrected” data.

So what did I forget to ask David G. last week? Did Pearl Harbor Day come up in any conversations concerning Zillow’s choice of unveiling the new upgrade? Did unveiling it at 9 p.m. on the 6th, camouflage any refererence to December 7th, when most would be waking up to see “God-Zillow” in their sheets with the morning paper?

Does It Really Matter….?

Ardell’s recent post on FSBOs was courageous as you won’t see many agents talk about how one might sell a property without listing it. While it may be a bit counter intuitive to some agents, one reading the post should come away feeling that Ardell (and others like her) are not in the business of providing self-serving advice.

In her post, Ardell said, “[T]here are several companies that offer this service, and while it is true that some agents may boycott you and not show your house, if you have one of those houses that will “sell itself