A Thanksgiving Real Estate Story

I’m greatful that I get to work in this wonderful world of real estate sales.  Every family that is buying or selling a home has a story to tell me.  Every investor renting, buying or selling a building or entrepreneur buying or selling a business brings the agent into their lives during the transaction and often long lasting friendships are forged. What I love is that every deal is different, every buyer and seller brings new and interesting lives with them.  I’ve learned about nearly every religion in the world (I ask a lot of questions).  I’ve learned why people come to the Greater Seattle area.  I’ve learned all about the books and operations of the businesses I represent and their hopes and dreams and I get to share these dreams.

But I want to share the story of Stacy Bannerman who is The Founder/Director of a Foundation called The Sanctuary For Veterans & Families, with whom one of my agents, Brian Borgen and I are currently working. 

This summer I co-listed with Brian a fabulous waterfront home/retreat/spa/B&B in Vaughn, about  ½ hour west of Gig Harbor with 900 feet of salt waterfront, 11,000 sq ft home and 5 acres.  Working with interested buyers has been fascinating and fun, seeing the property through the eyes of different buyers, such as a retreat for Hollywood stars and a Bed and Breakfast business supported by Social Entrepeurs from Europe.

However, Stacy Bannerman called us from an online ad this fall and thinks the property will be perfect for their needs as the Sanctuary they have been looking for.  Working with Stacy has humbled me and made me realize how thankful I am for our Veterans who have been in harm’s way.

Stacy shared with us her vision for this Sanctuary and explained to me why she was willing to spend countless hours volunteering her time so that veterans could have a place of retreat from the world while they get the special services they need to get back on their feet.

ChavezShe states that “at least 1.6 million American military personnel have served in Iraq and Afghanistan, and Iraq war veterans are exhibiting higher rates of post-combat mental health problems than veterans of any other war in this nation’s history.  

Due to repeat, extended tours, an unprecedented wound-to-kill ratio of 16 to 1, and the high incidence of civilian casualties in a war without front lines, the most conservative estimates now are that at least 30 percent of troops will suffer some post-combat mental health problems. While post-combat mental health issues affect an individual veteran, the aftermath of war impacts the whole family and reverberates across communities.”

Stacey is going through the hoops to get this property under contract, she already has set up work schedules for the operation and arranged to have Bastyr University  handle the rehab portion of the week to help with mental and physical recovery.  The foundation will also be setting up a children’s dayschool so that the veterans can find a safe place to bring their families and get special counseling for a week at a time.

So, today an architect is drawing up the changes to be made to submit to an appraiser and then we get under contract and she’s out raising money.  All this and she has a full time job herself.

I will be so proud to be part of this and sure hope it comes together.  It all feels right and I’m excited and once again, so grateful to be in this business.

  

Update on 'Fix and Flip'

Last Thursday night at the monthly REIA meeting, Than Merrill from A&E’s Flip this House presented an informative glance into his working business model. Than does more than 120 flips a year at an average of $27,000 each.  Although he just started 3 years ago, Than is making millions using a system that he partially nabbed from other fix and flip coaches and partially created himself.  Than acknowledged up front that he would have something to sell, otherwise he says there would be no point in his flying out here from Conneticut to talk to a real estate investment club.  And sell he did.  What my husband and I heard prompted us to attend an all day (9 to later than 6!) on Sunday.  The cost was relatively inexpensive and anything for more education, right?

In case you’re wondering who attends a real estate investing club, I noticed a lot of people with jobs looking for a way to become self employed, and I also found many who had already made that transition using real estate investment as monthly income.  Others are there to build a retirement using real estate investing as a vehicle. Some using sefl-directed vehicles and others doing 1031’s to defer taxes. 

Finding the right investment opportunity is key to good real estate investing. The investments we have been buying are properties that can be subdivided or converted to condos or in some other way create equity through development.  I hate fix and flips because there have been such a small margin in them because we didn’t knowi how to find below market inventory consistently.  We only do the fix and flips if we can increase the value of an adjacent lot or new construction home we sell by increasing the value of the original home. 

However, working with distressed sellers to find below market inventory is a business that is very specialized and can by itself be a full time occupation.  And there are a lot of investment buyers looking to buy discounted properties.  Finding these discounted properties has always eluded me. We have tried the foreclosure route and bought on the court house steps, but too many investors were chasing these properties and they still got bid up, squeezing that profit margin.  Then there are title issues and the fact that you can’t really inspect the properties among other things, like needing cash!

Than has been successful finding these sellers and I wanted to know how. He has multiple sources and mutliple campaigns aimed at finding anyone willing to sell at a discount. His program is a highly developed marketing and operation.  We were impressed, So, we decided to invest in the systems thinking that if he can make them work, so can we (I know, pretty egotistical). The cost of the program is pretty reasonable, the bigger cost being the time to attend a one week boot camp and implement the multiple marketing systems. But we’re looking forward to it and hope soon to have a source of ‘cents on the dollar’ real estate to offer our buyers.  Keep tuned.

BTW, still nothing definitive on the Contractor’s issue, i.e., an owner needing a contractor’s license to perform work on real estate prior to a sale if within one year. We’re all waiting for clarification. 

Sellers — are you getting SC@EWED by the lender? Fight back!

Over the last few weeks, there have been a few posts here on RCG discussing the means by which loan originators enhance their income by “harvesting” seller paid closing costs that otherwise would have been retained by the seller.  In a nutshell, the process works like this: In the purchase and sale agreement, seller agrees to pay “up to” a certain sum in buyer’s closing costs.  Immediately prior to closing, when all costs are known, the loan originator determines that the closing costs are less than the maximum amount to be paid by the seller.  The loan originator then increases the loan origination or related fees to “soak up” the difference between the “actual” costs of providing the service to buyer and the amount that can be charged based on seller’s obligation to pay up to a certain amount.

As I (and many others) noted in comments on the above posts, this conduct is dishonest and reprehensible.  Why should the loan originator (or other service provider, such as escrow) be paid an amount beyond that quoted in the Good Faith Estimate or elsewhere?  The service provider agreed to provide a service for a set fee, but then increases that fee at the last minute not because of additional work, but because there is additional money “available.”  Clearly, this constitutes a windfall to the loan originator at the seller’s expense. 

In Washington, there is a law, the Consumer Protection Act (CPA), that prohibits any unfair or deceptive acts or practices in the conduct of commerce.  If a person is the victim of conduct that violates the CPA, that person has a legal claim against the wrongdoer.  If the plaintiff prevails on such a claim, the plaintiff is entitled to an award equal to the amount they lost as a result of the wrongful conduct, plus an addition sum equal to three times that amount (up to $10,000), plus their attorney fees and costs incurred in pursuing the claim.  The legislature specifically enacted this law to create “private Attorney Generals,” private citizens who would have the incentive to seek out and punish unfair or deceptive business practices.

If you are a recent seller, you may have been victimized by the conduct described above, and you may have a claim under the CPA.  To find out, first determine whether you agreed in the purchase and sale agreement to pay “up to” a certain sum in closing costs.  Presumably, the more you agreed to pay, the more likely it is that some of those funds were “harvested” by the loan originator or other service provider related to the transaction. 

If you agreed to pay “up to” a certain amount, then you need to research further.  Ask your Closing Agent to provide you with a copy of the buyer’s HUD-1 Settlement Statement, which will show the amount paid by you (on buyer’s behalf) in closing costs.  If your Closing Agent will not provide you with a copy, contact your agent (if you used one), as the purchase and sale agreement requires the Closing Agent to share documents with the agents.  Once you obtain a copy, have it reviewed by someone knowledgable about typical closing costs to determine whether any are obviously excessive.  Alternatively, contact the buyers and see if they will share a copy of their Good Faith Estimate.  Comparing the GFE to the HUD-1 should indicate whether there were any significant (and presumably last minute) increases in the buyer’s closing costs.

If it appears that you were the victim of this scam, contact an attorney who is knowledgable about consumer law and/or real estate law.  The attorney may be willing to take the case on a contingency basis (meaning the attorney gets paid only if you recover funds) given the attorney’s fees provision in the CPA.  If it appears that you paid an additional $2000 in closing costs, then you could recover that $2000 plus an additional $6000, for a toal recovery of $8000.  Of course, I would be happy to discuss the matter and would very probably be interested in taking the case.  Regardless, though, sellers need to step up and enforce the protections of the CPA if we are to discourage this conduct in the future.

If it smells, it doesn't sell – planning for pets in home sales…

There truly is an adage in the real estate industry of “if it smells, it doesn’t sell”. A great article for dealing with pet odors is at this link.

This is something that, as a real estate agent, I run across frequently. With the number of cases of asthma and allergies rising in the US it’s even more important that pet owners be good about cleaning odors and allergens from their homes before and during the time they sell.

Allergies are pretty common and if a person walks in your house and is hit with the smell and/or allergic effects of a pet you can bet that this is where the home tour ends. No one will push their way through an allergic or asthma attack to see your house. A thorough cleaning is in order and you’ll want to be super-vigilant during the time your house is on the market to keep hair and dander levels down. If it makes sense to replace the carpet before going on market, and maybe sending the pup to a friend or family member’s house for a week, you should consider it.

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Plus, some pet smells are in more than just the carpet. If a pet has had a long history of soiling a carpet it is very likely that the wetness has penetrated to the subfloor which will also need replacing before the smell can be eradicated.

We’ve found that it also makes sense to have a plan in place to handle how your pet will deal with the stress of having your house on the market. Some dogs and cats have difficulty with strangers and that’s exactly who’ll be tromping through your house at all hours of the day while you’re at work. Letting “Fido” or “Sam the cat” run around loose is not the best idea because the pet could get out and get lost. Animals tend to sense the changes that are coming because of the increased activity around the house so preparing ways for the pet to be soothed and kept safe will make for a better experience for everyone. If you’ve crate trained your pet then you’ll be ahead of the game in getting your pet prepared for the visitors you can expect while waiting for the perfect buyer to choose your home.

From the new buyer’s perspective (and an agent’s) it’s not fun to walk into a house just to be met with a dog that you don’t know if it will be aggressive. Plus a portion of the population is also phobic of dogs – no matter the size. If the dog hears the agent getting the keys and unlocking the door most likely, if left loose in the house, the dog will be at the door. If barking is involved it’s possible that the prospective buyer or agent may say “let’s just pass on this one” for fear of what could happen as soon as the door is opened. Believe me, liability is an issue we all have to deal with on a regular basis. Just because your pet is usually very sweet and loving to you doesn’t mean that it will be to every stranger that comes into the house. Most pets are territorial by nature and you don’t want to get hit with a lawsuit for a dog bite just as you’re trying to sell your house. The number one insurance claim each year for residential property is dog bites.

A new item that was brought to my attention too regarding keeping houses clean and free of pests is dander and pet food sitting out without being in closed containers. A client of mine recently had an infestation of carpet beetles invade their home. The pest control folks told them that it was likely a combination of pet dander, hair, and open pet food that brought the little critters in. Specifically, the pest that showed up are carpet beetles. Read more about them here: Entomology info on carpet beetles  Be sure to put your pet food into sealed containers; either metal or plastic. Plus, the general smell of pet food isn’t too pleasant to humans so you don’t want that wafting through your house while you’re trying to sell it.

Pets are a wonderful addition to any home and family but they need to be considered just like any other family member and they need to be part of your planning when you’re ready to sell.

To Landlords and sellers in City of Seattle – new rules w/ fines… Get up to speed!

Important Fair Housing Notice for Seattle

The City of Seattle has recently adopted a new ordinance that requires all real estate professionals (including brokers and property managers) within the city limits to prominently display a fair housing poster in their place of business. The poster is available at http://www.seattle.gov/civilrights/outreach.htm under the link for “Housing Issues.

Selling houses is a flashback to dating on Match.com

[photopress:heart.jpg,thumb,alignright]Yes, that’s right, I too have used Match.com in the past and it’s actually how my partner, Michael, and I met. This weekend I was reminded of the dating experience online as I perused houses in the Greenlake area with some clients. First, we looked at houses in a price range of over $1 Million. The house they’ve written an offer on is gorgeous but the photos of it were horrible. It was exactly like how Michael and I met because he had a horrible photo – so I almost didn’t meet him – and it ended up that when we really did meet it was love at first sight. It was the same way with this couple, I almost didn’t show them the house because I was afraid it was going to be lacking in the aesthetics department based on the lame exterior photos – there were none of the interior. Thank goodness I took a chance and used it as a comparative for another expensive home and they ended up falling in love.

[photopress:IMG_1075.JPG,thumb,alignleft][photopress:master_bedroom.jpg,thumb,alignright]As I’ve been in the real estate biz only a few years I imagined that all agents who work with higher priced properties might actually take the time to provide exceptional skills when it comes to marketing a home. Well, apparently this isn’t the case. Do sellers just not think to ask to see what their house will look like online? The post that came in a few days ago about putting in good photos on real estate listings really strikes a chord with me. Which photo would you rather have for your home? The one that limits the scope of the room to be seen and is kind of dark and depressing? Or go for the warm, inviting photo that gives some sense of the actual space?

I’d post the photos of this house here but since we’re under negotiation right now, I can’t. Let’s just say my client’s digital photo did a lot better than the one the agent took. I have to say that, like Michael, I’m glad someone put in a bad photo this time because otherwise a love match (for me and then my clients) wouldn’t have been made.

Get Creative

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We lost IT. We use to have IT and now we lost IT and now you can get it on ebay! This IT is that huge chunk of our commission that used to come from being the gatekeeper to the multiple. At a listing presentation our competition was only another agent that charged the same fee (there were a few reduced fee offices but it wasn’t a trend).

But they don’t need us anymore for that. They can get it on ebay. And they can get listed for under $400! Of course, taking and uploading the listing in the multiple is just the beginning, but if we’re going to separate out tasks like the actual listing going into the multiple, why not separate out all the tasks and see what they’re really worth. I agree that uploading the listing is a pretty simple task and a lot of agents just fax it in so it probably is only worth $400 (you have to be registered with the mls for this, plus it involves contracts and accuracy of the listing information)….. if that’s all the service a seller wants.

So, last summer I decided to address all of the things that agents do by breaking up the tasks and establishing a monetary value to each. It’s the ala carte menu of listing services and I googled and googled but couldn’t find anyone with anything complete enough online. I even took the coursework to get licensed as a consutant from the National Association of Real Estate Consultants (NAREC) so I could see if someone had already done all that work.

I separated out the tasks ranging from $20/hr for real estate data input, filling flyer boxes, dropping off keys, etc. (a high school kid couldn’t do all of this) to $300/hr for negotiation and problem solving. Wow, I was surprised at how often I worked for $20/hr. I tried to figure out what I’d be charged by different people doing different levels of work and then added a profit margin.

The $300 work i assumed would be done by the senior agent taking the listing and running the team but personally doing tasks that take a lot of experience and skill like price opinions, market timing, the totally important negotiations with both buyers and the buyer’s agents and solving all those problems (I had a list of 88 things that can go wrong with a transaction). Personally, this is where I’d prefer to spend my time.

The results are on the LTDre.com website if you want to see how it works. My slick computer tech even built it to automatically compute based on different packages and house price.

What got me thinking about this was today’s Inman article on bloated commissions and how much I agree with it. The article suggests, “consumers would benefit most from fee-for-service real estate companies that base compensation on flat fees, hourly fees and other specific payments for services rather than relying on a commission rate that is based on a percentage of the sale price of a home.

Top Down – Bottom Up

I was helping an agent with a listing that hasn’t sold yet, and one of the simple, yet dramatically effective things I did was rearrange the blind openings. This is particularly important for view property and any property where cars or the street show when you raise the blinds from the bottom up.

If you see two sets of strings, one on the right and one on the left, this usually means they are “Top Down-Bottom Up” blinds. This type of window treatment allows you to cover the low portion of cars going by, but let in light and sky and sometimes tree tops from the top view.

They are great for view property if the windows are low and tall, because they allow you to enjoy the view from the inside without the neighbors seeing you in your boxers 🙂

EAL vs. ESL

[photopress:it.jpg,thumb,alignright] This comes under the category of “You learn something new every day.” Over the years I have found that I generally have a much higher percentage of clients who moved here from other countries, or whose parents moved here from other countries, than some of my peers. I was at a client’s house over the weekend (helping to strip wallpaper, which I am very good at doing) and everyone at the house was speaking both English and Romanian, except me of course 🙂

One of the guests taught me a new term, that was more politically correct, and I was at once converted! I asked if ESL, English Second Language, was an appropriate term or offensive in any way. My sister had taught me ESL, since she has a fairly high percentage of students that are ESL the same as I have a fairly high percentage in my field. Prior to that I was using “The English is not my first language crowd”, so ESL was definitely an upgrade.

A lovely young lady advised that her husband preferred EAL, and that it was more politically correct. Of course! How American of me to suggest that English was someone’s SECOND language, when in fact, it could be their FIFTH language. My friends from Bulgaria speak at least six languages. So EAL, English ADDITIONAL Language, is clearly more appropriate for most people from other countries.

I am a 2nd generation American, which may be the reason why I have a high percentage of clients that are Indian, Filipino, Romanian, Italian, Korean, Chinese, and others over the years. Not because I speak their language, which I do not, but because I understand that different cultures have different ideas with regard to home ownership.

I remember back to 1990, my very first year in the business. I had a client who was a young man from Russia. It was apparent to me, though he did not come right out and say it, that he didn’t have an accurate perception of what was included in the sale, and what was not included. Now many of my clients have some questions in that regard, but for this client the entire idea of owning a property was somewhat “foreign” to him.

I literally walked around and touched practically every item. He was in fact quite pleased to learn that the kitchen cabinets would be staying as well as the stove. He was a little confused about why the wall to wall carpeting was going to stay, but the area rug would not be there after the owner moved out. And when it came down to the mirror in the living room leaving because it was hanging like a picture, but the “mirror” in the bathroom WAS staying because it was a recessed, built-in, medicine cabinet, he just shook his head and took my word for it 🙂

This brings up a point that a recent commenter raised. He said he sometimes has to read my writings twice to “get” what I am talking about. In almost every real estate transaction a client has to trust that the agent is correct, rather than totally understand everything involved in the transaction. For persons who speak English as an additional language, who have not been involved in home ownership issues for most of their lives, being able to trust the judgment of the agent is even more important than almost anything else. Trust becomes the all important factor in the relationship.

Even if they do not understand all of the details and the “whys”, if they trust the person at the helm, life becomes a whole lot easier for them. Being able to focus primarily on which home they want, as opposed to each and every detail of the process, can be quite a relief for anyone, but especially for EAL clients.