Author Archives: ARDELL

About ARDELL

ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 34+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

Earnest Money – Where does it go and when?

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Some of the most Frequently Asked Questions in a Real Estate Transaction involve the Earnest Money Deposit. The Earnest Money usually follows with the transaction from day one all the way through to the last day, as in “follow the money”.

The buyer usually writes a check for the Earnest Money deposit at the same time that they sign the offer and they hand it to their Buyer Agent. The check can be made payable directly to the Escrow Company they chose in the contract, or to the Buyer Agent’s Company if they have an in house Trust/Escrow Account. More and more these checks are made payable to the closing agent.

When the seller accepts the buyer’s offer, the check gets deposited. Let’s assume the check was made payable to escrow and went directly to the escrow company for deposit.

At close of escrow this money comes back to the buyer as a credit against his costs or downpayment. If it is a zero down loan and the seller is paying the closing costs in full, this $1,000.00 can be returned to the buyer at close of escrow.

If you know you really want the house when you make the offer, and you have no problems at all throughout the transaction, the Earnest Money just slides like butter from your hand and back into your hand. Whether it actually goes into your hand at the end or is paid against your costs varies from transaction to transaction. But it still simply comes back to you like a boomarang.

The only time you should be worried about handing over an Earnest Money check, is if you are not sure you want the house at the time you make the offer 🙂

"bottom feeder" sites and the mls

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pac Let’s start with an analogy. I love analogies.

I come to your store and ask if I can take that really cool T-shirt out into the light to see it better. The shirt costs $8.00. You say sure. I go out and set up a little stand with your T shirt and get five people who want to buy the T-shirt. Now I come back in the store and say, I don’t want to buy anything in your store after all. But I have five guys over there who will buy your shirt if you give me $2.00 each. You scratch your head and reluctantly agree.

Now I ask to look at your T-shirt out in the light one more time please. I go out and tell everyone the shirt is only five bucks. I come in the store with 10 people this time and say OK. I still want $2.00 a shirt, but these guys will only pay $5.00. Hmmmm…

How many times do you give the guy the T-shirt to see in the light? Is the horse out of the barn, Robbie? LOL

A “bottom feeder” site does not sell real estate, never has. The original site said “put your listings here for free” so we can all look at them. It’s really cool! Look you can see it on the internet. Very Kewl! Then the site said, if you pay me $250 for each of your listings, I will put your name on it. Hmmmm…well why didn’t you put my name on it in the first place. Hmmmm…OK, I do want my name on it, so here’s $3,000 for all of my listings.

Now when you go look at your listing on the internet it has your name. But it also has a little flashing button that says click here for a school report. You click on the button for a school report and there’s some other agent’s name in there. Hey! What the heck is that all about? So you call the site and they say you can buy a flashing button that says school report and get double the exposure! Hmmmm, so you pay him another $3,000 to get school report flashing buttons on all of your listings that point to you again.

Then you go back to see your listing on the internet and at the top of the page there is another flashing button that says “find a Realtor”. Your name no longer shows on your listing unless they click for details. You say Hey! I’m paying to have my name on my listing. They say sure, and if someone clicks the detail button they do see your name. But if you want to have your name behind door number 3, the flashing button at the top of the page….another $3,000, later there’s a button in the side bar….

Bottom feeder sites and the people behind them don’t know anything about how to value homes or sell homes. Bottom feeder sites don’t ever go out and see a house, nor write up a real estate contract or accompany a buyer to a home inspection. But they do get paid when a house is sold. They post the mls on a website, just like the guy who takes the T-shirt out into the light. They then sell the consumers who want the houses back to the agents, just like the guy comes in the store with people who like the shirt. Then they tell the consumers “let’s get those guys!” Let’s tell them we only want to pay 1/3 of the old price! Then they still want to get paid their “finders” fee for finding buyers using the agent’s listings to do it.

The mls doesn’t want anyone taking the t-shirts out to the pavement anymore 😉

ZILLOW BUZZ

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Got my first “issue” of ZILLOW BUZZ this morning. Or actually an email announcing that ZILLOW BUZZ is coming.

ZILLOW really is exciting news…I’m not being sarcastic when I say that. We need a “shot in the arm” in this business.

That being said, I would like to say something about how real agents really value property. I read the “about us” notation on the ZILLOW BUZZ email and it showed how one of the partners had used spreadsheets to value his property. I just saw an elaborate spreadheet done by an owner at “The Newmark” in a downtown Seattle condo. Boy was it elaborate, and boy was it wrong. No way that condo is worth what that excel spreadsheet says it is worth.

The way we value property is on a comparison basis. The more we see the better we can value. That is why we go to Broker’s Opens (at least those of us who aren’t just looking for a free lunch 🙂

We have a mental running calculation in our brains. It goes like this. John’s listing last month sold for $700,000 and it was on the best view corner of the building, remodeled and up on the 21st floor. Better window configuration. Crappy cabinets, but otherwise a great remodel. The wall was knocked out around the kitchen. Penelope’s listing down stairs on the 9th floor had the best unobstructable view, but was 600 square feet smaller. Poor presentation. Owner left his clothes all over the place and it smelled like sweat. Original condition, no remodel and had a “handicapped” bathroom that gave it that “hospital” feel. That one sold for $400,000, but it was a pre-foreclosure with the owner under the gun. So I can list this one at $550,000. It is between the 9th and 21st floors. It is remodeled as to aesthetics, but no walls knocked out. It’s really worth $500,000, but I think I can squeeze an extra $25,000 out of it because it’s “the only game in town” at the moment.

I don’t think a computer can do that. Robbie, can you do a Vulcan Mind Meld? LOL.

Understanding STI

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In answer to Craig’s question, when you look for property “on market” at www.SearchingSeattle.com, you will see two types of property.

The ones on which you can make an offer, that is not a “backup” offer, will show “ACTIVE”.

The others, that I have asked you to pay more attention to in my previous entry entitled USING THE INTERNET TO BUY YOUR NEW HOME, will say “OFFER STI”.

Now Craig, being a lawyer, will be the first to understand that STI (Subject To Inspection), is not necessarily about an inspection at all. It is what we might call a very broad escape hatch or an “out” clause. This “out” clause can be used for many, many reasons that have absolutely nothing to do with an inspection at all.

If a buyer makes the offer contingent on an inspection, especially if it is a 35A inspection clause and not a 35B inspection clause, they have a huge timeframe to change their mind based on many things. In fact, in parts of this country, a buyer may tie up five properties all at the same time, and cancel four “based on the inspection” as he only tied them up to have the time to consider which one he really wants to buy.

That is why our mls system internally, calls these “ACTIVE STI” vs. the public sites that call them “OFFER STI”. Sometimes the very best property on market is the one that falls out of STI status and comes back on market.

It is very important to note that you, as a buyer, should ALWAYS have an inspection, even when you do not make that inspection a contingency. The Home Inspection Addendum makes the seller responsible in some way for the results of that inspection. Sometimes you make an offer without a home inspection contingency to get a better price. The property status then goes straight to PENDING and skips the STI phase, but that does not mean you do not do an inspection. It means you are willing to lose your Earnest Money if you are not happy with the inspection.

Sometimes you can save 5% or more off the price by being the one offer without an inspection contingency, and only lose $1,000 if you want to cancel based on the inspection. But, please do not think that not having an inspection contingency means that you do not do an inspection. You still need to close on that property with full knowledge of it’s total strengths and weaknesses.

Using the Internet to Buy Your New Home

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I have recently been enlightened on how grossly inadequate many of the home viewing sites are and how misleading they can be.

Maybe I should have known this before, but frankly, those sites rarely come into play in my everyday life. I use the mls and clients use me. I truly haven’t considered until recently how people use the internet in the home buying process and why they do that.

Now that I am viewing the world through your eyes a bit, with the help of my most recent clients, I would like to “give back

Technology Sucks!!!

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OK…Got that off my ample chest.

I know you guys just love the technological advances, but some days I just want to kick it all back to the 80’s. If you “kids” can say “I Want MY MTV!”. then why can’t I say “I Want My MLS BOOK!!!”

You guessed it. The mls is DOWN! It’s a beautiful sunny Sunday, I’m ready to show houses, and the system is acting up. Guess I’ll have to go to my own website, www.SearchingSeattle.com, and find properties to show.

We are getting a new super-duper, upgrade to the mls. Well thank you very much Rappatoni boys! Who asked for it! The whole system will be screwy in the meantime, for what? So we can say we “added” something? So the background color can be different or the buttons can be “cooler” and rad or whatever you kids say today.

Then I call the mls to gripe, so I don’t have to do it here, and they are closed for President’s Day from Sat. through Tuesday.

Are the upgrades really worth the inconvenience? Then we all have to take a class to learn how to use the stupid new upgrade…OK, I’ll find the homes the way that you do.

I bet the darned new upgrade is just a fire wall designed to help keep Robbie and his RSS feed out 🙂

"Klaatu Verata Niktor"

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Before we read Osman’s piece on Buyer’s Agency, let’s do a little review.

Does the seller or the seller’s broker really pay the buyer agent’s commission? To suggest, as Osman does, that the buyer is getting a “free ride” (down the garden path), is too simplistic.

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The day we envisioned that buyers would control their half of the transaction, we, the real estate industry, spent about 30 days toying with the concept. Then, in a New York Minute everyone turned on a dime and backpeddled to their comfort zone. That place where the seller and the seller’s broker controlled everything.

When you start talking about Buyer Agency in this Country, you might as well be spouting “Klaatu Verata Niktor”, as only agents seem to want to talk about it, while the general public’s eyes glaze over.

Buyer’s want a house, sellers want a buyer, and agents want to talk about agency.

Osman, buyer’s pay the buyer agent fee, not the seller. Unless we think of it that way, buyer’s will never be empowered in this Country, regardless of this whole data control “smoke and mirrors game” everyone is playing.

There are still many old curmudgeon rules in play, that prevent the buyer from truly controlling that fee, but let’s not suggest that buyer’s are getting anything for “free” please. The day the buyer takes possession and the right to pay a big mortgage payment every month, he starts paying for that fee in his monthly payment. The fact that he finances that fee, does not mean he doesn’t pay it…he pays it with interest!

Until we recognize this fact, buyer’s will remain Klaatu’s and will never become true Jedi’s.

"Sarasota Realtor sues local real estate association"

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In response to Giles comment and question, here is an Inman article from December 2004 giving the whole story. Lois had been emailing me some strange things. She then went into a coma and passed away. I believe her suit was dropped at that point. I’m pretty sure the Association won on the Kentucky suit. Not sure what happened in Spokane. Not sure how Barry can do these in so many states, aren’t lawyers restricted to the state where they are a member of the bar?

“A Florida Realtor is suing the Sarasota Association of Realtors for allegedly forcing local real estate agents to buy memberships in the association as a condition of purchasing lockbox keys and multiple listing service data.

The suit, filed Wednesday in federal district court in Tampa, Fla., seeks $5 million and class-action status, amounting to $4,500 for each member of the class, and names 14 association directors as defendants. Lois M. Hekker, broker with Buyer’s Agents International Realty in Sarasota, is the plaintiff in the suit.

A representative from the Sarasota Association was not available to comment on the suit Wednesday afternoon.

The complaint cites the 1991 federal appeals court decision in Thompson vs. Metropolitan Multi-List in Florida, which held that a Realtor association that had monopoly power over its MLS could not force real estate agents to purchase memberships in the trade association as a condition of gaining access to the MLS. The complaint alleges that the Sarasota Association and other Realtor associations in Florida evade the Thompson decision by tying lockboxes and historical MLS data to purchases of membership.

The suit seeks an injunction ordering the Sarasota Association to sell lockboxes and historical MLS data without requiring MLS users to purchase trade association memberships.

“In order to practice her profession as a real estate broker, plaintiff needed to buy lockbox services and MLS comparable data from the Sarasota Association, which forced her to purchase trade association services she did not want,” the complaint states.

Agents purchasing the local trade association services also must purchase state and national association services, totaling about $424 per agent in 2004, the complaint states.

Sarasota Association members rent electronic lockbox keys from the association, which purchases them from GE, according to the complaint. Lockboxes are attached to the front door of a for-sale home and contain a key so agents can show the home to prospective buyers. “Licensees who purchase lockbox services have lockbox keys that open all lockboxes in the area covered by the MLS,” the complaint states.

The 21-page complaint cites other states where courts have declared it illegal to tie the sale of trade association services to the sale of the MLS, including California, New Jersey and Colorado.

San Francisco-based attorney David Barry of Barry & Associates represents the plaintiff. Barry has filed more lawsuits against Realtor associations than any other attorney in the country. He has racked up a number of losses with the exception of one case in San Diego that accused the Sandicor MLS of illegal price fixing. Barry has attempted repeatedly but unsuccessfully to obtain class-action certification in the Sandicor lawsuit.

Barry filed two similar lawsuits this year against the Northern Kentucky Association of Realtors and the Spokane Association of Realtors in Washington, alleging antitrust violations through Realtor association and MLS membership ties-ins. Both suits are pending and neither has reached trial.

The plaintiff in the Kentucky suit is Sherry Edwards, broker of Florence, Ky.-based Buyer’s Corner Realty. Edwards seeks return of association membership dues from the past four years.

Real estate brokers Mathew Prencipe and William Koshman of Prencipe Realty and Robert Cooke of R.H. Cooke & Associates are the plaintiffs in the Spokane suit, which seeks up to $8.7 million in damages and an injunction ordering the association to sell MLS memberships to agents whether or not they join the Realtor association.”

Buyer Tip – Successful Negotiation of the Home Inspection

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You can ask for the moon in Phase 1 of the inspection contingency. But if the seller’s response to that is less than satisfactory, you need to get specific in your response to the seller’s response.

Let’s say you give the seller a big laundry list of “stuff” that is “wrong” with the house under Phase 1. of the Inspection Contingency.

Seller comes back in Phase 2. offering to fix only one of those things.

To be successful at getting more than that in Phase 3, you should go back with a very specific, and pretty much final request, such as:

I will buy the home “as is” with regard to all times noted in the inspection if the price is reduced from $514,000 to $512,000.” Or “I will buy the home “as is” with regard to all other items noted in the inspection contingency IF Items #2, 7 and 9 are repaired prior to closing and receipts for those repairs are delivered at closing with at least a 30 day warranty on those repairs”. There are many and better ways to state this, but be specific about what you want the seller to actually DO when you get to the final round.

The long winded version is on my blog. Trying to cut down on the verbiage over here. I tend to “overstate my case” to put it kindly, which results in blog-clog 🙂

And don’t forget…as with any negotiation…timing is everything.

Barb Schwarz – Home Staging – New Book

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I just orded a couple of copies of Barb Schwarz new book:
Home Staging: The Winning Way to Sell Your House for More Money

I am an Accredited Staging Professional (ASP) and am so glad that I took the course when I did, as I was very lucky to have Barb Schwarz as the teacher. I’m sure, now that Barb and HomeStaging.com is so nationally famous, that many ASPs are being taught by other people. I’m sure that’s great too, but I am glad to have had Barb as my teacher.

Here’s what Barb Schwarz had to say about her new book:

“Staging is a system used to prepare homes for sale. It is proven to help properties sell faster and for more money. Staging is not redecorating; rather it is a series of researched and proven techniques developed by the author to make a home appeal more to a buyer rather than its current owner. Like a personal makeover, Staging plays up a home’s strong points and minimizes its weaknesses. This book will offer clear directions for home sellers to utilize such as evaluating a home’s interior and exterior appearance, assessing the home against a nine-page checklist of pre-set Staging guidelines, and utilizing proven techniques to Stage for maximize sales appeal.”

I will report back on whether or not Barb Schwarz’ new book has anything new to say about Staging Your Home, after I read it.