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.

A lesson in the dangers of distressed property purchases…

A friend of mine contacted me the other day about a property investment opportunity that her brother-in-law (BIL) was placing in front of her and her husband. The property in question is located in the city and state where the BIL lives – and it’s far from the Seattle area at roughly halfway across the country. The house reportedly, and confirmed in the report I read, has a major mold issue that has attacked even the underlayment of the floors. (if you want to see some gross mold photos, check out this site) The buyer’s agent and BIL (who agent represents) are attempting to state that the water damage was caused by the former owner having a drug problem and not cleaning up after himself or perhaps because of a water leak in the bathrooms and from a leaking dishwasher. Hmmmmm…..

The house is supposedly being offered off-market at a lowball price of $400k for this tony neighborhood where $550k-800k is the common price points for various sized homes. Even the listing agent is nervous about selling the house with the mold issue but the owner is now deceased and the family can’t afford the home or to fix the home. This tells me that there is likely no insurance money to fix the problem especially if the insurance company deemed it to be failure of the owner to maintain the property. BTW – did most of you know that this is a common disclaimer in most insurance policies? If an insurer can point to an owner’s failure to maintain (ie. ignoring a leak) they can deny coverage. Also, as I’m learning, this particular state has had a rash of insurance companies choosing to deny the option of mold coverage in their policies at all… period because of prior mold problems that required huge insurance payouts.

Now, the price point initially sounds good but my personal concerns surround the mold issue, the fact that it has not been specifically identified in the mold specialist/inspection results, and the amount of work that actually needs to be done to get this house back in to the condition that this neighborhood typically expects. We are getting conflicting reports about the source of the mold and no one has sent my friend photos of the subject property to review. Also, there is the stigma associated with trying to sell a house that has HAD mold – and note I say “HAD” mold because frequently the average consumer can’t get past… well, the past. Agents are required to disclose known material defects, and so are homeowners (at least in WA State), so you’d have to tell a prospective buyer about the issue, even if it was fixed.

The BIL is a contractor and thinks he can replace the floors for about $20k and the only other item he thinks he needs to fix is a broken bathtub. Again, hmmmmmm……. Somehow I don’t think that this will be all that needs to be done.

His (BIL) expectation is that someone else will come in with the money to buy the property and he’ll do the labor and then they’ll split profits. I’m telling my friend/client that there is a lot more that needs to be sorted out and specified in a contract between the parties of the financial investor and the contractor (BIL). Thankfully, she agrees. On top of this issue there are questions of whether or not the house can be purchased with financing (likely not), what type of financing (preferably a renovation loan) is available, can it get insured, will it require oversight (it seems so based on the mold report) and by which entities (city, inspector, insurance, bank? most likely all of the above) and what it will cost to have re-testing done (what if it doesn’t pass?).

After even more phone calls today to the agent I have now learned that the listing agent is actually his secretary who has just gotten her license 2 months ago and that this is her first deal – ever. On top of this news, I also ferret out that the house is in foreclosure so we’re in a short sale position IF the $400k is even accepted. Wait, let’s recount the issues in a quick rundown….

1. mold problems that may or may not have had the water issue fixed.

2. foreclosure with short sale with proposed sale price at 80% of owed amount.

3. estate sale with unknown additional liens, taxes, etc. owed or owing. If the guy was truly a cocaine addict as desribed to us then there could be a lot more outstanding. Also unknown is who is actually selling the house: the widow, the attorney, the lender? Since it’s not yet foreclosed it’s likely the widow or attorney.

4. listing agent that works for the guy trying to be the buyer’s agent (MAJOR conflict of interest and not initially disclosed)

5. 1st time listing agent that has no other sales or negotiating experience working with a guy who has little, if no, experience in short sales.

6. unknown actual costs of repairs

7. no current photos available for review by prospective buyer (yet)

8. unknown lending environment for a distressed and damaged property

9. unknown insurance liability and potential to be an uninsurable property

I know what I think about this deal (a potential disaster) but I’d be curious to hear from others. What are your opinions? Would you go for it, and why? If you wouldn’t touch it, I’d love to hear your comments too.

Is EVERYBODY Happy!?!?

[photopress:ted_Lewis.jpg,thumb,alignright]Using Ted Lewis’ famous line, “Is Everybody Happy?” as my guide, I am going through all of the people who bought and sold homes last year.  Not just our personal clients, but the clients of other agents in the Company as well.  While it is very common to do so at this time of year for financial reasons,  I take some extra time to study who was very happy and why, and also who was unhappy and why.   

I’d have to say 90% to 95% were happy, but I find myself more interested in those who were not happy.  I think by writing about the unhappy people, maybe a few readers will learn not to go down that same path. 

The least happy prospective home buyer, was one who was being forced to move.  I had one prospective client who was being forced to move from her apartment due to a condo conversion, which is now Mira in Downtown Kirkland, behind the Post Office.  Cheap rent; great location.  While she could afford to buy a condo, she could not afford to buy a condo in the same location.  She considered Juanita and Kingsgate and Totem Lake and finally I said, “Why don’t you just rent right here in the same location for now?”  Finally…she was happy.  Because what she liked most was being able to take her two dogs out for a walk and enjoy the same sights and scenery she had come to love, visit the same coffee shops that let her two little doggies come in with.  Just because she was forced to move out, didn’t mean she was forced to leave her everyday happy times, which were location dependent.  So the least happy prospective buyer was somone who really didn’t want to buy at all…and so she didn’t.  Sometimes you make “a client” happy, by not selling them anything at all.

The least happy client of one of our agents was pretty much the same scenario.  She was renting a house with her handicapped daughter, and the owner of the house sent a notice that she had to leave because the house was being sold.  The agent was a friend of hers and found her house after house to buy, and nothing seemed good enough.  Mainly she was extremely unhappy because she really just didn’t want to move!  Unfortunately no one could fix that part for her.  She did buy a house and eventually got used to the idea and the new home.  But the only thing we really did for her was make it impossible for someone to knock on her door again and say, “You have to move because we are selling the house you are living in.”  When you have a handicapped child, moving is ten times more difficult.  The added burden of having someone give you 60 days or so to find a new place to live can be an overwhelming burden.  At least it is not likely that she will have to face that event again, and will only move if she chooses to do so, not because someone sends a notice saying she has to move now.

The other day someone came to me who lives on Lake Washington Blvd saying, “I have to move by March 1 because I was just notified that the place I live in is becoming a condo conversion.”   I am finding him a place to rent nearby so that when and if he chooses to purchase a home, more likely closer to the time when he is getting married next year, he can do so by his choice and in his own timeframe. 

Studying the patterns of unhappy clients, can help you set the wheels in motion in the right direction for that next person, who is being told that they have to move now.

Unhappy sellers pretty much fit the same criteria, those who are being forced to move due to a divorce or job transfer.  Those who did not electively choose to sell their homes, often leave “with a bad taste in their mouth”.  Being forced into moving out of your home by events not set in place by you, seems to set the stage for the least happy buying and selling experiences…at least in the short term.  Best you can do is try to make lemonade out of those lemons.

So when someone is telling you a war story about their terrible ordeal in buying or selling homes, ask WHY they were buying or selling.  You may just find that what they were least happy with, was the fact that they had to move in the first place.