Are you making your client homeless?

I’ve been wanting to warn sellers and seller’s agents about this for the last 10 days or so.  Courtney’s new post is a great lead in to this added consideration for sellers and listing agents.


Having had the benefit of working in a market exactly like this one, back in NJ/PA in 1992 or so, I think this warning will be timely advice for many.

When an agent is called to sell a house, they touch on the subject of “Where are you going to go when this house sells?” But most often the antennae of the agent is focusing on whether you will also be buying a house with them, or if they can get a referral fee by referring you to an out of area agent (usually 25% of the commission.)

WARNING TO SELLERS: IT IS VERY HARD TO GET A MORTGAGE.  In the last market like this, many sellers assumed that since they had a HUGE downpayment, they didn’t have to worry about qualifying for a mortgage on the house that they were planning to buy.  NOT SO!

Having 50% down and little income could leave you homeless, as NWMLS does not permit “provisional” listings.  There’s no turning back.

Here’s how it usually “plays out”:

1) Seller doesn’t want to look at homes until their house has a contract. With houses sometimes sitting on market for well over 100 days, looking at what you will buy when your house sells is often put off until you have an actual buyer for the home.

2) Once the contract is signed around, the seller goes out and makes an offer on a house they are buying with 30% to 50% down.

3) Often the seller and the agent for the seller of the home they are buying are so impressed with the big downpayment, everyone all the way around assumes that someone with that large of a downpayment can get a mortgage.

REMEMBER:  The buyer of a home has a legal out phase lasting about 10 days, but the seller does not have a legal out phase if they can’t get a house to go TO.

Often you can’t just go to the buyer and say, “Sorry.  I can’t buy a house so you can’t have mine.”

So to listing agents, I know you want that listing, and your are primarily interested in getting the seller to sign that listing contract.  But be careful that you are not making your clients homeless. If they are people living on a fixed income, saying they are planning to buy, part loan, your ears should perk up.  Make sure they check with a lender as to getting that loan…before you sell their house out from under them.

We are often in the business of “GETTING PEOPLE FROM HERE TO THERE” moreso than simply “selling houses”.  Don’t leave your seller’s homeless, as you walk off to the bank to cash your commission check for “selling their house”.

Should You Buy a Short Sale Property?

The current market is making me feel older than dirt.  Mostly because there are fewer and fewer agents around who have sold real estate in a previous bad market.  I find myself explaining what is going to happen next, to many who have never been through a short sale from beginning to end.  Even if you take classes about what may happen, it doesn’t replace the experience of living through what actually does happen.

Everyone wants a bargain, especially in this market.  But the truth is that many bargains go to investors and people inside the industry, because they can handle all the hiccups better than owners who plan to occupy the property.  Whether it’s a short sale, a foreclosure, an estate sale or other “discounted” property, often it’s like buying yesterday’s donut.  You can expect something to go sideways in a short sale, and often you can’t get it to go perfectly straight.

short sale1) The closing date may be delayed. In fact you can pretty much count on it.  For someone who is trying to coordinate a move, this can wreak havoc on their life.  If you are trying to link together the sale of your house with the purchase of a short sale, well good luck with that one.  If you are trying to give notice to your landlord and be able to move into the short sale property on a firm given date, not always a reasonable expectation.  Most often short sales involve a series of extentions strung together until it closes. If someone is not planning to live in the house, such as an investor, not a huge big deal.  But for someone trying to move into it, it can be a nightmare of uncertainties.

2) The bank does not approve the sale price. One of the hardest things to understand about a short sale is that the buyer and seller agree to a price, but the bank is the one calling the shots.  Even when you get the HOORAY OK from the bank, the road can be very bumpy to the end.

Say you are buying a house for $820,000 and the payoffs on the seller side are $860,000 including a first and second mortgage and seller’s closing costs including exise taxes.  The 1st mortgage is going to be paid in full, so it is the second mortgage lender who is agreeing to whatever is left after other costs are paid. You send them an estimate that they are going to get $60,000 of the $120,000 owed to them.  They say OK.  Now during the time you waited for them to say OK, guess what happened.  Yup.  ALL THE COSTS INCREASED!  The first mortgage payoff got a lot higher than expected.  The utility bills went into arrears and the utilities may even have been shut off.  The arrearages grew and grew and now the 2nd lender who agreed to take $60,000 is only getting $50,000.

You can see how this can turn into a big yo-yo affect with the buyer feeling like someone is not telling the truth.  Yes the 2nd approved the short sale.  No the 2nd isn’t letting it close now.  You must remember that the 2nd mortgage never approves the sale price of $820,000 in the example above. They approve the amount that they are going to be “short” on their payoff.

The buyer thinks the bank approved the sale price of $820,000 when we got the first Hooray OK, when in fact what they approved was receiving $60,000.  Now when you do the final closing statement and the payoff is $50,000…you are back to square 3.  You are not back to square 1.  You have made progress.  But not as much as you thought and the closing date is again delayed and the sale, again, may not happen at all.

3) Now you get to the final stage.  The bank approves the $50,000 or the buyer agrees to come up with an additional $10,000.  Somehow the gap between the $60,000 approved and the $50,000 left to pay the 2nd mortgage has to be bridged.  Possibly with a little give and take on everyone’s part, including the agents.  The buyer who is now being asked to give a bit more than agreed to at a sale price of $820,000 doesn’t understand why.  “I thought the bank agreed to the price of $820,000?”  Remember, the “shorted” lien holder never approves a sale price.  They approve the “short payoff” which is a moving target! It can get very frustrating and difficult to comprehend and follow.

4) Now the buyer wants to walk through the property the day of signing.  Uh-oh…the utilities are shut off.  Anyone who can’t make their mortgage payment and who is not living in the house, is not likely to keep the utility bills current during this long approval process. Yes it is reasonable for a buyer…normally…to want the utilities on for the final walk through or for the inspection.  But getting them turned on is easier said than done.  Whose name do they get turned on in?  If it is closing in the buyer’s name in 3 days, they likely don’t want the utilities in their name yet.  In fact the utility companies may not even let a non owner/non-tenant put the utilities in their name.  It clearly is not something a lawyer would advise a buyer to do prior to closing.

The seller isn’t forking out any money to get the utilities turned on, they have no proceeds and are not putting any money into the house.  Same goes for repairs.  You walk through and see something wrong with the house and want the seller to get it fixed.  No way Jose.  Seller is walking off with his tail between his legs licking his wounds.  He’s often depressed and disgusted and beat up by life.  He’s not coming over with a licensed contractor to make repairs.

5) The Buyer Agent often agrees to a short commission.  So if you have arranged with your Buyer Agent to recieve a portion of the commission, don’t be surprised if that amount changes at the end.

Lots of headaches.  Lots of uncertainties.  The truth is that investors foresee most of this.  They don’t care as much about the mundane things like what date it will close or making repairs.  They are going to gut it anyway.

So the next time you wonder why investors and insiders always seem to get the best deals, ask yourself this.  Who else would put up with all of this nonsense?  Looking for a bargain?  Great.  Just remember this.  It’s often like buying yesterday’s donut instead of a warm Krispy Kreme straight from the oven.  The taste left in your mouth after all’s said and done…may be a little stale.

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.


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.


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.

Rent back a recently sold home or wait to sell?

A reader asked me this great question today, and I simply don’t know the answer. Can anyone give him some advice?

As a buyer of new construction, we recently found out that the builder wasn’t going to make our late July completion date. Instead the builder estimated a mid-September completion. Ugh, we have a child who will start school in a new school district, so this will cause a hassle.

Anyways, we were planning on listing this week (with an open house on the weekend hosted by our agent) but because of the delay in construction I’m at a loss of what to do. Here are my thoughts on the numerous statistics and opinion I’ve found so far:

  • Spring, especially during the last weeks of school is generally one of the best times to list a home
  • Listing a home later in summer can increase Days on the Market slightly, but sales price is often unaffected
  • Due to the region having great job growth and numerous relocations, the school calendar, has a lesser effect on home sales than other regions.

BTW, we are selling a condo in the Klahanie – Issaquah area. So, long-winded way of asking… Do I:

  • List in mid-late June and get a high volume of traffic but have a request that we pay rent through mid-September (roughly 45 days+ if the condo sale closed near end of July)?
  • List in mid-late July hoping to close in late August, thereby having to pay rent to stay only an extra two weeks?
  • Do something else?

Should you have an Open House?

I just sold another house from an Open House this weekend, and am reminded of all of the articles about how Open Houses do not sell houses. Sometimes I think the articles are sponsored by agents who don’t want to spend their Sundays working 🙂

I have changed a few things that I do based on technological advances, like pricing the home straight on $350,000 for double hits, instead of $349,899 to be first to show in the mls book. But listing and selling houses via Open Houses has always been “my thing”. I have provided some online training on the subject to agents around the Country, and still there are some agents who can honestly say that they have never sold a house from an Open House. It just boggles my mind.

I have always spent a great deal of time helping the seller get the house ready for weeks beforehand, before it goes on market. Then I usually do open houses the first two weeks back to back. This weekend I listed a property, that I had already spent many hours staging,and put “No showings until the Sat. Open House and Open Sat. and Sun. 1-4 p.m.” in the mls remarks. This is less wear and tear on the seller and creates a new listing that opens up with a BANG! Lots of energy! Agents showing and people coming all at the same time. I have 6 Open house signs and those big flags that new construction people use. It’s like a big party! Sometimes I even cook Italian food and play Connie Francis and Mario Lanza…and of course FRANK! But that’s usually for Broker’s Opens. I even had agents dancing once…that’s an accomplishment 🙂

Anyway, back to this weekend. I had an offer by the time the Open House was over and another from an agent who was begging me to wait for her as she rushed back two hours from wherever she was to write it for the buyers who came without her to the Open House. Turned out I didn’t have to do the Open House on Sunday, as it was all tied up by noon on Sunday.

Of course an agent who sits in the living room watching the ball game or playing with his laptop looking bored to tears may never sell a house at an Open House. But if you love doing them, there are plenty of ways to turn an Open House into a SOLD House! I hate to admit it, but I did get a call from my friend Reidi in Florida when she saw American Beauty. When Annete Bening got to the Open House hours early in her work clothes scrubbing it down saying “I am GOING to sell THIS HOUSE TODAY!!, Reidi called me and said “Ardell, they made a movie with YOU in it! LOL I’m not quite that bad…but close.