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For Buyers Category

Slate on Real Estate

A couple of days ago, Slate wrote a piece on a Century 21 real estate TV ad. The author’s take on the ad is not new. It reflects the growing dismay of the typical consumer about the Real Estate industry. High prices, low inventory, and the inability of the average Real Estate agent to educate the customer appear to be the cause of the uproar.

To be sure, selling a home is not an inexpensive proposition. The average cost to a seller in my area is about 9% of the sales price. But, only 6% of that cost is commission. The remaining 3% is for excise tax, title fees, escrow fees, etc. that a seller must pay regardless if an agent is involved or not.

So, it appears that the debate centers around the sales commission, since that is what the author of the Slate ad focused on. I agree with his initial assessment of the Century 21 ad and how it could be perceived as further reinforcement of the common negative attitude that consumers have. However, I lost respect for the author when he commented “of course your agent wants you to buy a house you can’t afford – she gets a bigger commission”. Not only would this be unethical, but the increase in income to the agent is miniscule compared to the long term trust that the agent is trying to create.

It is easy to jump on the commission bashing bandwagon, but consumers should instead be focused on the services that we provide. Bottom line: If an agent cannot justify his/her value in the transaction, the consumer should shop elsewhere.

What are your thoughts?

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A brief history on the Mortgage Interest deduction

I remember when I was looking to buy my first home, I searched for reasons to justify the higher monthly payment as compared to paying the rent on my apartment. One of the justifications that I heard from my friends had to do with the mortgage interest that I would pay along with the principal each month. It is part of an acronym called PITI which stands for Principal, Interest, Taxes, Insurance.

Just recently, I came across an interesting article on the mortgage interest deduction, and I thought others might enjoy learning how it came to be.

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Pet Peeve for the day!

One of my biggest complaints about some fellow Realtors (the group to which I belong) is that they don’t return phone calls in a timely manner. Sure, we all get busy throughout the day, but it is common courtesy to return a call from somebody (especially when they leave you a message stating that they have an offer on one of your listings!). I left several messages for a listing agent on Tuesday morning about an offer I wanted to present and didn’t hear back until Wednesday! Imagine how you might feel if you were the seller of the home and your agent didn’t tell you about the offer until the next day.

What makes things even worse, is that as the buyer’s agent, I couldn’t even contact the seller until 24 hours had passed because of our MLS restrictions. So, I had my buyers calling me throughout the day asking if I had heard back from the listing agent (which I hadn’t), and hearing them voice their frustrations about the situation. My hands were tied, and that didn’t make me feel very good. But I will remember how this agent treated me, and the next time I have an opportunity to show one of her homes…

See your home from space!

I know for many folks who follow technology, Google Earth may be considered old news, but the coolness factor is such that I like to come back and check it out every now and then. Satellite images are nothing new, but how they are being utilized in the Real Estate industry is what is generating the buzz. Another site worth checking out is Zillow.com, where you can get a computer generated assessment on the value of your home. I know of many instances where the “Zesstimate” has been way off the mark (10% or greater error factor), but I applaud their attempt.

Many industry pundits cite this new wave of technology as the beginning of the end of real estate professionals. They obviously don’t understand or haven’t been educated to what extent we help facilitate the transaction and counsel our clients. Additionally, just because the information is out there, doesn’t mean that it is being interpreted or used correctly.

The best analogy I can come up with is this – You can learn how to do a heart transplant on the internet, but does that really make you a surgeon? My suggestion? Seek out as much information on the internet as you can, and use that knowledge to become a better informed consumer when dealing with a professional. It takes more to sell a home than just coming up with a price.

What are your thoughts?

Builder penalties

I recently represented a couple who purchased a new construction home from a major builder in the Seattle area. In the builder’s addendum (which the buyers must agree to and sign), there were several clauses that I found disconcerting to say the least!

The first clause had to do with the buyers’ choice of lender. If the buyers did not use the builder’s lender for financing, they would be charged an additional $350 fee at closing for “seller’s additional time and expense involved when working with a non-preferred lender“. My question is this: What additional time and expense is involved for the seller? In over 10 years of selling real estate, I have never had an instance where a seller incurred additional time and expense by a buyer’s lender. For that matter, I’ve never heard of a seller having any contact with the lender at all! I admit that when selling a new plat of homes, there may be some additional paperwork involved since the homes have no prior recording documents on file, but is it really that much more difficult working with a non-preferred lender? Maybe this is just another way to pad the builder’s pockets?

The second clause in this builder’s addendum had to do with closing delays. It stated that if the buyers were unable to complete the transaction by the closing date, they would be charged a penalty of $250 per day until it closed. But, in that same addendum it stated that “Seller may at its option extend the Closing Date with no penalty whatsoever… up to 60 days past the original closing date“. Where is the fairness in all of this? This smacks of a double standard!

With housing inventory at an all time low, many builders believe they can bully buyers into submission. Unfortunately in many instances, they are right. But, just wait until the pendulum swings back in the other direction and it comes back to bite them in the …

What are your thoughts?