Real Estate Information

One of the causes of financial distress is relocation.  Being in the military is a frequent cause of relocation, so it makes sense that there are special programs for short sales and other assistance for the military.  Members of the Armed Forces do so much for our country that it is important for real estate agents to provide special service to them. 

Military personnel and federal employees who are “under water” with their mortgage can benefit from a program by the Department of Defense that is administered by the US Army Corps of Engineers under the Base Closure Act known as HAP (Homeowner’s Assistance Program).   This program was extended under the American Recovery and Reinvestment Act of 2009.

The website says that “HAP provides assistance in four ways. For eligible applicants, the Government may:

1. Reimburse you for part of your loss from selling your home.
2. Assist you, if you don’t have funds from the sale of your home to pay-off your mortgage.
3. Purchase your home by paying off the mortgage.
4. Help, if you default on your mortgage.“

For short sales,  the private sale reimbursement program is the most applicable.  Under that program,  the military member or qualified government employee sells their home and gets reimbursed for some of the losses on the sale of the home. 

So, the home is sold with a short payment to the lender, but with an agreement to reimburse the lender later when these benefits come in.   This is an excellent use of the short sale process, as it gets the seller moved gracefully and may get the lender fully paid. 

So, if your seller is in the military or a qualified federal employee, look into these special benefits.  The members of the Armed Forces deserve to get every benefit allowed, as they have definitely earned it.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-how-to/short-sales-and-the-military/.

You need to develop certain principles that work for you in negotiating, and then follow them nearly every time.  Negotiating is an art, with a little science that is mostly probability, so you need to know when to apply a principle, and when to shelve it. Here are four main principles but there are more:

1. Your Clients’ Interests Are Paramount

Your clients’ interests come way in front of yours. Do not let your client miss buying the home of their dreams just because you want to do some fancy negotiating. If they think it is worth the price, be sure you give them your advice, but if they want to proceed, it is their life.   In the same manner, if it is going to take forever to negotiate a deal on the property they love, your obligation is to proceed and take the time required to get the best deal.  Another instance where your client’s judgment is paramount is the success of the negotiations. You might think it went extremely well, but if the client is not happy, there goes your repeat and referral business.

2. Let the Other Side Feel that They Won

Forcing your counterpart to recognize that you are victorious is counter productive. If they feel that they won, they will do everything possible to close the sale smoothly. If they feel that they lost, they will do everything possible to have a victory before the sale closes.

3. Don’t Push: Present Choices

I have yet to meet anyone who says they like a pushy salesman. We help people make decisions.  This principle is particularly appropriate for listing presentations. You discuss with the potential sellers that they can (1) Decide not to sell (2) Go For Sale By Owner (3) Use a discount firm or (4) Use my Team. Present all the advantages and disadvantages of each choice, and if you are the right choice, they will come to it. The first advantage of this technique is that you get clients who really support the decision they made. The second advantage is that you avoid clients who are not right for you. There are some listings that you do not want.

4. Present with Confidence and Conviction

According to President Lyndon Johnson, “Nothing convinces like conviction.” If you believe in your position, exude conviction.

In law school, they teach the future lawyers that 10% of the effect is the words you say, and 90% is how you say it. Be confident in what you are presenting. Don’t say this is your initial offer, that you want to run it up the flag pole, or that this offer is a good start. Each one of those phrases tells your counterpart that you are not serious about this offer. Present the offer as being a good offer.

For a more detailed discussion on this topic, please go to http://createagreatdeal.com/featured/steps-to-guide-your-decisions/.

 The old saying “Buy Low, Sell High” sure sounds like obvious advice.  How can a first time homebuyer tell when to buy real estate?  

There are two fundamental considerations, for all buyers:

-          Can you afford the home now?

-          Will you stay in it long enough to justify the initial costs?

The first point includes consideration of mortgage rates.  This point also means you need to consider your income, assets, and other debt – can you make the commitment to buy and maintain a home now?

The second point recognizes that there are some significant one-time costs when you buy, and when you sell, so doing both quickly is a bad idea.  It is typically recommended that a buyer feel sure they will stay in the home 2-3 years, minimum, but situations do vary. 

First time homebuyers have two huge advantages right now:

-          You don’t have to sell another home first!

-          You can get up to $8,000 from the government!  Not a loan, but free money!

We are in a slower market than we are used to, meaning there are more homes for sale now than usual, and fewer qualified buyers.  That, combined with the low interest rates available, defines this as a Buyers Market.  As a non-homeowner, that means you get the benefit of buying in a Buyers Market without the penalty of selling in one too.

So, if you can buy now, should you?

-          Larger than usual inventory of homes for sale means more to choose between

-          Low interest rates mean you can get more home for the same money

-          A Buyers Market means you have more clout than in a Sellers Market

-          The government’s $8,000 gift expires Dec. 1

That adds up to making this an unusually good time to buy a home anywhere from Cary to Wake Forest or any other part of the Triangle in North Carolina.

For a more detailed discussion on this topic, please visit http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/should-first-time-homebuyers-buy-now.

Many Realtors have never done a short sale.  If they represent buyers, they do not know what to tell them to explain the short sale home buying experience.  If you are listing a short sale, be an information resource for the buyer’s agent. 

The first point to explain about a short sale is that you do not know how long it will take the lender to review the sale.  You may have some experience with the same lender, but that does not mean they will be as efficient this time as they were last time. 

The second point is that negotiating on a short sale is different.  The sellers might sign anything at any price, because they want to get rid of the house, out of trouble and possibly avoid foreclosure.  You do not have a deal that can close until the lender approves it.

The third point is a short sale is not a sure thing.  The lender may not approve the short sale, or if the seller cannot pay the mortgage, the lender may foreclose. 

The fourth point is that the house stays on the market in a short sale.  The buyer needs to know that the house is still for sale until the contingency for lender approval is eliminated, and the buyer may have to outbid the other offers. 

The fifth point is to tell the buyer not to spend any significant amount of money on the short sale until the lender has approved the short payment.  

A sixth expectation for a short sale is that the lender is going to try to negotiate to get more money. 

A short sale is a different type of transaction altogether, so you need to explain the differences to the buyer’s agent and the buyer so that they have a home buying experience that is as pleasant as possible.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/dont-let-the-buyer-misunderstand/.

If you change your style of negotiating, you can have less stress, happier clients and create great deals. Most of the Realtors you negotiate with try to win by making you lose, which is why it is called Win-Lose negotiating. Some commentators call it Zero Sum or Distributive, but win-lose gets the point across better. The other type is Collaborative negotiating, also called Win-win. If you can practice Win-win negotiating, you will be a much more successful Realtor, not to mention more popular in the profession. Here is the difference between the two.

Win-Lose Negotiating

In this style of negotiating the parties view the transaction as having a fixed amount of something, and the more one party gets, the less the other party gets. In this type of negotiating, you “play your cards close to your chest” and do not disclose anything important about your situation.

Win-Win Negotiating

You will live longer if you learn Collaborative Negotiating. It is frequently called Win-win, a term that is used way too much, because it implies that everybody wins equally. This type of negotiating is characterized by questioning and listening, creating trust, avoiding hostile emotions and concentrating on ways to get mutual satisfaction. The first stage of this type of negotiating is for the parties to cooperate and exchange information, so they can create more value in the entire deal. The second part of this style of negotiating is for the parties to claim their share of the value.

To engage in this type of negotiating it is important that each side provide useful information about their circumstances and explain why they want to make a deal by discussing their real interests honestly. You concentrate on satisfying your counterpart’s needs. This style is different from Win-Lose negotiating, where the concentration is on what you can take from your counterpart.

For a more detailed discussion on this topic, please go to http://createagreatdeal.com/featured/negotiating-style-killing-deals/.

True or False? First Time Homebuyers can’t get 100% financing.
True or False? First Time Homebuyers pay 20% down or pay Private Mortgage Insurance.
True or False? 100% Financing means you don’t have to pay anything up front.

You may be surprised, but the answer is all three statements above are false. And there is no “one size fits all” answer to how much cash is needed – it depends on a lot of things including:

-          Loan programs vary in their down payment requirements. Talk with your Realtor and several lenders to see what will work best for you.

-          Closing costs vary. When you buy a home there are a variety of fees that must be paid. Your lender can provide a Good Faith Estimate that will list most, but perhaps not all of those fees and costs, so talk to your Realtor too.

-          Mortgage Insurance requirements vary. Some loan programs require the buyer to pay for insurance for the loan. It insures the lender, not you. On FHA loans, it is called Mortgage Insurance Premium, or MIP. On conventional loans, it is called Private Mortgage Insurance, or PMI. FHA loans will have an upfront MIP fee and a monthly MIP charge.

-          Don’t forget your earnest money. If you write a check for an earnest money deposit when you submit the offer to purchase, that money is available for your use at closing. While rare, it is possible, such as when the seller pays all closing costs and you borrow 100% of the purchase price, that you can even get some or all of it paid back to you at closing!

For a more detailed discussion on this topic, please go to http://solonglandlord.com/steps-for-first-time-home-buyers-to-take/how-much-cash-does-a-first-time-homebuyer-need.

In a real estate short sale, you have a seller with no money who needs to move out of the property. Understanding how moving costs money and having a plan for the proper thing to do is a very important step to understand.

The best answer occurs when the home mortgage lender allows some payment to the seller at the closing of the home sale that can be used for moving expenses.

Some short sale agents tell the buyer to pay money to the seller outside of the closing, or outside of escrow, so it does not show up on the closing statement.  One of the requirements for short sales is that all parties have to certify to the lender getting the short payment that the seller is not getting anything out of the sale.  Be careful who you listen to,  they may get you in trouble.

There is another seminar leader whose Realtor training is to pay the seller $2,500 for work the seller is doing as a part of selling a home.  The examples given are that the seller does the open houses and other work that the agent would otherwise have to do to market the short sale home.   It could be argued that this may have some merit, because it is a payment for services rendered and the mortgage lender may see that there is some way that the payment can be justified, so they may choose not to challenge it.  However, this a risky way of selling a home.   

So what do you do to avoid lying to the home mortgage lender?  There should be no problem if you want to take the idea above and pay the seller for work done, and pay a reasonable amount for whatever service the seller provides in a field that does not require a real estate license. 

This is a recurring problem and there are solutions that will not get you in trouble.  For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/dont-have-short-sale-moving-problems/.

A “short” sale is where a lender takes less money than what is owed on the loan.  This is done by the lender instead of foreclosing on the property, when the borrower is having trouble making the payments.

As you might imagine, lenders will not take less than what they are entitled to unless they have no better choice.  So, the borrower has to show that they do not have the ability to pay the rest of what is owned on the loan.  When an offer comes in to sell the property, be sure you put a contingency in the contract for the approval of this sale by the lender (s) that will need to accept the short proceeds. 

There may be other issues for the seller in selling “short”.   The amount of the principal portion of the debt that is not paid back to the lender may be taxed as ordinary income.  The other problem with selling short may arise if the borrower did a stated income loan.  If the borrower told the bank at the time of applying for the loan that his/her income was huge, then submits tax returns and other documentation to show that it was nowhere near that amount, the lender may have proof that there may have been loan fraud.

The advantages of this process for the buyer is that they get a home at a great price, below the value of the mortgage balance.  However, the buyer gets a bumpy ride since it will take the lender some time to review and approve or disapprove the short sale.  There may also be other requirements that the lender will put into the transaction as a condition of approving the sale.  Also, if the seller does not have any money to pay the balance on the loan, he/she probably has no money to do any repairs, so the buyer is probably taking the house “as is”.

The short sale will allow the seller to have less of a problem with his/her credit than a foreclosure, although the short sale normally shows as a blemish on the credit reports.  Some lenders will be kinder than others on how they report it.  The sale also allows Realtors to accomplish a sale that would not otherwise happen, although the lender who is going short frequently tries to negotiate the commission down.  Finally, the short sale allows the buyer to get a home at a good price and one that has not gone through the distress of a foreclosure process.

For a more detailed discussion on this topic, please go to http://createagreatdeal.com/negotiating-foreclosures/negotiating-short-sales/theory-vs-practice/.

After deciding that you are ready to buy a home, the first place most of us turn to is the Internet. The Internet can be a very useful tool to help, especially for first time homebuyers.  

Almost all the information you can imagine is at our finger tips online. However, the Internet is full of misinformation and advice.  Using a qualified Realtor is the best way to sort through the information out there.

Some of the best resources to use are mega sites like realtor.com to find homes that are listed on the MLS systems of all areas of the country.  Using a search engine can also be very helpful if you are as specific as possible in your search.  Another great resource is to use a Realtor’s website. Often you will need to give some information to access the full site, but a Realtor’s site, such as www.TeamForYOUrDreams.com, will contain links to every home that is available in the local MLS, and will usually contain other links to information about the area like schools, city and county websites, and many others.

For a more detailed discussion of this topic, please go to http://solonglandlord.com/first-time-home-buyer-dos-and-donts/first-time-homebuyers-using-the-internet

Real estate agents call negotiating repairs the second round of negotiations. After an agreement is reached, the seller’s mindset shifts from a position of questioning the original deal to supporting the completion of the agreement; as the seller releases his emotional attachment to the home and makes purchases and plans to move, the seller’s commitment to the completion of the deal strengthens.  On the other side of the transaction, the buyer frequently gets a case of “buyer’s remorse,” so the buyer’s commitment to the sale decreases.

This second round of negotiations is the most frustrating for real estate agents.  If you have a Team with a closing coordinator to handle the issues from the signing of the contract to the closing of the sale, you may want to teach them how to negotiate the repair issues.

In the book, Create A Great Deal, the items you can do for a seller are discussed. An inspection before putting the home on the market can eliminate repair issues, or it can give you a disclosure disaster. You need to know when to do it and when to avoid it.

Do you know how to set reasonable expectations for your buyers? Can you explain the difference between the standards that inspectors have to follow and the requirements for repairs in your contract? Do you know how to make your repair request sound smaller and more reasonable? When do you just let certain repairs go?

I have not had every repair issue possible come up over the last 29 years of selling real estate, just the vast majority of them. I would like to share what I have learned, so that your sales will close more often and more smoothly.

For a more detailed discussion on this topic, please go to http://createagreatdeal.com/featured/do-not-lose-the-sale-over-repairs/.