Blog

Hello everyone, I just receive one of the most unexpected emails from the HUD title company in my area, the email sounds more like an April fools joke than the news you want to hear from the title company that is handeling a large percentage of your business.

"I have some unusual news to report.
 
We have just received word from HUD that we are to cancel any closings we have scheduled for tomorrow. It seems that HUD has run out of funds and cannot do anymore work.  This probably has to do with the budget problems with the Government.  As a result, all closings on Thursday are cancelled until further notice.  You will be contacted when we know closings can resume."
 
 I haven't heard anything in the news or any other blog about this issue.

  Yep, it ROCKS!

I have made so many wonderful contacts and friends here.  Read some stuff, send some emails.  If you are truly looking to connect and not to just *GET SOMETHING* from someone you will be happy you found this group!

I am also a member of WinDS (charter member) and I am member of NAHREP AZ and NAHREP Vegas and also AREAA AZ and AREAA Vegas.  I also highly recommend all of these listed groups for the great connections and educational opportunities.

Patience really is a virture  

We've all had that client that looked and looked and looked at houses until we began to think they were just lonely and enjoyed our company.  I've had three in a row.  It makes me wonder if there isn't something about me that attracts that kind of buyer.  The first one has been the most unique.  After nearly a year and around 50 houses, he bought.  I never pried into his financial status other than to make sure he was pre-qualified to purchase any house.  After that, I left the subject of financing alone.  He gave me a $100K deposit and then paid cash  for the first $450K house.  I was a little surprised, but I was excited that things ended that way.  At least I thought that was the end.

A year later he called me to manage that house as a rental.  I still do three years later.  A few months after I starting managing his rental he called to have me sell another house I didn't even know he had.  He allowed me to set the price and it sold in a week. 

Six months later he called and said he had found a piece of property that he wanted to look at that had a large tract of land with it.  Now, the funny thing about this client was that he picked every house apart.  No matter how good it was he could find a dozen defects.  Some were real, and some were not.  This particular property was loaded with defects.  When I walked in I starting seeing issues right away.  He didn't acknowledge a single defect.  He wanted the property.  There was a very nice elderly couple living there that needed to move closer to town for health reasons.  They didn't have the money at that time to make the move.  So, they had to sell the house. 

My client made a good offer, and they accepted.  He had me put a clause in the contract that they could stay in the house for six months, or until they found adequate housing.  In that clause, it stated that it was at no expense to them.  That clause almost caused them to reject the contract.  They were so puzzled by his generosity that they were sure there was a catch.  I took a long time explaining the clause, but they finally accepted.  They stayed four months until they found a good house in a nearby community.  My client still stays in touch with them.

What I learned from watching this guy was patience.  Early on, I couldn't decide if he was really a buyer or just a shopper.  I also couldn't decide if I actually liked him or wanted to choke him.  I went back and forth on that one. He had been dumped on me by another Realtor, and now I am so glad.  The experience with him set me up to deal with the next two.  Both of them took six months or more to find their homes, but when they did, it was perfect.  Patience is a virtue.  I am still cautious when a client takes forever to buy, but I always think of that first client.  I still do business with him on a monthly basis.  He pays cash for everything, so I never have any questions when he wants to do something.  I know it will be fine.  I haven't wanted to choke him in years, and I really have come to love him and his family.  They have become a part of mine.

The group this week hit a milestone I wanted to welcome all the new members and thank the first members for their posting of comments and keeping the group active and growing.

This group is to discuss Fannie Mae properties with Fannie Mae and to share solutions to getting more business with Fannie Mae or getting in the door with Fannie Mae and to stay up to date on their requirements.

Website: http://reopro.ning.com/group/fanniemae
Members: 100

I’m reminded of good Sgt. Esterhaus, and his admonition, "Be careful out there…"

This one is also a runner up in my Personal "Darwin Awards" category…

Tenant guilty of burglary for breaking into his own apartment with intent to commit a crime.

A tenant and his wife jointly signed an apartment lease as co-tenants. The couple had a dispute prompting them to separate, causing the husband-tenant to move out. The husband-tenant returned to the apartment, "broke in" and stole money from his wife. The wife called the police, and the husband-tenant was charged with burglary. The husband claimed he was not guilty of burglary since he was listed on the apartment lease, and thus had a right to enter as co-tenant. The wife claimed the husband was guilty of burglary since he no longer lived in the apartment, and entered without the permission of his wife and with the intent of committing a crime. A California court of appeals held the husband-tenant was guilty of burglary since he no longer lived at the apartment he jointly leased with his wife, and he entered without permission with the intent of committing a crime. [The People v. Ulloa 180 CA4th 601]

Here’s one that should worry every REO listing agent that does work on behalf of a Bank to "get a property ready" for sale, especially if that work includes coordinating "contractors" who are painting, carpeting replacing, roofing or plumbing – since "coordinating" those jobs might in itself require a contractor’s license! Think about it – commissions are, by the way, "compensation."

A tradesman cannot collect for contractor’s services if unlicensed at any time during a job.

A homeowner hired a tradesman to perform contractor services at his home that required a contractor’s license. The homeowner was aware at the time he hired the tradesman that he did not have a contractor’s license. The tradesman obtained his license after commencing work but prior to completing the job. The homeowner paid for a portion of the completed work and terminated the tradesman before he completed the job. The tradesman made a demand for payment and the homeowner rejected the demand.

The homeowner sought a full refund of all monies paid to the tradesman, claiming he was entitled to a refund since the tradesman performed services requiring a contractor’s license and the tradesman was not a licensed contractor. The tradesman claimed he was entitled to collect a portion of his fee since he was licensed for a portion of the time he performed services for the homeowner and the homeowner was aware he did not possess a contractor’s license. A California court of appeals held the homeowner is entitled to a full reimbursement from the tradesman for all money paid to the tradesman since the tradesman is ineligible to receive compensation for services requiring a license when he is unlicensed at any time during the performance of the services, regardless of the homeowner’s knowledge that he was unlicensed when he was hired. [Alatriste v. Cesar’s Designs 183 CA4th 656]

How many times have you counseled a client that a Bankruptcy will "fix" their problem, or that it will "strip" a second lien? Here is an example of the Law of Unintended Consequences.

As bankruptcy strips a second trust deed, homeowner is forced to sell home.

A homeowner whose residence was encumbered by a second trust deed filed a Chapter 13 bankruptcy petition seeking protection from creditors. The value of his home was determined to be less than the balance owed on the first trust deed on the residence. The homeowner sought to keep his home, subject to the first trust deed only, by eliminating the second trust deed from title, since no equity existed in the property to secure the second trust deed.

The bankruptcy court stripped the second trust deed lien from title, thus converting the loan to an "unsecured debt" under the proposed bankruptcy plan, since the unpaid balance of the first lien exceeded the value of the residence it encumbered.

The bankruptcy trustee then sought to dismiss the Chapter 13 bankruptcy case before the plan was approved, claiming the homeowner’s total unsecured debt exceeded the limit for filing Chapter 13 bankruptcy, since the stripped second trust deed loan was now an unsecured debt.

The homeowner claimed the Chapter 13 petition was proper and should not be dismissed since the second trust deed would remain of record and the debt would continue to be secured until the bankruptcy plan was fully performed, and only then would the second be stripped from title.

The United States Bankruptcy Appellate Panel held the homeowner was ineligible for Chapter 13 bankruptcy on declaring the second trust deed loan an unsecured debt for purposes of the plan since the second lien, while remaining of record on title to his home, was now an unsecured debt – making his total unsecured debt exceed the statutory maximum for Chapter 13 eligibility. [In re Smith 9th Cir. BAP (2010) BR]

Without access to protection under Chapter 13, the homeowner’s alternative is Chapter 7, which then calls for his home to be sold and the proceeds paid to the first trust deed lender. Bankruptcy law places an unsecured debt ceiling of $336,900 on a homeowner to maintain a Chapter 13 bankruptcy petition. The unsecured debt limit coupled with the mortgage crisis obstructs homeowners from stripping off unmanageable debt from their title, leaving the homeowner qualified for only a Chapter 7 liquidation (sale) of the home, the antithesis of his intent to keep his home under the court’s order to strip away excess debt.

Once again demonstrating there is no such thing as a "non-refundable deposit" the court holds that – wait for it – there is no such thing as a non-refundable deposit!

Buyer’s deposit refunded, not forfeited, when a purchase agreement is breached.

A buyer and seller entered into a purchase agreement regarding the sale of a property. The buyer made an initial deposit upon opening escrow which the purchase agreement labeled as a "nonrefundable" deposit.

In exchange for extending the date for closing escrow as requested by the buyer, the buyer made an additional deposit into escrow, then released it with the initial deposit to the seller as consideration for the extension.

Before escrow closed, the buyer breached the purchase agreement by cancelling escrow without excuse or justification. The seller resold the property at a price producing greater net sales proceeds than a closing of the escrow with the breaching buyer would have produced.

The buyer made a demand on the seller to return his deposit, which the seller rejected. The seller claimed he was entitled to the buyer’s deposit since the purchase agreement called the deposit non-refundable and the release of the deposits from escrow was consideration for the extension of escrow. The buyer claimed the seller was not entitled to retain the deposits since the seller suffered no money losses as a result of the buyer’s breach.

A California court of appeals held the buyer was entitled to the return of his deposits on his deliberate breach of the purchase agreement since the seller received a greater amount of net sale proceeds on the resale than he would have received from the breaching buyer, suffering no loss justifying a retention of any part of the breaching buyer’s deposit. [Kuish v. Smith]

It is likely that, had the seller received less net sales proceeds from the resale of the property, he would be permitted to deduct his loss from the deposit and return the remainder to the buyer. This case is an example of a windfall sought by the seller which would have resulted in the seller being unjustly enriched by keeping both the buyer’s deposit and receiving more net sales proceeds than the buyer agreed to pay for the property – an impermissible punitive activity.

We’ve often advised clients NOT to sign ‘arbitration’ provisions – because, in our opinion, Arbitrators can be too arbitrary, and there is no right of review when they are. This case, holds that an Arbitrator can conceal things from the parties too. Important things, things you’d want to know before you agreed to a particular Arbitrator, with no remedy to you!

Arbitrator has immunity for failure to disclose conflict of interest.

A developer entered into arbitration with a contractor in an attempt to recover money losses. Following the conclusion of arbitration and an adverse award favoring the contractor, the developer learned the contractor’s lawyer was a long-time personal friend of the arbitrator, constituting a conflict of interest.

The developer sought a reversal of the arbitration award and demanded compensation from the arbitrator for the amount of money losses he sought from the contractor through arbitration, claiming the arbitrator’s decision was biased since he failed to disclose the conflict of interest with the contractor’s lawyer before the proceedings began.

The arbitrator claimed the developer was barred from recovering money losses, and the developer’s sole remedy was the reversal of the arbitration award since decisions made by an arbitrator as part of the judicial function are protected against civil lawsuits.

A California appeals court held the arbitrator was not liable for any money losses for his non-disclosure and the arbitration award was invalid since arbitrators are protected by arbitral immunity against civil lawsuits for decisions made as part of the judicial function. [La Serena Properties, Inc. v. Weisbach 186 CA4th 893]

So, how do you get out of a mandatory arbitration provision? You sue a third party who is not subject to the provision! Read on…

Arbitration provision between buyer and seller unenforceable when a third party is sued.

A buyer and a seller of real estate entered into a purchase agreement, which contained an arbitration agreement initialed by the buyer. Before closing escrow, the seller deeded the property to his broker and, by assignment, the broker became the substitute seller in escrow.

A dispute over mortgage payments arose, and the seller’s broker began foreclosure proceedings (since the broker was ‘the seller’ under the terms of the contract…). The buyer filed a lawsuit against the seller’s broker, as well as the buyer’s broker who was not a party to the purchase agreement. The seller’s broker sought to compel arbitration, claiming any dispute the buyer had under the purchase agreement must be decided in arbitration since the buyer initialed the arbitration provision in the purchase agreement, and the seller’s broker was the seller under the purchase agreement by assignment.

The buyer claimed the arbitration provision in the purchase agreement was unenforceable since the seller’s broker did not initial the arbitration provision in the purchase agreement on acceptance of the seller’s assignment.

A California court of appeals held the buyer may proceed with litigation in spite of having activated the arbitration clause by initialing it since only the seller’s broker by assignment of the seller’s purchase rights was a party to the purchase agreement containing the buyer-initialed arbitration provision and the litigation filed included claims against the buyer’s broker who was not a party to the purchase agreement under which the buyer agreed to arbitration. [Valencia v. Smyth (2010) 185 CA4th 153]

This case essentially provides a loophole for parties to real estate transactions to avoid an otherwise binding arbitration provision in a purchase agreement by taking the "shotgun" approach to litigation. If any party who is materially involved in litigation is not bound by an arbitration provision, then – apparently – no party involved in the litigation may compel arbitration.

Hmmm. How to get paid? Isn’t that always the question? But what if the broker doesn’t want the bother of suing? Can the broker give that right to the agent involved in the transaction? You betcha.

Sales agent enforces listing agreement against buyer on an assignment of the Broker’s right to collect the fee.

A buyer entered into an exclusive listing agreement with a broker to locate property for purchase. An agent of the broker located a suitable property, and the buyer entered into a purchase contract. Later, the buyer defaulted on the purchase agreement and refused to pay the commission owed the broker.

The broker assigned the agent his right to the broker fee due under the exclusive listing agreement. The agent filed an action, in his own name, against the buyer to recover the unpaid fee.

The buyer claimed the agent was barred from any action to collect a broker fee for services he was unauthorized to perform without a broker, since licensed real estate agents are ineligible to receive payment from anyone other than a broker.

The agent claimed he was permitted to file an action to recover fees earned by his broker under a written listing agreement since the fee had already been earned and the broker had merely assigned his right to enforce collection of the fee.

A California appeals court held the real estate agent was permitted to pursue enforcement of the broker fee earned under an employment agreement—the buyer’s listing—since the broker had assigned the agent his right to the already-earned fee. [Schaffter v. Creative Capital Leasing Group 166 CA4th 745]

By the way, the agent did collect the fee…

And on that happy note, we’ve another case where a broker has to sue to collect a fee… and won!

Buyer’s broker earns fee when his listed buyer acquires an option to buy.

A buyer entered into a listing agreement with a broker, agreeing to pay a fee if the buyer acquired any beneficial interest in property the broker was employed to locate. The buyer acquired a purchase option for a property the broker located. The broker made a demand on the buyer for his fee, which the buyer rejected.

The broker claimed his fee was earned when the buyer was granted a purchase option by the property owner, since the buyer’s listing agreement called for the broker to be paid a fee if the buyer acquired a beneficial interest in property the broker was hired to locate. The buyer claimed he did not owe the broker a fee since the buyer never exercised the purchase option and thus never acquired a beneficial interest in the property.

A California appeals court held the buyer owed the broker a fee since the buyer acquired a beneficial interest in the property at the time the purchase option was granted by the property owner, and an exercise of the option was not a condition which had to occur before the broker earned a fee. [RC Royal Development and Realty Corporation v. Standard Pacific Corporation 177 CA4th 1410]

With all the craziness related to short sales, and the frequent experience many short sale agents have had with a Bank foreclosing in the middle of a short sale process, we get asked – a lot – "Can they do that?" The answer is, generally, "Yes" – but this case might give a borrower another swing at the Bank.

A lender’s oral promise to negotiate a loan modification with a homeowner is enforceable.

A homeowner obtained an adjustable rate mortgage (ARM) from a lender and was unable to make the monthly payments after the loan was reset to fully amortize. The homeowner defaulted and the lender initiated foreclosure proceedings.

The homeowner filed a petition for bankruptcy protection, which stayed foreclosure proceedings.

The homeowner requested a loan modification and reinstatement and the lender agreed to enter into loan modification negotiations and reinstate the loan if the homeowner would forgo further bankruptcy proceedings. The homeowner agreed to forgo further bankruptcy proceedings in reliance on the lender’s promise to negotiate a modification and reinstatement of his loan.

After the bankruptcy stay on foreclosure was lifted, the lender never negotiated a modification of the loan and moved forward with foreclosure proceedings, selling the homeowner’s home at a trustee’s sale.

The homeowner made a demand on the lender for his losses, claiming the lender was liable for his losses due to the foreclosure of his home since he acted in reliance on the lender’s promise that they would negotiate a modification and reinstatement of his loan.

The lender claimed they could not be held liable for the homeowner’s losses since the lender did not enter into a written commitment for a loan modification with the homeowner and it was within the lender’s rights to foreclose on the homeowner’s home. A California court of appeals held the lender was liable for the homeowner’s losses due to the trustee’s sale since the homeowner acted in reliance on the lender’s oral promise to negotiate a modification and reinstatement of his mortgage when he abandoned his right to bankruptcy protection. [Aceves v. U.S. Bank (January 27, 2011) CA4th]

OK, this is really one of the "Top 10 for 11" but it was decided in January, and is really important – so we included it in the "Top 10 in 10" anyway…

New disclosure requirements have been imposed on a Listing Broker – requirements and duties that are now owed to a NON-CLIENT buyer! On its face, the case seems limited to the duty of disclosure of a short sale – but, in my opinion, it can be (is!) much more ominous than that.

Liens in excess of price must be disclosed by a listing agent before offer accepted.

A seller’s broker listed a single family residence (SFR) encumbered by liens in amounts exceeding the asking price (Sound familiar? This is the stereotypical "short sale" scenario.).

A prospective buyer inquired about the property and the seller’s broker responded but did not disclose his listed property was encumbered by liens which affected the seller’s ability to sell and convey the property at the asking price. The prospective buyer made a cash-to-new-loan offer on the property, which the seller rejected. The seller’s broker then prepared a counteroffer on behalf of the seller to bargain for a better price. The seller’s broker did not disclose in the counteroffer that the balance due on the liens exceeded the contract price, nor did he include a contingency provision in the counteroffer allowing the seller to cancel in the event the lenders would not accept the net sales proceeds in satisfaction of their liens.

The buyer accepted the counteroffer. Relying on his right to acquire the seller’s home, the buyer sold his home and incurred expenses. The seller’s broker later disclosed the clouded title condition to the buyer in a preliminary title report (prelim) containing lien information.

Ultimately, the seller was unable to close escrow as agreed since the lenders would not accept the seller’s net sales proceeds in full satisfaction of their trust deed liens. The buyer made a demand on the seller’s broker for his money losses, which the broker rejected.

The buyer claimed the seller’s broker was liable for his losses since he had a duty as a licensed real estate broker acting as the seller’s listing agent to disclose the existence of liens encumbering the property when the loan amounts are in excess of line the agreed-to price and do so prior to acceptance of the offer.

The seller’s broker claimed he was not required to disclose the status of the seller’s title condition as encumbered with mortgage liens prior to the acceptance of an offer since to do so would require the broker to breach his fiduciary duty owed to the seller by revealing confidential financial information, and that the buyer had "constructive notice" of the liens as they were recorded by the various lenders.

A California court of appeals held the seller’s listing broker is liable for the buyer’s losses due to his failure to disclose the existence of liens on the property with balances exceeding the purchase price, and do so prior to acceptance of an offer, since a seller’s listing broker has a general duty owed to prospective buyers before an acceptance occurs to disclose information regarding risks that may affect the seller’s ability to perform on conditions as disclosed. [Holmes v. Summer 188 CA4th 1510]

Listing agents! You better start Holmes-proofing yourself and your seller.

Holmes v. Summer is the agency case of the decade – the legacy of boom-time attitudes.

It is also, in my opinion, absolutely wrong! But, it is what it is. And we’re stuck with it now.

The only way for you, as a listing agent, to "Holmes-proof" yourself and your seller: comply with your duty to put prospective buyers on notice of conditions known or information readily available to you as the listing agent that might affect the buyer’s decisions regarding the listed property by preparing and handing the buyer a complete marketing package – and do so before your seller accepts an offer.

What does that mean? That’s the problem with this case. It means whatever a Buyer wants it to mean! You now need to be clairvoyant and determine what a Buyer will think is "a materials fact, affecting desirability or value" and to do so before an offer is accepted. Good luck with that!

So, every listing packet and every presentation packet should include – at a minimum – inspections related to:

• physical condition (the seller’s transfer disclosure statement (TDS) and a home inspection report?);
• title condition (property profile information and documents);
• property operations (monthly ownership expenses, any rents);
• property location (natural hazards and neighborhood security); and
• environmental conditions (man-made conditions hostile to human sensitivities).

When your sellers (in a short sale – let alone a bank that has already foreclosed) are so completely disinterested in the selling process, a listing agent’s burden to avoid liability has just increased ten-fold.

I couldn’t resist this one…

Death of property owner constituted change in ownership.

Sounds pretty straight forward, huh? Well, nothing to do with taxes – or money – ever is…

An owner of income-producing property transferred title to his property, vesting it in a living trust he established. On the death of the owner, the trust agreement provided the trustee was to retain title for the benefit of the deceased’s children until the last of the deceased children dies, at which time the trustee is to transfer title to the owner’s grandchildren.

Upon the owner’s death, the county assessor reassessed the property at its current market value, viewing the owner’s death as a change in ownership. The deceased’s children challenged the reassessment of the property, claiming a change in ownership does not occur on the owner’s death since title remained with the trustee without the transfer of any right to possess the property until the trust transfers title to the deceased’s grandchildren.

The assessor claimed a change in ownership occurred and the reassessment was proper since the owner’s entire interest in the property was transferred upon his death to his children (life estate) and grandchildren (a remainder interest).

A California appeals court held the reassessment of the property on death of the owner while title remained in the living trust was proper since the death of the property owner transferred all his ownership in the property, no matter how he may have vested his property’s title, which constituted a change in ownership triggering reassessment. [Phelps v. Orange County Assessment Appeals Board 187 CA4th 653]

Nothing is certain but death and taxes.

Peanut Butter and Technology 

Late one night this week I was getting ready for bed, but my stomach was growling.  What could I eat that wasn't too heavy and was quick and easy?  Peanut butter.  I know, anything right before bed could lead to dragons and one-eyed sloths dragging me off for a midnight snack in my dreams, but the growling stomach was going to keep me awake anyway so it was worth the risk.  A quick sandwich and I was off to bed.  No dragons or one-eyed sloths, but a thought did come to mind.  Do you ever outgrow peanut butter?  I know, what does this have to do with real estate, right? 

I posted the question, "Do you ever outgrow peanut butter?" on my Facebook page.  I was surprised at the large response I received from my FB friends.  It's unanimous.  Peanut butter is a staple, and it's here to stay.  Now, what does this have to do with real estate?  It made me think of how we do business today.  I'm a techno-geek so I love all the electronic ways we conduct business today.  I love all of the smartphones, ipads, zooms, electronic lockboxes, drip campaigns, auto-responders, electronic signatures, etc., etc., etc.  But, the reality is that real estate still needs a good dose of peanut butter. 

The peanut butter of real estate is getting to know your client.  It's putting their needs first and making sure they find the best house at the best price.  It's protecting their interest and seeing that they are not taken advantage of by a buyer or seller.  In our electronic environment, the personal touch is still the glue that creates the deal.  No matter how tech-savvy we become, clients need contact, understanding and an advocate.  That's the peanut butter of real estate, and it's here to stay.  Now, if I can just figure out what the jelly is I'll be set.

Well, first off, I bet your wondering why I would be writing about Wal-Mart in a real estate blog….right? I guess you first have to understand Wal-Mart’s role in our economy. Regardless if you agree or disagree with the Wal-Mart philosophy, the reality is, Wal-Mart has a unique ability to predict cost and peer into the future because of their role as the nation’s …..hell, the world’s largest retailer. Without sounding too nerdy let me break down like this.

Wal-Mart can predict cost because they make huge purchases. If those purchases are costing Wal-Mart more and more, they have to push that cost to the end consumer, you and I. It really is that smiple.

So, knowing how this works, when Bill Simon, President and CEO of Wal-Mart predicts that inflation is “going to be serious” in a recent meeting with USA Today, you really should listen.

Ultimately, no one can really predict inflation with any proven accuracy but, what we can do is compare the current cost of commodities and goods with previous cost and determine a rate of increase. For example, strictly hypothetically speaking, if every Monday I buy 5 bundles of cotton, because I am in the business of making t-shirts and my cost for the past 30 purchases has been $5.00 a bundle, my regular purchase cost would be $25.00 a week.

Now, let’s say I am putting my order in for this weeks cotton purchase of 5 bundles and I notice the cost has gone up to $6.00 a bundle, that’s a 20% increase. Granted, that’s a bit dramatic but, that is a perfect example of hyperinflation. You see, the supplier had to up his fee because the farmer had to up his fee and that was because fertilizer went up, seed went up, cost went up and cost went up primarily because of fuel cost. Or better yet, the value of the dollar dropped and that $1.00 bought less but, the farmer still needed the same amount of supplies. In other words, demand didn’t change but, cost went up, dollar value fell and I saw an increase of 20% over one week.

Guess what I am going to do….I can’t eat that cost so, I have to increase the retail sales price of my t-shirts to 20% or, maybe I increase it 30% because I know that the dollar isn’t getting stronger, gas isn’t getting cheaper and tension in the Middle East, isn’t getting better, the Governments taxing more to cover their losses, the Fed isn’t putting into place policies that make it easier for me to make money, in fact the EPA has stepped in and said cotton has to be grown a specific way which causes the farmer to incur more cost, etc….etc…..etc……

Are you getting the picture? I hope so because now let’s talk about how this effects the housing industry. When John Smith home buyer wants to buy a home, he has to sit down and determine how much he can afford. Part of this determination is something called, Debt to Income. He has to determine if at the end of the Month, he still has enough money to live on and pay his mortgage. Well, if prices keep rising and, no one really knows by how much however, he sees all the uncertainty in the world that I described above, not to mention, he knows last week when he filled his tank it was only 2.59 a gallon but this week it was 2.86 a gallon, what does he do? He starts looking at a smaller house with a smaller monthly mortgage or, maybe he doesn’t look at all. Let’s not forget, the Fed isn’t making getting a home loan easier, credit is tightening, high housing inventories already exist, prices are falling almost everywhere yet, John Smith can’t or won’t buy a home because, he isn’t sure how much that home is going to be worth in 3 months.

All said and done, if Wal-Mart is warning the us that they are seeing steep, fast increases in prices of commodities and everyday goods, that leads them to believe we are starting to see the beginning of hyper-inflation….or inflation at the least. If Wal-Mart sees it coming……….the stock market is warning of it…….energy prices aren’t dropping………Middle East is on fire and looking to cool down any time soon…….the Government seems to be making things worse with out of control spending………the Federal Reserve is printing Benjamins like no tomorrow………the Dollar is loosing value……..demand isn’t slowing…………it’s a perfect storm against a housing recovery.

5 Simple Things Sellers Should Know About the Value of Home Staging

1: The cost of staging is always less than your first price reduction!

It is a known fact that two things are key in selling real estate….price and location.

So why stage? Many reasons! STANDING OUT from the competition is one, especially in today’s down market where buyers see home after home, without being able to make up their minds.  Very often even the same floor plan comes up repeatedly. Staging makes a home stand out from the rest in a great way! Staging is the surest way to “help” the buyer envision living in the space.

2: Staging does not need to always be a full-blown/fully furnished affair!

‘Staging’ for the purpose of selling means to assess each property, and stage/address issues on a case-by-case basis. Some property conditions may not lend themselves to staging, and that’s fine. Staging is about having the presence of mind to address distractions as needed, (if/when allowed) or financially reasonable.

3: Staging is done with ONE goal - Guiding a buyer’s eye toward functionality!

Too often distractions distract buyers from seeing the true positives in a home. Staging is about removing those distractions, whether it’s a harsh paint color, minor repairs, or just trash and grime. Too many broken “small” details left undone WILL lead buyers to think there are other hidden problems.   

4: Staging is about removing doubt that a property it’s not worth its asking price!

 In today’s market buyers have choices, and they’re able to compare what’s on the market. Two exact floor plans will be set apart by their condition. In today’s market of HUGE homes makes it a daunting task for a buyer to just imagine having to paint an entire house with soaring walls, when there is another exact home down the street for the same price! If there is ANYTHING broken or dirty, it MUST be addressed - otherwise a buyer will feel overwhelmed and move on to the next house. Staging does NOT always mean adding “furnishings” anymore. I can mean addressing the smallest of details and distractions, as supposed to just sticking a For Sale sign in the yard and adding “sold AS-IS” on the MLS! 

5: Home Staging is about helping buyers visualize their dreams coming true!

 When we Stage a home we’re helping buyers gap their lifestyle dream, from what “is”, to what “will be”.   Helping a buyer envision themselves living (hassle-free) in the property, is what Staging is about. When a buyer can see themselves living in the home, wallets open.   

Why should sellers list with REALTORS® WHO STAGE?

Because Staging Realtors consistently do more, and innately go beyond what’s expected to market HOMES (not just houses).  Staging Realtors try to envision and connect the dots with what buyers look for in a HOME. Studies show buyers pay top dollar when they fall in love with THE perfect HOME! 

Here’s an EXAMPLE of how Non-Staging gent and a Staging-Realtor market the SAME space!  

This concept also include Realtors who even though they don't do Staging themselves, they use the services of a Home Staging Professional.

This home was on the market for 63 days with a NON-Staging agent, but on the market for only 7 days after being Staged, by yours truly, before receiving the accepted offer, and consequently TWO backup offers.

By the way, this was an REO listing.

 We all know whats happening to the single family home markets. Over supply and shadow inventory and the subsequent price declines will continue until fear is overcome and inventory is soaked up.

The kinds of issues that led to a boom bust in housing did not take place with multi family. There was no build out leading to over supply and the lender market was much more rationlized. Little of the kind of lending that led to so many foreclosures, ultimately driving home prices down.

Lack Of Supply In The Rental Market
From 1997 to 2006, multifamily construction was about 342,000 new units per year, but by 2010 they new construction declined 66%. Government estimates indicate we will need 1.5 million additional units annually just to keep up with population growth. Quite a shortfall, indeed

Lack Of Lender Interest In Funding Any Real Estate
Adding to a undersupply is a real lack of lender interest in more housing of any kind. Although this appears to be a negative, it protected the sector from the boom mania and has kept the multi family market on a sound footing.

Foreclosure
Realty Trac reports annual foreclosure filings spiked from 1 million in 2006 to 3.9 million in 2009, and were about the same number in 2010. Finally, the huge foreclosure debacle is making renters out of all of us.

Demographics
The combination of immigration, retirees moving back in and a new generation up will equal the size of the boomers,creating a large pool of new renters. Now thats huge!

A Solid Market
The national vacancy rate for rentals fell 17% last year to 6.6%, according to Reis. And rents jumped. In New York, up 9% on average in the last five years; in San Jose, they're up 8% San Francisco, one of the best rental markets in the country has seen its vacancy rates drop as rentals in all neighborhoods post new highs.
You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com

You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com 

Rent vs Buy End Of Year 2010

A Recent Survey: Is It Time To Buy Rental Property

Increase Rental Income and Lower Your Vacancies

I received the following email today.  I invite your comments.

"We are excited to announce a change to the home buying process for all properties sold through the GoHoming™ and Altisource Homes™ marketplace platforms.

This new approach will result in faster turnaround times and a more effective way of facilitating the documentation process for you and your buyer clients.

Going forward, we will write the contract for you! When the terms of your bid or offer are approved, our system will forward a ready-to-use, standardized Purchase and Sale Agreement. In the past, the buyer’s agent was responsible for drafting the state contract and attaching the seller’s addendum A. Now, you only need to have your buyer client sign and return the Agreement to continue with your transaction, saving you time and effort.

To view a PDF copy of the new Agreement, please click here. Also, you will find a copy of the Agreement on the “Property Details” page for each home. Simply click on the “Documents” tab.

As always, we appreciate your partnership and your business.

Best regards,
The GoHoming Team
P.S. Just a reminder that thousands of REO and foreclosed properties are bought and sold every month through GoHoming.com and our affiliated websites, and our sellers typically pay a full 3% buyer side commission. Also, find out why thousands of REALTOR® partners participate in our free buyer referral program. For more information, visit the program resource center."

Reconveyance Deed & why it might be important to make sure it happened!!!

I should explain what a reconveyance deed is to help make some more sense of this.  Anytime there is a loan on a property (at least in California), there is a deed recorded on the property.  Then when a loan is paid off against a property, another deed gets filed (reconveyance deed).  That type of deed shows that that lender no longer has interest in the property.
 
In my real estate world, I normally don't watch for that type of activity.  It's a behind the scenes thing that gets done after we close escrow, which makes sense because I am making sure my seller gets their home sold or that my buyer gets in the property they purchased. 

The loan against a property is what the title company handles, they send money (full payoff or agreed short payoff in a short sale) to those lenders & then either that lender will file a reconveyance deed with their own "prefered" title connection (which will then end up at the county) or they will send that reconveyance deed to the title company that closed the escrow & have them file it thru the county.  Either way, I don't follow up with these lenders to make sure they did their reconveyance deed. 

It seems like realtors might want to start doing that or maybe at least following up with the title company to make sure it's done.  It sure can cause a lot of issues down the road if it wasn't done properly.
 
I recently had a buyer (15 months ago) purchase a short sale in Tracy CA & the bank forgot to do their "reconveyance deed".  Not sure how you forget, but I guess there are humans at Chase Bank that didn't get it done.  About 6 months ago, my buyers started getting foreclosure notices addressed to the prior owner.  Of course she didn't live there & my client kept sending the mail back as "return to sender". 

Mr & Mrs Buyer got concerned a month ago because Fed Ex packages started being dropped off on their door step in Tracy.  A process server came to their door & wanted to speak to the old owner.  Now that's when it got serious.  Thankfully my buyer went to the local Chase bank, title company, county recorder's office & started pokeing around to get to the bottom of it.  They received an "investigation" fax number to Chase to send their documentation to show they owned it & to leave them alone.  

It must have worked because a week after they faxed to this "investigation" number, a RECONVEYANCE DEED was miraculously filed with the county recorder's office & the phone calls have stopped.  Now I think I should probably follow up on all my closed escrows to make sure this happens to alleviate any of my future buyers dealing with this sort of shenanigans. 

Hello all!

Just wondering if there's anyone out there that can assist me with an issue. I signed up with OCWEN over 1.5 years ago for BPO's and REO's. I've called several times to check on the status of my account and each time I receive the same info. That my account looks great and there's nothing needed.

My issue is that in this time frame, I have only received 1 BPO order. Very unusual and odd considering other agents in my office and competing offices receive numerous orders each day.

Therefore, does anyone have a contact there that I may call to see what's going on?

I would greatly appreciate it!

Joe

The Federal Deposit Insurance Corporation (FDIC) Chairman, Sheila Blair, has raised a proposal regarding “cash for keys” (CFK’s).   The proposal is encouraging the five largest U.S. mortgage servicers to consider a CFK’s option for 90-day plus delinquent borrowers that would pay them as much as $21,000 to move out!  According to The Financial Times, the proposal was not well received .

In the beginning of March 2011, the proposal was given to the servicers with the intent of revising and coming to a final draft in two months.  Nearly half of the time has passed without significant strides, and many are worried that the process could be stalled at a time when a solution is considered necessary for recovery.

According to Reuters, the Office of the Comptroller of the Currency is not supportive of Blair’s proposal and is working on a draft of its own.