My Sunday morning always starts with Active rain after a few cups of my drug of choice, coffee. I love to comment but my thoughts always turn to writing a blog post. This is a thank you to Christopher Solomon for his article today about a Buyers Negotiation Boot Camp. Let me share some of his pearls with you.

1. Negotiation mistake one. Jumping right in and looking for homes. He is right about gathering information first before buying. But his idea is to do this before you ever talk to a Realtor. I have to say that finding consensus on the internet is impossible. One needs someone to interpret the data. How about dare I say it a Realtor. Isn't that our job to separate fact from fiction? But this was the least objectionable part.

2. It is wrong  to believe your real estate agent is your buddy, so don't tell her what you can spend. Hello McFly! Dear Chris, as agents we go through a process of prequalification that most times includes a loan officer. Why show something you would like that you can't afford? I am also a bit insulted that you say that all I care about  is maxing you out on payments. Agents that are still in the business with professional intent know that your best advertising is a satisfied client. Your suggestion to go 5% to 10% below your qualifications is also crap. Why stop there. My back in ratio last time was 18%. I know, you drew that percentage out of a hat. Why not just consult the I Ching?

3. This one is laughable. If you see a house you like, don't express your interest in it, you will alert the seller or the seller's agent. Excuse me but I have a buyers agent that insist that the listing agent and seller are not present. But this is where ole Chris tips his hand for the next fun part.

4. This is where he says the best thing to do is ditch the Realtor you are working with and negotiate directly with the seller's agent. I have an idea Chris. The next time you are sued and go to court, rather than having your own lawyer, use the suer's lawyer. He will take care of you, and how. Mr. Solomon, a good agent that represents a seller has a duty to get the highest price and the best terms for them, and is limited to giving you information. Oh wait a minute, this violates your rule one about getting all the information you need! At this point I began to wonder if Chris was an owner or renter.

5. This was a fave for me. If you find a house you really like, don't make an offer immediately. Can I tell you a story? 5 years after I graduated from high school I met a girl that I was head over heels for from my class, and I told her that I wanted to date her but was afraid to ask her out out of fear of rejection. She told me that she would have gladly dated me, and why did I never ask her out? A good deal is like that. While you tarry someone else gets the girl.

6-8. Since this could go on forever and you need to get to church this morning let me share his other gems. Your first offer should be 20% to 30% lower. Overgeneralized, and all real estate is hyper local. Looks like the I Ching again. Don't accept a meet in the middle offer. Somethimes Chris that is a win-win. You just threw that in because you needed one more to reach 8.

Finally, Chris has a right to his opinion, but he also has a duty to know what he is talking about if he has a national forum. Chris when you are telling people what to do, try balance next time. And oh, before I forget, the next time you right a real estate article, consult a Realtor. They can help you.

Dear Consumer,

I understand your frustration, disappointment & even your anger about Realtors. You have been let down, lied to, and in some cases stolen from. And I do not feel sorry for most of you.

Let me share this story with you:

I had a computer that was constantly losing memory. It is now with it's 3rd technician. Like you, I know very little about "the industry." In fact, I know nothing about computers except what I've read online. Once in awhile a friend or relative will try to give me advice, but the result is always the same, more frustration. The first COMPUTER TECHNICIAN charged me $250.00 to fix my problem. He told me I had a leaky motherboard and to "throw it away." Unconvinced I took the computer to Best Buy ($150.00) where they simply said they needed to reconfigure my cpu and "wipe it." This would basically delete everything on the hard drive and restore it to day one. Guess what? That didn't work either!!

On the third attempt I dropped it off to yet another technician, referred by fellow Realtor. I was so angry with the entire process that I was determined to get to the source of the problem, no matter the cost..... Finally I was told I had a VIRUS in my BIOS system, whatever the hell that means. My situation was now solved.

I very easily could have said... "all computer technicians are stupid liars looking to STEAL from me," but I did not. To be honest, I'm very, very angry about my experiences, but.... 

---->I have one person to blame for my misery, myself.<-----

I rushed, trusted and didn't do my research when looking for the RIGHT guy to fix my computer. I was stupid, careless and too trustworthy. When I was growing up my parents always warned me to SHOP wisely. They reminded me that only fools make quick impulsive decisions with their money. And they were right.

Now that I've found my trusted computer technician I feel redeemed. If I ever need a computer repair, I'll know who to call. I'll refer him over and over again & even though I'm angry with my past experiences I harbor no ill will towards the industry. I would NEVER consider trying to nickle & dime him as I now know he's worth the money he was paid. I won't rely on my uncle in Nebraska who worked on computers in the 80's as he's "just trying to help."

The moral of the story is simple.

Ask lots and lots of questions before you hire a Realtor. Don't just sign paperwork assuming we are all bred, raised and educated the same. The 80/20 rule applies to our industry as well. I believe you get what you pay for in Real Estate. If you don't do your research than you are asking for potential problems. Learn from other peoples horror stories and not your own.

 

I'm a firm believer that if you're going to take a short sale listing (or any listing), you better know how to work it and close it! 

If you don't, hire a short sale negotiation company to handle that aspect of the transaction or refer it out to a local short sale expert!

I have recently encountered this situation on a number of ocassions: I call about a great short sale property and the listing agent tells me: "I will be submitting all 5 offers that I received to the bank for approval!"  WRONG!!

It is important to remember that in a short sale, the short sale lender is NOT the Seller!  The Seller is the homeowner, who holds legal title to the property and is the only one who can contract to sell the property.

The lender holds a deed of trust (or mortgage, depending upon what state you're in) on the property and in order to close the sale, that loan must be paid off in full or the lender must agree to a lesser amount (thus, a short pay).

It is not the short sale lender's job to review offers and "choose" one.  It is our job, as the real estate agent representing the Seller, to price the property competitively to sell and negotiate the best price and terms for our client (and, ultimately, the short sale lender).  

Did you receive multiple offers on your short sale listing?  GREAT!  Treat it like an ordinary sale and issue a counter offer or multiple counter offers to obtain the best price and terms for your Seller. 

ONE (1) offer should be accepted by the Seller and the others should be placed in backup position.

The accepted offer, together with a complete short sale package, should be submitted to the short sale lender for approval.  By submitting multiple offers to a short sale lender, it will only delay the process and frustrate everyone involved.

We are Los Angeles short sale experts!  Have a question about a short sale need assistance?  Call or e-mail us.

---

DANIEL DIMA BATSALKIN
Principal Broker | C.E.O. | Boulevard Realty
310.933.4281 | dima@blvdrealty.com
www.blvdrealty.com

Specializing in Los Angeles area residential real estate, including Los Angeles, Beverly Hills, Brentwood, Bel Air, Santa Monica, Sherman Oaks, Valley Village, Studio City, Encino, Tarzana and more!

Hire me or send me a referral because I have a defined and proven plan of action that I follow every day to help my clients achieve their real estate goals!

Have you thought about getting that bigger, better house in a better neighborhood?  

NOW IS THE TIME!

Whether you need more space, want to upgrade your location, or for any other reason, the current real estate market presents a unique opportunity to capitalize by trading up! 

5 reasons why this is the best market to trade up!

1. You will make money NOW on the trade!  

Here's how this works. You currently own a condo that was worth $1,000,000 three years ago, and now it's worth $700,000 (that's right, it's gone down 30%!).  You may be thinking, I've lost $300,000, right?  Wrong!  

What you do is go out and sell your condo and purchase the home of your dreams for $1,400,000.  That house, three years ago, was worth $2,000,000 and you probably couldn't have afforded it.  By buying it now, what you've just done is bought your new home at a $600,000 discount!  Just like that, on the trade, you've made $300,000!  This doesn't even take into account the money you'll save on property taxes because you're paying taxes on a $1.4M house, and not on a $2M house.

2. ... AND you will make money LATER when you sell your new home!

OK you've listened to my advice, bought that new home of your dreams and traded up. YES!  Fast forward five years and the real estate market has gone up 20%.  Let's take a look at what has happened.  Your old condo is now worth $840,000, for a $140K gain over today's value.  Your new home is worth $1,680,000, or $280,000 more than when you bought it today.  Just like that, you've made an extra $140,000 on the trade!

3. You can likely buy a house you otherwise could not have afforded, and may not be able to afford again!

Going back to my example above, you probably couldn't have afforded that $2M house three years ago when you bought your condo.  You also may not be able to afford it again in 3 - 5 years when the market rebounds. If you've been dreaming about a bigger home or one in a nicer area, now is really the time to capitalize.

4. It's much easier to trade up in a down market than in an escalating market!

I've had clients say that they will trade up when the market "goes back up."  Let's take a close look at that.  Let's say that 5 years from now, the market is back up 20% from today's values.  You then sell your condo for $840,000 and your dream home is now worth $1,680,000.  You've gained $140K on your condo (from today's values) BUT your dream home is now worth $280,000 more!  That means that, by waiting, you've now spent an extra $140K to buy that house!

5. You'll probably get a better house by trading up in a down market!

The current market presents some very unique opportunities.  In most areas, inventory is pretty high and buyers have a lot of great choices.  By shopping in this market, you can really get the home of your dreams and take your pick of all the inventory available.  In most cases, you can get a good deal on a great property in a terrific area.

The bottom line is that if you can afford it, now is a terrific time to upgrade!  Interest rates remain at historic lows and there is plenty of financing available.

 

---

DANIEL DIMA BATSALKIN
Principal Broker | C.E.O. | Boulevard Realty
310.933.4281 | dima@blvdrealty.com
www.blvdrealty.com

Specializing in Los Angeles area residential real estate, including Los Angeles, Beverly Hills, Brentwood, Bel Air, Santa Monica, Sherman Oaks, Valley Village, Studio City, Encino, Tarzana and more!

Hire me or send me a referral because I have a defined and proven plan of action that I follow every day to help my clients achieve their real estate goals!

Whether you are a Home Buyer, Distressed Home Seller, or Real Estate Practitioner, if you have been exposed to the Short Sale Process, you know it is often fraught with confusion, frustration, and lengthy time delays.

Under the new Home Affordable Foreclosure Alternatives Program, however, just finalized by the U.S. Treasury Department, the process could get a bit easier, and conclude quicker.  However, the road to a smooth short sale for every buyer, seller, and lien holder may not yet be so smoothly paved.

In a nutshell, a Short Sale occurs when the seller's lender agrees to accept less than the full amount owed on a distressed home seller's mortgage.  Most in the Real Estate Business consider it the most attractive alternative to home foreclosure.

To date, however, the frustration and time delays have resulted from a lengthy and unstandardized approval process from each lender.  Some lenders have systems in place to approve and close a short sale within a comparatively-short six weeks or so.  For others, especially larger, national lenders, the process can drag on for many months.

Often times, the buyer contemplating short sale purchase will grow weary waiting for lender approval, and moves on to a conventional sale, as many are available, priced competitively, in an oversupplied real estate market.

Sellers and Real Estate Practitioners often find the short sale approval process not only time consuming, but very painful.  Especially with larger banks, customer service is overtaxed, and poor.  Files have to be resubmitted for approval multiple times.  And completed paperwork need often be revised due to many lenders extended approval time frames.

Under the new, streamlined short sale approval process, originally announced last May, but only finalized on November 30th,  forms and approval times for all participating banks will be standardized.

Here are the highlights, as summarized by the National Association of Realtors via their website -

-  the HAFA Program would only apply to those whose subject property is a principal residence.  No second homes or investment properties would qualify.

-  the primary mortgage must have originated before January 1, 2009, and the mortgage is now either in arrears, or, in the judgment of the lender, likely to fall into default.

- the total house payment for the affected property is in excess of 31% of the borrower's monthly gross income.

- the Unpaid Mortgage Balance is no more than $729,750.

Under the program, the participating lender would have to advise their borrowers in distress - either those who have inquired about mortgage loan modification, or asked about a short sale - as to their option to sell short early in the process. 

Lenders would send the borrowers a Short Sale Agreement, which would need to be returned to the lender within 14 days.  This agreement would give the borrowers 120 days to sell their home, with extensions possible up to a maximum of 12 months.  Presently, the short sale process would not commence for most lenders until a written Offer to Purchase is in hand.

The lender would have 10 business days to approve any contract for sale after it is submitted to the lender.  Currently, there is not such guideline, and our Chicago Real Estate Team has often waited, without response or communication, for weeks or months on whether or not the contract will be approved.

The holder of the primary mortgage loan would have to release their lien on the property promptly after closing, and must waive their rights to a deficiency judgment from any forgiven indebtedness.

Under the new program, holders of secondary liens would receive $3,000 from the Fed as an incentive to release their often-smaller loans.  Not releasing these loans can stall any short sale, and often do.  Normally, however, if the secondary lien holders refuse to agree to release their lien, their due proceeds gets wiped out should a foreclosure be completed.

Loan servicers might also qualify for a separate $1,000 federal incentive.  Further, the sellers themselves would receive a $1,500 incentive to cover their moving expenses, payable when they vacate the property and leave it in clean condition.

As for the Real Estate Practitioners who service these short sales, new rules that any real estate fees or commissions not be cut lower than what is stated in the Listing Agreement, so long as they are 6% or less.  Neither the buyer nor the seller can profit from the transaction in any way - the seller has to walk out neutral.  The buyer, if a licensed Real Estate Professional, cannot receive any commission payout at closing, or subsequently.

Foreclosure may be initiated, but not completed, during the Short Sale Process.

Any pitfalls?

Perhaps . . . several!

The program is strictly voluntary for lenders, but will be required of any lender participating in the Home Affordable Mortgage Program no later than April 5, 2010.

Some fear that secondary lien holders may play hardball and not accept the usually-reduced settlement amount offered by the primary lender.  Even with the Fed $3,000 incentive to secondary lien holders, many stand to lose thousands of dollars should the short sale be successfully negotiated.

And, finally, it is unclear how this program will actually work in practice.  The Home Affordable Mortgage Program itself, begun early in 2009, has only gotten a small number of qualified, distressed borrowers through the application process for Mortgage Loan Modification.

The question remains - is the new HAFA Program really Short Sale Process Reform?  Or, just more lip service and opportunity for a sound bite or two around Washington?

Time will tell - but at least it represents a step in the right direction!

Please read our post via BlogChicagoHomes.com.

DEAN & DEAN'S TEAM CHICAGO

There are some terms that we toss around in the real estate industry as if people knew what we were talking about...  Absorption Rate is one of those terms. 

It isn't complicated, but if you are unfamiliar with the term, if can be confusing.  And unlike "Bacon Double Cheeseburger", it isn't really self explanatory. 

What is Absorption Rate?

There are a couple of components to Absorption Rates. 

• Inventory Level
• Sales Pace over a specified time period
• How long the inventory would take to be "used up" at the current level and pace...

That is it in a nutshell.  But, let's look at a few examples, as well as some caveats.  By the way, this isn't just for real estate, but can apply to anything that might be considered a commodity... 

Let's say that your family eats frozen pizza twice a week, and you have 6 Digiorno's Pizzas in the freezer.  If you don't go to the store to pick up more, and you continue eating them at the same pace, you have a three week supply of frozen pizza. 

Obviously there are a couple of ways that you can alter that situation. 

• You can start with more pizza
• You can alter how often the family eats pizza

Now, maybe you buy your pizzas at Costco, and go there once a month...  Even though you have 6 pizzas in the freezer, if you aren't going to be going there for another month, you might want to pick up a few more.  If you buy 3 more pizzas, you will have a 4 1/2 week supply, which will carry you through another month. 

About that "Specified Time Period"

In order to quantify sales or usage pace, we need to look at a period of time.  Back to our pizza... 

With Thanksgiving happening recently, the fridge is full of turkey, so maybe in the last week we haven't had any pizza...  But, things were really busy before that, so we had 3 pizzas in 6 days.  So, if we look at just the last week, we had 0 pizza... theoretically, 6 pizzas would last forever.  That can't be right.

So, we look at a longer time period.  Over two weeks we had 3 pizzas... 1.5/week.  That means that the 6 pizzas would last 4 weeks. 

But wait...  If we look at the last 4 weeks we had 8 pizzas... that is where we came up with the 2/week consumption level.

 

How about in Housing?

The generally accepted number in housing for inventory level is 6 months.  That means that is 100 homes are selling each month in a given area, then having around 600 homes on the market would be fairly balanced. 

If there are only 200 homes on the market, sellers have the upper hand.  Basically, supply is smaller than the demand.  That is referred to as a seller's market.  Sellers have their pick of buyers, can push up their prices and be less willing to offer incentives. 

If there are 1200 homes on the market, buyers have the upper hand.  Now the supply is outstripping demand.  That would be the classic definition of a buyer's market.  In this case, buyers can make more demands of sellers and prices are generally pushed down. 

Careful though...

Right now in Gwinnett County Georgia there are several markets happening all at once.  I compile sales data for a variety of markets and micro-markets and see conflicting data... 

• In Gwinnett County, overall we have about an 8.6 month supply of homes. 
  
• In Duluth, for homes under $200,000, the supply is about 6.1 months. 
  
• In Suwanee, for homes under $200,000, the supply is only 4.6 months.
• Also in Suwanee, for homes over $1,000,000, the supply is 45 months. 
  
• (please note, these are all using a 6 month sales average)

A little more about time frames...

Generally, in real estate we use 3 month, 6 month and 12 month averages.  To arrive at these, we look at sales data for the time period (3, 6 or 12 months), divide it out monthly, and then divide that into the number of available homes in that market. 

The fun pat is that we can glean additional information by comparing these three numbers.  Let's go back to Suwanee... 

• The 12 month Absorption Rate for homes under $200,000 is 5.2 months of inventory...
• The 6 month Absorption Rate for homes under $200,000 is 4.6 months of inventory...
• The 3 month Absorption Rate for homes under $200,000 is 4.3 months of inventory... (note, the November sales data isn't yet complete, and this number is actually going to get better...)

Comparing these numbers tells me that that sales in this segment were actually accellerating.  As we got more recent, the average sales per month increased.  Of course there are a few things to keep in mind...

Limitations and other notes...

To start with there is "seasonality".  This means that there is an expected change in the pace of sales because of the time of the year.  Here in the Atlanta area, sales generally pick up in the late spring and early summer.  They also tend to fall off of a cliff in January.  So, just because we see an accelleration doesn't mean that it isn't natural. 

The next thing we have to consider is "outside influence".  Right now, that would be the First Time Home Buyer Tax Credit.  It was originally slated to expire at the end of November.  So... there was a rush to get under contract in October.  And a rush of closings in November.  We'll have to see if the pace holds... 

Which brings us to the next point...  We can't predict the future.  We can look at the past and we can theorize about how outside influences are going to alter future trends.  But that is it.  How many times has the NAR said that "Now is the time to buy" or that they "see growth moving forward"?  Obviously over the last couple of years, they were WAY wrong.  I have made my share of mistakes.  Sometimes it is because we make wrong assumptions, and in other cases, things change...  Maybe the government changes FHA qualifications...  Perhaps there is a new tax credit...  A large employer could relocate... 

 

I hope this helps you understand the real estate (and other) markets a little better.  Market reports are often dry and full of stats, but understanding them can be a great way to understand why the market is moving.  Understanding why helps you better understand what you should do.

 

from LaneBailey.com

Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2009 Lane Bailey. 

I'd love to hear from you...

Who hasn't heard that age old putdown:  Real Estate Agents are akin to Used Car Salespeople?

Well, today . . . I heard something that may DISPEL that myth.

I had been consulting with buyers for about an hour when I was told: 

We wish we had an agent representing us when we bought our car!

Apparently, they got hosed!

Hmmm . . . got me thinking.

• Car salespeople can work AGAINST you to get the dealership THEIR price.  They go into the "back room" to talk to the manager to see if they can shake down your offer.  When you have a real estate agent working for you, and your best interests you DO have someone NEGOTIATING for you!
• There is no "right to revoke" after you've made an offer on a car, exchanged your deposits and got financing in place.
• You don't have a right TO HAVE YOUR CAR INSPECTED!
• You can't negotiate on repairs.
• You don't have an "appraisal" done on the vehicle's VALUE (checking the Blue Book doesn't count!)
• No one is going to take your around to "test drive" 30 vehicles.
• The car dealership isn't going to make buyer concessions
• The contract is a heck of a lot more "fine print" then a real estate contract

The ONLY similarity I see between the two professions is this: 

We both hand over a set of keys.

 

 

 

 -----------------------------------------------------------

~ Representing Buyers Since 1999 ~

Carla Muss-Jacobs, ABR, CEBA, e-PRO, Realtor®

Principal Broker/Owner
EBAPortland, LLC
YOUR Exclusive Buyer's Agent

CHECK OUT www.EBAPortland.com for Home Buyer TIPS! 

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