Many Home Builders Make an Exception to the First-Time Registration Policy Jan. 18th 2019
Just about all homebuilders have the same registration policy, that generally speaking says this: “If you do not introduce your prospect on their first visit you will not be paid if you accompany them on their second visit and they purchase a new home.” This outdated policy, in most cases, is a myth.To confirm what we are discussing call a local builder or send them a link and ask them what they think. Realtors lose thousands of dollars every day because they don’t know what to do or say when confronted with this policy. There is a common but little-known exception to this policy under one condition. Call first. A simple phone call to the builder’s sales office can result in thousands of dollars in your pocket. Case study: Prospect Watson tells Realtor Smith that he has visited a new home and liked it. “While we are looking at resales today, may we stop by the builders’ subdivision? I would like to take another look at one of their models, which i really liked. Realtor Smith took Watson back to see the builder but did not call first. They walked in unexpectedly. When the onsite agent saw Watson, he called him by name; then privately reminded Realtor Smith that he would not be paid a commission if Watson purchases, because Realtor Smith did not register Watson before Watson visited the first time. Watson bought the builders' home, and as promised according to the builder’s policy, Realtor Smith did not get paid. Smith was livid and swore he would never take another prospect back to that builder’s homes. However, Smith was wrong. Unfortunately, he did not know or forgot to call first. Remember this: If you walk unannounced, you lose control. If you call first, you are in control of a hot prospect for that builder’s home. Builders know this. What is the one thing that builders do not want you to do? Show this prospect another home, especially another new home. Had Realtor Smith called first, and asked the onsite consultant about the commission, he would have heard “Bring your prospect back. We will protect your commission.” Knowing what to do and doing it, in this case, would have put about $12,000 in Realtor Smith's pocket. Here is a suggested script when you are working with a prospect who has already visited a builder and wants to return for a second look. “Hi Builder Jones, this is Realtor Smith. I have a prospect sitting in my office, who visited your sales office yesterday and liked the Palm model. His name is Watson. He really likes that model and wants to see it again today. .I was wondering what your commission policy is regarding a second visit. “My problem is this: I know you have a “first-time registration’ policy. I'm sure you run into this situation before. What is your commission policy in a case like this.” Here is what the builder or onsite consultant will say,95% of the time. “Bring Watson back today. We will protect your commission.” Try it. Thousands of dollars are there for the asking.
Support Animals for the Disabled - Do's and Don'ts for Landlords Jan. 18th 2019
Disabled persons are permitted to be assisted by support animals on both residential and commercial rental properties, notwithstanding a landlord's rules to the contrary. Federal, as well as California laws, provide for such assistance. The intent is not to give disabled persons more rights than others, but to allow them to enjoy equal opportunities and equal access. A Broad Definition In order to qualify to have a support animal, the person requesting it must fit within the definition of "disabled." In California, the definition is quite broad. It includes physical or mental impairments or medical conditions which limit a major life activity or a record of disability or being regarded as being disabled. Although one qualifies as disabled, there are still some restrictions on the use of a support animal. The use of the animal must be related to the disability and necessary because of the disability. This exception to the rules (or "disability accommodation") must be reasonable under the circumstances. Residential Property Request. A housing provider may not inquire as to whether a person is disabled and needs special assistance (such as the use of a support animal) unless the housing provider is operating under a federally-subsidized housing program specifically for the disabled, which requires proof of disability to qualify for the program. After qualification, the procedure does not vary between subsidized and non-subsidized properties. All rentals are subject to HUD/DOJ guidelines. Those guidelines changed on May 17, 2004. Now, although the preference is to have the resident put the request in writing, the new guidelines indicate that the landlord may not refuse a request if the resident does not wish to put it in writing. In that event, we recommend that the landlord document the request and attempt to get the resident to sign or initial that the writing is a correct statement of what they want. If the resident refuses to sign or initial, it would be wise to make a notation to that effect on the request. Verification. Under the new HUD/DOJ guidelines, no verification is necessary if: • the disability; • the relationship of the request to the disability and; • the need for the request is apparent. For instance, if a person is obviously blind and wants to have a seeing-eye dog, in violation of a no-pet policy, the landlord would not need documentation to prove that it was reasonable to allow the animal. If any of the three issues above are not apparent, the landlord can, and should, ask for written verification. If an accommodation is allowed without sufficient verification for some and not others, the landlord could be accused of differential treatment. Verifiers. The new guidelines also expanded the acceptable sources of verification. A resident may now verify from: • a doctor or health care professional; • a peer support group (there is no definition, but we think it is reasonable to think that it may mean Alcoholics Anonymous or similar organizations); • a non-medical service agency (perhaps a group like the M.S. Society); • a reliable third party (it is our opinion that this person's testimony should be sufficiently persuasive to hold up in court); "self-verification" (it is likely that providing something such as written proof of receipt of Social Security Disability Income would suffice). Reasonableness. Once the verification is accomplished, the landlord should determine if the request constitutes a "reasonable accommodation." Reasonableness is determined by balancing the interests of the parties. How would denial of the request affect the resident v. how would approval of request affect the landlord? The landlord is not required to allow something that would create an undue burden or interfere with the nature of the operation of the business. Most requests for animals are deemed to be reasonable, notwithstanding a "no-pet" policy. Even if a landlord allows pets, the policies established for regulating pets do not apply to support animals: • Don't require that the animal is trained. Although California's Unruh Act requires that business owners allow only animals which are trained, case law has included animals that provide emotional support as "companion animals" based on mental disability. • Don't charge a pet deposit or any additional deposit because of the animal. If the animal damages the premises, the damage costs can be deducted from the ordinary deposit, as with any other damage expenses. • Don't apply size, breed or quantity restrictions as you do with pets. Approval or denial should be based on whether having the animal(s) on-site is reasonable. A support elephant or rattlesnake would not be reasonable, but many unusual animals could be. Monkeys have been trained to perform tasks for the physically disabled. Pit bulls or Rottweilers (who are statistically more likely to bite) are often used as companion animals. • Don't require compliance with pet rules, because a support animal is not a pet. However, landlords should be able to establish reasonable rules of conduct for support animals (which should not be more stringent than the property's pet rules). • Note that certified trainers of service animals for the physically disabled are entitled to the same rights about the animal they are training as disabled persons would be. Have written policies in place, and document interactions with residents to reduce the chance of a lawsuit based on failure to accommodate. Our firm has drafted forms for disability accommodation policies and procedures, including a lease addendum for animals, which sets out rules of conduct and requires the resident to warrant that their animal is not dangerous. Guests may bring support animals when they visit residents. If the disability, relation, and need are not apparent, it is a challenge to try to get proof that the animal is a support animal when it is there on a temporary basis. Unless the guest is on-site very often or for long periods of time, it may not be productive to try to address the issue. Management should focus on conduct instead. Commercial Property Commercial properties have fewer specific regulations on the issue of animals. The Americans with Disabilities Act (ADA) addresses areas to which the public is invited, and California's Unruh Act (Civil Code section 51 and following) addresses places that conduct "business" in the state. If you wish to read the text of the relevant laws, you can access them through a link to the Kimball, Tirey &St. John website listed below. In spite of the fact that there is not as much detail available in the codes, it is clear that tenants of commercial property and members of the public who visit the properties are allowed to be accompanied by support animals. Just as with guests in residential property, the landlord does not have much ability to control visitors to the commercial property who claim that the animal they bring on-site is allowed as a support animal. The issues that would be worth addressing would likely relate to conduct of the animal. With regard to tenants or employees of tenants, however, the landlord may reasonably exert some control. If a landlord wishes to establish rules which may be enforceable about the presence of animals, the rules should be in writing and should be part of the lease or addendum. If tenants or employees indicate that they are entitled to an exception to the rules based on disability, it is not clear that the procedure used in fair housing laws applies. Nevertheless, a landlord may be able to make a logical argument that to qualify for an exception, the tenant or employee should verify the right to the exception and, if that is so, the procedure used could resemble the one used for residents in rental housing. Conclusion Disability is the most common basis for discrimination complaints in California housing. ADA and Unruh Act violations are common claims made by visitors or tenants in commercial properties. These lawsuits are very time-consuming and expensive. If management personnel encounter a fact situation that could raise such issues, it would be wise to seek the advice of a supervisor and/or an attorney before taking action (or failing to take action)!
Top 8 Estate Planning Mistakes Jan. 17th 2019
Perhaps you have heard the expression: “If you fail to plan then you plan to fail.” This statement was never truer than for estate planning. By some accounts, 70% of adult Americans have no will or trust in place for their loved ones. Furthermore, others who initially did prepare an estate plan have failed to update it in light of changing circumstances in their lives. With this backdrop, I wanted to summarize what I have seen over the years as the most common estate planning mistakes that people make. 1. FAILURE TO PRESERVE YOUR INHERITANCE FOR YOUR GRANDCHILDREN SHOULD YOUR SON/DAUGHTER DIE AND THEIR SURVIVING SPOUSE REMARRY. You need to take steps in drafting your estate plan to assure that your assets are distributed to your grandchildren should your son/daughter die and not left to your daughter-in-law/son-in-law who could eventually remarry and end up using your inheritance with the new wife/husband and his/her step kids – all of home have no familial relationship to you. 2. FAILURE TO AVOID A GUARDIANSHIP PROCEEDING FOR YOUR CHILDREN. If you have children, have you considered who would raise them if for some reason you or their other parent couldn’t. While this is not an easy subject to contemplate, having a guardian arrangement spelled out as part of your estate plan will ensure they will be properly cared for by someone you trust and have chosen. A legal guardian is a person who is given the legal authority and responsibility to take care of your children’s needs, such as providing food, education, medical care, dental care and shelter. If you have minor children it is imperative to have a plan in place to protect them in the event you cannot. 3. FALL OUT FROM REFINANCINGS AND THE FAILURE TO PUT YOUR REAL PROPERTY BACK IN AN EXISTING TRUST. Did you know that most home refinancings require that your home be transferred out of a living trust back to your own name(s), at least until after the new lender has recorded its new mortgage or deed of trust on the property? The problem is that is most cases, no one ever thinks to transfer your real property back into the trust. This failure can result in an unforeseen probate of your home at the death of the second spouse. 4. FAILURE TO ENSURE THAT YOUR ASSETS ARE DISTRIBUTED THE WAY YOUR WANT AND NOT PURSUANT TO THE GOVERNMENT’S DEFAULT PLAN FOR YOU. Everyone has an estate plan. It is either the one we have created or the default so-called Plan B of the state in which we live. In our experience, it is very unlikely that a state’s default plan is what clients would really want. State laws vary, but generally they have it set for the assets go outright to the closest family members. Whom a state considers to be “closest” can be complicated in nonnuclear families. Nonfamily members, like an unmarried partner, will not receive any of the assets. This failure to act could cause family member fights over their inheritance. 5. HAVING ONLY A WILL OFTEN LEADS TO THE NEED FOR PROBATE. Having only a will is a just ticket to participate in the dreaded probate process costing your family time and money. Additionally, for those who don’t have a will, their assets will probably have to go through the intestate (“no will”) proceeding. Either of these scenarios will require that your assets go through probate before they can be fully distributed to the heirs. Probate proceedings vary from state to state, but many view the time, cost, and loss of privacy and control that come with probate as unnecessary evils which can – and should be – avoided. 6. AN OLDER PERSON HOLDING TITLE TO THEIR REAL ESTATE IN JOINT TENANCY WITH A CHILD OR GRANDCHILD. Many older people add an adult child (or grandchild) to the title of their assets (especially their home) as a joint owner in order to avoid probate. However, this type of property can create all kinds of problems, including: * When a joint owner is added, the original owner loses control: * Jointly owned assets are exposed to the joint owner’s possible misuse of them; * Part of these assets could be lost to the joint owner’s creditors; * The assets could become part of a joint owner’s divorce proceedings. 7. FAILURE TO PROTECT FAMILY MEMBERS WITH DRUG ALCOHOL, GAMBLING ISSUES. Many parents with a trust fear that an inheritance left to a child may be lost because of poor money handling skills or a drug, alcohol or gambling addiction of their children. With a living trust, you can instruct the successor trustee to retain person’s inheritance in trust and instruct the trustee to make payments, as needed, directly to third parties for rent, insurance, car payments, etc. to keep it out of their hands. 8. FAILURE TO HAVE POWERS OF ATTORNEY FOR UNMARRIED ADULT CHILDREN. Let’s say you have a college student or a young adult over 18 who is unmarried. Theyâ€Żare no longer minors that you have the legal authority to make decisions for. The law now classifies them as adults with the legal right to privacy. If they have not prepared a Power of Attorney (“POA”), certain problems could now arise with matters such as: 1. Driver’s license or vehicle registration renewals 2. Registration/admission for college 3. Tax return filing 4. Banking transactions 5. Ongoing legal matters (e.g., pending lawsuit from that fender-bender a few months back or speaking with child’s landlord) 6. Jury duty summons 7. Passport renewal Many estate planners urge clients to prod their adult children to draft POA on or around their 18th birthdays. So don’t forget a POA and make it one of the most important things on your to-do list. SUMMARY A will or trust is not a static instrument. To serve its purposes, it must keep current with life changes, including an individual’s financial circumstances, and with some external factors, such as tax laws. With the help of a professional, you should periodically review your will, staying alert to new or different circumstances that might call for updates. Let us help you have the peace of mind you deserve! Contact our office for a free analysis of your situation and receive a FREE estate planning session (valued at $750.00) consultation or a trust review if you already have a trust to make sure it is current. Contact Mark Klein at firstname.lastname@example.org or (949) 453-7979 call to schedule an appointment.
3 Signs Your Agent Deserves to be Trusted Jan. 17th 2019
Risk aversion stops many good things from happening when it is supposed to stop bad things. Natural fear in taking action or making a decision is meant to preserve our health, property, and way of life, but it can do the opposite. For some real estate buyers and sellers, any change or decision is seen as risk to be avoided. Even those less afraid of risk or more confident about decision making usually rely on relevant information and expertise they can trust before they act or make a choice. Since it is the person delivering information who usually imparts "trust-ability" to facts and choices, your ability to read the "trust-worthiness" of real estate professionals you intend to rely on when selling or buying will affect the decisions you make and don't make. In this column, we're not discussing cheats or crooks who are out to deliberately commit fraud or worse. That's a discussion I've had with you many times before including this earlier column: "Silent Crime Against Homeowners: Mortgage Fraud." That said, remember that professionals with the best of intentions but without up-to-date knowledge or skills can pose risks for sellers and buyers. Without trusted input, individuals and couples can second guess themselves when buying or selling, vacillating on whether to stick with their decision or not. For instance, "buyer's remorse" is a risk-averse response attached to purchases of anything linked to dramatic or expensive change like real estate. Trust grounded in the value of the purchase and the soundness of the buying decision reduces risk aversion, and lessens or eliminates second guessing. This trust usually arises out of the relationship with the real estate professional, not the real estate itself. How can I be sure my real estate professional deserves to be trusted? Here are three signs to look for: #1. Encouragement: The correct answer to the question above is, "you can't always be sure about others." Instead, it's yourself who you must trust. A real estate professional who is intent on increasing your knowledge of how the sales process influences outcomes is also determined to build your confidence in your decision making. At the same time, your skepticism will be encouraged by welcoming your questions and contributions. As you gain confidence in your understanding of buying or selling real estate, you'll realize how and when to trust yourself and the real estate professional and brokerage you've chosen to rely on. #2. Clarification: Trust in the face of certainty is an achievement, however, trust in the face of uncertainty is an art. When a knowledgeable real estate professional delivers services, or explains properties or advice, they also clarify what they expect to receive from buyers or sellers who give their trust to the professional. In other words, during the uncertainty of the adventure into real estate, buyers and sellers are told how they can act in their own best interest to facilitate good outcomes from their real estate transaction. Trust takes the form of clarifying wants and needs, confirming budget limitations, and finalizing key decision criteria like location and price range. When a real estate professional is unclear or unspecific about what buyers and sellers can expect during the transaction, trust can be replaced by confusion and frustration. If you find these are common reactions when dealing with your real estate professional, why would they deserve to be trusted? Search out that real estate professional who is clear how to make real estate's inherent uncertainty manageable from your point of view. #3. Reliablity: What is said, written, texted, posted…matters, but how professionals act on what they communicate matters more. When a professional's interest in you is genuine, this concern is visible in every facet of the work carried out for and with you. Your interests should always be transparently and prominently placed above the professional's according to the Agency Law and fiduciary agreements that rule real estate. This commitment materializes as services that are relevant to your needs and delivery methods that match your daily patterns. If you live through your smartphone, you'll benefit from working with a professional who is equally connected. If you prefer emails, phone calls, and face-to-face contact, you'd like that preference respected. How does the professional's commitment to you materialize? Does the professional deliver on promises and responsibilities without prompting or excuses? If it's not clear to you how connected you are, perhaps the professional does not deserve your trust. Perception is the reality in earning trust and loyalty. Your definition of trust, and the professional's, need to be aligned. Should trusting include you questioning the professional, or is unquestioning acceptance demanded by the professional? Is their reaction defensive or offensive if their knowledge or skill is challenged? Do you understand exactly what the professional expects from you and from themselves as your relationship progresses? From the start, you deserve to understand what "trust" will mean to both of you, and to your real estate outcome. Trust yourself to be sure about this. Source: "What's Your Point?" (CatapultPublishing.com)
You Can Keep Your KonMari Method: Why 'Tidying Up with Marie Kondo' Is Not for Me Jan. 16th 2019
I have something to admit: I am an HGTV junkie. To be clear, I’m using “HGTV” here in the same way one might use “Kleenex” in place of “tissue” because I’m pretty much obsessed with design shows and the like, regardless of the network. So, with a natural curiosity and, really, as a bow to societal pressure, I started watching Tidying Up with Marie Kondo this week...and, well, I’ve got thoughts. If you haven’t caught the show and you aren’t familiar with its namesake star or her famed KonMari Method, let me give you a quickie overview, courtesy of Netflix: “In a series of inspiring home makeovers, world-renowned tidying expert Marie Kondo helps clients clear out the clutter—and choose joy.” Yes, “choose joy.” Kondo’s shtick—and I only use shtick for lack of a better word because joy does, actually, seem to emanate from her—is that having too much stuff can steal that joy. And each item you keep in your home should spark joy, not take away from it. Bring on the joyous decluttering. But not exactly the joyous watching. Yes, America is having quite a love affair with Marie Kondo, and I guess I sorta get it. I see how her tips could be transformative, if you're open to them. (Frankly, I’m not. A few minutes into episode No. 1, I had to fight the urge to go throw some [more] clothes on the floor instead of thanking each item individually as I was choosing to get rid of it, as is her recommended process.) But here’s my bigger concern: These families on her show have issues. Not any more or bigger issues than other typical American families, but issues that definitely peek through the cracks of a crammed closet. I mean, I’m a believer that a pretty house can solve a lot of life’s problems, but to think that tidying up can fix your family is a little much, no? Let’s take Kevin and Rachel Friend (and their two uber-adorable kids), the family from the first episode. He’s busy and overworked and craves/expects a perfectly kept home. She’s admittedly sloppy and overwhelmed and home with the two kids most of the day plus working part-time. Clutter is clearly affecting their relationship, but anyone who took one pysch class in college can see that it’s really just a symptom of a larger marital problem. When it was all wrapped up in a Marie Kondo-approved bow at the end of the episode, I wasn’t even a little convinced that the family had permanently changed, or that they had healed, just because the bottles and plastic wear were nicely tucked away and the t-shirts were all folded in Kondo fashion in a drawer (a process I’m finding super irritating since it will clearly only work for those who are painting the rainbow with their tees and not housing 75 similar shirts in shades of gray and black, BTW). Please, Netflix. Commission a follow-up show ASAP. I need to see these people in one, three, and six months. And they need to be surprise visits. There, season two is all planned out. Even better, make season some kind of collab between Kondo and a marriage counselor. In the beginning of episode two, Wendy Akiyama basically explains how, now that she and husband Ron are empty nesters, it’s a great time to tackle the house since there’s no pressure to actually participate in their relationship. It was heartbreaking. She later announced, after going through the tidying up process, that her “retail therapy” was a way to hit her husband “where it hurts.” Ouch, but points for the self-realization. I really hope Netflix left them with a resource to talk through some of their issues—together. Perhaps Ron will tell the truth about how he really feels about paring his baseball card collection down, because no one who watched that believes he loves 10 cards just as much as he loved 1,000. I have to admit this show stressed me out, and not just because the Akiyama house was closing in on some Hoarders-level stuff. I mean, they got rid of 150 BAGS OF TRASH. ONE HUNDRED AND FIFTY! It was all just starting to feel like The Biggest Loser, Dysfunctional Family with Household Clutter Edition. Sure, you can lose the weight/clear the clutter, but what happens if you don’t get to the reasons behind it? Two and one-half episodes in, I’m done. And, I’m still more comfortable with my everyday mess than the idea of militant tidying. Plus, I feel like clutter-clearing should exist on some kind of a sliding scale according to the size of your space. I have a huge master closet and, frankly, it sparks panic for me to think about having to clean it out. Plus, I saw something recently that said that messy people are smarter, and, you know what: That definitely sparks joy.
3 Percent Down? Jan. 16th 2019
Government-backed mortgage loans, VA, FHA and USDA, require little to no down payment. FHA loans ask for a down payment of at least 3.5 percent of the sales price while the other two don’t require any down payment whatsoever. But did you know there are conventional loans that also accept a down payment of just 3.0 percent? There are three such programs, Fannie Mae’s Home Ready, Freddie Mac’s Home Possible and the Conventional 97, another Fannie entry. But the Conventional 97 comes with fewer strings attached. Home Ready is a program designed for first time buyers and asks for a 3 percent down payment. The program was designed to help underserved areas and geared toward low to moderate income buyers. The property must be owner occupied and there are income limitations for the borrowers. Borrowers cannot make more than 100 percent of the median income for the area. In certain areas designated as high-minority, there is also an income limit at 100 percent of median income. Home Possible is Freddie Mac’s entry and has similar restrictions regarding income and location. Because of the income limitations and areas served, there will be limits regarding the final loan amount. Buyers must not have owned a home within the previous three years. For both programs, borrowers must take a Home Buyer Education Course from an approved provider. The lender has a list of such agencies that help consumers get into their first home. The other player in this mortgage world is the Conventional 97. This program also requires just a 3 percent down payment but there are no restrictions regarding loan limits. Instead, the only limit is the one all conforming loans have which is $484,350 in most parts of the country. Like the others, the property must be for a primary residence and the Conventional 97 cannot be used to finance a rental or investment property. This program has been around for several years but appears to be catching on. The Conventional 97 can be compared to an FHA loan, the primary difference being the 3 percent needed for the conventional loan and 3.5 for the FHA. FHA loans also have a county-by-county loan limit as well, but they’re going to be higher compared to Home Ready and Home Possible. For most parts of the country, the maximum FHA loan for 2019 is $389,350. All of these low down payment options will require some form of mortgage insurance and some premiums are higher than others. But if you or someone you know is looking for a low down payment loan program, take a look at the Conventional 97 while comparing options.
What You Don’t Know About Real Estate Could Cost You Jan. 15th 2019
What you don’t know about real estate, real estate professionals do. PJ Wade identifies significant knowledge gaps for buyers and sellers and reveals how professionals fill those gaps—when asked. It’s what you don’t know about real estate that could cost you when buying or selling. • First-time buyers usually haven’t seen enough houses or condominium units to fully understand where real estate value lies. They may not have been caretaker of a house and, therefore, don’t notice subtle signs of damage, sloppy construction, poor maintenance, or worn-out elements. Those who have visited friends’ houses will rarely have toured the properties with an eye to determining value. First-time-buyer naivety is often preyed on with the latest buzz words, staging, hot shiny appliances, and a coat of fresh paint. • First-time-in-a-longtime buyers may not realize that they are out of touch with advances in materials, modern design approaches, or evolving lifestyle essentials. This can lead them to under- or over-value new houses or condominium units. For example, quartz kitchen counters have gained popularity over marble and granite for several reasons. Open-concept design is preferred by those with small children or those who live to entertain, but not by those who are untidy, relish quiet spaces, or are energy conscious. Residential elevators are increasingly common features in multi-story and age-in-place homes, but they may seem out of place to those not in touch with housing trends. Misevaluation of factors like these may mean missed real estate opportunity. • First-time sellers who base resale value on their total cost of acquiring and maintaining real estate ownership, plus expected profit, have missed the point. Emotions, including pride of ownership, can get in the way and prove expensive. Sellers may believe that their cost of buying and transforming the property into their home, plus money spent on maintenance and upgrades, plus profit and the cost of selling, including commission, add up to their actual “bottom line” for resale value. Problems arise for sellers when this must-have sale price is not in line with market value, which is value determined by the real estate market - current buyers and previous sales. When the seller expects more than market value, this “over-priced listing” may take longer to sell, may eventually sell for less, or may fail to find a buyer. First-time sellers may lack experience evaluating how their property compares with local property values and appraising their property from the perspective of current active buyers. Value determination and marketing - or communicating action-enticing value to potential buyers - represent two different professional real estate selling-skill sets, neither of which are usually possessed by sellers. • Empty-nester and downsizing sellers may decide, in theory, that smaller and cheaper are the characteristics they desire in their next property, but some discover it’s a different story in practice. When faced with the actual move to a smaller house in a cheaper location, they may find the mental leap too great. Downsizing is often wrongly considered merely moving into a smaller property. In reality, this less-space move usually involves adopting a different lifestyle, living in a different neighborhood, adjusting to different status, dealing with different interior finishes, and the list can go on. Many faced with wanting a change find they lack the real estate knowledge and planning expertise to make the shift gracefully acceptable and financially successfully. • Newbie real estate investors may believe that crunching numbers to determine how much profit they want and what it will cost to achieve this profit is all it takes. Creating an offer to purchase, which entices a property owner to sell for the buyer’s desired price, requires special professional expertise. Then, offering the property for profit-generating rent that will attract qualified prospective renters involves a different set of professional skills. Many new investors possess neither skill set, which are both common in real estate professionals. The emotional element regarding what sellers will sell for and what renters will pay to live in the resulting investment property can influence financial gain and bottom-line projections. Skill and experience is essential to investors taking all this into account to create profit. What you don’t know about property ownership and real estate transactions can cost you when buying or selling, wherever you fit in on the list of buyers and sellers above. Do you have experience with contracts, financing, interior design, renovation, conflict resolution…? Then, there’s marketing - both using it to persuade others and personally fending off its effects when you’re making decisions. What you don’t know about real estate, real estate professionals do. They are committed to studying and keeping up to date on what matters. Most have spent years on the job perfecting their expertise and learning local markets. Would you surgically operate on yourself or drill your own teeth? It’s that extreme an issue when you don’t engage available professional skill and knowledge to work for and with you. Concentrate on learning what the right real estate professional can help you achieve. Not the least of which is discovering what you don’t know about buying and selling. When you think, my goal is “buy my dream home” or “sell at my dream price,” understand what will have to happen and what you must do to achieve the desired outcome. If you don’t know where to start, no problem. Real estate professionals are trained to know what needs to be done for prospects and clients every day, every offer, every transaction…. Do you know what you’ll gain with professional help? How determined are you to achieve real estate goals and exceed your expectations, as quickly and hassle-free as possible? To continue learning about buying and selling real estate, checkout more Realty Times articles by PJ Wade The Catalyst: • 4 "Big Regrets" to Avoid When Buying a Home • Trends Cost Sellers Money• Ready to Talk About Real Estate?
5 Reasons to Buy a Fixer-Upper Instead of a Perfect Place Jan. 15th 2019
“Location, location, location” is the mantra when it comes to where to buy a home. But when it comes to what to buy, it gets a little more complicated. There is definitely a contingent who would insist that you would buy the best home you can afford. But while there is something to be said for buying a move-in ready home, a place that needs a little love can be downright irresistible. You don't have to go all Chip and Joanna here, but buying a fixer-upper makes sense for so many reasons .It costs less “Fixer-uppers list for an average of 8% below market value,” said LearnVest. If you’re on a budget or are being priced out in your market, this is a way to get a literal foot in the door. How much depends greatly on the location. “Fixer-uppers in Phoenix have the smallest cash discount, saving buyers just $1,000 off list price. But you can save a lot of money in expensive markets like San Francisco, where fixer-uppers are discounted an average of 10%—giving homebuyers $54,000 in upfront savings for renovations on the median home.” You may be able to finance your renovation One of the major drawbacks of buying a home that needs to be fixed up is having to come up with the cash—especially after you’ve just put so much money into your down payment and closing costs. There are a few different types of loans that package the mortgage with funds for renovations, and they often come as a surprise to buyers who have only focused on FHA and 30-year conventional loans. “Whether you need a new roof or your kitchen is outdated, there is a mortgage that’s right for your fixer-upper,” said Bankrate. Fannie Mae’s HomeStyle loan and FHA’s 203(k) loan both bundle a mortgage and funds for renovations. They each require a minimum credit score of 620. You’ll need at least 5% down payment for HomeStyle and just 3.5% for the 203(k). It gives you the opportunity to build value With an already-updated home, “If a seller has redecorated or improved the whole place, that seller is reaping the benefit,” said Forbes. “If the home's value has been raised, the buyer is paying for it. Also, consider this reality: A seller who re-does a whole house in order to sell is not likely putting in the highest-quality materials. They're cutting costs to maximize profit. But if you buy a fixer-upper, you might be able to secure an undervalued property, improve it and get the benefit of the extra equity. It's a core real estate concept. If you can find the right property, this could mean thousands of dollars almost immediately.” You can do renovations over time There may be a few things you can’t live with in a fixer-upper, like the grungy carpet and cruddy plumbing fixtures, but no one (other than design shows) says your place has to be perfect the day you move in. Taking your time to make updates as you’re able gives you the opportunity to save money and recover from all the expenses of buying the home and moving in. It allows you to put your stamp on it When you buy a home that was lived in and fixed up by someone else, it reflects their taste and style—or at least the taste and style they think will help the house sell faster. If you buy a house with the intention of fixing it up, you get to update and upgrade it to your standards, and you have the money to do so. “One of the primary reasons people buy fixer-upper properties is for the opportunity to make the space their own,” said Green Residential. “Instead of purchasing a home in which someone else designed the layout, chose the materials, and dictated where different elements were placed, you can buy a basic structure and then take charge. It’s like building your own home without having to go through the lengthy process of drawing plans and constructing it from the ground up.”
What’s the Real Impact of the Government Shutdown on Real Estate? Jan. 14th 2019
National parks are a mess (literally), air travel is being jeopardized as TSA agents call out sick and air traffic controllers are asked to work for free, and the Panda Cam at the National Zoo is offline (gasp!). But how is the government shutdown impacting the real estate market? It depends which part you’re looking at. “An NAR survey of 2,211 members found 75 percent had no impact to their contract signings or closings. However, 11 percent did report an impact on current clients and 11 percent on potential clients,” said the National Association of Realtors. Among those impacted by the shutdown, 17 percent had a closing delay because of a USDA loan.” The most impacted areas of the market surround: Buyer uncertainty Consumer confidence is always a topic of conversation when it comes to real estate, and with rising interest rates and a roller coaster stock market, a government shutdown only makes the issues that much stickier. According to the NAR study, “The most common impact, at 25 percent, was the buyer decided not to buy due to general economic uncertainty, though they were not a federal government employee.” Loan approvals/Closing delays Whether or not your loan and/or closing is impacted by the government shutdown largely depends on the type of loan you are getting. “If you're getting a Federal Housing Administration or Department of Veterans Affairs loan, it's likely you can expect delays in the underwriting process, and it's possible your closing date will be pushed back as well,” said the Dallas Morning News. HUD has said that while new FHA loans will be endorsed during the shutdown, “Some delays with FHA processing may occur due to short staffing.” In addition, new Home Equity Conversion Mortgages (HECM), more commonly referred to as reverse mortgages, are on hold for now. While the White House has insisted that the Internal Revenue Service (IRS) process tax refunds during the shutdown, it’s made no such mandate in regards to helping consumers who need info because they’re buying a home. That means that buyers won’t be able to requests tax return transcripts, which may be required by lenders, thereby delaying the purchasing process.
Housing Counsel Public Condo Law vs. Private Condo Law Jan. 14th 2019
Question: I am the President of a mid-size condominium in Washington. Our Bylaws specifically prohibit short-term rentals of any kind. The board – and most of our members – agree that cutting out short term rentals and subleases of less than a year helps cut down on the move in and out traffic that creates maintenance distress, having renters that don’t care about the building and administrative tracking of who resides in the building. One of our board members called to my attention that the Council of the District of Columbia recently enacted legislation that will allow – under certain conditions – using an owner’s primary residence for such short term rentals as AirBnb. Our question: are our current Bylaws, rules and regs unlawful in DC? We don’t really want to change this for reasons above, but we certainly want to be compliant with DC law. Answer: First, assuming that the Mayor does not veto the Act, and assuming Congress stays out of the District’s business – the law will take effect October 1, 2019. The simple answer to your question is no, your Bylaws – assuming they are recorded among the District land records – are perfectly legal and enforceable. The community association attorneys here in Washington arrange to have the following language included in the new law: “if the short-term rental is on property within a condominium, cooperative, or homeowner association, (the host shall) provide proof that the ...association permits the operation of a short-term rental..” If the host – the owner who wants to use the unit for short term rentals – finds language in the association’s governing documents prohibiting such rentals – but nevertheless proceeds with such rentals, there are strict civil penalties. For the first violation, $500; $2000 for the second, and $6,000 for the third and revocation of the business license. These are fined levied by the City. Let us assume, however, that such additional language was not included in the new law. If the association’s Bylaws prohibited short-term rentals, that would still be enforceable by the condo board. There is what I call “private zoning vs. public zoning”. Example: DC zoning is commercial, including medical clinics but the condo bylaws specifically disallows such clinics Since the condo bylaws are more restrictive than the public law, it is valid. However, if the zoning is residential, the condo cannot allow commercial use unless the owner obtains a “home occupancy permit” from the District. The condo board can also fine the owner who is violating the By-laws. However, District of Columbia law requires that the owner must first be provided a notice and an opportunity to be heard, before any fine can be imposed. This is not a formal court hearing; it is a meeting between the alleged violator and either the board or a committee appointed by the board. It gives the owner due process rights to try to explain why there was no violation. This same due process opportunity for a hearing is also in the Maryland and Virginia condominium acts. As you can see, it all depends on the zoning laws, the condo law in your jurisdiction, and your governing documents.