Q:  I have a friend who is a Realtor in another state. I am planning to sell my home and am in the market for a local Real Estate agent to help me do this. My out-of-state friend said she could refer an agent to me. She said, after my house sells, she would receive some sort of commission on my home sale because of the referral. Is this true? Is this legal? Will my friend have any involvement in my home sale? If so, what/how? – Melissa

A: Your friend CAN refer an in-state agent to you, and then she can collect a “referral fee” once the house closes – that is legal. Your friend will have no real involvement in your home sale beyond referring you to a local agent. Your local agent will be your primary contact in your home sale, but you can ask your friend for emotional support if you need it.

Leah Hill Pham is a Realtor® with Windermere Wall Street Realty in Seattle, WA.

A: What your friend is suggesting is a very common practice and it’s called a referral fee. Most Realtors welcome a true referral of either buyer or seller clients. I have personally both paid and collected many referral fees.

Does your friend know any of the top listing agents in your area? Or does she have a professional relationship through membership in a organization like the Residential Sales Council of the National Association of Realtors®?

If she has a personal or professional relationship with a Realtor in your area, then she’s probably turning you on to someone that can get the job done. On the other hand if she’s just looking for someone to agree to pay her a cut of their paycheck, you might not end up with the best or brightest.

It’s okay to talk to whoever she refers you to if you want; but for your benefit, I would talk to some other Realtors as well and ask for local recommendations from friends or co-workers that have had a recent, successful transaction with a local Realtor.

Jim Lee is a Realtor with RE/MAX Coast to Coast Properties in Portsmouth, NH. 

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If you’re a seller who is selling a home by short sale and your buyer is an investor, Burlingame, California Realtor® Mary Murphy wants to make sure you know your rights.

“There are special requirements in order to comply with the Home Equity Sales Contracts Act (California Civil Code Sections 1695) but this law applies only if all four of the following conditions have been met:

1) The property is residential one to four units, and

2) The owner currently resides in at least one of those units, and

3) A Notice of Default has been recorded against the property, and

4) The buyer does not intend to live in the property (i.e. the buyer is an investor)

The law requires that a special purchase contract giving the “equity seller” a rescission right and two Notice of Cnacellation forms be used. The agent representing the buyer must complete a statement in writing, under penalty of perjury, that he has a valid current real estate license. Bottom line – make sure you are using an agent who has short sale experiece. A short sale transaction is tricky…”

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Dallas area Realtor® Kevin Rhodes talks about appraisal issues and how they can affect the real estate transaction.

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Charlotte, North Carolina Realtor® Dave diCecco cautions against offering a buyer’s “allowance” in a home listing.

“Too many times I come across listings that have the phrase “seller willing to give X amount in allowance toward (fill in the blank)”. What does that say about your listing?  Are you doing your listing justice by writing that in there?  Is your seller portraying the home in a negative light?

The first thing I think of when I see that is the home needs work. Most times the allowance is designed toward carpet or appliances. However since the seller cannot actually give you money at the closing table, what good does it do to advertise you are willing to give X amount in allowance for floors, paint or appliances?  Why would the seller not just price the home accordingly to the condition of the house and let the buyer decide if the work is worth it or not?

A lot of buyers today are looking for homes that are in move in ready condition. By that, unless the price is below market value they want a home that needs little to no work when they move in. So, the question remains: are you doing your listing justice by writing that in the remarks section? Are buyers automatically bypassing the home?  Most buyers today are asking the seller for concessions on closing costs already; they have saved enough money for the down payment and maybe a little extra for some paint and moving expenses, but do they really have enough money to do the additional updating you are asking for? Probably not.

When you start to write allowance in your remark sections it portrays the home immediately in a negative light.  I talked with a few buyers who looked at homes online with that phrase in it and they said the first thing they thought of was the home was not cared for or was outdated. It could be something simple as not having the time or the money to finish it…yet, it is viewed in a different light among buyers. 

I tend to tell sellers adjust their price according to the condition of the house. Let the buyers make an offer knowing the home needs X amount of updating. What you may think is horrible might be a gem to someone else. You do not know what the buyer’s feelings are going to be when they walk in the house. If it is priced according to the condition and updating inside the house then the house will sell.  Buyers know that  if a home is priced below market value for the neighborhood, there is some work to be done to the house.  But you may never get them in the house to begin with by putting in an allowance for something and keeping your price up to offset the allowance.

Price your home according to the condition of the home and the neighborhood comparables and let the buyer decide if it is something that needs to be done NOW or can wait.

You never know your home may sell sooner than later…”

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Q: If a stove is not attached to the wall or cabinets and can be rolled or pulled out of the cabinetry, is it considered personal property? I know refrigerators are usually personal property. – Roger in Texas

A: In most states, anything that is not nailed down or screwed to a wall is personal property. But to be certain, ask any local Realtor. If the property is listed, the listing may say: “stove does not convey.”

George Szkup is a Realtor®-Broker with Tucson Home Advisor in Tucson, AZ.

A: If a stove is not attached to the floor by a safety bar, then it becomes personal property. You need to check with your local lender to make sure if a stove is required in the appraisal for financing.

Sandy Straley is a Realtor® with Rindlesbach Homes in Salt Lake City, UT.

A: Just like your toaster, blender and a refrigerator that isn’t built-in, a stand-alone stove would be personal property. If you are selling your home, your Realtor should specify in the purchase agreement which items of personal property are included or excluded in the real property sale. This will avoid any misunderstanding when escrow closes and something you thought was included or excluded was not.

Lee Dworshak is a Realtor® with Keller Williams LA Harbor Realty in Rancho Palos Verdes, CA. 

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Q: I’m a 51-year old single woman who has lived in my home for almost 12 years. My home has become hard for me to manage and is falling into disarray. I know if I don’t sell it soon (within the next year or so), and as I’m not getting any younger, it will just continue to be a burden. I want to move to a garden-type home. My current home needs (at a minimum) new carpet, complete interior paint and at least $8,000 worth of work in backyard landscaping (too many trees and too much shade has destroyed my grass). Am I better off doing the work myself before I sell it or offering a $20,000 allowance at closing for the buyer to do the repairs themself? – Anonymous

A: Interesting question and situation; there are two different approaches, as you don’t mention your financial ability to afford the updates/modifications. So I would recommend one of two options. These options are based on a few assumptions: Your home is in a desirable area where properties are selling, your price point is in the “sweet spot” of your market or some other factor makes your home a “must see”; your market is active and properties are selling when priced properly; and you are not “underwater” with your mortgage.

1. If you can afford to do that work I would suggest that you do the work. Most Buyers today have the mentality that they want to do absolutely no work, they just want to move in and enjoy a home. So doing those things, even at a minimal cost, will give you a better pricing position and probably significantly more in an offer than if you took the second option I will propose. Paint color and carpet color are important. Shop around, or ask a Realtor to help you make some of those choices in colors,and look at properties in your area that might help you see what the current market demands.

2. Offer a credit, but be prepared to get low-ball offers. Psychologically in this market people will read your situation as one of desperation and need to sell, which isn’t conducive to getting a good price. It could well be a 10-20 percent difference in final sales price (hard to know without knowing where your market is and what the price is, so the range is given to allow for that lack of information).

My best recommendation to my client would be to go with option 1.

Maya Paveza is a Realtor with Coldwell Banker Preferred in Wilmington, DE.

A: There are several issues that would need answers first. If you know a local Realtor with whom you would like to work, here is how I would ask them to help you at first – have them do a market analysis on what your property is worth if you don’t do any work on it prior to sale, and what it would be worth to paint and carpet prior to sale. Can you afford to paint and carpet prior to putting it on the market? Figure out if it is worth the cost difference and the trouble.

Clean and declutter as much as possible, pack your personal possessions (you are going to be moving) and store them neatly in a basement or garage. How you live in your home and how you market your home are completely different. Are the paint and carpet in bad enough condition that a good cleaning would not brighten them up? People want to buy clean homes, so even if it is not new, it can be clean.

My personal feeling is that an allowance is a detriment to selling a property. If you offer to pay an allowance, not only will the Buyer think that there is something very wrong with the property and not want to even come and see it, but the Seller will pay a lot more in an allowance than what it would actually cost to do the updating themselves. Also, in this market, it is very difficult for the Seller to give the Buyer an allowance, especially of that much money, because of appraisal issues and Lender issues. Too many complications with that alternative.

I would not do $8,000 worth of work to the yard under your circumstances. Everyone wants something different, and you never know what the potential buyer might want, or how they might want it fixed. Again, hire someone to clean it up.

But from your question, it seems to me that you are tired and would like to be done. Depending on your motivation factor, if you wait until the work is done it may never happen, and you will continue to live there. So I would pack and clean and stage it as well as you can, and price it to sell – in essence, giving them the allowance in the pricing of the home. Sometimes it is just better to be done, and I don’t believe that putting all of that money into it would bring you your return on investment. Better to price it in relation to its condition and get on with your life.

Mimi Foster is a Realtor with EPIC Real Estate Group in Colorado Springs, CO. 

A: You would be best to do fresh paint and new carpet, as 95 percent of the buyers can’t visualize how it could look and todays buyers want a home that they can just move in. I would leave the landscaping alone other than raking or cutting the lawn. Doing these things, along with a professorial cleaning of the home, will help you sell your house faster for more money.

Michael Sharp is a Realtor with RE/MAX Results in Plymouth, MN.

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Q: I am selling my home on my own; if a Realtor brings in a buyer, can I set the commission amount or does the Realtor have the right to tell me what amount? – Anonymous



A: As the seller you have the right to offer any sort of payment you want to.
However that doesn’t mean the Realtor bringing a buyer has to accept it. That’s what negotiation is all about. To further muddy the home selling waters, a Realtor that brings you an offer could also have a buyer agency contract with the buyers making the offer that specifies what they have agreed to pay for his or her services. The buyers could then make that Realtor’s fee part of their offer to you and you will then have to make a decision to accept their offer as is or risk losing them by make a counter offer. You could probably end up with more money by having someone on your side, e.g. a knowledgeable Realtor, that understands the ins and outs of home selling as well as negotiation.

Jim Lee is a Realtor with RE/MAX Coast to Coast Properties in Portsmouth, NH. 

A: In theory, commissions can always be negotiated; however, in practice, every area of the country has average/typical commission. It usually varies from state to state between 3 to 4 percent of the actual sale price (if you are dealing directly with the buyer’s agent). If you hire an agent to sell your house, commission will usually be 6 percent of the sale price – but you will be reasonably certain that the process is going to be handled correctly.

George Szkup is a Realtor®-Broker with Tucson Home Advisor in Tucson, AZ.

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Q: I need to sell my house quickly and would like to get back what I have in it, around $100,000. It’s a 2BR, 1BA older house, 900 Sq Ft, totally renovated and modernized down to the frame in 2007, within easy walking or biking distance from two colleges.

I sent two kids to college over a 10 year period, paying double rent the whole time. Later I learned that many parents buy a house near campus, then when the kids graduate they have an investment to rent or sell. Do you have any idea how to contact parents who might be interested in this kind of opportunity? – Pat in Missouri

A: I’m familiar with the strategy of buying rather than renting and it can work very well in the right market. Having paid rent for one son for four years of college I get it. Thankfully our second son went to college locally and lived at home for the six years it took him to graduate. In all fairness to #2 son, he worked full time as well.

As you’ve discovered, purchasing a home or condo near your child’s college can really make sense especially if you will have two or more children possibly attending the same college. Depending on their ages you could end up saving rent and growing equity for eight to twelve years.

Parents looking to purchase a home or condo to temporarily house their kids in college usually go about the search the same way any house hunter would. Especially if the location they are looking at is out of their area or even out of state. These folks usually employ a Realtor in the area they are interested in. The realtor will have immediate access to all prospective properties listed for sale on their local Multiple Listing Service (MLS).

Keep in mind those Realtors representing buyers usually provide their services for free since the sellers usually pay commission to both the buyers and sellers agents.

Good luck.

Lee Dworshak is a Realtor with Keller Williams LA Harbor Realty in Rancho Palos Verdes, CA.

A: Most Colleges and Universities have “advertising boards” where one can place an ad for anything including houses for sale. Also you could contact a Realtor that sells properties in that area – drive around and look at “for sale” signs. Go to Realtor.com and look at homes for sale in this area then contact agents that are selling them. And remember – the lower the price, (usually) the faster the sale.

George Szkup is a Realtor/Broker with Tucson Home Advisors in Tucson, AZ.

 



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Despite inflation rising around the world, the global economy will continue to recover and growth will continue to expand says Clark, NJ Realtor® Fernando “Freddy” Rivera.

“Today we live in a global economy, an interconnected world where goods and capital move freely at lightning speed across countries. The widely accepted view is that globalization not only benefits all countries across the world but lends itself towards the betterment of the economy as a whole.

As we have seen, globalization can also have a negative impact with a domino effect in times of turmoil and unrest. This impact affects the financial markets both in the U.S. and abroad.

Flight to Safety
When there is political unrest, which was sparked recently in Egypt and has spread like wildfire throughout the Middle East, global investors get nervous. Often they shed their risky assets like stocks and flee to the safe haven of the U.S. dollar and U.S. bond market.

This geopolitical unrest can create a buying binge, which helps bond prices improve. And when bond prices improve, so do home loan rates. However, there are growing concerns that trump the disturbing news coming from the Middle East, which will be the guiding force of home loan rates in the times ahead. What might that be?

Inflation, Inflation, Inflation
Inflation is the arch enemy of bonds and home loan rates, even if inflation is across the pond. The increase in global unrest, not just in Egypt but in other parts of the world as well, is mostly attributed to economic factors – primarily runaway inflation in commodities and food.

The People’s Bank of China has raised interest rates a couple of times, most recently by 0.25% in an effort to head off a continued rise in consumer prices in China. The culprits? Soaring food prices and higher raw material costs lead the pack.

China has also tightened lending standards by requiring banks to raise their capital reserve requirements. In their latest reporting, China’s inflation rose by 4.9% year over year. This was lower than their expectations, however it still marked their highest reading in a couple of years. China may have to tighten their belt some more.

Brazil is appearing on the scene with the hottest rates of inflation in six years. They are attributing this to a rise in food costs and increased bus fares. It is anticipated the Central Bank will raise the benchmark interest rate in March for a second straight time in an effort to contain the spike in inflation.

The British are grappling with inflation as well. Their year over year reading struck a hot 4%, which is twice the rate of the Central Bank’s target. The UK has yet to address this with rate hikes because their economy is in such bad shape that any hike would make matters worse.

Inflation is beginning to become a problem in Europe where it has risen to 2.4%. This is super hot and well above the European Central Bank’s (ECB) comfort zone of beneath 2%.

With an inflation problem in Europe, the ECB will eventually have to raise rates to fight it. When they do, the Euro will strengthen against the dollar, making European bonds relatively more attractive than U.S. bonds. This attraction will likely put a damper on U.S. bond purchases, and could also cause home loan rates to rise.

Many of these countries within Europe have a high number of union workers. They could very well demand pay increases to offset the higher cost of living resulting from inflation. This would exacerbate matters.

As we see signs of inflation around the world, the U.S. isn’t immune. With the second round of Quantitative Easing, known as QE2, the Federal Reserve’s stated goal is to boost Stock prices, create inflation, and lower the unemployment rate. These are all unfriendly to bonds and could also cause home loan rates to move higher. As the old trading saying goes, “Don’t Fight the Fed.” It’s a bit like the Golden Rule, “He with the gold, rules.” If the Fed wants to accomplish these goals at the expense of bonds, they probably will.

Some Good News
Consumer confidence has picked up, hitting the highest level since February 2008. With continued confidence as the economy picks up speed, housing may begin to show signs of improvement as well.

These are very interesting times. Historically speaking, rates are still extremely attractive and remain close to the historic lows…but for how long? Overall, as a percentage of total income, the cost of owning a home is less expensive than it’s been at any time since 1963.

So if you or someone you know has been thinking about purchasing or refinancing a home, now is the time to get started!”



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Q: Most seller’s disclosures are worded to say “as of the date of this disclosure.” My question is, does this mean that even if there was a problem with the home nine years ago, that problem still has to be disclosed? Or should it not be included? Does it matter whether or not this problem still may have the potential to arise in the future? – Meagan in New Jersey

 
A: The purpose of the seller’s disclosure is to identify any problems that the home had or has at the present time. If there was a problem and was corrected, that needs to be noted on the disclosure.

In some states, the seller’s disclosure is not mandatory and is given as additional documentation for the buyer to decide on a particular problem or to identify any issues when an inspection is conducted. Do not rely on the seller’s disclosure alone, always conduct a home inspection to ascertain any defects with the home. Any and all information relevant to the home should be included in the disclosure. The more information the better for the buyer. Good luck with the sale of your home.



Mary Diaz is a Realtor® with RE/MAX Action First in Tampa, FL.

 



A: The Residential Property Disclosure Statement should only be filled out by the owner/seller in an honest, straightforward manner. Do not pick and choose what may or may not be important to include. If you know about it, you know about it, period. If you do not know for certain, then utilize the “No Disclosure” option. Never knowingly say something that isn’t true, and never ask your REALTOR® to say or suggest something that isn’t true. If the problem (you mentioned) that occurred nine years ago was resolved, then indicate that it was repaired and offer any reciepts or documentation. Do not just pretend it didn’t happen.

If you try to hide it and the buyer finds out, they may or may not decide to take you (and your Realtor) to court for a legal (and probably costly financial) resolution. If, however, you have been straightforward and the buyers choose to continue with the purchase of the property, then they are accepting the property “as-is” and forfieting all legal action regarding the “problem.”

With this in consideration, you should consider a properly filled out Disclosure form as a type of “insurance” against future legal fallout over the property during the period of time during which you owned it. After all, you have told the new owners everything you know about the property and it’s condition during the time that you owned and/or lived in it. This is clearly a time when “honesty is the best policy.”

Good luck to you; whatever the “problem” was nine years ago, I hope that your honesty will prevent it from being a “problem” today!



El Brant is a Realtor® with Wilkinson & Associates Real Estate in Wilmington, NC.

 



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