Thursday, May 28, 2009
Wednesday, May 27, 2009
Wednesday, May 20, 2009
Not all Realtors are created equal: Is your Realtor helping you make it or break it?
Not all Real estate agents are created equal. Not only because some people have that go-getter personality, the kind that makes us think creatively to accomplish a goal and save a deal while others simply lack those over-achieveing traits, but because not every real estate agent has taken the time to educate themselves to be better sales people, better deal makers and the best at what they do.
Here, you will find a few ways to help you distinguish between the good, the bad and the ugly before hiring a real estate professional:
1. First off, you should know that not every real estate agent is a Realtor. A real estate agent has a state license that allows them to sell real property in that state. In Florida, the class lasts 60 hours, typically taken over the course of a week and is followed by a state exam. A Realtor however, is a member of the National Association of Realtors and someone who must abide by a strong set of ethical standards.
2. A good Realtor should be someone who thinks real estate is a serious business and treats it as a profession. Ask them questions about their track record. How many homes they have listed, how many they have sold, etc.
3. Ask what kind of continued education they have,what designations they hold and what they specialize in.
4. Some Realtors specialize in commercial properties, while others in residential. The Realtor you hire should have experience in selling and buying the type of property you’ll be buying/selling.
5. Hire someone who specializes in your geographical area and knows the various subdivisions, the prices, the bargains, the nice streets, the best values, etc.
6. A Realtor who has been in the industry for a while should have established sound working realtionships with people in related fields, such as mortgage brokers, property inspectors, etc. and can recommend them to you.
7. A professional Realtor keeps abreast of current market conditions and can advise you accordingly.
8. A good Realtor should treat every transaction with skill, care and diligence. Ask for references. You ask for references before hiring a plumber, so why not before hiring the person who will help you sell your most valuable asset? make sure you call a couple of past clients to find out how the Realtor performed and whether they were happy and satisfied with their services. Ask them also if they would hire them again.
9. You and your spouse should feel comfortable working with the person you are hiring, so make sure you both take the time to meet the Realtor and ask questions.
10. A Realtor should feel comfortable explaining to you the purchasing process. Ask if they have a written guide for home buyers/sellers or any other tool you might find useful in the home buying-selling process.
11. A Realtor is someone who can answer all of your questions honestly or help you find the answer if he/she doesn’t know it.
Here, you will find a few ways to help you distinguish between the good, the bad and the ugly before hiring a real estate professional:
1. First off, you should know that not every real estate agent is a Realtor. A real estate agent has a state license that allows them to sell real property in that state. In Florida, the class lasts 60 hours, typically taken over the course of a week and is followed by a state exam. A Realtor however, is a member of the National Association of Realtors and someone who must abide by a strong set of ethical standards.
2. A good Realtor should be someone who thinks real estate is a serious business and treats it as a profession. Ask them questions about their track record. How many homes they have listed, how many they have sold, etc.
3. Ask what kind of continued education they have,what designations they hold and what they specialize in.
4. Some Realtors specialize in commercial properties, while others in residential. The Realtor you hire should have experience in selling and buying the type of property you’ll be buying/selling.
5. Hire someone who specializes in your geographical area and knows the various subdivisions, the prices, the bargains, the nice streets, the best values, etc.
6. A Realtor who has been in the industry for a while should have established sound working realtionships with people in related fields, such as mortgage brokers, property inspectors, etc. and can recommend them to you.
7. A professional Realtor keeps abreast of current market conditions and can advise you accordingly.
8. A good Realtor should treat every transaction with skill, care and diligence. Ask for references. You ask for references before hiring a plumber, so why not before hiring the person who will help you sell your most valuable asset? make sure you call a couple of past clients to find out how the Realtor performed and whether they were happy and satisfied with their services. Ask them also if they would hire them again.
9. You and your spouse should feel comfortable working with the person you are hiring, so make sure you both take the time to meet the Realtor and ask questions.
10. A Realtor should feel comfortable explaining to you the purchasing process. Ask if they have a written guide for home buyers/sellers or any other tool you might find useful in the home buying-selling process.
11. A Realtor is someone who can answer all of your questions honestly or help you find the answer if he/she doesn’t know it.
Thursday, February 05, 2009
TO RENT OR NOT TO RENT: THAT IS THE QUESTION
Many landlords and tenants today are faced with a game of tug-o-war when it comes to minimizing risk and asking and giving deposits and advance rent.
With the economic crisis haunting consumers across the board, a lot of potential tenants have less-than-desirable credit worthiness to show a potential landlord that they will in fact pay their rent on time, so landlords are opting to ask for higher security deposits or more rent in advance (I have heard as much as six months worth of rent in advance plus security deposit).
It is only fair that a landlord, who is putting most of the risk upfront (if a tenant stops paying rent and continues to occupy the property it may take up to 3 months for an eviction process to be completed, plus the time it may take the landlord to re-rent the property), has the option to protect itself.
However, the only problem to the tenant in this case is not that they may not have the money to put upfront (I mean, not everyone these days has 3 to 6 or more moths worth of rent in the bank?)but that those funds are virtually unprotected. The Florida Landlord Tenant Act and most standard leases instruct the landlord to hold the security deposit and in some cases any advance rent in a separate bank account and in some cases even to post a surety bond against those funds, however, most landlords ignore or are unaware of this commitment they have made and spend the money elsewhere, typically in mortgage payments or improvements to the property. This is not only against the law, but in the event of a foreclosure, the bank who repossesses the property will not honor the terms of the lease and will not only have the tenant vacate the premises, but will not refund any money back to him, which means that if the landlord has in fact spent the money of security deposits and advance rent and is unable to refund it to the tenant, then the tenant has lost a significant amount of money and has to now go find a new place to live, where the new landlord may ask for security deposits and rent in advance.
So, how do we end this tug-o-war and make it fair for both parties? if you are a tenant and you have the finds available but are just scared to lose it in the event the landlord is unable to fulfill the terms of the lease, then ask that the funds are held in an attorney's trust account or a real estate brokerage's escrow account, which are governed by the Florida Bar and FREC respectively.
Short Sales: Are banks really interested?
It is hard these days to find a property advertised for sale that does not include the words "foreclosure", "bank owned", "repossessed" or at the very least, "short sale" in its advertising. A total of 31% of all sales in the nation in 2008 were of foreclosed homes and short sales according to Zillow.com, with some states having as high as a 58% of thse distressed sales.
The American Dream of owning a home has become an American nightmare, with about $3.3trillion in home equity being erased in 2008. American's highest and most precious asset is being lost to an economic crisis. During a crisis, when homeowners run into rough financial patches and would need to tap into their homes equity to pay bills, they find it impossible to cash out their equity (lenders won't loan more than the property is worth and many are reducing owner's already established lines of credit).
If you bought your homes five years ago, there is a 41.2% your home is worth less than what you owe on it.
So, when you have a home that is losing value with each passing day, you cannot tap into its equity and you cannot pay for it anymore, your most probable option is to sell it short. A good possibility at first, but the more and more people are interested in following this path, the slower the process becomes at the bank's end.
A typical transaction that is not a short sale and involves financing on the buyer's side should take 30 to 45 days to close, whihc means that from the time a buyer selects a home they like and the time they actually own it, 30 to 45 days have passed. In a short sale however, a seller's lender(s) must approve the sale before the buyer can even start their process, so that means that however long the lender(s) take to approve, should be added to those 30-45 days.
These days, lenders are taking anywhere from 60 to 180 days to approve a short sale.
Let me illustrate the problem with an example of one of my personal sales. I got a listing for a beautiful apartment in a prestigious area. We priced it right, competitive without giving it away. After about 40 days we got an offer at a very reasonable price.
In an ideal scenario, as soon as you have an offer, you should send it to the bank in what is called a short sale package, which includes seller's financial statements, bank statements, hardship letter and other documents. Once the package is uploaded into the bank's system (indeally 10 days after you submit the package), a BPO (Broker's Price Opinion) is performed on the property to determine whether the offer is at fair market value. Again, in an ideal scenario, the BPO is uploaded into the bank's system within 10 days and a negotiatior is assign, who should i turn accept, deny or counteroffer within 30 days. A total of 45-60 days in all. In most cases however, scenarios are far from ideal, so in our case, after 4 months of patiently waiting (most buyers would have walked after just a couple of months), the file was "closed in error" according to the bank's negotiator. The file had to be re-opened and because to much time had passed since the first BPO was performed, a new one needed to be ordered.
To my surprise, the buyers agreed to wait just a little longer, becasue according to the negotiator, this time it should be much quicker. Well, it wasn't and after 7 months, we finally got an approval. The problem with this approval is that it was for an offer 7 months old, which means that the value that the buyers saw in this property 7 months ago, was no longer there. We all know that in 7 months, the value of a home could drop significanlty and even if the buyers still want the home, if financing is invloved, the buyer's appraisal would come in lower that the offer, which would mean starting over from scratch.
We are now working on an approval for a new offer from a new buyer for $50,000 less than the original offer.
The American Dream of owning a home has become an American nightmare, with about $3.3trillion in home equity being erased in 2008. American's highest and most precious asset is being lost to an economic crisis. During a crisis, when homeowners run into rough financial patches and would need to tap into their homes equity to pay bills, they find it impossible to cash out their equity (lenders won't loan more than the property is worth and many are reducing owner's already established lines of credit).
If you bought your homes five years ago, there is a 41.2% your home is worth less than what you owe on it.
So, when you have a home that is losing value with each passing day, you cannot tap into its equity and you cannot pay for it anymore, your most probable option is to sell it short. A good possibility at first, but the more and more people are interested in following this path, the slower the process becomes at the bank's end.
A typical transaction that is not a short sale and involves financing on the buyer's side should take 30 to 45 days to close, whihc means that from the time a buyer selects a home they like and the time they actually own it, 30 to 45 days have passed. In a short sale however, a seller's lender(s) must approve the sale before the buyer can even start their process, so that means that however long the lender(s) take to approve, should be added to those 30-45 days.
These days, lenders are taking anywhere from 60 to 180 days to approve a short sale.
Let me illustrate the problem with an example of one of my personal sales. I got a listing for a beautiful apartment in a prestigious area. We priced it right, competitive without giving it away. After about 40 days we got an offer at a very reasonable price.
In an ideal scenario, as soon as you have an offer, you should send it to the bank in what is called a short sale package, which includes seller's financial statements, bank statements, hardship letter and other documents. Once the package is uploaded into the bank's system (indeally 10 days after you submit the package), a BPO (Broker's Price Opinion) is performed on the property to determine whether the offer is at fair market value. Again, in an ideal scenario, the BPO is uploaded into the bank's system within 10 days and a negotiatior is assign, who should i turn accept, deny or counteroffer within 30 days. A total of 45-60 days in all. In most cases however, scenarios are far from ideal, so in our case, after 4 months of patiently waiting (most buyers would have walked after just a couple of months), the file was "closed in error" according to the bank's negotiator. The file had to be re-opened and because to much time had passed since the first BPO was performed, a new one needed to be ordered.
To my surprise, the buyers agreed to wait just a little longer, becasue according to the negotiator, this time it should be much quicker. Well, it wasn't and after 7 months, we finally got an approval. The problem with this approval is that it was for an offer 7 months old, which means that the value that the buyers saw in this property 7 months ago, was no longer there. We all know that in 7 months, the value of a home could drop significanlty and even if the buyers still want the home, if financing is invloved, the buyer's appraisal would come in lower that the offer, which would mean starting over from scratch.
We are now working on an approval for a new offer from a new buyer for $50,000 less than the original offer.
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