A recent newspaper article lamented the fact that many first-time home buyers seeking to purchase properties with a modest amount down and a mortgage loan are being outmaneuvered for the same properties by investors with cash. The article stressed that often the cash offers are less than what it being offered by the mortgage-borrowers but sellers view is that 'cash is king'.
One thing the article didn't say is that most of these mortgage-borrowers, 1st time buyer's in particular, are asking for 'concessions' from the seller. By concessions I mean 'give backs'! The buyer wants the seller to give them up to 6% of the contract sale price to help cover the buyer's closing costs, the vast majority of which are associated with the loan itself. That's a big chunk of money any time, but especially now when sellers are already feeling used and abused by the falling market. That additional 'concession' amount is huge in comparison to what most sellers already see as a loss. The problem begins with FHA allowing and approving of this practice and ends with loan officers at every lending institution who push this as a way to get more house for less money.
My take on it is this: if you can't afford it , don't buy it. Relying on rebates other than the governments tax credit bill to get you into the next 'level' home is absolutely absurd. We got into this economic mess because people bought what they couldn't afford, thanks to sub-prime loans and the practice of issuing 1st and 2nd mortgages at the closing table with no money down. Now the issue is called 'concessions from the buyer' but it's still part of the same problem.
If you can't afford it, don't buy it. FHA accepts as little as 3% in downpayment. If you have more than that, either put it down on the home, use it for remodeling or repairs, or save it for a rainy day. But don't expect the sellers to come up with money you don't have. The average seller is making little or no money on the sale of their property these days and a request for them to give a buyer even more just doesn't fly, especially as compared to cash! When a seller gets cash there isn't any need to worry that the buyer won't ultimately be able to get the loan.
I tell all first time buyers or those seeking 'contributions' from the seller to be prepared for a stormy ride. And I tell sellers to weigh the options before making a decision. An offer is hand, even with concessions, is often worth more than continuing to have a property languish in a slow market. But it is rarely worth more than cash.
Friday, December 18, 2009
Saturday, December 12, 2009
It is as it is...'AS-IS' !
This was an article in my June '09 newsletter and I'm publishing it to the blog for a more permanent record. If you've already seen it, then hopefully it will refresh your knowledge of the ever growing trend to buy and sell property AS-IS.
During the past month I’ve written more purchase offers than ever before in such a short time period. Most of them have been negotiated successfully and now sit in ‘contingency’ limbo, awaiting the results of inspections, appraisals or loan approvals, or in the ‘pending’ file, waiting for the paperwork and closing date to come. But, two fell out immediately upon inspection, clearly demonstrating the true buyer benefit of contracting for properties in ‘As-Is’ condition, while reserving the right to inspections of the property.
The Florida Association of Realtors (FAR) and the Florida Bar Association (BAR) work together on the compilation of standard contract forms that are relatively easy to understand, even if the print is small and the terminology isn’t familiar to the general public. One of the most widely used and best, from the buyers standpoint, is the FAR-BAR ‘As-Is’ Contract for Sale and Purchase.
I know it sounds like there’s something amiss when you hear the phrase, ‘As-Is’, but that isn’t always the case. Many home sellers list their properties ‘As-Is’ in order to bring them to the market at a lower price, and for fear of being ‘nickeled and dimed to death’. And often Realtors recommend making purchase offers ‘As-Is’, since it allows the buyer to conduct inspections during an agreed upon time period (often 10 consecutive days from the date the contract is signed), and gives them the option to walk away, without penalty of any type. If those inspections reveal anything that isn’t acceptable, at the buyer’s sole discretion, the buyer can halt the sale process. All that is required to ‘bail out’ is a letter of cancellation, delivered to the seller within that inspection time period. It’s a buyer’s ‘loop-hole’ and it saved further cost and hassle for two of my buyer clients this month.
One buyer couple found numerous structural and building code issues when their chosen property was inspected. They decided that those repairs, plus all the desperately needed cosmetic work, made the house much too expensive in the long haul. (I had my doubts that the home would have appraised anyway, but that’s a topic for another time). The other buyer clients were dissuaded from going ahead with a cash purchase of a newly remodeled oceanfront condo when the initial inspection found environmental issues (which could have cost hundreds of thousands to mitigate), necessitating multiple additional, invasive inspections to arrive at a definitive answer. Both of these contracts were cancelled within the prescribed time frame and the buyer’s deposits were returned.
In some instances both the buyer and seller will agree to negotiate a new sale price and the deal can be resurrected. When contracts are cancelled, sellers are disappointed, especially if they aren’t aware of anything seriously wrong with their properties. And the buyer is disappointed because their ‘dream home’ wasn’t a dream after all.
No house is perfect, not even if it’s new, and realistic buyers understand they have to assume some responsibility. Most of the home inspections reveal only minor or cosmetic issues that buyers agree to fix or redo once they own the property. But when there is an unforeseen problem revealed by the inspections, the As-Is contract gives the buyer a clear advantage. Those inspection costs are money well spent to avoid years of problems and discontent.
For me as the Realtor, well, sure I’m disappointed when that happens. It’s a lot of time and energy expended without compensation. Hopefully, we’ll try again, and both of these clients will work with me to look for another property.
If at first you don’t succeed…it ain’t over ‘til it’s over!
During the past month I’ve written more purchase offers than ever before in such a short time period. Most of them have been negotiated successfully and now sit in ‘contingency’ limbo, awaiting the results of inspections, appraisals or loan approvals, or in the ‘pending’ file, waiting for the paperwork and closing date to come. But, two fell out immediately upon inspection, clearly demonstrating the true buyer benefit of contracting for properties in ‘As-Is’ condition, while reserving the right to inspections of the property.
The Florida Association of Realtors (FAR) and the Florida Bar Association (BAR) work together on the compilation of standard contract forms that are relatively easy to understand, even if the print is small and the terminology isn’t familiar to the general public. One of the most widely used and best, from the buyers standpoint, is the FAR-BAR ‘As-Is’ Contract for Sale and Purchase.
I know it sounds like there’s something amiss when you hear the phrase, ‘As-Is’, but that isn’t always the case. Many home sellers list their properties ‘As-Is’ in order to bring them to the market at a lower price, and for fear of being ‘nickeled and dimed to death’. And often Realtors recommend making purchase offers ‘As-Is’, since it allows the buyer to conduct inspections during an agreed upon time period (often 10 consecutive days from the date the contract is signed), and gives them the option to walk away, without penalty of any type. If those inspections reveal anything that isn’t acceptable, at the buyer’s sole discretion, the buyer can halt the sale process. All that is required to ‘bail out’ is a letter of cancellation, delivered to the seller within that inspection time period. It’s a buyer’s ‘loop-hole’ and it saved further cost and hassle for two of my buyer clients this month.
One buyer couple found numerous structural and building code issues when their chosen property was inspected. They decided that those repairs, plus all the desperately needed cosmetic work, made the house much too expensive in the long haul. (I had my doubts that the home would have appraised anyway, but that’s a topic for another time). The other buyer clients were dissuaded from going ahead with a cash purchase of a newly remodeled oceanfront condo when the initial inspection found environmental issues (which could have cost hundreds of thousands to mitigate), necessitating multiple additional, invasive inspections to arrive at a definitive answer. Both of these contracts were cancelled within the prescribed time frame and the buyer’s deposits were returned.
In some instances both the buyer and seller will agree to negotiate a new sale price and the deal can be resurrected. When contracts are cancelled, sellers are disappointed, especially if they aren’t aware of anything seriously wrong with their properties. And the buyer is disappointed because their ‘dream home’ wasn’t a dream after all.
No house is perfect, not even if it’s new, and realistic buyers understand they have to assume some responsibility. Most of the home inspections reveal only minor or cosmetic issues that buyers agree to fix or redo once they own the property. But when there is an unforeseen problem revealed by the inspections, the As-Is contract gives the buyer a clear advantage. Those inspection costs are money well spent to avoid years of problems and discontent.
For me as the Realtor, well, sure I’m disappointed when that happens. It’s a lot of time and energy expended without compensation. Hopefully, we’ll try again, and both of these clients will work with me to look for another property.
If at first you don’t succeed…it ain’t over ‘til it’s over!
Do you want fries with that…?
Throughout my varied career in real estate, I’ve only once, briefly, been associated with a franchise. And I’ve thought long and hard about the pros and cons of those relationships.
My decision is that some of the large, well known franchise names can benefit the real estate agents by driving clients to them through their closed system for national referrals. I honestly don’t believe that the franchise name benefits clients or customers. Buyers and sellers may think they are getting some inside track or special services, but I’m not sure that’s always true.
As an independent contractor based at an independent firm, I think I provide as much or more benefit to buyers and sellers .And here’s why...
- With the Internet being the primary place that buyers look for property, they can find me and my listings on dozens of sites and search engines. I advertise in Realtor.com, as well as HomesandLand.com (the largest nationally syndicated real estate magazine), TCPalm.com (local Scripps website for the Treasure Coast). Plus I have my own website, GetaFloridaLife.com, and the company website CompassPointRE.com. All those listings are circulated to various search engines and can be found on Zillow, Front Door, and the Florida State fed information data exchange (IDX). Often I have a listing featured in The Wall Street Journal. My listings are everywhere they need to be to be seen. That means both buyers and sellers receive a high level of service.
- Buyers and sellers can count on me to provide them with referrals to qualified real estate professionals in all areas of the country without regard to issues of loyalty to a company brand. I belong to a number of professional organizations that supply members with referral guides. I am then able to identify and interview real estate salespeople and narrow the field to a few who might work best with a particular client or customer.
- I personally do more advertising and marketing of my listed properties and my personal brand than most other agents. I can design and produce marketing materials that work best for each property without having to follow instructions from corporate headquarters. I make certain to disseminate the listing details to agents in other areas of the state and country with whom I’ve done business or who might have the appropriate client for a specific listing. And I also write a 'market condition' report for both Vero Beach and Sebastian on Realtor.com. That gets my name out there, driving more traffic to my website getting more potential buyers to see my listings. I publish this monthly electronic newsletter which keeps people coming back to my site and listings! All for the mutual benefit of buyers, sellers and me, as their real estate agent.
You, as buyers and sellers, don’t need a franchise to get good service. And I don’t need to be part of a franchise firm to give it. Bigger isn’t always better.
My decision is that some of the large, well known franchise names can benefit the real estate agents by driving clients to them through their closed system for national referrals. I honestly don’t believe that the franchise name benefits clients or customers. Buyers and sellers may think they are getting some inside track or special services, but I’m not sure that’s always true.
As an independent contractor based at an independent firm, I think I provide as much or more benefit to buyers and sellers .And here’s why...
- With the Internet being the primary place that buyers look for property, they can find me and my listings on dozens of sites and search engines. I advertise in Realtor.com, as well as HomesandLand.com (the largest nationally syndicated real estate magazine), TCPalm.com (local Scripps website for the Treasure Coast). Plus I have my own website, GetaFloridaLife.com, and the company website CompassPointRE.com. All those listings are circulated to various search engines and can be found on Zillow, Front Door, and the Florida State fed information data exchange (IDX). Often I have a listing featured in The Wall Street Journal. My listings are everywhere they need to be to be seen. That means both buyers and sellers receive a high level of service.
- Buyers and sellers can count on me to provide them with referrals to qualified real estate professionals in all areas of the country without regard to issues of loyalty to a company brand. I belong to a number of professional organizations that supply members with referral guides. I am then able to identify and interview real estate salespeople and narrow the field to a few who might work best with a particular client or customer.
- I personally do more advertising and marketing of my listed properties and my personal brand than most other agents. I can design and produce marketing materials that work best for each property without having to follow instructions from corporate headquarters. I make certain to disseminate the listing details to agents in other areas of the state and country with whom I’ve done business or who might have the appropriate client for a specific listing. And I also write a 'market condition' report for both Vero Beach and Sebastian on Realtor.com. That gets my name out there, driving more traffic to my website getting more potential buyers to see my listings. I publish this monthly electronic newsletter which keeps people coming back to my site and listings! All for the mutual benefit of buyers, sellers and me, as their real estate agent.
You, as buyers and sellers, don’t need a franchise to get good service. And I don’t need to be part of a franchise firm to give it. Bigger isn’t always better.
Friday, December 11, 2009
Time to Give Thanks and Praise....
During this time of year it's nice to acknowledge the people who help make my professional life easier. So here goes:
- Everyone needs a good handyman and I've finally found one. His name is Paul Chapline and he does home repairs and maintenance at very reasonable prices. His number is 772-360-9756.
- For pressure washing and painting I count on Glen Pacicca. His number is 772-480-1636.
- When I have scrap metal to be hauled, like old appliances and such, or even big furniture items to be moved to the dump, I give Dennis Mitchell a call. His number is 772-480-1843.
- For moving information, be it local or national, I can always depend on Mr. Small Move at 772-770-2689.
-For keys and door locks in Vero I use Benson Lock Service at 772-567-5968. In Sebastian for keys, door locks and safes I count on B & J Locksmith at 772-589-7528. And the mobile service of Mark Fischer at Guardian Locksmith is fantastic. That number is 772-581-2724.
- Tom Davis does lawn care and maintenance. And he's great at spiffing up old neglected landscaping. He's at 772-321-9497.
- For a maid or cleaning service Life-Maid-Easy at 772-562-7417 makes life easy.
- For useful and usable large items like furniture or appliances to donate, I call St. Vincent dePaul. They do everything possible to accommodate schedules and provide the receipt for tax purposes on the spot. Their Vero number is 772-567-6774 or in Sebastian 772-589-3338.
- Several mortgage lenders deserve kudos for being efficient and pleasant at the same time. I'm delighted when I find that buyers are working with them to obtain loans and appreciate knowing I can call on them for clarification on all types of mortgage issues.
Lucy Kranker - PNC Mortgage 772-360-3096
Shannon Pohl - PNC Mortgage 772-770-6985
Susan Callahan - Bank of America 772-473-0031
Katherine LaLime - Seacoast National Bank(Indian River)772-231-4402
Ellen Falk - Seacoast National Bank (St. Lucie) 772-342-7701
Lisa Amorosa - Wells Fargo Home Mortgage 772-231-3767 X 1004
Greta Pierpont - Chase Mortgage 772-243-3977
- Home sale closings can be done by title companies here in Florida. There are a few we can count on and like to work with.
Elite Title 772-231-5560 (Darlene Larabelle Pegg and Melissa Haywood)
Oceanside Title 772-234-0700 (Dottie Emmons)
Stewart Title 772-569-7603 (Cindy Silverstein and Carole Adams)
- When buying a home you should ALWAYS get an inspection done by a qualified home inspector. These guys are great to work with.
Greg Bertaux - IM Home Inspections 772-569-2141
Dakota DeLuca - WIN Indian River 772-228-9201
Jerome Young - Spector Home Inspection Service 772-564-0191
Joe Fersch - Amer Home Inspections 772-770-3661
William Powers - CGC 772-873-9701
- When I'm faced with a property without hurricane protection and need an estimate for the installation of storm panels, I call Joe Fersch, Licensed Contractor, at 772-770-3661.
- And I'd be remiss if I didn't mention the all important AAA! they have come to my aide innumerable times and I'm very grateful when they 'rescue' me, especially when I lock my keys in the car! American Automobile Association's emergency road service number is 800-222-4357. I know it by heart.
I'm posting this to the blog and not to the newsletter so you can return here to find these names and numbers if you need them. While I can't legally 'recommend' them, I can say that from personal experience, I'm please to know them and work with them whenever possible. Please check back often. I will update this resource page from time to time to keep current.
And, as this started out, THANK YOU to all named herein. You've made my professional life better through your hard work and diligence. Wishing everyone a prosperous New Year.
- Everyone needs a good handyman and I've finally found one. His name is Paul Chapline and he does home repairs and maintenance at very reasonable prices. His number is 772-360-9756.
- For pressure washing and painting I count on Glen Pacicca. His number is 772-480-1636.
- When I have scrap metal to be hauled, like old appliances and such, or even big furniture items to be moved to the dump, I give Dennis Mitchell a call. His number is 772-480-1843.
- For moving information, be it local or national, I can always depend on Mr. Small Move at 772-770-2689.
-For keys and door locks in Vero I use Benson Lock Service at 772-567-5968. In Sebastian for keys, door locks and safes I count on B & J Locksmith at 772-589-7528. And the mobile service of Mark Fischer at Guardian Locksmith is fantastic. That number is 772-581-2724.
- Tom Davis does lawn care and maintenance. And he's great at spiffing up old neglected landscaping. He's at 772-321-9497.
- For a maid or cleaning service Life-Maid-Easy at 772-562-7417 makes life easy.
- For useful and usable large items like furniture or appliances to donate, I call St. Vincent dePaul. They do everything possible to accommodate schedules and provide the receipt for tax purposes on the spot. Their Vero number is 772-567-6774 or in Sebastian 772-589-3338.
- Several mortgage lenders deserve kudos for being efficient and pleasant at the same time. I'm delighted when I find that buyers are working with them to obtain loans and appreciate knowing I can call on them for clarification on all types of mortgage issues.
Lucy Kranker - PNC Mortgage 772-360-3096
Shannon Pohl - PNC Mortgage 772-770-6985
Susan Callahan - Bank of America 772-473-0031
Katherine LaLime - Seacoast National Bank(Indian River)772-231-4402
Ellen Falk - Seacoast National Bank (St. Lucie) 772-342-7701
Lisa Amorosa - Wells Fargo Home Mortgage 772-231-3767 X 1004
Greta Pierpont - Chase Mortgage 772-243-3977
- Home sale closings can be done by title companies here in Florida. There are a few we can count on and like to work with.
Elite Title 772-231-5560 (Darlene Larabelle Pegg and Melissa Haywood)
Oceanside Title 772-234-0700 (Dottie Emmons)
Stewart Title 772-569-7603 (Cindy Silverstein and Carole Adams)
- When buying a home you should ALWAYS get an inspection done by a qualified home inspector. These guys are great to work with.
Greg Bertaux - IM Home Inspections 772-569-2141
Dakota DeLuca - WIN Indian River 772-228-9201
Jerome Young - Spector Home Inspection Service 772-564-0191
Joe Fersch - Amer Home Inspections 772-770-3661
William Powers - CGC 772-873-9701
- When I'm faced with a property without hurricane protection and need an estimate for the installation of storm panels, I call Joe Fersch, Licensed Contractor, at 772-770-3661.
- And I'd be remiss if I didn't mention the all important AAA! they have come to my aide innumerable times and I'm very grateful when they 'rescue' me, especially when I lock my keys in the car! American Automobile Association's emergency road service number is 800-222-4357. I know it by heart.
I'm posting this to the blog and not to the newsletter so you can return here to find these names and numbers if you need them. While I can't legally 'recommend' them, I can say that from personal experience, I'm please to know them and work with them whenever possible. Please check back often. I will update this resource page from time to time to keep current.
And, as this started out, THANK YOU to all named herein. You've made my professional life better through your hard work and diligence. Wishing everyone a prosperous New Year.
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