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Tips for a smoother settlement!

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We had our regularly scheduled training on Friday to discuss the Northern Virginia Real  Estate market and have Champion Title discuss worst case scenarios for closing and even a few other disasters to be aware of in today’s sales environment.  As is the case in any sales situation, it is your job as a professional to manage your client’s expectations of what is going to happen at the walk-through and closing.  Here are a few tips!

Tips for a Smoother Settlement

  1. Try not to Close on last day of the month
  2. Know the difference between a home inspection item and a walk-through, and know what it means to be in normal working order?  This is extremely important when discussing age appropriate items.
  3. Disclose fees/additional costs upfront (e.g., admin fees, FHA/VA fees),Initial  all changes to the original sales contract (“meeting of the minds “), initials/signatures on all pages on the contract – do your damn job!
  4. Work with service providers you know and trust, its all about the team being in place with all the changes going on with RESPA and the mortgage market.
  5. Confirm closing cost credits with the lender prior to ratification of your contract so there are no last minute surprises.
  6. Make sure termite inspection has been ordered and conducted. If treatment was necessary, make sure all parties are aware of treatment prior to closing
  7. Keep utilities on through the settlement date
  8. Contact the settlement company if you know you have any walk-through issues and conduct your walk-through the day BEFORE closing – not minutes before.
  9. Avoid escrowing funds  if possible, lenders are tougher on this issue of allowing escrows
  10. Bring certified funds to the table or wire money prior to closing
  11. Know your client (e.g. reader, needs a POA, etc.) and what they will expect to happen at closing.
  12. Read the REO contract and know its details.
  13. Read the short sale approval letter, know and understand its terms
  14. Have sellers keep hazard insurance in place until a few days after closing

 

 

Now, you can’t prepare for every situation and we haven’t experienced everything we are going to experience but here are some recent situations that arose at settlements:

Dealing with the Unknowns

  1. Unexpected liens – IRS, HOA, etc. – are filed against the property.
  2. Bankruptcy – will not kill the deal but will take time because trustee must release the property and this can and will take time.  Find out the seller’s situation in advance.
  3. More than 1 ratified contract – be smart, know your listings and only ratify one contract.
  4. Improper foreclosure – people added to title after settlement with no knowledge of bank, then property forecloses, proper notification or no notification  was not given to person added to title – bank must re-foreclose and this is a lengthy process.
  5. Unilateral default – not closing because…

 

As always we discussed what our agents are finding out in the marketplace today when working with both buyers and sellers.  Here are some comments on the conditions of our current market:

There is no inventory out there and houses are selling fast.

There are multiple contracts on a lot of listings throughout the area.  Price points that are in the low $200’s are where we are seeing the most activity…

Some buyers are not aggressive enough on their first few offers and therefore are losing contracts.

Pricing is critical for listing prices – do not price a little high as there continue to be appraisal issues.

Agents are writing backup contracts on under contract properties – even foreclosure and regular sales.

An agent recently read that 70% of first offer short sale contracts fall out as buyers lose patience waiting on the process.  It is a good idea to write back up contracts on short sales today.

We continue to have appraisal problems as there are not enough comparable sales for appraisers to utilize in their appraisal therefore they are claiming market is declining.  One agent had an appraisal come in $100,000 low – they made buyers change lenders and verify qualifications of the new appraisal with the second appraiser.  It is imperative to do your homework, know the market and present this to the appraisers.

Ethics are slipping with agents – keeping listings off market (coming soon) then selling them before they go on the market.  The lack of returned phone calls, promptly responding to offers, etc. are the issues we continue to experience.  And what is really scary is contracts and earnest money checks are being deposit after VREB regulations and even closing!  Agents need to stay on top of their game or get out!

Rates continue to be great – we expected them to increase and they did for a short time but they have come back down – we are still below 5%.

You have heard it before – the more you learn, the more you earn so come to training!  Get it?  Got it?  Good!

Now, go sell something!

 

 

 

 

 

 

How do we determine the price?

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I recently posted a blog on Tips for Securing an Accurate Appraisal.  It brought to mind the different aspects of pricing in real estate.  It is one of the most important aspects when buying or selling a home in any market.  Keep in mind, in Northern Virginia, there are always people willing to buy and sell in any environment.  It is critical to analyze various aspects that determine the true market value but ultimate determination is what a buyer is willing to pay and at a price the seller is willing to sell.  Listed below are a few points variations of value.

 

-Appraised value:  this is the most subjective piece of the puzzle today with the implementation of the Home Valuation Code of Conduct.  It has taken what was once and almost a given to a tougher process to achieve “market value”.  As a “value add” part of listing process to our listing clients to help them achieve our sales price, we always meet the appraisers at the property to help support the value or sales price.  We include floor plans, surveys, comparable sales, market data and trends as well as statistics on the area that will help in the process of determining the property’s value. 

 

-Market Value – the truest form of value – what the buyer is willing to pay and the seller is willing to sell the property for under current market conditions.  Market value is determined by a particular purchaser’s and seller’s research of the market, market trends and data available at the time of the offering.  This is the value we hope to attain through the appraisal process once a contract is ratified.

 

-Tax Value – what the local governmental agency sets as their valuation for tax generation purposes.  These values are determined by market conditions and perceived value based upon an assessor’s opinion of what is happening in the marketplace and to raise funds in the appropriate jurisdiction.  These valuation occur on a regular basis from once a year to once every 5 years depending on the area.

 

-Perceived Value – This is the value a seller has in mind for selling their property for – it may be low, but often times it is high.  This value can come from past sales, perceived values of improvements made to the property or lack of improvements made that are necessary to achieve the value they perceive.  Additionally, this opinion can come from family, friends or neighbors and what they believe the seller could obtain in a sale.  On the flip side, it can be a purchase’s perceived value and their attempt to “steal” a house.  This value typically holds the least weight.  This value is also the hardest to overcome for a Realtor in many cases.

 

-Agent/Realtor Value – this value comes from market knowledge, market trends, analysis of demand in the price point, and in depth analysis of square footage prices, tax assessed value to net sales price ratios, and sales prices of comparable properties that have settled within the previous 90 days.  An experienced Realtor can be your most valuable asset in determining the right value for the house being considered.  If you have the right Realtor on your team – they are an invaluable asset. 

 

Hire a Realtor today!  Get it?  Got it?  Good!  Now, call us today 703-652-5777.

How committed are you?

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Commitment – what is it and why do people have it and others don’t?  Is it motivation to achieve more than others that drives us to follow through on what we know is the right thing to do?  Is it respect for our self and others to do what we say we are going to do?  Do we have more desire to succeed and put for the effort to achieve what we say we are going to do?  Is it our belief that we need to live up to what we say we are going to do?  Do we have more discipline?  Is it better time management?  Is it because we have goals and the desire to achieve them?  Is it a matter of just being more responsible?  Is it loyalty?  Is the belief we need to stand up to our obligations?

What I have been experiencing a lot lately is a lack of commitment from others.  Is it fear of commitment and as a result lack of vision and focus?   Is there something missing in their belief system that allows them to drift or become complacent and not take responsibility for their actions?  Is it just easier to be lazy than do it right?  Is it lack of effort or the belief that they don’t need to follow through on what is the right thing to do? 

It is my belief is that people generally know what is expected of them and what they know they need to do succeed in our business.  Professional and ethics are at the top of the list.  People need to follow through on their professionalism and simple tasks that are required to take care of their business.  Is it laziness that prevents them from turning in paperwork, turn in escrow checks, returning phone calls, respond to emails, or simply just show up for appointments?  Is it lack of desire, not loving what they do, no goals, lack of respect for themselves, the business or their company?

It is my opinion that you need to have discipline, effort and desire to be successful and you must commit to these beliefs and live by them or get out of the business.  Get it?  Got it?  Good!

Now, go sell something!

Looking to Buy a ‘Fixer-Upper’? The 203k Program Can Help Make It Happen

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Today’s real estate market presents a lot of opportunity for interested home
buyers—with the growing supply of foreclosure properties and short sales, there
are certainly some great deals to be had.

The problem in buying a “distressed” property, however, is that these homes are
often damaged due to lack of maintenance or prolonged vacancy. So while the
price tag might be right, the investment necessary to make the home livable
might just push buyers well beyond their budgets.

As a member of the Top 5 in Real Estate Network®, however, I have access to the
latest information on mortgage and financing options. One particular option
that is providing hope for many of today’s home buyers is HUD’s FHA 203k
program, a loan that enables buyers to not only secure a mortgage, but receive
the funds necessary to improve the home as well.

Here
are five facts about the 203k program to help you determine if it might be the
right fit for you:

1. The
FHA Section 203k program was originally introduced by HUD
in 1978 as a program to rehabilitate and repair single-family homes. The 203k
is a single mortgage loan that provides funds to purchase a home and make
repairs and improvements. A simpler version, the Streamline 203k, was
introduced in 2005. This version offers less documentation and lower loan fees
for renovations that don’t exceed $35,000.

2. In
today’s market, conventional financing, which often requires
20% – 25% down on a home and a perfect credit score, is often hard to come by.
However, with less-than-perfect credit and as little as 3.5% down, you can get
an FHA loan, such as the 203k.

3. The
203k approval process is a little more complicated than a
conventional loan. For example, you’re required to secure renovation costs from
an established, licensed contractor and deliver a package of the proper
paperwork to the lender to secure FHA approval. Make sure you work with an
agent—like a member of Top 5—who is well-versed in the 203k program, or who can
connect you with a lender that is.

4. The
203k loan is not just for foreclosure or distressed properties.
More than 80% of the homes in America were built before 1990—that’s over 100
million homes that are 20 years old or older—and almost every one is in need of
some amount of repair and updating. The 203k loan, therefore, offers advantages
for almost any home purchase.

5. The
203k loan is not just for home purchases but can be used to
finance a home improvement, as well!

For complete details on the HUD 203k program, you can visit www.fhainfo.com/fha203k.htm.
Please feel free to leave a comment or e-mail
me, since this information can be hard to digest and confusing.

Be Careful What You Read

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The Northern Virginia real estate market remains strong for
both buyers and sellers.  Although
inventory levels have increased slightly over the last few weeks – more houses
are selling as well!  Our absorption rate
remains steady at a 1.8 month supply of houses! 

Be careful what you read. 
In a recent article, it was noted by Fox
Business that new homes sales had dropped to record lows.  In our area, builders are seeing robust sales
and tremendous activity.  We have said it
before and will continue to say that we are in the best real estate market in
the nation – take what you see and what you hear about real estate with a grain
of salt because we are different and good news doesn’t sell!  We put a condo on the market in Manassas on Friday of last week and it was sold by Sunday –
the market is HOT!

For the best in real estate advice and news, please call us
to hear the true information about our market. 
We want our clients to be the most informed and up to date with our
local housing market.  We have the most
current stats, data and information on financing as well as the home buyer tax credit and
how it can affect you so feel free to call today!  We are here to help.  The Results Realty Group – 703-652-5777.

Shopping for a Condo? Ask These 4 Questions before You Buy

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Condominium homes have always been, and will likely
always be, an efficient and economical route to becoming a first-time
homeowner. They can offer the comfort, prestige, and even luxury appointments
that apartment living may lack, often at a cost that is not much different than
rent. With the current first-time home buyer tax credit and the deadline for
the move-up tax credit fast approaching, I advise you move fast on any condo
purchase you may be considering.


With my experience as Member of the Top 5 in Real Estate Network®, I am well
aware that not all condominiums are the same, however, so make sure you ask the
following four questions before you buy:

What will you own?
Read the bylaws and be sure you understand what you will be responsible for and
what belongs to the condo association. Will you own the boat dock at the back
of your unit? Can you elect to build a spa on your patio? Generally, unit owners
own and are responsible for the interior of their condos, while costs for
outside maintenance including common areas and sewer lines are the
association’s responsibility.

Who lives there?
Are the majority of residents owners or renters? Owners generally take more
interest in proper maintenance and are more willing than renters to serve on
the association board and enforce complex rules and regulations–including the
regular collection of homeowner dues.

How effective is
the homeowner’s association? Do they have legal counsel,
reasonable funds and a capable, caring volunteer board? One way to judge is to
check with residents about restrictions, oversight and timeliness of repairs
and upgrades. Another is to take a hard look at the grounds and be wary of
signs of neglect.

What about special
assessments? The association should have the power to special
assess for needed, one-time large expenditures. Otherwise, things that need to
be done may never get done at all, leaving the complex vulnerable to disrepair
and lowered property values.


Don’t miss this great opportunity to become a homeowner or to downsize by
buying a condo (remember, the move-up tax credit does not require you to move
to a larger or more expensive home).

Notes from Scott’s Desk

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There are houses selling…2 contracts per listing of late – and
in different price points, $250,000 and $850,000.  The contracts came in close to list price even
though they were in competition.

Some agents like Equator, the new Bank of America short sale
portal – because of their quick responses and live chat, but some still have
repeated problems with acceptance of forms in particular formats.  Once in the final stage of approval, it takes
about 6 weeks to close, and they take precautions to stave off foreclosure.

Ask for 90 day short sale contingency approval – don’t pull
contract in final stages of negotiation, swap out contracts with same terms to
keep the ball rolling – you don’t want to have to go back to the beginning.

Short sale listings are finding agents – agents aren’t
pursuing them as much, they are just coming in.

Go back to database – reach out and talk to your people to
grow your business.  We are in a
relationship business – build those relationships deeper and your success will
follow. 

What will happen at the end of April when the tax credit is
gone?  No, what will happen at the end of
March when the Fed stops buying MBS?  The
market will slow…buyers will be back on the fence…financing is tough enough –
hopefully the restrictions on obtaining financing won’t get any worse…rates
will increase – buyers will drop out of market – will prices drop?  Message to send out: look at the positive
side of things…rates are great, inventory is available, prices remain low, we
know what loan programs are available…we need to list out true picture of the
market, it’s our job.

How do properties not listed as short sales end up in hands
of investors prior to courthouse steps?  Are
these investors negotiating directly with the seller or going to the trustee at
the steps or are they going directly to the bank?  This is a question our group would like to
know the answer too.

Appraisers are asking to have snow removed from the roofs of
properties…appraisals are coming in low…fewer sales make appraisals a problem
this time of year…appraisers aren’t going into the house in some cases…on FHA
loans, the lender has the option of using the first appraisal or ordering a
second one, if you are caught in a low appraisal situation with FHA loans on
your listings, switch lenders…

Housing starts rise in January 2.8% – RISMEDIA, February 22,
2010—Nationwide housing production hit its strongest pace in the last six
months this January, posting a 2.8% gain to a seasonally adjusted annual rate
of 591,000 units, according to figures recently released by the U.S. Commerce
Department.

According to the latest indexes (Zillow and the Feds “flow
of funds report) negative owner equity has dropped as prices have begun to
increase and between the 1st and 3rd quarters last year,
home equity rose by $1 trillion as a combination of increased home values and
principal pay down.  Although this news
was good for a lot of the country, the sand states (FL, AZ, NM & CA)
continue to be viewed as a high risk factor.

Josh Burruss of Potomac Mortgage Group mentioned the
upcoming FHA financing changes and dates to keep in mind to create buyer
urgency.

The following are some images from our monthly Real Estate Exchange in Gainesville. 

IMG_7864

IMG_7866 

IMG_7869     IMG_7872 

IMG_7877     IMG_7878

 

Do you have an On Purpose Attitude?

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One of the keys to success is to act…On Purpose.  Each of your activities must be intentional and must begin with the end in mind.  If there is no purpose to the activity, don’t do it!  Let’s analyze the On Purpose Attitude.

 

O – Outgoing, you must have a personality that is outgoing to achieve success.  You need to get out from behind your desk, out of your home office and get in front of people.  Be engaging and attract people through your personality and success will follow.

 

N – Nurturing, you must nuture the relationships you build through your outgoing personality.  Learn about those you meet, learn about their business, and help them grow their business and you will naturally have success follow you!

 

P – Proactive, be proactive in your daily activities.  Success won’t come to you – you have to go out and get it!  Areas of proactivity must include prospecting, learning, research and networking.

 

U – Urgency, develop a sense of urgency in your activities, as well.  John Wooden said, “be quick, but don’t be in a hurry”.  Have a sense of urgency to get things done.  Don’t procrastinate.  Develop to do lists, prioritize, and move on to the next activity.

 

R – Results, be effective and get results that build one step at a time to a successful life and career.  Determine what your results need to be to get the success you want and set a plan to accomplish what you need.

 

P – Planning, this is a critical step.  You need to plan your day, week, month and year to give yourself a road map to your success.  Review your plan and make appropriate adjustments as necessary.

 

O – Organized, you must be organized in all areas of your life to get the results you need.  Have an organized filing system, organized office, organized files, organized presentations, and you will reflect the professionalism that gets you to your desired level of success.

 

S – Systems, you must incorporate systems you need to follow to get the results you need.  Critical pieces of this puzzle include lead generation systems, follow up systems, processing systems, and other systems you need for your success.

 

E – Excellence, you must strive for excellence in all that you do.  The areas to consider are excellent customer satisfaction, excellent presentations, excellent communication, excellent work ethic, and excellent daily activities.

 

If you act On Purpose in all that you do, you will achieve success!  Get it?  Got it?  Good!

 

Now, go sell something!

The Market Is What the Market Is…

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Platinum
Group and Haymarket Real Estate Exchange in January

AMSHI
is charging $5,000 to buyers and $5,000 to sellers to negotiate short sales…short
sales are getting tougher – for example, Bank of America is taking forever and
in many cases sends you back to square one. 
Banks are setting unrealistic expectations for closing dates with
approvals on their short sales.  Banks
aren’t up to speed on lending rules and regulations when giving the approvals.  Employees at these banks are not educated –
fresh from college, calls are often outsourced, and they have not been trained
properly.  Bank of America is now using
Equator; therefore, there is no one person to speak with which makes the
process even more frustrating.

Foreclosures
are coming – it’s ground hog day – we keep hearing the same thing over and
over.  One agent has 6 in the pipe line;
another has 5 in the pipeline and 6 under contract and is getting about 1 every
2 to 3 weeks.  We are below the national
average as far as default rates and our inventory level is 33% distressed. 

We
discussed “shadow” inventory that we just don’t see, but the media continues to
talk about.  If banks are going release
foreclosures into the market, it will be a slow and steady release and not a
“dump” on the market scenario. 
Foreclosure filings were down 26% in Prince William County in 2009 –
stay tuned!

It’s
tough to find properties under $400,000.

We
are waiting on the FHA mortgagee letter to be released to hear about new
guidelines – increase in down payment with credit scores under 580, increase in
upfront mortgage insurance, reduced seller concessions, and the waving of the
seasoning requirements for flips – we shall see…

VA’s
max loan is now $758,000.

Inventory
levels are slowly increasing which give the appearance of things being slow,
but it really isn’t – especially in the lower price ranges.

Need
to build urgency in buyers – prices are affordable, interest rates remain
attractive, home buyer tax credit is still in place, and loan programs are in
place today that may not be available in the future.

A Real Threat?

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The
question surrounding our market lately is shadow inventory and how will it
affect us.  Well in my opinion, it is a
very good question as it is a question I have been asking myself and our agents
for several months.  Over the past 18-24 months we have heard about
foreclosure being released into the market – it hasn’t happened as of
yet.  The latest indication from asset managers is that properties will be
released in the 2nd quarter of this year.  We shall see if it
occurs.

 

The
question I ask is for agents to look around their neighborhood for vacant
properties not currently listed for sale, and ask their neighbors and friends
if they see many unlisted vacant houses.  The answer I typically get is
no, there aren’t that many. 

 

We
ask how many of your friends or neighbors outside of real estate are unemployed
locally.  The answer, not many.  We ask our agents if requests for
BPO’s (broker price opinions) are on the rise, steady or going down – here you
get a very mixed bag but mostly we hear they are going up, but only
slightly. 

 

We
run MRIS numbers Friday mornings in Fairfax, Loudoun, Prince William,
Arlington, Fauquier, Alexandria City, Fairfax City, Falls Church City, Manassas
City and Manassas Park for resales only in the categories of actives, under
contract, settled the last 30 days, vacant, and rentals to help us determine
trends in the market.  As of this past Friday, there were 4,727 active
resales in these areas.  335 were listed as foreclosures, 931 were listed
as short sales and 41 were listed as undisclosed (which are more than likely
short sales) which represents 28% of the inventory.  These numbers are
below 2008 numbers when we experienced our foreclosure boom.  And, our
inventory numbers are down 54% from the same week last year and are down 70%
from 2 years ago.  Plus, we only have a 2.5 month supply of homes.

 

So
where will the shadow inventory come from is the question and I believe it is
foreclosures and unapproved short sales.  What dictates
foreclosures?  Unemployment is one of the biggest factors.  The job
loss to foreclosure ratio is 6 – 1.  I understand that unemployment in
Northern Virginia is around 4.2% which is very low.  Job relocation and
subsequent inability to sell.  Well national unemployment is over 10% and
companies are relocating here so we are seeing fewer relocations out of the
area.  Divorce is another factor – it is my understanding that they are
down because people are under water with values and can’t afford to finalize
divorces.  So it seems unlikely we will see a huge influx on inventory
from these areas but we do have two real threats in our future – Prime loan ARM
readjustments and the eventual unapproved short sales inventory being reentered
into inventory.  The only issue is we are unsure of the true number we
have here in our area and if it will have any significant impact.

 

We
will have “shadow” inventory but I don’t believe it to be a real threat to our
market as our inventory level is low and we should be able to absorb it with
the pent up demand we are experiencing with the home buyer tax credit expansion
and extension coupled with low rates and reduced valuations of properties.  Get it? 
Got it?  Good!

 

Now,
go sell something!