What Other Listing Agents Don’t Do… Part 2

Ok… as a followup to Part 1 of this series, I’m not saying ALL other agents wouldn’t do these things, but the majority of them WILL NOT do these things, or simply don’t have a clue what to look for. Each example I give applies to my personal seller experiences…

Would Other listing Agents help out a Seller by pointing out and helping to correct any defects?

Very recently, I took a buyer through a house that had major foundation issues in the garage, and upon closer evaluation; several concrete issues. When I mentioned this to the listing agent, she didn’t have a clue. Did she even take a look inside the garage? How is that looking out for the sellers best interest? She told me she had another offer and wanted to know what my buyer wanted to do… and I told her about the problem. My buyer decided to wait, and about ten days later I got the call from her stating the other buyers backed out, because of the same issues I told her about. Even if the sellers deliberately don’t mention known defects… it’s a listing agents obligation to PREVIEW THE HOME AND PROPERTY FOR OBVIOUS DEFECTS so that they can come up with a strategy to either take care of the issue, or come up with solutions when; inevitably, a buyer or buyers agent (or their home inspector) brings it up.

Sellers also need to disclose known defects in writing (Seller Disclosure), so part of my job is to “get it out in the open” to avoid potential liability and legal issues after the deal closes. Why let it get to the point where the buyer hires a professional inspector to point the same issues out? Now you just wasted precious time off the market and went through all the motions of accepting a purchase offer, etc. only to have the buyer demand the seller fix or remedy the issue; drop the price, etc. or have the deal fall apart entirely.

Here’s a few other “hot topics” that sometimes the sellers aren’t even aware of…

• maybe those dark spots or discoloration could be mold… we better have it checked out and/or cleaned up before you go on the market, or be able to explain that it’s just “dirt”
• is your attic properly ventilated? I better take a look up there… oh; by the way, there’s evidence of staining in this or that area of your attic… we better have that looked into before you go on the market
• do you have copies of permits that would have been required for that addition or other improvement? Can we get copies? Did you use a licensed contractor to do the work?
• this wiring in the basement isn’t to code… do you want to address this now, or wait to have the buyers home inspector point it out?

Bottom Line: How many other agents take the time to carefully preview what they’re listing? Are they really looking out for their clients best interest if they can’t point out and strategize around issues that will inevitably cause problems getting a deal to close? Other agents will say “it’s not my job”… I beg to differ

Watch for Part 3 of this series… to be continued

 

What Other Listing Agents Don’t Do… Part 1

I should have started this series years ago… to differentiate myself from the multitudes of other agents. This winter has allowed me a little free time to ponder and blog a little bit about my past experiences… hope you enjoy!

Would Other Listing Agents help out a Seller having Financial Difficulties?

I have many examples, but the first I’d like to share is a recent situation where I was referred to a seller who had an out-of-state brother; no other siblings, and both parents had passed away. The local brother (my client) had moved in with his mother several years ago after the father passed, providing assistance to her and taking care of the home and property, etc. until her passing just last year. My client had also recently lost his job, paid for several expenses around the house and was being “forced” to sell by the out-of-state brother, since both had been deeded the property by the mother before her passing… and the out-of-state brother wished to exercise his right to either have the local brother buy him out, or sell.

The local brother (my client) had no choice but to sell… but after several prior expenses had no money to work with, as far as providing a buyer with the mandatory county health department certification to make sure the well and septic systems were in proper compliance. I informed both brothers that I would assist with said health department requirements and they could simply reimburse me from the sale proceeds when we closed the deal. We landed a buyer, and proceeded through the process of well and septic inspections… and of course both inspections initially failed due to bacterial contamination of the well and an unseasonably high water table, which prompted the sanitarian to “fail” the septic field as well… requiring the buyer to install a new field after closing.

The short story is, after I had personally contributed close to $2000 over the course of several weeks to bring the well in compliance and other aspects of the septic system… with no guarantee that we could get the deal to close, we were able to have the seller escrow another several thousand dollars out of their proceeds to take care of the new septic field, and the buyer agreed to close the deal. The sellers were then able to reimburse me out of their closing proceeds as well, and everyone went happily along their way.

Bottom Line: How many other agents would have taken that gamble? Are they really looking out for their clients best interest if they can’t have some of their own “skin in the game” in an effort to get the deal closed?

Watch for Part 2 of this series… to be continued

Multiple Offers – Perspective

In our current SELLERS MARKET, multiple buyer offers are common… and depending on the situation, can turn out to be methodical or MAYHEM; so…

HOW DO I COMPETE AS A BUYER?

There are two perspectives; from the buyer side and from the seller side:

BUYER SIDE

Numerous strategies can be arranged through your experienced Buyer Representative, in an attempt to make your offer stand out from any others; some points to consider:

• Limiting or completely waiving any inspection or other due diligence
• Waiving the mortgage appraisal contingency (with confirmation up front from your lender)
• Using an initial Earnest Money Deposit (EMD) followed by another deposit, post-inspection
• Flexibility with the closing date or seller occupancy after closing
• Not charging the seller for occupancy after closing
• Not selecting more than one title company for both the lender and owner policies of title insurance; in other words… “we’ll use the sellers title company for everything”

SELLER SIDE

The seller has all the control, but it is critical for any seller to receive guidance from their experienced Listing Representative. A line has to be drawn somewhere, both ethically and professionally (for example; if there is an offer receipt deadline, and offers continue to post after such deadline).

Here again, numerous strategies can be arranged through your experienced Listing Representative… the intent to ethically, legally and professionally acknowledge all submitting agents offers, while attempting to negotiate the best price and terms for the seller; typically on the fly… with some points to consider:

• The lender itself, and type of financing
• Do we have an actual mortgage pre-approval letter, or simply a prequalification statement?
• The buyer down payment and earnest money deposit structure
• The contract itself; is it concise and complete, or ambiguous… incomplete or sloppy?
• In a multiple offer situation, an experienced Listing Representative will also be able to negotiate on behalf of the seller on the fly, requesting offer re-submissions or revisions as needed before presenting to the seller
• Not interpreting ANY buyer agent verbal comments or changes as legitimate unless in writing

I am only touching on these perspectives, perhaps to be broken down in future blog posts… but any versions of these strategies can and should be employed by buyer and seller agents alike; even in the absence of other offers. A key takeaway is that; in the heat of the moment and when decisions may have to be made verbally… that the party making the verbal statement will in fact honor and abide by the conditions of that statement, or risk their reputation as an honest and ethical agent.

In these multiple offer situations, an experienced agent (representative) will outshine the mediocrity so prevalent in today’s market… while balancing trust and integrity from both sides of the transaction. Your “sister’s best friend who just happens to have a real estate license and is engaged to your neighbor’s cousin” isn’t likely the choice you’ll want to make, to represent you as a buyer or seller in this market 🙂

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Principal Residence Exemption… Can I Have More Than One?

I mentioned in my blog post “How Are My Property Taxes Determined?”, that Michigan’s General Property Tax Act (GPTA) allows an owner to “exempt” the local school district tax from their primary residence. Known as the “Principal Residence Exemption” or PRE, this saves about 40% on average, in total property tax burden each year. Second homes, vacation homes, investment homes, etc. are not eligible for this exemption.

An owner can typically carry only one PRE at any given time.

YOU WANT A LOOPHOLE? HERE’S AN EXCEPTION

Under the GPTA, a Michigan homeowner can claim only one PRE.

HOWEVER, there is a way for a married couple to claim TWO exemptions… as long as they each file separate income tax returns, and each spouse individually owns and occupies separate principal residences. Both residences can be anywhere in Michigan… or one can be in Michigan and the other in another state that allows for a similar exemption.

The most typical scenario is where a husband and wife own residences in different states. There are many “burden of proof” hoops to jump through, but the rumor that “we have to be legally separated” isn’t true… and over time, the tax savings can be huge.

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4 More Buyer Mistakes in our Sellers Market

It’s a Sellers Market in most of our local Real Estate Community… How SERIOUS are you about beating other buyers to the best homes? Here are four more mistakes you don’t want to make:

NOT BEING “FIRST TO THE PUNCH”

Locating a suitable home and having your offer presented to the seller before any others should be your goal. WHY WAIT AND COMPETE AGAINST OTHER OFFERS? You need to work with a Buyer Representative who feels the same way… and can make it happen.

BACKING DOWN IN A MULTIPLE-OFFER SITUATION

If we can’t be first to the punch… don’t let the presence of other offers dissuade you, unless you really “don’t care if you get the house or not”. By taking a backseat attitude, you’re basically giving in to defeat before you even begin.

NOT BEING “PAPERWORK PREPARED”

You need to work with a Buyer Representative who can execute offer docs ON THE FLY, either manually or electronically as needed… and be able to prepare and submit an offer at any time. THIS IS CRITICAL.

BEING “LACKADAISICAL” OR ONLY “MILDLY MOTIVATED”

You’ve heard the phrases “the early bird gets the worm”… “why put off until tomorrow what you can do today”, etc. This begs the question… how bad do you really want this? If YOU’RE not motivated… it will be difficult for ME to be motivated. And believe me… as soon as you decide you want that house, Murphy’s Law of Real Estate” says… SO WILL SOMEBODY ELSE; now the pressure is on. Bottom line… DON’T DAWDLE.

Related Post: 4 Buyer Mistakes

Curious about how I keep my Buyer-Clients one step ahead of the competition to locate and land their dream home? Let’s have that interesting conversation as soon as you’re SERIOUS about finding what you’re looking for!

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A “Taxing” Situation – Who Pays?

Here’s a followup to my blog post “How Are My Property Taxes Determined?”, geared toward those taxpayers who own homes in Michigan. The local “tax authority” (your municipality; city, township, etc.) must first formulate its budget… which identifies all necessary expenditures. It then projects all non-tax revenue (such as fees, fines, interest income, franchise fees, etc.) and deducts that revenue from the budget. The balance that remains “unfunded”, is the part that must be covered by your property taxes. That’s how the “Millage Rate” is determined… and taxes then “levied” against your property.

Levy = Budget divided by Spending, Minus Income

The amount of taxes a municipality collects must be equal to its levy. When the levy rises, taxes must also rise… so that the municipality collects enough money to meet the levy. Individual property assessments can fluctuate, but the taxes collected will be the same… because the local mill rate (tax rate) is recalculated every year. The municipality sets the levy; individual assessments are calculated by the assessor, and then added together for a total municipal assessment. The mill rate is then calculated by dividing the levy by the total assessment. So, what does this really mean for you?

For owners, if you successfully challenge your assessment, you may end up paying less in taxes. For buyers, it doesn’t matter if you pay one dollar for the house; the current taxable value will “uncap” to match the current assessed value, after you close on the purchase. Any “distress” sales (sold below market value) will NOT result in less taxes paid; since the total taxes collected must still equal the levy. All of the other properties combined must make up any difference. The only way to impact taxes “across the board” is for the municipality to lower its spending (budget), or increase its income.

I hope this helps to better understand the process; clear as mud, right?

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How are My Property Taxes Determined?

I’ll be breaking down more “technicalities” of the entire process  in future posts, but here are some of the initial topics and terms you need to be familiar with as a Michigan homeowner…

Michigan’s General Property Tax Act (GPTA)

Establishes a process for determining and collecting your taxes, along with local review boards organized to act as a “sounding board” for property owners.

Millage Rate

The amount of tax (in dollars) of every $1000 in taxable value of your property, that is required to satisfy that part of the local annual budget that remains unfunded, after other non-tax revenue is collected from all other sources. The rate is expressed in “mills”; in other words, one mill is equal to one dollar per every thousand dollars of taxable value.

Principal Residence Exemption (PRE)

Formerly known as the “Homestead Exemption”, this exempts an owners primary residence from the local school district tax (for school operating purposes) up to 18 mills. In order to qualify, a person must be a Michigan resident who owns and occupies a property; hence their “principal” or primary residence/home. Second homes, vacation homes, investment homes, etc. are not eligible for this exemption; an owner can typically carry only one PRE at any given time.

When you review your tax bill or public records, make sure the PRE is shown at “100%” to take advantage of the exemption. I have had owners who were entitled, but never bothered to verify their tax status… unnecessarily having spent thousands of dollars over the years for school operating taxes they weren’t required to pay.

What You’ll Notice on your Tax Statement

In Michigan, property taxes are typically collected each SUMMER and WINTER. You will receive a statement in the mail for each; usually around July 1st and December 1st. Aside from showing the millage breakdown for that period, the statements will also show:

Taxable Value (TV)

• The value to which your tax rate is applied
• Can’t exceed 50% of your home’s “true cash value” for tax purposes
• Can increase 5% annually, or by the inflation rate; whichever is less
• You pay taxes based on your “TV”, regardless of how much your “SEV” (see below) changes, unless title to the property/ownership was transferred
• The “TV” reverts to the “SEV” in the year after a sale; both become the same figure
• Your “TV” can never be higher than your “SEV”

State Equalized Value (SEV)

• The equivalent of 50% of your Assessor’s annual “recalculated” cash value, based on the actual appreciation (or depreciation) rate in your area
• The “SEV” will grow over time, as long as property values are increasing; becoming larger than the “TV”
• The “SEV” multiplied by two is an approximation of your market value
• The “SEV” should remain fairly consistent in a “flat” market; head higher in a rising market, and may even be reduced by the percentage of any annual decline in local property values… although your “TV” can still INCREASE each year due to inflation

A Common Assumption

When a property sells for MORE than (or maybe even LESS than), twice its “SEV”… the Assessor will NOT automatically increase (or decrease) the “SEV” to 50% of the sale price! The “TV” will most likely, revert to the current “SEV” for the new purchaser… so buyers need to be aware of this “future tax base” when considering a home purchase

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Credit Score “Principals and Practices”

Credit Score “Principles and Practices” – a basic overview

Your credit score affects everything from interest rates on loans and credit cards, to your insurance premiums. The “dominant” player is Fair Isaac’s FICO score, from “MyFico.com” or “Equifax.com”. A report can be provided for free at “AnnualCreditReport.com”, but won’t include actual scores.

The Fair Isaac Company produced the FICO score for consumers, as a general purpose indicator of our credit standing. FICO is the figure that lenders use to help determine our mortgage rates. Auto and Insurance companies use variations of this to determine your “auto” and your “homeowners” scores.

All three bureaus (Equifax, Experian and TransUnion) sell some version of your credit score. Experian and TransUnion are really “knockoffs” of the real thing; your FICO score, which you can ONLY get through FICO’s website or Equifax (or through your lender). The other two are “educational scores” sold to consumers (NOT lenders) and will give you an idea of where you stand, and how you can improve your score. If you’re shopping for a mortgage, the FICO score is the one you want to stick with.

Beware of internet scams! The only online source federally authorized to provide the “free” credit report is “AnnualCreditReport.com”, which is the consumer-version of the FICO score. Watch out for scams! “Scambusters.org” is a site that verifies the latest internet scams.

Other questions or concerns about your credit score or available mortgage products? If you don’t have a lender you’re already comfortable with, I’ll put you in touch with a few reputable resources, so you can “shop and compare” based on your particular situation.

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Do Banks Really Lose Money on Foreclosures?

So… did the banks REALLY lose money on Foreclosures?

There was a discussion a few years ago during the mortgage meltdown that “stuck” in my head, regarding the fact that thousands of failed banks have been taken over by the FDIC (you can research online by googling “FDIC bank takeovers”).

The FDIC then sold the “toxic mortgages” from these failed banks to any other “living” bank willing to pay them 70% of that debt. These “new” banks then sold the same homes, (pre or post-foreclosure defaulted loans) and were reimbursed by the FDIC at 80% of the original debt, less the new purchase price.

Here’s a typical example of how this would look:

• House forecloses or is in default at $500K (original debt)
• Mortgage is purchased from FDIC for 70% ($350K) by “new” bank
• New bank resells house for $250K
• Original debt less “paper” loss = $250K
• New bank reimbursed by FDIC at 80% of that loss ($200K)
• New bank now has $450K, less their $350K purchase
• New bank has instant $100K profit for basically shuffling paper around

Sound fair to you?

On top of that… the “new” bank could also make the “new” buyer pay a promissory note on all or part of the remaining “loss”, AND have the right to pursue the original seller for any deficiency it can gain there. Did I forget to mention the “TARP” funds given to these same banks? So, who’s REALLY losing money?

Kinda makes your blood boil… doesn’t it?

Underwriting Issues for Buyers – Shifting Money

Mortgage lenders are watching every monetary move you make… ALL money moving in and out of your accounts is now under scrutiny. Anyone applying for a mortgage should avoid transferring money between accounts, or making any significant, non-payroll deposits before the deal closes… even if they can account for such activity. When in doubt… check with your loan officer first!

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Miracle Deer Rescue Story

People still ask me about this after all these years; so here it is…

Back by Popular Demand…

My “Miracle Ice Rescue” – a true story

It was ten degrees on Tuesday morning, March 4^th, 2003. Robyn had left for work, and I was making my way to the barn for something when I noticed the deer. Not an uncommon sight, but something was different today. This particular deer was in the main pond, in a small section of open water (kept that way by means of an aerator) and obviously, wasn’t there on purpose. I move the aerator to about three feet of water each fall before the freeze, thinking if something ever fell in it would be able to get out…

 

I continued to the barn (at a much brisker pace) and retrieved a piece of the ever-so-handy famous TRW seatbelt strapping, then ran back to the house and got my chest waders from the basement. Waders on, I ran to the dock through about a foot of snow (which was a feat in itself) and tied one end of the strap to the dock, then cautiously approached the hole with the remainder. I figured once I got the deer out, I would need the strap to haul my arse out of that hole. Normally, a deer would not tolerate the presence of a human in such close proximity. This one, however, was moving towards me, as if she knew I would help…

I knelt down near the edge, reached down into the water to find a front leg. As I gently pulled her against the rim I managed to reach down with the other hand and get behind her opposite shoulder, as if to just haul her out of there. What happened next is I straightened up and leaned back, managing to get her chest up on the ice as I then fell backwards without letting go… she was out! Amazed that I managed to do this without getting in there myself (or breaking the ice), I then got up and slid her over the snow a safe distance from the hole. She was barely kicking her hind legs, head covered with ice, icicles hanging from the ears and eyes rolled back; now what? I just couldn’t leave her there…

It was then I realized just how big she was. This was at least a two year old doe, 120-140 pounds, perhaps one of the mothers of a younger group I see so often. All I knew was I had to warm her up. The barn was out of the question, so the only logical choice was the garage. I ran to the barn again (still in the waders) to get a plastic tarp and movers blanket, ran back to the deer and managed to slide her onto the tarp (no easy task in the snow), then covered her with the blanket. I grabbed the corners and proceeded, uphill, with my load. She started kicking after a few feet (still alive) and was tearing the blanket with those hooves, but we got about halfway before I had to reposition her. By now my lungs were froze from being winded and sweat was pouring down the waders; as I stood there catching my breath I was wondering how to get her over the wall of snow I had plowed up near the landing the day before. I walked over to the snow bank and just dug my way through it with my arms and sort of kicked a passage through it…

            Deer in tow again, we got to the snow bank and after another quick adjustment on the tarp I just hauled her right on through there and we gracefully ended up on the cement, so I just kept right on moving until we were in the garage. I ran to the overhead control and shut the door, then opened the door to the house to let in whatever heat I could. She was just laying there on the floor, with me just laying there on the stoop, both of us dizzy and not having eaten anything, I’m sure. I was actually getting nauseous at that point (still in my waders) but too wiped to move. I needed to walk, so I walked not-too briskly back to the barn to get my only propane heater and a few rugs. Back at the garage, I proceeded to remove the blanket, which was torn up and soaked, then covered her in the rugs. She was barely moving. I turned the propane on, positioning it a few feet from the rugs, placed a towel under her head and then went back to the stoop to sit. I managed to finally get the waders off, but was at that point feeling extremely ill and had to get to the couch where I could lay back for a bit, knowing she wasn’t going anywhere. This was great; I was having a heart attack, the deer would probably wake up and trash the house and Robyn would have quite the surprise when she got home. I needed about five minutes before I could move again, and I made my way to the sink for water, as I knew I had lost too much. I estimate at that point it had been maybe twenty minutes since I first seen the deer…

Knowing I had to warm her at a faster rate, I grabbed our hair dryer and extension cord, plugged it in and cautiously knelt down beside her. The rugs felt good and warm, so I turned the dryer on low and just started drying that ice sculpture of a head. I worked her ears, being careful not to apply heat too quickly as I melted the ice with one hand and manipulated the dryer with the other. I was talking to her all the while, so as to buffer the noise. I had one arm over her in case she tried to get up, and just kept working those ears until the icicles had melted and I could move them. I dried them inside, and then proceeded around her entire head until it was mostly dry. I noticed she was foaming a bit at the mouth, but this was probably from straining to get out of the pond. She never made a sound, even though the heat must have been as painful at times as it was life-saving. I was talking all the while hoping that she would remain calm. At least her eyes were focusing and she could now move her head up and back as if to stretch her neck again…

That’s when I noticed the shivering. I don’t think I have ever witnessed a deer shiver, but she definitely was. It was more like a constant trembling and at times she would try to shift a bit; we were both lying in a lake on the cement and I’m sure it wasn’t very comfortable for her, either. I then noticed the propane was dwindling, and it then ran out. It had been about an hour since I started the hair dryer, and I had also been alternating between her head and front legs, which were stretched out in front from the elbow. I would briskly rub her legs while working the dryer back and forth over the joints just to get some circulation down there. The rugs were dry, so I moved them a bit while I started working on her back legs and hips. Since I had shifted position she was now flexing her head back to look at me while I did this, then she would look forward again but would no longer lay her head down. I couldn’t believe she was letting me do this. She startled a bit when I tried to use the high setting on the dryer, so low it was. After about another ten minutes of this, apparently it was time…

She started scrambling, so I shut the dryer off and immediately moved the cords and propane tank out of the way while I tried to pull the rugs off and make my way to the overhead control, all in one swift motion. As the door opened, she just missed it as she managed to stand up and then stood there, half in and half out, looking at me. I prayed she wouldn’t try to run; she would fall for sure and maybe break a leg. She simply stood there, motionless; as did I. After a few minutes she would pick up a front foot, then the other, in an attempt to “stomp” as all deer do when in the vicinity of humans. This was in “slow motion”, and it was almost comical to watch her. I slowly knelt down again into a “ball”, as they feel less threatened by smaller “enemies”. Her back feet were too close together and she was wobbling, but eventually moved them apart without falling over. I was still talking to her constantly. The sun was now out, and she was steaming as the bright rays fell on her backside. Shivering now only in spasms, she slowly backed up to get out of the garage and more into the sun…

Turning to face the sun, she ambled a few steps past the corner and I could now get up, since we no longer had eye contact. I peered around the corner, and she was just standing there, alert and sniffing the sidewalk and some of the landscaping. She wandered a few more steps, turned south and kept walking down the drive toward the barn. I had plowed yesterday, so the walking was fairly easy. She then broke into a lope, actually jumped over the snow bank in front of the barn, and proceeded to run slowly into the scrub field where I then lost sight of her. I stared at the sodden mass of blankets, cords, towels, plastic and hair (of course) on the floor, and couldn’t believe what just happened. It had been roughly two hours since I first noticed her. I thought, after many years hunting them; God had different plans for this one. Nothing else mattered to me the remainder of the day, except for shutting down the aerator…

            It’s been over a week now, and just the other evening I saw one standing alone in the drive as I was coming home late from the office. Not much later, I counted six of them milling around the front yard; they like to pick at the corn and seed from the birdfeeders at night. I couldn’t help but thinking that one of them was my “new friend”…