Today I stumbled across this interesting article that discusses changes that may be coming to the Everett area which will impact housing and density in the area. The net effect is to try and minimize traffic and congestion in the area and to help improve people’s quality of life by limiting the commute time spent each day on our Puget Sound highways.
We’ve got a gem of a little home for sale in Edmonds that is looking for a new and loving owner. See the slideshow for this home at the link provided. It’s got 3 bedrooms and 1.5 baths with a family room as well. Kitchen has been completely remodeled and all new carpet in FR and bedrooms. Hardwoods in the living and dining areas. The backyard is large and has a lot of potential for play or gardening. A deck is there now and could easily be expanded for more summer entertaining.
In an earlier post I had mentioned a short list (but with longer explanations) of reasons why it is important to know how your agent handles documents and their thoroughness in reading them. Much of that article was based on my working with a young couple who is buying a townhome in the Greenwood area (details not included to protect the privacy of all parties) and I wrote in that article about details on our side of the transaction. Well, today opened up some new details that are quite interesting from the seller side and they should also be examined in a forum like this one.
So, here are 4 more important reasons to test your agent’s reading skills….
1. So you don’t lose money – sometimes more than twice in one transaction. We had had our first offer countered to a $10k under list price but then it was rescinded when the seller decided they wanted my buyers to do a pre-inspection. We’d already lowballed the offer by $15,000 so we weren’t surprised that they’d asked us to do this. For $400 out of pocket to save $10-15k, it was worth doing in advance plus the client had a guarantee from us that if the deal failed we’d credit them the amount of the inspection fee at their next closing.
Once we completed the pre-inspection we wrote up a new offer and put our $15,000 under list price on the front page of the purchase and sale agreement BUT in the financing addendum we ADDED a 3% closing cost credit that the seller would pay the buyer at closing.
When we first sent this new offer in I told my buyer clients that we weren’t going to draw attention to the 3% to the listing agent as we wanted to see if he would notice it or not. Well, he didn’t. And neither did his sellers. The seller signed off on it and we were under mutual acceptance 
. Score one for my clients to the tune of just under $8k on top of the $15k under asking price.
The big bonus in all of this is that the appraisal came in at $10k OVER the list price. Niiiiiiiiiice! We love deals like this one when we can get them for our clients.
2. So you don’t have to sue or mediate with your agent. – The listing agent (LA) told me today that his clients are now aware of the 3% element and they are threatening to sue him and/or his broker. Listing agreements are actually with a broker and they “assign” an agent, likely the person that you interviewed. The seller can’t change the terms with my clients because they agreed to it in writing and didn’t balk at it at the time. They did, however, ask the LA at the time of the 2nd offer submission if there had been any changes in our offer and he said that there were none. They also didn’t have a super clear copy of the contract in their hands (so I’m told) and they didn’t see it.
In my personal opinion, the LA should forfeit any commission he was to have been paid to appease his clients. If his commission percentage isn’t enough to cover the full 3% his clients are losing then he might be able to work out a deal with his broker and then pay them back via commissions earned on other transactions. Based on current MLS data he has 5 other properties either active or in pending contracts besides this one.
3. So you don’t put yourself in the position of possibly being sued yourself. – The seller is in a position that if they try to back out at this stage of the deal they could find themselves in a potential lawsuit from my buyers. This is not a great position to be in and I’m sure they feel pressed up against a wall. Without being an attorney, and only going from anecdotal experience here, my understanding is that my clients would need to file a lis pendens against the property which would limit the seller’s ability to list the house for sale again. They would then move forward with a suit for specific performance to attempt to get the seller to move forward with the final transfer of ownership by force through the judicial process.
4. So your don’t feel “screwed” at the end of the transaction. I feel for these sellers. They’re already in a dire and potentially complex emotional situation since they are in the middle of a divorce. Now they are likely feeling like they’ve been betrayed by a professional who is supposed to be looking out for their interests.
As for me and the buyers, I’ve got to look out for the best interests of my clients and so far that seems to be working out well for them. Even though the place needs work, they’ll end up feeling like they got a good deal, and they are.
I was checking out a site that had linked to a Rain City Guide post of mine a while back and in the process found this little gem. It’s sophomoric, I know, but it reminded me of when I traveled to Germany and saw some unusual signs. The other thing that cracks me up about this article is the lack of geographic knowledge of the writer. It specifically says that it is an Austrian town but the title of the article says, “Germans not amused.”
A scary but good rant by another contributor at Rain City Guide can be found at this link. It’s a cautionary tale to buyers that they really need to do their homework about financing BEFORE buying a home. There are also several lessons I can put into a few points:
1. If you are going to use a combination real estate agent and loan officer – check out their track record in both areas of business.
2. Realize there is some conflict of interest in an agent that is also a loan officer – they will be more hard pressed for you to close a deal because of the multiple sources of income you provide to them.
3. Escrow companies are supposed to be arm’s length neutral third party vendors and cannot give you advice. Most people don’t understand the forms that show up in the mail initially from an escrow office and don’t realize that they’re telling you up front that they can’t give you advice during the transaction.
4. Ask your agent and/or if they’ll be showing up to your closing. We’ve found that about 50% of all closings have something come up that requires phone calls and we show up to make those calls while the signing appointment is in process. This helps to alleviate last minute issues, hiccups, and stress for our clients.
5. There are lots of resources out there to learn about the financing process. If you have questions you can ask your agent, lender, and others. If you only have one source of information you should branch out and ask more people for help.
6. Consider letting your agent review your Good Faith Estimate (GFE) and ask if they have any questions to suggest for your lender. We do this regularly and many lenders are caught off guard when a seemingly novice new client suddenly calls with pointed questions. Having an extra set of eyes reading a GFE helps to find if any “junk fees” might be lurking in the paperwork and cost of the loan.
Many people know that I buy rental properties in Kansas where my immediate family lives. It works out well because prices are lower than here in Puget Sound and the rents usually allow for most properties to cash flow well, which as a real estate agent is good since our income fluctuates from season to season. Anyhow, the 4-plex I bought recently has a basement area that I’m renting out as storage currently to the past owner and her daughter. The former owner is now a licensed real estate agent in Wichita although she does it as a 2nd job after her work at Lear (formerly Learjet).
She should definitely keep her day job and get out of real estate. Not only was she not forthcoming with information about the property during the sale but she has been a pain in the butt ever since I took possession of the building. She has most recently dumped a bunch of garbage into both the receptacles that are for my tenant’s use (and only their use) as well as dumped into a neighboring owner’s garbage dumpsters. According to my brother, who manages these properties for me, the bins were overflowing and many items were left out sitting on the curb or in the alleyway.
I called the other agent and left a not too friendly message on her voicemail as well as sending her an email (copying her broker) with my remarks. She called and at first tried to give me every excuse about why she should be able to dump her and daughter’s stuff in my and the other owner’s garbage. She also mentioned that in Wichita if people lay things out frequently others will just come and take them. As I pointed out to her, she could take her stuff to her own home and put them out on her lawn but that she doesn’t own the property where my building sits any longer and she didn’t have permission from me to do so. I don’t intend to let my building look like the trashy one on the block – period (no pun intended).
I stayed firm and told her garbage fees weren’t included in her storage lease and that regardless of whether another owner’s tenants had abused her garbage privileges when she owned the building she DOESN’T own the building any longer. She can take up a personal argument with the other building owner if she wants but I am to be left out of it. She also tried to say she’d reimburse me for the garbage costs and I said, “no, you’ll remove your items now because you are using space that is specifically for my tenant’s use and you paying me for the right to use the garbage doesn’t free up space for their stuff.” She’s going by the building by end of week to remove her items.
A note to anyone that is buying a building anywhere – know your leases and what is or is not included when you allow storage space. In my case, my lease specifically stated the owner of the stored items must take their garbage off premises. Be willing to follow through on your lease terms.
Agents that are subscribers to the Northwest Multiple Listing Service have been put on notice! There are many rules that agents must abide by outside of licensing laws and REALTOR(R) code of ethics. A large number of those come from membership in the local NWMLS which is a cooperative of the brokers in the Puget Sound region who allow access to each other’s listings via this online vehicle. We all pay membership dues into it and the brokers are the owners.
Our daily business revolved around proper data and information being provided via the site – and that translates also to what is seen by the general public as data feeds from the IDX to broker and individual agent websites proliferate. The folks here at Team Reba are occasionally flummoxed by the lack of photographs, driving directions and other missed data points but it seems that the NWMLS has decided to implement a new tool that will provide automatic fines for the most common transgressions of the system. We welcome it even though we know that we could slip up some day and get tagged ourselves. Our support of the NWMLS implementing this program comes from the fact that we want to see each and every agent putting out their best efforts, all the time, for the benefit of the public and, more specifically, to our clients. Every step taken to improve, we believe, helps to improve the image of the real estate agent and our overall industry in the eyes of the public and that’s a good thing.
Below is a snippet of the language that was provided to all agents that puts us on notice:
Starting July 22, NWMLS will phase in automatic, escalating fines with lengthy grace period of at least 90 days. During that period, notices of violations will be sent to agents who violate NWMLS’s rules, but they will be sent as a warning only and no fines will be imposed. Under the new provisions, agents who violate the rules will receive a warning letter. The second violation results in a $250 fine. A $500 fine is imposed for a third violation. The fine increases to $1,000 for the fourth violation. For additional violations, NWMLS may proceed with formal disciplinary action.
A new client we’re working with noted a listing in the Greenwood area that has many comments by the listing agent that state the house’s value is really in the land. The conversation turned toward the foundation and a small tutorial about what foundations are made up of and why some might be better than others. My edited response to them is below:
“You can certainly consider it but look at the outside with a keen eye. This area of Greenwood is where a lot of the peat bog is located so you want to look for heavy settling. This house has what is called Post & Pier (aka Post & Pillar) construction as the foundation. Not many houses are built this way unless there is a compelling reason to do so nowadays.
An online presentation I found about foundations can be accessed here: http://www.abag.ca.gov/bayarea/eqmaps/fixit/ch5/sld001.htm It will help you learn more about foundations and their definitions.
This link will show a bit more specifically about post & pier construction types:http://www.countryplans.com/foundation/index.html
You’ll note that P&P is not recommended for areas where earthquakes might be present – such as the Pacific NW. It was a commonly used method of construction back in the early 1900′s but that was also before concrete had become a stronger material to build with so it is less used now in modern construction and is now usually limited to smaller homes or cabins or in areas where bringing in construction materials is cost limiting.”
I’ll add on here too that Post & Pier foundations are becoming more and more difficult to get insured. We’ve found that the following items are more difficult to get coverage for: post & pier foundation, knob & tube wiring (mostly whole house but sometimes even partial), and fuseboxes (most want upgrades to circuit breaker boxes), aluminum wiring (some 60′s/70′s houses). Some insurance carriers will also deny coverage by age of the home with early 1900′s homes being targeted. Before going out and looking for houses it would be a good idea to contact your insurance company to confirm what housing issues they will, or will not, cover.
I’m not addressing whether or not your agent has dyslexia or if they are perhaps illiterate. No, I’m putting out there that there can occasionally be a lack of reading on the part of an agent when it comes to documents that may be very important to purchase of a property. Rather than focus on the potential negative aspects of this topic let’s focus on the benefits of an agent being detail oriented and an avid reader of documents and what that provides to real estate clients.
1. Reading details of a document that a client or customer supplies within the scope of a real estate transaction will frequently result in the finding of details that have been missed and that need compliance for a closing to happen. (find)
2. Having your agent help read documents doesn’t mean you as the buyer or seller are relieved of your obligation to know about your own transaction. However, having multiple sets of eyes reading a form helps improve the likelihood of catching little details that might otherwise get lost when only one person is reading, getting bored or distracted, or just not generally understanding what they’re reading. (power in numbers)
3. Making sure all the details are in order helps to allow closings to go seamlessly and without last minute scurrying around of all participants involved. (detail oriented/anticipating issues)
Example: I’m working with a client on buying a town home that happens to also have a claim filed for faulty siding. In reading the forms supplied by the listing agent it was discovered that the claim may be filed incorrectly and that there are several missing details that will delay the filing and ultimate outcome of the claim. Also discovered in looking over the forms were items such as that the seller needed to notify and supply a copy of the sales contract to the siding company for the claim to be transferred to my clients. This piece is, indeed, a very important item. Had I just chosen to toss the forms “over the fence” so to speak to my clients and just say, “here read this and let me know if you have any problems” would be the wrong move.
4. I don’t have to be an attorney, CPA, or other type of professional to READ a document and see if there is something that brings up a question related to the transaction my client is involved in. In fact, I would venture to say that it would be more likely that I could get in trouble if I DIDN’T read the forms and at least remark on them to my client and to provide insight such as, ” you should get an attorney to read this” as well as saying, “you might want to sit down with your father-in-law (the contractor) to see how this might play out if he does the work,” and also, “you should contact the claims group to start asking questions to make sure you get this transferred correctly and without losing any rights to the claim. Hopefully this kind of commentary will get my client to be thinking critically as they read the information themselves and to come up with their own questions too. (referral of needed resources/protection/critical thinking)
5. My job as a real estate agent is to provide my experience in dealing with real estate on many levels. I don’t think that stops with marketing or just showing houses, even those items are also in my job description. It means I need to understand as much as possible about the overall process and to provide and inject a problem solving attitude into the mix. (problem solving/critical thinking/advisory role)
6. Washington State licensing law requires that I do my duties competently and to refer clients to the appropriate professions when it is appropriate; part of knowing when to do that is to read what is impacting the transaction, and not knowing just the details of the pre-printed contract. (meeting required and state mandated competency levels)
I find that the areas where people really start to have their eyes roll back into their heads is when they have to read a title report or a condo resale certificate or Public Offering Statement. And, that brings me to the next item…
7. Ask for help if you don’t know what you’re looking for. Even if the agent doesn’t read the full document for you, they might be able to provide you with tips on how to find the important items that might impact you and your decision to buy a particular property. (experience/critical thinking/problem solving)
So, the next time you are interviewing an agent you might want to ask him/her how well he/she reads. The answer may mean more than you think at first glance.
In the interim between now and your next real estate purchase or sale here is a photo of one of our dogs with Michael helping “read” a financial analysis report for a client one night:
One of our clients has moved out of state and is looking to sell his gorgeous view condo. Check out the slideshow of photos here. It’s a stylish 2 bedroom, 2 full bath unit on the top floor of a condo building with one of what I think is the best values in the city for square footage, layout, and view at $379,990.
This view from the unit was taken on a June summer evening around 9:30pm.
