First, the key factors you do and don't control. The seller controls the property's condition and price. The seller doesn't control the competition, previously sold homes nearby, whether or not it's a buyer or seller's market nor interest rates. Understanding the key market factors and the proper balance of these factors will expedite your sale. SOLDS… is the single greatest factor affecting value. Neighborhood desirability and recently sold homes is fundamental to a property’s fair market value. COMPETITION…Buyers compare your property against competing properties and buyers interpret value based on SOLD properties. TIMING…The real estate market may reflect a seller’s market or a buyer’s market (current market conditions). Market conditions cannot be manipulated; an individually tailored marketing plan must be developed accordingly along with intelligent list pricing. CONDITION…Property condition affects price and speed of sale. Optimizing physical appearances and advance preparation for marketing maximizes value such as staging. TERMS...The more flexible the financing, the broader the market, the quicker the sale and the higher the price (current market conditions are the exact opposite with very restrictive lending practices). PRICE…If the property is not properly priced in regards to condition & location then a sale may be delayed or even prevented.
First, for those who think a non-stop barking dog is a happy dog and it's your right to inflict a constant disruption of peace upon your neighbors , stop reading here because my post is going to be disagreeable to you. Thus, please skip to the bottom of this post and press play on the YouTube viewer. Turn your volume up on your computer and let it play ALL DAY and NIGHT and no you can't mute it during your phone calls, while reading a book, sleeping or during your favorite tv show. It must play non-stop. If you admit there is a problem, please seek the help of an expert trainer, or non-profit animal organization. There is a solution and my hope is your neighbors won't have to 'enforce' the laws and ordinances. Lastly, your dog isn't happy. He's lonely and miserable that's why he barks all day (and night).
Originally posted Nov 2011 before The Journal Record and OK Insurance Commissioner recently addressed this issue in October 2013. Two years after I wrote this blog and April 2014 the US Geological warned Oklahoma of a 5.0 or bigger earthquake. Read below how about insuring your most valuable asset.
We've been shaken by a 4.7, 5.6, and 4.7 to include about 25 in between 'little' ones within the last 5 days (Nov 2011). We're not built for earthquakes and our homes/structures are far from meeting earthquake engineering standards. Thus, many people are looking into earthquake insurance. I've had many clients asking if they should get it. Be clear, only you can assess the risks versus the cost and come to that conclusion. I'm getting it. Why? Because, the cost is low enough and earthquake prediction is far from being an exact science. I read that prior to these recent 2011 Oklahoma earthquakes the USGS database showed there was a 3.204% chance of a 5.0 or bigger earthquake hitting within 31 miles of Oklahoma City within the next 50 years. A 5.5 they had has less than a 1.303% probability within the next 50 years. Hummmm.......97 to 99% chance one wouldn't happen and three did.
Whenever sellers ask, 'Should I tell them about....' my immediate response is disclose, disclose, disclose. Sellers are required to tell buyers of any known material defects about a home. Such as a leaking roof, pest infestation, water damage, drainage issues, boundary disputes, environmental issues, etc.... Putting it in writing and having all parties acknowledge it with signatures is the most advantageous way to guarantee proof items were disclosed. Most state real estate commissions have seller disclosure forms that assist sellers in ensuring all items of concern under the law are fully disclosed.
Periodically, you'll hear old school real estate terms such as 'Kick Out Clause' or 'Texas Shoot Out.' These clauses got their nicknames because one party isn't going to like the outcome in most real estate agreements. Typically, they create an emotional and financial ride one party won't benefit from and can be ugly. Thus, before you agree to have one put in your contract fully understand what they mean and don't hesitate to get legal advice.
What doesn't work.
Home staging has come about as a result of sellers competing in a merciless buyer's market. It's no longer about baking cookies right before a showing or just keeping the grass mowed. It focuses on preparing and transforming a home into an environment appealing to the mass majority of buyers. With the right Realtor marketing, intelligent list pricing and staging, a seller can just about guarantee shorter days on market which translates into more money for the seller.
It is not unusual for a buyer and seller want to include personal property in their real estate contract. Personal property being included is far more complicated than the average buyer, seller and in a lot cases agents understand. Most especially when the buyer is getting a loan to buy the real estate.
First, a seller has every legal right to be present during a home buyer's inspection and in certain situations it might be necessitated by highly unusual factors. However, I'm discussing that in most cases it is not necessary and in my experience does more harm than good. This post is based on the assumption that both buyer and seller are represented by state licensed real estate agents and the buyer is using a state licensed home inspector.
I'm going to keep this one short, because sometimes less is more. Please click play to begin.
I've tried to capture the essance of what this song is saying for many years, through many consultations with buyers and sellers trying to get them to understand the importance of a home. Yet, once again, someone else said it so much better than I ever could. I've written a post about house's making such great memories and I wrote another post trying to help with a buyer's understanding where a seller's heart is when approaching negotiations. I consistently warn seller's during listing consultations to be prepared for moving week, because the feelings and memories can be overwhelming when you're leaving your home. Little did I know, I would hear this song, for the first time today, that would so elegantly put all my thoughts and feelings about home ownership to music. A month ago I said, 'good bye' to my child hood homestead of 40 years and I am writing this a week before I visit my home away from home after the loss of my 95 year old grandmother. I know what it means to have a home that built me, and I've owned homes that are me. There is a lot more to real estate than a financial investment. First and foremost you should own a home and understand what it means to 'have a house that built me.' For wonderful vivid pictures of homes and memories that built us check out: Dearphotograph.com.
"Start out with an ideal and end up with a deal." - Karl Albrecht
Sellers pour their heart, soul and finances into a home expecting a return. Buyers, work hard for their money and want the best deal. And, Realtors advocate for their respective client's interest. Residential real estate contract negotiations are a gentleman's negotiation (or womans). One 'gentleman' is proposing to buy another gentleman's home.
Beginning a search for a new home is an exciting one. It's fun to look online at all the homes at various price points, visit open houses or drive around with a Realtor and discover new neighborhoods. But, at a certain point you will want to get serious and unless you are a cash buyer, you must be pre-approved for a home loan. Knowledgeable sellers and experienced agents do not take buyers without home loan pre-approval seriously; resulting in you missing out, particularly in competing contract negotiations.
Getting pre-approved/pre-qualified for a home loan is an inevitable reality check and discovery process ALL (non-cash) buyers must go through. It lets you know what you can afford, current interest rates, terms, your monthly payment, down payment and estimated closing cost. Without this information, you cannot make a wise real estate investment. Smart investors plan. You are about to make two purchases, a home and a home loan. Familarizing yourself with different home loan products will ensure when the perfect house comes along you can quickly move forward with the appropriate loan in place. Getting pre-approved for a home loan sets the rules of the engagement and gives your Realtor insight into what homes will qualify for the loan that you have selected and how to negotiate your contract.
You may know you'll be approved, but this too can be a dangerous assumption. Not all home loan products (mortgages) are created equal. After reviewing your options there is a good chance you will learn about home loan products available that will better suit your financial needs and or you might need to adjust your expectations.
My advice is stay ahead of the game and align yourself for the best outcome; get pre-approved before you begin any home search. Let sellers and Realtors know you aren't just a tire kicker. Show up with a home loan pre-approval and I promise you will be taken a lot more seriously.
You hear these words repeated in real estate all the time but what does it really mean? Is it just real estate agents trying to be cute? No. It's single handedly the most important aspect of purchasing real estate. Location, location, location can typically be
identified by one simple element in every city all over the world. Identifying this 'element' takes enormous talent, experience and insight. If you purchase in the best location your property will retain more value and appreciate better over the long term versus the opposite.
Think of it this way, the biggest movie of the year is about to be released in theatres. You've got tickets, waited all day in line, and now you are first in the theatre. What seats do you choose? Most choose somewhere in the middle of the theatre. As the sold out theatre begins to fill the seating selection gets worse. When the first settlers or developers come into a new area, where do you think they chose? Typically it's near water, proximity to passages (roads/waterways), views and/or vegetation. From there community ammenities such as parks, schools, shopping, golf courses, restaurants all begin to be built around these fabulous locations creating very desirable lifestyles for the community members.
Not everyone can afford to buy in the French Riviera or right here in Nichols Hills. Location, location, location is the #1 real estate rule to investing and applies to all price points so don't be disappointed if you can't afford that million dollar mansion in Gaillardia. The best location for your price point is right here in the Oklahoma City Metro or your home town.
Here is a tale of a real estate urban legend meant to help explain what abstracting is. Enjoy!!!
A New Orleans lawyer sought an FHA loan for a client. He was told the loan
would be granted if he could prove satisfactory title to a parcel of
property being offered as collateral. The title to the property dated back
to 1803, which took the Lawyer three months to track down. After sending the
information to the FHA, he received the following reply:
"Upon review of your letter adjoining your client's loan application, we
note that the request is supported by an Abstract of Title. While we
compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin."
Annoyed, the lawyer responded as follows:
"Your letter regarding title in Case No. 189156 has been received. I note
that you wish to have title extended further than the 194 years covered by
the present application. I was unaware that any educated person in this
country, particularly those working in the property area, would not know
that Louisiana was purchased, by the U.S., from France in 1803, the year of
origin identified in our application. For the edification of uninformed FHA
bureaucrats, the title to the land prior to U.S. ownership was obtained from
France, which had acquired it by Right of Conquest from Spain. The land came
into the possession of Spain by Right of Discovery made in the year 1492 by
a sea captain named Christopher Columbus, who had been granted the privilege
of seeking a new route to India by the Spanish monarch, Isabella. The good
queen, Isabella, being a pious woman and almost as careful about titles as
the FHA, took the precaution of securing the blessing of the Pope before she
sold her jewels to finance Columbus' expedition. Now the Pope, as I'm sure
you may know, is the emissary of Jesus Christ, the Son of God, and God, it is
commonly accepted, created this world. Therefore, I believe it is safe to
presume that God also made that part of the world called Louisiana.God, therefore,
would be the owner of origin and His origins date back, to
before the beginning of time, the world as we know it AND the FHA. I hope
you find God's original claim to be satisfactory. Now, may we have our loan?"
The loan was approved.
After you buy your first home, you'll inevitably fall into property virgin pitfalls. One of the biggest things to beware of is that your newly signed wet ink deed becomes a matter of public record immediately. Thus, hundreds of companies, salesman and con-artist/scammers watch the new court house filings daily to solicit new home owners with all their wonderful products and services. You'll begin receiving tons of official looking mail, phone calls and door to door visits. Few tips: Never pay to obtain a copy of your deed. The title company will mail you the original one after it is recorded on public record and certified copies can be obtained at the courthouse for a nominal fee. Another offical piece of mail notifies you that a new mortgage company has bought your loan but the current mortgagee doesn't notify you it's been sold. Don't start paying the new mortgagee until the old one verifies this is true. These are two big ones, but there are lots of cons out there trying to take money off of unsuspecting people. When in doubt call your agent, lender and/or title company to verify if it's legit. Here is a recent email I received from an extremely savy client who ignored her better judgment just briefly:
There was an envelope left on my door when we moved in. It said "sorry
we missed you."
Enclosed was a flier that has a guy's phone number, name,
and a weird area code. It also said "Authorized ADT dealer." So I
called him and from that instant i knew he was a salesmen, a really
good one. I wasn't on guard at all, so he went ahead and got all my
information including my ssn and wanted to schedule installation like
right away, I couldn't because of various reasons, and also so I could
shop just in case. The rate was $44 a month no installation fee, no
contracts. Good thing I did, I called TNT, and they had a way better
rate but with installation fee, and 3 year contract.... which is
understandable. I wanted to cancel and didn't have his cell
with me, so I called ADT's 1-800 number and I went through 2 corporate
departments and then to Oklahoma City's managers office, to find out
he was 3rd party. So dug up his cell and called to cancel, he
picked up like he was already mad. I told him I needed to cancel and
he scolds the following words to me "YOU GOTTA BE KIDDING ME." Just
lectured me on how stupid I was for not going with a name brand that
someone knows. He just went on and on. Turns out later, when TNT came
to install, the installer met this guy and said he just seemed like
all sorts of shady and was based out in Moore. So, a lesson learned on
my part. Don't do anything door to door, don't ever buy from a
"fantastic" salesmen (because they are soulless creatures), and never
give out your SSN. I know he's already sold my phone number and email
addresses, I'm getting offers from cruises and Nigerian princesses.
So, if you could educate the next ignorant first time home security
participant maybe we can put him out of business.
Most folks have no clue as to why they should buy it and/or why their lender requires it. In most states title insurance is your only option when insuring a clear title to the real estate you are about to buy. (Although, here in Oklahoma an attorney's opinion of title is still used.) Title insurance is something you don't appreciate until you need it. Title insurance policies vary in coverages and offer various endorsements depending on your specific needs. You need to consult with a title attorney in regards to which coverages are best suited, needed and required to your transaction. This post is in laymans terms and for general informational purposes only.
Think of title insurance like any other insurance policy. Title insurance, insures your right to ownership. It has limits of coverages (typically purchase price), exceptions not covered (similiar to flooding on your homeowners) and additional endorsements (such as jewelry on your homeowners). Why title insurance? Because, transferring title (deed) on a property is not just as simple as signing the back of an auto title. A lot is at stake in real property including legal precedence in regards to rightful owners. If a 'cloud' on title is created at anytime during the chain of transferrences it becomes a non-marketable title. What is a non-marketable title? A title that has had a 'cloud' created on it as a result of improper and/or legal right of transferring ownership. Clouds can be created in all sorts of ways during and prior to your purchase that can make your ownership invalidated, such as:
1. undisclosed heirs claiming rights and interests from previous owner (ie: Uncle Bob left me this property 50 years ago and it's not yours)
2. duress in execution of instruments conveying title previously (ie: last minute will changes)
3. rights of divorced parties (ie: he had no legal right to sell you this property behind my back)
4. inaccurate legal property descriptions/boundaries (ie: neighbor claims part of your land is really his land)
The list goes on and on of possible 'clouds' on title getting created. Title insurance protects you against claims from outside parties claiming interest to the property. If a court rules does rule in the favor of the outside interest, and you are out without title insurance, you will be out of ownership and money.
Once you purchase a home along with title insurance, put the policy some where safe. It's a one time pay and stays in effect during the course of your ownership so there are no renewels of premiums. Find a reputable title company and ensure your right to title.
Many years ago, I had a colleague, 'Bill' who's buyer, 'Jim' was interested in obtaining a very specific home. Jim called my colleague, Bill, and asked Bill if he could find out about a home at '123 Main St' that was for sale. Bill made the appropriate phone calls to the listing agent and was told the home had, "just gone under contract that morning." Bill reported back to Jim that it was already under contract. Jim told Bill to find out who the buyer was currently holding the contract to purchase and offer them $10,000 to assign the contract to him. Of course Bill was blown away since this doesn't happen often in our business.
Appraisals, in my experience, are the most misunderstood real estate instrument in the business including by professionals. Appraisals do NOT determine the value of a property. (This post will not address appraisals acquired by cash buyers, refinances or sellers. Those too are often misunderstood and hold no validity when a new bank calls for their own appraisal.) This entry is written specifically to help sellers and buyers understand the purpose of an appraisal when a buyer's banker orders one.
I haven’t owned a home yet that wasn’t good to me, especially when I poured my heart into it. The hours spent investing good old fashion sweat equity. Freaking out over the little things that go wrong; lessons only learned with hands on life. I’ve always loved seeing my finished product. It’s just a shame that memories do not hold financial equity and not all improvements return dollar for dollar. After a person goes to Disney Land do they demand a refund? I once had a neighbor that was selling their first home. I really admired what he said to me about why he had priced it so fairly for resale unlike other sellers who start out demanding unrealistic amounts, ‘This house has been good to me. I’ve made a fair amount on it and I want it to be good to someone else.’ He put a price tag on his serenity, realized the gain he had already made and got it sold fast. The home had already been very good to him not only financially but mentally and spiritually too. I often times hear sellers complain, 'I'm loosing money', but most times they're not; when they do the math. There are lots of financial advantedges to owning such as the income tax mortgage interest deduction, homeowner capital gains exclusions, etc... Most times than not, when a seller actually does the math, they discover it cost them considerably less per month to live in their home full of memories versus had they been a renter. And, over the course of their ownership they are far from being at a loss. Of course in today's current economic mess, there are sellers that are truely 'loosing money' and that's a different story. Blessedly, here in Oklahoma, we have not seen the bubble burst the rest of the nation has had to endure.
Oklahoma School Report Cards:
EPA (lead base paint)
Oklahoma Housing Finance Agency
Making Home Affordable
USDA Rural Development
HUD 184 Loan- Native American Tribal Members
Chickasaw Nation Down Payment Assistance
OERB (Abandoned Well Clean Up and other Resources)
I do not recommend any one company nor it's services, nor is it my intent to exclude any company from this list. This information is provided solely for your convenience.
Home Team Inspection Service
ProInspect Home Inspection
Hearth and Home Inspections
Strike 3 Pest Control
OTS/OK Termite Specialist
The Structures Group
Accuperc Inspection Services (inspect well/septic/lagoon)
Biggs Backhoe & Trucking (septic services)
This Staged Space
Heat & Air (HVAC)
EJ's Heating & Air
Redus Heat & Air, Inc.
405-722-0773 or 405-520-5815
Drake Services, Electrical Contractor
I have yet to see a state real estate contract (this does NOT include builder or private contracts) that was not written in the favor of the Buyer. When presenting an offer to a seller I always ensure the seller understands that the odds of the seller ever keeping the buyer’s earnest money is low. It is at this time the Seller and Buyer should seek legal counsel in regards to their ability to keep the buyers earnest money and fully understand their rights per their specific contract. The law in regards to specific performance is in favor of the buyer since it’s the buyer who is truly at risk. (ATTN: Buyers do NOT assume this means the Seller will release your EM without a court battle and/or the Court will not side with the Seller in regards to buyer's specific performance obligations per the contract) What if you suspect the buyer isn’t being honest about why they are terminating? Good luck proving it.
In my experience most contracts fall out for 1 of 2 reasons. Either the buyer is unhappy with the inspections or the buyer is unable to secure financing. Either way most contracts (seek legal expertise on your state's contract) provide the Buyer a bonafide way to terminate and receive a refund of their earnest money and not be held liable to the Seller to specifically perform and complete the purchase of the home.
Ways to mitigate the sellers risk:
Work in due diligence to prove you have a bonafide buyer willing and able to financially purchase the home. Whether that be with pre-approval letters, bank proof of funds letter or other means of proof such as increased earnest money amount. The situation is still as such; a letter is only as a good as the paper it is written on. Buyers cannot deliberately cause their loan not to be approved but once again, good luck proving they did it.
Mitigate the length of time the buyer has for inspections. These should be done quickly. Allowing a buyer to have 3 weeks for inspections will result in your home being off the market that amount of time and result in the loss of other potential bonafide buyers if the buyer decides at their sole discretion the inspections are not satisfactory.
Accept back up offers; although very few buyers want to be 2nd it’s always a possibility.
Tighten up as many buyer contingency dates (inspections/loan application/appraisal/etc...) as possible including a closing date.
And, after all reasonable efforts are made to make it difficult for a buyer to back out, guess what; they back out. Welcome to the business. Many sellers feel burned when a buyer rightfully terminates per the contract and the seller has no recourse. However, if a seller goes into a contract with eyes wide open they can limit the feelings of resentment if they fully understand the risk they are accepting by assigning interest in their home to a buyer until the buyer terminates and or closes per the contract.
A good listing agent knows all this plus more tricks of the trade and can be invaluable when helping sellers beware of the pitfalls of buyers backing out and how prevent it from happening when at all possible.
"To know that we know what we know, and to know that we do not know what we do not know, that is true knowledge." - Copernicus
Whether, you’re a first time home buyer or buying your 25th multi residential complex; YOU DON’T KNOW WHAT YOU DON’T KNOW. I could end this blog entry there because it is as simple as that. In real estate, I’ve personally lost tens of thousands of dollars not knowing what I didn’t know on my own transactions and I’ve seen millions lost with heavy hitters in the business. We all get too big for our britches at one time or another but a good investor knows this is true.
So, you’ve admitted it. Where do you go from here? First, find yourself smart people (experts) and surround yourself with them then listen to them. Identifying them will be harder than you think, since, most people have just
enough information to be dangerous and everyone including themselves is unaware until it's too late. A true expert has several qualities to look for. First, they are passionate about what they do and they don’t have another part time job. Second, their actions and words match. Third, they have experience which means they’ve had years of opportunities to make mistakes prior to your transaction. Next, how do you find these experts? The web and/or referrals. Some will have designations and some will come highly recommended. Some you can get to know simply by reading their blogs and unfortunately others won’t be who they appear. Always be weary of experts who don’t respect other's expertise and remember there is a difference between a salesperson and an expert. An experts advice does not change based on how much you spend and knows when to call in another expert.
You want someone that specializes in whatever your real estate need. Not a jack of all trades. These
wannabe Trump types don’t know what they don’t know either and unlike you and I still haven’t admitted it. You want someone who eats, sleeps and transacts real estate everyday, 24/7/365 in the specialty you need. Do you want a surgeon practicing on you? Then why would you let ‘Your Cousin Vinny’ sell you a home? Just because an attorney may have contract skills that doesn’t make him a builder or soil expert nor does the builder necessarily have his finger on the pulse of the market like an agent or the motives to protect your interests.
Every deal is different; just like every medical patient is different. A good agent knows their clients and their
unique needs. I tell my clients all the time that my experience is from mistakes I’ve made and/or seen others make and from surrounding myself with information in the real estate field daily, year after year.
Some are still thinking…..I can save the commission or expense of an expert. Maybe, but probably not and even then no one is advocating for you. You might save money on the front end of the deal but it’ll cost you on the back end. I’ve seen it happen more often than not. Sometimes the mistake is realized immediately other times not until you go to resale. My question is, “Which problem do you wan to have?” Because, let me tell you a $40k mistake is hard to swallow. Real estate is a risk. It’s the safest financial risk you can make but it is still a risk. Who is helping you hedge that risk?
Experienced professionals you’ll possibly need in any given real estate transaction:
Buyer Broker Seller Broker Real Estate Attorney Pest/Insect Technician
Home Inspector Surveyor Structural Engineer Home Stager
Banker/Lender Insurance Agent Builder Architect
Enviromental Expert: Septic/Well/Soil