Exclusive Buyer Agent Seattle WA

How to negotiate your closing costs

2008-08-14T12:25:00.000-07:00

Shop around before choosing a mortgage lender, but don't stop there. When you receive your good faith estimate of closing costs, or GFE, the negotiation hasn't ended.

Excerpt from "How to Negotiate Your Closing Costs" by Holden Lewis of BankRate.com:

The lender or mortgage broker is required to give you a GFE within three working days of accepting your loan application. The GFE comes in the form of an itemized list of estimated closing costs for everything from the lender's fees to the appraisal charge to the title insurance premium to a partial month's interest payment.

The lender or broker charges some fees, and third parties charge others. The first step is to find out which are loan origination fees and which are third-party fees. Don't guess. Ask the lender or broker.

The big money question"Say, 'Please explain to me what those fees are,'" says Jessica Cecere, director of the Consumer Credit Counseling Service in West Palm Beach, Fla.
Simple advice, but a lot of loan applicants don't follow it.

On the GFE, fees are categorized by numerical codes ranging from the 800s to the 1300s. Most of the negotiable lender-charged fees are in the 800s: application, origination, commitment, loan discount, broker, tax-related service and underwriting fees.

Read full article on BankRate.com

What Buyers Need to Know About the New Distressed Properties Law

2008-07-06T12:46:00.000-07:00

According to Washington State Attorney General Rob McKenna, the original draft of the controversial Distressed Properties Law intended to protect homeowners from equity skimming scam artists. It was originally very narrow in scope and specifically targeted certain individuals who promise aid to distressed homeowners, but who would end up stealing a distressed home owner's equity.

The original intent of this law was well-meaning when it was first drafted, however, when the draft reached the State senate, the senate added new language at the last minute that made the law very broad and harmful not only to Realtors, but also to buyers. Steps are being made to correct the harmful language of this new law. However, until then, buyers and their agents must take care to avoid the actions that would impose the "Distressed Home Consultant" designation upon them.

What buyers and their agents need to watch out for:

1. Do not make any offers to save a home from foreclosure

2. Do not contact lenders on behalf of the seller (buyers and their agents should not be doing this anyway)

3. Do not close (or set a closing date) within 20 Days of a scheduled foreclosure date (IMPORTANT)

4. Do not systematically contact distressed homeowners, for example, looking specifically for foreclosure properties to buy, etc.

What happens if a buyer and/or their agent becomes a "Distressed Property Home Consultant"

1. Under the new law, if the "Distressed Property Home Consultant" designation is imposed, buyers and their agents will owe fiduciary duties to distressed homeowners under consumer protection laws. There will also be cumbersome procedures that must be followed under this legal implication (see video below for more details). This is a bad situation for buyers to be in, as well as their agents. At this point, buyer's and their agents would need to consult with their respective legal advisers asap.

It is critical to understand that distressed property homeowners cannot waive their rights under this new law. Therefore, the best way to avoid the risk of implication is to avoid being exposed to this situation altogether.

Bottom line:

Until legislative officials remove or revises the adverse language contained in this new law, buyers and their agents will need to stay vigilant and aware--being very careful not to become ensnared in the flaws of this new law.

To learn more about this new law and find out what is being done about it, watch this video as Washington Attorney General Rob McKenna discusses the issue:

The Distressed Property Law: Next Steps & Solutions

To learn more about this law in general as well as its implications, watch this video produced by the Washington Association of Realtors, Northwest Multiple Listing Services, and supported by the Washington State Department of Licensing:

Distressed Properties DVD Chapter 1

For buyers contemplating the purchase of a residential property of 1-4 units or who have questions about this law, please consult with your attorney and be clear on how to proceed with your buyer's agent before stepping into the market. Preparation and planning will go a long way to prevent becoming a "Distressed Property Consultant."

Retainer Fees: To Pay or Not to Pay

2008-06-19T15:16:00.000-07:00

I came upon a blog discussing the topic of buyer agents charging retainer fees. While there are some that are totally against paying retainer fees to a buyer's agent, there are others who understand the circumstances that would make the payment of a retainer fee valuable when it comes to retaining the services of a dedicated buyer's advocate.

Here is my comment:

From a buyer's perspective, I would want to know the buyer agent's policy regarding retainer fees before passing judgment. How will the agent or broker treat the retainer fee? Will they be returning the fee at closing, or will they be keeping the fee no matter what?

The answer to this question--in addition to the agent or broker's reputation--can determine whether a retainer fee is worth paying. Because, if a buyer's agent makes it clear that the retainer fee will be returned at closing, applied towards an appraisal, credited towards closing costs, etc., then one can safely assume that this agent or broker is only charging the fee to make sure that they are dealing with serious people; because, they only get paid when a transaction closes. They need to know that they are giving their best and dedicating their time, energy, and resources to serious clients only.

It is reasonable to assume that any employed person expects compensation for the work they do regardless of industry and regardless of whether they are on a salary, hourly wage, or any other form of compensation. How many here would go to work without the assurance of receiving a paycheck?

A good buyer's agent--especially, an exclusive buyer's agent with a good reputation for being a steadfast advocate for the buyer--is worth paying a retainer fee. When it is in writing that the fee will be returned upon the completion of a designated event, then this is a good indication that the agent or broker is not trying to "get rich" from charging retainer fees. Instead, they are merely looking for the assurance that they are dealing with serious people.

In summary

I work on retainer in my own real estate practice. However, I do not keep the retainers that I collect. Instead, I return them upon the completion of a designated event, which is ALWAYS in writing. I should also note that repeat clients NEVER have to pay retainer fees a second time and neither do the referrals they send my way. I am very dedicated to my clients' satisfaction. Their happiness means everything to me and I always give them 1000% of myself to inform, shield and protect the strength of their negotiating position. This alone substantiates the value of paying a retainer fee for my service--a fee that I return to clients in the end, which they do not have to pay a second time.

Buyer Beware: Washington State's New Distressed Property Law

2008-06-16T01:56:00.000-07:00

Buyers and their buyer agents need to be aware of a new controversial law that took effect on June 12th called the Distressed Property Law HB2791. In a nutshell, if an agent, broker, or buyer says or implies certain things to a distressed homeowner or systematically searches for distressed residential properties (1 - 4 units), then under the new law that agent, broker, or buyer would then become "distressed home consultants" and they would suddenly owe fiduciary duties to the distressed homeowner under the new law, which falls under the category of consumer protection laws. That a buyer could even fall prey to this new law is truly unbelievable.

According to legal sources, the Washington Association of Realtors is working with the WA State Attorney Generals Office to correct the language of the new law which was passed at the last minute without any public comment. However, in the meantime, we all have to be careful (including buyers) until these legislative revisions have taken place. This law only pertains to residential properties of 1 -4 units. Properties of 5+ units are exempt from this controversial new law. The association explains how this law came to be:

How was this law passed without the Washington REALTORS® intervention?

The Washington REALTORS® closely monitored the legislation as it was proposed by the Attorney General as the legislation progressed through the House and the Senate. Both the Washington REALTORS® and the AG were satisfied that the Bill, as proposed and intended by the AG, did not include the adverse language now causing the problems. However, after the Bill was passed in one form by the House and in a slightly different form by the Senate, it moved into a process that occurs outside the arena where public comment or influence are allowed. It was at that stage that the adverse language was added and the Bill was immediately voted out of the Legislature without any opportunity for the AG or the Washington REALTORS® to testify about the problem.

Source link: "What You Need to Know About Washington State's New Distressed Property Law HB2791"

FHA Threatens to Ban Downpayment Assistance Programs

2008-06-10T01:31:00.000-07:00

Today, the New York Times revealed the FHA's plan to do away with downpayment assistance programs offered through non-profits because they expect $4.6 Billion in losses, which they attribute to these programs. FHA commissioner, Brian D. Montgomery, warns that the F.H.A., "would have to renew its efforts to end the seller-financed down payment program, which accounted for 35 percent of its loans in 2007."

Rachel L. Swarns, the writer of this news piece explains how these seller-financed downpayment programs work:

"Under the program, a home seller arranges to cover the buyer’s down payment, using financial help from a nonprofit company, but typically adds that sum or more to the price of the house. The deal has been particularly attractive to financially struggling buyers and to owners in depressed markets, according to Congressional officials."

There is much debate with congressional leaders as to whether or not the FHA should ban these programs. On one side, critics say that these programs put overpriced homes in the hands of the poor. On the other side, supporters claim that banning these programs would make homeownership unattainable for low income families.

I believe there is a middle ground somewhere. Downpayment assistance programs are ok so long as buyers can afford them. The problem starts when buyers cannot afford the higher purchase price that results from adding the downpayment and closing costs to the purchase price so that the seller is willing to pay them on the buyer's behalf. Instead of banning these important programs, it would make more sense to implement stricter income qualifying requirements for buyers intending to use these downpayment assistance programs OR any other alternative to a straight ban on downpayment assistant programs.

Read full article here, F.H.A. Faces $4.6 Billion in Losses.

Multiple Offers: To Engage or Not to Engage, the Answer is up to You!

2008-06-07T12:39:00.000-07:00

I recently came across an interesting discussion among peers regarding the dynamics between buyers, sellers, and their agents and whether a buyer's offer is kept secret when presented to a seller and his or her agent. While the discussion was technically not about multiple offers, the discussion evolved to include this subject because the original post mentioned some of the things a seller's agent might do when there are multiple offers on a home; for example, when the author said, "Often the seller will counter the most qualified buyer with the higher price of another offer from a less qualified buyer. Technically they didn’t 'reveal' your 'offer,' but they used your price as the counter price to a different buyer."

These are the kinds of things that buyers need to be aware of before deciding to engage in a multiple offer scenario because ultimately the goal of a situation like this is to get the highest price possible for property. Depending on the situation, and the people involved, this scenario often leads to compromising the strength of a buyer's negotiating position. A good buyer's agent should work to shield, inform, and protect a buyer's negotiating position because through this strength a buyer has the best chance of negotiating the best deal possible. A compromised negotiating position means that a buyer has lost all of his or her bargaining chips and must now deal on the seller's terms if he or she wants to pursue that seller's property. Some agents might argue that some homes are worth pursuing in a multiple offer situation, but the decision of "worth" is ultimately the buyer's to make once they fully understand the rules of engagement because a situation like this truly falls under the seller's rule. Instead of negotiations, the transaction will seem more like an auction and the multiple buyers involved become levers in the seller agent's quest to get the highest selling price possible for their seller. In my opinion, buyers should not oblige, but it is up to the buyer whether or not they wish to engage.

A multiple offer situation is the best possible scenario for a seller, period. Indeed, it is quite the opposite for a buyer. Even under the advice of a buyer's agent of whether or not to engage in a multiple offer situation, the choice to engage is still the buyer's decision to make.

Click here to read the full post:

Is your offer a secret to be kept?

Home Buying Experts Warn - Builder Loan Fine Print Could Cost You Thousands

2008-05-21T16:19:00.000-07:00

Here is an interesting news release by the National Association of Exclusive Buyer Agents about what buyers should look out for when dealing with a builder's mortgage company:

AVONDALE, Ariz., May 19 /PRNewswire/ -- The home loan packages offered by builders are often touted as being very convenient. But when it comes to evaluating the true benefits the picture is often quite different, according to the home buying specialists at the National Association of Exclusive Buyer Agents, (NAEBA). Recent difficulties in the mortgage marketplace bear this out.

"Mortgage shopping can take a significant level of sophistication. In addition, negotiations with a builder's mortgage company can sometimes be stressful and costly," stated Barry Nystedt President of NAEBA. "Home buyers still need to compare the builder's loan offerings to what is available on the open market. Complications arise when the buyer becomes obligated to the builder's lender without being able to compare the rates and fees other lenders may offer months later when the home is complete. Sometimes the builder's lender takes advantage of a buyer by providing an overpriced loan, which the buyer accepts, not wanting to risk losing the builder's incentives."

Read the full news release from the National Association of Exclusive Buyer Agents (NAEBA)

The Ummel Verdict Is In - Buyers Need to be Careful in Choosing Their 'Buyer Agent'

2008-04-18T01:17:00.000-07:00

Here is a news update on the Ummel case as reported by the National Association of Exclusive Buyer Agents:

AVONDALE, Ariz., April 17 /PRNewswire-USNewswire/ -- The verdict is in and a California jury has decided that a real estate agent did not violate the law by failing to disclose to his buyer client information about comparable homes on their same street that were selling for substantially less money. In a case of first impression, Marty Ummel attracted national attention when she sued her buyer agent and his company, for allegedly duping her and her husband into overpaying for a $1.2 million home."Not disclosing comparable market data to a buyer client may not have been perceived as a violation of law by this jury, however it would certainly violate the Code of Ethics of our association," stated Barry Nystedt, the President of the National Association of Exclusive Buyer Agents (NAEBA). "Real Estate practitioners in traditional real estate firms that usually represent sellers may not have the commitment and skill to fully protect the financial interests of the home buyer. Home buyers would be smart to hire an agent from a firm that specializes in representing only home buyers and subscribes to a higher standard of performance," Nystedt added.

Read full press release.

Unhappy Homebuyer Sues Agent

2008-01-24T00:49:00.000-08:00

The opening lines of a news article in the SeattlePI reads, "Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom."

With real estate values plummeting in some parts of the country, and as the mortgage industry tries to restore a sense of order after its meltdown, there will no doubt be chaos and casualties, as the market tries to recover. These events will no doubt have a profound effect on the future of the industry, and the way its participants interact. There is so much upheaval and disarray that some would see it fit to cast a shadow over the entire real estate industry. However, I disagree wholeheartedly, because there are many who conduct their real estate businesses as responsible consultants and advisors.

It is time to raise the bar in the real estate industry. Establishing mutual expectations and responsibilities upfront will go a long way to avoid misunderstandings, bad communication, and bad decisions. While I believe that buyers should be responsible for their own due diligence, it is an agent’s job to provide enough data and information to enable clients the opportunity to make informed decisions; including where to find expert advice in matters that go beyond the scope of a real estate license.

When the market heats up, agents should advise against engaging in bidding wars, and if a buyer wishes to ignore such advice, it is better to terminate and walk away from the agreement than to benefit from a buyer’s bad decision. A good buyer’s agent will advise their clients against engaging in such activities that were prevalent in the last housing boom in Seattle. Many buyers were engaging in bidding wars against each other, agreeing to inflated sales prices, getting into adjustable rate mortgages with very little or no money down, waiving inspection and financing contingencies, and subsequently, driving up the values of surrounding homes.

The key is clear and honest communication. By communicating responsibilities and expectations up front, buyers will understand their responsibilities and agents will understand theirs. This will go a long way to foster trust, confidence, and mutual respect in the end.

Bush to unveil plan to help homeowners

2007-12-06T23:44:00.001-08:00

Today brought news from the Nation's Capitol that President Bush plans to help homeowners who have fallen victim to the surging mortgage crisis. While this will be a relief to some, there are many who will not qualify for aid under this new plan. You can read more about it in today's headlines from CNN Money.

As previously mentioned, it is important to stress again that planning a purchase is the key to a successful real estate experience--both in the short and long term. Buyers who take the time to plan will usually do the necessary research on everything including mortgage products, instead of leaving it to chance, and getting burned in the end. A knowledgeable exclusive buyer's advocate can be a valuable asset to buyers in the planning process and through every step of the purchase process.

The House Passes H.R. 3915: The Mortgage Reform Bill!

2007-11-20T12:14:00.000-08:00

Some interesting news that will impact the mortgage industry.

"On Thursday, by a vote of 291-127, the House passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, sponsored by Representative Brad Miller. The bill would enact standards on mortgage brokers, lenders, and Wall Street companies. Brokers and lenders would be responsible for guaranteeing that borrowers will be able to repay "adjustable rate" mortgages that will reset to higher payments in the future. They would also have to show that refinancing is to the borrower's advantage. Mortgage brokers and loan officers would have to be licensed and registered with the government."

EBA Gives Good Advice: When NOT to Buy Real Estate

2007-11-18T21:23:00.000-08:00

The Internet is full of real estate articles and blogs that say "now is the time to buy," but here is one blog entry that explains when it would not be a good time to buy. The message in this article carries a lot of merit, because part of a successful real estate purchase is knowing not only when to buy, but also when not to buy. The blog entry is by Exclusive Buyers Realty in San Antonio.

While it is true that we are in the midst of a buyer's market, it does not mean that every buyer is in a position to purchase a home, or invest in property. A few of the reasons given by Exclusive Buyers Realty include changing jobs, having low credit scores, or relocating to an area without being familiar with the communities in the area. This blog is a refreshing change of pace, and it is well worth the read. Enjoy!

A Rebuttal for Exclusive Buyer Agency Agreements Against Erroneous Fallacies

2007-10-26T16:42:00.000-07:00

The point of this blog is not to bash anyone, but to present facts as they are in an effort to clear up any misunderstandings, and to allow readers the opportunity to evaluate all the facts, so that they can decide for themselves what is right. I think it is important for people to have all of the information they need from an objective point of view, and not from a biased perspective tilted in favor of ones own business model.

Melson wrote:

“Indeed, an argument can be made that offering a high incentive (locally, 3% or more) to a buyer's agent is one of the better ways to get the property sold. Not only do many buyer's agents shop that way explicitly, but if they have an exclusive contract that says 3% (as many do, because their clients aren't educated enough to know what a crock exclusive buyer's agency agreements are in the first place, but they'll also willingly trust the chain agent as to what is "standard").”

Now the truth:

Speaking for myself, I do not look at commission rates when searching for properties. I look for properties that fit my client’s needs and wants. Secondly, every exclusive buyer agency agreement should have some sort of a realease or exit clause, if it does not, then buyers should not sign it. Having a release clause means that if either buyer or agent becomes “disenchanted,” written notice is all that is needed to terminate the agreement.

Under a non-exclusive buyer agency agreement, a buyer will still be obligated to buy through the agent who introduced the property under contract. An exclusive buyer agency agreement is no different. However, with a realease clause, if no property was found, and the exclusive buyer agency agreement is terminated in writing, then no commission is due. Buyers should review ALL written agency agreements with their attorney. This is how a buyer makes certain that this language is part of an exclusive buyer agency agreement.

Now, going by the "crockery" logic, if exclusive buyer agency agreements are a “crock,” then why aren't exclusive-right-to-sell agreements a “crock,” as well--since these two agreements are, after all, equivalent counterparts?

Melson wrote:

“If the Cooperating Broker's percentage is lower than what it shows on the buyer's agency agreement, that buyer will need to come up with more cash to pay their agent, from out of their limited pool of available cash. When that buyer's agent is in a position to demand 3% whatever property their victim buys, even if they didn't find it and weren't involved, that means properties paying less than that aren't contenders for this buyer's business, unless they've got so much available cash that it just isn't a constraint, and that is rare.”

Now the truth:

First of all, buyers who work with exclusive buyer agents (under exclusive buyer agency agreements) are hardly "victims," but they are progressive thinkers. Buyers can negotiate exclusive buyer agency agreements to include, for example, language that states the commission earned will be X%, OR the percentage offered by the listing office. Furthermore, a buyer and a buyer's agent can agree upfront to waive a portion of the commission if the property listing offers a "selling office commission" that is less than what was agreed upon in the exclusive buyer agency agreement. Three percent is not cast in stone.

Any good real estate attorney can advise buyers on how to accomplish this, and draft the necessary language for such a provision.

Admittedly, Melson is very biased against exclusive buyer agency agreements, so his opinions in this matter are not going to be very objective. However, he applies a double-standard when it comes to sellers signing Exclusive Right to Sell Agreements--the equivalent counterpart of an Exclusive Buyer Agency Agreement:

“As I said in Exclusive Right to Sell Versus Exclusive Agency, it is in the client's best interest to sign an exclusive right to sell, because the agent will have no mental reservations about whether they will get paid if the property sells.”

Melson wrote:

“A better buyer's agent puts a lower number on a nonexclusive contract, and if they get more, that's certainly fine with them, but because they have a non-exclusive contract, they don't get anything if the buyers become disenchanted with them and stop working with them.”

Question: Would a seller's agent consider working this way? Most, if not all, would not. Most listing agents will not offer real estate services to sellers without some sort of exclusive agreement, because they want to be assured that they are not working for free--after all, this is their job. For that matter, would anyone want to go to work, if they knew they might not receive pay; whether it is a real estate job or otherwise? Buyer agents are no different. Melson applies a double standard again. The truth is, buyers who sign an exclusive buyer agency agreement can terminate the agency relationship with their buyer’s agent, as long as the agreement contains some sort of release or exit clause, and there is no property under contract.

An attorney can advise buyers on how to insert a release clause when negotiating an exclusive buyer agency agreement. A real estate attorney is a valuable part of a buyer's real estate team.

As far as being locked in, regardless of whether a buyer agency agreement is exclusive or non-exclusive, a buyer will be obligated to work through a certain agent or broker if that particular agent or broker introduced the buyer to the property under contract. It’s called procuring cause.

Melson wrote:

“This gives a buyer's agent with a non-exclusive contract the incentive to find the property that's a real value to the clients as quickly as possible. I care far less about whether I'm getting two or three percent or something in between on a particular property, than I do about finding the property my clients want that's within their budget.”

Another question—if a non-exclusive contract is such a “value” to buyers, then why is this "value" not extended to sellers, as well? Does this seem fair? Furthermore, any agent or broker who is truly passionate about their profession is going to work hard for their clients, because they want to earn their client’s trust, loyalty, and future business.

Melson wrote:

“My incentive is to make the clients as happy as possible so that I do get paid, because if I don't, I won't. But the buyer's agent with an exclusive contract that pays three percent has a different set of incentives, which is another reason I advise strongly against signing exclusive buyer's agency agreements, and the existence of such creatures is the reason why it may be a good idea for sellers to offer a higher percentage to a buyer's agent.”

Now, the truth:

A buyer’s agent with an exclusive buyer agency agreement is no different than a seller’s agent with an exclusive-right-to-sell agreement. Melson speaks in general terms, as if to say that all buyer agents working through exclusive buyer agency agreements are untrustworthy. However, he is wrong on several points.

The choice of working on an exclusive or non-exclusive basis is not a matter of right or wrong, but a matter of preference—for example, a real estate investor may require minimum service and no guidance from a buyer’s agent. These types of buyers are usually very experienced with many years of real estate investing behind them, they typically have long-term banking relationships established, and because of this, their financing is often times readily available. These types of buyers know exactly what they want, and exactly what they need. In this case, a non-exclusive buyer agency agreement might work best for them. However, buyers that need or prefer to have more assistance and advocacy on their side are better off working on an exclusive agency basis, because this agency option offers full buyer support at every step.

Therefore, it depends on a buyer’s particular situation which form of buyer agency works best for them, but regardless of the chosen form, all agreements should be reviewed by an attorney before signing them around.

The Subprime Blame Game: A Heated Discussion

2007-10-20T16:20:00.000-07:00

Many people have different ideas about where to place the blame for all the problems in the mortgage market. This particular blog entertains the idea that maybe agents are somewhat to blame. However, I disagree with this logic, because doing so makes sweeping generalizations against all agents, brokers, and Realtors--which is not right, nor is it fair.

While many disagreed with what this blog implied, there were those who were content to say that "all Realtors" are alike. They claimed that it was the "greed of Realtors" that helped cause the current crisis in the mortgage market, and that Realtors supposedly misled buyers. While there are some agents, brokers, and Realtors who act unethically, to say that all are alike is a flawed and unfair stereotype.

Many buyers do not understand the responsibilities they have to themselves when it comes to making major financial decisions like purchasing a home. Many go into the market without having a plan, and most do not consult with their legal and financial advisors before signing mortgage and closing documents. Buyers should become well-informed--taking the time to plan things out well in advance. A good buyer's agent should be able to assist buyers with the research required for building a solid plan, as well assist in the plan's implementation, but it is ultimately the buyer's responsibility to review and finalize these plans with their legal and financial advisors before starting. In most states, brokers and agents are prohibited from interpreting legal language and giving legal or financial advice unless they are attorneys or accountants, as well.

Here are a few relevant quotes from a book by Charles A. Jaffe, called “How to Hire Financial Help the Right Way.” 2nd Ed.:

Regarding the act of taking financial responsibility:

“One of the most responsible actions anyone can take toward managing their money is to own up to their shortcomings and to pursue assistance for those weaknesses in a strong, self-assured manner. There is virtually nothing in money management that you cannot do yourself, but there is a big difference between simply taking on the task and actually doing it well. Whether it is buying stocks without a broker, building a portfolio of mutual funds, or purchasing life insurance, dabbling almost always leads to disaster. I'm a big believer in doing as much as possible on your own, provided you understand this simple strategy for managing things yourself: Go strong or don't go at all. The problem is that many people do neither. ” (Jaffe p. 1).

Regarding the abdication of financial responsibility:

"They don't have the know-how to do it themselves and don't want to take the time to learn, but they also don't want to hire outside counsel. They get their information in snippets, from friends, in the papers or magazines, from radio and television programs, at the barber shop or beauty salon, or in online chat rooms, and they wind up with a patchwork of products instead of a blanket of financial security. Worse yet, the decision to hire an adviser becomes an abdication of responsibility, rather than an aggressive move to make things better. Instead of choosing their helpers carefully—matching skills to needs and doing the interviews necessary to create the appropriate level of comfort—they look upon the hiring decision as a means to an end, as in ‘If I hire this person to do my taxes, I'll never have to worry about my taxes again’” (Jaffe p. 1 - 2).

Regarding what many people fail to understand :

“And that's where folks like my friend come to the conclusion that people who want or need assistance simply can't help themselves. They perceive financial relationships as an all-or-nothing proposition, either done on your own or handed off to someone in exchange for a hefty fee. Like most, they fail to recognize that the person who hires advisers must then manage those helpers and remain intimately involved in making decisions” (Jaffe p. 2).

Cite Source:

The Right Way to Hire Financial Help by Charles A. Jaffe

In the case of mortgage documents, it should be common sense that an attorney should review them--because in essence--they are legal documents. However, many buyers fail to do this. Then when something goes wrong, critics are quick to put the blame on someone else...like the entire real estate industry. Needless to say, it is the responsibility of consumers to become well-informed and prepared before entering the real estate market; this includes understanding the difference between available agency options, understanding the advantages and disadvantages of certain mortgage products, having a pre-approval in hand before entering the market, having detailed information and demographics about prospective neighborhoods, and saving enough cash to cover a downpayment in addition to any reports or inspections that might be necessary.

Planning is the key to a smooth purchase transaction, and reviewing closing documents with an attorney is key to spotting unnacceptable or risky loan terms.

Buyer Wants To Know Why Broker Is Showing Own Agency Listings Only

2007-10-15T14:03:00.000-07:00

In 2005, Realty Times columnist Blanche Evans responded to a Realtor looking for information in order to answer a buyer seeking an answer to why her broker is “showing her only the agency’s listings, and not all of the properties available that would be best for her.”

Blanche did a great job of covering all of the bases. She talks about the traditional way agents do business in real estate, as well as how and why a traditional agent would work to increase their “sides” per transaction, and the logic behind the different agency options available to buyers. I thought her article was both insightful and accurate. Although this article is a couple of years old, the information presented are still very relevant today. Blanche's article is definitely worth the read.

Latest NAR Forecast Indicates Mortgage Market Improving for 2008

2007-10-15T12:45:00.000-07:00

On October 10, a press release from the National Association of Realtors paints an improving picture in the mortgage market. According the press release, senior economist Lawrence Yun said that this improving forecast is due in part to “widening credit availability,” and that “conforming loans are abundantly available at historically favorable mortgage rates.” Other factors cited are the reduction of new home starts, because it reduces the amount of inventory, which Yun claims “will help lower inventory and firm up home prices.”

I should note that buyers who cannot qualify for a conforming mortgage might still experience difficulty obtaining the financing they need to make a home purchase. Speaking with a mortgage consultant and obtaining a mortgage pre-approval ahead of time is always advisable. Knowing your home buying limits in advance will go a long way to reduce---if not eliminate---uncertainty and anxiety at closing.

Why Buyers and Sellers Should Not Be Treated Differently

2007-10-12T12:04:00.000-07:00

A blog entry recently surfaced in the blogosphere from a San Diego Realtor who claims to be a Buyer’s Realtor, but in reality, he is a traditional Realtor, because he also works with sellers. Although this agent’s name will be spared, the focus of this blog entry will deal with the reasons why buyers should not be treated any differently than sellers. This distinction is very important, because buyers have traditionally been underserved and uninformed in the real estate industry--which is over 100 years old in the United States.

This agent wrote a hypothetical scenario of how he goes about critiquing a property. He did this by using a one-sided role-playing monologue to show how he works. Once he finished his one-man monologue, he started to explain the generic “benefits” of working with him, and then went on to make the assertion that in order to work with him, he would require a non-exclusive buyer’s agreement—along with his interpretation of the “benefits” of working in a non-exclusive capacity. The fallacy of his perceived “non-exclusive buyer benefits” will be explored with the use of critical thinking.

Using critical thinking skills, a person has to wonder if this agent would work in a non-exclusive capacity with a seller—and if not, why? After reading his web site, it has been found that he does not work with sellers on a non-exclusive basis; most listing agents do not. A good listing agent will go the distance for the sellers they exclusively represent. Does a buyer not deserve to receive the same level of service that a seller would receive? Why should buyers be treated any differently? Does this Realtor not understand that exclusive representation for buyers is only fair, considering the level of service and representation sellers have traditionally received for over a century? Why should consumers receive anything less as a buyer than they would as a seller, because a seller will usually become a buyer at some point in the future?

Lastly, this agent claims that it's only fair that buyers work through a non-exclusive agreement, because they are free to work with whomever they want. However, the decision to work under an exclusive agreement--or a non-exclusive agreement--is not a matter of fairness, but instead, a matter of buyer preference; because it depends on the level of service that a buyer wants to have. Buyers must decide for themselves whether they want to be treated as a client, or treated as a customer. As a client, buyers demand and get the best level of personal service from the professionals they work with, while buyers who are only customers are satisfied with—or are unaware of—arms-length transactional-based service.

An agent who offers transactional-based service is not concerned with the overall buying experience of buyers. Instead, they are only concerned with handling the particulars for the properties they find for buyers, also known as "procuring cause." Such an agent cannot call themselves an advocate for the buyer, who takes a personal interest in providing a level of service that includes the entire buying experience.

This level of service is the direct result of agent-client relationships that build over time. This keeps clients coming back in the future, because they know they will not be treated as a sales statistic. Such relationships include getting to know clients over time, getting to know their unique situations, getting to know their individual priorities, and taking all of this information into account when creating customized reports based on client needs, related research, compiled market data, interpretation of market trends, and area statistics. An advocate will synthesize all of this important information into a useful and valuable report that will assist their clients in making well-informed buying decisions based on their own unique situations.

This level of service is what a buyer receives as a client under an exclusive buyer agency agreement--not as a customer under a non-exclusive agreement. It also needs to be said that a traditional buyer agency agreement can be signed on an exclusive basis--meaning that a buyer agrees to work only with a particular agent from a traditional real estate office. However, if a buyer agent asks a buyer to consent to dual agency in writing, then the agreement is not for exclusive buyer agency services--which completely prohibits dual agency.

Seller’s receive a greater level of service from their exclusive listing agents, so why shouldn’t a buyer receive this level of service from their exclusive buyer’s agent? If a buyer is satisfied with an arms-length transaction, then a non-exclusive agreement may be right for them. However, buyers who demand the best service should insist on an exclusive buyer agency agreement, prohibiting dual agency, and they should articulate what they expect and need under the agreement.

Mortgage Problems Continue To Hamper Pending Home Sales

2007-10-04T16:45:00.000-07:00

On October 2nd, the National Association of Realtors reported that pending sales of existing homes "will be dampened near-term as mortgage disruptions continue to impact the housing market..."

NAR senior economist Lawrence Yun said that a separate internal survey of NAR members revealed that more than 10 percent of sales contracts fell through at the last moment in August because of cancelled loan commitments.

Read more about it, and get the full story here.