2007 February | Columbus Real Estate Voice

Archive for February, 2007

The Challenges of Buying (and Selling) A Short Sale Home

February 28th, 2007 Bank-Owned/Short Sale Homes, Columbus Buyer Info, Columbus Seller Info, Down to Business, Investment Property, The Bad 3 Comments

Shortsalehouse As buyers look for the ‘best bargain’ in a home, most are curious about three types of bargain-basement properties: the Short Sale, the Bank-Owned, and the HUD Sale.

The Short Sale home is basically a pre-foreclosure sale. The owners have financial issues, have missed or been late on mortgage payments, and are looking at a possible future home foreclosure and/or bankruptcy. Their credit rating will then be seriously impaired and there will be a period of time where they won’t be able to own a home. They may have already tried to sell their home, but the price at which they need to sell is higher than the market value, and there have been no offers.

At this stage, a realtor often becomes involved who has experience in proposing a short sale to the lender. The owners present a hardship letter along with a packet of information for the bank to consider, asking for time to get the property sold.

The lender has said it will consider a price that is lower than the payoff amount of the loan. The advantage to the lender is that this loss will be less than the losses the lender will incur with a foreclosure.

In a perfect world, the sale happens, the lender takes a small loss, and the owners have minimal damage to their credit so they can move on and even buy another home if they wish.

Here’s where things get tricky. First of all, the bank has said they will think about it- there are no guarantees they will decide to accept an offer. Banks are also notoriously slow and can take weeks to come to a decision. It’s the bank making the final decision, not the homeowners. There are also ‘addendums and qualifications’- the home is sold ‘as-is’, the buyer needs to be pre-approved, there is lots of bank paperwork (that their lawyers have created) absolving them from everything. Last of all, many of these properties have two mortgages- the primary mortgage and the equity mortgage (an equity loan is the same thing). There are frequently two lenders involved in these mortages, so you have two sets of people deciding if things will fly. (If you’re a betting person, figure the odds on this scenario moving along smoothly and quickly.)

So…. the seller is hoping and praying things will work out, and the buyer is often waiting for weeks for answers and hitting one brick wall after another.

SELLERS- Two things- first, your credit score will be affected in a negative way, and second, the amount of debt the lender forgives is still considered taxable income- and Uncle Sam is going to want his share. For example, if your mortage is $100,000 and the bank agrees to settle for $90,000, you are going to have to pay taxes on the $10,000 that was forgiven.

BUYERS- If you’re an impatient buyer and in a hurry, a short sale is not for you. If you want a perfect house that doesn’t need maintenance and possible repairs (remember, you’re buying the home as-is, and there’s a good chance the previous owners did not have the money to keep things up to high standards), a short sale is not for you. If you detest paperwork and bureaucracy, a short sale is not for you.

If you’re a handy fix-em-up person, patient with the world and its craziness, and looking for an opportunity to gain some ground on equity…… a short sale home could be your ticket to paradise.

(Note: for MORE issues to face on Short Sales, click on this later post….)

Columbus New Build Market Feeling The Cold….

February 27th, 2007 Columbus Buyer Info, Columbus and Central Ohio Real Estate Tid Bits, The Bad No Comments

Newbuildsold Any interested home buyer searching the real estate ads in the last several months has noticed a distinct turn-down in the new build activity in Columbus and central Ohio. Builders are offering huge incentives to buyers and realtors alike to drive in new business.

Local builders Dominion and M/I Homes reported large sale decreases in the last quarter of 2006 compared to the same time frame in 2005, and Dominion reported a year-end loss of $34 million for all of 2006.

On a national level, new build sales experienced a 17.8 decrease in 2006 compared to 2005. This brought new housing starts to its lowest point in 10 years, despite monthly gains in November and December.

It’s a strong buyer’s market to make a great deal on a new build home…

Don’t Have Real Estate Commission-Breath

February 21st, 2007 Columbus Buyer Info, Columbus Seller Info, Down to Business, It's My Opinion, The Ugly No Comments

Openmouth A couple of years ago a potential seller contacted me for a market analysis. While reviewing similar sold properties, it became obvious that she had purchased well above the fair market rate when she had moved into the area from out-of-state three years before, and she would have a tough time recouping her costs with the sale.

She sighed when I told her the news. Her buyer’s agent at the time had not given her comparable sales, and had kept pushing her that this home ‘was a great buy.’ Although she accepted her current situation, her comment about the previous real estate agent stuck in my mind. “I just felt like I was only a paycheck to him- I don’t think he really cared about my needs.”

Her feelings are a great example of commission-breath. I love that term, and would love to take credit for it, but the credit goes to Ken Blanchard, the author of The One Minute Manager who used this term in a recent presentation to realtors at the Keller Williams Family Reunion.

We’ve all experienced commission-breath…. from car salesmen, appliance salesmen, and all those other sorts of ’salesmen’ that look at us with a gleam in their eye and see dollar signs. They push hard for a ’sale’ and use a myriad of techniques to ‘make the close.’

Yuck. I feel used and discarded after these attempts have happened to me. I also feel pretty lousy when I hear about realtors with bad commission-breath.

We’ve got a Realtor Code of Ethics that we have agreed to live and work by and state laws that compel us to honor and represent our client’s best interests. The minute a realtor gets commission-breath he’s violating those interests, and in most cases, that client can sense it.

Yes, realtors earn a living helping people buy and sell homes. Those events are life-changing in our client’s lives. If we haven’t done our best to make that life-changing event a good experience, we’re violating our fiduciary responsibility to our client, and we probably have a case of commission-breath

The Rise (and fall?) of the Real Estate MLS- Multiple Listing Service

February 19th, 2007 Cartoons, Columbus Buyer Info, Columbus Seller Info, It's My Opinion 4 Comments

Once upon a Time, Realtors had listings and represented only the Sellers. They did not share their listings, and if a Buyer wanted to see the home, he would have to contact the Listing Agent.

Over time, other realtors working with Buyers could show the home, but they were still working for the Seller (called Sub Agency).

Showing a home was a laborious process. The realtor with the Buyer would have to drive to the Listing Agent’s office, pick up the house key, drive to the home and show it, then drive back to the Listing Agent’s office to return the key.

Realtors then decided to share their listings. They created a Multiple Listing Service that was run from a non-profit group- The Board of Realtors. They printed a book of all the listings so Realtors could know what was available for sale. They put lockboxes on the homes to make them easier to show. Realtors guarded their MLS books carefully- this was their ‘inventory,’ much like a store owner who had things to sell. Realtors even decided that they could represent Sellers and Buyers, and Buyer Representation was born. Sub Agency died a quiet death.

Then came the Internet. At first, Realtors celebrated- “Hooray! Now there is an easy way to let Buyers know about homes for sale!”

Showing a home became easy. Realtors with Buyers could call and arrange a showing- and use the lockbox at the home. They could print out maps and information on neighborhood sales.

Life was Good.

But changes were happening so fast… and there were problems.

Buyers and Sellers felt they had the right to access the Multiple Listing Service under their own terms. “It’s public knowledge,” they said. Sellers wanted to put their For Sale by Owner homes into the Multiple Listing Service. “We can’t be shut out,” Sellers said. “It’s not a monopoly… we think the Government should be involved.” Other Web services wanted to ’scrape’ the information from the MLS and put the home information on their sites. “The MLS can’t keep their information from us,: they said. The Government said “hmmmm… we should study this,” and there was much talking and shouting.

“Wait a minute,” said the Realtors. “This is our inventory, remember? We work hard to get and market these homes. We pay lots of money in dues, fees, marketing, and Internet costs.”

“We have worked together very hard to build this nice store with lovely things, and now you are saying that anybody can use our store, mess with our things, and put their OWN stuff in there as well. That’s not fair. That’s not right. That’s not American!”

“Well,” sniffed the Lawyers, “since your Board of Realtors is a cooperative, you can’t exclude anyone. We think you have to share- with anyone, anytime. After all….. it’s for the betterment of all……

What will the Future bring??

Some of the Big Realtors and their companies are thinking about taking their toys and going home. By building their OWN store (Listing Service) and keeping it privately owned, they can control their inventory. They can decide WHO can visit, and they can kick out anyone who is disagreeable.

This could be the ‘end of the world as we know it’. Much of the progress and convenience that everyone has enjoyed could be undone. Progress has brought everyone along nicely up to now.

Now we wait and see whether the MLS store survives. Your thoughts?

How I Got From There To Here

February 18th, 2007 Down to Business, From Professional to Personal 3 Comments

About me…. I’m Sondra Johnson, and I’m a realtor in the Columbus, Ohio area, now in my 6th year of being in the business.

I worked for 3 years as an independent agent with ReMax, and then joined a team of realtors (The Columbus Team) with Keller Williams.

I was aggressive with marketing from the beginning- and was in the first group of realtors who saw the need to create a custom web site (in 2002, most realtors who had a web site used the template version that Realtor.com provided).

Some people thought I was crazy starting out with ReMax, being brand new, with their high monthly fees. One realtor flat out told me, “what are you, nuts? Go to one of the ‘traditional’ companies, get their training, and when you’ve got the experience, THEN go to ReMax.”

I didn’t because I was focused on building a business from the get-go, and didn’t want a company that gave me a list of ‘do’s and dont’s’. I had several specific ideas that were a bit out of the box, and I wanted the freedom to sink or swim on my own merits.

My goal was to be a HUGE success… probably most everyone’s goal, I’d imagine.

The odds were stacked against me- I had no ‘sphere of influence’ (by the way, I hate that term), I had a bill of at least $1200.00 a month coming from ReMax, and there was little official training.

I dug out the information I needed, made lots of mistakes, made some good moves, made some good friends (alarmed a few others with my ‘strange’ ideas), and set out on the path of making it.

Years 2 and 3 at ReMax looked good on paper…. I made the “100% Club” (which signified I’d earned $100,000.00 or more). Looking at my bottom line, however, was a different story. By the time I’d paid all the expenses (internet costs, advertising, signs, etc. etc. etc) my NET income was not very exciting. Yes, I got 100% of the commission, but I also had to pay 100% of the expenses.

And I was tired. As a single agent, I had to wear all the hats- working with buyers, sellers, placing advertising, putting signs in the yard, negotiating contracts, arranging all the closing details, and so on. I tapped into using a virtual assistant early in the game, and that helped. BUT- the bottom line was…. when I compared my net income to the number of hours that I worked, I felt pretty bleak.

I decided that I either had to build a team, or join a really good one. Option B was a better choice for me.

I approached the best team that came to mind, and told the owner Sue I wanted onboard.

So, I know all about both the single agent and their issues, as well as the team agent and what that entails.

A big question that was unanswered was: would my net income be any better? With the team arrangement, I only received 1/2 of the commission- the team got the other half, but also paid the many expenses needed to run a business.

The answer was interesting…. at the end of the first year with the Columbus Team, my net income in commissions had doubled.

On the Team, I work as a Buyer Specialist…. I only work with buyers. My time is more focused. There are support staff that handles the myriad details once a client is in contract, and keeps things running smoothly.

I have to say- my main motivation was to join a great team, and the company choice was secondary. However, Keller Williams is truly unique, and I’m glad I’m there. (Of course, it goes to reason that a good team MIGHT have an inside track on a good company…).

In a nutshell, KW is an ‘out of the box’ thinker that offers unparallelled training and education for realtors (and as a person who had to go out and dig for training starting out, I can tell you how unusual that is), has a system for beginning agents to get up and running, has a culture of support and training, and even has this profit share program option where agents can get a passive income…… for forever (yes, that’s right. Even your heirs keep on reaping the rewards).

Here’s a key question for vibrant, busy agents…. where are you going to get your money when you don’t want to sell anymore? Keller Williams has a couple of good answers…….

Yes, That was a sales pitch. But it’s not done lightly, and it’s not because we’ve got “a cult, a crazy pyramid scheme.” A great statement I heard was, “It’s not a cult, it’s a culture. It’s not ‘kool aid’, it’s REAL aid.” Keller Williams offers people the tools to build their OWN business, and has vivid, visual ways to do it. I sincerely feel privileged to be a part of it.

(And trust me, if you knew me, you’d know I’m the LAST person to be a raving cheerleader just to make a ‘sale’.)

There ya go….. my story in a nutshell.

Oh….. as to “why?” I’m a writer at heart, and by golly, I’ve got a few things to say. As do others about the reality and the craziness of this business. I CAN’T STAND the smarmy ‘smoke and mirrors’ phoniness reflected in some of the “do this, and you’ll make a million dollars” ideas out there, the realtors who are not professional, the perception that ALL realtors are rolling in the dough and do nothing to earn it, and a few other topics that will come to mind.

So get a dose of Reality, learn a couple things of interest, learn what a GOOD realtor will do for you… and go buy a home!

The Weekend That Real Estate Died in Columbus Ohio

February 18th, 2007 Cartoons, It's My Opinion 3 Comments

Cartoon pics 284 If you signed up to get these postings via email, you’re going to be wondering ‘what the %@*^&# I’m doing sending you a boatload of postings’ this weekend in mid-February.

Nothing. That’s what I’m doing. After six years of working as a realtor, this is the quietest weekend I’ve had since I started.

We had a hefty snowstorm this week, and all is quiet on the real estate front. Buyers have gone AWOL and disappeared. There’s no phone calls, no messages, no internet inquiries, no requests for showings….. nada.

I think it was the convergence of snow/ice/snow, bad roads, more snow, temps hovering around 10 degrees, and having a Level 3 Snow Emergency in Delaware County on Wednesday (that means it’s illegal to drive, folks) that tipped everyone over the edge. People may be thinking of trips to the tropics, but they’re NOT thinking of moving.

Sooooooooo…. when facing a weekend alone (loving husband is on business in WARM Arizona), and wondering what the heck I should be doing (and I’ve shoveled the sidewalks as much as I can), I turned to the computer. Rest assured that this frenzy of writing will NOT be normal. Normal is wondering how I can find the time to write.

In the meantime, I’ll work at establishing a base of information that Columbus buyers and sellers will be interested in, such as Community sales statistics.

Here’s hoping that life in Columbus gets back to normal soon….

How MUCH House in Columbus Ohio For 3.1 Million?

February 18th, 2007 Columbus Buyer Info, Columbus and Central Ohio Home Sales Stats, Columbus and Central Ohio Real Estate Tid Bits, The Good No Comments

3million Here’s a GOOD look at what you can get for the money for a cool 3.1 million dollars in Columbus, Ohio– so heads up, you celebs, sports figures, and money moguls!

Five acres with river frontage and private boat dock, custom built in 1997, 9192 square feet PLUS another 7144 square foot complex that includes a guest house, pool, spa, basketball court, and more. Gracious and comfortable living at its best.

C’mon you coastal jet setters… we’re a short plane hop away, and we can offer you all the privacy you crave. And compare how much more your dollars will buy you in the hearty Midwest (and aw, shucks, we even have a few trendy and fun places to visit…. ask Eric Clapton– he lives in the Columbus/ Delaware area and can give you a few suggestions…..

Millionoutdoor