4 Things to Consider If You Are A Frustrated Buyer

I hear stories all the time about friends of friends who are trying to buy houses and the problems they run into. In my market in Modesto the most common problem I hear about is buyers writing offers over and over again just to have them all rejected by sellers. Here is my advice to buyers who are trying to buy but are not getting their offers accepted.

1. It is not necessarily your agent’s fault

While that statement may be shocking to some, it is true. The agent is the typical scapegoat for frustrated buyers. Ultimately though we can only be as good as you let us be. What I mean by that is we are your agent, not your attorney- meaning we act on your instruction and do not (and cannot) make decisions on your behalf. If you are giving your agent bad instructions and not listening to their advice, you may be getting less than optimal results.

2. OK, so maybe it is your agent’s fault

Let’s say it becomes apparent you are working with the wrong agent. It happens- sometimes people don’t “fit” and that is OK. The correct, polite and appropriate thing to do is to be an adult and thank them for their help thus far but because (insert your reason here) you are choosing to not work with them any longer. Trust me- we can take it. Speaking from personal experience, that is a pill much easier swallowed than finding out you told some elaborate lie to get out of the relationship.

3. It is not me or my agent. Now what?

The most important thing you can do if you are at a loss as to why you cannot get an offer accepted is this: Reevaluate your price range. Most people are inclined to look at homes that are at the top of their price range. This gives them little room to be competitive when asking for concessions such as repairs and closing costs. What I often suggest is to step down a bit in price and become the buyer with the upper hand against the competition who are maxed out on price. For example, if your max price is $150,000 and you need your closing costs paid, you may want to step down a bit to the $140’s so you have more room to offer more money if need be. The second most important thing to do is OBJECTIVELY look at how the offers you submit are structured. Look at them as if you are the seller looking at an offer from a buyer.

These are key points to consider:

• Price: Is my offer reasonably within asking price for my market? Know your market. Is it slow? Do homes sell for 90 percent of list price or is there an inventory shortage and homes sell for 105 percent of list price?
• Escrow term: Am I asking for too long of an escrow, or not allowing enough time for short sale approval? Saying up front you are unwilling to wait any less than 60-90 days for a short sale approval is the surest way to have your offer rejected.
• Repairs/Inspections/Certifications: Am I asking for repairs, inspections and certifications to be done at the seller’s expense? This turns off a lot of sellers, especially in a short sale situation. You should never expect a short sale seller to pay out of pocket for any repairs or inspections. A savvy agent will know this.
• Closing costs: Am I asking for an unreasonable amount for closing costs? Most good lenders can do a loan for a buyer with a 3% concession for closing costs. If a buyer needs 4 or more percent, something is wrong and they should get a second opinion on their financing. Remember: Anything you want the seller to "pay" comes off of the seller’s bottom line and is going to be viewed negatively by the seller.
• Do you have a good loan pre-approval? Having a pre-approval from a local, reputable lender speaks volumes for your status as a buyer. Your letter should say that your credit, income and assets have been verified, state your mid-FICO scores and the only contingencies should be a satisfactory preliminary title report and property appraisal. It must be dated within 30 days from when you are making your offer and must be for at least the amount you are offering on the home.

4. Last, and certainly not least- always put your best foot forward

In a market where almost every property has multiple offers and you are dealing with institutional sellers it is imperative that every offer you make be your best offer. Many sellers are not countering anymore, they simply choose the one they feel is the best and move forward. You may not get the chance to offer more money or put more money down or pay your own closing costs. So, if the house is one you cannot live without do not leave anything on the table. Come up with the best possible price and terms you can and hope for the best. You won’t always win that way but at the very least you will know that you gave yourself the best possible chance.

Stay tuned to my blog for more tips on buying real estate in Modesto. To start your search now, click HERE.

Buying a Short Sale? Patience is a Virtue… 5 Points to Know Before You Start

If you are entering the housing market, you will undoubtedly be looking at short sales. Hopefully you are working with an agent that knows the process enough to be able to effectively educate you, the buyer, on how the process will work- beyond the basic definition of a short sale. What I am finding unfortunately as a listing agent is an overwhelming contingent of agents who do not know what they are doing which results in frustrated buyers and cancelled contracts. If you are buying a house that is a short sale- here are a few things to keep in mind.

1. Ask your agent if they have ever listed or sold a short sale

Why is this important? Short sales are like snowflakes. No two are the same. Learning about them from a seminar or a book pales in comparison to actual real life experience. There are a litany of pitfalls that can occur, so having someone experienced on your side can help get the transaction closed. Do not be afraid to prequalify the listing agent, either. Many, many agents are extremely successful in closing short sale transactions and have teams that help them do so. Many are also not so experienced, so knowing who is working the other side of the deal can offer a level of comfort as you embark on the transaction.

2. Know what you are getting yourself into

It is often joked that short sales should be called long sales because they can take so long. I recently had one take me NINE MONTHS to close. However on the other hand I have had some close in 30 days. If you know you have to move in 60 days, you may not want to be looking at short sales at all. Do not be surprised when 4 weeks have gone by without an approval from the bank on your offer. It does not mean (usually) the listing agent is not doing their job- it just means that you are number 40,000 in a line of 60,000 offers waiting for approval.

3. Know what questions to ask

Ask your agent which bank is handling the short sale and how accommodating they are (generally), if there is a first and a second, and if the seller/agent has already initiated the process with the bank. All of these factors can contribute to a fast (or slow) transaction.

4. It does not matter how good your offer is, the process is still the same

I have been hearing a lot lately from buyers “well I wrote a cash offer, why don’t they just stamp it approved and sell me the house and not make me wait”. The quick answer- they don’t care how you are paying for the house. They still have to justify to themselves and the primary investor (the owner of the loan) that it is worth them forgiving sometimes upwards of $100,000 in debt for the seller. This process includes delving deeply into the financials of the seller- paystubs, bank statements, tax returns, letters of explanation, etc. While simultaneously determining the value of the property. The bank is just as much looking at the seller and why they are doing a short sale as they are what you have offered for the house.

5. Do not ask to contact the seller‘s lender yourself, no matter how frustrated you are

There are strict privacy laws and policies in place when it comes to short sales. As a listing agent on a short sale we are granted special permission by the seller to speak with their lender regarding the short sale. Along with this we are often privy to information why they are doing a short sale in addition to their financial records. Many buyers think they can “move the process along” by calling the bank themselves and doing what they think others cannot get done. While their heart is in the right place, it is just not going to happen. Even the buyer’s agent is significantly out of the loop when it comes to these issues. They cannot communicate with the short sale lender either and have very little control over what transpires between the listing agent, the seller and the short sale lender.

The bottom line- the point I cannot emphasize enough- is to be patient and know what you are getting yourself into. Short sales are not for everyone, so taking your situation into account can save you lots of time and frustration. If you have more specific questions about buying or selling a short sale in the Modesto, Stanislaus or San Joaquin County areas, please feel free to contact me.

House Flipping? The Devil is in the Details

As a Realtor who works with a lot of buyers in the Modesto area I have seen many, many “flipped” homes first-hand and could write a book of all the ridiculous things I have seen flippers try to pass off to potential buyers. This blog post in fact is inspired by two homes I have seen in the last month where flippers have made tragic mistakes and a recent Twitter conversation I had with a colleague, @Jeff_Kershner.

I am going beyond the basic suggestions I usually give to potential flippers and delving into the details of the property itself and how what you do (and do not do) directly affects your resale.

Here are some tips:

DO NOT alienate your target market:

• If you are flipping a house that is double your local median sales price (or more) then you need to realize your target buyer will likely have more expensive taste than a buyer at the median price range, so don’t use average (cheap) materials. This is a great segway into my second point.

DO NOT cut corners:

• Putting new flooring in the kitchen? Great! Don’t be too cheap/lazy to take out the old flooring, because when the newly laid floor is higher by ¾” than the adjacent floor it is going to turn buyers off. Why? It is not an easy fix! Who wants a tiny step to trip over when they walk from the family room to the kitchen?
• If you have never laid tile- don’t make this your first time. If you are not comfortable doing it and your only knowledge of the subject is from watching HGTV please hire someone instead.
• Installing granite counters? Fantastic! DO NOT put the granite on 30 year old cabinets that you painted. While painted cabinets can look very nice, it is a very difficult job to do and if not done properly by someone who knows what they are doing it can look very, very bad. Spending money by putting slab granite counters on old cabinets is a complete waste of money for you the flipper because the granite has no value to the potential buyer.
• Do not remodel the kitchen but ignore the appliances! Sure, they may only be a few years old- but they are still used. A bright, shiny kitchen can be completely ruined with appliances that are older than everything around them or mismatched. New dishwasher but old oven? New stove but old microwave? Equals bad news for buyers and bad news for your sales price.
• New carpet makes everyone happy. Unless it is uber-cheap carpet. Everyone knows what cheap carpet I am talking about. It is beige, has no variation in color and has a slight sheen to it and feels like it is about a quarter inch thick when you walk on it. Granted, it is new carpet. BUT savvy buyers will know that the work entailed in moving their entire house out to replace the carpet in a year or two is totally not worth having it in the first place.
• Do not ignore lighting! Proper lighting is an often overlooked yet very important aspect of home remodeling and staging. Older homes are usually lacking in proper lighting, so adding some recessed lighting here and there along with stylish overhead fixtures can go miles in making the home seem brighter and more contemporary.
• Do not leave the old toilets. Ever. Toilets are cheap and relatively easy to install. No amount of cleaning can equate to having a brand new toilet in your bathroom when you move in. It is a cheap, easy way to really brighten up a bathroom.
• Do not overlook the little things. Light switches, switch-plate covers, outlets, faucets, vent covers and doorknobs are one of the most overlooked aspects in remodeling/flipping. They can be replaced inexpensively and easily and although seemingly inconsequential, have huge effects in making homes seem CLEAN and fresh.

DO NOT fix only what you think people can see- and not fix what you think they cannot see.

• Leaving old water heaters, air conditioners, heaters, electrical systems and wiring will not make it past a savvy buyer and a good home inspection. At the very least have the items serviced or inspected by a qualified professional so you know they are working properly and are not surprised with repair requests during escrow.

DO NOT assume buyers will be willing to “just live with” all the little things you have chosen to not repair at all or repair properly.

• Although the Modesto area suffers from a lack of inventory it by no means indicates desperation on the part of buyers. This is not market specific, either. Buyers are becoming smarter and more aware, so as a seller you should too. Taking all factors into consideration, even ones you thing are “small” will ensure you get an optimal sales price in a reasonable amount of time.

House flipping is not for everyone, so if you are thinking about delving into it make sure you do your research and consult with a qualified Realtor throughout the process.

Click HERE  for Jeff Kershner's great blog on pitfalls to avoid when rehabbing/flipping.

A Dose of Real Estate Wisdom From Jerry Maguire- And No, I'm Not Kidding

OK so being your Realtor may not be quite as dramatic as Jerry’s experience in this classic scene from Jerry Maguire, but the man is making a very good point. As your Realtor, I have a fiduciary duty of the utmost responsibility to help you achieve your set-forth goals- much like a sports agent does for an athlete- I look out for your wallet.

What I cannot do though is read your mind.

What ever life-changing events may be influencing your current situation are not entirely my business. However, to a certain extent knowing WHY you are doing what you are doing helps me uphold my fiduciary duty to you so you make the best decision possible for your given situation. Here is an example: You hire me to sell your home. When I ask you the reason you could say any number of things- I want to change school districts, I want to be closer to work or family, I want a bigger or smaller house. None of these scenarios imply a sense of urgency. Therefore I suggest a price based on those goals. The problem arises though if the reason you told me you are selling is not the REAL reason. The real reason for hiring me is that you can’t afford the house anymore. The bank is going to default on you any day now if you don’t get it sold QUICK. This changes the pricing and marketing strategy considerably.

There is now a sense of urgency that we need to accommodate for. My advice to you in the second scenario, had I been aware of it, may be different than in the first- and keeping me out of the loop may result in you not achieving your goals. If I am not aware of the REAL situation, I cannot help you to my fullest ability.

This is a very rudimentary example, of course, but life changing events such as financial hardship, divorce, marriage, having children, etc. are all influencing factors when it comes to buying and selling real estate. The more you tell your agent, the better we can help you.

I know why buyers and sellers withhold information- and I can’t say I blame them. Sometimes it is to save face, and sometimes it is because they are private and do not want others to know their business. This is where it becomes vital to hire a Realtor that you are comfortable with and that you are confident has the experience and know-how to help you navigate whatever your situation may be. Trust me when I tell you if you are working with someone who has been in the business a while we have heard it all. There isn’t much you can say to surprise me anymore. I have held clients hands, hugged, wiped away tears and calmed fears more times than I can count- and I don’t intend on stopping any time soon.

So, in the words of Jerry Maguire, “help me help you”- or maybe I should say “LET me help you”.

Having Trouble Saving For Your Down Payment? This May Help!

Let's see if this scenario applies to you:

• You are a renter
• You pay your rent on time every month, along with the rest of your bills
• You have decent credit
• You live comfortably at your current rent, but have difficulty saving money

Many people in this situation really want to buy but have trouble saving money- and that does not mean that they cannot afford to buy or are not good candidates for home ownership.

I recently learned of a program offered by Lauren Morris at Ambeck Mortgage in Modesto to help people specifically in this situation. It is called the Platinum Program, and it offers a 3 percent grant to buyer to use towards their required minimum 3.5 percent down payment on FHA loans. This means as a buyer you only have to come up with .5 percent of the purchase price ($500 on a $100,000 purchase for example). As the buyer you end up with a 30 year fixed FHA loan, and since the money is a grant (gift) it never has to be repaid.

Since values in our area are so good right now, may people can find a home as nice or nicer than the one they are renting and pay the same or LESS than their previous rent!

If this is of interest to you, please contact me and I can forward you more information on the program and the contact info for Lauren. To get your property search started NOW click HERE!

Memorial Day- A Small Token of Appreciation

I want to take a moment to diverge from real estate talk for a bit to say a little about Memorial Day. I think we all know it is a day to commemorate our fallen soldiers so I am not going to bore you with definitions and history. What I do want to say though is this: As I get older and since I have become a mother I see and feel the importance of what our soldiers have done and continue to do for our country and I would like to encourage more people to do the same.

Last year on Memorial Day weekend my husband and I were in San Francisco celebrating our 10^th wedding anniversary. Although we have always frequented the city, neither of us had ever visited The Presidio, let alone were aware it is the home to one of our National Cemeteries. The cemetery sits on a hillside near the approach to the Golden Gate Bridge with sweeping views of Crissy Field below and Alcatraz in the distance. The hillside is covered in green grass dotted with bright white marble headstones aligned neatly in rows with a road leading to the hilltop. We arrived after a Memorial Day procession so the park was nearly empty, but what we found was one of the most breathtakingly beautiful sights I have ever seen. The entire cemetery- the entire hillside, was covered in American flags. Each grave site had a flag carefully placed in front of it to honor the soldier who was buried there and the road leading to the top of the hill was lined with larger flags.

I have been back since, and the cemetery is always a beautiful place, but nothing compares to the way it looked that day. The decorations are merely a small token of appreciation compared to the debt the soldiers paid to be buried there, so this Memorial Day we all need take a moment and think of the men and women who have sacrificed their lives for our freedom and be thankful we live in this great nation.

For more information and directions to the cemetery, please visit  San Francisco National Cemetery 

Don’t Sell Yourself Short- The Emotional Aspects of a Short Sale

I have been noticing lately a significant piece of the puzzle missing in the short sale debate- an overlooked, yet vital consideration when making the decision to short-sell or not. Sure, tax and credit consequences are important. There are many factors to consider in regards to those two issues. What I see missing however is the mental, emotional and social aspects of making that decision.

Many homeowners who are facing hardship such as divorce, unemployment or underemployment want to stay in their home but simply cannot keep making the payments. The stress of living this way has ripple effects throughout their lives. They may take a second job, work more overtime, sacrifice activities with the kids and other family all in the name of making the house payment. Financial stress can effect relationships with spouses causing undue tension in otherwise healthy relationships. Ultimately they are consumed with keeping the house and ’doing the right thing’ and paying the debt they agreed to pay.

What I have been seeing though is the stress and burden of living this way often clouds owner’s ability to see the light at the end of the tunnel. They are trying so hard to do the right thing but are doing it at the expense of their sanity, their marriage and their blood pressure.

Once the difficult decision is reached to do a short sale I have seen first hand the positive visible effects on sellers. The burden is lifted, the clouds of stress pass and they are able to focus on their family, their relationships and moving forward with a fresh start. If you are in this position, do not sell yourself short. Do what’s right for you and your family.

For questions and concerns regarding short sales, please do not hesitate to contact me.

UGH! My Landlord is in Foreclosure. Now What?

A question that I am asked frequently by frustrated renters is “my landlord is getting foreclosed on, do I still have to pay my rent?” The short answer is yes, as frustrating as that is. Paying your rent on time every month only to find out your landlord is not paying the mortgage on the house is undoubtedly a total drag. However, you still have to adhere to the contract that you signed with the landlord- as long as he or she still owns the house. Once the house goes back to the bank after trustee sale he or she no longer owns the home and does not have the right to collect rent from you. At this point a liaison from the bank will likely make contact with you. If you are ever in this scenario I strongly recommend doing some due diligence so you know your rights as a tenant because there are special rules that have been enacted to protect you.

Location, Location, Location!

The most important lesson I try to teach my first time buyers is that location is key. It is the one thing that you cannot change about a house- and if you are buying your first home with the intention of moving up in 10 or so years you will need to consider your ability to resell it.

Trying to buy your first home can be frustrating- especially in a market where there is lots of demand and not enough supply. What ends up happening is that buyers grow impatient and they end up compromising their needs in an effort to get into a home a little quicker.

I can always tell when a buyer is growing impatient and starting to think about compromising because the conversation usually goes something like this:

      Buyer: I really love this house! And it is so cheap!!

      Me: Yes, it is very nice and exactly what you want.

Then, before I can begin my next sentence we are interrupted by a blaring train horn and the ding-ding-ding of the crossing arms as the train blows by about 200 feet behind the house.

      Me: So what do you think about the train?

      Buyer: I think we could get used to it. I really love this house. And it is so cheap!!

Obviously everyone’s needs are different, and everyone’s ability to tolerate trains and other nuisances is different- but here are some things to consider before you let impatience get the best of you.

• You think the old phrase “location location location” is a joke? I’ll give you a clue- it’s not. The most crucial consideration when buying a home is by far the location.

The answer? Be very thoughtful about where you buy. Think about where the house is in relation to work and your commute. Do you want to add 20 minutes each way to work? Do you want to make your kids change schools? Are you familiar with the area and what surrounds it? If you are unfamiliar with the neighborhood, drive through at different times of day and different days of the week to get a feel for what your neighbors are like. A neighborhood can be vastly different from 11am on a Wednesday to 11am (or 11pm) on a Saturday.

• Once the newness of being a homeowner wears off, all the little things you knew you couldn’t change but thought you could ‘live with’ will become huge, annoying thorns in your side- and guess what? You can’t do a darn thing about it.

The answer? REALLY think about how the ‘little things’ that you notice before you buy will affect your day to day life after you buy. Think about living with that train day in and day out. Think about the neighbor’s barking dog or teenage garage band practicing every day after school when your 2 year old is napping.

• I found the perfect house and it is in a great location. Now what?

The answer? Think about how the house is situated. If your house is on a busy corner you can never change that. When you want to sell in 10 years it will still be a busy corner and your resale value will likely be affected. Don’t let a pretty interior or awesome pool blind you against obvious deterrents such as traffic noise, busy parks and schools, or fire stations.

If you are buying with the intent to resell or move up in the future- what appeals to you may not appeal to the masses. So if you pay attention to the basics when you buy you will have a leg up on the competition when you sell.

Stay tuned to my blog for more buyer tips!