May 31, 2007

Home Preparation Tips For Selling

One of the hardest things for most sellers is to know what should be done to the home to get it sold.  I have consulted with many sellers that already started projects that really will not benefit the sale-ability of the home while mistakenly thinking it would.   If you are considering putting your home on the market, it is a good idea to consult with a professional about the best things to focus on.  It can save you time and money.

I always try to give my sellers a list of things that can be done to make the home more desirable to buyers.  Each home is different, what needs to be done on one home, may not need to be done on another but there are some things that every seller should do for a quicker sale in any market. 

The most common mistake I see is a lack of knowledge about the common buyer.  Just because a seller loves “Electric Lime Green” carpet, does not mean that every buyer is going to love it also.  I once heard of a seller that had taken hundreds of carpet sample squares, of all colors, and had hand sewn them together to make a patchwork carpet in his livingroom.  He was apparently extremely proud of his accomplishment but when it came time to sell, it was the biggest obstacle to the sale of the home.

My suggestion is when you are planning to stay in your home, do what you want, live in it and enjoy it the way you like it.   Maybe think twice about doing unsual things to it that are permanent.   If you are planning to sell in the near future, it is time to step back and become objective.   The point is to get it sold so it won’t be your home anymore.  Neutral colors are always a good idea and “normal” amenities are less likely to turn anyone off.

The next most common mistake is common clutter and dirt.  In normal, everyday living it is hard to prevent the clutter from building up.   You know what I mean every time you do that “spring cleaning.”  We all feel mystified and wonder each time we clean out those clutter piles how they ever got so bad, again, and again, and again.  It never ends.   It is as though there is a clutter fairy that comes out when we go to bed and magically makes each pile grow while we sleep.  It is just one of those things that we have to accept and live with the struggle. 

However, when it is time to sell, it is time to become non-human.  It is all-important to make a home feel clean and spacious, even if it is only a 500 sq ft cardboard box.  If you want it to sell, sell quickly and sell for more money, you must clean and unclutter.  Yes! I am suggesting that during the listing period, you must be robots, a mechanical, anti-clutter, cleaning machine.  Box up everything that you will not absolutely need during the listing period and store it…somewhere else, not the closets or garage because they need to look clean and spacious too.  (you are moving, you need to box everything up anyway)  Clean, clean, and clean.  I also recommend that you hire someone else to come in and clean a once over for you.  After time, we learn to overlook many things that a buyer won’t overlook.  Having someone else come in and clean is a good way to find those things that we have learned to turn a blind eye to.

Have you ever been to the Parade of Homes?  I have enjoyed going for several years but in the first few years, I found myself feeling blue after each one.  I would go into these beautiful homes and feel how wonderful the atmosphere was in each one then wonder why my home did not feel like that.  I would try to decorate my home similar to what I had seen but still, it did not feel the same.  I realized finally that the reason they looked and felt so wonderful was that NO ONE LIVED IN THEM!  They were like a movie set.  Everything was staged to look perfect and it worked.  They did look perfect but if I were to move into one,  I would actually have to put things in the closets besides the lovely folded, perfectly matched towels,  displayed in them.  Real life means having more than just pretty towels in every closet.  I would actually have to cook meals, and lots of them for my family, so the home would eventually start to smell like grilled salmon instead of cinnamon potpourri all the time.   

So, incase you are where I was once and feeling bad wondering why your home does not look like a Parade of Homes house, remember that you are real and those homes are not.   However, to get the best results when selling your home, remember the houses in the Parade of Homes.  The more you can make your home look and feel and don’t forget, smell like them, the better your home will look against all the other homes it is competing against on the market.  It may mean acting like a robot for a short time.  The better you are at it, the shorter the time you will have to keep up the act.

Filed under: Real Estate,Selling — Susan @ 5:10 pm

May 23, 2007

Loan Fraud Warning Signs

To help protect yourself, be on the watch for these fraud warning signs provided by the Utah Division of Real Estate:

  • Properties reported as “sold” or offers to buy at values significantly higher than the asking price
  • Property sales history shows many sales with rapid and significant increases in value
  • Buyer purchasing multiple properties in a short period of time (often as owner occupied)
  • Appraisal is dated prior to the loan application
  • “Investor” using someone else’s identity and/or credit score to purchase a home (You have probably seen the billboards advertising how you can do this for a profit?)
  • Buyers providing false information on employment, credit score, income or the occupancy of the home
  • Real Estate Purchase Contract does not reflect the “true terms” of the agreement, such as undisclosed addendums
  • Unlicensed persons receiving “consulting fees” for helping “clients” purchase investment properties
  • Buyers and sellers conspiring to artificially inflate the property value and sharing the “profit”
  • Excessive payment to third parties such as unsubstantiated notices of interest or unrecorded second mortgages
  • Using HUD-1 statements as sales verification for appraisal “comparables”
Filed under: Buying,Credit & Finances,Real Estate,Selling — Susan @ 2:43 pm

May 21, 2007

Loan Fraud Story

I found the following report interesting and in light of my recent posts on loan fraud, I felt it a good idea to share the story.  The article explains some of the things this person did to constitute loan fraud and also detailed his sentence which is severe.  I do not say that because I disagree that it should be, only to demonstrate that it appears that our justice system is finally getting serious about putting a stop to this crime.

The article:

Filed under: Blogroll,Buying,Credit & Finances,Real Estate — Susan @ 1:56 pm

May 19, 2007

Sub-prime Lending

There has been a lot of talk lately about the sub-prime mortgage crisis.  Several sub-prime lenders have filed for bankruptcy recently.  I have to scratch my head and ask, “did they really not know this would happen?”

A sub-prime loan is one that is extended to someone that does not have favorable credit.  Poor credit scores,  delinquent payment history, and bankruptcy, are things that can put someone into the category of a sub-prime loan which is by design, meant to target these types of people.

So, I think someone was sitting around thinking, “Hey, we have these people out there that can’t seem to control their spending or manage their money.  Their history proves that they have poor judgement, poor payment ability, and an inability to stop even though they get in over their heads.    Let’s create a market that will provide them the ability to buy a home they can’t afford on top of all their other debt!  Yes, we can make lots of money off these people that have proven they can’t pay their bills already.”

To make matters worse, because the target market for these types of loans are a poor risk, the terms are less favorable such as higher interest rates, and additional fees.  Again, the target for these loans are people that have filed bankruptcy, and have a poor history of payment.  These are people that are already in trouble so they get thrown these terms which give them even higher odds of failure.  Even a financially sound person can have hard times druing the life of his/her mortgage in which terms like these could become a nightmare.  Purposefully targeting those that lack the financial skill to keep their heads above water is a stange idea to me.  I think it falls into the category of  what some call “predatory lending”.  

As several mortgage companies are now going bankrupt because of the high number of defaults in the sub-prime loan market, again, I shake my head, “Did they really not know this would happen.”

Filed under: Blogroll,Buying,Credit & Finances,Real Estate — Susan @ 8:54 am

May 16, 2007

60 Minutes and

60 Minutes aired a story Sunday about  Redfin is a new internet discount real estate company.  I was disappointed with the story as I felt it was very anti-REALTOR®.  They used only homes over $500,000 whenever they talked about the “6%” that REALTORs® charge.    There may be a few select areas of the country where a $500,000 home is just an average price but for the most part, a $500,000 home is considered a Luxury home.   Luxury homes are generally defined as homes $500,000 and up or the top 10% of the price range for the area.   In Utah County, the last time I checked the percentages, the top 10% was only around $385,000.   I felt the story was purposely presented to encourage a negative public opinion of the REALTOR® profession.  They suggested that REALTORs® charge a hefty “6%” on all the $500,000 homes they sell and are just raking it in but never offer discounts let alone rebates.   

I want to explain how the commission works.  The commission is negotiable.  There is no set commission percentage, in fact, it would be illegal to have a set “standard percentage”.  Each REALTOR® charges what he/she is worth.  What an agent is worth is determined by no one else but the consumer himself.  The agents that think they determine their own worth without consumer input are the ones that belong to the high drop out rate in our industry.  90% of all new agents in our state do not renew their license by the 1st two year renewal. 

You can find agents to represent you for less than 6% and you can find agents to represent you for more than 6%.   There are a  small number of agents that get away with charging more because they are in such demand.  Some consumers are willing to pay 7-8% because of the reputation of that agent.   If an agent is not in demand, they will be willing to work for less because they must put food on the table somehow.  There are always consumers willing to settle for less to save money.  If there is a public perception that 6% is the norm, then it is because that is what the average consumer has decided they are willing to pay for a good job. 

The house sells and the seller pays 6% of the purchase price in commission.  The listing office gets 3% and the selling office gets 3%.  In each office, the national franchise office takes about 8%, unless they are a small local company.  The Broker and the agent split what is left.  The agent actually only ends up getting approximately 1.5% of the total commission. 

No matter what the service or product, there are going to be people that willingly and happily pay the price,  there are always going to be people that pay the price and complain about it every step of the way, and there are people that will decide to do without because they refuse to pay the price.   I think that almost everyone wishes that they could live a champagne life style on the beer budget (forgive the cliche’) but most people understand that is not reality. 

Filed under: Buying,Real Estate,Selling — Susan @ 2:28 pm

Loan Fraud Alert

This letter was sent to me today.  Since I so recently posted about loan fraud, I thought it appropriate to share this information.  Click on this link to read the letter:  fraud-alert.pdf

Filed under: Real Estate — Susan @ 1:09 pm

May 14, 2007

Loan Fraud

I just heard that Utah is once again the #1 state, leading the country in loan fraud.  I have been encouraged the last couple of years as our ranking moved away from the top spot.  Now, it seems we are back where we started.  I know that the Utah Division of Real Estate has been making changes to help the matter but this only makes it seem more disappointing.  Derek Miller, the director of the Utah Division of Real Estate, said, “It’s disappointing and embarrassing to see Utah in the No. 1 position.”  Not only is it embarrassing, it also costs us as well.  Mortgage companies end up not wanting to lend Utahns money,  as a result, the interest rates often end up being more than they would be in other states. 

I have heard a lot of speculation as to why we rank so high.  Many have come to the conclusion that the predominant religious population here is more trusting of leaders and authority figures.    This sounds somewhat plausible but I think there must be more to it than that.  Many people do not even know they are participating in loan fraud until it is too late.  Often, they are victims themselves of the men and women that are making off with the money from these scams.  The scammers use the victim’s names and circumstances to perpetrate the fraud leaving the victim holding the bag, or the overinflated mortgage that they cannot afford. 

How do you protect yourself from loan fraud?  An average person might never be able to identify a loan fraud scheme until it is too late.   Loan fraud is ANY attempt to hide or misrepresent the truth when applying for a loan.   If you lie on a mortgage application about your income, you are committing loan fraud.  Misrepresenting your income or circumstances in any way is fraud so don’t be tempted even if it means you may be turned down for the loan.  It is better to be turned down than land in jail or be fined. 

Most of the people perpetuating these scams are not licensed and this is, in my opinion, the biggest reason loan fraud persists at the levels they do.  Until recently, in the state of Utah,  when a licensed individual was found to be committing this crime, the Utah Division of Real Estate could only tell the licensed person to cease what he/she was doing or lose his/her license.  If the perpetrator was not licensed, there was basically nothing the Division could do.  The new changes address this and hopefully we will start to see some results, soon.

Again, never misrepresent yourself in any way when applying for a loan.  If you are trying to get a loan and anyone suggests to you that you should hide or misrepresent information in any way, you should seek a second opinion to avoid ending up a victim of this crime.   If you are trying to buy a home and the loan is not looking good, be cautious if someone suddenly suggests that there are things they can do to make it work.  If it sounds too good to be true, it may be. 

Filed under: Blogroll,Credit & Finances,Real Estate — Susan @ 3:30 pm

May 9, 2007

Credit Scores And Buying A Home

I have many first-time home buyers call wanting me to help them buy a home. They know they want to purchase their first home but do not know where to begin. Let me suggest a couple of things you can do before you start the process.

First, find a lender. It is best to establish a good relationship with a reputable lender early on. It is a must to get pre-approved before you start looking. As listing agents, we owe it to our sellers to screen buyers and prevent wasting their time showing their home to buyers that will never be able to qualify. As buyer’s agents we owe it to you to insure that we will only show you homes you can afford. It is heartbreaking to look at a home, fall in love, only to find out that you cannot get a loan for the amount necessary.

Getting pre-approved early will also allow your lender to find your FICO score. This is a scoring system based upon your credit history. FICO scores run between 300-850 with either end of the spectrum being quite rare. The better your score, however, the more money you will save by being able to get the best interest rates. You can find your current FICO score at any or all of the national credit bureaus which are Equifax, Experian, and TransUnion. Also, by reviewing your credit report early, you may have time to correct errors in the report and/or improve your FICO score before you are locked into a higher interest rate.

FICO scores are determined by credit history factors such as the length of time a certain credit line has been established, the amount of credit used vs the amount of credit available, late payments, bankruptcies, collections, etc. So, to improve your credit score, you should try to:

  • * Pay your bills on time.
  • * Manage your money wisely. Avoid late payments, bankruptcies, foreclosures, judgements, and wage garnishments, etc.
  • * Reduce your credit card balances. Never “max-out” your credit cards. Always leave room between the amount of credit used and the amount of credit available.
  • * Try to increase your limit amounts if necessary. Having insufficient credit can affect your score.
  • * Use your credit cards occasionally. This is for those who do not have credit cards or have them but never use them. Some people have no established credit. Buying occasionally with credit then paying it off is better for your score then never using credit.
  • * Leave accounts open even if you no longer use them. A short credit history can count against your score.
  • * Correct errors on your credit report. Errors may include balances or collection problems from someone else with the same name, old unpaid balances, old credit balances that are payed off but never reported as paid, identity theft that you are unaware of, etc. Remember, it can take time to make corrections so it is a good idea to check your credit report periodically, even you if you do not plan to buy a home soon.
  • * Variety, have different types of credit lines: credit card accounts, mortgages and installment loans, etc.
  • * Don’t open a lot of different credit accounts all at once just before you apply for a home loan. FICO scores can distinguish between shopping for specific kind of loan but when you are running through the mall opening a line of credit at each store, it will probably lower your score temporarily.

You may want to seek professional credit counseling if you cannot raise your score with a reasonable amount of time and effort.

Filed under: Blogroll,Buying,Credit & Finances,Real Estate — Susan @ 4:11 pm

May 6, 2007

There’s No Place Like Home

I recently ran into a young woman who shared an apartment with 2 other girls.  She was expressing her desparation with her roommates because although she had never been late with her portion of the rent, the other girls seemed to be struggling to pay the last few months.    The manager was growing tired of constantly having to warn the roommates and was considering evicting them.  I asked the young woman why her roommates were having such a hard time paying before the last minute.  She mentioned that one of them had given her mother all of her money in a time of need and the other just seemed to have alot of other things to pay for.  I can see that this would be a stressful way to live.  It would be hard to get evicted even though you personally did nothing wrong and worked hard to protect your credit history and good name. 

I counseled this young woman to get  letters from her manager and roommates, stating that she was never late on her rent.  I told her to do it before things get ugly because then, no one will be willing to do so.  If she does end up getting evicted, this will be something that will come up in referrence checks for the next few years when she tries to rent again.  I also advised her to be upfront with any new landlord, telling them ahead of time,  “you are going to find this when you start checking out my references but here are some letters stating that I was not the cause of the problem.”   Hopefully, this will protect her from being classified as a bad risk as a future renter. 

As for her roommates, I know they are young but they need to realize that these things are not a minor issue.  No matter what happens, you are going to need a place to live.  Your car breaks down, you need a new appliance, or your mother needs your financial help;  whatever the reason, if it is risking your ability to pay your rent or you mortgage, then you are making a decision that your car is more important to you than the roof over your head.  You can ride a bus, you can wash the dishes by hand and you can give your mother what you can without putting yourself out on the street.   Choosing to not pay for “home” is a serious decision.  There are situations that may require this decision such as a life threatening medical procedure or maybe your mother is worth living in a cardboard box for but typically, risking your home should be your last resort. 

The same advise goes for people that cannot control their spending.  It seems to be the trend now to use your home’s equity to finance your spending habits.  People are increasingly charging their dream vacation, their dream car, that extravagant shopping spree, etc. to their home because they want “it” now.  They get in over their heads with credit card debt and use their homes to get out, but more often than not, they end up with a mortgage that is more than their home is worth and they have credit card debt all over again on top of that.  

Please be wise, please use wisdom when spending, manage your debt, and please, regard your home as a safe refuge from the world instead of allowing it to become part of the world that is crashing in around you.  You must have a place to live.  Do not do anything to jeopardize the only safe place you and your family can retreat. 

Filed under: Buying,Real Estate — Susan @ 11:10 am

May 1, 2007

I Could Not, I Would Not Break the Law!

This fair housing thing keeps coming up in my life and I am just dazed and amazed.  I recently sold a house and now many of my old neighbors are angry with me because of who the house sold to.   I am upset and frustrated and  I am very sure this is not a good time to be posting on my blog but if I don’t do something to vent, I am going to explode, (or break out in tears).  I just got off the phone with an old neighbor of almost 14 years.  I thought we were good friends.  My husband shoveled her walks every snow storm, every winter and edged her lawn every week, every summer.  We had many nice long talks standing out on the street, my kids chased down her runaway dog more times than I can count,  and I even visited her home on several occasions.  I am disappointed that 14 years of good memories can be erased so quickly because I did not break the law.    I am starting to feel that the neighborhood concensus is that I hand-picked the new owner for no other reason than to exact some kind of revenge, for what I do not know.  All the friendships, lasting relationships we had there mean nothing now by this one act.  The service I rendered for and in behalf of the neighborhood, the relationships I forged, the effect I thought I had, all have become meaningless or forgotten.   It really hurts to know that a person is not judged by the fruits of their labors but instead by whom they sell their home to.

Filed under: Community,Fair Housing,Personal,Real Estate,Renting,Selling — Susan @ 4:53 pm