Real Estate News and Commentary

August 12, 2009October 5, 2019

Making the right decisions starts with choosing your agent

By Dan Krell &copy 2009
www.DanKrell.com

For a smooth transaction, choose the right providers

If you are a first time home buyer, you may feel a bit confused and certainly overwhelmed by the huge amount of information that suddenly seems to cascade over you. Let’s face it, the real estate industry has changed significantly such that if even if you’re an experienced home buyer you may feel a bit confused and overwhelmed too. Choosing your service providers before you begin searching for a home can assist you through the different phases of the process as well as build a foundation for a smooth transaction.

Taking the time to interview and choose a Realtor, lender, home inspector and title agent before you begin searching for a home will create a team of professionals to guide you through the major aspects of home buying. It may sound a bit much, but when you are embarking on (probably) the most expensive purchase of your life, it’s important to know you are well represented.

Although the Realtor is generally known to assist in home searching and negotiating sales contracts, the agent you choose should be by your side throughout the transaction to help when the road gets bumpy. Besides asking how long the agent has been licensed, you should also ask if the agent is full-time so they may be accessible throughout the day. Additionally, calling an agent’s list of references of recent clients can shed light on the agent’s strengths and weaknesses.

Consulting with a lender prior to making an offer on a home is important; narrowing your choices by interviewing loan officers can help you learn more about their attention to detail as well as focus on customer service. The loan officer will help you through the mortgage process and should be available to assist you from application to closing. Comparing mortgage costs is more than comparing interest rates, asking for and comparing lender fees and points can help you differentiate total lender costs.

After you enter into a contract, you will most likely want to conduct a home inspection to determine the condition of the home. Many home buyers don’t consider choosing a home inspector and rely on the real estate agent to arrange the inspection; however, experience and scope of inspections can vary significantly! Choosing the right home inspector can help you not only accurately determine a home’s condition, but also put you understand age related problems of a home (such as settling) and prepare you for future maintenance. Make sure that the inspector you choose is available by phone and willing to return to the home if you have questions about the inspection.

Like the home inspection, choice of a title agent is often left to the real estate agent. However, choosing a title attorney early in the process may provide you a strong and useful advisor- a title attorney. The title attorney will not only help you understand the closing process, some title attorneys will make themselves available to answer legal questions that may arise from your home purchase.

Taking the time to interview and choose the providers whom you feel comfortable with is important to help guide you through the ups and downs of the home buying process. For more information on the home buying process, please visit the Department of Housing and Urban Development (www.hud.gov/buying).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 3, 2009. Copyright © 2009 Dan Krell.

July 29, 2009October 5, 2019

Alternative home buying consultation

by Dan Krell &copy 2009
www.DanKrell.com

Consulting the stars to buy a home

Before buying or selling a home, some people will consult a Realtor to understand market trend analyses, economic analyses and employment data. For a fresh approach to home buying/selling and real estate investing, some will consult with an astrologer (before meeting with their Realtor). Astrology has been used for many years to assist people in making business and financial decisions as well as attempting to predict future trends.

According to the American Federation of Astrologers (AFA), astrology has been practiced for over 4,000 years. It is considered an art by some, science by others, and mocked by many. Reported past followers of astrology include Plato, Copernicus, and Sir Isaac Newton. Former First Lady Nancy Reagan made headlines when she consulted with astrologers. Because there is a wide range of opinion, the AFA has stated that “few other topics stimulate as much debate as astrology.” The AFA conducts research and compiles data to better the practice of astrology. The AFA also established a code of ethics and provides accreditation to astrologers (astrologers.com).

The art/science of astrology is practiced by calculating and reading natal charts; each natal chart is exclusive to each person’s rising sign, planets, and houses. An individual’s natal chart is read to interpret and understand past and future influences on a person’s life, including (but not limited to) business, finances, relationships. Businesses owners sometimes use astrological charts to help time entering into contracts, expansion, and hiring.

Why rely on a real estate expert when you can consult the heavens? Having an astrologer read your natal chart can help you understand and choose the best timing for buying a home as it relates to your life events. Depending on your chart, the astrologer may determine that buying during a certain period of time may be best to avoid negative influences. Additionally, an astrologer may even determine the type of home that may be best for you as well its surroundings.

Some astrologers have actually claimed that they predicted the decline of the real estate market. In his book, Cosmic Trends, Philip Brown predicts future trends by studying celestial and historical cycles. Published in 2006, Brown described emerging astrological signs that were not seen since the 1930’s. Special attention is given to Cancer, which Brown describes as representing homes and real estate.

In 2008, Lloyd A. Wright, AMAFA wrote “The Catastrophic Eclipse of the Real Estate Bubble,” which describes the effects of lunar and solar eclipses to the relative positions of Saturn (land and real estate), Jupiter (money), and the moon (the public) during 2007. Prior to the lunar eclipse of October 24, 2007, he stated that the real estate market was relatively stable. However afterward, he described the markets as beginning to tumble (astrologers.com).

Although some astrologers may say that we are bound to our fates by karma, most astrologers will explain that we have free will that can be enhanced by reading our natal charts. Astrology is not exact, so it easy to misunderstand the intent and use of the field in one’s life.

Although often ridiculed, astrology is frequently misunderstood. However according to astrological practitioners, real estate market trends are not just associated with economic data – they may also be related to heavenly cycles and events.

July 24, 2009December 13, 2022

Feds to crack down on foreclosure relief scams

The 2008 Mortgage Fraud Report “Year in Review” published by the Federal Bureau of Investigation reports that mortgage fraud continues to increase (FBI.gov). Maryland, DC and Virginia are in the top ten states hardest hit by mortgage fraud. Due to a declining real estate market, the FBI states that incidents of mortgage relief scams will continue to rise through this year and is expected to increase in the future. Property flipping, short sales, and foreclosure rescues continue to be the main schemes perpetuated; however, new forms of the scams are appearing as reverse mortgage fraud, credit enhancements, condo conversions, pump and pay and loan modifications.

In an effort to cut down on mortgage relief scams, the Federal Trade Commission (FTC.gov) is launching an initiative to educate consumers and prosecute those allegedly involved in defrauding home owners. In a press release dated July 15th the FTC announced the launch of “Real People, Real Stories,” as well as four law suits involving foreclosure relief deception (there have been a total of fourteen such cases since April!).

“Real People, Real Stories” is a video that will educate home owners on foreclosure relief scams and deceptive practices. Actual home owners who were deceived by scammers were interviewed for the video; they divulge and expose how the scammers approached them and operated. The video advises home owners to investigate anyone offering a foreclosure relief program. Home owners are also warned that many foreclosure relief programs have the words “federal,” “U.S.” or “government” in the name, but in reality may not be associated with a government entity.

The video is also a promotion for the Hope Now alliance (HopeNow.com). Hope Now is a partnership of lenders, non-profit organizations, and other mortgage industry participants who are dedicated to offering a coordinated plan to assist home owners.

Operation Loan Lies is a nationally coordinated law enforcement effort to put an end to mortgage relief scams. Actions taken by 25 federal and state agencies are directed toward those who “deceptively marketed foreclosure rescue and mortgage modification services.” FTC Chairman Jon Leibowitz was quoted in the press release as saying; “These con artists see the high foreclosure rates as an opportunity to prey on people in distress…”

Alleged actions by targeted foreclosure relief companies across the country include (but is not limited to) false claims of services, experience and success rates, violating (state) laws prohibiting collecting fees prior to providing services (some up to $5,500), “Do-Not-Call” violations, and misrepresentation.

If you or someone you know is facing financial challenges or foreclosure, Hope Now can connect you to HUD certified counseling agencies. Hope Now resources include instructions on contacting lenders as well as a lender contact list, local counseling agencies, and government agencies. Hope Now also offers a hotline so homeowners can call toll free, 1-888-995-HOPE.

Don’t become another statistic, investigate anyone that offers you foreclosure relief by calling Hope Now as well as local consumer protection agencies (such as the Maryland Attorney General Office Consumer Protection Division, and the Montgomery County Office of Consumer Protection). If you suspect a foreclosure relief scam, the FTC would like your help by reporting such activity by calling 1-877-FTC-HELP; complaints are collected and given to federal and local law enforcement agencies.

By Dan Krell
Copyright © 2009

This column is not intended to provide nor should it be relied upon for legal and financial advice.

July 23, 2009October 5, 2019

What do FSBOs know that we don’t?

by Dan Krell © 2009
www.DanKrell.com

What do FSBOs know that we don’t?

Whether I drive by a “for sale by owner” sign or I come across an ad while perusing the Sunday real estate section, I often think that FSBOs (For Sale By Owner) are brave for going it alone. Is there something FSBOs know that others don’t?

Being a successful FSBO means taking your home sale seriously. Would you hire a part time real estate agent who is not genuine in marketing and showing your home? Probably not. Then why go half-way when doing it yourself? Having a serious attitude means doing the research, making a plan, and following through.

Research will help you avoid one of the biggest mistakes FSBOs make – pricing the home. If your home is not priced correctly, you’ll not only price yourself out of the market; but you’ll also waste valuable time. Therefore, using accurate and up to date neighborhood information is critical.

Online home sale resources, such as Zillow, Trulia, and tax records are helpful, however you may find that the information is not always accurate and does not tell the whole story. You can get valuable and up to date neighborhood sales information from local Realtors. Although not all Realtors may be open to helping you sell FSBO, some will! Don’t be afraid to explain that you are planning to sell FSBO and you would like a CMA for your home. Also, ask for their opinion and rationale for a list price.

Selling a home is much more than putting a sign in the yard. Having a marketing plan, even a basic one, can make a big difference in attracting home buyers. Write down the classified ads you plan to use, as well as where and when you will place them. Online ads should also be planned in advance; you will find that articulating an honest and exciting description of your home isn’t always easy.

Having an open house depends on your comfort level of having strangers traipsing through your home. When you consult a Realtor for a CMA, you might ask about open house information. You might want to consult with local police about open house safety.

Don’t forget the benefits of selling FSBO; well, there’s one major benefit- not paying a Realtor commission. But according to the 2003 National Association of Realtors Profile of Buyers and Sellers, FSBO sales net less for sellers compared to homes sold by agents. The profile reported that FSBO sales averaged $145,000 while real estate agent sales averaged $175,000 – giving the seller an average net of $19,500 more on the agent sale after a 6% commission (realtor.org).

Selling your home FSBO can have successful results; a FSBO sale can be a rewarding experience if well planned and handled properly. But before you decide to take on the sale on your own, do yourself a favor and visit a few FSBOs to get feedback about their experiences. You might find out that listing and selling real estate is not as easy as it seems; “they” will not come just because there is an ad in the paper or an internet listing; “they” will not buy at any price; “they” will not buy in any condition; “they” are not all qualified; and “they” will not always show up to settlement.

July 21, 2009October 5, 2019

Is it a scam, fraud, or legitimate transaction?

Simultaneous Closings

Some say it’s illegal, some say it’s fraud, some say it’s a scam, and yet others say it’s legal if disclosed. This is the mixed response that a real estate investor gets when trying to conduct a simultaneous closing. The fact is that that a simultaneous real estate closing is a legally complex transaction and has many pitfalls as well as consumer protection issues.

This does not stop the real estate investor who is looking to make a quick buck with little or no money down. A simultaneous closing (also known as a double closing) occurs when a single home is sold twice in the same day. The real estate investor (sometimes referred to as the “middleman”) settles his purchase from the owner, and almost immediately settles on the sale of the home to the home buyer.

Because of the obvious questions raised by such a transaction, investors sometimes use a technique called an “assignment” to get around some of the problems they encounter with a simultaneous closing. Rather than closing both the purchase and sale the same day, the investor assigns their sales contract to the home buyer for a fee.

Home buyers and Realtors may come across such sales as real estate investors advertise to attract home buyers to complete these transactions. Real estate investors may list the home in the MLS or place and ad as a FSBO- appearing to be the owner of the home (although they do not actually own the home). When entering into a contract with a home buyer, they may or may not disclose the nature of the sale.

Many times, home buyers take for granted that the home is being sold by the actual owner. As mortgage fraud and real estate scams increase, home buyers are encountering more irregularities. However, it may become evident to you and your Realtor that an investor is attempting a simultaneous closing or an assignment when: 1) the name on the public record does not match with the name of the person who is selling the home; and 2) the home is difficult to show- there are confrontations with the occupant (often the actual owner).

Buying a home through such a transaction poses some problems for the home buyer, including securing financing. A mortgage lender will not lend money to purchase a home from someone who does not actually own the home, an obvious stumbling block for the real estate investor. Although most title agents stay away from simultaneous closings, savvy investors will pressure the home buyer to use their title agent; the investor’s title agent may issue a title binder for the transaction making it appear that the investor owns the home to meet the buyer’s lender’s requirements.

Putting aside the obvious questions of meeting your lenders underwriting guidelines and possible fraud, it’s prudent to exercise your right as a home buyer to choose your own title agent for your purchase; a title agent uses due diligence to ensure there are no irregularities with the deed and title to the home to issue a title binder and title insurance.

The simultaneous closing or assignment transaction is legally complex for the home owner, real estate investor and the home buyer. If you find yourself in a simultaneous closing or assignment transaction, consult an attorney for legal advice.

Original published at https://dankrell.com

By Dan Krell