One of the questions that come to mind for a home buyer or seller is “How do I prevent problems in closing my escrow?”

The key to making sure your escrow closing goes smoothly is choosing a great Realtor that will anticipate problems before they happen. In order to stay on track, a great real estate agent uses a checklist of tasks that must be completed before the close of escrow, and then follows up to make sure they are all completed prior to the sellers or buyers going to the Title Company to sign closing papers.

Most issues that delay or prevent closings fall into three categories: loans and appraisals, titles, and home inspections.

1) Loans: Financing falls through at the last minute - An agent needs to help buyers understand that a prequalification letter doesn’t necessarily mean they are preapproved. Because of tighter lending standards and heightened concern about mortgage fraud, there is a lot more paperwork required from the buyer today. Making sure that the buyer gets in all of their documentation as quickly as possible to the lender is key, because 9 times out of 10, there is always something else that a lender will need in order to issue closing documents to the Title Company.

2) The appraised value doesn’t come in to support the contract price – FHA loans require comps to be within a three-month time limit, which means it can be hard to find comps in some neighborhoods. The agent should always work with the appraiser if possible to submit comps or reports that show the property’s condition and the neighborhood that the banker has never seen.

3) Title can’t be transferred at closing – Title defects are another issue. Getting a preliminary title report as quickly as possible to surface those issues is extremely important for a buyer or seller, as you then have time to resolve them quickly. Short sales and REOs are particularly prone to issues, as sometimes the owner doesn’t surface them or the owner isn’t around. Perhaps there was work done on the property and if it went unpaid, the sellers might now have a lien on the property, or maybe there are unpaid HOA fees. Make sure the proceeds of the sale will cover any mortgage liens and unpaid fees.

4) A home inspection uncovers serious issues - For the seller, it pays to have their own inspections done and work performed prior to listing their home for sale, as many issues can be resolved before they become problems during the negotiation process with the buyers. However, sometimes sellers can’t afford this, but having a good agent to do a thorough walk-through with the owner helps. Asking the owner about the age of the roof, any repairs that have been made, and looking at the foundation is also helpful, and alerting buyers to possible high-ticket repairs and suggesting they factor those costs in will cut down on the amount of post contract negotiations.

Above all, allow more time for the transaction and closing to happen. A good buyer’s agent can get a realistic estimate of the clients’ closing date by creating a timeline of how long inspections and approvals will take to ensure making the closing day on time.

Posted by:  Rick Smith

I work with a lot of buyers and I always get asked, “What are all these crazy foreclosure terms and what do they mean?”

To help make sense of all these terms, you can divide them up into three categories.

1. Pre-foreclosure
Pre-foreclosure homes are the ones in the process of foreclosure, but have not been auctioned off. Owners often try to sell the properties because they owe more on their mortgage than what the home is currently worth. This is called a ”Short Sale” although the process is far longer to undertake than what the term implies, as it is usually complicated and a slow process that can take anywhere from 3 months to a year to complete. However buyers are given the chance to inspect the home prior to purchasing, whereas it’s not always the case when buying in other stages of foreclosure.

2. Foreclosure
The second category is the public auction at a foreclosure sale. Homes in this stage are well-priced, but also come with a few challenges to buy. These homes are not available for inspection and buyers may later discover the property needs lots of repairs to make it suitable for living. Many of these homes are bought by investors who have experience working with these types of homes, or the home may be taken back as an REO by the foreclosing lender or bank.

3. Real Estate Owned
The third category is an REO or “Real Estate Owned” property that’s been taken over by the bank. Although homes in this stage sometimes do not offer buyers the best price, buyers can generally perform thorough inspections, and many times the banks have made some repairs before putting the property up for sale. The bank then sells the homes “as is” and will not pay for any cosmetic issues, although they will often pay for some repairs that are health or safety issues. One of the key issues here is reserving enough money as a cushion to pay for unexpected repairs.

This process can be very confusing and I hope this simple explanation helps.

Homebuyers, have you been hesitant to consider purchasing one of these types of homes? What are your biggest questions/concerns? Leave me a comment below and I’ll be glad to answer any question you may have.

Posted by:  Rick Smith

If you are toying with the idea of jumping into the market, either as a buyer or seller, Open Houses can provide a wealth of information – most importantly, the type of information that you cannot get from the Internet. This Sunday, April 25, is Frank Howard Allen’s Open House Extravaganza and hundreds of our listings throughout the North Bay will be open to tour. Whether you’re a buyer or seller, looking for a potential agent or just curious about the market, here are some things you can learn this weekend:

For Buyers
If you are a “potential, somewhat skeptic, maybe yes, maybe no” buyer, you most likely want to assess the homes in your price range to find out if there’s anything that even appeals to you. (This is sometimes called the “I don’t want to waste your time” stage, and we recognize that it really is the “I don’t want to be bugged by a real estate agent” stage.) When at this stage, public Open Houses allow you the freedom to check out specific homes and neighborhoods, become familiar with comparable sales, and learn what your money can buy.

During this process, you will also learn about yourself and what you really want in a home. Most buyers don’t end up with everything on their wish list; the more homes you visit, the easier the task of deciding what you can and cannot live without. It’s very difficult to do this without hitting the road.

If you have not yet chosen an agent to work with, Open Houses are an ideal place to interview for one. It’s important to find someone who is a good match for you, whether the criteria is personality, expertise, presentation or a combination of all three. Visiting an Open House allows you to observe agents in action and find the right fit.

The buying process can have many false starts, so if you meet an agent that you are impressed with but find that you need to put the brakes on the process, keep in touch. He/she will be able to provide you with updates so when you do get back into the market you are not beginning at square one.

For Sellers
If you are considering selling your home, the first order of business is to check out the other homes for sale in your neighborhood. It’s vital to know what your competition is because when it’s time to set your asking price, your agent will include these homes in the “Comparative Market Analysis,” the report that is used to determine where the market places the value of your home. It’s to your advantage if you have actually seen the homes yourself.

Another reason why it benefits you as potential sellers to visit Opens is that you can quickly learn how homes should – and shouldn’t – be presented when they are placed for sale. First impressions are the most important and you will want to “showboat” your house for prospective buyers.

Looking for an Agent?
If you have not selected an agent to sell your home, visiting Open Houses can teach you a great deal about agents and the service they provide. Ask yourself these questions when you go:

1. Was the agent enthusiastic about the house or did it seem like he/she was just marking time till the open house was over?

2. How did the agent engage with the public? If you were a buyer, would you feel comfortable asking him/her questions about the property?

3. Try to gauge the agent’s market knowledge: is he/she experienced in selling properties in your neighborhood?

4. Was the agent effective in getting the house ready for public viewing? How about the agent’s attention to detail?

5. Are you impressed with the quality of the agent’s marketing materials?

6. Did the agent seem genuinely interested in you?

The final question to ask yourself would be: Based on this person’s performance, is this someone you would want to represent you and your interests?

Buyers and sellers, we’re glad to see you out and about at Open Houses and we hope to see you this Sunday.

Posted by:Noreen Smith

When homeowners are asked what the most important criteria are in selling their home, the reply is often, “To sell at the highest price in the shortest amount of time.” While it’s natural to think that way, the current economy requires a more strategic approach, one in which sellers concentrate first and foremost on their primary objective: the reason why they want to sell in the first place.
 
Once the decision is made to sell, the next steps are selecting a qualified agent and establishing an asking price. The second must not be done before the first. When choosing an agent, review his/her experience, services, and marketing plan. Do not choose someone solely on the fact that he/she agrees with your asking price. For help with this process, review the Ten Questions to Ask a REALTOR®.
 
Real estate agents don’t establish value, the market does. Under no circumstances should you pick an agent based on price. The best agents have the confidence to tell you the truth about the market. Ideally, you should select an agent based on the criteria mentioned above; then together you can determine the asking price of your home.
 
So how do you settle on that magic number? Before answering that question, think back to when you purchased the home. How did you determine what to pay for it at the time you bought it? Most likely you and your agent compared it to all the other properties that met your criteria and arrived at a value based on that comparison. Buyers still comparison shop, and have a greater advantage today because of the sheer amount of information available on the Internet. (One thing to keep in mind is that the Internet often only discloses the asking price. Your agent will research the sales price – a truer gauge of the market.)
 
In the same way that you compared properties when it was time to buy, you will need to make comparisons if you truly want to sell. Your agent will prepare a document called a “Comparative Market Analysis,” or CMA: a report that compares the location, size and amenities of your home with recent sales and other comparable homes currently for sale in or near your neighborhood. 

In evaluating this CMA, it’s important to point out:
 
“Actives” represent the upper end of your price range; “Solds” represent the reality of the market. “Solds” are the most important stats to use in your evaluation. Your asking price should be at the top range of the “Solds” and the bottom range of those “For Sale.”
 
Your agent may include in the CMA the “Expired listings,” or those homes that didn’t sell. They represent the “out-of-range” price point. If you price your home in this “out-of-range” category, your home will not sell either. To receive the most amount of money in the shortest amount of time (the stated goal), you must price at market value. Think of the CMA the way a doctor thinks of an X-Ray: it shows precisely what’s going on so an informed decision can be made.
 
Consider these terms when determining your asking price:
 
Cost – The amount you paid plus the cost of capital improvements.
 
Price – The amount being asked for the home.
 
Value – What a home is worth to one person in an isolated situation.
 
Market Value – The amount that would appeal to many people and cause a sale within a reasonable period of time.
 
If you accept the above definitions, you must agree that there is no relationship between cost and market value. This is one of the most difficult points for a homeowner to accept. Value is a function not of what you have in your home, but in what you can get out of it.
 
Some sellers find themselves in the unenviable position of having to sell before they’ve had a chance to build equity in the home; others realize their home’s value has dropped below what they paid for it.
 
In both situations, sellers are left with a tough choice of whether to sell at a loss or stay in the house. The question to ask is, “Do the benefits of moving exceed the amount of the loss?” 
 
If you must sell now, take your time and choose an agent in whom you have confidence; one who will put your best interests first; one you will respect enough to listen to – even if the news is not something you want to hear. Then collaborate to arrive at the best price.

Have you recently sold your home? How was the asking price established? Let us know about your experience.

Posted by:Noreen Smith

Once you’ve made the important decision to sell your home, it’s a smart idea to interview at least three potential REALTORS^® before deciding on whom to hire. Without any obligation, you can invite local agents to preview your home and prepare a listing presentation. (Referrals, word of mouth, sales presence in your neighborhood, local brokerage websites – are all ways to find a potential REALTOR^®.) When agents arrive for the presentation, they will likely have prepared a Comparative Market Analysis (CMA) with data on nearby similar homes that have recently sold. They will also provide you with information on their credentials, a marketing and sales plan for your home, benefits of any company affiliations, and why you should list with them. For your part, it is important to prepare a list of questions to ask in return. Following are some to keep in mind:

1. How long have you been in the business?
2. How many properties have you or your company sold in the neighborhood?
3. How will you market the home?
   • Who will photograph my home?
   • Will you create a complete address-specific website for my home?
   • How else will you market the home?
   • How do you feel about Sunday open houses? Who would hold the home open?
   • May I see a sample flyer?
4. Will you provide me an update on your marketing efforts, as well as an overview of any new comparable active, pending and sold properties?
5. Will I work with you or your assistant?
6. How will you keep me informed?
7. Will you provide references?
8. What are the top three things that separate you from your competition?
9. How much do you charge?
10. What haven’t I asked you that I need to know?

For more seller tips and articles, click here.

Posted by:Noreen Smith

My new listing in Peacock Gap, San Rafael sold in a weekend with motivated, urgent, intentional buyers competing for the home. Isolated incident? Not. The key is strategic pricing. Buyers are savvy and will recognize and act on value when they see it. For the past couple of months I’ve been hearing about and experiencing multiple offers all over Marin County. Savvy buyers recognize this is an A+ prime market, understand real estate cycles and know their property will be worth a lot more in a few years… imagine 10 years!

The game has changed but I still love playing it! Let’s play ball… we’ve got a pitcher, a catcher and you’re up! This is the time to hit a home run with a solid piece of Marin County real estate at a price that was previously thought to be untouchable. Call me at 415-925-3285. Lock up a deal now, I know where they are.

After 20 years and 500 escrows… there are no surprises.

Posted by:Patti Cohn

It’s spring, the height of the selling season, and agents are ‘very busy’. Yet they’re also hungry because for all their work and effort there have been very few closed escrows. (For example, the topic at another marketing group was how to price the $1M plus home in San Rafael since there are 96 for sale and thus far this year only three have closed escrow.)

One of the six by-invitation-only Realtor marketing groups I attend meets at Tamalpais Bank in Corte Madera. (Each group is 10 to 30 agents from different companies who gather to help each other succeed). By presenting property and analyzing sales these groups help us create successful sales. From the Tamalpais Bank meeting:

“Tell us about the closing Willow. I heard it was tough.”

“After 28 years in the business and 100s of escrows, the closing was tough but manageable. The first lender changed underwriting standards after two weeks. Because the communications were clear nobody panicked as the buyer switched lenders. The second lender presented their own challenges including a last minute demand that included two review appraisals.

“Congratulations on your Ross listing, rumor has it that it’s a beauty. But it won’t be on for another week, right?”

“Yes, but I can get you in to see it. Hey, another rumor, two more sales and you’ll move to #1. So when’s your next sushi feed?” (A reference to my famous brokers’ open houses where I serve sushi).

“Soon.”

“You’re so involved and full of energy. How do you stay up and energized all the time?”

“I make like an energizer bunny with an on/off switch … right now the level of energy that it takes to get things done is quite high … but I’m not sizzling all the time. Wednesday evening, in the midst of the closing of Willow, I was so embarrassingly flat on a referral that was completely in my niche – a couple wanting to sell a beautifully crafted, water view home blocks from my office in order to purchase a smaller home in west Marin.”

“I may have somebody for that property. How many bedrooms and what’s the price?”

“There’s no price set. They asked for a price and since it was a pre-planning meeting I used the network formula – I took the price that ‘seems right’ based on experience, then knocked off 15% for market conditions.”

“What is the most important factor in today’s market?”

“Buyers are in no great rush unless they perceive a bargain so the missing factor is energy. It is imperative that the agent and the sellers ‘energize’ the property.”

Posted By: Tom Verkozen

After a phone call on Tuesday, ”I’m excited. I’m going to buy the home of my dreams through the listing agent and because she’s motivated and I get a good deal and save money,” I did some research. First, let me be clear – I get what she was saying about saving money and it seems there should be some savings for the buyer. ‘Seems’ is the operative word.

We know the listing agent is motivated. The listing agent is always motivated. Listing agents want to sell property. I know I always want to sell my listings.

The $84,000 question is, Do buyers get a better deal by going directly to the listing agent? I believe they do not because the listing agent is inclined to support and stand by the price they helped place on the home.

Here’s some common real estate dialogue:

“We just reduced our price and now it’s a drop dead good deal!”

• But that reduction was 3 weeks ago and it still hasn’t sold.

“Yes but now it’s priced right!”

• This is your second reduction. What is the right price?

“We have 5 very interested parties circling.”

• Circling, but no offers?

“Do you have a buyer?”

• Yes. (Now we have a really motivated agent – and one who’ll listen to market statistics and comparable sales in order to justify a ‘willing buyer/willing seller’ market price with the motivated seller).

Lastly, I reviewed the last six months of sales in my home town, Ross, comparing the list price with the sales price. On the average the buyers who shared their representation with the seller paid 8.49% MORE than buyers who had their own agent representing them. That’s $84,900 saved? Not exactly. A higher price is not saving – you’re the seller.

Posted By: Tom Verkozen