Selling your home? Why pay more ?

Here’s the deal. Brokers used to justify their 6% or 7% listing fee because there was a “cost” to marketing your home. They had pretty color glossary hand outs created that showed you the enormous cost of letting buyers know about your home.

Sure, they would list things like the Washington Post, Homes Magazine, the local Gazette, New Homes Guide and other real estate publications. They would have the cost of a virtual tour, color brochures and a sign out front listed as well.

They might have included the costs of broker’s open houses and general public open houses.

I have no doubt that back in the day; those were the only methods available to promote your home.

 THAT WAS THEN AND THIS IS NOW!

This is a new day.  The only thing that the Washington Post, Home Magazine, the local Gazette, New Homes Guide and other real estate publications promote is the agent listing your home.  They are asking you to pay for promoting their interests.

What about the virtual tour, the color brochures and that sign in the front yard?  Can I say “You tube”?  Can I share that creating a virtual tour is NOT brain surgery?  Those brochures are eye candy.  The people that pick them up are in the house. All of the pictures should be on line. Oh, and that sign out front with the listing agent’s picture and phone number; it shows the home is for sale but it promotes the listing agent.  They are asking you to foot the bill for things that either cost nothing or promote the agent.

Think about it. Should you pay for the cold cuts and soda served to agents that attend broker’s opens?  They are asking you to subsidize lunch for friends.

Almost all buyers find new homes on the internet.  Any agent worth his or her salt has a website and adding your listing does not cost a penny.  The majority of listings are found via the Multiple Listing Service.  Buyer’s agents review them daily. The use of the internet in marketing your home has slashed the cost agents used to pay.

WE GET IT.  LISTING A HOUSE SHOULD COST LESS.

INTERESTED IN A FULL SERVICE, COMPLETE INTERNET LISTING

We  only charge  4.5%

(You can take the rest to the bank!)

CONTACT  ME NOW

Washington’s Fine Properties

Washington DC has some of the finest properties in the area for sale.  The thing that amazes me is that those that own these properties and are attempting to sell them seem to have forgotten the basics of selling your home.  Maybe over the years, these folks have missed the changes that have taken place in real estate sales.  The only difference between these homes and homes in the suburbs is the number of zeros in the asking price and the location of the dirt they occupy.

They are still homes.  If marketed properly, they will sell.

I have had the opportunity to represent buyers seeking one of these fine Washington properties.  They did not use one of those out of date, flashy publications to do their search.  They did not flip through the Washington Post looking for a home.  They did not receive a post card in the mail that brought the home to their attention.

They found the information they were seeking right here on the world wide web.  

When representing these buyers, I have been perplexed by the limited opportunity to view homes.  Everyone can understand the desire to limit viewings to people that actually are in the market to buy.  It doesn’t matter if you are in a two bedroom condo in Germantown, Maryland or 6 bedroom home in Georgetown, Washington DC.  No one wants people that have neither the inclination nor wherewithal to purchase wandering through their home.  That being said, it is safe to share that bringing a buyer to one of the million dollar plus properties is often next to impossible.

During the listing appointment, I have no doubt the agents showed the glossy magazines and shared that they had a bevy of interested parties, etc.  I am sure they poo pooed negotiating commission.  Everything was shared in a manner that implied the agent was on the same social level as those wanting to sell.  Somebody forget to share that this is not a social endeavor, it is an attempt to sell your home for market value as quickly as possible. End of story.

It doesn’t matter if you are selling a home for $250,000 or $2,500,000.  The home has to be available.  Far be it from me to suggest a nefarious purpose behind making homes difficult to view.  There are some that might suggest that the listing agent is more available if they can get both sides of the deal.  Perish the thought.  It did strike me as odd that several weeks of attempting to view some homes have been met with excuses like the listing agent had to work at a charity event and could not make arrangements for the home to be shown.  Do the sellers really believe that the home will be sold quickly when it is not available to be seen?

Let me share.  If you list with me, your home will be available to anyone that is qualified to buy it.  Your home will be marketed where buyers are actually looking for homes.  I will be available to show your home as necessary. Oh, and I will do all of that for 4.5%.  My commission rate does not change.  Keep that in mind as your property just sits there waiting for a buyer.

If you are interested, just click on this CONTACT ME link.

Selling? Consider a Land Contract

Selling your home? Depending on your situation, you might want to consider a land contract. In the DC area, home sellers are still facing a depressed housing market. Regardless of the paper tiger pronouncements from the National Association of Realtors, people who live here know that the market is stagnant.

Sellers that place their home on the market face competition with bank owned properties that are for sale at reduced prices, homes put on the market by sellers seeking to complete a short sale (often marketed at a fantasy price), homes being sold by corporations and other sellers that are not upside down and just want to sell. The average days on market usually represents all of the homes for sale.

Faced with this situation, sellers need to be aware of every opportunity available so they can decide which way of selling the home will work to their benefit. The biggest factor behind the increasing days on the market is the fact that over 25% of the people who attempt to get a loan are turned down. The necessary credit score to get a mortgage has risen significantly. Despite information shared in the media, lenders have “overlays” that require a greater score and a squeaky clean credit history. It doesn’t matter if rates are low if those that wish to buy your home can not get a loan.

Another factor sellers face has to do with the appraised value of their home. Lenders will only approve mortgages for a percentage of the appraised value. If the appraised value is less than the contract price, there are a few options and none of them favor the seller. The buyer can opt to make up the difference in cash (in essence use their personal funds to pay more money than the lender has told them the home is worth), the seller can lower the price and if all that fails the contract can be declared void (legal term meaning everyone will act as if it never happened).

Consider a land contract. There are pros and cons to a land contract.  A land contract is a private, contractual agreement between a buyer and a seller. Due to the nature of the contract, sellers do not have to comply with the property-condition requirements that are usually part of a sale funded by a mortgage.  The seller decides upon whom to sell the property to in the agreement.  This creates an opening for people who can not get a loan through traditional methods.  These buyers can not shop around for loans seeking low-interest rates so the seller can demand a higher interest rate and probably a higher price than if the home were being financed by a third-party.  The title does not transfer until the loan is paid in full. This means that the seller retains legal ownership with the right to evict the buyers if they default on the payment plan.  If the buyer defaults, the seller keeps all the money paid.

There are other factors that must be considered. Land contracts do not provide a lump sum payment at the time of the contract.  The seller becomes the lender.  If you need the cash from the sale of your home to buy another property, this may not be the best way to proceed. If the full proceeds are not needed right away or if the market is so depressed there is no other way to move the property, a land contract may be the way to go.  The other point that must be considered is if the buyer stops paying, the seller must evict them and re-market the property.

Ideal candidates for this process include but are not limited to people who inherit property and want to sell it in a depressed market,  people who do not need a lump sum payment right now and people facing a financial crisis. You do not have to pay off your home to sell it via a land contract.  Land contracts and contracts for deed provide a  way for people to sell their homes and owner-finance them and not pay off the existing mortgage. A land contract establishes a purchase price and mortgage terms that the buyer pays to the current owner. If the seller currently has a mortgage lien, the seller continues to pay his monthly mortgage payment to the mortgage company.

Everyone’s situation is different.  If you would like more information about land contracts, CONTACT ME. My name is John MacArthur. I encourage you to experience the difference.

How Do I Price My Home for Sale?

How do I price my home for sale? The answer to that question takes a little more thought and creativity than it used to take in days gone by.  In the Montgomery County and Washington, DC markets, we watched prices explode and almost double over a period of a few years ending in the late to mid-2000’s.  Then, we watched in horror as home prices peaked and exploded, falling in a rush to levels equal to or below the pre-rise numbers.  It has been like reliving the explosion of the space shuttle… lofty dreams of uncharted areas being reached turning to fractured hopes and yesterdays ashes coating a new reality.

Practices used in the past have no relevance today.  The rise and subsequent crash and burn have occurred while other new paradigms were taking place.  The manner in which homes are sold has been completely revamped.  It used to be a simple matter of meeting with the most well known real estate broker in the area, evaluating the neighborhood sales, pricing your home, putting a sign out front, an ad in the Washington Post and waiting for offers.

Those days are gone.  The internet has changed everything.  Buyers begin looking for homes long before they know what they can afford.  Buyers begin looking for homes long before they choose a real estate agent.  Buyers sign in and begin searching for homes without any regard for the name of the broker.  Information is free, available and overwhelming.

How do I price my home for sale? Initially, the answer will include some of the old methods.  The clearest indication of market value is taking a look at market results.  Understanding market results and making sure that the actual market results are the ones you are using is the challenge.  The days of all homes being pretty much the same are long gone. While it is true that you need to narrow your market to somewhere in neighborhood of a two mile radius of your home, you need to cull the chafe from the grain within those parameters. Before the listing agreement is signed, you have to have an understanding of what the appraiser working for the lender being used by your potential buyer will be looking at when he appraises your home. This is a prime factor to be used in pricing your home for sale.  The amount of money you want to sell the home for has little relevance if no one can get a mortgage to pay you. The hidden secret is that the lending institution being used by your potential buyer will have the last say in the sale of the home.

How do I price my home for sale?  Bring in a real estate agent. Focus on one who knows your market.  Focus on one who has a good understanding of the internet who might buy your home.  Pricing the home for sale and the subsequent marketing of the home will be heavily influenced by information available on-line and the agent’s ability to use the internet to your advantage.

How do I price my home for sale? A broad overview indicates that you evaluate the actual market, come up with a reasonable range, visit homes for sale within your reasonable range and price the home accordingly.  It may appear biased for me to advise you to use a real estate agent. It really isn’t biased, it is an opinion based on years of experience and seeing the results of those that chose to go it alone.

If you have any other suggestions, share them with me. If you would like to talk about this or any other article, call me at 301-509-5111.

For more information, just send me your information

How do you pick an agent to represent you?

There has to be a better way !

All the experts say that you should have a real estate agent represent you when buying or selling a home.  That sure sounds like a good idea, but how do you pick an agent to represent you?  There seems to be a lot of agents to choose from.  You can go on line and just type in the name of any town and real estate agent and in a flash your google machine will spit out a gazillion choices.  You can call the agent that is listed as selling the home you like ( this opens a can of worms because in Maryland and DC they can’t really represent you).  There is always the option of asking a family friend whom they would recommend.

Maybe there is another option that will do the trick.

It might be wise to slow down and realize that whomever you choose is going to assist you in one of the largest purchases you will ever make.  It is more than just a purchase.  The agent chosen will have a big role in helping you find your home.  Money will come and go, home is every day.

Why not create a little checklist and then use the checklist when researching potential agents.  Try to avoid anyone that focuses on what they’ve done and hone in on those that are quiet and listen to what your dreams include.  Some agents will have more designations ( i.e. that long string of initials behind their name) than others.  Designations are like diplomas, they only indicate the agent passed the classes.  Those letters do not guarantee that the agent has a clue about the actual practice of real estate in your market.  A solid checklist should include :

  • Has the agent done successful transactions in your market.
  • Has the agent had clients that are similar in age and professional level as you.
  • Does the agent listen to you before making suggestions about how to proceed.
  • Does the agent communicate with clients in manner that you communicate (phone, email, text, etc).
  • Are you comfortable with the agent

Everyone has their own idiosyncrasies.  Some agents still really do use what appears to be a high school photo on their card and website.  There are some agents that want to put you in their car and drive you around. You have to find an agent that works well within your comfort level.  The process may take a little more time, but you will find the rest of the journey to your new home a much smoother ride.

I am always open to hearing from you. If you have found a method that works, let me know.

 

Hey short seller, that bird on your fence is a chicken come home to roost

Yep, that chicken has come home to roost!

I have to preface this with the statement that I do not work for the IRS. I am not a CPA.  I am just an average guy that reads the newspaper.  Recently, I came across an article about taxes.  Now the focus of the article related to the fact that the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which became law on December 17, 2010 has put the IRS in a jam.  The IRS has to create all new forms to comply with the law, so if you itemize your taxes, you probably won’t be able to file until mid-to-late February.

This news doesn’t change the fact that you have to have your paperwork ready by April 15 (this year you have until April 18th because the 15th falls on Emancipation Day).  Most home owners need to be on the lookout for their 1098 from their lenders. You will need this when you file (if you itemize).

If you were involved in a short sale of your house last year or if your house was foreclosed on last year, keep checking your mailbox for the 1099-C that is on it’s way to you. If $600 or more of debt was cancelled (or forgiven), your lender is required to send this form to you.

In many cases, a tax must be paid on the amount of debt cancelled!

Now, the other shoe falls

Now there are three important exceptions. If you filed for bankruptcy and the amount of the cancelled debt was authorized by the judge, the amount cancelled is not considered income and no additional tax is due.  If you were insolvent immediately before the cancellation ( a loose definition is the total of your liabilities exceeded your assets) no additional tax is due. Also, if the cancelled debt relates to your principal residence and the money borrowed was to buy, build or substantially improve the home, you will not have to pay any tax on the debt that was cancelled.

HOWEVER

If you refinanced and used that money to pay for your children’s education, to buy a new car, to buy a boat, to go on vacation, to pay off credit cards ( or any other purpose other than for the house) you will have to pay tax on that cancelled debt.

The price of that fancy car just went up.

If you receive Form 1099-C and you believe in your heart of hearts that you qualify under one of the three exclusions, you have to complete and file Form 982 with your final income tax return.  Once completed, it probably won’t hurt to drop by a local church and light a candle.


If you used your equity in your home like it was an ATM machine, well it is time to pay the piper.  You see, that bird on your fence is a chicken come home to roost.

For more information about this or any tax issue, please visit the IRS website irs.gov.

You DO need an agent… plain, cold real estate facts.

You think you found the house and the work is over.

Not so fast grasshopper. Who is going to assist you in the purchase? The nice agent that you met at the open house said they would help you? Really, do you want “help” or representation? You see, in the State of Maryland, that nice agent can not represent you and the seller. Maryland is one of the states where an agent (note agent, not broker) can only represent one side of the transaction. Please don’t get confused with Dual Agency, that is an entirely different matter.

What’s the big deal you say?

There is a very big difference between writing down terms that you dictate and explaining and guiding you through an offer. An agent representing the seller can not negotiate for you. An agent representing the seller can not legally suggest the terms of your offer. Those are the facts, period.

But that agent can take a cut in their commission you say. Sure they can, as a matter of fact, why not, they are not doing any work for you. They are not liable for any mistake you make. They weren’t going to get the buyer’s side anyway, so it is easy for them to smile and say no problem.

You weren’t going to pay the buyer’s agent commission either! It is offered through the terms set up by the MLS. It is part of the listing agreement, and the agent may offer to cut the price of the house and still keep the total commission. You will never know, they are not required to tell you and they certainly CAN NOT NEGOTIATE FOR YOU.

Seeing the world, collecting both sides now

The State of Maryland has a fund set up to cover the illegal behavior of agents. If they do not represent you, you will have little luck filing a complaint. The stack of paperwork you signed most likely included a document where you agreed to go forward on your own.  Everyone in the industry is well aware that by the time you start signing paperwork, you are more inclined to just sign where indicated rather than read every line. The comforting words, “oh this is a standard form” or “everyone signs this”, do not absolve you from responsibility for what the documents indicate. Within but a moment, you sign or initial and you have agreed that the agent sitting with you represents the other party.

 

Don’t try this alone

There is a reason that buyer’s agents will do searches, show you property and patiently explain the process. There is a reason that these agents assist you in the preparation of an offer and negotiate for you. Beyond the niceties of their passion for help others… that is what they are PAID to do.

I can not fathom why anyone attempting to accomplish one of life’s most expensive ventures would do it on their own. There is not room in the blog world to go over every challenge your agent must face. There is no way I can share the hurdles you must accomplish. I do know that I do this for a living and I read the same internet advice and I read the same books that claim to make it easy and I promise you….there is nothing as valuable as experience.

If you are in the buying mode and you would like to have your own personal representative, we would welcome the opportunity to assist you. We do this for a living and our success depends on your happiness.

The MacArthur Group

ReMax Realty Centre

301-509-5111