Choosing an Agent based on Price

Choosing an agent based on price can be a big mistake… Selecting the best agent can be counter-intuitive if you don’t look at this decision from all angles.

success

Sometimes, my assessment of the likely Sale Price is below what a Seller was hoping for.  Sure, I could be being overly conservative.  I also see Seller’s being gamed by agents too. So, here is the WARNING: I am setting my diplomatic filter aside on this post. If you are a potential Seller and are interviewing agents, here are 8 points to consider:

  1. Stretching the List Price is not necessarily a problem – as long as we can defend it and the property can appraise.  We have been very effective at defending our pricing on appraisals lately. No last minute contract amendments to lower the price because the property did not appraise. On the other hand, we have statistics that show Seller’s pay a “greed penalty” when the List Price is pushed above the limit. When we agree to list someone’s home, we take on responsibility for someone else’s money.  When someone else’s money is involved we have to live in the land of “probability” not “possibility”.  If a seller wants to gamble with their own money, we are happy to go on that ride up with them (up to a point) as long as they understand the risks.
  2. The most objective and accurate predictors of the value of your property are the recent sales. Those will be what buyer use, those will be what agents use, those will be what appraisers use.  Reality is in the numbers both from a timing perspective (i.e. the data shows sales for houses like this running about 1 sale every 3-4 weeks now) and value perspective (i.e. renovated homes like yours on the street are selling for $x).  Frankly, I am stunned when real estate agents could come up with a drastically different assessments.  But I see it. Your challenge is to keep asking questions to get at specific comparable properties to back up your price – not just an agents opinion.  They will not be able to bluff you past the appraiser.
  3. I do not think pricing is as much of a opinion question as it is an education process on how agents work.  There is a term for over-pricing listings just to get a sign in the yard –  it is called “buying” the listing. All agents know this term.  The agents who do this just concede the argument and assume the Seller will eventually cave in to the market reality of a lower price.  In the meantime, these agents know they will get visibility and sign calls from potential buyers which they hope to convert into clients.  Part of their motive is to get their sign in the Seller’s front yard as “bait” so that if the house does not sell, hopefully the agent will have at least picked up a buyer or two who will buy something else.
  4. We compete with agents day in and day out and our assessments of home values are sometimes higher and sometimes lower.  Pricing is really an art and a strategy rather than a hard answer. Our primary motive in any listing appointment is to figure out how to best project what the house will sell for in the current market.  It is not to hedge our bets and use the seller’s property to generate leads.  In the end, we believe we are positioning a property within the competition with both price and condition so yours is the best value. That should be your goal.
  5. We always seek to gain the Seller the highest possible price in the time they need with the least hassle. ALWAYS. Once Price and Condition line up, it is time to market the heck out of the property! Make sure your agent has a detailed plan for doing just that.  IF that plan includes sequenced price adjustments, make sure they are advancing your interests rather than the agent’s.
  6. You have access to discount brokerage models that offer lower fees.  We believe you get what you pay for.  So, if you are not paying very much… the agent will be covering their costs whether you sell or not. They will also probably be looking for compensation from other sources. Don’t overlook this conflict of interest. http://coachbunch.com/2013/02/08/selling-your-house-with-a-flat-fee-or-discount-broker/
  7. We do very well with isolating the strengths of a property.  We also have to be good at quantifying issues to be accurate on our projected sales prices.  When an interviewing agent mentions the weaknesses and offers strategies for overcoming them, please do not penalize them.  It is much cheaper to address issues ahead of time before you are under the microscope of being “on the market”.
  8. It is easy to hope in opinions about higher prices.  So just remember, agents are not bidding on your house by offering competing list prices.  You should however pay particular attention to how they handle themselves during a pricing discussion with you.  THIS will be a great indicator as to how they would negotiate for you down the road.

 

Filing for Homestead Exemption in Metro Atlanta

Every spring, home buyers are filing for Homestead Exemption in Metro Atlanta.

Homestead ExemptionDon’t leave money on the table! For this post, we asked Pam Robinson with closing attorneys Neel, Robinson and Stafford, LLC to simplify the Homestead Exemption process for us.  So, Pam, thanks so much for your help on this!

What is a Homestead Exemption

It is a Tax Savings. When it comes to Property Taxes, a homeowner is entitled to a “homestead exemption” on their personal home and land underneath provided the home was owned by the homeowner and was their legal residence as of January 1 of the taxable year. (O.C.G.A. § 48-5-40)  Buyers only have to file for this once following their purchase. After that initial filing, it stays in place in subsequent years. Typically, when someone buys a home (other than an investment property) there is Homestead Exemption in place through the current owner. When that property is sold, the Homestead Exemption will drop off. The new buyer must then apply for the Homestead Exemption so it can be reinstated under their name. If a new Buyer does not file for their Homestead Exemption by the county imposed deadline, the taxes will be higher than the previous year because the Homestead Exemption was not in place. Unfortunately, there are no exceptions of the deadline is missed. The only action to take is to file for the Homestead Exemption as soon as possible so that the exemption will be in place for the next year.

What and/or Who Qualifies?

You only get one homestead exemption at a time and it is on your primary residence. To be granted a homestead exemption, a person must actually live in the home and the home is considered their legal primary residence for all purposes.  Persons that are away from their home because of health reasons will not be denied homestead exemption. If this is the case, a family member or friend can notify the tax receiver or tax commissioner and the homestead exemption will be granted. (O.C.G.A. § 48-5-40)

How Do You Apply?

Homestead Exemptions applications must be filed by April 1. Applications filed after this date will not be granted until the next calendar year. (O.C.G.A. § 48-5-45)

Failure to apply by the deadline will result in loss of the exemption for that year.  (O.C.G.A. § 48-5-45)

Applications for homestead exemption must be filed with the tax commissioner’s office, or in some counties the tax assessor’s office who has been delegated to receive applications for homestead exemption. Filing for Home Exemptions is a one time event.

A homeowner can file an application for homestead exemption for their home and land any time during the calendar year. We suggest you apply at least 30 days in advance of the filing deadline to allow plenty of time for the tax office to review your application.  To receive the homestead exemption for the current tax year, the homeowner must have owned the property on January 1 and filed the homestead application by the same date property tax returns are due in the county. 

Exemptions Offered by the State and Counties

The State of Georgia offers homestead exemptions to all qualifying homeowners.  In some counties they have increased the amounts of their homestead exemptions by local legislation above the amounts offered by the State.  As a general rule the exemptions offered by the county are more beneficial to the homeowner.

What is needed to Apply?

Homestead ExemptionYes, this is a bit of a pain.  Here is a quick checklist to help you achieve success in just one trip:

  • Driver’s License – that matches the property address
  • Social Security Number
  • Motor Vehicle Registration(s) – that matches the property address
  • Warranty Deed – book and page numbers (recorded copy received from closing attorney 3-4 months after closing)
  • Mortgage Statement – proof of residence
  • HUD-1 Closing Statement (received at closing)

Below are links to the various Metro Atlanta Counties:

Cherokee County – deadline is April 1            678-493-6120

Clayton County – deadline is April 1               770-477-3311

Cobb County – deadline is April 1                  770-528-8600

DeKalb County – deadline is April 1               404-298-4000

Douglas County – deadline is April 1              770-920-7272

Fayette County – deadline is April 1               770-461-3652

Forsyth County – deadline is April 1               770-781-2106

Fulton County – deadline is April 1                 404-612-6440

Gwinnett County – deadline is April 1           770-822-8800

Henry County – deadline is April 1                 770-288-8180           

Paulding County – deadline is April 1            770-443-7606

Fine Print

This is our best effort to provide a quick convenient resource to get started.  It is not the be all/end all.  The links could stop working.  The municipal websites could change. Life is not perfect! Hopefully, though, this will still save you some time.

How soon can I get a home loan after my Short Sale?

How soon can I get a home loan after my Short Sale?

We are always looking for the short cut (or shall I say the “most efficient path”) Let me be clear – I do not mean cheating the system. We have had way too much of that in the real estate industry already! I just mean working the system as aggressively as possible while staying within the lines.

Life on the real estate front has been tough over the past 5 years. Many people have been directly affected by this through a short sale or foreclosure. Some have even opted for bankruptcy to try to avoid losing their home. Once the dust settles though, the healing can begin. And that is where our coaching and strategies come into play.

John Davis

So, here is today’s question: How soon can I get a home loan after my Short Sale? To answer this and some other related questions we turned our in-house loan expert, John Davis with W.R. Starkey for his take on the current lending guidelines in these situations.

In general cash reserves and credit scores are slow to recover after emerging from distressed situations so the quickest path is almost always an FHA loan.

LENDABILITY AFTER A SHORT SALE
How soon can I get a loan after my Short Sale?

It depends on how much money you want to borrow and how much cash you have saved. The quickest path is almost always an FHA loan because it requires the least money down at 3.5% of the Purchase price. FHA will allow you to qualify for a new loan as soon as 3 years have passed from the date of your Short Sale. And, they will lend up to $346,250 in the Atlanta area depending on your financial situation. If somehow you are able to save up 20% to put down, you can cut a year off of the wait through a conventional loan option and get your loan after only 2 years. Otherwise, it will be 3 years for conventional with 10% down and at that point the 3.5% down FHA loan may be more attractive from a cash flow perspective.


LENDABILITY AFTER A FORECLOSURE
What about a foreclosure?

The typical waiting period for obtaining a new conventional loan after a foreclosure is 7 years. That is the number most people associate with foreclosures. However, what most people do not know is that the waiting period is only 3 years through the FHA lending channels. That is less than half the time!


LENDABILITY AFTER A BANKRUPTCY
What does it look like if I had to file for bankruptcy?

With bankruptcy, the path is not as long as a foreclosure and it depends on which route was taken ( Chapter 7 or Chapter 13 ). If Chapter 13 was the route taken, the waiting period may only be 2 years. With Chapter 7 and all other types the wait will probably be 4 years.

GOING ABOVE THE FHA LOAN MAX OF $346,250
If I am looking at a $425,000 property, do I have to go with a conventional loan?

No. Although the loan maximum allowed by FHA for the Atlanta area is $346,250, a buyer can still use FHA as the loan type and make up the gap difference with cash. FHA is not just a low budget/low credit last stop. Sometimes the rates and underwriting conditions are more favorable even for buyers with good credit scores and plenty of cash. FHA financing then becomes a savvy way to take advantage of low rates and low down payment rules so cash can be conserved for other things (like renovations, furnishings, etc).

Great information! Thanks, John.


Here is the Legal Fine Print so no one gets on to John for helping me with this:
NMLSR# 216222
GA License # 24412
Email: jdavis@wrstarkey.com
Cell 404.461.3794
Fax 866.546.9061
WR Starkey Mortgage, LLP NMLSR# 2146
7000 Central Parkway Suite 1440
Atlanta, GA 30328
Georgia Residential Mortgage Licensee

Keller Williams Realty expands into Luxury Real Estate in Atlanta

Charter KW Luxury Homes  Atlanta small

As one of the Charter Members in Atlanta , we are thrilled!

KW LUXURY HOMES INTERNATIONAL LAUNCHES IN ATLANTA, GA

Atlanta Luxury Sign

Atlanta, GA December 7, 2012 — Keller Williams Realty announced today that one of the largest luxury divisions join the ranks of KW Luxury Homes International. With close to 60 current members the metro Atlanta division will formally launch on January 7, 2013 with a new look, image and benefits to both clients and agent members. The division focuses on listing and selling homes in the $750,000 and above price range.

With more than 1,200 members, KW Luxury Homes International is the elite, luxury properties arm of Keller Williams Realty, currently the largest real estate franchise in the United States. The organization offers eligible associates extensive training, marketing and technology resources as well as elite designation as a Luxury Homes Specialist via The Institute for Luxury Homes Marketing and benefits with the Wall Street Journal online.

Shaun Rawls, Operating Partner, The Rawls Group, Atlanta noted: “Launching this division is reminiscent of launching Keller Williams in the basement of my home thirteen years ago. Only this time, we launched at the St. Regis, Buckhead. I am thrilled to be a part of one of the most successful luxury homes divisions in Atlanta and look forward to the growth and great success in the Atlanta market. This area is an obvious place for this brand and we are excited to be leading one of the most powerful groups in the area.

Dee Shultz, the founder and chairman of KW Luxury Homes International said: “We know that the vast majority of luxury property transactions – on both the buying and selling side – are driven through agent connections, and our agents are among the most well-connected in North America! With Keller Williams Realty’s network of 75,000 associates and our luxury-specific referral network, we serve our buyers and sellers at a higher-level.”

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About Keller Williams Realty, Inc. and KW Luxury Homes International:

Keller Williams Realty Inc. is the second-largest real estate franchise operation in the United States, with almost 700 offices and more than 75,000 associates in the United States and Canada. The company has grown exponentially since the opening of the first Keller Williams Realty office in 1983, and continues to cultivate its agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders. In 2007, the company founded a member-organization for its luxury homes specialists, KW Luxury Homes International, providing training, marketing, and technology resources for associates serving high-end clientele. For more information, or to search for luxury homes for sale, visit (www.kwluxuryhomes.com).

Decoding the various “Status” types in FMLS

Now there is a guide for decoding the various “Status” types in FMLS.  What are CONKO, PLA, CONTG ????????  Some may appear online but most will show up on property information sheets printed and/or emailed to you by your agent.  We created the following crash course to help you  interpret the various abbreviations.

ACT

Active.  All listed properties start out with an “Active” status. They probably also start out with no photos because each listing has to be created and saved before photos can be uploaded. If you are a Buyer set up on ASAP alerts by your agent, you will probably get notified via email of the new listing before the agent even has time to upload the photos. Be patient; this is a minor side effect of super timely information. The system should update you again once the photos are loaded.

This is also the status for recently Under Contract properties listed by nervous, superstitious and/or lazy agents. They may consciously or subconsciously “not get around to” updating the listing to maintain maximum exposure for their seller. The published policy is “Within 3 business days of an executed contract, the listing Member (agent) must change the status in the FMLS computer system to one of the following statuses: Pending Sale, Contingency with Kick-out, Contingency-Other, Contingency-Due Diligence or Pending Existing Lender Approval.


CONDD

Contingent-Due Diligence: the property is Under Contract subject to the Buyer’s initial Due Diligence period.  The expiration date is required when the property is placed under this status and it will automatically convert to PEND once that date has passed.  Due Diligence periods range from a week or so for normal resales to months when re-development or rezoning is involved.

CONKO

Contingent-Kick Out: the Seller has a binding contract with some sort of buyer “kick out” provision. This means that the Seller has chosen to go under contract with a Buyer subject to some contingency in hopes that it can be removed soon. Prior to that time though the Seller can give notice to the original buyer if the Seller receives another offer they like. Once this notice is delivered, the original Buyer has to step aside if they cannot remove the contingency.  The most common instance of this contingency is the sale of the Buyers property that is not yet under contract.

CONTG

Contingent-Other:  the property is under contract subject to some contingency provision granted to the Buyer during contract negotiations other than standard Due Diligence. This status is used when the Seller has no “kick out” rights and is bound by this contract unless the Buyer chooses to terminate. Examples are approved financing, acceptable appraisal, satisfactory review of HOA documents, and receipt of missing disclosures.

PEND

Pending: the property is fully under contract with no contingencies remaining that would allow either the Buyer or the Seller to unilaterally terminate the contract (i.e. terminate the contract without the other’s permission or agreement).

POA

Pending Offer Approval:  There are two options here.  

  1. It could involve a potential Short Sale where a contract has been accepted in writing by the current Owner and the sale is contingent on the Owner’s Lender accepting the short sale terms.  The Owner probably also has the right to terminate the contract if the short sale approval terms received back from the Lender are deemed unacceptable.  OR,
  2. It could involve a Bank Owned property where an offer has been accepted verbally or via email by the bank’s Asset Manager and the final contract is being signed and forwarded to the Bank for written acceptance of the agreed upon terms.

zillow TruliaPlease note: Online resources such as Zillow and Trulia will continue to show properties under this status as Active because their systems do not recognize them as being “Under Contract”.

CLOSD

Closed: the property sale has been completed and the terms can now be disclosed.

EXP

Expired: the property listing period ended prior to selling or extending it. There can be multiple reasons for this.  The Seller may be choosing to restart the process with a new listing number, the Seller may be interviewing for a different agent, the Seller may be taking a break or the Seller may be giving up for the time being.  The listing will usually disappear from online websites at this point.

WITH

Withdrawn: the property has been withdrawn from the market by the Seller prior to the expiration date. The listing will disappear from online websites at this point.


Pitfalls and Gotcha’s in Leases

Lynn LecrawIt always helps to have talented people on your team! This post comes from a debrief the other day with our contracts expert Lynn LeCraw.

EARLY TERMINATION
What happens when our client is the tenant and they want out of their lease?

Most Lease forms have an “early termination” clause which must be followed exactly. Depending on whether the Landlord or the Tenant is terminating, the requirements can be different. The GAR Lease form (F40) provides that the Landlord can terminate with a 60 day notice to the Tenant. There is also a blank to be filled in as to how much the Landlord would owe the Tenant for the inconvenience of terminating early. Did you use the GAR form? What do those sections say?


AUTOMATIC RENEWAL
What do we need to do when our client is coming up to the end of their lease?

The GAR Lease form also has a clause dealing with automatic renewal. The Lease does not automatically terminate at the end of the original term. Paragraph 28 provides for an automatic renewal unless one party gives notice of termination. Often this paragraph is left blank and there is a dispute as to who is in default at the end of the Lease term.

Woah, that is an crucial provision to remember!


TERMINATION OF LEASE WHEN LISTING A PROPERTY

We have a client who is ready to get rid of a rental property. What do we need to do about the tenant?

As a listing agent of a rental property, you should insist on reviewing the Lease prior to listing the property to familiarize yourself with the terms for termination. In particular, make sure that the following is complied with:

  • Proper notice of termination is given to Tenant or that the contract is written subject to the lease (Paragraph #27)
  • Proper notice is given to the Tenant as to showings (see paragraph #20 of the GAR contract)
  • Proper procedure for signage has been followed, and
  • Review the lease for any automatic renewal (paragraph # 28)

Should there be any question as to when a Tenant must be out, either have all parties sign an Amendment to the Lease clearly setting out the terms OR have the Owner/Landlord consult their own attorney to help with any contracts subject to the Lease

EVICTION PROCESS
One of our clients just called and their tenant is not paying the rent. What should they do?

Grounds for eviction are non-payment of rent, violation of the terms of the lease or remaining in possession after the lease has ended. The Landlord can then file a dispossessory action if the property procedure for termination set forth in the lease has been followed. The Landlord must demand in writing that the Tenant give up possession and vacate; the Landlord must then file a dispossessory affidavit with the Court which then is legally delivered by the sheriff to the Tenant (serve the Tenant). The Tenant then has 7 days to answer in court. If the Tenant fails to respond, a writ of possession is answered and the sheriff can forcible remove the Tenant or Tenant’s property. If the Landlord answers, a trial date is set for the issues to be resolved.

Great information! Thanks, Lynn.