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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


Most recent articles

COE + 3

be on your way

Realtors tend to use industry jargon in their contracts, and regularly you’ll see the term, ‘COE + 3′ in a counter-offer coming back from a seller.  It means they get to occupy the home for three more days after the close-of-escrow date, at no charge – and usually no other written agreement.

Agents are very casual about these arrangements, because everything usually goes fine and the sellers move out as agreed.  They’ve never seen one go bad.

For buyers, it’s a nightmare waiting to happen.

An example: The seller (who was a realtor) was buying another home that was virtually brand new.  The buyer of her house agreed to the COE + 3 days, figuring that was plenty of time for them to move out.  But once the seller closed on the new home, she found that it needed modifications/improvements to suit their needs.

She hung out the buyer for two weeks, without compensation.

If it is a hot property and fresh on the market, the buyers don’t have much bargaining power and get stuck with COE + 3, whether they like it or not.

What can you do?

1. Don’t agree to COE + 3 days, especially if tenant-occupied.

2. If you do agree, then bargain with the listing agent that it’s in everyone’s best interest to complete our SIP form that spells out the terms of tenancy.

3.  If the listing agent refuses to include the SIP, then he/she is crazy – if the sellers don’t move after their three days, then the agent will get sued for damages too.  But how hard can you press them if they are threatening to take another offer?  Make the deal, and hope for the best.

4.  If you can include the SIP, be careful about the terms.  Use the form to ensure they move out as agreed, not to make a couple of extra bucks on 3-days’ worth of rent.  Sellers get bugged about renting their own house, and asking for a security deposit really sets them off.  I’ll forego both, and instead add a note at the bottom that any holdover rent past the three days be at least double the norm as an incentive to move.  Sellers always object to the amount, but I’ll point out that it doesn’t cost them a dime if they move as agreed.  The form covers other specific terms too; including maintenance, insurance, utilities, and buyer entry.

5.  Do your final walk-through at the last minute, and if you don’t get a warm fuzzy feeling that the sellers are about to move, then don’t close escrow.

Back in the day, we used to hand-carry a sellers’ proceeds check from one escrow company to the next for their closing – and they weren’t cashier’s checks.  It took an extra day or two to get the next escrow closed, so it was natural to give the sellers the time to close and move into their new home.  But today there is no reason to COE + 3, because we wire funds, and close concurrently every chance we can, even with different escrow companies involved (has to be the same title company).

Listing agents who insist on adding COE + 3 are just being tough guys and wanting to show everyone who the boss is – or on brain-dead automatic.  Unfortunately, they must be ignorant to the liability they are forcing on their sellers and themselves.

If you get stuck having to accept a COE + 3, be cautious about making your moving plans for an exact date.  If the sellers don’t move in three days, keep track of your expenses/damages and prepare for small-claims court – where you will win 100% of the time.  If you have to evict, it’s not the end of the world – it’s a three-month inconvenience for which you should be reimbursed.

Posted by on Dec 9, 2014 in Jim's Take on the Market, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 5 comments

Variable-Rate Commission

bounty

A listing that just closed escrow had this in the confidential remarks:

Seller will pay 6% commission if property is sold at $735,000 or higher; seller will pay 5% if property is sold for less than $735,000 – commission to be split 50/50 between listing and selling brokers.

In this case, the home sold for $715,000, but the agents can still say they made a decent living - and the seller can say he got a break on the commission for accepting a lower price (the list price was $735,000).

I love the idea of our pay being performance-based.

If listing agents promise to deliver a certain price, and they don’t, then sharing the pain with the seller would be a fair proposition.

Likewise, if a seller wanted to incentivize agents to sell the house for retail (or retail-plus), then the paying of an additional reward, or bounty, could make a difference.

The new purchase contract we were discussing?  Yep, the buyer-agent’s commission is still not disclosed anywhere - buyers will never know if their agent got a bonus.

P.S. There is a category on our MLS to specify ‘yes’ or ‘no’ to a variable commission, which serves as an alert to the buyer-agents that the listing agent has an incentive plan, and/or a dual-agency discount.

Posted by on Dec 8, 2014 in Jim's Take on the Market, Listing Agent Practices, Why You Should Hire Jim as your Buyer's Agent, Why You Should List With Jim | 2 comments

NSDCC November Sales

pres

We saw HERE how the new president of the N.A.R. has three goals for his term; winning the disintermediation battle, realtor safety, and having 100% of realtors get involved with the association.

But in another interview, he also mentioned that he wanted to “help further distinguish the difference in the minds of consumers between a REALTOR and a non-member real estate agent, and to help improve the understanding of that important distinction by the general public.”

The difference is the Code of Ethics.

But how many non-member real estate agents are there?  I could only think of one guy who is a renegade independent broker, but he doesn’t do much business.  Have you seen any non-member agents?

The $400 we pay each year to belong to the club does give us free access to the C.A.R. online forms – and those who are non-members have to pay $1,000 per year to access the same. So it makes sense to stay in the club.

But I checked – there are 5,600 people paying dues to the North San Diego County Association of Realtors, and of those, 1,100 are non-members.  But the vast majority have to be appraisers and assistants who don’t need access to the online forms.

I don’t know why the NAR president has a concern about non-member agents.  He may want to consider helping members be more productive, which wasn’t on his goals’ list.  There are over 10,000 agents in the three realtor associations in SD County, but there were only 2,121 sales in November of all types of residential properties.

Here are the November sales of detached homes from Carlsbad to La Jolla:

November
# of Sales
Median SP
Avg $/sf
Avg DOM
2011
176
$772,500
$372/sf
97
2012
241
$885,000
$415/sf
80
2013
187
$1,030,000
$474/sf
58
2014
163
$1,029,900
$497/sf
56

The frenzy broke out at the end of 2012, and by the end of 2013 it had subsided. The average cost-per-sf went up 5% since last November, but check the median prices – a balanced set of sales!

Posted by on Dec 8, 2014 in Sales and Price Check | 2 comments

Inventory Watch – Persisting

Christmas is 2.5 weeks away, but we haven’t seen much holiday dropoff in listings – we’re only 21% under the total number of properties we had for sale at the end of September (and +9% YoY).

One reason? Because listings go stale so quickly, there are probably sellers who haven’t had a showing in so long they forgot to cancel their listing!

The UNDER-$800,000 Market:

Date
NSDCC Active Listings
Avg. LP/sf
DOM
Avg SF
November 25
95
$376/sf
47
1,988sf
December 2
79
$371/sf
50
2,047sf
December 9
72
$383/sf
43
1,954sf
December 16
81
$378/sf
42
1,948sf
December 23
77
$374/sf
49
1,937sf
December 30
76
$373/sf
51
1,950sf
January 6
74
$370/sf
49
1,995sf
January 13
71
$381/sf
44
1,921sf
January 20
72
$384/sf
41
1,877sf
January 27
75
$399/sf
40
1,891sf
February 3
78
$409/sf
41
1,876sf
February 10
82
$395/sf
38
1,927sf
February 17
85
$387/sf
35
1,929sf
February 24
90
$383/sf
37
2,008sf
March 3
82
$397/sf
39
1,942sf
March 10
88
$377/sf
37
2,008sf
March 17
89
$366/sf
34
2,038sf
March 24
79
$369/sf
34
2,031sf
March 31
78
$367/sf
39
2,069sf
April 7
87
$373/sf
32
2,054sf
April 14
97
$380/sf
31
2,000sf
April 21
87
$377/sf
32
2,062sf
April 28
107
$379/sf
29
2,044sf
May 5
114
$376/sf
27
2,046sf
May 12
108
$385/sf
31
2,012sf
May 19
107
$385/sf
0
0sf
May 26
105
$375/sf
34
0sf
Jun 2
102
$376/sf
36
0sf
Jun 9
102
$377/sf
37
0sf
Jun 16
104
$369/sf
35
0sf
Jun 23
111
$380/sf
34
0sf
Jun 30
119
$376/sf
36
0sf
Jul 7
122
$387/sf
36
0sf
Jul 14
127
$388/sf
34
0sf
Jul 21
135
$381/sf
36
0sf
Jul 28
144
$382/sf
37
0sf
Aug 4
148
$379/sf
39
0sf
Aug 11
135
$375/sf
42
0sf
Aug 25
135
$374/sf
43
0sf
Sep 1
126
$377/sf
46
0sf
Sep 8
130
$375/sf
46
0sf
Sep 15
134
$369/sf
45
0sf
Sep 22
127
$376/sf
49
0sf
Sep 29
132
$378/sf
48
0sf
Oct 6
130
$367/sf
48
0sf
Oct 13
131
$378/sf
44
0sf
Oct 20
130
$385/sf
45
0sf
Oct 27
128
$375/sf
48
0sf
Nov 3
128
$371/sf
49
0sf
Nov 10
126
$366/sf
52
0sf
Nov 17
115
$367/sf
51
0sf
Nov 24
122
$373/sf
46
2,007sf
Dec 1
113
$375/sf
46
2,007sf
Dec 8
113
$372/sf
50
2,028sf

Read More

Posted by on Dec 8, 2014 in Inventory | 0 comments

Early Offers

Sellers and inexperienced agents are prone to panic when a purchase offer is received during the first 1-2 days the home is on the market.  They usually think something is wrong – like the price is too low.

But this is how the game works – the motivated buyers are automatically notified when a new listing hits the MLS, and they jump right on them.

Buyers may act quickly, but it doesn’t mean they are willing to pay the price.  Their decision is complicated by fewer closed sales, and generally flat prices – plus the sellers still want test new highs.

What do you do when you get a quick offer that isn’t full price?

Here are my three thoughts when deciding what to do:

Posted by on Dec 7, 2014 in Bubbleinfo TV, Thinking of Selling?, Why You Should List With Jim | 6 comments

Appraisal Issues

appraisal

Hat tip to Susie for sending in this article on appraisals:

http://www.usatoday.com/story/money/personalfinance/2014/12/06/appraisal-real-estate/19906355/

An excerpt:

This past July Janice Charlton of Thousand Oaks, Calif., says she was low-balled on a refinance appraisal with the value coming in at $745,000. “I was completely shocked. I follow the real estate market,” said Charlton.

She appealed the value through the lender with the AMC that hired the appraiser, to no avail. “It’s arbitrary. It’s a real conflict-of-interest,”  she added.

Charlton did not give up. She applied elsewhere. Less than a month later another appraiser through a different lender brought the value in at $860,000. Charlton’s perseverance paid off. She completed her refinance, saving $1,397 per month with her new, lower house payment.

Unfortunately for the loan rep, this borrower did the only thing she could to obtain her refinance – go to another bank.

Low appraisals are not as common on purchases because the appraiser is given the sales price and told to hit it.  But I never take it for granted – I meet every appraiser on time, and bring several comps to justify the price.  It’s a sales job – realtors who send one of their assistants or just tells the appraiser to use the lockbox are asking for trouble.  Get Good Help!

Posted by on Dec 7, 2014 in Mortgage News | 2 comments