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!
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!
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:
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!
“While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments,” said Secretary of the Treasury Jacob J. Lew. “The changes we are announcing today offer meaningful incentives for borrowers to stay current in their modifications, increase their opportunity to build equity in their homes, and provide vital safety nets for those facing greater financial strains.”
The Home Affordable Modification Program (HAMP), established in 2009, offers homeowners loan modifications with lower monthly payments achieved through lowered interest rates and modified loan terms. Many homeowners with HAMP modifications have been eligible to earn up to $5,000 if they adhere to modification terms for five years. The amount is applied to their outstanding principal balance.
Under the revisions an additional $5,000 will be available to homeowners after a sixth year of on-time payments and they will then have the opportunity to re-amortize the reduced mortgage balance, thus further lowering their monthly payment. HUD/Treasury estimate some one million borrowers with HAMP modifications may be eligible for the new incentive.
HAMP Tier 2 was developed as an alternative for homeowners who can’t qualify or are unable to sustain a HAMP Tier 1 modifications. It provides modifications with a low fixed rate for the life of the loan. The revision announced this week will include reducing the interest rate for these modified loans by 50 basis points which will also make more borrowers eligible for the program. It also extends the sixth year $5,000 pay-for-performance incentive to Tier Two borrowers.
The C.A.R does make some minor changes every year to our purchase contract, but according to Gov Hutchinson, the lead attorney for C.A.R., they haven’t made any wholesale changes in 12 years. Gov was in town yesterday to review the latest version.
Here are my notes:
1. The form is written by C.A.R. attorneys and is meant to protect realtors. There are 10x as many lawsuits filed today as there were thirty years ago, yet the State of California’s population hasn’t even doubled in the same time. Home buyers file more than 90% of the lawsuits against realtors.
2. Buyers used to have 17 days to release all contingencies, but now the new boilerplate gives 21 days to release the loan contingency. Most lenders can hit the 17-day mark, but it’s usually tight; so the 21 days is probably more realistic. But it does add a second contingency-release date, and more paperwork. We surmised that in the real world, all contingencies might drag to the 21st day.
3. The separate termite form was deleted, and its contents added to the ‘Request for Repair’ form. Previously it was customary to include the termite costs in the original offer (and assigned to the seller), but now they will be a negotiable item after the inspection, as is the custom in Northern California.
4. You regularly see these remarks, “Seller is exempt from TDS”, which applies if the actual seller is a bank, or a successor trustee who has in effect inherited the house. But they are only exempt from having to use our specific TDS form, they aren’t exempt from disclosing everything they know about the property.
5. There are times when the sellers will occupy the home for days or weeks after closing (a subject to which I will devote a whole post), but it is now stated in paragraph 9F that keys and passwords be delivered to buyer on the day escrow closes, regardless of possession.
6. The big-screen TVs have been excluded for a while, yet their brackets remain with the property. But this version added a second choice, if the box is checked – “[bracket] will be removed and holes or other damage shall be repaired, but not painted.” This is on the purchase offer that the buyer is submitting, so they will be guessing on whether the sellers intend to leave the bracket, or remove it and repair the holes or other damage.
7. If the buyer adds a phrase about intending to occupy the property for 12 months, it will negate the 60-day notice required to give a month-to-month tenant who has been living there more than a year. Instead, only a 30-day notice is required.
8. There are two stigmas that are required to be disclosed – death and meth.
9. Sellers have to disclose any insurance claims over the last five years – whether they owned it or not.
10. This is a first – they added verbiage about what happens when a party won’t sign off to cancel a sale. If either party fails to execute mutual instructions to cancel, the other party can demand that escrow release the deposit. Escrow shall promptly deliver notice of the demand to the other party, and give them 10 days to object. If they don’t object, escrow can unilaterally release the deposit to the other party. The form authors couldn’t resist adding a final paragraph that escrow companies can still require mutual cancellation instructions at their discretion, which we’re guessing that most will do.
11. This rarely comes up, but if a buyer cancels after releasing all contingencies, and the seller gets their deposit – he has to split the deposit with the listing agent.
12. It is in the boilerplate that every dispute goes to mediation. If both parties initial the arbitration agreement, then the dispute goes there instead of going to court. Arbitration is cheaper, quicker, and private, but it is binding – there is no appeals of an arbitration decision. If you don’t like that, then don’t agree to arbitrate. Small-claims court is excluded, so disputes under $10,000 can go there for resolution.
Once a seller has a signed agreement, there are no back doors – if the buyers can perform, then they are buying the house. Once the buyers release all contingencies, they are committed too – and will lose their deposit if they cancel later. There is always joking at these seminars that nobody reads the contract – including the agents. Get Good Help!
I think this is the first time we’ve heard from the chief economist of realtor.com, so glad they are trying to at least stay even with Zillow in the sound bite department. From the UT:
“San Diego falls into a short list of markets where I would say demonstrably already that demand outpaces supply,” Smoke said.
“That very tight supply condition puts it in a market thathas next to zero chance of seeing prices decline.”
Jed Kolko, the chief economist for Trulia, noted that people expected interest rates to rise last year, and that never happened. He listed San Diego as one of the nation’s 10 markets to watch next year, with Fresno the only other California metropolitan area to make the list. Others making the positive list are Boston, Dallas, Nashville and New York.
“They have strong fundamentals for the housing market without the risk that prices look overvalued,” Kolko said. “These are the markets who are in that sweet spot where the conditions are ripe for a strong year, without much downside risk.”
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At the end of this video she mentions the most hilarious comment in the history of real estate by the Case-Shiller talking head, David Blitzer – a guy who has never been seen outside of his ivory tower:
“It’s no longer about location, location, location, it’s about data, data, data.”
