Nottingham, MD

I Have the Latest Data

Or do I? Most real estate agents get their market reports from their local multiple listing services. For the most part, the data contained in the MLS data bases is very accurate. But is it all inclusive?

Here is some data related to home sales that may or may not be on any given MLS:

• For sale by owner transactions may not be recorded on the MLS unless a real estate agent represents the buyer and chooses to enter the transaction into the system. Although most FSBOs are eventually listed, the number which are not listed is higher at certain times in the market cycle. When the market is depressed, many Sellers will attempt to sell on their own to keep their transaction costs low. Likewise, when the market is hot, many Sellers will attempt to sell on their own because they believe that it will be easy to find a Buyer in a hot market.
• New home transactions may not be recorded on the MLS unless the builder uses a real estate firm to market its properties. Even when a real estate agent is used, the transactions may not be included in the MLS. The MLS listings may just be representative of certain model types that the builder is offering or simply for advertising purposes. A development with a hundred lots may have five different listings, which eventually are withdrawn when the development is complete.
• Some real estate brokerages offer varying levels of service. While most will involve listing on the MLS, some lesser options do not include a MLS listing.
• The numbers are even higher for rentals which are not included on the MLS. Other websites, such as craigslist are much more popular for renters who are looking for a place. The landlords have learned this and are advertising accordingly.

Also, not included in the MLS is the movement of people and other key demographic information. This is just as important as past performance of the market. For instance, not found on the MLS are the following:

• The number of jobs which have been lost or created in the region.
• The number of employers moving into or expanding in the region or the number which is moving out of or downsizing in the region.
• The number of people who are moving into retirement communities or nursing homes.
• The number of people relocating to or out of the region.
• Demographic data such as age, income levels, and family size which all have a bearing on home sales.

Most of this data can be found, but the MLS is not the one stop source for all of this information which is critical to understanding the real estate market.

GMAC Mortgage and Flood Insurance

When I purchased my house several years ago using a mortgage, I did not need to get flood insurance.

The house did not seem to be in a flood zone, although, the Sellers were asked the question anyway and responded that to the best of their knowledge that it was not in a flood zone.

My insurance company indicated nothing about needing flood insurance nor did my mortgage company.

This was all fine with me.

Over the years, because of refinancing and because of every lender with whom I had a mortgage eventually selling my mortgage to some other lender, I went through about 12 different lenders. I only refinanced twice up to that time.

During all of this time, none of the lenders indicated any changes that would require me to get flood insurance.

Then along came GMAC Mortgage who purchased my mortgage.

After about three months with them, they sent me a letter indicating that I needed to have flood insurance. Conveniently, they, also, told me that I could get it with GMAC Insurance and that, in fact, they would charge me for a flood insurance policy with GMAC Insurance if I did not otherwise get a policy.

Of course, I called and asked about the flood insurance; surely there must be a mistake.

I was treated rudely. I was told that their records, which they would not supply, indicated that my house was in a flood zone and whether I liked it or not I had to get flood insurance.

I stated that the terms of the mortgage to which I agreed and which they purchased did not have any requirement for flood insurance. They did not care. Get flood insurance or we will get it for you.

I asked what I would need to do to convince them that I did not need flood insurance. They told me that I would have to have the FEMA Flood maps changed to show that my house was not in a flood zone. They implied that they had done a review of these maps and found my house to be in a flood zone.

I went back to the broker who provided me with this loan which was ultimately purchased by GMAC. He found this request from GMAC perturbing as did I. Fortunately, he had done his work and kept the records. He had a certification based upon a review of the FEMA maps indicating that my house was not in a flood zone.

I sent a copy of this certification to GMAC which was enough to finally have them remove the requirement to get flood insurance.

I told the representative at GMAC that I intended to refinance my loan with someone else simply because they put me through such a hassle.

I did refinance, fortunately to slightly better terms, but would have done so even without the better terms.

Recently, I had a lender stop by who was trying to get my business referrals. I was pleased with his presentation and probably would have given him some referrals until he told me that most of his loans were sold to GMAC Mortgage. I told him to come back when he worked with a real lender.

Sell That House: The Serious Time of the Year

We are moving into the cold months of the year and into the holiday season.

For many people who would like to sell their homes, they feel like they have missed the prime selling season and so they intend to wait until next year.

There is a common belief that the best time to sell a house is in the spring when the snow has thawed, the holidays are over, the flowers are blooming, the children will soon be ending school, and vacations are still a few months away in the summer.

Indeed, the numbers do show that the winter months have fewer sales than the rest of the year. The drop may be as much as 25%.

Could Sellers be missing out on a very good time to sell their homes?

Here are some reasons why the winter months may be a good time for Sellers to put their homes on the market:

• Note first that there are sales that do take place, even if there are less than during the rest of the year;
• There are fewer homes on the market, meaning that there are fewer options from which a Buyer can choose; there is less competition;
• The Buyers are likely to be more serious if they are looking during the colder months; the window shoppers come out in the nice weather;
• It is easier to have a consistent atmosphere in the house during the cold months; basically the heat will be on and the humidity will be low; compare to the spring when one may use the heat, the air conditioning, or open windows and when the relative humidity will vary from day to day;
• It is easier to maintain the grounds, no trimming the bushes or cutting the lawn; just keep the paths clear of snow;
• For many people, the holiday season brings a built-in reason to decorate the house, hence making it look nice for the potential Buyers as well as for the holidays;
• People are more likely to cook meals during the colder months, which provided those meals are of a pleasant aroma, will also be pleasing to the potential Buyers;
• Agents can give more attention to each listing because they will have less listings overall and more time available overall;
• Any contracts which are received are likely to go to settlement more quickly, since everyone involved is working on fewer transactions.

Keep in mind, that interest rates may be going up as we move into next year, which could make homes less affordable. Another pressure to drive prices down.

So maybe it is not a good idea to hold off until next year; get that house sold now.

Sell That House: First Impression

The all important first impression is a very critical point in selling a home. It is said that some buyers make up their mind, yes or no, within the fist half minute of seeing a home. What is not thought about as often is that there are actually more than one first impressions.

Of course, there may be several people who are looking at the house, but beyond that, the first impression has various stages.

The first of these impressions may be the advertising.

• The truly most beautiful and appropriately priced home may never get anyone's attention if the listing is not done with care. The obvious and perhaps most critical part of the listing are the photos. Does the listing have photos, do they cover the interior and exterior, and are they good photos, which show off the homes best qualities? A camera which can account for brightness and darkness is important; a wide angle lens can be invaluable; the basic toilet shot does very little.
• Also, of importance is having a listing with sufficient information. Does the listing show the rooms, their locations and sizes? Is their a link to the public record or is everthing a secret?
• The listing should be up to date. It is not a good idea to have remarks indicating an open house which occurred last week.

The first contact:

• Is there a number to call and does someone answer who can help?
• Does someone on floor duty answer the phone, put you on hold three times, and then ask again for the address, and finally say that they can't find the listing so they transfer you to someone else?
• Does a receptionist answer who states that only an agent can give you information about the house and they would be glad to transfer you, which they do to a voice mail?
• You must make it easy for them. Do not frustrate them before they even get started.

The directions:

• First the directions should be accurate.
• Also, some thought should go into the best route to approach the house. Do the directions lead in down a tree lined street of well maintained properties or do they lead past the apartments and crowded bus stops.

The exterior:

• The grounds should have well trimmed and manicured lawns, trees, bushes, and flowers. Colorful flowers can be very attractive.
• Walkways and driveways should be in good repair.
• The house should be in good repair. All gutters, downspouts, roof shingles, shutters, and such should be intact. The house should not show signs of significant aging. It should be painted if necessary.

The interior:

• This, of course, applies to the moment that the buyer walks into the house, but they are not going to stop at the front door. They will enter every room.
• The home should be clean and free of smells. It should not be cluttered. The buyer is interested in buying your house, but only if the house can be seen.

Everyone of these stages that the buyer may experience is critical, because if they are turned off by any one of these first impression stops along the way, then they may not proceed to the end. If they do not make it to the end, then they most likely are not going to buy, let alone give the house a second thought.

Cap on Commissions

In the last two years several companies have received assistance from the government.

These huge bailouts mostly have been given to insurance companies, financial institutions, and automobile companies.

As a result of these companies being saved by taxpayer money, the government has determined that it also has the right to control some of the practices within these companies.

Most recently we have been hearing about limits to higher management's compensation. The top executives may have their pay cut by as much as 90%. Some of it may be made up for in stock options so there is at least an incentive to have the company perform well, but nonetheless, their pay will be significantly reduced.

Whether the bailouts should have taken place at all was a topic of debate, although very little debate, as this legislation was easily passed. Should the free market have adjusted itself or were the temporary consequences of no action too likely to create a catastrophic economic situation?

The results of the bailouts can be debated, but it is somewhat of a moot point since it has already been done.

In another part of the economy, the government also has extended help with the taxpayer's money. This has been in the form of the $8,000 tax credit to first time homebuyers. This program is likely to be extended past its original cutoff date of November 2009 and quite possibly will include more than just first time buyers.

This program like the bailout program can be debated as to its pros and cons.

For instance, one may wonder why there are not more buyers given the extremely low home prices and the very low interest rates. Would it be more cost effective to advertise the fact of these incredible buying conditions, rather than give away $8,000? Will this program encourage buyers, who were otherwise being conservative with their money, to purchase a home prior to the economy stabilizing, and then, possibly lose the home if they are caught in the unemployment lines?

If the program is extended, should their be some form of oversight on the people who are most likely to benefit? One group of individuals which would certainly benefit would be real estate agents.

Should there be a cap on commissions?

If an agent sells two houses per month at an average price of $300,000 and receives 1.5% commission after a split with their broker, then they would be making $108,000 per year. This is far above the average household income. Might it not be more appropriate to limit the commission to $3,000 per sale? This would yield with the same number of transactions a very respectable $72,000.

So many real estate agents are gungho about the tax credit that I thought I would talk about their pockets instead of the taxpayers pockets.

What do you think?