FRANK LL0SA- Northern Virginia Broker .:. FranklyRealty.com

What are your thoughts on Home Sale Contingencies in this marketplace?

Frankly Definition:A Home Sale Contingency is where a purchaser has a home that they need to sell first before they can buy a home. Oftentimes these offers are written as "Under Contract with Kickout." I will explain the Kickout part later. 

I was asked about this today by somebody looking to upgrade, but she needed to sell her place first. My initial reaction was "heck no." If you approach a seller that hasn't been able to sell their place in 200 days, you are effectively telling them, "I know you haven't been able to sell your place, but I want you to accept this contract and wait for me to sell MY place." I would think they would laugh.

But then I decided to look closer into the facts and perhaps it isn't so crazy.

I looked up over 1,000 homes in Alexandria, Fairfax and Falls Church. Of those 1,000 that are under contract...

• I found 24 that had Home Sale Contingencies. Or 2.4%

So as I suspected, they are still very rare. Crazy? Maybe, maybe not. If done creatively, I think one might be able to push one through.

Pros for Home Sale Contingency BUYERS:

1. Less risk for the buyer. Their alternative has been to: a) Own two homes at once or  b) sell your place first and run out and buy a place while you are selling your place. (people usually do the "b" option, but there is a major problem if you don't like much that is out there for sale)

Cons for Home Sale Contingency BUYERS:

1. You don't get as good of a price. Sellers care about price AND terms. Similar to the carfax commercial where they illustrate with a balloon how dealers either inflate the trade in, or the new purchase. If you have bad terms, they will hold out for more money. I prefer to write CLEAN offers and be more aggressive on the price.
2. Most contingencies are written with a KICK OUT. This means that if another offer comes in, you will have 3 days to remove your contingency, or they KICK you out to the curb. Also known as Curbin'. No not really, but that would be funny. So, if you listed your house for sale and are halfway through that process and a KICK OUT situation comes up, you bare some significant risk. Do you lose your contract to buy or drop the contingency and risk not selling your house? (there are some creative solutions to fill the gaps in time including Options to extend etc)
3. Your contract can help light a fire under another buyer to finally bid on the house you have under contract, therefore you get Curbed.

Pros for Home Sale Contingency SELLERs:

1. If you are getting no offers, and your house is unique and hard to sell (near a highway or odd style), and meanwhile an offer comes in with a Home Sale Contingency but the agent can prove it will sell fast... heck what is another 60 days?

Cons for sellers:

1. The obvious. You pull your house off the market, nobody sees it and the buyer never gets around to selling their place. Or worse yet, the buyer changes their mind and they have a HUGE way to back out.

How best to do one for buyers:

1. Prove to the listing agent and seller that your house will sell FAST (as in 1-2 weeks). Show them comps, show them the track record of the agent. Even consider LOSING $10,000-$20,000 by underpricing your house to sell fast (something I don't recommend, but something to think about if you can make up that savings on the purchase, also think of it as an insurance fee and cost of making your $100,000 lower offer on your purchase look better). (I hope that wasn't confusing)
2. See if you can do one without any Kickout. A smart listing agent will say no, but you never know.
3. Try to make the provisions as long as possible. But the more you ask them to wait, the higher a price they are going to expect.

Tips for sellers considering taking a Home Sale Contingency:

1. Pretty much the same as above but in reverse. Also KEEP MARKETING the house.The MLS makes you put it under contract and few agents will touch it, but don't forget Craigslist and Open Houses. It is easier to get an offer when you have a standing offer. People love to offer on homes with others that are interested.
2. Make sure you have the ability to Kick Out the contract and take another contract. Keep the # of days to as short a number as possible. Maybe charge a daily fee for an extension.

And whatever you do, don't have the agent that is listing the place you like, become the listing agent for YOUR house. Wow, that would be a nightmare. No matter what "deal" he offers you. You would never know who he is working for and you could lose far more money and sanity than saved in lower commissions.

Written by Frank Borges LL0SA- Broker FranklyRealty.com

The first task in writing this post was to look up whether "bullet holes" was 1 word or 2. Turns out it's 2 words. Learn something every day right? Or is it everyday?

Anyhow, I went to a bank owned property in Falls Church today.It was disgusting. It was infested by cockroaches (we didn't see any live ones) and a bullet hole in the window (or a run in with a Kevlar beaked crow). What a gem!

The good thing was this client was able to see it as an opportunity, instead of being freaked out. Don't get me wrong, it wasn't my thing, but this isn't about me, this is about the buyer.

It got me thinking about how bank owned properties (and other dumps) affect neighborhood pricing. I've never really believed in broad market data that say that an area has gone up or down. See my UP 14%!? No, Down 26.2%!? DATA. What Is It Good For?

Market Increase??

So when I hear that DC's median price supposedly went UP, I believe an insider that tells me, "That is because the condo market stalled out, fewer condos are selling, so if homes (which cost more) are still selling, it will look as if the average is jumping."

Or Market Decrease?

Well the flipside to the DC example is also true too. If you have a community where a 2 bedroom 1,000 ft unit sold for $400,000 and then a year later a similar 2bdr 1,000 sqft condo sells for $350,000, did the area, drop 10% or is it perhaps... a $50,000 dumpier place? Yes dumpier.

So skip the headlines and dig deeper to find the data that you want.

These "average" numbers don't cover same-home-sales. They cover apples that sold in one area to oranges that sold in the same area.

With all of these bank owned properties, which tend to be dumps (not always), I wonder what part of the "average" drop is uglier houses selling, versus an actual drop in an area.

Here is a link to a photo album (which all buyer agents should do) of the bank owned property. (viewer discretion is advised)

- Written by Frank Borges LL0SA Broker FranklyRealty.com

Please report typos.

I have wanted to post this post for a few weeks now. I want community participation on this one. I need examples and things to watch out for in Bank Addendums.

So you are buying a bank owned property, and REO or a Short Sale? You need to understand the bank addendums that accompany them, or you might miss a $3,000 hidden fee.

But first, a quick background. Agents that are members of NVAR, and are REALTORS, use a 15 page contract that was painstakingly created by lawyers and a contracts committee. They try to design it as evenly as possible and several "fill in the blanks." Local Realtors are given hours of training on these contracts. While a client might want to also have the contract reviewed by a lawyer, there is some comfort knowing that it everyone uses the same contract and was written by lawyers with a neutral bias.

But when you buy a bank owned property, you start with a standard contract, but then the bank sends the oftentimes non-negotiable "bank addendum."

They might appear innocent, but they are not. They are written 100% FOR the banks and since every bank has a separate bank addendum, there is currently no training for REALTORS so that they can fully understand them and the tricks that they sneak into them

Here are just a FEW of the things you should know about bank addendums:

1. Addendum means "Everything in the main contract is nullified if this addendum covers it. So if your main contract says you get a walk through, but the addendum says "As-is," the addendum wins.
2. Some bank addendums are written nationwide and ignore local laws. Local laws DO supersede these contracts, so sometimes there are points in them that are not enforceable.
3. Watch out for hidden fees. One of the agents that I work with had their main contract agreed to, but the addendum needed to be sign. The addendum shifted a $3,000 tax to the buyer. Hello! That is real money, don't just sign it.
4. Most addendums are more "AS-IS" than the regular contract. The bank would rather take less and be done with nickel and diming. This is fine, as long as you realize and are ok with this risk
5. Most addendums allow the bank to cancel the contract up to the sale date. Yep, they can walk, sometimes for a $1,000 fee or sometimes with no penalty. If they get a higher offer, or whatever, they can break the contract. Again, this might never happen, but you need to know what COULD happen.
6. Bonuses to use their title company. In Virginia the buyer is legally allowed to pick the closing company. But oftentimes the bank wants their company to do the closing (in part because they get kickbacks) so they offer a $1,000 incentive. On something like a bank sale, with people losing their homes, I would want MY title company to tell me everything is all clear.
7. Termite provisions are stuck. Normally the seller pays if there is termite damage. The addendum shifts the risk back to the buyer.

Does anybody else know of some tricks that are hidden into these addendums? Again, there are dozens of variations, so make sure you review it carefully and have a lawyer review it.

Written by Frank Borges LL0SA- Broker FranklyRealty.com

(please report typos)

The goal here is to list ALL the MLS search engines in the MRIS area (Northern Virginia, DC Maryland) that pull the entire MLS (all broker listings).

MRIS is the back end provider of the Northern Virginia MLS. They allow Realtors to log into their back end system via Matrix.MRIS.com. But they also let brokers and 3rd party providers have access to the MLS Data and republish it in their own manner via IDX and RETS feeds.

While almost every Realtor website has a "Click here to search," 95% of those link to a partner that slaps their name and photo on it, like Homesdatabase.com with about 1,000 sub accounts.

This list took me 2 hours to compile. Let me know if I missed any!

10,000 NOVA Realtors, but only 32 31 total unique search engines that pull the MLS (all broker listings) directly, yet they display them differently

Large Brokers:

1. Averyhess.com
2. LongAndFoster.com
3. McEnearney.com
4. PrudentialCarruthers.com
5. Remax.com
6. Weichert.com

Smaller brokers

1. BrioRealty.com
2. Choice Real Estate
3. NVFH.com (registration required for details)
4. Realtywatch.com
   
5. Redfin.com
6. TheBestHomeSearchEver.com and BirdsEyeSearch.com
7. VirginiaMLS.com
8. ZipRealty.com (registration required for details)

3rd Party Providers (most Popular), something an agent or Broker would subscribe to and put their name all over it.

1. Homesdatabase.com, Realtor product called Active Agent from MRIS $325/yr. Ex: MLS Virginia
2. iHOMEFINDER.com, Example Broker: Exit AllStar Realty
   
3. ListingsToGo, Watchdog service. "Starts at" $540/yr. Example: Bill Davis
4. MLSFinder.com from Wolfnet, Agent example: JustNewListings.com or Broker: KellerWilliams.com
5. MRIS Bridge, From MRIS for brokers. $750 a year. Example: Fairfax Realty
   
6. Top Producer, Agent example Grace Neary
   

3rd Party Providers (less frequently used), something an agent or Broker would subscribe to

1. Advanced Access, Agent example: Ann Gross
2. GoMethod.com, Agent example: BernieKagan
3. HomeCards, Broker example: Westgate Realty
4. Househunt.com Agent example: Maggie DelGallo (registration required for details)
   
5. IDXco, Starting at $468yr, Agent example: (Valarie Smallwood)
6. IDXPro.com, Agent example: Nova Real estate Team
   

3rd Party MLS showcasers (not sponsored by a particular broker or agent)

1. Homes.com
2. Homescape (Washington Post)
3. Realtor.com (they strip 50% of the images, details here)

Individuals:

1. Team Cornwell
   
2. Theearlofrealestate.net

Not included:

1. Century21 It only searches C21 listings. (Correct me if I'm wrong)
2. ColdwellBanker.com Only searches their own listings.
   
3. Zillow, Trulia. They do not have MLS access, read details here

Let me know if I missed any.

- Written by Frank Borges LL0SA- Broker FranklyRealty.com

Please report typos and errors.

UPDATE: and of course my new site FranklyMLS.com

Update: Roost.com