Ken Montville -- the MD Suburbs of DC

During the recent downturn in the real estate market it became commonplace - at least in my little part of the world - for Sellers to kick some money toward the Buyer's closing costs. So, as it turns out, if the Buyer could scrape together the 3.5% for a down payment (assuming an FHA mortgage), the other costs like State and County transfer and recordation fees, lender fees, title company fees, hazard insurance premiums, prepaids like interest and the like would be paid for out of the Seller's proceeds at settlement.

This is wonderful news for the Buyers because it means that they really have very little in the way of out-of-pocket expenses and, if the qualify for a VA mortgage (zero down payment) it's possible they could buy the house for close to zero out-of-pocket money. However, no matter how hard I try, I can never get the home buying experience to equal absolute zero for the buyer.

A recent example comes to mind: a VA qualified buyer found a home they wanted to purchase, we negotiated price and all the other financial terms, including a wonderful chunk of Seller money for Buyer closing costs. It looked like it was going to be almost zero out-of-pocket expense for the buyer. This was a good thing because the buyer didn't have a whole lot of ready cash. The keyword here is almost.

There are certain expenses that most lenders do not include in their good faith estimate and, if they do, the lenders like to collect it up front. The appraisal fee is one such expense. The home inspection is another. No matter what the Good Faith Estimate says, most lenders I know want to grab that appraisal fee up front because if the deal falls apart they still have to pay the appraiser.

The home inspection is another place the buyer actually has to have real money. The inspector usually likes to get paid on the spot. You see, they know the deal might fall apart, too. In fact, it is well known that many inspectors kill the deal by pointing out defects in the house that worry the potential buyer just enough to want to back away from the purchase. So, Buyers need to have a check or credit card ready and available at the time of the home inspection or the inspector may just pack up his or her gear and go home.

This is the "bottom line". Buying a house, under the right circumstances, can almost be done without much cash but you really need some money. This is at it should be. Consider if your were renting an apartment or house instead of buying. There would be the first month's rent and the security deposit and the pet deposit.

There should be some "investment" (another term I hate and will probably write about in the future) into the purchase of the house on the Buyer's part. Buying a house is a big deal and the decision shold not be made lightly. Buyers should expect to have some cash lined up for the purchase. There is no such thing as a free lunch.

In the last couple of days there have been rumblings about "the bottom" and even a cover story in Newsweek entitled The Recession is Over * (note: the asterisk). If you watch CNBC at all and you happen to catch a little of it before you tuned in Oprah on Friday you would have heard all manner of people getting all giddy about the stock market rally, and, most notably, about the fact that the economy didn't shrink as much as expected.

That bears repeating -- the economy did not shrink as much as expected. It did not grow/expand. It just was less shrinkage?

Whooooooa, Nelly. Hold the bus!

Just because things are not getting as bad as rapidly as they have been during the past year does not mean things are good! In fact, President Obama tried to manage expectations by admonishing Newsweek for putting out false hopes to which Newsweek had to reply in another article with the sub-title: Obama Rips Newsweek's Cover. We Rip Back.

Here's the deal: Yes. Everyone would like this "Great Recession" to be over and for the recovery to start rolling. Those of us on Active Rain would really like the housing market to start rolling again. Heck, I see all this "happy talk" all the time about this or that Realtor experiencing multiple offers (subliminal message to buyers: "hurry up and get back in or you'll end up in bidding war hell just like the early 2000s"). I also hear and read the data that most of the buying are first-timers and that they're after the foreclosures with the rock bottom prices. Joe and Jane Homeowner with equity and a nice house aren't getting multiple offers. If, and this is a big if, they price their home aggressively, they'll get that one offer they need to sell the house.

If we start talking up and buying into "the recession is over" giddiness in the absence of solid data and a good strong trend we are doing our clients -- both sellers and buyers -- a grave disservice. There is nothing worse than seller thinking it will be OK to price their home high "because the recession is over" or for buyers who have been on the fence to fall back over onto the rental side of the fence because they have just pulled enough money together for that 3.5% FHA down payment and now won't be able to afford higher priced home.

The economy is finally starting to show signs of life only because of mass government intervention. What happens when the $8,000 First Time Home Buyer Tax Credit expires on December 1st? What happens if mortgage rates start to rise? Credit guidelines have not and do not show any signs of loosening up.

As real estate professionals, we need to be able to manage the expectations of our clients. It's bad enough that most of them will listen to Aunt Harriet or Uncle Jeb who was in real estate for a couple of years back in the 80s. We need to be to voice of reason. I don't want to hear "Newsweek said the recession's over so I want to pretend it's 2004 again." It ain't gonna happen.

Managing expectations may be one of the most important things we do in the coming months. We need to tell out clients, Sellers especially, that pricing their home is still the key to selling it.

Maybe I'm a little slow and maybe I don't quite understand this whole SEO marketing thing. I'm really not a big super geek or anything and I'll grant that there are a lot of people who know a whole lot more about this than I do. Maybe someone can help me out with a marketing approach from some SEO marketing companies:

I have this neat-o website

and on this neat-o website I have a little form for people to fill out if they want me to get back in touch with them about anything that's on their mind

Now, here's the part I don't understand -- a SEO marketing guy finds my website and fills out the form and in the "comments" section he tells me about how he can put me on Google's first page search results, yadda, yadda, yadda.

OK, great. How did you find my website, Mr. SEO Marketer? What keywords did you put into the search field to a) find my website and b) fill out my little form? It seems to me that if this guy is looking for Realtors in an area that he can sell his marketing magic to it might be a little self defeating to find my website out of hundreds? thousands? of others that might match my keywords.

Who knows? Maybe he goes to the last page first. The point, in my mind, is that he found me...and, if he can find me, so can anyone else that's looking.

Am I missing something?

OK. I'm not selling anything here. No virtual tour companies. No DIY virtual tour companies.

I've been noticing this trend, fed by the SEO industry, of Realtors becoming videographer wannabes. Now, this isn't so bad, if you're standing in front of a camera talking about the neighborhood or subdivision and there's a nice park or a subdivision sign behind you. It's not so bad when you're at your desk and talking about this or that. I'm good with that. What I'm starting to see and getting disturbed about are th DIY listing shows.

That's right. Shaky, blurry, terrrible videos with terrible audio of people's homes Realtors want to sell. Worse are the still photos that Realtors take. I mean, I understand the Internet Empowered Consumer wants to see photos but ---

• toilets with the lid up (and hard water stains)
• half made beds with a white sheet tossed over them to "neaten them up"
• kitchens with sinks full of dishes
  
• decks with tons of clutter
• closets with all the stuff you tried to hide
• more, more, more

Hey, I understand. We're all trying to cut costs in this awful housing market. But, really. Are you really doing your Seller client a favor by showing all the (literally) dirty laundry?

In my view, it's time for Realtors to:

1. Tell there Seller clients to clean up the mess or you can't take any photos which means fewer people will visit the house
2. Get a professional who can take a good photo with a good camera and then take it back to the office to make it look pretty with nice captioning and maybe some pleasant music.

I don't care what the SEO gurus say. Do you really care about SEO if your client's home looks like a war zone on steroids?

I've always thought it was the Realtor's job to market the house to create the most excitement possible so that a potential buyer will actually walk through the front door to fall in love with the real, live, three dimensional house. A lot of what I'm seeing now shouts, "I don't care if you like this house or not!".

If I was a Seller and saw some of these videos and still photos I'd ask for a release. Hey, but that's just me.

Just sayin'

Thanks to a heads up from my clients (an Army pediatrician and DOD contractor) I realized that the Army Corps of Engineers has a program designed to help military families feeling the pinch of having to sell their homes in order to move from one station to another through no fault of their own. They need to go where the military sends them and, in this housing market, that's not always a good thing for selling a home they may have purchased not too long ago.

Enter: the Military Maven of all Realtors (at least in this area) - Cindy Jones of Woodbridge, VA. Cindy's input and insight have been invaluable. Her experience working with military clients over the years and he selfless assistance led me to the HAP website and then to a phone call to a HAP counselor in Savannah, GA.

Here's the bottom line: There is some assistance coming for military families on the move. It is a finite amount of money (about $55,000,000). It'll help a lot of folks avoid both the headache and stigma of short sales (not to mention the hurt it would put on someone's security clearance).

The not-so-good news is that final regulations for administering the program have not be written and handed down yet and they aren't expected anytime soon unless you consider August soon. Once final regulations are in place, the Army Corps of Engineers will start the processing. Add another 90-120 days.

All said though, it could be a shorter process than a lot of short sales and have a happier outcome for the military seller, the buyer and the Realtor.

Bottom line: don't hold your breath and don't hold out false hope. This ain't gonna be quick and when the final regulations come down, it'll be important to read all the fine print and follow the regs to the letter.