Monique Fountaine, CDPE, BPOR, e-PRO

3 Reasons to List Home with a Local Agent

When it comes to selling, though, it's quite a bit tougher, especially on today's tough-to-sell market where pricing and marketing nuances (along with vendor, lender and inspector relationships, and contacts with buyer's brokers and buyers themselves) are crucial to get homes sold.

Before we get into the details of what a local specialist has that another agent might not, though, I do want to say this: I don't know your local market, but in many areas of the country even the most local, smartest, most aggressive, best-marketing listing agent might not be able to move a home in five months or less. Frankly, the best agent cannot move an overpriced or poorly prepared home.

And the fact is that nonlocal, specialist agents do provide sound advice on pricing, preparation, marketing and strategy to sellers every single day across the country. So, while a local-area specialist might have a leg up on another agent based on relationships and insider knowledge, that is no guarantee that he or she will be superior to the agent you have right now.

So, before you go through the upheaval of finding another agent, ask yourself:

• Do the challenges you have with your current agent actually have anything to do with her relative "outsider-dom"?
• Has your current agent given you any advice on getting your home sold that you have failed to follow (i.e., cut the price, clear the clutter, hire a stager, etc.)?

If you are not following your current agent's advice, then you should think twice before firing her because your home hasn't sold. Hiring another agent will not resolve your problem if your home is still overpriced or underprepared.

So, assuming you are willing to do everything within your power to price and prepare your home fairly, here are some of the considerations that tilt my general opinion in favor of a local listing agent vs. an agent from outside the area:

1. Local agents may have insider marketing knowledge. In certain neighborhoods in my town, for example, the standard practice is to:

• List a home midweek.
• Hold it open for brokers only on Thursday -- and advertise those on agent-only fliers.
• Not allow it to be shown otherwise until the Sunday open house.
• Hold it open for two Sundays.
• Take offers the Tuesday or Wednesday following the second open house.

Agents from surrounding areas could probably guess at some but not all of these things, but often they don't. And that lack of insider knowledge might actually prevent out-of-the-area agents from getting the fullest exposure for their listings.

For example, if you just took the first offer that came in, you might forgo the offer of a local buyer who was expecting to have two weekends to get to the place.

2. Local agents may have relationships outsiders don't. They may know the other agents in town, and be able to market the property to them casually, as they run into them in the grocery store or at local meetings, in a way that (a) works and (b) an agent from outside the area cannot. They also will have the built-in marketing channel of being able to market to agents inside their own office -- not to mention the buyers they represent.

Finally, local agents might know the inspectors, appraisers, even lenders (i.e., all the pros who have to work together to close a deal) and have a relationship of trust with them that a stranger does not.

And that includes being able to find contractors or other vendors who will do repair work at better prices or on better terms than they would offer to a stranger.

3. Local agents might have a leg up on pricing. Possibly the strongest argument for working with a local listing agent is that they know what local buyers want, care about and deprioritize. That means they understand local pricing nuances better, having worked with local buyers, and having viewed and/or sold recent homes nearby.

You don't have to have been in the market long to understand that photos can be misleading and that location nuances weigh heavily on the prices that buyers are willing to pay, so the history of having actually been to and inside the comparable sold listings -- rather than just having seen them online, can be critically important to understanding how comparable they are to your home, and how your home should be priced accordingly.

PROPOSITION 60
THE INFORMATION YOU WANT TO KNOW

On Nov. 4, 1986, the voters of California passed Proposition 60 to provide to qualified homeowners the transfer of the base-year value of their principal residence to a replacement dwelling located in the same county, under certain circumstances.

If you or your spouse that resides with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property.

This is a one-time only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original home and the new home must be your principal place of residence., and you must file your claim within three years following the purchase or construction of your replacement home.

Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again.

Eligibility requirements include:

1. At the date of transfer of the original property, the transferor (seller) must be at least 55 years of age. (If married, only one spouse must be at least 55, but must reside in the residence, if co-owners, only one co-owner must be at least 55 and must reside in the residence.)

2. The replacement property must be purchased or newly constructed on or after Nov. 5, 1986. The replacement residence must e purchased or newly constructed within two years before or after the sale of the original residence.

3. The sale of the original residence must qualify for reassessment.

4. The principal claimant must have been 91) receiving, or eligible for, a Homeowner's Exemption or (2) have been receiving a Disabled Veteran’s Exemption on the original and replacement residences.

5. The replacement residence must be "equal to or lesser" in market value than the original residence.

6. This is a one-time only filing. Proposition 60 relief cannot be granted if the claimant, or spouse, was granted relief in the past.

*Contact your County Assessor’s Office as well as your Tax Accountant before making any decisions or taking legal action.

"Is it Harder to Shop Effectively for a Mortgage than for a Car?"

Shopping for a car is child's play compared to shopping for a mortgage.

Price features of mortgages must be verified: Price always depends on the features of the product or service being priced. These are easy to define on a car, consisting of the brand, model number, extras and accessories. A car buyer can specify these and obtain consistent price quotes from multiple dealers.

In contrast, the list of mortgage features that affect the price is long, and all features must be verified by the lender, which takes time. Lenders will not invest the time until a borrower applies for a loan, which means that the consumer must commit to the lender without being sure that the mortgage specs that the lender priced are correct.

For example, let's say a borrower wants to refinance a $200,000 loan on a property she claims is worth $250,000. But if the appraisal comes back at $230,000, it is a different mortgage carrying a higher price.

The quoted price on mortgages may not be valid: There is only one price on a car, the one quoted by the dealer to a potential buyer.

On a mortgage, in contrast, there are posted prices and quoted prices. Posted prices are those the lender will commit to ("lock") on a loan to a borrower whose loan specs have been verified. Lenders deliver posted prices to their loan officer employees every day, and sometimes more frequently.

The quoted price is the price the loan officer quotes to the borrower. It might be the posted price, but could be higher or lower for strategic reasons, as explained below.

Borrowers cannot depend on mortgage price quotes: The price quoted by a car dealer is an offer to sell that will remain open indefinitely. This means that car purchasers can almost always finalize a purchase at the quoted price.

The price quoted by a mortgage loan officer, in contrast, is not an offer to lend and is not binding on the lender until it is locked. By that time, it will probably be different because mortgage prices are reset every day with the market. A mortgage borrower, therefore, cannot depend on a price quote.

The multiple abuses that pervade the mortgage market stem from these differences.

Mortgage spec abuse: Lenders can use changes in mortgage specs as a screen that allows them to extract a higher price from the borrower. The most common abuse of this type today is with property value, which usually requires an appraisal that takes days or weeks to complete.

In the example given above, where the appraisal comes in lower than the borrower's estimate by enough to affect the price, the price will be raised. But the borrower typically will have no way of knowing whether the price increase is consistent with the lender's posted prices, or whether it has been padded. And if the appraisal comes in higher than the borrower's estimate by enough to reduce the price, the borrower won't receive the benefit of it.

Lowballing: This is the practice of quoting a price well below the posted price, with the intent of snaring the buyer as a customer. Lowballing pervades the home mortgage market because lenders being compared to other lenders usually have no other way to distinguish themselves. Lowballers have many ways to explain the higher price borrowers inevitably face after they are committed.

Lock abuse: Borrowers who select a lender based on a price quote, even if that quote was the posted price at the time it was given, are vulnerable to lock abuse. This is the practice of exaggerating market price increases, and minimizing price decreases that occur between the time of the price quote and the time the price is locked.

Probably the most pervasive lock abuse is ignoring a market price decrease that occurs between the last time the borrower was quoted a price and the time the price is locked. In that case, borrowers receive the price of the earlier quote, which in most cases is the price they expected, rather than the lower posted price, which is the price they deserve.

All the abuses discussed above involve strategic deviations from lenders' posted prices. Mortgage spec abuse means a price adjustment larger or smaller than the adjustment called for by the model used to calculate lender's posted prices. A lowball price is one quoted to a shopper that is below the lender's posted price. A lock abuse is a lock price that is above the lender's posted price at that time.

None of these abuses are prevented by the mandatory disclosures contained in Truth in Lending or the Good Faith Estimate. The remedy is to provide mortgage borrowers with direct access to the posted prices of mortgage lenders.

Existing-home sales post third gain in 4 months

NAR: large-scale REO-to-rental program not needed

Increased demand from investors and first-time homebuyers helped boost existing-home sales in January -- the third increase in the past four months, the National Association of REALTORS® reported.

NAR said total existing-home sales -- including single-family homes, townhomes, condominiums and co-ops -- were up 4.3 percent from December to January, to a seasonally adjusted annual rate of 4.57 million.

While that's essentially unchanged from the same time a year ago, for-sale inventory was down 20.6 percent from a year ago, to 2.31 million homes, a 6.1-month supply of homes at the current pace of sales.

Many housing analysts view a six-month inventory of homes as a good balance between supply and demand -- a larger inventory of homes can indicate an oversupply of homes for sale, which can undermine prices. When inventories drop below six months, the shortage of homes for sale can drive up prices.

"The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers," NAR Chief Economist Lawrence Yun said in a statement.

Yun cited the statistics as evidence that a government proposal to convert bank-owned properties into rentals on a large scale "does not appear to be needed at this time."

"Foreclosure sales are moving swiftly with ready homebuyers and investors competing in nearly all markets," he said.

Merrill Lynch analysts Michelle Meyer and Ethan Harris think part of the drop in inventory is due to delays in the foreclosure process in the aftermath of the so-called "robo-signing" scandal.

With top banks nearing a final settlement with state attorneys general, they expect the foreclosure process to accelerate, and for inventory to swell to eight months later this year.

The first REO-to-rental transactions are weeks away, but the property pools offered this year may be smaller and more manageable for groups of qualified local investors than previously assumed, Ken Harney reports.

NAR said foreclosures and short sales accounted for 35 percent of sales in January, and that the national median existing-home price for all housing types was down 2 percent from a year ago, to $154,700.

Investors purchased 23 percent of homes in January, up from 21 percent in December, while the percentage of first-time homebuyers increased from 31 percent in December to 33 percent in January.

Nearly one in every three January home sales was an all-cash transaction. A survey of NAR members showed more than half had at least one contract canceled or delayed in January, often as a result of a mortgage application being turned down or because appraisals come in below the negotiated price.

Single-family home sales were up 3.8 percent from December to January, to a seasonally adjusted annual rate of 4.05 million. That's a 2.3 percent increase from a year ago. The median existing single-family home price was $154,400 in January, down 2.6 percent from the same time a year ago.

Existing condominium and co-op sales increased 8.3 percent from December to January, to a seasonally adjusted annual rate of 520,000. That's a 10.3 percent decline from a year ago. The median existing condo price was $156,600 in January, up 2 percent from January 2011.

At the regional level, the West saw the biggest jump in sales, an 8.8 percent increase from December to January. Sales were down 3.1 percent from a year ago, however, and the median price was also down 1.8 percent from January 2011, to $187,100.

The Midwest saw the smallest jump in sales, with sales up 1 percent from December to January. Although that was a 3.2 percent increase from a year ago, the median home price fell 3.9 percent from January 2011, to $122,000.

In the South, existing-home sales rose 3.5 percent from December to January but were unchanged from a year ago. The median price in the South was $134,800, down 0.3 percent from a year ago.

Existing home sales were up 3.4 percent from December to January in the Northeast, and up 7.1 percent from a year ago. At $225,700, the median price in the Northeast dropped 4.2 percent from January 2011.