WORD: Disclose (and derivatives)

The WORDs for Today are:

Disclose—means to reveal or make known something of importance. In real estate there are many, many times when one party is required by legal practices, federal law, state statute or other legal requirement to provide information which is deemed important to other parties involved in the transaction. Failure to disclose completely and in a timely manner could be the basis of a lawsuit.

Disclosure—refers to the forms used to facilitate a required disclosure. Disclosure forms are generally created by the party who must disclose some information but some disclosure forms are created by an act of law (i.e. IRS forms, seller disclosure forms, W-2 forms). Most disclosure forms are not called disclosure forms, which may be a reason many consumers fail to appreciate their significance. Most disclosure forms require a signature from the person who receives the form as a way of documenting (acknowledgement) the receipt of certain important information. More simply stated, your signature says you were told. It is unfortunate you didn’t understand WHAT you were told or the long-term implications of that information. For an expansive list of disclosures related to real estate transactions, along with a pdf copy for your review AND an explanation of the form, log on to www.homeownershipmatters.com. Look for “Disclosures: Clear as Mud.” Good luck!

Disclosure Statement—a term commonly used to refer to the document which explains loan terms as required by the Truth in Lending Act. Broadly, a disclosure statement may be any document used by one party to convey important information to another party. Most often, by signing the document both parties are acknowledging the presenting and receipt of the information included within the disclosure. There is no proviso, most often, for understanding the disclosure. However, recent laws related to predatory lending, foreclosure consultants and mortgage brokers have begun to include language which states “the presenter must disclose and the borrower must understand” certain pertinent information. This information may include things such as fees being charged and rescission rights.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Myth #2

Myth #2: That it is okay to wait until a buyer writes an offer to notify them that it might be a possible short sale

Reality: While you avoid the risk of running a possible buyer away you open yourself (and the brokerage firm) to the strong possibility of a complaint or lawsuit for failure to disclose. There appears to be wide misunderstanding about Federal privacy laws and I repeatedly hear that you can’t disclose because of the seller right to privacy. What the Federal privacy actually states is that you can not disclose certain personal information “without the seller’s knowledge and consent.” It is imperative that licensees understand the vast difference between the two statements, get appropriate permission from the seller (in writing) so they do not run afoul of state law and ethical concerns.

Reason: Both the seller and the agent are obligated to disclose a possible foreclosure; the seller by seller disclosure law, the agent by ethical guidelines. The “SELLER DISCLOSURE LAW” provides for a buyer to be informed of anything which might impact their decision to write an offer on a particular house. It would be a significant “failure to disclose” to not mention a little detail like ‘possible foreclosure.'

© Copyright 2007, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Q&A: Home Inspection—Worth Every $$$$

Q: We recently sold our home using a REALTOR, a septic tank test was not done. The REALTOR did not suggest we have the house inspected and it did not occur to us that we should do so. Who should have had made the arrangements for the septic test and made sure everything was up to code?

A: Your question is an excellent one and points out the need for a pre-inspection to be completed by you, the seller, BEFORE you list your home. I have to lay responsibility for this one at your agent’s feet. Yes, it is your house and you are responsible for maintaining it but the biggest part of what you pay a real estate commission for is ‘sound recommendations from a professional whose training should have prepared them’ to tell you what I am about to tell you.

Your question was: Who should have made the arrangements for the test? It is unimportant who made the call, you or your agent, to a septic company to come out and do the inspection. Either your agent could have handled that on your behalf or made several recommendations so that you had picked up the phone and actually called someone.

The missing piece seems to be that there was no discussion about the NEED for such an inspection at the appropriate time. Pre-inspections save sellers a lot of heartburn and usually a lot of money as well.

In the industry, agents are pretty divided and very vocal about whether or not it is in the best interests of a seller to spend the money for an inspection which would have uncovered this problem (as well as any other major problems). I am adamant that a pre-inspection should be conducted on any property which is more than a few years old because of the strong possibility that problems exist which can best be taken care of BEFORE the listing has occurred.

Opponents of pre-inspections insist:

1. That the seller should not waste money on an inspection when the buyer is going to have one anyway
2. That the seller is unnecessarily spending $300-$400 which they could make better use of by putting in some flowers

Proponents of such inspections (I am the UNOFFICIAL president of this group)

1. Believe that you would avoid uncovering something which could be a deal breaker AFTER you have an accepted offer (don’t you hate when that happens?)
2. That the cost is a wise investment in the success of your real estate transaction
3. That if you uncover any significant problems you are in a better position to search out the right professionals to correct them and price shop for the best value as well as schedule that work at your convenience rather than be in a rush to get it done
4. That if the needed repairs represent a significant investment, then you can adjust what you’re considering listing the house for rather than have an unexpected expense eat into your profits at the end
5. That an investment for the “extra” inspections (mold, termite and septic system) of $200-$300 above the base cost could save you thousands of dollars at the back end since you can’t renegotiate the sales price AFTER the buyer hits you with repairs which are mandated as allowable under your state’s SELLER DISCLOSURE law. A septic repair/replacement would definitely be covered in most states and a repair could cost upwards of $1,000. The replacement of the septic system or an expansion of the field or the finger system could set you back MANY thousands of dollars. Likewise, a possible termite problem should keep you awake at night, UNLESS you had a pre-inspection and know that you don’t have any.

I could share several terrible, very, very horrible stories of bad things which happened because of major problems which were uncovered during an inspection when I represented the buyer. I will share only one—as briefly as I can. My buyers discovered active termites and significant termite damage during our inspection.

Additionally, there was a crack in the interior chimney wall. This was a lovely $350,000 home and the sellers could have and should have corrected those items before it was listed. The problems were, in fact, fixable. The sellers initially offered some half-baked resolution, which we rejected.

My clients were prepared to walk away and even leave their $3,000 earnest money on the table. They just didn’t want the house any more. A house they had loved and had picked as their retirement home. I prepared a very precise inspection response—quite frankly asking for more than they had to do and they refused. We requested and received a mutual release. We had to fuss a little bit, but their earnest money was returned.

The sellers of the home had already started construction on their new dream home, had had this house on the market for more than six months and now they had to start all over trying to find a new buyer. Plus, they still had to fix everything they should have fixed before. All for lack of a pre-inspection.

During my career as a REALTOR I helped many clients terminate the contract (and get their money back) as the result of significant inspection issues we could not come to terms over.

Much of the time we walked away from the transaction if the seller was not willing to give us EXACTLY what we wanted in the way of a fix. It is definitely not a position of strength for the seller to discover they have any major issue in the time leading up to a possible closing.

After helping numerous buyers ‘walk’ because we were not satisfied with the compromise of repair or other concessions from the seller, I eventually established a personal policy of refusing to list a home unless the seller agreed to a pre-inspection with one of the toughest inspection companies in the city and further agreed to repair the offending items before we listed.

Like I said, I have to drop this at the feet of the REALTOR for failure to adequately prepare you for just such a situation as later occurred. Additionally, I would be interested in whether or not the septic system is specifically addressed on a Seller’s disclosure form, if your state uses one. Any agent worth their salt would have checked to be sure you understood all the questions you were being asked on such a form.

The issue of pre-inspections gets my adrenaline flowing. I should probably go have a glass of tea.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

...From the Desk of..."Are You Ready to Intervene?"

Twenty Questions for Today’s Real Estate Professional

I was recently asked by the Charleston Trident Board of REALTORS® to differentiate the (FIS) Foreclosure Intervention Specialist certification from other short sale certification programs. Please know that the Board has offered both the (SFR) (Short Sales and Foreclosure Certification) and the (LMC) (Loan Modification Certification) certifications which are excellent programs.

Both have been widely attended in Charleston and I strongly encourage you to sign up for one or both at the next opportunity. Every single licensee should avail themselves of a basic short sale class so they have a rudimentary understanding of this ‘new’ transaction which is dominating the market in many parts of the country.

(FIS) will be offered for the first time in South Carolina beginning March 2010, courtesy of a FPR (Foreclosure Prevention and Response) grant from NAR. I think the operative word of distinction is ‘basic’ as compared to ’comprehensive’. This 30 hour program is designed for the agent who has decided to commit to getting an in-depth understanding of the various facets of handling these intricate transactions—the relationship connection, the Law, the Ethics, property valuation, the process, the negotiating, getting to the closing table, the downside, the resources needed, community partnerships, the self-study to continue to grow and much, much more.

Why offer (FIS)? Because hundreds of students who had taken either the 4 or 8 hour basic short sale training classes offered by Home Ownership Matters beginning in 2003 demanded more. More time, more expansive, more details. The course evolved and in 2005, the (FIS) certification was introduced in Ohio. Since then (FIS) has been approved for CE credit in six (6) states and there are graduates from twelve (12) states. States approved for CE include: Ohio, Indiana, Kansas, Nebraska, Colorado and Oklahoma.

30 hours, 700+ pages of material.

Tried and true methodology coupled with sound philosophy

from a former Fannie Mae Broker-Specialist

Updated regularly and state specific (Law section)

I decided the easiest way to say what you’ll learn is to pose the questions which will be addressed.

Are you ready to intervene?

1. Do you know how to distinguish a ’frozen customer’ from a potential short sale client? Do you currently use an intake form to determine who is a viable candidate for this type transaction and who is just not prepared for the commitment? Can you screen OUT the 60% of folks whom you should not list as short sales?

2. Are you prepared to analyze/distinguish the many HATS which may be required to help someone who is in default: the social worker, medical counselor, marriage counselor, human resources helper, spiritual advisor, budget counselor, salesperson extraordinaire, valuation expert, etc.

Are you real clear on what role you can and/or should play? Are you connected to/familiar with the community resources to address those needs which are outside of your scope of expertise? Do you currently utilize a referral form for this purpose? Can you see the potential for a fair housing complaint (or other complaint) without some standardized referral policy/form?

3. Do you know how to ‘handle’ the law while avoiding the ‘practice of law’? Do you clearly understand that it is necessary to understand some components of the law (and be able to explain them to your client) as part of a short sale attempt or an REO purchase?

4. Do you understand the impact of the seller filing bankruptcy on a potential short sale? The increased likelihood of a deed-in-lieu? Do you currently discuss this at the onset with your customer since it could/should end your relationship if they file later?

5. Are you familiar with the new Treasury guidelines for short sale—other than the fact that the commission cannot be reduced below 6%? Have you studied the guidelines? Do you understand them?

6. Are you familiar with the foreclosure law in your state? Is it a judicial or non-judicial process? What difference does it make? The guidelines for service on a defaulted borrower? Familiar with what the customary forms are and what they look like? Are you aware that violation of state foreclosure law can work in a borrower’s favor to gain extra time which could be used to facilitate a short sale? Or a reverse mortgage?

7. Do you have the expertise to accurately determine the value of a property in today’s declining market? Are you familiar with the professional BPO which is used as the industry standard (fanniemaebpo.com)? Could you complete one and do you understand why it can be much more accurate than the more commonly used CMA or market analysis? Are you clear on why accurate property valuation, from the beginning, plays such a critical role in the success or failure of your short sale effort?

8. Do you feel you clearly understand the unique protocol for short sales, not to be confused with REO and traditional sales? Who signs what? When? Presentation of offers? To whom?

9. Have you figured out what to disclose? To whom? And when?

Are the guidelines set by your Broker consistent with both Federal and state requirements/prohibitions on disclosure? Are you clear on the Who? What? When? HOW?

10. Are you familiar with your Board and Broker’s position on:

a. Disclosure—Who? When? How?

b. Commission—Who? What? When? How?

c. Signing of offers/amendments/price reductions—Who? When?

d. Presentation of offers—To whom? When? Signatures? Why?

e. Multiple offers—that is a whole other 20 questions

11. Does your brokerage utilize a set of disclosure forms which have been customized for the use with short sale scenarios? Are you familiar with them? Do you understand the protection that you may gain from covering the special risks associated with short sale transactions? Are you interested?

12. Do you understand the tax implications for a borrower who has completed a short sale? Please don’t tell me that you thought they were off scot free because the short sale was approved. (They are not) Do you have a referral to a tax accountant?

13. Have you read your state’s Seller Disclosure Law? Have you studied the state disclosure form? Does it include a reference to “threatened or pending litigation“? Or perhaps “notices from any Government or quasi-governmental agency”? Any “challenge to the title”? Are you clear on why any/all of these could forestall a short sale approval and therefore need to be disclosed?

14. Do you have clarity on the impact of a foreclosure on your customer’s ability to purchase down the road? Was that part of your discussion about the reason to consider a short sale in the first place? Have you discussed operating ‘in good faith’ as vital to the ability to keep the house on the market?

15. Is there a 2nd (or 3rd) mortgage? Are there other potential liens against the home (home owners’ association, taxes, personal judgment) which must be dealt with? Got a plan for how you are going to handle those? Do you know where to start?

16. Do you clearly understand the role of the Guarantor and/or the investor in determining whether or not a specific short sale can be approved? For that matter, do you know that the Servicer is merely a go-between hired to facilitate the administration of the loan but is NOT a decision maker? Who is? How can you find them? What are THEIR guidelines? Are they the same from Guarantor to Guarantor? Available in public records?

17. Are you familiar with the Qualified Written Request—backed by Federal Law (RESPA, no less) and the impact it can have as a ‘tool’ in delaying the foreclosure process if well-prepared? Used effectively and in a timely manner, you can gain valuable time to complete the short sale. We’ll cover that.

18. Has your firm/Broker created a “hold harmless” document which covers the scenarios which you cannot be responsible for with the clear understanding from your client that you will have no liability? Since the risk of lawsuit is pretty high with this new type of transaction, getting some understanding of what should be included and why should be paramount, I would think.

19. Have you identified as an agent/brokerage/Broker those scenarios which will require you to end the relationship? Have you established a policy concerning the need for a unilateral (not mutual) release? Under what circumstances, with what notice?

Certainly advance disclosure would be required: I would recommend at the inception of the agency relationship. We cover in detail during (FIS) training what I call the “Divorce Decree”. What happens if the client abandons? Files Bk? Enters into a deed-in-lieu? Refuses showings? Fails to cooperate in other ways? Policies should drive practices and both help to minimize liability.

Proper training and thorough understanding on each of these issues is paramount in order for you to be both effective at processing a short sale from beginning to end AND avoid the various opportunities to get yourself or your client into serious trouble along the way.

Short sales are the new reality for many markets around the country. They have become a major part of the market (along with REO’s) and becoming intimately familiar with how to process them successfully is paramount for any agent who wishes to thrive in today’s market.

If you do not already have clarity on ALL the issues which have been addressed in this article, then you are a prime candidate for the (FIS) certification program. Each of these will be explored and addressed during this 30 hour training program. You will leave with clarity on every single point covered here and will have the expertise to feel confident that you are representing your client with strong tools which have prepared you to be successful in getting the result you hope for and they deserve. YOUR knowledge base is a key component of your professionalism. Your success as a REALTOR® is tied directly to the caliber of your information.

Don’t miss an opportunity to learn, explore and interact with one of leading instructors on this timely topic. Her experience actually doing short sales, her time with Fannie Mae as a Broker-Specialist and expansive training (HUD, Fannie Mae, NeighborWorks, Legal Services, and National Consumer Law Center) can be invaluable to you.

Sign up today! Coming soon to a classroom near you!

Final Question

Is there someone in your office to whom you can refer a customer who needs short sale help? Within your firm? Maybe you can/should become that ‘Referral agent’ if you do not have the expertise today.

Are you Ready to Intervene????

*(FIS) is a registered trademark of Home Ownership Matters, LLC.

Other Foreclosure Resources

1. www.HOMwebinar.com

3. www.HomeOwnershipMatters.com — Calendar and Foreclosure/Loss Mitigation sections

4. www.nti.org — NeighborWorks America — Training Institute

5. www.consumerlaw.org — National Consumer Law Center

Mildred Wilkins

President of Home Ownership Matters

Author of “Your Real Estate Advisor”

available at: www.DovePublishingHouse.com

Toll-free 1 (866) 507-5105

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Short Sale Fast Facts for Consumers

Short Sale Fast FACTS for Consumers

1. Short Sale could be your solution—but it has some pitfalls

Get informed and Get started

2. Short Sale is an Option Not a RIGHT

You will need to “qualify” for the option to dispose of the house by using a short sale.

Most lenders use the same basic criteria—what I call the “Universal Hardship Test”

• Was the default ‘trigger’ something beyond your control
• Did the trigger lead to an increase in expenses or a decrease in income?
• Are you still an occupant in the home secured by the loan?
• Have you depleted all of your assets available to make mortgage payments?
• Are you willing to pull together the documents required by the lender/guarantor to determine if they believe you qualify for a workout?
• If there is a co-borrower, are both parties committed to this workout attempt?

3. Finding a competent REALTOR could be difficult

A short sale is a Speciality transaction. You need to find a

REALTOR who:

• Works full-time—yes, even in today’s climate
• Is experienced in short sales (means they closed)
• Is familiar with your area and price point
• Whom you feel comfortable with
• Who is able to demonstrate to you what the value of your home is compared to similar homes in the neighborhood
• Has the ability to effectively market your home
• Is pleased to share with you that they have had specialized training in Short Sales (I mentioned this last, because if they haven’t mentioned by now, it is because they don’t have any—Not a good sign)

4. You can list the home for short sale—BEFORE the lender approves the

short sale—

**As long as you indicate that “all offers are subject to lender approval” This should be included on your listing contract, on the seller disclosure form and within the comments on the MLS sheet

**You can’t ACCEPT and CLOSE without the lender’s approval but you don’t have to wait to get started. Why not start today? Is your house ready? Do you have the documents needed for the hardship package?

5. Might leave you with a deficiency—which could be used to get a judgment against you

Negotiate to get the lender to agree to “waive their right to a deficiency judgment” as part of the short sale approval letter.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right to pursue you for the shortage.

If it’s not in writing—signed by an authority—you should expect them to pursue you for the shortage.

6. Foreclosure process—will most likely continue, even while you have the house on the market for sale

FHA loans which are subject to HUD regulations—require that the foreclosure process STOP while the home is marketed for short sale

Foreclosure action continues on ALL other loan types

7. Listing Termination—can be mandated by your lender when you are in default

The Lender is not a party to the listing contract and you might logically assume that therefore they had no say so about what does or does not happen with the attempt to sell your home.

Unfortunately, you would be mistaken.

Government guarantors, HUD, VA, USDA, Fannie Mae, Freddie Mac, and Rural Development have the right under Federal regulations to compel you to withdraw the listing IF:

You are cooperating with showing the property as a show of ‘good faith’

Title issues are uncovered which would prevent the transfer to a new buyer

The condition of the property is such that a sale is unlikely

You have failed to comply with request for information to determine your eligibility for a workout. Remember: This is an Option, not a RIGHT.

8. Second Liens can present a challenge—also known as a ‘stumbling block’

Second lien holders seldom initiate foreclosure; they block short sales all the time with their obstinacy. You cannot transfer real estate to a new buyer when there is a second lien holder without their cooperation.

They must either:

a. Release the lien

b. ‘Lift’ the lien and permit the closing

Usually they can be enticed to do one of these things, preferably the first. Many will accept a token payment as a settlement for the obligation if foreclosure is imminent and they stand to get nothing after the lien is wiped out. Other they may agree to an unsecured loan in exchange for

their cooperation.

Your lender may make a contribution toward getting this second released, especially if you have a government backed loan. Their regulations have a stipulated amount set aside for this purpose. Get your facts and get going.

9. Tax Implications—Didn’t Your REALTOR mention that?

When there is a deficiency (difference between what you owe on the house and what the new buyer is willing to pay for it) you are taxed on that amount as though you received it as a gift.

IRS rules require that the lender provide this information directly to IRS for tax purposes.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right

10. Now about signing those papers…….WAIT

I believe strongly that the seller of a property which is upside down would do well to pretend their fingers are broken once they have signed the listing contract and seller disclosure form until Mr. Smitherman, the supervisor at the bank, has:

a. Approved their short sale, with all continguences

b. Given them permission in writing to sign something

As a trainer, I take the position that ‘lender approval’ means getting the lender’s approval before you agree to anything with a potential buyer.

That means do not sign a purchase agreement, no matter what contingency clauses have been included by a so-called sharp REALTOR. Do not sign a counter offer. I said, ‘pretend your fingers are broken until the supervisor at the bank tells you to sign something.

If you sign BEFORE he tells you to, you are agreeing to terms which he has not yet agreed to. You cannot perform (or deliver the deed to the house) without his agreement. He may:

a. Select a difference ‘potential purchaser’

b. Counter and ask for a lot more money

c. Go ahead and foreclose, then you have nothing to sell.

Don’t get ahead of the bank. “Lender approval required” means the bank gets to decide everything: to whom we will sell, and for what amount, on what terms. Don’t allow yourself to be lulled into thinking it’s okay to make an agreement and then get his approval. That is risky business. Remember, your fingers are broken.

Please share today’s blog with someone you know who is struggling and not sure what steps to take next.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Misrepresentation

And the WORD for Today Is...

Misrepresentation – refers to a statement or conduct by a person which represents to another something as though it was factual, which is not true. Someone who is obligated to disclose certain known information but fails to do so is also guilty of misrepresentation. For instance, a seller, broker or builder may be required by law to disclose certain information, including defects to a potential buyer. Failure to disclose is misrepresentation. Misrepresentation may be deliberate (known to be wrong), negligent (should have known) or innocent (reasonably believed to be true). Whether or not a suit for damages or other recourse such as rescission of a contract can be brought by the buyer will depend on the facts and the extent of the misrepresentation. It is not uncommon for punitive action to be brought against the broker including the possibility of losing their license to practice real restate. While federal laws provide for privacy concerning personal information, practitioners should keep abreast of state laws, which apply to disclosure of information pertinent to buyers. State seller disclosure laws are in place in most states as well as other laws which licensees should be careful to explain to their sellers. Additionally, changes in the real estate climate, such as short sale transactions, have created the need for new disclosures.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Caveat Emptor

And the WORD for Today is:

Caveat Emptor – means “let the buyer beware”. Caveat emptor is a legal expression, which means the buyer is assuming and accepting the risk regarding the quality or condition of an item purchased, unless they are protected by a warranty or there is misrepresentation. Consumer protection laws during recent years have placed more responsibility on the seller and broker to make appropriate and timely disclosure. In real estate, seller disclosure laws have been passed in most states since the early to mid-90’s which provide better protection for home buyers.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Days on Market (DOM/D.O.M.)

And the WORD for Today is...

DOM stands for “Days on Market” and is used primarily by real estate agents to indicate the number of days between when a property was first listed and when it eventually closed. You would think this would be simple math and not likely to be misleading, but the reality is that it (like most things) can be manipulated to give a more favorable picture than the actual truth.

First, let’s discuss WHY the number is important. If you are a buyer, you are likely interested in whether or not the listing is a new one (with a low number of DOM). This might indicate the seller has not gotten too worried about getting an offer and may be less willing to negotiate. On the flip side, a larger number of days on market could very well signify a seller who is starting to worry about the chances of getting the price they want and has become more willing to negotiate as a consequence.

Next, let’s discuss how this is one of those times when what you see may be an illusion. If the property has been listed with Agent Y for 95 days, then the listing sheet will show 95 DOM. But suppose the property has previously been listed with Agent X for a full 6months, 180 DOM but the listing expired without being sold. The cumulative DOM is actually 180 + 95 = an astonishing 275.

A seller might prefer you not be aware of the lengthy timeframe the home has been marketed, without success. Many REALTORS would also prefer that you not have access to that information. Only recently have real estate boards begun changing their guidelines to include CUMULATIVE days on market as information which can be accessed by the general public. While the information has always been available for an agent who chose to check the listing history on a property, a potential purchaser could not gain access to this information which was controlled by MLS systems.

As a consumer advocate, I believe it is only appropriate that the potential buyer have full disclosure of ALL pertinent facts. It is certainly important to have an opportunity to question WHY a home has been marketed for over 9 months and not been sold. The answers to the WHY could shape the decision of this potential buyer—whether the issue was the price, condition, some external factor, whatever it might be. Those boards which have chosen to fully disclose this important information are to be commended; those who still fail to do so should consider the implications of providing less than full disclosure a material fact to the public.

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Myth #6

Myth #6: It is okay to list a home even though the consumer has file bankruptcy because the attorney told you (or your client) to do so.

Reality: When a consumer files a bankruptcy petition all creditors are now prohibited from having any interactions with the borrower or their representatives. All borrower assets (including the aforementioned house) are frozen. Nothing is to be liquidated with the express approval of the trustee of the court.

Reason: All of the things stated above; additionally, it would be unfortunate for you to have a listing which is a “frozen asset” by a Federal court which someone wrote an offer on. Check the questions on your state “Seller Disclosure Form” “Is there any threatened or pending litigation?” The trustee may put the consumer into a Chapter 13 or may require they sign a deed-in-lieu. In either case, there is now no house to be sold.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Q&A: Listing agent to help me buy

Q. Last week while visiting open houses, I found a house which I really, really like and want to purchase. The listing agent has been very helpful and since I don’t have an agent, she is encouraging me to go ahead and let her help me with the purchase before someone else gets it. Is it a good idea to let the listing agent represent me as well?

A. Agency is the relationship you establish when you select or engage someone to represent you. It is a legal arrangement where you become the principal and they, as your agent has a responsibility to protect your interests in helping you complete a transaction. It is implicit in this agreement that they have a fiduciary responsibility to put your interests first.

Dual agency

The situation you are asking about is commonly called dual agency, where one party represents both people. It is entirely legal, but can become complicated. The agent must disclose to both clients the existence of the other client (get you to sign a paper which says you understand and are comfortable with this arrangement). The legal requirement addresses the issue of appropriate disclosure; it does not address the issue of human nature. Human nature is such that most of us are going to choose between two individuals one of them whom we like a little better or for some reason feel a little closer to and work harder to get what they want out of a situation. In addition, in a house purchase, the listing agent has a relationship FIRST with the sellers. Even if there is an agreement to treat all parties fairly, if there is a major inspection issue (for instance) it is likely to be harder for the agent to press the people who listed with her to spend the necessary money when they already have an accepted price. On the other hand, if you had selected a buyer’s agent whose only responsibility is to represent you, then your agent can fight aggressively for having the repair done since they have NO connection to nor consideration for the seller.

Limited or dual agency is very popular with many agents who contend there does not have to be a conflict and they can handle any conflict which arises.

I disagree and believe that while dual agency may be legal, it is fraught with the opportunity for a buyer to receive less than full representation. The major fringe benefit for agents is that dual agency comes with dual paychecks. When I sold real estate, I declined dual agency unless it was an inter-family transaction where they simply needed a competent agent to process the transaction but they were already in agreement about the details.

I will never forget one transaction where I had the listing and my client did NOT understand why I did not want to represent a buyer who wanted her property. I explained dual agency and the problem which that MIGHT create. I told her I wanted her house to sell but I did not want to represent the buyer.

She took that to mean I didn’t think much of her house (which was a reflection of her lack of self esteem and lack of understanding of agency as I had explained it to her). Her house appeared to be in excellent condition, very well kept, neat, clean. Roughly a $65,000 starter home in Indianapolis. I would not have listed it had I not felt comfortable with its presentation and my ability to sell it. We get the house under contract with a young woman who had wanted me to represent her as well since she did not have an agent when she first looked at the property during an open house. I had insisted she had to go find another REALTOR since I would only represent the listing side.

Her inspection uncovered a major leak in the attic which required a full roof replacement for FHA financing. Neither my seller nor I had any idea there was a problem with the roof since there had not yet been a leak inside the house, but here we are with an accepted offer, scheduled to close in two weeks. She is looking at an outlay of more than $4,000 to put on a new roof which would eat up almost every penny which she expected to get from the proceeds AND she didn’t have the funds to do it in advance. We tried to negotiate to get the buyer to increase her purchase price, to no avail. My seller was unwilling to move forward to closing at the agreed price AND shell out the funds for the roof. We did not close because she could not (chose not) to correct the problem. I supported her position. I felt she had a legitimate position. She somehow felt that if I had represented the buyer I could have made her accept the house without the roof replacement and that I had cost her the sale. She did NOT relist with me.

I am sharing that I refused to participate in dual agency and still lost the transaction and some agents reading this will say I should have represented both of them. I am more convinced than I was before that transaction began that the worse possible situation for me would have been representing both of these women—essentially AGAINST each other—over a $4,000 roof issue.

In real life, too often agents do press one party to go ahead when they run in a scenario similar to the one above. When they do so, they fail to pass the test of integrity and do a disservice to the real estate industry and the clients whom they profess to represent. The general public has significantly less regard for all real estate salespeople, including REALTORS, than they did 10-12 years ago. We have lost their respect as a profession because of the multitude of agents who do not adhere to the standards which had placed us in such high regards just a mere 20 years ago.

Agents: Will you be part of the move toward professionalism? Integrity? Respect?

Consumers: Will you become better educated about what you should expect from your agent and then demand that they provide a level of service which you are comfortable with?

You’re paying for it, you deserve no less!

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(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)