Mortgages For Empty Nesters Who Are Downsizing (or re-financing)

Here's a good article and a short video clip on some mortgage options and considerations for "empty nesters" who are downsizing.  I DO NOT ENDORSE Bank of America by the way, whose representative gives a brief description of basic mortgage types. Bank of America's stockholders or shareholders got completely HOSED.  The financial analyst and The Money Coach, Lynette Khalfani-Cox, at the 2:15 mark in the video clip does give some good objective advise on other considerations for empty nesters who are downsizing or re-financing.

What Realtors Wish You Knew About Their Profession

Here is a fantastic article copied below that really hits the nail on the head and epitomizes what Realtors wish the public understood and respected about their profession. (full source article)

<< As a real estate industry insider over the past several years, but never a broker or a real estate agent, I've always thought most consumers have no idea what it's like to be a real estate agent. We all know that people resent the hell out of real estate agents/brokers and have little respect for them. I mean, to be ranked below actors and union leaders -- that's just harsh.

Real estate is a weird business. It's a major pillar of the American -- nay, global -- economy, as the current malaise shows, and yet so few people understand it.

Buying a home is the biggest financial transaction for the vast majority of Americans, and yet because they do it so infrequently, most consumers don't have a clue about a process that could put them into debt for the rest of their lives. And people's impressions of real estate agents is formed more by movies, TV shows and commercials than reality, because they simply don't interact with them often enough to gain an informed opinion.

The first and most important thing that real estate agents wish you knew about their job is how hard you make it on them.


Otherwise rational, highly intelligent, highly educated people can lose their minds when it comes to their homes. I've heard more than one story of how a Wall Street investment banker, whose day job is to take cold hard looks at companies and put values on them, simply can't accept that his home isn't worth what he thinks it ought to be worth. Why hire an expert, paying them extraordinary amounts of money (5 or 6 percent of a house sale is rather a lot), then ignore their professional advice?

More fundamentally, you don't pay for their time. Real estate may be the last pure commission job left in America -- even retail sales has notions of draw-against-commission. An agent could spend three months and a few hundred hours working for you, showing you house after house, negotiating contracts, working through difficulties, and a hundred other things besides, only to have you change your mind at the last minute and decide to buy somewhere else. The agent made exactly zero dollars from that work. (Someone is going to point out that lawyers work on contingency all the time. True, and they also take 30 percent to 40 percent of the award.)

Real estate is the only "profession" in which the professional owes a fiduciary duty to a client who isn't paying him. All the liability, all the risk, and a relatively small reward (compared to other success-based endeavors) are the hallmarks of real estate. So like venture capital (another high-risk endeavor), real estate agents practice a form of portfolio management: They expect that the vast majority of their deals will fall through, and hope that the one that hits will pay enough to cover the costs of all those that did not.  ** And that, my friends, is why your real estate commissions are so freakin' high: You, the successful buyer or seller, are subsidizing all of those flaky buyers and sellers who had a change of heart, couldn't qualify for financing, had unrealistic expectations, and so on. **

** [ I do not agree with the author's opinion, assumption and erroneous conclusion here; commissions are NOT based on any quantitative or statistical analysis of a broker's, agent's, nor region's loss to win ratio - these figures are simply not captured or realized and most agents do not even claim "un-reimbursed clients expenses" or "costs advanced" as losses on their IRS Schedule C net profit/loss tax filing statement as they should and are legitimately entitled to -- so while I can see where this author, who admits that he has never been a broker or agent, could come to such a conclusion, and it does sound plausible on its face; his statement is merely an unsupported OPINION based on no factual, empirical, or statistical foundation and is therefore a grossly erroneous conclusion here.  Also what the author does not point out in this article is that the Seller is paying the commission for BOTH agents; his own listing agent AND for the buyer's agent too; so if buyers were expected to pay their own agents, then listing commissions which range from 5-6% of settled sales price could be lowered ] **

Article continued now....

To be fair, agents share some blame, too. + If they refused to work for free, chances are the industry would have evolved in a different direction. + But we are where we are. As we will see in future columns, this particular structure of the industry creates all sorts of interesting effects that real estate agents wish you knew about their job.

+ [ this I wholeheartedly agree on, and which is why I do not work for free unless I have a retainer or deposit and am guaranteed some return on my investment of time, money and resources with a prospect or "client" ] +

But for now: Next time you're in the market to buy or sell a house, and you're thinking about hiring a real estate agent, ask yourself just how serious you are about it. Are you just testing the market to see where your house would sell for? Please try not to waste an agent's time. Are you a buyer, but don't have a clue in which of the 17 nearby towns you might be interested, or what you could actually afford to buy? Try not to think too badly of the real estate agent to whom you represent a whole lot of risk. ** And when it comes time to pay the piper, understand that you're paying not just for you, but for every buyer and seller who flaked out on that agent. ** >>


**  [ see my first editorial remark above ] **

How To Deal With Unreaonable Clients - Get Real !

After having laid down the scenarios in my previous article when you need to cut someone loose; there are situations where you can turn things around and have a good positive and profitable outcome for you and your client.  As in the lyrics to Kenny Rogers song, The Gambler, goes; real estate reminds me of a big gamble or a vicious poker game when taking a buyer or seller case on a contingency basis where you are literally betting your own funds and personal resources that you'll get a commission check out of it in the end. If you're good at "the game" you can walk away from the [settlement] table with something to count; if you're not, you can literally end up loosing the shirt off your own back.

"You need to know when to hold 'em....and when to fold 'em. Know when to walk away and when to run. You never count your money when you're sittin' at the table. There'll be time enough for countin' when the dealin's done. Now ev'ry gambler knows the secret to survivin' is knowin' what to throw away and what to keep. 'Cause ev'ry hand's a winner and ev'ry hand's a looser." 

Here are some strategies for turning those clients with unreasonable expectations or your "bad hands" your dealt from the deck of clients into winning hands if you know how to play them correctly:

Keep Their Expectations in Line

Is there a mismatch between your clients’ expectations and the reality of your local market? It’s your job to bring them back to reality and for them to get real.

Recognize How Expectations Are Set

First you must acknowledge that your “unreasonable” buyers and sellers are that way for a reason. They got their expectations from somewhere. Buyers can be inundated with negative coverage of the national housing market from the media or internet outlets, and are often overwhelmed with their choices. Sellers, meanwhile, might be stuck on the selling price of their neighbor’s house a couple of years ago, and can’t come to terms with today’s market realities.

Both buyers and sellers base their expectations on what they believe is good, reliable information; they don’t necessarily intend to be unreasonable. Rather, they believe they are being entirely reasonable based on the information they have.  Sometimes that information comes from a family member, a "friend" or an "adviser" who is pumping them with invalid or incorrect information; but who they inexplicably trust more than you, the licensed real estate professional with a proven track record of success. 

Therefore, in the initial meeting with the clients you need to address their expectations of the market and your expectations of them working WITH you, not against you. Don’t wait until they start to get upset or frustrated with you, or you with them; it’s too late by then if that happens. You have to deal with it right up front.

Get Buyers to Get Real

It’s your job to explain to buyers that while there are a lot of houses on the market right now, they don’t need to see them ALL to make a good choice. They need to know that you have been spending time filtering, culling, and carefully selecting properties for them to see based on a clear understanding of their search criteria and parameters and budget. 

If you understand what they’re looking for, you should be able to find their house within generally a few outings, or within under 30 or so showings.  Some situations are different, of course, but generally if you're buyer expects you to show them 50 or more, possible hundreds of properties something is seriously wrong which needs to be addressed up front.  If they want to pay you to be a "tour guide" indefinitely or per outing that's one thing; but if it's a contingency basis where you're getting paid the commission from the Seller at closing there should be some reasonable expectations on how long the process will take and the extents to which you will go to make sure they are happy.  Again, if they're paying you or financing that proverbial poker game that's one thing; but if they're not then that's a completely different hand you're being dealt and they need to understand how you work and what your limitations are. 

No one wants to waste time. You should be able to convince buyers that they’re going to find a great house with very little hassle and time wasted, and they should be happy to follow your plans. If you can’t convince them of that, you must accept the fact that you’ll be showing lots and lots of homes before your clients make a purchasing decision. But again all this needs to addressed or discussed up front in your initial buyer meeting consultation to avoid problems and conflicts down the road together. 

Get Sellers to Get Real

Although some markets are exceptions, home owners probably aren’t going to be able to sell their property for as much as they could have sold it five years ago. They might still be tempted to “test” the market with a price that’s not going to garner very much buying activity. That’s why it’s so important that you’re prepared to address their assumptions.  Also, you need to know what their absolute bottom line is up front and deal with those expectations.  As I tell seller clients, the more money I can sell your home for, the more commission I am going to make, so I am motivated by that and understand and respect their financial conditions or what they might expect or NEED to get out of the property and I am not trying to undersell or undermine them in any way. However, we BOTH must get real about what the market is doing and what our hopes and expectations are.  This will all be based on good factual, objective market data and research you can show them.  You should also discuss or address a plan whereby if the property is not sold within XX days or months, what the plan will be for adjusting or lowering the price.

Gather the evidence from your local MLS to show that a home priced too high will languish on the market and the adverse effect of it becoming a stale or stigmatized listing that no one wants.  Remember that even if you take this listing off of MLS, then put it right back back in with a "new pricing or marketing plan" the audit trail or total number of DOMP (days on market property) can be seen and not just the new DOMM (days on market MLS under the new listing number). Also, calculate the absorption rate and explain that pricing real estate is based on supply and demand, just like in other industries.  You also can show a seller examples of local properties that have stood on the market for six or more months. 

There's nothing worse than working with a seller who is not amenable to flexibility in their pricing and marketing plan; or one who, when is convinced to lower the price, does so too late and is constantly "chasing" the market to stay or be competitive with other homes on the market.  I would tell such a client something to this effect, “I’d love to get you the $500,000 that you need, but now that you’ve seen the numbers, I think you can see that this is not likely to happen in the market as it stands. After all, if you were a buyer looking for a house now, would you pay $500,000 for this house when all the others in similar or better condition are going for $450,000?”  The answer to this question will tell you whether they’re living in denial or not. If they stick to their guns, they are likely still living in denial. Offer them the option to sleep on it and carefully and objectively review the numbers on their own, then meet again tomorrow when they’ve had a chance to really evaluate the comps data with them.  If they don’t get real, don’t take the listing. The fastest way to have a roster full of unreasonable clients is to take on listings from sellers who are in denial.  

Also, whether they have much or any equity in the property makes a HUGE difference too.  Ask to see their most recent mortgage statement balance and don't just take their word for it how much they owe on the property.  I've had cases were a Seller has flat out lied and misrepresented how much was owed on the property or the existence of any tax liens, divorce situation or existence of a property settlement agreement, owner(s) might be going into bankruptcy, or any other encumbrance on the property which can and will affect the sale.  You need to make sure that you do not ratify a contract and attempt to go to settlement on a property unless you know the whole truth and nothing but the truth regarding that property.  You don't need to get that call from the settlement agent saying your seller client will need to bring a check for $XX,XXX to the settlement table or encounter any other "surprises." 

Give the sellers a reasonable expectation of when the house should sell, and tell them that they shouldn’t even think about worrying until after that date. Write that date on a wall calendar in their home or have them put it in their Outlook, BlackBerry, iPad, iPhone, Droid or whatever they use. Then give them something else to focus on. Walk in with a list of things that they can be doing to improve the value of their home or to help in the marketing. If they’re focusing on a “To Do” list, then they don’t have as much time to sit and wonder why the home hasn’t sold yet.

Prepare Them to Be Frustrated or Unhappy With You

Yes, that’s right. In your meetings with sellers (or buyers), you have to prepare them for the fact that at some point, they may become frustrated or unhappy with you. When things aren’t going well or the way they expect it, people naturally look for a scapegoat; and that scapegoat is often you.  Don't kill the messenger because you do not like the news.

If you prepare them for the fact that this is can happen — even though you’ve been doing your job exceptionally well — then they can be alert to avoid it. And, if it does happen, you can acknowledge that you prepared them for it, which can help to diffuse the situation. and refocus the effort.

Stuck In Unreasonable Mode?

If you have clients who won’t budge from unreasonable thinking, then you may have either failed in your objective to educate them on the facts and reality (pun intended) of the situation and to enable them to get real (pun also intended) LOL.  Or....you could have one of those clients or hands in poker that you just need to fold on and walk away from.  Remember that Kenny Rogers song....

Fire Your Bad Clients

That's right, you heard me correctly... FIRE THEM, cut them loose !  Sayonara, 厄払い , 참 속 시원 할거야, Bon Débarras, Buon Viaggio, Selamat Jalan, ¡Que Se Vayan..... or as Donald Trump would say, "YOU'RE FIRED!"

As Realtors and business owners, we might feel that we have to or should take on every client who comes calling with that "cha-ching" in our heads about the possibility of making a commission.  But that cha-ching can and does sometimes turn into "cha-chump" on us leaving us not only having made nothing, but now in the red or in the hole because of all the time, energy and resources that we've advanced [un-reimbursed] out of our own pocket on a bad prospect, client or customer.  Watch out for the ones who have totally unreasonable expectations or are just set on "picking your brain" consuming you, then running off to do it their own way... or try it all over again with Realtor #2, 3, etc.  (see some of my other blog articles concerning Buyer Agency Agreements for ways to mitigate or avoid these pitfalls)

Just because someone comes to you who's interested in a business relationship doesn’t mean they're going to be a good client. In order to make your business as profitable as possible, you really need to assess your client relationships and ensure that they're win-win opportunities for you.  

As Realtors, we take every case on a contingency basis; advancing costs incurred on the "client's" behalf from our own pockets until such time as the buyer goes to settlement/closing, or the house is sold if we are the listing agent.  Neither event always or is guaranteed to occur for a variety of reasons.  An attorney or lawyer will take a case (personal injury, tort, or civil litigation) on a contingency basis; but the big difference is their client is receiving money (if they have a good case) and large sums of it; whereas our clients are SPENDING money - so it's a completely different dynamic with regard to any type of working relationship or commitment with each other involved.      

Here are 6 types of prospects or "clients" to avoid like the plague:

1)  Focus Hogs:

These are the type of prospects, "clients" or customers who constantly need to be massaged or have attention.  They can be highly indecisive and are analysis to paralysis type of people who will suck you dry of energy, time and resources that could be used on more income producing activities or clients.

2)  Time Wasters:

Similar to #1 above and could be merged in with this category, but time wasters can never make a decision and aren't ready and willing to listen to your professional advice and counsel.  These will be the ones who consume great amounts of your time, energy and resources without ever providing anything in return.  They may question all or some of your advise and counsel and you could find yourself being consumed or having to "take them on" on every little issue or concern to prove yourself right or their assumptions and opinions wrong. 


If you have a client or customer who questions everything you do or say, run like hell !  They'll never be happy and you'll end up aggravated and loosing valuable time, energy and resources that you could have otherwise spent on a more productive client or customer.  

3)  Low Profitability Clients:

Sometimes you still be able to salvage or work with types 1 & 2 above by re-focusing or re-directing your activities or finally getting them to listen to you; but by this time it's too late and they have now become low profitability clients or customers.  Unless they're likely to give you at least a couple referrals or do business with you again; you may want to really assess the situation with these clients or customers.  If you're not generating much income, or some income, from your clients or customers then you are on the loosing end of a bad relationship.  Only work with those clients who are likely to give you a good return on your investment in them. 

Remember, typically as a buyer's agent until such time as the buyer does find a suitable home and goes to settlement on it; you'll be advancing out-of-pocket expenses on their behalf.  In some cases that could be quite some time, a LONG road to travel on, and alot of expenses advanced on their behalf. Particularly if they are a relocation client or are new to the area and feel they need to see EVERY single listing on the market in various towns or cities before finally making up their mind on a specific location, subdivision, type of property, features, etc. 

I have had clients in this category who finally did select and go to settlement on a property but from whom I never got a referral -- and it wasn't because of the quality of service and representation they received.  I have some wonderful client testimonials and accolades from clients in this category; but since I never got a referral from them, in the final analysis they were very low to zero profitability clients.  I suppose those testimonials are quite valuable in securing other business, however.

As Realtors we have a business to run and operate, however, and we cannot keep a roof over our heads or food on the table by mere testimonials alone or by carrying no-profitability or low-profitability clients on our backs or from our bank accounts.  A buying client in particular must be carefully analyzed (before AND DURING the course of working with them) to determine if you're going to be left with the short end of the stick, or worse yet, in the hole directly because of them.

4)  Something For Nothing Clients:  

Dump those prospects or clients who want to milk or rob you of your professional services for everything they can possibly get, pick your brain clean; all for either totally for free, or at deep discount.  Only work with those prospects or clients who understand, value and RESPECT your professional knowledge, experience and abilities.  If they don't value and respect you now, they never will and you'll find yourself having to justify your work, your efforts and your professional service fees.  

This is particularly true of a seller who wants to lower your commission so much so that it actually leaves you broke; e.g. 4% total listing commission, less 3% or more to be buyer broker/agent in order to bring an able, ready, willing AND represented buyer to get the the property under contract and sold -- leaving your broker/you with 1% or less for all your efforts in marketing the home and representing the seller throughout the course of negotiations and managing the transaction to settlement process.  Or a seller (or buyer) who opts for the "Limited Services Agency Agreement" but then wants or expects the full services of a "Standard Agent."  If you have a prospect or client who's constantly working you over or trying to get something (or everything) for nothing, you're better off cutting these ones loose too as they'll never be happy and probably wont give you any referrals either even if you were able to close a deal with them. 

5)  Unreasonable Expectations: 

If you find yourself working with a prospect or client who is overly demanding or who has unreasonable expectations about either your professional services, the market conditions, or both; run like hell and cut these ones loose.  

To illustrate the living, walking, breathing personification and epitome of this category take this true anecdote.  I had a "client" once I had been showing houses to for quite some time who was only qualified for $450K.  In the DC Metro area this is on the low end of single family detached homes and could be in the mid to high category of townhouses.  So when I say "only $450K" that has to be taken into relative context. The family composition was he and his wife and 2 girls.  They wanted a property on a 1/2 acre lot and with a decent house, or possibly a lot with a tear down for a rebuild inside the beltway close to Metro transportation and other conveniences.  With only $450K this was really really pushing or stretching things.  

Instead of being shown properties that fit his basic parameters and within his budget, he insisted on being shown houses in the $650K range, telling me that I should just write a low-ball offer for them and see if it would work.  This was a grossly unrealistic expectation given that it was still a seller's market AND he was not paying anything for buyer agency representation.  I told him that he would have to alter or change his must have list by either increasing his purchasing power to get within the location, size, amenities he wanted; or compromise and move further out. He still wanted to be shown properties and try writing contracts on properties that were out of his league.  It would be analogous to trying to buy a Porsche, Lamborghini or Maserati (in very good to excellent condition - with low mileage) on a Volkswagen budget!  

I told him if he wanted to pay me per outing and writing contracts (fully refundable in the event his insane low-ball offers were accepted) that would be fine and I would be happy to do that until he either ran out of money, changed his expectations or parameters, or gave up trying; but that I was not about to do that all at MY EXPENSE and also compromise my professional reputation with local listing agents.  

This guy was trying to do "short sale" offers when "short sales" where not even "invented" yet and it was still a strong seller's market and properties were being sold for at or just slightly under list price.  The story gets worse; "But wait... there's more"  LOL. On top of his insane low-ball offer expectation, he also wanted $10-15K back in closing costs when the market was only bearing $6-7K in this price range.  I showed him the MLS market area data and sales statistics to unequivocally support this; but he didn't want to have anything to do with that.  

His strategy might have worked if he was targeting only distress properties or foreclosures; tax sales, FSBO's, (for sale by owner - unrepresented) etc in the strong seller's market; or perhaps even today in the bubble burst and economic recession we are in today.  But he would have had to pay for buyer agency representation in this type of scenario rather than using a buyer agent who was being paid by the seller in a more traditional MLS type of market and sales transaction scenario.  I gave him this option as well, but he did not want to have to pay a buyer broker/agent or pay a retainer.  This also fits within #4 above (something-for-nothings). These are the types with unrealistic expectations that you just need to walk away from and let them run less experienced agents into the ground, which is exactly what I did in this case. I was wise enough to cut or minimize my losses with this guy by dropping him like a hot potato before my investment of time, energy and personal resources mushroomed out of control, got out of hand or became a colossal loss on my balance sheet.  Haile this one was for you!  You were the inspiration and poster child for this entire blog article. 

6)  Know-It-Alls:  

These are the ones who think they are experts in real estate or know the market better than you do.  They will not want to listen or be receptive to your professional advise and counsel and will expect you to pretty much just shut up and be their taxi driver and locksmith to show them properties; indefinitely or even ones they do not even qualified for to buy.  A seller can also fall into this category as well and not be receptive to doing things you suggest or propose in getting the property "curb-appeal" ready to sell, or in your pricing and marketing plan. I often wonder with these types; if they are such experts in the field, then why are they coming to a licensed professional to help them?  Because they either don't have MLS access, a lockbox key, a yard sign, or the contract forms -- but they just want to use you for your "tools" but do everything their own way.

5 Tips for Selling a Home Fast

1.  Make sure the buyer has actually been approved for the loan and has gone some of the way through lender "underwriting" and has not been merely "pre-qualified" for the loan before you accept or "ratify" that contract !

Don't just accept that lender's "approval" letter for face value without you or your listing agent conducting some due diligence or dialogue with the buyer's agent and lender and ascertaining whether there are any "conditions" of loan approval that need to be met or satisfied first, before final approval could be given by "underwriting."  There is a HUGE difference between pre-qualification (subject to verification of income/assets, credit issues that need to be cleaned up or explained, or other conditions of the loan) and an actual and true "approval" (which should only be subject to a satisfactory appraisal , title binder or other MINOR or routine conditions not part of the buyer qualification). 

2. Focus on comparables in your neighborhood that have actually been sold (not new or current listings still on the market) as a means of benchmarking or gauging your selling price.

But of course do follow up and watch those listings which may then become settled sales and show up on the appraiser's comps list.  Spending too much time or emphasis on listings that are currently active and still on the market should not be given much weight because; A) the appraiser will also not make a case or give any weight to active listings because, B) sellers can drop the price on them dramatically or overnight, C) active listing values do NOT establish, nor are an accurate or true indication of actual fair market value. 

Also, with regard to homes recently sold in your neighborhood, or those marketing cards that a listing agent sends out telling you how much homes have sold for in your neighborhood make sure you check for two elements in that list or grouping of data; WHEN the property was sold or the settlement date (not contract ratified or accepted date) AND also how much did the Seller give back to the buyer as a "subsidy" or "concession" for buyer's closing costs, repairs, etc.  In other words, a property which sold for $500K with $0 back in closing costs really sold for $500K; whereas a home which "sold" for $500K with $20K back to the buyer really only netted the Seller $480K (minus the real estate agent's listing commission as well, and pay-off of existing mortgage(s) on the property).

It is also a useful way to gauge or benchmark how much other sellers are making in concessions; so that if your listing agent or buyer suggests a certain amount back for closing cost assistance or to help subsidize the buyer on the contract, you also have "comps" for what the "going rate" or amount for that is too.  And if you, as the seller, feel everyone is asking you to keep reaching into your pocket and throwing out or down money for the transaction, you should likewise ask the buyer's mortage lender or broker to reach into their pockets too and take a cut of their "points" or charges for the buyer's loan; ask the buyer's real estate agent to take a cut of his commission, heck even ask your listing agent to reach into his pockets too.  Sure... let's ALL help the buyer out.  The seller is ALREADY paying the buyer's real estate agent commission -- what else do they want you to do; pay for the buyer's mortgage payments too and leave a bottle of Dom Pérignon champagne in the refrigerator for them, pay their moving expenses ???   Sure... it's easy for everyone else to keep suggesting that you reach into your pockets to help the buyer out, but wait until you see their faces and expression when you suggest that EVERYONE involved in the transaction pitches in or helps out too !  LOL

3. Frequent open houses. 

Comparison shop by actually getting out of your home and into ones for sale. Yes, it's convenient to view listings on your computer or Blackberry, but not until you've actually been inside or really looked at them can you really begin to measure or gauge how the competition stacks up against your property for sale.  I had a client once (Walid this one is for you) who was not amenable to lowering his asking price or being competitive with other townhouses in the cluster and kept citing his granite counter tops and other upgrades he had done to the property.  I told him, yea, they were great updates or upgrades; but the problem is, is that the others right across the street have the same or better AND are priced lower than his expectation or perception of value.  I told him, go look at the other ones for sale priced lower than his and see for himself.  Did he listen to me ?  No !  I ended up losing the listing, but the funny part of this story is that the market imploded on him right around 2005/06 and he ended up getting totally HOSED !  LOL : )  I had also been telling this acquaintance to SELL, SELL, SELL while he had the chance at the height of the market.  Penny wise and pound foolish...

4. Personalize the home's marketing for the Internet-savvy buyer.

In addition to the information put out by your real estate agent, do a parallel effort yourself too.  Put out flyers  at your work place break room (if that's allowed of course) or if your company or government agency publishes any type of on-line or in-print publication for its employees which has a "wanted" or a "for sale section" for ads put one there! Put one up at the local coffee shop where you frequent; heck you can even create a blog about your property too!  You get the point; the more comprehensive your marketing and adverting strategy is the greater your chances are of getting the property under contract and sold.  There could be someone right in your office, where you frequent, or within your "sphere of influence" or contacts that may be looking for a home just like yours.  There is even what is known as an "Open Listing" - where if you are the one who brings the buyer you do not have to pay the listing agent's commission unless he could establish that he was the "procuring cause" of you getting the contract through his advertising and marketing initiatives. Not too many listing agents would probably go for this; but it does exist and is an option to consider depending on your particular circumstances and market conditions.

5. Educate the appraiser about the home and the neighborhood.

Thanks to the new HVCC appraisals codes of conduct (which I wont go into here as I've covered it already very thoroughly in other blog articles here on my site - just do a search my site for "HVCC") there is a good chance the appraiser will not be as familiar with the subject area as you are. The problem today is you can't assume an appraiser knows the neighborhood or has access to all of the neighborhood transaction details in the MLS database, especially if they're from out of the area.  Furthermore, not all sales are conducted through real estate agents but are "arms length transaction" directly between seller and buyer.  The appraiser may not have also checked public tax records for evidence of these other type of sales which would not show up in MLS.  That could backfire on you too as the seller especially if other lower comps are found, but if there was at least one good higher value sale which was not in MLS that could certainly be to your benefit by pointing this out or proving that information to the appraiser. You obviously would not want to disclose any information to the appraiser (negative or poor value sales or condition of the property such as any defects or repairs that were needed) that would hurt or kill the valuation of your property.

In certain states, "known material defects" have to be disclosed to the buyer through your listing agent, or by you directly absent a listing agent if selling as a "FSBO" (for sale by owner) or a "URO" (unrepresented owner) notwithstanding any type of "as-is" contract clause stipulation or Residential Property Disclaimer form.  But definitely do not point out anything to the appraiser that may get your property downgraded in terms of overall condition and subsequent valuation.  By the way, if you have ghosts or poltergeist in your property that is NOT considered a known "material" defect!  LOL   : )

Cash Strapped Retirees or Seniors - HELOC or HECM

Here is an interesting article giving some advice or suggestions for Cash Strapped Retirees or Seniors.  As this article points out a Home Equity Line of Credit (HELOC) or a Home Equity Conversion Mortgage (HECM or "Reverse Mortgage") can be a viable way of working the living expense numbers in your monthly budget along with other considerations about income from a pension, social security, continuing to work, or other investment income.

Can I Order My Own Appraisal - Or Do I Have to Use the Lender's One?

There is NO legal mandate which stipulates that the lender must make the decision for you who you hire either as a home appraiser, home inspector - termite inspection company, title or escrow company, settlement attorney, homeowner's insurance company, or any other service provider involved in connection with the sales contract and closing on the purchase or re-finance of a property. Where the borrower or purchaser is paying for all those services themselves they have an inherent right to choose or select who they want. 

Typically your average home purchaser would not know all those service providers and the lender or real estate agents end up making the referrals or recommendations for their client as part of their "concierge" services in closing the deal; but there is no mandate that you have to use "their people" -- especially when you are paying for it all.  The laws governing all this are referred to as "RESPA" or the Real Estate Settlement Procedures Act which prohibits, bans or enjoins a lender or mortgage broker from telling you there is a "required use" of their affiliated real estate settlement service providers or "controlled business arrangements".  

If you are concerned about the quality of a home valuation appraisal you will be paying for, and you want to legally circumvent the convoluted HVCC lender appraiser assignment process; order it and procure it yourself!  If a lender or mortgage broker tries to tell you that the "underwriter" wont accept or allow it, ask them to show you where it says that in "RESPA" under Title 24 of the Code of Federal Regulations (CFR) which governs how mortgage brokers or lenders operate. If they want to choose the appraiser, then insist THEY PAY FOR IT ! 

The assignment of the appraiser through Freddie Mac & Fannie Mae's Home Valuation Code of Conduct or "HVCC" guidelines applies only where the lender orders the appraisal. HVCC was designed to eliminate collusion or influence between the lender and the actual appraiser by cutting off communication and the process of direct referrals or "steering" to one particular appraiser by the lender.  This was at the heart of the whole sub-prime lending debacle where appraisers were in "cahoots" with lenders in over valuing property or "rubber-stamping" appraisals so the loan could go through.HVCC's legal mandates DO NOT apply, however, where a borrower (in a purchase or re-finance) or homeowner who is selling his property orders or requests the appraisal themselves.  As stated above, if you're paying for it, you have a right to choose who YOU hire to conduct the valuation of your property or the property you are contemplating buying. And remember, even if the lender orders or requests the appraisal (and you are paying for it), the appraiser is working for YOU, not for the lender; so they owe you (not the lender) the duty of professional responsibility -- the appraiser is accountable to YOU not the lender. 

If you do end up going with an HVCC controlled appraisal where the lender orders or requests it, here are some other things and factors to consider (in addition to what I just said above):

Unless you've got beaucoup, or at a minimum 5 recent (within past 6 moths) sales comparables or "comps" in a cookie-cutter condominium, townhouse or homogeneous single family home neighborhood; an appraisal is still an OPINION of value - and a rebuttable one at that.

Now throw in all the foreclosures, short-sales, REO (bank owned), trustee or other "distress" sales; and you could have a real quagmire on your hands (pun intended). 

And to make matters regarding your appraisal even more murky is the new Home Valuation Code of Conduct (or "HVCC") where lenders are required to farm your appraisal out to an Appraisal Management Company (or an "AMC") who then re-assigns your home valuation to one of their appraisers.  Often times the appraiser is not from your local area nor familiar with homes or properties where the subject property is located.  Additionally, because the Appraisal Management Company (or the new middle man in this process) is going to take a cut from the appraiser of the total amount of the appraisal fee that the borrow or homeowner is paying for the appraisal, this lowers or reduces his/her net gain from the assignment from what they otherwise might have made if they were getting the assignment directly from the lender and acting in the capacity of a sole proprietor, rather than now as a sub-contractor of the "AMC".  

What is the result of all this, and why should you care or be concerned ?  Because if the appraiser is: 1) not familiar with your market area by having regularly conducted appraisals there for some time or have acquired some "institutional knowledge" of the subject property's unique neighborhood and market dynamics, 2) is being paid less because they are now forced to work through or get assignments from an "AMC", and 3) is often rushed in their turnaround time frame to complete their full appraisal report (which entails an inspection of the subject property, review of recent sales comparables through MLS, completing their review and analysis of your property's salient features or characteristics as they compare to recent sales comparables, and analyzing the overall area and conditions in the vicinity of the subject property that could affect or impact value; i.e. "the big picture")  -- chances are very high that the QUALITY of the final analysis and opinion of value rendered by the appraiser is going to be diminished and the appraisal or final opinion of value could come back significantly lower than actual or true fair market value of your property, or the property which you are contemplating purchasing and have put a contract on.  That could work to your benefit if you are the buyer in negotiating a lower contract sales price with the seller, but what if you are the seller or you are re-financing ?  Then this is most definitely disconcerting.

Caveat Emptor -- let the buyer beware.  If you are purchasing a property or re-financing, your lender will more than likely order the appraisal for you (assuming you do not know one or could not simply look in the Yellow Pages directory and request one yourself) and will charge you for this either up front, or as part of closing costs "POC" (paid out of closing).  Chances are also very likely that the lender will also tack on a little "processing fee" on top of what the Appraisal Management Company actually charges, and pass that on to you. BOTTOM LINE IS however, that YOU ARE PAYING FOR IT !   And.... if you are paying for it, shouldn't you also have the right to choose which appraiser or company you want ? 

Push Underway for .MLS Domain ~ One Stop Shopping Portal to MLS Listings

Sixteen multiple listing services have signed on as founding members of the MLS Domains Association in hopes of creating a top-level Internet domain: .MLS.  Full story

The Greater Washington, DC Capital area's Multiple Listing Service or "MLS" hub (which covers around the beltway and surrounding or outlying areas of Northern Virginia, DC and Maryland) is called the Metropolitan Regional Information System or "MRIS".

If an agent in a Tri-State area such as this wants to show properties outside the metro area or expand his/her practice into other areas of the state; such as beach or mountain resort type of properties; i.e. Ocean City, Maryland; Shenandoah Valley Region, Chesapeake Bay area or Annapolis, Maryland  (all of which would be ideal resort or second home type of properties for the DC affluent or weekend warrior) -- the agent would need to belong or have some type of reciprocal privileges with other NAR Real Estate Boards, who are also tied into or connected with the local MLS hub AND the regional lockbox key system administration.  The Supra lockbox system hardware "key" or hand-held electronic device that an agent carries is only programmable for a certain number of regional MLS hubs or real estate board geographic areas.  This means that an agent would need to drop certain coverage areas to be able to show properties in another area or region and vice verse.

I went through this same very frustrating and convoluted process when I was also licensed in Maryland and trying to show and sell properties in Ocean City, Maryland.  Not only was the local MRIS regional MLS hub that I belonged to not able to show all the local MLS listings in that area (Coastal Association of Realtors - or CAR); [although some listings were put into the DC area's MRIS system] - but also my GE Supra DisplayKEY hand-held hardware device was not immediately programmable for that area; unless I dropped another area or region (such as the Shenandoah Valley region) to add the Supra DisplayKEY code for the Ocean City, Maryland area.

Then to compound the situation further, the maker of this entire real estate industry electronic lockbox key system, General Electric or "GE", would periodically update their lockbox shackle and electronic hand-held "key" hardware devices; and if you were working in an area or region where the agents in the local area had not yet updated to the latest version of the hardware devices, you could find yourself not being able to show your client a listing with your most updated hardware. GE has superseded the DisplayKEY for the newer ActiveKEY hand-held hardware device "key" system now. 

It can be very embarrassing to say the least to be standing at a door of a property trying to show it to your client buyer, then not be able to get into the property for whatever technological reasons which the client couldn't care to understand or comprehend; and rightfully so, they "hired" or selected you the agent as the "expert" in all this. Not only is it highly embarrassing but also a potential loss of the buyer client as well who may by now have lost confidence in his/her agent's abilities or "expertise"; a loss of time, money and energy in unsuccessfully attempting to show that property listing, but more importantly the possible loss of hard earned or potential commission income that could result from a sale if the agent was able to show that property.

As a Tri-State or major metropolitan area Realtor I found this to be most restrictive and convoluted.  Therefore, I would support and encourage the formation of ONE unified Multiple Listing System (MLS) database which any real estate agent or member of the National Association of Realtors (NAR) could access; rather than having to be a member of multiple local boards or get reciprocal privileges with a local or regional board to join or get access to their localized MLS hub system AND have localized lockbox key access privileges as well.  So long as an agent is licensed in a particular state; i.e. Virginia, that agent should be able to seamlessly show his or her client any property listing in that state across multiple jurisdictional or regional geographic areas within the given state by being able to access a centralized MLS database system AND there should be a centralized or unified lockbox access coding system in place as well to allow that agent access to properties in another region or geographical area.

Limiting or restricting agents to one or a only a few MLS hub areas or lockbox key regions within a given state (or across state lines if the agent has multiple state licenses) is overly and unnecessarily restrictive to both the agent and the buyer.  If an agent is knowledgeable about multiple regions within a state or across a multi-state metro area (as well as is knowledgeable about prevailing practice, local contract forms or addenda, etc) there is NO REASON why that agent has to pass off or refer his client to an agent in the local area and loose money on a commission sale because he/she does not have access to the localized MLS system AND lockbox key systems.

The localized or regional MLS hub system  must be abolished and a new more agent AND client friendly MLS system must be adopted !