A common theme here in Active Rain is the poor treatment of the buyer agents, these poor folks receive 85% of the liability in exchange for 50% (or less depending on the attitude of the listing agent) of the pay.  Sadly, the term cooperating broker is not in some brokers' and agents' vocabulary.

 One area that has increased exponentially in our area is the number of expired listings.  This can be a wealth of listing opportunities, but it can be very revealing as to why the listings did not sell in the first place.  One of the most revealing areas is the Realtor® only remarks.  These are things that the general public has no knowledge of but tend to be major impediments to showing and sale of the property.  Below is a sample selection of the comments in the Realtor® only remarks of the expired listings from this past weekend, along with my keen insight about why they might not have gotten fewer showings than most other listings.

 "FRIENDLY, TINY DOG, MAGGIE, ON PREMISES. PLEASE DO NOT LET HER OUT WHEN SHOWING. SXS FRIDGE WILL NOT CONVEY BUT WILL BE REPLACED BY FRIDGE IN GARAGE."  Perhaps you took this listing because the seller wanted someone to watch Maggie without paying a kennel.  I want to focus on selling a home, not have mental visions of running down the street looking for Maggie.  Additionally, who wants to explain to a buyer that the way the house shows is not the way it will sell?

 "Good location for the soccer moms out there."  Are you asking me to violate Fair Housing laws and steer folks to your listing?  Do it yourself, thank you.

 "SECURITY SYSTEM ACTIVATED - GUARD DOG ON PREMISES. GATE CODE: XXXXX. INVISIBLE FENCING STAYS. SELLER GIVING 2 YEARS OF CRIME PREVENTION MONITORING TO BUYER."  This wouldn't be so bad if Fair Housing laws let me answer the logical buyer question "Is this a safe neighborhood?"  Seriously you are giving me a choice show your listing and don't sell it, or show all the other houses in your area and possibly sell one of them.

 "Call owner, if no answer leave message, then use Marion County lockbox. Furniture will be negotiable."  I am here to try and sell your listing, not to run a consignment shop or flea market.

 "DINING ROOM CHANDELIER DOES NOT CONVEY - MAY BE BOUGHT SEPARATELY."  Ditto my comments about showing the home the way you want it sold at the price listed, and ditto my comments about running a consignment shop or flea market.

 "Seller is always at home. We do not have a lockbox and we do not have a key to the home. Please call listing agent Martha (352) XXX-XXXX prior to showing. If unable to speak to Martha please call seller at XXX-XXXX for access."  Oh the ease of showing, if the owner scoots off to Wal-Mart for a few, this could be a hassle.

 "KEY IN OFFICE, COMMISSION PAID ONLY UPON CLOSING, USE X. XXXXXXX XXXXX, PA, TRUSTEE FOR TITLE CO. AND ESCROW."  According to FREC Selling broker is responsible for the proper handling of escrow, and it is not worth arguing over who holds the escrow just for the right to present an offer.  I am not about to let some attorney get me all warn down before any contract negotiations start.  In case you were not aware, going to your office to pick up a key, and to return the key takes the time of showing two houses.  Unless your listing is so unique that none of the neighbors' homes have the same floor plan, is it in my buyers' best interest to show this house.

 "The Realtors are related to sellers."  What can I say?  I am printing a copy of that expired listing to include in my listing package for when I get this objection.

 "SHORT SALE CONTINGENT UPON THIRD PARTY LENDER APPROVAL. COMMISSION MAY BE NEGOTIATED BY LENDER IN ORDER TO APPROVE SHORT SALE."  I know the discussions over this, but I am not letting some third party renegotiate my paycheck after I do my work.  You and your broker should withdraw from the MLS until you figure out the meaning of "cooperation."  Just because some MLS boards allow it doesn't make it moral, right or ethical.

 "PRE-FORECLOSURE SALE - LARGE 3/2/2 HOME WITH DECORATOR CERAMIC TILE FLOORS, SPLIT PLAN, WELL & SEPTIC. SELLER SAYS BRING OFFERS! KEY IN LISTING OFFICE, HOME IS VACANT."  Do you want to sell this or are you just using it as buyer bait?  Buy a lockbox for this vacant house, so I don't have to take the time of showing three homes instead of your one.  Besides my buyers don't need to know where your office is unless they are trying to go behind my back and cut a deal with you directly, not that that could be a hidden motive on your part.

 Call owner first at 317-XXX-XXXX, then lockbox. ATTENTION REALTORS: 2 CATS IN HOME---DO NOT LET THEM OUT!!!  First, seller has an out of area area code.  I don't like to call long distance to show a home locally.  Additionally, if I wanted to be a cat wrangler, I would not have gone to all the effort of getting a Real Estate license.

 Bottom Line:  A few simple changes on the part of the owner or listing agent would probably have put these listings in the closed column rather than the expired column.

©2009 Dan Homan

Just a quick question.The popular site Trulia offers free ads, but only for licensed Real Estate Professionals.  Yet there are numerous feeds they receive where they just list the name of the website that it came from, not the broker's name.  I did not know that "postlets.com" was a licensed real estate broker!  This is a no no under the Code of Ethics and State Law.  Why aren't brokers and agents being more careful with their advertising?

I noticed one listing I clicked on and the broker was shown as "coldwellbanker.com" not a registered broker. I could however click back through the feed from coldwellbanker.com to the Coldwell Banker website, and then back to the actual brokerage information that by state law and the code of ethics should be included on all Internet advertising including the ad I originally selected on the public search page of Trulia.com.

I know that these ethical and legal violations are throughout Truliabut the biggest violator of the COE and state law is by Coldwell Banker Corporate which requires Realtor(R) membership of its brokers and agents, yet has no problem putting these Brokers and agents at risk.

I also find it patently unfair that Trulia runs blind ads for agents, but will not accept ads from FSOB sellers.  This smacks of anti-trust and racketeering.  Is Trulia a broker acting in a brokerage capacity?  If they are just an advertising co they are doing the same thing the DOJ is going after NAR for - limiting the market place and anti-trust violations.  Shame. Shame.

This is an illustration of brokers and agents not taking ownership of their listings.  By sending these feeds out to Truia Coldwell Banker who is large enough that they should know better, is thumbing its nose at the law and at its brokers and agents.  Brokers and agents need to stand up to these corporate criminals and gang leaders - or since this is a planned corporate policy and this type of advertising is not legal - can we call it organized crime?

People can and do sell their homes on their own all the time - without the help of a broker or salesperson.  It is not fair exclude them from the advertising market while at the same time  violating state law and being unethical. 

Bottom Line:  Just because Internet advertising is cheap and easy dosen't mean it does not have to be legal and ethical.

The other half don't understand it at all.  

So who paid off the state legislators?  In every state I know of you can get every math, business math and real estate math question wrong on the state licensing exam and still pass and get your license.

That really doesn't matter unless you believe the Realtor® line "your home is your biggest investment."  Well shoot, if you really believe that why do you walk around the office citing your inability to do basic real estate math and still get a real estate license as some how heroic, a badge of honor.

You wouldn't invest your retirement plan with someone who couldn't explain the difference between a Roth IRA and a defined benefit 401k plan would you?  Forget about it, you wouldn't even buy a pair of shoes without asking the clerk about the quality of the workmanship, materials and durability.  Why should you expect someone to list or buy with you as their agent when you lack the basic fundamental knowledge to calculate and explain the estimated cost or proceeds of the sale?

In addition to selling homes most states require a real estate license to sell vacant land, commercial real estate, manage rental properties and businesses.  How can you perform half these functions without a basic understanding of real estate math?

Let me ask you  . . . You just showed a house that costs $200,000.  The buyers have $50,000 to put down, the taxes are $3000 per year, insurance is about $1200 per year what is the approximate monthly payment?

Duh?

What would the house rent for (here is a clue, you need local market knowledge beyond the information above to make this work)?

Say what?

How much do I save by buying a home like this instead of renting?

Come again?

What is the price point for that home for a 6% return on cash if it was rented? 

What is the market rent and what price would I have to pay to break even if prices do not change? 

What would my short term negative cash flow be on a financial break even?

If you can't figure out the answers to these questions, do you have any business listing or selling the house in question?

If you said yes you are a con man and you need to get out of the business.

Instead of learning the math Realtors® learn a bunch of stupid lazy meaningless catch phrases than they can't explain - but they use them like loaded guns - they are loaded phrases that say and mean nothing, but if you challenge them - or asking for more detail makes you run the risk of a long boring explanation so is it worth the effort of asking.  The net effect is that by using these phrases Realtors® can cover for their financial and economic ignorance, hide their mathematical literacy and intimidate the questioner from asking any more questions on the subject.  This is the opposite of full disclosure - it is a shameful and abusive way to treat the public in order to save face.

Here are a few examples of meaningless banter that most Realtors® use to avoid directly answering questions that require basic math, financial and economic knowledge to answer:

The list goes on and so does the problem.  Wouldn't it be better to learn your job and become a real professional rather than offering the old razzle-dazzle? 

The fact is if you can't deal with numbers how can you do a CMA?  How do you manage your business?  How do you work with investors?  How do you work with rental properties?  How do you make sure that the HUD is correct before a closing?  Oh that's right, you just say "Pay no attention to the media, real estate is local, I am a local expert so take my word for it.

Sadly, with the advent with the internet and information savvy customer, that old dog won't hunt anymore.  If the customers know more than you, why do they need you in the first place? 

Bottom Line:  Perhaps instead of using mushy gut feelings and glossing over issues that matter to customers Realtors® should learn economics and maybe some math. 

This is the first in a series on real estate and business math.  If you want to learn more about numbers and economics, look for my next post.

© 2008  Dan Homan

Years ago before we were in real estate we lived in a rental.  We were care takers for a commercial property in exchange for reduced rent.  Our responsibilities were generally lawn, yard and minor exterior maintenance.

The interior maintenance was performed by the owner.

My oldest daughter was fascinated by Mr. Bauer - one of the owners who did some of the major repairs and upgrades.  She would occupy herself for hours with a few pieces of wood my hammer and some nails.  One day she said "Dad we need to get a good steady hammer like Mr. Bauer's - one that dosen't hit your fingers.

Dan:  Hi this is Dan!

Bad Banker:  Dan, this is ___________  _________  from ________ bank here in Ocala.

Dan:  Great I am really glad you called.  I was trying to find out what was happening with the loan for Mr. _________.  As you know the property was supposed to close 60 days ago and the contract has been extended twice for 30 days each.  We are supposed to close on Friday, It is Wednesday today and the selling agent just told me you had asked for another 30 day extension.

Bad Banker:  That's right.

Dan:  When I asked the other agent why he gave me the name of Ms. ___________ at your bank.  I had called her this morning to ask about the delay and she just said your bank needed more time.

Bad Banker:  That's Right.

Dan:  I am sure you are aware that I told Ms. ___________ that the contracts here have a time is of the essence clause and that means that the __________ family would loose their deposit if the closing does not take place on Friday.  The seller is antsy and won't extend unless the buyers double their escrow money.  This is money the selling agent says they don't have.  I reminded her that closings here in Ocala usually take place in 30 days or less and Friday would put us at about 105 days, another extension would bring us closer to five months in escrow, and so to ask the buyer anything I would need to have a real reason for the delay that the seller would accept.  She told me she could not provide that information to me because of "confidentiality" reasons.

Bad Banker:  That is right.

Dan:  I explained that the copy of the contract she had signed by the buyer requires updates on loan status and requires the bank share this information when requested.  I told her I would be glad to fax over a written request for this information with a copy of the contract authorizing your bank to comply.  She said that made no difference, and that my sellers had two choices - 1) Give the buyers an additional 30 day extension or 2) The bank would stop work on the loan.  I suggested a third choice, do what it takes to get the job done by Friday so the buyer does not loose his deposit. 

Bad Banker:  That is why I am calling, you don't have to worry about the mortgage.

Dan:  Great you mean it is going to close Friday?

Bad Banker:  No, I mean we have decided not to process the mortgage because you hurt MS. _________ feelings by suggesting she was not doing her job.  I am sending a letter to the buyer and the seller explaining that your rudeness and lack of professionalism offended my employee and so the buyer must look elsewhere for a loan.

I have never been spoken to in that manner before, but maybe once or twice in my 30 years in business, and I knew that I had to do something.  Some times you just have to suck it up.

Dan:  I am sorry, I offended her, I would like to apologize, would you suggest I call her, come in and meet her in person or should I just send her a note?

Bad Banker:  I can transfer you if you like.

Dan:  Since we clearly have a misunderstanding, is it possible to do a three way with you so you can make sure I don't step out of line again.

Bad Banker: That would be fine, just hold one minute while I get her on the line . . . Hello Dan I have Ms. _________ on the line go ahead.

Dan:  Hi Ms. ______________ this is Dan Homan from Coldwell Banker again, I just wanted to apologize for offending you this morning and suggesting that you had not done your job correctly.  I understand that there are many hands that a mortgage application goes through, and if I even implied that you had personally not done everything in your power to process this application in the last 105 days I am deeply sorry.

Ms. _________:  I accept your apology, but why were you so mean?

Dan:  I am sorry; sometimes I get so involved in the zealous representation of my sellers that I forget that I am not talking to the right person.  I just assumed that you represented the bank and I was voicing my disappointment with the bank, not with you.  By the way did you get my fax?

Ms. __________:  Yes but I did not look at it yet.

Dan:  After we hung up I called the seller.  As you know, since the financing contingency was not met, the first extension acknowledged that, and the second extension also included a post dated release of escrow that was signed by buyer and seller.  This was done to insure that the escrow would be released to the seller on Friday if there was no closing.  The fax was a copy of a letter I sent to the selling agent to forward to the buyer and to the seller stating that the seller was going to put the property back on the market on Friday at 5:00.  They would hold off on claiming the escrow if they received a letter from your bank stating the reason for the delay in financing a date when the bank would without fail close - in the next 15 days.  If the bank did not provide such a letter the escrow would be claimed on Monday morning.

Bad Banker:  Dan this is ____________ again.  I hope you don't mind my jumping in here, but that last part didn't sound like part of an apology.

Dan:  It wasn't.  I don't apologize for aggressively looking out for my sellers' interest in a transaction.  Is there anything else I can do for you?

CLICK!

I received the letter from the bank by over night mail the next morning and the closing took place the following Wednesday.

Bottom line:  Had I not looked out for my seller's interest throughout the escrow process - including contract extensions, I would have been a position of weakness when dealing with a nasty banker.

© 2007 Dan Homan

Dan:  Hi this is Dan!

Bad Banker:  Dan, this is ___________  _________  from ________ bank here in Ocala.

Dan:  Great I am really glad you called.  I was trying to find out what was happening with the loan for Mr. _________.  As you know the property was supposed to close 60 days ago and the contract has been extended twice for 30 days each.  We are supposed to close on Friday, It is Wednesday today and the selling agent just told me you had asked for another 30 day extension.

Bad Banker:  That's right.

Dan:  When I asked the other agent why he gave me the name of Ms. ___________ at your bank.  I had called her this morning to ask about the delay and she just said your bank needed more time.

Bad Banker:  That's Right.

Dan:  I am sure you are aware that I told Ms. ___________ that the contracts here have a time is of the essence clause and that means that the __________ family would loose their deposit if the closing does not take place on Friday.  The seller is antsy and won't extend unless the buyers double their escrow money.  This is money the selling agent says they don't have.  I reminded her that closings here in Ocala usually take place in 30 days or less and Friday would put us at about 105 days, another extension would bring us closer to five months in escrow, and so to ask the buyer anything I would need to have a real reason for the delay that the seller would accept.  She told me she could not provide that information to me because of "confidentiality" reasons.

Bad Banker:  That is right.

Dan:  I explained that the copy of the contract she had signed by the buyer requires updates on loan status and requires the bank share this information when requested.  I told her I would be glad to fax over a written request for this information with a copy of the contract authorizing your bank to comply.  She said that made no difference, and that my sellers had two choices - 1) Give the buyers an additional 30 day extension or 2) The bank would stop work on the loan.  I suggested a third choice, do what it takes to get the job done by Friday so the buyer does not loose his deposit. 

Bad Banker:  That is why I am calling, you don't have to worry about the mortgage.

Dan:  Great you mean it is going to close Friday?

Bad Banker:  No, I mean we have decided not to process the mortgage because you hurt MS. _________ feelings by suggesting she was not doing her job.  I am sending a letter to the buyer and the seller explaining that your rudeness and lack of professionalism offended my employee and so the buyer must look elsewhere for a loan.

I have never been spoken to in that manner before, but maybe once or twice in my 30 years in business, and I knew that I had to do something.  Some times you just have to suck it up.

Dan:  I am sorry, I offended her, I would like to apologize, would you suggest I call her, come in and meet her in person or should I just send her a note?

Bad Banker:  I can transfer you if you like.

Dan:  Since we clearly have a misunderstanding, is it possible to do a three way with you so you can make sure I don't step out of line again.

Bad Banker: That would be fine, just hold one minute while I get her on the line . . . Hello Dan I have Ms. _________ on the line go ahead.

Dan:  Hi Ms. ______________ this is Dan Homan from Coldwell Banker again, I just wanted to apologize for offending you this morning and suggesting that you had not done your job correctly.  I understand that there are many hands that a mortgage application goes through, and if I even implied that you had personally not done everything in your power to process this application in the last 105 days I am deeply sorry.

Ms. _________:  I accept your apology, but why were you so mean?

Dan:  I am sorry; sometimes I get so involved in the zealous representation of my sellers that I forget that I am not talking to the right person.  I just assumed that you represented the bank and I was voicing my disappointment with the bank, not with you.  By the way did you get my fax?

Ms. __________:  Yes but I did not look at it yet.

Dan:  After we hung up I called the seller.  As you know, since the financing contingency was not met, the first extension acknowledged that, and the second extension also included a post dated release of escrow that was signed by buyer and seller.  This was done to insure that the escrow would be released to the seller on Friday if there was no closing.  The fax was a copy of a letter I sent to the selling agent to forward to the buyer and to the seller stating that the seller was going to put the property back on the market on Friday at 5:00.  They would hold off on claiming the escrow if they received a letter from your bank stating the reason for the delay in financing a date when the bank would without fail close - in the next 15 days.  If the bank did not provide such a letter the escrow would be claimed on Monday morning.

Bad Banker:  Dan this is ____________ again.  I hope you don't mind my jumping in here, but that last part didn't sound like part of an apology.

Dan:  It wasn't.  I don't apologize for aggressively looking out for my sellers' interest in a transaction.  Is there anything else I can do for you?

CLICK!

I received the letter from the bank by over night mail the next morning and the closing took place the following Wednesday.

Bottom line:  Had I not looked out for my seller's interest throughout the escrow process - including contract extensions, I would have been a position of weakness when dealing with a nasty banker.

© 2007 Dan Homan

Property values are declining, in fact, they will be in a free fall over the next few months - after we look at the numbers we will take a look at the storm on the horizon.  There are more options for the serious buyer than ever before.  Two years ago sellers faced competition from only a few other homes on the market in their subdivision.  Now, savvy buyers are re evaluating their options as builders have made major changes in their pricing, that have put major pressure on the resale market.  For an urgent update, please see my post NEWS-FLASH-OCALA-REAL ESTATE MARKET LOOSES 30% IN ONE DAY . . .

Less closings.  Last year, there were 5487 closings in Marion County - or about 15 per day for the whole year. This year, through August 31 there were 2711 houses sold, or only 11 per day. Last year same period, January 1- August 31, there were 3900 or almost 16 per day - about a 30% decrease in homes sold.

More homes on the market.  As of August 31, the MLS shows 7624 homes available - almost a 683 day supply of available homes that is almost 23 months required to sell all the available homes if no new homes are listed for sale.  That is almost 2 Years, repeat 2 Years of available homes on the market.

More home listings expiring.  From January 1, 2007 through August 31, 2007, 8917 listings home expired.  That is 3.3 listings expiring for every home that sells.  Less than One in three homes listed will actually sell.

Currently there are 7624 properties on the market and 448 properties pending (under contract).

Bottom Line?  The rest of 2007 into 2008 is going to be rough no brutal.  Sellers need now more than ever to have a professional Realtor® representing them that understands our changing market and who can show you the correct price for your home.  Right now price is the key issue in achieving a successful sale. If your property is priced right it will sell.

Please feel free to contact me with your questions.

© 2007 Dan Homan

. . . AND MOST AGENTS DON'T KNOW IT!  Worse yet they probably won't figure it out until their listings begin to expire with no showings.

My wife went into the office today and was greeted by some dramatic news:  Pulte Homes has cut the price of their Fore Ranch community by over 30% in one day! 

One of the agents in our office who does a lot of work in that community received an advance email from someone in the Pulte sales office of a possible 25% reduction, but today as the news was made official that it was closer to 30%.  tHIS WAS IN BOTH THEIR FAMILY AND 55+ COMMUNITIES.  This move places many existing home owners in that subdivision with conventional mortgages - even those who had put 20% down - upside down in their mortgages

This is going to devastate the entire Ocala resale market.  Spec homes that were reasonably priced are in one day 30% over priced and now don't have a snowball's chance of selling.  Other resale homes are now in the same boat over night they are drastically overpriced.  It may not be evident over night, but the ripple effect is going to be staggering if you don't lower the selling price of the chances of selling your Ocala home will drop exponentially every day. 

My wife and I have already called all our sellers and told them that if they need to sell they need to consider a series of step down price reductions over the next 6 weeks, before all the other agents in town catch on to what is happening and panic sets in.

Are we over reacting?  I think not!  Agents are still taking over priced listings watching them expire and scratching their heads wondering why.  Desperate times call for desperate measures.

Sadly, this means that when the dust settles in a few months and the trend has taken over our whole county that the only sellers that won't be upside down in their mortgages are the ones who put down more than 30% and bought more than 5 years ago. 

End of the world?  I think not.  I am just glad I don't hold the mortgages in this town.

© 2007 Dan Homan

About three years ago we moved from New York to Ocala.  My wife Sara stayed behind to finish the sale and closing on our home and I did the advance work in Florida, finding a broker to work for, getting my license and learning the market area.  What I am going to let you in on is how I found my way around Ocala, and learned the various subdivisions and neighborhoods in town.

My wife Sara had remained back in NY to close our house there (we had a home in Ocala under contract) and I had to get started.  After signing up for the pre-licensing class my job after finding a broker to work for was to learn the new territory.  What did I do? 

I called several real estate brokerages in town.  I knew I was not a serious buyer, nor was I qualified (one home under contract for sale, another under contract for purchase).  I worked strictly on a "don't ask don't tell" policy.  I did mention that I was a Realtor® in NY, but no one even asked me if I was licensed, or seeking a license in Florida. 

Amazingly enough, based on the information that I had a home in NY under contract, five agents loaded me in their cars and toured the town with me.  I was treated to coffee, soda pop, ice cream and lunch.  Even though I had a home under contract in Ocala, not one of the agents asked me if I was working with another agent!  No one asked if I was qualified for a mortgage.  Only one asked about the home I was selling.

Did I feel guilty?  Kind of. 

Would I do it again?  To be honest, yeah.

Buyers:  I know all the personal questions selling agents ask can be annoying, but, if you work with an agent who does not have the professionalism up front, please remember that the reason they are too busy to answer your call is that they are working with someone who is just wasting their time.

©2007 Dan Homan

In our office there is one agent who is particularly negative.  There is always something wrong.  Her glass isn't half empty; it has been bone dry for years even ask her.

There is another fellow who is the eternal optimist.  No matter how big the cloud he always sees the silver lining his glass isn't half full, he drinks from a pitcher.

This is a story of one of their choice accidental encounters.    The other morning Ms. Negativity came in to the office and we asked her how she was doing. 

"Terrible, the storm over the weekend had lightning, and it struck the ground between my house and my neighbor's and left a big hole in the ground.  I don't know what to do"

With out skipping a beat our positive friend said "you can always plant a tree."

I guess you had to be there to really appreciate this, but I hope it brightened your day.

Always look for the opportunities that present themselves to you and be prepared to take advantage of them when they come.

©2007 Dan Homan