Whether it's from hard work, luck or your Great Aunt Edna - you have gotten a listing.  Congratulations!

Please do some basic things.  Fill out all the fields completely in MLS.  Upload as many pictures as you can of the house.  Do a nice fact sheet on the house.  Return calls from agents and the public. Do feedback on all showings and share that with your clients.  Update your clients weekly on new listings in the area, price changes on competing listings, and on pended listings.  If your listing is not selling after a few weeks, seek price reductions and ask your clients to make changes suggested from feedback.

None of what I suggested will cost you a dime but might just help you sell that listing and make a commission check.

In the hurry to get things done quickly, buyers' agents often will have clients fill out blank disclaimers and blank lead based paint disclosures for the listing agent to have the sellers sign.   For agents who do this:  DON'T!!

The law in most states (my guess is all states) is that sellers have to provide buyers signed disclaimers/disclosures.  HUD requires the seller/landlord provide a buyer/tenant a completed lead base paint disclosure and if there are know lead hazards, any records or inspection reports. 

If buyers do not get the disclosure/disclaimer at contract time they have a 3 day review/recession period on the contract.  If they don't' get it at all, they can walk from the contract anytime prior to closing.  Why would a buyer's agent want to cut short any recession period that a buyer may have?  By completing a disclaimer/disclosure in reverse order, the agents are actually creating a loop hole for anyone to get out of a contract.

As far as the lead based paint disclosures go, always follow HUD's rules and regulations.  HUD has severe penalties for mishandling the lead base paint disclosure form.  If you have a spare $10,000 go ahead and see what happens by incorrectly following HUD's rules on the disclosure of lead based paint.  On second thought, $10,000 might not be near enough. 

Also, buyers can't make disclosure for the sellers. 

Low on cash?

Have very few prospects?

Feeling really low?

Don't let fear paralyze your business.  I'm going to give you a simple, inexpensive marketing plan.  It's going to mean that you actually have to get out and work - so be prepared.

Step 1:  Choose a 100-home farm area.  Make sure the price range is between $125,000-200,000. Find an area with the highest rated schools.  Run a CMA and get familiar with home sales over the past three to four years. 

Step 2: Create a one-page flyer.  You can use the templates for newsletters in Microsoft Word.  On one section you will list sales in the area over the past 12 months.  List the address, the sales price, the square footage, bedrooms/baths, and sale date. Even if you get that information from MLS it is also available in the tax records and should not put you in violation of your MLS rules and regulations.   For other content write a biography about yourself and put in some information about the market. If you need other content, find a blog on ActiveRain that looks interesting.  You could search my past blogs on CLUE reports.  You have my permission to use it.

Step 3:  Get clear plastic door hanger bags.  You should be able to find these at your Realtor Association Store.  If you can't find them there go to www.doorbags.com.  Deliver your flyers to the neighborhood along with your business card.  This might take you a couple hours but it's good exercise, and if your business is slow what else do you have on your schedule?

Step 4: You are going to create another flyer.  This one has tips on getting your home ready to sell.  Again use Microsoft Word and find a template that works for you.  Microsoft Word is a great tool and fairly inexpensive.  Make sure all your flyers/newsletters have your picture, contact information, biography, company logo, fair housing symbol, and the following disclaimer at the bottom: "if your home is currently listed for sale with another real estate firm, this is not intended as a solicitation."  If there is a Realtor sign in the front yard just keep on walking.  This flyer will go out two weeks after your first flyer..

Step 5: Prepare a for sale by owner packet.  This packet will have your biography, tips on selling a home, information on your company, and your specific plan for selling homes.  Take time and list out everything you do to list and sell a home.  You'd be surprised how much you really do.  You are going to keep this packet handy so that when a fsbo pops up in your neighborhood, you have it ready to hand deliver to their door step.  Never call a fsbo - go there directly.  Your are going to use this flyer on expired listings as well so watch your MLS "hot sheet."

Step 6:  You guessed it - another flyer.  The point here is that if you don't have money to order postcards, or create professional marketing pieces, anything is better than nothing.  The third flyer can be on what controls the long term interest rates.  You have my permission to use my earlier blog on this topic.

This plan might seem boring and dull, but if you work your farm every two to three weeks with a newsletter of interesting topics, you'll soon become a household name in your farm area.  All it takes is one listing to get you going in your farm.  From there you can slowly add households.

I've had agents follow this plan with great success and then stop once they had an income.  My questions always is why stop something that works.  The typical response is that "it's boring" delivering flyers.  Funny, but I never get bored cashing commission checks. Do you?

Here is a helpful matrix I give my agents regarding marketing.  This shows the per piece price of marketing materials and how much it actually costs to market based on increasing sizes of market areas. 

Money is tight for new agents (all agents) so using marketing money wisely is very important. I suggest agents buy all their marketing material up front and have a plan to send out a marketing piece every two to three weeks.  They probably want to buy enough materials for ten mailings/distributions. 

This plan allocated .26 cents for direct mail.  We have a direct mail center in house and can offer our agents low cost bulk mail.  If they have to use first class postage the cost goes up.  Agents can save money by distributing items door to door or in the bottom newspaper box.  Never put anything in a mail box unless you want to get a very nasty call from the Postmaster.

Our suppliers are:

• Post Cards - www.richmondpostcards.com
• note pads - www.notepadsnationwide.com
• magnets - www.magnetstreet.com 

(This matrix first shows the per piece cost of marketing materials and then the cost of the combined mailing for various market sizes)

If you are an agent in the Central Virginia Region mark your calendar for November 13th from 7-9 p.m.  We will be hosting a "carreer night" for agents who want to know more about  RE/MAX Action.  The event will be held at 11551 Nuckols Road, Suite D., Glen Allen, VA 23059.  RSVP to Gary Duda @ 804-521-5601 or email at garyduda@remax.net. 

If you plan on making direct mail a part of your Real Estate marketing plan  -  start small.

Realtors new to direct mail often take on too large a market area only to find they lack the funds and time to keep up with their program.  The end result is that after a couple mailings the agent does not see results and gives up.  The only guarantee with direct mail is that if you don't do it - it won't work!

If you want to use direct mail a better plan would be to start with a small neighborhood of maybe no more than 250 homes.  For best results, plan on marketing to your farm every 10-14 days for a period of no less than six months.

Reducing the marketing size and increasing the frequency will greatly increase the effectiveness of your campaign.  At the same time, you should be working any "for sale by owner" or "expired" listings in that market.  If you have the time and desire, mixing in door-to-door canvassing will further increase your chances for success.  You are trying to become the best known Real Estate name in your market and if you follow this plan you will be.

When beginning your campaign find a neighborhood that might be easy to break into.  Your target market might include lesser priced homes that are not as targeted by experienced agents.  The goal is to create an income stream so work smart.

Choose the items that you are going to send out.  Post cards, notepads, refrigerator magnets, newsletters are among the items that work best.  Don't be afraid to send out the same post card several times.  You are trying to create name id for yourself.  Homeowners won't care that they received the same card from you several times.  In fact if they even notice, you are winning the battle.

Determine how you are going to deliver your marketing pieces.  Don't mail everything.  Using clear plastic door hanging bags is effective and less expensive.  If your Broker does not offer in-house direct mail services using an outside direct mail house might be too expensive so try to use post cards that are small enough to use a post card stamps rather than a first class stamp.

Create a budget for all of your pieces and make sure that you can afford to stay committed to your program for six months.  Price out all the marketing materials you will use, including the postage or labor for delivery.  Go ahead and order all of your materials in advance.  Ordering some items in bulk might be more cost effective.  By having everything in hand from the beginning, you are more assured of staying on schedule rather than having to order things as you need them.

The longer you stay with a marketing program the better your chances for success.  By focusing your resources on a smaller market you greatly increase the chances of getting that listing call.  Once you have that first sign in the yard you are well on your way to being the neighborhood expert.

 If you are getting ready to sell, here is an easy check list of what to do. 

Make Repairs:

If there is wood rot, broken windows, damaged shingles or other visible damage, then have it repaired.  It's a lot easier to sell a home that is mechanically and physically in shape.  Fixing items before a home inspection also allows the items to be repaired more economically because the seller can make repairs without having to abide by sometime unreasonable repair recommendations.  Buyers also hate to see repair items because they fear the home has not been care for by the sellers.

Cosmetic Items are cheap:

To quote a local handyman:  "A little caulk and paint makes something it ain't." Caulking and painting are some of the least expensive things a seller can do that will have the biggest impact.  It's best to have an experienced person do the work because nothing looks worse than a bad paint job and sloppy caulking.

When you touch up paint, don't use the paints in the garage if they are more than a year old or have been exposed to extreme temperatures.  Take a small sample of the sheet rock skin and go to the local paint store.  If you match the paint carefully you may be able to touch up rather than repaint entire walls.  An experienced person can usually "feather" the new paint so that it softly blends into the old paint.

Curb Appeal:

You never get a second chance to make a first impression:

• Make sure the yard is neatly cut and trimmed, bushes trimmed and beds freshly mulched.
• If the trim needs painted - paint it.
• Remove all screens from front windows - screens gray the windows (clean windows reflect the blue sky and make a house look amazing)
• Wash windows
• Does the house need power washed?  That included gutters - a bright white gutter really makes the house look fresh.
• Make sure your blinds are all evenly opened
• If you have wood steps paint risers white
• Remove bikes, skates, hoses, and other items from the front of the house

Clutter:

If anybody ever thought that selling a house was fun they might need to have their head examined.  While your house is on the market it needs to be in "showing shape."  By this we mean to remove all clutter and to have things neatly put away.

• Reduce the volume of clothes in closets.  Box up seasonal items, throw away old unused hangers, organize clothes and get everything off the floor.
• Don't have rooms "over furnished."  If there is too much furniture a room will look smaller.  Rent a storage unit, use the garage, drop stuff off at the in-laws, but reduce the volume of furniture in the house.
• Make the Kitchen shine by cleaning off countertops, the tops of cabinets, the refrigerator (except your Realtor's magnet) and organize the inside of your cabinets.
• Organize garages, basements and attics to make storage areas look at large as possible.

Cleanliness:

• Have the house professionally cleaned if possible.  Focus on areas that are normally missed on week to week cleanings.
• Clean all baseboards (especially before painting)
• Clean tubs and toilets both inside and out
• Clean all mirrors
• Clean all windows both inside and out
• Clean all vinyl and tile floors
• Vacuum all carpets (have them professional cleaned if needed)
• Clean out fireplace
• Remove any cob webs

Last minute check list:

The house has been cleaned, painted, and clutter reduced.  It's now time for one last look before showings begin.  Here is one last check list of items.

• Are there working lights in all fixtures? Are they the correct wattage?
• Does every room have a light that can be on during showings?
• Are all walkways in the house free of furniture?
• Are there any odors from pets, cooking or smoking (have a unbiased friend or neighbor give you their opinion)
• Are blinds open, heavy curtains tied back to allow light into the room?
• Are the beds made, laundry put away, dishes in the dishwasher and teenagers exiled to the grandparents?
• Is the yard picked up and in order

If everything is done as I've mentioned then at least you have given the home a great chance at selling for the most amount of money in the least amount of time.  As you look at other homes you will notice that most people don't follow this advice, which hopefully is why a buyer will want your home instead of another.

Once the contract is written, the job of a good Realtor has really just begun.  So has the job of a host of people including lenders, attorneys, title companies, insurance agents, home warranty companies and so on. 

The beginning:  Writing the contract.

Once the contract is written, the closing process is underway.  (This document is geared toward the Richmond Virginia Market and there are minor to major differences in other areas of the state and country.)  The contract must be sent to the following parties:

• Lenders
• Attorneys/Settlement Agents
• Both Real Estate Firms
• Buyers and Sellers

The closing process happens on several different levels before it all comes together at the end.

Lender Role:

The lender process starts before the writing of the contract with the purchaser beginning their approval process.

Once the lender gets the actual contract, the buyer usually has a set number of days to start the formal loan application process if that has already not begun.

At application time, the lender will have the purchaser fill out a formal application called a Form 1003 which is a HUD Document.  That document is the formal application to apply for a loan.

The lender will also produce the "good faith estimate" of cost relating to the purchase. It's important to note that the good faith estimate is made up of charges from several sources - many of which are out of the control of the lender.  This good faith estimate should closely match the final HUD1 Settlement Statement if done correctly.

The lender will be estimating not only his costs, but the attorney fees and charges, title insurance charges, local and state taxes among other things.  Many lenders cut short these charges giving the consumer a false idea of their actual cost of purchasing a home.

The lender's obligation is to prepare the most accurate assumption of cost possible.  If a lender does not accurately forecast property taxes, state and local taxes or any other expenses, the buyer could owe thousands more than they anticipate.

The lender will collect all appropriate documents, all supporting documentation, and collect an application fee for appraisal and credit report.  Once the documents are complete/collected, the lender will give the borrower a list of any other documents that are still needed before loan approval can be granted.

Appraisal

Next the appraisal is ordered.  This can be delayed by the whole house inspection because once the appraisal is done, the appraisal fee is not refundable.

Next the loan put into automatic underwriting.  If the loan is not a government backed loan, underwriting happens by review of an underwriter.  Once automatic approval or just plain old approval is given, guidelines for approval are matched with documents collected.

Once all completed docs match the approval conditions and application is done, the loan is submitted to underwriting for validation of the documents.  Once the validation is compete, the loan is forwarded to the closing deptartment and all parties concerned - such as the attorney - to set up closing.

The purchaser's settlement agent/attorney

In Virginia, as in many states, an attorney or a settlement service can conduct a closing.  However, in Virginia only an attorney can prepare a deed which is the major role of the seller's closing agent.  It is the buyer's settlement agent that does the vast majority of the work, including the title search, preparation of the HUD 1 Settlement Statement and the actual buyer closing.

Once the settlement agent for the buyer receives the contract, a whole host of events are set into motion including the ordering of:

• The survey
• Title Search
• Mortgage payoffs (sometimes done by sellers' attorney)
• Taxes
• Oil/Gas/HOA prorated fees

Title Insurance:

One of the first things to be ordered by the closing agent for the buyer is the title insurance.  This might be delayed if the closing is projected to be very far out.  Once the tile insurance is ordered, the actual title company will order their title search.  The title search is a search of County/City records that seeks to establish a clear line of ownership without defects.  A defect to a title search could include an unrecorded deed of trust, an unpaid lien or any type of cloud over ownership of the property.

In order for the title company to issue a title insurance policy over the property, all clouds to title must be cleared.

Survey:

A survey gives every homeowner a clear border line to know exactly what they do or do not own. If your property line is crossed, then an encroachment has transpired, and a Real Estate Lawyer will be needed to resolve disputed claims.  It is common not to have a survey done in many areas if the buyer is obtaining "enhanced" title insurance which covers defects to surveys.  Just because it is common doesn't make it a good idea.

Mortgage Payoffs:

The sellers' attorney or the purchaser's attorney/settlement agent may order the payoffs for the loans/liens against the property.  The HUD1 will show these pay off amounts.

County/City Taxes

The buyer's settlement agent is responsible to make sure all taxes are current on the property.  They also will collect 3-4 months of taxes in advance to that go into the lender's escrow fund.

Propane/Oil/Home Owner Association prorated fees

The settlement agent is also responsible for collecting information on prorated fees for oil, propane, homeowner's association dues among other items.

Realtor for the Buyer

During the process the Realtors are responsible for the following events:

• Ordering Home Warranty (depending on who is purchasing it)
• Conducting Home Inspections and forwarding addendum
• Updating all parties for any changes in contract, including changes in closing dates
• Forwarding all addendum to attorney/lender

Realtor for the Seller

• Ordering Home Warranty (depending on who is purchasing it)
• Ordering Termite Inspections
• Ordering Well and Septic Inspections
• Collecting Repair receipts
• Forwarding all addendum to attorney/lenders
• Ordering HOA documents

Insurance Agent

The Purchaser needs to choose the company that will provide their homeowners insurance.  The settlement agent must have information from the homeowners' insurance company before the final settlement statement can be completed.

At closing the settlement agent typically will collect 15 months of homeowners' insurance premiums that will go toward the lender's escrow.

As closing day approaches, the attorney, lender and Realtors will collect documents needed per the contract and conditional loan approval.

Prior to closing the lender will send closing instructions to the purchaser's closing attorney/settlement agent.  Those instructions will include information on fees to include on the HUD1 settlement statement.

The closing agent will send the final settlement statement to the lender for final approval.  Once the lender approves the HUD1 Statement, the closing attorney has the green light for closing.  It is only at this point that the lender can prepare the final closing packet and forward it to the settlement agent.

Preparation of the HUD Statement:

The settlement statement is a two page document that shows all cost relating to the seller and buyers' sides of the transaction.  This form is uniform and fees have designated places to appear.

It is important to note that before a final HUD statement can be prepared and delivered to the lender for review, all fees must be shown.  If the buyer has delayed obtaining their homeowners' insurance or a payoff cannot be obtained, the final HUD statement cannot be provided.  This is why so many buyers do not get their final numbers until last minute.

Also note that the HUD statement does not have a place for repair or decorating credits.  A seller can only pay closing cost, buyer prepaid items and points/origination fees. 

Closing Day:

Final Walk thru:

It is important that the Realtor and his or her purchasers conduct a final walk through of the home.  They should be looking to make sure all home inspection items are done properly.  If there were major items they might want to bring their inspector back much sooner.  You also are looking for any new items that might have occurred. 

Don't skip this step because once you close you lose most of your leverage with a seller to correct deficiencies.

The Closing Table

Seller Closing - In the Richmond area buyers and sellers have their own separate closings.  The seller will typically conduct their closing several days in advance.  Their closing consists of signing the deed and some other papers for the IRS.   In other areas all parties come together at the end.

Buyer Closing -

Hopefully the buyer has had a day to review the HUD statement but often the final HUD is not approved until a few hours before closing.  With the final figures in hand, the settlement agent can instruct the buyer how much money is needed to close.  That number is typically a few dollars higher or lower than projected by the good faith estimate.  It is almost impossible for the lender to be 100% accurate in regard to the final closing numbers. 

The closing agent will instruct the buyer to bring certified funds to closing.  At closing it is very normal for the buyer to have to write a personal check for small differences or to get a small check back at closing.

The settlement agent will take the buyer through numerous documents including:

• Loan application
• Mortgage
• Deed
• Survey
• HUD statement
• Termite Inspection
• Well & Septic Inspection

Once all the documents are signed, the buyer receives their keys.  However, they legally don't own the home yet.

After closing the settlement attorney/agent must make one last check with the county/ciy to make sure there are no new liens against the property.  They will record the old mortgage as satisfied and file paperwork regarding the new mortgage.

Once the settlement agent received the green light for the runner, then funds are dispersed.  At this point the old mortgage is paid off and all other funds held in escrow by the closing agent are released.

Post Closing

Once the closing has occurred, the settlement agent will file information so that the tile insurance policy is issued.  

Several weeks after closing the new home owner will receive their title policy in the mail.

In a free-market economy such as ours, the willingness to make money spurs on many things, including the housing and mortgage market.

Much of our recent real estate explosion was fueled by lenders lowering the bar on what it took to get a loan.  The reason they lowered the bar was there were investors willing to buy those loans in the secondary mortgage market.

In the mortgage-money cycle of life, loans are made, they are sold in the secondary-market, and then loans with similar characteristics are packaged into mortgage-backed securities.  These mortgage-backed securities typically are safe investments for pension funds and life insurance companies.

Over the past few years we saw other investors willing to buy mortgage-backed securities comprised of riskier loans.  The bar kept on getting lower and lower to get a loan because investors saw a profit.  Sure there was risk, but when there is a high enough return, investors will be there.

Investors finally saw too much risk and they are now turning away from the riskier mortgage-backed securities.  This is happening daily which is why the qualifying guidelines are changing so quickly.  If a loan cannot be sold in the secondary market, it won't be made at all.  I doubt many lenders would portfolio a 550 credit score loan at 100% loan-to-value.

Many mortgage companies are closing shop.  Sure a lot of fraud happened, but for the most part these companies built their business on making loans that no longer exist.  It's not the first time this has happened and it won't be the last.  Anybody remember Dan Marino and the Money Store?

It's become common for the public to watch the actions of the Federal Reserve, thinking that their raising and lower of interest rates will have some affect on home mortgage rates. 

The truth is that what the Fed does has very little impact on interest rates for most home mortgages.  To understand what drives long-term mortgage interest rates you must understand where the money for home mortgages originates.

Home mortgage money comes primarily from investors.   Once a mortgage is made to a homeowner it is sold on the "secondary" market and packaged with other mortgages becoming a "mortgage-backed security."  This security is sold to investors who are looking for a predictable return on their money.

It is very common for pension funds and life insurance companies to invest in mortgage-backed securities.  These securities have a credit rating based on the characteristics of the loans of which they are comprised.  For instance, a security that is made up of high credit score, low loan-to-value loans would carry a very high rating for investors.  

Mortgage-backed securities compete for investors dollars with the United States Treasury 10-year security or the 10 year T-Bill. 

If the interest rate (yield rate) for the 10-year T-Bill rises, investors tend to move their money into that investment and away from MBS.  If there is less money being pumped back into the mortgage market that tends to drive up interest rates.  If the T-bill rate falls more investors turn to mortgage backed securities, pumping more money into the primary mortgage market and lowering long term interest rates.

When the Fed adjusts rates they are affecting the overnight rate they charge to their member banks.  Changes in the short-term interest rate has an impact on interest rates for credit cards, automobile and boat loans, and home equity lines of credit.  It can affect adjustable rate mortgages but does little to change the 30-year interest rate.

The recent "credit crunch" was caused mostly because investors stopped investing in the higher risk mortgage-backed securities.  The bottom bar for investors' risk is rising every day which is why certain types of loans are increasingly become unavailable.   

Keep in mind that there are two types of secondary lending markets, the private market and the government backed market.  The government-backed market consists of Fannie Mae Freddie Mac.

Fannie Mae and Freddie Mac are shareholder-owned that have a federal charter and operate in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. 

While the private secondary market has tightened its credit requirements, the government backed side has actually loosened their requirements to help ease the crunch.

If you are working with a marginal buyer make sure your are working with a lender who can broker all types of loans.