We're all in this together

Welcome to the Triple-X...uh, Short Sale Department

Eric Martell (RE/MAX Properties SW, Inc.) — Thu, 17 Dec 2009 10:46:01 -0600

I've been working on one particular short-sale since June. I've filed the same documents via fax several times and been through all kinds of really crazy phone antics, but the call I just had wins the prize!

As this sale has progressed, I've spoken to bank employees on the East coast, the West coast and all points in between. I've been given top secret phone numbers which didn't work. Phone codes which sometimes did, and been transferred all over the place. Nevertheless, I've been making progress. Now the bank has changed the loan number and adopted an online system which seems to be helping with the work-flow.

I've completed all of my assigned tasks in the online system, which mostly consisted of uploading documents I'd faxed in months before. This morning I called in to check the status of the sale. I reached a very helpful woman in the bank's short-sale department who stated that there were a couple of tasks she had to finish on her side. She did these and then stated that there was one final task which she couldn't do. She told me that there was a special department which was responsible for uploading the borrower's pay-stubs and she then transferred me to that department.

After a brief pause, I was connected to...A PHONE SEX line!!! The recording told me some things I wasn't prepared to hear which almost caused me to choke on my coffee. Then it informed me that I'd be charged $7.95 for the first minute and $3.99 per additional minute. By then I figured out that I wasn't talking to the short-sale department any longer, so I hung up. I know the banks are trying to make up for loosing money on bad mortgages, but this is a service I didn't know they offered.

I called the short-sale department again and was disconnected when they tried to transfer me. Then, on the next call, I was connected to a woman who routed me to the foreclosure department after assuring me that they could help. The foreclosure department told me I had to call the short-sale department. I called them and was disconnected again.

At this point, I'm wondering if maybe the phone sex line wasn't a better option after all. Too bad I wasn't actually given the number.

CDPE - Is this course worthwhile?

Eric Martell (RE/MAX Properties SW, Inc.) — Fri, 24 Jul 2009 09:03:47 -0500

I just finished taking the CDPE course and passing the test (of course-LOL). I'd heard from many agents that this was the single best course they'd ever taken, so I was prepared for a great experience. I've also encountered a number of other agents who expressed doubts that the designation was worthwhile.

Here's what I think:

1. If you've been doing short-sales for awhile, you will probably have picked up on quite a bit of what the course is about. If you're new to short-sales, this course provides some really valuable information.

2. If you're new to real estate, the course gives you a concentrated dose of material which may otherwise take you months or years to encounter. If you've been in the business for as long as we have, you're going to find that you already know much of what is covered.

3. The negative is that this is a two day course and, even though it's presented at high speed, it can seem to drag on through sections covering information which you already have mastered in your practice. But, I guess that can be said of any course.

4. The really useful aspects of the course (in my opinion) have to do with the distressed home-owner orientation that you must maintain, how to list short-sale properties successfully, organization of short-sale packages in a professional form that the lenders will take seriously, and a number of general organizational tips and strategies which we intend to incorporate into all of our business.

My final opinion?

I'm glad I took the course. It was worthwhile to me based on just a few of the tips I received. On the other hand, I have taken a few courses that had more impact on my earning power during my career in real estate. Perhaps one of the best things we ever did was to take a series of courses from Bob Proctor (featured in The Secret). Those made a real difference in our earning power. The funny thing is, after we'd taken the courses from Bob, we went to a free presentation he was making and I spoke to a couple of agents who got nothing out of what he was saying. The old saying, "..when the student is ready, the teacher will appear," is really true. In the case of the CDPE course, I give it a "thumbs up." I now know that I'm ready to assist distressed homeowners with more tools than I had before.

Mortgage Mods - Watch out for possible unintended consequences

Eric Martell (RE/MAX Properties SW, Inc.) — Fri, 17 Jul 2009 17:53:51 -0500

Bloomberg recently published a report that the government's Home Affordable Modification Program may result in an unexpected drop in credit scores. The article cited one consumer whose credit score dropped 59 points. That's not as bad as the results of a foreclosure, but it's still bad and it may surprise some home owners.

The Home Affordable Modification Program began in March to reduce payments for owners who are either deliquent or near default.

A representative of FICO stated that a loan renegotiated for less than the full amount is a negative because past experience shows that people on reduced payment plans are a larger risk. People with high credit scores will probably suffer more from this action. The consumer cited states that his credit card limit was dropped from $15,000 to $500 as a result of the decrease in his score.

Lenders want to know that potential borrowers had to have loans modified in order to keep current according to a Bankrate.com representative. They view it as fair since the borrower wasn't able to abide by his original agreement.

Those seeking a loan modification need to know if the modification is through the government program or their bank's internal program and how it will be reported on their credit rating.

The energy bill may hurt real estate ownership.

Eric Martell (RE/MAX Properties SW, Inc.) — Tue, 30 Jun 2009 09:25:40 -0500

Among other provisions that control nearly every aspect of our lives, the Waxman-Markley energy bill has a requirement that forces the entire United States to use a National Building Code similar the green building standards of California. Regardless of whether your house is in Miami, Florida or Bangor, Maine, you'll have to adhere to the standards used in a state that has one of the most moderate climates in the U.S.

The bill, according to my preliminary information, will require sellers to have an energy inspection prior to being able to sell their home. Windows, appliances and insulation will have to be inspected and approved by a government inspector and it's possible that modifications would have to be made for compliance before you can close the sale. This could cost a prohibitive amount in many cases. For example, let's say that you own an older house which you bought in 2003 for $250,000 and you now need to sell. Not only has the value fallen to or below the level of the mortgage due the the drop in prices, but you are now possibly faced with re-insulating the entire house, installing new windows, and changing the HVAC & other appliances. The total cost for this type of renovation might easily come to well over 10% of the house's value.

It begins to look as if defaulting on the mortgage might become even more common. The real tradegy is that low income families are more likely to live in older houses which won't meet the new standards and which will require major upgrades. There will probably be a provision for government assistance for those who are unable to foot the bill of any required renovations. This is just another way of telling the people who are paying their bills and trying to play by the rules that they must pay for their houses and for other people's as well.

One preliminary part of the bill has been rumored to mandate that all energy efficiency evaluations of one particular type must be performed by one single company, regardless of where in the U.S. the house is located. Wow! I'd sure like to own that company. I wonder who does?

To further compound the irony, the EPA has now released a new study which states that the average temperature of the Earth is in decline. It seems that this data has been available for some time, but is only now being released. Hmmm!

Woops! Since I wrote this, the EPA has suppressed the study again. I guess it was an inconvenient time.

Let me review the science behind this legislative effort: Oxygen and Nitrogen combined make up 99% of the earth's atmosphere. Carbon Dioxide is found at a concentration of only 339 atoms per million atoms of atmospheric gas. It's been estimated that man's contribution to this 339 atoms is only about 3%. Of course there is a great divergence of opinion about this. The interesting thing is that plants absolutely must have CO2 in order to survive, so, if we actually were successful in lowering the CO2 percentage in the air, we'd probably be faced with lower crop yields. The other thing that bothers me is that the earth has been cooling for the past 10 years or so. Add to this the documented fact that many of the surface temperature measuring stations have been placed near air-conditioning compressors or in the middle of asphalt roofs or parking lots. The data from these have been claimed to show the earth's temperature rising. Finally, the disaster predictions made by those who are afraid of man-made global warming are all based on computer models which use parameters which have not been shown to be 100% accurate. Then, there's Mars...global warming is showing up there too. I wonder if it's due to the Mars Rovers we've sent up there and not due to increased solar radiation as the sun moves through its natural cycles.

The idea of trading carbon credits is an idea which large banks and corporations seem to like. It will be a market that they can use to get rich, while the consumers who will be faced with doubled electric bills will bear the cost. It's similar to the medieval practice of Papal indulgences. A wealthy sinner could pay the Pope for an indulgence which forgave him his sin. Of course, the person he sinned against was still damaged, but the sinner wouldn't have to feel guilty. If companies purchase carbon credits and then release carbon dioxide, the organization selling the credits benefits, but the earth still gets the carbon dioxide. Hmmm.

Of course, this bill has to pass the Senate and then go to the reconciliation committee before it goes to the President to be signed into law. The White House is deviously trying to push off the Senate's consideration of the bill until sometime in September after they have voted on the horrendous, healthcare-rationing bill (if you're over 65, I've read that you'll be forced to attend classes on how to shorten your life should you get sick). By then, I expect that they think that the average citizen will have forgotten all about what Cap and Trade is going to do. The only good thing about this delay is that there's time to let your Senators know what you think about this massive bill which will make all aspects of our lives far more expensive and destroy American industry and competitiveness.

Hey Congress, Thanks for Nothing!

Eric Martell (RE/MAX Properties SW, Inc.) — Sat, 27 Jun 2009 10:36:14 -0500

The price of housing was just increased by Congress

Last night, while millions of Americans slept and dreamed about Michael Jackson's death, the House of (non) Representatives passed the Cap and Trade bill.

The most egregious part of the bill is that fully 85% of the tax revenues raised by it are already earmarked to go to large donors who give money to the congress-critters who voted for it. This is nothing more than corruption in my playbook.

The EPA admits that this unread piece of legislation will have a bad effect on the environment, so what is it supposed to do?

Well, the official story is that it will save us from "Global Warming." The science involved doesn't agree, the CBO doesn't agree, the EPA doesn't agree, so what is it going to do?

It will massively increase the cost of living by increasing energy costs. The increase in energy costs will make your electric bill, your gas bill, your water bill, and the costs of everything you purchase go up, since energy is involved in everything we need for life. This will lower your lifestyle by forcing you to use far less energy and consume less. It will damage our economic system far more than the financial crisis has already.

The true producers of the United States will all be faced with higher costs. Many of them will be forced out of business resulting in job losses, thus continuing the foreclosure spiral. Many of the producers will out-source jobs or move completely out of the country. Of course this won't happen overnight, but it will happen. The U.S. will become far less competitive on a global basis. We're going to increase the debt load on our children once again.

What does this mean for real estate? The cost of energy will go up, the cost of harvesting lumber will go up, the cost of trucking materials will go up, the cost of steel will go up, the cost of just about everything that goes into a house will go up. Houses will need higher insulation standards and that includes more expensive windows. This will ultimately make the cost of building much higher.

Sure, it's a good idea to use less energy and people should have that option. Oh, wait a minute, they have always had that option without having it forced on them by the government. For the most part, it just wasn't cost-effective and it won't be cost-effective now that we're going to be forced to do it.

What about older houses? Surely the government will give a tax credit to upgrade those? Maybe, maybe not, but if they do, all that happens with a tax credit is that everyone that pays taxes is forced to pay for upgrades to other peoples houses. Doesn't seem fair to me. I pay my own expenses and I don't expect anyone else to cover them.

All told, if this bill becomes law, the cost of housing, including renting, will go up. So, you say, if it hits everyone equally, what's the problem? The problem is that the majority of people living in the U.S. (notice I didn't say citizens) are now net tax consumers. That means they receive more money back from the government than they pay in. The minority, the ones who carry the weight of paying for everyone, is not going to sit around and just pay up forever.

It's been said that a democracy is a group of 20 wolves and two sheep debating what to have for dinner. We've allowed our representative republic (not the same as a democracy) to deteriorate to that point. It can't last. Eventually you run out of sheep.

Showing with Children

Eric Martell (RE/MAX Properties SW, Inc.) — Sat, 27 Jun 2009 08:59:58 -0500

Ever had a showing where the buyers brought their children along? Of course you did and I'll bet that some of the showings were a disaster and some were funny.

Our favorite story was when my wife was showing 5 houses to a young couple with a small girl. The husband was a structural engineer and was very meticulous about opening every door and every cabinet drawer in each house (whether he liked the house or not).

The couple's daughter dutifully followed her parents from room to room and watched the door and drawer opening activity carefully.

My wife thought the little girl was too young to talk, since she was holding a pacifier in her mouth the whole time and didn't say a word.

In the last house, the toddler's patience finally ran out. She walked up behind her dad, pulled the pacifier out of her mouth, put her hands on her hips, stamped her foot for attention and asked with a great deal of irritation in her voice, "What are we looking for anyway?"

She obviously felt that if she only knew what to look for, she'd find it for them and then they could go on to something more interesting.

Open season on listings.

Eric Martell (RE/MAX Properties SW, Inc.) — Mon, 15 Jun 2009 08:19:54 -0500

Our board switched over to electronic lock boxes quite some time ago. There are two types of keys. One is a small keypad which the agent carries separately and the other is composed of software for certain models of cellphones. Both versions use an infrared to beam the unlocking codes to the lock boxes. The cellphone version even offers the ability to leave feedback for the listing agent.

Each key must be updated daily for it to open lock boxes. When the key is updated, it connects to the system's central computer system and uploads the identification of the lock boxes it opened. If the listing agent logs onto the system website and links the lock box id to the listing MLS number, the system will tell the listing agent who showed the property on a daily basis.

This system works very well and allows the listing agent to keep track of activity on their listings. It even makes it possible to email a showing report directly to the seller. An additional benefit is that the seller feels far more secure, since the people entering the property are known.

When we made the transition to this type of lock box, our board kindly accepted our old lock boxes in trade so that the cost was minimized. Periodically someone in our office will move out of the area or retire and they usually sell their lock boxes at somewhat of a discount, so the boxes are often available for a reasonable price.

There have always been agents who, for one reason or another, decide to use manual combination boxes. This may be because the combination boxes are about 1/3 the price of the electronic box. It may be because the combo boxes are readily available in most hardware stores. Now, it seems as if the number of combo boxes in use has increased until every other listing has one.

I realize that foreclosures and vacant short sales don't have sellers who are terribly concerned with security, but think of the liability these agents are taking on. They aren't really restricting access to only real estate agents. In fact, I know of some agents who list these types of properties and give the access code to buyers with instructions to look at the house on their own. Granted these agents are busy, but...

Years ago, we knew an agent who had a vacant listing which needed some repair. He placed a combo box on it (this was before electronic lock boxes). The handyman was hired by the out-of-state seller and did his job with no problem. The house was under contract and scheduled to close within a couple of weeks. The buyer's agent requested access and the listing agent gave him the lock box code. You can imagine his surprise when he stopped by about a week prior to closing and found the buyers had moved in the day before and were living there. He arranged for a pre-occupancy agreement very quickly and the buyer closed on schedule, so it worked out OK, but it might not have. Note: I've seen many problems arise with pre-occupancy, so I can't recommend it, but that's another topic. Incidentally, the buyers in this case thought they were within their rights since they fully intended to close!

Part of our job is to ensure that the properties we've listed aren't placed at risk by our showing practices. We take on a certain amount of liability when we allow a buyer unescorted access to a property. Maybe your seller doesn't care if you do this, but if the property gets vandalized by someone who had access through your combo box, I'll bet the seller will look to you for compensation. In my opinion, we're not properly representing our seller's best interest unless we use the best tools available.

Thinking about buying a home?

Eric Martell (RE/MAX Properties SW, Inc.) — Thu, 04 Jun 2009 09:59:33 -0500

Steps to buying a home

by Sally & Eric Martell

Orlando Information

Step 1 - Decide that you're ready to Buy

If you're not going to live in a location for 3 or more years, it usually doesn't make any sense to buy. You're better off renting. On the other hand, if you're going to be there for more than 3 years, you usually come out far ahead. Next you need to be sure that you can afford a house that will meet your requirements. Remember, your mortgage payment should not be more than 1/3 of your monthly income.

It's a good idea to consult with a mortgage broker or banker before you get started. They will tell you exactly what you can afford to purchase. This keeps you from wasting your time looking at houses that are too expensive.

Before you start your search for a home, decide what features are most important to you. How many bedrooms and baths do you need? Do you need a home office? Is being on a conservation, corner lot, or pond important? Do you prefer a 3-car garage? Maybe you prefer wood or tile floors over carpet or a split bedroom plan where the Master is away from the secondary bedrooms.

These are things to think about before starting your search. If you tell us exactly what you're looking for ahead of time, we can search for the perfect home for you.

Step 2 - Seek Professional Guidance - get a Realtor

While it's possible to find your home, make an offer, sign a contract, get financing, handle the inspections, deal with the problems, and close the purchase all by yourself, most people find it far easier to use a professional's expertise. It's been said, "If you think it's expensive hiring an expert, try hiring an amateur." This holds doubly true in home buying, because you, as a buyer, will almost never have to pay the real estate agent's fee. The seller pays for the agent's fee.

Since it doesn't cost you anything to have the assistance of a professional and it will greatly reduce your risk, you should interview several agents and pick one who has the right experience to assist you. Just like any group of people, some agents are more experienced than others.

Step 3 - Begin Looking for the Best Home for You

Most people start looking for a house on the internet. If you're reading this report, you're probably one of them. This is ok, but it can be extremely confusing. Web sites don't always tell the whole story. It's really important to have an agent who has local knowledge and experience. It's possible to locate a house on a web site owned by a real estate company that doesn't do business in the town where the house sits.

We can also make it easier for you to screen the available houses in the area you want. It's easy for us to set up a computer report that will automatically email houses that match your requirements to you. Our past buyers have found that this is very helpful. They no longer have to screen through hundreds of houses on poorly organized websites and their knowledge of their target market area is greatly enhanced.

Step 4 - Know the Local Market

Our knowledge of the local market is very helpful in your search. We make every effort to ensure that you know as much about the homes for sale in your target market area as possible. This helps you to understand what constitutes value and what doesn't. We'll provide all of the recent sales history for the neighborhood in which you're interested and this helps you negotiate more effectively.

Step 5 - Find the Home of Your Dreams

When we find exactly the right house for you, we'll put together an offer custom-tailored for your needs. The offer will include appropriate contingencies on important things such as obtaining financing, favorable home inspection, clear title, and so on. We've helped over 1000 families purchase and we know where the pitfalls lie. We're happy to assist you in avoiding them.

The contract offer is normally accompanied with a cash deposit called "earnest or good faith money." Our title company usually holds this deposit in an escrow account until you close on the sale. Then the amount is applied to your closing costs. If the seller signs the offer, you will then have a contract for sale and purchase. Closings in our area are usually held within 30 days from the effective contract date. This is mainly dependent on the time it takes your lender to approve your mortgage.

Step 6 - Negotiating

As your buyer's agent, we will provide you with a list of comparable properties to help determine the best price and terms to offer for the property.

We will jointly consider items in the house that you want to convey with the sale. For example, refrigerator, range, window treatments, ornate chandeliers and light fixtures, and outdoor sheds, and spas.

We usually make offers contingent on a satisfactory home inspection. It would be in your best interest to hire a professional home inspector to evaluate the home and advise you of any defects or potential negative aspects of the home.

Examples of additional contingencies are: inspections, financing, the sale of a house, satisfactory appraisal, reviewing the covenants and deed restrictions of the community or condo docs, etc.

Determine the date you would like to close. Keep in mind that the nearer the closing date is to the end of the month, the less interest you will have to pay at the time of closing. This can sometimes greatly reduce the amount of your closing costs.

A standard sale and purchase contract allows you to specify how long the seller may take to respond to your offer. Unless the contract is signed by the seller and delivered to the buyer by the date and time you specify, the offer will expire and your escrow deposit can then be refunded. This prevents the seller from keeping you in suspense while waiting for a better offer.

In most cases, you will be expected to provide a deposit or earnest money payment with the offer. An earnest money deposit could range from $500 to several thousand dollars. You should always get a signed receipt. We'll make sure that you will get the money back if the sale is not completed because of problems with the seller or because of contingencies that we place in the contract. If you decide to back out of the contract at the last minute, you may have to forfeit your deposit to the seller.

Once you have completed the contract, it is presented to the seller. If the seller accepts everything and signs the contract, the offer becomes binding for both the buyer and seller (subject to the contingencies). If the seller wishes to negotiate, a counteroffer may be made. You then receive the revised contract and can either sign it, if acceptable, or reject it and make a second offer. We sometimes find that negotiations go through several rounds of offer and counter-offer. Don't let this discourage you. We've done this many, many times and we will discuss the counter offer and help you decide whether to accept it, submit a counter to their counter offer, or reject the seller's counter offer and move on to another house. You can depend on us to provide you with advice based on our experience in hundreds of contract negotiations.

Market conditions will play a role in how we negotiate the contract. We're familiar with all of the winning strategies for all market conditions and you'll find that we will provide you with our best guidance and advice. However, the actual steps we take will be your decision. We give you the benefit of our advice and then we follow your informed instructions.

Step 7 - Inspections and Appraisal

The standard sale and purchase contract allows ten days from the effective date for the home inspection to be completed. This time frame may be changed depending upon the buyer and seller.

You should employ the services of a Professional Licensed Home Inspector to identify any hidden or possible future problems with the home. The cost of a home inspection normally runs around $300-$400 for a typical home (homes with larger square footage, pools, spas, etc. may cost more) and this has to be paid to the inspector at the time of service.

A home inspection for a conventional loan is optional to the buyer but inspections may be mandatory for FHA and VA loans and may follow guidelines set by the local government. We recommend that you have a home inspection, since it could save you thousands of dollars and help to avoid problems in the future.

A detailed home inspection usually takes two to three hours or longer, depending on the home's age and square footage. We recommend that you be present at your home inspection so that you can ask your inspector any questions and to look at any areas needing maintenance or repair.

The inspector's job is to give an in-depth and impartial evaluation of the home's systems as they appear at the time of the inspection. The inspector should also be fully trained in the proper operation of all commonly found home systems. You can expect the inspector to evaluate the physical condition including the structure, construction and mechanical systems, identify items that should be repaired or replaced, and estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.

Items commonly inspected during a home inspection are foundations, floors and walls, siding, paint, windows, decks, garage doors, roofing coverings, flashings, chimneys, piping, plumbing fixtures, faucets, water heating and fuel storage systems, electrical wiring, main service panels, conductors, switches, receptacles, heating equipment, safety controls, distribution systems, chimneys, air conditioning and heat pumps, cooling and air-handling equipment, controls and ducts, interior walls, ceilings, floors, railings, doors and windows, insulation and ventilation, attics, walls, floors, foundations, kitchen and bathrooms, pools and pool equipment, and many other items.

Once completed, the inspector should provide you with a detailed home inspection report. You can expect to receive this report with two days.

The Termite Inspection is a separate inspection. This is another expense to the buyer usually costing anywhere from $50 to $250. This is usually included in your final closing costs and paid at the time of closing.

If you are financing a home, the lender will usually require a termite inspection. This assures the lender that the home is free of termites and other wood destroying insects.

If a home is infested with wood destroying organisms, it could compromise the integrity of the structure. The pest inspector will look for infestation by wood-boring insects such as termites and carpenter ants, as well as evidence of dry rot and other fungal conditions.

If the pest report mentions damage from an active or previous infestation, the lender may ask the buyer to hire someone to verify the structural integrity of the home.

An Appraisal is an un-biased estimate of the value of a property. The purpose of the appraisal is to determine the market value of the home. This ensures that you are not purchasing the home for more than it is actually worth. The outcome of the appraisal determines the maximum amount a lender will loan to purchase that particular property. The buyer pays for the appraisal up front but the lender must order the appraisal.

An appraiser arrives at a final opinion of value by evaluating the property and the neighborhood in which it is located. The appraiser also obtains land values from county sources and recent sales information about nearby properties. They prepare a written report outlining methods by which the fair-market value was estimated. Usually, the buyer's lender will receive the final report within 3-5 days.

Step 8 - Financing

Unless you are paying cash for your purchase, you will have to arrange for a mortgage loan. We cannot do this for you, but we can assist by providing you with contacts with lenders and then by working closely with the lender you select.

Before your search for that perfect home begins, you must determine how much you can afford. There are several factors that determine how much home you can afford.

Your income is a major factor in determining how much you can afford. For conventional loans, the lender typically allows 28% of your monthly income for your complete mortgage payment including principle, interest, taxes and insurance (PITI).

The better your credit score, the better the interest rate you can get. Lower interest rates allow you to buy more home for the same monthly payment.

A larger down payment may help you buy a larger home. You may qualify for a home loan with a lower down payment if your credit is good.

Monthly expenses such as your car payment, minimum credit card payments, student loans, personal loans, child support payments and any other monthly obligations will reduce the loan amount for which you qualify.

By going to the county tax appraiser's website, you can estimate what your taxes would be for a particular home you may be interested in purchasing.

Due to recent hurricanes in the past few years, homeowners insurance in certain areas has skyrocketed. Since homeowners insurance is part of the escrow payment on your loan, you must factor this into your total monthly mortgage payment.

Your new home may be located in a community with a mandatory homeowner's association and you may be required to pay monthly association dues. This fee will become part of your carrying cost for your new home.

Shopping around for a home loan will help you get the best terms. A loan is a product and terms for the loan may be negotiable. While shopping for a loan, you should always compare the costs involved.

There are different types of lending institutions: commercial banks, mortgage companies, and credit unions. A buyer has the option of dealing directly with the above type lenders or with a mortgage broker who will check with many different lending institutions to find the best loan for you.

Here are some things to keep in mind while shopping:

Is the interest rate fixed or adjustable?
Are there any points involved? These are fees paid to the lender or the broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.
Ask what additional fees are involved. Some examples include: Loan origination fees, underwriting fees, broker fees, application fee, and appraisal fee. There may be others depending on the lending institution or mortgage brokerage.
Compare what the required down payment is per individual lender.
A lender may require you to pay Private Mortgage Insurance (PMI). Not all lenders require this so be sure to ask. PMI protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans where the down payment is less than 20% of the sales price or when the amount financed is greater than 80% of the appraised value.
How long does the loan last - 15, 20, 30 or more years? When comparing programs offered by the different lending institutions, pay close attention to the term of the loan and make sure you are comparing the same terms.
Does the loan have a pre-payment penalty? If so, how much is it and how long does the penalty period last?

Once you are satisfied with the loan terms, you may want to obtain a written lock-in from the mortgage broker of lender. The lock-in should include that rate, the period the lock-in lasts, and the number of points to be paid. By locking in you are protected from any rate increases while you are looking for a home, while you are negotiating and while the loan is being processed and you are waiting to close.

Step 9 - Insurance

The main purpose of homeowners insurance is to provide financial protection against disasters to your home and other structures like a shed or detached garage. Homeowners insurance covers both damage to your property and your legal responsibility for any injuries and property damage to others while on your property. When purchasing a home, the lender always requires the buyer to obtain and show proof of homeowners insurance before finalizing the loan.

The homeowner's insurance policy usually includes four different types of coverage:

1. Structure of the home: Pays to repair or rebuild your home if damaged or destroyed by fire, lightening, wind storm, hail, explosions, vandalism, vehicles, smoke and other disasters listed in the policy. Basic homeowner insurance policies do not cover against flood, earthquake, and sinkhole damage. One may consider adding these endorsements to their policy. Although, if the home you decide to purchase is located in a flood zone, the lender will require you to add flood insurance to your policy.

2. Personal Belongings: Electronics, furniture, clothes, jewelry, and any other personal items are covered if they are stolen or destroyed by insured disasters.

3. Liability: Covers you against lawsuits for bodily injury or property damage to others while on your property.

4. Additional Living Expenses: Pays the additional cost of living away from the home if repairs or replacement is needed. It typically covers hotel bills, restaurant expenses, and other living expenses while the home is being repaired or rebuilt.

The insurance companies use one of two ways for determining reimbursement to a homeowner for their losses.

1. Replacement Cost: Cost of replacing damaged property with no deduction for depreciation.

2. Actual Cash Value: Cost of replacing damaged property minus depreciation.

Keep in mind, before a homeowner is reimbursed for any claim they must first pay their deductible. If your deductable amount is more than the damage you're claiming, you will not receive any assistance from your insurance company and will have to pay the full amount yourself. The higher the deductable you are willing to pay, the lower insurance policy is going to cost.

Step 10 - Closing and Move In!

Before heading to the closing table, you'll want to do a final walk through the property you'll be purchasing. The final walk through is to confirm that the property is in the same condition as when you previously viewed it, all items are in working order, and all necessary repairs have been completed.

To keep the mystery out of the actual closing process, here is an explanation of what will happen and what you'll need on closing day.

Closing is when the real estate deed is transferred from the seller to the buyer. It's also when the buyer signs all mortgage documents, makes the remaining down payment, and settles all closing costs. Any form of payment to the title company on the day of closing must be by certified funds. Cash or personal checks are not usually accepted.

It takes about an hour for you to read and sign all necessary documents. The closing is held at a title company usually selected by the seller.

You will need a valid form of photo identification such as a driver's license. You'll also need any and all funds needed to close in the form of a certified check.

You and your agent, the seller and their agent, a representative of the title company, and sometimes a representative of the lender will all attend closing.

You will carefully review and sign all mortgage paperwork and title documents, give a certified check to the title company representative for your down payment and your share of the closing costs.

You will receive a Good Faith Estimate of closing costs from your selected lender at the time the loan application is submitted. This estimate is based on the loan officer's past experience and may not include all the closing costs. We will review your Good Faith Estimate and answer your questions about it.

We will go over the closing statement HUD-1 form provided by the closing agency for accuracy and to make sure you are not being charged too much. We will make sure you bring your down payment to the closing and we will be present while you sign all of the required documents.

Once the documents are signed, you've turned over your down payment to the title company officer, and been handed the keys, you own your new home!

We don't disappear at that point. Instead, we're available to you as a resource for as long as you need us. We often find that our buyers call us with questions years after their closing. Of course, if you need to sell your house in the future, we're pleased to consult with you about your requirements.

We can provide you with a wealth of community information that will ease your transition into your new neighborhood. We can tell you about places to purchase decorator items, home repair items, lawn care items and also about service providers such as carpet cleaners, handy men, lawn companies, pool services and so on.

It's our goal to have you be so satisfied with our service that you don't hesitate to recommend us to other people you may know or meet who need to buy or sell real estate!

Suicide in a Vacant Listing

Eric Martell (RE/MAX Properties SW, Inc.) — Thu, 28 May 2009 11:35:31 -0500

I've thought about telling this story for some time now. It brings up painful memories for me and I'm sure that some of you, at least, will find parts of it unbelievable, particularly if you still believe in a Newtonian Universe where cause and effect are obviously related and nothing strange can happen. However, I assure you that everything I say here is true.

When we'd been in real estate for a few years, we had a young friend who had just become an agent. After a rocky first year, he started doing very well. He was outgoing and his clients liked him. It seemed as if he was always positive and upbeat about everything. He farmed some of the local neighborhoods and was getting to the point where he dominated the listings in his farm area.

At the end of that year, he found that he'd qualified for the RE/MAX 100% Award. RE/MAX bases it's awards on the dollar value of commissions brought in by the agent and the 100% award is given to those who bring in at least $100,000. Our friend used some of his money to buy a smaller Mercedes and enjoy himself. He was in his twenties and had never earned that much before. I don't think that he'd ever even thought about earning that much.

The next year, things were harder in the real estate market. Our market had hit a point where it was relatively stagnant and not much was moving. Our friend had developed a spending pattern which didn't allow for much saving. Still, he was doing pretty well until he suddenly figured out that his tax bill was going to be about $40,000. Needless to say, he didn't have that much saved and the additional pressure was enough to throw his production off.

Then IRS began to hound him. As they cranked up the pressure, he started to become more and more desperate. Still, he was usually upbeat and pleasant to be around. We even tried to help him by holding a multiple open house in three of his listings for a couple of weekends. My wife talked him into going door to door in his farm area and she went with him to make sure that he followed through. Every time he knocked, he was greeted with enthusiasm. He was really quite popular in his neighborhoods.

Now comes the painful part. I didn't see it coming and that makes me feel pretty rotten, but he gave no indication that he was considering suicide. In retrospect, he did say a couple of things that might have been interpreted as indicative, but the statements weren't enough to raise our suspicions until he turned up missing one Thursday.

His brother alerted our Broker to the fact that he was missing and had an appointment he was supposed to keep. My wife actually went to speak to the prospective seller in an effort to get the listing for him. On the way back from the appointment, she had a strong urge to look at a small, 2 bedroom vacant house he had listed which was in the neighborhood. She ignored the impulse since she had another appointment.

The weekend passed and he still hadn't shown up by Monday. His brother and parents were getting very worried, since they'd discovered that he'd left his back-up store of cash under his mattress. They figured that he hadn't gone too far without that money.

Tuesday morning before dawn, my wife sat up in bed, shaking, and told me she knew where he was. She was very upset and stated that she'd seen him in a dream. She'd had a message appear to her that he was dead and felt as if she'd had a strong electric shock. I tried to calm her down and, after a bit, she proceeded to describe what she'd seen.

She'd seen the ceiling light in the garage of our friend's two-bedroom listing. The light was on and was reflecting off of the top of his car, which was parked in the garage. There were cigarette butts all over the floor, the driver's door of the car was open, and our friend was on the floor behind the car. To make this vision even stranger, she'd seen it from a perspective as if she were hovering about 12 feet off of the ground.

She insisted on checking on the house as soon as it got to be light. It was mid-August and hot. The instant we parked and I got out of the car I knew that she was correct. The odor was terrible. I checked the door to the house and it was locked and the key case was missing from the lockbox. Then I peeked through the side garage window and there was his car with the ceiling light on just as she'd seen. I couldn't see behind the car.

We called the police and our broker and everyone showed up at about the same time. I've got to give the police credit. It's a little stressful telling a detective that your wife saw a body in a dream, but they seemed to think that our story wasn't too unusual.

The police concluded that it was obviously a suicide due to the large amount of cigarettes that he'd smoked prior to turning on the car and other indicators they saw.

The house was substantially damaged and required a lot of cleaning to alleviate the odor. The owner ended up suing our broker and it cost quite a bit to settle.

What I learned was that there is more to life than what we normally see. As a result, I began to study spiritual issues and have continued studying ever since. Her description of her dream coincides with numerous accounts of out-of-body travel. This is a relatively common experience since almost all humans move their energy center out of their body when asleep. What's less common is to have an extremely clear vision while out-of-body and to remember it. You can choose to believe this or not. If you want to know more, I can suggest a number of good references.

The practical take-home lesson here is that real estate can be extremely stressful. It's even more stressful given our current market. If you are having difficulty coping with the stress, seek help. Solving your problem this way is a lot easier on your friends and family.

Some gave all...

Eric Martell (RE/MAX Properties SW, Inc.) — Mon, 25 May 2009 08:00:07 -0500

Do you agree with the following paragraph?

It's obvious that all humans are basically the same in some elementary ways. Just as an animal will struggle to stay alive and free, humans want and have the natural right to protect their life and liberty. All humans desire happiness and will seek it just as surely as an animal will seek food. Since individual strength only goes so far, it is natural for humans to band together to provide protection for all members of a group when faced with threats that are beyond the power of an individual to combat. In order to be most effective, the group must gain the consent of each of the individual members. Even groups that work well together may sometimes cause minor problems for their members, but as long as the group is still working reasonably well in meeting its goals, the members are most likely going to endure these minor infractions. Whenever any group begins to consistently exploit or destroy the liberty or life of its members, it is the right and duty of the members to either dissolve or restructure the association so that the individuals' original goals may be achieved more effectively.

I don't know about you, but the above sounds pretty fair to me. It mostly says that, while associating in a group can be useful, individuals don't have to participate in a group which abuses them.

Perhaps you'd prefer the following version. Its language is a little dated and far more eloquent, but still very understandable.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. - That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, - That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

Would you have the courage to sign such a document and send it to your current rulers? Would you be willing to give up your life fighting for the country founded by this writing? Many of our fellow citizens did exactly that. They died so that we could have the benefits of Life, Liberty and the pursuit of Happiness. Take a moment today to pause in rememberance of their honor and devotion to duty.

It's a sad thought that today's society has a large number of individuals who think the second statement is irrelevant and that the possessions, time, and even the very bodies of the group members belong to the rulers of the group. Surrendering your Liberty makes the sacrifices made by the people we're supposed to remember today seem sort of meaningless, doesn't it?