Doc every time I do this I get a shooting pain down my back. The Doctor's answer is: "then, don't do that". Old joke but it has a lesson, I needed to take a closer look at. In many respects we realtors can get a shooting pain right in the lower back area very close to our wallet every time we trust an unknown participant in a transaction. So we do what the doctor orders "don't do that".

We can acquire tunnel vision just like a horse running the Kentucky Derby with blinders on, we don't want to look to the side for fear of distractions. 

I had a wonderful surprise enter a transaction a couple of weeks ago. One of my clients needed a lender and of course I sent her to a couple of lenders I trust. They have always kept me in the loop, and gave me all the pertinent information to conclude a successful closing. It seems her income-to-dept ratios were a bit off and we were in the middle of the sub-prime debacle so things in the lending fields were in flux. The two lenders just didn't have the right product for my client. So they came back with a negative report that sent us to "THE LENDING ZONE".  

W O-O-O-O   I just had a shivers go up my spine. Unbeknownst to me, she went on line and started looking for someone that would give her a simple "YES". That in itself can get a client and agent in a mess of trouble. I was quite skeptical when she came back with a lender from Lending Tree. They're something like a supermarket of lenders.

His name was Lee Brown, Branch Manager of Top Mortgage in Wichita, KS. I have a hard time working with folk I can't see or never met and you always get those phone tag conversations: he calls you, leaves a message, you call him, leave a message, you both call each other, and get a busy signal. You call and a machine says, "press 1 if you speak English", "press two if you don't", "press three if you don't care" or something like that. You all know the routine. They sound good on the phone; they tell you what you want to hear. But when it comes to results, Wham there goes that pain.

So I'm waiting for the other shoe to drop when he gives me a call. "Hey Russ, do you have an appraiser you trust in the area" ah, what was that, you want the name of an appraiser I trust?  So I'm like fumbling over myself to get him the name of a good fair appraiser.

That transaction went with out a hitch he said it, he did it, the HUD statement was in way ahead of time. None of that mad dash over a calculator at the closing table. On time-all the time I loved it.

We need stuff like this every now and then to shake us up, get us out of our routine.  I told him I was quite skeptical at first with the online lenders but he told me that Lending Tree has some pretty stringent requirements on the lenders that participate with them. With this experience I just might go out on a limb and take my wife to a new restaurant and maybe just maybe try something new on the menu. I said "just maybe" I don't want to get carried away.

In Your Service, Russ Prothero

 

Do You Want the House or Not?

That was the question a contractor told my buyers while we were under contract. These particular buyers were a dream the wife was expecting their first child and the husband was the owner of a successful boat dock company in our area. I had shown this building site to them but all that was visible was the foundation for the lower area, the home was a walkout. We went under contract and my buyers selected the siding, the type of rock highlights, the cabinets and upgraded the home in a couple of areas. Instead of carpet they wanted hardwood floors in the kitchen and dining areas. The lower area was to be left unfinished. Everything was going like a dream, at first. The home came out of the ground and things looked normal. The framing and trusses went up and the roof was being sheeted. We were in the dry when we notice the dining area was about 2 feet short. Matter of fact the entire upper level of the house was 2 feet short. What gave it away was the second floor was cantilevered over the first floor by 2 feet. So the upstairs was 2 feet and the lower area was 4 feet short. So not only were we short but the builder new it and didn't say a thing. That meant we had a builder that if left alone was going to sell what he built not what he promised.  We brought the shortage to the contractors attention and he said "well that's why we cantilevered the upstairs". I replied  but your still 2 feet short on the main level and 4 feet on the lower level. Well we negotiated to have the contractor build a large walk out deck on the second floor and concrete in the lower area to make a patio with footings so the buyers could frame in the second floor patio in the future. We were back on track or so we thought. It was one thing after another, they put on the wrong siding, the rock was the wrong color, the stairs to the down stairs had a gap of about 2" on each side and when they put the carpet down it just hung over the edges. In the living room the carpet laid over one of the heating and air conditioning duck openings. In our final walk through my clients wife just about fell down when she stumbled in the hole. One thing that really got my goat was in the plans the house had a large storage room off the garage and a small master walk-in closet. The buyers wanted to nix the storage room and make a larger walk-in. We negotiated a $100 fee for the added work. I came over about 2 days later and the framing and electrical hadn't been altered. I called the contractor and said what's up. He said he forgot to tell the framer and electrician and oh by the way the price is now $400 because the house is now dry walled. I'd like to point out now that my client's wife is looking like she needs a wheel barrel to help her hold this baby. No time to look for another house she is about 8 months alone and will need a nursery real quick. That is when the contractor said "Well do you want the house or not"? That is when I earned my commission. The art of negotiating has curtain rules. 1. Never corner a rat. They always bite when they think there is not avenue of escape. 2. Always let your adversary thinks the solution is theirs.  3. Remember who you represent at all times. 4. Never loose your cool. Some times the only difference in a debate and an argument is the civility of the conversation. 5. You have two ears and one mouth because you should listen twice as much as you speak. You adversary my just give you your solution. They feel real uncomfortable when they preserve themselves as the only speaker. At the end all went well. Was it a blemish free transaction? No. Were the buyers happy with their new home? Yes. Did I miss a couple of nights sleep? Yes.  Will I ever bring a buyer to this contractor and put a contract on his unfinished homes?  NO.  Why should you get a Realtor when buying a home, even a new home? Ah, read the story again.       

In Your Service, Russ Prothero

In this time of tighter credit requirement agents and Loan officers need to look for alternative lending options for you buyers. Some of those are Buyer's Dream, Niamiah, Chapa, or other 501 (C) (3) not for profit corporations. The 100% loan is still out there like FHA (Disaster Loans), Freddie Mac Home Possible but your buyers need higher credit scores to qualify. In the Gifting program the buyer & seller enter into an agreement where the seller gives a gift to a not for Profit charity corporation. The not for profit charity keeps a fee then gives the funds to the buyer for their down payment. If you need help in closing fees the seller can help in that area also. Different loan have different requirements so you need to talk to your lenders to get all the information & percentages. The great thing is the charity gets funds the buyer gets their down payment and the seller gets their home sold. It's a win, win, win situation. You will want the right appraiser also. Some of the appraisers look at the gift as an artificial inflation to the purchase price. I myself am against appraisers getting a copy of the contract. But in Missouri it's required. I don't see the relevance in the contract price and the appraised price. Some years back I was refinancing our home in Hawaii. I wanted to use my VA loan because Jimmy Carter had all but wrecked the economy and interest rates were going through the roof. So we called an appraiser in to do his job. When he arrived he asked me how much I was refinancing the house for. I was thinking what does that have to do with the price of turnips on the moon? I told him $100,000 his reply just about floored me. He said "I can do that". I can do that? I just gave this guy $250 to tell me something my 10 year old son could tell me. I can hear him now "Hay dad how much are you refinancing the house for" $100,000 "I can do that".  I asked well what was the house worth?  He said "$100,000" that was a quick $250 down the tubes. I was talking with an appraiser in our area that I Trust to give an honest appraisal. My question was if you as an appraisers are constantly look backwards to get your comps how do the homes in our area ever appreciate. I mean there has to be some mechanism that allows you the ability to show supply and demand. One of the first things you learn in any area of commerce. If you have a limited supply and an upward demand the price will elevate. If on the other hand you have a surplus of supply and a diminished demand the price will subside. He told me they didn't. The question is what does the contract price have to do with the appraised price? Absolutely nothing!

In Your Service, Russ Prothero

Who should I see for the financing of my new residence? See your agent first. I'd like to tell you a story that has been repeated too many times. A young couple goes to buy a new home. They sit down with a friend of a friend who just happens to be a loan officer. They think, "Well, Jenny said he or she was a great person and real funny."

So they sit down at the person's office and start the process. "I'll get you the best rate and don't worry about anything. This won't cost that much, and oh, by the way, here is your pre-approval letter."

I had a couple come into my office one time that wanted to buy a home. I asked "have you been in with a lender yet. Knowing how much you are qualified is paramount to a successful transaction. It doesn't do any good to look at homes you can't buy. So this couple said that they had been in with a loan officer. I asked could I ask who the lender was. They said it was XYZ lending. I said in a matter of fact way "well you have two questions to ask yourself "are you getting a new lender or a new agent". You see it doesn't do a lick of good to right a contract that won't close. The most horrifying event in an agents life is when the buys, sellers and agents are at the closing table and there is no money. The whole world just seems to stop. The worst thing is if the seller has now moved out of their home and the buyer has $2,500 in earnest money at risk. Who is going to pay for the damage? The buyer with their earnest money and what about the lender? In Hawaii we used to say "here today and gone to Maui" no where to be seen.  

Let's start with the contract: When you sign a contract to purchase a piece of real estate, you put down what is called ‘earnest money', which shows your good faith in the contract. This amount can vary from $500 to $10,000; the larger the sum, the more good faith. Remember, the seller is putting up their home as earnest. The larger the sum, the better the contract looks -- showing your viability as a buyer.

You have within the contract a prescribed amount of time to acquire a loan commitment. If your lender keeps telling you not to worry, "no problem, we are almost there", and your loan commitment date is coming up and gone, your earnest money is at risk.

Remember that pre-approval letter? It only says with the little information the lender has you look good for a certain amount. That piece of paper is only as good as the lender and the information you gave them. If your lender is a charlatan, your pre-approval letter isn't worth the paper it's written on. If you didn't give them accurate data, then it's "garbage in, garbage out'.

A HUD statement gives you a fair estimate of your loan cost and fees in the purchase from your lender. Many times you will be told all the costs are all closing costs. They are not closing cost; closing costs are actually escrow fees, title policy & search, & prorated taxes. 

Many of the fees you will pay will be just loan fees for the privileged of borrowing the lender's funds and insurance to make sure they get their money back. Lenders love to call them closing costs because it sounds like they are all the same no matter which lender you see. If you are dealing with a second-party lender that doesn't have their own funds, they will package your loan for a bank or another lending institution, and you guessed it, they also have fees. These are individuals that do the paperwork and have to answer to an underwriter. This is the person that calls all the shots (the money man).

How do you know the lender is who they say they are? Well, as my granddad used to say, the proof is in the pudding. A real estate agent doesn't get penny one until the property gets sold. So what is in their best interest? GET ‘ER DONE! If you want the names of a number of dependable lenders see you agent. Agents know which lenders with blow smoke in your ears and which one gets the job done. Your agent has a working relationship with a number of reputable lenders. All you have to do is ask. So we are back to square one:

SEE YOUR AGENT FIRST

 

So you want to buy a home? Well, I've been in real estate for most of my adult life, and there is very little I haven't seen or heard. There are a number of questions that should be popping into your mind about now. Like, what is the first step in acquiring a home? Or, who should I see for the financing of my new residence? How do I know the home I'm getting is worth what I'm paying? How do I know after the purchase something catastrophic won't happen to the inner working of my newly-purchased palace?

What is the first step in purchasing a new home?  My father-in-law was one of the brightest individuals I think I've ever met. When my wife and I were first married, he came to town wanting to find avenues of information that could help us in our times of need. When you're looking for answers, go to the people that have them. Sounds pretty simple but you would be surprised how many people miss the obvious. Our first stop was to an attorney's office. You go to an attorney to keep you out of trouble. That's a lot less expensive than getting you out of trouble. The second stop was to a real estate agent. He had learned there are people that have their fingers on the pulse of certain industries and those were the ones you seek out. Real estate agents that are ardent professionals see the working of the real estate market place in real time.

I was told a story about a fellow named Peter Kiewit. Some years ago he owned the world's largest construction company. Working in this atmosphere can be physically draining for even the healthiest individual. Mr. Kiewit was not what you would call the picture of health. As a matter of fact, he spent to some estimates about 3-6 months of the year in the hospital.

He found out that if he was going to make his mark on the world, he was going to have to surround himself with people he could trust and tap into their personal talents and experience. With this collective talent base, he was able to forge a commercial calluses.

It was Archimedes that said, "Give me a big enough lever, and I could move the world."  In your purchase of a home, your greatest leverage is a great Realtor and their insight in the real estate market place.

            When I first went into the Marine Corps at age 17 I was about 160 lbs. Soaking wet. It was hard keeping any weight on with all the running and the lack of time to eat. I think the first two weeks in I survived on split pea soup and milk. We would get into the chow hall and get every think you ever dreamed of eating. Stakes, chicken, mash potatoes, chocolate milk piled high on your tray. The problem was getting the time to eat it. Our drill instructor would have each table standing at attention waiting for his instructions to sit. Then he would give the command "ready seat". If we didn't sit exactly at the same time he would yell "get up, get up, get up. This would go on until he was satisfied with the sound of our butts hitting the bench. Then he would go down to the next table and so-on and so-on. When we were all seated he would command "Ready Eat". This process would sometimes take quite a bit of time and time was something that was not to be wasted or at least in the eyes of the DI. So guys would start to dig in sparks flying, teeth grinding, chow gulping and within a couple of second you would heard "Get Out". With all the running, crawling, jumping, push this and pull that it was hard to keep weight on. Things got a little easier as time went on. We only had to run three miles at 3 pm and do our pushups, setups, step-ups before we were allowed to go on liberty. Not bad.

            When I got married at 19 and was just out of the Corps I was about 185 lbs. No running, no all the stuff I use to do and let's say I'm a little over 185 lbs. My wife Debbie use to dance with the service men at the Service Man's YMCA in Honolulu. That's where we met. She told me when she first saw me walk in her sister said "he wouldn't be half bad looking if he would put a little meat on his bones. Well their wish was my command.

            I've said all this to bring to your attention an article I read yesterday. It seems soap is in a large degree the culprit for my indiscriminate weight gain. There is a chemical that is affecting the testosterone levels in men. Hallelujah! It's not all the French fries and whoppers I've been swallowing.  That's right men change you soap and watch the weight wash away. No running, no nasty weight lifting, this could be an answer to prayer. Now let me see I wonder if it's because they smell so girly. I think there is a plot here. You know they want us to be in touch with our feminine side. Some female chemist has come up with a way to hood wink the entire male population by us just taking a bath. "Brilliant". That's it I'm done. I don't care if the dogs won't lick me and they try to bury me while I'm asleep.  I haven't smelled any soap lately like the stuff grandma use to make. That stuff would take the hide off of a rhino. So repeat after me "I swear not to cave in to the female persuasive allurements and never take a bath again". So help me God.  

In Your Service, Russ Prothero 

Hi Folks, 

        Well the stock market seems to be going into the pot. Up and down every time Greenspan clears his throat we feel ripples in the market. Everything from stocks, real estate, Mortgage industry. There is a mass excites in the lower regions of the loan market. I had a lender call the other day and told me there were 12 mortgage companies that went out of business that week. Some of this is market corrections and others are self fulfilling prophesies. Market corrections are a part of a healthy economy. Corrections in any market brings a cense of reality to the market place. What will a person pay for a product at any given time. Those speculative buyers (and we all are to some degree) are reeled in by market adjustments. Some loans have all but vanished and many are on the way out. The 100%, the 80%-20% may be harder to come by as well as Stated income loans. The 80%-20% and the 100% loans are instruments where the buyer brings nothing to the table. Even the closing cost many time are rapped into the purchase.  Greenspan brought up this problem last year. In our hopes to bring more people into the housing market we deleted one of the prerequisites, invested capitol. We thought if a buyer was paying a certain amount in rent it would be ok to sell them a home with those payments. The walk away rate in these lower end mortgages is at an alarming rate.

        I took a trip to Boston a couple of weeks ago. That economy is in transition. With the Big Dig over there are thousands of construction workers looking for work. The days on market in the housing industry is rising and home prices are adjusting. The west coast has been slowing for quite some time. We in the Midwest have had our problems also. In the Michigan and other northern state plant closing lost 30,000 jobs. The trickle down on those numbers touches everybody. Much of Wisconsin's economy is in servicing secondary products to major industries like the auto makers and they are slowing. If the big boys in the economy don't pull in their horns the adjustments will take their course and we will be onward and upward. But if folks grab their wallets with both hands and squeeze till George bleeds we could be in for a ride.

          When we moved to the Ozarks 6 years ago I use to sit on the porch of my then neighbor Moon Cook. Moon wasn't his real name but he liked to chew the cork if you know what I mean. So folks just seem to call him Moon. He talked about the old days in the Ozarks when everyone was looking for anything to keep their families fed. A couple one time found that in the White River there were fresh water clams and the shells made beautiful button for high end cloths. By the way they tasted pretty go to. It wasn't long before every body that was any body was making buttons. Before long the clams were gone and the folks in the Ozarks had to move on to the next bigger and better thing. Which happened to be tomatoes. Everyone planted tomatoes till the market was so overwhelmed you couldn't give them away. I tell you that because there is nothing new under the sun. Weather it's buttons or tomatoes your product is at the mercy of a ever changing economy. What will your button bring tomorrow depends on the consumers ability to buy at a given perception of value. That value has also been put on a larger stage than our forefathers. In the Ozarks today we are a bit sheltered in that we have something just about everyone wants. Low taxes, affordable housing, government under control, good fishing, great entertainment, delightful neighbors.  I'm just sorry that Moon passed away, he was a delight to talk to and brought common sense reality to complex world.  

In Your Servce, Russ Prothero

Hi Folks,
A couple of years ago I had to go to the doctor's office thinking I was going for a routine check-up because Debbie my wife was concerned about me. Well, little did I know that Debbie had told him I hadn't had my prostate checked. I knew then I had been set up. So, with a snap of the latex gloves and a high-o-silver or as he put it, "put your elbows on the table"... I thought he was kidding at first, but then I knew he was serious when he looked at me with a real stern look as if to say, "we can do this the easy way or the hard way". To be truthful, I think he was more concerned with my tonsils than my prostate. I didn't know I still had such a vocal range. The last time I sang soprano was in seventh grade. No "I love you", no nothing; I felt cheap. Hey, if you guys out there haven't had yours checked, you should. It can be a life saver, and a great way to meet new friends.

In Your Service, Russ Prothero