ComeBuyAHouse.com

Here’s a way to hold title to your primary residence as a married couple.
It has more protections than holding property as joint tenants.

This isn’t a suggestion or recommendation.  Check with your lawyer, accountant, etc.

Tenants By The Entireties

Lynette

Larry and I took an interesting class today with attorney Greg Ursich covering legal issues from purchase and sale to closing.  It covered title insurance, types of deeds, essential elements of a purchase and sale agreement, and avoiding misrepresentation. 

The new thing that I learned about title insurance that more people will come up against is this:  if you place a property into a trust, an LLC, or any other ownership entity AFTER the purchase, the title insurance coverage ends.  You can provide for continued coverage by contacting your title insurance company and obtaining a rider to transfer the title to the new entity.

It was interesting to get the information about each kind of title insurance–there are three–without the marketing bent of a title insurance rep.  Greg’s a lawyer who is often hired by title companies to handle legal issues that arise in this arena, so he sees not as a salesman, but as a practicing litigator, handling claims and problems. 

Title insurance is backward looking–not forward looking like most insurance–though there are some new provisions for identity theft and future encroachment.  Title is primarily research of the marketability of the title using recorded documents for the research.  I can get lots more detailed, but for a blog, I’ll keep this brief.  Title insurance tends to be rather dry till there’s a problem.  Any time you have a question, I’d be happy to talk it over with you, and either explain it myself, or get you in contact with one of our title partners.

Regarding deeds, there are three basic ones.  Warranty deed, the most common.  Bargain and sale, usually for lender owned foreclosures or estate sales.  Quit claim deed, with no warranties or covenants attached to it.  Add a spouse, or remove a spouse from ownership on a property using a quit claim deed, and it would be good to check with your title insurer to make sure you are still covered.

Regarding the purchase and sale contract, real estate agents have a license for a limited practice of real estate law. Limited because we are licensed to fill out standardized forms that have been painstakingly created by lawyers.  We are allowed to fill in the blanks, and create simple addenda with simple instructions like extending closing dates or instructions following inspections.  Custom instructions or agreements beyond the agents expertise should be created by a lawyer.  A real estate agent that writes anything into a purchase and sale agreement will be held to the same standard as a lawyer. 

Disclose disclose disclose is the mantra for a real estate agent, and incidentally for the seller of real estate.  I’ve been told by one of the area’s top lawyers that a seller need not disclose an issue in their home that has been fixed.  But Greg advises that it’s better to tell the buyer everything–the problem, the repair, the whole history.  More comfort for the buyer, more protection for the seller. 

All in all, a great class, lots of info, even better super agents.

Big topic of talk in our office and probably across the country. I’m sure more people in Seattle per thousand were thinking about this one– I just found out today that one in eight people in Seattle are real estate agents. -Lynette

NAR Responds to 60 Minutes’ May 13, 2007 Segment
CBS News Magazine Show Misses the Mark May 14, 2007

In the world of political campaigns, it’s a standard ploy to set the stage with an empty chair when one candidate refuses to debate his opponents. The CBS show 60 Minutes gave the NATIONAL ASSOCIATION OF REALTORS® the empty chair treatment in a May 13 segment that examined the impact of online brokerages on the real estate industry. The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin, but no one from NAR, even though NAR twice offered and prepared Association spokespersons for interviews with Leslie Stahl. It was CBS that made the decision it would rather interview our opponents and let them make unanswered — and inaccurate and unfair — accusations about REALTORS® and NAR policies. The one-sided journalism and egregious errors served no one well, especially the once-vaunted news magazine show.

NAR staff spent nearly a year working with CBS, briefing producers on the issues involved. The producers attended the REALTORS® Conference in New Orleans and met with NAR’s legal counsel for half a day in Chicago. Yet, still the segment was full of major errors. NAR is in communication with 60 Minutes about its unbalanced reporting and presentation of misinformation and will be sending the CBS network a letter demanding an opportunity to correct these errors and misrepresentations.

Here are some examples of the misinformation:

Error: The six percent commission is “sacrosanct.”
Fact: All commissions are negotiable. The average commission rate is not 6 percent, but 5.1 percent, according to Real Trends.

Error: NAR is the industry’s “governing body.”
Fact: NAR is a trade association. It does not govern the industry.

Error: In 2003, NAR issued new rules of its own that threatened to block Internet discounters’ access to the MLS.
Fact: The Virtual Office Website policy did not block access to MLSs for discounters or any other brokers who are members of the MLS.

Error: The MLS is the database that lists virtually every home for sale in the country.
Fact: There is no single national MLS. Rather, there are more than 900 local and regional multiple listing services. These are not simply “databases” but private exchange of offers of cooperation and compensation between real estate brokers.

Error: Eight states have “minimum service laws” that require REALTORS® to provide a level of service many Internet discounters can’t afford.
Fact: “REALTOR®” is a trademarked term and should never be used synonymously with “real estate agent.” The intent of minimum service laws is to ensure consumers receive a minimal level of service from licensees.

Error: The brokerage industry has a powerful lobby. Eleven states flatly prohibit rebates.
Fact: The intent of anti-rebate laws is to prevent kickbacks in real estate transactions, not to limit brokers’ incentives to attract customers. The brokerage industry does not lobby for anti-rebate laws.

Other key points 60 Minutes misrepresented or overlooked: NAR supports all business models and favors none. Our 1.3 million members include REALTORS® who work on a full-service basis, as well as those who consider themselves to be limited service, fee-for-service, minimum service, and discounters. We think it’s great that consumers have a choice today.

The real estate industry has harnessed technology for the benefit of consumers and will continue to do so. Real estate is both high-tech and high-touch, so can be enhanced by both electronic and personal interaction.

There is no such thing as a “standard commission.” Commissions are negotiable and prices vary. The fact is that commission rates have decreased 16 percent from 1991 to 2004 (source: Real Trends).

The real estate business is unique in that competitors must also cooperate with each other to ensure a successful transaction, and MLS systems facilitate that cooperation. The first MLS was created more than 100 years ago as way for brokers to share their listing agreements with each another in hopes of procuring buyers for their properties more quickly and efficiently than they could on their own.

The MLS is a tool to help listing brokers find cooperative buyer brokers to help sell their clients’ homes. Without the collaborative incentive of the existing MLS, brokers would create their own separate systems, fragmenting rather than consolidating property information.

I think agents need to prepare sellers for a longer time on the market when they list their homes. I’m seeing so many more houses on the market for a longer period of time than was usual, even last year at this time.

Both buyers and sellers in the Seattle area are used to sales that happen quickly when a house is listed, and that does still happen when a house is priced well, looks great and suits a lot of buyers. But now we are seeing perfectly good houses stay on the market 60, 90, 120 days, especially when they are over the median price range. It’s time for buyers to stop judging houses by how long they’ve been on the market–stop asking what’s wrong with this house–and just go see it. There is very likely nothing wrong. And it’s time for sellers to be a bit more patient with the process–we’ve had it easy for a long time now.
There is not automatically something wrong with your agent if your house doesn’t sell in 30 days like it would have a year ago. That being said, there are ways to increase the probability of selling your house in 30 days–price it right and market it like crazy in the first couple of weeks. Staged, good looking homes sell quicker. Get all the way ready before listing. Make the most of the first two weeks. And then be patient because the purchase requires a buyer, and they are just now coming out to buy in greater numbers.

Today I spoke with the young lady at our optometrist’s office about the real estate market.  She asked how the market is, and then wanted to know if prices are going down.  I’m sorry, but the answer is no.  I haven’t really seen a bursting bubble. Prices will increase over time in the Seattle area at a rate of at least 7% a year.  That means that homes will be twice as valuable (or more), and yes, twice as expensive (or more) in ten years.  So that begs the question, when should you buy?  You should buy as soon as you are ready.

Think about this, though:  if all you are looking at is home prices, you are looking at only part of the picture, unless you have cash for the whole purchase price.  The other part of the picture is the rate/terms of your loan, or how much your money costs. 

See, you qualify for a payment amount when you are applying for a loan.  When the interest rate is higher, more of your payment goes to pay your interest, less to cover the house price, so you get less house.  The inverse occurs when the rates are lower.  We like lower.  So when you are ready to buy, the thing to watch is interest rates.  You also want a loan officer that will quote a reasonable rate (not the teaser that can’t possibly be honored) and keep you informed about rates until you are ready to lock it in, once you are under contract. 

Our friend mentioned that she might want to get a place with more bedrooms than she needed in order to rent to roommates.  I told her that there are loans that will use the rental amounts as income to help qualify the borrower.  Not all lenders allow that income to be used, but if you can afford a place then you use the rent income to give you a financial cushion, well that can be a good conservative move. 

Though it might start out a bit more expensive, the larger (3 bedroom) property appreciates at the same rate as others around it.  I would rather have the equity growth on a $300,000 house than a $200,000 house, yes?  And if you own a three bedroom instead of a two bedroom, and the next step in your strategy is to move up into a nicer place, it will be easier to sell.  Or rent.  Hmmmm…. another avenue to take. 

Another young future client is working with me on building her credit and job history right now, and plans to own a building that houses not only a dance studio, but apartments to rent.  These are ambitious plans, and what a great idea! 

You’ve always wondered what it is like for an agent at an open house, haven’t you?  This is what we do for sellers, to sell their houses, and to meet buyers face to face. 

Larry and I toured the neighborhood yesterday to be sure that we knew the houses around this one.  We found that about half the houses on the market in the area are vacant.  Many had been bought, fixed up and re-sold–otherwise known as “flipping”.  We talked to one owner who said that the market had gone flat after his purchase, and he didn’t realize the gains that he had wished for.  It’s a GREAT time for a buyer.

To this pseudo gingerbread hardwood-floored cozy little enclave, Larry brought two guitars, and we brought our coffee, flyers, and cards to give to passers through and lookie-loo’s.  It’s the cutest little three bedroom, one bath with a sunny southern exposure family room in the back.  You can see a few pictures on my website http://www.lynettehensley.com.

So far, we’ve had one gramma, one agent, (then the agent came back with his clients), a couple looking in the area….Took a break, because another agent with a couple just came through, then another couple who are selling a condo in Edmonds, and then a man who wants to buy a rental home.

It’s almost 2 PM, and we are going to be here till 3 PM.  I’ll let you know if I sell the house.