Archive for February, 2009
Whose Earnest Money Is It?
February 26th, 2009 categories: Real Estate News, Relocating
When dealing with someone whose got something you’d like, have you ever been asked the question, “What’s it worth to you”? If you haven’t, you will some day. While that question may seem more rhetorical than actual, in the real estate business, often, the answer comes in the form of an Earnest Money Deposit (EMD).
What is an Earnest Money Deposit and why is it necessary when purchasing real estate?
First, sometimes as little as a dollar may suffice as the EMD, and sometimes, nothing at all. While it is customary, it is not essential in all states. Why? Since it is a show of commitment of “good faith” by the buyer, normally, it serves to demonstrate the buyer’s seriousness of intent to purchase through the deposit of earnest money into an escrow account. Is it ususally part of the real estate transaction process? Yes.
Often, in cases involving transactions between friends or family, no EMD is involved. Remember, an EMD is a commitment; a deposit that is held in escrow until settlement. At which time, it is applied to the buyer’s closing or settlement costs.
Earnest money deposits not only provide the seller a sign of commitment by the buyer, it also serves as a source of security as well. If the transaction is not consummated, and the buyer is found in default, the EMD may be forfeited. When the contract is ratified, the earnest money is placed in an escrow account. Once this deposit is made, the money no longer belongs solely to the buyer, but is now jointly owned by both parties to the contract.
The Deposit Will Be Held in Escrow Until:
1. Settlement occurs. In which case, it will be credited to the buyer towards the sales price.
2. All parties have agreed to its disposition.
3. The court has ordered its disbursement.
4. Finally, it is disposed of in a manner authorized by the laws and regulations of the appropriate jurisdiction.
In other words, if the buyer is in default, they will, most likely, lose their EMD.
How Much Should the Earnest Money Deposit Be?
That depends. On the market, and, in many cases, the value of the property. The EMD is normally no more than two percent of the purchase price. In a seller’s market, the EMD is normally larger, indicating to the seller the offer is a strong one. Similarly, popular properties may generate more than one offer, subsequently, increasing the amount of the earnest money deposits from interested buyers.
Good faith, interest, and trust are all components of real estate transactions. The EMD provides security for both the buyer and the seller. The buyer feels they have a “monetary interest” in the property from the day of ratification. The seller, on the other hand, finds security in the commitment the buyer has made, and availability of compensation through forfeiture of the EMD, should the buyer back out of the contract.
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When A First Time Home Buyer Really Isn’t
February 23rd, 2009 categories: Real Estate News, Relocating
The stimulus package recently signed into law has met with praise and criticism. For some, there’s too many billions being directed at the wrong programs. For others, there isn’t enough, and besides, isn’t it too late for anything to work?
Like most legislation that’s passed, there’s plenty of criticism from both sides of the political aisle. While determining the success of the initiative is perhaps better seen in hindsight, there appear to be a number of bright spots that look promising. One of those is the first time home buyers tax credit.
To begin with, to qualify for “first time” status, you only need to have not owned a principal residence for three years before buying a house. So, do you qualify if you’ve purchased homes before? Well, according to Uncle Sam’s definition, almost anyone qualifies, as long as you have not “owned a principal residence for three years before buying a house.” Of course, that’s this house, the one you’re receiving the tax credit for.
Some of the package’s stipulations include:
1. The tax credit is equivalent to 10 percent of the purchase price of the home. While this figure is capped at $8000, it does not have to be repaid, unless the purchaser sells the home prior to owning it for three years. In that case, the credit must be returned to the federal government.
2. There are income limits for the program. To qualify for full credit, single buyers need an adjusted gross income of $75,000 or less, while the limit for couples is double that amount.
3. The program applies to those purchasing homes in 2009, after January 1, and before December 1.
With mortgage rates and home prices at bargain rates, is this stimulus package the ideal opportunity for home buyers? As they say, isn’t this the “perfect storm“?
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Never Growing Old
February 17th, 2009 categories: Real Estate News, Relocating
Have you ever wondered whether those daily vitamins people take make a difference? Years ago I ran across a New York Times article indicating seventy percent of Americans took daily vitamins or supplements, convinced that these would make them healthier, and, as a result, add years to their lives. Would imagine, in today’s health conscious, image driven society, those numbers have only increased. But, is that money well spent?
In a report published last week by the U.K’s Daily Mail, researchers found ”no benefits from vitamin pills against cancers or heart disease, and they did not protect against dying prematurely.” However, the good news is the same article indicated the study’s results may have been skewed “by the type of people habitually taking vitamins.” Those being the same people who eat healthier and exercise more. In other words, lead healthier lifestyles, thus making it difficult to pinpoint exactly which acts were responsible for what benefits. So, is it the lifestyle or the pills that are making those studied healthy? While we may not be able to stop the aging process, there are some simple things we can do each day to make the moments we do have a bit better for ourselves and those we come into contact with.
The English writer and poet Samuel Johnson once said:
“The excesses of hope must be expiated by pain; and expectations improperly indulged, must end in disappointment. If it be asked, what is the improper expectation which it is dangerous to indulge, experience will quickly answer, that it is such expectation raised as is dictated not by reason, but by desire; expectations raised, not by the common occurrences of life, but by the wants of the expectant; an expectation that requires the common course of things to be changed, and the general rules of action to be broken.”
In other words, expecting too much can certainly lead to loads of disappointment. How many times has a friend or family member failed to respond to the letter you sent? Or, in today’s digital world, do your e-mails to them (and to clients), containing questions (and, no, not the rhetorical kind), ever go answered? If so, does it ever frustrate you? Or, do you simply shrug it off as being impolite or inconsiderate, or unprofessional? Are you exepecting too much?
Have you ever thought that the receiver is simply making a choice. They have better things to do than respond to you! I can recall my father reminding me that if something is important to someone, they’ll will do it. Logically, it seems that if it is important to the receiver, a response will be forthcoming.
As a Realtor, response time is one of our keys to success with leads, and generally, with clients. As a provider of information – information that is available from many sources - the value of how and when we respond to inquiries can’t be understated. The term normally applied to the “when” is the word, ”timely”. OK. But what does timely mean? How do we quantify it? Is that a response within a day? An hour? A couple of minutes?
Fortunately, with the proliferation of handheld devices, most of us are able to respond rapidly, and oftentimes immediately, to lead or client/customer requests. Even if we’re out of the office, the calls are forwarded to our iPhone or Blackberry, or other handheld device. Regardless of what data the inquirer is looking for, frequently, the details are at our fingertips.
While a rapid response is important, accuracy, some would argue, is more important, especially when it’s the first contact with a lead. As we’ve all learned, first impressions are oftentimes lasting impressions.
While doing our best to enjoy the life we have, and possibly add a few more years to our lives, we’re willing to make some modifications to our diets and lifestyles. While it won’t make time stand still, we hope it improves our quality of life. But, there are some practices and habits that never grow old, whether we do them personally or professionally. Answering inquiries, proving information, and responding to e-mails in a timely manner, aren’t just good business, they’re also common courtesy. And, without them, your business doesn’t stand a chance.
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When Seeing Is Believing
February 16th, 2009 categories: Real Estate News, Relocating
“There’s a sucker born every minute.”
David Hannum
Have you ever wondered what separates fact from fiction? Is there a difference between fact and opinion? If so, is it simply a matter of personal interpretation?
In the real estate business, we sometimes find that what is advertised may not be exactly what is delivered. In real estate vernacular, that is often referred to as “puffing” or “puffery“. According to the 17th edition of the textbook, Real Estate Practice, puffing is defined as “a legal exaggeration of a property’s benefits or attractiveness.” Apparently, in the sales business, this is an accepted practice! On the other hand, its evil twin, “FRAUD”, is characterized as ”the intentional misrepresentation of a material fact to harm or take advantage of another person.”
So, as a prospective home buyer, how do you decipher the creative verbiage you often encounter when reading property descriptions about homes that interest you? In other words, how do you minimize the “noise” or misinformation? Short of giving the listing agent a dose of Truth Serum, an “eyes on target” approach is probably the best one. After all, nothing replaces an actual walk through of any property that might interest you.
Since many of my buyer clients are PCSing (for you non-Department of Defense types, PCS means permanent change of station, in other words, you’re MOVING) from across the country or around the globe, their first look at properties is done via the internet. Come to think of it, that’s how most people shop for homes these days!
Their desired home criteria is used in defining their property search, and that criteria is also used to provide them a direct e-mail feed of homes from our area’s Multiple Listing Service or System. Unlike other online home databases like Realtor.com, Zillow or Trulia, the MLS feed of homes provides prospective buyers the best and latest (Realtors who have homes listed on the MLS are required to keep the status current) information on properties. Since the MLS e-mail feed is free to the consumer, and the status of viewed homes current, why would those looking for homes use anything else as their reliable source for information on homes for sale?
Many home shoppers have pored over tons of data sources to include magazines, flyers, and various online sources for information. After days and weeks of reading property description after property description, there are times when they probably feel like they’re in the Twilight Zone instead of on the road to locating their next home.
Fortunately, there is a light at the end of the tunnel. While it is difficult to know exactly what they’re getting, most property descriptions are an accurate depiction of the property being considered. But as I mention to my incoming buyers, while they may get a fairly good idea of the homes and neighborhoods through pictures and property descriptions sent via e-mail, until they get their “boots on the ground” and actually see the properties first hand, they can’t be certain that what they’re reading is exactly what they’ll see upon closer inspection. Once they’ve actually walked the neighborhoods and properties, it’s another story. As they say, “seeing is believing.”
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Shakin’ Up the Commonwealth
February 12th, 2009 categories: Entertainment, Relocating
One of the many pleasures of life in Northern Virginia is the opportunity to enjoy the well kept history of the Commonwealth. For U.S. Colonial history buffs, there are more historic sights, sounds, and treats than one could possibly enjoy in a single lifetime. Fortunately for me, my hometown of Fredericksburg offers a multitude of historic must see venues, some of which are worth stopping in more than just a couple of times a year.
Goolrick’s Pharmacy is a combination of drug store and Soda Shop. While the convenience of a corner pharmacy isn’t lost on its clientele, the front half of the store and its old fashioned soda shop is what draws the tourists and keeps many visitors coming back.
The assorted sandwiches (on toast if you’d like) include an assortment of the salad (egg, chicken & tuna) type, and favorites like the BLT and grilled cheese. Each also includes a side of potato chips and a dill slice. And, while these and the history are reason enough to drop by, many of us can’t wait for the supersized milkshakes which are about as good as you’ll find. Not only are they twice the size you’ll find at your normal malt shop, but are thick and leave you wanting to return again and again to enjoy the flavor.
As a military brat growing up on Air Force bases, much of my free time was spent at Youth Centers, playing basketball, playing ping pong, or shooting pool. One the refreshments that each of the Youth Centers had was the mikshake. So, my addiction to that particular drink came at a very early age, and remains with me to this day. So, as you might imagine, a visit to Goolrick’s is never too far out of the way.
But, Goolrick’s pharmacy has much more going for it than the the food and friendly service. Not only does it serve as one of Old Town Fredericksburg’s most popular places for a bite to eat, it also is rich with history.
Goolrick’s Pharmacy was originally established in the late 1800’s by William Barber Goolrick. That store was moved to its current location on Caroline Street in the late 1890’s. William’s son, Keating Nelson Goolrick, installed the store’s Soda Fountain in 1912, and serves as the oldest continuously running fountain in the United States. It was also the first to serve this nation’s favorite soft drink, Coca Cola, in Fredericksburg.
The Commonwealth of Virginia offers its residents and visitors historical, cultural, and community activities and sites that few other states can rival. So, whether you’re visiting or just out enjoying the area’s beauty, and you’re in the Fredericksburg area, take a few minutes to drive into Old Town and spend a few minutes in Goolrick’s. The inviting atmosphere, enjoyable and engaging staff, and the tasty menu won’t disappoint you. And, if you love a great milkshake, you may end up spending more time in Old Town than you planned for!
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Are Brand Names Better?
February 10th, 2009 categories: Real Estate News, Relocating
As a father of three sons, I’ve been through the “must have” brands a couple of times. You know, the teenager that turns to you, upon opening a Christmas present, and gives you that look, “You expect me to wear that”? In other words, if it isn’t a brand name, I ain’t wearin’ it.
Of course, growing up in a family of five boys with a father who worked two jobs to provide for his family, we were simply happy not having to wear hand-me-downs! However, as we know, times have changed. Besides, as my sons were probably thinking (just as I was at that age), “What does Dad know”?
But, the apparent need to wear brand named clothes brings up a good question, “Do brand names make a difference”? While many are convinced that the brands make them more hip, are those clothes really any better than their non-brand name counterparts? And, what about other items we purchase or services we make use of? Does a popular or well known “name” make a differnce in the quality of the product?
In the real estate business, we have our share of “legacy systems” or brand names that most people recognize, but few have taken the time to carefully research. But, are the “big players” (Century 21, Coldwell Banker, ReMax, etc) any better than their competitors who lack that Brand identity? Do their tools and information do a more effective job of assisting their clients and customers to buy and sell, or market homes? In other words, do they necessarily provide a better service?
Recent surveys have shown that those in the market for homes are looking primarily for home, neighborhood, school and other “local” information when searching for homes. While this information used to take days or weeks to compile, it’s now readily accessible in minutes via the internet. In many ways, the web has served as a “force multiplier” or equalizing force for smaller companies in their attempts to compete with better financed and supported national real estate brokerage firms. Does the information they provide, those in the market to buy or sell, different than that provided by brand named firms? Perhaps when all is said and down, it isn’t the “company”, big or otherwise, that should be the focus of the consumer. After all, as many an agent, and client can tell you, it really boils down to the individual professional doing the work, not who they work for.
Just think, if the internet does level the playing field for agents by providing the resources needed by clients to achieve their objective, isn’t the onus on the individual professional to be where the money meets the road? Aren’t they the interface with the client? Is it not their interpersonal skills, job knowledge, and judgment the client is dependent upon? Or, is it the brand name of the company the client is putting their faith in?
Choosing a brand name may provide you the security of knowing (well, at least, assuming) what you’re signing up for. National brands certainly have the resources to support the needs of the clients they serve. But, where content is king, bigger doesn’t necessarily mean better. In my profession, the individual agent is the “pointy end of the sword.”
It is the individual agent’s expertise and professionalism you’ll be relying on to make your home buying, or home marketing venture as smooth and seamless as possible, whether they work in a company of two, or two hundred. The next time you look for a real estate professional to assist you, it may serve you well to consider the words of legendary coach, Pete Carill:
“The strong take from the weak, but the smart take from the strong.”
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