Year in Review

 

2012 was a good year for us – especially now at the end of the year, when the housing recovery seems to be really taking hold.  In 2010 & 2011, the foreclosures and short sales were making life very difficult for sellers.  Mortgage defaults, though, are now down significantly and there are many fewer of those distressed properties on the market, which is having an upward pressure on prices.

Prices, while they are rising, are still low however – partly due to the reality of our appraisal process.  Generally speaking, appraisers look at sales for the last 3-6 months within a mile radius of your home to determine the proper appraised price for your home.  But this “backward” look makes it difficult for prices to rise and keeps a governor on how quickly they can rise.

Sellers, after looking at a market analysis of their home or having an appraisal done, in many cases are deciding that now is NOT the time to sell and so they are holding off putting their home on the market.  The combination of fewer distress properties, low appraisal prices, and reticent sellers has resulted in LOW INVENTORY – there simply aren’t enough homes out there for the number of buyers we have.  We’ve even seen bidding wars in many instances – bidding wars!  In this market!

High quality problems, to be sure.

What this means is that it IS a good time to put your home on the market if you have a good agent who can market your home to buyers AND to the buyer’s lender’s appraiser to get you as much as possible for your home.  If you are thinking you’ll wait until the Spring to list and sell your home, it’s still a great time to meet – we can put together a staging plan that you can implement over the holidays. 

The long and short of it is – CALL ME.  Whether listing your home, buying another home, or both; or if you know of anyone who wants to buy or sell.  I’m here to help with all of your real estate needs.

LET’S GO TO COURT – OR NOT…

 

Most new construction contracts contain an ARBITRATION PROVISION.  If you’re buying new construction, you’ll notice it because typically it requires a specific initialling at that particular paragraph.  Our resale contracts in Georgia do not contain such a provision.  So the question is raised – is a good idea or NOT to agree to arbitration in advance?  Here are some thoughts from a recent briefing with the law firm of Epstein Becker Green I attended –

First, what IS arbitration?  Often confused with mediation, which is less formal and not binding, arbitration CAN be legally binding.  This means if you choose binding arbitration you may be stuck with the outcome with no avenue of appeal.  There are only very limited bases for appeal of an arbitration provision; as they stated at the briefing, you would need something akin to having a picture of the other party handing a monetary bribe to the arbitrator in order to have a judicial appeal. 

One party cannot force another to go to arbitration unless it is agreed upon in advance in writing – hence the provision in many new construction contracts.  So, say you’ve entered into an agreement with an enforceable arbitration provision and there is a dispute.  If you file a claim in court, the other party can legitimately ask the court to force you to arbitrate instead.  When you arbitrate, a private company is chosen to provide the arbitrator or arbitrators (typically there is one arbitrator or three – for obvious reasons, an even number of arbitrators would not make sense).  As a party to the arbitration, you will have the opportunity to strike arbitrators for cause.  You then proceed to a hearing.

WHY arbitrate?  Might you WANT an arbitration provision in your contract?  There are several advantages: typically it is less expensive than litigation, because it is faster.  It is also more certain, since there are only limited grounds for appeal.  On the con side, third parties aren’t bound by the arbitration agreement and cannot be forced to appear.  There are no rules of law or evidence in an arbitration proceeding other than those set by the parties or the arbitration company –thus, what often happens is that “if you can get it through the door, you can get it into evidence.” 

As a practical matter, the arbitration provision in many new construction contracts is probably favorable for all concerned.  Filing a lawsuit is expensive.  But most do not add an arbitration provision to the standard Georgia Association of Realtor resale contracts.  Our standard practice in Georgia is to adhere to the form contracts without extensive rewriting of them; rewriting by an agent who is not a lawyer might be considered unauthorized practice of law.  Even if your Realtor IS a lawyer (there are a few of us out there) you will want to carefully consider whether or not adding such a provision makes sense.    Talk to your Realtor about it when you are entering into your agreement – it may or may not make sense for you.  And as always, never hesitate to call the Mary Anne Walser team if we can help in any way!

SURVEYS - WHAT YOU SEE MAY NOT BE WHAT YOU GET

(Image: Residential Lot- 908 Peachtree Battle Circle, Atlanta, GA 30327 - Listed at $125,000)

What’s your line? When a buyer goes to look at a home, sometimes it seems very obvious where the property lines (boundaries) are. But what you see may not be what you get. Property boundaries don’t always coincide with fences nor are they always where you think that they are. In fact, we’ve seen cases where even a large pool was half on a neighbor’s property; no one was aware until a survey was performed.

When we make an offer on a property, we usually ask the Seller for a survey. If the Seller does not have a survey, the usual course to order a survey at closing – but this is not the prudent course. The best thing to do is order a survey long before, so if there are any issues they can be resolved prior to closing or so that the Buyer can terminate if the issues are of great concern and not fixable.

Typically you will want to have an inspection *first* and then if there are no big issues with the inspection, order the survey. Since we often have only a 7 to 10 day inspection period, that may not be long enough for both to conclude.  So insert a stipulation in the contract that says something to this effect: “Seller must provide a survey, if Seller has ever had one done, within 48 hours of binding agreement date. Buyer has the right to order his/her own survey, whether or not Seller provides one. If Buyer’s survey reveals any title, permitting, easement, or encroachment issues Buyer shall provide said survey to Seller within 3 days of receipt and Seller shall have a 5 day opportunity to cure any deficiency. If Seller cannot cure, Buyer shall have the option of terminating this Agreement at no penalty to Buyer.” 

Why the mention of “permitting” issues above?  Well, if a structure or improvement encroaches on a neighbor’s property, it likely means that the structure or improvement was not permitted with applicable governmental authorities, which is another, potentially even bigger issue.  While encroachment issues have a two year statute of limitations, permitting issues do not.  This comes up most often with garages and other structures on the edges of the property.

As with everything you purchase, be sure you know what you are buying!  One important aspect of this is knowing the boundaries of your property through a survey.  And as always, call the Mary Anne Walser team when you or someone you know wants to buy or sell a home!

IN AND OUT OF THE CLOSET

One thing about being a real estate agent – you become very comfortable looking into other people’s closets.  It’s just part of the job.  Closet space is IMPORTANT – we have lots of stuff these days.  The homes built in the 1960s or earlier generally have very very small closets compared to what we’re used to today.   Lots of times, owners have added on closets or expanded closets (one of my relatives even made a small bedroom into a closet).  In any event, closet space, and storage in general, is an important aspect of a home for most buyers.

Now when I go to a friend’s home to socialize I sometimes find myself automatically opening closet doors as I’m getting a tour of the house.  Not cool.  I catch myself right away, and people laugh.  But now I try to remind myself when the house I’m viewing is not on the market to NOT look in the closets unless prompted.  Looking into closets has become an automatic reflex.

When we put my now-husband’s home on the market, in one of the closets we left a piece of artwork that consisted of a stylized hanging skeleton, hoping that buyers would get a kick out of it and feel warmly towards the home.  Okay, it’s a stretch – but the more you can make buyers feelGOOD when they are in your house, the more likely they will buy it!  The house sold, but I have no clue whether or not the skeleton had anything to do with it – I am pretty certain it didn’t hurt, however.

I got the idea for this blog from one of my favorite columnists, Joel Stein, who writes “The Awesome Column” in Time Magazine.  Stein’s article is about “stuff” and “clutter” in general and was based on the book “Life at Home in the Twenty-First Century”, about an 11 year UCLA project studying the homes of 32 Southern California middle class families.  I can’t wait to read it.  If you’re as fascinated as I am about homes, home life, and what people use and keep, I also recommend Bill Bryson’s “At Home: a Short History of Private Life”.  Bryson goes room by room – including the closets – to describe how the modern home got to where it is today.  Happy reading!  Excuse me now, I’ve got to go clean out those closets…..

DO YOU WANT CONTRACTORS OR CASH? - A look at money in lieu of repairs

During the due diligence period, the buyer does an inspection and asks for repairs.  The seller may prefer to give money, and not want to actually do the repairs because (1) they fear that the buyer will not be happy with the repairs and will ask the seller to redo them; (2) they may not have sufficient time to schedule repairs, pack, and move; (3) they simply do not want to have to take the time and effort to have them done. 

The buyer may also prefer that the seller give money in lieu of repairs because (1) the buyer can oversee the repairs and be sure that they are to the buyer’s liking; (2) the buyer may want to do other modifications related to the trade at the same time and the money can simply go towards the larger bill; (3) the buyer may find it worthwhile to postpone the repair and use the money now. 

In the instance where both sides agree to money in lieu of repairs, the buyer has several choices: he/she can reduce the purchase price by the agreed-upon amount, or have that amount added to seller-paid closing costs.  Previously, we could have checks written at closing to third party vendors for the repairs to be performed later, but with the tightened mortgage restrictions that is generally not possible.  Which is preferable –reducing the sales price or increasing the closing costs?  Here are the pros and cons:

• Either way, the buyer brings less cash to closing. 
• The lender typically will limit the amount of closing costs the seller can pay on behalf of the buyer.  For most loans, it’s three percent of the purchase price.  So just be sure that if you’re increasing the closing costs paid by the seller, you’re not running afoul of this limit. 
• If you decrease the purchase price, the purchase price is reflected in the tax records and future buyers will see that you paid less for the place.  The plus side is that the tax commissioner also looks at the purchase price in determining taxable value, so a lower purchase price may result in a lower property tax burden. 

Either way, be sure your lender knows of the change in the contract.  Any changes – particularly those that change the purchase price of the property – must go through underwriting and you want to be sure there is plenty of time before closing to take that step.

Atlanta Metro TSPLOST SPLASH

Tomorrow, please go to the polls and vote!  I am hopeful that you will vote FOR TSPLOST.  In a nutshell, TSPLOST would increase our sales tax to 9 cents in order to fund a laundry list of projects – some make sense, some might not – but all of which are designed to help alleviate our increasingly difficult traffic problems.  The project list is lengthy and encompasses all ten counties which are voting on the TSPLOST but particularly benefit those of us who live intown.  The AJC ran a detailed list of the projects in the paper yesterday – and the list is also available online.

TSPLOST may well NOT pass – no one likes a tax increase, and some in areas outside the immediate Atlanta area feel as if they will not be getting enough from the tax.  The Marietta Daily Journal ran a headline: “Cobb County Not Getting Much Bang for the Buck [with TSPLOST].”   But helping intown Atlanta also benefits those who live farther out, in that all of the Atlanta metro area is losing business and relocations because of our difficult traffic – anything and everything that helps alleviate traffic helps Atlanta AND the areas surrounding Atlanta.

Why vote on it NOW?  The political negotiation process in the Legislature that resulted in the list was a lengthy, involved process (no surprise).  We need solutions, and even though these solutions may be imperfect, they are before us now.  If rejected, and the process has to begin anew – who knows how long that could take, or even if the outcome would be very much – if at all – different?

Defects, Due Diligence, and the Deal Killer

Once you are under contract to purchase a home in Georgia, you enter the due diligence period, during which you, as a buyer, does all relevant inspections and investigations and ultimately decide whether or not you would like to proceed with the sale.  This is very buyer-friendly, since during this period the seller is bound to the buyer and cannot enter into other contracts for the sale of the home (except as back ups)– but the buyer is free to terminate the contract with no penalty.

This due diligence period is relatively new in Georgia.  We used to have “inspection periods” instead.  In the former version of our purchase and sale agreement (with the inspection period rather than the due diligence period), it was tougher for a buyer to get out of a contract once she or he had entered into one - to terminate the contract, the buyer had to find a defect in the property through the inspection, ask the seller to fix it – AND the seller would have to refuse to fix it for the buyer to get out of the contract.  If the seller agreed to fix all defects, the buyer was bound and would be liable for breach of contract if they failed to proceed.

If as a buyer during this inspection period you decided you wanted OUT of a contract, one tactic was to call in a REALLY tough inspector – like the one known as the “Deal Killer” - and come up with something you knew the seller could not or would not fix.  The Georgia Association of Realtors Forms Committee decided the inspection period created a perverse incentive in that respect.  There was too much litigation over what is or is not a “defect”.   

So they changed our contracts to conform with those of a majority of other states – and now in Georgia we no longer have the inspection period.  Instead we have the due diligence period or the “FREE LOOK” provision.  During the due diligence period, which it typically anywhere from 7 to 14 days, the buyer can terminate the contract for any reason or no reason at all.  They do not have to have found something during the inspection not to their liking, and they do not have to give the seller the opportunity to fix any defects.  They can simply notify the seller that they have decided to terminate.

Thus, it is in the seller’s best interest to keep the due diligence period as short as possible.  That way, if the buyer does terminate, the property can go back on the market quickly and hopefully with little ill effect.  There is always some ill effect when a buyer terminates, however – the next buyer will wonder WHY the first terminated.  Sometimes there is just no good reason.  But the subsequent buyer will be more suspicious, and will devalue the property accordingly.

For the buyer, of course, a longer due diligence period is preferable.   There is really no risk for the buyer.  This creates a different sort of perverse incentive – some buyers will get a property under contract before they have really decided if they want the place or, perhaps, before they have even seen it. This is a particular problem in foreclosure sales, where there are often multiple bids.  A buyer looking for a bargain may make multiple bids on several foreclosure properties, but not even visit those properties until they win a bid. 

To end due diligence, typically the parties will enter into an “Amendment to Address Concerns” – in which the seller agrees to fix or give monetary compensation for repairs needed to the property.

Notes on Negotiating

What does your Realtor do for you? Well, many things, but a lot of what we do is negotiate contracts – either on behalf of the buyer or of the seller in the purchase or sale of a home.  I have taught classes on negotiation skills.  Because I am also an attorney (a former litigator) I have a lot of experience negotiating deals.

But recently I took a class from a professional mediator about negotiating.  Jennifer Keaton owns One Mediation, a mediation firm based here in Atlanta, and she made some great points about negotiation that are well taken, a great reminder, and applicable to any type of negotiations, including real estate.

First, every contact with the other side conveys information – so pay attention to every contact.  Most importantly, you do not have to mean or rude to “win”.  After all, haven’t you heard that you get more flies with honey than with vinegar?  Particularly in real estate, often a more emotional negotiation, this is important.  Being professional and polite does not mean you cannot be tough and represent your client well.  In fact, make sure your agent is one who is respected and liked by other agents.  Agents want to work with other agents who “play fair”, and that will serve you well when coming to agreement.  Also, say you do not come to agreement on a given negotiation.  Timing matters – a seller may get more motivated, a buyer may find a greater source of funds – in other words, the deal may work, just not right now.  If you have kept a congenial relationship, the other side may just come back, offering more.

Another important point is that knowledge is power.  With information, your arguments actually hold weight – without the hard facts, you have no ground to stand on.  When an agent is representing a buyer, that agent should marshall the LOWEST comparables and be able to discuss them with intelligence to convince the seller, hopefully, to accept less than they would otherwise.  Similarly, an agent representing the seller should marshall the HIGHEST comparables available to help convince the buyer that they are getting a great deal (which every buyer wants and expects).

Also: be creative.  Every negotiation is not all about money.  What else can your client offer that is of value to the other side?  Perhaps a seller will take less for the home if you close quickly.  Or if they need more time, if you will close later.  Your agent needs to ask questions and pay attention to the nuances of the other side’s needs and wants; that can certainly help ease the parties to agreement.

Finally, stick to your plan and stay the course.  Do not walk away without offering your “walk away” offer.  But if you give a “take it or leave it walk away” offer, make sure that is exactly what it is.  If it is not, you lose credibility.

In this market, great negotiation skills mean more thanever.  Make sure your agent has them!

Obtaining a Mortgage: 3 Steps to Improve Your Credit Score

Right after the mortgage meltdown, it was very difficult to obtain a mortgage.  It is still not especially easy, and I find that some buyers have credit scores that either prohibit them from getting a mortgage or make it difficult to get a good rate.

The first step to improving your credit score is to get a current copy of your credit report. There are three nationwide consumer credit reporting companies that provide reliable credit reports. Those companies are: Equifax- www.investigate.equifax.com, Experian - www.experian.com and TransUnion - www.transunion.com.  At AnnualCreditReport.com you can get a copy of your credit report from one of these companies absolutely free. To report false information that appears on your report you may contact the nationwide consumer credit reporting company that provided the credit report. The time it will take to correct your report depends on the specific error contained in your report, but no matter the length of time, getting your credit information corrected is your best and only option because your credit is at stake.

The second step to improving your credit score is to take control of your monthly debt. Your credit score reflects what you owed at the time of your last billing cycle and the amount of credit that you have available. People with the highest credit scores only use 10% of their total available credit each month. To maintain good credit you must keep your monthly debt under 25% and not utilize more than 25% of your available credit each month.

The third step to improving your credit score is to remember that “credit” cards don’t always benefit your credit. Paying off the balance on your credit card every month will not always improve your credit score. At the end of each billing cycle the full amount that you owe on that card is posted on your credit score, even if you paid your monthly charge. Once you have paid off the full balance on a credit card, do not cancel it. Canceling a credit card will lower your credit score, even if you have paid it off. Mortgage companies suggest that if you plan to purchase a home, you should not make any purchases with your credit card 3 to 6 months before you plan to secure financing for your new home. Instead, use cash or debit to pay for purchases during those months so you can enhance your credit worthiness.

Overall, your credit score is only a small part of your complete financial standing, but it is one of the most important because it proves your responsibility for paying off your debt. Don’t miss out on the historically low mortgage interest rates that are being offered. There’s no requirement for you to have outstanding income and a high down payment if you have good credit. Improving your credit score will give you an opportunity to take advantage of a low interest rate. Follow these 3 easy steps to improving your credit score and be on your way to owning a new home! 

 

Buying a Short Sale can be a Tall Order

A short sale is usually anything but short.  Sort of like the attorney’s “legal brief” which is never brief, a short sale is very rarely “short”.  The term refers to the situation when the seller OWES more on the property than the property is worth, and is attempting to persuade the lender to take less than is owed on the property in full satisfaction of the loan.  You have probably heard the term “underwater” – a short sale seller is underwater on the house (has borrowed more against it than is supported by its current market value) and is trying to sell the home without having to cough up the difference at closing.

A short sale can take MONTHS and MONTHS (although I HAVE had one approved in two weeks – that is very unusual).  The lender generally doesn’t WANT to take less than is owed, as you might imagine.  Therefore it’s somewhat of a fight, and if/when there are multiple lenders and lienholders (as there often are) it is often next to impossible to get them all to agree.  We agents sometimes say that it’s the THIRD short sale buyer who actually gets the house, meaning that most buyers who make an offer on a short sale get tired of waiting for the approval and just go on and buy something else.  Of course, the short sale may or may not EVER happen.  The seller may just stay and pay – or it may end up as a foreclosure.

Even when the short sale lender or lenders approve the short sale, they will sometimes reserve the right to disapprove the short sale at any time before closing – which poses another problem; it could fall through at the last minute.  In fact, you can be sitting at the closing table when the word comes that the lender has decided to withdraw approval and foreclose instead.

Other potential snafus are that the seller usually wants a release from any and all liability with respect to the loan, while the short sale lender(s) will often require that the seller sign a personal note back to the lender for the remainder owed.  Another problem I have seen is when the seller does not realize that they may be TAXED on the forgiveness of debt (why the seller’s agent did not bring up this issue to the seller prior to getting a contract is beyond me, but it happens).  The IRS considers forgiveness of debt taxable income, and the seller will be responsible for paying that tax.  A side note - if you are the seller, please consult your accountant on this one – because if it is your personal residence you are selling, the forgiveness may be excludable, much as GAIN from the sale is excludable if you have lived in the house as your main residence for two of the past five years.

In other words, short sales are a PAIN, but you CAN get a great deal.  It’s best to look for PREAPPROVED short sales where only one lender is involved.  Pre-approved means the lender has already agreed to accept a short pay-off, and these deals are much more likely to go through.  In any event, I usually counsel buyers to go ahead and make an offer on a short sale if that is the property that they really like, but then to KEEP LOOKING.  You can always terminate your short sale offer if you find something better in the interim.

We agents are all ready for the day when regular sales again outnumber foreclosures and short sales, but I am also glad to see those sales moving through the system.  The quicker we turn over the troubled properties to buyers who can handle the payments, the faster the housing market will recover.

FORECLOSURES - as I see them

Lots of buyers want to look at FORECLOSURES, and there are a lot of them!  You can certainly get a great deal on foreclosed properties, and these days many Banks are even cleaning them up, painting them, putting in new carpeting – in other words, they aren’t all in “terrible” shape.

Here’s how most foreclosures work these days (it’s changed a LOT since 2008).  Lenders give notice of foreclosure to the homeowner – and often wait months and months to foreclose, even though legally they can foreclose sooner (in Georgia, they just have to give four weeks notice, published in the legal newspaper for the appropriate county).  Banks have so many foreclosures on their books they often just do not WANT anymore, and once they foreclose then the Lender, as owner, is responsible for any code violations (such as grass growing too high, etc.).  In other words, once they foreclose it’s not only a liability on their books, they have potential further liability due to the condition of the property.

When they DO decide to foreclose, it’s “sold” on the courthouse steps for the county the property is in, on the first Tuesday of the month.  Used to be you could GO to the courthouse steps on the first Tuesday of any month and buy property.  They still offer properties for sale then, but it’s much less common for anyone to purchase there.  For several reasons: (1) the reason that has always existed – you must have CASH or a CASHIERS CHECK (same as cash) to purchase on the courthouse steps, no exceptions; (2) it’s so much easier, and you can actually get it for LESS, by waiting for the foreclosure LISTING to come up.  Because at the courthouse steps you must pay AT LEAST what is owed on the property.  Almost by definition, the property can’t be worth what is owed on it, or it wouldn’t have ended up there to begin with.

Banks then list the property with foreclosure agents – like Rick Hale of Keller Williams, the Peargin Team at Remax, etc. etc.  YOU CANNOT CALL THE BANKS – THEY WILL NOT TALK WITH YOU.  If you DO pull off a miracle and someone will actually talk to you, they will tell you that they do not sell properties; they hand them over to the assigned agent.  Most of the time they can’t even tell you who that agent is because they use so many.  Believe me, take from someone who has had plenty of clients try despite this explanation.  The Banks know that the best way to get the best buck for the property is to PUT IT ON THE OPEN MARKET.  They do not WANT to sell to you before then.  Because foreclosures often end up in BIDDING WARS and the Bank gets much more than they thought that they would.

MY HOUSE IS UNDER CONTRACT – WHAT HAPPENS NOW?

CONGRATULATIONS!  You have a contract on your home.  You have a willing and able buyer and you have come to terms on the sale of the home.  What happens between now and closing?

Unless the buyer is purchasing “as is” (usually not the case) the buyer has a “DUE DILIGENCE PERIOD” – typically somewhere between 7 and 14 days.  During that time the buyer can terminate the contract for any reason or no reason at all.  The buyer can simply send a notice of termination and the deal is over – you are left with an unsold house and a search for the next buyer.

But do not worry – it does not often happen like that.  Instead, the buyer will have an INSPECTION – by a certified home inspector.  The inspector’s job is to find anything and everything that is wrong with the place, so don’t be surprised or offended.  Also, the standard inspection report is about 30 pages long – so don’t panic about that either.  It contains a lot of OTHER information in addition to any “problems” the inspector has found with your home.

After the inspection, the buyer will provide the inspection report to you and ask you to fix items that the inspector says need to be fixed.  They might ask for EVERYTHING, so be prepared for that – but more often the buyer will pick what is most important to THEM.  You can either agree to fix these items, or you can negotiate a dollar amount to compensate for the things you don’t want to fix.  You don’t have to agree to do ANYTHING, but it’s best to be as reasonable as you can – because again, during this period, the buyer is able to TERMINATE the contract for any reason or no reason at all. 

Once the due diligence period ends, the buyer cannot back out of the contract (except under a different, applicable contingency – financing or appraisal, for instance).  If they back out prior to closing and no other contingency gets them out of the contract, they lose their earnest money.  You, the Seller, can then claim that earnest money OR you can sue for damages.  But rest assured – a vast majority of the time buyers do NOT back out once the due diligence expires.

There may also be the aforementioned FINANCING and/or APPRAISAL contingency associated with the contract.  The financing contingency gives the buyer an OUT from the contract if they are unable to obtain financing.  The period can be anywhere from 7 days to 30 days.  As a seller, you have likely insisted on a prequalification letter from a lender – so you know the buyer at least HAS talked to a lender – and have negotiated as short a period as possible. 

The appraisal contingency is sometimes a longer contingency.  Sellers attempt to negotiate as short a period as possible, of course, but the problem is that many lenders are ordering multiple appraisals – sometimes even the day prior to closing.  So imagine the buyer’s dilemma.  They think that the property has appraised and there’s no problem – and then the lender orders ANOTHER appraisal and it comes in low.  As a seller, all we can do is keep in contact with the buyer’s agent and make sure that at least the first appraisal is ordered in a timely manner.  There’s no way to know in advance if the lender is going to order multiple appraisals.  It is not the norm, but it can and does happen.

Say the property does NOT appraise for the contract price – it appraises for less.  In that instance, if we are still within the appraisal contingency period, the buyer can (and will) ask the seller to sell the property for the lower price.  If the seller refuses, the buyer can walk from the contract.  But if the seller AGREES to sell for the lower price, the buyer is bound (unless another contingency applies).  One sticky issue here can be when the seller has agreed to pay for some of the buyer’s closing costs.  Say the contract is for $100,000, seller paying $5,000 of the buyer’s closing costs, and the appraisal comes in at $95,000.  Well, that’s what the buyer is REALLY paying, right?  Because they are effectively getting $5,000 back.  STILL, the buyer has the right to insist that the seller lower the purchase price AND keep the closing costs in.

 What happens NOW?!?!  All contingency periods are up.  We are waiting for closing.  Time to have all your utilities disconnected as of the day of closing, except for water.  It is common to leave water on for three days after closing.  The reason for this is that the buyer must present a closing statement to get water service – and, of course, they won’t have the statement until the day of closing.   In addition to scheduling the disconnection of utilities, do not forget to put in a change of address with the postal service – www.usps.gov – and notify your credit card companies, magazine subscriptions, and the like of your new address.

What can you leave in the place?  Best to leave nothing except what was agreed to in the contract (with the exception of any manuals for left appliances or the neighborhood directory).  If you want to leave anything else, or think the buyer might want you to, get your agent to get the okay from the buyer.  A typical issue here is that you cannot leave old paint cans unless the buyer says it is okay, for instance.  (Paint is not always easy to dispose of).  Then, hire someone to do one last, final, deep cleaning.  All that is required under the contract (unless there is a special stipulation) is that the home be left “broom clean” – floors and carpets swept, horizontal surfaces wiped down, ovens and fireplaces cleaned, etc.  But you don’t want to have an issue the day of closing over dirt; simpler to pay someone to do one last sweep.

Then, to closing it is!  Your job at that point is to bring all keys and remotes to the closing table.  Most of the documents will be signed by the buyer – you will have only a few.  You can give the buyer a forwarding address and/or email if you so choose – but that is by no means required.  You can always ask them to contact your agent if mail arrives for you after closing.  If you have gain from the transaction, you will be given a check at the closing table or you can have it wired directly to an account (this can be arranged ahead of time).

And you are done!!  CONGRATULATIONS!!!  You have sold your home in a difficult market!

MAKING THE OFFER – when should I ask to close?

Typically buyers placing an offer do so 1-2 months before they want to actually move.  So the “normal” time for a closing would be one to two months from the date the offer is placed.  In terms of WHEN during a month you should ask to close, if you close at the END of the month, you bring less money to closing – so most buyers want to close at the END of the month.  How it works is like this: unlike RENT, your mortgage payment is paid IN ARREARS.  If you close at the end of March, your first payment isn’t due until the first of MAY – you pay the first of May for the month of April (for rent, as you know, you pay at the first of the month for the month following – for example, rent is due April 1 for all of April).

Another consideration is this: when you own and occupy your home, you qualify for what is called “homestead exemption”.  It’s a partial exemption from property tax for your principal residence.  But in every metro county, you must own and occupy the home as of January 1^st in order to qualify for the homestead exemption.  Therefore, if you are looking for a home in the fall or winter, you want to be sure to close prior the end of the year in order to qualify for the exemption.  My husband and I closed on our home at the end of December for this very reason.

Other than that, there really is no “right” time to close.  It’s entirely up to you.  Most sellers are not going to want to accept a contract to close for too long after the contract date, though, because it ties up the property and makes it unavailable to other potential buyers.  You can always try, but know that the seller is probably going to counter with a closing date closer in time.  Their thinking is – what if the property is tied up for those months, and then you, Buyer, fail to close?  During the time they were under contract, they might have found another buyer for the property.

Be aware, also, that if you are making an offer on a short sale OR on a foreclosure, all bets are off, time-wise.  Short sales can take months and months to be approved (if they are approved at all), so even if you ask for a fast close date, it’s not likely to happen.  You will make an offer and then, usually, wait – and wait- and wait.  Foreclosures can sometimes close quickly, but at other times also take some time.  The seller must be sure that the foreclosure deed is recorded and in the chain of title and that other liens have been cleared before they can sell the property to you. (While many liens are extinguished by the foreclosure, some liens, such as tax liens, survive foreclosure and must be dealt with by the seller before they can give you clear title).

WHAT I LEARNED FROM BUYING A HOME – STUFF

So, I have sold hundreds of homes in my real estate career.  And each and every time I give my clients checklists of things to do.  But until I recently purchased another home (fifteen years after purchasing my first) I did not fully appreciate everything that must be done prior to move-in.  This first lesson can begin even before you find your dream home and get it under contract.

First, Goodwill is your friend.  Start putting aside items to take to Goodwill NOW.  A good rule of thumb is anything you have not used for two years – goes to Goodwill.  I am loathe to increase our landfill load, but I feel no qualms about giving to Goodwill, where I know the items will go to good use and the money to a great organization.  Start culling through your stuff now!  And while you are at it, start packing up off season clothes and other things you do not use on a regular basis.

While you are doing this – and this may be the most important piece of advice I give – mark each and every box with as much detail about the contents as you can muster.  Have thick masking tape you can write on handy for this purpose, particularly if some of the boxes you are using are from the grocery or liquor store and have no clear space for writing.  Label each box on the top and on two sides, so that no matter where or how you are storing things, a label can be visible.  For your box packing, you will want to have on hand a thick black marker, wide masking tape, scissors, a cutting knife, and clear box tape.

For boxes, many find the clear storage boxes from your local discount store to be a great help, particularly if you may be storing things even temporarily in a garage, carport or storage unit.  I love liquor boxes.  I do not drink.  But the boxes are substantial, and small – perfect for carting books, and the liquor store has a fresh and large supply every day.  Go to your local store (liquor or other) and ask when the best time to pick up boxes might be.  And of course you can always BUY boxes, but that always seems wasteful to me.

And be prepared for the emotional impact of this entire packing up process.  My husband keeps more “stuff” than I do.  But then, he has three children, now grown – but there is plenty of “stuff” that we want to keep for them, and for good reason.  So, you cannot rid yourself of everything that you do not use regularly when you are keeping things for others – and that’s just part of the process.

I must say, even with the many things we do not use and yet have kept for others, culling through what we have and ridding ourselves of so much “stuff” feels incredibly wonderful and freeing.  One of the best parts of moving is that feeling of freedom – of starting afresh. 

WHAT I LEARNED FROM BUYING A HOME – GETTING A MORTGAGE LOAN

I vaguely recall getting a loan when I purchased my first home.  And what I remember is that it did not seem all that difficult, but that the closing was a nightmare.  The loan officer did not show up for closing, there were charges on the closing statement that hadn’t been revealed to me previously, and the loan officer was nowhere to be found.  As a result, the closing was much more arduous and took a lot longer than it should have.

And while I work with clients every day who are getting a loan to purchase their homes, most of my clients work with my favorite lender.  He makes the process appear seamless to me as a Realtor.  He is patient, explains everything carefully to them, and always answers the phone or returns calls promptly.  So in recent years I have been less aware of what getting a loan is really like.

So when I convinced my husband that buying another home was a great idea, I was not really sure exactly what to expect.  I called my favorite loan officer.  And even though he made the process as easy as possible for me – I had forgotten all the information you need to provide for the loan – recent pay stubs, W-2 statements, tax returns for the last few years.  You will need to get with your lender and fill out forms, provide the documents, and then provide more documents as issues come up.  For instance, my husband was divorced from his first wife, but continued to pay alimony for a period of time after the divorce.  The lending underwriter needed to see the divorce settlement to determine when those obligations ended.  Why, I am not really sure.  But that is how it goes in the lending world these days.  The best advice I can give is to get all your important tax, account and legal papers together and organized and have them ready.  Some documents you may not even know that you need until the very last minute, when the loan goes through final underwriting.  Luckily, although the call came for that divorce document at the last minute and while my husband was overseas, I was able to locate it quickly in his organized files.

So, lesson one – have all important papers ready and handy and make sure that you have filed your income taxes regularly, particularly for the most current year.  I already knew not to make any large purchases between applying for the loan and closing.  Lenders do not like to see large sums of money going OUT of your account(s) during that time.  Now, lots of buyers purchase appliances, furniture, that sort of thing – if it is a large purchase, just run it by your loan officer before you do it.

The other part of this lesson is something I already knew: HAVE A LOAN OFFICER WHO IS ACCESSIBLE, AVAILABLE, AND RETURNS YOUR PHONE CALLS PROMPTLY.  Loans are more difficult these days.  You want someone who can guide you through the process and make sure everything goes great at closing.  Have what I had the second time – a seamless, efficient closing with no surprises that was over in less than an hour.  Do not have a closing like my first one – and you can avoid that by finding the right lender.

A REALTOR BUYS A HOUSE

I have been a real estate agent for almost a decade. But until recent, I lived in the home I owned I purchased PRIOR to becoming an agent, back when the process was more mysterious to me than it is now. In the past few years, it is no secret that home prices in Atlanta have tanked, crashed, bottomed out. SO, I decided to take the advice I give my clients – buy a home NOW! Interest rates are incredibly low, so are home prices – buying a home has never been more affordable and has never made more sense.

First I had to convince my husband that this was a good idea. We love our home in a charming little neighborhood called ChanningValley, where the neighbors know one another, kids play in the quaint neighborhood park, and there are active garden and book clubs. Our home is a ‘50s ranch that I renovated into a cute little cottage that is the perfect size for two people. So why would we move? Well, I told my husband, we can rent out our home in Channing Valley, make money every month from it – and use that money to leverage ourselves into a home that is even better for us.

Once I showed him what we could purchase in today’s market, and once we found an architect’s dream home – he was convinced. And it has been the best process in the world for me. I have a much clearer idea of EXACTLY what my clients go through in the home buying process.

First, there is the difficulty in deciding which neighborhood to live in. I have a better idea of all the “neighborhoods” in Atlanta and their individual characteristics than my clients do, of course – unless you are a Realtor, you do not intimately know a large number of neighborhoods. Part of my job is to help a client decide which neighborhood is best for them. My husband and I knew this much: that we did not want to move more than five miles from his work. (He works right across from the High Museum of Art). Since as a Realtor my work is all over the metro area (as far North as Forsyth County, as far South as Peachtree City, as far East as Stone Mountain, and as far West as Douglasville), location was not as key to me. My office is my car and it goes everywhere.

But even with that focus on my husband’s place of business, it was much more difficult to decide on a neighborhood than I imagined – there are so many that we love (Virginia Highland, Morningside, Ansley Park, Garden Hills… the list goes on, but all closer in). And the number of available properties is staggering. While with clients, I can generally know in very short order which home would be perfect for them by listening to their needs, wants, likes, dislikes, when it is a personal decision it is a lot more difficult.

This definitely helped me become more aware of my value in guiding clients in choosing a neighborhood. A third party unbiased view is very helpful. Ultimately, of course, it can be and must be the client’s choice, but a good Realtor familiar with the neighborhoods can be an invaluable asset.

What I learned from my own experience with this also, however, is that the “right” home might not be in your favorite neighborhood. The home my husband and I ended up buying is farther out than we thought we’d be willing to move, and not in the “historical” intown neighborhoods that we so love. We initially thought we had to live inAnsleyPark. But when we got down to considering practicalities and our budget, a larger home a little farther out on a larger lot made a lot more sense for our lifestyle.

So, keep your mind open! But also keep in mind that you cannot look “everywhere”. It’s very important to be limited in geographic scope. Consider traffic patterns – if you work downtown, you probably don’t want to spend an hour and a half every day in traffic. Look for something closer in. But if your Realtor suggests a neighborhood you did not think of, consider it! If the home you love is in a neighborhood you were not considering, consider it! It may be the perfect neighborhood for you.