Archive for the 'Consumer Protection' Category
Pocket Listings – Are They a Good Way to Sell Your Los Altos Home?
The Los Altos real estate market is sizzling. Buyers are out in force, multiple offers are the norm rather than the exception and as might be expected, inventory is limited. Given our current strong seller’s market, why would any seller want to limit the amount of exposure (and therefore money) their home would receive by selling as a pocket listing?
If you are thinking of selling your home “off market” as a pocket listing, you should watch the following video.
Five Reasons You Don’t Want to Sell Your Home to the Person Who Leaves a Flyer on the Doorstep of Your Los Altos Home
Every so often, I receive flyers dropped off on my doorstep asking me to sell my home to someone who is “interested in buying a property in my neighborhood.” I’ve been receiving them from the same person for over 5 years, yet he hasn’t moved into the neighborhood. I wonder why?
In this particular flyer, the buyer’s terms were clearly spelled out:
- I will buy the property in “as is: condition
- I will pay a fair price
- I will pay cash
- You can remain in the home for a while after we close
- I am not an agent
- I will pay all closing costs
- I will make this transaction easy and smooth
The second paragraph reads…
“If you are thinking of selling, please let me know and I will be happy to meet with you and make a fair offer. I am not a real estate agent. I am interested in property in this neighborhood. I look forward to hearing from you…. “
The bottom had a first name, phone and e-mail address.
From a quick glance it appears as if this is just a guy who wants to move into my Los Altos neighborhood. How flattering, he likes my neighborhood and wants to be my neighbor. I did a little research and this is what I found out.
The buyer is a real estate investor. He wants to buy a house if he can make money on it. I’m not going to see him doing yard work out front. His kids aren’t going to play with mine. He won’t be at the neighborhood block party!
His flyer makes it look as if he is really interested in buying in the neighborhood for personal use, but the reality is he buys and sells homes off market for a profit. It is a pretty sophisticated system whose success is based in part on the lack of knowledge or sophistication of the homeowner.
Here is how it works
After targeting a neighborhood with flyers (apparently his neighborhood is the entire peninsula), he receives a call from the unsuspecting home seller. He offers a substantially below market offer but makes it sound better by making the process easy on the seller (buying “as is,” pay cash (really does he?), pay closing costs, allow the homeowner to stay in-house etc.).
The contract puts him and/or an assignee as the buyer (this allows him to assign the buyer’s contractual rights to a third-party). Either before or while in contract, he secures an investor/buyer who will take over the purchase, he removes himself from the contract and a new investor/buyer becomes the buyer. He walks away with a large fee for setting up the deal (does he need a real estate license for this?). The new buyer gets a home below market and the seller is left wondering what happened.
The investor doesn’t want a real estate professional, real estate attorney, or anyone else who might scrutinize the deal involved. The more eyes that look at the deal the less likely the deal will go through.
Why is this a bad deal for the home seller?
- The investor will only purchase properties that are sold substantially below market rate – seller is leaving a large sum of money on the table.
- The investor will only purchase properties “off-market” because he knows a house exposed to the market will cost him substantially more money, thereby reducing his profit – again, seller leaves money on the table.
- By assigning the contract to another, the seller doesn’t know who the buyer really is or what the buyer’s qualifications are – there is a much higher probability that the deal won’t go through.
- The investor is not a licensed real estate sales person yet acts like one (are these activities illegal?) - could potentially involve the seller in future legal problems.
- The investor can tie up a property for months (until he/she finds a buyer) – thereby preventing the seller from selling the home to anyone else.
Note: I don’t believe the investor’s activities are illegal. However, his flyers are misleading and his success is directly related to the seller’s lack of market knowledge.
If you receive one of these flyers and are curious, make sure you fully understand the deal and the person behind the deal before committing to anything. You must know that if you choose to sell your home off-market or as a pocket listing, it is highly likely that you will net less money than if you sold it with full market exposure. If approached, contact your local Realtor or a real estate attorney who specializes in these types of transactions to see if it is in your best interests to sell your home in this manner.
If you have questions about what is in your best interests when selling your home in today’s real estate market, please call me directly at 650 917-4250.
Five Crucial Reasons Real Estate Agents Shouldn’t Represent Themselves When Selling Their Own Home
I’ve been selling residential real estate in Los Altos and the surrounding communities since 1994. Most of the time when I’m representing a buyer, I don’t talk directly to the owner. I talk with the listing agent, who in turn talks with his/her seller client. However, every once in a while you run into a home being sold by owner or by agent-owner. This is can be a less than ideal situation for all parties involved.
It is totally understandable that seller-agents want to sell their own home. I’ve done it myself – once. Why would I pay someone else to sell my home? After all, that’s what I do for a living. I know the real estate market. I know the comparable properties. I know the neighborhoods and what buyers like. Lastly, I know my home like no other agent could. And that is where the problems begin.
Dealing with for-sale-by-owners is difficult enough, but dealing with one who also is a real estate agent can be extremely difficult for the following five reasons:
1. Agent-owners lack the objectivity to view their home as a buyer would. That rust colored shag carpet does not make the home retro and worth more. Rather, it makes it look old and tired and worth less. Successful home sellers understand the need to look at the home through the eyes of a buyer.
2. Agent-owners think the price they paid for their home is related to its current value. Too often agent-owners behave like traditional home sellers. Even though they know there is no cause and effect relationship, agent-owners believe (or hope) that their home is worth more than the amount they paid for it. Hello, just because you paid $$$ for the home, doesn’t make it worth $$$ plus $. This is especially true in today’s real estate climate. Current market conditions determine a home’s current market value. In a buyer’s eyes, your ownership does not add or detract value from the home.
3. Agent-owners can be irrational. This usually becomes apparent during negotiations. Comparable homes sales are just that, comparable. Agent-owners use comparable home sales when establishing market value for their client’s homes. Yet this same process gets skewed when they are dealing with their own home. I love it when you go over comparable sales with agent-owners, they invariably believe that their home is worth more because it has “potential.” Hello, ground control to agent Tom, potential means nothing! Look at the numbers.
4. Agent-owners sometimes throw ethics out the window when they are dealing with others on the sale of their own home. Is this intentional? No, but it happens. Do they fill out the disclosure documents thoroughly or is some information lacking? Agent-owners understand the process of selling a home, yet often disregard these processes. For example, an agent-owner may tell agents that offers will be looked at “as they come in.” Then when only one offer is presented, they change the rules and tell the real estate community that they are holding off looking at offers until a certain date in the future. Meanwhile they “shop” the original offer to interested buyers and their agents. Changing the rules midstream usually bites the agent-owner in the backside by scaring off solid buyers and their agents. Unlike when a traditional home seller enlists a Realtor to sell their home, there is no second pair of eyes to oversee the process when an agent-owner sells his/her home.
5. Agent-owners can scare off potential homeowners with their “over-exuberance.“ Ever go to an open house hosted by the owner? That owner follows you around, pointing out everything they like about the property. Kind of irritating. Agent-owners do this to the “Nth” degree. They’ll meet you at the door, want you to “sign-in” and then walk two feet behind you pointing out the lovely fireplace mantle and how much it means to them. C-r-e-e-p-y! Back off and let the buyers take a look at the house at their own pace.
It really comes down to the fact that anyone selling their own house can be far too emotionally invested in the home to make good real estate decisions. There is no objective filter, no second pair of eyes. That is one of the benefits of hiring a Realtor to sell your house. A Realtor will look at things objectively and give you the perspective needed to achieve your real estate goals.
If you need someone to give you real answers to your real estate questions, call or text me at 650 465-0755
The New PRDS Real Estate Purchase Contract Clarifies Common Real Estate Misconceptions
The new revised PRDS Real Estate Purchase Contract is available and is quite an improvement over the old contract. It is logically ordered and clearly defines the obligations of the parties involved. As a real estate practitioner with almost 20 years experience, this is one of the best purchase contracts we have ever had and I like it.
A Case in Point
I recently met with a South Los Altos home seller who was selling his mother-in-law’s home. The home was held in a Trust and he was going to sell the home without hiring a local real estate professional. This provided me with an excellent opportunity to get one of my buyers into a solid property. I met the seller at the property with my buyer to see if we had a match.
The seller was confident that the home would “sell itself” because it was located near one of our local top performing elementary schools. I asked him if he was aware that the neighborhood school might be impacted and that a buyer’s child was not guaranteed a spot in the neighborhood school. Assignments were based on available classroom space. He was firm in his belief that he did not need to disclose this information because the house was held in a Trust.
New PRDS Real Estate Purchase Contract clarifies disclosure issues
Had he read the last section of paragraph 10 in the new PRDS Real Estate Purchase Contract, he would see that regardless of whether a statute exempts the seller from completing certain disclosure documents (like the Transfer Disclosure Statement or Seller Supplemental Disclosures), the seller is still legally required to disclose all known material facts about a property. Given that many home buyers purchase in Los Altos for their outstanding schools, do you think a buyer would be interested in knowing that his/her children may not initially get into the neighborhood school?
This is just one of many examples where the new PRDS Real Estate Purchase Contract makes it easier for the consumer to understand the important issues involved when making an offer to purchase a home.
What can you take away from this?
Should you be in the market to either buy or sell a home locally, make sure that your agent is familiar with the most current forms which would include the new PRDS Real Estate Purchase Contract. You would be surprised to find how many agents use older outdated forms. Should there be an issue, the first thing opposing counsel will look at is the published date of the legal document used by you or your agent.
*Note: I am not an attorney nor do I pretend to practice law. The preceding information is just that, information to get buyers and sellers to think about their home purchase or sale. Please consult your own qualified real estate attorney should you have questions concerning real estate law, contract law, disclosure law and/or your own personal situation.
Should you have any questions about the value of your home in today’s market or you wish to purchase a home, please call or text me at 650 465-0755.
Craigslist Scam Uses Mountain View Property As Bait
I received a call yesterday from a woman who was looking for information about a rental property in Mountain View that she saw on Craigslist. The ad was offering a 4 bedroom/3 bath home in the Gest Ranch neighborhood of Mountain View for $2,000 per month. There was a property address but no further information was given. The ad also included a rental application that was to be submitted via e-mail.
Since there wasn’t much information about the home, the prospective tenant drove to the property to check it out. She saw our Coldwell Banker real estate sign (not realizing that it was a “for sale” sign not a “for rent” sign) and called to get further details and access. That is when I informed her that she almost had her identity taken.
Coldwell Banker does not have a rental in the Gest Ranch neighborhood of Mountain View and if we did, it would not be priced at $2000 per month (market rent is more than double that for a home of that size). What we do have is a home for sale (although it went sale pending immediately) that matches the subject rental property. So what happened?
Someone “hijacked” (took the online photo, address etc.) a new Coldwell Banker listing and entered it into the Craigslist rental database as their own. They were hoping that someone (or better yet, many people) would e-mail a completed rental application and/or someone (or many people) would send them money in the form of a deposit. Once they had the information, they would assume the person’s financial identity and go shopping.
How to protect oneself from online scams?
Things to think about:
- Does the rent or asking price seem really low.
- Is the text poorly written.
- Do they ask you to submit personal information or a deposit before seeing the property.
- Will they personally meet you at the property (If so, make sure that you go with a friend).
- Can you verify that they are the owner of the property or a representative hired to market the property?
- Google the property address to see if it is for sale/rent, vacant lot etc.
- If it seems to good to be true, it probably is.
Craigslist has its own personal safety tips when using their site. They are:
You can sidestep would-be scammers by following these common-sense rules:
- DEAL LOCALLY WITH FOLKS YOU CAN MEET IN PERSON – follow this one rule and avoid 99% of scam attempts on craigslist.
- NEVER WIRE FUNDS VIA WESTERN UNION, MONEYGRAM or any other wire service – anyone who asks you to do so is a scammer.
- FAKE CASHIER CHECKS & MONEY ORDERS ARE COMMON, and BANKS WILL CASH THEM AND THEN HOLD YOU RESPONSIBLE when the fake is discovered weeks later.
- CRAIGSLIST IS NOT INVOLVED IN ANY TRANSACTION, and does not handle payments, guarantee transactions, provide escrow services, or offer “buyer protection” or “seller certification”
- NEVER GIVE OUT FINANCIAL INFORMATION (bank account number, social security number, eBay/PayPal info, etc.)
- AVOID DEALS INVOLVING SHIPPING OR ESCROW SERVICES and know that ONLY A SCAMMER WILL “GUARANTEE” YOUR TRANSACTION.
- DO NOT RENT HOUSING WITHOUT SEEING THE INTERIOR, OR PURCHASE EXPENSIVE ITEMS SIGHT-UNSEEN – in all likelihood that housing unit is not actually for rent and that cheap item does not exist.
- DO NOT SUBMIT TO CREDIT CHECKS OR BACKGROUND CHECKS FOR A JOB OR FOR HOUSING UNTIL YOU HAVE MET THE INTERVIEWER OR LANDLORD/AGENT IN PERSON.
If you are looking for a quick, safe and easy way to find your local dream home, click here?
Should you have any questions about the value of you home in today’s market, please contact me directly at 650 917-4250 for a confidential conversation.
What is One of The Most Important Things a Buyer or Seller Must do When Selling a Home?
*I am not an attorney nor do I pretend to practice law. The following information is just that, information to get buyers and sellers to think about their home purchase or sale. Please consult your own qualified real estate attorney should you have questions concerning real estate law, disclosure law and/or your own personal situation.
Disclose, disclose, disclose, that’s what sellers and their agent(s) are required to do when a home is sold. From the seemingly innocent leaky faucet and barking dog next door, to more serious issues like mold or school attendance boundaries. If it affects the value or potential value of a property it must be disclosed. Disclosure is required by the seller, the listing agent(s), and the buyer’s agent(s) in most real estate transactions.
A seller’s agent should make sure the seller is aware of their obligation to disclose all material defects that may affect the value or potential value of the property. The seller’s agent also has a duty to complete a diligent physical inspection of the home and note items that may be of concern. If the seller’s agent is aware of any neighborhood issues that may affect the home’s value, those also should be documented.
A buyer’s agent should read the completed disclosure documents prior to giving them to a buyer. If the documents aren’t completed (which happens more than one would think), the documents should be sent back to the seller to complete. A buyer’s agent has a duty to complete a diligent physical inspection of the home and note items that may be of concern. If the agent is aware of any neighborhood issues that may affect the home’s value, those also should be documented.
The buyer’s obligation in the process is to read the disclosures, ask questions, have the home inspected and check things out for themselves. If a buyer is thinking of expanding the home, go to the city’s planning and building department and ask what is required. Your agent may have an idea, but your agent isn’t going to prevent you from building. The city can! What is the FAR (floor/area ratio), setbacks, height limitations and tree removal requirements? Is the home in the right school district? Is redistricting a possibility? Is there currently space in a particular grade level? Ask, don’t assume and try to get the answer in writing.
Too often buyers want their agents (or others) to weed out the issues that might be of concern to the buyer. Horse pucky! How does the agent (or anyone else for that matter) know what is going on in the inner recesses of a buyer’s mind? That obligation duty falls on the buyer. Buyers…Read all the disclosures, have the property fully inspected and check out everything that is a concern to you prior to removing your property condition contingency.
Note: In our most recent legal update, we were told of some new advisories coming within the next few months. Stay tuned.
*I’d like to think the law offices of Thief, Grief and Steal for providing the introductory disclosure to my disclosure post. Just kidding!
The Costs Associated With Preparing Your Home For Sale Have Just Gone Up.
The costs associated with preparing your home for sale will likely go up due to a new EPA rule that goes into effect on Thursday. The Renovation, Repair, and Painting (RRP) rule requires those who are paid to renovate residential structures that contain children must use lead safe building practices. According to the EPA’s website:
The Renovation, Repair, and Painting Rule applies to all firms and individuals who are paid to perform renovation, repair, and painting projects that disturb paint in pre-1978 housing and child-occupied facilities. This includes home improvement contractors, maintenance workers, painters and other specialty trades.
Those doing the actual work will need to follow three basic lead safe work practices:
- Contain the work area
- Minimize work related dust
- Clean up/cleaning verification
The National Association of Realtors has produced a series of short videos that discuss the RRP rule and its applications. Click here to see the first video in the series that describes the RRP rule.
When selling a home, interior and exterior painting typically adds the highest return on investment. Sellers who opt to paint are going to face higher costs due to contractor compliance related expenses. According to the EPA’s website, in addition to a certification fee of $300, a training fee of approximately $200, contractors will also see increase in the costs associated with compliance (ie. containing and minimizing dust etc.).
Sellers may also need to plan ahead because finding a contractor who has completed the compliance and certification training may prove to be difficult, at least initially. As of the writing of this post, there are 14 contractors within a 10 mile radius of Los Altos who have completed the certification process. To find local contractors who have been certified, click here .
Lastly, there are exemptions to the RRP rule:
- The home or child occupied facility was built after 1978.
- The repairs are minor, with interior work disturbing less than six sq. ft. or exteriors disturbing less than 20 sq. ft.
- If the house or components test lead free by a Certified Risk Assessor, Lead Inspector, or Certified Renovator.
- If the property owner is conducting the RRP work themselves.
For further information regarding lead hazards and home renovations, click on the following brochure.
Why Loans Aren't Funding in Flood Hazard Areas!
The National Flood Insurance Program has expired and it was not extended prior to Congress taking its spring break. The absence of this Program may make it difficult if not impossible to secure flood insurance on property located in flood hazard areas. Most institutional lenders will not fund a loan secured by real property in a flood hazard zone without that insurance in place.
It is unknown how quickly Congress will move to reinstate this federal program when they return to Washington on April 12th. As such, we are facing a minimum of a 2 week gap in the availability of this important federal program.
Buyer Tip: check to see in there is any effect on the funding of your loan with your lender prior to removing the financing contingency. Otherwise you may up a creek without a paddle or a boat.
The Strength of Silicon Valley's Economy is Revealed
Our local housing market is based on the strength of our local economy. The Joint Venture: Silicon Valley Network and the Silicon Valley Community Foundation recently released its 76 page Index of Silicon Valley report (note: report takes awhile to download):
The 76-page 2010 Index reports the latest data and trends in economic development, workforce, housing, education, public health, land use, environment, governance, arts and culture and other sectors throughout Santa Clara and San Mateo Counties and portions of Alameda and Santa Cruz Counties. An accompanying Special Analysis section of the report each year takes a closer look at a particularly significant topic.
Some of the issues highlighted in the publication include:
- Shifts in methods of funding innovation
- Governmental forces negatively effecting the region
- Decline in employment opportunities
- Housing affordability
- High commercial vacancy rates
All is not bad, but the report is not overly optimistic. If you like analytics and statistics than this is the publication for you.
How First-Time Home Buyer's Can Save $10,000 in Taxes!
Are you a first time home buyer who isn’t quite sure whether now is the time to buy? The State of California is trying to motivate you by offering an incentive to those first time home buyers who make the move in 2010.
Under a newly enacted California law, a home buyer may receive up to $10,000 in tax credits for purchasing a qualifying single-family residence in 2010. The credit is claimed over the next three years (e.g. $3,333 for 2010, $3,333 for 2011, and $3,333 for 2012).
There is a total of 100 million in tax credits available and once the credits are gone, they are gone. The beauty of the program is that there are no income restrictions or maximum purchase price requirements. The program is perfect for those wanting to buy their first home in Silicon Valley .
Note: In addition to the first time home buyer credit, there is a total of 100 million in tax credits set aside for new home buyers as well.
Further details of the program can be found by clicking here.
If you are think of buying your first home in Silicon Valley and you are a first time home buyer, please give me a call at 650 917-4250.
David Blockhus, 650-917-4250
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Recent Posts
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- Pocket Listings – Are They a Good Way to Sell Your Los Altos Home?
- 13th Annual Silicon Valley Kids Triathlon – June 10th 2012
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