wrongway

Dumb Reasons People Don’t Buy the House They Want

When you decide you’re in the market to buy a house, you can: 1. Do this the smart way, and maximize the likelihood that you’ll end up with a house you like and can afford; or 2. Do this the dumb way, and rush headlong into a complicated process without the support or information you need to be successful.

It always amazes me how many people opt for #2.

Most people don’t buy and sell houses very often, so it’s understandable that they don’t know much about the process, but if you’re going to make one of the biggest purchases of your life, it seems as though a little homework and some help from experts would be a good idea, right?

Mistake #1: Not Selecting a Realtor

The first mistake some people make is to try to save money by opting to go without a Realtor. A good Realtor can save you time and money. They walk you through the process, preparing your for each step so you have as few setbacks and surprises as possible. (Is it self-serving for me to say this? Yes. But is it true, anyway? Yes.)

Mistake #2: Not Getting Qualified for a Loan Up Front

The second mistake people make is to start looking at houses before they know what they can afford. This wastes time and can be very disheartening. It’s far better to schedule an appointment with a loan broker to get “pre-qualified” or “pre-approved” for a loan. Pre-qualified consists of sitting down with your Realtor to figure out roughly how much income you have and how much debt you carry (car payments, insurance payments, tuition payments, etc.), as well as whether you have any savings for a down payment. Being pre-qualified is much better than not being pre-qualified, but it’s not as good as being pre-approved.

To become “pre-approved” is more involved, but it can dramatically increase the chances of getting the property you want. Pre-approval requires a thorough review of all your assets, liabilities, tax returns, W-2s, credit history, and any other relevant financial information to begin the process of applying for a loan. Basically, the only difference between being pre-approved and applying for a loan is that when you’re pre-approved, you haven’t found your property yet.

Getting pre-approved increases the chances of having your offer accepted, and it puts you ahead of your competition, if you have any.

Mistake #3: Choosing the Wrong Loan Broker

Working with an out-of-town or online loan broker can be a risky business. Real estate loans are complicated, so ask your Realtor for a referral so you know you have a loan broker you can trust, one who will walk you through the process—and look out for your interests.

Mistake #4: Putting in a Low-Ball Offer

In a seller’s market, sometimes it’s wise to put in a full-price offer. Sound crazy? It’s not. It’s fine to negotiate in a buyer’s market, but don’t lose your dream house because you thought you were supposed to play hardball.

Mistake #5: Messing Up Your Financing With a Big Purchase

Once you’re in escrow, don’t buy a car with $500-a-month lease payments (or make other, similarly expensive purchases), because big purchases can change whether you still qualify for your loan.

Mistake #6: Running Out of Cash

In addition to a down payment, you’ll need cash for several other expenses when you buy a house. You may have to pay a premium for private mortgage insurance, fund a lender’s escrow account, or pay upcoming property tax and insurance bills. Plan accordingly (your Realtor can help you with this).

Sometimes escrows fall through, but you can reduce the chances of a failed escrow by avoiding these unnecessary mistakes.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Photograph showing the headquarters of the U.S. Mortgage company Fannie Mae in Washington, DC, on 14 July 2008. US mortgage giants Freddie Mac and Fannie Mae are set to be put under government control in an attempt to rescue the firms, media reports say on 07 September 2008. Top bosses would be removed under the US Treasury plans which could see the US's largest ever financial bail-out.  EPA/MATTHEW CAVANAUGH

Time to Buy, Thanks to a Loosening of Loan Restrictions

If you’ve been waiting for home prices to fall before you jump into the market, you might have a long wait. It still costs less to buy a house than it does to build one, and with recent changes to rules covering many conventional loan programs, now could be a great time to embark on the adventure that is home ownership.

The two biggest government-sponsored buyers of residential real estate loans are the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, and the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac. As of July, they’ve loosened restrictions, making it easier for people to get home loans.

First, they decided to eliminate derogatory credit remarks on some credit reports, which will improve some people’s credit scores and help them qualify for a larger loan amount, or perhaps a lower interest rate. Second, they increased the debt-to-income ratio from 45 to 50 percent. If your combined monthly income is $6,000, the 45 percent debt-to-income ratio would only allow you to put $2,700/month toward monthly debt. Now, with that same income, you can put $3,000/month toward debt. Debt includes things like your mortgage payment, any car payments, revolving credit card debt, and student loans. If your situation allows you to put the additional $300/month toward a mortgage payment, that enables you to spend almost $60,000 more on a house at today’s rates, potentially moving you from a two-bedroom, one-bath house with a single-car carport to a three-bedroom, two-bath house with a two-car garage.

This change is important because Fannie Mae and Freddie Mac own a huge percentage of mortgage loans, and influence even more. Banks underwrite to Fannie Mae and Freddie Mac standards so they can sell to them.

So, if you want to buy a house, you may be able to get a larger loan with the same income. I understand that there are benefits to renting over buying—like having a landlord who is responsible for the structural repair and upkeep of your home, but there are many great perks to owning your own home as well.

First, real estate is one of the best long-term investments you can make. Although home prices may rise and fall in the short term, the trend during the last 40 years is clearly upward. Ask your parents what they spent on their first house and you’ll see what I’m talking about.

Another benefit to owning over renting is that much of your new monthly housing cost is tax deductible. Interest rates remain near historic lows. In fact, in my 40 years in the real estate business, the lowest interest rate for a 30-year, fixed-rate mortgage I recall was 3 percent, and it was only that low for about a day. Today, rates range from about 4 to 4½ percent. Compare that to the peak interest rates in the 1980s, when they were above 14 percent, and you’ll understand why I’m so enthusiastic about today’s rates.

Finally, there are benefits to home ownership that you can’t put a price on. It feels empowering when you don’t need anyone’s permission to change the landscaping, replace the carpet, or paint your dining room lavender.

All in all, these changes from Fannie Mae and Freddie Mac will allow more buyers to qualify and at higher prices than they would have in the past. But remember, just because you can qualify for more, doesn’t mean you should. Review your personal finances and consider the fact that your mortgage payment won’t be your only house-related expense; you’ll need to budget for repairs and upkeep, too.

If your situation supports it, now could be the perfect time to venture into the world of home ownership.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

10 ways to improve home

10 Inexpensive Improvements That Make Your Home More Valuable

When it comes time to sell your house, you want to get top dollar. With some simple, inexpensive updates, you can significantly improve how people perceive your home’s value.

  1. Wash Siding
    If your exterior paint is in good condition, washing the exterior can almost make it seem like you’ve just repainted your house. You can rent a commercial power washer to make the job quick and easy; but be careful, you can inadvertently blow a hole in the side of your house if you’re not careful.
  2. Paint Inside and Out
    If your paint is chipped or wearing out, go directly to the paint store (or in my case, call professional painters). A new coat of paint revitalizes a property, making it clean and bright.
  3. Update Landscaping
    While I love bright, pretty flowers, they are hard to maintain and rarely drought-resistant. I recommend low-maintenance, native plants that can stand up to our brutal summers and chilly winters.
  4. Replace Kitchen Cabinet Doors
    If your cabinets are in fine shape but outdated, consider replacing their doors. Old oak cabinets will last forever, but you may not want the style of those cabinets to remind potential buyers that your house was built 50 years ago. With updated glass-paneled doors, for example, they’ll just see your beautiful kitchen.
  5. Add a Hot Water Dispenser
    You can install an after-market hot water dispensers next to your kitchen faucet for instant tea, hot cocoa, or a head start when you put water on the stove to boil. This is an inexpensive luxury feature you can pick up at a hardware store for less than $300. Just don’t do what I did, and sweep your hands under that scalding water. It’s just shy of boiling hot.
  6. Replace Door Handles
    Choosing new door handles can add a little pizzazz as you enter each room. Just be sure not to put stainless steel levers in a Victorian-style home or old-fashioned class knobs in a contemporary home.
  7. Showcase a Unique Fixture or Piece of Furniture
    Before you go buy a new piece of furniture, remember: it’s best if you remove a third of your belongings before you put your house on the market. Your house will seem roomier when it’s not cluttered. Now, if you have a piece of furniture or an interesting fixture that will make your property memorable (in a good way), go ahead and bring it in.
    I have a table that belonged to my mother. It has a big oval marble top, and while it is a little more ornate than my other furnishings, I absolutely love it and it sets off the room perfectly. If you are a crafty do-it-yourselfer, you might be able to find a gem at a garage sale or thrift shop. Sometimes old pieces just need a little refinishing to become stunning works of art. If it were me, I’d head down to the Furniture Design Center in Ukiah. I’m not really the crafty type.
  8. New Window Treatments
    Replacing worn curtains or broken shades can really update the look of a house and give the impression that it’s newer than it is.
  9. Build a Window Seat
    Assuming you have space and the right location, a window seat can be an attractive addition, providing a charming little spot to read or enjoy a cup of coffee.
  10. Add Storage
    I don’t think you can ever have too much storage. Adding shelving and plastic storage bins in a garage or basement pulls unnecessary items out of closets, making the house seem spacious. You can also add an inexpensive shed, so people know they’ll have a place to store things when they move in.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business in Ukiah for more than 40 years.

costco

Ukiah Will Finally Get Its Costco

I’ve been promising my children we’d do our Christmas shopping at Costco in Ukiah since about 2013, so when I tell them Costco plans to open in April, I can hardly blame them if they don’t rush to put it on their calendars. However, this time, it’s the real deal. Escrow is scheduled to close in September, and Costco plans to break ground shortly thereafter.

When a company like Costco decides to build a store in a new location, it’s generally the result of long hours of negotiation to determine who will pay for what. Costco needs infrastructure to support its new store, and local government needs to be sure the tax revenues and other benefits outweigh the costs.

Now that negotiations are done, we can expect construction to begin. While Costco works on building its store and gas station, local contractors will begin several infrastructure projects: reconstructing Airport Boulevard, adding a second left-hand turn lane from westbound Talmage Road onto Airport Boulevard, as well as creating a two-lane off-ramp from southbound Highway 101 at Talmage Road with censors connected to the traffic light at the Talmage and Airport intersection. They will also add a left-hand turn lane from Hastings Avenue on to State Street   and a traffic light at Hastings Avenue and Commerce Drive.

I don’t have a lot of details, but I am told Ghilotti Construction has been awarded a $4.6 million contract for much of the construction (not including the off ramp).

The half-cent sales tax recently approved by Ukiah voters via Measure Y will fund the rebuilding of Airport Boulevard. Additional funding will come from a gas tax and a capital improvement fund. Contributors to the capital improvement fund include businesses currently located in the Redwood Business Park (that’s the official name for the Airport Boulevard shopping area).

I know we still have people against Costco coming to town, but it’s here so let’s embrace the benefits, of which there are many. When Costco opens, it will provide a place with more goods at lower prices, and its presence will likely lead to lower prices on goods throughout our community (thanks to the laws of supply and demand). Gas prices should also drop. Lower prices make everyone’s paycheck go further. Most of the jobs at Costco will pay enough to allow their employees to afford Ukiah-area rents, and I expect many employees will be able to afford to buy homes.

People will not go to Santa Rosa to shop as often, saving gas and keeping more sales tax revenue here. Having a Costco in town will also reduce online shopping. Many locals say they would shop in Ukiah if they could find what they’re looking for. While Costco may not be a local mom-and-pop business, shopping there will certainly support the local employees who work there, and it will increase sales tax revenues to pay for things like public safety and other services many of us appreciate.

Ukiah’s 8.375 percent sales tax gets distributed to city, county and state governments. The city gets approximately 2 percent. The state gets approximately 5 percent, and the county gets the rest (including 0.125 percent for the library). Costco will also pay property taxes to the tune of about 1 percent of the finished value of the land and improvements.

Thanks to City Manager Sage Sangiacomo and City Councilmember Doug Crane for providing timely information about costs and revenue on this project. The city’s fiscal analysis for Costco conservatively estimates net annual sales tax revenue to the City of Ukiah will be about $800,000. The estimated assessed valuation for the Costco development is about $27,000,0000, so property tax revenue should be approximately $270,000 of which the city will get about $25,000. Most of the other $245,000 gets distributed to other local agencies. Overall, this is a good deal for Ukiah.

If you have questions about real estate or property management, contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

 

 

 

 

Meathead Movers

Do What You Can, Then Hope for the Best When Moving Part II

Last week, I reviewed a few tips about how to minimize potential problems that come along with moving. I recommended ways to carefully manage the packing process; I provided information on choosing a reputable moving company, and I shared advice from Rob McAsey at Mark Davis Insurance about reviewing your homeowner’s policy to be sure you’re adequately covered. I also mentioned the importance of contacting utility companies before you move to prevent the unfortunate scenario of completing your move, only to be left sitting in a cold, dark house surrounded by boxes ready to unpack.

Because most people don’t move very often, they have no way of knowing what’s normal and what’s not, as well as what’s included in the base price and what’s extra. I’m happy to say that I’ve heard of no reports of fraud or negligence with professional moving companies in Ukiah, but for those moving out of town, here are some additional tips on how to protect your belongings and minimize the move’s impact on your pocketbook.

The number one way to have a bad moving experience is to work with a bad moving company, so be sure to ask your Realtor for a list of licensed and insured movers. Be aware that hiring a company solely because they offer the lowest price can end up being very expensive.

Not all moving companies are created equal. In addition to their experience and professionalism, consider their specialties. Some companies are accustomed to the challenges of rural moves with dirt roads and homes that aren’t accessible with big moving trucks. Other companies are used to working in big, metropolitan areas with constant traffic zipping around their movers and the challenges of getting your belongings into your third-floor condominium.

Once you’ve found a good company, avoid misunderstandings by clearly expressing your needs and expectations. Carefully review the moving company’s scope of work and fee structure so everyone is clear on who does what. Are you packing your belongings, or are they? Where will they unload your belongings—to the curb, to the first floor, upstairs? Is there an extra fee for furniture that weighs more than a specified amount (like your solid oak desk or piano)? Here’s a list of common services for which you may have to pay extra.

  1. Disposal Fee. If you want the movers to take the extra packing material with them after they move the furniture, you may have to let them know ahead of time.
  2. Furniture Disassembly and Reassembly. Some furniture won’t fit through a regular door jamb and must be disassembled and reassembled when moved. Are you doing this, or are they?
  3. Appliance Hook Ups. Some moving companies may not even offer to hook up your appliances because of liability issues, but if they do offer this service, they’ll likely charge for it.
  4. Long Carry. If the movers cannot park directly in front of your house, or if there is no parking close to your house, they may charge extra for a “long carry.” If possible, reserve the space in front of your home to avoid this charge.
  5. Shuttle Moves. If the movers cannot drive their big truck up to your new house, they may need to transfer your belongings to a smaller “shuttle” truck. This will cost extra.
  6. Storage and Warehousing. If there is any delay in moving your belongings directly into your new house when the truck arrives, the moving company will charge you for the use of their truck (or the cost of the warehouse), and any extra labor costs.

Although moving is stressful, if you plan well, you shouldn’t have any problems.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Meathead Movers

Do What You Can, Then Hope for the Best When Moving

You’ve sold your house and you need to be out by 5:00 pm today, but the movers don’t show up as promised. You call to inquire why and they let you know they’re running a couple days behind. You call your Realtor to see if the buyers can wait a couple days, but find out their movers are on the way with two big trucks full of everything the buyers own, and they’re on schedule to arrive promptly at 5:00 pm, when you no longer own the house, according to your sales contract.

To avoid this and similarly dreadful moving scenarios, it’s best to plan ahead as much as you can. Then, all you can do is take a deep breath and hope for the best.

Carefully manage the packing process.

Whether you pack your own belongings or have professional packers do it for you, head to the hardware store and purchase about eight different colors of duct tape. Use yellow on boxes for the master bedroom, blue for the kitchen, and so on. When you arrive at your new home, put a little duct tape of the corresponding color on the doorway to each room so movers can put boxes in the right rooms.

If you pack your own things, use small and medium-sized boxes (ones you can lift when they’re full). If you hire movers to pack your things, I recommend keeping a close eye on the process by letting them know you’ll label boxes as they pack.

Choose a reputable moving company.

Many people try to save money by moving themselves. If you can afford professional movers, I recommend you do so. While your brother-in-law and your Great Uncle Ned might be fun at family barbecues, their knowledge about how to transport Grandma’s heirloom china might not be too impressive.

To find a good moving company, ask your friends, family, or Realtor for a referral and then check out the reviews online. Make sure whoever you hire has liability insurance, workers’ compensation insurance, and content coverage. And for specifics about what is included in their fees and what is extra.

Review Your Homeowner’s Insurance.

According to Rob McAsey at Mark Davis Insurance, you should review your homeowner’s insurance before you move so you know what’s covered. Let’s say you own a home worth $500,000. Contents coverage is usually set at 70 percent of that value, or $350,000. The coverage for contents that leave the home is often 10 percent of that, so $35,000. If all your belongings in that truck would cost more than $35,000 to replace, you might consider purchasing more insurance.

I recently heard a horror story about a family moving to Ukiah whose mover stopped en route to visit someone. During the stopover, the moving truck was stolen. Unfortunately, although the client had confirmed that the moving company had insurance, he had not checked how much. The moving company’s insurance carrier paid $50,000 for $130,000 worth of losses, leaving our new Ukiah resident $80,000 in the hole.

Schedule Utilities Activation Early.

It’s Friday at 6:00 pm. Your belongings have been transported to your new home and almost all the boxes have miraculously been placed in the right rooms. The sun is setting. It’s time to order pizza and celebrate.  You reach for the light switch to turn on the lights when you realize no one has alerted the utility companies that you’ve arrived. You have no electricity, no water, and no gas.

Avoid this situation by contacting utility companies early.

Be Clear About What’s Included and What’s Extra.

Next week, I’ll write about all the services that are typically included when you hire movers, and those for which you must pay extra.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Appealing Your Property Tax Bill

 

When you purchase a property, the Mendocino County Assessor’s Office determines the property’s assessed (or market) value for the purpose of establishing future property taxes. The initial assessment is critical because it establishes the basis for all future payments. Property taxes are calculated on the base year (first year) and cannot increase by more than two percent compounded per year.

Once this base value is established, if the property value falls below the original base year value, the assessor can lower the assessed value to reflect the current market value. But if prices take a big jump the following year, the original base value comes back into play, and the value can be increased by two percent per year from the original acquisition date and amount.

Usually, the assessor establishes the base year value at the purchase price, a reasonable approach. However, there are occasions when this approach isn’t appropriate. The assessor’s job is to equate the assessed value with the fair market value as of the closing date of the purchase. If you got a screaming hot deal, the assessor is obligated to assess the property at a value higher than the purchase price. In this case, the responsibility to justify a base value higher than the purchase price is squarely on the assessor’s shoulders.

Revenue and Tax Code 110 says, “For purposes of determining the ‘full cash value’ or ‘fair market value’ of real property, other than possessory interests, being appraised upon a purchase, ‘full cash value’ or ‘fair market value’ is the purchase price paid in the transaction unless it is established by a preponderance of the evidence that the real property would not have transferred for that purchase price in an open market transaction. It goes on to say, “This presumption may be overcome if the assessor establishes by a preponderance of the evidence that all or a portion of the value of those improvements is not reflected in that consideration.”

Clearly, the assessor has to do two things: use evidence to show that the sales price wasn’t fair market value, and then demonstrate what fair market value is. The method to determine fair market value is well established by appraisers, using comparable properties that have sold recently and making adjustments for the condition of the property in question.

Now, this can work in the opposite direction, too. Let’s say you overpaid for a property, perhaps this property was your childhood home, or maybe you want to be sure no one builds on the empty lot next door. In these cases, if you want to have the property assessed so you can pay taxes on a lower base value than the purchase price, the burden of proof is on your shoulders.

The most critical thing to remember is that the first year of assessed value will impact your taxes for as long as you own the property. Once the base year is established, doing home repairs should not impact the assessed value; however, improvements will. If you replace your roof with the same type of roof, that’s considered a repair. If you replace a flat, 1955 tar-and-gravel roof with a peaked composition shingle roof, that’s an improvement and can cause an increase in the assessed value. To the extent that the new roof is superior to the old, the assessed value can reflect that improvement.

The bottom line is this: if you honestly feel your assessed value is higher than fair market value, call the assessor’s office and explain your position; then ask them to lower the assessed value.  If they don’t agree, don’t be afraid to appeal the decision. If you convince the appeals board you’re right, it could save you a lot of money.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Don’t Accidentally Sell Your House Twice

With interest rates remaining low and nice weather making it easy for people to get out and see new properties, the housing market is likely to remain hot. This is often when we see multiple offers on a single property.

A seller’s first reaction to multiple offers is usually, “Yay! Lots of offers.” The reaction immediately afterwards is, “Dang, I priced the house too low.” The first feeling is justified; the second may not be.

Multiple offers give the seller options. More offers increases the likelihood of a higher sale price, but price is not the only consideration in determining the best offer.

With multiple offers, sellers have the luxury of choosing a buyer who is prequalified or even preapproved for a loan. The seller may also get to choose a buyer who can make an all-cash offer, one who can provide copies of bank statements to prove it.

In addition to finding a highly qualified buyer, sellers with multiple offers can compare contingencies and lengths of escrow. One offer may include no contingencies but require a 90-day escrow (that’s a long time). Another offer could require a seller to perform repairs based on a pest and fungus report, but also close with an all-cash offer in three weeks. Like I said, more offers means more choices.

Things can get a little complicated when multiple offers lead to multiple counteroffers. This is where you have to be careful not to inadvertently sell your house twice. A good Realtor will help you manage the multiple offer/counteroffer process by assuring contracts are written with clear boundaries. Your Realtor will write counteroffers on your behalf that can be withdrawn at any time, and will assure you only confirm the counter offer you want to accept.

Just so you know, you are not obligated to counter all offers or to offer the same terms in counteroffers to multiple prospective buyers. You may be willing to settle for a lower price from a buyer who doesn’t require you to pay closing costs or do repairs.

It is illegal for you or your Realtor to take into consideration anything considered a protected class at any stage in the real estate transaction. This obviously refers to race, ethnicity, and religion. It also refers to age, marital status and whether the buyers have children.

To be clear, it is NOT legal to consider the needs of a family with four kids looking at your four-bedroom house with a jungle gym in the backyard over the needs of a single elderly gentleman. However, if you fall in love with a young couple, you could give them preference over a grumpy old man, because personality is not a protected class.

After you’ve selected your favorite offer, your Realtor will be sure to cancel all other counter offers and open escrow for you. However, do not forget about other prospective buyers. One or more of whom may still see your house as their dream home. They can be encouraged to write a back-up offer, which would become the primary offer if the first offer falls through for any reason.

A certain percentage of offers do not go through for a whole host of reasons. Sometimes the highest price offer—the one that looked so good at first blush—comes with problems. Many of us tend to ignore problems when the money looks good, but we’re sorry later when the transaction falls apart. That’s when the back-up offer swoops in to save the day.

However, as your Realtor will remind you, if the first escrow fails, not only will you need formally cancel the contract, you will also need to disclose any material facts brought to light by the first buyer’s inspections.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

The Multiple Listing Service – Then and Now

In 1975 (just like today), real estate brokers in the Ukiah Valley belonged to a local association called the Multiple Listing Service (MLS) to share information about properties they were trying to sell. This is back when houses in Oak Manor sold for about $30,000 and today’s Ukiah High School on Low Gap Road wasn’t built yet.

When a Realtor secured a new listing, he or she would type up the pertinent information about the property (location, number of bedrooms and bathrooms, square footage, etc.) and then share that information with the MLS office. There, the information was reduced to a half-sheet of paper using what would now be considered an antique device—a mimeograph. Those of you who have been around awhile may remember mimeographs from your elementary school days.

Information was carefully typed onto a master copy, of which there was only one. To create the master copy, you punched letter-shaped holes into the paper. Once completed, it was put on a drum saturated with ink. When the drum turned, the ink came through the holes and created copies of the original form. Mimeograph copies of each listing were created for every Realtor. The mimeograph required a whole room of its own in the MLS office. The room was about 15-feet square and everything in it was coated with varying amounts of ink dust.

Each week every Realtor received a packet of all the new listings—typos and all. To keep track of the properties for sale, Realtors filed each mimeograph copy in their 18-ring binders. Then, as now, the housing market changed constantly. Listing agents would have price changes. Sellers would decide to take their properties off the market. Houses would go into escrow and fall out of escrow. All that information was reported to MLS to be distributed the following week. Then Realtors (or their assistants) updated their MLS binders, pulling out sold properties and keeping them in a shoebox to use when determining pricing for future listings. They manually crossed out the old price and wrote the new one on the MLS listing form for that property. They noted any status changes by painstakingly going through the binder, finding the listing form, and handwriting the change.

Believe it or not, as I’m working on this column, I’m looking at my MLS binder from 1975. There was a property for sale on Pomo Drive in Oak Manor—a four-bedroom, two-bath house with a two-car garage—for a whopping $36,000. It would probably go for $375,000-$400,000 today.

In 1976, I was able to convince the MLS finance committee and board of directors to discard the mimeograph in favor of a photocopier. It was incredibly expensive, costing $5,000 at a time when houses were selling for $30,000. In today’s dollars, that photocopier would be about $25,000. Ultimately it paid for itself by requiring far less office space and fewer hours of staff time. It took ten minutes instead of all day to prepare the MLS listing information for all the agents. The binder was replaced by a bound book shortly thereafter.

Fast-forward to the mid-1980s and computers arrived, revolutionizing real estate. We could take “dumb terminals” to a client’s house and upload information about the new listing directly to the MLS database and a printer using a landline telephone hooked up to a coupler as a modem for the lowest-speed connection you can imagine.

In today’s world, we upload detailed information with pictures and sometimes video for listings, and within moments, other Realtors have instant access to it. If I want details about a listing I happen to drive by, I can park my car and pull out my phone—and say “Hey, Google.”

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Disclosures – What Happens if You Don’t Mention Those Pesky Details

Last week, I shared the importance of disclosing what are called “material facts,” information a seller knows or should have known that could influence a buyer’s decision to buy—or the amount they’d be willing to pay. Disclosures cover everything from natural hazards to underground utilities, storage tanks, septic systems, short sales, mother-in-law units, proximity to agriculture or industry, naturally occurring asbestos, and more.

Disclosures cover such a wide range of topics and can be so detailed and complex that there are whole companies that do nothing but deal with them. They’re called Natural Hazard Disclosure Companies (NHDs), and even they don’t deal with all the disclosures legally required by some real estate transactions. Because there are literally hundreds of potential disclosures, many may seem inconsequential to the seller. After all, you’ve gotten used to the noise that the neighbor’s dog makes. And since you and your neighbor (who happens to own a liquor store) are friends who often enjoy a glass of wine together, you’re not likely to complain about Fido the yappy schnauzer.

Since the prospective buyer is a teetotaler who is unlikely to socialize with the wine-drinking neighbor, he may not find Fido’s quirky but constant yapping so endearing. The point of all this is, as a seller, you need to think of disclosures through the eyes of prospective buyers. It is critical that even seemingly irrelevant issues are disclosed. As I indicated last week, if it changes the buyer’s mind regarding the sale, it was “material.” If it doesn’t affect the buyer’s decision to purchase the property, it doesn’t hurt to make the disclosure.

So what happens if the sellers do not disclose a material fact (in writing!) they should have? Nothing good, I can assure you. You may wonder why it is so essential to note every pesky detail. After all, the prospective buyer tours the property and hears the schnauzer for himself. Let’s fast-forward eight months. Your buyer just found out he has been transferred to New Mexico and it’s mid-2007. The property value just dropped 10 percent and the buyer is now looking for a way to undo the sale. He’s looking for a plausible way out. For example, he wouldn’t have purchased the property if he had known that the neighbor had an obnoxious dog who barks incessantly.

Will you, the seller, win this lawsuit? Maybe yes, maybe no. Will you spend some sleepless nights and help fund your attorney’s child’s college education? Almost certainly, yes. Just the letter from your attorney telling the buyer he has no case (which may or may not be true) will probably cost $300-$500. If a lawsuit is filed and the case never even gets to court, add at least one zero ($3,000-$5,000). If the case goes to court, add another zero. And that is assuming you win. Losing may mean damages or a rescission. You get the house back and the buyer gets the purchase price back plus and money he spent on taxes, improvements, and interest minus the fair market rental value while he lived there. The buyer may also be entitled to damages for the pain and suffering of listening to Fido’s yapping.

So, the rule is this: when it comes to making disclosures, mention every pesky detail, no matter how small or seemingly insignificant.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.