FSBO

For Sale by Owner Leads to Lower Sales Price

It’s no secret that home sellers want to sell their property for the highest possible price, while homebuyers want to buy for the lowest possible price. One of the ways people try to save money is to avoid paying the commission typically charged by Realtors by choosing to sell the property themselves. This is called a For Sale By Owner (FSBO). Unfortunately for those sellers, studies show that residential sales that involve Realtors often sell for higher prices than those sold by owners directly.

Here’s why: Realtors know what they’re doing. You wouldn’t hop on an operating room table and say, “Hand me that scalpel. I got this.” While I admit that real estate isn’t a life or death situation, real estate law is complex and one wrong move can haunt a seller for years.

Most buyers seem to understand this. They find a Realtor to represent them, to save them time by identifying all the properties that match their criteria, to make sure appropriate disclosures are completed, and to negotiate on their behalf. The only reason a buyer would look at a FSBO is to save money. And while a buyer’s Realtor will certainly be fair and honest with the seller, that Realtor’s job is to look out for their client’s (the buyer’s) interests.

As a FSBO seller, you must do all the work you’d pay a Realtor to do. You must figure out a sales price that attracts buyers but doesn’t leave too much on the table. You must look at your house with an objective eye and make only those improvements that are likely to influence a sale. Once the house is ready, you must figure out how much to spend on what type of advertising. You must go to the online housing search engines that accept FSBOs and enter your information there. You must try to figure out who would like to buy a house like yours and how to entice them to look at your house.

You must also be available to show the property to any and all comers (without the benefit of a Realtor’s screening). An unscreened prospect may or may not be a looky-loo who is just curious and has time to kill, or a sketchy person casing your home to rob it.

And there are some things you simply cannot do without a real estate license, like uploading your property information to the Multiple Listing Service, which feeds third-party online databases used by real estate offices across the country.

Speaking of third party, one of the most important services Realtors provide is assistance in negotiations. As a FSBO seller, you need to follow up with potential buyers to see if they are interested, thereby tipping your hand as to how eager you are to sell. Realtors who follow up are simply doing their job.

Let’s say everything went your way: you found a buyer and are ready to sit down and sign a contract. Here’s where things can really get challenging. Do you know which inspections to get and who should pay for them? Do you know how to write contingencies into the sales agreement? When I began in real estate more than 40 years ago, a transaction file had about 30 pages, 28 of which came from the escrow company. Now, the Mendocino County Disclosure form alone is 11 pages long. And the ramifications of not making the required disclosures, whether standard forms or disclosures to address a specific issue, can be financially devastating.

Not surprisingly, many FSBO sellers eventually decide to list with a Realtor. Sadly, by that time, the listing is old news rather than an exciting new prospect, so it can be harder to sell. However, a good Realtor can often highlight the property’s best features and find buyers who are just the right fit.

If you have questions about getting into real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. 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.

 

MCCC

Mendocino County Construction Corps

As long as there have been schools, there have been students who knew sitting in a classroom all day wasn’t for them. This feeling doesn’t necessarily go away when it comes to the workplace; not everyone is meant to sit behind a desk. But because kids often hear that they have to go to college to amount to anything, they don’t consider other avenues.

Well, I’m here to present another avenue: getting into the trades. In Mendocino County, many tradespeople are approaching retirement age and they cannot find enough people to replace them. I just attended a meeting of the Mendocino County Construction Corps (MCCC) program, a pilot program that encourages high school seniors to pursue a career in construction, and I enthusiastically support it.

MCCC is made up of tradespeople and business people, educators, and community benefit organizations. It’s a great example of community members recognizing a need and working together to address it.

As a real estate broker, my business depends on having enough housing for the people who live in our valley. Right now, we have a shortage—one that just got worse because of last October’s fires. I love the idea of local people supporting themselves financially by becoming carpenters, plumbers, electricians and general contractors. I also love the idea of having enough plumbers in town so if my washing machine breaks and water is flowing all over my house, there’s someone I can call who can help me immediately.

In recent years, there’s been more school funding for what they call “career technical education” (CTE), programs that help students get the skills they need to pursue careers that do not necessarily include going to a four-year university. CTE programs remind students that there are plenty of people who make a good living fixing cars, growing food, and building houses, among other pursuits.

While there is some money for CTE programs, it’s limited, so when Ukiah Unified School District CTE Coordinator Eric Crawford was inspired to start the MCCC, he knew he’d have to figure out how to fund it with grants and donations. He pulled together a steering committee and since then, he has been able to raise more than 75 percent of the funding needed to provide 14 weeks of education for the 21 students who were chosen through a rigorous selection process.

The program includes weekly evening classes and four all-day Saturday classes on subjects like power tools, reading blueprints, construction safety, first aid/CPR, framing, roofing, solar, plumbing, concrete, electrical, construction math and more. Students also learn to drive a forklift and other heavy machinery.

Once they complete the coursework, which is mostly hands-on practice, the students participate in a two-week boot camp where they help build houses for Rural Communities Housing Development Corporation and the Hope Crisis Response Network. At the end of all this, they’ll receive a $750 stipend for their work and a tool belt with tools to get them started.

Local tradespeople who believe in the importance of supporting our community and who like the idea of creating a pool of well-trained people have volunteered to teach the classes. John Boies of Granite Construction said Granite encourages employees to give back to the community, which made it easy for those who like to teach to sign up.

In addition to teaching, several local businesses signed up to be major donors (donating $1,000 or more) include Christensen Construction, Friedman’s Home Improvement, the General Contractors Association, Granite Construction, Guillon Inc. Construction, John McCowen, the Mendocino County Office of Education, Mendo Mill, Menton Builders, Jim and Arlene Moorehead, Realty World Selzer Realty, and the Ted and Wilma Westman Fund of the Community Foundation of Mendocino County.

After the boot camp, local contractors will have the opportunity to hire MCCC graduates. If you’re interested in learning more about this program, visit https://sites.google.com/uusd.net/mcccwebsite.

If you have questions about getting into real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. 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.

 

messy_unsplaish

Crazy Tenants

Our Property Management division has seen some crazy things in their day, from tenants (residents) parking motorcycles indoors to ankle-deep water after botched faucet repairs.

Happily, most of our residents are reasonable, responsible people, but a few of them—or sometimes their children—get themselves into some wild situations.

While I was still in college, I bought my first rental property. I knew almost nothing about property management, but I was thrilled when my mom found someone to rent my place. Unfortunately, he was not an ideal resident. Not only did he park his motorcycle indoors “to keep it out of the rain,” he thought it was just fine to change the oil in the living room. By way of explanation, he said, “I put carpet remnants down.” Ugh.

These days, before we rent a property, we put potential residents through an extensive screening process. We check their credit, their rental history and their references, and we pay attention to how they treat our staff. We adhere to fair housing practices and never discriminate based on race, color, religion, sex, familial status or national origin. We do, however, refuse to rent to people with terrible credit, with a history of late payments, or those who are belligerent with our employees. If they can’t be reasonable with our staff now, that tells us a lot.

Sometimes, no matter how carefully we screen our residents, their children will do the darndest things. Whether they are trying to hide something to avoid punishment or spite their sibling, kids find creative ways to be hard on houses. Property manager Kathy Hair recently recalled a time when a potty-training toddler had an accident in his pants. Rather than admit it to his parents, he tried to flush the dirty underpants down the toilet. Needless to say, things got a bit clogged up. Toddler tantrums can also get expensive. When one little boy threw his Tonka truck against the mirrored closet doors in his bedroom, the glass shattered and made a huge mess.

Sibling rivalry has also cost more than one tenant a fair chunk of change. When siblings are angry with each other, they tend to find their brother or sister’s favorite toy and flush it down the toilet. We’ve found Barbie doll heads, Matchbox cars and many other interesting items.

Even without children, residents sometimes surprise us. At times, they surprise us because of their lack of initiative (seriously, you can change your own light bulb); and sometimes they surprise us because of the repair projects they take on, even when they clearly know nothing about a given situation (based on this flooding, you probably shouldn’t have tried to replace the leaky faucet).

When people move into a new place, it’s normal to have some questions, but before calling us, we expect folks to spend a moment or two trying to solve their own problems. For example, before calling about a broken refrigerator or faulty thermostat, they should check to make sure appliances are plugged in and turned on. Once we tell people there’s a service charge for us to come out—one we will pay if there’s a legitimate problem and one they will pay if the appliance simply needed plugging in—they tend to reach for the phone a little less quickly.

If you have an investment property and prefer to manage it yourself rather than hire a professional property manager, the best advice we can give you is to use a robust screening process. Although you’ll still get the folks who think it’s okay to tear down the carport, so their truck will fit better from time to time (true story), well-screened residents will usually work out just fine.

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.

warning signs_pexels

Warning Signs of Underlying Problems

When you fall in love with a house, it’s easy to get swept away in the emotion of it all, imagining summer barbecues in the backyard and holiday celebrations around the hearth.

However, before you begin arranging the furniture, be sure to look for these warning signs that things may not be as perfect as they appear.

  1. Overpowering Scent
    When your Realtor opens the front door to show you a house for sale and your nostrils are immediately accosted by strong smells, from candles to air freshener, be suspicious. It’s one thing to notice a pleasant aroma; it’s another when the smell is strong enough to mask a problem. Pets, mold, smoking and other issues can cause long-term odors.
  2. Gaps in Tile Work
    Poorly executed do-it-yourself remodeling can be problematic for a few reasons. At best, it’s unappealing. At worst, it may indicate this and other work on the house doesn’t meet professional standards. For example, is the tile the only problem, or did the previous owners neglect to remove the dry rot underneath, opting to patch over it instead?
  3. Major Cracks and/or Sticky Doors and Windows
    Most homes have hairline cracks in walls in ceilings, but if you see major cracks, take a closer look. Is the house settling on its foundation, or is the foundation crumbling? Also, pay attention to any doors or windows that are hard to open and close. If you’re concerned, consider hiring a contractor, home inspector or engineer to check things out.

    While foundation problems may be more common on hillsides, flat lots can be unstable, too. I once owned a building on a flat lot. It was a concrete building on a slab floor. What I didn’t know when I bought it was that one corner of the building had been built on an old dumpsite. The landfill underneath began to settle and that corner of the building settled with it. After extensive and expensive testing and renovation, the problem was finally solved, but it was a huge bummer.

  1. Mold
    A few small, black or gray mold spots may seem like no big deal but think again. Mold can cause major health problems, and it may indicate more extensive water damage that isn’t visible during a casual inspection. Look carefully at walls, inside cabinets, under sinks and behind furniture in kitchens, bathrooms, laundry rooms, around water heaters, and anywhere else water is commonly used. Keep in mind that problems resulting from mold can be so bad that some insurance companies exclude them from homeowner policies.
  2. Cosmetic Enhancements
    Paint can hide a multitude of problems. While many people put a new coat of paint on the interior and exterior of the house to spruce things up before they sell, others use paint to cover flaws. It’s perfectly okay to ask your Realtor, “Is that new paint covering anything I should know about?”

It’s always better to find problems before escrow closes. Of course, sellers are legally required to disclose problems, but they can only disclose what they know or should reasonably have been expected to know. This is why inspections are so important: home, roof, pest and fungus, heat and air, well, pool and more! Can they get expensive? Sure, but not getting them can be even more expensive. Consider the cost of inspections a down payment on your peace of mind.

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.

pain in the pocketbook

Uninsured Deeds Can Be a Real Pain in the Pocketbook

Sometimes cutting corners to save a buck can be really expensive.

Let’s say you have great neighbors. You’ve known them for years. You have dinner at each other’s homes from time to time and you often chat over the fence. They’re quite a bit older than you, and eventually one of the spouses passes away. The other decides to sell and move to be closer to family, and you decide to purchase the property and make it a rental for a little extra income. This helps your neighbor and your pocketbook.

Because you have years of trust built with this neighbor, you decide to save a little money on all those “unnecessary” expenses like title insurance, escrow fees, and Realtor commissions.

Fast forward five years and you’re in a situation where you need cash quickly. You glance out the window and see your investment property, an asset worth $300,000 that you own outright, and think, “I’ll use my rental as collateral for a loan!”

You make a beeline for your local bank and explain to the loan officer that you need $100,000. You tell him you have a rental property that will certainly support the loan. You have good credit, adequate income, and even the rent on the investment property will cover the loan payment. Slam dunk, right? Should be.

The unreasonably picky loan officer says, “That’s wonderful, but we need title insurance.” So you open an escrow and get a preliminary title report. Shortly thereafter, you’re scratching your head wondering why you didn’t get title insurance when you bought the property from your neighbor.

This is when you discover that the original neighbor purchased the property with seller financing. While not normally a problem, especially because your neighbor did, in fact, pay off the loan, you realize no one thought to get a reconveyance of the loan that was paid off 20 years ago. The sellers who carried the financing have long since passed away. Just to make matters a bit more difficult, two of sellers’ the three children have also passed away. So, before you can get title insurance, you have to do two things: 1. Prove the neighbor’s loan was paid off and 2. Get a signed reconveyance from the original seller’s surviving child and the six surviving grandchildren.

After a couple valiums, you learn that all the heirs still live in town and know this loan was paid off and none of them is the greedy, shady sort who would try to extort money from you. They all sign the reconveyance. Ah, all is right with the world.

That is, until you find out that when the neighbor died, no probate was done. His old ownership must now be cleaned up, which will take additional time and like everything in life, cost a little money. At this point, I hope your need for that cash was not truly urgent because you’re going to spend at least several weeks (and maybe several months) cleaning up this issue.

The moral of the story is this: get title insurance. Have an escrow officer handle the transaction. Retain the services of a Realtor who can help you negotiate a fair purchase price and advise you about how to handle disclosures needed to protect all parties.

Don’t try to save money when cutting corners can cost you so much in the end.

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 in Ukiah for more than 40 years.

arbitration

Arbitration

When you buy or sell a house, it can be very exciting, whether you’re becoming a homeowner for the first time, upgrading to a new neighborhood, or selling a home to start an adventure elsewhere. Sometimes, however, things do not go as planned.

There’s a paragraph in the standard purchase agreement from the California Association of Realtors that allows a buyer to include an arbitration agreement as part of the offer. The agreement basically states that if the buyer and seller have a disagreement that will likely amount to more than a small-claims-court-sized settlement, then both parties agree to binding arbitration.

Arbitration is an alternative to taking someone to court. It’s a dispute resolution process whereby both parties agree to an arbitrator who acts like a judge, listening to arguments from both sides, reviewing the evidence, and “awarding” one side or the other. Usually, arbitrators are attorneys or retired judges, but sometimes a real estate expert can fill the role. The upsides of arbitration are that it is typically cheaper and faster than litigation. The downside is that it is often binding, whether the arbitrator makes a bad decision or not. If there’s mistake is in your favor, that’s great; but if you’re on the losing end, you’re stuck with it.

While this may give you pause, arbitration is often a faster, less expensive alternative to litigation. Here’s how it works.

A typical arbitration starts with selecting an arbitrator. Both sides must agree to the arbitrator, preventing one side from insisting that their brother-in-law, who happens to be a lawyer, preside over the case, for example. Since most people don’t go into arbitration too often, they contact a private arbitration service to fine a qualified person.

Once the arbitrator is selected, the buyer and seller submit formal written statements before the hearing, outlining their positions on the dispute. Both sides then prepare for the hearing, which to the untrained eye seems exactly like a court trial. Both parties submit evidence, call and cross-examine witnesses, and make arguments to the arbitrator. They can also depose witnesses and gather written evidence and documents.

After the arbitrator considers all the evidence and testimony, they announce their decision (usually several days after the hearing ends). This whole process can take months, which may sound like a long time until you realize that if it were litigated in the courts, the same case could take years.

The types of disputes requiring arbitration include things like breach of contract, misrepresentation and/or fraud. The arbitration agreement most often used in Mendocino County excludes certain matters from arbitration, including those within the jurisdiction of small claims, probate or bankruptcy court.

Be aware that if a dispute includes the actions of a third party (someone other than the buyer and seller), arbitration usually isn’t worthwhile because the third party isn’t bound by the arbitrator’s decision. For example, if a dispute involves an inspector, insurer, or appraiser, unless they agree to arbitration, they can simply refuse to comply with the arbitrator’s findings.

Even if the buyer and seller did not agree to arbitration in their original purchase agreement, they can still opt to go that route in the event of a dispute. The bottom line is this: there are pros and cons to arbitration, and the best way to know if it is a good choice for you is to ask your attorney. Talk to your attorney for advice; advice WILL change based on the facts of the case.

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.

RWSR Sign

Tired of Renting? Now’s a Great Time to Buy!

Many renters are under the mistaken impression that they cannot afford to buy a house. Some believe they need a substantial down payment; others believe they cannot afford the monthly expenses of home ownership. While these assumptions may be true, it’s best to review the facts before crossing home ownership off your list.

We’ll assume you’re a first-time homebuyer interested in buying a $380,000 home in Ukiah’s Oak Manor subdivision. You don’t have money for a down payment, but you do have a job and good credit. You’ve been paying $1800 per month for rent, but you could afford a little more.

Here’s the good news: FHA loans do not require a large down payment (typically 3 percent), and at today’s rates if your household income is at least $85,000, you may be able to qualify for a loan that gets you into that $380,000 house. You’ll need to budget about $2400 for PITI (i.e., mortgage payment, interest, taxes, and insurance). So, instead of buying that new car, find a used one and, voila! You can afford little higher monthly house payment.

You’ll also need to budget for things the landlord used to pay for, like painting your home inside and out, putting a new roof on, replacing the water heater, and similar maintenance. Let’s estimate about 1.5 percent of the purchase price for upkeep each year (about $475/month), since that’s usually about what it costs.

Before you panic, let me share a little more good news: you get to write off some of your mortgage payment. Let’s say your household income puts you in the 25 percent tax bracket. Some of your mortgage payment is tax deductible:

Mortgage payment        $2400
Maintenance/upkeep   $   475
Tax benefits                    $ -265
                                          $2610/month

If you think this is a realistic number, here are some important facts about qualifying for a home loan. First, you need to have good credit (a credit score in the mid-to-high 600s). Next, you need reportable income. For the FHA loan I’ve used as an example, there are minimum income restrictions based on formulas that have to do with the number of people in your household, the number of children you have, and other factors. The final requirement is job stability. You need to have been in your job for at least a year, and it needs to appear that you will remain in that job for the foreseeable future.

Owning your own home has many benefits, the most obvious of which is financial. Your monthly mortgage payments allow you to build equity in an investment that is likely to increase in value over time. I can’t make promises, but I can tell you that with all the ups and downs in the economy during the past 50 years, the overall trend in the value of real estate has been up. I bought my first property in 1973 for $18,000. Today, it is conservatively worth $275,000. That’s an average annual increase of 6.4 percent.

Owning your own home also has benefits that go beyond financial. You get to pound a nail and hang your child’s artwork wherever you want without asking anyone for permission. You get to plant trees, paint a room your favorite color, and rip up that ugly carpet. And all your hard work benefits YOU.

If you think you might be able to purchase a home and you’d like to learn more, call your local Realtor and they can help you figure it out.

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.

HeatGoesOut

What To Do When Your Heater Goes Out Midwinter

You may have noticed that heaters, and electricity in general, have a way of going out when Mother Nature brings her coldest winter storm of the season. While we don’t face the same freezing extremes as people in Wisconsin or Minnesota, it’s still a bummer to be cold. If you have a low tolerance for whining and you live with teenagers, a broken heater in winter can be truly unbearable.

So how can you warm up with a broken heater? After you schedule a service call, the first thing to do is to locate any places in your home where outside air can get in. Cracked windows are common culprits, as are poorly caulked or weather-stripped doors. Ideally, you’ll want to replace broken or cracked windows, but since that can get expensive and takes time, re-caulking and/or putting packing tape over cracks and holes will help keep warm air in and cold air (and moisture) out.

Keep curtains and other window coverings closed until sunlight hits the windows directly. During the day, concentrate heat in the main living quarters by closing doors to unused rooms such as bedrooms and bathrooms. To make this even more useful, you can get under-door draft stoppers at CVS. These sleeves fit under the door with Styrofoam cylinders on either side, effectively preventing drafts under the door.

Once you’ve done all you can to prevent warm air from escaping, you can do a few things to increase the indoor temperature. If your heater is broken, but you have electricity, you have more options, of course. You can bring in space heaters and allow the heat from the stove and/or oven to warm things up. Incandescent light bulbs, while not a great source of heat, do produce some. (You’ll know this if you’ve ever burned your fingers trying to change a bulb after it’s been on for a while.)

If your electricity is out, options are more limited. If you have a fireplace or wood-burning stove, you’re in great shape. If not, candles help a little, as do kerosene or propane lamps from your old camping days. Be careful with these, especially if you have small children in the home. Never leave them unattended. If you use a kerosene lamp or heater, be sure to crack a window to re-oxygenate the room. If you have ceiling fans, you can reverse their direction (or install the blades upside down) to push warm air down toward you. You’ll also feel warmer if you put rugs over hardwood or tile floors.

Although healthy adults can throw on warm pants and a ski jacket and do just fine without a functioning heater, be aware that infants and old folks have a harder time regulating their temperature. Be sure to keep them extra bundled.

While Murphy’s Law gets all of us eventually, you can sometimes prevent your heater from going out at the most inopportune time with some preventive maintenance. Call the furnace inspector in fall when you’re the only one calling, rather than in December when everyone in Ukiah wants an inspection. As a side note: be sure to ask for a carbon monoxide inspection at the same time. We recently had a property management client call to let us know their carbon monoxide alarm went off. When we called to have the heater inspected, the company did not check for carbon monoxide, only to be sure the heater appeared to be heating. I was livid.

Preparing for contingencies is rarely the most pressing thing on anyone’s mind, but you’ll thank yourself later if you find yourself in a pinch. For tips on winterizing your home, visit richardselzer.com/2017/10/23/winterizing-your-home. For more on emergency preparedness, visit richardselzer.com/2017/10/30/emergency-preparedness-mendocino-county.

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.

inclusionaryzoning

Inclusionary Zoning Discourages Development

If we thought we had a housing shortage before the fires, we really have one now. While the developers of the Vineyard Crossing housing development on Lover’s Lane in Ukiah are determined to work with the county to make the development a success, they and developers like them face significant hurdles as they try to remedy our local housing shortage. Between inclusionary zoning, proposed school impact and fire impact fees, and new building codes, it is more challenging than ever to develop new housing in our valley.

Inclusionary zoning is particularly frustrating. It requires real estate developers to give the county a certain percentage of the lots they develop or to pay a fee in lieu of the “gift”. In the city of Fort Bragg, I believe the required gift is 20 percent of the newly developed lots in subdivisions of 5 or more lots. In the county, developers can either include low-income units as part of their development or build low-income housing in a different location as a condition of approval for their main development.

Obviously, when developers must pay a fee, give a percentage of their lots to the local government, or make similar concessions, the cost of the housing they’re building will go up to cover their costs. If we want to solve our housing shortage, maybe we could start by rewriting state regulations which tie the hands of both the local governments as well as developers with unnecessary requirements.

I know local government decision makers often have little choice when it comes to state mandates. If the state requires a certain percentage of housing to be “low-income” or insists that new buildings include fire sprinklers, we must comply. Be aware, that sprinklers would have made absolutely zero difference as to which house survived the Redwood Valley fire. In fact, sprinklers would have hindered fire-fighting efforts by draining the water supply, but I digress.

Can you imagine any business that would survive if they had to give 20 percent of gross sales to the government (not profits, but sales before the cost of goods is considered)? If you add inclusionary zoning fees (potentially worth hundreds of thousands of dollars) to all the other building expenses ($12,000 sewer hookup fee, $3,000-$5,000 water hookup fee, $3.48 per square foot proposed school impact fee, fire impact fee and building permits)—all before a shovel hits the ground—you can see why only the brave or crazy get into this business.

I have attended some public meetings where people implied it is the greed of developers causing our local housing shortage. I’m not suggesting developers are altruistic. Their goal is to maximize profits from real estate projects of all kinds. However, their greed isn’t causing our housing shortage. If profit margins are thin in Ukiah and thick elsewhere, developers will go elsewhere.

While I’m tempted to place full responsibility for the housing shortage at the government’s doorstep, that’s not fair, either. Market conditions definitely contribute to the problem: home prices and the cost of rent still remain somewhat low here compared to construction costs. So, the solution to the housing shortage will come from one of two places. Either real estate development and construction costs will have to go down or housing and rent prices will have to rise. Until this happens, our shortage will continue.

One way construction costs could go down is by reducing the red tape. Many building codes start with safety in mind, but somewhere along the way, common sense gets thrown out the window. If we want to find a remedy to our housing shortage, maybe we should take a look at the codes on the books and see if we can bring a little common sense back into the process.

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.

career_opportunities

Looking for a Great Career? Try Real Estate.

Every year at this time, people contemplate new beginnings. When it comes to our happiness, jobs can have a big impact, so if you’re in a job that makes you unhappy for whatever reason, this might be a great time to consider a change to real estate.

The housing market in Mendocino County and throughout California continues to roll along at an impressive pace. Home values have been rising for the better part of a decade, and interest rates remain low. Add to that the fact that many people who are currently in the industry will be retiring in the next several years, and you’re looking at a golden opportunity.

According to the National Association of Realtors, since 2008 most people remain in the same home for an average of almost nine years. With a median age of real estate agents in the U.S. being 53, it’s clear that many of the agents who helped clients buy or sell real estate last year will not be working when those clients are ready to buy or sell again.

Even if someone’s agent is still in the business nine years later, a recent study showed that people often don’t remember who helped them buy or sell their last house. This should be a reminder to current Realtors to stay in touch with former clients, and an encouraging fact for those who want to get into real estate–there’s plenty of business to be had.

Years ago, my colleague Warren Liberty (father of Factory Pipes owner Ross Liberty) said, “A job in sales can be the easiest low paying job or the hardest high paying job.” I’ve been doing this for more than 40 years and I cannot imagine doing anything else. Although it absolutely requires hard work and long hours, it also affords me the flexibility to schedule vacations when I like, attend my children’s sporting events, and be in control of my own financial future.

Most licensed agents can find a job within a day or two in almost any city in the nation. Then it’s up to them to stay in business. Although Realtors affiliate with a brokerage, they are still their own boss.

If this career path is of interest to you, talk to some people. Talk to Nash Gonzales, the real estate instructor at Mendocino College. Talk to a real estate broker or two here in Ukiah. Each one will give you a slightly different perspective on the business, but I guarantee all of them will say they can’t think of a more satisfying career.

As I mentioned, this is a great time to get into real estate. During the next five years or so, you can learn from people who’ve been selling real estate for years (some of them decades). Once they retire, not only will you benefit from their years of institutional knowledge, they can provide you with a book of business in return for referral fees. In most cases, this will be well worth the investment.

As you get further into the business, you may choose to specialize in a certain area: residential, commercial, industrial, ranches/land, agricultural properties, or new development. Each area has laws and practices associated with it, from zoning to water rights. If you’re selling ranches, plan on owning a four-wheel drive vehicle and a pair of sturdy boots. If you want to sell agricultural property in Mendocino County, educate yourself on how soil and terrain affect different types of grapes. If you want to work with a developer to subdivide land and build spec houses to sell, you better be good at details and willing to work with bureaucracy at all levels. Whatever you choose, I welcome you to the wonderful world of real estate.

If you have questions about getting into real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. 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.