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Saudi Family Takes Genie To Court

I’m not sure how this is going to work out, but a family is Saudi Arabia is taking a genie to court, alleging that the spook engaged in theft and harassment, according to CNN.

It’s just a guess, but I suspect that it will be terribly difficult to serve a subpoena….

I know of no similar case in the U.S., but before we laugh at folks overseas it might be good to consider that we DO recognize that ghosts, goblins, genies and whatever impact real estate values. If you have a haunted house — what we call stigmatized property — you must tell any would-be home buyers in some states. And while some potential purchasers may find the possible presence of a ghost attractive, others may not.

With a stigmatized property there may be no worries about the physical condition of the house, instead the concern is with psychologically impacted homes. Some states have regulations which say what must be said or not said when homes are stigmatized.

The concept of stigmatized property is defined differently depending on the jurisdiction where the property is located and can include a requirement to inform buyers if the property has been the scene of a murder, a suicide or maybe it has been haunted. There may be a time limit — say no requirement to tell about a suicide from three years ago. If you have a property where such events have occurred you need to speak with a knowledgeable real estate broker or attorney to find out what must be disclosed and what can be kept quiet.

While some buyers may shy away from such properties, a good ghost story might well be an attractive selling point for more-adventuresome purchasers.

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Sellers Drop Prices By $27.4 billion

Foreclosures are impacting the marketplace and even the homes of the rich are going for less these days.

A new study by Trulia says that 23.6 percent of current homes on the market have had at least one price cut and that the reductions are valued at $27.4 billion. The company says “the average price-reduced home has seen a listing price reduction of 10.6 percent.”

The study finds that “of the top 50 cities in the U.S. based on population, 33 have seen 25 percent or more of home listings reduced in price, higher than the national average of 23.6 percent.”

U.S. cities that have seen at least 30 percent of homes reduced in price include:

Jacksonville, Florida — 36 percent
Tucson, Arizona — 32 percent
Boston, Massachusetts — 32 percent
Los Angeles, California — 32 percent
Columbus, Ohio — 31 percent
Dallas, Texas — 31 percent
Honolulu, Hawaii — 31 percent
Minneapolis, Minnesota — 31 percent
Austin, Texas — 30 percent
Washington, DC — 30 percent
Baltimore, Maryland — 30 percent
Las Vegas, Nevada — 30 percent

“Summer time is the peak season for buying and selling, and with some of the lowest prices in the last decade, we expect to it be a busy season,– said Pete Flint, Trulia co-founder and CEO. “Everyone wants to think they are getting the best deal available and price reductions are helping to spark a renewed interest in the U.S. real estate market.–

Foreclosures

The national average for price reductions on current home listings is 10.6 percent, says the company, but sellers in the areas hardest hit by foreclosures are slashing prices the most. Detroit home owners on average reduce their homes by 23 percent, while Las Vegas sellers reduce their homes by 16 percent and Miami sellers reduce their homes by 15 percent. Phoenix and Mesa are also experiencing deep price reductions with 13 percent slashed off the original listing price.

Luxury Market

Trulia also says that 24 percent of homes with a selling price greater than $2 million are seeing price reductions compared to 23.6 percent of homes on the market for the less than $2 million. While the percentage of homes seeing discounts are almost identical, discounts on luxury homes are significantly more with 14.3 percent being slashed off the original listing price compared to only 9.7 percent of homes under the $2 million dollar price tag.’, ‘Sellers Drop Prices By $27.4 billion’, 0, ”, ‘publish’, ‘open’, ‘open’, ”, ‘sellers-drop-prices-by-274-billion’, ”, ”, ’2009-07-14 07:59:06′, ’2009-07-14 11:59:06′, ”, 0, ‘http://www.ourbroker.com/?p=2994′, 0, ‘post’, ”, 0, ”, 1); (2983, 2, ’2009-06-09 08:00:57′, ’2009-06-09 12:00:57′, ‘it’s been quite a week on the mortgage front. According to Freddie Mac, as of last week rates for fixed-rate, 30-year mortgages went from 4.91 percent to 5.29 percent, both with 0.7 points.

That’s a big jump for a seven-day period, but let’s have some context here: Last year at this time the same loan was priced at 6.09 percent.

“Thirty-year fixed-rate mortgage rates caught up to the recent rise in long-term bond yields this week to reach a 25-week high,” said Frank Nothaft, Freddie Mac vice president and chief economist.

“Yet, there are signs that the housing market may be moderating. Housing affordability rose in April to the second highest reading since January 1971 when records began, according the National Association of Realtors? (NAR). As a result, pending existing home sales rose for the third consecutive month by 6.7 percent in April and represented the largest monthly increase since October 2001. Three of the four regions experienced increases, led by a 33 percent jump in the Northeast, the NAR reported.”

Affordability

Of course affordability is up. If the price of corn goes from $10 for five ears to $5 for five ears you can buy more corn — but do you really want to buy more?

As to sales, a huge percentage of sales are not everyday transactions between buyers and sellers, they are now transactions which involve the purchase of lender-owned properties, typically at discount.

Negative Interest Rates

Despite the big increase this week, the point remains that mortgage rates are ridiculously low. A year ago no one would have thought they could get 5 percent financing, now you can and such rates are characterized as “high” in some quarters.

You’re kidding. These are the rates of a lifetime. it’s possible that rates may again go into the 4 percent range and in theory it’s possible that they could go even lower — during the Great Depression U.S. securities were actually priced with negative interest levels. As Forbes magazine has reported, “T-bills got so popular that for brief periods between 1938 and 1941 they carried negative interest rates.” (See: “A Brief History of Stock Fads,” September 14, 1992)

In other words, you gave the government $100 and a year later maybe you got back $99. Why would people make such an investment? Because the banks were so iffy at the time that it was safer to lose a little with the government than with banks that paid interest — but might close.

We are now into the traditional home buying season. Whether you want to buy or refinance, now is a very good time to speak with lenders and brokers. Look into fixed-rate loans, forget about adjustables. If rates do go down again, and if they go down enough, then consider refinancing with a “no cost” closing — there’s a cost in the form of a rate somewhat above market level but not in the sense of a lot of cash (or maybe any cash) needed at closing.

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How Come My Broker Wants Me To Leave My Open House?

Question: My real estate broker wants to hold an open house — and wants me to leave! What’s up with this? Who knows more about the house than the owners?

Answer: There’s little doubt that owners are the world’s leading authority on the in and outs of their homes. But the real question ought to be: What are we trying to accomplish?

Your goal as an owner is to get as much for the property as possible, an offer with the fewest hurdles and costs as well as an offer from buyers qualified to purchase the property.

That means you want buyers to deal with someone who has negotiating experience — that’s one of the services for which you pay a broker.

As a practical matter, owners not only know a lot about their homes, they also have a certain psychic investment. How will you feel when buyers criticize your home or its d????cor? A third-party broker can easily ignore such comments and stick to the matter at hand, selling the home.

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Syndicated originally by Content That Works and posted with permission.

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Must A Home Seller Accept Our Full-Price Offer?

Question: We made an offer — which was at the asking price — and owner thinks he now can get more and refuses to take our offer. Can he raise the price or does he have to accept?

Answer: He does not have to accept — just think of all the homes in hot markets that are sold for more than the asking price.

When a home is placed on the market a seller is really asking for bids. As well, price is one element of an offer, there are many more.

If there is a broker involved, an owner may be responsible for a real estate commission by refusing to accept an offer that meets all listing terms from a ready, willing and able buyer.

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Syndicated originally by Content That Works and posted with permission.

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Can I Back Out Of A Real Estate Listing Agreement?

strong>Question: What happens if you list a home with a real estate broker and then decide you don’t want to sell? Can the broker make you sell the property?

Answer: No. You cannot be forced to sell. However, there can be financial consequences.

A listing agreement is a contract between a property owner and a broker. It provides certain requirements for a sale — say the price, deposit size, what\’s being sold with the property, etc.

If you list with a broker and decide you don’t want to sell before the end of the listing, the broker does not have a chance to complete his or her marketing efforts and thus loses the potential to earn a commission. In this situation, a broker could demand a full commission for such a lost opportunity.

Usually, though, brokers are community-based business people. They want to deal reasonably with folks in the neighborhood and avoid bad PR. Most likely if an owner wants to end a listing early, a broker will agree to such a termination if the owner pays the broker’s costs to date. How much is paid, if anything, is a matter of negotiation. Some brokers, in fact, have a built-in listing clause which allows termination with little or no cost. For details, review your listing agreement.
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Syndicated originally by Content That Works and posted with permission.

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Can I Sell “As Is” A House I Inherited?

Question: I’ve been offered a reasonable price on a house I inherited. I want to sell it in “as is” condition. What things should I look out for to protect myself during escrow and after closing?

Answer: The matter of “as is” sales has evolved during the past decade or so. The best advice used to be “caveat emptor” –- buyer beware, but now it is both buyer and seller use care.

The issue here is that you can plainly sell a home on an “as is” basis. At the same, many would argue that “as is” does not mean a seller has a license to simply sell a damaged property to an unwary buyer. In general, owners must disclose what they know about a property even in an “as is” sale situation.

Given the current trend, sellers wishing to sell on an “as is” basis should take several steps.

First, require the buyer to obtain an independent home inspection with an inspector selected, hired and paid for by the purchaser. In exchange for the right of the inspector to enter the property, require the buyer to give you a copy of the completed inspection for your records. Keep this document with your closing papers.

Second, “as is” requirements vary by state. Depending on the state, either a real estate broker working with language from an attorney or an attorney directly should write a proper “as is” clause. This clause should be written to “survive” closing (have standing after the sale is completed and the matter goes to court).

Third, properly and fully complete any required seller disclosure form to the best of your ability. Review with a broker or attorney – this document should be seen as relating to the “as is” agreement.

Fourth, if you are not living in the property, see if it can be sold as “commercial” real estate. An attorney can explain if this is possible and the advantages which might be available in a given jurisdiction.

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Syndicated originally by Content That Works and posted with permission.

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10 Ways To Make Your Home Sell Faster In A Tough Market

There’s little doubt that the real estate marketplace is now in transition. Sale volume has fallen and in many markets the days of quick sales and multiple offers are long gone.

These changes follow record year after record year, a pace that’s not sustainable. The catch is that a softer marketplace means sellers will have to fight harder to get top prices and quick sales. Here are 10 ways to get more out of your local marketplace.

1. Go for the junk — and get rid of it. A house with less stuff looks bigger and roomier. If what you want to throw out can have value to others, see if you can help by donating goods to local charities.

2. Price within reason. Trying to sell a home for $700,000 when like homes go for $525,000 is a non-starter. The days of “testing” the market with huge price increases is finished in many areas. Overprice and you won’t be competitive.

3. Use the best local broker you can find. Experience, connections and reputation can be a real edge when marketing a property.

4. Require your broker to have a marketing plan that makes sense for you and your property. The technique that sells one property may not be appropriate for another, so find the approach that’s right for you.

5. If the home doesn’t sell within a reasonable time period, think about changing the deal rather than lowering the price. In other words, rather than cutting the price from $500,000 to $480,000, instead keep the $500,000 price and offer a 2 percent “seller contribution” to help a buyer pay for closing costs. This approach is cheaper ($10,000 in closing cost help rather than a $20,000 price reduction) plus it gets to the real need of many buyers, closing assistance.

6. Have a home equity line of credit in place — even if you don’t expect to sell for several years. This way you can have funds available if you want to buy a replacement home while the current property is being sold. Just be aware of the risk — if your current home does not sell in a reasonable period you could face lots of mortgage payments.

7. Make sure everything works — and nothing leaks. Expect buyers to ask for a home inspection and be prepared to make reasonable repairs if requested. Remember that it may be better to upgrade an electrical service box than to look for a new buyer.

8. Find out what buyers thought after a showing or open house. Don’t take negative comments personally. Look for ideas that can help you make a better impression with the next prospect.

9. Beware of buyers who want you to take back financing. At a time when loans with little or nothing down are available from every lender, don’t go into the banking business and take back a loan when there is less risk to you with an outright sale.

10. Don’t get upset with small inconveniences. If a prospect wants to see a home with little notice or at an odd hour, don’t worry about it. It’s better to show the property than to have a home which is both undisturbed and unsold.

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Published originally by Realty Times on March 21, 2006 and posted with permission.

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What are the pros and cons of owner financing?

There are several potential pros and cons for sellers, at least.

You will get a steady monthly income.

You won’t have to worry about the buyer qualifying for financing, or as much financing.

Tax obligations may be stretched out in certain cases — see a tax pro for details.

But, it could also happen that:

1. The buyer won’t make payments.

2. The buyer won’t put in much equity (or any equity), thereby increasing your risk.

3. The buyer will graciously provide the loan agreement papers, including “substitution” and “subordination” clauses that you won’t want.

4. The buyer will rent the place, not make payments, and simply flee. This is an extreme scenario.

5. The buyer will say there is hidden damage and refuse to make payments until the matter is resolved in court.

Bottom Line: If you are an owner do not agree to seller financing unless your attorney has first approved all terms and documents.

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Will Real Estate Brokerage Fees Fall To Zero?

Since the Internet first became commercially viable in the 1990s it’s been driven largely by a single principle, the idea of pushing prices to zero. If you can make money by not charging then you’ve likely got a winner.

The reigning champ at this time is obviously Google — it makes a ton of money and has greatly rewarded investors by offering free search, free software, free blogs, free video broadcasting via YouTube.com, free e-mail and much else that’s free. This is possible because while Google services and features are free to users, to reach the online hordes attracted by no-cost services advertisers must pay Google for each ad click they receive. Advertisers for their part want to pay Google because the cost-per-result is cheaper than elsewhere and results can be tracked with far greater accuracy than most traditional media.

It’s not just Google that’s been knocking down traditional prices and approaches. The Internet has impacted every business from travel agents and stock brokers to auto dealers and funeral directors.

Consider the case of Zecco.com. It allows you to buy and sell stock without charge. This is possible, says the company, because “after years of dramatic cost reductions and advances in technology, trading has essentially become a commodity in which every brokerage uses substantially similar exchanges, automated ordering systems, and clearing firms. All this has lowered the average cost per trade to a level that enables us to absorb these costs. At Zecco, we see it as the cost of doing business with you. It helps, of course, that we’re not spending up to $4 a trade on advertising, the current practice of many of the large online brokers.”

In other words, technology substitutional allows for new service concepts and lower pricing.

Well, okay, what about real estate brokers? Will we see a day when brokerage fees drop to zero?

This is obviously the goal, or close to it, for those who philosophically believe that brokerage services are without worth. But can the Google or the Zecco models work for real estate? Google is really in the substitute income business. That is, Google takes something that Smith might sell — such as a search service — and gives it away. Google can do this because it sells other services, ad opportunities in this case. Smith, without something else to sell, cannot compete.

But what if a firm engaged in the substitute income business? For instance, a company could offer free brokerage services if you would agree to use their mortgage and settlement companies. Can’t be done? Just look at the way new homes are sold. If you use the builder’s lender and closing company you can often get a variety of discounts and price breaks. In effect, if a buyer wants to trade there’s a discount, if a buyer doesn’t want to trade they pay more for the property but perhaps save on mortgage and closing services by going elsewhere.

In the case of a buyer brokerage there could be a trade of reduced brokerage fees or no brokerage fees in exchange for the use of a particular lender or closing agent. The fee reduction could be in the form of a rebate or price discount equal to the buyer broker’s entire fee, something obtained from a share of the commission offered by the listing broker.

If it’s fair for real estate brokers to provide mortgage services, then perhaps mortgage brokers could offer free brokerage services as a way to sell more loans.

As to listing brokers they could — with approval of seller clients — act like builders and offer homes for sale with two prices, one price if you use any old mortgage company and a lower price if you use the broker’s affiliates. The seller would pay a lower fee or no fee if the buyer accepted the lower sale price and the broker would make up lost commission revenue by selling mortgage and closing services.

The technology-substitution model makes sense for stocks because there is no physical component to buying shares; that is, no one has to inspect a stock certificate or visit a company to buy stock. Real estate is different because while paperwork can be automated actual transactions are not technologically dependent. Instead, real estate sales are predominantly and traditionally an activity that require real people to physically examine real property.

As to income-substitution ideas, they’re currently well outside common norms and practices for real estate. But will that always be the case in one form or another? Stay tuned.

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Published originally by Realty Times on January 16, 2007 and posted with permission.

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