The Standard in Real Estate

February 5th, 2014 6:02 AM
               

     If you were going into a court of law, most of you, if not all of you would not go without an attorney.  If you needed knee surgery, all of you would seek out the services of a well-respected orthopedic surgeon.  If the pipes in your house burst, you would hire a licensed plumber to fix the leak.  Then why is it that so many people believe they can conduct their own real estate transaction without the services of a licensed real estate agent?  The short answer is that some people do not want to pay the full real estate commission, or they seek limited services brokerage firms that charge a minimal commission with no representation.  These companies charge a fee to place the property into the multiple listing service (MLS).

      In my humble opinion, you as a consumer are asking for a lawsuit.  First of all, there are numerous disclosures required as part of a real estate transaction in Florida.  Secondly, agents who show your property knowing you are not represented are exposing themselves to all kinds of liability.  If these two issues don’t get your attention, then there are more.  For example, how do you go about qualifying a potential purchaser?   Are you prepared to ask personal and financial questions to a total stranger?  How do you know if the prospect is telling the truth?  How do you know they are not casing your home when you conduct an open house?  If you are still not convinced that paying a real estate commission is worth the value, then how do you feel about the published statistics by the National Association of Realtors that Realtors typically get you fourteen (14) percent more money when the property is listed, then if you sell yourself?  In other words, in most cases a For Sale By Owner leaves a lot of money on the table because they do not possess the negotiating skills of a real estate professional, nor do they know the market.  And if you believe Zillow estimates, you are really in trouble.  The money you would realize using a real estate professional more than pays the real estate commission in most cases.  

     Real estate is the only profession where many people try to discount the services that are being provided.  I don’t know too many lawyers that negotiate their fees, nor do doctors negotiate theirs.  I will agree that not all agents are equal.  But, you can say that about any profession.  You have good apples, and you have bad apples.  When you consider the educational course work to get a real estate license, and the continuing education requirements, it makes sense to hire a real estate professional to represent your most valuable asset. 


Posted by Mario DArtagnan on February 5th, 2014 6:02 AM

January 21st, 2014 2:40 AM
             
 

     I have often been asked if having a home inspection is necessary and worth the cost.  I think it is important to identify what types of inspections would be considered prudent.  Regardless of the age of the subject property, a termite inspection should always be performed.  We live in a tropical environment (although this winter you’d never believe it).  In addition to the termite inspection, a general inspection should be performed by a competent home inspector.  Many times, this same inspection company also does the termite inspection for an additional cost. 

     The general inspection isolates various components of the property.  For example, all of the electrical outlets are tested to make sure all are performing to standard.  The air conditioning is tested by measuring temperatures at the vents.  The heating system is also tested.  If there are ceiling fans in the house, these are tested operationally also.  All faucets and toilets are checked for leaks and proper flow.  All windows and doors will be checked to make sure they open and close properly.

     The inspector will test appliances to determine their working condition.  This usually requires the inspector to run the washing machine and dishwasher through an entire cycle.  The garbage disposal is also checked, along with the clothes dryer.  Refrigerator and dishwasher seals are checked for leakage.  The burners on the stove and oven will be turned on to make sure they are working properly, along with the microwave.  If a house has mechanical or electrical storm shutters, they too are tested for functionality.  Once all of the basic electrical components are tested inside the house, the inspector will move to the exterior.  If the property is waterfront and has a dock with electricity, those circuits will also be tested. 

     Next, the inspector will move up to the attic space of the home and look for evidence of dry rot, mold, or obvious roof leaks.  Remember that not all home inspectors are qualified to do roof inspections.  This may require a separate inspection by a licensed roofing contractor.  However, it is not uncommon that some home inspectors are also licensed general contractors.

     Many times, if a buyer is financing the acquisition, the home owner’s insurance carrier may require a wind mitigation test.  This is where the entire roof system is tested to determine its integrity in the event of high winds.  There are a limited amount of inspectors who are certified to perform this test.  Homes with pools may require a subsequent inspection by a licensed pool contractor if there is sufficient evidence of leaks or surface issues.

     Not all inspection companies are qualified to test for defective (Chinese) drywall.  If the obvious symptoms are observable by the home inspector, they will be noted in the report.  For example, if there is the unmistakable sulfur odor or corrosion on electrical copper, these would be good indicators that further testing should be conducted.  It would be well worth the investment to have a qualified inspector test for defective drywall for obvious reasons.

     If you are investing in a short sale or bank owned property, it would be worth your time to bring in a qualified inspector or contractor to inspect the condition of the property.  Short sales and foreclosed properties are typically purchased using an “as is” contract for sale with the right to inspect.  If the inspection report indicates many repairs need to be made, the buyer would generally be responsible for those repairs, or could cancel the contract.

     Once the inspection is completed, the results are put into a report format that would include a summary of the findings.  Any deficiencies would be described in more detail somewhere in the body of the report. Purchasing a home for occupancy or investment is a major undertaking and should not be taken lightly.  It is one of the most expensive purchases you will ever make.  With that said, it is worth the price of the inspection.  You can call home inspection companies to compare prices, but on average for a 1,700 square foot house you are looking at about $300.00.  If wind mitigation or defective drywall inspections are required, the price can go up from there. 


Posted by Mario DArtagnan on January 21st, 2014 2:40 AM

January 3rd, 2014 5:44 AM




             

     There are several types of real estate ownership that vary based on the number of owners or type of property.  It is the form of ownership that determines the legal rights of each owner and how these rights affect title transfers, and whether these rights may be inherited.

     One or more people may own real property.  The type of ownership is determined during the acquisition of real property.  Today I will discuss the Estate by the Entirety, which is a form of ownership by husband and wife, and Joint Tenancy, which is a form of ownership by two (2) or more persons with full rights of survivorship. 

     It is the marriage that creates an estate by the entirety, and carries full rights of survivorship.  What this means is that in the event of death, the surviving spouse automatically takes possession as an owner in severalty.  Ownership in severalty simply means that the bundle of rights associated with the property is owned by ONE person.  This person can sell the property, lease it, or encumber it by using the property as security for loans.

            In addition to death terminating the Estate by the Entirety, divorce can terminate the estate as well.  Moreover, a judge can order the sale of the marital property to satisfy existing debts incurred by both husband and wife.  While married, neither spouse may sell his or her interest without the consent of the other spouse.  In Florida, the Estate by the Entirety is assumed when both parties are indeed, married.  An Estate by the Entirety is a form of Joint Tenancy which I will now discuss.

            Joint Tenancy is a form of ownership wherein each owner has exactly the same percentage of ownership.  In other words, if four (4) people take title as Joint Tenants, then each has a 25 percent ownership interest.  Joint Tenancy carries full rights of survivorship.  If one of the four owners dies, then the remaining three inherit the decedent’s interest equally.  In this case, upon the death of owner number four, the remaining owners would each have 33 1/3 percent ownership rights.  None of the joint tenants my sell, convey, or encumber the property without the consent of the other owners.  In the event all but one joint tenant remains, then the ownership would revert to a tenancy in severalty, which is ownership by a single person.

            Another form of ownership includes Tenants in Common, wherein the ownership does not require equal shares, and each tenant in common may do what they want with his respective interest without the consent of the remaining tenants in common.


Posted by Mario DArtagnan on January 3rd, 2014 5:44 AM

December 2nd, 2013 1:31 AM




                     
    
     Today’s topic is about what has been described as folklore, where others know it to be historical truth.  Saint Joseph, the earthly father of Jesus Christ, is the patron saint of handcraft and home protection, and considered the “home selling agent.”  Burying a Saint Joseph statue is believed to bring about the perfect buyer and facilitate the sale of a home.  I have encouraged homeowners to bury a Saint Joseph statue upside down somewhere on their property if they want to sell quickly. 

     The history behind this tradition to bury a statue of Saint Joseph dates back to 1515 A.D.  It began in Europe with the nuns at a Closter needed to expand their land, and as a prayer to St. Joseph they buried medals of him in the ground.  After a short time they found out that their prayers had been heard and they got more land.  This story has lived on until today but the tradition has changed from burying medals to burying statues.

     St. Joseph was the husband to Virgin Mary.  We don’t know a lot about Joseph, except that he was a skilled craftsman and a good father.  He became a Saint for workers and it is very common to pray to him to get help with house sales and many other things.  The reason he had been made a Patron Saint is that he taught Jesus the craftsman’s trade and made sure that Jesus always was well housed.  That is the reason why he always helps people to find a house they are specifically looking for and helps the people who need to sell their homes.

     It doesn’t matter if you are Catholic, Protestant, Jewish, or of any other religious denomination.  If you pray to Saint Joseph, he will help you find the right house to purchase, or help get your house sold.  Over two million people today are doing this for a better sale.

     I have buried Saint Joseph at my own properties in the past.  And, I have had unbelievable success.  You can read more about St. Joseph in the book, St. Joseph, My Real Estate Agent, by Stephen J. Binz.  There is belief that faith in the home selling Saint has proven to be a savior for many people.


Posted by Mario DArtagnan on December 2nd, 2013 1:31 AM

November 20th, 2013 3:32 AM



                   

      It has been several months since I first wrote about the distinction between customer and client, and is worthy of some expansion.  I just finished reading forty or fifty blogs discussing the difference between what a customer is, and what a client is.  Frankly, they are all wrong.  It has nothing to do with mindset, nor does it have to do with how long you have had a business relationship with someone.

      We will keep this discussion limited to real estate practitioners.  If you as a licensed broker or salesperson, do not have a written contract with a party wherein you create a relationship that contains fiduciary duties (trust and confidence), then that party is nothing more than a customer – period.  The only relationship where a licensee could create a fiduciary relationship is by entering into a written, single agency agreement with a consumer.  That consumer would then be considered a client.  Somehow, these definitions and distinctions have become convoluted as more and more people entered the real estate industry.  It is the lack of these distinctions that attorneys love.  If you want to end up defending your words in court, continue to refer to that customer as a client.  And if you think I’m mistaken, you could check out the case law files on this issue.

      When you continue to address someone as a client, you have ostensibly created a fiduciary relationship, albeit it is not in writing.  By mere utterance of the word, you have created the relationship between client (fiduciary) and agent, notwithstanding your intent.  In other words, that “customer” has just become a “client” and would have an expectation of client/agent duties.  That party would have a reasonable expectation that whatever he or she told you would be held in confidence.  What is really interesting is that I have perused continuing education workbooks, and pre-licensure text books, and nowhere was I able to find the word “client”, attached to any relationship, except when a single agency is created by written contract. 

      I hope this clears up the issue once and for all.  It is very simple.  If you do not have a written agreement with a buyer or seller as a single agent, then that party is a customer only.


Posted by Mario DArtagnan on November 20th, 2013 3:32 AM

November 12th, 2013 12:24 PM

               


     When a sales contract is fully executed between a buyer and seller, a real estate attorney or Title Company will perform a title search.  This is the process where recorded documents that may affect the title to real property are examined for encumbrances and liens, and other real estate interests and their priority for each parcel of land within the county.

     Title records are maintained by recorders of deeds, county clerks, collectors, and clerks of court, and include written documents, such as deeds and mortgages, and other records, such as tax, marriage, and probate records, and judgments, that may affect the title of a property.

     Recording is the deposition of written documents pertaining to a parcel of land in the public records, which in most cases, is in the courthouse of the county in which the real estate is located.  The details of recording are stipulated by state law.  Generally, any document that affects either the title or the interests in the land may be recorded.  Any liens are generally given priority by their date of filing, with earlier liens having higher priority than later recorded liens.  However, tax liens have higher priority over all other liens regardless of when they were recorded or even if they are recorded.  Real estate interests also have a priority order, with earlier recorded interests taking priority over later ones.

       Before a document can be recorded, it must satisfy the requirements of the recording laws of the state in which the property is located.  Some states require witnesses, or that names be printed below the signatures and notarized.

     The title record serves as a central repository of information about a parcel of land.  Hence, anyone who has an interest in a property or wants to record a lien is expected to file a notice of it in the records, and anyone considering a future interest in the property, such as a buyer or lender, is presumed to know what can be found in the title records and by inspecting the property.  Constructive notice is the legal presumption that anything recorded in a public record can be known by anyone who wants to know it.  In real estate, constructive notice is also anything that can be learned by inspection of the property.

     Not all liens are recorded.  Statutory liens, such as inheritance taxes and corporate franchise taxes, are not recorded.  Real estate taxes and special assessments, which are taxes assessed to pay for a public improvement that benefits the property, are not recorded until well after payment was due.  Information about these off the record liens must be obtained from the municipalities, or receipts may be available to show that the real estate taxes were paid.

      A title search is a search of all title records of a particular property to ascertain if the current title is good.  The chain of title is examined from the root of title, which is the first record of the chain stipulated by state law that must be considered up to the present title.  Many states have adopted the Marketable Title Act, which requires that the chain be complete only back to 40 to 60 years, depending on the particular state law.  The marketable title act serves as a statute of limitations for potential claimants.

        Most real estate sales contracts stipulate that the seller is conveying a marketable title to the buyer.  A marketable title is one that has no defects in the title record and is not contingent on dubious law or facts.  Other qualities of a marketable title are that it will not give rise to litigation and interfere with the buyer’s enjoyment of the property, and that the buyer will have no problem selling the property in the future.

        A certificate of title is an opinion by a title company, licensed abstractor, or an attorney that the title is good on a specific date based on the information in the title record and other public documents.  Title insurance is purchased to protect against hidden defects.  Most policies do not cover any defects or liens that are known to the buyer nor do they cover any changes in zoning or other actions by the government, such as condemnations.  Now you have a better understanding of the title process.


Posted by Mario DArtagnan on November 12th, 2013 12:24 PM

November 4th, 2013 2:09 AM
           

During the course of listing short sales and bank owned properties, the mortgagees (lenders) almost invariably order a broker price opinion (BPO).  Even when there is an offer to purchase on the table, the lender may request an updated BPO.  These are ordered from real estate agents doing business in the county where the subject properties are located.

            Although the BPO is not an appraisal, appraisal principals should still be applied during the process of determining the value opinion.  The most recent closed sales are paramount in the comparison method of evaluating property.  This means that the agent wants to find similar properties with similar attributes, if possible.  One of the reasons agents take on the task of performing BPOs is to ultimately list properties owned by banks.  They get paid anywhere from $50.00 to $150.00 for each price opinion submitted.   One of the pitfalls is that some of these real estate agents are totally unfamiliar with the market in which the subject property lies.  I have seen BPOs where the subject property is situated in a gated community, and yet the comparables lie outside the community, with no adjustments made to the value of the comparables.  In the event there are no closed sales in the gated community, it is permissible to go outside the community but, there should be price adjustments made for doing so.  In other words, you really don’t want to mix apples with oranges.

            Let’s say your subject property is located on the golf course.  You wouldn’t want to compare it to say, a property with gulf access.  This would be mixing apples with oranges.  Moreover, comparing fresh water to gulf access would also be a bad mix.  In many cases, there are no closed sales in a particular neighborhood.  The next step would be to look at pending sales in the same market.  The agent would not know the contract price, but would at least know the asking price.  This could be a good indicator of value if there is some history on what percentage of the asking price properties sold. 

            In the event there are no closed sales and no pending sales in the neighborhood in recent months, the challenge would become greater for agents.  In the BPO report, active listing prices should be listed, and notations that there are no recent closed or pending sales.  The more experienced agents could possibly use a “square-foot” method of evaluating the property.  But, this gets risky, too.  For example, a custom built home with lots of detail and craftsmanship could possibly be built for $200.00 a foot.  The same home with only the basic design and no extras could be built for say, $75.00 a foot.   

            Once the lender reads the BPO, they rely on the report, the skewing of data notwithstanding.  Then it becomes a challenge for the listing broker to convince the lender that the BPO contains inaccurate data and consequently, the value is suspicious at best.  Unfortunately, lenders do not want to pay for an appraisal that is performed by a state certified or licensed appraiser.  I believe it would be more prudent for lenders to pay for the appraisal, and then charge the purchaser the price of the appraisal at closing.  This way the value is more supportable and the Uniform Standards of Principle Appraisal Practices have been followed.  Also, appraisers are more adept at making price adjustments for time and market conditions. 

            BPOs have their place in this market.  However, they should be reviewed and relied upon with caution.  BPOs are very broad at best, and as I’ve heard before, you get what you pay for!


Posted by Mario DArtagnan on November 4th, 2013 2:09 AM

October 14th, 2013 12:15 PM

                         


           Sometimes you walk into a beautiful home, when all of a sudden, the lighting grabs your attention.  In many cases the lighting is either too bright, or too dim.  Certain lighting without dimmer switches is repulsive to the eyes, and may be the difference between selling your home and not selling it.  Women are particularly attuned to correct lighting, especially in kitchens.  Lighting creates the ambiance of a room.  Here are some tips on kitchen lighting. 

            The kitchen is where you and your family spend lots of time, and therefore, should be an inviting space.  Lighting does not have to be expensive to be effective.  Accent lighting takes into consideration focal points of the room, such as paintings, sculptures, house plants, and other areas of interest.

            When recessed lighting is used, some of them should be positioned over the center of countertops, and should always have a dimming system that allows you to vary the mood of the room.  Dimming systems also extend the life of bulbs.  White trim and baffles should be used because white blends more naturally into the ceiling.  Task lighting helps you perform specific tasks such as preparing food, reading, or cooking.  Cabinet lighting is an example of task lighting.  Many people make the mistake of positioning the lighting at the back of the cabinets, when the fixtures should be positioned as close as possible to the front of the cabinets.  This eliminates the possibility of working in your own shadows.  Granite countertops act as mirrors and will reflect the image of the under-cabinet light very well.  Light fixtures with frosted or textured glass covers will diffuse the light as much as possible.  The kitchen sink is another example of task lighting.  Many contemporary kitchens have recessed lighting above the kitchen sink. 

            Pendants are hung above tabletops or breakfast bars and should be positioned 30 inches above the tabletop.    These lights are easy to install and give a nice effect.  The color of appliances and countertops also effect lighting.  Dark wood cabinets and black appliances will make your kitchen seem smaller, and therefore more lighting would be required.  White appliances and cabinets reflect light better.  The height of ceilings will also determine how much flexibility you have with respect to lighting options.  If your kitchen has seven foot ceilings, flush- mounted lighting may be your only option.  In any event, lighting is as important in a home as the number of bathrooms.  You may want to talk to a lighting consultant to discuss the many options available. 


Posted by Mario DArtagnan on October 14th, 2013 12:15 PM

October 9th, 2013 5:57 AM

                                       
 

            How exactly, does a potential buyer choose where he or she wants to live?  Two very important aspects of a purchasing decision are safety, and quietness.  Equally important are a property’s amenities, proximity to dining and shopping, and access to major transportation arteries and airports.

          We live in a city that is abundant in waterways, yet these homes may not be suitable for some buyers.  Water is a conductor of sound, and I assure you that if your neighbors across the canal are entertaining on their lanai, you can virtually hear every word they say.  If buyers are not interested in boating, there are alternative properties such as golf course, homes situated in rural areas, or off-water locations.

          With respect to safety, providing crime statistics is risky business for real estate agents.  Moreover, discussing school systems and districts is equally risky and therefore, buyers should be referred to specific law enforcement agencies and school administrators to obtain the respective statistics.  Another important consideration is the presence of sexual offenders or predators.  A buyer may visit the Lee County Sheriff website at: www.floridaoffenderalert.com to receive email alerts about specific locations of sexual offenders. 

          Gated communities are another option for buyers.  However, there are some caveats to consider.  The Home Owner Association and Condominium Association fees could be very expensive depending on the community.  It is important to know how frequently maintenance is performed.  For example, are the landscapers continuously mowing lawns and fairways, or trimming trees?  Will you be incessantly inconvenienced by the sound of leaf blowers, those God forsaken tools that blow trimmings from one end of the street to the other?  I have lived in communities where maintenance people work six days a week.  So, if you are looking for total quietness and enjoyment, this is an issue that a buyer should be asking questions about.

          Other considerations are play and recreational areas, including pool, tennis courts, and friendly "trustworthy" neighbors who respect their own privacy as well as the privacy of others.  Other considerations that are extremely important to people when choosing a neighborhood may have to do with living close to family.  Real estate decisions are quite often made so that generations of family members - even given the extraordinarily fast-moving lifestyles of young families - may live in proximity to each other.  Other considerations may be selecting a neighborhood that is either abundant with or deplete of young children. 

          Choosing the right neighborhood can be tricky, and that is why it is important to hire a real estate professional who knows the area.  This is the person that can provide first-hand knowledge and experience, and lead you in the right direction. 


Posted by Mario DArtagnan on October 9th, 2013 5:57 AM

September 25th, 2013 8:25 AM

                     
  

    There has always been keen competition among real estate professionals.  You can’t drive down any main corridor without seeing real estate offices.  So, how does a buyer or seller choose a real estate agent or firm?

    From a seller’s perspective, I would first look at the agent’s website to see if it is social-media friendly.  How and where they market online can make all the difference in getting a property sold.  I believe that experience, knowledge of the market, and how an agent uses other technology all play an important role in getting the property sold.  We are all familiar with products and services that have been branded over the years.  Name recognition and branding is an important element in marketing, and real estate is no exception. 

     Communication skills are critical when hiring an agent.  Can this person speak intelligently, answer questions about the market, and describe in detail a marketing plan?  Moreover, someone that really understands contracts and real estate law is the person you want to gravitate towards.  Attention to detail and organization skills are paramount in this challenging market.  I would also be looking for a person who possesses excellent negotiating skills.  I believe it is important during the interview process to ask as many questions as possible.  For example, how long has the agent been in the business, how many transactions has the agent closed, and if they could refer satisfied customers.  I would not necessarily dismiss newer agents.  Typically, they are hungry, and won’t have a large customer base.  That means they can spend more time on your real estate needs until their business grows.  You are likely to find many agents that fit both criteria.    

    Many times the decision to choose one agent over another is based upon whether you simply like the agent.  In many cases you can warm up to a person within the first five seconds of meeting.  Then, there are others where your instincts tell you to run away quickly.  Some people prefer to do business with men, where others prefer women.  Regardless of the chosen gender, real estate agents are professionals and want to satisfy your objectives. 

    Many people search websites to access real estate information, although much of this information is redundant, out of date, and overwhelming.  Even though you can get a general picture of the market, there are certain details that you just cannot find on a website.  Many agents use websites, email, and other technology that plays an integral part in marketing property.   New technology is wonderful, but if agents don’t know how to use it, and understand where and how their marketing efforts are yielding results, then it is a waste of technology and time.  I would ask the agent for these results. 

   From a buyer’s perspective, finding an agent can be strictly accidental.  You may just happen to walk into a real estate office or call on a “for sale” sign.  Rapport is always important in how successful your relationship will be with any agent.  Any Realtor can access the multiple listing services for properties.  However, how the agent understands your needs and wants can make your buying experience more efficient and pleasant.  Some buyers find agents on the Internet by virtue of real estate listings.  I believe that creating a relationship prior to actually seeing property will usually end in a successful transaction.  Don’t be afraid of the agent that asks you for a buyer-broker agreement.  This shows commitment on your part, and the agent will work harder to find you the right property.


Posted by Mario DArtagnan on September 25th, 2013 8:25 AM

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