Virginia Real Estate and Musings

Mr. Innocent First Time Home Buyer called me (we'll call him IB) and asked to see one of my listings.  When I asked IB if he was currently working with an agent, he politely said, "Yes, I am.  However, she is currently out of town and cannot show the property to me.  She TOLD ME to call you."

Really?  "IB, are you under a buyer brokerage agreement with this agent?".  IB's response, "Yes, I am".

At this point, I really felt sorry for IB.  He seemed like such a nice guy and he also deserves BETTER.

Buyer's Agents:  by having the listing agent (who represents the SELLER, in case you forgot) show the property to your BUYER (whom YOU represent), you are failing in your fiduciary duty to that buyer!  WHY?  WHY?  WHY would you do this??????

Don't get me wrong now...I represent the seller, remember?  I will be more than happy to show my listing to YOUR buyer.  While I'm chatting him up, I'll find out where he works, what his motivation is for buying, take the time to explain to him why THIS house is the perfect one for him.  And...I will use all this information to negotiate on behalf of my client, the SELLER.

Just to satisfy my curiosity, I asked IB if "his" agent mentioned anything about another agent covering her business while she was on vacation.  He said, "No, she told me just to cal the listing agents if there was anything I wanted to see and she would write the offer when she got back".

I wonder how IB's agent would feel if she were being sued and when her attorney went on vacation, the attorney told her just to call the plaintiff's attorney for help.  Maybe if she continues this type of behavior, she will find out.....

A question on Trulia Voices today prompted this post.  "What is the norm for an earnest money deposit"?

One of the agents who answered said that a buyer should put down as much as they can to indicate their "seriousness" in buying.  Really???  Should they also make their offering price as much as they can afford to indicate their "seriousness" in buying???

A buyer's agent who is looking out for his/her clients will negotiate the EMD along with the other terms of the contract.

An earnest money deposit amount isn't something that should be halphazardly thrown out there.  Why?

Because the buyer may never get it back!

In most states, the earnest money deposit can only be released from escrow by either an agreement of all parties OR through the order of a judge.

In many cases, if the transaction doesn't come to fruition, someone may be very upset.  The only thing that person may have any control over is the release of the earnest money deposit.  They may decide they just don't want to sign that release.  You know what?  THEY DON'T HAVE TO!  No one can physically force them to sign that release!

Let's say the contract is contingent upon the buyer's obtaining a mortgage.  Said contract states that if the buyer's loan is denied through no fault of the buyer (let's just say their ratios were very close and the underwriter was having a bad day), they get their earnest money deposit back.  However, the buyer's have tied the seller's house up for 3 months.  The seller is mad.  Contrary to what some may say, with a denial letter in hand, the seller can put their house back on the market without a release from the previous contract.

What if the seller doesn't want to release the EMD?  It is usually not worth the buyer hiring an attorney to go to court for the release if there aren't any other damages.  Listing agents should be careful in pressuring sellers to release the EMD back to the buyer if they don't want to.  A listing agents represents the seller and should explore all options for their client.  Perhaps the seller should instead consult with an attorney or try negotiating with the buyer to split the EMD.

Tina in Virginia

It seems every site nowadays gives you the opportunity to follow "friends".

So, what type of "friends" are there?  Let's take a look....

1. True friends.  People you personally know.  People you talk to at least once per month.  The people who probably know way too much about you.  The people who you would have to pay to be silent if you ever decided to run for public office.

2.  Business Associates.  Colleagues you do business with on a regular basis.  Maybe you work in the same office.  Maybe they have done your loans/home inspections/closings for the past 5 years.  People who know you personally, but probably don't REALLY know you.

3.  Clients.  Past, present, future.  You handled a business transaction for them 3 years ago, haven't talked to them since - but that doesn't mean they don't like you.

4.  Former classmates.  Gary the Geek, Popular Priscilla, Doug the Druggie, Wanda the Wierdo....you know what I mean.  The old boyfriend who is now married with 3 kids or your best friend from 7th grade.

5.  Social Networking friends.  This gets tricky.  People you have never met face to face but have watched on YouTube, read their blogs, subscribed to their feed, etc.  People you feel like you know - though you have never personally met.

6.  Acquaintances.  People you have heard of, or they have heard of you - though you really do not know much about them.

7.  Circle of Sphere.  People who know people you know.  You may or may not ever get to actually know them.

8.  Strangers.  The friend request you get that you accept and the person is some guy who builds skateboards out of his garage in Brazil.  You have absolutely nothing in common....and probably never will.

When deciding who to "friend", keep this in mind.....what is the purpose of the site you are on and who are you trying to connect with?  Very often, your "friends" will take a look at the others you have "befriended".  Be careful here....if you are using Facebook for business, do you want Boobalicious Brenda or Boozing Bernie to show up in your friend feed? Also, periodically check out your "friends" - you may be surprised what their new profile picture looks like and how it can reflect back on you.

Tina in Virginia

Seth Godin wrote a blog post about this today.  Unfortunately, he had purchased a Kitchen Aid teakettle which produced melted plastic in his hand.  Upon calling the "customer service" number for Kitchen Aid, Seth was greeted with a 9 prompt message which, after wasting a good bit of his time, told him they were closed.

Seth makes the statement, "The only reason to answer the phone when a customer calls is to make the customer happy.  If you're not doing this or you are unable to do this, do not answer the phone."

This really got me to thinking about all of the times I have seen an agent answer the phone (or I have answered the phone) when they (I) shouldn't have.

We have all experienced it.  Call someone up and they proceed to put you on hold while they finish up another conversation.  Try to make a showing appointment and listen as the other agent checks out at the grocery store.  Answer your phone while walking to an appointment with a briefcase in one hand, purse in another while dodging traffic and the caller is an appraiser wanting to make an appointment.

I'm going to say it.....SOMETIMES IT'S JUST NOT APPROPRIATE TO ANSWER YOUR PHONE!  If you cannot give the caller your undivided attention, don't answer the phone!  If you are not in a position to make that caller happy, DON'T ANSWER THE PHONE!

It's OK to not answer the phone.

Tina in Virginia

When I first started in real estate abut 11 years ago, I was told it was "company policy" that I apply for and become a member of the local, state and national Realtor Associations.

I've never been one who thrives on conformity.  I didn't like the "policy" and I let that be known.  Other than a Code of Ethics which a lot of agents seemed to ignore, the only other thing I really saw the Association doing was organizing and hosting the Circle of Excellence Awards Banquet (aka Realtor "Prom") each year.  Unlike most MLS's throughout the nation which are coordinated through the local Associations, our MLS is maintained and run through an outside entity.

It seemed the Association and I were just not on the same page.  After my first year in the business, I was told that I would not receive my "award" if I didn't submit my picture (I HATED that agents plastered their mugs on everything so I never had mine taken).  My Broker explained how thoroughly embarrassed she would be if I couldn't get my award because of a silly picture so I caved and went to a photographer the day of the deadline.

A few years later, I was personally invited to a Realtor/Lawyer Committee meeting by the Chairperson.  I enjoyed it and learned a few things and started attending on a regular basis.  We also got a free lunch out of it so that was a plus!  Then, I was asked to give a presentation on centralized showing systems and the various options.  As I spoke about the different programs and online options - I began to lose people and thought that maybe I was no longer speaking English.  Thus, I realized the majority of my peers knew very little about technology and were nowhere near ready to embrace it.  I withdrew back into my anti-Association shell.

For the next few years, I pretty much ignored NAR, VAR and HRRA.  I received my North Carolina real estate license and was then required to join more Realtor Associations (North Carolina, Outer Banks and Albemarle) which I had little use for.  I even stopped going to Realtor Prom when I found out my company charged us to go.  The Associations just seemed like a clique that I would never fit into.

Then, I met Ben Martin.

Ben is the Director of Communications and New Media at the Virginia Association of Realtors.  We met through the Active Rain Real Estate Network.  Ben was the only person I had ever met who was involved in the Association and embraced technology in real estate like me.  Slowly, Ben was able to get me to crawl out of my shell and start getting involved...but in ways that worked for me.  I became an author for VARBuzz, the Association blog.  I wore a "Virginia is for Bloggers" button at the Inman Conference in San Francisco.  And a HUGE step came a few weeks ago when I actually attended the VAR Conference in Baltimore where Ben recruited me to be a Social Media Correspondent.

I feel so fortunate to now know lots of agents embracing techology all over the Commonwealth of Virginia who are also active in their Associations.  Most, like me, were not involved until Ben Martin reached out and brought them in.  Some local Associations are now getting their own Techology Committees, New Media Directors and Social Media Trainers - mostly due to Ben's efforts.  VAR has been used as a role model for other State Associations throughout the United States and Ben Martin is a huge part of that recognition.

Through Twitter last week, I was recruited to be on the Professional Development Advocacy Group for VAR.  In fact, I think many appointments were nominated by Ben through Twitter.  I am truly excited to be involved with the Association and look forward to helping it grow and prosper because I now know that the Association represents all of us...including me.

Tina in Virginia

I've been reading some seemingly misinformed comments regarding short sales lately and thought I would share some insight.  By no means do I consider myself to be an expert on short sales; nor do I have any desire to be.  That being said, I reside in the same household with a person who is employed by one of the largest banks in the world and happens to work in this department.  Please do not ask me which bank nor what their position is as I do not want to put their job in any type of jeopardy.  There.  My disclaimer is done.

First, let's talk about the definition of a short sale.  The "shortage" is the amount the bank is being asked to waive, forgive, delay collecting......the definition varies depending on the circumstances and the state and local laws.

See that word I just used?  LAWS.  Yes, this entire process is governed by laws.  Laws you and I do not know and understand because we are not attorneys.  Am I saying that agents are stupid and attorneys are genuises?  No!  I am just saying that this is a legal process and sellers should really be consulting an attorney from the get-go to be advised regarding all of their legal options.

A seller or someone legally (there's that word again) authorized to act on their behalf, requests a short sale package from the bank.  The bank cannot legally share any information regarding the short sale with anyone who is not legally authorized by the seller to discuss it.  Having a signed sales contract is not sufficient in the bank's eyes to speak with someone.  The Privacy Act governs this.

So, now the bank has a complete package (if you are lucky).  Unfortunately, the banks are completely overwhelmed by short sales and the paperwork constantly coming in and yes, things get lost....a lot.  Think of it this way....the bank is running a business that is losing money and they are laying people off and cutting back.  Yet, in the department they are bleeding from, they need to increase staffing and production.

Ok, let's say the package is really complete and really gets to someone to review.  Unlike what many people think, this isn't a quick "this makes sense" decision.  What makes sense to us may not make any sense to the bank's bottom line.  Why?  Laws (again).  Let's look at this scenario:  a short sale request comes in for a house in State C.  In State C, if the bank forecloses, the bank is not permitted by law to go after a deficiency judgement nor any other loans they may have with the borrower.  So, before a bank can make a decision whether to approve a short sale or foreclose, they need to research and determine if the seller has any other debt obligations with them.  Maybe there is a debt that was sent to a collection agency a couple of years ago.  The bank will have to track down that debt and find out what the current balance is on it and get this....how much the bank will need to pay the 3rd party collector to buy the debt back in order for it to be "erased". 

In some states, if the bank opts to foreclose, they have the ability to "unforeclose" should they choose to do so in a specified period of time.  Why would they do that?  Well, maybe the house has been a meth lab which requires so much money spent on remediation that it is not worth the bank carrying on their portfolio.  What happens when a bank "unforecloses"?  The house goes back to the last owner or the taxes just go unpaid to a point where the municipality takes the house. 

In other states, the bank may be legally permitted to file a deficiency judgement, garnish wages, etc.  Depending on the laws and whether or not the borrower has filed for bankruptcy, the bank may be able to go after retirement or investments.  Maybe the borrower just filed for bankruptcy hoping to "protect" their assets, the bank may want to send their attorneys to attend the bankruptcy hearing and try to get it thrown out.

So, I suppose this is enough for part 1 of the bank's side.  Please do not assume I am taking sides...because I am not.  Just keep in mind the following:

1.  An agent's E&O insurance may not cover the negotiation of short sales.

2.  What makes sense to "us" might not make any sense whatsoever to the bank.

3.  The bank is being asked to "eat" tens, even hundreds of thousands of dollars.

4.  There are no guarantees on timeframe for approval.  If you have to make a specific deadline, let the bank know; however, don't schedule life around it.

5.  A short sale is not always the best option for the borrower.  There are instances when a foreclosure may be a wiser financial decision (which is why professionals should always be consulted).

I hope this information was helpful in telling the "other" side of the story.

Tina in Virginia