The World Has Become Complicated
Five broker skill sets which effect buyers and sellers
- Real Estate Properties
People skills – Ask questions and listen.
If they sound like you know everything, it is probably not true and they have a confidence problem.
We have to learn by their mistakes, so arguments may not help. A seller overpriced her property, after I had suggested a lower range. She does not need the money. She increased the price by 25%. Six months later she got down to the top of the price range and one year later it is now priced to sell. She paid property taxes and mortgage payments on a vacant property for one year. The most important question to ask is …. “When do you want the money?”
Most likely, I will let you learn by your mistake My two most recent property seller’s did not listen to my suggested asking price. They both increased the asking price to be 10 % higher than the original starting ask price.
Then later then reduced the ask price, then again reduced the price a third time. They wasted 6 months of property taxes and maintenance and made the marketing time appear to be stale.
Sellers have to get through the emotional stages to have realizations to reduce the price. All of us often learn by experience. It would be nice to listen to experts with more experience.
A client should know, like and trust their agent otherwise the client thinks every problem is created by the agent.
Ultimately, The market is right.
Most importantly, “I don’t always know.” I must admit that sometimes it is hard to determine value, especially on unique properties.
You can Not use the county appraisal district value. That is why owner tax payers hire property tax consultants.
Here is a list of 24 people that may be involved. Not all of them in each deal.
· Buyer agent
· Seller agent
· Title company
· Building inspector
· Bug inspector
· Mold inspector
· Environmental consultant
· Hydrostatic plumbing inspector
· City inspector
· Utility company
· 1031 Tax Deferred Exchange 3rd party Intermediary
· Commercial mortgage broker
· Residential mortgage broker
· Property Manager
· Real Estate attorney
· Insurance agent
· Residential appraiser
· Commercial appraiser
· Residential lender
· Owner Association
· Sometimes a locksmith
Laws, Taxes, Trusts, Legal entities –
The world has changed from 25 years ago. I feel like a target. Wish I had gotten a law degree to have more and cheaper ammunition.
The real estate residential transaction contracts were 5 pages and are now 9 pages plus 3 addendums with 6 additional pages.
The commercial contract is 14 pages plus may 6 additional pages of addendums and amendments…… And each year, the addendums and amendments are changed. The brokerage firms now have added their own docs for their client to sign and for my clients to sign. Some have added an additional seller disclosure document and a final buyer home walk through acknowledgement.
I am not supposed to give a legal opinion about any documents which are not promulgated by the Texas Real Estate Commission, but often will discuss those docs and disclose I am not an attorney
Do you understand the different types of written contracts and the different parts of each contract.
There are more than 150 legal contract forms to understand PLUS
- Texas Real Estate Commission
- Texas Association of Realtors
- Houston Association of Realtors
Plus recently the Managers of brokerage forms are requesting the completion of their own broker forms ….. such as a second additional Seller Disclosure form for buyer to sign and a Buyer Home Walk Through form to be signed before closing.
Plus Lenders are now requiring their own loan disclosure own forms to be signed by borrowers and sometimes by sellers before closing … such property financial disclosures and environmental disclosure questionaires.
Where are the red flags? How do you avoid the hidden snakes in the contract? Should you check the sales contract box which requires that the property appraise for a specific amount ….. when we know that a unique property has no comparable sales in last 6 months.
Here is a list of government entities and governmental regulation concerns.
- Texas real estate commission
- Harris County Appraisal District
- Federal rules and laws about everything. Lending, Fair Housing, environmental pollution. Flooding, etc.
- Texas Insurance Commission deals with title ownership insurance, Home insurance, flood insurance.
- Errors and Omission insurance
- Advertising laws
- Zoning laws
- 1031 Tax Deferred Exchanges and third party intermediaries
Who has to sign for (without a phone call to a lawyer) --- LLCs, tenants in common, divorce, “Durable Statutory Power of Attorney” is not like other power of attorney?
What is the difference on the sales contract … between a general warranty deed and a special warranty deed? Does not matter if you buy title insurance?
- Lenders –
- Property Management company
- Banks and government guarantors.
- Hard private lenders.
- Houston Association of Realtors and MLS. (there are rules).
- City laws such as zoning.
- Neighborhood associations, deed restrictions, HOA and civic clubs.
- District Management jurisdictions
- City Historic area bureaucrats
- City of Houston Neighborhood protection agency (slum inspectors)
- City Construction Permit Inspectors
- Harris County neighborhood protection and environmental safety.
- County Appraisal Districts
- Flood Control District
It is common for lenders to NOT be sensitive to the closing date in the contract.
Typically, one week before closing, the clerk reviews the contract to know that the buyer meets all the policies of the lender, then asks questions or wants more documents, which must be requested through the broker and then communicated to the other broker and then secured from the buyer or the seller.
Then those additional last minute docs must be reviewed by the lender clerk.
Then the file in finally reviewed the supervisor of the clerk who may ask more questions or for more paper from buyers or sellers … and the Last week before closing is gone and past.
Do we need to ask written permission of the seller to extend the closing date?
Did the seller have a backup contract at a higher price, which will automatically become active if the closing date on your contract is missed …. Making the buyer contract to breach and thus the buyer automatically lose the property and lose all the buyer acquisition costs and earnest money.
There is language which we can put in the initial contract which will help us plan for this anguish and allow the buyer to automatically extend the closing date, without asking for the written permission of the seller. Seldom do buyer agents know how to do this.
This is especially true of large out of state lenders. Do you know the city and state of the lender headquarters?
How can we add language to automatically extend the closing, without asking written permission from the seller?
Does the contract for a single family residence have word to credit the buyer with the lease deposits for which belong to the tenant? And the prorated rent if the close the sale during the middle of the month?
Texas is a Non-disclosure state (like 7 others) which means that buyers do not have to tell the government or the appraisal district how much they paid to buyer the property.
Therefore what language do we add to the purchase contract to prevent the seller and seller broker from disclosing to anyone except the IRS and their accountant. To stop the seller’s broker from disclosing to an online database that is also subscribed to by the county appraisal district.
This may save the buyer thousands of dollars of future property taxes. I frequently add this language to buyer contracts
No other buyer broker has ever (in 25 years) added this language to any of their buyer contract when I have represented the seller.
Knowledge of Real Estate –
Appraisal Theory – comparable, replacement, financial income approach
Can you determine the Net Income of a property and the value of an income producing property ….. if you do not have the financial info from the seller?
Can you determine the future value of a property …. In advance of you spending repair dollars to increase the rents?
Good brokers have a password key to property databases and know how to use it.
Are the online properties propagated to other online publications? Where?
Often I meet agents that do not understand how to use plat maps, which help find property dimensions and can give clues about easements, alleys, and landlocked land parcels.
Know the different types of land surveys and how to read a land survey. With a magnifying glass, date, copyright, expectation of title insurance company. Where do you get the Metes and Bounds?
Can you read a title insurance commitment? Where are the red flags? Do you know where to find title insurance exceptions on the title commitment. How do you have those exceptions omitted from the insurance?
- Computer skills and phone skills
- Phone apps
- Electronic signatures
- Marketing knowledge and skills
- Databases and how info propagates. (Appraisal district subscribes to ALL )
- Loopnet and CoStar
- Commercial Gateway
New Trends – Wholesalers, internet Buyers (why do they exist?)
How does this effect you as a buyer or seller?
Your agent and broker must have these skills, because it effects the life of buyers and sellers. It determines how legal contracts are written.
Each of us is different and all of us have a special situation.
Some real estate brokerage firms teach agents how to make a listing presentation to prospective seller clients. I am NOT one of those brokers. We should just have a conversation. You will then know who to hire by our questions and answers
Hopefully now you can better understand the questions to ask a prospective broker.
Go to our Website at Houstonius.com to listen to our weekly podcast entitle “Snakes, Landmines and Grass Fires” or watch our shorts videos when we Rant and Whine about real estate nightmares.
Or phone us at 2812368189
We reveal the Not Obvious Pitfalls of Real Estate.
There are often unusual or unexpected problems.
What are the underlying main issues?
You should ask revealing questions and find the true answers.
Who, What, Where, When and How ??
We know what to do and we enjoy helping people.
· Phone us to discuss real estate at 281 236 8189
· Go to our website at Houstonius .com
· Listen to our weekly podcast “Snakes, Landmines and Grass Fires”
· Find our YouTube channel “Houstonius”