Archive for the 'Sellers' Category

Why Houses Aren’t Selling.

Despite what you see in the national media, houses in our market ARE selling. Seriously! I know of 2 local homes that went under contract last week at or above list price. Bother were on the market less than 3 days. And get this…one of them was not being actively shown because the homeowner was in the hospital. The offers were made sight unseen!!

In The Market, Out Of The Market, And No Man’s Land

Today’s housing market is fundamentally no different than any other. It’s just that there are fewer houses now that are truly “in the market”…meaning that buyers are seriously considering buying them. It’s all about a home’s price and condition.

Jap Papasan, best selling real estate author and VP at Keller Williams Realty put this short video together to go over the key issues. As always, Jay nails it. Check it out…

For information on how to properly price your home, contact Hal Benz -Westfield NJ’s Home Sale & Short Sale Specialist. 908-216-4836

Tags: Home Sales, Jay Papasan, marketing

Building Permits Part 2: The High Cost Of Doing It Wrong

In Part 1 of “Building Permits”, we reviewed when you might and might not need a building permit for a home improvement project. We learned that failing to obtain the proper building permits can complicate a real estate deal down the line, and can potentially cost the seller a lot of money. But who should be responsible for pulling the permit? And when you’re buying or selling a home, who should check?

Whoever Pulls The Building Permit Takes Responsibility

In most of the country, a homeowner can legally do most home improvement projects on their own (check in your local area). According to Jan Burchett, Executive Director of the National Association of the Remodeling Industry, it’s a good idea to have your contractor pull the building permit. While you might need to pay a little more for their time to do this, it’s worth it. “In most jurisdictions” says Burchette “the person obtaining the permit is considered to be the contractor and therefore the one liable if the work does not comply with building code.”  

Translation: If the job was done wrong, the homeowner will  be held responsible for correcting the problem…NOT the contractor! How many homeowners are prepared to take this on?

And here’s something I bet you didn’t know: If a home renovation project is done without the required building permits, you may inadvertantly VOID coverage for claims under your homeowner’s insurance policy. This issue alone makes the cost of the permit look more appealing, don’ you think?

So when you’re buying a home, how can you tell if the proper permits are in place?

One way to check this out is to review the Seller’s Disclosure Form. It asks whether the proper permits were obtained for a variety of jobs. If the homeowner answers “no”, then be careful. I’m NOT suggesting that the workmanship will always be poor and there is a safety risk.  But I AM saying is that without having an inspector come and check it out, you won’t know for sure. And we already know how complicated and costly that can be!

Another way is to check the home’s Property Card. The local building department maintains a record of permits obtained on every property in town. It is often referred to the “property card” for the home.

One of the most important tasks that a real estate agent can provide (and unfortunately, one that most fail to do) is to get a copy of it for their client. It’s a public record, and is available to anyone. (Here is a copy of a property card that I pulled for a buyer client last week. The identifying information was blacked out, since this is still an active contract)

By reviewing this card, you’ll see which jobs had permits pulled, and which ones didn’t. I can’t tell you how many times I find finished basements or additional bathrooms in a home that the town has no record of. Not only does this raise a safety concern, it also means that when the town catches on, the assessed value of the home could increase…sometimes significantly. And that means the property taxes will too!!

You should also find out if all open permits are CLOSED. I once represented a buyer in a sale where the contractor got all the permits, but never had the inspector come out to sign off that the job was finished.  The job was a large addition, and when the homeowner found out that the permits were still open (10 year later) the builder was out of business!! In the end, the homeowner had to escrow $60,000 at closing until everything could be resolved. What a mess!!

So to me, the takeaway here is simple: Don’t do a home renovation project without getting the required permits. And if they’re not in place, take care of the issue BEFORE the house goes on the market. Believe me, you’ll be glad you did!!

Tags: building permit, Home Improvements, property card

Building Permits Part 1: What To Know When Buying Or Selling A Home

Building permits are one of the most overlooked parts of many home improvement projects. Why? Because many homeowners don’t know when they’re needed, and some contractors don’t want to deal with them.  But when it comes time to buy or sell a home, the issue WILL come up. And when it does, hang on. It can be a rocky (and expensive) ride!!

When And Why Are Building Permits Needed?

Building permits are required to ensure that construction is safe and meets standard building code. But the problem is that there is never a single code that needs to be met. There are often national, regional and even local codes…which makes sense. Buildings in an earthquake prone region would have different requirements than those that are not, right? But the inspection process can slow things down. Towns often have a limited number of inspectors to do handle the workload. This causes contractors to slow down, which drives costs up. Sometimes, a shady contractor will offer a “discount price” if the homeowner agrees to do the job without permits. (This is a major red flag. RUN…don’t walk…to a more reputable professional).

For the “do-it-yourself crowd”, the best advice is to call your local building office before starting any job you’re not sure about. You probably need a permit if you plan to do something major like:

• Change the footprint of your home,
• Move a load bearing wall,
• Change the roof line,
• Add electrical wiring,
• Open the wall to add a door or window,
• Add or move a fixture that requires venting to the outside – like a sink, toilet or gas burning appliance.

You probably don’t need a permit if you’re doing something small like:

• Replace a faucet,
• Replace floor covering,
• Change countertops,
• Replace doors or windows without altering the structure.

But remember – everything about real estate is local…including the permit process. I needed to get a permit to have a security system installed in my Westfield home. Don’t assume that you know…call the town and find out for sure.

If you are trying to buy or sell a home that has not obtained the required permits for renovation work, expect the transaction to become complicated. Typically, the buyer will want an inspector to come out after the fact, and certify that the work was done properly. This often requires walls to be opened up, and fixtures to be removed. It can be a costly and time consuming process…paid for in most cases by the seller.

A seller can refuse to participate and attempt to sell the home “as-is”. But if the failure to obtain permits was not properly disclosed prior to the negotiation of the contract, the seller should expect the buyer to re-negotiate the price…or terminate the contract. If the buyer decides to walk away, the sellers find themselves in the unenviable position of having to disclose the lack of permits to all future buyers. This is NOT good for your marketing plan!

In Part 2 of this series, I’ll review some of the risks associated with not properly resolving permit issues, as well as a simple way for both buyers and sellers to protect themselves.

Tags: building permit, Home Improvements

Westfield NJ Homes: How To Choose A Realtor.

 

Westfield NJ Homes have long been sought after by local home buyers. By offering beautiful parks & neighborhoods, high quality schools, an award winning downtown and a wonderful quality of life, the Westfield housing market has remained among the area’s strongest in the midst of our current housing downturn.

 

With so much to offer, you might think it wouldn’t matter which Realtor was chosen by those selling their Westfield NJ homes. And you’d be wrong.   Keller Williams…a relative newcomer to the Westfield NJ’s housing scene… leads the pack when it comes to delivering the best outcomes to Westfield NJ home sellers.

 

Picking The Best When Selling Your Westfield NJ Home.

How does anyone become “the best” at anything? I’ve always believed it had to do with results. But how do homeowners decide which Realtor to use when selling their Westfield NJ homes? Usually, they go with familiar names or recommendations from a friend. They often go to the web to check out the presence that their agent has online. And sometimes, they pick up the local paper to see who is advertising the most listings.

 

But surprisingly, most homeowners do very little real research about the agent or the company that they choose to represent them. In fact, studies conducted by the NJ Association of Realtors show that a full 2/3 of home sellers interview only ONE Realtor for the job!

 

The agents and companies with the strongest name recognition love that!

 

But what does the research show about the agents and companies serving the Westfield NJ market? I have long believed that there are 2 key indicators to look for in choosing a Realtor: 1) Who gets the home sold for the highest percentage of the original asking price, and 2) Who gets the home sold the fastest.

 

So I decided to run a little search in the MLS.

 

I compared Keller Williams (whose Westfield Team is currently working out of their Summit office until they secure office space here in Westfield) with some well known local real estate companies. I looked at ALL SALES reported in the first half of 2010 by these offices in the MLS…not just those taking place in Westfield. After all…these agents do business in lots of great towns. By expanding the study in this way, you’ll get a better picture of how successful these agents and offices are in a wide range of markets.

 

Included in the study were Coldwell Banker (both CB East and CB West, both in Westfield), Weichert – Westfield, RE/MAX – Westfield, Prudential NJ Properties – Westfield, Century-21 Taylor & Love – Westfield, ERA Meeker- Cranford, and Keller Williams- Summit/Westfield.

 

So what does the study show?

 

Keller Williams delivers the HIGHEST sale price /original list price ratio of any major player in the Westfield NJ home selling market. Keller Williams also has among the LOWEST days on market for their listings of any major player in the Westfield NJ home selling market.

(This data represents ALL transactions posted through the Garden State Multiple Listing Service in Union, Morris, Essex, Middlesex, Somerset and Hunterdon Counties for the target offices. Transactions took place between January 1, 2010 – June 30, 2010. All information is deemed reliable, but is not guaranteed by GSMLS.)

 

Being able to consistently deliver outcomes like these for my clients is one of the reasons that I joined Keller Williams (after leaving a management position for one of the other real estate brands in this study). And delivering outcomes like these are helping to make Keller Williams the fastest growing real estate company in America!

 

Here’s a few more things I bet you didn’t know:

• In 2009, Keller Williams surpassed RE/MAX to become the 3rd largest real estate company in the country.
• In 2010, Keller Williams won the prestigious JD Power and Associates Award for Buyer Satisfaction…for the THIRD year in a row!
• Locally, the Keller Williams Summit office (which currently includes my Westfield team) has done over $1 BILLION dollars in volume since it opened in 2005. So far in 2010, we are the #3 office for total sales volume in the Garden Sate MLS (out of about 2000 offices)!

So the next time you or someone you know needs to sell your Westfield NJ home, I encourage you to give me a call. Let me show you how we do things differently from the other real estate names you know so well. And experience for yourself what I call the Keller Williams Difference!

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

 

Tags: Home Sales, Keller Williams, Westfield

Is Your Home Stigmatized By Homicide or Suicide? What You Need To Disclose.

Through the years, I’ve come across several home sellers who’ve shared their secret with me. Something happened inside their house. Something horrible…something unthinkable. On occasion, the secret involved a murder. Other times, a family member committed suicide inside the house. And now it’s time to sell. Will letting people know what happened scare buyers away? At minimum, these sellers worry that disclosure might decrease the value of their home.

And the truth it…it might. Do they need to share what happened to prospective buyers?

Disclosure Rules On Stigmatized Properties Vary From State To State

Stigmatized Properties is the term we use to describe properties that the public might shun for reasons unrelated to its physical condition. According to Christopher Strahan a real estate attorney practicing in Princeton NJ, “New Jersey law does not require a home seller to proactively disclose this type of stigma. But if the buyer asks directly, then the seller is obligated to share the truth.”  

A stigma could be caused by an event like one of those described above. Sometimes, the home becomes notorious…well known in the public space…because of something remarkable that happened there. The 1971 murder of Westfield’s List family by husband and father John List, is a story well known in these parts, and comes to mind whenever I think of notoriously stigmatized homes.  (Incidentally, the List home on Hillside Avenue in Westfield burned down years ago. Still, curiosity seekers still visit, searching for something…) “When a home becomes notorious, it enters a much murkier area from a legal standpoint” says Strahan. “Buyers often do their diligence online. If you can Google the address and it pulls up pages of results, then I think the seller needs to be prepared to address the issue”. 

Consider the Dutch Colonial on Ocean Avenue in Amityville, New York…the scene of the famed Amityville Horror.

There Are Many Types Of Stigmatized Homes

According to Wikkipedia that there are numerous ways a home can become stigmatized. These include:

• Public Stigma: Where something causes the house becomes notorious as in the List case,
• Murder/ Suicide Stigma: When the event occurs inside the house or on the property but it hasn’t become notorious,
• Criminal Stigma: When the house becomes notorious for a criminal event…like being used as a brothel or known drug den,
• Debt Stigma: When the debt collectors repeatedly come to the home trying to collect, unaware that the debtors have moved on,
• Phenomena Stigma: You know…when the house shows up on an episode of Ghost Hunters

The Takeaway… In New Jersey, it’s still “buyer beware”. Sellers are not obligated to disclose stigmatizing events, so it’s up to you to do your homework and ask. As for sellers, I always counsel them to be prepared to share everything when asked. The truth WILL kill some deals…that’s the unfortunate reality of stigmatized properties. But it won’t kill EVERY deal! Be patient, have faith, and a deal will come together. 

A colleague once told me ”there’s a lid for every pot”. I agree. And there’s a buyer for every home…even a stigmatized one!

Tags: disclosure, home sellers, stigmatized

ATTENTION WESTFIELD HOME SELLERS: Keep Your Bonus To Yourself!

I showed a home for sale in Westfield the other day. The real estate agent called me for feedback, as all good agents would. When I told her why it didn’t meet my clients needs, she said something that really struck me: “My sellers really need to be under contract before the end of the month” she said. “If you can find a way to convince your buyers to take it before then, my seller will throw in a $1000 bonus to you the selling agent!” Say what?

Do Agent Bonuses Really Work When Selling A House?

I suppose her comments were designed to entice me, but instead…they ticked me off.  I just spent several minutes explaining why the house didn’t meet my clients needs. I told her that the neighborhood was terrific, but some of the bedrooms were smaller than we needed. The kitchen and baths were more dated than one expects at this price point in town. When she asked my opinion on the price, I politely told her that I thought it was a bit high for the current market. In the end, we were still looking.

But wait…there’s a bonus!!

Do you think that the extra $1,000 in my pocket matters that much to me? Really? No don’t get me wrong…I’m running a business, and I enjoy being fairly compensated for my efforts. I have a wife, a daughter and 2 crazy cats who all like to eat. But asking me to convince my client to do something that isn’t right for them just annoys me. It would be amazingly short-sighted on my part, and isn’t how I run my business. It reinforces the stereotype of the slimy real estate agent who is only out there for themselves. And frankly, I find it pretty offensive. Believe me, I would have sold your house if I could have. I didn’t show it just for giggles. If it met my clients needs, and represented VALUE TO THEM, I can assure you that you would have seen an offer from us. 

So here’s a quick note to all you Westfield Home Sellers looking for a creative edge in this market: There are still qualified buyers out there. Interest rates are still really, really low. I have buyers, and I would LOVE to sell your house! But help me out.

If you want to sell, it’s not all that complicated: 1) price your home properly, 2) have it staged it so it shows better than it’s peers, and 3) put together a complete marketing plan. The buyers will come…believe me.

But as far as I’m concerned, you can keep your bonus to yourself!

Tags: Bonus, Home Seller, Selling Agent, Westfield Homes

If Your Home Doesn’t Sell, Try To Confuse The Buyer!

I saw a new home for sale in Westfield recently…or at least that’s what the seller wanted me to think. But when I looked closely at the address and pictures, I knew it was a home that’s been on the market for months.  The only thing “new” about it is that they replaced the exterior photo from one with snow on the roof, to one taken on a glorious spring day. Oh yeah…and they dropped the price by a whopping 1.2%!

Did they think we wouldn’t notice?

It’s a process that real estate brokers call “churning a listing”. A seller takes their home off the market for a few days (or weeks), and then re-introduces it again.  It’s a game that’s as old as the hills. But it’s a pretty bad idea (just my humble opinion, I guess). Here’s why…

Churning A Listing Resets Days On Market…But At What Cost?

The reason a seller and/or agent churns a listing is because the MLS keeps a record of days on market. When you “churn it”, the DOM count goes to zero and starts over again. So a house that has been sitting on the market for 5 months looks like it’s brand new. Or does it? 

As a broker, I’m constantly asked “how long has that one been on?” The assumption (and often an incorrect one) is that the higher the DOM, the more “motivated” the seller would be to hear a lower offer. The seller doesn’t want that, so they pull it off the MLS…wait a bit…and put it back on again.

But the serious buyers are not easily fooled. And the full-time agents are NEVER fooled! So when the house comes back on in the “new listing” column, everyone who is serious about real estate sees two things: 1) the same house, and 2) that this seller and their agent are open to manipulating the truth. 

And then I’m asked this question: “If they’re trying to hide the days on market, what else will they try to hide?”  Is this REALLY the message you want to be sending out to the market?! It’s kind of like resetting the odometer at the used car lot. Nobody’s really fooled, and it makes everyone look sleazy.

Now I have colleagues in the business who disagree with me on this point. They tell me that they’re just doing what they’re told…just honoring their fiduciary responsibility to their clients. BUNK! Article 1 of the NAR Code of Ethics is pretty clear. It says that the obligation to the client is primary, but it doesn’t relieve the Realtor from treating all parties honestly. Exactly where does resetting the odometer fall on the honesty spectrum?

So here’s what I propose to be a better plan: 1) Price your home properly the first time, 2) Stage it so that it looks better than it’s peers, and 3) Sell it and move on happily with your life.

Real estate doesn’t have to be that complicated, right?

Tags: churning listing, days on market, fiduciary duty

Online Agent Reviews: Would You Use Them? Should Agents Be Afraid?

It’s well know throughout the real estate industry that despite all of our marketing efforts, the most common way that a client finds a Realtor is through a personal recommendation. When asked how they found their agent in a recent NJAR survey, buyers cited ”referred by a friend” 3 times more often than the second most popular choices (and there was a tie here)  ”used in a previous transaction” and “internet website”.  

Those agents fortunate enough to have “raving fans” find that their business grows steadily through word of mouth referral. But sometimes, people are moving to a new area where they don’t know anyone. And sometimes they don’t know who to ask. Then who do you do?

Online Real Estate Agent Review Sites

We live in a world of online reviews. Whether you’re buying a new car, a BBQ grill or even a book for your weekend reading, there are scores of places online where you can learn what others are saying about that product. Increasingly, sites like Angie’s List and Yelp! are gaining momentum, and consumers are sharing their experiences with contractors and businesses.

But the real estate community has been reluctant to engage…

Let me clarify…there are already sites like Incredible Agents and Rate My Agent which exist to provide just the service I’m describing. But a quick search shows that most agents aren’t registered. And those that are have almost no reviews. Why?

And the Houston Association of Realtors is introducing a controversial new application designed to provide information for the consumer about agent productivity. Now that’s a level of transparency that I’ve not seen in the industry before!

I’ve spoken to many agents who are afraid of these online review sites. They worry that if a transaction goes bad, a disgruntled client could trash them online. And we all know that once your reputation gets hammered online, it can create a firestorm! (Just ask the folks at DELL about how this post by Jeff Jarvis changed their entire business plan). And consumers tell me that they worry about sites like this being “gamed”, with bogus testimonials singing the praises of a lousy agent. 

My personal opinion is one that welcomes the idea of online agent reviews. I think this is increasingly the way that consumers look for information about products and services. Today’s agents need to be OK with this level of transparency. Yes…there could be a bad review posted on occasion…real estate transactions can be complicated, emotional endeavors. But on balance, I have to believe that the good reviews should outnumber the bad.

So I put the question to you the real estate consumer: If agent reviews were readily accessible online, would you use them? Should agents be afraid? I’d love to know your thoughs on this…

Tags: Agent reviews

Buying or Selling A NJ Home? The Basics of Attorney Review (Part 2)

As a practicing broker, I find that one of the most misunderstood aspects of the real estate transaction is what’s know as the ”attorney review clause”. Is it a requirement to have an attorney review the sales contract? What’s all this about the attorney review lasting for 3-days?

In Part 1 of this series, I reviewed WHY we have an Attorney Review process in New Jersey. Today I want to briefly explain how it works.

Attorney Review Is Like Opening and Closing a Window.

I once heard the attorney review clause described this way, and the analogy made sense to me. When a buyer and seller enter into a properly executed contract, it becomes legally binding upon all the parties. It’s like closing and locking a window. But an attorney is allowed to unlock the window for you. S/he does this by canceling the contract as written, and proposing changes. Once this is done, the window is open again…and the contract is no longer binding.

All kinds of things can happen if you leave your window open all week…so it’s generally not a good idea to do that. The same holds true with the attorney review period.

Once the contract has been cancelled under the attorney review clause, it’s really cancelled!  Either party can change their mind and walk away, and they don’t need to give a reason. But in most instances, the buyer and seller want the deal to happen, so their lawyers make whatever changes they see fit, and then everyone agrees to make the contract binding again. The process of re-closing and locking the window is known as closing attorney review.

Attorney Review Does NOT Last 3 Days!

This is the most common misconception that I come across. Remember…the attorney review clause exists so that you have enough time to get a proper legal review of an agent-prepared contract. You are given 3 business days to retain an attorney and make any changes…or the contract stands as written. (Yes…this also applies if you’re buying a short sale and need to wait for bank approval. Get the review done within 3 days…or trust me, you’ll have problems!!) But once the attorney “unlocks the window”, it stays “unlocked” until all the parties agree to close it. I’ve seen attorney review periods that have lasted hours, and others that have lasted weeks. In some rare instances, the deal goes all the way to closing without EVER formally ending the review period! Which brings me to my last point…

Use A Real Estate Attorney!

Please understand…retaining legal counsel is optional in New Jersey. But if you do decide to get counsel, PLEASE use an attorney who specializes in real estate law!! I KNOW that everyone has a cousin or neighbor who is a lawyer that will handle the closing on the cheap. But they usually mess things up (IMHO). Would you go to a dermatologist for cardiac surgery? How about letting the anesthesiologist handle the plastic surgery? Probably not, right?

Real estate law is a specialty. Fail to recognize this fact at your own peril. Feel free to contact me if you want the names of some excellent local real estate attorneys!

Tags: attrorney review, real estate transaction, sales contract

Buying or Selling A NJ Home? The Basics of Attorney Review (Part 1)

As a practicing broker, I find that one of the most misunderstood aspects of the real estate transaction is what’s know as the ”attorney review clause”. Is it a requirement to have an attorney review the sales contract? What’s all this about the attorney review lasting for 3-days?

In this 2-part series, I’ll briefly review the basics of NJ’s attorney review process – why it exists, and how it works.

Selling A Home And The Unauthorized Practice Of Law

Historically, preparing contracts has been considered the practice of law, and has been the responsibility of attorneys. When real estate brokers and their agents began preparing real estate contracts for their clients, the NJ Bar Association cried foul. After many years of litigation, the Bar Association and the NJ Association of Realtors reached a settlement.

The settlement allowed brokers and their agents to fill in the blanks on an approved, standard contract for the following types of transactions:

• Contracts for the sale of 1 to 4 – family homes,
• Contracts for the sale of vacant, 1-family lots,
• Lease contracts for residential dwelling for terms of 1 year or more.

(Brokers and their agents can represent clients in other types of transactions…multi-parcel lots, apartment buildings, commercial property, etc., but they cannot prepare the contract of sale.)

One of the purposes of the attorney review clause is to allow agents to expedite the preparation and signing of the contract and avoid any delays which might occur if an attorney was not available. Consumers would be given an opportunity to retain an attorney “after the fact”.  The brokerage community in the state was generally happy with this compromise.

In 1995 however, the NJ Supreme Court rendered a decision which held that several of the services being performed by brokers and their agents DID constitute the unauthorized practice of law. In their ruling they stated that consumers would be well served to retain an attorney and obtain proper legal advice. But they also ruled that it was it was in the consumers interest to have the right to decide whether or not to retain an attorney.

The outcome of this decision is that all contracts prepared by a broker or agent MUST include a notice to buyers and sellers. This document commonly referred to as the “Opinion 26 Notice” (named after the court case which addressed the unauthorized practice of law by brokers/agents), MUST be signed BEFORE signing the contract of sale. It explains the following:

• Who the broker is representing in the transaction,
• The fact that only an attorney can provide legal counsel. No legal advice will be provided by brokers, their agents or representatives of title companies,
• The importance of the contract in the transaction, the important services that can ONLY be provided by an attorney, and the risks associated with buying or selling a home without legal representation,

The Opinion 26 Notice also states that there will be a 3-day “cooling off period” in which buyers and sellers have the right to hire an attorney to review and edit the agent-prepared contract. The contract becomes binding as written if no changes are made during this time.

Interestingly, there is still a geographic divide in New Jersey, with most transactions involving attorneys in the northern part of the state, and far fewer in the southern part.

So that answers the question “why is there an attorney review clause”. In Part-2 of this series, I’ll get into the “nitty-gritty” of how the attorney review process actually works.

Tags: attorney review, real estate transaction, sales contract