Wednesday, January 30, 2008

Careless Buyers Making Deal-Killer Mistakes

by M. Anthony Carr

It's every homebuyer's nightmare -- write the contract, get it ratified, go through the excruciating mortgage application process, get approved, and then at the last minute a hang-up turns your American Dream into a nightmare. What's most frustrating is when it's your own fault.

Just this week I've talked with agents where a buyer has made some not so wise choices in their home-buying process. The first story was about a buyer who just got cold feet, plain and simple. The second one sabotaged himself financially by taking a vacation with the money that was supposed to be used for closing.

For many cases in this area, the buyers market has people getting nervous and some taking unnecessary risks. In the Washington DC market about 5 percent of properties in the MLS mention either "short sale" or "third-party approval" in the remarks. This is the language of pre-foreclosure. With that said, it can be frustrating in the negotiations to be talking with an agent who doesn't understand the short-sale transaction, a seller who wants to sell but who really doesn't have the final word and a bank employee who's just trying to clear his desk of old cases, preparing for the new ones coming in the door.

When everything comes together, as in the case of this one short-sale buyer, it's even more frustrating when that buyer gets cold feet at the last minute. The buying agent had lined up everyone. The seller had priced it right, the short-sale executive had agreed to the terms of the contract, including a home inspection and closing costs.

The buyer had gotten a full commitment from the bank and then it happened -- she dropped her feet into an icy vat of buyers' remorse. She just couldn't do it. Instead, when the final initial was needed to seal the deal -- she sealed, alright, with her landlord.

Media reports of sub-prime mortgages, dropping sales prices and rising inventories put the fear of failure in her mind that this wasn't a good decision, so she bailed. But if one were to take a look at the regional numbers, a different story arises: inventory is dropping, days on market have tumbled compared to a year ago and in her market area sales prices are up 3 percent compared to the same time in 2006. The stars were aligned, but her feel-goodometer, wasn't engaged.
The second buyer catastrophe was a matter of over exuberance and celebrating too early. The house was situated just across the street from this renter. The family was so excited to stay in the same neighborhood, get a foreclosure property that barely needed any repairs and get the house for thousands under the going rate. The mortgage was in place and settlement date was approaching -- so why not celebrate?

One vacation and final verification later, and the deal was hosed when the buyer spent the reserve money necessary for the house to go to settlement.

Buyers can get great deals in today's market, but they must not be overcome with unnecessary fear, or make financial decisions that could harm their financial standing.

I once had a buyer who was going to purchase his first home. He and his wife had borne three sons while living in the same apartment over 23 years. He could have used his Veterans Affairs status to purchase a property for no money out of his pocket whatsoever, but he didn't understand how it worked.

So once he did, he went after the house with a vengeance. Then he did it. One week before settlement he bought a truck -- for the move, you understand. It nearly wrecked his buying power and the deal almost fell through.

When the contract is signed, the money is approved and settlement's on the way -- buyers should stand in place until the fat lady sings. Worrying about your decision and celebrating too early, can both ruin your dream.

Friday, January 25, 2008

Pocket Markets Reveal Pent-Up Demand

Here’s the Big Real Estate Story – Interest rates are headed in the 5-ish range again and prices have leveled. That’s it. End of story. Sign here. In fact, the market is actually turning around. Despite what the two dailies have reported, homeowners and shoppers must look at pocket markets to determine how they’re doing as far as the equity in their homes and in determining if it’s time to hold or get sold.

In the Washington, D.C. area, headlines from The Washington Post and The Washington Times would make any mere human shake in their household boots – “Region’s Home Prices Continue to Fall; Some Pockets Thrive,” and “Overvalued Homes Discourage Buyers.” The statistics tell a different story. Consider these numbers from (the local MLS web site):

December 2007 home sales prices of single-family homes compared to December 2006:

Washington, D.C.: +22%

Arlington County (VA): +21%

Alexandria City (VA): +12%

Fairfax County (VA): Even

So what? What does that mean to you? Answer these questions:

Ü When do you want to buy that move up property?

Ü Now, while the prices are low and interest rates drive down your monthly payment?

Ü While sellers are willing to provide buyers with thousands in closing costs?

Ü While there are plenty of great looking houses with new flooring, new kitchens and baths?

Ü Or when the prices start up, the seller subsidy evaporates and the monthly payment inflates because of higher interest rates?

It starts inside the beltway and moves outward from there. Where do you want to be in 2008?

For more information on Commonsense Real Estate Advice, visit Anthony’s blog at

Tuesday, January 22, 2008

The Rental Game: What Are The Rules?

by M. Anthony Carr

What do you do when the dishwasher has spewed soapy water across the kitchen floor and leaked down on your neighbor below? Who's responsible? The landlord or the tenant? Across the country, tenant law differs as much as the geography. Nevertheless, some principles remain the same regardless of the local nuances of tenant and landlord rights. One of the first places to visit is the landlord/tenant area posted online by Cornell University's Law School.

Commonly speaking (because the biggest problem I find with legal websites is that they don't speak in such basic terms) there are certain rights reserved for the landlord and certain rights reserved for the tenant. Tenants, says Cornell, have "a property interest in the land...for a given period of time." The lease reflects the length of the landlord/tenant agreement and what the tenant is allowed to do with the property. "The lease," says Cornell, though not historically or strictly a contract, may be subject to concepts embodied in contract law."

"Basic to all leases is the implied covenant of quiet enjoyment. This covenant ensures the tenant that his possession will not be disturbed by someone with a superior legal title to the land including the landlord," according to the site. Now, I bring Cornell's Web site to the forefront as it is an official sounding, and at most of all, reputable place, for all of us to seek out what the law says. However, a site based in Cleveland puts the responsibilities of landlords and tenants into simple language.

NeighborhoodLink is a product of Levin College of Urban Affairs, a part of Cleveland State University. An easily navigable site with plenty of information on rental laws in Cleveland, the site also includes form letters for tenants who must deal with unresponsive landlords. (This is a very cool part of the site -- check it out.

Nevertheless, the lists of landlord and tenant duties found here give a simple approach to who's responsible for what in a lease agreement and are generally relevant across the country.

Here are a few sample landlord duties from the site:

  • Keep the premises fit and habitable.
  • Keep the common areas safe.
  • Comply with building, housing, health, and safety codes.
  • Keep all systems in good working order -- plumbing, electrical, heating, etc.
  • Maintain all required appliances and equipment.
  • Provide, in most cases, running water and reasonable amounts of hot water and heat.
  • Provide garbage cans and trash removal.
  • Give adequate notice, at least 24 hours in some jurisdictions, before entering a tenant's unit -- except in emergencies. Enter only at reasonable times.

And what about tenants? The school says that tenants have an obligation to:

  • Keep the premises safe and sanitary.
  • Dispose of rubbish in the proper manner.
  • Keep the plumbing fixtures as clean as their condition permits.
  • Use electrical and plumbing fixtures properly.
  • Comply with housing, health, and safety codes that apply to tenants.
  • Refrain from damaging the premises and keep guests from causing damage.
  • Maintain appliances supplied by the landlord in good working order.
  • Permit landlord to enter the dwelling unit if the request is reasonable and proper notice is given.
  • Comply with state or municipal drug laws in connection with the premises and require house-hold members and guests to do likewise.

Oh -- who is responsible for that leaky dishwasher? Most likely, the tenant has an obligation to limit the damage by shutting off the machine and drying the floor. The landlord who supplied the appliance should have it repaired or replaced as soon as possible.

Keep in mind, tenant laws differ by jurisdiction. For details regarding your area, speak with local realty brokers, attorneys, and housing offices.

For more information on real estate investing, resources and news, check out my Commonsense Real Estate Blog at

Originally Published: May 4, 2001

Wednesday, January 09, 2008

Are You Reading The Signs?

By M. Anthony Carr

I’m in the middle of jury duty. As you approach the courthouse entrance there is obviously a very long line to check in. In a post 9/11 world, those of us in the Washington, D.C. area have become accustom to security forces rifling through our bags, computers and the like for entrance into any public place, including courthouses and ball games. It’s just a matter of life, these days. Yesterday, there were hundreds of us answering the cattle call from the district court. We had to walk through the metal detectors. You know the drill…open your bags, empty your pockets, remove your belt, turn on your computer-pda-cell phone.

As we came through the check-in, there were hundreds of us in line. We passed by signs in various languages directing those with cell phones that have cameras to turn them in to a sheriff’s deputy for safekeeping. No phones with cameras allowed. Period. So by the time anyone got up to the metal detector you have read the signs and there have been plenty of verbal instructions from the security team that phones with cameras must be turned in. The security team was also directing people who were not potential jurors that they may not need to be in the long line, but could use another, shorter entrance to get to court.

So let me set the stage – signs – about 3 x 5 feet big – were hanging in the hallway; deputies (2 – 3 at a time) were constantly giving verbal direction to us all of these instructions. However, you would have been amazed at how many people were “surprised” when they were turned back from the metal detector to the cell-phone station or had their phones confiscated because they didn’t read the signs about the limitations of camera phones. Were they illiterate? No, couldn’t be – otherwise how would they be there with the Juror Summons in their hands? Could they not understand the instructions because of a language barrier – not with what I could observe. Were they just tuning out anything that they had no interest in? Ahhh – that’s what it was. They weren’t paying attention.

The same is happening with those on the side lines of the real estate market.

Let me ask you something – as a buyer or seller are you doing the same thing when it comes to the state of the real estate market? Are you ignoring the signs that are there screaming that now is the time to buy?

Fact: The number of existing homes sold rose 0.4 percent nationally in November. (buyers are out there)

Fact: Month-to-Month prices have stabilized in most markets across the country. (Yes, they are down if you look year to year, but when you want to buy, you want to know when prices have hit bottom, not how much less they’re selling for than last year.)

Fact: Job growth continues (meaning more wealth)

Fact: Population is still growing (more need)

Fact: Interest rates are still at historic lows (cheap money)

Fact: Inventory is dropping steadily across the country (Houses are selling, sellers are taking them off the market, builders aren’t building as many houses)

Fact: Seller are providing buyers with closing costs so that buyers can move in with little or no money down (This is a temporary situation!)

Now let me ask the agents: Are YOU ignoring the signs? Do you see more buyers coming out to opens; more calls at the front desk; discussion coming up in social events…but are you armed to respond? Do you know the message? Do you know where you stand in your market? Can you answer immediately the condition of your individual market? Sales are down 11 percent for the year, but prices are at the same level? Can you say that? If not, you’re not the agent of change necessary to help buyers get the best deal they’re going to get in the next decade.

For more information on real estate investing, resources and news, check out my Commonsense Real Estate Blog at