Lazy Agents?
Recently, the following scenario has occurred a number of times: An agent contacts me to advise that one of my listings might be of interest to his or her buyer/renter client, but the listed price is substantially above the client's ability to pay. Usually, the agent hasn't even shown the home to the prospective buyer/renter, but he or she wants to know--"in the interest of saving everyone's time"--if the seller/lessor would entertain an offer in the buyer's/renter's qualified price range. What the agent is asking, in other words, is that a negotiation take place on a "possible" offer from someone who may not have even seen the property.
While an answer either way should be given only with the consent of the seller (to avoid a possible breach of fiduciary responsibility by the lister), in my opinion, the best response from a listing agent in such a case is to neither affirm nor deny the acceptability of the lowball price. To indicate that the lowball figure might be acceptable would be tantamount to reducing the listed price exclusively for that buyer, without the benefit of exposing the lower price to the general market. The seller/lessor may choose to do this, but since there was no real (i.e. written) offer to begin with, the buyer/renter in making a formal offer might then be encouraged to start at an even lower price, and the seller/lessor would have no way of recapturing the ground he had already given up before the negotiation began.
On the other hand, to arbitrarily reject the suggestion of a lowball price could go against the best interest of the listing client in that it might drive the buyer/renter away, without any real negotiation taking place. I generally hold that a low offer is better than no offer at all in that it at least provides a starting point. Even great chasms can sometimes be bridged through meaningful negotiation.
For the most part it would seem that buyer/renter agents should not be presenting properties to their clients that are so far above the client's ability to pay, especially if there are decent opportunities within the client's qualified range. That said, there are sometimes legitimate reasons to do so. In such situations, however, it might behoove the buyer/renter agent to do a little research first. Knowing where the market is on a given home might give the agent and his or her client an indication as to whether or not a low offer would be reasonable. If a given listing is properly priced for the market, it is less likely the owner will make the kind of concessions we're talking about here. If the owner were that desperate, it would probably be reflected in the listing price to begin with.
With or without market data to support a low offer, however, if an informed buyer/renter client is interested, the agent should show the home, write the offer and see where it goes. An agent who is not willing to do the work involved to properly represent his or her client isn't placing the client's interests first, and that is a clear breach of responsibility.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
Consumer Confidence vs. Consumer Sentiment
The Consumer Confidence Report data is collected by a non-profit organization that surveys 5,000 different households and asks if the survey participants feel positive, negative, or neutral about the following five topics: 1) current business conditions, (2) business conditions for the next six months, (3) current employment conditions, (4) employment conditions for the next six months, and (5) total family income for the next six months. The report is benchmarked with the year 1985 as being 100 (that year was chosen due to it being a year of consumers feeling "balanced," neither overly optimistic nor pessimistic).
The Consumer Sentiment Report is slightly different. It uses the year 1964 as its benchmark year with a value of 100. The Consumer Sentiment Report was developed by a professor at the University of Michigan and still continues on today with the same format–surveying only 500 households, but going much deeper. The Consumer Sentiment survey asks a total of 50 questions, centered around these five topics: (1) personal financial situation now and a year ago, (2) personal financial situation one year from now, (3) overall financial condition for businesses over the next twelve months, (4) overall financial condition for businesses over the next five years, and (5) current attitude toward buying major household items.
The above information was provided by Susan M. Dziurgot, Sr. Residential Mortgage Banker, PHH Home Loans-Midwest Region, Phone: (847) 971-8204. Thanks, Susan!
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
News for Property Owners Considering Bankruptcy or Selling Through a Short Sale
Information courtesy of Susan Dziurgot, Senior Mortgage Banker, PHH Home Loans
Uncle Sam is still giving homeowners until Dec. 31st 2012, to go through the short sale or foreclosure without tax consequences-AS LONG AS THE LENDER RELEASES THE DEBT. But on January 1, 2013 the rules change: The amount the lender forgives, for either short sale or foreclosure, on primary residence will be taxable on federal income taxes.
Example: If a house sold $50,000 short of what is owed on the mortgage, then the selling homeowners will owe federal income taxes on that $50,000. Homeowners would owe $12,500 if they’re in the 25 percent bracket; $7,500 if in the 15 percent tax section. Homeowners would be on the hook even if the house sold but the bank had not formally forgiven the loan in a letter: THE BANKS MUST OFFICIALLY SIGN OFF IN WRITING BEFORE DEC. 31, 2012
Homeowners declaring bankruptcy could escape paying income taxes on any cancellation of debt income if the debt is forgiven in the bankruptcy even if the debtor is solvent, said Nick Jovanovich, a board certified tax attorney in Fort Lauderdale, FL..
In Short… Whichever process they chose to avoid the tax a changes coming in 2013, homeowners should decide sooner rather than later this year to begin. Short sales can takes months to years depending on lender, type of mortgage, market activity and many other variables. Some major lenders are offering quicker short sale programs as an alternative to foreclosure. Owners benefit from reduced documentation and smoother processing. In some cases, owners may be eligible for cash incentives from a couple thousand dollars to upwards of $30,000.
Bob Dohn
Coldwell Banker Residential Brokerage
Direct Phone: 847-301-3126
E-Mail: Bob@BobDohn.com
Web: www.BobDohn.com
A New Year In Real Estate Begins
As we launch into 2012, here are some interesting statistics from the Illinois Association of REALTORS® on residential real estate market conditions:
Interest rates continued to drop. In December the 30-year fixed-rate mortgage in the North Central region was 3.94 percent for December 2011, according to Freddie Mac. In December 2010 the rate was 4.8 percent. This once-in-a-generation opportunity has created more sales and refinancing interest. In short, the rates are seen by many homebuyers as too good to pass up.
Consumer confidence is increasing as the labor market appears to be improving. According to a Thomson Reuters/University of Michigan survey, an index of consumer sentiment reached its highest level in eight months. The Conference Board’s Consumer Confidence Index also showed gains, reporting levels last seen in April 2011. Better consumer confidence translates to more people comfortable with making a home purchase.
The decrease in median residential sales prices means that price points are reaching truly attractive levels for consumers who have put off such purchases in the face of economic uncertainty. According to data compiled by the Illinois Association of REALTORS®, the last time consumers saw home prices this low ($137,500 in December 2011) was in 2000 when the median price was $140,800.
There have been six straight months of increases in the number of single-family home sales. There was a significant turning point in July. The swing since July has been as high as 27.1 percent (August) and as low as 13.9 percent (September).
Although there were home sales gains in the second half of 2011, they were not enough to swing the numbers into positive territory for the full year. The good news is that strong sales in the second half of the year caused year-to-year comparisons to be relatively flat (down just a tenth of percent).
While overall sales of single-family homes appeared to be gaining traction in the second half of 2011, median home prices still struggled. Year-over-year comparisons show that the median home price recorded decreased in every month. The worst months for median price declines were April (-12.9 percent) and March (-12.2 percent). The best was July (-5 percent).
Fifty-two counties out of 102 in Illinois (51 percent) showed increases in home sales from 2010 to 2011. Forty-three counties showed gains in the median price.
Chicago PMSA All counties in the Chicago PMSA showed gains in home sales in December. DeKalb County led the pack with a 44.7 percent gain over December 2010, followed by Grundy County with 40.7 percent. Cook County lagged with a gain of 12.3 percent.
For the year, all counties in the PMSA except Cook showed home sales gains. Kendall County was the leader with a 13.3 percent gain in home sales over 2010. Cook County saw a decrease of 2.5 percent for the year.
Most Chicagoland PMSA counties showed decreases in December median prices. Grundy (3.7 percent) was the lone exception. DeKalb (-21.1 percent) and Will (-19.3 percent) counties had the steepest declines.
Previous month comparisons show some sales increases in the Chicago PMSA (November, 2011 to December, 2011.) Only Grundy County (0 percent) showed no gain for the measurement period. DeKalb (23.6 percent) and Will (18.5 percent) counties showed the strongest month-to-month gains.
A Challenge to My Fellow Real Estate Agents
These remarks--some might call it venting--are directed to my brothers and sisters in the real estate community who list residential properties for sale. One of the maxims of selling something is that the prospective buyer must be exposed to that which you want him to purchase. In real estate that usually means the buyer has to be able to inspect the property being offered. While the Internet has enabled "virtual" showings of real estate listings, in the vast majority of cases it's still necessary for the buyer to physically tour a home before making a purchase decision. Common sense would thus seem to dictate that responsible listing agents should remove as many impediments as possible to the prospective buyer 's convenience in seeing their listings. This responsibility escalates to a critical level in today's challenging market, where competition is more plentiful than ever, and not fulfilling it constitutes nothing short of gross negligence on the part of a listing agent.
Why is it, then, that when attempting to schedule appointments to show homes, it seems invariable that there will be problems obtaining timely confirmation? And why do so many agents require that showing appointments be made directly through them, when they're not always available to handle these requests promptly and efficiently? What happens when a buyer's agent has clients at his or her desk who want to see a home on short, but reasonable, notice and the listing agent can't be reached? There are systems and services available at nominal cost that make these problems avoidable. The successful firms and agents know this and take advantage of them.
Missed opportunities for listings to be viewed in person by prospective purchasers hurt everyone. They deprive the seller and the buyer of an opportunity to create a transaction; they cost the listing agent and the buyer's agent a commission opportunity; and they make the real estate profession--especially the listing agent and his brokerage company--look incompetent.
Lost sales opportunities increase marketing times and marketing costs for listing companies and agents.With so many brokerages and individual licensees struggling financially, it doesn't make sense that there are not good systems in place for scheduling appointments to show homes. Nor does it make sense that agents do not educate their sellers on the crucial importance of being reachable and ready to show their home at all times. A little bit of pre-planning goes a long way here. To be sure, there are legitimate occasions that require a seller to decline a showing request or require a certain amount of advance notice, but these are the exception, not the rule.
Gone are the days (if they ever existed in the first place) when it was only necessary for lazy and inept agents to place a home in the MLS and wait for the offers to pour in. Today's real estate market requires both the agents and their sellers to work harder and smarter to make their listings easy for buyers to see and purchase.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
Rent vs. Own
Fact: Rents are rising
Fact: Rent is not tax deductible
Fact: Paying rent adds to your landlord's bottom line and does nothing for your wealth
Fact: Mortgage interest rates are at the lowest point … EVER
Fact: Home prices are the lowest in a decade
Fact: Buying power is the strongest it has been in 40+ years
Fact: Nobody will send us a memo when the market is going to turn around
Fact: Nobody will send us a memo when rates will spike
Fact: Buyers can purchase a home with as little as Zero - 5% down
Fact: Home buyers enjoy huge tax benefits
Fact: Home prices and rates will go up due to many factors
Fact: It is impossible to pick the bottom of the market
Fact: Real estate is still the best long-term investment available
Sound Familiar?
Here is an excerpt from a piece written by Benjamin Franklin (yes, THAT Benjamin Franklin) in his autobiography, which I am currently reading. It seems quite apropos to today's market and I thought we might take a lesson from it. The time reference of the piece is the early 1700's, well before the American Revolution. The young Franklin had just opened a printing shop in Philadelphia.
"There are croakers in every country, always boding its ruin. Such a one there lived in Philadelphia; a person of note, an elderly man with a wise look and a very grave manner of speaking; his name was Samuel Mickle. This gentleman, a stranger to me, stopped me one day at my door and asked me if I was the young man who had lately opened a new printing house. Being answered in the affirmative, he said he was sorry for me, because it was an expensive undertaking and the expense would be lost; for Philadelphia was a sinking place, the people already half-bankrupts or near being so; all of the appearances of the contrary, such as new buildings and the rise of rents, being to his certain knowledge fallacious, for they were in fact among the things that would ruin us. Then he gave me such a detail of misfortunes now existing or that were soon to exist that he left me half melancholy. Had I known him before I engaged in this business, probably I never should have done it. This person continued to live in this decaying place and to declaim in the same strain, refusing for many years to buy a house there because all was going to destruction; and at last I had the pleasure of seeing him give five times as much for one as he might have bought it for when he first began croaking."
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
The Dream Is Alive and Well
With so many talking heads seeming to declare the end of the home ownership as something desirable, one wonders if we are to become a nation of renters, with the pleasure of owning one's own home left only to a privileged few. Not if you ask the average American on the street! A recent study by the Pew Research Center indicates that Americans continue to see value in home ownership. In the Pew report 81% of adults surveyed agree that buying a home is the best long-term investment. Even current owners whose homes have lost value in the current stormy market still favor homeownership by 82%, and 81% of renters would like to own a home.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
Proposed QRM Harms Creditworthy Borrowers and Housing Recovery
The following organizations, along with the National Association of REALTORS®, prepared an in-depth analysis of the impact of the proposed QRM regulation:
- Center for Responsible Lending,
The executive summary of the white paper, entitled, “Proposed QRM Harms Creditworthy Borrowers and Housing Recovery,” is provided below, or the entire white paper is available for download as a PDF. The executive summary was also issued as a joint statement.
Executive Summary (and statement)
In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream. First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment. And 25 million current homeowners would be locked out of lower refinancing rates because they lack the required 25 percent equity in their homes.
High down payment and equity requirements will not have a meaningful impact on default rates. But they will require millions of consumers, who are at low risk of default, to either put off buying a home or pay unnecessarily high rates. The government is penalizing responsible consumers, making homeownership more expensive or simply out of reach for millions. We urge regulators to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers.
Download “Proposed QRM Harms Creditworthy Borrowers and Housing Recovery” white paper > (PDF: 680K
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
Donald, You’re Fired!
Reprinted from FactCheck.org, a project of the Annenberg Public Policy Center
Trump repeats false claims about Obama's birthplace.
April 9, 2011
Summary
If Donald Trump worked for us, we’d have to say: "Donald, you’re fired — for incompetence." The successful developer and TV celebrity says he’d make a good president, and maybe he would — we take no stand either way about that. But when it comes to getting facts straight, he fouls up again and again on the basics of President Barack Obama’s birth. As a rookie reporter, he just wouldn’t make it.
- He claims the president’s grandmother says Obama was born in Kenya. In fact, the recording to which he refers shows Sarah Obama repeatedly saying through a translator: "He was born in America."
- He claims that no hospital in Hawaii has a record of Obama’s birth. Hospital records are confidential under federal law, but Honolulu’s Kapi’olani Medical Center has published a letter from Obama calling it "the place of my birth," thus publicly confirming it as his birthplace.
- He insists that the official "Certification of Live Birth" that Obama produced in 2008 is "not a birth certificate." That’s wrong. The U.S. Department of State uses "birth certificate" as a generic term to include the official Hawaii document, which satisfies legal requirements for proving citizenship and obtaining a passport.
- He claims that there’s no signature or certification number on the document released by Obama. Wrong again. Photos of the document, which we posted in 2008, clearly show those details.
- He says newspaper announcements of Obama’s birth that appeared in Hawaii newspapers in 1961 "probably" were placed there fraudulently by his now-deceased American grandparents. Actually, a state health department official and a former managing editor of one of the newspapers said the information came straight from the state health department.
- He claims "nobody knew" Obama when he was growing up and "nobody ever comes forward" who knew him as a child. "If I ever decide to run, you may go back and interview people from my kindergarten," Trump said. Well, two retired kindergarten teachers in a 2009 news story fondly recall teaching a young Barack Obama.
The evidence that Obama was born in the U.S.A. is so overwhelming that we haven’t had much to say lately about the sort of bogus claims that Trump repeats. Hawaii’s top official in charge of vital records stated long ago, for example, that the confidential records underlying Obama’s official birth certificate show that he was born in Hawaii and is "a natural born American citizen."
But when a leading prospect for the Republican presidential nomination embraces and repeats these spurious claims and groundless conspiracy theories on national television, we are forced to wade into this swamp once again. For details of where Trump goes wrong, and full documentation of the facts, please read on to our Analysis section.
Note: This is a summary only. The full article with analysis, images and citations may be viewed on our Web site: http://factcheck.org/2011/04/donald-youre-fired/