Here is what the Maine Real Estate Commission demands: 

Chapter 410: MINIMUM STANDARDS OF PRACTICE

A licensee who represents a buyer or seller client shall advise the client of any factors or conditions actually known by the licensee, or if acting in a reasonable manner, should have been known by the licensee, that may materially impact the client’s interest as it pertains to the market value of real estate.

So, first and foremost, we need to be careful and complete. But, what is the right answer from a business standpoint? Sellers want the highest price possible but to believe that naming the highest justifiable price is too simplistic and just plain poor brokerage. Also, sellers have different circumstances. Some have a strong need for a fast sale.

Today it’s all about competing for buyers. Unfortunately, not every property is going to sell, so being the best value might keep the property off the expired list. Some very successful licensees are doing more than analyzing sold comps; they’re also showing their sellers what the competition looks like and suggesting ways to position the property to be the best choice in its category. The issues include condition, curb appeal and certainly price.

Great client care dictates helping your client understand the world they are about to enter. Showing them where they stand includes going over properties that have sold and properties that they will compete with. You might even bring them through properties that are currently on the market. That way they’ll clearly understand what they are up against and that you, as their real estate broker, are truly working for them in getting the right price.

First and foremost:  Developing a strategy and sticking with it.
With  many avenues to explore, articles to read, techniques to implement and places to advertise what you want to do and how many resources you want to expend to get there is of top priority.  Nothing is free- be it your time or money- and with the Internet as vast and complex as it is, the learning curve can be steep and intimidating, but with the commitment to spend as little as an hour a week, the benefits of the online world can be reaped. 

The Goal: A content rich, keyword laced, search engine optimized website with hundreds of anchor text inbound links, (like Maine Real Estate), from credible high page ranking sites combined with informative blog posts on sites such as Active Rain.

Note: If the above sentence seems like a foreign language fear not and read on! 

Having a game plan, keeping it simple and incrementally building upon your work is the key.  One blog entry here, one new page of content there and a year later you will be amazed at the network of legitimate leads you can generate. Consistency and commitment! 

Education
So where can one begin learning about real estate Internet marketing, search engine optimization, (SEO), what is out there and what is going on in this dynamic, quickly changing environment?

• Active Rain:  The number one, hands down, best real estate  social networking community. Sign up here through my referral link,(http://activerain.com/action/referrals/johnherrigel), its free and the numerous groups, blog posts and more can answer any question. Just go slow, it is easy to get overwhelmed.
• Real Estate Webmasters www.realestatewebmasters.com
  They are a real estate web design and services company but have a great forum for information.
• Search Engine Blogs
  www.seobook.com - great commentary on marketing online
  www.seomoz.com - lots of great articles and blogs.

These sites will provide you with more than enough information to last a lifetime. 

Thanks for reading,

John

VACANT

I think we can all agree that these are tough times in the real estate market. One of the areas of home selling where sellers make it harder on themselves is trying to sell a vacant home.

STAGED

Vacant homes do not inspire a buyer to buy or brokers to set up showings for buyers. If you’ve seen one vacant room you’ve seen them all.

Real Estate agents typically list the property on the MLS (Multiple Listing Service).  Sellers need to be aware that there is a maximum of 8 photos that can be uploaded. Two of those photos are usually exterior shots. The remaining 6 photos are usually interior shots. These 6 photos are crucial for attracting the interest of the buyer. If it’s shot after shot of vacant rooms, the buyer makes a quick exit and moves onto the next property. With the amount of inventory on the market, a seller needs to do all they can to stand out amongst the competition.

Here are five reasons to show why, (especially in today’s market), it’s more important than ever to stage a vacant home: 

1. Homes that show well are the ones that are warm, inviting, and make an emotional connection with the buyer. Vacant homes rarely accomplish that goal;
2. Without furniture, there is no frame of reference, making it difficult for buyers to distinguish or discern the scale and size of the room. Will the king bed fit in the master bedroom or the sectional couch in the living room? When buyers can’t figure that out, they are more likely to move on;
3. When homes are vacant, every flaw is exposed;
4. Only 10% of buyers can visualize. 90% won’t actually be able to visualize the home’s potential. You don’t have to be a gambler to see that these are terrible odds;
5. A vacant home will send a message to buyers that the seller is desperate to sell. Right or wrong, knowing that the seller has already relocated gives the buyer a distinct advantage when negotiating, often submitting a lower offer.

Statistics show that the ‘price’ of trying to sell a vacant home can result in a lower selling price and/or a longer time on the market. Sellers must ask themselves if this is a price they can afford to pay in this real estate market.

Sometimes it is impossible to leave furniture behind. My suggestion is to have a budget for a few furniture items and accessories. Also, ask friends and family to borrow furniture. And remember that not all rooms need to be ‘staged’.  Just a few pieces of furniture can make all the difference!

Financing problems can defeat the deal and present a problem for all concerned.  The financing contingency currently in Zip Forms allows The Buyer to be relieved of all of their obligations and receive a full refund of their earnest money if their financing is withdrawn anytime, up to the last minute before closing.  They are very protected. 

That is not the case for The Seller.  They must rely on The Buyer’s commitment letter… not the most iron clad document.  And if the financing crashes, The Seller takes the biggest hit. (Wasn’t financing a buyer problem?  How did it get to be a seller problem?).  While,  I don’t want to see The Buyer get hurt, a crashed closing is a nightmare for The Seller.  So, how might we deal with this to provide protection for BOTH sides?  I’d like to suggest what may be a more balanced solution in today’s market. 

For those buyers who must make the transaction subject to financing, perhaps keeping the language, (in the Purchase & Sale Agreement), regarding the application and commitment timeframes is a good idea, but adding language to indicate that once The Buyer accepts the commitment letter, satisfying the finance contingency, The Buyer then accepts all risk regarding their financing, thus allowing more protection for The Seller.  This will help to define the Buyer’s commitment needed in order to proceed and ensure that The Buyer is protected until they have secured a solution regarding financing and The Seller is protected if an unforeseen “glitch” occurs after commitment but prior to closing.  After all, The Seller has little, if any, control over who The Buyer chooses as a lender and what conditions the commitment letter contains.  The result is a more reasonably “balanced” Finance Contingency.  It is in the best interest of all parties to negotiate an agreement that will give The Buyer enough comfort to make an offer but not put The Seller in unreasonable jeopardy.  I invite you to visit our website to find courses that cover issues in offers, counteroffers and other real estate continuing education for Maine and/or New Hampshire.

First of all, let’s go over, briefly, the definition of what a 203K product is. Then we can answer some specific questions on how it might work and/or help the consumer.

Per Wikipedia:

“The 203(k) program offers low-cost loans to allow low-income participants or nonprofit groups to buy and renovate a house”. (Read more from Wikipedia).

FHA 203(k) Streamline FAQS

1. What is the minimum repair amount?

None.

2. What is the maximum repair amount?

$35,000 (including contingency reserve).

3. What is a contingency reserve?

It is a fee that is charged, typically 1.5%, but can go as high as 5%, depending on repairs that are being done. It is used incase the contractors go over from what they have estimated. If the contingency reserve is not used, the fee is applied to the principle balance.

4. How many draws are allowed per contractor?

Two.

5. What are ineligible Improvements?

Major rehab/remodel;

New construction;

Structural damage;

Anything involving architectural drawings/exhibits;

Pools, landscaping, debris removal.

6. What is the 203(k) Streamline best used for?

Minor repairs;

Appliances;

Cosmetics.

7. Can a septic system be replaced or repaired?

Yes.

8. Are both purchase and refinance transactions eligible?

Yes.

9. Is a FHA Consultant needed?

No.

10. What happens when the property is uninhabitable?

The borrower may not be displaced from the property for more than 30 days during repairs.

11. Can the borrower complete the work if he/she is a licensed plumber or other trades person excluding their labor costs?

This is considered a “self help” borrower. Although HUD does allow this, not all financial institutions do. The consumer should contact the lender to find out if this is offered, and if not, find out if there are other options.

12. How are the contractors approved?

Contractors are not approved, but rather assured that an “acceptable” contractor has been hired and by contract agrees to complete the work. His/her credentials will be reviewed, work experience, licensing information, type of work performed, experience, and client references (preferably vendor references).

13. Will an initial disbursement of 50% be done at closing and then final payment when the work is done?

Up to 50% can be done upfront. But the normal initial disbursement is 10% - 20%. But it will really depend on the type of work that needs to be done.

14. What is the timeframe for the work to be started and then completed?

The work must be started within 30 days of close date and completed within 6 months of close date.

15. How will the appraiser arrive at the “as completed” value?

Cost estimates need to be provided to the appraiser so he/she may arrive at an “as completed” value.

16. Will a contingency reserve be required and how is it calculated?

The contingency reserve will be 10% of the repair costs not to exceed $2,500.

17. What happens to the contingency reserve funds if they are not used?

The funds would be applied to the balance on the loan.

18. Will an EEM, (Energy Efficient Mortgage), be allowed with this program as allowed by HUD?

Some lenders may allow EEM’s, you should contact the lender to find out if they do.

19. Are HUD owned properties eligible?

Although the 203K program does allow HUD owned properties, not all lenders do. You should contact the lender to find out if they do or not.

20. Are FHA Jumbos eligible?

No.

21. Are there any additional fees?

Most lenders will charge a Supplemental Origination Fee of the greater of $350 or 1.5% of the rehab amount.

22. What is the minimum FICO, (credit score)?

585 for a manual underwrite and 580 for an ‘Approve/Eligible’ through a automated system called Desktop Underwriting or an ‘Accept’ through Loan Prospector. It is advised that you contact the lender for more information on how this works.

Please keep in mind there is a regular 203(k) program that can be used if repairs are over $35,000 or if there are repairs that are needed that disqualify it for the streamline. Please feel free to contact me with questions and or comments or you may also feel free to post a comment to this blog, (see below). 

How do we convince the seller that they are asking too much and what is the right price?  Let’s take the first part now and deal with the second in another article. 

In my opinion, sellers resist reducing the price for many reasons.  They need a certain amount to buy their next property, they want to save face, they’re listening to someone else… or what sometimes seems an infinite number of others.

The “need more” objection has to do with qualifications and motivation of the seller as a buyer.  Are they really a candidate to sell in this market?  Do you really want to invest your time, money and emotional energy in this listing? 

All other objections have to do with your credentials and credibility.  Other professionals, physicians for instance, have to deliver much worse news than the market rejecting a seller’s price and often get their patients to agree to a much more difficult course of action than we do.  How do they do it?   Why do we listen to our Dr. but doubt our Realtor®?  They have obvious credentials:   Professional office setting with highly trained staff, sophisticated diagnostic equipment and certificates on the walls.  Many sellers never see our office or are aware of our extensive training.  Physicians are likely to give us proofs, when they present their recommendations that we seldom match.  It may be time for us to step it up.  Speaking of stepping it up, are you extensively or even adequately trained?  I hear licensees complain that 55 hours of education, to become licensed, is a burden!  Beauticians in this state have to take 1,500 hours of training to be licensed.  Is 55 hours really enough?  Should you be seeking ways to improve your knowledge and skill after licensure… maybe for your whole career?

When you list the property, it is critical for you to demonstrate your extensive knowledge of the market, (past, present and likely future), as it relates to their property and a comprehensive marketing plan that you will deliver to get their home sold.  Most importantly, you must ask and they must agree, that your proposed course of action, (doesn’t that sound more exciting than a plan), is destined to get the best price.  The next vital step, after the property is on the market, is to report your progress in delivering on that course of action.  Lastly, if the property hasn’t sold in a month, a personal visit is in order.  At that visit you will go over the steps that you have taken and the results of that action.  You will then re-establish that they believe that the actions are more than adequate and should deliver the desired result.  Ask them if they are satisfied with the result.  They are usually not.  Then ask them “if the problem isn’t marketing, what do you think it is?”   If you did your job, they will almost always answer that it must be the price.  Reduction accomplished!  It’s all in the work you did at the listing presentation. 

If you wait till it hasn’t sold, it’s too late.

As a professional photographer and also a licensed real estate agent, I frequently come across pictures that do a disservice to the property for sale. Using my photographer’s eye, and my knowledge about what sells a house, I’ve put together some simple tips for agents.  Agents, you don’t have to incorporate all of these ideas at once; try one or two to start.

BEFORE

AFTER

1 ) Keep surfaces neat – the camera picks up every detail; the best idea is to clear all clutter off surfaces before shooting.  Have a few decorative items, but no personal ones (ex. Flowers on a kitchen counter vs. dish soap and a sponge).

BEFORE

AFTER

2 ) Exterior shots should be taken closest to the main part of the house, rather than from the driveway. A natural inclination is to park your car in the driveway, get out and start taking pictures.  Instead, try this idea.  A) park your car on the street away from the house, b) instead of standing in the driveway, walk on the lawn to the opposite side of the yard and take pictures there.  You don’t even need to have the garage in the picture; what’s important is an attractive shot of the main part of the house. You may want to take many shots so you have options.  Finally, try not to repeat the same angle that everyone else has (shots taken from the driveway with part of the realtor’s car etc…).          

Also, because exterior shots are very important (generally the reason that buyers look at more pictures or decide to move on), try to only shoot the exterior shots either early in the morning or late in the afternoon, for the best light.  Midday light tends to be too harsh.  This picture was taken late afternoon/early evening.

 3 ) NO TOILETS EVER – in the bathroom, only take pictures of the sink/vanity, and preferably take pictures only of the master bathroom. I generally only take pictures of bathrooms if there is a really nice vanity, if it’s new construction and done very well, or if there simply aren’t many other photogenic aspects of the rest of the house.

 4 )  As with most photography, the most important component to a good picture is how natural light is used.  I try to never use a flash, make use of the natural light and realize the best pictures are ones where the main source of light is behind you, illuminating the object you are shooting.

 5 ) Try to take at least one picture at every angle there is in every room.  Go to every corner of the room you are in and take a vertical and horizontal shot.  I generally shoot over 100 pictures for a house just so I don’t have to go back and do more shots.  I never spend more than 45 minutes shooting a house; what tends to be more time consuming is coming back and reshooting.

6 ) Rooms can be livened up very easily with some staging materials.  I generally try to utilize three fake plants that I bought for under $20.  This simple staging also gives the consumer something to focus on, rather than blank walls and floors.

WITHOUT LIGHTS

WITH LIGHTS

7 ) Just as I mentioned above about the use of natural light, make sure to turn all the lights on in every room, making each room warm and inviting. Be careful about windows, shoot using that light (with the windows behind you) otherwise the room will be very dark. These pictures below I had simply forgotten to turn n the overhead light.

 8 ) When a house isn’t professionally staged, we often come across furniture that is overwhelming, too large for the room.  What I do is take a picture of only part of the furniture (i.e. a corner of the bed) in order to give the essence of the room, rather than the whole piece.                                           

As well, sometimes the feeling of a room can be conveyed in a very small detail.

  9 ) I’ve found that buyers like a clear idea of what they are looking at that tells a specific story (example: a warm and inviting living room).  I’ve found that these rooms are what the buyer wants to see in order of importance; 

• Exterior, 
• Kitchen,
• Master bedroom,
• More kitchen,
• Living room,
• Dining room,
• Other rooms as necessary (less is more).

10 ) Photography is a creative art.  Use this idea to your advantage.  If you don’t have a great exterior shot, (or have a ranch for sale amid the other 56 ranches for sale), take your best picture and use that as your primary shot.  The picture below I have is the primary one for a subdivision project I am co-listing.  I wanted to show the potential buyers the cathedral ceilings, open floor plan and great use of space this house has which wouldn’t be immediately apparent from an exterior shot.

 Have fun and enjoy!  Remember  to try  one idea and work from there, so as not to get overwhelmed.

Hannah McChesney is an Assoc. Broker in the Greater Portland area and works for the Masiello Group (www.hannahmac.com). She specializes in first time sellers and buyers, and waterfront. Her degrees include a BA in Russian and Masters in International Education.

Hannah’s photography is primarily real estate related and fine art. She has a virtual tour company (www.envisionpix.com). Two years ago she exhibited her fine art photography at Timebank Gallery in Portland. This December 5th she will show at gallery j located on High St and Congress.

As an instructor with The Real Esate Leaning Group, I have observed that when we teach the purchase and sale agreement to new licensees, (and even some experienced ones), there’s a lot of discussion around counting days from effective date.  The latest version of Zip Forms defines a day as “days in this agreement shall mean business days defined as excluding Saturdays, Sundays and State/Federal holidays (including but not limited to Patriots Day, Columbus Day, Martin Luther King Holiday, etc).

I decided to go to the source.  Kim Coit has been the chair of the committee that reviews all of the language in Zip Forms based on concerns and suggestions from the users.  Here is some Q & A.

TRELG:  When we teach the purchase and sale agreement to new licensees, (and even some experienced ones), there’s a lot of discussion around counting days from effective date.  The definition provided on the latest version of Zip Forms reads:

“the use of the term “days” in this Agreement, including all addenda made a part hereof, shall mean business days defined as excluding Saturdays, Sundays and any State/Federal holidays (including but not limited to Patriots Day, Columbus Day, Martin Luther King Holiday, etc.).”

Since days in a contract can be defined as calendar days or business days, how did the committee decide to go with business rather than calendar?

Kim:  Days from the effective date in the Realtors® provided forms, including most recently Zip Forms, have ranged from calendar, or actual, days to business days.  Sometimes this could even be mixed from paragraph to paragraph from one form to the other.  So consistency is one goal.

TRELG:  How did you all settle on business days?

Kim:  Some of the feedback we received was that using calendar or actual days sometimes end on a weekend or a holiday.  This meant that licensees had to monitor these dates constantly, even when they were trying to take some time away from their real estate practice.  Also, if the clients needed to make changes to the agreement, they and, their licensees, would all have to be available to make the necessary changes to the agreements.  It was felt that using business days would lighten the workload during what might be non-business times.

TRELG:  So all of the Zip Form documents have been changed to the business day standard.

Kim:  That was the goal.  Even the Kick-out form that previously specified hours, has been changed to days.

TRELG:  Anything else you’d like to pass along?

Kim:  Yes, the new agreements define 5 PM as the end of the day.  That’s something that some licensees are missing.  Every year, MAR asks for input from the members regarding the forms and suggestions from the field.  Everyone should take a moment to share their thoughts.

If you have any questions or comments regarding this topic, (or any other relating topic), we would love to hear from you!  Please post your comment below or email us.  We also invite you to visit our website to find out more about us and what we offer.  Mary Beth Guard wrote an interesting article, “Working Days, Business Days and Reg Z“ that might be helpful when determining business days.

I have been working the foreclosure/REO market for nearly five years and currently represent most of the major banks in my area. My personal listings tripled in 2007 and doubled again in 2008.  I project that they will at minimum double again in 2009. While REO’s do present some challenges they are certainly not going away soon. In our current market it is critical that agents learn how to represent their clients with regards to buying or selling foreclosures.

Here are important points from three perspectives:

1. Council your sellers that if they are going through pre-foreclosure, to sign for all notices that are delivered.  It is easy to think that avoiding notices will delay the process and it will.  It will also annoy the heck out of the lender and run up their costs dramatically.  While this might be entertaining, it will reduce the likelihood that the lender will work with the borrower on a proposed short sale and the lender will always attempt to pass those increased costs to the defaulting borrower.
2. If you are the listing agent asked to do a BPO, do a Google search and get a Better Business Bureau report on the lender asking for you to do the work.  There are some that are notorious for not paying for the report you submit.  If the relationship results in a listing, the lender often asks you to front the fees for snow plowing, lawn care, repairs, inspection reports, etc. and then refuses to reimburse you. More than one licensee has gotten an urgent call to do a BPO.  Think twice before accepting desperate calls for immediate help.  This often leads to you working for free.
3. As a buyer’s agent you should understand and council your client that title defects in foreclosed properties are common.  An example would be Foreclosure Deeds not being properly recorded.  Many of these defects take three or more weeks to rectify and to exasperate things, the purchase and sale contract that many of us use gives the seller thirty days to clean up the problem without permission from the buyer and no penalty to the seller.

Done well with a skillful licensee, BPOs and foreclosed properties (REOs) can be transacted with mutual benefits.  Just do them with open eyes and reasonable expectations.

1. They work hard! Yes, they play hard, too! They get up early, they rarely complain, they expect performance from others, but they expect extraordinary performance from themselves. Repeated, high-level success starts with a recognition that hard work pays off.

2. They are incredibly curious and eager to learn. They study, ask questions and read - constantly! An interesting point, however: While most of them did well in school, the difference is that they apply or take advantage of what they learn. Repeated success is not about memorizing facts, it’s about being able to take information and create, build, or apply it in new and important ways. Successful people want to learn everything about everything!

3. They network. They know lots of people, and they know lots of different kinds of people. They listen to friends, neighbors, co-workers and bartenders. They don’t have to be “the life of the party”, in fact many are quiet, even shy, but they value people and they value relationships. Successful people have a rolodex full of people who value their friendship and return their calls.

4. They work on themselves and never quit! While the “over-night wonders” become arrogant and quickly disappear, really successful people work on their personality, their leadership skills, management skills, and every other detail of life. When a relationship or business deal goes sour, they assume they can learn from it and they expect to do better next time. Successful people don’t tolerate flaws; they fix them!

5. They are extraordinarily creative. They go around asking, “Why not?” They see new combinations, new possibilities, new opportunities and challenges where others see problems or limitations. They wake up in the middle of the night yelling, “I’ve got it!” They ask for advice, try things out, consult experts and amateurs, always looking for a better, faster, cheaper solution. Successful people create stuff!

 

6. They are self-reliant and take responsibility. Incredibly successful people don’t worry about blame, and they don’t waste time complaining. They make decisions and move on. Sometimes they are criticized for taking this to extremes - Jimmy Carter carried his own briefcase and a President “shouldn’t” do that! Extremely successful people take the initiative and accept the responsibilities of success.

7. They are usually relaxed and keep their perspective. Even in times of stress or turmoil, highly successful people keep their balance; they know the value of timing, humor, and patience. They rarely panic or make decisions on impulse. Unusually successful people breath easily, ask the right questions, and make sound decisions, even in a crisis.

8. Extremely successful people live in the present moment. They know that “Now” is the only time they can control. They have a “gift” for looking people in the eye, listening to what is being said, enjoying a meal or fine wine, music or playing with a child. They never seem rushed, and they get a lot done! They take full advantage of each day. Successful people don’t waste time, they use it!

9. Repeatedly successful people respond instantly! When an investment isn’t working out, they sell. When they see an opportunity, they make the call. If an important relationship is cooling down, they take time to renew it. When technology or a new competitor or a change in the economic situation requires an adjustment, they are the first and quickest to respond.

10. They “look over the horizon”   to see the future.  They observe trends, notice changes, see shifts, and hear the nuances that others miss. A basketball player wearing Nikes is trivial, the neighbor kid wearing them is interesting, and your own teenager demanding them is an investment opportunity! Extremely successful people live in the present, with one eye on the future!