Christopher's Hemet CA Real Estate Blog - Mission Grove Realty: December 2006

I have had only 3 clients that have ever appealed their assessed values. Their results were;1 that was successful in reducing the assessed value by $8,000 (NETsavings to them was +- $80.00 yr) 1that, after review process, the value was left unchanged and 1 that after review was assessed at a higher rate +$12,000.

I would recommend that anyone contemplating the appeal process to do extensive analysys ahead of time, do some more and then be prepared for the possibility that you could end up with an assessed value HIGHER than when you started the process. In places where property tax rates are 1%, a 10k decrease ($100 gross yearly savings) in assessed value may not be worth the time or risk. You must also consider that the 100-200 in annual savings, when itemizing deductions, your net savings will be even less! (Consult you tax preparer or attorney for tax liability)

One (Riverside County, California)  Assessors office employee stated that it is best, when requesting a review, to do so after a transfer.....I must have had that look. After all, there would be not much point in that now, would there? She said that most any material change to the deed would be deemed as a transfer in the Assessors eyes. ie: add spouse, parent, child of leagal age or other to the deed or remove one from a deed with the first being the best situation when requesting an appeal.

(Consult with a tax professional or attorney when choosing to file an appeal with the County Assessor's office)

I read a story, quite a while back, which was about a request made from a buyer through their agent;

The buyer requested that their agent, after the home inspection, submit to the seller a request to have the homes heating system be replaced as it was very old inefficient. The seller agreed to the request and the deal closed.

To the buyer's surprise, the heating system had been replaced but, it had been replaced with a unit very similar to the one already there.

The request stated "owner to replace heating system".

The owner did what was requested. Albeit, there is a question of morality.

This did end up in court.....The seller prevailed.

Do you, in preparing an offer, counter offer, request for repairs or any other document, convey to all parties the true requests of your principle?

Stating that the carpet is to be replaced, the interior is to be painted or?????? Is simply not enough. When asking for the seller to replace or repair anything, are you specific? Include specifics as to what is to be replaced and, what it is to be replaced with and maybe even more important, inspect what you expect. Ask yourself how your request could be interpreted. Even when you feel that it is perfectly clear what you meant, it is what the contract reads that, in most cases, will determine the outcome in the event of a dispute.

Bottom line........Be careful what you ask for...AND, how you ask for it!

I thought I would share something that all of our clients appreciate and get a little laugh out of. There has been no better  tool for breaking the ice!

"prescription" reads:

HOME BUYERS AND SELLERS:

Take 1 when symptoms of anxiety arise and call your Realtor in the morning.

REFILLS: Unlimited until the close of escrow.

Mission Grove Realty: Your prescription for a more enjoyable experience.

We use prescription bottles that can be found easily on the web and designed the label in Corel. We print on plain paper in color and then attach with regular clear packing tape and fill with fun size wrapped candies. Cheap, easy and fun! (TLW) I wont take the credit for this one. My mother, who has been a Realtor for over 30 years has used this since the 70's. I have just updated and elaborated on it a bit.

Do you have something simple that you use to break the ice?

Please, share it with us!

Most association listing contracts include a "safety" clause for you that could protect you beyond the listing expiration. C.A.R. California residential listing agreements have this "safety" clause in section 4. A(2)

I think that most of us know this but, I have seen quite a few where the listing agent claimed yet, did not do what was needed to have protection.

To be able to claim any protection you must:

1. Enter the number of days that you are seeking protection beyond the listing period.
2. Advise your client, at the time of the listing, about the "safety" clause.
3. Within 3 calendar days after expiration, you MUST submit to the client, in writing, a list of all prospective buyers.

Your protection can extend to anyone who physically entered the property and was shown the property by you, or a cooperating broker during the specified time period after a listing has expired as long as the prospective client is listed and submitted to the seller within 3 calendar days.

Listings appear in search engine results long after a listing has expired and, if you have not completed these simple steps, your efforts could still result in a sale and you could still be entitled to a commission.

For listing agents that market to expired listings,  you should ask to see the prior contract AND verify if the prior listing agent provided a list of prospective buyers within 3 days. Chances are, when the property sells, the seller will care less about your commission than they do about the sale.

I am not an attorney! In the event of a dispute, contact your broker,  attorney or you local association for guidance.

I am writing this as there seems to be much confusion, in California at least, about contingency periods with regards to a residential property purchase. It may be obvious to most of us yet......

The contingency period for buyers in California when using a CAR (California Association of Realtors) residential purchase agreement is 17 days for the buyer's inspection, loan and appraisal contingencies.

So, on the 17^th day those contingencies expire and the buyer's earnest money deposit could now belong to the seller.... right?

WRONG.

All contingencies must be removed, IN WRITING. If contingencies have not been actively removed, the buyer may be able to cancel at any time, without risking their deposit.  

Contingencies run with the contract until the contract is cancelled, escrow closes or the contingencies are removed by the buyer, in writing. (Time frames can change by prior written agreement or by failing to supply required disclosures when due). Even when contingencies are removed that the Seller will not be entitled to the buyer's deposit yet, properly reoving the contingencies will bring the seller closer to securing the deposit if the deal goes south.

It is up to the agents to make certain that all contingencies are removed at the appropriate intervals....in writing.

Use CAR form CR(Contingency Removal) to remove your clients contingencies or CAR form NBP ( Notice to Buyer to Perform) to demand removal of buyer contingencies. After the "Notice to Perform" has been delivered and contingencies are not removed, the seller may have the right to cancel the agreement.  

Many times, a buyers agent will not remove contingencies. It will be up to the seller, based on your advice, to decide the correct way to proceed.

In this market, most will simply hang on and hope for the best. It is up to you to let them know that the buyer's earnest money deposit, in most cases, will never make it to their pocket if the deal doesn't close.

There are many more factors that can effect the outcome of a transaction when it comes to contingencies and many different scenarios. I am no attorney and when questions arise, it is best to contact your attorney or the legal hotline form CAR or your local association.

Writing those ads and property descriptions gets harder and harder it seems. There are may good resources out there that can help and an LA Times article last week has motivated me to re-visit the issue.

The Dec 17th LA Times had a great article about the wording used in real estate ads. Everyone should take a minute to read it.  One that always impresses me is the "motivated seller". As if listing their property wasn't enough indication of their "motivation".

"For example, a Canadian professor, as part of a broader study on real estate sales patterns, found that homes where the seller was "motivated" actually took 15 percent longer to sell, while houses listed as "handyman specials" flew off the market in half the average time."(LA TIMES DEC 17^th)

Words like: Quality, Value, Service, Caring and Integrity are said to be avoided like the plague in any type of advertising because of their over-use and potential, negative impact. Stating in an ad that you were a "caring Realtor with integrity" may make the reader question your motivation and need to state what would be presumed in the first place.

What words have you had great success with?

Any that you find to bring certain death to an ad?

For all of you out there who must counter for services (Escrow and or Title):

What do you tell a seller when having them sign a counter for services only when all else is agreeable?

Have you ever had a buyer walk as a result?

If a buyer walked, how did you explain to the seller?

 An example would be that a counter is made stating, with no other point of contention, that Escrow is to be with XYX Escrow and Title is to be with XYZ title and seller has no true preference in providers and those providers do not offer a more substantial service nor offer it at a lower price or add additional value to anyone other than the Sellers agent or broker.  The counter is made only to satisfy a requirement of the agents broker to do so. All other parts of the offer are acceptable to the seller. This is more common in California than any other states it appears.

Any info would help! Thanks in Advance!

Here is one that we have had twice in the past 6 months:

An offer comes in. It all looks good yet, a line item in the purchase contract states "Commission to Buyers Agent to be 5%".

Call me a loon but, since when does the buyer care what commission is paid to their agent?

In this instance, the offer was written at more than the asking price. I imagine that the agent convinces the buyer to pay more so that he could get more commission...?

For those of you that don't know: Standard of Practice 16-16 of the Code of Ethics of the National Association of REALTORS®, and Rule 9.5 of the California Model MLS Rules, generally state that a cooperating broker shall not use the terms of an offer to purchase to attempt to modify the listing broker's offer of compensation nor make the submission of an executed offer to purchase contingent on the listing broker's agreement to modify the offer of compensation.)

Have any others out there been experiencing this?

Do you dictate who is to provide services in your transactions? Do you make it a point, or is it policy that you must use a particular Escrow or Title Company?  Do you disclose ALL of the potential implications for doing so to your client?

We have all seen it. Many have done it. Have you properly advised your client of the possible implications of countering for "Services Only"? ie: Escrow to be XYX & Title to be XYX.

For California agents, you can look to California Real Estate Law Fifth Edition Which states that; "it is unlawful for an agent or broker to make the choice of services in a transaction a condition precedent to a  transaction involving 1-4 single family residential units".

For anyone in the U.S. with a transaction that involves a Federally related mortgage:

TITLE 12  CHAPTER 27  § 2608 (a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company. (b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

I can not imagine the explanation that could be given to a client when they are sued for 3x's the amount of the title policy when an Agent or Broker makes the decision for the client...can you?

How about the ethics side of a counter offer that only involves a choice of services? Who would this type of counter offer benefit in 9 out of 10 transactions? Would it truly be the Buyer or Seller?  How would you explain to a seller that, when making a counter for services, that they have cancelled the Buyers offer?  When that buyer walks, what explanation could possible be given to the Seller?  Are we here to represent a Broker, Title Company, Escrow, or our Principle?

Affiliated or not, this type of activity is being scrutinized and it will be interesting to see what transpires over the coming year. Litigation is costly and ignorance is not an acceptable defense!

Christopher Walker - Broker - Realtor

Mission Grove Realty

A little late for your holiday business card but......Does anyone out there change your business cards throughout the year?

Most of us, I am sure, create a business card and use the same one throughout the year. Judging from some photos....for many years thereafter.

How about changing your cards to match the season? At the very least....how about a business card for the spring, summer, fall and winter? It would make a great accompaniment to your newsletters!

Is anyone out there doing this now?