It’s official, online brokers will now have access to all MLS listings based on a settlement reached today between the Department of Justice and the National Association of Realtors. Since this means we will see more clients represented by online reps, I felt I had to comment on this type of service and the effect they are having on the real estate industry. I apologize for another “non-technical” post but this just had to be said.

When you first walk into a class to begin education to get a real estate license, what is the first responsibility the teacher drills into your head? Realtors have an ultimate responsibility to THE CLIENT first and foremost!! I repeat - the client and their best interests are #1…

This is the worst type of professional representation snafu that I have personally seen in 22 years in the business world. I can certainly see the allure of a seller thinking they might save some money with an online broker (although on average they do not); but I urge you to speak to a licensed Realtor in your own area, that you can touch, that knows the area, that can accompany you on a home inspection, that knows the up and down side of specific types of homes in specific areas for resale value, etc…

Now don’t get me wrong on this - I do not have a problem with an online brokerage gaining access to the MLS, or even assisting a buyer or seller up to a certain point with some general real estate terms. However, I have a HUGE problem with a person on a headset (sitting in a boiler room in another state) holding themselves out as an exclusive buyer or listing agent when they have never set foot within 100 miles of the desired property!! Someone who has never even seen the contract for a specific state yet feels they have the expertise to guide a client through the pitfalls of every paragraph of a twenty page offer of purchase!! How is this making the client #1? How can an individual honestly help a seller sell their home in any kind of professional manner without ever seeing the home? Without seeing the neighborhood, amenities, other houses on the street? How can that same individual help a buyer make the biggest purchase of their life when they cannot see the home and know if it matches the needs of the buyer?

There are already too many nightmare stories of clients of these online brokers getting killed for five figure losses on a sale or a purchase. A seller who thinks they did great by paying a $2,000 flat fee to list their home and netted $350,000; only to find out that a Realtor with a similar listing on the same street has gotten his seller $400,000 and netted them $26,000 more!

Or the person who buys the money pit because they had no representation at a home inspection, or anyone to tell them that a certain type of home has horrible resale in a certain area, or who pays list price from a builder only to find out that a Realtor knew of another builder who would have sold them the same home for $50,000 less on the price plus a finished basement!

If you are up late one night, after three glasses of wine, and want to know the current ballpark price of your home or what might be available to purchase in your areas — then the web is a great source of information. When you actually want to participate in a transaction, do the smart thing and find a quality Realtor who works and lives in your area and can give you the quality service and representation that you will need through the entire transaction!

**Disclaimer - I am not saying that all agents will perform the same. As in any profession, there are great agents and there are lemons. However, the answer is not to use an online broker who knows nothing about houses or your area of interest. The better answer is to ask around and find an agent who does do good work and will earn every penny of their fee, and give you the quality representation that you will need during your transaction.

The smartest person is the room is the one who is listening and not speaking!
Steven Epstein
Words to live by! — Listen to your clients and prospects, hear what they are saying, ask questions to isolate their concerns and objections, try not to talk over them, and then listen some more!!!!

For all of you feng shui Realtors out there - remember the flow of your perfect listing? It’s the same with your web site links!!

Whenever you place an outside link that promotes any content that is not on your site, it should always open a new browser. Never, ever, change the current browser and take someone off of your site to go to another. You always want to keep an open browser on your site even if your prospect is looking at a fellow vendors’ site that you referred them to…

You never want the surfer to have to try to find you again. Just think about - you are at the mall at a big anchor store and they are referring you to a product line from another store for an item that they may not carry. Do they tell you to leave their store and go halfway across the universe to get the product? Thereby putting more distance between them and your wallet?

No way… If they can get you to buy the product right there in their own store, they keep you on the premises and keep the chance to market other products to you. Anything you can do to keep people on your site longer, this is the proper protocol for successful Internet marketing.

So when you (or your webmaster) set up those links on the side of your web site, or even when you place links in your blogs; make sure you ALWAYS have those links open a new browser. The logic demands it, and the conversion stats back it up. Now go get those incoming links!!

This post is not tech related; it is a “beware” for all Realtors out there on their upcoming deals and hiccups that have been happening recently in final underwriting.

Appraisals - Many areas of the country are now considered officially “declining markets” by the national lenders. This coupled with the “over supply” in the markets are raising red flags for lenders in final underwriting. Appraisers are checking these two boxes on the appraisals more often now. As of January 1st, these loans may have their terms changed as they come out of final underwriting and their terms amended when the underwriter sees it! Most likely they will ask for an increase in the downpayment. (Exceptions are rare now for gifts from family also.)

As of April 1st, we are also seeing the first appearances of the “risk assessment fee” by lenders across the board. Buyers with a credit score under 700, and a small down payment (less than 20%), and/or higher LTV, are also coming out of underwriting with new specs. Most often it is a 1/2 to 2 point assessment at settlement to keep the terms the lender quoted you at the automated underwriting stage. No grandfather clause on these either!

Moral of the story is to stay up with your lenders on a frequent basis and find out about the new trends. They are slowly becoming facts of life on a national scale and causing even more purchases to fall apart right before settlement.

Good luck out there!

Steve

In every state in the US, your taxes are about to go up!! In my home state, our lovely state delegates “got us” at 3am in the morning a couple of weeks ago. Here is one of the major revenue problems: A large portion of your state (and local) budgets come from property taxes. And a major portion of those property taxes just went bye-bye!!

When a foreclosure happens and the home sale net proceeds are less than what’s owed on the loan, no taxes are paid! When market values go down and the taxes are based on the value of the home, residents start protesting their tax bills and pay less (rightfully so since their homes are based on inflated values)! Even the transfer taxes (or stamps) paid at settlement on a purchase are decreasing since there are less overall purchases to tax in the first place.

However, I have not seen one state adjust their spending budget for this shortfall they have seen coming for the last 18 months. They just figure out a way to make it up with a tax. Just once, I would love to have seen a municipality anticipate this (since we always vote the rocket scientists into office) and take steps to curb their spending so this would not be as painful.

I don’t have a magic bullet either but I would love to see the issue studied, not by a Blue Ribbon panel of congressional reps and economists but by actual successful business people in the local area. In every city and state in this country, there are hundreds if not thousands of VERY successful business people that each market could tap. Put the ones who KNOW how to do it in the position of making suggestions. I love these special blue ribbon panels of people who have never turned a profit in their lifetime!! If it means tightening the belt than that is what happens. If it means taxing the residents or businesses in a “responsible” way that that is what happens. At least have the discussion out in the open and not at 3am in a back room in your statehouse!!
Get ready for court battles over the legality of new taxes!! Get ready to see your state and local governements coming after your wallet. There has to be a better way..

Homeowner Beware!!!