How to Get the Seller to Pay the Marketing Fee.

In a recent general conversation with a real estate agent who just listed a new property, I asked him how much was his budget to market the home and if he got the seller to pay for the marketing expense of the home.

Well…, he gave me a mysterious look and in stammering words, he muttered something about putting it in MLS, putting a sign out front along with flyers, presenting it to their weekly sales meeting. And then he stopped and looked at me with a stare and said, “What do mean ‘getting the seller’ to pay for marketing? How can I get the seller to pay for marketing when I’m charging a commission.”

I then asked him how much of the potential commission he would earn , was he going to spend now in order to get the home sold? He proceeded to tell me that was up to his broker as he couldn’t afford to spend his (the agent’s) share of the commission on marketing, that was the responsibility of the Broker-in-Charge, i.e., his boss.

We then had an in-depth discussion as to how auctioneers market properties and who pays the marketing fee. I then proceeded to ask him if he ever had asked a seller to pay for marketing. He said no, that most of his clients were “underwater” financially and couldn’t afford to pay anything.

I agreed with him that many sellers were in financial straits, but offered some suggestions: (1) Use his own money by way of a credit card, home equity loan, borrow from friends, relatives, etc. and then get reimbursed at closing . Yes, he did ask the proverbial question, “What if it doesn’t sell?” [Puts pressure on you to get it sold doesn’t it?] (2) If the client doesn’t have the money, they could sign a promissory note for the amount you plan to spend in case the house doesn’t sell. (3) If there is no existing home equity loan in place or if it is maxed out, go to the bank/lender and explain to the lender what you are attempting to do.

Explain to the bank/lender they could suffer a financial loss themselves if they don’t cooperate. This approach takes some pre-planning to convince the bank/lender that their help is needed.

Did the agent take my advice? No, he thought it was too much work. Next….

If a property is listed for $195,000, in all probability the first offer will be much less, perhaps $185,000 to $190,000,  depending on the area you are in, and the offer will be full of contingencies. The agent should be able to reach a much broader base of buyers with an extensive marketing plan. A detailed marketing plan needs to be shown to the seller showing them that by reaching more buyers, the offers should be higher, thus they will net more dollars at closing. Of course there are no guarantees. The only guarantees are that the government will get more of your money.

 

What are your auction or real estate sales expectations?

Let’s face it. We are not in a booming economical cycle. Unemployment is currently in excess of 8% and has been for quite some time. With regards to housing, with a hand full of exceptions, home prices continue to decline. With some commodities like food, and energy, prices are going up. Yet interest rate on savings is at an all time low. My bank wants to pay me 1% on my savings but with true inflation in excess of 4%, I’d be going broke if I did that.

 

And let’s not forget what is going on in the European markets. With the euro on the verge of collapse, and with many US Banks invested in the European Banks, is it any wonder banks are unwilling to lend.

 

Plus, Israel and the US continue to threaten to bomb Iran because of Iran’s possible nuclear capability and that will certainly affect gas prices at the pump and transportation cost to get the goods delivered. Then there is the election coming up in November With all these uncertainties, businesses are not going to hire or expand. You might ask, “What does all this have to do with an auction? Plenty. Let me explain.

 

We recently sold a home via auction that brought less than the seller expected. Was the seller disappointed? Yes, but not devastated, as it was the seller’s decision to sell at the last high bid price. While the seller was disappointed, I felt we had done a good job educating the seller with regards to her expectations.

 

You see, she had the home appraised and was given a dollar valued that was stuck in her mind. When I saw the appraisal, I told her that the appraisal was just an “opinion of value” which it really was, and that I didn’t think she would get close to that value with an auction or even with a traditional listing. The appraiser had to go pretty far out to get comps, of which none of them were recent, as this property was in a rural area.

 

You see, prior to the auction contract being signed, we sat down with the seller to explore her expectations, to see if they were realistic. She had bought the home during the last real estate boom, viz., she over paid in comparison to today’s market price. We explained to her unless we had a cash buyer, it would be more difficult to get a buyer qualified for a loan in today’s market because the lending requirements had changed in the last year or so. In addition, the home needed some cosmetic repair that a traditional lender would have required the seller to fix.

 

We even explained to her how all the other things mentioned above (world events) would affect price. While not getting the price she wanted, her disappointment was lessened because of being informed of what to really expect. I would rather turn a client down than let them down. As auctioneers or real estate agents, we must inform and educate our clients with regards to their expectations.

 

What are your expectations? Are they real or just a wish, want or desire?

 

For more information on our auction and real estate services, go to http://www.cansellnow.com or call us at 252-257-4822.

Seniors Are Target of Scammers

Almost on a weekly basis, I receive e-mails from some foreign country’s ambassador, banker, attorney or heir, willing to pay me millions of dollars if I would help them transfer some money out of their country. There are many variances to this, like the Nigerian Scam going around on the internet. Of course to get the money, they need some more personal information about me and my bank account… yea, sure.

 

It appears these scammers are targeting senior citizens as if all senior citizens have lost all their faculties or need to supplement their Social Security check. These scammers must be having some success based on the number of e-mails I get. Being 66 years young doesn’t necessarily qualify someone for stupidity.

 

Our staff had been discussing how to expand our Senior Move Management service when I got the latest scam e-mail. It reinforced to me the importance of honesty and integrity in dealing with the senior market.

 

When a senior is downsizing, getting ready to retire, looking at a retirement community, etc., they are faced with many decisions about their personal needs. In many cases their children are too busy or live far away to take the time to assist them with their planning. Here are a few topics the seniors are faced with:

• Placement Specialist
• Senior Real Estate specialist- traditional listing versus auction
• Assisted Living Advisors
• Home Renovation Specialist
• Independent Living Advisors
• Reverse Mortgage Specialist – do I want to receive monthly payments from the equity
• Residential Care Home Advisors
• Estate Sale Coordination – tag sale versus personal property auction
• Home Health Care Specialist -Medicare supplement programs
• Financial Advisor/Planner – what to do with the 401(k) plan?
• Senior Move Managers
• Legal Assistance Counselors/Attorney- updating wills/medical will-estate distribution

Being a senior myself, my wife of 38 years will not admit to being a senior :-), I think I have a good understanding of the needs of a senior. If you would like to discuss your needs on a no obligation basis, go to http://www.cansellnow.com/seniormovemanagement.html and check us out, then give us a call.

 

Ron Taylor<><

President/Broker/Auctioneer/Personal Property Appraiser

The Restorer, Inc.

Ron Taylor and Sons Auctioneering and Real Estate

Taylor Estate Services

252-257-4822 (Office)

www.canSellnow.com

IS IT TIME TO MOVE TO THE COUNTRY?

I can remember all the discussion about what to do about Y2K. I was already living in the country, living on a farm, so all the suggestions about getting out of the city and living in the country did not speak to me. I was getting e-mail after e-mail about food storage. We had our own garden and either canned or froze what we grew. We had cows, goats and chickens (and deer) for our meat supply, so food storage was not a hot button for me. Admittedly, we did order extra grain, rice, salt, sugar, etc.

All of that was over eleven years ago. But what about today? Is it time to move to the country? What is different today from eleven years ago? Did we have unemployment bumping 10% ( and some say the real figure is closer to 15%)? Did we have real inflation in double digit? ( Have you bought any coffee, sugar or grains lately?).  The average price of gas was $1.51 a gallon for unleaded compared to $3.65 today and is on the way up.

Our government is on  a spending binge, mainly to buy votes. The current administration has accumulated more debt in the last two and a half that all previous administrations cumulative. And the debate now is about raising the debt ceiling so Congress can spend more money and buy more votes. And may I add, who is going to pay all this back? You children and mine and their children and theirs and so on.

If the local food store shelves became bare, how will/would you survive?  Do you have enough land to grow your own food? Can you gut and skin a deer? Got toilet paper?

Many people will steal from their neighbor? Almost every week I read about a group of teenagers going in mass into malls or local stores, taking what they want and walking out. Is this the beginning of anarchy? If there is a economic panic, you ain’t seen nothing yet.

Never in my 65 years on this earth, would I have believed that our country would be in the state it is in now. America is no longer the America I grew up knowing. There is no faith in our government. We no longer have statesmen, but professional politicians. Just recently President Obama said, “… ‘professional politicians’ know more than the
average American,” meaning we as voters are stupid.

Is it time to move to the country? Only you can decide that. As a real estate broker and auctioneer, it seems the time is ripe to sell land, outside the city and in the country.

The Sky Is Falling! No It Isn’t! Yes It Is!

Let’s face it. We are living in a new economy whether we like it or not. The real question is how are we going to adjust to it or better, what are we going to do about it?

The Obama administration is spending money like no other before it since the founding of this great nation. All of this is done under the guise of saving our economy but the path is socialism.

I remember someone asking former President Bill Clinton the question, “When has any nation ever spent itself into prosperity?” Of course the answer is, never. Just ask Greece.

Listen to what Matt Spalding of the Heritage Foundation said: “This past year has been a historic one when it comes to the sheer size of legislation forced through Congress. But the health care bill is just a symptom of a larger epidemic: the shift toward an “administrative state” — an unelected, unaccountable, bureaucratic government operating without the consent of the governed. The United States has been moving down this path in fits and starts for some time, from the Progressive Era reforms through the New Deal’s interventions in the economy.”

But what has all this to do with real estate you might ask? A lot! Remember last week’s volatile stock market movement when at one point the market was down almost a thousand points. Investors fled to the 10 year Treasury, driving the yield way down and pulling down the rate on the 30-year fixed mortgage right along with it. The yield came up a bit, but at one point you could get a 30-year fixed rate mortgage for 4.5 percent with no points. That’s not bad but at what cost?

What if the market never recovered that day or what if the same thing happened the following day? How would that affect consumer confidence? As everyone knows, consumer confidence is a very important part of the real estate market.

I can go to several websites that will tell me the real estate market has bottomed out and things are on the rise again. On the other hand I can go to some websites that will tell me the worst is not over. Many will tell me the commercial real estate market is the next to fall.

The National Association of Realtors, of which I am a member, has to put a positive spin on things or they will lose more members. Even Clear Capital says a 3.9% decrease in home value was better than the previous 5% between February and March of this year. The slowing of the decline in housing value is seen as a positive trend, even though the overall numbers are still negative.

If our government keeps spending at the current rate, the best thing you can do is get out of debt as there will be a day of reckoning. And that starts with paying off your current mortgage as quickly as possible as more and more banks are projected to default.

Many European nations are making an adjustment away from socialism but we as a nation seem to be on the path that they want to get off of. Greece is broke through over-spending and many are comparing California to Greece. What comes out of California seems to move eastward.

What can we do about it? Get rid of these socialites in November.

For more information about our company, go to http://www.cansellnow.com

Why Are Lenders Making It Hard To Stimulate The Economy?

I don’t know about you, but as a real estate broker and professional auctioneer, I have to wear many hats. One of the hats we have to wear is that of working short sales for a client that is upside down financially, viz., owing more on their home than what it is worth in today’s market.

I don’t recall the exact source, I want to say it was NAR, [National Association of Realtors] but back in May-June etc., almost 30% of the homes sold were purchased by investor’s via short sales or REO. The investor bought the property with the idea of re-selling it for a profit. Now that is stimulating the economy by way of moving money around, providing liquidity, etc.

However, have you tried to work a short sale lately? Many lenders want the current owner of the property to have been on title for 30 to 90 days before they will approve a loan by a new buyer. It is called seasoning. Most investors hold property for a short period of time. They may make improvements on the property, if needed, or may sell it in an “as is” condition.

This whole process of seasoning has slowed down investor’s purchasing and stimulating the economy because they want to keep turning their money over. Having to hold onto a property for 30 to 90 days adds additional cost and cuts into the investor’s profit.

The negotiating process normally takes three to six months to go full cycle. And now the investor is told he or she must hold the property for an additional 30 to 90 days after purchase. I think you are beginning to see the picture. Less homes being purchased means more “toxic assets,” less money is available to the banks to lend out.

In looking at our records, here are some of the related industries who make money off of a successful short sale:

• Foreclosing Lender (they make far more in a short sale then when they foreclose)
• Listing Agents and Buying Agents
• Attorneys and Title Companies
• Mortgage Broker/Direct Lender
• Fannie Mae, Freddie Mac, FHA or whomever buys this loan in the secondary market
• The Appraiser
• The Home Inspector
• Plumbers
• Contractors
• Electricians
• Cities and Towns
• Insurance Company
• The IRS
• Accountants
• Marketing Companies (Direct Mail and Signs)
• Printing Shops

What’s the best way to stimulate the economy? The lender’s can start by making the short sale process a lot easier.

For more information on how we work with homeowners and realtors with short sales and pre-foreclosures, go to our website at http://www.cansellnow.com .

Get the Feds Out of the Real Estate Business!

Is more government the solution or the problem? I would submit to you that government is and always has been the problem. We can all remember when the Clinton administration under Barney Frank wanted home ownership available to all Americans, even to those that could not afford one and was not credit worthy.

How was this accomplished? By pressuring the lenders to make 100% financing available and even in some cases 110%, where the homeowner walked away from the closing table with several thousand dollars in their pockets and never put one penny down in the deal. The first time I saw this, I said to myself, “How is this possible?” Oh, how I learned how it was possible.

When I was a little boy and did wrong, my grandmother would always shake her long index finger in my face and say, “You will reap what you sow”. Now the mortgage industry and the real estate industry are reaping what has been sown over the last few years.

The Obama administration tries it best to put a positive spin on the current state of our economy. I remember watching a charismatic preacher on television one time quoting verses from the Bible out of context about physical healing. He had a terrible cold and looked awfully miserable.

He said that just prior to the program being televised, he prayed to Jesus to heal him of his flu and Jesus did heal him, even though he sounded like he was still sick and his nose was still red and running.

That is a picture of our government today. It is sick (bankrupt) but refuses to believe it. All you have to do is look at our deficit and the amount of spending going on.

Just today I got an e-mail from the National Association of Realtors [NAR] giving tacit endorsement to more spending proposed by a group called the Center for American Progress. Isn’t that a nice, patriotic, sounding organization?

The fact is CAP is liberal think tank organization headed up by John Podesta, former chief of staff to President Clinton. And to think we pay our dues to NAR to support such lunacy? We don’t need more government spending. When has any nation ever spent itself into prosperity? Not in my life time and probably never yours.

Is Obama Hurting or Helping the Real Estate Industry?

Like many of you, I get e-mails and magazines from the National Association of Realtors and from my state association wanting me to write my representatives and endorse many things the Obama administration are proposing to “stimulate” the real estate industry.

Now the Obama administration has proposed to pay each lender $1,000 for each successful short sale. In addition, they want to pay the homeowner $1,500 as “moving” money. They will pay the first lender $1 for every $2 the second lender is allowed to receive.

While this may loosen up the lenders a little to accept more short sale, now the lenders want to put a stipulation in the closing instructions that a home cannot be resold for 90 days after their closing. How is this going to stimulate the economy?

I recently read that 40% of home sold were bought by investors. These investors bought the homes with the idea of reselling for a profit. By adding this stipulation to any closing instructions will only hurt the sale of these homes. I am thankful that many title companies have said they will not issue title insurance with that stipulation. They can’t monitor what happens to a home after closing. Secondly, I even wonder if it is legal.

The loan modification program established by the Obama administration just postpones the inevitable, viz., a foreclosure. Even with reduced payments, you still have to have a job to make the payments, plus many homeowners are finding out they don’t qualify for this loan modification program.

More foreclosure homes are coming on the market affecting the value of the one next door. Unemployment at a all time high while real estate is at an all time low. Which raise an important question? Where is the money coming from to pay for all this? You got, from you and me in the form of higher taxes.

Can anybody tell me what country or individual has ever spent their way into prosperity by going deeper into debt? Why does our government think otherwise?

For information on working with realtors through short sales, go to my web-site page at http://www.cansellnow.com/shortsaleinfo.html .

Should Realtors Become Auctioneers?

I received an interesting phone call from a realtor in California. She had read some articles I had written about using an auction as a first choice method of selling a home, rather than as a last option. Her question to me was this, “Should I become an auctioneer?”

My first tacit thought was, “Go for it!” Yes, auctioning a home is a fast way to sell it, but not all homes will qualify for an auction. But before I get into answering the question, let me discuss briefly what an auctioneer does and does not do.

Some think that an auctioneer shows up on the day of the auction, starts talking fast, sells the house, and he/she is done. Actually, the activities that take place on the auction day, represents about 5% of the total auction process.

The perception of a realtor may be closer, viz., a contract is signed, a sign is posted in the yard, information is listed in the local MLS, and the listing agent hopes and prays that it gets sold. We know that is not always true but that is how the public portrays us.

Now back to the question “should realtors become auctioneers?” My answer is, “It depends.” Most auctioneers are a second, third or even fourth generation of auctioneers. They are in the business become they love it and have been around it since the beginning of time. Most auctioneers are specialist in a particular area such as farm equipment, heavy duty equipment, antiques, cars and trucks, land and yes, real estate, both residential and commercial.

I don’t know what the licensing laws of California are, but here in North Carolina you must go to a state approved school for pre-licensing requirements which may involve ten days to two weeks of your time, then you must past a state administered test.

There are annual renewing requirements, professional associations to join such as your state association and/or the National Association of Auctioneers [NAA] in addition to continuing education requirements [CE] each year. Add all this up plus your NAR and state dues, MLS dues and CE requirements; you can spend several thousand dollars a year on licensing and professional dues requirements.

Then you must become a marketer, that is, know how to market and get bidders to your auction. Who coordinates the marketing process? Who makes up the25 to 100 page proposal to the client?  Who’s responsibility is it for placing line and display ads in which newspapers? What income range are you targeting? Who makes up the flyers and ads mats?  Who checks on the cost of these things? Who sets up information on dozens of web-sites? Who draws up the Property Information Package (PIP)? Who registers the bidders and records the auction? Who keeps the client informed as to what is going on? And it goes on and on.

Rather than trying to re-invent the wheel, unless you have a real love for the auction industry, your best bet would be to partner with a local auctioneer in your area.

For more information about auctioneering, go to my website at http://www.cansellnow.com

When is an Auction not an Auction?

When is an Auction not an Auction?

Over the past six months or so, I have noticed an increase in the ads in the paper about auctioning homes. Here in the state of North Carolina, you must list your auctioneer license number in the advertisements and the property owner along with the terms of the sale. When I don’t see this in the ad, I get suspicious.

Upon further investigation of these ads, I have found two things happening. First of all, there is an investor or group of investors that claim they own the home by way of a deed BUT they do not own the debt (the mortgage), that is, they took over the property “subject to” the existing mortgage.

 In most cases these are homes they are about to be foreclosed. The homeowner has throw up his or her hands and have basically given up trying to stay in the home. They deeded the property over to the investor(s) with the understanding that the investor will stop the foreclosure, buy their home or get the property sold and save their credit.

In the meantime, the investor(s) work out a “short sale” with the lender.  The investor(s) then try and find an end buyer to sell the home to, at a higher price than the “short sale” offer. Part of the marketing plan is to “auction” the home to the highest bidder by way of what I call a Dutch action or round robin bidding process.

Potential buyers come and look at the home and write an offer down on a list provided by the investor(s) along with their phone number. The bidding process stays open for several hours then closes. The investor(s) call everyone on the list after the bidding process closes and tells them what the highest bid was and wants to know if they want to increase their bid. A few will, most don’t.

If the highest bid does not meet what the investor(s) need or want out of the house, there is no sale, and it basically goes back to the bank through a foreclosure. The homeowner’s credit is ruined.

The second thing I see happening is that realtors are advertising a property as an auction using a form of the silent auction method. A potential buyer makes an offer through a sealed bid. The bid process may stay open for several days. Again, as in the investor group above, if the bid does not meet expectation, there is no sale.

As a professional auctioneer, I question the legality of some of these selling methods that are being advertised as “auctions.”  If you are approached about selling your home via an auction, ask that person if he or she is a licensed auctioneer,(not all states require a license)  a member of the National Association of Auctioneers [NAA] and/or a member of their state auctioneer organization and about their experience in the auction business. They should also be licensed to sell real estate.

For more information on real estate auctions, go to my website at www.canSellnow.com or call me with your questions at 252-257-4822.