In The Trenches…March 2021
Due to the 2020 COVID disruption, I thought it would be a slow year. I was wrong. It turned out to be a very good year for real estate. Sales were up about 7 percent over 2019. Inventory (houses for sale) was EXTREMELY low making prices go through the roof. (no pun intended) Today there are 17 houses for sale in Pike. That is a long way from over 1000 houses on the market ten years ago. The interesting variable is that there are a ton of buyers looking for homes. When good houses at fair prices go on the market, there is instant activity. Numerous showings, multiple offers, and quick sales.
Recently I listed a house in Pike, and I had 36 scheduled showings, 9 offers and the seller accepted an offer in 24 hours. One of the offers was $23,500 over the list price. During the first 24 hours, my texting and phone calls about the property were non-stop. Realtors wanted to know what it would take in an offer to get their buyer’s offer accepted. Half of the communications were asking me if I had any offers on the property yet. And no, the seller did not take the high offer. I find that not too many Realtors think about the appraisal when pricing a property. Lenders will only lend to the appraised amount. You may think that you are doing your seller a great service when getting a much higher price than the list price but, if it does not appraise the buyer and seller have one of three choices. Either the seller has to reduce his price to the appraisal amount, the seller could reduce his price by some amount and the buyer would have to come up with cash to get to the reduced amount, or the sale gets terminated. It is best when the listing Realtor can come up with a fair market value and the seller accepts it.
BLC (Broker Listing Cooperative)
MIBOR (Metropolitan Indianapolis Board of Realtors) has a database of houses for sale which in most states is called an MLS (Multi Listing System). MIBOR calls theirs BLC (Broker Listing Cooperative). When you become a member of MIBOR you get access to the BLC. To become a member of MIBOR, you must be licensed, and pay yearly membership fees. Technically, MLS’s were created so that real estate brokerages could share commission fees between listing and buyer agents. So, it means that just because a house is listed with another brokerage firm, your buyer’s agent can still sell it to you.
I ran across this with my neighbor. He was a real estate investor. I had shown him homes and he had made offers but they were never accepted. A condo in my neighborhood when up for sale and it was listed with a big-name brokerage. He went directly to the listing agent and bought it. After the fact, I asked him why he did not let me sell it to him. His answer was “It was not listed with your brokerage.” Needless to say, I was disappointed that he did not understand real estate protocols.
I got hooked up with a Department of Justice bankruptcy Trustee attorney about 4.5 years ago. He sends me property addresses and who to get in contact with to see the properties. Rarely do I meet the owner and the properties are mostly vacant. I tour the property and put together a report as to what I think the property is worth on the market today. He decides if he wants me to list it. Most of these properties have very little “wiggle room” to break even when sold. Most are short sales (another story, another time).
In bankruptcy, the Trustee’s job is to decide what to do with your house (if you own one). He makes all the decisions and signs all my legal documents. I treat him like the owner of the property.
I get calls all the time when I list a bankruptcy property. The Realtors want to know the procedure. It is like a traditional sale, only it must be approved by a bankruptcy judge. This will take about 30 days after we have a buyer and Trustee signed purchase agreement contract. Judge signing is pretty much routine.
Since there is very little “wiggle room” in bankruptcies, I have been known to have to discount my brokerage commission to get the sale done. Sometimes everyone involved in the transaction will discount their fees in order to close the deal. You may think that Realtors never have to do that. Well, you are wrong. Years ago, a listing agent and I bought a radon unit and had it installed in a house so we could close a deal. I have known several Realtors that have bought refrigerators in order to close a deal. One of my agents is having carpets cleaned in order to close a deal. Happens all the time.
Quick Claim Deeds
When you close at a title company and use and pay for their services, your transaction is insured. It may cost you several hundred dollars more, but it is worth the money. If the title company misses something in their research, they are liable. I had a sale once where the title company missed a homeowner’s dues fee of $2,500 that the seller owed. After some negotiations, the title company paid the missed fees. These fees could be property taxes, vendor liens, anything the has to do with the house. These items must be cleared before a house can sell.
Quick claim deeds are different. It allows you to sign one document, exchange money, have the deed recorded and you are done. If it sounds easy, it is BUT the aftereffects can be disastrous. There is no research done on the property. It may have unpaid liens, homeowner’s fees, etc. Since those are not cleared before the sale, the buyer is now liable.
Also, since property taxes are paid in arrears, (property taxes that you pay today are for last year) some adjustments must be made at closing. Since the seller owned the property last year, they should pay the property taxes for that time period. If no adjustment is made, the new owner will pay the property taxes for the last owner. Traditionally in an insured closing, the seller gives a property tax credit to the buyer.
Behind the scenes in real estate, there are many things that the average buyer and seller may not think about or even know about. I am a big proponent of real estate education. I find the more buyers and sellers know about the transaction the more they can make the right choices and the happier they will be.
Note: I am not an attorney, and this is not legal advice. I only speak from my experiences.
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