March 2005 Article History

There are 13 articles published in March 2005. Here are the first 20:

March 30, 2005

The real estate industry is changing. Consumers are empowered with information from the internet, are demanding more and want to know what they are paying for. The old models are breaking. Can we provide the services consumers want and need and get paid what they are worth? I think we can.

New business models are emerging almost daily. Many tend to believe our services can be turned into a commodity. And, in many cases, our professional image is threatened. We just haven't done a good job educating the public. Consumers are attracted to these cut rate models because they simply don't understand what we really do to earn our fees. If Wal Mart and Saks Fifth Avenue are the extremes, is there a Nordtroms model that makes more sense? I firmly believe there is and we have bet our entire business on it...

Consider:

Join the revolution and get ahead of the curve. The National Association of Real Estate Consultants® offers programs that teach a different way of doing business. As C-CREC® ceritfied agents, Pam and I have first hand knowledge and experience that can help. We are building our entire business around delivering high quality, best in class real estate consulting services delivering significant value to our clients.

To learn more, request the C-CREC® brochure and flyer (both in PDF format) and the A. D. Little study presentation (PowerPoint). Just contact us with your request, comment or question (Comments form below).

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March 29, 2005

We recently posted a new construction disaster tale from people we met the other night. The builder remained anonymous. We have our own experiences having bought several new construction homes (we will hold those for now). We recommend buyers of new construction get references on builders among other important steps. What better way than posting your experience right here, the good, bad and ugly. It should develop into a rich repository of reference material. So, post away! We will add the category after your entry. If we don't have it in our category list, we'll add it. Be candid but hold the profanity...

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March 28, 2005

You are probably wondering why there are wine postings on a real estate blog. The only reason is I haven't created a separate blog for my wine musings. It is that simple. If you are not interested, don't look.

On the other hand, fine real estate is like fine wine. When carefully cared for while it is aging, it develops more intrinsic value. There are ups and downs in every market. Care for your property...realize greater enjoyment and potential returns.

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If you are really into getting the latest and greatest in a broad range of wine from cheap (uh, inexpensive) to futures, visit the Wine Library. I signed up for their email alerts a few years ago and routinely receive 3-4 emails a week on specials, futures and stuff they are trying to unload because they bought too much. I know...I'm a victim. Although, I have never met a wine so bad I couldn't drink it...(umm, maybe a couple times). They ship. Seriously, not a bad place to get ideas and occasionally find a bargain or venture out to try something new. I have never had a bad experience with them. Always deliver what they say. Try it!

PS: Tonight I am drinking a 1997 Clos La Chance Cabernet from the mountain area between San Jose and Santa Cruz. It's good now and can age another 5 years or more. The joy of collecting! By the way, 1997 was a great year for California Cabs.

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March 27, 2005

n. pl. fi·du·ci·ar·y
One, such as an agent of a principal or a company director, that stands in a special relation of trust, confidence, or responsibility in certain obligations to others.

I realized I use terms that are second nature to me. There you have it...a simple definition. How about PRINCIPAL, CUSTOMER and CLIENT? Sometimes these are used interchangeably. So here we go...

PRINCIPAL:
Same as a CLIENT and can be used interchangeably. It is simply the party whose interests are to be served by an agent with or without a contract according to law.

CLIENT:
Same as PRINCIPAL.

CUSTOMER:
If you are not a PRINCIPAL or CLIENT, you are a customer. For example, a buyer represented by the buyer's agent is the seller agent's customer And vice-a-versa.

That clears up this issue doesn't it?

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The agency realationship of a REALTOR® to a client or customer is very confusing. Not long ago, all agents represented the seller, even the one that brought the buyer. Not so any more. A transformation took place over 10 years ago with state laws enacted to establish protection for buyers. Hence, agency came into being. That's a good thing. Prior to agency, buyers were never really represented in a transaction. Everybody worked for the seller. How fair is that? Short answer: not at all. Now, almost all buyers are represented by a buyer agent through a "buyer agreement". Lets see if we can clear the air...

What is Agency Anyway?

It’s important to understand what legal responsibilities your real estate agent has to you and to other parties in the transactions. Ask your agent to explain what type of agency relationship you have with him or her and with the brokerage company.

1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

2. Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

3. Buyer's representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.

4. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.

5. Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

6. Nonagency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

If you are a buyer, always be sure your REALTOR® explains this to your satisfaction. And if you still don't understand it, find another agent...Or if your agent has not disclosed who they are representing, find one that will. You deserve to know and it is the law!

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Northern Virginia is a seller's market and has been for a couple of years. This year doesn't look any better. To buy in this market requires an aggressive game plan. Many buyers lose contract competition because they have too many contingencies, think that everything is negotiable all the time (not motivated to step up to market demands), not quick enough and generally indecisive.

Here are some tips that might help...

Increase your chances of getting your dream house instead of losing it to another buyer, with these easy steps.

1. Get prequalified for a mortgage. You’ll be able to make a firm commitment to buy and make your offer more desirable to the seller.

2. Stay in close touch with your real estate sales associate to find out first about new listings that come on the market. And be ready to go see a house as soon as it goes on the market.

3. Scout out new listings yourself. Look at Internet sites, newspaper ads, and drive by the neighborhood frequently. Maybe you’ll see a brand-new “for sale” sign before anyone else.

4. Be ready to make a decision. Spend lots of time in advance deciding what you must have so you won’t be unsure when you have the chance to make an offer.

5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don’t try to go too low to get a deal. In a tight market, you’ll lose out.

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

7. Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy anything. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound.

Remember: get pre-qualified, limit contingencies, be decisive and make a competitive offer! You will greatly improve your chances of getting the home you really want.

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I began collecting (more on collecting in a minute) about 1990. My best friend Rod had been accumulatiing fine, realtively nice wines for a few years and I quickly learned that when you find something you like, buy it in quantity, put it away and enjoy it a later day. For most of us wine collecting is not like stamp collecting: we really are buying to consume at some point in time.

My wine taste centers around the reds....

I am from California (please don't hold that against me) and fine California cabernets were in abundance and affordably priced when I bacame interested. I have expanded my tastes over the years and now enjoy French, Spanish, Italian (yum) and Australian. I have recently become enamored with the New Zealand "unoaked" whites in the Chardonnay and Sauvignon Blanks (better check the spellings) varieties. Ah...refreshing!

The problem with fine wine now is it is getting unaffordable. What I used to pay $15 to $20 a bottle a few years ago now costs north of $60 a bottle. Need to find more good, inexpensive wines...

That brings me to a couple of recommendations:

• The Leesburg Vintner: Mike Carroll is absolutely the best at finding and stocking good, inexpensive wines. Visit him on the corner of Loudoun and King Streets in Leesburg. Tell him I sent you.


• Windsor Vineyards: Windsor produces some fantastic wines across a wide spectrum of prices. The unique thing about Windsor is they are mail order only! Yes, they ship to Virginia without getting anyone into trouble. They will even put your own signature on the label of the wines you buy. Find them at WindsorVineyards.com

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An agent experienced in new construction should represent you when buying. Builders do not operate in your best interest and you will not get a price reduction if they do not have to pay our fees. However, you must have your agent with you from the very first visit. Many agents (including myself) can give you a portion of the compensation a builder pays to be applied toward closing costs. The amount depends on the price range of the home, the amount of work involved supporting you and how much the builder is paying agents that bring buyers.

Here are the 13 things you need to know before buying new construction:

(1) Pick a reputable builder. Many enjoy good reputations. Make sure you compare and ask for references from other clients. Visit the neighborhood and talk to future neighbors. Our experience can help.

(2) There is usually very little room to negotiate builder contracts in a seller's market. There will be a hefty deposit required including a percentage of the cost of options you buy. Incentives may be offerred if you use the builders preferred lender and/or title company. In addition, builder sales people cannot commit to anything. If they do, get it in writing. Conversely, in a strong buyer's market, builders are very willing to negotiate to include discounted or free options, price and lucrative mortgage terms (if you use their affiliated mortgage company). Be careful of this last one though, an offer too good to be true usually is.

(3) To the extent possible, make sure you know all your options and cost estimates before you ratify a contract. Add-ons after contract will cost more and could influence the delivery schedule. Important elements to consider are window options (type), bricking the whole house, wiring for smart homes (telephone, internet, audio and video), heating and air conditioning upgrades and appliance options.

(4) You might want to consult an architect and/or a professional decorator to help you. Always be thinking resale. Potential future buyers might not think highly of your special modifications.

(5) When your home is completed, it will not look like the model home. Builders employ professional decorators for their models and spare no amount of creativity (and expense). Decorating makes builder homes sell.

(6) The builder will not commit to a specific delivery date, but rather an approximate range of dates for your home to be completed. There are just too many variables in the construction process. You need to be flexible as you will probably only get a two to three week notice and that occurs when the local government grants the builder an occupancy permit.

(7) Expect unfinished work when you close on your home. The builder usually has a certain period after closing to complete all the finishing work.

(8) It is usual for builders to use subcontractors to do the work. The quality of workmanship depends on the experience and skill of the subcontractor and the construction supervisor. Construction supervisors cannot catch every mistake made during construction as they are managing the build of several homes simultaneously. You will have a chance to remedy these.

(9) The single most important recommendation we can make is to hire your own inspector to assist with every walkthrough at various stages of the construction process. This will be an added expense but worth it for the peace of mind that you have an independent observer working to detect major mistakes and poor quality. Some builders don't like this but insist upon it.

(10) Expect delays. These are unforeseen and include weather, subcontractor and material shortages, and may include overly optimistic schedules by the builder.

(11) Expect issues after occupancy. These are normal and usually minor in nature. It will take the builder some time to get to them all. Any major issues will usually be attended to quickly (severe leaks, appliance failures are examples here). Builders offer a one-year construction warranty and a homeowners warranty covering appliances and major systems.

(12) Before or during the final walkthrough, be sure to inspect the grading around the home and mechanisms to channel water away from the downspouts. The biggest issue causing basement leaks or moisture has to do with improper grading and not properly channeling water away from the house.

(13) Finally, there will be many questions and concerns during the process. Always put questions, requests and complaints in writing and be sure to copy the highest levels in the company you can find so you get the proper attention. You always need a document trail.

In summary, builder references, an independent inspector and a knowledgeable REALTOR® are a few of the important elements assuring your success and satisfaction when buying new construction.

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We just met some new friends last night and they told us a tale almost too disasterous to imagine. Here's the scenario:

Purchased a lot and selected a model to be built from a local well known builder (will remain nameless at this point). During construction, would be owners observed that the elevation being built was not what they contracted for. The construction manager continuosly ignored their requests to check the the contract and repeatedly told them they were in error. Eventually it got fixed but the builder literally had to tear down much of the exterior and start over.

This is only the beginning...

They documented over 34 pages of punch list items at the final walkthrough, including severely sloping floors and appliances that were not installed. After several months and several thousand dollars (in the $5,000 range) in independent inspectors, engineers and lawyers, the issues are not resolved and the builder denies any responsibility for the severe structural problems.

How do these people stay in business? My friends report that all of their new neighbors had severe issues as well. In fact, a consecutive row of 6 houses all had an inside water pipe break (with obvious results) and according to the builder the insulation provided was within code but not enough to keep the pipes from freezing the first winter. Oh, the pipes were run in an exterior wall. DUH! (Can you see me smaking my head with the palm of my hand?)

Now my perspective...These really nice people made several errors in their purchase (maybe unknowingly):