Audrey's Adventures in Real Estate

Right now most of us are worrying about, well Right Now!!  The market, money, staying afloat.  But have you thought about how and when you will leave your business? Your retirement?

I have a girlfriend that says she will never retire, wont be able to, they will carry her out on a stretcher while she is showing a house!!  We laugh, but I wonder how much truth there is to that statement.  Probably more than most of us realize.  We all know we need to save money in our retirement 401K, SEP IRA, whatever you are set up in.

Where I am going with this is; Selling Your business to another Business person when you are ready to slow down or retire.  We must think of ourselves as a business that will be sold when it is time to go,unless you are handing it down to your children or family members?

In the past I have seen agents "sell" their business/ database to another agent.  One example was that  One agent gave the retiring agent a large lump sum to "buy their SOI"  with the promise of the retiring agent sending out postcards from time to time reminding the SOI to stay in touch, that the new agent was taking over.  The new agent would then incorporate the new SOI into their marketing plan. There were also referral fees negotiated.  I don't know the exact specifics of the deals. 

What I found interesting about this transaction, from an outsiders perspective was that the retiring agent "sold" the business to the highest bidder, not necessarily the best match as far as personality goes.  What I mean by this is while, the agent who bought this business is one of the best agents I know, he is very business like and bottom-line oriented.  Very successful person, nothing wrong with that.  The agent who retired was a hand-holding, motherly type agent.  I believe in that we attract people that are similar to us?  Like begets like?  So, I don't think it was a good deal for the agent that bought the business because I don't think the SOI felt comfortable with the second agent?  I know that some of the SOI did business with a different agent from another company, but her style was more like the retiring agent, hand holding - motherly. 

 My point is if you think it is a really good idea to buy a successful persons business, make sure your business, personality model is similar so you can reap the benefits of this situation.  If you are the retiring agent, be conscious of your SOI, will this agent be a good fit for them.  You will benefit in the long run because you will have more referrals.

The second example was that the retiring agent "referred" the clients from her  SOI to a handful of agents and who she thought would "fit the mold" based on personalities.  I think the second agent had more success in her retirement.

What is important about this is Know that your SOI is a gold mine.  If you don't have an SOI, get one, nurture it and make it grow because it can be a big part of your retirement plan. 

Every morning I get up, my dog has his routine.  He stands at the top of our staircase, waits for me to go downstairs, rattle his colar and make the tags jingle.  Then, he comes down.  In the evening before we go to bed, some how , he sits in front of my view of my television to make eye contact with me and my husband to let us know it is 8:55, give or take 5 minutes,  that means his last walk before dinner.  Now, he know many words, walk is one we cant say out loud because he understands and gets all excited, so we have to say "W". My dog has me trained in these routines.

I have always known that animals are more intelligent than we give them credit for.  Here is an article in the March 2008 issue of National Geographic that shows us just how much we humans have to learn. 

The Border Collie here on the cover, Betsy, has a vocabulary of over 340 words.  There is the story of Alex, the African Gray parrot and how Irene Pepperber, who studied Alex for 30 years and taught him to speak and to communicate, not just "parrot" words.  The story of the Dolphins in Hawaii is amazing.  The author visits the Wasington DC zoo, the Baltimore Aquarium and many labs, schools, and homes arround the world for this ariticle.  On a side note, if you ever get a chance to vist the Baltimore Aquarium, it is one of the most fabulous places to see!

In typical National Geographic fashion, Vincent J Musi, the photographer, has beautiful photographs of all of his subjects no matter if they are dogs, fish, or chimps.  The article is a facinating read, written by Virginia Morell. Click here to read the story.

This article just confirms what I have always known, animals are just little people in fur coats.

 Birds and Bees are; why not Credit as Curriculum???

Credit is probably one of those discussions most parents don't have with their children.  It is surely a subject that will probably go by the way of the Birds and the bees.  . . .  let them learn it on the street.

Truth be known, most parents don't completely understand the world of FICO scores themselves?

Credit is the basis for just about everything these days.  I mean just about EVERYTHING.  What if we started teaching kids about credit in school?

I am talking about early in high school not college.  By then it is probably too late.

By the time they get to college, they are already spending money pretty regularly and have been given the "college credit card".  All you have to do is sign this paper and viola' you have a credit card.  Ahh . . the mighty credit card, what fun and/or dangers may lurk ahead?

My Mom and Dad didn't explain credit to me.  They said if you have a bill you have to pay it and be responsible for it.  Save your money.  Take part of your allowance and save it.  Do odd jobs, get paid, and learn how to deal with your money.  Those were the basics of money.  Not watch out for your FICO scores? 

I think if there could be a class that kids take early in high school where they understand the importance of how credit works, what to do and not do in order to keep themselves in good standing and understanding the importance of good credit.  I guarantee we have young people who would like to buy a home and have their credit pulled to find out that they have ruined their credit for the next few years and they have no idea how that happened?  When you try to explain it to them, you might as well speak a foreign language.  Now it is too late for you and your client.

 This might just save a few kids from making mistakes in their youth that could save them many dollars in the years to come.

It's a business check!

I had settlement the other day, yeah!!  My buyer noticed my commission amount and said, "Wow, that's a nice paycheck."  I think many people don't get how we are compensated; I would guess that more than half think we are employees of our brokers on a salary.   I guess some brokers are set up that way, but not mine.

I have had this said to me from time to time over the years of being an agent.  I tell them, very politely, that it is not a paycheck that I am my own small business and it is an account receivable in order to run my business.  You see, Ms Buyer or Mister as the case may be, I have a full time employee that I pay her and my salary, plus all taxes, FICA, social security and the like.  I also pay rent, pay for supplies, marketing/advertising, and continuing education in order to better serve you, my client.

I compare my real estate business to them going out to dinner with friends.  While your dinner check may be $500.00 for a pretty nice dinner, the owner of the restaurant did shove $ 500.00 into his pocket.  He has to pay rent for the actual building; he bought the food, wine, and paid someone to prepare it.  He also has to pay the waiter/ waitress waiting on you, the electric bill, and water bill and so on.  I work in a similar manner.

For some reason they get that analogy? This is especially effective when I go on listing appointments with sellers. After that, we just keep on going and it is not brought back up again.  I think you must give quality service to your clients and let them understand that you are a professional business person that owns their own business turning the wheels of the economy.

Hope this helps if some of you are having trouble with this on listing appointments.

On the first day, God created the dog and said:

'Sit all day by the door of your house and bark at anyone who comes in or walks past. For this, I will give you a life span of twenty years.'

The dog said: 'That's a long time to be barking. How about only ten years and I'll give you back the other ten?'

So God agreed.

On the second day, God created the monkey and said:

'Entertain people, do tricks, and make them laugh. For this, I'll give you a twenty-year life span.'

The monkey said: 'Monkey tricks for twenty years? That's a pretty long time to perform. How about I give you back ten like the Dog did?'

And God agreed.

On the third day, God created the cow and said:

'You must go into the field with the farmer all day long and suffer under the sun , have calves and give milk to support the farmer's family. For this, I will give you a life span of sixty years.'

The cow said: 'That's kind of a tough life you want me to live for sixty years. How about twenty and I'll give back the other forty?'

And God agreed again.

On the fourth day, God created man and said:

'Eat, sleep, play, marry and enjoy your life. For this, I'll give you twenty years.'

But man said: 'Only twenty years? Could you possibly give me my twenty, the forty the cow gave back, the ten the monkey gave back, and the ten
the dog gave back; that makes eighty, okay?'

'Okay,' said God, 'You asked for it.'

So that is why for our first twenty years we eat, sleep, play and enjoy ourselves. For the next forty years we slave in the sun to support our family. For the next ten years we do monkey tricks to entertain the grandchildren. And for the last ten years we sit on the front porch and bark at everyone.

Life has now been explained to you.

Welcome to Darnestown Maryland.  Darnestown is located in Montgomery County Maryland, a suburb of Washington DC.  Darnestown is not incorporated but instead has a Civic Association.  The Darnestown Civic Association, with its officers and neighbors, regulate, debate and vote on zoning and development issues that affect the Darnestown area.   Even though we are located 20 minutes outside of one of the largest metropolitan areas in the US, it feels like living in a quaint New England Town.

 Darnestown was originally settled in 1750 to Irish and Scottish immigrants.  Click here for the detailed History.

Every season is has it's own beauty.  Even the Snow of the winter is like a postcard.  The spring with all the different blooms, summer spoils us with the beautiful sunsets.  Fall in my backyard is like going to New England on a trip to see the trees. I have several maples and they are breathtaking.

The homes are situated on 2+ acre lots; many families have had, and still do, have horses.  There are several equestrian trails in the area.   I love walking my dog on a nice Sunday morning.  You can hear the church bells toll.  There is just something so nice about that.

Every spring the Smokey Glen Farms sponsors a neighbor BBQ.  Everyone has a blast.  In the fall there is a Hoe Down.  People get all dressed up and have a good time.

My Husband and I play softball on the Darnestown Coed Softball league.  Each neighborhood has a team.  There has to be a minimum of 3 women playing on a team.  The games are played on Sunday afternoons and let me tell you, they can get pretty competitive sometimes.

I count my blessings to be so fortunate to live in such a fabulous place.  If you have thought about moving to the Suburbs of DC, but are enchanted by living in the country, then this is a place for you.

Photo from Darnestown.net site

Years ago my niche market was first time buyers, Now, they have gotten married, have babies and many of them are my move up buyers.  I still have a large base of first timers.  I love them, they soak up all of the information I give to them.  My buyers know what is going on during their transaction because I have educated them as much as I possibly can.

When my buyers come to see me, I do a Buyer Listing Presentation , where I try to touch on many of the main details they are about to encounter.  Part of this is talking about the financing.  Now, I don't do a final prequal, I leave that up to the actual loan officer, but I try to prepare them for some of the "lingo".  I find that most loan officers throw words like ARM, Conforming, Non Conforming, FHA, VA, Purchase Money etc around like everyone just knows what that means?  I am not picking on my lender friends, I am sure you could turn this around on us agents.  I think we get used to our own lingo, we all forget the public might be saying, Huh?  Don't worry, I will get to the agents shortly.

It would be like my Biopharma husband explaining the breakdown of proteins and cells to me in his work, I just get that deer in the headlights look.  it is giving me a headache just thinking about that. 

Anyway, I thought I would address some of the most popular terms I hear with my clients from lenders to clarify, in layman's terms,in English, for the first time home buyer.  These are basic terms and you should consult a loan professional for actual rates and terms of any loan you are considering when purchasing a home.

Note- This is the document you will sign when settling on your home that is the agreement between you and the mortgage company of your exact interest rate, what kind of loan you are getting.  It spells everything out in specific detail of what you will be obligated to pay for your home.

Fixed Rate This means your interest rate will stay the same through out the term of your loan.

ARM- Adjustable Rate Mortgage.  This means that your interest rate is set to be the same for a short period of time.  If you chose a 5 year ARM, for example, the rate will stay the same for 5 years and then at the anniversary, it will adjust based on what the Caps are. After it adjusts in 5 years, your payment can change monthly, semi annually or annually.  Make sure you read the note for the exact terms at settlement.

Caps - the maximum your ARM can change when it is time for the adjustment.  For example, if you have a Fannie Mae loan, you may see 2/6 caps on your note .  This means if your interest rate starts at 6% and at the time of adjustment, it cannot go any higher, or lower, than 2% at a time.  The lowest it could go is 4% and the highest it could go is 8%.  If you never refinanced this loan, the highest interest rate you would have is 12%.  There is probably a minimum interest rate that the loan would be.

Conforming- This is a loan limit of $417,000, currently- you may see that this amount is about to be raised in higher priced areas- we are still waiting for a final number.  When you are borrowing money the rates are typically lower on a loan under the conforming limit.

Non Conforming- This is a loan amount above $417,000.  These loans are also called Jumbo loans. The rates are typically higher on the higher limits.  This is why it is important for the Conforming limit to be raised in the higher priced markets of the country.  This will make it easier for the consumer to have a cheaper mortgage payment.

FHA - Federal Housing Administration.  These are loans made that are insured by the Federal Government.  These loans are great for first time home buyers, although you do not have to be a first time home buyer to qualify.  There is a minimum down payment and the rules, or underwriting guidelines, are relatively easy to work with.

VA Veterans Administration.  You must qualify by having served in the Military for specified lengths of time to qualify.  See the VA's website for details.  This program is great for veterans with liberal guidelines and 100% financing programs.

GFE Good Faith Estimate.  Your lender, I actually do this as an agent - I know some agents don't do this-, is an estimate of how much cash you will need to bring to settlement to purchase your home.  It will also include the estimate of your monthly payment.

These are very basic terms in the loan world.  I hope this helps some of you that are new at the home buying process.  It is not difficult at all and always remember, if you are not sure what the loan officer is  talking about, stop ask again and make sure they explain it to you until you understand.  It is a lot of money, more importantly it is your money,  and it is important that you understand.

I will tell you I am a real estate agent, not a loan officer and find these are some of the more popular terms I hear with my clients.  You should always speak to a qualified lender to clarify and confirm this information.  I feel this if very important- they are handling one of your biggest financial decisions of your life.

I wish you luck in your endeavor of home ownership!!

Do you know who your client is?  Who is getting into your car, meeting you at that vacant house?

I know we discuss this topic from time to time in our office, amongst ourselves and here online.  We have all heard the stories of agents being assaulted, even killed, just doing their job.   For some people they don't think about it- it happens to other people.  Others will be better next time. . .

Our office has put together a committee for new security policies in our office.  It is for all, some men think this does not apply to them, but it does.

I will share with you some of the highlights of our policy.  It is a work in progress, so if you have another idea that would be helpful.

*Photo copy ids for all new clients.  It will be part of the contract file.  The buyer should always come to the office for the first initial meeting.  When going over mandatory disclosures, the agent is to make a photo copy of the persons id.  This applies to all people that come in.  If going to a listing, name, address and phone number are put in the office file.  Time and date.  This will make more work, we have it organized where we think it will work fine.

*All agents to supply copies of their  own personal car registration.  This is so if you go missing then the office has the make model and license to give the police.  You must admit, no one knows that stuff.  It will go into your office file.

*If we have to meet someone at a house we are to call on our cell phone and give our front desk person the make model and license plate of the persons car.  Also a brief description of the person.

*In the event something happens to us and we can get to the phone, we are to call the front desk of our office and us a code word in a sentence.  We have our code word, you make up yours.  If you can, leave your cell phone on.  911 will be called at this point.

*Have a buddy system. My friend and I have done this for years.  When you are going to meet someone at a house whether it be a buyer or seller, tell someone where you are going, name, address, phone.

*When showing houses to someone you don't know stand at the front door of the house.  Do not go into the house.

*Trust your gut! It is more powerful than you think.  Some times you just have to say no.  One sale is not worth your life. I know this sounds weird, a hundred years ago when I was the youngest in the office, my manager had some guy call and ask to have the "youngest female agent" in the office to show him land way out in the country.  My manager called me in, I just told him no that is too weird. You know the signs.  Trust yourself.

This system is going to only be as good as the agents who work it.  I know it seems like a lot for our front desk, but our manger there is the one who is really pushing this for our office.  We will have a clipboard with standard forms to fill out with the information.

Hope some of this is helpful to you.

It is not perfect but a work in progress. 

  I know we put a big emphasis on our Listing Presentations .  They are slick, high quality graphics, power point presentations and the like.  But do you do a "listing presentation" for your buyer?

I really call it a "Buyer Presentation".  But I treat it like a listing presentation.  This is not a "sit down I will prequalify you and run out the door to look at houses" appointment.  It is an in depth qualifying appointment.  When I get an initial phone call from someone who is interested in purchasing a home, our first appointment is CITO, Come Into The Office.  This is from the old Floyd Wickman Sweathogs, if any of you remember that?  I don't call it CITO to them, I just explain that our first appointment will be at my office to go over the details of their purchase.  Then we will look at houses.  If they are serious, they will come. If they don't come, they weren't serious.  I do not got straight to a house and meet some one for a first appointment at a house.

At the appointment, I give them a buyer presentation packetwith all of kinds of stuff in it.  I have local area information, you can call your state capital office and they probably have endless books, booklets, calendars of events - the list goes on and on- and it is free.  You may have to pay some sort of postage.  I include  maps, copies of contracts, high quality color brochures about buying a home, insurance, etc.  I put a personal  brochure , magnet, notepad, calculator, you know the stuff in as well.  It is something you are giving to them with your name all over it.

Now, I use part of that packet as my presentation. 

I explain agency to them and why they need an agent to navigate through the transaction.  At this point, I explain how I get paid.  I have many buyers ask me how that works?  I go through disclosures with them in regard to their rights when buying real estate.  This lets you touch on inspection issues, zoning type things.

I go through closing costs, and an overview of financing.  I tell them they will need to confirm the information with a lender.  I explain a lot of lender terms.

I explain the process from start to finish.  When I have first time home buyers I show them what a HUD-1 looks like.  Everyone talks about the infamous HUD-1.  If they have never bought a house do you think they are going to know what the heck that is?  I tell them it is a lot of information, but as we go through the transaction, they will remember from out initial meeting. 

When I started doing this years ago, I started having almost a 98% turn around of people I meet with that used me as their agent.  My buyers are the most informed, educated, know what to expect buyers out there.  I think it makes my job easier.  I think too many agents just run out the door to the house to show it.  It is also an interview process, just like the seller presentation.

When I have finished the appointment with a potential client, I can tell - especially if they are a first time buyer- they looked so relieved because I have taken the fear of the unknown out of the process.  I think they see it is  as an easier transaction then they thought, therefore making it easier to take the plunge!

I hope this helps!

 Would you put your SSN on the Internet? Of course not!

We are all aware of the hazards of identity theft.  If you have ever known anyone that this has happened to it is devastating in so many ways -  it changes their lives.   We all have to be diligent to protect information and protect our own information.  I do not ask my clients for their SSN anymore.  I don't feel I need them.  The lender needs it and will let me know if the purchaser qualifies or not.  The title company can get the payoff information directly from the seller as well.  I am just one less place that someone could find that information.  Don't give it to doctors offices anymore either.

I have seen the commercials for "Life Lock".  The CEO is handing his SSN out to everyone on the street, with a mobile billboard for everyone to see. His SSN is posted on the Internet.  He says it is that safe?  I looked the website up and it is $99.00 a year.  Apparently you sign up and if someone tries to open an account with your information you are contacted to verify?  I am sure there are other things they do as well.

I am not here to sell or advocate this product, just wondering if anyone knows anything about it?  Do you have it?  Are there  similar companies that the consumers can shop for price/ service?

Thanks,

Audrey

www.Audreyjune.com