Find out about Real Estate on the Monterey Peninsula

Well I lost an escrow this week. I started kicking myself because I’ve had such an excellent record of closing this past year. As soon as I began talking to other agents about it, I realized I’m not the only one struggling to get buyers through the loan process.

Banks and asset management companies are going through some tremendous changes right now. Remember all those bank mergers last year? Well the big banks are just now starting to realign the banks they bought. Departments are being phased out, managers are being replaced and companies are going through the inevitable "downsizing". All of this adds up to chaos and confusion for real estate agents trying to buy and sell their properties.

Patience is the buzz word in this situation. Escrows are going to take longer. Some deals that should be slam dunks are going to crash out. I’m educating my buyers that escrows are going to be more bumpier than normal. The winners will be the buyers who have the fortitude to ride out this storm and stay the course.

• Several new laws are coming into effect in 2009 that affect short sales transaction. Agents need to help their clients by knowing the rules and using contract language to protect them. Failure to do so could even lead to an Agent having their license suspended or revoked!

  S.B. 1737 says the Dept of Real Estate can discipline by suspending or revoking a licensee for generating an inaccurate  Broker Price Opinion in order to acquire a financial or business advantage, such as obtaining a listing agreement or manipulating a lender in the short sale process.

  H.R. 1424 says that the tax exemption for debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 has been extended to December 31, 2012. It was set to expire on December 31, 2009. This act means that the reduction in mortgage payoff is not income taxable to the seller. Howver, it may cause an increase in gain on the sale resulting in Capital Gains Tax. Sellers are encouraged to talk with their CPA to understand the tax implications of a short sale.

  Agents listing a short sale must make use of the "Short Sale Addendum" and the listing agent should put in writing "Seller to obtain written statement from lender (or lenders plural) that lender shall waive and hold Seller harmless for the amount of reduction in Seller’s payoff of lender’s note."

  It is imperative that the Seller receive a written statement that the reduction amount of the debt on the Note is forgiven as set forth above. Without this written statement from the Lender, the Seller could continue to be liable for the portion of the Note that is not paid off from the sale proceeds.

"How is the land, is it fat or lean? Are there trees in it or not? Make an effort then to get some of the fruit of the land." Now the time was the time of the first ripe grapes. Numbers 13:20

This passage from scripture captures the essence of prospective. Moses had sent the spies out to the promised land and he was interested in their report. Only two had a positive report, Caleb and Joshua. During this time of great financial upheaval, I ask myself  "how is the land, is it fat or lean?"

My response to this question is going to set my course to either a successful and profitable real estate career, or one of failure and  disillusionment. Fear is rampant in the marketplace. Buyers are afraid to get involved in a purchase and sellers are worried they can’t sell. Throw in lenders who are overly cautious, and you have the perfect recipe for inertia.

How is this inertia overcome? By education and understanding. Buyers need to be shown why it’s a good time to buy. Sellers need to be shown how they can have a successful outcome to their sale. Lenders need to be shown the path to profitability.

All of this will take courage, faith and conviction. Those start with me, the real estate agent. If I’m missing just one of those three, I can’t possibly expect a buyer, seller or lender to trust my judgment or advice. So I must constantly ask "where is the opportunity?" People will trust me if I am courageous, faithful and act out of conviction. I believe I can change their lives in a positive way, but they need to see it from my prospective.

In my market, I can’t see lower interest rates or much lower home prices. It’s the best time I’ve ever seen to get into a real estate transaction, but will the buyer and seller have the courage to do it? Will I have the conviction to educate them on it? Will all of us have the faith to move forward and and experience success?

Lately I’ve been doing a lot of home buyer seminars. I enjoy teaching people how the process works and it’s great to give insights to first time home buyers. On the other hand, it makes me think, why don’t more people take the time to get educated on what to expect as a home owner?

How many people would buy a car without first learning how to drive? That would be reckless, yet time and again people will go out and make the single biggest investment of their entire life without any education into what they are doing. Down the road they’ll be wondering "what the heck did I get myself into?"

In this day of internet access, it’s easy to do searches and gather info, but how are you to know what info is correct and what info is incorrect? Because there is so MUCH info out there, it can get confusing and some stuff that is conjecture is passed off as gospel. People "pretend" to be experts all the time.

Misinformation is every bit as dangerous as uneducated. Sometimes more so, because buyers are so sure they know what they are doing. Imagine your neighbor offering to teach you how to drive that new car you just bought.

Neighbor: I saw a movie once where they drove a car. I’ll tell you what I remember them doing and you’ll be fine. Let’s head over to the freeway and practice.

Yikes! That would be nuts.Yet all the time I talk with potential home owners who were "educated" by fellow renters who never once owned a home (or worse, homeowners who are going through foreclosure and they are instructing first time buyers on how to buy in such a way that could lead THEM to end up in foreclosure!)

Not every Realtor or Broker is an expert, but they do have experience and training. Use that. Ask questions, take classes, read books. Take the time to understand what you are doing and how it would benefit you. Trust me, the education you get now will pay off in a big way later on.