About a gazillion years ago a general was being defeated in battle and so like all good generals he buried his treasure in his tent.  Now, apparently this was the Biltmore Estate of tents because his treasure could not be found.  Personally, I think they must have been man-looking in the tent, but I digress from the legend.  So totally stymied by his incredibly clever hiding place, the seekers of the treasure consult the Oracle at Delphi who advises them to turn over every stone.  Seriously, is that the best advice the Oracle has?  Quit man-looking and do real looking?  Sometime later when people still used outhouses, this legend was converted into our lovely overused phrase “leave no stone unturned.”

I don’t know what is in the water, but there is this insane post on another forum about agent responsibilities.   So if a real estate agent here in Salem Oregon tells a buyer “Hey, I think the house has mold,” is that right, wrong, or some shade of quick silver (that’s the shade of gray in the Crayola swirls collection for those of you without kids).     The agent that wrote the post felt it was wrong for the agent to say this and felt that the agent should have called the listing agent to inform them of the potential  mold and NOT share their thoughts with the buyer.

Seriously?  So you are out with a buyer agent who thinks the house might have mold based on some red flag they see, and they aren’t supposed to discuss that with you the buyer, but the listing agent?  Um…yeah.  Chalk one up for demise of the real estate profession with that behavior.

If you decide to work with a real estate agent to help you buy a house, it is OUR JOB, to leave no stone unturned.  Now, I am not aware that Clark Kent has been posing as a Salem Oregon real estate agent which is a possibility because the newer Superman movie wasn’t that good:   I can see Superman needing a second career.  We agents don’t have X-ray vision and can’t see inside walls, but it is our job to look for red flags.  As a buyer, beside having the normal ol’ home inspection you can also do

• Mold inspections
• Radon inspections
• Well flow testing and water quality testing above what the seller is required to do.
• Septic inspections
• Lead paint inspections
• Sewer scopes
• System specific inspections like HVAC, roofing etc.
• Structural engineer inspections.
• Pest inspections

It is my job to help you know which ones might be appropriate for you.  It’s my job to know where the Historic Districts are, where the general flood plains are, landslide hazard areas, sensitive groundwater areas…you get the idea.  I mean isn’t that the point of hiring me say over a dog?  I can read and gain knowledge whereas my cute dog cannot, but he does know how to hide granola bars in our back yard so I can’t find them…hmmm….maybe it was the general’s dog that hid the treasure…

Unless I am totally missing the point of my job, most of you aren’t hiring a buyer agent to hide information from you.  Some of you may want to practice your telepathic skills on your agent so you may not want them to share anything with you, but most of you are hiring us to leave no stone unturned.  So think about that when you go to hire a buyer agent.  Ask them where the flood plains are in Salem Oregon.  Ask them where the landslide areas are.  If they can’t answer those basic  questions, they might be lacking knowledge and at that point that it’s a toss-up about whether or not that buyer agent or the Oracle at Delphi will give you better advice.

Paul Slaybaugh, who is a really good Scottsdale Arizona real estate agent by the way, wrote an interesting blog post about buyer agent bonuses.  He syndicated it to the real estate network ActiveRain and a brouhaha ensued.    I think as a consumer you should take the time to read some of the comments and what some real estate agents across the country think about you knowing what they get paid.

Here’s the truth…well according to me anyway…

Home buyer bonus paid to Salem Oregon real estate agents?

If a real estate agent has agreed to act as a buyer agent for a client, then that client has a right to know how their agent is going to get paid, how much, and for what services. Now real estate agents scream about raising the bar of the quality of real estate agents, but frankly I think some agents need to be hit over the head with the bar because they just don’t get it.

Now before you think there is some massively huge conspiracy going on in real estate, I pulled the WVMLS properties that are offering a buyer agent bonus: 123 of them out of 5, 492.  That’s 2.2% here folks.  It is not a common practice in our area to offer buyer agent bonuses, and I can tell you without running those numbers that a good chunk of those are bank owned properties.   So why should you care?

Well because you are spending a boatload and a half of your money to purchase a property.  The real estate machine will tell buyers that representation is free, but really it is amortized over 30 years and figured into the price of a home. For most people that pick a good buyer agent, it is worth the additional cost.    You know I have a great company attorney who bills me and writes next to it what he did for me.  My doctor bills me along with the services.  I know that consumers get that real estate agents don’t work for free.   I know you are all intelligent people and don’t need to be schmoozed with soundbites.  So what I don’t get is why agents feel compelled to not share how they get paid or what they get paid to provide services to someone that they agreed to represent.

The example I shared in a comment stream

Let’s say an agent is offering a $2,000 bonus +3% on a $200,000 home purchase.  So the buyer agent will make $8,000.  The seller runs their NET sheet and says “I want to net this amount.”  The seller negotiates from a position of net, unless they have a doofus agent who doesn’t know what a net sheet is.  The seller should only care about their bottom line.

So the seller doesn’t really care where that $2,000 goes, as long as it gets the property sold.  On that I totally agree with you…bonus, commission, closing costs…whatever…to the seller it is a tool.

Now, enter the buyer.  The seller won’t budge off their $200k price because they want to net a certain amount and the buyer loves the house so they agree.  NOW, if there was no bonus involved, the seller would have come down to $198,000 or given the buyer $2k in closing costs because it worked with their net numbers.

In this scenario the buyer loses $2,000 and the agent gains, but is that okay if the buyer isn’t aware of it?  I think the only way for a buyer agent to act as a true fiduciary to their client is to disclose any incentives.  I think a buyer has the right to know if their agent, potentially, has a conflict of interest.  If you are buying a house and hire an agent to be your representation, do you think the agent representing you has an ethical obligation to tell you of any financial incentives that they will receive as a result of bringing in a buyer to that property?

Are you one of those?

You know, those people who want to live off-grid, have a cob house here in Salem Oregon, or build your own strawbale instead.  If those words are green music to your ears, I just stumbled on this cool map.

If you want to see who is doing what in serious green living across the US or here in Salem Oregon, check out this little map.  You can add your own house on here and talk about it briefly.  I’m thinking this would be great for those of you interested in this type of home.  Building codes vary and so being able to talk with a local who is doing what you want…that can be seriously valuable.  So…check out natural homes.

I don’t normally write about my listings on this blog.  I figure if you all are looking for a house, you know where to go and reading about a house on my blog probably will only send some readers away…but, I am going to post about one of my listings today.

A little history…

In the late 1800’s Mr. Clint Budd homesteaded land in the Halls Ferry district. He became blind later in life and had no family to care for him.   Mr. Ed Croisan, the county sheriff, was appointed his guardian.  When Mr. Budd died, Mr. Croisan donated 1.5 acres of land to be used for a school.    Before 1917,  the children of Halls Ferry walked to Roberts school. When the land was donated, a one room school was built at Halls Ferry Station.  They called it Riverview then Riverdale, and then later it was changed it to Halls Ferry after a boiler that was supposed to go to Riverside ended up at Riverdale.  Too confusing!

Around 1939, the school needed to expand and a primary room was built from the old woodshed and the one room school house became two.  Later a kitchen, bathrooms, and electricity were added.  I’m glad they added those last two. When the students were merged with Schirle school the building was sold and became the Roberts Community Church.  Now, it is a residence, and is up for sale.

The sellers of this house are such wonderful people that they are allowing the Halls Ferry Class Reunion to rent their home for a few hours for the reunion.  This is just one of those houses that you have to see.  The video is down below, but the grandness of the open living and dining room…which of course was the one room school house, is impressive.  For the history buffs out there, if you know anyone that would love the thought of living in a piece of history…the old Halls Ferry school is up for sale and have them call me.

You can call this house anything but cookie cutter.

In June of 2009, in Oklahoma, a lawsuit of a buyer against a seller and the listing agent was allowed to go to the Oklahoma supreme court.  At issue, the ability of the buyer to sue the seller and the agent for misrepresentation of square footage.

Here in Salem, Oregon, I have been appalled by some agents adding in unfinished basements into square footage in order to make the house seem larger than it is.   Personally, I think that is an easy way to get yourself sued because it is misrepresentation.   Fortunately, it is obvious misrepresentation and just makes real estate agents look like schmucks. What is interesting about this situation in Oklahoma, is that the house was listed at 2,890 sq feet but it really ended up being somewhere between 2200-2400 square feet.  If you can’t walk into a house and see the difference in a 2200 sq foot house vs a 2800 sq foot house, then I suggest you need glasses, but they didn’t ask me and I digress…The buyers purchased the house and then when they saw the appraisal realized how small the house was and sued.

As a result of this lawsuit, one of the local MLS’s in Oklahoma made the decision recently to pull square footage data off the MLS for public viewing and encouraged agents to avoid quoting square footage.  So if you are a buyer in that MLS area and tell an agent, I want at least 2000 sq feet… they have to say “sorry can’t tell you that” or pull data based on that.  What that means for buyers is a lot of wasted time seeing homes that are 3 bed/2 bath and 1,000 sq feet, when what you really want is a 3 bed/2bath home with at least 1,500 sq feet.

I see the next step in real estate is to stop quoting the number of bedrooms because someone might sue because a bedroom in an old house doesn’t have a closet.  Maybe someone will sue an agent because they quoted 3 bathrooms on the MLS,  but it really is not 3 full bathrooms because one only has a shower and not a shower tub combination.  Pulling the square footage data off the MLS is such an unfortunate turn of events.  I think most buyers find this information essential in determining if they want to see a house.  This is truly a step backward for real estate.

I don’t mean to demean the buyers involved in that lawsuit in Oklahoma because they obviously feel deceived and the representation made by the agent and seller sounds dubious.  What I do hope is that all buyers of real estate here in the Salem Oregon area realize is that we have a clause in our OREF contracts, lines 316-318 in fact, that explicitly states

“Neither seller nor any Licensee (s) warrant the square footage of any structure of the size of any land being purchased.  If the square footage or land size is a material consideration, all structures and land should be measured by Buyer prior to signing or should be made an express contingency in this Agreement.”

Square footage is not an exact science, and there are in fact several ways to measure square footage.  I guess what disturbs me most about this lawsuit is that the “defect” was apparent.  It’s not like this was hidden mold, or a zoning change that the seller knew about but didn’t disclose.  The buyer’s could walk in and physically SEE what they were buying.    So dear local buyers…when you walk into a house and it feels “small” just know that it may really be small.  If you walk into a house and it feels “large” it may really be large.  I just encourage all of you to LOOK at what you are buying.  Make your judgments about you physically see.  If you don’t like what you SEE, then you know you aren’t looking at the right house for you.

Most people have heard of HOA’s:  Home Owner’s Associations.  Salem Oregon has some HOA communities but generally speaking they are not a large part of our real estate market like in some parts of the country.  HOA’s are always formed for condo developments and sometimes for single family developments as well.  The local golf club communities such as Creekside Estates,  and Illahe Hills are examples of communities where residents pay HOA dues.  The dues are used to pay for common areas like entry signs or in the case of condos exterior maintenance, clubhouses, etc.

CC&R’s are those pesky rules that tend to send home owners over the edge claiming someone is impinging on their constitutional rights.  Here’s the deal…you have the legal right to restrict yourself, which is exactly what you do when you buy a house with CC&R’s.  Conditions, Covenants and Restrictions tend to bring fear or joy into the heart of a homeowner.  The important thing to remember about CC&R’s is that they run with the land. If you don’t want to follow the rules, don’t buy a house that has them.  We have many neighborhoods that don’t have them in Salem so you have choices.

NA’s are neighborhood associations. Neighborhood associations are not rules that are part of the deed like CC&R”s are.  Salem and Keizer both have neighborhood associations.  The purpose of these is for citizens of our cities to get together once a month and find out what is occurring in the city of Salem that will impact those neighborhoods directly.    When problems arise such as speeding along residential streets, speed bumps are discussed.  Is there a development going in nearby? Attend these meetings and find out.  This is a great opportunity for residents of the city to talk with the city councilors.

Often times as a real estate agents I throw out these terms and forget that not everyone knows what they mean.  This is a just a brief introduction to what these terms mean in our city.

Paul Slaybaugh, an excellent Scottsdale Arizona real estate agent, wrote a great blog post today.  I wanted to comment on it because I have talked about this issue so many times in the past few years.

In the world of real estate there seems to be this polarization occurring, agents like myself and John Kirk, that take due diligence for our clients very seriously and those that step out of the transaction as much as possible.  I guess I figure that if I don’t have an opinions, advice or knowledge to share with you, I’m kind of worthless.  Why hire me, if all I have to offer a client is knowledge of how to open a door and announce “here’s the kitchen!”   I really think most consumers can figure out that the counters are Formica.  What I am being paid for is to learn and study the things that Salem Oregon area home buyers and sellers just don’t have the time to learn.

In Paul’s post he wrote ” No businessman walks around looking for a financial colonic, but the very real potential for having his inner sanctum legally hollowed out exists in each and every transaction he undertakes.  As such, it has become customary for many to simply ward off as much exposure as possible by abstaining from any form of guidance that can later be labeled  malfeasance or conflict of interest.  Heaven knows, if the contractor you recommend for repairs screws the electrical pooch, any rabid attorney worth his salt will gleefully encourage the client to pursue the deep pocketed brokerage (and agent by proxy) as well as the contractor for damages.  Why put yourself on the line by recommending a home inspector when the potential for blow-back on a balky A/C unit can put you directly in the cross hairs?  For that matter, why even bother to attend the inspection if the due diligence can be misconstrued for interference?”

Paul is quite colorful in his writing and an incredible blogger, by the way.  Don’t tell him I said so or it’ll make his ego grow even larger   What I do agree with is this…real estate transactions by nature can be difficult and risky.  There is risk in every transaction, and some agents have chosen to “lessen” that risk by recommending three lenders, recommending three home inspectors, not attending home inspections, etc.  I don’t think people hire me to step out of the transaction; they hire me to step into it and become intensely involved in the details of it. With that…comes risk.  Risk that a contractor I recommend does something wrong; risk that a home inspector I use misses something; and risk that I miss something in my due diligence. I have had contractors I recommend do a horrible job for my clients.  I scratch them off my list; I learn;  and I move on.

But here’s the deal.  Life is filled with risk and I cannot control everything, as hard as I try sometimes.   I also firmly believe in the intelligence of the consumer.  You all know when I am being honest and acting in your best interest.  You all know I can’t see inside walls so there might be something lurking there in your house.  You all know that there is risk in everything we do, even driving to the grocery store.  All you ask, is that I study, learn, and share my knowledge with you so that YOU can make the best choice for you.   The last thing you want from me is to abstain from participating in your real estate transaction because you might sue me.

I, like Paul, think that the best defense to preventing a lawsuit, is to have a good offense.  I don’t hide behind the fear of a lawsuit as an excuse to not step into a transaction; to not ask the questions that need to be asked for your benefit.  If I get sued, I get sued.  I am a firm believer in the golden rule and run my business with that in mind.  I can go to bed every night knowing I did my best for my clients that day.   I prefer to insert myself into the transaction offer my opinions and make recommendations because in the end,  it’s how I would want to be treated, if I was you.

Anyone involved with the world of real estate including little ol’ Salem Oregon,  knows that lending is a pain in the behind for many folks.  Working with good mortgage brokers is essential these days or buyer risk spending a lot of money on home inspections and appraisals only to have deals fall through.

I know I want my buyers to talk to a good lender and have their ducks in a row before house hunting. I can’t imagine anything worse than falling in love with a house only to find out you can’t get it.  If you are a first time home buyer, you need to get your ducks in a row BEFORE you start to hunt for homes.  Sometimes you have things on your credit report that don’t really belong to you that impact your credit.

If you need to know who some good local mortgage brokers are, just shoot me an email and I’ll give you some names, but here is what you want to do to start getting ready…

• If you have recently moved here from another state get your Oregon driver’s license and make sure it has a current address.
• Social Security Card. Yes, they will request your social security number and run them.  If you don’t have a real social security number then it will be found out during this process when they are “unable to verify” the social.  My seller got some earnest money on that buyer snafu.  Don’t lie on mortgage applications.  That’s fraud.
• Pay stubs. If you normally send these to the recycling bin, don’t.  You will need them.
• Bank Statements. You will need copies of a recent bank statement so same deal, don’t send these to the round file.
• Work. I know this seems like an odd one, but you need to have a solid work history with no to few gaps in jobs.  FHA especially wants to see a solid two year work history.
• Pay your rent. You need to have at least one year rental history for most loans and they’ll want proof.  So pay by check so you have proof of payment.

In case you were wondering how to  shoot yourself in the foot during the home buying process and lose a house…

• Quit your job. People naturally get laid off during the home buying process, but for pete’s sake (oh man, I just sounded like my mother…)  please don’t voluntarily quit your job.  A buyer did this to one of my seller clients one time and it delayed the process for three weeks.  You can’t get a loan without a job.  Seriously they stopped doing that a couple of years ago now…Lenders want at least one paycheck from your new job so DON’T QUIT if you want a house.
• Forget to show me the money. Okay it’s weird for people to suddenly dump a large sum of money in their checking account outside normal pay.  If you transfer funds from an investment account just keep the paper trail. Banks don’t want to give buyers loans based on drug money.  Paper trails=happy underwriters.
• Buy things. I can’t tell you how many sad stories I hear about people who bought some new furniture for their “new” house only to find out that financing the furniture changed their debt to income ratio and they no longer qualified for the house.  Seriously…don’t buy anything extra during the home buying process.

Buying a house can be stressful with all of the crazy lending changes.  Having a good mortgage broker and a good Salem Oregon real estate agent (cough, cough…we are talking about me here, you know) working with you can help to minimize the stress in this crazy real estate environment.

Okay I’ve been asked a lot of questions about the home buyer tax credit lately by some of my Salem Oregon clients.  I saw this really great summary video and wanted to share it with you.

This explains the basics of the tax credit. Now some of you have unique situations that I just don’t have answers for. The IRS has their news release, which I don’t find particularly helpful, but you can read that as well.

The most important aspect for those that qualify is to get under contract by April 30, 2010.

I participate on a couple of real estate forums online.  There is an interesting thread on one of them about lessons learned in real estate.  This is a national forum, not just local Salem Oregon folks.

What were consumers regrets when buying a house?  I thought it was an interesting topic and for you first time home buyers out there…here are a few words from your peers on “if I had to do it again…”

• Don’t overestimate your skills or time.
• Only buy what you can afford.  Buy less than what banks say you can afford.
• Don’t be arrogant or rude in negotiations.
• Don’t believe the MLS listings.  Many aren’t correct.
• If you haggle over the last 1%, you’ll lose out to the person who doesn’t.
• Visit the neighborhood at 10pm on a weekend night.
• A good real estate agent is priceless and agents are not all created equal.
• Get inspections on new construction homes.  New doesn’t mean problem free.
• Get everything in writing.
• There is always a better house so be thankful for what you have.
• Don’t get stuck on the small things and lose a house.
• Don’t cheap out on home inspections.
• If a listing agent says your house will sell quickly at list price, run the other way.
• Be cautious of the seller’s disclosure statements.
• Location is everything.

I think it is always interesting to hear what consumers have to say about their real estate experiences.  Trying to prepare Salem Oregon area home buyers for the process can be difficult because some have had such a negative experience in that past, and some are first time home buyers and we agents spend a lot of time educating them about what they need to know.

So for those of you thinking about diving into our local market…here is a brief glimpse into the real estate school of hard knocks.