Protecting Your Client and Yourself

Several years ago, I assisted an attorney and his girlfriend in finding a home.  She fell in love with a very expensive 5,000+ sq feet home that overlooked Lake Grapevine (in Texas).  This house was also in a wonderful location.  The house was located on a cul-de-sac and only two private streets made up the whole neighborhood.  The houses were all on one side of the street as the lake bordered the other side of the street.  There were also no houses directly behind this house.  It backed to a heavily treed area that was government owned. 

Needless to say they entered into a contract to purchase the home.  My buyers (the attorney and his girlfriend) were told up front that the home had undergone foundation repairs (approximately 47 piers had been place under this home). 

For those not familiar with North Texas, North Texas sits on a natural area of clay.  That means water does not absorb into the soil correctly.  The ground constantly expands and contracts.  If regular watering is not maintained than a home can get extensive foundation problems.  This leads to uneven flooring, separations in doors and windows, and cracking in walls.   Correcting requires piers drilled into the ground under the home.  These peirs are set in the area that the house has shifted to even the home up. Cosmetic repairs are also done to the home to repair cracking in walls and brick. 

Both clients were familiar with North Texas homes.  They also knew of the problems with foundations.  This was not a deterrent in wanting to purchase this home. 

To protect my clients, however, I had them go through several inspections.  They had a general inspector inspect the home.  I had them meet with the company that did the original foundation repairs.  We also had an engineer come out and reevaluate to see if the house needed more foundation repairs.  We then had two other foundation companies come out to the home.  A roofer was sent to make sure the roof had not been affected.  And a contractor came out to evaluate the retaining walls to see if they could be reinforced. 

It was discovered during all this inspecting that additional foundation repairs (6 more piers) were needed.  My clients decided to go ahead and purchase the home as long as the seller paid for these additional repairs.  The sellers agreed.  My clients bought the house. 

Clients need to be able to make informed decisions when purchasing a home.  Some contracts may require you to go above and beyond to help them discover as much as possible.  This not only helps to protect them but yourself as well.  Homes are big investments.  And they can easily lead to big lawsuits. All clients should be advised to get a home inspection.  If they waive this right get it in writing.  In the end be sure to protect your client(s) and yourself.

To buy a house you will need to start meeting with a lender.  Here are the items that you will need during the process.  You will most likely need these items for both the borrower and the co-borrower.

General:

• Picture ID
• Social Security Numbers
• Application Fee (payment)
• Credit Report Fee (payment - reports will be pulled from all three credit agencies)

Income:

• Name, address, phone number, and employment dates of employer(s) for the past 2 years
• Copy of most recent pay stub
• w-2 forms or signed income tax returns, with all schedules for the past 2 years
• Verification of other income (child support, retirement, social security, etc)
• Lease Agreements on any rental properties

Assests:

• Bank statements for the past 3 months
• Investment or retirement account statements for the past 3 months
• Titles of any owned automobiles (including boats, RV’s, and motorcycles)
• List of any major household item(s) of value
• Life insurance policies (face amount, monthly premium, and face value)

Creditors:

• Letters of explanation for any bad debts (for any bankruptcy bring discharge and schedule of creditors)
• Landlords (name and address) for the past 2 years
• Mortgage loans for the past 2 years (proof of sale, or current property address, lender name, lender address, lender phone number, account number, monthly payment, and balance owed)
• Child care expenses (name, address, phone number)

Other (if applicable):

• Divorce decrees, propery settlements, quit claim deeds, and modifications
• VA Form DD214 and Cerfication of Eligibiltiy
• Retirement and Social Security Award Letter

Purchasing a home is a very important decision. The experience should be fun and enjoyable as there are many beautiful homes on the market. Here are some tips to help you find the right home and not get caught up in the moment. You don’t want to move into a home only to find out it really doesn’t fit your needs.

1. Get pre-qualified with a lender. This is really your fist and most important step in selecting a home. If you start looking at homes in the that are worth $300K only to find out a bank will only give you a loan for $200K it is hard to lower your expectations. Knowing what you can afford first will make it easier to find the right home in the long run.
2. Make a list. Before you look make a list of items that are REQUIREMENTS in a home (ie: number of bedrooms, number of living areas, school district, etc). Then make a list of items that are EXTRAS (lot size, number of bathrooms, pool, etc). There are many different features in a home. Some will be necessary while others will be added luxury. A home loaded with amenities is easy to get excited about but you may find that it might not truly meet your needs. It is important to find a home that meets most of your requirements first before worrying about the extras.
3. Take notes on the homes as you go through them. You will find that the more houses you look at the harder it will be to remember them. They will all begin to look the same and you will find that you just don’t remember things about the homes that you wish you did. It is also helpful to keep track of you top 3 favorites throughout the showings. Ask your self with each house where it ranks in the list of houses you looked at. This will help you remember the ones you like and help eliminate the rest. Homes that do not fulfill your list of REQUIREMENTS should also be eliminated.
4. Be aware of the house and surrounding neighborhood. Be aware of the location, the neighborhood, the neighbors, and the house itself. You may love the house but you suddenly notice the neighbor has not maintained his home you may decide that it is not the house for you after all. All these items could easily contribute to a potential for a hard re-sale. If possible eliminate all hard re-sales. If you cannot eliminate the house and the location is less then desirable be prepared for a hard time selling it in the future.
5. Talk to the neighbors. The neighbors are a great way to get a better sense of the community. Meeting the neighbors is also a great way to find out if anyone knows anything about the house that could give you an advantage when putting in your offer. Side Tip: Be sure to ask those neighbors if they know why the owners are moving. And ask what do they think of the neighbors and the neighborhood. These items are not only informative but could help you get a better deal on the home.
6. Drive the route. Drive to work and to the house during different hours of the day. This will give you an idea of what type of traffic you will be facing. It will also help you gauge access to freeways and the community. Be sure the house fits in the parameters of what you need for work commutes and/or any other special needs.
7. See it again. Do another walk through before making an offer. Look at the walls, ceilings, in the closets, walk the exterior, and get a copy of the seller’s disclosure notice (if available in your state). All offers should reflect the house in its present condition. You do not want to make an offer only to realize that you came in too high due to a condition issue that was clearly visible.

We had this cute older couple move to town.  They bought a one-story home.  They decided the house had everything they wanted except wood floors.  So they bought the house and waited to move in until their new flooring could be installed.  Two weeks later the big days arrived.

The couple go over to the house and open the front door and the house immediately smells of gas.  They call us (my real estate partner and I) worried what they should do.  They didn’t go in and they were worried about now owning a house with a gas leak problem.

We tell them they need to call the gas company to determine the leak.  And once we knew what the problem was we could determine what we could be done.

The next day they call us back and tell us the gas company had come out to the house.  The inform us the gas company said that there was NO leak.  Gas had indeed flowed freely into the house but it was from the fireplace.  It was determined that the floor guy, as he crawled on his hands and knees, had bumped the gas switch (match light) on the fireplace with his rear end.  This had caused the gas to flow freely and the house to smell of gas.  It was very enlightening to learn that rear ends could cause more than one kind of gas problem!

For Sale By Owners (FSBO’s) are a great group to prospect.  They want to sell.   The trick is convincing them they need a Real Estate Agent to do it.

The only advantage a For Sale By Owner has is saving the commission.  But statistics show they really don’t save the commission.  They are often on the market longer, sell for less than market value, and did all the work themselves.   Not to mention the legal and safety risks they took to sell it. 

However, Real Estate Agents have lots of advantages.  Agents provide experience for getting through the process smoothly, provide marketing exposure, price it right, sell it in less time, and HAVE the BUYERS.  Acquiring For Sale By Owners, despite the advantages, often takes patience and persistence.  

Here are some steps to help you make FSBO’s your client:

Step One: Find For Sale By Owners

This is the easiest step.  You can look online.  You can drive through neighborhoods.  You can look in the paper.  You can pay for a call sheet of For Sale By Owners (www.landvoice.com).  If you need help filling in missing information (names, address, phone numbers) you can try www.suprapages.com.  Side note: if you call be sure to cross reference all phone numbers against the Do Not Call Registry.  You can not contact any on this list without permission.  Or without the request of a client. 

Step Two:  Make a spreadsheet. 

You will need to create a spreadsheet to keep track of your FSBO contacts.  Your spreadsheet should contain address, name, phone number, week contacted, and how they were contacted.  You should also have a place to add information (IE: list price, notes, etc). 

Step Three:  Make a flyer or resume. 

Make a resume or flyer about you.  Or a flyer about the advantages For Sale By Owners have with using a Real Estate Agent.  The National Association of Realtors (NAR) has a great survey they do every year (NAR Profile of Home Buyers and Sellers) that gives the statistics of For Sale By Owners.  These statistics are a wonderful information source to give to FSBO’s. 

Step Four: Develop a level of comfort. 

There are lots of scripts to help agents get listing from For Sale By Owners.  Your real estate company probably has copies of some.  The key is to find your comfort zone.   Role playing is an excellent way to decide what to say before you get to the door or pick up the phone.  If you can’t find someone to role play with practice in front of a mirror. 

Step Five:  Develop a Plan.

Come up with a plan to set in place.  You need to contact them each week.  You will need to decide how you are going to contact them each week (phone, mail, in person, etc).  And what you are going to say and do once contact is made.  Here is an example plan to help you get started. 

1. Week one: Go to their house. Knock on their door.  Introduce yourself.  Tell them you noticed their lovely home and wondered if it would fit any of your buyers.  Try questions like:  “How much are you selling your home for?”, “How did you arrive at that price?”, “Have you had much luck selling it yourselves?”, “If I brought a buyer would you pay me a commission?”, and ”Why are you selling it?”  Try to get a conversation going to develop a rapport.  Developing a rapport is the goal.  Always be friendly and polite.  You are not there to debate them.  If they were not home leave the flyer you made (see step three) on their front door. 
2. Week two.   Follow up with a phone call.  The goal is to continue to build rapport.  Try questions like:  ”How is it going?”, “Have you had much luck since last week”, “Have you thought about using a real estate agent?”, If yes, “Did you have an agent in mind?”, “What kind of time frame where you trying to sell your house in?”   If you left a flyer you will need to start this conversation by introducing yourself and asking if they got your flyer.  If you do not reach them this week via phone leave them a message.
3. Week Three: Follow up with a hand written card. This card should be a card of thanks.  Thank them for talking to you.  Ask them to keep you in mind if they decide they need an agent.  Also include anything on a personal level you learned  (IE: I hope you are feeling better this week, I hope the painting is going well, etc.)  Be sure to enclose your business card.  If on week two you left a message try calling again.  If no answer leave another message.
4. Week four.  Go back to their house.  Knock on their door.  Take them something helpful (IE a seller’s disclosure notice, warranty brochures, etc).  Explain you were in the area and thought they might find ____ useful.  If they are not home leave the useful item with your business card on their door with a handwritten note (Sorry I missed you. I thought you could use this ____.  And here’s why ___.  Please call me if I can be of help.) 
5. Week five.  ETC.

Step 7 Get Started.

Timing is everything.  Since the majority of For Sale By Owners eventually list with a Real Estate Agent the key is to be in contact when they make that decision.  You may not get them on the first, second, or third contact.  You have no way to know when they will be willing to list with you.  It may take several months.   So remember persistence and patience is the key to making For Sale By Owners your clients.

Honesty is always the best policy.  This is especially true when selling a home.  

Every home has undergone some type of repair.  Some homes are even sold that are in need of repair.  The best thing a homeowner can do is disclose all information about the condition of the home.  Most buyers will discover whatever it is you are trying to hide.  Whether through the nosy neighbor or when they move in.  Problems do not go away just because you move out.  Do not let a $1000 repair lead to a $200,000 lawsuit.  It is just not worth it. 

Most states require sellers to disclose property condition.  In Texas, it is a law that falls under the Texas Property Code.  Also, if you choose not to be honest, do not involve your Real Estate Agent.  Because it is the law, if you tell them a condition problem, they must also disclose it (even if you don’t). 

To give an example of this.  I was handling a sell on a property on a couple who where getting divorced.  The wife would fill something out.  She then would give it to the husband to look over and have him fill in the rest.  They did this with every form including the property condition form (in Texas it is called the Seller’s Disclosure Notice).   They mention to me they are going to put up some blinds.  They proceed to tell me that several windows have broken window seals and the windows have fogged.   Even though they were both involved with the paperwork no one wrote it down on the form.  The problem is, we all KNOW the problem exists.  To hide it is not only dishonest but against the law. 

Long story short, a Real Estate Agent calls me and says she has some clients who want to submit an offer.  I tell her that the house has several broken window seals and the buyers need to take that into consideration.   She adds it to the property condition form and everyone signs it.  The sellers still sell the home and are happy.  And no lawsuit resulted. 

Not only do agents have to obey the law but to have it disclosed up front also helps the seller in negotiations. 

Here is another example.  I was helping a repeat client sell his house.  He had a pool and the house backed to a green way.  The problem was a small section of fence had broke and he had it tied up with a piece of rope.  He disclosed this in the disclosure.  He gets an offer that he accepts.  Then the buyer comes in and inspects.  The house had no problems found during the inspection except the fence and a pool filter.  The buyer decided they want the fence repaired because of the pool and green way along with the pool filter.  I encourage the seller not to do the fence because the buyers offer should have reflected this repair.  I talk to the other agent about it.  I also explain to her how most sellers price their home according to the amount of needed repairs.  She reluctantly agrees with me.  My seller repairs the pool filter.  The house sells and the seller is happy about having saved some money.   

I keep a book holding all my receipts on my rent house and my personal house.  When I go to sell I will give this to the buyer(s) to review.  I personally think this will HELP the sell of my home when the time comes.  The buyer will feel secure in knowing I am honest, and that I maintained our home(s).  I also think that will help to get a better price for these homes. 

So remember, honesty is always the best policy!

I love this time of year. You get to look at the past and decide how to make the future better. A new year is always a great time to evaluate your life.

I have actually taught a couple classes on goal setting and have been to a few goal setting classes myself. And from those discussions I have found that many individuals find goal setting intimidating and/or a waste of time. The biggest reason for those thoughts seemed to be the goals that were set were never accomplished. So in this article I would like to address how to set and accomplish your goals.

In a class I took several years ago the instructor had us write a brag letter to ourselves listing everything that was great about our life and all that we had accomplished that year. When the class was finished we were required to tear up the letter and burn it (or throw it away). It was very hard for many of us to get rid of that letter.;

But that assignment had several purposes. It really made you think about your life. It made you focus on the good. And it made you want to keep those good feelings in your life. And it the year had been short of accomplishments it made you want to start over. And by destroying the letter you were able to focus on the future.

If you have a hard time setting goals then I would recommend that same assignment to you. It will help you focus on the next step which is thinking about the goals you would like to set.

Goals can usually be broken down into the following four sections: Mental, Physical, Financial, and Spiritual. Everyone should try to set a goal in each of these sections. While physical and financial goals are the most common goals set (ie: physical - losing weight and financial - eliminating debt or improving your career) the other two areas area equally as important. Mental goals really give you an opportunity to focus on your self. Mental goals can be about eliminating stress, developing talents, learning something new, etc. But it really helps you focus on what you need in your life. Spiritual is equally important. Spiritual does not necessarily mean religious. Spiritual is really about serving others. Improving relationships is the best way to look at spiritual goals whether improving your relationship with your family, friends, or your God. All these goal categories are important in our lives. These four goal areas are really the core of developing a better you.

Once you have your goals in mind you will need to write them down. Once they are written down you will need to go back and decide how you are going to accomplish that goal.

Here are a couple examples:

Mental: Less Stress
Physical: Loss 10 lbs
Financial: Eliminate Discover Card Bill
Spiritual: Be a better Wife/Parent

Mental HOW TO (Less Stress):
1.) Make a chore chart for my kids to have them help with the house more
2.) Find a good handy man or delegate more repairs to my husband
3.) Eat healthy and exercise
4.) Get kids to bed 30 minutes earlier to make time for my hobbies
5.) Go to bed on time to give myself a feeling of rest the next day

Physical HOW TO (Lose 10 lbs):
1.) Join a gym
2.) Go to the gym M, W, F
3.) Eat healthy
4.) No food past 8pm

Financial HOW TO (Eliminate Credit Card Bill):
1.) Eliminate home phone
2.) Put money that would go to phone toward bill
3.) Pay other extra money when possible

Spiritual HOW TO (Be Better Wife/Mother):
1.) Have a set date night twice a month with spouse
2.) Have a set family night with my children
3.) When doing hobbies at night try to do them in the same room as husband
4.) Have husband go to the gym with you for more together time
5.) Praise children and husband for accomplishments

The last thing I would like to recommend is make your goals visible. This is THE ONLY WAY to accomplish your goals. Otherwise you will forget about them. And don’t be afraid to change the HOW TO steps as needed. Sometimes we find that our steps aren’t helping us achieve our goals. Don’t be afraid to create new steps to get there. Reviewing your goals often will help you stay on track!

Here are a few ideas to help you remember your goals: Tape them to your bathroom mirror. Make a poster collage of your goals and place it on the floor next to your bed so you step on them every morning. Write them in your planner.  Write on the 1st day of every month in your calendar to review your goals.

HAPPY NEW YEAR and enjoy Getting Your Goals in Gear!

In 2001, I was a brand new Realtor.  The office I worked for had a policy that to work on your own you first had to have a trainer on your first two buyers and first two sellers.  That meant that I would make very little money on those first four clients.  I was required to give a large portion of my commission to the trainer for this assistance.

I had listed two houses for sale and had sold a house to a buyer.  I only needed one more house to get out of the training circle and start making money.

So, I get this phone call from this Plumber.  He was looking for a cheap house (no more than $25,000) to buy for his ex-wife and young son.  I wasn’t ral excited about the price but I was determined to get out of the training circle.

I take them to go look at the houses that met the area and price range.  The houses we looked at were falling apart.  Some had been trashed.  Some had water damage.  Some had particle board floors.  Somehow despite all this they find a house that will work.  The house is a living are/kitchen combo, a small bedroom, and a bathroom.  It had about 300 sq ft in the whole house.

I write up the contract and it gets accepted.  The house is under contract for $22,000 ($3,000 less than the list price).  The plumber tries to get a small loan on it.  An appraiser goes out and won’t approve the value for the loan.  The appraiser said the house wasn’t worth $22,000! 

To top it all off the seller wouldn’t lower his price to meet the appraised amount.  The Plumber refused to pay cash for the difference between the appraised amount and the contract amount.  So the loan fell through and the ex-wife and son wound up without a house! 

And yes, I still wound up in the training circle just a little longer than I had hoped.

In conclusion, just because it looks like a cheap house doesn’t mean it is CHEAP enough!

I knew I wanted to be a Real Estate Agent.  But I didn’t know what office to join. 

I asked around and was given the advice to get an office with good training.  I talked to a couple Real Estate teachers and got their opinion.  I was given the name of an office that had good training.  But I only lasted with that company for a year because the commission split was so low and the office did not help me target the area that I wanted to sell in.  So, I decided I needed to switch. 

I left but it cost me.  I had to buy all new marketing materials.  And recreate many myself.  I was also not allowed to take any of my listings with me.  The switch lost me time, clients, and money.

I asked my title company where I could get a better commission split in the area I wanted to sell in.  I was told the names of two.  I had heard bad things about one of them so I went with the other one.  I lasted there for two years.  I lost a client over the management not getting back to me on a special scenerio that I did not know the answer to.  The company was just too large.  They also charged high office fees, I didn’t have an office space, and buyer leads were pretty non-existant.   So once again I decided to switch.   It again lost me time, money, and clients. 

This time I decided not to get any advice or opinions. I would do it the right way.  I decide to interview EVERY office in the area that I thought might be worth working for.  I talked to SIX offices before finding the right fit.  I have been happy now for the past five years.   If I would have gotten it right the first time I would have been able to save myself lots of grief. 

Here are some things you may want to consider when looking for the right office (also refer to my article Getting the Best Office Experience for a list of questions to ask):

• Location - Is the office located in the area you want to sell in?  If not it is probably not the right fit.  What free marketing they offer will probably not be suited for the sellers you are trying to target.  And the chances of you getting buyers for the area you want to work are slim to none.
• Size - Very large companies may not be able to offer new agents the amount of time they need to get started.  And companies that are too small may not be able to assist you with getting buyers.  Keep both those things in mind when talking to different offices. 
• Management - How are they going to assist you?  Are they there to answer questions?  If you join a large company that only has two managers chances all your phone calls may not be returned.  Make sure they have a system in place in case you run into a problem.  Even after hours. 
• Clients - What does the office do to help you get buyers?  If the office does not have a system that you can use to get buyers than it is probably not the right fit.  It usually takes three years before you will start getting referrals, and repeat business.  In the meantime you will need a way to get some business just to get your feet off the ground.
• Training - Do they have a training program to help you get started?  How often is it and what does it cover?  If you have training that is only once a week or doesn’t cover the must haves like contracts, as a new agent, you could be in trouble. 
• Goals - Does the company fit where you see yourself in five years?  Ten years?  If you can’t see yourself there long term than it is probably not the best place to join. 
• Cost- Are the office fees and commission structures going to work when the market is up and down?  Plan for the long term scenario instead of just the short one.  You need to be able to make and keep your money now and in the future. 

Once you found your perfect home you will need to prepare for the big day.  Here is a list to help you! 

Complete a change of address form with the post office four to six weeks (if possible) before moving (can be done online at www.usps.com).  The post office will generally forward mail for up to one year.  You will also need to mail change of address notices to the following:

•  Post Office
• Friends and relatives
• Charge Accounts, credit cards
• Insurance companies (see below)
• Subscriptions (Require 6-8 weeks)
• Organizations which you are a member of
• Driver’s bureau
• Voters Registration officials

Make moving day easy by planning in advance!

• Get boxes for items you plan to pack yourself
• Schedule a moving company
• Notify people who are assisting with the move of the moving day.

Don’t forget to notify your bank before you go!

• Discuss branch options in a new location
• Arrange for check cashing
• Transfer funds
• Close Safety Deposit Box
• Obtain cash or travelers checks for traveling

Contact your insurance companies!

• Cancel home insurance (a day later than the close date just in case)
• Arrange home insurance for new property
• Provide home insurance company with new address so they can mail a refund of any unused portion of your policy
• Be sure to check on your life, auto, health and personal belongings insurance coverage to make sure it is in force while you are in route. 
• Notify all other insurance of address changes.

Visit your dentist, doctor, and pharmacy before you go!

• Transfer prescriptions
• Obtain copies of x-rays, medical records, and vaccination history

Be sure to terminate the following utilities and ask for any refunds on deposits made!  You will also want to arrange new utilities in advance as some require deposits or take several days to turn on.

• Terminate Electric
• Terminate Gas
• Terminate Water
• Terminate Trash
• Terminate Phone
• Terminate Cable Television (return any cable boxes)
• Set up Electric
• Set up Gas
• Set up Water
• Set up Trash
• Set up Phone
• Set up Cable Television

Cancel any home deliveries or services and arrange for service at your new address.

• Newspaper
• Cleaning service
• Lawn service

Make the move on your pets as easy as possible. 

• Consult the vet about the move. 
• Arrange for transport or care for the moving day (travel by air will require special arrangements)
• Obtain vaccinations if shots not up to date
• Purchase any needed pet medications
• Obtain a copy of your pets records
• Ask about state or city regulations and arrange for licenses and/or tags at your new location

Don’t forget these last minute items!

• Empty freezer, plan use of food.
• Clean out refrigerator.  Place charcoal or backing soda to dispel odors.
• Carry your jewelry or use registered mail
• Keep your receipts (check with your accountant on if your move is tax deductible)
• Keep documents (important papers along with any papers you might need to close on your new home)
• Double check closets, drawers, shelves, and attics for any last minute items

Leave old keys, garage door openers, broiler pans, and instruction manuals with the home