So Now What? On The Way To Closing...

A funny thing happened on the way to closing...

I have a buyer client, I'm going to call her Daphne. Daphne wants to have a handle on every single part of the house buying process. She wants to KNOW what's going to happen next so she can make plans. She phones frequently, saying things like, "I was wondering..." or "We were thinking..." and when I tell her what I know, which is often, "I don't know." she ponders. When I try to explain, because I don't like to not know, after all I'm getting paid here for what I know, when I explain as best I'm able, she responds with a "But why?" or "That doesn't make any sense."

And she's right. It doesn't make any sense. Underwriting, in preparing to turn her loan over to USDA, (oh yeah, it would be USDA and she's a real first time home buyer - as opposed to a first time in three years home buyer - and it's a foreclosure, which means we have a seller who won't fix every single little thing). Every stip (short for stipulation) has brought forth moans, from all of us. Underwriters seem to live for the sighs, sort of like Dementors in the Potter stories feed on emotion,  but that's beside the point and patently untrue, although I do wonder if they spend weekends studying stips like - if there is any termite damage we'll need a structural letter from a licensed contractor. And really, in North Carolina, South Carolina, or Georgia  is there any house over 15 that has NEVER had termite damage? We could have just ordered the structural letter along with the pest inspection, but we didn't know for sure they were going to ask for it, did we?

Of course we didn't. They don't ALWAYS ask for everything, however, given the terms, if there's any wood destroying damage on the pest inspection report and this will be required, they will probably ask for a structural letter. It's probably a good indicator to go ahead and plan for said structural letter while a contractor is under the house. "But why?"

"Um, do you really want to pay someone to go under the house again, when we know pretty surely that there will be termite damage?"

"But we don't KNOW, KNOW."

"We're in North Carolina it's a pretty sure bet."

"I was thinking we'd just wait until we know."

"Fine."

I agree, it is frustrating, it's frustrating for the mortgage officer, for the REALTOR®, and especially for the client who is looking to these experts for guidance. I mean to Janice, I mean Daphne, this is one of the biggest decisions of her life, she's investing every penny of her hard earned savings into this home. This home will provide not only a physical shelter, but a financial shelter that will protect her well into the future. It's important to her to know if she's going to make it down the river, and not worry that she's going to end up in the rocks, several hundred dollars poorer.

I get that. So, this morning I'm reading Seth Godin's Blog Post The River Guide and the Rapids and have an ah, ha moment, and it makes sense to me, because we don't know everything that's going to happen on the way to the closing table. We are steering the client's closing and we've got to weave and bob with the current. We don't know what underwriting is going to throw at us. Now we do know, or we should know where the big rocks lie. In an older home there will be stips for windows, there will be stips about heating, there will be stips about electrical, there will be stips about any safety issue. Which ones will be enforced?

USDA has some pretty stringent guidelines for the applicant. http://www.rurdev.usda.gov/SupportDocuments/CA-SFH-GRHUnderwritingGuide.pdf This is where a good mortgage broker carries a large part of the closing.

And USDA has some pretty stringent guidelines for the house
http://www.rurdev.usda.gov/id/5-0_existing.pdf  which is optional. Optional?

And therein lies the rub. If you go by the letter of the law, and underwriting tries, really they do, then you're just not going to find a house that's suitable. You have a leak? They may require that it be fixed. You have a broken heat pump? They may require that it be fixed. You have a.... they may, on every single item, but they may not. And we can not KNOW with any certainty what they're going to pick up. One thing we know,is if the house is in bad condition it will NOT qualify and we will NOT let you apply for a USDA loan in the first place. If the house or the applicant do not qualify. All bets are OFF and we won't even start.

For a loan, the house AND the applicant must qualify and then, for the low interest rate, the 100% financing, assuming the house appraises, it's worth a shot.

But I can't know what underwriting is going to throw at us, just like I can't know about the low hanging branch ahead on the river where last night's storm toppled a tree. This month I heard about a loan that underwriting declined because the appraiser wouldn't write a letter stipulating that the land could not be subdivided - in Rutherford County any land joining a paved road can be subdivided, although you can't sell a part of your property if there's a lien against it without getting a release from the lien holder - so I miss the point of declining that loan. Poor buyers, paid for the appraisal, the home inspection, the survey... and then underwriting turns down the loan because the appraiser won't stipulate that the property can not be subdivided, which he can't because he's in Rutherford County!

Some of these stips don't make sense to me either. I had one loan denied at the eleventh hour because there was a building on the property. The previous owner used it for a home-based business and had a mailbox for it. Underwriting declared, after an appraisal, a home inspection, and a survey, three days before closing, that they wouldn't loan on the house because it had two addresses, because it wasn't a residence it was an investment property and they couldn't make a residential loan on an investment property. In this case all was not lost. My buyer had some connections and he pulled some strings and it came down from on high that this loan would be approved. And it was.

I could not have done that for him. There are things on the way to closing that the mortgage broker must do, that the appraiser must do, that the home inspector must do, that the title attorney must do, that the REALTOR® must do, and that the CLIENTS (buyer and seller) must do.

So what have we learned? What can we take from this? There are a few things we know for sure, there will be setbacks, and bumps and weird stips from underwriting, as sure as there will be blue skies, mold, and termites in North Carolina. And we should bear in mind as my writer friend, Brian Rathbone said on Facebook this week, "It's always darkest right before the dragon lands on you."

Relax, there are no dragons, it's a metaphor. Underwriting? Yeah, they're real, and we can expect them to toss us some stips on the way to closing, and they will, oh yes, they surely will. But you can relax, I've been running this boat for a while now, and I have friends who have been guiding this river for many, many years. If we encounter something strange I'll look into it. Trust that we'll steer around the large rocks, I know they will be in our path. When the unexpected arises, we'll steer around it. And if a hippo rises up out of the river and capsizes our boat? All bets are off. We'll make for shore with as much dignity as we can manage. After all, we didn't expect a hippo to rise out of the water in Rutherford County. Underwriting stips can be that surprising.

So why didn't I tell you all of this in the first place? River guides don't go over every rock, rill, eddy and rapid. They just cover the big rapids. Remember, we get paid to get you safely down the river, and even we won't know every difficulty until we get to it. That's why you want experienced guides. And in case you don't know - if we don't get you down the river safely - if we don't bring you to the closing table - we don't get paid. Not one red cent. We REALTORS® are self employed contractors, we work on 100% commission. So even if I wasn't an honest, loyal, hardworking, salesman, rest assured, I am invested in this transaction, I am committed, I am in the boat, too and I am always working for you.

KS's Seller's Newsletter, May 2013

Hi There,

You haven’t heard from me lately because all of a sudden I’m in a hot market, well… the bottom of the market is hot. The question is will the heat rising from the bottom bubble to the top? It’s inevitable, isn’t it?

By now, you know I’m an optimist…

And then this:

The Ridge at South Mountain is in Foreclosure

 April 30, 2013, and a Notice of Foreclosure takes an entire page of the Daily Courier from top to bottom. All of the unsold land, in The Ridge at South Mountain, a very fine development, will be sold on the courthouse steps. And what will this do to Rutherford County? It depends. It depends on who buys the property, if another developer picks it up to hold for resale, or if the bank sells the lots piecemeal, and that too, depends, on whether they release the lots onto the market slowly, two or three at a time, or dump all of the parcels at once. Will they hold them in inventory for a few years or release them right away? That remains to be seen. And there’s nothing to be done for it, so I’ll keep on keeping on.

In the interim, the bottom of the market is hot. Properties priced lower than the market value are selling. People are shopping for deals and they’re finding some. Transactions have become more difficult as banks lay on more and sometimes onerous guidelines. A lot of deals are falling apart on the way to the closing table and some right at the closing table. But I am in the business of helping people buy and sell real estate and except for keeping an eye on the weather, there’s not much I can do about all that, so I am here, taking fresh pictures, enhancing properties on the internet, and doing what I can do to market the properties I have listed. And toward that end I am playing with the big boys in the industry, listing aggregate giants, Zillow, Trulia, Homes.com and to a lesser extent Realtor.com. I have a paid subscription to Zillow advertising my services and I’m getting calls. As more people begin their search on the internet, they say 90%, it makes playing with the big boys worth while.

There are still problems with geocoding in the rural areas. I have your latitudes and longitudes in the MLS and on file, but sometimes I sit in the living room on Sunday night with my laptop manually mapping your properties so they’ll show up in mobile searches in the right places. So far there’s no app for that.

Someone said at our board meeting that I must have a lot of free time to attend to all of this technical stuff. Not really. We all have 1440 minutes in a day. Last night around 10 pm I was online figuring out how to hook a dual monitor system to the newest computer in my arsenal and this morning I was here before 6 am writing to you. I have to go to the office today for a business meeting and to preview homes we have listed. My new housekeeper asked me how I could work at this pace, and I told her, half the time I’m playing. I work awfully hard to be able to play at this level. Yesterday morning I was up on Cherry Mountain to talk with two potential sellers, and what a gorgeous spring day it was! Iris and some wild azaleas are blooming; the mountain laurel is covered with buds. There were ducks, and a pony, and dogs, both large and small, there were chickens and running streams and springs and lovely people. I made some new friends and came home with a dozen fresh eggs! It wasn’t like work at all – it was like a mini-vacation. So, yeah, I do put in some awkward hours, but I enjoy it, and that, as Robert Frost said, that makes all the difference.

Karen D McCall, Broker, e-PRO®
4 Seasons Homes and Land, Inc

Mobile 828 429-0251 Direct or Text
GVH Office 828 245-9003
KDMcCall.com

PS  Friends, I haven’t ever asked for you to recommend me to your friends and family members, because I know most of you live far away, but I’m going to ask you on the behalf of the buyers and sellers I may, through you, be able to help. If you run across my profile on Trulia or Zillow (and you can do that by visiting the website and plugging in the zip code here, 28018) and review my service, it would help me, and consequently the higher ranking in the site will generate more phone calls, which will in turn help you. Thanks.

Remodeling Cost Vs Value the National Data Report 2013

It's here and I've found it the 2013 cost versus value report. This comprehensive report by Remodeling Magazine looks at 35 remodeling projects and runs a value proposition. Thinking of doing a little remodeling to inprove your property value? See the Cost Versus Value 2013 Report. Since our area is not listed I picked Charlotte and figure Gastonia is about as close as I can get unless this link will pull in the South Atlantic Region.  You will note that you never recover 100% of the cost of the remodel nor do you increase your resale value enough to justify spending money on a remodel project unless your house is not going to sell without it. You'll find this site informative and enlightening.

A Personal Note

One of my favorite sayings is, "If you keep doing what you're doing, you'll keep getting what you're getting." and I say it a lot lately. You know I decided to leave the franchise I was with and I made the change, carefully, and prayerfully. I choose to hang my license with a company rather than start my own, because I am a great agent, but I am not interested in the day to day business of running a firm. I find it paradoxically deadly dull or terrifying, always one or the other. 4 Seasons Homes and Land, Inc, a small local upstart, with super talent is a good fit for me with my renegade marketing ideas.

The sheer work of changing firms bogged me down for much of March, taking care of my current listings (of which every single one made the move with me - thank you for the vote of confidence). I didn't take on any new business, but in April my market started selling, and so I've been working as hard and as fast as possible for weeks on end, but it's exciting! I've increased my business, which means properties I've listed are selling and I have buyers and together we're riding this comeback wave. This spring I'm taking on a few new listings.

Is this really a comeback? That remains to be seen, and I'll tell you the prices are staying low. More properties are selling, but they're selling for less than they have in the twelve years I've been in the business. But as people press in to grab up the bargains, the tide will rise, and so will the prices. The real estate market is always driven by supply and demand.

But I said this was personal, so let me digress,this business allows me the opportunity to create a win-win. Twice this week I've sat at the closing table and gotten huge Thank Yous from my buyers and from my sellers and the closing attorney and let me tell you - when I have smiles all around the closing table, that makes it all worthwhile. Taking things from contract to closing is harder now than ever, I have Joe Stumpf's list, with 88 problems that might arise during the closing process and the last four problems I've had aren't on his list. So working for that pay check, the one that might or might not be coming makes the payoff in dollars and cents less attractive than ever. Realtors who came into the business with a pure profit motive have gotten out. I believe you've got to love this business to be successful at it. I help people to sell property that isn't working for them anymore and I help people find a place to call, home.

I was fortunate to work for The Real Estate Book for nearly 3 years during the transition period when the market was so unstable and I learned a few things besides how to take a good real estate picture. I learned how to showcase listings in print and online, I learned how to market property far and beyond the MLS. I met nearly every single Realtor in Polk and Rutherford Counties and drafted marketing material and wrote ad copy for quite a few. This was invaluable experience, and as the print ad business began to dwindle I dipped my toes back into real estate and rediscovering how much I love the business. This year, finding my passion and creative energy at an all time high, I have immersed myself whole heartily.

Anyone who knows me knows I tend to stay busy. I get up early and get creative, it's 7:30 on a Saturday morning and I've been up a couple of hours. But I'm playing, and I am living the good life. Yesterday morning I grabbed the Ladybug 2,000 (my new Sport Vacuum cleaner with the shoulder strap) and ran up on the mountain to spiff up a cabin for a showing. While I was there I put up one of my new signs, set the heat pump to 85º, spiffed up the cards agents have left on the counters, left some brand new flyers on the counter and made sure we were ready to show. It was fun, being out on the mountain early in the morning, seeing the wild blueberry bushes that are sprouting all around the tree where my sign is. What fun! Then I rushed home to put together my closing package and to burn Transaction CD's for my buyer and my seller and my office, then I went to town to close, by the office to take my closing packages in, and left there for a little shopping. Came home in time to build most of a CMA and met clients on Cherry Mountain at 6. I visited with them until 10 then came home and fell into bed happy as can be. Today, I don't have to work this morning, but I want to! This weekend I am answering the office phones and so I'm spending some time on this chilly morning blogging, listening to some great training videos, and catching up with the work left on my desk. I am enjoying every day, very much, Namaste and wow  -- God is good.

That's it for now, it's a beautiful day here in Golden Valley, I'm having a good time and I hope you are, too.

Then and Now -- with Real Estate Coach Matthew Ferrara