What You See Is Not Always What You Get

When I started my Exclusive Buyer Agency, I felt that Buyers were not getting the whole truth when they were shopping for a home, so I made it my mission to give them the truth.
  
As part of that commitment, and because the majority of Martha’s Vineyard buyers are not local, I felt they needed an accurate picture of the properties they were interested in. At that time the photographs that accompanied property listings were, in a word, abysmal.  It was commonly believed, and it still is among some old timers, that more and better photographs were counterproductive to the seller agent’s goal which was to sell real estate.  It just gave potential buyers a reason to reject a property before actually seeing it.

As I set out on my mission, I bought a really good professional camera, flash w/ auxiliary battery pack, and an 11mm wide angle lens, which is my go to lens today.  I started taking what I call “Scratch-n-Sniff” photographs of all properties I previewed.  I move very fast and don't have time for staging, lighting, etc.  All in all, I do a good job of accurately representing the property and explaining the layout.  I experimented with video and I have used Facetime, but I find the way I take my photographs gives my buyer clients a very accurate representation of a property.

Very soon after beginning this process colleagues would want to know what equipment I was using and my technique.  I was happy to share.  What followed was a HUGE improvement in the quality of property listing photographs. I wish I owned stock in Nikon.

And then a competition evolved among the larger offices. Who could take the glitziest photographs? Photoshop and Lightroom became common tools to embellish the photographs to the point that they became distorted and cartoon-like.

Businesses were born and now there are a number of professional real estate photography companies on Martha’s Vineyard offering still, video and drone photography.

I continued doing what I do, staying true to my original mission, keeping it simple stupid (KISS), and doing my best to tell the truth.  Over the last 12 years I have amassed a library of tens of thousands of images all cataloged and easily accessible.

I was reading an article about real estate photography in one of the professional real estate publications I receive and here are some excerpts I want by Buyer readers to think about. A survey by VHT Studios, a professional real estate photography company found that “professional online photographs increased a buyer’s perceived value of a listing by 11.5 percent when compared to listings with descriptions only. Adding an online video tour of the property increased perceived value by 6 percent.”  The article goes on to say that the ‘perceived value’ leads to more interest and multiple offers creating bidding wars which result in higher closing prices.I think another result of overly embellished photographs is buyers who get very upset when they make the effort to see the property and realize the property is not as nice as the photographs they saw.  Actually, one could argue that this is a breach of the REALTOR® Code of Ethics, not to mention state and federal laws protecting consumers from false or misleading advertising.

One of my favorite slogans is “Get What You Want, Not What You Get”. Buyers seek me out and engage me as their Exclusive Buyer Agent because they know I will tell them the truth – the good, the bad and the ugly.  Ask anyone who has worked with SplitRock Real Estate and they will tell you --- the truth.

The End of the World is Coming on August 1st

No, it’s not but the Closing process is going to dramatically change and we still don’t know if it will be for the better. We don’t know what we don’t know, and we probably won’t know until we work with it for a while.  But why go through all of these changes?  The hope is that by making these changes we can avoid the conditions that led to what we painfully remember as the Great Recession.

I was speaking with the Mortgage Sales Manager for Santander Bank and she listed what she says are the stated goals of the ‘New Rule’, also being called the TILA-RESPA Integrated Disclosure (TRID) rule, which is supposed to:

1) Make it easier to use mortgage disclosure forms.

2) Improve Customer understanding – “Know Before You Owe”.

3) Aid in comparison shopping.

4) Prevent surprises at the Closing table.

The bottom line is increased consumer protection.

We’ve all heard of the Dodd–Frank Wall Street Reform and Consumer Protection Act which requires combining the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures together. 

What has been termed the “Rush Closing” will be long gone.  No longer will you receive a Good Faith Estimate (GFE) or a Truth in Lending disclosure. Those two forms have been combined into one Loan Estimate (LE) form.  Here is one of the problems lenders will be faced with: although this is called an “estimate”, lenders will be accountable for the exact charges outlined on the LE and they must be within 10% on many others, or lenders will incur huge fines.

Most of us have seen a HUD-1 Settlement Statement that discloses where the money goes and who gets what in a purchase and sale transaction.  The HUD is prepared by the closing attorney and the buyer gets to review it one day before they close on their new home.  The HUD is going to be replaced by the Closing Disclosure (CD). Although the CD will be similar to the LE, the most important and challenging change will be that the CD must be presented to the buyer a full three days before the closing, and if there are changes during that three day period, you guessed it – the closing could be delayed an additional three days or more.  Attorneys will also be required to provide costs much earlier in the process than before. 

The new Rules will place the burden on all partners at the Closing table – buyers, sellers, real estate licensees, bankers and attorneys.  As you can imagine, any delay in the closing could be very costly to all parties. Imagine what it could mean if during a delay the buyer’s loan rate lock expires?  Or a moving company has to wait to deliver furniture to the buyer’s new home?  Or the seller’s payoff will no longer be any good because it has expired. 

  

In the short run, what does this all mean to you as a potential buyer? It means, if you are considering making a purchase in 2015 and you will require a mortgage, make your purchase decision now and apply for a mortgage before August 1 or be prepared for the process to take a lot longer (~15+ days).  Rest assured there will be bumps in the road while everyone involved in the process goes through OJT while sorting out the bugs in the new “Know before You Owe” package.

Home Inspections are not the Gospel

As you know, Massachusetts is a Buyer Beware state and many areas like Martha’s Vineyard do not require an owner to complete a ‘Seller’s Description of Property’ check list. Matter-of-fact, attorneys will suggest to their seller clients not to fill out the form due to possible liability, even though there are three choices provided for an answer: Yes, No and Unkn.

So what can you do to help you avoid buying a money pit?  The first thing you do is hire the best most through home inspector you can find. Usually, that will be the one the seller agents are not keen on. 

 

Next, you can ask your insurance company for a Comprehensive Loss Underwriting Exchange report, which is known as a CLUE report.  The CLUE report contains a 7 year history of any claims made on the home you are thinking about buying.  

Obviously, many problems in the home are not reported to insurance companies, but this is one more step beyond having a home inspection and those additional inspections that may be triggered by the home inspection, like asbestos, radon, mold, pest infestation, and lead. 

A cautionary from Bill Loden who is the President of the American Society of Home Inspectors is to be careful when buying a home that is or has been ‘flipped’. "Experienced flippers looking to maximize profits at the expense of the buyer will learn how to hide problems from the inspector rather than correct the problems."

Loden goes on to sight examples like, "an air conditioner that has coolant leaks can be charged just before the inspection and may work fine for a couple of weeks." 

Something else a buyer can do, and I always recommend to my clients, is to talk to the neighbors.  They would be the ones to know if there was a flood or a fire in the house. They may know just as much as the owner does and they are more than happy to spill the beans.

Finally, and most importantly is to hire an Exclusive Buyer Agent, one that has a track record for putting their client’s interests before their own.  Don’t take the Agent’s word for how wonderful they are, read their testimonials and ask to speak directly to some of their past and/or present clients.  This is your life, your money and your happiness.  You deserve the best so go out and get it.

Dreamers Dream, Martha's Vineyard Winners Act!

I realized a long time ago that I do not have the heart of a salesman.  I have the heart of a teacher, an advisor and a protector. 

I empathize with anyone who longs to make a buying decision on Martha’s Vineyard, because it is their dream and they know it will be good for them and will enhance their life in ways that almost nothing else will.  When I made the decision it was like immersing myself in the fountain of youth and from that decision many other positive life enhancing events sprung forth.

I find that many people today are scared to make that huge decision so they imagine all the reasons why they cannot or will not have what they want.  For many people that means assuming that they will not be able to qualify for a mortgage or have enough cash for a down payment.

I would like to present some graphics to enhance this conversation.

According to Freddie Mac, approximately 42% of all 30-34 year old potential buyers believe that they need a minimum of 15% to buy a home.

 

 

Relating this to Martha’s Vineyard, if you are purchasing as a first time home buyer or purchasing a residence either as a move up buyer or as a first time home buyer there are local programs allowing a down payment as little as 3% down.

 

I am not a mortgage expert but I am the source to the source.  With the disclaimer that all loans are made according to the specific profile of the applicant, Santander (Formerly Bank of Martha’s Vineyard) has given me this brief summary:

A 30-year fixed rate loan with 95% financing is available for a primary home purchase and is not restricted to first time home buyers.

The Mass Housing Program (MPH) has 97% financing available to first time homebuyers and restricted to low & moderate income families.

FHA has 96.5% financing available on qualifying purchases for both primary purchases and is not restricted to first time home buyers.

Here are a couple of charts to give you something to think about if you are unsure about waiting another year to make your life more complete, or if you are thinking the prices are going to go down significantly.

 (Please note that the interest rates were as of the time this chart was created) 

 

I do believe prices will go down more on Martha’s Vineyard but not in double digits as they have in the past. As soon as the inventory starts to get absorbed, and it will, prices will start to increase and then the path will be clear.  First we will enter a neutral market and then a seller’s market. This is the normal cycle for Real Estate and we go through it about every 15 years.

 

And where do we go from here?

If you want to do more than just dream about Martha’s Vineyard I suggest you start now by getting in touch with a lender and find out what you can comfortably afford. List your ‘wants’ and ‘needs’ and then in the fall you can get out there in the market and be clear, confident and focused.  Be a winner!