FSBO’s beware of the latest scam

It just seems so easy to sell your home yourself and save those huge real estate commissions. Or just pay up front for one of those listing services that promise you a quick sale. Well, it sure is a tough market here on the Treasure Coast as the latest numbers indicate that the average time on the market for a home or condo that’s being sold by owner is now over 6 years. But, the choice is up the owner, and I can definitely sympathize with the desire to save some money in this time of declining values.

For your safety and security, I’m writing this article to alert you to a recent increase of a technique used by unscrupulous investors to scam the unrepresented seller and pick up properties for much less than market value.

The scam starts with the prospective buyer making a close to asking price cash offer on a Florida as is contract, very often on a relatively quick closing date. The seller/owner is happy and buys a new home and/or makes his moving arrangements. Then the problems begin. The buyer asks for an extension for the inspection, because his inspector was unavailable for some reason. When the inspection finally takes place, all sorts of problems are discovered and the offer is reduced significantly to account for these problems.

Now, the owner/seller has the option of cancelling the contract or going through with it at a greatly reduced price. It doesn’t matter to the buyer, he just wants to get the property at below market value and then flip it for a higher price. If the seller has moved and/or bought a new home, he’s facing a very large expense if he cancels the contract. These less than scrupulous buyers are counting on the seller resigning himself to sell the property at below market value just to get out of this mess.

All this can be prevented by knowledge of contracts and Florida (or your particular state) standards of real estate transaction. A professional realtor or real estate attorney can prevent these sort of problems from happening.

If you have any questions or comments please contact me here. Or, feel free to browse my websites for valuable real estate information at  www.GabeSanders.com.

Withdraw or expire your Real Estate Listing – Be Careful !

Are you unhappy with your agent? Have you changed your mind and want to take your property off the market? Be careful how you do it. Here on the Treasure Coast of FL, in Martin County and Port St. Lucie Florida, we adhere to Florida common real estate practice, where a withdrawn listing normally has some very stringent obligations on the part of the seller to his listing broker.

If you just change your mind and decide not to sell your property this is not a problem, but if you plan to re-list or attempt to sell the home yourself, you may be in for surprises. Most of Florida’s standard listing agreements have a withdrawal clause that obligates the seller to pay the agreed commission to the broker for a period (often 180 days) from the time the original listing was scheduled to expire – this is called the ‘protection period’.

So, if you withdrew your listing 1 month into a 6 month listing and 10 months later a friend or acquaintance agreed to buy your home, you would still be obligated to pay the commission to your previous listing broker. Worse than this scenario, you re-list with another broker who sells your home quickly. Now you have to pay the commission twice, to your new broker and your old broker. It can be a very expensive mistake!

In fairness, a good reputable agent taking your listing should advise you of this possibility if he/she finds out that your listing has been previously withdrawn and the Realtor code of ethics will prevent him/her from exposing you to this type of jeopardy.

The easy solution for the property owner/seller is not to withdraw the listing, but to ask the broker to expire the listing early. This will relieve you of obligations from the protection period of a withdrawal. Should a buyer come to you as a result of efforts from the original listing, you will still have an obligation to pay a commission. If you procure your own buyer, there is no obligation. Should you re-list with another licensed real estate agency, all previous obligations are waved.

If you have had a listing withdrawn and are unsure of your obligations, call your previous broker and ask for a written release from the protection period. Most reputable agencies want to keep good relations and will release you upon request, but not all.

The bottom line, know your obligations, have your agent take the time to explain the fine print of all real estate contracts. If you’re unsure contact a real estate attorney, or feel free to contact me at www.TreasureCoastFLHomes.com or www.GabeSanders.com. If I know the answer, I’ll tell you; if not, I’ll point you in the right direction to find out.

What type of contract should you use for your sale/purchase?

In Florida, we have two basic types of contracts that are used almost universally. They are the ‘Standard’ and the ‘As-Is’ contract. The biggest difference in the two types of contracts is that the standard contract has built in settlement provisions for repairs and/or wood destroying organisms (WDO), while the as is contract does not.

Most sellers seem to like the As-Is contract as they feel that there will not be any surprise problems or reductions in price if an inspection discovers any possible problems. Unfortunately they couldn’t be more wrong. Whether there are problems or not during the inspection, the buyer has the right to negotiate what he wants for repairs or just cancel the contract all together for no reason whatever. However using the standard contract, a buyer is limited in his options to withdraw from a contract. The Florida standard is a 1.5% allowance for damage and another 1.5% for WDO. (This can be modified in the contract to a smaller or larger value) There are set and specific criteria for these provisions and if the adjustments are under the agreed upon values the buyer is committed to going through with the purchase.

So, in this difficult market, if you are a seller, do you want to give a potential buyer an easy out to possibly save a maximum of 3% of your contract price, when in all likelihood even on the as-is contract these issues will come up and a re-negotiation will possibly decrease the sales price or even jeopardize the sale. Many sellers today are insisting on the as-is contract and I feel they are making a big mistake.

If the buyer submits an as-is offer, it is possible in negotiations to counter with a standard contract. This can make the difference between a successful sale or an exercise in futility. The negotiations can get complicated and the advice of a professional is highly recommended.

If you have any questions about Florida real estate contracts or standards, please feel free to call me at contact me here. Or, feel free to browse my websites for information at  http://www.gabesanders.com/ .

Truisms for today

A good time to keep your mouth shut is when you’re in deep water.

How come it takes so little time for a child who is afraid of the dark to become a teenager who wants to stay out all night?

Business conventions are important because they demonstrate how many people a company can operate without.

Why is it that at class reunions you feel younger than everyone else looks?

Scratch a dog and you’ll find a permanent job.

No one has more driving ambition than the boy who wants to buy a car.

There are worse things than getting a call for a wrong number at 4 a.m. It could be a right number.

Think about this: No one ever says “It’s only a game” when their team is winning.

How come we choose from just two people for president and from 50 for Miss America?

Money will buy a fine dog, but only kindness will make him wag his tail.

Learn from the mistakes of others. You won’t live long enough to make them all yourself.

A backyard barbecue draws two things: flies and relatives.

The nicest thing about the future is that it always starts tomorrow.

Seat belts are not as confining as wheelchairs.

There’s no organization called Chocoholics Anonymous. Nobody wants to quit.

You know you’re old when you reach down to get the wrinkles out of your panty hose and realize you aren’t wearing any.

Home buying not always the best investment

Buying a home is often called the American dream. But for those who buy with a 3 percent down payment (or no down payment at all), it can be a poor proposition.

A Harvard University study of home sales in Philadelphia, Boston, Denver, and Chicago found that sellers of low-priced homes lost money up to 40 percent of the time once transaction costs were included.

Economists at Wellesley College say whether home ownership is a good or bad investment often depends on the time of purchase. The odds of taking a loss are higher if the seller bought after home prices had already risen and if the buyer stayed in the home for only a few years.

Regular investing in stocks and bonds could be a better alternative. Returns on housing tend to be lower than returns on stocks. The risk of losing money is high when most of a family’s wealth is tied up in a single asset. Factors to consider:

* When satisfactory rentals are not available, buying a family home could be the best option in any case.
* Owning a home can cost more than renting when house payments, taxes, insurance, and maintenance are considered.
* For those who don’t plan to stay in a home for seven years or more, the risk of losing money on a home sale is higher.
* Buyers may not benefit from the tax deduction for interest because their standard deduction is a better deal.
* Easy home-equity loans could mean little forced saving or equity building.
* Those who make a small down payment may pay higher mortgage interest rates and the cost of mortgage insurance.

Over time, buying a home can be a good wealth-building strategy. When housing prices rise, the owner benefits. But housing prices, like the stock market can be cyclical and often don’t rise very much in some areas, and many people don’t stay in a home long enough to build equity. Knowledge of local conditions is the key to making a successful real estate decision.

In the Stuart and Martin County areas, we are nearing or at the bottom of a correction and there are some very good opportunities for home buyers that plan to stay in their home for a number of years. For other areas on the Treasure Coast, please contact me and I can go through a list of options and probabilities for different action scenarios tailored individually for you.