Q. I am working with a Realtor, but I typically go to open houses without her. Why should I sign the guest register? Who does it protect? Do I have to work with the open house agent?
A. First off, congratulations on working with a Realtor. There is a big difference between an agent and a Realtor, and you have chosen the best. But the phrase “working with” can encompass a large number of things. Do you have a Buyer’s Agreement in writing with her? Has she explained all of your Agency options to you?
The Agency Disclosure is the document that describes the various duties and responsibilities of the different Agents in the transactions, and is a mandatory disclosure to all parties in any real estate transaction. This is the first document signed before any contracts can be consummated with a client.
A Buyer Broker Agreement is very much like the listing agreement used by a seller and their agent. It is a formal agreement that puts in writing rights of the buyer and their agent in the home buying process. It protects you in ways that a casual “working” relationship does not. If you have that agreement in place, then both parties are protected, both you and your Realtor, from any specious claims by a third party broker.
If no formal relationship exists between you and your Realtor, then the reality is that a third party broker may in fact have a claim to share you as a client for that specific home, if they introduce you to the property, or complete certain actions “as your agent”, even though you have an informal relationship with another Realtor.
Remember too that the agent sitting at the open house has a duty to her Seller to document all parties who have viewed the home. Some agents will not let you enter the home without signing a guest register, as it is their job to protect the seller. It is commonplace for the Buyer to sign the guest register with their name, followed by their agent’s name, to make clear the status of their representation. If possible, bring your Realtor’s business card along with you, to leave with the Seller’s Agent. That way, the Seller’s Agent will feel comfortable talking about the features and benefits of the house with you, and your relationship with your Realtor remains intact.
The simplest solution for you? Sit down with your Realtor and get informed about your Agency options. Sign an Agency Disclosure with your Realtor, and discuss the possibility of signing a Buyer Broker agreement. Discuss the pros and cons of a formal versus informal business relationship with your Realtor. Then, when you attend open houses, you can feel confident signing the guest register, and know that your interests are being well represented by all parties.
Q. Our lender stated we had full approval for our loan. Then two days later, they said the loan was denied because of the debt-to-income ratio. What happened?
A. Often times, during escrow, clients make changes that affect their debt to income ratio during escrow, such as buying a new car, increasing their credit card debt, canceling a credit card, and the like. Small changes, which may seem insignificant to you, can make a difference if you are right on the border of qualifying.
In addition, behind the scenes, the lender’s guidelines could have changed, throwing of your qualification ratios. Sit down with your Realtor, mortgage broker, or banker, and ask the question, “What has changed and how can we fix it?”
Some questions:
1. Was there an error in calculating debt to income in the first place?
2. Was it something that changed with my qualifications…or something that changed with bank guidelines?
3. What made the debt to income too low….did they give me less income or more debt…..and why?
4. (If you are using a mortgage broker) Was the loan placed with a different lender for some reason?
5. Did it occur because of something that showed up new on my credit report?
6. What can I do to tweak my debt to income so the loan can proceed?
It may require shopping for a different loan with looser underwriting ratios, or it could be as simple as clearing up a credit glitch.
Q. When did housing prices “peak” in California?
A. It depends on where you live. While 2005 was “the peak” in THIS CYCLE in many areas, certain areas continued to hold steady or even climb until 2006. You need to look at the data for your county, and your city, and even for specific neighborhoods. The best solution is to contact a local Realtor to help you obtain and interpret the data. A great resource for this information is DataQuick ( http://www.dqnews.com ) or the local Multiple Listing Service.
Remember that every cycle, roughly 10 years, has its own peak, but in general, historically, real estate has always increased in value. I am an optimist. I think our peak years are still ahead.
Q. Do I have to tear down the unpermitted bath I put in, when I sell my property?
A. The best advice I can give you, and your Realtor, is to DISCLOSE, DISCLOSE, DISCLOSE. While some buyers will be perfectly content to purchase a home with an unpermitted space, others will not, and will consider it a major flaw. Put the information front and center on your listing remarks, on your marketing materials, and in every seller disclosure you make. In addition, know that the appraiser will consider the tax assessor’s square footage when they value the space, so they may not give you credit (value) for unpermitted space. This is the moment when a good Realtor can help you navigate some very choppy waters.
If the work was done by a licensed contractor, consider advertising these upgrades as “professionally done to industry standards.” Never represent that the work was done to code, unless you have independent verification that this is true.
Obtaining a permit now to facilitate the sale will definitely involve some invasive or destructive measures. All work that is reviewed must comply with 2009 building codes. (Example: New wiring will require AFCI circuits. ) A pre-listing physical inspection will give you a better sense of what the buyer will find when they do their inspection, and be a trusted third party source for making your disclosures. The home inspection and your disclosures present you as honest and forthcoming.
Ultimately, the choice to buy or not to buy will be in the hands of your purchaser, and the amount of value placed on the addition will be assessed by them.
Have a question you want answered? Contact us at TheBremnerGroup.com, and let us know. Or just reply here. We are always happy to help.
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