Monthly Archives: March 2007

March 7, 2007 · 9:59 am

Missouri Finally Gets It

Congratulations Missouri. You are finally getting the message. Today’s Kansas City Star reports that the state of Missouri is forming a special task force to help root out mortgage fraud. Even though Kansas City is somewhere around the 26th largest market in the country we have the 6th highest rate of mortgage fraud. Don’t believe me? Visit Mortgage Fraud Blog and look at the entries for the Kansas City area. Real estate and mortgage fraud is and has been a problem here for quite a while.

Here’s an idea. Require licensing for the mortgage brokers. Kansas does. You require licensing for the real estate agents. It’s really ridiculous that a crook can lose his license in Kansas and move his office 4 miles to the east and re-open with no oversight.

The Penguins are coming…The Penguins are coming…or are they?

The sports web sites are alive with all of the passion you would expect on the topic of the Pittsburgh Penguins moving to Kansas City. Kansas City has offered a sweet deal and apparently the ownership of the Pens is growing tired of the lack of urgency on the part of the City of Pittsburgh and the State of Pennsylvania.

I don’t know whether they will come or not. I hope they do. But I would much rather Kansas City get an expansion team than have to take over another franchise. Pittsburgh has proven to be a great hockey city. They deserve a team. But if they have to leave, I hope they come here.

When I lived in Washington, DC I loved to go the Washington Capitals’ games. Most of you know I am a college basketball nut. But you have to experience a Stanley Cup playoff game to really know how exciting professional sports can be. I still follow the Caps to this day.

Last note: If the Penguins do move to Kansas City they should be required to leave their name, tradition and records in Pittsburgh. Their fans deserve that.

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Filed under Kansas City Sports

March 5, 2007 · 10:56 pm

Seller’s Agent in Kansas: Who Does My Agent Represent?

Earlier I posted on what a Buyer’s Agent is, or is supposed to be. Today I want to go after Seller’s Agency. Probably the most abused agency, in my opinion. Again, let’s see what the State of Kansas has to say about what the duties of a Seller’s Agent are.

SELLER’S AGENT

The seller’s agent represents the seller only, so the buyer may be either unrepresented or represented by another agent.

The seller’s agent is responsible for performing the following duties:

· promoting the interests of the seller with the utmost good faith, loyalty, and fidelity
· protecting the seller’s confidences, unless disclosure is required
· presenting all offers in a timely manner
· advising the seller to obtain expert advice
· accounting for all money and property received
· disclosing to the seller all adverse material facts about the buyer that the agent knows
· disclosing to the buyer all adverse material facts actually known by the agent, including the following:
Ø environmental hazards affecting the property that are required to be disclosed
Ø the physical condition of the property
Ø any material defects in the property or in the title to the property
Ø any material limitation on the seller’s ability to complete the contract.

The seller’s agent has no duty to:

· conduct an independent inspection of the property for the benefit of the buyer
· independently verify the accuracy or completeness of any statement by the seller or any qualified third party.

The matter seems pretty self explanatory. Where I see it run in to trouble is on the every day application. You see, many a real estate agent out there gets so excited when they receive a call off of one of their signs or ads that they will readily throw their Seller under the bus in the wink of an eye. Forgetting that they (the agent) signed an Exclusive Right To Sell Agreement with the Seller when the house is listed they immediately will want to buddy up to the caller, answer all of their questions and have a great chance of either obtaining the caller as a new Buyer to work with, or better yet, selling the home they called about and thus earning both sides of the commission.

Now, stop just for a second. It’s okay to to assist a Buyer and a Seller in the sale of a home. It’s called being a Transaction Broker in Kansas. And it will be discussed in the next post. What is not okay is violating agency to do it.

When a sign call turns into a possible Buyer off the house they called about, it is most likely that they are an Unrepresented Buyer. For example, If Buyer A calls me about my listing at 123 Main Street and I disclose that I am a Seller’s agent and they see the home with me and then make an offer with me and then close on the house with me it is almost certain that they were unrepresented throughout the entire process.

Make no mistake, I still have to treat them honestly, help them fill out the paperwork, disclose any defects in the property I am aware of, etc. But at no time am I trying to help them negotiate, disclosing that the Seller would take less for the property, etc. I cannot mislead them. I just can’t advise them to my Seller’s detriment.

So Sellers, make sure your agent isn’t acting as a Secret Agent. Are they disclosing to their sign

calls/ad calls/board calls that they are YOUR agent? Or are they signing a Buyer’s Agency Agreement with them as soon as they get done showing them your house so that they can immediately flip them and you into a Transaction Brokerage Agreement to make their job easier.

You see, they are probably afraid that when they tell the potential Buyer that on this house and this transaction that they would be the Seller’s agent. They are afraid the Buyer will go off and find another agent to represent them. They are afraid they have done all the work and won’t get paid for it. It never occurs to them to treat the Buyer like a grown-up. To explain the facts to them. And hey, if they want their own representation they are entitled to it. The agent doesn’t have to pay their representation, but they are entitled to it.

Is this clear as mud? Great. Be sure to email or call with any questions.

Kansas Buyer’s Agent: Real Estate 101

One of the most confusing things for most people to understand is who exactly a real estate agent is working for when they are buying or selling a home. Each state has their own particular rules regarding real estate transactions. For instance, I am licensed in the states of Kansas and Missouri. (For those of you not intimately familiar with the area the city is split in two by a road called State Line. On one side is Kansas. The other Missouri. Kind of like Western & Eastern Avenues in Washington, DC and Maryland.) Both states have their own set of rules and I have to adapt as I move from one state to the other.

Today I want to talk about Kansas. It is my home state! And in Kansas a real estate agent can represent you in one of three ways. You can download the brochure to get your own copy of the three. (You can also be unrepresented, that’s a whole other subject.) There is Seller’s Agency, Buyer’s Agency and Transaction Broker status. Over the course of this week I will discuss all three in detail. Today we will start with what you should be getting from a Buyer’s Agent.

The State of Kansas says:

BUYER’S AGENT

The buyer’s agent represents the buyer only, so the seller may be either unrepresented or represented by another agent.

The buyer’s agent is responsible for performing the following duties:

· promoting the interests of the buyer with the utmost good faith, loyalty and fidelity
· protecting the buyer’s confidences, unless disclosure is required
· presenting all offers in a timely manner
· advising the buyer to obtain expert advice
· accounting for all money and property received
· disclosing to the buyer all adverse material facts that the agency knows
· disclosing to the seller all adverse material facts actually known by the agent, including all material facts concerning the buyer’s financial ability to perform the terms of the transaction.

The buyer’s agent has no duty to:

· conduct an independent investigation of the buyer’s financial condition for the benefit of the seller
· independently verify the accuracy or completeness of statements made by the buyer or any qualified third party.

In short, the Buyer’s Agent is looking out for the Buyer’s best interest. Let me give you an example; REALTOR A has been working with Buyer A under an Exclusive Buyer’s Agency Agreement and Buyer A decides there is a For Sale By Owner they want to check out. (Another term, more correct, for FSBO is Unrepresented Seller.) So REALTOR A gives the Unrepresented Seller a call and identifies himself, his agency and his purpose of the call which is to set up an appointment. The Unrepresented Seller then decides he/she will work with the Buyer’s Agent and they work out a commission agreement before showing the home…in writing. During the course of these conversations the Seller says to the Buyer’s Agent, after having been told the Seller will be unrepresented, that the sales price is $100,000 but that they would take $97,500 for the house.

The house is shown to Buyer A and they love it. They decided to make an offer on the home of $99,000 because they really do not want to lose the house. Should the Buyer’s Agent:

Write the offer for $99,000 because he will get a slightly higher commission?
Keep the Seller’s $97,500 number private since the Seller told him in confidence?
Advise the Buyer that the Seller confided in him that he/she would sell the home for $97,500?

I’ll await your answers… You can contact me by clicking on “comments” below or through the new feature of the IM by Meebo on the right column. The IM is already proving to be very popular.

2 Comments

Filed under Kansas City Real Estate, Misc. Real Estate

March 3, 2007 · 9:17 am

Kansas City Real Estate Links That Help: Localism

Most of you know my policy on open information regarding real estate in Kansas City. I’m completely for it. Open the MLS. Open the tax records. Open the comparable sales. The more information the consumer has to make intelligent real estate home buying decisions the better I can do my job. And that is to help them secure (or liquidate) the right home(s) for their situation and to negotiate the best deal possible and then walk them through to success closing.

To that end I have provided you with Free, no registration, Kansas City MLS searches, links to investment clubs like MAREI and KCIG, private MLS sites like Trulia and write this blog and this blog to allow you insight into what a real estate agent does and how he thinks.

So today I want to give you a new link. It is still in Beta. But Localism is a great site that you will start seeing in your real estate searches. Localism is a real estate agent driven site that allows you to learn about your state and community and your local real estate conditions. There are even homes for sale sections and great articles about the current state of the market.

Of course, there are some REALTORS that are better writers than others. Some that seem to put more effort into the posts than others. Obviously, some are just fishing for leads. Some are really trying to serve the public.

The great thing about it is you get to decide. It’s like an interview with an agent. Like what you are hearing? You can leave a comment or question. Get to know more about them without actually meeting in person or making the phone call. In short, you get open information about your next real estate agent. You learn how they think, what they specialize in, where they live, etc. You get to decide who the best agent for you will be instead of just stumbling into an open house an working with that dude.

Check out the site. You’ll find me on the Kansas side. Due to an oddity of the system,since it’s still in Beta, I cannot do both Missouri and Kansas.

Ameriquest & The Sub Prime Loan Debacle

Today’s Kansas City Star reports that the $295 million settlement with Ameriquest is about to begin taking hold and that consumers should start receiving their refunds in April. It seems they were taking advantage of people with their loan vehicles. The article even contains a link that describes in detail the settlement. If it affects you, it might be worth your time to read the links.

My own personal word about sub-prime loans is “caution”. I have had clients that have used them to their advantage. And I’ve had clients (who probably never even should have purchased a home) continue down the path of financial disaster with them. Seek sound financial counseling before deciding whether or not a “B” or “C” paper loan is the way to go for you.

Here is a great story of someone that used it to their advantage: I had some clients call and say they were two years out of bankruptcy, had $1,900 in cash and wanted to buy their own home. They readily admitted that their own financial stupidity is what caused the bankruptcy. For their family of four they were paying $925/mo for rent in a 3 bedroom apartment.

We talked about the positives and the negatives of what they were about to do and talked about the loan they would be taking on. It was a 100% loan and the interest they ended up paying was 8.7% with all closing costs paid by the Seller. After adding up principal and interest and taxes and insurance and working out their tax situation we discovered that their real dollars house payment was $963/mo. So yes, the interest was very high, but no they weren’t any worse off than they were renting. They had kept the style and price of the home very affordable.

Three years later and they have just refinanced their house and did it at 7.0%. The house had appreciated enough and they had paid down enough of the loan to end up with an 80% LTV.

There, my friends, is a great example of how sub prime loans can and should be used.

3 Comments

Filed under Misc. Real Estate

March 2, 2007 · 10:44 am

Investment Clubs in Kansas City

Last night when I picked up my mail I had a flyer from MAREI (one of the two investment real estate clubs here in Kansas City, KCIG being the other) announcing a Conference that they were conducting and selling tickets for. It looks to me like most of the topics are covering issues surrounding Buy & Sell (flipping) real estate transactions and Subject To financing, foreclosures and the like.

I am not endorsing this conference but I am telling you about it because I know I have quite a few readers that Buy & Sell or would like to. I think I’ve made my feelings be known about Buy & Sell (I’m not against it…just be wary) and if you would like to go it looks like they have some speakers worth hearing from. And there is probably worth to the Buy & Hold real estate investor, as well.

Not everybody I recognize, but certainly Jerry Clevenger and Jeffrey Taylor are two that jump to the forefront. In fact, Jerry Clevenger is interviewed by Dave Jenks/Gary Keller in the Millionaire Real Estate Investor book I often speak about.

If you go, get back to me and let me know how it flies!

MAREI = Mid America Association of Real Estate Investors
KCIG = Kansas City Investment Group

4 Comments

Filed under Kansas City Real Estate, Real Estate Investing