Brutal Honesty - A Real Estate Blog

One of the most important steps in the home-buying process is being pre-approved for a home loan. Many buyers apply for a loan and receive approval from a lender BEFORE searching for a home. This is called “pre-approval.”Why is pre-approval important at the beginning of the home-buying process?

• Pre-approval can cut days or even weeks off the closing, because the lender has already conducted its credit analysis and approved you for a mortgage.
• Pre-approval strengthens your offer and negotiating position. A home seller will often choose to accept an offer from a buyer who is pre-approved for a mortgage over one whose financial picture is still in question.
• Pre-approval will determine your price range and narrow your search parameters. Based on your down payment and that pre-approved mortgage amount, you will know how much you can afford before you even start looking for a house.

There is also a significant difference between buyers who are merely “pre-qualified” and those who are pre-approved.

Pre-Qualified Buyers - are those whose lenders have determined how much they can borrow based only on information the buyer has provided to the lender. Nothing has been verified to determine the buyer’s true creditworthiness. The buyer still must fill out a loan application and go through the lender’s approval process.

For buyers who have been pre-approved, the lender has already done a credit check along with verification of employment and deposit. The lender’s pre-approval is a commitment to loan the buyer up to a certain predetermined amount. The only piece missing is the lender’s appraisal of the home to confirm its value.

Contact me when you are ready to purchase your next home. And let me know if I can provide any additional information about pre-approval or financing options.

Real Estate across the country is different.  In some state, it may take 90 days to close while in others, like Georgia, 30 days is the norm.  Additionally, in some states you can close at a title company’s office, in other states you may get an attorney to help coordinate the closing while still in other states (Georgia) your Realtor is the one who coordinates for you. In Georgia, a Realtor has a fiduciary responsibility to look out for your best interest.

So what does fiduciary mean? Wikipedia defines it as,

A fiduciary duty is the highest standard of care imposed at either equity or law. A fiduciary is expected to be extremely loyal to the person they owe the duty (the "principal"): they must not put their personal interests before the duty, and must not profit from their position as a fiduciary, unless the principal consents. The fiduciary relationship is highlighted by good faith, loyalty and trust, and the word itself originally comes from the Latin fides, meaning faith, and fiducia.

This agreement is set by a contract known as the, "Buyer’s Brokerage Agreement."  If an agent does not go over this relationship with you AND asks you to sign it before helping you, they are not looking out for your best interest. It only with honesty, loyalty and integrity that someone can represent you in the biggest transaction of your lifetime.

It’s more than just searching for homes, it’s knowing the market and identifying good investments, negotiating the best price, protecting your investment of earnest money, looking out for your family in their move and it’s about telling you that you might consider waiting to purchase or not purchase at all in certain situations.

In early October I hosted a Client Appreciation Party and it was a blast! We had pumpkins to decorate, ghoulish tattoos for the kids and BBQ to eat. It was such a reward not just for my clients but for myself to really enjoy all the new relationships I have. It’s what makes the business fun.

The party was held at Little Mulberry Park in Dacula, GA.

I’ll be posting more on this great event in the coming days. If you see your photo, let me know if you want prints, I’ll happily get them out to you.

When a buyer is looking for a new construction home, the question always comes up, "Is This A Good Builder?"  It’s a loaded question to say the least.  Although, the Real Estate Commission will be upset about this, most agents DO have opinions about the builders.  The bottomline however, is that an agent’s answers are based purely on their perceptions of a builder or their direct experience.  Keep in mind that even the most successful agents whose team closes 600 transactions or more a year, may only have a few transactions with a builder.

Still, the question remains.  So should you buy from a builder or not? There are some key things worth mention and I’m also a firm believer in bringing in the inspector early on.  Having the inspector there early on will "catch" many of the issues.

See, the truth is that most builders are not inherently bad.  Instead it’s the people they hire that make the difference.

For example, you could have a fine, upstanding builder who hires an equally qualified general contractor to manage his subdivision.  He in turn hires excellent framers, concrete people, electricians, plumbers, drywallers, painters, carpet people, lighting, landscape and fixture folks and of course, "punch out" people to finish up.  There may even be designers, realtors, and other people who have some input.  Last but not least, let’s not forget that the county will likely want to inspect and of course they have their own people in on the deal.

If one or two of these "hires" or contractors has a bad day, bad employee … bad "run" then you’ll end up with 5 to 10 homes that all have a leaky shower for instance.

Building a bunch a homes very quickly isn’t always a bad thing, but it gives the builder a smaller margin of error.  One wrong move and it’s going to effect 10 homes or more in some cases.  Whereas a smaller builder may only be building 1 to 4 homes at a given time.

So how do you find out if a builder is "good" or not?  Try to inspect the finished product, try to inspect the product as it’s being built.  Then you’ll know the work of the contractors.

Real Estate is Local, so is building.  One subdivision does not a builder’s reputation make.

After much feedback I’ll be updating the newsletter that comes out of here. There’s got to be a better solution, feel free to update me on that!

After writing about accountability a few weeks back, I decided to check my self and posted a week’s worth of activities .  Be sure to check it out if you have any interest in becoming a real estate agent or want to know what I am doing every day .

The market is up and down on a weekly basis.  Great deals are still selling in 2 weeks, good deals are sitting.  Homes that are price correctly will sell in 60 days or less.  Other can sit up to 6 months to 1 year.  A little milestone was reached as several parts of the county dipped under 12 months of inventory which.

Just a little note to remind folks that I’m pretty much jumping into to becoming a social media guru.  I want to be the one on the internets for all your real estate needs, so be sure to follow me @JarvisTeam .

I’ll be posting some follow up to the tax credit in the coming days.  In addition, I’ll be covering some blog topics to use in my class.

On July 30th Pres. Bush signed a major housing bill (HR 3221) into law.  As part of the bill, Congress created a new, temporary tax credit to provide some incentive to buy a home.  Here’s a quick check list to see if you qualify:

• Bought and CLOSED after April 9th, 2008
• YOU MUST CLOSE BEFORE JULY 1st, 2009
• Must be your first home (or you must be an individual who has not owned a principal residence in 3 years)
• You must make under $75,000 or have a joint income of less than $150,000 (you still get partial credit if you are over)
• The credit is 10% of the purchase price of the home, with a cap at $7,500
• Obviously, this property must be in the US
• Finally, you must have use Joshua Jarvis as your Realtor (ok, so I am kidding about that one)

As many of you know the real estate market is flooded with foreclosures.  However, there seems to be some misconceptions about what a foreclosures is.  Some mistakenly think that all foreclosures are HUD homes.

HUD homes are not the only foreclosed homes out there. Foreclosed homes are often mis-categorized. There’s Pre-Foreclosure, Auction and Post-Foreclosure homes that all get thrown into the mess. 99.9% of all post foreclosure homes are actually listed on most MLS’s.

Post foreclosure homes are bank owned, corporate owned, HUD homes, and some estate property. These are properties that did not sell at the auction or were bought back by the bank.  In the case of HUD homes, these are properties where the seller had an FHA loan on the property and the insurance (our tax dollars) kicked in.

The county usually holds an  auction for CASH for ACTUAL foreclosures, these are listed in the local paper for the area.

Pre-Foreclosures are also called Short Sales in some cases. Most of these will be listed as well.  Short sales can be a great deal and opportunity but do require patience and a easy living arrangement in case the deal falls through. Not all pre-foreclosures are short sales, but most will be.

If you are watching the news you are drinking up the fear… from a Water Hose.  My journey to NO FEAR this week has taken me down steps and I don’t think I can be concise about it, but I do want to share with you my journey.

• I had my first reading of Who Moved My Cheese and everything everyone says about this book is true. It really forced me to wake up and realize, I’m "hemming and hawing" and not really …
• Shift - ing - Gary Keller of Keller Williams just released his new book, Shift .   In it he describes how the real estate market has shifted and what you have to do to be successful in a shift.  Short story… back to basics - and by basics, it’s being effecient and creative… but more importantly changing and having…
• NO FEAR - Many of you know I’m a Christian.  I am not the best example but I do read THE WORD and I was listening to Pastor Dennis Rouse talk about Fear and the economy.  As many people are away, there are cycles of life and this too will pass.

II Timothy 1:7 For God has not given us a spirit of fear, but of power and of love and of a sound mind.

I don’t know about you but I’m not about to succumb to a spirit of fear.

All of these changes got me on the road of POWER and I noticed that "SHIFTING" is BIblical as well.

Revelation 3:1-6 (paraphrase)

“Wake up! Stop just doing the same things you have always done and change how you think and how you live!”

When faced with a challenge, we can either adopt (quit), abdicate (become bitter), or adapt (overcome).

The "trials" we are going through are expected, whether it is David, Jesus or Peter or basically EVERYONE in the Bible, they all went through trials.  Change is important in surviving, but the one thing that will work everytime is:

FOCUS ON HIM

But seek first his kingdom and his righteousness, and all these things will be given to you as well. Matthew 6:33

I liken it to driving a car.  When I’m in the ditch or riding on the median, I’m literally tearing the wheel away from Jesus, when my life feels like I’m in the HOV lane, it’s because I’M THE PASSENGER .

As we go through this tough time, just keep your eyes on HIM.  The Bible says he speaks in a "still, soft voice."  If you are having a hard time hearing him, it might be because you have the "World’s" volume up to loud.  Try going without TV for a week and see if your perspective changes.

I’ll be back on topic next time, but if one person gets encouraged, then the time spent writing this is worth it.  Let me know.  Drop me an e-mail or comment!

Unless you’ve had your head in the sand all week, then you know that there’s talk of an economic bailout that should cost you and I about $10,000 a piece. It got me thinking about accountability .

Whatever happened to personal responsibility?

As I finished my workout today I passed someone having a conversation about that very topic.  Apparently this person’s child had stolen something and didn’t think much of it.  The distressed parent did not know what to do.  Her ultimate method of "accountability" was to let the child know that if it happpened again and he got caught, then she would let the authorities deal with it.

What’s somewhat funny about this story is this is exactly what has happened to our economy.  Re-read that story above and let’s replace some words:

[Our Country's ] ultimate method of "accountability" was to let the [Industry ] know that if it happpened again and they got caught, then they would let the [Government ] deal with it.

Sorry, but that’s not really what I want.  I doubt you want the Government to take your money at gunpoint [TAXES] and bail out these financial districts either, when the solution is a simple, time tested word, ACCOUNTABILITY.

In Real Estate, there is no accountability.  There’s almost no barrier to entry for the mortgage industry or to be a real estate agent.  The public puts absolutely no weight in these professions.  Realtors are often compared to used car salesmen and when it comes to selling a home, most home owners would rather have a colonoscopy than think of paying a Realtor for their services….

Mortgage Broker and Real Estate Professionals are responsible for handling, for most, what is the biggest investment of their entire life. In the case of Real Estate Agents, in some states they have a fiduciary responsibility to look out for their client — this is the same responsibility that an attorney has! It’s hard to believe then that the state and the industry know the value of a Real Estate Agent but the public and the agent themselves don’t take the responsibility seriously… and WHY?  Because there is no accountability.

Mortgage Broker gives you a loan that on paper looks ridiculous but still clears underwriting.  What can you do?  At best, file bankruptcy.

An Realtor suggests a price to win your listing and is not honest about the market.  You are happy in the short term but in a declining market, you’ve just signed your foreclosure papers.

Now I’m done with my rant, but I’d much rather see accountability and standards added to the Real Estate industry as a whole than see these bailout plans.