Monday, December 29, 2008

the No Offer

Nothing bugs me more than an agent who calls to inform me that they will be sending an offer on one of my listings, only to never receive it. After I give him or her my fax number and email address to send it to, after I email them the Seller's Property Disclosure, after I sit patiently by the computer waiting for the offer....I get diddly squat.

My next course of action is to call the agent, send them a text message, or email them, sometimes doing all three. Who knows, maybe the file was too large to get through email. Amazingly, these agents never return my calls. Is it embarrassment? Probably, but I chalk it up to pure old unprofessional behavior.

Like most people, I hate it when my time is wasted. So now, I don't contact my clients until the offer is in my hand. What's the point of disappointing them as well and wasting their time? So the lesson of this story it, don't tell me about an offer unless you actually have one.

Sunday, December 28, 2008

Do I have to Sign a Buyer's Contract to be Represented?

Lately I have had some buyers ask whether they have to sign a Buyer's Representation contract in order to be represented in Minnesota. In some states, like Florida for instance, it is not a state law to sign a representation form, but here in Minnesota, it is.

It seems like everyday I run into a local real estate agent who does not know the basic rules and laws of Buyer Representation. They tell prospective buyers or their clients that there is "no need" to sign an agreement, and then people wonder why I make them sign one. The fact is, here in Minnesota, you are not represented until you enter into a written agreement with a brokerage.

Upon first meeting an agent, he or she should give you what is called an Agency Disclosure form. This form is just a disclosure for the different types of representations available for sellers and buyers, which are:

  • Seller's Broker

  • Sub-Agent

  • Buyer's Broker

  • Dual Agency

  • Facilitator

You'll notice that I said the disclosure is JUST a disclosure. It is NOT a contract for representation. People always get confused over this one. If you want an agent to represent your interests, then you must, by Minnesota law, enter into a written contract.

Yep, that's correct...a written contract/agreement.

So here's a scenario: Buyer Bob calls Agent A and tells her he just moved to the area and needs to find a home. Agent A meets with Bob, finds out his needs, and they go house hunting. Buyer Bob really likes a home and wants to put in an offer. Agent A doesn't return his phone calls. After two days, Buyer Bob finally hears from the agent and is told the agent is working with another client on the same home. Bob is really upset and wants to know why "his agent" is not putting his best interests first. Agent A reminds Buyer Bob that he refused to sign a Buyer's Representation contract, and so the Agent owes no fiduciary duties to Bob.

Hmmm...what's going on here?

Well, on the disclosure form that was presented to Buyer Bob, it reads that if a buyer or seller does not enter into a written contract, that they:

"will be treated as a customer and will not receive any representation from the broker or salesperson...and will be working as a facilitator"

Yes, there is a difference between a "client" and a "customer". Buyers and sellers do not become clients until they sign a written agreement with an agent. So, this leaves us with the question, what is a facilitator?

For the simplest definition, a facilitator performs limited services for a buyer or seller. They do not owe any Fiduciary Duties to the customer, except confidentiality. Oh, no, I have brought up another topic! What the heck are Fiduciary Duties?

Whenever an agent represents a client, that agent owes the client certain duties:

  • Loyalty (agent acts for the client's best interests)

  • Obedience (agent will carry out the client's lawful instructions)

  • Disclosure (agent will disclose all material facts known by the agent)

  • Confidentiality

  • Reasonable Care (agent will use reasonable care in performing duties)

  • Accounting (agent will account for client's funds received)
You get all these rolled up into a nice package when an agent represents you as a Seller's Broker, Buyer's Broker, or Dual Agent, but if a buyer refuses to sign the Buyer's Broker Agreement, then the only thing an agent owes you is the right of confidentiality.

Now I ask you, what type of relationship do you want to have with an agent? One in which you can actually say she is "your agent" (because you entered into a written agreement). Or do you want the other one, where no one is really looking out for your best interests and you are left out in the cold, blowing around, lost in the wind?

Thursday, December 11, 2008

Minnehaha Falls Getting a Face Lift

Starting this month, one of my favorite areas in Minneapolis will begin a year long process of getting a much needed face lift. Minnehaha Falls, located in Minnehaha Park, has been famous every since Henry Wadsworth Longfellow made the falls famous a century ago by writing the poem "The Song of Hiawatha". Visitors, like those I photographed last year in the above photo, can walk beneath the falls in winter when it is frozen over, or throw rocks into the waterfall pool and bubbling stream in the summer.

For the price of $6.3 Million, Minnehaha Falls will have its crumbling retaining walls repaired, hiking trails fixed, creek banks stabilized, etc. Work will be going on during the winter because the area will be frozen over, and workers will not have to fight the water current. I visit Minnehaha Park a couple times a year and the banks are indeed eroded very badly. As long as the parks department keeps the renovations natural looking, I think everyone will welcome the improvements.

Wednesday, December 10, 2008

Working on a Short Sale in Minnesota

Let me tell you, working with a bank on a short sale sucks.

There, I said it.

Whew, I feel better...but I am sure it won't last long.

For the past three weeks, I have been trying to keep a deal together with a client of mine. We finally had an offer submitted and quickly sent it off to the bank. Unfortunately, it was the same week of Thanksgiving, and as you can imagine, the bank got nothing done.

  • First, we had to wait for the property to be assigned to a short sale rep in the loss mitigation department. (Some banks will not do this until an offer comes in). Sadly, this delays the process.

  • Next, we have to wait for a BPO (broker's price opinion) to be completed on the home. It follows the line of a CMA (comparative market analysis) and falls short of an appraisal.

  • Once we here from the bank regarding the offer, two weeks after the initial submission, the short sale rep decides to counter offer, reducing the buyer's requests and slashing the real estate commission. (Don't get me started on that part)

  • Next we have to negotiate back to the bank and tell them the deal will walk out the door unless they give the buyer such and such for closing costs. Not too mention that if they try and make the seller sign a promissory note at closing, the owner will just let the property go into foreclosure and the bank will lose everything.

Now, I call the bank at least two times a day, trying to push the transaction along. Christmas is just weeks away and both parties want to be in and out before then. Today I find out I have to wait until end of the week for the final approval because some other person at the bank has to sign off on the deal. Geez!

Needless to say, but the whole thing has been more aggravating than I can put in words.

People say real estate agents don't do anything and are not worth the money, but I tell you this, if you had any idea of the "behind the scenes" things we do to keep a deal from falling apart, you would change your mind. Someone once told me that real estate agents earn their money best, by keeping the deal out of trouble, and that when the deal does go south, buyers and sellers really see our true value. You can kind of equate it with insurance. You pay into it for years, and nothing happens. But finally when something does happen, you thank God for having the safety net there, even while the whole time, you didn't think you needed it.

Tuesday, December 9, 2008

Latest Chicago Government Corruption Shows Nothing has Changed in Politics

I had to laugh out loud this morning to read about the latest government corruption coming out of Chicago. When is the city and state going to realize that they are one of the most corrupt cities in the nation...not only do they have a dictator of a mayor with union corruption ties, now the Illinois Governor has been arrested by the FBI for trying to sell the Senate seat vacated by Barrack Obama to the highest bidder. Apparently he wanted to personally gain from the sale and was "seeking a "substantial" salary for himself at a nonprofit foundation or union affiliated organization, a spot on a corporate board for his wife, promises of campaign cash, as well as a cabinet post or ambassadorship in exchange for his Senate choice".

He also is accused of "threatening to withhold substantial state assistance to the Tribune Company in connection with the sale of the Chicago Cubs' baseball home Wrigley Field "to induce the firing of Chicago Tribune editorial board members sharply critical" of him".

Amazing, isn't it? The people we continue to elect are corrupt just like the ones we vote out. Now the state is seeking to impeach the Democratic Governor before the Governor can select who will feel the seat. Illinois law allows the Governor to appoint someone to the seat, no matter if he is in jail, and the Dems fear losing the Governorship in 2010 because of this latest scandal.

Those of us that have lived in Chicago or in its shadow understand this is just another part of the Chicago Godfather Saga. Don't be surprised when Blagojevich is pardoned by Barack Obama in a few years. If that happens, I will lose all remaining respect for the President.

Monday, December 8, 2008

Covered in Snow

Tonight we are getting about 4 inches of snow....Christmas time is so much prettier when covered in white.