Buyer’s Choice Realty blog

Let’s step out of the realm of real estate for a moment, and focus on another issue…

Politics are politics. Mud slinging, name calling, attack ads, character questioning, etc. is all happening right now. This is typical in our country, and we’re all used to it by now. No matter what your view is or who you intend on voting for (the important thing is to vote!), we have serious issues facing us.

One of the biggest, aside from the pesky housing market and economy (no one cares about those anyway, right?) is energy. Specifically, our country’s energy policy, and what we can do about it.

I came across a smart fella who seems to have some decent answers. And get this - there are no politics involved! He’s an oil man (so naturally, a billionaire), but strangely enough, he’s attempting to get his own energy policy out there that does not focus on oil. T. Boone Pickens is his name, and if you are curious about what he intends to do, check out the Pickens Plan website.

Pickens basically wants to end our dependence on foreign oil, the same as any politician keeps saying over and over, but he actually has salient ideas on how to accomplish it, and soon. Don’t we all want to stop giving money to the Saudis, the Russians, and other folks that don’t necessarily have democratic ideals in mind?

What does the plan entail? Solutions for right now that will give us time to come up with new technology to make alternative energies feasible. What can be done right now? Fuel cars with natural gas, of which we have to import almost none. Set up turbines all around the midwest. Apparently we have the best wind in the world… and it can produce huge amounts of electricity. Job creation, money staying in the U.S., what could be better?

Give it a minute, check out the site. It’s a quick read with tons of facts. We have to move beyond oil. I joined, and so should you.

Literally. Here in the north shore town of Beverly, MA, a multimillion dollar mansion burned to the ground Thursday night into Friday morning. Thankfully the owners were away and no one was hurt. Why did this house burn completely? Not because of a lack of response from fire crews.

The house was in a secluded area off a private road in Beverly, and the nearest fire hydrant was an estimated 1200 feet away! The first fire truck arrived one minute after a 9-1-1 call was made by a neighbor. That’s fast. Trouble was, they had to run miles of hose, and the first responders didn’t have enough length of hose in their truck. Neighboring town Peabody sent a fire company with plenty of hose, but by then it was too late, and the crews just made sure that the fire did not spread. It consumed the house faster than they could string hoses up to fight it. Unfortunate, but avoidable. Something to think about if you are in the process of building your dream home. Privacy and views are wonderful, but ashes are not.

The fire inspector determined that the fire was caused by rags covered with paint solvent that spontaneously combusted.  Below is a picture of the flames in action.

picture from wbz-tv.

I wrote recently about the troubles that Fannie Mae and Freddie Mac are facing currently. Increased foreclosures and uncertain finances are dogging these two GSEs. Jonathan R. Laing reported in Barron’s that both companies may well be on their way to becoming extinct, at least in their current forms. To wit,

“Heaven knows, the two government-sponsored enterprises, or GSEs, both need resuscitation. Soaring mortgage delinquencies and foreclosures have led the companies to gush red ink for the past four quarters, and their managements concede the outlook is even grimmer well into next year.”

As if Laing’s statement isn’t harsh enough (sometimes the truth hurts!), he goes on to write,

“What’s more, the fair-value figures reported by the companies may overstate the value of their assets significantly. By some calculations each company is around $50 billion in the hole.”

Yes, you read correctly. Although these folks insure, own, guarantee, etc., trillions of dollars worth of U.S. mortgages, they are, for all intents and purposes, bankrupt and worthless.

What will happen? Even if the Bush administration doesn’t take over, the next administration most assuredly will. That will mean that your taxpayer dollars will be used to ‘recapitalize’ Fannie and Freddie. Although they won’t be added to our country’s deficit, we will still essentially be footing the bill for their indiscretions in purchasing Alt-A (read: subprime) mortgages to increase their market share. Greed and lack of solid management are partly to blame, as are many Americans who got in over their heads with mortgages they couldn’t afford. Speculators/flippers/rehabbers, you name it, they are a serious part of the problem.

Caveat Emptor - Buyer Beware! While this rule usually applies to buying a home in Massachusetts, it also can apply to applying for and obtaining a loan on your home purchase. Boston Business Journal recently reported on a temporary cease-and-desist order taken by the Massachusetts Division of Banks against a company based in New Hampshire that also operates in Mass.

Here are the details, as well as the company involved,

“The order against The Mortgage Specialists Inc. of New Hampshire was taken after examinations by the Division of Banks revealed it had knowingly inflated borrower income and falsified documents to secure loans. The regulatory move requires the company to place all remaining loans with a qualified lender or broker and forbids it from initiating any new mortgage loans pending a Division of Banks hearing on the firm’s practices.”

This is not a permanent order, and the company can appeal the decision. I took a look at their website, and found a message from company president Michael Gill. A highlight,

“We feel that because of the climate in this industry that this has been blown up. We feel confident that we will resolve this with the banking department quickly.”

Gill basically stated that this was a ‘compliance’ issue and defended his company’s integrity and track record. I have never had buyer clients work with this company so I don’t have an opinion, but be sure to do your homework when shopping around for a mortgage so that you can be confident the company that loans you money is reputable and honest. I will update this when more information is available, and a decision has been reached regarding the operations of The Mortgage Specialists Inc.

What is the team approach? All I need is a decent agent and I’ll find a good home and be all set, right? Only in rare cases.

When thinking about buying a home, consumers are often unaware of the complexities involved. Here are the players that should be on your team:

1. An exclusive buyer agent (EBA). This type of agent will work in an office that does not take listings. Why? No potential conflicts of interest. They will put your interests first. An EBA functions as the ‘quarterback’ of the team, helping to find other members of the team and keeping everyone on the same page with effective, timely communication.

2. A qualified, thorough, licensed home inspector. In Massachusetts, only buyer agents are legally allowed to recommend a home inspector. Knowlegeable exclusive buyer agents will often recommend only a select few inspectors, for numerous reasons. They will have worked with each inspector in the past and will know that they will put in the time necessary to find any previously unknown problems in the home, which will save buyers money. Many large firms only allow their ‘buyer agents’ (agents that are designated for that transaction only to work for a buyer) to give a lengthy list of home inspectors so as to avoid liability.

3. A real estate attorney. Agents that are also attorneys pose some problems for clients. Sure, you may get a discount on services, but being an agent and being an attorney are two full-time jobs. Will they get the job done to your expectations? Good agents will be able to tell you attorneys they have worked with in the past, much the same as finding an inspector.

4. A lender/loan originator. Again, firms that offer in-house financing may not be in your best interest. Will the agents in that firm push you to get a loan from the finance officer that they work next to? Of course. You, the consumer, should not be pressured. An agent with no connections like that will be able to tell you what to ask a potential lender or a loan originator, and will help you understand some of the complexities involved in finding a good loan. Again, they will have worked with honest, ethical lenders in the past and will know who offers the best rates and terms. Junk fees can be avoided.

5. A home insurer. The same applies to this person. Solid agents will know who is honest and efficient, as well as who sometimes is not as good. Insurance is so important, especially since most home buyers are making the biggest financial purchase of their lives, and they need and deserve to know that they and their purchase will be protected.

With these five teammates on your side, your home purchase is sure to become a little bit less overwhelming, and maybe even a little fun.

House Hunters has a fairly simple premise — a salesperson shows a buyer three homes, they make a decision to put in an offer, and we check in with them a few months later.

As part of HGTV’s first-time home buyers’ week, we meet recent graduate Lindsay who is looking for a condo closer to her job, and enlists local practitioner J.J. Love to help. She has a price range up to $160,000. Lindsay tours three condos in the Nashville, Tenn. area, ranging from a bargain-priced two-bedroom townhouse listed for $125,000 to a brand new unit with an asking price of $162,000.

Lindsay ends up choosing the place at the top of her price range. She explains that she loves the fact that she would be the first owner, that the unit has a garage, plenty of closet space and that her parents both like it — always helpful, especially since they are providing the down payment.

But a few questions need to be raised about House Hunters. Why is the buyer only shown three places? Most buyers would look at many more before choosing. Sure, it’s only a half-hour show, but would you want to have to commit to placing an offer on a home when you have only seen three? How much did Lindsay end up paying for her new condo? We never find out, so we don’t know if Ms. Love is a skilled negotiator and is truly working on behalf of Lindsay in order to find her the best deal possible. It appears that her agent has picked out each unit to show her. Were they her listings, or listings from her office? This issue is not addressed either.

As an agent who works exclusively for buyers, I would love to see a show that portrays how a knowledgeable real estate practitioner puts clients’ best interests first. This means consulting with potential buyers at length about their goals, while also educating them about market conditions — rather than merely focusing on selling them a home.

In this era of escalating foreclosures and short sales, consumers should occasionally be able to see what is involved in the process of buying “distressed” properties, not just cute, new-construction condominiums. The final verdict: entertainment first, reality second, if at all.