Why are the Fees so "High"?

Lisa and I are representing an experienced 3rd generation custom builder in our Warren's Gate community in Clemmons, NC. It is for active adults who do not want to worry with exterior maintenance of their lawn OR dwelling. One question we get often concerns the monthly HOA fee... on the surface, it seems high compared to other "simialr" communities (I say that tongue in cheek because few "no maintenance" communities are truly "no maintenance", but that is another blog post!). Anyway, we explain that dwelling insurance is included. All the occupant needs is an H06 policy, which covers contents and interior "stuff"... here is an email I sent recently to a potential customer that puts it in more understandable terms:

If you want to mention this to your insurance agent, what is needed is called an H06 policy. It is contents plus interior shell (that’s “Amanda speak”…). The exterior is completely covered by the master policy of the HOA. The reason this is CRUCIAL these days is because of how appearance affects perceived values. If your neighbor goes into foreclosure, abandons the property, or just plain and simple fails to maintain it, the HOA is still maintaining the exterior. So, if a tree limb falls on the roof during the time it is unoccupied, it will be fixed rather than sit there and cause more and more damage. Similarly, if your neighbor is under insured and something like that happens, you don’t have to worry – all homeowners in the neighborhood have the same level of insurance, so one underinsured or absentee homeowner’s lack of maintenance does not bring the whole neighborhood down.

Depending on the level of coverage, you CAN have some costs savings with the HO6, but that is relative to your level of comfort. So, that MAY be a benefit, but the definite and main benefit is in future protection. With all the foreclosures, short sales, etc, happening now in ALL price points, this is tremendous for peace of mind.

One of the things I said about K****** leads just to this issue. K****** has some gorgeous properties, but there is NOT a blanket HOA policy there. In the last few years, there have been quite a few short sales and foreclosures out there. I personally had a home on the market 2-3 years ago that was gorgeous inside and out, but the lack of maintenance of the properties on both sides just killed it when it was shown. That is a worst case scenario, but in this day and age very relevant.

The HO6 covers contents as well as the following example… should you go on vacation and have a water leak, your HO6 covers the internal damage.

Let me know if you have questions. I tried to relay this is “non Realtor speak” like you said yesterday ;-), but your insurance agent will absolutely be the best person to explain it in more detail. I can also give you contact info for the policy holder of the policy out here at WG if you or your rep would like to speak to them.

*** Another important point to realize about the dues is that they have a repair and maintenance escrow built in, so that your chance of all of a sudden getting a $3000 assessment for gutters and downspouts in the mail one day that is due and payable within 60 days is MUCH less. In the case of WG, money for things like that is being set aside little by little every month.

Finally, to put it all in perspective, how much do you spend in a year just on your yard?? I know I personally spent over $200 in weed killer ALONE in July (that is still sitting unused on my front porch, by the way). So, to get all lawn maintenance (that will actually be done!), exterior maintenance, sprinklers in the front and back (and the water for them), repair escrows, maintenance reserves, dwelling insurance, sidewalks and street lights, entrance upkeep, and HOA management for $217.50 a month really isn't a burden...

So What Does That Unfair and Exorbitant Fee Get You?

I have had several inquiries lately regarding me cutting my commission -- first, let me state that I DO NOT do that. Second, even if I wanted to, my company wouldn't let me, so... this is sort of moot, but here's why:

We are a full service brokerage. Another company or agent may list your home for a percent less, but put the exposure you get with them next to the exposure you get with us, and ours is 2, 3, even 4 or 5 times more extensive. So, that "extra" percent you are paying us is getting you much more than 1 percent more exposure. In a market like we have now, everyone needs and wants to cut expenses; but with the overabundance of unsold inventory we have, the LAST thing you need to do is go with someone who isn't giving you maximum exposure!

I am a full service, full time Realtor. Between Lisa and I, we truly strive to be available for you anytime. Of course there will be exceptions to this, but we don't work a 9-5 M-F day like a lot of other professions. Additionally, we have personally undertaken a very aggressive marketing plan, so even within our own company, we can state without a doubt that we offer more services than most other agents. I tell people that the second the sign goes in the yard, I start spending money, and I mean it. Often in marketing a home I actually go in the hole, but if I think on that long enough, I'll get depressed, so let's move on...

You are paying not just for our marketing capabilities but also for our experience and professional insurance. A woman I know (and who is one of my really good friends who gave me permission to use her story!) bought a home on her own. There were some undisclosed issues that ended up really affecting her property value. When she went after the seller, his pockets were empty. Had she had an agent and the issues been undisclosed, she could have sought recourse from the agent's company. Of course, with an experienced agent who knew the red flags, she probably would have avoided the pitfall all together! Then, not learning from experience, she later attempted selling a home on her own. She had complete strangers knock on her door at 10pm asking to see her home. Not only did she run security risks like that, but NAR statistics show that selling your home with a Realtor brings you more than selling it on your own. What most folks don't realize is that when folks look at a FSBO, they are expecting to pay less... so you are not only getting less money, but getting less experience! I often give my tax preparer example. When I was teaching school, my husband and I were audited. (Don't ask why a 2 teacher household was audited, but I digress. Surely there are bigger fish to go after??). Anyway, I had paid a professional to prepare our taxes. Could I have done it myself? Probably... but then I couldn't have gone back to them for help or recourse when I was audited. The fee I paid was well worth the peace of mind.

Finally, I'll let you in on a little secret... we really don't put as much in our pockets as you think! Let's do a hypothetical example to demonstrate this:
123 Main St sells for $200,000. Commission is 6%, so $12,000 total. A Tate agent (moi) is representing the seller, and an agent with XYZ Realty is representing the buyer. So, that $12,000 immediately becomes $6,000 to Tate and $6,000 to XYZ. Of the $6,000 to Tate, let's say my split is 50% (again, hypothetical)... so my part is down to $3,000. But wait, I have to pay taxes on that, so I set aside $900, or 30%, to be safe. So now I'm down to $2,100. But wait again! I spent $700 marketing it in various print and online media (never mind the hours spent actually doing the work), so I am now down to $1,400. And, unfortunately, it took 4 months to sell, so I am down to $350 a month. And, oh yeah, the seller wouldn't agree to sell at the negotiated price, so I finally agreed to pay the home warranty out of my pocket just to get us to closing. Welp, there goes one month's check. So, I end up with $1,050 for 4 month's work. Oh... but wait! I had to drive out to the house often to fill brochure boxes and flier trays, make sure my sign was still up, sweep off the front stoop, and clean the toilets for showings, so I spent some of that on gas, cleaning supplies, and new pants (because I splashed my good ones with bleach...), etc. Do you get my drift???

Don't get me wrong -- I LOVE MY JOB! I thank God every day for putting me in a career that I enjoy so much and in which I get to interact with so many different and wonderful people. But, I have to be honest, the perception that I am the greedy one because I won't cut my commission is reeeeeeeeeeeally getting to me.

Oh, did I mention I left home this morning at 7:30am, I'll zoom home at 6 to see my children before they go to bed, I'll leave again to go out to show one more home to folks who don't get off work til 6, and then I'll return home to relax complete paperwork and plan ads til I doze off? Yeah, we are definitely overpaid...

What Do I Need to Ask???

There is a GREAT post on Allen Tate's At home blog today. I didn't realize that I haven't posted in over a week (YIKES!), so I guess I should be ashamed for just pointing you in the direction of another blog, but I really do think the info is relevant. I was especially impressed by the "other obligations" question. That has really become relevant for me, as yes, as a matter of a fact I DO have other obligations now... namely an adorable 2 year old and precious 1 year old! But, never fear! I realize this may be a hindrance to our partnership. Everyone is totally cool with the need for family time, but let's face it, when you want your agent, you want your agent NOW. So, yet another reason why I am soooo thankful I have partnered with Lisa. She can fill my gaps, and I can fill hers. Aaaahhhh.... it's a 2 for 1 deal!

The other part that really spoke to me dealt with what communication mode you prefer. I will text, email, tweet, call, etc... and not all agents can say that. If texting is important, make sure you work with an agent who regularly communicates that way. If phone calls are important, make sure your agent has her mobile phone with her constantly. If email is your preferred method, make DOUBLY sure they have mobile email capabilites and don't just check their messages once or twice a day. Time is of the essence, folks!

Read the full article here.

Real Estate v Baseball

OK, I admit it... this is copied from the At Home in the Carolinas blog -- I love baseball, so this one was very enjoyable!


South Carolina produced major league standouts like Camden’s Larry Doby and Anderson’s Jim Rice. North Carolina brought us Williamston’s Gaylord Perry, Hertford’s Catfish Hunter, and Raleigh’s Josh Hamilton. And while the Carolinas do not have a major league baseball team (yet), minor league teams such as the Durham Bulls, Charlotte Knights, Carolina Mudcats, Burlington Royals, Greensboro Grasshoppers, and Winston-Salem Dash keep the game relevant and thriving.
Being a fan of the sport, I recently spent some time thinking about the game and its myriad of rules, rituals and strategies developed over its many decades. Turns out, there’s a lot we can learn from the game when talking real estate:
 Baseball is a rewarding long-term investment of your time. So is real estate.
 In a Buyer’s market, it’s better to be the batter than the ball.
 Numbers are important. You can’t properly analyze a baseball team or a real estate market without understanding them.
 Deferred maintenance never works to your advantage (Apologies to the Baltimore Orioles).
 Waiting until next year is not always the best strategy. Get your home sold now before inventories explode. Buy a home now before mortgage rates leave the basement.
 Past performance does not guarantee future performance. Watch out for underperforming “superstars” and housing bubbles.
 Trust your coach. Love your trusted REALTOR®.
 Sometimes homeownership throws us a curve. That’s when you’re happy to have a home warranty.
 A well-maintained lawn is more valuable than artificial turf.
 Spitting should never be permitted in a dugout or a living room.

Our New Blog!!!

Allen Tate Company now has a blog called "At Home in the Carolinas" -- follow the link below to visit it and subscribe!

http://athome.allentate.com/2010/06/whats-up-with-the-upper-end-market/

From the Blown Mortgage Blog

Loan Modifications, Foreclosures, Short Sales, and The Truth About Your Credit Score

Posted: 09 Apr 2010 08:04 PM

There has been a lot of ink spilled on the issue of loan modifications, foreclosure, short sales, and their effect on your credit score. Depending on which newspaper, blog, or Wikipedia article you read there are a couple dozen theories or authoritative statements on how the whole credit scoring system works.

If you are planning to do any of the above: modify your mortgage, foreclose on your mortgage, short sale your home, or any other loan related activity it is worth finding out what the effects will be on your credit score. But why is our credit score so important? And, how does your payment history affect it?

Your credit score is important because it summarizes your credit risk to lenders and businesses. It is a number that describes your financial reliability as a borrower. Some employers and landlords also use this score as one of many ways to get a background check on us. If we apply for a loan and our credit score is low we a) might not get approved, or b) will have to pay higher interest rates than if we he had a higher score. It is as simple as that.

What makes up your credit score?

The biggest factor is your payment history. Around 35% of your score is based on your borrowing and paying record. This is quite understandable; a lender is justified in wanting to know if you have paid your debts in the past. This does not mean that a single (or event two) late payment/s will automatically destroy your credit score. An overall good record of paying your loans could outweigh a couple of bad instances.

This doesn’t mean either that if you have no late payments you will have a perfect score (that would be 850, in FICO’s main scoring system), there are many other factors to consider.

How long will past delinquencies affect your credit score for?

Bankruptcies, foreclosures, wage attachments, and other cases of delinquency seriously affect your credit score. How recent and frequent a case of delinquency is also counts in your credit score. Bankruptcies will stay on your credit report for 7 to 10 years depending on what chapter you filed under. The good thing is that more recent activity in your account will weigh more in your credit score than older delinquencies. A foreclosure, even though some of our readers would like to believe otherwise, will stay on your credit report for a long time. How long is not specified by FICO, but even a 90 day late payment 5 years ago will affect your credit score. Although thankfully the longer ago a delinquency occurred the less effect it has on your score, which means it is worth trying to improve your score because what you do now will have a great effect on your score.

Rising Interest Rates

A lot of people don't realize the impact an interest rate can have on their payment... for example, on a $100,000 loan, the difference between a 4.5% rate and a 5.5% rate could be $100 a month! So, with economists forecasting that rates will rise after April 30, it is extremely prudent for a lot of folks to put on their home finding hats NOW, get a home under contract, and lock their rates. I have heard some buyers say "well, after April 30 there won't be as much demand, so sellers will have to reduce their prices...". While this may be true in some cases, those rising interest rates may more than make up for any price cut done by aggressive sellers. So, why not take advantage of the low rates AND the tax credit and find something now? As always, I am here to help!