Category Archives: Real Estate

Pitfalls of Poor Tenant Screening Part 1

One thing to keep in mind while screening applicants is the federal Fair Housing Act, which:

“prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and disability.”

3Does this mean you can turn a prospect down because they don’t dress well?  Absolutely.  How about if they show up reeking of smoke?  Sure.  What if they just give you a bad feeling?  Yes.  None of these reasons are provided for in the FHA.  But here’s the rub.  What will stop a prospect from suing you for discrimination because you did not rent to them because they were minorities, and not due to the fact that they showed up to view in a car with trash falling out of it.  You felt that represented how they may keep up your property.  The problem is convincing the court this was your reason for not qualifying them.  Whether it’s true or not, you can run in to a lot of liability issues if you deny applicants who otherwise meet your screening criteria.

You should also be familiar with your state and local laws to make sure you are not violating any laws or statutes.  Please consult an attorney if you have any concerns.  I am an advocate of one of the prepaid legal programs.  I pay $25 per month and can ask them for legal advice when anything comes up. They will also review legal documents you have, such as leases, addenda, etc. to ensure it is legal.  Or have a professional Residential property management in Charlotte handle things for you.

Just to reinforce the need to properly qualify prospects, here is another video showing the result of a Landlord who did not property qualify their tenant who moved in to a brand new town home:

One valuable trick is, while processing the application, if an applicant lives locally, visit them unannounced.  Tell them you were in the area and wanted to stop by for them to sign their application in person, or for some other reason.  This will give you a chance to see how they maintain their current unit.

Investing some additional time and effort into the qualification process can pay big dividends in the future.  What you save now could cost you more down the road.  Best of luck.

 

 

6 Real Estate Secrets When Selling Your Home

#1: Open Houses Don’t Work.

Open houses are a thing of the past. Years ago, when you wanted to sell your home, the only way that buyers could see the inside of your home was to be invited to view your home via an open house or making an appointment with the agent listing your home. Now, if a buyer wants to see your home, they can just go online, to any of a dozen sites, and see the inside of your home without ever having to leave their living room.

The truth is open houses don’t work! Real Estate agents host open houses not to sell your home, but to obtain additional clients who are looking to sell their homes (including your neighbors). The fact is, you are more likely to win the lottery than sell your home with an open house in most areas.

#2: Marketing is Job Number 1.

If you are selling your home, the real reason you hire a Realtor is marketing. A Realtor’s job is to get as many qualified buyers to your home as possible so that you can sell your home for the highest price. Marketing is the cornerstone of the Real Estate business and a Realtor that does not know marketing, is not worth the commission. Many Realtors avoid the topic of marketing and try to confuse homeowners with internet terms and the size of their firm, all of which means nothing to the actual sale of your home. Here are the things you should be aware of:

* When you hire someone to sell your home, first make sure they are a Realtor and ask to see their Realtor card. There is a big difference between Realtors and Real Estate agents. Real Estate agents cannot list your home in the MLS, a database of homes for sale by participating Real Estate firms.

* Make sure you select a Realtor that truly understands marketing – proactive marketing. All agents use the internet, so that is no big deal. All listings will likely be on Realtor.com and Zillow. Have your agent do a S.W.O.T analysis for you, find out if they work full-time as a Realtor, and ask them what they do that DOES NOT involve the internet to sell your home. Find out how long they have been Realtors, and ask to see any 3 homes sold in each of the last four years. In a very short time, you will be able to sort through the wheat and chaff.

* Don’t be fooled by the most common secret. An agent will mention they work for a big firm, and therefore, your home will get more views on the internet. This is not true, in almost all cases, any home being listed by a Realtor will be listed on the website of all the Real Estate firms in the area and most national websites as well. So even if you list your home with “Mom and Pop Realty,” your home will show up on even the big companies’ Real estate websites.

#3: Discount Brokers/Limited Service Brokers Can Be a Good Choice.

Regardless of what the industry tells you (including real estate agents) these firms have a place at the dinner table and serve a vital function in the industry. Let’s be honest – all people are a little frugal, and if you could find a cheaper alternative to paying a Realtor, you would. On occasion, discount brokers/limited service brokers can save you money.

Here are two specific cases where we refer our clients to limited services/discount Realtors:

Scenario 1: You have a home under $120,000 (don’t be jealous, Californians and New Yorkers).

Real Estate is a business, and agents are people who rely on that business to pay their own bills. So, if your agent works at a firm that takes a cut of the commission (in many cases 30-50%), the agent must determine if selling your home is a good business decision. Lets look at the numbers:

* Home Price = $120,000

* 3% commission (Listing Side only) = $3600

* Minus Firm Split (35%) = – $1260

* Minus Taxes (25%) = – $900

* Minus marketing = – $800

* Leaves a net commission of $640, to the agent

If the agent only nets $640 on the deal, how much time can you reasonably expect them to spend on your behalf selling your home? In this case, using a limited service broker could save you $2000+ dollars on the listing side after the cost of the limited broker fees and expenses are deducted.

Scenario 2: You are in a super hot market.

If you are in a market that is so hot that all you have to do is put a sign in your front yard, then limited service is a good option. They put your home in the local MLS system and buyers just show up. AWESOME! The key to making this work is to have your home appraised before you call the limited service brokers to make sure you are selling your home for the right price. Once you get a contract from a buyer’s agent, hire another agent or lawyer to help you with the details on an hourly or fixed-rate basis. The key is making sure you only accept contracts from buyer’s agents. If you are not sure what that means, get clarification in your state. (I can’t give you all the secrets!)

#4: All Agents Are NOT Created Equal.

Just like any industry, there is a range of competence within the Real Estate world; However, many people believe that all agents are the same. I suggest that when you are interviewing agents, request that they send you the contracts ahead of time, and prepare a set of questions for them to answer. If you are in North Carolina, here are just a few questions I suggest:

* What is dual agency? And do you practice dual agency?

* What is the difference between due diligence and earnest money? And what happens if a buyer cancels the contract?

* Am I required to do repairs on my house, or is my home sold as-is?

* Show me the marketing plan for my home, not a generic presentation.

#5: Some Agents Will Try to “Buy the Listing.”

This is when an agent convinces a homeowner they can sell their home for a price significantly higher than market value. This tactic is successful when an owner uses money to select the agent. The agent’s intention is to have the owner sign the listing agreement under the auspices of an inflated sales price, and then the agent will steadily lower the price of your home until it actually sells.

#6: For Sale By Owner (FSBO) Homes Don’t Save Money and Time.

The company line for agents is that they will help you buy any home; however, most agents do not like to deal with FSBO properties. First and foremost, Real Estate is a FOR-PROFIT job. Owners selling their own home have made a decision not to pay a Realtor, but your agent does not work for free. Therefore, as a buyer, if you choose to consider FSBOs, you need to have a discussion about who is responsible for paying commissions. In many cases, you as the buyer could be responsible for paying the commissions on the deal in addition to closing costs and down payments