Do you have trouble steering? Home Builders don’t !
March 17th, 2007 by Mark FlandersThere is a very questionable practice on the increase in WA Real Estate communities. Potential buyers of Condominiums, Manufactured Homes, Modular Homes and Stick-Built Homes are finding themselves in an uncomfortable position created by the seller. The discomfort occurs when the buyer finds that they will be penalized if they try to use a Realtor® or Lender of their own choice. This practice is called steering.
Unfortunately, at the moment, gray areas in the law and RESPA (Real Estate Settlement Procedures Act) are being abused by builders and developers intent on improving their profit at any cost.
Steering is the practice of guiding a potential buyer towards an affiliated or related Lender, Title Company or Insurance Company. Steering reduces a buyers access to fair representation. Many home buyers have an existing relationship with a Realtor® they trust, or a Loan Officer they trust. Yet, when the buyers attempts to pruchase the property of their dreams, they are confronted with the information that, if the do not use the builder’s chosen Real Estate Company or Lender, they may be penalized in the form of Higher Earnest Money requirements and additional pre-qualification demands.
An example of the deceptive way this begins.
If you are a buyer interested in one of the new Condominium projects in Downtown Bremerton WA, you will be forced to fill out a “Registration Form” before you can view any of the units. While there is nothing wrong with this in itself, what happens later is, at the very least, questionable. Should you decide that you would like to buy one of these condos, you will find that, in the Condominum’s view, you already agreed to use the Listing Agent as your representative! Not only that, if you insist on using your own Agent, your agent will be given a reduced commission. The last person I want representing me when I purchase property, is the Listing Agent. The Listing Agent is legally required to protect the seller’s interest. In my mind, there is no way an Agent can represent my best interests at the same time that Agent is protecting the seller.
An example of the pressure you can expect.
If you are a buyer looking at property in Port Orchard WA, and you decide to pursue the purchase of a home in one of the new develpments, you will have to agree to disclose all of your personal financial information to a Lender that the developer chooses. In other words, even if you walk into the office with a Pre-Approval Letter and Proof of Sufficient Funds to Close, this developer will insist that you cannot make an offer on the home unless you get pre-qualified by his Lender!
An example of the financial penalties to watch for.
If you are a buyer interested in one of King County’s new condo projects, you can expect to be informed that if you insist on using your own Lender, your Earnest Money Deposit will be increased by $5000! No, you didn’t mis-read that. This is currently happening to a member of my own family. This buyer is prepared to put up a normal Earnest Money deposit. She has $2500 set aside for just that purpose. That’s just not good enough for this condo development, unless the buyer uses the seller’s Lender. If the buyer is determined to use her own choice of Lenders, she must come up with $7500! Does that sound like a financial penalty to you? It did to this buyer. She was incensed and furious. The sellers response? “Other buyers haven’t had a problem with it”. This form of coersion is happening with increasing frequency at the moment. I think a more accurate response from the seller would be “We have forced others to do it this way, and we’ll force you too!”
These are not fictitious examples. Each of these situations has happened this year. They happened right here in Washington State. Your Realtor® did not gain your trust by accident. Your Realtor® gained your trust by proving to you he or she is worthy of it. The seller has not proven that you can trust them. On the contrary, didn’t the seller, by practicing these business techniques prove beyond a doubt, that you had better be very careful around them?
As a buyer, you have a right to representation of your choosing! You may have to fight for this right. Your Trusted Realtor® and Loan Officer are the people you can count on. Don’t let yourself be manipulated this way. Eventually, the government will put a stop to these practices. For now, you must protect yourself. And if a seller tries to tell you that these are acceptable practices, you may want to ask them why there is a current lawsuit in progress.
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The revolving debt nightmare is faced by many Americans everyday. An entire industry has developed because of it. As with any industry, there are some good companies, many mediocre companies and too many very poor companies. In this industry, the mediocre and poor companies can make a bad situation significantly worse. The impact of this mediocrity shows up on your credit report. While you believe all your credit problems are under control, the reality is often quite different.
An adjustable rate mortgage (A.R.M.) is one of the most popular options available to both home buyers and homeowners considering a refinance. Many borrowers do not fully understand the concept of an A.R.M. and as a result may be somewhat hesitant to pursue this type of a mortgage. There are some situations in which an A.R.M. or a hybrid mortgage can be the best mortgage solution for a homeowner who is in the process of refinancing. This article will focus on explaining the concept of an A.R.M., explaining situations where it is the best solution, debunking the most popular misconception regarding A.R.M.s and explaining how those with bad credit can benefit from an A.R.M. At the conclusion of this article you should have a better understanding of A.R.M.s and may want to investigate this option further.
One of the most popular types of adjustable rate mortgage is the hybrid mortgage. Hybrid mortgages typically have one component which is fixed and one component which is adjustable. These types of mortgages may have a fixed rate for a set number of years. The don’t truly begin to vary until after this initial period. Alternately, a hybrid loan may be variable for a number of years and then become fixed after this initial period.
I believe most people are basically honest. Sure, we cut corners at times. We deduct items on our tax returns that may not be quite legitimate. We call in sick to work when we just want a day off without having to explain the true reason. Most people though, would never think of robbing a friend, or lying to their children.
What I see happening all to often is this. A client meets a Loan Officer and brings along all the requested paperwork. The client arrives with bank statements, tax returns and paystubs. The Loan Officer proceeds to enter data into a computer program prior to printing up paperwork and finds that the client’s income is too low to fit the loan guidelines. One of two things happens at this point. Either the client asks, “Well can’t we just get a Stated Income Loan?” or worse, the Loan Officer says “This won’t work, we’ll have to go Stated Income”. The client might have a defense, if they don’t understand what these loans are for. The Loan Officer has no defense.
“Beauty is in the eye of the beholder” or so the saying goes. The perception of beauty can be applied to Real Estate. I am referring to the rundown, lawn-overgrown, plywood-covering-the-windows, missing shingles and grafitti decorated houses that can be found in many neighborhoods. You know the one I am talking about. It has had 7 different real estate signs in the front yard in the last 3 years, but still sits vacant. It has trails through the tall grass where the local kids have their shortcut paths. Several cats seem to live on the grounds, but nobody knows for certain how many. And if you listen to the big kids talking to the little kids in hushed tones, it is haunted.
Did you know that Uncle Sam is just waiting to ride to the rescue on properties like this? These dilapidated homes are an opportunity waiting for both the enterprising fixer-upper buyer AND the Realtor® who will think outside of the box. Not only is Uncle Sam waiting to help, he’s willing to offer help with low interest rates, reasonable closing times, reasonable closing costs and approval of the whole transaction is based on what the ugly house will be worth after it’s finished! Repeat after me: “America is the best county in the world”.
