Don't we all love that line "You Can't HANDLE the Truth!!"  In my most recent article on RainCityGuide.com regarding Real Estate Commissions, I deal with some of the truths and misconceptions regarding the consumer's options in the real estate arena.

I find that most people really don't want to hear the truth.  Sometimes I am somewhat naive, and think maybe they don't know it.  But usually they just choose to ignore it for their own reasons.

Some agents and companies don't want people to know that commissions are negotiable, because they don't want the added burden of explaining that the fee they quote is THEIR limit, as opposed to an" industry set" limit.  It's easier to pretend that they have no say in the matter. Some buyers don't want me to get involved with which houses they see, because they don't want their spouse to see houses they don't want to buy.  "Bubble People" don't want to hear anything, because most of them never have bought a house and are trying to justify their inaction by saying they are the "smart" ones" who chose not to buy.

We have entered the "Era of Manipulation", where truth is an unwanted commodity.  Easier to steer people to your "hidden agenda" if you bag truth and tie it up and bury it.

I'll bet dollars to doughnuts that JACK would WANT the truth.  He's a big boy.  He can HANDLE it.  How about you?

This one's for GaryP over at Tri-City Real Estate News.

Gary, to understand the benefit of using a zero down, stacked cost loan to help safeguard you with regard to overpaying for a property, you need to get rid of some common mis-conceptions.

Most people think appraisers know what a property is "worth".  There really is no such thing as a "true value to the penny of what a property is worth".  Heck, we agents change the value of what a property is "worth" everytime we sell 3 houses collectively, as appraisers think a house is "worth" what the last three sold for.  So if we over sold the last three, that value the appraiser is using is inflated, because he is using those last three sales to determine value.

Most people want to know what "it appraised for", AS IF  that means something to THEM.  Even though the buyer pays for the appraisal, the appraiser is not valuing the property for the benefit of the buyer.  The appraiser is valuing the property for the benefit of the LENDER ONLY!

So, it is only common sense, that if you put 50% down and the lender is only "on the hook" for 50% of value, the accuracy of that value is not all that important.  Even if the appraiser is off by 10%, it won't affect the lender.  So the appraiser should not waste a lot of time on that appraisal, fine tuning it to the Nth degree, as it is somewhat irrelevant how accurate it is.  A quick "drive by, wham-bam-thank you m'am" appraisal is good enough for that purpose.

So when DOES the appraiser have to be MOST ACCURATE?  Again, common sense, whenever the lender's risk is the highest.  And when is the lender's risk the highest?  When you have no money down and the closing costs are included in the sale price.  So you can make your offer with 50% down, so the seller' will accept your offer IF AND ONLY IF YOU ARE PREPARED TO DO THAT IF NEEDED!  You can't lie and say that in the contract, if you don't HAVE 50% to put down,  if the lender would require that.  (Some people get that part wrong.  But that's another story for another day.)

So if you apply for your loan with zero down and the closing costs as part of the loan, the appraiser has to be really, really sure of his value when doing the appraisal.  That is because if the lender had to foreclose, the lender would need to sell the property at more than the price you are paying, to get his money back.  The appraiser protects the LENDER, not the BUYER.

So let's say you pay $350,000 and have $10,000 worth of closing costs and are applying for a loan of $360,000.  If it appraises at $350,000 or better, you know it is worth what you are paying, and then you "change your loan program" before docs are drawn, to your original 50% down intention.

Hope that makes sense.  Ask questions over here Gary, if you have them, because I don't visit your blog as often as I do mine .  And lately, not as often as I write at Rain City Guide.  I have to balance that better :-)  

I've spent the entire day and will spend most of tomorrow in a class explaining the different ways you treat a consumer if they are a client vs. if they are a customer.

Here in Washington I don't think agents should be allowed to make that distinction.  In this State we have representation at first contact.  As far as I'm concerned that includes both buyer consumers and seller consumers.  ALL should be treated as CLIENTS, meaning at the higher level of care.

Until there is a huge explanation of the difference between these two that the consumer can readily understand, agents should NOT be taught how to treat people differently.

My opinion is that a seller's confidences should be kept with regard to anything  the seller says at a listing appointment, EVEN IF they do not hire that agent to sell their home.  That should be irrelevant.  That is NOT what I was taught in class today.  In fact the teacher told a room full of agents that they could tell anything they heard during the listing appointment, unless they were hired to sell the house.  I'm sure the sellers meant for their conversation to be private. 

Same with buyer consumers.  There should be no difference in the way one buyer is treated from another, unless the buyer asks for a lesser level of care at a greatly reduced price.  Seller's can also request a lesser level of care for a greatly reduced price.  But no consumer should be treated with higher and lower levels because the agent decided to treat one as a customer and the other as a client, until and unless that distinction is made clear and the consumer signs that they understand the different level of confidence and care.

For 16 years I have heard agents making this distinction between clients and customers.  If agents don't get it after all these years, how can the average consumer be forewarned when someone intends to treat them with a lesser level of care.  It should not be permitted without informed, written consent of the consumer.

Just my $02...back to class tomorrow for more of the same.

I just posted a blank sample closing statement which I extracted from the Trust Title website, where you might find some additional information of interest.

When you go to your signing appointment a few days before closing, you will be signing your loan documents, some other fairly generic closing papers and the HUD 1 CLOSING STATEMENT. 

Here in Washington, you only see your side of the HUD 1.  On the samples you will see that one side is for the Seller's final figures and the other is for the Buyer's.  But when you get your actual paperwork, you will only see your figures and not the figures of the other party in the transaction.

I always read the second page first, as that total is brought forward to the first page.  So you should first review the detailed costs on Page 2 and then move to Page 1.

The Closing Statement groups costs by numbered lines.  Page two starts with the 700 series of costs which pertain to the real estate commissions and is only shown to the seller.  The 800 series are the buyer's loan costs which only appear to the buyer.  The 900 series are the Prepaids shown to the buyer.  The 1000 series are the lender impounds shown to the buyer.  The 1100 series are the Title Insurance and Closing Agent Fees which are shared fees and the buyer sees his and the seller sees his.

Page 1 carries forward the total costs and prepaids from Page 2 and tells the buyer how much they need to bring to closing in the form of a Cashier's Check payable to the Closing Agent.  On the Seller side it shows the amount the seller will be receiving as Net Proceeds.

If you are selling a house and buying a house on the same day, you would subtract your net proceeds from your sale from the amount due on your purchase, and bring a check for the difference.

The Beauty of Blogging is that just as "the eyes are the window to the soul", a blog is a glimpse of whether or not an agent's style will be compatible with your needs.  By reading the Blog posts of various agents, you can pretty much tell if that agent is the type you want to represent you in the sale of purchase of your home.  Some people want an agent who does what they are told; who follows instructions well.  Some people want an agent who points out those things they may have missed, like the potential future obstruction of a view, or the inadequacies of the quality of some of the improvements.

For instance, I do some pretty weird things, like use my fingernails to ascertain the quality of the carpet.    I mentally construct a "buyer profile" of the property, to determine if the buyer pool will be diminished, when and if, this buyer ever calls me back to sell the place.  I always point out the resale strengths and weaknesses, before a buyer makes an offer.  Some people HATE that.  It gives them a headache.  Some people LOVE that someone is looking out for their future value issues, so that all they have to do is decide if they like the place, or not.

Consumers finally have a great agent selection tool at their disposal, the BLOG.  Use that tool wisely, and you won't find yourself in the middle of a relationship with an agent, only to find that their style is not compatible with your needs and desires.

Over the last ninety days or so, I have been able to negotiate one major price concession, one change of price after the fact based on the home inspection, one complete tackle of a potential second offer without concession, and a few other minor skirmish wins.  This may be a sign that we are moving toward a balanced market in some market segments.

It is more important now than ever, to evaluate the situation when making an offer.

For Buyers: Don't assume there will be other buyers, and don't assume there won't be other buyers.  Pay close attention.  And as always, listen to what is NOT being said more than what IS being said.

For Sellers: Close hard and tight.  Tie up the loopholes.  Time to focus on getting most of the chips and the important ones, and not necessarily all of them.

Waiting can be excruciating for me.  I have a symbiotic personality.  The same traits that help me to put myself in someone else's shoes and just know somehow what type of property will make them happy, comes back to bite me at times like this.  I feel the anxiety of every waiting moment, almost as if I were the one waiting to hear about my new home. 

Accepting things once they happen and quickly moving to the next step comes, easy for me.  Dealing with the moment given what we have to work with, is easy for me.

But once we've done everything we can and are waiting for the other side to respond, when the ball is just not in our court, I can't imagine the actual buyer feels any differently than I in this moment.  Waiting.

Changing your mind in a Real Estate Transaction should FIRST be shared ONLY with the real estate agent who represents YOU and not the seller or the seller's agent.  There are many ways for your agent to create a happy ending wherein you do not lose your Earnest Money. Clearly, Timing is EVERYTHING, when it comes to extricating yourself from a real estate contract.  Talk it over with your agent as soon as you feel you may not want to proceed with the transaction.