Negotiating Commissions with the Realtor

Wednesday, April 22nd, 2009

Many Buyers and Sellers believe that the commission charged by a Realtor is set by statute or regulation. This is not the case. In fact commissions are entirely negotiable and can be quite dependent on your situation. There is no set rate though consumers are often told it is a standard 6% commission rate. This is simply not true. That amount is what they like to customarily charge. However, like everything in your deal, it is negotiable. If you find yourself needing to hire a real estate sales person be sure to clearly set the commission rate. Ask questions such as what happens if you find your own buyer or seller, what is the rate if another broker is involved. At times you can set a sliding scale or even an hourly rate.

Before you sign any listing agreement to sell or a buyers agency agreement to help you find a property consult an attorney ( like me, or me) who are is familiar with these contracts and can work with you to set the lowest commission. Remember, real estate sales is a competitive world so get the best deal!. For another article on this topic click here.

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Debt to Income Ratio=Affordability

Wednesday, April 15th, 2009

We are hearing and reading that home affordability is elevated to record levels, so lets look at what hard numbers, tell us in terms of debt to income ratio.

Recent figures show that the cost of home ownership has fallen 43 percent from the peak in this cycle, with more than half of that due to the decline in home prices and the rest due to lower mortgage rates and increases in income.

What does that mean on a real monthly payment basis, because the contract price is often less important than the actual amount of the check we’re going to write at the end of every month for your mortgage and taxes. How much of your income are you going to spend each month to pay for the house? (Assume that you put 20 percent down on a conforming loan).

In Philadelphia you will now pay 28 percent of your income, down from 36 percent. Historically, a 31 percent debt-to-income ratio on your mortgage was considered fiscally healthy.

So for those of you potential home buyers unsure, waiting for prices to be ever-so-favorable, open your eyes! Prices may fall more, but you’re already in a pretty good place. Now is the time to go for it. There is a great deal of inventory out there and deals to be had!

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1st Time Home Buyers $8,000 tax credit.

Monday, April 6th, 2009

For those who are thinking of becoming first time home buyers, now there is great incentive to act.

The American Recovery Reinvestment Act provides an $8,000.00 or 10% of the Sale price ( whichever is less) tax credit provided you make your purchase prior to December 2009.

To qualify you cannot own a Primary Residence in the past 3 years but you can own a 2nd investment home. Your income must be under $75,000.00 (though there are partial credits for those who earn up to $95,000.00) or under $150,000.00 for marrieds.

This is a refundable tax credit, not a deduction, so if your tax liability is under $8,000.00 you will receive a refund of the balance. Check out realtor.org for more information

This makes for an even better time to strike as a Buyer. Interest rates ( as of this post) are under 5% of a 30 year fixed loan.

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Signs that it is a good time to buy?

Wednesday, March 25th, 2009

I am asked constantly as to whether the residential real estate market is finally creeping back. Honestly, without looking at statistics ( since there aren’t many current indicators) it does seem that slowly but surely it is coming back in the Philadelphia region. With interest rates at record lows and stimulus money available for first time home buyer’s it is now a great time for Buyers, if you have the cash and credit, to get a great dea.l Recently channel 6 here in Philadelphia did a nice story that speaks to the upside of being a buyer now.

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Learn a lesson from AIG

Tuesday, March 17th, 2009

President Barack Obama and his top aides expressed outrage at reports that American International Group Inc. (AIG) went ahead with $165 million in bonuses even though the company received more than $170 billion in federal rescue money. Obama directed Treasury Secretary Timothy Geithner to see whether there was any way to retrieve or stop the bonus money. “I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?” Obama said Monday.

I could not agree with President Obama more. Financial institutions seemingly have blatant disregard for how they are to perform the one task they are supposed to do with responsibility… investing money with answer-ability! In my opinion, they lack fiduciary accountability. They find no problem with paying themselves bonuses while their company miserably fails. Worse, they try to justify the bonuses because they have a contract that requires a bonus.

Perhaps if they looked in the mirror for once they would notice they would not even have a base salary if not for the bailout; how they can even attempt to justify paying bonuses to the failures they employ is unconscionable, especially when those employees caused the collapse. Shouldn’t bonuses only be paid for successful performance?

There is a lesson to be learned in the residential real estate world from the disgraceful conduct of AIG and it is this: BE RESPONSIBLE for your financial decisions. If you are about to purchase a house, think long and hard about the affordability. While you are contemplating your decision, hire an attorney who can advise you and guide you so you do not make poor fiduciary choices in a residential purchase. RESPONSIBILITY and AFFORDABILITY will equal PEICE OF MIND and SUCCESS.

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City working with businesses trying to help homebuyers

Tuesday, March 10th, 2009

Finally, a City trying to help those attempting to purchase a home. Philadelphia has implemented a program to aid the sluggish housing market by working with local employers to provide matching contributions for those who work within Philadelphia and wish to live in Philadelphia. The city will provide $5,000.00 to match an employers contribution as part of what is called the Home-Buy- Now program.

It is inspiring to see both government and private employers involved in what is fundamental to our return to economic growth…getting people in to home ownership. Remember though you should have a lawyer guide you through your real estate transaction so go to my website where I can further help you.

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A good time to buy?…Yes

Tuesday, March 3rd, 2009

The index of pending home resales fell 7.7 percent after a 4.8 percent gain in December, the National Association of Realtors said today in Washington.

A lack of credit and record foreclosures are pushing property values even lower which may keep prospective buyers out of the market for much of 2009. With tight credit, mounting job losses and fears of further price declines the housing market is showing no sign of a bottom through the first half of this year.

Is it a good time to buy? Clearly it is because prices continue to tumble as do interest rates but you must consider the above especially asking can you afford the property if you lose your job. That should be the driving question as you contemplate a purchase. Your credit score will dictate what a lender will be willing to lend but you must consider what savings you have and what you can endure if you lose your job.

This is why I continue to stress the need for an overall legal inspection of your deal, to determine if the deal is right for you as far as the physical property but more importantly do you have peace of mind to go through with the transaction.

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Mortgage Foreclosure Diversion Program

Tuesday, February 24th, 2009

I am pleased to see that the city that a large portion of my law practice centers has a new and innovative program to help mortgage holders who are in a serious crisis and heading toward foreclosure. The Philadelphia Court System in response to the vast increase in foreclosure filings in Philadelphia in 2008 determined that judicial intervention was not only justified, but absolutely necessary to avert a crisis.

The Court created The Mortgage Foreclosure Diversion Pilot Program as a case management alternative designed to provide early court intervention in residential owner-occupied mortgage foreclosure cases. The process involves early identification of suitable properties for the program and diverts those cases to counselors and pro bono attorneys for possible interest rate renegotiation, loan restructuring, or other settlement options prior to foreclosure. The Mortgage Foreclosure Diversion Pilot Program provides court-sanctioned negotiations between lenders and borrowers to try to resolve troubled loans and avoid foreclosure.

It is my understanding that the program has been extraordinarily successful and other jurisdictions are considering implementation. It is great to see that the judicial system is being proactive and innovative in an effort to keep those that can afford to stay in their home with some reformulation of their loan.

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Help in the foreclosure world

Tuesday, February 3rd, 2009

Embedded video from CNN Video

The above video courtesy of CNN explains that there is help in the residential world if you are facing foreclosure. Many lenders are offering programs to reformulate your loan rather than foreclose upon you. The lenders DO NOT want your house, they only want you to make payments, so if you can get back to making some level of reasonable payments they will work with you to avoid foreclosure. Bottom line, contact your lender.

If you have any questions in Pennsylvania or New Jersey call Howard Jaffe, Esquire at 215-564-5200 or see my website at www.jafferealestatelaw.com.

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Renters may not have to vacate property in foreclosure.

Tuesday, January 27th, 2009

The failure and subsequent government bailout of Fannie Mae, along with Freddie Mac, was one of the key factors leading to the steep descent of the stock market, starting over the summer of 2008. Now the mortgage giant is attempting to ease the pain of some of its clients by saying it will ban the eviction of renters if properties undergoing foreclosure. If you are being told by a landlord that you must vacate because of pending foreclosure be sure to ask the Landlord who the lender is as it is possible you will not have to move while the foreclosure process goes forward. For more information contact Howard Jaffe, Esquire at www.jafferealestatelaw.com.

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