Freqently Asked Questions, Part II: Sellers

Will it cost me more because of the level of service you provide?

No, you get all of the exclusive real estate services we provide, plus a fully trained team of real estate professionals for the same price as hiring a single agent and another brokerage.

If a person shows up to my house wanting a tour, should I let them in?

No, never let anyone into your home unannounced. REALTORS® follow a set protocol for making appointments to see your home and serious clients will contact a REALTOR®. Be leery of the person who knocks on the door, expecting to be let into your home. If this ever should occur, have the people wait outside while you contact us.

Should my listing agent be showing my home?

Many homeowners use this as a barometer to judge whether an agent is doing a good job; however, a listing agent’s job is not to bring a buyer to your home, but to market your home to other real estate agents and their prospective buyers. With over 1,000 real estate agents in the Prescott Tri-City area, the likelihood is that someone other than your listing agent, or even the listing agent’s firm, will sell your home. Although, the Kathleen Yamauchi Group sells a high percentage of our own listings, it is possible we might go through the entire listing period without having the right buyer for your home. We will show your home as often as we have a qualified buyer, we will not however show your home to just anyone to make you think we have a buyer.

How does a lockbox work?

A lockbox is a hollow metal box that attaches to the front doorknob or some secure place nearby. Inside the hollow area is another matchbox-sized box that contains a key to the house. When an agent opens the lockbox, that smaller container slides out, revealing the key.

The lockboxes have a tiny microprocessor inside and can only be opened with an electronic key, which is only available to members of the local Prescott Az MLS. All of the keys have a unique identifier, so when someone opens the box, the microprocessors inside "registers" the agent who opened it. In addition to the agent’s name, the date and time of access are also identified. Once the lockbox has been accessed, the information is stored in the electronic key and sent automatically to the local MLS Association that evening.

Do I have to have a lockbox on my house?

The main purpose of a lockbox is to facilitate the sale of a home. Without it, buying or selling a home would be much more difficult. A lockbox provides convenience to the seller, buyer, and real estate agents. Without the lockbox the seller would have to be present for all showings, leave the door unlocked, or coordinate getting a key to each and every buyer’s agent who wanted to show clients the home. Since it would be near impossible, not to mention extremely inconvenient to do any of the above, a lockbox is a good, convenient solution to accessing your home.

Do you only accept "high-end" listings?

No. We are often perceived as a "high-end" brokerage because of the level of real estate marketing we provide; however, we work with clients at every range of the home scale, from 600 square foot, $100,000 bungalows to expansive, multi-million dollar estates. Browse our current homes for sale.

Can I turn the utilities off once the home sells?

No, the utilities must remain on the entire listing and escrow period due to showings, inspections, and the final walk-through.

What is the listing price you recommend based on?

The listing price your real estate agent recommends is based on a careful analysis of the market, sold homes that are comparable to your home (known as comparables or comps), location, and your homes distinguishing features.

How much will it cost to sell my home?

Since many of the fees associated with selling a home in Prescott is based on the purchase price, a definitive answer is hard to come by; however, the following items are a general list of expenses a seller can expect to pay. (Note: some items are negotiable between the buyer and seller, if written into the purchase contract.)

Home inspection
Pest inspection
One half of the escrow fees (split with the buyer)
Recording fees (split with the buyer)
Payoff of Seller mortgage
HOA transfer fee
Assessments
Real estate commission
Title insurance
Septic inspection
Survey, well inspection, home warranty (negotiable with buyer)

Should I leave when my home is being shown?

It is always best to leave when your home is shown. With you there, potential buyers may feel like intruders and will hurry through the house. With you gone, buyers will be free to envision your home as their own or talk openly about the features of your home they like or dislike.

If you must be in the house during a showing, be courteous but don’t force conversation with the potential buyer. Do not volunteer information about your home. What seems like an advantage to you, may be a disadvantage to the buyer. Let the prospective buyer’s agent, who knows his/her client’s likes/dislikes point out the features of your home and answer their client’s questions.

What are comparables or comps?

Comparables, or comps for short, are recently sold properties that are similar in size, age, location, and amenities to the subject property. Comparables are used by appraisers and real estate agents to determine fair market value of a property.

Frequently Asked Questions, Part III: Buyers

What is a Buyer Broker Agreement and why should I sign one?

A Buyer Broker Agreement is a contractual agreement between a buyer and real estate agent that precisely outlines responsibilities, representation, and compensation.

By default, all real estate agents work for the seller (even if the agents and sellers have never met before), and have a legal obligation to protect the interests of those sellers. As such, the seller agents can provide information about particular properties to buyers, but their primary loyalty is to the sellers of the properties. A seller agent, cannot do anything that would be in the interests of the buyer rather than the seller.

A Buyer Broker Agreement establishes that the real estate agent works for the Buyer exclusively and owes loyalty, honesty and fiduciary duties to the buyer alone. By signing a Buyer Broker Agreement, you allow your real estate agent to completely represent your interests. They can also talk to you about real estate in general (including providing information about potential market downturns and risks), provide honest opinions and analyses about the relative values of properties, expose you to properties other than those listed by other real estate agents (including showing properties For Sale By Owner), negotiate offers on your behalf and in general, represent your interests to the exclusion of the interests of the seller.

Can you show me any home or just ones listed by your company?

We are not limited to showing you only the homes we have for sale. We can show you any home listed in the Multiple Listing Service, as well as newly constructed homes in a new home subdivision, and For Sale by Owner properties.

What is earnest money and how much do I need to put down?

Earnest money is the deposit you make on a home when you submit an offer. The Earnest money proves to the seller that you are serious about wanting to buy the house. When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment, closing costs, or other agreed upon expense specified in the purchase contract. If your offer is not accepted, your money will be returned to you.

The amount of your earnest money varies and is negotiable between parties; however, an industry standard is anywhere between 1% – 2% of the purchase price.

Should I get prequalified before looking at property?

Yes. It is to your advantage to pre-qualify for a mortgage. The following is a list of benefits of prequalification:

Prequalifying for a given loan amount allows you to comfortably shop for a home within your price range.
Prequalfying can speed the process of obtaining a mortgage once a house of your liking has been identified.
Prequalifiying gives you an advantage with the agent and sellers to whom you submit an offer, demonstrating to them you are a determined and qualified buyer. This is especially important in a fast-paced market, where competition for a limited number of homes exists.

Prior credit approvals can expedite the closing of your loan. Proof of prequalificaiton is required with the submission of the Arizona Residential Purchase Contract (your offer).

What is the difference between prequalification and preapproval?

Prequalification is a quick, simple process that is done either over the phone or at your initial meeting with the loan officer. Prequalification is based on housing and debt ratios, and will give you an idea of how much house you can afford, as well as options for loan programs.

A preapproval requires more detailed documentation of the information necessary to complete your loan. The loan documents will be processed, with information obtained from you and outside sources and then submitted to underwriting, where all the documentation will be reviewed. The underwriter will do one of three things: approve, reject, or approve with conditions. If the Underwriter issues an approval of your loan with additional conditions to be met, it is considered approved; however, the outstanding conditions will need to be satisfied before your loan is considered fully approved. Once the process is complete, you will be given a preapproval letter stating the lender is willing to give you a loan. This letter is typically valid for 60 days.

What information will I need to apply for a loan?

Some general information that is typically required includes:

The names and social security numbers of the borrower and co-borrower(s).
Where you have lived for the past two years. If you were renting, the landlord’s name, address, and phone number.
Your most recent two-year employment history, including income.
W-2 tax forms for the past 2 years.
A listing of all creditors, including account balances.
Information about all bank and investment accounts, including balances.
The value of any other assets you might own, including other real estate.
Bank statements for the past three months.
Gift letter statement. If you have received any money from friends or relatives which will be used towards the purchase of the home.
Most recent pay stubs. (Usually the last 30 days.
Any supporting documents proving claims of additional or supplemental income for sources like: social security, pension, stock dividends interest and such.
If self-employed, additional tax forms and financial statements regarding both you and your company may be requested.
If recently divorced you will need to provide a copy of the divorce decree as well as proof regarding any claims of receiving alimony or child support.

There may be other information as well.

Enticing Home Buyers Who Are ‘Somewhat Interested’

A client of mine asked what I could "do to entice the buyer" whose agents said they were "somewhat interested" which is a box they can check our showing feedback form. Unlike the sales of smaller ticket items, there is little we can do to convince another real estate agent to convince their home buyer to make an offer. "Somewhat interested" seldom translates into action. You might be "somewhat interested" in buying a Mercedes but to move on that interest isn’t something the dealer can control other than offering that car at a lower price or throwing in extras.

You could offer that agent a 1% bonus if they sell your home. In my experience such bonuses have not been effective. No one is going to persuade a buyer to buy a home. It’s our job to get the buyer into the home. A real estate agent will point out features and get answers to questions. But the buyer, alone, makes their decision.

You may, indeed, be priced fairly. But a severely reduced ticket price on a Mercedes is always more enticing.

New Real Estate Market Reality

Today’s Seller is much more aware of real estate market conditions than Sellers of the past. Unless you live in a cave, it’s impossible not to know that property values have declined significantly and the future is uncertain. I am asked daily to gaze into my crystal ball and "see" when we can expect a turn around.

My answer is this: markets like ours in Prescott Arizona that saw massive increases in values over the first half of the decade, were fueled by the frenzy of speculators, investors and irresponsible lending. We’ve seen a decline of 40-50% in property values, fed by short sales, foreclosures and repos. We are at least close to values bottoming out, but any appreciation is likely to be slow and cautious. It could take a decade or two to rise to the values of 2005-2006. Facing this new reality is the challenge.

Banks Are Responding Quicker To Short Sales

The Short Sale transaction process has taken a turn for the better. A process that once took as long as six to ten months is now whittled down to as many weeks. Banks are realizing the importance of responding more quickly to submitted offers, and they have increased their staffs to meet the rising demand of distressed home owners who owe more than their homes can fetch in today’s market.

I recently opened two Short Sale escrows and both banks, National and Chase, ordered and had appraisers in the homes within ten days. Each promised to respond to the offers within ten days of receiving these appraisals. It should make the Short Sale process much less of a nightmare for folks already stressed by economic conditions.

The Reality Of 2010 Real Estate In Arizona

I spoke with a homeowner the other day. In response to my recommended price for selling his home in today’s market, he said he thought he’d just wait for the market to come back.

He wasn’t in any hurry. So you don’t really want to move to be near your children I asked. How long are you willing to wait? We are selling at 2002-2003 prices. It will be years before we see the peak prices we hit in 2005 which followed a couple of years of 20-30% increases. I’m guesstimating 5-7 years if things go well economically. Well, he says, my grandchildren will be grown by then. I guess I don’t want to wait that long. This is the reality of 2010 real estate in Arizona.

Should You Remove Your Home From the Market For The Holidays?

I addressed this same issue earlier in the month, but I still get numerous calls from Sellers wondering if they should remove their home from the market for the holidays. One couple I convince to reactivate their listing after they’d taken it "off for the winter", is especially happy – they received a good cash offer closing in 2 weeks.

The important thing to remember about "off-season" sales is this: if a buyer is looking in the cold and rain or snow, they are most likely serious buyers. The fair-weather browser won’t be scheduling an appointment to look at your home. It’s fair to guess that the winter buyer will be more interested in the home itself, the roaring fire and the apple pie in the oven than the view from the deck, so lay a fire on the hearth and have an "apple pie" candle ready for that call to show your home.

Busiest Christmas Sales Season in My 19 Years In Real Estate

Warren Buffet recently said "Buy something that can’t be moved to China or India – buy quality and hold for the long term". There may never be a better time to buy real estate in Prescott, Arizona.

That probably explains the heavy shift from financed to cash transactions. Where else can you put your money and know a year from now you’ll still have something to show for it? Whatever the reason, this has been the busiest Christmas sales season in my 19 years in real estate with sales prices ranging from the mid $200,000s to the mid $700,000s and several million dollar clients zeroing in on their purchases. There are still plenty of great deals to be had in this buyer’s market and the good news is that not all good deals are bank owned. Savvy Sellers are pricing their homes within range of the bank competition and are attracting ready, willing and able buyers.

Many Want To Take Their Home Off The Market For The Holidays

Many of my Sellers want to take their homes off the market for the holidays. "No one is shopping for a home at this time of year," they say.

Well, maybe. But why take it off? If there is anyone shopping at this time of year when most of us want to sit back and enjoy the Christmas season, you can believe they are serious buyers. I have sold a few homes the week between Christmas and New Years and in this tough market you don’t want to be missing out on any opportunity. Who knows? The buyer may be feeling more generous and appreciative of holiday decorated home. After all, as Arizona’s Christmas city, Prescott is so appealing this time of year.

Tax Credit Extension

Much anticipated, the news for the housing market came Friday when President Obama signed the extension of tax credits for home buyers and broadening their application.

The tax credits apply to contracts signed no later than April 20th, 2010 that close by June 30th, 2010. To qualify the borrower must have a yearly income of $125,000 or less for individuals and up to $225,000 for couples. Tax credits of up to $8,000 are offered to first time home buyers and now there is a $6500 tax credit for buyers who have owned their current home – valued at less than $800,000 – for at least five of the last eight years. Check out the Federal Housing Tax Credit website for more information.