REAL ESTATE JOKE OF THE MONTH

A client bought a new home and the broker ordered some flowers to be sent to him for the occasion. They arrived at the home and the owner read the card; it said "Rest in Peace".

The owner was angry and called the florist to complain. After he had told the florist of the obvious mistake and how angry he was, the florist said:

"Sir, I'm really sorry for the mistake, but rather than getting angry you should imagine this: somewhere there is a funeral taking place today, and they have flowers with a note saying, "Congratulations on Your New Home".

HOUSING AND ECONOMIC RECOVERY ACT OF 2008 - A MIXED BAG!

Although it has been heralded as a piece of "life-saving" legislation for the housing market, The Housing and Economic Recovery Act of 2008 that will kick in on October 1st contains some important provisions that will affect our industry adversely:

1. It eliminates DAP (downpayment assistance programs) that allowed buyers to borrow 100% of the purchase price. While this makes sense from a risk-based analysis point of view (these types of loans defaulted at a much higher rate than loans where the buyer actually puts in a downpayment out of their own money) it does not stimulate the housing industry by restricting first-home buyers, who are the ones supporting the whole housing "food chain". No one disputes that homeowners have more to lose if they have a downpayment, so maybe they will "try harder" to make ends meet when the going gets tough. But a responsible, stable income buyer will be a better credit risk than an irresponsible buyer with a downpayment.
   
   Comment: I believe that this provision will affect the demand from first-home buyers substantially. In this economic climate it is very difficult for a person with moderate to low income to save any substantial amount for a downpayment. A more equitable and fair way of determining default risk and access to use these types of programs would be by looking at the buyer's ability to pay (income & employment history) and financial responsibility track record (i.e. credit scores).
   
   


2. It amends Section 121 of the Internal Revenue Code (which is the exclusion that allows homeowners to sell their qualifying primary residence and exclude up to $250,000 ($500,000 for a couple) of capital gain from capital gains tax. Many savvy investors were combining this exclusion with the 1031 exchange provisions to build up equity via several 1031 exchange transactions, and then convert this investment property to a primary residence to take advantage of the capital gain break. With this amendment, Section 121 no longer permits homeowners to take advantage of the full tax-free exclusion on the sale of a home that was their primary residence if there was a non-qualified use of the property (i.e. investment) prior to being held as primary residence.
   
   Comment: I believe this amendment is just closing a loophole that only savvy investors with high net worth were using, so I am OK with it. However, it will restrict the demand for investment property transacted with investors looking to maximize their tax-free equity, and the sale of homes via 1031 exchanges.
   
   


3. It provides up to $7,500 in tax credits for first home buyers (or individuals who have not owned a home in the last 3 years). While this is being publicized as a "great thing" for our industry, this amount is only an interest-free loan for a 15-year period.
   
   My opinion: People with irresponsible credit behavior will be lured into home ownership by the shine of this tax credit (we are already seeing many volume builders advertising this credit) , will spend the $7,500 on consumer goods when they receive it, and increase their indebtness to the point of default. I believe it is our duty as REALTORS to point out to our clients that they will have to pay this amount back, and strongly suggest that they use the $7,500 instead to pay off high interest credit lines, or principal off their mortgage to shorten the life of the loan, build equity and have some forced savings.
   

ROAD IMPROVEMENTS PAVE THE WAY FOR MAGNOLIA
(Charleston Daily Journal)

Magnolia Development LLC has chosen two general contractors to begin road improvements in the upper peninsula area where it plans to build a large, mixed-use community on about 150 acres of highland. Workers are expected to begin constructing a 1,400-foot bridge and refurbishing three nearby roads next month.

COURT UPHOLDS SMOKING BAN, STRIKES PENALTY
(Charleston Daily Journal)

The town of Sullivan's Island's attorney said the ruling reaffirms local governments' authority to ban smoking. Though the original penalty was ruled unconstitutional, the town earlier this year changed it to comply with state law.

HOW DO YOU DEFINE QUALITY SERVICE?

For every business (especially for those of us in professional services) client satisfaction guarantees future success.

Happy clients bring more clients, and a great reputation in the marketplace (especially in a small market like Charleston’s) is a very desirable asset. It is essential to have business strategies and practices that result in repeat business and word-of-mouth referrals from our client base.

So, how does one make sure that clients are happy? Obviously, we need to provide them with “outstanding service”. The problem is that not everyone is on the same page when it comes to defining “outstanding service”. In order to avoid disappointing clients, I recommend following these guidelines:

1. Clarify mutual expectations from the beginning. Ask your clients what they expect from your service, as well as letting them know what you expect from them. This way everyone will know what to expect, and you can EXCEED your clients’ expectations.
2. Educate your clients. Explain the whole process from A to Z and identify the most common potential problems, so that they don’t get surprised if they happen.
3. Keep in constant communication. The worst you can do when there is a problem is to avoid communicating with your clients, thinking the problem may just go away, or that you may be able to solve it without their involvement. It is much better to let them know what the problem is, why it is happening, and how you are working to resolve it.
4. Assume responsibility. If there is an unforeseen event that affects the process, assume responsibility (even if it is someone else’s fault) and try to provide proactive solutions.
5. Be honest. Your clients will appreciate your honesty, even if the news that you bring are not favorable to them.
6. Show genuine interest for your clients. Give them personalized attention and be sensitive to their personal situation. This will set you apart from other service providers and will provide the “personal touch” that will remain in your clients’ memories looking forward.

You Can Now Buy a Home in Belle Hall Using an FHA Loan!

As of today, the Federal Housing Administration (FHA) loan limit was raised from $268,000 to $335,000!

Now buyers can buy some homes in Belle Hall using this program, which currently is the most flexible available for buyers...

7 Deadly Sellers' Sins

Adapted from " The 7 Deadly Sins Your Sellers May Be Committing" By Thomas M. Mitchell as published in National Realty News, March 6, 2008

So, what's the biggest mistake home sellers make? Thinking that potential buyers will walk into their home and just love the way they have decorated. Wrong.

Here is what the Accredited Home Staging Council refers to as the Seven Deadly Sins of Staging. Do you know any sellers guilty of any of these potential deal breakers?

1. Failure to thoroughly deep clean the home – especially the kitchen and bathrooms.
2. Failure to de-clutter the entire home.
3. Failure to de-personalize the entire home.
4. Failure to use neutral colors when painting both inside and outside.
5. Failure to spotlessly clean the windows and window coverings.
6. Failure to make the pets disappear.
7. Failure to spruce up the number one calling card – the landscaping.