Jon Kichen's Blog

Tax bill changes coming...

2012-01-31T14:33:00.001-08:00

February 2012 will be the first time the counties throughout Arizona will be sending some important information with the annual property tax information. As a result of a bill signed by the Governor in early 2011, every homeowner will be required to execute an affidavit stating that the property is their residence, and send that back to the county. By doing so, the homeowner will receive the state credit to keep their property taxes low. If the homeowner fails to return the affidavit within 60 days, they will lose that credit and will experience an increase in their property taxes. And, there is no appeal available if the taxes are increased as a result of the owners failure to submit the form.

Every homeowner will need to do the same every two years, in even numbers years unless the legislature repeals the bill.

This is an opportunity for every real estate agent to contact all their previous clients and tell them to look for the envelope from the county and to complete and return the form. Since the form must be notarized, you might want to pay special attention to some owners who are home-bound or who have a hard time getting around. Check with your local title company and see if they offer mobile notary to help those who can’t travel to get this done.

While we all want to see the state balance the budget, we do not want to see it done in this fashion; taking advantage of the elderly and others who are unable to complete the form.

Jon Kichen

Vice President/Associate Broker

WestUSA Realty

7077 E. Marilyn, #130

Scottsdale, AZ 85254

602-942-4200

602-863-4602 E-Fax

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Don't Sign a Commission Reduction...

2010-07-02T10:39:00.000-07:00

DON’T SIGN A COMMISSION REDUCTION…

Unless you fully agree with the change. If you sign, you agree, so don’t think you can file an arbitration against the listing agent later.

Sadly, lately, there has been extreme pressure on our commissions, both at the time of listing and at the time of contract acceptance. So, what can you do, as the buyer’s agent, when the listing agent, representing a short sale or lender owned property, asks or demands your acceptance of a lower commission? Must you sign it? Can you say no?

Let’s explore…

You wrote an offer on a short sale listing offering you 3% in the MLS. The offer was accepted by the seller, but now needs lenders approval. After waiting weeks, the listing agent calls you and says the lender has accepted the deal, but they are cutting the commission from 6% to 4%, so you need to accept 2%. They send you an addendum for you/your broker to sign.

The Commissioners Rule, R4-28-1101.D says… A licensee shall not allow a controversy with another licensee to jeopardize, delay, or interfere with the initiation, processing, or finalizing of a transaction on behalf of a client.

So, you might interpret that to mean you cannot say no. Well, that is not necessarily the case. The balance of that section says...This prohibition does not obligate a licensee to agree to alter the terms of any employment or compensation agreement or to relinquish the right to maintain an action to resolve a controversy.

Thus, you might be faced with a difficult business decision. Say yes and sign it, and the deal probably goes through, albeit at lower compensation for you. Say no, and you have the right to say no, the deal might fall apart, and you might need to start all over again with that buyer. Or worse, that buyer might be upset and bail on you, leaving you with no buyer and no commission.

But remember, if you sign it, even with the words “under duress” “under protest” etc. you will have little or no chance of collecting any compensation later at an arbitration. As a member of the AAR Professional Standards Committee, I can attest that I have witnessed this attempt by agents to collect the balance after they signed “under protest”, and every one failed.

This issue can pose a difficult decision for you. Feel free to call any of your brokers for help sorting through this issue.

Jon Kichen

Vice President, Associate Broker

West USA Realty

602-942-4200

602-863-4602 (e-fax)

2009-09-14T10:00:00.000-07:00

Arizona’s Anti-Deficiency Statutes to Remain Unchanged

As a result of legislation that was signed by Governor Brewer last week, the Arizona Anti-Deficiency statutes will remain unchanged.

Earlier this summer, the Governor signed SB1271, which effectively changed the rules on how and when lenders could pursue a borrower after a default of a mortgage loan. The statutes have been in place in Arizona for decades, and they protect a residential homeowner from being sued by a lender after a default, such as a foreclosure. With those statutes in place, after a lender foreclosed against a homeowner, in most cases, they were unable to pursue the homeowner for the deficiency. SB 1271 would have changed that, and many of the provisions of the bill were ambiguous as to the definition of a resident or occupant. This ambiguity could have thrown thousands of homeowners into a situation whereby they could have faced additional costs after a foreclosure. Thus, The Arizona Association of Realtors along with many other consumer groups lobbied the Governor and the Arizona Legislature to draft legislation to repeal 1271 before it went into effect on September 30,2009.

The Arizona Legislature and the Governor did just that. During a special legislative session this summer, HB 2008 was drafted and approved and Governor Brewer signed the bill last week. HB 2008 repeals SB 1271 and its change to the anti-deficiency statutes; thus, the statutes remain as they were.

2009-05-22T13:36:00.000-07:00

Lenders think they are exempt: they’re not!

With the flood of foreclosed homes on the market, many agents are faced with the task of convincing the lender/seller of their statutory obligations to make certain disclosures or provide certain services. They are:

Federal Lead-Based Paint Disclosure. This is a federal rule and lenders are not exempt. Although they will try and cite the exemption to the rule that states it is not needed “…in foreclosure transactions…” they fail to realize that they are misinterpreting that rule. When they foreclose on the property; THAT is the foreclosure transaction. But, when they sell it to your buyer, they are not exempt and if the property was built prior to 1978, they must provide the disclosure.

Septic Certification. This is a state law that went into affect a few years ago, whereby upon transfer of title, any property that has an in-service septic tank must have the tank inspected and serviced and thus, certified before title is transferred. This is a statutory obligation of the seller, even a lender who foreclosed, to provide that certification, and the agents should be proactive in getting this accomplished.

Affidavit of Disclosure. Another state law, that went into affect around 2002, which requires a seller of real property that is in the county (not in an incorporated city) and never subdivided, to provide a disclosure statement to the buyer as to certain information regarding the property. The actual form itself is required by statute, so the seller must complete and sign it, have it notarized, provided to the buyer 7 days before COE. Our AAR purchase contracts change that last part to 5 days after acceptance. Once completed and signed by the buyer, the Affidavit must be recorded.

In all three cases above, the seller is obligated to provide the disclosure or service, and they cannot be waived. Even if both parties agree to waive either their rights or obligations under a statute, any such waiver would be deemed unenforceable by the courts.

Thus, the agents; both listing agents and buyers agents, must be aware of the necessity of any of the above, and be instrumental in making sure they are completed and delivered to any buyer.

2009-04-16T10:40:00.000-07:00

“Be Afraid, be Very Afraid…”

You might remember that line from a movie. Ahh, but what movie?

Most people think it comes from “Alien”. No, it comes from “The Fly” (the 1986 remake with Jeff Goldblum and Geena Davis). The scene has two women and a man. The one woman, fearful of doing something, says, “. ..But I’m afraid…” The man says, “No, don’t be afraid…” and the other woman says, very sternly, “Be afraid, be VERY afraid”.

This brings to mind the fear and paralysis that affects some real estate agents who fear the unknown. I have talked to so many agents who tell me “… I refuse to do a short sale or lender owned deal”. Why? They are afraid of the unknown, but the difference here, versus the movie, there is nothing to be afraid of. What most agents fear is the process, which is unknown to them, and sadly they have heard the horror stories and use both of those factors to take that position.

As a result, they are staying away from a large segment of our current market, which likely will stay that way for most of 2009. We will see more foreclosures before we see less, especially with the government-imposed moratorium being lifted last week; thus the sheer number of pre-foreclosure and lender-owned sales will increase. If you are fearful of that part of the market, you might be out of business.

So, if you decide to go after those foreclosed, lender-owned listings, you should answer these questions.

First, are you going to work harder for potentially less income? Yes. These deals take longer, require more documents and certainly require patience. With prices at a record low, and pressure on commissions, your income will be less. That’s a fact, but there is not much we can do about that.

Next question. Will I lose some control of the deal? Yes, as lenders make their own rules, we need to far-more flexible in dealing with many of our standard rules. Your brokers are here to help you with that.

Last question. OK, how do I get these deals? How can I get listings from lenders? This takes work, good ole prospecting. Talk to every mortgage broker and title officer you know. They deal with lenders and asset managers every day. Ask for names, or have them put in a good word for you. It’s just like prospecting for listings. Knock on doors, call people, and make yourself known. Lenders are assigning hundreds of listings to real estate agents all over the valley every day. You might just get in front of that person (or on the phone) on the right day, when they need another agent. Timing is a big part of success. You certainly won’t get these listings unless you prospect for them every day.

Remember when you started in the business? Did your phone ring the first day, with a buyer ready to buy, or a seller ready to sell? Probably not. Think of this as your first day in the business. What should you do to generate leads?

Fear is the #1 killer of successful sales careers. Fear of anything… Fear of rejection, fear of failure, fear of the unknown, even fear of success. Each of these can be overcome by a desire or need that is stronger than fear. That is up to you to decide what that is, but if you do, there is a lot of money to be made in this market.

2009-04-16T10:12:00.000-07:00

As the Market Turns

Good news from the trenches... the market is picking up.

An article in the Sunday paper 3 weeks ago identified price points and listing availability in certain areas of the market. As readers saw that they could buy a nice 3 bedroom house for $50,000, they were obviously surprised. Sensing that was the "bottom" of the market, they started looking at houses. We have seen multiple offers, some over list price. We have seen extremely busy open houses, and many agents are reporting that their phone is ringing constantly.

So, are you getting your fair share? If not here are some tips. Your phone will not ring if you do not have any marketing tools out there, signs standing or ads running. If not, then do the following (not in any order)

1. Call everyone (and I do mean EVERYONE) that you have worked with in the last 5 years. Buyers or sellers, no matter. Call them and see how they are doing. Catch up with family, life events, etc. Each one of them has a story, might have a real estate need or might know someone who does.

2. Find other agents who have listings and offer to sit them open. EVERY DAY! Not just the weekends. Time shift. Think about 3-6 PM and catch people on their way home.

3. Think about how you made your first 10 sales in your career. How did you find those buyers/sellers? Go back to basics and do the same things.

4. Bump up your website. Add some valuable tools. Work with a lender for a mortgage calculator. Add flash video. Give visitors a reason to go there (find ways to drive them to your site) and stay there (give them valuable information and keep them engaged. You might need to hire a SEM or SEO person (search engine marketing or search engine optimization). No sense in having a website if no one sees it.

Bottom line. There is no sales slump that can't be cured by good ole fashion marketing and prospecting.