Real Estate Glossary
It occurred to me that there are few places for consumers to go to get a layman’s explanation of Real Estate Jargon, so I thought I would begin a glossary on this blog for people who are planning to buy or sell real estate. I am going to start with the A’s of course, but if you need to have a W or Z term described, just ask. The list will by no means be exhaustive and may have many important holes in it when I am done. If you find that is the case, please email me at john@mijac.com or leave a post here and if it is at all relevant to the Buying and Selling of Real Estate, I will add the term to the list! Many thanks to Hogan Real Estate School http://hoganschool.com/index.php where I learned a lot of what I know about these terms, and to Michelle Lind who’s excellent book “Arizona Real Estate” http://www.aaronline.com/documents/MLindBook.aspx is a must have resource.
Abstract of Title: A summary of the history of the property which might reveal gaps in the record of ownership (which might need to be cleared up before a sale.)
Acceleration Clause: This clause in a Loan allows the lender to declare the balance of the loan immediately due (usually attached to some condition like non-payment).
Acceptance: The moment at which an Offer becomes a Contract. When there is a Meeting of the Minds, when all parties have agreed in writing to the terms of a contract.
Accretion: This is when land grows…think of lava flows, river deposits and the like.
Acknowledgement: In Real Estate this is a formal declaration made before a Notary and part of what a Deed needs to be valid.
Acre: In the US an Acre is 43,560 square feet (no more, no less). This weird number is actually rather elegant. One square mile (a Section) contains 640 Acres, which is a great number because you can divide it up so many ways without fractions…but this is true of 43,560 too. You can evenly divide it by 2,3,4,5,6,8,9,10,11,12 and so on – what an amazing number! You can easily and equally divide up an acre thousands of ways; this makes splitting land up rather easy.
Actual Eviction: If a tenant (or Lessee) fails to perform their duties, the Lessor can sue for possession of the property (typically unpaid rent, but other terms may be used.) See Constructive Eviction.
ARM: An Adjustable Rate Mortgage is where the interest rate and payments change over the life of the loan.
Adverse Possession: So called squatter’s rights, this is the taking title to land or an interest in the property of another. The specifics may vary from area to area but generally this happens when property is possessed through Notorious, Open, Continuous and Hostile Action. So, if I were to give you permission to use my land in a certain way you could not take it, but if you had been using my land every day, Openly and with Hostile intent over a period of time and I did not try to stop you or give permission then you might have a claim to the property.
Affidavit of Affixture: In Arizona this is the document which converts a mobile home (personal and movable property) to Real Property (Immovable and a part of the land). In all states there is a process of Conversion in which personal property becomes a part of Real Property, and sometime vice versa. (lumber into a home, trees into lumber, for example).
Agency: An Agent represents the Principal, the Principal employs the agent. So, in a Real Estate transaction the Client (Seller or Buyer of a home) is the Principal and employs the Agent, which is the Designated Broker. The Real Estate Agent who is working with the Buyer or the Seller is actually the Agent of the Broker, who is her Principal (because the Broker employs the Agent). This may be confusing but it is important to know that that your Real Estate Agent is the Agent of her broker and that Broker is you real Agent.
Alienation Clause: This is the clause in a loan which allows the lender to declare the balance of the loan is due upon the sale of the property. Without this, you could (in theory) sell your property and still owe the lender .
ALTA Title Policy: This is the Title policy the lender usually requires on the sale of a financed property, though in a cash sale the new homeowner could call for this type of policy which would protect against the same additional items (over a standard owner’s policy). These items would be: Mechanics liens not yet recorded; Persons in possession of the property; and Encroachments or Errors a survey would find.
Amortization: Leveling out the payments over the life of the loan (including principal in interest).
ARP: Annual Percentage Rate .Interest, discount points and loan costs expressed as an Annual Percentage Rate. (Disclosed this way because of Regulation Z, which is the Federal Truth in Lending Act). This makes it easier for you to compare loans and lenders to figure out which one really is the best deal.
Appreciation: An increase in value for any reason. Property can appreciate due to owner efforts (commonly called Sweat Equity, also known as Earned Incriment), due to an Unearned Increment which would be a change not due to owner effort like inflation or increase in demand, or Assemblage, which is the joining of different pieces of land.
Appurtenance: The rights and improvements that are transferred with the Property (unless they are reserved or excepted. Appurtenances fall generally into two categories. The first is all that is physical and attaches to the land, like buildings, plants and trees, but not water and minerals. (Another exception to this are the emblements, which are crops or fruits, which may not transfer on a sale – imagine you buy a home in the spring and then later in the fall the Seller returns to harvest the fruit trees: it may be his right!) The second category is the so called intangible rights and privileges. These include water, mineral and air rights and any easements. As a note, and of these rights can be leased or sold by the owner of that right.
Asbestos: Asbestos is a mineral which was widely used to create fireproof materials used in housing until it was proved that tiny airborne fibers would be released when it was disturbed which often resulted in respiratory diseases. Encapsulating asbestos may ameliorate the problem, but if a homeowner knows there is asbestos in the house is must be disclosed.
Assessment: An involuntary lien on a property placed by an action of law. Examples: Government assessments for road improvements or HOA assessments for association repairs or improvements.
Assemblage: The joining of two or more pieces of land to increase their usage and/or value.
Assignment: In the Real Estate and Lending worlds, the process of selling a loan to another lender. For example, you meet a Mortgage Officer who works with a lender and you buy a house financing it with a loan from that institution. Suddenly one day you find you must now make payments to another lender: your loan has been assigned.
Avulsion: The erosion of land through natural forces.
Attorney-in-Fact: Any person authorized to represent another through a Power of Attorney.
Automatic Right of Survivorship: When at the death of one Joint Tenant that person’s interest in a property passes to another tenant(s) immediately and without Probate. There are many different ways to hold Title to a property; some allow for this path to ownership, others involve the government through probate.
Balloon Payment: This is where the term of the loan is shorter than the Amortization period, so the balance is due in a “balloon” at the end of the loan.
Bargain & Sale Deed: This is a deed which conveys the grantor’s interest but has no expressed warranty. In other words, though it implies that the grantor has the right to convey(sell or give) the property, there will not be any other guarantees (see Warrantees or Covenants)
Beneficiary Deed: This is a special deed which an owner of a property can sign and record which will not go into effect until the owner dies. Upon death the property automatically conveys to the grantee (the beneficiary).
Bequest: This is a gift of property through a will.
Bequeath: To give personal property.
Bill of Sale: Document used to transfer Personal Property (also called Chattel) , such things as cars, furniture, potted plants and anything not attached to the Real Property.
Block Busting: This is the practice of encouraging people to sell or move out of a neighborhood because people of a different race, ethnicity, religion (ets) are moving in. This practice was prohibited by the 1968 Federal Fair Housing Act.
Boot: A term from the rules governing a 1031 Exchange (which allows property owners to defer taxes when similar property is exchanged). So, Boot is an unlike property given or received in exchange (consult your tax attorney!)
Broker: As in the Agent section: The Designated Broker is the agent of the client, the clients Real Estate Agent is the Agent of the Designated Broker for the Real Estate firm.
Buffer Zone: This is an area separating to incompatibly zoned areas, think Rail yard and public park…there would likely be a buffer zone between the two.
Buyer Broker Agreement: This is a written agreement in which the Buyer of a property hires a Broker to represent and assist them in locating and purchasing property. Years ago most all Brokers worked for the Seller of a property and Buyers really had to beware. That Caveat Emptor mentality has changed and now it is understood that Buyers must have equal representation. If you are buying property I strongly suggest you hire a Buyer Broker to represent you in a transaction.
Capitalization: This is a way to find a value for income producing properties. Finding a, a value for a residential income property (a duplex or a triplex for example) is not the same as finding the value for a residence. In this case the value really is determined by deducting expenses from income and then dividing that by the rate you expect to receive on your investment. This is called the Capitalization rate or the Cap Rate.
Cap Rate: Value=Net Income/Rate For example, suppose we had a duplex that brought in $19,200 a year (each unit rents for $800 a month), but we know our expenses are a total of $4,200 a year (we know through experience that we have a month out of each year with a vacancy equaling $800. We also have $1,000 in upkeep, $400 in common area utilities and $2,000 in other expenses for a total of $4,200). We deduct that from the Gross income to get Net Income of $15,000. We divide that by the rate which would be acceptable to us for a return on investment (let’s say 12%) and we would get a value of $125,000 for the property.
CC&Rs Covenants, Codes and Restrictions These are Encumbrances (restrictions) on the use of the property put in place by a land owners, a developer or by a HOA (Home Owner’s Association). These may be found in the deed, recorded separately or even kept by an HOA as an unrecorded document.
Certificate of Elegibility: This is issued by the VA to veterans stating that the veteran is eligible or entitled to the amount of the entitlement for a VA loan.
CRV: Certificate of Reasonable Value This is the name of the VA appraisal, which is required for a VA loan (and the value MUST be at the purchase price (plus a VA appraisal will look for certain defects in a home which must be repaired and not at the Buyer’s expense prior to funding.
Chain of Title: As opposed to an Abstract of Title, the Chain of Title is a complete history of the property – or, as complete as human necessity and history can make it.
Chattel: Personal property, but specifically personal property associated with an estate. Property not affixed to land (this used to include slaves and, once, women).
Civil Rights Act 1886: (Didn’t know we were getting into history, did you?) This act, as you might guess, prohibits discrimination based on race or color and, I would say, is the foundation for all subsequent Federal Fair Housing Laws.
Client: A Client is a person a brokerage represents – whereas a customer is a person not represented by that brokerage. What is important here is the representation. If a property is listed by one Real Estate Agent and a Buyer is represented by another agent from the same brokerage, then a dual agency (or a limited representation) exists. In other words in this situation there are limits on the representation of both the Selling and Buying clients…a potential conflict of interest exists and by law, the clients must be advised of this potential conflict.
Commingling: This is the mixing of a client’s funds with those of the Broker’s business or personal accounts, and it is strictly forbidden.
Common Areas: In Condominiums or Townhouses, the shared ownership of common areas might include land and improvements, such as parking areas, stairs, pools, parks or land buffers, walls and so forth.
Community Property: This is a method of ownership or a way to take title, but in most states also includes property acquired by husband and wife (unless otherwise specified) and each spouse shares in the property 50-50. This also includes things like salary and personal property. With Real Property, both spouses must sign to convey, whereas either spouse may sign to convey personal property.
Competent Party: In Contract Law, a person must be legally capable of entering into a contract. To be competent a person must have reached their majority (be at least 18) be mentally competent and not under the influence of alcohol or drugs. Contracts entered into by incompetent people are Voidable by the incompetent person (unless also signed by a legal guardian.)
Condemnation: This is the way a governmental body can take property through Eminent Domain.
Condemnation Clause: This is a clause in a Lease which terminates the lease if the property is taken through Eminent Domain.
Conditional Commitment: If a loan is insured by the FHA (Federal Housing Administration) an appraisal is required and the purchase price must at or less than the appraisal value, if not the buyer is released from the obligation to purchase the property.
Condominium: This is a property type in which the owner receives a Deed for the unit, and may pay taxes on the unit, but participates with the other condominium owners in shared ownership of the Common Areas (these may include the land, parking, stairways, pool and other facilities.)
Confidentiality: One of the Fiduciary Duties owed by an Agent to their Client. The Agent must keep certain information confidential and this confidentiality may remain in effect for an indefinite period of time (perhaps even the lifetime of the agent.)
Consideration: One of the 6 essential elements of a Contract. Valid consideration can be anything of value including: money, real or personal property and even love and affection.
Constructive Notice: One of the elements for a valid Deed. Constructive notice is a public declaration usually performed through Recordation in the county in which the property exists.
Constructive Eviction: This is the reverse of Actual Eviction. Constructive Eviction is where the Landlord fails to perform obligations to the tenant and the tenant can terminate the lease and sue for any damages. Such obligations might be failure to provide promised utilities or keep the major systems of the residence functional.
Contingency Clause: This is a clause in the contract which makes the sale hinge upon an event. If the contingency is not accomplished then the Contract is void. Examples would be, Discovery or Inspection contingencies, or an appraisal or Mortgage contingency (If the hose won’t appraise for the sale value or if it cannot be mortgaged then the sale is void).
Contract: A contract is a legally enforceable agreement to do or not to do specific things. Certain Contract must be in writing to be enforceable (this is through the “Statute of Frauds”). Contracts that must be in writing include: Employment Agreements to hire a Broker for the purchase or sale of Real Property; Agreements to transfer or sell real property (or even an interest), and a lease for more than 1 year.
Contracts must have the following elements to be enforceable (Legally Binding.) They must be between Competent Parties; they must include Valid Consideration; there must be an Offer and an Acceptance (a meeting of the minds); there must be a Legal Object or Legal Purpose; they must be written; and there must be a proper description (in real estate, of the Property.)
Conventional Life Estate: A Life Estate is an ownership interest in a property created by one person for the benefit of another. Imagine you want your mother to have a home for the rest of her life and so you give her a Conventional Life Estate. She can live there and has all the rights of the property except, she cannot destroy the property (commit waste.) She could even sell or lease the property, however she would only be selling or leasing its use for the term of her life. Upon her death, the property reverts back to you even if sold or leased. (see Reversionary Interest)
Conversion: Conversion is the process of turning Real Property into personal property or personal into real. For example, trees are a part of the land and therefore Real Property. If the trees are harvested and turned into lumber, they are converted to Personal Property. If the lumber is used to construct a hoiuse on the property the lumber has been converted in to Real Property.
Cooperatives: In this case, a corporation holds Title to a building and a buyer purchases stock in the corporation, for which he receives shares and a lease on a part of the building. Only one tax id and tax bill, upon sale of the stock the Seller transfers his leasehold interest.
Correction Township: (See Township, Range and Section) A Township is a grid of 36 square miles (6 on a side), and this is the basis of surveyed land in the United States. However, because it is a flat grid and we live on a globe, occasionally the grid has to be adjusted. This is done by shrinking the six Sections (a section is a one by one square mile area) on the North of the township and the 6 sections on the West (making a total of 11 sections since one is shared) of the township and cutting them down to fit the map. These are called Fractional Sections.
Counter Offer: A Counter Offer is an Offer made by the receiver of an Offer (Offeree) to the sender of the Offer (the Offeror). When an Offer is made it is unilateral and is not a binding contract because the other party has not agreed to it. If there are changes the receiver of the offer wants to make (a different price or date of closing for example), the original offer is gone and it only becomes a part of a new offer from the side making the change. If any change is made in the offer (even a typo correction by the Offeree), then that original offer is not a contract at all but simply a counter offer.
Covenant: A binding agreement to do something or not to do something, made between two or more parties.
Customer: In Real Estate, a customer is a person not represented by the Agent’s Brokerage. Agents who are not representing customers still have the obligations of fairness, honesty and the disclosure of any known material defects and facts to a customer.
Dedication: Transferring Private Property to the public without any consideration (recompense).
Deed: A deed is the written instrument which conveys the ownership of a property. There are four main types of deeds, each of which grant various warranties: in order of strongest to weakest warranty, the Warranty Deed, Special Warranty Deed, Bargain and Sale Deed, and the Quit Claim Deed.
Deed Restrictions: These would include Restrictive Covenants, and Covenants, Codes and Restrictions (CC&Rs). These may be found in the deed, recorded separately or even kept by an HOA as an unrecorded document. It is important to note that deed restrictions cannot violate the law or public policy. For example, there are still many CC&Rs which restrict the purchasers of land to people of certain ethic groups, religions or that specifically excludes some protected classes of people. As this is against federal law those restrictions are not enforceable.
Defeasance Clause: This is the clause in a note (mortgage or loan), which declare the note and mortgage are defeated (or voided) when the note is paid off.
Defeasible Fee Simple: This is a kind of ownership where the owner only keeps the property as long as certain conditions are met…if they are not then the ownership of the estate is “defeated” and the property reverts to the original owner, or Grantor of the property. Imagine your rich uncle in law gives you ownership of a home so long as you remain married to his niece or nephew. At divorce the property would revert to the controlling uncle.
Deferred Maintenance: This is a kind of depreciation where there is a loss in value due to accumulated deterioration of the property.
Delivery & Acceptance: The final Step in transferring Title to a property usually is accomplished through recordation, but that is not required by law for a deed to be valid.
Demise: (Do not confuse with Devise.) This is another, more formal name for a Lease.
Depreciation: This is a loss in value to the property for any reason but primarily through: Deterioration, Functional Obsolescence, or Economic Obsolescence.
Descent: This is the transfer of property when the holder of the interest dies without a will (Intestate).
Designated Broker: This is the Broker legally in charge of a Brokerage. All agents in a brokerage are acting on the designated broker’s behalf.
Deterioration: This is the loss in value to a property through wear and tear or the effects of time such as destructive pests such as termites, rats, weather damage, erosion, water…often the effects are curable.
Devise: This is to transfer property through a will. Remember the phrase “Devise and Bequeath.” To Devise is to give Real Property, to Bequeath is to give Personal Property.
Disclaimer Deed: This deed is signed by a spouse, prior to the purchase of a property by the other spouse in order for it to become community property. Most often used when one spouse is financing and the other’s name cannot be on the title.
Disclosure: There are many types of disclosure and I would say that most all of them are good to practice. For example, a Seller should disclose everything material that they know about a property they are selling. That means one should disclose everything which might be important to a buyer (and that could be a lot). People are often afraid that disclosing might prevent the sale, but I say, you want those sales to be prevented. All properties have issues, and if a person discloses the issues, not only may that protect them legally in the future, but it engenders trust with a buyer. Buyers also must disclose anything which may prevent them from completing the sale. Agents must disclose all matters which may affect the client including any conflicts of interest, other offers on the property, Material defects they are aware of and their agency relationship status (if the agent (or their Brokerage) is already representing the Seller the agent must inform a potential Buyer of that fact, up front and at the beginning, since this implies a limited representation or Dual Agency.)
Discovery: This is the actual process of investigating the property (by the Buyer) during the Inspection Period. Only the Buyers know what may be Material to them, howev er and Agent is required to exercise reasonable skill and care. If the agent suspects problems then disclosure must be made.
Dominant Parcel: When two or more parcels of land share an easement appurtenant (which is the right across one parcel for the benefit of the other), the dominant parcel is the one benefitting from the easement. Imagine you have a piece of land and to get in and out of it you have an easement for ingress and egress across your neighbor’s property, yours would be the dominant parcel. Now imagine that he had an easement across your land for city water and power, for the easement his would be the Dominant parcel, and yours would be the subservient parcel.
Dual Agency: This is when one or more agents (licensees), from the same brokerage represent both a buyer and a seller in the same transaction. Dual Agency must be disclosed to all involved parties as there is an inherent conflict of interest and neither party can be said to have full representation.
Earned Increment: This is a kind of Appreciation, and it is often called sweat equity. Simply put, this is an increase in value do to the efforts of the owner.
Earnest Money: This is sometimes called the binder or hand money. This money is traditionally offered by a Buyer to insure the Seller knows his offer is in good faith. Interestingly, there are cases where Earnest Money is appropriate from the Seller…such as when the Sellers owe more on the property than they are likely to receive. This is a negotiated amount, there are no set rules about how much you should offer (or demand), and it is not required by law.
Easement: This is the right to use a property not belonging to you (though it is possible to own an easement.) There are four categories of easement (see below).
Easement Appurtenant: This is created by a deed or reservation. Such an easement is created to allow ingress and egress, or for utilities, access to water or other necessities. See Dominant and Subservient Parcels.
Easement in Gross: This is the kind of easement that utilities have across property for the benefit of one or more other parties. The distinction is that it benefits a person, persons or companies instead of another parcel. These are always recorded as far as I know.
Easement Personal: This kind of easement is rarely recorded and pertains to permissions or licenses a specific party has been granted with regards to another property. These are often limited by time and purpose and may be revoked at any time. They may be verbal or in writing and they may be given freely or with compensation. Examples of an easement personal include private camping, fishing and hunting permits.
(Prescriptive) Easement: An easement created by Adverse Possession. For example, a rancher walks his cattle on a neighboring property every day on the way to a stream or pasture, or a group of children cut through a property every day on their way to school. The length of time this must be done to claim the prescriptive easement as a permanent right may vary from state to state, but this has existed in land law longer than the US has been a country. However, to claim ownership or an easement through adverse possession the person or group must take a court action to demonstrate that the property was possessed in a manner that was Notorius, Open, Continuous and Adverse (Hostile).
Economic Life: This is how long an income property is expected to produce income.
Economic Obsolescence: This is a kind of depreciation. A loss in value to a property because of external factors, such as Zoning or other legislative changes, neighborhood conditions (ie a new highway or airport increases noise and congestion in the area, or an over improvement of the property for the area.
Ejectment: This is part of an actual eviction where a tenant has breached the terms of a lease. It is the legal proceeding used to regain possession of the property by the Landlord.
Emblements: These are crops or fruit which are being raised on a piece of land. Unless expressed otherwise in writing the Seller of a piece of land (or a tenant farmer), has the right to return to the land after the sale of the property and harvest these. This term can also refer to that right.
Eminent Domain: One of the four basic governmental rights, which also include Police Power, Taxation, and Escheat. Eminent Domain is the right, through the process of condemnation to take private property for public use with fair compensation.
Encroachment: An encroachment is when a structure or some improvement (like a road or a planted tree or bush), invades (trespasses) on a neighboring property. An encroachment is not equivalent to an easement and in and of itself does not constitute adverse possession.
Encumbrances: An encumbrance is any claim, restriction, right or interest that is held by one party on the property of another. For example, liens, easements and deed restrictions are all encumbrances on a property.
E & O Insurance: Errors and Omissions Insurance is similar to Malpractice Insurance for doctors, it insures Real Estate Licensees against errors the agent might make.
Endorsements: This is an addition, extension or restriction of a Title Insurance policy.
Erosion: See Avulsion. The removal of land by wind, water or other natural causes.
Escape Clause: Also called the FHA Amendatory clause, this is an addendum to the contract with allows the buyer to back out of the contract if the appraisal does not meet the agreed purchase price.
Escheat: This is one of the four basic Governmental Rights. This right allows the reversion of the property to the state if the owner dies intestate, or without a will.
Escrow: In Real Estate this is a neutral third party who holds the funds and the title and exchanges both at Close of Escrow. Opening Escrow mean opening the account which holds earnest money and other funds until all parties are paid and the title is changed and recorded.
Escrow Instructions: These are usually defined by the Contract. In a conflict between written and preprinted words the written always prevail. The Escrow company is an agent of the Buyer and the Seller and so has the job of remaining a disinterested third party go-between. They are hired by both to faithfully close the transaction.
Estate at Sufferance: Here a lease has terminated but the tenant has refused to leave, their rent is neither paid nor accepted. (if accepted the leaseholder’s right to evict could be affected.)
Estate at Will: An informal tenancy where the property owner (lessor) gives permission to use the property. Think guests for the summer or a child that returns to the nest. In this case rent is not formalized and may not be required or accepted.
Estate for Years: This is a tenancy where rent is paid for a specific time period. A lease always must have a start and ending date. Think Hong Kong, which was leased by the British from the Chinese for 99 years. This kind of leashold does not automatically renew itself.
Estate from Period to Period: This is the so-called Month to Month lease, it can also be from year to year or any other time period. It does automatically renew itself indefinitely and requires notice to terminate.
Estate in Remainder: This is an Estate where the holder (who is someone other than the grantor) gains an interest in the future. For example, you grant you parents a Life Estate (which means they get to use the property as long as they live) and let’s imagine that your sibling is living there with them taking care of them in their final years. You may give your sibling an estate in remainder which means that upon the death of your parents the life estate passes to your sibling. BTW, the person holding this kind of estate is called the Remainderman.
Estate in Reversion: In the above example (where a grantor gives a life estate), the grantor holds a Reversionary Interest. This means that upon the death of all parties who hold a life estate the grantor reacquires the property (or whatever granted interest is held.)
Estoppel Certificate: This is a certificate issued by the tenant (To Whom It May Concern) that the Lease is in full effect. This may be requested by a lender when financing a property, or it may be required during a sale. Remember that a lease takes precedence over a sale. (If you sell your residential income property, part of what you are selling are the leases, if you buy such a property, you are bound to the terms of the lease.)
Excess Land: A very odd idea for most of us, excess land is the land which is not required to fulfill the “Highest and Best Use” of a property. Think filling station on the corner of a one acre parcel. Clearly, only the corner (and parking lot) needed to fit the gas station is necessary for the functioning of that business, the remainder of the parcel would be considered excess land.
Exclusive Agency: In this kind of listing, the Broker will be paid a commission if she sells the property or if another broker sells it, but not if the owner sells. Contrast with the entry below:
Exclusive right to Sell: Here the broker is paid no matter who sells the property, this is the most common kind of listing. Note that the amount of payment may be different (or not) if: One Broker Lists and another sells, if one broker lists and sells or if the owner sells.
Executed Contract: This is when all terms in the contract have been fulfilled by all parties.
Executory Contract: Here, all terms have not been fulfilled or performed, but it is a complete contract fully signed, dated and initialed. A contract prior to closing is executory.
Expressed Contract: If, all of the terms have been stated, either in writing or verbally, then a contract is said to be expressed. (Note that in Real Estate, with the exception of a lease of less than a year, contracts must be in writing to be enforceable.)
Expressed Agency: This is the type of Agency created by the Principal, and is what we generally think of as an Agency. Contrast this with an Implied Agency.
There are five reasons to hire a REALTOR® when planning to buy or sell property:
Market Expertise; Lowering Your Risk; Saving You Money, Reliable Advice and the REALTOR® Code of Ethics
- Market Expertise: We are immersed in the housing market everyday and are experts in the tools used to interpret this data. Because we receive lots of mandatory continuing education, we are informed of current trends and legal changes. Also, we have access to information it would be difficult for most people to even find let alone interpret.
- Risk: REALTORS® share the risk of home buying and do their best to insure this risk is minimal for all. We give recommendations based on deep knowledge of the marketplace and likely areas of concern. We also recommend experts who can help assure you of the home’s safety or make you aware of any discoverable problems
- Money: Because your REALTOR® understands the market and has the tools to interpret current trends they can help you understand the appropriate price for a property, whether you are a Seller or a Buyer and help you negotiate the best terms for your sale.
- Advice: Buying or selling a home is an emotional decision, so your REALTOR® will help you see beyond personal emotions to what is best for you. This is so important that many REALTORS® hire other REALTORS® to sell or buy their own homes. Also, contracts to buy property will have scores of pages and many addendums. REALTORS® work with these contracts daily so they understand them and will explain them to you.
- Lastly, REALTORS® adhere to the REALTOR® Code of Ethics and professional behavior and because of this we must: Be honest will everyone in a transaction, Disclose all pertinent facts, but never your confidential information; Cooperate with other brokers except when cooperation is not in your interests; Disclose any personal share or interest in a property or transaction and all fees or compensation to every interested party; We must always put your interests first; Realtors cannot deny services to anyone for reasons of Race, religion, sex, family status, handicap, national origin or sexual orientation.
Your REALTOR® works for you, and is obliged to act in your interests, so whether you are a Seller or a Buyer you want representation on your side to assure that you fully understand whatever is happening and that you have the information to make the best choices for yourself.
Tucson is known for its Southwestern architectural styles. As with all American cities, you can find examples of most any style, from Bauhaus to farmhouse, even modern lofts are available. But for those who want a home that reflects The Southwest and its history, Tucson is a Mecca.
Many people who move here have a clear idea in their mind of what southwestern style means, but they lack the vocabulary. Perhaps what you want is a Santa Fe style home, but it could be a Pueblo home, a Territorial Home, a Southwest Territorial Home, or a Spanish Colonial Home. Read below to understand what these styles are and then you may know you exactly what you want. Adobe homes in Tucson, whether 250 years old or built this year, can give you the charm and ambiance of the traditional Southwest without losing the convenience and sophistication you need.
Here is a simplified way to differentiate and define the various building styles which belong to the region.
1) Pueblo: This is most often what people mean when they are looking for Southwestern ambiance. Homes in this style have been built in the Tucson area from the 18th century . . . though the oldest you probably will find were built in the 1870’s. These homes are typified by:
a. Rounded corners and stepped walls
b. Flat roofs with canales to drain water through the parapets
c. Often elaborate entry ways with portales and/or loggias
d. Stucco over adobe, masonry, brick or (more recently) framed walls
e. Doors and windows are usually deeply inset and usually have wood lintels
f. Sometimes vigas (roof support beams), real or decorative protrude from the walls and are evident inside supporting the ceiling and roof
g. Low courtyard walls or interior patios
2) Territorial: Also a strong tradition here, homes and businesses in this style have been a part of the Tucson mix since the mid 1800s. These homes are typified by:
a. Square corners and fewer stepped walls than adobe homes
b. Flat roofs with canales to drain water through the parapets
c. Often elaborate entry ways with portales and/or loggias
d. Stucco over adobe, masonry/brick or more recently framed walls
e. Doors and windows are flush with the stucco surface but with decorative wood trim
f. Decorative brick or adobe cornice at the parapets and chimney
g. Wood covered porches with decorative columns and trim
3) Spanish Colonial: Starting with the Mission at San Xavier, begun in 1699, an enduring architectural tradition. These homes are typified by:
a. Square corners combined with a few arches in doorways and occasionally windows
b. Clay barrel tiled roofs set at a 4 in 12 pitch or gentler pitch over porches
c. Courtyards and covered patios
d. Stucco over adobe, masonry/brick or more recently framed walls
e. Doors and windows are usually inset and usually wood decorations
f. Simple or no decoration at chimney
g. Occasionally wood beams and corbels exposed at roofline
4) Southwestern Territorial: found early on in the larger ranch homes from themed 1800’s and in town from the late 1800’s These homes are typified by:
a. Square corners and angles
b. Pitched, Sheet metal roofs, usually painted, extending beyond the walls gentler slope over porches
c. Yards more than patios, wrap around covered porches
d. Stucco over adobe, masonry/brick or more recently framed walls
e. Doors and windows are flush with the wall
f. Simple or no decoration at chimney
Southwestern Glossary:
Adobe - A block originally made of mud and straw, usually made into bricks. Now, adobe is usually made of sand and clay often stabilized with asphalt.
Banco - Built-in benches, often at a porch or near a firepit or kiva.
Canales - Water spouts, scuppers or rain troughs that protrude through a parapet wall, normally to drain water that collects on a flat roof.
Corbel - A supporting timber under a beam or arch. The end of the corbel may be cut square for a stepped appearance or elaborately carved.
Entrada – The entryway.
Fogon – A fireplace set in a corner.
Hornos - Round earthen outdoor wood burning ovens, used for cooking.
Kiva - A style of fireplace, normally with rounded front, placed in the corner of a room or wall in a patio.
Latillas - Small peeled poles used to form a ceiling. These can be made out of pealed Aspen or Pine, Saguaro ribs or ocotillo branches. Latillas are often placed between vigas for form a ceiling. They used to be covered in cement made of lime and mud.
Lintel - Crossbeam above a window. In southwestern homes, they are often wooden beams set into the adobe or stucco wall.
Nichos – Inset display shelves or "niches" in walls.
Parapets – Exterior walls above the roof line.
Portales – Decorative porches, and/or decorative entryways for the main entrance.
Ramada - Freestanding canopy made of upright posts (usually mesquite) and a loose roof of saguaro ribs, native cane (Carrizo), ocotillo branches or other sticks to give shade.
Rammed earth - A type of construction where walls are built compacting soil in forms at the building location.
Saltillo tile - Red and yellow clay floor tile, 6 or 12 inches square (sometimes octagonal).
Stucco - A plaster or mud finish originally made with lime, mud and cactus juice for a binder, now usually a cement product.
Vigas - Traditional peeled log beam supporting the ceiling and roof. They are visible inside and often protrude through the outside walls.
Zaguan – An entry, hall or entry courtyard, sometimes running through the house to the interior courtyard.
Free Tools for Home Buyers and Sellers in Arizona
Times are challenging for anyone buying or selling RealEstate today. For Sellers, home priceshave plummeted from their heights in 2006 and for Buyers, credit has been tight. Also, finding sources of trustworthy information can be daunting at best. The good news is that from all appearancesthe market is finally turning. If you need to sell, this may be the besttime to list in the last year, and if you are ready to buy there could hardly be a better time for interest rates and home selection.
However, you need to arm yourself with the best possibleinformation and if you’re looking in Arizona you’re in luck! The ArizonaState Department of Real Estate contains links to information very useful to anyone buying or selling Real Estate in Arizona. Among other things you can find a list of all Real Estate practitioners and see whether or not they have had any complaints filed against them.
Another, even richer source of information can be found onthe Arizona Association of Realtors website. This living document is called the Buyer’s Advisory and it really should be required reading for anyone thinking about buying or selling a home in Arizona. It contains links about almost anything related to property in Arizona. These tools are free for your use and will give you the edge you need to be the smart, informed Buyer or Seller in today’s competitive marketplace.
For Buyers and Sellers in the Tucson Market there are two links which are a must. The first is the link to the statistics published by the Tucson Association of Realtors. This is the best, most completeand most impartial source for data on the Real Estate market in the Tucsonarea. Last, but not least is the Tucson Association of Realtors Multiple Listing Service If you aresearching the marketplace yourself, go here first, it is the most up to date and most complete list of publicly available Active listings in the Tucson area. Of course, if you would like to save your searches and the listings you find, sort them and make comments on them you can do that through my "Portal." You can set a free, no obligation account here.
Explore these websites and arm yourself with the knowledge you need.
Susan, how did youbecome an Escrow Officer in the first place?
I was 18 years old and looking for a job, I contacted aemployment service and with the skills that I had, I had one interview and washired by Pioneer National Title Insurance at 45 W. Pennington.
Wow, so you’ve beendoing this all your life, no wonder you’re so good at it. I also notice you seem to take great joy indoing this work, what is it about Escrow that you enjoy so much?
I love the people; closing is my favorite part of my job.
What tips would yougive potential buyers and sellers who are thinking ahead and want to prepare tobuy or sell a?
I believe the most important thing buyers and sellers need todo is complete all documents that are requested of them the day they receivethe request.
That can be a littletough since there are so many papers, but I guess it doesn’t get any better ifyou wait. What’s the simple explanationfor what a title company does?
The title company performs a search and examination of thepublic records relating to the real property to be insured.
I guess they would belooking for problems, or clouds, on the title which might have to be fixedprior to closing. What sorts of thingsmight they find?
All sort of things, Mechanic Liens, Judgments, IRS taxliens, Unreleased but paid off Deeds of Trust, Parties not in title to theproperty, and deceased parties.
So to break this downa bit, Mechanic’s liens would be when a workman or contractor did work on ahouse and wasn’t paid? I understand thatcould stop a sale.
Potentially, yes.
And Judgments againsta homeowner or the IRS of course and I get the deceased parties who might stillbe named on the title, but what do you mean by “Parties not in title to theproperty?”
An example would be a spouse who didn’t sign a disclaimerdeed when the other spouse took title. In this state, we would need to clarify if the spouse had any right tothe property (even if the name was not on the title) prior to a sale.
Wow, there sure arelot’s of things to research. So, whatdoes an Escrow company do?
An escrow company is an independent "stake holder"account and is the vehicle by which the interest of all parties to thetransaction are protected.
So it’s more thanjust holding the earnest money in trust and swapping the funds for the propertywhen it is time.
Yes, much more.
Your job is to betruly independent and act as a sort of “go between” for Buyer, Seller, Lender,Agents and all other parties which might be involved in a transaction.
Yes.
What is the actualprocess of an Escrow from your point of view?
I have attached a document, “The life of an escrow”, whichis also on our website at Title Security
Who else is involvedfrom the Escrow and Title side of things (name the parties and describe theirduties – anyone who works on the deal)
Well, as you know, Licensed Real Estate Agents prepare thecontract and represents the buyer and seller, and a loan officer negotiates theloan terms if it’s not a cash sale; but we do have a few other departments thatare involved in the Escrow. One is theEscrow Support Processing Department; they order the title reports, payoffs andassociation information. We also have Recon/Tracking Department they obtain theDeeds of Releases from the lenders that we payoff. All in all it takes a teamof people on all sides of a transaction to sell a home.
Thanks Susan, thiswas a wonderful interview
If you would like tocontact Susan (or schedule a closing at her office) here are her contactnumbers and her company’s website:
Susan Farero, TitleSecurity
6390 E. Tanque Verde,Tucson, AZ 85715
Phone: (520) 885-1600
Fax: (520) 885-2309
Email susan.farero@titlesecurity.com
http://www.titlesecurity.com/index.htm?template=getDocument&docId=18&auth=109B06075C189D9DC95FA3C0A92520A5
http://www.titlesecurity.com/
Thom Culpepper and I have been working together for sometime and I respect the quality of his work. I found his comments on home inspecting of interest.
Thom, how did youbecome an inspector in the first place?
My wife and I discussed starting a business, but we bothbiology majors at the time and then I went to nursing school. At the time, we had several rentals, we had"flipped" houses and liked Real Estate, but I was not interested inselling it. A friend talked to us abouthis business as a home inspector and so I decided to make it happen!
You must love this job, because whenever you do an inspection for me,you seem to be having so much fun.
I love most aspects of it, however I love to learn andresearch and there is a great deal of that in this business. My boss is the greatest as well!!
Right, I love minetoo. Being your own boss does reduce thearguments. So, what tips would you givepotential homeowners who are thinking ahead and want to prepare to sell?
I would say that if the house is 10 years or older, aninspection before selling could save thousands of dollars and be a greatmarketing tool.
Wow, great point buthow can you save money?
An inspection can reminda homeowner of issues they got used to and forgot. I’m sure you do this too, but people tellthemselves “I’ll get to that repair later" and sometimes it never happens.
You’re right, I’vedone it. Sometime, after the Buyers giveyou their list of requests you don’t have time to do much but hire the firstcompany you find to fix things, surprises aren’t good in a home sale.
So, an inspection provides Sellers with a list of issues to focuson to prepare the house for sale. As yousaid, knowing what to expect can be a tremendous relief!
How about tips fornew homeowners?
Home buyers should think of an inspection as a short terminvestment. A $350 inspection can yield areturn of possibly $500 to $5,000 in repairs in a month; you can’t do that on WallStreet. Buyers should shop for a homeinspector based on the Inspector’s knowledge and experience; not on whichinspector charge’s the least amount. Whysave $15 and risk losing $5,000! Homeinspections are also tax deductible, so why not get the best and save the most?
I agree. I encourage my Buyers to shop the market forall their services; but I try to help them make sure they are shopping forquality over cost. How do inspectors getcertified to do this work?
We must attend an accredited school accepted by the state,and accomplish 30 co-inspections with a certified inspector. Then we must take a national test, and gothrough a state background check. Ourinspections are sent to the state for review to make sure they meet thestandards of the state.
So you really must meet some exacting standards. I would bet you have lots of fun andinteresting experiences doing your inspections.
The most fun is seeing, well, let’s call them unusual andcreative fixes to household problems. I photographed and placed some of these onmy website! Once, I had an Anthropologist follow me around for 2½ hours filming me.
How bizarre!
Yes, it kind of threw me off a bit.
I’ve seen your blogtoo, there’s a lot of excellent information there.
Yes, I have been writing blogs for homeowners aboutdifferent home related topics for quite a while. I’m now preparing to place home maintenancevideos on the website as well. I wantmore people informed --it saves money and energy down the road!
Well thanks Thom,this has been great. If you’d like more information feel free to contactThom
ThomCulpepper
TLCProfessional Inspections, Inc.
Cell; (520)991-1717
e-mail;TLCinspections@msn.com
Web Site: http://www.TLCproinspections.com
http://www.tlcproinspections.com/newsite/photo_gallery/
Blog;www.TLCpro.wordpress.com
Alex and Dusty were worried about the sale of theirhouse. They had bargained hard with theBuyers and had reached an agreement last night, but they felt at a disadvantagein today’s market. Under the terms ofthe Arizona Residential Purchase Contract they had to fill out a Seller’sProperty Disclosure Statement (SPDS), get a Letter of Experience or a CLUEreport from their insurance agent and provide both to the Buyers. Dusty wondered if these items mightdisadvantage them even further and was feeling a bit resentful in this wholeprocess.
They asked their REALTOR® if they could just skip fillingout the disclosure statement but he seemed somewhat surprised at thisrequest. “Dusty, the contract you signedrequires you to provide a full disclosure of everything you know about theproperty. I can understand why you’reworried you might jeopardize the sale but not disclosing what you know raises abigger flag than being happy to tell all. Besides, it is your protection to tell all.” Alex perked up, “How’s that?” “Alex, everyonewho is selling a home must disclose whatever they know about the premises, soyou’re really not at a disadvantage filling this form out. But if you know something and don’t discloseit, under certain circumstances you could be liable. When you disclose, the Buyer is then underobligation to determine whether or not that item is material. You are not obliged to discover things youdon’t know about the property, only disclose those things you do.”
The sellers mulled this information over a bit and thenDusty grinned. “It’s just like when wetook that trip overseas.” “What?” saidAlex. “You remember the long releaseform the travel agent sent us. Shewarned us about everything she knew about the countries we were visiting. By the time we were done reading the form Iwondered if there would be anything there for us to eat and how safe it wouldbe for us to go, but it didn’t stop us, it just helped us be aware of what tolook for and what to do about it. Thefunny thing was that after I read her disclosures about the food I felt betterabout shopping and eating because I understood the risks and what to do tominimize them.”
Alex and Dusty filled out their disclosure forms completelyand got them to the Buyers in plenty of time. The Buyers asked for somerepairs, but our Sellers figured the Buyers would have done so anyway. Disclosure is always in the best interests ofall parties in a sale; it protects you and is the right thing to do.
SPDSExample
EveryBuyer is entitled to an SPDS by Michelle Lind
CLUE(Comprehensive Loss Underwriting Exchange ) Report by Lind
BIO and Links:
I have been a softwaretroubleshooter, an email administrator, a restaurateur, a Laser Tag Amusementbusiness creator and owner, a Faux Finisher and a decorative artist, a webdesigner, a writer, a painter an actor, a director and now I am a REALTOR®. Ihave lived around the world and in many of the States. I've been anentrepreneur for most of my life and I have tried to pursue a spiritual path inall my ordinary dealings. To my surprise I have found that by being a REALTOR®and adhering to the REALTOR® code of Ethics I can live the ideals I have alwaysbelieved. Who knew?
My website: http://www.johnmijac.com email at john@mijac.info
You can also contact me on Twitter, LinkedIn, FaceBook and The Examiner
Pat and Kim decided to make an offer on a property. We’d looked at many houses; some great forPat, some perfect for Kim, but this was the only property both loved. As Pat said, “It doesn’t matter how muchmoney you have, buying a home is always a trade off.” Kim replied, “Yes, butthis is a win-win. We’re both giving up a little while getting what’s mostimportant to us.” As this is true forany family finding a home, there is also give and take between Buyers and Sellers.Ideally, a successful Contract is a win for everyone; both give up a little butalso get most of what they want.
We wrote the offer at a fair price, but we asked for acouple of items which made the offer a little weaker. We hoped the Sellers needed the sale badlyenough that they wouldn’t mind a long closing, paying some of our closing costsand furnishing a home warranty. Typically, Sellers look for a quick closing (amonth or less) because the longer the closing the greater the chance somethingwill happen on the way to the sale.
As my Buyers had done their research on the web, they werewell informed about the neighborhood, the schools and all kinds of demographicdata which were material to them. So they were committed to the purchase. Byfederal law, there are things a REALTOR® cannot disclose about a property. Wecannot give you any information on the make-up of a neighborhood with regardsto age, sex, religion, race, color, familial status, National Origin,disability or Marital Status. That alsomeans buyers cannot be refused a sale based on those classes. However, a REALTOR® can point clients to thesource for such answers, this is one of the reasons the Arizona Buyer’sAdvisory is so important in my state.
Unfortunately, though the Sellers were okay with ouroffering price they rejected some of our other items: the long closing date,and the home warranty. My Buyers wereangry. Pat said that there were plenty other houses in the area and that weshould just walk. Kim wasn’t so sure.Kim wondered how the Sellers could risk the sale for the price of a homewarranty and a couple of extra weeks.
I remembered an experience I had when I lived in India. Iran a kitchen there for several years and occasionally I would purchase largequantities of grain in the market, sometime several thousands of kilos. Thefirst time I went to the market I assumed my purchase would be so large themerchants would be ecstatic over the sale. To the contrary, when I walked inand placed my order they told me I could not buy in their shop. I went for awalk in the market, a little confused. A fruit Seller told me that in India arelationship must be established prior to a sale, and gave me a slice of mango.So I went back to the shop and asked if the owners would mind having tea withme as I was very thirsty. We had a wonderful conversation and later completedthe sale (I also bought a dozen mangos from my fruit seller later that day).Sometimes, I learned, the other party needs a conversation, but a relationshipis always a plus.
I suggested to my Buyers that we write a cover letter explainingwhat the house meant to them, why they needed the extra time - and that we alsooffer to pay the home warranty (a very small cost compared to the house). TheSellers immediately accepted our counter offer.
For additional reading onProtected classes please see:
Fair Housing, Government HUDpage
FairHousing Primer ~ Real Town Fair Housing ~Real Estate Times
BIO and Links:
I have been a softwaretroubleshooter, an email administrator, a restaurateur, a Laser Tag Amusementbusiness creator and owner, a Faux Finisher and a decorative artist, a webdesigner, a writer, a painter an actor, a director and now I am a REALTOR®. Ihave lived around the world and in many of the States. I've been anentrepreneur for most of my life and I have tried to pursue a spiritual path inall my ordinary dealings. To my surprise I have found that by being a REALTOR®and adhering to the REALTOR® code of Ethics I can live the ideals I have alwaysbelieved. Who knew?
My website: http://www.johnmijac.com email at john@mijac.info
You can also contact me on Twitter, LinkedIn, FaceBook and The Examiner
Pat and Kim, (who we met in Making the Offer and Pricing theHome) were under contract to buy a house they loved. By the time the counter offers were finishedand everyone had come to an agreement, the two were very attached to the homeand nervous about inspections. Bargaininghad been tough and the Sellers insisted on an “As-Is” Addendum. Pat was unsure what that meant. Was there something wrong with the house orsomething the Sellers were trying to hide? Would they have to take the propertyjust as it sat or lose their earnest money if there was a problem with the roofor the plumbing and they decided not to buy? Could they ask for repairs, and would it riskthe contract?
In the state of Arizona the Purchase Contract for aresidential property has strong protections written in for the Buyer. Most important here are those built aroundthe Discovery period: when inspections and other investigations areperformed. Buyers have the right toperform whatever detective work they need to determine that the house they arebuying is what they want. The defaultperiod for this is the first 10 days after the contract has been accepted, butthat period can be altered by agreement between Buyer and Seller. A t the end of this time the Buyers can endthe contract and walk away with their earnest money, rejecting the house forany material reason. Even if Sellersinsist upon an As-Is Addendum in the original contract, that does not curtailthis right.
Prior to making their offer I provided Pat and Kim with alist of local inspectors. They wentthrough the list and found several people they liked who offered a reasonableprice and had references. (Kim alsobrought in a relative who was a licensed electrician). We had inspections fortermites and pests, inspections of the roof, sewer connections, the HVAC, andeven mold in additional to our regular Home Inspector. Naturally, many things were found, as happensin almost every house. They feltoverwhelmed. On the one hand, they saw abeautiful home which they already imagined being theirs, on the other, an As-IsAddendum and a stack of reports on problems with that home.
Only the Buyers know what is important to them, but Pat andKim were having a hard time sifting through the large list of problems. The Home Inspector, who used to be a nurse,smiled at them and said, “It’s just a matter of triage.” Pat and Kim wereperplexed. “It’s just like an accidentvictim in the emergency room. You lookover the patient and quickly pick out the major problems. If there aren’t any and it’s all minor cuts,scrapes and bruises, you are lucky because all houses have those. If there are Major issues, addressthose.” Kim and Pat stuck to the bigstuff, and submitted their list ofrequests. The Sellers addressed Pat andKim’s requested repairs, even though there was an As-Is Addendum. The Sellers knew that if this contract fellapart and they had to deal with another inspection the same things wouldprobably be asked of them.
For additional information see:
Official Site Arizona ASHICertified Home Inspectors
The National Association ofHome Inspectors, Inc. (NAHI)
BIO and Links:
I have been a softwaretroubleshooter, an email administrator, a restaurateur, a Laser Tag Amusementbusiness creator and owner, a Faux Finisher and a decorative artist, a webdesigner, a writer, a painter an actor, a director and now I am a REALTOR®. Ihave lived around the world and in many of the States. I've been anentrepreneur for most of my life and I have tried to pursue a spiritual path inall my ordinary dealings. To my surprise I have found that by being a REALTOR®and adhering to the REALTOR® code of Ethics I can live the ideals I have alwaysbelieved. Who knew?
My website: http://www.johnmijac.com email at john@mijac.info
You can also contact me on Twitter, LinkedIn, FaceBook and The Examiner
Billy and Kim needed to sell their home. They were in the Service and were beingposted to Japan in two months. They’d triedto sell it on their own, but finding a buyer in today’s market seemed impossible. Kim pointed out that neither of them had theexperience to price or market their home effectively. But Billy noticed that the people who hadcome to their showings had seemed uninterested. They decided that the few percentage points they might save didn’t mean anythingif they couldn’t sell. “Also,” they toldme later, “we would still pay the Buyer’s broker a commission if the buyer wasrepresented, so we were really just cheating ourselves out of our ownrepresentation.” That’s when they found me.
I suggested we market their home online with a focus on youngprofessionals. More than 80% of allbuyers start their search on the web. Mysellers hadn’t really thought beyond Craig’s list. They were pleased to see how I could populatetheir listing to all the search engines in a few days, and set up a dedicatedwebpage for their listing. We talkedabout price but Billy and Kim had done their homework. They had realisticexpectations based on a professional appraisal they had received. They were nervous about pricing their home atthe appraised value, but understood the logic once I showed them theircompetition. They also agreed to placethe house under a home warranty. Ipointed out to them that a warranty would protect them from any system failureswhile the house was listed (a water heater or HVAC). Also, they remembered how important a policyhad been to them when they bought. Thelast important item was to prepare the house for showings. Kim had a hard time with this.
The two of them were collectors of art, pottery, rugs andall kinds of interesting memorabilia. Ihave been in many houses and look past my client’s personal effects, but thishouse was a museum curator’s dream. Isaw items everywhere which distracted and fascinated me. I told them everything must go, that weneeded to simplify the house. I toldthem we wanted people to feel free to make their own space in the house butthat now it reminded me of a crowded rickshaw, no room for anyone else. Kim objected and insisted we leave theirpersonal items in place. We agreed to try it their way first and learn from theexperience of our first visitors. We heldan open house and I kept all the contact information. Most agreed to fill out an anonymous form viaemail and the results were conclusive. Ninety percent said they could barely remember the house, only thewonderful artwork and collectables.
The next day week we removed all of their personal effects,so potential buyers could imagine their own pictures and artwork on the walls. We left just enough furniture to give thespaces definition but not so much as to make a room feel cluttered. We gave the house a thorough cleaning,replaced every broken light bulb, and simplified all the window dressings. No surface had more than two items on it, novisible products were allowed on the counters and shelves. Kim thought we had turned their house into anice hotel. I laughed and said that wemust have succeeded, since the idea of a hotel is to invite new guests in tostay.
I called everyone back for a second showing, just like thatprogram on TV. That week-end we had two offers, one over our asking price.
My first exposure to bargaining was in grade school. I played the part of a Mexican vendor givingadvice to his new gringo friends. I still remember my lines (after all, it wasmy debut!) “First, ask the vendor howmuch the pottery costs; his price is double the cost. Offer him less than cost, but enough so youmeet in the middle and you are both happy. Senor, you should never be mad or act insulted . . . bargaining shouldbe a game everyone enjoys.” Buying ahouse is not like buying a pot in old Mexico, but there’s a message here for usall. First, you must know the rulesbefore you begin to bargain and have some understanding of how the Seller haspriced his home. Second, don’t take theprocess personally. Even though buyingor selling a home is one of the most personal of decisions, you will be muchmore effective in your bargaining if you remain detached and enjoy theprocess.
A few weeks ago I took my clients Pat and Kim househunting. We visited two homes in anupscale neighborhood. They werecomparable, except that one had a pool and a remodeled kitchen and was pricedmuch higher. I knew my buyers wanted aremodeled kitchen and a pool but I took them by the other home to give them areference for bargaining. The problem wasthat the Seller of the tricked out home put the price of all those extras righton top, plus added room for bargaining. Ihad already given Pat and Kim a Comparative Market Analysis of these homes sothey knew what comparable homes had sold for in the neighborhood. They quickly realized that this Seller hadpriced himself out of their bargaining range. They decided they could buy the less expensive home and then add thepool and kitchen of their dreams.
The two parties could have found a meeting place if theSeller had really been aware of the market value of his additions. Pat and Kim would have seen that they weregetting a benefit if the Seller had not priced the home so high so there wouldbe “bargaining room”. As a Seller, it isbetter to stay firm with a realistic price than price the home high and thenbargain down. But, how do you find thatmagic number? You must dispassionatelycompare the property to those which have sold and avoid putting a high price onupgrades. In today’s market, most upgradesadd less than half their installation value to the price of a home.
Buyers and Sellers should go through the same process whentrying to decide upon the purchase price of a home. When they don’t, bargaining to an agreedprice often leads to heartache and hard feelings - if not a lost sale. Whether you are a Buyer or a Seller, take arealistic look at the market in your area. Get an appraisal or ask your REALTOR® to provide you with a ComparativeMarket Analysis. The more you know aboutthe homes which have sold in the neighborhood in the last six months, thebetter armed you are for a successful negotiation.
ConsumerReports: How to bargain for almost anything
Bargainingto buy the best home: Negotiating tips
That is compared to what there is to know. I am always amazed by how few people who live in Tucson know about even a few of the great things to see and do here. I know that my tastes are a bit catholic, but really, Tucson has something for everyone. If you love Opera, Symphony, Pops, Local Professional Theater, dance, museums or zoos, (and of course there’s the Desert Museum which is neither a zoo nor a museum but much more than both) we’ve got it.
If, on the other hand you’re more of a gardener . . . wow! What about the Tucson Botanical Society, Thono Chul, or the Tucson Bonsai Society to name a few. Perhaps your thing is Hiking, City Biking, Mountain Biking, four-wheeling, nature walks, birding, telescopes, minerals & gems, mining, history . . . as you can see from these few links, whatever it is we’ve got it in abundance.
So, in some ways I can see why it’s so hard for us to form a city center . . . we all have so many different directions we can go and few of them lead downtown. This, however, could be our real strength, if we can find a way to make the center a vital connection between all of these disparate destinations. How? We can do it with public transportation. So, will the planned Streetcars do the trick? It is a start, but not unless we follow that small plan up with an immediate second, third and fourth stage. Let’s be forward thinking here and encourage our representatives to do the same!
For those of us who live in Tucson, subjects like Rio Nuevo can raise hackles. Still, there seem to be signs that something may be happening. Unlike the so called Rainbow Bridge or the now mostly forgotten Aquarium, substantive things are happening.
Take for example the call for a Tucson Town Hall by local media and government, or the recently approved Streetcar . . . or even the more sober, infrastructure approach proposed recently at the Fox by the Pima County Real Estate Research Council. What do you think? Here's a place to voice your ideas and hash out your concerns, vision and plans. As for me, I'm getting involved.