Why do real estate agents do a visual inspection of the properties they sell?

What is the agent visual inspection, or AVID, and why is it required with home sales in California?

The short answer on the purpose of the AVID

When real estate sales people represent buyers and sellers on residential real estate transactions in CA, they must do a visual inspection of the property as part of their disclosure obligations. In other words, they are required to walk through the property, inside and out, and look carefully at what they sell and advise the parties to the contract of any red flags noticed.

This is required by the state. It is not optional.

If an attentive Realtor walks through and notes something that would make a buyer unhappy to discover after close of escrow, that agent needs to note it on the required form so that any such concerns are disclosed to the home buyer(s).

Video discussing the AVID, or Agent Visual Inspection Disclosure

 

Where do the agents write up their visual inspection disclosure comments?

 

Agent Visual Inspection Disclosure, top of page 1

Agent Visual Inspection Disclosure, top of page 1

 

Sometimes the real estate licensees will simply make a few comments on page 3 of the Transfer Disclosure Statement (TDS).  More and more, though, they are completing the separate 3 page AVID (Agent Visual Inspection Disclosure) form instead.  It is larger and allows for more thorough list of items noted. Both approaches are permitted by law to fulfill that obligation, though.

 

Why is the AVID required?

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Doesn’t the listing agent have to show it to me?

Telephone Photo with dialogue between a caller and listing agent - Doesn't the listing agent have to show it to meIf a buyer wants to view a property, does the listing agent have to show it to him or her outside of regular open houses? The answer might surprise you!  Here’s a quick overview:

  • The listing agent and seller decide about showings that the listing agent is expected to do. Does the listing agent have to show it privately, or during open houses, or only on one weekend before offers are reviewed?
  • The listing agent will make showings possible for buyer’s agents with instructions on scheduling in the comments that members of the MLS can read.
  • In many cases, the real estate licensee working with the home seller will hold the property open for the public on the weekend and sometimes mid-week as well. It may or may not be the listing agent holding it open.
    • For safety reasons, many listing agents will not have private showings with buyers whom they don’t know and who aren’t clients of theirs. Realtors are harmed every year in the line of duty.
    • For agency reasons, a listing agent who plans to only represent the seller may not want to have an appointment with a buyer who plans to write the offer with someone else.
    • There are many other reasons why the listing agent will not personally show the home for sale outside of open house times, but may be able to arrange for the buyers to see it with another agent.

When does the listing agent have to show it?

The most important thing for buyers to understand is that the accessibility of the home for viewings depends upon the agreement, verbally or in writing, between the owner of the property and the agent/brokerage hired to market, negotiate, and sell the real estate as to whether or not the seller’s agent is obligated to show it privately.

It’s not an “on demand” situation where an interested buyer can insist on seeing the property as desired. To make an absurd point, no one would say “doesn’t the listing agent have to show it to me at 10 p.m.?” Without any thought, we know that’s unreasonable.
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What happens at an appraisal?

What happens at an appraisal - image with camera, grid paper, measuring tape, housesWhen Silicon Valley home buyers purchase real estate using a mortgage or loan, the lender will require that an appraisal be done. (This is true even if you do not have an appraisal contingency.)  The main reason for the appraisal is to protect the bank from the risk of its making a bad investment.  The question being posed is a simple one: is the house, condo, land etc. worth the purchase price?

An appraisal isn’t just a visit to the property, but more of a process. But first, who is the person doing the appraisal?

Is an appraiser another real estate sales person?

A real estate appraiser is a professional with a license specifically targeted for performing this work. It’s not the same as a real estate salesperson’s license. In California, they are regulated by the Bureau of Real Estate Appraisers.

The appraiser must evaluate the target property and arrive at worth based on comparable sales.  (There are other ways of arriving at value.  In the case of income property, for example, it might be important to look at the rent, expenses, cash flow and ratios of several factors to calculate value. Another angle may be replacement cost or cost for rebuilding.)  In most cases, though, comparable sales will be analyzed and this approach will be given the most weight.  We often refer to these as “comps”.

In many cases, the appraiser will do some research before visiting the property (and we real estate agents may email comps or other information ahead of the visit).

Once at the site, he or she will

  • measure to calculate the square footage of the house and garage (living space plus other space)
  • will take photos of the inside and outside of the house or condo plus the street view
  • plot out the basic floor plan of the home
  • verify that there are smoke detectors, carbon monoxide detectors, and water heater strapping as required for health & safety

Please note that no people can be in the images!

Sometimes the appraiser may ask the real estate agent who is present some questions about either the property or the sale.

Often the buyer’s agent will be the access person for the appraiser, but just as frequently it’s the listing agent.  Why should the listing agent take the time when it’s something for the buyer?

As I see it, a low appraisal will hurt my seller clients because it could cause the buyers to bail out or try to renegotiate the price.  For that reason, when I represent the sellers, I like to meet the appraiser and bring comps (or email them ahead of time) to help defend the price.  As the buyer’s agent, I also see risk that my clients may have to come up with more cash if the appraisal falls short, or have some other unhappy remedy such as cancel the same – that’s expensive, as in most cases not only does the appraisal cost a few hundred dollars, but inspections aren’t free either!  For me, I like to go no matter which side of the transaction I’m working.

How long does the appraisal appointment take? When is the report done?

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Can a real estate agent help you to buy a foreclosure?

San Francisco Victorian Homes - Can a real estate agent help you to buy a foreclosure?Can a real estate professional help you to buy a foreclosure? There are some nuances to this answer, but in short, it depends. We haven’t had many foreclosures in recent years, but once in awhile we find them popping up here and there.

There are several stages in the foreclosure related sales in California.  Often, homes somewhere in this quagmire are listed on our Silicon Valley area MLS or multiple listing service.  If a property is listed in the MLS, then yes, we Realtors can help home buyers with a distressed sale purchase.

The stages of foreclosure

  1. Pre-foreclosure (where payments have been missed and a Notice of Default or NOD has been filed – sometimes these homes are on the market and included in the MLS.

    If they’re in the MLS, I can help.

    If these properties are for sale, often these are short sales (but short sales are not always in pre-foreclosure – they may not have missed any payments).

  2. Trustee’s sale, or actual foreclosure on the courthouse steps. This does not involve the MLS or Realtors at all. There is literally no role for the real estate agent here unless you, as the buyer, want to pay the commission (most buyers don’t in this circumstance).

    There are some big caveats and warnings!

    First,  often what’s owed against the home is more than it’s worth and the only way to purchase a home here is to pay off all the debts (so it may not be much of a deal!). Some buyers who “bought” a home actually have only purchased the second deed of trust, not the first, and are left empty handed.

    Second, if you buy here, you get NO inspection contingency and must pay cash for the house.  End of story – no backing out.  Worse, you cannot inspect it ahead of time!

    Third, you are likely to be bidding against flippers and builders who can more affordably rehab the home than you or I could do.

    There are a lot of risks, so buyer beware!

  3. Bank owned or REO. REO means Real Estate Owned (by the bank).

    These are usually listed on the MLS and if so, I can help you with it.  Sometimes banks hold onto them between the trustee’s sale and prior to listing them with a broker.  Often this is only for a month or two but sometimes it’s longer.  If it’s not on the MLS, it’s very very hard, or maybe impossible, to buy it.

Want to buy a foreclosure? Want professional help to do so?

While it’s not hard to locate homes where owners have missed some payments, it should not be assumed that these houses are either for sale or that the owners have any intention of selling them.  In my opinion, it would be harassment if consumers showed up on their doorsteps trying to purchase a house where a payment has been missed.

Most, maybe all, of the residents there would be offended.  They may be trying to get a loan modification (it does happen, I’ve known people to work through it that way) or have family & friends helping them to get back on track. If it is not listed in the MLS (which you can find at MLSListings.com – the public portal of our agent multiple listing service), the odds are overwhelmingly against it being available to you.

The short answer to the question “Can a real estate agent help you to buy a foreclosure?” is that the answer is generally NO if it’s an auction on the courthouse steps.

Related reading:

What’s the difference between short sales and foreclosures? What is an auction?

See also these much older articles from the downturn:

So you think you want to buy a Silicon Valley short sale?

Short sales sell but often don’t close: why?

Browse Short Sale Listings & Bank Owned Properties for Sale in Los Gatos

Short sale and REO articles on the Live in Los Gatos blog (old articles)

 

How responsive should your real estate agent be?

Stone stepsThe odds are good that if you are looking to hire a real estate professional, one of the criteria you seek is “responsive”. Those of us who sell real estate for a living know that consumers want to hear back from us as soon as possible when they call or email (or text, in some cases).

How responsive should your real estate agent be?

  • Most real estate agents will return phone calls within a half day regularly, or at the end of the business day worst case scenario
  • Some will answer the phone when it rings every time, unless they are with clients or otherwise crunching on something urgent, such as writing or reviewing offers
  • For emails, the response times can be similar – often within a few hours, but not more than 24 hours
  • When consumers text, the response may be faster since it seems urgent to the recipient. You’ll want to see if your agent wants texts outside of certain hours or not, or if texting should be reserved for things that demand a quick response.
  • Some agents may have a dedicated day off and will not return messages until the following day. It’s good to ask ahead of time about how time off is handled.
  • Be sure to ask about your agent’s schedule and communication style (when and how they’d like to hear from you). Make sure you let your preferred method be known so you can be on the same page not just for when to communicate, but how!

Responsiveness and phone calls

If not with clients or otherwise tied up, many Realtors (yours truly included) will pick up the phone when called during business hours. (Some won’t. Some do time blocking and return calls at set times, such as between 11am and noon and 4 and 5pm. Those who time block in this way will often put a message on their voice mail explaining when they will call back. Hopefully, that works for the caller!).  (more…)

Do you have an agent or USE an agent?

Meeting with home buyers to review disclosures and purchase offer documentsWords can be so revealing.

Recently at an open house, a home buyer said that he and his wife don’t have a buyer’s agent. Later, though, he volunteered that recently they’d written an offer on a property and had “used an agent“.

What does that tell you?

Most Silicon Valley real estate professionals would like to have established professional working relationships with home buyers and sellers.  They want clients, not customers. Realtors put in a lot of time reviewing disclosures, pulling comps, analyzing the realty market, looking for red flags at the property and in the paperwork. The real estate salespeople or brokers want to go “all in” to help their home buying clients to buy their next home with the best price and terms possible.

But do home buyers want the same thing that their Realtors do? I’d say usually yes – but not always. Often you can tell how committed a home buyer is by the way he or she speaks, but sometimes only in the way that person behaves. For those of us working in the industry, it’s very important to understand the client’s motivation and loyalty; spend too much time with buyers who aren’t committed to working with you and you will be in the hole financially.

 

List of words that characterize the agent and home buyer relationship, such as client or customer

 

Probably 15% or so of San Jose area home buyers really don’t want a relationship with a Realtor.  They’d rather go it alone.  At another open house, someone said to me that she didn’t like “feeling obligated” to anyone, and found that if she did anything with any real estate agent, that person was expecting her ultimate business.

Yes, that is how it works.  We only get paid if a sale closes.

In many areas of the United States, it is very common for Realtors to engage with home buyers using a Buyer Broker Contract (buyer broker agreement).  Here, it’s not so common. We prefer to work on a handshake, we prefer to work for our clients with the faith that they will reciprocate our hard work with their loyalty. Silicon Valley Realtors want to guide and assist you all the way through from before, during, and after the sale.  They do want to know that you will work exclusively with them – and not just “use” them. If that’s the working, professional relationship you have with your Realtor, it will give you benefits for years to come as that buyer’s agent can be an ongoing source of advice and guidance.

Related Reading

How Does the Real Estate Agency Relationship Work in Silicon Valley?

Silicon Valley Home Buyers: Should You Use a Buyer Broker Agreement?

 

 

Planning to sell your Silicon Valley home? Hire your Realtor before making any big decisions!

Hire FirstSeveral times in recent years I have represented buyers in transactions where the seller’s side of the escrow seems to be a little messed up.  In most of those cases, the problem was a result (directly or indirectly) of the home seller doing too much prep work before hiring an agent.  That is really putting the cart before the horse, is a waste of money and it can cause harm to you, the seller, down the road.

In a couple of instances, the sellers ordered pre-sale inspections first and hired a real estate licensee later.  What could be wrong with that?  Like all professionals, there are better and worse inspectors (and better and worse companies).  There are firms with fantastic reputations for honesty, thoroughness, and reliability. And then there are the duds.

Most of my real estate colleagues have a preferred vendor or two, but also have a long list of professionals whom they would trust to inspect a property and do a good job of it.  Most home sellers, though, do not have much experience with inspectors and do not know these companies by reputation.  More than once, I’ve heard sellers picking a national brand due to name recognition.  That may be OK some of the time, but it’s sure not how most real estate agents would suggest hiring anyone!

When you hire a Realtor or other real estate licensee in a full service capacity (which is what happens most of the time), you are paying not for just the MLS entry, the negotiations, the fliers etc., but the whole transaction package, from start to finish. You’re paying for advice and guidance and that can begin long, long before there’s a sign in the yard.  Why not take advantage of that guidance from the very beginning, with basic input on decluttering and staging and then which inspections to order – and for those, get a list of trusted sources from the real estate professional you hire.

As for the sales in which the seller made a poor inspection choice, in one case it cost that home owner about $10,000 and in another a lost sale.

There are many decisions you’ll need to make when selling your home.  You don’t have to go it alone!  Hire a great agent or broker to work with you and take advantage of your trusted resource from the very beginning. That will save you time, money and stress in the long run!

If you found this informative, there’s plenty more to read. Try one of these related posts:

Hiring an Agent to Help You Sell or Buy a Home in Silicon Valley

How to get a great buyer’s agent in a seller’s market (when most Realtors would rather assist home sellers)

How do you choose a real estate agent whom you trust?

Thinking of Selling Your Silicon Valley Home? Get It Right The First Time if You Go On The Market!

 

 

 

Mistakes that buyers’ agents make which damage their clients’ chances of winning in multiple offers

Lightbulb This year I have seen lots of multiple offers, both when working with buyers and also working with sellers here in Silicon Valley. It’s not rocket science to write a strong offer and to get the terms and the “personal stuff” right.  But so many real estate agents don’t get it.  Unfortunately, when that’s the case, they seriously hurt their clients’ odds of success.  So let’s talk about it.

The basics for writing strong real estate offers in the San Jose – Silicon Valley area:

  1. Agents need to READ the MLS carefully as sometimes there are offer instructions, such as “call listing agent before writing deposit receipt”. That means that the buyers’ agent should email, phone, or otherwise make contact with the listing agent before writing an offer.   Why? It doesn’t matter, do it!  But usually there are a lot of good reasons, such as making sure that the buyers know ahead of time if  there’s a need for a rent back, that their agent knows about online disclosures, or any other condition.    This is missed probably 10% of the time.  Remember, drafting and presenting the offer are part of the courtship – if it goes badly, the escrow will be worse, so it’s crucial to make a good first impression.
  2. If there are online disclosures, reports and inspections, GET THEM. The listing agent can tell if you pulled them or not.  Write an offer without even looking at them and the listing agent may think your agent is unprofessional or a flake.  That may halt the deal right there. (Bonus points: the BEST agents will have their buyers sign all disclosures and submit them with the offer, at least if it’s multiples.)
  3. Don’t submit your offer too early or too late.  Listing agents do not want to see offers long before the deadline, because the response time may expire before the contract can even be presented to the seller.  Likewise, if the deadline is 10am Friday, don’t send it at 2pm Friday – you will be a pain in the rump and it will seem that you will “be difficult” in escrow.  Submit your offer within 12 hours prior to the deadline.
  4. Don’t be a secret.  If you like the property, make sure that the listing agent knows who you and your agent are.  If there are 20 offers, it will help if you stand out as people. Often when I have a listing which gets multiple offers, there will be some agent who comes out of nowhere with an offer – he or she never called or emailed, did not leave a card, did not appear to show the property, did not pull disclosures but wow – out of nowhere they submit an offer.  I got one like that today!  It is so not good!
  5. Have a complete offer package!  Include the agency, offer, copy of check, proof of funds and any other documentation.  Letters are nice.  Offer summaries from your agent are nice too.  Make sure that your agent and you look “easy to work with”.

Those are things your Santa Clara County buyers’ agent should do. But what about you as a home buyer?  Here are some a related articles with more food for thought:

How To Increase The Odds That Your Purchase Offer Will Be Rejected

5 things your Silicon Valley buyer’s agent can do to help improve the odds that your offer will be accepted

Preparing to buy your first home in Silicon Valley

There are more than 30 articles on this site relating to multiple offers. Find all of them here:

https://sanjoserealestatelosgatoshomes.com/category/buying-tips/multiple-offers-buying-tips/

 

 

 

 

Who finds the property? Usually, the home buyer sees it online first!

But I found the house firstOne of the most common misconceptions I see among home buyers today is that the real estate agent assisting them is the one who should locate the property to view first.  This was true 20 years ago, but not today. (A spin on this is “I found the property first. My agent has no value!”)

Let’s get this huge misconception addressed right away.  Anyone can find homes for sale on the web; the real estate community opened this up years ago and syndication made it even more pervasive.

Realtors are no longer the gatekeepers of the inventory.  Most of the time, both the agent and the home buyer are going to the web to see possible matches.  Your agent may happen to see something before you do, or may find something in an area where you aren’t looking, but the odds are that you, the hyper motivated home buyer, will see the home online first.

 

Why is that?  For one, as a home buyer, you are likely obsessed with finding your next home. Your every free moment is spent scouring real estate sites for listings.  Secondly, while you’re doing that, your agent might be showing properties, staging a listing, meeting inspectors, having photos taken of a listing, attending a sign off (settlement), getting keys duplicated, giving relocation clients a tour, etc. And your Realtor is working with LOTS of home buyers and home sellers.  So most likely, you will see it first.  Finding the home is not your real estate agent’s main value.   In other words, commissions aren’t “finder’s fees”.  They are much, much more than that.

The agent’s main value is far deeper than locating a home for you to purchase which is widely advertised on the web. (Article to read: Who Needs A Buyer’s Agent? I Can Find It All On The Web!) It is understanding the market (someone who knows what’s happening with multiple offers, concessions), understanding local issues (some red flags that you may not know about), whether relating to neighborhoods, construction issues, lending pitfalls or other items), being able to negotiate not just the purchase contract but the myriad of other details as well, understanding the nuances of the real estate contract, finding great inspectors to help you (rather than picking a name out of the proverbial phone book), navigating appraisal challenges, etc. etc.  A good, experienced Realtor will help you every step of the way and even after the close of escrow.  But he or she probably will not tell you about a home you want to see first.  You will see it first.  That’s how it is across the country now.  If you are expecting your real estate professional to locate the property first, you will be upset and disappointed because your expectations are all wrong.
A little more reading for the truly interested:

How to get a great buyer’s agent in a seller’s market (when most Realtors would rather assist home sellers)

 

 

 

You must know lots of real estate agents, so please hire a great one when buying or selling!

Bozo Alert!In our Silicon Valley area there are gobs and gobs of real estate professionals – about 15,000 people are members of our local MLS.  In Los Gatos alone, there are probably about a thousand (for a town with about 30,000 residents, maybe 2/3 of them adults).  So definitely, if you live here, you do know Realtors.  You must.  In Silicon Valley, if you don’t know any real estate licensees, you don’t have any friends, as the saying goes.

So any licensee, like yours truly, knows and understands that when our friends (or even sometimes our family members) go to list a home for sale, or pick a buyer’s agent, we may not be the Realtor of choice.  At times, we get a nice email or call explaining (that is nice, and it is appreciated) why someone else was hired.  Other times,  we aren’t even called, texted or emailed, but instead find out “by accident”. That’s harder.  Lots, lots harder.

In all cases, though, it’s much easier to lose the listing (yes, that’s how we real estate agents feel about it) when the agent who is hired is a great agent, or at least a really good one.  The better agents are well liked in the real estate community: they know what they are doing, they work from strong ethics, are fair and honest to deal with, they work hard in representing their clients’ best interests, their egos aren’t super-sized, they don’t BS sellers with what they “want to hear” but tell them the truth (what they need to hear), and they don’t take stupid shortcuts to save a couple of hundred bucks in marketing…. This is not a comprehensive list, but you get the idea.

If a friend or loved one hires a great agent, I will say right away “good choice!” or  “we are great friends, she will take wonderful care of you!  or “fabulous agent, you’re in good hands!”   Not so good?  I will wish you all the success in the world, a speedy sale and fast and uneventful escrow.  I cannot tell you that you’re hired a super agent when I know better.  And I will not tell you what I wish I could, namely, you just hired someone who’s clueless or massively distrusted / disliked or whatever negative thing might be the case.  No can do. That would be a violation of the Realtor code of ethics. (more…)