Entries from Searchlight Crusade tagged with 'prevention'
Using the Real Estate and Mortgage Information Found Here
The inspiration for this article came when I checked my referral logs and found an article where somebody was essentially saying "If you want to be depressed, go read this site and then go rent somewhere for the rest of...
Wells and Community Water Systems
We read Searchlight Crusade every day and consider your essays a priceless education in avoiding the major pitfalls in the home-buying process. On behalf of all of us consumers, thank you so much for your hard work! Please comment on...
"You've Got Something I'm Interested In, But I Don't Want to Pay You"
One of the things I have to deal with on a continuing basis is people calling me because they like something they saw on one of my websites, but they have no intention of doing business with me. Most common...
The Are No Schools That Teach What A Good Agent Needs to Know
I find it fascinating the number of people who will claim that because no college degree is required to become a real estate agent, that agents can't possibly be worth any significant amount of money. The reason no college...
Negotiation Requires More Than Dueling Ultimatums
Not too long ago, I started negotiating for a property. I did extensive research online, and and I and my clients visited several competing properties. We made an offer that was a little under 90% of the asking price, and...
What Does Escrow Do?
This is a question that gets asked a lot. Escrow is nothing more or less than a neutral third party that stands in the middle of a real estate transaction and makes certain all of the i's are dotted and...
Rent to Own and Lease With Option to Buy
This has always been a portion of the market, but right now, more and more people are emphasizing it, or at least the ones who are able. Actual Rent to Own is rare these days, a sign that the...
Professional Referrals in Real Estate and Loans
People ask for referrals all the time, and many folks will stumble all over themselves to provide referrals. Some of them really are excellent providers. Others are not so good, but the person providing the referral has an agenda of...
What If You Cannot Refinance Later?
People always assume they'll be able to refinance later. Even most of my articles have it as an implicit assumption. But what if you can't refinance later? There are situations where it happens. Many situations, as millions of people...
Mortgage Rate, Points, and Closing Costs
Everybody knows that you want the lowest rate, and everybody knows that you don't want to pay any money you don't have to, in order to get it. However, not everybody makes the connection that it is always a tradeoff...
"All of the Good Properties Get Offers So Fast!"
That's way up there on the list of complaints buyer's agents get. Probably number one, definitely no lower than number three, and it's only going to get worse when the markets recover. There's really only one honest response: "Well,...
Don't Allow Yourself To Become A Victim of Bad Real Estate Practice
This woman made herself a victim stayed in a hotel for 7 weeks looking for my "Dream Home." And, when I found it, even though it wasn't in my price range, I knew I would do anything I could to...
Desperation Mining: How a Buyer Hits Paydirt (and How Sellers Can Avoid it)
One of my favorite blogs ran a picture of a listing sign that included the caption "REDUCED But Not Stupid or Desperate". I beg to differ on the former. On the latter, time will tell. Most successful real estate investors...
Procuring Cause and Multiple Agents
Dear Mr. Melson, If you sign two or more non-exclusive buyer's agent agreements in your search for a home to buy, how do you avoid putting yourself at risk for a procuring cause situation from either agent, or even the...
What Does It Mean To Fall Out Of Escrow?
I got this question in an email, and almost blew it off, but then I realized for every person who actually asks, there are probably at least a dozen who are unclear but don't ask, and I apologize that...
Buying Teardown Properties and Condemned Buildings
Dear Mr. Melson: My husband and I are great fans of your Searchlight Crusade essays. Excellent work! In today's mortgage-mess market, will lenders reject loan applications from average buyers (not investors) wanting to purchase acreage with a teardown outside the...
Customer Disservice and Alienation - Why Nobody Else Talks to My Clients For Me
(This article was originally written in July 2008. The genesis was a bad experience with medical office staff, but it applies to every customer service situation there is. If the professionals themselves are too busy to handle your problem personally,...
Buying or Selling Subject to Existing Deeds of Trust
This is something that often happens with highly appreciated properties where the owner can no longer keep up the payments, they get hit with a notice of default, and along comes Joe or Jane seemingly riding to the rescue on...
Top Ten Reasons You Bought The Wrong House
A while ago, I wrote Top Ten Reasons Your Home Isn't Selling. It was well received so I thought I'd take it from the buyer's perspective. Once again, I'll try to inject as much humor as I can. And...
Agents "Buying" Listings: Promising the Undeliverable and Hurting Their Clients
Quite a lot of the time when I view a property, I get requests for feedback. Usually it's an automated email. Other times, it's some office assistant who wants to fax me a form which will "only take a...
Why Do Purchase Escrows Fall Apart? (And Why Is It Happening More Often?)
There have always been real estate transactions that fall apart. The reasons why they fall apart are as varied as the people who enter into the transaction in the first place. Let's get back to the very basics for...
Why Is My Rate Higher Than My Lender Promised?
First off, neither the California Mortgage Loan Disclosure Statement nor the Federal Good Faith Estimate are promises, commitments, or anything more than your loan provider wants them to be. Quite often, they're nothing more than a fictional story told...
Protecting My Buyer Clients Good Faith Deposit
The buyer's deposit is always at risk. This is just a fact of real estate transactions. I could pretend it's not so, but that wouldn't keep the deposit from being at risk - it would just make me a...
Unsustainable Loans You Should Not Use to Purchase a Property
You've probably heard the horror stories, and I've mentioned the possibility more than once. Some unsuspecting person is looking at properties beyond their price range, and it therefore has all kinds of attractive features that properties which are in their...
Is The Good Faith Deposit At Risk?
Many agents seem to answer this question differently depending upon whether their client is the prospective buyer or seller, according to what they think will make the client most comfortable. When their client is making an offer, "No, your...
Consult a Loan Officer Before You Make a Purchase Offer
I don't know how many people have told me the story of the Purchase Offer That Was Accepted But Couldn't Be Done. They come to me because they lost their deposit or are about to and they want some way...
Why Buyers Should Avoid Short Sales
I've been saying this for a long time: Short sales are poison for buyers. I don't know why people encourage buyers to look at short sales, because there is no advantage for buyers that I am aware of. In...
Real Estate: Giving Someone a Monopoly Does Not Encourage Top Performance
From an e-mail I've been talking to agents lately and I ask them about the things I've learned about from your site. I thought I would say things like "I want to apply for a backup loan" and they would...
The 2010 Good Faith Estimate (Page Three)
This is the conclusion of the series begun in The 2010 Good Faith Estimate (Page One) and continued in The 2010 Good Faith Estimate (Page Two) Page Three is where the most blatant lies of this whole piece take...
The 2010 Good Faith Estimate (Page Two)
Continued from The 2010 Good Faith Estimate (Page One) The next section is on origination charges. Indeed it is titled "Your adjusted origination charges" It starts with "Our origination charges" saying this is the charge for doing the loan....
The 2010 Good Faith Estimate (Page One)
I had a great rant about the limitations of the Good Faith Estimate all planned out in my head when I when I was in the very first stages of planning this website in my head. It was the first...
Pretending the Service Equation is Simpler Than It Is
Way back when I was just out of high school, I was doing a lot of things with my time. Working, dating, competing on the fencing team, gaming of various sorts. But every once in a while, I dropped...
Real Estate: Know What Can Be Fixed and What Can't, What's Profitable and What Isn't
It's a well known fact that not all factors in real estate are equally important, and not all property investments perform equally well. A critical part of successfully choosing the right property, whether it's for investment or personal use, lies...
My Sixty Second Public Service Announcement about Buying Real Estate
Here was an idea I had: Pack a list of the most important things consumers need to know about buying real estate, as packed into the words I can say in sixty seconds without sounding like an over-clocked squirrel. Here...
Negative Equity and Short Payoff Scams
Saw a sign driving: "Negative Equity? Sell and Get cash!" Notice that it doesn't claim that you can do so legally. I saw another of these signs on the way to the office this morning. When things are going sour,...
Consumer Due Diligence on Real Estate and Mortgage Loans
Or: Please don't believe everything you read on the internet! Rarely a week passes by that I don't get a request from someone to link to their website or article. I'm happy to link to good sites and good articles...
Selling In Buyer's Markets: Do You Need to Sell Or Are You Part of The Problem?
One of the things that sticks out about buyer's markets is that there are two sorts of listings: Those who are willing to do whatever it takes, anything it takes, to get the property sold, and the other who apparently...
My Thirty Second Public Service Announcement On Mortgage Loans (UPDATED)
I usually write medium-long articles, Part of that is because I've done all of the easy subjects, part because sound bites facilitate sloganeering, not serious thought that's likely to result in a better answer - or the realization that you've...
Selling to Avoid Foreclosure in a Buyer's Market
Found this on a public forum I need help to stop foreclosure on my home. I need to sell quickly? I am a couple months behind on my payments and want to sell now. I am not looking to make...
The Difference Between Note Rate (APY) and APR
I am continually horrified how many people shop their loans by APR, just as I am by people shopping their loan based upon payment. Why? Because in either case, you're setting yourself up to spend a lot of money in...
Finding Bargain Real Estate: Work With the Buyer's Agent Who Actually Finds The Bargain!
Several times a month I get calls and emails. Sometimes, it's even people stopping in. "I've heard you're good at finding bargains." Well, yes I am. "Please tell me the addresses of some bargains so I can drive by."...
Real Estate and the Four Levels of Competence
People who talk about learning skills tend to discuss a model for learning called the conscious competence learning model. It starts with unconscious incompetence. You not only don't know how to do something, you don't realize that it is...
Avoiding Mortgage Prepayment Penalties by Partial Payment
I enjoy your blog very much and figured you would be a good person to ask this prepayment penalty question to. Is there a prepayment penalty if you dont pay down the whole amount? For instance, say I owe 620k...
The HUD-1 Form
I have mentioned this form several times in the past as the only form in the entire mortgage process which is actually required to be accurate. Department of Housing and Urban development form 1, the so-called HUD 1 form, is...
From How Much You Make to A Payment and Price You Can Afford
I'm clueless about how home loans work. Is there any way to figure out how much I can afford to spend per month on a home. If I were to get a home for $(figure) how much would that...
Changing Rates and Streamline Refinancing - Reasons to Love Zero Cost Loans and Hybrid ARMs
(NOTE: AT this update, laws exist enacted in the latter part of the previous congressional session that essentially outlaw zero cost and low cost loans by outlawing yield spread. If you can't make yield spread, you can't use yield...
Real Estate Liquidation Auctions
Liquidation auctions were a big thing for a while there. They were just advertising one on all the stations around here. The other agents in my office asked if I was going, and I told them, "There will be...
Fixing A Bad Mortgage Sale
i was sold a bad home mortgage who do you talk to That was a search I got the other day. The answer depends upon where you are in the process. If you've just applied, not yet signed the...
Lenders Holding Your Money Hostage
My lender told me that there is an application fee? He said an application fee of $250 and then we'll need the appraisal fee and of course we'll need an inspection. Does all this sound legit, is there always...
The Self-Fulfilling Prophecy of Lender Fear
Most people, particularly first time buyers, want 100% financing or as close as they can get. Actually, most first time buyers don't have a down payment and couldn't put a significant down payment (5% or more) if they had...
What to look for at Loan Closing
I've said upon more than one occasion that the factors at closing are all in the loan provider's favor. Unless they signed up for multiple loans, the typical consumer has no leverage to get the loan provider to play it...
Differences Between Loans Look Smaller Than They Are
One of the things I keep getting told by people is that my loans are the same as everybody else's. When I originally wrote this, I had quoted a 5.625% with no points, and got told, "That's the same rate...
In Order To Deal With Looming Foreclosure, You Must Get Out of Denial
A while ago, I got a call from a hard money lender, asking what I could to to "rescue" one of his clients by refinancing. He was being about as altruistic as a drowning man. What he really wanted...
Buyer's Agency, Due Diligence, and the Illusion of Comity
Somebody sent me this story via e-mail: Feeling Misled on Home Price, Buyers Sue Agent Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing...
How Can Buyers Get the Lowest Possible Price on the Best Possible Property?
The first piece of advice I have for buyers who want to get a fantastic bargain is to find a good buyer's agent (this guy is one of the best in San Diego County). Nothing else will make as...
Why You Shouldn't Have All Your Money In Real Estate
Is there any problems with having all your money in only real estate? That was a question I saw. The answer is YES there are problems! 1) No diversification. The real estate market tanks, like it has right now,...
How to Sell Your Home Quickly and For The Best Possible Price
There's really nothing mysterious about this. There are some subsidiary tricks and issues, but the most important thing is obvious. The economic games theory is crystal clear, as is the research into what really happens. But most people don't like...
Real Estate Agents and Mortgage Loan Officers Don't Want to Compete
It's the same reason the phone company doesn't want to compete, General Motors doesn't want to compete, Wal-Mart doesn't want to compete, Disney doesn't want to compete, and Microsoft will do everything in its power to appear as if it...
In Real Estate, You're Better Off Doing One Thing At A Time
Hi--I just found your site today. The best I've ever seen/read, etc. Thank You!! I do have a question I didn't see addressed regarding our current situation/dilemma: Our present home, which we've lived in for 8 years, is worth...
The Future of Real Estate Agency is Expert Consultants, Not Controlling Market Access
Expertise and attitude, not control of an informational chokepoint, is the way that things are going. Let's analyze this from both sides of the problem. The current owner looking to sell really needs a marketer. For better or worse, most...
Buyer's Markets Are A Great Time For Moving Up
I have said repeatedly that buyer's markets are not the time to be selling a property if you have any choice. There is one exception: People looking to turn around and buy a more expensive property. It's still better if...
Full Service Agent For Discount Price? Demand Specifics!
There is no such thing as a free lunch, but lots of people will pretend there is. It seems to me that many people consider compensation earned by real estate agents as paying some kind of toll. They think of...
Real Estate and the Tale of Aesop's Dog (Greed Envy)
At a very young age, my parents bought me a book of Aesop's Tales. Aesop has gone out of style, probably because these are stories with a moral lesson, and it seems the modern society is actively averse to moral...
Should I Buy A Home? Part 2: Process
Continued from Part 1: Preparation I am considering buying a home, although I have not made up my mind on the subject. This is not due to indecision, but rather due to a lack of necessary information. There are many...
Which Makes More Difference To Your Future - Buyer's Agent or Listing Agent?
Having done both, there's no question in my mind. For the average person and the average transaction, the buyer's agent makes a lot more difference. In the aggregate, a good buyer's agent has the opportunity to make a lot more...
Nightmare Mortgages and Self-Destructive Behavior
This article started another one of those desperate consumer fishing calls a while ago. Loan standards have tightened since then (In my considered opinion, over-tightened and the lenders and Wall Street will figure it out within a couple years). Stated...
The Doctrine of Delaying The Moment Of Truth
One of the worst things about the loan process, and indeed, found throughout the whole real estate industry, is the idea that if you can just delay telling the client about something they won't like, it's more likely they'll continue...
How to Avoid A Repeat of the Housing Market Mess
Scapegoating mortgage brokers or anyone else is not the answer, nor is prohibiting yield spread. We've been here before (in the early 1990s), congress did something remarkably similar except a little bit more sane. It didn't work then. Why would...
The Lender's Rule of Mortgage Payments
Every so often, someone who thinks they're a wit sends me a copy of The Rules For Relationships According To Women. Unlike those rules, which might have been funny around the time Nefertiti was a debutante, there are very few...
The Loan Shopping Koan
It's very easy for loan providers to talk about a much better loan when you're shopping than they have any intention of delivering. Then you give them thirty days after you sign up, and you're put into a situation where...
How To Keep Listing Agents From Filtering Out Offers
This is a real, major and pervasive problem in the industry. For a while, it mostly went away as listing agents were desperate for any offer, but it has come back. At least two properties my buyer clients have...
Real Estate and "Priced for Perfection"
The stock market has a phenomenon where a company's stock is "Priced for perfection." It may sound nice, but "priced for perfection" is emphatically not a good thing. It's where the stock price of a company has been bid...
The Tollbooth Model of Real Estate Agency
Over the last couple of decades, there's been a rising movement, mostly on the part of those who want a piece of real estate agents business, to sell agents as a toll booth. Tollbooths sit there, guarding the entry to...
There Is No Fairy Godmother for Loans
Really. I know that most people who read that title are replying "no kidding" but you would be amazed at how many people act like there is such a fairy godmother. I got an email yesterday that said, basically, "Help...
"I'm Working With Someone Else, But Could You Just Help Me With..."
I recently got an email from a reader that was coming into a property as I left. I dropped my card and we did the lockbox shuffle thing, then there was an email when I got back to the...
The Sperm Donor Theory of Buyer's Agents
Some fathers, sad to say, are not involved in their children's life beyond conception. Maybe it was just a one night stand and they have no idea they even have a child, maybe they were involved with the mother on...
Don't Rely On Reputation - There Are No Silver Bullets
On a regular basis, I get emails that ask me what I think of a particular company. When I check out public forums, I see questions about particular companies every time. "What do you think of X Realty, or Y...
I'm Competing Against Multiple Offers. How Do I Proceed?
The first thing to consider is that maybe you shouldn't. You never want to get involved in a bidding war. There's a classic riddle I ask every single one of my buyer clients at least once. "How often does...
The "We'll Keep You In Your Property" Scam
I've been aware of this scam for some time, but with a larger than normal number of people in foreclosure or otherwise at the end of their rope, it's probably past time to cover this. It is a pure scam...
Student Loans and Real Estate Loans: Default, Repayment vs. Nonpayment and Consolidation
This is one of those things that trips up people to buy a house or refinance it: student loans. First off, Form 1003, the Federal Uniform Residential Loan Application has the following relevant questions on page 4, among the...
Buying Real Estate Isn't Simple
And I don't know why people expect it to be. Cancel that. I do know why. Popular media. It's not all that common in popular media, but on those occasions I see someone buying a house in the movies...
You Want an Agency That Can Pay ENOUGH Attention to YOU
A lot of advice gets given to choose a "top producing" agent. These highly corporate offices may have the name of an individual agent attached to them, but they are in fact transaction mills. They have done pretty well for...
Realtor and Loan Officer Responsibility: Can the Client Afford The Property?
Every so often, I write about professional responsibility. Every month I get a couple of magazines because I'm a Realtor. There was a letter from someone who was proud of the fact that he had never asked someone if they...
Shopping For The Best Loan In The Changed Lending Environment
It shouldn't be any surprise to anyone with the headlines of the last few years that shopping for a mortgage loan has radically changed. Indeed, a lot of the regulatory changes seem directly aimed at what were the best...
Financing Tricks and Calculating What You Can Really Afford
(Note: the available loan options have shrunk since this was first written, and the rates are significantly lower right now, but the main point is calculating what you can and cannot really afford) Hi Dan, I am a first time...
Top Twelve Things That Help You Buy Property At A Bargain Price
Quite a while ago, I wrote Top Ten Reasons You Bought The Wrong House and Top Ten Reasons Your Home Isn't Selling. In that vein, I'm going to write a list of the most important things when you're shopping for...
The Difference Between a Reliable and Unreliable Prequalification or Preapproval Letter
If you don't know, chances are your agent doesn't either. Even if you know, chances are that your agent is as clueless as a newborn about loans. I and my clients get asked for all kinds of nonsense (to put...
How Easy Real Estate Scams Are
Hi, my name is DELETED, I need help. I bought a house (a few months ago) because my boyfriend persuaded me to. This was supposed to be a real estate investment between us. I put the house in my...
Truth In Lending and APR
(Note: This article is a reprint of one of the earliest articles I wrote, from a time when rates were higher. The principles, however, are quite valid - and even reinforced by the fact that rates now are much lower)...
Why It May Be Costly to Reject Paying Points
I hear it and read it all the time - advice that says to pre-emptively reject the possibility of paying points. People that talk to me about loan rates that tell me they will not consider any loan that...
Title Deeds And The Form They Should Take
On a forum I frequent, someone posted this advice for prospective property purchasers: At closing, at the title office or bank, when signing the title, contract for sale or any transfer instrument (use a single obliterating line) mark out the...
Loan Documents - Contracts of Adhesion
Got a search for "mortgage closing documents do not sign changes." Unfortunately for this person, the documents you get at closing are what legal folks call a contract of adhesion. This means you can either accept it, sign, and adhere...
Finding a Good Buyer's Agent (And Eliminating Bad Ones)
I hear people complain that they've never had a good buyer's agent, that they can't find one, or that they one they had hosed them (Sometimes, they're wrong about that, by the way). I also regularly get email from people...
Transaction Coordinator: For The Agent's Benefit, Not The Consumers
The last few years, real estate agents and brokerages have begun charging a transaction coordination fee in addition to whatever their share of the sales commission was. The purpose of this is to pay a transaction coordinator, so your...
Don't Roll Mortgage Refinance Costs Into Your Balance If You Wouldn't Pay Them Cash
One thing that is very common in the mortgage industry is masking loan costs by rolling them into your loan balance. People are less sensitive to being asked to roll this money into their loan balance than they are about...
Pay a Prepayment Penalty Now, or Wait to Refinance?
Hi Dan wondering if you could help me out I'm getting a lot of different answers from a lot of people and I'm really searching for help I bought my house brand new (three years ago) for 550,000, and...
Let Me Tell You About The Loan You Could Have Had
Not interested? Most people aren't when it's talking about how they got taken advantage of in the past. First off, it's in the past so it is over and done with, and there's no use dwelling on it, right? Second,...
The Qualification Letter I Use for My Buyers and Require For My Listings
I have never had someone tell me they wanted more information than this letter provides. I also require the prospective loan officer to fill if out for prospective purchasers of my occasional listings. DELETED (Mortgage Corporation) Address DELETED City...
Cash to Close - A Basic Primer
Cash to close has always been an underwriting standard, but more people are running into it as a reason why they cannot buy that property, why their buyers cannot perform, and why they can't get that refinance approved. With...
Homesteading and Declaration of Homestead
This has nothing to do with the Homestead Act of 1862 that encouraged settling the western United States. A Declaration of Homestead basically protects your equity. In many cases, you may not even have to file a declaration to receive...
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