Charlotte Real Estate Blog

Buying a home, whether its your first home or just the next step up, requires some careful planning to ensure that you do not over extend yourself financially.  The worst time to find out if you did or not is when that first mortgage payment comes due 60 days after closing and you realize are just barely going to get by.  To make sure that you don’t put yourself in that situation, follow these simple guidelines.

1. No Savings, No House!

If you do not yet have money that you are putting aside in savings for yourself, you should consider holding off on that house purchase.  Buying a home in the Charlotte area will require that you spend at least 6% of the purchase price of the home in closing costs and a down payment.  Often times, your lender may offer to finance in your closing costs and the seller may even pay your down payment through an assistance program.  However, there are things that you will want to do or that you will need that you shouldn’t go into hock for.  Also, your dream house may not have the equity to do what’s described above.  Therefore, start saving now so that you won’t feel the pinch of buying later. 

2. Make Your Mortgage Payment Today

Tying in with the first point is the idea that you should start making that mortgage payment today on the house you do not yet own.  What do I mean?  If the homes you are looking to buy will result in a mortgage payment of $1,500 a month and your rent is $800 a month, pay yourself the $700 by stashing it in your savings account - AND DON’T TOUCH IT!  This will be your rainy day or emergency fund.  At the end of the year, you will have an additional $8400 above and beyond your normal savings.  This will also help you to get use to paying a larger mortgage. 

The same holds true if you’re looking to move up to a bigger home.  Many move-up buyers have equity in their homes but don’t rely on that entirely.

How to do this:

Take for example that you are looking at homes in the $250,000 price range and you have 3% to put down.  Your mortgage will be $242,500.  The easiest factor for mortgages is that at a 6% interest rate, for every thousand dollars financed is $6 in payment.  So for a $242,500 mortgage, your principal and interest payment will be $1,455.  You can estimate an additional $200 for taxes and $100 for insurance and mortgage insurance.  Totalled up, an estimated mortgage payment would be $1,755. 

3. Pay down your revolving accounts. 

If you have lingering revolving accounts, its time to knock them out.  Yes, you lender may not tell you that its necessary for the mortgage however there’s no point in having a bunch of revolving accounts with lingering balances.  Instead of paying the bank all that extra money in interest, you need to be paying yourself.

4. Make the job change now

If you’ve been considering purchasing a home but have held off because of instability at work or the desire to change jobs, make that move now.  Unlike renting, you cannot move as freely and therefore you could end up with a undesirable commute.  Therefore, make the change and hopefully it is a good fit. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

I am watching and reading very closely all of these bills in Congress which are targeting the oil companies.  Of course, we’ve all heard the talk of taxing the oil companies a windfall profits tax, which has bigger implications for all American’s if congress is successful.  H.R.5800 is one such bill: Consumer Reasonable Energy Price Protection Act of 2008.  For those not familiar with the bill and what a windfall profits tax is, here is an excerpt: `(2) WINDFALL PROFIT- The term `windfall profit’ means, with respect to any sale, so much of the profit on such sale as exceeds a reasonable profit.`(3) APPLICABLE PERCENTAGE- The term `applicable percentage’ means–`(A) 50 percent to the extent that the profit on the sale exceeds 100 percent of the reasonable profit on the sale but does not exceed 102 percent of the reasonable profit on the sale,`(B) 75 percent to the extent that the profit on the sale exceeds 102 percent of the reasonable profit on the sale but does not exceed 105 percent of the reasonable profit on the sale, and`(C) 100 percent to the extent that the profit on the sale exceeds 105 percent of the reasonable profit on the sale.`(4) REASONABLE PROFIT- The term `reasonable profit’ means the amount determined by the Reasonable Profits Board to be a reasonable profit on the sale.Does this scare you as much as it scares me?  Don’t get me wrong.  I’m furious every time I drive by the gas station and I see prices are up AGAIN and when it costs $80 to fill up the car.  As a small-business owner, I am equally as terrified that the government will establish a board to determine how much money one can make.  During the rapid sellers markets of just a few years back, many in congress were looking into the profits of real estate professionals, thinking we were making too much.  Now that the tables have turned, I wouldn’t expect such a bill but a bill like HR 5800 would establish precedent for one.  Imagine for a minute that there was a federal schedule that said how much you could make in a given year like the one above.  Let’s say the government established that $2,000 per home was a reasonable profit for a real estate professional.  How would you feel?  By the way, don’t think for a minute that its not possible.  With Obama and Clinton both seeking a windfall profits tax on the oil companies and Obama already promising to raise the Capitol Gains Taxes, we could be next.   

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

Things between you and the agent you have been working with have finally broken down.  They don’t call anymore, don’t return emails, aren’t familiar with your needs and you want out.  Well, that may prove more difficult than one might expect. 

You see, most buyer agency agreements are written to ensure that the broker will receive some compensation for the time spent with you.  I would say that 80% of buyer agents do not charge any sort of retainer fees so any available compensation for their time and efforts happen at closing.  Therefore, the protections put in place are to ensure that they get some money for their efforts should you decide to walk away.  Many people think they can just walk away from their agent to cancel the agreement but like a gym membership, you may still be required to pay that agent regardless.  After all, most agreements are between you the buyer and the brokerage so not even killing your agent will get you out of the contract.

At issue is the idea of “procuring cause.”  Generally speaking, procuring cause is the reason how you found the property you ended up buying in first place.  For example, if I showed you a home that you wrote a contract on, I would be the procuring cause for the transaction and would be owed a commission.  You may say that your agent didn’t show you that property however a quick search of their records could reveal they may have sent it to you in an email.  I use the standard of crossing the threshold but not everyone is as liberal as myself.  Its not totally about procuring cause. 

However, if you find that your agent just isn’t getting it for you any longer, the first thing you can do is call their broker-in-charge.  You can obtain the phone number of this person by calling your agent’s office and asking for the BIC.  Request that they release you from any standing agreements from your agent and to send you written or email confirmation your wishes have been granted.  This may not be an easy phone call.  First of call, you’re firing not only that agent but the brokerage and so the BIC may ask if they can assign you to another agent.  Also, if your agent is less than professional, they may not take the news very well and retaliate with a nasty email or phone call.  That’s ok because that’s just more of a reason not to work with them, right. 

You can also send a certified letter to the broker-in-charge and keep the receipt to show that you did so. 

Remember the whole talk of procuring cause?  Most agreements have a provision that protect the agent from you firing them and then making an offer on a property without them that they showed you.  Depending on who you were working with prior, they may sue you for their commission.  If you are hiring another agent, this will more-likely-than-not eliminate that provision. 

The bottom line of this is don’t sign anything until you are absolutely sure you really want to work with that agent.  I’ve always taken the tact that I will work with someone for a few weeks without an agreement to see how well we work together.  If things are copacetic, the buyer and I have no problem with an agreement.  However, sometimes personalities don’t mess right or the buyer wants a property that I cannot help them with.  I would much rather refer them to someone more experienced in their needs than I rather than develop a relationship that isn’t productive. 

Remember: walking away doesn’t void your buyer agency agreement.  The last thing you want to ever have happen is you receive notice that you are being sued for commission.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

This morning, I received a call at home from a recording from Cardmember services saying that if I wanted the rates on my credit cards lowered, I could take advantage of a limited time offer by pressing 1.  The number that called me was 850-648-6744 and my caller ID said “Port Saint J FL.”  I pressed 1 because I was cautiously optimistic.  When a live person picked up the phone, I asked who I was speaking with and they responded “Cardmember Services.”  Then they started asking for information and I asked them for some kind of verification that they aren’t some sort of scam artist.  After all, how often does the credit card company call to lower anyone’s rates?  They’re always trying to jack mine to 24.5% if I’m 15 seconds late with a payment.  The person on the other end was VERY rude at that point and said “I hate dealing with people like you in the morning.  You are a stupid jackass!” and hung up the phone. 

I was furious to say the least so I decided to call all of our credit card companies since they should know which their auto dialers called the house and which operator picked up.  None of them said their dialers made the call so this leads me to believe that this is a complete and total scam.  Another thing about their dialer is that every time you call a bank or anywhere, they always say that this call is being recorded / monitored for quality assurance and this one didn’t. 

BE SMART!  Don’t give out any information over the phone to anyone!  Do like I did and call the companies directly.  I have in the past called and negotiated a better rate directly with the card companies since they want to keep receiving my interest payments.  However, don’t fall victim to these scammers!

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

It should be absolutely no suprise to anyone that when the government comes up with an idea to “save” troubled homeowners, it turns out to be less of a lifeline and more of a lesser of two evils.  The FDIC released a plan describing a Home Preservation Loan program, which is designed to assist homeowners with mortgages they can no longer afford but could do so otherwise.  Maybe assist is too strong of a word for this proposal.  Essentially, homeowners could sign up for a Home Preservation Loan to buy down up to 20% of their mortgage principal if the mortgage company agreed to it.  Some may not because it would have the government (specifically the Treasury) a super-priority interest above all existing liens. 

With 20% paid down by the HPL, the homeowner could then refinance an adjustable rate mortgage into a fixed rate 30 year mortgage which payments not to exceed 35% of their debt to income ratio.  The bank would pay the interest on the loan for the first 5 years of the restructure, a reverse of a typical mortgage amortization where the interest is the majority of the payment each month.  So far, so good right?

What happens when the homeowner sells the property?

Since the government has a superior interest in the property, the government would be paid above all other liens on the property, as much as 50% of any profits from the home.

Doesn’t this sound like something better suited to Tony Soprano?  You can read more about this proposal here on the FDIC website.  What do you think about giving 50% of your profits to the government?

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

For years, I’ve purchased home warranties for my buyer and seller clients for protection against what can go wrong will go wrong at the least opportune time.  For the most part, I’ve used one AHS because they were among the better companies and never had an issue when a service was needed.  Others have cropped up but they all have their own flaws. 

Advantage warranty requires their own inspector to do the home inspection for them to cover ANYTHING.  If the inspector found an issue or something could not be tested, those items are excluded.  Talk about not insuring a risk.  Others have a low base price but if you want things like the a/c, refrigerator, roof, garage door opener, etc, you need to spend an additional $300.  In spite of that, I have been a total advocate for home warranties but that could change soon. 

A client of mine called tonight absolutely frusterated with the situation he finds himself in.  The home warranty company is denying his claims for service and he’s trying to figure out what good is it.  As for myself, I’m trying to figure out what I paid for if they’re going to deny the claims?  Nobody likes being taken but I but I’m feeling like a Grade-A sucker.  I’ve made contact with my sales rep to fight for these guys and hope this is just an oversight.  Otherwise, this may be the last warranty I’ll be buying for awhile.  After all, if they’re just going to deny the claim, I’d might as well save the money. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

An Update 5/7/08: I guess I just assume since I work 7 days a week everyone else should too.  However on Monday, I did hear that AHS had reversed its decision and is covering the replacement of my client’s a/c components.  I stated earlier that I had hoped this was just an oversight and it looks as if it was the case.  After all, in the five years I’ve been sending business to them, these aren’t the first folks to request service…just the most recent.  Since this, I have ordered another warranty through AHS so they haven’t lost me as a customer.

New Orleans has Marti Gras, New York has New Years, and Charlotte has the NASCAR All-Star week.  While Charlotte plays host to many other events, nothing draws quite like the All-Star week for Charlotte.  If you’ve never been to a NASCAR race, the All-Star race at Lowes Motor Speedway on May 17 is the one you’ll have to attend.  However, the racing is just one dynamic of this incredible week.  Here are some of the other highlights:Hang Out at Dale Jr.’s New Bar Whiskey River

Whenever Dale Earnhardt Jr. does anything, it gets a lot of attention and his new Bar / Nightclub has done just that.  Whiskey River, located at the Epicentre at Trade & 4th Streets, is a great live music spot right at the center of town.  If you’re planning to stick around and attend the Coke 600 the following week, you should plan on Tuesday May 21 for the EA Sports Kick-off Party for the NASCAR ‘08 video game. 

Pit Crew Challenge at The Cable Box (Time Warner Cable Arena)

Every race can either be won or lost in the pits and on Thursday May 15, you see the Pit Crew Challenge live.  This is an absolutely fun event as you watch the best in the business go at it for bragging rights and $70,000.  By the way, while you’re there, make sure you cheer on Eric Wallace on the 16 team.

You’ve got to hit the race shops

The Charlotte area is home to the last majority of the NASCAR Sprint Cup, Nationwide Series, and Truck Series teams and most have shops that are open to the public.  You can see the cars up close, take lots of pictures (so bring a large memory card) and even meet the drivers.  One of the coolest shops is Michael Waltrip Racing’s Raceworld USA.  While most shops have the overlooks into the shops and a car on display, at Raceworld, you can watch pit crew practice, get really up close to the cars, tour a NASCAR hauler, and so much more.  Even if you’re not a MWR fan, this is one shop you cannot miss.  Also, your favorite driver may be doing an appearance during this week so check their websites for more information.

RCR up in Welcome has also a great shop with a museum that will be home for any Dale Earnhardt fan.  Here are the addresses of the Sprint Cup Shops.   

Why not Buy a Condo While You’re Here

I know of a great agent who can sell you a condo overlooking Lowes Motor Speedway; me.  Yes, like many other professional sporting arenas like Camden Yards and Atlanta Motor Speedway, you can buy a luxury condo and have a front-row seat to race day.   

And then there is the racing!

The reason why many will tell you that the best race all year is the all star race is simply because the drivers race for nothing but money.  There’s no second place and the race is actually broken into a few shorter mini-races.  Last year, we saw Kurt and Kyle Busch take each other out during the race and Kevin Harvick winning.  Qualifying starts May 16 at 6:15 and following qualifying, the Craftsman Truck Series takes to the track for the NC Education Lottery 200.  The Sprint All Star race is the 17th at 7pm and goes into the night.  Then things really pick up on May 22nd for Windstream Pole Night, the 24th for the CarQuest Auto Parts 300 (Nationwide Series), and concludes with the Coca-Cola 600 on Sunday May 25th at 5:45pm.  Now how’s that for an action packed week. 

I’m looking forward for All Star week as I’m a big time NASCAR fan and it has to be the best week and a half in motorsports.  Hopefully, I’ll see you at the track. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

Out today, the numbers for S&P’s Case/Shiller survey for February, which examines home values in 20 housing markets.  While Miami and Las Vegas were at the bottom with 22.8% and 21.7% 1 year price decreases, Charlotte was the only city in the study with appreciation, even though it was a mere 1.5% year over year.  The study also compares the index numbers from January to February, which showed declines across the board including Charlotte down -.4%.  I don’t put as much weight in the month-over-month numbers because real estate, in most markets, is very seasonal.  The market will always slow in months like November, January, February and some as early as October. 

While these modest gains are great news, recent layoffs at some of the areas banks may put a strain on the market however we have been fortunate enough to have press releases announcing almost as many job openings as are being cut.  The other strain is the level of inventory in the Charlotte area.  A tremendous boon for the Charlotte economy has been the large number of folks (25,000 - 50,000) moving here from places like Florida, California, the mid-west, and the north east.  However, many of them who have been moving lately for jobs or work have been taking up residence in temporary housing as their old home has yet to sell.  With declines in those markets, they means they’ll have less to spend here in Charlotte.

Overall, the early spring has brought a lot of buyers in the market who are taking advantage of the higher inventories and the summer market should once again show strong area-wide sales. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

For the last six months, by far the number one request I have had from clients are those looking for homes in some sort of distress.  They are buying anyway and if they can snag a home below market value, why wouldn’t they.  Unfortunately, searching for these types of properties is imprecise. 

At first, I would just come across then when I was searching for my client.  Then, I started by looking for certain keywords like Foreclosure, HUD, and Bank.  These produced some results but there has to be more out there than my searches are producing.  When I inquired to the MLS how to find foreclosures more efficiently, they responded with a list of wildcard keywords to search for in the remarks field.  Asked if they could have a link, add a field, or anything else to make search more efficient, they responded that every year that idea has been raised and voted down.  So I gotta know, why in the world are we not able to search the MLS for foreclosures? 

Truth be known, not every agent displays the appropriate lingo in their remarks to indicate that a home is in distress.  Often, I can read a remark line and gather that it could be in trouble and occasionally able to verify if they uploaded the appropriate disclosures.  However, some agents put in just enough information for the computer to accept the listing and never return.  Others have mis-spellings which render the wildcard search absolutely useless.  This doesn’t even account for those agents who have not figured out which area to assign their listing to (the second most unreliable way to search for listings). 

This is definately a case where the local MLS has completely missed it.  A few months ago, I opined that there were quite a few outside companies that were trying to replace the MLS systems and this is one area where they are ahead.  For a monthly fee, you can sign up for any number of websites which will provide for you the pre-foreclosures (listed and not), homes up for auction, and even the status of the file.  I have clients coming to me sometimes that have more information than I do and I’m the local expert. 

It wasn’t until this year that the MLS allowed virtual tours and remarks to appear on the IDX feeds (which is what displays listings on the brokers websites).  We also had a short-lived field that was titled “Single Family Attached” which no one used properly and it went away.  Finally, we’ve seen the switch from stating the approximate square footage of a property to a range, to which makes sense to no one (I ran across a listing for a client that had a 1,200 sq. ft. size range!).

Change isn’t easy but it is inevitable.  If we are to remain the local experts and have a viable stake in this market going forward, we need all the tools available to us to work efficiently.  That includes giving us the ability to search for foreclosures. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

I’ve known real estate agents to show clients over a hundred homes only realize that the first house they saw was the one their client liked best.  You don’t have to see 20, 50, or even a hundred homes to find that one perfect house for you if you start by first building a criteria of what you’re looking for in your next home. 

Most start with the basics (bedrooms, bathrooms, garage, location) but that’s just the beginning.  Here are some other things to consider when you’re putting together your criteria:

• Distance to work, church, friends, etc
• Distance to shopping?
• Do you entertain and if so how many at a time?
• Do you need space for your hobbies or home office?
• How much work can you reasonably do or can afford to do?
• Do you have pets and are there special requirements that go along with owning pets?
• Do you use your kitchen to cook more often than you tend to eat out or get carry out? 
• If you’re not planning on hiring a lawn service, how long do you want to spend on lawn work?
• What are somethings that you’ve seen in other homes that you like and what are somethings that you didn’t?

Now, you can take this criteria and your budget to find the perfect home for you much more efficiently.  Here’s a sample of the criteria for myself.

• Single Family Detached Home
• 3 Bedroom plus den or bonus room or 4 bedrooms minimum
• 2.5+ Bathrooms
• Matthews, Mint Hill, Stallings, Indian Trail, Weddington, Wesley Chapel no more than 30 minutes to church.
• Brick, Stucco, Hardieboard Siding only
• Distance to work doesn’t work matter but high speed internet is a must
• Yes we entertain 10-15 people per weekend so a large family room is a must with a large kitchen that flows into the family room a plus.
• Yes, we need space for home office and additional space in the garage for hobbies.
• A fixer is ok if the work can be completed for less than $15,000
• Yes, we have 2 large dogs and so we need .4 acres or more fenced in. 
• Yes we need to have a functional kitchen, appliance color doesn’t matter but quality does.  I prefer a convection oven and enough room for table in the kitchen, large pantry.
• Must have a large soaking or jetted tub in the master bathroom or room to add one.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate