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By Kim, July 8, 2010

There was a Dilbert cartoon a few days ago that was so good I decided to grab the punchline panel and write a post around it. So here it is.

Contracts can be dangerous things. Now, most people don’t deal with contracts on a regular basis, and for those who do – like lawyers – it’s usually their employer’s or client’s money on the line, and it’s their business. In my business, I have to work with contracts for residential real estate every day, but go beyond that and I’m stretching my legal abilities. Not to mention the matter of practicing law without a license, which the state allows me to do in a very, very limited way.

Often one of the greatest challenges even the best Realtors face is managing the transaction once a contract is achieved. Most buyers and sellers have no idea how much work is involved in getting from there to an actual closing. It is difficult to juggle the demands of gathering the necessary documents, maintaining communication with your client and managing the other parties. The 10-page DC area contract is just the beginning. There’s a 6-page addendum for Virginia, plus multiple disclosures and optional addenda on top of that. This creates an unbelievable amount of paperwork to maintain, deadlines to track and requirements to be met. Additionally, licensing requirements make it way too easy for the less-than-professional person to be an agent, further increasing the challenges.

I tell people that every time something goes awry with a contract in Northern Virginia, we get another form, or at least another paragraph in an existing form. Most of my contracts are at least 25 pages of stultifying fine print, a lot of which simply serves as CYA material. Occasionally, however, there occurs a situation proving the importance of knowing exactly what’s in there.

Case in point: I have been working with some very nice people who want to buy a home, but need to sell their own home. According to their lender, they could qualify to carry both mortgages – to which they say, “Sure, but we like to have food with our meals.” They contracted to buy a new home, but because the owners wouldn’t agree to it, they did not include a contingency requiring that they sell their own home. They did, however, include home inspection, appraisal, and financing contingencies, and the state of Virginia requires a contingency for reviewing homeowner association (HOA) rules and finances (that’s important, as it turns out).

They quickly put their home on the market and we (they, me, and the other agent) thought it was so nice we would surely get an offer right away. Two weeks went by with a total of 5 visitors. My clients are getting more nervous by the day, and our contingencies are running out – home inspection’s done, the financing is not a problem, and the appraisal is not within our control. But wait – the HOA packet has not appeared!

The seller’s agent (of 30 years’ experience) was going to drop off the packet on June 16, but for some reason she was delayed or forgot. We received it on June 24 instead, thus giving us until 9 PM on June 27 to back out. On June 25 we received a too-low offer and tried to counter it, but the prospective buyers refused to respond within 48 hours to the counter. The sellers refuse to give my buyers a home sale contingency at this point – perhaps they thought we were bluffing? So, given the constraints, my clients had to use the HOA contingency, inadvertently extended by their seller’s agent, to back out of a contract for a home they dearly wanted. I’d warned the other agent about it, and gave her two days’ notice that we were looking for alternatives, but she still claimed to be “shocked” that we used the HOA contingency to back out when there was nothing wrong with the HOA. Her sellers were upset too, of course – but after the warning we gave them and the opportunity they had to hang on to the contract, I couldn’t be very sympathetic. They had to put their home back on the market, with a month less to sell before they move, not to mention all the negotiations and inspections they would have to put up with all over again.

Fortunately for all concerned, my sellers did get a contract they could work with, and they did come to agreement on a new contract with their sellers (at the same terms), so we made it through that mess unscathed except for deep psychological scars. But it was a very near thing.

In contracts there are some things we can’t control, but we must pay attention to those things we can.

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By Kim, June 24, 2010

It s All Done – Just Unpack!

Overview Maps Photos Description Neighborhood Market Stats IDX Search

$465,000 Single Family Home For Sale Main Features 5 Bedrooms 3 Bathrooms Interior: 2904 sqft Lot: 15,047 sqft Location 7016 Galgate Drive Springfield, VA 22152 To get updates on open home dates and other property events, please click the “Like” button below:

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Kim Hannemann Samson Properties (703) 861-9234 Kim.Hannemann@gmail.com http://www.KimHannemann.com Listed by: Samson Properties

Our recent listings It’s All Done – Just Unpack! Home Sweet Home! Subscribe to our listing feed

See more Springfield, VA real estate for sale

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By Kim, June 24, 2010

Buyers should take this seriously – once you have applied for a mortgage and received preapproval, don’t open new credit cards or buy anything substantial using credit until after your settlement!

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By Kim, June 18, 2010

A “reverse mortgage” allows you to trade equity in your home for cash, access to cash through an equity line of credit, or a monthly income, that you never have to pay back. You can use your current home or buy a new home or even a vacation home using a reverse mortgage.

Got your attention?

The catch—you have to be 62 or older. But hang on, kids, there are potential advantages for you too, if you’re on the good side of, ahem, those “mature individuals distinguished by their vast experience.”

Reverse mortgages, or as FHA calls them, Home Equity Conversion Mortgages (HECM), have been available for seniors for many years. The basic deal was that they use the equity in their primary residence as a source of cash, they can live in the home as long as they want without paying anything back, and the mortgage is paid off when the home is sold, with the owners or the estate getting the difference. If there isn’t enough money from the sale for the payoff, FHA eats the difference, not the estate or heirs.

Now comes the HECM for Purchase Program. The FHA developed the program because it saw that seniors were selling their homes, buying smaller, more affordable homes and then taking out reverse mortgages on the new properties. That meant they were paying closing costs twice—first on the purchase closing, and a mortgage if they needed one, and then again when they switched to a reverse mortgage. But the new program allows seniors to buy a home directly with a reverse mortgage—paying closing costs only once. A sale of an existing home is not necessary and is not part of the transaction.

The program allows seniors to use a reverse mortgage to buy a home or a small multifamily residence, and allows them to convert some of the equity in their existing home to cash. They never have to make a single payment. Instead, they can collect monthly payments out of the equity on a tax-free basis as long as the home serves as their principal residence. If they do not sell their previous home, they could get additional income out of renting that property. Under the plan, you can choose to take the money either in monthly payments, as a lump sum, a combination of the two or even in a line of credit that you can access whenever you need cash.

This year, seniors can access up to $625,500. In 2011, unless Congress changes its mind, the amount reverts to $417,000. Most reverse mortgages range from 35 percent to 55 percent of the home’s equity.

You must agree to pay your taxes and make any necessary home repairs. No credit check or income verification is required. To qualify for the reverse mortgage, a senior, age 62 or older, must:

• Agree to live in the reverse-mortgaged house as a primary residence.
• Own the home outright or have enough equity to pay off any existing mortgages and equity lines with the proceeds from the reverse mortgage. Those with more equity may be able to access even more cash.
• Not be delinquent on any federal debt.
• Participate in a consumer information session given by an HUD-approved counseling agency or HECM counselor.

Generally, three factors will affect the amount you can borrow:

• The value of your equity (the higher the better).
• Your age (the older the better).
• Interest rates (the lower the better).

Here are some hypothetical examples of how it can work:

1. Problem—you want to buy a new one-level home for $450,000 with no mortgage payment. You cans sell your colonial in Springfield with net proceeds of $300,000. Solution—you take out a reverse mortgage on the new home for $275,000, paying $150,000 of your cash for the balance. Instead of a $150,000 mortgage to pay, and no cash, you have $150,000 in cash left to invest, and no mortgage payment!
2. Problem—you own your Springfield home worth $500,000 and want to keep it as your principal residence. You have no mortgage, or a small one. You would like to buy a $300,000 vacation condo in Ocean City, but on your teeny retirement income you can’t afford a regular mortgage on either the condo or your main home. Solution—you take out a reverse mortgage on your main home for $250,000, paying $50,000 cash from other sources for the balance. You just bought your vacation condo for $50,000, and no mortgage payment!
3. Problem—you want to keep your current home, but it needs remodeling and updating to fit your changing needs. Solution—use your equity to take out a reverse mortgage for remodeling. No mortgage payments.
4. Kids, pay attention here! Problem—you want to help your son and his family buy a new home. You could take some cash out of the equity in your own home—but you can’t afford the additional mortgage payments. Solution—use your equity to take out a reverse mortgage to gift their down payment.

One added cost to a reverse mortgage is an extra insurance premium, usually more than a conventional mortgage, which has to be paid by the homeowner to insure the lender against the possibility the homeowner lives longer than anticipated. The insurance guarantees you will never pay more than a stated amount despite increased borrowing costs over time. You can finance this premium into the mortgage itself.

Interest rates on reverse mortgages today are similar to conventional mortgages. Fixed rates I’ve seen quoted by Wells Fargo recently are 5.4% fixed, or 2.5% adjustable (monthly adjustment tied to LIBOR). Of course, since you aren’t paying it, how much can it matter?

Here is the link to the HUD/FHA site for all the straight info.

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By Kim, June 18, 2010

This report covers Alexandria, Arlington, Fairfax County and the towns within.

A total of 1,957 homes sold in May 2010, an increase of almost 9% from May 2009 home sales of 1,803.

Active listings decreased by about 4% from last year, with 7,710 active listings in May, compared with 8,050 homes available in May 2009. The average days on market (DOM) (for sold homes) decreased by 47% to 40 days, compared with 76 days in May 2009.

Sales prices rose by about 6% compared with last year. The average sales price this May was $460,828, compared with last May’s average of $433,257.? ?The median sales price – usually a more accurate indicator – was $404,000, which is an increase of almost 8% compared with May 2009’s median price of $375,000.

The number of pending home sales decreased by 28% with 1,901 sales pending compared to 2,637 in May 2009. This was an expected result of contract signings pulled into April by the tax credits, which expired April 30.

My take on the market in the area is that it’s still strong, driven by the ridiculously low interest rates (under 5% fixed, and 3.5% for 5/1 ARMs) which look to be with us for at least the next couple of months as signs of inflation remain low. If you’re on the fence about buying, I’d say it’s time to jump.

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By Kim, May 24, 2010

For the accountants and engineers – or otherwise spreadsheet-inclined – here is a really detailed Rent vs Buy Calculator from the New York Times.

The calculator provides not only for basic mortgage and tax info, but also includes the opportunity to add and change advanced settings such as rate of return on investments, condo or common fees, utilities and more. It provides a graphic output with the breakeven point, and all the details for whatever number of years you wish to carry out the calculations.

Try it!

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By Kim, May 12, 2010

Another long (but worthwhile) excerpt from Dave Barry’s Homes and Other Black Holes ©1988. Illustrations by Jeff MacNelly.

If you want to come out a winner in the negotiations for your new house, you have to be tough. “This is not a time for human decency,” are the words of Wayne Savage, the internationally renowned lecturer and author of the best-selling book on negotiating strategy, Leave Them Bleeding in the Dirt, which retails for $178.63 and not a penny less. Which is why you need to know:

How To Negotiate Like A Real Slimeball

A fine example of the kind of negotiating approach you should take can be found in the excellent corporate training film The Godfather, where, as part of his negotiations with a movie producer, Marlon Brando gains a subtle psychological advantage by arranging to have the producer wake up in bed next to the head of a deceased horse.

This is not to suggest that to get a good price on a house, you need to go around decapitating domesticated animals. No indeed; wild animals are more than adequate for most residential transactions. But the point is, you have to be firm.

At the outset of your negotiations, it is very important to create the impression that your really don’t want to buy the house at all, that in fact you hate the house, and the mere thought of it makes you physically ill. Your opening offer should convey this. It should be worded as follows: “We don’t want your house, so we will give you X number of dollars for it, including all major appliances and the children.” (Note that you should not name a specific amount. You should actually use the term “X number of dollars,” so as to avoid tipping your hand.) The broker will take your offer to the seller, who at this point has a number of options, such as:

1. He can accept your offer.
2. He can reject your offer.
3. He can give back the dinette set, the pool table, and the Epcot Center vacation in exchange for whatever is behind curtain number two.

Another possibility is that he will make a counteroffer, which your broker will bring back for you to consider. “We don’t want to sell the house,” it might say. “We only put it on the market because we joy having total strangers come around and test-flush all our toilets. But we are willing to let it go for Y number of dollars, plus you can have little Deirdre, provided you raise her in a religious environment. We get the microwave.”

And then you send the broker back with another offer, and they send you another counteroffer, and so on until the broker, his fingers bloodied from typing up the various negotiating positions, drops dead in the street from exhaustion, which is the signal for the buyer and seller to settle on a price equal to the original asking price minus about five percent. This is the price that everyone always winds up at, and if we all just agreed on it at the beginning, there would be a lot less hassle and inconvenience in the form of dead brokers. But we have to ask ourselves if this would really be such a desirable outcome.

In any event, now that you and the seller have set a price, you need to sign the agreement of sale, which should be worded in standard legal terminology, as follows:

WHEREAS the Seller wants to sell, and the Buyer wants to buy, and they think they got a price that’s not too low or too high; and the Buyer gave the Seller a down payment to hold, now he’ll try to get a mortgage ‘fore they BOTH grow old; and the Seller’s gonna see if he got termites in his place ’cause if he does, the Buyer’s gonna tear it right up in his face; but if everything’s cool and nobody’s late, then the deal will go down on the Settlement Date.

CHORUS

Oooh baby baby

We gon’ have a transaction tonight

Of course I realize you probably don’t understand some of this “legal jargon,” but this is only because you are stupid. This is why it’s important to ask several lawyers to give you contradictory advice before you sign anything, including get-well cards.

Meanwhile, however, it is time to go around to some banks and see if you can find one foolish enough to lend you some money.

Are You Financially Fit?

The first thing you need to do is perform a detailed financial analysis of home much money you have versus how much you’re going to need to buy your house. The way you do this is to draw up what professional accountants call a “Balance Sheet,” which should look like this:

Money You Have

• Savings Account:  $927.62
• Checking Account:  Conceivably as much as $83.15, provided that the check you wrote to Mr. Muffler has not been cashed yet.
• Other Assets:  Primarily canned goods and undeveloped photographs of the airplane wing take during your trip to Disney World:  $44.02

Total:  $1,054.79

Money You Need to Buy a House

• Cost to pay random lawyers for God knows what (see “The Ritual Closing Ceremony”):  $6,765.90
• Cost to have various inspectors come around and hold clipboards and shine flashlights at things but fail to notice any sign that the heating system is going to explode moments after you take possession of your new home:  $1,250.00
• Taxes:  $3,856.90
• Additional taxes that nobody ever mentioned to you:  $4,847.89
• Taxes that are just now being rushed into law and will only to your specific house purchase:  $5,563.92
• “Points,” which is technically defined as “money that for some reason you have to give the bank, even though you are the one trying to buy the goddamn house, and no matter how many time you ask, you will never be given an intelligible explanation for this”:  $8,745.00
• Other (phone deposit, cost of actual house, etc.):  $126,436.06

Total:  $157,465.67

So we can see from this financial analysis that your are definitely going to need the bank to give you a lot of money in the form of a mortgage. The bank is willing to do this because, the way mortgages are set up, no matter how many payments you make, you still owe the bank all the money you ever borrowed. Really. This explains why, in all your wide circle of friends, you don’t know a single person who ever came close to paying off a mortgage.

It may seem as though the banks are taking unfair advantage of consumers here, but they really have no choice. A few years ago, they lent billions and billions of dollars to the Third World, which had promised to spend the money on factories and heavy machinery, but which in fact lost it gambling on rooster fights. And since the banks can’t very well march down to the Southern Hemisphere and repossess, for example, Brazil, you can understand why they have no choice but to get the money from average everyday unarmed consumers such as yourself.

All mortgages work basically the same way:  you sign a bunch of papers, then you make large monthly payments until the Second Coming. Nevertheless, the top Consumer Money Geeks all recommend that you “shop around” for your mortgage, because there are a number of different kinds available. Some of the more popular ones are:

• The Fixed-Rate Mortgage
• The Variable-Rate Mortgage
• The Mortgage Whose Rate Is Based On What Order The Teams Finish In The National League East
• The Mortgage with a Real Low Rate That Is Advertised in Huge Print in the Newspaper But Nobody Ever Actually Gets It
• The Balloon Mortgage
• The Party Hat Mortgage
• The Mortgage That is Really the Expired Warranty for a 1966 Sears Washing Machine
• The Mortgage of the Living Dead

Here’s an important piece of advice to bear in mind when you’re shopping around for a mortgage:  Don’t be intimidated. Sure the bank is a great big, rich, powerful financial institution and you are a small, worthless piece of scum. But that doesn’t mean you should walk into the bank with your hat in your hand, like some kind of beggar! Not at all! You should crawl into the bank!

Ha ha! Just kidding, of course. You have nothing to worry about. All the bank will ask you to supply the home phone number of everybody you have ever known, even casually, since the fourth grade. Then you’ll have an interview with the Loan Officer, who’ll ask a few standard screening questions, such as:  To get this mortgage, are you willing to lick the gum wads off my shoe bottoms?”

Assuming that you come up with the correct answers (“yes”) to these questions, your mortgage application will be sent on to the Committee to Hold Up All Mortgage Applications for Several Months. This will give you time to practice signing checks in preparation for

The Ritual Closing Ceremony

This is an important and highly traditional part of the home-buying process, the last major hurdle you must clear before you become on Official Homeowner. It is comparable to the initiation ceremonies at major college fraternities, where, to prove he is worthy of the privileges and responsibilities of membership, the pledge must perform some feat such attending a Papal Mass wearing only a softball glove.

Essentially, what you must do in the Ritual Closing Ceremony, is go into a small room and write large checks to total strangers. According to tradition, anybody may ask you for a check, for any amount, and you may not refuse. Once you get started handing out money, the good news will travel quickly through the real estate community via joyful shouts: “A Closing Ceremony is taking place!” Soon there will be a huge horde of people—lawyers, bankers, brokers, insurance people, termite inspectors, caterers, photographers, people you used to know in high school—crowding in the closing room and spilling out into the street. You may be forced to hurl batches of signed blank checks out the window, just to make sure that everyone is accommodated in the traditional way.

Another ritual task you must perform during the Closing Ceremony is frown with feigned comprehension at various unintelligible documents that will be placed in front of you by random individuals wearing suits:

RANDOM INDIVIDUAL:  Now, as you can see, this is the Declaration of your Net Interest Accrual Payments of Debenture.

YOU (frowning):  Yes.

RANDOM INDIVIDUAL:  And this is the Notification of you Pro Rata indemnities of Assumption.

YOU:  Certainly.

RANDOM INDIVIDUAL:  And this is the digestive system of a badger.

YOU:  Of course.

Once the various officials present are satisfied that you truly wish to become a homeowner and have no checks left, they will award you a mortgage, which will spell out your new duties and obligations in standard legal terminology:

Mortgage

Hear ye, hear ye, everybody listen up because the MORTGAGOR, hereinafter referred to as the MORTGAGEE, has, by duly picking up this piece of paper and putting his JOHN HANCOCK thereontofore, committed himself and his family and his distant relatives and unborn children and domesticated animals body and soul to the terms and conditions of this MORTGAGE, whether these terms and conditions are actually stated right here in print on the MORTGAGE or exist only in the form of vague concepts in the minds of LAWYERS working for the BANK, to wit:

1.  The money has to BE THERE on the first of the month, rain or shine.

2.  If the money is not THERE, the BANK is going to get VERY ANGRY.

3.  The BANK is going to want to GET EVEN.

4.  The BANK is going to make SOMEBODY wish he was naked and tied down spread-eagled on an anthill with ants eating his EYEBALLS because that would be a lot more pleasant than what the BANK has in mind IF THE MONEY IS NOT THERE.

5.  Specifically, the BANK is going to get a pair of NUMBER SIX KNITTING NEEDLES and heat them up to 11,000 DEGREES FAHRENHEIT, and then the BANK is going to  . . .

And so it continues, in technical legalistic detail. It’s really nothing to concern yourself about. The important thing is:  at last you’re a homeowner. Now you can immerse yourself in the many rewarding and traditional activities that new homeowners engage in, such as trying to figure out how to make the mortgage payment and, simultaneously, not starve to death.

Coming soon, our final excerpt from Homes and Other Black Holes – Getting Some Fool To Buy Your House.

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By Kim, May 11, 2010

Continuing my series of Dave Barry excerpts, here are further selections from Homes and Other Black Holes ©1988. This is a long one . . .

How Many Houses Should You Look At?

Most experts recommend that, for maximum effectiveness, your should look at forty-five or even fifty houses per day. Experienced home shoppers often reach the point where they can leap out of the real estate broker’s car, look at a house, and get back into the car before it reaches a complete stop.

If you follow this procedure, by nightfall your brain will be tightly packed with hundreds of thousands of bit of important real estate information, and you and your spouse will be able to have useful decision-making conversations like this:

YOU: I kind of liked that contemporary with the fireplace in the kitchen.

YOUR SPOUSE: No, the contemporary had fire damage in the kitchen. You’re thinking of the split-level, the one where the garage floor had a Rust-Oleum stain shaped like the Virgin Mary.

YOU: No, that was the colonial, remember? With the big white pillars out front and no toilets?

YOUR SPOUSE: No, you’re thinking of Monticello. Remember? We went there on vacation in 1979?

YOU: No, it was 1978.

Using this logical elimination process, you’ll begin to narrow down your list to the three or four dozen houses that you are truly interested in. These are the ones you should go back and inspect in a thorough manner, using this convenient

HOME INSPECTION CHECKLIST

The Roof

This is a “must.” So the first think you should do is go up and crouch in the attic and see if you get bit by a bat. This is usually an indication that the house contains bats, which, depending on your lifestyle, could be a negative factor, especially if one tries to suck out your blood, because that means it’s a vampire bat, which means the house is located in South America, so right away we are talking about a fairly long commute to work.

Also while you’re up there you should look around and see if you notice any of the following important house parts:

You will recognize these objects instantly, because most of them are pieces of wood. Make a note of them.

The Floors

These should be sturdy and level. The only proven way to check for sturdiness is to drop a men’s standard sixteen-pound bowling ball (always carry one with you!) onto the floor from a height of seventy-five feet through a hole drilled in the roof, then carefully note the results. (No, the seller will not object, unless he has “something to hide.”)

To check for levelness, you will need a standard piece of string and a standard rock. Using a standard knot, tie one end of the string to the rock, then, holding the other end of the string, stand in the middle of a room, and carefully note which way the rock points. Ideally, it will point toward the floor. If it points somewhere else, such as toward a wall, this is often an indication of nonlevelness. (SEE DIAGRAM –>)

The Electrical System

The most important thing to find out about the electrical system is whether it contains enough “volts,” which are little tiny pieces of energy shaped like arrows so you can tell which direction they’re moving in science class diagrams.

The standard measurement for volts is “amps,” also called “watts,” which travel around in what is called a “circuit.” A typical circuit works as follows:

At the electric company, fuel oil is burned to set fire to a generator, which gives off electrical energy in the form of sparks, which are put into wires and sent to your home, where the electricity waits in the wall until you turn on your toaster, at which point it rushes through the wire and into your English muffin, and from there into your stomach, where it remains until a cool, dry day when you are walking down a hall scuffing your feet on a carpet and you go to open a door, causing the electricity to leap into the doorknob, where it remains forever, building up over time to tremendously high levels, which is why scientists are now concerned that if some unscrupulous entity like Libya or God forbid an adolescent male ever figures out how to release the power, he could, using only the latent doorknob energy contained in an older ranch-style home, vaporize Oregon.

But your immediate concern, as a potential buyer, is making sure that the house has the right number of volts. Following is a chart depicting the most popular voltages currently available in the housing market:

POPULAR HOME VOLTAGES

120

220

9*

*Requires a 9 volt battery (not included)

Which voltage is right for you? This, more than anything else, is a matter of personal taste; and like most matters of personal taste, it is best left in the hands of a qualified interior designer.

Insects

Make no mistake about it: there will be insects in the house. The entire planet is teeming with insect life; scientists now estimate that there are over 60,000,000,000,000,000,000 different species living under my kitchen sink alone.

Fortunately most insects pose no threat to homeowners. All they want is to eat your food and have babies in your sock drawer and maybe crawl up your nostril while you’re sleeping. In exchange for this, many of them gladly perform useful household services, such as pooping on your toothbrush. “You scratch my back, and I’ll suck blood out of yours”- that is the insect motto.

The exception, of course, is termites, which are small socialist insects that eat houses. (We don’t know what they ate before houses were invented. We think maybe garages.) Termites live in large colonies ruled by a lady termite with an enormous butt, called the Queen, which governs over a strict termite hierarchy consisting of: the Biters, the Chewers, the Spit Makers, the Soldiers, the House of Commons, the Nannies, and the Cute Little Baby Eggs. each of these colony members has specific duties and responsibilities that are clearly posted on the Bulletin Board, although of course, being insects, they are much too stupid to remember what these duties and responsitbilities are, so they basically just scurry around at random. Nevertheless, as I noted earlier, they can eat your prospective house, so it is very important that you inspect carefully for the Two Telltale Signs of Termite Infestation, which are:

1. Termites walking around with pieces of your prospective house in their mouths
2. No sign whatsoever of termites, because they are hiding

If all the items on this checklist check out to your satisfaction, it’s time to make the standard Insulting Opening Offer on the house, which we will cover in the next chapter.

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By Kim, May 7, 2010

Continuing with excerpts from Dave Barry’s real estate-related books, our second excerpt is also from Homes and Other Black Holes ©1988. Illustrations by the late great Jeff MacNelly.

It is possible to buy or sell a home without a broker, as will be discussed in a later chapter, unless we forget to write it. But most people prefer to use a broker, because of the many advantages, such as:

1. If you have a real estate broker, you an excuse to fend off the other brokers, who will otherwise follow you around and hurl rocks through you window with notes taped to them explaining the many advantages of using a broker.
2. Brokers always have nicer cars than you do, a phenomenon that will become more understandable when we get to the section on commissions.

This is by no means meant to be a comprehensive list of all the advantages of using a broker. The only reason I’m not listing all the others here is that they don’t spring immediately to mind.

The best place to obtain a broker is at a junior high school, where you’ll find that virtually all the teachers obtained real estate licenses once they realized what a tragic mistake they had made, selecting a profession that requires them to spend entire days confined in small rooms with adolescent children. Often it is sufficient to just drive by the school and beep your horn; within seconds, brokers will come swarming out of doors and windows, eager to abandon their lesson plans on the Three Major Bones of the Inner Ear so they can help you find a home.

There are many factors to consider in selecting a broker, such as competence, honesty, vertical leap, and placement in the Evening Gown Competition. But the most important factor is an intangible quality called “professionalism,” by which I mean “car size.” You want to select the broker with the largest possible car, because you’re going to spend far more time in this car than in whatever home you ultimately buy.

Next you should tell your broker what your Price Range is, so he or she can laugh until his or her official company blazer is soaked with drool. What your broker finds so amusing, of course, is that there is virtually nothing, outside of the Third World, available in your Price Range. I don’t care if your Price Range is a hillion jillion dollars, there will be nothing available in it. This is a fundamental principle of real estate.

At first you will probably insist on looking at something in your Price Range anyway, which will result in the following comical dialogue:

YOU: This is it? They’re asking $89,500 for a refrigerator carton?

BROKER: Yes, but I think they’ll take $85,000.

This process is called “getting a feel for the market.” Once you’ve undergone it, your broker will explain a creative new financial concept that has been developed to enable people such as yourself to enjoy the benefits of home ownership, called: Spending Way More Than You Can Afford. Usually you have to talk yourself into going with this concept. Here are some sound financial arguments you can use:

1. Although you may not really be able to afford a more expensive home at your current income level, it makes sense to buy it anyway, because in just a few years, at the current rate of progress in your career, you’ll probably be dead.
2. There are major tax benefits to owning a home. The law, written by wise lawyers and bankers, permits you to deduct all the money you give to lawyers or bankers, which will turn out to be virtually all the money you have.
3. Owning a home is a smart investment. As inflation pushes up the cost of living, you will build up equity* in your home, so that, when you eventually sell it, you will have made enough profit to be able to afford to pay the points** and closing costs*** on your next home!

So, as you can see, you really can’t afford not to buy a home that you really can’t afford. It’s time to sit down with your broker and take a serious look at the listings.

The listings are computerized lists, or “listings,” of all the houses that all the brokers in your region have been trying to sell since the Carter Administration. Listings are always written in a special real estate code. For example, this listing:

CHARMING¹ RANCH² 4BR³ 3B⁴ 2TD⁵ FULLY LANDSCAPED⁶ NEWLY RENOVATED⁷

can be decoded as follows:

1. Rooms the size of nasal spray cartons.
2. IN URBAN AREAS: No attic or basement. IN RURAL AREAS: Also, cattle have wintered in the foyer.
3. Four bedrooms.
4. Three bathrooms.
5. Two turtle doves.
6. Extensive comical lawn statuary including minority groups holding lanterns; also large, permanent, fully mechanized, spectacularly illuminated display of Santa’s Workshop.
7. The walls have been pretty well scraped clean in the room where the demonic beings from another dimension came through the TV set and cause the previous occupants’ heads to explode.

Study the listings carefully and make a note of any houses that look right for you, so your broker can confirm that they were all sold just that morning. This is actually good, because it will help to get you into the proper highly desperate frame of mind where you will do almost anything to get a house, including paying large sums of money you really don’t have to people you really don’t know for reasons you really aren’t sure of. Which is the essence of real estate.

Next Excerpt (when I get around to it):  How To Pretend To Look Knowledgeably At Houses