http://www.denverpost.com/business/ci_11475891

See M. Anthony Carr’s article from The Realty Times at the following link:

http://realtytimes.com/rtpages/20080919_hotmarket.htm

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According to a recent article from “Business Week,” luxury homes in the Silicon Valley are selling as strong as ever. No mention of those properties below a million dollars, but that market is stronger than most, especially in those areas mentioned in the article, Saratoga, Los Gatos, Cupertino and Los Altos.

http://www.businessweek.com/lifestyle/content/jul2008/bw2008078_555230.htm

In California, foreclosure sales are specifically made exempt from the statutory transfer disclosure requirement. Therefore, it’s anyone’s guess as to what problems may be inherent in the REO (Real Estate Owned or bank-owned) property one is purchasing. Thus it is all the more incumbent upon the buyer to obtain as many inspections as possible, including a general home inspection, a termite inspection, a foundation inspection (if indicated by either the termite or the home inspection), and a roof inspection. All these inspections could cost between $1,000 and $1,500 but they’re well worth the advance cost considering the possibility of what may be revealed by them. It’s best to know up front what one is purchasing. There’s no luxury of having a seller who is responsible for disclosure. One consolation, however, is that the listing and selling agents are required by statute to disclose to the principals all of the material facts revealed by a visual inspection “materially affecting the value or desirability of the property that an inspection would reveal” (section 2079(a) of the California Civil Code).

Dual agency is when the broker/agent represents both the buyer and the seller in the same transaction. In California, it is permissible only if both principals are notified of the dual agency and both consent to it. The best way to prove consent is to have them sign the Agency Disclosure. However, many pitfalls are involved in acting as a dual agent. More often than not, in trying to represent the interests of both clients, one ends up representing neither very well. It’s a quick way to lose the trust of both clients. Then one has no hope for referral business from either. An agent must think long and hard about whether the benefit (usually a higher commission) outweighs the risks: a lawsuit or license discipline.

Let’s suppose a few scenarios to illustrate our point:

1) Seller A has disclosed to the agent that the property has a problem that would be a material fact bearing upon the property’s value. However, Seller A confided this information to the agent and has asked for his confidentiality. Yet, under the laws of agency, the agent is obliged to disclose to his client, Buyer B, the existence of said problem. The agent may be violating his duty of disclosure to B if he remains silent and he may be violating his duty of confidentiality to A if he discloses to B. What should the agent do? Unless the agent can obtain express written consent from A to disclose to B the information, and he subsequently discloses it, the law provides no clear solution to this problem.

2) Buyer B has been trying hard to get his loan but he just learned that his loan has been denied. He asks his Agent not to disclose to Seller A the status of his loan. Again, the agent is in a precarious position. He owes the duty of confidentiality to B but the duty of disclosure to A. Once more, the best approach would be to obtain express written consent from B to disclose his loan status to A.

3) Another case comes straight from the California courts. Agent Z wrote a contract involving dual agency between Seller A and Buyer B for B’s purchase of A’s property. A told Agent Z that there were IRS liens and judgments in excess of the sales price but that they were working on an offer in compromise (where the IRS agrees to reduce its judgments and liens). However, they wouldn’t be able to consummate the sale if the offer in compromise wasn’t accepted by the IRS. Agent Z didn’t disclose any of this information to Buyer B. Buyer B learned independently about A’s predicament and they approached Agent Z. He explained that A was working on an offer in compromise and that it wouldn’t be a problem. A was unable to compromise the liens and thus couldn’t transfer title to B. Z didn’t perform his fiduciary duty to B. There was a real risk that A wouldn’t be able to perform and Z failed to inform B. B may have decided against moving forward with the transaction had Z kept B’s interest first and foremost. The court found that Z and his employing brokerage had civil liability in this case.

Fiduciary, as defined by the California Dept. of Real Estate

A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the duties of agency.

Agency, as defined by the California Dept. of Real Estate

The relationship between principal and the principal’s agent which arises out of a contract, either express or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.

Fiduciary Duty, as defined by the California Dept of Real Estate

That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress, or pressure.

There are a few good reasons why a smaller down payment is better than a larger one.

1) The secret to success in real estate (besides location) is leverage. It’s in your best interest to leverage as much of a loan amount as possible, so you’re effectively using someone else’s money. While the lender’s money is tied up on your loan, you can use the money you would’ve otherwise spent on a down payment to some other good use (to buy stock, or purchase another piece of real estate, or to buy CD’s, or whatever).

2) The larger the loan amount and the newer the loan, the greater is the amount you have to deduct on your income taxes. The greater your deductions, the less income tax you pay, the more money you put in your pocket, or as usually is the case, the greater the size of your income tax refund.

3) In the case of FHA financing, it’s just as easy to qualify for a loan with 3% down as it is with more down, assuming you can make the payments in both instances. Why knock yourself out saving $120,000 (or 20%) when you don’t have to? It’s a lot of work, a lot of time, and a great deal of sacrifice to save that kind of money. Heck, your kids will probably be in college by the time you accomplish that.

Most agents stay away from FSBO’s (For Sale By Owners) like they have the plague.  Most of the time the fact that they want to market their own properties is understandable.  Many of them hate with a vengeance agents.  They often have good reason to.  Among their travels they’ve been burned by an unscrupulous practitioner and they indict the entire profession due to their one bad experience.  Let’s face it, real estate brokers and agents are one step below used car salesmen and one step above attorneys.  The thing about attorneys is, if you have a good one, he or she is great and can save you or earn you lots of money.  The same applies to a good agent.  The key is to finding one.  But in the meantime, for those who hate us, most of us want to stay away from you anyway.  It’s not worth the pain.

Look for Someone Who:

* Is focused

* Is an excellent communicator

* Is available on your time, not theirs

* Always tells the truth and puts your interests first

* Pays for his or her commission by saving you money

* Is a powerful negotiator

* Has experience—17 years of it

* Has built strong relationships that can work for you

* Writes excellent contracts

* Gets results