Real Estate Investing

It’s in the best interest of real estate agents to gather once or twice each month to talk about the housing market, community news, and legal issues.  My former broker once said that he couldn’t afford the liability of carrying agents who don’t attend meetings because they don’t hear the updates on what’s new and how to handle different situations morally, ethically, and legally.

That said, a colleague brought one issue to the room that was teeming with knowledgeable agents … a little clause in a new construction contract by a builder that is actually quite well-known across the country.

The contract stated something to the effect of buyers having the right to seek arbitration should they have problems with the home or contract, but that they GIVE UP THEIR RIGHTS TO A TRIAL.  In fairness, most builders do state that conflicts shall be resolved through arbitration, but rarely are they so specific that they spell out the fact that buyers give up their rights to a jury trial.

In California, the Castleman Law Firm specifically addresses the concern,

If a provision for binding arbitration is included in a printed contract, it must be set out in at least 8-point bold type or in contrasting red in at least 8-point type, and if the provision is included in a typed contract, it shall be set out in capital letters.

Immediately before the line or space provided for the parties to indicate their assent or nonassent to the arbitration provision, and immediately following that arbitration provision, the law requires the following language to appear:

“NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES’ PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES’ PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.” “WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES’ PROVISION TO NEUTRAL ARBITRATION.”

[initial] [initial] [initial] [initial]

This may be the cause for the one builder to have it so clearly spelled out here in the Tennessee contracts.  However, whether it’s this specific or not, buyers should be wary of the language that limits their legal rights to arbitration only (e.g., “binding” arbitration).  You have the right to cross it out, though it’s likely that builders may say that if you don’t sign it they won’t sell to you.  If that’s the case, perhaps it is advisable to walk away.

In any case, if there’s anything in the contract that give you reason to pause, be encouraged to take the contract to a real estate attorney for review.  Don’t get caught in a trap where you have no legal recourse.

As a side reference, here’s a link to an article about California’s Arbitration Lemon Law.  Cartoon from this site!

I don’t believe 2008 will go down in history as a great year for real estate.  We saw the market continue to struggle, even as interest rates and home values shrank - usually something that would spur more interest in housing.  We’ve seen foreclosures throughout the country sink families - up close and personal.  My friend Mary is still hanging on by a thread, but a look around sees homes that used to be filled with laughter now sitting vacant. 

I started writing here at Banks.com in May of 2008, replacing our friend Hayli Morrison who continued to write on other sites for some time.  Here are some of my favorite posts since I started here.

A laughable sales tactic by one agent - block the door to prevent the buyer from leaving!

Top 10 signs of when a builder goes bad - I’ve seen even more craziness from some builders since this post. One finally put some screens in the windows of a home he sold a year ago when he needed his former buyer to sign off on an easement mistake. She refused to sign until he brought her some screens.  Now the bugs stay out when her windows are open!

Who knows what market lurks in the hearts of real estate?  The DENTIST knows! (The buyer never did buy…) (Oh! And I recently heard that Ed McMahon gets to continue living in his home).

Oops… why Realtors cannot conduct home auctions on eBay (you must have an auctioneer’s license!).

The ups and downs of living in a mobile home.  I’ll sum it up… tornadoes = bad and affordable = good.

Can you find another place to live after foreclosure?

People either love Realtors or they hate them.  Me?  I love them.

Pets are abandoned when homes are foreclosed.  This still makes me really sad.

Look out!  Spy cams and hidden mics can be anywhere!

Outgoing referrals are a good thing - when the client is just not ready to buy/sell! Or if they’re a jerk.

It’s lollipops and gum drops out there, people.

Different types of agents:  Lions and Tigers and Bears, oh my!

A Real Ghost Story … and you do have to disclose ghosts in California.

Unemployed Should Get an Automatic Stay on Mortgage Payments: An Editorial Opinion

I’m still mad about this … mortgage companies won’t sell if they only break even (but I’ll bet they’ll get some bail out money!)

At Thanksgiving, everyone gets thankful.  This post say why I am thankful to be a Realtor.

Safety Tips when Decorating for the Holidays

How One Salesman was a Real Jerk

Building Green

Happy New Year!  Again, may tomorrow’s dawn bring much joy to your life.

While all real estate is local, it appears that new construction has remained slow across the country and conversely, home builder sentiment also remains low.   According to MSNBC.com, National Association of Home Builders/Wells Fargo Chairman Sandy Dunn said,

“The crisis continues.  Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral that is weighing so heavily on our national economy.”

Further, the article reports that “home builders have asked Congress to enact a 10 percent tax credit of up to $22,000 for homebuyers that purchase a home over the next year. They also are seeking a temporary interest-rate reduction on 30-year mortgages.”

In my own area where the housing market has actually remained fairly stable - but slow - new construction permits have tanked which is also impacting funding for the county,

The county and its three cities issued just 1,177 single-family home permits from January through November, a 50.8 percent drop from the 2,391 issued over the same 11-month period in 2007.

With the drop in homebuilding, city and county governments experience a drop in permit fees and a reduction in anticipated property tax revenues.

The Daily News Journal of Rutherford County, Tennessee further reports that the codes office that oversees permits has not filled vacant positions as a result of fewer permits being issued. 

What I find to be very interesting is the real lack of concern for builders.  I do think that the high volume builders could get sloppy sometimes when they threw homes together, but as one commenter said, don’t cut off your nose to spite your face,

The drop in the housing market serves all those greedy developers and homebuilders right. How dare them make so much money ! Yep, ha HA! they aren’t making money now!!!!! Neither are the blue collar workers like plumbers, electricans, block/brick layers, supply companies, carpet layers, big equipment operators, insurance agents, real estate agents, AND NO DEVELOPMENT TAX, coming in to the county for schools, roads, firestations, and general services provided by the county. And that means people aren’t spending as much in retail stores, restaurants and that means SALES TAX collections are down that go into schools, education, teacher pay and general gov’t services! DUH!!!!

Like the commenter above, I find it very interesting that the silence is deafening in regards to ancillary jobs related to home building.  The construction workers, plumbers, electricians, lumber yards, home supply stores, etc. have all been negatively impacted but you don’t read a lot about those positions.  However, those could be figured into the higher unemployment numbers we keep reading about.  Or NOT according to Business Week,

Contract workers, sometimes known as freelancers or independent contractors, face a special set of problems when it comes to being counted by the government. First, employers aren’t required to report layoffs of contract workers to the government, so when companies say they’re cutting their contractor workforce … no one knows by how much.

The recovery IS coming, but how long will we be at the bottom?  Tick tock, time will tell.