All Forum Posts by: Robert Carmody

Did the brokerage get in over their head trying to expand while the market has been so busy? It sounds like they have financial problems and are clearly robbing Peter to pay Paul, covering commission checks they are behind on with the new ones coming in, which is a bad sign. 

1) Contact an attorney right away. A firm demand letter may help get your commission check released that you were owed in early February. They wont want to get sued over something like that, where they are are clearly in the wrong. 

2) Look for another brokerage to work for right away, even if you are stuck with the current one until those pending sales close. You can probably refer any new transactions to the new broker or agent in that office so you don't get trapped with the current company if you continue to have new pending sales. 

3) If your paperwork and file is complete prior to closing, will the brokerage send a disbursement agreement or instructions to the title company, allowing them to deduct the transaction fee you pay from the commission, and issue one check to you and one check to the brokerage for their transaction fee? 

If this is a larger company or issue affecting many agents, it seems like agents would be leaving the company. Most people can't wait 3 or 4 months to be paid, so what are the other agents doing about it? About 10-12 years ago, a larger brokerage here was doing the same thing, and the problem kept getting worse, and the brokerage ended up in bankruptcy, and dissolving a few months later. They had a lot of agents named as creditors in the bankruptcy documents, many owed many thousands of dollars. 

Your real estate contract should say whether or not there is a prepayment penalty, and most likely there is not any penalty for paying off the note before the call date, or end of the loan term. The payment on the REC is most likely amortized over 30 years, but loan term for some amount of time less than that. Either way, there most likely is not a penalty for repaying the seller or person holding the note before the end of the loan term. You'll want to review the contract to see if there is a due on sale clause. If so, you have every right to sell the property, but must completely payoff your loan at the time of the sale. Typically you would not be able to sell to a new buyer using owner financing without the permission from whoever holds your note first. 

Currently our market is very strong and there is very little inventory across the board. This is especially true with duplex, triplex and fourplex buildings, that are popular for investors, along with buyers that plan to occupy one of the units and secure financing at owner occupied rates, and/or lower down payment programs, like FHA. Therefore, owner financing is not as much of an essential or helpful tool when it comes to marketing the home to prospective buyers as it might be in a softer market, or one with less favorable financing terms and options. If the property is not eligible for mortgage financing, either due to condition or nonconforming zoning, you may need the previous owner or lienholder's permission to resell via owner financing/REC.

When compared to agent assisted sales, FSBOs do consistently sell for less, and the difference is significant and would suggest that the benefit to most sellers is greater, or their net proceeds are higher, when they hire an agent to sell their property compared to doing it themselves. In today's market, which favors sellers heavily, the way to get the best possible price and terms for the property is to list it for sale, on the open market and available to all ready, willing and able buyers to offer on. It's a difference of something like 16 or 18%, I believe. Of course, as an agent, my opinion is from the perspective of one. However, I will say in all seriousness, that I've recently worked with a couple different customers that were attempting to sell on their own, or about to attempt to, and in both instances, they were very pleased that not only were they leaving closing with more money in their pocket, but also with a lot less time and effort involved, than if they had stuck with their plan to do it on their own. I think the assumption is that it will save money, as the commission typically accounts for the majority of the closing fees. I'm sure there are many examples where the seller did save money, but the overall statistics say otherwise. And, despite all of the different resources and sales data that individual consumers have access to these days, the % of FSBO completed sales has gradually declined every year since 2004, and there are fewer FSBOs today than any time in the last 40 years.

Experience has little to do with age, and also doesn't always have a lot to do with the number of years an agent has been licensed either. Age brings life experience, which is often useful in real estate since customers are usually in some sort of transition in life, good or bad. And, at the same time, an older agent can still be brand new, or only work part time. 

There is a difference between "having a real estate license" and "having a real estate business". About 20% of the agents in Albuquerque, where I am, have sold just 1 property, or none, during the last 12 months. 5 or 10 years of no sales from an "agent" who "has a real estate license" still equals 0 sales. Meanwhile, maybe you've only had your real estate business for 3 or 4 years, selling 25 houses each year. If you've got 100 deals under your belt, and another agent got their licensed 10 years ago,  but still at 0 sales, which would you hire?

I know that I am biased on this topic, being an agent myself, but if I were you, I'd hire my own buyer's agent. You need someone who is working for you and making your goal a priority. Here's why:

• 1) Zillow is a great resource and database of listings, but Zillow isn't able to navigate the logistics of a long distance or overseas purchase/relocation, nor do they offer valuable local insight. You'll need both, especially buying in a new market virtually or sight unseen. 
• 2) Your experience will be more enjoyable, take less of your time, and seem less chaotic if you've got someone experienced in your corner and prepared in advance to assist you. 

• 3) You might not actually be talking to the listing agent. Zillow and other sites sell advertising space to agents and often feature those agents or list them ahead of the actual listing agent. Many consumers think they've contacted the listing broker, but turns out to be another agent with another brokerage who has never seen the property you've called on. 
• 4)  If you contact a listing agent by email or phone, from long distance and overseas, and are wanting to make an offer right away on a property that you haven't seen, or won't be here to see, they may have concerns about your seriousness as a buyer, or worry that it will be challenging to work with you. Those concerns will likely be conveyed to the seller with your offer. By hiring your own broker, you'll be able to have your offer presented based on the terms of the offer alone, and without the question of where you are and how this will work. Some agents are more equipped and able to handle long distance and overseas transactions than others. 
• 5) You will not pay any out of pocket expenses when you hire your own agent. Both agents are paid by the seller, upon closing. The listing agent is hired to represent the seller, not the buyer. 
• 6) A good buyer's agent will have a plan in place for notifying you of new listings. They'll be prepared to write an offer quickly, and will proactively search for other listings not yet listed. Your information will be setup in their system so that a new offer can be prepared, signed and submitted much faster than starting all over each time. This will save you time and energy from having to rush to try and reach an agent, while feeling like other offers are received before you've had the chance. 

It's a market that is moving very quickly right now, and has been for a while now. Inventory is very tight with approximately 1/2 the number of residential properties (including multi units) for sale today as there was 1 year ago, which at that time, was a record low level. This is pushing prices up, and seems like most projections point towards prices gaining another 5 or 6% during 2021. Rental prices are also up about 5 to 6% from one year ago. Historically, our rental prices and real estate prices tend to grow at a pretty consistent and steady 2.5-3.5% each year. There is an eviction moratorium in Albuquerque right now, due to COVID, although I haven't heard of widespread issues of tenants not paying rent and refusing to move. It's something to be aware of, and a reason to see recent payment history if the building you purchase is tenant occupied when you complete the purchase and close.  

If you are waiting for something to list on the market, be prepared to move very quickly when it does, and you may be up against multiple offers, so making yours shine is important. Sellers are naturally looking for someone that is easy to work with, and pre qualified with a reputable lender.

 Some of the question I'd have, and you may already know the answers, would be:

1) Is the property in the city of ABQ or just Bernalillo County? You'll find both in the South Valley. Zoning codes are slightly different, along with some of the building codes (if you are adding another dwelling or dividing the lot). Property taxes are about 30% less if the property is only in the county and not within city limits. 

2) Does it have public sewer service and city/municipal water, or septic tank and/or private well? If it is within the city, it should have public services for both. If it is within the county, it may have septic and well, or sewer service with private well, or it may also be connected to public services. If it is on its own septic system, and you are wanting to divide the property or build a 2nd dwelling on the one property, you'll want to know what type of septic tank is there currently. If it is a conventional system, Bernalillo County requires that the property is at least 3/4 acre or larger. And, the size of the system will be determined by the # of bedrooms and how many people you intend to have living there, so it is possible that a larger tank would need to be installed if you were building a casita or guest house, as one property. And, dividing the lot into 2 can be al little tricky if you have 1.15 acres and need the lot where the existing house is located to be a minimum of 3/4 acre. Also, Bernalillo County will require that there is a certain amount of distance between a private well and septic system, and distance from neighboring wells too. The county Environmental Dept can help figure out what you are working with there, and what challenges might present themselves , but wells and septic systems are expensive to dig/drill/install/replace, so know what you are getting into there. 

3) People often think that because their property is in the south valley or outside of ABQ, or on acreage, that they can do whatever they want with it, but there are usually still CC&Rs that will dictate the type of property, size it needs to be, whether or not a guest house or 2nd dwelling can be added, height restrictions, and so on. The CC&Rs are filed with the county and public record, so you may want to review them carefully. If the property is located on a private road, there should be a private road agreement filed, or private access easement, and again, you'd want to keep that in mind if dividing the lot from 1 into 2. 

4) When it comes to water or irrigation rights, are they ditch or acequia rights from MRGCD? Or, are they surface rights? groundwater rights? are they currently in use? priority year? Water and irrigation rights are complex, and often confusing, and they all carry some value but it will vary greatly. Also, I'm not sure if dividing the property would mean that both properties would then have rights, or only one, or how that would work. 

5) If you were to divide the land and build, how does that affect your real estate contract or owner financing arrangement? Does the seller have interest or ownership in the portion of the property that is divided off from the portion with the existing house? You'll need the county approval with new surveys, plat map, etc. If you build a house on its own lot, there will be impact fees, utility connection fees, permitting fees, etc. If you build a guest house on the one property, you'll just have the permit fees, but might be restricted on the size that is allowed. I think, and not certain on this, that in ABQ, for example, a guest house or casita can't be larger than 600 square feet under the newer zoning codes, where they are allowed. 

Those are some of the question or consideration that jump out at me, but it seems like there could be an opportunity there. Prices have been climbing in the South Valley at a faster pace than the overall market, after years of lagging behind. It sounds like the "deal" is probably in the price that they are selling the property to you for, and also the terms of the lease/purchase with large % being credited back to you. If you do move forward with it, keep an eye on interest rates over the next few years. While you are able to lock in the price today, and get a generous credit towards the purchase each month, I doubt that interest rates will be at 3% forever and so at some point, you may want to complete the purchase and secure your own financing if rates are increasing above whatever amount you are comfortable with. 

Good luck. Let me know if you have other questions. 

The standard NM purchase agreement is 16 pages, not including addenda, disclosures or any amended terms. It is a very "buyer friendly" agreement, and basically protects the buyer from the seller much more  so than it protects the seller from the buyer. It covers all of the different conditions or contingencies, such as your financing, deadline for closing, ability to obtain insurance, timeline for completion of inspections, addresses how inspection issues are resolved, maintenance of the property before closing, lists other items included with purchase (ex: appliances), specifies what documents the seller will provide (disclosures, lead paint disclosure, maintenance records, leases, financials) and when they must provide them by, and addresses the title services too. In the event that you don't close, or can't close, the purchase agreement provides clarity on whether or not one party is in default, and what happens to the earnest money if either party defaults on the agreement, or can't reach a resolution over an issue along the way. The purchase agreement probably gives the buyer 10-15 ways out of the agreement, without penalty, provided that the deadlines are met. And, there is only 1 section of the agreement that specifically states that the buyer would be in default and that earnest money would be released to the seller. Your earnest money deposit is held with the title company, not the seller, and they cannot release those funds without either a closing taking place, or an agreement between the buyer and seller that each signs. The purpose of the earnest money, or one of the purposes, is to secure your interest in the property, showing the seller that you've got skin in the game and something at stake, and therefore they will not continue showing the property or entertain other offers while you are doing your due diligence and preparing for closing. If you are concerned that they will try and sell it to another party while you are trying to buy it, you need to make sure you have a really solid contract that protects your interests, and is clear with where the funds are held (which title company), how much the deposit is, deadline that it is deposited by, and that it is fully refundable if you can't qualify for financing, aren't satisfied with inspections, can't reach an agreement over repairs, appraisal doesn't meet lender's requirements, title to property isn't clear and marketable, insurance can't be obtained, seller doesn't provide satisfactory disclosures, etc. It's harder for the seller to just disappear and sell the property to another party when you deposit funds with the title company. If it is a residential property or multi unit property or small commercial property, 1% of the purchase price is a common earnest money deposit that you'll see in a lot of offers and signed agreements. 

If you aren't working with an agent, and neither is the seller, you may want to consider splitting the attorney's fee and hiring a real estate attorney to prepare the contract. It will probably cost you both a few hundred dollars, but will be more likely to cover your bases and prepared in accordance with NM real estate laws and customary practices. Otherwise, check with the title company that you were planning to use and some will assist you with the contract or provide a blank form for you to fill out. You don't want to get into handshake deals and promises or verbal agreements in general, and especially not when there are only 2 people involved and nobody else involved to vouch for either. 

No problem at all. Not a bad idea to ask for the credit or rebate from the seller. Regardless of how they purchased the property or how they insure the property, the flood zone should have been disclosed. It's an important detail that can be costly and therefore impact the viability of the investment, future value or market appeal, and affordability or could have caused some borrowers to no longer qualify for their loan with the premium added to their payment.

It is a bummer on the flood insurance, and those 2012 flood maps were expanded to included a lot of rural areas where generations of residents have never seen homes lost or seriously water damaged. It's not that there is never flooding in NM, but when there is, it's not wide spread. There might be damage to a farmer's crop or fields, and dirt/sandy roads in some areas, but the residential property damage is usually limited to a few inches of water and mud in a few houses caused by flash flooding in random locations, or bad roofs during a heavy rain. NRIP covers structures, not farmland and public or private dirt roads. 

Do you have an elevation certificate? Or does the seller of the duplex have one? An elevation certificate will help lower the premiums or eliminate the requirement for flood insurance if the structure is built outside of, or higher than the ground level if within, the designated flood plain. Click here for FEMA Elevation Certificate info. You can contact the Flood Manager for the Town of Taos or Taos County to find out if an elevation certificate is on file. If the structure is naturally elevated or elevated with "earthen fill", above the base flood level, you can use the certificate to submit a Letter of Request for Map Change (LOMC) to FEMA, and they will review the request and respond within about 60 days. If approved, you'll get a Letter of Map Amendment (LOMA) or Letter of Map Revision based on Fill (LOMR-F). Your mortgage company will need to approve your request also, which they will most likely do with either the change or amendment from FEMA.

If you are required to have a flood insurance policy and structure is not elevated or outside the flood plain, you can look into a Lloyds of London Flood Policy, or some of the private flood insurance providers. Here is a list that I copied:

You can also try for a reduced premium or grandfathered-in lower rate if: 1) the seller or current owner has a flood policy in place from a previous Flood Insurance Rate Map (FIRM), and there isn't a lapse in coverage or changes to the exterior of the property since that FIRM was complete. 2) you agree to a higher deductible in exchange for lower premium.  3) Lower your risk by retrofitting property to be more floodproof 4) you have the Elevation Certificate & recent Survey so that your premium is based on your specific risk level. 

In 2012, the flood maps were expanded and large areas within NM were added to the high risk zones, without a history of flooding, and where water shortages are  usually the concern. The flood insurance premiums in the national program are largely based on community participation, or how many other homes in the community and in that state have flood coverage. It's a little alarming when you see that NM's flood premiums, on average, are nearly double the average in Texas and Florida, but only 2% of the properties in NM have flood insurance, compared to over 40% in FL and 12.5% in TX. Most of the State of NM is rural, and agricultural along the Rio Grande River, where many properties fall into a high risk flood plain. While flood insurance can be required by mortgage lenders, and on all federally insured home loans, there is no requirement to carry flood coverage on property owned free & clear, or sold via owner financing. Compared to urban or suburban homes, those that are in rural areas are less likely to be mortgaged, often due to the characteristics of the property, or source and reliability of the owner/buyer's income, or because the property was acquired with seller financing. And, without a mortgage lender requiring flood insurance, property owners will be less likely to purchase costly flood coverage when they question the need for it to begin with. Good luck with it and with the investment property. 

While I'm not from Atlanta, I have worked with builders and developers, especially when I was new and newer in the business. At the time I started selling real estate, there was a lot of new construction in our market, most of which was not in the MLS. There are usually apps or systems sold separately, or for an additional fee, from your MLS that are for new construction. Those will familiarize you with the inventory but probably not helpful at cultivating business with. Visit the developments, model homes or sales offices in person and during the week, during the early afternoon or times when they aren't busy with customers. The sales staff will be happy to talk to you, and it's a good way to learn about the new houses and neighborhood, and a good time to build a rapport with the sales staff. And, just like we have to do when we are trying to build a pipeline or list of contacts, find reasons to stay in touch with the same sales people, or the builder themselves in some cases.

The big builders have their own sales staff, who are employed by the builder and only sell for the builder, but they often have customers that have houses to sell, or sometimes customers that end up not buying from the builder and also aren't working with their own agent. There is referral opportunity there. The small builders that don't have their own sales staff don't have any interest in selling other houses, or aren't licensed to, but they also have customers with homes to sell, or have buyers that don't have an agent when having one might help close the sale that the builder hasn't been able to. There is referral opportunity there also. It's easy to think that the builder knows other agents already, and they do. However, it's the kind of business where they are connecting with agents constantly, and the moment they need one, it's going to be the one that is standing there or is fresh in their mind and easy to reach. 

I ended up getting a referral from one of the builder's reps, and it was more than just one referral. It was 7 listings purchased by an investor who wanted to flip them for a quick profit, which investors were doing at the time. In addition to the 7 listings, I gained a presence in the area, which was immediately adjacent to a couple small communities of established homes, where I ended up listing a couple properties also. About 1 year after the first listing, I got a call at my office and the builder was closing out the subdivision, but had something like 11 or 12 spec homes to sell because the market had shifted, buyers had backed out, and they overbuilt inventory. The builder was coming to me as the "go to" agent for the area or subdivision, and I'm not sure if they knew that their sales rep's one referral only a year or 15 months earlier was what led to their phone call to me that day. Real estate contacts and connections build upon themselves, and when concentrated in one area, likely to much faster. Newer subdivisions also aren't farmed heavily, or at all, by other agents. While most owners of a brand new home completed today are not going to be in the market to sell today, it's a good time to start marketing and getting your name out to them because you will usually see some turnover as soon as the builder completes a subdivision, or within the first 2 years. There might be homeowners that bought there but ended up not liking the area, or job moved them elsewhere, or plans changed and they were waiting to try and sell until they weren't in direct competition with the developer anymore.