OMG! My Appraisal Came in Low! What Now?

You’ve gotten the home under contract, you’ve negotiated inspections, you’ve started to call movers and plan for your next phase when all of a sudden a terrible wrench is thrown into your transaction that causes heart palpitations:

“The appraisal came in low”

Now to everyone out there who just read that last sentence and think to themselves “So What?”…allow me to explain this as simply as I can: When going under contract for the sale of a home, there is a portion in the agreement of sale where it defines the terms of the loan. Usually this is called a mortgage contingency and buried within that is ANOTHER contingency; the appraisal contingency. What this does is ensure the lender is lending the appropriate amount of money on the property… in other words, is the lender getting its money’s worth. The minute this low appraisal comes to light, the buyer and seller are what they call “out of contract”…meaning that one or both parties are not in compliance and can no longer settle as originally agreed.

The following are the most common outcomes from this dreaded scenario and how to keep the deal alive:

  1. Desk Review – As soon as you get a low appraisal, everyone should request a copy of the report to review. The appraisal itself uses what are called “comps”, which are similar properties that have sold in the recent past. In some cases, the agents can find other suitable comps the appraiser might have missed and agents/lenders point these out, but generally are not very receptive to changing their report after its submission. The fact is appraisers do this all day for a living and more than likely they’re right and you’re wrong, but a strong lender and agent can jump up and down enough on an appraiser to save the buyers a little money or better yet, save the deal entirely. Rarely, there is a blatant miss by an appraiser, but it can happen.
  2. Seller Drops the Price – No seller wishes to do this but the truth is that a low appraisal is usually not low at all. In the current market, sellers have the upper hand when it comes to getting what they want from buyers going into contract but a low appraisal is one of the rare moments where the power dynamic is flipped. After all, if the buyer can’t get financing then they can usually walk away and get their deposit monies.
  3. Buyer Brings More Money – If the seller has entertained multiple offers and selected yours, they can hold firm and ask the buyer to come up with the difference. Sometimes this is not an option since people are stretched thin getting into houses as it is. (no extra cash) Also, some just have a principled objection to overpaying for a home. If the seller is really dead set on getting their price, they can boot the buyer and go to another buyer who lost out. The only catch is the new buyer would then be forced to get another appraisal which run the risk of getting an even LOWER value.
  4. Buyer & Seller Meet in the Middle – In this case a compromise is reached and everyone shares the pain a little bit. This isn’t as common as you might think since most buyers and sellers will leverage their advantage accordingly. For example, if a buyer is under contract on a house that had been on the market for quite some time and senses weakness in the seller, they may threaten to walk. This would in turn force the seller to reconsider their position. Poker anyone?
  5. New Lender – In even rarer circumstances, you can actually get a new appraisal performed, but this would force the buyer to switch lenders which means more credit checks, due diligence and paperwork. Like in Option #3, there is a chance that the appraisal could come in even lower than the previous one. Theoretically, you could keep getting new appraisals (for conventional loans) until you got the value, but the buyer would fork out roughly $400 for each one.
  6. Loan Restructure – In certain circumstances, there are ways to revamp the loan to make it work, but the appraisal amount usually is not changeable. Therefore, a work-around needs to be had and it usually means borrowing a little less and then freeing up cash to overpay for the property. You read that right…buyers sometimes have to overpay for the property in a robust seller’s market like this. Sellers have got the goods and buyers know it.

It’s worth noting I have had all of these things happen to me and low appraisals are not total deal killers. You do enough deals where buyers and sellers are pushing the upper ends of market values, it’s bound to happen every once in a while, but having skilled and experienced real estate professionals are key to navigating the potentially choppy waters.

If you have any questions on anything I’ve discussed, I hope you will reach out to me via 610.804.104 or asksethanything@gmail.com

How Do I Select the Right Real Estate Agent?

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It’s a great question. One that people grapple with often, but perhaps not enough. Most know several agents, but can make the wrong selection just based on either not knowing their background or worry over having to tell them “no”. This can be a neighborhood realtor, the relative, the old high school classmate, etc. You should know that ultimately this decision is YOURS and there are several factors that come into play which I will describe below and some are more important than others, but all are worth consideration. My hope is that this will allow you to make a more deliberate decision when your time comes to hire an agent.

Part Time/Full Time – Rarely is a part time realtor going to be as well suited for your real estate needs as a professional who does this all day, every day. Part timers come in different forms…some are semi-retired, but most never really got started and do this as a “hobby” (good grief) or just to add some supplemental income to the household. This usually means less experience which can lead to clunky real estate transactions, missed contingencies and lack of market knowledge. They also often have less connections in the business which means they don’t know as many contractors for repairs and less of a chance to know their counterpart (the other agent). Read further why this is no bueno.

Personality – A couple things on this… first of all, you don’t need to be “besties” with your realtor, but your personalities should be at least compatible. Another less considered aspect is that strong, gregarious personalities get more deals done. If you have an introverted, reserved agent this sometimes equates to more difficult negotiations (selling your position). An outgoing, emotionally savvy agent is more likely to make that connection and make people see their point of view which will lead to signed contracts, smoother inspections and ability to handle problems as they arise. This isn’t to say that realtors have to be the life of the party and some can come on way too strong, but it certainly helps in standing out when in a ten-way bidding war. Real estate agents are salespeople after all, not home showers or real estate enthusiasts.

Accessibility – Speaking of bidding wars, I have personally engaged in a 17-way bidding war (I won it by the way!) If the house is decent and properly priced, you’re likely to see multiple offers on it in this market. From a buyer’s perspective, your agent should be at the ready to show, make calls and put together paperwork in short order. In this day and age, one can see a property hit the market, show it and submit an offer within a matter of hours. Not days. Every realtor worth their salt goes on vacation so it’s important to ensure they have arranged for coverage in case the perfect home pops up while they’re away. In fact, I have personally gotten that call from a friend who has an agent they can’t get a hold of and they ask me to write up the agreement of sale! Thank you very much!

Experience – How many deals does the agent get to the settlement table a year? It’s a fair question and one that you should ask them. I would say that if your agent isn’t closing a deal a month, you’re at the edge of having a realtor who is either not really hungry or unable to get deals done in enough volume to give you assurance of their capabilities. Keep in mind, you don’t necessarily need a realtor who does 100+ deals a year since they aren’t doing most of the work and their team is handling 95% of it. Be prepared to be “handed off” in that case. Someone who does a couple dozen deals a year is a nice mix of track record and you can be more certain that you’ll be working with he or she through all stages of the transaction.

Specialties – There is a misconception that all realtors can handle all types of transactions. You’d be amazed at the sub-specialties we realtors develop over time. Some by accident and some by design. A high-end luxury realtor on Philadelphia’s Main Line (home to some of the country’s best real estate) is not going to be your go-to if you wanna become a Section 8 landlord. Conversely, an agent who specializes in investment properties might not be the best for selling your primary residence. Those different specialties require different real estate languages. Sure, they could muddle through but is that what you really want?

In closing, it is important to be wary of the agent who claims to know everything about all areas of real estate. I can appreciate the irony of that statement since my hashtag is #asksethanything and even the name of my blog (www.asksethanything.com) implies that very thing. However there has always been a caveat to that assertion in that if I don’t know the answer, I will find someone who does and, if needed, hand you off to someone who can more easily assist you in achieving your real estate goals. For most people, their home or real estate investments involve high dollar amounts, so be sure you think through who the best person is to help you along the way. I strive to help as many people as I can in any given year, but will be honest with you if there are professionals better suited.

If you have any questions on anything I’ve discussed, I hope you will reach out to me via 610.804.104 or asksethanything@gmail.com

What’s It Been Like Being a PA REALTOR During COVID?

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By: Seth Lejeune (no,seriously)

On May 19th, 2020 the Commonwealth of Pennsylvania became the last state in America to allow real estate services during COVID. Granted, most states (and countries) never discontinued this sector of their economies, but after several weeks of stalled transactions, heavy restrictions, double mortgage payments and inconvenience to many of its citizens we real estate agents are able to start helping our clients again!

This article won’t be discussing the prudence of this hiatus in real estate and for that you can turn to your neighbor turned epidemiologist turned constitutional scholar. LOL.

In March when the shutdowns began to occur, it was like having a hole ripped through my sail as I was starting the America’s Cup. The Spring market, flush with new listings and buzzing with activity, was upon us and I was churning out deals for my clients. Then we were dead in the water (Ok, I am done with the sailing metaphors). Overriding the implications of a stalled real estate market were graver concerns of public health and disruptions of society across the board. These concerns remain as of this writing…

For the Seth Lejeune Team and all of us at RE/MAX Homepoint, this time has not been wasted… After about a week of adjustment and realization that real estate in any form simply was not going to happen, my team and I went to work on educating ourselves, brushing up on best practices, and getting our business plans together. Instead of us all being “keyboard warriors” and complaining about our circumstances, we all focused on what we could control. We got more certifications, explored new areas of the real estate business, read books, watched webinars…you name it, we absorbed it. In totality, this has allowed us to be super prepared for this day… the day we would reopen…

If you follow my blog, you know that I have written on more general topics in recent weeks…topics such as your “New Normal“, The Wisdom of Simplicity & Productivity Hacks. I’ve discussed these since at that time, I felt this is what people needed to hear and focus on (and perhaps I needed to work through these ideas as well). I hope you’ve enjoyed these topics as much as I’ve enjoyed writing about them…

You can expect this blog to continue in this vein, but I will be also focusing more on relevant real estate topics since this is going to be very important for you all and what you now need to hear. As always, my mission here is to provide you with relevant real estate information!

But for RIGHT now, I’m ready to work and feel very blessed to have a job to return to… I know many Americans are concerned they won’t when this is all over. For me, this time will be spent solving as many problems as I can for my clients. Whether they wish to buy a 3 million property in Villanova or they need me to walk them through the foreclosure process, my goal is help everyone I can! Lots of coffee and long days but I promise to get to as many of you as I can!

Stay healthy and safe everyone! I’ll see you all out there!

“How Much is My Home Worth In COVID?”

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This is the “big kahuna” question these days…It’s the one you might be afraid to ask… or too angry to ask, but in times of uncertainty the question of home values are top of mind and people come to real estate pros for answers. People’s emotions are all over the place right now, so I would like to offer you my steady hand during this time.


I am offering you a special invitation for a completely free call with yours truly to discuss your “hyper local” market and the value of your home. These are completely for your information only. Even if you’re not my client, never have been or never plan to be, I feel pretty strongly that someone needs to step up and set the record straight when it comes to real estate… and that person might as well be me. I’m confident that you will find it helpful (and reassuring). I am also looking to chat with my out of state friends/family who have general real estate questions.

“Fortune favors the prepared mind.” ~ Pasteur

Click HERE to schedule a time to chat….


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“Can You Help Me….”

Whether it be a client, high school acquaintance, business colleague, family member, etc. rarely does a day go by where I don’t get a request for information, a referral or advice. As many of you know, for the last 5 years I have been sporting this #asksethanything hashtag on social media and it has caught on. One of the reasons I chose real estate as a career was for the fact that I saw many in the Great Recession get stuck in a house, make bad decisions and lose lots of money. One of my missions is to make sure the people in my circles make the right decisions and get hooked up with the right people!

It can be daunting at times as I attempt to help as many people as I can. Requests come in all shapes and sizes. Some people want straight up real estate advice. Other want names of contractors. Others need help with their mortgage strategy or an insurance quote.

Often times, I get a prelude to a request to say, “Hey, not sure if this is your expertise…” or “I know you don’t specialize in this, but…” Nonsense. While I don’t specialize in everything, I have spent close to 20 years building a network of people who probably do. Simply put: If I can’t help you, I probably have someone who can.

Therefore, if you should need anything during this time, I want you to reach out so I can get you the answers you seek. I want you to #asksethanything. (Yes, I just referred to myself in the third person) That’s what I’m here for.

Check out this handy dandy info-graphic I created to show what people ask me about on any given day:

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Most of these I can handle directly since they are real estate related, but my industry is tied to others such as contractors, insurance, divorce attorneys and mortgage professionals. As I said, if I am unable to give you guidance in a specific area…I can get you hooked up with someone who can! So don’t be shy… go ahead and ask me anything!

 

“What Can the Year 1985 Teach Us About Today?”

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By: Seth Lejeune

It was the year of the Goonies, Back to the Future and too many great songs to count. (RIP Prince) “What can 1985 teach us about today?”

I’m fairly certain that everyone has (or at least I hope they do) a year or era of their lives where their recollection is one of pure innocence and simplicity.  For me, this year was 1985. As the youngest of 6 siblings and a full time job romping in the woods, those are the times that make me sentimental of my childhood. As I venture into middle age, I naturally find myself drifting back to those days with my curated memory, realizing we had a whole lot of fun and laughs back then. No digital devices, no internet, no Google, lots of board games and outside activities. If we needed something, we had to wait for it. We had to pick our Xmas gifts out of the Sears catalog by circling them. If our parents were late, we had to sit idly by and wonder where they were only to see that heavenly over-sized station wagon pull in a few minutes later …the symbol that everything was going to be ok. Overall, we experienced more discomfort back then, but we were still capable of being happy. In fact, were we happier? I’ll get back to that…

Since mid-March 2020, the posh regularities of life have been stripped away by an external force. Leading up to this time, we were overworked, overbooked & controlling. We all knew these things about ourselves… we would joke about it at parties or rhetorically ask ourselves privately when the hell we were gonna slow down and why we felt the need to fulfill all these obligations. Who were we trying to please anyway? What were we trying to prove?

Say what you want about social media but it does provide an interesting window into the mindset of people. As shutdowns began, it was apparent people were having trouble letting go of their old routines and obligations. But as time went on, something unforeseen (and predictable at the same time) began to happen. People starting letting go. Letting go of the “needs” and “wants”. Letting go of the structure. Realizing that their ways weren’t going to work in this “new normal”. Some have struggled more than others with this… some have hit their stride by now.

The question is really this: What if the key to cracking the code of this new reality is to reflect and remember we were all able to live perfectly well with a lot less in our own 1985. What if instead of fighting with our kids about “screen time”, we shove them out the door into the backyard? What if we stop worrying so much about perfection and focus on contentment? What if everything we need is right here, right now… it was simply hidden by all the extra stuff we were told by the world to integrate into our lives.

Is simplicity what we all thought it might be? The “way out”… not sure, but we’re gonna know one way or another in the coming weeks. I, for one, hope so…

Operating Partner and Leader of The Seth Lejeune Team at RE/MAX HOMEPOINT. Founding Partner at BWB Capital / asksethanything@gmail.com / 610.804.2104

What Does It Mean When It says “Pre-Foreclosure” on Zillow?

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By: Seth Lejeune

It’s inevitable. I get the random text from a client or acquaintance with an address and something that read, “Whoa… is this for real?” or “Why hasn’t this shown up in my MLS portal?” I then hop on my trusty MLS to find no such address for sale. Hmmmm…. AHA! It must be another of these pre-foreclosures!

What’s a “pre-foreclosure” you ask? Well, unbeknownst to most people, your mortgage is recorded in public record. Meaning that if one does enough digging they can see how much money you borrowed to purchase your property, when you borrowed it and what type of loan. These public records are available to Zillow along with lots of other information. Usually your mortgage goes unnoticed by these public sites, but in the case of a pre-foreclosure your lending institution has filed what’s called a “default notice” on the property. In English, this means that the homeowner is behind on their mortgage and the lender has noticed and taken an action.

These homes are listed by Zillow because for those in the real estate profession, this can be useful information. For example, if someone is behind in their mortgage, there is a chance that owner would perhaps sell their property at a discount to get out from underneath of it. In other cases, those investors may wish to assume the mortgage. Overall, it can be seen for investors as a head start on the eventuality of a short sale or foreclosure. Keep in mind, only the most seasoned and unflappable of my fellow realtors/investors have the guts to call these homeowners.

Imagine the following scenario: There’s a family of four. One of the spouses handles all the finances and has not worked up the courage to tell the other they’ve fallen behind on their mortgage payments. Now imagine an inbound call from an investor to the land line (usually the one in public record) to the spouse who is unaware of this situation. The agent uses a sales script like, ” Hello, I’m calling because I noticed your home listed on Zillow as a pre-foreclosure and didn’t know if it was worth me coming by to talk about a way I could help you out of this situation. Would that interest you?” Needless to say, this would be jarring for anyone who thought their mortgage payments were on track. Almost always it’s a hang up or some kind of angry response to this kind of a call. This is one of the uglier sides of real estate investing, but it exists and I know people who find deals this way.

As for the rest of us, a pre-foreclosure is either a sign of things to come (short sale or foreclosure) or a little public shaming to make sure that people continue to pay their mortgage. So the next time you see your neighbors house pop-up as a pre-foreclosure, you now know what you’re looking at. Do with this information as you see fit.

If you have any questions regarding this topic, please note I am a certified Short Sale & Foreclosure Specialist (SFR) and am happy to help you.

Operating Partner and Leader of The Seth Lejeune Team at RE/MAX HOMEPOINT. Founding Partner at BWB Capital – asksethanything@gmail.com / 610.804.2104

 

 

“What Does “10x” Mean?”

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By: Seth Lejeune

If you follow me on social media, you will often see me comment “10x”. Many have asked me what I mean. Talking about parenting wins? 10x! Talking about business success? 10x! People are crushing their personal goals? 10x! People are hitting the gym? 10x! What the hell am I talking about? Glad you asked.

It is in reference to the book “The 10x Rule” by Grant Cardone. Let me explain…

The book’s premise is this: Your success is directly tied to the amount of effort you put forth. In other words: Everything you want is on the other side of massive amounts of effort.

See, once you realize that the effort most people expend is not enough to reach their goals, you also realize you can outwork them…creating a massive advantage. This concept also explains a lot of why people are unhappy in this world. In my opinion, most people aren’t working toward their full potential and many of the ones who find something they’re passionate about don’t realize what is required to make all their dreams (if they have them) a reality. I’m not saying people don’t work hard… I am saying they may not be working toward the thing that will get them to where they truly want to go.

The 10x Rule doesn’t speak about finding your purpose or your life’s mission… one knows there are plenty of books that can help with that. This book is about understanding the amount of work and consistency needed to get what you want. Upon reading the actual book and re-listening on Audible several times, his philosophy became mine and the rest is history. This isn’t for those who wish to dabble… this is for those who wish to go for it.

Furthermore, Cardone leaves the 10x Rule purposely ambiguous so that it can be applied to many things. Whether training for a triathalon, starting a business, repairing a relationship, learning a new skill, developing a new idea or starting a movement, the common theme is that massive amounts of action are necessary. Through that ambiguity, I have turned it into a bit of an “attaboy” response that I can type quickly. A “congrats” or “way to go” so to speak. So there’s your answer. So if you see that comment, you now have context.

But let me ask you something… Are you “10xing” or are you languishing? Are you going for things or just waiting “until”? Are you working toward the thing that makes our wanna get up in the morning? Last week I wrote about productivity (HERE) which I hope you read. After reading that post, I realize that almost everything I was suggesting for being productive during COVID are the same things I would have recommended a month ago before all this started. So I ask you again, are you working as hard as you can on the things you need to do to be successful through this period and beyond? I sure hope so… I know I am.

Whether in paper form or on Audible (recommended), the “The 10X Rule” might be worth a look… (Order here)  It kicks you in the ass and it could change your life. It changed mine.

Operating Partner and Leader of The Seth Lejeune Team at RE/MAX HOMEPOINT. Founding Partner at BWB Capital – asksethanything@gmail.com / 610.804.2104

“HELP! How in the World Do I Stay Productive Right Now?”

 

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By: Seth Lejeune

It’s a very common complaint right now and if the picture above looks like your new daily work schedule, then keep reading. Like me, if you’re confined to your home office, homeschooling, landscaping, cooking, cleaning all in any given day, then you need these tips even more.  Many of our lives and our routines have been thrown into chaos and hardly anyone’s life is as it was 30 days ago. Below are some of my thoughts: 

Sleep – Keep your sleep schedule. It matters… a lot. The initial two weeks it felt like a good idea to binge on Netflix and hit the snooze button. But here’s the thing: your body doesn’t know about the pandemic and your concentration and discipline is being affected. This leads to all types of non-constructive behaviors. Sleep is vital to keeping your brain chemicals (and mood) balanced. 

Morning Ritual – Tying this into the above, we are creatures of habit. If you had a morning routine that you’ve since abandoned, revert back to it and keep it. How you operate in the morning sets the compass for the rest of the day. Waking up late and groggy is not a recipe for success (or productivity). Wake up with intention and you’ll be better for it. Also, get dressed every day. 

Kids – Kids are people too… LOL. Get them up and moving (within reason). If you wake up at 5am, you don’t need to get them up that early, but letting them sleep the morning away isn’t always the best thing either. If they have schoolwork, get that done first and let them play the rest of the day. This rule is age dependent… teenagers generally sleep later than the little ones. Conversely, lower your bar for their achievement. This is not the time to be raising Doogie Howsers . I have witnessed parents in their attempts to incorporate strenuous regimens into quarantined life and it isn’t fun for anyone involved. Power down those expectations and realize that everyone is winging it. 

Time Block – Pandemic or not, this is a great idea. For those juggling a lot at the same time, being able to focus on one thing can make all the difference between productivity and “busy work”. Make your schedule the night before and stick to it. Tell the people in your home of certain times you cannot be disturbed and reciprocate that courtesy. If a block gets delayed, that is fine but then return to it with the same intention of completing it. Who knows… you may build a great muscle that creates tons of productivity for years to come. 

Limit Digital Devices – Not always easy, but spending the better part of your most productive hours scrolling away on social media can be the difference of getting your stuff done and always playing catch-up. A screen is the way we are getting stuff done and staying connected these days but too much is still not good. Never forget that almost no brilliant ideas are realized while looking at a screen. 

Say “No” to Zoom – Ahhh ZOOM… the new platform for those people who love to meet and discuss EVERYTHING. These calls have been extremely important in keeping companies and teams together, but for the love of all this is holy I don’t need to hop on a ZOOM to discuss something that could be solved in three text messages. Jim Rohn has a great quote that says “Stand guard at the doorway to your mind.” I would also say, “Stand guard at the doorway to your schedule.” With a finite amount of time to get things done, resist the urge to hop on those useless ZOOM calls filled with people who want to “catch up”. If you do ZOOM, ZOOM with purpose. Perhaps replace those with a call in the evening with your favorite people in the world instead (i.e. friends and family). My wife and I do trivia nights with friends after the kids go to bed. 

FINALLY: Don’t forget to keep it simple and give yourself a break… everyone is doing the best they can. 

“Will COVID-19 Permanently Change Cities?”

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It was a question that came from one of my #asksethanything sessions on Facebook and it made me pause. Even in these times, I am able to handle most questions pretty easily since this is a temporary (hopefully) situation, but this question has larger implications and requires some imagination. Could COVID-19 fundamentally change how and where we live when it comes to city vs. suburbs? That’s essentially what this question is asking and I love the big picture thinking!

My response can be found on Facebook, but it goes something like this: “It depends” LOL.

I know, that’s a nonsense answer, but it really does. I guess it really depends on the duration of this event. For example, if businesses begin opening back up in the next month, the answer is a resounding “NO”. While disruptive, it will take a lot more than that for people en masse to emigrate from the cities into the burbs. My sense is that for a mass exodus to occur there would need to be a sustained event where people had to consider an urban setting hazardous to the long-term health of their family. Don’t forget, moving to a new area involves more than packing your bags and loading the car. In most cases, this would mean changing jobs, school for the kids, moving away from friends. I don’t know about you, but going back to those familiar things will be really great for my family and I.

While cities are generally more prone to outbreak of this virus, this question is actually asking more fundamental question: Will we no longer wish to live in close proximity to each other after this. 85% of the world’s population lives in cities, so my thought is that if this were to occur, things would have to get devastatingly terrible around the world since this be a universal demographic shift across the world. Keep in mind, since the very beginnings of civilization, humans have concentrated in towns, villages and cities to organize themselves.

Thankfully, it is the humble opinion of your real estate agent that this too shall pass. As I write this, we are sitting in Early April of 2020 and our leaders are telling us to brace for the worst, but even the most dire projections have our situation improving by May and further into the summer. Therefore, it is unlikely this projected short term disruption would be a catalyst for a major demographic shift described above. Fun question for sure. Keep ’em coming and don’t forget to Ask Seth Anything!

Operating Partner and Leader of The Seth Lejeune Team at RE/MAX HOMEPOINT. Founding Partner at BWB Capital – asksethanything@gmail.com / 610.804.2104