The Dark Side of Real Estate by Ken Fisher Realtor

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Real Estate, The Dark Side

Presented By:

Ken R Fisher & Associates, Inc.

This Web Page Is Purely Informational And Is Not In Any Way Intended To Be Nor Is In Any Way To Be Construed As A Negative or Derogatory Or Defaming Commentary Regarding Any  Member Of The National Association of REALTOR®s (NAR), The Indiana Association of Realtors® (IAR), The Metropolitan Indianapolis Board of REALTORS® (MIBOR) Or Any Particular Individual REALTOR® Whatsoever.  A REALTOR® Must Be A Licensed Real Estate Agent, But A Licensed Real Estate Agent Does Not Have To Be A REALTOR®.


There truly is a Dark Side in the Real Estate Business (and many folks now believe it).  Have you lost your house, your credit, your credit score?  Are you upside-down in the value of your house and your mortgage company won't even talk to you (see Mortgages).  Has Obama totally failed in his truly unbelievable promises ... did you really fall for it?  Most people don’t discuss the Dark Side because they don’t want others to know how uninformed and gullible they were!  Nor do they want to discuss the financial cost (both short and long term) of their wrong decision and the scam that they fell for.  Some folks just go through life with a devil-may-care attitude presuming that everything will be all right … rude awakenings are often financial Nightmares!  The sub-prime mortgage scandal (initiated by Bill Clinton in 1997-1998) coupled with a rapidly expanding home pricing fiasco and 'go-along-with-it' appraisers was an octopus-like nightmare that grabbed everything in it's path (except apparently the now rather rich financial folks and selected real estate agents, builders and politicians like Clinton, Cuomo, Franklin, Frank and Dodd who initiated the problems)!

The Housing Meltdown

 Real Estate is perhaps the largest industry in the United States.  It is definitely large enough for the federal and state and even local governments to pass laws to govern most of the segments of the business to protect the public and FIGURE WAYS TO TAX EVERYTHING THAT DOESN'T MOVE as well as a lot of things that do!  Laws are passed to establish guidelines and to prevent people from taking advantage of other people (few of these laws protect you from the Government) ... and to prevent unscrupulous Real Estate Agents and companies that say they are real estate companies from taking advantage of people.  Unscrupulous Real Estate Agents were definitely a part of the Sub-Prime Mortgage Scandal and heavy contributors to the economic downturn of the United States.  As you well know, some laws are enforced, many are not, often for 'political' reasons.  To a great degree, you are on your own ...  unless, you seek out the services of someone you know and can trust in the real estate related businesses and/or you deem it necessary to secure the services of a, perhaps unknowledgeable, attorney to secure compliance with the laws.  You should always check with the Better Business Bureau before proceeding.  It is your MONEY, it is your CHOICE!  Choose wisely!

The Real Estate Business operates on data:  Listings, Sales, Expired Listings, Days on Market, Listing Prices, Selling Prices, Ratios, etc.  The National Association of Realtors has announced that their sales data was exaggerated by about 14% over the last several years ... it has supposedly been corrected.  The Metropolitan Indianapolis Board of Realtors attempts to control the accuracy of the data for Central Indiana.  Click for a report on Real Estate Data.

In Real Estate, the concept of Teams may well be nothing more than a cover up or an excuse for a lack of experience and possibly lack of ability.  Ultimately, a Team can be your financial downfallThere is no 'I' in Team!  There is an 'I' in Business.  There is also an 'I' in Professional.  You can see every member of a basketball team or a football team.  You will see but one member of the Real Estate Team (and probably hear from one or two others that you believe to be on the team).  You can watch the Coach move people onto and off of the basketball court or football playing field.  You will never see the members of the Real Estate Team ... who is the Coach ... who is doing what and how well ... do they know what they are doing ... are you getting the personal attention that you deserve ... the team leader often captures all of the production credit for the entire team and then advertises how successful HE or SHE has been.  Would it not be better for you to select an 'I' to work for you ... someone successful as an 'I' in the business and not needing the crutch or convenience or excuse of a team ... someone with whom you have met and interviewed and selected to work for you... someone who has, on a personal and individual basis, proved their worth to you ... someone who is responsible and responsive ...   someone with the training, knowledge and experience to handle the complete task at hand successfully ... someone who acknowledges where the "buck stops"!  It's always your CHOICE!  It is your MONEY!  The wrong CHOICE has and or will cost you a lot of time and money!

The big BUZZ WORD in Real Estate today is the Guaranteed Sale.  Few Guaranteed Sale Plans are upfront in what they offer to you ... most ARE NOT!  And then there is its' ugly  sister If I Don't Sell Your House, I'll Buy It.  You can easily find out what UPSIDE DOWN means!  You have the opportunity of losing your equity or profit in your current home as well as your savings and later find out that you have paid much more for the new home that it was really worth.  Your monthly payments for the rest of your life will tell the tale.  You did it your way!  You will pay the Piper!  MAKE SURE THAT YOU GET ALL OF THE DETAILS BEFORE YOU SIGN ANYTHING!

This web site is a compilation of facts and fictions about the everyday business of real estate.  It is not intended to defame any particular person or company.  It fully complies with the Rules of Ethics and Standard of Practice of the National Association of Realtors® in that it must not ever disparage the actions or activities of a Realtor® per se.  You should seek out the knowledge and the necessary honest, well-trained, experienced and knowledgeable service providers before proceeding with what may be the largest investment in your life.  YOU COULD HAVE AN EVERLASTING SMILE OF SATISFACTION, but it could easily become your worst nightmare and even a potential disaster if you make the WRONG CHOICE!

Real Estate, the Business

In the real estate business, it is often said that about 85% of the business is done by 15% of the agents in the business.   Conversely, about 85% of the agents in the business are splitting up about 15% of the business.  This is a part of the reason that the business is shifting to a higher percentage of part time agents, people who call themselves agents, unlicensed agent assistants of unscrupulous licensed agents, spouses or friends of licensed agents and real estate company secretaries.  Part-time agents should only receive part time commissions!

Real Estate companies have shifted to a ‘pay us to work for us’ basis.  They offer differing commission splits in exchange for rather expensive monthly fees for desk rent, office rent, office equipment rent and secretary rent, as well as fees for advertising, forms, signs, company mandated direct mail, phone calls, coffee and even stamps.  It may be hard to believe, but some companies even charge for management support.  These companies make money whether you make money or not (and that is a rather large NOT)!  Some of these companies are waiving their typical fees for up to 6 months to STEAL agents from other companies rather than recruit and train their own.  Some agents cut every corner possible to try to make a living with these upfront financial expenditures.

Will the Amway concept work in Real Estate?  It looks good, it generates a lot of 'suds', but it probably will not ever succeed in the long run!  It is well known that a pyramid operating system or scheme establishes levels of operands.  Most state real estate commissions have two levels, the Broker and the Sales Associate or Associate Broker.  Some pyramid companies have a Broker, sub-Brokers, Agents, sub-Agents, Assistants, Secretaries, Janitors and who knows what else.  Do you really want to deal with this kind of a company with questionable and obviously un-provable practices?

Franchising works extremely well for ice cream stores, hamburger restaurants, clothing brands and the like where the franchisor dictates to the franchisee the ice cream or the hamburger or the clothing or the other product that the franchisee may use.  Real estate franchisors can only franchise the name, the philosophy and the operating instructions, not the people.  That is a very important consideration that most consumers just ignore.  People are people.  There are great people, good people, mediocre people and bad people.  The franchisor has little control over this factor, their primary concern is receiving Franchise Fees.  And, it is obvious that many a franchisee exercises little control.  But, in  the eyes of the consumer BIG is ALWAYS BETTER, until they suffer the consequences of a foggy decision, an over-priced deal, or an untrained agent fiasco.

Buy A Company Name is the latest 'scam' out there.  Companies are actually selling their 'Name' to real estate agents in an effort to improve the company's bottom line.  For less than $1,500 a month, an agent can buy  a company name and tell prospects they are associated with that company while they work full or part time from home.  Most have to pay a closing fee of $300 to $400 for each sale closing.  They get no benefits other than the company name and the company sanctioned closing security.  That's all, that's it!  Management and marketing functions are not the company's responsibility.  You are on your own with this arrangement.  What are you paying who for?  Is this arrangement being disclosed to you?

As an industry, it is known that every new agent will generate an average of 2.3 sales before they decide to stay in the business or leave the business.  This initial business success usually comes from friends, relatives and previous business associates resulting from lots of emails, phone calls, and personal visits.  These companies know that approximately 80% of the new agents will not survive 12 months (often a result of poor or no training and no management guidance or supervision).  Of the 20% who do survive the first 12 months, less than half of what's remaining will survive the following 12 months.   The real estate company’s overhead will be more than covered by the monthly fees and any commission splits will be pure profit.  You should be wary of companies that promote the fact that they recruit many new people each month but always have the same year end total staffing level.  The Average Agent in 2015-2016 in Central Indiana is selling approximately 7 houses and earning between $20,000 and $24,000 in commissions before taxes and expenses.

Recruiting new agents is quite profitable to the real estate company whether the agent lists or sells any property or not.  Typically, companies will hire ‘anything that breathes’.  The first two qualifications to become a real estate agent are:  (#1)  Can you find the office for the interview and (#2)  Can you pass the mirror test?  These companies are sometimes referred to as ‘body shops’.  These companies offer training programs to teach the new agents how to do business.  Many of them use the You're in the OK Corral ‘herd’ concept; training large numbers of new agents at one time (classes move at the speed of the slowest new agent).  Some use ‘mentoring’ where an experienced (commission based) agent allows the new agent to follow them around (sort of like a puppy!) usually for a fee.  Some have so many agents working in an office that management cannot begin to provide guidance or supervise the new agents and review and approve their work In progress.  Real Estate is a numbers game.  A few agents are quite successful, many are not.  These fast track companies only talk about the successful agents!  This is another part of the reason that the business is shifting to a high percentage of part time agents and people who call themselves agents and unlicensed agent assistants and real estate company secretaries.  A question, if a company hires 25 new agents every month and ends the year with the same number of agents they started with, what happened to 300 agents?

Training for new agents as well as continued training for existing agents often fails.  Sarah Ellison, 2004 President of the Indiana Association of Realtors, said, in the November, 2004, issue of Indiana Realtor "Historically, the biggest consumer gripe against real estate agents has been that you never know what you are going to get.  When you leave a message for an agent, you may or may not get a call back; the agent may or may not be on time to an appointment, may or may not provide the services they promised."  Sarah continued on by reminding that "some agents have become sloppy about getting to appointments on time, returning phone calls and e-mails" and adding "making proper disclosures or even working hard to make sure loose ends are wrapped up by closing. In some cases, the prevailing attitude is "Why be accommodating, or even cordial?  If you don't buy it, someone else will".  This attitudes continues even in today's market.  Consequently, more consumer complaints are coming into local Boards of Realtors". 

As a new agent, selecting a company with which to become associated is difficult to say the least.  A long term track record should receive your utmost attention.  Experience and longevity definitely count!  A medium to small company should be your best bet.  Some folks select an agent based upon their 'looks', their car or their ability to  tell the folks 'exactly what they want to hear'.  The ‘new kid’ company on the block with 'gee whiz" untried practices and procedures should definitely be avoided.  Some of these companies are in violation of the Indiana Real Estate Commission Laws.  Many companies are not willing to discuss true expenses of sale and their impacts on commission or flat fee splits.  Management support may be minimal or non-existent and this fact will typically not be disclosed to you … you will learn this fact when it is too late to do anything about it.  Your contract remains binding under the law whether you receive the promised training or management support or not.  It is imperative that you interview at least 3 companies before making this very important career beginning or career ending decision!  Keep in mind that Smoke and Mirrors are just that!

Once you are in the business, your office manager will probably recommend that you purchase a number of rather expensive sales aids and attend a number of real estate training programs where the featured speaker sells more sales aids.  These aids are great ... they are a fantastic profit for the sales speaker/ trainer.  There is often more money to be made talking about the real estate business than actually doing it.  Phone number capture programs, methods of contacting potential buyers and sellers through their employment offices, special computer programs for tracking and soliciting prospects, post card campaigns, drip systems, marketing systems, repetition marketing,  legally (illegal and unethical)  soliciting listings before they have expired, for sale by owner contact systems and on and on and on.  Your office manager may also recommend that you secure a new vehicle to chauffer your buyers around town.  These activities will accomplish one thing,  you are in debt up to your eyeballs and could find it very necessary to work your tail off to just break even!  You may need to get a part-time job as a greeter at Wal-Mart just to pay for all of the expenses.  As is often the case, there is a better way.  It you want a leg up on the business, check out

Best wishes in your new career!

Lead Generators

Lead Generating companies prey on home buyers and home sellers and then prey on the new and the unsuccessful real estate agents as well as on the new and unsuccessful mortgage representatives for fun and profit – easy profit.  And, they are moving into the home improvement business, the insurance business, the moving business and related sales/lead oriented businesses.  It is anticipated that they will soon move into providing referrals to doctors, lawyers, dentists, and other such providers.

These companies offer ‘benefits’ to naive or just plain stupid  buyers and sellers which, when one considers the competitive nature of the actual real estate business in general, become very questionable. 

They offer ‘benefits’ to buyer agents and seller agents and mortgage representative with potential new business for a fee; a fee that is far more costly than if the agents and representatives sought out potential business on their own.  They seek out lazy agents and failures for their profit model.

People who are uninformed about the real estate and mortgage business in general are most culpable to the lead generating company’s shtick.  The new and the unsuccessful real estate agents as well as the new and the unsuccessful mortgage representatives pay fees to these companies for leads because they are unable (usually too lazy) to generate leads on their own due to many factors, a major factor being the inability or refusal to actually perform the necessary functions of prospecting in the business (a/k/a  lack of direction and ... lazy).  Some experience agents use leads of this type to provide business activity to their licensed and unlicensed assistants and secretarial staff.


Using Lending Tree, purely as an example, customers are generated by television, print advertising and marketing connections with companies such as Costco and AAA.  The Lending Tree real estate agent network (no longer illegally called 'REALTOR' network) consists of agents willing to pay them a 35% referral fee (in other words they are willing to pay 35% of their commission fee to Lending Tree for the successful lead).   They do control the numbers of agents they use in any particular area.  They will return a part of that referral fee as a rebate to the buyer or seller keeping the rest as an EXORBITANT service fee for doing nothing more than collecting and then referring your name.   For example, based upon a recent Lending Tree brochure from Costco, if you sell your home for $450,000, your agent will pay approximately $5,500 to Lending Tree for the referral of your name and Lending Tree will rebate to you approximately $3,400 ... Lending Tree will keep approximately $2,100 as a service fee.  The referral fee is just over 1% of the commission.  Do you think you could convince the agent to reduce his fee by 1.0% thus increasing your 'rebate' from $3,400 to $5,500?  (Or, just use for Reduced Fee Programs.)  It's only your money!  Also, keep in mind that your agent would has to pay such referral fees will work LESS for you than for a client or customer who is paying the full commission fee!   Believe it or don't!   Pigs really don't fly!

Costco uses Lending Tree as a member benefit. 

AAA will give you an up to $1,200 vacation in lieu of the potential fee or rebate.

For Home Equity and Credit Lines, Lending Tree has advertised the following benefits:

You can receive up to 4 offers – you could get them yourself by just dialing your phone.

No closing costs – (often offset by an interest rate increase) - most reputable local sources don’t have closing costs

Get Lines of credit at Prime – (The Bank sets the Prime)  - you can get that on your own also

For New Mortgages and Refinance, Lending Tree has offered the following benefits:

You can receive up to 4 offers – you can get them yourself by just dialing your phone

Save an average of $1,000 on closing cost – compared to what?

No 1% origination fee – reputable companies don’t charge an origination fee anyway

Lending Tree has had complaints as they are always 1 of the 4 offers (they know the other 3 bids).

Other Lead Generating Companies typically advertise through the Internet with ads placed on web sites including,,,, etc. and with SPAM to your e-mail Inbox.

With a very simple ad Do You Want To Know What Your House Is Worth, they get your e-mail address and then broadcast your address to every potential services provider on their lists.  More and more and more Spam! – 30% referral fee for accepted leads – promises cash back to the buyer or seller (charges Realtor 35% for the lead) – (owned by the company that owns Lending Tree) sells all leads to Realtors, mortgage people, movers, home improvement companies, etc. for advance fees – sells all leads for advance fees – sells all leads by zip code for annual advance fees – sells all leads by zip code territories for advance fees whether the lead is valid or not – sells memberships for $39.95 lifetime - sells leads by territory - sells leads by territory and – have referral deals with real estate agents and brokers and mortgage bankers and representatives for money and profit.

There are probably as many lead generating companies either starting up business, in business or going out of business as there are channels on Direct TV.

This is A REALLY BIG BUSINESS!  The consumer complains about the high cost of selling a home and the high costs of securing a mortgage and then takes steps to further INCREASE the cost.  You should ‘let your fingers do the walking’, and then 'you do the talking' to see if you can secure your own list of companies that will give you the best deal out there!


Sellers - Real Estate Listings

Real estate companies and their agents aggressively seek property listings.  Most companies use considerable amounts of institutional advertising (radio, TV, and print ads not advertising specific properties) which is directed toward securing property listings.  Some institutional advertising is directed toward obtaining buyers.  No such advertising attempts to actually or specifically sell any particular property. The seller’s overpriced and obviously excessive commission dollars pay for this advertising.

Listing Presentations and Market Evaluations are quite often not what they seem.  Your initial contacts with real estate agents are usually to view a Listing Presentation and secure a Market Evaluation of your home.  Listing Presentations take every form imaginable from None to a 2-3 hour Song and Dance Routine complete with smoke and mirrors and bells and whistles (don't allow a dog and pony show into your home).  In some cases, a clown suit would be appropriate!  Some agents are so professionally prepared they could or perhaps should sell tickets to their performances.  You must realize that there is often a big difference between performance and practice!  Perhaps the biggest problem is knowing the difference between a Competitive Market Analysis and a Comparative Market Analysis.  You always want a Comparative Market Analysis, many agents only want to give you a Competitive Market Analysis.  The Comparative will tell you what your house is worth based upon comparatives of similar properties in the general area.  A Competitive will tell you how badly the agent wants your property listing ... it compares your house to houses all over the map in an effort to give you a price high enough to secure your listing (often with little relation to the true value).  The Competitive Market Analysis will cost you!

Agent, agent, agent, who is my agent.  It is imperative that you find out if your agent is licensed (in Indiana, every licensed agent is required by law to have a pocket card license at all times). You then need to find out who will handle the listing of your property, who will handle the advertising and the marketing, who will set up the appointments, who will provide showing feedback, who will handle the potential Purchase Agreements, who will handle the monitoring and follow through on the transaction in process and who will attend the closing of the transaction.  If you don't ask, they won't tell.  You may be surprised at the answers.  Someone needs to put an "I" in Team somewhere.  Many 'teams' are nothing more than excuses for inaction, inability and a failure to properly market and sell your home.  If the licensed agent, the "I" in Team, is not performing the functions of a licensed agent with your home, perhaps they are being paid too much for their services.  Please note that there is an 'I' in Professional and there is an 'I" in Business.  Real Estate really is a Professional Business for Experienced Business Professionals!

Does Anybody know anything about anything, at all!  Some just don't have a clue!

Signs, signs, everywhere a sign!  The true and most visible measure of an honest, law-abiding real estate agent is his or her use of signs.  Communities have laws regarding real estate signs. Nearly all communities allow a For Sale sign on the street sides of a property.  Most condominium communities only allow a sign on the inside of one window.  Most communities outlaw directional signs on street corners except during specific periods for the purpose of Open Houses.  The Metropolitan Indianapolis Board of Realtors sells these illegal directional signs.  Dishonest agents ignore the sign laws about the same as they ignore speed limit signs in school zones (I hope they don't run over my grandchild).  Occasionally, these agents do receive fines from the enforcement agencies ... just not often enough!  One should not ever do business with a dishonest agent.

Real estate business models have changed dramatically over the last several years.  Many models are now based on so-called ‘one stop shopping’ with each stop or step designed to increase the profitability of the real estate company.  Many of these 'one stop shopping' companies violate Federal RESPA laws.  In the past, companies were pretty much standing alone as independent or franchised businesses, offering and excelling in one service, that being real estate marketing and sales.  Some have now added title companies, mortgage companies, appraisal companies, inspection companies, insurance companies, home repair companies and even furniture companies to the mix.  In the past, every individual business competed against every other business in the specific field.  Not any more!  The checks and balances of the business are gone!  Profits are increasing, at your expense!  Ethics problems and subsequent violations of RESPA laws have contributed considerably to the sub-prime mortgage scandal ... surprise! surprise!

In many cases, ‘one stop shopping’ costs the uninformed consumer resulting from non-competitive pricing for services. Some companies own or have a financial interests in the companies that provide every service along the way.  The real estate company, the mortgage company, the appraisal company, the inspection company, the title company, the insurance company and even the surveyor may be owned or be a part of a financial association conglomerate.  No competition!  In general, the use of ‘one stop shopping’ will cost you money! 

You probably have checked out new construction.  Some builders now own the construction company, the appraisal company, the real estate company, the mortgage company, the insurance company and the title company.  The novice new home buyer doesn’t think twice about the deal.  They don’t question whether another appraisal company would reach the same appraised value, they don’t question whether another mortgage company would make the same loan, and they don’t even know what a title company is.  They don't question that many guaranteed sale programs result in a higher purchase price on the new home and considerably more costs on the sale of the existing home.  They just move blindly forward.  They just don’t think!  They don’t think that it might be of benefit to have an experienced independent real estate agent working for them.  And they don’t even think enough about the deal to hire a reputable home inspector to make sure they are getting a properly constructed new home!  When it comes time to sell that home, they always fail to deduct the cost of financing and closing costs from the purchase price to determine the actual purchase price.  Some even add on the costs of the 'free' basement or free fireplace or other free upgrades.  NOTHING is or was ever FREE.  Every cost was built into the price the buyer paid for the home.  It takes, on average, 5-7 years to break even and 7-9 years to appreciate enough to actually realize a small profit after expenses of sale on new construction.   If foreclosures begin to appear in the neighborhood, appreciation could actually STOP or even fall into NEGATIVE territory.  It was your money, and you did it your way!  We hope you are happy!!  Are you a member of the Sub-Prime Victims Club ... sorry, you did not call us.  Visit today.

The BIG Real Estate Company says that ‘discount brokers’ are bad, yet most discount their fees a bit and definitely discount their services a lot.  The major question really is, considering that real estate fees are always negotiable, who is right?  Is the so-called discount broker right and the other companies just exorbitant in charging whatever they can get away with?  Perhaps!  You need to understand what the real estate company will do for you, what they will actually charge you to do the job and then demand it in writing in the Listing Contract!  Many agents and companies will not ever put their promises and conversations in writing.

Real Estate companies promote Virtual Tours.  Some provide the Tour free of charge, others charge for it in advance.  Virtual Tours are very nice and show considerable detail of the interior and exterior of your house.  Prospective purchasers and burglars alike view these Tours!  The benefit to prospective purchasers is questionable.  The benefit to prospective burglars is not.

There are companies that List and Sell houses, companies that only List houses, and companies that only Sell houses.  There are companies that do not List or Sell, they just advertise the property for you.  There are companies that provide “full service”, modified levels of service, no service and “reverse service” where you do all the work and they get paid well for your efforts.  There are companies that charge very high commissions, moderate commissions, blended commissions and no commissions.  There are companies that charge commissions and fees.  There are companies that just charge fees.  There are companies that make a lot of promises and fail to put anything in writing.  And then there are Lead Generating companies that do little or nothing and cause your costs to increase without your knowledge.  How do you decide what to do and where to go from here?  There are companies that violate Indiana Law everyday!  Use your brain, THINK!  THINK ABOUT WHAT YOU ARE DOING ... THINK ABOUT HOW CHEAP IS CHEAP ... THINK ABOUT WHAT IT WILL COST YOU IN THE LONG RUN!  THINK!  THINK!  THINK!  It Is Your Money!  Poof!  Wrong Decision!  Now It Is Gone!

We have real estate agents moving into the property management business to provide much needed services to their clients and customers.  Others are like vultures on road kill.  Some just couldn't make it in the marketing and selling side.  Some are just looking for a quick buck.  There are scams everywhere.  Owners just don't make the call ... it's easy ... the BBB can save a lot of headaches and lawsuits too.

Full Service, Full Commission:  This is rather self-explanatory.  This type of company typically states that they provide full real estate services and will seldom discuss the commission (unless you ask).  They elaborate quite extensively on how great they are, how big they are and what they are going to do for you, but very few will actually put their specific services in writing.  Some offer extra benefits, discounts on services and/or “freebies”, trying to offset complaints and commentaries about their full service commission fees.  (They typically make additional profit from the referral fees that they secure from the contractors who actually provide the extra benefits and discounts on services).  These companies represent the old line type of real estate company.  Today, they are dominant in the industry.

Modified Service, Modified Commission:  This type of company typically states that they provide full real estate services.  The initial approach is much like that of the Full Service, Full Commission company as described above.  They will typically describe a full service scenario and then initiate a negotiation phase where they agree to provide their services for a (pre-planned) reduced commission fee to secure your agreement to list your property …often a good portion of those services that they described in the initial presentation are reduced or eliminated as the commission fee is reduced.  (Some folks call this practice Bait and Switch).  This type of company should be more up front in specifically what they will do for you and what commission structure they will use.  After considerable verbalizing, they, too, seldom put it in writing.  You will find out later that certain services just are not included with the commission fee plan that you negotiated.  You must get it in writing.

Hybrid Services, Blended Commission/Fee:  This type of company appears to be the ‘new breed’.  They have been around in the market place for some time now and are continually tuning their services (usually using variations of a Menu of Services).  Advance fees for initial services are becoming commonplace.  Commissions are being adjusted or reduced based upon the amount of service you feel that you will need.  The reduced commission fee allows the seller more room for negotiation in the selling price and often shortens marketing time.  These companies operate with smaller, well trained agent staffs.  They are growing rapidly in significance throughout the country.  Most companies of this type really don’t want to waste time and effort to work with anyone who is not really sincere in selling the property … the advance fee usually limits those people and causes them to seek out other companies.  Visit for the best example we can offer.  Some of the Modified Service, Modified Commission agents are attempting to appear like a Hybrid company … check them out fully before proceeding.    

Some Service, Flat Fee:   This type of company typically states that they can provide full real estate services but "will sell your house for a flat fee".  They use the Flat Fee promotion to get into your house and to list your house ... usually as a For Sale By Owner.  Watch Out For the Mail Order Real Estate Company.  If it doesn't sell within a short time, they then make frequent contacts to convince you that you really need to modify your contract to shift your marketing into the BLC/MLS System (some folks call this practice Bait and Switch).  Some companies just add on the co-brokerage fee and put the property into the BLC/MLS System.  Some companies eliminate the Flat Fee portion of the program and use a commission based program.  This type of company should be very up front in specifically what they will do for you and what commission structure they will use.  After considerable verbalizing, they, too, seldom put it in writing.  You must get it in writing.

No Service, Flat Fee:  This type of company is always quite interesting.  Some secure prospects using illegal unlicensed personnel and illegal telemarketers.  Very little service description and/or very little, if any, service at all other than a yard sign and a fax number to fax all of the offers you are going to send to them for their broker to review.  We underline all because these companies infer that by using their services (?) you will get multiple offers and you can just pick and choose the best one, rather than counter a specific proposal.  Most Sellers, if they get an offer at all, get only one and perhaps two offers before being able to negotiate a mutually acceptable offer.  Sometimes, they will provide a web site address that will advertise your property (if the prospective buyer can find it).  They, too, seldom put it in writing.  Check to make sure that their ‘agents’ are actually agents licensed by the State.  Many are not agents at all; always ask to see their pocket license card.  Some of these companies do not have Buyer Agents and as such, cannot legally advise or represent buyers.  Personally, we recommend that you deal with companies that offer seller agency, buyer agency and limited agency (see below).  

Flat Fee for MLS Insertion – MLS Only:  A unique offering with growing success.  This basic program is often an initial service offered by an experienced Real Estate Consultant.  Additional services may be added on for additional cost, of course.  The real key in this service relates to Broker functions, duties and performance relative to the laws of the State Real Estate Commission. The listing agent handles offers as with any other type of full service listing.   Add on services can further provide assistance as needed to the Seller.  Watch out for unqualified and ill-equipped agents trying to offer this service.  If the Seller must work directly with the Buyer Agent, the Listing IS NOT PERMITTED IN or A good, well qualified Broker will offer listing services pursuant to the laws of the State Real Estate Commission ... see  

Flat Fee for MLS Insertion – MLS Only - The Down Side:  A very unique offering with growing success among a clientele who just doesn't have a clue about the real estate business, the state real estate licensing law as well as general business practices and ethics.  This basic program is all that the provider is apparently capable of providing.  The real key in this (lack of) service relates to the Broker functions, duties and performance that the provider is not providing and, in effect, is trying to impose upon the Buyer Agent..  Ask yourself, if you were a real estate agent and were showing homes to your prospective buyer, would you show a home where there was really no qualified agent to handle the seller’s side … meaning that you would, in effect, handle both sides for the same buyer agent fee which, in itself, is often reduced.  Watch out for unqualified and ill-equipped agents offering this service ... these listings are not permitted in or   A good, well qualified Buyer Agent should not and typically will not handle the seller side of the transaction without getting paid for that service.  The Buyer Agent should have developed a payment structure form that will accompany the offer to purchase to the Seller stating in advance the additional dollar fee to the Buyer Agent for providing the service to the Seller.

Internet Advertising, No Service, Flat Fee This type of company seems to be gaining apparent acceptance into the market place because they offer what appears to be a valuable service for very little expenditure; however, the results are questionable.  Remember the 'Yugo' ... lots of folks spent lots of money for absolutely nothing of benefit.  Many people can’t find the typical web site (how many contacts would you get if you put a flyer on the back of your bathroom door).  Some, realizing that they cannot fulfill the full spectrum of services required to actually process and close the transaction for sale, establish a connection with a local agent to handle all of the offers that you will receive including the technical questions and processing and closing requirements (for an extra fee of course).  Suddenly, a commission fee appears and the flat fee increases disproportionately.  More often, they are establishing a relationship with an agent would will put the property into the MLS similar to the Flat Fee For Insertion model discussed above.  Often, the Flat Fee MLS model is a violation of the law as well as the rules and regulations of the BLC/MLS System.  One method of checking on the activities of this type of company is to make contact with random sellers showing on the web site to find out when they actually put their property on the web site and ask if they ever actually sold their property and would they use the service again.  Ask if they have since listed the property with another company and why the property is still showing on the previous web site.  And finally, ask if they are still on the market for sale or have they taken the property off the market.  Another method of checking on the activities of this type of company is to make contact with the local Board of Realtors and several member Brokers.

Exclusive Right To Sell versus Exclusive Agency models are quite different.  Exclusive Right to Sell gives the brokerage that you have contractually agreed to work for you to market and sell your property  for a particular commission and/or fee and to pay a particular commission fee to a co-broker who provides the buyer for your property.  Exclusive Agency allows you to contact the prospective Buyer directly after a Real Estate Agent has taken the time and the effort to show your home in the course of their business  and then approach the Buyer with the deal of a lifetime ... buy from me direct and there is no commission.  Honesty or Dishonesty becomes a very important question!  It is the opinion of the writer that abuse of Exclusive Agency will lead to legal action ... can a Seller win a criminal prosecution for FRAUD!

Whatever you decide to do, you should be able to secure a written agreement from any reputable agent and their company that you agree to hire to do precisely what they say will do for you in writing and at least do the following:

As the provider of listing services for your home, your agent should agree to …

Use the correct address number

Use the correct address name

Use the correct spelling of the address name

Provide the correct map co-ordinates to facilitate locating your home by prospects and/or agents

Provide proper directions to facilitate locating your home by prospects and/or agents

Provide the correct legal description from your township assessor

Provide the correct real estate tax information from your township assessor

Provide the correct square footage from your township assessor

Provide the correct the number of rooms

Provide the correct number of bedrooms

Provide the correct number of baths

Provide the correct room size measurements – no guesses

Provide the correct heating and cooling system descriptions

Provide the correct water, sewer and cable system descriptions

Provide the correct school system information                                                          

Place the property in the correct MLS Area when authorized and verify that the information is correct

Insure that quality pictures are taken and displayed in the property listing

Develop an appropriate property description for marketing … limited, incomplete and misleading descriptions defeat attempts at marketing your property

(You may think that the above information is a JOKE, but it is actually a list of individual problems identified by reviewing a number of listings on the Metropolitan Indianapolis Board of Realtors BLC/MLS System ... no wonder some houses just don't ever sell!)

You must get a Guarantee that the office manager personally will review each property listing to insure correctness of the detail.  Correct information will enhance the marketing of your property.  Incorrect information may well prevent the sale of your property.

And, the agent should agree to  …

Present the appropriate and true market information (comparative versus competitive market analysis) to allow you to determine the best marketing price for your home (and keep you up to date regarding new listings and solds throughout the term of your contract).

Not bid up the listing price recommendation just to get the listing of the property

Not use poor quality or poorly designed signage to market your property

Not use unlicensed ‘agents’, secretaries or other such personnel to market or show your property.

One might also question advertising practices.  The law requires that the company name and contact number be in every ad, without question.  Some agents advertise only their personal phone number, others a phone number and a first name … are they embarrassed about your property or perhaps the company that they work for or perhaps they feel it somehow advantageous to just violate the law.  What is the benefit of dealing with a dishonest real estate agent?

Builders advertising practices are not regulated so they can do anything they want because their people are employees and not agents.  They do run blind ads, phone number ads, phone number and first name ads, etc.  They feel they have something to gain by not telling the prospect who they are … who knows, maybe they do!

A Lease-option to Purchase offers some pitfalls and pratfalls and some winners too!  Most real estate agents don't encourage lease-options because often only a part of the commission is paid up-front, with the balance being paid when the option is exercised if it is exercised months or years later.

What is a lease-option anyway?  A lease with option to purchase is a real estate sales and finance method. It is a lease for a fixed term such as 12 or 24 months, sometimes longer, with an option for the tenant to buy the home at an agreed option price.

The lease-option owner-seller is obligated to sell at the option price but the tenant-buyer is not obligated to buy. However, when a lease-purchase is used, the buyer is obligated to purchase at the end of the rental period.

A unique lease-option and lease-purchase feature is the rent credit.  The tenant usually pays top rent for the residence. But a portion is credited toward the purchase price if the buyer decides to exercise the purchase option.

For example, on an example lease-option, the house rents for $1,500 per month with a 33 percent, $500 monthly rent credit when the option is exercised. If the tenant elects not to purchase, the rent credit is lost. Needless to say, the rent credit loss is a very strong Incentive for the tenant to buy.

The primary lease-option advantages for home sellers include:

Whether a local home sale market is weak or strong, there are always more potential lease-option buyers than sellers. A lease-option usually solves a home seller's problem of getting enough monthly income to pay the mortgage payment and other expenses. Also, the seller receives the tenant-buyer's nonrefundable option money, typically several thousand dollars.

Lease-option home buyers are usually acceptable to a top dollar option price for the house. This option price is usually the home's market value at the time of entering into the lease-option.

If the market value goes up during the lease-option term, the buyer will benefit. If market value drops, the tenant often exercises the option because of the rent credit feature.

Lease-option tenants usually take excellent care of the home because they plan someday to own it.

As a lease-option landlord, one will find that tenants will pay 10 to 20 percent higher than market rent. Typically, the tenant considers the monthly rent to be a bargain (i.e. $1,000 plus $500 in a rent credit "down payment forced savings account”).  The lease-option landlord will view that as $1,500 monthly rental income!

During the lease-option term, the seller enjoys tax deductions for the mortgage interest, property taxes and depreciation. If a tenant complains about the lack of tax benefits, a reminder of the rent credit benefits usually more than compensates.

Proceeding from a Purchase Agreement through to the Closing can be very smooth or very bumpy.  The Seller usually selects the Title Company and the Title Company should review and control the transaction through the various stages all the way through the actual Closing.  Your agent or consultant should and you may want to establish a personal contact at the Title Company to talk to the contact frequently to insure that the steps of the transaction are proceeding properly.  Concerns are prompt issuance of the title work and resolving of any problems that may be therein, the survey and identification of any problems that may exist, the Seller’s first and second mortgage company payoffs, your mortgage company processing, and the merging of the necessary data into the final form for the Closing.  Watch out for a company that assigns this extremely important function to an internal secretary or out sources it to someone else.

Watch out for the BLC/MLS Service Fee.  This is an undisclosed fee charged by some real estate companies to physically enter the Seller’s property information into the real estate agent’s MLS Service.  These exorbitant fees range from $395.00 to $695.00 and are often charged by the real estate company to the agent who then attempts to charge it to the Seller.  You should REFUSE to pay it ... you have no legal obligation to pay it!

Watch out for the Transaction Processing Fee.  This is a fee charged by some real estate companies to the Seller for the processing of the closing of the sale through the real estate agent’s office.  These fees also range between $395.00 and $695.00 and often magically appear on the Closing Statement at the Closing without disclosure or comment.  Some Real Estate Brokerages add this type of junk fee to the Seller which is potentially a violation of RESPA (Federal Real Estate Settlement Procedures Act) .  You do not have to pay any undisclosed fees … just walk away from the transaction.  The Brokerage or Agent will typically waive the fee under pressure. 

When your property sale closes, ask your agent to send you a copy of the Closed Sale print-out from the BLC/MLS System.  You should insure that the detail was posted properly.  Some agents will post the days on the market incorrectly.  Some agents will post the selling price incorrectly.  Some agents will just not post any closing costs that you actually paid on behalf of the buyer.  Some agents will post your listing from Pending Status to Withdrawn Status rather than post the actual selling price.  Some agents will even withdraw your property from the System the day of the excepted offer, put it back in as a new listing, wait two days, post it as pending and then advertise that they sold your property in TWO days!  These violations of the BLC/MLS System Rules and Regulations are often done to distort the agent's true track record in an effort to enhance potential marketing of their services in the future.

And if it doesn't sell,  your agent will most likely want to renew the listing for another term .  If you are satisfied with the services, you should do so.  If you are not, you should definitely seek proposals from other agents before making your decision.  You should keep a wary eye on your agent if your Listing Contract Expiration Date in the BLC/MLS System mysteriously changes to a future date without your authorization.  You should also keep a wary eye on your agent if your Listing Contact is Withdrawn in the BLC/MLS System without your knowledge.  Both of these events are illegal and are violations of Indiana Law.  Both actions are used to prevent other agents from knowing that your Listing Contract has expired.  Both of these events occur more that they should.  Watch out for these Bad Apples ... they give the business a bad name!

A Listing or Buying Agent that does not appear for a Closing is violating Indiana Law and should be prosecuted accordingly!


Buyers - Real Estate Sales

Real estate agents like to be Buyer Agents, but most don’t consider the legal liability they are assuming.  A Buyer Agent may well need to know more about the house you are considering than the Listing Agent.  People select a Buyer Agent because they are experienced and knowledgeable in the real estate business or a least they think they are.  They also select them because they they answered the phone, they are the best friend of their son or daughter, they were sitting in an Open House watching TV, they look nice, they have a nice car or some other very important criteria.  Whatever, it is important that you request to see the actual License of the Buyer Agent to insure that that agent really is an agent and not just an unlicensed assistant or an agent's secretary.  Relying on the Seller Disclosure forms may just not be enough to protect your interests.  All should recommend a Home Inspection without question.

Determining Where You Want To Live is an individual selection or desire based upon many things including school systems and locations, job locations, shopping center locations, subdivision locations, locations of friends and relatives, etc.

Check out the EPA at  Insert a Zip Code and get a list of the areas of pollution, hazardous waste sites, and other regulatory information for the area.

School System Information can be obtained by calling or visiting individual schools for the desired information or you may contact a real estate consultant for published written reports on specific school systems.  You can even search for a listing on and scroll down to often provided school system information.

Crime Watch Information can be obtained by contacting the local police departments either by phone or in person.

Subdivision Amenities are pretty self-explanatory when you make face-to-face contact with persons presently living in subdivisions of interest to you.  The information provided by the BLC/MLS Listing Sheet is often incorrect and often leaves a lot to be desired.  Visit selected home owners in the early evening before dark or on a weekend early afternoon when they are home.  Have a written list of questions to present. Many subdivisions offer pools, clubhouses, tennis courts, playgrounds, walking trails, green spaces, common garden areas and golf course lots.  Many agents don’t take the time to find out what is offered.

Home Owner Associations and Dues are a very important consideration.  Talk to home owners to determine their feelings toward their HOA and the amount of the mandatory dues.  Question what you will get for your money.  Inquire as to how well the association handles the enforcement of the rules and regulations.  Failure to enforce those rules and regulations can result in invalidation in a Court of Law.  Inquire as to how well the association handles and supervises subdivision maintenance.  Keep in mind that some HOA’s are very strict, others are a total waste of everyone’s time … but all collect your money quite handily.  And the fees always tend to grow upwards without much explanation.  Make sure that you know the amount of the fee.  By talking with owners in the subdivision, you can determine what they think of the current fee, when it last increased and any potential increase in the offing.

Selecting properties to view can be easy and can be difficult.  Use the newspaper ads as well as your local Board of Realtors web site to select the properties that may be of interest to you.  Avoid properties advertised without providing addresses or prices or bedrooms unless you have a lot of time on your hands.  Real Estate Agents and Owners who are serious about advertising will provide the price range, address and bedrooms and who to contact.  Make your contacts with the owners or respective real estate companies or select a specific real estate company or real estate consultant to show the properties to you.  Avoid agents will show you only the listings that they want to ‘sell’ to you without showing the other available properties.

Days on the Market is a very important criteria in the minds of many buyers.  This number is often misrepresented.  Ask your agent to check the property's history or archive to see how many times it was listed and re-listed to determine the actual number of days on the market.  Your agent should volunteer this information without asking.  There are two Days On The Market SCAMs  that are practiced by several of the larger real estate companies.  About 5 days before the long term listing contract expires, they change the expiration date to that date, then, just before the listing would have truly expired, they re-list it as a New Listing.  Or, they Release a listing on the expiration date and then re-list it the next day.  These activities reset the Days On The Market calculation, thus scamming you.  The local Board of Realtors attempted to control the previous practice of just withdrawing and re-listing a property to reset the DOM calculation, but scandalous agents always find a way to defraud the public.  Have your agent check out the MLS Archive for the true record.

A Lease-option to Purchase offers some pitfalls and pratfalls and some winners too!  Most real estate agents don't encourage lease-options because often only a part of the commission is paid up-front, with the balance being paid when the option is exercised if it is exercised months or years later.

What is a lease-option anyway?  A lease with option to purchase is a real estate sales and finance method. It is a lease for a fixed term such as 12 or 24 months, sometimes longer, with an option for the tenant to buy the home at an agreed option price.

The lease-option owner-seller is obligated to sell at the option price but the tenant-buyer is not obligated to buy. However, when a lease-purchase is used, the buyer is obligated to purchase at the end of the rental period.

A unique lease-option and lease-purchase feature is the rent credit.  The tenant usually pays top rent for the residence. But a portion is credited toward the purchase price if the buyer decides to exercise the purchase option.

For example, on an example lease-option, the house rents for $1,500 per month with a 33 percent, $500 monthly rent credit when the option is exercised. If the tenant elects not to purchase, the rent credit is lost. Needless to say, the rent credit loss is a very strong Incentive for the tenant to buy.

Few lease-options are advertised. Most real estate agents don't encourage lease-options because only often only a part of the commission is paid up-front, with the balance being paid when the option is exercised. The result is a lease-option shortage, with more buyers than sellers. However, smart real estate agents may realize a lease-option is better than no sale at all.

To create lease-option opportunities, smart home buyers run "house wanted" classified ads such as "Executive needs 3 BR. 2 BA home on two year lease-option. Call Ken at 555-5555." You won't get many phone calls, but all you need is one or two.

Another technique is to check the "houses for rent" classified ads. After inspecting a suitable house, offer to lease it with an option to buy. Most landlords find it hard to resist a tenant's tempting offer of nonrefundable option money instead of a security deposit.

Advantages for buyers include little up-front cash required.  Compared to a home down payment, the lease-option up-front cash required is usually very small and in the 5% range.  For example, one can typically run a newspaper ad headlined "$5,000 MOVES YOU IN." The $5,000 is allocated to the first month's rent plus the nonrefundable option consideration. This is usually far less cash than is required to buy a home.

Rent credit builds a down payment.  The higher the rent credit percentage, the greater the probability the tenant will exercise the purchase option. A low 10 percent rent credit is not much of an incentive to buy. Highly motivated home sellers offer 50 or even 100 percent rent credits to practically assure a sale.

Try before buying. A special benefit is that tenants can try the home before buying. If it isn't a home they want to own, they won't exercise the option and the landlord benefits from the forfeited nonrefundable option money and lost rent credit.

The tenant can control property with little cash. If the property goes up in market value during the rental term, the tenants leverage their investment.

Although lease-option buyers don't enjoy any tax deductions, their monthly rent credit earned toward the purchase price is usually far more beneficial.

Lease-options offer benefits and solve problems for both home buyers and sellers. Lease-options can also be used with other types of properties.  Get more information from your real estate agent or consultant.

Preparing The Offer To Purchase is an extremely important and legally binding function.  It should be handled as such.  Don’t forget to include a pre-closing walk-through in the agreement.  You should use an attorney, a real estate agent or a real estate consultant for this function.  You WILL have problems if you attempt to handle this very important legal step on your own.

Proceeding from the Purchase Agreement through to the Closing can be very smooth or very bumpy.  The Seller usually selects the Title Company.  The Title Company should review and control the transaction through the various stages all the way through the actual Closing.  Your agent or consultant should and you may want to establish a personal contact at the Title Company to talk to the contact frequently to insure that the steps of the transaction are proceeding properly.  Concerns are prompt issuance of the title work and resolving of any problems that may be therein, the survey and identification of any problems that may exist, the Seller’s mortgage company(s) payoffs, your mortgage company processing, and the merging of the necessary data into the final form for the Closing. 

Watch out for a company that assigns this extremely important function to an office secretary or out sources it to someone else.

A real estate consultant can be of considerable service to you.

Tricks and Traps

Call 1-800-xxx-xxxx for this report on information or this house or whatever and your name and phone number are captured automatically.  No one discloses that you cannot block to an 800, 888, 877 or 867 number.  They ‘gotcha’!

Calling local numbers can also capture and store your number in a real estate, mortgage, insurance or moving company’s computer database for the company’s future use.  This is also not ever disclosed.

Federal Investigators are looking into controversial real estate sale closings after being hit with numerous complaints.  What they are finding should disturb home buyers nationwide.  The big problem is kickback schemes involving real estate brokers, mortgage companies, home builders and title insurance companies.  Apparently the participants set up a shell corporation to handle business referrals from each other ... service fees are then inflated and the parties then split the profits.  To avoid such schemes, one must make sure that all settlement costs are disclosed.  HUD requires that all such costs be disclosed at least one business day before the home buyer closes on the purchase.  Watch for new, undisclosed fees that suddenly appear and low-balled fees that are boosted at the closing table.  Watch for up-charges and markups:  Lenders and agents are prohibited from charging more for appraisals, credit reports and other services unless they can justify higher fees for individual services before the sale is completed.  The only way to avoid being ripped off in these types of swindles is to ask for guaranteed closing fees up front in writing.  When in doubt, talk to a real estate attorney.

The Investor Scam - Buyers Beware

Real estate Investment Clubs can be a benefit or a disaster to the Investor Buyer.  Sometimes, it is difficult to determine what is right and what is wrong with certain opportunities.  Surprisingly, many people just do not check out what they are doing until it is far too late! 

The Scammer sets up an Investment Club or Investment School as a brick and mortar or online or both enterprise.  They often offer opportunities in other 'potentially more profitable' cities than where the investor lives.  They then develop a network of real estate agents, a title company, a mortgage company, a remodeling company and a management company in most or all of which they have a financial interest.  They buy houses in foreclosure, rehabbed houses that won't sell, 'we buy houses' properties and the like.  Some will buy new home pre-construction properties.  The Scammer is able to convince the Investor of the fantastic opportunity and go in for the kill.  Some investors plow their own cash into the deal, some borrow on their homes to get cash, some cash in their savings and mutual fund accounts.  Most investors lose a greater part or all of their investments and just walk away rather than seek recourse.  Some 'hang in there' for a long period of time, chasing more good money after the bad, hoping and hoping that the market will turnaround' without realizing that they were scammed. 


My company offers an Investment Package to local and out of town investors seeking a way to invest in the real estate industry for fun and profit.  We will assist the Investor in locating good investments and then carry through with the steps involved to inspect it, arrange a mortgage as needed, arrange for title work and attend the closing.  We can then arrange for independent people to remodel and improve as needed.  We then provide a property management service to lease and manage the property.  We ultimately list and sell the property.  We have absolutely no financial interest, overt or covert, in the ancillary services companies.


Call your local Board of Realtors, call the BBB, call the County Tax Assessor before you make a mistake that causes your 'opportunity' to actually become the 'opportunity' for the scammer.


The Mortgage Meltdown ... Click here for the who, what, when, where and why.

Mortgage Fraud ... It still continues on ... and on and on!

"Remember Your Mortgage Company" should go down in history along with "Remember the Alamo". 

Have you paid your first mortgage (and your second mortgage, if you have one) payments promptly and on time since the inception of your loan(s)?  Do you have "better than agreed" car loans and credit cards? 

Did your credit card companies reduce your available credit limits or close your accounts without notice? Don't feel like the Lone Ranger!  Lot's of folks with excellent credit GOT SHAFTED by their "friends" in the financial world. 

Has your mortgage company dropped new loan rates considerably?  Can you NOT REFINANCE because your CREDIT SCORE dropped as a result of the shaft described above?  And, they don't really care about your credit and payment history with them.  OR, did you lose a Refinancing Opportunity because the value of your house has dropped below what THEY consider acceptable?  Now, THEY are holding a HIGH RATE MORTGAGE on a LOW VALUE PROPERTY ... which they could easily resolve a portion of the issue BUT WILL NOT!  Will they not talk to you about a Loan Modification?  What can you do now?

Eight Tips to Getting Your Loan Modification Application Reviewed

For the most part, absolutely nothing ... EXCEPT ... Remember Your Mortgage Company and your Credit Card companies.  Don't get mad, get even!  Tell your friends and associates to avoid those blundering fools.  In many cases, these financial wizards participated in what became the Mortgage Meltdown by making loans that should not ever have been made, lost a lot of money, received great bonuses, and are now wanting YOU to pay for THEIR MISTAKES and boost their bottom line profits again.

For the moment, you are STUCK!  In a few years, when things settle out a bit, you should make every effort to refinance with some other mortgage provider.  Ask your friends and associates for recommendations. 

What About Mortgage Providers

How many mortgage providers are there in your marketplace compared to how many there were last year?  How many are owned by real estate companies?  How many are owned by builders?  How many are owned by Banks and Credit Unions?  How many are really independent?  How many have you checked through the Better Business Bureau?  How many have you talked with to determine the differences in interest rate, closing costs and fees to the Buyer and also those to the Seller.  Some providers make presentations that look like apples to oranges or walnuts making it quite difficult to come up with true comparisons.  How many mortgage programs can your selected provider present to you?  What are the differences in interest rate, closing costs and fees to the Seller?  Did you get a Truth in Lending statement outlining everything when you made mortgage application?  Are you Pre-Qualified, Pre-Approved, 'In My Opinioned', or Approved Subject to Appraisal … the first three are pretty much a waste of your time and really benefit no one other than the mortgage provider who is thinking that you won’t switch mortgage companies once you have received an unbinding letter indicating basically nothing.  Will the mortgage provider perform to meet the purchase agreement that you have negotiated with the Seller to acceptance?  What happens if the Seller refuses to pay the undisclosed fees imposed by your mortgage provider on them … no closing or a delayed closing while a new purchase price is negotiated … you may even lose the house over the problem.  What happens if the fees quoted by your mortgage provider were way too low?  Now what?  Will they loan you more money to cover the fraudulent fees so you can close the transaction and take possession of your new house?  Perhaps!

Was your mortgage provider one of the over 100,000 who lost their jobs due to their participation in or because of the sub-prime mortgage scandal?

Securing a Mortgage Company can save you money, cost you money or even cost you the potential purchase of the property that you wish to own.  There are many mortgage companies to pick from.  Some are excellent, some are good, some are fair and some are quite poor in what they do … but most all make a rather hefty profit (from you).  Keep in mind that you must consider more than just interest rate when considering which loan package to accept.  Some companies offer rates that are too good to be true … and they are.  They will put so many charges on your closing statement at the last minute at the closing that you will wish you had never heard of that company.  And watch out, too, for companies that offer to finance all of your costs (both in new purchase loans and re-finance loans).  You may not notice the excessive amounts of those costs until it’s too late because they were built into your new loan amount. 

People spend more time buying a car than securing a mortgage loan.  You should consider interviewing at least three companies and literally demand a Good Faith Estimate (list) of the fees that they will charge you as well as a time table for processing your mortgage through until the actual closing.  Compare the fees between the mortgage companies … question the differences. 

Also, keep in mind that mortgage companies are not, by law, allowed to collect illegal kickbacks and unearned fees.  HUD has stated that builders, lenders, mortgage companies and title companies CANNOT mark up third-party charges such as appraisals, settlement fees, credit reports, flood certifications, pest inspections, postage and courier costs, surveys, title work and title insurance.  Does this really mean anything?  Take A Guess!

The Real Estate Settlement Procedures Act (RESPA) prohibits payment of any fee, kickback or thing of value for the referral of Real Estate business.  Enforcement is another issue.

One Stop Shopping in the mortgage business is becoming more acceptable; however, the following conditions should always be met:

(1) All of the savings in the negotiated prices by the actual provider should be passed along to the consumer with no management, administration or other costs added.

(2) The consumer should be free to opt out of any component of the bundle, with no penalty or loss of benefits suffered.

(3) The bundle should be transportable from one investor to another.  This would include the credit report, appraisal, survey, pest inspection, etc.  It would then not be necessary for the consumer to start all over again if the consumer decided to move on to another provider.

(4) The RESPA 'kick-back' provision including the referral fee prohibition must apply to bundled services.  Kickbacks and referral fee payments should remain illegal between the participants in the bundling of services.

(5) The Good Faith Estimate must compare exactly with the Closing Statement to allow the consumer to compare exactly with the Good Faith Estimate provided by their choices of mortgage providers.

You should also get a list of the fees that the mortgage company plans to charge to the seller … the seller may refuse to close if those fees are exorbitant.  Check those fees for reasonability.  We advise that you require the mortgage company provide a list of those fees to the Seller by certified mail at the time you make mortgage application.

Watch out for JUNK FEES!  They can be added on by the mortgage lender at the last minute to the Buyer, the Seller or both.  Some of these fees are unearned in some respect, or duplicative of other fees (with just another name), or simply not justified by the service provided.  These fees are subject to the Federal Real Estate Settlement Procedures Act (RESPA).  

Other RESPA violations include failure of the mortgage person to give you a Good Faith Estimate and the RESPA Information Booklet “Buying A Home” either at the time you make mortgage application or within 3 days thereafter.

Real Estate companies, Builders, Mortgage companies, Title companies, Appraisal companies, all must disclose any ownership between them in writing in advance or they are violating RESPA.  You do not have to deal with their various divisions.  We recommend getting price quotes from various providers.

You should talk with a real estate consultant for advice and recommendations about how to secure a reputable mortgage company.  You may order a Mortgage Guide from the Consumer Information Center at 1-888-878-3256.  You may also order a Homebuyer’s Mortgage Kit from



Appraisers have a dilemma.  If they appraise too many properties too low to meet the desires of the mortgage provider, they won’t be hired anymore.  If they appraise too high, who cares … the appraisal figure seldom ever exceeds the Purchase Price of the property (they often require that the purchase price is disclosed to them prior to making the appraisal).  Many appraisers are always in training requiring a superior to sign off on their work.  Which appraiser did you get?  Did you ask for the name and qualifications of the individual?  Guess who is paying for the appraisal … the very same person who has the absolute right to know the qualifications of the individual doing the appraisal.  You also have a right to demand a copy of that appraisal.  When buying new construction, forget asking the name of the appraiser working for the mortgage company working for the builder … that property will appraise … period.  In August, 2004, HUD implemented a new regulation making the appraiser subject to the mortgage company’s responsibility ... it was never enforced.  Finally, the pendulum is swinging toward the consumer, at least a little.  You need to add an honest, experienced real estate agent to the mix.

Watch out for the Appraisal JUNK FEE!  Typical full appraisals cost between $375 and $475 for a first mortgage loan.  More and more appraisals are not FULL APPRAISALS.  Exterior only appraisals and Drive by or Windshield appraisals cost considerably less … some mortgage companies will charge the full price and pay the appraiser between $50 and $100 for the task.

The biggest problem we have now is that mortgage providers are using Low Bidder Appraisal companies from other areas to appraise properties in your neighborhood.  These folks are unqualified in the writer's opinion and will always appraise low thereby killing your deal or requiring the buyer to make up the difference between purchase price and appraisal price with cash that most don't have.  They will often include foreclosures in valuations thereby making YOU pay for a neighbor's misfortune ... and the all-knowing and soon to be all-controlling FEDERAL government is mute regarding the problem.  AND, if you complain about the low appraisal, the mortgage providers will ask the failure appraiser's boss to 'review' his work ... Whoopee!  Little good that will do ...

News Flash from Fannie Mae Regarding Appraisals

The Seller's Agent should remove the lockbox from the property immediately upon sale and then MEET the appraiser at the property and GIVE him or her the actual true comps for the property.  It should help.

An honest, experienced real estate agent can quite often assist you in determining the true value of your purchase, in most cases presenting you with those same comps.

Appraising property is not rocket science!


The biggest mistake you will make in purchasing a home would be to not secure a home inspection on your new or existing home!  The second biggest mistake you could make in purchasing a new or existing home would be to call an inspection company from the yellow pages to inspect your potential new home UNLESS you do three things.  (1) Talk to at least 3 companies for a services description and pricing, (2) Secure references from all three, (3) Actually call and talk to the references to determine that (a) the inspection was done on time, (b) the inspection was thorough and a readable report was prepared, (c) the inspector physically marked each and every potential problem in the house so the Seller and the Seller’s agent can determine what the inspector is talking about, (d) explain to you what building codes are and whether or not potential problems are really problems or  are grandfathered by those building codes, (e) the inspector delivers a readable report to the Seller’s agent within the time frame of the purchase agreement, and (f) determine if problem occurred after closing that the inspector missed.  Otherwise, you could save a lot of your time and effort by just taking your money and tossing it into the wind.

Verifying the License of the Inspector by visiting is a must.  The Indiana Licensing Law was effective July 1, 2005. 

Participating in a Quality home inspection is very important.  When you select the inspection company, make sure that the company provides you with their track record and most importantly with good references.  Check them out!  Pay particular attention to the older inspection references … it is always good to note how well the results of an inspection stand up over, say, 6 months to a year.  Just like in many businesses, there are people who think that they can read a book, pay a fee and set up a company to make money … they will make money from you … you will get little in return other than a lot of headaches and a possibility of souring your home purchase.  Check out their disclaimers if you want to see some very interesting commentary.  Talking with a real estate consultant can be a benefit here. 

The inspection should cover the roof, siding, windows, structural including settlement cracks and drywall or plaster problems, basements, crawl spaces, electrical, plumbing, heating and cooling components, appliances and also termites, radon gas, mold, water sampling and septic proficiency.  The inspection should consider the age of the home and it's components.

You should accompany the inspector throughout the inspection and ask many questions … there is no such thing as a dumb question in a home inspection ... you are paying a lot of money to ask any question that you want.  Make sure that the inspector itemizes each and every potential problem and thoroughly informs you of the difference between actual problems and maintenance requirements.  If a window thermal seal leaks, it should be marked.  If an electrical receptacle is not grounded properly, it should be marked.  If they don’t mark the problems, you have the wrong inspector.  Let’s face it, if your inspector indicates that there is one ungrounded electric receptacle in a house with, say, 40 receptacles, and doesn’t have the common sense to mark it for identification, you are probably working with the wrong inspector.  If your inspector calls for specific inspections from plumbers, electricians, roofers, heating and cooling people, you also have the wrong inspector … your inspector just does not appear to be properly qualified to do the job at hand.  Also make sure that the inspector notes the difference between code violations and grandfather clauses, this is extremely important.  Some inspectors may not even know what you are talking about.  Again, you have the wrong inspector.  The wrong inspector can cost you your new house!

Ask the inspector to insure that the final inspection report in its' entirety will be delivered to the Buyer and the Seller and their respective agents, if any, promptly and within the time frame of the Purchase Agreement … and, remind them that an illegible or hard to read copy is just not acceptable at all.  A top quality inspector will have the capability to email the report promptly to the appropriate parties and include digital color pictures of the problem areas.  You will then need to negotiate with the Seller to arrive at a mutually satisfactory agreement to resolve the problems presented by the inspection report.  Or, you may walk away.

Do not consider using any repair person who might be recommended by the Inspector ... this is BAD business!

Keep in mind that the Seller often feels that the Inspection is just one more opportunity for the Buyer to negotiate the price of the home sale.  Also, keep in mind, that many folks believe that the Inspector is often merely justifying his fee, the same as a lot of attorneys.


Concierge Services

It seems like everyone today is in the business of referring someone to someone else for fun and profit, mostly profit.  Real Estate companies have adopted another means of improving their profitability … at your expense.

The real estate company makes contacts with home improvement stores, home improvement contractors, roofers, painters, landscapers, etc. and agrees to refer them to you for a fee (sometimes a set advance fee and sometimes a percentage of the potential job cost).

The contractor then contacts you to bid for the work.  You should keep in mind that they are already paying a portion of their profitability to the real estate company who provided the lead.  So, in effect, you are paying for the referral fee out of your pocket.

And, you just know that the contractor will always work the hardest and the best for the person who is paying the most. 

Wouldn’t letting your fingers do the walking and a subscription to Angie’s List or another such source have been a better deal?  Or just e-mail for suggestions.

Opportunity always knocks for someone!  You may have the opportunity to find out just how much 'free' Concierge Services will COST YOU!  Can you spell SCAM!


We really do recommend Angie's List and use it ourselves ...


Let us lead you out of the Dark and into the Light and Bright Side of Real Estate! We are honest and upfront in everything that we do.  Got a question?  We will answer it!



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Ken R. Fisher, Realtor®, Broker, GRI, CRS, e-Pro    

Member:   MIBOR, IAR, NAR          Since 1973



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This site was last updated 08/07/16