Marathon Sellers Race Reality B

Steve Kent's October 2006 Newsletter

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The One And Only AnnualCreditReport.com

By Broderick Perkins

      Under the provisions of federal consumer law, if you want to obtain a free credit report from one or all of the big three credit reporting companies, go to AnnualCreditReport.com. Period.
      If you want a free credit report from Experian -- one of the big three -- and the possibility that the company will sign you up for a credit report monitoring service with a monthly fee, go to Experian's FreeCreditReport.com website.
      Likewise, FreeCreditReportSource.com; FreebieCreditReport.com; FreeCreditReportsInstantly.com and a host of other similarly named websites will all also "give" you your "free" credit report, but you could wind up paying extra for credit services you may not want.
      Confused? That's not surprising. First, the facts.
      A year ago this month the federal government finished rolling out the free annual credit report provision of the Fair and Accurate Credit Transactions Act (FACTA), enacted Dec. 4, 2003 to overhaul the Fair Credit Reporting Act (FCRA).
      The provision says you are entitled to one free credit report each year from each of the three major credit reporting agencies, Equifax; Experian; and TransUnion.
      Along with your personal identification information -- Social Security number, birth date, name, recent addresses and employers, etc. -- your credit report is a sort of fiscal fitness report on your credit habits. It names your credit accounts, identifies them by type and tracks balances, credit limits, payments, available credit, open-or-closed status and other information that reveals how well or how poorly you pay each account. The report also documents credit requests and notices of liens, judgments and other "derogatory" remarks, remarks from the consumer, and other information.
      (Your credit score, a numerical analysis of your credit worthiness, is not available under the free report provision and must be purchased separately.)
      You've always had access to your credit report under previous provisions -- say, if you credit application was denied -- but now you need not apply for credit to learn what's on your report. It is, after all, your information.

      Under the federal law's provision, official, free access to your credit report is available through a single website, AnnualCreditReport.com; by phone, via (877) 322-8228; by mail (Annual Credit Report Service, P.O.Box 105281, Atlanta, GA 30348-5281); or by filling out the official "Annual Credit Report Request Form" available on the Federal Trade Commission's website.
      Now for the fiction.
      The FTC warns consumers to beware of "impostor" websites, those with enticing names that pose as "free credit report" websites but which are questionable marketing gimmicks designed to enroll you in credit report monitoring and other credit services in exchange for granting you your "free" credit report.
      Before the feds were finished rolling out the official, federally sanctioned free credit report service a year ago it, went after Experian (operating under FreeCreditReport.com and ConsumerInfo.com), charging the company with "deceptively" enticing consumers with "free credit reports" but "not adequately disclosing that consumers automatically would be signed up for a credit report monitoring service and charged $79.95 if they didn't cancel within 30 days, in violation of federal law."
      A settlement bars deceptive and misleading claims in such offers and requires clear disclosure of terms and conditions of any such offers. Experian had to return $950,000 to consumers.
      Now websites typically, clearly state that when you obtain your "free credit report" you'll be signed up for monitoring or other services -- for a fee. Most websites give you the first month of services free, but then it's up to you to remember to cancel the service. If you don't, your "free" will become a "fee."
      The home page of AnnualCreditReport.com contains a link to each of the big three credit reporting agencies. In all three cases, hit the link and you'll arrive at a page hawking credit monitoring and related services.
      "While consumers may be offered additional products or services while on the authorized website, they are not required to make a purchase to receive their free annual credit reports," the FTC says.

      A new species of real estate owner has begun to emerge, the marathon seller. Maybe you have them in your community, owners who believe in real estate exceptionalism, the idea that their homes are growing in value while real estate prices all around are stalled or falling. These owners truly believe that somehow their property is unique and different, a home so wonderful that general sale trends are irrelevant .
      Compared with last August, in my area we have evolved from a strong seller's market to something which has more balance. Prices are up a touch, but not up insanely. Days on the market have doubled, unit sales are down 20 percent and instead of paying premiums some buyers are getting "seller contributions" at closing.
      How can you spot a marathon seller? Here are some clues:

The home has been on the market 400 days while local properties typically take 88 days to sell.

A look at the MLS in August shows a home with snow.

The property has fewer visitors than a forgotten cemetery.

When the listing expires no broker steps forward to instantly re-list the property.

When finally re-listed, the property has a higher price -- even though it could not be sold at a lower value.
Much of what we're seeing in today's marketplace has no relation to reality. Immovable prices seem designed more to enhance throbbing egos and party-talk bragging rights rather than produce sale results.
Surely it makes sense for sellers to test the market, to select the highest possible price they realistically think they can get. But marketing tests should not continue eternally. After a reasonable time on the market -- the term "reasonable" being different for different markets and different properties -- owners should have some sense of what's real and what isn't.

      Unrealistic prices not only lead to marathon selling periods, they also produce excess costs. There are mortgage and utility payments to be made each month as a home languishes on the market, plus the tax bill grows.
      Worse, if a replacement home has been purchased and the first property remains unsold, there may well be two mortgages and two sets of taxes and utilities.
      Given that many households can barely tolerate one set of ownership costs, doubling such expenses hardly seems attractive. A house with expenses of $3,000 a month that stays on the markets for months on end means the eventual sale price has been effectively cut by thousands of dollars.
      Longer selling times also change broker economics. The old expression is that brokers who are not careful "can list themselves into bankruptcy" by taking on too many homes that do not sell -- or do not sell within a reasonable period. Why? Because each property must be advertised and marketed and such things are not cheap. Owners, having once established in their minds what a property is worth, sometimes see any lower price proposal as a "loss" when that's not the case.
      For instance, imagine a home that will not sell for $750,000 -- but it might sell for $700,000. To the owners who dreamed of the first price, this is a $50,000 "loss" even though they never had a sale at $750,000.
      In an environment where prices are rapidly rising you see buyers more willing to take a chance because there's some certainty that replacement buyers can be found if necessary. But slow the market and both the math and philosophy of home buying changes. Buying is more risky because a quick re-sale at a good price is less assured.
      Slower markets also change the math and thinking needed to be a successful seller. Alas, some sellers have yet to understand that when the marketplace slows it slows for everyone.

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