Persuading sellers to be realistic is a consistent challenge for any real estate agent, especially in a slowing or a declining market. Recent technological innovations make this much easier than ever before.
It’s important for sellers to know how to use rate-of-absorption numbers to help them to be more realistic about the probability of selling their home. For example, if there are eight months of inventory on the market, the probability that a seller will sell in any given month is 12.5 percent. The probability that the seller will not sell is 87.5 percent. Consequently, sellers who want to place their properties under contract must position their property in the marketplace where they will be in the best 12.5 percent in terms of value, which is a combination of condition and price. If not, their listing will sit on the market until it expires or until they lower their price sufficiently to motivate a buyer to purchase it.

One of the tried and true strategies from the past was created by the late Lee Coats who wrote much of the training for Coldwell Banker. Lee invented the “pricing line.” If you haven’t worked with this approach, it’s extremely effective. The system is fairly simple. Imagine a page with three different charts that resemble rulers marked in 1/4-inch segments. The top chart has the “recently sold” properties. Record each property that has sold on this pricing line. On the second chart, record the properties that are currently for sale. Finally, on the third chart you record the properties that did not sell. The sellers can quickly see the range of the most recent sales, what the current competition is, as well as how much higher priced the expired listings were as compared to those listings that sold. When you show the seller the listings that are currently available, the closing question is, “Where do you want to be in line?” When properties have comparable amenities, it’s easy to demonstrate that the lower-priced listings usually sell more quickly.

A company called ScatterGramPricing.com has now automated the pricing-line process. Agents simply enter the sales data and the computer generates the charts. The company also offers a true scattergram (a graph that allows you to plot the relationship between two different variables as a straight line.) While there are a number of statistical programs that do this, this particular program is designed specifically for the real estate industry. Agents enter the data and the computer does the rest. The most relevant chart to plot is the relationship between square footage and price. This is another way to help sellers be more realistic about pricing because you can visually demonstrate where their property falls as compared to the competition. Typically, the lower the price per square foot that a property is, the more quickly it will sell.

A third approach in helping sellers to be more realistic works best after you have taken the listing. This approach involves tracking how many visitors or hits that you are receiving from various Web sites where your listing appears. Until recently these data were expensive and hard to obtain. Now Point2Agent provides this as part of its suite of Web site products at no charge. Agents fill out a brief form and the Point2 software generates a template Web site. Once agents create the site, they can upload their listings. From there, they have the option of syndicating their listings to more than 30 different sites, including GoogleBase, Yahoo Classifieds, Trulia, craigslist and a host of others. The great news is that this system then tracks the number of visitors that each listing receives from each of the sites where the listing is syndicated.

When sellers are being unrealistic about their price, it’s extremely powerful to print out the charts that show exactly how much traffic has come from each site. It’s common for a listing to be viewed hundreds if not thousands of times from exposure on so many sites.

Whether or not you elect to use Point2, placing your listing on craigslist.com may be the most important marketing step that you can take to reach today’s Web consumer. Anecdotal reports from numerous blogs indicate that consumers are finding and purchasing homes that are posted on craigslist. The traffic reports from Point2 (their tool tracks how many hits their Web sites receive from craigslist.com) and from RealEstateShows.com confirm these anecdotal reports. The traffic from craigslist dwarfs the amount of traffic coming from other sites.

If you want to realistically price your listings, the rate of absorption, pricing line and scattergrams are excellent visual aids. If you’re are in need of a price reduction, posting your listing on Point2 and then monitoring the traffic provides you with a strong piece of data that the seller will have a hard time refuting. When a listing has been viewed more than 1,000 times on the Web and there have been no offers, it’s a pretty safe bet that the price needs to be reduced.

A friend of mine thought he would take advantage of the rotten winter weather — and the perception that real estate is about the same — and make a low-ball offer on a piece of recreational property that one day could become his second home.

His theory was that owners of summer lake cottages felt removed from their sunny getaways at this time of year and those older owners, reluctant to tackle another stretch of off-season maintenance and security, would especially be more likely to consider a cash proposal during the dark days of winter.

“Besides, I could borrow against my primary residence to pay for most of the place and then take a larger deduction on my income tax.”

While the off-season may be a terrific time to make an offer on a summer cabin, review your debt history on your primary residence if you plan to borrow against it and deduct the mortgage interest on your federal tax return. Under the mortgage-interest guidelines, taxpayers are limited to the original acquisition debt, plus $100,000.

“For owners who have lived in their home a long time and who might have refinanced more than once, the mortgage-interest limit can easily be exceeded,” said Rob Keasal, real estate tax specialist in the accounting firm of Anderson ZurMuehlen & Co. “If you borrow money to make major improvements on your primary residence, that amount is added to your basis. But if you are borrowing to buy another property or pay for college, the limits can be reached in a hurry.”

You can deduct the loan fees (”points”) paid to buy or improve your main home in the year of purchase. You cannot deduct these fees in the year you refinanced if you refinanced only to obtain a lower interest rate on your loan.

“Tax deductions differ from tax credits,” Keasal said. “For example, a mortgage-interest deduction, like a charitable deduction, reduces your taxable income. They are not dollar-for-dollar tax credits that are subtracted from your tax bill. If you have a $1,000-a-month mortgage payment and are in the 15 percent tax bracket, only about $150 a month escapes being taxed in the early months of the loan.”

For example, let’s say you purchased your primary residence 10 years ago for $100,000 and took out a loan for $80,000 to finance the purchase. Since then, you have paid the loan down to $20,000. The house is now worth $275,000 and you are eyeing a second home. The primary residence definitely has equity to tap, but your mortgage-interest deduction would be limited to the first $120,000 ($20,000 old loan plus $100,000).

According to Keasal, exceeding the limit for the mortgage-interest deduction typically does not spark an Internal Revenue Service audit of an individual’s tax return, especially in a tax year when so many changes were adopted in the last few days of the year.

The IRS recently announced that more than 3 million taxpayers will have to wait until February to get their refunds because of Congress’ late fix to the alternative minimum tax (AMT). The IRS has created a special section on its Web site, www.irs.gov, with updated copies of AMT forms.

“The IRS is looking to question individual returns where the numbers are really out of whack,” Keasal said. “If it has a lot of red flags on one issue — like the home-office deduction once created — it often creates a special form for that issue. If the mortgage-interest deduction comes up during the audit, the taxpayer should be prepared with an answer.”

The tax rules and deductions for second-home owners who rent out their properties on a short-term basis depend on many factors, including how often you personally use your second home, how many nights or a percentage of the nights you rent out your home, and your personal adjusted gross income (AGI). The details can be found in the IRS Publication 527, Residential Rental Property (including Rental of Vacation Homes).

Real estate — including second homes — typically is a sound long-term investment. Yet it’s usually not wise to buy property simply for tax reasons, and borrowing against your home to do so could put your mortgage-interest deduction in questionable territory.

Have you ever walked into a home for sale and thought, “Oh my goodness, does this place need work!” If you’re like most people, we all have the open house horror stories to tell, especially Realtors. I’ll never forget shopping for my first house and being shown a beautiful home (on the outside) with “blood red” wall to wall carpeting on the inside and pink walls to boot! Now that I’m older and wiser, I can see past the cosmetic horrors but am one of the few (only 10%) who do. So how do you quickly and easily prepare a home to sell without breaking the bank? Let’s jump in…

1. Remember the Masses – Rule # 1 and # 2, I consider the Golden Rules of home staging because this is what separates “home staging” from interior decorating. Interior decorating takes into consideration the personal tastes, personality and preferences of the home owner whereas “home staging” focuses on creating a valuable marketing commodity so that it appeals to the general home buyer who is trying to visualize themselves in the home. Unlike the home seller who is emotionally invested in the home, a Professional Home Stager is trained to see the home is an objective and critical buyer would so that they can position it to the best of it’s ability by focusing on rule #2

2. Keep to the Cosmetic – Only improving those things in the home that will add to the bottom line. Stagers keep to the cosmetic so that it makes financial sense in the sale price of the home. By focusing on the most dramatic transformations on the cheap a professional home stager gets equally dramatic results in the resale of the home. Home Staging in essence is an investment in future home sales earnings by the home seller and sometimes even the Realtor involved.

3. Consider the homes integrity when you prepare it to sell – In other words, it is what it is, what it is. Don’t try and make a Tuscan style home into a craftsman…it just won’t feel right to buyers or anyone else for that matter. A successful home staging works with the personality of the home rather than against it in order to get best resultsCreate Warm Lived In Spaces. Yet No One Lives There – When you walk into a home, you can usually tell exactly what age, style and personality individual lives there? If there are baby toys in the family room, a dog bed in the corner and a dozen family pictures on the mantle that gives you a clue as to who lives there which is as it should be for a home NOT for sale. In order to create broad appeal to buyers however we need to strip the home of the seller’s specific personality and quirks while still giving it warmth and style. There is a definite “fine line” between “lived in” and sterile looking. Shoot for the model home look and if you don’t know what that looks like visit some in your area.

5. Find the Focal Point and Make It Fabulous! – The basis for any good design lies in finding the focal point of a room and making sure it really shines. The focal point is the first place someone looks when they walk into a room. In the home staging sense we want to make sure the eyes are drawn to the best part of the room while conversely playing down any negative aspects of the room. Walk into a room and take note of what you notice immediately…is it positive or negative? Remember, buyers are looking for reason NOT to buy the house…make sure those focal points don’t give them any.

6. Clean is Critical! – This really goes without saying but unfortunately needs to be said and emphasized because many times home sellers cannot objectively clean their own home. Their noses have adjusted to any strange odors that buyer’s notice and that rusty sink drain goes completely unnoticed by the seller who has lived there for ten years now while the buyers are repulsed. How do you combat this lack of objectivity by the sellers without offending them? Quick tip, cleaning windows, walls and reflective surfaces helps to add light and space to a room. I’m dating myself when I say, “be a Felix not an Oscar”.

7. Create the Illusion of Space – This is a standard maxim of home staging. It states that by removing extraneous furnishings you can create the illusion of space within a room. Everything in a room must earn it’s place so it’s usually safe to say that 50% of what’s in a room can be packed away now in order to stage the room effectively and create space WITHOUT stripping it of it’s personality.

8. “Up Down” to Update – The best thing a home seller can usually do to update their home is to remove those purchases over 10 years old. I call this “up down” to update. Take down the old flowery prints, old pink swag drapes and brass chandeliers. It’s usually cheaper and easier just to remove or camouflage those distracting out dated furnishings rather than buy new ones. Every accessory’s sole purpose should be to update or modernize the existing space so given today’s trends the accessory left out should be large and less of them.

9. Let There Be Light! Brainstorm lighting of all types within every room. Whenever you show a home make sure every light is on in the house…no exceptions. Buyers respond to “light and bright” so make sure your rooms have lots of natural light (trim plants and shrubs around windows) as well as artificial in the form of general, task and accent lighting. Kitchens especially need to be sunny and bright so use inexpensive under cabinet light as well as hanging lights over your islands and bars. Make sure every corner of your rooms are well lit by using simple up lights behind trees and tables. Use candles liberally as an emotional connection as well as form of lighting. Rule 10, 11, and 12 are particularly why using a professional home stager makes such a difference in the end result…successful staging is not easy, natural or automatic.

10. Remember It’s Calling, Balance Like A Rowboat, Scale Like a Dinner Plate and Be a Traffic Cop – Make sure each room has a clear purpose by remembering its original true calling. Most Buyers cannot use their imagination so don’t confuse them by having an office dining area or pool table in the front living room. Balance your rooms by evenly placing each piece on the sides of the room (like a rowboat). If you have a large entertainment center in one corner with nothing in the opposite corner to balance it, your room will feel tipped or off balanced and turn buyers away. Your professional home stager knows how to create equilibrium in a room. Make sure each piece in the room is in scale with one another. Like a properly balanced meal, don’t have a gigantic sofa with a tiny coffee table…it doesn’t work. A home stager borrows from other rooms to scale each one effectively. Finally, organize the traffic and flow in a room by making sure your furniture is not placed like wall flowers. It’s uncomfortable for anyone to have to walk through a conversation area to get to another room so make the traffic go around the conversation by pulling your furniture in. Believe it or not it makes the room appear larger rather than smaller as so many believe.

11. Color is Always King and Beige is Boring – I think we’ve all made some color mistakes in the past but Rule #11 can be a particularly fatal mistake many Realtors will make trying to play it safe with the home sellers by telling them to paint the house a neutral color. What you get is a bunch of black holes (furniture) in a white or vanilla setting…not good for those Internet photos. The reason why a Realtor would do this is very sound…most people cannot pick out color very well and use it to their advantage. If you don’t feel comfortable with this tricky skill then play it safe but remember, paint is the easiest and least expensive way to drastically improve interiors. If nothing else, have an experienced professional home stager give you a simple consultation and suggest colors. Decorators and Stagers will have the tools and rules to know when to play it safe and when to use color to highlight or downplay a particular feature.

12. Create “Emotional Connection Points” – Well you made it, point number 12 is like icing on a cake (and what would a cake be like without icing?). Like any great marketer, strive for “buyers envy” when they view your home by creating points throughout each room that speak to buyers emotionally about a lifestyle they can aspire to. This subconscious conversation gives buyers fuel for their imagination and multiple reasons to purchase this “emotionally” staged home. You want a buyer to walk into a house and say, “this is it, this is the one, this is where we FEEL HOME”. There are simple ways to do this: set out a tray on your master bed with a newspaper and cup of coffee, drape a throw and soft pillow over your favorite chair, set out plates, napkins, wine goblets and wine on an outside patio set and stack fluffy towels on your bathroom counter as well as several pillars of lit candles.

I hope these 12 rules have helped you in your efforts to prepare you home to sell. It takes a bit of work but is a small investment in a much bigger reward of selling your home fast and for more money. Good luck!

On its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. “I want to be sure you are getting the best loan possible,” the sales representatives would say.

But providing “the best loan possible” to customers wasn’t always the bank’s main goal, say some former employees. Instead, potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.

Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided. One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.

Now, with the entire mortgage business on tenterhooks and industry practices under scrutiny by securities regulators and banking industry overseers, Countrywide’s money machine is sputtering. So far this year, fearful investors have cut its stock in half. About two weeks ago, the company was forced to draw down its entire $11.5 billion credit line from a consortium of banks because it could no longer sell or borrow against home loans it has made. And last week, Bank of America invested $2 billion for a 16 percent stake in Countrywide, a move that came amid speculation that Countrywide’s survival was in question and that it had become a takeover target — notions that Countrywide publicly disputed.

Homeowners, meanwhile, drawn in by Countrywide sales scripts assuring “the best loan possible,” are behind on their mortgages in record numbers. As of June 30, almost one in four subprime loans that Countrywide services was delinquent, up from 15 percent in the same period last year, according to company filings. Almost 10 percent were delinquent by 90 days or more, compared with last year’s rate of 5.35 percent.

Many of these loans had interest rates that recently reset from low teaser levels to double digits; others carry prohibitive prepayment penalties that have made refinancing impossibly expensive, even before this month’s upheaval in the mortgage markets.

To be sure, Countrywide was not the only lender that sold questionable loans with enormous fees during the housing bubble. And as real estate prices soared, borrowers themselves proved all too eager to participate, even if it meant paying high costs or signing up for a loan with an interest rate that would jump in coming years.

But few companies benefited more from the mortgage mania than Countrywide, among the most aggressive home lenders in the nation. As such, the company is Exhibit A for the lax and, until recently, highly lucrative lending that has turned a once-hot business ice cold and has touched off a housing crisis of historic proportions.

“In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.”

Started as Countrywide Credit Industries in New York 38 years ago by Angelo R. Mozilo, a butcher’s son from the Bronx, and David Loeb, a founder of a mortgage banking firm in New York, who died in 2003, the company has become a $500 billion home loan machine with 62,000 employees, 900 offices and assets of $200 billion. Countrywide’s stock price was up 561 percent over the 10 years ended last December.

Mr. Mozilo has ridden this remarkable wave to immense riches, thanks to generous annual stock option grants. Rarely a buyer of Countrywide shares — he has not bought a share since 1987, according to Securities and Exchange Commission filings — he has been a huge seller in recent years. Since the company listed its shares on the New York Stock Exchange in 1984, he has reaped $406 million selling Countrywide stock.

As the subprime mortgage debacle began to unfold this year, Mr. Mozilo’s selling accelerated. Filings show that he made $129 million from stock sales during the last 12 months, or almost one-third of the entire amount he has reaped over the last 23 years. He still holds 1.4 million shares in Countrywide, a 0.24 percent stake that is worth $29.4 million.

“Mr. Mozilo has stated publicly that his current plan recognizes his personal need to diversify some of his assets as he approaches retirement,” said Rick Simon, a Countrywide spokesman. “His personal wealth remains heavily weighted in Countrywide shares, and he is, by far, the leading individual shareholder in the company.”

Mr. Simon said that Mr. Mozilo and other top Countrywide executives were not available for interviews. The spokesman declined to answer a list of questions, saying that he and his staff were too busy.

A former sales representative and several brokers interviewed for this article were granted anonymity because they feared retribution from Countrywide.

AMONG Countrywide’s operations are a bank, overseen by the Office of Thrift Supervision; a broker-dealer that trades United States government securities and sells mortgage-backed securities; a mortgage servicing arm; a real estate closing services company; an insurance company; and three special-purpose vehicles that issue short-term commercial paper backed by Countrywide mortgages.

Last year, Countrywide had revenue of $11.4 billion and pretax income of $4.3 billion. Mortgage banking contributed mightily in 2006, generating $2.06 billion before taxes. In the last 12 months, Countrywide financed almost $500 billion in loans, or around $41 billion a month. It financed 177,000 to 240,000 loans a month during the last 12 months.

Countrywide lends to both prime borrowers — those with sterling credit — and so-called subprime, or riskier, borrowers. Among the $470 billion in loans that Countrywide made last year, 45 percent were conventional nonconforming loans, those that are too big to be sold to government-sponsored enterprises like Fannie Mae or Freddie Mac. Home equity lines of credit given to prime borrowers accounted for 10.2 percent of the total, while subprime loans were 8.7 percent.

Regulatory filings show that, as of last year, 45 percent of Countrywide’s loans carried adjustable rates — the kind of loans that are set to reprice this fall and later, and which are causing so much anxiety among borrowers and investors alike. Countrywide has a huge presence in California: 46 percent of the loans it holds on its books were made there, and 28 percent of the loans it services are there. Countrywide packages most of its loans into securities pools that it sells to investors.

Another big business for Countrywide is loan servicing, the collection of monthly principal and interest payments from borrowers and the disbursement of them to investors. Countrywide serviced 8.2 million loans as of the end of the year; in June the portfolio totaled $1.4 trillion. In addition to the enormous profits this business generates — $660 million in 2006, or 25 percent of its overall earnings — customers of the Countrywide servicing unit are a huge source of leads for its mortgage sales staff, say former employees.

In a mid-March interview on CNBC, Mr. Mozilo said Countrywide was poised to benefit from the spreading crisis in the mortgage lending industry. “This will be great for Countrywide,” he said, “because at the end of the day, all of the irrational competitors will be gone.”

But Countrywide documents show that it, too, was a lax lender. For example, it wasn’t until March 16 that Countrywide eliminated so-called piggyback loans from its product list, loans that permitted borrowers to buy a house without putting down any of their own money. And Countrywide waited until Feb. 23 to stop peddling another risky product, loans that were worth more than 95 percent of a home’s appraised value and required no documentation of a borrower’s income.

As recently as July 27, Countrywide’s product list showed that it would lend $500,000 to a borrower rated C-minus, the second-riskiest grade. As long as the loan represented no more than 70 percent of the underlying property’s value, Countrywide would lend to a borrower even if the person had a credit score as low as 500. (The top score is 850.)

The company would lend even if the borrower had been 90 days late on a current mortgage payment twice in the last 12 months, if the borrower had filed for personal bankruptcy protection, or if the borrower had faced foreclosure or default notices on his or her property.

Such loans were made, former employees say, because they were so lucrative — to Countrywide. The company harvested a steady stream of fees or payments on such loans and busily repackaged them as securities to sell to investors. As long as housing prices kept rising, everyone — borrowers, lenders and investors — appeared to be winners.

One former employee provided documents indicating Countrywide’s minimum profit margins on subprime loans of different sizes. These ranged from 5 percent on small loans of $100,000 to $200,000 to 3 percent on loans of $350,000 to $500,000. But on subprime loans that imposed heavy burdens on borrowers, like high prepayment penalties that persisted for three years, Countrywide’s margins could reach 15 percent of the loan, the former employee said.

Regulatory filings show how much more profitable subprime loans are for Countrywide than higher-quality prime loans. Last year, for example, the profit margins Countrywide generated on subprime loans that it sold to investors were 1.84 percent, versus 1.07 percent on prime loans. A year earlier, when the subprime machine was really cranking, sales of these mortgages produced profits of 2 percent, versus 0.82 percent from prime mortgages. And in 2004, subprime loans produced gains of 3.64 percent, versus 0.93 percent for prime loans.

One reason these loans were so lucrative for Countrywide is that investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.

As a result, former employees said, the company’s commission structure rewarded sales representatives for making risky, high-cost loans. For example, according to another mortgage sales representative affiliated with Countrywide, adding a three-year prepayment penalty to a loan would generate an extra 1 percent of the loan’s value in a commission. While mortgage brokers’ commissions would vary on loans that reset after a short period with a low teaser rate, the higher the rate at reset, the greater the commission earned, these people said.

Persuading someone to add a home equity line of credit to a loan carried extra commissions of 0.25 percent, according to a former sales representative.

“The whole commission structure in both prime and subprime was designed to reward salespeople for pushing whatever programs Countrywide made the most money on in the secondary market,” the former sales representative said.

CONSIDER an example provided by a former mortgage broker. Say that a borrower was persuaded to take on a $1 million adjustable-rate loan that required the person to pay only a tiny fraction of the real interest rate and no principal during the first year — a loan known in the trade as a pay option adjustable-rate mortgage. If the loan carried a three-year prepayment penalty requiring the borrower to pay six months’ worth of interest at the much higher reset rate of 3 percentage points over the prevailing market rate, Countrywide would pay the broker a $30,000 commission.

When borrowers tried to reduce their mortgage debt, Countrywide cashed in: prepayment penalties generated significant revenue for the company — $268 million last year, up from $212 million in 2005. When borrowers had difficulty making payments, Countrywide cashed in again: late charges produced even more in 2006 — some $285 million.

The company’s incentive system also encouraged brokers and sales representatives to move borrowers into the subprime category, even if their financial position meant that they belonged higher up the loan spectrum. Brokers who peddled subprime loans received commissions of 0.50 percent of the loan’s value, versus 0.20 percent on loans one step up the quality ladder, known as Alternate-A, former brokers said. For years, a software system in Countrywide’s subprime unit that sales representatives used to calculate the loan type that a borrower qualified for did not allow the input of a borrower’s cash reserves, a former employee said.

A borrower who has more assets poses less risk to a lender, and will typically get a better rate on a loan as a result. But, this sales representative said, Countrywide’s software prevented the input of cash reserves so borrowers would have to be pitched on pricier loans. It was not until last September that the company changed this practice, as part of what was called in an internal memo the “Do the Right Thing” campaign.

According to the former sales representative, Countrywide’s big subprime unit also avoided offering borrowers Federal Housing Administration loans, which are backed by the United States government and are less risky. But these loans, well suited to low-income or first-time home buyers, do not generate the high fees that Countrywide encouraged its sales force to pursue.

A few weeks ago, the former sales representative priced a $275,000 loan with a 30-year term and a fixed rate for a borrower putting down 10 percent, with fully documented income, and a credit score of 620. While a F.H.A. loan on the same terms would have carried a 7 percent rate and 0.125 percentage points, Countrywide’s subprime loan for the same borrower carried a rate of 9.875 percent and three additional percentage points.

The monthly payment on the F.H.A. loan would have been $1,829, while Countrywide’s subprime loan generated a $2,387 monthly payment. That amounts to a difference of $558 a month, or $6,696 a year — no small sum for a low-income homeowner.

“F.H.A. loans are the best source of financing for low-income borrowers,” the former sales representative said. So Countrywide’s subprime lending program “is not living up to the promise of providing the best loan programs to its clients,” he said.

Mr. Simon of Countrywide said that Federal Housing Administration loans were becoming a bigger part of the company’s business.

“While they are very useful to some borrowers, F.H.A./V.A. mortgages are extremely difficult to originate in markets with above-average home prices, because the maximum loan amount is so low,” he said. “Countrywide believes F.H.A./V.A. loans are an increasingly important part of its product menu, particularly for the homeownership hopes of low- to moderate-income and minority borrowers we have concentrated on reaching and serving.”

WORKDAYS at Countrywide’s mortgage lending units centered on an intense telemarketing effort, former employees said. It involved chasing down sales leads and hewing to carefully prepared scripts during telephone calls with prospects.

One marketing manual used in Countrywide’s subprime unit during 2005, for example, walks sales representatives through the steps of a successful call. “Step 3, Borrower Information, is where the Account Executive gets on the Oasis of Rapport,” the manual states. “The Oasis of Rapport is the time spent with the client building rapport and gathering information. At this point in the sales cycle, rates, points, and fees are not discussed. The immediate objective is for the Account Executive to get to know the client and look for points of common interest. Use first names with clients as it facilitates a friendly, helpful tone.”

If clients proved to be uninterested, the script provided ways for sales representatives to be more persuasive. Account executives encountering prospective customers who said their mortgage had been paid off, for instance, were advised to ask about a home equity loan. “Don’t you want the equity in your home to work for you?” the script said. “You can use your equity for your advantage and pay bills or get cash out. How does that sound?”

Other documents from the subprime unit also show that Countrywide was willing to underwrite loans that left little disposable income for borrowers’ food, clothing and other living expenses. A different manual states that loans could be written for borrowers even if, in a family of four, they had just $1,000 in disposable income after paying their mortgage bill. A loan to a single borrower could be made even if the person had just $550 left each month to live on, the manual said.

Independent brokers who have worked with Countrywide also say the company does not provide records of their compensation to the Internal Revenue Service on a Form 1099, as the law requires. These brokers say that all other home lenders they have worked with submitted 1099s disclosing income earned from their associations.

One broker who worked with Countrywide for seven years said she never got a 1099.

“When I got ready to do my first year’s taxes I had received 1099s from everybody but Countrywide,” she said. “I called my rep and he said, ‘We’re too big. There’s too many. We don’t do it.’ ”

A different broker supplied an e-mail message from a Countrywide official stating that it was not company practice to submit 1099s. It is unclear why Countrywide apparently chooses not to provide the documents. Countrywide boasts that it is the No. 1 lender to minorities, providing those borrowers with their piece of the American homeownership dream. But it has run into problems with state regulators in New York, who contended that the company overcharged such borrowers for loans. Last December, Countrywide struck an agreement with Eliot Spitzer, then the state attorney general, to compensate black and Latino borrowers to whom it had improperly given high-cost loans in 2004. Under the agreement, Countrywide, which cooperated with the attorney general, agreed to improve its fair-lending monitoring activities and set up a $3 million consumer education program.

But few borrowers of any sort, even the most creditworthy, appear to escape Countrywide’s fee machine. When borrowers close on their loans, they pay fees for flood and tax certifications, appraisals, document preparation, even charges associated with e-mailing documents or using FedEx to send or receive paperwork, according to Countrywide documents. It’s a big business: During the last 12 months, Countrywide did 3.5 million flood certifications, conducted 10.8 million credit checks and 1.3 million appraisals, its filings show. Many of the fees go to its loan closing services subsidiary, LandSafe Inc.

According to dozens of loan documents, LandSafe routinely charges tax service fees of $60, far above what other lenders charge, for information about any outstanding tax obligations of the borrowers. Credit checks can cost $36 at LandSafe, double what others levy. Some Countrywide loans even included fees of $100 to e-mail documents or $45 to ship them overnight. LandSafe also charges borrowers $26 for flood certifications, for which other companies typically charge $12 to $14, according to sales representatives and brokers familiar with the fees.

LAST April, Countrywide customers in Los Angeles filed suit against the company in California state court, contending that it overcharged borrowers by collecting unearned fees in relation to tax service fees and flood certification charges. These markups were not disclosed to borrowers, the lawsuit said.

Appraisals are another profit center for Countrywide, brokers said, because it often requires more than one appraisal on properties, especially if borrowers initially choose not to use the company’s own internal firm. Appraisal fees at Countrywide totaled $137 million in 2006, up from $110 million in the previous year. Credit report fees were $74 million last year, down slightly from 2005.

All of those fees may soon be part of what Countrywide comes to consider the good old days. The mortgage market has cooled, and so have the company’s fortunes. Mr. Mozilo remains undaunted, however.

In an interview with CNBC on Thursday, he conceded that Countrywide’s balance sheet had to be strengthened. “But at the end of the day we could be doing very substantial volumes for high-quality loans,” he said, “because there is nobody else in town.”

Judy Mello wasn’t looking forward to buying a new place to live, imagining a lengthy, complicated and perhaps stressful experience.

“I figured it was going to drag on for months and months,” she says. “But it wasn’t like that at all.”

In fact, it took Mello, a retired registered nurse, a total of only 3 1/2 weeks to buy a $500,000 condominium in Carpinteria, a small coastal town a few miles south of Santa Barbara.

Although a number of factors smoothed the process, Mello says an inspection report commissioned in advance by the sellers played a large part in her decision to buy and helped speed the sale.

As housing sales continue to bog down — last month Southern California sales were the slowest for any July since 1995, according to DataQuick Information Systems — property owners are turning to new strategies.

One tactic increasingly bringing buyers and sellers closer together is a property inspection obtained by the seller before the home is even listed. A seller’s inspection report is not in lieu of one commissioned by the buyer, but it often accomplishes the goal of signaling openness and good faith while at the same time unearthing any unpleasant surprises.

In some cases, a preemptive seller’s inspection means repairs, such as leaks or faulty electrical wiring, will likely be completed in advance on the buyer’s behalf; less pressing matters may be flagged and the asking price adjusted down accordingly. “To me, the report meant they were definitely interested in selling and cared about selling to somebody who was going to be satisfied,” Mello says. “I felt comfortable that they were thinking of my interests.”

Colleen Badagliacco, president of the California Assn. of Realtors, says not so long ago, when sellers were being bombarded with multiple offers, they didn’t have to worry that much about the shape of the home.

“Now, the seller has to go the extra mile,” she says. For some, the downside means making sure the house is priced right, taking disclosure to the next level — the more they know, the more they legally have to disclose — and offering to fix things.

But on the upside, a pre-listing inspection that gives buyers a better idea of where they stand and what, if any, additional work is needed, can also help sellers fend off demands for unrealistic price reductions to cover repairs.

According to Dan Steward, president of Pillar to Post, a nationwide home inspection company, buyers typically expect a $2 to $3 price discount for every $1 worth of defects turned up by their inspector.

With their own report, sellers can choose, for example, to spend a few hundred dollars fixing a plumbing problem that might otherwise mushroom into a claim for more than $1,000 off the price and, in the process, spark further potentially prickly negotiations.

“It definitely makes sense,” says Chuck Miller, a 16-year veteran of the real estate business and now associate manager and sales agent with Coldwell Banker in Studio City.

In his own and other real estate companies, he’s seen a marked uptick in the number of pre-listing inspections, perhaps a rise of 10% to 15% in the last year, and believes the ploy is helping sales move faster and more smoothly.

“Most people want to turn the key and walk in,” he says. “They don’t want repairs, and they certainly don’t want surprises. If they know they have to do some work, they can at least prepare for that.”

The National Assn. of Certified Home Inspectors, based in Boulder, Colo., also has noted a rise in the number of inspections carried out for sellers, though founder Nick Gromicko says they do not have national statistics.

However, on a local level, Gromicko does have some figures: “Our Denver chapter went from doing less than 2% of their inspections for sellers last year to doing 28% for sellers in 2007.”

When Jack Lucarelli and his wife, Jeannie Wilson, decided to put their Toluca Lake home on the market for $3.75 million, they followed agent Miller’s suggestion and first had an inspection.

The way it turned out, they need hardly have bothered. As Bob Wood, senior inspector with Sunland-based LaRocca Inspection Associates, combed through their 3,700-square-foot, two-story home, he was hard-pressed to find anything wrong.

A little dry rot in one post in the backyard, two faulty sink stoppers, a loose faucet and a cracked tile in the driveway. “It cost us about $18 for repairs,” Lucarelli says, adding that the clean bill of health did not surprise him.

He says that he and his wife — both of whom work in the entertainment industry — have done a lot to the 1936 Spanish Mediterranean-style home and always kept the place in top shape. “But we thought the inspection and termite inspection were important to alleviate any fears or anxieties about any internal, hidden problems,” he says. “It’s an added convenience to the purchaser.”

Chris Wrightsman, co-owner of LaRocca Inspection, sees these types of inspections becoming more prevalent and estimates that the number of homeowners choosing this option has risen about 5% in the last year.

He says the practice is much more common in Northern California, especially in the Bay Area, and he expects the trend to continue to grow. “When homeowners know the condition of their property, they can avoid a lot of problems and price accordingly.”

Lisa Endza, director of communications for the Boulder-based national home inspectors group, says the cost of inspections ranges from $300 to $600, depending on the size and age of the property.

Tom Valinote of Thousand Oaks, who inspected Mello’s Carpinteria condo for the sellers, runs Pillar to Post franchise offices in Camarillo and Goleta. Armed with a digital camera, laptop and a 1,600-point checklist, he typically spends two to three hours working through a house for an average cost of $425.

Inspections give sellers options, he says.

“They can say to the buyer: ‘We found these problems. But we wanted to make sure we sold the house in the best condition possible. So, we fixed things, here are the receipts and now you don’t need to deal with this.’ ”

That approach certainly appealed to Robert and Judy Parkinson. Longtime Los Angeles residents before moving to Oregon two years ago, they are in the process of selling a Montrose house they’ve owned as a rental for about five years.

Robert Parkinson says it was because they had never lived in the property, which is almost 90 years old, that they opted for the pre-listing inspection. “We wanted to do the due diligence and know the condition of the house before we put it on the market,” he says.

“We didn’t want to get into escrow and have someone do their own report and have a bunch of surprises. We mostly wanted to know that the price we’re asking, $615,000, is a good, fair, solid price. We wanted to have a real clear idea of the condition of the house and do any work that needed doing. We felt that put us in a stronger position.”

The inspection brought to light a number of issues, he says, the main ones being some plumbing, electrical and roof caulking work. They have now fixed most things and feel that having the inspection and spending about $7,500 on repairs were good moves.

The Parkinsons’ agent, Gena Pinkerton, with Richard Keilholtz Realtors in La Cañada Flintridge, says the feedback from potential buyers to the roughly 30-page pre-listing inspection report has been very positive.

People assume because the house is old that it must need a lot of work, she says. “But the report shows that it doesn’t. It’s a huge relief for people to know that.”

With recent reports that some toys made in China contain lead paint, it is also timely for homeowners and renters, particularly those with small children, to test their homes for lead hazards.

According to Richard Wiles, the executive director of the Environmental Working Group, a nonprofit research and advocacy organization in Washington, high levels of lead in children 6 and under have been linked to nervous-system damage and learning problems. And the primary source of lead in the home is old paint.

“Windows, doors and peeling paint are the primary problem areas,” Mr. Wiles said, even though lead has been banned from paint made for residential use since 1978. He explained that when lead paint has been painted over, peeling or friction from opening and closing a door or window can produce chips and dust containing lead.

Another potential source of lead is drinking water. “If you live in an older city, there’s a chance lead pipes are used in the delivery system,” Mr. Wiles said. “Most of the time the lead levels are not objectionably high, but the water being delivered to your house may not be the same as the water coming out of your tap.”

He said that lead can leach into tap water from lead pipes in the house, from lead-based solder and from brass fittings and faucets. Other potential sources of lead are pottery and crystal, and lead can also be present in the soil outside.

Wendy Cleland-Hamnett, the deputy director of the Environmental Protectional Agency’s Office of Pollution Prevention and Toxics, said that if a family with children 6 and younger is living in a house built before 1978, the best thing to do is to have some testing done by a certified inspector or certified risk assessor. They can be found by calling the National Lead Information Center at (800) 424-5323 or online at http://cfpub.epa.gov/flpp/.

For the basic test, the inspector will check all painted surfaces, including outside walls, for lead paint. A more comprehensive risk assessment will test all painted surfaces as well as samples of dust on floors and soil around the house. The cost varies widely, depending on the location and size of the house where the test is performed.

Homeowners can also test for lead themselves. “There are a number of kits available that provide good information,” said Jeff Gordon, a researcher at the Building Research Council of the University of Illinois in Urbana. With some kits, a paint chip, dust or soil sample is sent to a lab for analysis. (A list of federally certified labs is available at hud.gov; search for “lead labs.”)

Dave Lachance, president of Abotex, a Grand Bend, Ontario, company that makes Lead Inspector home test kits, says that they can be used to check for lead on painted surfaces, and in crystal, pottery, soil and water, without having to send samples to a lab. (The kits range from about $13, for 8 tests, to $50, for 100 tests.)

Tildy La Farge, a spokeswoman for Consumer Reports, said public water suppliers are required to provide a consumer confidence report every year. The reports should be available on the municipality’s Web site.