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Archive for the ‘Legal’ Category

State Specific Forms

J. Andrew English J. Andrew English
Wednesday, May 20th, 2015

We are able to provide our clients with state specific forms as produced by the state association of Realtors(R) at no cost. These forms are available in our private client area under the tab marked, “state files”. They can be downloaded and printed 24/7 whenever you need them. On rare occasion, a new more recent form may be available that is not yet available through our private client area. In these rare instances, shoot us an email or give us a call and we can log into the appropriate portal and acquire the newer version for you.

 

Examples – In Nevada, we use the forms produced by the GLVAR. In California, we use the forms produced by the California Association of Realtors, in Arizona, AAR, etc… and the list goes on and on. We do not use generic forms that our competitors use. We pay each state association for the right to use their forms. These are the same forms that Realtors(R) in your area utilize on each transaction.

 

 

Contingent Offers

J. Andrew English J. Andrew English
Thursday, November 15th, 2012

What is a contingent offer? A contingent offer is an offer that contains some sort of contingency during the escrow period. This contingency needs to be released in order for the home to close escrow. Common examples can include, appraisals, lender approval, inspections, etc… These are all examples of very common contingencies that you see on an every day basis.

Typically, questions arise when an offer is contingent upon the sale of the buyer’s property. For the sake of this entry, I want to focus on this specific contingency. First – what does this mean exactly? The buyer is attempting to purchase your home, however, they must first complete the sale of their property in order to purchase your home.

As a seller, what do I need to know?

1) You have little to zero control over your buyer’s transaction. If the buyer’s buyer defaults, your sale is gone.  You are reliant upon something/somebody whom you have zero control over. (and many times zero interaction with)

2) Your property will be marked as contingent in the MLS. The problem here is that many brokers will only show active properties to their prospective clients. Thus, even if you are accepting back up offers, your showings will decrease greatly by having a contingent status listed.

3) You always want to have an “out” clause or a time table listed in your contingent offer for exiting the offer. For example, if you accept a contingent offer, give your buyer 30 or 60 days to close on your home from the time you accept the offer. Never leave this open ended. If the buyer can not close during this time frame, give yourself the option to cancel the contract at no penalty to yourself.

4) Understand that accepting a contingent offer where your buyer’s home is not under contract is extremely risky. If the buyer’s property is under contract, ask to review their contract prior to agreeing to anything. Review their buyer’s pre-approval, etc… Judge the strength of their offer.

5) If you do accept a contingent offer, follow up constantly with your buyer. Put pressure on your buyer to stay on top of their buyer at all times.

 

When should I consider a contingent offer?

As a seller, if I accept a contingent offer, I had better be getting something in return for the risk I am taking for pulling my property out of active status. Typically, this means I am pursuing the price and terms that make it worth the risk to me. Secondly, I personally would not accept a contingent offer from a buyer who’s property is not already in escrow unless the potential reward is enormous. (and I don’t mind the risk)

Brokerages Syndicating Listings – Why such a hot topic?

J. Andrew English J. Andrew English
Wednesday, February 22nd, 2012

To the average consumer, the ongoing issue concerning syndication of listings may not make a whole lot of sense… but as a homeowner, you need to understand what it all means and how it affects you. First, when a listing brokerage takes a listing, in the eyes of the Association of Realtors(R), they own that listing. What this means is they control where they market the property. The first place this brokerage will market the property is through the local MLS.  That much is obvious, however, from there it gets a bit more complicated. Various competing brokerages can pay a fee to display listings from the MLS on their own personal websites. What this means is that if listing brokerage A acquires a listing and places it for sale in the MLS…. brokerage B can pay a fee to advertise this property on their own website. The  debate here is simple… Brokerage A owns the listing and may not want Brokerage B to be marketing the property. On the flip side, Brokerage B will argue that they are assisting Brokerage A and the seller by simply giving them more exposure.

So why wouldn’t Brokerage A want Brokerage B to market the listing in question? Simple, Money. Brokerage A wants to try and acquire potential buyers for the property. Not only do they want to try and sell the listing, but they want to use this listing to acquire buyer leads for other properties that are for sale. If the property is in demand… brokerage A could  generate a large # of new potential clients on the buyer side. On the opposite end of the spectrum… Brokerage B is not trying to help the seller or Brokerage A… instead, they want these same buyer leads that Brokerage A wants. It’s simply a battle b/w brokerages concerning who owns the right to internet advertising.

Let’s take this a step further:

This matter has gotten more complicated recently with the increased popularity of Zillow, Trulia, etc… These sites rely upon  brokerages syndicating listings to their websites. W/out these listings… Zillow and Trulia become basically worthless to the consumer. So why would a brokerage not want to syndicate listings to these websites? I mean… after all… it’s just more exposure for their listing, right? Let’s use Realtor.com for example…Realtor.com literally sells leads back to agents. That’s how they make money. They charge agents for the ability to receive their own leads on their own properties. Thus, in essence, Realtor.com is selling brokerages leads for properties generated by the listings already owned by the brokerage. As you can imagine, this infuriates many Real Estate Brokerages. Zillow and Trulia do not operate in the exact same manner as Realtor.com, however, they are still profiting off of the listings owned by the Real Estate Brokerage.  So while profiting off of these listings… you might think Zillow and Trulia would compensate the brokerage for the ability to advertise their listings? No, instead they cold call these same Real Estate Brokerages asking them to pay for ad space on the Zillow/Trulia Website. (Trust me, they call often)

So what does all of this mean and how does it concern Congress Realty? Seller’s should be aware that we syndicate our listings everywhere unless a homeowner specifically asks to be omitted from a certain website. Thus, homeowners are getting the absolute maximum exposure possible through our Flat fee listing program. In some cases, this exposure exceeds what a homeowner might get from a traditional 6% brokerages who refuses to syndicate listings to other competing brokerages. W/ Congress Realty… your listing will show up darn near everywhere. Plain and Simple.

 

 

Flat Fee MLS Listings in the NOMAR MLS system

J. Andrew English J. Andrew English
Thursday, January 26th, 2012

One thing I really like about the NOMAR MLS system is that they require every single MLS listing to include the disclosures. This means that anytime a broker inputs a listing into the system, they must also add the disclosures as an attachment to the MLS listing. Any broker that sees the property through the MLS database can print off the disclosures ahead of time and bring them to the initial showing. NOMAR enforces this policy by issuing fines to any broker who inputs a listing without the disclosures. I personally love this rule for a number of reasons. This eliminates any risk of the seller forgetting to provide the state mandated disclosures to the buyer in a timely fashion. In addition, it gives showing agents more information to provide their clients during showings. It’s a win-win for everyone involved.

Louisiana sellers can download the state mandates disclosures at:

http://www.lrec.state.la.us/forms/Residential%20Property%20Disclosure%2001-01-11.pdf

Arizona anti-deficiency statute update

Donald L. Plunkett, Jr. Donald L. Plunkett, Jr.
Wednesday, August 19th, 2009

With the budget mess in Arizona, it is not clear whether Gov. Brewer would veto a revision to the new bill SB 1271, the anti-deficiency bill which allows banks to go after you for a deficiency judgement unless you lived in the house for 6 months.  Many experts feel this bill will have a negative effect on investment properties, second homes, and investing in general in Arizona real estate.

The Arizona Association of REALTORS is pulling out all the stops and most of the local associations (Prescott, Central Arizona – Payson, Tucson, Phoenix, etc.) have emailed us with an urgent Call to Action.  They want us to contact the governor and urge her to sign HB 2008.

Here are the talking points on why SB 1271 is bad:

  • Removes any incentive for a lender to work with a borrower of a distressed loan
  • Places the burden solely on the borrowers, allowing banks to conduct “risky” lending without consequence.
  • Bankruptcy cases will increase dramatically since protection against deficiency judgment as been removed.
  • Family owned property for children going to college or elderly parents may lose their anti-deficiency protection if the trustor did not occupy the home for six consecutive months.

Montana FHA Loan Limits going down in 2009

Donald L. Plunkett, Jr. Donald L. Plunkett, Jr.
Tuesday, November 18th, 2008

We received a note from Western Security Bank in Billings that the FHA limits for Yellowstone County are going down to $271,050 in 2009 (from $292,250)  If your home is in the upper $200’s to low $300’s, you need to seriously consider listing your property now before the potential negative impact of this change.  There is still time to get a property listed, under contract, in escrow for around 30 days, and sold by the end of the year.

Reviewing your Hud 1 at closing

J. Andrew English J. Andrew English
Wednesday, August 6th, 2008

Review your Hud 1 very closely at COE, it is as simple as that.

Hud 1’s are produced by the escrow officer just before closing. This document breaks down the exact cost of the transaction between buyer and seller. In its most basic form, the Hud 1 is a list of debits and credits to both parties. (sim to a balance sheet) Every fee charged by the lender, brokers, escrow company, etc.. will appear on this document. You as the seller want to make sure this document is accurate before signing. It is very common for the Hud 1 to contain mistakes, thus, it is essential you review this document. A few things to watch out for on your Hud 1 below.

Overnight fees from Title – Many times you will see an overnight fee on your Hud 1, however, you very well may not have had anything overnighted to you.

Incorrect Commissions -Escrow Officers don’t always get these right despite receiving written instructions from both brokerages.

Tax Prorations – If you own the property free and clear, you may have already paid your property taxes directly.

HOA Fees – HOA’s are notorious for double charging buyers and sellers. Double check the Hud 1 and your most recent HOA bill to ensure your HOA is not collecting the same fee from both you and your buyer.

Arizona Sellers – How to prepare a BINSR Report

J. Andrew English J. Andrew English
Thursday, July 17th, 2008

During the escrow period, your buyer will most likely have an inspection completed on the property. They will do this during the due diligence time period. Once the inspection is completed, the buyer will either accept the premises, reject the premises, or accept the premises subject to the request repairs being completed. A buyer will submit this information on the BINSR document. (this document is available to all AZ sellers through the private client area)

The BINSR is a document that allows the buyer to state their wishes. If the buyer accepts the property in its current condition, they sign the doc stating this and nothing more is needed. If the buyer rejects the premises, the escrow is cancelled. If the buyer accepts the premises subject to repairs, the seller then can negotiate through the form of the BINSR. A seller can choose to make these repairs, offer a credit instead of making the repairs, decline to make the repairs, etc… the buyer will then be able to respond to the seller accordingly. All of these negotiations are done through the 3 page document known as the BINSR.  If you have any questions on how to fill out the BINSR doc or general questions about Arizona procedures, give us a call at 480 471 9393.

Texas Option Period

J. Andrew English J. Andrew English
Tuesday, July 15th, 2008

What is an option period?

The option period is the time for which the buyer pays the seller to take the property off the market so that the buyer may complete inspections on the property. A typical option period in a 30 day escrow would be 7-10 days. During this time period, the buyer will complete their inspections and submit any request for repairs. After the option time has expired, the buyer no longer can back out of the deal based upon these inspections. Option periods in Texas are very similar to due diligence time periods in CA, AZ, NV, etc.. however, in TX, the option period must be bought by the buyer. Typically, this is a very nominal amount, such as $100-$200. The buyer actually makes the check out the seller directly. In the event the deal does not close for any reason, the seller will retain the option money for taking the property off the market. In the event the deal closes escrow, this money is applied to the purchase price at closing. Option money should not be confused with earnest money.

RESPA

J. Andrew English J. Andrew English
Friday, May 30th, 2008

The term RESPA violation is thrown out often in the real estate world, yet most individuals have no idea what it really refers to. Real Estate Brokerages are not allowed to receive undisclosed illegal kickbacks from related service providers within the industry. For example, a RE Brokerage should not receive a kickback from a local Title Company for repeatedly sending business their way. The same holds true for loan officers. A loan officer can not pay a fee to a brokerage for closed mortgage transactions.

The Federal Government takes RESPA violations seriously because they are in place to protect the public and encourage free competition. RE Brokerages are in a position of trust with their clients. Clients take the suggestions of their brokers very seriously. As a result, RESPA wants to prohibit a brokerage from profiting at the expense of this trust w/out full disclosure. Look at it this way, if a broker is sending a buyer to a loan officer in hopes of receiving a kickback later, is the broker really serving the best interest of his/her client?

NAR repeatedly stresses to brokerages to keep up to date with changing RESPA guidelines. Despite this, new stories pop up regarding serious RESPA violations and the involvement of RE Brokerages month after month. In the real estate world, the relationships that are closely monitored are between Title Companies and RE Brokerages and Lenders and RE Brokerages. These two relationships are littered with opportunities for abuse by both parties.