The Perfect World Of Real Estate Why Real Estate What Do You Expect From This Session Today Begin with the End in Mind A Goal without a Plan is Just A Wish Have a back up income source or 6 months reserve ID: 789131
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Slide1
A Nuts & Bolts Session on Navigating the Business.
The
Perfect World
Of
Real Estate
Slide2Why Real Estate?
Slide3What Do You Expect From This Session Today?
Slide4“Begin with the End in Mind!”
“A Goal without a Plan is Just A Wish!”
Have a back up income source or 6 months reserve.
Get a Mentor; choose your Broker carefully!
Start building your ‘book of business’ immediately.
Start out right with technology and the internet.Write a business plan for yourself.
Preview! Preview! Preview!
Study past transactions!
Set up simple systems.
Interview Team Members:
Lenders
Title & Escrow Officers
Inspectors
Get to know your peers!
_____________________
_____________________
Slide5KNOW THE PEOPLE INVOLVED!
Listing Side
Listing Agent
Sellers
AttorneyHomeowners Association (HOA)Payoff Lender(s)?
Any Delinquent Taxes?
Child Support?
Title Company
Buyer (Selling) Side
Buyer Agent
Buyers
Inspectors
Lender
Credit Bureau’s
Loan Processors
Underwriters
Appraiser
Title Company
Insurance Company
________________________________________________
Slide6STUDY YOUR MARKET!
STATISTICS
Days On Market (DOM)
Median/Average Sales Prices
What is the market doing in your area?
___________________
PROPERTIES
Comparable Homes
Neighborhoods
Condition
___________________________________________________________________________________________________________________
Slide7IT ALL STARTS WITH A GREAT LISTING
ASK THE HARD QUESTIONS!
How soon do you plan on moving?
Know your sellers!
Are they all present?
Are they of sound mind?
Legally competent?
Is there any litigation pending? Bankruptcy?
Are mortgage payments current?
Net Sheet?
What are their expectations of you?
Are they realistic with price/timeline?
What are their goals?
Where will they be moving next?
Who do they know who may need your services as well?
Showing Instructions?
Condition?
Slide8What are the consequences of taking a challenging listing?
For Your Clients?
Frustrated Clients
Unrealized Goals
Disappointment
Time & Money
Inconvenience
For You?
Your Time & Money!
Your reputation!
Misrepresentation?
Frustration
Disappointment
_________________
Slide9Putting The Property On The Market
Set Expectations From The Beginning!
SELLER:
I need to be in the paper every week!
I want you to hold my house open every weekend!
I don’t want a for sale sign in my yard or any open houses.
You need to be present for all showings. No Lockbox!
I don’t want to be inconvenienced at all.
I will only look at full price offers.
REAL ESTATE AGENT:
__________________.
__________________.
__________________.
__________________.
Slide10Marketing/Open Houses
What Opportunities Are Available For You?
Agent Open House!
Sunday Open House!
Facebook!
LinkedIn!MLS Marketing Meetings!Market the neighborhood!
_____________________________________________________________________
Slide11Working With Buyers
Questions:
Are you working with an Agent?
How soon do you plan on moving?
Will you be paying cash?
Tell me about your lender.Is this your first home purchase?Tell me about your goals, wants & needs.
What do you have available for your initial investment?
Who do you know who may need my services as well?
Slide12Common Buyer Obstacles
Best to know these up front!
Little or no down payment.
Less than perfect credit.
Recent bankruptcy, foreclosure, short sale.
New job/Divorce Pending?Limited income.Indecision.Want to make ‘low-ball’ offers.
__________________________
Slide13Characteristic/Intent of Buyer
Occupancy:
Owner Occupied/Primary Residence
Second Home: Used for recreational purposes by the buyer only. No Rental Income.
Investment Property: Income Producing.
FALSIFYING OCCUPANCY INTENT IS MORTGAGE FRAUD!
Slide14*CAPACITY*
DOES THE BUYER
HAVE
SUFFICIENT
INCOME TO MAKE
THEIR MONTHLYPAYMENTS???
Slide15What are the consequences of working with ‘difficult’ buyers?
Frustrated Buyers.
Frustrated/Inconvenienced Sellers.
A Waste of Your Time/Energy.
__________________
______________________________________________________
Slide16Worry about that later….
Just go show them houses, right?
Slide17Showing Property;
A Method to the
Madness!
Slide18You are in charge!
Limit your showings per day.
Show homes well within the buyer’s budget.
Watch showing instructions.
Respect the properties.
Play “Better or Worse”. ASK! ASK! ASK!Is this the one?If not; why. What challenges do you see in owning this property?__________________________________?
__________________________________?
Slide19What Do You Expect of the Lenders You Recommend?
Slide20The RIGHT Way To Select Your Lenders!
Broker, Correspondent, Retail Lenders
Enthusiasm!
Great Customer Service!
Accurate!
Product Knowledge!Problem Solver!Communicative!Pro-Active!Best Interest Rate?
Lowest Closing Costs? TRID?
Slide21Integrated Mortgage Disclosure
(August 1, 2015)
Combining the initial Truth-in-Lending Disclosure and the Good Faith Estimate (RESPA Sections 4 & 5) into a new form – the Loan Estimate
The HUD-1 and final Truth in Lending disclosure have been combined into the Closing Disclosure.
Easier to find interest rate, monthly payments and costs to close the loan.
Provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.
For applications received prior to August 1, 2015 the Good Faith Estimate, HUD-1 & Truth-in-Lending forms will still be used.
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions
Slide22The Loan Estimate
Designed to be helpful to consumers in understanding the key features, costs and risk of the mortgage loan.
Must be provided to consumers no later than the third business day after they submit a loan application.
Delivery must satisfy the timing and method of delivery requirements. Creditor is responsible for delivering the Loan Estimate or placing it in the mail no later than the third business day after receiving the application.
Creditors may only use revised or corrected Loan Estimates when specific requirement are met.
The Loan Estimate must also be delivered or placed in the mail no later than the seventh business day before consummation of the transaction.
The consumer may modify or waive the seven-business-day waiting period after receiving the Loan Estimate if there is a
bona-fide personal financial emergency.
Creditor must ensure that the consumer receives the revised Loan Estimate no later than four business days prior to consummation.
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions
Slide23The Closing Disclosure
Designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction.
The Closing Disclosure must be provided to consumers at least three business days before consummation of the loan.
The creditor is legally responsible for any errors or defects and the delivery satisfies the delivery requirements
The Closing Disclosure can be provided to the consumer in person.
Creditors may use electronic delivery methods subject to compliance with the consumer consent and other applicable provision of the Electronic Signatures in Global and National Commerce Act.
If mailed or delivered electronically, the consumer is considered to have received the Closing Disclosure three business days after it is delivered or placed in the mail.
The Closing Disclosure provides an easier to find interest rate, monthly payments and costs to close the loan.
Provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.
The consumer may
waive
the
three-business-day
waiting period
if
there is a bona-fide personal financial emergency.
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions
Slide24What does it not apply to?
Home Equity Lines of Credit (HELOCS)
Reverse Mortgages
Mortgages secured by a mobile home or manufactured home (not de-titled)
Loans made by persons who are not considered “creditors” because they make
five or fewer mortgages in a year
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.
Slide25Business Day Definition**
For the Closing Disclosure all calendar days except Sundays and legal public holidays specified in
5 U.S.C. 6103(a) such as:
New Year’s Day
Birthday of Martin Luther King, Jr.
Washington’s Birthday,
Memorial Day
Independence Day
Labor Day
Columbus Day
Veterans Day
Thanksgiving Day
Christmas Day
**For purposes of providing the Loan Estimate, a business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions.
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.
Slide26What would re-set the
three-business-day delivery requirement?
review?
The three-business-day waiting period can be effected by:
Changes to the loan’s APR
Changes to the loan product; or
The addition of a prepayment penalty
If other types of changes occur, creditors must ensure that the consumer receives a corrected Closing Disclosure at or before consummation.
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.
Slide27What do you need to know?
Closing Disclosure requirements will impact your closing date.
Who should schedule the closing?
Effective communication is a must.
Critical and realistic thought must be given to the Buy/Sell Agreement Closing date.
Pay attention to the fee areas on the Closing Disclosure.
How will the Title Insurance fees be shown on the Closing Disclosure?
Source: Dodd-Frank Wall Street Reform & Consumer Protection Act and TILA-RESPA Integrated Disclosure rule Small entity compliance guide September 2014
First Interstate Bank and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omission. Title Financial Corporation and its subsidiaries make no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions.
Slide28Slide29Will the new mortgage disclosures delay my closing?
The
answer is NO for just about everybody. For mortgage applications submitted on or after August 1, 2015, lenders must give you new, easier-to-use disclosures about your loan three business days before closing. This gives you time to review the terms of the deal before you get to the closing table. Many things can change in the days leading up to closing. Most changes will not require your lender to give you three more business days to review the new terms before closing. The new rule allows for ordinary changes that do not alter the basic terms of the deal.
Slide30Only THREE changes require a new 3–day review:
1
. The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans
.
A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.
2. A prepayment penalty is added, making it expensive to refinance or sell. 3
. The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.
Slide31NO OTHER changes require a new 3–day review:
§ Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer
.
§ Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow
.
§ Typos found at the closing table.
Slide32Be Very Careful & Cautious!
LENDER OVERLAYS MAY BE MORE STRICT THAN THE ACTUAL CFPB RULE.
PENALTIES ARE STIFF!
UP TO $1M FOR A BLATANT DISREGARD OF ANY TRID RULE…PER DAY!
Slide33What Information Does The Borrower Need To Gather?
Bank Statements
Pay Stubs
Letters of Explanation
Tax Returns
Investment Account Statements$$$$$$$$$$$$$$$Photo Identification._______________________________________________________________
Slide34What About The Property?
The Loan Program May Determine The Property Type for the Buyer!
Slide35Write A Great Offer!
Use Clear & Understandable Language
Avoid Unrealistic Timelines.
Avoid Unreadable Contracts.
State the names of the buyers as they will take title to the property.
Make Sure Any Addendums pass to the lender/Title Agent.Know your legal description.Ask Your Title Company for Information!
Slide36Interesting Contract Clauses
“The property is being purchased ‘as is’ and the buyers are aware of the major structural defects in the foundation & they are aware the property line encroaches on the neighbors property to the south”.
Slide37Slide38Nobody informed the lender about the upgrades to the new home changed the original sales price.
Now, at the closing table, all of the documents are wrong.
Uh, oh….
Slide39The Appraisal!
What About A
Comparative
Market Analysis
(CMA)
Prior to Writing An Offer?Isn’t That What The Appraisal Is For?
Slide40The Appraisal Is Being Done For One Reason Only…
To
Protect The
Interest
Of The
Lender!
Slide41What If The Appraisal Comes In Below The Agreed Upon Sales Price????
The Seller Comes Down.
The Buyer Comes Up With More Cash.
They Split The Difference
Sale Fails.
Can you negotiate this or do your clients start over?
Slide42Condominium Projects
Who Is The Contact Person for the HOA?
Condominium Questionnaire.
VA/FHA Requirements.
FNMA Requirements.
Know Your Condo Lenders!
Slide43Manufactured Homes
Must be 1976 or Newer.
Must be on Permanent Foundation.
Must be de-titled…correctly.
Foundation Inspections will likely be required.
Note: Modular Homes are Financed like sight-built homes. Look at the metal tags on the house.
Slide44Seller Concessions
Home For Sale: Beautiful home, 3 br, 2 ba, 1400 square feet. Seller will include a 1973 Corvette, fully loaded and a 2010 Four Winns Fish & Ski Boat plus 3 snowmobiles.
All offers will be considered.
Slide45Slide46Holdbacks
Repairs
Roof/Siding Repair
Landscaping
Tax Lien (Negotiated by Seller with IRS)
Pet Droppings___________
___________
Slide47Slide48Property Challenges
Your buyers are so excited! They qualified for $350K with 10% down!
Closing is in a week…
The appraiser calls the lender today to ask…’how would you like me to handle this…no sinks, no toilets, no carpet or cabinets.’ Hmmmm….
Cabin In The Woods…financeable?
Slide49Slide50*Loan Fraud*
Fraud for Property
Fraud for Profit
Trust Your GUT!!!
Mortgage Fraud
$1M30 Years in Prison
Slide51Let’s Play…
“WHAT WILL YOU DO?”
Slide52The Buyer (wife)
Suddenly goes into labor an hour before signing.
What will you do?
Slide53At the closing table, the buyers discovered the wife was not on the loan. She wanted to be on the phone to build credit.
You are furious with the lender. The buyers are furious with the lender.
The sellers are expecting this to close today.
The buyers are refusing to sign.
What will you do?
Slide54Water, Water Everywhere!
You schedule your final walk through the weekend prior to closing.
Everything is perfect.
After the signing (around 5pm on a Friday night), you receive a frantic phone call from your buyers.
Upon moving into the property, they discover the basement is full of water, the heater has blown, and the house is ice cold.
What will you do?
Slide55You are 10 days past your closing date.
The sellers allowed your buyers to move in prior to closing; they have 4 little children.
The listing agent & the sellers are about over it.
You have know idea what the problem is with the lender.
No communication is happening.
The buyers are very frustrated.
WHAT WILL YOU DO?
Slide56PATHWAYS TO PROFESSIONALISM
Slide57Listing Agent Tips
Ask your Title Company for a complete property profile.
Research Condo & HOA Information
Have Accurate Seller Information.
Provide a GREAT Listing Packet to all potential buyers!
Slide58Buyer Agent Tips
Require Clients to see a lender BEFORE you show them property.
Provide Buyer with a complete listing packet, especially condo information (or short sale; foreclosure, etc.).
Get Contingencies removed quickly.
State your buyers on the purchase agreement correctly.
Slide59Transactions Will Close More Easily If You…
Plan the timing of your transaction carefully.
Will clients be in town for signing?
Will all parties be available?
Who will schedule the closing?
When will you do your final walk through?Notify Lender/Title/Escrow of ALL changes to the purchase agreement! (This will reduce the likelihood of errors & delays).
Slide60QUESTIONS & WRAP UP?
Slide61Debbie Sauskojus,VP/Manager
First American Title Company
Thank you!
GOOD LUCK OUT THERE!