Welcome to… RI 411: Successful Settlement Matthew Rathbun, Principal Broker ABR, ABRM, AHWD, ASR, CNE, CSP, e-PRO, GREEN, GRI, QSC, SRS, SRES, RECS
What is our mission for today? Successful Settlements Table of Contents
Section 1: Checklists and Timelines As a result of this session, you will be able to:
Identify the importance of utilizing and refining checklists to keep you on track.
Implement and revise a timeline to track all facets of the transaction to include all responsible parties.
Identify the benefits of providing service beyond the basics.
Computer Systems Tracking the Transaction
Active Agent for Outlook http://www.sonomaenterprises.com
Pat Zaby’s Respond Software www.PatZaby.com
The Sale Begins When the Listing Agreement is Signed Successful settlements begin before even encountering the client Page 4
Setup the Successful Listing How should showing access be setup? Multiple Systems / combo boxes How to Showcase the home MLS Advertising How to handle offers to purchase Office Tours Open Houses Property Staging and Repairs What else…? Page 4
Evaluating the Seller’s Position Seller Estimate of Costs Short Sale Evaluation Letter to Negotiate Letter to Obtain Payoff
Listing Action Plan – Page 5
Checklist of Listing ProcessingPage 6
You’ve got an offer… …now what? When Do You Use theContract Review Checklist? Page 7
Confidentiality Standard of Practice 1-13 When entering into buyer/tenant agreements, Realtors must advise potential clients of: 1) Realtors company policies regarding cooperation; 2) the amount of compensation to be paid by the client 3) the potential for additional or offsetting compensation from other brokers, from the seller or landlord, or from other parties 4) any potential for the buyer/tenant representative to act as a disclosed dual agent, e.g., listing broker, sub-agent, landlords agent, etc., and 5) the possibility that sellers or sellers representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06) Standard of Practice 1-15 Realtors, in response to inquiries from buyers or cooperating brokers shall, with the sellers approval, disclose the existence of offers on the property. Where disclosure is authorized, Realtors shall also disclose whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker (Adopted 1/03, Amended 1/06)
Contract Review ChecklistPages 8 and 9
When do you use the Contract Checklist? Whenever you write a contract Prior to presenting a contract to another agent Prior to presenting a contract to a seller Page 10
Contracts Importance Why is it important that contracts are written properly?
They are the blueprint for the entire transaction
All parties should understand the terms of the contract
It may be used in a court of law
Spells out the obligations of each party
Spells out the timeframes for performance
Applications of the Code Articles 1-9 Deal with Client Obligations Standard of Practice 1-6REALTORS® shall submit offers and counter-offers objectively and as quickly as possible. (Adopted 1/93, Amended 1/95) Standard of Practice 1-7 When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing Standard of Practice 1-8REALTORS® , acting as agents or brokers of buyers/tenants, shall submit to buyers/tenants all offers and counter-offers until acceptance but have no obligation to continue to show properties to their clients after an offer has been accepted unless otherwise agreed in writing.
Applications of the Code Standard of Practice 1-9The obligation of REALTORS® to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law. REALTORS® shall not knowingly, during or following the termination of professional relationships with their clients: Standard of Practice 3-2REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate any change of compensation for cooperative services to the other REALTOR® prior to the time such REALTOR® produces an offer to purchase/lease the property. (Amended 1/94)
Applications of the Code Standard of Practice 3-6REALTORS® shall disclose the existence of accepted offers, including offers with unresolved contingencies, to any broker seeking cooperation. (Adopted 5/86, Amended 1/04) Article 12 REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations.
Applications of the Code Standard of Practice 16-16REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)
Ernest Money Deposits When must deposits be made? What is Broker’s Role? How can disbursement be made? Mutual Consent Judicial Order from Court of Competent Jurisdiction Broker Discretion 30 Day notice, certified mail
Why is a Properly Written Contract So Important?
How Can I Protect the Consumer as Well as Myself When Writing a Contract?
Learn How to Present Offers
6 Steps to Presenting 1. Hit Highlights – set aside 2. Present copy to each decision maker 3. Review entire contract 4. Answer questions 5. Accept or Counter (avoid “rejections”) 6. Give client a copy of what they signed. Page 11
Negotiations: Why would two hero’s fight?
BATNA Best Alternative To A Negotiated Agreement
Developing a Checklist for Each Responsible Party
Checklist for each Partypages 12 - 19
Section 2: Buyer & Seller Services and Checklists As a result of this session, you will be able to:
Identify methods for providing lists of reputable service providers;
Utilize and refine checklists for buyers and sellers to use before, during, and after closing.
Service Providers How to Find a Service Provide Network
Networking with other REALTORS®
Classified Newspaper Ads
Solicitations (flyers, office visits)
Sales Meeting Presentations
Buyer’s Checklist(To present to your buyer)
Seller’s Moving Checklist ( To present to your seller)
Section 3: Preparing Information Pages 26 - 29 Prepare information for all parties to the transaction including attorneys, title companies, lenders, appraisers, etc.
Section 4: Home Inspections and Warranties
Understanding the Home Inspector
Background and General Scope of Inspections
What does AS-IS mean?
Purpose of the Home Inspection?
Visual Inspection Only?
What isn’t covered?
Pages 31,32 and 33
The Inspection Process
Who should be there?
Should Seller be present?
How can an agent help the process?
Opening a can of worms?
How long should an inspection take?
Pages 34 - 37
The Inspection Process
Why do many different reports?
Inspectors interpreting the Sale Contract
(walk thru vs. repairs)
Can Inspector Specify Solutions?
How is the inspection helpful?
Instructor Certifications / Licensure?
Pages 34 - 37
Virginia Residential Disclosure
Section 5: Working with Appraisers As a result of this session, you will be able to successfully communicate, assist and work with the appraiser.
URAR – Appraisal Report
CommunicationWith the Appraiser
Salespersons should share
Information about properties sold
Detailed list of upgrades and features
Understanding Appraiser’s Needs Page 39
What does an Appraiser Look for? Pages 40 and 41
Handling Appraisal Challenges Sample Letter of VA Appraisal Appeal – Page 42 Sample Letter of Standard Appraisal Appeal – Page 43
Section 6:Troubleshooting the Transaction You’ll be able to identify potential challenges in the home buying or home selling process and describe ways to resolve them.
People and Property Problems Pages 44 and 45
Section 7: Communicating to Prevent Problems Write a plan to keep all parties to the transaction informed. Page 47 and 48
The Walk-Thru Walk Thru Addendum Walk Thru versus Repair Inspections
Section 8:The Settlement
Dissecting the HUD-1Settlement Statement
Handling Issues at the Table
Table Trouble I Pages 49 & 50
Table Trouble II Pages 50 & 51
The Settlement Statement – HUD1 Pages 53 - 62
Clouds and Titles Joint Tenancy – Ownership reverts to other owners of undivided interest Tenancy in Common – Undivided interest that can be sold as a portion of ownership Tenancy by the Entirety – Agreement of ownership, typically between spouses
Bonus Section: Shortsales
Statutory Confidentiality 54.1-2131 A 3. Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the seller consents in writing to the release of such information;
Short Sale Listing – the investigation Ask Difficult Questions Are you behind? (Should be asked of EVERY client) Have you called your Lender May I disclose the pursuance of the short sale? Can I obtain your pay-off information Commissions Routine Payment / Payoff Investigation Contingent Listing Agreement
Short Sale – The investigation Get Lender’s Short Sale Packet Does the Seller meet the Criteria for a Short-Sale Have all Options been explored Have they called / visited 995Hope.org? Have they spoken to an “investor”? Have they signed any documents for “assistance” from anyone other than lender?
Options for sellers
Tasks for agents to track Order Title Work – EARLY Follow up with Seller: Hardship Letter 2 months reoccurring bills Proof of Assets and Income Obtain Draft HUD / Settlement Sheet Update CMA – Monthly Monthly Phone Call to Lender(s) *maybe more* DOCUMENT, DOCUMENT, DOCUMENT
HUD / Settlement Sheet This is a Final Seller Side, not Draft Should be done by Attorney Things to have for Attorney Arrears Taxes (back taxes) Commissions and Admin Fees Liens / Debts Legal Description Sales Price Pre-Payment Penalties Forbearance Payments Etc….
Tax relief act of 2007 You’re not a CPA, and neither am I Signed December 20, 2007 Excludes income made from real property sale Applies on to primary residence Forgives qualified debt for 2007, 2008 and 2009 Only applies to properties under 2 million (1 million is married filing separately)
Offer to purchase agreements You CANNOT negotiate commission in terms of the offer to purchase Buyer Agency Agreement? Buyer required to pay commission? Home Inspections AS-IS Third Party Approvals When are you really ratified?
Force disclosure in the offer to purchase Recommendation to Paragraph 34: “As a condition of ratification, the seller obligates themselves to disclose to the purchaser if they are pursing a shortsale, or if they decide during the time period from ratification to closing, to pursue a shortsale. Notice of the Seller to the Purchaser shall be in a timely manner, and the Purchaser will have 3 days to decide to void the contract based on the decision to pursue a Shortsale.” Recommendation ONLY: Consult your Broker and legal counsel…
Buyer Consideration Lender on Board? When to Lock-in? Due Diligence for Buyer’s Agent Interviewing the Listing Agent When to walk away BPO versus Appraisal Distressed Market Areas (95% LTV) WikiMLS.com