VAR GRI 411 - Successful Settlement


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VAR GRI 411 - Successful Settlement

  1. 1. Matthew Rathbun, Principal Broker ABR, ABRM, AHWD, ASR, CNE, CSP, e-PRO, GREEN, GRI, QSC, SRS, SRES, RECS
  2. 2. 2
  3. 3. Buyer Checklists And Preparing Home The Problem Communi- The And Seller Information Inspections Appraiser Solving cations Settlement Timelines Services Successful Settlements 3 Table of Contents
  4. 4. Thinking! Critical Use 4
  5. 5. 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. Page 3
  6. 6. Tracking the Transaction
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  8. 8.  9
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  12. 12. Page 4
  13. 13. 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…?  14 Page 4
  14. 14. Seller Estimate of Costs Short Sale Evaluation Letter to Negotiate Letter to Obtain Payoff 15
  15. 15. Listing Action Plan Checklist Seller's Property Address Date At the Listing Appointment: (I have explained each of these documents thoroughly to sellers) Completed and signed Listing Agreement-Seller must receive copy Have them review the MLS data information, sign, and give them a copy Signed Property Disclosure or Disclaimer-Seller must receive copy Signed CMA-Seller has received copy Signed Estimated Sellers Net Sheet based on Listed Price-Sellers must receive a copy Signed Mortgage Information Request-Seller must receive copy Signed Lead Paint Forms if applicable-Seller must receive copy Signed Home Protection Application or Waiver-Seller has received copy I have reviewed with the seller the following: Explain Agency relationships Explained financing alternatives including discount points, seller assistance with closing costs, pre-paids and owner financing Explained Marketing Plan Explained Marketing Guarantee Explained property tour by office Explained how the MLS works and how appointments will be made Obtained key for lock box and explained how the lock box system works 17 Explain and give samples of quot;Tell 20quot;- Just listed, Open House and Just sold flyers
  16. 16. Checklist for Processing of Listings Immediately after listing is signed: Photos of property Prepare a personal folder for yourself, with a copy of all of the documents signed by the sellers. Review the MLS listing agreement and data forms and input. Add additional forms that may be required in your office. Copy payoff letter and transmit. If home owners warranty was accepted-mail and/or fax. Turn in tour request date to secretary. Prepare marketing material.Check MLS carefully for accuracy and copy sellers. Distribute your “Tell 20” Have a lender prepare financing sheets on the property. Prepare Feature Sheets-give copy to sellers. Have (2) extra keys made and check-install lock box with key (1) for office, (1) you personally keep. Get sign up - make sure it is clean. Verify septic or sewer, water and/or well, connection fees, schools, etc. Implement Personalized Marketing Plan by inserting dates, coordinating it with the sellers and your contact management program or appointment book. Prepare Home Book. Prepare display area in home with your marketing materials. Deliver all of the materials you prepared to seller and explain if they have questions. Discuss with seller the removal of items not conveying or tag them. Prepare “Highlight Feature Cards” for items that will convey 18 Send Military Housing forms to appropriate military bases, if applicable.
  17. 17. Page 7
  18. 18. 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)
  19. 19. Contract Review Checklist Make sure names are spelled correctly. Make sure legal name and address are correct. Check real and personal property that will convey against the listing agreement and computer printout to ensure conveyances are what they should be. The purchaser can ask for and the seller can agree to any other item conveying, but they must be made aware of them and avoid any surprises. VHDA contracts cannot have chattels listed in the contract. They must be addressed through a separate bill of sale. Check remarks for other items that need to be transferred to the contract, such as quot;storage shed in its as-is conditionquot; or Seller or Buyer is a licensee. Review financing-Make sure it is spelled out and adds up. Earnest Money Deposit- Make sure that deposit is a check, money order or note, not cash (Ask them to get a money order). Make sure that it is clear who is to hold the earnest money deposit. On VA pre-owned homes most firms request that the $1000 deposit is to be in certified funds, in the event that closing is within 30 days. Make sure contract designates who is paying the closing costs, pre-paids, MIP, VA funding fee, etc. Make sure the type of financing and loan ratios are identified. 21 Who will be handling the settlement? Make sure parties understand mandatory language.
  20. 20. Whenever you write a contract  Prior to presenting a contract to another  agent Prior to presenting a contract to a seller  22 Page 10
  21. 21. 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 23 Page 10
  22. 22. Articles 1-9 Deal with Client Obligations   Standard of Practice 1-6 REALTORS® 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 1-8 REALTORS® , 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. 24
  23. 23.  Standard of Practice 1-9 The 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 3-2 REALTORS® 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) 25
  24. 24.  Standard of Practice 3-6 REALTORS® 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. 26
  25. 25.  Standard of Practice 16-16 REALTORS®, 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) 27
  26. 26. 28
  27. 27. “Meeting Requirements to of the Offer and Present Offers Minds” Acceptance Promote the interests of the seller by: c. Receiving and presenting in a timely manner written offers and counteroffers to and from the Performance seller and purchasers, even when the property is / Delivery already subject to a contract of sale; and Standard of Practice 1-6 Statute of REALTORS® shall submit offers and counter-offers objectively and as quickly Frauds as possible. (Adopted 1/93, Amended Consideration 1/95) 30
  28. 28. Countering Negotiations 6 steps To presentation
  29. 29. 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.  33 Page 11
  30. 30. 34
  31. 31.  Best  Alternative ▪To ▪A Negotiated Agreement 35
  32. 32. Listing Agent’s Checklist-From Offer to Closing Listing Agents Responsibility in Preparing to Present Offer: Obtain all information possible on purchasers in order to humanize them. Check with selling agent, to see if the buyers have been pre-qualified by agent or lender. Set an appointment with sellers to present the offer-Do not discuss offer on phone. Invite Selling agent to go along to present offer (if local custom). Read everything in the contract thoroughly; pay careful attention to all clauses, statements, and contingencies. Develop checklist to protect everyone. Review personal property portion spelling out what will or will not convey. Review Financing portion. Type of financing, down payment, MIP, etc. Check discount points, seller concessions (i.e. pre-paid, closing costs, funding fee, etc.). Prepare Sellers net sheet based on offer. Check earnest money deposit, have a copy of check available. Prepare an updated CMA. 37 Prepare list of Pro’s and Cons of offer prior to presenting offer.
  33. 33. Section 2: Buyer & Seller Services and Checklists As a result of this session, you will be able to: methods for providing lists of reputable service Identify providers; and refine checklists for buyers and sellers to use Utilize before, during, and after closing. 38
  34. 34. Networking with other REALTORS® Classified Newspaper Ads Internet Solicitations (flyers, office visits) Sales Meeting Presentations Previous Clients Educators 39 Pages 20-23
  35. 35. Section 3: Preparing Information Prepare information for all parties to the transaction including attorneys, title companies, lenders, appraisers, etc.
  36. 36. Section 4: Home Inspections and Warranties
  37. 37. Background and General Scope of Inspections What does AS-IS mean? Purpose of the Home Inspection? Visual Inspection Only? What isn’t covered? 44 Pages 31,32 and 33
  38. 38. 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? 45 Pages 34 - 37
  39. 39. 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? 46 Pages 34 - 37
  40. 40. 47
  41. 41. Mold Can grow on almost any organic surface if  moisture and oxygen are present Gradually destroys its host and causes serious  health problems Produces potent toxins and irritants  EPA has published guidelines for remediation or  clean-up Number and size of lawsuits is growing  48
  42. 42. Underground Storage Tanks 3-5 million underground storage tanks in the US –  about 40% are leaking Some are currently in use, but others are  abandoned Clean-up can be expensive  UST owners are required to register tanks and  adhere to requirements that prevent pollution EPA regulates tanks that contain hazardous  substances or petroleum products that store at least 10% underground 49
  43. 43. Asbestos Once used in insulation (banned in 1978)  About 20% of nations commercial & public  buildings are contaminated Inhaling can result in respiratory disease  Highly friable  No safe level of asbestos exposure  Used in residential properties to cover pipes and  ducts It is fire resistant  Costly to remove  50
  44. 44. Lead-Based Paint / Lead Hazards Lead was used as pigment and dying agent in paint  Present in 75% of private homes before 1978  Can cause brain, kidney, nervous system and red blood  cell damage Children are most vulnerable  Lead particles can be present in soil and ground water  Banned in 1978  No federal regulation to test in private homes  EPA and HUD require disclosure of known lead-based  paint hazards be attached to contract/ lease 51
  45. 45. Radon Gas created by natural decay of other  radioactive substances Hazardous when trapped in buildings in  high concentration Colorless/ tasteless – impossible to  detect without testing Levels can be reduced by installing  ventilation systems or exhaust fans Most accurate testing results come from  professionals 52
  46. 46. 53
  47. 47. Section 5: Working with Appraisers As a result of this session, you will be able to successfully communicate, assist and work with the appraiser. 54
  48. 48. 55
  49. 49.  Salespersons should share Information about properties sold Comparables used Detailed list of upgrades and features _______________________ _______________________ _______________________ _______________________ _______________________ 56 Page 38
  50. 50. Meet the Appraiser at the Property Point out Special Features Be Helpful, Not Overbearing Prepare Your Seller The Appraisers Viewpoint 57 Page 39
  51. 51. BPO CMA Appraisal 59
  52. 52. Sample Letter of VA Appraisal Appeal – Page 42 Sample Letter of Standard Appraisal Appeal – Page 43
  53. 53. You’ll be able to identify potential challenges in the home buying or home selling process and describe ways to resolve them. 61
  54. 54. 62
  55. 55. Buyer Seller wants Buyer not wants out out qualified Buyer too Buyer Loss Repair cost much debt of Job are too high Appraisal is low Pages 44 and 45 63
  56. 56. Section 7: Communicating to Prevent Problems Write a plan to keep all parties to the transaction informed. Page 47 and 48
  57. 57. Walk Thru Addendum  Walk Thru versus Repair Inspections  65
  58. 58. Section 8:The Settlement
  59. 59. 69
  60. 60. Truth-in-Lending Title Co. RESPA Vs. Attorney Equal Credit Pages 49 & 50 Kickbacks Reporting 71
  61. 61. What Happens and When Choosing the Good Faith Settlement Estimate Agent Pages 50 & 51 Title Insurance Title Searches 72
  62. 62. Pages 53 - 62 73
  63. 63. 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 74
  64. 64. 75
  65. 65. 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; 76
  66. 66. 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  77
  67. 67. 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  Have they spoken to an “investor”?  Have they signed any documents for  “assistance” from anyone other than lender? 78
  68. 68. Deed in Lieu of Foreclosure Workout Loan Modifications Agreement Repayment Forbearance Plan 79
  69. 69. 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  80
  70. 70. This is a Final Seller Side, not Draft  Should be done by Attorney  Things to have for Attorney  Arrears Sales Price Taxes (back taxes) Pre-Payment Penalties Commissions and Admin Forbearance Payments Etc…. Fees Liens / Debts Legal Description 81
  71. 71. 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) 82
  72. 72. 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?  83
  73. 73. 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…84
  74. 74. 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)   85
  75. 75. REALTOR® Institute