EscrowCoord.com

When are disclosures and documents due using a CAR contract?

Diana Turnbloom (Escrowcoord.com) — Sun, 14 Aug 2011 19:34:43 -0700

Hi All!

Received an email from a student named Debbie about time frames for disclosures and documents. Here's my response. I hope it helps! :-)

Debbie: We (company) are using Docusign which is a great time saver but I’m still confused as to how to determine time frames for all the various disclosures to be completed. Any help or suggestions I can get is appreciated.

Diana: If you take a look at the CAR contract, the seller usually has 7 days from acceptance to deliver all required disclosures and reports to the buyer. (See page 5 14A) .

I like to see the disclosures and reports delivered to the buyer at MINIMUM 5 days prior to the buyer’s inspection contingency removal is due (See page 5 item 14B(3)). There is a clause allowing the buyer 5 days from delivery of the disclosure or document to review prior to removing the inspection contingency

The Inspection/Loan/Appraisal/Deposit and Increased Deposits usually have a specified date for when they are due on the contract.

Hope this Helps!

The Slippery Slope of FHA Condo Approval

Diana Turnbloom (Escrowcoord.com) — Wed, 16 Feb 2011 13:14:04 -0800

Oh what a slippery slope we climb when trying to list and purchase a condominium.

FHA has tightened the thumb screws on condominium purchases.

The reason for this is they don't want to loan on condos where the homeowner's association (HOA) is unable to pays bills (i.e. maintain the common areas) due to too many vacancies or current homeowners behind paying monthly dues.

So what's the big deal? A lot of perspective buyers of a condominium will be using an FHA loan to purchase (decent rates and low down requirements). That leaves all-cash buyers and there are not that many running around wanting to purchase a condo with high dues and defunct HOA!

Both the above are creating a vicious cycle with some condominium complexes.

1-Can't get loans on units for sale

2-HOA dues are not paid

3-Complex is not kept up

FHA has created an approval process that all of us in real estate land need to pay attention to.

Condominium complexes must go through a complex certification process and be approved. This can take months! (Note there are no longer spot approval).

A pro-active HOA will have begun the process as an added value service to unit owners who are or may in the future be selling. A smart agent will have confirmed its approval status PRIOR to listing and/or writing an offer on the property.

There are two ways to determine FHA approval;

1-Contact a loan officer and ask, "Is this condo FHA approved?"

Cost-FREE

2-Visit https://entp.hud.gov/idapp/html/condlook.cfm to check status.

Cost-FREE

Buyer's Agents DO NOT WASTE TIME writing an offer on a condo until you have verified FHA status! Status should be disclosed to ALL buyers.

Listing Agents Find out the status of certification BEFORE you list the property. Be willing to disclose this to any perspective buyers.

Being open and honest up front is going to prevent a lot of wasted time for the team and disappointment for the buyer and seller. EYES WIDE OPEN BABY!

FHA Extends Flip Rule

Diana Turnbloom (Escrowcoord.com) — Wed, 09 Feb 2011 12:44:52 -0800

Looks like FHA is going to play nice and wave the 90 day flip rule again for 2011.

Below are general guidelines that HUD uses to identify properties that are exempt from the 90 day rule. As I mentioned, some banks have adopted this criteria as well. Others may not be willing to loan, period.

1-All transaction must be an arms-length loan with no identity of interest between the buyer and seller or other parties involved.

2-The property cannot have a pattern of previous flipping in the past 12 months (One previous flip a year people!)

3-If the seller is earning more than 20% of what they originally purchased the property for, then the lender has to justify the markup with information about renovation OR a second appraisal.

If you recall in my previous posting about this, many banks have adopted this same criteria for their loans and it becomes a problem when no one bothers asking the seller if they have owned the property for more than 90 days.

What this means to the team is that we all have to wait to fund the loan (occurs one business day prior to or on the day of recording) until the seller has a history of owning the property for 90 days! Types of sellers who might be in this situation would be REO and investment flippers.

Buyer and Seller agents should be pre-emptive and avoid unnecessary/unanticipated delays in close.

1-Listing agent should always ASK the seller if they have owned the property for more than 90 days.

2-Buyer Agent should always ASK the listing agent if the seller has owned for property for more than 90 days.

Burning Bridges via Email

Diana Turnbloom (Escrowcoord.com) — Tue, 01 Feb 2011 10:35:34 -0800

OK, I think I've made it clear that I LOVE the use of email for communication between team members during a transaction! It performs a number of functions at once which helps me save time!

Unfortunately, some people forget they are working in a professional environment and use email to personally attack other team members when they are frustrated.

My hubby taught me long ago to "Never Burn Bridges in Real Estate." Because you never know when you may forced to work with that person again.

I believe email Bridge Burning is even worse, because the documentation can be saved for many years to come by the recipient of the attack and possibly be used against you in the future.

A good question to ask yourself is does this letter reflect how you and your company want to be perceived? A friend recently received a scathing email from a disgruntled customer and I wondered what the CEO of her company would say if a copy had been delivered to them?!

When you believe you have a legitimate complaint about someone, stay away from personal attacks (You're lazy, you only want to get paid, you don't care, etc.).

Instead focus on the FACTS ONLY and clearly identify what you want. Also, provide consequences if they don't follow through (Note-consequences should only be used as a last resort!)

Here's an example;

Dear Bob,

I am writing this letter regarding your unresponsiveness to our email and phone requests.

Specifically, your input is required immediately to help assist the rest of the team in closing the transaction.

We have attempted to contact you via email and phone on the following dates with no response..

1/2 email

1/3 email

1/4 email and voice mail message

1/5 left message with receptionist at your office

Once again, we ask that you immediately contact our office at xxx-xxx-xxxx by 12 pm tomorrow or we will assume that you are unable to perform and will contact your supervisor for further advice.

Thank you in advance for your cooperation in this matter.

As you can see, I am in no way personally attacking Bob by assuming I know why he is not responding (he doesn't know how to do his job, he's hiding something, he is doing drugs, his phone and email are down, he had a death in the family).

Bob may not be happy with me, but I have stated the facts only. I have maintained my professional integrity and asked him respectfully to follow through while assuming his also the consummate professional.

Acceptance of a Contract

Diana Turnbloom (Escrowcoord.com) — Mon, 24 Jan 2011 13:15:13 -0800

Spoke with another Attorney at California Association of REALTORS® last week about acceptance. It's interesting how different attorneys at CAR have separate interpretations of the contract.

3 things must happen to have a binding offer.

1-Buyer and Seller must sign the contract/counter

2-Offer and Counter must be delivered back to the maker of the Contract/Counter

3-Acknowledgement of receipt must be communicated by the maker of the contract/counter.

Many people are confused that as long as they deliver it (email/fax/mail/drop off) that a deal is consummated. But until the maker of the counter/contract personally receives it (Opens the email attachment/Retrieves the contract from the FAX machine/Picks up the contract from the front desk) and provides an acknowledgement (either in writing or verbal), you may not have a deal.

Time frames for the contract (acceptance date) begins the day the maker of the offer/counter acknowledges receipt.

This provides a challenge for the rest of the team identifying the acceptance date when an acknowledgement was verbal. I have ALWAYS advocated use of written acknowledgement on the Counter/Contract so it's very clear to all when the timelines begin.

Natural Hazard Disclsoure and REO requirements in California

Diana Turnbloom (Escrowcoord.com) — Mon, 24 Jan 2011 13:12:23 -0800

NHD and REO Clarification

Although CAR's Natural Hazard Disclosure form is not REQUIRED to be completed by an Asset Manager, the seller is STILL obligated to disclose if the property is located in a high fire, flood and earthquake zone. This is best completed by ordering and paying for a Natural Hazard Disclosure report prepared by a neutral third party.

CAR recommends that if a report is not available the NHD be incorporated into disclosures for the property.

BTW it's not California Association of REALTORS® who decides what disclosures are required. It's the California Department of Real Estate who passes laws. CAR helps us understand the requirements and also offer recommendations from their attorneys and other specialists. Who Knew?!

Disclosure Updates for California

Diana Turnbloom (Escrowcoord.com) — Mon, 24 Jan 2011 13:07:08 -0800

WooHoo! CAR has released their 2011 disclosure requirements. Here

are several items I'm paying attention to for this year;

Smoke Detector and Water Heater Statement of Compliance

Hooray for California Association of REALTORS® for incorporating the smoke detector and water heater statements of compliance into the Real Estate Transfer Disclosure! As a result CAR has indicated if the RETDS is used, a separate disclosure is not necessary. This means one less disclosure to track and obtain signatures!

I have just one teeny, tiny concern though. For the newer real estate agent, they may not know what the compliance law is and fail to ensure a working smoke detector(s) in the house and the water heater is properly strapped prior to close. The separate disclosure describes this in detail.

If you are confident you won't forget this mandatory compliance for California properties, then by all means eliminate the separate disclosure.

Carbon Monoxide

New law effective July 1st requires existing California Single Family homes to have a Carbon Monoxide detection device installed. Per CAR, no additional disclosure is necessary as it's already addressed on page 1 of the Real Estate Transfer Disclosure Statement. Again, let's hope agents remember to confirm this prior to close.

HERS

The Home Energy Rating System Program booklet is now a requirement and describes whole house home energy rating services and benefits, opportunities to invest in energy efficiency improvements a the time-of-sale plus more! Here's a link to download the booklet for your office http://www.energy.ca.gov/HERS/booklet.html

The bummer is it's NOT yet incorporated into our earthquake/lead/mold booklet and receipt. So a separate acknowledgement of receipt will need to be generated.

New 2011 Disclosure Charts and Summary Chart for Disclosure requirements

Remember to download a copy of the new 2011 disclosure charts from CAR.org. These disclosures are MANDATORY they be incorporated into certain transactions.

These charts help you to identify what to incorporate for REO/Short Sale/Probate/Land etc.

I always save a copy on my desktop so it's available any time I have a questions about which disclosure to use.

Be sure to also ask your Broker for their office disclosure requirement as well!

I found a VERY cool disclosure chart which further clarifies when certain disclosures should be used.

Check out CAR.ORG's website. Go to Legal/2011 Disclosure Charts/Summary Disclosure Chart

Agent's Responsibilities When Working with a Coordinator

Diana Turnbloom (Escrowcoord.com) — Wed, 27 Oct 2010 13:17:13 -0700

I have had several Transaction Coordinators (TC's) who attended my classes want clarification on agent responsibilities during a transaction.

It really depends on what the TC and agent needs are. If a TC is working for ONE agent and receiving a salary, they may be more willing to add on extra tasks to the job description agreement.

If a TC is working for multiple agents on a per transaction fee basis, then it's important for the TC to set limits on activities so she can be productive and fair to everyone!

First, let's discuss the differences between a licensed an unlicensed Coordinator and their responsibilities...

In my opinion, there are NONE!

If a licensed TC IS explaining contracts, disclosures and negotiating on behalf of the client, then an Agency Disclosure should be signed by the TC and client, AND in my opinion, because the TC's liability is increased, SHOULD receive a portion of the commission and carry E&O insurance. See a further dialog of this in my posting Licensed vs. Unlicensed Coordinators.

Now let's discuss the role of the agent using the professional services of a Transaction Coordinator (Full Service). These are GENERAL guidelines and will vary depending upon the job description agreement and relationship the TC has with the agent.

1-Provide at minimum once weekly updates to their clients

This is important-I have had buyers and sellers complain that their agents never contacted them once during the transaction.

2-Negotiate terms on behalf of their client

See above

3-Prepare and deliver Contingency Removals, Notices to Perform, and Addenda for signature and delivery to the other agent

These can be extremely time sensitive items that the agent should take direct responsibility for preparing and delivering. A delay in delivery could mean disaster for the buyer and seller.

4-Follow through with TC requests in a timely manner.

If you are unable to follow through OR disagree, please do not ignore the TC's request! This is a waste of their time and yours. A good Coordinator will continue to request until they receive an answer. A quick response will reduce frustration for both of you.

5-Keep the TC and other team members notified of any changes to the terms, team and timelines of the transaction.

A TC will do a much better job for you if they have a clear understanding of when things are due and who is on the team

6-Participate in solving complex problems and communicating to other team members.

Agents who pass off complex problem solving to their TC are not doing their client any favors. A good TC can certainly provide you of examples of what other agents have done in the same situation, but ultimately it's up to the agent and their client to decide the best course of action. It is NOT the TC's job to negotiate, nor explain the agent's and client's position to the other agent. If an agent is unsure of what to do, then they SHOULD speak with the Broker or Office Manager who are ultimately the decision makers on how an issue is to be resolved.

7-Obtain updates from the lender

The buyer's agent SHOULD dialogue with the loan officer before and during a transaction. Since the buyer's agent is preparing and assisting the buyer to remove the loan contingency, it's important they communicate directly with the loan officer to have a clear understanding of loan approval.

Confusion can be avoided between the role of the TC and agent by creating and signing a job description agreement before hiring.

I created an agreement for TC's I hired for my hubby's office to help me to train and stay within the parameters of the agreement.

Visit my website for purchase of a downloadable pdf version. (Go to Escrow Coordination Secrets, then click on Products)

Beware of REO Properties and the NEW "Cloud" on title

Diana Turnbloom (Escrowcoord.com) — Fri, 15 Oct 2010 12:50:14 -0700

Guess the banks got caught with their preverbal pants down again.

Seems "representatives" of some of the banks who provided affidavits confirming their personal knowledge and "right" to foreclose on a property were in fact...NOT!

As a result, the judges who granted permission to foreclose were granting these foreclosures without having all the facts regarding who owned the property and who had the right to foreclose.

Oh, what an ugly can of worms. This means that if it cannot be proven that the entity who foreclosed on the homeowners had the right to do so, then the homeowners may have a right to sue and get their property back!

But wait, the sellers can't just take the property back! It's already been sold to an innocent buyer. Will poor Bob and Betty Buyer be kicked out of their home?

No, thankfully they won't. What SHOULD happen is the title insurance that was HOPEFULLY purchased on the property will kick in and a cash settlement will be issued to the foreclosed homeowner.

HOWEVER MOST title companies don't want to do this! Some are FREAKING out about this loophole and have declined to offer insurance on REO properties until this mess gets worked out.

OK, now we have a potential ugly black CLOUD on the property's title and we can't get title insurance. What's the work-around the REO banks are doing?

They are offering the buyers to use the bank's company owned title insurance.

Well, that kind of solves our immediate problem of obtaining title insurance. But what about long term issues for the buyer and industry in general?

First of all, many purchase agreement contracts include language that the property shall be delivered to the buyer FREE of clouds on the title. Buyer's SHOULD insist on this because that cloud will still be there when they turn around to sell the property years down the road.

A new buyer will run into the same challenge finding an insurance company willing to issue title on the property, ad infinitum!

Could this potential affect the salability/value of the property? YUP!

The work-around for this problem is to have the same title company who was willing to insure with the cloud continue to insure ad infinitum! This means;

1-The buyer and seller will never have a choice on title company selection.

2-If that title company goes out of business, another title company (by law) will have to pick up the "dirty title". What other title company in their right mind is going to want to do that?!

My final concern is that if the banks are willing to insure on these clouded titles with their own title companies, then what happens if all of these previous homeowners DO decide to sue AND win?

Does the title companies that are owned by the banks have enough assets to pay-out for these potential issues? Or, are they figuring on a government bailout to cover the cost if things get really ugly?

If the title policies are FORCED on another title company, will THEY have enough funds to cover the potential pay-outs?

I'm sure there are buyers out there that have pressured the transaction team to close the deal ASAP. In answer, real estate and bank industries have worked out a plan B, but I wonder what future ramifications are in store for our industry for what appears to be short-sighted decisions?

Red Flags of a Short Sale Approval Letter

Diana Turnbloom (Escrowcoord.com) — Wed, 29 Sep 2010 15:36:08 -0700

Congratulations, you finally received an approval letter from the bank! You note the expiration date and you have plenty of time to negotiate with the second (if applicable) to close the deal on time.

But wait, did you really read the approval letter? Some banks are adding additional terms to this letter (raising the sales price, asking the seller to come up with cash to close, etc.).

Be sure to double check the approval letters from the first AND second bank, if applicable. Make sure everyone is dialed in on the rules to the game! And there are no hidden surprises that end up taking a chunk of your commission!

Red Flags of a Short Sale Approval Letter

Diana Turnbloom (Escrowcoord.com) — Tue, 21 Sep 2010 10:05:29 -0700

Congratulations, you finally received an approval letter from the bank! You note the expiration date and you have plenty of time to negotiate with the second to close the deal on time.

But wait, did you really read the approval letter? Some banks are adding additional terms to this letter (raising the sales price, asking the seller to come up with cash to close, etc.).

Be sure to double check the approval letters from the first bank AND second bank, if applicable.

EscrowCoord.com is now a Preferred Provider for Realty World Northern California

Diana Turnbloom (Escrowcoord.com) — Tue, 24 Aug 2010 16:24:39 -0700

Exciting News! EscrowCoord.com has been approved as a Preferred Provider for Transaction Management for Realty World Northern California!

I am so proud to have been considered and accepted by this awesome company and especially appreciate Wanda Klor and Michael Strong of The Klor Strong Team, Scott Gill, plus all of the other outstanding team leaders for their support and referrals. Their cutting edge technology and social media options for agents and brokers are a perfect fit for me.

If you are a Realty World agent, be sure to let me know when you call for our transaction management services. For the rest of our devoted clients, you will STILL receive the same outstanding services we've been providing to you!

Want more information about our virtual transaction management services? Simply fill out the linked form and I will get in contact with you ASAP! OR call 925-692-0076. You can also visit EscrowCoord.com

Ahh, a glass of champagne, er sparkling wine is in order tonight! :-)

90 Day Flip Rule STILL Haunting Buyers!

Diana Turnbloom (Escrowcoord.com) — Wed, 18 Aug 2010 12:16:51 -0700

I thought we had worked this one out! On Feb 1st of this year FHA agreed to temporarily allow funding on homes that were acquired by the current owner (bank/investor/seller) in less than 90 days IF the property met certain criteria.

Now I hear some banks are still enforcing the 90 day flip rule-even for non-FHA loans!

Why was this rule created in the first place?

HUD recognized a few years ago that a minority of flippers (someone who purchases properties, then immediately sells for profit) were in cahoots with loan officers and appraisers and took advantage of innocent buyers by selling properties at over-inflated prices.

But that was a long time ago before the loan police came in and made the big real estate bust. I would venture to guess that because of the new lending policies, rules, regulations, etc., it might be difficult to locate a team willing to burn buyers.

Anyway, FHA realized they were making things tough for borrowers who could not compete with non-FHA buyers on REO's and Flips. These types of sellers would much rather close earlier on a deal, then wait for FHA funds 90 days after they obtained ownership of the property.

So why are banks slow at waiving the 90 day rule? Paranoid, gun shy, once bit-twice shy, too busy to make a new policy. Who knows?!

It does make it difficult for us to figure out which properties to write up offers on!

1-All transaction must be an arms-length loan with no identity of interest between the buyer and seller or other parties involved.

2-The property cannot have a pattern of previous flipping in the past 12 months (One previous flip a year people!)

3-If the seller is earning more than 20% of what they originally purchased the property for, then the lender has to justify the markup with information about renovation OR a second appraisal.

The challenge is to obtain this information from the listing agent prior to writing an offer.

I believe a simplistic method of identifying enforcement for the 90 day rule is to ask the listing agent before writing offers how many times has the property transferred ownership in the last 12 months? If the loan officer is working for one bank, ask him/her what the flip rule is prior to showing property to a buyer.

Take a look at the history of sales transactions on the property in your property profile/intax or mls. See if you can identify what the current owner purchased the property for. If there is a 20% or more difference from the sales price you're trying to negotiate, then you'll need to speak with the loan officer to see what criteria the bank will be using for funding.

Asking this information upfront is not going to kill the deal for your buyers (unless you are competing with an all cash offer). Remember, if the buyer's bank will not waive the 90 day rule, there is a 50/50 chance that another borrower will have the same problem.

CALIFORNIA AGENTS-DO NOT TOSS YOUR CLOSED FILES!

Diana Turnbloom (Escrowcoord.com) — Wed, 18 Aug 2010 11:35:12 -0700

A little birdie just informed me that a couple of large California brokerages have been dinged for not providing reports/disclosures to perspective buyers from a previous transaction on that same property that the broker was involved in!

What this means is if your brokerage represented the seller on a transaction that closed 5 years ago, for example, and you now list it with the new owners and subsequently receive an offer on it, you must now provide ALL disclosures and reports to the buyer from the previous transaction as well as new/updated disclosures/reports.

Talk about a can of worms! How many of us destroy closed files after 3 years per DRE rules?

What do we do if the files have been destroyed? How long should we keep the files now under the new obligation-forever? Do we have systems in place to track our involvement in a previous transaction with that property?

What if the seller does not want the brokerage to disclose previous reports issued prior to a house being completely remodeled for fear of scaring the buyer away? Will they then list with another brokerage who does not have access to the information?

I am all for disclosure and don't mind perspective buyers seeing history on a property. But trying to follow this rule and enforce it (IF the file has not been destroyed, IF the company can even locate the file and disclosures) is going to be a challenge.

Some real estate companies have already incorporated a new disclosure notifying the seller at the time of listing of the agent's obligation to disclose previous disclosures/reports and another disclosure to the buyer explaining these documents are for historical disclosure only and may not be complete nor accurate as to the condition of the property today.

Sheesh, I see another huge round of paperwork that we will now have to track.

Get Team Members to Respond to Email Requests!

Diana Turnbloom (Escrowcoord.com) — Thu, 05 Aug 2010 13:20:28 -0700

Now that our primary method of communication is via email correspondence, our first impression of others on the pending sale team is frequently based upon the content of your email and how it's written.

If you want to earn respect and encourage others to respond quickly to your requests, then follow these simple rules;

1-KISS. Keep it Simple S.....!

Be very clear as to the reason you are sending the email. Provide a brief description in the subject line and again in your introduction.

Example: Subject line- "Loan Contingency Due Today"

Example: Introduction- "I want to remind you that per the contract, the loan contingency is due today."

2-Break up content into short paragraphs and use less words to communicate what you want.

When other team members are busy, they won't take the time out to read a lengthy email as one giant paragraph!

4-Use bullet points or number items you want the reader to do something about

If you have a laundry list of items you are requesting from the other side or several points you want to make, always list them using bullet points and separate into paragraphs. This is much easier for the receiver to read and they can use your list as a check-off sheet to help them follow through with your requests.

5-Subject line-Property address, escrow number, buyer's last name and what the email is about. (Buzz Statement)

Be courteous to other team members and let them know what the email is about on the subject line. ALWAYS put in the property address. I work on dozens of transactions and it's frustrating to receive an email from someone with no reference to the property address. If you are sending an email to the escrow officer, then add the escrow number as well. When sending an email to the loan officer, add the buyer's last name.

Use a buzz statement to give the receiver a little more information about the content of the email. This is really helpful when team members need to locate a specific email received or sent. See example #2

6-Use good grammar, spelling and punctuation

Turn on your spell checker! Look at your email content before you hit the send button. An email with numerous spelling errors, poor grammar and punctuation is what other team members will use to gauge your professionalism and competence.

7-Use easy to read font

Busy backgrounds or hard to read text will distract your reader from content. Use Times Roman or Arial 11 or 12 point AND DON'T CAPITALIZE-IT MEANS YOU'RE YELLING!

8-Recyle email requests.

Never delete emails you sent. Keep them in case someone does not respond to your first email request. You can re-send the email instead of re-recreating a new one!

Take the time to communicate effectively and professionally with others through email. If you don't, your first impression and subsequent communication attempts may sabotage your ability to obtain efficient responses to your requests.

Stuff Your Broker Never Told You!

Diana Turnbloom (Escrowcoord.com) — Thu, 22 Jul 2010 12:29:15 -0700

Brokers are great at teaching agents how to create a pipeline of business, but have difficulty breaking down the complex aspects of the pending sale into a clear, understandable format.

Throw in the fact every transaction is different and may require a different set of rules makes it even more challenging to offer advice.

Truth be told, it doesn't matter how many transactions you have, but how many you successfully close and are paid (It Ain't Over Till It's Over, Baby!).

Remember, closed transactions you are paid on but come back later to bite you in the you-know-what as lawsuits, or if you have to come out of pocket to pay for something DO NOT COUNT as successful closes!

So here are a few basic rules you should incorporate into all of your pending sales;

1-Disclose, Disclose, Disclose! Make sure disclosures are incorporated into ALL transactions (yes, I said ALL-including REO's and probate). These should be signed off by the buyer PRIOR to removing inspection contingencies. This is the number one way in my opinion, to avoid litigation.

2-Be a team player-Not someone who takes prisoners along the way. Win-win negotiations will always keep buyers, sellers and agents happy LONG after the transaction is over.

3-If you don't know something, ASK your broker or the other team members to help you. This is no time to try to "fake" your way through and refuse to listen to advice. The rest of the team will pick up the fact that you are a rookie anyway, so be upfront about it before you screw up the deal and make life harder for the rest of the team.

Don't know what disclosures are required? Ask your broker or go onto your state or local Association of REALTORS® website to obtain a list. When you are in court, your excuse that you didn't know is going to fall on deaf ears.

4-Inspections, Inspections, Inspections! At minimum, most properties should have a home and termite inspection of the property. Strongly encourage buyers to order these inspections and if they decline, then have them sign a disclosure indicating you have recommended inspections, they are declining, and they will not hold you responsible for anything that comes up after close.

5-Pay attention to what's going on with the buyer's loan. If you don't understand something, then ASK! DO NOT write up a contract, counter or addendum that negotiates dollar amount terms unless you have first spoken with the loan officer. ASK the loan officer for specific language to use so you don't waste time and embarrass yourself in front of your clients because a contract had to be re-written and re-signed.

6-Use good grammar and check for spelling when writing offers, counters, addenda and sending emails. Certainly it looks better to your client and the rest of the team when you appear to at least have a high school education. If English is not your first language, then for heaven's sake, take some classes. You're running a professional business and should project competence to all team members in your communications.

Now go out there and kick some real estate butt!

TMI on a Contract May Cause Delays in Loan Approval!

Diana Turnbloom (Escrowcoord.com) — Fri, 16 Jul 2010 14:04:56 -0700

Too Much Information on a contract can create a nightmare for you and your clients. when trying to obtain loan approval. As I have mentioned before, things are different in real estate land today.

An example of this is the California Association of REALTORS® Seller Property Questionnaire Disclosure.

Underwriters (the person who reviews the loan package the buyer has submitted to the bank) are catching this when it's included in the contract, then requesting to see a copy. If they see any red flags on the disclosure, they'll make it a condition (an item that needs to be repaired/replaced, etc. prior to close OR prior to loan approval).

But if it is NOT negotiated in the contract, then the Underwriter will usually not ask for it!

Another example is the termite report.

If a termite report is negotiated into the contract or is being paid through escrow, many Underwriters will ask for a copy of the report then make a condition that repairs be completed prior to close or docs even though it's an "As Is" sale.

However, if the termite report is NOT negotiated in the contract, the underwriter most likely will never ask for a copy of the report!

The bank certainly has a right to add these two items as conditions for loan approval or close. And the buyer and seller have a right to complete the disclosure and termite inspection even though it's not necessarily specified in the contract.

Be aware of additional terms you add to a contract that may create red flags to the bank and prepare your client for added conditions that may come up for loan approval.

Always check first with the buyer's loan officer to make sure you are creating a clean (no red flags!) contract to submit for loan approval

And the cat and mouse game continues....

Born to Be Wi-i-i-i-i-i-ld!

Diana Turnbloom (Escrowcoord.com) — Tue, 29 Jun 2010 18:06:47 -0700

Tee Hee! I invited our Active Rain Community Manager Brad Andersohn out to ride as a passenger in my hubby's race car last Sunday at Infineon Raceway.

You know that look of pure joy you see on a child's face when they experience something new? Well, I saw it when I opened the door to the car after the time trial. A big WOO HOO gushed forth first, then a sweaty Brad clamoring over the roll bars to get out(It was well over 100 degrees in the car).

I have to say that I get that same feeling when a really challenging pending sale finally closes. I can congratulate and thank the team for their patience, expertise and willingness to participate in problem solving. Ahhh, that feels good!

Check out his post on the experience! Hmm, what else can I offer to get the stink out of him? :-)

Where, Oh Where Have the Short Sale CLOSINGS All Gone?

Diana Turnbloom (Escrowcoord.com) — Fri, 25 Jun 2010 12:33:45 -0700

Anyone else out there in real estate land who thought they would have a million dollar year this year working on short sale transactions?

OK, I was duped. I heard the rumors about the next big trend in real estate, got ready to gear up for short sales and even started to include the new laws to help push short sale offers into acceptance faster into my Escrow Coordination Secrets seminar. But it seems the "loan police" are not doing as good of a job of enforcing as I expected!

So what happened? I don't see any significant change in the average amount of time the short sale properties are pending nor a dramatic increase in closings!

According to the MLS statistics in Contra Costa, Bay East and East Bay in Northern California (I pulled and compiled the data on my own), the number one pending and sold transaction type this year (townhouse/patio homes/single family) has been (drum roll)....CONVENTIONAL SALES!

I know there are some agents who put all their eggs in one basket betting on the short sale closings to bring in a ton of money for them this year.

But let's face it, they are a tremendous amount of work for the average agent who is not using a short sale processor, or if they have one, it's costing them money to pay for salary and yet they have not received any income from the deals!

Also, the chances of a short sale getting approval from the bank are pretty low unless you have an attorney to review the seller's situation and the offer (A good attorney can offer advice whether or not the offer is going to fly with the bank before you go through months of playing the paperwork and phone call game).

Finally, the risk of future litigation for giving bad advice to the seller is extremely high for agents. Is it worth it for you right now given the circumstances of the market?

I'm in the business of Coordinating pending sales. From a business model standpoint, I need to decide where my marketing money will get the biggest bang for the buck. But what if I get a lot of business on a product (like short sales) but no cash flow? Was this plan successful?

I've stopped listening to the media reports and now focus on real time sales. My conclusion is I'm better off spreading my business between conventional, short sale AND REO's. If one transaction type slows down, I still have an income stream from the others.

I think we need to be realistic with this constantly changing market and keep it real by maintaining an open mind on the type of transactions you want to work on. It has to be profitable to work!

At this point in time, I really don't see myself becoming a millionaire on short sales. But that may change in another month so I'll continue to keep my eyes open for trends.

Good Practices of a Pending Sale Transaction

Diana Turnbloom (Escrowcoord.com) — Wed, 16 Jun 2010 18:49:49 -0700

Some of the best transactions I've worked on have not been because they were easy but because each team member took responsibility for their part in problem solving, communicating and keeping their clients focused on the final goal.

Having a TC to help you with your transactions does not let you off the hook with regards to responsibility. There are still critical key items that require an agent's participation to ensure a successful close.

Below are a few items I see frequently trip up agents who are not paying attention;

Termite report negotiated on an as-is sale

What happens if the report is on the contract?

•· The Underwriter at the bank will red flag it and ask for a copy of the report

•· The Underwriter will condition any section 1 damage and make it a prior-to- funding or worse prior-to-doc condition

•· Buyer is paying for repairs on a home they don't yet own and in some cases, do not have loan approval on!

If the intent of the buyer and seller is to purchase/sell without any repairs, do not negotiate the report into the contract.

Buyer can still opt for a report and has a right to cancel the escrow during the inspection contingency period if they are not comfortable continuing on with the sale.

Adding credits to a contract

Ask the loan officer first exactly what language to use.

Certain banks allow only a certain amount of credit and a certain type of credit (closing costs, non-recurring closing costs). You are wasting everyone's time when you don't take this important step and get the language right the first time.

Signed documents and the inspection contingency removal

All documents (disclosures, reports, etc) should be signed by the buyer prior to removing the inspection contingency for a good paper trail. Judge Judy is not going to like the fact that your buyer removed the inspection contingency on the 1st of April but did not sign off on reports and disclosures until April 15th! If you are working with a TC, always check with them first to see if there are any items the buyer still needs to sign.

When to remove the loan contingency

MEMORIZE THIS SENTENCE THEN REPEAT MULTIPLE TIMES TO THE LOAN OFFICER UNTIL YOU GET THE ANSWER "YES"

"Have all prior to doc conditions been met AND approved by underwriting?"

Buyer's agents are getting into trouble with this because they assumed that if the appraisal came in at asking, the buyer has loan approval! Ever heard the words "appraisal review"? The appraisal report along with any other conditions must be APPROVED by underwriting before the team can go to third base. When this happens, the buyer can then remove the loan contingency.

Before a Buyer Removes an Inspection Contingency

Diana Turnbloom (Escrowcoord.com) — Wed, 09 Jun 2010 11:38:59 -0700

Before your buyer signs the contingency removal, several things should be accomplished. Be sure to create a checklist for yourself to ensure the following are complete;

1-All required disclosures for the property have been received, reviewed AND signed off by the buyer.

This MUST be done for paper trail purposes. Two years from now when you are in front of Judge Judy, it's not going to matter that you did deliver the documents to the buyer prior to the contingency removal but did not get them signed until after!

2-All reports generated received, reviewed and signed off by the buyer.

Ditto scenario above

3-All inspections that the buyer wants completed on the property have been done.

Once the contingency is removed, the seller no longer has an obligation to allow inspections on the property NOR negotiate with the buyer for additional repairs!

4-The buyer has had ample time to review the reports prior to removing the contingency.

No handing the report over to the buyer and asking him to remove the contingency at the same time. The California Purchase Agreement Contract allow buyers 5 days (template) to review received reports prior to removing the inspection contingency!

4-Repair requests have been negotiated and agreed upon by both parties.

Drives me nuts when I see a buyer's agent in the middle of repair negotiations remove the inspection contingency. What is the seller's motivation to do any of the repairs at this point? He can now say no and the buyer is obligated to continue on with the sale.

5-The buyer is comfortable and willing to proceed with the transaction based upon the condition of the property and any repairs the sellers has agreed to complete.

It important to ask this question when discussing the inspection contingency removal with a buyer. Ultimately, it's up to the buyer to decide whether they want to buy the property or not.

Confirming completion of these tasks will keep you out of the courtroom and ensures your buyers are continuing on the transaction with eyes wide open.

What's your experience with a short sale processor?

Diana Turnbloom (Escrowcoord.com) — Thu, 27 May 2010 13:07:18 -0700

I'm looking for feedback on short sale processors that have their own attorney. If you have used the service, would you share with others your experience please?

Why In-House Transaction Coordinators Don't Always Work!

Diana Turnbloom (Escrowcoord.com) — Wed, 26 May 2010 14:46:53 -0700

I used to be strong advocate for in-house Coordinating when I first started teaching classes on Transaction Management.

However, recently due to my own experiences as well as the experiences of other TC (Transaction Coordinators) and Agents/Brokers who hire and utilize this service, I see increasing problems with this type of arrangement.

As a result, turn-over in many offices is high, TC's are burnt out and the industry in general is not benefiting from some of the greatest services an experienced TC can provide.

Back when I started working as a Coordinator, it was rare that an office or Agent even used one. Now a Coordinator can be found in many offices and are used as an added value service for prospective agents interested in joining the company.

A GREAT Coordinator has closed 100's of transactions and has a wealth of knowledge to share with the team that the average Agent/Broker will most likely NEVER experience in their entire career! She keeps a watchful eye on documents and potential problems plus helps reduce potential litigation after close.

Let's start by listing the most common complaints I hear from Brokers and Agents;

"I hired someone who supposedly had experience, but they were totally disorganized and incompetent"

"The TC quit after 6 months because they couldn't keep up with the high volume of transactions"

"The TC quit after one year because the office did not have enough transactions to maintain the income they required (commission based)"

"I can't hire anyone because; my office only sells 1-4 properties a month and can't afford to hire someone full-time/I don't have an office/I'm worried that I'll have to lay off staff when the market slows down"

Here are common complaints TC's have about working as an in-house Coordinator;

"I can't get my work done because I'm constantly interrupted by agents asking me to do non-TC duties such as fix the copy machine, make copies (for a transaction that it not mine!), FAX contracts, input listings into the MLS, answer phones, do bookkeeping, etc."

"I can't get my work done because agents interrupt me asking about contracts/negotiating etc. and the broker is never around to help them"

"I can't make enough money per transaction because I'm bogged down with non-TC duties which makes it impossible for me to manage high volumes of sales" (commission based)

"The broker wants me here 8 hours a day whether I'm working on one or thirty transactions. I'm losing money when I can't get business outside the office (commission based)"

"I received no training when I started the job. They just dumped a bunch of files on my desk and told me to get started. Now agents are mad at me!"

5-I don't have a choice of whom I want to work with. A few of the agents are downright abusive towards me but I can't "fire" them.

Both sides have legitimate complaints and I see a critical need for change in the expectations and responsibilities or experienced TC's will be a rare commodity.

So what's the best way for our industry to retain these golden nuggets of opportunity? Here are just a few;

1-Proper Interviewing

2-Specific job description (do not blend job duties) When you hire an attorney, do you ask them to pick up your dry cleaning for you?)

3-Training

4-Setting limits on agent abuse and being an advocate for the Coordinator

5-Allow the Coordinator to work virtually and for other companies

6-Pay commission only

What's YOUR Red Flags of Potential Deal Killers?

Diana Turnbloom (Escrowcoord.com) — Wed, 12 May 2010 12:17:57 -0700

I read a fellow AR member's post regarding an issue that came up and killed a deal while under contract.

After 13 years in the biz, I've got a radar sense when a transaction is in trouble. Identifying these problems can help avoid delays and wasting everyone's time. Believe me, it's rare when I DON'T have some sort of problem associated with it.

So for the agent who has not closed a lot of transactions, I'm going to share with you my Top 5 Red Flags of Potential Problems. I welcome you to add your red flags as well!

1-Loan officer doesn't call you back! Big Red Flag-Lenders only want to talk to you when they have good news!

2-Can't get a pre-qual letter-Come on! Requirements for a pre-qual letter are pretty simple like being able to fog a mirror. Just kill the deal now and don't waste anymore of the team's time!

3-UHO's on a title report (unidentified home owners). I'm always leery of this when a seller is unaware of someone on a title report. Fixing this problem takes a lot of time and effort and can cause delays in closing!

4-House has sold for way more than comps support. Big red flag in today's Real Estate World. Why waste everyone time when there is a greater than 50% chance the appraisal won't fly if the buyer is obtaining a loan? Check your comps before writing and accepting an offer. Or make sure your buyer can come up with the extra cash to close.

5-Prisoner-taking team member. These types of individuals are not team players, do not communicate well with the team to keep everyone informed. Worse, they are angry, suspicious and become more uncooperative as the transaction continues. I have seen this negative attitude turn an OK transaction into bad Karma where everything seems to go wrong!

OK fellow AR members, what's your red flags?

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What's YOUR Red Flags of Potential Deal Killers?