Paying attention to the title report is crucial.  Especially now when people are sometimes upside down in their home.  Not to mention, some people have no clue when there is a lien on the property, could create sticky situations.

Kim: You cannot imagine how many times a title report reveals money is owed against the property that the seller did not disclose to the real estate  agent.

I am not sure why, but this plays havoc with the transaction. If the appriasal comes in low in combination with more $ being owed, the whole sale can go up in smoke. This has happened to me.

I always do a seller net sheet with my CMA so that a seller can decide if it makes sense to sell.  One of the title companies has an online program that lets me lookup what lenders have liens on the property.  Now construction liens etc don't show up, but if it's a new home I just head to the county and look it up in their database. I always ask about taxes as well and include that in my net sheet.

Sometimes people when they see the numbers understand that they can't sell.  I've never had a deal blow up over this issue.  I GRILL my sellers about their finances and when they see my net sheets they ususally call the the correct payoff amount so I can "correct it" for them.

Forget the title report.  Seems to me that the listing agent should be doing due diligence when they list.  Good grief, many never even ask.  Over the years, I've had contracts where the agent didn't know that

The seller is in bankruptcy

The seller has 3 liens on the property.

The seller is in foreclosure.

The seller has $55,000 tax liens and $20,000 net proceeds.

The seller has a $65,000 lien from Mrs. Fields Cookie Franchise financing company which he didn't know created a lien on the title of his home. 

All are true. Honest.  All closed but it takes some real hard work.  None of the listing agents even asked. 

Okay, Lenn. As always, you tell it like it is. I was too afraid to come right out and say what you did:

Some agents never even ask. As the mortgage broker, I discover this, but by then I have a buyer who thinks they have found their dream home. I must tell a listing agent that we have a problem (and I hate this because at this late stage in the game, many people are involved and wondering why this agent did not do their job)

When I was an agent many years ago, they taught us net sheets. I always filled them out trusting that the sellers knew how much they owed.

Now that I am a mortgage broker, I understand how often the info they feed you just isn't right.

Maybe in the past we took a casual approach to this information, but now there is too much at stake to gloss over it.

No one WANTS to have a deal blow up. But not getting this info up front is really really RISKY IMHO.

Melina: I am glad you GRILL. You are a very savvy agent. You should GRILL because there are so many people out there who don't understand how close they are to break even.

Getting this info, no matter HOW it is done is absolutely critical.

There is absolutely no reason for the buyers to get this information following a title search.  There has got to be more reward to listing a house than writing it on the monthly production board.

Due dilligence for a listing agent requires that they ask for an exinine the owner's last mortgage statement, do a net sheet and ASK about additional loans, bankruptcy, WHO IS ON THE DEED and a whole list of "stuff". 

I had one in Anne Arundel County where the seller was in foreclosure and we didn't find out until a week before it went to auction.  It was ugly.  The seller had to move the second trust to his ex's house.   The lender delayed the foreclosure for one week to give the seller time to close.  The seller paid off $7,000 tax lien with money from his family and walked away with nothing.  There was about 4% left for real estate commission and the listing agent tried to get me to agree with the old 50/50 split.  HA!

The listing agent was a "Top Producer".

My buyer client sent her a draft of a complaint to the Real Estate Commission that he would file if we didn't close and if I wasn't paid my full commission.  We closed and I collected my commission. 

It pays to have good buyers. 

Lenn: OUCH. I have had that happen to me as well and it isn't pretty and it isn't fun.

Of course when you have too little equity at the end of the transaction, they always look at your commission as a slush fund for shortfalls.

This is why IT PAYS to know early on by being that slueth.

Great post Janet.  I think I am thorough, but you gave me some pointers especially in this market where some of are sellers keep dropping their price.  Can they really drop drastically and come out OK???  I have some checking to do.  Over my 16 years in the business I had one Seller that put in about 3,000 out of pocket to close the transaction.  We were all aware of it from the get go.  Pre-Lims are SO important for the Seller, Buyer, and Realtors to READ and UNDERSTAND.  If you don't understand, call your chief title officer.  I order any exception on the Pre-Lim, give copies to my Buyers and have them sign for it.

Roxanne Schilling, Realtor at Lake Tulloch

Ok so this is news to me - I  don't know anyone (in BC) who would ask this information of their Seller (I'm speaking of Realtors).....I realize our market isn't like yours - but that imformation is privileged....we can ask the questions - but they are under no obligation to show us the paperwork.  I usually recommend they talk to their Bank and review their assets, penalties, payouts etc....We also don't typically do net sheets..........these are great ideas though in anticipation of what one day will probably be a changing market.......Interesting.