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3 "Quickies" for Realtors! - You asked for education, here it is!

By
Mortgage and Lending with Funky Quail Vintage

I have had 3 things come up lately that ARE LITTLE THINGS...that have turned into BIG things...so I am sharing with everyone as a learning experience!  These are pitfall items that can cause you grief at the end of a transaction!  Let's deal with them up front shall we??

1.  Chattel- On the OTP

 

It is defined as follows:

Personal as opposed to real property; any tangible movable property (furniture or domestic animals or a car etc) or,

An item of tangible movable or immovable property except real estate and things (as buildings) connected with real property

 In other words, something that is not attached to the home like a LAWN TRACTOR, the family PET, Big Screen Tv, etc..etc.. 

This has come up several times recently, so I thought I would address this in a blog, as well as give you some verbiage that would help eliminate the problem if it MUST be put in the OTP!

 

Here are a couple of language choices you can use to eliminate this problem!  Especially with in-experienced lenders, this will come up at the last minute and bite you...so be aware!  I would check also with your local Board of Realtors to see what THEY might have to put in there already typed up!

 

"Stove & Refrigerator are not included in the purchase price" (this one is only an example..so CHECK with your local Board of Realtors on this one, or company.  It may also vary from State to State)

&

"Walter Filtration System,Shed & Hot tub are of no value to the borrower and at no cost to the borrower!" (this one is an ACTUAL example, and is exact wording from JP morgan chase on a recently CLOSED LOAN)

If you deal with ONLY a local small town bank or Credit Union, this may not be an issue....

Point of the whole thing is to TALK WITH YOUR LENDER PARTNER!!!

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2.  Power of Attorney

"A legal document allowing one person to act as the agent of another"

 This one is HUUUUGGGEEE!

I realize that as a listing agent, you can only be as good as the SELLER IS TRUTHFUL!

Hence, a POA, or Power of Attorney, in some cases MAY NOT BE accepted!  PLEASE do not assume that it will be...get a copy of it...and provide it to the LENDER right away!  Send it over at the same time as the OTP and earnest money!  That way, the LENDER can determine with his/her underwriter if it is acceptable, ONCE AGAIN, at the BEGINNING, or FRONT END of the transaction!

Furthermore, if there is any kind of a Trust Involved, Will...etc....always good to have COPIES of those documents handy! Sadly, yes, even a Death Certificate! YES it is YOUR BUSINESS!  YES, it MAY come up!  Wouldn't it be nice to just HAVE in your file if needed?  If there was/is an attorney involved, it is also good to have THEIR name & phone# available as well!  More than anything, in a situation such as this, the TITLE COMPANY will need this information!

 

 

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3.  Earnest Money

"Money paid as a deposit to show intent to buy or to reserve an item to be purchased; especially, money accompanying an offer to buy real estate"

In the past, it has been acceptable to just send over a copy of the check, along with a receipt from the Realestate firm that holds the money and we were good to go!  Well, dependent upon the program, the underwriting departments are now taking it just a LITTLE FURTHER...

Now, they are asking for Proof that not only the customer PAID the money, but that it has also cleared their bank!!  Why you ask??  Well, let's say for a second that the buyer was REALLY CLOSE on verifying enough in their bank accounts to close on their home!  However, if the bank statement provided or verification of deposit provided does NOT have that money deducted from it yet...they will be short to close!  This is mostly prevelant on 1st Time Home Buyer loans, and should be part of the discussion both on the Realtor side, as WELL AS THE LENDER SIDE!!

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Obviously, these situations are subject to lender overlays, as well as the TYPE of loan that the buyer is aplying for!  HOWEVER, if you get into the habit of following these 3 simple suggestions..(and you may already), you will be able to help eliminate some of the last minute snafu's that are starting to pop up!

Thanks for reading & Keep selling!

-Darin-

As always, I welcome your concerns,comments,issues and suggestions!

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Feel free to check out a few of my more popular blogs by clicking on the link below!

Open House Suggestions    Open House Suggestions 2     Golf Outings   Wall-E   USDA Loans 

What do I need for Pre-approval?  Buying a Fixer Upper  What is a pre approval?

What is a search & hold and why dont we use them?

Proudly serving the entire State of Wisconsin since 2003!

UPDATE- 6/8/09  Spoke to MY title company....they stated Transfer of EMD from acct to acct is State Specific...Hence, they suggested that if a borrower places the escrow with ONE First American office,  closing at another First American office will make for an easier paper trail and transfer of funds!

Darin Osenberg
Funky Quail Vintage - Nashville, TN

Jim-  I recently had a deal here in Wisconsin, where the daughter was "selling her mom's home", and the mom was in a nursing home.  She had a copy of the power of attorney, but it was a general power of attorney.  NOT a specific to the transaction POA!  Why was this important...because the mom was in a nursing home, but SHE WAS OF SOUND MIND & BODY...hence, the was FINE to sign the OTP etc...However, the daughter did!  I THOUGHT it sounded fishy, so I ordered a Search & HOLD from MY TITLE COMPANY!!! LO and behold, there was another daughter in title, as well as a TRUST!!!! The realtor had no idea...So, she had to go back and overnight the original document to the other daughter, and then when she received it back...she then had to take it to the MOM in the nursing home and have HER sign it!  All in all, daughter #1 tried to pull a fast one, and this is a Great example of why LENDERS & REALTORS need to work together! 

Thank you VERY MUCH for your thoughts!

D

Jun 09, 2009 02:36 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Jon- Most Realtors I asssumed knew all of this, and LEARNED all of this..whether it is thru the massive amount of CE, or just experience...I was just trying to share as I am sure a few of these items are going to continue to come up!  If just ONE PERSON has a pitfall they are facing and says..hmmm..." I remember this blog that saidddd"....then I accomplished MY goal!   Thank you very much for sharing!  It is appreciated!

D

Jun 09, 2009 02:38 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Lenn-  I looked into this a little bit more after your statement...and I do agree on a couple of points.  NORMALLY the appliances are just PART of the OTP...You are correct!  One of the multiple points of my blog was to try & "head off" issues with the FUNDER before they became issues!  THe actual 2nd suggestion line I put in there, was specifically given to me by both JP MORGAN CHASE BANK & WELLS FARGO!  I had placed a customer at both companies to see who could u/w it first!  Chase actually won in this case!  However, the language had to be added per UNDERWRITING!  Hence, trying to head it off at the pass again!!!

As far as the Earnest money goes...I am not a Realtor, so I guess even after 21 years, I didnt realize that the actual CHECK is not deposited right away.   That said, I dont think I intended in the blog to specify a time line.  I was just implying that AFTER the OTP has been signed, and everything is moving along...that proof of the check clearing the buyers bank WILL be required!  There are some types of loans not requiring this, but this is happening more & more...and is a potential pitfall!

Thanks very very much for commenting! 

D

Jun 09, 2009 02:52 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Richard-  WOOPS I skipped you!! sorry!   You know, I find it HILARIOUS that people think this is a TRACTOR, and I am guessing because I am in Wisconsin!  A lawn tractor is another name for a LAWN mower!  :)  LOL   ...Often times if people buy a large property, say...a  house and 2 acres...the seller will throw in the lawn tractor!  people HERE are very particular, and want that put in the contract....SO...I am merely finding a happy medium for them to not only satisfy that requirement, but also to make sure they UNDERWRITER will accept it!  IN the end, that is what is important!  :)

Thank you kindly for sharing!  D

Jun 09, 2009 02:55 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Florida Pines-  Awesome that you commented!  THANK YOU!  I have 3 short sale financing deals working right now, 1 has no appliances, 1 is missing the fridge, and one has everything!!    I defer to the experts on these...but will say I have seen it all!>>>no wait, I cannot say that....because if I do....something new will pop up!!! LOL  Thanks!  -   Darin/Bucky

Hanson's-  Thanks for stopping by!  Your experience is always appreciated!  You are probably right about your "brokerage" on the appliances, but I would encourage EVERYONE reading this...to actually CHECK with their local Board of Realtors on this!  That's the point of the exercise really!  Just because it has been done ONE WAY for years...doesnt mean it was done correctly!  And, in the end, the good people left in this industry dont care about THEIR paycheck, they care about protecting the customer!  That is what I do..but I also have to balance that with what the UNDERWRITER asks for on a specific loan!   :)

Thanks!  Bucky

 

Jun 09, 2009 02:59 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Florida Pines-  Awesome that you commented!  THANK YOU!  I have 3 short sale financing deals working right now, 1 has no appliances, 1 is missing the fridge, and one has everything!!    I defer to the experts on these...but will say I have seen it all!>>>no wait, I cannot say that....because if I do....something new will pop up!!! LOL  Thanks!  -   Darin/Bucky

Hanson's-  Thanks for stopping by!  Your experience is always appreciated!  You are probably right about your "brokerage" on the appliances, but I would encourage EVERYONE reading this...to actually CHECK with their local Board of Realtors on this!  That's the point of the exercise really!  Just because it has been done ONE WAY for years...doesnt mean it was done correctly!  And, in the end, the good people left in this industry dont care about THEIR paycheck, they care about protecting the customer!  That is what I do..but I also have to balance that with what the UNDERWRITER asks for on a specific loan!   :)

Thanks!  Bucky

 

Jun 09, 2009 02:59 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Lee & Pamela-  Thank you for the kind words !  Anyone who knows me...knows that when I say I appreciate it...I do!! :) 

Larry-  I know with your Mortgage Lendinig background, and being Lawyer...You knew better than to call your wife Chattel...However, your puppy is chattel!  :) :(   ....LOL....Please dont sell your house and included him in the purchase price!  Kristin would not be happy either!!!  Thanks-  D Money

 

Kristin-  Am I right about Larry?  LOL  You know, one day...someone will write a blog about the difference between a single wide trailer, double wide, manufactured home, modular home & stick built!  I dont think alot of people in general KNOW that mobile homes have car titles!  EVEN on their own land!!!  Thanks for sharing!  -  D

Jun 09, 2009 03:03 AM
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Darin: Thanks! That is so true. Every "i" needs to be dotted and every "t" crossed these days. It's important there is great communication between all the parties in order to get a deal closed. Any slip along the way and the closing could be delayed.

Jun 09, 2009 03:10 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Lenn, Sally, and others..>I UPDATED THE BLOG to compensate a little bit, as I was getting emails of confusion on the 1st CHATTEL example.  Point of the blog was to THINK ABOUT IT and talk with your LENDER PARTNER .....make sure that based on the Lender overlays, and the loan program that the wording is how the underwriter will like it!  I realize that we are concerned, and working in the best interest of the buyers/sellers..BUT, it doesnt matter unless we get the loan approved!    Your board of Realtors, or even YOUR COMPANY may have requirements, or suggestions on how to handle Chattel items as well!  It is clear already that there are mixed feelings on CHATTEL coming in from all over the country!  Discussion like this open eyes!!

Jun 09, 2009 03:35 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Paul- THANK YOU for commenting!!!  Preventive maintenance is KEY right now!  I JUST GOT OFF THE PHONE with a Realtor that is relatively NEW to the business!  What a treat to be working with him!  He is fresh out of his classes, and wants to work in conjunction with me as PARTNERS to make sure the loan goes smoothly !  We talked about the OTP and an issue with water in the basement!  We are even talking about Chattel!  Great to deal with up front!!  Thanks again for sharing!  I totallly agree with you!

D

Jun 09, 2009 03:46 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Interesting topics and good ways to handle the problems.  I have never accepted a deposit check.  I have always had the buyer hold them and/or put them in escrow.  We do not have an Trust Account and I want to avoid paper work.  We may have to change that.

Jun 09, 2009 04:01 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Gene-  THANK YOU For commenting!  ALways good to hear from you!  You bring up REALLY interesting subjects here...Leaving the money at the TITLE COMPANY is actually a good method...I am asssuming that is what you mean by "escrow".  My folks live in Arizona.  Ariz does things differentlyl than Wisconsin.  point is that what is typical for your area, may no longer be acceptable for different lenders...Good to just "ask" and see what they say!  I got an interesting article today from a friend of mine that I am going to be posting tomorrow...It basically states that if you make a mistake, own up to it..if you dont know the answer, ask!!!  A RESOUNDING response here on AR has been calling for COMMUNICATION TO IMPROVE!  EVERY blog is mentioning it now!  I think that street travels both ways!  We cant read minds as lenders, but we ARE asked to look into our crystal ball sometimes.  IN this blogs case..I am merely pointing out POTENTIAL pitfalls, and if it accomplishes anything, it will be that PEOPLE are now asking more questions!!

Thanks again-  Darin

Jun 09, 2009 04:19 AM
Dora C. Zuses
Coldwell Banker United Realtors - Navarre, FL

It s always good to have read these sorts of reminders

thanks

Jun 09, 2009 04:40 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Dora, you get my HOORAY for you today!  I have bestowed this upon you for your wisdom!!!

Jun 09, 2009 04:56 AM
George Wilson
Lincolnton, NC - Lincolnton, NC

Darin:good reminders that we all need at times. Another thing along with checking deeds is life estate deeds. The resident is not the owner but who gives the deed, IE: father/mother lives at the home but the children must approve the sale and sign the transfer deed or no sale. Some local agents have gotten in trouble with life estates not the deed did not get recorded until 4 business days after the attorney closing because some of the "heirs" lived out of state and it took time to get all the documents back to the closing attorney.

Jim: just checking the ownership on the deed sometimes is not enough. A saying here in NC is "it takes one to buy but two to sale"; in other words a husband or wife could on their own buy real estate without the other being on the deed but when they sale it both have to sign the transfer deed or else the recorded deed is no good. Like Darin is saying check & then recheck.

Lenn: In NC, anything that can be moved without damaging the property is considered personal property. When I list property with a stove that is not built into the counter area but a slide in and could easily be removed (has happen to several agents), I make sure it is on the listing contract (or purchase contract in case of my buyer) that the seller intends for it to go with the house so that there is no misunderstanding after the closing. If the seller plans on taking any appliances with them I again put that on the listing contract & note it in the agent's remarks on the MLS. It may be overkill on my part but I have heard too many "horror" stories from agents who walked onto the property with their buyers the next day after deed is recorded and no appliances. Attorneys said it wasn't on the listing or purchase contract as it is "personal property" it could be removed. The seller did replace them but with inferior quality compared to what was in the home (read yard sale).

Again thanks Darin for the reminder.

Jun 09, 2009 08:47 AM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

George- Thank you SOO much for all of the valuable information!  It is always nice when someone chimes in that has alot of experience in this area!  Mainly when I do these things, I am hoping to create awareness....Not be TOO specific!  As long as we are all asking ALOT of questions, we should be good to go!!

Thanks again!

Darin

Jun 09, 2009 11:10 AM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Darin,

This ought to be featured!  Excellent post!

Mike in Tucson

(regarding comment #39, how did you place the file with two banks at one time?  Who got the original file?  Enquiring minds want to know.  :)

Jun 09, 2009 11:43 PM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Mike-  Thank you for the compliment!  I was/am grateful that this post was featured in the newsletter, AND i made the member spotlight too!  Thanks so much!

#39.  Well, some of our funders require original documents, and some dont.  Some ONLY want copies...In this case, the two funders, did not require orignals, and I merely made copies of the entire file and forrwarded it to underwriting.  Both, have a habit of getting another set of FINAL 1003's, etc...signed at close, so not sure why it would be a big deal.  However, it does vary from FUNDER to FUNDER>   We used to work with a company called COMCOR mortgage, and they ALWAYS required the originals.  I always thought that was funny though, because if the State or Fed came in here, and wanted to see the original file, we would not have proof to show them that the customer actuall signed the stuff!  Kinda crazy!!  ANyway...hope that answers your question!

Have an awesome day, and I appreciate the compliment!

D

Jun 10, 2009 02:45 AM
Ryan Hukill - Edmond
405home @ ERA Courtyard - Edmond, OK
Realtor, Team Lead

All good tips, and things that agents have to be aware of.. this is why the experienced agents are rocking & rolling right now and the green ones are hitting hurdles left & right.  Great post!

Jun 17, 2009 03:14 PM
Darin Osenberg
Funky Quail Vintage - Nashville, TN

Ryan-  Thanks so much Ryan!  I COULD not agree with you more!  It is amazing the power of repitition!!!   Thanks again..and hope to see you AGAIN!!  Check out my open house ideas..you will probably like them too!  -  Darin

Jun 17, 2009 03:21 PM