Real Estate Transaction Closing Rules and Forms Change on August 1, 2015

Real Estate Transaction Closing Rules and Forms Change on August 1, 2015 

On August 1, 2015 the HUD1 and the Good Faith Estimate will no longer be used. There will be NO more HUD1 or Good Faith Estimate. 

This is important for real estate agents to understand and be able to also schedule closings taking the new changes into account. 

Don't get embarrassed by asking your buyer to get a Good Faith Estimate after August 2015:). 

The documents that will be replacing them are:

1. New Loan Estimate 

2. New Closing Disclosure

The reason for these new documents is because of the Dodd Frank Reform Act that was passed on July 21, 2010. They phase in all the new laws. 

The reason for the government to implement these 2 new documents they say is to:       “improve the settlement process for consumers”. 

After we read the laws regarding these forms we see how it could really become an issue rather than an improvement. 

We'll come back to that after we explain what the new forms entail: 

The most important changes are that IF anything changes at all it will require the lender's approval and a 3 day waiting period for the buyer. 

If the interest rate changes this automatically triggers a 3 day waiting period. This means that even if the buyer has to close or wants to close, the law will NOT allow him or her to close. Of course, the regulators “know” more than the consumers do about what is good for them. 

If the loan product changes in any way this automatically triggers a 3 day waiting period. The means that even if the contract states that the closing will happen at said time and place, the government rules trump your contract. ( Now that is for another discussion.) 

Talk about having to lock in your loans! ( Is that still allowed?) 

If the seller removes something from the property and thereby this triggers an addendum to the contract… oh no…. that triggers not only a 3 day waiting period but also an approval from the buyer's lender who is most likely not going to be at the closing table. 

Make sure you schedule your closings with these built in waiting times. NAR legal counsel advises to set your closing up for 7 days in advance of the day you want to close. 

Work very hard to not have any last minute changes, especially at the closing table. Explain to your sellers and buyers the reason why, that the closing WILL be delayed. 

Make sure your sellers stick to their agreements in the purchase and sales agreement. 

Make sure that you stay in close contact with the buyer, the seller, the agents involved and the lenders. I know that is easier said than done. However, this is paramount to being able to close on the agreed upon date. 

Make sure everyone is on the same page! 

Imagine the scenario- each time one of these 3 day triggers happens you have to get all parties to sign extensions and addendums. 

Imagine the buyers at the closing table with their belongings in a U-haul truck and suddenly something changes on their closing disclosure! 

Imagine the sellers at the closing table all packed up and ready to maybe close on their next home and need the funds from this closing to pay for their next closing, but this closing is delayed because the interest rate changes and so now they have to wait another 3 days. You can see the chain reaction. The ripple effect. 

We like to call this, the law of unintended consequences of passing laws without fully understanding all the consequences. 

For now, Cash is still King and that is why sellers would rather have ALL CASH offers!  

Here is a video of the  NAR Legal Counsel explaining these changes: 

 

Shifting Your Focus In Order To Sell More Homes

Shifting Your Focus In Order To Sell More Homes

There are some shifts in the real estate marketplace that have been taking place over the last year. One of the most important strategies you have as a real estate agent in order to be successful in selling homes is to be aware of shifts and changes in the marketplace. 

When our market was super hot that the prices were going up thousands of dollars per hour- Nestor knew that the market was going to go bust so we got out of the residential marketplace and switched over to the parcel assemblage niche- putting properties and owners together for developers and builders to buy. 

Then Nestor said a few years later that we would need to shift again since the signal that the land assemblage niche was not going to be lucrative any longer was when builders stopped going through with the sales and terms. 

Nestor said that short sales were coming around the corner- this was in 2007 so we positioned ourselves to be there when the market crashed. At that time, there were no designations for short sales. There were no rules. We did very well during those years with having a high 98% success rate in closing our short sale listings and staying in the top 3% of closed sales for our MLS. 

So what are the new shifts? 

Developers are back in the marketplace. New construction is happening again. Those are 2 great niches. 

Where are you focusing your marketing? 

The Move-Up buyer pool is one of the markets that is shrinking. There are 18% less move up buyers. Move up buyers typically are between the ages 36-45 years old. These move up buyers were born in the 70's. 

Think about it. How can these people be move up buyers when they have negative equity in their properties in most cases, still. In most cases, these would be move up buyers bought their first homes about 10 years ago at the peak of the market and we are not anywhere near those prices again, at least not yet. 

Some of these buyers are instead coming into the marketplace as boomerang buyers. They are starting over again and have been through short sales or foreclosures. 

We have always said that if you want to make more money selling real estate you either have to sell more units or sell higher priced units. I would rather sell fewer homes at higher prices any day over selling more units. 

The Luxury home buyer niche is growing and at a good rate. 

Stock prices have been going up and the interest rates are still low, this fuels the luxury niche. 

This niche are people between the ages of 46 to 60. These buyers are the tail end of the baby boomers. They are wealthier than any other generation before them. In many situations, their kids are grown and typically both spouses have successful careers or own their own businesses. They also have less debt. 

This group is good with their money. They have success in business equity, they own financial securities, stocks, bonds and mutual funds. They also tend to have income producing real estate, trusts and life insurance. 

The best part about this niche- is there are  A LOT of them! 

The best group if you love to help people is the older baby boomer generation, the ones who are turning 65. 55+ communities are popular with this age group but we also must consider multi-generational households who would not qualify for active adult communities. 

8 million people will be turning 65 over the next 10 years. This group tends to be very loyal so if you develop the loyalty they will refer their friends to you. In this group- you will see a lot of them will move in social groups. One couple will move into a community, fall in love with the community and start telling their friends about it. Soon more and more within that social sphere move into the same community. 

While Florida and Arizona have typically benefited from this group of buyers that is no longer the case. Yes, they will continue to flock to Arizona and Florida but many in this group will retire in places like Logan Utah, Boise Idaho and Fargo North Dakota. They also will move to places close to their grandchildren. 

Be ready to shift in your marketplace. Embrace the different niches you can work within to be successful and sell more houses this year! 

Point2 is Sold to Move.Inc

Point2 Listing Syndication services ( which is a Canadian company Ltd) is sold to Move.Inc. 

2014 seems to be the year of selling companies in the tech sector of real estate. 

Point2 announced this morning that they sold their Point2 Syndication services to Move.Inc. 

Point2 has syndication relationships with 112 MLSs in the U.S. with over 900,000 listings. 

“The combined network will remove duplication of listings currently served by both systems, and will now provide information from more than 600 data sources, and distribute approximately three million listings nationwide, or close to 85 percent of residential listings in the country.  “

Move.Inc is the parent company of ListHub. Move.Inc bought ListHub in 2010. 

Move.Inc bought TigerLeads in 2012. 

Point2 just signed a 10 year lease in a new building. 

Move.Inc operates Realtor.com. 

According to Luke Glass who is the executive vice president of industry platforms for Move: 

“This is a critical step toward our vision of a single industry platform to manage listing, agent, lead and other analytics information in a single platform,  which is an important component for the largest brokerages and franchises that span multiple MLS markets,” said Luke Glass, executive vice president of industry platforms for Move. “Once the transition is completed, these listings will be protected under ListHub's stringent terms that guide the responsible and fair exchange of value between content owners and publishers, while brokers will have a single point of control through their dashboard. This model offers significant advantages to the industry in improved online listing accuracy, a single platform for MLSs and their largest brokerages and franchise members, and streamlined service for the publishers who strive to serve the industry through marketing websites and other software solutions.”   

BROKERS BEWARE: Do You Use Drones for Your Listing Photography?

BROKERS BEWARE: Do You Use Drones for Your Listing Photography? 

When we were at our homeschool convention in Orlando we took Tristan to his first “rock concert”. It was a Christian rock band playing for the attendees of the convention. I noticed a photographer at the front side of the stage controlling a drone with his remote. 

I was amazed at this technology as I watched the drone flying above the crowd taking video. I thought about how many agents use this same technology for taking images of their listings. The fly over drones take very good photos and you get a great in depth perception of the lay out of the land. I also of course, being me, thought about how everything that is invented can be used for good or evil. I thought about the intrusions in our personal lives and privacy by governments using drones. There is ying and yang. 

Now, the FAA ( Federal Aviation Administration) has issues subpoenas to real estate brokers for using drones to take images of their listings. The FAA just went after several New York City brokers. The FAA is issuing fines for unlawfully using drones as drones are considered flightcraft NOT model airplanes. 

The FAA does not allow the use of drones for commercial uses. Federal law outlaws this. As with most government rules, they fall behind the times and technology advances so the best thing to do for now is to stop using your drones until the FAA creates the rules for commercial uses of drones. 

They do allow hobby drones and have also given police and first responders some rights in using drones. 

The National Association of REALTORS® has warned real estate brokers and agents to NOT use drones for getting pictures of their listings until the FAA releases rules about using the drones. The FAA is expected to release their rules in the later part of 2015. 

If you use drones in your real estate business you take the risk of getting fined by the FAA if they find out. How can they find out? Of course, your listing's neighbors can call them:). Be careful out there! 

Photo credit:  By Clément Bucco-Lechat (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons with permission to alter photo. 

 

3 Facts That You May Not Know About Zillow- That are NOT in Your Best Interest

It is bad enough that third party aggregators get the MLS feeds and then sell the leads to the listings that you worked to procure back to you, the agent.   

1. But did you know that a homeowner can list their property as a FSBO on Zillow too? Yes, for FREE, they can list their house for sale by owner on their website, in case you did not know that. 

2. If you have a widget from them ( see, I don't want to use their name over and over again- because that helps their branding on Google) on your website you are telling Google that they are the authority for homes for sale. Of course, you are not as big as they are, so the authority benefit goes to that link to them and not back to you. 

3. They bought Postlets. Did you know that whenever you create a postlets flier and you have that on the internet, there is a link back to their website at the very bottom of the postlet under the flier? 

From an SEO standpoint – these are not in your best interest. 

From a listing agent standpoint- this is not in your best interest. 

I know, many agents tell me they have to play the game or they lose business. I have never believed that one must compromise their principles, values or business in order to make a profit. There is always another way. 

Of course, it is all up to you how you play the game and how you run your business. But real estate agents who don't pay attention to the actions they take online are the ones who begin to wonder why they no longer have their website ranking on the first page of Google, and guess who has taken your place! Agents are the reason for their own loss of control of their inventory.