July 26th, 2011 at 11:38 pm
On July 12, Bank of America introduced its “Substitute Buyer” program for short sales. According to this new policy, agents can submit a backup offer to B of A if the original buyer has walked away from a short sale transaction. According to B of A, this means you will no longer need to initiate a new short sale for the next buyer. Rather, you will continue to work with the same transaction in equator and with the same short sale specialist. Remember, this policy only applies if you have a backup offer ready when the original buyer cancels. If there is no backup ready, you will need to market the property again and start from the beginning when a new offer is received.
If, on the other hand, you have a backup offer ready when the first buyer walks, you should notify your short sale specialist about the cancellation. According to the Policy, the specialist will then respond, asking if you have a back up. If the answer is yes, the short sale can proceed without having to repeat the short sale initiation steps. Instead, you will be directed to complete the following tasks within 14 days: 1) Complete the “listing data” task; 2) Provide the marketing description; 3) Review the marketing plan; and 4) Upload the offer. When that is done, you can proceed with the short sale from that point forward without starting anew. Of course, this is good news for B of A transactions and will hopefully be copied by other lenders very shortly.
As always, please feel free to contact us with any questions you may have.
July 15th, 2011 at 11:37 pm
With the increasing importance of the internet in our business, we have seen a corresponding increase in copyright issues and claims being made against our agents. The most common claim is made by the owner of a picture, such as Getty Images, against an agent website for using their photos without permission. Typically, our agent finds a community type picture (such as the Hollywood sign or Coronado Bay Bridge) and puts it on their website without paying for it or getting permission from the owner. Many companies are now protecting those assets aggressively, writing demand letters and seeking payment of a use fee, sometimes in the thousands of dollars. Frankly, those claims have merit, since under the law, the owner of a picture has the right to control its use. As a result, be very careful about the photos you use and make sure that (1) all pictures were taken by you or (2) your have permission to use them. Since the photographer of a picture is assumed to be its owner, using your own pictures solves this problem.
This issue also has implications for the photos you use for your property listings. As I said above, as a general rule, the photographer is the owner of the pictures she takes. As a result, if you want to protect the pictures of listings you upload to the internet, you need to make sure that the photographer you hire will assign its rights to you and the Company. By doing so, we can protect those pictures on the internet, and stop other agents from using them on sites like Craigslist or their own personal sites. Without those ownership rights, however, we would have no right to take any act to protect these pictures. To make this easier, we have reached agreements with our two preferred vendors, Visual Tours and Image Maker 360. If you use either of those vendors, our agreement will govern and all pictures taken for our listings will automatically be owned by us, thereby allowing us to protect them for you. However, if you use a third party photographer, you will not automatically have this protection. So, please either use one of the vendors above or make sure that your photographer will assign his/her rights to your listing pictures.
As always, please let us know if you have any questions.
July 1st, 2011 at 11:35 pm
As most of you know, the limits for conforming loans will change on October 1, 2011, going down from $729,000 to $625,000. Any loan that does not close by September 30 will be governed by the new loan limits, with no exceptions or extensions. This change leads me to two important points. First, if you have a loan/escrow in process where the necessary loan will be conforming under the soon expiring limit, make sure to do everything possible to get that loan approved and ready as early as possible. Most loan problems, like unknown liens, etc, can be solved, but those solutions take time. So give yourself as much time as possible before September 30. Take your client to HSL as early as you can, so they can find out what problems might exist and can solve them. Remember some clients will not be able to get a loan after that date. So work early, avoid those problems and get the loan absolutely ready as early as possible.
Next, use this as an opportunity to get your hesitant buyers to move on a property. Let them understand that a loan above $625,500 will be much harder to get after October 1. Make them understand that until then, they can get much more house for their money. This change should make many of our buyers more serious and allow us to find them a house to buy immediately.
As always, let us know if you have any questions.
June 27th, 2011 at 11:34 pm
As you know, in this market we have seen an increase in our lease business. People are losing their homes in foreclosure or going through short sales, and do not have the credit or money to buy a new property. As a result, there are many more leases in our market place. In that context, we have noticed one issue with our practice that we wanted to address. In most leases where we represent the landlord, we get a Lease Listing Agreement signed. In that Agreement, paragraph 3 deals with compensation and paragraph A(1) covers fixed term leases. Paragraph A(1)(a) is the clause where we should place the percentage commission rate, such as 6% “of the total rent for the term specified…” Our problems have arisen in paragraph A(1)(b), which relates to renewal commissions and provides as follows: “Owner agrees to pay Broker additional compensation of ___________ if a fixed term lease is executed and is extended or renewed.” What we have seen on multiple occasions is that the blank in that clause is not filled in. Of course, in all those cases the lease we originally negotiated was renewed, and we wanted our renewal commission. Unfortunately, given the fact that this is a CAR contract, and we are deemed the experts on the document, a blank where the compensation term is supposed to be will be interpreted against us. In other words, if we do not fill in the blank in that paragraph, we are most likely waiving any renewal commission. The percentage in paragraph (a) does NOT automatically get read into paragraph (b). As a result, please make sure you fill in both blanks, the first relating to a commission for the original lease, and the second for a renewal commission. If you don’t, you will unnecessarily be waiving commission money that you have earned.
As always, please feel free to contact us with any questions you may have.
June 20th, 2011 at 11:33 pm
As you all know, one of the first things an agent needs to do before taking a listing is pull a property profile and check the property’s title. After all, it does no good to get a listing agreement signed if the person signing does not own the subject property and therefore cannot sell it. Most of the time, this is an easy process: the person on title is the person you are dealing with. It is when that is not the case that complications arise and your due diligence becomes more extensive. Of course, if the title and your contact do not match, the first thing you need to do is talk to your contact and see why title is in someone else’s name. Normally, we hear that our client is handling the transaction for their parent or sibling. While that may be true, legally it makes no difference. Without the owner’s signature, or an enforceable power of attorney, the child cannot act for their parent. So, if that is the explanation you hear, ask for the power of attorney and give it to your Cal Title rep to make sure they will insure title based on that document. Again, in most instances, this will be all you need to do.
However, in today’s world of short sales and foreclosures, it is not unusual that the story we hear is much more complicated than above. For example, in one case we represented a client who wanted to sell a short sale, and when we checked title we saw a second owner on title for only 1%. That owner was in bankruptcy and, apparently, he was put on title to stop a foreclosure of the subject property. What that move also did, however, was give that person some control over the sale of the property. After all, since his signature was necessary to sell the property, we needed to determine what he would want to sign a Grant Deed at close of escrow. Obviously, this is something that cannot be ignored and must be dealt with. You will need to contact that owner, find out if they will sign a grant deed, have them actually do so, or perhaps you will need to step away from the property.
In another case, we were told by our contact that he was a hard money lender on the property, had “foreclosed” on it, and had a power of attorney from the prior owner authorizing its sale. When our agent checked title and found it in the name of a woman, we were told that the client always takes title in the name of his “sister.” With that explanation, our agents listed the property and received multiple offers, only to find that title was much more complicated than that. Apparently, when Cal Title reviewed the chain of title they learned that (1) the original foreclosure deed had the wrong legal description and was therefore rescindable; and (2) After the foreclosure, our “client” got numerous additional hard money loans against the property and recorded those Deeds of Trust as “accommodation recordings.” According to Cal Title, accommodation recordings are uninsured and therefore have to be dealt with before the property can be sold. The lender either needs to go back and get title insurance for the recording, or clear it in some other way. Regardless, these recordings and the foreclosure problems created complications making the sale of our listing significantly more difficult.
In short, please remember a couple of things. First, always check title before taking a listing. You need the right signatures to sell a home. Next, don’t just accept your contact’s explanation for a discrepancy. The contact may not be telling you truth about what the property’s owner is saying, but you need either a power of attorney or the actual seller’s signature. Next, be aware that “accommodation recordings” are uninsured and may make your deal very hard to close. And, finally, remember to get your manager and Cal Title involved as these issues become more complicated. Ultimately, the question on title issues is whether your deal can be insured, so Cal Title is your go to resource.
As always, please feel free to contact us with any questions you may have.
