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Sellers Need to Be Cautious at Showings

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 8th, 2019

The names Samantha Keithley, Orlando Martinez and Steven Wilson probably don’t mean anything to you. But they are the names of three real estate agents killed in the line of duty in just the last six months of 2018, Keithley in Land O’Lakes, Florida, Martinez in Philadelphia and Wilson in Hanover, Maryland. A fourth agent, David Stokoe of Salt Lake City, was killed in January by his tenant while serving an eviction notice.

The possibility of being shot, stabbed or bludgeoned to death is hardly the only issue agents face when they show houses to total strangers at all hours of the day and night.

According to the National Association of Realtors’ Member Safety Report, a third of all agents experienced some sort of situation that made them fear for their personal safety in 2017. It happened everywhere, not just in the big cities. And while women felt threatened the most, so did men.

That’s why NAR and many member firms have made safety a top concern. Every September is Realtor Safety Month. But there is no Seller Safety Month, and agents rarely pass along safety tips to their clients. So sellers go forth, often totally oblivious to the dangers that may lurk.

Here are some precautions every seller should take to protect themselves and their property:

-- First and foremost, trust your instincts. Your intuition is your most powerful crime-fighting weapon. If something or someone makes you uncomfortable, be extra alert and extremely careful.

-- If someone shows up to see your house unannounced, have them call your agent to schedule an appointment. That’s why you have one. No exceptions!

-- If you fail to heed that warning, at the very least you should never, ever let a stranger into your home when you are alone. There is safety in numbers. If the visitor is insistent, ask a neighbor to come over while you show the visitor around. If no one is available to keep you company, tell the visitor to come back later, or call your agent. It’s better to lose a sale than your life.

-- Identify unknown agents. It’s too easy for someone to print up fake business cards, so call the agent’s office to make sure the agent is who he says he is. Never let another agent directly into your house. Instead, make them open the lockbox your agent placed on your door to gain access. Non-agents won’t be able to.

-- Don’t make an appointment with potential buyers unless they give you their names and phone numbers and you have called them back to verify the information.

-- Beware of callers who knock on your door at strange hours, either late at night or early in the morning. Again, no matter who they say they are, ask them to make an appointment at a more reasonable time.

-- In advance of an open house, remove your valuables, including jewelry, artwork and electronic equipment. Also, guns and other weapons should be locked up and separated from the keys and ammunition. And never leave money, mail, bank statements, credit cards or your keys lying around. Keep them on your person, not in a drawer. Lock up your prescription drugs, too.

-- Pay attention to the way prospects view your house. Professional burglars often linger in rooms, looking for items they can dispose of quickly. They also search for ways to get in and get out, scouting possible escape routes and checking for security devices. Couples up to no good often split up so one can case the joint while the other keeps you occupied.

-- Be mindful of someone who is asking unusual questions that have nothing to do with the house.

These queries could be an attempt to determine how long you’ll be alone, or when the house will be empty. Never let potential buyers know your schedule.

-- If a prospect asks you to show him around, let your visitor enter the room first. Don’t turn your back on them or lead them around. In other words, direct them as opposed to letting them follow you.

-- Don’t allow yourself to be trapped in a corner or behind a desk or other piece of furniture. And never go into a walk-in closet, laundry room, basement or storage area with someone you don’t know. Those spots leave little room for escape.

Overly cautious? Probably so. But it’s better to be safe than sorry.

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Emotional Matters in House Selling

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | March 1st, 2019

There’s only one thing more traumatic than selling the family house you’ve lived in for years: Selling the house of a recently deceased loved one.

All things being perfect, the former owner should have a will that states how the house should be disposed of. Beyond that, though, you and your siblings, other family members or friends are going to have to wing it. But either way, the sale will be fraught with emotion, if only because it’s like saying another goodbye.

Agent Maria Sapio of Berkshire Hathaway Homesale Realty in Carlisle, Pennsylvania, has a lot of empathy for people entrusted with selling a loved one’s house. She walked the same path in 2016 when her mother passed away. She’s also helping several clients go through the process right now.

Sapio’s best advice: Before putting the place on the market, hold a gathering at the house so extended family and close friends have the opportunity to join you as you sift through furniture, clothing and other household goods. “This,” she posted on the ActiveRain real estate chat room the other day, “helps to transform a challenging task into a celebratory event of reminiscing and sharing about special times and memories.”

Several years ago, Kathy Streib of Room Service Home Staging in Delray Beach, Florida, held such a get-together when a dear friend passed away. “It became a celebration of his life,” she says.

Once the gathering is over and your emotions subside, you’ll probably want to have an estate sale. And after that, it’s probably a good idea to clear the house of what’s left -- consider giving the remaining contents to charity -- so it can be cleaned thoroughly and possibly even painted so it shows fresh when you eventually put it on the market.

While you’re at it, take care of whatever repairs might be needed. Fix the dripping faucet, have the HVAC serviced and mend anything else that might turn off a prospective buyer. Also consider hiring a home inspector to go over the house so you’ll know if there is anything major that needs to be addressed. Your eventual buyer almost certainly will hire his or her own inspector, so it pays to know what to expect.

It helps if the deceased has named a favored agent in his or her will to sell the house. Jeffrey DiMuria of Waves Realty in Melbourne, Floria, says he’s been named “several times” in wills to handle a sale after someone has passed.

Absent that, you’ll have to find an agent on your own, and doing that takes some legwork. You’ll want someone who specializes in the hyper-local market, as well as one who is well-known in the area and is a sales leader.

But also consider agents who have experience dealing with situations such as yours. Pat Starnes of Front Gate Realty in Brandon, Mississippi, has assisted in several sales of a loved one’s home. “One of our privileges is to help” survivors and executors, says Starnes.

In looking at the house as something that must be liquidated, consider hiring an appraiser to come up with a fair market value. If there is a dispute among siblings, everyone should agree to hire his or her own appraiser and set the price somewhere in the middle of the various valuations.

Don’t set the asking price too far above the appraised value -- over-priced places don’t sell unless it’s a seller’s market -- and don’t haggle too hard with someone who makes you a reasonable offer. “Making an irrational counter-offer and not being willing to give an inch is what over-emotional sellers do,” Sidney Kutchuk of Realty Works in Temecula, California, warns. “This only drives well-intentioned and capable buyers away.”

Unless you intend to move into an inherited house, it pays to sell it as quickly as possible, if only because of the federal tax implications. Inherited properties don’t qualify for the sales tax exclusion, but you do gain ownership at a stepped-up tax basis -- the fair market value of the property -- at the time of the loved one’s passing.

That means you take over the house without having to pay any taxes to Uncle Sam. But for every day you own it after that, you’ll have to pay a tax on any increase in value until the house is sold.

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New Loan App Is Coming

The Housing Scene by by Lew Sichelman
by Lew Sichelman
The Housing Scene | February 22nd, 2019

Big changes are coming in the standard application for home financing. But if lenders are not on the ball, the modifications could throw a monkey wrench into the mortgage sector. At least for a while.

The changes in the Uniform Residential Loan Application, aka form 1003/65, “are long overdue,” says Jon Haring, director of product management and a compliance expert at Ellie Mae, who notes that the document hasn’t been updated in nearly 20 years. But they “won’t be easy” to implement.

They have “the potential to disrupt” not just loan originations but also secondary market activities, Haring warns. Most lenders these days sell their loans to investors on the aftermarket.

The improvements to the form are intended to make the lending process more efficient and increase certainty. But, the Ellie Mae executive reports, they “are creating anxiety among lenders.”

Some 2,500 lenders use Ellie Mae’s loan origination system to process loans. About 40 percent of all mortgages are made on the Pleasanton, California-based company’s platform.

Fortunately, lenders have 11 more months to prepare for the changes. Use of the new URLA won’t be compulsory until Feb. 1, 2020. But in the lender world, that’s not a lot of time, especially with the heavy buying and selling seasons approaching rapidly and federal and state regulators looking over their shoulders.

At their request for a pre-mandatory test period, lenders can start using the upgraded form after July 1 so they can get any bugs out of their systems. But the changes impact not just lenders, but everyone else up and down the food chain, including title companies, mortgage insurers and servicers -- the companies that collect payments and distribute monies for insurance, taxes and profits on behalf of investors who own your loan.

“It’s probably unlikely that everyone across the entire lending ecosystem will be ready to support it. ... And if they don’t get it implemented correctly and information doesn’t flow completely and effortlessly, there could be delays or even pushback along the production line.”

Among the numerous challenges facing lenders and their vendors: Websites and point-of-sales platforms will need to be modified, data will have to be saved and reported, and decisions will have to be made regarding unusual situations, such as non-borrowing owners. And all of this will have to be done under existing compliance regulations.

The good news is that there is gold at the end of the transition rainbow. “The changes upon us are very positive,” Haring says. “Ultimately, the new URLA form is simpler, cleaner and provides better instructions for borrowers, and that’s a step forward.”

One of the benefits of the new application form is that it puts a lot of the information that’s already being gathered into greater context. For example, the current 1003/65 collects employment information in one place and income info in another, and there’s no correlation between the two. Consequently, the underwriter must figure out where the applicant’s money comes from.

With the new form, though, employment and income data are married together, side-by-side, so there is no longer confusion about how much of the borrower’s income comes from a particular source.

Also, space to list current and former addresses and employers is limited on the current application, as is the spot for listing other properties owned by the would-be borrower. But on the new form, those sections can be expanded to accommodate all the information a borrower needs to provide. 

There are numerous other positives, too, all intended to provide additional levels of detail to make it easier to process, underwrite and securitize your loan. Here are just a few of the other improvements:

-- Borrowers should find the new form easier to complete without a loan officer’s help.

-- A new section allows you to choose the language you prefer. And there are now spots for email addresses and mobile phone numbers, items that weren’t even considered the last time the URLA was updated.

-- There’s a new field for rental or mortgage payments on former residences.

-- Another new section allows you to list assets such as earnest money, employer assistance and sweat equity that are tied to the transaction.

-- An unmarried addendum helps define the relationship between the borrower, additional borrowers and others with an interest in the property.

“All this may seem mundane; no big deal for consumers,” says Haring. “But in the final analysis, the time to get pre-approval or even approval should improve, and there will be less fallout because something was unclear. And eventually, the time it takes to close should be shorter.”

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