Category: homebuyer

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Home buyer’s privacy

Buyer InformationIn a time when there is increasing concerned about personal privacy, maybe it’s time for local Realtor® associations (such as the Greater Capital Area Association of Realtors®) to retire the Buyer’s Financial Information Sheet, or at least make major revisions to the form. The Buyer’s Financial Information Sheet is an invitation for abuse and misuse by those who may otherwise be well intentioned.

Sure, privacy laws have been recently enacted that prescribe protocols on the handling and disposal of sensitive personal information. However, there are no provisions to ensure that real estate brokers, agents, and those who have access to the personal data follow such precautions.

If you ask a real estate broker about the origination of the Buyer’s Financial Information Sheet, they might explain how agents needed a means to pre-qualify buyers in a time when loan officers’ pre-qualification letters had little meaning on their own. The tradition of a completed form portrays the buyer’s ability to purchase a home. Legal minds might go further to explain that the form may provide additional recourse for the home seller in case the buyer provides misleading and/or false information, and/or omits relevant information about their financial standing.

Today, many home buyers are pushing back (and rightly so) at the request to provide an abundance of specific financial and personal information to their agents, listing agents and sellers. For many home buyers, the resistance to sharing personal and financial information is not only because of discretion, but mainly because they feel the sharing of the information is redundant and ineffectual. Many home buyers have already provided similar (if not more) information to their loan officer so as to be issued a pre-qualification letter. Additional concerns include the use of buyer financial information to during contract negotiations.

Times change, and it’s time to take home buyer financial information out of the hands of real estate agents. The argument that sellers want to see the buyer’s ability to purchase is antiquated. Today, mortgage originators are licensed and take seriously approvals that are issued because consumers may have recourse; the loan officer usually performs a minimal level of due diligence.

Mortgage originators are required to undergo a federal and state criminal background checks for licensing. Additionally, lenders offer training on managing and disposing sensitive personal information; many lenders offer secure means of electronic transmission of sensitive data. Chances are that the agents involved in your transaction did not undergo a recent background check, much less the seller. But if you are asked to complete said form, you are expected to trust those who may handle and view it.

Additional problems that can occur when presented with the Buyer’s Financial Information Sheet include the compulsion by listing agents and home sellers to underwrite the buyer’s mortgage; they may indulge in deciding whether or not the buyer is mortgage worthy when they may be unqualified to do so. Additionally, listing agents and sellers are tempted to use the buyer’s financial information in negotiations; misguided sellers may regrettably lose a deal when they are told to hold out for a higher price from a buyer who may walk away from negotiation.

Protect home buyers and sellers: retire or change the Buyer’s Financial Information Sheet. Cash buyers can still provide proof of funds to purchase, while other buyers can provide a lender’s letter along with a “Buyer’s Financial Affidavit” that certifies that all information provided to their lender is accurate.

Original published at https://dankrell.com/blog/2013/08/21/home-buyers-privacy-an-argument-to-retire-the-financial-information-sheet/

By Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright ©2013 Dan Krell.

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Title insurance history, perspective, and necessity

Homes

Home buyers would like to consider themselves as being financially savvy. Of course, I often hear the question about buying a home without title insurance, which usually arises from the advice they may receive from some questionable source debating the necessity of title insurance. However, the importance of title insurance is highlighted by recent ownership disputes that have occurred in the last five years due to foreclosures, improperly recorded deeds and mortgage modifications.

Historically, title insurance came about as a necessity. According to the American Land Title Association (alta.org), title insurance resulted from a landmark court case in Pennsylvania in 1868, which found that home seller was not be responsible for a erroneous title opinion. Subsequently, the first title insurance company was formed in 1876 in Philadelphia. The company promoted itself by claiming that they would insure “the purchasers of real estate and mortgages against losses from defective title, liens and encumbrances;” thus increasing the speed and accuracy of the property transfer process.

Prior to the availability of title insurance, title examinations were conducted similarly to how they are today with the purpose of ensuring title marketability (ensuring title is free of unpaid liens, mortgages, and other encumbrances). However, prior to the offering of title insurance, property owners were often held responsible for title blemishes. Of course, unresolved tile disputes were often settled in court.

Initially, title insurance was often a local process. However, the title insurance industry surged along with an expanded housing market after World War II ended. Additionally, the use of lender’s title insurance grew along with the secondary mortgage market; because as the number of nationwide mortgage holders increased, lenders found that title insurance was necessary to protect their interests.

Researching a property’s title relies on the “recordation system.” Although the recordation system has been in use in most of United States in some cases before the formation of the country, many countries use a land registration. Land registration systems used in some countries typically do not provide the same recourse as does the recordation system when disputes arise; where the registering government may resolve these disputes.

Title insurance is a result of our recordation system that continues to this day, where property ownership can usually be determined by conveyance. Although the recordation system relies on transfer instruments that indicate a grantor, grantee, and property description; the system is not perfect. Issues can arise from unrecorded deeds, as well as erroneously recorded documents; fraud may also occur by recording falsified transfer documents with a complicit or unsuspecting clerk.

There are two types of title insurance that are offered: lender’s and owner’s. A lender’s policy is usually required by a mortgage lender and is thought to protect the interests of the lender by validating the lender’s validity and enforceability of the mortgage. The lender’s policy is typically issued for the mortgage amount and coverage decreases as the principal is paid down.

An owner’s title insurance policy is understood to protect the owner’s interest in the property, however there may be limitations. You should consult with your title attorney about the policy coverage and limitations. Policy coverage varies– so check with your title agent for pricing and coverage levels.

A Consumer Guide to Title Insurance is available from the Maryland Insurance Administration, the local State agency that regulates title insurance producers (insurance.maryland.gov).

By Dan Krell
Copyright © 2013

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Original published at https://dankrell.com

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The next real estate technology breakthrough

by Dan Krell © 2013
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Real estate predictionsBesides face to face meetings, the telephone was the only way real estate agents could communicate with their clients up until about 1990.  By the mid 1990’s the fax machine was a fixture in every real estate office and was a major method to send home listings and contract addenda to clients.  By the housing boom in 2004, large numbers of home buyers turned to the internet to get the latest home listings before other buyers; and during that time, many real estate brokers and agents were taking to the internet finding rudimentary uses for email marketing.

Much like the advances in previous technologies that made the “business” of real estate easier, current advances also seek to make the process increasingly convenient and efficient.  Before the internet was widely used, the increasing abilities of fax transmissions made communication faster and more accurate.  And even though there has not been a major technological advent since the internet, the internet experience has much improved due to the exponential advances in computing power as well as widespread wi-fi access and increasing bandwidth.

Ten years ago, most home buyers and sellers used their desktop computer to access the internet; mobile computing was somewhat in its infancy.  Advances in mobile technologies, including smart phones, have untethered home buyers and sellers; they now have access to real estate information at their finger tips any time of day, wherever there is a signal.  Additionally, real estate websites can now send listing alerts via text messages.   Technically known as “short messaging service” or sms, texting is not only allowing  the “set and forget” convenience of the home search, but allows anyone to communicate contract details and showing instructions with minimal effort.

The internet as a platform has really changed the home buying and selling experience.  Home buyers and sellers don’t have to wait for their agent to send listing information; and because they don’t have to meet with their agents to sign documents, fax machines have basically become obsolete.

Electronic signing is a technology that is becoming increasingly popular, especially for those who have busy schedules.  The technology allows a person to review and electronically sign a document it via the internet.   Too bad for Fed-Ex, as e-signing has all but eliminated the need to send packages of documents to be signed; most notably, the use of electronic signatures has made the process easier for international home buyers and sellers.

It might seem as if technology is not only allowing consumers to conduct the business of real estate with increasing convenience and efficiency, but also lessening the reliance on real estate professionals.  Ten years ago, most home buyers relied solely on their real estate agent for home listings.  Today, however, a majority of home buyers search the internet for home listings and public information.

However, as information is increasingly available, real estate professionals have become even more relied upon to decipher and provide perspective to the information that consumers are accessing.  A real estate agent’s role is continually changing from the information “gate-keeper” to information analyst.

So, I don’t expect real estate agents to be replaced by androids or Star-Trekesque holo-decks in ten years time; however, new technologies will continue to make the home buying and selling process easier and increasingly efficient.  But, who knows, maybe one day the holo-deck could allow buyers and sellers, who are thousands of miles apart, to attend settlement together.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 17, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Unusual considerations when owning an unusual home

by Dan Krell © 2013
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Luxury Real Estate“Be different and be damned…” is a telling quote from Margaret Mitchell’s Gone With The Wind.  Social commentary aside, the quote can be somewhat of a warning to those who build or purchase that unique, unusual, and one of a kind home.  Although it is just a quote from one of the highly celebrated novels of the twentieth century, “damned” is a strong word to use in a real estate column.  However, because of the many considerations of owning a unique home, there may be an occasion or two you might feel “damned.”

When would you consider a home as being unique?  Mostly, the degree of uniqueness can be to a person’s perception of a home as well as what they consider to be unusual.  However, there is some consensus to what is generally accepted as “mainstream” in the real estate industry; and if a home falls outside these norms through its construction, size, floor plan, etc – it may be considered as unusual/unique.

Some homes are so extreme in their construction, either in size and/or building materials, that it is clear they are unique and one of a kind; there are other homes that may have been converted from commercial or industrial buildings that may also indicate a unique flair.  However, there are many homes that appear to fit in their respective neighborhood, but the custom nature expresses a specific style and preference; which is often found in the luxury home market.

Some considerations you might think about when purchasing a unique home include: financing, insurance, maintenance, and resale.

If you’re set on purchasing a home that is unique, check with your mortgage lender about financing; lenders may have objections on lending on an unusual home.  It is also not unheard of that extreme unusual homes appraise lower than market value due to uncertainty of value.  Unusual homes, including the “Über-luxury” market, may require specialized loan products that are offered by specialized lenders.

Additionally, you should consult with your insurance agent as the home may not meet your underwriting guidelines for home owners insurance.  Many people don’t realize that insurance carriers may rate your home based on construction materials, zoning, size, etc, which can affect the premium.  And it’s not unheard of that an insurance carrier may also limit or even deny coverage because the home does not meet their underwriting standards.

Maintaining a unique home can sometimes be challenging too.  Many unique homes are constructed with materials that may be exotic, uncommon, and/or can be found in commercial applications.   Repairs and labor costs can be much more than the typically constructed home.  Finding replacement materials and qualified contractors to work with those materials may also be difficult.

Home ownership is often a labor of love for the home, and that emotion can be carried into the resale.  You could easily be disappointed in the time it takes to sell the home as well as the sale price.  Be prepared for an extended time on the market because your unusual home may have a very limited pool of buyers, and negotiation could be long and dragged out due to variances in perception of value.

“Doing it your way” may be the theme of a popular song and an advertising campaign for burger joint; but when it comes to building or buying a home – being unique and unusual can sometimes come at a cost.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of June 3, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Handling home buyer feedback

home buyer feedbackYou’ve spent months preparing your home by de-cluttering, painting, and maybe even making renovations; the last thing you want to hear are objections from home buyers why the home is not suitable for them. Obviously, you’ve had years of enjoyment and you’re thinking about all the benefits the home offers. However, getting honest home buyer feedback when they visit your home is invaluable information to help get your home sold.

Asking for home buyer feedback is one of the tasks that your agent performs throughout the listing period. However, soliciting feedback from agents who bring buyers to your home is often hit or miss; although many agents offer good and honest feedback, just as many don’t respond (for various reasons) to feedback requests unless their buyers are interested in the home. Additionally, home buyer feedback is solicited when they visit open houses and includes questions such as: “What do you find most appealing about the home?”; “What do you find least appealing about the home?”; and “Is the home priced right?”

Ok, it’s nice to hear the good things people have to say about your home; these are obvious benefits and what others find appealing. Buyers may list various home features, upgrades, and/or renovations as appealing or beneficial; but it is also important to put weight on the negative feedback too. All the de-cluttering and neutralizing can make a home look good, but it may not change home features that do not fit other’s needs. Likewise, making cosmetic and minor repairs also increases your home’s appeal; but may not make obsolete systems acceptable.

One of the most common pieces of feedback you might encounter is about the home’s price. Since home buyers typically view similar homes, you get perspective about how you priced your home compared to other similar homes. If there is overwhelming feedback that the home is overpriced, then you should consider reviewing additional comps with your agent and correct the price as needed. It is also not uncommon that buyers may feel that the home is priced well, but for various reasons they are not interested in making an offer.

Keep in mind that the feedback you will receive is subjective and offered from various points of view, so don’t be surprised with seemingly contradictory objections from different home buyers. Some objections can be addressed readily while others cannot.

For example, objections about the size and/or location of the home or yard are not easily overcome; and it may be that buyers offering such objections are looking at the wrong home. However, objections about shabby flooring or lack of updates can be addressed by either taking action or changing the list price to reflect the home’s condition.

Sometimes in pushing their client’s limits, home buyer’s objections may actually be a commentary on their limitations rather than the home’s attributes. In the hopes of getting a great deal, buyers are taken to view homes that are out of their price range and/or in need of updates they cannot make.

Buyer and agent feedback is the easiest way to gauge how your home is positioned in comparison to your competition on the market. Clearly, the home’s positive attributes and benefits should be highlighted as these items would be appealing to home buyers. However, buyer objections should also be considered and addressed if possible to help facilitate a sale.

Original located at https://dankrell.com/blog/2013/05/31/handling-buyer-feedback-and-objection-for-home-sellers/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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