• To protect the public against unethical and incompetent practitioners.
• To assure that practitioners have certain minimum levels of education and experience.
• To assure that consumers receive certain minimum levels of service.
• To define what is and what is not ethical.
• To provide a forum for public complaints.
• To punish practitioners with fines and the suspension or revocation of their licenses should they engage in material misconduct.
• To reward those who meet certain standards by limiting competition to individuals with licenses.

Given that real estate involves an important and complex financial transaction, consumers want to know that brokers and salespeople are competent and ethical, standards established with regulation and licensing.

Syndicated originally by Content That Works and posted with permission.

Real Estate: Why Do We License Brokers & Agents? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Now James Robertson, a federal district judge based in Washington, DC, has decided that mortgage brokers will have to disclose their secret fees under new rules set up by the Department of Housing and Development.

The judge shot down an effort by the National Association of Mortgage Brokers to block the new HUD requirement.

Yield Spread Premiums

“Broadly speaking,” said the Judge, “NAMB opposes the new GFE because of the way it discloses ‘yield spread premiums’ (YSPs). A YSP is a payment by a lender to a broker that compensates the broker for originating a loan with an ‘above-par’ interest rate. The ‘par rate‘ is the interest rate at which the lender will fund 100% of the loan with no premiums or discounts.

“If the par rate for a certain $100,000 mortgage is, say, 5%, and the broker originates that mortgage at a 5.5% interest rate, then the lender might deliver $100,500 at closing — $100,000 that will be disbursed to the borrower, plus a $500 YSP for the broker.”

Huh? What’s this all about?

Par Pricing

Imagine that you are qualified to borrow $200,000 at 5 percent. Your lender says the best rate available is 5.5 percent. Since you rely on the lender, depend on the lender for product information and understand that the lender promised to get you the “best” rates you naturally accept the 5.5 percent rate.

Or, seen another way, you might qualify for a loan with a “par” price of 5 percent and no points. Instead, the lender sells you a loan at 5 percent and two points. Again, you’re paying more than you should.

The lender in either case has actually up-sold the loan because the mortgage has a higher interest rate than someone with your qualifications should pay. By paying more the asset — a mortgage loan is an asset to the owner — is now more valuable and mortgage investors will pay extra for it. When mortgage investors pay more that money goes to the lender and the loan officer. You, of course, also pay more for the life of the loan because you have a higher rate or steeper up-front costs.

The ARE some cases where paying more points can be a good deal say, for instance, if the lender will pay some or all of your closing costs. But there are many cases where the borrowers have no idea that they are overpaying for the loan because they do not know how loans are priced in the first place.

Confusion Alleged

“District Judge Robertson’s decision effectively guarantees that the consumer will continue to be confused during the loan selection process,– says Jim Pair, president of the National Association of Mortgage Brokers. “NAMB’s legal challenge against the RESPA final rule was an attempt to ensure all loan originator competitors uniformly provide information to consumers for them to proficiently shop for a loan.–

However, Judge Robertson rejected the unfairness claim. As he explained, YSPs are known in advance while “the value of any premium a direct lender may earn depends on when the lender sells the loan, what the market conditions are like, and other factors that are not established with certainty at settlement.”

For the full decision, please see: National Association of Mortgage Brokers V. Donovan.

Mortgage Brokers Must Disclose Secret Fees, Says Judge is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Why is anyone amazed? Combine a new and different program with a huge number of interactions and there are certain to be bumps in the road.

That said, why don’t we get to the core issue? Is it really a good idea for bankers, brokerages, lenders and builders to have captive appraisers? If not, what are we going to do about it?

Any Conflicts Here?

Let’s imagine this situation: Smith is a buyer broker. Smith has an agency obligation to his client. A home is found. The deal is funded by the lending affiliate of Smith’s broker. The lending affiliate has a record for pressuring appraisers — remember that 11,000 appraisers signed an online petition saying that they had encountered pressure to come up with a “right” price, so such pressure is not unknown. After closing, the purchasers come down with buyer’s remorse. They feel they over-paid for the property. They’re attorney connects the dots — a pressured appraiser produces the “right” valuation, which allows the broker’s lender to justify the funding of the property, which permits the broker to collect a commission, the lender to get a fee, buyer broker Smith to get paid and the buyer to get screwed. All get sued.

Not a plausible claim? No conflicts of interest, real or imagined? Want to test this idea in court?

The point is not that the HVCC is perfect or can be perfect, but then that was not the standard we used previously. Instead, the idea is that we should try to make the marketplace better and more transparent to assure that purchasers do not overpay, lenders do not lend more than they should and mortgage investors do not overvalue mortgage-backed securities. Gross and overt conflicts should not be applauded merely because they’re faster, more convenient and long allowed.

We need independent appraisers and by independent I mean appraisers who are licensed, qualified, local and not pressured into coming up with the “right” valuation to keep their jobs and their livelihoods.

Suspend the HVCC

There is now an effort to “suspend” the HVCC for 18 months, after which there will no doubt be more pressure for additional suspensions. If this comes about, ask yourself if borrowers and mortgage investors benefit. If not, who does? And if we tilt the system so that buyers and mortgage investors feel less comfortable than they should, then who will buy real estate and who will fund mortgages?

Since When Are Appraisal Conflicts Okay? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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That’s how many signed on at AppraisersPetition.com. And what, exactly, is their beef? As the site explains, “pressure comes in many forms and includes the following:

___”the withholding of business if we refuse to inflate values,

___”the withholding of business if we refuse to guarantee a predetermined value,

___”the withholding of business if we refuse to ignore deficiencies in the property,

___”refusing to pay for an appraisal that does not give them what they want,

___”black listing honest appraisers in order to use “rubber stamp” appraisers, etc.

“We request that action be taken to hold the lenders responsible for this type of violation and provide for a penalty on any person or business who engages in the practice of pressuring appraisers to do dishonest appraisals that do not provide for independent judgment. We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists. We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.”

The Same Old Story

I have had these arguments before. Long ago I advocated that real estate brokers should be allowed to represent buyers and not act merely as seller sub-agents. Nope, can’t be done, I was told. Today buyer brokerage is everywhere. NAR reports that 42 percent of all purchasers had written buyer brokerage agreements in 2008

Option ARMs are great, I was told. Just look at the credit scores. Right. But the credit scores did not account for vastly higher mortgage payments down the road, after the loan was originated.

Stated-income loan applications are fine, it was said. Why do we have to verify income when we have so many other ways of measuring borrower finances? Sure. Consider what the Mortgage Brokers Association for Responsible Lending found in one study: “A recent sample of 100 stated income loans which were compared to IRS records (which is allowed through IRS forms 4506, but hardly done) found that 90% of the income was exaggerated by 5% or more. MORE DISTURBINGLY, ALMOST 60% OF THE STATED AMOUNTS WERE EXAGGERATED BY MORE THAN 50%. These results suggest that the stated income loans deserves the nickname used by many in the industry, the ‘liar’s loan.’”

Now we’re told that accurate and independent appraisals cost too much and take too long. Right.

The idea of appraisals is to have a fair, accurate and independent property valuation to protect borrowers, lenders, mortgage investors, and lender shareholders. That’s not something you get when appraisers are bullied to come up with the “right” number, as 11,000 appraisers can explain.

Can 11,000 Appraisers Be Wrong? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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The HVCC was an agreement worked out between New York Attorney General Andrew Cuomo, Fannie Mae, Freddie Mac and their then regulator, the Office of Federal Housing Enterprise Oversight (OFHEO).

Appraisals are hugely important to real estate brokers, agents, buyers and sellers. If the appraisal is for less than the sale value then the buyer must put up more cash to qualify for a loan, the sale price must go down or both — unless, that is, the sale falls through. In other words, if you’re a buyer you want an appraisal to assure that you do not overpay for the property –a protection which is undermined and eroded when the appraiser is pressured and threatened to come up with the “right” number.

There are a number of points under the Cuomo agreement, but three important items look like this:

___ Mortgage Brokers are prohibited from selecting appraisers. Since the mortgage broker profits when the loan is originated, it follows that such folks are only going to select appraisers who come up with the “right” price valuation.

___ Lenders are prohibited from using “in-house– staff appraisers to conduct initial appraisals. This is a built-in conflict of interest since the lender (meaning, usually, not a mortgage investor but rather a party that originates a loan and then sells it as quickly as possible) wants appraisers to approve any and all deals, otherwise the lender doesn’t eat.

___ Lenders are prohibited from using appraisal management companies that they own or control. This is another overt and obvious conflict of interest — and still another way to screw buyers who are not getting the protection for which they paid if an appraisal is less than accurate.

The solution, say many in the real estate community, is to get rid of the HVCC. Why? Well appraisal costs have risen — that, of course, is not a problem if brokerage fees go up and bank revenues increase. Also, sales are being delayed because it takes time to do an accurate appraisal. Given a choice of speed or accuracy, many in the real estate community prefer whatever it is that produces fees and commissions.

The real issues are different. First, since many purchasers are now represented by buyer brokers and agents it is an outright and absolute conflict of interest for those who represent purchasers to advocate weaker appraisal standards. Second, why on earth should lenders ever be allowed to own or control appraisal companies? This is like guarding a hen house with wolves.

A good appraisal and a professional home inspection are vital consumer protections, well worth the dollars they cost. And if it takes a little more time to get them done right and without pressure on the appraiser or inspector, so what? A home is a long-term investment, why not wait a few more days to assure that purchasers are not paying more than they should?

___ Lenders are prohibited from using “in-house– staff appraisers to conduct initial appraisals. This is a built-in conflict of interest since the lender (meaning, usually, not a mortgage investor but rather a party that originates a loan and then sells it as quickly as possible) wants appraisers to approve any and all deals, otherwise the lender doesn’t eat.

___ Lenders are prohibited from using appraisal management companies that they own or control. This is another overt and obvious conflict of interest — and still another way to screw buyers who are not getting the protection for which they paid if an appraisal is less than accurate.

The solution, say many in the real estate community, is to get rid of the HVCC. Why? Well appraisal costs have risen — that, of course, is not a problem if brokerage fees go up and bank revenues increase. Also, sales are being delayed because it takes time to do an accurate appraisal. Given a choice of speed or accuracy, many in the real estate community prefer whatever it is that produces fees and commissions.

The real issues are different. First, since many purchasers are now represented by buyer brokers and agents it is an outright and absolute conflict of interest for those who represent purchasers to advocate weaker appraisal standards. Second, why on earth should lenders ever be allowed to own or control appraisal companies? This is like guarding a hen house with wolves.

A good appraisal and a professional home inspection are vital consumer protections, well worth the dollars they cost. And if it takes a little more time to get them done right and without pressure on the appraiser or inspector, so what? A home is a long-term investment, why not wait a few more days to assure that purchasers are not paying more than they should?

How To Pick On Appraisers is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: agents, brokers, buyer, code, Conduct, conflict, home, HVCC, lender, real estate, seller, Valuation

But will the new collaborative really change marketplace realities? You’d like to hope that the answer is yes but traditions can be hard to overcome.

The group says its members generate mortgages worth $520 million annually and describes itself this way:

“For the first time ever,” says the Collaborative, “American consumers seeking mortgages will now have the option of using lenders that are certified as “safe,– “fair– and free of predatory lending, under a 21-member national network known as the nonprofit “Fair Mortgage Collaborative– (FMC), the members of which are committed to providing homeowners and homebuyers access to mortgages at a fair rate of compensation. The major effort supported by the Ford Foundation is the first national campaign of its kind aiming to restore consumer confidence in mortgage lending in the wake of the ongoing mortgage foreclosure crisis fueled in large part by predatory lending abuses.”

Standards

Okay, so how do we know that a lender is safe, or fair or not predatory? The Coalition has set up five standards:

___ FMC Lender Works for Customer, Not Other Way Around;

___ No Steering;

___ Absolutely No Predatory Loans;

___ Non-Standard Loans Require Clear and Compensating Customer Benefit; and

___ FMC Keeps Rules and Standards Current for New Loan Types.

Missing Lenders

The group is supported by an impressive list of housing foundations and related organizations, but what’s missing are the big banks, S&Ls, mortgage brokers and mortgage bankers who provide the overwhelming majority of the nation’s home loans.

Most lenders have traditionally opposed the concept of working for borrowers. No less important, federal rules are entirely devoid of any requirement to get the best possible deal for the borrower, what’s generally known as a fiduciary obligation.

“Fiduciary” is simply a fancy term that means when you employ someone they will put your interests first and not their own. Doctors, dentists, lawyers, buyer brokers and listing brokers all have an obligation to do what’s best for their patients and clients and if they don’t they can be sued. Lenders and loan officers under federal rules — the rules that count — have no such obligation.

Mortgage Brokers

“Some have proposed,– said Harry Dinham in 2007, then president of the National Association of Mortgage Brokers, “that a fiduciary duty standard should be implemented and mortgage originators and their loan officers should act in the ?best interests’ of the consumer. NAMB remains opposed to any proposed law, regulation or other measure that attempts to impose a fiduciary duty, in any fashion, upon a mortgage broker or any other originator.

“Simply put, a mortgage broker should not, and cannot, owe a fiduciary duty to a borrower. The consumer is the decision maker, not the mortgage broker,– says Dinham.

And where do consumers get their information? Upon whom do they rely for product options? How can a lender advertise the “best rates” or the “lowest” rates without being obligated to hold down the borrower’s costs? Would any sensible person go to a lender who advertised the highest rates?

Mortgage Bankers

John Robbins, a former chairman of the Mortgage Bankers Association, said during June 2007 congressional testimony that “notably, MBA does not believe that a disclosure of function and fees is warranted for mortgage lenders. Unlike a broker whose role may be uncertain — agent or loan provider — a lender’s role is clear. A lender underwrites, approves and funds the loan. The lender does not hold himself out as an agent of the borrower. While a lender must serve its customers fairly, and the industry has done much to assure high professional standards, a lender owes a duty to its shareholders and investors. A borrower knows a lender offers its own products and does not offer to shop for borrowers.–

The problem, of course, that in the everyday world of borrowing consumers have no idea who is or who is not a mortgage broker or a mortgage banker. What consumers do know is that they need assistance with what’s likely to be their largest purchase, a mortgage — and not a house. For example, imagine that you buy a home for $200,000. You get a $190,000 mortgage at 6 percent over 30 years. The total interest cost over the life of the loan will be $220,094.

Changing Industry Standards

Interestingly, I suspect that a number of mortgage brokers, mortgage bankers, community banks, credit unions and thrifts will be willing to be certified under the terms of the Fair Market Collaborative. Why? Because they realize that the best way to build “relationships” with people is not to drive them into bankruptcy. Just look at the lenders who refused to originate option ARMs, interest-only mortgages and have never accepted stated-income loan applications.

But in addition, more is needed. Federal standards must be changed to assure than when you get a mortgage and rely on a loan officer for advice that the individual who provides information is absolutely obligated to get you the best possible rates and terms.

Certified Lenders

Lenders can be certified by the Collaborative and hopefully borrowers will be educated to only deal with lenders who have agreed to the group’s standards. Those who have so far been certified to offer “safe and fair” mortgages include:

__ The Boeing Employees’ Credit Union (BECU)

___ Prime Alliance Solutions

___ The Federation of Appalachian Housing Enterprises & Just Choice Lending

___ The Mortgage Grader

___ The National Council of La Raza Homeownership Network and Direct Lending Family

___ The National Federation of Community Development Credit Unions (The Mortgage Center)

___ Neighborhood Housing Servics of America and Just Price Solutions

Can You Trust Your Lender? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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During the past few years many states have seen the emergence of real estate brokers who provide minimal real estate services at minimal prices. Such brokers provide an option for consumers who prefer, for example, a menu-of-service option and lower costs.

But price is not the issue. No real estate regulator, no federal agency and no consumer group believes there should be any rule requiring a certain or minimum pricing level. As well, no regulator believes that new forms of competition should be dissuaded from entering the marketplace.

Instead the conflict is this: If you exclusively hire a real estate broker, someone who acts as your agent in the marketplace, should that individual be required to provide a minimum level of service? If so, what should you expect?

To untangle this matter we must first address regulatory absolutists who claim that no standards should be required, that “consumer choice” is paramount. They argue that with disclosures and waivers consumers should be able to refuse any brokerage service or obligation. In this way, absolutists assert, consumers would be able to better control and thus reduce costs.

This line of reasoning, such as it is, makes a wonderful debating point but offers no substance in the real world. We do not, for example, allow consumers to save money by hiring doctors who cut costs by not sterilizing surgical instruments or washing their hands. This may seem “paternalistic” to some, but whether patients like it or not as a society we require certain levels of cleanliness when someone removes your gall bladder or replaces your cornea.

Thus if the question is some regulation or no regulation, the absolutists lose. As a society we long ago agreed that some regulation is required.

Regulation, by its nature, restricts competition. There’s a lot of money to be made removing kidneys, but even with disclosures and waivers we don’t allow untrained and unqualified people to perform such operations. Before operating, society says you need a license, you need training and there are minimum standards of performance for physicians.

In real estate there are also standards. One is that a real estate broker who acts in an “agency” capacity has certain legal requirements which include care, accountability, loyalty, disclosure and confidentiality. If agency obligations are breached, regulators can fine the broker or suspend or revoke a license. In addition, a broker who does not meet minimum standards can be sued for malpractice by aggrieved clients.

Wayne J. Thorburn, previously the chief executive officer of the Texas Real Estate Commission, says that in his state the legislature has enacted legislation “whereby a broker who obtains an exclusive agreement to represent a party in a real estate transaction is that party’s agent. Such a person must inform his client if he receives material information related to a transaction, must answer the client’s questions and present any offer to or from the client and may not instruct another broker to negotiate directly with the first broker’s client.”

Amazingly enough, both the Federal Trade Commission and the Justice Department opposed the Texas standards and similar standards in other states. In the case of Texas, they argued that “imposing new restrictions on the ability of Texas real estate professionals to offer flexibility in brokerage services. The agencies expressed concern that the proposed regulation would not only cause Texas consumers to pay more for real estate services, but also would reduce consumer choice by restricting the ability of real estate brokers to provide services tailored to customer needs.”

The problem with the federal position is that it sets the consumer-protection bar too low.

Here’s an example:

My wife and I bought a property. The sale agreement ran 10 pages. There were four pages of addenda. There was a separate financing appraisal contingency and a notice of our right to a property disclosure statement. There was a four-page property disclosure; a two-page HOA notice; a fee-sharing notice; another two-page HOA notice; still another HOA disclosure; six pages of HOA regulations and a farm disclosure ordinance. There was also a lead-based paint hazard notice and agreement; two pages of property disclosures; two more pages of lead paint disclosures; a list of fixtures; a survey; and an affiliated disclosure statement. Previous to buying the property, there had been a three-page agency disclosure statement, a three-page exclusive buyer brokerage agreement and a page of addenda modifying the buyer brokerage agreement.

There was other paperwork as well. We have a file that’s more than an inch thick documenting the transaction. Much of this paperwork is apparently written in legalese or Babylonian. It doesn’t matter which as they are both mutually indecipherable to most people.

My wife and I also sold a property last year. Same deal. A mound of paperwork. Another thick file. Maybe more pages than were required to purchase.

In each case you can bet that we asked our listing and buyer brokers many, many questions. We went over various documents at great length.

Now imagine being a seller and engaging a broker to represent you and then having a listing agreement under which the broker would not be obligated to review any offers, provide counsel or answer your questions. Or, imagine being a purchaser and making an offer with complex paperwork and without assistance from your buyer broker.

Does this make sense to anyone?

The key to real estate transactions, the absolute central matter, is what buyers and sellers have stipulated in writing. If a listing broker does not review such documents, then a seller may be signing away important rights, making needless concessions and getting far less than market value for a property. If a buyer broker is not required to answer questions or present offers, then a purchaser can lose important marketplace advantages — the very reason to hire a buyer broker in the first place.

Those who philosophically oppose minimum service requirements need to consider the real-world realities of the marketplace: Consumers are plainly unable to navigate complex contractual waters and that’s the central reason to hire a broker. If a broker screws up and fails to meet basic standards of practice, then to protect the public regulators should be able to fine that individual or suspend or revoke their license and the public should be able to sue.

If this seems unfair, call me the next time you need a kidney removed. I’m having a sale.
—————————————-
Published originally by RealtyTimes.com on April 11, 2006 and used with permission.

Should You Expect Less Hiring A Real Estate Broker? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: agents, brokers, discount, FTC, minimum, MLS, regulators, standards, state

I’m not sure that buyers or anyone else was especially well educated as a result of the Time’s report regarding the economic impact of real estate commissions. While the math may be right, the conclusion is surely open to question.

“Most home sales generate a 6 percent commission,” said the Times, “split between the brokerage firms representing the buyer and seller. The agent generally receives half of the firm’s draw, or 1.5 percent of the sale. So if a home sells for $500,000, the agent personally receives $7,500. Not bad for what may be just a few days of work. If the agent works for an additional week and urges the seller to hold out for $515,000, that’s an extra $15,000 for the seller, but only an extra $225 for the agent. Because every additional dollar throws only a penny and a half into the pocket of the agent, the economists reason, the agent may push clients to accept lowball offers.”

As evidence, the paper cites a recent study by economists Steven D. Leavitt and Chad Syverson which shows that when compared with client properties, brokers sell their own homes for 3.7 percent more money. As well, say the economists, broker homes stay on the market for an additional 9.5 days.

Given that real estate is a “nonhomogeneic” commodity — a fancy word meaning that no two homes or transactions are alike — it seems difficult to compare property sales. However, if we accept that brokers receive more money for their homes than non-brokers, why should anyone be surprised? Does it not make sense that professionals in real estate are better able than non-professionals to purchase, prepare, price and negotiate real estate transactions? As to why client homes are sold more quickly, one practical reason is that many sellers list as close to the time they need to move as possible. Brokers, knowing the marketplace and how to juggle settlement dates, may be in a position to allow their homes to remain available for longer periods.

But do brokers push lowball offers because they have little economic incentive to seek higher sale prices? The math would seem to support such claims, but common sense does not. Here’s why:

If you’re a real estate broker you understand that no transaction stands alone. To be successful, what you seek is a stream of income over time, transaction after transaction fueled by good results that produce client referrals.

Thus the reason for brokers to push higher sale prices is not a marginally-increased commission from a particular transaction, rather it’s to gain the referrals that a satisfied client can produce.

It’s those client referrals, not marginally-higher sale prices, which produce real broker income. Go back to the example in the Times and the logic of this notion is easy to demonstrate.

Imagine that the Smith house sells for $500,000 and produces a marginally-satisfied client. “Nice job,” says Smith, “here’s your commission check.” Alternatively, the Green house sells for $515,000. Owner Green is very happy because that extra $15,000 can be used to offset tuition bills, reduce credit card balances, or buy a second car.

“Here’s your check,” says Green, “and by the way, the Conklins expect to be selling their home in two months and I’d be happy to suggest your name.”
Suddenly the Green transaction is not worth just another $225, to use the figure cited in the Times. It’s $225 plus another transaction, perhaps another $15,000 in commission revenue.

To a large extent, real estate brokerage is a “fungible” activity — most brokers in a given community belong to the same MLS, have the same forms and the same licenses. Successful brokers stand out because they do something which makes them different, noticeable and prominent, they offer “more or better” or at least the perception of “more or better” because they understand that a career requires more than a single transaction.

The best form of promotion, the surest way to stand out, is with the head start a broker receives when a client says to another owner or buyer “you ought to try broker Jones. She was really good and helped us get the best possible price and terms.”

The value of such a recommendation is obvious: In its 2004 Profile of Home Buyers and Sellers, the National Association of Realtors found that 73 percent of all owners contacted just one broker to market their home, 38 percent used someone recommended by a friend or relative. If you’re a broker, the odds of getting a listing are overwhelming if you’re the first professional called and if you’re recommended.

None of this is a secret, and economic theory easily describes broker motivations. Adam Smith, the father of economics, pointed out that we are each motivated by the “invisible hand of self-interest.” Brokers push for the best possible sale prices and terms because such results not only benefit client sellers, they inherently benefit brokers.

____________________________________

Published originally by RealtyTimes.com on March 1, 2005 and re-posted with permission.

Right Math, Debatable Conclusions is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

Technorati Tags: agents, brokers, commissions, fees, motivations, real estate, referrals

What steps should you take? Here’s a baseline list to get you started.

• You Can Do It. Some 5,652,000 existing homes were sold in 2007 according to the National Association of Realtors, more than 15,000 a day. Other owners have done it and so can you.
• Define Your Goal. Do you want the highest sales price — or the biggest check at closing? They’re not necessarily the same. Imagine that two homes sell for $300,000, but one owner pays 2 points and agrees to replace the roof. The owner who sold without such costs got a bigger check at settlement. The bottom line: To have a successful sale you need to look at both price and terms — you must have a strong negotiator in your corner.
• Times Have Changed. Today’s real estate marketplace is radically different when compared with 10 years ago. Purchasers now use the Internet, receive seller disclosure forms, get home inspections, and are routinely represented by buyer brokers. The result is that buyers can be better prepared than in the past.
• Sparkle And Shine. Imagine going to a supermarket and seeing dusty fruit or aisles filled with old shelving and cans. It doesn’t happen because the grocery store knows how to present its goods. Sellers must do the same. Get rid of things you don’t want to move, organize closets and storage areas, and clean everywhere.
• Mechanics Count. Buyers expect everything to work. Home inspections are now entirely common and what buyers miss home inspectors will catch. Fix and paint things now and they won’t be an issue in the future.
• Think Broadway. When buyers see your home, it’s showtime. They want an environment where they can see themselves. Given them a show where everything is painted, arranged, and attractive, a home where the only issue is when to move in.
• How’s The Market? Real estate is local. Your broker can explain current market trends in your community, including what’s selling, what isn’t selling, and why. This information is central to getting the best possible price and terms.
• Know Your Rivals. Your property will be competing with other homes for buyer attention. Ask your broker how to be competitive — and how to have an edge.
• What Time Is It? Markets differ by location and time. When interest rates are low and the local job base is growing, it’s great to be a seller. But when times are slack and mortgage rates are rising, homes also sell. In 1981, when the prime rate topped 20 percent and the population was smaller, 2.4 million existing homes were sold. The trick is to be realistic, to get as much as market conditions will allow.
• Understand The Plan. Real estate marketing involves far more than a sign in the yard and an ad in the paper. Successful brokers use a variety of methods to attract and qualify prospects, including the latest Internet and communication advances. Make sure that brokers explain up front how they will market your home. Once listed, check the plan regularly to see that it’s being carried out and to change it as market conditions require.

————————
Published originally by Realty Times on January 23, 2002 and posted with permission.

10 Tips For First-Time Sellers is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Given this trend it’s not surprising that security is a growing issue within real estate. Theft is a concern with open houses and taking an unfamiliar person to an unfamiliar property may not always be the best idea for brokers and agents. It’s now a common requirement for brokers and consumers to first meet at brokerage offices before looking at homes so drivers’ licenses can be copied.

But safety in real estate is not only an issue for brokers and salespeople. How do consumers know that the person who wants to list your home or help you buy does not have a history of gross fraud or violent crime?

Because large sums of money are involved, jurisdictions generally limit the ability of convicted felons to obtain a real estate license. Typically such bans are not absolute, the theory being that after people have paid for their crimes they should have an opportunity for redemption and rehabilitation, opportunities made realistic with the right to earn a living.

So how do regulators know that “John Doe” is really John Doe at a time when identity theft is rampant? And how do they check Mr. Doe’s past record?

Application forms routinely require individuals to self-report criminal backgrounds and regulators say that many prospective licensees with a crime in their past do report such incidents. But self-reporting does not always occur, one reason regulators are turning to more exhaustive background checks.

Several states, such as Florida and Oregon, require fingerprints. Once collected, the prints are sent to a national database for review. This process, however, is not foolproof: it can take time to obtain reports and not all felonies have been entered into the national database.

A different approach is to require credit reports, a system used for brokers in Maryland. A credit report shows someone’s financial standing as well as their driver’s license number and “public records” such as tax liens, judgments and bankruptcies. Credit reports, however, do not include police records.

Another security check occurs when applicants take exams to obtain licenses. Many states require that applicants present government-issued photo IDs at testing sites to assure that the person taking the test is actually the same person who may ultimately receive a license.

And what if someone does have a criminal record and self-reports? Regulators say they do consider granting licenses in such situations, depending on the facts and circumstances in each case. For instance, was the crime related to real estate? Was violence involved? A sex offense? Was it a minor matter or major? How much time has passed since the offense?

It seems likely that jurisdictions will increasingly adopt tighter security measures with licensees. Checking drivers’ licenses or state-issued IDs at real estate exam sites costs nothing and can flush out spoofers. The growing use of electronic fingerprint systems makes such identifications faster and thus more attractive to regulators. Moreover, the programs now in place do catch people who should not be licensed or who are taking tests for others.

Regulators are careful to point out that their intent is to confirm identities and prevent inappropriate licensing. There is no interest in private matters.

Are fingerprints and other identity checks necessary for brokers and salespeople? While it may seem invasive at first glance, people are not always who they seem to be. Long ago there was a local property for sale-by-owner. The price was attractive and the sellers collected deposits from several bidders on a busy Sunday afternoon. By Monday both the deposit money and the “owners” were in Brazil. It turned out the sellers weren’t owners at all, just house sitters with plane reservations.

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Published originally by Realty Times on November 11, 2003 and posted with permission.

Should Real Estate Brokers Be Fingerprinted? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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