Complaints about real estate agents – legitimate or reflection on client poor choices?

Volumes can be written on this subject alone…and “the cloud” is already filled with so much data, those volumes are not necessary. And there are those times where you blame your current or previous real estate agents for some type of errors or omissions in judgement or observations that if done appropriately at the right time, could have spared you grief at some level. Stuff like no coat closet on main floor of a house Mortimer rubs against a buyer…or not telling the Buyer about current events in the neighborhood or what was happening around them in the near future…or defects in the house that the agent may have been aware of before purchase but not a severe nature…or just caused more expense fixing it after closing than desired.

But are complaints legitimate, or just a reflection on the poor choices made by the Buyers or Sellers?

Each agent/broker pays money each year for what’s called professional “Errors and Omissions” Insurance. This covers some insurance for thefts through lock-boxes, errors or omissions in contracts, or performance of services. But like all other insurance coverage, it comes with a deductible and doesn’t cover ALL issues.

Bottom line: It’s difficult to prove complete incompetence and what the Agent knew or didn’t know before closing.

So…Buyer and Seller Beware – Be informed and perform your Due Diligence.

Let me know your thoughts.

Source of inspiration for post: Where to turn when you have a problem with your real-estate agent. Even though this article dealt with Ontario in Canada, complaints against real estate agents know no physical boundaries.

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Home Builders Remain Confident

The sentiment and index of new housing is as strong as it has ever been within the community of exiting home builders.

Not only are prices up, but the near future looks attractive for several reasons:

(1) Actual number of new home builders has shrunk to a low right now.
(2) The cost of any new builders entering the market is more difficult with respect to (a) obtaining a bank loan to start building and (b) buying available property that already got scooped up by other builders.
(3) Even though the pace of building new homes has slowed, that has resulted in lower “new” inventory. Coupled with a strong current demand by potential Buyers, this has pushed prices higher.

Now there are difficulties that builders are facing – mainly higher costs to acquire materials and a labor shortage.

Home sales have hit their highest pace in a decade – national median home price jumped almost 7% from last year – millennials are getting back into the market –

Bottom line: Existing home builders are riding the wave of higher prices, more profits, and fewer competitors…in other words, near nirvana.

Source: Wall Street Journal, May 16, 2017, Page B12 and Page A2.

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After closing – property tax bill and homestead exemption

Now this is an interesting, often ignored, topic.

Almost everyone who purchases a property in the State of Georgia signs a form similar to the sample document in this blog post at closing.

In addition to the Buyers and Sellers signing paperwork or documents at the closing table that they agree to cooperate to sign revised paperwork to correct inadvertent errors or omissions, the parties also agree that if estimates are used to calculate each party’s pportion of current or previous year’s property taxes, they agree to get together to share proration of any property taxes or tax assessments against the property after closing.

Attached is a typical statement that both parties sign reflecting that agreement.

Also, notice the other statement reminding the new Buyer to file a homestead exemption paperwork to extend or use all existing homestead exemptions to reduce property taxes.

Does anyone ever read this?

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Can an HOA prevent you from leasing your real property?

Yes and no – depending on your existing HOA CCRs and your HOA reaction to limitations placed on certain types loans (i.e., FHA) by lenders allowed to be used by Buyers if rentals/leases exceed certain thresholds and whether or not the HOA has elected to submit itself to the 1994 Georgia Property Owners Act (POA).

HOAs that agree to be compliant with the POA are not subject to Section 44-5-60 (4) of the Georgia Code. This code section states that “no change in the covenants which imposes a greater restriction on the use or development of the land will be enforced unless agreed to in writing by the owner of the affected property at the time such change is made.” This advantage is most readily apparent in those Associations who wish to pass amendments to their Declaration to enact stricter leasing restrictions.

So in the case where your HOA is now in compliance with the POA, leasing regulations can be enacted and the renewed lease with your tenant may be denied and you will no longer be allowed to lease the property.

Source: The Georgia POA Act and Your Association.

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Georgia Intangibles Tax – How much Does Georgia Collect each year?

Good question – since it amounts to HUNDRED$ of DOLLARS per mortgage transaction and it’s rolled into Georgia’s General Budget, nobody knows.

What is it?

Each time a real estate property (house, land, condo, etc) is purchased (not refinanced) with a mortgage, the Buyer is charged a fee at closing and the mortgage is filed/recorded in the public county real estate records where it is located in Georgia.

The fee is calculated by multiplying $1.50 by each $500 (or equivalent) of mortgage amount. For example, in the mortgage amount is $100,200, then divide it by 500 and you get 200.4 – round up to 205 and multiply by $1.50 and you get $301.50 Intangibles Tax.

The total proceeds are distributed to several State and local tax jurisdictions within the counties where the money is collected.

The total collected by each jurisdiction depends on the county’s millage rate multiplied by the standard state rate of 0.25.

It is unknown as of this writing how much Intangibles Tax collected each year in Georgia, but the most recent amount I’ve seen is 2002 number where the State of Georgia collected about $1.75 million. I’m sure there has been at least that much collected each year over the years…but somehow those numbers are hard to find – lack of transparency based on such a small portion of everyone’s budget I guess.

How much intangible tax should Georgia collect?

Source: Intangible Recording Tax information by the State of Georgia.

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How was the $110 Billion in bank fines spent?

Your guess is as good as the US Government’s!

Make sure you put on your big boy and big girl panties when you read this….

Major US banks paid about $110 Billion in fines over the mortgage banking crisis.

New York State spent some of their money on a new stable and horse barn at the state fair…

A mortgage firm in New Jersey received $8.5 million for reporting a bank’s bad conduct.

Large portion (about $50 Billion) of the fines stayed with the agency/organization levying the fines with limited disclosure where the money was spent.

The U.S. Treasury Department received about $49 Billion and there is no accountability where that money went.

The U.S. Justice Department collected about $450 Million and hasn’t disclosed any details about how that money has been spent. And by the way, there is a “Three Percent Fund” administered by the Justice Department. The fund is comprised of 3% of all civil fines or penalties collected by the department and yes – there is no accountability of funds.

Almost all US States received about $5 Million to spend as they saw fit.

The Federal Housing Finance Agency (FHFA) collected about $34 Billion, of which most went into the US Treasury which in turn $187 Billion helped bail out Fannie and Freddie, who subsequently were taken over (under receivership) by the Federal Government and all profits were also turned over to the US Treasury, with no accountability where those funds were spent (if any on housing related matters). And both Fannie and Freddie have been profitable since 2012 and have paid over $245 Billion in dividends to the US Treasury – and where have those funds been spent?

There has just been no disclosure as to where the fines went!

The U.S. Treasury has stated that the settlement money isn’t specifically tracked.

Source: WSJ, 3-10-2016, Page A1.

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HOAs might need FCAR’s 2015 Community Association Fact Book 2015

The Foundation for Community Association Research (FCAR) provides authoritative research and analysis on community association trends, issues and operations. FCAR supports and conducts research and makes that information available to those involved in association development, governance and management.

This publication is designed to provide accurate and authoritative information in regard to the subject matter: 2015 Community Association Fact Book.

References to articles, sources, products, or services are not a specific endorsement and not guaranteed to be true or accurate, but the user must perform their due diligence and investigate whether the information provided is valid, or the product or service is right for them. I welcome any or all comments that would help others. Be careful – if it sounds too good, it probably is!

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HUD’s reverse-mortgage program (HECM)

I have no dog in this fight. I’ve heard closing costs may be high (especially lender costs) to get the equity but for those who are 62 or older who are cash strapped and need supplemental income to live or other emergency needs, this is a source of funds.

How does a reverse mortgage work?

Reverse Mortgage is a way to borrow from the sizable portion of equity if you are 62 years of age or older. It is a financial arrangement withdrawing the eligible equity (it is not all of the equity – but lender determines ultimate level) in your home in (a) lump sum in the beginning, (b) fixed monthly payment, or (c) line of credit after loan closing costs are covered. The home must be your primary personal residence and the loan continues until (a) owner dies or (b) total amount of eligible equity is depleted. The loan must be repaid from the proceeds of its sale after (a) owner’s death, (b) owner moves out, (c) house is sold. Now, in addition to any other restrictions, the homeowner agrees to continue to (a) pay homeowner’s insurance, (b) pay property taxes, (c) pay any homeowners’ association fees and dues, and (d) maintain the home in a livable condition and retain its value (i.e., exterior paint, deck, roof, hvac, and other repairs).

What are some features and benefits to the reverse mortgage loan?

  • Supplement their monthly income;
  • Pay off an existing loan;
  • Use funds to make home improvements or maintenance repairs;
  • Pay for health care expenses; or
  • Pay off debts or any other legal expenditure.
  • No pre-defined maturity date.
  • Repayment is normally capped at 95% of the value of the property.
  • Lender needs to pre-qualify borrower’s ability to meet property maintenance and other loan term obligations

What are the closing costs?

  • Loan Origination fee – A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.
  • 3rd party fees about the same as a typical mortgage (i.e., appraisal, inspections, title insurance, surveys, recording fees, credit checks, title searches, etc.).
  • FHA Mortgage Insurance Premium (MIP) – both the up front fee and annual fee (annual fee never disappears)
  • Loan Servicing Fees – typically less that $40/month.

Source #1: FHA website on reverse mortgages.

Source #2: Some features, pros and cons of reverse mortgages from bankrate.com.

Source #3: AJC, Buyer’s Edge Section, 11-6-2016, A2.

Source #4: CONSIDERING A REVERSE MORTGAGE? (Published by CFPB)

Source #5: Wall Street Journal, November 13, 2017, page R11B.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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Criminal background checks for Real Estate Agents in Georgia?

Are criminal background checks being performed for real estate agents in Georgia?

Yes and No – d-“pending” on how you look at it…

As far as I know, a criminal background check is made for any real estate applicant for new or renewed license by the Georgia Real Estate Commission to verify that any charges are pending for certain crimes but not a “complete” history of “charged” criminal background checks are researched or considered, only those “convictions” that are less than 5 years ago and only 2 years for a single conviction.

Georgia Code – 43-40-15-(1.2) A person who has a conviction in a court of competent jurisdiction of this state or any other state shall be eligible to become an applicant for a licensure or an approval authorized by this chapter only if:

(A) Such person has satisfied all terms and conditions of any conviction such person may have had before making application for licensure or approval, provided that if such individual has multiple convictions, at least five years shall have passed since the individual satisfied all terms and conditions of any sentence imposed for the last conviction before making application for licensure or approval; and provided, further, that if such individual has been convicted of a single felony or of a single crime of moral turpitude, at least two years shall have passed since the individual satisfied all terms and conditions of any sentence imposed for the last conviction before making application for licensure or approval;

Per Georgia Code 43-40-15: Grant of licenses; grounds for suspension or revocation of license; other sanctions; surrender or lapse; conviction, there are certain circumstances which would prohibit issuance or revocation of licenses covered in Georgia Law – Georgia Code:. These circumstances only apply if “charges are pending” against an applicant for new or renewed license. Georgia Code 43-40-15 (1.2) (B) says “No criminal charges for forgery, embezzlement, obtaining money under false pretenses, theft, extortion, conspiracy to defraud, a felony, a sexual offense, a probation violation, or a crime involving moral turpitude are pending against the person;”

Bottom line: As long as you only commit certain crimes every 2+ years and even if you are accused and charged but “NOT” convicted of the crime – you too can be a REAL-A-TOR in Georgia!

Hope you feel safer now – Merry Christmas!

Source of inspiration for post: Measure was proposed in South Carolina legislature after kidnapping and murder charges were filed against a currently licensed real estate agent. The proposed legislation would require background checks to renew real estate licenses.

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Who owns the interior and exterior photos of your home?

Are Google’s satellite photos of your home an invasion of privacy or does everyone not care because they now see into their neighbor’s back yards?

Take it one step further, when you are marketing your home to the public, do you also have interior photos of the home to show features of your home to prospective home buyers? Do you care to share your personal furnishings with the general public, some of whom are either nosy neighbors (i.e., self-proclaimed decorating critics) or maybe local criminals? And what does it matter if you do show photos, you are moving, right? So why care? Even the nosy neighbors are going to come over to see inside and get ideas for their home.

Well, how about the new Home Buyer caring not to show the interior views of a home to total strangers and where all possible access points, alarm panels, or otherwise revealing the interior of your new home. It’s one thing to see the photos of home interiors to compare features of various possible homes, but once you move in and even though you change furniture placement, paint, or flooring…do you feel uncomfortable that basically your home is viewable from anyone in the entire world?

Can you remove previous photos of your new home’s interior or exterior from the internet? Probably not entirely. Or perhaps the realtors can use your home’s exterior photo to advertise previous properties that have been sold. Also, Realtor Multiple Listing Services (MLS) normally delete those photos after a specified length of time (i.e., probably about 90 days after to use as sales listing or appraisal comparables). I’m sure if you pressed the issue with them, you can request them to do so and they should comply. Please consult with your real estate agent to address concerns, or contact the local MLS to remove photos.

In these days of smartphones and the number of cameras out there, even the potential Buyers visiting the home will snap photos of interior to help remember the homes they visit…are you ok with that?

Bottom line: In this day and age, if you are really paranoid of who sees the interior of your home, you have concern and not sure how you can stop it in the short run…maybe an enterprising unemployed attorney will file a class action lawsuit, but not sure of the extent of “damages”???

Source of ide for blog Post: Some buyers don’t want to show off the photos of their new home.

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