American Trust Escrow

Finding a Better Mortgage – Tips for Success

 

Banking woes have brought the mortgage industry back down to Earth, but the new rules and requirements don’t mean that you can’t get a loan.  With a little work ahead of time, you can increase your own chance of qualifying for the best loan when you’re ready to buy.

• Ensure your credit report is 100% accurate.  Review each line item on your credit report to be sure that everything on there belongs to you.  (Mistakes happen, especially if you have a common name.)  Ensure that your payment record is accurately reflected.  If you find any discrepancies, contact individual creditors to request corrections.  Once the creditor has corrected any error(s), re-check your credit report to determine if your record has been updated accurately.
• Credit maintenance.  Cleaning up your credit BEFORE applying will help ensure the lowest rates.  By making timely payments, paying off any collections, and paying down credit card balances, you increase your credit score.  It also shows potential creditors that you’re being responsible with your obligations and keeping debt levels low.
• Being upfront.  If you’ve had credit issues in the past, trying to cover them up will only hurt you.  Be straight forward on your source(s) of income, and don’t try to hide assets.  Omissions like these can only delay your application, and may jeopardize your chances of securing credit at all.
• Documentation accuracy.  Review your paystubs, investment and bank statements to ensure information on them are accurate.  If the amounts, names, and addresses, are incorrect, submit corrections ahead of time.  If you’re putting a down payment on the property, be prepared to provide documentation on the source of the funds.
• Review your Good Faith estimates.  Know all the fine print of the loan(s).  While paying the lowest APR is what we all aspire for, focusing solely on the APR can mask other negative terms buried in the fine print (e.g. origination fees and/prepayment penalties).

Before you go to the bank seeking a loan, a little attention to your finances can go a long way.  While some of these steps may be time-consuming, they can help you get the best deal possible.

Tips for Achieving a Smooth Closing

While you don’t always have control over every aspect of your closing, there is some preparation that you can do ahead of time to ensure a smooth, stress-free experience when you sit down for the last time in escrow.  Here are a few hints that will help you be prepared for the avalanche of documents:

• Review your HUD-1 or final closing statement.

1. Go line by line and check every fee:  lender, title, and escrow.
2. Review the credits – deposits, credits due from the seller, etc.
3. Double-check the math to ensure calculations are correct.
4. Bring a list of any discrepancies or questions – and go over every single one BEFORE you sign anything.

• Review the preliminary report or guarantee of title insurance.

1. Verify the property’s legal description.
2. Review any liens, encumbrances, or other items that might have come up in the title search.
3. Check vesting to ensure the title is being recorded in the proper name(s).
4. Bring a list of any discrepancies or questions – and go over every single one BEFORE you sign anything.

• Reinspect the property.

1. Ensure corrections and/or repairs that were previously agreed upon have been made.
2. Check the condition of the house – speak with your agent if anything may have fallen into disrepair.

• Review the purchase contract.

1. Make sure that all conditions have been met.
2. Check off any items tasked to the closing agent.
3. Confirm that interest rate, points, fees, and the property’s condition are correctly noted before you start signing anything.

 

With a little “home” work, you can be fully prepared for the stacks of paper you’ll soon be signing.  It will not only take pressure off during closing, it will give you peace of mind that you’ve covered all your bases before signing your name on the dotted line.

Give Your Real Estate Clients a Better Mobile Experience

With Smartphones becoming more and more popular, the number of people using home computers and laptops as their primary device is going down.  By following some simple tips, you can create a better mobile experience for you and your clients.

• Short, sweet, to the point.  Long, windy paragraphs used to be in, but on a mobile device, they slow down your clients’ mobile experience.  Simplify your site, including eliminating Flash presentations.  Not only does Flash drag down downloads, but it isn’t compatible with many mobile devices.
• Try another angle.  Google offers a simple but effective tool to evaluate a website’s mobile appearance at HowToGoMo.com.  There, you can check the size of buttons and your site’s searchability (to name a couple) to ensure a better mobile experience.
• Safety first.  When you’re on the go, occasionally you may find yourself in a potentially dangerous situation.  “Real Alert” is an app with five crucial features, such as automatic 911 dialing, GPS positioning, and hospital locations.
• Keep the receipt.  When you’re on the go, sometimes keeping track of receipts can become a fulltime job.  Instead of filling your wallet with paper receipts, try out the “Expensify” app.  By making use of your mobile device’s camera, you can digitally track your receipts and eliminate the paper.
• Cover your tracks.  Keeping track of your mileage on your mobile device is easy with the “MileBug” app.  Whether you use one vehicle or several, MileBug allows you to export the records to your PC so tax time is a breeze.
• Floorplans just like “MagicPlan.”  The “MagicPlan” app allows you to create an interactive floorplan with photos.  It makes measurements easy and publishing to the web a snap.
• Open houses made easy.  With the “Open Home Pro” app, you have a great tool for signing in clients.  After they’ve entered their email address, they get an immediate “Thank you” email with your contact information and any other info you want.  If there’s a price reduction, the app has a tool to notify all attendees.

As you become more attune to the mobile experience of you and your clients, you’ll be amazed how you ever got along without them!

Happy New Year!

Wishing you a wonderful new year. May 2012 be your best year yet!

Tax Credits For Making Your Home Energy Efficient

 

As winter closes in, the chill that you feel in the air could very well turn into cold hard cash in your pocket! On December 31, 2011, federal tax credits for energy efficiency are set to expire. So, as you buy those last minute gifts and sip on eggnog, why not explore opportunities to improve the energy efficiency of your home? Not only will you see some dollars on April 15th (up to a maximum of $500), but these upgrades promise to save you money for years to come:

 

1. Windows: By replacing drafty, single-pane windows with models that
insulate better against the elements, you can save up to $200 on your taxes.
2. Insulation: Whether it’s attic or wall insulation, weather stripping for
your doors or windows, or expanding foam to fill voids, up to 10% of the
cost can be reimbursed by way of tax credits.
3. Doors: Up to a 10% tax savings.
4. Heating & cooling systems: Tax credit of up to $300.
5. Main air circulating fans: Up to $50 worth of tax credits are available.

Before you tick away the final moments of 2011, check with your tax advisor and visit Alliance to Save Energy’s website for program requirements and suggestions: http://www.ase.org. Who knows: by improving your home’s efficiency, you might also find a few extra dollars to finance this year’s festivities!

Using Personal Landing Pages to Grow Your Business

Savvy real estate professionals are turning to personal landing pages to help grow their businesses.  Now, more than ever, it’s easy.  DooID.com and other services give you the ability to setup a personal landing page in just a few minutes. Once it’s up, modern-day technology allows your personal landing page to pull content from sources that you regularly use, keeping it timely, relevant and virtually maintenance-free.

Before you start building your personal landing page, decide what kind of personal connection you want to make with your clients.  Tell them about yourself:  hobbies, family, favorite restaurant, favorite movie.  By doing this, you allow your clients a look at the person behind the sign and resonate with you on a personal level.

Since there are so many ways to be in touch these days, your personal landing page can be a virtual contact list for you.  You can link clients to your Facebook page, Linked In profile, or Twitter feed, while also allowing them a way to contact you via email.  Additionally, you can list all of your phone numbers, office address, and Skype contact information. The more ways a client can get in touch with you, the better.

The most common recommendation is to set up a personal domain (e.g. yourname.com).  That way, you not only appear more professional, but you allow your clients to find and see your “official” brand.  It also allows them a way to find companies and services that you personally trust.

Your personal landing page can become a powerful tool in your sales arsenal.  With some thought and planning, you allow past and present clients a way to stay in touch, while giving them a place to send new referrals.  Then you’re growing your business and building your reputation as someone they like and trust!

Studies Show Energy-Efficient Homes Pay Off

Energy-efficiency ratings have started finding their way into listings for residential properties.  A recent survey conducted by The Earth Advantage Institute, a non-profit group in Portland, OR, found that Energy Star or LEED (Leadership in Energy and Environmental Design) certifications increase the sale price of a home.  EAI states that new homes certified for sustainability and energy efficiency sell for 8% more, on average, than their non-certified counterparts.  The news is better for existing construction, where the same certification can add a premium of about 30% to the home.

In response to the trend, new training programs are finding their way into the banking and appraisal industries.  The institutions have found it necessary to teach officers how to acknowledge the benefits of energy efficient designs and how to translate them into lending and appraisal practices.  Banks are starting to realize that, when a borrower pays less for heating and electricity in an energy-efficient home, their ability to pay (and thus, credit-worthiness) increases, making them less risk for the underwriting bank.

Sales price isn’t the only place energy efficiency pays.  In the Portland, OR, market, a recent review of listings showed that energy-efficient homes spent 18 days less than comparable non-certified properties on the real estate market.

Understanding Net Operating Income (NOI)

Net Operating Income is one of the most important components of financial analysis for commercial real estate investors. A few months ago we discussed another important financial index, CAP Rates, which are determined directly from the NOI.

What is the NOI?

The NOI is calculated as follows:

NOI = GOI – Expenses, where GOI is the Gross Operating Income of the commercial real estate asset. Expenses include property taxes, insurance, maintenance, utilities, capital reserves, management fees and incidental expenses. NOI is analogous to a simple profit calculation for a business.

Of course, the commercial property’s Gross Operating Income (GOI) is needed for the NOI calculation. The GOI is determined by subtracting the vacancy rate reserve from the Scheduled Gross Income (SGI). This is done to adjust the SGI for tenant vacancies. The SGI is simply the total amount of rents scheduled to be collected annually.

An investor (buyer) typically obtains the necessary financial information by requesting it from the seller or the seller’s agent prior to executing a commercial real estate sale transaction.

It is customary that the sale transaction purchase contract sets forth the details by which the buyer and his agent verifies or determines a NOI and other important components of his financial analysis by his own due diligence work, while in escrow.

New Laws to Affect California Real Estate Agents and Brokers in 2012: Part Three

We hope that you’ve found our past few posts regarding the new California real estate laws and regulations helpful! This article marks the final laws that will be going into affect in the near future. The following laws relate to notice of sale, condo rentals, smoking bans, political signs and recycling. We wish you the very best in the final months of 2011!

Revising the Notice of Sale: Effective April 1, 2012, a notice of trustee’s sale for the non-judicial foreclosure of one-to-four residential units must contain specified notices to the owner on how to seek postponement of the trustee’s sale, and to potential bidders on the risks involved in bidding at trustee auctions.  Additionally, a lender or authorized agent must make a good faith effort to provide up-to-date information about sale dates and postponements to persons who want this information.  The lender must also provide updated information through the Internet, a telephone recording, or any other means that allows free access at any time.  Senate Bill 4.

Renting Out Condominiums: C.A.R. also successfully sponsored legislation protecting owners’ right to rent out their units in common interest developments.  Starting January 1, 2012, an owner in a common interest development is exempt from any prohibition in a governing document against renting or leasing the unit, unless that prohibition was in effect before the owner acquired title to his or her unit.  When renting out a unit, the owner must give the HOA verification of the owner’s acquisition date, and name and contact information of the prospective tenant.  An owner’s right to rent under this law does not terminate for certain transfers of title, including, but not limited to, probate, spousal, parent-to-child, adding a joint tenant, and other transfers exempt from property tax reassessment.  For sales transactions, the required HOA disclosures must include a statement describing any prohibition in the governing documents against renting or leasing.  This law does not apply to rental prohibitions in effect before 2012.  Senate Bill 150.

Tenants Smoking Ban: Beginning January 1, 2012, a residential landlord can prohibit the smoking of cigarettes and other tobacco products on the property, including any dwelling unit, building, other interior or exterior area, or the premises on which the property is located.  For new tenants on or after January 1, 2012, the areas where smoking is prohibited must be stated in the lease or rental agreement.  For preexisting tenants before 2012, a new provision prohibiting smoking is a change in the terms of tenancy that requires adequate written notice, depending on whether the tenancy is month-to-month or for a fixed term.  Senate Bill 332.

Tenants Displaying Political Signs: Effective January 1, 2012, a residential tenant can generally display political signs related to elections, legislative votes, initiatives, and other political matters as specified, but the landlord can make reasonable restrictions as to location, size, and duration of display.  In a single-family dwelling, a tenant’s political signs can be displayed from the yard, window, door, balcony, or outside wall of the leased premises.  In a multifamily dwelling, a tenant’s political signs can be posted in the window or door of the leased premises.  A landlord can restrict the size of a political sign to six square feet.  A landlord can also prohibit a tenant from displaying political signs that violate local, state or federal law, or a lawful provision in an HOA’s governing documents.  A tenant must remove political signs in compliance with time limits set by local ordinance, or absent such time limits, the landlord can reasonably restrict the posting of a sign to 90 days before an election or vote, and its removal within 15 days after the election or vote.  Senate Bill 337.

Tenants Recycling Rights: Commencing July 1, 2012, a multifamily residential dwelling of five or more units (or a multifamily residential dwelling or business that generates more than four cubic yards per week of commercial solid waste as defined) must arrange for recycling services.  The intent of this law is to address the challenges local governments are facing in reducing solid waste disposal in multifamily properties.  The required recycling services are to be consistent with state or local laws, to the extent that these services are offered and reasonably available from a local service provider.  The property owner of a multifamily residential dwelling may require tenants to source separate their recyclable materials to aid in compliance with this law.  Assembly Bill 341.

New Laws to Affect California Real Estate Agents and Brokers in 2012: Part Two

Last week we posted the first five news laws that were announced by the California Association of Realtors. This week we wanted to share with you the next five on the list. These new laws pertain to a plethora of topics, including citations, escrows, tax issues, appraisals, and small claims. Stay tuned, as we will be sharing the remaining laws next week!

DRE Issuing Citations and Fines: Starting January 1, 2012, the DRE can issue a citation and fine up to $2,500 if, upon investigation, it has cause to believe that a licensee has violated the DRE rules, or a unlicensed person has engaged in licensed activities.  The person cited can request a hearing within 30 days from receipt of the citation.  The citation and fine will be in lieu of DRE disciplinary action for the offense cited, and the citation will not be reported as discipline.  However, failure to comply with the terms of the citation or pay the fine within a reasonable time specified by the DRE shall result in disciplinary action and non-renewal of license.  The DRE may also apply to a superior court for a judgment in the amount of the fine and an order compelling compliance.  All administrative fines collected will be deposited into the Real Estate Recovery Fund, which has, under Senate Bill 706, been renamed the Consumer Recovery Account.  Additionally under this law, if the DRE delays the renewal of a license due to a pending disciplinary action, the license will not expire until the results of the disciplinary action are final or the license is voluntarily surrendered, whichever occurs first.  This law also gives the DRE the authority to make public information confirming the fact of certain investigations or proceedings regarding a licensee, and to apply for a court order to enforce a subpoena if a licensee has refused to obey.  Senate Bill 53.

Reporting Broker-Owned Escrows and Securities Qualification Exemptions: Starting July 1, 2012, a broker who conducts escrow activities for five or more transactions in a calendar year under the broker exemption from the Escrow Law, or whose escrow activities are $1 million or more in a calendar year, must file with the DRE an annual report of the number of escrows and dollar volume.  The report must be filed within 60 days after the end of a calendar year in which the threshold is met.  A failure to submit the report will be penalized at $50 per day for the first 30 days and $100 per day thereafter, up to $10,000.  A broker who fails to pay the penalty may be subject to license suspension or revocation.  All penalties collected will be deposited into the Consumer Recovery Account under the Real Estate Recovery Program.  Effective January 1, 2012, this law also requires a broker who files certain information with the DRE for an exemption from securities qualification to submit a copy of that information to any investor who gives funds to the broker in connection with a transaction involving the sale of a series of notes (or undivided interests in a note) secured by real property under section 10237 of the California Business and Professions Code.  Senate Bill 53.

DRE Suspending Largest Tax Delinquents: Commencing January 1, 2012, both the State Board of Equalization and the Franchise Tax Board must periodically make public a list of the 500 persons with the largest tax delinquencies in excess of $100,000.  The lists must include, among other things, each taxpayer’s occupational or professional license numbers.  The DRE and other state governmental licensing entities (with certain exceptions) must suspend and refuse to issue or renew an occupational or professional license for anyone on either tax delinquency list.  Assembly Bill 1424.

Agents Handling Appraisal Issues: Beginning January 1, 2012, a licensee cannot knowingly or intentionally misrepresent the value of real property.  Furthermore, a licensee who offers or provides an opinion of value of residential real property that is used as the basis for originating a mortgage loan cannot have any direct or indirect interest in the property or transaction as defined under Regulation Z (at 12 C.F.R. section 226.42(d)).  A licensee or other interested party is also prohibited from using coercion, extortion, bribery, intimidation, compensation, or instruction to improperly influence a person preparing an appraisal or valuation for a real estate transaction.  Senate Bill 6.

Increasing Small Claims to $10,000: Commencing January 1, 2012, the small claims court jurisdiction will generally increase from $7,500 to $10,000 for an action brought by a natural person.  For a claim of bodily injury from a car accident, the increase to $10,000 will not occur until 2015.  The dollar limit in small claims court for an action brought by a corporation or other entity will remain at $5,000.  Senate Bill 221.