How to Pick the Best Home Warranty For Your Client

Guest Blog by Joshua Lopez, Landmark Home Warranty

As a buyer’s agent, you’re responsible for a lot in a real estate transaction to make sure everything goes smoothly. One of those things can be picking out a home warranty. But – how do you know which home warranty plan is the best for your client? After all, picking a good home warranty plan reflects well on you and can result in future business from the homeowner – or referrals. Unfortunately, there’s not a “one size fits all” home warranty plan that works for every home and homeowner, either. Use these tips to pick the best home warranty for each unique homeowner and house.

1. Determine What Coverage the Home Needs

To begin, look at what type of coverage the home needs from a home warranty. It might be easy to say, “Well, I want my buyers to have coverage on everything!” But unfortunately, you’d be hard-pressed to find a home warranty that covers every part of a home’s systems and appliances. Otherwise, their yearly premiums would be sky-high. Instead, pick the home warranty based on what your clients’ needs are. You can determine what your clients need coverage on from a home warranty by asking these three questions:

1. Are there systems or appliance that are well maintained, but nearing the end of their lifespans?

2. Are these systems and appliances expensive to repair or replace?

3. Are these systems and appliances integral to the comfort of the home?

Systems and appliances that meet these requirements should go on the list of what you want covered in your client’s new home. These are the “problem areas” and what they’ll probably need help repairing or replacing in the upcoming years of home ownership. Once you have a list of the systems and appliances that need coverage, begin looking at the home warranty companies that provide coverage on these items.

It’s important to note that using the home inspection report as a guide to what may need to be covered by a home warranty is a good start. However, a majority of home warranties do not cover systems and appliances that show they have problems in the home inspection report. You can use the home inspection as a jumping off point, but if you want those items to be covered by a home warranty, you’ll need to give the home warranty proof that they were repaired before the date the warranty begins coverage on the home. 

2. How Experienced Is Your Buyer?

Next, consider how experienced your buyer is with home repairs. A home warranty not only provides cost savings, but it also provides a guarantee for a qualified professional to do the repairs and replacements.

If your homeowner is an avid DIY repairer who likes to get their hands dirty and is extremely experienced, they might want something that covers the bigger systems in the home that they don’t have enough experience to repair. If your homeowner is a brand new homeowner, you’ll probably want a home warranty that covers a lot more of the smaller repairs and replacements within a home. You may want to include some add-ons to the basic home warranty plans to help cover new home buyers. Some home warranties have things like roof repair coverage or extreme pipe-leak repair that may be attractive to first-time buyers.

3. Read Through the Contract Thoroughly

After determining what your buyer needs coverage on and how much they need, it’s time to start comparing home warranty contracts. Make sure to read through the contracts with your buyer to help them understand the basics of a home warranty. Teach them that a home warranty has two main parts: the yearly premium and the service call fee that they must pay to the contractor who comes out to their home for diagnosis. Most home warranties allow you to look at a sample contract for your state or region that outlines what they cover, exclude, and limits. For your convenience, we’ve outlined their basic descriptions below:

Covered: This is what items the home warranty will repair or replace if they fall in line with the overall coverage of the home warranty contract. (This means, for example, a home warranty may cover an oven and it will be listed in the covered items section of the contract, but they’ll only cover the oven if it has failed from normal wear and tear, not because someone has purposely damaged the oven because they want a brand new one.)

Excluded: This section explains what is not covered under the contract. This may be smaller parts of a system that are less than the service call fee, so a waste of your buyer’s money, or systems or appliances that are obscure.

Limits: Home warranty companies do limits two ways. Some home warranties have an overall limit on contracts, meaning they’ll cover any repair or replacement in their contract up to a certain monetary amount, and after that, the home warranty is useless and the homeowner has to pay all repairs and replacements out of pocket.

Other companies just have limits on certain parts of their home warranties, meaning that they’ll pay up to a certain dollar amount for a repair or replacement on that item, and then the homeowner will have to pay the rest out of pocket.  Beware: most home warranties that are low in price have lower limits, making your buyer pay more out of pocket for repairs.

After reading and comparing the coverage from each home warranty, pick the one that has the best coverage for your buyer based on what they need coverage on, your buyer’s homeownership experience level, and what the contract states.

Home Warranties: What to look for and how to advise your clients

In our competitive and busy market, many buyers are no longer asking for home warranties as part of the purchase contract, and homeowners certainly don’t feel the need to offer them. So why, as an agent, should you worry about home warranties? Because your clients will want to know if they should buy one and they’ll turn to you for advice. Be prepared to offer an expert opinion with our tips.

Coverage

Have the client look at the seller’s disclosure, the inspection report, and think about their personal observations. Home warranties repair or replace things that break down from normal wear and tear. Have your clients make a list of things in the home that are well-maintained but nearing the end of their expected lifespan, are expensive to repair or are necessary for quality of life. These are things like hot water heaters, HVAC units, and appliances. These are the things that your client will want to ensure are covered. Have them keep those things in mind when they are reviewing their coverage options. Remember that major structural items, like the roof and foundation are generally covered by home owner’s insurance and not home warranties. Also, if the home is new or has new systems, the manufacturer warranty may offer some initial coverage, initially reducing the need for a really substantial warranty policy

Pricing versus Coverage Limits

Your client will want to consider the cost of the premium of the plan, as well as service call fees. And they will also want to consider the limits of the policy. If they are really concerned about the HVAC unit breaking down in the middle of a heat wave, then they will want to ensure that the policy they choose will cover the cost of a new system if needed. Some policies will limit the amount of coverage available on certain items. They need to consider the value having a policy given the amount required to repair an item unexpectedly versus the cost of the policy, service fees, and whether the limits will cover the replacement costs.

Keep in mind that home warranties won’t cover problems arising from a lack of maintenance or known conditions. For instance, you can’t buy a home warranty policy if your air conditioning is already broken and then expect the warranty to cover that system.

Who is doing the work?

If your clients have preferred contractors, have them ask whether they are contracted with a home warranty company and which ones. When they are reviewing policies, they should ensure that the warranty company only works with contractors who are licensed and bonded in Texas. Your clients should ask about their vetting process and how they handle work that doesn’t meet correct standards.

Why should your clients consider a home warranty?

The average annual cost of a home warranty is several hundred dollars. That can mean conservable savings if something expensive break down. A $400 warranty is well worth the money if you are replacing an $8000 air conditioner. Cost savings aside, a home warranty can offer some peace of mind if your client is doesn’t have cash on hand to handle an expensive repair.

Make sure your clients read online reviews of different warranty companies before they make their final decision. Not all warranty companies are the same.

Home warranties can be a great option for your clients, and you should make sure they understand what is – and isn’t – covered before they buy their policy. If they do opt to buy a policy ask them to tell you what company and policy they chose. You might even ask if you can write their policy number in their file. Because your clients will call to ask you for recommendations for contractors when the oven breaks, or the garage door won’t open. If they’ve bought a warranty, you could save them a lot of money and heartache when you remind them to call their warranty company. Having that policy information on hand will be a great benefit to your clients.

And THAT’S how you become their trusted real estate advisor for life. 

Helping your clients fit into their new neighborhood

One of the best pieces of advice any Realtor can follow is to try to develop deeper, more meaningful relationships in their lives. This means that in everyday life, you take the time to really listen to what people around you are saying. In work life, it means asking meaningful questions and listening and then repeating back what you hear. Joe Stumpf, renowned coach and author uses his “5,6,7” (word doc) method to really get to the root of what it is that his clients truly want. It’s usually nothing to do with the physical properties of a house, and everything to do with family, friends, and community.

Stumpf believes that if you develop the relationship with your clients by helping them see deeper into themselves, they will look to you to make their goals happen. Which you will do when you help them get into that new property.

Once they’re in that great new home, however, you’ll find that those clients still look to you for advice. And a great way to continue to be an advisor to them – their real estate resource for life – is to help them transition into loving their new community. And if your client has just made a long distance move, then that follow up can really make the difference in how they perceive their new community.

Now, I’m not saying you need to turn up to all of their kids’ baseball games, or have them over to Sunday dinner every week. What you can do is to offer advice from time to time, via a blog, email, or personal note. These little touches will go so much further than any marketing campaign you can dream up, and are much more cost-effective.

Author Melody Warnick recently released a great read called, This is Where You Belong – the art and science of loving the place you live. On its own, it would make a great closing gift for your relocation buyers and sellers. But you can also use some of her ideas as a springboard for providing tips to your clients. For instance, Warnick suggests a two minute exercise to help you focus on the positive. Simply write down, “I love {my new neighborhood} because…” and then write down some positives.

Another great way to get your client invested in the community is to help them feel at home is by getting involved. Volunteer at a local organization, like a community food bank, animal shelter, library or school and ask your clients to join you. A few might join you and those that do will leave feeling inspired to do more. And someone who is focused on giving to the community will inevitably begin to feel more invested, more rooted. If your clients are scattered over a large area, you can help them find community groups that are involved in their hobbies.

Getting out and about on foot will make the area more familiar, too. If the community hosts outdoor performances in the summer, like Shakespeare in the Park or a summer concert series, jot down a few “did you know about these interesting dates” personal notes and mail to your clients. You can also email links to local bike and nature trails. Or join a national movement and invite your clients to participate in something fun like the Audubon Christmas Bird Count or an annual butterfly count.

Help your clients, past and present, discover more about themselves and their community and you offer them greater value than just the initial transaction. You become their trusted advisor, and one they will be happy to refer to their friends, family and coworkers. You develop more meaningful relationships and greater job satisfaction for yourself, too.

August housing sales booming after slower start to summer

DFW home sales increased 12 percent to 10,860 sales in August, in contrast to weaker sales figures in July, according to the July 2016 North Texas housing market report released today by the MetroTex Association of REALTORS.

“August was an exceptionally busy month,” said Russell Berry, president of MetroTex. “We’re seeing strong increases in terms of number of sales and in dollar volume. Prices are up and inventory remains our biggest challenge.”

According to the report, 10,860 homes were sold in North Texas in August, a 12 percent increase from the year prior. The median price for DFW area homes increased 10 percent year-over-year to $230,000 during the same time frame.

North Texas’ monthly housing inventory fell to 2.3 months in August. The Real Estate Center at Texas A&M University cites that 6.5 months of inventory represents a market in which supply and demand for homes is balanced.

Homes spent an average of 37 days on the market in August. There were 19,964 active listings for the North Texas housing market during the same time frame, a 6 percent drop.

August 2016

  • 10,860 – Homes sold, 12 percent higher than August.

  • $230,000 Median sales price for homes, 10 percent more than August 2015.

  • $280,402 Average sales price for homes, an 8 percent increase over August 2015.

  • 2.3 – Monthly housing inventory in August 2016.

  •  37 – Average number of days homes spent on the market in August 2016.

  • 19,964 – Active home listings on the market in August 2016.

The MetroTex Association of REALTORS® represents more than 17,000 members involved in all aspects of the real estate industry. As the largest REALTOR® member association in North Texas, MetroTex represents the entire region. Established in 1917, MetroTex is an advocate for the real estate industry and private property rights. For more information, visit us online at DFWRealEstate.com.

Why you should tell your clients not to assume the highest offer for their house is the best one

There are many factors involved when considering competing offers with your clients. Here’s a handy guide to help your clients better understand all of the offers on the table. Share it with them and let the referrals roll in!

Consider all of the factors that will determine which offer is right for you.

Where’s this money coming from?

Without cash or a letter from a lender that is providing a mortgage loan, buyers may not be able to afford the price they’re proposing. Ask your MetroTex Realtor to find out if potential buyers are prequalified or preapproved.

How serious are the offers?

Potential buyers will put a certain amount of earnest money toward the sale in advance of the closing to show they’re entering into this transaction in good faith. Your MetroTex Realtor can help you verify if the amount of earnest money is a strong offer, which is a sign of serious buyers. If the transaction closes, the money counts toward the down payment; if it doesn’t close, you may get to keep the earnest money.

When’s moving day?

Determine if the proposed timeline for the transaction matches your schedule. If the buyers want a closing date that’s too soon for you, temporary-housing costs could eat into that higher offer. Of course, if the buyers don’t want the transaction to close for a few months, you could end up paying two mortgages for a while.

They want the TV and the dining room set?

Buyers can put all kinds of things in an offer. They can request an option to terminate, ask for repairs, see if you’ll leave appliances or furniture, and make the offer contingent upon the sale of their current home. Your MetroTex Realtor can help you decide what is reasonable.

Do your buyers know what’s in their credit report?

Many buyers want to look at houses first and worry about their credit later, and many Realtors don’t want to show potential buyers homes unless they’re already working with a lender. You can help explain to your buyers why lenders need all of the information they do and how they use a credit report. Here’s and handy guide to share with them.

You can’t afford not to get your credit report

The Fair and Accurate Credit Transactions (FACT) Act of 2003 made it possible for consumers to access free copies of credit reports (also called credit-file disclosures). The free reports list key aspects of your financial history.

Before you apply for a loan, you should request a free credit report to get an idea of what a lender would see. If the report has errors, you can correct them before they affect your ability to qualify for a mortgage loan. And if you find legitimate flaws, you might be able to take steps to improve your credit standing before purchasing a property. Your Texas Realtor may be able to help you find resources to repair your credit.

How many credit reports can you request?

You can request one free credit report every 12 months from each of the three major consumer credit-reporting agencies: Equifax, Experian and TransUnion. But you don’t have to get all three reports at once. How many you request and when is up to you. If you know you will be applying for a loan soon, you might choose to receive all three at the same time to look for errors or legitimate problems that only appear on one or two of your reports. You can also directly compare all three reports at the same point in time.

Or, you can space out the reports to receive one on a quarterly basis or one each month for three months in a row. Getting the reports periodically can help you monitor changes and is a good way to find out whether you have fallen victim to identity theft.

What’s in the report?

A credit report lists how much you borrow, whether you pay on time, if you’ve been sued or have declared bankruptcy. The disclosure includes some information that a third party would not receive, such as medical-account info.

It’s important to note that a credit report is not the same as a credit score. If you want your credit score, you typically have to purchase that information.

How do I get my reports?

You can request free credit reports online at www.annualcreditreport.com. You’ll be required to provide your date of birth, Social Security number and current and previous addresses so the credit agencies can obtain your information. The site is encrypted to ensure a private and secure connection. During the process, the site may ask you to verify previous addresses or accounts you hold to further verify your identity.

Once your information is verified, your report will appear on the screen and is usually available to download onto your computer. If you find errors, you should work directly with the credit-reporting agencies by submitting written documentation of the mistakes. Their sites are www.equifax.com, www.experian.com and www.transunion.com.

If you do not want to use the Internet to access your reports, you can request them by phone at (877) 322-8228. You can also mail a request to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Ga., 30348-5281.

Beware of any person or organization that sends you an email offering you a credit report or ads you see claiming to be from www.annualcreditreport.com. The FTC warns that you should not reply or click those ads, as they most likely are scams.

A legitimate report, though, that you request through the Web site, by phone or by mail can help you make sure your credit is in good shape to pursue your dream of buying a home. 

Tips for Buying a Home with Friends

With housing inventory low and prices going up, some people are making the decision to partner with friends and buy a home together. This scenario allows people who otherwise would not be able to afford a house to share expenses and achieve the dream of becoming homeowners. But how do you know if buying property jointly is the right move for your clients?  

It is important to remember that this is a business transaction, so your clients and their friends will have to approach it as such. You are going to have to have a very open, very frank conversation with all parties about their finances, their plans for the future, what to do if someone wants to sell, etc. If these are conversations they are uncomfortable having or they are worried about the effect they might have on their friendships, then buying a home with friends is probably not the right choice for them.

However, if your clients and their friends can come to terms, owning a home while sharing the burden of all the costs can help you build their savings while gaining equity in a home.

Here are some tips on purchasing a home with friends you can share with your clients.

Review your friends’ finances. This is most likely the largest financial decision of their lives, so now is not the time to hem and haw on questions of finance. They will need to be aware of everyone’s credit scores, income, savings and any other relevant assets. It is important to make sure that your clients and their friends are financially prepared to become homeowners.

 

Decide how payments and costs will be split. Questions to consider are how much each person will contribute to the down payment and if that will affect how your clients and their friends divide the mortgage payments? Will the utilities be split evenly every month or will they alternate who pays? It is important that these details be worked out and understood by everyone involved before the home is purchased.

Decide on the type of house. Are they planning on buying a single-family home or a multi-family home? Do they see themselves sharing a kitchen and bathroom, or are they looking to buy a place where they will each have your own private residence. Your clients and their friends should also decide ahead of time on everyone’s must-haves for the home. Knowing that the friends will only buy a house with a big backyard or that they will not buy a house on a corner lot can save you a lot of time house hunting.

Get everything in writing. It is important that all of the co-purchasers keep written documentation of all of the agreements regarding financial and other responsibilities. So many people think that because they are dealing with friends that there is no need to write up a contract, but it can help you to avoid conflicts and surprises down the road.

Work with a Realtor. Buying a home is an important decision, and whether your clients and their friends are doing it on their own or with a friend, using a Realtor® is a smart move. A Realtor can provide counsel, discuss listings, show homes in person, negotiate on your clients’ and their friends’ behalf and help them stay focused on the issues that are most important.

If your clients and their friends enter the arrangement educated and prepared, co-purchasing a home can be a great way to get your clients and their friends on the first rung of the homeownership ladder.

Housewarming Traditions From Around the Globe

The saying goes that all real estate is local, but that does not mean that all homebuyers are local. According to the National Association of Realtors® 2015 international homebuyers report, global buyers spent an estimated $104 billion on housing in 2014, an increase of more than $10 billion from the previous year. And with Dallas becoming a popular place for international transactions, it’s good to know some traditions from folks all over the world.

“We live in an international marketplace, and U.S real estate is extremely attractive to foreign buyers,” said Russell Berry, president of MetroTex. “International buyers recognize the country’s attractive prices, economic stability and well-defined property rights as an amazing opportunity for investment in their future.”

As more international buyers become a part of the fabric of American communities, they bring with them their many traditions and customs – including those that go along with moving into a new home.

MetroTex Association of Realtors has pulled together a few common housewarming traditions from around the globe, which you may want to use to welcome friends, family or neighbors into their new home.

Russia. According to Russian custom, a cat should cross over the threshold of the new home before anyone else enters. This is said to ensure that the homeowners will have a happy and prosperous life.

Thailand. Thai tradition dictates that visitors should bring a new homeowner three items: rice, water and a knife. The rice and water are so that food will always be plentiful and the homeowner will know prosperity, and the knife is to protect them from any evil spirits. There is also a traditional ceremony known as ‘Sen Wai Jour Teen’, during which the homeowner asks the ‘Lord of the Land’ and any restless ghosts and spirits in the vicinity for protection through an offering of food and water, flowers and incense.

China. Before moving into a new home, Chinese custom is to shine a light in every corner, closet and wardrobe of the house. This is said to let any lingering spirits know that it is time to leave and how to find the way outside.

France. When construction of a new home is finished, the French throw a traditional party called the ‘pendre la cremaillere,’ literally meaning ‘to hang the chimney hook.’ The phrase comes from medieval times when it was customary to invite over everyone who took part in the building of the house and eat dinner as a gesture of thanks. The food would be cooked in a large pot over a fire, where the chimney hook could be used to raise or lower the pot to heat or cool the food.

India. In India, it is considered lucky to move into a new house on Thursday, while Friday and Saturday are the unluckiest days to move. There is also the ceremonial housewarming known as ‘Grinha Pravesh,’ during which, in some parts of the country, a cow is allowed to walk through the house first, bringing good fortune to the homeowners.

For more information on how you can connect with international clients, check out our Certified International Property Specialist certification courses available on a rotating basis throughout the year. Or, join our Global Business Council and network with area leaders who specialize in the international market. Visit mymetrotex.com and check our calendar for upcoming meetings and events.

A Solution for Rising Property Taxes?

With property tax protest season in full swing, Realtors all over the Metroplex are busy running comps and offering advice to homeowners who are headed into their tax protest hearings. And no wonder. With property values rising quickly, many homeowners are finding themselves paying more and more taxes every year. Unfortunately, salaries are not rising as quickly as tax bills. As Realtors, we need to stay active and advocate property tax reform to protect our clients and the health of the market. That’s why we supported Proposition 1 to increase the homestead exemption and prevent sales tax on homes. As it is, Texans pay some of the highest property taxes in the country; many are being forced out of their homes as values rise.

In Dallas County, Dallas Judge Clay Jenkins and others are considering cutting the property tax rate. That’s a great start. But we’d like to see more. Judge Jenkins’ proposal to lower the property tax rate is not ultimately is not a proposal to lower taxes. Rather, his proposal would equate to a smaller annual tax increase. Lowering the property tax rate still allow the amount of tax that homeowners pay to increase every year as long a property values are on the rise.

Currently, property taxes are calculated by multiplying property values by the tax rate. When value rise, so do your taxes. When property values rise every year, as they have done lately, that means your tax bill gets bigger every year, too.

We’d like to see a more predictable model for homeowners and offer some relief from large tax bills. First, we’d like to see a local homestead exemption by county. This proposal would offer immediate tax relief to homeowners. Additionally, we advocate an effective tax rate. An effective tax rate will fluctuate with the market so that homeowners will have a predictable, stable tax bill regardless of how the market is doing. Local governments will know how much they are going to collect from homeowners, and any additional revenue will only be derived from new and omitted properties. Texas state law requires property taxes to be based on property value, but the law does not require the rate to be set. By using an effective tax rate we can satisfy Texas state law and can offer homeowners a predictable way to plan their budgets.

We’d like your help to advocate for responsible taxing policy. Please visit http://www.thehiddenpropertytax.com/ to learn more about the effective tax rate and how you can help make this happen.

Foreign Buyers Flock to Warmer Dwellings

It’s not uncommon to hear of friends, family and neighbors packing up and heading to a second home in warmer states during the winter months. After all, many parts of the country experience brutally long bouts of cold and snowy weather. However, U.S. citizens are not the only people looking to spend at least some of their year down south or out west, whatever the reason. According to the National Association of REALTORS® 2015 Profile of International Home Buying Activity, just four states accounted for half of all international home sales: Florida (21 percent), California (16 percent), Texas (8 percent) and Arizona (5 percent).

Our Own Global Business Council has been working hard to ensure MetroTex REALTORS have the deepest understanding of Dallas’ place in the global market and how to work with international buyers and sellers.

International activity in North Texas is growing quickly. Increasingly, we’re seeing activity from China and India in addition to our important relationship with buyers and sellers from Mexico and their neighbors to the south. Interestingly, the most international online property searches for Dallas-Fort Worth are coming from people in Canada, Mexico, the U.K., Germany and Australia. It’s reasonable to expect interest to translate into dollars at some point. International activity is a big reason why cash sales account for approximately 30 percent of all sales in the region.

Rapid population growth, lots of industry moving into the area and an increasing number of long haul non-stop international flights make the region more attractive to a globally-minded crowd. As a REALTOR®, your ability to take advantage of the global market are dependent on your expertise and knowledge. Becoming a Certified International Property Specialist and a member of the MetroTex Global Business Council should be are essential part of your business plan. Find out more by joining us at the next Global Business Council meeting on July 20 at MetroTex Dallas. Contact stevet@dfwre.com for more information.

2016 is All About the Single Ladies

Realtors might not be courting blushing brides this June; new data from the National Association of Realtors suggests that singles women will be a growing demographic when it comes to homebuyers in 2016.

Single women buyers have made up a larger share of the housing market than their male counterparts since the early 1990s, buying at nearly twice the rate. These women have a strong desire to feel settled and be part of a community and do not believe that marriage is a prerequisite to homeownership.

According to NAR’s 2015 Profile of Home Buyers and Sellers, single women accounted for 15 percent of all home buyers. Many believe that number will increase in the next few years. The median age of female buyers was 50, and 72 percent of them purchased detached single-family homes. About 90 percent used a real estate agent or broker to guide them through the purchase process. 

Here are some reasons why single women are set to take the 2016 real estate market by storm: 

Desire to Own. Thirty-seven percent of unmarried female homebuyers said that the desire to own their own home was their primary reason for purchasing a house. Women are the most likely to make sacrifices, like cutting spending on entertainment or luxury items, to afford purchasing their home. This demonstrates just how high a priority they place on homeownership.
 
Rising Incomes. In large cities across the country, women have seen a significant rise in average income the past few years. Traditionally, single female homebuyers have had to stretch their budget to buy a home. Now, with higher incomes, unmarried women can enter the housing market without taking on as much of a financial burden.

Availability of Housing. According to NAR research, single women typically purchase single-family homes with three bedrooms and two bathrooms; the same properties usually targeted by investment buyers. It’s good news that over the last year, people buying homes strictly as investment properties were not as active in the market. If investors continue to back away from the market, that means housing could become even more affordable for single buyers in 2016.

Visit www.dfwrealestate.com to connect with a MetroTex Realtor about buying a home in 2016.

Avoiding Scams

Among the legislative sweep going on in Austin this week is House Bill 2590, a bill which would impose significant penalties on scammers who are claiming vacant houses that don’t belong to them through fraudulent adverse possession claims often known as “squatter’s rights.”

Unfortunately, there are a number of other housing schemes happening around the country right now. With prices on the rise and houses in short supply, the Dallas area could also become a target for these scams.

So what are these scams and how can you protect yourself and your loved ones from becoming a victim? First and foremost, whenever you enter into a real estate transaction, consult a MetroTex REALTOR. Aside from being licensed professionals, REALTORS use standardized contracts which protect both buyers and sellers. Further, REALTORS will advise their clients to use title companies to help ensure that the property is actually owned by the seller without disputes or claims on the title from third parties. If you aren’t sure whether the person selling the house is a REALTOR, you can check for licensee information online at trec.state.tx.us. Remember, the reason we have REALTORS is largely to protect consumers against unscrupulous real estate bandits.

The FBI warns about a number of scams currently being reported across the country. Here’s a run down of the most common schemes and specific steps you can take to protect yourself.

Reverse Mortgage Scams

Reverse Mortgages can be a legitimate option for senior citizens to benefit from equity in their homes without having to move or sell. Legitimate reverse mortgages are insured by the FHA and have specific age, residency and mortgage balance requirements.

Unfortunately, fraudsters are using the legitimate programs as a springboard for some very unscrupulous practices. Basically, they either steal the equity from property of unsuspecting seniors, or use seniors’ good credit and identities to steal equity from other properties. In many cases, people are offered fake foreclosure or refinance help, free homes, or shady investment opportunities.

FBI Tips for Avoiding Reverse Mortgage Scams:

  • Do not respond to unsolicited advertisements.
  • Be suspicious of anyone claiming that you can own a home with no down payment, unless it is a specifically insured mortgage program, like USDA or VA.
  • Do not sign anything that you do not fully understand.
  • Do not accept payment from individuals for a home you did not purchase.
  • Seek out your own licensed reverse mortgage counselor.

Phony Online Rental Ads

Online ads for finding rentals can lead to consumers losing thousands of dollars and ending up without a place to live. In these scams, people will post a classified ad with a great looking house most often at a relatively low rent. The landlord –who is leaving the country quickly, often for business or on a mission trip - will accept your application and will ask you to wire a couple of month’s rent to his account. But when you show up at the house to move in, the house isn’t available and the owners have nothing to do with your agreement. Not only are you out two months’ rent, you might also find that your identity has been stolen.

FBI Tips to Avoid Rental Scams:

  • Only deal with landlords or renters who are local;
  • Be suspicious if you’re asked to only use a wire transfer service;
  • Beware of e-mail correspondence from the “landlord” that’s written in poor or broken English;
  • Research the average rental rates in that area and be suspicious if the rate is significantly lower;
  • Don’t agree to accept a larger payment than is needed and refund the remaining balance.

Foreclosure Fraud

Unfortunately, scammers find a big target in people who are desperate to stay in their homes. Distressed homeowners can be presented with offers that allow them to stay in their homes at half their current mortgage payment so long as they sign over title to their homes and pay an upfront fee. In reality, these schemes are run by people who never pay off the existing loans, instead pocketing the money for themselves and causing the unwitting homeowners to ruin their credit and eventually wind up evicted from their homes.

FTC Tips to Avoid Foreclosure Help Fraud

  • Avoid offers that guarantee to get you a loan modification or stop the foreclosure process;
  • Only use people who advise you to contact your lender, lawyer, or a housing counselor;
  • Deny requests for upfront fees before providing you with any services;
  • Do not transfer your property deed or title to others;
  • Be suspicious of people who only accept payments by cashier’s check or wire transfer
  • Don’t sign anything you haven’t read or don’t understand.

House Stealing

This scam is a variation of the adverse possession schemes being addressed by the Texas Legislature. Basically, scammers steal your identity, forge sales documents and register deed transfer paperwork with the county. Then they claim to own the house and sell it. This often happens with unoccupied or vacation homes. Untangling this mess can be costly and difficult.

Avoid House Stealing

  • Check your property records. When you get your tax bill for the year, verify information pertaining to your property. If you see any changes to title or names you don’t recognize, ask for more information from the deeds office.
  • If you receive correspondence or a payment book from a mortgage company that’s not yours, whether your name is on the envelope or not, don’t throw it away. Read it and if seems suspicious or you don’t understand what it means, follow up with the company that sent it.

For more information on buying or selling a home in Texas, visit dfwrealestate.com

Buyers Agents! Get your Offer Noticed!

It’s tough to be a buyer’s agent these days! You’ll spend a lot of time showing every house that comes on the market as soon as it lists and writing offer after offer only to lose out to the competition. But there are some things you can do to get your offer noticed in the stack.

Network in Your Area
Get to know listing agents in your area. Give them a call and see if they have anything coming to market that meets your client’s needs. Join social media platforms that discuss properties coming to market (a simple search for “Coming Soon” and your town on Facebook will likely reveal a few groups in existence. If not, start one and invite all of the agents you know to join). They’re a great way to get a heads up on properties that will be listed, so you can see them as soon as they are active.

Call the Listing Agent
If the house looks good on paper, call the agent before you see the property. Ask what the seller’s circumstances are. Do they need a leaseback or a longer close? Are they planning on painting or changing carpet while the house is listed? Are there any special features that might not be apparent at a glance? Or, have they had a recent appraisal or inspection? Develop a relationship with the listing agent before you show the property. That way, when your buyers have questions, you’re better prepared.

Check for Documents on the MLS
Take the time to check for additional information in the MLS – things like average utility bills, seller’s disclosure, or a list of upgrades are great tools and shouldn’t be overlooked in your rush to get to a property first. The more information you have, the better.

Have Financing in Place
Make sure your buyers go through the pre-approval process and that their lender has a reliable history of closing on time. Remember that a pre-approval is much stronger than a pre-qualification letter because it demonstrates that all of the necessary documents have already been reviewed and closing won’t be held up because of things like missing tax returns or paystubs. Also, having a really good lender that understands the new closing documents and timelines is crucial. If you’ve got a good relationship with your lender and you’ve got pre-approval in place, you should be able to close reliably within 30 days even with the new lending procedures.

Call the Listing Agent Before You Write the Offer
When your clients are interested in making an offer, call the listing agent first. Ask if the sellers have a preferred closing date, if they need a lease back, and whether there are other offers. Let the agent know when to expect your offer – and meet or beat that deadline. And – tell the agent a bit about your clients – how much they love the home, how they have been looking in the neighborhood for some time, or how important it is to them to send their kids to that school. The listing agent wants to know that your buyers are motivated and serious. Make sure you have the correct email address to submit the offer. Express to your buyers that time is of the essence in this stage of the game.

Use Care When Writing an Offer
Nothing turns a seller or a listing agent away from your offer faster than an offer with mistakes. If you check a box that an addendum is attached, it had better be included the first time. Make sure all fields are addressed and that the math is right. Pay attention to the third party lender addendum, dates and conditions. Sellers want to work with an agent who will the most likely to ensure a smooth and drama-free transaction. And a big red flag is raised when a contract comes with little errors or inconsistencies.

Think hard how your structure the offer: Things like a larger earnest deposit and a larger down payment signal to the buyer that your buyers are serious and are more likely to be able to close the loan. Cash offers are great, but they won’t necessarily win the day if the other terms aren’t as good. If you’re putting in an offer that is well over list and you don’t have comps to justify that high of a sales price, make sure that it is clear that the buyer is willing to pay over appraisal value and has funds to cover the portion that the lender won’t.

Don't Request Favors.
If there are items specifically listed as included with the house, then by all means, put them in the contract offer. But don’t ask the seller to leave non-realty items without compensation, or to perform cosmetic fixes that weren’t part of the listing. If your buyers insist on some of these items, at least float it past the listing agent first to see what kind of reception that type of condition would receive. It could be that the sellers were planning on selling items before the move and it would be beneficial to them to negotiate them. Just verify before you write it.

CE Classes Can Help
Classes like Write it Right (coming up on July 10) and Secrets of Top Buyers Agents (Aug. 23) are a great way to really hone your skills and offer a chance to network with fellow agents. Register online 

How to make your offer more attractive

In North Texas today, we’re seeing all kinds of creative tactics buyers and their agents are using to get their offer to the top of the pile. You may have heard of buyers writing heartfelt letters to the sellers, or even having warm cookies or bouquets of flowers sent to the sellers in hopes of gaining favor. These are interesting strategies and sometimes they work. But there are a few things you absolutely must do to have your offer considered above all else: get your financing and credit in order long before you make an offer.

When you’re ready to buy a home, one of the first steps you should take is to seek preapproval—or better yet, prequalification—for a mortgage loan. These documents state how much a lender is willing to let you borrow, and when you’re ready to put an offer on a property, they tell the seller you’re serious and that you’ve already taken the first steps toward seeking funding.

Preapproval and prequalification can put you in a stronger buying position, but they are different processes. Here are the steps to take before pursuing either.

Watch your credit report

Don’t go into the preapproval and prequalification process without getting a copy of your credit report, which lists your financial history, including total debt and whether you pay bills on time. Checking your credit report regularly is the best way to spot identity theft, credit-report errors or other financial missteps that could affect your ability to buy a home.

You’re entitled to one free credit report from each of the three credit-reporting bureaus every year. Find out how to obtain your free reports at annualcreditreport.com.

Prepare for questions

When you’re seeking prequalification or preapproval, your loan officer will request information from you, like pay stubs, bank records, your credit history, debts and tax returns. It could take some time to gather these details, so you may want to meet with a loan officer early in your home search. You should also start thinking about your answers to the loan officer’s potential questions:

  • When are you planning to buy?
  • If you’re in a lease, when does it end?
  • Who will be listed on the loan?

This information will help determine your timeline for borrowing.

What is prequalification?

To prequalify you for a mortgage loan, your loan officer uses the information he or she collects to calculate how much money you may be eligible to borrow. However, all information you submit during prequalification is subject to verification when your loan application is actually submitted. The home loan isn’t guaranteed with prequalification because your financial situation hasn’t been verified. You may receive a Conditional Qualification Letter, which states that you’re eligible and qualified to meet the financial requirements of a loan.

What is preapproval?

Preapproval typically means that your financial situation has actually been verified by the lender. If you want to get preapproved, you’ll complete a mortgage loan application and you may have to pay an application fee. After an extensive examination of your financial situation, a lender will commit in writing to fund your loan, pending a successful appraisal of the property and a few other conditions.

Being preapproved for a mortgage loan doesn’t mean you’re obligated to borrow the money, but the lender must stand behind its written loan commitment unless something changes with your situation. Think about how attractive your offer will be to a seller when it comes with a letter preapproving you for the funds needed to make the purchase.

Put major purchases on hold

There are some reasons that could cause a lender to withdraw from providing a loan after a preapproval letter is issued. If your credit situation changes between your preapproval and the loan’s funding, the lender could change your interest rate or even deny the loan application. So, while you’re buying a house, abstain from applying for credit cards or other loans.
Your MetroTex Realtor can give you more information about getting prequalified or preapproved for a mortgage loan. You can also visit dfwrealestate.com to learn more about buying, selling and leasing real estate in North Texas.