When is Disclosure too Little, too Much or Just Right?

Real estate agents walk a fine line regarding disclosure in meeting their fiduciary responsibility to their clients. The question is when is disclosure too little, too much or just right? The truth is that there are no absolute answers, just common sense practices that an agent can follow to best serve their client and protect themselves.

We recently took a look at the C.L.U.E. report which has been available for approximately the last 8 or 9 years. Re-Insider finds this report to be a great example of the variety of information that can find its way into today’s real estate transactions.

The first question that should always be looked at when vetting disclosure information is, is there a legal requirement in the California Civil Code for a particular disclosure of information? If there is, for example the NHDS or TDS in most residential transfers, then it has to be in the disclosure information to the buyer.

But what about non legally required reports, C.L.U.E. being a good example? In the case of C.L.U.E. reports being provided, this grew simply from CAR adding a question to their SSD form which was then incorporated into the SPQ on page one. This is a form that has grown over the years to 10 questions in which a seller is advised, by CAR, to disclose to a prospective buyer of their residential property. The question on the CAR SPQ regarding insurance claims is simply “Insurance claims affecting the property in the last five years”— answer to be given as simply yes or no.

So how did the additional information contained in a C.L.U.E. report, not requested or required, come into use and does it potentially pose a liability to the agent? The quick answer to the first question for coming into use is money. What was once a simple yes or no answer from the seller is now a $19 + report that companies make money selling into the transaction.

As far as the question of liability to the agent, if the additional information in the C.L.U.E. report has a mistake in it, as happens from time to time and causes some of the problems discussed in the previous article, then who takes responsibility? The most common response from agents is the company that sold the report to me of course. But as it turns out this is not necessarily the case.

Why you ask? The C.L.U.E. report comes with no guarantee or indemnification from LexisNexus, the company that produces the report. The resellers, usually disclosure companies, all have a third party exclusion in their limits of liability that state they are not responsible for mistakes in information provided to them from outside sources.

This can leave the real estate agent or brokerage financially responsible for the C.L.U.E. report if there is a problem. The message in this for agents, using C.L.U.E. reports in this case, is to look at your disclosure procedures with an eye towards not only meeting your fiduciary duties to your clients, but managing your own risk. With that in mind, with the case of C.L.U.E. reports the best answer may be to use the CAR SSD form.

What do you think of this situation? Are you in favor of regulating disclosure companies?

 

RE Insider read more here:

http://re-insider.com/2014/07/23/when-is-disclosure-too-little-too-much-or-just-right/

You've Opened Escrow, Now What?

Congratulations, you are on your way to owning your very own home!

Follow these suggestions (and your realtor's advice) so that escrow and settlement with go as smooth as possible.

• You will be asked for a down payment on the home you are purchasing.  You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.
• During this period of purchasing your home, you are going to need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes on during the escrow period.  This deposit check may also be held by an attorney or in the broker's trust account. Make sure that there are sufficient funds in your account to cover this check.
• The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.

The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following:

1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
3. A requirement that the seller must provide marketable title.

With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership.Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.

Secure homeowner's insurance. This will probably be required before you can close the sale. Due to such requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period of time. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.

Contact local utility companies to schedule to have service turned on when you close escrow.

Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.

You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!

High-End Home Sales Soar throughout California

By RE Insider

While home sales throughout much of California have remained flat throughout this spring and early summer, a new study has indicated that multimillion dollar homes are selling in record numbers, offering hope that the market is still improving and prompting many to wonder what’s holding the rest of the market back.

According to a recent study performed by San Diego-based DataQuick, $1 million-plus sales grew at a 9.1% clip statewide compared with last year, while sales overall fell 7.4%. Additionally, California in the second quarter set all-time records for the number of homes sold for more than $2 million, more than $3 million, more than $4 million and more than $5 million.

What’s driving these high-end home sales? According to market-watchers, there are several factors.

One is the hot technology sector in the Bay Area and some affluent parts of Southern California, which is minting new millionaires who can afford seven-figure homes. Another is the 11.6% price growth in California over the last year, which means a house worth $925,000 last summer may be worth $1.03 million today. And there’s the influx of international buyers, which is pushing up prices at the high end.

“It’s always fascinating to watch this part of the real estate market. It behaves differently, responds to its own set of criteria,” said DataQuick analyst Andrew LePage. “These buyers, especially those in the multi-million-dollar market, are less likely to agonize over credit scores, income and job security, down payments and mortgage interest rates.”

With this in mind, do you think this the market is improving as a whole? And considering that mortgage rates remain historically low, what do you believe is holding other buyers back?

http://re-insider.com/2014/08/18/high-end-home-sales-soar-throughout-california/

First Step- Getting a Real Estate Agent in Rolling Hills Estates

If you are thinking of buying or selling a home, one of the most important decisions you will make is picking the right real estate agent. However, when most people give a great deal of time and thought to choosing a home, they spend very little time when they choose their real estate agent.

It should go without saying that if you want a smooth and trouble-free buying or selling experience for your home, you first have to find a competent real estate agent. Sadly, it doesn’t always turn out this way, as many homebuyers are anxious to buy or sell and rush through choosing a real estate agent.

Buying or selling a home is one of the biggest financial decisions that you will have to make. The process can be complicated. With so much at stake, you need to know you are working with a professional who will help find the right home for you and possibly sell your home at the right price and negotiate the best deal.

You may also be interested to know that the National Association of Realtors is the largest commercial association in the United States, with over 1.3 million members who offer a high standard of quality, so you should not find it hard to find someone qualified to help you.
How do you choose a good real estate agent? Start by looking outside your door. Drive or walk around your neighborhood and take a look at the for sale signs. Are there many different companies or does one seem to have the monopoly? Are the signs well maintained? Do you see SOLD signs within weeks, or rarely at all? This shows you if the properties are being actively marketed or not. If a real estate agent isn’t marketing other properties well, the chances are they won’t do any better for you either.

Talk the agent’s previous clients and ask them questions about the real estate agent, such as:
How well did they handle the process?
What did they like and dislike about the real estate agent?
Were their needs listened to?
Did he negotiate the best terms?

A good way to meet agents casually is to visit open house viewings that an agent is hosting. In this way you can tell how professional, informative and friendly they are. However, you should always interview an agent you meet in this way, as this might be his only area of expertise.
You might need more experience in an agent, so find out his specialties, success rate and experience. This applies equally to any agent whether recommended by a friend, relative, or someone that you cold called.

Looking at various company web sites can also provide useful information. Look to see if there are virtual tours, good photos and then decide how comprehensive they are. What about their information–is it descriptive or obviously over-embellished? Read real estate blogs. These will give an idea of the agent’s personality and the type of issues they are used to handling. You will need to read between the lines as some reveal little information whereas other will be frank and candid.

Once you have chosen your real estate agent, make sure you have a written agreement, which spells out your requirements and one where they work for you exclusively. Overpricing your home keeps it on the market longer. A good agent will assist you in setting a price that is in comparison with others like yours that have sold recently in your area. It should be high enough to give maximum profits, but not too high where it will scare off buyers.