6 Types of Monkey Business Going on in Real Estate Now

May 23rd, 2016

If you are a real estate agent or a home buyer you may notice that the market is obviously low on inventory right now. Being that it is the “selling season” of Spring/Summer, and since there are a lot of buyers out there looking at homes, there are many situations involving multiple counter offers and homes selling for well over asking price…all great if you are a seller. However, there are also some fishy things going on out there and it is frustrating to agents and their buyers. th

Let’s take a look at what is happening:

1. Homes listed well over comparable value. Many, and I mean a LOT, of homes in North San Diego are being listed over market value – some slightly and some way over. Buyers, who normally would avoid such homes until the price drops, are flocking to them and making offers anyway. No one seems concerned that the home likely will not appraise, and if one buyer walks there are many more who will step right in. This is pricing out first time homeowners and bringing prices up…you may think the latter is good, but it is dangerous because such inflation could create problems for the market – especially when there are many buyers who have incomes that will price them out of neighborhoods they should have been able to afford had prices reflected comparable sold values.

2. Many sellers are taking a long time to respond to offers – even very strong ones. If a buyer makes a very strong offer over asking price, many listing agents are waiting for 4 or 5 days to even respond, during which time they collect more offers. Many then submit multiple counter offers to all bidders asking for the best and highest price. This prices many potential buyers out of the running, and most already submitted an offer slightly over their budget.

3. Sellers are refusing to make repairs or pay for reports. In a seller’s market the seller knows s/he is in the driver’s seat, and many sellers are countering back stating the home is sold as is, and that they will make no repairs and pay for no reports – like termite reports. They want the cleanest offers possible with the least amount of money out of pocket. This means the buyer can get stuck with multiple repairs, termite work, etc. If the buyer is already paying top dollar for the home, s/he has to make sure those things are affordable. No one wants to see a new foreclosure wave hit in a few years.

4. Appraisals are not coming in at contract value – but that is not deterring sales. I have not had problems with appraisals on listings (I don’t market properties in the “insane” price category), but have heard from many agents who have. Even if the home does not appraise at contract value, there are plenty of buyers who are willing to pay the difference in cash if sellers will not negotiate prices down to the appraised value. They feel that is the only way to secure a home purchase in these crazy times. Does this sound like 2003/2004 – “pre-crash” – to anyone else besides me?

5. Overly aggressive listing agents seem to be multiplying, and they are not being cooperative. There are many listing agents who are ruthless and even rude. They don’t care that your buyers love the home and have been looking in that neighborhood for a long time, or that they wrote a very strong offer and submitted it first. To these agents, it’s all about playing the game and finding the highest bidder. Some agents do not return calls and emails, and some violate the Realtor code of ethics – a few may even commit fraud. It is extremely frustrating for buyer’s agents, who are trying to find a home for their well-qualified buyers.

6. Pocket listings and homes listed “off the MLS” are increasing. Many agents are marketing their listings on third party sites like Zillow, and not placing them on the MLS – the cooperative tool used by Realtors to benefit all parties looking in particular areas/price ranges. While it is their right to do so, it makes a problem for buyer’s agents whose clients may see these listings and want to visit them – but when their agent calls the listing agent to make an appointment she is often told that the seller is not paying a commission to buyers’ agents. Imagine you have been helping your buyers for months to find a home and now you cannot show them this one home because the broker will not cooperate with your broker. It puts buyer’s agents – who play an imperative role in protecting buyer’s rights – in a very sticky situation. You may ask why listing agents do this: the answer is so they can find buyers who will work with them, thus saving the seller from paying out a commission to the buyer’s agent. Hopefully the California Supreme Court will soon put an end to double ending sales and this will no longer be a problem.

I am a bit concerned and hope that we are not heading into trouble in the real estate market. I hope that agents keep in mind the spirit of cooperation that is inherent in our business – we all need to work together and be fair. If we do not then buyers and sellers will not be protected from future lawsuits, and many people will be priced out of the housing market – which could cause a domino effect with local economies and eventually the US economy.

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Real Estate Agents Need More Rules

May 17th, 2016

There are too many mistakes made by real estate agents – some come from a true lack of understanding of the legalities that are inherent in buying and selling real estate, and others from ignorance, selfishness or stupidity. But either way the fact is that real estate agents need more training and licensing requirements should be much stricter. images

I was contacted last week by a lady who felt she had been taken advantage of by her current agents. They failed to inform her about the process of accepting a particular tricky offer, and the ramifications associated with doing so, in order for her to  make an informed decision on whether to accept the offer. They did not explain many other things she had the right to know. She was beyond frustrated.

The reason this home seller called me is that she had been referred to me, and liked my legal background – she wanted to fire her agents and have me list the home. I counseled her on the terms of her listing agreement, and provided options and advice; in the end I told her she should try to resolve issues with her current agents so that she could get her home sold since they had already done so much work, while renegotiating some terms and making clear that she needed to be kept in the loop throughout the process. She said she felt much better after speaking with me, and I was glad to help.

The listing agent team she was working with is seasoned, so I was rather surprised that they did not provide information and explanations on many of the forms and processes that come with selling a home. They also charged a 6% commission fee, and they offered 2.5% commission to the selling agent, so they were planning to make 3.5% on the sale! She tried to negotiate with them but they would not do so. She was told that was standard and she had no idea that commissions are negotiable. But I am more disgruntled with other aspects of the sale that I feel were not handled properly.

It is time our national, state and local associations set up mandatory training programs for every agent, and license renewal programs that touch on much of that training so that agents are reminded of their professional and legal responsibilities every time they have to renew their license. Here are some suggestions:

1. Real estate exam – this needs to be more difficult and more expensive to take – that will keep those out who are only in it because they think they will make a lot of money.

2. Across-the-board mandatory training programs – these need to be implemented for all new agents – every broker must comply. This will ensure that all new agents have the same degree of basic knowledge about real estate and law, and the practicalities of sales (forms, paperwork protocol, transaction management, etc.).

3. Stricter license renewal requirements – these also need to be addressed, because the license renewal requirements could be more challenging.

4. Stricter punishment for ethical violations and breaking of laws – as the current rules stand in my state, an ethical violation may or may not be punished – it all depends on whether the agent on the other side of the violation, or a disgruntled buyer or seller – reports the behavior. Unfortunately many do not, because they do not want to be involved in a situation where they are pointing a finger. Agents especially do not like to get involved in ethical hearings because they feel their reputation may be at stake for calling out a fellow agent – thus many unethical agents continue to slide downhill. Punishment is also not meted out often enough or enough to match the crime. The same is true of agents who break laws, like committing fraud. Reporting and punishment need to change.

The real estate business would benefit immensely from the above changes – real estate agents would be a more educated, professional and savvy group of people, and home buyers and sellers would win in the biggest way.

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CA Supreme Court to Review Legality of Dual Agency

May 10th, 2016

The California Supreme Court will soon have a chance to review the practice of dual agency, where a broker (either through one agent or two agents who work for the same broker) represents both the buyer and seller in the sale of real property. California is a state that allows this practice, although the California Association of Realtors has penned rules that require full disclosure of such situations to all parties. Nevertheless, when one agent/broker represents both sides of a sale transaction there is a big conflict of interest, and the possibility of misrepresentation and breach of agency duties is highly possible. I have always been against dual agency, but I have represented both buyer and seller in transactions – there are rare situations where the scenario can work effectively. I think it would be better for all sellers and buyers if it were not allowed. images

Here is an example of a typical dual agency dilemma for an agent: If a seller tells his agent something in confidence, say what is his bottom line for an acceptable sales price, and that agent then represents the buyer – who asks what price they should offer on the home – the agent is placed in a very precarious situation. The agent in this example owes a duty to both sides, but how can she answer  her buyer’s question without betraying the seller’s confidence? She knows what the seller will take, but it is her duty to get the seller the best offer possible. Similarly, it is her duty to do her best on behalf of her buyer now, so it puts her in a hard place.

The case at hand stems from a sale of a luxury home in Malibu, in which the buyer (represented by a Coldwell Banker agent) claimed the listing agent (a different Coldwell Banker agent) failed to disclose to him that his home was much smaller in square footage than advertised – this claiming that the price was inflated for the size of the home.

I believe that dual agency should never be allowed unless the broker is also an attorney, and even then I have doubts. After all, it is not allowed with attorneys – could you imagine hiring counsel for the opposing side in a court battle! This is a very sensitive area and many agents do not understand the legalities involved. It will be interesting to see what the court decides.

 

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Prince’s Death Teaches an Important Lesson on Estate Planning

May 6th, 2016

The passing of Prince really effected me – it’s crazy but I really fell into a mild depression. Prince’s music plays on the soundtrack of my life, my most poignant self-discovery years of high school and college. He was a musical genius and stood up for ownership rights to his music, which I admired immensely. He also reminded me much of my birth father – a very talented musician who learned to play the violin as a small child and ended up at 17 (same age Prince was noticed by the industry) getting into a popular band and touring the country as it’s lead bass player (he was also a talented vocalist and song writer as well, and recorded many songs). th

Prince was a prodigy, a mover and a wizard of words and sounds. There will never be anyone like him in the music industry. He was also a big philanthropist, helping others all over the world. But the saddest note in all this is that he left this world without an estate plan. As an attorney I am beyond upset for him and his legacy. As a fan I am devastated as well, and can only hope that all the beneficial causes that he contributed to, as well as the vault of thousands of songs that were never released, are handled properly. I hope that his estate, Paisley Park, does get turned into a memorial museum for fans to pay their respects.

I tell all my real estate clients when they purchase a home that they need to consider creating a trust and an estate plan in general. It is easy as a young home buyer to not consider doing so, but life has no set expiration date, and in order to protect those you care about and not tie up your property in probate, as well as for tax purposes, this is a no-brainer.

If you are thinking of creating an estate plan (and if you don’t have one you definitely should be thinking about it, especially if you own real estate and especially if you are a parent, have a spouse, etc.), stop thinking and get moving. You will need to collect lots of information to provide your attorney, so find a good estate planning lawyer and get started.

Here are the documents you should incorporate into your estate plan:

1. Trust: You should hold real estate in a trust – it enables you to appoint executors of your estate so that your wishes are adhered to properly when you die. It also avoids the costs of an estate sale and court time to determine who inherits the property. Just as importantly, if you have children you will set up plans for them should anything happen to you and your significant other – no parent should be without a trust. You can set up a revocable (changeable) trust, or an irrevocable (non-changeable) one depending on circumstances.

2. Will. This will specify your wishes regarding a host of issues like who will inherit personal items. You can always make changes to these documents – my husband and I have done so over the years due to the passing and health of family members.

3. Power of attorney. This allows you to name who will pay your bills, sign tax returns and sell any needed assets. If you do not do this the state will appoint a stranger to oversee such issues (like in Prince’s case), and your wishes may not be followed.

4. Health care directives and DNR. This will allow you to appoint the person who will make medical decisions for you if you are unable to do so yourself, and  you can include a DNR (do not resuscitate) to specify whether to keep you on life support if you cannot breathe on your own. It is hard to think about but is necessary, and will save your loved ones from having to make a decision if they don’t know what your wishes would have been.

Depending on your net worth and the particulars of your assets, you can have estate planning documents drafted that range from the simple to the very convoluted. But no matter what you need, my advice to you as a lawyer and real estate broker, is to create a trust. Unlike Prince, you can make sure your legacy is left to your heirs or whatever organizations you choose. If you need a referral to an estate planning attorney in the San Diego county area please shoot me an email, text or call me and I will be happy to provide some names.

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Will Lower Commissions Become Standard in Real Estate?

April 25th, 2016

For years the idea of lowering real estate commissions has been the topic of conversation amongst many in the real estate industry. Since the discount brokerages came onto the scene in full force back in the early 2000s, many home sellers have sought out agents who will cut commissions to save sellers money. Could lower commissions eventually become the norm? http://www.dreamstime.com/-image4640694

A recent study by Realtor Magazine indicated that 62% of buyers and sellers want lower fees in real estate transactions, yet of those 22% still want to receive quality service and worry that low fees do not go hand in hand with that type of service. So while sellers want to pay Wal-Mart fees, they obviously still want Nordstrom service.

I have written many blogs over the years about the benefit of working with agents who provide stellar service – not just in marketing a property or knowing a neighborhood, but with respect to the very important legalities of real estate transactions – negotiations (by the way, 89% of sellers in a recent study indicated that negotiation was the number 1 skill they desired of their real estate agents), paperwork, disclosures and other potential liabilities.

Many sellers for years have complained that it is not right that an agent can be paid 2 1/2-3% of the purchase price for a million dollar home and the same for a $300,000 home. The real question is how much work is that agent doing? I personally know of listing agents who “list and pray,” doing virtually no or little work to market a home and bring a buyer without spending time or money out of pocket. Also, what about the buyer’s agent who has been working for months with her buyers, showing them 20, 30+ homes, driving the around to show them areas and being there on hours of phone calls, writing offers…that agent gets nothing until she actually closes a sale, which may or may not happen.

If you wonder what agents actually do, here is a list of some of the things your agent should be doing…so do not be afraid to ask your agent what he or she is doing for you.

1. Marketing – this varies vastly so make sure you understand the marketing plan that is proposed

2. Open houses – if desired

3. Broker caravan

4. Professional photography

5. Creating custom flyers and other marketing pieces (mailers, ads, emails, etc.)

6. Showing advice/preparation and staging, if necessary

7. Handling all paperwork and explaining it all to you

8. Showing the property (being available to do so – you’d be surprised how many agents are not)

9. Negotiations with the other party/agent – this does not stop after a contract is signed, as it is still often necessary for repairs/credits.

10. Providing a list of repair people if needed

11. Constant communications with all parties involved – agents, lender, escrow, title, and of course, you

12. Making sure you have copies of your entire file at the close of escrow, and helping with other things like finding agents out of the area if you are moving somewhere else, or helping you synchronize closings of current and new homes. I have even helped clients move out and clean up after everything is taken from a home.

Of course each listing may require a different plan, and some may need more pre-listing work or more marketing than others, which of course means more money. So, will lower real estate commissions eventually become standardized? That remains to be seen but hopefully if they do, quality service won’t go down with them.

 

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Just Listed: Model-Perfect Carlsbad Townhome

April 21st, 2016

Welcome to 4102 Karst Road!

Offered at $495,000 1_8201474_72550_EA-72550-101

Absolutely immaculate tri-level Carlsbad townhome in Mystic Point – shows like a model with soaring ceilings and natural light everywhere. Granite kitchen with stainless appliances, crown molding, custom paint, beautiful tile and upgraded carpeting in bedrooms. Separate office/den/playroom with balcony. Attached 2 car epoxy garage, community pool/spa and tot lot, and steps to Calavera Hills nature preserve and trails. 5_8201470_72550_EA-72550-105

Features include:

  • 2 bedrooms plus office, 1341 square feet
  • Gorgeous white cabinet kitchen with dark brown/black granite counters
  • Stainless appliances
  • Custom paint throughout
  • Crown molding
  • Cathedral ceilings
  • Large tile flooring and upgraded carpeting
  • Extra sink adjoins bathroom in downstairs bedroom
  • Ceiling fans
  • 13_8201473_72550_EA-72550-113Air conditioning
  • 2 car garage with epoxy flooring and built in storage, laundry area
  • Community pool, spa, BBQ and play area
  • Steps to Calavera Hills nature preserve and trails
  • Carlsbad schools
  • Close to shopping, dining, beaches, schools and parks

For more photos and information please click here. To schedule a showing please call Broker Rachel LaMar at 760-310-9466. MLS #160021250

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Report: San Diego March Home Prices Were Highest in 9 Years

April 19th, 2016

A study just released by CoreLogic states that homes sold in San Diego this March had the highest prices in 9 years, with a median home price of $478,000. How is this possible with such low inventory, you may ask? Well, it is likely because of that low inventory that prices have skyrocketed. When levels are low affordability tends to increase as homes sell for higher prices, making it a seller’s market. statistics

Another factor contributing to the current market status is that interest rates have remained exceptionally low, creating a surplus of buyers (some rates are reportedly under 4% for 30 year fixed loans). Spring  and Summer – the traditional “big” selling seasons – are in full swing with qualified buyers abound who have few choices. We are seeing multiple offer situations all over the place (I just wrote an offer the other day and there were 6 offers, all at or over asking price). Buyers are ready to buy and when a home in a desirable area is listed it likely will sell quickly – a strong reason to make sure you are preapproved if you are planning to purchase a home soon.

According to the report, home sales increased 5.1% year over year, with new home sales leaping 28.1% last month. All of this makes it a great time to sell, but many sellers do not do so because they are afraid they won’t find replacement property, putting many in a Catch-22 situation. On the other hand, home improvement stores have been doing very well since the start of the year, as many homeowners may be deciding to make improvements rather than chance selling with no where to move – we seem to be stuck in a rut of sorts.

Here in North San Diego I have seen a lot more off-market homes being marketed to real estate agents. In other words, agents list properties and market them without putting them on the MLS (a VERY good reason why all buyers need to have agents!). Many of these homes do not make it to the MLS until they are in escrow, giving buyers no opportunity to view them or make offers. This is frustrating but the early bird gets the worm I suppose. I have received emails and recorded phone calls about property that are not on the market yet but are being marketed to brokers or agents.

The bottom line is that prices have definitely risen and inventory is tight, but if you do your homework and prepare before buying or selling, you should be able to do well. If you are merely selling and have an appealing home in a desirable neighborhood you will be in the driver’s seat. If you are buying make sure to get preapproved, work with a real estate agent, get educated on the market in which you focus your search, and be ready to write the strongest offer you can.

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Who is the Best Presidential Candidate for the Housing Market?

April 13th, 2016

If you have been paying attention to what is going on in the political circus…I mean arena…you may or may not understand how different candidates feel about certain issues. While some have not made clear statements on many issues, and others have literally changed their minds and don’t appear to have opinions (or don’t care to share them with the American people), some have wondered where the candidates stand on housing. protect-house

It is a fact that many people in this country were affected by the crash of 2008-2010. Many lost homes, lost jobs, declared bankruptcy. Although the economy has come a long way since then, as has the housing market, there are many who still distrust putting their money into home ownership for fear of another collapse. The number of renters has skyrocketed since the crash (according to the Huffington Post there are 9 million more renters today than existed a mere decade ago), and renting in many areas (including most parts of California) costs more than home ownership – and rents continue to rise in most areas. But of those who would like to purchase, many cannot afford a downpayment.

So you may wonder what will happen to housing once a new President is elected, and whether the choice of candidate will make a difference. Let’s take a look at party philosophies first to get an idea of what might happen depending on whether a democrat or republican is elected.

Hillary Clinton is the only candidate who has authored a specific plan for housing and home ownership attainment. The plan aims to provide better support and credit for those who wish to own homes. Under a Clinton presidency rentals will be more affordable as well, benefitting lower and middle class Americans. The plan details job creation, apprenticeship and investment in American youth, as well as the creation of job programs for convicts re-entering the work force and investment in small businesses. Where will the money for all this come from? Do your research.  Click here to read her plan in detail.

Bernie Sanders does not have a specific housing plan, but plans to raise taxes across the board – both for individuals and businesses. This would likely mean salaries will decline, as businesses will have to pass the tax increases along to employees. However, other things would be beneficial to Americans under a Sanders presidency, like free colleges and medicare. As for housing, it will of course be affected by lower wages and higher taxes, so one has to weigh the positives and negatives.

Ted Cruz has vocalized his across-the-board tax plan, which would put everyone in the same 10% tax bracket. Sounds good, especially if you pay a lot more, but he also wants to institute a flat tax on business payroll and profits. This could lead to salary cuts for workers, which would be detrimental to the real estate market (lower salaries mean no new home buyers and many owners that could need to sell to heed their new lower income levels). With the promise to end local and state tax deductions as well American homeowners could get hit hard, depending on where they live.

Donald Trump also has no specific housing plan, but has talked about substantial tax cuts and less tax deductions. The big tax cuts could cause interest rates to rise, which will likely affect mortgages – again, this could make homeownership less attainable.

John Kasich plans to cut the tax rate, but there is not much more about his proposal for housing or direct effects on housing due to his plans.

Housing plays a very important part in our lives as Americans, so make sure to do your research and decide whom has the best plan for your needs. Hopefully whomever is elected will keep housing on track so people to afford to become homeowners in the future and the housing market will continue to thrive.

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How Much Commission Will You Charge to List My Home?

March 31st, 2016

Today I received an email from a home seller who found me online and wanted to know how much commission I would charge to sell his home, without meeting me or having me see his home. I have had this question before, and it got me thinking. Many sellers want an answer before an agent even meets them or sees their home, and this is a bit challenging. Of course, commissions are negotiable – some agents will lower them and others will not, and some may even have a set low number they’ll provide before seeing your home or meeting you. images

While a low commission will save you money, here are some important points all home sellers should adhere to when selecting an agent:

1. Understand what the agent will do for you. Full service and partial service brokerages vary a great deal, so make sure you know what you are “getting” for the low commission an agent has proposed. Will your agent provide:

– Professional photography

– Custom color flyers

– Marketing – online, print, social media, etc.

– Showing tips and staging (if necessary), as well as referrals to service providers that may be needed

– Broker caravan tour

– Open houses (if desired)

– Take calls and show the property

– Vet potential buyers before accepting an offer

– Communicate with all parties involved in the sale – escrow, title, lender, buyer’s agent, inspectors, repair people

– Handle all paperwork, including disclosures, amendments, repair requests and contingencies

– Negotiate with the buyer – it is important to note that getting a contract accepted is only the beginning. There is still negotiating to be done (unless the buyer agreed to purchase as-is and has no contingencies). Many sales fall through because of a weak negotiator, so make sure your agent is going to be there to do so.

– Keep the buyer in the sale – this really is similar to the point above, but a little different. Sometimes a buyer may discover something that makes him/her uncomfortable, so it is important to have an agent who can think outside the proverbial box and lessen those anxieties.

2. Understand what the agent will NOT do for you. Make sure you have a clear idea of what will not be included in the commission – some low commission brokerages only list your home on the MLS and leave it at that. If you run into any negotiations – over price, repairs, etc. you need to have a strong negotiator on your side or the sale may fall a part. Make sure you know your agent’s role.

3. Understand YOUR role in the sale. Again, if you hire an agent who is pretty much just placing your home on the MLS, you need to understand it may be your responsibility to hold open houses, let agents in and schedule showings, and provide all required paperwork. Some people don’t mind doing these things, but others don’t have the time nor want to be bothered with them. Also, if during the course of the sale bumps arise in the road, it is important to have someone to rely on for advice. If your agent is not going to do so I strongly recommend having an attorney in your corner – of course this will cost you extra money so look into it first.

The bottom line is that pretty much everyone wants a “deal.” Since commissions are negotiable there is a good change sellers will find one if that is what they are looking for, but keep in mind that selling a home is a legal transaction, one for which there could be liability and potential lawsuits – even long after the home has been sold. Saving money is nice but when it comes to legalities personally I would rather know that I am protected in the best way possible, and if that means spending a bit more I wouldn’t mind – often in life you get what you pay for. You have to decide what you think is important.

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Real Estate Buyers and Sellers Beware: Internet Scam

March 28th, 2016

If you are a buyer, seller or real estate agent involved in a sale transaction, or may be in the future, please read this important warning from the Federal Trade Commission as posted by the National Association of Realtors (NAR):

“On March 18 the FTC Consumer Blog issued a post focused on hackers who have been breaking into some consumers’ and real estate professionals’ email accounts to get information about upcoming real estate transactions. After figuring out the closing dates, the hacker sends an email to the buyer, posing as the real estate professional or title company. The bogus email says there has been a last minute change to the wiring instructions, and tells the buyer to wire closing costs to a different account. But it’s the scammer’s account. If the buyer takes the bait, their bank account could be cleared out in a matter of minutes. Often, that’s money the buyer will never see again.” – NAR

To read the article in it’s entirety click here. The bottom line is that during the course of the transaction if you receive any emails asking you to wire money to escrow or the lender, you must contact the sender first and verify the account number prior to sending any wires. If you do not do so, you could lose the entire sum. PLEASE never wire money to anyone based on an email until you confirm the account number with the sender. It is too easy for hackers to get into accounts, as I am sure you may have seen before, and phishing is on the rise so protect yourself.

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