Posts Tagged ‘San Diego Realtor’

Protect Yourself: What You May Not Know About Escrow Companies

Wednesday, November 15th, 2017

Most people know that escrow is the party that handles the money, paperwork and closing details of a transaction in California (and other states – the remaining states use attorneys for closings). But many do not know that escrow and escrow officers can fall under two regulatory categories, and that this could have an effect on their duty to remain a neutral party to both sides of a property sale.

2 Types of Escrow Companies in California

Independent or licensed escrow companies are independent companies that are licensed by the California Department of Business Oversight (DBO), which are governed by strict regulations designed to protect consumers.

Some of the requirements of independent escrow companies are that they are subject to management and bond requirements, are trust fund insured, are subject to annual financial and procedural audits and Department of Justice investigations of all employees, as well as escrow license requirements.

Controlled, or non-independent, escrow companies are nonlicensed businesses owned by third parties, such as real estate brokerages, attorneys, banks or title companies. These controlled companies are regulated by different licensing and regulatory authorities, which can vary amongst jurisdictions and are not governed as strictly as independent escrow companies.

Escrow officers have a difficult role in that they need to represent both parties in a property sale transaction while remaining neutral. An independent escrow company is the best choice, in my opinion, for real estate parties and clients, as there is more protection offered and there is not the threat of compromised neutrality.

 

 

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Can a Home Seller Be Sued for Contractor’s Knowledge of Problems?

Wednesday, November 1st, 2017

As a home seller it is imperative that you make sure you do everything you can to avoid lawsuits from your new buyers. Failure to disclose has been one of the most litigious causes of action in real estate law. Upon selling property, sellers must disclose all they know about the property according to state mandated forms – this usually includes past insurance claims, any upgrades or improvements, damage to the property, repairs, noise issues, and many other questions. Sellers must answer these questions to the best of their knowledge, and provide explanations and any necessary receipts to verify the claims. But what happens when other people who work on your home make a discovery that could render the home undesirable?

The most recent case, RSB Vineyards, LLC v. Bernard, was upheld by the California Court of Appeals. The court ruled that a seller must have had ACTUAL KNOWLEDGE to be held liable for non-disclosure, and a contractor’s knowledge is not imputed to the seller. In lay terms, this means that if a seller hires a contractor to do work, and the contractor discovers something about the property, the seller cannot be held liable unless the seller was made aware of the problem by the contractor.

In the lawsuit the contractor had converted a residence into a wine tasting room on vineyard property that was later found to be structurally unsound – the buyers found out after they purchased the home and had to demolish the structure. They sued the seller for failure to disclose. The contractor was found to have known about the problem but there was no “actual knowledge” by the sellers.

In many areas of disclosure here in California, the seller CAN be held liable for items about which they should have known. For example, if the sellers notice water stains on a ceiling of a room and do nothing about it, then have the ceiling painted prior to sale, without disclosing the stain…this would likely render the seller liable for failure to disclose, as the water stains obviously indicate some kind of problem. Note that had the seller disclosed the stain and not painted over it, s/he would not be liable. It would then be up to the buyer to investigate and ask for repairs if problems were discovered.

If you are selling a property it is very important to answer ALL questions on the disclosures to the best of your ability. Back up any claims with receipts, documentation, etc. I always tell my clients it is better to over-disclose. Put everything out there so that you do not have to worry about liability down the road. If you are made aware of any issues by a third party, make sure to include that in your disclosures so the buyer can look into it further.

If you are ever unsure of whether or not to disclose something, the rule of thumb is that you should do so. However, I suggest obtaining legal advice…or if your real estate agent happens to be an attorney that could help too 🙂

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How the New Tax Reform Could Effect Real Estate

Thursday, September 28th, 2017

If you own a home or are thinking about purchasing one, you need to be aware of how the new proposed tax reforms could effect you and the effect they may have on the real estate market. Here are some of the proposed changes:

Tax Increases/Doubling of the Standard Deduction. Taxes could increase for hundreds of thousands of California homeowners, and this will hit the middle class hard. It would also put homeownership out of reach for many buyers.

Recently the National Association of Realtors stated that increasing the standard deduction and erasing others would “effectively nullify the current tax benefits of owning a home” for the majority of people. This could reduce housing demand and home values.

Elimination of State and Local Tax Deductions. These deductions make home ownership more affordable. This could include property taxes, and if implemented homeowners could see a rise of up to $3000 annually, leading to plummeting home values. Potential buyers may not be able to afford property tax increases, pushing them into lower price ranges. Homeowner equity would suffer.

If these new tax laws are implemented it will be a big hit to the housing market, with home purchases slowing  or even grinding to a halt; more importantly, we could face large foreclosures waves heading into the future, which of course could have big implications for the mortgage and banking industries.

Hopefully we will soon see some clarification regarding these proposed changes. Write your Congressional representatives and express your views on the new tax laws. Unless you exist in the 1% of the uber-wealthy you will not likely benefit from the expected changes.

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Are You Ready to Find a Home?

Friday, July 22nd, 2011

Have you been considering buying a home, maybe for the first time, maybe to move up or down? Have you been waiting for the market to hit bottom, for prices to fall, for loan rates to get lower? Guess what? It is that time. Yes, I am a Realtor, and my telling you this may sound self-serving, but let me tell you why that is not the case:

1.  Rates are still low. They will get higher – that is something I would be money on. There are a few reasons why. One is that they have been historically low for a long time and it is inevitable. Another reason is that there could be some big changes coming up in the loan industry (see below), which will make them rise.

2.  Qualifying for a loan is not going to get any easier. Lenders are still reeling from the housing crash and make it difficult to qualify new borrowers (believe me, I have seen it happen to my own clients). If the new rules pass in September, come October 1 loan limits will decrease, meaning buyers will have to put MORE money down in order to qualify for a loan, and limits will be lower so that means less of a loan (buyers will have to buy smaller homes, or maybe even consider different areas/neighborhoods).

3.  Down payment requirements could rise. If the loan limit rates decline the downpayment amounts will increase. Borrowers will have to pay more money up front to get a loan. This will make buying a home a pipe dream for many Americans.

4.  There are still some great loan products out there. FHA loans require much lower downpayments and better interest rates. If the new limit restrictions pass they will have an effect on these loans.

5.  Selling a home could get much more difficult. If the loan rates change it may effect sellers the most, especially in higher priced areas like San Diego county. Buyers who could qualify for a loan to buy a home may no longer be able to afford that much house, so sellers may have a hard time finding qualified buyers. Many homeowners may not be able to sell their homes, which could lead to more foreclosures. Property values will go down, but who will buy these properties? One theory is that the lenders will simply rent them out rather than try to sell.

6.  It is a great time to negotiate! With the market slower than usual for the time of year, and the many well-priced homes out there that are available (especially short sale and lender owned properties), buyers are in the driver’s seat as far as negotiations are concerned. There are some stubborn sellers out there, but if you encounter that situation you can always find another property that is ripe for negotiation.

7.  Learn from who is buying now. If you look closely, especially in the attached home market, you will see many investor buyers. As I have said before, this is a sign. It is a sign that now is the time to buy. I am personally working with multiple investor clients right now, and they are getting great deals on short sale and lender owned properties.

I get asked all the time what the market is like, how we are faring here in North San Diego. The market is doing much better than in some other areas of the country, but we are still struggling a bit. Prices have come down, and will likely continue to do so. If the new loan limit reductions pass it will create qualification problems for many buyers and for sellers as well. Right now you can still lock in a very low rate (today’s conforming rate on a 30 year fixed mortgage is  4.5% with no points). There is a decent amount of inventory out there.

So, here is my pledge to you: I will do my best to help you find the right property, at the right price – if you don’t there is no pressure at all. Use me as a tool to help you, because that is what I am here for. I will provide all the information you need about any home we find. You don’t need to sign any agreement, I won’t make any demands on you. I offer you honesty and professionalism, and all you have to do is call me. I will be around all weekend. 760-310-9466

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