Action Plan #9 – The Property

With all the talk about TRID and expanding the time it takes to close a transaction, we must continue to stress the point that preparation is the key to a smooth and timely transaction. Doing the work upfront, the work everyone knows will need to be done at some point along the way, is essential to making the transaction flow and go as smooth as silk.

This week we take a look at the subject property. There a few things that come to mind right off the bat that need to be addressed even BEFORE the property is LISTED for sale.

• What is the legal definition of the property? You can’t assume anything. A townhouse may really be a condo! A SFR could be a PUD! You need to really know, because it matters!
• Are there any open permits on the property? You can’t trust the seller to know this; you have to check official records.
• Do the people listing the property really own the property and are there any legal entanglements attached to the property AND the people?
• Does this property belong to an HOA or historic association that may hold sway over the deed transfer or who have restrictive covenants?
• Property restrictions. Land size? Outbuildings? Easements?
• Do we have well water or septic systems?
• Property condition and obvious repairs?
• If the property is part of an HOA or historical organization, do we have the condo questionnaire or the historical organization obligations filled out and handy for review PRIOR to contract?

How many times does one or more of these items delay a transaction? We know these are a few of the things that can cause a delay, why aren’t we coaching our Listing Agents to be more attentive to these items and to work with their potential sellers in getting the home ready for a smooth and timely sale?

Just like we work with loan originators and teach them to do a full document pre-approval and to note this on their pre-approval letters to make the buyers stand out and to show the world of the buyer’s commitment to a smooth and timely transaction; why aren’t we working with our Listing Agents so that they can prepare their sellers to be just as prepared?

We all know these things come up. But so many of the things that stall or delay transactions can be avoided or dealt with before the transaction even begins. If true professionals prepare their buyers and sellers by coaching them through what makes a smooth transaction, many challenges can be avoided. And isn’t that why we have a job? Isn’t that what we are paid for, to prepare our clients for a smooth and timely transaction?

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan Week #8 – What is a business day?

Part of TRID requires that certain disclosures are delivered to the customer within a certain number of BUSINESS DAYS! A business day can be different from company to company. They can also carry different meanings within the same company depending on your own company policy. So first things first; a business day is considered to be a day that you are open for business and performing business related functions. However, those days can change from task to task. Example; Saturday may count as a business day for purposes of delivering the “Closing Disclosure” to the client three business days prior to closing; but may not be a business day when it comes to delivering the Loan Estimate within three business days of application.

So if you take a loan application on Thursday, you won’t count Saturday or Sunday in your three days and your “LE” would need to be delivered by Tuesday of the next week. For the CD, or Closing Disclosure, you WILL count Saturday IF your company chooses to do so and if you deliver the CD on Friday, you could close as early as Tuesday counting Saturday as a business day.

The other part you need to be clear of is delivery. PLEASE be sure to get your electronic disclosure form signed when you first sit with the client, or have them complete it when you get your credit authorization signed. This will allow you to send the disclosures by email and for tracking purposes start the clock ticking the day you send them. If you fail to get the authorization executed, you will have to wait an additional three days because service will be deemed delivered by mail.

I know this gets confusing but you do have to get very clear from your company standpoint what counts as a business day and for what purpose. You also have to be very clear on how you are disclosing and delivering those disclosures. It really matters! So take a few minutes and ask the question and get your company policy in WRITING! Be sure everyone involved in the transaction is aware of what days count as days and when and why they count. It could make a real difference.

The last part of this but not least is the fact that unlike a refinance right of recession, where you have to wait three full days to disperse funds; the three day wait for the CD is any part of the day counting as a day.

Again, more technical stuff to deal with but it is important and you have to be clear. Once you are very clear about how you and you company are going to handle when Saturday’s count and when they don’t, how you are going to get your disclosures signed and delivered; you will be well on your way to being able to explain these things to your clients and your referral partners so there is no misunderstanding.

Once again this shows the importance of setting the proper expectations up front. When you put the process over a timeline, it all makes much more sense to everyone. There is a great deal of misinformation out there about TRID. The ability for some companies to interpret some of these things differently could really cause an issue. So be careful, be clear, and be up front with how you are navigating the process and you will have a smooth and hassle free closing!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan #7 – Contracts

One of the places we can really help in a smooth and prompt transaction closing is with the contract of sale. Since in many states there are different ways in which an offer is converted into a contract, we will try to be as generic as possible. Obviously if you have a specific state requirement or obligation, you must follow it.

The first issue with the contract of sale will be clarity and accuracy. Be sure everything is spelled correctly and easy to read. It all means nothing if the information is wrong or you can’t read it.

Next we have to look at the “landmine” provisions that will slow everything down like asking for a ten-day inspection period. Come on people, it doesn’t take ten days to get a property inspected and report issued. It also doesn’t require days of back and forth talking about repairs. If you want all of that drama, then just state in the contract that the closing date shall be 28 days from the receipt of a completed application contract and authorization to order the appraisal.

Another challenge seems to be providing the lender with a copy of the contract as soon as it’s ready. The clock doesn’t start running on the closing countdown until the lender has everything in their possession, and the contract of sale seems to be overlooked as an important item. Without the contract, not much can happen, so get it to the lender within 24 hours of execution and be prepared to authorize the appraisal fees!

The contract can also spell out penalties for delaying the process on BOTH sides! If sellers don’t provide access to the property or suddenly chooses to go on vacation, someone needs to be available to respond to requests on their behalf. If the title insurance is ordered by the seller, it should be in the contract the liability of the seller should the transaction be delayed by the title company they chose. Title companies have an obligation to provide timely information. Without all the title fees and charges, the Closing Disclosure can’t be issued. Without the Closing Disclosure being issued, the three-day clock can’t begin toward closing! You need to be aware of the title company and their turn-around times!

The last part I would like to discuss about contracts is to be as specific as possible about everything included or NOT INCLUDED with the sale or any repairs the seller has agreed to make prior to closing. Since we just can’t make wholesale changes at the closing table any longer without running the risk of having to re-disclose the loan and wait three more business days to close!

You have to remember we are in a very volatile interest rate market. The tolerance for the APR is 1/8%. If you go higher, that triggers a re-disclosure and another three-day wait! You also have the possibility of having to extend the interest rate lock. This COSTS MONEY! Who is going to pay for the extension? What if the buyer doesn’t have to money available or by taking a higher rate either triggers a re-disclosure or worse, no longer qualifies for the loan?

The contract of sale is very important and should be the framework of a smooth and successful transaction, not the cause for delay or hardship! By being prepared and specific we can avoid a great number of potential issues and close on time and with little or no drama!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan #6 “SELLERS”

After what seems to have been a very active holiday weekend in the real estate markets across the country, we are on to Action Plan Item #6; Sellers! Now I know you are a little confused by this and aren’t quite sure how the seller can find themselves responsible for delaying the sale of their own house, but I am here to tell you there are an iatrical part of being sure a transaction flows smoothly.

The seller knows the listed property better than anyone. It is up to the seller to HONESTLY answer all of the listing agent’s questions so that they are both starting off in the right direction. Since the details matter, it is up to the listing agent to have a prepared series of questions to ask the seller so that no stone is left unturned. Items that need to be addressed include:

• Actual people in title to the property
• Any prior sale information
• Surveys, deeds, restrictive covenants, etc.
• Property condition
• Known challenges or repairs needed
• Recent work done
• Open permits or repairs
• Repairs or alterations done without a permit
• Past insurance claims on the property
• Flood zone or flood insurance

These are just a few of the things that need to be addressed. In addition, we need to talk about reality.

• What are the real prices in the area?
• What is a realistic timeline for sale?
• Where are the sellers going?
• Are they already pre-approved for their next loan?
• Will they be staying in the property until closing?
• Will they make needed repairs quickly and completely?
• Are they absolutely certain what stays and what goes?
• Must maintain the property through closing!

These are just a few areas that can lead to delays. You also run into challenges if the seller is the one ordering title. With the TRID requirements for disclosure, it is important that the title company selected understands their obligation to provide accurate and binding information to the lender/closing agent in a timely manner, no later than SEVEN BUSINESS DAYS prior to closing. Since we can’t count on electronic service in all cases, we have to allow for service by mail which requires extra time. It is important to remember, people need to know that there could be serious ramifications if the seller, or the seller’s selected title company cause a delay in closing that could cause a financial hardship on the borrower!

With a volatile rate market, we are all aware how much rates can move in a single day. If the process is delayed and the loan lock expires, who is going to pay for the extension? It won’t be the buyer or the mortgage lender! What if the new terms now price the buyer out of the transaction? You could make a case that the CFPB will be paying close attention.

I am not saying this to scare people. I am saying this to try and prepare people. Everything I am talking about in this series is designed to get all of us to look at our transaction process and be certain we have accounted for all the things we possibly can, and take care of these things EARLY in the transaction so they do not cause a delay!

Purchase transactions can and will still be closed in less than thirty days if everyone is prepared and on the plan. If Realtors®, mortgage lenders, title people, and closing agents aren’t all prepared to set the proper expectations and deliver a great customer experience, you might as well plan on finding a new career, or joining the ranks of those who don’t close on time and never will. These people are going to slowly find their way out of the industry as a new group of experts take control of the market and execute as true professionals.

The time has come to become the professional you always wanted to be. In this segment, we take care of the seller by preparing them for their obligations in this transaction!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com

Action Plan #5 – LISTINGS!

Okay, so here comes some of the unpleasant business of TRID. If we are going to close transactions in thirty days or less, LISTING AGENTS are going to have to step up to the plate. There will no longer be time to run around chasing items that could have been taken care of earlier. In fact, LISTING AGENTS do need to be aware that delays in closing and any financial damage done as a result of delays that should have been avoided may very well become the responsibility of the LISTING AGENT. Make no mistake; the CFPB has no issues with going after real estate agents. If a consumer is harmed because of a foreseeable circumstance, it may very well be the LISTING AGENT that bears the brunt of the financial burden.

So what things am I talking about? Well, let’s look at a list of items that often cause delays in the transaction process that LISTING AGENTS should have known about and dealt with PRIOR to accepting an offer and either taken care of it or brought it to the attention of all parties so that a proper timeline could have been established. Here is a list of a few things that come to mind.

• Well water
• Septic systems
• Certificates of Occupancy
• Ownership
• Property condition
• Type of property
• Condition of property
• Repairs
• Price comparables
• Availability to inspection
• Final property condition
• HOA restrictions
• Condo questionnaires

All of these items are related to the subject property and could cause a delay in that process. It would not be a stretch for someone to find fault with a LISTING AGENT for any delays that may result in cost to any of the parties involved in the transaction. Just like mortgage professionals need to do a much better job qualifying borrowers and setting a reasonable timeline, LISTING AGENTS have a growing responsibility to know their listings and understand the things that could delay the closing. Why is this so important? Because a closing delay can cost real money! It may also prevent the transaction from closing at all!

As we deal with a volatile interest rate market where the bias is for interest rates to move higher; the cost of “locking the loan” or having the loan lock “expire” could result in additional costs or even the inability for the borrower to qualify for the loan! The financial damages could be extensive! Not just to the borrower, but the delay in an entire string of purchase transactions.

It isn’t like we don’t know that these things are going to have to be dealt with. We all know that the deal won’t close until all of these items are taken care of, why not get most of these items taken care of when you LIST the property, not AFTER the deal is in contract?

I wish everyone a very happy Independence Day 2015! Please take a few minutes and read the Declaration of Independence. Maybe even read it out loud with your family and friends. Before the food and the fireworks, please take a few minutes to remember what took place in this country 239 years ago. Listen to the words and try to understand the feelings of our founding fathers as they took action in pursuit of life, liberty, and happiness. No matter what our differences, the concept of this country is something we all need to rally around!

Don’t be surprised if this Sunday is a busy day in the housing markets. The Saturday holiday will either trigger an active Sunday, or a big weekend next weekend!

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com