PROTECT YOURSELF IN HOW YOU WORD YOUR REAL ESTATE CONTRACT

3-22-14 PROTECT YOURSELF IN HOW YOU WORD YOUR REAL ESTATE CONTRACT

3-22-14 podcast

 

Highlights from today’s podcast:

 

Market News

 

LOOK BACK MEMPHIS TRIVIA CONTEST

QUESTIONS ANSWERED BY ATTORNEY RON COHEN

1. 1.      What are some of your legal tips on how to provide an adequate description of the parties to the real estate contract and what mistakes to look out for?
2. 2.      What are some details of the  contract dealing with the purchase price and terms of payment that can seriously help you or hurt you?
3. 3.     What is your advice about how much to pay down as earnest money on a real estate contract?
4. 4.     What are some ways you can build in a better probability of getting to keep your earnest money even if the deal dies?
5. 5.     How is the best way to deal with the description of the land in a real estate contract?
6. 6.      What personal property do you need to list on the contract to identify if it stays or if it goes away with the seller?
7. 7.     What is a “subject to” on a contract and how does that affect us as buyers?
8. 8.     Please talk about the importance of having a financial contingency in the real estate contract?
9. 9.     Do you need to ask for a survey to be done when you are negotiating with the seller of a piece of real estate?
10. 10.  What if the sellers cannot move out of the property and until a few days or weeks following the closing with the buyers?
11. 11.  How do prorations of taxes, insurance, association fees, propane in the tank and other prorations affect me as a buyer or as a seller?
12. 12.     

 

QUESTONS ANSWERED BY PAT GOLDSTEIN:

1. 1.     (Pat to offer some local examples of how Ron’s points can help buyers or sellers)
2. 2.     Pat to make some comments about some of the points Ron and Jo discuss.

 

 

QUESTIONS ANSWERED BY JO GARNER:

1. 1.     You’ve spent over 25 years in the mortgage lending business and you’ve seen a lot of real estate contracts. What advice do you give to YOUR customers when they are finalizing their real estate contracts?
2. 2.     What are the loan limitations on what sellers can pay for buyers’ costs? 

 

 

1. 3.     Do lenders require surveys on residential properties? 

 

REAL ESTATE TIP OF THE WEEK  offered by Ron Cohen

___________________________________________________________________

 

Good morning, Memphis.  The great news for us and IHEART listeners around the country is that it is FINALLY SPRING.   Let’s bring on some warmer temps and lots of sunshine. You’re on the Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Professional with Evolve Bank and Trust.   Our general topic today is “Protect Yourself In How You Word Your Real Estate Contract”  Our legal expert to guide us is Attorney Ron Cohen of Premium Title Group.

Ron, great having you back in the studio.  Also around the coffee table with us Pat Goldstein , realtor associate with Crye-Leike joins us.  And to our listeners, if you have a real estate or real estate financing situation you want to share or a question or comment. We want to hear from YOU.  Call us on the air at 901 535-WREC or 901 535-9732.

Pat and Ron, what do you see happening in YOUR area of the market this week?

<Ron makes comments about what HE sees in his area of the market>

<Pat makes comments about what SHE is seeing in her area of the market>

(Jo)  The leadership of the Senate Banking Committee has released draft legislation to revamp the nation’s housing finance system—in other words over a period of 5 years they will begin scaling down and eventually eliminating the largest mortgage holders in the nation—Fannie Mae

and Freddie Mac.  Replacing them with an entity called the Federal Mortgage Insurance Corporation which will be modeled in part on the Federal Deposit Insurance Corporation (FDIC).   It you’re in a real estate related industry, we need to have some conversations about this upcoming change and what this means to the industry.   If you are thinking about buying a home or refinancing one, IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.

 

• Mortgage rates got a little scary this week after all the news in the Ukraine and with the Federal Reserve meeting.  Rates went up and up again but finally settled back down a little yesterday ending the day 30YR FIXED – 4.5%
• FHA/VA – 4.00%
• 15 YEAR FIXED –  3.5%
• 5 YEAR ARMS –  3.0-3.50% depending on the lender

 

If you’re thinking about refinancing even if you have not been successful in the past, give me a call right now on the air at 901 535-WREC or call me directly off the air at 901 482 0354. Susan Belew and I would like very much to work the numbers for you. The numbers will tell you if the deal works for you or not.  If you’re driving just catch me later on my blog www.mortgageloansblog.com

 

If you’re thinking about buying a house for your home, a vacation home or investment property.  There are still some great opportunities out there.  Susan and I can work up some financing scenarios or you to see what will fit you best.  If you’re planning to buy a home, connect with an experienced realtor with a good reputation. Get the advise of a good real estate legal firm like Premium Title Group and make sure the professionals you put around you, not only have a great reputation but that they truly care about you and helping you reach YOUR goals.

 

 

An experienced realtor and title company and an experienced mortgage officer can save you thousands of dollars and many sleepless nights.   For loan officers I think the most important thing we can offer our customers are our knowledge of the loan regulations and how the credit and underwriting systems work, so that we can offer instant solutions when there is a hiccup in the loan process.  For instance, we just had a transaction where the borrower told us on the front end that his income was one amount, then the regional office of his employer sent a letter verifying a lower amount of income for him and then his local employer sent over an income of amount of even lower, which caused the income-to-debt ratios to be too high for the loan program. Susan and I went to work to determine the absolute minimum income amount that would make the deal work for our client.   This client’s employer worked with him to renegotiate his income and incentive pay so that the guaranteed part of his income was high enough to clear the income-to-debt ratio obstacle.

For realtors  I see more smooth closings between buyer and seller when there is an experienced realtor at the helm.  An experienced realtor includes the right details in the contract and knows the market values and availability of home choices in the area.  Premium Title Group has worked out a clean title on many deals where there were unexpected problems like unreleased liens, unexpected claims by other parties on the property and the list goes on and on.   Experience counts!

 

 

We’re talking about “Protect Yourself In How You Word Your Real Estate Contract”  Attorney, Ron Cohen, you are our expert from Premium Title Group.   Give us some of your thoughts on points to pay attention to when drafting a real estate contract.

 

 

LOOK BACK MEMPHIS TRIVIA CONTEST brought to you by notable Memphis historian Jimmy Ogle.  Jimmy Ogle gives free walking tours in Downtown Memphis during the Spring and Autumn.Go to jimmyogle.com for the 2014 Spring season schedule and locations.  Our trivia contest is sponsored by David Altizer of BackupRX your prescription for data security. State of the art data center and cutting edge technologies. For a free Disaster Recovery Planning consultation, call David at (901) 488-6976. I personally use BackupRX to keep my data files safe and secure.  David is offering a $30 gift certificate to Amazon to the first person who calls with the correct answer to our Look Back Memphis Trivia Contest.   If you know the answer call us at 901 535 WREC.

• Claridge House
• Question:  It’s the “Roarin’ 20s” and Downtown Memphis is in the middle of building boom – the Peabody Hotel, Cotton Exchange, King Cotton Hotel, Lincoln-American Tower, Goodwyn Institute, Shrine Building, etc.  But, I was built as a Hotel and I am now a 17-story building full of condominiums.  Who am I?  If you know the answer, call us at 901 535 WREC  901 535 9732.
• Hint:  Scenes from Andy Griffith’s movie “A Face In The Crowd” were filmed here in 1954.
• Hint:  My top floor ballroom was named “The New Balinese Room” and roof was the “Magnolia Gardens Roof”.
• Hint:  I was converted to apartments in 1983 and condominiums in 2004.
• Last Hint:  I overlooked the Mississippi River and Civic Center Plaza, and I am very close to City Hall.
• Answer:  Claridge House.   Open in 1924, the Claridge House was a 17-story, 150-room hotel full of Luxury, Charm and Atmosphere located at the corner of Main and Adams.  By the end of the post-WW2 era, the automobile became the means of most travelers and the Claridge built a parking garage at Front & Adams to compete.  The Pilot House Motor Inn (now the # 1 rated Comfort Inn in America by its guests) was opened on the roof of this garage, but in the 1980s the Claridge became apartments and then in 2005 converted to condominiums.

Our trivia contest was brought to you by notable Memphis historian, Jimmy Ogle. Jimmy  gives free walking tours in Downtown Memphis during the Spring and Autumn.
Go to jimmyogle.com for the 2014 Spring season schedule and locations. Our trivia sponsor today is David Altizer of BackupRX. Confused about Cloud Computing?  Call David at BackupRX.  State of the art data center and cutting edge solutions. For a free consultation, Call (901) 488-6976.

• Back Story:  The name comes from a 5-star hotel located at the corner of Brook Street and Davies Street in Mayfair London (England) – Claridge’s.  In 1924 in Memphis, room rates ranged from $2.50 to $7.50, with an air-conditioned room being 50 cents extra. “The Ultimate In Comfort”, the Claridge provided a quaint lobby, coffee shop and tap room to compliment the roof’s entertainment and dining venues (New Balinese Room and the Magnolia Gardens Roof). Nationally known performers, such as the Tommy Dorsey Orchestra performed here.
• Elia Kazan’s acclaimed movie “A Face In The Crowd” stared Andy Griffith as Lonesome Rhodes and was the film that launched his distinguished career, most notable Sheriff Andy Taylor of Mayberry and private detective Ben Matlock.  Patricia Neal and Walter Matthau also starred in the movie, which was added to the National Film Registry by the Library of Congress in 2008.
• Modern amenities include a new roof deck, stainless steel indoor swimming pool, the hot tub and fitness center that is available 24/7, the party room that comes complete with big screen TV, a bar and catering kitchen, and lots of space for invited guests. Built in a segment of the 17th floor of the Claridge House that originally was a rooftop party area, the history of this party room is as grand and extensive as the views of Memphis from its windows.
• Last Week: Poplar Avenue.   One of two (the other being Lamar Avenue) notable “high ridge” trails developed by transient animals centuries ago during Spring flood seasons so they could keep their little paws dry from the flood waters of the Wolf River and Nonconnah Creek basins as they migrated eastward.  These tow “high ridge” roads lead westward to the highest piece of ground on the Mississippi River between Cairo, Illinois and Natchez, Mississippi – Downtown Memphis (and it will never flood either).
  
  Jimmy Ogle gives free walking tours in Downtown Memphis during the Spring and Autumn.
  Go to jimmyogle.com for the 2014 Spring season schedule and locations:

QUESTIONS ANSWERED BY ATTORNEY RON COHEN

1. 1.      What are some of your legal tips on how to provide an adequate description of the parties to the real estate contract and what mistakes to look out for?
2. 2.      What are some details of the  contract dealing with the purchase price and terms of payment that can seriously help you or hurt you?
3. 3.     What is your advice about how much to pay down as earnest money on a real estate contract?
4. 4.     What are some ways you can build in a better probability of getting to keep your earnest money even if the deal dies?
5. 5.     How is the best way to deal with the description of the land in a real estate contract?
6. 6.      What personal property do you need to list on the contract to identify if it stays or if it goes away with the seller?
7. 7.     What is a “subject to” on a contract and how does that affect us as buyers?
8. 8.     Please talk about the importance of having a financial contingency in the real estate contract?
9. 9.     Do you need to ask for a survey to be done when you are negotiating with the seller of a piece of real estate?
10. 10.  What if the sellers cannot move out of the property and until a few days or weeks following the closing with the buyers?
11. 11.  How do prorations of taxes, insurance, association fees, propane in the tank and other prorations affect me as a buyer or as a seller?
12. 12.     

 

QUESTONS ANSWERED BY PAT GOLDSTEIN:

1. 3.     (Pat to offer some local examples of how Ron’s points can help buyers or sellers)
2. 4.     Pat to make some comments about some of the points Ron and Jo discuss.

QUESTIONS ANSWERED BY JO GARNER:

1. 4.     You’ve spent over 25 years in the mortgage lending business and you’ve seen a lot of real estate contracts. What advice do you give to YOUR customers when they are finalizing their real estate contracts?
   1. First of all, as a buyer needing financing, it is my standard advice to have a financing contingency in the contract that list specific terms on the financing like for instance  “subject to acquiring satisfactory financing on an FHA loan at a max rate of 4.5%”    If you’re in a multiple offer competition for a property and you don’t want a financing contingency, be sure the lender has underwritten your income and asset documents and that the only item left to get is the appraisal. Then put a contingency in the contract that the appraisal must be satisfactory and  must have a value of at least the sales price.
   2. When you are negotiating for personal property like the big, beautiful chandlier in the grand entrance way or the window treatments, washing machine and dryer, make sure you are very specific in listing these.   If the items are screwed into the wall as opposed to being nailed there or in other words, not permanently attached, it is generally considered personal property.    You should not have a problem in underwriting with getting personal property like the washing machine and dryer or range and refrigerator, but it gets a little sticky when you’re asking for the riding lawn mower, tools and expensive personal items these items are not commonly granted with properties in  area. You may have to delete some of the listed personal items for the seller to leave for the buyer if they are not commonly left with houses in that neighborhood and if they have enough value that would cause an appraiser  to reduce the value of the home because of the contributions of personal property being too much.
   3. C.     If you are asking the sellers to pay your closing costs and prepaid taxes and insurance, then specifically state that you are asking the seller to pay all of your closing costs and prepaid taxes and insurance.  If you just say seller is paying buyers’s closing costs, and you are expecting them to pay your prepaid taxes and insurance too, you may end up with a food fight at the closing because you weren’t specific enough.   If you are a seller and the buyer is asking you to pay their costs, it’s a good idea to write in a specific limit on how much you will be willing to pay.   
   4. D.    If my clients want a home inspection by a professional home inspector (the home inspection is more detailed than the appraisal that is going to be done), then many of my customers will write in their offer a contingency that there must be a home inspection done that is satisfactory to the buyer within X days from the seller’s acceptance of the offer.   Then if there are major problems with the house, the buyer can walk away and get his earnest money back.   If the inspection can be done immediately and the buyer sees problems with the house, he may be able to stop the appraisal before his appraisal money is spent too.  That can be a BIG money saver!
   5. 5.     What are the loan limitations on what sellers can pay for buyers’ costs? 
      1. On 3.5% down payment FHA loans or on 10% or more down conventional loans, the seller is allowed to pay 6% of the sales price toward the buyers closing costs and prepaid taxes and insurance. (But sellers are not allowed to pay toward the buyer’s down payment funds.)   On conventional loans with less than 10% down payment, the seller is allowed to pay up to 3% of the sales price.   Sometimes, in the case of shortsales and resales of foreclosures, the banks will not agree to pay more than 3% for the buyers.
      2. On investment properties the sellers are only allowed to pay up to 2% of the price for the buyer’s costs.

 

1. 6.     Do lenders require surveys on residential properties? 

Lenders generally no longer require a survey of the property unless it is new construction or if modifications have clearly been made or if there may be a question about the boundaries of the property.    

 

REAL ESTATE TIP OF THE WEEK—(Ron Cohen) 

Jo has two announcements:   Talk Shoppe offers free education and networking to anyone interested in real estate or in business. This Wednesday Talk Shoppe is presenting the Mastermind Principle: based on the book Think And Grow Rich. By Napoleon Hill.   You get a chance to share and receive ideas, resources and referrals from other business people in a small group setting.  For more information about Talk Shoppe go to www.TalkShoppe.BIZ

 

Next Saturday on the Real Estate Mortgage Shoppe Gwen Christensen with Builders Floors and Interiors will be giving us some money saving tips on how to get and maintain your floor coverings.

 

Transitional Songs:  “Stuck In The Middle With You” Stealers Wheel;  “Read The Warning Signs” by Bill Engvall and John Michael Montgomery; “Straight Talk” Dolly Parton

 

ABOUT PAT GOLDSTEIN, realtor with Crye-Leike Realtors in Memphis, TN.  Licensed in Tennessee and Mississippi.  (901) 606-2000   30 years full time Realtor   Memphis Area Association of Realtors 2006 Realtor Associate of the Year and a veteran member of the TN Association of Realtors Residential Forms Committee.

 

 

About Attorney Ron Cohen: Kusper & Raucci, Chartered

33 N. Dearborn Street Suite 1530

• Chicago, Illinois 60602
• 312-332-5000   312-346-1145 (direct)  312-332-4663 (facsimile)
• Premium Title Group (phone number for Memphis Area office 901 752-1587 option 2 for Jenett Rochester

 

Jo Garner’s Bio

www.MortgageLoansBlog.com  www.MoneyShoppe.NET  (901) 482 0354  jogarner@mindspring.com

Jo Garner is a mortgage officer with extensive knowledge in tailoring mortgages to her customers who are refinancing or purchasing homes all over the country.  She offers conventional, FHA, VA or other loan programs for refinancing and purchases.

 

Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home  purchase financing.

 

Jo Garner  has been in the real estate/financing business for over 20 years.  She got her start in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine  and was personally mentored in San Diego, California  by Robert G. Allen, author of Nothing Down, Creating Wealth and The Challenge.

 

On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate.  In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 17 years.  Her goal is to offer excellent, affordable service to her customers,  tailoring the loan programs to the specific needs of her clients.

 

In addition to her work in the mortgage field, Jo Garner  is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.BIZ  She is currently the host of the Real Estate Mortgage Shoppe program 9A-10A CDT Saturdays on News Radio AM 600 WREC and IHEART Radio http://www.iheart.com/#/live/2145/?autoplay=true   and currently publishes on her blog www.MortgageLoansBlog.com

For real estate financing solutions, plug into the Real Estate Mortgage Shoppe program.  You can find mortgage rates, FHA Streamline refinance with no out-of-pocket costs, refinancing options, home purchase loan programs, answers and  real estate, money-saving tips and more.