REAL ESTATE PRACTICE Category
Nigerian Scams Target Redding Renters
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY
I walked into the office this morning to a note from our receptionist from a woman who wanted more information about the home for rent in Stanford Hills. The woman was told the owner had to leave in a hurry for South Africa and wanted to rent the luxury home at a bargain rate. The woman was instructed to wire funds and upon receipt by the owner the keys would be in the mail.
Only one problem here-the home is for sale, not for rent. The owner still occupies the home and knows nothing about it being for rent. Fortunately, this renter knocked on the door and was informed of these facts before any money changed hands. Now knowing it was a scam, she emailed the fellow from Nigeria saying she wanted the rental and just needed to know where to send the money. He quickly provided the instructions which were handed over to local law enforcement authorities.
For unknown reasons, Nigerians have targeted renters in our area. They first peruse the homes for sale on Craigslist, cut and paste photos and property details to a Home For Rent ad and re-post to Craigslist. They typically select an upscale home then attach a below market rent hoping to make the rental look like a bargain. The better they make the deal look, the more likely someone will sight unseen send money for keys before waking up to the fact they have just been scammed.
Anyone coming across a suspicious ad should:
- Ask for a personal showing of the property for rent. If the owner can’t make it, ask that someone else show you the home. If this can’t be done, a big “red flag” should go up.
- If the home is occupied, knock on the door and explain you heard the home was for rent. The occupant should be able to tell you if it is a ruse or not.
- If the home is vacant, call a local real estate agent to see if it is listed for sale or lease. You can also ask the agent to confirm the legal owner’s name and address, which all local agents have access to.
- Do not send money to anyone without a signed rental agreement and keys in hand. This should take place at the property to be rented.
- Call the Shasta County real estate fraud unit at 530-245-6350 with details of suspected scams.
I find it amazing that these con artists can pull this off. Are Americans that gullible? The old adage-if it sounds too good to be true, it’s not true-certainly applies here!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE EXPERIENCE
Inability To Make Mortgage Payments Tops Reasons To Sell
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent survey of California home sellers found that the biggest reason cited for putting their home up for sale was difficulty meeting the monthly mortgage obligations. Two thirds of sellers surveyed sold their home due to financial challenges caused by job loss or increases in their mortgage payment.
Complicating factors included an inability to refinance due to declining property values and tighter loan underwriting standards. Homeowners usually explore all their options including refinance as a way to keep their home. Loan modification, short sale, deed in lieu of foreclosure and deed-leaseback are potential options available to sellers who do not want to lose their home to foreclosure.
Other findings of the survey include:
- 99% of sellers chose to work with a Realtor
- 72% cited the agent’s ability to get a higher price as the primary reason they used a Realtor
- Homes sold on average $20,958 less than the listed price
- First-time sellers accounted for 44% of all sellers-a 33% increase from 2008
- Job loss was cited by 18% of sellers as the reasoning for listing their home for sale
- Nearly three-fourths of sellers expressed concerns whether a buyer could secure a loan
- 63% of sellers lost a sale with 70% of those failed escrows due to buyer inability to get an acceptable mortgage
- 26% of buyers had buyer’s remorse and canceled the sale
- 50% stated the sale did not close on time
This year may see an improvement in some of these numbers as prices stabilize and fewer homes begin the foreclosure process across portions of the state. Unemployment rates will need to drop before a housing recovery can get a foot-hold here in the Redding/Shasta County area.
bradgreps@yahoo.com
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Chico, Oroville and Pardise To Join Statewide MLS
INDUSTRY NEWS, REAL ESTATE PRACTICE
Cal REDD, the new statewide Multiple Listing Service (MLS), will begin the task of transitioning these areas away from their current MLS software provider to the new statewide MLS system. The acronym stands for California Real Estate Dynamic Data. This software was developed by a private firm at the direction of the California Association of Realtors (CAR). CalREDD is owned and operated by Realtors as a non-profit mutual benefit corporation and subsidiary of CAR.
CAR hopes more of the 60+ associations across the state will follow suit and convert in the near future to CalREDD. Thus far, Merced and Madera have switched to CalREDD with Lake County adopting the system recently. MLS’s can dump their current software vendor entirely or run both systems parallel until association leadership decide to a permanent switch.
One benefit of the new system, assuming the majority of real estate practitioners across the state get on board, is agents will be able to access listing data from most parts of the state, not just their local market area. This could be helpful in assisting Realtors’ clients contemplating a move to another area of the state. Agents will be able to provide detailed information about property for sale in the area under consideration. Assuming the agent does not want to represent the prospect in that area, referral to another Realtor is likely to follow.
The development and launch of this new software has not been without controversy. Considerable angst existed during the development phase as agents and brokers pondered how sharing their local market data with agents outside their market area would impact their business. Heretofore agents have been very protective of their local MLS- afraid agents unfamiliar with their area will attempt to represent buyers from afar. In reality, this practice is discouraged by most brokers since agents selling property in unfamiliar areas increases chances of costly litigation.
Personally, I see increased market exposure for property sellers since their listing can be accessed by more than 170,000 agents across the state, assuming the system is embraced by the vast majority of real estate practitioners. Who cares where the buyer comes from or who represents the buyer if they want to buy a property listed for sale?
In the past I have tried to list or sell properties outside my local market area but ran into resistance from agents in those areas. They basically have drawn a line in the sand saying ”you stay over there and I’ll stay over here!” - don’t step on my toes. What they fail to understand is a California real estate license entitles the bearer to sell anywhere in the state, not just one locale.
A statewide MLS has been in the works for nearly a decade primarily to address issues agents in metro areas faced trying to access all the MLS services that served their geographic market area. Understandably, some regions felt CAR was moving too slowly developing a statewide MLS while others thought things were progressing too quickly. Some of these areas spent considerable sums developing software to allow data sharing within their regions and now are reluctant to mothball their systems to join CalREDD. Existing software vendors also stand to lose millions in revenues and have voiced concerns regarding CAR’s efforts to develop a statewide MLS.
The Shasta Association of Realtors has not decided whether or not to stay with its current software vendor (FLEX) or adopt the statewide MLS, or run both systems parallel in what is known as a hybrid system. Now that our neighbors to the south have made a leap of faith, we will monitor their experience and contemplate a change at some future date- if it is in the best interest of Redding area Realtors.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS REAL LIVING
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE SALES EXPERIENCE
Racial Discrimination Is Alive and Well
INDUSTRY NEWS, REAL ESTATE PRACTICE
Beverly Hills Properties was just hit with a $2.725 million dollar fine from the U.S. Department of Justice for housing discrimination. According to an article from the California Association of Realtors, a lawsuit brought in August of 2006 claimed Donald T. Sterling and others engaged in discrimantory practices including refusing to rent to African-Americans, Hispanics, and families with children.
In Koreatown buildings, apartment owners refused to rent to non-Koreans. The real estate firm manages about 119 apartment buildings with over 5,000 units in the Los Angeles area. They allegedly misrepresented the availability of units and kept internal reports of tenants’ racial profiles.
The settlement is the largest ever obtained for rental housing discrimination. In addition to the fine, the defendants must take action to ensure non-discrimantory actions in the future including fair housing training for employees and monitoring their compliance with fair housing laws for the next three years.
The bulk of the settlement monies will be placed in a fund to pay tenants harmed by the defendants’ discriminatory practices. A great outcome considering how difficult it is to uncover these acts and prosecute violaters.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Shasta County Real Estate Fraud Cases Discussed
LOCAL GOVERNMENT, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR SELLERS, TIPS FOR SENIORS
Robert Angulo is the investigator recently assigned by the DA’s office to handle real estate related crimes.
Robert spoke to a group at the Shasta Association of Realtors weekly meeting Wednesday. The real estate fraud unit has been up and running for just a few months and is already handling 31 cases. Here is a summary of cases being investigated or prosecuted:
- Property management company being operated by individual that does not have a real estate license or a trust account to handle tenant deposits and rent. This case goes to trial in November.
- Another property manager that committed grand theft, embezzlement and grand theft from an elderly person. Amount lost was reported at $40,000.
- Person creating false deeds. This person first created a deed to get the property out of his name and into the name of his girlfriend because he was incarcerated and didn’t want his neighbor, with whom he had disputes, to take his property. He later created another deed to put his name back on the property. He used false identification to get the documents notarized. This is a felony.
- Florida loan modification firm took $2,700 from a county property owner for loan modification services but did nothing. Robert found out the Florida Attorney General was already involved in prosecuting this firm so no action will be taken locally.
- Craigslist-Nigerian scam artists are using properties advertised for sale on Craigslist to create rental ads. Potential tenants are baited with really nice homes for cheap rent if they would just wire the funds to the scammer. Of course the home is not for rent and the money will be lost once sent. If it’s too good to be true, it’s probably a scam.
Robert also did a cross-check of all the property management companies in the phone book and found 8 that were being operated without a real estate licensee. In fact, most of the real estate fraud investigated thus far involved unlicensed individuals.
He also encouraged those in attendance to contact his office if anyone hears of someone being victimized by fraudsters or sees an ad for loan modification services that require an upfront fee or if our clients have strangers knocking on their door asking about the home for rent or asking them to leave because the bank has foreclosed. These are all scams that are happening here and elsewhere across the state and country.
Robert can be reached at 530-245-6350 or rangulo@co.shasta.ca.us.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Short Sale Buyers Beware
INDUSTRY NEWS, REAL ESTATE PRACTICE
Time is running out to take advantage of the federal tax credit for first-time buyers. Buyers who are in escrow on a short sale may want to ponder their options now before the tax credit expires in November. Escrows average 45 days and can take as long as 60 days so time is of the essence. A local lender reminded agents at this week’s Shasta MLS meeting that they may want to counsel clients expecting the $8,000 federal tax credit about their options. Real estate agents should not be surprised if buyers back out of properties sold pending lender approval. These approvals take at least several weeks and can even go 6 months or longer. Buyers desirous of using the tax credit should stay away from short sale listings.
Short sales were a rarity prior to the current recession. Now they are a significant part of our business. Real estate agents are learning the process as they go. Depending on the bank involved, the amount of money the property is upside down, and the strength of the buyer’s offer, these factors can make or break a deal. Once a purchase offer is accepted by the seller, it is forwarded to the bank’s loss mitigation department. Here, a negotiator is assigned to the file and the process begins. Assuming the borrower has submitted a hardship package and the lender has given the green light to a short sale, one or more Broker Price Opinions (BPO’s) is ordered. Once these are returned, the negotiator compares the BPO values to the offer in hand. If they are reasonably close, the sale is usually approved and the escrow closing date is set.
This process sometimes gets bogged down when there is a second loan on the property or the buyer tries to negotiate repairs. If the seller is uncooperative, the short sale will come to a grinding halt. Banks typically request pay stubs and bank statements to confirm the seller really is in dire financial straits. If the seller has given up on the property, the home may be auctioned off before a short sale can be completed. Out of the more than 500 homes currently in escrow, about 150 are short sales. There is no way to tell how many of these buyers are first-time buyers counting on the tax credit. If you know someone that is, pass this information along.
Other roadblocks include lender requirements that the borrower sign a promissory note to the bank so they can try to recover some of the loss at a later date. Most sellers balk at this demand. Other times the negotiator must seek approval from the investor that purchased the loan from the originator. This process is cumbersome and slow. In some cases, the property value has fallen significantly during the lengthy short sale process. The buyer’s lender may want to have a review appraisal done to confirm the value has not dropped. If it has, the whole process starts over with new BPO’s or fee appraisals ordered by the bank. Expect a delay of several more weeks.
Buyers may want to find a home to buy that is not a short sale if they want to take advantage of the federal tax credit. Many bank repo’s and well-priced homes are available that are not subject to the frustrating short sale process.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE SALES EXPERIENCE
Home Again-A Place To Hang Your Hat
REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS
California property owners became accustomed to viewing their homes primarily as an investment and secondly, less importantly, a shelter to keep the elements at bay. Today, nearly 1 of 4 mortgages are “underwater”, meaning more is owed than the market will bear, causing many to re-evaluate home ownership.
Over the years I have tried to emphasize to my clients that buying a home should be viewed as gaining control of your future by allowing you to call the shots. Renters are always at the mercy of their landlords. Rent can be increased, you can be asked to move with little notice and making improvements to your abode benefits the landlord.
California’s climate and natural beauty has attracted residents from other states and all over the world wishing to live here in the land of endless summers. The side effect has been ever-increasing real estate values that, until recently, we took for granted. I try to explain that this is not the case in many other states.
My brother moved to Dallas Texas in the late 1970’s. He rented out his condo in Novato, knowing he would return to California some day. He bought a home in the Dallas suburbs for $85,000, lived there for nearly 20 years before selling it for slightly less than he paid for it and moved back to California. His condo in Marin County, which he bought for about $70,000 new, sold for more than $500,000 after minimal updating. The more than 6-fold appreciation windfall was not all that uncommon here in the Golden State.
Times have changed. Reality is setting in for many that saw their homes as cash cows to be milked whenever extra funds were needed. College tuition, a new car, boat or RV were purchased or paid for using equity extracted from homes that appreciated substantially despite the owner not lifting a finger. Home equity lines of credit (HELOC’s) have been frozen or canceled, credit tightening has made cash-out refinancing difficult and equity evaporation has made it impossible for many to lay their hands on needed cash.
Californians must change their attitude toward home ownership. Priority needs to return to it being a shelter and a tax writeoff. Even if market prices stabilize, I would be surprised to see double-digit appreciation return anytime soon. Banks will be stingy with loans, builders will be cautious building new homes hoping someone will buy them and the business climate has become so toxic in California that new jobs and industry will move elsewhere. Demand will be held in check and supply will be ample for those that desire home ownership.
I believe this is all for the best because it has made people look at home ownership differently. Buy because you want a place of your own, not because it is going to make you rich!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Fix It, Then Disclose It
REAL ESTATE PRACTICE, TIPS FOR SELLERS
Many home sellers get their home ready for sale by fixing, painting and replacing worn out items to get the best possible price. After all, many real estate professionals encourage their clients to do just that prior to placing a home on the market for sale. However, some sellers believe they do not need to disclose what repairs or alterations were made.
In reality, failure to disclose material facts about the property known to the seller is the basis for most lawsuits brought by homebuyers. The confusion arises in some cases because the seller corrected a problem and feels there is no need to disclose it to the buyer. However, a buyer should be made aware in writing all repairs and remodeling completed by seller and previous owners if known, so the buyer can ask questions or have their inspectors examine these areas more closely.
A case in point related by Dian Hymer, a San Fransisco real estate broker, is a seller that converted a basement to a den just prior to placing the home for sale. The home sold and low and behold the first time it rained, the basement flooded and all the improvements had to be demolished and removed. Yes, the seller was sued and the buyer won. The critical line crossed here was concealment after fixing up. The seller knew the basement flooded and not only withheld that fact, but added significant improvements to garner a better price which came back to bite him or her.
One form in the Realtor’s tool box to help avoid such disclosure issues is the Seller Property Questionnaire. This form goes above and beyond the state required Transfer Disclosure Statement by asking more in-depth questions of the seller. It asks 44 questions including if:
- Any part of the property was painted in the past year (covering stains from roof leaks?)
- Any water intrusion problems (mold?)
- Any pets inside (soiling the carpets?)
- Any repeated maintenance calls (clearing the sewer line of roots?)
- Any lawsuits (past or present-what was the dispute over?)
This form jogs the seller’s memory so they can disclose any past problems that a buyer may want to examine more closely. My experience has been that sellers forget about a problem because they have become accustomed to living with it, or have fixed it and forgot it even existed. This form reminds the seller of all aspects of the property which may be of interest to a prospective buyer. If a seller has to ponder if something should be disclosed, disclose it! Better safe than sorry.
Other things sellers can do to avoid disclosure problems:
- Take before and after pictures of any remodeling projects
- Have professional inspections done prior to placing the home for sale
- Keep records and/or receipts of repairs or replacements and provide to buyer if requested
- Attach extra sheets of paper if the forms don’t have adequate space to explain your answers
- Consult with your real estate agent or attorney for guidance on filling out disclosure forms
Some sellers are concerned disclosing material facts will scare buyers away. In reality, buyers would prefer knowing as much as possible about a property they are considering even if the seller thinks it’s problematic. Error on the side of over-disclosing, even if it scares a buyer away. Sitting across the table from a plaintiff’s lawyer is not where you want to be after selling a home!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Some Landlords Confused By New Lease Termination Rules
INDUSTRY NEWS, REAL ESTATE LEGISLATION, REAL ESTATE PRACTICE, TIPS FOR SELLERS
Owners of rental property must be familiar with notice requirements when terminating a lease. A new federal law, aimed at protecting tenants occupying properties that were foreclosed upon, requires 90-day notice prior to eviction. Only “bona fide” tenants on a month-to-month tenancy are protected by this law.
Otherwise, tenants on a month-to-month rental agreement living in a property not in foreclosure are only entitled to a 30-day notice. Those with a 1-year or longer lease must be given a 60-day notice. Landlords renting to Section 8 recipients must give a 90-day notice regardless of the length of tenancy.
The law contained within the Protecting Tenants at Foreclosure Act of 2009 became effective May 20 and expires in 2012. The definition of a “bona fide” tenancy excludes the mortgagor and family members of the debtor. Furthermore, the tenancy must be an arm’s-length transaction and the amount of rent must be close to fair market rates. Finally, the rent being paid by the tenant must not be reduced or subsidized due to a federal, state, or local program.
I recommend my clients contact a legal professional that specializes in real estate to handle any evictions or lease terminations if the tenant may be uncooperative. Failure to follow the letter of the law in an effort to vacate a rental property could require the process be started anew-costing you time and money.
Contact me if I can be of help!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
New Loan Rules Could Slow Home Closings
HOME LOANS, INDUSTRY NEWS, REAL ESTATE PRACTICE
As of July 30,2009, home buyers securing a loan may experience a delay in the loan closing if the interest rate on their loan changes from the initial quote. The Good Faith Estimate will have to be redone if the interest rate changes by more than one eighth of a percent (0.125%) triggering a three-day right of rescission. The new rule is part of the Mortgage Disclosure Improvement Act which is intended to increase transparency in the mortgage lending arena.
Here are some of the details:
- The new rules apply to purchase and refinance loans
- Covers all loans subject to RESPA regulations
- The lender must provide the borrower a Good Faith Estimate within 3 business days of receipt of a written loan application
- No one can charge an upfront fee on the borrower (except for a credit report) until the borrower has received the loan disclosures
- Barring financial emergencies, the lender must wait seven business days to close the loan from the date the borrower receives the loan disclosures
- As mentioned above, if the final interest rate changes more than 0.125%, the lender must provide the borrower a corrected loan disclosure which allows the buyer an opportunity to cancel loan
Lenders, escrow companies and real estate agents will need to be aware of these new regulations to prevent a delay in the loan closing. Hopefully, this will change the practice, by many lenders, of waiting until the last possible moment to draw final loan documents for signature, funding and closing!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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