REAL ESTATE PRACTICE Category
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
AB 33 Would Abolish Department of Real Estate
INDUSTRY NEWS, REAL ESTATE LEGISLATION, REAL ESTATE PRACTICE
A bill working its way through the California Assembly proposes to abolish the Department of Real Estate, the Department of Corporations, the Department of Financial Institutions and the Office of Real Estate Appraisers and replace them with a new Department of Financial Services.
The California Association of Realtors (CAR)opposes the bill primarily because “the function of a real estate licensee is not to provide financial services” according to a news release from CAR’s Virtual Advocate. CAR does not want our business blended with banks, credit unions, consumer finance lenders, pawnbrokers and residential mortgage lenders. Unlike these businesses, real estate agents are individually licensed and have a fiduciary relationship with their clients.
The National Association of Realtors recently prevailed in a long time battle with federal regulators to keep banks out of the real estate sales industry. Merging real estate agents and appraisers under one state department would likely open the door for banks to delve into real estate sales just as national banks had hoped to do the same.
Based on the recent revelations about banking practices that have brought the world economy to the brink of financial catastrophe, the banks have proven they should not be trusted with selling real estate. Combining real estate and financial institutions is a step in the wrong direction.
The bill will be heard by the Assembly Business and Professions committee on April 28th.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER STREETS
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
New Regulation Will Cut Communication Between Lender and Appraiser
HOME LOANS, INDUSTRY NEWS, REAL ESTATE PRACTICE, TIPS FOR BUYERS, TIPS FOR SELLERS
Fannie Mae and Freddie Mac, the government sponsored agencies that purchase mortgage loans from lenders across the country, have placed stipulations referred to as the Home Valuation Code of Conduct (HVCC) on future loans they buy . These regulations will be implemented May 1, 2009. The rules prohibit loan officers, brokers, real estate agents and anyone else with a vested interest in the approval of a mortgage loan from ordering an appraisal or influencing the selection of the appraiser.
It has been common practice for loan officers to directly communicate with appraisers to discuss the value needed to get the loan approved and discuss property condition issues that might cause a problem for the borrower. In fact, during the market boom lenders routinely called appraisers regarding loan refinance appraisals asking if the appraiser could justify a specified home value. If the appraiser could not justify the desired value, the lender would simply call another appraiser and repeat the process until they found an appraiser that would agree to work up an appraisal at the requested value.
These rogue appraisers pushed the value beyond reasonable fair market value in order to make the deal work for the buyer and lender. Unfortunately, the investor that ended up with the loan falsely believed the loan was secured by sufficient collateral which, in many cases, just was not there.
The downside to the regulation is real estate agents will not be able to assist appraisers by providing comparable sales data for properties the appraiser has overlooked. Borrowers wishing to refinance may pay several hundred dollars for an appraisal, only to find out later the value was not high enough to allow a refinance. They lose the appraisal fee and are unable to refinance.
Some banks have already adopted the regulations and order appraisals through a management company that retains a pool of licensed appraisers. The listing agent can make arrangements for the appraiser to access the property but can not provide any comps to assist the appraiser.
The management companies will retain a portion of the appraisal fee and ask appraisers to reduce their standard appraisal fee. If the appraiser refuses the lower fee, the appraisal management company will assign the appraisal to another appraiser. The end result is the borrower may not get an experienced appraiser but one that is hungry for a paycheck.
Mortgage brokers will find the new regulations difficult to implement because the appraisal will not be transferable from one lender to the next. This will put mortgage brokers that shop loans to a number of lenders at a disadvantage with institutional lenders and mortgage bankers who loan their own money.
Like so many laws, these regulations punish honest loan officers and appraisers in an effort to root out the few bad apples that tarnished the real estate profession. Most would prefer existing laws that regulate the real estate industry be enforced rather than creating a new layer of rules. Ultimately, borrowers may have fewer choices when selecting a mortgage lender and pay higher fees for appraisals.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Dam House-$34,900
REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS
Nearly seventy years ago, Shasta Dam was under construction and many homes were hastily constructed to house the laborers. One of those homes, dam houses as they are called, is available for the price of a compact luxury car. Located on Front Street in Shasta Lake City, this home sports a blue and white exterior. Apparently the home needs work as agents are cautioned against using the front door-the porch could give way.
What do you get for $34,900? A two bedroom one bath home with 660 square feet. The lot is 75 feet wide and 140 feet deep. A basement is included as well.
The property is bank owned. I can recall selling homes back in the early 1980’s of similar price and size. Has the market fallen that much? This home may be ready for a D8 or one handy buyer that can breathe new life into this old house. Contact me for additional information and availability.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
REP GMAC On The Move
INDUSTRY NEWS, REAL ESTATE PRACTICE, REDDING RECREATION, SHASTA COUNTY
Apparently the word is not out yet about our move to a new West Redding location. Over the next few days, agents and staff will pack up and move either to our Hilltop office or new location at the corner of Court and Placer. The building has undergone extensive remodeling and promises to bring state-of-the-art technology capabilities. Bridge Mortgage will share the office space with Real Estate Professionals GMAC.
Originally, the Court Street property housed a mortuary before I arrived in town. That was demolished to make room for the current building which housed a title and escrow office over the past few decades. The location is convenient to county facilities including the planning, building and assessor’s office. This area is likely to see tremendous change when the new county courthouse is constructed nearby.
I will miss the Cobblestone Court office location I have called home for 16 years but also look forward to being much closer to my West Redding abode. Downtown eateries can expect new customers from the 40+ new arrivals within easy walking distance of their dining establishments. Some of the lunch spots I visited when I worked for 10 years at Medley Realty on Market Street in the 80’s and 90’s may see my shadow grace their doorways once again. Pat and Sandy, see you soon at The Sandwichery!
Shasta County Jail inmates will notice more activity looking out their east facing vertical windows once our busy office comes to life. The post office will be nearby when important snail mail documents must be deposited. Market Fest will be an easy walk after Thursday work day. Carnegie’s will beckon on those 100+ degree days when we need to wet our whistle.
Change is the sign of the times and I look forward to new memories in a new location with old friends. Stop by and say hi if you get the chance.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Banks Barred from Real Estate
INDUSTRY NEWS, REAL ESTATE LEGISLATION, REAL ESTATE PRACTICE
When President Obama signed the Omnibus Appropriations Bill into law last week, he permanently banned national banks and other financial institutions from engaging in the practice of selling real estate. The bill prevents the Treasury Department and the Federal Reserve from creating rules that would allow such activities. The banks have been pushing to enter the real estate business ever since former President Bush took office more than eight years ago.
The Bush administration sought to expand the authority of national banks to engage in real estate development and other real estate related practices, including sales. Had the Bush administration been successful, bank employees could engage in the same real estate practices that states require a real estate license for.
The current banking fiasco should be proof enough that banks should not be dabbling in real estate sales and development. Banks have failed to oversee their own activities which were rife with fraud and corruption. Underwriters looked the other way in order to get those toxic mortgages out into the marketplace. Wall Street aided the banks by providing seemingly endless streams of capital to fund these risky loans. Greed went unchecked.
The news of AIG awarding hundreds of millions in bonuses to retain employees that brought the world financial markets to their knees is ample proof these industries should be kept separate. Realtors have fought and won this long battle. Hallelujah!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Pulse Detected in Local Real Estate Market
REAL ESTATE PRACTICE, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Word of mouth indicates sales activity is picking up in urban areas across the state. What about Redding? Are homes selling? Are buyers buying? Well, it depends!
I have several buyers actively looking to buy. Like most buyers these days, they are either first-time buyers or investors looking to take advantage of today’s low housing prices. The most important factor determining whether or not you will sell your home today is price. Homes under $300,000 are hot. Below $200,000, take a number. Bank repo’s? SOLD!
Buyers are finding stiff competition if they are focused on entry-level homes, especially if they are bank repo’s. Banks anxious to unload properties are aggressively pricing their homes, offering help for buyers to pay closing costs and offering above par commissions to real estate agents that produce a buyer.
In some cases, banks appear to be intentionally under pricing homes they are listing for sale to generate multiple offers and spark bidding wars. Earlier this week I checked on a bank repo on behalf of a client in Shasta Lake City that had just sold after one of four competing buyers produced the winning bid. I wrote an offer yesterday for a buyer on a home that just hit the market and it already has one other offer (so far)!
Farfield, California had the largest 4th quarter sales increase according to a ranking of 25 ZIP codes with the most improved sales volume in the US compiled by Business Week. Sunbelt states beside California with cities making the list include Florida, Arizona and Nevada. The increase in activity is attributed to price drops and cash-ready investors and first-time buyers making multiple offers on distressed properties.
In February, 121 homes sold. Homes priced under $350,000 represented 88% of the sales activity. Nothing sold over the $550,000 mark. The trend has been ever increasing demand at the lower end of the price spectrum with about half the home sales priced below $200,000. One other noteworthy trend is distress sales are nearly half the sales volume of homes sold in the Shasta MLS. Last year, distress sales (bank repo’s and short sales) were 32% of the home sales volume.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
A Rare Real Estate Find
REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS
Over my 25 year real estate career, I have previewed thousands of homes and occasionally I will see one I would love to own. That happened this week when I viewed a new listing near Redding.
A long driveway leads past several stocked ponds to the log home perched on a hill overlooking the estate and beyond to the Lassen Range. The home inside has has a very warm feel, accented by huge wood beams, knotty pine walls, huge windows, 
a very dramatic and inviting fireplace with river stone hearth, a claw foot tub in one bathroom and an open loft with additional bedrooms and bathroom.
A wraparound porch on the rear of the home overlooks a beautiful pool with a rock mountain feature with built-in slide and seating areas. There is a shaded cabana area 
next to the pool as well.
Next to the home and pool is a huge 960 square foot shop with an office and extra storage area. Asking price is $690,000.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
PREMIER SERVICE® is the focus of Real Estate Professionals/GMAC. We are located in Redding, CA (at the North end of the Sacramento River Valley) in the midst of river, lake, ranch and mountain terrain.
Our Customer Satisfaction Rating, based on an independent survey, exceeds 97%. This is reflected in our 2008 "QUIE" Award recognizing the TOP 10 REAL ESTATE COMPANIES in NORTH AMERICA! REP/GMAC in #2.
