Part I – Real Estate Knowledge!
Long gone are the days when customers came into a real estate office and asked for help in finding a home.
Today the trend is that customers call you after seeing numerous listings on-line and tell you which houses they want to see. Since Realtors no longer control the information about available houses, what is left? Quite a bit.
The last blog I wrote noted no less than 22 areas that come into a real estate professional’s knowledge base.
My bad, I forgot to mention Interior Design and Stager, as well as Photographer/Videographer. It is actually 24.
In this blog,
I am going to go through what the Real Estate Professional brings to the table relating to her local real estate knowledge.
In future blogs, I will discuss the 23 other roles played by the Realtor.
General knowledge of your local real estate market is no longer the sole preserve of brokers and agents.
Between Zillow, Trulia and Realtor.com, the ability to search for what is perceived as the perfect home belongs to everyone. However, there are many facets of local real estate knowledge that require much more than a simple on-line search.
One of the most important things that a Realtor brings to the table is their knowledge and understanding the art
of compromise between what buyers want and what they can afford.
How many times has a couple come into your office demanding to see five houses (that they chose) and afterwards coming back empty handed because none of those houses actually fit what they perceived as their needs and desires (let alone fit their budget)?
My bet is that has happened a lot. Knowledgeable Realtors listen to what their buyers say when they are going through each house. Hearing what they like (and don’t like) about each lets you understand what they are really looking for in a home. You need to take that information and point them in the right direction.
This is where your superior knowledge of your market comes into play. The time that you have spent going to brokers’ open houses and trolling through the MLS listings means that you should have a very good idea of what is available in your market. After one day of listening to your buyers, you should be able to say “I know that you thought that one of these houses you asked to see would be exactly what you are looking for. After listening to you, I believe that I know one or two places that would work.” Of course, this assumes that your buyers are being reasonable in their expectations of what they can afford. Your recommendations will provide them with insight as to what they can really afford in their desired location, and what is available in other locations.
A young couple may think that they want to live in a high rise downtown, but when you tell them about the local school district, you can help them to realize that they probably want to live elsewhere. You know which neighborhoods are “up and coming” and which ones are headed in the opposite direction. Living on the beach sounds great, until the subject of taxes and flood insurance comes up (not to mention the traffic jams getting to and from home in season, and the number of homes that are used as vacation rentals (spring break is great if you are on spring break, it is pretty awful if your home is next door).
There is a lot more to local real estate knowledge than is ever going to be available on-line. You just need to let people know that you have this knowledge.
I know that many (if not most) real estate agents believe that “lawyers are deal breakers, not deal makers”.
My experience has been that those who believe in that mantra have either never dealt with a knowledgeable, experienced real estate attorney, or simply only care that a deal close, whether or not it gets done legally.
Having been called in numerous times at the last moment to try to save a deal that has gone horribly wrong, it often takes major changes to the contract between the buyer and seller (and by the time that I get called in, getting those two to try to work together is tougher than herding cats). Rather than have a deal collapse one day prior to settlement (usually because the lender or the title insurer has issues with the way that the deal is structured), try calling in a real estate attorney at the beginning. While I grimace when I get the phone call that starts “I know that I cannot . . .”, I am happy to try to come up with a method of making the deal work. Instead of tweaking a solution that we all know cannot be done, an experienced real estate attorney can look at the problem, and then (usually) come up with a viable solution.
I recently got a call from a realtor that started “I know that under the condominium documents my seller’s father cannot rent the unit for the winter season from the buyer, but the only way that the seller will sell is if his father can remain in the unit until March!” The condominium rules do not allow for rental of units until the owner has owned the unit for at least two years. Rather than trying to hide the sale from the condo board (as if that was even possible), and then hide the fact that the new owner was renting the unit, we were able to structure the deal as a holdover of the seller.
There will not be a lease, rather there will be a long post-closing holdover. There will not be regular monthly payments during the holdover period, rather, the entire amount to be paid will be credited to the buyer at closing (benefiting both the buyer, who will need to come up with less money at closing and the seller who will pay taxes on the sale based upon the reduction in their basis).
The condominium association is okay with this structure, since the unit was owned for the benefit of the father to be able to snowbird every year (the son lives in a house nearby, no one else used the unit other than the father each winter).
By coming to me at the beginning with the issue, we were able to come up with a solution that worked for everyone. Had they come to me after the contract was signed, with a lease agreement that would be turned down by the condominium board, we would probably have lost the deal, since the board would not want to “lose face” by agreeing to the solution above after having denied the lease.
Going to them with this solution up front saved everyone from spinning their wheels on a deal that would have been doomed from the start.
I often get asked, “Why do I need to buy title insurance for myself? You searched the records, made sure everything is good, and besides, the bank has title insurance for its mortgage, so I really don’t need to spend any more money. Right?”
The fast answer is WRONG!
There are a number of reasons to purchase title insurance for yourself when you purchase real property. I have always said that title insurance is the second most important thing that you pay for at settlement (my legal fee, of course, being the most important J).
Title insurance provides insurance against many things that are not part of the filed records, and in addition, provides insurance against human error in doing the search, and in the clerk’s office for mis-indexing documents.
The time between when you close on your home and the documents being recorded and made public (which in some counties can be several weeks, because of how far behind the clerk’s office is in indexing documents) is referred to as the “gap”. During this time, things can be recorded before your deed that affect your property, that you would not know about.
By law, title insurance in the state of Florida protects you against anything that is filed during the gap. For example, your seller might owe a lot of money to the IRS for taxes, but no tax lien has been filed against them . . . yet. The title search would come back clean (meaning no IRS lien showing up), but during the gap period, the IRS files its lien. Your title would then be subject to the amount that was owed by your seller to the IRS. Without a title insurance policy, you could be forced to pay this sum when you sell or refinance your house.
Another thing that is covered (which is not easily found from a search of the public records) is fraud and forgery. A recent real estate scam has been to file a deed from the true owner by a forged deed into a new name. The fraudster then lists the property at a below market price and sells it to an unsuspecting buyer.
The buyer then comes down to Florida to spend some time in their vacation home, only to find the true owners already there! Without title insurance, the unsuspecting buyer could be without a house and without the money they paid. With title insurance, they can be made whole.
A final example (by the way, the list is endless) is human error. Although title examiners are highly trained and knowledgeable, they are also human. Humans make errors. All the time. I cannot tell you how many times I have reviewed a title commitment that did not call for a mortgage to be satisfied, when my client the seller has already given me the information that I needed to obtain an estoppel letter from their lender!
If the mortgage is not set forth in the title search, and no title insurance is purchased, the only thing that the title insurance company is liable for is the cost of the search.
While it may seem to be a good place to save on closing costs, the actual cost of title insurance (which is paid one time and is good for as long as you own the property) versus the potential loss, makes this the second best deal at closing.
Peter J. Pike, Esq. is approved by the Florida Realtors Association to provide instruction on Core Law subjects to Florida Realtors.