If you have recently gotten a mortgage, your lender asked you to sign a form authorizing them to pull your original tax return in case of an audit.  Unfortunately, there have been instances in the past when either a borrower or their loan officer falsified numbers on a tax return which was later caught during an audit.

It is hard for most of us to believe that someone would commit such blatant fraud.  What we don’t realize is that almost every day, there are opportunities for buyers, loan officers or Realtors to commit fraud without intention and without knowing it.

Basically, problems happen when there are terms in the contract that are not shared with the lender and/or the underwriter.  For example: Let’s say the seller has offered to give the buyer a $2,000 carpet allowance.  At closing, the seller hands the buyer cash or a personal check for the $2,000.   Payments that go from one party to another without the lender's consent are a violation of real estate escrow laws. The buyer's mortgage lender is entitled to know all the financial details as the loan approval is based upon those details.

In this example, it is very probable that none of the parties intended to commit fraud.  The Realtor doesn’t think of carpet as having to do with the loan, the loan officer doesn’t want to “muddy things up” with extraneous details, and the buyer has no idea what the underwriter requires.

Another example would be if the buyer financed only 80% of the property’s value from the lender and the seller accepted the proceeds as full payment but collected the remaining 20% from the buyer with an “undisclosed seller second mortgage”.

Both buyer and seller are asked to sign an affidavit at closing stating that all terms of the sale are included in the statements and that there are no undisclosed agreements.  Parties that sign this document but proceed to transfer money outside of the closing run the risk of committing fraud.

What to watch for?

Be aware if any party to the transactions directs you not to share certain documents with your lender.  While this is not always wrong, you want to be sure you understand why the document is being withheld.  If furniture or appliances are included in the sale, but the buyer isn’t paying any more for the house to get them, the lender would prefer that the personal property be addressed on a separate addendum.  Lenders prefer the loan cover only the real estate.  Also, agreements between the buyer or seller and their agent may not require disclosure to the lender as long as they don’t affect the actual terms of the sale between buyer and seller or the buyer’s costs.

Boiling it down to basics:  Lenders use the buyer’s income, their debt-to-income ratio, the property’s value and the buyer’s cash investment to approve or deny the loan.  Any agreements between parties related to the transaction that might change these factors should be disclosed to the lender and the underwriter to avoid loan fraud.

If you have any questions, contact your favorite RE/MAX Perrett agent today and don’t worry, we’ve done this a million times!

REAL ESTATE IS EASY…

Why do people succeed?    Because they INTEND to.

What if you asked yourself to fill in these blanks at the end of each day?:  “I’m glad I did ______________ or,  I wish I had___________________”.   How about at the end of each week?  The end of each year?  The end of your career? 

One of the most common mistakes that small business owners make is spending all of their time working IN their business and not enough time working ON their business.  A real estate agent is a small business owner and just like any business, they have several departments:  Marketing, Sales, Admin, Accounting, Receivables/Payables, etc.

Now is the perfect time to step back and look at your business and evaluate the performance of each department and make a plan for improvement for 2020.  A written business plan is the roadmap to your 2020 goals.


essful agents go through this process at least once a year.  They intentionally decide where their business is heading and they intentionally decide how it is going to get there.  Once an initial business plan is created, the process is relatively easy each year as it typically requires tweaking an already existing plan.  The hardest part for most agents is creating that initial plan. 

Jon Cheplak, a top agent coach recently said in a presentation of video for social media, “don’t let your fear of looking bad in video keep you from starting.  My crappy video beats your no video every day”

The same could be said for business planning.  A one-page no-frills basic business plan beats no business plan every day.

So, just start with these five basics:

1.  Make a written production goal.

2. Divide that goal by your average commission and determine the number of sales you have to have to reach that goal.

3. Decide what percentage of your sales will be with sellers and what percentage with buyers.

4. Decide where these sellers and buyers will come from.

5. Decide what you are willing to do to attract the number of sellers and buyers you must work with to accomplish your sales goal.  Don't forget that Quality is by far the best business plan.  As you develop yours strategies, ask yourself how you can build on quality.
   

Here is an example:

1.  Annual production goal: $100,000.00

2.  Average commission: $3,000. $100,000/3000 = 34 total sales

3. 50% sellers/50% buyers= 17 sellers and 17 buyers
   

4. Sources for clients: FSBO’s, Expireds, My network, On-line Leads, Sign Calls, Open Houses, Relocations, Referrals, Farming, etc.
   

5. Create a written statement explaining how you will work with your selected lead sources to attract the clients needed for your goal. (“I will attract 5 listings and 4 buyers by contacting my current network at least once per month including a phone call at least every 6 months”).

This is a very bare-boned business plan, but it is a terrific start.  Once this plan is in place, you can add to it, improve it and concentrate on different areas of your business each year as you improve. 

If you would like to see this process in action, please feel free to attend our in-house business planning sessions beginning this week.  We will be concentrating on creating and updating plans for agents in both our Marshall and Battle Creek offices and are happy to share the process with you. 

I Googled “Questions to ask a real estate agent” and got 137 million results.  The most common are; How long have they been in the business?, What is their marketing plan?, How much do they charge?

These are all good questions.  I spend quite a bit of time coaching our agents on how to respond to these questions and how to demonstrate their value.

What I also teach agents is how to interview the client.  Effective agents know that not every client is the right client for them and they know how to determine which clients can effectively be served by our services.

In many ways, real estate agents are just like grocery store owners.  They have to determine which inventory to put on their shelves and they make those decisions based on which products are most likely to sell.  A store owner isn’t going to move the Frosted Flakes or Honey Nut Cheerios over to make room for a new cereal unless they are convinced it’s a smart move.

Similarly, an effective agent fills their inventory with listings they are confident will sell.

So, what does an agent look for in a seller?  We like to say that an “A” seller is motivated, loyal, and has reasonable expectations. 

A motivated seller wants to sell their home and has a desired deadline.  In contrast, a non-motivated seller only wants to sell if certain expectations are met and has no real deadline to sell.

A loyal seller chooses an agent they know, like and trust and then follow’s that agent’s advice through to the conclusion of the sale.  They implement their agent’s suggestions and cooperate as much as possible to remove potential barriers to selling their home.

Reasonable sellers understand these things:

• Buyers will not over-pay for a home because sellers need or want them to
• Homes sell because of price and exposure. If your home has been properly exposed in the MLS and it isn’t selling, it’s over-priced.
• They expect their agent to hustle and do all that they can, but understand that they, as sellers, also have to do all they can to make a sale happen. They understand that they may need to stage, they will need to price right, and they may need to do necessary repairs.

Unreasonable sellers expect the agent to work a miracle and ignore their own role in the process.

Before my back surgery, my surgeon asked me questions that were not the kind of questions doctors usually ask.  He wanted to know what my plans were once I recovered.  He wanted to know how I saw myself post-surgery.  Eventually he explained that he was interviewing me.  He had a policy of refusing to operate on patients unless they could demonstrate a belief that they would fully recover.  He needed to know that I had a positive attitude about my recovery.  If not, I could find someone else to do the work.  Once I realized he was interviewing me, I practically fell over myself to prove that I was qualified to be his patient.

So, what can you do to prove that you are the right client?

First, choose your agent based on the right criteria.  Choose someone you know, like and trust.  If you don’t already have an agent, ask your friends who they trust.  Work with someone who will tell you what you need to hear even if it’s not what you want to hear. Listen to them and respect their advice.  I’m not saying that you shouldn’t question them when necessary, but if they can logically and tangibly explain their position – go with it.

Second, know what your walk-away price is and if the data shows that price is not realistic in the current market, don’t list your home.  Wait and pay down your principal or do whatever else you need to get the house ready and your finances where they need to be to sell at a reasonable price.

Lastly, be a member of the team.  Agree up front with your agent on your expectations of them and their expectations of you.  Understand that a price drop may be necessary.  Have faith in the value of upgrades you are asked to complete.  When you get the urge to ask your agent to do more, ask yourself if you’ve done what you agreed to do.  If you are working with an agent who knows, likes and trusts you, they will go to bat for you and stick up for you when a buyer tries to push you too far.

Would you like to meet quality agents who will tell you what you need to hear?  Call us.  With 30+ agents, we’re sure we have an agent you can know, like and trust!

I was in a broker training recently, and the speaker asked, “What is the most important factor that makes agents stay with a brokerage: The culture, Production, The physical space, or Leadership?”

Since I work hard on our culture at RE/MAX and try to create an atmosphere where agents are challenged to personal growth, I found myself hoping the answer was culture, but as soon as I heard the correct answer, I knew it to be true.

Production is the number one factor.  Office culture can be a wonderful “family” environment; the building agents work in can be modern and beautiful with all of the best tools; and the broker can be a great person who truly cares about you, but if motivated agents aren’t producing, they are not going to stay.

There are a lot of companies out there offering a full menu of promises that do not speak to productivity. 

If you are thinking about getting into real estate, or are wondering if you are in the right place, ask yourself these questions as you look at your options:

• When interviewing with a broker or recruiter, what is their focus? Are they asking you about your production level and if you are happy at that level?
• Are they talking to you about changes you could make to your business that would allow you to make more money?
• Are they challenging you to work on a business plan that will help guide you through your year?
• Are they offering you solutions that are actually geared toward creating a consistent income based on repeat and referral business?
• Are they being clear about the amount of work and time needed for new agents to build a business?
• Or, did they not even discuss production? Are they just offering cheap splits or virtual tools that have nothing to do with the 4 core real estate responsibilities: Lead Generation, Lead Conversion, Client Care, and Business Management?  Are they promising a large income without explaining the work necessary to achieve it?

The most important thing a real estate salesperson needs to know is that they own and operate a business. 

Businesses have several departments:  Sales, billing, payables, development, marketing, etc.  We often make the mistake of only focusing on our sales department.  An effective broker teaches and encourages agents to focus on the entire business.  Promises of lots of money with cheap fees are empty without the support needed to grow a complete business.

If you would like to know more, I highly recommend you read, “Takin’ Care of Business” by Brian Buffini and Joe Niego.  Or, call me at 269-441-5573 and I would be happy to visit with you and share my goal of helping agents make more money in less time – no strings attached.

Have you heard stories lately of homes selling quickly above full price with multiple offers? That is the market we are currently in. While not every listing gets this kind of results, it is not uncommon for homes priced correctly in good condition in the average price range for our market. Many buyers have “lost out” on 4 or 5 homes before finally being the winning bidder on a home.



With activity like this, there is bound to be some confusion and frustration in the offer (bidding) process. Here are 5 common misunderstandings:

1. OFFERS SHOULD BE REVIEWED ON A FIRST-COME, FIRST-SERVED BASIS.

There is no rule or law that requires a seller to look at the first offer before others. It is actually the seller’s agent’s job to get the best offer possible no matter when it comes in. If an initial offer comes in and the agent or seller feel that a better offer may be coming, the seller has the right to wait any length of time for additional offers. Since most offers include a deadline for the seller to respond, there is a risk that a good offer will expire while the seller waits for better offers, but that is a chance the seller is open to take.

2. SELLER'S MUST RESPOND TO AN OFFER WITHIN THE DEADLINE GIVEN.

The deadline given in an offer does not “force” the seller to respond within a certain time period. It only gives the buyer the right to rescind their offer if the seller does not respond in time. This allows the buyer to move on and write offers on other homes without the risk of being under contract if a seller accepts their initial offer. If the seller does not respond within the given deadline, the offer is technically rejected.

3. IF THE SELLER RECEIVES MULTIPLE OFFERS, THEY MUST GIVE EVERYONE A CHANCE TO REVISE THEIR OFFER BEFORE CHOOSING ONE.

Typically, if a seller receives more than one offer, they will notify all potential buyers that they have until a certain deadline to modify their offer or confirm that they have submitted their “highest and best” offer.  Once the deadline has passed, the seller selects which offer, if any, they want to accept or counter. While this is the typical response, it is not required. If the seller receives an offer they like, they may at any time accept it and move on with that buyer without giving other buyers the chance to improve their offer.

4. THE SELLER MUST ACCEPT THE BEST (HIGHEST NET) OFFER.

It is assumed that the seller is going to choose the offer that they feel is best. Confusion occurs, however, when we assume that the highest net offer is the best offer. There are many terms in an offer for the seller to consider besides price and net including type of financing, time to close, and possession. As long as the seller is not discriminating against a protected class, they can even choose the offer from the buyer they like the best. Recently, a seller chose a slightly lower offer because it was from a neighbor and friend who they knew would be easy to work with and would be open to delayed possession.

5. IF THE LISTING AGENT HAS THEIR OWN BUYER, THEY ARE NOT SUBMITTING OTHER OFFERS TO THE SELLER.

Let me just start by saying that withholding any offers from a seller would be against real estate law and our code of ethics and professional suicide. Our code of ethics says that we will put our client’s best interest first and that NO inducement, financial or otherwise, shall interfere with our responsibility to our client. A recent revision to our code also states that a selling agent can request a signed rejection of their offer. We always advise that you work with an agent you know, like and trust. Trust your agent to protect you and do what they can to assure that your offer was in fact submitted.

An agent came to me recently for help in explaining possession to their buyer client.  When their buyer made an offer, the seller asked for possession of the property for 7 days after closing.  The buyer accepted and moved toward closing.  Now that the buyer is ready to close, he is starting to question the possession issue.  Here were some of his questions:

• Why doesn't the seller have to pay rent while they continue to live there?
• How do I know the seller will leave the home in good condition?
• What is my recourse if the seller damages the property?  Is there some type of a deposit in place to cover damages?

These are all very good questions.  To answer them, let’s start with a little history:

First, it is important to know that once a buyer closes on a home, they are paying their mortgage payment, taxes and insurance on the property even though they may not yet be living there.  As recently as 20 years ago, it was pretty normal in our area for sellers to maintain possession for 30 days after closing.  However, with the recession came many vacant and bank-owned sales where the buyer received immediate possession.  That market "killed" normal on many fronts including average possession time.  While there is no hard and fast rule, a buyer typically receives immediate possession on vacant homes, but in transactions where the seller is still in the home, it is "customary" to give them 7 to 10 days to get out without charging rent.  Any amount over 10 days usually includes the seller paying rent to reimburse the buyer for the costs they are incurring. 

Now that we've covered possession and rent, let's move on to liability and damages:

Most purchase contracts state that the seller will leave the house in broom-clean condition, remove all personal property and debris, and make any repairs/replacements necessary from any damage or neglect.  When the seller accepts the offer, they are contractually bound by it.  However, buyers must understand that the only real way to enforce a contract is in court.  If either party to a contract (buyer or seller) breaches the agreement, the other party must file suit and win a judgement to enforce the contract.  Even if a deposit is held to cover seller damages, if the seller does not agree with the buyer as to the release of the deposit, they would most likely have to go to court to settle the matter.

In the end, there are a lot of promises made in a purchase agreement and both parties are bound contractually to keep those promises.  It is important that you ask a lot of questions and work with your agent at every step to do your best to protect yourself against possible outcomes but there also has to be some level of trust that the other party will perform per the agreed terms.

Questions?  Call your RE/MAX agent today at 269-968-6101 for Battle Creek or 269-781-8966 in Marshall.