Friday, January 18, 2013

Should A Realtor Have Both Sides Of A House Sale?

Should a Realtor have both the listing and the buyer for a sale of a home? it is a good question and the answer is not as black and white as some people like to think it is. I do not know about other states; but in North Carolina we all represent the seller unless the buyer signs a buyer agency agreement with the realtor they chose to represent them. The only time it really comes into conflict is when the buyer likes and wants to put an offer in on a home represented by their Realtor. I admit; I have been in this situation a few times over the years. All have worked out well for both the seller and the buyer.....But should you as a Realtor represent both sides? My opinion on this varies depending on the situation. I have represented sellers in a short sale listing (one in where the bank is agreeing to take less than the amount owed on the house0 and represented both parties. In those cases the bank is setting the price and not the seller. Generally it is at a point where the bank has told me to list the house at a certain dollar amount and they will accept the offer. It really does not matter who is representing the buyer at that point. If the dollar amount fits the guidelines the bank is asking for it will be accepted and the house will proceed to close. However; what if the listing is not a short sale. What if it si a retail listing where the buyer wants to buy the home and you know the seller is not short on funds? Is it right to represent both sides in that transaction? i have represented both sides in that transaction type before and have had situations where i asked another Realtor to step in and help the buyer out. I think it depends. I believe in complete transparency. I disclose everything to the buyers and sellers that I am legally allowed to and explain the situation with me representing both sides. I have found it to be advantageous for both parties and helped close transactions that otherwise might not have closed. The buyer gets answers to questions quickly and timely first hand. It has speeded up the process of negotiation between the two parties making it less stressful on both sides. Any delays casued by the seller or the buyer were easily explained and met without concern knowing I was the middle man between them and could explain why and not feel like they were not getting the truth. it has helped me with inspections and home repair requests because i would be present for the buyer and be able to tell the seller first hand what was going wrong and that it should be repaired. Last, I have also offered a reduction on commission to help close a transaction where i knew the buyer was capped and the seller was at their bottom line and cut the commission to help close the gap and close the deal. Now, there are times when it does not work. I have had it where I did not feel comfortable representing both parties; because of a gut feeling. Or the buyer felt a little uneasy doing it....Also, if I had a home go into multiple offer situations while I was representing both sides. I have gracefully stepped aside and either referred them to another agent or allowed them to locate one to help them facilitate the transaction. I do not necessarily believe it is cut and dry that you should represent both sides or should not. i think each and every transaction is different and needs to be looked at individually...Ultimately my goal is to do what is right for both sides. Dave diCecco Realtor/Broker Coldwell Banker United www.davedicecco.com

Tuesday, January 15, 2013

What Does Repair Escrow On A HUD Home Mean?

As more buyers are venturing out this year and sales are expected to increase; a question that seems to be popping up is what is repair escrow on a HUD home. HUD does not do any repairs to the houses they put on the market. Instead HUD offers these homes with a FHA financing with repair escrow. HUD has the homes inspected for the basic functions and appraised. HUD then offers the house for sale with a repair escrow. A repair escrow is when they estimate the repairs to be minor (up to a maximum of $5000) in order for the house to qualify for a FHA loan. These repairs would have to be completed normally for the house to be sold as an underwriter would not approve the home loan without the repairs normally. In these cases the lender holds the money in an escrow account until the repairs are done and pays the contractor that has properly repaired the problems. HUD gives the buyer up to 90 days to get the repairs done on the house. Though there are some exceptions to this rule; depending on the repairs to be done to the house. For example if it is to repair siding or any outside area of the house that requires warmer weather HUD can extend the time frame do to the weather conditions at that time of the year. Once the repairs are completed the contractor submits an invoice into the lender and the lender will pay them out of the repair escrow. In some cases this works well and in other cases it does not. I have seen situations where the repair escrow was more than sufficient to cover the cost of repairs and the buyers received a check back for the unused amount of money they put up in escrow. In other cases the repair work was greater than the repair escrow and the buyer had to come up with the difference. Even with this type of situation buying a HUD home have many benefits. Because even though they may require an escrow amount of money from you to finance the home as FHA insurable; they offer the homes with $100.00 down program. So you would not have to put the standard 3.5% down and can still get the FHA loan and use that money to cover the repair escrow. I have found HUD homes to be very advantageous to purchase and if your Realtor knows what they are doing along the way it can be a smooth transaction. Dave diCecco Realtor/Broker Coldwell Banker United www.davedicecco.com