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  • coronavirus, 2 05-17-2021

    Question

    I have a question about the new mask guidance issued today. The announcement states, "This guidance allows fully vaccinated people to no longer wear a face covering with certain limitations." However, the guidance further states, "Face coverings are required to be worn at all times by real estate brokers, their clients, and industry partners (e.g. appraisers, inspectors, photographers, stagers, etc.). Brokers may not provide services to any client who does not wear a face covering." So what happens if the broker is fully vaccinated? What happens if the client or an appraiser is fully vaccinated? The guidance is contradictory. What is the broker's responsibility if a visitor comes into an open house without a mask and claims that they are fully vaccinated? Please clarify the guidance.

    Answer

    Throughout the evolution of the "Stay Home, Stay Healthy" plan, the Governor has released a set of protocols that apply generally to all Washingtonians and also specific requirements for different industries. For example, restaurants have different requirements from movie theaters which are also different from law offices or RE offices. The RE industry is subject to industry-specific protocols that require, while a county is in Phase 3 (which is the phase that all counties are in today), that brokers implement the mask policies described in the Washington REALTORS announcement. Broker should stay tuned for updated information. As the Governor modifies the protocols required of the RE industry, the WR will update the information provided to brokers.

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  • MLS, 05-17-2021

    Question

    I am a broker who is looking to buy a property for myself. Looking through the NWMLS listings, I saw for the first time, mentioned in the 'SOC comments' field these words - 'No commission if buyer is also the selling broker'. I was surprised as well as offended, frankly, to see this and I wanted to ask you, if this is even a legal or enforceable thing for the listing agent to do? The ‘commission’ field was 3%. Is there any way the commission could be withheld from me, if I as a broker am buying a property for myself ?

    Answer

    Yes. This was a common occurrence when short sales were a significant part of the market. Short sale lenders (the seller's lender who had to approve the sale and in doing so, agree to accept less in "pay-off" of seller's loan than what was owing) would commonly refuse to allow a buyer/broker to receive compensation. This was because, from the lender's perspective, the property was already being sold for less than what was owing and the lender refused to pay a commission to a "buyer" that would effectively reduce the price even more for that "buyer". The fact that the buyer was also a broker and could earn the compensation as a broker was irrelevant. The short sale lender refused to allow the transaction to proceed, by withholding short sale approval, if buyer was taking a RE commission. Thus, it became normal for buyers, who were also RE brokers, to forego collection of the SOC in those transactions. The Hotline lawyer has no knowledge of the background facts associated with this listing or why this seller is refusing to allow the SOC to be paid to the buyer/broker. The point of this answer is to communicate that the concept is not new and it is also not, necessarily, a violation of MLS rules. Broker should ask this question of the MLS if broker questions whether this particular offering is a violation of MLS rules.

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  • CFPB Acts To Head Off 2021 Foreclosure Crisis

    a wooden house atop jenga blocks

    REGULATORY

    The CFPB proposes prohibiting servicers from filing for a judicial or non-judicial foreclosure process through the end of the year.

    In response to findings that 2.1 million U.S. households are at risk of losing their housing as legal protections against foreclosures and evictions expire in 2021, the Consumer Financial Protection Bureau (CFPB) published a proposed mortgage servicing rule on April 5 as a first step to head off what Acting Director Dave Uejio has called “a national foreclosure and eviction crisis.”

    The Looming Problem

    The Coronavirus Aid, Relief, and Economic Security (CARES) Act—which was signed into law on March 27, 2020—provided up to 360 days of forbearance for homeowners with mortgages purchased or securitized by Fannie Mae or Freddie Mac, and loans made, insured or guaranteed by the FHA, VA or USDA if they requested forbearance from their servicer and attested to a financial hardship during the COVID-19 emergency.

    The federal agencies announced in February 2021 that the moratorium deadlines would be extended until June 30. The Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), and U.S. Department of Agriculture (USDA) also announced in February that they were expanding forbearance for up to an additional six months, for a maximum of 18 months of forbearance for borrowers who requested additional forbearance by June 30, 2020.

    “The Bureau is not aware of another time when this many mortgage borrowers were in forbearances of such long duration at once, or another time when as many mortgage borrowers were forecast to exit forbearance within a relatively short time frame,” the CFPB said in its proposed rule.

    The CFPB Findings

    The findings relied upon by the Bureau were published in a March 1 CFPB Report, which found that:

    • As of January 2021, there were 2.7 million borrowers in active forbearance. Of the loans actively in forbearance, 903,000 are owned by the government-sponsored enterprises (GSEs), 1.26 million are insured by the FHA or VA and 678,000 are held in a portfolio or are privately securitized.
    • As of January 2021, there were an estimated three million borrowers who were 30 days or more delinquent on their mortgage obligations. This number has doubled since the beginning of the pandemic—from 3% in March 2020 to 6% as of December 2020.
    • Of these three million borrowers, 2.1 million were behind by at least three months on mortgage payments. The amount of homeowners who have fallen more than 90 days on their mortgage has increased by 250% since the beginning of the pandemic, and is now at a level not seen since the height of the Great Recession.
    • There were 242,000 borrowers not in a forbearance program who were 90 days or more delinquent as of January 2021.
    • Homeowners are estimated to owe almost $90 billion in deferred principal, interest, taxes and insurance payments.
    • Black and Hispanic families are more than twice as likely to report being behind on housing payments than white families.
    • Households with incomes below $75,000 are more than twice as likely to be behind than households with incomes above $75,000.
    • Mortgage loans insured by the FHA have fared significantly worse than other loan types; their delinquency levels exceed those seen in the last financial crisis.
    • 28% of manufactured home residents reported being behind on their housing payments, compared to 12% of single-family home residents and 18% of residents in small- to mid-sized multi-unit buildings.
    • Households that appear to be thriving according to the CFPB data may be struggling in real life. Many house-holds rely on nontraditional forms of financing to prevent falling behind on their housing payments, whether that may be credit cards, emergency savings or family and friends. Additionally, their distress may be masked by temporary government assistance, such as stimulus payments.
    • One strength of the current housing market is that the average home-owner has built up a considerable amount of equity, and home prices in most parts of the country are still rising. But long-term forbearance can erode equity, and foreclosures can negatively impact neighborhood housing values.

    The CFPB Proposal

    According to the CFPB, its proposed rule “seeks to ensure that both servicers and borrowers have the tools and time they need to work together to prevent avoidable foreclosures.”

    First, the proposed rule would establish a temporary COVID-19 emergency pre-foreclosure review period that would generally prohibit servicers from making the first notice or the filing required by applicable law for any judicial or non-judicial foreclosure process until after December 31, 2021.

    Second, it would permit servicers to offer certain streamlined loan modification options made available to borrowers with COVID-19-related hardships.

    Finally, it proposes amendments to the early intervention and reasonable diligence obligations to ensure that servicers are communicating timely and accurate information to borrowers about their loss mitigation options during the current crisis.

    Given “the urgency of the crisis,” the CFPB is requesting comments be submitted before May 11, 2021.

    Sue Johnson is the former executive director of RESPRO, the Real Estate Services Providers Council Inc. She retired in 2015 and is now a strategic alliance consultant.


    This article originally appeared in the May 2021 issue of the REAL Trends Newsletter. It is reprinted with permission of HWMedia. Copyright © 2021. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Earnest Money, 05-17-2021

    Question

    I have a problem with a Cash Sale transaction that originated on April 26, 2021, and was scheduled to close on May 12, 2021 (yesterday). It did not close. As it turns out the proposed Buyers on closing day May 12, 2021 submitted a signed Form 90C Failure to close, along with a Form 50, Authorization to disburse funds to Buyer (requesting the entire $25,000.00 earnest money deposit be refunded to Buyer). Earlier on May 12, 2021, Buyers Broker mentioned to me verbally via phone that Buyers had reviewed the proposed Form 34 and were not moving forward with the purchase, due to the fact that the Seller had not produced the RSS from Pierce County Health department prior to the contracted closing date. On May 11, 2021, Seller signed all escrow instructions together with the proposed Form 34 Addendum (also provided to Buyers Broker via email on May 11, 2021) indemnifying Title Company, and stating her (Sellers) responsibility for any additional repairs that could be required by Pierce county for issuance of said RSS. Note: Buyers made no attempt to execute escrow Instructions and or deposit any of the required additional funds for closing? Naturally the Seller is not happy and does not want to authorize release of the earnest money back to the Buyers. My thought is that the Buyers actually defaulted as they made no attempt to sign escrow instructions and or request counter and or modification of the Form 34 Addendum so provided. Please advise, and feel free to call me should you want to discuss further.

    Answer

    Unfortunately, there is no way that broker or the Hotline lawyer can evaluate ownership of the EM based on this set of facts. The question of performance requires a complete assessment of the facts and a comparison of the facts to the law that is required to show a party's performance of contract terms. It appears that buyer's argument is that seller owed certain actions for performance of seller's obligations under the purchase agreement. It is not clear what was required of seller or whether seller performed but if seller owed performance of a material term and failed to perform, buyer may succeed in arguing that seller's breach (or failure to perform) excused buyer's performance. Buyer may be able to argue that buyer was not required to take futile actions, such as tendering funds to escrow, if seller, through seller's failure to perform, already made a timely closing impossible. The Hotline lawyer has no knowledge of seller's obligations under the contract or whether seller performed those obligations. Thus, nothing about this answer is intended to say that either buyer or seller should recover the earnest money. Rather, the purpose of this answer is to illustrate that neither broker nor the Hotline lawyer can reach any conclusions about ownership of the EM. Broker should direct his client to legal counsel for assistance assessing this question. The earnest money is significant and it is likely that seller's lawyer will be able to fairly quickly describe to seller why there is not an easy answer to this question. The money spent by seller, for legal counsel, will enable seller to then evaluate what seller wants to do. Does seller want to litigate with buyer for ownership of the EM? Does seller want to attempt to negotiate some other outcome with buyer? Does seller want to avoid the risk of incurring legal fees owing to buyer because of waging a battle for the EM that seller is unlikely to win? These are the questions that seller and seller's lawyer must consider and based on that consideration, develop a strategy for moving forward. Neither broker nor seller can assist seller in that purely legal analysis. Broker should advise seller, in writing, to seek legal counsel.

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  • Form 22C, 05-17-2021

    Question

    In form 22C when dealing with vacant land to be purchased for the purpose of constructing a residential dwelling after purchase, seller should have the box, not be used for a residential dwelling, correct? Since it is vacant land at the time of purchase with buyers intentions to build the question has come up.

    Answer

    If buyer is purchasing residentially-zoned, raw land, with the intention of improving the property with a dwelling, then the sale is subject to the Department of Financial Institutions requirements. Broker should recommend that seller contact the Department of Financial Institutions, seeking a waiver.

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  • Form 65B, 05-17-2021

    Question

    I represent the buyers who would like to buy some rentals. Cash purchase, Occupancy after closing up to 90 days no fee. Recording was last Friday. Preparing for seller occupancy after closing they research Washington law for landlords and sent rental agreement to seller for them to sign via Docusign. I was not aware this was sent. Friday morning before recording. Seller signed. Buyers were looking fir a deposit if 2500 and a walk through with owner to make a list of the current condition of the property. I admit I made a mistake not doing a hold back of 2500 for at time of purchase and sale contract. Using the Rental occupancy firm the only place to list would have been under other. Seller is very upset saying he had no funds available for deposit. All of his funds are needed to purchase new property. He would be contacting his agent Monday. I talked to listing agent Monday and Tuesday would have a response. No response. After 6:00 in evening received this message. "Well I am not a rental agent and have no authority to advise my client but I did just sent a message to my managing broker and yes they are both upset and should have been handled in the offer. At this point I am not going to respond to this needs to be handled between them your clients sent the rental agreement (nothing to do with me or you)...my managing broker is more then happy to discuss this with you and your managing broker. Me: Understand you are not advising your client. Have you talked to ______ today as mentioned yesterday? LB: For the last time talk to my managing broker she is awaiting a call from your managing broker I will not discuss with you anything dealing with a rental agreement that your client sent before the signing do not contact me trying to negotiating a rental agreement..I am not once again a property manager." My understanding is that Purchase and Sale contract binding till seller leaves the property. Called listing broker's managing broker. Her understanding is once recorded the conditions of the P&S are met. Is seller officially a renter since they were not chosen by my buyer and are not required to meet the requirements as walk thru etc. and Washington rental agreement is not needed? Current P&S binding till seller moves out.

    Answer

    Listing broker is absolutely correct about an important point. The brokers representing buyer and seller in this transaction have nothing to do with the rental agreement and cannot advise the parties with respect to the rental agreement. This is because buyer generated the rental agreement with no assistance from the brokers and seller signed the rental agreement with no assistance from the brokers. Where the brokers could have a problem is that Form 21 says that if the parties agree to possession at any time other than closing, the parties SHALL sign a Form 65A or B. In this case, since seller retained post-closing possession, the parties were obligated to sign a Form 65B. Seemingly, the brokers never prepared or presented that form to the parties. On the Form 65B, the parties could have accounted for the $2500 deposit if that was important to buyer and seller could have negotiated that term if seller was opposed. If the two could not reach agreement, then there would be a failure to achieve a meeting of the minds and the transaction would not have closed. As the facts unfolded, the transaction closed and this dispute was not discovered until after closing. Once the transaction has closed, there are no remaining RE Brokerage Services to be provided in the sale transaction. Very clearly, buyer is not seller's landlord and seller is now buyer's tenant, regardless of whether buyer "chose" seller as a tenant. Seller lives in buyer's property by permission of buyer. Moreover, they apparently executed a written agreement controlling the terms of the tenancy. Buyer and seller are in a landlord/tenant relationship that is controlled by the Washington Landlord Tenant Act and the terms of the contract ... that the brokers did not draft. Broker should advise buyer to consult legal counsel. Broker is not licensed or insured to provide the assistance to buyer that buyer now needs with respect to buyer's/landlord's rights and obligations in this situation. The brokers can certainly facilitate conversation between landlord and tenant as to move-out date and other logistics but it seems that since buyer and seller now have a landlord/tenant relationship with one another, they should be discussing logistics directly with one another and if that is not possible, then through legal counsel.

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  • Advertising, 05-17-2021

    Question

    I have read and re-read the DOL advertising guidelines and understand: “When using social media, disclosure of the firm’s and the broker’s or managing broker’s licensed name should be prominently displayed and easily understood and be no more than one click away from the viewable page.” So I’m wondering why an instructor for a SKCR class would have recently said and specifically emphasized that ALL social media posts, including Facebook and Instagram posts, must include/show the firm’s name within the picture or text. He specifically said that we can’t control where the consumer may click, but if anyone can click on the name of the poster and view the brokerage name within their profile, doesn’t this meet the one-click rule? When I attempted to ask for clarification from the instructor I didn’t receive any, and would really like to get an answer. IF the instructor is correct and every post must include the firm name, would the broker using the firm as the post location or checking-in to the firm so that the firm’s name appears in the post work?

    Answer

    It is not clear what the instruction was but the guidance from DOL is correct. When using social media to advertise, broker's firm name and personal name, as licensed, must be displayed so that the viewer can find the broker's name with only a single click. This necessarily means that broker's name and firm name need not be on every page that can be accessed from broker's social media page but broker's name and firm name must be no more than a single mouse click away from any page that a viewer may access from broker's social media page.

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  • coronavirus, 05-17-2021

    Question

    Do I need to require people to wear a face mask when coming in for an open house?

    Answer

    Yes. As of today, the requirements for Counties that are in Phase 3 (which includes all counties), requires that brokers holding open houses must require all attendees to the open house to wear a face mask. That requirement could change in coming days. Broker should stay tuned to for Washington REALTOR updates regarding developments from the Governor's office regarding these requirements.

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  • Agency, 05-17-2021

    Question

    I showed property on the day of listing (may 12th). Buyer wanted to write an offer. Listing agent stated in “Private” that all offers were to be reviewed om May 17th. I wrote a one day offer for $25,000 over asking on May 13th, with an expiration of the same day. I texted the listing agent that offer was sent, and asked for an ack of receipt. When no response was forthcoming, I called listing agent and verified receipt. Waited all day for a response, and finally texted agent for buyer’s offer around 8pm. Sellers agent response was that all offers were to be presented on May 17. My response to seller’s agent was that she was in possession of an offer for her listing and she needed to present it before it expired. Needless to say, her response was “my client did not wish to accept”. It would seem the listing agent has a duty to read all offers as they are received, not wait until Sunday afternoon to review them. Had she read this offer, she would have known that the offer needed a response that day. Unless listing agent has something in writing, from the seller, that states the seller will not look at any offers until May 17, it would seem the listing agent made a mistake that may have ruined the chance of my buyer being the successful buyer. Thoughts?

    Answer

    Broker is correct that listing broker (and seller) may have ruined the chance of seller selling to a well-qualified buyer at a price in excess of the listing price. Buyer broker is also correct that listing broker has a duty to timely present all written offers to seller and that an offer should be presented prior to termination of the offer, unless seller directs otherwise. What is not clear, in this case, is whether LB presented buyer's offer prior to expiration. It is true that LB did not communicate well, with buyer broker, as to the status of buyer's offer but there is no way that the Hotline lawyer or buyer broker can draw meaningful conclusions from that, about whether or not LB presented the buyer's offer, timely to seller. If buyer feels strongly about this, buyer could file a complaint with the Department of Licensing.

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  • computation of time, 05-17-2021

    Question

    My Buyer called me panicked saying that the 2 days on the contract to deposit EM meant calendar days not business days after I told them we have two business days to deposit the earnest money. We signed around on Saturday; I told him we have till Tuesday to get the earnest money deposited. He sent me this link where he got his ‘additional’ information-https://app.leg.wa.gov/rcw/default.aspx?cite=64.04.220 . Can you tell me what this link is in reference to? Is this only if it is not defined in PSA contract? I am going off of the form 28 section l. Computation of time stating ‘any specified period of 5 days or less except for any time relating to the possession date, shall not include Saturdays, Sundays, are legal holidays’.

    Answer

    The referenced statute identifies the protocols that parties must follow to set in motion a process that addresses the handling of disputed earnest money following a sale fail. It has nothing to do with buyer's obligation to deliver EM pursuant to the terms of a purchase agreement. Broker is correct that the delivery requirement is subject to the Computation of Time provision and that buyer's two-day delivery obligation includes business days only.

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  • Form 21, 05-17-2021

    Question

    Seller performed a home inspection just prior to home going on the market and provided a copy of the report, which included a roof evaluation by an inspector without him actually going on the roof, to the prospective Buyer. The home is now under contract with that same Buyer. Per NWMLS Form 21, Paragraph w, (Information Verification Period) “Buyer shall have 10 days after mutual acceptance to verify all information provided from Seller or listing brokerage firm related to the property.“ As the Seller provided this report to the Buyer, does the Buyer have the right to have a licensed tradesperson out to the home to verify the information on the report? If so, does that change if the Buyer waived their inspection contingency via NWMLS Form 35W? After mutual acceptance, which included the 35W, the buyer wanted to perform an evaluation of the roof for future budgeting. I understand that typically listing agents will dissuade sellers from allowing this, but doesn’t the fact that the seller provided the inspection report to the buyer give the Buyer the right to do so?

    Answer

    Nothing in the Information Verification provision grants access to seller's home, to buyer. If seller will allow an inspection of the roof, then buyer can perform that inspection but nothing in the boiler plate language of that provision gives buyer access.

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  • Possession, 05-14-2021

    Question

    Currently, with multiple offers and Seller Occupancy after closing (Form 65B) is used. Are agents responsible for the transaction until seller vacates the property, or just up to the time of recording? When form 65B (Rental Agreement Seller Occupancy After Closing) is used and the property records, are any, or all parts of the purchase and sale agreement still binding, such as Form 22D (Optional Clauses item #3) i.e. Seller cleaning out the property? Also, after the property records into the buyer’s names, does the seller need to obtain renters insurance or does their current homeowners insurance carry over till they vacate the property Buyer obtained homeowners insurance on the property at time of recording.

    Answer

    Broker's first question is difficult to answer because a RE Broker is never responsible "for the transaction". The parties are responsible for fulfilling the terms of the purchase agreement. Broker is responsible for providing RE Brokerage Services consistently with the Agency Law. Broker's agency relationship with her client ends when the broker has completed performance of the RE Brokerage Services she undertook to provide to her client. RCW 18.86.070. However, broker remains liable for the quality of the services she performed. The Form 65B rental agreement is an agreement prepared by broker for the purpose of conveying an interest in real estate. Again, the parties are responsible for fulfilling the terms of Form 65B, not the broker. Nevertheless, seller occupies buyer's home because of an agreement broker drafted. If this does not answer broker's question, she should consider resubmitting the question. Once the purchase agreement records, all terms of the purchase agreement are deemed satisfied. That is the significance of the parties going through the closing process. If either party believes the other has not fulfilled contract terms, that party should not execute the closing documents. Either party may sue the other for a breach of contract alleging that the party did not fulfill the terms of agreement as required but the purchase agreement is deemed performed. Broker should recall, however, that some terms of the purchase agreement require seller to surrender "possession" of the property in a certain condition. Form 21 requires seller to maintain the property until "possession" is tendered. Form 22D may require seller to remove all personal property before possession is tendered. Consequently, seller has a contractual obligation to perform those terms of the agreement. If, upon taking possession, buyer learns that seller did not perform those terms of the PSA, buyer may have a claim against seller for breach of contract and/or other claims. Broke should advise seller to consult seller's insurance carrier about seller's insurance needs once seller no longer owns the real estate. It is entirely possible that seller would benefit from some form of "renter's insurance".

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  • Property Management, 05-14-2021

    Question

    A landlord wishes to increase rent by $50.00 per month, which doesn’t cover the increase in real estate taxes and the increase in insurance coverage, but will at least mitigate some of the landlord’s loss in net income. However, the Realtor property manager does not want to violate Governor Inslee’s mandates and moratoriums. Is there a written mandate or moratorium which the property manager could share with the landlord? Unless the moratoriums are extended, could the landlord give a thirty day notice of the rent increase, or would it need to be a sixty day notice? Can the landlord give the notice now, or must the notice be given after the expiration of the latest moratorium (June 30th, 2021)?

    Answer

    The Governor's moratorium prohibits all residential rental increases through June 30, 2021. The moratorium can be found here: https://www.governor.wa.gov/sites/default/files/proclamations/proc_20-19.6.pdf. Landlord may give notice now, of a rent increase that will not take effect, until after June 30. There are different notice requirements associated with rent increases depending upon whether tenant is a month-to-month tenant or on a term lease. Broker should advise seller to consult legal counsel for assistance in determining what period of notice is required in this case, in light of the expiration of the moratorium, implementation of several new laws controlling LL/T relationships and the status of this tenants as a month to month or term lease tenant.

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  • License Law, 05-14-2021

    Question

    I have a question regarding filing in property management. We converted our property management system to a cloud based program about 6 months ago or so, and this program is said to be safe for filing electronically due to multiple back ups at multiple locations. We are wanting to convert all of our paper files to electronic within the system as soon as possible, but first want to make sure the legalities of it. We are wondering if, in doing this, if we can no longer have to file paper copies as well?

    Answer

    DB should consult the firm's lawyer for assistance in determining best practices. The state (Department of Licensing) does not require paper backups if required files are properly stored, electronically, and can be readily accessed and printed as needed. However, firm's lawyer may give advice that is different from the state's minimum requirements. DB should ask this question of the firm's legal counsel.

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  • Form 35, 05-14-2021 2

    Question

    We are pending inspection on my listing and the seller did not check either box on the 35 section 4. The agent submitted a 35r and right on the 35r they stated "Inspection report and sewer report sent in a separate email" Then they asked for a credit of $30k and listed out what they considered the few major items this credit would go towards. The agent followed up by sending the full inspection report and sewer scope report to me in a separate email as stated on their 35r. By sending me the full inspection reports, without the seller's request and consent, did the buyer's inspection period just get waived? Is there a notice we can send accordingly to them that they waived inspection and that seller will not respond further? Wasn't sure how this is to be handled.

    Answer

    From the facts presented, it appears that buyer waived the inspection contingency. There is no statewide form that seller needs to use to advise buyer that the inspection contingency was waived. Rather, if seller does not want to negotiate with this buyer, listing broker can simply advise buyer that the reason seller will not be negotiating buyer's request for a price change is because buyer waived the inspection contingency. Listing broker will likely need to point out the language in the revised Form 35 that results in this outcome. If buyer challenges this conclusion, broker should advise seller to seek legal counsel.

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  • Form 35, 05-14-2021

    Question

    I had a question related to form 35 and 35R. We represent the seller. The buyer performed a home inspection and a sewer inspection. The buyer broker delivered a 35R, and in their written response, the buyer broker included a link to the sewer scope and report. The seller did not request the sewer inspection report. All forms were the NWMLS provided forms. The forms manual for the 35 and 35R did not specify “general home inspection” or “sewer inspection,” they simply state “inspection report” or “portions of the inspection report.” Does the inclusion of the sewer scope and report constitute delivering a portion of the inspection report without the seller’s consent? Did the buyer broker waive their inspection contingency?

    Answer

    The sewer scope report would likely be considered an "inspection report" or a portion of "the inspection report". Buyer should not have delivered a link to the report without seller's consent. That said, there is no way of knowing how any particular court will enforce this provision of the inspection contingency. If the parties cannot resolve their differences, broker should advise seller to consult legal counsel. Seller's lawyer should assist seller in determining seller's rights and obligations under the contract, based on this particular fact and then assist seller in developing a strategy for pursuing any claims seller may hold. Broker should not advise seller that buyer has lost buyer's inspection contingency because there is no way of knowing whether any court asked to adjudicate this set of facts will reach that conclusion.

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  • Homeowners Gained $20,000 In Wealth In 2020

    a row of houses colored green

    MARKET WATCH / TODAY’S MARKET

    Soaring home values and unprecedented buyer demand meant property owners pocketed substantially last year.

    Homeowners in 2020 gained more than $20,000 in wealth as home prices soared and buyer demand remained strong across the nation.

    Home prices nationwide increased in February 2021 faster than in January, and continued to appreciate at higher-than-2020 average monthly rates, according to recent data released by Red Bell Real Estate, LLC, a subsidiary of Radian Group Inc. Home prices nationally rose from the end of January 2021 to the end of February 2021 at an annualized rate of 8.2%.

    February 2020 was the last month before pandemic-related shutdowns were implemented nationally. One year past that transition, home prices have shown tremendous resiliency in aggregate. The Radian Home Price Index (HPI) rose 8.3% year-over-year between February 2020 and February 2021. In comparison, the year-over-year period from February 2019 through February 2020 recorded a 7.4% increase in home prices nationally.

    Nationwide Data And Trends

    Nationally, the median estimated price for single-family and condominium homes rose to $272,186, representing a more than $20,800 increase over the $251,384 median estimate at the end of February 2020. This means that the average U.S. homeowner gained more than $20,000 in wealth last year due to strong home price appreciation, and home prices rose an annualized 9.3% over the last six months, according to the study. This change represents a strong increase over the prior six-month appreciation rate of just 6.9%.

    Housing markets continue to be buoyed by ongoing imbalances between housing supply and demand. February 2021 continued a streak of records broken, both by setting the record for lowest number of active listings in any February, as well as for the highest number of sales in a February. Moreover, the absorption of inventory was brisk. The number of sales equated to 27% of the number of active listings, suggesting a very strong demand for inventory.

    Regional Data And Trends

    Similar to the national reporting, all U.S. regions reported positive price appreciation in residential markets in February 2021. The Mid-Atlantic and Northeast regions were particularly resilient in what are normally down months for housing activity. While appreciation rates in these markets were comparable to those recorded over the last four months, it is more common to see some slowing of appreciation during winter months in these areas. The Midwest did record the weakest regional appreciation rate, and was weaker than prior months. The Southwest and West were the top performing regions in February.

    At the state level, home price appreciation was positive in all 50 states and in the District of Columbia; however, 20 of the 51 states reported slower monthly appreciation in February when compared to the prior month. Home price appreciation momentum differs by state.

    Metropolitan Data And Trends

    All of the 20 largest metro areas in the U.S. reported positive price appreciation in February as compared to January 2021. Three metros—New York, Philadelphia and Boston—recorded slower annualized price appreciation month over month. It is striking that 17 of the 20 largest metro areas report higher rates of appreciation than in the month prior to the onset of the COVID-19 pandemic in the U.S. in early 2020. These metros grew faster in February 2021 than they did in February of 2020. To put that in perspective, the start of 2020 was the strongest on record following the Great Recession, as housing markets were very strong prior to the pandemic and reflected the broad strength of housing market prices.

    In just the first two months of 2021, the average median estimated price of homes in the 20 largest metros is greater by almost $5,000, which is a 78% increase over last year’s estimate of $2,800 for the same period.

    The Radian HPI is calculated based on the estimated values of more than 70 million unique addresses each month, covering all single-family property types and geographies.


    This article originally appeared in the May 2021 issue of the REAL Trends Newsletter. It is reprinted with permission of HWMedia. Copyright © 2021. To read the rest of this issue & more, please visit our Real Trends page online.

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  • Fair Housing, 05-14-2021

    Question

    My real estate coach has encouraged me to do a series of videos about living in Spokane, including ones that highlight different neighborhoods. I want to do this, but also make sure that I don’t violate any fair housing laws when discussing specific areas of town or home sales in those areas. What is the risk of talking about the top selling areas strictly in terms of number of sales, or doing videos talking about specific neighborhoods, or pros and cons of living in those neighborhoods and of living in Spokane? I’ve always followed the rule “talk about the house, not who should live there,” but does that general rule apply when discussing a specific neighborhood or area of town?

    Answer

    Under no circumstances should broker produce a video in which she characterizes the " pros and cons of living in those neighborhoods". Broker can produce a video showing Spokane and its many neighborhoods and features but should leave characterization of each neighborhood up to the buyer who will be looking for a home. Broker can provide data about the number of sales and prices in any part of the community but should not do so in terms of describing any given area.

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  • Earnest Money 2, 05-11-2021

    Question

    I’ve listened to you YouTube videos regarding the forms revisions and the timely delivery of the EM. My question is, if we put 3 days in for the timely delivery of the EM, and the Buyer forgot to transfer funds from his Savings account to his Checking account, delivers the check within the 3 days, but the check is returned NSF, now what? The Buyer did get it straightened out with his bank, and delivered a Cashier’s check on the 4th day. Do we now need to draft an addendum changing the days from 3 days to 4 or 5 days, and have both Buyer and Seller sign?

    Answer

    No. Broker's job was to remain vigilant as to buyer's timely delivery of funds and upon first notice that buyer's funds were insufficient, deliver notice to seller of that fact. However, once buyer's EM is deposited, buyer's breach related to the failed deposit, is cured. There is nothing that needs to be done with the PSA. Although buyer was in breach of the PSA during the time that buyer's EM was due but not paid, buyer's breach has now been cured and the parties should be proceeding to closing. Seller has no ongoing right to terminate the PSA and thus, no basis for consenting (or withholding consent) to buyer's late deposit. For that reason, no addendum related to buyer's late deposit is necessary or appropriate.

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  • Thriving In The New Abnormal

    Woman outdoors holds out face mask

    BROKERAGE

    Three New Skills to Help Your Business Post-Pandemic.

    When will things return to normal after the pandemic? This often-asked question assumes our experience was some sort of cyclical event such as daylight automatically following darkness. But what if there were structural changes caused by the pandemic? What if these changes are the new abnormal? Here are three new skills required to thrive:

    1. Virtual viewing. Due to the lockdowns, buyers became very comfortable viewing properties online—even making offers without physically seeing the property. Here are the facts according to the National Association of Realtors.
      • 63% of buyers last year made offers without ever physically viewing the home.
      • Buyers viewed an average of nine homes before writing a contract.
        • Five of these were virtual viewings.
        • Four of them were physical viewings.
        • How a home shows virtually often determines if it “makes the finals” and is viewed physically.

      Strategies in the new abnormal:
      • When working with buyers, have the knowledge and the tech skills to serve them virtually.
      • When working with sellers, make sure your listings “shine” online.

    2. Bring your “A Game.” Due to virtual viewing and contracts, listings need to shine online. Homes that received the most views and contracts were staged and had professional photography, video and virtual floor plans available with the listing. These homes received more views, more contracts, sold faster and had fewer cancellations.
      In one study, homes where real estate professionals brought their A Game were viewed online for 90 seconds on average, whereas homes that did not have staging, professional photography, video, and floor plans were viewed for only four seconds.
      Your next listing is embedded in your current listing. Because of virtual viewing, future sellers are now more often picking their listing associate based on how the associate’s listings show up online. Who is bringing their A Game? Sellers want to list with those Realtors.

    3. The three-step listing launch. The obsession with “speed to market” is a trap. Putting a home on the market before it is properly prepared (staged) and the marketing materials (A Game) are ready results in a lower sales price and hurts the seller. The best associates in our industry follow the three-step listing launch.
      • Step 1: Package. Package the house well (staging) and prepare your marketing materials (professional photography, video, floor plans, etc.). Take the time to get the home as move-in ready as possible.
      • Step 2: Price. Develop your pricing strategy. This is based on the condition of the home, as well as current market conditions.
      • Step 3: Promote. Launch your marketing program — MLS, online, open houses, social media, outreach to potential buyers, neighbors and Realtors, etc.

    Follow your “marketing syntax.” Syntax is the order and sequence of words. For example, “The dog bit Johnny,” and, “Johnny bit the dog” are the same words. But when you change their order, the meaning changes—and therefore so do the results. The same is true with your marketing syntax. Follow the “package, price, promote” order, and you will get the results you are looking for. Unfortunately, some associates do the right things but do them in the wrong order. The most common mistake is promoting (Step 3) before they have packaged (Step 1).

    Develop your three new skills and you will thrive in the new abnormal!

    Larry Kendall is one of the founding partners of The Group, Inc., a real estate company that is owned equally by its sales associates and staff. He is also the author of “Ninja Selling.”


    This article originally appeared in the May 2021 issue of the REAL Trends Newsletter. It is reprinted with permission of HWMedia. Copyright © 2021. To read the rest of this issue & more, please visit our Real Trends page online.

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