Keeping Your Real Estate Transaction Safe

Homestead Title will be taking extraordinary measures to protect the health and safety of our customers, clients, and team.

Remote Staff: More than 85% of our team are working remotely from home.  We have had remote capabilities for over 15 years and you may not notice a difference.  We still ask for patience and understanding as it is hard to work with co-workers who are toddlers, pets, and family.

Drive-Up Signings: All in-person transactions will be “Drive Up Closings” at our WEST office until Wisconsin’s Emergency “Safer at Home” Order expires (currently set for April 24). Here’s what you should know:

• In-Person Signing at 555 Zor Shrine (WEST): All closings will take place at our West office as “drive up closings.”
• Strict Lock-down of our Office: We are not admitting anyone into our office other than essential staff.
• Alert Us When You Arrive: Call our main number and we will have our closing officer come right out to your car with documents to sign.
• Only Signers at Closing: We urge only signers come to Drive-Up Closings. Others can come, but they will not be allowed in our building and will be asked to stay in their cars in the parking lot.

Digital Closings: We can do fully digital, remote closings for Sellers or Cash Buyers. The mortgage industry is moving fast to add financed buyers, but we are not yet aware of any Banks or Credit Unions that can do a fully remote closing.

Our mission statement is to make the closing process easier, smoother, and less stressful for our buyers and sellers. For the next few weeks or months, we need to add: “… and safer.”

 

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2015 Real Estate Market

 2015 Early Market Update

This is the time of year for forecasts and market predictions.  What will 2015 bring?  Will the market improve?  What kind of year can we expect?

We are hearing cautious optimism of a solid to strong year in real estate.  Our very early numbers are consistent with this prediction, with Sales orders from December 1^st through January 15^th up 28% over the same time last year!

Interest rates continue to influence the market, again nearing historic lows.  Mortgages traditionally follow the movement of the bond market. On Friday, the 10-year Bond Yield dipped to 1.76%.  To put this in perspective, Bond rates have only dipped lower for a short time in 2012, when Mortgage rates hit their all time low (just under 3.5%).

Indeed, local Mortgage Rates dropped from 3.8% at the beginning of the year to today’s 3.6%.  It is conceivable they could go lower. This is good news for home affordability (and a good thing for buyers to know when considering houses), but signals weakness in the economy and markets.  Despite the weak stock market, NAR, Freddie Mac, and the Mortgage Banker’s Association all predict robust growth in housing sales in 2015 and an even better 2016!

Thank you to my friend Joe Long at Waterstone Mortgage for this graphic and information. It is significant and unusual that all three predictions match so closely.  Interest rates will likely rise by year end, and this could dampen the market.  Nevertheless, interest rates may not be as important as consumer confidence, especially confidence about Jobs.  If people feel secure in their jobs and confident in their ability keep employed, they buy houses. The national jobs numbers have been strong, with 2014 having the best rate of job creation since 1999.

All of this should translate into a solid 2015. And, so far, our numbers are consistent with this hopeful prediction.  Happy New Year and we hope you have a healthy and prosperous 2015!

Homestead Title Company

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Mortgage Rates And The Market

Up, Up, and Away

Rates on the Rise, But Sales Remain HOT

Mortgage rates spiked over the last two weeks. In fact, since the end of April, the average rate on a 30-year fixed rate mortgage increased by nearly 25%.

Pressure From The Fed Kept Rates Low

The Fed had helped keep mortgage rates low through a bond purchase program called Quantitative Easing (QE for short). But, recent announcements by Fed Chairman Ben Bernanke signaling a slow down or end to QE spooked the market.

Mortgage rates jumped and have continued to rise since those announcements.

Real Estate Market Continues Hot Streak

Despite rising rates, the real estate market remains hot. Realtors continue to be overwhelmed with activity and many sellers are seeing multiple offers near or at asking price.  Homestead’s numbers are no different. After an incredible year of growth in 2012, we have seen a 30% year over year increase in closings. And, despite the jump in interest rates from April to June, our new orders have not slowed.

Homestead’s growth is both a function of a strong market and of our strong commitment and passion to making the closing process easier for our customers and clients. Our values of caring, empathy, flexibility, loyalty and a hands-on, education based approach have cemented a loyal following of Realtors and do-it-yourself sellers.

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Mortgage Rates, QE, and Wonky Talk

Mortgage Rates Shot Up This Week

Mortgage rates shot up this week and many are wondering why and what’s next. Homestead Title is going wonky today and dabbling in the guessing game of mortgage rates.

Bonds and Mortgage Rates

Mortgage Rates tend to follow long term bonds and, specifically, the 10 year Treasury Bond market. As bond yields increase, mortgage rates go up. And, sure enough, bond yields rose this week. But, most economists believe there is a much stronger force at play that has kept interest rates low. It is called the Fed and its program of Quantitative Easing.

Quantitative Easing Explained

The Federal Reserve has ways of influencing the economy. Its primary tool is to lower the interest rate charged to banks for inter-bank lending. By lowering the cost of money they hope Banks will borrow more, lend more freely, and spur economic growth.

Over the past 4 years, the Fed lowered rates to nearly zero, yet banks still weren’t lending enough and the economy wasn’t growing fast enough. In fact, banks were borrowing this cheap money and using it to buy safe bonds that paid a small return. Unable to lower the cost of money, the Fed sought to influence the quantity of money (hence the term Quantitative Easing). They pumped cash into the economy by buying up the same bonds and safe investments that banks were buying. This lowered the yields on bonds and indirectly lowered mortgage rates.

And sure enough, people borrowed. This spring has seen a surge in the real estate market and low interest rates have surely played a role.

Why Did Rates Rise Suddenly This Week?

When the Fed talks, the markets listen. On May 22, Federal Reserve Chairman Ben Bernanke suggested that the Fed might slow down or stop Quantitative Easing sooner than expected. The markets and banks reacted strongly (some would say they overreacted) and mortgage rates spiked.

What Will Happen Next

We’re a Title Company, not fortune tellers. If we could accurately predict the economy, we’d be on a beach in the Caribbean. But we can report what other’s are saying. Many economists think this is still a volatile market and rates will drop back down. It is hard to imagine rates dropping back to the historic lows of the last year, but we never imagined that was possible in the first place. Rates are still well below 4%, which is a screaming deal by comparison to rates over the last 50 years.

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Title Commitments 101

Reading Title Commitments For Better Closings

Q: What is the most common mistake Realtors (and FSBO parties) make in reviewing a title insurance commitment?

A: They don’t review or read it at all!

Most Realtors are trained not to act as attorney’s or give any legal advice. The Title Commitment is a legal document and advising a client on it could constitute legal advice. In addition, many Realtors and FSBO parties simply don’t know what to look for and, therefore, don’t read the document.

Title Commitments Provide Critical Information

All Realtors should be reviewing the title commitment for certain, important information. A title commitment has three sections or schedules: Schedule A, Schedule B-I Requirements, and Schedule B-II Exceptions. At a minimum, Realtors should be reviewing the following:

Schedule A

The first part of the title commitment provides the names of the proposed insured. This should be your buyers. If it is not, call the title company right away – they might be missing an Amendment or their might be an error in your paperwork.

The Policy Amount should match your purchase price.

The name of the seller should be listed in paragraph 3 as the “fee simple” owner. If the name is different, there may be a title issue such as a deceased individual or spouse that still owns the property, a trust or LLC that has an interest in the property, or some other issue that requires attention.

The land referred to in the policy should match the land being sold. It will be a legal description, not a postal address. Review to make sure it looks right, especially if the property is a Condominium or includes multiple lots.

Schedule B-I Requirements

This portion of the title commitment provides a list of requirements that must be met in order to close. The requirements will call out any unusual issues that must be dealt with at closing. For instance, if the seller is deceased, the Requirements might require a valid Personal Representative to be appointed to sign on behalf of the estate.

In addition, most title companies will include any loan payoffs, taxes, or other liens that must be paid at closing. Some title companies, however, will show those liens in Schedule B-II.

Schedule B-II Exceptions

This section shows all of the title “issues” that are excepted from coverage – in other words, the title company will not insure for these issues. They are usually things like covenants, restrictions and easements. But, at some title companies, seller mortgages and liens will appear in this section. Therefore, it is important to review.

Reviewing is not Advising

Although Realtors should review the title commitment, they should not advise their clients about the legal meaning and effect of this document. That would constitute legal advice and is prohibited under Wisconsin Law. Nevertheless, if the Realtor spots a problem (the wrong seller or buyer or too many Mortgages), that should be brought to the client’s attention with the advice to seek legal counsel.

The title commitment is a critical document that provides all parties and their agents with notice of the current state of title. While Realtors should not make a “legal” review of this document, they should make a thorough review to avoid any closing problems.

 

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RESPA DANGERS: Realtor Incentives May Violate RESPA

“Refer A Friend” Program Likely Violates Federal Law

A Realtor recently asked me about an interesting incentive program. In hopes of increasing business, the agent would like to consider a “refer-a-friend” program, providing raffle prizes to former clients who refer listings or buyers to the Licensee. She suspected that this might not be legal. Her legal intuition is correct. A “refer a friend” program with raffle tickets and prizes likely violates RESPA Section 8 and Wisconsin State licensing law. Incentives-for-Referral programs should probably be avoided.

RESPA Prohibits Giving Value in Exchange for Referrals

A referral program that provides anything of value to the referring party likely violates State and Federal law.  The Real Estate Settlement Procedures Act (RESPA), Section 8 prohibits the giving of “any thing of value” in exchange for a referral of real estate services or the splitting of fees where one party performs no services (a referral is not a service). This prohibition includes the giving of raffle tickets, prizes, or other non-monetary consideration.

The Department of Housing and Urban Development (HUD) has addressed similar programs in the past.  In February 2004, HUD entered into a settlement agreement with Integrity Home Funding LLC over a “Refer a Friend” program.  Under this program, a mortgage broker provided raffle tickets and the opportunity to win prizes to any former client that referred business to the broker.  HUD determined that the “Refer a Friend Program” violated Section 8 of RESPA because it provided a thing of value for referring business.  The broker entered a settlement agreement with HUD, agreeing to pay $1,500 in penalties and an additional $20,000 if he was found to have later violated the agreement. 

Wisconsin Law Limits Referral Fees to Licensed Agents

In addition, Wisconsin State law prohibits the payment of any fee, commission, or referral fee to a non-licensed individual:

Wisconsin Statute 452.19 Fee-splitting. No licensed broker may pay a fee or a commission . . . for a referral or as a finder’s fee to any person who is not licensed . . . .

This prohibition would also likely apply to providing prizes in exchange for referrals.

Moral of the Story – Don’t offer prizes for referrals:

Refer a Friend Programs or raffles tickets in exchange for referrals are almost certainly prohibited under state and Federal law.

 

DISCLAIMER: This post should not be used for, and is not intended as, legal advice. Please consult an attorney regarding the specific facts and circumstances of your situation and never rely upon any blog as legal advice!

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Madison Plant Sales – 2013

Madison Plant Sales

Spring is finally here and its time to get planting! If you are selling a home, a beautiful garden can add curb appeal. If you’re staying put, a garden can add to your home’s value, the sustainability of your property, and your happiness.

Homestead Title takes pride in being green and sustainable. Every year we provide a list of local garden sales in the Madison area. Enjoy!

 

Date	Location	Event
May 4, 9am-1pm	Alliant Energy Center	Compost Bin Sale: bins are $45 each
May 5, 12pm-2pm	Olbrich Gardens	Dahlia Tuber Sale: sponsored by the Badger State Dahlia Society
May 10-11, 9am-3pm	Olbrich Gardens	Plant Sale with the Pros: Olbrich Gardens annual fundraiser.
May 10 -11, 8am-4pm	West Side Garden Club: 3518 Nakoma Rd.	West Side Garden Club annual plant sale.
May 10-12, 8am-3pm	5586 Cheryl Dr., Fitchburg	Fitchburg Plant Sale
May 11, 9am-2pm	UW Arboretum Visitor Center	Native Plant Sale
May 11, 9am-1pm	1008 Shorewood Blvd, Shorewood Hills, WI	Shorewood Hills Garden Club Plant and Mulch Sale
May 11, 9am-2pm	Waterman Park, downtown Oregon	Oregon Garden Club Plant Sale
May 11, 8:30am-1pm	7437 Terrace Ave., Middleton	Sunset Garden Club Plant Sale
May 11, 8:30am-11am	Mt. Horeb Fire Station, 120 S. First St., Mt. Horeb	Mound Vue Garden Club Plant Sale
May 16-18, 9am-5pm	Habitat ReStore, 208 Cottage Grove Rd.	Habitat for Humanity of Dane County Plant Sale
May 18, 9am-12pm	West Madison Agricultural Research Station, 8502 Mineral Point Rd.	Wisconsin Hardy Perennial Society plant sale.
May 18, 9am-11am	Spring Harbor School	Indian Hills Garden Club plant sale
May 19, 12pm-3pm	1 Fen Oak Ct., Madison (east side UW-Extension)	Master Gardener Plan Sale, Dane County UW-Extension Office
June 2, 10am-2pm	Olbrich Gardens	Wisconsin Hosta Society, hosta sale

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Photo Tips For Real Estate

Photo Tips For Real Estate

Homestead Title Company provides a unique touch at closings table, showing slide-shows of the homes being sold. We see some beautiful photos. A quick survey of the MLS and FSBO sites, however, will show some dismal listing photos.

As an avid, amateur photographer, I am sometimes dismayed at the quality listing photos. Realtors and FSBO sellers often post some terrible photos and do themselves and their hopes of selling a disservice. The following tips are compiled from great Realtors, some great photographers we’ve worked with, and materials listed below.

1. Understand the photo’s purpose: The purpose of a real estate photo is to sell real estate. Buyer’s viewing the picture should be drawn in and want to see more. Focus on parts of the property that will sell and do not photograph parts of the property that are less desirable.
   
2. Simplify! Simplify your photos by removing everything from the picture that distracts from your purpose of making the home look attractive. Particularly avoid including chair backs, door frames, pets, people, toilets, and clutter in photos. The photographer should keep an eye out for things that can be done to improve the photo. Sweep floors and patios and remove clutter. If you use a stager or professional cleaner, try to take photos immediately after they complete their work.
   
3. Use a wide-angle lens to shoot interiors: If possible, use at least a 24mm equivalent lens – anything higher than 28mm is not wide enough. Few off-the-shelf or point-and-shoot digital cameras come with lenses that are wide enough to truly, effectively shoot interiors. Consider hiring a professional or investing in a digital SLR camera with a good wide-angle lens
   
4. Shoot Bright Interiors: Bright interiors are more attractive to buyers than dark moody ones. Use a flash, interior lights, and window lighting to brighten the photos.
5. Don’t let bright windows distract:
   Bright is better.  But, windows can be hundreds of times brighter than other parts of interiors, causing them to appear completely white or “burned-out.”  Avoid this by using a flash, shooting at twilight when the light level outside is near the inside light level or using photo-editing techniques to darken the windows.
   
6. More is better. Home buyers want to see more than just the front of the house. Buyers also want to get a look at the living room, kitchen, dining room, family room, master bedroom/bathroom and the backyard. For condos, consider shots of attractive common elements.
   
7. Change With The Weather. Out-dated photos send the message that this is an out-dated listing. Don’t include snow pictures in spring and summer, or summer pictures in winter. Also, be aware of the mood of the scene. A gray, cloudy day offers great lighting conditions, but may convey gloom and despair in outdoor photos. New fallen snow can be beautiful (and difficult to photograph) but will obviously convey a chilly feeling. Include warm interior photos along side such pictures (fireplace or a bright room with warm colors).
   
8. Go Pro. Professionals are surprisingly affordable and should provide much higher quality, sharper, properly lit images. They will often also provide other services, including virtual tours and web-ready photos).
   
9. Invest In Good Equipment:
   If you insist on doing it yourself, invest in good equipment. Professionals use SLR cameras (single lens reflex camera with interchangeable lenses), a tripod, and an external flash unit. This equipment is expensive, but worth the investment. Consider that a Cannon or Nikon DSLR with a wide angle lens, a tripod and flash will cost under $1,000. Paying a professional for 10 listings will likely cost more. In other words, you could pay for your investment in less than a year.
   
   
10. Consider Leveraging Your Talents:
    If you have good photography equipment, a little talent, and time to prospect, offer your services to FSBO Sellers. Take a look at FSBOMADISON.COM for an example of hundreds if not thousands of horrible real estate photos. Offering free photo services allows you to spend a lot of time with prospects while selling your services and building incredible good will.
    

     

Good Photography Resources:

 

The Digital Photography Book, By Scott Kelby

Excellent, easy to read book with outstanding and understandable advice for amateurs.

The Ditigal SLR Book, by Jon Canfield

Good book with good information for all levels of experience

http://www.bhphotovideo.com

Best, low-cost outlet for all things photography

http://photographyforrealestate.net

Photography resource for Realtors and the source for much of this publications

http://www.all-things-photography.com

Resource for professional photographers, but may have some helpful links and ideas

http://www.squidoo.com 

Good Educational content posted by blogger/readers

The Camera Company

Excellent, local (Madison, WI) source of equipment and expertise.

 

Finally, if you really want to see some AWFUL pictures, check out:
https://www.facebook.com/BadMLSPhotos

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Another Great Real Estate Year?

Will 2013 Outpace 2012 for Another Great Year in Real Estate?

It was a great year for real estate. Yes, 2012 was “great” for real estate! We finally saw a marked improvement in sales both in Dane County and the State. Dane County sales were up by over 22%. Homestead Title outpaced the market with an increase of 40% in 2012! In addition, sales related to foreclosures showed a steady decline for the entire year. This is all great news.

In addition, there has been good economic news with lower unemployment and a surge in the stock market. As so often happens, this has corresponded with higher interest rates. Rates on 30 year mortgages ticked up last week. If you haven’t refinanced, NOW may be the time or you might just miss this historic window.

So how does 2013 look? It is way too early to tell, but the early returns hint at another strong year. Anecdotally, things look great: Facebook and twitter are lighting up with Realtors and Lenders celebrating an incredible start to 2013. Reliable statistics aren’t in, but Homestead Title’s early numbers suggest that 2013 is off to an even better start than 2012. Homestead Title’s sales orders are up over 40% from this time last year. In fact, this has been the best January we’ve ever had.

Here’s to a GREAT 2013 in real estate!

 

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CYA Letters for Realtors

CYA Letters and Better Communication

Real Estate Agents would be well served to learn a lawyer’s trick of the trade – the CYA letter. Short for “Cover Your A$&,” these letters serve an important function both for limiting liability and improving communication. Rather than viewing these as obnoxious, overly legal annoyances, Realtors should view CYA letters as tools to better serve their clients.

Scenario

Buyer:        I like the work the seller did in the basement. But I worry about whether it’s up to code. Can you find out?

Realtor:    I don’t know. You would need to ask an inspector and maybe an attorney. We can ask the Seller’s Realtor about permits and whether all the work meets code, but the ultimate determination is a legal question and I’m not an attorney.

This might be a good, safe answer that does not delve into legal advice. But, without more, there is still a risk of being sued or having a licensing or ethics complaint filed against you. A buyer who later has costly problems because of code violations may lash out at anyone and everyone, including the Realtor. The Buyer might misremember the conversation or even fabricate what was said. All of this can be avoided with a simple, follow up letter – a CYA letter.

CYA Letters are Good Customer Service

Anytime a Realtor is asked for legal advice, they should both decline and follow up with an email or letter. This creates a written record that the Realtor did their job and complied with the law (Wisconsin law prohibits Realtors from offering any legal advice – REEB 24.06). More importantly, it is great customer service and provides a clear communication to the client. A good, CYA letter might read as follows:

I want to follow up on our conversation about the basement. As I said, I don’t know whether there might be code violations. I did ask the Seller’s Realtor and we’ll see what she says. I’m not an attorney and can’t offer anything on this kind of question. An inspector or attorney could help you answer this question and I have some great referrals, if you need them. Thanks!

Following up in writing shows a level of professionalism and assures a clarity of communication. And it covers your tail.

By Attorney Peter Zarov. Mr. Zarov is a Wisconsin attorney who represents many Realtors and Brokers.

This post is not intended as legal advice. Realtors, Brokers and other individuals should consult an attorney regarding their specific issues and questions.

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