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Monday, May 10, 2004

Lighthouse Point, Florida Beacon For Home Sales

by Blanche Evans

Like other areas of Florida, Lighthouse Point is in a strong seller's market, say local Realtors.

"Florida real estate is booming! The average single family home is appreciating approximately 18 percent per year," says Realtor Maria Galligan. "Broward County is almost totally built out with almost no more vacant land for builders to develop. The trend is moving east and old homes are being either torn down or majorly renovated. Developers are very active in high-rise condos and townhouses. The feeling is that this trend is going to continue for quite some time and the costs will keep rising. Investors are buying pre-construction and making a tidy profit at time of completion when they re-sell."

"The real estate market in Lighthouse Point and the surrounding area has been "red hot" for the past six months," say Realtors Marilyn Wechsler and Allen Rosenthal. "The result is a decrease in available inventory. Whether you are interested in buying or selling, now may be the best time to call for assistance with your plans. It's anybody's guess how long the cost of borrowing will remain affordable or low."

Suggests Realtor Karen Dove, "The intercostal and Hillsboro Mile and the inlet are to the east, Deerfield Beach and The Cove are to the north, and Pompano Beach and Fort Lauderdale to the south. Wonderful waterways wind through this boating community, many new high-end homes offer easy access to the sea for large deepwater yachts; upscale dry lot homes enjoy the lifestyle and breezes off the ocean.

"Safe and clean, and minutes to all the amenities you could want or need, Lighthouse Point is a most unique upscale community," says Dove. "There's condos sitting on the intercostal and the Hillsboro inlet where the Lighthouse points the to the sea. The nearby communities of Las Olas, Fort Lauderdale, Boca Raton and Delray make for easy access to fine dining, the very best of shopping and the arts. The ease of ocean cruising from this town brings new boaters and residents here in droves.

Dove advises, "For the serious boater, there are a wide choice of priced properties, the land-lubber dry lot homes run considerably less but still afford you this area's lifestyle. Florida draws folks from all over the world, the international mix of the cultures can be found in the diversified dining and architecture found from years past and now reflected in homes and communities being built. There are abundant choices of both new and custom construction in LHPT. Feel free to come, play and live in one of the most desirable areas in South Florida."

Published: May 10, 2004

Blanche Evans is the publisher of Agent News and the associate editor of Realty Times, the Internet's largest independent real estate news service. She is the author of two best-selling real estate books: The Hottest e-Careers In Real Estate, Real Estate Education Company, an Internet marketing primer for real estate professionals, and homesurfing.net: The Insider's Guide To Buying And Selling Your Home Using The Internet, Dearborn, a consumer homebuying and selling guide. In 2000, she was recognized by the editors of REALTOR(r) Magazines as one of the "25 Most Influential People In Real Estate," and in 2003 when the "Most Influential" list was updated, she was recognized as one of nine "Notables." She is also a frequent contributor to "Your Money" on CNN fn.

Copyright © 2004 Realty Times. All Rights Reserved.

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When Is A Commission Earned?

by Benny L. Kass

Question: I have a problem, which may turn into a lawsuit. A month ago, I listed my home for sale with a real estate broker. He agreed to charge four percent of the selling price if he was the only broker involved, or six percent if he had to cooperate with another company or agent. A couple of weeks after the listing, the broker presented me with a full-price offer, but the buyer wanted $8,000 in "seller's costs." I counter-offered, and the final contract requires that I give a $5,000 credit to the purchaser. Settlement is scheduled for mid-May. The broker has advised me that all is going well, but reminded me that I will owe a real estate commission of four percent based on the full selling price.

I do not think this is fair, since I will not get the full selling price. I believe that the commission should be based on the selling price minus the $5,000 which I will be giving to the purchasers at settlement. Am I correct? Furthermore, what happens if the buyers do not go to settlement? Am I still liable for the commission?

Answer: The simple answers are "no, you are not correct" and "yes, you will probably still be liable to pay the commission."

Let's step back a bit and review some basics. When a homeowner decides to sell his/her house, there are several options. The most common approaches are to try to sell it by yourself, without using a real estate agent or a broker, or to engage the services of a real estate company.

If you opt for the latter approach, you should make sure that you are satisfied with the person who will be your specific agent. The fact that you may have selected a large brokerage firm does not mean that the entire company will be working for you. Inquire of that person as to his/her experience, and knowledge about the area where your house is located.

Once you have selected a real estate agent to help you sell your house, you must sign a "listing agreement" with that person or company. There are different kinds of listing contracts:

Open listing -- this means that you agree to pay a real estate commission only to the broker or agent who finds a buyer for you. If you personally sell your house by yourself -- or through some other agent -- the holder of the open listing is not entitled to any commission.

Exclusive listing -- this means that you have given the exclusive right to an agent or broker to sell your house. Regardless of who sells the property, the person holding the exclusive listing is entitled to a commission.
While brokers periodically do enter into open listings, the exclusive listing is most commonly used. Brokers and agents do not want to spend a lot of time -- and money -- marketing your house, only to learn that no commission will be earned because you or someone else has sold it.

A signed listing contract is a binding, legal document. You should read it carefully before it is signed. Most standard form listing agreements provide that the commission is earned when the broker presents a ready, willing and able purchaser to the seller and a real estate contract is entered into. Accordingly, whether or not the buyer actually goes to settlement, the real estate agent is entitled to his/her commission.

As a practical matter, it is my experience that many agents will waive their right to a commission should settlement not take place. However, this is not universal. Accordingly, it is recommended that you add the following language into the basic listing agreement:

The commission will not be earned until and unless settlement actually takes place.

Without this language, since the agent found you a person who signed a real estate contract with you, that agent could legally claim a commission, even though you have not sold your house.

Turning to your other question about the amount of the commission you will owe, the standard listing agreement obligates the seller to pay the commission on the full selling price. This is not mandatory, however. You have every right to negotiate different terms -- and different commission arrangements -- with the broker, but only if you do so before you sign the listing contract.

Make sure that all relevant terms are included in the listing agreement. These terms include such things as price, the amount of any points you agree to pay (if any), and any other seller concessions you are willing to make. If you are unwilling to pay a full commission on the entire selling price, this should be discussed in advance with the broker and made a part of the written listing agreement.

However, since you signed the listing agreement without making any changes, you are legally obligated to pay a commission on the full selling price -- regardless of the amount of seller concessions you have given your buyer.

While I appreciate your concerns, the amount in question is, after all, only $200 (4 percent of $5,000). Perhaps you should raise your concerns with the broker, who may be willing to reduce the commission by this amount – or at least split the difference with you. Good will is a very important element of any business, and they want your business -- or referrals from you -- in the future.

Published: May 10, 2004

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of Kass, Mitek & Kass, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.

Copyright © 2004 Realty Times. All Rights Reserved.

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When Is A Commission Earned?

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Buying? Consider Insurance Implications

by Michele Dawson

With the chaotic spring home-buying season in full gear, would-be buyers are getting pre-approved for mortgages, researching school districts, and looking at houses. But one thing that should be added to the to-do list is considering the insurance implications of buying a specific house.

Home sales so far this year have been strong, and experts expect a robust pace to continue this year.

Existing single-family home sales rose strongly in March to the second-highest level on record, according to the National Association of Realtors.

Existing-home sales increased 5.7 percent to a seasonally adjusted annual rate of 6.48 million units in March from an upwardly revised pace of 6.13 million units in February. March's sales activity was 12.7 percent above the 5.75-million unit level in March 2003; the record is 6.68 million in September 2003.

"Although interest rates are rising modestly, an improving job market is creating a favorable backdrop for home sales, but at a somewhat slower pace in the months ahead," said David Lereah, NAR's chief economist.

When consumers are house hunting, the Insurance Information Institute (III) recommends keeping insurance issues at the forefront of their buying decisions.

"In the frenzied excitement of buying a home, it is important that consumers ask a number of key questions about securing financial protection for their most valuable asset," said Jeanne M. Salvatore, vice president, consumer affairs at the III.

For example, if the house you're eyeing is located in a flood zone, you'll need a separate flood insurance policy, which you'll need to budget a few hundred extra dollars for.

The III says you should also get a copy of the house's claim loss history, which comes in the form of a CLUE report from ChoicePoint or an A-plus report from the Insurance Services Office.

"Getting a copy of a home's loss history provides powerful information to a potential buyer," said Salvatore. "These reports provide information on the number and types of homeowner insurance claims filed by the home's owner going back five years."

If the house had water claims, that would be a red flag -- problems that should be remedied before you buy the house. Conversely, you can also pick up reassurances about the house you're eyeing, Salvatore said. For example, if there was significant wind damage that required roof replacement, you'd be pleased to know you have a new roof.

The III says some of the factors that will influence your insurance include the house location, the type of construction, and its condition. You should also consider:

How old the house is. Older homes tend to have features -- plaster walls, ceiling moldings and wooden floors -- that are more expensive to replace and may ultimately raise the price of your insurance.

Plumbing, heating and electrical. The older the systems, the more likely fire or water damage will occur. If recent upgrades have been made, it will be easier to get insurance.

Quality and closeness of fire department. Your insurance premiums will typically be lower if you live near a fire department with a top rating that staffs firefighters full-time.

Disaster-resistance. If the house is built with products that stand up to disasters -- like hail-resistant roofs and windstorm shutters -- it could cost you less to insure.

Location. You always hear location is key in real estate. It's also important in determining your insurance premium. It could cost you more if you leave near the coast or a river or in a dense, wildfire area. If you live in an earthquake-prone area, it will mean getting a separate policy, as is the case with flooding.
Published: May 10, 2004

Copyright © 2004 Realty Times. All Rights Reserved.

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Suits By Credit File "Rescorers" Challenge Dominance Of Three Giant Private Bureaus

by Kenneth R. Harney

Home buyers, Realtors and mortgage brokers all have stakes in two major class action lawsuits challenging the dominance of the American credit system by three giant private corporations. The private companies are Experian Information Solutions, Equifax, Inc., and TransUnion, LLC.

The suits -- one filed in federal district court, the other in California Superior Court -- are significant because they seek to preserve the key roles of local, independent credit agencies in correcting erroneous data in consumers' national credit bureau files. Independent credit agencies developed and market "rapid rescoring" services for credit files -- corrections of consumer credit data in the national files and revised FICO scores within 48 to 72 hours. By contrast, consumers who attempt to get the national bureaus to correct their files often find the process takes weeks or months -- too long for most home purchase opportunities or mortgage applications.

The independent agencies charged the national bureaus with predatory pricing of credit report, and antitrust law violations designed to put them out of business. Experian and Equifax spokesmen declined comment on the suits. TransUnion did not respond to multiple requests for comment.

In the federal suit, filed in US District Court in Santa Ana, Calif., 23 independent credit agencies complained that the national bureaus have sought to "place a stranglehold on the consumer credit reporting market." The national bureaus' monopoly power is most evident in the home mortgage market, according to the suit, because they have complete control over the local credit agencies' ability to offer lender clients the mandatory "triple-merged" credit reports using data from all three bureaus.

The independents must buy credit file data from the national bureaus because there are no alternative sources. But the nationals increasingly are pricing their data in a "predatory" manner, according to the suits, charging the independents more on a wholesale basis for credit reports and FICO scores than the bureaus charge small mortgage bankers and brokers for the identical products on a retail basis. Yet those banks and brokers are the independent agencies' main customer base for mortgage credit reports and "rapid rescoring" services. If the independents are forced out of business, say the plaintiffs, home buyers will lose their most important resource for correcting bad data in the national bureaus' files.

Terry Clemans, executive director of the National Credit Reporting Association (NCRA), the trade group representing independents and itself a plaintiff in one suit, said his members are a "safety net that has been built into the home mortgage system to provide the lender and the homebuyer an independent professional with the ability to quickly verify the accuracy of the (national bureaus') data, to correct errors and fill in missing items, and to assure a complete and accurate credit report."

Without intermediaries totally independent of the three national bureaus, Clemans said, "thousands of mortgage applicants will either be denied loans, charged higher rates than their true credit risk, or greatly delayed" in the home buying process.

How bad is the raw information in the three national bureaus' files? A 2002 study of more than 500,000 randomly-selected credit files by the Consumer Federation of America and NCRA, found that:

78 percent of all files were missing at least one revolving credit account in good standing.

One third omitted a mortgage account that had never been paid late.

Two thirds were missing installment accounts that had never been paid late.

43 percent contained conflicting information on whether a credit account had, or had not, been paid on time.

Credit scores on the same consumer varied significantly from bureau to bureau -- often by enough to push home purchase applicants into higher cost loans than they deserved. The score variations were directly attributable to the conflicting or erroneous raw data in the files.
Overall, concluded the study, one in four consumers -- 22 percent or 40 million Americans -- are "at risk of misclassification into the sub-prime, higher priced lending market" because of bad data and omissions in their credit reports.

Published: May 10, 2004

Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation.

He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.

Copyright © 2004 Realty Times. All Rights Reserved.

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