January Newsletter

Broker Newsletter
January 15, 2008

In This Issue
· Dual Agency
· Waiving the SPDS
· Continuing Education
· Broker Blog
· FHA Loan Changes
· Maximum Allowable Contributions
· EA vs. ER
· Getting Short Sales Approved
Revelation Links
Training Calendar
Current RE Issues
Homebuilders In Trouble
Several Valley New Home Subdivisions are Stalled – see list with status
Updated Buyer Advisory
Renters’ have a right to SPDS. Also, Buyer Advisory now available in mobile format for use on your phone.
Broker Blog
Read Our Online Broker Blog
Continuing Education Requirements
Enter your CE hours as you take them on the ADRE website
Contact Us
480.722.9800 Office
480.802.1599 Broker Hotline
http://www.mywestusa.com
brokerreview@westusa.com

Dual Agency: When to use and when to avoid
Dual agency is defined as a transaction in which one broker represents both clients. Dual representation can be even more complex when both parties are represented by one licensee. It can even be advantageous in some ways but it is not without its inherent risk of conflicts.
The ADRE Commissioner’s Rules state that “A licensee shall not … represent both parties to a transaction without prior written consent of both parties.” ADRE can sanction a licensee that has “acted for more than one party in a transaction without the knowledge or consent of all parties to the transaction.”
· If you have a listing, either for sale or for lease, and you find a buyer or tenant that is not working with an agent, you do not need to offer representation to that customer. You can write the contracts and collect the full commissions. The discussion you need to have with the customer before you show them your clients’ home is as follows: Pull out the Agency Election form, explain it to them, and let them know that you work for the sellers, checking boxes 43 and 44 and have them acknowledge that they are the buyers on line 47 before they sign.
· Remember that the time to discuss agency with a buyer is before you show the buyer any homes. Likewise, discuss agency situations with your sellers before you bring any buyers through the home.
· When working with short sales, it is important to know that when the contract goes through the bank approval process, it is very possible that they will not pay more than 4% total commission when one agent represents both parties.

Waiving the SPDS?
In section 4a of the purchase contract, lines 131 through 133, verbiage clearly states that the seller shall deliver a completed Seller Property Disclosure Statement (SPDS) to the buyer within 5 days of contract acceptance.
In today’s market with vacant properties and bank owned REO properties, we have become comfortable with accepting no SPDS in a transaction.
If your seller initially refuses to complete the SPDS on the basis that they have never occupied the property, or maybe they’ve never even seen the property, be persistent. All owners should be able to answer the questions in the “Ownership and Property” sections which refer to address, legal owner, retirement community, vacancy, whether it is rented, etc. Even the questions in the rest of the SPDS are generally worded as “are you aware?” which the seller can answer.
If you are working with a buyer and the seller will not provide a SPDS, provide your buyer with a blank copy of the SPDS before you have them waive the SPDS. Also have them sign and initial the bland SPDS for your records.

Continuing Education Requirements
Although license renewals are now valid for four years, don’t forget that Continuing Education Periods are still 2 years. Therefore, all agents are required to take 24 continuing education hours every 24 months. Remember to enter your hours online at the ADRE website as you earn them.

Visit Our Broker Blog for Answers
Don’t forget our online Broker Bulletin for West USA Revelation agents. We will post information on specific real estate and contract topics to assist you with your transactions. If you look today, you will find information on topics ranging from Using Lease Option Contracts to Mortgage Fraud as well as Short Sales. Additionally, I post the monthly Broker Newsletters there for you to refer back to.

FHA Loan Updates
Guidelines for FHA mortgages changed at the beginning of the year. The maximum loan amount is now $271,000, and the minimum down payment was raised to 3.5% of purchase price.
Remember to get your FHA buyers to sign the “For Your Protection Get a Home Inspection” form (A140 in A-Forms).
Don’t forget that FHA mortgages allow your lender to build a credit file for your clients with little to no credit history. We just saw a buyer get approved based on his rent, cell phone, and Tivo bill!

Maximum Allowable Contributions
When you are involved in a transaction where the seller is contributing to the buyer’s closing costs, make sure you know what the maximum allowable contribution is for the loan program that they buyer and lender intend to use. Compensation in lieu of repairs will also be counted towards the maximum allowable contribution and may become a deal killer. Look for alternatives like getting the seller to actually pay for the repairs directly through escrow at close of escrow.

Exclusive Agency vs. Exclusive Right to Sell
Lately we’ve had a few agents using the Exclusive Agency Listing Contract instead of the Exclusive Right to Sell contract. For clarification, the Exclusive Agency offers you only the right to be the “exclusive agent” as it states. Meaning that no other realtor will be enlisted to advertise the property and find a buyer. However, it offers you no compensation or rights if the sellers find their own. Always use the Exclusive Right contract; it provides you with the exclusive right to sell the property with no exceptions. If you and the seller agree upon a particular situation in which your compensation would be reduced or excluded, write it on page 3 of the listing contract.
Additionally, as our in-house short-sale negotiator has pointed out, for lender approval, it is critical that you use the ER paperwork in order to get the transaction approved and get paid.

Getting Short Sales Approved
Whether you are representing the buyer or the seller, there are a few key points to getting your short sales transactions approved:
n Make sure the seller’s personal package including their financial statements and hardship letter is prepared and ready to be submitted.
n Make sure the house is priced appropriately. Realize that before approving short sales, the lenders attain Broker Price Opinions (BPO’s) and use comparable sales to justify their losses. Do not price your short sale listings significantly below the comparables in a desperate attempt to attain a contract that will never get accepted anyway. Don’t let your buyers fall victim to ridiculously priced listings which tie your buyers up and impact their reality of market prices. Discuss the comps!