Real Estate Transactions A-Z: Mastering the Transaction

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1 Real Estate Transactions A-Z: Mastering the Transaction Presented by your GMAR Affiliate Committee Greater Metropolitan Association of REALTORS

2 GMAR AFFILIATE COMMITTEE MOVING AND STORAGE Greater Metropolitan Association of REALTORS

3 MOVING AND STORAGE NAME OF PRODUCT/SERVICE Moving and Storage PURPOSE OF PRODUCT/SERVICE To assist the consumer with the packing, unpacking, storage and relocation from one property to another based on their individual needs and budgets To teach REALTOR how to refer moving company Relieve stress from client on how to prepare for the move: Packing Moving Temporary storage Timing

4 MOVING AND STORAGE TYPES OF MOVES AND SERVICES Local: 40 miles or less Intrastate: Over 40 miles in Michigan Interstate: Out of state moving Climate vs non-climate controlled storage Packing services and materials

5 MOVING AND STORAGE STATE LICENSING All moving companies in MI must be licensed with CVED Commercial Vehicle Enforcement Division which is monitored by the MI State Police CVED: 7150 Harris Dr. PO Box Lansing, MI (517)

6 MOVING AND STORAGE AVOIDING MISTAKES Interview the moving company Preparation: list expectations, what services you need, budget Get estimate and compare quotes Research references: MMA Michigan Movers Association (517) Greater Metropolitan Association of REALTORS

7 COSTS MOVING AND STORAGE Local: Quoted hourly with service/travel charge Intra: MI tariff weight and mileage Inter: Weight zip code to zip code Typical Base Cost: 2 hour minimum Local $400

8 MOVING AND STORAGE FINAL REMINDERS Understand level of liability Estimate in writing Ask Questions Know the company moving your client

9 GMAR AFFILIATE COMMITTEE TITLE INSURANCE Greater Metropolitan Association of REALTORS

10 NAME OF PRODUCT Title Insurance Policy TITLE INSURANCE PURPOSE OF PRODUCT A policy of title insurance protects the insured against partial or total loss arising out of defects, liens and encumbrances in the title to real estate Based on theory of Loss Prevention Two types of policies: Owners Policy/Loan Policy

11 TITLE INSURANCE TITLE COMMITMENT Title Commitment is a promise to issue a title policy upon satisfaction of conditions and requirements Invoice Schedule A Schedule B- Requirements Schedule B-II- Exceptions Copies of Recorded Documents It is vital to review the commitment early to ensure that all unacceptable exceptions have been eliminated and all requirements met

12 TITLE INSURANCE TITLE COMMITMENT / Schedule A-Declaration Page Effective Date represents the date through which the register of deeds is certifying the records of recorded documents Proposed Insured Owner s Policy -The proposed insured is the purchaser on a sale and the sale price is the owners coverage Mortgage Policy The proposed insured is the lender or investor for either a purchase or a refinance and the loan amount is the mortgage coverage Legal Description This is the legal description of the property as disclosed by the County Real Estate Records.

13 TITLE INSURANCE TITLE COMMITMENT / Schedule B-Requirements Record deed to recited purchaser (wife of male grantors must sign) Record mortgage to be insured (spouse of mortgagor must sign) Evidence mortgagor is over 18 years old The spouse of any mortgagor must sign the mortgage Existing Recorded Mortgages, Future Advance Mortgages & Liens/discharged Taxes and Special Assessments/paid Note - Tax Information : The information contained here is gathered from local Municipal Authorities and is provided for informational purpose only as a courtesy. It is not guaranteed or insured by the title company.

14 Standard Exceptions Matters which would be disclosed by a survey Rights of parties in possession Mechanic s liens Interests or claims of parties not shown by public record Easements, liens or claims not shown by public record Unrecorded water, mineral, oil, gas and exploration rights Dower or homestead rights TITLE INSURANCE TITLE COMMITMENT / Schedule B-II-Exceptions Specific Exceptions All matters that affect this specific parcel of property Specific in nature, not general Easements Right of ways Building and use restrictions Condo Master Deed/Bylaws

15 TITLE INSURANCE BENEFITS OF PRODUCT/SERVICE Cost of policy small % of total investment TITLE INSURANCE Coverage against hidden dangers Expanded (post policy) coverage available

16 TITLE INSURANCE COST OF PRODUCT/SERVICE Title insurance premiums are regulated by the State of Michigan and vary based on the sales price and loan amount; check TITLE INSURANCE with your local title company for a detailed chart of premiums Title company closing/escrow fees are not regulated by the State of Michigan and vary by type of transaction and company handling the transaction Greater Metropolitan Association of REALTORS

17 TITLE INSURANCE LICENSE REQUIREMENTS All title companies must be licensed with the State of Michigan and approved by a national underwriter. Any title company employee that discusses title premiums and pricing must be a Licensed Title Producer

18 GMAR AFFILIATE COMMITTEE Mortgage Financing Greater Metropolitan Association of REALTORS

19 MORTGAGE FINANCING NAME OF PRODUCT/SERVICE Mortgage financing PURPOSE OF PRODUCT/SERVICE To provide consumers with the ability to purchase a home without having to liquidate all of their assets To provide the consumer with financing options that best suit their individual needs

20 MORTGAGE FINANCING DESCRIPTION OF PRODUCT/SERVICE Mortgage lenders require the following information from all consumers: One month of current pay stubs One month of current asset statements (with all pages) Copy of 2 years personal federal tax returns (with all supporting schedules and corresponding W2s) Copy of most recent Profit and Loss statement for selfemployed borrowers Brief letter of explanation for any delinquent credit, job gaps or large deposits

21 MORTGAGE FINANCING BENEFITS OF PRODUCT/SERVICE Home ownership would not exist without mortgage financing options US economy would have little to no growth without mortgage financing options Provides consumers with a reasonable monthly payment based on their individual income, assets and credit worthiness Provides consumers with several tax advantages

22 MORTGAGE FINANCING COST OF PRODUCT/SERVICE Costs will vary from one mortgage lender to another based on loan program, loan product and loan size Costs can be paid by the buyer, seller or mortgage lender

23 MORTGAGE FINANCING PROVIDER OF PRODUCT/SERVICE Mortgage lenders that are not owned or affiliated with a depository institution must be licensed, certified and approved by the NMLS (Nationwide Mortgage Licensing System) with annual continuing education required Mortgage lenders who are owned or affiliated with a depository institution must be registered in the State of Michigan but are not licensed or certified by the NMLS. No continuing education is required

24 GMAR AFFILIATE COMMITTEE HOME INSPECTIONS Greater Metropolitan Association of REALTORS

25 HOME INSPECTIONS NAME OF PRODUCT/SERVICE Home Inspections PURPOSE OF PRODUCT/SERVICE To inform and educate the consumer about all aspects of the home including the current and future issues and the proposed expenses

26 HOME INSPECTIONS DESCRIPTION OF PRODUCT/SERVICE Typical home inspection involves the following: Roof, attic, insulation and ventilation Plumbing and electrical services Heating and cooling systems Foundations, slabs and floors External walls, driveway and garage Internal walls and ceilings Bathrooms and fixtures Kitchen and built-in appliances

27 HOME INSPECTIONS DESCRIPTION OF PRODUCT/SERVICE (CONT) Additional possible components are as follows: Test for radon Test for lead based paint Test for mold Test for asbestos Test for carbon monoxide Inspect outdoor pools, hot tubs and spas

28 HOME INSPECTIONS BENEFITS OF PRODUCT/SERVICE Identifies potential safety hazards Identifies areas not working/functioning Identifies major concerns and provides deferred cost items Identifies items that may need monitoring Provides peace of mind

29 HOME INSPECTIONS COST OF PRODUCT/SERVICE Time required to complete a home inspection ranges from 2 hours to 4 hours Costs should average in the range from $250 to $450 depending on the size and amenities of the property

30 HOME INSPECTIONS PROVIDER OF PRODUCT/SERVICE There are no licensing requirements or certifications for a home inspector in the state of Michigan The minimum requirements in most licensed states require passing the national home inspector exam and get certified by a recognized training institute

31 GMAR AFFILIATE COMMITTEE APPRAISAL SERVICES Greater Metropolitan Association of REALTORS

32 APPRAISAL SERVICES NAME OF PRODUCT/SERVICE Appraisal services PURPOSE OF PRODUCT/SERVICE To provide the mortgage lender with an independent and objective opinion on the marketability and value of a property using national policies, procedures and guidelines

33 APPRAISAL SERVICES DESCRIPTION OF PRODUCT/SERVICE A multi-page report outlining all of the individual features of the subject property typically compared to recent comparable sales in the area Report used and analyzed by mortgage lenders to determine the value of the collateral for the transaction

34 APPRAISAL SERVICES BENEFITS OF PRODUCT/SERVICE Provides the mortgage lender and consumer with an objective opinion on the value of the collateral for the transaction Provides a detailed analysis of the unique features of the collateral used to set the maximum financing options for the consumer Provides the seller with a realistic sales price/market value when selling a property

35 APPRAISAL SERVICES COST OF PRODUCT/SERVICE Costs may vary from county to county and city to city based on the size, location and complexity of the work involved in reviewing the property Costs will range from $350 to $750 Costs will differ based on type of property (primary residence, second home or non-owner occupied/investment)

36 APPRAISAL SERVICES PROVIDER OF PRODUCT/SERVICE Each appraiser must be licensed and certified by the State of Michigan Continuing education is required every 2 years

37 GMAR AFFILIATE COMMITTEE HOME WARRANTIES Greater Metropolitan Association of REALTORS

38 HOME WARRANTIES NAME OF PRODUCT/SERVICE Home warranties PURPOSE OF PRODUCT/SERVICE To provide home buyers with peace of mind in case of unexpected repairs/problems after closing

39 HOME WARRANTIES DESCRIPTION OF PRODUCT/SERVICE Typical warranty protects the buyer from problems with household appliances or general systems that may malfunction Generally provided for a 1 year period after closing but can be renewed on an annual basis thereafter

40 HOME WARRANTIES BENEFIT OF PRODUCT/SERVICE Provides peace of mind to buyer Keeps a real estate transaction from falling apart Makes home more appealing from a listing perspective Reduces post closing risks for seller or listing agent Helps homes sell quicker and at a higher sales price

41 HOME WARRANTIES COST OF PRODUCT/SERVICE Costs range from $350 to $600 and are typically paid by the seller at closing Buyer typically pays a small deductible if services are required during length of warranty

42 HOME WARRANTIES PROVIDER OF PRODUCT/SERVICE There are no licensing or certifications required from the state of Michigan Many companies have a network of contractors to complete repairs while others allow the home owner to select their own contractor

43 GMAR AFFILIATE COMMITTEE Legal Services Greater Metropolitan Association of REALTORS

44 Legal Services NAME OF PRODUCT/SERVICE Attorney/Legal Services PURPOSE OF PRODUCT/SERVICE To provide buyer, seller and real estate professionals legal advice and services in all aspects of the transaction Risk management and problem avoidance

45 Legal Services DESCRIPTION OF PRODUCT/SERVICE For Buyer or Seller 1. Identify type of purchase: primary, secondary or investment 2. Financing options: cash, note/mortgage, line of credit, business loan, personal guarantee, land contract or other type of seller financing 3. Identify type of ownership: individually, joint tenants, tenants in common, tenancy by the entireties, LLC, corporation, partnership or trust Greater Metropolitan Association of REALTORS

46 Legal Services 4. Identify capacity to perform: Power of Attorney, Corporate Resolution or Probate Court Approval 5. Identify special needs: short sale or mortgage deficiency, settlement of liens, payoff issues, probate, title problems, use/zoning, boundary line disputes, assignments, lease/tenant, foreclosure 6. Prepare and/or review all closing documents 7. Prepare documents for seller financing, lease, options, etc. 8. Attend closing with or without client 9. Pursue legal & equitable remedies or defend against such claims

47 Legal Services For Real Estate Professionals 1. Insure client has legal advice throughout the transaction and is in best interest of client 2. Provide legal opinions 3. Identify broker policy or state licensing issues 4. Address errors and omissions 5. Respond to demands and threatened litigation

48 Legal Services BENEFITS OF PRODUCT/SERVICE Legal services support and complement other real estate professional services Early involvement avoids costly problems that might jeopardize closing Insures that parties are not engaging in the unauthorized practice of law

49 Legal Services COST OF PRODUCT/SERVICE Legal fees can vary from issue to issue and provider to provider Typically hourly, not flat or contingent fee arrangement All clients should have a written representation agreement that specifically describes scope of representation, legal fees and hourly rates Hourly rates may include time for attorneys, paralegals and legal assistants

50 Legal Services PROVIDER OF PRODUCT/SERVICE All attorneys must be licensed by the State Bar of Michigan Attorneys may practice or specialize in any field of law. There are no specialty licenses or certificates required.

51 GMAR AFFILIATE COMMITTEE SPECIAL THANKS TO THE CONTRIBUTING MEMBERS OF THE GMAR AFFILIATE COMMITTEE Jeff Becker Home warranties Mike Fontana Mortgage lending T. Scott Galloway Legal services John Higgins Mortgage lending Lori Hoover Home Warranties Elise Lievois Title company Renee Smith Title company Johnna Struck Moving and storage Robert Zorzan Home inspections