The bill, H.R. 4123, included an amendment allowing home buyers the three-month extension on the tax credit. The extension, though, only applied to buyers who signed purchasing contracts before the original April 30 deadline.

With a backlog of transactions waiting to be processed, and in danger of not closing by the required deadline of June 30, 2010,  the National Association of REALTORS®, as well a mortgage lender groups, had urged Congress to extend the time for escrow closings to the proposed September time frame.

Unfortunately for those of you in the Lake Oroville real estate market and the Paradise real estate market in danger of not closing your transaction on time, the provision for the extension was added as an aside to an unemployment bill that had become a political hot potato.

Why Congress can’t do the common sense thing, (oh wait, my English teacher told me never to use the words Congress and common sense in the same sentence), and vote on these unrelated issue separately is beyond me.

If you are in danger of missing this deadline you might want to turn up the heat on your loan officer, as loan processors and underwriters could really care less about your time frame

There is still an outside chance that this extension amendment and be added to another bill or simply be voted on on its own merits. My advise though is don’t assume anything.

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One day as the transaction for the sale of the property was coming to a close I had occasion to meet with them about their transaction. During our conversation the wife was telling me that she felt bad about selling the property. When I asked her why, she said that she felt sad that she was selling her “home.” At that point I said to her, “You’re selling your house, you get to take your home with you.” She was puzzled by my comment until I explained that her “home” was simply contained within the house. Her home was all the memories she enjoyed in the house. All the photos, the furniture, the keepsakes and all those things hanging from refrigerator magnets, along with all the memories while living there, were all things that she gets to take with her to her next house, to turn IT into a home.

Over my nearly 16 years in the Lake Oroville real estate business I have seen many sellers struggle emotionally with the sale of their property. In fact, so much so,  that it can sometimes actually negatively affect their decision making process. Negotiating from an emotional standpoint is never a good thing.

For some sellers, and prospective sellers, this little bit of advice I am going to give you may not be what you want to hear but I think it is vital to your ultimate goal of selling your property.

The minute you decide to sell your dwelling you need to put it out of your mind that you are selling your home. The thought that you are selling your home needs to be replaced with the thought that you are selling a house. A house is a commodity and you need to do the best you can do to make this your mindset from the time you decide to sell through the entire escrow process.

To do otherwise runs the risk of making  decisions that could cost you the opportunity to sell at the best price. It can actually cost you an opportunity to sell at all.

Nearly every REALTOR® can tell you a story of a seller who was  ‘offended’ by a buyer’s offer because of an emotional attachment to their house. What normally happens in these instances is that the seller will either reject the buyer’s offer or be totally inflexible during the negotiation process, resulting in the buyer deciding to buy a different house.  Inevitably the frustrated seller eventually either takes the house off the market or ends up selling it for much less that the original buyer’s “offensive” offer.

Becoming emotionally detached from the property you are selling can be be very difficult. But, as hard as this may be for some of you to hear or read,  for your own financial well being, is something that is necessary to accomplish.

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Well, this has never held more true than it does today in this age of bank owned properties. No, this is not another one of those bank, bashing blog posts that seem to be everywhere these days. Quite frankly it is difficult to tell if the expanding trend of banks REQUIRING  more and more of a potential purchaser before accepting an offer, is the work of the banks or of some of the bank-employed REALTORS® that have hitched their fortunes to their bank-employer.

Let’s take a little walk down memory lane to see what I mean.

Inch #1-In the beginning, banks that owned foreclosed homes simply required that a buyer present a loan prequalification letter with any offer that was made on one of their homes. This seemed fair, as no seller wants to be dealing with a buyer that is not qualified for a loan.

Inch #2- It was then not good enough that the purchase contract stated that the buyer had given a deposit check to their agent. The bank wanted a copy of the check.

Inch #3-Next the major banks required that any prospective buyer be loan prequalified with their bank before they would consider the buyer’s offer. Great way for the bank’s loan officers to try and persuade a buyer to swtich their business to them. Yes, it is happening!

Inch #4- Banks then refused to sign their own counter offer before the buyer signed it. So even after the buyer agreed to the terms of the counter offer there would be no binding contract until the seller signed. Providing more time for other offers to come in that may be more attractive the bank. Totally backwards from how it should be done.

Inch #5-Now some banks are not only demanding  for a loan pre-qualification letter, but they are demanding for proof of the buyer’s credit score and in some cases asking for the buyer’s social security number. We just had a bank ask our buyer for thier social security number and we refused to give it to them. Guess what, the bank accepted our offer.

Inch #6- The latest twist is that some banks are requiring that the buyer open escrow and place the deposit money in the escrow account at the escrow company before they will sign their own counter offer. That’s right, Mr. Buyer, put your money up first and then the bank may or may not sign the counter offer that they drafted.

So who is responsible for this “taking of the inches” and how do we stop it from turning into a mile?  My take on this is that the banks are the inch-takers. They will continue to take as much as they are given. I also believe that nearly all of the local bank-employed REALTORS® have a hand in this too.  I always get the same answer when I ask any of them about the shenanigans their banks pull.”It is the way they want it done,” they say. “The buyer can take it or leave it.” Virtually none of them stand up to their employers on these issues, they simply go with the flow.

You, the buyer have total control over this nonsense. Don’t stand by and let the banks’ demands compromise your financial security. Take a stand and hold your ground for what is right. Yes, you may miss out on a house or two but there are plenty of others out there.

You see, last year at this time I was pretty much sitting alone in this big ol’ office space with a bunch of empty desks hoping against hope that I would be able to get through just one more year of slumping sales and keep my head above water. To be totally candid, it was not a good start to a new year.

A lot has changed since that January of 2009. Just about the time I was feeling at the end of my rope, a former associate of mine approached me about coming to work for me. Steffan and I had started out in the real estate business together in 1994. I has always respected him for his ethics, honesty, and putting his client first. Plus, he is an all around nice guy. So, aboard he came.

Just a couple of months before this, I began working on one what I thought was one of those escrows from hell. The kind of escrow that you work on for 7 MONTHS and never get the deal done. (yikes). Turned out that because the transaction took so long, the other agent and I spent quite of bit of time on the phone together.  As we got to know each other better it began to seem to both of us that she would be an excellent fit in my office. We had the same work ethic, we both believed in doing the right thing, and in addition to her amazing commitment to her clients, she also understood that real estate will be impossible to do going forward without the tools of technology. It took a while for Christi to make the move but she finally made it.

Towards the middle of the year, as Christi and Steffan got settled into their new desks, I had the opportunity to speak to another agent or two about making the move to a better office. Although it seemed clear that they were not happy where they were, they were hesitant to make a move. Which, as it always seems to, worked out  perfectly.

Steffan suggested that I talk to an agent that he thought would be good to have in the office. Not only had I never worked on a transaction with her, I can’t say for sure that I had ever met her. Trusting Steffan’s opinion as I do, I finally arranged to meet with her. Robin subsequently joined the team in August and I must confess that had I not hired her I would have missed out on working with a very loyal person who will do nearly anything for her clients. I also appreciate Robin for her honesty and ethics.

It is said that things happen for a reason. In each of these cases it was all the right reasons.

So here I sit with just a little over 6 hours left to this year of 2009, amazed, once again, at how far I have come in just 12 short months.  3 awesome associates to work with, nearly $7 million dollars in sales, and finising in the #2 spot among all Lake Oroville real estate office that don’t deal mainly with foreclosures.

To Christi, Robin, and Steffan I say thank you. To our valued customers, I appreciate your loyalty. To those of you who we will meet in the coming year, I say, in advance: Thanks for placing your trust in us. We promise to make your real estate transaction as easy as possible.

Please be safe tonight

When you finally get the disclosures all you see written across them are the words, “Bank owned, Seller Exempt.” You ask your REALTOR® about the lack of disclosure and he or she tells you that the bank is not obligated to provide disclosures to you because the home was taken back in foreclosure.  Only problem is, that this is not exactly true.

While it is accurate that the banks are exempt from providing some disclosure documents, they are not exempt from ALL disclosure requirements. And your REALTOR is not exempt from ANY disclosure requirements. Unfortunately what I am seeing is banks, and agents alike, ignoring their disclosure obligations by hiding behind the “bank owned”  excuse.

Here is an example of what I am talking about.  The following link will take you to a disclosure a BROKER from another office sent to one of my associates as part of the broker’s disclosures. By the way, I really wanted to leave the broker’s name and office information visible but thought  that even though it demonstrated his incompetence, I don’t want to appear unprofessional.

Click Here to See “Disclosure” 

This document is a form that most REALTORS® are now using to fulfill their duty to perform a diligent visual inspection of a home and report their findings to the buyer. Writing “exempt” across the front of this form does not relieve the broker of his LEGAL duty to disclose and is not a correct use of this particular form.

As a buyer you, and more importantly your REALTOR® need to insist on getting the required disclosures from the seller, whether it be a bank, or not. Don’t continue with your transaction if you are being deprived of your legally required disclosures.

We’ll review what these disclosure documents are in upcoming posts.

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Only nine Oroville area property sales this week, however I do expect the numbers to improve over the next two weeks as those escrows that were opened as the original tax credit window of November 30th was closing, should be completed toward the end of the month and into the first week in December.

Of particular note in these numbers is that the number of properties listed for sale continues to decline and has hit a new low since I began reporting Oroville sales to you.

On the foreclsoure and short sale front, we continue to these properties selling at a rate that is far larger than the percentage of these on the market, which will, if nothing changes, make them harder and harder to find.

Expanded Report

To be honest here, most buyers, and sellers for that matter, don’t fully understand the escrow process because they have very limited contact with the companies that provide these services. Generally, they show up at the escrow company’s office to sign their papers and that is just about it. So, for the most part they really do not see the anxiety that is caused by these out of towners. The agent ends of bearing the burden of the frustration of working with these companies that do not know the area, could care less about the clients, and are absolutely inflexible in trying to resolve any problems that occur during the process.

One of our buyers, however, has experienced what we go through everyday in trying to deal with some of the most absolutely stupid things going on in escrow land.

This buyer recently signed all of his loan documents as provided by the lender. As part of the signing process, the out of town title company, who will remain nameless for now, calculated and provided a settlement statement to the buyer showing the amount of funds required of the buyer in order to finish the transaction. The buyer brings the exact amount of fund as requested by the escrow company and expects to close the transaction in the next couple of days…

Not so fast, escrow breath.

It seems that after the documents and buyers funds got back to the Sacramento escrow company, an error, made by the escrow officer, was discovered which showed that the buyer still owes $4.25, and that the escrow cannot close until the mathematically challenged escrow officer gets the additional funds. One problem though, the buyer works on an oil rig too far out of town to get to Sacramento to pay the money without causing a significant delay to the transaction. Our agent, representing the buyer, has a relative living nearby the escrow company that could take the $4.25 shortage to them. But NOOOOOOO says the escrow officer, the funds have to come directly from the buyer.  So the transaction gets delayed another two days in order to get a $4.25 check from the buyer to the escrow company. In case you think I put the decimal in the wrong place, I said four dollars and twenty-five cents!!!!!!!!!!

Here is how it would have worked with one of our local escrow companies- The company would have made a simple adjustment to one of their fees, (i.e. the escrow fee, or the notary fee, et. al) to cover the $4.25 shortage and then closed the transaction on time.

You know, the common sense approach. Heaven forbid we use common sense in this business.

In the coming days I will provide a brief overview of each of these new laws and how they may affect your next Oroville real estate transaction. In the meantime, you can click on the link below to read the Governor’s press release  and, if you would like, delve deeper into each one of these new laws yourself.

The new law that will be of the most immediate impact to the sale of homes in the Oroville market, as well as the rest of the state, is one which requires that both title and escrow fees be paid by the seller of a bank-owned property if the seller (bank) requires a specific title insurance company and/or escrow company to be used in the transaction.

This law went into effect immediately upon receiving the Governor’s signature.

Previously, a seller was only required to pay the owner’s title insurance fees if the seller directed who the title insurance provider would be. The new law adds escrow fees to this requirement.

This law was necessitated by the fact that banks were dictating that escrow services be performed by companies of their choosing, often at fees that were significantly higher than our local escrow companies are charging. These higher charges were being forced onto buyers who basically had no say in where the escrow services were being performed.

Banks now will have to pay the fees if they are dictating where the escrow services are performed.  But proceed with caution on this. The banks are masters at getting around things. The huge whole in this law is that banks can basically place the whole burden of title and escrow fees directly on the buyers’ backs by simply refusing to pay any fees if the buyer chooses. It remains to be seen how this will play out. Just be sure your agent is informed on this before writing your next offer. 

See the Governor’s press release

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Part of the phenomena of this market is that banks have established some sort of alliances with title and escrow companies in the Bay Area and Southern California and are demanding that these companies are used during the transaction, while virtually ignoring the value that our local title and escrow companies can bring to the transactions.  The policies of these banks cause a lot of heartburn during  the transaction as there are undue delays and errors made that can end up costing buyers a lot of money if not caught before the close of the transaction.

Under current federal law a seller cannot require a buyer to PURCHASE title insurance from a specific title company if the purchase of the home is being made with any type of federally regulated loan. For the purposes of our discussion that means any institutional loan. The seller can, however, mandate who provides the title company as long as the seller pay for the entire policy. Meaning that if the buyer even pays one penny towards an owner’s title policy the buyer gets to select the company that provides the coverage.

What is not part of the law however, is the buyers’ right to choose the company to provide escrow services for the transaction. Under current law the seller can direct where the escrow services will be carried out, regardless of who is paying.

This is where transactions for foreclosed properties can run into trouble. As a REALTOR® dealing in the business of selling Oroville area homes, I have a very good working relationship with my local escrow companies. I know how they work and they know how I work and what I expect from them in order for me to continue doing business with them. None of this is true when working with out of town title and escrow companies. To them you are not a customer but another notch on their stat sheet. And to top it off, their fees are almost always twice as much as we pay locally.

Enter the State of California.  After dealing with this dilemna for 3 years now the California State Legislature recently passed AB 957 which  prohibits a seller of a foreclosed property from requiring buyer to PURCHASE title and escrow services from a specific provider. As of this writing the bill is still awaiting the Governor’s signature.

The immediate reaction from our local escrow companies and many of our local REALTORS® was celebrate the fact that we will be able to use local title and escrow companies for bank owned properties again. But how realistic is that? Probably not very.

Being the father of an 18 year old son and 16 year old daughter I can tell you that there is virtually no law or rule that cannot be “worked around.” In fact my kids are like mini-lawyers; they know all the angles. Like the time………..whoops, sorry about that. Let’s get back to the topic at hand.

Much like my teenage attorneys , the banks are going to find a way around this new regulation and will continue to deny the use of our local title and escrow companies. In fact, it is a loophole so big you can drive a train thorough it.

Remember that if the buyer is required to PURCHASE the services that the buyer gets to pick the provider. All the banks have to do is to pay for ALL of the title and escrow fees and THEY pick the provider. Remember in cases where your real estate professional knows what he/she is doing when negotiating the contract, the bank is already paying for all of the owner’s title insurance because federal law says they have to if they insist on a specific company. All they have to do now is pay ALL of the escrow fees and they can continue to dictate who the escrow company will be.

But, you say, that means the buyer is going to save money. As the late Johnny Carson might say, “Wrong, escrow breath.”  If the banks decide to absorb the escow fees as well as the title fees, your buyer may save out of pocket expenses, but you have no idea if the buyer is paying more for the house then he/she would be otherwise, not withstanding these fees. The banks accept offers based on the best bottomline price they can get. Doesn’t it stand to reason that if the expenses of the sale go up that they may actually negotiate a price that makes up for these additional expenses? If the banks want to use their service providers, trust me, they will you their service providers. And somehow the buyer is still going to pay for it.

So contol your enthusiasm everyone this may not accomplish what you are hoping it will accomplish. As usual , time will tell.