The 11-1-11 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


CONTENTS
1. Pending Sales Down, But Higher Than in 2010
2. Credit Scores Getting More Personal
3. Taking Precautions With Lease Options
4. HOT LINE: Body Buried on the Property?
5. HOT LINE: Seller Wants To Exclude Inspector?
6. HOT LINE: Sellers Want To See Emails?
7. HAPPENINGS – This Week And Next
8. Rates Change Very Little
9. Useful Web Links

To ask a TAR Legal and Ethics Hot Line question, CLICK HERE.

For other questions about this newsletter, please use the “CONTACT” form HERE.


1. Pending Sales Down, But Higher Than in 2010

Pending home sales declined in September, although activity remains above a year ago, according to the National Association of REALTORS.

The national Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 4.6 percent to 84.5 in September from 88.6 in August but is 6.4 percent higher than September 2010 when it stood at 79.4. The data reflects contracts but not closings.

Pending home sales in the South fell 5.5 percent in September to an index of 91.6 but are 5.0 percent above a year ago.

[SOURCE: NAR Research]


2. Credit Scores Getting More Personal

If you’re concerned about the loss of privacy in today’s world, this recent Chicago Tribune story by Mary Ellen Podmolik, reprinted in RISMedia, may not be reassuring:

*** BEGIN QUOTE ***
Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic last week announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, last month, the big three credit reporting agencies, Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option. And earlier this year, Experian began including data on on-time rental payments in its reports.

The new information could prove to be a double-edged sword for consumers: It may open the door to homeownership to some consumers who have, according to industryspeak, a “thin file” or worse, a “no-file,” meaning they lack sufficient credit histories.

On the other hand, the extra information may make a borderline borrower look even worse on paper. And it’s unlikely to quiet critics who complain that too much emphasis is put on a single number.
*** END QUOTE ***

To read the entire article, CLICK HERE.

[SOURCES: RISMedia; Chicago Tribune]


3. Taking Precautions With Lease Options

A new article on Realty Times by Bob Hunt (“Lease Options are Back: Proceed Carefully”) advises extra caution when dealing with lease options:

*** BEGIN QUOTE ***
When real estate markets slow down, and especially when mortgage financing becomes difficult to obtain, many buyers and sellers turn to lease options as a way to achieve their short-term real estate goals, while waiting for situations to become more conducive to engaging in a straightforward purchase or sale.

…There are lots of things for both parties to think about when entering into a lease option. First and foremost is the fact that they are committing to three distinct, though related, transactions: a lease, an option to purchase, and a sale agreement. These three different agreements might be spelled out in three separate documents, with cross-references, or in one fairly complex one.
*** END QUOTE ***

To read the entire article, CLICK HERE.

[SOURCE: Realty Times]


4. HOT LINE: Body Buried on the Property?

QUESTION: I have a property listed for sale. I recently received an email from the owner of the adjacent property stating that the previous owner of the property I have listed is buried on the property I have listed. Is this information that should be disclosed to potential buyers?

ANSWER: This is the perfect Hot Line question for Halloween week!

Real estate agents are required to disclose adverse facts.  Pursuant to Tenn. Code Ann. 62-13-403(2), a real estate agent is required to “[d]isclose to each party to the transaction any adverse facts of which the licensee has actual notice or knowledge.” Tennessee law defines an adverse fact as “conditions or occurrences generally recognized by competent licensees that have a negative impact on the value of the real estate, significantly reduce the structural integrity of improvements to real property or present a significant health risk to occupants of the property.”  – Tenn. Code Ann. 62-13-102(2). Therefore, if an agent has actual knowledge of an adverse fact, he must disclose it.

There are two different areas wherein this could constitute an adverse fact. First, any descendant of someone has a right to enter the property where someone is buried in order to visit their deceased relatives. Secondly, if any development is planned for the property, a court order would be required before the remains could be moved.

First, you will need to speak with the sellers to determine whether they had any knowledge of this since you have been put on notice. If they do not, then you should do some investigating to determine whether this is true. We would recommend having a title search to determine whether there is anything recorded.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


5. HOT LINE: Seller Wants To Exclude Inspector?

QUESTION: I have a contract wherein I represent a seller. The seller has an inspector that they would prefer not to use.  It is illegal to request that a buyer not use a certain inspector?

ANSWER: The parties can contract wherein the seller states that a particular home inspector will not be used, as long as there is not a discriminatory motive. The seller cannot dictate who will do the home inspection since the buyer is paying for it.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


6. HOT LINE: Sellers Want To See Emails?

QUESTION: We have sellers requesting all past email correspondence between selling and listing agent for a particular transaction. The buyer’s agent is not agreeable to having his emails forwarded and the listing agent doesn’t wish to go through 200+ emails and edit/forward each one. The sellers claim they have a right to see any emails sent or received on their behalf.  Please advise.

ANSWER: First, the buyer’s agent does not have the right to prohibit you from providing your client with a copy of these emails.  There is nothing which is confidential within these emails.  Once you have disclosed who you represent, there is no expectation of confidentiality.  Pursuant to Tenn. Code Ann. 62-13-403, a licensee has a duty to all parties to “Maintain for each party to a transaction the confidentiality of any information obtained by a licensee prior to disclosure to all parties of a written agency …agreement entered into by the licensee to represent either or both of the parties in a transaction.” Once this relationship has been disclosed, you owe no duty of confidentiality to the buyer.

Furthermore, your client is the seller. Therefore you have an obligation to do what is in the best interests of your client, the seller. You are also required under Tenn. Code Ann. 62-13-404(1) to “Obey all lawful instructions of the client when such instructions are within the scope of the agency agreement between the licensee and the licensee’s client.” It goes on to state that a licensee has a duty to “Be loyal to the interests of the client. A licensee must place the interests of the client before all others in negotiation and in other activities, except where such loyalty duty would violate licensee’s duties to a customer under 62-13-402 or a licensee’s duties to another client in a dual agency.” Tenn. Code Ann. 62-13-404(2). You will likely have to produce those emails.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


7. HAPPENINGS – This Week And Next

Nov. 3-4: GRI 3, Financing the Successful Transaction (16 hrs. CE) – WCAR Office, Cool Springs/Brentwood. For more information or to register, CLICK HERE.

Nov. 3 – Dec. 7: GRI 6, Sticky Situations (16 hrs. CE) – An E-Class distance-learning course. For more information or to register, CLICK HERE.

Nov. 3: 2011-2012 Residential Core Course (6 hrs. CE) – GNAR Office, Nashville. For more information or to register, go to: http://www.gnar.org

Nov. 3: 2011-2012 Commercial Core Course (6 hrs. CE) – MAAR Office, Memphis. For more information or to register, go to: http://www.maar.org

Nov. 4: Effective Negotiating for R.E. Professionals (WCR-PMN Course, 8 hrs. CE) – GCAR Office, Chattanooga. For more information or to register, call: For more information or to register, call 423-698-8001.

Nov. 9-14: NAR Annual Convention – Anaheim, CA.

The complete 2011 schedule of GRI courses (both Classroom and E-Class) is online HERE.

For information on the NEW 2012 GRI Program, go to: http://tnrealtors.com/main/education/gri_in_2012/

Watch each week’s TAR DIGEST for schedule changes and additions!


8. Rates Change Very Little

Freddie Mac’s Primary Mortgage Market Survey showed average fixed mortgage rates changing little for the second consecutive week amid mixed consumer confidence and housing data. Fixed mortgage rates remain near their 60-year lows.

30-year fixed-rate mortgage (FRM) averaged 4.10 percent with an average 0.8 point for the week ending October 27, 2011, down from the prior week when it averaged 4.11 percent. Last year at this time, the 30-year FRM averaged 4.23 percent. 15-year FRM this past week averaged 3.38 percent with an average 0.7 point, the same as the previous week when it averaged 3.38 percent. A year ago at this time, the 15-year FRM averaged 3.66 percent.

According to Frank Nothaft, vice president and chief economist, Freddie Mac, “The latest monthly housing market indicators were mixed, with consumer confidence soft, house prices largely flat, and new home sales up from very low levels. Consumer confidence fell below the market consensus forecast in October to the lowest reading since March 2009, according to The Conference Board.”

[SOURCE: Freddie Mac]


9. Useful Internet Links

Click on any of the following to access:

Back Issues of the TAR DIGEST
Tennessee Assn. of REALTORS
TAR Education
TAR on LinkedIn
TAR on Facebook
Follow TAR on Twitter
Online Risk Reduction Resources
Online Resources for Association Leaders
Tennessee Real Estate Commission

____________________________________________