The 4-24-12 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


THIS WEEK & NEXT AT TAR
April 25: Commercial Forms Committee Meeting
April 28-29: Nationwide Open House Weekend!

HOT LINES IN THIS ISSUE:
1. HOT LINE: Appliance To Stay …or Not?
2. HOT LINE: Where Do I Show Seller-Paid Closing Costs?
3. HOT LINE: Keeping Copies of All Offers?

IN OTHER NEWS:
4. New Timeline Requirements for Short Sales
5. New Home Sales Up Over a Year Ago
6. Down Payments Remain High
7. Low Ball Offers Declining
8. The Truth About Lying
9. Current Mortgage Rates
10. To Ask a Hot Line Question…

NOTE: If you are reading a hard-copy of this DIGEST, and want to access some of the links cited, simply go to http://www.tardigest.com to access the current issue with “live” links!

AND: To see a complete calendar of upcoming TAR courses around the state, go to: http://tnrealtors.com/calendar/index.php


1. HOT LINE: Appliance To Stay …or Not?

QUESTION: An appliance (dishwasher) is excluded on the listing agreement and the MLS entry states it does not stay. However, when the purchase agreement is written, there is no indication that the appliance will not remain. Which one of the agreements will stand? One of my agents has a buyer who knew the dishwasher did not stay, and talked to her about the seller removing it, but now thinks that it should stay since it was not excluded on the contract.

ANSWER: We cannot provide advice to the buyers and sellers as to who is entitled to the dishwasher in this situation as this would constitute legal advice to the clients as well as an interpretation of the contract. The contract should be reviewed in order to determine if it is addressed. If the parties have questions, they should consult with their own attorneys.

In the future, we recommend that items such as these be specifically mentioned in the contract. If the seller is planning on taking the appliance, they should so state. If the buyer is expecting that he is purchasing the appliance, they should so state. This will avoid any problems in the future on this issue.

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


2. HOT LINE: Where Do I Show Seller-Paid Closing Costs?

QUESTION: Where is the most appropriate place to include seller-paid closing costs and prepaids on the Purchase and Sales Agreement? I have been advised by some to put it in Special Stipulations and advised by others to put it on line 71 under the Title Expense section.

ANSWER: Line 71 of the 2012 Purchase and Sale Agreement is for changes to title expenses only. Lines 74-75 can be used to modify any of the expenses listed in lines 51-72 or you can use the area in Special Stipulations. Either area would be fine.

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


3. HOT LINE: Keeping Copies of All Offers?

QUESTION: In accordance with TREC rules, we are supposed to keep copies of all documents for each transaction. Do we have to keep a copy of all original offers as presented, in addition to the document ultimately signed by the buyer and seller?

ANSWER: YES. The firm must have a copy of all records for a minimum of three years. Tenn. Code Ann. 62-13-312(b)(6) states that a licensee can be penalized for “Failing to preserve for three (3) years following its consummation records relating to any real estate transaction.” According to TREC, these records must contain, at a minimum, the following: listings; offers (even those that do not become contracts); contracts; closing statements; agency agreements; agency disclosure documents; property disclosure forms; correspondence; notes; and any other relevant information.

Based upon issues that have arisen in the errors and omissions cases over the years, we strongly recommend that licensees keep each and every document that comes into their hands while representing a client or customer, regardless of whether they are working as sellers’ agents, buyers’ agents, or facilitators.  We cannot stress how important it is to keep documents that evidence contact with clients, customers, cooperating agents, and/or inspectors. Such documents include email and facsimile confirmations. These records can be stored electronically; you just must be able to access them whenever the auditor comes to the office. It would likely fall upon the principal broker to keep these records.

Although the Brokers’ Act requires that records be retained for only three years, it is a good business practice for licensees and firms to maintain their records for at least six years following the consummation of a transaction. The statute of limitations for breach of contract actions is six years. In other words, if a former customer or client brings a cause of action against a licensee or a firm under a breach of contract theory, he/she has six years from the date of the breach to do so.

Also, the statute of limitations for negligent misrepresentation, intentional misrepresentation, negligent nondisclosure, and/or concealment regarding the condition of property is three years from the “date of discovery”. With these causes of action, a buyer has three years from the date he discovers a problem with the property to file a lawsuit.

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


4. New Timeline Requirements for Short Sales

Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.

The GSEs issued new guidelines on April 17 that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales. To get the details on this, you can download Freddie Mac’s new bulletin on this through the following link: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1209.pdf

DSNews.com also has a complete explanation of this that you can read by CLICKING HERE.

[SOURCES: DSNews.com; Freddie Mac]


5. New Home Sales Up Over a Year Ago

While sales of new homes slowed in March, government figures for the previous two months were revised sharply higher on April 24, pointing to a solid winter rebound in the housing market.

The Census Bureau reported that sales of new homes in March came in at an annual pace of 328,000 when adjusted for the season. That was down 7.1% from the 353,000 sales pace in February — but that February figure was revised up by 40,000 from the reading issued last month.

The improvement was reflected by the year-over-year data, which showed a 7.5% increase in March.

Meanwhile, Commerce Department data shows that U.S. builders in March requested the most permits for single-family homes and apartments in three and a half years, offsetting a slow month for construction and suggesting that the housing market may be on the mend.

[SOURCES: CNNMoney; The Advocate]


6. Down Payments Remain High

Down payments greater than or equal to 20 percent were made by 34 percent of all residential home purchasers last month, a percentage that has remained relatively stable over the past year, according to the latest Realtor Confidence Index survey from the National Association of Realtors.

However, over the past year, lenders have been raising down payment requirements. In 2011 median down payments for conventional loans were approximately 22 percent, according to Zillow. That percentage doubled in three years and represents the highest median down payment since the data were first tracked in 1997.

Both these surveys show higher down payment costs than NAR’s 2011 Profile of Home Buyers and Sellers, which is based on 2010 transactions. To read more, CLICK HERE.

[SOURCE: UPI]


7. Low Ball Offers Declining

A new article by Kenneth Harney in the Washington Post (“Low-ball bidders in many markets learn they can no longer get a steal on a house”) describes a trend away from low ball offers:

*** BEGIN QUOTE ***
A year ago, according to researchers at the National Association of Realtors, one out of 10 members surveyed in a monthly poll complained about low-ball offers on houses listed for sale. In the latest survey — conducted in March among 4,500 agents and brokers across the country but not yet released — there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels — fewer houses available to sell — and multiple offers on well-priced listings.

A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25 percent or more below list. Low-balls increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring.
*** END QUOTE ***

To read more, CLICK HERE.

[SOURCE: Washington Post]


8. The Truth About Lying

People who tell lies show that they are engaging in deceitful behavior through their body language, so experts say it makes sense to rely more on gestures than words to gauge truthfulness. Real estate agents might be dealing with prospects who have trouble saying no; but if they are able to identify half-truths or lies, they can identify the prospect’s concerns and overcome their objections. When speaking lies, experts say people tend to cover their mouths, rub or touch their eyes, or cover or put a finger into their ears. When they do this while listening, it means they tend not to believe what is being said to them. People tend to look up and to the left when considering the past and up and to the right when considering the future, so if their eyes move to the right when they are asked about their past, the response is not a truthful one. To read more, go to: http://rismedia.com/2012-04-15/body-language-the-truth-about-lying/

[SOURCE: RISMedia]


9. Current Mortgage Rates

To see current mortgage rates, go to: http://www.mortgagenewsdaily.com/mortgage_rates/


10. To Ask a Hot Line Question…

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