2019 Real Estate Round-up — By the Numbers

If you’re buying a home, chances are you’ll have to put up an earnest money deposit (EMD). Earnest money tells the seller that you are serious about your offer to buy the house and this deposit is a show of good faith. Without the requirement of earnest money, a real estate buyer could make offers on multiple homes, essentially taking them off the market until they decided which one they liked best. So for this reason, sellers rarely accept offers without the buyers putting down earnest money to show that they are serious and are making the offer in good faith.

The amount of earnest money you will want to present will depend on the market, there is really no set amount and can be negotiable, but typically it equates to around 1%-3% of the purchase price of the home. And as a buyer, you should remember that this is generally non-refundable, as it acts as a deterrent to backing out of a deal in progress. This money is generally held by the seller’s broker, and used towards the down payment and closing costs.

In a buyer’s market when home sales are slower, you may be able to get away with a smaller earnest money deposit, especially if you’re the only interested buyer. But in a seller’s market, where multiple bids are coming in, the seller will likely require a larger deposit. Offering too little could also come off as insulting, so best to consult your realtor for their suggestion.

To protect the buyer, they may want to discuss adding contingencies in the contract in regards to the earnest money deposit, so that they can legally cancel the contract without losing the EMD.  These could be things like:

  • Financing
  • selling their current home first
  • home appraisal
  • home inspection
  • clear title

A reminder that lack of contingencies can be favorable to the buyer, and the seller could counter the offer to not include them. But before removing any contingencies, it’s best to discuss it with your real estate agent.

We all get irritated by how often we’re asked to update our software and passwords on our phones, laptops, and tablets. It’s both time consuming and annoying. But what if you thought of it in terms of a workout, where you’re putting your body through an exercise regimen to help improve its performance?

It’s safe to say that just about every device that we own will require regular updates; your personal computer, laptop, tablets, phone, smart watch, etc, in order to stay current and up to date.  Whether it’s a “patch” – smaller maintenance update – or a full blown update, these are essential to the health of our devices.

Any device connected to the internet is vulnerable to fraud, including phishing scams. And just as we try hard to combat these weaknesses, we’re having to keep up with the new and creative ways that fraudsters are finding to attack us through our technology. The first way you can be vigilant against fraud is to not ignore your update notifications. These updates and patches will make it much more difficult for hackers to access your device and take it over, thus gaining access to your personal information and credentials.

But not only are you only protecting yourself, you’re also protecting others, as some criminals will gain access to your contacts and use them to create a botnet (a huge group or hacked, connected devices), or other scheme to deliver large-scale hardware viruses or disable programs.

If you work for a larger company, they may push out fairly regular patches and updates. But regardless, here are a few tips to remember when keeping your devices safe:

·         Many devices have a setting you can enable that will allow regular updates by default. Take a look and see if you’ve enabled that setting on your device.

·         When an update notification comes through, take the time to apply it, instead of repeatedly putting it off because you don’t have the time.  Because then you risk                  forgetting to get back to it later.

·         For any connected devices – like smartwatches, for example – make sure that you’re occasionally connecting them to their consoles, so you’ll know when a patch might        be needed and how to apply it.

Like any new health routine, it just takes a little time to get into the habit until it becomes second nature. Make your cyber security one of those priorities.

As you’re well aware by now, when buying a new home you need to purchase title insurance, as this protects you in case the seller does not have a free and clear title to the home they’re selling. But what about new construction, surely the same rules don’t apply, right? Wrong.

When you buy a home, the original seller is transferring that title deed to you. This is on the assumption that the seller themselves has full possession of the title, without any liens on the property or shared interest in the property.

This is where the title company comes in. They will perform a title search on that property to ensure the deed is free and clear. And as much of a pain and frustration it is when the title company uncovers a title defect or issue, it’s better to find out now than when it’s too late.

There are, however, circumstances that can arise where ownership of the title can fall into dispute. Somewhere along the line someone may have misfiled or improperly recorded the paperwork related to the title, there could have been fraud involved, or an heir could suddenly come out of the woodwork and claim that the family property is partially theirs. And when you consider the costs involved with a legal saga, or the possibility that you could lose the property in the end, the cost of title insurance doesn’t seem all that expensive in comparison.

Now you may still be wondering, “OK, that’s all fine and dandy. But these scenarios all involve properties with a previous owner. What about new construction, I’m off the hook, right?” Well, actually, no. Someone still owned the land which you are building a house on before you did, and the title to that land may at some point have come into dispute. To be frank, there’s no land you can rely on to be completely 100% claim-free. Any newly constructed home will be built on land that has been around for a long time, and may even have been part of a larger parcel that may have undiscovered claims.

No matter how confident you are in the builder or how many developments they’ve been involved in, there’s still a risk for things like a contractor putting a lien on the home. But even more important to remember, title insurance covers mistakes made in the recorder and registrar of deeds offices.

And one last point to remember, in regards to the cost of title insurance. Consumers have the right to shop around for title insurance, they do not have to use whatever company their realtor or lender has chosen or recommended. As consumers, we routinely shop around for better prices on other things that are important to us, why not also do that for the most important and arguably most expensive purchase in your life.

 

 

 

 

We’ve tried to share a large amount of info on a lot of topics surrounding title insurance. Let’s see how well you remember that info with a little pop quiz.

 

Who does the attorney at the title company represent? 

The title company represents the lender.

 

If a transaction is $242,400, what is the amount of transfer tax on the transaction?

$1,067 (242.5 x 4.4)

 

What is a “title commitment”?

It’s when the title company tells the lender that they will issue a title insurance policy subject to their requirements.

 

A town’s tax year runs from July through June, with taxes typically paid October 1st and March 1st/ If you are closing on February 10th, who will receive a credit at closing for taxes if they are already paid?

The seller received the credit (March is already paid).

 

What is a “mil rate”?

A mil rate is the amount of tax payable per dollar of taxable value. (Example: a mil rate of 20 is really a 2% rate, or .02)

 

What is a “back policy”, and how is it useful to title companies?

A back policy is evidence that a title search has previously been performed on the property and the title company is able to rest upon that and begin its own title search at that point.

 

What is a “warrantee deed” vs. a “quitclaim deed” vs. a “release deed”?

Warrantee Deed – conveys the property with certain promises or covenants, which last forever.

Quitclaim Deed – the same as a warranty deed, except covenants only last during the seller’s period of ownership.

Release Deed – no covenants at all.

 

What changes to a closing disclosure will trigger a new 3-day waiting period to start?

Change to the APR, adding a pre-payment penalty, a loan product change which causes the disclosed information to become inaccurate.