Great Deals for the "Budget Conscious"

There are some GREAT deals out there to be had and most of them on a daily basis.  Here are just a few:




SONIC Happy Hour 1/2 price drinks from 2-5pm EVERY DAY.  My favorite is the Cherry Limeade with extra cherry and extra lime.  (I also like the Cherry Lime Slush.)

SONIC 1/2 price Shakes after 8 pm.  I like this one because UNLIKE MANY other chain restaurants, they use REAL ICE CREAM!  (It REALLY bothers me that so many Ice Cream treats are now "Frozen Dairy Desserts".  That means they are NOT Ice Cream.)



Popeye's Louisiana Kitchen in Herriman ONLY:  Thursday Night ONLY from 5-8pm, children's meals only 99¢.  They also do face painting, and a few other fun things.  They also usually have a pretty good "Special" for adults for about $4 or $5.

Taco Bell.  "Happier Hour" between 2-5pm, $1 small freeze drinks, or regular drinks.  I like the Baja Blast. But the Starbust flavored freezes are really good. and the Orange Vanilla Crush looks pretty good, but I haven't tried it yet.

Right now if you apply for a FREE Maverik Adventure Club Card at ANY location, you can get an XL soda for $1.  ANY DAY, ANY TIME, ANY LOCATION.

If you're a SODA freak, this is nice if you are out and about all day.

Culver's has about 8 or 9 "SnackPak" Meal Deals, all for around $5.  They include a small drink and small fries, but it is a complete meal for me, and their BURGERS (Called BUTTERBURGERS) are the best Fast Food Burgers money can buy.  If you've never had a butterburger, may I suggest giving them a whirl.
They also have "Kids Meals" ALL of which INCLUDE a kids size Frozen Custard.
Also, check the "Flavor of the Day" for the location nearest you, and plan your visits according to your favorite flavors.  My families favorite flavor is "Just Drummy."  But there are SO MANY GREAT FLAVORS...  Turtle, Double Marshmallow Oreo, Chocolate Oreo Volcano, Cherry Chocolate Chip, Caramel Cashew.

And here is a little known tip about the "Flavor of the day."  For Kids size, you can add 1 extra "Mix-In", and for larger sizes, you can ADD 2 ADDITIONAL "Mix-Ins." at no additional charge!  So my suggestion is to get the "Flavor of the Day" with 2 "Mix-Ins." when you go.


As I find more deals I will post them.  I will also try to keep this as up to date as possible.  Happy eating, drinking and snacking!

HELOCs may cause another rise in Foreclosures, Bankruptcies, and Short Sales.

Here is the latest information I have been distributing in our neighborhood.  This is GREAT information.  There is an old saying that says something to the effect of:
"Those that cannot remember the past are condemned to repeat it."  I believe it was Winston Churchill that gave us that great quote.

This attached flyer goes along great with that saying as it was only back in 2006-2008 that we had a FLOOD of property foreclosures, bankruptcies, and short sales in the housing market.  There were serious repercussions throughout the whole country.

This information is GREAT for those that may still be "feeling the burn" from 2006-2008, and may not know that they may be able to qualify for a home loan since that time. It also spells out the current thought in the industry, and that is; the HELOCs may cause the same scenario, but most likely not to the degree that 2006-2008 gave us.  However, if you know ANYONE that may be in danger of the attached scenario, please give me a call, I can go through every situation on a case by case basis.

Please feel free to share this blog with anyone that you think may benefit from it:
brettinfo.blogspot.com

Here is the flyer. (2 pages)

Real Estate Math

OK, so if you know me, you know I've always been somewhat of a math nerd...  I love math!  It makes sense, it doesn't change, there is a right and a wrong answer, and sometimes there are many different ways to come up with the right answer.

There are so many different things you need to be able to calculate in math to be a successful agent.

Simple interest, be able to calculate a monthly payment, calculate the ROI, or the capitalization rate, are just a few of the things an agent needs to be able to do.  Fortunately, this is a pleasure for me.  With a background in Financial Analysis at one of the largest mortgage bankers, my division was able to assist them in producing an average of $445 Million per month loan production, with a HIGH month of about $550 Million. 

The best thing about Real Estate, is that you have many backups.  You have lenders, and loan officers that will confirm your numbers, and even be able to give better estimates and more accurate market interest rates and monthly payments.  You also have escrow and title companies that confirm these numbers as well.  That's not to say that mistakes NEVER happen.  They do occasionally occur, so it is up to the agent and the borrower to confirm all numbers and verify their accuracy.

Utah Real Estate Acts, and their importance

There are a few acts relevant in Utah:

The Uniform Land Sales Practices Act
  Requires all Developers to register their projects with the Division of Real Estate.

The Timeshare and Camp Resort Act
  Requires all Timeshare developers/sales to disclose important facts and data about their projects, including Contact Information, Criminal Background Information, Project information and maximum number of interests available.

The Utah Marketable Record Title Act and Homestead Act
  Allows defects on title more than 40 years to be disregarded for marketable title.  And the Homestead Act protects the homeowner in the case of bankruptcy.

Why is Equal Credit Opportunity so important?

The Equal Credit Opportunity Act is very important to create and maintain a level playing field for obtaining and accessing credit, whether it be for a mortgage for a home, or a credit card, or an auto loan, or any banking type loan.

It protects the following classes:

Race
Sex
Color
National Origin
Marital Status
Religion
And if they are receiving public assistance

A lender CAN use: history of credit, bankruptcies, foreclosures, judgments, credit score, etc. in determining credit worthiness.

Why is Fair Housing important?

The Fair Housing Act was passed in 1968 and enforced law that would make it illegal to discriminate against anyone based on:

1.  Race
2.  Color
3.  National Origin
4.  Sex
5.  Familial Status
6.  Religion
7.  Disability

If you believe you have been discriminated against, while trying to purchase or rent a home based on any of the above protected classes, you are encouraged to contact HUD.gov and report it.  I have been actively involved in the Equal Housing from my first day in the Mortgage and Real Estate Industry.  It is very important that every agent/broker knows and is sensitive to the public, and dealing with the public.  If you own real estate, it is your duty to educate anyone involved with dealing with the public, from leasing to maintenance.  They need to know how to interact properly with the people who lease property on your premises.

There ARE exemptions from this:
1.  When certain conditions are met, owners of single family homes are exempt when selling the home without the use of an agent and broker, so long as they are not discriminatory in advertising.
2.  The leasing of residential space of a 1-4 unit building, so long as the parties are not discriminatory in advertising and one of the units is owner occupied.
3.  Facilities owned by private and religious organizations may be leased to members for non-commercial purposes.

And this is NOT to be confused with denying rent for legitimate reasons:
Inadequate Credit
Inadequate Income
Misleading or False information given on the rental application
A negative rental rating
Or it may be that another rental applicant was just BETTER qualified.

If you contact HUD because of any of the above reasons, or conditions under the exemptions, they will most likely not be able to assist you.

What is a Deed?

There are actually MANY different kinds of deeds.

For the most part when you go to sell your home, the escrow company will have a Grant Deed drawn up, and you will execute the Grant Deed in front of a Notary Public.

The other types of deeds are as follows:

General Warranty Deed:  Guarantees that nobody has any claim to the property.  This is the best type of warranty.

Special Warranty Deed:  Says they have had no problem with the property for as long as they've owned the property.  These are better than quitclaim deeds, but not as secure as a General Warranty Deed.

Quitclaim Deeds:  Basically releases any and all interest in the property. No warranty is implied.

Contract for Deeds:  Used in Seller Financing.  Can get messy if the original owner has a mortgage, and they end up not paying on the mortgage after they sold it with seller financing.

And then there are the following:

Sheriff's Deed and Tax Deed - These types of deeds are the results of the owner defaulting either on the mortgage payment resulting in a sheriff's sale or defaulting on property taxes resulting in a tax sale.
Administrator's Deed - Used to transfer a property when an owner dies without a will.
Executor's Deed - Used when a person dies with a will to transfer the property.
Deed of Gift - Used when the property is transferred as a gift.

What is Title Insurance and why is it important?

If you have ever purchased a home, you see all kinds of fees, one of the fees you will always see if you are purchasing a home and are using conventional financing is a Title Insurance Fee.  There is a state maximum fee based on the purchase price of the home for all title insurance policies, so the fear that you are being charged too much for escrow and title is not likely at all.

So what is this Title Insurance?  It is basically an insurance product required by most lenders and protects THE LENDER against any deficiencies in title.  If there are any problems that come up down the road, the title policy would protect you and the lender against any claims on the property.  So a title insurance policy is a great way to protect yourself in case someone claims they own the property after you close escrow.

What if there is a mistake on the Closing Disclosure?

With the new disclosures since Dodd-Frank, there is now a mandatory closing disclosure to be given to the buyer and seller at least 3 days before closing.  What if you see that you are being charged for something you already paid for?  What if you see a mistake on the disclosure?

Great news!  since it's 3 days before closing, you have time to call your escrow/closing agent and let them know what you have found, then they can compare it with their information and have time to correct the document, and make sure all the funds go to the correct places to close escrow.  Most escrow agents are VERY easy to work with, and they realize they are in a position of service.  They are there to help you, so the good ones will take the time to make sure you are 100% satisfied.  There are MANY moving parts when buying or selling a home.  To think that you can do it all yourself is silly!  With Title, Escrow, Appraisal, Lending, Home Inspection, Pest Inspection...  you really think you can do it all yourself?  You need to find someone that can assist you, someone you trust, and someone with a track record of success.  There ARE good agents out there... and unfortunately, there are BAD agents out there... don't get stuck with one of the bad ones.

After the Mortgage Meltdown of 2007-2008, what is the next big fraud on the horizon?

The next big FRAUD ALERT on everyone's radar is the mortgage closing table fraud.  At the end of the transaction, in many states there is a "closing table" that usually happens at the escrow company, title company, law office, or real estate broker's office. 

The type of fraud that has happened at the closing table is mostly identity theft.  Real Estate Agents/Brokers seem to be the major fraudsters here, taking unsuspecting clients identities, taking out huge mortgages, and then making the payments of the mortgage to hide their deed.

Real Estate Agents forging documents and creating straw buyers.

Creating a fake law firm has been done and the fraudsters got away with $27 Million before they were caught.

There are many more types of fraud still being committed.  But the best way to protect yourself is to do some research on ALL the service providers you use, and remember, you are not OBLIGATED to use any/all of the services suggested by your real estate agent or lender. You get to decide who you work with and what service providers you choose.

But remember, your Real Estate Agent is on your side, so choose wisely which Real Estate Agent represents you.

What can I expect to see when I get an appraisal of my home

If you are buying or selling a single family home, you will most likely see an appraisal that uses the Sales Comparison Approach.

This approach takes the subject property, then the appraiser will do a walk through just to see if there is any significant damage to the home, holes in the wall, missing appliances, started projects that have not been completed, square footage, etc.  Then they will take a few pictures, mostly of the outside of the structure and the street surrounding the structure.  Then they take all this information back to their office and then the REAL work begins.  They may take HOURS researching homes in the neighborhood of the subject property and find similar properties, both in Lot size and structure size, as well as year built, and whether or not they both have swimming pools, 3 car garages, etc.  Then based on the recently sold data in the neighborhood, they can assess any differences in lot size, structure size or any differences and add or subtract value to come up with an appraised value.

Why is an appraisal important?

An appraisal will ALWAYS be required if you are financing the property through a traditional lender.  The appraisal process is in place to verify the existence of the property, as well as get a general feel for how the property stacks up against other homes in the vicinity.  This protects the banks, as well as may protect the buyer from purchasing a home that may be WAY overpriced compared to other surrounding homes.  I have seen deals where the price is agreed upon between the buyer and seller, and then the appraisal comes in, and the value is $10,000 below what the buyer and seller agreed upon.  What happens then?  That is a great question...  There are a few things that CAN happen. 

First, the seller may lower the price by $10,000 to match the appraised value, because he knows that another appraiser will not be able to raise the value of the appraisal.  Also, the banks will only use the value of the appraisal for lending purposes (not take into account the fact that the buyer and seller agreed on a different price), and now the real estate agents have a fiduciary duty to disclose this to any future buyers/banks should this deal fall apart.

Second, the buyer and seller may agree on a negotiated price somewhere in the middle, BUT the buyer will have to come in with additional cash, because the banks will only value the property at the appraised price.  So, for example, if the buyer and seller originally agreed on a $400,000 sales price, but the appraised value comes in at $390,000, the banks will only lend on the $390,000 price.  So if the banks set up the financing at 80% LTV (Loan To Value), originally, the buyer was expecting to get a loan for $320,000.  And they would put as a down payment $80,000 (20% Down Payment.)  Well, when the appraisal comes in low, they negotiate to meet in the middle, so if they split the $10,000 appraised value down the middle, and meet at a sales price of $395,000, the bank will still only loan 80% of the APPRAISED VALUE of $390,000, or $312,000, but now the buyer will have to come in with an $83,000 down payment to make the deal work for everyone.

Supply and Demand... in Real Estate

Does the principles of Supply and Demand work in Real Estate?

Yes!  Absolutely!  Sometimes to a lesser degree than say a box of doughnuts, but the principles are the same, and the effect is the same.  Let's look at a couple examples:

If there is a new employer in town that is hiring top level software security experts, don't they need homes to live in?  And what type of homes do you think a top level software security expert want to live in?  My guess is they would make pretty good money, and would want their families to live in nice homes, so either a builder would have to come in and build nice homes, or the number of homes available for this type of person may be somewhat scarce, which would drive up the price of homes in the area.  So the principle is the same, the demand would go up, so the supply may go up, but if not, then the prices go up even more.

Now it is also true that the interest rates play a big part in what home prices do as well.  If a buyer goes to his loan officer and gets pre-qualified for a home, typically, here in the U.S.A., the buyer wants to buy as big of a home as they can afford.  So if the interest rates are low, that will allow them to purchase a larger home, if the interest rates start going up, they may start looking at smaller homes.  Also, if the trend continues, and interest rates continue to rise before they are able to purchase a home, the price of homes may start to slip a little, and may even go down a little, however, that usually means their monthly payment will be the same, just more of their payment will go to interest.

Lastly, if an employer who employs thousands of workers in the area closes up shop, moves out of state, what happens to the housing prices in the area they left?  Yep, lots of homes for sale in the area, lots of competition to sell a house quickly means, usually, the savvy seller knows that to sell quickly, you have to make the price EXTRA attractive to potential buyers... that means lowering the price below market average, and if enough sellers want to sell quick enough, the price of homes can go down quickly.  Does this always happen?  No.  But can this happen?  Yes.  And that's how Supply and Demand can affect Real Estate.

Home Warranty

There are many different Home Warranty companies out there.  Old Republic, American Home Shield, First American Home Warranty, etc.  They all do basically the same thing...  They insure the home's existing appliances, A/C, pool equipment, and some even have roof protection for an additional fee.  (Usually, A/C, and pool equipment are slightly more expensive to include as well.)  But, in most cases, if one of these breaks down during the first year of ownership, it typically will cost a $50-$75 service charge (or some companies call it a deductible) to repair or replace the defective unit.  And if they come out, and for some reason say the item is not covered (which DOES happen occasionally, when the home inspection calls out issues with the unit.), they still charge you the $50-$75. And then you still have to repair or replace the defective unit.

On the other hand, I have had clients receive brand new, upgraded dishwashers because the installed model was no longer available.  I have also had clients receive a new water heater because there was no sign that the installed one was going to die on them.  So in those cases, it makes perfect sense to pay $50 and get a new dishwasher, or water heater... installed.

Utah's State Construction Registry

In Utah, there are some potential issues for contractors, subcontractors, suppliers of building materials, and owners of the new construction project.

To help safeguard all involved, the state has created a mandatory online submission for everyone who owns/builds on/supplies for a property with a construction project.

The overall view is that if the owner pays the General Contractor, they hire a SubContractor, who gets their supplies from a local building supplier, the chain of who does what is fairly evident to the General Contractor, however, the owner doesn't necessarily know who is working on his house.  He only knows that he hired a General Contractor.  So if the General Contractor skips out, and leaves town without paying the SubContractor, who in turn would need to pay his supplier, especially after he was paid by the owner of the home, this presents a huge problem... the owner would essentially pay for some things twice in order to free all the liens on his property.  The State Construction Registry if properly used is supposed to address all these issues.

If everyone working on a project registers on the website, then the owner knows who did what, who provided what, and who needs to be paid for what.  Simple as that!

Beware of Foreclosure SCAMs

I think it is unfortunate that there are people in the world that take advantage of desperate people in desperate situations.  Think about it, someone has defaulted on their loan, they stand to lose their home, and then a fraudster comes in, says give me some money and I will fix it, however, they do absolutely nothing.  It's shameful!

The NUMBER 1 RULE when searching for someone to help you with mortgage relief is: Pay Nothing Up Front.  (That is the law.  Period.)  Under NO circumstances should you pay anyone to assist you with a loan modification or bail you out of your foreclosure.  There are "straw buyers" out there that basically artificially inflate the value of the property for appraisal purposes, then has their straw buyer buy the property, then they promise the borrower can buy the property back.  I don't know how anyone doesn't see "red flags" all over this scenario.  Well, if you don't, hopefully you will look for the warning signs.

Just remember, if something sounds too good to be true, it usually is.  Sorry to be a dream killer.  :-)

What is LTV and why is it important?

When qualifying for a loan, most lenders will look at the Loan To Value (LTV).  If a borrower is willing to put in money toward the purchase, this tells the lender that the borrower is not as likely to default on the loan.  Basically, the borrower has some "skin in the game."  Consequently, the lower the LTV, the more attractive the loan to a lender.

Conversely, a typical FHA loan is 96.5% LTV.  That means the borrower only needs to come in with 3.5% down payment in order to purchase the home.  This is why the FHA loan is so popular.  They have relaxed underwriting guidelines, HOWEVER, they ALL require MI (Mortgage Insurance.)  This mortgage insurance can be quite expensive, hundreds of dollars per month.  And the only use for this insurance is if YOU DEFAULT on the loan, and the only beneficiary is the lender in case of default.  Ideally, I recommend hat borrowers either come in with 20% down, and avoid the MI altogether, or occasionally, it makes sense to do a second lien that will avoid M.I.  As mentioned, it can be hundreds of dollars per month, so if the math works out, then it makes sense.  Any competent Loan Officer will be happy to run the numbers for you.  And if they won't, please... PLEASE contact me directly.  I will be happy to put you in touch with a lender that WILL do the math for you.

Best of luck!

How do I improve my credit score quickly?

This is one of my favorite questions.  There are many things one can do to improve their credit score, but the most important thing I can tell someone is to just not get in over their head.  Make sure that anything they put on credit, they absolutely NEED.  (Not just "want.")  And then make absolutely sure that you make the payments ON TIME EVERY MONTH.  If you can't commit to making the payment every month, it is probably NOT a good idea to purchase the item.  By simply doing this, your credit score will skyrocket.

However, there are those that have made some mistakes in the past.  If you do carry a balance, the easiest and quickest way to get a little boost in your credit score is to call your credit card company and ask for a credit limit increase.  This may sound a little strange, but the math works out like this...

If you carry a balance of $1500 on your credit card, and your credit limit is $2000, you have $500 of unused credit, or 25% of unused portion of your credit.  If you are able to call your credit card company and have them raise your credit limit to $3000, well, your balance is still only $1500, but your unused portion of your credit is now $1500, or 50% unused credit.  (You just have to make sure you don't go and max out the new unused portion of your credit.

Some of the things that seem like they would help your credit score, actually can drag down your score.  For instance, if you have older collections, it seems like you would want to pay them off before applying for a new loan.  However, there are instances when it will actually hurt you.  The reasoning is because it was an older collection and had not been reported on for months, maybe even years, but when you pay it off, it now shows as new, even though its paid off.

My personal recommendation is to NOT use credit once it's established.  However, the only way to get a credit score is to USE credit.  So for most people, I would recommend a small auto loan, and make sure you make the payment every month.  Then get a small credit card, maybe $500 limit, and purchase only necessities, then carry a very small balance every month, $250, this will show that you understand how to use credit.  Even if your APR is ridiculously high, at 25% and you carry a balance of $250, your monthly interest payment will only be $5.21/month ($250 x .25 / 12 months = $5.2083333)  I personally, would consider $5.21/month a good investment in your credit, and in your future as a homeowner.

What is a Bridge, Gap, or Swing loan?

If you own a property and have a significant amount of equity in the property, there are private money lenders out there that have cash on hand, and want to lend out money.  These lenders have been tightly regulated over the past few years, however, the interest rates are still significantly higher, and these lenders are much more proficient at foreclosing on your property if any payments are missed. 

Occasionally, there may be a rare opportunity when I would recommend one of these Hard Money loans (Also called Bridge, Gap, or Swing loans), but for the most part I would not recommend this type of loan.  One of the rare situations would be, if you find the perfect property at an unbelievable price, and the seller has only given you about a week to get the money together to buy the property.  How often has this situation come up in your life?  If you said, "Never." don't worry, I haven't ever come across it either... and I'm in the industry.

The reality is, these loans are far too expensive unless you have money to burn.  I highly recommend skipping this option, and if you need to sell a property to buy another one, give me a call, I have ways of protecting you from being "kicked out" of your home during the whole process of selling your home and buying a new home.

No matter where you are in the U.S.  I have GREAT contacts ALL over the country!  Give me a call/text, I can definitely help!

What is the difference between a Fixed Rate Mortgage and an Adjustable Rate Mortgage?

There are many different types of home financing loan programs, but for most Americans that just want to make their monthly payments and own their home one day, the 30 Year Fixed Rate Home Mortgage is the best option.

This is the best option because it gives them the lowest possible payment every month, and the payment will not change over the life of the loan.  The Amortization is the same as the loan, 30 years, or "Fully Amortized."  These are widely available loans and they typically have the broadest underwriting guidelines available to most borrowers.

The next few types of loans are typically only used in special circumstances.

Interest Only ARM loans (Adjustable Rate Mortgage):  In rapidly appreciating areas, these are a great option to "get your foot in the door", have a manageable payment every month, and then the goal is to refinance into a 15 or 30 year fixed loan, once you have been able to get rid of the M.I. (Mortgage Insurance.)  This has been typically at 80% LTV (Loan To Value) however, recent changes to the M.I. schedules may require you to refinance to take advantage of removing the M.I.  Please make sure you discuss with your loan officer about removing the M.I.  These loans also have "caps" associated with the adjustable terms.  The caps are typically 2%/2%/6%.  (That is, 2% initial maximum jump from the original rate, 2% maximum jump every adjustment term, with a maximum of 6% increase cap over the initial rate for the life of the loan.)

Fully Amortized ARM loans:  Very similar usage to the Interest Only ARM Loans above.  The difference is that Interest AND Principal are due each month.

Neg-Am Loans:  (Negative Amortization Loans, Sometimes these are also called PayOption ARM loans):  The lender actually gives you 4 options to pay each month, but what was not crystal clear to the average borrower was that if you chose the cheapest payment every month, true, it would not hurt your credit score, however, you would not even be covering all of the interest due each month, so they would "tack on" the interest to your principal balance at the end of the loan term.  OUCH!  This loan has traditionally been reserved for ONLY the most savvy investor who understands about cash flow.  Mostly commercial real estate developers, who plan on selling in the near future, and are just streamlining their cash flow for the short term.  This may be the "straw that broke the camel's back" with the mortgage meltdown in 2007 - 2008. 

Subprime Loans:  These are typically higher interest rate loans, and either 2/28 or 3/27.  And most of them have a PrePayment Penalty built into them (unless not allowed by state law.)  These were meant to be a "band aid" loan, typically to get a borrower into their home, or refinance their home with this loan, then work on repairing their credit, then refinance into something more traditional.  This is the loan program that got all the blame for the mortgage meltdown of 2007-2008.  And while there was definitely some abuse of these types of loans, the FINAL straw was the Pay-Option ARMs.

What is FannieMae, FreddieMac and GinnieMae?

FannieMae, FreddieMac and GinnieMae have a HUGE impact on the mortgage markets.  They help keep home loans affordable and available no matter what the economy is doing.  They all have similar underwriting guidelines for the types of loans they purchase, and the main goal of all 3 is to keep housing affordable.  Fannie and Freddie are publicly traded on the stock exchanges, while Ginnie is 100% government owned and operated, and NOT traded on the stock exchange.

These 3 investors of Mortgage Backed Securities have been and continue to be very helpful for many families in the United States. They have also streamlined the underwriting process with their AU (Automated Underwriting) engines available online.  Many lenders can submit loan parameters, credit scores, and specific underwriting/loan processing information, and upload it to the online AU engine and get a credit decision within minutes... sometimes in just seconds.  There are usually loan conditions that must be met, conditions, verifications, etc. that must be uploaded and verified manually (by human eyes), but the process has been significantly quicker.

There have been a few attempts by some of the larger banks/mortgage companies to create their own Automated Underwriting engines, but none have been quite as successful as Fannie, Freddie, and Ginnie.

What is an Underwriter?

An Underwriter is the lender's last line of defense against fraud.  An Underwriter takes ALL the aspects of the borrower, their income, their assets, their liabilities, along with the appraised value of the property, and then creates a decision to lend, or to deny credit to the borrower.  Occasionally there are "compensating factors" that if the borrower doesn't quite meet the guidelines, they can show that there are other areas of the loan that they are "over qualified" for. 

The Underwriter acts as the "sound of reason," and sometimes make a decision for the borrower that they may not like, but is in their best interest...  basically, they tell the borrower that they would be over-extended.  So an underwriter looks out for the bank and the borrower, and they do this by looking at default rates, Debt-To-Income ratios, liabilities, credit scores, etc.

With all the fraud in the world lately, the banks have to have their underwriters give "conditional approvals", that is...  The loan is approved, but they require additional information in one or more areas.  Think of it like this... if a fraudster knows EVERYTHING the lender will ask for and "creates" all the documentation necessary to fool the underwriter and bank to get a loan, then the fraud becomes very easy.  If the banks are allowed to ask for additional verification information to ensure that no fraud is being committed, then the banks will feel more confident in the truthfulness of the loan file, and that will lead to less default rates, and less fraud, which will lead to overall lower rates for the consumer.

What is a REIT? and why are they important?

A REIT is a Real Estate Investment Trust.

This basically means a number of people with money to invest, invest in Real Estate through a REIT.  They do not have the direct holdings of real estate, but all the assets are invested in Real Estate, the holdings can be Residential, Commercial, Strip Malls, etc., and any rents (revenue) collected are then used to maintain the building, pay any taxes, and then any leftover monies is divided up and paid out as dividends to the investors of the REIT.

These REITs can be Publicly traded on the stock market, or Privately held.

They are essential to the Primary Mortgage Market, so the next time you think about getting a mortgage, and wonder, who is putting up the money so I can buy a home?  It's not always, "The bank down the street."  Many times it's large corporations with enormous amounts of money that like to invest in solid investments, not looking for HUGE returns, but have collateral associated with the debt.  Which is what makes Real Estate the PERFECT investment for these groups.  Such companies like Insurance companies, corporations, etc.

The Secondary Mortgage Market is like the "back end" of the mortgage market.  A few days ago, I mentioned that many times, the mortgage you get is "assigned" to another bank just weeks after closing escrow.  This is common, and does not mean that they do not want you as a client.  It just means that another bank was interested in investing in "the type of loan" you contracted.  If you've ever heard of the bond market, well, mortgages are typically traded very tightly to what the bond market is doing, that is because in order to keep interest rates low for borrowers, the banks look for very conservative investments that they can trade against, the bond market is perfect for this, and typically, is connected to the stock market with an inverse relationship.  So when the Bond market is down, the stock market is up, also, when the Bond market is up, the stock market is down...  Again, this is typically... but occasionally, both can be up, and both can be down.  Also, many times the bank that lends you money initially, they borrow the money from a "Warehouse Lender" and is usually borrowed with the intention of paying off the warehouse line within 30 days.  Also, there can be significant fees for the lender if they do not pay off their warehouse line within 30 days.  That is another reason why you may see the bank you pay your mortgage to, may change within the first few weeks of closing escrow.

The importance of attention to details in Real Estate Contracts

Luckily, early on in life, I was blessed to work for a gentleman that *WAS* very, VERY sensitive to all the small details, and he was able to show me how important the details are, and what might happen if even the smallest detail is overlooked.  I have tried to instill the same lessons into my children, and I consider myself very lucky to have someone to show me how important every little detail is... ESPECIALLY in Real Estate Contracts.

There are quite a few "little" checkboxes throughout the contract.  It is IMPERATIVE that EACH one is reviewed, and the wishes of the client are met and the contract is executed as both parties agree.

I can't stress enough to every prospective buyer and seller of real estate how important it is to select the right agent, who has the experience, knowledge, and professionalism to help you execute your transaction.  If you need any help, please give me a call/text/e-mail.

Seller's Disclosures and Buyer's Conditions of Purchase... and how they are related to each other.

Upon opening Escrow, both the buyer and seller have obligations and tasks they must perform in order to close escrow.

The seller must disclose all knows defects of the property.  The Seller's Disclosures is kind of the "road map" and will help the seller recall anything pertinent to the buyer.

Also, the Buyer's Conditions of Purchase is his chance to have the property fully reviewed in any way he sees fit, home inspection, chimney inspection, A/C, Heater Inspection, Foundation Inspection...  Whatever he feels is necessary, but also these are typically paid for by the buyer, so most of the inspections are few after the General Home Inspection (Usually $350-$500.)

If anything is uncovered or disclosed that the buyer is uncomfortable with, they may cancel the contract and receive all of their Earnest Money Deposit back.

The Seller, once accepting an offer has very little chance of cancelling the contract, so it is vital that the seller is absolutely sure they want to sell the home before accepting any offer.

What is a novation and what is an assignment?

If you have ever purchased a home, you have probably noticed that the bank that you started writing your monthly check to is not the same bank a few months after the loan is closed.  This is because you signed an "Assignment" to the note that says the bank can sell your loan so long as the terms remain the same.  This "Assignment" is just that, an agreement, usually beforehand and in the contract that allows one party to "Assign" the right to take someone's place in the transaction, again, so long as the terms of the contract remain the same.

A Novation is a little different.  In a Novation, ALL parties must agree to the person taking someone's place.  Again, all terms remain the same in the contract, but by replacing someone by novation, the other party as the right to object for any reason.

What is an "Option to Purchase" in Real Estate?

Very simply, an Option to Purchase is just what it sounds like...  The buyer typically gives some type of consideration to Purchase the home at a future date in time.  There are certain requirements that need to be met for it to be a valid Option to Purchase contract.
1.  There must be a termination date.
2.  Terms - There must be terms of how the transaction will occur IF the option is exercised.
3.  Consideration - The buyer must give some form of value for the option.  This is the option consideration.  In the event the option is exercised, additional consideration will be given from the buyer to the seller.

These types of scenarios typically come at a premium to the buyer.  Either the price of the property is slightly higher to compensate the seller, or the monthly allotment to the purchase price in the lease portion may be lower than you might have wanted or expected.  Either way, these scenarios are not right for everyone, but for the buyer with a lot of cash, but not all that great of credit, this may be a great way for them to be able to get into their dream home.

This is not to be confused with a "Lease/Purchase", or a "First Right of Refusal."

Many experts believe there is too much advantage for the person leasing the property in a Lease/Purchase agreement.  (If you'd like more information as to why, Google me, send me a text or e-mail, and I would be happy to share with you exactly why.)

And a "First Right of Refusal" is not a guarantee to sell or buy a property, it is just a courtesy to someone who is interested in the property.

How are disputes resolved in Real Estate?

Occasionally disputes DO arise in the normal course of executing a real estate contract.  Large sums of money, along with LOTS of moving parts involved with a real estate transaction; Title Searches, Home Loans, Appraisals, Flood Zones, HOAs, etc., just to point out a few of the pieces of the puzzle that have to fall into place all on the timelines set by the real estate agents.  It is inevitable that occasionally there are miscommunications and the deal can start to go sideways.

Of course, the best (and least expensive way) for parties to resolve disputes is to negotiate directly.  If that breaks down, the next course of action is to seek mediation through a third party with expertise in resolving real estate disputes.  And if THAT does not bring satisfaction to both sides, lawyers and judges finally can be brought in.  Usually at a very high expense and can take some time as well.

But remember, the best way is to avoid disputes in the first place is by clear, concise communication in the contract, along with competent agents helping to perform specific parts of the contract in a timely manner.

What makes a contract Valid and Enforceable?

What makes a contract valid and Enforceable?

As you may already know, entering into contracts is a very serious issue.  One to be taken very seriously, and one you should have the best experts on your side.  Experience matters!  Remember the old saying, "If you think an expert is expensive, try hiring an amateur."  (The thought being, that an amateur will get you into much more trouble as they are not as aware of the pitfalls that the expert knows to avoid.  And after all, THAT is what you are paying for, isn't it?)

So today's thought for you is what makes a contract valid and enforceable?

There are quite a few items required to make a contract "Valid"
1.  There must be mutual consent between the two parties.
2.  Legal Purpose - The reason for the contract must be legal in purpose.
3.  Voluntary Act of Good Faith - Both parties must not be fraudulent or under duress.
4.  Competent Parties - In the state of Utah, all parties must be at least 18 years of age, and must be mentally competent of the requirements placed upon them under contract, and the consequences.
5.  Valuable Consideration - Both parties must exchange something of value upon the execution of all parts of the contract.

Additionally, a "Void" contract means it is not enforceable by law.  This type of contract is missing one or more of the requirements of a valid contract.

Also, a "Voidable" contract means the contract may have a problem with fraud, misrepresentation, undue influence, or duress, meaning the contract may become void through one of the parties exercising rescission.

Finally, enforceable vs. unenforceable contracts is as simple as having the contract in writing.  All real estate contracts must be in writing to be enforceable.  While Verbal contracts are still valid, they are NOT enforceable as there is nothing in writing for any mediator or judge to say with conviction who is to do what under contract.  So again, ALL real estate transactions MUST be in writing, and both parties must work towards closing escrow.

What happens when one party backs out of the contract without valid contractual reasons...

Today I will share with you some of the consequences of trying to end a contract if you are not allowed to based on the contract that you already signed.

Please note, that a good agent will always know and advise you of the best options available to you, and while nobody wants to go to court or mediation, occasionally there are misunderstandings and that is exactly where you end up.  Please check out the link below for an unfortunate set of circumstances:

Duress - Example

Note that in the example above, the party that won, they still were not able to recapture their legal fees, so my feeling is that it's best to NOT let things end up in court if at all possible.

The damages you may be subject to are as follows:

Monetary Damages - If someone paid money out of pocket per the contract, they are entitled to recapture that according to the contract.

Liquidated Damages - If the contract spells out that either party that backs out of the contract will owe the other party $10,000, then the defaulting party can sue for the $10,000 (Liquidated Damages.)

Specific Performance - If a party backs out of the contract for no good reason the day before the end of the contract, the judge can find that they have to execute the contract.

Types of Easements in Utah

There are 5 types of easements utilized in Utah:

Appurtenant Easement - Transfers with the property, the Easement is necessary to access their land.  There is a Dominant Tenement and a Servient Tenement.  The Dominant is the property that needs the easement, the Servient is the property that facilitates the easement.
Easement in Gross - If someone were to pay to use a part of their land, the easement would end when the property is sold, or the person needing the easement dies.  (This is the type typically used by utility companies.)
Party Wall Easement - The 2 properties share a common wall, the property line is the middle of the wall, and each side of the wall can be used by the party each side of the wall.
Easement by Necessity - If a property is subdivided into two properties, and only one of the properties can be accessed by road, an Easement by Necessity must be created on the property that has direct access to the road.
Easement by Condemnation - This is used by government (exercising Eminent Domain) for public good (usually a highway).

Water Rights in Utah... very interesting

So, the state of Utah views ALL water in the state as owned by the people of the state.  Therefore any water found on your property is actually owned by the people, and to use it, you must receive approval from the appropriate government entity.

There is an interesting pamphlet put out in 2012.  Please click on the link below to check out the 16 page pamphlet (in .PDF format).  This is a great full color document with illustrations, graphs, background of the state, etc.  Did you know that Utah is the 2nd most arid state in the country?

How Utah Water Works

What is Real Estate?

Real Estate as defined by most states is land, and anything permanently affixed to it along with the subsurface (all things below the land) and the air above.  Everything else that can be owned is described as Personal Property, or Chattel.

Along with land and home ownership go a "Bundle of Rights."  These rights include:
The Right of Possession  (If you rent the property, you have the right to possess it.)
The Right to Use  (The right to fish, farm, hunt, etc. so long as it is legal and does not bother or disturb others from using their land.)
The Right to Transfer (The right to sell the property.)
The Right to Encumber  (The right to use as collateral, or borrow against.)
The Right to Exclude  (The right to post No Trespassing signs, and prosecute violators.)

Implied vs. Express contracts

Just a quick FYI...

Did you know that an Express Contract can be verbal or written?  Most express contracts are written and agreed upon by agents and clients.

And an Implied contract is basically someone taking the suggestions of a real estate agent.

Communication Skills

Have you ever heard the saying, "It's not what you say, it's how you say it."?  So the saying goes, so goes your business.  Think about it, if you offend people, are they going to want to do business with you?  Are they going to want to even be around you?  It is important to remain professional at all times in your business.  Sometimes that means biting your tongue, and "being the bigger person."

There is an element of "Acting" at every job.  Think about it...  Have you ever been to "In-N-Out" Burger?  They pay their employees very well for a fast food chain, but they also require their employees to be professional, friendly, and courteous at all times.  But what if the employee just doesn't feel like being friendly that day?  It's very simple, and goes back to my original point in this paragraph, there is an element of "Acting" that is required.  The same is true for you in your profession.  No matter what you do for work, it is important that you remain professional, friendly, and courteous at all times, even if you're having a bad day.  So how does one accomplish this?  It's really a mindset, once you set foot in your office, or business setting, you have to tell yourself to put on your professional "game face."  Get in the mindset that every time you go to work, you will be professional, friendly, and courteous.  Yes, it takes practice, yes, it's not always easy... especially if you deal with difficult people, but it ALWAYS pays off in the long run.

Give it a try!  Let me know how it goes for you.

Fiduciary Duties of a Real Estate agent to their clients

Today's topic is Fiduciary Duties.  There are 6 core elements to consider in Fiduciary Duties:
Accountability, Care, Confidentiality, Disclosure, Loyalty, and Obedience.  The bottom line is that an agent needs to ALWAYS put the needs of their client above their own interests.

Accountability is the obligation to make sure the deposit check is deposited to the right account by the due date.  It is also the obligation to make sure the clients home is locked up and secure when the agent is finished showing the home.
Care is the obligation to go above and beyond for your client when you see that they are in need of something during the transaction, to truly care about your client will go a long way with them when they want to refer their friends and family to a good real estate agent.
Confidentiality is the obligation to keep your clients financial positions confidential from the other side of the transaction.  For example, if the client wanted to offer $650,000 for a home, but they could afford and would be willing to pay up to $700,000 for the home, it is the agents duty to keep that confidential.
Disclosure is the obligation to disclose all material facts known about the property, including any rumors heard about the property.  For example, if the property was near a train track, and every night at 11pm the whole house shakes from the train rushing by, that would need to be disclosed.  (That is not something that is likely to be discovered until ownership of the home is taken.  It would not be discovered by a home inspector, or any other specialized inspections, neither is it likely that prospective home buyers would look at homes at 11pm at night, therefore it needs to be disclosed.)
Loyalty is the obligation to put the needs of the client above the agents own needs.
Obedience is the obligation to do what the client asks you to do (so long as it's legal.)

It is very important that you select the right agent!  Honesty, integrity, experience is important! 

If you need any assistance, please give me a call/text.

How DisneyWorld came to be...

Did you know that Walt Disney had the insight and help of some great real estate minds when he set out to bring DisneyWorld to Florida...  When he began buying up huge chunks of land in Florida, his agent was wise enough to designate Mr. Disney as an "Undisclosed Party" in the transaction.  Can you imagine what prices he may have had to pay if he were not able to remain anonymous in the transaction.  There are many things your agent needs to know to protect your interests when buying a property.  Do you have the best agent?

Give me a call if you need any assistance.

Update on Brett Bystrom's Real Estate Business

Just a quick update for you with regard to my status.  As many of you are aware, my family and I have relocated to the state of Utah earlier this month.  Yes, it's a LOT colder, and I have gotten my first taste of shoveling snow!  It is a beautiful state, and I am currently enrolled in school to get my real estate license in Utah.  Please note, I will be keeping my California Real Estate License active, and will be able to assist all my previous clients with the help of my previous office in Moorpark, CA.  (Thank you Nicole for being a great resource for my clients.)

I also wanted to share with you something I picked up during my Utah R.E. schooling recently:

In Utah, there are 21 ways you can lose your Real Estate License, I will just share one aspect of one way you can lose your license:
Dishonesty - You can lose your license for misrepresenting material facts about the home you are showing.  While this is very similar to California, they have spelled out every way, and then given very specific examples of what you must do, and what you cannot do.

This is the Bystrom and Strongo kids sledding, 2016 (Note the moon in the upper right corner)