Fall is About Change

As we enter Fall, a big theme is change.  Change is happening in nature, but also throughout our industry.  For our realtor friends, we see changes with how real estate is sold, changes with how brokerages operate, business is developed, etc.  The same is true for those in the mortgage industry.  Mortgage professionals, like realtors, are seeing changes in the way they market, deliver services etc. Mortgage professionals also deal with Federal laws which regulate much of their industry (real estate agents, while also affected by Federal laws, are governed by State law). Changes adopted to TRID in 2018 go into effect October 1st.  Check in with your favorite mortgage professional to find out what’s new on a regulatory basis. Like the real estate and mortgage professionals there are changes going on in the closing industry.

Change is happening much faster in 2018 largely because of technology.  We are all on technology overload, and we have to sift through what is needed and can help us, and what is just “noise.”

Sometimes we change to solve a problem and create a new one. Years ago, funds in excess of $5,000 were not required to be delivered by wire. The “Great Recession” changed that. Georgia decided wires were the safer alternative.

Today we know wires are risky business.  With wires, the industry attracted cybercriminals intent on redirecting funds.  In past articles we have addressed this industry risk and how to mitigate.  If you have questions, ask your favorite S&D attorney to share our tips to protect yourself.

However, some innovations and changes are for the best.  Ten years ago, we did monthly bank account reconciliations manually.  Some firms did them internally, and some firms through outside auditors. Issues likely were not be caught for 30 days (if the auditor or staff was paying attention). Today, most firms, including ours use automated daily 3 way reconciliations to ensure the accuracy of their accounts.

Also, 10 years ago, fraudulent checks could be cashed at a branch and became major headaches for firms. Today our firm uses a bank product called Positive Pay to block fraudulent checks; only checks we pre-authorize to the bank (by a daily data upload) will be paid. Finally, 10 years ago, wires for payoffs and proceeds were much rarer and had to be called in.  Today, we initiate wires from our computer on-line at time of closing.   If the Seller doesn’t receive their funds within an hour after closing, we might get a call, wondering what is taking so long.

Technology leads to “faster”, and creates expectations to do, respond, address, download, upload etc. faster. When people are moving fast on computers they make potentially big mistakes.  So when dealing with those critical processes, slow down, and have a process to avoid costly mistakes.

Here are a couple of big changes in the not too distant future of closings –

E-closings.  Years ago our firm worked with one pioneer lender to do closings partially on-line. There is  major movement in this direction.   Our firm is exploring this and preparing for the future.  Some states will transition to this new technology faster.  Remember: real estate (unlike mortgages) is governed by state law.  But before too long like everything else expect to see some “closings in the cloud.”

Blockchain & Cryptocurrency in real estate transactions. Though likely not as imminent as e-closings, the buzz right now is to expect to see this relatively soon. At least a few people have asked if we accept bitcoins.  It seems cryptocurrency is presently for speculators and criminals (since they in theory allow for anonymity) but real applications for both cryptocurrency and blockchain are expected.

One thing that will never change is our commitment to you and your clients.  Our pledge to care, to improve and to serve, we hope will allow us to be successful regardless of changes within our industry!

Financial Freedom

Speaking of change… I often think about that quote –

“Insanity is doing the same thing over and over and expecting a different result.”

We want change for the better; but do we change?

Like everyone reading this review, I am not getting any younger, and like many of you, I survived the “Great Recession.”  Survive is the honest word and that’s frankly something any of us should be proud to tell our children or a stranger.  But, time marches on and I am looking to achieve financial freedom.

Zig Ziglar and Jim Rohn argued for decades about motivation and information – Zig suggested motivation was most important and Jim is credited with the famous quote –

“If you have an idiot and you motivate him, now you have a motivated idiot.”

In a way, both are correct, you need the motivation to change but also the information, knowledge and growth to make it meaningful and lasting.

David Bach’s book delivers enough knowledge and motivation to make a lasting difference if you want to improve your financial future.  You don’t have to be an economist or stock expert to implement his best ideas and improve your financial upside.  It’s easy to read, easy to learn and easy to apply.

For me, several of the chapters had an impact, but two chapters really stood out: Chapter 3 – Find Your Double Latte Factor and Chapter 8 – Pay yourself first…faster.  In both cases, I have heard the advice from others, but he helped crystalize the importance of each and better implement for results.  In the case of the Double Latte it was about focusing on converting wasteful spending into successful saving.  We all have joked about how much we spend eating out or drinking the fancy coffees. and how wasteful that is, but it’s not just about spending less.  David Bach argues that you should set a goal and invest a specific amount.  Don’t just save in one area and spend in another, find your double latte, figure out what you can save monthly and invest this amount immediately and over time consistently.

Paying yourself first…emphasizes aggressively paying yourself before you even pay your taxes. This doesn’t mean splurging on frivolous things because you deserve it, but rather investing in tax deferred plans such as 401ks and IRAs to the max before you even pay taxes.  Since these are pre-tax dollars, he shows how you can invest heavily, reduce your taxes and limit the impact on your “take home pay.”

These are just two of the many good ideas which he explains in easy to understand and apply to your financial life.  But I also liked his chapters on living a rich life and being more charitable. Making money to just collect is not the way to go – as they say, “you can’t take it with you,” right?

Each idea included the growth over time with compound interest based on a 10% rate of return.  I am not sure in this generation of low rates and volatility in the markets that 10% is truly realistic but … all the more reason to find creative ways to earn more, waste less and save your way to financial freedom.

Finally, I was in a closing with two partners this week, and one asked me the last book I read, I started talking about this book. The friend who asked the question, said

“Wow I need to read it… it sounds amazing.”

Meanwhile his friend, a financial planner, said, “It is a great book.  I have it and you can borrow my copy.”

Unless you are there already, pick up this book, read, apply and thank me in 30 years! Here’s to your financial freedom!

Back To School! License Law

By Doug Dean

It’s that time of year – back to school!  At this time of year, I picture kids with backpacks, school buses, summer heat giving way to cooler fall temperatures, football games, and all the changes as we move from summer break to autumn and school.

For professionals, education is a year-round activity, both to stay current in our field and to meet our licensing requirements for CE (continuing education).  At Shafritz & Dean, LLC, we’re proud of our resources to assist you with your education, both through our own GREC-approved real estate school and as an instructor in other real estate schools.  It’s one of the ways we are here to help and support you, and we typically teach 3-5 CE classes each month for real estate agents.

A popular topic for our CE classes is License Law, as it is both important topic, and a mandatory component of real estate agent CEs.  I’ve compiled a list of 5 License Law pointers as a refresher.

1- Presenting Offers: A licensee shall promptly tender to any customer or client any signed offer to purchase, sell, lease, or exchange property made to such client or customer (GREC 520-1-.10(1)).  Although, the language is clear and unambiguous, I hear stories that an agent “won’t even pass that offer along to my seller; I know it’s too low and they won’t take it”.  Remind your fellow agent of their duty under this rule to tender any offer to their customer or client.

2- License Numbers: The license number of each licensee participating in a transaction and their firm shall appear on all brokerage agreements and purchase offers (GREC 520-1-.10(2)).  Interestingly, while this is not a new requirement, the GAR forms were revised only recently (within the past 2 years) to add places in the GAR Purchase/Sale Agreement for the license numbers.  Having the space to enter this information serves as a “reminder”, and I now see the license number on these documents much more consistently than in the past.

3- Copies of Documents: A licensee shall provide a copy of any document utilized in a real estate transaction to any individual signing such document. If any offer is accepted and signed by all parties, copies of that document shall be properly distributed, one to each person signing the document and one to each brokerage firm involved in the transaction (GREC 520-1-.10(3)).  This rule is straightforward, and the increasing use of electronic signatures and document distribution have made compliance with this rule more streamlined.  If you’re still paper-based, don’t overlook the requirement to distribute copies of documents properly.

4- Retention of Copies of Records and Documents: Copies of sales contracts, brokerage engagements, closing statements, leases, and other documents related to a real estate transaction required by law to be maintained in a broker’s file for three years shall be made available to authorized agents of the Commission upon reasonable request and at a reasonable cost to the Commission (GREC 520-1-.10(4)).  Remember your duty to keep the records for 3 years, and make them available to GREC upon request.  You may keep copies of the documents in any records storage system (that utilizes paper, film, electronic, or other media) provided you can produce true and correct copies of such documents and records and make them available to GREC upon request.  IMPORTANT: If you retain electronic or scanned copies of documents, be very careful to maintain good back-up copies, so that any failure or loss of a computer or storage device doesn’t cause you to lose all of your document copies!

5- Managing Trust Accounts and Trust Funds: A licensee shall place all cash, checks, or other items of value received by the licensee in a brokerage capacity into the custody of the broker holding the licensee’s license as soon after receipt as is practicably possible (GREC 520-1-.08(1b)).  The standard of care for this rule is very high – “as soon after receipt as is practicably possible”.  Make sure to place earnest money (and other cash, checks, or items of value) into the care, custody and control of your broker as quickly as possible.

Please check our calendar, and join us for the full 3-hour License Law CE class, coming soon to a location near you! Additionally, if you have any questions regarding license law or real estate law in general, please reach out to me.  We are here to help!

Realtors & Lenders Need Coaches Too

Wooden – A Lifetime of Observations and Reflections On and Off the Court

With the theme of this month’s newsletter – “Back to School” I could not think of a better choice for a book review than Wooden.  So many of the agents and loan officers we work with have sought out coaches to help them in business.  Our firm has also looked to coaches to help make us better in business.  I recently heard a life/business coach indicate that her industry developed from sports coaching which makes sense.  Wooden is the coach of coaches. So much of the coaching I have been exposed to in business seems to borrow from John Wooden’s philosophies and strategies.

Sports coaches are famous most often for winning.  John Wooden, my all-time favorite coach, is famous for not only winning but for teaching and developing his players into great people.   While, he won 10 national college basketball championships in 12 years, at heart he was a teacher.  This book is a summary of his philosophies and suggestions for what to focus on to become the best version of you.  As I reread the book for this article I was reminded just how influential John Wooden can still be as a coach.

The book is a collection of short essays, paragraphs and even poetry which are broken down into four parts: I. Families, Values, Virtues, II. Success, Achievement, Competition, III. Coaching, Teaching and Leading, IV. Putting it All Together: My Pyramid of Success.   This book has something for everyone and at each stage in a person’s career and life.

Section 1 is for all of us.  My favorite advice in this section was to make each day your masterpiece.   His words –

“Too often we get distracted by what we can’t control.  You can’t do anything about yesterday. The door to the past has been shut and the key thrown away.  You can do nothing about tomorrow.  It is yet to come.  However, tomorrow is in large part determined by what you do today.   So make today a masterpiece.  You have control over that.”

 And with that small quote is the foundation for the book and the philosophy that each and every day we need to attempt to become a little better and if we do, over time we’ll become a lot better.
In this book, Mr. Wooden “coaches” you in so many areas, and if you listen to his words, reflect on them  and attempt to apply them, you will likely see that improvement you’re seeking.  Sure you may already have a coach for your industry (albeit one you are likely paying hundreds of dollars monthly) but who better to seek coaching from then the winningest coach of all time who defines success as so much more than wins and losses.  Success to John Wooden, is the “peace of mind that is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming.”

At heart John Wooden was a teacher and this is your opportunity to learn from the best!

Banana Tree | Stone Mtn, GA

By Robynn Miller

Nestled in the Redan neighborhood in Stone Mountain.  It is Caribbean Cuisine at its finest.  Really it is some good old fashion Jamaican food.  It reminds me of my grandmother’s cooking in Jamaica.

The staff are personable and remember0 their clients well.  My favorite dish lately has been the vegetable plate with Ox -Tail gravy.  What is funny I’m not a gravy girl.  We have sent so many people there and it is great to hear their favorite dishes.  We have one friend that buys Rice and Peas with Jerk Gravy, that is all.

Banana Tree’s soups are really popular and sell out fast.  My Dad’s favorite is the Cow Foot Soup.  Don’t ask what is in it.  I really do not know but I have to call in early on Saturday to make sure 1 large soup is held for my Dad.

There is a vibe when you walk in; the music is loud and you dance your way to the counter or table but you can have a conversation.  Like a sports bar the TV is on and the men are watching with their sports. They are active in the community; sponsors of local soccer teams, and up and coming politicians.  They keep us informed about local news and upcoming Reggae shows.

Boss Lady (Management) and Peter (Waiter) sure make me and my family feel welcome and at home.  They remember little things like my granddaughter only likes the Beef Patties and the Jerk Chicken Alfredo Pasta Dish.  Boss Lady threw herself a birthday party and made it a customer appreciation party.  They always make going there an experience to remember.

Visit Banana Tree at 4885 Redan Rd, Stone Mountain GA 30088.

Freedom and HOAs/COAs

by Richard Shafritz & Doug Dean

Planned Unit Developments

So many of our communities are Planned Unit Developments and the condos, townhomes and even fee simple have mandatory associations!  We pay a price for all regulation and with these properties the price is freedom.  We have to make sure the communities we purchase in allow us to live the lives we wish to live.  For example –  Is it me, or does everyone all of a sudden want chickens – for eggs, for meat and even for pets.  But before you get to excited because the City /County your buying in allows them, make sure the association does too!  Otherwise, you’re dream of chickens could be cooked before the first egg is hatched (the metaphor is scrambled but you get the idea).

Rental Restrictions

But so often lately, the big pinch is on rental restrictions.  Please consult with the association directly before assuming (now that you have read the 4 Agreements of course you’ll never assume) you can rent the property in general or that the maximum rental capacity has not been met.

Just last week, we got to closing and a realtor representing a buyer assumed that the property had no rental restrictions because it was near a similar community and appeared to have the same architecture.  Fortunately the saving grace was that the listing agent was aware that the buyer wanted to rent and had already confirmed there were no restrictions.

Mandatory COAs or HOAs

The last point on HOA/COA is as the saying goes – “Freedom isn’t Free” and neither are Mandatory COAs or HOAs.  They are downright expensive at times and we often find ourselves in a “tug-of-war” with the appropriate party to pay for the letter required to close your transactions.  Don’t let this happen for a number of reasons – 1. if your client is waiting, the fees get much higher as we get much closer to the closing date.  It’s not uncommon for us to see a $100 letter become a $300 letter as we go from 14 days or more to a “super rush fee” of 3 days or less. 2. If we wait, we run the risk of discovering a fee which is a surprise to either party, and 3. Waiting can delay a closing – something we all fight to avoid.

So encourage your clients to cooperate so the closing attorneys and staff may ensure the letters are ordered to minimize costs, surprises and delays!

Of course if you want that chicken, another option is to avoid the COA/HOA in the first place… but be careful the county or city may have something to say and don’t even get me started about roosters…

The Four Agreements

by Richard Shafritz

Oddly enough, this month, a staff person handed me a book as a gift entitled “The Four Agreements… A Practical Guide to Personal Freedom.” By Don Miguel Ruiz

As many of my friends and those who know me best are aware, I read a lot of books on a variety of subjects but often the purpose of the book is to improve in a specific area.  Self help as one comedian joked is what gets us into our problems in the first place so I like to see what others have to say that can help me improve.

This small 138 page book packs much into the easy to read pages.  If you read fast you can certainly finish in a couple of hours and if you read slow not much longer.  But of all the books which fit into this category called “Self Help” I am convinced this book is the one to read if you read no others.

I begin by noting there is definitely a “New Age” and “Spiritual feel” to the book but suggest that even if that’s not your cup of tea, push through the beginning and get to the 4 agreements which the author correctly notes that “if you begin to live life  with these agreements, the  transformation in your life will be amazing.”  The 4 agreements is a premise that you can enjoy freedom and be a much better version of yourself by adhering to 4 agreements:

  1. Be Impeccable With Your Word
  2. Don’t Take Anything Personally
  3. Don’t Make Assumptions
  4. Always Do Your Best

Here what many reading this might be inclined to think – oh this is “common sense” and while I agree, it’s not often common in practice and I’ll bet everyone is better at one or two of the four listed above.  However, instead of 12 Principles for this that and the other as so many books suggest (and I have seen 25 prinicples and more in these kind of books) the four agreements above are enough to transform yourself and your life.

I loved this little book and want to read it until I am as close to 100% as I can be with the 4 Agreements. Please if you do read the book or have read it, let me know what you think!  Here’s to your freedom and to your transformation too.

Bronx Bagels, Alpharetta

by Tracy Wood, Director of First Impressions

When I first moved from New Jersey, to Georgia, I was desperate to find a place that served up a good New York style bagel.  When a friend recommended Bronx Bagels, in Alpharetta, assuring me that it was just as good as the ones back home, I decided to see for myself!

Bronx Bagels has a fun retro diner vibe, with an old school menu loaded with a variety of breakfast and lunch choices. The staff is hustling and bustling behind the counters, tending to each patron, ready to place their order whether it is in house or carry out. While all of their food is delicious, I HIGHLY recommend ordering their AMAZING bagels or bagel sandwiches.  Each day they bake fresh hand rolled, Kettle-Boiled bagels which gives them that authentic New York flavor. My personal favorite is their Taylor Ham, egg and cheese sandwich served on your choice of bagel.

So if you are in the mood for a real New York style bagel, I would urge you to check them out. There’s a reason they’ve been voted #1 Bagel in Atlanta and Top Ten Bagels in the United States!

Visit Bronx Bagels

The Real Estate Market is Hot

Reh! Quente! Atsui! Caliente! Hot!

So many languages and so many ways to say hot!  You know it when you see it and we are in a traditional hot month for real estate sales throughout the country and in Georgia!

Did you know that nationwide, June is traditionally the fastest month to sell a home?  So if you have listings right now or you’re a loan officer with successful listing agents you are probably very busy!

It’s  even better for all of us because the current economy worldwide and nationwide is hot.  Globally,  growth is “expected to reach 3.2 per cent in 2018 and 2019” which is robust  and in the United States, unemployment is at the lowest level since 2000  just 3.8%.

“But  wait…. There’s more!” as the infomercials say!  Our greatest optimism for real estate professionals (including realtors, agents, mortgage professionals, builders and closing agents) is what’s going on right here in Georgia!  Our employment growth and wage growth are both outpacing national averages.We have the busiest airport in world but more importantly we are currently #1 in corporate relocation.  That means jobs, which means more housing needs, which means more purchases, sales and financing opportunities.

Don’t let anyone tell you otherwise!  So  the Fed raised rates on June 13thand is signaling they may play a lesser role in keeping rates down.  Many of us are old enough to remember when fixed rates first dropped below 10% and we all cheered.  Perhaps ARMs will make a comeback but if we are employed and the local economy is booming you can make it big in real estate (and Shafritz & Dean is here to help!).

Be excited and be ready because this is haymaking season and for those of us who survived the Great Recession it’s time to make up for lost time, lost profits and well, just plain old losses. However, don’t forget that word recession, because cycles happen so make sure you squirrel some away for the rainy day.

At Shafritz & Dean, LLC we are hot, but we are never too busy for your referrals,  never too busy to help you with your contracts, your loans, your questions and your business!

Don’t Get Burnt By Cold Feet

By Richard Shafritz & Douglas Dean

Wow… what a month it’s been!

Activity is significant, but we saw a rash of Purchasers of all kinds getting cold feet after the due diligence period lapsed, after the appraisal contingency lapsed and after the opportunity to terminate lapsed. A pattern seemed to take shape: Purchaser became anxious for one reason or another (justified or otherwise) and wanted to unilaterally terminate; unfortunately, they simply were not in a position to do so. When their agents contacted Shafritz & Dean, we became the messenger of what happens when you want to terminate, but the other party doesn’t, & worst of all, you don’t have the unilateral right to do so any longer.

So let’s start with some generic examples of what happened.

Example 1 – Agent calls me to tell me the client wants to terminate as home did not appraise initially. Agent was told orally by listing agent that Seller would not sign amendment presented to reduce price. Armed with that information, agent showed new home to her client who fell in love. You guessed it, Seller on first property signed the amendment and now a real problem existed for the Purchaser, since they could not buy both homes. They tried to unilaterally terminate and of course were told that was not acceptable.

Example 2 – Investor purchased home “as is” with limited due diligence period. When they pulled down a decorative blanket placed by the tenant during their walk through and after the due diligence period, to their surprise they discovered what appeared to be mold and water damage. They wanted to unilaterally terminate and the Seller hired a good attorney who notified our firm the next day we needed to hold the earnest money and be prepared for potential litigation.

Example 3 – Purchaser and Seller agreed that Seller would make numerous repairs to the property, following written underwriting approval by Purchaser’s lender. Purchaser wanted to terminate despite only providing written underwriting approval 24 hours or less and after extending the contract unilaterally due to their lender requiring additional time. Seller was unwilling to do so and has threatened litigation.

Why is this happening so frequently?

We believe the Buyers are not fully aware of the rights of the Seller (and perhaps vice versa) when a default occurs. Agents must know the GAR contract inside and out, and this means ensuring your clients know what the risk is of failing to perform or default.

Under GAR Contract Section C.2 a.-c. The defaulting party is liable, and for much more than earnest money. “Any lawful remedy may be pursued against the defaulting party.” Section C.2.a. The broker may pursue commissions under Section C.2.b. and perhaps worst of all the non-prevailing party will be liable to the prevailing party for reasonable fees under Section C.2.c.

So you may be wondering how these and other “fine messes were resolved.” Several are ongoing but 2 were resolved: one for the Earnest Money plus damages under $5000, and one for a five figure settlement. Oh… in one case the buyer didn’t believe us, and so they met with an outstanding local real estate attorney. That buyer settled for five figures (not including the attorney charges).

Don’t let this happen to your clients, and don’t get caught in the middle.

Even though it is a sellers market, if you want to limit liability to the Earnest Money, submit your offer accordingly. Call or email us for guidance on contracts and look for our CEs on drafting etc. Don’t let your buyers get burnt!