All posts by etopkins

Real Estate Attorneys at Open Houses–Some Uncommon Opportunities to Shine

I am not trying to imitate that I have no life outside of my profession. I have a beautiful and talented wife, four devoted children and three interesting grandchildren. On the other hand, when a favorite loan originator of mine asks me to sit with him or her at an open house for a few hours on a Sunday afternoon in the winter time, I rarely refuse.

The open houses generally run no more than two or three hours. Sometimes they are not very well-attended. But, even when just two or three couples show up, I enjoy the arena. First of all, they do not expect an attorney to be in attendance. Most of the couples are young, and they have not yet established a relationship with an attorney. That is something for their parents, not them.

They ask me questions; I try to answer. We interact. I have some cards on the kitchen counter which have my name, cell phone number and email address. They are oversize cards which are gridded. I purchase them through Levenger’s. They are perfect for open houses because the people who come can use them to sketch floor plans. Their “floor plans” have my name and vital information on them. What could be better?

If I had not become an attorney, I would have been a teacher. I like to explain. I like to interact with people and see what makes them tick. My open house experience gives me this chance. More than that, I am doing a favor for, and keeping company with, a consistent source of business introductions. It all ends when the robins show up, and I can put a golf ball in the air. In the meantime, my Sunday open houses mean a lot to me, and I hope I can continue them for many winters to come.

FSBO’s–They are Increasing in Number; They Have their share of “Holes”; It Would be a mistake to view them as the “Enemy”

In the past three weeks, I have been actively involved in three FSBO’s. As a Massachusetts real estate attorney, I am often the “default resource” for people who do not want to pay a broker’s fee for the sale of their home. Whether this is an accurate conclusion on their part or not, they no not see the “value added” of a 3 or 4 or 5 percent charge to sell their home. They can rely on Craig’s List; they can relay on word of mouth; they can rely on the Internet:

I thought it might be worthwhile to describe the three situations in some detail. They may give our ActiveRain Naton some insight into FSBO’s and the fact that a constricted economy has caused many more people to use them:

     1. The Luxury Home in the Suburbs. My client is an extremely successful person in the financial area. His home is in pristine condition. He has an opportunity to relocate to the Western state where he grew up. He got the word out through the network in which he operates that his home was available, A similarly situated young couple had recently signed a purchase and sale agreement to sell their home. They have the money and the credit score. I have worked many times with their attorney on other deals. There were a few title issues. The other attorney and I worked things out. Last night I picked up the signed purchase and sale agreements at my client’s home. I will be holding the deposit for a closing in late March. This is a done deal, with very little likelihood of not taking place. I find it hard to see how a Realtor could have filled many of the holes here. My fee will be be more than usual, but certainly not in the middle five figures. This transaction would appear to have presented an efficiency that cannot be questioned. ActiveRain Nation may question this statement. I would be interested in hearing your comments.

     2. The Home in the Suburbs which has some “issues”.This matter came to me at a time when the Seller had received an “Offer” from a couple who had seen the FSBO Listing on Craig’s List. The Offer was a “low-ball” and there was no pre-approval letter attached. The Seller is in the “in-between” stages; he may be losing his job, and he would rather take a defensive stage and sell his home now. I prepared a counter Offer which provided some of the protections an Offer should contain, especially for a Seller. The putative Buyer declined to respond. He was a “tire kicker” from the get-go. My client has wasted money  , and is no further along. Sooner rather than later, I am going to suggest that the client list this home with a Realtor. It is my feeling that this will be easier to do now that he has seen how expensive and wasteful of time and money FSBO’s can be. I do not believe I could have told him this; he had to experience it.

    3. The Condo in the Back Bay that my Seller has not really even decided whether he wants to sell or not. This is a different kind of FSBO. It is kind of “I will run it up the flagpole and see if anyone salutes.” The Unit has charm and the asking price is only a little over market. My sense is that in this economy the Seller will not get much traffic. I prepared an Offer for them to use if one of their open houses produces a Buyer. I am not holding my breath. I am not getting any of my broker friends involved just yet. This Seller is a reverse “tire kicker”, and it is my belief that having a Realtor involved at this stage would not be productive.

So, there is a waterfront of three (3) FSBO’s, each offering different situations. Our industry should be considering how we can offer”value added” to FSBO Sellers. They are a rapidly increasing population, and just calling the Sellers who are listing property without a realtor  may not be the ultimate solution.

The Case of the Victimized School Teachers–Sometimes You just have to say “what the Heck!!!”

A few months ago, I received a call from a client whose daughter lived with three other women in an apartment.  The landlord, who had a chain of apartments in the Greater Boston area, was being neglectful.  There was a rodent problem, a leak in the ceiling persisted, and in this winter of winters, the heating system often failed.  Phone calls, letters, threats of non-payment of rent all were ignored.  In desperation, we were called upon to try to make the situation better.

The women wanted to remain in the apartment.  They all taught school in the local area.  They were friends and had found a location that was suitable.  They wanted the landlord to be responsive to their needs and live up to the assumption which exists in all Massachusetts tenancies which provides that an apartment must be “habitable”.  We started off with normal channels.  We wrote a certified letter to the landlord, requesting a forum to explain the problems.  This was unanswered.  We sent another letter and advised the landlord that if remedial action was not commenced, we would advise our clients to withhold rent.  Again, no response.  We informed the health officers in the town involved and requested that they inspect the alleged problems.  They conducted an inspection and cited the landlord for health code violations.  The landlord agreed to address the problems, but nothing happened.

With no other options available, we  advised our clients not  to pay rent to the landlord. We kept their rent in a segregated account.  The landlord sued: we defended.  When we had our day in court, subpoenaed the health officer to testify, and presented the facts, we were able to demonstrate that the landlord had violated the Lease and was not entitled to rent until the health code violations were rectified. The landlord has finally responded, and the problems have been rectified. The women are not vacating the apartment. We are confident that the landlord has learned a lesson and will take better care of health and safety issues in the future.

What we proposed to our clients was risky. Self-help is generally not recognized in our judicial system as a means of protest. But, we prevailed in this instance because the facts were so decidely on our side. It is cases like this which make the practice of law gratifying. Helping others help themselves gives one a good feeling

Let the other side win a few points–You will be amazed how well transactions move along when both sides feel good about the deal

I went to a good law school where I was challenged every day to develop new and innovative ideas. In effect, I was told that what I did needed to be special, because I was “so well trained”. Over forty years into a career as a Massachusetts real estate attorney have demonstrated to me that the wisdom of this approach is fleeting. I am much better off being thorough and competent, rather than being the “best and brightest” who always gets the better of the deal.

What I am trying to say is that a real estate transaction is like trying to catch a fish. Until the fish is in the boat,no one wins, not the fisherman; not the person steering the boat; not the people waiting on shore for their seafood dinner. In real estate, you really have nothing until you have a signed purchase agreement at a reasonable price with a deposit. Oh sure, you can hold out for a better price and show how tough you are, but the danger is that you obtained such a good price, there was no way the property appraisal would match the purchase price, so you are back to square one.

It has been my experience that real estate transaction come in waves. There is the initial negotiation which leads to a sales agreement. Each side wants an agreement that demonstrates that they did not “get taken”. As we approach the closing, ancillary issues come up. Can we move the closing date slightly? Would you be interesting in including the refrigerator? Can we close at my attorney’s office because it is “kid friendly” and I have three young children.

If the initial negotiation went smoothly, and the parties more or less got along (through their representatives), the rest of the transaction will usually continue to be amicable. The purchase will close, and that is how all of us will get paid. You will be surprised how many “yes” answers you will get when the initial dealings went well.

I tell all of my clients I do not want the phrase “He wrote the perfect purchase and sale agreement” on my headstone. I would rather be known as a person who was a “deal-maker”, who knew his craft and practiced it in such a way that people were comfortable using him. I am sure each of you feel the same way as approach Ground Hog Day and yearn for the joys of the spring market.

Appearing Before Local Zoning or Planning Boards–Use the Local Luiminary to Help You “Sail Through the Process”

There are some important things I have learned about appearances before local Planning Boards or Zoning Boards. Have someone really “local” leading your team. I am a Massachusetts practicing real estate attorney with more than 40 years of experience. From time to time, I am asked to represent clients before local Boards. I can make myself familiar with the terms of the local ordinances. I can speak to people I know in the community involved to find out what the appetite is in that community for the type of development or zoning change my client is seeking. I have some public speaking ability.

All of that being said, I never, ever appear before a local Board without retaining an attorney or attorneys who live in the town or city in question, or have a considerable amount of experience obtaining successful decisions in that arena. I have experienced too many “knowing looks” from  Board members in the past, when I tell them where I am from. It just doesn’t get me much mileage when I appear in Town X, in Y County and inform the Board members that I practice in Boston.

Have your  primary attorney find out who it is who gets  positive decisions in the town or city you are working in. Contact that person. In Massachusetts. I have complied a list of “go-to” people in many communities. I will gladly furnish my knowledge to any of you if you contact me.

You may want to keep your primary attorney somehow involved for iinformation and communication purposes, only. Your primary attorney should stay “way” in the background.  Allow the local luminary to have center stage.

If there ever is a time when “LOCAL” means something, it is before municipal Boards, who have the power to either make or break your intended transaction(s). Make sure your appearance before these bodies acknowledges that fact, and your chances of success are exponentially increased.

Saving Deals and Saving Time–Use and Occupancy Agreements Are “All-Purpose Solutions”

In Massachusetts, where I practice real estate law, lenders and developers often do not live up to their promises. That Unit which, for sure, is going to be ready by the end of the month, still has requires major finish work. “On my God, your loan got stuck in underwriting, and even though we issued a commitment and knew that you needed to close by January 29th, we just are not ready.” How many times have we all heard this and cringed, because our clients have no place to live and a truckload of furniture and furnishings are driving around somewhere in a moving van or storage facility, accruing daily charges at an alarming pace?

The solution to these, and many other problems, can be a well-drafted Use and Occupancy (“U and O”) Agreement. There are some caveats here:

     1. You cannot utilize a Use and Occupancy Agreement if an occupancy permit for the dwelling has not issued. Living in a dwelling under with a C of O poses insurance, and even legal risks.

 

    2. A Seller should NOT enter into a U and O if there is any real doubt that the delay with the lender is ministerial and not substantive. In other words, even though a U and O states that it is only a license to inhabit, and not a Lease, if the Buyer’s mortgage loan does not come through, the Seller may have to evict the Buyer from the dwelling, notwithstanding the language in the U and O.

    3. Make sure the title to the premises is clear. I have had clients enter into longer-term U and O agreements, and then run into title problems when they were ready to close on the purchase.

    4. Do a Walk-through of the dwelling before the Buyer takes occupancy. Normally, this walk-through will be the final inspection called for in the Purchase and Sale Agreement. Therefore, this will be the time to note, and deal with, conditions in the dwelling which do not comply with the terms of the Purchase and Sale Agreement.

Assuming all of the hurdles set forth above are not problems, I often draft U and O Agreements, which permit occupancy prior to closing. Among other things, these are the items which must be considered and included in a well drafted U and O Agreement:

     1 Financial Terms.  Normally the U and O licensee pays the principal, interest, tax and insurance for the dwelling. The Seller should be able to present evidence of all these items so there is no confusion.

     2. Term of the U and O. That varies from deal to deal. It is important ,however, to provide for a large payment due from the Buyer should the Buyer “hold-over” after the agreed upon term. For example, if the U and O fee is $100 a day, after the term is over, it increases to $250 a day. This protects a “squatter” situation by the Buyer.

     3. Escrow Held by an Attorney. This needs to be substantial (at least $2,500) to protect the Seller from a “holding-over” Buyer or physical damage done by a Buyer who does not close.

     4. Other Terms. Payment of utilities is usually a Buyer requirement. Other items like condominium common area charges are similarly treated. It is important to set forth what standard of cleanliness is required at the termination of the U and O, if a sale is not completed.

At Topkins & Bevans, we do Use and Occupancy Agreements on a regular basis. We will soon  be including some standard types of Use and Occupancy Agreements on our website, www.topkinsandbevans.com. Those of you who are in the business of buying and selling real estate should know about Use and Occupancy Agreements. They may be the “secret weapon” you can use to hold a wobbly deal together.

The Title Abstract as a “Family Tree” for the Home your Client is Buying–Help your clients learn the “Rest of the Story”

In Massachusetts, where I practice real estate law, the closing agent (almost always an attorney) requests a title abstract, which provides an at least 50 year history of the property in question. The Abstract, among other things, will show a “chain of title” which indicates dates and purchase price paid for the various prior deeds. Since the goal of the abstract is to establish that there are currently no “encumbrances” on the property, all mortgages and other consensual liens will be checked out, as well as bankruptcies and foreclosures. I like the process to knitting a sweater. If there is one dropped stitch (i.e problem in closing out all prior encumbrances) the abstract falls apart, and that issue needs to be dealt with.

Parenthetically, in this day and age, the “dropped stitch” is generally a missing mortgage discharge, where a prior mortgage has been paid off, but the proper evidence of same has not been recorded, so that the “record title” still shows the mortgage as being outstanding. Depending on the circumstances, a missing discharge may delay, or even more importantly,  prevent, a pending sale transaction. Having a ready ability to “play over” this imperfection is one of the most important reasons why I always suggest my clients obtain an Owner’s Policy of Title Insurance. With that document in hand, the Title Insurance Company will generally assume the burden of providing the missing discharge, post closing, and the transaction can be completed.

Setting aside the legal aspects of the Title Abstract, I have another “marketing” suggestion for you Buyer’s Agents who want to highlight the unique aspects of the service you are rendering to your Buyer. Request the actual Title Abstract from the title agent furnishing title certification.  This little puppy is crammed with useful information that your Buyer will enjoy researching. It will show who owned the property and for how long. It will show Probates and deaths of owners. It will show how much the property sold for in 1968, and the price fluctuations throughout the period  of the Abstract. It may also show divorces and other instruments and agreements affecting the property.

In this age of Google, your Buyer will have a field day looking up the prior owners, and determining whether any of them are famous,or at least noteworthy. From the 50 year Abstract, your Buyer can make a Registry or Town Hall visit and find a way to trace the house’s longer than 50 year history set forth in the Abstract. I have found that local Registry officials are more than happy to direct constituents to the old document books either on site or in an off-site archive. Lots of cocktail conversation, and more, is sitting right there in the Registry.

For my important clients, I have done this work, myself, and presented my clients with a house “family tree” at the closing. It is just one of the little things I try to do to differentiate myself from other Massachusetts conveyancers doing, essentially, the same work I am doing. This might be an interesting “add-on” for you Buyer’s Agents, as well

BPOs for loan Modifications and Short Sales need agent involvement!

To those people who regularly look at my posts, I commend this information for you review. Short sales are not going away, and our real estate community needs to know their options.

Elliott

When listing a Short Sale one of the most important things during the process is the BPO (Broker Price Opinion).  For those of you not familiar with these it is somewhat of a mini appraisal done by a Realtor to help advise the bank of the market value during a loan modification or short sale.  It is important for the listing agent to meet the BPO agent to assist in providing detailed info about the property and it’s value.  You never know what the experience level of the BPO agent is.  They might not even be the actual BPO agent and merely a licensed assistant.  I do tons of BPOs for both loan modifications and other agent’s Short Sales.  What amazes me is how many times the listing agent doesn’t show up when I have an interior BPO.

Today, after driving all the way down to Temecula from Riverside, I found that the home was in a gated community.  I tried calling the agent to no avail.  I searched the MLS from my phone trying to find gate codes.  There were none and the property I was headed to wasn’t listed.  I finally was able to follow someone else in and I was met by the homeowner.  The homeowner didn’t speak English.  I don’t speak Spanish.  When she answered the door, she looked puzzeled at who I was and why I was there.  The best I could do was wave my camera in the air to show her I wanted to take pictures.  She reluctantly let me in but I’m not sure if she even knew why.  The next issue was that 4 of her 6 bedroom doors were locked and I couldn’t get in to take pics.  Apparently the rooms belonged to her kids and they locked them before going to school.  She didn’t have keys.

Well, I took pics of what I could and left, leaving another message for the agent to reschedule me driving all the way back down to Temecula AGAIN!  I let the asset manager know I needed an extension and why.  he thought it was funny.

Foreclosures are a bad thing for homeowners.  No one wants to be foreclosed on.  Realizing this, the Government (along with cooperation from the banks)is making it far easier and appealing for homeowners to conduct Short Sales to save themselves and their credit from the terrible stigma and long term affects of the dreaded foreclosure.  Short Sales are a great avenue to help homeowners and the banks are getting better at getting them pushed through.  But without agents out there that are willing to do their job and do it well, the homeowner is left…well, pretty much just left!

So, agents…PLEASE!  Help me help you! And homeowners, make sure you have copies of your kid’s bedroom keys.

By the way, if you or someone you know is at risk of losing a home to foreclosure, please know that there are new options available to avoid this devastating occurrence. And know that there is someone here you can trust to help. As a Certified Pre-Foreclosure Specialist, I understand the ins and outs of Short Sales and Loan Modifications. I am also a Wachovia and World Bank trained Pre-Foreclosure expert and well educated in the Government’s new H.A.F.A. and H.A.M.P. programs for helping homeowners facing foreclosure.

Click on the link below to find out more about Preforeclosure alternatives:

Ray Wright – Preforeclosure Specialist

Click on the link below to find out more about Preforeclosure alternatives:

Click here to visit my website!

Dealing with Home Inspection Results–Health, Safety and that old Stand-by “Bargaining Power”

In Massachusetts, we have a rather archaic practice regarding agreements for the purchase and sale of real estate. There is an Offer to Purchase (usually signed by both parties without the benefit of counsel). After the Offer is signed, there is an hiatus where the Buyer causes a home inspection to be conducted. A well-written Offer will give the Buyer a complete “out” if the Buyer finds something that is seriously wrong with the dwelling.

The difficult issues come up when small issues arise, and the Buyer often sees these as an opportunity to “renegotiate” the deal. The Buyer’s risk after the Offer is signed is minimal. He or she could possibly lose the $500 or $1,000 which they put down as a “good faith binder” when they submitted the Offer. The Buyer has much more risk after the Purchase and Sale Agreement (more terms, almost always with the assistance of counsel, and a substantial deposit) is signed.

Whichever side I am representing in terms of turning an Offer into a Purchase and Sale Agreement, these are the rules, I try to live by with home inspection issues:

     1. Unless we are speaking about new construction, and Seller’s warranties, the Buyer is purchasing a “used house”. That means that the paint may be chipped, the electrical and plumbing systems not the most modern, the boiler not as efficient as the brand new ones. The Buyer needs to understand this set of facts and accept them.

     2. Health and safety issues are a different story.If the electrical system contains unsafe wiring, or there is a hole in the foundation, these items needs to be addressed. I normally opt for a “credit at closing” over having the Seller do the repairs. Somehow, I cannot see the Seller putting his or her heart and soul into a repair or re-installation which is only done to permit the sale of the dwelling. To me, the Buyer is the proper person to effect this work, because of his or her entirely different perspective on the project.

     3. Nothing I have said in Paragraphs 1 or 2 applies if one of the parties has disparate bargaining power. A home which has been on the market for 249 days is a lot different from one that was listed last week. If you have a motivated Seller, there is nothing wrong with exacting some financial or repair concessions based on your situation. Similarly, if the home you have dreamed of just gets listed, you may have to swallow some expenses to get the deal done.

My experience has been that a savvy Buyer’s Agent will be able to steer the Buyer through this minefield. First and foremost, the Buyer’s Agent should let the Buyer know what would appear to be possible. At that point, taking a reasoned, and unemotional, approach to dealing with home inspection items seems to have worked best for my clients. I have said in other posts that a major contribution of a real estate professional is to attempt to moderate, and channel, the Buyer’s, or Sellers’, angst. There is no better example of this talent than in the area of dealing with home inspection items, which never fail to arise.

Fixed fee Billing for Purchase Transactions and Sale Transactions–I have found this the only way to provide effective representation to my Massachusetts clients

I am a Massachusetts real estate attorney with over 40years of experience in the field of titles and conveyancing. If I don’t know how to do a residential real estate transaction by now, it it pretty obvious that I will never know. I am not saying I know every nuance of every kind of a transaction: I am saying my years of experience  have pretty much shown me what to expect in terms of time and expertise in any matter I am asked to get involved in.

That being said, I now take the position, in all residential real estate transactions, of providing my client with the option of a fixed fee for representation. I take a look at the scope of the deal, determine what amount of time I reasonably would expect to spend on the matter, and tell the client what the fixed fee will be. I ask for one-half of the fee as a retainer; the remainder of the fee can be paid at the closing table, by the Buyer or the Seller.

Once the fixed fee is agreed upon, there are no more discussions about billing. I keep my end of the bargain, in all instances. Sometimes (not often) I overestimate the time I need to spend on the matter, and the fixed fee presents a small windfall for me. It is more often the case, however, that I spend more time on the matter than anticipated. That has not proved to be a major matter of concern, and I  never,ever to mention that fact to my client. From my point of view, it is business risk I have assumed, and it generally has nothing to do with the client.

The results of this fixed fee approachhave been gratifying. I have clients who communicate, who ask questions. They do not call all the time. A few are somewhat pesty. You have the same problems as realtors or mortgage originators. The best effect,for me, is that my clients are unafraid to contact me. They are not worried about that Boogeyman, the time meter. They know that they have an all-inclusive fee, and they have to right to understand what they are signing and committing to.

I do fully 85% of my business through referrals. Satisfied clients tell their friends and family that I was easy to work with. They will use me to prepare their estate plans, or set up an LLC or corporation for them. They have learned to trust me. I have become convinced that my fixed fee approach to residential transactions has been a great part of the reason i have been able to expand my practice.