Go GREEN, Go paperless!

Things have been hopping around here in New Jersey, lots of contracts being written. And, with every Real Estate transaction there is a lot of paperwork but, I’m learning, that doesn’t have to mean a lot of PAPER!

As part of our “GREEN-ing”, we have tried to implement paperless transactions where ever possible. Emailing, Faxing and Online listing databases and transaction management calendars, as well as shared online files have certainly paved the way to reducing the amount of paper used. Before the online MLS, each agent had an MLS book, full of all of the active listing for a given area (currently there are 457 homes available in: Maplewood, South Orange, Summit and Millburn alone). What a waste of paper!

When I schedule Buyer Appointments, I print out as few (if any) copies of the MLS listing sheets as possible. Instead, my clients and I review online listing and narrow down our home selections online. And, I have noticed that my clients no longer want to take every piece of paper that the Listing Agents leave out. Savvy buyer’s think: “I can pull up everything on my phone…why carry around a bunch of papers and kill more trees.” Love That!

I have a client whose profession has caused him to transfer locations (and homes) 7 times in the past 15 years. He and his wife have actually purchased 2 of these homes completely online – not having stepped foot into them until they were the owners.

As a GREEN REALTOR there are two sites are the backbone of my GREEN paper (less) work trail: NJAR.com which provides Realtors with access to online copies of all forms needed for any Real Estate Transaction and Docusign.com which provides the ability to securely obtain digital signatures (considered legal). I am sure they are not the only game in town, but I am really happy with their product.

When all is said and done we have clear, legible documents that everyone can read, because they haven’t been copied/scanned/faxed a million time and you didn’t have to schlep around town (wasting gas) getting original signatures. Best of all you avoid the mounds of wasted paper copies along the way.

So next time you go out with me to look at a house, let’s bring our smartphones and view the listings online.

Paper copies are sooooo last year!

Tracy Freeman, REALTOR GREEN
Buyer Specialist

What is the HVCC?

The HVCC is the Home Valuation Code of Conduct. The HVCC is the result of a joint agreement between Freddie Mac, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General. The agreement was formed in an effort to enhance the independence and accuracy of the appraisal process. Unfortunately, that has not been the case. This past year, the HVCC has quietly transitioned from a mere proposal into concrete national policy which has altered the core aspects of real estate appraisals.

As a result of the HVCC, many appraisals are now being outsourced to 3rd parties, many of whom do not have a working knowledge of the geographical areas they are appraising. As a result, buyers are being subjected to higher appraisal costs, inaccurate valuations, and the elimination of the longstanding benefits of one-on-one business relationships with local Realtors, mortgage originators, and appraisers. Because of the formation of the HVCC, local market value decisions have now been shifted to unfettered and often uninformed appraisal management companies located hundreds, if not thousands of miles away.

It’s likely that local real estate transactions are being derailed by so-called appraisal reviewers, hourly workers who have absolutely no working knowledge of the community where the appraised home is located. This practice hurts home buyers, sellers, Realtors, and mortgage originators.

The Good News

Although many banks are now outsourcing appraisals to management companies as part of the HVCC, regulations do allow mortgage lenders such as Mortgage Master to use their own in-house, approved appraisers to perform home appraisals with the following caveat:

“Lenders may use in-house appraisers, provided they are completely independent of the sales staff and their compensation does not depend on their estimates or on loan closings.”

Bottom Line

It is extremely important for homebuyers to determine whether potential lenders use an appraisal management company or have in-house appraisers. This choice can mean the difference between a loan closing and a loan unraveling.

Rich Hirsch

Mortgage Master Inc.

Phone: 908-410-9066

eFax: 908-325-0018

rhirsch@mortgagemasterinc.com

Interested in purchasing a home in New Jersey, but have not sold your existing property? 

I’m not an advocate of buying before selling in today’s market unless you understand and are comfortable with the risks involved, but if you insist on going this route, according to Rich Hirsh, from Mortgage Masters, here are Fannie’s guidelines:

If you are applying for a conventional loan, Fannie Mae requires that you either have 30 percent equity in your CURRENT residence OR 6 months cash reserves for BOTH homes. 

  Home Buying Scenarios

     #1 – Current Home is SOLD but not CLOSED prior to purchasing other one.

o   Must qualify for BOTH house payments and have 6 months worth of payment reserves for BOTH homes

 UNLESS

o   There is an executed purchase contract and all finance contingencies have been cleared on the home you are selling

    OR

o   Have 30 percent equity in current residence (Appraisal/BPO) PLUS 2 months worth of payment reserves for both homes

     #2 – Existing Home Converts to Second-Home Status

o   Must qualify for BOTH house payments

AND

o   Have 6 months worth of payment for BOTH homes

 OR

o   Have 30 percent equity in home being converted to 2^nd home

(Appraisal /BPO) PLUS 2 months worth of payment reserves on BOTH homes.

     #3 – Existing Home converts to Rental Property

o   Must qualify for both house payments AND have 6 months cash reserves for BOTH homes

UNLESS

o   Rental income can be used to offset monthly payment ONLY if home being converted to rental has 30% equity (Appraisal /BPO) AND home is leased AND security deposit has been verified.

The bottom line:  If you are buying a home without selling your current home, there will always need to be cash reserves after closing in the amount of 6 months PITI unless there is 30 percent equity in their current home.  Then you will need 2 months reserves! 

Rich Hirsch Mortgage Master Inc. Phone: 908-410-9066  eFax: 908-325-0018 rhirsch@mortgagemasterinc.com

In New Jersey, when a contract to purchase a home is signed, it is not binding, until it’s out of “attorney review”. What this means to a buyer is that another buyer can come along and outbid you during this period. And to sellers, it means that your neighbor’s house with the new gourmet kitchen can come on the market and lure away your buyer. This is why its in the best interest of all parties to hire competent REAL ESTATE attorneys who will protect their interests with protective clauses, and at the same time get them out of attorney review quickly.

Sounds simple, right? Well, if you follow this advice, you will be protected, and also have a much smoother transaction.

1. Hire a recommended LOCAL REAL ESTATE attorney, Notice I didn’t just say attorney. They should ONLY be practicing real estate law. A local lawyer will know what’s customary. If you’re purchasing in Short Hills, Summit, Chatham, Maplewood and other towns in our area, they will know when to add a clause in about an oil tank sweep. They’ll know which areas have had flooding issues. They’ve dealt with zoning,permits in Millburn, Summit or Maplewood town halls and are familiar with the local home inspectors and their reports. They know who to call for asbestos removal, and they know reputation of different builders, etc…. I have 4 real estate attorneys who I work with on a regular basis who really know their stuff. Email me & I’ll pass along those names. Its not a bad idea to interview a few attorneys before choosing one to see who’s style works best for you.

2. Before hiring the attorney, find out if he/she will be going on vacation any time during the next few weeks or if he/she has anything going on which will affect availability. NOT Returning phone calls & not responding to attorney review letters in a timely manner is one of my biggest pet peeves. I know that the lawyers I work with on a regular basis will NOT put my files under the pile on their desk. You need to feel confident that the attorney you choose will be available to you.

3. Inspection “Requests” or Inspection “Demands”…. Make sure you approve the attorney’s letters before they go out. I have found that when I’m trying to get through inspection issues with my buyer, sometimes the attorney “inspection demand” letters (which I would prefer to call “inspection requests”) are worded so strongly, that it immediately puts the seller’s in a defensive mode. When I bought my house in New Jersey ( after having sold real estate for many years in Philly, where we handled everything ourselves and rarely used attorneys), I used the attorney recommended by a friend, instead of one recommended by my realtor. Big mistake. She shot off letters without my approval, and when I read the harsh sounding “inspection demands” letter, I found myself calling the sellers and apologizing for the threatening tone of the letter. Afterall, didn’t our parents teach us that you catch more flies with honey?

Over the years I have categorized real estate attorneys into 4 types:

First: “My way or we kill the deal”,

Second: ” I’ll fight for whatever my client wants no matter how unreasonable the request may be, and NOT advise him. I’m my client’s puppet.”

Third: “I don’t have the time to be bothered with returning calls. I’m too busy.
Oh, closing is tomorrow? Oops, I forgot to order the mortgage payoff. ”

Fourth:” I am my client’s advocate, and at the same time, it is my job to advise my client on what is reasonable. If I can’t get anywhere with the other lawyer ( who is type 1,2 or 3), I’ll have my clients work it out through the realtors. The smoothest transactions are when we are all working together to resolve the issues in a timely manner.

Which type of attorney would you like to represent you?

Sue Adler is the #1 Keller Williams agent in New Jersey, specializing in towns with 20-50 minutes from NYC. Visit www.SueAdler.com , the ONLY real estate site you need for New Jersey real estate.