This is the second article (see the first one here) in our series on the specific terms and phrases you can encounter during a real estate transaction. The language of escrow and the real estate transaction doesn’t need to be a stumbling block; once you know the terms, these words become what they are meant to be – valuable tools to help smooth the road to a successful transaction.
Contingency
This is a clause in the sales contract that says something must happen before the sale goes through. The sale is contingent on this event, in other words. Common contingencies are the arrangement of financing, a successful home inspection or wood pest inspection, or a roofing or sewer report. Negotiate contingencies carefully, as they can cause the failure of a deal.
FIRPTA
The Foreign Investment in Real Property Tax Act of 1980 is important if you are buying a property from a person or corporation that is not US-resident. It is up to you to find out if the seller is a foreigner. FIRPTA rules state that the buyer must withhold 10% of the realized sale price for tax purposes. A common exception is if you are buying a personal residence for under $300,000. Talk to your broker or escrow officer, who will know all the details.
Cal-FIRPTA
The California version of FIRPTA, this legislation requires the withholding of a percentage of the sales price for most California real estate transactions. Talk to your realtor or escrow officer to get a full explanation of how this law affects your transaction.
Easement
An easement is an allowance, written into the property’s title, for another person or company to have access to a portion of the land for some purpose. Often an easement allows access to power lines or utilities running through the property. A registered easement gives the other party legal access, and restricts what the owner can do on that piece of the property.
Encroachment
An encroachment is any structure or physical thing that intrudes on somebody else’s space. This could be a neighbour’s building or fence encroaching on your land, your building or other structure encroaching on your neighbour, or your structure encroaching on city or state property. Encroachments must be agreed upon before building, resolved if discovered, or removed if objected to.
Watch for more terminology posts in the months ahead.
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Every Tuesday, here at the CMG Escrow Blog, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of real estate.
Last week’s Tech Tuesday post featured a video from Albert Tran of the California Association of Realtors discussing the latest version of zipForm’s, which allows Realtors to type their contracts. One of the great features for California Realtors in zipForms is that it is DocuSign compatible, meaning that Realtors can have their contracts electronically signed, securely and legally, by all parties in the transaction. While at the CAR Expo in San Jose this year, I stopped by the DocuSign booth to and spoke with DocuSigns’ An Bui. Here is a video of our conversation with her explaining a little bit more about the DocuSign product.
Docusign also has a great blog that answers many of the common questions about their product such as the legality of electronic signatures, illustrates why DocuSign Electronic Signature might be a Realtor’s best friend, and discusses new features of the DocuSign product such as their new iPhone application.
DocuSign and zipForms are two technologies that are a huge step in the right direction for Realtors who are interested in making the real estate transaction as seamless and efficient as possible. I suggest you check them out.
Interested in what you are reading? To automatically receive these Tuesday Technology Tip posts in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
Real estate transactions, and the escrow processes that make them happen, sometimes have a level of industry jargon that can be confusing or intimidating to buyers and sellers who aren’t familiar with the meaning behind the words.
This is the first in a series of definitional posts designed to better inform buyers and sellers about the escrow process and the terminology used during the course of a transaction.
Escrow
The escrow procedure, at its core, is where a neutral, trusted third party holds onto an item for sale until something happens, usually until the buyer pays the seller. As real estate transactions have grown in complexity, so has the business of escrow. Now an escrow agent watches over all the details of the sales agreement, facilitates the transaction paperwork, and coordinates the interests of many different parties with an interest in the sale. They also make sure that the seller gets their proceeds, and the buyer gets their title, when all is said and done. For a detailed explanation of escrow, see this earlier post.
Deed of Trust
In many states, including California, this document takes the place of a mortgage. The Deed of Trust places a property’s title in the hands of a Trustee, usually a title company, along with the specifics of the buyer’s loan and repayment provisions. If the owner defaults on the loan, the Trustee has the legal right to foreclose, and give the lender the proceeds. When the loan is paid off, the Trustee reconveys the title to the owner.
Lien
This is a legal claim on a property by someone the owner owes money to. In real estate transactions, the lender will attach a lien to the property title, saying any money from sale of the property will first be used to pay off the loan.
Prorations
In a real estate deal, the escrow agent will need to figure out the buyer’s and seller’s portions of expenses that get paid according to a certain date – eg taxes, interest or utility bills. The agent will pro-rate the expense, doing the arithmetic based on the transaction’s closing date.
Grant Deed
This is the actual document of the real estate sale. It states that the seller, or Grantor, is selling the property to the buyer, or Grantee. It states the specifics of the property, and that the seller has revealed any liens or encumbrances. The Grant Deed is usually notarized and recorded.
HUD-1 Statement
This is the Department of Housing and Urban Development’s official settlement form, used in most real estate transactions to detail exactly what settlement costs occur in the sale, and whether the buyer or the seller is paying them. You get this form at or shortly before the closing. It represents a complete accounting of every cost of the transaction.
Title Insurance
This is an insurance policy for buyers that protects them against unanticipated defects in the property title. These could be anything from hidden liens, ex-spouses, unrevealed heirs, or recording errors, to forgery. Title insurance policies carry different specifics and exceptions, so examine yours carefully.
Additional terminology will be defined in future posts. If you have a term you would like clarified or defined, leave us a note in the comments section of this post.
Interested in what you are reading? To automatically receive these Escrow Tips in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
Every Tuesday, here at the CMG Escrow Blog, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of Real Estate.
In early October, while at the California Association of REALTORS Expo in San Jose, I had the opportunity to chat with Albert Tran, the Director of Training and Technology Services for C.A.R. who talked to me about the new release of Zipform 6 (the re-branded, and improved Winforms) on November 16th. If you are part of the 30% of the C.A.R. membership who is still hand writing your contracts, the new release of Zipform 6 is the perfect opportunity to take your contract generation digital. Take a look at this video interview with Albert to learn more.
Albert’s key points include:
- November 16th is the release date and CAR members can choose to optionally update at this time. The update will become mandatory early next year (February or March 2010)
- Winforms is being rebranded to “zipForm 6″ – all the functionality you are used to with Winforms, but a new name along with some added features.
- zipForm 6 is both PC & Macintosh compatible
- zipForm 6 will have the same user interface for both the desktop and web versions of the software
- zipForm 6 is compatible with DocuSign electronic signatures
- More information can be found here: http://www.car.org/winforms/
If you are new to zipForms and WinForms software, there are several upcoming zipForm 6 webinars that are free for C.A.R. members. The webinar training schedule and registration links can be found here on the C.A.R. website.
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Whether you are a REALTOR considering getting into the niche business of dealing with REO’s, a buyer looking to find a deal on a home by seeking a foreclosed property or a seller looking for information on what happens when a foreclosure proceeding is started, you need to know and understand the foreclosure process. By understanding this process, you will know how long the process may take, which entities are involved, and when the proceedings can be halted. Below is a simplified version of the process.
Defaulting on one’s loan causes the start of foreclosure, the process by which the lender takes over the home in order to recover their principal investment. Once the house is either sold on the steps of the title company or the court house at the Trustee’s Sale or “repossessed” by the lender, it is sold and the former owner must vacate at the discretion of the new owner. When there is a power of sale clause in the deed of trust the non-judicial process of foreclosure is used.
Notice of Default:
In California, the timeline of non-judicial foreclosure begins when the trustee files a notice of default. This is a letter that is sent to the owner/trustor notifying him or her of their default of the loan. This notifies the owner of the intent of the lender to follow through on their right to collect on the debt. The copy of the notice, which is recorded at the County Recorders Office of the appropriate county, is mailed to the address of notice as per the deed of trust.
Notice of Trustee’s Sale
No sooner than ninety (90) days after the trustee records the Notice of Default, the Trustee must publish a notice of trustee’s sale in the local paper and simultaneously file that notice with the county recorder’s office. No sooner than twenty days (20) after the notice of trustee sale is filed, the home may be sold at public auction for the amount of the debt plus foreclosure costs. If no one bids at the auction, the lender assumes ownership of the property, and may dispose of that property to recover their cash investment.
Interested in what you are reading? To automatically receive these Escrow Tips in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
Every Tuesday, here at the CMG Escrow Blog, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of Real Estate.
Have you ever noticed that little orange icon that appears on web pages and blogs everywhere? (If you haven’t, after reading this post, you will – trust me!). Are you curious what it is? That icon is the symbol the cornerstone technology that has enabled the explosion of blogging and transformed how information is consumed in a web 2.0 world. And, it is called RSS. My personal journey into social media started the day I discovered RSS. Understanding RSS is what allowed all kinds of doors to open for me in social media and the web 2.0 world. My hope is that it will for you too.
The stage has been set for this post. In previous weeks I have defined “blog”, and discussed in detail the concepts of web 2.0 and social media, and discussed how these pertain to real estate. If these concepts are still new to you, it will be helpful to review my post on blogs as a basis for learning the power of RSS.
So then, what is RSS?
Most literally, RSS is an acronym for Really Simple Syndication. But, this is such a bland definition, and one that is generally irrelevant to understanding the true meaning of RSS. Following are 3 different (outstanding) sources who have a slightly different take on how to describe and understand RSS. Go with the one that resonates best for you:
If you are a visual learner, here is the Common Craft video explaining RSS in plain english and points out that RSS is “like Netflix compared to the video store”:
Interested in a straightforward, practical explanation of RSS? A great working explanation of RSS is provided by ProBlogger Darren Rowse who explains RSS as:
RSS is a technology that is being used by millions of web users around the world to keep track of their favorite websites.
In the ‘old days’ of the web to keep track of updates on a website you had to ‘bookmark’ websites in your browser and manually return to them on a regular basis to see what had been added.
The problems with bookmarking
- You as the web surfer had to do all the work
- It can get complicated when you are trying to track many websites at once
- You miss information when you forget to check your bookmarks
- You end up seeing the same information over and over again on sites that don’t update very often
RSS Changes Everything
What if you could tell a website to let you know every time that they update? In a sense, this is what RSS does for you.
RSS flips things around a little and is a technology that provides you with a method of getting relevant and up to date information sent to you for you to read in your own time. It saves you time and helps you to get the information you want quickly after it was published.
I find the ’subscription’ description helpful. It’s like subscribing to a magazine that is delivered to you periodically but instead of it coming in your physical mail box each month when the magazine is published it is delivered to your ‘RSS Reader’ every time your favorite website updates.
Let me say right up front that I’m not the most technically savvy guy going around – but even I can use RSS. At first I found it a little strange to make the change from bookmarking to RSS but I found that when I started that I just couldn’t stop.
Still a little foggy on RSS? Here is “The Oprah Way” of explaining RSS, courtesy of Stephanie Quilao who explains RSS “The Oprah Way” in her great, non-technical post (read her full article here):
So, to make RSS much easier to understand, in Oprah speak, RSS stands for: I’m “Ready for Some Stories”. It is a way online for you to get a quick list of the latest story headlines from all your favorite websites and blogs all in one place. How cool is that?
Suppose you have 50 sites and blogs that you like to visit regularly. Going to visit each website and blog everyday could take you hours. With RSS, you can “subscribe” to a website or blog, and get “fed” all the new headlines from all of these 50 sites and blogs in one list, and see what’s going on in minutes instead of hours. What a time saver!
So, how does this all relate to real estate?
Are you interested in offering creative ways to gain more exposure for your clients? Or maybe you are you interested in simply expanding your knowledge base of what you can do for your clients. How about syndicating your listings information out to the internet? Maybe you just want to stay on top of what is going on, or learn from others. As Keller Williams Simi Valley, California agent Ted Mackel points out in the following video, these are just some of the benefits that RSS has afforded his real estate business. Ted created this video as part of a 2008 MyTechOpinion.com contest asking for submissions from real estate folks about which technology has impacted your business the most. Take a look:
You too can benefit from the power of RSS. As a first step, I suggest signing up for a Google account (if you don’t already have one) and sign up for their feed reader. Then, every time you see that RSS logo out on the web on a site that interests you, add that site to your reader. It will open all kinds of doors for you in this internet and social media world and help you to better serve your clients as social media becomes an ever increasing part of real estate.
Interested in what you are reading? To automatically receive these Tuesday Technology Tip posts in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
The typical real estate escrow requires the buyer to sign 70 – 120 pages of documents, several of which require notarization. The seller also will have to notarize, at the minimum, the grant deed. Notarization, or the act of an uninvolved witness (the Notary) verifying that the signor (the buyer or seller) is indeed who they say they are, is an essential part of the escrow process. And, if notarization is not properly done, it can cause delays which can impact the closing of the escrow. When it comes to notarizing documents during escrow, clients can choose to go to the escrow office or hire an outside notary.
Option 1: Notarize and sign at the escrow office
Escrow offices all have a notary on staff. Therefore, a common option for notarizing documents is to have the parties go to the escrow office to sign documents. With customer satisfaction as our highest priority, at CMG Escrow, we prefer that our clients physically come to our office to sign closing documents. This not only ensures that buyers and sellers feel they are receiving the highest level of service, but also we can personally correct any errors that may have been overlooked by the many parties involved in the transaction as well as answer any questions that may arise.
However, circumstances do not always allow for clients to sign at the escrow office (for example, in the case of an out of town buyer). When this occurs, working with an outside notary is the alternate solution.
Option 2. Notarize and sign with an outside notary
If you are to hire an outside notary, you have two options: A Certified Document Signor or a Mobile Notary.
Both Certified Document Signors and Mobile Notaries are certified by the State of California to verify signatures. However, a Certified Document Signor also undergoes regular continuing education training specific to real estate transactions. They are familiar with the documents that are signed in the transaction. Mobile Notaries are not required to have this specific training and as a result, are not always familiar with the documents that are being signed.
A Certified Document Signor will cost more, but clients should be aware that our most common reason for the delay of a transaction is due to the incorrect signing of closing documents. With the amount of paperwork that needs to be signed and notarized, it is easy to see how someone without the proper training could overlook a detail here or there. As a result, Certified Document Signors are our preferred option if the client is not able to sign in person at the escrow office. That said, it is possible to have an accurate and successful closing with a mobile notary. The choice is really up to the client and will be impacted by many factors specific to the transaction.
So when choosing, ask yourself what is more valuable in a real estate transaction, your time or your money? If time is not of paramount concern, a mobile notary may be a great choice for you. If it is imperative you close on time, your risk of signing issues will decrease by going with a certified document signor. And, if you have the ability to sign at your escrow office, you will run the lowest risk of delays.
Interested in what you are reading? To automatically receive these Escrow Tips in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
Every Tuesday, here at the CMG Escrow Blog, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of real estate.
Blogging is the cornerstone of the new media marketing movement, and the promise of business for the REALTOR who embraces it is tempting. This post is designed to give the pros and cons of blogging, and help you decide if blogging is something that you should incorporate into your real estate business.
First, what is blogging?
Recently, I did a detailed post answering this very question. Basically blogging is an on-line journal. It consists of posts, or articles, that the blog author writes and adds on a regular basis to the blog. The most current post resides at the top of the blog, and the prior posts move down the page.
Success in blogging results from two things:
1. Providing content of value to your target audience
2. Frequency
What content is of value in real estate?
I view the following topics as good topics for REALTOR blogs:
* Market Data: Answer the question, how is the market? This is likely the most common question in real estate and makes for excellent blog post fodder.
* Neighborhood Info: Talking specifically about different neighborhoods and farms will help build your credibility, establish your expertise in an area, and help you with what is called the “long tail” search in Google. When it comes to buying decisions, people are very interested in the nuances of a particular neighborhood. You discuss this in the car with prospects, and you work to show sellers your neighborhood expertise with post cards mailings, and in your listing presentations. Take this information to the web in the form of blog posts.
* Lifestyle Information: Every buyer wants to know what the lifestyle is like in various cities, communities, and neighborhoods, and you as a REALTOR are selling not only the houses in a particular area, but you are also selling the lifestyle. Blogging about the events, people, restaurants, schools, and area information are all great topics for a blog and paint a picture about the local lifestyle in the area.
* Transaction Education: For most people, the process of buying a home is complicated and overwhelming. As the REALTOR, part of your job is to navigate buyers and sellers through that process. By discussing the process and providing an education on the nuances of the transaction, you have the opportunity to establish your professional credibility and attract buyers and sellers who appreciate the education you are providing them on the process of home buying and selling.
* Competent Advice/Perspective/Interpretation: No doubt about it, there is access these days to almost any information someone could want. The problem is that the amount of information is overwhelming. This presents a blogging opportunity for the REALTOR who can provide an interpretation of all the data. From all the stats, what is the most important piece of information for today’s buyer to know? Why is it important for them to know? What is meaningful about that?
And what about frequency of blogging?
How often you blog is going to vary for each REALTOR. I suggest that blogging once or twice a week is a good target. The key is to do it on a regular basis. This keeps your blog fresh, reminds people that you are active and current in the market, and helps you with Google.
Blogging has several advantages for the REALTOR.
Blogging Pros:
* Establish Your Expertise: Keep in mind that when you are positioned in the mind of the buyer or seller as THE trusted advisor, you have a client. There is no better way in social media to establish yourself as a trusted advisor than with blogging. Blogging provides you a golden opportunity to establish your real estate expertise. It allows you to express your perspective, your professionalism, and you market knowledge in a way that reflects your tone and personality.
* Google Friendly (Search Engine Optimization – SEO): By definition, blogging is Google friendly. The platform of blogging is designed to be indexed by Google and if you are blogging using words that are relevant to your market (key words), you are helping yourself naturally appear in search results when people search Google for terms that match what you are blogging about. So, for example, if you are frequently blogging about items related to San Fernando real estate, when someone types in “San Fernando real estate” into Google, you are more likely to rise to the top or be on page one.
* Subscribe Feature: Blogs have the ability to have people subscribe to them so that any content you post is automatically distributed to the reader (vs. them having to come to the site to see new content). When this channel is properly respected (and not abused, which would result in the reader “unsubscribing”), the blogger creates a drip marketing opportunity to all of the readers who are “reminded” of you ever time you post a new blog post.
* Brand Building Opportunity: Through blog subscribers (as described above) and in the visual design of your blog, you have the opportunity to establish, and extend, your personal brand. What you say on your blog, and how it looks, is a reflection of your professionalism and your personality and gives people an impression about you.
* “Long Tail” Opportunity: This benefit relates to the opportunity to reach people who are searching for specific terms in Google, vs. broader terms. For example, “San Fernando Real Estate” is a very general term that yields about 1.6 Million results in Google. Compare this to “Sherman Oaks Real Estate” which yields about 8,000 results and you can see that there is a much greater opportunity to be found on the long tail search. Another benefit is that people who search long tail terms tend to be closer to a purchase or sale decision as they have gotten specific in what they are looking for.
* Can be a Lead Generator: Blogs can generate great leads. When you are effective in articulating your real estate knowledge, answering the questions of your target market, and positioning yourself as a trusted advisor, people will contact you through your blog. Those that do contact you are generally attracted to your perspective and generally stronger leads than you may get off of an ad or other form of marketing. People tend to watch a blog for a while. They will get a feel for you. When they do contact you, it is because they have a feel for who you are and they are interested in working with you.
Blogging Cons:
* Time Consuming: No doubt about it, blogging is a time consuming endeavor. It takes a commitment from the REALTOR. Keeping in mind that frequency is a key element to successful blogging, you really need to view blogging as a strategy that you have a plan for. It takes time to generate good content.
* You Need Average, or Above Average Writing Skills: Blogging is a content driven marketing vehicle. If you are not generating good content, you are not going to get good results. If you do not have the ability to articulate your perspective easily with the written word, blogging will be a challenge for you. There is an alternative – video blogging. With a very affordable piece of equipment called a Flip Video Camera, you can post a video blog instead of writing one. A video blog doesn’t carry the same SEO benefits that the written word does, but it can be a very effective way to articulate your perspective, or actually show your market area. A video blog can also be an efficient use of your time (maybe video tape yourself while you are sitting at an open house and waiting for traffic).
* Several Nuances to Learn: Although the actual process of posting a blog is not much more difficult than sending an email, to succeed in blogging over time, there are many nuances to learn about the blogging platform. For example, there are better (vs. worse) ways to title your posts so that you rank well in Google and/or capture the attention of your readership. There are best practices to follow in terms of naming your images and inserting links into your posts. Although none of these items are particularly challenging, all of these little items tend to present a learning curve for the Realtor just getting into blogging.
* Becoming Competitive: Blogging has been popular in real estate for several years now, and in some markets, there are some very established real estate blogs. In these areas, the landscape for blogging is very competitive. You should survey the blogging competition for your market and determine if there is a great opportunity for you there. Even in markets where blogging is very established, there are still ample blogging opportunities on a hyper-local level. You don’t have to blog about Sherman Oaks. You can blog specifically about the homes around Sherman Oaks Galleria. This would be a hyper-local topic and one where you have a strong chance to stand out and dominate a niche area. Alternatively, you could also define a niche market – maybe foreign buyers or sellers for your area. Or , seniors. Or, first time home buyers. Think about segments that may be under-represented by blogs that are focused on larger areas and geographies and you will find some great blogging opportunities.
I’ve pointed out the reality of the challenges of blogging in an effort to give you a realistic view on what it takes to succeed in blogging. Blogging may or may not be for you. But, if you are searching for a new strategy, or you actively farm a geographic area or demographic niche, and plan to be in business for 5 years or more, I suggest you seriously consider establishing a blogging presence. There is just so much to be gained. In a future post, I will lay out the leading blogging options for those who would like to pursue a blogging strategy for their real estate business.
Interested in what you are reading? To automatically receive these Tuesday Technology Tip posts in your email box, subscribe to these articles at the top right corner of this site (www.cmgescrowblog.com) in the box titled “Subscribe via Email”.
Demystifying the escrow process for buyers is part of our goal here at CMG Escrow. One of the ways we accomplish this is by providing buyer’s a detailed opening package. This package contains a particular form called a Vesting Form that is integral to the escrow process and to the buyer’s future interest in the property. Simply put, it requires the buyer to outline how they will hold title to their new property.
The vesting of a title should be given special consideration because it specifies who is responsible for the costs, benefits, and transferability of a property. The value of real property is significant and with a little forethought, conflict can be avoided down the road with partners, creditors, spouses and/or heirs, as well as the Internal Revenue Service.
The most common forms of holding title include:
1. Sole Ownership
a. As a single man or woman
b. As a Married man or woman
c. As a registered domestic partner, man or woman.
2. Co-ownership
a. Community property, which is the presumed form for married couples. This entitles each party to equal parts of the property.
b. Community property with rights of survivorship, which automatically transfers the property to the survivor in the face of a death.
3. Joint Tenancy
a. This includes equal interests with rights of survivorship, but where the partners aren’t necessarily married.
4. Tenancy in Common
a. In this form, the parties’ interests are broken up, and the costs and benefits are then divided as such.
It’s important to remember that the form of title that you choose has inheritance and/or tax implications. Your escrow officer at CMG Escrow is more than happy to explain the differences between the various manners in which title can be held. However, it is beyond our scope to actually recommend what would be best for a buyer. For that, the buyer should consult an attorney, CPA or estate planner who is more familiar with the buyer’s specific situation. Research and clear communication with one of these resources will help make the transaction a smooth success.
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