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The Massachusetts Landlord Survival Guide  is an invaluable tool to help new and longtime owners succeed. Simple, fast and an informative legal resource, the Landlord Survival Guide is the source for owners to navigate the common pitfalls of being in the rental business. Covering topics from fair housing, discrimination, evictions, owners duties, tenant rights, and more, this book is the ultimate resource with all the information you need in one place.
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A one-stop-shop

The Massachusetts Landlord Survival Guide  is an invaluable tool to help new and longtime owners succeed. Simple, fast and an informative legal resource, the Landlord Survival Guide is the source for owners to navigate the common pitfalls of being in the rental business. Covering topics from fair housing, discrimination, evictions, owners duties, tenant rights, and more, this book is the ultimate resource with all the information you need in one place.
New Landlord Survival Guide


Article Courtesy of:  Inman News
By: Carl Medford

With multiple offers being the order of the day, buyers are overbidding to outgun their competitors. What happens if an appraisal comes back low? Here are a few important steps to take before writing an over-asking offer.

I had a disturbing call recently. We put one of our listings into contract with a buyer who had submitted a fully non-contingent offer $100,000 over list price. That is not unusual in our market. In this current overheated madness, a significant percentage of offers are written non-contingent, and we can easily see homes go a few hundred thousand dollars over realistically set asking prices.

The call was from the buyer’s agent, who cut right to the chase. “I just talked to my lender,” the agent said. “She let me know that if the property only appraises at list price, our deal will not work. They don’t have enough to make up the difference.”

“I’m sorry to hear that,” I replied, “but I’m not sure what you want me to do — we are in a binding non-contingent offer.”

Their response? “We did not discuss our offer with the lender before writing.” Bad move.

No matter who you talk to anywhere in the country, inventory is at unprecedented lows. The result is buyers scrambling to find homes and fighting tooth-and-nail to get a contract accepted on one of the few properties available.

In this unprecedented environment with multiple offers on almost every listing, buyers will do almost anything to land a contract. A prevalent tactic in our market is to submit offers with all contingencies removed.

Most sellers in our region, priming the pump for non-contingent offers, provide full disclosures and inspection reports upfront, and as a result, many buyers feel comfortable removing their inspection contingency. Additionally, with lenders going to extra lengths to preapprove their buyers, many homeowner wannabes do not hesitate in removing loan contingencies as well.

The real rub comes with the appraisal contingency for properties on which a buyer needs to procure a loan. Even with properties that are priced correctly based on past closed sales, it is not uncommon to see multiple offers driving offer prices to dramatic new heights.

In many cases, the offered prices are significantly above comparable sales, which in turn makes the requisite appraiser’s task incredibly difficult. While some appraisers understand the increasing market and try to justify soaring prices, others are not comfortable with the new reality and provide valuations more in line with previous sales.

This difference in appraisal styles adds confusion to the market and increases the difficulty for buyers determining how high they might go for any given property. As an example, if a property is listed at $500,000 but buyers offer $600,000, they are $100,000 over the asking price.

If they have an 80 percent loan approval and are putting 20 percent down, their loan will be $480,000 with a down payment of $120,000. If the property appraises at $500,000, then the lender will only provide 80 percent of the appraised value: $400,000. This means that a buyer needs to be able to provide a down payment of $200,000 to make the deal work.

If the buyers have the extra cash, the deal can proceed. If, eager to score a deal, they write a non-contingent offer and do not have the extra cash, the deal may collapse, and they could forfeit their deposit. These are tough times indeed, and it once again underscores the age-old saying, “Buyer beware.”

As real estate agents, our job is to look out for the best interests of our clients. With this in mind, here are three steps we take before writing an over-asking price offer:

1. Compile a comprehensive picture of a buyer’s true financial capabilities

In addition to a preapproval, we ask for verification of funds on deposit that can be liquid within 30 days. We are sometimes shown fund balances that are in long-term CDs, retirement vehicles or other funds that cannot be readily accessed — these cannot be used.

We also check to see if funds are available from family members, friends and the like. If they are, we gather the details and make sure we have gift letters. With the preapproval and fund totals in hand, we can then set a limit on the buyer’s capabilities.

2. Run a comprehensive comparative market analysis (CMA) to determine a fair market value for any home they wish to purchase

We have discovered that in the heat of the battle, many buyer’s agents fail to determine a fair market value for a listing and, therefore, have no idea what a realistic offer might actually be.

Even though we will most often be offering more than the list price, we run the CMA because we have to know what valuation an appraiser might end up with. The actual market value provides the foundation upon which we base the calculations needed to determine how high a buyer can actually go over list price.

3. Plug the numbers into an appraisal calculator

We start with the following:
• Offer price.
• Percentage of loan to purchase price.
• Loan amount.
• Down payment amount.
• Projected closing costs.

By adding the closing costs to the offer price and subtracting the loan amount, we end up with the amount of cash required to close. If an offer is being made for $600,000 with an 80 percent loan and $10,000 in closing costs, we will need $130,000 to close the transaction if the property appraises at $600,000.

We then factor in the following:
• The price at which we believe the home might actually appraise (taken from the CMA).
• The new loan amount based on the projected appraisal price.
• The desired offer price minus the new loan amount.

As an example, if your offer is $600,000, but you believe it will appraise for $500,000, and your loan-to-purchase ratio is 80 percent, then the lender will only lend 80 percent of the actual appraised value, which results in a loan amount of $400,000.

If your offer is $600,000, but the lender will only lend $400,000, then you add the projected closing costs to the offer price and subtract the revised loan number ($600,000 plus $10,000 for a total of $610,000 minus $400,000 for a balance of $210,000).

In this scenario, if the home appraises at $500,000, but the contract price is $600,000, instead of needing $130,000, the buyer must bring in a total of $210,000 to make the deal work.

Once we have run this calculation, we go back to the buyer’s available cash — if they have in excess of the amount required if it appraises low, we know we can remove the appraisal contingency. If they are short, then it is a no-go.

Because these calculations can be a bit clunky, we built an excel spreadsheet that quickly does the calculations for us. It takes about 20 seconds to plug in the numbers. We even set it up so it gives us the maximum amount they could offer based on the amount of cash on hand.

At the end of the day, the goal is to get a property for the buyer and protect them at the same time. The worst thing that can happen is getting into contract and then discovering that your clients do not have what is needed to actually get it closed.

Carl Medford is the CEO of The Medford Team.
How to Protect Your Buyers From Appraisal Catastrophes
The Centers for Disease Control (CDC) announced today that it is extending its nationwide eviction moratorium through June 30, 2021. 

The order was put into place Sept. 4, 2020, but has been challenged in court across numerous states and localities in the months since. In addition to the court challenges, the National Association of REALTORS® has fought successfully for federal rental assistance—and will continue to advocate to ensure the moratorium doesn’t lead to a spiraling crisis for housing providers and tenants.

“NAR helped secured $25 billion in 2020 and another $21.55 billion earlier this month in federal rental assistance funding, which can be paid directly to property owners,” says Shannon McGahn, chief advocacy officer of NAR. “This was critical to averting a multifamily real estate crisis, as many of our nation’s housing providers are mom-and-pop operations. Our focus now turns to ensuring there is not just enough funding but also a smooth implementation of rental assistance while the various challenges to eviction bans work their way through the courts.”

Under the terms of the CDC order, residents must declare that they have pursued all appropriate government assistance; met certain income and employment requirements; and are using best efforts to make timely partial payments, among other qualifications. Today’s announcement expands the order to include people “who are confirmed to have, who have been exposed to, or who might have been exposed to COVID-19 and take reasonable precautions to spread the disease.”

Covered persons must now provide their housing provider with a copy of a signed declaration form stating that they meet the requirements to be a “covered person.”
As with previous CDC orders, property owners may still evict tenants due to criminal activity, damaging property, or for violating other contractual obligations.

“Rental assistance averted two crises—one for mom-and-pop property owners who did not have a reprieve from their bills and relied on their rental income and one for tenants who would have been responsible for months of back rent when the eviction moratoriums expired,” McGahn says. “We must continue to look for ways to protect tenants and property owners from further financial turmoil while ensuring housing in America remains safe and stable for decades to come.”
Read the CDC order.

Read NAR’s Coronavirus: Housing Provider FAQs.
See all NAR resources related to COVID-19 at

What the Eviction Moratorium Means for You
Article Courtesy of: Inman News
By: Jimmy Burgess

Real estate farming is a foundational activity for any sustainable real estate sales business. With inventory at all-time lows, the need to generate listings has never been more pressing. Whether you’ve never built a farm before, or it has been a while since you have, these steps will help you create and grow a thriving geographic real estate farm.

Step 1: How do I find the right neighborhood?

Success in farming hinges on choosing the right neighborhood. Agents should base this decision on two factors: The first is whether there is a dominant agent in the neighborhood already, and the second is seeing whether there are enough sales in the area for the numbers to make sense. 

If more than 25 percent of the homes listed in the neighborhood over the past 12 months have gone to one agent, then I would consider that neighborhood to have a dominant agent.
We aren’t afraid of competition, but why attempt to take market share when another agent already has a foothold in the neighborhood? The ideal farm does not have a single agent with more than 15 percent of the previous 12-month listings taken. We would consider this a segmented market and ripe with opportunity.

The next step is to evaluate the numbers. We want to make sure there are enough listing opportunities over the next 12 months to merit our investment of time and effort. Here is the formula I use for an example neighborhood of 300 homes with an average sales price of $400,000.

We anticipate in normal market conditions that at least 10 percent of the homes in a neighborhood will sell in a typical year. For this example, we would estimate 30 listings available to agents for the year. Based on an average sales price of $400,000 and 30 listings anticipated in the coming year, there is $12 million worth of listing-side sales volume expected in the coming year.

For this example, let’s use an average listing-side commission rate of 2.5 percent, meaning an average gross commission of $10,000 per average $400,000 sale. For this example, let’s use an agent’s split of 75 percent, meaning each listing-side net commission would be $7,500 on a $400,000 sale.

Because we chose a segmented market, we anticipate with the marketing plan (to follow) that we should be able to take at least 10 percent market share, so in this case, three listing sides sold for a net commission to the agent for the year of $22,500. We should take more market share and pick up a buyer or two from having the listings, but we want to be conservative for this example

What are our expenses to farm this neighborhood? It might not be on the front of the marketing, but I like to use $2 per month per house. This will be a combination of marketing expenses to be discussed in the next section. So, in this case, that would be $600 per month or $7,200 for the year.

Based on this evaluation, the breakeven point is selling one listing for the year. With our plan of action and understanding that we should be able to take at least 10 percent market share in 12 months, the numbers for this neighborhood appear to make enough sense to proceed.

Step 2: Become the most knowledgeable agent of your farm

This marketing plan will yield listing appointments and conversations with sellers. To take advantage of those opportunities, you must have an in-depth understanding of this neighborhood. 

Having in-depth knowledge means you should:

• Study historical sales data to be able to speak intelligently with owners about the last 10 sales in the neighborhood.
• Know the average days on market and the average price-per-square-foot of those sales.
• Have seen every home currently for sale in the neighborhood.
You never get a second chance to make a first impression. Make sure you know every detail of home sales in the neighborhood. This will give you the confidence to speak boldly and with clarity when a potential seller calls to ask your opinion about their home.

Step 3: Gather contact information for the homeowners

The next step is harvesting the contact info for all owners in the neighborhood. The mailing lists should be easily available through your local county’s property appraiser’s website. To effectively market to a neighborhood, however, we need phone numbers as well.

To obtain phone numbers, you can use a service such as Cole Realty Resource or an app such as ForeWarn. An accurate database will help maximize marketing effectiveness. 

If you are going to farm a neighborhood you personally own a home in, you may be able to obtain an owners list from the HOA. These lists can be golden because they often include email addresses, phone numbers and accurate mailing addresses.

Step 4: Develop a marketing plan of action

In marketing, “the seven-times factor” says that people have to see an ad seven times before they notice it on average. The key to effective farming is consistency. Your marketing repetition will build your reputation as the trusted source for real estate information in the neighborhood. 

The marketing to the neighborhood not only needs to be consistent but of value. Ask yourself, “What would I find valuable as a homeowner?” Also, ask, “What form of communication would I prefer?” Our plan of action will include direct mail, email if you have addresses, phone calls and special events.

The core marketing principle for farming is direct mail. We want to send one direct mail piece to each owner at a minimum of one per month. These should be a mixture of sales activity pieces, just-listed/just-sold cards, open house announcements, trend explanation pieces for the neighborhood, and special events announcements.

Always include a call-to-action of free CMA or automated email every time a home comes on the market, goes under contract or sells in the neighborhood.

The next core piece of farming marketing is phone calls. Meaningful real estate-related conversations drive our business. These calls should not be sales pitches but rather informational.

For instance, call to let the neighbors know when a house is sold for a record price in the neighborhood. Simply say:

“This is Sally Agent with ABC Realty. The house at 123 Oak Street just sold, and it has really moved the home prices for the neighborhood. We are just calling to let you know your home’s value has gone up. Also, the sale had multiple offers, and we have other buyers who are wanting to buy in the neighborhood. Would you happen to know whether any of your neighbors might consider selling?” 

Other calls include letting the neighbors know about new listings, open houses or special events planned for the neighborhood. 

Although personal calls are best, you can use a tool such as Slydial to record a single message and send it to all neighbors’ voicemails. Slydial allows you to upload a group of phone numbers and record one voicemail to drop in the owner’s voicemail box for around 10 cents per number. This is a great way to leverage your time in a large farm area. 

The last way to increase your recognition and influence in the farm area is through hosting or coordinating special neighborhood events. 

Here are a few of the best examples I’ve heard of special neighborhood events:
• Coordinating a food truck night in the neighborhood and providing free desserts with branding.
• Host a movie night in an area park.
• Schedule an ice cream truck at the pool or some other amenity area in the neighborhood for adults and kids on a Saturday.
• Hire a photographer to provide free family photos to families who schedule an appointment in a neighborhood park.
• Molly Slagle in Houston, Texas, used an exciting spin to provide pet photography for the neighborhood.

The bottom line is that real estate is a contact sport. The more you contact and connect with your targeted farm, the more relationships you will build and the more business you will ultimately do. Take action! Develop a farm! Nurture your farm, and you will reap a harvest of listings.

Jimmy Burgess is the Chief Growth Officer for Berkshire Hathaway HomeServices Beach Properties of Florida in Northwest Florida. Connect with him on Facebook or Instagram.
Looking For Listings? How to Build a Real Estate Farm Step-by-Step

If you offer to start a new marketing program where you decide to give a rebate to either my buyer or seller client, would that be legal?  Would it be ethical?

It is both legal and ethical; however, the REALTOR® Code of Ethics and the Massachusetts Board of Registration for Brokers and Salespersons place clear requirements and limitations on the use of offering gifts or incentives.

From a legal standpoint, REALTORS® cannot share in their commissions, fees or other valuable consideration with others who are not licensed and are performing brokering activities. REALTORS® may, however, offer gifts to the buyer or seller in a specified real estate transaction.  An example of providing a gift within a real estate transaction is either the payment of closing costs or a cash rebate at closing to the buyer or seller.  The gift or incentive, however, must be paid to someone within the transaction; it cannot be paid to an outside entity such as a charity on behalf of the person within the transaction.  

Ethically speaking, Article 12 of the National Association of REALTORS ® Code of Ethics states that the offering of prizes or merchandise discounts is not unethical even if it requires a person to list or purchase a home through a REALTOR®. This Article does require that all advertisements clearly state what the customer must do in order to receive the gift (e.g. Must he/she buy a home that is one of the REALTORS’ ® listings? Must he/she purchase a home when you are acting as a co-broker on another firm’s listing?). 

GBAR advises all REALTORS® who provide gifts or incentives to consult an accountant or tax attorney regarding potential tax consequences resulting from this practice. 

Furthermore, the rebate should be disclosed on the Closing Disclosures.
Legal and Ethical Dilemmas Associated with Rebates

Article Courtesy of: RealTrends
By: Sue Johnson
May a real estate broker, lender, or other settlement service provider give a gift, rebate, or discount to a consumer for purchasing its services (or its affiliated services) under Section 8 of RESPA? 

“Generally, yes,” says the Consumer Financial Protection Bureau (CFPB) in its RESPA Frequently Asked Questions (FAQs) published on October 7.

The FAQs were released in the same CFPB blog post that rescinded its controversial 2015 Marketing Services Agreement (MSA) Bulletin. As discussed, in the November and December 2020 REAL Trends Newsletters, they also provided guidance for MSAs and for gifts and promotional activities.

The CFPB FAQs on Consumer Incentives

The CFPB’s new FAQs provide the following regarding consumer incentives under RESPA: 

Q: Under the Real Estate Settlement and Procedures Act (RESPA) Section 8, may a lender or other settlement service provider give a gift, refund or discount to a consumer for using that lender or provider? 

A: Generally, yes. RESPA Section 8 does not prohibit a lender or other settlement service provider from giving a consumer a gift or an incentive (e.g., a discount, refund of fees, chance to win a prize, etc.) for doing business with that entity. However, RESPA Section 8 prohibits, for example, giving an incentive to a consumer in exchange for the consumer referring other business to that lender or other settlement service provider. Other federal and state laws may also have restrictions that apply and should consulted.

The CFPB’s interpretation is consistent with guidance provided by the Department of Housing and Urban Development (HUD) when it was responsible for administering RESPA.

Examples of Consumer Gifts, Rebates, or Discounts

While consumer incentives in the real estate industry can take many forms, here are some examples of gifts, rebates, and discounts provided by real estate brokers and agents that could be allowable under RESPA given the right circumstances:

  • Closing gifts: A real estate broker or agent may give a $500 gift certificate to the client as an expression of the broker’s or agent’s appreciation for the client’s business without violating RESPA. But, the gift certificate should not be an expression of appreciation for referring other clients, even under an unspoken understanding. The basic rule of the IRS is that if you give someone a gift for business purposes, your business expense deduction is limited to $25 per person per year. 
  • Real estate commission rebates: Real estate agent or broker commission rebates to borrowers would not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business.  However, many states, including Massachusetts, forbid sharing fees with anyone who doesn’t hold a real estate license.  Keep in mind though, under Massachusetts law real estate professionals may give gifts to their clients.  For further information and guidance, read this Q&A from the MAR Legal Dept. and consult your attorney and/or a closing attorney to the transaction.
  • Discounts on a package of affiliated services: Since 1992, RESPA regulations have said that the offering of a package or combination of settlement services or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use, which is prohibited under RESPA affiliated business regulations. However, any package or discount must be optional to the purchaser, the discount must be a true discount below the prices that otherwise are generally available, and the discount must not be made up by higher costs elsewhere in the settlement process.

Beware of State Restrictions!

The CFPB FAQs make clear that one should always check with state laws and regulations when offering consumer incentives, even if they are allowed under Section 8 of RESPA. As noted above, some states forbid sharing fees and/or providing gifts to anyone who doesn’t hold a real estate license, and many states that permit it require that any rebates be disclosed to all parties in the transaction. Some state regulators may totally prohibit consumer incentives in a particular industry. As always, consult with your attorney before proceeding with a consumer incentive program. 

Sue Johnson is the former executive director of RESPRO, the Real Estate Services Providers Council Inc. She retired in 2015 and is now a strategic alliance consultant.

Consumer Incentives Are Generally OK Under RESPA


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