GBREB NEWS

MEMBER RESOURCES

Information is rapidly changing.  GBREB will update this post as new information becomes available. There's a lot of information about government's response to COVID-19, however we have narrowed the focus of this page to issues impacting the real estate industry to serve as a resource for our members. 

Additional information, including legal advisories are available to members here .

MASSACHUSETTS EXECUTIVE ORDERS AND ADVISORIES
Mortgage Loan Borrowing , Division of Banks 3/25/20
Constuction Letter With Guidance  3/25/20
COVID-19 ESSENTIAL SERVICES  Order of  the Governor Assuring Continued Operation Of Essential Services  
Essential Services FAQ
SMOKE ORDER Smoke Alarm and Carbon Monoxide Inspections for One and Two-Family Dwellings and Three to Five-family Apartment Buildings
Standing Order Housing Court
DHCD Resources For Renters and Homeowners

BOSTON EXECUTIVE ORDERS AND ADVISORIES
Guidelines For Open House and Apartment Showing Policy
Construction Notice 3/25/20
Construction Permitting 3/16/20

DIVISION AND AFFILIATE RESOURCE PAGES

Building Owners and Managers, BOMA Boston, BOMA International
Multifamily Apartments, Massachusetts Apartment Association, National Apartment Association   
REALTORS, Greater Boston Association of REALTORS, Massachusetts Association of REALTORS, National Association of REALTORS
Commercial Brokers Association
Real Estate Finance Association






COVID-19
With recent escalation of the coronavirus health crisis, GBAR & GBREB have begun compiling information and materials that may be of assistance to REALTORS®. 

Additionally, the Massachusetts Association of REALTORS® COVID-19 website features useful resources and guidance for REALTORS® on business practices, licensing, employment and government assistance, and more in the COVID-19 environment, and NAR has issued general guidance on the issue which we encourage you to review. Upon review of these documents, should you have additional questions, please don't hesitate to reach out to GBAR Counsel Bill Mullen via our Brokerage Counselling Hotline at 617-399-7842.

Importantly, on March 25, the Baker Administration issued guidance for REALTORS® during the COVID-19 State of Emergency.  The guidance follows an Executive Order closing non-essential businesses, including real estate brokerages, from March 24 at 12 p.m. to April 7 at 12 p.m.   The Order specifically addresses closing of bricks-and-mortar offices, therefore this guidance is intended to help clarify which real estate activities may continue virtually or under parameters set forth below.
 
Showings and open houses are permitted, but are subject to Governor Baker’s order limiting gatherings to ten or fewer people. If open houses are held, they must be limited to ten people at a time and social distancing must be enforced. Additionally, the Massachusetts Association of REALTORS® recommends the use of hand sanitizer and thorough and frequent cleanings.  Notably, although allowed, REALTORS® are strongly encouraged NOT to host open houses in order to help prevent the spread of COVID-19.
 
Real estate closings may continue, with social distancing for any in-person transactions.
 
Meetings with clients and prospective clients cannot take place at a real estate brokerages’ physical offices, but may take place with social distancing or remotely by phone or video.

MA Registry of Deeds Office Status

Open House & Apartment Showing Policies and Guidelines

Sample Extension Language for Contracts

For agents and brokers seeking guidance to address timing of a closing and extensions that may occur as a result the COVID-19 pandemic, GBAR shares the following useful language which you may consider incorporating into Offer and P&S contracts following consultation with and approval from your attorney.   
 
SAMPLE CONTRACT LANGUAGE: The parties agree and acknowledge that in the event either the Buyer, Buyer’s lender, Seller, any of their respective attorneys, or the Registry of Deeds becomes the subject of a mandatory COVID-19 virus quarantine or closure order from any governmental agency, prior to or at the time for performance hereunder, or the Buyer’s financial institution is shut down for any reason related to the global COVID-19 pandemic or unable to send Buyer’s funds for the closing, the closing shall be automatically extended for a reasonable period of time after such quarantine or closure order is lifted or after such time as Buyer’s financial institution confirms that it can send Buyer’s funds for the closing.

Mortgage Requirement Revisions, Foreclosure/Eviction Relief and Small Business Assistance


 Significantly, in early March, the FHFA & FHA reiterated mortgage forbearance options and payment assistance available to those not only sick from the virus, but also owners who may be facing a temporary hardship from it, such as a borrower who is quarantined and unable to work:  Mortgage Forbearance Options Available to Owners Affected by Coronavirus

COVID-19 Update & Preventative Safety Measures and Resources

REALTORS® Guide to Coronavirus Concerns
Article Courtesy of: Inman News
By: Erica Ramus
 
Here's how to manage when a top agent leaves your brokerage

At least once a month, a broker hits me up with an urgent request for a one-on-one call: “My top producer quit! Now what?”

Before you break down in tears — take a step back. It’s happened to me personally, and if you’ve been in business for a decent period of time, it’ll probably happen to you eventually. It’s part of running a brokerage (unless you’re a one-man office).

Breathe

Breathe. Agents leave. Sometimes it’s because the grass is greener (with more money being offered). Sometimes they are running toward a new office — a new business model or broker with magnetic culture. Sometimes they are running away from something they don’t like at your office. No matter why they left, you don’t have time to feel sorry for yourself or analyze the agent’s motivations right now. This isn’t necessarily a crisis situation, though it may feel like it in the heat of the moment.

Assuming the agent has packed up her desk and is gone, take inventory of the situation. Make sure passwords to company software are changed (if they had access) and that files are locked down. Change the office locks if necessary. Here’s a list of steps to take when any agent (not just one of your top producers) leaves the firm.

Take stock

Take a look at that agent’s participation in the office. What was their gross commission income (GCI) and the company dollar you kept from that? Analyze their sources of business.

What percentage of GCI came directly from that agent personally and his or her book of business? What percentage of their sales came from office-generated leads? If they were generating their own leads and they were a large chunk of your GCI, yes you may have a problem this year. But if they were closing mostly company-generated leads, that’s a different story.

One broker called me at the turn of the year, upset that her No. 1 agent announced she was going to the broker’s main competitor, a 100-percent company. When we looked at the numbers, it was clear to see that, yes, this agent closed the most sides of the company in 2019, but 60 percent of their business was directly given to them by broker-sourced leads. Twenty percent came from their sphere and repeat business, and another 20 percent was referral income coming again from broker-sourced relationships.

Suddenly the loss of this agent didn’t seem so catastrophic, as 80 percent of her closings originated from broker-generated leads that would simply be redirected to other agents.

Know your numbers. Once you know agent statistics and source of business, you can see the big picture of where your business is coming from, and where you need to concentrate. When someone leaves who is bringing in their own business, they take it with them. But when someone leaves who is living off of broker leads, the impact will be less. This is another important reason to source every closing and track all vendors.

Look inward

After you know the impact of the agent’s leaving on the numbers, step back and take a look at why he or she left. Many times they will quote “bigger split” or money as the reason. Sometimes this is true, but often, it is only an excuse.

Plenty of good agents stay with a broker who they admire and respect for a lower split than a competing brokerage offers. Money is only a piece of the puzzle.

Was the agent offered better tools or technology (another enticing carrot to lure agents away?)

Does the new brokerage offer a specific culture that attracted your agent away? Did they think they were a better fit over there, for some reason?

This one will hurt — but perhaps it wasn’t really the money or magnetic culture that drew your agent away. Was it you or your office culture that instead drove them into the arms of another broker?

This is the time to take a good long look at how things progressed the past six or even 12 months with this agent.

Were they asking for help, and you were too busy to give it to them? Did the agent ask for time or training with you, and you weren’t there? Was there a clique of “mean girl” agents in the office who made her feel less than welcome? I’ve seen all of these situations in the offices I’ve visited.

Maybe you as the broker don’t see the problem, so you may need your agents to help you analyze the situation.

Regroup

Take a look at the agents who you have left. If you’re not careful right now, that ex-agent may recruit more of them away to join the new company. Frequently your old agent’s new broker will urge him or her to recruit friends while the seeds of discontent are sown.

Your old agent may be texting and calling her co-workers and asking them to meet her for lunch or drinks, where she’ll talk about how great the new company is and how they should join her here. Before that happens, you need to cut it off at the knees.

Be transparent and alert the agents when someone has left. The worst thing you can do is ignore it and try to quietly push it under the rug. That becomes embarrassing when one of your agents marches into your office and says “I tried to send a referral up to Amy in the northern territory, and she told me she left two weeks ago! Why didn’t I know this?”

It should go without saying, but don’t gossip or tell stories about the agent. I announce it on our private Facebook page and in the next office meeting, in a factual way that Suzy has decided she’s a better fit over at Brokerage X, and we wish her best of luck.

You don’t have to go into details or discuss it at length, but questions may come up. Handle those in private and not in a group meeting if at all possible.

Circle the wagons

Although you might not be talking smack about the agent who left, know that the same courtesy may be be extended on the other side of the table. If the agent leaves and badmouths the broker or the office, hold your head high and don’t lower yourself to play their games. If your agents are kept close and in the loop, you might be surprised how they come to the office’s defense.

In one situation, I watched the ex-agent try to tear down her old broker with lies and snide remarks. She told his agents that he was stealing from them and fabricating fees so he made more money from them than they knew (which is a silly accusation for anyone who knows how to read the commission disbursement sheet). She tried to recruit the broker’s agents away with promises of higher splits and lower fees, to no avail.

Not one followed her to the new company — specifically because the others watched how she badmouthed the broker and firm. To a person, they ignored her recruitment efforts as a group. They became more tight-knit and protective of their office after she left.

Start afresh

You might be surprised what happens after the initial surprise when a top producer leaves. In another broker situation, two solid mid-level agents came to the broker privately and said they were glad that this person left. Afterward, both bloomed in the office.

Somehow the top agent’s diva-like presence had stifled their growth. Unknowingly, the broker had let this develop because she was such a heavy hitter. With her gone, the others felt free to express their true feelings.

As a final takeaway, think about that last paragraph. Do you have divas, heavy hitters in the office would could be intimidating or holding back others? If so, is their production and presence in your office worth the turmoil that might be bubbling underneath the surface?

In hindsight, what could have been a devastating blow — losing a top agent — was the best thing that could have happened to that particular office. The office has doubled in agent count, GCI and market share since that defining moment three years ago.

You might as well prepare for worst-case scenarios. Take a moment to reread this article, and run your numbers. Who are your top agents? Run the numbers, examine their sources of business, and then close your eyes. If it happens next month, how good or how bad will that be for you?

Erica Ramus, MRE, is the broker/owner of RAMUS Real Estate. You can follow her on Twitter or LinkedIn.
6 Steps to Take When Your Top Producer Quits
The Massachusetts State Senate recently adopted three energy bills, S.2477, S.2476 and S. 2478. Among the 124 amendments offered to S.2477 was an amendment offered by Senators Lessor and Pacheco to require a home energy audit prior to the time of sale. The seller or agent acting on behalf of the seller would then be required to disclose to the buyer the energy assessment and energy performance label prior to the signing of a contract to purchase. The Greater Boston Real Estate Board and Massachusetts Association of REALTORS® opposed the amendment which was ultimately withdrawn. Similar legislation filed by Senator Eric Lesser, S.1983 still remains before the Joint Committee on Telecommunications Utilities and Energy. The final outcome of the issue will not be known until the legislature adjourns at the end of July.
 
Senate Adopts Three Energy Bills, Home Energy Scoring Not Included

 For years, property owners have struggled with how to enforce no-pet policies on their properties with the growing number of renter requests for assistance animals.  Complicating the matter, in recent years reports have risen about some renters using dubious third parties over the internet to buy certifications or registrations that say they need an emotional support animal.  
 
To address the issue, the U.S. Department of Housing and Urban Development (HUD) just last week unveiled new assistance animal policy guidance, which includes important reforms advocated for by the National Association of REALTORS®.  Most notably, HUD’s final guidance contains the following policy revisions: 
 
- The prohibition of exotic and farm animals;
- Clarification that landlords and doctors can inquire about the specific needs an animal meets for those with non-obvious disabilities; and
- Clarification that so-called Internet forms will not be accepted.

The guidance issued by HUD on January 28, 2020 explains how housing providers should handle requests for reasonable animal-related  accommodations to comply with the Fair Housing Act The full guidance can be found here:   https://www.hud.gov/sites/dfiles/PA/documents/HUDAsstAnimalNC1-28-2020.pdf.

While this notice does not change the law, it clarifies how to handle circumstances that are often confusing. The guidance includes a step by step analysis for requests for a reasonable accommodation for an assistance animal, specifically noting the differences between service animals (i.e. dogs trained as guide dogs) and emotional support animals and what questions a housing provider may ask in each situation. 

Of particular note, the guidance differentiates between those animals which are commonly kept in household and those animals which may be considered unique. If an animal is commonly kept in a household, such as a dog, cat, small bird, rabbit, hamster, gerbil, other rodent, fish, turtle, or other small domesticated animal, the reasonable accommodation should be granted if the requestor has provided reliable information confirming the disability-related need for the animal. In those situations where the accommodation request is for a unique animal, the person making the request then has a “substantial burden of demonstrating a disability-related therapeutic need for the specific animal of the specific type of animal.”

Additionally, as a best practice, the guidance recommends that individuals seeking a reasonable accommodation for an assistance animal have their health care professional provide the following information: 

(1) whether the patient has a physical or mental impairment; 
(2) whether the patient’s impairment(s) substantially limits one or more major life activity or major bodily function; and 
(3) whether the patient needs the animal. 

Further, if the request is for a unique animal, the following information would be helpful in supporting that request: 
(1) the date of the last consultation; 
(2) any unique circumstances justifying the need for the particular animal; and 
(3) whether the health care professional has reliable information about the specific animal or whether they specifically recommend the animal. 

Keep in mind, however, that the aforementioned items are not required.

Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel. Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service.  The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service
.

What Does the New Guidance From HUD on Assistance Animals Mean?
Article Courtesy of: Inman News
By: Steve Cook

On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.

The Federal Housing Administration finances about one out of every eight homes sold each year. For decades, it’s been popular with first-time buyers because it was the first significant source of low down payment loans.

These days, first-time buyers can choose from thousands of low down payment loans and many with down payments lower than 3.5 percent. Yet FHA remains the most popular gateway to homeownership.

Myths about FHA single-family loans confuse many new buyers. FHA loans are not restricted to lower-income buyers, nor to first-time buyers. They are available in every state and have no income or age requirements.

However, the FHA does have a mandate. In recent hearings, former FHA commissioner, Carol Galante summarized FHA’s misson thusly: “FHA must continue to focus its activity first and foremost on providing access to affordable mortgage credit for those households and communities that are underserved by the private mortgage finance market.”

One out of every three buyers today is a first-time buyer. Knowing more about how FHA works — and how to work with FHA — helps agents identify opportunities for their first-time buyer clients. FHA is not for everyone, but for millions of young families, it is the piece that is solving the homeownership puzzle.

Here are seven little known facts about FHA.

 1. Homeowners don’t have to pay FHA mortgage insurance forever.

 FHA’s “life of the loan” policy on mortgage insurance is one of its most unpopular features. Many first-time buyers shy away from FHA when they learn that FHA requires them to keep their FHA mortgage insurance as long as they have an FHA mortgage.  
Borrowers with conventional loans and private mortgage insurance (PMI) can drop their mortgage insurance once they have accumulated 20 percent equity in their homes.  Equity grows with increases in value and paying down the loan principal.

FHA borrowers can get out of an FHA mortgage by refinancing into a conventional mortgage. To refinance an FHA loan, you must wait at least 210 days after your FHA mortgage clears or have six months of on-time payments before applying. 

As long as today’s fantastic low rates continue, refinancing makes sense, but an upturn in rates will make this tactic less attractive.

2. You can qualify for an FHA mortgage only two years after a bankruptcy and three years after a foreclosure.

In line with its mandate to provide mortgage credit to underserved populations, FHA is more lenient than many conventional lenders on giving qualified borrowers a second chance after foreclosures and bankruptcies. 

After a foreclosure, a former owner must wait at least three years. If the foreclosure also involved an FHA loan, the three-year waiting period starts from the date that FHA paid the prior lender on its claim. On the other hand, former owners who defaulted on conventional loans can wait just as long before they can qualify for a mortgage.

Following a Chapter 7 bankruptcy, you must wait at least two years from the date of the discharge to qualify for an FHA or a Veterans Administration loan approval.

To qualify for conventional financing after a Chapter 7 bankruptcy, borrowers will often need to wait four years. Filing for Chapter 13 bankruptcy can take as long as five years but a borrower can get an FHA loan with court approval, and after making 12 months of payments on time under their bankruptcy plan.

3. You can get an FHA mortgage with a much lower credit score than a conventional mortgage.

Borrowers with credit scores as low as 580 can qualify for FHA financing with 3.5 percent down. Scores between 500 and 580 can be eligible for mortgages with 10 percent down.
However, Fannie Mae and Freddie Mac won’t buy home loans with credit scores under 620, so you will find it hard to get a rate below that. In December 2019, the average score for approved FHA purchase loans was 679 compared to an average of 755 for approved conventional purchase mortgages.   

4. FHA loans usually have lower interest rates than conventional loans.

There’s no guarantee that FHA-approved lenders will give you a better rate on an FHA loan than a conventional one, but they usually do. 

FHA mortgage rates began to be consistently lower than conforming loan rates by 0.125 to 0.25 percent in 2010, partly because of the lack of penalties on FHA loans for having a lower credit score or a higher loan-to-value, says Keith Gumbinger, vice president of the mortgage site HSH.com.

For example, in the first week of December 2019, the average interest rate for 30-year fixed-rate mortgages backed by the FHA was 3.79 percent compared to 3.98 for a 30-year fixed-rate conforming conventional mortgage.

However, credit scores have a more significant impact on the rates that a borrower pays than the difference between FHA and conventional rates. FHA borrowers with credit scores of 660 will often qualify for the same interest rate as would conventional borrowers with a score of 740, according to Carla Blair-Gamblian, a home loan consultant for Veterans United Home Loans.

5. FHA is not for everyone. Investment properties, second homes and higher-end homes don’t qualify.

FHA will not finance second homes, vacation homes, investment properties, or flips (a property purchased within 90 days of a prior sale.)  Properties must be primary residences where owners live for the majority of the year. The FHA requires that a buyer moves into the property within 60 days of closing.

Like Fannie Mae and Freddie Mac, FHA limits the size of loans it will insure. Loan limits change annually and vary by location.

6. FHA is kind to debt limits but tough on deferred student loan debt.

Lenders assess a borrower’s ability to handle a mortgage by the debt-to-income ratio.  The “front-end” ratio looks at housing-related debts only (monthly mortgage payments, property taxes, etc.). The “back-end” number takes all recurring monthly debts into account. This can include the mortgage payment, credit cards, car loans, etc. 

The current (2019) limits for FHA debt-to-income ratios are 31 percent for housing-related debt (mortgage, property taxes), and 43 percent for total debt or less. In December 2019 the actual average DTI for FHA purchase loans was 28 percent front-end and 44 percent back-end. For conventional purchase loans, the DTI average was much lower, at 23 percent for housing expenses and 36 percent for all monthly debt payments .

Last year, FHA tightened the way it treats student loan debt. Before applying for a mortgage, many student loan debtors defer payments on their student loan debt for three years. Now, FHA requires that one percent of that debt be included in your DTI calculation.
So if you owe $100,000 in student loans, you must add $1,000 in your back-end DTI, which could raise some borrowers’ debt-to-income ratio above the threshold to qualify for an FHA home loan. The threshhold is 43 percent.

7. If you have a good credit score, you will pay more for FHA mortgage insurance than private mortgage insurance. 

A study last year by the Urban Institute found that borrowers with better credit scores are better off with a conventional mortgage than FHA.

Both FHA and conventional borrowers will pay less each month as their credit improves, but the difference in cost between FHA’s mortgage insurance and private mortgage insurance (PMI) makes a conventional loan a better deal.

Borrowers with credit scores below 640 will pay $266 a month more for PMI than FHA insurance while borrowers with PMI and an excellent score over 760 will pay at least $69 a month less.

Washington policy-makers are eager to move ahead with privatizing Fannie Mae and Freddie Mac, though that may not happen before the November elections.  Reorganizing the Department of Housing and Urban Development and FHA are also on the agenda, so changes to all of this may be in store over the next two or three years.

Steve Cook is the editor of the Down Payment Report published by Down Payment Resource.
7 Facts About FHA Loans You Should Know
Article Courtesy of: Inman News
By: John Giffen

Every transaction is as different as its participants, but these timeless principles will get you through smoothly every time

Each real estate transaction is as different as are the people participating in it. The personalities of the clients and real estate professionals can have a bearing on whether the transaction goes smoothly.

I believe there are six fundamental “rules” an agent must follow to enable transactions to move forward expeditiously and with integrity. 

Without these critical elements, the transaction is at risk of collapsing and leaving all parties frustrated and angry in its wake. Here they are:

1. Protect the client’s interests

Protect the interests of the client at all times, placing theirs above all others. This means you think of your client first when you negotiate an offer, an inspection repair list, closing and possession dates, or any other activity.

The only exception to this protection is when you are asked by your client to do something that could harm the other party in the transaction (the customer) or their agent. A client’s interest cannot be protected when they instruct you to do something unlawful or unethical.

Also, you must never put your personal interest ahead of that of your client at any time during your agency relationship. For example, if you are negotiating an offer and the result would be an increased amount of compensation for you, you must consider the client first and negotiate in a way that keeps their interest primary — no matter what the outcome is for you. The client always comes first.

2. Remember the original objectives

Before I work with a buyer or seller, I discuss their goals in purchasing or selling a home. I write down each goal, make a copy for them and keep one for myself, so we have a list we can refer back to as we progress through listing or contract. 

It is very easy, especially for buyers, to get off track and go down another path instead of the one we laid out in that first meeting.

Of course, people can change their minds. However, it is your responsibility to keep the client focused on their original intentions, so the outcome they are looking for is reached. Without staying true to these initial objectives, you will find yourself doing much more work in the management of the client and the transaction.

3. Confront any and all issues immediately when they occur

Remember that saying “A stitch in time saves nine?” There’s a reason it exists. As a principal broker, I’d become frustrated with an agent who would tell me about an issue just a day or two before the closing date — when it should have been resolved much earlier.

As agents, we do not like to confront others with a problem. We want everything to go smoothly, without any bumps in the road. Unfortunately, it doesn’t always happen that way.

When you have something come up in the transaction that could be problematic, you must deal with it immediately. Do not let anything sit and fester.

4. Be honest

Honesty is an essential part of the underlying fabric of the National Association of Realtors’ Code of Ethics and Standards of Practice. As Realtors, we must act honestly in everything we do and be truthful in all we say.

Dishonesty does nothing but cause harm to clients, customers, cooperating agents and us.

5. Don’t be afraid to admit that you’re wrong

I don’t like it when I’m wrong. Most people don’t like being wrong. However, we cannot be right all the time. When you find yourself having to fess up to an issue involving a listing, a contract, or a client, be upfront and honest.

Trust me, you will gain the respect of those with whom you were wrong, and you’ll be more likely to preserve the relationship.

6. Do not let personal opinion or your emotion get in the way

Believe it or not, agents can change the course of a transaction with the words that come out of their mouths.

I have seen occasions when an agent would offer a personal opinion on an issue, and it would change the client’s mind. Closings are delayed or fall apart entirely because the agent injects himself or herself into an issue, creating a more significant problem than the original one.

I have also seen agents let their emotions come to the forefront when talking with other agents and brokers about a problem. The issue needs to be resolved, but the agent becomes emotional in trying to seek a resolution, and more problems arise. Emotions can quickly take away objectivity and clear thinking.

Stay calm, and remember you are a professional. Solve the problem; don’t be the source of the problem.

It is important not to let the challenges and frustrations of what you do get in the way of negotiating a contract or closing a transaction for your client. Staying calm and collected and being objective will allow you to be successful in the work you undertake for your clients and yourself.

Keeping a real estate transaction from unraveling takes experience and expertise in solving problems and creating solutions that allow the buyer and seller to get to the closing.

I tell agents to remember the primary goal of the parties in the deal: The seller wants to sell the house, and the buyer wants to buy the house.

To make that happen, a real estate agent needs to do what they can to make sure the transaction stays together and their client remains positive and upbeat.

Most of the time, things will work themselves out in the end. My late father gave me a piece of advice a long time ago: “Don’t worry. It will work itself out in the end.”

And most of the time it does. I share this advice with agents almost on a daily basis.

John Giffen is Director of Broker Operations for Benchmark Realty, LLC in Franklin, Tennessee.  He is the author of “Do You Have a Minute? An Award-Winning Real Estate Managing Broker Reveals Keys for Industry Success.”
6 Rules For Keeping the Deal on Track Every Time

Article Courtesy of: Inman News
By: John Giffen

Knowing when you need to take an issue to the next level

The role of the principal broker (or managing broker, broker-in-charge, etc.) is significant to the success of your real estate career. He or she must be able to provide advice and counsel on a wide array of topics including regulatory compliance, growing and operating your business, professional standards, and continuing education.  

The broker is the one who told the state’s licensing authority they would be responsible for all the activities in your real estate practice. You should be able to turn to the broker at any time, especially if there is an issue or problem you cannot resolve. Rely on their education, experience, and expertise to assist you when you face a challenging issue with a client, cooperating agent, or any other party involved in your transaction. They will always have a duty to protect your reputation as well as the reputation of the firm.

I became a principal broker many years ago at a firm affiliated with a national real estate franchise in Brentwood, Tennessee. I never saw myself as a managing broker. Through a series of different events that occurred at our firm with a change of ownership and personnel, I was asked to step into a leadership role and oversee the operations of one of our branch offices. I accepted the job as a managing broker and ever since then, I have enjoyed helping hundreds of agents and their clients.

When I was selling full-time as an agent, I felt called to guide and direct my clients through the process of listing and selling their home or purchasing their next one. I took this same mindset as a managing broker, except I viewed my role as shepherding agents as they managed their clients and transactions. I always told my agents they could call me with a problem or an idea anytime. As I am now in a corporate management position with our company, I still receive calls, and I always want to help wherever I can.

Many of the conversations I had with my group of folks were questions about something to which they already knew the answer — they just needed my affirmation.

However, on several occasions, an agent was either backed into a corner by another agent or client or faced a roadblock to keep their transaction on track. I was always there to help them find a solution to a problem or intervene in a matter that only a managing broker could address.

I would recommend you consult with your principal broker when you are faced with the following:

1. Contract issues

Today’s real estate contracts have become very lengthy and complicated. The language used in most Purchase and Sale Agreements are designed to provide specific terms and conditions for the buyer and the seller to follow. Your broker can help you navigate through the contract and supplemental documentation.

2. Agency issues

A real estate license is all about representation. Representation in real estate is created through an agency relationship. Agency can be a complex subject for an agent if they are not well-versed in the various agency categories. Your principal broker can assist you in deciding whether or not you should establish a designated agency relationship, change your agency status to a neutral facilitator/transaction broker or terminate an established agency relationship with a buyer or seller.
Assisting an agent through an agency status change was something I did on a regular basis. More times than not, it involved moving from being a designated agent to becoming a facilitator. Agents need to know the advantages and disadvantages of facilitation. The broker can provide them with the proper guidance.

Terminating an agency relationship is one you will face at least once in your career. There are different reasons why clients and agents want to (or need to) stop working with each other. No matter what the issue might be, the broker needs to be involved in this process. He or she can assist you in handling the termination professionally and with minimal stress.

Remember, only the principal broker can release the client from an agency agreement as the broker is the “owner” of his or her firm’s listing agreements and buyer representation agreements.

3. Client issues

You may need to get a principal broker involved if you’re having problems with your client. For example, you may have different opinions over the amount of time you are spending marketing the seller’s home. Or, your buyer client is upset at you because they feel that you haven’t been attentive enough.

Whatever the matter might be, ask your principal broker to work with you in resolving your client’s concerns or complaints. A good managing broker can function as a mediator who can “mend fences” in the agent/client relationship so the client’s goals and objectives can continue to be met.

4. Earnest money issues

There will be times when your client’s contract falls apart. Maybe an inspection revealed a structural defect with a house, or the bank denies a buyer a loan.

When a contract is terminated for a valid reason, sellers must return earnest money back to the buyer. But if they’re not willing to terminate the contract, you may need to ask your broker to get involved.

Quite often, I’ve been called upon to help when one of my agents needed to get the buyer’s earnest money returned, but the seller would not sign the earnest money disbursement form. If discussions between the agents and I, and/or the cooperating managing broker didn’t resolve the issue, we’d have to go to the local court with an interpleader action, where the court decides who will receive the money.

5. Disclosure issues

I receive numerous calls from agents asking me whether or not a potential adverse fact discovered by a home inspector, the client, the agent or a third party should be disclosed. Non-disclosure is the number one reason sellers and listing agents are sued by “injured” buyers.

If you find yourself with a question on whether or not something should be disclosed, call your broker as soon as possible. He or she will be able to provide you with what you should and should not do concerning disclosure. Don’t make any decisions about disclosure if it is not crystal clear. Call your broker.

6. Cooperating agent issues

Not everyone in this business plays by the rules or acts civil toward one another, including cooperating agents on the other side of our transactions.

I wish I had a penny for every time one of my agents called me to complain about the “other” agent involved in their deal. Sometimes the complaints are merited; other times they are not. Either way, if you are unable to resolve a problem with a cooperating agent, you need to contact your broker. He or she can tell you what you need to do to address the matter.

If another agent is not communicating with you concerning an offer or a contract issue, you should contact their principal broker first. If you don’t get anywhere with them, call your broker so he or she can get in touch with the other broker to work things out.

7. Potential legal matters

Our work as real estate agents requires us to handle multiple legal documents on a daily basis. However, our real estate license does not allow us to practice law.

If you feel you or your client are facing an issue that may require the opinion or counsel of an attorney, call your principal broker to discuss the matter. He or she will be able to work with you and an attorney in addressing anything that is outside of our scope of licensing.

Most title attorneys are well-versed in real estate contract law and are an excellent source for help when legal questions arise for you or your client.

8. Regulatory compliance/licensing issues

Lawmakers created real estate commissions/state licensing boards to protect consumers. Your principal broker is the one the state has designated as responsible for all of your activities. Do not hesitate to contact your broker if you face an issue that may jeopardize your real estate license. Trust me, the last thing you and your broker want to do is to find yourselves in front of your state real estate commission at a disciplinary hearing.

9. Disputes adjudicated through your Realtor association

As Realtors, we agree to resolve any potential disputes with our industry peers through our local Realtor associations. If you feel that you need to file a complaint against another Realtor, you should contact your principal broker about filing a grievance or request for arbitration through your association’s Professional Standards Committee.

Many times, your broker must participate in the process with you. Do not file any complaint with your association without your principal broker knowing about it. The last thing you want to do is catch your broker off guard by going around him or her with a grievance filing.

10. Intracompany issues

Sibling rivalry in families is a real thing, and it is not any different in the real estate industry involving two agents licensed under the same principal broker. There may be an occasion when you and another agent in your company will be the two agents involved in a transaction. Most of the time, this is a good thing because you and the other agent received the same training from your broker and will know how to manage each respective side of the transaction correctly.

However, it’s possible that the two of you may not see eye-to-eye on an issue. If this happens, immediately contact your principal broker to mediate the conflict. He or she will know how to find a resolution that will allow you, the other agent, and the clients to move forward in the transaction.

The bottom line: Lean on the knowledge and experience of your principal broker when a need arises. They’re an excellent resource to get you through tough situations with your transactions.

John Giffen is Director of Broker Operations for Benchmark Realty, LLC in Franklin, Tennessee. He is the author of “Do You Have a Minute? An Award-Winning Real Estate Managing Broker Reveals Keys for Industry Success.”

When It's Time to Call Your Broker: 10 Issues You Should Ask For Help With
Article Courtesy of: Inman News
By: Steve Cook

On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.

The Federal Housing Administration finances about one out of every eight homes sold each year. For decades, it’s been popular with first-time buyers because it was the first significant source of low down payment loans.

These days, first-time buyers can choose from thousands of low down payment loans and many with down payments lower than 3.5 percent. Yet FHA remains the most popular gateway to homeownership.

Myths about FHA single-family loans confuse many new buyers. FHA loans are not restricted to lower-income buyers, nor to first-time buyers. They are available in every state and have no income or age requirements.

However, the FHA does have a mandate. In recent hearings, former FHA commissioner, Carol Galante summarized FHA’s misson thusly: “FHA must continue to focus its activity first and foremost on providing access to affordable mortgage credit for those households and communities that are underserved by the private mortgage finance market.”

One out of every three buyers today is a first-time buyer. Knowing more about how FHA works — and how to work with FHA — helps agents identify opportunities for their first-time buyer clients. FHA is not for everyone, but for millions of young families, it is the piece that is solving the homeownership puzzle.

Here are seven little known facts about FHA.

 1. Homeowners don’t have to pay FHA mortgage insurance forever.

 FHA’s “life of the loan” policy on mortgage insurance is one of its most unpopular features. Many first-time buyers shy away from FHA when they learn that FHA requires them to keep their FHA mortgage insurance as long as they have an FHA mortgage.  
Borrowers with conventional loans and private mortgage insurance (PMI) can drop their mortgage insurance once they have accumulated 20 percent equity in their homes.  Equity grows with increases in value and paying down the loan principal.

FHA borrowers can get out of an FHA mortgage by refinancing into a conventional mortgage. To refinance an FHA loan, you must wait at least 210 days after your FHA mortgage clears or have six months of on-time payments before applying. 

As long as today’s fantastic low rates continue, refinancing makes sense, but an upturn in rates will make this tactic less attractive.

2. You can qualify for an FHA mortgage only two years after a bankruptcy and three years after a foreclosure.

In line with its mandate to provide mortgage credit to underserved populations, FHA is more lenient than many conventional lenders on giving qualified borrowers a second chance after foreclosures and bankruptcies. 

After a foreclosure, a former owner must wait at least three years. If the foreclosure also involved an FHA loan, the three-year waiting period starts from the date that FHA paid the prior lender on its claim. On the other hand, former owners who defaulted on conventional loans can wait just as long before they can qualify for a mortgage.

Following a Chapter 7 bankruptcy, you must wait at least two years from the date of the discharge to qualify for an FHA or a Veterans Administration loan approval.

To qualify for conventional financing after a Chapter 7 bankruptcy, borrowers will often need to wait four years. Filing for Chapter 13 bankruptcy can take as long as five years but a borrower can get an FHA loan with court approval, and after making 12 months of payments on time under their bankruptcy plan.

3. You can get an FHA mortgage with a much lower credit score than a conventional mortgage.

Borrowers with credit scores as low as 580 can qualify for FHA financing with 3.5 percent down. Scores between 500 and 580 can be eligible for mortgages with 10 percent down.
However, Fannie Mae and Freddie Mac won’t buy home loans with credit scores under 620, so you will find it hard to get a rate below that. In December 2019, the average score for approved FHA purchase loans was 679 compared to an average of 755 for approved conventional purchase mortgages.   

4. FHA loans usually have lower interest rates than conventional loans.

There’s no guarantee that FHA-approved lenders will give you a better rate on an FHA loan than a conventional one, but they usually do. 

FHA mortgage rates began to be consistently lower than conforming loan rates by 0.125 to 0.25 percent in 2010, partly because of the lack of penalties on FHA loans for having a lower credit score or a higher loan-to-value, says Keith Gumbinger, vice president of the mortgage site HSH.com.

For example, in the first week of December 2019, the average interest rate for 30-year fixed-rate mortgages backed by the FHA was 3.79 percent compared to 3.98 for a 30-year fixed-rate conforming conventional mortgage.

However, credit scores have a more significant impact on the rates that a borrower pays than the difference between FHA and conventional rates. FHA borrowers with credit scores of 660 will often qualify for the same interest rate as would conventional borrowers with a score of 740, according to Carla Blair-Gamblian, a home loan consultant for Veterans United Home Loans.

5. FHA is not for everyone. Investment properties, second homes and higher-end homes don’t qualify.

FHA will not finance second homes, vacation homes, investment properties, or flips (a property purchased within 90 days of a prior sale.)  Properties must be primary residences where owners live for the majority of the year. The FHA requires that a buyer moves into the property within 60 days of closing.

Like Fannie Mae and Freddie Mac, FHA limits the size of loans it will insure. Loan limits change annually and vary by location.

6. FHA is kind to debt limits but tough on deferred student loan debt.

Lenders assess a borrower’s ability to handle a mortgage by the debt-to-income ratio.  The “front-end” ratio looks at housing-related debts only (monthly mortgage payments, property taxes, etc.). The “back-end” number takes all recurring monthly debts into account. This can include the mortgage payment, credit cards, car loans, etc. 

The current (2019) limits for FHA debt-to-income ratios are 31 percent for housing-related debt (mortgage, property taxes), and 43 percent for total debt or less. In December 2019 the actual average DTI for FHA purchase loans was 28 percent front-end and 44 percent back-end. For conventional purchase loans, the DTI average was much lower, at 23 percent for housing expenses and 36 percent for all monthly debt payments .

Last year, FHA tightened the way it treats student loan debt. Before applying for a mortgage, many student loan debtors defer payments on their student loan debt for three years. Now, FHA requires that one percent of that debt be included in your DTI calculation.
So if you owe $100,000 in student loans, you must add $1,000 in your back-end DTI, which could raise some borrowers’ debt-to-income ratio above the threshold to qualify for an FHA home loan. The threshhold is 43 percent.

7. If you have a good credit score, you will pay more for FHA mortgage insurance than private mortgage insurance. 

A study last year by the Urban Institute found that borrowers with better credit scores are better off with a conventional mortgage than FHA.

Both FHA and conventional borrowers will pay less each month as their credit improves, but the difference in cost between FHA’s mortgage insurance and private mortgage insurance (PMI) makes a conventional loan a better deal.

Borrowers with credit scores below 640 will pay $266 a month more for PMI than FHA insurance while borrowers with PMI and an excellent score over 760 will pay at least $69 a month less.

Washington policy-makers are eager to move ahead with privatizing Fannie Mae and Freddie Mac, though that may not happen before the November elections.  Reorganizing the Department of Housing and Urban Development and FHA are also on the agenda, so changes to all of this may be in store over the next two or three years.

Steve Cook is the editor of the Down Payment Report published by Down Payment Resource.
7 Facts About FHA Loans You Should Know

Article Courtesy of: Inman News
By: Christy Murdock Edgar

KISS your way through 2020: Keep it simple ...

You may have already started thinking about what you’ll do to improve your personal and professional life in the new year. On the other hand, you may be thinking that resolutions never work, so why bother?

The following five resolutions however, are not only easy to stick to, but offer the kind of payoff that will help keep you motivated for the long haul.

1. Learn to use your phone

You may think that you’re already living on your phone, but you probably haven’t fully explored its capabilities. Take some time to learn more about your phone’s features. Learn to optimize its assistive options, and install mobile versions of your favorite desktop platforms.

Truly mastering your phone’s potential can help you work more effectively on-the-go and save you hours of desk time. In addition, with mobile CRM and transaction management, you’ll be more responsive and more organized than ever before.

2. Develop a time management program

If you feel that you are constantly stressed out and running to catch up, you need to take control of the clock and the calendar. Develop a time management program that can help you organize your day and make time for the things that pay dividends both at work and at home.

Whether you choose time blocking, Beat the Clock, mono-tasking, or just get better at setting reminders and alarms on your phone, better time management will help you to feel more in control, reduce stress, and keep you on track each day, week, month, and throughout 2020.

3. Get serious about content

What is your biggest marketing challenge? Whether it’s keeping up with your social media posts, revamping your website, or starting that long-delayed blog, podcast, or video channel, you can no longer afford to put off content creation

Instead of beating yourself up for what you haven’t done, figure out what is keeping you from creating content and address that challenge first.

Do you lack time? Expertise? Confidence? Consider working with a coach or outsourcing some of your content production in order to overcome your reluctance, so that you can give yourself a boost and get started.

4. Learn something new

One of the most important things that you can do to differentiate yourself is to take on a growth mindset. Whether you choose to seek a new certification or designation, move from agent to broker, or take a class at the local association, you’ll find that investing time, money, and effort in education pays big dividends.

Alternatively, take advantage of one of the many free and convenient online platforms to learn something new that you can use each day in your business. Explore Canva or Poster My Wall for flyers, postcards, and other promotional graphics. Work with Wix to create a customizable website. Master Excel spreadsheets in order to better track your finances.

5. Practice self-care

New Year’s resolutions are often punishing, involving things that we need to improve or tasks that we need to do. Instead of resolving to do more or be better, why not resolve to take better care of yourself?

If you spend all of your time taking care of your clients and your family, who’s taking care of you? Set aside some time each day for meditation or visualization. Make a standing appointment for a weekly massage. Keep facial masks on hand for anytime you have an extra half hour to chill out.

Remember, resolutions don’t have to make you feel bad about yourself. Choose something that makes you feel more relaxed, more in control, and more connected. Hopefully, each of these can become a meaningful and rewarding part of your daily routine.

Christy Murdock Edgar is a Realtor, freelance writer, coach and consultant with Writing Real Estate. She is also a Florida Realtors faculty member. Follow Writing Real Estate on  Facebook, Twitter, Instagram  and YouTube.
5 Simple New Year's Resolutions That Will Pay Big Dividends in 2020

After clearing hurdles in the House and the Senate, President Trump signed a federal spending on Dec. 20, funding part of the federal government through Fiscal Year 2020, and, "brings certainty and stability to the housing market", according to a press release issued by the National Association of REALTORS® (NAR).
  
Specifically, the spending package contains three key NAR priorities, each representing wins for REALTORS® and the real estate industry: The National Flood Insurance Program (NFIP), Terrorism Risk Insurance Program (TRIP), and three tax extenders. Read More.

Federal Funding Bill Contains Key Wins for Real Estate

Right now, state lawmakers are considering a bill that would allow ANY city or town in Massachusetts to impose a new sales tax on ALL real estate of up to 2%. This will drive up costs, hurt the economy and destabilize the marketplace.

Sales Tax on Homes-We Need Your Help!
This and other transfer tax bills would further exacerbate the housing affordability crisis in Massachusetts, undermine the basic tenet of fairness in tax policy, and create an unstable revenue source for affordable housing. 
If enacted, H. 1769 would have an extremely negative effect on the Massachusetts real estate market and Massachusetts Realtors®. If you share your Association’s concerns that a new sales tax on homes is bad public policy, the time to act is now!  

Your legislators need to hear from you TODAY.

Take action now to send a pre-drafted email to your State Senator and Representative. If REALTORS® like you don’t make their voices heard, this bad tax policy could become a reality in all communities in the Commonwealth.

Additionally, for talking points in opposition to the legislation, see the Greater Boston Real Estate Board issued an email earlier this week, addressing the board's disapproval of the bill.

Participate in Legislative Call For Action to Oppose RE Transfer Taxes

Calendar

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Event
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Real Estate Investing
GBAR Member Service And Training Center
8:30am
 
Lunch & Learn: 1031 Tax Exchange
GBAR Member Service And Training Center
 
Pricing Strategy Advisor (PSA Certification)
Crowne Plaza Boston-Natick
8:30am
 
GBAR New Member Orientation (Woburn, MA)
Hilton Boston Woburn
9:00am
 
RealTour Member Meeting- Southern Norfolk Region
Hampton Inn
9:30am