Florida Existing Home Sales Flatten

Prices, however, continue rising.

Florida’s housing market continued to report a tight supply of homes for sale and rising median prices in February, according to the latest housing data released by Florida Realtors®.

Sales of single-family homes statewide remained relatively flat last month, totaling 18,033, down 0.5% compared to February 2016.

“Florida’s economy is growing, with more jobs being created,” said 2017 Florida Realtors President Maria Wells, broker-owner with Lifestyle Realty Group in Stuart. “And a growing economy boosts the state’s housing sector as well. However, many local markets are reporting low inventory of for-sale homes at a time of increasing buyer demand.”

The statewide median sales price for single-family existing homes last month was $225,000, up 12.5% from the previous year, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in February was $167,500, up 11.7% over the year-ago figure. February marked the 63rd month in a row that statewide median prices for both sectors rose year-over-year. The median is the midpoint; half the homes sold for more, half for less.

via Builder Magazine

http://www.ForeSiteResidential.com

15 THINGS REALTORS WANT BUILDERS TO KNOW (2)

Hand With Magnifying Glass Over House

…continued

8. Baby Boomers
Realtors have noticed that many builders across the country are failing to connect with one of the largest group of buyers: baby boomers looking to downsize. They say there is a shortage of appropriate housing for this demographic, made up of older adults who prefer new, one-level construction to existing dwellings, says Baltimore-area Realtor Janice Kirkner. “Eighty-five percent of my 55-plus buyers prefer new construction because there is no maintenance and all common areas are maintained for them,” she says.

Hailey finds older buyers in Texas desire smaller new-construction one-story houses of 2,500 square feet or less that have the features and amenities they want. “They are looking for smaller single-story homes but they want the upgraded amenities that they feel they deserve. They also want that energy efficiency.”

9. Cultural Considerations
Builders often overlook the needs of foreign buyers, says Miami agent Andre Brown, who works for an Asian-owned company. Marketing materials should be available in a variety of languages depending on the area and bilingual staff or interpreters should be on hand to assist potential buyers.

“As the U.S. population becomes more culturally diverse I think it would be good for builders to research cultural preference, architecture and design to implement different aspects into their development,” says Brown. For instance, Richard says sales in his Asian-dominated market often hinge on a home’s favorable feng shui.

10. Closing the Deal
When it comes time to finalize a deal, there is one thing that Realtors agree on: Home buyers are turned off by overly forceful marketing tactics. They see deals falling through because of salespeople’s relentless calling and inflexible rules. For instance, it’s common practice for builders to tell buyers they must use a specific lender or title agency in order to get the pricing they want.

“The hard-sell on the builders preferred lender and title company is not appreciated by most agents,” says Hailey. “Many times before we assist a buyer in looking for homes, we have already had them get pre-approved with a lender outside of the builder’s preferred lender. Giving the consumer the ability to shop the loan is the right thing to do.”

Instead of “used car salesman tactics,” sales professionals should focus on a specific buyer’s preferences and motivators, adds Rice.

“They should break past old‐school sales tactics and dive into the psychology of what their buyer is looking for in their next home,” he says. “Their interests, wants, needs, and priorities are what a sales agent can search for when developing a relationship with a customer. Closing the sale will come as a result of a sensible process that adds value.”

Realtors can be indispensable in knowing what motivates a buyer. “Ask us what is the best approach to dealing with our buyer, we have a relationship with them and can recommend the best way to enter into negotiations, says Kirkner.

11. Contracts
Home buyers are sometimes shocked by builder’s contracts, Realtors say. They are put off by no option periods, non-refundable earnest money, and no hard close date. They are nervous when they see that builders giving themselves one to two years to complete the home and that they’re locked in to the contract no matter what the inspection shows.

Houston Realtor Kindi Scartaccini has had clients walk away from listings when they realize the deal would involve a builder’s contract. She recommends builder use a standard state form with just a few addendums. “Most realtors and their buyers love that because the contract is not so slighted toward the builder,” she says.

12. Working Together
Although Realtors help facilitate sales, they often feel as if they not a valued by builders. One of their biggest pet peeves is when a builder reaches out directly to their client. “If a buyer has an agent, call the agent not the buyer,” says Scartaccini.

In addition, they say, Realtors should be treated with the same respect as any other industry professional and have their calls returned promptly. Not answering a Realtor’s questions fast enough slows their own customer service. “In the age of the Amazon World, people are used to answers fast and we like to work that way as well,” says Fields.

On the flip side, builders should consider using a selling agent to market and sell their homes, says Benson. Think of Realtors as another subcontractor. “Builders won’t hire a tradesman with no experience but sometimes they think that their homes should sell themselves,” he says. “New homes don’t build themselves and they don’t sell themselves. Hire a professional to do the job.”

13. Realtors Fees
Many builders do not work hard enough to partner with local real estate agents, and few include a fee for a Realtor in their sales process. Some even try to cut them out of the deal or don’t return their calls.

“It’s frustrating to the Realtors, because they may spend many hours in educating the buyers through showing existing homes and general questions about the process of buying,” says DelVecchio, who is the exclusive marketing agent for a local builder Carina Homes, one of the only builders in her area that reaches out to Realtors with a “Realtor Referral Program” that provides a marketing fee of 3% of the build price.

“Our relationship is built on the premise that the builder’s best skills are with construction, but not marketing/sales. Our arrangement is that I get a marketing fee on every home Carina builds, which is about 10-12 per year,” says DelVecchio. “When there’s another Realtor involved in bringing a buyer to Carina, they also get paid a fee for the referral/assistance with the buyer from financing to closing.”

14.Closing
Realtors often see builders do everything right in their sales process but then drop the ball at the eleventh hour by not having the home completed at closing. Benson urges them to have everything ready at least a week before closing so that the builder and buyer can do a walkthrough and create a punchlist, which should be completed prior to closing. “It far more difficult to do repair or finish work in the home when the owner is living in the home, both for the builder and the homeowner,” says Benson.

“Builders need to learn to finish a house,” echoes Baldwin. “93, 97, 98 percent is not finished! A buyer is always going to focus on things not done,” he says. “In football, you can go 99 yards, but you don’t get any points unless you cross the goal line. There’s no A for effort.”

15. Follow Up
Repeat business and referrals are the lifeblood of any home building business. The best way to achieve them is through excellent service before, during, and after the sale, say Realtors.

Fields says many of her clients have heard warranty nightmares about lingering issues in new homes. “Not having a strong system in place will lead to lost referrals and angry customers,” she warns. “If there is a problem, builders need to take ownership of issues and repair them immediately.”

Manage buyers’ expectations with a follow-up service schedule for the first year. Benson recommends that builders check in with homeowners 90 days and 330 days after closing. “The first visit is to check in and make sure that all of the expectation of the homeowner have been met. The second visit is just prior to the end of the typical one-year warranty and goes a long way toward referrals and ensuring the builder can use his past homeowners as references,” he says.

These visits can be helpful for builders, too, as they are a chance to receive feedback on the design and livability of the home to alert them to the need for any changes in future homes, he adds.

Kudos
Most experienced real estate agents feel a kinship with their builder peers, especially after having weathered the down years of the Great Recession together. They understand the stress and challenges of making a living in the volatile U.S. housing industry.

“The shortage of labor and capital, increased land cost, excessive government regulation, elevated taxes and impact fees all make the job of being a builder and developer very difficult,” says Brown.

In spite of the challenges, Realtors say they are impressed with builders’ devotion to their craft. As Parker says, “Truly, they are doing a great job!”

Terrific article via Builder: Jennifer Goodman

15 THINGS REALTORS WANT BUILDERS TO KNOW

Realtor Builder Relationship
From dirty model homes to pushy salespeople, here are the top blunders that real estate agents see builders make.

Builder: Jennifer Goodman Home buyers rely on real estate agents for information about their local market that they can’t get anywhere else. In fact, real estate agents are home buyers’ most important source of information about new homes after the Internet. Last year, 33% of buyers learned about their new homes via a real estate agent.

Agents’ influence is not declining despite consumers’ use of the Web, and for most new home transactions, Americans still prefer to have a Realtor. Last year, 87% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69% in 2001, according to the National Association of Realtors.

In the course of helping their clients find the right house, these buyer agents meet a lot of builders and walk through an untold number of houses. This means they see where builders are making the grade and where they are slipping up. While many of them compliment builders for doing a great job even during tough economic conditions, they have also have strong opinions about what building pros could do better. Here are 15 of the top things they wish builders did differently.

1. New vs. Existing
Realtors say builders undermine sales by not playing up their biggest advantage: New homes are preferred to previously owned ones. They urge builders to market the value of a new home, which comes with warrantees, energy efficiency, and up-to-date design that older homes don’t have.

Buying a new home is especially ideal in markets where there’s a lack of inventory in certain price ranges, especially in entry level and move up categories, they say. In her Edmond, Okla., market, Realtor Jennifer Fields says new homes are highly sought after, especially in popular school districts. Builders in her area are working to design and customize homes that rival the price point of existing homes. “This makes new homes the obvious choice for many buyers,” she says.

In addition, new homes also offer flexibility on closing times, says Dana David, an Amherst, N.Y., real estate agent. “The hardest thing in this market is for my sellers to sell their home and also buy in a timely fashion,” she says. “Building a new home allows them to know where they are going before we list their existing home, and also gives me the ability to negotiate in time to rent back or for an extended close.”

Even though buyers prefer new, in the end it all comes down to price, says Susanna Madden, a Tampa RE/MAX agent. “If the HOAs and CDDs and add-ons are cost prohibitive, buyers will look at a ‘lovingly maintained’ resale that the seller has kept up.”

2. Model Homes
A model is often a prospect’s first impression of their future home, and it should entice them to visualize living there, says David Rice, founder of New Home Star, a Chicago-based real estate sales management firm. “It’s a hugely meaningful thing to be able to conceptualize the next chapter of your life,” he says.

Models need to be fully complete, says Houston agent Bill Baldwin, because ones that are not finished give a bad impression. Moreover, agents are dismayed to walk into a model with a client and find that it isn’t in working order or is dirty. “They should be equipped with everything including light bulbs, working sinks, and door knobs,” says Seattle-based Keller Williams agent Matt Parker. “And they should be cleaned every other week.”

3. Staging
Realtors say that no matter the style or size the model home, it should always be staged. It’s one of the most important steps to selling a home, says New York Realtor David.

“I’ve taken on expired listings of vacant model homes… once staged, buyers can picture themselves living in them and usually they sell in record time,” she says.

But many agents caution builders and their designers not to take staging too far because overdecorated models can look cluttered and confuse customers about what is standard and what is an upgrade. “Sometimes they are set up with lots of bells and whistles that don’t come standard, says Coldwell Banker agent Missy Stagers of San Antonio, Texas. “Make sure to clearly notate what is an upgrade.”

Models need to strike a middle ground between overdesigned and plain vanilla, says David. “It is hard for clients to walk into a fully loaded model home and picture it at the base level,” she says. “While I realize builders need to showcase their ‘best stuff,’ it would be great if there was a way to have a model with every upgrade, and also one available to see with just the basic offerings.”

Stagers has a good idea: “Offer some nice things in the basic package so everything is not an upgrade,” she says.

4. Price
The price of a new home can be a touchy subject between builders and buyer’s agents, who work to get the best deal for their clients. Realtors say they realize that builders need to make a profit, but “we do expect them to price their homes fairly. If you are always getting low ball offers, check where you stand price per foot with your competitors and other homes,” says Oklahoma agent Fields.

The biggest mistake builders make is that they price their homes based on their costs rather than on market conditions, says Garry Benson, managing broker at GPB Marketing Solutions in Chicago. “The market doesn’t care how much the builder had to spend to buy the land or build the home. They only care about the market value.”

Realtors don’t understand why the price of houses in new communities increases so quickly. “I feel as though every house that is built gets bigger, better, and more expensive,” says David. This is offputting to many of her clients who are young buyers or empty nesters on a budget. “It would be amazing if there was a builder that could supply us with reasonable, not overly upgraded homes that could appeal to not only first time homebuyers but also downsizers at an affordable price point,” she says.

When prices do rise, it’s important that builders honor quotes, says Plano, Texas, broker Melissa Hailey, who was shocked when a builder gave her clients a price and then wanted a $3,000 increase four days later when they sat down to sign the paperwork. Her buyers, who couldn’t afford the increase, were heartbroken.

5. Multiple Listing Service
The multiple listing service (MLS) is one of a Realtor’s most powerful tools, letting them know when new houses come on the market and allowing them to see recent sales. But many builders don’t provide enough information in their listings about variations and options, according to Albany, N.Y., broker Wayne Richard.

“If you consistently list on the MLS your to-be-built four-bedroom, 2.5-bath colonial you’ll get filtered out of the buyer (and Realtor) searching for a five bedroom, or a third garage, or an in-law suite,” he says. “You have to tell both buyers and Realtors that you can build those variations.”

6. Construction Updates
Once a house is under contract, builders must communicate with the Realtor about what is happening on the site, adds Richard. “Set construction milestones and expectations and advise them ahead of time: The hole is being dug tomorrow, the sticks start going up this week, the kitchen cabinets are being installed.”

Realtors often are reluctant to bring clients to a job site, says Richard, who worked for a public builder before becoming a Realtor. He thinks this is based on an unspoken fear that they will be embarrassed in front of customers because they don’t know much about the construction process. He urges builders to work with Realtors to educate them on how houses are built so that they are comfortable on site.

7. Buyer Preferences
Real estate agents, who work intimately with their clients sometimes over decades-long periods, often have a better idea than builders what buyers are looking for. Savvy builders use them to follow local statistics and trends, and to understand the demographics of the market. For instance, they can help with design and layout decisions before a house is built.

“Are you sure that theater room is going to go over with your clientele?” asks Fields. “You may think people want a theater room versus a four bedroom, but if you are selling in an area with good schools, four bedrooms may be far more important to the buyers.”

Failure to consult with a Realtor led to major problems for a developer in Christine DelVecchio’s Ithaca, N.Y., market. The spec homes in the development had a floor plan flaw that could have easily been averted: the first-floor master bedroom was located directly off the main entrance to the home and contained an oddly shaped angled wall that made bed placement challenging. “It was just badly designed for the flow of the entire house,” she recalls. In addition, the houses were not priced correctly for the lot size and location. An experienced Realtor could have researched homes in that area and suggested a more appealing lot size and floor plan, she points out.

“Only after the spec house was built did they reach out to the Realtor community after it had taken several years to sell lots/homes in that location,” she says. “They surely lost on their investment by this misstep.”

To be continued…

5 Real Estate Ads That Will Air During The Super Bowl

Takeaways:

1. Some real estate players are pulling out all the stops to make the major leagues with celebrity cameos and millions of dollars invested into this year’s Super Bowl Commercials.
2. Tech, convenience and change in the industry are common themes throughout the messaging.
3. Both the Super Bowl and the housing industry as we know it are a half-century old.

Which commercial do you like best?

via Inman by Amy Swinderman

NAR releases 2015 Profile of Home Buyers and Sellers

WASHINGTON – Nov. 5, 2015 – The share of first-time buyers declined for the third consecutive year – to its lowest point in nearly three decades, according to an annual survey released today by the National Association of Realtors® (NAR).

2015 Profile of Home Buyers and SellersOverall, home sales strengthened, but the uptick was driven more by repeat buyers with dual incomes. The survey also found that nearly 90 percent of buyer-seller respondents worked with a real estate agent to buy or sell a home as for-sale-by-owner transactions dropped to their lowest share ever.

NAR’s 2015 Profile of Home Buyers and Sellers evaluates the demographics, preferences, motivations, plans and experiences of recent homebuyers and sellers, and dates back to 1981. Results are representative of owner-occupants and don’t include investors or vacation homes.

In this year’s survey, the share of first-time buyers declined to 32 percent (33 percent a year ago) – the second-lowest share since the survey’s inception (1981) and the lowest since 1987 (30 percent). Historically, first-time homebuyers make up nearly 40 percent of primary purchases.

“There are several reasons why there should be more first-time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college-educated, and the fact that renting is becoming more unaffordable in many areas,” says Lawrence Yun, NAR chief economist. “Unfortunately, there are just as many high hurdles slowing first-time buyers down. Increasing rents and home prices are impeding their ability to save for a downpayment; there’s scarce inventory for new and existing-homes in their price range; and it’s still too difficult for some to get a mortgage.”

Yun says this year’s survey offers additional clues to why fewer first-time buyers reach the market.

“First–time buyers reported that debt (all forms) delayed saving for a downpayment for a median of three years, and among the 25 percent who said saving was the most difficult task, a majority (58 percent) said student loans delayed saving,” Yun says. “With a median amount of student loan debt for all buyers at $25,000, it’s likely some younger households with even higher levels of debt can’t save for an adequate downpayment or have decided to delay buying until their debt is at more comfortable levels.”

Buyer characteristics

This year’s survey finds a higher share of married couples – 67% (up from 65 percent last year) – with a higher household income than previous years. Married repeat buyers have the highest income among all buyers ($108,600). The share of single-female buyers decreased from 16 percent to 15 percent, and male buyers remained flat at 9 percent.

“Similar to some of the obstacles facing first-time buyers, tighter credit conditions and having less purchasing power than households with dual incomes likely led to the share of single-female buyers declining to its lowest since 2001 (also 15 percent),” adds Yun.

The percent of multi-generational households (adult children, parents and/or grandparents) at 13 percent didn’t change since last year. Eighteen percent of buyers identified as military veterans, 8 percent as an unmarried couple and 3 percent as active-duty service members.

The median age of first-time buyers was 31, unchanged for the last three years, and the median income was $69,400 ($68,300 in 2014). The typical first-time buyer purchased a 1,620-square-foot home (1,570 in 2014) costing $170,000, while the typical repeat buyer was 53 years old and earned $98,700 ($95,000 in 2014). Repeat buyers purchased a median 2,020-square-foot home costing $246,400.

The primary reason for purchasing? More first-time buyers in this year’s survey (64 percent) cited a desire to own their own home as the primary reason compared to a year ago (53 percent). For repeat buyers, desire to own a home of their own and wanting to own a larger home were both the top reason given (each at 13 percent). Nearly half of all buyers (46 percent) said the timing was just right and they were ready to purchase a home.

Most homebuyers (80 percent, up from 79 percent last year) continue to view a home as a good financial investment, and 43 percent believe it’s better than stocks. First-time buyers plan to stay in their home for 10 years, and repeat buyers plan to hold their property for 15 years.

Financing the purchase

An overwhelming majority of recent buyers (86 percent versus 88 percent in 2014) still financed their purchase, despite above-normal activity from all-cash buyers likely pushing the percent share down. Younger buyers were more likely to finance, and the median down payment ranged from 6 percent for first-time buyers to 14 percent for repeat buyers. Almost half (45 percent) of first-time buyers in this year’s survey said the mortgage application and approval process was “much more” or “somewhat more” difficult than expected.

Ninety-one percent of all buyers chose a fixed-rate mortgage, with 23 percent financing with a low-down payment Federal Housing Administration (FHA)-backed mortgage – a decline from 43 percent five years ago; 11 percent financed used the Veterans Affairs (VA) loan program with no downpayment requirements.

In addition to using their own savings for their downpayment (81 percent), first-time buyers used outside resources, including a gift from a friend or relative (27 percent), selling stocks or bonds (8 percent) or tapping into a 401(k) fund (8 percent).

For repeat buyers, the proceeds from the sale of their primary residence (53 percent) was the top source for their downpayment, up from 47 percent last year and 40 percent in 2012.

“With first-time buyers stuck on the sidelines, the majority of sales activity in most parts of the country is coming from pent-up sellers taking advantage of rising home values in their neighborhoods and using their equity to trade up or move down,” says Yun.

The home search process

More homebuyers began their search on the Internet (42 percent) than any other source, but real estate agents remained an integral part of the process: 88 percent of buyers who searched for homes online ended up purchasing through an agent.

The two most popular resources continue to be online websites (89 percent) and real estate agents (87 percent).

“Although buyers between the ages of 18-24 were the most likely to use an agent (90 percent), over 85 percent of buyers in each of the other age categories also used an agent during their home search,” says NAR President Chris Polychron. “With tight inventory conditions leading to stiff competition in several parts of the country, and what’s found online sometimes not entirely accurate, buyers are turning to Realtors for expert advice and assistance in navigating today’s fast-moving housing market.”

The home search resource gaining the most traction is mobile or tablet applications. Their use steadily increased from 45 percent in 2013 to 61 percent this year. However, traditional resources continue to prove popular with buyers, including yard signs (51 percent) and open houses (48 percent).

With tight inventory conditions in many markets, buyers moved faster than in previous years to find the house they purchased, typically taking 10 weeks (for the second consecutive year). From 2009 to 2013, the typical home search process took 12 weeks.

A detached single-family home continues to be the most common type of home bought (83 percent), while purchases of townhouses or row houses remained unchanged from a year ago at 7 percent. Of buyers with children under the age of 18, 89 percent bought a detached single-family home compared to 80 percent of buyers with no children in their home. Overall, the typical home purchased during the survey period was built in 1991 and had three bedrooms and two bathrooms.

Slightly more buyers in this year’s survey purchased a home in a suburb or subdivision (52 percent) compared to a year ago (50 percent). The remaining bought in a small town (20 percent), urban area (14 percent), rural area (13 percent) or resort/recreation area (2 percent). Recent buyers also moved further from their previous residence this past year – a median distance of 14 miles (12 miles in 2014).

Similar to previous years, the biggest factors influencing neighborhood choice were quality of the neighborhood (59 percent), convenience to jobs (44 percent) and overall affordability of homes (38 percent). Unmarried couples were the most likely to cite convenience to entertainment and leisure activities (26 percent), and single women were the most likely to cite convenience to friends and family as an influencing factor (43 percent).

Seller characteristics

Eighty-nine percent of sellers sold their home with an agent. Only 8 percent were by for-sale-by-owner (FSBO) sales, down from 9 percent the last three years and the lowest share ever recorded since the survey’s 1981 inception.

“Although the Internet and digital technology have created several channels for sellers to market their listings to a wider cast of potential buyers, the preference to use a Realtor to sell a home has never been stronger,” says Polychron.

Overall, the typical seller over the past year was 54 years old (unchanged from 2014; up from 49 in 2010) and married (77 percent), with a household income of $104,100 ($96,700 in 2014). The seller lived in the home 9 years before selling, which is a bit less than 2014’s all-time high of 10 years. This year, only 14 percent of sellers said they wanted to sell earlier but couldn’t because their home was worth less than their mortgage, compared to 17 percent a year ago.

Sellers realized a median equity gain of $40,000 ($30,100 in 2014) – a 23 percent increase (17 percent last year) over the original purchase price. Sellers who owned their home for one to seven years all reported roughly selling their homes for $30,000 to $35,000 more than they purchased it. Underlining the price swings during the downturn, equity gains fell to $3,000 for owners who bought between eight and 10 years ago. Homes sold after 21 years reported a price gain of $138,000.

The median time on the market for recently sold homes remained at four weeks for the second year in a row, again highlighting the persistently low inventory in several markets. Sellers moved a median distance of 20 miles (70 percent stayed in the same state) and the top reason for selling a home was that it was too small (16 percent).

Two out of three sellers (66 percent) found their real estate agent through a referral from a friend, neighbor or relative, or they used their agent from a previous transaction.

Client referrals and repeat business remain the predominant source of business for real estate agents, with most sellers (84 percent) indicating they would definitely (67 percent) or probably (17 percent) recommend their agent for future services.

NAR mailed a 128-question survey in July 2015 using a random sample weighted to be representative of sales on a geographic basis. All information is characteristic of the 12-month period ending in June 2015 with the exception of income data, which are for 2014.

The 2015 NAR Profile of Home Buyers and Sellers can be ordered online or by calling (800) 874-6500. The study costs $19.95 for NAR members and $249.95 for non–members.

© 2015 Florida Realtors®

New Rules, New Forms, New Closing and Disclosure Procedures

Terrific Synopsis of the New Mortgage Disclosure Rules by Margy Grant, Florida Association of Realtors vice president and general counsel,  as she reviews the changes and their direct impact on your role in the transaction.

This is something All Realtors, lenders and real estate professionals need to get their arms around.

If you wish any training or further information, I suggest you contact Barbi Bozich at Title Security… she has been out in front of these changes for the past 9 months — 727-866-6600.

You May Be Ready for TRID, But Are Your Clients?

Source: Inman – Amy Swinderman

Takeaways:

  • Are your clients aware of how the TRID regulation affects the closing process?
  • If this is not their first rodeo, you will need to explain the new process and consumer disclosure forms and establish expectations.
  • Encourage your clients to think through mortgage choices, apply for loan estimates through multiple lenders and indicate intent to proceed; you’ll need to find out who’s responsible for the Closing Disclosure and be the source of accurate information.

So you’ve spent the last 23 months preparing to comply with the Consumer Financial Protection Bureau’s new TILA-RESPA Integrated Disclosures rule, or TRID, which takes effect Oct. 3.

Or you’ve spent at least a few months on it, anyway — for your sake, let’s hope so.

TRIDBut what about your clients? Are they aware of how the regulation affects the closing process? If they are purchasing their first home, the changes will be new only to you. But if this is not their first rodeo, you will need to explain the new process and consumer disclosure forms and establish expectations for how the mortgage transaction will proceed.

Here are the CFPB’s five recommendations for what to focus on to facilitate the best experience for your clients:

1. Encourage your clients to think through mortgage choices first.

Engaged homebuyers are more likely to select a mortgage loan that meets their needs and presents few surprises during underwriting, the CFPB says. The preapplication time frame is critical, and gives clients a chance to decide on a loan type and down payment amount before they are focused on a closing date.

Agents should make their clients feel comfortable that they can afford the home and receive a mortgage loan approval. They should encourage prospective homebuyers to review their credit reports early in the process so they can find and correct errors to potentially raise their credit score and reduce their cost of borrowing, the CFPB advises.

2. Once a property has been identified, encourage your clients to apply for Loan Estimates from multiple lenders.

Loan Estimates no longer require written documentation, so agents should encourage clients to compare offers from several lenders to avoid second-guessing whether they got the best deal. Loan Estimates show rates and loan terms in an easy-to-compare format, customized based on clients’ credit and the details of their request. Loan Estimates are most useful when your clients define the requested mortgage type and compare “apples-to-apples” Loan Estimates, according to the CFPB.

3. Make sure your clients indicate their intent to proceed.

Clients may request a Loan Estimate and then feel like they’re done — but Loan Estimates expire after 10 business days. If clients do not complete the steps required by the lender to express their intent to proceed, their applications could be closed as incomplete. If this happens, your clients will likely need to start over with a new application.

Lenders will have different policies about what your clients need to do to successfully move an application forward from the Loan Estimate stage into active processing, when the appraisal and other verifications typically begin. Talk to your lender partners to learn about those policies and discuss lender requirements with your clients to be confident that your clients have an active mortgage application underway, the CFPB advises.

4. Be the source of accurate and timely information about the property and transaction.

Because TRID makes lenders responsible for overseeing compliance from everyone involved in the closing, lenders are now at the center of all transactions. But real estate agents will still play an important part in making sure that clients have all the information they need to experience a smooth closing.

The CFPB advises agents to make sure clients have detailed information they can share with their lender about property taxes, homeowners association (HOA) fees, condominium association fees and the estimated cost for homeowners insurance; communicate any transaction changes to everyone involved and confirm that any revised information has been received; and confirm that the lender and closing agent have the buyer’s and the seller’s broker information so it appears correctly on the Closing Disclosure.

5. Find out who provides the Closing Disclosure.

Who will prepare the Closing Disclosure? Some lenders have already said they will be the only party with access to it. Other lenders may allow title insurance or settlement agents to do it.

When and how your client receives this form will vary from lender to lender and state to state — so communication, early and often, with your partners will be key.

Method of delivery may vary, too. Closing Disclosures may be sent via mail, delivered in person or electronically.

Keep in mind that no matter who prepares or provides the Closing Disclosure, the lender is still accountable for its accuracy and approves the final version, the CFPB says.

For more information and guidance on how to handle mortgage transactions after Oct. 3, visit the CFPB’s resource page.

Source: Inman – Amy Swinderman