Posts Tagged ‘real estate’

hand on head emoji

Self-fulfilling prophecy?

One expert says fear of a recession could lead to one.

Increasing anxieties over a recession could be the cause of the next recession, according to Analyticom President Dan Geller, developer of the theory of money anxiety.

Geller’s theory explains that an increase in money anxiety can lower consumer confidence and cause a recession by reducing consumer consumption by just 5%. Since consumer consumption makes up about 70% of gross domestic product, a 5% reduction in spending equals 3.5% of GDP, which is greater than the projected GDP for 2019.

In July 2019, the Money Anxiety Index was flat at 44, the same as June, but slightly higher than May’s 42.7 points. While these figures are relatively low and don’t point to an immediate recession, Geller explained that the constant hype about a recession could increase the level of money anxiety.

“An example of how recession hype can increase peoples’ perceived anxiety and reduce their confidence in the economy can be seen in the preliminary August figures of the Michigan Survey of Consumer Sentiment,” Geller explained. “The August index decreased 6.4% from the previous month indicating that the level of consumer confidence in the economy dropped in the first couple weeks of August.”

“Since the Michigan index is based on what people think about the economy, in the form of a questionnaire, it is highly likely that the recent recession hype influenced the respondents’ confidence about the economy,” he explained.

Nearly half of experts surveyed by Zillow back in 2018 said they expect the next recession to begin sometime in 2020, according to the company’s Home Price Expectations Survey, a quarterly survey of more than 100 real estate experts and economists.

Since then, the talk surrounding recession has only increased as more and more experts begin to predict a recession by late 2019 or early 2020.

There were several dire warnings this week about the economic dangers posed by President Donald Trump’s ramped-up trade war with China.

“On a scale of 1-10, it’s an 11,” Cowen Managing Director Chris Krueger said in a note to investors, describing the economic ramifications of the trade war. 

In July, Zillow’s panel of more than 100 housing experts and economists said the next recession is expected to hit in 2020. A few even said it may begin later in 2019, while another substantial portion predict that a recession will occur in 2021. But unlike last time, the housing market won’t be the cause.

target your closing table

The Best Call of the Day: Optimizing Opportunity at the Closing Table

Showcase your firm’s strengths at the closing table.

Many title agents spend money and time on marketing and sales efforts to increase directable business. While most campaigns are effective, and certainly essential, one of the best opportunities to showcase your firm’s strengths is at the closing table.

A well thought-out and unique closing table strategy will result in increased referral business, and will cost half of traditional marketing plans. A well thought-out closing table strategy looks like this:

  1. Target referral sources who attend closings at your office.
  2. Showcase your firm’s customer service and competency.
  3. Follow up with collateral materials and a call to action.

As real estate professionals, we value a well-planned and executed marketing campaign, directed at realtors, loan officers and future clients.  Typically, this includes direct mail, targeted email, web presence, social media and office visits.

All of these methods have varying degrees of cost, both in dollars and time. Everyone would agree that they are essential to building and maintaining a business.

The closing table, however, is a hotbed of opportunity that is, unfortunately, often ignored. A number of factors that make this situation unique include:

  1. All parties can be scheduled and will attend;
  2. Traditional referral sources are there;
  3. As a closing agent, you control the pace, flow, and agenda of the time you spend together.

As the closing approaches, since your office will schedule, you will be aware of who will be attending. With that information, you can tailor your approach to fit the needs of each. Your approach should be a systematic and repeatable part of your processes.

The buyer’s agent is most likely your referral source. You should acknowledge their competence and professionalism, in the presence of their clients, the buyers, and be sure to thank them with a small, parting gift, in full view of the seller’s agent.

The seller’s agent is your primary target. An informational packet should be prepared with contact information, pricing and an order form. Also, testimonials are always helpful if they can be obtained. It can be useful to acknowledge them in the presence of the parties, and thank them for their help in facilitating the closing. Be sure to obtain a business card and information on their office which could be helpful in future marketing opportunities. Finally, it is always appropriate to ask for their future business in person.

The mortgage broker, if present, and not familiar to you, should have their own take-away packet, containing similar information to the seller’s agent, as well as a document outlining their firm’s experience in handling various types of loans other than residential. An acknowledgement of their professionalism and assistance in putting together the transaction is essential. 

Sellers should be given a branded packet with all their documents, containing all you contact information and some swag such as pens, highlighters or pads. Do not overlook this important contact. They are a potential future client. At some point later in the year, they will be looking for copies of various documents which they have lost. Their ability to contact you and obtain these documents will cement your relationship, and make it more likely they will call on you for their real estate needs in the future.

Finally, remember that you, as the closing agent, are on stage. Whatever you project at this closing, will make or break your ability to obtain future business from the parties. You should be affable, available, and project quiet confidence. This is important at what can be the most stressful experience in a consumer’s lifetime.

At the closing table, by targeting referral sources, showcasing your abilities, and having collateral materials prepared ahead of time, you will be able to take advantage of a unique and valuable marketing opportunity.

3d orange exclamation mark and thumb up stick figure men on white background

How to Help Customers Understand Title Insurance

Sure you know the ins and outs of title insurance, but it is likely buyers and sellers have limited knowledge of what title insurance covers and why they need it. You need to be able to respond to questions that will be asked, or have answers to some that should be asked, to be able to best serve your customers.  Learn more about title insurance regulations, and other key points to explain to customers why the policy you provide is to protect their interests.

Cyber securiy if something doesn't smell right

If Something Doesn’t Smell Right, It’s Probably Not

It may seem like “Title Insurance 101” – but small mistakes can be signs of fraud or misuse of funds or outright intentional undoing of a clear road to closing on a real estate deal.

It may seem like “Title Insurance 101” – but small mistakes can be signs of fraud or misuse of funds or outright intentional undoing of a clear road to closing on a real estate deal.

Not everyone knows everything all of the time; a thousand items have to fall into place and “add up” in order to make the process smooth and completely unencumbered.

Download Our Fraud Detection Guide for Agents

A power of attorney showing up in the middle of a transaction (or at the end) should be scrutinized. So should cashier’s checks drawn from geographical areas that don’t coincide with the seller’s, buyer’s or property’s locale.

Take a look at the potential red flags below; being aware is half the battle.

Preliminary Title Report/Title Search

Red flags” involving the preliminary title report and title search may include:

  • Ordered by, prepared for, or mailed to a party other than the lender.
  • Property seller is not in title (possible purchase disguised as a refinance or improper property flip).
  • Seller owned property for a short time with a cash-out on the sale.
  • Notice of default is recorded (possible cash-out purchase with a straw buyer or foreclosure rescue).
  • Report indicates delinquent property taxes.
  • Report indicates modification agreement on existing loan(s).
  • Title documents show the borrower or Seller on a purchase is not the owner of record.
    • For a purchase transaction, the seller should be the owner of record.
    • For a refinance transaction, the borrower on the loan application should match the owner of record on the title documents.

Escrow/Closing Instructions

“Red flags” involving escrow and closing instructions may include:

  • “Fill in the blank” or generic escrow instructions.
  • Change of sales prices to “fit” the appraisal.
  • Odd amounts paid as a deposit/down payment.
  • Significant or unusual buyer credits or fees.
  • Unusual amendments to the original transaction.
  • Seller on Closing Disclosure different than seller on preliminary title report.
  • Evidence of “white-outs” or alterations without initials.
  • Payoffs to third parties whose lien was not listed on the preliminary title report.
  • Reference to another escrow.
  • Down payment is paid into escrow upon opening.
  • Cash is paid outside of escrow to property seller.
  • Sale is “subject to” property seller acquiring title.
  • Entity acting as the property seller is controlled by, affiliated with, or related to the applicant or another party to the transaction.
  • Buyer is required to use a specific broker/lender.
  • Sale of subject property is not subject to inspection.
  • Power of attorney used with no explanation.
  • Power of attorney is not properly documented/recorded.

Funds to Close

“Red flags” involving funds to close may include:

  • Remitter on cashier’s check or source of the wire is not the borrower.
  • Cashier’s check issued from a bank that is inconsistent with the depository information on application.
  • Cashier’s check issued from a bank branch that is out of the buyer’s geographic area.
  • Dollar amount is incorrectly encoded on check.
  • Sources of funds are questionable

Closing Disclosure/Settlement Statement

“Red flags” involving the closing disclosure or settlement statement may include:

  • Names and addresses of property seller and buyer vary from other loan documentation.
  • Seller’s mailing address is the same as another party to the transaction.
  • Excessive real estate agent commissions paid.
  • Real estate commission paid, but no realtors listed on the purchase contract.
  • Sales price differs from sales contract.
  • Reference is made to undisclosed secondary financing or double escrow.
  • Rent prorated on owner-occupied transactions.
  • Zero amount due to/from buyer.
  • Closing Disclosure or escrow instructions contain unusual credits, disbursements, related parties, delinquent loans paid off, or multiple mortgages paid off.
  • Payoffs for items not consistent with liens listed on title commitment.
  • Excessive seller paid marketing, administrative, assignment or trust fees.
  • Payouts to unknown parties.
  • Terms of the closed mortgage differ from the terms approved by the underwriter.
  • Date of settlement is delayed without explanation.

Download Our Fraud Detection Guide for Agents

Avoiding Fraud pitfalls

Wire Fraud, Appraisals & Contracts (Oh, My!)

No one wants to learn that fraud or misuse of funds or fraudulent transfers happened once a closing is complete, yet those events can be part of real estate closing worlds.

Appraisals can also prove to be undependable, as parties involved can have less-than-legitimate agendas.

Download Our Fraud Detection Guide for Agents

Who wants to learn of a crooked contract – that’s already been signed, notarized and filed?

No one. Below, we take a look at what agents can do regarding all of the above and how to avoid pitfalls before they happen.

What Agents Should Do If Wire Fraud is Suspected

After the Exchange of Funds (regardless of the dollar amount of the loss)

  • Contact your bank.
    • Speak with someone who has authority to reverse or “recall” the wire. This contact may be in your bank’s fraud department. Note: A best practice is to identify this contact and establish a relationship with him or her before a wire fraud incident occurs. 
    • Make sure the bank understands you have been the victim of a Business Email Compromise (BEC) scheme.
    • Request a Wire Recall or SWIFT Recall Message.
    • Ask your bank to fully cooperate with law enforcement.
  • Contact your local FBI office (https://www.fbi.gov/contact-us/field-offices). The FBI has a number of protocols aimed at freezing and retrieving funds. They will activate appropriate protocols based upon the circumstances of the loss. The American Land Title Association has more information on the FBI’s protocol for reversing fraudulent international wires.
  • Complete and submit a Complaint Referral Form to the FBI’s Internet Crime Complaint Center (IC3). Be prepared to provide all details related to the transaction including date, amount, the name of your bank and the beneficiary bank, account numbers, contact information, etc.
  • Contact the fraud department at the beneficiary bank to notify them about the wire-recall request due to the fraud. Provide details and request that the account be frozen.
  • Contact local law enforcement (https://www.policeone.com/law-enforcement-directory/)
  • Contact your Secret Service field office (https://www.secretservice.gov/contact/field-offices/)
  • Contact the Alliant National Claims Department by first calling the Claims Manager at (303) 682-9800, ext. 425, and then follow up by emailing applicable information to Claims@alliantnational.com.

When the Money Goes Out, Minutes Count

The 48-hour period following a fraudulent wire transfer is critical; immediately contacting your bank, the local FBI office and submitting a complaint to IC3 as described above will increase your chances of recovering the funds. 

Special Handling of International Wires

Since international wire fraud has a very low chance of recovery or reversal of the wire, special precautions are advisable, such as requiring “in-person authorization” from only those authorized signers on an out-going international wire, and having such precautionary requirements agreed upon with your bank.

Appraisals

Appraisals and appraisal reports may contain “red flags” indicating potential fraud. “Red flags” may include, but are not limited to:

  • Owner of record listed is inconsistent with other information disclosed in the loan file.
  • Occupant is identified as a tenant on an owner-occupied refinance application.
  • Owner-occupied refinance transaction, but the property is vacant.
  • Occupant of subject property is listed as “unknown.”
  • Appraiser uses public record, exterior inspections, or property seller/builder as sole data sources.
  • Illegal zoning is checked on first page of the appraisal.
  • “Physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity box” is checked “Yes” on the first page of the appraisal.
  • Subject property has increased in value in a stable or declining market.
  • Land value is atypically high for the area.
  • Excessive adjustments in urban or suburban area where marketing time is under six months.
  • Timeframe between sales does not allow enough time for reported renovations made to property.
  • Loan file contains a note with a predetermined value.
  • Ineligible Condition (C5, C6) or Quality (Q6) ratings.
  • Blank spaces on the form (borrower, client, occupant, etc.).
  • Missing photos or maps.
  • Photos do not match description of property.
  • House number in photo does not match property address.
  • Photos do not match the floor plan sketch (i.e. location of garage, fireplace, etc.).
  • Photos of subject property taken from odd angles or with no depth of field, or have been cropped or otherwise altered.
  • Photos reveal items not disclosed in appraisal (e.g., commercial property next door, railroad tracks, another structure on premises, etc.).
  • Weather conditions in photo of property are not appropriate for the date of the appraisal (i.e., July photo shows snow on the ground for a property in Illinois).
  • “For rent” or “for sale” sign in photo of subject property on owner-occupant refinance application.
  • Most recent sale(s) and/or listing information on subject property and/or comparable properties are missing.
  • Use of unverified comparable sales (i.e., not verified through traditional data sources such as MLS, sales office, Closing Disclosure, real estate agent, etc.).
  • Use of inappropriate comparable properties (e.g., that are not similar to the subject property when comparable properties are present).
  • Excessive distance between comparable properties and subject property.
  • All comparable properties are from different town(s) than the subject property.
  • Lack of bracketing with comparable sales used (e.g., all sales are significantly larger in living area than the subject).
  • Appraisal is ordered and/or prepared prior to date of sales contract or loan application.

Appraiser is located outside of the county in which the property is located.

Sales Contracts

Sales contract “Red flags” indicating potential fraud may include, but are not limited to:

  • Multiple sales contracts exist.
  • Sales contract is dated after the appraisal date.
  • Sales contract is subject to an existing lease on an owner-occupied transaction.
  • Sales contract includes personal property or prohibited sales concessions.
  • Sales price is significantly above or below market value.
  • Purchase contract addenda adjusts the sales price.
  • Applicant is not shown as purchaser.
  • No real estate professional involved.
  • Real estate agent(s) used, but not paid a fee; or no real estate agent(s) involved at all.
  • Seller is a corporation or LLC and the subject property is not new construction.
  • Seller is an affiliated real estate agent, trust, relative or employer.
  • The parties to the transaction are related by family or commercial enterprise.
  • The contract is not dated.
  • Names are deleted from or added to the purchase contract.
  • The contract is an “option contract.”
  • The contract was assigned or is assignable.
  • Earnest-money deposit is an unusually high amount, consists of the entire down payment, or is an odd amount.
  • Contract has a very short inspection period and upon satisfactory inspection, the buyer is to notify the settlement agent who is then supposed to transfer a large portion or all of the deposit to the seller (scam is that 10 business days later, it is discovered that the cashiers’ check is counterfeit after the money has been sent, and the escrow account suffers a shortage). 
    • Recommendation is to contact the bank or entity issuing the cashier’s check to confirm that the cashier’s check number and amount is valid prior to depositing the item in the account. Most banks will confirm this by telephone. Due to the increasing occurrences of counterfeit cashier’s checks, most banks have instituted mandatory holds on cashier’s checks. It is not uncommon for a hold to last up to 10 days (check with your bank to confirm their policy).
  • Name and address on earnest-money deposit check is different from that of the buyer.
  • Earnest-money deposit checks have inconsistent dates, for example:
    • Check #111 dated November 1
    • Check #113 dated September 1
    • Check #114 dated October 1
  • Earnest-money check is not cashed or is not reflected on the Closing Disclosure.

Download Our Fraud Detection Guide for Agents

Let’s Connect

Discover more stories and conversations on our social media networks,
or drop us a line on our contact page.


The Independent Underwriter for
the Independent Agent®