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Updated: Thursday, April 17, 2014

When Dual Agency Can Be A Good Thing

A man cant serve two masters, the Good Book says; but neither the law nor common practice precludes the possibility of both buyer and seller being represented by the same real estate agent. When this happens a "dual agency" situation is created; and dual agency is a subject about which both confusion and controversy abound.

First of all, how does dual agency come about? In what sorts of contexts does it occur? No doubt the example that most readily comes to mind is when an individual agent shows his or her own listing to someone who then decides to buy it or at least to try. A most natural setting where this might occur would be at an open house.

Dual agency is not restricted to situations where there is only one individual real estate agent i.e. person involved. We have noted before that California law stipulates that it is the broker or the brokerage company that is actually the agent in a transaction.

Suppose, for example, that Jim Jones of the ABC company writes an offer for a buyer who wishes to purchase the property listed by Jane Jackson who is also an agent at the ABC company. There would be dual agency in this situation, because the ABC company is the agent of both buyer and seller. Moreover, this would hold true even if Jim and Jane worked out of different offices of the ABC company. It wouldnt matter if Jim worked in the Los Angeles office and Jane in the San Diego office; the ABC company would still be acting as a dual agent. This is not the case when there are two independent franchisees represented, even though they share the franchise name.

It is not hard to imagine why some people find dual agency controversial. "How," they ask, "can the same agent represent parties whose interests are in conflict?" "It sounds like asking the same person to be both prosecutor and defense attorney." "Su>

In response to this, let us note first what California law requires. Other states may differ. There are two primary conditions:

i Dual agency must be adequately disclosed to both parties. There are severe penalties for agents who fail to disclose dual agency.
ii The law specifically prohibits someone acting as a dual agent from telling the buyer how low the seller will go, or from telling the seller how high the buyer will go. Not that agents always know these things, anyway.

However, we know that all sorts of other information can influence what someone may offer, counteroffer, accept or not accept; and it is this fact that the critics seize upon. They will argue that insofar as the dual agent uses his skills and knowledge on behalf of the buyer, then in that respect he will be doing a disservice to the seller, and, of course, vice versa. How could this not be so?

Those who believe that dual agency does not entail unavoidable conflict reject the model that the critics assume. They do not believe that sales negotiations are what the theorists would call a "zero sum game" -- one in which every plus for one side means a minus for the other. That may be an appropriate model for the adversarial proceedings in a courtroom, where one party wins and the other loses; but it fails to take into account that sales negotiations are, after all, negotiations. The aim is not simply for one side to "win" and the other to "lose." The aim is to get a deal together, to create a transaction that is, of necessity, acceptable to both parties.

Not only is it the aim of sales negotiations to arrive at a mutually satisfactory agreement; but also, especially in residential real estate, there are often important considerations which have nothing to do with the ultimate price. There are matters of personal pride, emotional attachment, convenience, etc. All of these are factors which an agent, or agents, must take into account.

More than one transaction that could have happened didnt, because agents were not sufficiently sensitive to the personal nuances that play such an important role in negotiations. That is especially likely to happen when agents act like adversaries. Ironically, it is precisely because of their special >

Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.

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Why Do Some Real Estate Agents Do Well in Todays Economy?

Is that a question youve ever asked yourself? Have you ever wondered why some real estate agents do well in todays economy while others fail? There is a huge discrepancy right now between people who are failing and people who are succeeding.

Having been a real estate business coach for the past 15 years Ive had the privilege to observe how real estate agents function. And this experience has included new agents and seasoned agents, and the experience of watching them work through hard times and good times. In addition, Ive even had the privilege to be able to participate in helping them to become successful.

Heres the secret to what separates those who are doing well in todays economy from those who are not. Its one word - fear. The not so successful real estate agents have fallen into a cycle of fear. Usually that pattern is established through incessant watching of the news, whether its reading a newspaper, or a magazine, or watching TV, or listening to the radio, the real estate agents who arent doing well are following the news much too closely, and what happens is that their mind is focused on gloom and doom.

They have gotten in a cycle of focusing on what they dont want instead of what they do want. Because the media focuses on lack, they have also been focusing on lack. Since our thoughts create our reality the more we focus on lack the more we bring that experience to us.

The energy of fear is a contracting energy. If youre caught up in fear you might not know it but you might notice the signs and symptoms of fear. Here are some things to watch out for: Are you feeling discouraged? Are you procrastinating? Are you avoiding marketing? Are you feeling depressed? Are you suffering from low energy?

You see all of these signs and symptoms simply indicate that your energy instead of being expansive and confident has shrunken.

So whats the way out? Lets take a look at group B, the successful real estate professionals in todays economy. These professionals are not watching the news very much at all; in fact most of them go out of their way to avoid the news because they know the devastating effects on their mindset if they inundate themselves with the latest media blitz. Instead they focus on the opportunities available in their marketplace.

They are keenly aware of the properties available. They are keenly aware that this is one of the best times to buy. They are taking action.

What the successful group is doing that the non-successful group is not doing is that they are keeping their confidence level high and their mindset. They are focusing instead on, "How can I serve the people in my community?"

In addition they are not focusing on what they dont want; theyre focusing on what they do want. Theyre focusing on their vision. Theyre focusing on the income they want to create. Theyre focusing on how they want to help people.

In addition, theyre focusing on their capabilities. If they have skills that they need to refresh theyre taking that opportunity to do it now.

Finally, the most important thing theyre doing that the other group isnt doing, is that theyre taking action. With a positive mindset its easy to take action. They are getting on the phone. Theyre not afraid to pick up the phone and call their past clients, their current clients, their sphere of influence, and even people they dont know. Because they know that they have a valuable service they offer.

Most of the time when I coach my clients I help them with this belief: "I have a valuable service to offer and people are happy to hear from me." Since our beliefs create our reality if thats what you put out to the universe that is what you get back.

Many of my former clients that are practicing being proactive, practice getting their clients connected with the great opportunities. They have actually doubled and tripled their income in an economy that the rest of the world is calling a recession.

My advice to any real estate professional right now who wants to be successful is this; you may have knowledge of the current economy, but you dont have to participate. Instead you could do what Jack Canfield recommends and just say to yourself, "I hear theres a recession going on and I choose not to participate."

Dr. Maya Bailey, Multiple 6 Figure Income Business Coach for Real Estate Professionals, integrates her 20 years of experience as a psychologist with 15 years of expertise in marketing. Her powerful transformational work creates a Success Formula for Real Estate Professionals ready to create a Multiple 6 Figure Income. To get your free report: "7 Simple Strategies to More Clients in 90 Days" and to apply for an Initial Complimentary Consultation, go to:

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Homeowners: Are You Really Insured?

Homeowners insurance, also known as hazard insurance, provides you protection from the damage or loss of your property as well as liability coverage for anyone who has an accident on your property.

Its so important that lenders wont close on the loan until you provide proof of purchase. And many require you to escrow hazard insurance for at least the first year you pay back your loan.

Your policy covers major repairs or rebuilding from fire or water damage. It also reimburses you for damage or loss of personal property and protects you from the liability or legal responsibility for accidents to others.

But your basic policy may not cover everything you may need. Flood and earthquake insurance arent available on basic policies. According to, flood protection can be purchased through the Federal Emergency Management Agency FEMA. Your state may have an entity similar to the California Earthquake Authority CEA which provides earthquake insurance coverage for state residents.

What if a pipe bursts in your home? That depends on what made it burst. Even if water floods your floors, flood insurance wont cover it. Flood insurance is for natural disasters where the water comes in from the outside.

Your basic policy may cover a water break, but it may not cover mold remediation inside the walls where the pipe was leaking. Thats why its crucial to get the right insurance for your needs.

A basic policy, HO-1 will cover fire, lightening strikes, explosions, vandalism, theft, liability, but it doesnt cover personal possessions. The HO-3 provides comprehensive coverage, including personal property.

So how much mortgage insurance do you need? Many homeowners buy just enough insurance to pay off their mortgage. Thats enough to satisfy lenders and it keeps monthly costs down. But with building costs rising, youd be wiser to insure your home with a guaranteed replacement homeowners policy. No matter what the cost of labor and materials, your home can be rebuilt to the same quality as before.

Be sure to add insurance riders for valuables such as jewelry, antiques, fine art and other personal property if our replacement policy is inadequate.

If you want to save money, raise your deductible or combine your homeowners insurance with your car, motorcycle or boat insurance. Many insurance carriers will lower the monthly costs to have your business for more than one product.

Also See:

  • What Your Homeowners Insurance Does, Doesnt Cover
  • Homeowners Insurance Policy Terms, Conditions Can Contain Hidden Costs, Coverage Gaps
  • 6 Foolproof Ways To Save Money On Your Homeowners Insurance
  • How Renovations Impact Your Home Insurance

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What Happens When Your Loan is Sold?

Question: We refinanced our home loan in March with an on-line mortgage lender. Within a couple of weeks, we received a letter from another mortgage company advising us that our May payment was to be made to them. A May payment invoice was included. I contacted the original lender, and was told that the loan was not sold. They said if and when that happens, we would receive a "goodbye letter" which has not arrived. We now have May payment invoices from both lenders, and only 2 weeks to go until the first payment is due. We contacted the second lender and they still insist they now own the loan. What should we do? We do not want this to impact on our good credit rating.

Answer: It will not be any consolation to you, this appears to be a common problem. However, there is a federal law that protects you. The short answer: until you get a letter from both lenders advising that your loan has been sold or assigned, you should continue to pay the first lender.

When you get a mortgage loan, your lender has two alternatives. They can keep the loan in house -- called a "portfolio" loan -- or they can sell or assign it to an investor. And as we know, one of the factors that led to the "mortgage meltdown" several years ago was the securitization of loans -- ie where loans were litterly "bundled"together and sold to an investor -- who could be in the US or anywhere else in the world.

Why do lenders sell their loans? Many mortgage lenders do not have millions of dollars in their bank account to enable them to make all of the loans they would like to do. In order to get more cash, they sell the loan for a discount to an investor, thereby enabling them to make more loans.

The original lender makes its money in two basic ways. First, by charging various fees to the borrower -- such as loan origination points or underwriting. If the lender is a mortgage broker, it will also get a fee, which in the trade is called a "yield spread premium" YSP.

Your lender also makes money by servicing your loan. That means that although the original lender may no longer own the loan, it continues to collect your monthly mortgage payments including escrows for taxes and insurance and are paid a servicing fee by the then current lender.

Over the years, there have been serious problems with these mortgage sales. There have been a number of documented fraud cases, whereby an unscrupulous individual obtains the names and addresses of homeowners, and sends them a letter advising the borrower that effective immediately the loan payment should go to this unscrupulous lender. The names and addresses of borrowers are generally publicly available from the Land Records where the deeds of trust are recorded.

Picture the following scenario. You have a loan with the ABC mortgage company, which is a legitimate lender. All of a sudden, you get a letter from the XYZ company, advising you that effective immediately you are to make your new mortgage payment to the XYZ company.

You would be surprised at the number of gullible people in the United States that blindly follow the XYZ companys instructions, without any investigation.

After one or two months of receiving mortgage checks, the XYZ company folds its camp. It moves on to another state, and the scam begins anew.

As a result of these mortgage scams, in 1990, Congress regulated the assignment, transfer or sale of mortgage loans. As part of the National Affordable Housing Act, certain provisions were added to the Real Estate Settlement Procedures Act RESPA.

The law is quite complex, but oversimplified here are some of the protections afforded to individual borrowers whose loan has been sold, transferred or assigned to a new lender.

At the time a potential borrower applies for a mortgage loan from a federally regulated lender, that lender must disclose to the borrower their policy on assigning or selling loans. If a mortgage lender does in fact assign, sell or transfer your loan, both the transferor your current lender and the transferee must make certain disclosures. These disclosures include the effective date of the transfer, the name, address and telephone number of the transferee, and an appropriate contact number at both the transferors and transferees offices. This will afford the borrower the opportunity to ask questions and confirm the transfer.

More importantly, this disclosure statement must state that the transfer does not affect any term of the security instrument other than the servicing provision.

This means that although your loan has been sold, and you must start paying the new lender, the basic terms of your note and deed of trust cannot be changed. Specifically, your interest rate terms cannot be changed. They remain in full force and effect regardless of who holds your legal documents.

Congress also was concerned about payments made during the transition period when a loan is transferred. The 1990 law specifically provides a 60-day grace period if the borrower misdirects payments. For 60 days from the effective date of the transfer, as long as the borrower makes the payment on time in accordance with the terms of the note, no late fee can be charged. The payment cannot be deemed late for any purpose whatsoever, even if that payment is misdirected. In other words, if you send your payment on time to the old lender when it has been transferred to a new lender, for the first 60 days no penalty or other late charge can be imposed on you. This is very important, since it also means that neither the old lender nor the new lender can report you as being late or delinquent to a credit reporting bureau.

Congress also created a complaint resolution mechanism in the 1990 law. If you, the consumer borrower, have a question or a complaint about the transfer of your loan, you have the right to send a written request to the lender. Please note that in order for the complaint resolution mechanism to be effective, you have to send a separate correspondence, and cannot me>

Your lender must either take action or respond to your letter within 20 business days of receiving your correspondence. Furthermore, the lender has 60 business days from the date of receipt of the request to either correct the problem and give the borrower notice that the problem has been corrected, or give reasons in writing why the account is correct or the information requested by the borrower is unavailable. The lender is required to conduct an investigation before it responds to your letter.

Finally, Congress added incentives to make sure that lenders would comply with this new law. If a lender violates the law, an individual consumer can recover any actual damages, and any additional damages that a court might allow if the court finds that there is a pattern or practice of non-compliance with the RESPA provisions. The damages are limited to 1,000.00 per individual consumer. Furthermore, if the consumer files a lawsuit in court, the court can award reasonable attorneys fees if the consumer prevails.

These are obviously technical issues. The bottom line is that you really do not have to worry about your loan if your current lender sells or transfers your loan to another lender. Obviously, you want to make absolutely sure that this is not a scam, and that it is a legitimate transfer. Contact both lenders and make sure that you have something in writing from both the old and the new lender before you send your next mortgage payment check.

The normal procedure nowadays is for the borrower to get a joint letter from the old and the new lender, advising that the loan has been sold and where the monthly payments should now be sent.

In your situation, since you have not received a letter from your first lender, you should continue to pay that lender. But advise the new lender in writing what you are doing, and I also suggest that you send a copy of your letter to the old lender, as well as to the consumer protection office of your States attorney general.

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Make These Upgrades to Save Energy amp; Boost Your Homes Resale Value

Most homeowners would benefit from a home energy audit, especially those with older homes. An audit will uncover where your home is wasting energy and how to best remedy the situation. Remodeling your kitchen, bathroom or living room may add to your homes resale value, but the following energy-efficient upgrades add value and save you money on your monthly utility bills - and youll help the environment, too.

Replace Windows amp; Roofing

If you have old, drafty windows with loose frames or gaps that let conditioned air escape, youre losing money. Replace them with energy-efficient windows. You will improve your indoor comfort and reduce heating and air conditioning costs. In addition, window treatments can keep you cooler in summer and warmer in winter. The U.S. Department of Energy DOE reports that treatments such as awnings and blinds reduce solar heat gain by as much as 77 percent, and shutters and storm panels reduce heat loss in winter.

The same principle applies to your roof. A new, properly installed roof will lower your energy costs and increase your homes resale value, according to Champion Home Exteriors. Make sure you use a >

Seal amp; Insulate

Take the time to seal your homes walls, windows, vents and any other cracks or gaps, and consider adding insulation, too. Not only does this improve comfort and save on utilities, but it also reduces outside noise, prevents an inflow of dust, pollen, insects and debris, and provides better humidity control. Brett and Elna Wells of Shelbourne, Vermont, told Mother Earth News how they added 19 inches of insulation in their attic and added foam sealant around their foundation, and not only did they lower their energy consumption, but they received a 2,900 rebate from their electric utility, too.

Replace Siding

One of the home improvement projects with the best return on investment is replacing your current siding with new vinyl siding, according to Remodeling Magazines Cost vs. Value Report. It provides a whopping 78 percent return on investment. To realize savings on your energy bill, make sure the contractor uses ENERGY STAR-rated underlayment and corner wrap to protect your home from moisture.

Get an Energy-Efficient Furnace

Linda Barnwell is a certified eco-broker with the real estate franchise company Keller Williams. She told Fox News that an energy-efficient furnace will boost energy savings and a homes resale value. Airtight homes with newer furnaces are what homebuyers are looking for, and it can even drive the outcome of a real estate deal. Sellers whose homes have furnaces that are 20 or 30 years old may see sales negotiations stall, or buyers may demand you replace the furnace as a condition of the sale.

If a professional home energy audit isnt possible, try this energy-savings calculator from the DOE.

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Outdoor Sofa, Mac Books and More in This Weeks Deals and Steals

If youre looking for chocolate bunnies this week, youre in luck. Theyre EVERYWHERE, and you can eat yourself into a little chocolate bunny coma for a couple of bucks. If youre looking for furniture, electronics, or home goods, this is a good week for you too. Our weekly scouring of ads and stores and more ads and more stores has turned up some great steals and deals. Check em out right here.

The IKEA ARHOLMA sofa combination offers a high-end look for outdoors at a fraction of the cost. Even by IKEA standards, this is a good deal. Their regular price of 550 is still far less than you will find outdoor sectionals like this; at 415, its definitely a steal. Thats a member price, so make sure to sign up for this free program in the store.

Throw an outdoor rug, like this Arizona Ivory amp; Brown Rug by Wildon Home, in front of the outdoor couch, and youve got yourself a good-lookin space. For just 24.99.

This is just one of the many outdoor rugs Wayfair currently has on sale for 50 percent off.

Macmalls Easter sale means some pretty cool savings on some pretty cool Apple products, like 599 off the Apple 13.3" MacBook Pro with Retina display, Dual-core Intel Core i7 3.0GHz, 8GB RAM, 512GB flash storage, Intel HD Graphics 4000 Turbo Boost up to 3.7GHz.

Light up your indoor, or outdoor area, with SONOMAs Wooden Pillar Candle Lantern, on trend and on clearance at Kohls for 29.99, down from 99.

Plus youll save up to 30 percent off by using your Kohls card and get a bonus 10 for every 50 spent basically, Kohls will pay you to take this home.

Redoing a bathroom? This VIGO Square Shaped White Phoenix Stone Glass Vessel Bathroom Sink will give you a modern look at a great price. Just 119.61, down 65 percent from the regular price of 221.79 on Overstock.

Happy hunting

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The Five Biggest Mortgage Mistakes You Can Make

For most buyers, the mortgage is the largest monthly expense they will have. Yet most borrowers will do little to no preparation, negotiation, or shopping to get the best deal. And they end up paying much more for their loans than they need to. You? Youre smarter than that, or you wouldnt be reading this article. Here are five of the biggest mistakes that can cost you real money.

1. Believing advertised rates are what youll pay

Unless you have perfect or near-perfect credit, most advertised rates are out of your league. To get boasting rights on a rate that good, you have to pay part of a point one percent of the loan amount a point, or more to get the best rates.

Your lender will go over your credit with a fine-tooth comb to find anything to raise the rate. That includes qualifying you at the beginning of the transaction, and then running your credit again a day or two before youre supposed to close on the home and loan. If theres been any change in your debt-to-income ratio, goodbye low mortgage rate.

2. Not comparing lenders

Just like everyone knows two or three real estate agents or more, everyone knows a loan officer or a mortgage broker. A loan officer works for a bank or savings and loan and can only offer you loan packages that the bank has put together. A mortgage broker prequalifies you just like a loan officer, and shops your deal around to various lenders.

Whether you talk to a loan officer or a mortgage broker, youre going to have to share personal financial information in order to get a realistic rate. Reputable brokers will show you what certain banks and credit unions quoted and you can pick the loan you like best.

If youd rather do your own shopping, consider talking to a local bank, a national bank, a credit union, and a savings and loan, but remember, unless you give them personal information and permission to run your credit, its just talk.

3. Not paying attention to terms

Advertised rates even for those with perfect credit arent what you will actually pay. The true cost of the loan is the APR or annual percentage rate, which includes fees from the lender.

Understanding loan terms is harder than shopping for a new mattress. There are so many ways lenders can inch up the fees. A loan origination fee is also called a processing fee. It pays the loan officer or mortgage broker, so this fee can vary widely. You may pay one lender more for an appraisal than another might charge you.

One lender may charge more for pulling your credit than another. Its all in your good faith estimate, which you dont get until youve applied for the loan.

All terms are negotiable, so dont be afraid to ask what a particular fee is for and can it be reduced or eliminated.

4. Waiting for a better rate

Its great to have bragging rights on a low rate, but you dont want to lose the home of your dreams over a quarter of a point in interest.

Theres a big picture here you could be missing. No matter what your interest rate is, youre going to pay thousands of dollars in interest up front before you make any serious gain in equity. If you go all the way to the end of your loans term, youll pay so much interest that you could have bought the same home two or three times.

Instead of focusing on the percentage rate, work on how quickly you can build equity. Make one extra payment a year. Pay 25, 100, or 500 extra per month and youll more than offset the rate youre paying.

Down the road, if rates drop through the floor, you can refinance, but even thats not an ideal solution. Youll pay loan origination fees, title search fees, appraisal fees and so on -- enough to equal the closing costs you paid the first time around.

And dont forget, youll start the amortization schedule all over again -- with most of your payments going to interest instead of principal.

5. Choosing the wrong type of loan

Many families were hurt post-9/11 when lenders opened the spigots and gave a loan to almost anyone who could sign the paperwork. Suckers bought homes that were too expensive using balloon loans with low teaser rates.

The type of loan you choose should depend on current market conditions and how long you plan to stay in your home, not how much home you want to buy.

Current market conditions favor fixed rates, because rates are rising from all-time lows. Yes, they cost more than hybrid loans or adjustable rate loans, but the base amount is fixed and doesnt change. Only your taxes and hazard insurance will cost you more over the years.

If you get an adjustable rate mortgage, you are at the mercy of market conditions. While theres a cap on how high your interest rate can go, its still a risk.

If you plan to stay in your home five years or more, get a fixed-rate mortgage. If you plan to sell your home sooner, youre taking a risk. It takes most borrowers five years just to earn back their original closing costs in equity.

Once youve narrowed your choice of lenders, ask them on the same day to give you a quote. If you wait even one day, rates may have changed, so youre no longer comparing apples to apples.

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Updated: Thursday, April 17, 2014

What Happens When Your Loan is Sold?

Question: We refinanced our home loan in March with an on-line mortgage len...
> Full Story

Make These Upgrades to Save Energy amp; Boost Your Homes Resale Value

Most homeowners would benefit from a home energy audit, especially those with older homes. A...
> Full Story

Outdoor Sofa, Mac Books and More in This Weeks Deals and Steals

If youre looking for chocolate bunnies this week, youre in luck. Theyre EVERYWHERE, and you ...
> Full Story

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