Huntersville|Charlotte|Lake Norman - A seller’s duty to disclose latent material defects

Thinking of Selling Your Home?   We have the experience and resources to help you get it done ethically!

QUESTION: In reading last week’s Q&A (Disclosure, Material Facts, the Residential Property Disclosure Statement, and the Due Diligence Fee, release date: 6/4/2020), I was surprised to learn that a seller has a legal duty to disclose a material defect about their property when the seller knows about the defect and the defect is one that is not discoverable by the buyer in the exercise of reasonable diligence. I have long understood that a seller can’t hide or actively misrepresent a material fact about their property, but I didn’t know that a seller has a duty to disclose latent material defects. Can you give me a real-life example of when a seller got into trouble for not disclosing a material defect?

ANSWER: Yes. The case of Everts v. Parkinson was decided by the North Carolina Court of Appeals in 2001. It involved the sale of a house in Wilmington in 1993 that was clad with synthetic stucco. Approximately two years after moving into the house in 1988, one of the owners, Mr. Parkinson, began to discover rotting pieces of brick molding around at least seven windows or doors. He replaced the rotting brick molding himself. Later, a painter who power-washed the house discovered that one of the windows was rotted in the sash, jamb, and part of the sill. Again, Mr. Parkinson made the repairs himself. He testified that the work “didn’t appear that complicated,” but an engineer who inspected the house testified that the window had undergone extensive repair behind the surface cladding between the inner and outer walls.

Mr. Parkinson later hired a company to build a band of stucco around the perimeter of each window to protect the windows from water. The president of the company testified that he told Mr. Parkinson the bands would not provide any waterproofing and that all the company was providing was decorative banding.

At the time of sale, the Parkinsons did not inform the buyers, Mr. and Mrs. Everts, about any of the repair work that Mr. Parkinson had done or about the construction of the stucco bands. The Everts’ home inspector testified that he did not observe any problems with the windows or doors and that he was not able to observe the perimeter joints of the exterior windows because they were concealed by the stucco bands. He also testified that he had not been informed of any moisture intrusion problems, and that if he had, he would have performed an intrusive test by inserting a moisture probe into the synthetic stucco. According to the inspector, it was not the normal practice of his company to perform this kind of test unless it was provided with information about water intrusion problems.

In its opinion, the Court of Appeals stated that “[a] duty to disclose material facts arises where material facts are accessible to the [seller] only, and he knows them not to be within the reach of the diligent attention, observation and judgment of the purchaser.” The Court concluded that a jury could infer from the evidence that material defects were known to Mr. Parkinson, that he knew the Everts’ were not aware of the defects and would not discover them in the exercise of diligent attention or observation, that Mr. Parkinson therefore had a duty to disclose the existence of the defects to the Everts’, and that his failure to do so supported their claim of fraud.

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Huntersville|Lake Norman|Charlotte - Your Listing Agents Directive

In real estate, a fiduciary is an agent who has a legal obligation to act in the best interests of their clients, rather than their own. This is known as a fiduciary duty. The National Association of REALTORS® created an acronym to help real estate agents remember the key points of fiduciary duty, which is "OLD CAR": obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence.

Starting August 17th, buyers will meet with an agent and sign a buyer representation agreement before seeing a property on the MLS, laying out the terms of that engagement including the compensation the agent will be paid for those services. We all know that buyer agent compensation will vary from agent to agent, market to market, company to company, etc. With that in mind, as a listing agent, acting as fiduciary to your seller, why would you in advance of an offer from the buyer, advertise what your seller is willing to pay in buyer agent compensation or concessions, knowing that every buyer's financial situation is different, and what they agreed to pay their buyer's agent might be different as well? You're literally telling a buyer what your seller is willing to give up to make a deal come together in advance of an offer. This "might" make some sense in a buyer's market, but certainly not a "normal" or "seller's market". I bring this up because I've had two lawyers now tell me, breach of fiduciary duty claims could rise against listing agents, if they continue to advertise specific amounts for offers of compensation or concessions in advance of an offer, "potentially" resulting in the seller leaving money on the table.

The best approach going forward for everyone is simply this: "Seller is willing to entertain any and all requests, put it in your offer". Let the offer dictate your response and strategy for putting a deal together with the buyer. If a buyer's agent calls you and asks if your seller is offering compensation or concessions, simply state: "Our seller is willing to entertain any and all requests from your buyer, please just put them in your offer". What if the offer includes amounts significantly less than what your seller was willing to offer in compensation or concessions in advance? Let the buyer request what they want or need to put a deal together. It's a negotiation... LET THEM MAKE THE FIRST MOVE!

Contact me and I will explain this new confusing process.   

QUESTION: Commissions – Can I share my commission with my client?

I have always been willing to negotiate my commissions with my clients.  With the new NAR ruling, this is even more important.  Below are the rules, I am bound by. (Note, this applies to our Property Management business as well)

ANSWER: Yes. The Real Estate Commission takes the position that brokers may rebate or pay a portion of their brokerage fees to buyers and sellers who purchase or list real estate through the broker, because a real estate license is not required of persons who list for sale real estate which they own or who purchase real estate for their own account. Agents should: (1) have the consent of the principal(s) (for example, if you are acting as a seller’s (sub)agent or dual agent and want to share your commission with the buyer, then obtain the seller’s consent in writing); (2) disclose the payment to the lender; and (3) assure that the payment appears on the settlement statement (failure to disclose the payment on the settlement statement could constitute a “false statement to a lender,” which is a federal crime and also a violation of the License Law and North Carolina Real Estate Commission rules).

Contact me and I can answer all your questions!

A Realtor's Tribute To Jimmy Buffett

 I have been saddened recently by the death of Jimmy Buffett.    I grew up with him, well kind of.  Some might argue, I have some growing still to do!    However, as we get older and lose those that inspired us or entertained us, it brings mortality into focus. 

An acquaintance of mine wrote these words from his interview with him:

JB: You know, I didn’t try and create all of this. It just happened while I was having a good time. I wanted to have a good time, so I wrote about what I know. Life is hard, and I wanted to create a place where it wasn’t.

From Dave Matthews.  

Whether planned or coincidence, every time I ran into Jimmy it was like seeing an old friend. He was brilliant and a genuinely good and generous man.

If you read all the tributes to Jimmy Buffett, you have a roadmap for a life well lived.   I realize he had wealth beyond what most have.   However, he had these qualities before he ‘made it’.  He just lived a life of giving and fun.  

I try to live my life with a smile on my face.   Whether I am helping my real estate customers, playing golf with friends or just spending time with family, I try to make others smile and not stress about whatever we are involved in.    

Jimmy’s passing has been a reminder that I sometimes have to work harder at ever present smiles. However, I will continue to work at being generous, smiling a lot and just treating others like Jimmy Buffet!   #RIP JB

Roby Robertson | Your Realtor and Friend

 I have been a Realtor and Property Manager for 20 plus years now and I feel I have been pretty successful.   Heck, making it that long in this business has been interesting and a challenge.

I  like what I do and have the intention of retiring because of that enjoyment.     However, even at my age and years in the business, I struggle with marketing decision making and growth. 

A lot of real estate is about marketing and it is so easy to throw good advertising money at bad advertising.   I have always thought about my chick flick favorite movie ‘The Notebook’ when Ryan Gosling says to Allie in a forceful way ‘WHAT DO YOU WANT’  and how I can use that in marketing.

When someone becomes a customer, I feel I can always give them what they want and do a great job for them.   With all the competition, I struggle to get that message across without sounding salesy like everyone else.   I also often wonder if it is a beauty contest since we all put our pictures on everything.   I sincerely hope not because I feel like I lose every time  up against the glamor shots and the young guns.

I will just say this.   I work hard for my clients and look out for them.   Don’t know how else to put it. 

Huntersville | Charlotte | Lake Norman - The Many Benefits of Homeownership

 

The past two years have taught us the true value of homeownership, especially the stability and the feeling of accomplishment it can provide. But homeownership has so much more to offer. Here’s a look at a few of the non-financial and financial benefits of owning a home. If you’re looking to buy a home today, think about all the ways homeownership can impact your life.

Homeownership Has Impactful Personal and Emotional Benefits

Owning your home gives you a significant sense of pride because it’s a space that is truly yours. And as a homeowner, you can customize your home to your heart’s desire. Having a space you’ve put your stamp on enhances the pride and sense of ownership you may feel.

And that sense of ownership can extend beyond your shelter to help create social, community, and civic benefits as well. That’s because the average homeowner stays in their home for longer than just a few years. That means you’ll naturally feel a stronger connection to the community around you the longer you live there. This can help you experience a greater sense of belonging and a greater stake in your community as a whole. As the National Association of Realtors (NAR) says:

“Living in one place for a longer amount of time creates an obvious sense of community pride, which may lead to more investment in said community.”

Owning a Home Is a Significant Step Toward Financial Stability

In a financial sense, homeowners benefit from home price appreciation, equity gains, and having a shield against some of the effects of inflation. These benefits can have a big impact on your life. As you gain equity through home price appreciation and paying down your mortgage, you build your net worth. And in times of inflation, your 30-year fixed-rate mortgage can help you stabilize one of your largest monthly expenses for the duration of your loan.

Lawrence Yun, Chief Economist for NAR, explains how you can start to see these lasting effects of homeownership as soon as you make your purchase:

“Owning a home continues to be a proven method for building long-term wealth. . . . Home values generally grow over time, so homeowners begin the wealth-building process as soon as they make a down payment and move to pay down their mortgage.”

Knowing you’ve made a good investment soon after your purchase is powerful. And that may give you confidence in your decision to buy a home.

Bottom Line

The benefits of owning a home are foundational. As a homeowner, you can feel proud of the space you call home and know you’ve made a sound financial investment. To learn how homeownership can help you, let’s connect to start the conversation today.

An Expert Advisor Will Give You the Best Advice in Today’s Market

 

Huntersville/Charlotte/Lake Norman| Carolina Living Real Estate Can Be That Trusted Advisor!

Having an experienced guide coaching you through the process of buying or selling a home is important in a normal market – but today’s market is far from normal. As a result, an expert real estate advisor isn’t just good to have by your side, they’re essential.

Today’s housing market is full of extremes. Experts project mortgage rates will continue to rise this year, and that’s driving significant demand for homes as buyers want to make their purchases before rates climb even higher. At the same time, an absence of sellers is leading to record-low housing inventory. This imbalance in supply and demand is creating bidding wars and driving home price appreciation as well as considerable gains in home equity.

These market conditions can feel overwhelming, but you don’t have to go at it alone. Having a trusted expert to coach you through the process of buying or selling a home gives you clarity and confidence through each step.

Here are just a few of the ways a real estate expert is invaluable:

Contracts – Agents help with the disclosures and contracts necessary in today’s heavily regulated environment.

Experience – In an unprecedented market, experience is crucial. Real estate professionals know the entire sales process, including how it’s changed over the past two years.

Negotiations – Your real estate advisor acts as a buffer in negotiations with all parties throughout the entire transaction and advocates for your best interests.

Education – Knowledge is power in today’s market, and your advisor will simply and effectively explain market conditions and translate what they mean for you.

Pricing – Finally, a real estate professional understands today’s real estate values when setting the price of your home or helping you make an offer to purchase one.

A real estate agent is a crucial guide through this unprecedented market, but not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding an expert real estate advisor – not just any agent – should be your top priority when you’re ready to buy or sell a home.

What’s the key to choosing the right expert?

It starts with trust. You’ll want to know you can trust the advice they’re giving you, so you need to make sure you’re connected with a true professional. No one can provide perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in today’s unique market. But a true professional can give you the best possible advice based on the information and situation at hand. They’ll help you make the necessary adjustments along the way, advocate for you throughout the process, and coach you on the essential knowledge you need to make confident decisions. That’s exactly what you want and deserve.

Bottom Line

It’s critical to have an expert on your side who’s well versed in navigating today’s rapidly changing market. If you’re planning to buy or sell a home this year, let’s connect so you have a real estate professional on your side to give you the best advice and guide you along the way.

Huntersville| There Won’t Be a Wave of Foreclosures in the Housing Market

 

Carolina Living Real Estate Is Here For You

When mortgage forbearance plans were first announced and the pandemic surged through the country in early 2020, many homeowners were allowed to pause their mortgage payments. Some analysts were concerned that once the forbearance program ended, the housing market would experience a wave of foreclosures like what happened after the housing bubble 15 years ago.

Here’s a look at why that isn’t the case.

1. There Are Fewer Homeowners in Trouble This Time

After the last housing crash, over nine million households lost their homes to a foreclosure, short sale, or because they gave it back to the bank. Many believed millions of homeowners would face the same fate again this time.

However, today’s data shows that most homeowners exited their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. The latest data from the Mortgage Bankers Association (MBA) studies how people exited the forbearance program from June 2020 to November 2021.

Here are those findings:

38.6% left the program paid in full

• 19.9% made their monthly payments during the forbearance period
• 11.8% made up all past-due payments
• 6.9% paid off the loan in full

44% negotiated work-out repayment plans

• 29.1% received a loan deferral
• 14.1% received a loan modification
• 0.8% arranged a different repayment plan

0.6% sold as a short sale or did a deed-in-lieu

16.8% left the program still in trouble and without a loss mitigation plan in place

2. Those Left in the Program Can Still Negotiate a Repayment Plan

As of last Friday, the total number of mortgages still in forbearance stood at 890,000. Those who remain in forbearance still have the chance to work out a suitable plan with the servicing company that represents their lender. And the servicing companies are under pressure to do just that by both federal and state agencies.

Rick Sharga, Executive Vice President at RealtyTrac, says in a recent tweet:

“The [Consumer Financial Protection Bureau] and state [Attorneys General] look like they're adopting a ‘zero tolerance’ approach to mortgage servicing enforcement. Likely that this will limit #foreclosure activity for a good part of 2022, while servicers explore all possible loss [mitigation] options.”

For more information, read the warning issued by the Attorney General of New York State.

3. Most Homeowners Have More Than Enough Equity To Sell Their Homes

For those who can’t negotiate a solution and the 16.8% who left the forbearance program without a work-out, many will have enough equity to sell their homes and leave the closing with cash instead of facing foreclosures.

Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home. As Frank Martell, President & CEO of CoreLogic, explains:

“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth.”

4. There Have Been Far Fewer Foreclosures Over the Last Two Years

One of the seldom-reported benefits of the forbearance program was that it allowed households experiencing financial difficulties prior to the pandemic to enter the program. It gave those homeowners an extra two years to get their finances in order and work out a plan with their lender. That prevented over 400,000 foreclosures that normally would have come to the market had the new forbearance program not been available. Otherwise, the real estate market would have had to absorb those foreclosures. Here’s a graph depicting this data:

5. The Current Market Can Easily Absorb Over a Million New Listings

When foreclosures hit the market in 2008, they added to the oversupply of houses that were already for sale. That resulted in over a nine-month supply of listings, and anything over a six-month supply can cause prices to depreciate.

It’s exactly the opposite today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals:

“Total housing inventory at the end of November amounted to 1.11 million units, down 9.8% from October and down 13.3% from one year ago (1.28 million). Unsold inventory sits at a 2.1-month supply at the current sales pace, a decline from both the prior month and from one year ago.”

A balanced market would have approximately a six-month supply of inventory. At 2.1 months, the market is severely understocked. Even if one million homes enter the market, there still won’t be enough inventory to meet the current demand.

Bottom Line

The end of the forbearance plan will not cause any upheaval in the housing market. Sharga puts it best:

“The fact that foreclosure starts declined despite hundreds of thousands of borrowers exiting the CARES Act mortgage forbearance program over the last few months is very encouraging. It suggests that the ‘forbearance equals foreclosure’ narrative was incorrect. . . .”

Where Have All the Huntersville Area Houses Gone?

Experts Advise If your thinking of, Don't wait!  This will not last forever.  

Huntersville area Sellers, never pay 6% to sell especially in this market!   We do it PROFESSIONALLY for less!

In today’s housing market, it seems harder than ever to find a home to buy. Before the health crisis hit us a year ago, there was already a shortage of homes for sale. When many homeowners delayed their plans to sell at the same time that more buyers aimed to take advantage of record-low mortgage rates and purchase a home, housing inventory dropped even further. Experts consider this to be the biggest challenge facing an otherwise hot market while buyers continue to compete for homes. As Danielle Hale, Chief Economist at realtor.com, explains:

“With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower. In January as a whole, the number of for sale homes dropped below 600,000.”

Every month, realtor.com releases new data showing the year-over-year change in inventory of existing homes for sale. As you can see in the map below, nationwide, inventory is 42.6% lower than it was at this time last year:

Does this mean houses aren’t being put on the market for sale?

Not exactly. While there are fewer existing homes being listed right now, many homes are simply selling faster than they’re being counted as current inventory. The market is that competitive! It’s like when everyone was trying to find toilet paper to buy last spring and it was flying off the shelves faster than it could be stocked in the stores. That’s what’s happening in the housing market: homes are being listed for sale, but not at a rate that can keep up with heavy demand from competitive buyers.

In the same realtor.com report, Hale explains:

“Time on the market was 10 days faster than last year meaning that buyers still have to make decisions quickly in order to be successful. Today’s buyers have many tools to help them do that, including the ability to be notified as soon as homes meeting their search criteria hit the market. By tailoring search and notifications to the homes that are a solid match, buyers can act quickly and compete successfully in this faster-paced housing market.”

The Good News for Homeowners

The health crisis has been a major reason why potential sellers have held off this long, but as vaccines become more widely available, homeowners will start making their moves. Ali Wolf, Chief Economist at Zonda, confirms:

“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed.”

With more homeowners getting ready to sell later this year, putting your house on the market sooner rather than later is the best way to make sure your listing shines brighter than the rest.

When you’re ready to sell your house, you’ll likely want it to sell as quickly as possible, for the best price, and with little to no hassle. If you’re looking for these selling conditions, you’ll find them in today’s market. When demand is high and inventory is low, sellers have the ability to create optimal terms and timelines for the sale, making now an exceptional time to move.

Bottom Line

Today’s housing market is a big win for sellers, but these conditions won’t last forever. If you’re in a position to sell your house now, you may not want to wait for your neighbors to do the same. Let’s connect to discuss how to sell your house safely so you’re able to benefit from today’s high demand and low inventory.

Reasons to Hire a Real Estate Professional

 Never Over Pay To List Your Home Again!  Check With Carolina Living Real Estate First. We Represent Buyer and Sellers with patience and professionalism!

Some Highlights

• Choosing the right real estate professional to work with is one of the most important decisions you can make in your homebuying or selling process.
• The right agent can explain current market conditions and break down exactly what they mean for you.
• If you’re considering buying or selling a home this year, let’s connect so you can work with someone who has the experience to answer all of your questions about pricing, contracts, negotiations, and more.