Have you ever failed to call back a buyer’s agent about one of your listings because you don’t have time to answer their questions? Do you become aggravated when a buyer grills you about the mortgage and other property details? Only a small percentage of agents can answer the 10 questions in below — are you one of the select few who can? 

Is there still time to put in an offer?

If there is not a signed contract on the property and your state allows you to negotiate more than one offer at time, when the buyer’s agent asks, “Is there still time to put in an offer?” the only correct reply is “Yes.” 

How much will the seller take? 

The correct answer to this question is: “I don’t know. The only way to find out is to submit an offer.” 

How many mortgages are there on the property?

Very few agents ask this question because mortgage-related issues are normally handled by escrow or title once the property is under contract. 

Here’s the challenge. According to RealtyTrac, approximately 5 percent to 10 percent of homeowners in the U.S are underwater on their mortgage, owing more than their property is worth. Moreover, 64 percent of Americans are currently living paycheck-to-paycheck. 

If you don’t know the number and the amount of the mortgages on the property, how do you plan on closing the transaction when the seller is part of the 5 percent to 10 percent of homeowners who owe more than what the property is worth? 

While the sellers aren’t always forthcoming about this issue, a quick way to check this data is to visit HomeDisclosure.com, a site powered by ATTOM Data. Here you will find a list of all the mortgages that have been taken out on the property including the dates when the loans were originated.  

Once the listing is signed, always verify the loan information with the seller. Some of the loans may have been paid in full or removed through a refinance. 

Are there any liens or judgments?

Sellers may be embarrassed to admit they haven’t paid their homeowner dues or that there is an IRS tax lien against them. This is the reason you should always ask this question and then double-check what is currently recorded against the property anyway. 

For example, IRS tax liens can take months to remove, even if the lien is in error. City and state liens are often easier to resolve provided there is enough cash in the deal to pay them off. 

The most accurate resource for this information is your title company, although they typically charge if there is not an open title order on the property. You can also search “check for liens for free” to access companies that provide this service. 

Ideally, you should do this before the listing goes live on the MLS. It’s much better to work this out prior to taking a listing than having to deal with it once the property is under contract. 

Are there any municipal or city fines on the property? 

If a property is vacant, if the seller is having financial difficulties, or if the property is an REO (bank-owned), the seller may have additional fines that will have to be paid before the transaction closes. 

For example, an agent I know listed a property in Florida where the swimming pool was infested with mosquitos. The fines from the city were $1,000 per day. In a strange twist, those fines transferred to the new owner AFTER the transaction closed. Complicating matters even further, if you as the listing agent become aware of these fines, you are obligated to disclose them to any potential buyers. 

Again, the sites that check for liens are a great place to begin. 

How much will the property taxes be on this property?

The AVMs and most MLSs display the current property taxes. Depending upon your state, these can increase dramatically once the property closes. 

For example, whenever a buyer purchases a home in California, their property taxes will increase to approximately 1.2 percent of the property value. After that, taxes increase at a rate of about two percent per year. 

On the other hand, Texas requires all properties to be appraised at market value as of January 1st each year. Moreover, while a few areas may have tax rates under two percent, most major metropolitan areas in Texas range from about 2.3 to 3.0 percent of the full assessed valuation. For existing owners, property taxes can increase up to 10 percent per year, depending upon current market value. 

If you can’t answer this question for your area, investigate what the exact requirements are so you can correctly advise your buyers how much they will expect to pay, especially if they’re relocating from out of state. It can often be much higher than they anticipate. 

Does the Homeowner’s Association (HOA) have any pending dues increases or special assessments? 

It’s extremely common for an owner who hasn’t kept up on their HOA news to be unaware of whether there is a special assessment or dues increase in the works. 

Two ways to you can determine this is to ask for the HOA minutes for the last two years. Alternatively, you can contact the management company to see if there is a special assessment or dues increase currently pending that hasn’t yet come due. 

The reason this is important to the buyer is that they may be stuck paying part of these additional fees. Moreover, if it’s a substantial dues increase, it could impact that buyer’s ability to qualify for their loan. 

Are the improvements permitted?

Your seller tells you their home has a new roof and a new kitchen. The question you need to ask is whether they pulled a permit for all the work? Depending on where you live, some areas are relatively lax when it comes to obtaining permits. In places like Los Angeles, however, you must pull a permit even if you are only going to replace a dishwasher or a hot water heater. 

To illustrate this point, a homeowner in West L.A. where did a major remodel on a million-dollar home that included adding a substantial amount of square footage. The homeowner didn’t pull permits. The city demanded that the seller remove the improvements.  

Again, when you take a listing and the seller says they have done work to the house, determine the nature of the work and whether a permit is required. If a permit is required and the seller didn’t obtain one, encourage the sellers to deal with the issue before listing the property. If they refuse, you have three options: 

  • If you take the listing, you must disclose that the improvements are not permitted on the MLS, the property disclosure statement, and to any mortgage lender. 
  • The stickiest situation occurs if the sellers ask you not to disclose that there are no permits. Failure to do so can not only result in a lawsuit, but you could also lose your license as well. 
  • The real question is should you take this listing in the first place. The answer most likely is “No.”

Who do I need to contact to change the utilities? 

This is one I experienced personally when we were building our first house here in Austin. The model home had all gas appliances. I didn’t see any propane tanks in the subdivision. What I didn’t realize was that there was one large, underground propane tank for the entire subdivision. 

That was an expensive mistake. Not only was my propane bill almost 4 times higher than being on natural gas, but it’s also a dirtier fuel as well. 

Consequently, whenever you take a listing, don’t assume. Ask for copies of their most recent utility bills to determine their providers for cable and internet, electricity, gas, trash collection and water. 

Did you tell the seller about the offer we submitted?

This is probably the most frustrating issue for competent agents and serious buyers. For whatever the reason, some listing agents do not submit the offers to their sellers or worse yet, don’t even call back the buyer’s agent who has the offer. 

If you’re not presenting offers in a manner that conforms to local real estate law, you need to start doing so now. Failure to do so can result in litigation and even possibly cause you to lose your license. 

If you can’t answer the basic questions, it’s time to start figuring out the answers now for each of your listings. That’s the best way to make sure you provide your sellers and their prospective buyers with the most professional representation possible.  

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