In Massachusetts and throughout New England, the Boston Red Sox are not just a baseball team. They are a regional obsession. And "Red Sox Nation" is present in just about every other baseball stadium, rooting for Youk, Big Papi, Pedroia and Jacoby. (Let's hope the boys can overcome their poor start and compete for the pennant!).
Come to think of it, there is a lot that the Red Sox and baseball can teach us about real estate. Here are a few analogies –
Listen to your Manager and your General Manager. Your Manager is your real estate agent. Your General Manager is your real estate attorney. Tito Francona and Theo Epstein (yeah!). Joe Girardi and Brian Cashman (boo!!! Hating the Yankees is also a national pastime). This is the foundation of your team. Listen to them. Trust them. They will lead you to the World Series–your closing.
Spring training is more than just practice. In real estate, spring is the busiest time of year. So apply your eye black and get your game face on. Make your best offer. Swing for the fences. Everything counts in the spring in real estate.
When you get up to the plate, make sure you have your batting helmet and battling gloves on, and you’ve studied the pitcher. In real estate, this means that if you are buying, you need to be well prepared. Get pre-qualified or even better, pre-approved for a mortgage so your offer will be seriously considered by the seller. Studying the pitcher means do your homework. Have your real estate agents pull comparable sales and obtain market research before settling on a offer price. Same for sellers. It’s not what you need or want for a price, but what the market will bear. Reality check time.
Baseball is a rewarding long-term investment. Watching a baseball game can be a long term investment. (Sometimes too long!). So is real estate. Think long-term. This is going to be your home for the next several years. Don’t lose sight of that.
Don’t get caught stealing. Sellers, be honest and upfront about your home and its problems. The home inspector will most likely find all the issues you’ve tried to hide, so disclose up front. Otherwise, you’ll lose all credibility, and the deal will be that much harder to close.
Expect an occasional curveball. With tight credit requirements and longer underwriting, closing in 30 days is very difficult. Delays are becoming more prevalent as well. So, hope for the best, but prepare for the worst.
Statistics & numbers are critical. ERA stands for Earned Run Average, not a well known local real estate office. CMA stands for Comparative Market Analysis. For real estate, you need to crunch a lot of different numbers: price per square foot, PITI, down payment, taxes, etc. You can’t properly analyze a baseball team or a real estate market without understanding the numbers. Sabermetrics for real estate anyone?
Waiting until next year is not always the best strategy. This is more true than ever. Most experts believe we have hit bottom in the Greater Boston area. Interest rates are still at historical lows. It’s time to pine tar the bat and get up to the plate. Get out of the on deck circle and up to batter's box.
Spitting should never be permitted in a dugout or a living room. ‘Nuff said.
Play Ball and go Red Sox!!!
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Richard “Lefty” Vetstein, Esq. is an experienced Massachusetts real estate attorney and life-long, diehard Red Sox fan. Rich was once a fire-balling southpaw pitcher in Little League, striking out 14 batters in one game. His baseball career is now relegated to second-guessing managerial decisions and throwing things at the TV. For more real estate law information, check out his award winning Massachusetts Real Estate Law Blog.
The long awaited ruling from the Massachusetts Supreme Judicial Court in case of Real Estate Bar Association (REBA) v. National Estate Information Services (NREIS) has just come down. The ruling can be read below. The net effect of the Court’s ruling is to reaffirm Massachusetts attorneys’ long-standing role to oversee the closing process and conduct closings. For more background, please read my prior post, Battle Between Massachusetts Closing Attorneys vs. Settlement Service Providers Argued Before SJC.
This case pits Massachusetts real estate closing attorneys vs. out of state non-attorney settlement service providers which are attempting to perform “witness or notary” closings here in Massachusetts. At stake is the billion dollar Massachusetts real estate closing industry.
The closing is where all parties in a real property conveyancing transaction come together to transfer their interests, and where the legal documents prepared for the conveyance are executed, often including but not limited to the deed, the mortgage and the promissory note. The closing is thus a critical step in the transfer of title and the creation of significant legal and real property rights. Because this is so, we believe that a lawyer is a necessary participant at the closing to direct the proper transfer of title and consideration and to document the transaction, thereby protecting the private legal interests at stake as well as the public interest in the continued integrity and reliability of the real property recording and registration systems.
Implicit in what we have just stated is our belief that the closing attorney must play a meaningful role in connection with the conveyancing transaction that the closing is intended to finalize. If the attorney’s only function is to be present at the closing, to hand legal documents that the attorney may never have seen before to the parties for signature, and to witness the signatures, there would be little need for the attorney to be at the closing at all. We do not consider this to be an appropriate course to follow. Rather, precisely because important, substantive legal rights and interests are at issue in a closing, we consider a closing attorney’s professional and ethical responsibilities to require actions not only at the closing but before and after it as well.
The case will move back to federal court where it started for more fact-finding unless it can be settled. There were several unanswered questions because the record was not adequately established. It remains to be seen whether NREIS and its ink can adopt their business model to the SJC’s holding. It’s possible it can be done, but they will have to hire a group of attorneys to manage the system.
More Coverage: Court Weighs In On Lawyers and Closings, Boston Business Journal (interestingly argues that this is a blow to attorneys–completely disagree).
State Court Rules Attorneys Must Participate In Home Closings, Boston Globe (yours truly quoted)
The Massachusetts Supreme Judicial Court’s U.S. Bank v. Ibanez foreclosure decision is already a huge national story and has huge implications for the foreclosure and REO market. (The ruling is embedded below). The high court ruled that two foreclosures of sub-prime mortgages were null and void where the lenders could not establish the chain of ownership within the securitized mortgage backed securitized pools. CNN-Money calls it a “beat down” of the big banks. Reuters says it’s a “catastrophe risk” for banks. The Huffington Post claims there’s some Obama Administration-Bank of America conspiracy in play. The ruling has spooked investors, as bank stocks were down in reaction to the ruling. In reaction to the ruling, a coalition of seven major public pension systems called on the boards of directors of Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo to immediately undertake independent examinations of the banks’ mortgage and foreclosure practices.
National Implications
The case certainly has national implications as the Massachusetts SJC is the first state supreme court to weigh in on the legal ramifications of widespread irregularities in the residential securitized mortgage industry. Over half of U.S. states have foreclosure laws similar to Massachusetts’ regarding the assignment of mortgages, such as California and Georgia. Other courts across the country will likely be influenced by the ruling, especially since the SJC is widely regarded as one of the most respected state supreme courts in the country. If other state courts follow this ruling, it's going to have a huge impact on the foreclosure and REO markets, as billions of dollars of mortgages could be rendered "un-forecloseable" and without resource against mortgaged property.
What Happened Here?
For those new to the case, the problem the Court dealt with in this case is the validity of foreclosures when the mortgages are part of securitized mortgage lending pools. When mortgages were bundled and packaged to Wall Street investors, the ownership of mortgage loans were divided and freely transferred numerous times on the lenders’ books. But the mortgage loan documentation actually on file at the Registry of Deeds often lagged far behind. In the Ibanez case, the mortgage assignment, which was executed in blank, was not recorded until over a year after the foreclosure process had started. This was a fairly common practice in Massachusetts, and I suspect across the U.S. Mr. Ibanez, the distressed homeowner, challenged the validity of the foreclosure, arguing that U.S. Bank had no standing to foreclose because it lacked any evidence of ownership of the mortgage and the loan at the time it started the foreclosure.
He won, and now gets his home back, despite defaulting on the loan.
What This Means For Realtors
For Realtors in the foreclosure and REO markets there are 3 take-aways from this case:
If you are interested in a more indepth analysis of the case and its impact on the securitized mortgage industry, read my outside blog post here, and Georgetown Law Prof. Adam Levitan's piece here.
Ibanez Case JAN 2011
This post is a continuation of my discussion about the recent Massachusetts Appeals Court case of NRT New England, Inc. v. Moncure (click for link). Last week I talked about why the decision was very important in upholding the standard liquidated damages clause in the the typical purchase and sale agreement.
This week I’ll talk about the court’s ruling that the listing broker violated its fiduciary duties when it messed around with the escrow deposit.
The important take away from this case for all real estate agents is that if you are holding a deposit as an escrow agent, don’t even think about messing with it even if there’s a legitimate dispute about your commission or other monies owed to you. It’s not your money! The best advice is to let the dispute run its course and continue holding the funds in escrow.
The facts of this case are a bit unusual. Listing Broker represented the seller in a purchase of residential property in Wayland, MA. Under the standard purchase and sale agreement, the buyer posted a $92,500 escrow deposit which Listing Broker held as an escrow agent. The same buyer apparently used Listing Broker on another transaction and owed it nearly $35,000 in fees.
The buyer lost its financing and defaulted on the contract, thereby forfeiting the $92,500 deposit. (I covered that in my prior post). Listing Broker took an assignment of the buyer’s right to the escrow funds, but didn’t tell its client that right away. Then Listing Broker tried to strong-arm its client by threatening litigation if he didn’t accept $2,500 and release the escrow deposit to Listing Broker.
The court was none too happy with Listing Broker’s course of action here. The court reaffirmed that Listing Broker had a fiduciary duty — one of the highest duties under law — to hold the funds for the benefit of the seller and not to engage in any self-dealing. The court found that Listing Broker’s collection of a debt against the escrow deposit while it was acting as escrow agent was a clear breach of fiduciary duty.
The kicker was that the court imposed triple damages and an award of attorneys’ fees under the Massachusetts Consumer Protection Act, Chapter 93A. So Listing Broker is now on the hook for $277,500 plus thousands in legal fees. Ouch!
Last week I presented some social media strategies in front of over 200 Massachusetts real estate agents (which got great reviews by the way!). I got a big laugh from the crowd when I pronounced:
“What?! I’ve been doing market reports for the last 20 years,” said one Realtor. “I spend hundreds of dollars a month on market report mailers,” said another. “That’s all I post on my blog,” said another.
Here are some questions you need to ask yourself if you are relying on market reports. Are you tracking the response rate? How? What is the response rate, either by mail or online? If you are blogging, what are your statistics and traffic on the market report posts? Can you track any direct leads from them? Is your competition doing market reports? Is the consumer flooded with the same data?
Also, market data is readily available to consumer in a much better format on Zillow, Trulia, and other sites. Why compete with them?
That said, I’ll will guarantee that market reports are some of your most under-performing marketing materials, and if you’re spending a ton of money on them, well, you might as well just give me the money.
For real results, especially online, you need to focus on hyper-local posts, informative posts (how to guides, etc.) and content that lets your experience and personality shine through. Here are some suggestions:
Take a peruse of my company HubConnected's portfolio to see how our real estate bloggers do it right. And contact me if you need more advice.
About: Rich Vetstein is a nationally recognized real estate attorney and blogger. He was recently named one of Inman News Most Influential In Real Estate. Rich created the award winning Massachusetts Real Estate Law Blog and started his own real estate social media company, HubConnected.
Richard Vetstein is a nationally recognized real estate attorney and social media expert. He is the founding partner of the Vetstein Law Group, P.C., TitleHub Closing Services LLC and HubConnected LLC
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