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Two Spooky Real Estate Tales

Two Spooky Real Estate Tales

1. Squeezed into the Box of Forced-Placed Insurance

It was a dark and rainy night. Slowly, very slowly the invisible hand of the free market – the mortgage economy hand – purchased Force Placed Insurance for an unsuspecting home owner who had let his insurance lapse He didn’t scream. Why would he? He didn’t know what had happened … until it was too late.
Too late because the homeowner was now paying three times more ($1,500 vs. $500) than he should be paying for home insurance. And surprise: The policy protected only the lender, not the owner.
The doors creaked and the windows slammed. SURPRISE! In some cases owners pay for flood insurance when there is no water in sight.
According to Ben Lawsky, Head of the Financial Services Department of New York State, Forced Placed Insurance “is a silent killer harming both the consumer and investors while enriching the banks and their affiliates.”
How do you fight this menace? First, make sure your insurance premium is always paid and up to date. Most clients of Homebuyer Associates pay one year of insurance prior to closing and then funds are escrowed monthly by the lender to pay for the annual policy.
If you refinance make sure provisions are made to have payment for your insurance policy escrowed and payment made to your insurer annually. To be really safe, check with your insurer on your policy due date to verify your policy is in effect.
If you are responsible for the annual payment, put the due date into a “tickler file” to make the payment on time.

2. Consequences of the Unknown

It was hiding in plain sight but it was an unknown to you, the buyer. The unknown can be a scary place and can hurt you financially. How? The Multiple Listing Service (MLS), the repository of listings that agents send to their customers or clients, is like a haunted house – if you don’t open the correct door you may be trapped or worse yet, drop money into an abyss never to be seen again.

The MLS has two versions of listing sheets to send to potential home buyers – a public or private version. Most often agents choose to send the “public” version which omits information. In fact, before e-mailing the listing sheet, the system prompts the agent with the question, “Are you sure you want to e-mail a private version?” It’s interesting that the MLS would refer to it as “public” implying open. Better to visualize it as an open trap door.
The private version contains private information for agents to see and not the public (Yessss…it is mysterious isn’t it – the public is really private and the private is public).
At Homebuyer Associates we always send the “private” version to our clients. We want our clients to have all the information. Recently a private version of a listing sheet noted, “$1,500 bonus to selling broker for accepted, full price Offer by 10/30/12. Spooked yet? No?
The information on the websites of real estate companies is the public version.
What if you received the public version listing information and didn’t know about the bonus to be paid to the agent for a full price Offer?
Your Halloween surprise is that you get to pay full price for a home that may or may not have been worth it. The agent collects a bonus of $1,500 and you were never made aware of it.
Trick or Treat? Don’t be haunted by paying more for a home than you should and have the agent benefit from your frightening choice.
If you aren’t working with Homebuyer Associates (that’s a scary thought) then at a minimum make sure you are getting or seeing all the information about the listing you deserve to see so that you can make an informed choice.

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129