YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
Sometimes I get asked questions that inspire me to think before I respond. Then I share so that everyone is made aware.
Question: I have a transaction in which the Seller is a Trust. The original Trustee is mentally incapacitated and we have two doctors’ letters that state so. The Successor Trustee has taken over the handling of the sale of the property. The Seller Trust has no bank account under its name. The signed instructions says to send the proceeds to the original Trustee’s personal account. The questions are: Can it go into her individual account? If it does and the Successor Trustee had a power of attorney, could he steal all her funds or could he do that even if it went into a Trust bank account? If she dies and the funds didn’t go into her trust account could I be responsible if those funds do not get distributed pursuant to the Trust? Do the types of accounts make a difference? She does not have a trust bank account set up.
Answer: These are tough questions! Normally we all know that proceeds should go to the bank account set up under the Trust name. However, when there is no such account set up the next best thing is sending it to the original Trustee’s personal account since she is still alive. If she had passed away I would definitely tell the Successor Trustee to set up a new Trust bank account. He will need to get a separate Tax ID for the Trust anyway and can no longer use the social security number of the deceased. So setting up a different bank account after the death of the original Trustee should be important for future accounting of the Trust Estate taxes.
Whether the Successor Trustee can access the personal bank account by using the power of attorney is up to the bank to decide, we need not be concerned.
Whether the Successor Trustee is a crook and is not going to disburse the funds according to the Trust is also not our responsibility to police. Our responsibility is to disburse according to the written instructions given from the person who has the authorized capacity to act and advise that person to seek their own independent legal and financial counsel.
TALKING ABOUT BEING PRIVATE! – 2019 NS3 CONFERENCE
One more time, with feeling! Last year at the NS3 summit, where national settlement agents gathered, I was invited to talk about WIRE FRAUD because that was the HOT TOPIC. This year, fraud is still piping hot but something else is looming and it is gonna scorch us, but good. This year I will talk about the GDPR and the CCPA and everyone will get a gander at what our new reality is going to look like. Timely! What with the Russia political influencing fiasco, Cambridge Analytica, and just recently, a huge case of data exposure at First American Title Company, (in which the first class action lawsuit was filed 3 days after the findings were reported) PRIVACY is the buzzzzzz word.
Oh, right. I’m so used to letting the acros roll off the tongue (fingertips) that I forget others may say “huh?” We are a nation of acronym lovers, aren’t we? That’s because we are lazy. To spell them out – NS3 – National Settlement Services Summit. GDPR – the EU’s General Data Protection Regulation. CCPA – the California Consumer Protection Act. It’s all about CONSUMER PRIVACY now that California passed AB375 – the toughest national privacy act and a template for other states. Here is this year’s NS3 line-up agenda. As you can see, our industry has a whole bunch of “concerns” that we are looking out for.
WHEN SHOULD I LIST MY HOME?
If you are reading this right now, it’s a little too late! In my humble, unsubstantiated opinion, and in observation of the workflow on my desk, here is a timeline for a motivated Seller who wants to be out by summer:
- Start making arrangements to refurbishing your home and make preparatory noises in January.
- Then you want to beat the crowd and put it on the market by the end of March.
- If you did a good job and priced it right, you should be able to sell it at your requested price and enter into escrow in April.
- With a 30 day escrow you would close at the end of May (probably right around the Memorial Day weekend).
- Then you would be free to take that long vacation with those net proceeds you got and
- The Buyer would have the whole summer to do their painting/remodeling and move in, before school starts.
In this article, there are recommendations on when to sell to obtain maximum return. As always, timing, timing, timing! If you use the article to decide when you want to end up selling, count the days backward and you will see when to start the preparations to list your home, market willing.
I can tell you that we saw the surge of openings of escrow at the end of March through April which fell off in May. The openings translated into 2 weeks of intense, crazy closings by Memorial Day through to the end of the month. We are hoping for a second rush of openings early June for the latecomers to the game, which would finalize by the end of July, just in time for kids to start their school year in August.
Yes, our lives center around the ebb and flow of the market.
iBUYER? WHAT? ANOTHER APPLE PRODUCT?
iPhone, iPad, iPod, iTunes, iTech, iRS, whatever. We now have a new term – iBuyer. The following real estate companies – Opendoor, Zillow Offers, among others – are all new entries into the real estate brokerage market, taking advantage of “one stop shopping” but putting a different twist to what they offer. Gone are the age old brick and mortar brokerages concept that exist in every block of the community. Today, new start up companies do most of their work and marketing on the internet.
The new term “iBuyer”, is the name given to real estate tech companies who have developed their algorithm driven flipping platforms to entice buyers to conduct their one stop shopping. They offer you online sites to review potential homes for purchase, help you make the offer, walk you through escrow, mortgage, title and all the necessary steps of the purchase. More importantly, and here is where the distinction comes in, they buy your existing home (at their offered price, of course), thereby freeing up your equity for the new purchase immediately. No more waiting on tenderhooks for your old home to close escrow and transfer proceeds to the new one. The iBuyer fixes up your old home and sells it at a profit. Everyone gets what they want. Here is one article describing this “new” concept. And if you are interested in more, here is another article.
Is this changing the way the market is working? Yes and no. One stop shopping has been promoted for many, many years by the large brokerage houses who own their own escrow companies, title companies and mortgage companies. The difference is iBuyer brokerage houses have a source of funds to enable them to swing the purchase of the Buyer’s property first, taking out a source of tremendous frustration for Buyers who need their homes to sell in order to buy.
Someone developed an innovative idea and others are jumping on the bandwagon. Capitalism at work.
IPOS, SAN FRANCISCO AND HOUSING
The 3 subject matters do flow together very well, one affecting the other, a problem not seen in any other city in the nation.
My daughter and her “significant other” are combining households this spring. Although they are only renting, finding a place that is big enough for 2 (and their shoes) and yet not too outrageously expensive in or around San Francisco was an exercise in frustration. They did find one of those modern apartments that are built near transportation, the rent is almost $4,000 for a 900 sq ft one bedroom but it is in San Carlos, which, they say, is a fair compromise to living in San Francisco as there is suitable transpo.
I know it is difficult, but why? I found this fascinating article about one person’s efforts to mine data of San Francisco’s real estate scene, using public records and the internet. Did you know that out of 400,000 housing units, only 5,471 properties changed hands in 2018? Well, obviously, residents there know that if they sell, they had better have another place they can get into or they would be leaving the area forever. As tech companies offer their IPOs, wealth is being built, and new workers are drawn in, but no new housing is developing, sellers can’t afford to sell and the housing shortage just grows and grows. Prices, rent or purchase, escalates and the whole situation becomes outrageous. Where else in the nation do you find this problem?
Finding suitable housing demands translates into finding anything buildable. Here is a shack that is being sold for $2.5 million for its view and demolition permit value. So, any IPO millionaire who can’t find a suitable home near his work can buy this shack, put in another million, build his own little castle and still have money left over.
In San Francisco “money can’t buy everything,” it can’t buy you a new home and that is just sad.
AND THEN AMAZON CAME RIDING INTO TOWN
You remember when Amazon was looking for a second home it drew a frenzy nationwide, with cities and towns eagerly submitting their bids to become the next HQ2. Arlington, VA was chosen, and now the story of how this choice is affecting the area’s housing market comes out. As this article reports, “… Amazon’s presence is a factor for nearly every homebuyer and seller this season.” The questions are: Buy now or be priced out? Or sell now or wait until the prices are driven higher? Ugh. Such terrible choices.
A PERSONAL TECH SAFETY ANNOUNCEMENT
The Federal Trade Commission wants you to know! When those teenagers in your household stream illegal movies, etc. they are also leaving their computers open to malware being streamed in at the same time. Here is the FTC announcement and it would do well for you to be aware, particularly if your home computers are interconnected through a main system. Malware slipped in through illegal streaming would leave your home system unprotected for everything else you are using on it, like online banking, shopping and to store your sensitive and private information.
ONE’S HAPPY PLACE MAY BE OTHERS’ UNHAPPY PLACE:
And finally, an amusing story about a house in Hillsborough CA (yes, it is near San Francisco) that was built to mimic the Flintstones house, much to the dismay of the community. Apparently, Hillsborough is the “4th richest town in the country” and the super wealthy did not like Barney and Fred in their backyard, much less their dinosaur pets. The city is suing the owner for devaluing the neighborhood. Click here for the incredible sight of what the neighbors have to see outside their front door. The property sold for $2.8 million recently. What do you think? Should the property remain as it is? Depends on your “point of view”, doesn’t it? HaHa!
As we come to the end of this edition of my newsblog I have to share funnies that liven up my otherwise stressful day. And if they have to do with weight loss (or gain), so much the better:
I just did a week’s worth of cardio after walking into a spider web. Yay me.
I ran (not literally, duh) across a recent study that found women who carry a little extra weight live longer than men who mention it. Hmm. Hubby may live forever. I may die early.
Ate salad for dinner. Mostly croutons & tomatoes. Really just one big round crouton covered with tomato sauce. And cheese. FINE, it was a pizza. I ate a pizza. Are you happy?
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”