Patty Manzi’s Tri-Valley Real Estate Blog

Happy New Year! 

Along with the hope of prosperity, the new year also brings with it some new and exciting changes in our state and federal laws.  One important change will be new license requirements for anyone conducting mortgage loan activities.

As of January 1, 2010 new license requirements go into effect for anyone conducting residential or commercial Mortgage Loan Activities.  Any person engaging in mortgage loan activities must report to the Department of Real Estate their intent to arrange or service loans secured by real property, by January 31, 2010. 

Also, any person conducting licensed activities as a Mortgage Loan Originator (MLO) is now required to have the following:

• An endorsement on their Real Estate License
• Register with the Nationwide Mortgage Licensing System & Registry (NMLS&R)
• Satisfy the requirements to obtain an MLO license (including new qualification assessments, federal & state exams, and background checks).  NO EXCEPTIONS OR EXEMPTIONS for existing licensees.
• The MLO endorsement must be issued by January 1, 2011 on the real estate license.  (Endorsement applications for qualified MLO registrants must be submitted by September 15, 2010 to be issued by January 1, 2010.

Failure to comply can result in the assessment of penalty fees of $50 per day for the first 30 days, and $100 per day for every day thereafter up to a maximum of $10,000.

Senate Bill 36 (SB36), signed into law October 2009, was enacted to identify licensees conducting mortgage activities and bring California into compliance with the federal Secure and Fair Enforcement Mortgage License Act (SAFE Act). 

Under the SAFE Act all Department of Real Estate (DRE) licensees who conduct MLO activities must meet the following requirements to qualify for the MLO endorsement:

• Take and pass the National and California Unique State component of the SAFE written exam.
• Complete 20 hours of pre-license education.
• File an online MLO license endorsement application and license enrollment fee on the NMLS&R.
• File  a NEW set of fingerprints using a NMLS&R live scan vendor.
• Authorize NMLS&R to obtain a credit report on the applicant.

The SAFE Act prohibits the licensing of an MLO for the following reasons:

• An applicant has ever been convicted of a felony involving fraud, dishonesty, breach of trust, or money laundering; or convicted of any felony in the 7-year period prior to applying for an endorsement.
• An applicant has eve had a MLO license revoked in any governmental jurisdiction, or
• An applicant has demonstrated lack of financial responsibility by showing disregard in the management of his or her own financial condition.

Further information can be found on the DRE website at www.dre.ca.gov, or by calling the DRE Licensing Section at (877) 373-4542.

If you are thinking of buying a home in the near future, one thing you need to know about is all of the paperwork that you will need to sign!  Many times people will rely on the real estate agent to tell them what is in the contract before they sign it, but it is the responsibility of the buyer to read the contract & make sure they understand the contents.  Often times the buyer will sign the paperwork, take a copy and say they will read it later.  I doubt that everyone does.  Keep in mind that a Residential Purchase Contract is a legally binding contract, not just ‘an offer’.

A good way to be informed is to ask your real estate agent for a sample copy of a Residential Purchase Contract.   Grab a highlighter and sit down and read the whole thing from start to finish.  Highlight anything you don’t understand or need clarification on.  Then meet with your real estate agent and ask them to explain these things to you.   When it is time for you to write a contract for a home purchase, you will know what you are asking for and understand the terms and conditions.

Be an informed buyer!

Happy house hunting~

Here is a little information on home warranties for resale and new homes.

Resale Home Warranties-

When you purchase a resale home, you can purchase a home warranty plan that will protect you against most ordinary flaws and breakdowns for at least the first year of occupancy.  The warranty may be offered by the Seller as part of the overall package, but if it is not offered, it is well worth the investment to purchase it yourself.  A home warranty program will give you peace of mind, knowing the major covered components of your home will be repaired if necessary.  Coverage for home warranty plans start with a basic plan with an option to purchase additional coverage for specific things like appliances, pool equipment, and air-conditioning.  Your real estate agent will be able to provide you with names of local home warranty companies in your area.  I suggest contacting the companies to inquire about their pricing, coverage, and deductibles for service calls.

New Home Warranties-

When you purchase a newly built home, the builder usually offers some sort of full or limited warranty on things such as the quality of design, materials, and workmanship.  These warranties are usually for a period of one-year from the date of purchase of the home.  At closing the builder will assign to you the manufacturer’s warranties that were provided to the builder for materials, appliances, fixtures, etc.  For example, if your dishwasher were to become faulty within one year from the purchase of your newly built home, you would call the manufacturer of the dishwasher – not the builder.

If the home builder does not offer a warranty, BE SURE TO ASK WHY!

I’m often asked the question:  Why should I use a real estate agent to purchase a brand new home?

The advantages of having an agent help you purchase a newly constructed home are the same as those for purchasing a resale home…..knowledge of the market, help in finding the perfect home quickly, expertise in contract writing/negotiation, and closing assistance.  The builder has a professional representative watching our for his needs, and you need the same expert representation.

Buying a new home is a little more difficult and time-consuming that buying resale.  A real estate agent can professionally guide you through this process.  A real estate agent has experience working with builders, and can help you research loan programs that will best suit you.  A real estate agent  can also guide you through the  new home warranties and builders purchase contracts. 

It is very important that your interests be professionally represented when you are entering into a contract for a semi-custom, or build-to-suit home.  These transactions are complex and the contract details must be exact in order to protect you and to ensure you get exactly the home you want!

Is there any advantage to not using an Agent to purchase an brand new home?  NO!

Think of planning a trip around the world without the help of a travel agent, or buying insurance for your car without an insurance agent.  What if you were the  executive of a major corporation involved in a legal dispute, would you represent yourself in court?  If you depend on people in the service industry for travel needs, insurance claims for a car accident, or handling legal affairs, then why would you want to represent yourself in the most expensive and probably the most important purchase of your lifetime – your new home?

It is a common misconception that buying a home directly from the builder, without the help of an Agent, will save you money.  There is no financial advantage for you to buy directly from the builder.  Builders, for the most part, have a ’single-price’ policy, meaning you will be charged the same price whether your interests are represented by an Agent or not.  Just as in resale, the Seller pays your Agent’s fee.

REMEMBER though, the Builder requires that your Agent accompany you on your first visit to the Builder’s sales office, or they will NOT PAY your representative’s fee.

When you are considering purchasing a brand new home, there are several questions you should ask before you commit to the purchase:

• Is this a good builder?
• Does this builder have a solid reputation?
• How many years has this builder been in business?
• How does the quality of this builders product compare to that of other builders?
• What are the existing inventories of the various builders?
• How do the builders models meet your needs (floor plan, square footage, location)?
• If I should sell in a few years, what upgrades are available now that I can include to be competitive?

Your Agent will be able to help you research many of these question and it is well worth the time to do so.  Taking these precautions will help to assure you the best service and expertise in making this important decision.

Choosing the right neighborhood is almost as important as choosing the right house!  There are many factors to consider when selecting a neighborhood that is right for you.  Below are just a few of the many factors – You may think of others that are important to you.  Please write them on your ‘requirements’ list so they are not forgotten.

Neighborhoods have characteristic personalities.  Investigate to determine that the neighborhood in which you choose to look for a home matches your lifestyle and personality.

Scout out the Neighborhood! 

It is important that you scout the neighborhood in person.  You live in more than your house.  Talk to people who live in the area.  Drive through the entire area at different times of the day, morning, afternoon, evening, and late at night, go during the week as well as weekends.  Look carefully at how well other homes in the area are being maintained; are they painted, are the yards well cared for; are parked cars in good condition; etc.

Neighborhood Factors to Consider

Look for things like access to major thoroughfares, highways, and shopping.  Listen for noise created by commerce, roads, railways, public areas, schools, etc.  Smell the air for adjacent commerce or agriculture.  Check with local, civic, police, fire, and school officials to find information about the area.  Research things like soil and water.  Look at traffic patterns around the area during different times of the day and drive from the area to your place of business.  Is the neighborhood near parks, churches, recreation centers, shopping, theaters, restaurants, public transportation, schools, etc.?  Does the neighborhood belong to a Homeowners Association?

Taking the time to investigate these things before you commit to buying a home can save you some surprises and potentially some disappointments later on down the road.