It may seem to some that it is a deep topic while others believe it to be topical. There are so many things that are required to be disclosed by real estate agents (brokers and salespeople). From first substantive contact, to scheduling showings, to writing the offer and closing the sale, there are multiple items needing disclosure.

Some will say that the class may be redundant and repetitive. (That comes from our Department of Repetition and Redundancy Department). Yet, when reviewing the violations on the Minnesota Department of Commerce’s website, it appears that the common thread throughout the violations is a lack of disclosure.

At Minnesota Realty School, we always encourage our students that there is no such thing as over-disclosure. An agent should play their cards with all the cards showing and facing up. A consumer’s faith should never be tested and by disclosing things – from beginning to end – reassures the consumer that their agent is being thorough, honest, and faithful.

When a consumer suspects something is amiss, the concern typically surrounds “they are withholding something”. The “they” referenced could be sellers, landlords, property owners, agents, tenants and/or buyers. Once the seed of doubt is planted, it can grow quickly into an ugly weed. As such, by disclosing fees, material facts, relationships, a consumer can move forward with comfort and confidence.

An issue that always garners discussion in classes covers the material fact disclosures. Even though these seller disclosure requirements have been around since 2001, there is confusion of responsibility of disclosure and what should and should not be disclosed. With ever changing laws, it is no wonder uncertainty exists.

This new course will provide in depth details on numerous real estate licensee disclosure requirement issues. Curriculum also includes the proper disclosures required by sellers, including selling property “as is” and the liability sellers can incur for non-compliance. When you attend this course, an attendee will receive detailed information on real estate licensee disclosure requirements. We also will review seller material fact disclosure requirements including waiver conditions and cautions. In addition, attendees will become informed on special disclosure requirements such as environmental, predatory offender and other disclosure considerations and learn disclosure rules related to special statutory disclosure items.

This is the only course a licensee must attend between now and June 2021. With the pandemic happening, your choices may be limited to an online event which is either recorded or live. You will earn 3.75 hours of continuing education. This class also fulfills the 1-hour broker module.

With the winter months approaching and business possibly slowing down, consider taking your credits early.
Stay well, be safe and may health follow you wherever you go.

CASS: You are correct. This hasn’t happened in over five years; but for those of you with 10-plus years in the business, I’m sure your perspective is different. Along the lines of “you ain’t seen nuthin yet.” We have been stable and doing fix 30 lending for so long we may have forgotten much of what we once knew … that what comes down may go up again. The historical longer-term perspective reminds us that interest rates haven’t always been below 4.5 percent on a 30-year fixed rate mortgage!

WHY ARE RATES UP?

Rates rise with a healthy, growing economy and increased government spending. There is much more to be said on this, by smarter people than me, but let’s move on to what you can do about it:

#1 STAY FOCUSED ON YOUR CORE ACTIVITIES. Fixating on interest rates will not help you locate more sellers or buyers, so keep your focus on real estate. If you could truly know where interest rates were going, I’m not sure how that would actually help you do more business. For that matter, I could say the same to my loan officers.

#2 BE INFORMED. While you may not require perfect knowledge of where interest rates are going, you should be conversant enough to give your clients confidence. Lots of great resources are available, starting with your mortgage loan officer or blogs by sites such as Mortgage News Daily (www.mortgagenewsdaily.com/) and others.

#3 HAVE A TRUSTED LENDING PARTNER. An experienced loan officer can be very beneficial consulting with your clients on the rate environment, so they remain confident in their home hunt, and loan officers do have ways to help in a rising rate environment that can be useful.

#4 EXTENDED RATE LOCKS. While the stable rate environment of the last few years has gotten us out of the practice of rate lock decisions, there are lenders that off er extended rate lock protection to your buyers at no upfront cost.

#5 RETHINK YOUR POSITION ON ARM PRODUCTS. For most of the last decade, the 30-year fixed rate mortgage has been the common choice, but we can expect to see a resurgence in the 3/1, 5/1, 7/10 or even 10/1 ARM products that can off er a substantially lower interest rate than a 30-year mortgage while offering fixed interest rates and payments for three, five, seven or 10 years before the adjustable part of the mortgage kicks in. The average mortgage is either refinanced or paid off when the borrower moves, which typically happens every five to seven years. Why assume you need a fixed rate for a full 30 years when you can get a nice discounted rate that will last for seven years?

#6 TEMPORARY INTEREST RATE BUYDOWN. If you have a rate sensitive borrower with improving income prospects a short-term buydown of the current market rates might be just the ticket to keep them engaged to buy a home now instead of waiting. With a temporary buydown of interest rates using funds from the seller or lender your client can secure discounted interest rates for one, two or three years (for example).

#7 PERMANENT INTEREST RATE BUYDOWNS. If you have a client with some extra money or seller concessions you can use those funds to buy down the interest rates permanently or the life of the loan versus just a few years … not an option for everyone and your loan officer can help with the math for your clients.

#8 IT’S ABOUT PAYMENT, NOT RATE. I wish I had a nickel for every borrower that called me worried about an interest rate increase and were pleasantly surprised at the small impact of that interest rate increase on their monthly housing payment. Make sure they talk to a loan officer about the math.

#9 IF NOT NOW, WHEN? They may not like interest rates at 4.625 percent versus the 4.25 percent they have been hearing in the recent past … but in accounting theory that is termed “sunk cost” thinking. They may not like 4.625 percent, but will they like 4.75 percent more if they choose to wait? Do they want a house or not?

Steady as she goes and stay focused on what makes you a successful real estate agent!

There are a lot of factors at work right now to give us a positive outlook about the demand for homeownership and our ability to supply financing for that demand. It would seem it’s a matter of time, patience and preparation.

Let’s talk about demand for homeownership first. A study of current renters showed a clear desire to “own a home at some point” and that is very important. The millennials may be renting today, but 89 percent of them indicated the desire to own a home in the future. The American Dream of homeownership is alive and well and we need to nurture that dream and demonstrate to the millennial and GenX renters that homeownership is not just a dream, but an attainable goal.

Source: Freddie Mac, Study commissioned by NAR “Hurdles to Homeownership: Understanding the Barriers” Kenneth T. Rosen, Rosen Consulting Group

That means we need to focus our conversations with these prospects around the traditional benefits of homeownership they may not have heard clearly to this point in their lives. The tax advantages of homeownership were not impacted by the recent tax bill for the overwhelming majority of individuals, and the long-term ongoing increases in home values continue to demonstrate the value of a home as an investment tool. These prospects have fresh memory of the bubble and housing crisis, but the longer-term trend may not be as evident to this current group of homebuyer prospects and we need to help them see that opportunity.

If we can nurture the dream and demonstrate the value of homeownership then our next hurdle is helping these renters realize they can afford to buy a home.

We can help by investing time and energy getting to know their unique situation and challenges. If it’s a concern about student debt, we may be able to help them with the relatively new Income Based Repayment (IBR) options for student loan debt that can dramatically lower their payment and increase their lending options. Only recently has the mortgage industry changed the ways they view student debt and renegotiated IBR options and those changes can make a dramatic difference in your renter’s homebuying options.

If they have the income but are concerned about the down payment there are a plethora of down payment assistance programs they can tap into, plus accessing the bond loan financing options, USDA and FHA and VA programs all can mitigate down payment concerns. These home shoppers need to sit with experienced real estate agents and loan officers and explore their options.

We should also be prepared to say, “not now” to many of these individuals as well, but offer them a clear path to homeownership. That path may mean a savings plan, an income goal, credit counseling or any other form of advice to help them navigate their hurdles to homeownership.

Finally, we have to address the supply issue with these prospects. Wanting to buy a home is great and uncovering financing options to make the attainable is even better, but we have to prepare them for the reality of a tight listing market. Make sure your home shoppers are fully approved for financing with a reputable lender and a loan officer you trust and that they are not walking around with a simple prequalification letter in their pocket. If you are to win the eventual bidding war on the home they want, you will want them fully approved and ready to close quickly and cleanly. Encourage your shoppers to invest the time and energy to secure a full loan approval based on a thorough review of their income and credit, and to do that before they find the home of their dreams or that dream may remain just that.