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Archive for the 'Real Estate Transactions' Category

November 25, 2015

geo2Sometimes basic due diligence can uncover things on a real estate deal that would otherwise open a can of worms and trigger a chain of actions that can become a major pain! Unfortunately, in real estate, from people who don’t accurately recount their information to out and out fraudsters, due diligence is one vital activity that is the burden of every real estate sales professionals.

Most real estate sales professionals, at the very least, when taking on a new listing will perform a property search to validate that their client is the legal homeowner. Now, some real estate sales professionals will go a step further to validate that the mortgages registered against a property match what the client disclosed at the time of engagement.

One very common thing that can come up on a new listing is an undisclosed mortgage or lien on the property being listed and depending on the amount borrowed/owed it could consume some or all of the property’s equity – in the worst circumstances, not even leaving anything left to pay commissions and closing costs.

Your due diligence may begin with a basic property search that could generate information that leads you to want to do some more digging. The next step in the evolution of due diligence in this regard would be to look at a Parcel Register*.

A Parcel Register* is going to tell you the legal owners and type of ownership, legal description, registered encumbrances – not exclusive to mortgages, these could be liens, easements and other types of registrations.

Should something solid be revealed on a Parcel Register* you can now go back to your client and question them. Perhaps there is a lien registered and they have the money to pay off the lien – but don’t have the contact information for the registrant.

The next step in the evolution of due diligence is to look at the Instrument Image associated to the registered lien in question. This will provide you with the registrant’s complete information including how to contact the registrant or their legal representative.

Next you may want to have a look at the sales history – particularly the amounts of transactions and who the buyers and sellers were.

Taking the basic measures above will ensure that you are spending your time working on good quality deals that have a high probability of closing which in the end makes you more profitable!

GeoWarehouse has the tools for both basic and more in depth due diligence. Ensure that you are covered – protect your own assets. Visit www.geowarehouse.ca today.

* An official product of the Ontario government pursuant to provincial land registration statutes.

 

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geoThis question is fair enough and asked often enough for us to blog about it. There are many different skilled professionals involved in a real estate transaction: you, the real estate sales professional, a lender and/or mortgage broker, a real estate lawyer and many more. You, however, are the first line of defense when it comes to the long list of due diligence measures that have to be taken to prevent mortgage fraud and ensure that good quality deals are taking place.

OREA defines due diligence as “the reasonable analysis or research that is done to check or verify material information about a property.” https://www.oreablog.com/2013/02/what-is-due-diligence/

Real estate sales professionals can and do choose how far they can go with due diligence, making it a time consuming and costly task on some deals. With all the tools and capabilities available, one could spend countless time and a significant amount of money performing due diligence – so is there in fact such a thing as too much due diligence?

One way to mitigate the time spent on due diligence is to evaluate what due diligence to perform and when you do it.

For example, common types of due diligence performed by real estate sales professionals include:

  • Verifying who the legal homeowners are
  • Obtaining a survey
  • Validating the legal description of the property
  • Reviewing the sales history on a particular property
  • Checking for encumbrances like mortgages and liens and more…

Once you know what needs to be verified on every deal, your next step is to look at how you can get it verified. This is going to come down to the tools and technology you use to perform due diligence. Place a monetary value on your time and pursue tools that do as many of the due diligence items you need to perform, in one place – even in a single report. This will reduce the need to do 5-6 things separately, instead doing them all together.

Finally, when should you do it? We firmly believe at the application stage. Once a client has made the decision to engage you, due diligence should begin. Again, getting back to placing monetary value on your time – wasting time on deals that have issues is not good for you or any of your colleagues along the supplier chain. Not only do you stand to save time and expense, but you also stand to save credibility by performing due diligence at the point where a customer signs on.

There can never be too much due diligence when it comes to preventing real estate fraud. Generally speaking, if you establish a standard framework to perform due diligence within a set time and expense parameter, you should never find performing due diligence too time consuming and should be able to get through it with ease.

For more information about GeoWarehouse, a revolutionary tool that helps real estate sales professionals perform due diligence, please visit www.geowarehouse.ca

 

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landing good real estate dealsDeals go POW all the time…. Most times deals go POW when they weren’t “a deal” in the first place. Landing good real estate deals depends upon discerning good deals from POW-destined deals right from the get-go.

What does that mean? Well, when you meet a client and conduct a new client interview, the prospective buyer or a seller provides you with available personal information. But at this point in your relationship with them, the information provided is all you have with which to assess them…. So what do you do next?

Often times, a client may often innocently omit information they could have provided you. Many times a prospective client could have been confused or simply forgot about other documents that would have been of appropriate interest to you. Other times a prospective client may intentionally omit providing information he or she well knows positions them to reap some personal gain, perhaps even at your expense.

Whether you are trying to prevent fraud or simply keep a deal from going POW, you should perform your due diligence at this crucial application stage. So what information is vital to confirm at the application stage? Here are some essentials:

Verifying a Seller’s worthiness

  • Verify your client’s identification by asking to see it
  • Verify that your client is the legal homeowner
  • Verify that your client is the only legal homeowner and if they are not, insist on knowing who all other legal homeowners are
  • Check registered mortgages to ensure that there is enough equity to pay for closing costs (including your commission)
  • Check the sales history on the property to make sure that there is no funny-business or reason to suspect the property has issues

Verifying a Buyer’s worthiness

  • Check the client’s identification
  • Ensure that your client is able to finance a mortgage
  • If a client tells you their purchase depends on the sale of their other property – check that the other property has enough equity to finance the purchase of another (including land transfer taxes and related closing costs)

Conducting an airtight interview is the first vital component to your landing a good real estate deal as a real estate sales professional. Utilize tools to validate information about your clients ahead of all other business to pave the way for a successful deal – and close. Some real estate sales professionals perform due diligence at various stages in the real estate process and for good reason. If something comes up the deal could go POW.

Even if the client provides you with documents like the deed or MPAC assessments – you should still independently verify all information provided by a client or prospective client. Tools like GeoWarehouse, Google and even the MLS are great ways to do this and can save you substantial money and headaches in the long run!

For more information about how you can validate the information your client provides to you please visit www.geowarehouse.ca.

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Real Estate TransactionsYou know better than anyone that when the time comes to close a deal, paper begins to fly! Offers begin going back and forth and this can become time consuming and complicated. As with many other industries, the real estate industry continues to move towards going paperless. According to 680 News, in March of 2013, Canada’s PC Government made it clear that they believe it is time that Ontario approve the use of electronic signatures for real estate transactions. In fact, Ontario is one of the last provinces still manually signing and closing real estate deals.

On June 12, 2013, OREA applauded the passage of the 2013 provincial budget which included provisions to make electronic real estate agreements a reality in Ontario. The budget included an amendment to the Electronic Commerce Act (ECA) which will extend the legal protection of the ECA to include electronic real estate agreements. You can view the Act here http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_00e17_e.htm.

In September of this year, OREA posted an update on the amendment to the ECA forecasting that we will likely see electronic signature capability in 2014.

Some real estate sales professionals have commented that they feel that the ability to sign electronic forms will interfere with face-to-face relationships and engagement with clients, while others have surmised that it could lead to an increase in fraud.

We actually believe it will be quite the opposite. This amendment will certainly lead to new technology and successes for real estate sales professionals across the province. New capabilities will mean that you can do more on the go, service your clients better and close more deals. As Henry Ford famously said, “If everyone is moving forward together, then success takes care of itself!”

With the introduction of mobile applications, such as ViMO (Virtual Mobile Office), real estate sales professionals will be able to use their tablet in a client meeting instead of preparing and carrying the necessary documents ahead of time. They will also be able to have the client sign their documents electronically. Instead of going back and forth between the client’s home and their office, they can send the documents to the real estate sales professional instantly.

This amendment is a progressive step in the right direction and will lead to more success and prosperity for all.

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