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“sold real estate just fine without the internet. Google …Jason Christiansen of Internet media and Jason specializes in Real estate, Internet, Marketing Consulting. Jason, there are lot of Real estate agents out there, brokers who think that they sold real estate just fine without the internet. Google (more) (less)”

Attorney, title agent team up to tackle reissue rate fraud in Sunshine State — without litigation

Excerpts from an original article published in “The Legal Description” on 1/15/2007

Attorney Nancy Norelli and her husband, real estate broker and title agent Jack Laufer, have teamed up to tackle the title insurance industry’s reissue rate woes in Florida — possibly without filing a single lawsuit.

“Our mission is consumer advocacy,” Norelli recently told The Legal Description. “We believe that educating consumers and making changes in the legislative process — especially the language in key state statutes — will be more effective than filing class action lawsuits.”

Several years ago, Norelli and Laufer investigated filing class action lawsuits against underwriters and title companies for overcharging homeowners for title premiums in refinance transactions. Rather than file the lawsuits herself, Norelli, then pregnant, passed them onto colleague, attorney Marc A. Wites, founder of Lighthouse Point, Fla.-based Wites & Kapetan PA….

In 2005, Wites won a $2.5 million settlement from Florida’s largest title insurer, Attorneys Title Insurance Fund Inc., known as The Fund, which also agreed to institute wide-ranging changes in their business practices to educate underwriters and title agents about reissue rates….

Said Laufer, “What we see happening in Florida is a long series of successful reissue rate cases.” However, Despite Wites’ success, Norelli and Laufer believe the legal route is no longer the way to go.

“We won’t be working with Marc Wites anymore,” Norelli said. “We are going a different route — consumer protection.”

Burden of proof
The lawsuits don’t get to the heart of the reissue rate debate — the disconnect between the underwriter and consumer, the pair said.

Worse yet, ambiguous statutes don’t empower consumers to request discounted rates they may qualify for in refinance or new home purchase transactions.

The couple learned firsthand just how confusing the language used by the industry was…

“When we bought our home in a new development, we thought we qualified for a new home purchase discount – but couldn’t figure out what that new home purchase rate was,” Norelli said. “There we stood, Jack a title agent and me an attorney, and we couldn’t understand it. So how can we expect anyone else to?”

The state describes the New Home Purchase Discount in this way:

“Provided the seller has not leased or occupied the premises, the original premium for a policy on the first sale of residential property with a one- to four-family improvement that is granted a certificate of occupancy shall be discounted by the amount of premium paid for any prior loan policies insuring the lien of a mortgage executed by the seller on the premises. In the case of prior loan policies insuring the lien of a mortgage on multiple units or parcels, the discount shall be pro-rated by dividing the amount of the premium paid for the prior loan policies by the total number of units or parcels without regard to varying unit or parcel value. The minimum new home purchase premium shall be $200. The new home purchase discount may not be combined with any other reduction from original premium rates provided for in this section. The insurer shall reserve for unearned premiums only on the excess amount of the policy over the amount of the actual or prorated amount of the prior loan policy.”

Many found this language difficult to translate into layman’s terms.

“I have no problem with how the new home purchase discount regulation reads, although I would propose mandatory disclosure be given at the time of purchase or when a new file has been opened,” Laufer said. “The disclosure could either be given by the developer/seller or the title insurance agency conducting the closing.”

Norelli and Laufer believe the burden of understanding the reissue and new home purchase rates should fall on the underwriter — not the consumer.

“We can use every tool to reform the industry, but we want to change the language of the legislation and have the industry inform the homeowner about reissue rates and new home purchase discounts,” Norelli said. “One almost needs a secret code to obtain a reissue rate. We found that even industry professionals and title agents were genuinely confused about when to apply the reissue or new home purchase rates. They had not been educated by the underwriters. The consumer needs to know the reissue rate exists, and demand it be given. The consumer’s ignorance has worked to the industry’s favor.”

Bad for the industry?
Florida law states consumers are entitled to the discounted reissue rate provided that the reissuing agent and the underwriter kept for their respective files a copy of the prior policy, Norelli said. But if the underwriter was the same person who had issued the prior policy, it’s difficult to believe he couldn’t obtain this information if the consumer had purchased his prior title policy from the exact same underwriter, she said.

“The underwriter’s entire job is to keep track of the history of a property’s title,” she said.

As part of a class action settlement, one can require industry disclosure, but there are problems with using the legal forum to address these kinds of industry practices, Norelli said. A class action lawyer’s duty is primarily to the plaintiff and the class. But a class settlement may or may not address the underlying problem that led to the bad practice in the first place.

“Class action lawyers are not title experts just because they bring a title case to court,” she said. “Class actions require an enormous investment of time and money. Class action lawyers will call riffs off the same successful cases for as long as they can. This may not be good for the industry.”

Other worries may lay ahead for the industry, Norelli said. Given the success of the recent reissue rate cases, the class action bar will next look to pursue title agents for the portion of the premium they retained on the reissue cases, she predicted.

These agency cases will probably be barred as a matter of law, since the insurer will be found to be an indispensable party and solely responsible for making the premium charge, Norelli said. The primary function of an agency is to perform primary title services, conduct closings and to act on behalf of its principal — the underwriter, she pointed out. Since the charge for the performance of primary title services is wrapped within the premium charge, it is an integral component of the total charge — and ultimately, the responsibility of the underwriter, Norelli said.

Then it might be tempting for lawyers to go after underwriters regarding the new home purchase discount, she said.

One or the other
Laufer and Norelli are not closing the door on lawyers.

“We are not ruling out class action cases,” Norelli said. “We will partner with class action lawyers when it provides the necessary framework for addressing consumers’ concerns.”

Even before Norelli offered Wites the first reissue rate cases, “we tried to informally engage many title industry professionals in a dialogue on the reissue rates,” Norelli said. “And if we were able to effectuate change within the industry without filing suit, we would have done so.”

But when Wites filed the reissue rate class actions, Laufer and Norelli “made a trade-off — and our concerns as consumer protectionists became secondary,” Norelli said. “We had to support a particular lawyer who had filed our case on behalf of a particular group of aggrieved consumers. The settlements were adequate, but we are happy that we can regain an independent voice to address the industry.”

The Legal Description will provide updates on Laufer and Norelli’s new direction — and on the results of Wites’ pending and future reissue cases.

Feedback? Contact Lori Lesko at llesko@octoberresearch.com.

One May 27, 2008, the National Association of Realtors (NAR) reached a favorable settlement with the U.S. Department of Justice (DOJ), resolving litigation between them regarding how listings from multiple listing services are displayed on brokers’ virtual office Web sites. The proposed final order, which was filed with the federal district court in Chicago, validates NAR’s longstanding Internet Data Exchange (IDX) policy and strengthens the rule governing participation in multiple listing services.

Final Judgment Approved - DOJ-NAR (PDF: 743KB)

Final Settlement Details

Cover Letter - Notice of Actions Required by Association Executives and MLSs (PDF: 23KB)

2008 Virtual Office Website Policy (PDF: 109KB)

Model VOW Rules for MLSs (Microsoft Word: 45KB)

Amendment to Section 3 or 4 of Model Bylaws (PDF: 64KB)

Certification Form - Note: Form must be signed (PDF: 86KB)

Frequently Asked Questions (PDF: 65KB)

Brokerless, a Florida based Real Estate company, has a great solution. Brokerless will list your property in your local MLS for a flat fee while you retain your For Sale By Owner status.

It’s amazing! You will no longer be subject to the exorbitant fees associated with listing your property in your local MLS. Brokerless has accomplished this goal by providing its customers with an interactive, web based, online system that in certain circumstances creates a paperless/seamless transaction, resulting in savings of up to thousands of dollars. Other services are being provided as well.

Brokerless has developed a platform that gives its web customers the ability to submit real property listing information via the website and have the data transmitted directly to Brokerless. Brokerless, Inc. appreciates your business and looks foward to servicing your needs.

Click a state on the map to learn about state laws or regulations affecting competition in real estate. Add a Flat Fee MLS Listing in Your Local MLS .

Paying a flat fee for an MLS listing means more equity in your pocket! All the advantages associated with having an MLS listing will be available to you at a fraction of the cost. As a result, there will be no additional listing fees owed specifically to Brokerless. Typically, those fees run from 2.5% to 3.5% of the selling price, and are normally paid to the Listing Broker at closing. Since lower fees means more equity in your pocket, Brokerless could save you, the seller, thousands of dollars in commissions.

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Flat fee MLS (a.k.a For sale by owner MLS or limited service MLS) is a term used to describe a practice in the real estate industry in which realtors place pertinent information about a property for sale into the database of the local Multiple Listing Service (MLS) for a set fee or dollar amount as opposed to a commission based on the contract selling price of the property.

The arrangement between the real estate broker and the property owner (”seller”) typically requires that the parties enter into an exclusive-agency listing agreement, a listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker. In return, the seller will be required to pay the listing broker a flat fee for his/her limited services provided. This essentially reduces contractual risks between the seller and the listing broker, since the seller is free to sell (or otherwise transfer title to the real property) to any person procured by the seller (i.e. someone who is not represented by a “Buyer’s Broker”) without having to pay a brokerage commission or penalty. The net effect is to limit brokerage services provided, thereby giving the seller greater control and flexibility at significantly reduced costs.

In this instance, the flat fee that the seller pays replaces the much higher listing fee, usually 2.5% to 3.5% of the sales price, that is otherwise paid if the seller were using a full service listing broker in his/her local area. As a result, the seller will not pay the listing broker additional service fees that are typically based on the contract selling price. The seller will, however, be required to pay a cooperating brokerage fee, usually between 1.5 to 3.5 percent, stated as a percentage of the total purchase price. The title agent conducting the closing will be be instructed, pursuant to the purchase and sales agreement (or listing agreement), to disburse any fees due to the cooperating broker.

The listing fee for a “Flat fee MLS” can range anywhere between $99-$699, depending on the area. Real estate brokers have traditionally charged sellers anywhere from 3% to 7% of the contract selling price, which is typically split between two brokers involved in the transaction or two agents/brokers from the same company. MLS Rules require that its members cooperate and offer compensation to other members.

Please note: In all cases, where the property is “listed” in the MLS for a flat fee, the seller must offer compensation to a “Buyer’s Agent”, typically 2% to 3.5% of the selling price. This fee is paid to the cooperating broker (or agent) for producing a bidder or purchaser, when the transaction results in a successful sale and closing of escrow of the property.

Paying a flat fee for an MLS listing means more equity in your pocket! All the advantages associated with having an MLS listing will be available to you at a fraction of the cost. As a result, there will be no additional listing fees owed specifically to the Listing Broker. Typically, those fees run from 2.5% to 3.5% of the selling price, and are normally paid to the Listing Broker at closing. Since lower fees means more equity in your pocket, Brokerless could save you, the seller, thousands of dollars in commissions.

What is the Multiple Listing Service (”MLS”)?

The MLS (”Multiple Listing Service”) is a computerized database that enables realtors to display real time real property listing information, so that authorized participants, as well as the public, can view and evaluate listings. The MLS serves as a means by which authorized participants (listing brokers representing sellers) make blanket unilateral offers of cooperation and compensation to other authorized participants (co-operating brokers representing buyers). MLS participants actively show and sell homes that are listed by other participants (member realtors). This process provides the basis upon which the Broker, who is working with the buyer and referred to as the Cooperating Broker, earns a commission. A cooperating broker’s entitlement to compensation is determined by the broker’s performance as procuring cause of sale or lease. 75% of all properties sold are sold through the MLS.

What savings will I realize using a flat fee home selling discount broker?

Paying a flat fee for an MLS listing means more equity in your pocket! All the advantages associated with an MLS listing will be available to you at a fraction of the cost. As a result, there will be no additional listing fees owed specifically to Brokerless. Typically, those fees run from 2.5% to 3.5% of the selling price, and are normally paid to the listing broker at closing. Fees vary by State, County, and Broker. Consumers who choose a limited service option can realize savings of up to thousands of dollars.

How does the Brokerless home selling system work?

The flat fee that you pay replaces the much higher listing fee, usually 2.5% to 3.5% of the sales price, that you otherwise would pay if you were using a full service Listing Broker in your local area. As a result, you will not pay additional fees that are typically based on the contract selling price.You will, however, be required to pay a cooperating brokerage fee, usually between 1.5 to 3.5 percent, stated as a percentage of the total purchase price. The title agent conducting your closing will be be instructed, pursuant to your purchase and sales agreement (or listing agreement), to disburse any fees due to the Cooperating Broker.

What type of listing agreement will I be required to sign?

An exclusive agency listing agreement is the most commonly utilized instrument when using a discount broker. The owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying a commission if he or she sells to a prospect who has not been introduced or claimed by a specific broker. Most commonly used with Flat fee MLS listings.

This essentially reduces contractual risks between the seller and the listing broker, since the seller is free to sell (or otherwise transfer title to the real property) to any person procured by the seller (i.e. someone who is not represented by a “Buyer’s Broker”) without having to pay a brokerage commission or penalty. The net effect is to limit brokerage services provided, thereby giving the seller greater control and flexibility at significantly reduced costs.

Will I need to offer compensation to a buyer’s agent?

Yes. In all cases, where the property is “listed” in the MLS for a flat fee, the seller must offer compensation to a “Buyer’s Agent”, typically 2% to 3.5% of the selling price. This fee is paid to the cooperating broker (or agent) for producing a bidder or purchaser, when (and if) the transaction results in a successful sale and closing of escrow of the property. As previously stated, you will not be required to pay a commission to a buyer’s agent if you sell to a buyer (or prospect) who has not been introduced or claimed by a specific broker.

Can my property be listed on the MLS for longer than my listing agreement calls for?

Yes. However, listing agreements must have a definite expiration date. Therefore, additional paperwork will be required to extend the original period contemplated in the agreement.

Who will be in control of my Flat Fee MLS listing?

You will be in control all showings, buyer inquiries and negotiations. The listing broker may assist with paperwork.

What are the duties of a limited service flat fee mls listing broker?

The duties of a real estate broker will strictly depend on the laws of the state in which the property is located. If your state does not impose minimum service requirements, then the duties will be limited to the following:

As a real estate licensee who has no brokerage relationship with you, (insert name of Real Estate Entity and its Associates) owe to you the following duties:

1. Dealing honestly and fairly;

2. Disclosing all known facts that materially affect the value of residential real property which are not readily observable to the buyer.

3. Accounting for all funds entrusted to the licensee.

What is an AfBA notice?

AfBA stands for Affiliated Business Arrangement. This is to give you notice that [referring party] has a business relationship with [settlement services providers(s)]. [Describe the nature of the relationship between the referring party and the providers(s), including percentage of ownership interest, if applicable.] Because of this relationship, this referral may provide [referring party] a financial or other benefit.

How soon will updates appear on realtor.com?

MLS Listings are updated within 24 hours of any changes being made and are available for public viewing on www.realtor.com and your local MLS 24/7.

How do I find property that is listed for sale on Realtor.com?

Visit www.realtor.com

How many people will get to view my property listing?

Every month millions of unique visitors searching Realtor.com will be able to view your listing. Realtor.com sends out numerous feeds to other major internet sites that display MLS listings as well.

May a real estate agent rebate a portion of the agent’s commission to the borrower? If so, how should the rebate be listed on the HUD-1?

According to HUD, yes, real estate agents may rebate a portion of the agent’s commission to the borrower in a real estate transaction. The rebate must be listed as a credit on page 1 of the HUD-1 in Lines 204-209 and the name of the party giving the credit must be identified. Real estate agent or broker commission rebates to borrowers do not violate Section 8 of RESPA as long as no part of the commission rebate is tied to a referral of business.

Are real estate “broker referrals” a violation of RESPA Section 8?

No, according to HUD, payments pursuant to cooperative brokerage agreements between real estate brokers are not a violation of RESPA Section 8. See Sec. 2607(c)(3)

May I require that the buyer/borrower use a particular title company as a condition of sale?

No. 12 U.S.C. 2608 RESPA Section 9 states:

(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

According to HUD, however, section 9 of RESPA does not apply if the seller pays all charges associated with insuring the title to the real property.

What are my duties to the buyer regarding not readily observable known facts, which would materially affect the value of the residential real property?

The seller has a duty to Disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer

What do I need to understand regarding the Lead-Based Paint Hazard Reduction Act of 1992?

Most importantly, it pertains to residential dwellings built prior to 1978. The act requires that Before ratification of a contract for housing sale or lease, sellers and landlords must comply with certain HUD requirement.
Lead Disclosure Rule and EPA Information Pamphlet

What documents will I need to execute at closing?

At closing, the parties will execute a number of documents, prepared by their closing agent, including the deed (a.k.a the instrument of conveyance). The deed is a legal instrument used to convey certain rights an individual has to property to someone else. Deeds come in various forms. The most commonly used deed is the warranty deed. With this type of conveyance, the grantor (seller) fully warrants that the title to the real property is free and clear of all liens and encumbrances and will defend against the lawful claims of all persons whomsoever.

Will I be required to hire an attorney?

There is no legal requirement to hire an attorney. However, many customers will hire a real-estate lawyer to protect their interests. In most regions of the country, a title company (agency) can handle every aspect of a real estate transaction, including the preparation of documentation. A real estate lawyer can act as both your attorney and title agent (i.e. one who issues title insurance policies and conducts closings).

What types of charges will appear on the HUD-1?

Real estate transactions involving federally related mortgage loans involve three basic categories of services and related charges in order to close escrow. These charges appear on the Uniform Settlement Statement (as defined in 12 U.S.C. § 2603) and include:

(1) title insurance charges in connection with establishing and transferring ownership (i.e., title search and examination fees, premiums charged in connection with issuing a lender’s and/or owners title insurance policy (including endorsements), and the costs associated with conducting the closing)

(2) amounts paid to the city and/or state and/or local governments for establishing and transferring ownership (i.e., documentary stamp and intangible taxes on both the note and mortgage, including all fees associated with recording the mortgagee’s interest in the property), and

(3) fees associated with originating a new loan (i.e., survey fees, appraisal fees, tax service fees, credit check fees, loan document preparation fees, notary charges, loan origination fees, loan commitment fees, loan processing fees, hazard insurance fees, flood certification fees, interest prepayments, and lender inspection fees). The majority of these services, however, will not be provided and performed until closing.

Who pays for Title Insurance at closing - Buyer or Seller?

Who pays for title insurance (or any portion thereof, including related title services) usually depends on the location (i.e., county) of the real property. Although the allocation of costs involved in any real estate transaction are negotiable, local custom strongly influences which party, buyer or seller, pays for both the owners and lenders title insurance policy, including related charges. See Florida Title Insurance Rates