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Avoiding Problems with Your McFarland WI Escrow Account

Posted by Michael Collins, CDPE, SFR on November 7, 2011 at 6:00am

 

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Avoiding Problems with Your Mc Farland Escrow Account

If you are using a mortgage to purchase your first home it is highly likely that the lender will request that you use escrow in order to handle the annual homeowner's insurance and taxes on the property. This is reflected by an additional payment on top of the interest and principal payment that you make on the home loan. Ideally, the lender will review this account every year to see if there are overpayments or underpayments and change the escrow accordingly.

Unfortunately, we don't live in a perfect world and companies do make mistakes. Here are some important facts to help you understand the basics of an escrow account.

Taxes

Property taxes are usually reviewed one year after a home has been purchased. At this time the property will likely get a new assessment, which can drastically increase the tax amount. For people that are buying a previously owned home this will usually not be an issue, although you should look at what the current assessment value is. If you are buying a brand new home, or if you have just built a home, then the previous tax amount was based on an empty lot. The existence of a new home will greatly improve the lot's value and subsequently change the tax amount.

Insurance

Before finalizing the loan you will be asked to provide proof of insurance from a licensed insurance agent. The location of your home may dictate a few extras that might not be prevalent in other areas.

For instance, if you are considering the purchase of a home that is close to a river or lake then you may be in a flood zone and subject to flood insurance. Homes that are located in extremely rural areas may be subject to higher premiums if there are no fire fighting stations in close proximity to the home. It is vital that you speak to your Realtor® before buying a home to see if there are any conditions about the home that would result in a higher insurance policy.

Reviewing the Escrow

Every year your lender should mail you a letter that goes over the escrow account for the previous year. It should list all of the payments you made to the escrow account as well as any amounts disbursed from the account to cover your expenses. You should also contact your homeowner's insurance agent and the local tax assessor's office to see if there are any upcoming changes for your tax bill or your insurance bill.

How to Handle Property Tax Increases

Going back to the early example of someone buying a new home or building a home, there is the expectation that the property tax amount will increase tremendously. If the increase is more than $1,000 then the lender will possibly add $2,000 to the escrow account in case the taxes increase again the following year. This presents you with three choices:

  • Accept the new escrow amount and pay the additional $167 monthly amount
  • Ask your lender if they will spread the extra amount over the next two years to make the monthly amount lower
  • If you have the funds, offer to pay the increased tax amount yourself so that your escrow payment does not change.
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Inflated BPO's Cause Problems for All

Posted by Jesus (Jesse) Gonzalez on September 2, 2011 at 10:41am

 

As a REO agent, we learn very quickly how important a good BPO is. Not only because we have to do them...along with MMR (Month Marketing Reports) but because our AMs rely on 3rd party BPOs to help them determine our list prices. Yes, you heard me correctly, I as the REO agent rarely get to list the property for the price I want. In fact, most to the time, I have to list the property at the 3rd party BPO price. So, I am trying to sell a property at a price I had no control over, my AM has no control over and yet we are held to that standard.

So, does this policy work......um, not really but sort of kind of. Figure that one out?

I understand that the 3rd party BPO prevents the AM and Realtor from fire selling the property but, guess what it also does, it prevents properties from selling. What....did I say that? Yes....oh hell yes I did. You see, some of these people doing these BPOs are working under the misconception that they have a chance to get the REO, if the price the property high. They think a high BPO suggested list price means the am looking at the BPO is going to give them a call and that AM is going to say....those two magic words, "You're hired!"

In reality, it sticks me with a list price, 10-50% above FMV because it's the AMPs policy to take the 3rd party BPO, add that to my BPO, average the two and add 5%...whiz, boom, bang, you got you a list price good buddy. SERIOUSLY!?!?!?

In fact, without naming names, without disclosing the address, I got a listing right now, it's 100% overpriced. Now, I am not saying that as a figure of speech or as an exaggeration to make a point, I literally do mean it's 100% over FMV (Fair Market Value). Now, here is the sad part...I know it's 100% over priced, my AM knows it's 100% over priced yet, neither one of us can do a damn thing about but ask for price reductions every 30 days while we both kill our stats.

So, here we are, 202 days later, it's now listed at $44,900.00 and yes, in 2 days I had 5 offers. MOF (Multiple Offer Forms) have been sent out and yes, it looks like we are going to have a deal.

Now, just a thought....but, it's a good thought, I promise. Why punish me and my AM? Why not ask yourself, "why didn't this property sell when it was listed at 95,000? We marketed this property no different than the others, in fact, we did much more.....multiple open houses, broker tours, neighborhood farm post card, email blast...etc, yet...not a single offer till we got down to $44,900.00.....maybe that's because the FMV is $44,900? Which is actually amazing considering my BPO...202 days ago suggested a list price of 49,900.

I am truly sorry to say but, I strongly feel the BPO and Appraisal industries are sham...truly a sham. Especially BPOs. Let's be clear, I understand why they are used, I understand what makes them important but, I don't believe it's any different than going down to my friend local psychic Esmeralda and asking her, how much should my house sale for.

Better yet, why don't we let AMs and Realtors determine value? I know, it's a novel idea..truly it is but, why the hell not try it, it might just work.

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Don’t call with problems, call with resolutions

Posted by Jesus (Jesse) Gonzalez on August 18, 2009 at 9:38am
For many Asset Managers, agents calling with their problems rather than with their resolutions are some of the biggest headaches they get. Now, granted, someone might argue that the problem can only be rectified by the AM and in those few and far between issues, ok…I get it however, it’s important to note than many agents just don’t take it upon themselves to solve problems. Ok, I am not going to take the typical approach to this issue that you are accustomed to reading or hearing about. I am not going to tell you about how the AM is paid on a graduated performance scale and the more time he can spending closing deals, the more he gets paid and the happier we all are. My approach to this is a little different. It’s how your silly call about what you need to do with all the personal property left in the home caused my very important call from my Title Agent to go missed by the AM and now we have a buyer wanting to walk from the deal at closing! If you are one of those agents eating my AMs time because you don’t know what to do, how to do it, when to do it, go and get you some training. I don’t want to come off harsh or insensitive but, my AM doesn’t have time to teach you, he needs to close deals and the more deals he closes, the more successful I am so please don’t waster his time, it’s my money you are playing with! Get proactive, call with a resolution, leave it on voicemail and tell the AM to only respond if necessary. Take ownership, satisfy all parties, save as much money as you can but most importantly, don’t waste my AMs time, it will come back to benefit you….and me!
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“I don’t believe you have multiple offers”, said the Selling Agent.

Posted by Jesus (Jesse) Gonzalez on January 11, 2009 at 11:17am
Nothing irks my soul more than the Realtor who questions my integrity. Yes, it can be argued that our industry is faced with many challenges, of which, personal integrity could be considered at the top however, I am not the one. My integrity and reputation precedes me and of this I am much aware. I pride fully admit I have never been good at humility but, we each have our drawbacks. As I was saying, I am not the one. I got out of my way to ensure everything is on the up and up, not because I am bound by some generic code of ethics or some legal statue but because, that is how I was raised. (cliché I know) So, when I sent out multiple offer notices to all the Selling Agents on a recent property, I was a bit miffed by the oblivious yet gallant response by one Realtor that went something like, “I don’t believe you have multiple offers.” Well, in this situation I could have responded many different ways however, reverting back to those wonderful lessons I learned as a child, of which my mothers favorite came to mind, “If you don’t have anything nice to say, don’t say anything at all”. With that in mind, I simply stayed quiet………..(Long Pause) and, then the Selling Agent said, “are you there?” My reply was yes, I am here, I have been here listening to you. I guess he was shocked that I was listening but, I am sure that is the by-product of most likely never being listened to because he obviously never has anything worth while to say but, that is another story for another time. I proceeded to end the conversation by saying, “did you have any other questions I can help with?” I was hoping he would say no and hang up but, I wasn’t that lucky. None the less, the conversation did come to an end, almost just as dramatic as it started. I repeated myself 5 times….I know, 5 times seems a lot but, for some people, that is just the start. For 5 times I said, “I am providing you the opportunity to instruct your client that multiple offers are on the table and they should submit in their final and best offer.” Eventually, the Selling Agent hung up and, I moved on to my next call. I don’t know how this is going to end but, I assure you, as always, I will be a gentleman and scholar……until he pisses me off.
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