kwu mrea admin: contract to close online manual

M i l l i o n a i r e R e a l E s t a t e A g e n t

MREA Admin: Contract to Close

Susan Harris

A Course for the Millionaire Real Estate Agent Team

Preface

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. ii

Acknowledgments

The author(s) gratefully acknowledge the assistance of the following individuals in the creation of this course:

Raejean Myers

Mimi Patrick

Melissa Shipman

Madeline Griffin

Jeanie Harvey

NOTICES While Keller Williams Realty International (KWRI) has taken due care in the preparation of all course materials, we cannot guarantee their accuracy. KWRI makes no warranties either expressed or implied with regard to the information and programs presented in the course or in this manual.

This manual and any course it’s used as a part of may contain hypothetical exercises that are designed to help you understand how Keller Williams calculates profit sharing contributions and distributions under the MORE System, how Keller Williams determines agents compensation under the Keller Williams Compensation System, and how other aspects of a Keller Williams Market Center’s financial results are determined and evaluated. Any exercises are entirely hypothetical. They are not intended to enable you to determine how much money you are likely to make as a Keller Williams Licensee or to predict the amount or range of sales or profits your Market Center is likely to achieve. Keller Williams therefore cautions you not to assume that the results of the exercises bear any relation to the financial performance you can expect as a Keller Williams Licensee and not to consider or rely on the results of the exercises in deciding whether to invest in a Keller Williams Market Center. If any part of this notice is unclear, please contact Keller Williams’ legal department.

Material excerpted from The Millionaire Real Estate Agent appears courtesy of The McGraw-Hill Companies. The Millionaire Real Estate Agent is copyright © 2003 Rellek Publishing Partners LTD. All rights reserved.

All other materials © 2004 Keller Williams Realty Inc. All rights reserved.

Printed September 2007.

No part of this publication and its associated materials may be reproduced or transmitted in any form or by any means without the prior written permission of Keller Williams Realty Inc.

Preface

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. iii

TABLE OF CONTENTS

INTRODUCTION ............................................................................................1

Ground Rules 2

What You Will Learn 3

Why You Are Here 6

How You Will Learn 7

CHAPTER 1: THE ROLE OF THE TRANSACTION COORDINATOR .......................8

Job Description 9

Customer Service 13

My Scorecard 14

CHAPTER 2: INITIATE PAPERWORK .............................................................15

Overview 16

Review the File 17

Parties to the Sale 18

Contract Worksheet 20

Contact Management System 22

Greensheet 23

Review the Disbursement Authorization 32

Let’s Review 33

My Scorecard 34

CHAPTER 3: COMMUNICATION ...................................................................35

Overview 36

Cooperating Agent 37

Closing Company 38

Lender 44

Client 48

Let’s Review 59

My Scorecard 60

Preface

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. iv

CHAPTER 4: TRACKING ..............................................................................61

The Loan Process 62

The Appraisal 66

Inspections 68

Let’s Review 86

My Scorecard 87

CHAPTER 5: FINAL DETAILS ........................................................................88

Before Closing 89

After Closing 99

Let’s Review 111

My Scorecard 112

CHAPTER 6: MAKING IT EASIER ................................................................ 113

Tools 114

Leverage Yourself 132

My Scorecard 133

CHAPTER 7: PUTTING IT ALL TOGETHER ................................................... 134

Action Plan 135

Introduction

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. 1

MREA ADMIN: CONTRACT TO CLOSE

Introduction

In this chapter, you will…

[1] Describe the Ground Rules for this class [2] Identify what you will learn [3] Identify why you are here [4] Identify how you will learn

Introduction


Ground Rules 1. Arrive to class on time and return promptly from breaks.

2. Move quickly when you are instructed to form small groups or partner with someone to role play.

3. Limit your side conversations.

4. Turn your cell phones and pagers to vibrate or OFF.

5. Feel free to stand and walk around if you find yourself getting tired.

6. Accept the reality of time and participation.

7. Respect the different learning styles and opinions of others.

8. Help each other learn because none of us is as smart as all of us working together to improve our skills and knowledge.

9. Consider everything we discuss confidential. What is discussed and role-played behind closed doors stays behind closed doors.

10. Have Fun!

Introduction

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC.

What You Will Learn

About MREA Business Systems

The Millionaire Real Estate Agent courses were created to help you and your team design and implement business systems that will increase your productivity. From lead generation to lead conversion, post-closing to managing the office, the systems you put into place will dictate the efficiency of your team.

The courses in the MREA curriculum present a comprehensive set of systems to improve and maintain key elements of your business. Used in conjunction with the MREA: Operation Manual and the MREA: Scripts Catalogs, the MREA courses will train each member of your team on how to design and implement the systems that affect their particular duties. Once they are trained on these systems, you can easily incorporate the distinctive elements of your team and local market, such as marketing messages and customer services.

Many of the ideas and systems presented in these courses will be a complete paradigm shift for you and your team. The goal is to train your team to go from an entrepreneurial mindset to a purposeful one (E to P). This shift is meant to change you and your team’s way of thinking from that of a sales career to that of a real estate business. If you are in the process of building your team, these courses will show you how to leverage others to get the job done better than you ever could have alone.

Integrating any one of these systems may necessitate changes in current procedures. However, exercise caution in implementing excessive amounts of change in your business too quickly. Trying to completely rearrange many facets of your business all at once can have disastrous effects on your productivity. These changes should come about incrementally over time. For best results, use the 4-1-1 to plan out a progressive incorporation of these systems into your business. And after implementing any changes to your business, you should always play Red Light, Green Light to hold those changes accountable and determine their effect on your team’s productivity.

3

Introduction


What You Will Learn

Contract to Close Action-Oriented Outcomes

At the end of this class, you will be able to:

1. Apply the best practices from offices around the country.

2. Conduct proactive communication.

3. Effectively use your resources.

Introduction


What You Will Learn

Chapter Topics

1. The Role of the Transaction Coordinator

a. Understand your role in getting the accepted contract successfully closed.

b. Create a 4-1-1. c. Discuss the importance of Customer Service.

2. Initiate Paperwork

a. Parties of the Sale b. Contract Worksheet c. Using your CMS d. Greensheet e. Disbursement Authorization

3. Communication a. With the Cooperating Agent b. With the Closing Company c. With the Lender d. With the Client e. With other Vendors

4. Tracking a. Loan Process b. Inspections c. Repair Negotiations

5. Final Details a. Handle the final details before closing. b. Define the funding and recording process. c. Implement the post-closing process.

6. Making it Easier a. Identify tools to make managing the Contract to Close process easier.

b. Leverage yourself in the Contract to Close process.

7. Putting It All Together

a. Hold yourself accountable for executing the tasks you have set for yourself throughout this course.

b. Document your 90-day action plan to implement your systems for successful closings.

c. Summarize what you have learned in this course.

Introduction


Why You Are Here What keeps you up at night?

6

Introduction


How You Will Learn Get ready for some action-oriented training!

In order to learn and succeed, you will:

1. Participate in large group interactive lecturettes.

2. Participate in small group discussions and exercises.

3. Observe your instructor as he/she demonstrates the desired skills and behaviors.

4. Practice the skills you are learning.

5. Develop an Action Plan at the end of the course.

Are you ready to learn how to move a contract towards closing with ease and success?

The Role of the Transaction Coordinator Chapter 1



Chapter 1: The Role of the Transaction Coordinator


[1] Review the job description of the Transaction Coordinator [2] Create a 4-1-1 [3] Discuss the importance of Customer Service

Chapter 1 The Role of the Transaction Coordinator


Job Description The Transaction Coordinator assists the mega agent in closing the contract and completing the sale. The job responsibilities of the Transaction Coordinator are:

1. Responsible for the processing of all contracts through closing.

2. Assures that all post-closing disbursements, filing, and procedures take place.

3. Communicates with customers, clients, other agents, and service providers throughout the closing process.

4. Responsible for keeping the entire team updated on the progress of all contracts and advises team members when they need to become involved in negotiations or problem resolution.

5. Maintains all vendor and service provider files.

6. Responsible for effective communication with clients to ensure that fiduciary service is delivered from contract to close.

7. Supervises the work of the Assistant Transaction Coordinator and any Runners on the team.

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The 4-1-1 4-1-1 Action Goal Worksheet (continued)

4-1-1 Action Goal Worksheet

MY ANNUAL GOALS YEAR OF: ________

JOB PERSONAL

MY MONTHLY GOALS MONTH OF: ________

MY WEEKLY GOALS

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1.

2.

3.

4.

NAME:



Creating an Effective 4-1-1

Exercise

What’s wrong with this picture?

Directions:

1. Form groups of 4-6.

2. Review the 4-1-1 on the next page. Based on the goal categories and the 80/20 rule, identify a) Five problems with the 4-1-1 and b) how you would fix them.

3. Identify a group spokesperson. Your instructor will ask some of you to report some of your conclusions.

Time: 30 minutes

(continued on the next page)



Creating an Effective 4-1-1

4-1-1 Action Goal Worksheet

MY ANNUAL GOALS YEAR OF: ________

JOB PERSONAL

1. Set up Contract to Close filing system.

2. Establish communication standards with all parties.

3. Provide Post Closing Information and Services.

1. Take a vacation this year.

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MY MONTHLY GOALS MONTH OF: ________

1. Coordinate Loan Application Process.

1. Go to Little League games if possible.

MY WEEKLY GOALS

1. Fill out Greensheet.

2. Advise parties on time table to closing.

3. Follow up on inspections promptly.

NAME: NAME: Terry Transaction Coordinator

Wee

k 1



Customer Service “It’s My Pleasure!”

The role of the Transaction Coordinator is to balance many tasks at the same time. You will be interacting with a great number of people. Remember, you are a representative of your agent and their team. When you keep your cool and do what is needed, your acts of kindness will speak volumes when your clients and everyone else involved are reflecting on the transaction.

No act of

kindness, no

matter how small,

is ever wasted.

Exercise

Directions: Brainstorm things you would and would not want to hear if you were in the process of closing a home.

-AESOP

Time: 15 minutes

Don’t know what to say? Here are some ideas:

• I can appreciate how you feel.

• I understand how you feel. If I were in your position, I’d probably feel the same way.

• Can you please tell me why you feel that way?

• I can see where you are coming from.

• I understand.

• Tell me about…

• Let me make sure I understood what you said. (Rephrase and repeat.)

• Team language (our service providers, our seller, etc.)

• (Agent Name) asked me to call. (Let them know everyone is in the communication loop.)

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My Scorecard We have reached the end of this chapter! Before we move on, take five minutes to assess your mastery of this chapter's objectives.

1. Refer to the My Scorecard sheet located at the back of this manual.

2. Review the topics for this chapter.

3. Grade yourself on your mastery level of each topic (A - F). Be honest with yourself. At the end of this course, you will use this scorecard to evaluate your weak areas and develop an action plan for complete mastery of the subject matter.

Chapter 2 Initiate Paperwork



Chapter 2: Initiate Paperwork


[1] Create the Parties to the Sale [2] Initiate the Closing Worksheet [3] Update your Contact Management System [4] Complete and turn in the Greensheet [5] Review the Disbursement Authorization (DA)

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Overview Congratulations! You have a contract! Don’t stop now, there is still a lot to do to get the buyers and sellers to closing. Getting from contract acceptance to closing requires attention to a great number of details. The individual coordinating the transaction must be aware of deadlines and be proactive.

Coordinating a transaction from accepted contract through closing is not like other functions. Your tasks will not occur in a linear fashion. It won’t be ‘coordinate the inspection, check that off, move on to coordinating the loan application, check that off, move on to track funding, etc.’ You will be handling all of the tasks throughout, moving between tasks as they come up in the process.

You will see that many of the tasks are similar whether you are representing the buyer or the seller. For this clinic, when we discuss the tasks, you can assume that they are required for both seller and buyer, unless otherwise specified.

A Note on Using Forms

The forms that are referenced in this manual are all available in paper copy and on disk with the MREA Operations Manual. If you do not have a copy of the manual, you will be able to reproduce the blank forms used in class. We have included 2 sets of forms—one for you to use during class and one for you to take as a sample. In the manual, we will often look at these forms a section at a time, so you may want to pull one set out for reference as we go through the class.

Check Point

How well do you multi-task?

I’m invincible, and can balance many tasks at one time.

I’m pretty good at multi-tasking, and with checklists I can keep on track.

Multi-task? I can’t even walk and chew gum at the same time.

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Review the File Once the contract has been accepted, you should receive the following items from the agent or listing manager:

1. Contract

2. Required Addenda

3. Seller’s Disclosure

4. Lender Pre-Approval Letter

5. Checks (actual or copies)

6. Survey

Exercise

Directions: Using the Sample Closing Packet in the back of your book, review the closing documents with the instructor.

Time: 30 minutes

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Parties to the Sale Completing the Form

The Parties to the Sale allows you to have the names and contact information of everyone involved in the sale in one place. Be sure to check “in CMS” once all parties’ information have been entered into your CMS.

Note: If you are using an electronic agent system, the Parties to the Sale may not be required. If your CMS has the ability to print the Parties to the Sale or something similar, you do not need to complete this form.

Exercise

Directions: Using the Exercise Packet in the back of your book, complete the Parties to the Sale with the instructor.

Time: 10 minutes

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Parties to the Sale

Completing the Form

Parties of the Sale Agent: ______________________________________________Transaction:______________________________ Seller / Buyer Representation: Our Client Buyer Seller Res. Condo Resale New Construction

Property Address: _______________________________________________ Sales Price: $ ________________ (# & street name) (city, state) (zip)

SELLER BUYER In CMS

Name(s): ________________________________ Address: ________________________________ City, State, Zip: __________________________ Email: __________________________________ Work Phone: _______ Home Phone: _________ Fax: _____________ Cell: __________________

In CMS Name(s): ____________________________________ Address: ____________________________________ City, State, Zip: _______________________________ Email: ______________________________________ Work Phone: ________ Home Phone: _____________ Fax: _______________ Cell: ____________________

CLOSING COMPANY MORTGAGE INFORMATION

In CMS Company: ___________________________ Closing Agent: _______________________ Assistant: ___________________________ Address: ___________________________ City, State, Zip: _______________________ Email: ______________________________ Work Phone: ______ Home Phone: _______ Fax: ____________ Cell: _______________ Closing Date & Time: __________________

In CMS Company: ___________________________________ Loan Officer: ________________________________ Loan Processor: _______________________________ Address: ____________________________________ City, State, Zip: _______________________________ Email: ______________________________________ Work Phone: __________ Home Phone: ___________ Fax: _________________ Cell: __________________

Co-Op Agent Name: ____________________________________________________________________________________________ Email ____________________________________________Work Phone ________________________________ Fax ______________________________________________Cell _______________________________________ Referral: Yes No Fee _________________ Agent Info: __________________________________________________________________________________

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Contract Worksheet Overview

The Contract Worksheet creates a snapshot of the terms of the purchase so that you reduce your need to re-read the contract. This limits the opportunity for error.

The Contract Worksheet is your checklist as you move towards closing.

Section Description

Contract Set-up Information

The effective date of the contract, contract receipted by, possession date, settlement closing date. Checklist for Greensheet, DA, packets sent and information entered in the CMS

Deadlines per Contract This section is grouped into 4 areas: Mortgage Company, Closing Company, Inspections and Insurance.

Pre-Closing Deadlines Checklist for various items to be sent to the closing company, buyer’s walk through appointment, seller leaseback information, etc.

Closing Statement (HUD) Information

Commissions, fees, warranty information, etc.

Exercise

Directions: Using the Exercise Packet in the back of your book, review the Contract Worksheet with the instructor.

Time: 10 minutes

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Contract Worksheet

Completing the Form

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Contact Management System Use Your CMS

As part of your Lead Generation, always be sure to update the Contact Management System with all of the parties involved in the sale. Once this is complete, use the CMS to print the Parties of the Sale sheet, or something similar.

Create a record for the Seller or Buyer, if they are not your client. These are considered “orphan” or “adopted” clients, and can be a great resource.

1. Create a new contact for the Seller or Buyer. You will need a way to categorize them as “adopted.”

2. Add the name and address of the “adopted” client.

3. Save the contact.

Create a record for the Co-op agent.

1. Add the co-op agent to the contact manager, if they are not already there. Add the name, address, and phone number.

2. Add the status as a realtor. If they are not with KW, add the source as recruit.

3. In the notes section, add the property sold and closing date.

4. Save the contact.

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Greensheet Completing the Greensheet is the first step with regards to tracking funding. It is important that you turn this in within 24 hours of the accepted contract.

The Greensheet is available in three formats:

1. Online

2. Microsoft Excel

3. Paper

Ask your MCA which version he or she prefers to receive.

For instructions on completing an online Greensheet, go to www.kellerwilliamsuniversity.com and click KWConnect. Then, click eAgentC Training and finally KWLS and Greensheet. These demos will walk you through all aspects of creating an online Greensheet. From that site, you can also download “An Associate’s Guide to the KWLS and Greensheet.” If you complete an online Greensheet, it will automatically be sent to your MCA. You must also provide your MCA with a fully executed contract, any addenda and the seller’s disclosure.

If you complete a paper or Microsoft Excel Greensheet, these must be turned into your MCA with a fully executed contract, any addenda and the seller’s disclosure.

The MCA will then enter the information into the WinMORE system and provide you with a Disbursement Authorization.

If both the Listing Agent and Buyer Specialist are Keller Williams agents, only one Greensheet will need to be completed. Be sure to include a signed copy of the information regarding brokerage services or notification of intermediary relationship (check with your Team Leader to determine which is required in your area). Begin with the Listing Agent and then forward to the Buyer Specialist for completion. Confirm with your Team Leader regarding any time requirements that may be set regarding the receipt of any items to the Closing Company. Some companies charge ‘late fees’ if items are not submitted within specified time ranges.

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Complete the Greensheet using the information on the Contract Worksheet and the information you have on file regarding commission splits your team has with your Buyer Specialists or Listing Specialists (if applicable). Be sure to have a copy of the Greensheet for your Buyer/Seller folder.

http://www.kellerwilliamsuniversity.com/



Greensheet

Greensheet Field Description

General Information

Close Date* The date this closing was funded. If entering a new Greensheet, enter the expected date this closing will fund.

Contract Date* The date of the signed contract. In order for the Greensheet to be accepted by the MC, this date needs to be in the current period of the local WinMORE system.

Type/Class/Source

Type* The type of deal: Listing Sold, Sale, Both Listing and Sale, or Other. (An example of the “Other” option is a personal transaction with $0 company dollar.)

Class* This field details additional information about the transaction: Property, Lease, Referral, or Other.

Listing Side This field denotes the marketing source; how you obtained the listing.

Selling Side This field denotes the marketing source; how you obtained the listing.

Property This is the type of property: Resale, New Home, REO Sale, HUD/VA Sale, Lot, Commercial, Farm and Ranch, or Lease.

Property

MLS # The number obtained from your local Multiple Listing Service (MLS).

MLS Area Area identifier from the local MLS map.

Street #* The physical street number of the property being sold.

Street Name* The street name of the property being sold.

City* The city of the property being sold.

State/Province* The state or province of the property being sold.

Zip/Postal Code* The state or postal code of the property being sold.

County* The county of the property being sold.

Subdivision The name of the subdivision where the property is located.

Map Grid The map grid information (used by your MLS or from a MAPSCO) for the property, if applicable.

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NOTE: Fields with an asterisk (*) indicate the information is required and

must be completed

before saving or submitting a Greensheet.

Initiate Paperwork Chapter 2


Greensheet


Buyer

Buyer* The first and last name of the buyer. Enter the name in this specific format: fist name first, then middle name, and then last name.

Address The current address or post office box of the buyer.

City The current city of the buyer.

State/Province The current state/province of the buyer.

Zip/Postal The current zip/postal code of the buyer.

Phone The phone number of the buyer.

Fax The fax number of the buyer.

Will Owner Occupy Click in the appropriate radio button to select if the buyer will occupy the property.

Seller

Seller The first and last name of the seller. Enter the name in this specific format: fist name first, then middle name, and then last name.

Address The physical street address or post office box where the seller is moving.

City The city where the seller is moving.

State/Province The state/province where the seller is moving.

Zip/Postal The zip/postal code where the seller is moving.

Phone The phone number of the seller.

Co-Broker

Company Name The company name of the broker on the other side of this transaction..

Agent Name The first and last name of the agent at the co-broker’s office.

Address The address/post office box of the co-broker

City The city of the co-broker.

State/Province Then select the state/province of the co-broker.



Greensheet


Zip/Postal The zip/postal code of the co-broker.

Phone The phone number of the co-broker.

Fax The fax number of the co-broker.

Amount MC to Pay Co-Broker

The dollar amount that will be paid to the co-broker by your MC. Only enter an amount if your MC is paying the co-broker,

Tax ID# The Tax ID number of the co-broker, if applicable in your state/province. Contact your local real estate governing authority if you are not certain if this applies in your area.

Have you talked to this agent about Keller Williams?

Specify whether or not you talked to this agent about joining Keller Williams.

Why not? Enter a reason why you have not talked to this agent about joining Keller Williams.

Would be want this agent on our team?

Specify whether or not you would want this agent on our team.

Why? Enter a reason explaining your answer as to whether or not you would want this agent to be on our team.

Mortgage Company

Company Name The name of the mortgage company.

Address The address or post office box for this mortgage company.

City The city where this mortgage company is located.

State/Province The state/province where this mortgage company is located.

Zip/Postal The zip/postal code for this mortgage company.

Phone The phone number of this mortgage company.

Fax The fax number of this mortgage company.

Loan Number The loan number, if applicable.

Loan Amount The amount of the loan, if applicable.

Loan Officer The first and last name of the loan officer.



Greensheet


Loan Type The type of the loan.

Closing Company

Close File ID# The close file ID#.

Company Name The full name of the closing company.

Address The closing company’s address or post office box.

City The closing company’s city.

State/Province The closing company’s state/province.

Zip/Postal The zip/postal code of the closing company.

Phone The phone number of the closing company.

Fax The fax number of the closing company.

Closing Officer The first and last names of the closing officer.

Home Warranty Information

Who is paying for Warranty?

The name of the person who will pay for the home warranty policy fee.

Warranty Provider The name of the warranty provider.

Warranty ID# The warranty ID number.

Address The address or post office box of the warranty provider.

City The city of the warranty provider.

State/Province The closing warranty provider’s state/province.

Zip/Postal The zip/postal code of the warranty provider.

Notes

Enter any additional notes that you want to include regarding the transaction.



Greensheet


Property Address:

Sale Price* The purchase price of the property as reflected on the sales contract in numerals only—no commas.

Commission Percentage

The commission percent of either the listing and/or sale, if applicable.

Commission Flat The commission dollar amount in numerals only (no commas) of either the listing and/or sale, if applicable. If you have a percentage on one side and a flat commission on the others side of the transaction, calculate the flat commission amount for both sides and enter that amount.

Associate Detail Page 1

MORE ID The associate’s MORE ID.

KW Associate Name The associate’s name.

Associate Role The associate’s role: Individual, Team Lead, Buyer Assistant, Listing Assistant, etc.

Type The type of deal: Listing, Sale, Inside, or Other

Class The property class: Property, Lease, Referral, or Other

Agency The agency type: Buyer, Seller, Dual, or Other

Listing Unit The listing unit amount (in numerals) if the type is a listing or both. Leave blank for all other types. The listing side of a transaction represents one unit. If you have multiple associates, the total listing units should be equal to one (1) unit.

Sales Unit The sales unit amount (in numerals) if the type is a sale or both. Leave filed blank for all other types. The sale side of a transaction represents one unit. If you have multiple associates, the total sale units should be equal to one (1) unit.

Associate Written Volume

(price multiplied by listing unit) + (price multiplied by sales unit)=Associate Written Volume

Gross Commission Gross commission amount.

Outside Referral The amount of gross commission paid to an outside referral (someone outside your MC).



Greensheet


Concession to Buyer or Seller

The amount in numerals only (approved by the TL) the MC has agreed to be taken out of gross commission as a concession to close the transaction.

Bonus/Admin Fee The amount in numerals only to be paid in addition to the gross commission by the buyer or seller as a bonus or administration fee.

--split with MC or 100% to agent

Specify if the bonus/admin fee will be shared with the MC or paid to 100% to the associate.

Subtotal Gross Commission subtracted by Outside Referral subtracted by Concession to Buyer or Seller + Bonus/Admin

% Assoc. Commission Split

Enter your commission split percentage with the MC.

Assoc. Commission Subtotal

Subtotal multiplied by % Assoc. Commission Split (Gross Commission subtracted by Outside Referral subtracted by Concession to Buyer or Seller) multiplied by % Assoc. Commission Split + Bonus

Royalty Rate Typically this is 6%

CAP INFO Enter 100% if you have capped, or 0% if not.

Associate Royalty Gross Commission multiplied by Royalty Rate multiplied by Agent (A) Cap.

Inside Referral The amount that another associate agrees to pay another associate within your MC. Make sure you indicate which associate(s) are paying and which associate(s) are receiving the referral amount.

KW Cares The KW Cares donation amount (in numerals only) to be deducted from your commission.

Other Deductions Any other deductions to be paid in numerals only.

Buyer’s Home Warranty

The buyer’s home warranty amount if being paid by the associate.

Net Commission If the % Assoc. Commission Split is less than zero, then use the Inside Referral amount; if it is more than zero, subtract % Assoc. Commission Split, Assoc. Commission Subtotal, Associate Royalty, Inside Referral, KW Cares, Other Deductions, Buyer’s Home Warranty.



Greensheet


Outside Referrals

Broker/Company Name/Agent

The name of outside referral person’s broker, company or agent.

Dollar Amount The amount of the referral to be paid in numerals only.

Paid By: Associate The associate that will pay the referral amount.

Tax ID# Tax ID # in numerals only of the outside referral person.

Address The address of the outside referral person.

City The city of the outside referral person.

State/Province The state/province of the outside referral person.

Zip/Postal The zip/postal code of the outside referral person.

Phone The phone number of the outside referral person.

Fax The fax number of the outside referral person.

Email The email address of the outside referral person.



Greensheet

Exercise

Directions: Using the Exercise Packet in the back of your book, complete the Greensheet with the instructor.

Time: 20 minutes

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Review the Disbursement Authorization Your MCA will use the Greensheet to enter the information into Keller Williams’ system of record (WinMORE) and print a Disbursement Authorization (DA) for the closing company. You may want to have your agent review the DA as this is sent to the closing company, and is used to cut commission checks.

Exercise

Directions: Using the Sample Closing Packet in the back of your book, review the Disbursement Authorization with the instructor.

Time: 10 minutes

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Let’s Review Using your Contract Checklist, mark off the items that are now completed.

33

Communication Chapter 3



Chapter 3: Communication

In this chapter, you will initiate contact with…

[1] The cooperating agent [2] The closing company [3] The lender [4] The client [5] Vendors

Chapter 3 Communication


Overview Proactive communication is essential as you move from the contract acceptance to the closing date. You will be in constant contact with:

1. The Cooperating Agent

2. The Closing Company

3. The Lender

4. The Client

5. Various Vendors

Check Point

Do you like to talk?

Yes! I lose track of time I love to talk so much!

No, leave me alone and let me do my work.

I like to interact with others, but I hate when I hang up and I’ve forgotten one of my questions!

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Cooperating Agent

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During the contract acceptance, your agent will notify the cooperating agent of the members of their team. As soon as you have the cooperating agent’s information, introduce yourself to them. Be proactive and let them know how you can help them.



Closing Company Initiating Contact

The closing company should have been chosen during the offer acceptance. How the contract and escrow check are delivered to the closing company may vary from state to state. Check with your team leader for state specific guidelines. The closing company should send everyone copies of the contract. They should also fax an escrow/earnest money receipt immediately to both agents. If you have not received it, ask for it.

You want to establish communications with the closing company from the beginning of the process.

1. Fax an introduction letter to the closing agent using the Settlement Summary for Escrow. You will:

a) Update the template with the date, the closing company’s contact information, the information on the property, and your closing department’s information.

b) Add the effective date and closing date for the transaction.

c) Fax the letter, along with a copy of the contract and a Power of Attorney, if applicable, to the closing agent.

(continued on the next page



Closing Company Initiating Contact (continued)

2. Check on the title process weekly. If the closing company does not already have a status update procedure, use the Closing Company File Status Update form to communicate with and request feedback from the closing company. You will:

a. Update the template with your contact information, information on the property, and the closing agent’s name.

b. Fax this form to the closing agent, along with the introduction letter. Ask them to please use this form to provide you with weekly feedback.

c. Some of the items are verifying include:

The HOA Resale Certificate has been received (if required).

Home warranty ordered - if the buyer is purchasing a home warranty, get the appropriate forms filled out and submitted to the closing company.

Insurance information received - if the buyer purchases homeowner’s insurance, provide the name and number of the insurance agent to the closing company.

3. Call the closing company regularly during the last week to be sure that everything is going as planned. Confirm that the loan documents have been sent to the closing company by the lender and all signing appointments have been scheduled.

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Closing Company

Settlement Summary for Escrow

The Settlement Summary for Escrow introduces you to the closing company and gives the closing company a snapshot of the contract. Sending the closing company the Settlement Summary for Escrow ensures that you have effectively communicated with the closing company, as faxed copies of the contract may be difficult to read. If there is a Power of Attorney, be sure to include that. And, if the contract requires documents be mailed to the client, be sure to notify the closing company and the lender, as this may cause adjustments to the deadline dates.

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Closing Company

File Status Update

The Closing Company File Status Update can be faxed to the closing company, or used as a checklist when calling the closing company for an update on the file.

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Closing Company

Preliminary Title Report

The preliminary title report should be ordered and received within 10-15 days of the contract being accepted. The preliminary title report shows any outstanding liens, information regarding easements or encroachments, etc. It is important to carefully review the preliminary title report.

Key areas to check:

1. Homeowner’s Insurance Policy- this is the amount of insurance paid by the seller based on the sales price. (This is different that the Lenders Insurance Policy paid by the buyer based on the new loan amount.)

2. Outstanding liens- if this is your seller, explain that all outstanding liens should be paid off before closing, or the closing may be delayed and their net amount from closing may be less.

Now is the time to be proactive. If the seller has a common name (example John Smith), check with the tax office and confirm that the tax lien really belongs to the seller.

Exercise

Directions: Review the Title Policy in your Sample Closing Packet for liens, easements or judgments.

Time: 20 minutes

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Closing Company

Payoffs, HOA Information and Other Charges

Payoffs

When representing the seller, as soon as you have a listing contract, review a preliminary payoff. This can usually be done quite easily by calling the automated account information at the seller’s mortgage company. Once an offer has been accepted, the title company will ask for an actual payoff statement. Have the title company send you a copy of the payoff immediately. Confirm that there are no prepayment penalties, HELOC balance, etc. Confirm that there isn’t anything outstanding that will affect the seller’s net amount or affect the closing in any way. Have the seller review the payoff information to confirm it is accurate.

Home Owner Associations (HOA)

If there is an HOA, you must give the title company the full contact information (some states have mandated deadlines as to how quickly the buyer receives the information regarding the Home Owners Association). The HOA must also provide financial reports to the buyer. Confirm that there are not any assessments or fees (fines that may have been charged to the seller). These can get in the way of the closing.

Other Charges

Be sure to review the Preliminary Title Policy for any outstanding charges such as tax liens, judgments against the property, etc. Should you find a lien on the preliminary title report, confirm the charge belongs to your client. You should first provide the party’s social security number to the title company to be sure the charge belongs to your client. If it does not, the title company will prepare a “Not One in the Same” affidavit.

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Lender Initiate Contact

The amount of required contact with the lender will vary based on the status of the buyer when they enter into an accepted contract. It is recommended that you only work with buyers that are at least Prequalified, preferably Pre-Approved.

Prequalification—a preliminary determination on whether a prospective applicant would likely qualify for credit, or for a determination on the amount of credit for which a prospective applicant would likely qualify. BEWARE- this is based solely on the verbal information the buyer has given to the lender!

Pre-approval—a written commitment issued as a result of a full review of the credit worthiness of an applicant, including verification of income, resources, etc. This is also known as a conditional loan approval (CLA). Conditions may be a final verification of income, resources, etc, acceptable title insurance binder, clear termite inspection, etc.

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Lender

Introduction Letter

You want to establish communications with the buyer’s lender as soon as the lender is identified.

1. Fax the contract and an introduction letter to the lending agent using the Lender Introduction Letter. You will:

2. Follow up with an introductory fax or call to the lender to review the basic information regarding the buyer’s loan using the Lender File Status Update.

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Lender

File Status Update

The Lender File Status Update can be faxed to the buyer’s lender or used as a checklist when calling the lender for an update on the file.

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Lender

Loan Officer vs. Processor

While working with the lender, you may find your self talking with the loan officer and/or the processor. The loan officer and processor work together as a team.

The loan officer works with the buyer as they complete their application. The loan officer also helps the buyer determine which loan program is right for them.

The processor is responsible for gathering and verifying the information required for approval. When requesting an update form the lender, most of the time you will be contacting the processor.

So, who do you contact?

For day-to-day questions (such as “has the appraisal been completed”) contact the processor.

For more in-depth questions such as locking in an interest rate, changing loan programs or qualification problems, talk to the loan officer.

NOTE: As part of your fiduciary responsibility to the seller, you should be regularly following up on the buyer’s loan approval process to determine if there are any potential issues that will delay closing. Who you will follow up with will vary from transaction to transaction—based on whether or not the buyer has given you permission to speak directly with their mortgage company. This authorization should be included in the contract or on an addendum. If you do not have permission to speak directly with the mortgage company, you should direct all inquiries to the buyer’s agent. Otherwise, you may follow up directly with the lender.

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Client Initiating Contact

Whether you are the buyer’s agent or seller’s agent, communication is the name of the game. It will be up to you to educate your client about the process, remind them of deadlines and their contractual obligations.

Check Point

How many closings does your office have in a month?

1-5

6-14

15-20

21-35

36-50

More than 50

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Client Initiating Contact (continued)

Prepare a closing packet for your client containing:

1. Buyer/Seller Closing Introduction Letter* – This letter identifies important dates, such as the inspection deadline and loan application deadline, that the client needs to be aware of, introduces you, the Transaction Coordinator, and explains your role in the contract to close process.

2. Closing Department Newsletter for Buyers/Sellers – This newsletter answers some common questions that buyers have about contract to close in addition to preparing them for some of the final steps that they will be necessary in order to get the keys to their new home.

3. Copy of the contract.

4. Service Provider List - A list of your preferred third-party vendors (mortgage company, title company, etc.) whose services you recommend to your clients.

5. Ways to Communicate* – A form that assists you in establishing your communication expectations with the client. Ask the client to fill in their communication expectations (how often they expect to hear from you). They will return the form to you in the Self-Addressed Stamped Envelope.

6. Self-Addressed Stamped Envelope (for the client to return the Ways to Communicate).

7. Large envelope with an ‘Urgent’ label. (Everything that is sent to the client will be sent in this ‘Urgent’ envelope).

8. 2 business cards.

*Examples of these forms appear on the following pages. Source documents can be found in the MREA Operations Manual.




Closing Introduction Letter

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Ways to Communicate

The Ways to Communicate form is a great way to set expectations for your client, and to determine what expectations your client may have of you. Have your client complete this form and return it to you in the enclosed self-addressed stamped envelope.

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Affiliated Business Arrangements

If you have partial ownership/financial interest in the mortgage company, title company, or any vendor the buyer or seller may chose to work with, verify that the Affiliated Business Arrangement Disclosure form has been signed by the buyer and it is in their file.

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Client

Additional Buyer’s Items

1. Home & Termite Inspection Notification – This form will be completed by the buyer to indicate their preferences with regards to the Home and Termite Inspections. For more information on this form, refer to Chapter Four: Tracking.

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Client Additional Buyer’s Items (continued)

2. Buyers Estimated Charges worksheet. This form shows the buyer the potential costs that they may incur. This information needs to be communicated to the buyer. However, you may choose to refer them to their lender, rather than providing this information yourself. If you choose to refer them to their lender, make sure you let the buyer know that they should contact their lender for a list of potential charges based on the type of loans available. If you choose to provide the information, update the Buyer Estimated Charges worksheet and include it in the Buyer Closing Packet.

Make sure the buyer understands that this is just an estimate.

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Client

Additional Seller’s Items

Seller’s Estimated Closing Statement. Make sure that the seller understands this is just an estimate. Using the numbers from the contract, create a new Seller’s Estimated Closing Statement (Net Sheet). Make sure the seller understands their repair limits. Please verify with your Team Leader that the form complies with your state’s regulations.

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Client

The Buyer Folder When the Buyer Specialist turns in the paperwork, it will be in a manila folder. The Parties of the Sale, Contract Worksheet, and Contract Checklist should be included. Take the paperwork out of the manila folder, and place it in the appropriate order (as illustrated on the next page) in a blue classification folder with 2-dividers/6 partitions.

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Front Section Middle Section End Section

Left-Side-CONTRACT

1. Parties of the Sale

2. Contract with all counters and addenda (most current on top)

3. All contractual disclosures (agency, lead based paint, seller disclosure, etc.)

4. Finalized Inspection Form* with signed seller’s response with Inspection report

Right-Side-LISTING

1. Contract Worksheet

2. Greensheet

3. Contract Checklist

4. MLS translate

5. Assessor’s info

6. Public Record

7. Survey

*Note: Your State may have an Inspection form that is required and considered part of the contract. If not, replace this with the Home Inspection Agreed Upon Repairs.

Left-Side-LENDER

1. Intro Letter

2. Lender File Status Updates

3. All fax cover sheets showing transmittal to lender

4. Conditional Loan Approval letter

Right-Side-ESCROW

1. Settlement Summary for Escrow

2. Closing Company File Status Update

3. Earnest money receipt

4. Preliminary title report/title commitment

5. Payoff information

6. HOA information

7. Termite report

8. Copies of invoices (receipts for repairs) submitted to escrow

9. Copy of Disbursement Authorization (DA)

10. Pre-audit HUD-1

11. Final sales paperwork (HUD-1, copies of checks)

12. Mortgage Information Request letter (Estoppel)

Left-Side-AGENT CORRESPONDENCE

1. Any correspondence with the cooperating agent.

Right-Side-CLIENT CORRESPONCE

1. Any correspondence with the buyer. Includes:

a. File Notes

b. Ways to Communicate



Client

The Seller Folder When the Listing Manager turns in the paperwork, it will in a 2-divider/6-partitions classification folder (listed on the next page). The Parties of the Sale, Contract Worksheet, and Contract Checklist should be included. At that point, all of the documentation will be in the front section. You will need to move documents out of the front section as needed to the Middle and End sections of the folder:

Front Section Middle Section End Section

Left-Side-CONTRACT

1. Parties of the Sale

2. Contract with all counters and addenda (most current on top)

3. All contractual disclosures (agency, lead based paint, seller disclosure, etc)

4. Finalized Inspection Form* with signed seller’s response with Inspection report

Right-Side-LISTING

1. Contract Worksheet

2. Greensheet

3. Contract Checklist

4. MLS translate

5. Assessor’s info

6. Public Record

7. Survey

*Note: Your State may have an Inspection form that is required and considered part of the contract. If not, replace this with the Home Inspection Agreed Upon Repairs.

Left-Side-LENDER

1. Intro Letter

2. Lender File Status Updates

3. All fax cover sheets showing transmittal to lender

4. Conditional Loan Approval letter

Right-Side-ESCROW

1. Settlement Summary for Escrow

2. Closing Company File Status Update

3. Earnest money receipt

4. Preliminary title report/title commitment

5. Payoff information

6. HOA information

7. Termite report

8. Copies of invoices (receipts for repairs) submitted to escrow

9. Copy of Disbursement Authorization (DA)

10. Pre-audit HUD-1

11. Final sales paperwork (HUD-1, copies of checks)

12. Mortgage Information Request letter (Estoppel)

Left-Side- CORRESPONDENCE 1. Any correspondence with

the cooperating agent.

Right-Side- REJECTED OFFERS 1. Any correspondence with

the buyer. Includes: a. File Notes b. Ways to Communicate



Vendors Throughout the process, as a contract moves towards closing, there will be various individuals you will be working with.

If there is a Home Owner’s Association, you will be contacting them to transfer any documents from the Seller to the Buyer. As the buyer’s agent, you will be working with insurance companies as the buyer secures the necessary insurance policies.

During the inspection period, you will be working with inspectors and contractors as repairs are done. As a proactive measure, you may want to have the contractor attend the inspection.

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Chapter 4: Tracking


[1] Create your system for tracking the loan process [2] Track the appraisal [3] Track inspections [4] Negotiate Repairs

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The Loan Process Request for Update

One week after the contract has been accepted, request an update from the lender using the Lender File Status Update. Until the loan is approved with no conditions, call the lender weekly. You are verifying the status on:

1. Credit—Is the credit approved? Are there any conditions the borrower still has to meet? Is there any concern with the buyer meeting these conditions? Are there any specific issues to be aware of?

2. Appraisal—Has the appraisal been ordered? Has the appraisal been received? What is the result of the appraisal? What is the appraised value? Are there any required repairs (specific to FHA/VA loans)?

3. Survey—Has the survey been authorized and approved by the lender?

4. Title Work—If the lender mentions having problems getting the title work from the closing company, offer to help.

5. Buyer’s Insurance—Has the buyer’s insurance been secured and provided to the lender?

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The Loan Process

Loan Approval

There are three main steps to the buyer obtaining a loan approval.

1. Loan Application- The buyer must have completed a loan application with the lender within the time period allowed per the contract. Write the date that the loan application is complete by the buyer and submitted to the lender on the Contract Worksheet.

2. Loan Commitment- The lender must be able to issue a loan commitment letter (Conditional Loan Approval) stating that the buyer has been approved for financing, and note any conditions to the loan commitment. The conditions should be normal conditions, i.e., proof of insurance, title commitment, etc. Any out of the ordinary conditions should be questioned and may not constitute a true loan commitment.

3. Final Loan Approval- Final loan approval comes from the underwriting department after all conditions have been met and all requirements are in, such as verification of employment, verification of deposit, review of tax records, etc. Check off when final approval is given by the lender on the Contract Worksheet.

As the seller’s agent, you will be notified during the initial contract negotiations as to what type of loan the buyer selects. If the loan type is FHA or VA, the lender may require certain inspections. Provide this information to the seller, and make sure the inspector has access to the property.

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The Loan Process

Submission to Underwriting

Before a buyer is approved for a loan, their loan application and various other information, as determined by the lender (bank records, inspection information, appraisal information, etc.) is submitted to the lender’s underwriting department.

Using the guidelines set forth by the investor, the underwriting department will determine the final loan approval and any conditions.

If you are using an electronic agent program, you will receive a script 10 days before closing to contact the lender and confirm they have everything they need to submit to underwriting. You want to update the Contract Worksheet with the date of the underwriting approval.

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The Loan Process

Loan Documents

Once the loan has been approved by underwriting, confirm that the Loan Documents have been ordered. These documents include:

1. The Good Faith Estimate

2. Truth in Lending

3. Deed of Trust

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The Appraisal An appraisal is an estimate of a property's value as of a given date, determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property's ability to produce income.

Check Point

Is an appraisal the same thing as an inspection?

Yes

No

Conventional vs. FHA/VA loans: Conventional loan appraisals do not include repair issues. FHA/VA loan appraisals include a minimal inspection along with the appraisal. An FHA/VA appraiser may call for items such as a clean termite inspection, flat roof inspection by a home inspector or a licensed roofer, shingle/tile roof to have at least two to five years of useful life, repair of peeling or chipped paint, removal of lead paint, etc. If repairs are required, a final inspection prior to closing may be required and there may be a fee.

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Once you know when the appraisal is occurring, contact the seller’s agent and make sure that the seller knows when the appraiser will be coming out to the house and that the appraiser will have access to the house.

Chapter 4 Tracking


The Appraisal

Once the Appraisal has been completed:

1. Once the appraisal has been completed, find out the appraised value of the property and record it in the Deadlines Per Contract section of the Contract Worksheet. Discuss the appraised value with the buyer. Make sure it is in line with the sales price.

2. If a house appraises below the sales price, renegotiation needs to take place. The buyer can:

Agree to pay the sales price originally agreed upon, and bring the additional funds needed to closing,

The price can be reduced to the appraised value, or

The difference can somehow be split between the buyer and seller.

The renegotiation is the responsibility of the agent, and they need to be informed as soon as possible.

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Inspections Home and Termite Inspection Notification There are 2 main types of inspection:

1. Home Inspection- an inspector determines if the house is structurally sound, roof in good condition, appliances work, heat and air conditioning work, etc.

2. Termite Inspection-A visible check of a property for the presence of termites. Usually performed by a licensed exterminator. Requests for termite inspections will depend on the contract terms and financing requirements.

If the buyer requests an inspection, they will complete the Home & Termite Inspection Notification that was mailed to them in the Buyer Closing Packet.

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Inspections

Home Inspections

The buyer can ask for an inspection of the property. It is important for the buyer to understand the importance of a Home Inspection. The inspection must be completed within the inspection period, otherwise the buyer waives all rights to ask for any repairs.

Before the inspection period begins, the seller needs to be aware of their repair limits.

The buyer has the option to decline an inspection or—if the inspection is completed—they may choose to negotiate repairs, amendments to the contract, or withdraw.

Once the buyer has requested an inspection, provide them with a list of home inspectors that you feel comfortable recommending to your clients. Include the company name, phone number and whether the company has Errors & Omissions (E&O) Insurance and/or is a member of the American Society of Home Inspectors (ASHI).


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Inspections Home Inspections (continued)

The buyer is responsible for scheduling the home inspection within the inspection period. The earlier the inspection is scheduled the better.

If the buyer prefers you to make the appointment, have the buyer sign a waiver. If you don’t, you could be held liable for the results or lack of findings of the inspector.

1. Make sure that the buyer knows to contact the Closing Department with the time and date of the inspection.

2. Follow up with the buyer within 24-48 hours if the buyer has not called with the inspection details.

3. Call the seller’s agent and inform them of the inspection date and time. Make sure that the Inspector will have access to the property.

4. Once the inspection report comes in, contact the buyer and schedule a time to review the report.

5. Review the report with the buyer. Make sure that the buyer understands the repair limits based on the contract they are using. Repair limits may be based on a percentage of the sales prices and there may be a cap to the amount the seller is willing to pay. The seller is only obligated to repair warranted items or provide treatment/repairs up to these repair limits. Let the buyer know that they can get bids on the items they would like repaired, or you can get the bids for them. (This step may vary from state to state, check with your team leader for state specific guidelines.)

6. If the contract is contingent upon the satisfactory results of the home inspection, the buyer must decide whether to proceed with the transaction to purchase this home. The seller’s agent is to be notified within the time period allowed per the contract as to whether the buyer chooses to remove their inspection contingency and have the seller agree to complete certain repairs, or not to proceed and withdraw from the contract.

Chapter 4 Tracking


Inspections

Accepting the Inspection

Accepting the Inspection

If the buyer accepts the inspection as is and does not require any repairs, prepare a Home Inspection Acceptance addendum.

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Inspections

Requesting an Extension

If the buyer needs more time to complete the inspection, call the seller’s agent and see if the seller will agree to an extension. If all parties agree to an extension, complete a Home Inspection Extension addendum, get it signed by all parties and include it in the paperwork with the contract. Check with your Team Leader regarding any State specific forms.

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Inspections

Requesting Repairs

If the contract is not contingent upon the satisfactory results of a home inspection, the buyer must decide if they want to ask the seller to fix anything. The seller’s agent is to be notified within the time period allowed per the contract as to whether the buyer chooses to request that the seller have certain repairs completed or ask for no repairs. If the amount of the repairs exceeds the limits allowed for in the contract, the seller can pay the overage, the buyer can pay the overage, or the buyer and seller can come to an agreement on how to split the difference. If an agreement cannot be reached on how to cover any overage amounts, either party can cancel the contract.

If there are certain repairs where only a licensed/bonded contractor is acceptable, indicate so in the list of repairs.

If the buyer has asked the seller to complete certain repairs in order to proceed with the purchase, and negotiating will not be completed within the inspection period, then the buyer still has the right to walk away from the contract as long as the initial response to the seller was completed within the time frame allowed per the contract.

If you are the seller’s agent, have the seller fax or mail you a copy of all receipts for repairs. Provide the closing company with copies and keep copies in the seller’s folder.

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Inspections

Negotiating Repairs

When negotiating repairs, you will use many skills such as

• customer service

• empathy

• selective agreement

• problem solving

Negotiating repairs comes down to options for both the seller and the buyer. This is a critical time during Contract to Close. If a contract is going to fall apart, more than likely, it will be during this period of repairs.

Exercise

Directions: Now it’s your turn to negotiate repairs. Your instructor will present two different case studies. With the person next to you, create a script for negotiating the repairs.

Time: 30 minutes

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Inspections

Negotiating Repair Amendments

If the seller chooses to negotiate repairs, they may opt to have a licensed professional provide them with estimates. The seller will determine which repairs they will and will not agree to and will prepare and fax to you the response from the seller (see Home Inspection Repair Response by Seller Addendum).

Back and forth negotiations may occur several times until the buyer and seller either reach an agreement or the contract is cancelled because no agreement can be reached.

Seller Repair Limits

When an offer is made on a property, occasionally the seller will negotiate repair limits within the purchase contract. This occurs when a property is considered a “fixer upper”. Most of the time, the repair limits will be set after the inspection is complete and when the repairs are being negotiated.

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Inspections Negotiating Repair Amendments (continued)

Agreed Upon Repairs

Once an inspection addendum and inspection report are presented to the seller’s agent, the seller will either agree to all of the repair requests and sign off on the Home Inspection Repair Request addendum, or they will choose to negotiate the repairs. Once an agreement is reached, the buyer’s agent will prepare the Home Inspection Agreed Upon Repairs addendum.

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Inspections

Scheduling Contractors

Be sure to request contractors who are licensed and bonded. This will protect the agent from future litigation. Ask that all receipts and work orders be forwarded to the closing company. The originals should be given to the buyer at the time of closing.

Chapter 4 Tracking


Inspections

Credit in Lieu of Repairs

Agreed to repairs will either be repaired prior to closing, money will be held in escrow at closing for repairs to be completed after closing, or credit is given to the buyer at closing in lieu of repairs. If a credit is being given to the buyer in lieu of any repairs, it can be shown one of three ways:

1. A lump sum credit on the HUD (used most often in cash sales).

2. The sales price can be reduced by the amount of the credit.

3. The seller can pay the buyer’s closing costs for the amount of the credit.

Check with the lender to see how they would like it to show on the closing statement.

In each of the three cases, there are specific forms that need to be executed to make sure the information is appropriately documented. These three forms appear on the next pages.


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Inspections Credit in Lieu of Repairs (continued)

Lump Sum Credit

When a lump sum credit is given to the buyer, complete the Lump Sum Credit Addendum. Some lenders will not allow for a credit, so be sure to verify this with the lender.

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Reduction of Sales Price

When there is not time to complete the repairs, and the lender will not allow a lump sum credit, the seller may choose to reduce the sales price.

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Closing Cost Credit

The seller may also choose to pay a closing cost credit. There are a few things to check with this option:

• Confirm this option is acceptable with the lender and that the amount does not exceed the amount of closing costs allowed for the buyer’s loan program.

• If the seller was already paying closing costs for the buyer, it may not be possible to increase the closing cost amount. In that case, the seller may need to lower the sale price.

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Inspections

Unsatisfactory Home Inspection

If the contract was contingent upon satisfactory results of the inspection, the buyer can back out of the contract during the option period (this may vary from state to state). If the inspection is not satisfactory, complete the Home Inspection Unsatisfactory addendum with the appropriate information and have the buyer sign it.

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Inspections Unsatisfactory Home Inspection (continued)

Escrow Release

Throughout the negotiation process, your job is to provide guidance and advice to your client, assist in gathering bids as necessary, communicate your client’s requests to the cooperating agent, and, if you are the buyer’s agent, prepare the final addendum once an agreement has been reached.

During negotiations for repair requests, if an agreement cannot be reached, the contract will fall apart. At that time, an Escrow Release will need to be prepared.

NOTE: Make sure that you begin the termination process 3 days prior to the end of the option period (this step may vary from state to state, check with your team leader for state specific guidelines).

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Inspections

Termite Inspections

The buyer is given the option of ordering their own termite inspection or having you order it for them. If you will be ordering the inspection for the buyer, they must indicate so on the Home & Termite Inspection Notification form.

The specifics for ordering a termite inspection vary based on the contract terms and financing as outlined below:

1. Cash Sale: If the buyer is paying cash for the property, they should be given an option of having a termite inspection or not.

2. As Is Sale: If this is an “as is” sale, a termite inspection should be completed within the initial inspection period. This type of a sale may not apply in your state, check with your team leader for state specific guidelines.

3. Financing: FHA/VA loans require a clean termite inspection for closing while conventional loans may or may not require a termite inspection for closing. Termite inspections required by a lender must be no more than 30 days old for closing*.

4. Inspections Done Early: If any inspection is completed early in the contract pending process and is more than 30 days old, it should be updated prior to closing*.

5. Condominiums: Typically a termite inspection is not a requirement of the lender (or not required if paying cash) with regard to condominiums. However, you should let the buyer decide. If information is received from the association or management company about any warranties or inspections, present the information to the buyer so that they can make a more informed decision.

6. Financing Issues: If there are any financing problems, hold off on ordering the termite inspection until the financing issues are worked out. You don’t want to incur any costs for the buyer if the property will not close. If you are within a week of closing and financing issues are still being resolved, the buyer should be advised that a termite inspection needs to be ordered if they are to close on time.

*However, if the termite report is part of the inspection period, then get a written extension for the Termite Inspection if you still want the option of backing out of the contract based on the results. Check with your Team Leader for your State specifics on inspection guidelines. Some states may have stricter policies governing when a buyer can cancel their offer.

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Inspections

Post Termite Inspection

1. Once the termite report is completed and received:

a) Make sure that the report is faxed to the lender (depending on your state, this may be done by the closing company. If it is not, when you are representing the buyer’s agent, you will fax the report).

b) Provide a copy of the report and invoice to the closing company. If there is any damage or live termites found, also fax a copy to the seller’s agent.

c) Make sure that the buyer is familiarized with the report. The buyer should know everything that is contained within the termite report, including evidence of past infestation, areas that could not be inspected, and areas with extensive moisture.

2. Make sure that your buyer is aware of what the contract stipulates in regards to the treatment of live termites and what the repair limit is, should live termites be found. If treatment and repairs exceed the limit per the contract, the seller or buyer can pay the overage, or they can agree on how to split it.

3. The seller’s agent will present the results of the inspection to the seller, who will arrange for repairs and/or treatment to be done. If the seller’s property is under warranty for termites and live termites are found, the seller will contact the termite company to retreat the property.

Chapter 4 Tracking



86

Chapter 4 Tracking






87

Final Details Chapter 5



Chapter 5: Final Details


[1] Handle the final details before closing [2] Define the funding and recording process [3] Implement the post-closing process

Chapter 5 Final Details


Before Closing What are the Final Details?

During your weekly calls with the seller (if they are your client) or the seller’s agent, find out when they are planning to move out of the property, if they haven’t already.

There are just a few details left such as:

1. Inviting your client to the closing

2. Key transfer

3. Checking insurance information

4. Making sure the utilities are transferred

5. Doing a final walk-through

6. Tracking the funding and recording.

Once the closing has taken place, it’s time to close out the file and launch any follow-up marketing plans.

Check Point

True or False: Every successful person became that way on their own.

True

False

89




Before Closing What are the Final Details? (continued)

You will work with the cooperating agent and the closing company to schedule the closing. Prepare and send your client a Closing Invitation. (Note that the recommended form for a closing invitation is on 5½ x 8½ cardstock, folded with an appropriate title on the outside. The inside is reproduced here and on the following page.

Buyer’s Closing Invitation

90




Before Closing What are the Final Details? (continued)

Seller’s Closing Invitation

91



Before Closing

Keys, Insurance and Utilities

Prior to the closing, the seller should gather all of the keys (house keys, mailbox keys, etc.) and have them together on the counter for the buyer. If the lockbox is still on the property, all keys can be left in the house. If the lockbox has been removed, advise the seller to bring one key to the closing office.

The buyer’s insurance company will contact the title company with information regarding the insurance, if the insurance is escrowed. The buyer will also provide proof of insurance at the time of closing. If you are representing the seller, stress the importance of not canceling the insurance policy until after the closing.

The buyer should be provided a list of the names of the utility companies used by the seller. Coordinate with the cooperative agent regarding the transfer of the utilities. Your goal should be to have the sellers turn off the utilities the same day that the buyers turn on the utilities.

Seller Leaseback

Occasionally, due to the pending closing of the seller’s new house, the seller may “lease back” the current property. The seller will remain in the property after the closing and pay rent to the buyer. The lease rate is usually equal to the P&I and any escrow (taxes and insurance). There may be an extra provision for “wear and tear” during the time the seller stays in the house.

During a leaseback, the buyer still must secure insurance for the property. The seller would then secure a renter’s insurance policy, and transfer of utilities would occur at the end of the leaseback agreement.

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Before Closing

Check Paperwork

The Pre-audit HUD-1

Prior to the closing, review the pre-audit HUD-1. Check EVERYTHING! Review each line of the HUD-1 and using the Contract Worksheet, confirm the charges and credits to your client are reflected accurately.

The Home Warranty

Usually a 12 month Home Warranty policy is placed on the property. Check with your Team Leader as to your office policy for who orders the Home Warranty.

Make sure the Home Warranty is ordered.

Make sure the buyer understands what is covered and ask if they want to purchase additional coverage.

Exercise

Directions: Review the HUD-1 in your Sample Closing Packet. Compare the HUD-1 to the Contract and DA to confirm accuracy.

Time: 30 minutes

93



Before Closing

Signing, Walk-Through and Completed Repairs

As soon as you know the Loan Documents have been received by the closing company, notify the buyer specialist and have them schedule the walk-through and signing (closing).

If the walk-through does not occur on the same day as closing, it should occur 1-2 days prior to the signing (closing). The buyer cannot raise any new issues at this time. This is strictly for making sure that any agreed upon repairs were completed and all warranted items are still in working order (except in the case of “as is” sales) and that the home is in the same condition as when they wrote the offer. Make sure that the utilities are still on for the walk-through and that the seller is aware of the time of the walk-through.

If the buyer is unable to verify on his/her own if a repair was completed, they can have their inspector come back to check the repairs.


94



Before Closing Signing, Walk-Through and Completed Repairs (continued)

Repairs Completed

If the buyer determines all of the repairs have been completed, have them sign a completed Buyer Walk-through Acceptance form.

95



Before Closing Signing, Walk-Through and Completed Repairs (continued)

Repairs not Completed

If, during the walk-through, the buyer determines that the repairs have not been successfully completed, you will need to contact the seller’s agent. Since the walk-through occurs anywhere from just a few hours to 1-2 days prior to closing, there will more than likely not be time to get the repairs made. The best way to handle this is to either follow up on repairs with the selling agent 1-2 weeks prior to the closing, or negotiate to get the seller to provide monetary compensation in lieu of repairs.

If the seller agrees, prepare the Final Walk-Through Concessions addendum. Make sure you get a copy of the addendum signed by the seller.

96



Funding and Recording Once the closing has taken place, the signed documents are forwarded to the lender and recording office. As soon as the closing company confirms funding, the recording office will be notified. When the documents are recorded, the keys will be transferred to the buyer. At that time, the loan will be funded, and the loan documents sent to the proper offices for recording.

97



Funding and Recording

Moving Day!

At or before at the closing, have your client complete the Staying in Touch form. This will allow you to quickly and easily update your CMS after closing. As part of exceeding your client’s expectations, provide lunch on your client’s moving day.

98



After Closing Close the File

The closing has taken place, the loan has been funded and documents recorded. It’s time to wrap up the file. Now is the time to clean up the CMS, update addresses and add any final details of the sale. If it’s your listing update the databases and close out marketing. Don’t forget to launch follow-up plans and programs.

If you are using a CMS, it is incredibly important to properly “tag” your clients in your database. We recommend “Past Seller 2004” or “Past Buyer 2004.” Your database is effective only if you can identify your clients for target marketing. For example- you want to send out a Market Watch letter alerting all the buyers you sold to 2-4 years ago that interest rates have dropped…can you find just those people in your database? If not, it’s time to rethink how you will tag your clients. Be creative and think outside the box. It is difficult to imagine today, the kinds of marketing you will do in the future.

99



After Closing

Complete the File

Within 24-48 hours of closing, the closing company will deliver the checks (yours and KW’s), copies of the Disbursement Authorization (DA) and the signed settlement statement (HUD). Depending on the closing company, they may deliver all paperwork and checks to you or they may deliver your set of paperwork/checks to you and deliver the paperwork/checks for the KW office directly to the office. Verify how the closing company you work with handles paperwork and checks after closing.

Copies

You will need:

• 3 copies of the signed settlement statement (HUD).

• 2 copies of the MLS printout, after the MLS is updated.

• 3 copies of the KW check and 3 copies of your check/wire transfer.

• 3 copies of the Disbursement Authorization (DA).

100



After Closing

Seller’s and Buyer’s File

Once you have your copies, you will:

1. Add the original HUD statement, a copy of all checks/wire transfers, a copy of the MLS print out and a copy of the DA.

2. Strip out any unimportant papers- Keep the entire contract, Greensheet, check copies, HUD, anything signed by the seller and buyer, all faxed correspondence, and a copy of the CMS (but not all MLS printouts). Keep the MLS listing and tax records.

3. Write “S-month/year (of the closing)” for the seller or “B- month/year (of the closing)” for the buyer next to the name on the file tab.

4. Place the file in a closed file drawer alphabetically sorted by Seller or Buyer’s name. Keep the files until the filing cabinet becomes full (check with your Team Leader to see if there is a preferred specified time limit). When the filing cabinet becomes full, place all files older than the preferred time in a box and ship them to a designated off-site storage area.

HUD -1

When you receive the final HUD-1 from escrow, print a HUD-1 letter (dated January 1st of the following year). Sign it for your agent and handwrite “Have a Wonderful YYYY” at the bottom. Insert into an envelope, but do not seal or stamp. Place in alphabetical order in a drawer or box until the beginning of the year for mailing. Your HUD-1 letter should be generic enough to use for buyers or sellers. If you have a client with multiple transactions, at the closing of each new transaction, print the new HUD-1 and add it to previous ones. Think how appreciative your client will be if they have multiple HUD-1s and you send them all together!

101



After Closing

KW File

You will also need to provide some documents to the KW Office:

1. Include the KW check, copy of your agent’s check/wire transfer, MLS printout, copy of the DA, and a copy of the HUD statement.

2. Fill out the Post-Closing KW File form and attach it to the front of the file. Check off on the form that all items are included in the file.

3. Turn it into the MCA.

102



After Closing

Other Closing Paperwork

Closing Binder

If you are not using a Contact Management System, you should maintain a 3 ring binder of all closings for the year. Place a copy of the flyer and Greensheet in the closing binder.

Referring Agent

If another agent referred the listing, distribute the referral check along with a thank you note for the referral. If the agent is not with Keller Williams, you might also want to send some recruiting materials (such as your Market Center’s training calendar) as well.

Update the Contracts Pending Spreadsheet

During contract to close, you should have been maintaining the Contracts Pending Spreadsheet (see the following chapter for information on this spreadsheet). When a listing closes, go into the spreadsheet and bold the text for that listing. The listing should already be at the top of the spreadsheet, since it is sorted by closing date.

Leave the listing on the spreadsheet for one week. Include it in the printout for your weekly team meeting. After one week, delete the closing list from the spreadsheet.

Commission Check

Make sure the commission check is received from the closing company, the amount is properly recorded in the accounting software, and the check is deposited.

103



After Closing

Update Databases

Now that the sale is complete update:

1. MLS

2. Contact Management System (CMS)

3. Interactive Voice Response (IVR) System

MLS

Seller’s Agent- As the seller’s agent:

1. Change the status to “Sold”. You will need the buyer’s agent’s license number or MLS ID, and the closing statement.

Buyer’s Agent- As the buyer’s agent:

1. Confirm the proper credit was given in the MLS. If not, follow up with the cooperating agent.

2. If the property was new construction or FSBO, load the information into the MLS (if this is permitted by your local Board of Realtors).

104




After Closing Update Databases (continued)

CMS

For both buyers and sellers:

1. Update their record with their new address and phone number and mark them as “past client”.

2. Add the year of the closing so that you will be able to pull out all of the closings for the year when you are ready to mail out the HUD statements.

3. Update the record for the “orphan” client (if you did not represent the client on the other side of the transaction).

4. Update the record for the cooperating agent. If they are not with KW, add the source as a recruit.

IVR System

If it was your listing and you use an IVR System, follow the instructions from your IVR provider to remove the listing from the system.

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After Closing

Close-Out Marketing

As the seller’s agent, close-out the marketing for your listing.

1. Remove the Lockbox

2. Remove “Sold” and “For Sale” signs

3. Remove the listing from all of your websites

4. Remove the listing from any and all magazines and newspapers in which you advertised the listing.



After Closing

Follow-up Marketing The last thing to do is launch your post-closing marketing plan, including:

1. Moving Day Gifts or Events (see Stay in Touch form on page 98)

2. Just Sold! Postcards

3. Post Closing Communication Plan

4. HUD Statements for Tax Purposes

5. Post Closing Marketing Plan

Just Sold! Postcards

Many agents give a lot of credit to Just Sold Postcards to obtain new listings. Even if it wasn’t your listing, you can send the Just Sold Postcards when representing the buyer.

Post Closing Communication Plans

The next year is critical for cementing the relationship with your client and insuring that when they think of real estate, they think of you. Here are a few ideas on how you can stay in touch with your client. Use the Buyer or Seller Post-Closing Communication Checklist to guarantee that you stay in touch.*

• Congratulations on the Purchase of your New Home or Congratulations on the Sale of your Home

• Satisfaction Survey—this should be sent out within one week of closing. It can be mailed out with the Congratulations letters, or mailed separately. Be sure to include a self addressed stamped envelope.

• Introduce the client to your Advocate Appreciation Program (Lead Generation).

• After a week, call the client and ask how they are doing or if they need anything.

• Over the next few months, call and touch base to make sure everything is ok and see how things are going.

• 365 days after closing, send a Happy Anniversary Letter.

• Update the contact information and move your client into the 33 Touch: Client for Life program.

*Forms referred to here can be found in the Forms Appendix of the MREA Operations Manual.




After Closing Follow-up Marketing (continued)

Orphan or Adopted Buyers

Check Point

You should only contact your own client out of courtesy.

Yes

No

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After Closing Follow-up Marketing-Adopted Clients (continued)

When you did not represent the buyer, they are considered an orphan buyer. Now is the time to create a relationship with that buyer, so that when they think of real estate, they think of you. Use the Orphan Post-Closing Communication Checklist to keep on track and stay in touch.*

• Orphan- Congratulations on the Purchase of your New Home

• Call and see how they are enjoying their new home. You can say “as the listing agent, I am very familiar with the property, and just wanted to see if you have any questions I can answer…”

• Send them a copy of your latest newsletter.

• Send a set of address labels with the Orphan Label Letter. To create address labels use your CMS (if this feature exists) or in Microsoft Word.

• Send out a marketing piece from your 33 Touch: General Program (Lead Generation)

• Send out the VIP Questionnaire

• Call and see how the family is doing

• Send another set of address labels

• Every other month, call and see how things are going.

• 365 days after closing, send the Happy Anniversary Letter.

• Update the contact information and move the client into your 33 Touch: Client for Life program (Lead Generation)

• Send them the HUD-1 letter at the beginning of the year.

*Forms referred to here can be found in the Forms Appendix of the MREA Operations Manual.




After Closing Follow-up Marketing (continued)

Post Closing Marketing Plan

Now that the property has sold, use this as a marketing opportunity.

1. Testimonials

If the client submitted a testimonial with their Satisfaction Survey, add the testimonial to your KW Website. Make sure you maintain a file of testimonials.

REMEMBER-

National Association

of Realtors says the

average homeowner

moves

approximately every

4 years…make sure

you stay in touch

regularly for at least

that amount of

time.

2. Newsletter

Add the sale information to your next Newsletter.

3. Advocate Appreciation Program

The Advocate Appreciation plan should be used for those clients in your inner circle who either have referred business to you or have committed to referring future business (Allied Resources, Advocates, and Core Advocates).

You must be systematic in your approach to rewarding a referral. There are three things to keep in mind when it comes to rewarding referrals:

1. Your rule of thumb should be: treat the referral source even better than the referral.

2. Show your appreciation at every stage of the transaction: when you take the referral call, when you meet with the referral, when you do business with the referral, and when the transaction is complete. The important thing is that you reward them right away, so that they repeat the behavior soon.

3. Reward the right behavior. Your sphere of influence isn’t in the business of screening clients before they refer them to you—the act of referral is what should be meaningfully rewarded. That is what you want them to do again and again.

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111

Making it Easier Chapter 6



Chapter 6: Making it Easier


[1] Identify tools to make managing the Contract to Close process easier [2] Leverage yourself in the Contract to Close

process



Tools Checklists

Through systematic checklists, you will be able to keep track of each task required as the contract moves towards closing.

These checklists include*:

• New File Processing Checklist (Buyers/Sellers) The New File Checklist for Buyer and the New File Checklist for Seller is a great tool when first creating the file.

• Closing Packet Checklist (Buyers/Sellers) When you use the Buyer Closing Packet Checklist and the Seller Closing Packet Checklist you will be confident that you are sending your client a complete package of information to ensure a successful closing.

• Contract Checklist The Contract Checklist is used when creating the Buyer or Seller Folder.

• Complete Post Closing Checklist After closing, use the Post Closing Checklist to complete the file process.

• Post-Closing Communication Checklist (Buyer/Seller/Orphan) When you use the Post Closing Communication Checklist for the buyer, seller or orphan, you can easily follow up with the clients on a regular basis. You can always enter the checklists into your Contact Management System as an action plan. The CMS will automatically launch mailings to the client or send you and your team reminder notices that it is time to contact the client.

• Exceeding Buyer/Seller Expectations Checklist MREA’s always Think Service. Use the Exceeding Expectations Checklist for buyers and sellers to put your name in their mind anytime they think of real estate in the future.

*Forms referred to here can be found in the Forms Appendix of the MREA Operations Manual. Examples of these are found on the next few pages. Note that not every form is included—where there are two forms, the sellers form has been illustrated.



Tools Checklists (continued)

New File Processing Checklist - Sellers

Complete ? Activity (forms) Assigned To

Receive Paperwork from Listing Manager

Contract Checklist should be turned in with the paperwork and includes a list of all required forms/documents. In addition, the Contract Worksheet and Parties of the Sale worksheet should be turned in with the pertinent contract information completed.

Immediate Processing Change the status in the MLS to Pending. Check Listing Agreement expiration date. Notify agent if an extension is necessary. Fill in the Closing Statement (HUD) Information section of the Contract Worksheet.

Update contact database to include co-op, lender, and closing company information in the notes section.

Add the closing to the Contract Department Calendar. Add the closing to the Contracts Pending Spreadsheet.

Update the Cash Flow Spreadsheet so that you know how much money will be coming into the team that month.

Make initial call to the seller introducing yourself:

Date & Time: _______________

Processing Review/Reorganize Seller’s Folder Print notes from contact database and include in the file. Initiate activities listed on the Contract Worksheet.

Give the Greensheet, Contract, and MLS Full Listing to the MCA and request the Disbursement Authorization (DA).

Fill in and fax the Settlement Summary for Escrow to the closing company. Calculate all deadlines, contingencies, repair limits, and closing costs

Prepare Seller Closing Packet:

Refer to Seller Closing Packet Checklist

Remove brochure box, if applicable.


Chapter 6 Making it Easier



Seller Closing Packet Checklist

116





Contract Checklist

117





Complete Post-Closing Checklist

118





Seller Post-Closing Communication Checklist

119





Exceeding Seller Expectations Checklist

120



Tools

Closing Department Calendar

If your office space allows, use a 4-month erasable calendar to keep track of closings and contingency deadlines. Write the closings in black and the major contingencies in red. Add the buyer or seller specialist initials for tracking.

1. If a closing date changes, you will need to move the listing to the appropriate date on the calendar.

2. Once a listing closes, cross through the information on the calendar. In the example on the next page, Smith/Jones has closed.

3. At the end of the month, all of the transactions for that month should be crossed through.

4. At the beginning of each month, update the calendar.

5. Erase all of the transactions for the month that just ended and add the new month in its place. (For this diagram, on August 1st, you would erase July and add November in its place.)

On the next page is a diagram showing the layout for your calendar and a sample.




Tools Closing Department Calendar (continued)

In the diagram below, bold text indicates ‘red text’—major contingencies.

MONTH: July

S M T W T F S

1

2

Smith/

Jones

9am KW

3 4 5 6 7

8

9 10 11

Clark Insp

12

Clark Walk

10am

13

14

15

16 17

Clark/

Adams

3pm RA

18 19 20 21

122



Tools

Contracts Pending Spreadsheet

One of your first steps on your New File Processing Checklist - Sellers should be to add the listing to your Contracts Pending Spreadsheet.

1. Fill in the appropriate information. The first row in the spreadsheet provides a sample of what to put in each column.

2. Sort closings by closing date.

3. If a closing date moves, make sure you update the spreadsheet, and sort again by closing date.

4. Include a copy of the spreadsheet weekly in your team meetings.

123



Tools

Cash Flow Spreadsheet

Part one of the one-page form is described below:

The cash flow spreadsheet contains a tab for each month of the year. The sheets are printed landscape on legal paper. Following is a snapshot of the first few columns of the sheet. Definitions for each column are as follows:

A. Closing Date: The date the listing will close. B. Closed & Funded: Put a ‘C’ in the column when the listing has

closed but has not yet funded. Once you receive the check from the closing company, check it against the spreadsheet and the Disbursement Authorization (DA). If everything is correct, put ‘C&F’ in the column.

C. Property: Record the property address. D. Comm. %: Record the commission % your team will receive on the

listing. E. Total Comm. $: Volume times Commission % for total commission

(in dollars) to be received. F. Proc. Fee: If you charge a processing fee (sometimes referred to as a

transaction fee), record the amount here. G. KW Fee: If your MC charges a processing fee, record it in this

column. H. KW Fee/BS: Use this section if you split the KW processing fee with

your Buyer Specialists. Use this field for your seller transactions only if you are also representing the buyer.

I. Buyer Agent $: Record the dollar amount received by the Buyer Specialist from the commission based on the split that they receive. Use this field for your seller transactions only if you are also representing the buyer.

J. Referral Fee: If the listing was received as a referral from another agent, record the referral fee paid in this column.

K. Prospect Agent: If you pay your Listing or Buyer Specialists a fee for prospecting (example: 10% for a come list me, 15% for a come list me that they negotiate, 25% for a self-generated lead, and 30% for a self-generated lead that they negotiate) then record the dollar amount for that fee in this column.




Tools Cash Flow Spreadsheet (continued)

Part two of the one-page form is shown below:

Below is a snapshot of the last few columns of the sheet. Definitions for each column are as follows:

L. Net MREA: Replace MREA with the primary agent’s name. Use this column to record the net take home to the agent after paying all fees.

M. Buyer Source: Record the lead generation source for the Buyer. Use this field for your seller transactions only if you are also representing the buyer.

N. Seller Source: Record the lead generation source for the Seller. O. Mortgage Company: List the name of the mortgage company. P. Closing Company: List the name of the closing company. Q. Volume: Record the sales price for the property. If the sales price

changes, you will need to update this field. R. Seller Units: Enter 1 for every seller unit. The number of units is

totaled at the bottom. This allows you to see the total number of seller units for the month at a glance.

S. Buyer Units: Enter 1 for every buyer unit. The number of units is totaled at the bottom. This allows you to see the total number of buyer units for the month at a glance.

T. Days on Market: Record the total number of days that the listing was on the market. This allows you to calculate, on average, how long it takes you to sell houses in your market.

U. Listing Agent: List the Listing Specialist’s name. V. Buyer’s Agent: List the name or company of the agent who

represented the buyer.



Tools Cash Flow Spreadsheet (continued)

126



Tools

Managing Changes

Many things can occur as you navigate the contract to close process. Closing dates may need to be moved, extensions may need to be filed, or the entire contract could fall apart. In order to provide fiduciary service to your seller, you need to understand the possible changes that can occur and how to respond. Below is a list of possible changes, along with the procedure or addendum to use in order to handle the change. You should work closely with the cooperating agent to determine which of you will prepare the addendum. Instructions for preparing each addendum follows.

• Closing costs added after contract

• Financing extension

• Assignment

• Extension to closing date

• Early closing

• Price Change

• Hold Harmless




Tools Managing Changes (continued)

Closing Costs Added After Contract Addendum

This addendum is used when the seller agrees to pay closing costs on the buyer’s behalf after the contract was negotiated. This usually takes place as a result of the seller crediting the buyer in lieu of repairs with regard to the home and/or termite inspection. Either you or the buyer’s agent can draft the addendum. Discuss this with the buyer’s agent. If you prepare the addendum:

1. Fill in the date, seller’s name, the buyer’s name, and the property address.

2. Enter the new amount for the sales price and the closing costs to be paid by the seller. Enter the original sales price.

3. Get the seller to sign and date the addendum.

4. Fax the form to the buyer’s agent. Follow up with a phone call to make sure the buyer’s agent received the addendum. Make sure you get a copy of the addendum signed by the buyer for the Seller’s Folder.

Financing Extension Addendum

This addendum is used when the financing commitment deadline is extended. Either the seller’s agent or the buyer’s agent can draft the addendum. Discuss this with the cooperating agent. If you prepare the addendum:


2. Enter the new deadline for financing commitment.


4. Fax the form to the cooperating agent. Follow up with a phone call to make sure the buyer’s agent received the addendum. Make sure you get a copy of the addendum signed by the buyer for the Seller’s Folder.





Assignment Addendum

This addendum is used when adding an additional buyer to the contract or assigning it to a different buyer. NOTE: If the second buyer doesn’t qualify, the Earnest Money is returned to the buyers.

Since this is a buyer-initiated step, the buyer’s agent should prepare the addendum. Once you receive the addendum, signed by the buyer:

1. Review it with the seller.

2. Get the seller’s signature.

3. Fax the signed addendum back to the buyer’s agent for their records. Retain a copy in the Seller’s Folder.

Extension to Closing Date Addendum

This addendum is used whenever the closing date is moved to a later date. Either the seller’s agent or the buyer’s agent can draft the addendum. Discuss this with the cooperating agent. If you prepare the addendum:


2. Enter the new closing date.


4. Fax the form to the cooperating agent. Follow up with a phone call to make sure the cooperating agent received the addendum. Make sure you get a copy of the addendum signed by the buyer and the seller for the client’s folder.





Early Closing Addendum

This addendum is used whenever the closing date is moved to an earlier date. Either the seller’s agent or the buyer’s agent can draft the addendum. Discuss this with the cooperating agent. If you prepare the addendum:

1. Fill in the date, the seller’s name, the buyer’s name, and the property address.

2. Enter the new closing date.


4. Fax the form to the cooperating agent. Follow up with a phone call to make sure the cooperating agent received the addendum. Make sure you get a copy of the addendum signed by the seller and the buyer for the client’s folder.

Price Change Addendum

This addendum is used when changing the sales price once both the buyer and seller have agreed to a new sales price. Either the seller’s agent or the buyer’s agent can draft the addendum. Discuss this with the cooperating agent. If you prepare the addendum:


2. Enter the new sales price.







Hold Harmless – Seller Staying Long Period After Closing Addendum

This addendum is used when the seller will stay in the property after closing. It needs to include the specific date and/or time that the buyer will take possession. This form is not to be construed as a lease agreement, so terms of payment from the seller to the buyer should be addressed in a separate document. Typically the seller pays rent per month at 1/12th of the buyer’s PITI. If closing date will change, include the new closing date. Either the seller’s or the buyer’s agent can draft the addendum. Discuss this with the cooperating agent. If you prepare the addendum:


2. Enter the date that the seller will move out and the date on which the buyer will take possession.





Leverage Yourself Is there anyway you can get someone else to do any of these pieces? You bet! Leverage yourself with your closing companies, lenders, etc. Here are some things that have worked for other agents:

• Closing Company sends you 3 copies of everything so that you have them for your files, and do not need to make copies yourself.

• Ask if the closing company is willing to order the Home Warranty.

• Set up a system of communication so that the lender faxes you updates every Monday morning so you don’t have to call.

• Have the closing company send out your intro letter.

Can you think of other ways to leverage yourself?

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MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. Evaluation


Chapter 7: Putting it All Together


[1] Complete your action plan.

MREA ADMIN: CONTRACT TO CLOSE V3.2 © 2004 KELLER WILLIAMS REALTY, INC. Evaluation

Action Plan We have now reached the end of this course! Before we conclude, take 15 minutes to develop your action plan for complete mastery of this subject matter.

1. Refer to the My Action Plan sheet located at the back of this manual.

2. Choose a peer partner and exchange contact information.

3. Use your My Scorecard sheet to review your weak topic areas.

4. In the “Big Rocks” column of My Action Plan, list the major areas in which you need improvement.

5. In the “Action Plan” column, list three to four specific tasks that you will complete to bring yourself up to a mastery level.

6. Under the “Accountability Date”, record the date your partner will call to check on your status.

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