ABCs of Title Commitment

A Commitment is a document the title company provides to all parties connected with a particular real estate transaction. It discloses the title of record to the property as well as all the liens, defects, burdens and obligations that affect the subject properties. It is comprised of four schedules.

Schedules A, B, C and D are as follows:

Actual Facts
Is the Who, What, Where and How Much section of the Commitment. You will see the names of the buyer, record owner (seller), a legal description of the property, the sales price and the name of the lender, if applicable. It is a good idea to double check this information with the contract.

Buyer Notification
This section lists the general and specific exceptions to the property. It will list
items such as survey matters, taxes, easements, setback lines and a variety of other items that will not be covered by the title policy. It is important to review and discuss any questions you have with your title company.

Clear in Order to Close
These items must be resolved in order to transfer title to the new owner. They might include such things as a mortgage that will be paid off at closing, liens for home improvements or unpaid taxes. All items shown on Schedule C should be discussed and resolved before the closing.

Disclosure
This section outlines the ownership of the title company and all the parties who will share in any part of the insurance premium collected to issue the policy. It includes underwriters, title agents and attorneys.

This information is not to be substituted as legal advice and is descriptive only. If you have any concerns about any portion of your title commitment or any portion of Schedule A,B,C, or D, please contact your attorney.

For a PDF version of the ABCs of the Title Commitment, click here.

 

 

 

May 2020 Stats Are In!

The May 2020 DFW area real estate statistics are in and we’ve got the numbers! Take a look at our stats infographics, separated by county, with MLS area stats on each county report as well! These infographics and video are perfect for social sharing so feel free to post them!

To see past month’s reports, please visit our resources section here.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Digital Resources for REALTORS® to Take Your Business to the Next Level

There’s a plethora of resources at your fingertips that can help you grow your business and be a better REALTOR® to your clients. Here are a few of our favorites and where to find them.

STATS, INFOGRAPHICS & MARKETING MATERIALS
RPR®
RPR, or Realtors Property Resource, provides REALTORS® with data. Easily search properties, create and send branded reports, and view local market statistics, anytime, anyplace. www.narrpr.com or the NTREIS dashboard

ListReports
Generate marketing materials for your listing including open house flyers, property reports, neighborhood demographics, infographics with local information & more. www.listreports.com

Breakthrough™ Broker
Brand professionally created infographics for real estate agents, as well as postcards, social media posts and other marketing materials. Breakthrough™ Broker also has lead generation strategies and business planning tools as well. www.breakthroughbroker.com

MarketViewer
A real estate market analytics portal exclusively for members of TAR where you have instant access to market stats across thousands of geographies in Texas. www.texasrealestate.com/members/research/marketviewer

NTREIS
NTREIS Local Marketing Updates/Reports and Monthly Market Indicators each month with information from the previous month. www.ntreis.net/resources/statistics.asp

NTREIS Trends
An interactive market analytics tool, based on MLS data. It allows the user to instantly access nearly any view of the local housing market, all with an immersive interface. NTREIS dashboard

Texas A&M Real Estate Center
Housing activity statistics from over 50 MLS systems in Texas, released monthly. www.recenter.tamu.edu

TOOLS FOR FARMING
REiSource®
Specializing in data mining and lead generation, REiSource® is a nationwide database tool that helps you narrowly focus your business contacts and leads as well as helps to identify your most viable prospects based on sophisticated search options. Contact Republic Title Business Development Rep.

Remine
Remine puts REALTORS® in the center of the transaction. Remine’s interactive map and data-based filters help REALTORS® quickly and easily find new leads, track current and past opportunities. NTREIS dashboard

Realist® Tax
Realist® from CoreLogic® is a public-record database that seamlessly integrates with MLS to provide in-depth property and ownership data, market information, street and aerial maps, as well as market trends to its users. NTREIS dashboard

SOCIAL MEDIA CONTENT
Canva
Easily create beautiful and professional designs and documents to use in your business for social media, email marketing and even postcards & flyers. www.canva.com

Ripl
Create branded videos and images in minutes, then instantly post to all your social media accounts at once. www.ripl.com

Planoly
Plan, edit, and schedule your social media content now so you don’t have to later. All the Instagram and Pinterest visual planning and management tools you need in one easy tool. www.planoly.com

Unsplash
With over 1 million free high-resolution photographs, Unsplash is the perfect place to start when looking for images to use in correlation with your social content. www.unsplash.com

Print Version

Texas Housing Insight – April 2020

Here is the April 2020 Summary from Texas A&M Real Estate Center.

Texas Housing

Total Texas housing sales declined 17.6 percent in April amid economic uncertainty surrounding the COVID-19 pandemic. Showings of homes for sale were not explicitly prohibited by the month-long statewide stay-at-home order, but potential buyers and sellers were certainly more reluctant to host and attend in-person tours and open houses. Nevertheless, demand remained stable as the average days on market slid to 57 days, although loan applications for home purchases decreased while lenders implemented stricter lending standards.

On the supply side, both housings starts and building permits plunged more than 20 percent despite construction being considered an “essential” business under the statewide mandate. Median home-price appreciation decelerated but remained positive as corroborated by the Texas Repeat Sales Home Price Index. The coronavirus outbreak is the greatest threat to the Texas housing market since the 1986-90 recession via disruptions to buyer and seller confidence, the negative income shock, and wariness of visiting and showing homes for sale. The Real Estate Center, however, projects the rate of decline in single-family housing sales will slow in May relative to April.

Supply*

Contemporaneous and anticipated construction activity continued to fall during the coronavirus-induced downturn. The Texas Residential Construction Cycle (Coincident) Index, which measures current construction levels, sank to its lowest reading since 2017 as industry employment plummeted. Decreased building permits and housing starts offset falling interest rates, pulling the Residential Construction Leading Index down to levels around those last seen in January 2007.

As economic uncertainty ramped up due to coronavirus concerns, single-family construction permits nosedived 22.2 percent. Nevertheless, Texas remained the national leader with Houston and Dallas issuing 2,829 and 1,856 nonseasonally adjusted permits, respectively, despite declining about 25 percent. Other locales registered more moderate decreases between 11 and 17 percent, but San Antonio permits fell for the sixth consecutive month to 632. Austin issued 1,618 permits, double the per capita statewide rate, while Fort Worth posted 1,002. On the other hand, Texas’ multifamily permits improved for the second straight month, increasing 16.1 percent.

Total Texas housing starts fell more than 20 percent to a year-and-a-half low as building activity slowed under social distancing rules. Meanwhile, single-family private construction values dropped 26.9 percent in April to a seven-year low after adjusting for inflation. Every major metro registered a steep decline, with San Antonio values contracting by a third. Houston’s metric sank 22 percent after flattening the previous month, while Austin and DFW values decreased for the second straight month. Single-family construction, however, is expected to rebound in the coming months as housing demand remains relatively stable.

The state’s supply of active listings fell to its lowest level year to date (YTD), offsetting plummeting sales and pulling Texas’ months of inventory (MOI) down to 3.4 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 (where four-fifths of total sales take place) slid to 2.7 months. On the other hand, luxury home inventory (consisting of homes priced more than $500,000) ticked up for the first time in eight months as falling sales outweighed a decline in the supply of active listings. So, despite falling sales, the overall market remained relatively tight and in short supply.

On the metropolitan level, the Houston MOI registered the greatest drop but remained above the statewide level at 3.6 months. North Texas inventory flattened at 2.7 and 2.5 months in Dallas and Fort Worth, respectively. San Antonio’s MOI increased slightly to 3.3 months, while Austin’s metric reached 2.1 months. Most of the expansion happened in the higher price ranges. 

Demand

With COVID-19 impacts well underway, total housing sales dropped 17.6 percent in April to their lowest level since 2015, decreasing in every price cohort. Homes priced less than $300,000, however, accounted for two-thirds of the decline, corresponding to the sales composition. Texas sales decelerated from a double-digit pace in the first two months of the year relative to the same period in 2019 to just a 1.5 percent clip when comparing the first four months of the year.

Sales activity in the Metropolitan Statistical Areas (MSAs) declined at a faster rate than the previous month, with Austin and Houston sales volumes falling by a fifth. Sales plunged 18.7 percent in DFW, largely due to decreases in the $200,000-$300,000 price cohort. San Antonio was the only major metro to not register reductions across the price spectrum as homes priced from $400,000-$500,000 reached an all-time high. However, the MSA’s total sales still slid 14.3 percent.

Despite massive layoffs across the state, housing demand remained healthy as Texas’ average days on market (DOM) extended a year-long downward trend, sinking to 57 days. Some of this resiliency may reflect disproportionate job losses occurring at the lower-end of the earnings spectrum which primarily consists of renter households. Austin’s metric slipped to its lowest level in five years at 47 days, while the San Antonio DOM inched down to 59 days. The average home in Houston sold after 59 days, stabilizing around its year-ago level. Demand softened slightly in North Texas as the DOM ticked up to 52 and 44 days in Dallas and Fort Worth, respectively but remained strong compared with the statewide average.

Ongoing concerns, such as the global coronavirus pandemic and critically low oil prices, pulled interest rates down in April. Both the ten-year U.S. Treasury bond yield and the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped to their lowest readings on record at 0.7 and 3.3 percent, respectively. Despite the former reaching a series low, mortgage applications for home purchases decreased for the third straight month plummeting 28.5 percent YTD amid coronavirus-related disruptions to the housing market and stricter lending standards. Applications to refinance home loans fell 13.2 percent in April but maintained positive YTD growth after doubling since year end in the first quarter. However, Center staff expects applications volumes to recover in the coming months assuming housing demand remains stable.

Prices

The Texas median home price flattened at $247,400, posting its lowest annual growth rate this year at 4.2 percent. Austin’s median home price sank to $316,400 after double-digit YOY hikes the previous two months when the proportion of homes priced more than $300,000 exceeded 60 percent for the first time ever. Home-price appreciation in Dallas and Houston also decelerated to around 3 percent, with the metric hovering around $296,700 and $248,800, respectively. On the other hand, YOY growth in Fort Worth and San Antonio accelerated, pushing the median price up to $252,900 in the former and $240,600 in the latter.

The Texas Repeat Sales Home Price Index, a better measure of changes in single-family home values, provides insight into how Texas home prices evolve. The index indicated home price appreciation decelerated in April on both the state and metropolitan levels. Texas’ index rose just 3.6 percent YOY, with the larger locales sliding well under the statewide average. The Dallas and Houston metrics increased only 2.3 and 2.6 percent, respectively. Austin’s index maintained the highest annual growth rate of 6 percent. The Fort Worth and San Antonio indices slowed to 3.8 and 3.2 percent YOY growth, respectively, contrasting median home price data. Favorable housing affordability relative to other parts of the country supported the Lone Star State’s economic growth after the housing bubble burst a decade ago. Texas needs to maintain affordability for the housing market to remain a stalwart in the current recession and subsequent recovery.  

The Real Estate Center projected single-family housing sales using monthly pending listings from the preceding period (see Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Although activity is expected to worsen, the rate of decline decelerated at the statewide level, from a 13.6 percent decrease in April to an anticipated 10.1 percent decrease in May. The drop in single-family sales in DFW and Houston is also expected to slow with the metric falling 10.4 and 7.4 percent, respectively. Central Texas, on the other hand, contradicted the overall state trend as the sales are estimated to plummet at a faster rate in May, 17.6 and 11.0 percent in Austin and San Antonio, respectively, relative to the previous month.

All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (June 11, 2020)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

How Does RON Work?

Remote Online eClosing (“RON”) is a new, technology-driven notarial process that allows the signer to appear before the notary over a live audio-video feed when executing digital documents.

Step 1 Identity Verification

RON uses the latest identity verification technologies to make notarizations more secure.
A. Signer passes a knowledge-based identity quiz
B. Signer submits ID for review
C. Third-party software performs forensic test on ID

Step 2 Audio-Video Conference

The notary and signer talk to each other over a webcam in real-time and observe the necessary digital documents.

Step 3 “Tamper-Sealed” Documents

The notary adds a “tamper-seal” to date/time-stamp the notarized documents.  The seal will indicate whether any of the documents are altered in the future.  The signer downloads a PDF of the completed, digitally signed and digitally notarized, document.

Step 4 Audit Trail and Notary Records

Like with traditional notarizations, the notary keeps a journal logging the basic details of the notarization.  The journal can be kept in a secure digital format that includes a video of the notarial act, which can be used to prove who actually digitally signed the document.

Click here if you would like more information on our digital settlement services.

Print Version

Definitions and Rules of a Deferred 1031 Exchange

1031 Exchange
An event where a taxpayer exchanges or trades real property held for investment or used in a trade or business for other real property and defers the capital gains tax on the transaction.

Tax Deferred
The capital gains tax which would have been paid on the sale of the real property is not paid but is deferred to be paid at a later time when the property traded for is sold in a non-exchange sale.

Property Held for use in a Trade or Business
Any real property used by a taxpayer in its business. This could be an office building, warehouse, ranch, shop, garage, farm, etc.

Investment Property
This is real estate purchased to produce an investment income or an investment gain on resale. It can include, but is not limited to apartments, a rent house or raw land.

Like-Kind Property
In the exchange world, “like-kind” does NOT mean you must exchange an apartment project (investment property) for another apartment project, or raw land for raw land, it means that you must exchange real estate for real estate. This permits, within the categories of “held for investment” or “used in your trade or business”, the exchange of apartments for land, or office buildings for apartments, etc., as long as the old properties sold and the new properties acquired are either held for investment or used in a trade of business. The property sold and the property acquired do not have to be exactly alike, they just have to be real estate and fall in the category of “held for investment” or “used in your trade or business”.

Relinquished Property
Relinquished Property is the real estate held for investment or use in your trade or business which is sold or “relinquished”. Think of the Relinquished Property as the property being sold and the Replacement Property as the real property being acquired.

Replacement Property
Replacement Property is the real estate acquired by the taxpayer/seller in a 1031 exchange as replacement for the relinquished property.

Exchange Proceeds
The cash received by the Qualified Intermediary through the sale by the taxpayer of the Relinquished Property and any debt paid on the property sold. In order to defer all of the tax on a sale you must spend all of the cash proceeds received or more if you want to and you must borrow the same amount of money or more if you need or want to that was used to pay off any loan or loans on the property sold. You will pay the tax on any cash proceeds not used to buy Replacement Property or any loan paid off in your sale that was not replaced with same or greater payoff amount of loan on the Replacement property.

The 45-Day Rule
You must identify by written notice (signed by you) to your Qualified Intermediary the Replacement Property or Properties (you can identify more than one possible Replacement Property) you want to buy within 45 days after you close the Relinquished Property. Do not count the date of closing; count 45 days after the closing date and that is the end of the “Designation or Identification Period” – the true end, whether it’s a Saturday, Sunday or any legal holiday. Better get this part completed on that date as a minimum. Before that date is better. After that date, your exchange may be disqualified.

The 180 Day Rule
You must close, fund, and acquire (do it all) the Replacement Properties within 180 days after you close the Relinquished Property. Do not count the date of closing; count 180 days after the closing and that’s the “drop-dead” date to completely acquire the Replacement Property – the true end, whether it’s a Saturday, Sunday or any legal holiday. Better complete this part on this day as a minimum. Before that date is better. After that date, your exchange may be disqualified.

Three Property Rule
Try to designate three Replacement Properties or less to purchase, generally, because if you stay with three or less, you don’t have to worry with anything other than being sure it is like-kind property. If you designate four or more, then you must deal with the “200% Rule”.

The 200% Rule
This rule only comes into play if you designate more than three properties as possible Replacement Properties. If you do, add up the “fair market values” of all the properties designated and be sure that this aggregate number is not more than the gross sales price of the Relinquished Properties times 2. If it is more and you don’t fall within the “95% Rule”, your exchange is outside the safe harbor and may fail.

 The 95% Rule
This is an exception to the consequences of violating the 200% Rule, which applies if you violate the “Three Property Rule”. If your sum of the fair market values of more than three Replacement Properties is greater than two times your sales price of the Relinquished Property, you are still “safe” if you acquire 95% in value of these designated properties, which means that you really need to buy all of the Replacement Properties you designated.

Exception to the 180 Day Rule
You don’t get 180 days to complete the exchange if you have to file your Federal income tax return for the year in which your relinquished property sold before the 180th day. If your tax return for the year in which your relinquished property sold is due on April 15th and your 180th day falls in May, you have to complete your acquisition of the replacement property before April 15th even if there are more days left in the 180 day time frame. BUT, if you file an extension to your tax return, then this exception doesn’t apply. Remember to file the extension if you are in this situation.

Direct Deeding
1031 Exchange allow Direct Deeding, making it all much simpler. In previous years, the exchange taxpayer deeded the property to be sold to the Qualified Intermediary who would then deed to the buyer of the Relinquished Property, and the seller of the Replacement Property would deed to the Qualified Intermediary who would deed to the exchange taxpayer. You don’t have to do this anymore. You can deed the Relinquished Property directly to your buyer, and receive the Replacement Property deed direct from the seller.

For more information on 1031 Exchange, please reach out to our Texas Escrow Company team:

Bill Kramer
Executive Chairman
214.855.8850
bkramer@republictitle.com

Carla Janousek
Sr. Vice President, CES®
214.855.8879
cjanousek@republictitle.com

Helen Wooten
Exchange Assistant
214.855.8879
hwooten@republictitle.com

Disclaimer: This information is a summary of some of the common terms involved with 1031 deferred tax exchanges. Do not rely on this summary alone to make an exchange decision, or think that there isn’t much more involved than what is described in these simple definitions. Exchange decisions should be based on conversations with a tax advisor, an accountant, a Qualified Intermediary, and a tax attorney.