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CASE STUDY: DO NOT CALL, DO NOT EMAIL:
Q: I was wondering if I could get approval to send this email to potential sellers.…Would you be interested in possibly putting your house up on the market? If so, I would love to make an appointment to talk with you, and give you a realtor's opinion of what your home is currently worth…….. A: Hello X, So, you can't just start sending emails without complying with federal email restrictions and guidelines. Go to the following link and make sure you can meet all of the federal requirements. We will need to sign off on your email marketing plan and need to see documentation that you are able to comply with FTC guidelines. There are substantial fines and penalties for violations. Please send a screenshot of your layout and email headings and disclosures for our review and approval. See guidelines in FTC compliance guide below or at the following link: https://www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business Let us know, Jeff.
CAN-SPAM Act: A Compliance Guide for Business: Do you use email in your business? The CAN-SPAM Act establishes requirements for commercial messages, gives recipients the right to have you stop emailing them, and spells out tough penalties for violations. https://www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business |
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General AAR Residential Purchase Contract Reasons to Cancel 1) preliminary title report 2) BINSR 3) SPDS 4) Ins Claims History 5) Pre-qual rate offered must match the rate offered after initial underwriting (10 day lsu) or cancel 6) HOA Disclosures 7) Changes During Escrow 8) Risk of Loss 9) Loan Denial (unconditional loan approval) 10) Mutual 11) CURE 12) Contingency
BINSR CANCELLATON EXAMPLES: See BINSR section at the beginning of this document
Unpermitted garage OR Unpermitted addition
Buyer cancelling due to safety concerns with grandchildren around backyard water feature (or pool).
Buyer elects to cancel the contract due to disapproving of premises school district ratings and the crime rate in the vicinity,
Property location with respect and proximity to childrens school and desired school district. This is material to the Buyer.
Buyers cancel after deciding that they want their daughter in a gated community.
Buyers do not approve and elect to cancel for the following reasons: sewer/septic work/fees and sewer application period different and much longer than expected.
Upon air sampling tests performed by Syntech Environmental, presence of black mold was detected in all wet areas of the home and at guest bedroom. Report included for reference.
Several items not up to code. Cost to address property condition is much higher than Buyers original repair budget estimates and buyers capabilities
Buyer cancels due to seller not using licensed contractors for remodel work and for not having permits for work performed on the home.
Square Footage is not sufficient for Buyers needs.
Buyer disapproves of the view fencing in the backyard which cannot be changed without HOA approval.
Quality of renovations inadequate to meet Buyers needs. Buyer elects to immediately cancel this contrct.
Buyer feels there are too many substantial items and components that will need to be repaired or replaced immediately or in the near future: air conditioner, roof, all kitchen and bath fixtures, bathrooms, etc.
HVAC units are at end of life, pool equipment, hot water heater, garage door and equipment.
After speaking with various neighbors, Buyer has become aware of excessive scorpions in the area. This is a material matter to the Buyer and her children and pets.
Buyers have visited the property on several occasions during the inspection period and have determined that the constant road noise heard in the back yard is not acceptable.
Roof condition, underlayment at the end of its life and needs a full replacement. Excessive amount of additional repairs and general lack of maintenance found throughout the property as listed on the inspection report. This is in addition to higher than anticipated remodeling and cosmetic costs needed to bring the home into the Buyers desired final contemporary mid-century condition.
Roof truss issue discovered by home inspection (attached). Concerned that the modification to the roof supports was not done by the builder with the proper approval and permits and may become an issue structurally or financially in the future.
Crime statistics for the surrounding areas and the proximity and number of registered sex offenders is of a material concern to us. The ratings and locations of the schools within the boundary are not satisfactory.
Solar Lease terms are not acceptable to Buyer. School District is not acceptable to Buyer.
Buyers have reviewed the solar lease and do not approve of the cost and long term debt and escalating monthly costs. Buyers have also discussed the solar lease with their lender and feel that the solar lease will impact their available cash funds as a larger cash down payment may be needed. Buyers also feel solar lease will be a problem if they ever decide to sell the home as it could lessen the interest level from potential buyers.
Roof appears to be at the end of its useful life (25-30) years. Heating/Cooling units are at the end of their useful life. Average life expectancy of a heat pump is 20-25 years. The units inspected are 17 years and 20 years old respectively.
Multiple issues; inspection not complete due to gas not being turned on, termites were found in multiple locations and spray painted over, scorpions were found in garage, not post tension slab and appears to have something going on under the tile in the living room.area.
1) Patio condition. The non free-standing patio cover connection to the main house was improperly connected to the fascia board. 2) Roof is beyond its expected service life and also improper installation of roof. 3) The air conditioner is near the end of its expected service life. 4) Tile flooring-improper installation, cracking.
Due to an unexpected change in familial status, this property will not be adequate in terms of overall size/sq ft, number of bedrooms, bathrooms, storage, parking and outside yard for two large dogs.
Buyer cancelling due to scorpions seen at property, polybutylene plumbing and piping, Master Bedroom needs to be downstairs, the freeway behind the property is a negative view and remodeling costs are too high.
Buyers general contractor has walked the property and informed Buyers of the costs required to convert the home into a group home for their assisted living business and the costs exceed expectations. The buyers hereby elect to cancel the contract immediately as the property will not work for their business.
REMODELING COSTS: You will use the vacant land BINSR. You should create a brief narrative that building costs exceed initial estimates by $X or a substantial amount, both materials and labor have increased substantially from initial estimates project inception, etc, etc. Add some numbers in the mix as well.
Buyer cancelling due to: water damage on the exterior of the home as well as ongoing maintenance costs in order to prevent further damage. Also close proximity of home to the guard gated entrance to the community, as well as noise and traffic due to parking lot directly behind the home. A/C units kept tripping the breaker due to an unknown issue.
Buyer has concerns with the SPDS attachment:”Disclosure statement regarding prior legal action”, seller is unable or unwilling to provide any information regarding the slab, foundation, soil settlement and expansion problems as indicated on the sellers SPDS. Buyer also disapproves of cracks in slab and walls as indicated on line #’s 1,2,3,4,5,6,7 of Sellers Property Disclosure Statement. Buyer also disapproves of soil settlement and expansion problems as indicated by seller on line #’s 9,8,7,6,5,4,3 of the Sellers Property Disclosure Statement.
SLAMMER: Buyer hereby gives notice of their election to cancel this contract. Buyers election to cancel is based on safety and security issues which were identified during independent inquiries regarding criminal activity and sex offenders in the vicinity. Search results show various types of criminal activity along with sex offenders located within the targeted search area using the property address as the search address; See AZ DEPT OF PUBLIC SAFETY website: http://icrimewatch.net/index.php?AgencyID=55662 for sex offender information. Also see www.communitycrimemap.com and https://ucr.fbi.gov/crime-in-the-u.s/2019/preliminary-report/tables/table-4/state-cuts/table-4-alabama-through-california.xls for crime statistics in the vicinity of the home. The contract says the buyer shall deliver notice of disapproved items in a "single notice" (see line #263 of the pc). This means you can only submit the BINSR one time. We call that "One Bite at the Apple."
WIRE FRAUD: CYBER SECURITY ESSENTIALS (online training at HomeSmart) HOLD FOR NEXT REGIONAL MEETING PLUS ARTICLES
What is Cyber Fraud?
BEC, “Business Email Compromise, aka “CEO Fraud,” “HR Fraud” or “Cyber-Enabled Financial Fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with Financial Institutions or foreign businesses that regularly perform wire transfer payments. The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals. This is often accomplished by impersonating a key employee or business partner after obtaining access to that person’s email account or sometimes done through social engineering, phishing, romance and lottery scams. Could include Buyers, Sellers, Real Estate Agents, Lenders, Title Companies, Appraisers, Insurance Agents, etc.
The con typically involves phony email accounts with addresses that are confusingly similar to the real thing. Scammers generally begin by compromising a legitimate email account. They then study the purloined messages for information about the pending transfer of funds and analyze tone and style to make their communications as believable as possible. The fraudsters then attempt to convince their unwitting victims to wire money to bank accounts that they actually control. This sort of fraud is a new evolution of online crime that has been on law enforcement’s radar for about five years, says’s FBI supervisory special agent Jim Abbott.
The FBI recommends all companies have strong verification protocols in place, for example a phone call to confirm the payment request is legitimate, would be a good start—and use two-factor authentication to verify requests for any changes to account information. Be alert for slightly misspelled names and hyperlinks that redirect to misspelled URLs. Don’t provide sensitive information without doing a “very solid amount of due diligence,” Abbott warned. And, he added, always check to make sure the routing and account numbers in wire transfer instructions resolve to the right institution in the proper location. And for real estate professionals, never forward emails with wiring instructions. If you do, you could also be held liable for the clients losses.
SOURCES: https://www.nar.realtor/legal-case-summaries/licensee-liable-for-wire-fraud-losses
https://www.fbi.gov/contact-us/field-offices/phoenix
Cyber Security Essentials
Q: What steps should you take if your client has been victimized by wire fraud…?
A: 1) IMMEDIATE ACTION should be taken by the buyer to escalate the wire fraud incident to the appropriate personnel/department/agencies: BANK MANAGER, BANKS FRAUD/LOSS PREVENTION DEPT (where wire originated), CONSIDER CONSULTING WITH AN ATTORNEY
2) Contact additional appropriate agencies; Title Co, Lender, FBI, Local Police. Be aggressive, wire transfer can be stopped if caught in time. If the wire is sent on Friday, it could be too late by Monday, the funds could already be received and withdrawn. If M-Th, there is a good chance the wire can be stopped by the next business day.
Phoenix FBI 21711 N. 7th Street Escalate through the correct channels immediately and remember that minutes count. ACT QUICKLY on cyber crime and security breaches (restricted data)
Immediately Change Passwords; email, other, have IT dept remotely deactivate the lost tablet (If company tablet or laptop is lost)
Investigated by: FBI, Secret Service, Dept of Homeland Security, US Postal Service.
PII: Personal Identifying Information. Federal and State laws include fines and imprisonment. Severe legal, financial, reputational implications for data breach.
PHI: Protected Health Information (18 identifiers)
Anonymize Data: Remove personal data/PII
HIPAA: Health Insurance Portability and Accountability Act of 1996
$1.5MM possible fines plus criminal conviction |
