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The Anatomy of a First-time Buyer in 2017

Prospective first-time buyers in recent years have had to navigate several obstacles on their path to homeownership, including higher rents and home prices, tight inventory conditions and repaying student loan debt. These impediments are a big reason why first-timers were only 34 percent of all transactions in the National Association of Realtors®’ 2017 Profile of Home Buyers and Sellers, which is far below the long-term historical average of 39 percent since the survey debuted in 1981. Amidst these ongoing supply and affordability challenges, here is the typical makeup of a successful first-time buyer: Age – 32 years old Household income – $75,000 Cost of home purchased – $190,000 Down payment amount – 5 percent Student loan debt – $29,000 Type and location of home purchased – Single-family home in a suburban area
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Brandon Farber

Brandon Farber

 

What Are Mortgage Points? Should You Pay Them?

(TNS)—When people want to find out how much their mortgages cost, lenders often give them quotes that include loan rates and points. What Is a Mortgage Point?
A mortgage point is a fee equal to 1 percent of the loan amount. A 30-year, $150,000 mortgage might have a rate of 7 percent but come with a charge of one mortgage point, or $1,500. A lender can charge one, two or more mortgage points. There are two kinds of points: Discount points Origination points Discount Points
These are actually prepaid interest on the mortgage loan. The more points you pay, the lower the interest rate on the loan and vice versa. Borrowers typically can pay anywhere from zero to three or four points, depending on how much they want to lower their rates. This kind of point is tax-deductible. Origination Points
This is charged by the lender to cover the costs of making the loan. The origination fee is tax-deductible if it was used to obtain the mortgage and not to pay other closing costs. The IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs and inspection fees, it is not deductible. How do you decide whether to pay mortgage points, and how many? That depends on a number of factors, such as: How much money you have available to put down at closing How long you plan on staying in your house Points as prepaid interest reduce the interest rate—an advantage if you plan to stay in your home for a while—but if you need the lowest possible closing costs, choose the zero-point option on your loan program. By the Numbers…
A lender might offer you a 30-year fixed mortgage of $165,000 at 6 percent interest with no points. The monthly mortgage principal and interest payment would be $989. If you pay two points at closing (that’s $3,300) you might be able to drop the interest rate down to 5.5 percent, with a monthly payment of $937. The savings difference would be $52 per month, but it would take 64 months to earn back the $3,300 spent upfront via lower payments. If you’re sure you will own the house for more than five years, you save money by paying the points.
©2017 Bankrate.com Distributed by Tribune Content Agency, LLC This article is intended for informational purposes only and should not be construed as professional advice. The opinions expressed in this article are those of the author and do not necessarily reflect the position of RISMedia. For the latest real estate news and trends, bookmark RISMedia.com. The post What Are Mortgage Points? Should You Pay Them? appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

Who Owns a Half Million-Dollar Home?

After the release of the tax reform legislation from the House, last week’s question was “who will be affected by the new bill?” One of the key elements of the tax reform is the proposed capping of the mortgage interest deduction at $500K. Under the current tax framework, taxpayers who own a home are able to reduce their taxable income by the amount of interest paid on the loan, which is secured by their principal residence. Interest is deductible on only the first $1 million of debt used for acquiring, constructing, or substantially improving the residence ($500,000 for single individuals if filing separately), or the first $100,000 of home equity debt regardless of the purpose or use of the loan.  The new tax reform legislation allows homeowners to take the deduction on their first $500,000 of mortgage debt, half of the current threshold. The new threshold will affect only mortgages on purchases made after the law is in force (but will not include refinancing). Thus, a new homebuyer will be able to deduct from his taxable income up to $15,475[1] under the new proposed tax framework, while he could deduct up to $30,950 under the current tax framework. Although $500K seems to be a decent amount of money, is it enough to buy a home in all areas in the United States? Since all real estate is local, we calculated the share of homes[2] with a value higher than $500K by Congressional District. Based on the data, on average, 15% of homes with a first mortgage are worth over half a million dollars across the congressional districts. The share varies from 0.1% (13th District, Ohio) to 94% (14th District, California). Actually, one out of every two homes is worth over half a million in several districts in the following states: California, Connecticut, District of Columbia, Hawaii, Massachusetts, New York, Virginia and Washington. Furthermore, we should bear in mind that the limit of $500K is not indexed to inflation, causing its value to diminish even further over time. Thus, we took our analysis one step further and calculated the share of homes with a value higher than $500K (subject to an inflation rate of 2%) in 2026 and 2036. The map below allows you to see the share of homes with a first mortgage and value higher than $500K in 2016, 2026 and 2036.
It is true that the statistics above include people with a mortgage who already own a house. As we already mentioned, the MID cap will be applied to new mortgages only. Thus, someone would argue that these people will not be affected. It is true that there will not be a direct effect on these owners, but we expect that they will be less willing to sell their home. Consequently, homeowners are expected to be less mobile. Finally, the diminished role of mortgage interest deduction will impact home values negatively. By how much is debatable, but all homeowners can expect to lose some portion of their housing equity if the proposed tax bill become the law. [1] In the first year of a 30-year mortgage (assuming a 20% down payment and 3.9% mortgage rate) [2] Only homes with a first mortgage are included
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Brandon Farber

Brandon Farber

 

View the Possibilities With Virtual Staging

By Brian Balduf, VHT Studios Appealing to home buyers is all about making that emotional connection. Smart marketers know emotions trump other factors, especially when you hear buyers say the listing “just feels right.” They may be searching for a new house, but they’re envisioning their next home. Buyers’ emotional experience while home shopping is heightened even more by stunning real estate photography that is the attention-grabber in the age of Facebook, Instagram, Pinterest, YouTube and Houzz. Breathtaking photographs and video stir buyers’ emotions and imaginations and prompt dreams about how they’ll live in that home. New virtual staging tools go even one step further. Virtual staging makes a listing stand out and allows buyers to visualize their dreams – not only in their minds – but on their monitors or mobile devices. When marketing to those buyers, virtual staging allows real estate professionals to present the rooms of a listing in many styles and functions, enabling agents to reach the widest audience possible by appealing to myriad tastes and lifestyle needs. Virtual Staging blows up the current one-size-fits-all listing model and gives real estate pros far greater flexibility in customizing a listing to the desires and expectations of their perceived audiences. It starts with high quality photographs, the standard for showing how a home is currently furnished and decorated today for its current owner.  Virtual staging tools inserted into or enhancing those photographs amp up the features of a listing and showcase why each room is a great space and how it can be used, whether the prospective owner is a workout enthusiast, a craft hobbyist, or a new parent. Also, virtual staging eliminates the expense of renting furnishings or hiring traditional stagers, while allowing buyers to mentally prepare how they can live in their prospective home. Virtual staging helps buyers look beyond the stark, off-putting appearance of a vacant room. It also presents decorating options that enhance, for instance, a living room containing worn carpeting and outdated furniture that could leave a bad impression. Virtual staging presents a property’s potential and can attract and interest different audiences with a variety of lifestyles. See for yourself how virtual staging was used successfully by Robert Pribyl and Bernadette Ray, with Berkshire Hathaway HomeServices KoenigRubloff Realty Group in Chicago. Robert says they took advantage of virtual staging’s flexibility for a vacant and fully remodeled 130-year old house in the trendy Logan Square neighborhood. Virtually staged by VHT Studios “This neighborhood is very hot. It’s become a magnet for millennials and high-net worth investors, so we needed to showcase how single professionals or families with different needs might live in the home,” Pribyl says. “I like the modern furniture that buyers see in the living room – it fits the style of the buyers I’m trying to attract. The home looks more appealing to buyers when they can see select rooms that are furnished. They used virtual staging to showcase how a bedroom might appeal, for instance, to a young couple with a newborn. They also transformed that same vacant bedroom into an office and an exercise room for a young entrepreneur or a workout enthusiast.   Virtually staged by VHT Studios Virtually staged by VHT Studios In the finished basement, virtual staging allowed the duo to show the space’s potential as a child’s playroom and man-cave for TV sports fans and game lovers. Virtually staged by VHT Studios Virtually staged by VHT Studios Virtually staged by VHT Studios In just four weeks after installing virtual photographs, they received multiple offers on the listing, and as of this writing, they were in negotiations with potential buyers. Virtual staging opens many real estate marketing options which up until now have been impossible to deploy. There are now unlimited ways to present a room’s functions or decor through virtual tools. Real estate professionals are also applying flexibility to how they use virtually staged photographs. In addition to websites, advertising and brochures, agents are using enlarged virtually staged photographs that depict multiple room functions and placing them on easels in each room of their listings. This allows buyers to instantly recall the virtually staged home they viewed online, as well as to envision the many possibilities. Also, consider these other virtual tools that can solve common headaches that real estate professionals have had to work through over the years: Virtual paint is helpful when walls need a fresh coat of paint or when dated wallpaper needs a makeover. Virtual declutter removes mementos and personal effects that may be cherished by the owner but are distractions to buyers. And virtual twilight wows buyers and with warm, romantic, and welcoming exterior views that appeared to be photographed at dusk. Here’s another example of a virtually staged living space at a listing in Rosemont, Ill. See how the space has been configured to appeal to different style preferences. Virtually staged by VHT Studios Virtually staged by VHT Studios Virtually staged by VHT Studios Don’t Try This at Home! Some digital photography pros may be tempted to hire a Photoshop hobbyist to digitally alter photos with virtual enhancements. Having great Photoshop skills doesn’t guarantee beautiful virtual staging. Installing a virtual couch into a photograph and hitting “Sharpen My Image” may do more harm than good to a vacant room.  Often the end result looks like the old Colorforms stickers we played with as kids. Experienced virtual stagers are studio and image specialists who have composition skills in real estate photography and know how to blend multiple exposures in which lighting, window views, and details are merged to create the final composite photography. They also understand perspective, shadows, and size in relation to room dimensions. We advocate trusting your visual marketing to a pro, just as real estate brokers advocate to their clients. The newest visual marketing tools are proof that real estate marketing is no longer a one-size-fits-all proposition. Smart professionals are adopting these tools to reach a much wider audience, to make a greater first impression on potential buyers, and sell homes faster and at the best price. ABOUT THE AUTHOR: Brian Balduf, CEO, chairman and co-founder of VHT Studios, has built the Rosemont, Ill.-based firm into the nation’s largest real estate photography and image management services company. Since he co-founded the company in 1998, VHT Studios has helped more than 200,000 real estate professionals sell more than $200 billion in properties through its nationwide network of hundreds of photographers and image specialists. Delivering to real estate professionals their most powerful selling tools – high quality photography and video – Balduf has worked to ensure their properties get seen more, sell faster and at the highest price. For more information, visit VHT.com, The VHT Studios Blog or find us on Facebook, LinkedIn, Twitter and Instagram.
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Brandon Farber

Brandon Farber

 

The Most (and Least) Valuable States in America

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:
San Francisco: The Sweet Spot for Trick-or-Treaters Jeff Bezos May Seek HQ2 Close to Home Home Haunted? No Problem, New Survey Shows
Everyone knows location is the most important part of real estate. You can’t change where your house is (all things being equal). You have to consider school districts, crime rates, commute times—the list goes on and on. It can be much simpler when you’re considering buying a home to compare apples to apples so you can see how the real estate market differs according to location, so HowMuch.net created a new visualization showing land and housing prices at a glance.
The blue dots represent the value of an acre of land, and the red circles indicate the median value of a home. The bigger the blue dot and the larger the red circle, the more expensive it is to become a property owner. Small circles and dots likewise indicate a very low cost of purchasing property. The home values are from the U.S. Census Bureau’s 2015 American Consumer Survey, and the numbers behind the land values come from the Bureau of Economic Analysis. Several things stand out in the illustration. An acre of land is much more valuable in the Northeast compared to any other part of the country. This is partly because the Eastern seaboard is a very densely populated area with several large cities, most notably New York. New York and Massachusetts have some of the oldest modern structures anywhere in the U.S. In other words, Eastern cities are a lot older than Midwestern cities, so there isn’t a lot of farmland for suburban expansion anymore. In terms of geographic size, these are some of the smallest states in the country. As a matter of fact, the three states where the cost of an acre of land is greater than the median price of a house are all located on the East Coast, and they happen to be some of the smallest states in the Union (Rhode Island, Connecticut, and New Jersey). Median home values (the red circles) are a different and more complicated story. California has the most expensive houses by far ($449,100). Oregon and Washington boast similarly high housing valuations, as well ($264,100 and $284,000, respectively). It is also expensive to buy a home on the East Coast, with six out of the top 10 states with the most expensive median home values. There’s a noticeable dip in both housing and land prices in Southern and Midwestern states. Prices slowly rise the further you move from east to west. This highlights unique economic developments over the last several years, including the boom in oil exploration in North Dakota and the growth of Western cities, like Denver, thanks to young people. Snowbirds also tend to move to Florida and Arizona when they retire, which also pushes up housing prices in those places. Top 5 Most Expensive States to Buy a Home
California
Value per Acre: $39,092
Median Home Value: $449,100 Massachusetts
Value per Acre: $102,214
Median Home Value: $352,100 New Jersey
Value per Acre: $196,410
Median Home Value: $322,600 Maryland
Value per Acre: $75,429
Median Home Value: $299,800 New York
Value per Acre: $41,314
Median Home Value: $293,500 Top 5 Cheapest States to Buy a Home
West Virginia
Value per Acre: $10,537
Median Home Value: $112,100 Mississippi
Value per Acre: $5,565
Median Home Value: $112,700 Arkansas
Value per Acre: $6,739
Median Home Value: $120,700 Oklahoma
Value per Acre: $7,364
Median Home Value: $126,800 Kentucky
Value per Acre: $7,209
Median Home Value: $130,000 All this shows that the laws of supply and demand are alive and well in the real estate market. You can easily find cheap acres of land where they are plentiful and un-useful (sorry, Nevada), but owning property is a lot more expensive in smaller places crowded with lots of people. As always: location, location, location.
A version of this article originally appeared on HowMuch.net. For the latest real estate news and trends, bookmark RISMedia.com. The post The Most (and Least) Valuable States in America appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

Appraisal Disappointing? Steps to Take

Appraisal disappointing? You have options, according to the Appraisal Institute. “Homebuyers and sellers should first understand what an appraisal is and how it’s used,” says Jim Amorin, president and acting CEO of the Appraisal Institute. “Real estate appraisals for mortgage finance applications are prepared for the bank or financial institution so they can better understand the collateral risk in making the loan. This can be confusing, because homebuyers typically pay for the appraisal and receive a copy of it.” In some cases, the appraisal may not match the contract price—but just because an appraisal comes in below (or above) the listing or contract price doesn’t mean it’s flawed, Amorin says. The agreed-upon contract price may be above market value, for example. In those situations, the buyer and seller often renegotiate the contract at more favorable or balanced terms. Homebuyers should ask their lender for the qualifications of the appraiser, including whether they are designated by a professional association like the Appraisal Institute, says Amorin. A qualified and competent appraiser knows how to conduct a thorough market analysis and make appropriate adjustments. Homebuyers also can ask whether the appraiser is directly engaged by the bank or whether the bank utilizes an appraisal management company, and what their procedures are for engaging qualified appraisers. “The best way for consumers to combat potential problems with appraisals is to ensure the appraiser hired by their lender is highly qualified and competent,” Amorin says. “Consumers have every right to demand the use of a highly qualified appraiser, someone with field experience in their market and knowledge and experience to handle the assignment properly.” Contrary to incorrect interpretations of appraiser independence requirements, appraisers welcome information that would assist the development of credible assignment results,” says Amorin. If lender policies permit, consumers can accompany appraisers when conducting the property inspection and may provide the appraiser with any information they consider important. Amorin suggests consumers ask their lender for permission to do so, and confirm the appointment. Consumers should also take note of whether an adequate inspection is performed. Did the appraiser spend enough time at the property to observe important features or improvements or potential problems? Homebuyers should take advantage of their right to obtain a copy of the appraisal report,” Amorin says. Even though the appraisal is ordered to help assess lender collateral risk, buyers are entitled to a copy of the appraisal report. Federal regulations require lenders to provide property buyers with free copies of appraisal reports no later than three days before the loan closes. Although appraisal review is best performed by qualified appraisers, consumers should examine the appraisal for potential deficiencies, says Amorin. According to “Appraising the Appraisal: The Art of Appraisal Review,” common errors in appraisals include: misuse of adjustments to comparables; disregarding special financing and concessions; or miscalculation of gross living area (GLA). Amorin suggests consumers ask themselves: Do adjacent homes add or detract from the value of the subject property? Is the subject property equal to or lower in price than surrounding homes? Does the floor plan have any functional problems? Does the house (particularly the kitchen and bathrooms) require major remodeling to make it comparable with similar homes in the same price range? Is the number of bedrooms and baths in the home comparable to similar homes in the same price range? Did the appraiser perform an adequate inspection? “Most lenders have appraisal appeal procedures, known as ‘Reconsiderations of Value,'” says Amorin. “If you’re aware of recent, comparable sales information or items that may not have been available or considered by the appraiser, provide those to the lender. If problems were found with the first appraisal, you can and should obtain a second appraisal.”
Source: Appraisal Institute For the latest real estate news and trends, bookmark RISMedia.com. The post Appraisal Disappointing? Steps to Take appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

What We’re Reading: October 16-20

Office haunts, security, natural disasters, family, environment, heating, germs, nuisance, and Halloween.
It would be a little difficult to get those TPS reports done with restless spirits about! Better make sure there aren’t any images of your keys out there! Can people avoid the path of destruction? Unfortunately, unlikely. Has it really come to this?   Mark Morgan/flickr/2015 Toronto will soon be a smart city. We would love to get data on the indoor air quality of this apartment. We don’t need sensors to know that the air quality of this workplace would be heavenly. Servers throw off a lot of heat, so why not use that energy in a positive way? Want to avoid illness and create awkward business and social encounters? We have a way! People just will not stop throwing pizzas on this famous roof! Noted. We won’t bother trick or treating in South Carolina, Alabama, New Mexico, Michigan, or Idaho.  
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Brandon Farber

Brandon Farber

 

To Get Higher Sale Price, Client Could Refinish the Floor

What does it cost to make old hardwood floors look new again? Let’s say it costs $3,000. That’s a lot of money, especially for owners who just want to get their house on the market and be done with it. But of all the remodeling projects homeowners can do to increase the resale value of their house, refinishing the floors is right up there at the top. Of course, no one can predict with certainty if an investment will pay off, but recent research suggests owners who redo their floors will get their investment back, and maybe a bit more. New windows and a new roof are also cost-effective ways to get a higher sale price when the home goes on the market. The cost-effectiveness of almost two dozen remodeling projects is analyzed in research NAR put out a few weeks ago in partnership with the National Association of the Remodeling Industry. The findings are detailed in the latest Voice for Real Estate news video from NAR.

Tax reform The video also looks at why NAR is concerned with the tax reform framework that members of Congress and the Trump administration are looking at. The framework seems like a win for middle-income households because it calls for a near doubling of the standard deduction, but what often gets lost in the debate is that it also calls for the elimination of the personal exemption and the exemptions for dependents. Depending on family size, whatever gains one gets from the higher standard deduction would be wiped out by the loss of the exemptions. Meanwhile it calls for eliminating most itemized deductions, including the deductions for state and local taxes, which means many households that now itemize would be better off taking the standard deduction. As a result, they would in many cases end up paying more taxes. On the plus side, the framework leaves the mortgage interest deduction in place, but that’s not going to be enough for most homeowners to itemize. Without the state and local tax deductions, many would still find themselves choosing the standard deduction—and paying higher taxes as a result. The video also looks at why 1031 like-kind exchanges are so beneficial to commercial real estate, why home sales are expected to drop despite continuing strong demand, and what to do to keep your transactions on track in the weeks after a natural disaster. Access the video.
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Brandon Farber

Brandon Farber

 

‘Hottest Zip Codes’: A Tale of Three States

Realtor.com®’s annual Hottest Zip Codes in America ranking reads like a tale of three states: California, Colorado and Michigan. Watauga, Texas (76148) Livonia, Mich. (48154) Kentwood, Mich. (49548) Medford, Mass. (02155) Littleton, Colo. (80123) Castro Valley, Calif. (94546) Colorado Springs, Colo. (80922) Overland Park, Kan. (66210) Mira Mesa (San Diego), Calif. (92126) Hilliard, Ohio (43026) California, Colorado and Michigan nabbed six spots in the top 10 (another zip in California, 95758, stopped just shy at No. 11), thanks to three traits: affordability, good-paying jobs and millennials. Of California’s zip codes in the top 10, the median home price ranges from $536,394 (Mira Mesa/San Diego) to $728,267 (Castro Valley); of Colorado’s zip codes in the top 10, the median home price ranges from $273,222 (Colorado Springs) to $533,873 (Littleton); and of Michigan’s zip codes in the top 10, the median home price ranges from $118,833 (Kentwood) to $223,780 (Livonia). Generally, homes in the top 10 are more affordable than counterparts in their county or metropolitan area, and the markets themselves have higher incomes, low unemployment and more millennials. “While low inventory is a challenge, millennials are the largest generation in U.S. history and they are flexing their muscle when it comes to the housing market,” says Danielle Hale, chief economist for realtor.com. “Increasingly, the hottest housing markets are the ones that appeal to millennial preferences, and right now the standouts are relatively affordable suburbs with local ‘it’ factors such as hiking trails, great restaurants and nightlife. “With the largest cohort of millennials turning 30 in 2020, we can expect these types of areas to stay in demand in the years to come,” Hale says. Homes in the top 10 sell in an average 21 days, the ranking reveals, and listings located in the top 10 are viewed four times more on realtor.com than those in the rest of the U.S.
For more information, please visit www.realtor.com.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
For the latest real estate news and trends, bookmark RISMedia.com. The post ‘Hottest Zip Codes’: A Tale of Three States appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

Tips From Industry Professionals on Surviving Real Estate During Hurricane Season

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:
Buying a Home? Factor These Into Your Interest Rate Calculations Spotlight: Does realtor.com Really Care About REALTORS®? 5 Spooky Seats to Recline on This Halloween While the immediate danger is gone and hurricane season is winding down, individuals in the affected areas are still working through a recovering market. Most residents of hurricane-prone areas expect storms to hit, but the buyer and seller population may not be familiar with the ramifications of a hurricane that disrupts a real estate transaction. Here’s what Orlando Regional REALTOR® Association President-Elect Lou Nimkoff and RE/MAX 200 Orlando-based REALTOR® Daniel Wilson have to say about navigating the real estate market during hurricane season: Trust your gut.
Unfortunately, you may come across individuals that try to take advantage of vulnerable homeowners. Following a natural disaster, service “professionals” who are not qualified to perform a job may try to overcharge for a service claiming an increase in demand. If not careful, you can wind up with a botched repair that costs you thousands of dollars. “My No. 1 piece of advice to buyers and sellers post-hurricanes is to be aware of everyone that you’re dealing with and make sure that they’re a trusted name in their industry. During times of distress, a lot of companies try and profit from those in need. For example, make sure the roofer that comes to your door knocking for business is an actual licensed and insured roofer. Better yet, look up the business and find their customer reviews online,” says Wilson. “You need to have a home inspector take a look and make sure any work you had done was done properly,” says Nimkoff. Have patience. 
The market was hit hard and it will take time for everything to settle down. Not all homes are back on the market after sustaining damage during the hurricanes. In a few more weeks, you could be seeing more activity; however, if you do see something you like, it will most likely sell quickly since inventory is low. If a home fits the bill, jump on it before another buyer comes along and claims it. “I advise buyers to act on the same day the homes get listed if they’re interested, otherwise they will have a very difficult time in getting their offer accepted once there’s been a multiple offer situation. My theory is: the first agent in the door—with the best offer and continued communication with the other agent—wins!” says Wilson. “Because it is a seller’s market and there is an unusually high number of sellers, buyers want to be able to try and attract them and negotiate with them quickly,” says Nimkoff.
Get back on the market.
If your home was damaged by the hurricanes and you are trying to sell, fix any issues as quickly as possible so you can get your home back on the market. If your home only sustained minor damage, fix any issues without withdrawing your listing. Time off the market can translate into offers that you could be missing out on. Buyers will start to come out of the woodwork after laying low in the weeks following the hurricanes. “I have a current seller who needed to have a new roof put on because of the hurricane. We went under contract with a buyer, got insurance to approve the new roof and scheduled a professional to place the new roof on the home—all while still on track with the original closing date of just 30 days from contract to close,” says Wilson. “You need to make sure that your insurance values are up-to-date. If you do have a loss, you can quickly have it repaired and you don’t have to get into a fight with the insurance company. If you suffered some sort of loss, you need to repair it quickly and properly,” says Nimkoff. Be flexible and keep the end goal in mind.
Do remember that hurricane season can be stressful. Emotions are high for both buyers and sellers. Work together to achieve your goal while avoiding the drama.
“If you’re going to buy a house during hurricane season, talk to your landlord and say, ‘I need an extra month if I can’t move into my new house.’ Or if you’re selling your home, you have the right to delay the home you are selling so you can work out the issue because of a pending hurricane,” says Nimkoff “It’s an awfully tight market. A thousand people a day are moving in here. Don’t get too focused [on hurricanes] that you forget about the long-term benefits. We have pretty low interest rates right now,” he adds. Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com. The post Tips From Industry Professionals on Surviving Real Estate During Hurricane Season appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

NAR Explores Top Reasons for Choosing a Career in Real Estate

On Wednesday, the National Association of Realtors® released a new research report, Choosing a Career in Real Estate: A Perspective on Gender, Race and Ethnicity.  The report was developed to discover how and why Realtors® chose real estate as a career and to examine gender, race and ethnicity in real estate. According to the report, nearly 70 percent of Realtors® self-initiated their career in real estate based on interest in the industry, and almost 20 percent were referred by a friend. Sixty-nine percent of males self-initiated their career compared to 65 percent of females, and 20 percent of women were referred by a friend, compared to 18 percent of men. Seventy-five percent of Black and African American members self-initiated their career in real estate – more than any other ethnic group – while 27 percent of Asian and Pacific Islander members had their career in real estate referred by a friend, also more than any other group. Seventy percent of female members work exclusively in residential real estate, compared to 45 percent of male members. Fifteen percent of males work exclusively in commercial real estate, compared to only 4 percent of females. Hispanic and Latino members make up the largest share of those working exclusively in residential real estate (71 percent), and Asian and Pacific Islander members make up the largest share working in both commercial and residential real estate (37 percent). The graphic below shows additional data from the report, such as important skills to possess to be successful in real estate
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Brandon Farber

Brandon Farber

 

Raw Count of Home Sales (August 2017)

Existing-home sales dropped 1.7 percent in August from one month prior while new home sales declined 3.5 percent.  These headline figures are seasonally adjusted figures and are reported in the news.  However, for everyday practitioners, simple raw counts of home sales are often more meaningful than the seasonally adjusted figures.  The raw count determines income and helps better assess how busy the market has been. Specifically, 535,000 existing homes were sold in August while new home sales totaled 45,000.  These raw counts represent a 4 percent increase for Existing-home sales from one month prior while new home sales dropped 10 percent.  What was the trend in recent years?  Sales from July to August declined by 2 percent on average in the prior three years for existing homes and decreased by 6 percent for new homes.  So this year, existing homes outperformed compared to their recent norm while new home sales underperformed. Why are seasonally adjusted figures reported in the news?  To assess the overall trending direction of the economy, nearly all economic data – from GDP and employment to consumer price inflation and industrial production – are seasonally adjusted to account for regular events we can anticipate that have an effect on data around the same time each year.  For example, if December raw retail sales rise by, say, 20 percent, we should not celebrate this higher figure if it is generally the case that December retail sales rise by 35 percent because of holiday gift buying activity.  Similarly, we should not say that the labor market is crashing when the raw count on employment declines in September just as the summer vacation season ends.  That is why economic figures are seasonally adjusted with special algorithms to account for the normal seasonal swings in figures and whether there were more business days (Monday to Friday) during the month.  When seasonally adjusted data say an increase, then this is implying a truly strengthening condition. What to expect about home sales in the upcoming months in terms of raw counts?  Independent of headline seasonally adjusted figures, expect slower activity in September and October. For example, in the past 3 years, September sales decreased by 8 percent on average from August while October sales dropped by 4 percent on average from September. For the new home sales market, the raw sales activity is expected to diminish in September while sales rise in October.  For example, in the past 3 years, September sales decreased by 5 percent on average from August while sales in October increased by 6 percent on average from September.
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Brandon Farber

Brandon Farber

 

What Does President Trump’s Association Health Plan Executive Order Do?

The executive order President Trump signed on Oct. 12 to expand association health plans (AHPs) is of interest to REALTORS® because NAR has a longstanding interest in these types of health plans. But it’s important for real estate professionals to know what the executive order does and doesn’t do. First, it doesn’t itself expand association health plans; it only directs a handful of federal agencies to consider ways to amend existing rules with the aim of expanding the plans. And second, the rules that would be amended are federal labor rules, and these rules apply to employees, not independent contractors. For that reason, NAR has expressed an interest in working with the administration to see if changes can be made in the future that would expand AHPs for independent contractors. To learn more about the order, Jon Boughtin of NAR Media sat down with Christie DeSanctis of NAR Government Affairs to learn what the order does and doesn’t do. Watch video.
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Brandon Farber

Brandon Farber

 

5 Steps to Finding Your Best Mortgage Lender

(TNS)—You’re buying a home and you need a mortgage. How do you choose the right lender—one that will offer not only the best deal, but also good customer service? You’ll find no shortage of banks, online lenders, mortgage brokers and other players eager to take your loan application. Here are five tips for selecting the best mortgage lender out of the bunch. Compare Offers and Lenders
Start getting familiar with various lenders and the deals they’re offering by browsing through mortgage rates. Lenders will “present price differently,” notes Robert Davis, an executive vice president at the American Bankers Association (ABA). “Some lower rates might include fees with it, so the annual percentage rate is different than what you might think.” Also, understand that some lenders specialize. One might be a good choice if you’re financing a condo, while others might offer a better deal if you’re building your home from scratch. You’ll want to have a general idea of the type of property you’re interested in. Check With Lenders and People You Know
You might find the right mortgage and the best lender without having to look very far. Go to the bank or credit union where you have a checking or savings account and ask about the types of mortgage deals that are available to current customers. Compare any offer against what other lenders in your area and online and large national lenders will give you. “Interest rates change as much as three or four times a day, so get quotes from three different (lenders) to increase your odds,” says Brian Koss, executive vice president of Mortgage Network. Be sure to ask family members and friends for referrals to loan officers and mortgage brokers who gave them good, professional service and helped them find the most competitive loans. Decide: DIY or Hire a Broker?
One important decision is whether to seek out a mortgage and lender completely on your own or use the services of a mortgage broker. A broker can help with your comparison-shopping by gathering quotes from several lenders, but it’s important to understand that a broker isn’t obligated to find the deal that’s best for you. If you decide to work with a mortgage broker, it’s wise to look at how the loan offers from the broker size up against those you find on your own. Look at differences in rates, fees, mortgage insurance and down payments—and compare what your bottom-line costs will be. Talk With Your Real Estate Agent
Be sure to ask your real estate agent for lender recommendations. Smart loan officers rely on that business and take good care of the clients sent their way by local real estate agents. Keep in mind that agents might have relationships with certain lenders, so when your agent gives you a name, ask whether there is any affiliation. While some real estate brokerages have their own favored in-house mortgage lending businesses, good agents will not limit their referrals to those particular lenders. Be Ready for a Possible Hand-Off
Many lenders will end up selling your mortgage to the secondary market, which means you will likely have a different company servicing your loan than your original lender. This transfer is often outside your control, but you can ask the lender whether it knows if your mortgage will end up being serviced by a different company. If you want a lender you can reach out to immediately if problems arise, finding one who will hold onto your mortgage might be the best option. “If it’s important for you to have local contact with the lender, then you’ve got to go to a bank that keeps your mortgage,” says Davis.
©2017 Bankrate.com Distributed by Tribune Content Agency, LLC
This article is intended for informational purposes only and should not be construed as professional advice. The opinions expressed in this article are those of the author and do not necessarily reflect the position of RISMedia. For the latest real estate news and trends, bookmark RISMedia.com. The post 5 Steps to Finding Your Best Mortgage Lender appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

Self-Driving Cars Take On Manhattan; iPhone8 and Pixel 2 Cameras Battle It Out, and More

Manhattan traffic. Four-season weather. Tests of self-driving cars are about to get really real. If you’re the kind of phone owner who cares about the camera on your phone more than any of its other features, you’ll like reading this Battle of the iPhone 8 vs. Pixel 2 cameras. Got some smart home tech and want to make things work together? Check out this introduction to IFTTT. Sounds crazy enough to be real: workers in certain professions and those undergoing certain medical treatments experience changes to their fingerprints that render fingerprint scanners useless. Google’s Advanced Protection Program goes beyond digital two-factor authentication, requiring you to use a physical key to access certain kinds of information on your computer.
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Brandon Farber

Brandon Farber

 

Instant Reaction: September Housing Starts

The following is NAR Chief Economist Lawrence Yun’s reaction to this morning’s U.S. Commerce Department release on September housing starts: “The one month fall in new home construction, especially in the South region in light of Hurricane recovery, is understandable. What is frustrating and hard to comprehend is the drop in total permits in the West region. Home prices have been rising too fast in the West, and several metro areas are in dire need of new home construction. If housing shortages continue, along with the commensurate affordability challenges, then expect new job creation to begin shifting away from the West to other parts of the country.” 
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Brandon Farber

Brandon Farber

 

August 2017 Housing Affordability Index

At the national level, housing affordability is up from last month but down from a year ago. Mortgage rates increased to 4.19 percent this August, up compared to 3.74 percent a year ago. Housing affordability declined from a year ago in August moving the index down 8.4 percent from 163.7 to 149.9. The median sales price for a single family home sold in August in the US was $255,500 up 5.6 percent from a year ago. Nationally, mortgage rates were up 45 basis points from one year ago (one percentage point equals 100 basis points) while median family incomes rose 2.2 percent. Regionally, the West recorded the biggest increase in price at 7.8 percent. The Northeast had an increase of 5.8 percent while the South had a gain of 5.4 percent. The Midwest had the smallest incline in price of 4.8 percent. Regionally, all four regions saw a decline in affordability from a year ago. The West had the biggest decline of 10.8 percent. The South followed with a decline of 9.1 percent. The Midwest had a decline of 8.2 while the Northeast had the smallest decline of 8.1 percent. On a monthly basis, affordability is up from last month in two of the four regions. The South had the biggest incline of 2.5 percent followed by the Midwest, which had an incline of 2.1 percent. The West and Northeast both shared a decline in affordability of 0.7 percent. Despite month-to-month changes, the most affordable region was the Midwest, with an index value of 187.2. The least affordable region remained the West where the index was 106.2. For comparison, the index was 151.6 in the South, and 151.7 in the Northeast. Mortgage applications are currently down. Inventory shortage remains with the speed of transactions moving at face pace. Rates are steady, since prices drop the qualifying income decreases and more people can afford to buy a home. While median family income increased and qualifying income decreased, housing affordability will rise and homes will become more affordable. What does housing affordability look like in your market? View the full data release here. The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation here.
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Brandon Farber

Brandon Farber

 

Buying a Home? Factor These Into Your Interest Rate Calculations

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:
Spotlight: Does realtor.com Really Care About REALTORS®? 5 Spooky Seats to Recline on This Halloween The Most (and Least) Valuable States in America The mortgage process can be complicated if you jump in without any prior knowledge on home-buying and lending. The best tool you can arm yourself with is an understanding of how your mortgage interest rate is calculated. Credit can make or break you.
Your credit score will determine how reliable you are in the lending world. The higher your score, the lower your interest rate will likely be. Check your credit on one of the three major credit reporting agency sites—TransUnion, Experian and Equifax—or your credit card company may have a free credit report service (although these aren’t as reliable). Improve your FICO score for a better chance at a lower interest rate. Factor in size and location. State or County: Even your place of residence can affect your rate. Local Mortgage Lenders: Shop around. Interest rates can vary from company to company even if they’re located in the same town. Loan Size: The size of your home can also impact your interest rate. The bigger the loan, the higher your interest rate will be if you’re not putting more money down. Down Payment Size: Your mortgage interest rate may also depend on how much you’re putting down and if your loan includes closing costs and private mortgage insurance (PMI). Putting down less than 20 percent can increase your risk factor and may require PMI, but your interest rate may be lower depending on the loan.
Not all loans are created equal. Loan Length: Your loan terms play a bigger role in interest rate calculations than you think. Have you decided whether you want to pay off your loan in 15 or 30 years? You may pay more per month with a shorter term, but you’ll be paying less interest over the life of your loan. Short-term loans may also have a smaller interest rate. Fixed or Adjustable: You’ll also have to consider whether a fixed- or adjustable-rate loan is right for you. Your interest rate can change over time if you choose an adjustable-rate loan. It may start off low or fixed, but can increase over time depending on market conditions. Fixed-rate loans, however, will have a higher interest rate attached to them. Loan Type: Interest rates can also vary according to your loan type. Choosing a loan can be overwhelming, but a local lender should be able to provide you with the best options. Some of the more popular loans are conventional, FHA and VA loans. While FHA loans have less down payment restrictions and a smaller interest rate, your monthly payment can be more expensive due to the required PMI added on. VA loans can have smaller interest rates and don’t require PMI like FHA does. Conventional loans are widely accepted in the real estate industry as dependable, but your interest rate may be higher. Source: Consumer Financial Protection Bureau (CFPB) Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com. The post Buying a Home? Factor These Into Your Interest Rate Calculations appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

San Francisco: The Sweet Spot for Trick-or-Treaters

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:
Jeff Bezos May Seek HQ2 Close to Home Home Haunted? No Problem, New Survey Shows Answering the Call: HomeSmart CEO Pilots Irma Rescue Mission
The annual Trick-or-Treat Index from Zillow puts San Francisco in the sweet spot: No. 1 for trick-or-treaters. Zillow Trick-or-Treat Index 2017 (PRNewsfoto/Zillow)   Analysts at Zillow began with the Zillow Home Value Index (ZHVI), concocting a formula that includes home values, how close homes are in proximity to each other, and the share of 10-year-olds (and younger) in a given market. Bubble, bubble… “Searching for neighborhoods with the best candy is a Halloween tradition for many kids and their parents,” says Dr. Svenja Gudell, chief economist at Zillow. “Our annual list is a fun way for families to see how their neighborhood stacks up against others when it comes to trick-or-treating. These are places we think will have plenty of candy and lots of young kids running around from door to door.” In the City by the Bay, the top three neighborhoods for trick-or-treaters are Presidio Heights, Sea Cliff and Golden Gate Heights; in No. 2 San Jose, the top three are West San Jose, Willow Glen and Cambrian Park. Is your city out of the running this year? Fear not. “If you don’t live in one of these cities, look for areas that are getting into the Halloween spirit with decorations and lots of costumed kids,” Gudell says. See the 2016 Trick-or-Treat Index.
For more information, please visit www.zillow.com.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.
For the latest real estate news and trends, bookmark RISMedia.com. The post San Francisco: The Sweet Spot for Trick-or-Treaters appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

On the House: What to Expect When It’s Time to Get Your Home Inspected

(TNS)—Buying a house can be difficult enough—especially in today’s market. Even after a seller accepts an offer, the sale is not a done deal until certain “contingencies” are met. Some are straightforward: Some buyers stipulate, for example, that a sale cannot proceed until they sell their current home. Other contingencies are more complicated. Either way, all are in place to protect buyers and sellers, allowing either to walk away from a deal if their conditions are not met. Navigating these contract conditions can be confusing, and in today’s hot real estate market in which some buyers are waiving contingencies in order to win bidding wars, it can be difficult to determine which are important. These days, real estate agents say they have seen buyers waive inspection contingencies to make their offers more attractive. In doing so, buyers are forgoing their rights to an independent inspection, meaning they cannot ask the seller for repairs or walk away from a property if it turns out to be unsatisfactory. In short, buyers are accepting a house as is—and potentially, all of its hidden problems. To help buyers decide how important independent inspections are, we spoke to real estate agents and inspectors about what goes into a home inspection, and whether waiving that condition is a good idea. What exactly is a home inspection?
In most typical real estate transactions, a home inspection is the next step that occurs after a bid is accepted. Buyers are responsible for hiring the inspector before the deal closes, and the process is in place to protect them. The inspector’s job is to examine a home, determining whether there are problems with its exterior or interiors, from the foundation to the roof. The inspector provides a report to a buyer, who can then bring that information to a seller and use it back at the bargaining table. How quickly do I have to schedule one?
“It depends on the contract and the state you’re in,” says Frank Lesh, executive director of the American Society of Home Inspectors. But typically, he adds, buyers have five to 10 days after a home goes under contract. Lesh’s advice: Once a home is under contract, contact an inspector immediately. “Inspectors are busy, especially in hot markets,” he says. “Some people tend to forget and wait until the last minute. You really only have a few days.”
How can I find a well-respected home inspector?
Regulations for home inspectors differ across the United States. In New Jersey, for instance, inspectors are licensed and regulated by the state’s Home Inspection Advisory Committee. To become certified, inspectors must, by law, complete 180 hours of study courses, including 40 hours of unpaid field work in the presence of a licensed inspector. Each inspector must pass a national exam, and complete continuing education every other year. In Pennsylvania, by contrast, home inspectors are not regulated by the state, and instead are required to be a “member in good standing of a national home inspection association,” such as the American Society of Home Inspectors (ASHI) or the International Association of Certified Home Inspectors (interNACHI). Each association has its own requirements on certification and continuing education; for example, ASHI requires inspectors to pass the national exam and to complete 250 inspections to become certified. Continuing education is also required. What does my home inspection cover?
A general home inspection is a noninvasive exam of a seller’s home. “The standards of practice are pretty uniform,” says Pete Ciliberto, owner and chief inspector of Real Estate Inspections, an inspection group. “We are covering all the major components and systems of a house—all of the structural elements, the foundation, exposed framing,” and more. What that means: A general inspector will inspect the general structure of the roof, and the gutters and downspouts around it. He or she will make sure the home’s “flashing”—the thin layer of waterproof material that prevents water from getting into where it does not belong—is correct. The heating and air conditioning systems are also inspected to ensure they are up to snuff. So are ceilings and floors, chimneys and vents. The ventilation of attics is inspected, and a generalized overview of electrical systems is completed. “There are probably over 200 things that we inspect,” Lesh says. What does it not include?
Many things are not included, inspectors say. An inspection is not technically exhaustive, they pointed out, nor does it determine a property’s suitability. Inspectors are not required to determine whether a building is up to code, and they are not required to move furniture, enter crawlspaces, or offer any services besides the inspection. Most important, the experts said, inspectors are not required to determine the presence of rodents or pests. They are not required to assess air quality or test for mold, mildew or fungus. Airborne and environmental hazards are also excluded, meaning radon, lead paint and asbestos tests are not conducted in a general inspection. However, buyers can bring in specialists if they have particular concerns—or hire a general inspector who may be trained in a specialized area. “There are guys who do mold testing, air sampling, and other ancillary services,” Lesh says. “If you want one person to take care of the whole thing, you can (find someone) to do that.” Why should I get one—and should I waive that contingency?
When making a financial decision as significant as purchasing a home, you want to confirm that you are making a wise investment. While inspections are not holistic, they offer a snapshot of a home’s condition, and can give you fair warning of what repairs may be needed now or in the near future. Plus, agents point out, after an inspection report is issued, a buyer can use the report to ask a seller for repairs—or can walk away entirely. “They can ask for anything they want or can terminate for any reason—they do not have to say why,” says Mike McCann, a real estate agent with Berkshire Hathaway HomeServices Fox & Roach, REALTORS®, which has offices in the Mid-Atlantic region. “The fall-through rate is only about 10 to 15 percent of the time, but I will tell you now, over 90 percent of the time, concessions are made after the inspections.” McCann says he advises clients to never waive the inspection. “If they don’t own the home, there are many things about it that they don’t know yet. You can’t check the roof. You can’t see every joist. Having a professional go through that is very important.” ©2017 The Philadelphia Inquirer Distributed by Tribune Content Agency, LLC For the latest real estate news and trends, bookmark RISMedia.com. The post On the House: What to Expect When It’s Time to Get Your Home Inspected appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

Home Purchase Originations Rose by 10 Percent in 2016, But are Still Below Pre-Housing Crash Level

Amid improving macroeconomic conditions, residential lending continued to increase in 2016, based on the recently released 2016 Home Mortgage Disclosure Act (HMDA) data. [1] [2] The number of first-lien loan originations for the purchase of one-to-four unit properties intended for owner occupancy rose to 3.46 million in 2016, a 10 percent increase from 3.12 million in 2015. Although residential lending has been growing at double-digit rates since 2012, loan originations in 2016 were only at three-fourths of the peak level of 4.83 million in 2005. Lending has not fully recovered due to the interplay of factors relating to the borrower’s capacity to obtain a mortgage, tighter lending standards, and the faster appreciation of housing prices relative to income growth amid a lack of housing supply. An increasing share of originations has gone to high income earners.[3] By type of loan, conventional loans accounted for 61 percent, well below their 90 percent share in 2005-2006, when loan originations rose to a peak of 4.42 million. FHA-insured loans accounted for 25 percent, up from 5.5 percent in 2005, but the level is well below the 40 percent share in 2009-2010 when FHA increased lending as conventional lending collapsed. FHA’s share to loan originations has declined in part because of the increase in upfront and annual mortgage insurance premiums and the change in duration of payment of premiums to the full term of the loan for loans that have more than 90 percent loan-to-value ratios.[4] Meanwhile, VA-guaranteed and RHS/FSA-guaranteed loan originations have generally continued to increase since 2004, except in 2005-2007 when the number of loans decreased slightly. VA-guaranteed loans accounted for 10 percent of originations, while RHS/FSA accounted for three percent. Low-to-Middle Income Borrowers Were More Likely Obtain FHA and FSA/RHS-Insured Loans, While High-Income Borrowers Were More Likely to Obtain Conventional and VA-Guaranteed Loans Residential lending has not fully recovered to pre-crash levels due to the interplay of demand (borrower) and supply (lender) factors. On the borrower side, the fast pace of house prices relative to income growth may be one factor. As of July 2017, the median sales price of existing homes sold has increased by 68 percent since 2012 compared to 15 percent growth in median family income. On the lender side, tighter lending standards (loan-to-value, debt-to-income, credit scores) have also made obtaining a mortgage more difficult or costly, especially for low to middle-income households/earners. The chart below shows that shows that applicants whose gross annual incomes are “high” (relative to the U.S. median household income of $59,039 in 2016[5]) were likely to obtain a conventional loan: the median applicant income on approved conventional loans in 2016 was $90,783 and the median applicant income on approved VA-guaranteed loans was $74,863. Applicants with incomes that were in the range of the U.S. household median income were more likely to obtain an FHA-insured and FSA/RHS loans: the median applicant income on FHA-insured loans was $60,007 and the median applicant income on approved FSA/RHS loans was $47,211. Although applicants with lower incomes were more likely to obtain an FHA-insured loan, the median loan amount was also small, at $179,172. Conventional and VA-guaranteed originated loan amounts were typically larger, but borrowers typically had higher incomes and were more likely to put in larger downpayment, as suggested by the lower loan-to-income ratios on conventional loans. The share of loan originations going to “high” income applicants (applicant income is 80% to 120% of the median metropolitan area income where the census tract of the property is located) has been steadily rising. As of 2016, 46 percent of loan originations went to applicants whose incomes were above 120 percent of the metropolitan area median income, up from 35 percent in 2009. Amid rising home prices, jumbo loans —loans that exceed the loan limits that the government sponsored enterprises (Fannie Mae and Freddie Mac)— rose to nine percent of originations[6], higher than the 4.3 percent share in 2004. Not Meeting Debt to Income Limit is Major Reason for Denial HMDA does not collect data on credit scores, loan-to-value, and debt-to-income on individual applicants, so an evaluation of why applicants with incomes higher than the household income were denied is difficult to assess. However, HMDA allows the lender to provide up to three reasons for the denial (in no order of preference). Based on the first reason listed (which may be deemed to be a random sample of the denial reasons), not meeting the debt-to-income (DTI) ratio was the major reason provided by lenders why applicants were denied (29 percent), followed by credit history (22 percent) and insufficient collateral or downpayment (15 percent). Not meeting the debt-to-income ratio was the major reason applications were denied across all loan types. (In this regard, Fannie Mae’s decision in July 2017 to increase its back-end DTI ratio limit from 45 percent to 50 percent is a positive move to ease the constraints for mortgage borrowers with 50 percent DTI whose risk profile is not significantly different from the risk profile of borrowers with 45 percent DTI.)   Rising House Prices, Lack of Downpayment, and Weak Credit Profiles Made Homes Less Affordable For middle-income borrowers, an FHA loan is the best option (i.e., the borrower is more likely to get approved), but the faster appreciation of home prices relative to income growth has increasingly made a home purchase less affordable. Since 2012, house prices have increased by 68 percent, while incomes have increased by 15 percent. Low downpayment conventional loans are available, but middle-income earners may be hard pressed to meet the downpayment on a bigger loan. Moreover, borrowers with less than sterling credit profiles and with little downpament bear additional costs associated with a higher mortgage rate that government-sponsored enterprises (Fannie Mae and Freddie Mac) charge to reflect the higher borrower risk (called loan level price adjustments, which reduce lender’s fees). [7] For example, Fannie Mae assess an LLPA of 1.5 percent of the loan ($1,500 on a $100,000 loan) on a loan it will purchase from a lender where the a borrower has a 680 FICO score and a loan with a 95 loan-to-value ratio (or 5 percent downpayment), The LLPA rises to 3.5 percent ($3,750) for borrowers with less than 620 FICO score. LLPAs increase the mortgage rate charged to borrowers because lenders make up for the reduction in fees arising from the LLPA by increasing the mortgage rate charged to the borrower. In summary, the latest 2016 Home Mortgage Disclosure Act data indicates that residential lending has been growing at double-digit rates since 2012. However, loan originations remain below 2005 levels for reasons related to the interplay of borrower’s income and credit profiles, tighter lending standards, and rising home prices due to inadequate supply. For these reasons, an increasing share of originations[8] has gone to high income earners. [1] The author thanks Hua Zhong, Data Scientist, for writing the code that greatly facilitated the tabulation of the HMDA data. [2] The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board’s Regulation C. On July 21, 2011, the rule-writing authority of Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB). Regulation C requires lending institutions to report public loan data. Federally-insured banks, savings institutions, credit unions, and non-depository mortgage financial institutions that meet Regulation C requirements for asset size, presence in a metropolitan area, number of originations, and whose loans are intended for sale to the GSEs, are required to report their lending transactions. In 2016, there were 16.3 million HMDA records from 6,762 financial institutions. According to FDIC, there were 9,498 FDIC-insured and FIDC-supervised institutions as of June 2017. See https://www.ffiec.gov/hmda/, https://www.ffiec.gov/hmda/pdf/2013guide.pdf, https://www.fdic.gov/bank/statistical/stats/ [3] First-lien, one-to-four family, owner occupied, home purchase originated [4] The annual mortgage insurance premium increased from 0.55 percent of the loan amount to 1.35 percent of the loan amount from 2010 to 2013 and it was reduced to 0.85 percent for most borrowers in 2015 (loans less than or equal to $625,500 and greater than 95% LTV). The upfront mortgage insurance premium was increased from 1.75 percent, to 2.25 percent, then 1.0 percent in 2010 and then raised to 1.75 percent in 2012. Starting with cases in June 3, 2013, loans with more than 90% LTV are charged the annual MIP for the term of the loan. See https://www.fha.com/fha_requirements_mortgage_insurance [5] U.S. Census Bureau, 2016 Annual Social and Economic Supplement of the Current Population Survey. [6] Again, first-lien, one-to-four family, home purchase, owner occupied. [7]LLPAs as not added directly to the mortgage rate. Rather, the LLPAs are deducted from the lender’s fees (e.g., fees for underwriting, appraisal, recording)) when they sell the loan to the GSEs. Lenders recover the reduction in fees by charging the borrower a higher mortgage rate. [8] First-lien, one-to-four family, owner occupied, home purchase originated
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Brandon Farber

Brandon Farber

 

7 Secrets for Adding a Finishing Touch to Your Staging

Photo credit: Blinds.com By Katie Laird, guest contributor When staging a home for an open house, you can transform a space from an unimpressive, run-of-the-mill property to one with a “wow” factor. But without a little extra attention to detail, even the most professionally staged homes can leave something to be desired. Don’t let staging efforts go to waste—advise your clients to put the finishing touches on their staged homes, and boost their chances of selling. Here is a list of seven often overlooked finishing touches that can make a home shine. 1. Switch the lights. It may seem like a big project, but switching out ceiling light fixtures is actually quite simple. Replacing old or broken fixtures can add a polished look and make a home feel updated. Remember that during showings and open houses, all lights will be on, so buyers’ eyes will be drawn to them. Choose something timeless that will go with any décor. And don’t forget the switch plates – dingy or yellowed light switches can make a staged room feel incomplete. 2. Consider window treatments. Your clients may hesitate to replace blinds or shades before they move, because they can’t take them when they go. But remind them that custom window treatments can add significant value to the sale price. The right treatments can add privacy, style, and even energy efficiency to the home. They’re also the perfect way to frame a professionally-staged room. During your showing, treatments should allow as much natural light into the home as possible. Natural light balances any overly yellow lightbulbs and provides a blank canvas for the buyers to see clearly. 3. Touch-up the paint. A professionally staged home will have impeccable furnishings and accessories. But chipped baseboards or scuffed walls can undo that polished look in an instant. Advise your clients to go through the home with touch-up paint and get rid of the most obvious offenses. It’s a simple way to hide the home’s age, and keep potential buyers focused on the its best attributes. 4. Give the floors some attention. Stagers may add area rugs, but their not to hide scratched hardwoods or stained carpeting. Recommend that your clients make the investment into buffing and deep cleaning the flooring, so the rest of the staging looks at home in the pristine environment. 5. Add a little life. Staging companies may add artificial plants as décor, but the living variety are even more appealing. Fresh flowers and houseplants brighten dining rooms, entryways, and bedside tables. Go neutral white or use this as an opportunity to add a pop of color. Also, try bowls of fruit, hanging ferns, or a small window herb garden to avoid having to put fresh flowers out every week. Don’t forget to look outside and freshen up the flower bed with new blooms and/or add a few potted plants around the front door. 6. Remove personal items. Another final touch to making sure the staging looks natural is to remove any overly personal distractions. Remove family photos and memorabilia. If your sellers want to leave the frames on the wall to hide nail holes, have them consider putting a nice landscape print or piece of scrapbook paper in that spot instead. This goes for art, too. Your potential buyers might not share your enthusiasm for turn of the century pop-art, so the best choice is to swap it out for something classic, or remove completely. 7. Don’t forget storage areas. Stagers will give special attention to the main living areas, but storage spaces like garages, closets, and basements are also vital selling points that need attention. Potential buyers look for roomy areas where they’ll be able to fit all their stuff. If basements and garages are overcrowded, it might send the signal that the home isn’t big enough for the buyers’ needs. Sellers may benefit from renting a storage space to help declutter and make every inch of the home irresistible. ABOUT THE AUTHOR: Katie Laird is a frequent public speaker on social media marketing, social customer care, and profitable company culture. An active blogger and early social technology adopter, you can find her online as “happykatie” sharing home décor, yoga, parenting and vegetarian cooking tips. Laird is also the director of social marketing for Blinds.com.
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Brandon Farber

Brandon Farber

 

Buying in a Seller’s Market: Who’s the Winner?

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com: Crowdfunding Your Way Into a Home Great Spaces: Living Luxe in Beautiful Bradenton Survey: Broker Operations and Technology The change of season often brings a shift in real estate market conditions. Inventory tends to decline and buyers may become more aggressive in their home search. This change can affect real estate transactions in a variety of ways. Here’s what you need to know about buying or selling a home in a seller’s market:
Time is valuable.
Buyers don’t have as many options as during the peak purchasing months. This means more competition because there aren’t as many homes to look at in their price points. Buyers need to know what they want. If they absolutely need three bedrooms, then they’ll have to ignore that two-bedroom house or risk losing out on better opportunities. They will also need to be prepared to make offers quickly. Buyers without a preapproval will not be considered and will likely miss out on highest and best deadlines by the time they obtain one. On the other hand, sellers will have an easier time selling their home. If in good condition, their home will likely be the cream of the crop during low-inventory months. Offers are aggressive.
In a seller’s market, buyers will often have to deal with multiple-offer situations. If they don’t bring their best offer to the table, they will most likely lose out. Sellers can also prioritize stronger terms. They may decide to go with a lower offer if the buyer can close faster or is putting more money down. A combination of the highest purchase price with a 20 percent down payment and a reliable lender is usually the winner. Of course, you can’t forget that cash is king. An all-cash offer will likely trump any others on the table. Negotiations are a game changer.
Unfortunately, buyers may lose some negotiating power in a seller’s market. Unless the seller is incredibly motivated to get rid of their property, they may take advantage by refusing to take care of some inspection items. Buyers should be wary of asking for too much, as even big-ticket items may not be taken care of. Unless something is a safety or health hazard, it shouldn’t even be brought up. Sellers may also decide to be more selective about what they are leaving with the house. They may decide not to include appliances such as a refrigerator, dishwasher or washer and dryer. Even small things like tone in a negotiation email should be taken into consideration. Alienating the sellers this early in the game can force them to go with a back-up offer. Real estate agents are essential.
Even though a seller’s market clearly tips the scale in one direction, buyers are more likely to lose out if they are not working with an experienced agent. Likewise, sellers may not even be aware of their advantage without the help of a real estate professional. Agents will advocate for their clients—whether they are buyers or sellers—by helping them get as much as possible during sale price and inspection negotiations. Things that may not seem significant—such as getting all of the paperwork submitted correctly, sending emails to the opposing agent and doing due diligence on the property—can make a huge difference in a seller’s market. Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com. The post Buying in a Seller’s Market: Who’s the Winner? appeared first on RISMedia.
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Brandon Farber

Brandon Farber

 

What We’re Reading: October 9-13

Famous locations, social media addiction, financial education, cleaning, energy, pets, internet shopping, names, security, and nail houses.
Shut up and take our money. Ugh, look at those crowds! We’d close it off, too. How addicted are you to the “bright dings of social pleasure?” Recently dubbed Nobel Laureate, Richard Thaler, has a bleak outlook on our ability to apply personal finance education to our lives. Wait, people don’t clean these things? Philip Wilson/flickr/2012 If you are going to have a 3,123 sq. ft. home, it’s probably best to make it as energy efficient as possible. Are we surprised that IKEA is branching out into furniture and toys for pets? Nah. Are we surprised that Amazon sells whole houses? A little. Geez, what did this wasp do to deserve this name? Is this an innocuous or fishy security system? Speaking of safety, you’ll never guess which city ranked #19 of the world’s safest cities. How much could you put up with around you to stay put in a house you love?
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Brandon Farber

Brandon Farber

 

New and Updated in the Library – October 2017

The following References have recently been updated in the Library: Arbitration & Dispute Resolution Traditionally, real estate industry disputes rely on negotiation for solutions. If negotiation fails, litigation is often initiated. Mediation involves the skillful intervention of a third-party professional to help resolve disputes that arise between two or more parties. Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts. The parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters,” or “arbitral tribunal”), whose decision (the “award”) they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. Franchises vs. Independents Most REALTORS® are likely to be affiliated with an independent, non-franchised company. The decision to join a franchise or an independent firm can be difficult. There are pros and cons to each. Starting Your Career in Commercial Real Estate Though both the U.S. and world economies remain in a somewhat precarious state, the commercial real estate market has shown incremental improvements since the economic collapse of the 2000s. Navigating the commercial real estate landscape often requires deft knowledge and skill. Resource Efficiency Mortgages The green movement is here to stay, and nowhere is this more apparent than in the housing market. Vacation, Resort and Second Homes In 2016, low housing inventory in 2016 impacted housing sales and prices across the nation. As inventory remained constrained, home prices increased.  Also in 2016, the share of buyers who purchased a primary residence rose for the third year to 70 percent from 65 percent. The share of vacation home buyers declined for the third straight year to 12 percent from 16 percent.  The share of investment buyers remained unchanged at 19 percent for the third straight year.  The median vacation and investor home purchase price was higher in 2016 than in 2015. The typical price was $200,000 for vacation buyers, up from $192,000. Investors typically purchased a median-priced property of $155,000, up from $143,500. Thirty-six percent of investors and 29 percent of vacation buyers paid all-cash for their property purchase. When financing their purchase, 45 percent of vacation buyers and 47 percent of investors financed less than 70 percent of their purchase.  The sales estimates are based on responses from nearly 2,099 U.S. adults who purchased a home in the last year.  On this page, you will find information on the activity in the vacation/second home market as well as tips on working with the vacation/second home buyer. You’ll also uncover a variety of resources available from the National Association in addition to updates on the RSPS certification. Industrial & Warehouse The outlook for the industrial/warehouse sector continues to brighten, including expected decreases in vacancy rates and projected gains in rental rates. The demand for warehouse space is on the rise and gaining the attention of companies and investors. Read about market data and statistics; innovative ways to market and utilize warehouse space; and insight into the how the legalization of marijuana is making an impact on the warehouse industry. Effects of Trails and Greenways on Property Values Examining the effects trails and greenways have on the value of surrounding properties and some possible resources people can use to educate communities about them. Small House Movement Does size matter? The current economic climate as well as a desire for a greener lifestyle has driven some Americans to examine how much space they really need. The small home movement is hardly a novel concept—just ask New Yorkers who often spend decades in studio apartments.
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Brandon Farber

Brandon Farber

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