Real property disclosure

property disclosure
Top home issues found (from cincinkyrealestate.com)

Finally, there is a new resource to get real property disclosure for home buyers. Home buyers can access property information that is not always readily available or hard to find.  A July 19th RealtyTrac (realtytrac.com) press release introduced Attom Data Solutions, their new parent company.  The introduction described what the company offers to the real estate industry and consumers.  Attom Data Solutions’ (attomdata.com) self-stated mission is: “to increase real estate transparency by arming businesses and consumers with the property and neighborhood data needed to make wise decisions.

You may recognize RealtyTrac as being the go-to resource for foreclosed homes.  But what you may not realize is, like other real estate websites it is an aggregator of information.  RealtyTrac describes itself as “the leading provider of comprehensive housing data and analytics for the real estate and financial services industries…” by providing information on over 125 million properties.

So the idea of aggregating property information is not new.  However, until now, there has not been this amount of information available for each property located in one place.  The size and scope of Attom Data Solutions’ aggregated information is mindboggling.  RealtyTrac’s press release revealed that the new parent company’s database of property information (called “ATTOM Data Warehouse”) holds more than 9 terabytes of information!  (One terabyte is 1 trillion bytes).  Putting the jargon into perspective, the data represents 99% of the U.S. population.  And it features “enhanced and standardized data for more than 150 million U.S. property parcels.”

Before the ATTOM Data Warehouse, you would have to check a number of websites and make inquiries to several local agencies.  The aggregated info includes: a property’s historical and current public records, ownership, mortgages, foreclosures, neighborhood information, demographics, environmental issues, natural hazard information, potential health hazards, and property features and neighborhood value information.

Besides being able to help you decide on which home to buy, Attom Data solutions’ reports may also help you decide on price.  Additionally, home sellers may find the information useful as a form of disclosure, to answer many of the questions that are often difficult to find.  Attom Data Solutions is reportedly offering data licensing to the industry, however the information is also available via their consumer websites RealtyTrac.com, Homefacts.com and HomeDisclosure.com.

The idea of consolidating property information into one location has been trending for several years.  There have even been hints of creating a national MLS.  Several years ago, the National Association of Realtors® created the Realtors Property Resource® (narrpr.com) to assist Realtors® in providing detailed reports to home buyers and sellers.  Besides offering details on neighborhood comps, the generated reports incorporate data from various sources. Buyers and sellers are informed of analytics, trends and other factors. Of course, RPR is exclusive to Realtors®.  But if you receive a report from your agent, they can help you with the analysis.

The amount of information about any given property seems to be ever increasing.  However, an ongoing issue echoed among professionals and consumers is that the data is not always reliable.  Even information that is pulled from public records are not always current. Verify the veracity included in any property report by cross checking several resources.

Copyright © Dan Krell

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

About friendly advice

friendly advice
Human behavior (from thediagonal.com).

Home buyers and sellers often seek advice from others.  Even when they’re working with a professional who provides expert guidance.  You might think it’s good to get validation from others on your real estate decisions.  However, a Vancouver consumer study suggests that following friendly advice may be a bad idea (Friends give bad advice; The Sun, 4/14/2011, p29).

Research of consumer psychology and behavior have time and again found that consumers want to be correct in their choices.  They want to feel good about their decisions.  They want to believe that their purchases are the best, and the professionals they choose are tops in their field.  Consumers are known to behave irrationally to prevent the cognitive dissonance that occurs when they are confronted with conflicting thoughts about their choices. And that means they often make poor decisions.

Mintel’s American Lifestyles 2015 report indicated that 69% of those surveyed sought out product and service reviews before purchasing.  While 57% of those surveyed sought out recommendations from social media.  Given the finding, it is suggested that there may be emphasis for communal thinking over “individual preference.”  However, about 38% of those surveyed considered independent review websites as “trustworthy;” while 34% found them useful.  But, 31% found social media contacts trustworthy; while 25% found them useful (Seven in 10 Americans seek out opinions before making purchases; mintel.com; 6/3/2015).

Seeking out friendly advice is part of herding behavior, which has been found to be a part of our everyday decision making process.  A groundbreaking study of home owners’ decisions to walk away from their mortgages (strategic default) during the great recession revealed how people seek and give advice (Luchtenberg & Seiler (2013). The effect of exogenous information signal strength on herding. Review of Behavioral Finance, 5(2),153-174).  The study concluded that people tend to seek advice when they feel that their choice is not in agreement with others.  While advice was readily given by those who felt their choices were believed to be the consensus.

Buying and selling a home may not always feel as if it is a rational process. And you may think it logical to seek friendly advice.  However, indiscriminately following advice may not be the best practice because all real estate transactions are different.  Each transaction presents a different set of variables such as personalities, market conditions, contract terms, etc.

Given the research, more often than not, you are doomed to follow the advice of a friend or family member – even when confronted with the evidence that the advice is ill advised.   You can infer from the Vancouver study mentioned earlier that friends and family feel “pressured” to give you advice on your real estate transaction because they want to be helpful.  Furthermore, herding research suggests that you probably give emphasis to advice from friends and family because following their advice will likely make you feel you are “doing the right thing,” as well as increase your acceptance by them.

Regardless of your rationale, your real estate decisions are most likely based in psycho-emotional needs and/or fears (such as status, acceptance, and avoidance of failure).  Breaking away from the herd is difficult.  Improve your decisions and make your transaction successful by pursuing balanced information and becoming aware of your motivations.

Copyright © Dan Krell

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Home buyer life hacks

home buyer life hacks
5 Home Buyer Life Hacks

“Life hacks” have been trending everywhere the last few years, from the internet to social media.  Life hacks are typically actions or wisdoms to make life easier.  However, home buyer life hacks are not easy to find.

The home buying experience can be time consuming and stressful.  Over time, the home buyer’s responsibilities change.  In fact, the home buying experience has drastically changed in the last decade.  Consider that mortgage programs and Realtor® contracts changed and continue to evolve.  Which includes the TILA-RESPA Integrated Disclosure (TRID) rule that went into effect last fall, which changed how a transaction settles.  Here are a five home buyer life hacks to make the experience straightforward and more enjoyable.

The first home buyer life hack is to learn about the home buying process.  Certainly a must for first time home buyers.  However, even experienced home buyers may find themselves in strange waters if they’ve not bought or sold a home in the last couple of years.  Becoming acquainted with home buying process can help you anticipate and prevent most surprises that can upset the flow of the transaction.

Home buyer life hack number 2 – make a budget.  Creating a budget may take the romance out of the buying process, but will help you with your home search and contract decisions down the road.  Consult a professional if necessary.  In making your budget, consider your income, debts and other financial obligations, as well as your life style.  Make a housing budget that includes mortgage, property taxes, HOA or condo fees (if any), homeowner’s insurance, utilities and maintenance.  In creating your budget, also consider future changes to income and home related cost increases.

Home buyer life hack number 3 – know what to expect from the housing market.  Knowing whether the housing market is benefitting the seller or buyer can help decide on a winning home buying strategy.  Understanding that a low inventory market may necessitate you and your agent to do a little more leg work to find homes for sale.  Know the current housing trends for the neighborhoods you are perusing, so you can prepare for competition and multiple offer scenarios.

Home buyer life hack number 4 – hire a professional.  The process isn’t rocket science, however, you can easily find yourself in over your head if you’re not experienced in buying a home in today’s market.  Although some home buyers believe they can get a better deal by not using an agent to help them buy a home, it could end up costing more because of poor negotiating in price, home inspection, and other add-ons.  Hiring a buyer agent can also free up time that is necessary to conduct the process.  Experts know the market such that they can help you determine the best offer price.  They can also package your offer in a way that facilitates the transaction.

Most home buyers will follow home buyer life hacks 1 through 4.  However, they will take for granted that everything they are told is true.  Which brings us to home buyer life hack number 5 – do your due diligence.  As you can imagine, not everything you are told is true or depicted accurately.  “Trust and verify” can help you identify and reduce hidden and obscure risks by verifying the truth.  Conduct your due diligence throughout the home buying process; from the veracity of a seller’s statements about their home to vetting the professionals you hire.

Copyright © Dan Krell

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Brexit benefits US housing

Brexit benefits US housing.
International home buyers (infographic from realtor.org)

The immediate response of Great Britain’s referendum to exit from the European Union was one of anxiety and fear.  Some thought the separation would set off a global recession, matching the financial crisis of 2008.  While others believed it would be a blip on the financial radar.  Of course, the housing industry is watching to see how if the aftermath of the Brexit will affect home buyers and sellers.  And it looks as if Brexit benefits US housing.

If you remember, last summer’s US market gyrations were attributed to China’s stock market declines.  As a result, many home buyers who relied on their 401k’s (or other investments) for their down payments had to make other plans. Some were unable to buy.  At that time, the National Association of Realtors® reported a decline in last August’s existing home sales, only to rebound in September (realtor.org).  Will the aftermath of last week’s Brexit have a similar effect? Or maybe Brexit benefits US housing.

Some expect that British home prices will fall as a result of the Brexit, which could affect our housing market.  Foreign home buyer investment in US housing will withdraw as foreign cash will look to the UK for housing bargains.  This will most likely affect the luxury home sector of the market, where many foreign home buyers have parked their money.

In the meantime, initial reactions indicate that the Brexit benefits US housing!  AnnaMaria Andriotis, writing for The Wall Street Journal (Mortgage Rates: How Low Can They Go?; wsj.com; June 28,2016) reported that mortgage interest rates may go lower as a result of the Brexit.  Lower interest rates could make housing more affordable for home buyers, while home owners continue to have opportunities to lower their mortgage payments.

The housing market has already been brisk.  The NAR reported on June 22nd that existing home sales increased to its highest levels in nine years!  Additionally, the S&P/Case-Shiller Home Price Index (spindices.com) reported June 28th revealed an additional 5% year-over-year increase for April 2016.

NAR chief economist Lawrence Yun concluded that low mortgage rates are an incentive for many home buyers.  Although he stated that first time home buyers are finding it difficult to enter the market for various reasons, repeat home buyers make up the majority of home sales.  As home prices increase, many repeat home buyers are finding down payment funds in the form of the proceeds of their home sales.

Yun felt that first time home buyers may find that increasing home prices will be a continuing obstacle.  This is compounded by the enduring low housing inventory.  However, new home construction may add other options for home buyers.

Aside from the interest rate benefit to home buyers, mortgage lenders are finding new programs to help those with little down payment funds!  Of course, the venerable FHA mortgage has been the go-to mortgage for those who qualify, because the down payment can be as low as 3.5%.  The downside to the FHA mortgage is the mortgage insurance premium.  To compete, Fannie Mae and Freddie Mac offer a 3% down payment program to those who qualify.  Like its FHA counterpart, the conventional 3% down payment program has also required private mortgage insurance.

However, HousingWire (hosuingwire.com) has reported that a few lenders offer a 3% down payment mortgage program without the PMI.  And within the last seven days, HousingWire reported that Quicken Loans and Guaranteed Rate Mortgage offer a 1% down payment mortgage program to those who qualify!

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Vacation home buying

Buying a vacation home

Vacation Home
Vacation Homes (infographic from realtor.org)

A trip to the beach or mountains may have you wondering about owning your own vacation home.  And as it happened you’re not alone!  An April 1st 2015 National Association of Realtors® press release estimated that vacation home sales bounced back to peak levels in 2014.  There was a massive 57.4% increase over 2013 sales!  In contrast, during the same period there was an estimated 7.4% decrease in investment home sales. And an estimated 12.8% decrease in owner occupied home sales (realtor.org).

Although your motivations may be personal, the NAR’s 2015 Investment and Vacation Home Buyers Survey revealed that there are various reasons to buy a vacation home.  Not a surprise, a majority of those surveyed (33% of respondents) indicated the primary reason they bought was to use for vacations or family retreats.  However, 19% of respondents indicated their purchase was for a future retirement home, while 11% or respondents bought for the home to be used as a rental property.

Do the research

You’ll find vacation homes in different styles, sizes and prices.  However, your favorite destination may dictate the price range and style.  You may realize that although you are able to afford the week’s rental at your favorite retreat, you can’t afford to buy a vacation home there.  However, if you broaden the search area, you may find suitable and lower priced vacation home nearby.

Benefits

You may have heard others talk about the benefits of their vacation home, such as being able to visit any time they desire without having to worry about reservations, or restrictive check-in and check-out times.  They usually don’t have to worry about having too many guests either, as they can invite whomever they wish to keep them company.  And they don’t have to worry about special accommodations – it’s their home after all!

Disadvantages

There are benefits of owning your own vacation to be sure.  However, it’s probable that you may not hear vacation home owners talk about the downside.  Jeff Brown, writing for US News and World Report, stated: “A second home can produce a wonderful family tradition or turn into a stress-inducing money pit.” (The Pros and Cons of Investing in a Vacation Home; usnews.com; February 10, 2016).  Brown quoted Alison Bernstein, founder of Suburban Jungle, saying: “It is less expensive to stay in hotels in various destinations than it is to upkeep a home, including the hidden expenses of caretaking, overall operations of a home and property taxes…However, for those that are able to enjoy it, it is definitely worth it.”

Brown points out the increasing costs of ownership.  Property taxes, insurance, and possibly a condo or HOA fee can increase.  Additionally, the vacation home requires regular maintenance just like your primary residence.  Repairs may compel you to make extra trips to work on the home rather than being a relaxing holiday.

Brown cautions that a vacation home may not be the best vehicle for investment because of the volatility of resort property.  Additionally, if you need the money, it’s more difficult to tap the equity in a second home.  Applying the tax advantages can be tricky too, so consulting with a tax professional before buying a vacation home would be wise.  Self-managing the property can become aggravating, as it can be difficult to find tenants during the off season; however, hiring a management company can be pricey.

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.