Unpacking is part of the buying process

unpacking tips
Unpacking tips (infographic from visual.ly)

People don’t really give it much thought until they’ve already moved.  Maybe that’s the reason for a lack of information and guidance about unpacking.  I estimate that for every six articles about packing and moving, there’s probably one about unpacking.  And like buying a home and moving; there should be more thought to unpacking because it’s the first activity that makes your new digs feel like home.

Unlike packing for a move and decluttering, unpacking seems to get left out of the home buying process.  Many believe that you instinctively come home after settlement (or signing a lease) and just unload all the boxes and just begin living as you did in your previous home.  But the reality is that unpacking can be just as, if not more, overwhelming than the move itself.   And this applies to whether you’ve hired a moving company or concierge service to unpack for you, or you do it on your own.

That’s correct, you can hire someone to unpack for you.  However, just like packing house, it can get expensive.  Of course, charges vary.  However, if this is the way you decide to go – get multiple estimates from insured and bonded companies.  Once the service unpacks for you, consider taking the time to review where they stored items.  This will save you time later when you need to find something in a hurry.

Unpacking a house on your own may seem overwhelming (even with the help of friends), but don’t give in to procrastination.  Extreme procrastination can lead you to living out of moving boxes for a prolonged period.  Instead, make a simple unpacking plan and prioritize.  Although the chore of unpacking seems to be the physical aspect of unloading boxes; there can be an emotional drain of deciding where to best place and store items.

When packing your previous home, you most likely packed each room and labeled each moving box for their destination room.  And although unpacking each room in sequence may seem logical, you most likely won’t get it all done in one day.  The result can leave you frantically digging through boxes searching for items you use on a daily basis.

To avoid this trap, consider unpacking essential items first.  Having the essentials put away first will help you feel as if there is continuity.  You will find it easier going about your daily routine without disruption – even if you don’t unpack all the boxes.  Of course, it helps if you’ve marked the boxes containing essential items when you packed.  However, if you didn’t, that’s ok too.

If you’ve unpacked the essentials first, you’ll notice that you’ve become aware of the available storage spaces.  As a result, you’ve set the tone for each room, and the entire unpacking process becomes easier.  You’ll be able to go through your room priority list quicker and get through storing items where they belong with less deliberation and angst.

When unpacking essentials, focus on the kitchen and bathrooms first.  Chances are that you will need to use these rooms throughout the day as you unpack.  Then go through your priority list of rooms, unpacking the essentials.

Once the essentials are put away, you may feel at ease and in control.  You can then unpack rooms in sequence or as prioritized.  You may also decide to go through the remaining boxes at a leisurely pace.

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.

Lot premium value on new home

lot premium and new home
Buying a new home (infographic from jeffruttbuilder.com)

There is an ongoing debate about the lot premium.  Essentially, is there a value of paying a “premium” for a home site when buying a new home?  Certainly, the home builder is seeking to increase their profit margin.  But for a home buyer, there is a question of future value at resale.

A home builder will typically sell certain home sites within a community at a higher price, effectively increasing the price of a new home.  Some home sites are deemed to be more “valuable” because of the lot’s characteristics and/or location.  A lot premium may be charged if a home site is larger, flatter, and/or more symmetrical than others in the community.  Lots tucked away from the main road or close to common areas are typically premium priced as well.

Don’t hate the home builder for charging a lot premium on your new home.  Home builders are trying to sustain a business by recouping the cost and financial risk of land development.  Placing a premium on home sites has become a science, and research consultants typically provide data on developing home sites and pricing.

However, there is also an economic factor.  When the housing market was still reeling from the Great Recession, charging a lot premium was not common.  However, home builders added lot premiums when sales recovered.

John Burns, CEO of John Burns Consulting, wrote about the rising premiums on home sites as the new home market recovered in 2013 (Lot Premiums Are Back!; realestateconsulting.com; May 23,2013), stating “Our consulting team has noted a significant trend in the market: lot premiums are rising substantially!” Burns broke down lot premiums based on region.  And, of course, lot premiums increased according to how the region’s housing market recovered.  For example, lot premiums in Florida were about 10 percent at that time; While Southern California was trending to include the premium in the list price to help stabilize prices.  Also, the DC region’s housing market was still recovering and home builders were only charging 1 to 2 percent for a lot premium.

Burns also noted that buyer demographics can also dictate lot premiums.  At that time, it was reported that home builders in Southern California were charging a 5 percent premium based on feng shui and home site orientation.  And a 20 percent premium was charged for home sites with “good feng shui” that were located on a cul-de-sac.

The availability of buildable home sites may also dictate lot premium charges in the near future.  A recent National Association of Home Builders survey indicated a shortage of home building lots (Lot Shortages Worse Than Ever According to NAHB Survey; nahb.org; May 26, 2016).  NAHB Chief Economist Robert Dietz stated, “We have monitored lot availability for the last two decades, and it is clear that the scarcity of building lots is growing… Whether due to land use policy, geographic constraints or other regulatory constraints, the lack of lots for residential construction will have negative impacts on housing affordability in many markets.”

To understand the relative numbers, NAHB stated “…this record shortage comes at a time when new homes are being started at a rate of under 1.2 million a year. In 2005, when total housing starts were over 2 million, the share of builders reporting a shortage of lots was 53 percent…”

If you pay a lot premium on a new home, however, it is not always clear that you would be able to pass on the premium when you re-sell.  But a recent study conducted by Paul K. Asabere and Forrest E. Huffman (The Relative Impacts of Trails and Greenbelts on Home Price; Journal of Real Estate Finance and Economics; May 2009; vol 38, p408) provides some data on what you might expect: home sites close to trails, greenbelts, and greenways can demand a price premium of up to 5 percent.  A similar effect can also be found in homes with a “view” or in a cul-de-sac; as well as homes that are adjacent to a golf course, playground, tennis court, neighborhood pool.

Copyright © Dan Krell
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Credit report reforms

credit report
Credit report (infographic from dollarcents.org)

One of the main reasons you’re likely to be declined for a mortgage is your credit report.  More specifically, derogatory information contained therein.  Unfortunately, many of us are still not proactive when it comes to our credit report.  And for many, erroneous information that is foisted upon them without their knowledge affect their daily lives.

Flawed data has been a long standing issue in the credit industry.  A 2012 study conducted by the Federal Trade Commission (ftc.gov) found that “one in five consumers” disputed and corrected an error that was reported to a credit reporting agency (CRA).  A follow-up study conducted in 2015 found that “Most consumers [almost 70 percent] who previously reported an unresolved error on one of their three major credit reports believe that at least one piece of disputed information on their report is still inaccurate.”  The follow-up study recommended that CRA’s “review and improve” the dispute process, as well as increase consumer education efforts. From the FTC report:

The follow-up study announced today focuses on 121 consumers who had at least one unresolved dispute from the 2012 study and participated in a follow-up survey. It finds that 37 of the consumers (31 percent) stated that they now accepted the original disputed information on their reports as correct. However, 84 of these consumers (nearly 70 percent) continue to believe that at least some of the disputed information is inaccurate.  Of those 84 consumers, 38 of them (45 percent) said they plan to continue their dispute, and 42 (50 percent) plan to abandon their dispute, while four consumers are undecided.

The final study also examined whether consumers from the 2012 study who had their credit reports modified after disputing information on their credit reports had any of the negative information that had been removed subsequently reappear on their reports. The study found two instances of this, representing about 1 percent of these consumers.

On March 9, 2015, New York Attorney General Eric T. Schneiderman announced an agreement that was worked out with the three credit repositories (Experian, Equifax, And Transunion).  The agencies agreed to seek improvements to the credit report dispute resolution process, as well as increasing protections for consumers from false claims and reporting paid debt (such as medical bills).

As A.G. Scheiderman’s statement was released, the Consumer Data Industry Association (the trade association for the consumer data industry) announced the creation of the National Consumer Assistance Plan.  The roll-out of The Plan is to be over three years, and includes a website (nationalconsumerassistanceplan.com) where consumers and the CRAs are to interface about credit reporting news and information.  Stuart Pratt, President and CEO of the Consumer Data Industry Association, stated in a press release:

“…The nationwide consumer credit reporting companies are making important changes to their procedures that will improve their ability to collect accurate information, and we want to make sure consumers know about the new options available to them…”

Additionally, the press release included highlights of the National Consumer Assistance Plan:

Consumers visiting www.annualcreditreport.com, the website that allows consumers to obtain a free credit report once a year will see expanded educational material.

Consumers who obtain their free annual credit report and dispute information resulting in modification of the disputed item will be able to obtain another free annual report without waiting a year.

Consumers who dispute items on their credit reports will receive additional information from the credit reporting agencies along with the results of their dispute, including a description of what they can do if they are not satisfied with the outcome of their dispute.

The credit reporting agencies (CRAs) are focusing on an enhanced dispute resolution process for victims of identity theft and fraud, as well as those who may have credit information belonging to another consumer on their file, commonly called a “mixed file.”

Medical debts won’t be reported until after a 180-day “waiting period” to allow insurance payments to be applied. The CRAs will also remove from credit reports previously reported medical collections that have been or are being paid by insurance.

Consistent standards will be reinforced by the credit bureaus to lenders and others that submit data for inclusion in a credit report (data furnishers).

Data furnishers will be prohibited from reporting authorized users without a date of birth and the CRAs will reject data that does not comply with this requirement.

The CRAs will eliminate the reporting of debts that did not arise from a contract or agreement by the consumer to pay, such as traffic tickets or fines.

A multi-company working group of the nationwide consumer credit reporting companies has been formed to regularly review and help ensure consistency and uniformity in the data submitted by data furnishers for inclusion in a consumer’s credit report.

An improved credit reporting industry was to take another leap forward with the introduction of H.R. 5282 – Comprehensive Consumer Credit Reporting Reform Act of 2016 (congress.gov).  Introduced in Congress May 19, 2016, the bill is a comprehensive restructuring of the credit reporting process.  Among the many details, the bill also: calls for a new dispute process; “meaningful” disclosures about resulting investigations; limits credit reports for employment purposes; requires removal of items that were a result of identity theft, fraud and other crimes; and transfers authority from the FTC to the CFPB on “procedures for reporting identity theft, fraud, and other related crime.”  The bill was referred to committee, where it appears to have stalled.

Your credit report has become akin to your “financial soul.”  Some of its uses include assisting entities in deciding whether to employ you, lend to you, or extend you credit.  It has even become vogue for individuals to check someone’s credit report before going out on a date!

Financial experts and government agencies recommend you become proactive and check your credit report annually, and dispute inaccurate information.  Annualcreditreport.com is the only “authorized” website where you can receive a free credit report annually from the three repositories.  The site also contains information on protecting your identity, and links to the FTC and CFPB for topics such as how to maintain good credit, and credit repair.

Copyright © Dan Krell
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35 years of home buying changes

home buying changes
Years of home buying changes? (infographic from keepingcurrentmatters.com)

This week’s release of the National Association of Realtors® Annual Profile of Home Buyers and Sellers marks the 35th year of NAR’s analysis and description of home buyer and seller behaviors and attitudes.  You may not remember what it was like in 1981, but the country was coming out of a deep recession.  The economy was still scarred with double-digit unemployment, inflation and interest rates.  The 35th issue makes us think about home buying changes over the years.

According to the US Census Bureau (census.gov), the median price for a new home in 1981 was $68,900, while in 2010 the average new home price was $221,800.  Freddie Mac’s (freddiemac.com) data indicates that the average mortgage interest rate in 1981 was 16.63 percent, and 4.69 percent in 2010.  Surprisingly, the cost of housing (when financing 100 percent of the sale price) has only increased about 17.5 percent from 1981 to 2010!

People want their space and privacy.  According to the American Enterprise Institute (aei.org), the median square feet per person in a home in 1981 was about 550sf, while in 2014 it was 987sf.  This expansion in personal space was expressed in the home size.  The median size of a home in 1981 1,550sf, while 2010 it was 2,169sf (according to the Census Bureau).  Also consider that the typical home of 1981 only had one and a half bathrooms, and the expectation today is that a home should have at least two and a half bathrooms.

An October 18th news release from the NAR (Five Notable Nuggets from NAR’s Home Buyer and Sellers Survey’s 35-Year History; realtor.org) provided some insight into how the housing market has changed through the years.  One noticeable factor is the reduced number of first time home buyers entering the market due to underemployment, student debt, lack of down payment, or delaying family formation.  Last year’s percentage of first time home buyers dropped the lowest rate since 1987; and “according to the U.S. Census Bureau, the homeownership rate for 18-35 year-olds is currently at 34.1 percent, the lowest level in records dating back to 1994.”

It’s becoming apparent that real estate agents are not being replaced by the internet.  Although a majority of home buyers use the internet to assist them with the home buying process, the NAR reported that 90 percent of home buyers and sellers surveyed for this year’s profile worked with a real estate agent.  As a result, for-sale-by-owner transactions were at the lowest level ever (FSBO transactions peaked during 2003-2004).

The home buying process now takes longer than it used to.  Putting aside recent changes to the mortgage process, the 2016 Home Buyer and Seller Profile brings attention to the amount of time a home buyer needs to find a home.  According to the NAR, the average time to find a home was relatively unchanged from the 1980’s to about 2007; which about seven to eight weeks.  The duration of the home search peaked at twelve weeks from 2009 to 2013.  However, since then the average time needed to find a home is about ten weeks.  The increased search time is due to a number of factors.  Brisk sales combined with periods of low inventory has not provided home buyers with much of a choice from which to select.  Not to mention an unprecedented amount of available information that has created a savvy home buyer.

Copyright © Dan Krell

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Liberty, housing, private citizens

Liberty, housing, private citizens
Liberty, housing and private citizens (infographic from anthem.edu)

Since its inception, the Consumer Financial Protection Bureau (consumerfinance.gov) has had many advocates and many critics.  While many point to the CFPB’s staunch protection of consumers, some have argued that the independent agency has too much power with little oversight.  And this week’s opinion from the United States Court of Appeals in the case of PHH Corp v. Consumer Financial Protection Bureau seems to side with CFPB’s detractors – and highlights liberty, housing, private citizens.

As you know, the CFPB was created in the aftermath of the financial crisis by the passing of Dodd-Frank in 2010.  Dodd-Frank (also known as the Dodd–Frank Wall Street Reform and Consumer Protection Act) came at a time when politicians wanted to reign in financial institutions and businesses.  In order to carry out financial reform, Dodd-Frank created a number of oversight boards and agencies in an expansive piece of legislation that covered many areas spelled out in over 2,000 pages.  And even in its behemoth size, Dodd-Frank left much of the reform regulations to be written by agencies and its unelected officials – including the CFPB.

The CFPB has issued many new rules and have fined many banks and lenders.  Some of the new rules have fundamentally changed the relationship between the consumer and the bank.  For example, the TRID (TILA-RESPA Integrated Disclosure) rule that went into effect this year which not only changed how settlements are conducted but can levy stiff a penalty for each violation.

The case PHH Corp v. Consumer Financial Protection Bureau, appeared as if a seemingly “bad” mortgage lender was pushing back against fines and penalties for doing wrong.  (PHH Corp was fined $108 million by the CFPB for mortgage re-insurance deals with company affiliates, even though it claimed to have followed HUD’s previous rule of paying a reasonable market rate.)  But there’s more to this story, and it highlights exactly the what the CFPB’s critics have complained about – the CFPB’s independence from oversight and guidance.  The case is about the CFPB’s authority to change the rule and retroactively apply it to PHH Corp.

Judge Kavanaugh wrote: “This is a case about executive power and individual liberty. The U.S. Government’s executive power to enforce federal law against private citizens – for example, to bring criminal prosecutions and civil enforcement actions – is essential to societal order and progress, but simultaneously a grave threat to individual liberty.”

He continued to say that “…the Director of the CFPB possesses enormous power over American business, American consumers, and the overall U.S. economy. The Director unilaterally enforces 19 federal consumer protection statutes, covering everything from home finance to student loans to credit cards to banking practices. The Director alone decides what rules to issue; how to enforce, when to enforce, and against whom to enforce the law; and what sanctions and penalties to impose on violators of the lawThat combination of power that is massive in scope, concentrated in a single person, and unaccountable to the President triggers the important constitutional question at issue in this case.”

The result is that the CFPB will continue to operate and go after bad actors in the financial world.  However, the recent appellate ruling will likely change the scope and focus of its operations, as the CFPB will be under the “ultimate supervision and direction of the President.”  This case and the opinions of the Court can be found here (https://www.cadc.uscourts.gov/internet/opinions.nsf).

Copyright © Dan Krell

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