About Dan Krell

March 9, 2018November 23, 2021

Insurance claim after storm

After enduring the recent twenty-four hours of near hurricane winds, many home owners are making repairs to their homes. Many are reporting storm damage claims to their insurance companies. Anyone who has made an insurance claim to repair their home knows that it can be ordeal. But you can make the process easier if you know what to do.

When making an insurance claim, the Maryland Insurance Administration recommends that you contact your insurance agent or company immediately to report damage. Prepare a detailed inventory of all damaged or destroyed property, to provide to the adjuster and for your records. It is recommended that you take pictures or video of the damage for documentation and to help the insurance company’s investigation. If emergency repairs are required, keep all receipts. It’s important to only make necessary repairs, and to contact your insurance company before making permanent repairs. You can view the Maryland Insurance Commissioner’s video on “Filing a Weather-Related Claim” for additional information and tips about your homeowners insurance (youtu.be/XywD4mdU1q8).

Before you make a claim, check with your insurance company about your deductible, policy coverage, and how they will pay-out the claim. If total cost of the repair is approximately, or slightly more than, your deductible, making a claim may not be worth the trouble. Your homeowners policy may also limit repairs to only the damaged areas, resulting in mismatched roof or siding. If your mortgage company has to endorse the insurance check, contact the mortgage company to engage the process and expect a delay in reimbursement or contractor payment.

Making an insurance claim may also have consequences on your insurance premiums and future applications. Much like credit reports that help creditors make decisions about extending credit, there are reports that provide the same to insurers. These reports help underwrite insurance policies. The “CLUE” report is a history of your insurance claims for the last seven years. A CLUE report can exist for you personally, as well as your home. Although the CLUE report has taken the public spotlight over the last decade, the A-PLUS property loss report is also popular with insurers.

Much like checking your credit report annually, the Maryland Insurance Administration recommends that you annually review your CLUE and A-PLUS reports. The reports contain a detailed history of insurance claims for you and your property, as well as details about damage to your home. Knowing what is contained in the reports may help you understand how an insurance company views your and your home’s insurance risk. This can affect your insurance policy acceptance, limitations, and/or premiums. And like credit reports, you can dispute any errors on the CLUE and A-PLUS reports. The MIA website offers a list of contacts to help you obtain these reports (insurance.maryland.gov/Consumer/Pages/CreditandPropertyLossHistoryReports.aspx).

It’s not uncommon to hear from contractors after the storm (verify contractor license).

The MIA issued a consumer advisory regarding what contractors can and cannot do:

What contractors can do:
-Prepare an estimate of the loss.
-Discuss the estimate with their customer.
-Answer questions the insurance company has about the estimates.

What contractors cannot do, unless they are licensed as a public adjuster by the Maryland Insurance Administration:
-Investigate, appraise, evaluate, give advice or assist their customer in adjusting a claim.
-Prepare the insurance claim for their customer.
-Negotiate the claim with the insurance company on their customer’s behalf.
-Advise their customer on the insurance policy’s coverage.
-Advertise or provide written materials that they can negotiate or investigate a claim on their customer’s behalf.

If the hassle of filing a claim is too much for you, you might consider hiring a Public Adjuster. The MIA describes the Public Adjuster as, “…an insurance claim adjuster who, for compensation, acts as an advocate for the policyholder in appraising and negotiating a first party property insurance claim under a property and casualty policy that insures the policyholder’s real or personal property…” The Public Adjuster must be licensed by the MIA and enter into a contract with the policy holder, as well as provide disclosures. Although a convenience, your insurance company is not obligated to accept the Public Adjuster’s claim.

The MIA states that a Public Adjuster must:

-be licensed by the Maryland Insurance Administration;
-prior to entering a contract with the policyholder, provide the policyholder with an explanation of the types of adjusters involved in the claims process and the insured’s rights to communicate directly with the insurer or its agents about settlement of the claims process and obtain the policyholder’s signature on the form;
-keep financial and business records and establish a separate escrow account for the policyholder’s proceeds.

-provide the policyholder with a written contract disclosing:

the terms of the contract;
the right to rescind or cancel the contract within 3 business days of signing;
that out-of-pocket expenses incurred by the Public Adjuster and approved by the insured will be reimbursed out of the insurance proceeds;
any compensation the Public Adjuster is to receive for services; and
the disclosure of any direct or indirect financial interest that the Public Adjuster or any immediate family member has with any other party who is involved in any aspect of the claim, including but not limited to the ownership of, or any compensation expected to be received from, any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop, or any other firm that provides estimates for work or performs any work in conjunction with damages caused by the insured loss on which the public adjuster is engaged; and
the insured’s rights under the Maryland Consumer Protection Act.

By Dan Krell
Copyright © 2018

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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.

March 2, 2018November 23, 2021

Technology is the new real estate

I recently wrote about companies that are going through identity crises. Are they real estate companies or are they technology companies? Regardless, the big name real estate disruptors have changed the industry. They have given home buyers control of their home search. They have also given home sellers choices of real estate services and commissions. But the recent trend of real estate companies touting themselves as technology companies may be a signal that large real estate brokerages want more change. But are they mistaking the map for the territory?

Are real estate brokers still interested in selling homes?

technology and real estate — Technology (infographic from nar.realtor)

Last November, the real estate brokerage Compass made headlines because of its ability to raise massive capital investments. In a Compass press release, the company announced raising $100 million in capital (Compass Raises $100 Million in New Investment Round; prnewswire.com; November 8, 2017). The colossal investment comes one year after raising $75 million in capital. The capital is to be used for expanding brokerage offices in new markets as well as “building new technology.”

Compass’ vision is to be “the world’s largest real estate platform.” The press release quoted an investor saying:

“Compass has proven that its technologically advanced platform is incredibly attractive to the industry’s top agents…Their position at the intersection of technology and real estate gives them the unique opportunity to be the single largest holder of real estate data, ushering in a new realm of possibilities for agents and clients alike.”

In a similar move, RE/MAX announced this week of its purchase of booj, a technology company. In a February 26th RE/MAX press release, the acquisition is touted as means to “…deliver core technology solutions designed for and with RE/MAX affiliates. The objective: technology platforms that create a distinct competitive edge for RE/MAX brokerages and agents…” (RE/MAX Takes Bold Step to Provide Best-in-Class Technology; remax.com).

Is the shift to being a technology company about revenue?

It would seem that recent industry moves may indicate that real estate brokers would prefer to be technology companies. However, the latest trend may be more about generating revenue, raising capital and investor relations than it is about selling homes.

Lizette Chapman’s report on the matter is revealing (Tech Startup or Real-Estate Broker? Fidelity Values Compass at $2 Billion; bloomberg.com; November 8, 2017). Chapman likens Compass to Redfin saying that the company “is almost certainly unprofitable,” although generating massive revenue. In her reporting, Chapman quoted a seasoned real estate agent who was briefly with Compass, “The technology was mostly marketing tools…It was sleek, but I can’t say it was different from anything else out there.”

Although many home buyers and sellers turn to the internet for housing information, they don’t wholly rely on technology when choosing real estate services. According to the National Association of Realtors 2017 Profile of Home Buyers and Sellers (nar.realtor), a majority of home buyers and sellers hired agents with whom they worked in the past, or were referred by friends and family.

The problem with technology is that humans are the ghosts in the machine. The human element, contrary to technology, is erratic, messy, and highly subjective. The human element remains at the core of home buying and selling.

Many consumers recognize that tech and the internet are tools that are often used as gimmicks to get their business. Technology is not a substitute for an experienced real estate professional who can also empathize along the home buying/selling process. The turn to tech only underscores that residential real estate is still a personal business.

Choosing a real estate agent

Choosing a real estate agent is much like searching for a home. It is an objective and subjective process.

The real estate agent is supposed to be a fiduciary that is supposed to protect your rights and assets. A real estate agent is supposed to be honest and act with integrity. They should act in your best interest.

The quality of an agent is not dependent on the firm. Quality agents are affiliated with almost all brokers. If you haven’t already, ask friends and family for their recommendations.

Prepare questions to interview several agents. The purpose of the interview is to learn about the agent’s professionalism, training, and knowledge base. You get to hear about their experience, and get a feel how they interact with you. Besides asking about their experiences, ask how many years they have been selling homes, and if they full time agents.

If you live in an area where agents are licensed in multiple jurisdictions, ask about their experience in the area you plan to buy/sell. Just because they have a license to sell homes doesn’t mean they have extensive experience in that jurisdiction.

Original published at https://dankrell.com/blog/2018/03/02/technology-new-real-estate/

By Dan Krell
Copyright © 2018

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February 22, 2018November 23, 2021

Home selling basics

It’s that time of year again. Many home owners, just like you, are getting ready to put their houses on the market. One thing I’ve learned over sixteen-plus years of home selling is that there are different strategies to achieve the same result. Basically, there is no “one way” to sell your home. But, if you look beyond the gimmicks and tactics promising to sell a home faster and for more money, the basics are essentially the same. In other words, focus on home selling basics to increase home buyer traffic and possibly get a better price.

Prepare for home selling

Most would be home sellers don’t realize that selling a home is a process. Preparing your home can seem overwhelming, but it doesn’t have to be. Focusing on home selling basics will not only get you excited about selling your home, but can help your home sale results.

Preparing your home to sell can be a costly endeavor, especially if your home has a lot of deferred maintenance or lacks updates. However, the obstacle of selling when your home is in need of attention can be overcome by pricing it with its condition in mind.

Regardless of your home’s condition, it should still be neat and clean. This means decluttering. Decluttering is a process of prioritizing and clearing out unnecessary items from your home. Removing unneeded items and furniture from your home will make your home feel larger and organized. You don’t necessarily have to throw out these items, you can decide to make charitable donations and/or store them until you move.

People talk about “Neutralizing” a home to take away personal affects from the home. It basically strips away the things you did to personalize your home. Neutralizing applies to paint schemes, decor, wall hangings, flooring, etc. It may sound extreme, but neutralizing your home will allow home buyers to envision how they can live there. Although your proud how to show your personal touch by displaying trophies, awards, diplomas, family and personal photos, these should be removed because they can distract home buyers’ attention.

Should you stage your home? Maybe. Staging can be another home selling expense you’re not prepared for, but it can help sell your home faster. You can hire a professional stager or interior designer for the total staging experience. However, staging doesn’t have to be expensive. Some staging or design professionals can provide you a list of recommendations for a nominal fee. If you’ve already decluttered and painted a room or two, you’re well into the first phase of staging. Although some home sellers decide to rent furniture for their home staging (which can also be expensive), it’s not an absolute. Once you remove the unnecessary furniture, the remainder may just need rearranging.

Don’t let your home’s exterior can turn away potential buyers before they get inside. Even if you spend lots of time and money on preparing your home’s interior, it may not matter if home buyers don’t make it inside. Many home buyers decide if they like a home by its exterior appearance.

Improving your home’s curb appeal is similar to preparing the interior. Take care of deferred maintenance and declutter the exterior. Believe it or not, landscaping is a key factor to attract buyers when home selling. Make sure the lawn is cut regularly, and don’t over-crowd the flower beds and shrubs. Trimming back trees will not only add to your manicured landscape, but it will also make your home easier to see from the street.

Once your home is one the market, consider having an open house. The open house is more important today than it has been in decades. Consider that contemporary home buyers are taking control over their home search. Besides searching listings on their own, many will visit open houses on their own as well. Deciding to not have an open house eliminates many potential home buyers from seeing your home.

Home selling basics is about safety too. Selling your home means having people whom you don’t know visit your home, mostly when you’re not there. Having unknown people walking through your home increases the chance of things going missing. Don’t tempt would be thieves by leaving money, jewelry, medicines, or any other valuables on display. Don’t just put your valuables away, lock them in a safe place.

But in the end, home selling basics comes down to the price. Home buyers are savvy and know value. In this market, it’s easy to get big eyes and over-price your home. Making the mistake of over-pricing your home can stretch out the days-on-market and test your nerves. Instead, decide on a list price that is consistent with recent neighborhood sales of homes that are similar in size, style and condition.

Home selling basics

Make repairs
Declutter
Improve the curb appeal
Staging
Open house
Find a buyer

By Dan Krell
Copyright © 2019

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February 15, 2018July 15, 2019

Stock market and home buying

It’s easy to understand why the recent stock market volatility triggered some into proclaiming that the sky is falling. The potential for losing money can evoke some strong emotional responses. Interestingly, some experts have speculated how the recent stock market activity would spill over to consumer spending, including the housing market. Reporting such as Jacob Passy’s recent article titled “Could Stock Market Volatility Cause House Prices to Fall?” (Marketwatch.com; February 8, 2018) makes for good click-bait. However, the details of the article would suggest otherwise. The consensus is that the recent Wall Street activity is not likely to impact the housing market.

Passy is trying to make an argument that the housing market will suffer from the recent stock correction, and subsequent interest rate increases. But Daren Blomquist, senior vice president of communications at Attom Data Solutions [formerly RealtyTrac], was quoted in Passy’s article saying “The strength of the housing market and economy in general is what’s spooking the stock market.” However, the volatility may make some home buyers wary of making an investment in housing.

The stock correction and increased Wall Street volatility is not a new phenomenon. The last market correction with lasting volatility occurred in June and August of 2015,through the fall. The current stock market volatility is part of the cycle of a healthy economy. Unlike the crash of 2008, current economic fundamentals are positive.

This stock market correction is not unusual, however it is extraordinary.

Seeking Alpha noted that the percentage drop for the two largest Dow losses this year are not even in the top 100 (10 Figures On Historic Dow Correction; seekingalpha.com; February 6, 2018). And this correction is distinct, according to ZeroHedge, because most individual stocks were left intact (If This Correction Is Over, It Will Be Unique in Leaving Most Individual Stocks Unscathed; zerohedge.com; February 13, 2018). Many individual stocks actually made gains while the Dow and the S&P stocks “took it on the chin.” This phenomenon is unique and is said to demonstrate that the economic fundamentals are working.

As for rising interest rates, they are needed to moderate home prices. If home prices aren’t controlled by market forces, such as interest rates, then homes will become unaffordable for many home buyers. Mortgage interest are still historically low, even with recent increases.

Homeownership is out of reach for many home buyers because of increasing home prices. David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, declared in the January 30^th S&P CoreLogic Case-Shiller Home Price Index release:

“Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months.”

Blitzer pointed out that these increases are not based on home buyer demand, stating, “Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices.” Instead, sharp home price increases are due to the lack of homes for sale and new construction. And until housing inventory increases, “home prices may continue to substantially outpace inflation.”

Lawrence Yun, chief economist for the National Association of Realtors, remarked that the recent stock market volatility should not impact the housing market. He stated, “Underlying economic fundamentals remain strong.” However, he cautioned that if the stock market retreats further, it could affect home buyers who plan to use funds from their 401k’s and other investment vehicles as down payment sources.

By Dan Krell
Copyright © 2018.

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February 8, 2018July 30, 2019

Mortgage Choice Act good or bad?

Monday’s Reuters “exclusive” report about the Consumer Financial Protection Bureau dropping their investigation on the Equifax data breach caused quite a stir in DC (Exclusive: U.S. consumer protection official puts Equifax probe on ice – sources: reuters.com February 5, 2018). The exclusive cited unnamed sources. However, a spokesperson for Transunion (a credit repository) suggested that cybercrime is not within the jurisdiction of the CFPB.

Later that day, Reuters cited Democratic Senators’ concerns and outrage over the alleged investigation pullback (Senators urge Trump administration to resume Equifax probe; reuters.com February 6, 2018).

The next day, Reuters reported that Treasury Secretary Mnuchin desired to meet with CFPB’s Acting Director Mick Mulvaney, based on its initial reports of dropping the Equifax investigation (Treasury’s Mnuchin says he wants answers on Equifax breach; reuters.com February 6, 2018) . In the same report, Reuters cited the CFPB’s spokesperson saying that the CFPB was working with other government agencies on the Equifax data breach.

The veracity of Reuters’ unnamed sources in the report is not clear. However, there may be something to the fact that cybersecurity falls under the domain of the FBI and Homeland Security. Additionally, there are many other agencies investigating the Equifax data breach, as Housing Wire reported on Monday (CFPB reportedly pulling back from Equifax data breach investigation: Reuters reports that bureau is not aggressively pursuing investigation; housingwire.com; February 5, 2018). The FTC appeared to be the lead agency investigating the matter when the data breach became public news. Additionally, the House and Senate Financial Committees, as well as all fifty states attorney generals are investigating.

Mortgage Choice Act goes under the radar…

News created drama, such as the Reuters’ CFPB story, allows real consumer issues to fly under the radar. Consumers should take note that the once dead Mortgage Choice Act has come back to life. Much like a scene out of Tin Men, the revived legislation is being promoted by the likes of the National Association of Realtors® under the guise of being good for the consumer.

According to the CBO (cbo.gov/publication/53497):

“Under current law, a ‘qualified mortgage’ has certain characteristics that make it more affordable…To meet the qualified-mortgage definition, certain costs that are incidental to the loan and that are paid by the borrower…cannot exceed 3 percent of the total loan amount. Lenders offering “high-cost mortgages” (home mortgages with interest rates and fees that exceed certain thresholds) must make certain additional disclosures to borrowers and must comply with restrictions on the terms of such loans.” The Mortgage Choice Act “…would exclude insurance premiums held in escrow and, under certain circumstances, fees paid to companies affiliated with the creditor from the costs that would be considered in determining whether a loan is a qualified mortgage or a high-cost mortgage.”

The NAR is urging support for this legislation, as well as issuing an open letter to Congress. The NAR’s rationale is that the Mortgage Choice Act:

“… will enhance competition in the mortgage and title insurance markets, and ensure that consumers will be able to choose the lenders and title providers best suited for their home buying needs.”

This sounds virtuous, but in reality it’s a play to allow broker affiliated lenders and title insurers to charge consumers more without additional disclosures. NAR says that lenders and title insurers would still be subject to RESPA (which prohibits steering and kickbacks). But charging consumers excessive fees and affiliated businesses giving kickbacks are not mutually exclusive. Meaning that a lender charges can be excessive independent of the lender providing a kickback to the broker. (the CFPB has recently fined brokers and lenders for kickbacks).

Is NAR interested in building consumer trust?

The NAR has for years tried to influence public opinion of Realtors® and the industry. The NAR Code of Ethics has been used as a focal point to increase positive sentiment towards Realtors®. However, NAR’s desire to implement a Code of Excellence may have been a beginning shift towards building public trust.

The Code of Excellence, like the Code of Ethics, is a desire to increase competence and proficiency. But research has demonstrated that showing off accolades and awards doesn’t instill value, nor does it increase sales (Valsesia, Nunes, & Ordanini: What Wins Awards Is Not Always What I Buy: How Creative Control Affects Authenticity and Thus Recognition (But Not Liking). Journal of Consumer Research. Apr2016, Vol. 42 Issue 6, p897-914).

Value, along with quality and price, has much higher regard than ethics in a consumer’s mind. This was demonstrated by Carrigan & Attalla’s ground breaking consumer research (The myth of the ethical consumer – do ethics matter in purchase behaviour? The Journal of Consumer Marketing. 2001.. 18(7),560-577.)

If the NAR is truly interested in building consumer trust, the NAR leadership should get on the correct side of this issue and provide value to consumers instead of giving lip service.

By Dan Krell
Copyright © 2018.

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