About Dan Krell

October 17, 2014December 13, 2022

Home designs for multigenerational families under one roof

“Wait long enough and it will come back in style” is a saying that typically applies to clothing styles and fashion. And unlike fashion trends, which typically relies on pop culture, fads, and a designer’s vision; home design trends are more practical and rely on changing life styles, advances in building technologies, and the development and/or use of new construction materials.

Although the idea of extended family living under one roof has not been commonplace for decades, multigenerational life styles have been trending in recent years. And this year, there was a surge in the demand of multigenerational home designs.

Consider a Pew Research Center analysis, as reported by Sally Abrahms in the AARP Bulletin (3 Generations Under One Roof, April 2013; aarp.org), that indicated multigenerational households increased 10.5 percent (which is about 16.7 percent of the U.S. population) between 2007 and 2009. She also cited a 2012 survey by the Pulte Group, that indicated about 32 percent of adult children plan to live with their parents.

Such surveys make sense, if you consider that our population is increasingly aging. And as long term care costs are increasing, there is growing pressure on adult children to take care of their parents during their waning years and declining health (as was once expected decades ago). Consider the cost of long term care as reported by Genworth Financial (genworth.com): the 2014 Maryland median cost of a private one bedroom accommodation in an assisted living facility is $40,800 per year; while the 2014 Maryland median cost for a semi-private room in a nursing home is $98,368 per year.

Besides the rising aging population, Abrahms also pointed out that multigenerational living is also due to the return of young adults to their parents’ homes. Also known as the “boomerang generation,” many pay rent and contribute to housing costs. About 75% of young adults aged 25-34 moved back with parents; as well 61% of young adults aged 25-34 who know of friends or family who moved back with parents due to lack of living arrangements, lack of money, and/or lack of employment.

In the past, the extended families that lived under one roof had little choice but to make the best use of a home typically designed for one family. However, home builders have taken notice of the trend in multigenerational households and have responded. Amy Taxin, of the Associated Press, reported (The family that stays together: Homebuilders are making room for more multigenerational households; Associated Press – The Washington Times, April 16, 2012) that builders are offering single family home designs with “…semi-independent suites with separate entries, bathrooms and kitchenettes. Some suites even include their own laundry areas and outdoor patios for additional privacy, though they maintain a connection to the main house through an inside door. “

Taxin pointed out multigenerational housing options, which includes: Lennar Corp, which offered a 3,400 square foot home in the Las Vegas area that contained 700 square foot suites; and Standard Pacific Homes that rolled out the “casitas” idea which is independent living areas attached to the main house.

After many decades of the “break-away” family, a number of socio-economic factors have come together to bring about the reintegration of the extended family under one roof. The idea that multigenerational living is once again popular has created a new niche and trend for home builders and architects.

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.

October 9, 2014November 23, 2021

Real estate, a dangerous profession

If you asked anyone on the street to name the top dangerous professions, “real estate agent” is not usually considered. But the recent murder of Arkansas Realtor® Beverly Carter highlights, once again, the dangers of selling homes. Carter went missing in September after she planned to show a house, and her body was later found in a rural area.

Although the details of the murder is yet to be revealed, it feels reminiscent of the 2010 murders of two Ohio real estate agents killed in separate incidents within the same week. Vivian Martin was found on the floor of burning home, Martin’s death was found to be by strangulation. Andrew VonStein, was found shot in a vacant home (usatoday.com).

Dealing with the public on a daily basis puts real estate agents in contact with a wide range of personalities and potentially dangerous situations. And although reports of general crime may not grab our attention until we hear about a life being taken prematurely, other daily dangers that agents may face can include stalking, robbery, assault, and rape.

Here are a just few reports from this year:

Over the summer, a Pennsylvania real estate agent was allegedly carjacked at gunpoint, then allegedly sexually assaulted and forced to stay in back seat. While the alleged assailants drove her SUV, it lost control and ran into pedestrians a fruit stand. Two Philadelphia men were charged with the deaths of three children and their mother, as well as the kidnapping, aggravated assault and sexual assault of the real estate agent (cnn.com/2014/08/08/us/philadelphia-carjacking).

The Charlotte Observer reported May 14^th that a man was arrested and charged with rape, attempted rape, felonious restraint and kidnapping, and two counts of sexual assault. Police stated that the alleged assailant arranged to view a number of homes with the real estate agent the day before they met. The two drove together, and while in the first home the agent was choked and was threatened to be killed with a knife lest she comply. The agent was sexually assaulted in the home; the alleged attacker ordered her to take him to the second home, where she was assaulted again (charlotteobserver.com).

Earlier this year, ABC-7 WJLA reported that a Maryland agent was robbed in a New Carrolton home. Police stated that a man followed the agent into the vacant home, when a purse and other items were taken by threat of an alleged weapon (wjla.com/articles/2014/03/real-estate-agent-robbed-in-vacant-maryland-home-101466.html).

A recent story out of Arizona (kpho.com) tells of a buyer texting female real estate agents to see a home. Seemingly innocent, the would-be buyer would initially text the agents about a house listed for sale; however, quickly changing the topic to the agents’ feet and foot wear. As bizarre as this story may sound, one of the affected agents seemed to think that this foot-fetish pervert was harmless; she stated to in this CBS-5 KPHO story, “You very much have to trust your instincts and intuition…If something doesn’t seem right, ask questions…”

Most real estate agents are personable and service oriented, but don’t be surprised if your call to urgently see a home, with an agent whom you have never met, is answered with deliberate caution. The recent murder of Beverly Carter once again puts safety first in the minds of many agents and others in the industry.

By Dan Krell
© 2014

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October 1, 2014November 23, 2021

Home equity entitlements, home prices, and talk of external price controls

A home buyer who visited a recent open house told me that home sellers need to “let go of their perception of entitled equity.”

I will pause here for a moment, as you are no doubt trying to make sense of the last statement.

Was this visitor verbalizing that a seller’s home equity be measured and controlled? And the follow up question might be: “Since when is a home owner’s equity perceived as an entitlement?” Was the buyer saying that there should be outside intervention to determine the equity a home owner may net on their sale (so as to make housing affordable), much like rental controls that exist in some areas around the country?

Who makes the decision as to how much equity a home owner may realize (net)? Sure, one could argue that home equity is an intangible concept that comes from the perceived value of your home; where the value is relative until it is realized (liquidated). You could also say that equity is realized through liquidation of the home by either selling it (or cashing out with a mortgage or equity line of credit); the value being the price a buyer is willing to pay, (or the amount a lender decides so as to make a loan). So it seems that when it comes to home sales, market forces still (mostly) determines the sale price and the amount of equity (if any) the home seller nets from the sale. Simply put – buyers and sellers negotiate home prices; generally, buyer pushback on listing prices can pressure sale prices to decrease, much like high demand can pressures prices to increase.

Let’s give the open house buyer the benefit of the doubt; maybe having outside intervention was not what he meant by saying home sellers need to let go of their perceived entitled equity. Maybe he was using (or misusing) economic jargon to make a point by expressing his opinion that housing is currently overpriced.

As I wrote in August, if you want to know where the housing market is headed, ask a home buyer. And it seems as if this buyer is not alone in his sentiment, as the attitude that home prices are too high is (again) an increasing view among many home buyers. It could be that the housing market is encountering what was experienced in 2009, when at that time there was a growing disparity between the price home sellers are asking and what home buyers are willing to pay. After all, it was during 2008-2009 when similar attitudes were strongly expressed, a time when rapidly falling home prices did not encourage home sales.

Quentin Fottrell pointed out in his pithy MarketWatch analysis of recent housing data (10 most overvalued (and undervalued) housing markets, marketwatch.com, 10/1/2014) that “Seven of the top 100 metro areas are overvalued by more than 10%, the highest number since the first quarter of 2009.” He also mentions that the last time this occurred was early in the housing bubble; but Fottrell says there should be little concern of current housing bubble because of the current economic environment (jobs and construction).

Conversations with home buyers are extremely valuable to home sellers for many reasons. What you might come away from this conversation is that there is continued push back on listing prices; and unless home sellers are responsive to pricing feedback, they should prepare for a long time on market.

September 26, 2014November 23, 2021

Don’t leave money on the table

A nagging concern that is often expressed by many home sellers is that they are leaving money on the table; in other words selling for too little. The dilemma often presented to a home seller is that if the home is priced too high, then there is risk eliminating potential home buyers; while at a lower price, there is risk selling at a less than desirable price.

Pricing a home is both a science and art. Skilled agents employ mathematical formulas as a foundation upon which to build a case for a range of sale price (the science); as well as demonstrating their ability of making price adjustments for variations in improvements, updates, as well as intangibles (the art).

But it may not necessarily be your home’s list price that can set you up to leave money on the table. Examining how your home is marketed, as well as your motivations and reasons for selling may reveal a weakness in your negotiation position as a result of convenience.

Selling a home can be disruptive to your daily life; and the prospect of having people, whom you’ve never met, traipse through your home can be unsettling. The typically limited and highly targeted private placement or pre-listing marketing may offer the convenience of limiting buyer traffic to your home, but its appeal is sometimes promoted to increase the potential of the agent receiving both sides of the commission.

Before you agree to a marketing plan that promises exclusive home buyer targeting; consider that many experts make the argument that you can leave money on the table when limiting your home’s exposure to potential buyers. In a world where everything and everyone seems electronically connected, you can increase the buyer pool by taking advantage of every reasonable marketing opportunity (including the internet and local listservs, and electronic bulletin boards, and other acceptable marketing tactics).

The process of selling a home can also be emotional and time consuming; more so if you’re divorcing and selling marital property, or selling your parents’ or grandparents’ home (sometimes because of a move to an assisted living facility or to settle an estate). The convenience of a quick sale can be very tempting; but can also set you up for selling for too little. And if the home is in need of repairs, updating, and renovations, the pricing can be unclear and inaccurate adding to the pressure for a quick sale.

You might even be considering responding to an ad promising a fast home sale without real estate commissions, repairs or home inspections – which is alluring to be sure. However, consider that many of these operations are seeking to purchase homes at a fraction of retail value minus repair costs.

Unfortunately, there is no “real time” measure to determine if you’re selling your home for too little; and some home sellers often lament in hindsight selling at a lower price out of convenience. However, a little homework and investigation can at least better your negotiating position. Ask questions and understand the purpose, benefits and limitations of a private placement or pre-listing marketing. Additionally, you can get pricing guidance from a market analysis, obtained from at least two (three is better) neighborhood real estate agents. And finally, weigh the pros and cons of selling out of convenience to the process of selling on the open market (listing the home in the MLS).

Original published at https://dankrell.com/blog/2014/09/26/dont-leave-money-on-the-table/

September 17, 2014November 23, 2021

Retro-future of real estate – buyers like representation

When I wrote about the future of real estate brokerage seven years ago, I predicted that consumers would become increasingly reliant on the internet; while the process of selling homes would remain interpersonal. Once thought to free home buyers and sellers from real estate brokers, the internet has become ancillary to the home buying and selling process.

Some real estate experts point to home buyers’ perception of buyer agency as a reason for the integration of the internet into the buying process. The internet has become a prolific source of information that funnels buyers directly to listing agents. With information in hand, many buyers are seemingly ditching their agents when viewing homes; some thinking they can negotiate a sweat deal directly with the listing agent.

Consider this 2012 anonymous post from a popular real estate web site. The poster proclaimed to have fired their agent and on their own negotiated a $490,000 price, when a previous buyer backed out from a $515,000 contract. The poster stated that “it makes financial sense,” the rationale being that there is always a 6% commission built into the price. The post stated that the seller makes more money if there is no buyer agent to pay, even if the offer is lower; while also getting the listing agent to accept a lower commission.

The post’s rationale may seem ostensibly compelling; and if the tactic works, it most likely has nothing to do with commissions per se. The strategy of negotiating a better price based on commission falls flat when you understand how broker commissions are negotiated. Generally, commissions are negotiated between the listing broker and the seller before the home is listed; the negotiated commission is expressly stated in the listing contract. The commission belongs to the listing broker, not the agents. The listing contract is also specific to the amount of the commission to be split if the buyer is represented by a buyer broker. Trends in commissions vary; including variable commissions, which is an agreement to a reduced listing commission if the buyer is not represented.
(Continued below)

Of course this do-it-yourself (DIY) home buyer post (and many others like it) has garnered a lot of attention and unconfirmed corroboration. However, there is no additional information about this specific transaction; and two thoughts immediately come to mind, either: the home did not appraise at the higher price (this was 2012); or the buyer walked on the home inspection.

The truth is that many still value buyer broker representation, which goes beyond just finding a home and negotiating a sales price; and may include (among other responsibilities) identifying and guiding you through any obstacles that can arise during the transaction. Of course, not all agents are the same. If your agent is a strong negotiator, the probability on settling on a better price is higher; as well as other occasions during the transaction where negotiation is paramount – notably during the home inspection process.

What some experts proclaim to be evidence of a trend of home buyers purchasing sans a buyer agent, may actually be just a shift in buyer behavior. Sure, there will always be the “DYI” buyer trying to justify a price by reducing commissions. But the reality may be that, rather than ditching the buyer agent altogether, the internet has allowed many home buyers to put off signing a buyer agency agreement until they are ready to make an offer.