After you move in

after you move in
After you move in

Moving into your new home is exciting.  You just went through an intensive process that tested your character.  You feel a sense of relief it’s over.  But the work is not over, it’s just beginning.  What you do after you move into your new home can help maintain its value. It also can save you time, money, and keep your home functioning.

Of course, there are the standard items that needs immediate attention after you move in.  Changing the locks is the number one item on the new homeowner list for obvious reasons.  Deep cleaning the home is a task that is also performed, especially if the previous owner had pets.  Keep all warranty information, including a home warranty policy (if you have one), in a safe place so you can find it if you need it.  Make sure you know where the water shut off valve and the main electrical breaker is located in case of an emergency.  Change of address forms from the USPS need to be completed to ensure you receive your mail.  A visit to the DMV is necessary to change the address on your driver’s license. 

But what else can you do after you move in to make life easier in your new home?  Revisit your home inspection report.  If the home seller made repairs, make sure you keep those invoices (your agent should have asked for those receipts prior to closing).  If there is a problem with any of the repairs, you can call the associated contractor to reinspect the repair.  However, it’s likely that the seller didn’t repair everything in the inspection, or maybe they didn’t repair anything.  Review the report to see which items require your immediate attention, or may require attention within the year.  Make sure you install any missing safety items (such as smoke and carbon dioxide detectors).  Taking care of the urgent items immediately will likely prevent expensive repairs down the road.  Keep the list of items likely needing attention in the future, so you can check them when you conduct regular maintenance.

Next on the list , after you move in, is to create a maintenance schedule.  For most new home owners, maintenance seems to be a dirty word.  After all, you just moved in and the last thing you want to focus on is “upkeep.”  But putting off repairs can make the likelihood of damage to your home and repair expense increase over time.  Research has even verified that deferred maintenance lowers your home’s value.  Your home inspection report also should have information about maintaining systems such as (but not limited to): HVAC, electric, plumbing, roof, and exterior.

If you haven’t yet created a maintenance budget, do it now.  Some of the systems may need replacing sooner than others.  Check your home inspection report for the systems’ age and average life expectancy.  Start saving to replace systems (HVAC, roof, etc.) so it’s not as much of a financial burden when the time comes to replace them.

Life happens and so does the occasional surprise.  It is not uncommon for maintenance and other “surprises” to occur your first year in the home.  Although it may seem correct to blame the home inspector, they are not perfect.  They are limited to what they can see.  “Surprises” often occur in a system or area that was not observable during the time of the inspection.  It is my experience that home inspectors make themselves available within the first year of ownership to answer questions relating to their report.  Some will even reinspect the item in question. 

Original published at https://dankrell.com/blog/2019/04/09/after-you-move-in/


By Dan Krell. Copyright © 2019.

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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.

Negotiating agent commissions

negotiating agent commissions
Brokerage models (infographic from nar.realtor)

It’s no secret that residential real estate agent commissions are decreasing. Market forces has created new broker models that has put downward pressure on commissions. Many agents embrace consumers negotiating agent commissions.

If market forces are working in negotiating agent commissions, and commissions are decreasing, you might wonder about a recent class-action law suite.

If successful, an anti-trust class-action law suit filed March 6th could potentially change the landscape of the residential real estate industry.  The law suit alleges that the National Association of Realtors and a number of major real estate brokerage brands engaged in “anticompetitive practices.” 

According to the law firm Hagens Berman (hbsslaw.com), “the lawsuit alleges NAR and the Big Four have enacted a set of anticompetitive policies intended to prevent competition among real estate brokers, as well as stopping buyers and sellers form negotiating commissions, including: Only allowing listing brokers to list a property on an MLS if the listing broker makes a unilateral, non-negotiable offer of compensation on the MLS to buyer brokers. Prohibiting buyers and sellers from negotiating buyer broker commission. Prohibiting brokers from disclosing commissions offered on MLS. Allowing brokers to take both buyer and seller commissions, if the buyer is not represented by a broker. This anticompetitive activity has been devised at the national level and enforced at the local levels.”

I am not an attorney, but I have been listing and selling homes for over seventeen years.  These thoughts are my own. I am not speaking for anyone except myself.  I am offering insight from my professional experience.

On the face of it the lawsuit assertions are false. First, the allegations make it sound as if home sellers have no choice in how they sell their home except to use a full-service exclusive real estate broker.  As I wrote just last month, home sellers have many options in selling a home.  Besides selling “By Owner,” there are multiple broker options as well, including (but not limited to) MLS placement services, limited services and à la carte. 

These assertions also make it sound as if a home seller can only get an “exclusive right to sell” listing agreement with a real estate broker.  But again, the home seller has options in the type of listing agreement and broker agency type.  Because my space is limited and the issue of brokerage representation is technical, I won’t expound on the types of listing agreements and home seller representation.  However, each type of listing agreement has specific benefits and disadvantages.

Furthermore, commissions have always been negotiable. And market forces have been in favor of consumers negotiating agent commissions. The lawsuit’s assertions about real estate commissions are misconceived and cliché.  The matter of real estate commissions can be complex and depends on a number of factors, which can include (but is not limited to) market conditions, type of representation, types of services provided, among other things.  Additionally, home sellers are not the only party to a transaction that negotiates commission.  Home buyers who are represented by a broker negotiate the buyer agent commission as well.

The internet has created an empowered savvy consumer.  Like other industries, public access to information (internet) has been a major factor in reducing real estate broker fees and commissions.  Both listing broker and buyer agent commissions have decreased.  The internet has allowed home buyers to find home listings on their own regardless of advertised buyer agent compensation, including non-MLS listings such as home builder and FSBO listings. 

Although the NAR has yet to issue a formal statement, NAR vice president Mantill Williams was quoted as saying on Fox Business’ Bulls and Bears program, “We think this lawsuit is baseless and it has no merit. The state and federal courts have considered challenges to the MLS and they’ve concluded the Multiple Listing Service actually benefits consumers.”

Original published at https://dankrell.com/blog/2019/04/02/negotiating-agent-commissions/

By Dan Krell. Copyright © 2019.

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Identity protection real estate

identity protection
Be proactive with identity protection (infographic from nsa.gov)

Even with precautions and laws to protect your sensitive data while conducting financial transactions, there can still be a weak link in the chain that can put your personal data at risk.  You may not have heard about the latest data breach, but it involved the potential leaking of over 24 million mortgage documents. Identity Protection during the real estate process takes awareness and vigilance. However, what do you do after the transaction is over?

The data breach to which I refer was discovered and reported by Bob Diachenko, Cyber Threat Intelligence Director of Security Discovery with the assistance of Zack Whitaker of Techcrunch.  This data breach was discovered by Diachenko just by searching public search engines.  According to Diachenko’s report (securitydiscovery.com/document-management-company-leaks-data-online), the unprotected database contained about 51 GB of credit and mortgages information.  The database potentially exposed more than 24 Million files.

Essentially, the over 24 million unprotected records (24,349,524 according to Diachenko) that existed on the database were likely scanned (OCR) from original documents.  Diachenko stated, “These documents contained highly sensitive data, such as social security numbers, names, phones, addresses, credit history, and other details which are usually part of a mortgage or credit report. This information would be a gold mine for cyber criminals who would have everything they need to steal identities, file false tax returns, get loans or credit cards.” 

Diachenko and Whitaker tracked down the owner of the database and found that the exposed database belonged to a third party.  After the database was secured, however, Diachenko found a second vulnerable server that contained original documents.

How is consumer iinformation handled through through institutional real estate transactions?

According to Whitaker, the documents date as far back to 2008, possibly further.  The documents concerned “correspondence from several major financial and lending institutions” including government entities such as HUD.  Whitaker stated that not all data was “sensitive,” however the database included: names, addresses, birth dates, Social Security numbers, bank and checking account numbers.  They also found some documents that contained other “sensitive financial information,” such as bankruptcy and tax documents, including W-2 forms. 

To understand the broader implications of identity protection in a real estate transaction, read Diachenko and Whitaker’s first (techcrunch.com/2019/01/23/financial-files) and second (techcrunch.com/2019/01/24/mortgage-loan-leak-gets-worse) report. The reporting of Diachenko and Whitaker is significant because it exposes how your identity and sensitive information can be mishandled in the broader financial transactional process that occurs between entities.  Even though direct correspondence with you may be encrypted and secure, security lapses can occur during the institutional transaction process (such selling and/or transferring a mortgage)

The moral of the story is that once your information is out of your hands, you cannot assume it’s 100 percent secure.  Even blockchain technology, which has been touted as a safe means of digital data management, has weaknesses.  And as governments and financial institutions are looking to blockchain as the “answer” to data security, there are reports of “attacks” of increasing sophistication according to James Risberg (Yes, the Blockchain Can Be Hacked; coincentral.com; May 7, 2018). 

Take your identity protection seriously when buying and selling a home

Be vigilant and proactive to protect your identity and sensitive information.  Be wary of unsolicited requests for information, even if it appears to be from someone with whom you are conducting business. Always make a call to confirm the request. Consider a credit freeze to prevent fraudsters from opening credit accounts in your name.  Check your credit report regularly and dispute errors.  If you’ve been a victim of identity theft, the FTC’s IdentityTheft.gov site can help you report it and create a recovery plan.  You can learn more about protecting yourself from identity theft from the FTC (consumer.ftc.gov) and the Federal Reserve (federalreserveconsumerhelp.gov).

Original published at https://dankrell.com/blog/identity-protection-real-estate

By Dan Krell. Copyright © 2019.

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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.

Buy vs rent market

buy vs rent
Buy vs Rent Housing Market (infographic from keepingcurrentmatters.com)

After last year’s active spring, the housing market’s fall home sale decline shocked many.  Although home sales were on target to outpace the previous year’s activity, the slowdown diminished the spring’s impact.  In fact, the National Association of Realtors (nar.realtor) January 22nd press release indicated a sharp decline of home sales during December.  The 6.4 percent month over month nationwide decline should not have been a surprise because of the season.  However, December’s nationwide 10.3 percent sales decline from the previous year is significant.  The Greater Capital Area Association of Realtors (gcaar.com) indicated that Montgomery County single family home sales decreased 12.2 percent during December. Is this an indication of another buy vs rent market?

Back in August, I predicted and discussed the causes for the fall’s sales slowdown.  Among the issues that contributed to the slowdown include increasing mortgage rates and the continued home sale inventory shortage. However, it’s important to note that although home sales seemed to go to sleep during the early winter, home sale prices continue to increase.  It’s not the 4-5 percent price gain that home owners have become accustomed.  But the 2.9 percent nationwide price increase (2.7 percent increase in Montgomery County) during December is indicative that home ownership is still valued.

Although there are many who are saying it’s now a buyer’s market, it’s not entirely true.  The current housing environment has home buyers under pressure.  Increasing mortgage interest rates are making buying a home more expensive, and there are not many homes from which to choose.  Consequently, motivated home buyers who are eager to buy a home during the winter are pushing back against high home prices.  The reality is that home sellers will remain in the driver’s seat as long as they price their homes correctly.

There is a lot of promise for the spring, but it still depends on many factors (such as inventory).  But the push back on increasing home prices will likely continue, as home buyers are increasingly sensitive to housing costs.  “Buy vs rent” and housing affordability will once again become hot topics this spring. 

Buy vs rent is on the mind of home buyers. Although buyers are in the market to buy, there is no urgency. However, it’s clear that this market is about value.

If you’re a home buyer trying to figure out the market, consulting with a professional Realtor can help you decide if it’s the right time to buy a home.  Trulia’s Rent vs. Buy Calculator (trulia.com) is a tool that compares the cost of buying to renting a home over time in a specific area.  It can estimate the point at which home buying is better than renting.  However, depending on your budget and area, renting may be a better financial option.  Montgomery County Department of Housing and Community Affairs (montgomerycountymd.gov/DHCA) and the Housing Opportunities Commission (hocmc.org) offers affordable housing programs for first time home buyers and renters.

If you’re a home seller, think back to the 2014 spring housing market when home buyers pushed back at the sharp home price gains of 2013.  It’s recommended that you don’t take home buyers for granted, buyers are just as savvy as you.  Keep in mind that buyers are thinking about “buy vs rent.” Don’t over-price your home, however expect to negotiate the price.  Make your home show its best through preparation and staging.  Stay away from cheap renovations meant to look expensive, this can actually decrease your home’s value.  If you’re selling “by owner,” consider consulting a staging professional to help prepare and stage your home.  If you’re listing your home with a Realtor, your agent should have a strategy to sell for top dollar in this market. 

Original published at https://dankrell.com/blog/2019/01/25/buy-vs-rent-housing-market

By Dan Krell. Copyright © 2019.

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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.

New home diligence

new home diligence
New home sales (infographic from nar.realtor)

It’s understandable that new homes are alluring.  After all, newly built homes are modern and efficient.  And there is the idea that new homes require minimal maintenance for the first year of ownership.  But new homes are not flawless.

Last week’s Florida’s Attorney General home builder settlement is the latest reminder that new home buyers need to exercise due diligence.  The multi-million-dollar settlement with PulteGroup, Inc came after a two-year investigation.  A simultaneous complaint alleges that the home builder violated the Florida Deceptive and Unfair Trade Practices Act by: failing to disclose to certain home buyers in Florida that the homes were being constructed in violation of applicable building codes; unfairly denying certain homeowners’ repair claims for various reasons: unfairly denying certain Florida homeowners’ repair claims without performing an adequate inspection of the home; and unfairly withholding a customer’s deposit in certain instances.  The details of the settlement can be found in the Florida AG’s December 28th news release (myfloridalegal.com). 

This settlement comes two years after the Florida AG entered into a settlement with KB Home in 2016 for similar alleged complaints. 

Home builder complaints are more common than you think.  In fact, Home builder complaints occur throughout the country alleging violations that may include (but not limited to): code violations, improper warranty denials, and improper handling of deposits. 

Maryland’s Attorney General fined NVR Inc in 2012 because it was alleged that required warranty protections were omitted from their subsidiary new home contracts.  A number of other home builders were fined that year for failing to register with the Consumer Protection Division’s Home Builder Registration Unit.  And in 2016, the Maryland AG filed charges against a Rockville home builder for alleged violations of the Home Builder Registration Act, the Maryland Express and Implied Warranties Act, and the Consumer Protection Act.  And more recently, the Maryland AG filed charges in September against a Baltimore County home builder for allegedly “failing to comply with Maryland’s Home Builder Registration Act, Consumer Protection Act, and the Custom Home Protection Act.”

Unfortunately, many home buyers let their diligence lapse when buying a new home.  New home builder reps are friendly, helpful and often appear to be on your side, so it’s understandable how a home buyer may misconstrue the builder rep’s loyalties.  However, when buying a new home, you should conduct your due diligence.  You should also consider hiring a Realtor and a licensed home inspector to assist you through the new home buying process.

When buying a Maryland new home, you should know that the state regulates home builders.  Before considering a home builder, make sure that the home builder is registered with the Consumer Protection Division’s Home Builder Registration Unit.  Before entering into a contract with the home builder, review and understand the contract.  You may want to consult an attorney to make sure that your Maryland new home contract complies with the state requirements. 

You should also keep in mind that Maryland has established a Home Builder Guaranty Fund that is overseen by the Consumer Protection Division. The fund allows consumers to seek recourse “for losses resulting from an act or omission by a registered builder who constructs a new home for a consumer.”  For additional information about due diligence when buying a new home and obtaining the handbook “Buying a New Home, Consumer Rights and Remedies Under Maryland Law,” contact the Maryland Office of Attorney General’s Consumer Protection Division (marylandattorneygeneral.gov/Pages/CPD).

Original published at https://dankrell.com/blog/2019/01/03/new-home-diligence

By Dan Krell. Copyright © 2019.

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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.