homebuyer Archives - Page 13 of 25 - Real Estate News and Commentary

June 30, 2016July 11, 2019

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 22^nd 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 28^th 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!

By Dan Krell
Copyright © 2016

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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.

June 24, 2016October 20, 2020

Vacation home buying

Buying a vacation home

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 1^st 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.

By Dan Krell
Copyright © 2016

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April 29, 2016September 23, 2019

When transfer tax becomes controversial

The legislative process encourages discourse for proposed legislation. The result is a bill that is passed or defeated. Regardless, proposed housing market and real estate legislation is not typically exciting; and in fact the minutia of the bill can be downright boring and/or confusing. However, there are occasions when proposed legislation has the potential to affect home owners and buyers such that it can create a brouhaha.

First, let’s review a few bills passed by the Maryland General Assembly: The first has to do with agency. Currently, “licensees” are required to provide the Maryland Real Estate Commission’s Understanding Whom Real Estate Agents Represent at the time of first face to face meeting and is a notice to the consumer. The disclosure explains seller’s agents, agents who represent the buyer, and dual agents. For many home buyers, the first face to face meeting of an agent is at an open house, and are supposed to be given the disclosure by the agent sitting at the open house regardless if the buyer has an agent or not. The new law is to simplify the disclosure, eliminating redundant notices and allowing agents at open houses to post who they represent instead of the asking every visitor to sign the disclosure.

Another change is how agents recommend service providers. The current requirement is for agents to check the licensing status of all recommended service providers, ensuring that the provider is currently licensed in Maryland. The new law will only require agents to annually check home improvement licenses of recommended contractors.

The General Assembly also passed legislation that will require home sellers throughout the state to disclose deferred water and sewer charges. Additionally, legislation was passed that adds requirements to the state brokerage licensing exemption for attorneys.

Still with me? Good. Local residents should be aware of the Montgomery County Council’s attempt to fast track a bill to increase the county’s recordation tax on real estate transactions. On April 14^th, Expedited Bill 15-16, Recordation Tax – Rates – Allocations – Amendments was introduced by Council President Nancy Floreen. Recordation tax is collected when a home is sold, and when a home owner refinances a mortgage. If passed, it will become effective July 1^st 2016 (which is about 2 months from now!).

The Greater Capital Area Association of Realtors® issued an April 18^th press release opposing the bill, stating that it unfairly targets home buyers and home owners by increasing a tax that is already among the highest in the state.

In an April 12^th memorandum to Councilmembers (page 7 of pdf) Councilmember Floreen stated: “While nobody likes the idea of increasing taxes of any kind, our needs are great, and this tax is less likely to affect those Montgomery County residents who are struggling most. On the up side, it will generate millions of dollars to support our desperate need for new schools and educational facility improvements. What’s more, a portion of the recordation tax is earmarked for affordable housing.”

Although aspirations for certain projects may be well intentioned, Councilmember Floreen should consider that further burdening home buyers in an already high cost area for real estate could impact homeownership and make “affordable housing” less affordable. Furthermore, the average Montgomery County home owner refinancing their mortgage may not be struggling, but they are trying to get by the best they can in a high cost of living area.

By Dan Krell
Copyright © 2016

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April 14, 2016November 23, 2021

Subtext in buying or selling a home

Profile of home buyers and sellers from nar.realtor

It’s all in the subtext. “Buyers are liars” is a saying that many real estate agents seem to verbalize when things don’t work out with a home buyer. It’s an insulting false aphorism that is proclaimed as an attempt to shift all responsibility by saying that the buyer was deceptive and did not cooperate. And when things fall apart with home sellers, the same agents won’t take responsibility and start hurling insults such as wacko, ignorant, or greedy. Of course, if the relationship becomes contentious, then you can imagine that the name calling becomes increasingly harsh.

And it goes both ways, of course. Real estate agents, as a profession, have a bad rap; and conditioned consumers bring those expectations into their relationships with their agents. Many buyers and sellers have a low opinion of real estate agents while often having high expectations for the outcome of their experience.

You may begin to see that, unless the settlement is flawless, these mindset combinations don’t bode well for the agent-consumer relationship. The home sale transaction is full of pitfalls. And if there is an underlying distrust between you and your agent, then the outcome can become an ordeal for you both.

Writing for RealtorMag, Jason Forrest laid out why such buyer (and seller) repudiation by agents is wrong (Agents: Stop Saying Buyers Are Liars: realtormag.realtor.org; September 2015). He pointed out that agents often blame the buyer (or seller) when the relationship and transaction is unsuccessful. But in reality, Forrest stated, the agent is the one who fails by not taking the time to understand and coach their client.

Research of real estate outcomes suggest that your experience during a real estate transaction may depend on both the agent’s and your ability to communicate. Clear communication between you and your agent should leave no doubt about your intentions, as well as your agent’s ability to convey and interpret motivations from your transaction counterpart.

The evolution of the real estate industry has not really improved the quality of communication between agent and consumer. Agents focusing on high volume sales along with the public’s reliance of the internet for home information reduce face-to-face interactions; which may allow for the creation of false expectations while decreasing overall consumer satisfaction.

In his book Re-examining The Art of Sales: Broadway Style (AuthorHouse, 2006), real estate broker Nilton De Macedo asserted that the key to communication and understanding lies in the subtext of the dialogue. Having stated that subtext is “what you really mean under what you say,” he provided an example: saying “I’m going to bed” may sometimes imply “I don’t want to talk to you now.”

De Macedo explains that as a sales professional, it is essential to discover the subtext of the conversation. The real estate agent should not only attempt to decipher the client’s subtext to reveal their “unspoken intentions” – but they should also work to discover the subtext of their own communication. He proclaims that this approach deeply influences how we relate to each other and will greatly improve communication.

Although De Macedo places the responsibility of communication square on the shoulders of the real estate agent, it really goes both ways. Your agent may also be communicating something else through subtext, implied by what or how it is said. You can improve your outcome by becoming aware of the subtext in the communication between you and your agent.

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April 8, 2016December 13, 2022

Real estate confessions

“How Working with a Real Estate Agent Benefits You” from rsimedia.com

When asked about their real estate agent, consumers logically list characteristics such as savvy, sharp, and knowledgeable. Some may even describe their agent as efficient, or someone who made the process easy for them. These descriptions usually attest to the agent’s business acumen and typically focus on the agent’s ability to market a home and/or negotiate a contract. However, one trait that is often overlooked is “authenticity.”

And it’s not just in the real estate industry. Authenticity just isn’t the trait that most seem to care about in a sales person. The reason may seem obvious; for most consumers and salespeople, it’s about money. So what role, you may be asking, does authenticity have in real estate sales?

In a recent article, Don Kottick wrote about the need for authentic leaders in the real estate industry (8 examples of authentic leadership in real estate; inman.com; March 17, 2015). Kottick talked about authentic leaders as creating their “legitimacy” through honest relationships. These are individuals who “remain true to themselves;” they are positive, truthful, empathetic, “introspective and aware of their own strengths and weaknesses.” Kottick reminds us that authenticity doesn’t come from what’s learned at business school, but what is gained through life’s journey.

Keeping that in mind, we agents are in an advantaged position. As real estate transactions tend to be associated with life events, we often experience these events as well; sharing in the promise of a new family, the joy of a new baby, the sadness of the loss of a loved one, and even the ambivalence of a divorce. And we spend a good amount of time with our clients, regardless if it is in person and/or on the phone. We become acquainted with who our clients are; we learn their vulnerabilities, and sometimes (whether they know it or not) we also become aware of their “dirty laundry.” Being in such a position, we become trusted advisers if not treated as part of the family (at least for the duration of the transaction).

The nature of the real estate transaction, and our involvement with our clients, places us (real estate agents) in a fiduciary role. Regardless of our feelings (positive or negative) toward our clients, or our personal and financial situation – we are to look out for our clients’ best interests. Unfortunately, many in the industry have forgotten that.

Similar issues about agent competency and ethics were discussed last year in The National Association of Realtors® DANGER report. And although concerns about agent competency and ethics have been discussed for years, the media glommed onto such quotes as “the real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents…” as if to say “we told you so.” But the truth is that competency does not guarantee ethical behavior, and vice versa. Additionally, competency and ethics do not assure a positive buying and selling experience for the consumer. The answers, like the issues, are complex; and advancement in the subject is debatable.

Don Kottick’s point, that authenticity is a foundation upon which agent competency and ethics is built upon, is overlooked by many industry leaders, brokers, office managers and agents. Considering authenticity, competence, and ethics together may not only facilitate an environment that creates a meaningful transaction for the agent and consumer; it may also be a response to treating consumers fairly, and putting clients’ best interests first.

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