Holiday Home Selling

holiday home selling
Home staging during the holidays (infgraphic from nar.realtor).

Conventional real estate wisdom used to be that timing the market was the key to listing your home for sale.  Most home sellers tried to aim for the spring and early summer months to sell their homes.  In fact, June continues to be when most settlements occur.  However, selling strategies have changed over the last few years such that home sellers are confidently listing in the fall.  Many also hold nothing back to sell during the winter months.  But how about holiday home selling?

The holiday season is typically when the real estate industry slows to a crawl.  But it doesn’t mean that the housing market is closed!  Consider that there were 658 Montgomery County MLS listed homes that went under contract since the beginning of November.  This confirms that active home buyers are constantly searching for homes, and will certainly visit houses that are available during the holiday season.  The only obstacle for home buyers (and your home sale) is severe weather.  

Holiday home selling is not for everyone. If you have not yet listed your home for sale, you may consider waiting to list after Thanksgiving.  Or you may just decide to wait until the new year.  Your listing strategy should be based on your lifestyle.  Although the holiday season is often synonymous with joy and good cheer, many experience increased stress during this time.  If the holidays are a hectic time for you, the thought of the additional stress of selling your home may sway you to waiting the holidays out.  Keep in mind that, like any other time of the year, you still have to prepare your home for sale (which includes decluttering, repairs and staging).

If your home is already listed for sale, you have some choices.  It used to be the rule that if your home was still on the market approaching Thanksgiving that the listing would be pulled from the MLS until spring.  And as of the November 1st, 181 county homes have been pulled off the MLS.  You may decide to do the same. 

But keeping your home on the market during the holiday season is no longer taboo.  As I mentioned earlier, conventional wisdom is passé.  Some home sellers see an opportunity to sell during the holiday season as many homes come of the market.  Consider that since November 1st, there were 444 new MLS listings.  There are also another 46 homes currently listed as “coming soon.”

Obviously, if your home is vacant it’s easy to show.  However, you should still visit the home weekly to make sure it is clean and shows well.  But if you’re selling the home where you reside during the holiday season, you may want to think about showings and staging.  Talk to your agent about requiring home buyer appointments to view the home so you don’t have inopportune surprise visitors.  This will give you the flexibility and emotional space to have your home show its best while you enjoy the holidays.

What about holiday decorations and holiday home selling staging?  According to Melissa Dittmann Tracey, writing for the NAR blog (Should You Stage Homes for the Holidays?; nar.realtor; December 19, 2011), most real estate professionals tell their clients to stage with “holiday-spirit and glow.”  Although thirty-seven percent of professionals indicated that they advised holiday staging without religious decorations, twenty-eight percent advised their clients to also include their religious decorations.  Only eight percent of professionals surveyed advised to do generic staging without any holiday decorations.

Original article is published at https://dankrell.com/blog/2019/11/28/holiday-home-selling/

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.

Real Estate Transparency

real estate transparency
10 Steps to Home Buying

Ten years ago, I reported on the growing demand of transparency in real estate.  As you can imagine, mistrust of real estate agents was at an all-time high after the housing market crash.  At that time, home buyers and sellers felt betrayed by an industry that was perceived as keeping their cards close to their chest.  However, times were changing and consumers demanded real estate transparency, especially from their agents.  Home buyers and sellers not only want their agents to act in good faith, but also want more information and communication during the transaction. 

Since then, the National Association of Realtors (nar.realtor) has been trying to mend their reputation.  The 2015 DANGER Report was intended to identify issues affecting the industry as well as provide a roadmap to the future.  One of the major issues identified was agent competency and ethics.  However, it was obvious that ethical Realtor behavior didn’t guarantee competency. And vice-versa.  The upshot of the Report was that many of the identified concerns were already known.  Ironically, the identified issues and answers only prompted more questions.  It was not known if and how the industry would provide real estate transparency.

Fast forward to 2019, when the real estate industry is at a crossroads.  Earlier this year a class-action law suit was filed that challenges how agent commissions are paid.  Also, earlier this year, the Consumer Federation of America (consumerfed.org) published the first in a series of reports focused on “the lack of real estate agent transparency on representation, compensation, and service.”  The Consumer Federation of America (CFA) is described as an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.

The class-action suit filed in March, if successful, has the potential to force a major change to the industry.  Besides having the potential to change how agents are paid, it may force increased real estate transparency in agent compensation.  Nevertheless, similar past challenges to the NAR and the real estate industry resulted in minimal (if any) change to how business is conducted. 

Serendipitously (or not), Stephen Brobeck’s most recent CFA series report, “Hidden Real Estate Commissions: Consumer Costs and Improved Transparency”was published this month (consumerfed.org).  The report confirms consumers’ “lack of understanding” of commissions.  It also points out how “concealment of commissions” does harm to consumers.  The report indicated that 70 percent of the agents surveyed charge six-percent commission.  Commissions are mostly uniform, more so for buyer agent commissions.  The report also indicates that there was a general rationale that buyer agents would not show property if the buyer agent compensation was below the average for the area.  Of the agents surveyed, 73 percent indicated they won’t negotiate their commission.  It also calls attention to administrative fees of several hundred dollars, which is typically charged in addition to commission. 

The report concludes that the real estate industry must change its attitude about agent compensation, or risk eroding consumer trust.  Home buyers and sellers are savvy, and are increasingly sensitive to the role that commissions play in housing costs.  Home seller costs could be reduced if consumers compare commission rates and ask if they are negotiable.  Home buyers can also be helped if they are aware how their agent is paid, as well as knowing the offered buyer agent compensation on homes listed in the MLS. 

Original article is published at https://dankrell.com/blog/2019/11/23/real-estate-transparency/

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.

Real estate scammers emailing you

real estate scammers
Business email scams (infographic from fbi.gov)

The warnings of real estate closing scams were rapidly broadcasted in 2015 .  And by 2016, there was awareness that criminals were wholeheartedly targeting all parties involved in real estate transactions through phishing emails.  The phishing emails that were sent seemed legit, and in many cases appeared to have come from your agent or title company, but were actually sent by criminals intent on having you wire money to them.  No one was immune from receiving these emails. Real estate scammers targeted home buyers and sellers, real estate agents, title companies and attorneys.

The FBI (fbi.gov) categorizes this type of crime as Business E-mail Compromise (BEC)/E-mail Account Compromise (EAC).  The scam didn’t begin in 2015, but the FBI began tracking this type of crime in 2013.  But it wasn’t until 2015 that it seemed as if the real estate scammers used BEC/EAC to target the real estate industry, and it spread ike a plague.  And despite efforts by the real estate industry to prevent such crime, BEC/EAC is on the rise.  Real estate scammers have adapted and have become increasingly sophisticated.  Many of the phishing emails (calls) are not distinguishable from the real thing.

Statistics compiled by the FBI Internet Crime Complaint Center (ic3.gov) indicate that there were 78,617 incidents of BEC/EAC worldwide between October 2013 and May 2018.  Over half of these victims (41,058) were in the U.S.  Total global losses during this time period is calculated to be $12,536,948,299 (U.S. losses were $2,935,161,457). 

Unfortunately, the real estate industry has been a target of interest since 2015.  According to FBI statistics, the number of BEC/EAC real estate related victims increased 1100% between 2015 and 2017.  So far, the highest number of BEC/EAC real estate victims were reported in May 2018, while the highest dollar loss from real estate victims was reported in September 2017.  The number of complaints and losses is likely correlated to real estate market activity (notwithstanding efforts to thwart such crimes).

How do criminals know about your real estate transaction?  The internet.  Real estate scammers use information available on real estate portals to identify homes that are pending (under contract) along with agent contact information.  The information is used to infiltrate agents’ emails to compile client names and closing information to target everyone involved in the real estate transaction with phishing emails.  The emails typically request changes in settlement funding.  The changes can request wire in lieu of check, and/or changes in the wire instructions (which would send funds directly to the criminals). 

The FBI has also described BEC/EAC spilling over into phone calls!  In addition to sending spoofed emails, the criminals are also calling you asking for personal information for “verification purposes.”  Experts suggest you be cautious about calls asking for changes in payment types and/or wire instructions.  The fake calls are so real such that victims have reported not being able to tell the difference. Security experts recommended that you create code phrases to verify phone calls with your agent and title company. 

Experts also warn of any communication that is exclusively email and/or asks you to call for verification purposes.  It is likely that any contact information listed in the phishing email is fake.  If the email sender claims to be from the title company or your agent, call them directly to verify the authenticity of the email.  If you receive any email requesting personal information and/or changes in payment/wire instructions, verify the email is legitimate by calling the sender directly (and use your code phrase).

Original article is published at https://dankrell.com/blog/2019/11/19/real-estate-scammers-emailing-you/

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.

Ask About Closing Fees

ask about closing fees
Home Buying Process (infographic from keepingcurrentmatters.com)

To help home buyers understand the costs of buying a home, the Consumer Financial Protection Bureau (consumerfinance.gov) rolled out the Know Before You Owe initiative in 2015.  The intention was to help home buyers understand and ask about closing fees. The project actually has deeper roots in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  Dodd-Frank created the CFPB and mandated that the Bureau “shall publish a single, integrated disclosure for mortgage loan transactions” in a “readily understandable language” so borrowers can understand the financial aspects of their loan. 

Prior to Know Before You Owe the home buyer would receive a Good Faith Estimate from the lender and a proposed settlement statement (which was on the HUD-1 form) from the title company.  The pre-HUD, gave a fairly close estimate of the amount they needed at closing but could change depending on final lender charges.  If the amount was a little short, the buyer would write a check to cover the difference.  Sometimes the buyer would get money back at closing because the amount they needed was less than the amount the title company actually collected.  Regulations dictated when the buyer received a lender’s Good Faith Estimate and settlement costs.  If the HUD-1 was delayed, home buyers didn’t have much time to ask about closing fees.

But in the aftermath of the financial and foreclosure crises, there was concern that home buyers didn’t get accurate and fair closing costs disclosure.  Know Before You Owe changed the process of disclosing closing cost estimates to provide more accurate closing cost figures.  A new Closing Disclosure (CD) was devised to be consumer friendly.  The process of closing cost disclosure changed such that the lender is now responsible for providing the buyer the CD (in lieu of title company’s HUD-1).  However, the role of the title company (or closing agent) is still to conduct the settlement.  The standardization of the closing form allowed time to ask about closing fees.

Unfortunately, title insurance and other title related fees (such as water escrows and the property survey) are still often misunderstood and disputed.  Although the CD does a good job breaking down closing costs to help you understand what you’re getting, it falls short in explaining title fees and options.  For example, in Maryland, the cost for title insurance that is disclosed on the CD is the more expensive enhanced policy.  And it’s not just happenstance, Maryland Realtor purchase contracts require that the lender disclose an enhanced title insurance policy on the CD so you know how much the most expensive title insurance will cost.  But unless you know to ask, you may by default be purchasing the more expensive enhanced policy.  The survey is another title charge that may be charged by default.  Although many feel it’s not worth the expense, it may be relevant to your title policy.

Fortunately, your loan officer will review and help you understand your lender fees.  On the other hand, the title company will be communicating with you throughout the home buying process.  Make sure you read and understand all emails, as they will likely describe your title charges and options.

Life is hectic and it seems as if time is at a premium.  And although buying a home can be exciting, it can significantly add to your daily stressors.  But if you want to avoid surprises down the line, take the time to understand the process.  Ask as many questions as it takes to know what to expect at closing.  Have your real estate agent explain to you your purchase contract.  And, don’t wait until settlement to communicate with the title company, or ask about your CD. 

Original article is published at https://dankrell.com/blog/2019/11/08/ask-about-closing-fees/

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.

Real Estate Riches Promises

real estate riches
Real Estate Investment Homes (from nar.realtor)

House flipping has been around as long as people have lived in houses.  Flipping houses got a bad rap in the 1990’s, when scammers engaged in widespread fraud using mortgages, appraisals, and straw buyers.  In some cases, some “renovated” houses were uninhabitable and sold to unsuspecting home buyers.  But house flipping has regained its legitimacy because of its significant contribution in revitalizing the country’s housing stock after the Great Recession.  As a result, many investors found their fortunes.  Of course, reality TV glamorized house flipping and the prospect of real estate riches.  And as more people wanted in, flipping instruction courses multiplied.

Many embarking in house flipping courses believe it’s their road to real estate riches .  Unfortunately, what’s not understood by many consumers is that flipping houses is an incredibly risky business.  For most, it’s a full-time job that offers a modest living.  And, many real estate flippers lose money

Last week, the Federal Trade Commission (FTC.gov) entered a temporary restraining order against a real estate investment seminar promoter.  You may have seen ads for these seminars, as they were promoted with reality TV star endorsements.  The FTC alleges that the seminars are misleading and make “deceptive promises of big profits to lure consumers into real estate seminars costing thousands of dollars.”  According to the October 4th FTC press release, the promoter claims to offer consumers coaching and training on how to make large sums of money by flipping houses.

But it’s not so much about real estate riches through flipping houses. The FTC complaint alleged that seminar ads attracted consumers to free event that claimed they would learn how to make large profits “using other people’s money.”   It is alleged that the free event was a sales presentation for a three-day workshop that cost $1,997, and was promoted as teaching everything needed to know “to make substantial income from real estate.”  The three-day workshop was sometimes described as a “beginner’s course,” and attendees were “upsold” products and services that cost as much as $41,297.

The FTC action just didn’t pop up overnight.  It resulted from years of investigation.  An eye opening 2013 report highlighted complaints about these seminars (Some Buyers Call Classes By ‘Flip Or Flop’ Stars Misleading; Investors Business Daily; 10/28/2016, p43-43).  The reality TV star who was supposed to be at the seminar, instead appeared in a video stating they were busy filming their show.  An attendee who paid $1,997 for the three-day course, $1,000 for real estate software, and “thousands more” for additional classes, stated, “They weren’t really teaching at all.” 

Real estate investing and flipping courses have been around for decades.  However, not all advocate house flipping as the vehicle to make riches.  There are many avenues to invest in real estate; some teach buy and hold strategies, others teach auction strategies, etc.  Before spending any money on a real estate investment course, do your due diligence. Check with the Better Business Bureau and FTC for complaints.

Andrew Smith, director of the FTC’s Bureau of Consumer Protection stated, “From start to finish, these defendants used the promise of easy money and in-depth information to lure consumers down a path that could cost them thousands of dollars and put them in serious debt.  When a company tells consumers they have the secret to get rich with little work, we encourage consumers to take a hard look at what’s really being offered.

Original article is published at https://dankrell.com/blog/2019/11/05/real-estate-riches-promises/

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.