when real estate agents go over the line

Luxury Real EstateAlthough not listed in this year’s Careercast’s annual Top 10 Most Stressful Jobs, “real estate agent” has been included in previous years’ lists. Supposedly, real estate is one of those industries where “frequent or difficult interactions with the public or clients” along with high levels of stress may also be responsible for high levels of depression, as described by Wulsin, Alterman, Bushnell, Li, & Shen in their 2014 study (Prevalence rates for depression by industry: A claims database analysis. Soc Psychiatry Psychiatric Epidemiology, 49,1805-1821). Results suggested that the real estate industry has the second highest rate of depression, second only to bus drivers and transit workers. Certainly to be included in such lists is not an achievement. However, it may explain the erratic behavior of the few agents who are willing to go over the line to gain an edge over their competitors; such as in this recent account…

In their November 2nd Miami Herald article (Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami; miamiherald.com), David Ovalle and Nicholas Nehamas gives us insight to the highly competitive Miami uber-luxury real estate market. What seems to be the plot of a TV crime drama is the real life story that will soon conclude in a court room. Having pleaded not guilty, a middle aged real estate agent is now awaiting trial for “felony extortion, resisting arrest with violence and attempting to deprive an officer of his weapon.”

The story’s main characters are the agent duo known as “the Jills” and Kevin Tomlinson. The Jills have been recognized as being a top producing team in Miami’s luxury real estate market for some time. Tomlinson is no slouch either. He has also been recognized as a top Miami luxury agent, and in the past served on the board for the Miami Association of Realtors®. And although Ovalle and Nehamas’ report suggested that the Jills garnered jealousy from other agents; others have also questioned their business practices.

At the heart of the matter was the allegation that the Jills hid expired listings so the properties would not be solicited from their competition. The allegation is that MLS listing data (such as address, city, and neighborhood) were changed to “hide” expired listings. In an attempt to end the practice, Tomlinson filed a complaint of listing manipulation in April of this year. And that’s when things got interesting.

Rather than waiting for the ethics complaint to process through the system, Tomlinson allegedly asked the Jills on several occasions for large sums of money (up to $800,000), to rescind the complaint. Tomlinson supposedly also threatened to go public if they didn’t pay up.

The combination of high end real estate, allegations of unethical behavior, extortion claims, a police sting operation, may already be the basis for a night’s entertainment. However, the ending sounds like a “take down” scene from Hawaii Five-0: no one expected that Tomlinson would be also charged for going for a policeman’s gun while charged for resisting arrest.

Although the public details may seem incriminating, it appears that there’s more to the story; and maybe each is a “villain protagonist.” Many in the Miami real estate community have rallied around Tomlinson, and some “have petitioned the Miami Association of Realtors® to take ‘disciplinary action of the highest severity’ against the Jills.” For the thrilling account details, please read Ovalle and Nehamas’ story at (miamiherald.com/news/local/community/miami-dade/miami-beach/article42178872.html).

Original published at https://dankrell.com/blog/2015/11/05/when-real-estate-agents-go-over-the-line-to-gain-edge/

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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.

Living with a ghost in your home

Trulia’s House Of Horrors

A recent Trulia poll (infographic at right) revealed how men and women differ about living in a home associated with the paranormal or macabre (Trulia’s House of Horrors; trulia.com; October 13, 2015). Respondents (45% of women and 36% of men) answered that they would prefer to be haunted by a “vengeful ghost” rather than a demon, evil leprechaun, or possessed doll. When asked, 59% of women respondents indicated that they would lose interest in the “perfect” home if they knew the home was a former crime scene; while 47% of men indicated the same. Additionally, 32% of women indicated that they would rule out an otherwise perfect home knowing that a person died there; while 23% of men indicated the same. Apparently, living next to a cemetery was not a detractor from purchasing an otherwise perfect home, according to 61% of the men and 50% of the women who responded.

Ghost or not, the “creep factor” is definitely an issue for many home buyers. So much so that home buyers are turning to services such as DiedInHouse.com to determine if a death occurred in a home they are considering buying. For a fee, DiedInHouse.com will provide a report indicating if a death has occurred and the cause, as well as other information about the home including any reported meth-lab related activity or fire incidents.

Although many alleged haunted homes are old and in many cases have historic significance, new homes can also have ghostly activity. Local historian, Karen Yaffe Lottes, re-tells this story on her blog Montgomery-Ghosts (montgomeryghosts.wordpress.com) about a modern Germantown home where a police officer lived. The officer reported that the house shook and he heard heavy footsteps on the stairs, when putting on “dress blues.” Apparently, the house was built on the site of the farm where Lincoln conspirator, George Atzerodt, was arrested by a uniformed Union soldier – the Union Army uniform was blue. Atzerodt, was subsequently jailed and hanged for his part in the conspiracy. Could Atzerodt still reside on the site where he was apprehended and sent to his demise?

Karen knows a thing or two about local haunted homes, and told me that she uses ghost stories as a medium to tell a history. Along with co-author Dorothy Pugh, years of stories from their “In Search of Ghosts (ISOG)” event at the Montgomery County Historical Society was published as In Search of Maryland Ghosts: Montgomery County (Schiffer Publishing, October 28, 2012).

When asked what to do if paranormal activity is suspected in a home, Karen explained that people try various methods to rid their home of ghosts; some work and some do not. She pointed out that not everyone is uncomfortable with the thought of living with apparitions. Some people actually welcome the spirit to stay; and in some cases ask the ghost to move with them to their next home.

By Dan Krell
©2015

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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.

Housing affordability in a post recession world

HomesI talk to lots of people at open houses. You shouldn’t be surprised to hear that although some express concerns about increasing home prices and their ability to buy a home, many also express their exasperation with increasing rents. And although home prices and ability to get a mortgage are among top concerns for home buyers, according to Realtor® Magazine (Top 6 Home Buyer Concerns, realtormag.realtor.org, August 24,2015); buyer apprehensions have not changed much over the years. There is always a group of buyers who fuss over home prices, down payments, and mortgages. So much so, that it seems as if it is a permanent part of the housing landscape.

From Trulia.com

The housing market is experiencing year-over-year home price gains. The September 29th release of the S&P/Case-Shiller U.S. National Home Price Index (spindices.com) that indicated the 10-city composite increased about 4.5% year-over-year, while the 20-city composite increased about 5% year-over-year. And a recent report from Zillow Research (zillow.com) that indicated median national home prices increased about 3.3% year-over-year during August, while median national rent increased 3.8% during the same period. However, owning a home may be presently a lower percentage of income when compared to other historical periods: Zillow Research indicated that the U.S. Share of Income Spent on Mortgage was about 15% during June 2015, and the U.S. Share of Income Spent on Rent was about 30% during June 2015; while the Historic Share of Income Spent (during 1985 to 1999) was 21% and 24% respectively.

Home prices certainly affect housing affordability. However, affordability may also be affected by the cost of qualifying of a mortgage. Although there is a recent movement for lenders to loosen credit guidelines, qualifying for a mortgage is still more difficult today than it was a decade ago.

Laurie Goodman, Director of the Housing Finance Policy Center at the Urban Institute, recently wrote about how the lack of private-label mortgage securitization has affected many who don’t fit government backed mortgage guidelines. (Mortgage securitization is what provides the mortgage market liquidity, and allows banks to make the loans.) Goodman had this to say about the present lack of private-label mortgage securitization: “The disappearance of this market has affected the availability and cost of mortgages for one group of borrowers—those with less wealth and less than perfect credit who do not quality for government-backed loans” (Why you should care that private investors don’t want to buy your mortgage anymore, urban.org, October 9, 2015).

Goodman pointed out that prior to the great recession, the private-label mortgage securitization market was thriving; however post recession, private-label securitization has all but “collapsed.” Presently, mortgages are primarily government backed and or purchased by Fannie Mae, Freddie Mac, FHA, VA and others; which eliminates many borrowers with imperfect credit and/or don’t meet strict guidelines. However, if the private-label securitization further retreats or is eliminated, she predicts that borrowers with perfect credit and those living in “expensive” regions (such as Washington DC, New York, San Francisco) will be affected as well.

Tight credit guidelines may not be the only reason for many renters to rule out a home purchase. Not having an adequate down payment is another reason many don’t qualify for a mortgage. The lack of savings by Americans was documented by a survey conducted by the Consumer Federation of America (7th Annual Savings Survey Reveals Persistence of Financial Challenges Facing Most Americans, consumerfed.org, February 24, 2014).

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Beyond the benefits – reverse mortgages have risks

houseYou’ve seen the commercials promoting the benefits of the FHA reverse mortgage for seniors. If you’re 62 years of age or older and have equity in your home, it may seem attractive to get a mortgage that converts your home’s equity into cash and eliminates existing mortgage payments. However, the ads don’t tell you the entire story. In fact, the FHA reverse mortgage, also known as the Home Equity Conversion Mortgage (HECM), is probably the most misunderstood mortgage program available today.

from reversemortgagecompanies.com

To educate borrowers of their obligations and how the program works, HUD requires reverse mortgage applicants to go through counseling. Nonetheless, many are still unsure about their responsibilities, as well as the impact on their spouses and how the loan is repaid. Additionally, the equity conversion to annuity payments along with repayment responsibilities has been highly criticized because of the effect on estates and surviving spouses.

On February 9th, the CFPB released highlights of collected complaints about reverse mortgages. Many of the complaints stemmed from misunderstanding the mortgage terms and issues with loan servicing. Many of the issues seem to describe confusion about borrower requirements and difficulty in loan repayment.

Current reverse mortgages ads can be very engaging about the benefits, to be sure. However, what the commercials don’t tell you is that you have some very specific obligations as part of the loan terms, and that you can be at risk of default if you fail to meet those obligations. Because of how the reverse mortgage is structured, you retain the responsibility to: pay property taxes and homeowners insurance, pay HOA and condo fees, and maintain the property. The financed home must also be your primary residence.

And of course, they don’t tell you about the “widow foreclosures” either. Widow foreclosures may be one of the least reported on issues facing seniors who have a reverse mortgage. Ken Stein, writing for HousingWire (Is HUD hiding embarrassing data on widow foreclosures?; housingwire.com, October 6, 2015), described the growing problem of surviving spouses who are at risk of losing their homes to foreclosure because they are not the reverse mortgage borrower. Mr. Stein described a FOIA battle between the California Reinvestment Coalition (with which Mr. Stein is affiliated) and HUD, about disclosing the number of current and impending widow foreclosures.

Joseph Otting, President and CEO of OneWest Bank, stated during a February 26th joint public meeting held by the Federal Reserve and Office of the Comptroller of Currency (about the proposed acquisition and merger of CIT Group and Onewest Bank) that the criticism of their reverse mortgage servicing practices are a “really the criticisms of the regulations” that they are required follow. And that they urge and support a moratorium on foreclosure of non-borrowing spouses of reverse mortgages (federalreserve.gov).

As a result of the recent focus on widow foreclosures, HUD issued new guidelines in January and then again in June to assist non-borrowing surviving spouses who are at risk of losing their homes because of a reverse mortgage. Mr. Stein, in his HousingWire piece, concedes that the new guidelines have potential to help; however, he points out that the new guidelines are optional for lenders.

Additionally, the CFPB issued a Consumer Advisory on June 4th pointing out details about reverse mortgages that the ads omit. The CFPB (consumerfinance.gov) and HUD (hud.gov) websites provide detailed information and considerations about the FHA reverse mortgage.

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Real estate agents getting back to basics and focus on relationships

real estateDon’t be surprised when you’re getting more real estate agent phone calls, or seeing more agents at your doorstep. You may be surprised to know that in this increasingly tech dependent world, agents are getting back to business basics; which is founded in personal introductions, building relationships, and providing personal service.

You see, many real estate agents (like the rest of the population), are realizing the limitations of the internet. What was once the promise of a new market place for products and services has become a super-saturated arena of information, advice, and “content” clamoring for your attention; and is a growing disappointment for many due to the increasing irrelevance of information, not to mention the surge of fraud and hacking.

The National Association of Realtors® (realtor.org) has reported on the growth of internet use in real estate over the last fifteen years in their annual Profile of Home Buyers and Sellers (the 2014 Profile indicated that 92% of buyers “use the internet in some way in their home search process…”). And although the statistic is astounding, it is becoming clear that is still not wholly understood how home buyers and sellers use the internet.

You may not be surprised to know that home buyers and sellers don’t entirely rely on the internet for choosing their agent. In fact, many choose an agent through friend/family referrals, personal introductions, and even serendipitous meetings (such as visiting an open house). Furthermore, buyers and sellers are increasingly aware of the internet’s limitations as well; as one home buyer’s recent statement of “…this home is not what was advertised on the internet…” illustrates the type of misleading information that is often found.

Although many are just waking up to the fact that “point and click” does not sell homes, “big housing data” knows it generates online revenue by capturing your information and selling it to real estate agents, loan officers, movers, and others. Last year’s acquisition of Trulia by Zillow was thought by many analysts to be an industry game changer by merging two of the most visited real estate portals. However, many did not consider that the move was to increase traffic and revenue for two companies that were reportedly not “yet profitable” on their own, by “grabbing a bigger slice of the advertising market” (Logan, Tim. “Zillow Deal to Buy Trulia Creates Real Estate Digital Ad Juggernaut.LA Times. 28 July 2014.<latimes.com>).

More recently, HousingWire’s Ben Lane reported on Zillow’s downgrade by Barclays (“Is Zillow in Trouble?” HousingWire. 20 July 2015. <housingwire.com>), referring to a slowdown of traffic due to saturation and competition. Months after the major acquisition, growth of the online real estate portal is “slowing significantly.”

Just as the growth of the internet created markets and changed how real estate agents conduct business; personal needs and attentions are changing how consumers view the internet, as well as producing voids left by agents and brokers who heavily relied on the internet for business.

The NAR’s recent DANGER Report misses the mark by highlighting perceived shortcomings in Realtor® ethics and competency.  However, the real issue may be more about the lack of professional intimacy; which is necessary for commitment, integrity, and building trust. While some already know it, others are waking up to the notion that the quality of the professional relationship is vital to the consumer’s satisfaction – and it all begins with an introduction.

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