Civil asset forfeiture

civil asset forfeiture
Home Buyer Sanpshot (infographic from nar.realtor)

Can your home be seized through civil asset forfeiture? Consider the ongoing and expanded effort to identify cash purchases of residential real estate to catch criminals.

An imminent Supreme Court decision on Timbs v. Indiana could have implications on your home and property. Although the case is about excessive fines brought on by a state, it highlights the issue of due process in civil asset forfeiture. To bring you up to speed, the case is about the seizure of an Indiana resident’s $42,000 Land Rover by the state of Indiana, although his drug related fine was only $10,000. The Land Rover was allegedly purchased from cash obtained from an insurance policy, instead of illicit monies.

Civil asset forfeit is a when the government (federal, state, or local) confiscates your property when you are suspected of a crime. You don’t necessarily have to be charged or convicted of the crime. Civil libertarians criticize governments and law enforcement agencies for abusing civil asset forfeiture for profit. Maryland is one of the many states that have recently passed legislation reforming civil asset forfeiture. However, Congress has yet to pass a civil asset forfeiture reform bill.

In their effort to fight money laundering and mortgage fraud, the Financial Crimes Enforcement Network (fincen.gov) recently stated that their Geographic Targeting Orders (GTOs) program has “provided valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity…”

Previous GTO’s required title companies to report all-cash transactions that met specific criteria. The purpose was to track and identify individuals who mask their identity behind shell companies. FinCen found that the GTO program provided “valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations.” So much so, that A November 15th press release revealed expanded reporting criteria and metro coverage. FinCen believes that the “reissued GTO” will assist in “tracking illicit activity.”

FinCen’s targets were previously limited to suspected foreign entities purchasing luxury properties. However, FinCen is becoming increasingly aggressive to include more transactions and individuals in their reporting criteria.

Two years ago, I reported on the expansion of the FinCen’s interest in fighting mortgage fraud and money laundering through residential real estate transactions. A January 13th 2016 FinCen release stated their intention in expanding their anti-money-laundering efforts to cash purchases of luxury real estate. The GTO was supposed to help learn about the risk posed by “corrupt foreign officials, or transnational criminals” who were suspected of “secretly” buying of luxury real estate in certain metropolitan areas.

Previous GTO’s focused on the cash purchases of luxury homes (over $1 million) in limited metro areas. However, in their November 15th revision, FinCen lowers the reporting threshold of cash purchases to $300,000. Additionally, the metro areas of interest have been expanded to include certain counties Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas. Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco, and Seattle. Additionally, title companies in those metro areas are also to report “natural persons” behind shell companies used in all-cash purchases of residential real estate, as well as virtual currency purchases.

Original published at https://dankrell.com

Copyright© Dan Krell
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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.

Buyer and seller attitudes about real estate market

Economists are officially pessimistic about the housing market.  This is the general sentiment following another month of declining home sales.  Experts are pointing to a number of factors for the slowdown, including increased interest rates and housing affordability.  But what are home buyer and seller attitudes about real estate? The National Association of Realtors’ most recent Housing Opportunities and Market Experience survey hints at a busy spring!

Economic attitudes about real estate market

attitudes about real estate
Attitudes about real estate market (infographic from nar.realtor)

An October 19th NAR news release (nar.realtor) reported that September’s home sales were the weakest in several years.  The nationwide trend affected all regions.  NAR chief economist Lawrence Yun stated:

This is the lowest existing home sales level since November 2015…A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

First-time-home-buyers are finding the housing market increasingly challenging.  This segment’s participation needs to be strong for a healthy home sales.  September’s low thirty-two percent first-time-home-buyer participation is attributed to rising interest rates and home prices.

But low housing inventory is also an issue.  September’s housing inventory decreased to 1.88 million existing homes available for sale (from the 1.91 available during the previous month).  NAR President Elizabeth Mendenhall stated:

“Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.”

Economists at Fannie Mae believe that the housing market will continue to disappoint.  In an October 18th press release (fanniemae.com) Fannie Mae Chief Economist Doug Duncan stated:

“Our expectations for housing have become more pessimistic. Rising interest rates and declining housing sentiment from both consumers and lenders led us to lower our home sales forecast over the duration of 2018 and through 2019. Meanwhile, affordability, especially for first-time homebuyers, remains atop the list of challenges facing the housing market.”

But what do economists really know about the future?  Let’s hear it directly from the consumer!

Home buyer and seller attitudes about real estate

NAR’s Housing Opportunities and Market Experience survey tracks opinions from renters and homeowners about homeownership, economy, and the housing market.  The release of their third quarter 2018 survey indicates that sixty-three percent of respondents strongly or moderately believe that it’s a good time to buy a home.  Although optimism is somewhat diminished from the second quarter’s survey, there continues to be a positive sentiment about buying a home.  The survey’s positive sentiment continues even though a majority of respondents believed that home prices will continue to increase in the immediate six months.  Additionally, a majority of respondents believe that qualifying for a mortgage may be an obstacle to a home purchase.

The survey also concurs with other metrics indicating high consumer sentiment for the economy.  In light of the recent slide in home sales, NAR’s recent Housing Opportunities and Market Experience survey reveals a near-record high of sixty percent of households believe that the economy is improving.”  Adding to the strong sentiment is the survey’s increased monthly Personal Financial Outlook Index, which indicates that respondents believe that their financial situation will be better in six months.

The survey also indicates a record high of home sellers who believe it is a good time to sell a home.  But given the seasonal decline of housing inventory, it is likely this will translate to a surge of home listings in the spring.  The added inventory combined with high consumer sentiment will boost the housing market. So sayeth the consumer.

Original located at https://dankrell.com/blog/2018/11/01/attitudes-real-estate-market/

Copyright© Dan Krell
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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 tin men

real estate tin men
Beware the real estate tin men (infographic from keepingcurrentmatters.com)

Beware the Real Estate Tin Men!  “Tin men” was a term used to describe con-artists after the 1987 Barrie Levinson movie by the same name became a nationwide hit.  The movie was about aluminum siding salesmen who did whatever they could to sell home improvements in 1963 Baltimore.  The story revealed how everyday “schnooks” created the façade of a successful sales person, as well as revealing their unscrupulous sales tactics.  The main characters are flawed and likable, so much so that you’re rooting for them as they are cross-examined at their MHIC license hearing.

Modern versions of tin men still exist.  They exist in all professions.  They are constantly refining their tactics to get your business. They will often tell you what you want to hear.

When it comes to buying and selling a home, beware of the real estate tin men!  These are agents who will say and do almost anything for your business.

Many real estate agents still use tin men tactics.  Real estate sales is difficult and many agents will do whatever they can to get a leg up on their competition and a chance at a sales commission.  There is a subculture in the industry that is focused on pushing the ethical envelope to make money.  This philosophy is spread by “gurus” and coaches who teach sales tactics, persuasion, and income strategies.

Unlike the world of 1963, when a salesman could easily lie to make the sale, today’s easy flow of information makes it unlikely that a real estate agent would flat-out lie.  The internet has created a savvy and knowledgeable consumer by allowing easy authentication of information.  However, the internet has not changed the real estate agent’s reputation for bending the truth, otherwise known as “puffery.”

Rapport is often built on appearances.  Like the 1960’s tin men, many real estate agents also employ smoke and mirrors to help them appear successful.  Although some still drive cars and dress beyond their means to “fake it,” many agents rely on technology for their trickery.  The art of deception is widely used by agents who dare to manipulate data.  Many real estate agents, who supervise other agents, take credit for MLS sales they had nothing to do with so as to appear they have many more sales (than they actually do).  Likewise, many agents pay for fake internet reviews.  Although many platforms screen for false reviews, agents continue to find ways to get fake 5-star reviews on websites, including incentivizing unsolicited otherwise 5-star reviews from clients.

Many real estate agents rely on gimmicks as a means of getting business.  A popular agent promotion is “I will buy your home if it doesn’t sell.”  The reality is that although the agent may offer to buy your home if they can’t sell it, the conditions actually don’t make it a viable option.  Another oversold gimmick is “cutting-edge” marketing.  The promise of cutting-edge marketing used to mean advanced and new.  However, today cutting-edge real estate marketing is overshadowed by the truth that homes are primarily viewed on real estate internet portals, such as Zillow (all MLS listings are posted to these portals).

Most Realtors are ethical and do the right thing.  A recent article by Jim Dalrymple II even touts broker (and agent) humility as the “new method” and business model (Humility, not arrogance, is the new real estate leadership trend; inman.com; October 17, 2017).  And although real estate agents have increasingly been leaning towards transparency and authenticity, you should still beware of tin men.

Original located at https://dankrell.com/blog/2018/10/25/real-estate-tin-men/

Copyright© Dan Krell
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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 services personality

The “one-size-fits-all” service model is becoming an all too familiar experience in every day life.  You encounter it when you go to the doctor’s office.  A day at the mall is certainly a one-size-fits-all adventure.  Now, there is also the pressure towards automated buying and selling systems in the real estate industry.  Real estate services that is one-size-fits-all?  The idea of a one-size-fits-all real estate transaction is becoming trendy from both online companies and local real estate companies.

How do real estate services treat clients?

real estate services
Real Estate Services (infographic from nar.realtor(

The move toward systematizing consumer encounters comes from the corporate goal of profiting from efficiency.  Don’t get me wrong, there is nothing wrong from a business making money.  After all, making money is the basis of our economy.  And the one-size-fits-all system for home buying and selling is a business solution during a healthy housing market where homes sell quickly.

However, the systematization of the service industry, including real estate, is not welcome by all consumers.  There is some acknowledgement that a systematized real estate transaction can have unfortunate outcomes when the plan is derailed.  Not all real estate transactions are easy, nor do all homes sell quickly.  It is a fact that that most home buyers and sellers still want an expert they can count on to help them navigate one of the most expensive and stressful transactions of their life.

Customer service research

Gauging the effects of a systematized service industry on the consumer is a growing interest.  One recent study examined customer service reactions when the provider system fails (Diaz, Gomez, Martin-Consuegra, Molina; The Effects of Perceived Satisfaction with Service Recovery Efforts: A Study in a Hotel Setting; Ekonomie a Management; 2017, 20:4 p.203-18).  The study suggested that customer issues are inevitable.  They conclude that customer service models should have strategies to address and resolve issues to maintain positive customer relationships.

Another study suggested that when it comes to automated service, some service industries are better suited than others (Scherer & Von Wangenheim;  Man Versus Machine-How the Service Channel Affects Customers’ Responses to Service Encounters; AMA Winter Educators’ Conference Proceedings; 2016, Vol. 27).  The authors suggest that a consumer’s expectation is guided by how a service is provided.  Satisfaction levels are increased when personal services are delivered by a human.  Furthermore, they found that consumers who prefer technology or automated services tend to be ego-centric.  These “self-service” consumers attribute success to their abilities, while shifting blame to externals when there is a failure.

Real estate services for all personalities

The growing body of research may explain why real estate agents have not become extinct in a technological world.  Instead, the profession has endured.  Moreover, Realtors have embraced technology (for better or worse).  As new technologies make the home buying and selling process easier, the industry will undoubtedly adapt.  The fad of systematizing the real estate transaction, as well as buyer and seller encounters, is in reality a “one-size-fits-some” solution.  In other words, there is a place for the automated and systematic real estate transaction, but it’s not for everyone.

Before you embark on your home buying or selling journey, you should think about your needs.  What are your expectations?

As a real estate consumer, you have a duty to explore your options for real estate services.  You should interview and compare real estate services. Questions to ask your real estate agent before you buy or sell a home:

  • Is there one point of contact, or do you have to deal with a “team” of people for different situations.
  • What do you do if the point of contact is not available?
  • How do they handle unexpected obstacles or emergencies?
  • Ask for recent client references whom you can call.

Original is located at https://dankrell.com/blog/2018/10/19/real-estate-services-personality/

Copyright© Dan Krell
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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.

Rent vs Buy puzzle

rent vs buy
The Rent vs Buy decision is a personal puzzle (infographic from keepingcurrentmatters.com)

For some, committing to buying a home is an easy decision.  However, some struggle rationalizing homeownership.  Adding to the confusion are the attempts to persuade tenants to be home owners by flaunting its benefits and financial savvy.  To be sure, there are personal and financial factors that go into deciding Rent vs Buy.  However, the reality is that the Rent vs Buy question is a complicated personal puzzle.

Are you weighing the decision of Rent vs Buy?  Consider that homeownership does have benefits over renting.  Besides having a place to live, the consensus is that homeownership provides stability and belonging to a community.   Numerous studies have associated being a home owner with increased well being and better health outcomes.  Research by the Harvard University’s Joint Center for Housing Studies concluded that homeownership and growing wealth are associated (Herbert, McCue, and Sanchez-Moyano; Is Homeownership Still an Effective Means of Building Wealth for Low-income and Minority Households? Was it Ever? Joint Center for Housing Studies Harvard University, September 2013).

But frustrated home buyers are returning to their rentals because of inventory shortages, intense competition, and increased home prices can be aggravating.

The latest National Association of Realtors (nar.realtor) press release indicted a 1.5 percent decrease in home sales from the previous year.  Although home sales were weak for the previous four months, home prices have increased for the 70th consecutive month!  Nationwide median existing home prices increased 4.6 percent from the previous year to $264,800.  The lack of home sale inventory is partly to blame for the decreased home sales, which increases the upward pressure on home prices.

The Greater Capital Association of Realtors (gcaar.com) release of August housing data for Montgomery County is not much different from the national figures.  Single-family home sales in the county decreased 0.7 percent from the previous year.  Inventory is 8.3 percent below last year’s available homes for sale at the end of August.  But median home sale prices jumped to $443,000, which is an increase of 4.2 percent.

Those who are dissuaded from buying a home because of increasing home prices are facing rent increases.  The median rent for Montgomery County is $1,647.  But according to Healthy Montgomery (healthymontgomery.org), there is upward pressure on rent.  This is not just a local phenomenon, it is nationwide.  According to the Census Bureau (census.gov), some metropolitan areas and cities have experienced increases well over $300.  Rent increases are in part due to inflation and the increasing cost of owning a rental property.  However, tenants are mainly experiencing rent increases because of supply and demand.  Rental inventory is just as tight as home sale inventory.  The Census Bureau reported that the vacancy rate decreased year over year.  Additionally, the Census Bureau reported last year that the percentage of renters who moved during 2017 was the lowest recorded since 1988.

The robust economy has prompted the Fed to increase interest rates this year.  Another rate hike is expected this week.  According to Freddie Mac (freddiemac.com), mortgage rates have increased in anticipation of the Fed’s rate hike.  According to Freddie Mac’s Mortgage Market Survey, the average 30-year fixed rate mortgage is 4.65 percent.  Although mortgage rates are the highest in several years, rates continue to be historically low.

For many who continue to rent, they’re perspective may be justified by comparing housing costs.  The Trulia Rent vs Buy Calculator (trulia.com/rent_vs_buy) is a tool that compares these factors.  Paying rent for a long term may make sense if your rent is low.  However, buying can be a better long-term decision when comparing similar size properties and housing costs.

Consulting with  Realtor can help too. You can find out which is feasible Rent vs Buy. You can see if there are any homes for sale in your affordability range. You can also find out what rentals are available in your rent range.  Regardless of your Rent vs Buy decision, your real estate agent can assist you with housing and the process for home buying or renting.

Original located at https://dankrell.com/blog/2018/09/27/rent-vs-buy-puzzle

Copyright© Dan Krell
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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.