For Sale By Owner: Why Going Solo May Not Be Going Smart

Some people opt to sell their own home for the purpose of avoiding the payment of commission to a real estate agent. But what most people fail to understand it the fact that selling a home is a complicated process. It can be challenging to under any kind of market condition and more so in the prevailing real estate environment.

When you choose to take the route of “For Sale By Owner” or FSBO, you are basically listing your own home. Since you are already a homeowner, you sure know the time consuming process, the complex paperwork, and a ton of legal language that was involved in the home buying process. Selling a home also involves its share of legalities, risks and liabilities. There are very few homeowners that are proficient in the ever-changing rules and regulations of real estate sales and those that are may be able to pull off a sale on their own. However, the vast majority of homeowners do not have the in-depth knowledge and intricacies involved in selling a home.

Lack of knowledge and training in real estate transactions can hurt most FSBO sellers in many ways including failure to set the right asking price, staging the home properly, wasting a lot of time showing the home to bargain hunters or unqualified buyers, not getting professional recommendation regarding repairs and enhancing the home’s appeal, and most importantly, they miss the professional advice of an experienced real estate agent that can help them comply with the pertinent legal and paperwork requirements.

According to the National Association of Realtors (NAR) Profile of Home Buyers & Sellers survey, the median price for homes sold with the help of a real estate agent was 21 percent higher than for those sold For Sale By Owner without professional assistance. Nationally, 86 percent of buyers relied on a real estate agent to buy a home. NAR studies have shown that 83 percent of real estate sales happen because of agents’ contacts, past clients, testimonials, referrals, personal contacts, or family and friends.

Setting the right price is critical. Real Estate agents do this for a living and they are aware of local neighborhoods, trends, available amenities, schooling, buyers’ hot buttons and other aspects that are essential in helping sellers with the right asking price. In a typical FSBO scenario, the for sale sign in the yard is the only primary marketing channel. However, real estate agents can help sellers by listing the home in the multiple listing services (MLS) databases, periodicals, newspapers, various websites, and by spreading the word through their large network of contacts via events, blogs, social media, and member association meetings.

Over-pricing and under-pricing can also make a big impact. An over-priced home may generate a lot of initial interest, but when buyers see similar homes in local neighborhoods that are priced lower, the interest levels drop precipitously. Similarly, under-pricing can be misconstrued by potential buyers as a sign of desperation and they may try to push down the prices further with the hope of scoring a bargain.

Real estate agents are required to undergo ongoing continuous education regarding disclosures, limiting seller’s liabilities, state and federal laws, fair housing standards, environmental regulations and contractual responsibilities. The soup-to-nuts process of listing through closing of a home is considered a team effort. The team members include lenders, attorneys, home inspectors, appraisers, and repair experts. Real estate agents have the advantage of a readily available team of experts. Most people that choose to sell on their own don’t have the network or knowledge in these areas, which could expose them to unnecessary risks, and liabilities.

When it comes to negotiations, real estate agents can deal with potential buyers objectively without any emotional attachments. They can also deftly manage buyer contingency responses, timelines for appraisals, inspections, and financing issues.

In conclusion, a very small percentage of owners that sell their homes on their own are successful. However, for most people, the convenience, knowledge, expertise, ease of paperwork, professional advice, and the peace of mind that comes by working with a real estate agent is worth way more than the cost of commission.

What Home Buyers are Asking For

This has been one of the longest real estate buyers’ markets in recent U.S. history. With the availability of an abundant supply of homes at rock-bottom prices, buyers have become very picky about their wants and needs. It has therefore become imperative for sellers to not only maintain their homes in impeccable condition, but to also entice buyers with various incentives. It is as if homebuyers are able to catch fish with their bare hands and choose the biggest and the best fish from the lot!

Buyers are driving a hard bargain and demanding the best bang for their buck by seeking properties that are well-maintained, mechanically sound, and have an intrinsic value. As a seller, setting an appropriate asking price has become difficult because regardless of the already low listed price, buyers are bargaining hard and negotiating for various freebies.

Money is tight everywhere. Although buyers have cash to buy a home, generally they don’t have enough to buy a fixer-upper or the desire to renovate it. Another reason for this is the difficulty in obtaining a loan for home improvement. Most Realtors agree that their clients are demanding to see homes that don’t require any repairs. Banks are also seeing similar attitudes from buyers for REO properties. They expect bank-owned properties to be in ready to move-in condition.

To make their homes standout from the crowd, sellers are urged to update, repair, clean and stage their homes very well. Sellers must put themselves in the shoes of fastidious buyers and take care of every subtle nuance in their homes that may prevent buyers from giving a second look.

Given the market conditions, it’s not enough these days to have a solid, well-kept house with a great curb appeal. Buyers look for homes that have upgrades such as screened porches, home theater rooms, home offices and other goodies. Sellers are also upping the ante by offering incentives such as free flat screen TVs, gift cards and the most common contribution to the closing costs. As if this isn’t enough, some buyers are demanding tank-less water heaters, new windows, high efficiency appliances and upgraded landscaping.

Interestingly, buyers prefer homes with an open kitchen that extends into the family room without a separating wall. This is not surprising considering that the kitchen has become the most important room in the house for Baby Boomers. Many buyers are practical and environmentally conscious too. While they prefer granite kitchen countertops, they will settle for any natural composite material with a stone-like appearance.

The weak economy seems to be fueling entrepreneurship in a big way. A lot of buyers prefer to convert rarely used rooms such as the formal dining room or the living room into home offices, reading room or a space for pursuing a hobby. This makes sense because studies have shown that on an average, families use the formal living room no more than 3-4 times per year.  To make the living space feel larger, try staging a rarely used formal area, as additional useable space. 

The thrill of scoring a bargain is driving homebuyers’ demands into unchartered territories. As a seller, think outside of the box and wow the buyer. 

What goes into a written offer

Buying a home is not only one of the biggest investments a person makes in his or her life, but the amount of paperwork and legalities involved are also enormous. A written offer is the final and one of the most important aspects of the home buying process.

Once you have found your dream house and you are ready to pull the trigger on purchasing it, what comes next is a written offer. Although it sounds simple, a written offer is a legally binding contract which can have serious legal and financial implications if done incorrectly.

All the paperwork that’s involved in the formal written offer is prepared by the buyer’s real estate agent. The agent will get input from the buyer for payment terms, contingencies, and legal protections. It is very important to be knowledgeable about what goes into this document.

The starting point of a written offer is the price the buyer is willing to pay for the house. Other factors include the method of funding the mortgage, the down payment amount, earnest payment, and closing costs, inspection of the home, conveyances, terms of cancellation, any repairs to be performed by the seller, timeline of events leading to the closing, mediation, etc.

The following terms are typically included in a written offer according to Freddie Mac:

Proposed purchase price
It is a good idea to discuss the offer price you are proposing with your agent because they can figure out the prices at which similar homes were sold in the area, market conditions, overall condition of the house, supply and demand, etc. Too many people make the mistake of low-balling their first offer, hoping the seller would come back with a slightly higher counter offer. This strategy can backfire if the seller feels insulted by the low offer and refuses to make a counter offer or if another buyer makes a better offer and purchases it while you are waiting to hear from the seller.

Concessions
This includes things you'd like the seller to help pay for, such as portions of the closing costs, home owners warranty, and other expenses.

Conveyances
This includes any personal property that the seller may leave behind such as kitchen appliances, washer or dryer. These items must be clearly itemized and listed in the written offer.

Home inspection contingencies
The written offer must clearly state that you would proceed with the sale only if the home inspection comes out clean. Many surprises can show up after a home inspection such as mold, radon, termites, etc.  You must determine if you would ask for a reduction in the sale price and do the repairs on your own or if you want the owner to repair them before the sale is made.

Earnest money
Earnest money is a deposit the buyer offers to show their seriousness about purchasing the house. Earnest money is usually held in escrow and applied to the buyer’s closing costs at settlement.

Acceptance
This covers how long the seller has to respond to the buyer’s offer before the offer is no longer binding. If the seller accepts the offer outside of this time limit, the offer may no longer be legally binding

Mediation and arbitration
These are legal methods for handling contract disagreements between the buyer and the seller.

Picking between a New and Existing Home

One of the biggest dilemmas potential home buyers face is the decision whether to purchase a new one or an existing home. Although many factors influence this decision, it is strictly a matter of personal choice and circumstances. There are pros and cons to both and this must be taken into consideration in the early stages of the planning process.

In the prevailing real estate environment, the biggest difference between new and existing homes is price. The price difference between new and existing homes is growing, both regionally and nationally. According to SalesTraq, the median price of existing homes was $108,000 and $195,950 for new ones. The gap between new and existing home prices in Las Vegas widened to $88,000 in March 2011, compared to $7,000 in 1996. Although differences vary, the stark difference in prices between new and existing homes is a common scenario nationally.

In addition to factors such as price, distance from work, neighborhood, schooling, amenities and resale value, there are many other pros and cons that must be considered to make it easy to decide between a new or existing home.

New Home
Pros: you usually get a builder’s warranty which covers construction and appliances. It’s your own brand new home. You can customize, paint and decorate it anyway you prefer. It may have more energy-efficient design, building materials, and appliances. You may be able to negotiate with the builder to thrown in various options. New homes are built to updated building and safety codes. The electrical system may be wired to handle today’s technology demands such a home theater. The new subdivision may have modern recreational facilities and amenities. You definitely have less maintenance than an older home.

Cons: New homes can cost a lot more than existing ones because of the increase in costs associated with land, materials, and labor. In a down market, it may be difficult to sell your existing home to help you pay for the new home. Your commute to work may be longer because new homes are usually constructed on the outskirts of the city or suburbs. The schooling system in the new neighborhood may not be as good as ones is established areas. You may pay higher property taxes to expand utilities and other services to a new area with fewer inhabitants. Landscaping can be expensive. The homeowners’ association fees may be higher than an older subdivision.

Existing Home
Pros: An existing home may be a lot cheaper than a new one. You may have many more choices of types of home as well as locales. You may be able to find a house in a desired neighborhood or a good schooling system. Landscaping costs are generally lower. You may get more bang for your buck in terms of quality of workmanship in a home that was built when land, labor and material costs were lower. You may have more living space, more land and more distance between houses. If the yard has mature trees, you’d benefit by having a cooler home and lower air conditioning bills in summer. The home may have a renovated kitchen and other goodies such as a finished basement. Appliances and window treatments are often included.

Cons: Older homes are generally less energy-efficient and may have leaky doors and windows, which means higher cost for heating and cooling. The house may require expensive repairs. Appliances which are no longer under warranty can fail anytime requiring immediate repair or expensive new purchases. The styling, décor, and flooring may be outdated. Building materials can be harder to match or replace.

The best way to decide if a new or existing home is best for you and your family is to make a list of what you are looking for in a home, your budget, preferred location and other factors that are important to you.

Mortgage Rates at Lows for Year

Amidst the continued weak economy, mortgage rates have dropped for four weeks in a row to their lowest point this year, according to Freddie Mac’s Primary Mortgage Market Survey that was released on June 2, 2011.

Rates on 30-year fixed-rate mortgages averaged 4.55 percent with an average 0.6 point for the week ending June 2, down from 4.71 percent last week and 5 percent a year ago.

The 30-year fixed-rate mortgage hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, and so far this year has ranged from 4.71 percent in early January to a high of 5.05 percent in February.

Rates on 15-year fixed-rate mortgages averaged 3.74 percent with an average 0.7 point, down from 3.89 percent last week and 4.36 percent a year ago. This is a new low for 2011, but it is well above the all-time low in records dating back to 1991 of 3.57 percent, set in November.

Rates on 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.41 percent with an average 0.6 point, down from 3.47 percent last week and 3.97 percent a year ago. The 5-year ARM hit a low in records dating to 2005 of 3.25 percent in November.

Rates on the 1-year ARM loans averaged 3.13 percent with an average 0.6 point, down from 3.14 percent last week and 4.07 percent a year ago.

Some analysts are anticipating an upward movement in mortgage rates. Mortgage applications have been rising, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Also, the number of borrowers looking to refinance is currently at its highest level since the second week of December. Mirroring the steady decline in rates, refinancing activities have increased 35 percent over the past seven weeks. However, refinancing is only at 50 percent the level it reached during the fall of 2010, when mortgage rates fell to their record lows.

Despite an uptick in refinance activities, the low mortgage rates haven’t been good enough to nudge the weak housing market. According to the National Association of Realtors, fewer people bought previously occupied homes in April. Sales fell to a seasonally adjusted annual rate of 5.05 million units, which is far below the 6 million homes a year that economists consider a healthy housing market.

Despite the lackluster housing news, Freddie Mac’s Vice President and Chief Economist Frank Nothaft highlighted one positive observation.   "Households have been strengthening their balance sheets over the past year," he said. "The New York Federal Reserve Bank reported that the serious delinquency rate (90 or more days delinquent plus foreclosures) on first mortgages and closed-end home equity loans balances fell to 7.46% in the first quarter from a peak of 8.89% the same period last year. This suggests there may be fewer distressed sales later this year." Distressed houses have accounted for a much higher than normal share of all homes on the market for the last year, and a reduction in their number would help stabilize home prices, which have been falling since last summer.

Ackley Realty Captures Region Sales Honors

We were honored by this amazing article in the June 9^th Osceola News Gazette front page (cover) and front page on the real estate section of the HomeFinder. 

I would like to let each and every one of you know how proud I am of your contribution to us getting this prestigious award.

Feel free to send this article to your clients with a note from you.

Coldwell Banker Ackley is truly grateful to have you as part of our team.

You all rock!!

Have a fabulous day!

Rajia

What happens to mortgage rates after QE2 ends in June?

As far as federal agencies are concerned, none of them have a bigger clout than the Federal Reserve. It is said when the Feds sneeze, the world economy gets hiccups. Their policies affect everything from the milk we buy at the grocery store to the interest rates of a 30-year mortgage.

It is no wonder that Quantitative Easing 2 or QE2 is one of the hotly debated topics these days? So what in the world in QE2? Simply put, it is an attempt by the Feds to jump-start the sluggish economy by pumping billions of dollars into the financial markets.

Under normal circumstances, if the central bank wants to stimulate economic growth, it simply lowers interest rates, which in turn increases the money supply and infuses cash into the real economy. The domino effect occurs when people borrow this increased amount of available cash and banks lend it, which eventually sputters the economy back to normal growth patterns. However, this only happens in normal market conditions. But the market situation in the U.S. is far from normal these days.

Back in 2008 the feds lowered the short-term interest rate target to near 0%, but the economy continued to be sluggish and has not gained any traction since. So, when the central bank exhausts all its options to influence interest rate movements, it engages in a process known as quantitative easing. The goal of quantitative easing is to increase the money supply by purchasing Treasury securities. This increase in money supply is meant to ease the financial burden on banks. As pressure is alleviated from banks, they will be encouraged to lend money to people seeking small business loans, mortgages, auto loans, etc.

Between November 2010 and Junes 2011, the central bank will invest $600 billion in long-term bonds. The bond/treasury purchases are aimed at stimulating the economy. By buying Treasuries, the Fed intends to soak up supply and push their prices up. Because interest rates move inversely to bond prices, interest rates move down. Mortgage rates, corporate bond rates and other interest rates will go down, or at least be lower than they otherwise would be.

But now that the central bank's bond-buying spree is drawing to a close, even some of the Fed's toughest critics are nervous. QE2 was designed to keep bond prices high and interest rates low. It is credited with propping up the economy a bit and, in turn, boosting the stock market. Technically, the Fed is in the midst of its second round of bond buying—hence the 2 in QE2 —since the financial crisis struck in 2008. When the first round ended in spring 2010, both stocks and bonds tumbled.

Now that QE2 is scheduled to cease at the end of June, financial analysts are predicting that the demand for bonds and mortgage-backed securities will fall, which could result in higher rates. This is because there won’t be any bulk buyers of bonds after the Feds stop buying them. Others are speculating that if the prices of oil, gasoline and food continue to remain high, the economy may slow down even further, which may cause the mortgage rates to decline even further. While there are no clear answers, the best thing to do is stay tuned.

The Fed proposes Mortgage Standards Rule

The Federal Reserve Board has proposed a rule that would require banks to determine a borrower’s ability to repay a mortgage before making the loan.

Although this rule seems obvious, it is now required by the Dodd-Frank act, which also establishes minimum mortgage underwriting standards. This means borrowers can sue lenders if appropriate efforts are not taken to ensure they can repay the loan.

The proposed rule is in response to a spate of so-called “liar loans” that lenders offered to borrowers in the years leading up to the housing market crash. In many cases, lenders did not verify the income stated by borrowers, which meant no due diligence was made to determine the borrower’s ability to repay. Many of these liar loans ended up on foreclosures, which contributed further to the nation’s financial crisis. Some of the criteria that will be used to determine a borrower’s credit worthiness and ability to repay a mortgage loan include a person's income, employment status, the monthly mortgage payment, any other current debt obligations and a consumer's credit history.

The revisions to mortgage regulation, which implements the Truth in Lending Act (TILA), are being made following the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposal would apply to all consumer mortgages except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans.

The proposed rule would provide four options for complying with the ability-to-repay requirement.

·         First, a lender can meet the general ability-to-repay standard by considering and verifying specified underwriting factors, such as the borrower’s income or assets.

·         Second, a lender can make a "qualified mortgage," which provides the creditor with special protection from liability provided the loan does not have certain features, such as negative amortization; the fees are within specified limits; and the creditor underwrites the mortgage payment using the maximum interest rate in the first five years.

·         Third, a lender operating primarily in rural or underserved areas can make a balloon-payment qualified mortgage. This option is meant to preserve access to credit for consumers located in rural or underserved areas where banks originate balloon loans to hedge against interest rate risk for loans held in portfolio.

·         Finally, a lender can refinance a "non-standard mortgage" with risky features into a more stable "standard mortgage" with a lower monthly payment. This option is meant to preserve access to refinancing.

The proposal would also implement the Dodd-Frank Act's limits on prepayment penalties. The Fed is seeking comments on the proposed rule until July 22, 2011. The process of writing rules based on the Fed’s proposal is scheduled to transfer to the soon-to-be-effective Consumer Financial Protection Bureau (CFPB).

The Dodd-Frank Act requires the creation of this bureau, which will write rules for mortgages and other consumer credit products. The CFPB will take over enforcement of consumer protection laws on July 21.

Gas Prices Impact Real Estate Choices

Gas prices have been steadily rising. The average price of a gallon has increased more than 30 percent over the past 12 months. Although it has come down a few cents in the past few weeks, economists expect it to remain well above the $3 per gallon mark through the rest of 2011. This not only affects the type of cars Americans drive and their driving habits, but it also impacts their housing choices. More buyers are choosing homes closer to shops and services because of the increase in gas prices.

Home buyers are not only thinking about carpooling and taking public transportation to work, but they are also rethinking their long commutes to work. According to a Coldwell Banker survey of 1,188 of its real estate agents regarding buyer trends, 75 percent said higher gas prices are influencing homebuyers about their decisions purchase homes. 89 percent of the respondents said buyers want to look for homes closer to work, and a whopping 93 percent said buyers would choose to live closer to their work if gas prices continue to rise.

Since more employers are providing flexibility to work from home, more buyers are expected to look for homes which allow them to telecommute. In fact, 77 percent of the surveyed agents said more buyers are interested in having or creating a home office.

Since most buyers wouldn’t fancy living in their gas-sipping Toyota Prius, they are thinking about considering urban living. 56 percent of the surveyed agents said compared to 5 years back, more home buyers are contemplating urban living as a way of reducing their commute time and distance. The main attraction is the ability to walk to work, buy groceries and hop on public transportation. It is no wonder that smart growth communities are becoming popular in several metros. People seem to like the attractive mix of affordable, middle-income, and up-scale housing with restaurants, theaters, offices and retailers located within the community. Many of them are located near or close to a public transportation facility, which means people can walk to work, ride a bike or take the bus or train.

"The decision to buy a home has always been tailored around the personal, multi-faceted lifestyle needs of each buyer," said Jim Gillespie, CEO of Coldwell Banker Real Estate. "Today, rising fuel costs and a person's decision to commute or perhaps work remotely are additional factors of the decision home buyers must consider."

When a nation is in recession, real estate typically helps in recovery. But given the weak economy combined with sustained high gas prices, real estate is not expected to get the country out of this recession. But it is definitely interrupting the pattern of unending urban sprawl in most metros.

Are gas prices influencing your decision about where you would buy your home? Are you planning to look for smart growth urban living communities? Let us know the choices and changes you are considering.

Existing Home Sales Rise in March

There have been some signs lately about the housing market crawling its way back slowly after it bottomed out last July. According to the National Association of Realtors (NAR), sales of existing homes in the United States rose 3.7% in March to a seasonally adjusted annual rate of 5.1 million.

These results were better than expected because many experts and economists had predicted that number to be close to 5 million units. In February, 4.88 million existing homes were sold, while the initial estimate was 4.92 million units. Although March's rate was 24.8% below the November 2009 peak of 6.49 million units, the fact that existing home sales have increased in six of the past eight months is being considered a small but sure step towards the U.S. housing market recovery.

In March, three of the four U.S. housing regions saw an increase in existing home sales. The South led the way with an 8.9% increase in resales to an annual level of 1.99 million, followed by a 3.9% increase in the Northeast to an annual level of 800,000, and 1% in the Midwest to an annual rate of

1.06 million. Sales of existing homes fell 0.8% in the West to an annual level of 1.25 million. 

Sales of single-family homes grew by 4% in March to a seasonally adjusted annual rate of 4.45 million units. Sales of condos rose 1.6% to an annual rate of 650,000. Some housing analysts argue that sales of existing homes in March of this year were lower than the 5.44 million units sold in March 2010. Although it is true that sales were at a higher level between the months of March and June 2010, these elevated levels were due to buyers rushing to take advantage of the federal tax credits for homebuyers.

According to a NAR survey, first-time buyers purchased 33% of homes in March, compared with 34% in February. Cash sales accounted for 35% of the market share in March, up from 33% in February. Investors accounted for 22% of sales, up from 19% in February. The remaining 45% were purchased by repeat buyers.

The improving sales pattern is likely to continue, said NAR Chief Economist Lawrence Yun. "Existing-home sales have risen in six of the past eight months, so we're clearly on a recovery path," he said. "With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain-primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percentage of income have been at record lows."

"Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago-before the loose lending practices that created the unprecedented boom-and-bust cycle," Yun explained. 

NAR's housing affordability index shows that the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February.

The inventory of existing homes decreased to 8.4 months in March, as compared to 8.5 months in February. If sales continue at this rate for the rest of 2011, this year will be better than 2010 for existing home sales.

Congress eliminates all funding of HUD “Housing Counseling Assistance Program”

The recent budget approval by the U.S. Congress avoided a government shutdown and ensured that the federal government would be operational through the end of this fiscal year (FY). The final budget agreement contains numerous spending cuts across a variety of domestic discretionary programs, including the elimination of all funding, totaling $88 million, for the Housing & Urban Development Department’s (HUD) Housing Counseling Assistance Program. The program helps millions of home owners by providing free counseling on foreclosure, reverse mortgages, refinancing, and pre-purchase services.

These cuts include all funding for federally mandated reverse mortgage counseling. Borrowers seeking FHA-insured reverse mortgage are mandated by federal guidelines to first go through HUD-approved reverse mortgage counseling. In many cases, local housing counseling agencies – approved and funded in part by HUD – are the only source of help for distressed homeowners.

"This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans,” said Barbara Stucki, of the National Council on Aging (NCOA), one of eight intermediaries that provide this counseling service nationwide. “Without this funding, older Americans who can least afford it may have to pay for this critical advice out-of-pocket,” Stucki said. 

The federal agency, state housing associations, and even some lawmakers themselves have touted such HUD-approved counselors as the go-to source for homeowners struggling to make their mortgage payments. Their services are free and organizations working to educate borrowers about foreclosure relief scams position HUD-approved counselors as their strongest defense.

Over the past two years, HUD-approved housing counselors have helped more than 4 million families struggling to keep their homes, according to the federal agency.  Housing experts state that the HUD funding provides much-needed assistance to struggling homeowners across the country — and the housing recovery — could be severely impacted by its elimination.

Faith Schwartz, executive director of HOPE NOW, said, “Housing counseling dollars remain critical to homeowners at risk…Housing counselors have a proven track record of success with regard to pre-purchase and foreclosure prevention counseling. Eliminating an important source of funding is concerning, as industry and non-profit counselors have been working together to keep people in their homes.”

Despite having a history of bipartisan support, the program lost its entire budget. Eliminating this program will cause many nonprofits to cut these free counseling services and lay off highly skilled staff. A lot of people are shocked that Congress would cut such a results-driven program especially with data showing that access to counseling reduces default rates. 

Many industry analysts feel cutting the nation’s nonprofit housing counseling system is a bad public policy, especially when the country is burdened by record foreclosures, high unemployment and economic uncertainties. Many nonprofit organizations are warning about an increase in foreclosures due to the elimination of the Housing Counseling Assistance Program. Scam artists and real estate speculators are expected to come out in droves to take undue advantage of vulnerable homeowners.

2011 First Quarter Office Awards

Coldwell Banker Ackley Realty, just named "Top Office" AGAIN by Coldwell Banker. 

The Top Office Awards was presented to CBAR for the following awards.  This is a repaeat of the previous quarter.  CBAR has an exceptional team, who not only lists homes but sells them!

FIRST QUARTER, 2011

LISTING UNITS

SOUTHERN REGION

51-100 SALES ASSOCIATES

FIRST QUARTER, 2011

TOTAL UNITS

SOUTHERN REGION

51-100 SALES ASSOCIATES

The relationship between Real Estate and Social Media

Marketing and PR have dramatically changed in the past several years because of the financial woes gripping the nation. Gone are the days of fat budgets for glossy printed brochures, multiple billboard ads, TV commercials and other forms of traditional methods. While many of these old marketing channels will hang around with a diminished stature, the social media way of marketing and PR is spreading like wildfire, and with Facebook having over 500 million members, social media is here to stay. It is therefore important to learn its relationship with the real estate industry and the right way to play it.

The foundation of an effective social media strategy starts with the website. A website is the backbone of an agent’s online presence. Baby boomers and the younger texting generations do most of their searches online for researching and buying all kinds of products and services. Even if agents have a strong social media presence, prospective clients will always want to visit their websites to gather facts and do a gut-check. Some of the key ingredients of a good website include an elegant design, user-friendly navigation, great content and Search Engine Optimization (SEO), to make it appear at the top of search engine results. Since consumers are increasingly using their smartphones for web searches, it is important to make your website mobile friendly.

After taking care of the website, it is time to create a social media strategy. This is important because social media gives agents the opportunity to create a two-way conversation with their prospects. Today’s prospects demand and expect immediate information. They also want it to come directly to them through smartphones, tablets and in some cases, their automobile dashboards. There are many ways to enter and conquer the world of social media. It may be through blogs, Facebook, Twitter, YouTube, LinkedIN, and a plethora of other platforms. It is therefore imperative to first become familiar with some of these popular sites because it will help you determine which direction to go in depending on your interests and strengths.

Facebook is perhaps the best platform for real estate agents because of its relationship factor. It allows people to easily opt-in and refer others. By creating relevant content, it can also be used for targeted advertising campaigns and online promotions to attract potential customers to the agent’s website and Facebook page.

Realtors can carve a niche by using blogs to position themselves as experts in their field, particular neighborhoods, types of housing and other aspects of their business. By consistently posting blogs on a variety of focused topics and issues, agents can attract a huge following, which could bring in qualified leads and referrals, and increase their visibility. It is important to make your blog insightful and interesting in order to continuously add new fans.

Twitter is also a great tool for realtors because it can be easily used with smartphones. Because of the 140 character limit for each tweet, brevity is the key. Unlike email, it provides you an opportunity to broadcast your message to all of your followers in real time. It can be used to broadcast new listings, open house events, model home showings, and links to pertinent articles.

LinkedIN can be used to build meaningful and direct connections with vendors, lenders, prospects and past clients. You can build credibility by answering questions in your area of expertise. You can ask satisfied customers to recommend you on your LinkedIN profile, which can help potential clients to choose you for their home buying and selling needs. You can join and participate in many groups or start your own group.

Other sites such as YouTube, Flickr, Stumble Upon and Digg are also good social media applications for agents. You can create your own customized YouTube channel to show videos of listings, virtual tours, testimonials of happy buyers/sellers, how-to video articles, etc. Similarly, Flickr can be used to display photos of homes, office events, and conferences.

If you are active on multiple social media accounts, there are apps available to help you automate and schedule the delivery of posts and tweets. Also feeds from one or more accounts can be syndicated to your other social media accounts, which in turn will help you in creating a greater following.

Coldwell Banker Ackley Realty is at the forefront of social media technologies to better serve its buyers and sellers. Raising the bar on traditional home searches, Coldwell Banker has created smartphone apps which enable tech savvy consumers to perform GPS-enabled searches for listings and sales in 28 countries. Also, their listings from Realtor.com, Trulia, Zillow and other websites feed directly to Facebook and Twitter accounts.

Please visit our various social media sites and follow us for interesting articles, specials and announcements.

Facebook: http://www.facebook.com/ColdwellBankerAckleyRealty

Twitter: http://twitter.com/AckleyRealty

You Tube: http://www.youtube.com/ColdwellBankerAckley

Linked in: http://www.linkedin.com/groups?mostPopular=&gid=1095987

Remodeling Ideas that Increase Value

Any remodeling you under take is going to increase the value of your house. However, some improvements add very little value while others add a lot. Before starting any remodeling work it is best to do detailed planning about colors, materials, styles and costs. It is also important to keep in mind that if you add a lot of additional rooms or make radical changes, you may end up pricing your house way above the average selling price of homes in your area. This could make it difficult to sell your house, or in soft markets, it may not sell at all.

To avoid such pitfalls, let’s examine remodeling projects that give the highest return on investment. In the prevailing buyers’ market it is very important to raise the perceived value of your house either by raising your home’s curb appeal and/or increasing its value through smart, cost effective remodeling. The best way to figure out which way to go is to find your home’s current value by calling a real estate agent or by using one of the many websites that can show it instantly. If you are calling an agent you should also ask the prices at with remodeled houses of the same size as yours were sold in your neighborhood. The agent can also do a Comparable Market Analysis (CMA) to analyze the average value added for different types of remodeling. This will help you determine how much money to spend and what kinds of renovation projects to do.

Curb Appeal

The first thing buyers notice about your home is its exterior and since first impressions are very important, remodeling the exterior and landscaping gives one of the highest returns on investment. Look at your house from various angles on the outside and take pictures. Create a checklist of things that need fixing or replacing. Repainting the exterior, including the patio, immensely enhances your home’s curb appeal. Paint or replace the main door, mailbox and shutters. A lush green, weed free lawn with colorful flowers and plants amplifies the image of your home. Invest in professional landscaping if you don’t want to do it yourself. Replacing old light fixtures above the main door and near the garage are also recommended. A walkway lined with lights and a pressure washed driveway and exterior will give the house a new look. If the steps leading to your door have iron railings, give it a fresh coat of paint.

Kitchen

The kitchen is arguably the most important and most used room of any house, not only because it is where food is stored, prepared and consumed, but also because it tends to be the social hub of most family activities. If you have the budget, replace your appliances with ones that have a high Energy Star rating. Stainless steel appliances are hot these days. If you have an old sink consider replacing it and also replace the faucet along with it. Granite counter tops are very popular these days. Replace or repaint old or damaged cabinet doors. Redoing the kitchen floor with hardwood or tiles is also an option that may pay off. Consider adding can lights and drop lights above the island to make your kitchen look elegant.

Interior Paint

Do you still have original wallpaper in your kitchen or your children’s room? If so, this has got to go. In the early 90’s it was fashionable to have different colored or multi-colored wall paint in various rooms. Today, homeowners prefer neutralized wall colors that complement the flooring, appliances, drapes and furniture. If you already have neutralized colors decide if a fresh coat is required.

Bathrooms

Renovating a bathroom or adding a new one will definitely increase your home’s value. Aging baby boomers prefer having their master bedroom on the first floor. If yours is not on the first floor see if it’s possible to convert a powder room into a full bath, and if you have a spare bedroom close by, you may even want to consider attaching the remodeled bath to it. If you have the space and budget to add an extra bathroom, it would be a big plus. Changing faucets, shower heads and shower doors will also enhance the bathroom’s look and feel.

Adding a home office may payoff in urban areas since a lot of people are increasingly telecommuting or starting home-based businesses. Investing in finishing a basement, replacing windows and siding or adding additional rooms may only add value to houses in hot real estate markets. New flooring does not add any significant value to your home. However, replacing worn out carpet in high traffic areas is definitely a good thing.

What is Curb Appeal?

The importance of creating a good first impression is considered very important for jobseekers and sales professionals. The same is true for the curb appeal of your home. Most potential homeowners are very clear about their requirements of the home they are seeking. In their quest to find that perfect home, buyers visit several “open house” events. Open house?…Why isn’t it called “open home?”  This is because when buyers tour open houses they are visually inspecting and analyzing the various tangible aspects of the house such as how spacious are the bedrooms, is the kitchen big enough, does the patio offer privacy and so on. All they are doing is looking at various houses which fit their specific requirements and criteria. But at some point in their search, they will find this one house that “feels like home.”

So what was magical about this one particular house that felt like home? It probably had all their desired needs on their checklist. But it may also have fulfilled their wants, emotional factors and other intangible feelings which gave them the feeling that this could be their home. Studies have shown that one of the factors that positively influence homebuyers’ emotions is the curb appeal of the house. Although this is such an important part of selling a house, surprisingly very few sellers invest time and money on improving curb appeal prior to putting their homes on the market.  Here are some simple steps you could take to significantly improve curb appeal of the house you are trying to sell.

Start with the exterior. If buyers don’t like what they see on the outside, they will perceive the inside to be not that great either, which means you won’t be able to bring them inside. Mow and edge the lawn, rake leaves, mulch flower beds and make the yard weed free. Trim bushes and get rid of overgrown or dead branches. If it is spring time plant some flowers. Having a lush green lawn and a well-landscaped yard is a big piece of the curb appeal puzzle. Consider having a seasonal wreath on the door or an American flag or the flag of your favorite sports team near the main door.

Pressure wash your driveway, walkway and sidings. Paint the exterior and interior if required. Clean windows inside and out with a glass cleaner. Stain and polish your main door if required. The same goes for door knobs and handles. Repair or replace broken shutters, gutters and shingles. Don’t forget the mailbox. Give it a fresh coat of paint or replace it if the one you have has worn out. Leave the outside lights on till about 10pm. Many people who work during the day and on weekends do their drive-byes in the evening after work. Ensure that the house number is clearly visible even at night.

After creating a wow factor on the outside do the same for the inside. Have all your carpets steam cleaned and vacuumed and your hardwood floors polished. Replace non-working bulbs, broken light fixtures and switches. Tighten hinges of cupboard doors and polish their door knobs. Clean the surfaces of stovetops, dishwasher, microwave, refrigerator and oven. Don’t forget to clean and polish granite countertops. Organize tools and bicycles in the garage symmetrically. Clean and stain the patio.

Place fresh cut flowers on the kitchen island and/or in large planters on either side of the main door. Light candles that have subtle fragrances in the kitchen, bathroom and other places in the house. Turn on the fireplace if it is winter to create a warm and cozy ambiance. Bake a batch of cookies so that their aroma wafts through the entire house. It will have a lingering effect on the buyer.  If the house is located on a busy street or highway, play soft jazz or classical music to drown out traffic noise. This will also take care of noisy neighbors or their barking dogs.

Dust and clean mantles, furniture, drapes, curtains and other surfaces.  Replace broken blinds. Scrub shower walls and bathtub floors. Clean and disinfect sinks and toilets. Fix leaky faucets and showerheads. Ensure that walk-in closets are neatly organized.

After you have taken care of the above mentioned tasks get a second opinion. Ask a friend or your agent to walk through the exterior and interior of your house. They may find other small issues that you may have missed. Creating a good feeling involves touching various human senses including visibility, smell, touch and noise. While people’s preferences, tastes and choice vary, a nice smelling house with a clean and well organized interior and an inviting exterior can bring every house one step closer to becoming someone’s “home.”

Importance of being pre-approved before you start viewing homes

Unless you are going to pay cash to buy your home, it is extremely important to first get pre-approved for a loan. Before delving into the significance of pre-approval, it is important to differentiate it from pre-qualification, since the two terms are often confused or mistakenly considered the same.

Prequalification is merely an informal estimate of how much house you can afford. Based on your stated income and total expenses, a lender would make an educated guesstimate of the loan amount you would potentially qualify for. A credit check is generally not performed for this process. A debt-to-income ratio is calculated which simply tells how much you should be able to borrow. The loan amount specified in the pre-qualification statement does not provide any credibility with either the lender or seller. If you are in the early stages of your home-buying process, you can use a free pre-qualification calculator from the Internet to get a clear idea of the loan amount you may qualify for.

Unlike prequalification, Pre-approval carries a lot of weight in the mortgage industry and it offers plenty of benefits to the home buyer, which we will outline shortly. Your lender would begin the pre-approval process by performing a much deeper probe of your financial affairs. You will be required to produce hard evidence of your income from employment and other sources such as a business you may own; assets, loans, monthly financial obligations, wage garnishments, tax returns, investments, and bank statements. You would have to pay for a mandatory credit check that the lender would perform for obtaining your credit scores, payment histories and a record of any payment defaults or bankruptcies. The lender would also communicate with your employer to verify employment status, history and current income. The lender then processes all this information and issues you a pre-approval letter, which specifies the exact loan amount they are willing to give you, the interest rate for the loan, monthly payment amounts and other terms.

Arming yourself with a pre-approval letter puts you in the driver’s seat in your hunt for a home. It offers you significant advantages over other buyers that are not pre-approved. Some of the benefits include the following:

·         Sellers love you because you are a serious buyer and not just a tire-kicker or looker

·         Some sellers and listing agents only accept offers from pre-approved buyers

·         Some owners will only show properties to pre-approved buyers

·         Since you know the exact loan amount you can get, you can focus your search on homes in that price range

·         Realtors and listing agents will take you seriously

·         It gives you leverage in the negotiation process

·         In a hot market, it gives you the ability to act quickly when you find the right home

·         For a seller you are more attractive than a cash buyer because they need to provide bank statements and a letter from their bank as proof of cash in hand, whereas you don’t

·         Because of stricter lending practices, your pre-approval may be delayed or denied because of financing issues, and you may lose the opportunity to make a timely offer

·         It will force you to get your financial affairs in order upfront, so that you don’t end up scrambling to get it done in a hurry when you find your dream home and want to pull the trigger.

When you are seriously ready to start your home buying process, getting preapproved is the best way to begin. It assures all stakeholders that you are a serious buyer. Just consider this fact.  To set up a home showing, the seller, seller’s agent and the buyer’s agent must coordinate the appointment. Sellers may have to make arrangements for baby-sitting, clean the house, and drive away with pets, house guests and elderly parents for a set amount of time. They turn on the lights, cool down or heat up the house to make you comfortable…and hope that you would buy their house. If you are not a pre-approved serious buyer, you are wasting everybody’s time and inconveniencing everyone involved in the house showing process.

When you are ready to make an offer on a house, you must submit the pre-approval letter with it. Be aware that if you are submitting an offer on a REO property, you may be required to get prequalified through a second lender even if you are pre-approved through your lender.

The reason for this is the listing agent or bank may have built a long-term relationship with a lender who they consider to be dependable and whose judgment they fully trust. To smoothly make the sale, the bank will often make prospective buyers to go through a prequalification process through their lender. This is similar to the “second opinion” that people choose to seek while making important decisions prior to going under the knife for a surgical procedure. Since all lenders are not the same and the experience of loan officers differ, the bank uses the second pre-qualification process to vet the sale.

2011 Women Who Mean Business Awards

Last night, the Orlando Business Journal recognized Central Florida’s top businesswomen whose efforts and creativity helped better our region and their firms. This year, 15 women are finalists in three categories: Business Owner of the Year, Business Executive of the Year, Up-and-Comer of the Year.

Coldwell Banker Ackley Realty's President Rajia Ackley was selected as a Finalist in the Business Owner of the Year Catagory.  Congratulations Rajia!

METRO MARKETS

Since the bust of the real estate bubble, people have become cynical about the state of affairs of the residential real estate markets in America’s major metros. While it is true that the residential housing market is depressed, it’s not all bad news.

According to the Fiserv Case-Shiller Index, which monitors and forecasts single-family home price changes in over 375 U.S. metropolitan cities, it is predicted that 75 percent of these metro cities will see stabilization in home prices by the end of 2011. According to this Index, despite price declines of up to 1.5 percent in the third quarter of 2010, home prices have leveled out in one out of four metro U.S. cities.

The Index points that after five years of record declines in home prices a few metro area housing markets are beginning to hit their bottoms. According to Fiserv, prices have already stabilized in the metro areas of Washington, D.C., San Francisco and San Diego. Furthermore, the Index states that as 2011 goes by, about 75 percent of the metro markets would bottom out and subsequently stabilize. Portland (Oregon), Minneapolis, and New York City are amongst those that will join the ranks of stability by the end of 2011.

Metros that are not expected to recover till the end of 2012 include Las Vegas, Phoenix and Miami, according to the Index. These three cities had the steepest declines in home prices. For the mid and smaller cities, the recovery in prices will be slow and an uphill battle because of the ongoing financial crisis and the large supply of foreclosed properties that continue to drag most of the nation’s housing markets.

The housing market situation in Central Florida is worth looking into from an opportunity perspective. According to the Florida Association of Realtors, home prices across the state of Florida have fallen about 20 percent since the past year. However, they are still about 13.3 percent higher than the past five-year period. But the good news is the volume of home sales is rising again, which is a signal that the market may be recovering. Thanks to the high inventory, conditions are ideal for buyers. Mortgage rates are at their lowest levels since the 60’s. Families that are looking to upsize can expect to get more home for their money.

According to several studies, Florida will continue to be the favorite retirement destination for the 80 million strong Baby Boomers. Central Florida in particular, where the healthcare and technology sectors continue to show healthy growth, is seen as one of the best bets in the nation as far as recovery and growth in single-family home sales.

Single family home sales in Central Florida reached 1,708 in March, which is a 36 percent increase over February. Over 10,000 properties were under contract waiting for closing. About 5,400 new listings were reported in March, which is a substantial increase. Consumer confidence is on the rise in Central Florida and interest from Canadian and European buyers continues to grow.

Existing-Home Sales Fall About 5% in 2010

According to a report released by the National Association of Realtors (NAR), existing home sales fell about 5 percent to 4.9 million in 2010. This included single-family homes, condos and co-ops. In 2009, the number was 5.6 million. The NAR report states that sales rate for previously owned homes rose 12.3 percent in December 2010 as compared to November. But compared to December 2009, the sales slid about 2.9 percent. The number of people who bought previously owned homes in 2010 fell to the lowest level in 13 years. The estimated median price was flat in 2010 at $172,500, compared to 2009.

NAR reported that the seasonally adjusted annual rate of existing single-family home sales rose 11.8 percent from November to December but dropped 2.5 percent compared to December 2009, while the rate of condo and co-op sales rose 16.4 percent in December and fell 5.2 percent compared to December 2009. The median price was $168,000 in December, which is a 1 percent decline from the same month in 2009.

But according to CoreLogic, a provider of housing market data and statistics, home sales totaled 3.6 million, down 12 percent from 4.1 million in 2009. As per CoreLogic’s report, NAR’s existing home sales data are overstated by about 15 – 20 percent. NAR is in the process of evaluating its benchmarking methodology to determine the reality behind this discrepancy.

It’s not just the lower sales numbers that concern economists, but also the falling prices.  Home prices fell 5.1 percent for four straight months ending November 2010. The downturn in home prices is driven by weak sales, an excess supply of unsold homes and larger impact from distressed sales.

The number of homes sold in 2010 was at its lowest point since the housing market collapsed. Sales were more than 50% below the level seen before the crisis in 2005 and 33% below the level measured in 2000.

The trend for 2011 doesn’t show any positive changes. As of the end of November 2010, there was a 16-month supply of homes on the market, which is the highest level since February 2009 when prices were falling about 20% on a year-over-year basis. Typically, the housing market has a six or seven month supply.

Since loans are becoming more expensive, the ability for borrowers to obtain home loans will become more difficult. So what does all this mean for home sales figures for 2011? Only time will tell.

Fair Housing Laws: Fair, But Confusing

All “home-owner wannabes” have several common objectives. They want to find the best house money can buy, in the most perfect, decent and safest neighborhood, with ideal neighbors on either side! These objectives are purely subjective.

While it is easy for a real estate agent to provide a plethora of specific but publicly available data to potential home owners such as the best schools, parks, past resale values, etc., it is impossible for agents to answer questions such as “is this a good neighborhood, is it safe, does it have decent people or what’s the ethnic makeup?” and so on. It is impossible on two counts. First of all, any answer provided by the agent to any of these questions is not only 100 percent subjective, but it is also illegal under the federal fair housing laws.

In 1968, Congress passed the federal Fair Housing Act. The primary purpose of the Fair Housing Law is to protect the buyer/renter of a dwelling from seller/landlord discrimination. Its primary prohibition makes it unlawful to refuse to sell, rent to, or negotiate with any person because of that person's background, as opposed to their financial history and resources.  When the Fair Housing Act was first enacted, it prohibited discrimination only on the basis of race, color, religion, sex and national origin. In 1988, disability and familial status (the presence or anticipated presence of children under 18 in a household) were added. The law is enforced by the U.S. Department of Housing (HUD).

Real estate agents support the fair housing laws. They are expected to fully understand it and required to strictly abide by it. This is where the can of worms opens. While everyone agrees with and appreciates the intent of these laws, folks in the real estate industry unanimously find it confusing, convoluting and frustrating because of its numerous land mines.

For example, a house cannot be advertised as a family home or a great place to raise a family. Instead, it can only be labeled as a single-family home, multiple-family home, condominium or townhouse. Because of the broad language of the fair housing laws, a simple expression of a preference can get an agent into a boatload of trouble with the HUD.

The National Association of Realtors' (NAR) Office of Legal Affairs suggests the following tips:

·              Use words that describe features of the property rather than describing the type of buyer that might want those features. For example, describe the property as ‘located near a scenic park with jogging track in the woods' as opposed to ‘great location for joggers, athletic people or nature lovers'.

·              Avoid words that relate to race, color, religion, age, familial status, or national origin ("Heart of China Town", "Hispanic neighborhood" , "adult building", "walking distance to Baptist church", etc.)

·              Avoid using descriptive words such as "exclusive," "private," or "integrated" that convey preferences for one group over another or may tend to characterize a community's makeup.

·              Do not make references to nearby landmarks that may be racial, ethnic, or religious in nature.

Here are a few resources which provide various details about the fair housing laws:

http://www.realtor.org/library/library/fg705

http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp

http://www.nationalfairhousing.org/

http://www.fairhousing.com/

http://www.civilrights.org/fairhousing/laws/