That successful lemonade stand has real estate implications
Trulia Pro Blog Trulia Pro Blog
Nov 5, 2014
Real estate can be contagious, some say infectious, and, yes, even hereditary. Families with generation after generation of real estate agents are more common than anyone would think. They’re also pretty easy to spot. Here are six signs you’re raising an agent and you’ll be coaching your “little ones” through managing their first closings one day.
Business baby image via Shutterstock.
1. The mobile lemonade stand
When your 7-year-old starts strategically placing (and moving) his or her lemonade stand in efforts to bring in the big bucks, you might have a deal-maker on your hands. An innate sense of the importance of location — and knowing the signs of a soon-to-be super hot market — is a clear sign that a kid has a closer’s charisma running through his veins.
2. No school supplies — everything’s for sale
If your former infant is willing to sell anything, including his school supplies, know that your grandkids might get fed by commission. If your child sees a payoff where others see essentials, you’re raising an entrepreneur.
3. Rolling nap times
One of the biggest parts of closing a real estate deal is negotiation. If you find yourself arbitrating over nap time, dessert or other kid “concessions,” you might be bringing up an expert bargainer.
4. The under-the-bed bubble
Converting a home from chaos into staging success, not to mention deterring sellers from making their own staging mistakes, are critical agent skills. While we’d all like to think everything is beautiful underneath, we know that there are sometimes secret stashes and storage units full of junk behind some closings.
If your kid is an expert at room “showings” that would all unravel if you looked under the bed, he or she may have the staging chops to make it in the business.
5. Killer contact list
Real estate professionals have to be neighborhood experts. That means they know someone who can help get almost anything done.
If your child’s virtual Rolodex is bigger than yours and all of his friends call them for help solving problems, he might have the connections to later to become your neighborhood’s top producer.
6. They’re bringing you leads
One of the ancillary benefits of your bundles of joy is that they are an instant connection to the community, which can be great for business. If your tike or teen runs around telling all of his friends, teachers and community members what you do, he may be headed for your shoes. The walking commercial kid is a sure sign that he’s paying attention and taking notes.
These are just a few we’ve heard that signal your kid has a commission in his future. What signs have you spotted?
This post was originally published on the Trulia Pro Blog. Follow Trulia Pro on Twitter: @TruliaPro.
White house on top of money
A funny thing’s happened to mortgage rates this year. They’ve gone down. Every expert we spoke with said mortgage rates had nowhere to go but up in 2014. We started the year with the average 30-year, fixed-rate mortgage — the most popular way to finance a home — costing 4.69%. The consensus among economists and industry analysts was that it would rise to 5.5% by the end of the year
So what’s happened? The average price of a 30-year, fixed-rate home loan has pretty steadily declined reaching a 2014 low of 4.01% in our most recent survey of major lenders.
Indeed, we haven’t seen home loans this cheap since May 2013. The typical 30-year, fixed-rate home loan costs nearly a half point less than this time last year, which saves borrowers $30 a month for every $100,000 they borrow.
And that’s just looking at the average cost of financing a home.
Savvy borrowers with decent credit can almost always pay a quarter to half point less than that.
Spend a few minutes searching our extensive data base for the best current mortgage rates from dozens of lenders in your area. You’ll see what we mean.
Type of loan Current average Record-low average Established
30-year fixed rate 4.01% 3.50% Dec. 5, 2012
15-year fixed rate 3.23% 2.75% May 1, 2013
30-year fixed jumbo 4.09% 3.93% May 1, 2013
5/1 ARM 3.09% 2.63% May 1, 2013
Why did everyone think mortgage rates were going to go up this year?
The Federal Reserve is ending its campaign to drive down long-term interest rates, including mortgage rates.
The nation’s bank-for-banks began buying $85 billion worth of debt a month in September 2012, a fairly even split between Treasury bills and bonds backed by thousands of home loans.
By flooding the mortgage market with money, it pushed mortgage rates to record lows in an attempt to boost real estate sales and property values.
In a process the Fed refers to as tapering, it reduced those purchases to $75 billion in January, $65 billion in February and March, $55 billion in April, $45 billion in May, $35 billion in June and July, and $25 billion in August and September.
With growth slowing in many European and Asian economies, nervous investors are fleeing stocks this month and piling into bonds — especially U.S. debt, including mortgage-backed securities.
The promising bottom line for borrowers: Crashing demand and lots of money to lend from sources other than the Fed have eased any pressure on interest rates. At least so far.
For full story go to www.Interest.com
Wedding cake swans image via Shutterstock.
At Real Estate Connect New York City, I had the opportunity to interview Keller Williams Realty CEO Mark Willis onstage about partnerships, and backstage I met with Realogy Franchise Group CEO Alex Perriello. Each of these leaders shared some very valuable insights that can help you grow your business now and throughout 2014.
Where’s the market heading?
I caught Perriello for a few moments in the green room before he went on the main stage at Real Estate Connect. Perriello believes that the market will continue to be strong throughout 2014. Part of his confidence is based upon demographics. Specifically, Gen Y has become the largest generation ever. Moreover, the building industry has failed to build enough new housing to keep pace with the population increase.
Perriello shared a second factor that he believes will continue to drive strong housing demand: shadow buyers. “Shadow buyers” are people who have owned their home in the past and had to sell it in a short sale. After three years, the short sale will be removed from the owner’s credit report, making them eligible again to purchase a property.
To take advantage of this tip in your business, go back through your files from 2008-2011 and identify which clients had to sell using a short sale. You may also be able to obtain this information from your local title company.
Rates on New Home Loans Join Downward Trend
On Christmas Eve, the Federal Housing Finance Agency (FHFA) reported a 10 basis point decline in mortgage interest rates for the month of November. Data from FHFA’s Monthly Interest Rate Survey (MIRS) cover conventional single-family mortgages and distinguish whether the loans are for the purchase of new or existing homes. In October, rates on existing home loans declined while rates on new home loans stubbornly continued to inch up. But in November, rates on both types of loans declined. In particular, the November data show a 6 basis point decline in the average contract interest rate on loans to purchase newly-built homes, from 4.32 to 4.26 percent.
Initial fees have the potential to offset a decline in the contract interest rate, but the initial fees on mortgages for new homes also declined in November, from an average of 1.30 to 1.27 percent. (Although down from October, this is still relatively high by historical standards, as the average fee on new home loans has only been as high as 1.27 percent five times since 1996.)
The combination of declines in the contract rate and initial fees took the average effective interest rate on new home loans (which amortizes initial fees over the estimated life of the loan) down 8 basis points to 4.39 percent (after two consecutive months above 4.40).
The November data on conventional new home mortgages showed relatively little change in the average size of the loans ($302,000), the average price of the homes purchased with the loans ($401,800), or the average loan-to-price ratio (77.4 percent).
The MIRS collects data on loans closed over the last five working days of the month. For other caveats and survey details, see the technical note at the end of FHFA’s December 24 MIRS release.
May your New Year bring Happiness, Joy & Prosperity
New mortgage rules may crimp lending, but should build Investor Trust
CoreLogic: Return of private capital hinges on confidence in lending process
SeanPavonePhoto / Shutterstock.com
While some say new mortgage rules scheduled to take effect on Jan. 10 could crimp lending, the rules are key to building private investors’ confidence in the secondary market, according to a white paper released by real estate data and technology firm CoreLogic.“Setting the rules and boundaries for consumer mortgage loans is one of the first steps needed to encourage more private capital investment in the housing finance system,” the paper said.
“Uncertainty of investor appetite for credit risk and litigation risk under the new rules persists, but the new rules provide a foundation to build investor trust in the system over time.”
Under “ability to repay” and “qualified mortgage” rules first announced earlier this year, mortgage lenders will be required to ensure borrowers don’t take on more debt that they can afford by evaluating them on eight underwriting factors, including current income and assets, credit history and monthly payments on the mortgage.
Amendments to the ability-to-repay rule will exempt certain nonprofit and community-based lenders who work with low- and moderate-income homebuyers.
A “qualified mortgage” prohibits excessive points and fees (generally, those above 3 percent of the loan amount) tacked on to upfront origination costs; cannot have risky loan features such as a term that exceeds 30 years, interest-only payments that don’t pay down a mortgage’s principal, or negative amortization payments where the principal amount increases; cannot have a balloon payment at the end of the loan term except, under certain circumstances, those made by smaller creditors in rural or underserved areas; and the borrower’s debt-to-income ratio — his or her total monthly debt divided by total monthly gross income — cannot exceed 43 percent.
Temporarily, loans with debt-to-income ratios above 43 percent will be considered qualified mortgages so long as they meet underwriting requirements of government-sponsored enterprises Fannie Mae or Freddie Mac, or the U.S. Department of Housing and Urban Development (HUD); the Department of Veterans Affairs (VA); or the Department of Agriculture (USDA) or Rural Housing Service.
Although mortgage lenders will be allowed to make non-QM loans, meeting the QM guidelines will create a presumption of compliance and will therefore provide lenders with some legal “safe harbor” from lawsuits.
The Consumer Financial Protection Bureau was charged with drafting and implementing the rules under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation was enacted in reaction to the 2008 financial crisis, which erupted after easy access to credit fueled an unsustainable increase in home prices. In the years before the crisis, lenders often made loans without considering the borrower’s ability to repay because the loans were bundled into securities that were sold to investors.
As the housing market turned, private investors fled the secondary market in droves, and now the vast majority of mortgage loans are backed by the federal government, mainly through Fannie Mae and Freddie Mac.
“A failure to adequately review the borrower’s ability to repay for a sustainable mortgage at the time of origination had serious consequences not only for the borrower, but also for the originators, servicers and the investment community,” CoreLogic said.
The Obama administration has pledged to put private capital back at the center of the housing finance system. In the path toward that goal, making sure a borrower has the ability to repay “is good business,” according to CoreLogic.
“The road map to a sound residential finance marketplace will rest on transparency, accountability and traceability. Validation of consumer data and documentation, including material changes prior to funding a mortgage loan, will lead to more confidence in the process,” the firm said.
While some lenders remain worried about how they will comply with the rules, CoreLogic said those concerns would be resolved through “common sense” and, in the end, “the markets will have confidence that the information and processes established to make a sound loan are likely to result in sound loan performance for the life of the loan.”Concerns also remain regarding whether there will be a market for nonqualified mortgages due to their heightened litigation risk and investors’ possible aversion to non-QM loans, which is expected to drive up their pricing.
“One area of focus will be how to meet the demand of the changing demographics of first-time homebuyers, some with low wealth but less risky credit score profiles, who may have limited options when it comes to the first-time homebuyer programs offered by the government,” CoreLogic said.
The firm asserted that there is ”a nearly unlimited market for those who do not need the ordinary protections afforded the unsophisticated buyer,” however, including housing investors who may not meet QM requirements but still demonstrate an ability to pay.
Overall, the paper’s authors were optimistic about the potential for the non-QM market.
“We have a robust capital market system today, and it’s reasonable to think that a savvy entrepreneur or established organization will figure out a way to deliver qualified and nonqualified mortgages in a way that meets all the regulatory requirements, incorporates sound lending and consumer protections, and makes a profit,” they said.
“Accurate underlying mortgage data, servicer due diligence, and enforceable and consistent representations and warranties will be required for any entity engaging in non-QM lending, but the tools and data are available to make that a reality.”
Use of the Internet among consumers in the homebuying process continues to grow, but those buyers are more, not less, likely to use a real estate agent, according to an annual survey from the National Association of Realtors.
NAR’s 2013 Profile of Home Buyers and Sellers includes survey responses from 8,767 people who purchased a home between July 2012 and June 2013. The seller information in the report is from those buyers who also sold a home.
For those who purchased a home during that time period, the highest share ever – 92 percent — used the Internet to search for a home, up from 90 percent in last year’s survey and 71 percent in 2003.
Source: National Association of Realtors.
Just over 4 in 10 buyers (42 percent) started the homebuying process by looking for properties online (up from 35 percent in 2011) followed distantly by those whose first step was to contact a real estate agent (17 percent). Online websites and agents tied as the most common information sources homebuyers used in their search with 89 percent using each. Yard signs followed at 51 percent.
Source: National Association of Realtors.
Last year’s survey found that homebuyers were more likely to use multiple listing service websites when searching for homes than any other source of online information, including third-party listing sites and mobile apps.
That finding, along with a claim that buyers used realtor.com more often than unspecified “other Web sites with real estate listings,” was met with some skepticism.
On last year’s survey, consumers could check boxes indicating that they used realtor.com or homes.com, among other sources, when answering the question, “Did you use any of the following real estate Web sites in your home search.”
While consumers on last year’s survey could check “Other Web sites with real estate listings (e.g. Google and Yahoo),” the survey did not offer Zillow and Trulia — the most-visited real estate search portals, according to third-party monitoring data — as choices. At least one Inman News reader commented that the wording of the question, and the choice of answers provided, was likely to skew the results.
This year’s profile does not break down the types of online websites used by homebuyers in the home search process.
“[I]t’s fairly normal to drop some questions from the survey when new ones are added to track market developments. With growth to nearly one million real estate sites online, including individual agent sites operated by two-thirds of NAR members, consumers typically go to multiple sites,” NAR spokesman Walt Molony told Inman News.
Regardless of the specific source, an ever-increasing share of buyers found the home they purchased online: 43 percent this year, compared to 8 percent in 2001. The share of buyers that found their home through an agent has been dropping since 2010 when it stood at 38 percent, and clocked in at 33 percent this year. In 2001, 48 percent of buyers found their home through an agent.
Among those who used mobile search (45 percent), 22 percent found their home with a mobile app. Only 4 percent found their agent with a mobile app.
Among buyer respondents overall, 88 percent purchased their home through a real estate agent, but among those who used the Internet to search for homes that share goes up to 90 percent. Only 69 percent of those who did not use the Internet to search bought through an agent.
“While the vast majority of buyers use the Internet during the home buying process, the Internet does not replace the real estate agent in the transaction. In fact, buyers who used the Internet were more likely than those who did not use the Internet to purchase their home through an agent,” the report said.
“Buyers who did not use the Internet to search were more likely to purchase through a builder or builder’s agent and through a previous owner of the home.”
Among both buyers and sellers, the most common way they found their real estate agent was through a referral from a friend, neighbor or family member: 42 percent and 39 percent, respectively. Among sellers, a quarter used an agent they had used previously to buy or sell a home. For buyers that percentage was cut in half: 12 percent. Buyers were twice as likely to find their agent through an online website: 9 percent, compared to 4 percent for sellers.
Source: National Association of Realtors.
Among the skills buyer respondents valued in a real estate agent, the most valued skills were honesty and integrity; knowledge of the purchase process; responsiveness,; knowledge of the real estate market; and negotiation skills. More than 86 percent of buyers said those skills were “very important.” By contrast, only 46 percent said “skills with technology” were very important.
Buyers were most likely to cite helping them find the right property as the service they most wanted from real estate agents (53 percent), followed by help negotiating terms of sale (12 percent), help with price negotiations (11 percent), help identifying comparable properties (8 percent), and help with paperwork (7 percent). Only a few (3 percent) identified advice on how much home they could afford as a most-wanted service, or helping arrange financing (3 percent) or providing information about a neighborhood (1 percent).
The median 2012 income of all homebuyers was $83,300, up 6 percent from 2011, and the average age 42, unchanged from the previous year. Eighty percent purchased detached, single-family homes.
First-time homebuyers represented 38 percent of buyers, down 1 percentage point from last year’s survey. With a median age of 31 and median income of $67,400 (up 9 percent from last year), first-timers bought homes at a median price of $170,000 (up 10 percent from last year).
Source: National Association of Realtors.
Repeat buyers, in contrast, had a median age of 52 and median income of $96,000 (up 3 percent from last year) and purchased homes with a median price of $240,000, up 9 percent from last year.
First-time homebuyers placed a median down payment of 5 percent down on their homes, compared with 14 percent for repeat buyers. Of those entry-level buyers who financed, 78 percent tapped into savings; 27 percent used a gift from a friend or relative, most often parents; 9 percent sold stocks or bonds; 8 percent used 401(k) funds; and 7 percent received a loan from a friend or relative.
Neighborhood quality was the No. 1 factor for neighborhood choice by buyers (63 percent), followed by commute-to-work convenience (48 percent), affordability of homes (40 percent), and proximity to family and friends (38 percent).
The median age for home sellers was 53 with an income of $97,500, up from $95,400 last year. Their homes were on the market for an average of 5 weeks, down from 11 weeks last year.
Only 9 percent of sellers said they sold their home without the assistance of an agent (“for sale by owner,” or FSBO), down from 14 percent in 2003. And 40 percent of FSBO sales were to buyers who were previously known to the seller.
FSBO sellers used yard signs (36 percent), and marketed to friends, relatives and neighbors (28 percent), but they also used online classified advertisements (16 percent), open houses (14 percent), for-sale-by-owner websites (13 percent), and third-party aggregators (11 percent). Four percent said they used realtor.com.
Among sellers who used an agent, 85 percent said their agent listed their home on an MLS website, 66 percent used a yard sign, 51 percent held an open house, 50 percent listed their home on an agent website, 45 percent listed the home on a company website, 42 percent listed it on realtor.com, 27 percent listed it on a third-party website, 15 percent used a print newspaper advertisement, and 9 percent used video. Only 6 percent said their home was featured on social networking sites like Facebook and Twitter.
Eight in 10 sellers said their agent provided a full set of services, while 10 percent said they hired an agent to place their home in the MLS and perform few if any additional services. Another 9 percent hired an agent to perform a limited set of services.
The share of married couple buyers rose to its highest level since 2001 to 66 percent. A quarter of all buyers were single, unchanged from last year. Nonetheless, NAR indicated that tight lending conditions are impacting buying activity among singles and first-time buyers.
“Single home buyers have been suppressed for the past three years by restrictive mortgage lending standards, which favor dual-income households who are more likely to have higher credit scores,” said Lawrence Yun, NAR’s chief economist, in a statement.
“Not seen in this survey is the elevated level of investors in recent years. The housing recovery would have been much weaker without investors, who often purchase with cash.”