Monthly Archives: October 2018

Last-minute wire transfer scam targets home seller

NAPLES, Fla. – Oct. 31, 2018 – When Maryland residents Roger and Shirl Lynn Butschky sold their home in East Naples more than a year ago, they didn’t get their money after the closing.

Every dime – more than $450,000 – went to a fraudster who sent bogus new wiring instructions to the couple’s title company at the last minute without their approval or knowledge, according to court documents and a report filed with the Naples Police Department.

The Butschkys sued Dunn Title in Naples and several of its employees for negligence and breach of fiduciary duty in 2017, seeking damages and a jury trial. The lawsuit is still pending in Collier Circuit Court.

Real estate wire fraud, a form of cybercrime that intercepts money transfers in home sales, is nothing new. It can take many forms.

Local experts say Southwest Florida is ripe for such scams because of its wealth and plentiful supply of high-end homes.

Title fraud is common

“It’s common. It actually happens all over the country – this title fraud,” said Amanda De Medeiros, fraud line coordinator for the Lee County Sheriff’s Office.

Last year the FBI’s Internet Crime Complaint Center received more than 300,000 complaints, with reported losses of more than $1.4 billion. The real estate sector was heavily targeted with 9,645 victims, who lost more than $56.2million.

In 2016, the number of fraudulent wire transfer scams reported by title companies and closing agents to the Internet Crime Complaint Center increased by 480 percent. The crime has been reported across the country – in every state.

Many title companies, Realtors, real estate lawyers and banks have tightened their rules and procedures for closings to try to fend off fraudsters. Still, sellers and buyers should stay alert, especially as a sale draws closer.

“Just stop for a minute and think about things and double check and triple check. Pick up the phone and have a conversation with your title agent,” said Bryan Oglesby, director of public relations and outreach for the Better Business Bureau serving West Florida.

In the Butschkys’ case, the FBI got involved after the couple’s money came up missing.

After investigating the fraud, the FBI recovered less than $30,000, so the couple still lost more than $421,000 on the sale of their home, according to court documents.

“It’s very unfortunate. They lost a lot of money,” said their attorney Michael Petruccelli, with offices in Naples and Fort Lauderdale.

Wiring instructions changed

According to court documents, the scammer posed as a legal representative for the transaction in an email sent to the closing agent and asked for a change in the money transfer instructions, claiming the request came from the Butschkys’ son.

No such directions came from the couple’s son. “That was from the fraudster,” Petruccelli said.

In their lawsuit, the Butschkys accuse the title company and its employees of not having the proper policies and procedures in place to avoid such scams and failing to meet industry standards in their handling of the closing.

Additionally, the couple claims Dunn Title’s employees should have spotted red flags that ought to have put them on high alert before following the new wiring instructions.

Court documents show there were three attempts at changing the instructions for the money transfer. After two other banks refused to clear the funds because the sellers’ names didn’t match up with the bank account numbers, Iberia Bank finally accepted the money anyway, which then quickly disappeared.

Email hacked

In a report filed with the Naples Police Department, Michelle Roman, the closing agent for the transaction, said she didn’t suspect anything until she learned the Butschkys hadn’t received their money a few days after their home sold. She said that’s when she contacted the IT department at Dunn Title, which looked over her computer and concluded her email had been hacked.

Roman reported Dunn Title was “a victim of a scheme to defraud” to the Naples police and she wished to prosecute on the title company’s behalf.

In a court filing, Roman and the other defendants argue the lawsuit should be dismissed for several reasons. Their arguments include the suit wrongly lumps the defendants under a single count of negligence and assumes a fiduciary duty that doesn’t exist between Dunn Title and the sellers.

Omega Title Naples LLC – doing business under the name Dunn Title – had a contract with the buyers, not the sellers.

Roman no longer works for Dunn Title. She chose to leave the company, but she’s still in the title business in Naples. She declined to comment.

Title company too busy

In sworn testimony, Roman said mistakes were made at Dunn Title because it didn’t have enough employees to handle the workload. Management, she said, refused to hire more staff, claiming the office was “not making any money.”

Dunn Title’s chief executive and owner Scott Dascani disagrees.

“She did have enough staff in my opinion,” he said in a phone interview. “She felt like she didn’t. Everybody is entitled to their opinion.”

Dascani, who is also a named defendant in the suit, blames the Butschkys’ lawyers, Threlkeld & Cetrangelo in Naples, for the mistake, although the sellers aren’t suing the firm. He said he’s convinced the fraudster obtained detailed information about the closing by hacking into the law firm’s email first.

“My heart goes out to anybody that’s gone through this. It’s terrible,” Dascani said.

He believes the Butschkys will get their money back, but there’s a legal process they need to go through for the insurance companies that cover these types of losses to react, he said.

Schemes get more sophisticated

Dunn Title has gotten more cautious with closings since falling victim to the scam, Dascani said. But he noted the title fraud schemes are getting more sophisticated, with the fraudsters now taking over the mobile-phone accounts of their victims by gaining access to their SIM cards.

“If I could take everybody back in time to receive the paper check at closing, we wouldn’t have this situation,” Dascani said. “Unfortunately, it’s the times we’re in.”

Over the past year a few victims have reported title scams to authorities in Southwest Florida, while other cases of the fraud have flown under the radar.

In January, Domenic Costantini, a Naples Realtor and residential builder, filed a report with the Collier County Sheriff’s Office, saying he and his client were targets of wire fraud.

According to the report, a scammer sent an email that looked like it came from Costantini to one of his buyers with instructions for a wire transfer needed for a closing. The buyer followed the instructions and sent the money, only to discover the email didn’t come from Costantini and the money didn’t go to the real title company.

The Sheriff’s Office didn’t disclose how much the buyer lost. The information was redacted from the incident report made available to the public.

Costantini couldn’t be reached for comment about the outcome of the case.

A lucky break

Naples real estate attorney Liz Hazelbaker almost fell victim to wire fraud in February after selling her house in North Naples, but she never reported it to authorities. She and her husband had provided instructions to the title company to pay off a $400,000 loan on the day of the closing, with money from the sale.

Two days before the closing, a scammer – posing as the couple’s bank – sent an email to the title company with new wire instructions. As a result, the money went to the wrong bank on the day of the closing.

“The day after closing, I called our bank to make sure they had received the $400,000 and they said no. I called the title company and they sent me the wire confirmation. This is when I realized the money went to a Chase Bank account and not to our bank. We were able to get the money back from Chase – luckily,” Hazelbaker said.

She was lucky to get the money back because she had friends working in the law department at Chase Bank, who got the account flagged and locked down to protect her money, she said.

“Normally the money gets yanked immediately into a foreign account, and once it leaves the U.S. there is nothing that can be done,” Hazelbaker said. “These scammers try to get it out as quick as possible.”

A growing problem

She fears title schemes might be a growing problem in Southwest Florida.

“When I was talking to other legal people about this, they were like ‘this happens all day, every day,'” Hazelbaker said. “It just made me want to throw up. It’s like every day, people’s money is getting stolen. It’s the new bank robbery. You’re not stealing from the bank, but the customers.”

She’s not eager to sell or buy another house anytime soon.

“I’m not going to do a real estate transaction for a while,” she said. “I’m still really freaked out by the whole thing.”

Since she was scammed she’s heard more horror stories including one from a friend who owns a title company in Cape Coral who paid a client $200,000 because of wire fraud. That’s the amount a fraudster stole by impersonating his client in an email and changing the wiring instructions on a sale, Hazelbaker said.

“I think it’s getting worse, and I think people are hearing about it more. I had never heard of it and I’m actually an attorney,” she said.

How to avoid a title scam

·Never accept a change to an agreed transaction based on an email.

·If someone tells you there’s a new plan, especially one that involves thousands of dollars, check it out before you send a dime. Call your agent or title company and make sure the new directions are legitimate.

Tips to spot a phishing scam

  • Do not click on links or open files in unfamiliar emails.
  • If a company usually contacts you by phone, be suspicious if you suddenly start receiving emails or text messages.
  • Just because an email looks real, doesn’t mean it is real.
  • If something seems suspicious, check the company’s website or call them.
  • Email is not a secure way to send financial information.

© 2018 Journal Media Group, Laura Layden

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How to apply recent tax changes in your 2018 return?

WASHINGTON – Oct. 31, 2018 – What income do you include when calculating the new 20 percent business income deduction?

Independent contractors and sole proprietors are eligible for the deduction that was introduced as part of the federal Tax Cuts and Jobs Act enacted last year, but the details can be confusing. For example, do you take the deduction before or after accounting for marketing and other business costs?

The IRS plans to release rules by December on how to apply the tax law changes, but that info will arrive a bit late for independent-contractor Realtors who must pay estimated 2018 quarterly tax filings.

To help members understand the tax changes, the National Association of Realtors® (NAR) created a series of videos on what real estate professionals need to know.

Important note, however: The videos aren’t a replacement for talking with your accountant or tax adviser. However, you can get information about the parts of the law that apply to Realtors as both a practitioner and a homeowner or renter.

The videos look at three ways the tax changes can affect Realtors: 1) as an independent contractor or sole proprietor, 2) as a homeowner or renter, and 3) as an individual or joint filer.

NAR posted the videos on its website.

© 2018 Florida Realtors®

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Home prices still rising rapidly in a few Fla. metro areas

ORLANDO, Fla. – Oct. 31, 2018 – Higher mortgage rates and home prices are taking their toll on potential homebuyers and slowing the recent rapid rate of median home price increases, according to a new report released by ATTOM Data Solutions, a real estate data firm – and the U.S. median home price rose 4.8 percent in the third quarter, the slowest rate of annual appreciation since the second quarter of 2016.

However, not all Florida cities are seeing a slowdown in rising home prices yet. In seven Sunshine State cities, price increases are continuing unabated, at least for now.

In 11 other Florida metro areas, however, prices continue to move higher but at a progressively slower pace.

All Florida cities have seen notable price gains since the recession-era real estate crisis, and, according to ATTOM, four Florida cities have now surpassed their pre-recession highs. They include: Pensacola-Ferry Pass-Brent, Jacksonville, Lakeland-Winter Haven and Tampa-St. Petersburg-Clearwater.

“The continued slowdown in the rate of home price appreciation nationwide and in many local markets is a rational response to worsening home affordability – which has deteriorated at an accelerated pace this year due to rising mortgage rates,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Markets not experiencing this price appreciation cool down may have more of an affordability cushion to work with, but some are in danger of overheating if home price gains continue to run hot.”

Rates of home appreciation slowed in half (74 of 150) metro areas that ATTOM tracks, including Los Angeles, Chicago, Dallas-Fort Worth, Houston and Miami – which all posted single-digit percentage gains in median home prices compared to a year ago.

“I think the key factor underpinning the decelerating price appreciation is the impact of rising rates on the monthly payment,” says Tendayi Kapfidze, chief economist at mortgage marketplace LendingTree. “Absent financing structures that allow a borrower to increase leverage while mitigating an increase in the monthly debt service, buying power is decreasing across the board. This especially affects the marginal buyer who doesn’t have a lot of wiggle room.”

Counter to the national trend, home price appreciation is still accelerating in 76 of the 150 metro areas that ATTOM tracked. For example, the following markets all posted double-digit percentage gains in median home prices compared to a year ago: San Jose, Calif.; Boise, Idaho; Las Vegas; Grand Rapids, Mich.; Lakeland, Fla.; Colorado Springs, Colo.; Dayton, Ohio; San Francisco; and Atlanta.

Metros where price gains aren’t slowing – and current prices vs. pre-recession highs

  • Pensacola-Ferry Pass-Brent, up 16.1% from pre-recession peak
  • Lakeland-Winter Haven, up 1.7% from pre-recession peak
  • Tallahassee, down 0.6% from pre-recession peak
  • Gainesville, down 0.6% from pre-recession peak
  • Punta Gorda, down 3.7% from pre-recession peak
  • Panama City, down 4.3% from pre-recession peak
  • Crestview-Fort Walton Beach-Destin, down 10.6% from pre-recession peak

Metros with decelerating price gains – and current prices vs. pre-recession highs

  • Jacksonville, up 6.3% from pre-recession peak
  • Tampa-St. Petersburg-Clearwater, up 0.3% from pre-recession peak
  • Deltona-Daytona Beach-Ormond beach, down 2.5% from pre-recession peak
  • Orlando-Kissimmee-Sanford, down 5.0% from pre-recession peak
  • Palm Bay-Melbourne-Titusville, down 6.6% from pre-recession peak
  • Northport-Sarasota-Bradenton, down 6.5% from pre-recession peak
  • Naples-Immokalee-Marco Island, down 8.2% from pre-recession peak
  • Port St. Lucie, down 8.4% from pre-recession peak
  • Miami-Fort Lauderdale-West Palm Beach, down 8.6% from pre-recession peak
  • Ocala, down 11.4% from pre-recession peak
  • Cape Coral-Fort Myers, down 15.7% from pre-recession peak

Source: “U.S. Median Home Price Increases 4.8 Percent in Q3 2018, Slowest Rate of Annual Appreciation Since Q2 2016,” ATTOM Data Solutions (Oct. 23, 2018)

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Listing a haunted house? Millennials won’t care

SANTA CLARA, Calif. – Oct. 30, 2018 – Realtor.com released its annual Haunted Real Estate Report and calls the 2018 findings “spookier than one might expect.”

The report found that one in three people – especially millennials – were willing to take a chance on a haunted home if there was something to sweeten the deal, while 18 percent of people say that a haunting wouldn’t affect their purchase decision at all.

“In a competitive market, it’s harder for prospective buyers to be extremely selective,” says Danielle Hale, chief economist for realtor.com. “If a house is commensurately priced, or has desirable features, the fact that it may be haunted seems to matter less. This report shows that, for those looking for a good deal, a lower price, better neighborhood or larger kitchen can balance out a few spooky happenings.”

The survey of 1,067 people across the United States was conducted in early October by Harris Interactive through online interviews.

When asked to decide between a haunted or non-haunted home, respondents fell into one of three categories:

  1. I’ll buy, but I need something more: One-third of respondents were willing to take a chance on a haunted home if presented with additional features. Topping the wish list was a cheaper home price (15 percent), followed by a tie between a larger kitchen and better neighborhood (9 percent). Millennials are the most price-sensitive of all demographics, with 17 percent persuadable by a lower price tag.
  2. Nothing else required: 18 percent of people wouldn’t require any additional features to choose a haunted home over a non-haunted home – perhaps the percentage that don’t believe in ghosts. Nearly 25 percent of people aged 35-54 said they wouldn’t be affected by the haunted nature of a home while making a purchase decision.
  3. Would not buy, not for anything: For the remaining 49 percent of possible buyers, there’s no price low enough or kitchen large enough to make them purchase a haunted house. The older generation of homebuyers is most reluctant, with 61 percent of those over 55 insisting that they would never buy a haunted home as opposed to 41 percent of millennials and Gen X’ers.

Living in a haunted home is more common than one would imagine. Nearly two in five people believe they have lived in a haunted (or possibly haunted) house – and 44 percent of them either suspected or were fully aware of said haunting before moving in. In fact, the majority of people under 55 years old suspected – or were sure – their home was haunted before they moved in, a decision possibly incentivized by a lower home price or better neighborhood. Hearing strange noises (54 percent) topped the list of most common spooky behaviors, followed by odd feelings in certain rooms (45 percent) and erratic pet behavior (34 percent).

A seller’s haunted dilemma: To reveal, or not to reveal?

When posed with the hypothetical question of selling a haunted house, people were polarized on revealing its spooky status to potential buyers. While Florida has no specific disclosure requirements for haunted properties, some realtor.com survey respondents would tell buyers anyway.

  1. Yes, tell them everything: The most popular approach is full transparency, with 34 percent of people saying they would tell interested buyers everything. Men and millennials are the most likely to divulge all the details to buyers.
  2. Only when asked: In second place, 27 percent of people would choose the less risky route and divulge details only when asked.
  3. Mum’s the word: Saying absolutely nothing is the third most popular approach for hypothetical sellers, with 22 percent preferring to stay quiet. This is a strategy preferred by 25 percent of those over 35 years old.
  4. No details please: The least popular selling strategy, at 17 percent, is to admit that the house was haunted but not provide details.

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Hurt by Hurricane Michael? We’re here to help

Many Panhandle Realtors, brokers and staff must now rebuild their lives and cope with daily stress. If you need help, apply today to Florida Realtors Disaster Relief Fund. https://www.floridarealtors.org/AboutFar/DisasterReliefFund/

 

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Case-Shiller: Home price gains slow for 5th month

WASHINGTON (AP) – Oct. 30, 2018 – U.S. home price gains slowed for the fifth straight month in August as higher mortgage rates have lowered home sales.

The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, increased 5.5 percent in August compared with a year earlier, down from a 5.9 percent gain in the previous month.

The deceleration reflects a broader weakening in the nation’s housing market. Sales of existing homes have dropped for six straight months, and sales of new homes have fallen for the past four. Home price increases have run ahead of wage gains for five years and appear to have left many would-be buyers on the sidelines.

Prices rose the most in Las Vegas, San Francisco and Seattle. But price gains have slowed compared with a year earlier in 14 of the 20 cities tracked.

The slowdown in housing shows little sign of becoming a broader crisis similar to what occurred in 2007. David Blitzer, chairman of the index committee at S&P Dow Jones, points out that mortgage defaults, which spiked in the housing bust, remain stable.

Higher borrowing costs have raised monthly payments for new buyers, on top of rising home prices. Some of the biggest increases in mortgage rates occurred in September and October and aren’t reflected in Tuesday’s data. That suggests that price gains will likely slow further in the coming months.

The average 30-year fixed mortgage ticked up to 4.86 percent last week, from 4.85 percent the previous week. A year ago, it stood at 3.94 percent.

“These challenges for buyers will continue to diminish affordability, taking a bite out of home sales and exert more downward pressure on home prices,” said Cheryl Young, senior economist at real estate data provider Trulia.

Home prices in Las Vegas jumped 13.9 percent from a year ago and rose 10.6 percent in San Francisco. Seattle’s home values increased 9.6 percent, the first time its gains have fallen below double-digits since December 2015.

The slowest increases were in Washington, D.C. and New York City, with 2.8 percent each, followed by Chicago with 2.9 percent.

AP Logo Copyright 2018 The Associated Press, Christopher Rugaber. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Seasonal anxiety affecting home sales

NAPLES, Fla. – Oct. 30, 2018 – According to Florida Realtors’ September existing-home market report, it took 85 days for a home to sell in Citrus County, down from 99 days a year ago – and there were 334 new listings, an increase from last year’s 206.

C.J. Dixon, president of the Realtors Association of Citrus County, says the county is approaching the seasonal slowdown. He also cites “uncertainties” outside the market right now that are having an impact, such as rising interest rates, the upcoming elections, and inventory that still has a ways to go to catch up to demand.

“By January the seasonal dip will recover as the uncertainty is resolved,” Dixon says. “Where the final balance point is depends on how the factors play out.”

Citrus County Chronicle (10/26/18) Bates, Michael

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NAR buyer/seller study: Women a force, first-timers struggle

WASHINGTON – Oct. 29, 2018 – Single female buyers continue to be a powerful force in the market, while low inventory, rising interest rates and increasing home prices hold back first-time buyers despite their high interest in buying a home.

The just-released National Association of Realtors®‘ (NAR) 2018 Profile of Home Buyers and Sellers also identifies numerous current consumer and housing trends. Those include mounting student debt balances; the impact of pets on home buying decisions; increases in downpayments for all buyers; the rising age of repeat buyers; and an all-time low in for-sale-by-owner (FSBO) transactions.

“With the lower end of the housing market – smaller, moderately priced homes – seeing the worst of the inventory shortage, first-time home buyers who want to enter the market are having difficulty finding a home they can afford,” says NAR Chief Economist Lawrence Yun. “Homes were selling in a median of three weeks and multiple offers were a common occurrence, further pushing up home prices. These factors contributed to the low number of first-time buyers and the struggles of would-be buyers dreaming of joining the ranks of homeownership.”

Here are some additional key trends of buyers and sellers detailed in this year’s 150-page report.

Single female buyers continue to be a strong market force
For the second year in a row, single female buyers accounted for 18 percent of all buyers. The group was the second most common household buyer type behind married couples (63 percent). Single male buyers came in third and accounted for half the number of buyers as their female counterparts (9 percent). However, single males tended to purchase more expensive homes, with a median price of $215,000, compared to single females with a median price of $189,000 – the lowest of all household buyer types.

Share of first-time buyers continues to fall
The share of first-time home buyers continued a three-year decline, falling to 33 percent (34 percent last year). This number has not been 40 percent or higher since the first-time homebuyers tax credit ended in 2010.

“Low inventory, rising interest rates and student loan debt are all factors contributing to the suppression of first-time home buyers,” says Yun. “However, existing home sales data shows inventory has been rising slowly on a year-over-year basis in recent months, which may encourage more would-be buyers who were previously convinced they could not find a home to enter the market.”

Buyers to rely on agents and the internet to find a home
For the third year in a row, 95 percent of buyers used the internet at some point during their home search process, and 50 percent said that they found the home they eventually purchased online. Eighty-six percent of buyers used a real estate agent in their home search, and repeat buyers were more likely to use an agent than first-timers (87 percent to 86 percent).

Overall, 87 percent of buyers ended up purchasing their home through a real estate agent (the same as 2017). Finding the right home and negotiating terms of the sale were the top factors buyers desired from their agent. Ninety percent of respondents said they would definitely or probably use their agent again or recommend them to someone else.

“With inventory so low, buyers are relying on their agent’s knowledge of markets and neighborhoods to find listings, rather than relying only on online searches,” says NAR President Elizabeth Mendenhall. “A Realtor has years of experience, generating insight and expertise that can help buyers navigate a tight market where buyers are forced to move fast and make competitive bids in order to get their dream home.”

Student loan debt still an issue
Once again, student loan debt stands out as one challenge keeping would-be buyers out of the market. Among the 13 percent of buyers who said saving for a downpayment was the most difficult part of the buying process, 50 percent reported that student loan debt had inhibited their ability to save for a home purchase or downpayment. Twenty-four percent of all buyers indicated that they have student loan debt, at a median of $28,000, and 40 percent of first-time buyers indicated that they have student loan debt at a median of $30,000.

“Even with a thriving economy and an abundance of job opportunities in many markets, monthly student loan payments coupled with sky-high rents and rising home prices make it exceedingly difficult for potential buyers to put aside savings for a downpayment,” says Yun.

Downpayments are higher for all buyers
Overall, buyers paid a median 13 percent downpayment, up from 10 percent last year and the highest since 2005. First-time buyers paid a median 7 percent downpayment, up from 5 percent last year and the highest since 1997 (9 percent), while repeat buyers paid a median 16 percent, up from last year’s 14 percent and the highest since 2010.

A majority of buyers ranked their personal savings as the primary source of their downpayment (58 percent). Repeat buyers were most likely to use the proceeds from the sale of the previous primary residence (56 percent), while first-time buyers were the most likely to use a gift from a friend or relative (24 percent).

Nearly all buyers choose a single-family home
A majority of buyers continue to choose a detached, single-family home (82 percent) as opposed to a townhouse or row house (8 percent) or a condo/duplex/apartment unit (4 percent).

Median age of repeat buyers skyrockets but stays flat for first-time buyers
For the third straight year, the median age of first-time homebuyers was 32 years old. A majority of first-time buyers were married couples (54 percent), followed by single females (18 percent). Their median income was the same as last year’s at $75,000, and they spent a median of $203,700 on a home. These buyers were more likely to purchase smaller homes than repeat buyers, with a median size of 1600 square feet.

The age of repeat buyers increased to an all-time high of 55 years old (up from 54 last year). Most were married couples (57 percent), followed by single females (18 percent). Their median income increased from $97,500 last year to $100,000 and they spent a median of $280,000 on a home. The median home size remained the same as last year: 2000 square feet.

Pets influence many buying decisions
Fifteen percent of all buyers said that convenience to vets and/or outdoor space for their pet was a critical factor in determining where they wanted to purchase their home. That number rises to 20 percent – one-fifth of buyers – for unmarried couples.

“NAR conducted a survey on the important role pets play in our home buying decisions and the unique considerations that pet owners face,” says Mendenhall. “Realtors understand that when someone buys a home, they are buying it with the needs of their whole family in mind. And any pet owner will tell you that their animals are an important and beloved part of their family.”

Downsizing isn’t a trend
Only 9 percent of buyers listed downsizing as a factor in their decision to move. In fact, 73 percent of buyers purchased a home that was either larger or similar in size to what they previously owned.

“Homeowners that may be looking to downsize tend to be competing for the same homes as first-time buyers, and we are experiencing a scarcity of inventory in those smaller-sized, moderately priced homes,” says Yun. “These buyers, not finding the smaller home they are looking for, may decide to purchase an equivalently sized home or simply stay put in their current home.”

FSBO’s at record low
For-Sale-By-Owner (FSBO) sales accounted for 7 percent of all sales – the lowest number recorded in this survey’s history.

This number has been steadily declining since a high of 15 percent in 1981, with more and more owners relying on the expertise of an agent to help navigate the complicated process and intricacies of a home sale.

© 2018 Florida Realtors®

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Create a photo marketing library from listing shots

NEW YORK – Oct. 29, 2018 – Since real estate is a hyper-local business, agents can benefit from having generic high-quality shots of three specific types of photos. These can be taken when creating listing photos but used anywhere there’s a need for generic shots that necessarily represent any single listing.

Once you create a library of attractive general photos, they can be used in listings in social media, on a website and in print marketing materials.

Atmospheric photos: Every area has distinctive design characteristics that make the homes unique, and they close-up photos taken of architectural details can showcase an agent’s knowledge and show that they appreciate their area’s history. If common to an area, these features can include crystal chandeliers, stained glass windows, veined stone walls, crown molding, ceramic painted tiles or cedar beams. The images should speak to the market as a whole, and can add texture and context to marketing materials.

Nearby landmarks: Agents should obtain shots of recognizable area landmarks, as well as places in their neighborhood and community, including local shopping districts, the best local restaurants and coffee shops, and popular parks. These images can help agents build a connection with their audience, enable potential clients to visualize their daily life in a particular area, and emphasize the agent’s knowledge of what’s happening in their city.

Source: RISMedia (10/16/18) Maloney, Lauren

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Opendoor’s co-listing program could offer opportunities

NEW YORK – Oct. 29, 2018 – Opendoor, a leader in the so-called iBuyer space, is planning to test a new program to co-list properties with real estate professionals outside its firm. The company reportedly has selected about a dozen real estate teams for a preferred partnership.

Opendoor and other iBuyer companies – including traditional real estate brokerages that are getting in on the trend – have been expanding in recent months to offer a completely digital homebuying and home selling experience. Sellers can get instant cash offers from iBuyer firms within hours, and sales can be completed quickly without publicly marketing properties.

Opendoor’s latest announcement differs from its previous approach to selling homes. In the past, it listed properties it owns on MLSs. Opendoor would then use smart locks and sensors to enable buyers to tour homes without a real estate agent present.

Opendoor says the new agent partnerships are meant to supplement that approach and enable real estate professionals to host open houses in the homes Opendoor purchases. Also, as part of the new preferred partnerships, Opendoor will make homes that it decides not to purchase available to real estate agents for a referral fee.

Opendoor plans to be in 18 markets nationwide by the end of this year and plans to expand to 50 markets by the end of 2020.

Wall Street is heavily backing the iBuyer concept, and Opendoor recently nabbed $400 million in funding from investors. The company’s finances are now at $2 billion that it plans to use to rapidly expand its footprint across the U.S.

Source: “Opendoor Is Testing Co-listing Agreements With Agent Teams,” Real Deal (Oct. 23, 2018)

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$700M: Fla. business loss on Jan. 1 if Amendment 2 fails

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Crowdfunding could radically change commercial RE investing

NEW YORK – Oct. 23, 2018 – Commercial real estate could be the largest asset opportunity in the online lending space, according to Brian Korn, a partner at law firm Manatt. Korn was part of a panel discussion at the Urban Land Institute’s Fall Meeting in Boston. Other panelists included Chad Cooley, co-founder and managing partner of AWH Partners; Darren Powderly, co-founder of CrowdStreet; and Greg Rush, partner and managing director at Cadre.

Korn said that there is now a great opportunity in the real estate space. Today, commercial real estate is the third largest asset class at $14 trillion, just behind stocks and bonds. Additionally, the United States is home to the largest, most liquid commercial real estate market in the world. From 2015 to 2020, alternative investment is projected to grow by 15 percent for accredited investors.

There are several types of online commercial real estate syndication platforms, colloquially known as real estate crowdfunding services. Companies like Cadre and CrowdStreet are leading the space in the equity investment model. There are also platforms that make debt investments such as residential loans and smaller 30-day notes.

For non-accredited investors, there is the opportunity to invest in an eREIT, which has its transactions registered with the Securities and Exchange Commission.

There used to be hundreds of [online syndication] startups, now there are only six, said Powderly. The six that are still around are run by a team of reliable and responsible professionals that come from the industry; these startups operate on an institutional level.

The benefits of online syndication platforms are cost and transparency. When you invest in a traditional real estate fund, you usually do so because you know the principal, trust the process and know that they’re going to go out and find the best transaction, said Korn. But that model is quickly being replaced with one of transparency. Sometimes investors want to invest in one property but not another. Investors that have the desire to pick and choose transactions they want to invest in can access deals without knowing someone they trust thanks to the advent of these platforms.

In five to 10 years, Powderly predicts tremendous innovation. He foresees that startups will offer privately managed accounts that look similar to Vanguard-like services.

When asked about the industry outlook, Cadres’ Rush said that better use of data when investing would make players in the industry smarter investors.

Securities law seems to be the biggest challenge for startups expanding internationally. Powderly said, “We would love to [expand], but it’s a matter of opportunity cost. We are only scratching the surface in the United States. We have to continue to focus what we know locally, but also because of securities law.

Powderly said that solving multinational securities law is a big challenge, but somebody will do it – maybe it will be Blackstone with lawyers and offices all over the world, but “We are not big enough.”

If there was a key takeaway from the panel event, it’s that the industry is growing but the number of players is shrinking. Companies that are succeeding in this space offer institutional-level services and products.

© 2018 ITP Business Publishing Ltd. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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3 Fla. cities top U.S. News and World Report’s retirement list

NEW YORK – Oct. 23, 2018 – The top recommendation for a U.S. retirement? Lancaster, Pa. But three Florida cities – Fort Myers, Sarasota and Lakeland ranked in the top 10.

Fort Myers took the No. 2 spot in U.S. News & World Report’s 2019 list of the “100 Best Places to Retire in the USA.” According to this year’s review, Lancaster’s housing affordability and residents’ high rank for happiness helped it to bump Sarasota, Fla., from the number one position that it held last year.

Sarasota was ranked as the third top spot for retirement in 2019, but a non-coastal Florida city, Lakeland, held down the No. 10 spot.

To come up with a ranking, U.S. News & World Report evaluated the country’s 100 largest metro areas to see how well they met retirees’ expectations, such as in housing affordability, desirability, health care and overall happiness.

“Deciding where to retire is a big decision,” says Emily Brandon, senior editor for retirement. “The ‘Best Places to Retire’ offers a way for future retirees to make a more informed decision based on what matters the most to them. Whether that be housing affordability, access to quality hospitals, or the desirability of a place in general, the rankings offer a comprehensive list that can point people in the best direction for their needs.”

2019’s top 10 best places to retire:

  1. Lancaster, Pa.
  2. Fort Myers, Fla.
  3. Sarasota, Fla.
  4. Austin, Texas
  5. Pittsburgh
  6. Grand Rapids, Mich.
  7. Nashville, Tenn.
  8. San Antonio
  9. Dallas-Fort Worth, Texas
  10. Lakeland, Fla.

Source: “100 Best Places to Retire in the USA,” U.S. News & World Report (October 2018)

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Buying a home? You may have leverage soon

NEW YORK – Oct. 23, 2018 – Keith and Kylie Beukema were bracing for a yearlong slog as they started hunting for a larger home in the Denver area, one of the hottest housing markets in the country the past few years.

Instead, it recently took them just two weeks to snag their four-bedroom dream house with mountain views in Thornton, paying $490,000 – $10,000 below asking price – after visiting just three other homes.

“I was nervous (the seller) would laugh us off,” said Kylie, a 29-year-old physician. “We figured we’d get into bidding wars” and almost certainly have to pay above list price.

Denver epitomizes the slowdown taking hold this year in the nation’s housing market as mortgage rates climb, home prices rise and the new tax law limits the benefits of ownership. Those hindrances are adding to a longer-standing obstacle to sales – low home supplies – and making the housing market across most of the country more favorable for buyers – if they can afford the added costs.

“Definitely, there is a shift in the market,” said Lawrence Yun, chief economist of the National Association of Realtors® (NAR). “Buyer activity appears to be softening … Buyers have more chances.”

While housing is still largely a seller’s market, it’s becoming less so, and the playing field should be roughly balanced between buyers and sellers by the middle of next year, said Ralph McLaughlin, chief economist of research firm Veritas Urbis Economics.

“I think we are entering a (return) to normalcy,” McLaughlin said.

Home sales slip

Nationally, existing home sales were down 2.1 percent through the first nine months of the year compared with the same period in 2017. The prior three years, annual gains for home sales totaled 6.3 percent, 3.8 percent and 2.7 percent, according to NAR. The Realtors group on Friday reported a 3.4percent sales drop in September from the previous month to the lowest level since November 2015, though Hurricane Florence in the Carolinas contributed to the weak showing.

Prices for homes are still rising in general, although more slowly. In September the median price was up 4.2 percent from a year earlier to $258,100, but that marked a pullback from gains of 5.1 percent and 5.7 percent in 2016 and 2017, respectively.

Next year, NAR’s Yun expects flat sales and price increases of just 2 to 3 percent.

Of course, housing’s health varies by location. Generally, expensive Western markets such as Denver, San Francisco and Seattle had been posting double-digit yearly price gains that have slowed. More affordable areas such as Indianapolis and Grand Rapids, Michigan, are still seeing price increases accelerate. And reasonably priced Southern markets such as Atlanta remain hot, said Daryl Fairweather, chief economist of real estate brokerage Redfin.

But even the still-vibrant markets could cool by late next year as housing costs continue to mount, said McLaughlin of Veritas Urbis Economics.

Last year, economists blamed softer sales gains on skimpy inventories that limited the pickings and drove up prices, discouraging some buyers. And the nation’s 4.4-month supply of homes in September – the time it would take to exhaust the stockpile assuming no units were added – was still below a normal six months or so. While low, that was up from 4.2 months a year ago, marking just the second annual increase since 2015, according to NAR.

That’s largely because builders have responded to the shortages and put up more houses, mostly higher-priced units that can offset sharply rising labor and material costs.

Homes linger longer on market

In Denver, housing inventory is up 16.1 percent from a year ago, according to the Denver Metro Association of Realtors. Yet just 3,983 homes were sold last month, down from 4,994 a year earlier. The median sale price is off 5.9 percent from its April peak of $455,000. And single-family homes were on the market an average 27 days, up from 19 days in June.

Lisa Huntington-Kinn, a broker with Your Castle Real Estate in Denver, said the market started to sputter in July. Before, houses often drew dozens of bids and routinely sold for above asking price. Now, she said about 30 percent of sellers have had to reduce their list price.

As costs ratcheted higher, “a lot of buyers dropped out,” she said.

Until summer, broker Van Lewis of RE/MAX Alliance in Aurora, Colorado, was having his best year ever. Since then, he said, monthly sales have fallen 50 percent. He partly blames an influx of apartment buildings that are offering significant concessions, making renting more attractive than buying for many millennials.

Although the tech-driven Denver economy is still robust, and wages are rising, “the spread between income and (purchase) costs became too much,” he said.

The thinning pool of buyers gave more leverage to the Beukemas, who wanted to move up from their smaller townhouse because they plan to start a family soon. Besides dropping the asking price, the seller also agreed to make the deal contingent on the Beukemas selling their townhouse by December – an allowance almost never granted during the go-go days.

On the other side of the ledger is Holly Steele, 65. She eventually sold her Aurora townhouse in late September, but it took nearly three months instead of the two weeks she expected. And she had to drop the price three times, from $295,000 to $276,500.

“It was getting a little stressful because I wanted to make my move” to Rapid City, South Dakota, before snow season, she said.

Rates rise, first-time buyers dip

Nationally, rising mortgage rates are playing a bigger role and compounding the effect of U.S. home prices that are up more than 50 percent since their 2012 bottom.

Fixed 30-year mortgage rates averaged 4.85 percent for the week ending Oct.18, according to Freddie Mac, up from 3.88 percent a year ago. That bumps up the monthly payment on a typical $210,000 mortgage by about $125.

The higher rates are “making many people scared,” from first-time homebuyers to trade-up buyers seeking more expensive homes, Yun said.

The new tax law is also chilling some sales. It caps the deduction for property and state and local income taxes at $10,000. And it limits the mortgage interest deduction at home values up to $750,000, down from $1 million. The changes are tempering sales in states with more high-end houses, such as California, Connecticut, Illinois and New York, Yun said.

Meanwhile, pent-up demand from first-time homebuyers – who have driven the market the past couple of years – may be starting to peter out, said Aaron Terrazas, chief economist of Zillow, a real estate research firm.

The slowdown could mean housing will provide less support for the economy. Builders might put up fewer homes, fearing weaker economic growth and reduced home sales in coming years, Terrazas said. Single-family housing starts are down 1.7 percent so far this year. But he said the downshift will be nothing like the housing crash of the late 2000s, which toppled the economy into recession.

“This is not 2008,” he said.

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Amenities and cleanliness matter to vacation-home renters

LOS ANGELES – Oct. 23, 2018 – If you’re thinking of listing your home as a vacation rental, have a listen to what travelers say makes a space inviting and welcoming, and what’s a turnoff.

For starters, amenities and cleanliness matter.

“I would have loved better sheets and towels as well as decent soap and amenities,” says Carol VanderKloot of New York, who was underwhelmed by a recent Michigan rental.

Nice linens are mentioned often in online reviews. In a poll conducted by Airbnb this summer, travelers rating their vacation experience cared most about the quality of their accommodations, followed by amenities that are functional and thoughtful. So along with nice shampoo, consider a bottle of wine, a bicycle, scooter, sled or fully loaded beach bag.

A host in Los Angeles whose home is popular with young families stocks kids’ books. In Milan, Italy, a host with a pool set up Bluetooth speakers outside.

Focus on potential guests’ comfort, both in your decor and your marketing, says Peter Lorimer, a Los Angeles-based real estate expert.

He has teamed up with interior designer Genevieve Gorder on a new Netflix series, “Stay Here,” in which they help homeowners refurbish and redecorate their spaces to make them more attractive to visitors.

“Massively bad for repeat business is dirt,” he warns. “After every guest there needs to be a cleaning plan. Look at this as an investment in your business; if a restaurant is dirty you’ll never go back, and it’s the same with short-term rental.”

Gorder notes that everyone has different standards for tidiness, so it’s best to go pro. “It has to look, feel and be CLEAN,” she says. “That means having a professional service handle your rental before and after each guest checks out. Your reviews will skyrocket and that’s worth its weight in gold.”

Get rid of stained or worn carpeting, refinish wood flooring, and lay fresh tile or new rugs. Provide several good mirrors, as well as storage, and a folder or notes on how to operate things. As Lorimer points out, “the last thing any guest wants is to try and figure out how to use the TV remote or turn the ceiling fan on and off.”

Consider including “insider” suggestions for what to do and where to go in the area. Displaying some local photography or artwork might pique curiosity and help you build a relationship with nearby shop owners too.

Lorimer suggests drawing up a calendar of fun local events and posting it with your listing. Consider an incentive gift for longer stays, like a gift certificate for a local restaurant, or lift tickets at the ski hill.

Gorder warns against the “junk drawer” effect, where owners try to save by fitting out their rentals with dated furniture and hand-me-downs.

And keep the decor relatively neutral.

“Owners tend to decorate for themselves and how they live instead of for their guests,” she says.

“Home is in many ways a reflection of our most intimate selves. When you turn a property or a room in your home into a short-term rental, it’s time to shift your thinking.” The key is finding a balance: a space that’s neither too personal nor impersonal.

Renters differ about how much personal style they like in a space. VanderKloot enjoyed an array of vintage radios displayed on a shelf in a Michigan home, but appreciated not having kitschy decor in a rental in New Orleans. “The Scandinavian interior in that rental was a perfect counter-palette to the excess of (the city),” she says.

In an apartment in Copenhagen, New Yorker Darby Drake says she would have appreciated some personal touches. “What turned me off most was how bland everything was. It didn’t quite feel ‘lived-in,'” she says.

Invest in a standout piece or two, if you can. Drake fondly recalls a big, comfy, cowhide lounge chair in a different Copenhagen rental, as well as another great piece: “There was this massive gray bean-bag lounger that was wonderful. After a long day exploring the city, it was great to be enveloped by it.”

The lounger wasn’t shown in the online photos, Drake says. And that could have been a missed opportunity.

“The No. 1 reason for guests not booking is bad marketing,” Lorimer says. Cell phone photos won’t do. “A professional photographer must be engaged, and the whole area needs to be designed or even staged so that the lifestyle is being sold every bit as much as the accommodation,” he says.

“Think of short-term rentals like online dating. If you take bad pictures and/or don’t dress up for the shots, you just get swiped and forgotten.”

Take seasonal photos of your yard or nearby attractions, he suggests, and change them online accordingly.

Consider, too, a well-stocked snack cupboard, some unobtrusive but pleasant home fragrances, a first aid kit, and perhaps some chilled beverages in the fridge upon arrival; small, thoughtful details make even the most modest space welcoming.

“It may be your guests’ first time in your city or town,” Lorimer says. “You may not physically be there, so anything you put in your rental is acting as guide and host. Anticipate what they’ll need before they know they need it. That’s the key to a happy guest.”

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Help fellow Realtors recover from Hurricane Michael

For many Realtors, brokers and staff, it’s more than “clean the mess” – it’s “rebuild lives from scratch.” Help them. Donate today to Florida Realtors Disaster Relief Fund.

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Tech firm to pay $3M over poor tenant screenings

NEW YORK – Oct. 23, 2018 – RealPage Inc., a technology provider to the real estate industry, agreed to pay $3 million to settle allegations that its tenant screening reports were flawed over a five-year period.

The Federal Trade Commission (FTC) accused RealPage of failing to “take reasonable steps to ensure the accuracy of tenant screening information that it provided to landlords and property managers” from January 2012 through September 2017. Some potential renters may have been denied housing due to the erroneous reports, the FTC alleges.

“You shouldn’t get turned down for an apartment because someone has the wrong information about you,” says Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “This case shows that, especially with today’s tight rental market, we will hold tenant screening companies responsible for the accuracy of their reports.”

RealPage has denied wrongdoing. Company officials say they settled the dispute to avoid the cost and distraction of fighting the charges, HousingWire reports.

FTC alleges that RealPage’s screenings may have shown incorrect criminal records of prospective tenants. The screening reports are generated using the applicant’s first name, middle name (when available), last name and date of birth for the criminal records search. However, the FTC alleges that RealPage only required a match of the applicant’s last name and not an exact match of first name, middle name or date of birth. As such, FTC says a screening on someone named “Anthony Jones” born on April 15, 1969, could find a criminal record for people with names like Antony Jones, Antonio Jones or Antoinette Jones on the same birth date.

“The FTC’s investigation centered on certain ‘soft’ matching practices for consumers with common last names,” RealPage said in a statement. RealPage officials say that it’s an issue that impacts the entire screening industry.

“The FTC was unable to identify any prior industry or regulatory guidance or other clear legal precedent that RealPage should have followed,” RealPage said in its statement. “We are disappointed that the FTC singled out RealPage for an issue that has confronted the entire screening industry, namely how to match applicants with common last names to public records when most courts do not make social security or driver’s license numbers available as part of those records.”

Source: “RealPage Settles U.S. Charges Over Tenant Screening Reports,” Reuters (Oct. 16, 2018) and “RealPage to Pay $3 Million to Settle FTC Allegations of Faulty Tenant Screenings,” HousingWire (Oct. 17, 2018)

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Condo QandA: Do I have to show proof of auto insurance?

STUART, Fla. – Oct. 23, 2018 – Question: I was recently informed by our association manager that as a resident I’m required to provide them with my proof of auto insurance info because they’re liable if something happened involving my vehicle on their property. It looks to me like the local law enforcement would be who I will need to prove I have insurance coverage to in the event something happened. The law requires auto insurance but what business is it of the HOA? I live in an un-gated townhome community and am a homeowner. – B.C., Port St. Lucie

Answer: Unless your association’s governing documents require each owner to provide proof of auto insurance, you would not have any obligation to provide a copy of your policy to the association. We recommend that you consult with a Florida licensed attorney, so they can review your community’s governing documents and determine whether this obligation exists.

Question: I’m on the board of a condominium association and we want to place limitations on how long guests can part their cars in visitor spots. Can we do that? Are there any city or county laws that we have to follow? Thank you for your advice. – M.N., Jupiter

Answer: If your association’s governing documents gives the board the right to make rules governing the association’s common elements, the answer is yes. With regard to any city or county laws that you have to follow, depending on the status of the parking spaces (such as if any of the spaces are handicapped spaces), you will have to follow the applicable city or county laws (or state or federal laws, if applicable). We recommend that you consult with a Florida licensed attorney, so they can review your governing documents and the applicable laws to determine what rules the board can make regarding the visitor spots.

Question: Hi, I live in a condominium association. I just received a notice from our board that the city has asked our permission to put their Christmas tree on the green space in the front of our property (close to the street). Can the board make this decision without approval from the owners? And if this is approved, are there any concerns that we should know about? – J.G., Boca Raton

Answer: Assuming that the association’s green space is not a limited common element of one or several owners, the board by itself can approve the city putting its Christmas tree on the association’s green space. Please note that the approval would need to be obtained at a duly noticed board meeting (i.e. with 48 hours prior notice). If the board approves of this action, we recommend that the association enter into a written agreement with the city memorializing the terms of the approval (i.e. the specific dates for the construction and removal of the tree; that the city would indemnify and hold the association harmless agreement from any liability, claims, lawsuits, etc., that result from the tree being on the property; and that the city adds the association as an additional insured and loss-payee on the city’s insurance policy).

The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, civil litigation, estate planning and commercial transactions.

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New credit score to help some buyers qualify for a mortgage

LAS VEGAS – Oct. 22, 2018 – Experian, FICO and Finicity announced a new credit score Monday during the Money 20/20 USA conference in Las Vegas.

The new score, called UltraFICO Score, from Experian and Finicity improves access to credit by including consumer-contributed data – such as checking, savings and money market account data – that reflects consumers’ financial management responsibilities.

Under the UltraFICO Score, a consumer grants permission to contribute bank-statement information, including the length of time accounts have been open, frequency of activity and evidence of saving, which can be electronically read by Finicity and combined with consumer credit information from Experian to provide lenders an enhanced view of positive financial behavior.

Experian, FICO and Finicity say that the new score has the potential to improve credit access for the majority of Americans, and it’s particularly relevant for people who fall in the grey area in terms of credit scores (scores in the upper 500s to lower 600s) or fall just below a lender’s score cut-off. Consumers relatively new to credit or those with previous financial distress stand to benefit the most.

“This changes the whole dynamic of the lender and customer relationship,” says Jim Wehmann, executive vice president, Scores, at FICO. “It empowers consumers to have greater control over the information that is being used in making credit risk decisions. It also enables a deeper dialogue between the consumer and lenders to help both parties make better financial decisions. It’s a game changer.”

The UltraFICO Score will launch as a pilot program in early 2019. If all goes well, it’s scheduled to be broadly available to lenders by mid-2019.

The model developed by FICO will be implemented through Experian and integrated into a lender’s existing operational workflow. Borrower data will be aggregated through Finicity. The UltraFICO Score builds off the framework of a base FICO Score.

“As the consumer’s bureau, our goal is to help empower consumers and to give better access to credit for more consumers, all while promoting fair lending,” says Alex Lintner, president, Consumer Information Services, Experian. “Through this project, we’ve found a new way to use consumer-permissioned data that allows lenders to make better decisions and helps consumers gain access to credit.”

“This approach allows Americans to benefit from positive financial behaviors,” adds Steve Smith, CEO, Finicity.

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HUD allocates $37M more for 2017’s Hurricane Irma victims

MIAMI – Oct. 22, 2018 – The U.S. Department of Housing and Urban Development (HUD) awarded an additional $50 million in voucher funding to 26 public housing agencies (PHAs) in Puerto Rico, Texas, California and Florida – areas severely affected by major natural disasters in 2017.

The supplemental funding will help PHAs support existing and new families in the Housing Choice Voucher program who live in or around disaster areas.

“Public housing authorities play a tremendous role in assisting families and communities impacted by disasters,” says HUD Secretary Ben Carson. “This increase in voucher funding allows housing authorities to serve more families who are still in unstable living conditions as a result of disasters.”

Florida agencies will receive about 74 percent of HUD’s $50 million, for a total of $37,181,066. California agencies will receive $3,475,850; Puerto Rico will receive $5,311,812; and Texas will receive $4,005,726 for a total of $49,974,454 nationwide.

Florida PHAs receiving HUD funding

  • Hialeah Housing Authority (Hialeah): $2,702,523
  • Housing Authority of The City of Fort Lauderdale (Fort Lauderdale): $2,562,804
  • Housing Authority of The City of Key West (Key West): $358,848
  • Monroe County Housing Authority (Key West): $164,164
  • Miami Dade Public Housing and Community Development (Miami): $29,269,590
  • Housing Authority of Brevard County (Melbourne): $2,123,137

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Realtors to serve as FREC chair and vice chair

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Florida’s 2018 profile of international real estate activity

ORLANDO, Fla. – Oct. 22, 2018 – Florida Realtors® has released its latest report on the state’s foreign buyer and seller transactions, the 2018 Profile of International Residential Real Estate Activity. The one year-report – from August 2017 through July 2018 – found a small slowdown in international activity within the state, due mainly to a tight home inventory and rising property values.

In many areas, foreign buyers compete with U.S. buyers for the same properties, and solid U.S. employment growth boosted the domestic competition. In addition, mortgage rates remain relatively low compared to historic values, and the large supply of buyers, both foreign and domestic, had to compete for a relatively small number of homes for sale.

A stronger U.S. dollar also made Florida homes more expensive for foreign buyers from selected countries, notably Venezuela and Brazil. When asked about challenges faced by their international clients, Realtors surveyed said top objections included “Cost of property,” “could not find property,” and “exchange rate.”

South Florida remains the preferred location for international business. While foreign buyers purchased property across the state, most foreign buyers were concentrated in five metropolitan areas:

  • Miami-Fort Lauderdale-West Palm Beach (54 percent)
  • Orlando-Kissimmee-Sanford (9 percent)
  • Tampa-St. Petersburg-Clearwater (9 percent)
  • North Point-Sarasota-Bradenton (5 percent)
  • Cape Coral-Fort Myers (5 percent)

Size of Florida’s international market, 2017-2018

  • Foreign buyers purchased $22.9 billion of Florida’s existing detached single-family, townhomes and condominiums – a five percent year-to-year decline from $24.2 billion.
  • In dollar value, foreign buyers made up 19 percent of the market (21 percent in 2017).
  • In number of sales, foreign buyers purchased 52,000 of Florida’s existing homes – a 15 percent year-to-year decrease (61,300 one year earlier)
  • As a percentage of all sales, foreign buyers made up 13 percent in the latest report – 15 percent in the year before.
  • Average cost of foreign-purchased home: $286,500 compared to $259,400 in 2017, or about a 10 percent increase.
  • Overall, foreign buyers paid about 20 percent more that the median price of a Florida home.

Characteristics of Florida’s foreign buyers

  • 68 percent primarily reside in another country; the rest are recent immigrants (less than two years in the U.S.) or visa holders.
  • Latin American and Caribbean buyers accounted for 36 percent of Florida foreign buyers, followed by Canadians (22 percent), Europeans (19 percent) and Asians (11 percent).
  • Most foreign buyers – 67 percent – made an all-cash purchase (72 percent in 2017).
  • 71 percent purchased residential property for vacation, residential rental or both (68 percent in 2017).
  • Slightly more than half of foreign buyers preferred townhouses or condominium (53 percent), while 43 percent purchased a detached single-family home, 3 percent purchased residential land and another 3 percent purchased other types of properties.
  • Nearly half of foreign buyers purchased in a suburban or small town/rural area.
  • 93 percent visited Florida at least once before purchasing a property.

International clients role in Realtors’ businesses

  • In 2018, 41 percent of Florida’s Realtors worked with an international client; in 2017, however, 44 percent did.
  • In 2018, 23 percent of Realtors reported an increase in their international business; in 2017, it was 26 percent.
  • Only 30 percent of Florida’s Realtors reported an increase in their business that is international in the past five years (33 percent in 2017).
  • Only 34 percent expect an increase in their international transactions in the next 12 months – it was 37 percent in 2017.
  • 35 percent of respondents said that their client found Florida’s home prices less expensive than the prices in their home country– a decrease from 41 percent in 2017.
  • 68 of foreign clients were referrals for a Realtor – personal or business contacts or former clients.
  • 60 percent of Realtors reported no significant issues working with international clients.
  • Of the Realtors surveyed, 75 percent were born in the United States, and 34 percent were fluent in a language other than English.

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Fla. small businesses, economy to suffer if Amendment 2 fails

ORLANDO, Fla. – Oct. 22, 2018 – According to a recent study by the independent research institute Florida TaxWatch, Florida faces a $700 million tax increase if Amendment 2 fails, with a large majority of that tax burden falling on small businesses.

Amendment 2 seeks to preserve the 10 percent cap on annual increases of non-homestead property taxes that has been in place for the last 10 years. Non-homestead properties are properties that do not serve as a person’s primary residence, such as commercial properties occupied by small businesses.

“There is a local coffee shop I like to visit every morning before I start my work day,” says Brian Sharpe, vice president of Sharpe Properties. “They make a mean cup of coffee and their prices are reasonable, but they didn’t exist a decade ago prior to the non-homestead cap. I shudder to think how they would fare back then when their property taxes would have been erratic and 50 percent tax increases were not uncommon.”

Prior to the 10 percent cap, non-homestead property taxes were rising at uncontrollable rates. For example, according to data contained in a Revenue Estimating Conference analysis conducted in 2011, 30 percent of all non-homestead properties were hit with an 80 percent or more tax increase from 2005 to 2006. This means a $300,000 property could have been valued and taxed at $540,000 or more from one year to the next. Seventy-five percent of non-homestead properties saw an increase of over 10 percent those years.

“If you don’t own a non-homestead property I can see how easy it would be to dismiss this amendment, but that would be a big mistake,” adds Sharpe. “If we do not vote YES on Amendment 2, then those visits to the coffee shop are going to get a lot more expensive. So is grocery shopping, eating out, getting a haircut, the list is endless. These small businesses cannot absorb huge tax increases, so those costs are going to get passed on to all of us.”

Small businesses account for 99.8 percent of all businesses in Florida and employ nearly 3.2 million Floridians. They create jobs and reinvest in their communities, making them critical to the well-being of Florida’s economy.

To help protect small businesses and avoid the looming $700 million tax increase, Florida Realtors® developed a tool kit filled with various images, social media content, videos and news media templates that Realtors can share with their family, friends, clients, colleagues and social media networks.

Realtors are encouraged to use the tool kit resources through early November to help educate voters in advance of the Nov, 6, 2018, general election.

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New tax breaks proposed for ‘opportunity zone’ investors

WASHINGTON (AP) – Oct. 22, 2018 – The Trump administration is proposing rules for investors in a new program that it says could have a big impact on economically depressed areas around the country. About 8,700 so-called “opportunity zones” have been set up in all 50 states to lure investors and developers with tax breaks.

The rules from the Treasury Department, issued Friday, lay out the period of time that individuals or companies must hold on to their investments in the zones to avoid paying taxes on resulting profits.

Administration officials say the goal of the program, established by the new tax law enacted last December, is to create businesses and jobs in low-income areas and lift residents out of poverty. Treasury Secretary Steven Mnuchin predicts that $100 billion in private capital will be invested in the new zones.

“This incentive will foster economic revitalization and promote sustainable economic growth,” Mnuchin said in a statement.

But some critics say the new rules and the way the program is set up will benefit real estate developers and Wall Street funds, and will pull investment toward more well-off areas that need it least.

“The real estate industry is completely excited and mobilized about this, and now is getting paid through massive tax cuts,” said Timothy Weaver, a professor at the State University of New York in Albany who has studied similar development programs.

He said the program “doesn’t have much of an effect other than giving tax breaks to people who are going to invest anyway.”

Under the rules, the investments are open to individuals, corporations, partnerships and real estate investment trusts. Any kind of business or real estate development is qualified so long as it isn’t deemed by regulators to contribute to vice – a liquor store or massage parlor, for example. Participants can take their profits from unrelated investments and plow them into an opportunity zone fund, avoiding paying taxes on those gains until the end of 2026. Depending on how many years they hold the investment, they can reduce their eventual tax bill by up to 15 percent.

Investments within the zones held for 10 years or more are entirely free of capital gains taxes.

A new rule sets up a 70-30 split for determining if certain businesses are eligible for the tax break. Provided that at least 70 percent of a business’s “tangible” property sits within a zone, it is considered eligible even if the rest is outside the zone. An example would be individual locations of a restaurant chain, some inside and some outside.

With 30 percent of the properties allowed outside the zones, many of the new jobs could come in already booming areas, Weaver suggested. Conventional economic development programs generally require all of a business’s property to be within the affected area, he said.

Brett Theodos, principal research associate at the Urban Institute, estimates that only about 10 to 15 percent of the zones will attract investment, and that around 10 percent could get 90 percent of the money invested.

The 8,761 census tracts – in every state, the District of Columbia and five U.S. territories – now officially beckoning to investors as opportunity zones encompass some 35 million people. Based on Census data, the zones have an average poverty rate of about 32 percent, compared with the national average of 17 percent.

Governors in the states and territories put forward their choices for areas to become special development zones. Every choice – 100 percent of the areas proposed – was blessed by the Treasury Department after a four-month review.

The choices “indicate only minimal targeting of the program toward disadvantaged communities with lesser access to capital,” Theodos wrote in a research paper. “Low- and moderate-income residents will need to be able to afford to remain in their communities as the areas upgrade and not be displaced, if they are to benefit from the gains opportunity zones bring.”

Census tracts were eligible to become opportunity zones if their residents meet average low-income requirements. Some tracts with higher average incomes were allowed if they’re located next to the low-income tracts. Those better-off areas, with more infrastructure and amenities, could be more attractive to investors.

The mix will work out well, as Maurice Jones, the president of Local Initiatives Support Corp., a community development organization, sees it.

“From our perspective, the governors did a really fine job in picking places that are in distress,” Jones said in an interview.

The program has drawn bipartisan support. Even Democratic lawmakers, who fiercely opposed the tax legislation and unanimously withheld their votes for it, do like the opportunity zones program nestled within it.

Supporters see the estimated $9.4 billion in lost revenue from the program’s tax breaks as a small price – for U.S. taxpayers indirectly – to pay.

AP Logo Copyright 2018 The Associated Press, Marcy Gordon. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Curb appeal is important – but so is a home’s entryway

NEW YORK – Oct. 22, 2018 – Don’t discount the entryway with staging – your chance to make them feel welcome and instantly fall in love with the home. The entryway is also a high-traffic area, so it needs to be functional, too – a ready place for muddy boots, wet umbrellas and shoes.

“Entryways set a tone for the rest of the home,” says Aimee Lagos, who co-founded Hygge & West, a wallpaper and home-goods company. “It’s the first thing you see when you enter and the last thing you see when you leave.”

The New York Times recently asked interior designers for their best tips on enhancing a front entryway, whether it’s big or small. Here are a few of their tips:

  1. Make it functional
    “While you want your entryway to make a visual impact, functionality is also important,” says Anne Chessin, an interior designer based in New York and Fairfield, Conn. “You need a place to put your keys, mail, coat and shoes.” She likes to use a dramatic light mixture, hang a mirror so you can check your reflection before you leave, add a console table for keys and mail, and hang colorful art or wallpaper.
  2. Splurge where it’s needed
    Chessin suggests splurging on an investment or statement piece and saving on accessories. For example, she recently splurged on a walnut console table, making it the biggest item in the entryway, and then saved by adding a fresh coat of paint and lower-cost accessories, including a mirror and vases. She also suggests picking budget-friendly options when it comes to a runner or area rug because it’ll get a lot of wear and tear in the entryway.
  3. Stage it
    Lagos and fellow co-founder Christina Coop offer a vignette in their new book, “Hygge & West Home: Design for a Cozy Life”: Hang a rounded mirror above a minimalist seating area with a tufted bench and add a patterned kilim pillow for a splash of color – in a shade such as red or blue – to keep the area from being too neutral. On the opposite wall, hang a row of hooks for coats and hats.
  4. Take into account the architecture and overall home’s style
    The entryway is setting the tone and should mix in well with the rest of the house. It shouldn’t look like a stand-alone space, but be the perfect lead-in and introduction to what else potential buyers will see as they tour the house. CeCe Barfield Thompson, an interior designer in Manhattan, says she used an entry door’s color, Prussian Blue lacquer, throughout the home too. “The door stands out at the end of the hallway and also creates a strong connection to the other rooms in the home,” Thompson says. “For the walls, we chose a white Venetian plaster with a reflective quality, to give it light and serve as a neutral palette for rooms stemming off the entry.”

Source: “Making an Entrance,” The New York Times (Oct. 16, 2018)

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New top reason for loan denials? High debt-to-income ratios

IRVING, Calif. – Oct. 16, 2018 – A high debt-to-income ratio (DTI) has superseded poor credit history as the number one obstacle for mortgage applicants, according to real estate data firm CoreLogic.

Though the number of borrowers denied a mortgage has steadily declined over the last few years, nearly one in 10 were turned away in 2017, CoreLogic says – and about 30 percent of those denials were attributed to their debt-to-income ratio.

There has been a gradual increase in the average debt-to-income ratios among mortgage applicants over the last few years, rising from 35.1 in 2012 to 38.6 in 2018, according to CoreLogic.

“Rising application DTI is likely a reflection of the erosion of affordability, as home prices have risen much faster relative to wage growth,” researchers write on the company’s blog, CoreLogic Insights. “A typical household’s mortgage payment (principal and interest only), for example, has climbed quickly due to fast-rising home prices and a higher interest rate. In the event of a negative income shock, higher DTI loans are at greater risk of default.”

Source: “Debt-to-Income Is the Number One Reason for Denied Mortgage Applications,” CoreLogic Insights (Oct. 11, 2018)

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Panhandle’s weaker building codes tested during hurricane

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TALLAHASSEE, Fla. (AP) – Oct. 16, 2018 – Unlike in South Florida, homes in the state’s Panhandle did not have tighter building codes. It was once argued that the trees would help save Florida’s Panhandle from the fury of a hurricane, as the acres of forests in the region would provide a natural barrier to savage winds that accompany the deadly storms.

It’s part of the reason that tighter building codes – mandatory in places such as South Florida – were not put in place for most of this region until just 11 years ago. And it may be a painful lesson for area residents now that Hurricane Michael has ravaged the region, leaving sustained damage from the coast inland all the way to the Georgia border.

“We’re learning painfully that we shouldn’t be doing those kinds of exemptions,” said Don Brown, a former legislator from the Panhandle who now sits on the Florida Building Commission. “We are as vulnerable as any other part of the state. There was this whole notion that the trees were going to help us, take the wind out of the storm. Those trees become projectiles and flying objects.”

Hurricane Andrew a generation ago razed Florida’s most-populated areas with winds up to 165 mph (265 kph), damaging or blowing apart over 125,000 homes and obliterating almost all mobile homes in its path.

The acres of flattened homes showed how contractors cut corners amid the patchwork of codes Florida had at the time. For example, flimsy particle board was used under roofs instead of sturdier plywood, and staples were used instead of roofing nails.

Since 2001, structures statewide must be built to withstand winds of 111 mph (178 kph) and up; the Miami area is considered a “high velocity hurricane zone” with much higher standards, requiring many structures to withstand hurricane winds in excess of 170 mph (273 kph).

Though Michael was packing winds as high as 155 mph, any boost in the level of safety requirements for builders helps a home avoid disintegrating in a hurricane.

Tom Lee, a homebuilder and legislator, says past hurricanes have shown time and time again that the stricter codes help. He said during past hurricanes he looked at the damage by plane and could tell if a home was built before the new code.

“The structural integrity of our housing stock is leaps and bounds beyond what it was,” said Lee.

The codes call for shatterproof windows, fortified roofs and reinforced concrete pillars, among other specifications. But it wasn’t until 2007 that homes built in the Panhandle more than one mile from shore were required to follow the higher standards. And Hurricane Michael pummeled the region with devastating winds from the sea all the way into Georgia, destroying buildings more than 70 miles from the shoreline.

Gov. Rick Scott said it may be time for Florida to boost its standards – considered the toughest in the nation – even further.

“After every event, you always go back and look what you can do better,” Scott said. “After Andrew, the codes changed dramatically in our state. Every time something like this happens, you have to say to yourself, ‘Is there something we can do better?'”

Mexico Beach, the Gulf Coast town destroyed by Michael, lacked a lot of new or retrofitted construction, said Craig Fugate, the former director of the Federal Emergency Management Agency and a former emergency management chief for the state of Florida. The small seaside community had a lot of older mobile homes and low-income year-round residents working in the commercial fishing and service industries.

“Quiet, idyllic, what I call ‘Old Florida,'” Fugate said. “This is not a bunch of high rises or brand-new developments.”

Bill Herrle, who owned a house near the shoreline in Mexico Beach until it was destroyed by the storm, said he wasn’t sure it made a difference when the homes there were built. He said the storm took out his house built in the mid-80s as well as newer buildings put up recently.

“It wiped out both the older and newer homes. It looks like my entire street is razed,” said Herrle, who was not in Mexico Beach during the storm.

David Prevatt, an associate professor of civil and coastal engineering at the University of Florida, said in an email Thursday that drone footage of the devastation in Mexico Beach showed structural damage to roofs and exterior walls, and damaged rafters and trusses, “indicating the strength of the wind that caused those failures.”

Prevatt noted the damage could have occurred at wind speeds lower than the 155 mph (250 kph) that the National Hurricane Center reported at Michael’s landfall. That is, the homes could have been peeling apart before the eye and the hurricane’s strongest core winds came ashore.

Prevatt was preparing to lead a team to assess the damage. He said engineers will be asking how old the destroyed and damaged buildings were and under what version of the Florida building codes they were built. They also will be looking at the differences between the structures that survived and those that did not.

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Housing market facing a gentler slowdown than in 2007

NEW YORK – Oct. 16, 2018 – Home-price growth has slowed over the last several months and that trend is expected to continue as mortgage rates creep higher. In addition, there have been year-over-year declines in existing home sales for six consecutive months.

It appears the U.S. housing market is entering a slowdown – but there’s no reason to panic because it doesn’t look anything like the 2007 collapse. The big reason? The current housing cycle peak never came close to the level of the last boom by most measures.

This cycle is much different, in part because building construction never really took off during this expansion, and instead of an oversupply, the United States has had the worst shortage of for-sale homes in at least three decades.

Observers believe that if an upcoming recession resembles either the bursting of the dot-com bubble in the early 2000s or the mild early 1990s recession, the impact on housing will still be minimal. Worst case scenario? Home prices likely will stagnate for a year or more but not fall.

Source: Wall Street Journal (10/15/18) P. A2; Kusisto, Laura

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Sender of scam ‘Realtor Board’ mail identified, charged

JACKSONVILLE, Fla. – Oct. 16, 2018 – In March 2017, Florida Realtors warned members that the “Florida Board of Realtors” does not exist after members from across the state said they received a bill from the group.

The bill said it was a “Final Notice” and that real estate licenses were in jeopardy, claiming “Failure to respond with your 2017 Agent Board Listing may lead to closure of board listing. Response required to be included in the Agency listing.”

It appears the sender of that mail has now been identified. The Florida Office of the Attorney General has filed a complaint in Jacksonville alleging violations of the Florida Deceptive and Unfair Trade Practices Act against two companies and their owner. The state seeks civil penalties, consumer restitution, attorney’s fees and injunctions.

The case will be heard in the 4th Judicial Circuit by Judge Virginia Norton. According to the complaint, Alfredo Zambrano, owner of Florida Regulation Enforcement Council and Florida Real Estate Council LLC, violated the Florida Deceptive and Unfair Trade Practices Act.

Zambrano allegedly acted under the umbrella of the Florida Real Estate Council LLC when targeting agents, and up to160,000 real estate agents licensed in Florida allegedly received a scam solicitation. The mail was sent on a staggered basis from 2016 through 2017.

The mail piece identified the sender as the “Florida Board of Realtors,” but no agency has that name. The state association is Florida Realtors or Florida Association of Realtors.

Agents who received a fraudulent email were told to pay a $225 fee, answer a few questions about felony convictions, and return it to the “Board.” Failure to do so, according to the letter, would lead to revocation of their real estate license.

In addition to Florida real estate agents, Zambrano allegedly also operated under the “Florida Regulation Enforcement Council” name since 2014. In this activity, he allegedly targeted newly formed Florida corporations by sending deceptive mail to the names listed as contacts. Each piece of mail looked official and most asked for “certificates of status” payments.

Source: Jacksonville Daily Record, Max Marbut, associate editor

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How to give investment buyers the best service

CHICAGO – Oct. 16, 2018 – Many investment buyers rely on their agents for much more than help choosing the right property. Providing the best service is a layered process.

Best practices for working with investors and standardizing brokerage services

Cultivate trust through open communication
“Sometimes, I only see my clients in person one time through the entire process,” says Shane Morgan, a real estate broker with Inhabit Portland. This means communication is an essential component to his business. “It’s really important that I establish trust in the initial meeting. My clients need to know that I’m capable of taking care of things if they can’t be present.”

Investment clients often juggle many responsibilities, so communication has to be on their terms. “It’s my job to follow the pace they set and meet them where they’re at, as far as communication is concerned.” This means Morgan might be texting updates to one client and emailing or calling another client. The key is to make sure agents tailor their communication style to the needs of the client.

Make sure agents understand goals upfront
The initial conversation is the time to ensure proper understanding of what the client intends for his or her investment property. Not every investor is looking for the same thing. Some plan to buy single-family homes, multifamily buildings, or individual condos, for instance. Sometimes, they want a property for long-term investment while others want to flip the property quickly. “Understanding my clients’ goals up front means I will be able to narrow down where to search and what type of property to show them,” Morgan says.

This decreases the margin of error and saves time. Providing agents with a checklist to use during their initial meeting with investors would be helpful.

Having a grasp of the client’s financial goals associated with their purchase is also important, which means an agent needs to have an intricate understanding of the value of properties in his or her market, as well as the cost of renovations and repairs. “In my market, a client usually needs to have the capital – cash or 40 percent down – for the transaction to make sense financially,” Morgan says. Having this knowledge shows investment buyers that their agent understands the financial side of the transaction, and it helps to cultivate trust.

Be knowledgeable about your area’s micro markets
An investment buyer might be interested in turning a property into an Airbnb rental. To serve this buyers, agents should know which areas cater to different types of rentals to help investment buyers choose the right property. An agent should also have a working knowledge of the local school district, a property’s proximity to major employers, and the style of home vacationers seek out if applicable.

Have a team of experts at your disposal
Many investment buyers will purchase a discounted property in need of repair. Some might even opt for a teardown. The more experts an agent has in his or her arsenal, the better.

“The goal is for me to be the single point of contact for my clients,” says Morgan. “If I’m not the expert the client needs, I have to know who that expert is and how to get in contact with them quickly.”

To do this, Morgan as built rapport with contractors, painters, inspectors and property managers in his market. This way, if a client needs some repairs done to the property’s plumbing, for example, Morgan can easily refer his client to a local plumber. The goal is to limit the amount of work a client must do.

Unlike a buyer seeking a dream home, an investor is more interested in the return on investment than in making an emotional connection with a property. To accommodate an investment buyer, an agent should adjust his or her mindset and have a keen understanding of the business of investing. This, says Morgan, is fundamental to providing great service.

“In the end, it’s my job to be my clients’ boots on the ground and be their sound adviser when it comes to finding the right property for the right return,” he says.

Source: National Association of Realtors®, Nicole Slaughter Graham

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