Monthly Archives: March 2020

Case-Shiller: Home Prices Rose 3.1% Annually in Jan.

Home prices were rising at a faster pace in Jan., up 3.1% year-to-year but also up 2.8% month-to-month – a sign of solid demand before the COVID-19 outbreak.

BALTIMORE (AP) – U.S. home price growth was showing signs of acceleration in January, a sign of the solid demand that existed before the coronavirus outbreak caused millions of job losses and tossed the U.S. economy into a likely recession.

The S&P CoreLogic Case-Shiller 20-city home price index rose 3.1% in January from a year ago, up from a 2.8% annual gain in December, according to a Tuesday report. Lower mortgage rates and solid job gains had been fueling interest from would-be homebuyers, but the housing market is now in a moment of tumult as the virus-induced downturn has led to fears of missed mortgage payments.

Phoenix posted the strongest annual price growth at 6.9%, followed by Seattle and Tampa at 5.1%.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Scammers Try to Dupe Homeowners Who Need Help

Scammers love stressed people in need, and they’ve deployed a range of spoofing and other tactics that offer financial aid to panicked homeowners.

NEW YORK – Scam artists see struggling homeowners as easy marks right now, and they’re reportedly using multiple methods, including spoofing tactics, to trick them using offers of financial aid.

Freddie Mac warned this week of a scam: Borrowers were receiving fraudulent calls supposedly from Freddie Mac and being offered low interest rates and other false promises. Freddie Mac says it never reaches out to consumers over the phone with a refinancing opportunity or a new loan offer.

Knowing that some homeowners are struggling economically thanks to the COVID-19 pandemic, scammers may call owners with offers of immediate relief from foreclosure or help with programs that can temporarily suspend their mortgage payments.

Freddie Mac, Fannie Mae and many private lenders actually are offering programs to help homeowners have trouble right now – but those calls need to be initiated by the owner.

“Spoofing is when a caller deliberately falsifies the information transmitted to your caller ID in an effort to disguise their identity while pretending to be someone else,” Freddie Mac warns in a statement about the growing scam. Through spoofing, a homeowner’s cell phone could actually say the call is coming from Freddie Mac.

“During times of distress, it is important to be on your guard against fraud schemes,” Freddie Mac says in a post.

Tips from Freddie Mac to help homeowners avoid being scammed:

  • If a call comes from an unknown number, let it go to voicemail. If it’s important, the caller will leave a message.
  • If you answer and receive a robocall, don’t press any numbers. Hang up.
  • Never give out any personal, financial, or other sensitive information unless you’ve verified the caller is a legitimate source.

Be cautious of numbers on your caller ID since scammers can make any name or number appear.

Source: “Avoiding Fraud: Call Spoofing,” Freddie Mac (March 25, 2020) and “Avoid Getting Caught Up in Coronavirus Scams Involving Your Mortgage,” Forbes.com (March 26, 2020)

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Embracing Remote Work: Freedom Without Sacrifice

Appearance counts when selling homes, but “appearance” includes the things customers see in the background if you sell property from home via webinars and FaceTime.

NEW YORK – It’s a new decade, a new era, and more professionals are working from home than ever before. Not just because of the recent chaos that has taken our world by storm but also because, quite frankly, working from home is simply awesome.

By being able to work from home, you are able to work on your own terms. Even if you are not your own boss, you still remain the master of your domain. With the recent changes in the workplace, countless people are discovering – for the very first time – just how effective and productive they can be when they are able to work on their own terms in the place they feel most comfortable.

When working from home, it is very easy to toss on your robe and slippers, play an old episode of Seinfeld in the background, and treat every day like it’s a Sunday. But, for most people, there will also be plenty of occasions where professionalism remains an absolute must.

People want to work with those who appear to be taking their job seriously and while you may love the way you’ve designed and arranged your home for living, that doesn’t necessarily mean your current setup will be what’s most conducive for conducting business. You have people to impress, to win over, and, in some cases, convince to give you money. They may not want to invest in you unless you are willing to show you’ve taken the time to invest in yourself.

Fortunately, developing a professional work-from-home setup is much easier than many people initially assume. By investing in a quality greenscreen, along with professional audio and video equipment, you can immediately increase your sense of professionalism while still being able to indulge in all the creature comforts that working from home can provide.

Video is perhaps the most expressive form of media ever to exist. It enables us to share ourselves with the world, without the need to sacrifice anything. It engages the two key senses, sight and sound, that we rely on when having conversations and interactions in the “real” world. When utilized correctly, videoconferencing means we don’t have to give anything up; it allows us to be anywhere and everywhere in a way that even the novel telephone never possibly could.

Building an in-home studio is not as difficult as you may think; it requires just a little effort that will pay off now and for the long run. While working from home, whether temporarily due to the recent outbreak or permanently because you just love freedom, you’ll have an adaptable setting that can be modified for seemingly any type of meeting. Whether you are meeting with serious capital investors, reassuring a client or simply chatting with a colleague, your entire domain remains within your control.

You won’t just be surviving – you’ll be thriving. And you’ll have more control over your life and professional ascendance than you ever thought possible.

The bad news and sadness we’ve being seeing on the news every day has caused countless people to reevaluate and rethink their lives. Why are we here? What are we doing? What really is and isn’t necessary in my life? If these thoughts have crossed your mind recently, as they have for many, throwing out the office in favor of something freer and more personal has never been an easier decision.

Working from home doesn’t mean sacrificing the sense of professionalism that has helped you ascend in your career – quite the opposite. With the right equipment and setup, you can truly capture the best of both worlds and impress whoever you happen to be conferencing with. Whatever happens, moving forward, remains entirely within your hands.

Adam Gower Ph.D. is an authority in content marketing for the real estate industry. He has more than 30 years and $1.5 billion of transactional experience in commercial real estate finance and investment. Over the last five years he has built a digital marketing agency at GowerCrowd.com and you can learn exactly how he has made his own remote home office appear like a TV studio by clicking here.

© 2020 Penton Media, National Real Estate Investor, Adam Gower, Ph.D.

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March Consumer Confidence Drops After Feb. High

It’s the first economic statistic to show the pandemic’s impact. Total Consumer Confidence dropped to 120 from 132.6, but the future-expectations measurement fell 20 points. A senior economist calls it “more in line with a severe contraction rather than a temporary shock.”

NEW YORK – The Conference Board Consumer Confidence Index® declined sharply in March, following an increase in February. It’s the first economic indicator covering a timeframe that includes the COVID-19 pandemic.

The complete Index fell to 120.0 compared to 132.6 in February. However, the Present Situation Index – a gauge of consumers’ assessment of current business and labor market conditions – decreased only marginally from 169.3 to 167.7.

The Expectations Index – a gauge of consumers’ short-term outlook over the next six months for income, business and labor market conditions – declined almost 20 points, from 108.1 last month to 88.2 this month.

“Consumer confidence declined sharply in March due to a deterioration in the short-term outlook,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index remained relatively strong, reflective of an economy that was on solid footing, and prior to the recent surge in unemployment claims. However, the intensification of COVID-19 and extreme volatility in the financial markets have increased uncertainty about the outlook for the economy and jobs.

“March’s decline in confidence is more in line with a severe contraction – rather than a temporary shock – and further declines are sure to follow,” she says.

Current conditions: Consumers’ assessment of current conditions was less favorable in March. The percentage of consumers claiming business conditions are “good” was relatively unchanged at 39.6%, while those claiming business conditions are “bad” increased from 10.8% to 11.4%.

Consumers’ assessment of the job market also moderated from last month. Those saying jobs are “plentiful” decreased from 46.5% to 44.9%, while those claiming jobs are “hard to get” was unchanged at 13.9%.

Future conditions: Consumers were significantly less optimistic about the short-term outlook. The percentage of consumers expecting business conditions to improve over the next six months decreased from 20.6% to 18.2% – but those expecting business conditions to worsen increased from 7.2% to 14.9%.

Consumers’ outlook for the labor market was also less positive. The proportion expecting more jobs declined from 16.6% to 15.5%, while those anticipating fewer jobs in the months ahead increased, from 12.0% to 17.1%.

Regarding short-term income prospects, the percentage of consumers expecting an increase declined from 22.7% to 20.7%, while the proportion expecting a decrease rose from 6.1% to 8.8%.

The monthly Consumer Confidence Survey is conducted for The Conference Board by Nielsen, a global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was March 19, 2020.

© 2020 Florida Realtors®

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Mortgage Industry Asks Fed for Help

Lenders says Congress’ $2T stimulus package allows homeowners to postpone mortgage payments for a year – but they still have to pay that debt to their investors.

WASHINGTON – Congress recently passed a $2 trillion stimulus package that, in part, allows homeowners impacted by the pandemic to postpone mortgage payments for up to 12 months.

The bill is similar to decisions announced earlier by Fannie Mae and Freddie Mac. The goal is to prevent an upsurge in foreclosures.

However, mortgage servicers must continue to pay principal and interest on the mortgages to investors. They also must make payments to mortgage insurers, property insurers and local tax authorities.

Nonbank mortgage servicing company Mr. Cooper estimates that one in four Americans could request mortgage payment deferrals. The mortgage industry is turning to the Federal Reserve to invoke emergency powers and serve its role as the lender of last resort.

The central bank would need to offer a line of credit that mortgage servicers could draw on to make the payments to mortgage investors on behalf of borrowers. The Fed says it intends to set up an entity to buy corporate bonds and pledged to buy an unlimited amount of mortgage bonds.

Large bank mortgage servicers like JPMorgan Chase and Wells Fargo could borrow from the Feds discount window to make the mortgage payments, but nonbanks like Mr. Cooper and Quicken Loans do not have that option. Mortgage executives say that cash advances from the Fed would be repaid when the mortgages are paid off or refinanced, so they are not a bailout.

Source: CNN Business (03/26/20) Egan, Matt

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Careful Asking about COVID-19: It May Be a Fair Housing Issue

“National origin” is a Fair Housing Act protected class, and the law applies even if someone hails from a country with a high rate of COVID-19 infections.

ORLANDO, Fla. – “National origin” is a Fair Housing Act protected class, and the law applies even if someone hails from a country with a high rate of COVID-19 infections.

Florida Realtors is monitoring everything regarding how the COVID-19 pandemic is affecting the real estate industry and Realtors and sharing it here.

The Connecticut Fair Housing Center has said it’s received a lot of calls asking about the nation’s fair housing laws and whether they apply if the primary fear is spread of COVID-19, the pandemic spreading within communities.

The short answer is yes – discrimination based on country of national origin is illegal even if the goal is to limit the spread of the virus. The Fair Housing Act protection for people with disabilities may also apply.

The Connecticut Center created a list of things that cannot be done based on national-origin protections:

• It’s illegal to deny housing or shelter to someone from one of the countries most affected by the pandemic – or against someone who seems to be from one of those countries.

• If you’re from one of the countries most affected by COVIC-19, it’s illegal to have different rules for everyone else.

• It’s illegal for a landlord to try to evict a tenant because they’re from – or perceived to be from – a country most affected by COVID-19.

• If a tenant doesn’t have COVID-19 but a landlord or housing provider denies them housing or shelter because they believe the tenant might, it’s illegal.

• If a tenant doesn’t have COVID-19 but a landlord or housing provider attempts to quarantine them or impose different rules than those for other tenants, it’s illegal.

What if a tenant, buyer or seller actually has COVID-19? That situation is less clear, but blocking a rental or trying to create a quarantine could still have legal ramifications.

© 2020 Florida Realtors®

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NAR Offers No-Cost Business Tools During Pandemic

The association brought back its recession-era program, Right Tools, Right now, and is giving Realtors access to free or discounted programs, such as ePro.

CHICAGO – National Association of Realtors® (NAR) Bob Goldberg announced a program that gives association members that will give them free or discounted access to a number of new and existing business resources.

The “Right Tools, Right Now” program originally launched during the Great Recession. Between March 2009 and December 2010, members accessed $54 million worth of business resources.

“At this time of unique need, I want NAR members to know we will continue to ensure every member has the tools and information they need to emerge from this crisis stronger and more prepared for their future,” Goldberg says.

Educational courses and webinars offered at no cost include “Financial Tips During Challenging Times: A Business Survival Guide”; e-PRO certification courses, which help Realtors master advanced digital marketing techniques; and the 2020 Technology Trends webinar.

There are also free commercial courses in financial modeling, leasing and use of market data. Association staff will find free association management self-study courses.

NAR says it will update the list regularly.

© 2020 Florida Realtors®

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NAR: Pending Home Sales Increase 2.4% in Feb.

Chief Economist Yun: Index shows housing was very healthy prior to the coronavirus, though the data doesn’t capture fallout from the pandemic or response measures.

WASHINGTON – Pending home sales rose in February, climbing for the second consecutive month, according to the National Association of Realtors® (NAR). Each of the four major regions saw an increase in month-over-month contract activity, as well as growth in year-over-year pending home sales transactions compared to one year ago.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, grew 2.4% to 111.5 in February. Year-over-year contract signings increased 9.4%. An index of 100 is equal to the level of contract activity in 2001.

“February’s pending sales figures show the housing market had been very healthy prior to the coronavirus-induced shutdown,” said NAR Chief Economist Lawrence Yun.

He noted that the data does not capture the significant fallout from the pandemic or the measures taken to control the outbreak. “Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year.”

Yun says that naturally there will be a lengthier stay of inventory in the market from reduced short-term demand, citing data from active listings at realtor.com that show year-over-year increases. Markets drawing some of the most significant buyer attention include Colorado Springs, Colo.; Lafayette, Ind.; Modesto, Calif.; Rochester, N.Y.; and Sacramento, Calif.

“Housing, just like most other industries, suffered from the coronavirus pandemic, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals,” Yun says. “Many of the home sales that are likely to be missed during the first part of 2020 may simply be pushed into late summer and autumn parts of the year.”

February pending home sales regional breakdown: The Northeast PHSI rose 2.8% to 96.3 in February, 5.9% higher than a year ago. In the Midwest, the index increased 4.5% to 110.1 last month, 14.9% higher than in February 2019. Pending home sales in the South inched up 0.1% to an index of 129.2 in February, a 7.1% increase from February 2019. The index in the West grew 4.6% in February 2020 to 97.1, a jump of 10.8% from a year ago.

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Mortgage Markets Freeze Up as Volatility Increases

Interest rates have been cut and stocks have dived – so why aren’t fixed mortgage rates any lower? A flood of refinancing demand combined with last week’s volatile credit markets caused mortgage rates to spike on Tuesday and Wednesday.

DENVER, Colo. – Consumers who thought they could snag a rate on a 30-year mortgage in the low 3% range whenever they wanted are facing a rude awakening.

A flood of demand for refinancing combined with volatile credit markets this week caused mortgage rates to spike Tuesday and Wednesday. By Thursday, buyers for mortgage debt had largely stopped making bids, with the exception of a few credit unions, said Lou Barnes, a loan officer with Premier Mortgage Group in Boulder.

“The main thing that consumers need to understand is that in the short term, the market is closed at the moment,” he said.

A high volume of demand from people looking to refinance their mortgages was stressing the market, Barnes said. But mortgage markets have dealt with surges in refinancing before. What changed last week was the extreme volatility in stock and bond markets because of concerns over the coronavirus pandemic.

Buyers of mortgage debt typically purchase hedges to protect themselves from big moves up or down in interest rates. But with Treasury yields swinging around, buying that protection has become difficult.

“The ability to hedge those risks started to break down Tuesday. The answer of the mortgage industry was to raise rates so high that nobody applies,” Barnes said.

Borrowers who were looking at a 3.25% or lower rate on a 30-year mortgage last week were being quoted 4% on Tuesday and then above 4.5% on Wednesday. The mortgage industry was effectively telling people to go away.

By Thursday, bidding on mortgage loans effectively stopped, with the exception of a handful of credit unions, Barnes said. Think of it as a Black Friday sale that got out of hand. The manager first raises the price of the doorbuster flat-screen television from $200 to $400, then closes the store when that isn’t enough to keep the hordes away.

The last time mortgage markets faced this kind of volatility was during the financial crisis in 2008. Back then, lenders and investors were sitting on trillions of dollars in mortgages that were bad or about to go bad. Consumers owed more than their homes were worth and many were losing their jobs. The financial system was on the verge of collapse.

That isn’t the case this time. Most borrowers are sitting on a thick equity cushion, and the number of people behind on their payments is at a record low.

“The banking system is not broken. There is a specialized fear,” he said.

But the mortgage market is broken and needs the Federal Reserve to step in as a buyer, Barnes said. That could happen any day with the Fed offering to buy 30-year mortgages with an interest rate above 3.75% or some ceiling. That would be enough to get buyers back in the game.

© Copyright 2020 The Denver Post Corp., Aldo Svaldi

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Has the Single-Family Rental Market Peaked?

ATTOM: The business of buying single-family homes to rent lost some steam after rents stopped increasing as fast as the purchase cost for those rental properties.

SAN FRANCISCO – Rental returns on single-family homes decreased from a year ago in the first quarter in more than half of the 389 U.S. counties tracked by ATTOM Data Solutions, according to the real estate firm’s Q1 2020 Single-Family Rental Market report.

On average, the annual gross rental yield was 8.4% in the first quarter (measuring the annualized gross rent income divided by the median purchase price of single-family homes).

“The business of buying single-family homes for rent has lost a little steam this year across the United States as rents aren’t rising quite as fast as prices for investment rental properties in the majority of the country,” says Todd Teta, chief product officer at ATTOM Data Solutions.

“But from the national perspective, things are generally holding steady for landlords in the single-family home rental market,” he adds. “Also, profit trends are moving in favor of investors in higher-rent counties and against those in lower-rent regions.”

The counties with the highest potential annual gross rental yields for 2020, according to the report, are:

  • Baltimore City/County, Md.: 28.9%
  • Cumberland County, N.J., in the Vineland-Bridgeton metro area: 20.1%
  • Bibb County, Ga., in the Macon metro area: 18.2%
  • Mobile County, Ala.: 15.7%
  • Clayton County, Ga., in the Atlanta metro area: 15.1%

Baltimore City, Cumberland and Bibb counties also had the top three yields in 2019, ATTOM researchers said.

The report noted the top growth markets for single-family homes include Detroit, Cleveland, Milwaukee and Memphis. These areas are showing increasing wages over the past year and carry a potential 2020 annual growth rental yields of 10% or higher.

However, prices rose faster than rents in 59% of the markets that ATTOM researchers tracked in the first quarter. The largest annual gross rental yield decreases for 2020 compared to 2019 in the first quarter were in Delaware County, Pa., in the Philadelphia metro area (down 30.5%); Bibb County, Ga., in the Macon metro area (down 27%); Erie County, Pa. (down 26.6%); Saint Louis County, Mo. (down 26.5%); and Sussex County, Del., in the Salisbury metro area (down 26.4%).

Source: ATTOM Data Solutions

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Mortgage Brokers May Save Buyers Time and Money

Not all loans are the same. Prefer a low down payment? Focused mainly on low interest rates? Mortgage brokers can often help buyers confused by all their options.

NEW YORK – Hiring a mortgage broker can help relieve some of the stress and loan-related questions when you’re buying a house, especially if you’re a first-time homebuyer.

In their role as the middleman between borrowers and lenders, a mortgage broker can help you find a lender that meets your needs and financial requirements, such as a preference for a lower down payment or the best interest rate possible. If you’re seeking a Federal Housing Administration (FHA) or Veterans Affairs (VA) loan, for example, a mortgage broker with experience in working with veterans, or who understands the requirements for FHA loans, can simplify the process.

Variety is another benefit of brokers. Using a mortgage broker can help you find the right lender for your specific needs, especially if your situation in terms of your credit profile or the property is unusual.

“Some (lenders) may specialize in particular property types that others avoid. Some may have more flexibility with credit scores or down payment amounts than others,” says David Reiss, a law professor who specializes in real estate and consumer financial services at Brooklyn Law School in New York and the editor of REFinBlog.com.

Working with a mortgage broker has advantages over going directly to a lender to obtain a mortgage. Consumers can save money during the process, obtain more loan options and have someone explain the fine print to them, which can save time.

The mortgage industry is changing constantly and a good mortgage broker can help a homeowner understand the lengthy process from getting a good interest rate to paying lower fees to closing the loan on time.

A mortgage broker is a mortgage expert who knows how to “navigate today’s mortgage market and to get loans closed,” says Andrew Weinberg, a principal at Silver Fin Capital Group, a Great Neck, New York mortgage company. “They can quickly determine the best lender for each individual borrower.”

What is a mortgage broker?

A mortgage broker works for a lender known as a non-depository institution, says Rick Masnyk, a branch manager at Network Funding in North Smithfield, Rhode Island.

“They provide home financing without having access to the other products that a depository institution or a bank provides,” Masnyk says.

Unlike a bank loan officer who can only offer mortgage products available at his own bank, mortgage brokers have an advantage because they have access to sources of financing from multiple financial institutions, such as JPMorgan Chase and Wells Fargo, as well as other ones that a consumer may not have heard of because they don’t have brick-and-mortar locations within that consumer’s geographic area, Masnyk says.

Federal laws require that mortgage brokers are licensed and cannot have their salary linked to the interest rate you receive from a potential lender. Working with a broker should not impact how much your loan will be.

A mortgage broker can save the consumer time and effort in “locating the best possible loan,” says Jackie Boies, a senior director of housing and bankruptcy services for Money Management International, a Sugar Land, Texas-based nonprofit debt counseling organization.

Part of a mortgage broker’s job is to “do the math” and let a borrower know the loan amount they qualify for to be approved for in a mortgage, Masnyk says.

Mortgage brokers work with homeowners to find a loan program and interest rate to fit their needs, says LeeAnn Casanova, U.S. sales director of wholesale mortgage products for Quontic, a New York-based digital bank.

“They would be responsible for originating the loan and placing the loan with the investor who would fund the transaction at the closing table,” she says. “It is about finding the right mortgage for each unique buyer.”

How does a mortgage broker get paid?

A mortgage broker’s fees are more transparent in the aftermath of the Great Recession in 2008.

The cost of the loan is charged to the borrower and the lender purchasing the loan provides a credit equal to that cost, resulting in no cost to the borrower, Masnyk says.

Mortgage brokers get paid in either one of two main ways: upfront at closing by the borrower, or after the transaction closes by the lender. The broker’s fee is a small percentage of the loan amount, usually between 1-2%.

How are brokers different from loan officers?

A loan officer is employed by a bank or another lender and will be limited to promoting and providing the loan products of their employer only, Boies says. A broker doesn’t have those limitations and works with multiple lenders.

Should you work with a mortgage broker?

Homeowners who choose to work with a mortgage broker can receive more in-person interaction and let a licensed professional do the legwork for them, Masnyk says.

“Working with someone you can see face to face and/or someone your realtor has used in the past and trusts is always a great source,” he says. “There’s no reason not to.”

In addition to consulting a mortgage broker, shop around at several mortgage lenders to obtain the best interest rate and term of loan that fits their situation. Whether the consumer chooses to use a mortgage broker or banker is a personal choice. Bankrate’s rate tables are a good place to start your search.

“It’s just as important to shop for the lowest possible closing costs in conjunction with that rate,” Masnyk says. “A mortgage provider may appear to have a great rate, but if their closing fees are excessive, you may not be getting the deal you think you are. What you pay overall in monthly payments and closing fees determines the best possible mortgage program.”

A mortgage broker does the work of shopping around for your mortgage loan to find the best rates, while providing the “deep expertise required to close your loan quickly and efficiently,” Silver Fin Capital Group’s Weinberg says.

Many brokers have access to a powerful loan pricing system that helps price your loan across many lenders at one time.

“They can quickly focus in on the best lenders for your scenario,” Weinberg says. “In most cases, they do not charge the client a penny for their services. Their compensation comes solely from the wholesale lender, and only in the event the loan closes.”

Brokers maintain a large network of wholesale lenders and can provide consumers multiple offers, rather than being limited to the offerings of just one lender.

How do you choose a mortgage broker?

Finding a mortgage broker requires a bit of homework: ask for referrals from your realtor, friends and family.

Check their licensing with your state professional licensing authority, read online reviews and check them out with the Better Business Bureau, Boies says.

Check with a couple of different sources and do your due diligence, Masnyk adds.

Questions to ask a mortgage broker

Here are questions to ask a prospective mortgage broker:

  1. Can I get your references? Ideally, you found the broker through a reference from a friend, relative or co-worker. But if you found the broker another way, it’s smart to check on references.

    Ask for the names and contact information for the most recent two or three customers who closed loans with the broker. Then call and ask what their experience was like. Did the broker treat them fairly? Did the loan estimate have accurate information? Were there any issues closing the loan? Did the closing disclosure have roughly the same costs as the loan estimate?

    Above all, ask if they would do business with the broker again.

  1. How long have you been in business? How long is long enough? Choose a broker who has been in the industry for at least three years (but preferably more). Ask how much experience the broker has with specific loan types you might be interested in, such as FHA or VA loans, for example. You can check to see if they hold the proper licensing to be a mortgage broker in your state through the Nationwide Mortgage Licensing System and Registry.
  1. How do you handle rate locks? Once you commit to working with a specific lender, you can request a rate lock. This ensures that you receive the same interest rate you’re quoted for a set timeframe, regardless if rates go up or down. A typical rate lock period lasts up to 30 or 60 days, or you can pay more money to extend the rate lock. Also, you can add a float-down clause, if your lender permits it, within a rate lock that guarantees you a lower rate if rates fall during your lock period.

Ask your broker for a loan commitment letter from the lender. It should have the lender’s name and specify the interest rate and points, the date the rate was locked, and when the lock expires.

Copyright Missoulian, Ellen Chang Dec 17, 2019

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RE Q&A: My Boyfriend Owns the House – Can I Be Protected?

After 10 years together, a woman who pays some of the bills wonders what happens if her boyfriend dies and her name isn’t on the deed. Could his kids kick her out?

FORT LAUDERDALE, Fla. – Question: I moved in with my committed boyfriend about 10 years ago. I have helped with the bills and repairs since moving in and even pay the property taxes. We cannot get married or he will lose an income stream he inherited. I am concerned that if he passes away, his kids will kick me out of my home. What can I do to protect myself? – Renee

Answer: You are right to be concerned. You are in a situation where you are at the mercy of your boyfriend and his heirs. Since you are not on the home’s title, you have no ownership rights, nor the protections afforded a tenant.

Even if he were to write a will leaving you the house when he dies, wills are not contracts, and he could change it at any time without informing you.

You have options. You could accept the status quo, continue to live there while saving money just in case he passes away or you break up. If you choose this option, I would suggest that you limit your spending on repairs and property tax, and come to an understanding with him regarding the bills.

I think a better choice would be to sit him down and have a heart-to-heart conversation. A decade is a long time, and you should not have to worry about where you are going to live in your sunset years.

There are various ways that you could work things out to satisfy both of your interests.

He could deed you onto the title of the home or have the home put into a trust that will control what happens with the house if you part ways or either of you pass away.

If he does not want to share ownership with you, perhaps because he wants to leave the house to his children, you could purchase life insurance. Include the payment along with the other household bills, and if he passes before you, you will have enough to buy the house from his kids or get a new place.

There are many other creative options that you could come up with.

If he does not want to have the discussion at all, you may have to take a second look at the relationship.

About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation.

© 2020 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by Tribune Content Agency, LLC.

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Fed Slashes Interest Rates Near Zero, Eases Lending Rules

In addition to a full-percent interest rate cut, the Fed will take other stimulus steps, saying COVID-19 “weighs on economic activity and poses (economic) risks.” The move should benefit adjustable rate mortgages, credit cards and other short-term loans.

WASHINGTON (AP) – The Federal Reserve took emergency action Sunday and slashed its benchmark interest rate by a full percentage point to nearly zero (0% to 1/4%) and announced it would purchase more Treasury securities to encourage lending to try to offset the impact of the coronavirus outbreak. The central bank said the effects of the outbreak will weigh on economic activity in the near term and pose risks to the economic outlook. The central bank said it will keep rates at nearly zero until it feels confident the economy has weathered recent events.

The Fed also said it will purchase $500 billion of Treasury securities and $200 billion of mortgage-backed securities to smooth over market disruptions that have made it hard for banks and large investors to sell Treasuries.

The disruptions bumped up the yield on the 10-year Treasury last week, an unusual move that threatens to push borrowing costs for mortgages and credit cards higher. The Fed also said it has dropped its requirements that banks hold cash reserves in another move to encourage lending.

The Fed also announced that it has cut interest rates on dollar loans in a joint action that it has taken with five central banks overseas. That is intended to ensure that foreign banks continue to have access to dollars that they lend to overseas companies.

All told, the Fed’s actions amount to a recognition that the U.S. economy faces its most perilous juncture since the recession ended more than a decade ago.

By aggressively slashing its benchmark short-term rate to near zero and pumping hundreds of billions of dollars into the financial system, the Fed’s moves Sunday recalled the emergency action it took at the height of the financial crisis. Starting in 2008, the Fed cut its key rate to near zero and kept it there for seven years. The central bank has now returned that rate – which influences many consumer and business loans – to its record-low level.

Still, with the virus’ spread causing a broad shutdown of economic activity in the United States, the Fed faces a daunting task. Its tools – intended to ease borrowing rates, facilitate lending and boost confidence – aren’t ideally suited to offset a fear-driven halt in spending and traveling.

“We have to hope that the Fed getting out in front of events, not to mention other central banks, pushes the economy in the right direction,’’ said Adam Posen, president of the Peterson Institute for International Economics. “The heavy lifting for stimulus and for preventing lasting economic damage has to be done on the fiscal side. That’s nature of this shock.’’

“It confirms that the Fed sees the economy going down … very sharply’’ toward recession, Posen said.

Posen advocates fiscal steps such as providing sick leave and pay for quarantined workers and rolling over bank loans to small and medium sized businesses hit hard by the outbreak.

Earlier, Treasury Secretary Steven Mnuchin said that both the central bank and the federal government have tools at their disposal to support the economy.

Mnuchin also said he did not think the economy is yet in recession. Most economists, however, believe a recession is already here, or will be soon. JPMorgan Chase predicts the economy will shrink 2% in the current quarter and 3% in the April-June quarter.

“I don’t think so,” Mnuchin said, when asked if the U.S. is in recession. “The real issue is what economic tools are we going to use to make sure we get through this.”

On Saturday, President Donald Trump reiterated his frequent demand that the Fed “get on board and do what they should do,” reflecting his argument that benchmark U.S. rates should be as low as they are in Europe and Japan, where they’re now negative. Negative rates are generally seen as a sign of economic distress, and there’s little evidence that they help stimulate growth. Fed officials have indicated that they’re unlikely to cut rates below zero.

With the virus depressing travel, spending, and corporate investment and forcing the cancellation of sports leagues, business conferences, music performances, and Broadway shows, economists increasingly expect the economy to shrink for at least one or two quarters. A six-month contraction would meet an informal definition of a recession.

Two weeks ago, in a surprise move, the Fed sought to offset the disease’s drags on the economy by cutting its short-term rate by a half-percentage point – its first cut between policy meetings since the financial crisis. Its benchmark rate was lowered to a range of 1% to 1.25%.

But policymakers have largely accepted research that says once its benchmark rate approaches zero, it would produce a greater economic benefit to cut all the way to zero rather than just to a quarter- or half-point above. That’s because it takes time for rate cuts to work their way through the economy. So if a recession threatens, quicker action is more effective.

Some of the attention Wednesday (the Fed’s next scheduled meeting) will likely be on what steps the Fed takes to further smooth the functioning of bond markets, a topic that can seem esoteric but that serves a fundamental role in the functioning of the economy. The rate on the 10-year Treasury influences a range of borrowing costs for businesses and consumers, including mortgage and credit card rates. If banks and investors can’t seamlessly trade those securities, borrowing rates might rise throughout the economy.

“Even more important than the Fed’s rate-cutting function is the market-calming function,” said David Wilcox, a senior fellow at the Peterson Institute for International Economics and former head of research at the Fed.

The central bank took a huge step in that direction Thursday, when it said it would provide $1.5 trillion of short-term loans to banks. The central bank will provide the cash to interested banks in return for Treasuries. The loans will be repaid after one or three months.

That program is a response to signs that the bond market has been disrupted in recent days as many traders and banks have sought to unload large sums of Treasurys but haven’t found enough willing buyers. That logjam reduced bond prices and raised their yields – the opposite of what typically happens when the stock market plunges.

The Fed also said last week that it would broaden its $60 billion monthly Treasury purchase program, launched last fall, from just short-term bills to all maturities. The Fed is already reinvesting $20 billion from its holdings of mortgage-backed securities into Treasuries of all durations, thereby bringing its total purchases to $80 billion.

Those purchases would help relieve banks of the Treasuries they want to sell. Some analysts expect the Fed to extend those purchases past their current end-date of the second quarter and even vastly increase the size.

Guy LeBas, chief fixed income strategist for Janney Capital Management, said the Fed could boost its purchases to up to $1 trillion or more over the next year. The goal wouldn’t be to directly stimulate the economy, as the Fed did with its bond purchases during and after the recession, LeBas said. Those purchases were known as “quantitative easing” or QE.

Rather, the idea would be to take more Treasuries off banks’ balance sheets. That, in turn, would boost banks’ cash reserves and enable them to lend more. Still, most economists would likely refer to the purchases as QE.

“Shifting hundreds of billions of dollars of assets quickly doesn’t happen without central bank intervention,” LeBas said.

Another option would be to relaunch a program that lets banks use corporate bonds and other securities as collateral to borrow from the Fed.

On Wednesday, the Fed’s policymakers will also update their forecasts for the economy and for interest rates. Economists at Pimco predict that the Fed’s policymakers will collectively downgrade their estimate for growth this year from 2% to below 1.5%. That figure would be consistent with an economic contraction in the first half of the year, followed by a sharp rebound, Pimco said.

Copyright 2020 The Associated Press, Christopher Rugaber. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Florida Realtors President Shares Update on COVID-19

To limit exposure to the virus, Pres. Barry Grooms announced that Florida Realtors has suspended all in-person meetings at Orlando headquarters and the Tallahassee office – but the state association remains open for business and all its products, tools and services are available.

Dear colleagues and members of Florida Realtors®:

In times of stress and uncertainty, our Florida Realtors’ family stands strong together, ready to support each other and their communities. As COVID-19 (coronavirus) continues to be a developing concern in Florida and across the globe, know that your Florida Realtors Leadership Team has been in constant contact with local associations and the National Association of Realtors® to safeguard continuity of service.

Your state association remains open for business, and all of our products, tools and services are available to our members to assist in their business throughout this global crisis. Going forward, we will continue to update you on any developments or cancellations.

There are changes to other operations, however, to limit exposure of our members and employees to the virus.

Effective immediately, Florida Realtors has curtailed all in-person meetings held at our Orlando headquarters and the Tallahassee office for the next 30 days. Committee meetings and all other association business will be conducted electronically. Staff travel has also been suspended.

Florida Realtors continues to monitor all official state communications regarding COVID-19. See Florida Realtors’ recent statement on the novel coronavirus.

Please take care of yourselves and continue to follow health officials’ recommended preventative precautions for COVID-19. Stay vigilant and be well.

Your 2020 President,

Barry Grooms

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Fla. Law: Proxy Votes Differ for HOAs vs. Condo Boards

A homeowner walked into a meeting with 50 proxies and asked for 50 ballots but was turned down. That might be okay for an HOA election – but not a condo board.

STUART, Fla. – Question: At our recent HOA election, an owner walked in with 50 general proxies and asked the management company for 50 ballots. The management company refused, arguing that proxies could not be used for this purpose. Is this correct? – Y.H., Boynton Beach

Answer: I should note that the law on this topic is very different under the condominium statute compared to the HOA statute. In condominiums, proxies may not be used in the election of directors. In other words, the owner must cast the secret ballot.

In a homeowners’ association, Chapter 720 does not prohibit the use of proxies in election. This means that a proxy may be used in the election of directors unless the governing documents specifically prohibit the use of proxies in this context. So, when an owner walks into the annual meeting with 50 proxies, there is merit to a request for 50 ballots but you must first analyze the bylaws to determine whether proxies are prohibited. For this reason, we recommend you consult a licensed Florida attorney to provide an opinion based on the appropriate statutes and governing documents.

Question: Our condominium recently painted our buildings and the cost was much more than the board anticipated. The owners voted to allow the board to use other reserves to fund the shortfall but the board is not adjusting the budget to catch these depleted reserve accounts up. Can the board underfund the reserves now indefinitely? – A.B., Stuart

Answer: For purposes of this question, I will assume that your association maintains straight line reserves, which provides that funding for each specific reserve component is based on its own initial balance, replacement cost and remaining useful life. The default rule is that reserve dollars set aside for the roof reserve, for example, could only be used to fund permitted roof expenditures unless the members authorize a dollar intended for the roof to be used for painting. The threshold to authorize the board to use reserves for other purposes is only a majority of those voting at a meeting where a quorum is present.

If the board borrows dollars from one reserve component to fund a shortfall in a different reserve component, the outcome is that the reserve will be underfunded unless the board takes corrective measures or unless the members continue to authorize underfunding the reserve.

For example, if the roof reserve has a $100,000 balance and needs $500,000 in 20 years, the board must set aside $20,000 each year for the next 20 years [($500,000-$100,000) / 20]. If the board borrows $50,000 from the roof reserve balance for the paint shortfall, the roof reserve will be insufficient in 20 years unless a) the cost of roof replacement decreases; b) the budget is adjusted to increase the annual contribution; c) the useful life of the roof is justifiably extended; or d) the members authorize the board to underfund the roof reserve account.

In other words, there may be a justifiable reason dictating that the reserve contribution should remain the same, but all other things being equal, the math dictates that the annual contribution should increase to make up for the shortfall. If all other things do remain equal, the board should pursue the owners’ approval to maintain a budget with underfunded reserve accounts due to the need to fund the paint shortfall.

Again, I should note that the analysis would be different if the association maintains pooled reserves because the board would not be required to get a vote to borrow from one reserve account to fund the shortfall of another account, and the overall funding calculations can be different.

Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. 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.

© 2020 Journal Media Group, Steven J. Adamczyk

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Coronavirus and Businesses: Fla. Studying Its Options

Fla. businesses are facing a threat from the COVID-19 pandemic, and Gov. DeSantis released a survey to gauge its impact so far.

TALLAHASSEE, Fla. – Florida’s businesses know what to do when a hurricane threatens: Hope for the best but plan for the worst.

The spread of COVID-19, the novel coronavirus, has caused a similar reaction, and Gov. Ron DeSantis’ office has taken steps to prepare for it.

DeSantis issued Executive Order 20-52 declaring a State of Emergency for COVID-19 and directed the Florida Division of Emergency Management to activate the Florida Emergency Operations Center (EOC) to a Level II, to coordinate the state’s response to COVID-19.

Last week, the governor issued Executive Order 20-51 directing the State Surgeon General to declare a public health emergency.

On Thursday, DeSantis announced that the state has released an Emergency Business Damage Assessment Survey for COVID-19. The survey, managed by the Florida Department of Economic Opportunity (DEO), was created as a way to evaluate businesses affected by COVID-19, and the impacts the virus has had on local economies in order to implement appropriate relief programs.

“Gathering information about the impact COVID-19 has on Florida businesses and industries will be invaluable to the state’s efforts in coordinating our response,” says DeSantis. “It is important that we understand the total impact COVID-19 has on businesses to ensure that we access the resources that may be available.”

The Business Damage Assessment Survey can be taken online, and the results will be shared with state agencies and local partners. Surveys submitted by small businesses can also be used to access the Small Business Administration’s Economic Injury Disaster Loan, made available for COVID-19 through the Coronavirus Preparedness and Response Supplemental Appropriations Act.

For inquiries or assistance with the survey, businesses can contact Emergency Support Function 18 at ESF18@em.myflorida.com.

“We need feedback from all Florida businesses to provide comprehensive information about the impacts of COVID-19 to our partners at the federal level,” says Florida DEO Executive Director Ken Lawson.

For the most up-to-date information about COVID-19 in Florida, visit the Florida Department of Health’s dedicated COVID-19 webpage. For any other questions related to COVID-19 in Florida, contact the state’s dedicated COVID-19 Call Center by calling (866) 779-6121. The Call Center is available 24 hours per day. Inquiries may also be emailed to COVID-19@flhealth.gov.

© 2020 Florida Realtors®

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Millennials: The Lion’s Share of U.S. Home Buyers

However, there are notable demographic differences between older millennials (ages 30 to 39) and younger millennials (22 to 29) who have more college debt.

NEW YORK – Millennials now represent a significant majority of U.S. homebuyers, though there are notable demographic differences between older millennials (ages 30 to 39) and younger millennials (ages 22 to 29).

According to the National Association of Realtors’ (NAR) 2020 Home Buyers and Sellers Generational Trends Report, older millennials and younger millennials represent 25% and 13% of buyers, respectively, compared to Gen Xers (ages 40 to 54) who made up 23% of the market.

Student debt interfered with down payment savings for 46% of younger millennials, with a median loan balance of $26,000, and 38% of older millennials, who had a median balance of $34,000. Across nearly all age groups, debt delayed home buying by four to five years.

While buyers across all age categories cited a home purchase as a “good investment” and the desire to own as their primary reason for purchasing, older millennials were slightly less likely than other age groups to consider a home purchase as “better than stocks” and more likely to consider it merely “as good as stocks.”

Older millennials were also the most likely to be buying as married couples and paid the highest prices for homes – a median of $282,000, compared to the overall median of $257,000 across age groups – even though Gen X purchasers came to the table with the highest incomes of any demographic, a median of $110,900.

Younger millennial buyers, on the other hand, had the highest rate of purchases by unmarried couples and the lowest median purchase price of any age group, at $206,300.

Detached single-family homes represented 83% of homes bought across all demographics, with buyers of all ages also opting for a median size of three bedrooms. Silent Generation buyers (ages 74 to 94) were the only age group moving into smaller homes, going from a median of 2,100 to 1,800 square feet.

Older boomers (ages 65 to 73) made up the largest share of sellers, at 23%.

And while younger sellers were generally interested in trading up to larger spaces, boomer sellers generally purchased equivalent or smaller spaces but moved greater distances, often to be closer to family and friends.

Source: Mansion Global (03/05/2020) Smith, Virginia K.

© Copyright 2020 INFORMATION INC., Bethesda, MD (301) 215-4688

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Environmental Bill with Higher Penalties Passes Legislature

Gov. DeSantis is expected to sign the bill. It makes numerous changes, including steeper fines for those who violate Fla.’s environmental laws.

TALLAHASSEE, Fla. – An increase in fines for environmental lawbreakers, a priority of Gov. Ron DeSantis, is heading to his desk.

The House voted 115-0 on Thursday to give final approval to a proposal (HB 1091) that would make numerous changes in the amounts and duration of penalties for violating Florida environmental laws. The Senate also unanimously backed the bill earlier in the day.

Sen. Rob Bradley, R-Fleming Island, said the proposal will “add some teeth” to enforcement efforts needed to prevent dumping sewage into waterways. It also would expand on a water-quality measure (SB 712) approved Wednesday that addresses issues such as agricultural runoff and septic tanks.

“We can’t solve these water issues unless we get a handle on these discharges,” Bradley said of the bill that passed Thursday. “And this is a really, really important step towards getting a handle on it.”

Bill sponsor Sen. Joe Gruters, R-Sarasota, said more than 500 million gallons of sewage have been spilled into waterways in the past year.

“We’ve had a spill every three hours of every day of every week for the last year, resulting over the last decade in over 3 billion gallons of raw sewage dumped,” Gruters said. “In this year alone, we’ve had in one area, one community, we’ve had three 350 Olympic-sized swimming pools that you could fill with raw sewage, dumped down to our waterways.”

Most of the changes would increase penalties by 50%. Also, the length of time certain penalties could be imposed would run until the violations are resolved by order or judgment. The duration change would be made by declaring each day an offense occurs as a separate offense.

House sponsor Rep. Randy Fine, R-Palm Bay, has argued waterways face an “existential crisis” and the intent of the law is to prevent illegal releases from being considered a “cost of doing business.”

Fine unsuccessfully sought to raise the fines a year ago, a proposal that was aimed at Brevard County for a 2017 sewage spill into the Indian River Lagoon that lasted 35 days. Fine’s solution last year was to impose a $2 fee for every gallon of raw sewage released.

DeSantis in September called for a 50% increase in fines for environmental violations. He labeled the existing structure a “slap on the wrist,” noting penalties for sewage spills are capped at $10,000 a day while pollutants are flowing.

The fines are part of DeSantis’ environmental wish list for legislators this year.

Budget negotiators have tentatively agreed to DeSantis’ call for $100 million for the Florida Forever land preservation program and putting more than $650 million into water projects, which would exceed for $625 million for the Everglades, natural springs and water projects.

The water bill approved Wednesday would, in part, shift oversight of the 2.7 million septic tanks in the state from the Department of Health to the Department of Environmental Protection.

Source: News Service of Florida, Jim Turner

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iBuyers No Longer the New Kids on the Block

Brokers may see iBuyers in 1 of 3 ways: As an insignificant trend that will go away; as a big threat to the industry; or as a niche player appealing to some sellers.

DENVER – As someone who works with technology, Parker resident Lee Sutta was willing to give a new way of selling his home a shot when he learned about it in late 2018. Sutta, who was looking to close on a new home six months out, stumbled onto a Facebook ad for a company called Opendoor. It promised an instant offer on his house with the click of his mouse and a closing date of his choosing.

“My spouse didn’t believe it,” he said of the price that came back. The couple hired a real estate agent who provided an estimate that was $5,000 under what Opendoor was offering, which settled the issue. They tried something new and it paid off for them in ways they didn’t expect.

“The value of our house plummeted, and they sold it for $35,000 less in April than what they offered for it in December,” Sutta said. “We were really lucky in that sense.”

Opendoor was the first instant or “iBuyer” to enter the metro Denver market in October 2018, and Zillow Offers came in right behind it. It marked the first time the two big players in making instant offers went head to head in a new market.

By May of last year, RedfinNow, an arm of the Seattle brokerage, and Zavvie, a Boulder company, joined the fray. And other traditional brokerages are making instant offers of their own. iBuyers have gone from nothing to something in short order, but it remains to be seen how large a share of the market they will grab.

They accounted for 2.7% of home sales in metro Denver last year, but in Raleigh, N.C., a more established market, they accounted for nearly 8% of sales, estimates Redfin, the Seattle-based brokerage.

Initially, the firms started out buying newer, bread-and-butter homes needing minimal repairs in Denver’s suburbs, ones they could resell quickly. They have since spread up and down the Front Range and are bidding on older and more diverse homes.

“It is really a lot of work to sell your home,” said Jim Lesinski, Opendoor’s general manager for Denver. “It is one of the most difficult processes that a consumer can go through. Our mission is to make it a seamless buying and selling experience.”

iBuyers market the elimination of showings and having to handle repairs. They promote the certainty of a solid offer over having to haggle with a buyer who may or may not come through. They can provide a fixed closing date, one timed to the next purchase, eliminating the costs and hassle that come with double moves.

In short, they are selling a convenience not available going the traditional route, and the market is still trying to figure what that is worth.

Paul Stone, co-owner of Hinge Real Estate Group in Denver, said the brokerage community has split into three camps when it comes to iBuyers. Some consider them insignificant players and take a “this too shall pass” attitude.

Another group considers them a huge threat to the traditional brokerage industry and claims they gouge uninformed consumers with hefty fees, unreasonable repair requests and low-ball offers.

Stone takes an in-between approach, viewing them as new players filling a niche that appeals to a certain set of sellers. Rather than fearing or ignoring them, he suggests agents cooperate with them when it makes sense. They compensate agents fairly, and they provide offers that should be presented to sellers.

Nor does he think they represent the end of the brokerage model. Stone said iBuyers are making inroads with the 20% of the market that was represented by do-it-yourself sellers, who have long been neglected.

A different approach

So who is gravitating toward the new players in the market? Lesinski said Opendoor has found a good match with new-home buyers, in that it offers a way to line up a sale precisely with the completion and closing of a new home. Unlike competitors, who prefer a closing within three months of an offer, Opendoor is willing to honor an offer for up to nine months, which might be necessary given how long some homes are taking to get built with all the construction labor shortages.

RedfinNow has found a niche in working with people who want a quick closing, such as military personnel who are deploying, people relocating for a job or sellers who had a buyer back out at the last minute, said Mike Welk, the company’s senior asset manager in Denver.

The company has gotten the time it takes to provide an offer down from 72 hours to 48 hours and is looking to tighten that even more – it has gone from start to finish in seven days.

“The quicker we can deliver the offer, the higher our acceptance rate,” he said.

But it isn’t always about speed. Clif and Michelle Briley of Westminster learned about iBuying after a friend recommended Opendoor. They were skeptical, but decided to give it a try. The working couple didn’t want to have to keep their cramped townhome spotless to appeal to buyers. Nor did they relish the idea of picking up a toddler and cat on a moment’s notice to vacate so strangers could check the place out.

But the biggest draw for the couple, who have been trying to buy a larger home for 18 months, came in having a solid offer in hand when shopping for their next home.

“We made an offer on three houses and lost on all three,” Michelle said. “We can now say that we are about to get cash on our house and we can close in 24 business days. That is a much stronger offer.”

They have gone back and forth between Opendoor and Zillow Offer, but are with Zillow Offer, which Michelle said offered better customer service. At no charge, they can continually refresh the offer as they hunt for the next house, and plan to lock in once they get a purchase lined up.

Putting a price on convenience

There are three points where iBuyers can make or lose money with consumers. The first is in the initial offer on the home. Some real estate agents accuse the firms of low-balling sellers, but iBuyers say they try to get that as close to the market price as they can.

“We believe that as we get to scale in more markets, you will see us get better,” said Viet Shelton, a spokesman for Zillow Offers. “We are not intentionally doing what people accuse us of. We always knew this was going to be challenging.”

Customers need to feel like they got a good deal or they won’t be back or make referrals. Low-balling doesn’t provide a sustainable business model, Shelton said. If anything, the data seem to show that iBuyers are still missing the mark on pricing, but in a way that disadvantages them, not consumers.

Boulderite Mike DelPrete, a real estate technology analyst, recently released an analysis that estimates in the fourth quarter Zillow Offers lost an average of $6,407 on every house it resold. That’s after accounting for the spread between the purchase price and resale price, and the fees charged to cover expenses, such as agent commissions, renovation costs, and interest. And those losses are growing rather than shrinking.

Why would Zillow or any iBuyer do that? For starters, they are new companies trying to establish a new market and shift consumer behaviors; think Uber and Lyft. They are also competing to win business, while also honing their algorithms, which should improve as they complete more transactions.

But it is also important to take a broader view of the $1.9 trillion real estate market and what the price of admission is to become a player in it.

Even if a consumer rejects an offer, Zillow has gained a valuable lead on a motivated seller, one it can refer to its “Premier Agent” network, which costs money to belong to. If it does land the offer, that opens the door to selling that customer a mortgage, which represents a $44 billion market for origination services, and title and closing services, which is a $35 billion a year market, Zillow said in its annual report.

And beyond that are a host of other services the company is exploring, such as home insurance, home renovation and moving services. Those represent markets with several-fold more revenue and profit potential than the real estate marketing niche that Zillow has historically focused on.

A more direct revenue source for iBuyers are the fees they charge sellers. As a frame of reference, traditional real estate commissions can range from around 5.5% to 6% in a transaction.

RedfinNow charges a flat 7% fee on its instant offers, while Opendoor and Zillow Offers say their fees usually fall in the range of 6% to 8%. Fees go up if their models tell them the risks are higher, such as when prices are flat and falling or homes might take longer to sell.

“It is a premium service,” Lesinski said. “Everybody has to make their own determination.”

The third area where iBuyers charge consumers are for repairs to get a home ready for resale. iBuyers claim the repairs they request the sellers cover are standard items, the kind of things a listing agent or a buyer would ask for anyway.

If a home requires major renovations or expensive repairs, they usually pass on making an offer. Rather than putting the inspection near the end of the process, it comes at the beginning, eliminating surprises and last-minute haggling that can shipwreck a transaction.

Given the increasing volume of homes they repair, iBuyers claim they can purchase materials and contractor services at a much lower rate than an individual seller can, savings they pass on. For example, Lesinski said Opendoor spent $4 million on renovations with local contractors last year.

Stone, however, said he has seen cases where iBuyers have made ridiculous requests, such as replacing a toilet that only required the bolt be tightened. And new carpet and paint are pretty much a given and, for quality control reasons, they are less willing to let owners make their own repairs.

And while iBuyers may request a long list of items to repair, sellers don’t have a contractual obligation to actually do them, something Sutta said he witnessed firsthand on his Parker home.

He let Opendoor take care of most of the repairs, other than rehanging closet doors, which he did at a quarter of the price listed. Given that his new home was close to the one he sold, he could check on what got done. He noticed OpenDoor didn’t re-stain the deck, even after charging him $600 for that.

That may have cost them on the resale, however. Sutta said he thinks iBuyers have focused so much on buying that they have neglected the resale and need to do better.

“The market shifted on them, and they had a rough time selling. I almost feel bad for them,” he said.

A true believer now

Jason Shepherd, co-owner of Atlas Real Estate Group in Denver, was skeptical when he first heard about the new business model. He viewed them as the latest in a long string of fix-and-flip models, an upscale version of We Buy Ugly Houses.

But he is a true believer now, so much so that Atlas is helping Zillow Offers buy and sell homes in Colorado. And talking to consumers gives him an insight on where things might go next.

“I wasn’t expecting it to be so well received from consumers, but it has been an overwhelming response,” he said. And one thing he keeps hearing from clients is that they won’t buy or sell real estate any other way.

Some critics argue that iBuyers are floating on rafts in a market flooded with capital. If interest rates spike or financial backers pull back, the whole process could collapse. Some iBuyers could follow the path of WeWork.

Buy iBuyers argue that flexibility is built into their model. If the market softens and homes take longer to sell, fees could go up to compensate. Anxious sellers, rather than sitting on a home for months, might be willing to pay more money to avoid that risk.

“I expect us to be in it for the long haul,” Lesinski said. “We are very good about trying to mimic the market and we price accordingly. It is highly unlikely that we could get caught in a difficult position.”

© Copyright 2020 The Denver Post Corp.. Aldo Svaldi

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COVID-19: FHFA Reminds Lenders About Owner Forbearance

Homeowners unable to work during the pandemic may have trouble making their mortgage payments, but FHA, Fannie and Freddie have ways to offer them help.

CHICAGO – Not everyone can work from home, and borrowers who find that they can’t make monthly mortgage payments due to COVID-19, also known as the coronavirus, have options to postpone payments, according to a statement released by the Federal Housing Finance Agency (FHFA).

FHFA Director Mark Calabria reminded mortgage servicers this week that they have forbearance options to offer homeowners as the virus continues its spread through the U.S.

“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said in a statement. “For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer.”

The Federal Housing Administration (FHA) also announced that mortgage payment assistance is available to those impacted by the virus.

“As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers – including those that could be impacted by the coronavirus – to help prevent them from going into foreclosure,” FHA said in a statement.

Forbearance options are available not only to those sick from the virus but also owners who may be facing a temporary hardship from it, such as a borrower who is quarantined and unable to work.

Source: National Association of Realtors® (NAR)

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Homeowners Don’t Move Much in Some U.S. Cities

2 out of 5 Detroit homeowners (39.3%) spend 30 years in the same house. Fla.’s longest-stay city is Miami Gardens (32.6%); Cape Coral has lowest ownership longevity.

MIAMI GARDENS, Fla. – Detroit has the highest percentage of homeowners who live in the same home for more than 30 years (39.3%), according to a 55places.com analysis of housing data from the U.S. Census Bureau.

The analysis focused on more than 300 cities with populations of 100,000 or more, with a focus on owner-occupied homes where homeowners have lived for at least 30 years or more.

Miami Gardens – where 32.6% of homeowners have occupied their home for more than 30 years – was the only Florida city in the Top 25.

Meanwhile, the study also created a list of cities where owners tend to move the most. Frisco, Texas, topped the top 25 list of cities in which owners had the same home for less than 10 years (43.6%).

Only one Florida city made the move-often top 25 list: In Cape Coral, 37.8% of owners have occupied their homes for less than 10 years.

During the fourth quarter of 2019, single-family home sellers in South Florida owned their homes an average of 8.4 years, up from 4.8 years a decade earlier, according to ATTOM Data Solutions.

Source: South Florida Business Journal (03/03/20) Cukier, Eileen

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How Do You Calculate a Home’s Square Footage?

No law mandates square-footage calculations, and while a national group offers guidelines, a home can be larger or smaller than the numbers listed by the county.

SEATTLE – While no laws govern a process for determining a home’s square footage, the American National Standards Institute offers guidelines to calculate it, which are largely considered the standard.

But discrepancies still exist. For example, some MLSs report all finished and unfinished square footage of a house as one number.

Since many buyers consider a home’s size important, they or their agents may need to determine what was included in the listing’s determination of the square footage of a home.

“Since square footage is used to determine a home’s market value, it can matter a lot,” according to a guide on the topic posted on Redfin’s blog. “When it comes time for you to sell, 400 fewer feet in measurement can impact the price you’ll get, particularly in a buyer’s market.”

There are some nuances to what is included and what is not. In general, below-grade spaces such as basements don’t usually count toward a home’s square footage. Even a finished basement is not usually counted toward a home’s gross living area. But it can be noted separately in the listing’s total area.

Also, garages, pool houses, guest houses or any rooms that require a person to leave the finished area of the main house aren’t usually counted either.

Covered, enclosed porches can be included as long as they use the same heating system as the rest of the house. Also, the finished attic square footage can be included as long as it has at least seven feet of clearance.

To check on the square footage, refer to a city’s building department records. But note that some unpermitted remodeling may not be reflected even in the records, so they aren’t always accurate either.

Source: “How to Easily Check the Square Feet of Your House,” Redfin Blog (March 10, 2020)

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