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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

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

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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.

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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)

© 2020 Florida Realtors®

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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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Real Estate Q&A: Inherited Home Sales Can Get Tricky

Three siblings inherited their sister’s house upon her death, and then one of the brothers died without a will. Can the remaining two siblings still sell the house?

FORT LAUDERDALE, Fla. – Question: My sister passed away and left her house to me and our two brothers. The three of us decided to sell the house, but before we could, one of my brothers also passed away. He was single with no children and did not have a will. Can we still sell the house? – Richard

Answer: You will be able to sell the house eventually, but there will be some work to do.

After a person passes away, “probate” is the court process of gathering and distributing their property. When you probated your sister’s estate, her home was transferred to the three brothers.

You each owned a third equally. All three of you needed to work together to sell the house, which is now impossible.

Even though your brother did not have a wife or children, his estate will still need to be probated.

When someone who has a will dies, their probate is called “testate,” and the will is used as instructions to control how their possessions will be distributed.

When there is no valid will, the estate will be “intestate,” and the law will provide default instructions.

In certain situations, it can be complicated to determine who will inherit, but the decedent’s spouse will inherit, followed by the children, and then to the grandchildren. If none of these people are available to inherit, the decedent’s parents are next in line, followed by the siblings, and the list will go on.

Your next step is to retain an attorney and file a probate case. Unlike most areas of law where people can file a lawsuit themselves, probate requires using an attorney.

Within a few months, you will be able to sell the house with the help of the estate’s representative. The money from the sale will still get split three ways, with your deceased brother’s share being distributed through the probate process.

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. This article will be available for 30 days following publication.

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Can AI Match Luxury Agents With Well-Heeled Buyers?

Until recently, RE technology focused on the middle market, but the luxury market could soon see some disruption as AI helps agents connect with high-net-worth buyers.

NEW YORK – Artificial intelligence (AI) is on the rise, augmenting or changing how industries like real estate and others operate.

Until recently, real estate technology firms focused on the middle market where comparable, median-priced homes offer ample data points to feed algorithms that underline new tools and churn novel market insights in real time. However, the luxury market could see disruption as well, as some say AI can help real estate agents connect with high net worth buyers.

AI can be used to create custom ads that target sole neighborhoods or client preferences; it can automate messages and make them instant and personal. AI can also help agents expand their high-net-worth networks.

Andy Barkett, chief technology officer of AI-powered brokerage REX, says its AI tools can reach individuals across countries and cultures, placing luxury homes for sale in front of diverse shoppers. That can be a big benefit to the high-end luxury market since not many people in the world that can afford multi-million-dollar homes, which can sometimes spend years searching for a new owner, he says.

Beyond insights for high-end buyers, technology can also help agents get to know their customers – perhaps before they ever meet in person.

Source: Forbes (02/21/20) Williams, Dima

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Top Goal for Remote Workers? Feeling Like Part of the Team

While “Are they really working?” worries bosses with off-site staff, a big one should be retention: “How do I build team spirit when we’re never in the same room?”

NEW YORK (AP) – Nicolas Vandenberghe’s company has 42 staffers scattered among 36 cities in 15 countries. As technology makes it possible for people to be in constant touch while working remotely, businesses like Chili Piper are becoming the norm.

“We have Zoom, Slack, and a myriad of other collaborative tools – do we really need the in-person water cooler meetings?” asks Vandenberghe, whose business makes software to help companies manage meetings. Vandenberghe himself is continually remote, splitting his time between New York, Los Angeles and France.

Whether it means a parent working from home while caring for a sick child, a staffer who logs into a company computer daily from a coffee shop or an entire law firm that operates online, remote working is gaining momentum at small businesses. Technology that makes communication and meetings easy is a big factor in the growth of remote working, but so is the shrinking labor pool that accompanies an unemployment rate below 4% for over a year. Many companies no longer look for help close to their home base.

It’s hard to find definitive statistics on how many people work remotely. Gallup’s most recent survey in 2016 showed that 43% of employees worked remotely in at least some capacity; that was up 4 percentage points from 2012.

But even as remote working grows, business owners find managing offsite staffers involves more than giving them the latest technology. Communication, for example, can’t be left solely to videoconferencing and messaging apps like Slack. Three of Jazmine Valencia’s seven staffers are in her Los Angeles office, three are in New York and one is in Chicago. Her company, JV Agency, does marketing for the music industry. Valencia’s remote staffers can feel left out when the onsite team discusses issues.

“I have to over-communicate and make sure everyone is on the same page. This might mean more one-on-ones, more calls and sometimes just being constantly emailing or private messaging the remote team,” Valencia says. “I need to give them a sense of security.”

Owners say a remote operation can’t work without trust between a boss and staffers, especially because it can be difficult for an owner to know what an employee is doing during a workday. Tyler Forte recalls that when he first managed staffers remotely, “it was me checking on them probably too frequently.” He worried about staffers at his real estate brokerage spending time on social media.

But, “over time, you develop trust with the employee, that we’re all working toward the same goal,” says Forte, CEO of Felix Homes, based in Nashville, Tennessee. The company has staffers in Los Angeles. “Even if I’m not overseeing every move, I believe they are doing their best to advance the goals of the company.”

Forte has found project management software, an aid many owners use, helps him keep track of what everyone is doing.

Sometimes the problem is very different from staffers goofing off.

“People have this idea that if you have a remote team, they won’t work,” says Emma Rose Cohen, CEO of Final Straw, a maker of reusable straws that has a hub in Seattle. “It’s the opposite – if you hire the right people, they’re self-starters, and self-starters are often people who work too much.”

She’s alert to signs that any of her 15 staffers are spending too much time on the job, and when they tell her they feel burned out, tired, or stressed, Cohen says it’s time to take a break. And she’s very public about the fact she blocks off time for non-work things she needs to do.

One reason why employees take remote jobs is their bosses give them flextime; they can make their own hours, take time off for children’s activities or to go to the gym or walk the dog. That perk can help a small business attract and retain staffers.

But remote work is a bad fit for some employees because it often is isolating; staffers can feel disconnected and even alienated from co-workers. That can be countered to some extent through messaging channels that allow everyone to chime in on a fun discussion. Cohen has gone further, creating channels devoted to specific topics like pets or podcasts.

When Andrew DeBell hires remote staffers, he flies them to his company’s home base for interviews; that’s one way to increase the odds they’ll work well with the team at Water Bear Learning, a Ventura, California-based company that creates educational materials.

Some owners find remote work can have a stifling effect on a team’s creativity – there’s no light-bulb moments as staffers pass each other in the hallway, no riffing in a meeting, no break room chats that are unexpectedly productive.

“You’re able to feed off each other and brainstorm ideas better in person than when you’ve got several people on the phone,” DeBell says. His company has one staffer in Denver and two in Ventura. It also has a network of freelancers in the eastern U.S.

Vandenberghe encourages staffers to go to coworking spaces so they can avoid isolation. When he needs a brainstorming session, he flies staffers to where he is so they can meet in person.

Saili Gosula has a remote administrative staffer and several onsite employees at her Synergy HomeCare franchise in San Mateo, California, and all of her caregivers work out in the field. Gosula has some of the same issues as owners whose work is computer-based; she does a lot of communicating and informing, trying to be sure that all her office staff is on the same page.

As it turns out, Gosula uses some of the same skills with her caregivers, who are all working in sensitive, emotional situations as they care for elderly or sick people.

“We talk to them often, ask them how it’s going,” Gosula says. “We ask them questions every time we interact with them.”

Copyright 2020 The Associated Press, Joyce M. Rosenberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This article will be available for 30 days following publication.

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NAR Calls 2019 Advocacy Its ‘Best Year in Washington’

The association created a list of 19 advocacy “wins” last year – a diverse array of accomplishments from the environment to condo loans and even cannabis banking.

WASHINGTON – The National Association of Realtors® (NAR) called 2019 its “best year in Washington” based on successful advocacy programs. According to Senior Vice President of NAR Government Affairs Shannon McGahn, “look behind all the political news, and you will find one of NAR’s best years for federal advocacy in a long time – maybe ever.”

She says NAR compiled a list of 19 federal policy accomplishments from 2019 that “should give every one of our 1.4 million members reason to cheer.” She says those 19 issues aren’t the entire story, but it “showcases how hard our brilliant and talented team of advocates fought for your business last year.”

The entire list – 2019 NAR Advocacy Success – is posted online.

NAR helped secure a one-year extension for flood insurance and a seven-year extension for terrorism risk insurance, for example. It got an extension for excluding forgiven mortgage debt from federal taxes. And, after a 10-year fight, NAR helped secure new FHA condo-loan policies that should lead to more condo sales – a major benefit for Florida, notably its first-time buyers.

“NAR was busy in the courts, too, filing amicus briefs in cases surrounding both the Consumer Financial Protection Bureau and Association Health Plans,” McGahn adds.

NAR says it also has high expectations for 2020. In January, NAR leadership stood alongside President Donald Trump to unveil new environmental reforms, and later to attend a bill signing ceremony for the USMCA trade agreement (the new NAFTA).

“NAR strongly supported these efforts, and in the case of USMCA, we even partnered with the Canadian and Mexican Realtors to help get the deal across the finish line,” McGahn says.

Realtors can help boost the advocacy efforts of Florida Realtors and NAR by giving to Florida Realtors PAC.

“And speaking of support – thanks again to all our members!” McGahn adds. “Because of your support, our voice is one of the loudest and most respected in Washington. And the results show!”

© 2020 Florida Realtors®

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People without REAL ID Can’t Board Airplanes After Oct. 1

If your driver’s license isn’t REAL ID compliant, you’ll be grounded – banned from flying internationally to pursue real estate deals or see grandkids in Ohio.

ORLANDO, Fla. – The federal REAL ID Act of 2005 updated the standards for driver’s licenses and ID cards. It created new safety standards for forms of identification and rolled out enforcement in a series of phases.

After Oct. 1, 2020, any U.S. citizen hoping to board an airplane must produce an acceptable form of ID under the new standards. If using a driver’s license, it must be REAL ID compliant as outlined in the Act. In general, REAL ID complaint licenses have a gold star near the upper right corner.

The change largely applies only to IDs required to board a plane. All Florida drivers licenses issued within the past few years are REAL ID compliant, but some residents who haven’t renewed a driver’s license lately will still have non-REAL ID ones. Those will remain legal for driving until their expiration date; however, they won’t be valid for boarding an airplane.

For more information on REAL ID licensing, visit the Florida Department of Highway Safety and Motor Vehicles website.

© 2020 Florida Realtors®

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Coronavirus Fears Could Have a Market Impact

Fla. has no coronavirus victims and may never have one, but fear of the virus may have a greater impact than the actual disease. World outbreaks could slow international home sales, and stock market declines could convince some Americans to sit tight and wait it out.

NEW YORK – Global stock markets plunged further Friday on spreading fears over the impact of the new coronavirus, with some indexes set to close out their worst week since the depths of the financial crisis in 2008.

Germany’s DAX skidded as much as 5% before stabilizing, Tokyo and Shanghai closed 3.7% lower. Wall Street looked set for more losses a day after enduring its biggest one-day drop in nine years. Futures for the Dow Jones Industrial Average and S&P 500 were down 0.4%.

Investors had been growing confident the disease that emerged in China in December might be under control. But outbreaks in Italy, South Korea, Japan and Iran have fueled fears the virus is turning into a global threat that might derail trade and industry.

Anxiety intensified Thursday when the United States reported its first virus case in someone who hadn’t traveled abroad or been in contact with anyone who had.

Virus fears “have become full-blown across the globe as cases outside China climb,” Chang Wei Liang and Eugene Leow of DBS said in a report.

In Europe, London’s FTSE 100 sank 2.9% to 6,599 and Frankfurt’s DAX tumbled 3.3% to 11,955. France’s CAC 40 lost 2.7% to 5,346. The Stoxx Europe 600 index is heading for its sharpest weekly drop since October 2008.

Markets in China and Hong Kong had been doing relatively well despite virus fears. Mainland markets were flooded with credit by authorities to shore up prices after trading resumed following an extended Lunar New Year holiday. Chinese investor sentiment also has been buoyed by promises of lower interest rates, tax breaks and other aid to help revive manufacturing and other industries.

But now, major companies are issuing profit warnings, saying factory shutdowns in China are disrupting supply chains. They say travel bans and other anti-disease measures are hurting sales in China, an increasingly vital consumer market.

On Thursday, the S&P 500 fell 4.4% to 2,978.76. The index is down 12% from its all-time high a week ago, putting the market into what traders call a correction.

Some analysts have said that was overdue in a record-setting bull market, though Mizuho Bank noted hitting that status in just six days was “the fastest correction since the Great Depression” in the 1930s.

Investors came into 2020 feeling confident the Federal Reserve would keep interest rates at low levels and the U.S.-China trade war posed less of a threat to company profits after the two sides signed a truce in January.

The market’s sharp drop this week partly reflects increasing fears among many economists that the U.S. and global economies could take a bigger hit from the coronavirus than previously thought, weakening consumer confidence and depressing spending.

The Dow shed 1,190.95 points on Thursday, its largest one-day point drop in history, bringing its loss for the week to 3,225.77 points, or 11.1%. To put that in perspective, the Dow’s 508-point loss on Oct. 19, 1987, was equal to 22.6%.

“It is a race to the bottom for U.S. indices,” Jingyi Pan of IG said in a report. “It may still be too early to call a bottom given the uncertainty around the matter of the coronavirus impact.”

U.S. bond prices soared Thursday as investors fled to safe investments. The yield on the benchmark 10-year Treasury note, or the difference between the market price and what an investor will be paid if the bond is held to maturity, fell to a record low of 1.16%.

A shrinking yield caused by investors shifting money into the relative safety of bonds and pushing up their market price is a sign of weakening confidence in the economy.

Most access to the city of Wuhan, a manufacturing hub of 11 million people at the center of the outbreak, was suspended Jan. 23. The Lunar New Year holiday was extended to keep factories and offices closed. The government told the public to stay home.

China has begun trying to reopen factories and other businesses in areas with low risk after shutting down much of its economy to stem the spread of the infection. Travel controls remain in effect in many areas and elsewhere governments are tightening anti-disease controls as new cases mount.

Japan is preparing to close schools nationwide and officials on the northern island of Hokkaido, where there are more than 60 confirmed cases of the virus, declared a state of emergency and asked residents to stay home over the weekend if possible. Saudi Arabia has banned foreign pilgrims from entering the kingdom to visit Islam’s holiest sites. Italy has become the center of the outbreak in Europe.

“The more countries that are faced with fighting a pandemic, the wider the potential for economic disruption and potential for increased recessionary risks,” said Tai Hui of J.P. Morgan Asset Management in a report.

Copyright 2020 The Associated Press, Joe McDonald. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. This article will be available for 30 days following publication.

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NAR: Pending Home Sales Rise 5.2% in January

Economist Yun: “Solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates.”

WASHINGTON – Pending home sales rebounded in January following a decline in December, according to the National Association of Realtors® (NAR). Only the West region reported a minor drop in month-over-month contract activity, as the other three major regions saw pending home sales grow.

Year-over-year pending home sales activity was up in all four regions and up nationally compared to one year ago.

The Pending Home Sales Index (PHSI) – a forward-looking indicator based on contract signings – grew 5.2% to 108.8 in January. Year-over-year contract signings increased 5.7%. An index of 100 is equal to the level of contract activity in 2001.

“This month’s solid activity – the second-highest monthly figure in over two years – is due to the good economic backdrop and exceptionally low mortgage rates,” says Lawrence Yun, NAR’s chief economist.

“We are still lacking in inventory,” he adds, noting December’s and January’s combined supply was at the lowest level since 1999. “Inventory availability will be the key to consistent future gains.”

Pointing to data from active listings at realtor.com, Yun says the year-over-year increases show a strong desire for homeownership. Markets drawing some of the most significant buyer attention include Fort Wayne, Ind.; San Francisco, Calif.; Sacramento, Calif.; Lafayette, Ind.; and San Jose, Calif.

“With housing starts hovering at 1.6 million in December and January, along with the favorable mortgage rates, among other factors, 2020 has so far presented a very positive sales climate,” Yun says. “Moreover, the latest stock market correction could provide exceptional, even lower mortgage rates for a few weeks, and that would help bring about a noticeable upturn in the coming months.”

Regional breakdown: The Northeast PHSI rose 1.3% to 92.9 in January, 1.2% higher than a year ago. In the Midwest, the index increased 7.3% to 105.3 last month, 6.5% higher than in January 2019.

Pending home sales in the South grew 8.7% to an index of 129.4 in January, a 7.1% increase from January 2019. The index in the West declined 1.1% in January 2020 to 92.6, still a jump of 5.5% from a year ago.

© 2020 Florida Realtors®

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Mortgage Rates Decline; 30-Year Loan at 3.45%

The coronavirus outbreak spooked markets and investors’ move to bonds pushed long-term mortgage rates lower this week. One year ago, the average FRM was 4.35%.

WASHINGTON (AP) – U.S. long-term mortgage rates declined this week as growing concern over the economic impact of China’s viral outbreak spurred a steep downturn in global stock markets.

Mortgage buyer Freddie Mac said Thursday the average rate for a 30-year fixed-rate mortgage fell to 3.45% from 3.49% last week. Rates are far below year-ago levels: the benchmark 30-year loan averaged 4.35% a year ago.

The average rate on a 15-year fixed mortgage slipped to 2.95% from 2.99% last week. The slide in stock prices pushed investors to buy up U.S. Treasury securities, viewed as a safe haven in the event of an economic downturn.

The rush of investors toward U.S. government securities pushed the yield on the 10-year Treasury note sharply lower. It marked a record low of 1.28% Thursday morning. Long-term mortgage rates usually follow the yield on the 10-year note.

The decline in mortgage rates in recent months and the solid economy have pushed up demand for housing. Americans signing contracts to buy homes jumped 5.2% in January from the previous month, the National Association of Realtors reported Thursday.

Real estate brokerage firm Redfin said its agents are seeing an escalation in competition and bidding wars among would-be homebuyers. “As buyers snatch up available homes, we see more competition and higher prices on the horizon,” said Daryl Fairweather, Redfin’s chief economist.

Freddie Mac surveys lenders nationwide between Monday and Wednesday each week to compile its mortgage rate figures. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages was unchanged from last week at 0.7 point. The average fee for the 15-year mortgage also was steady, at 0.8 point.

The average rate for a five-year adjustable-rate mortgage fell to 3.20% from 3.25% last week. The fee remained at 0.2 point.

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

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What Do Homeowners Fear Most? Unexpected Major Repairs

A survey of 1,500 Americans found that only 18% “don’t have any housing worries.” 1 in 3 worry about major unexpected repairs; 17% fear home prices will go down.

NEW YORK – Homeowners are sitting on a record amount of equity, so what has them so worried about housing? A new study by LendingTree surveyed more than 1,500 Americans to gauge their expectations of homeownership.

Their No. 1 worry? Upcoming repairs needed on their home. Nearly one-third of respondents (32%) cited major home repairs as their top housing-related worry.

More than half of respondents surveyed say that homes are becoming less affordable in their neighborhoods. As a result of those higher prices, they plan to stay put longer. And as a result of staying longer, nearly three out of four respondents are considering renovations.

Of those considering renovations this year, 53% said they were motivated by a desire to increase their home’s value. Other reasons were to give the home an updated look (24%), make the home easier to sell (22%) and add more space (9%).

While rising home prices have some homeowners concerned, they’re still upbeat about the housing market overall – and they’re upbeat about their equity: 55% of respondents said they believe their home’s value will improve this year; and 68% said they believe homeownership is a good investment.

But rising home prices do spur concerns for them about affordability: 53% predict housing will be less affordable over the next decade. Gen Xers and baby boomers – at 53% and 57%, respectively – are the most pessimistic about housing affordability.

Overall, about 1 in 5 homeowners (18%) have no housing worries. Of those who do, the following tops their list:

  1. Will have to make major repairs: 32%
  2. Home value will go down: 17%
  3. Mortgage payment will increase: 13%
  4. It will be hard to find a new house: 8%
  5. Won’t be able to sell the house: 6%
  6. Will become underwater on their mortgage: 4%
  7. Other: 2%

Source: “LendingTree Survey: More Than Half of Homeowners Expect Home Values to Rise in 2020,” LendingTree (Feb. 24, 2020)

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

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What’s the Fastest Way to Improve a Credit Score?

Buyers may be able to boost their credit scores by 15-20 points in only a few months by paying bills on time and lowering their credit card balance.

NEW YORK – The higher your credit score, the better your chance to snag a lower mortgage rate and potentially save tens of thousands of dollars over the life of a loan. But one missed payment or a default can instantly bring a credit score down.

“Depending on your credit history, a 15- or 20-point shift could mean the difference between being approved or declined – or better terms or higher costs,” says Rod Griffin, the director of public education at Experian.

The top way to increase your credit score: Pay your bills on time and reduce your credit card balance. That habit alone can improve a score as quickly as within a few billing cycles.

“As a rule of thumb, you could see an appreciable difference in six months,” says Ted Rossman, an industry analyst at CreditCards.com.

However, “if a missed payment has dragged your score down, your score could rebound in a month or two; a series of late payments will take longer to make a full recovery,” Griffin adds.

The recovery for a late mortgage payment can take about nine months for a credit score to recover. Filing for bankruptcy could take as long as five to 10 years.

The overall credit history of the borrower plays a significant role in how fast they can recover from financial mishaps, says Griffin. But “the better your scores are to start with, the more difficult it is to improve them.”

A lower credit score reflects a pattern of missed payments, so adding one more missed payment isn’t as significant. But a person with a clean credit report who misses a payment will see a bigger impact, Miron Lulic, founder and CEO of SuperMoney, told CNBC.

However, the goal needn’t be a perfect score, but “the goal is to have a score that qualifies you for the best terms of rates, generally 750 or above,” Griffin says.

Overall, credit scores recently have been at an all-time high, according to FICO. FICO credit scores range from 300 to 850.

Source: “Here’s How to Improve Your Credit Score Right Away,” CNBC (Feb. 25, 2020)

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

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3 Fla. Cities in iBuyer Top 20 – but Still Not That Many

Study: About 1% of homes sold in 2019 went to an iBuyer, but while Orlando ranked 13th nationally (No. 1 in Fla.), only 2.2% of its home sales involved an iBuyer – and it was one of the few cities to see a decline compared to its 2018 iBuyer sales (2.6%).

SEATTLE – Raleigh, N.C., led the nation with the highest market share of iBuying activity in 2019, followed by Phoenix, Charlotte and Atlanta, according to new study on iBuyers released by Redfin. Redfin used MLS and public records data on home purchases and sales to track national iBuyer purchases from firms like Opendoor, Zillow, Offerpad and RedfinNow.

iBuyers are a growing group of companies that use technology to pitch instant offers to home sellers. They’ll purchase homes in all-cash transactions, allowing sellers to pick the closing date and bypassing selling publicly on the MLS. iBuyers tend to charge sellers a higher fee than a traditional real estate agent for the convenience.

A growing group of Wall Street-backed iBuying firms are competing for home sellers, but brokerages – like Keller Williams, Redfin, and Coldwell Banker – are jumping in with their own spin on instant offers as well.

While iBuyers present a new and growing element of the real estate market, however, they didn’t play a big factor in overall 2019 sales. In the 200 metro areas of the study, iBuyers purchased only one out of every 100 homes (1%). However, that’s almost double their market share in 2018.

Raleigh had the highest iBuyer market share in the country with 7.3% of homes purchased by an instant offer (up from 3.9% in 2018). Phoenix had 5.9% of its housing inventory purchased by an iBuyer, followed by Charlotte. N.C., and Atlanta (5.2% each) and Las Vegas at 4.1%.

Florida had three cities in the iBuyer top 20: No. 13, Orlando, had iBuyers involved in 2.2% of its 2019 home purchases (a decline from 2.6% in 2018). At No. 16, Jacksonville had 1.9% (0% in 2018). And at No. 18, Tampa had 1.5% (1.2% in 2018).

By numbers alone, Phoenix had the largest number of homes purchased by an iBuyer in 2019 at more than 5,200, followed by Atlanta at more than 4,300 and Houston at 2,100.

“It’s no surprise Raleigh and Phoenix led the nation in iBuyer share because those housing markets are iBuyer sweet spots and are poised for price growth in 2020,” says Daryl Fairweather, Redfin’s chief economist. “These markets work well for iBuyers, which tend to purchase homes that are relatively affordable, were built within the last few decades and are easy to price accurately because they are located in tract neighborhoods with largely homogenous housing stock. iBuyers also try to buy homes that will likely retain or increase in value over the short period between purchase and sale. Our forecasts indicate that both Phoenix and Raleigh will have strong price growth in 2020.”

Fairweather predicts that those metros experiencing strong iBuyer activity will also likely see a 2020 growth in home sales.

“It’s a seller’s market right now, but this can be a double-edged sword for sellers who also are looking to buy,” Fairweather says. “iBuyers are a big help for folks who need the equity from their current home to buy the next, and who want the flexibility of lining up their sale with the purchase of their new home. Homeowners who may have been reluctant to sell because they were concerned about carrying two mortgages or worried about the stress of choreographing two transactions may be persuaded by the convenience of an iBuyer sale.”

Source: “Raleigh Led the Nation in iBuyer Market Share in 2019, Followed by Phoenix, Charlotte and Atlanta,” Redfin Blog (Feb. 25, 2020)

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

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When is a closing agent not an escrow agent?

It’s not a trick question. An escrow agent oversees just that – escrow – and a closing agent oversees closings. It’s still confusing for a few Realtors, however, because the same person often does both tasks. After a while, these Realtors start thinking they’re the same thing.

ORLANDO, Fla. – In completing one of the Florida Realtors contracts, there are spaces for the escrow agent’s information, including name, address, and telephone number. Not only is this information required per 61J2 14.008(2)(b) of the Florida Administrative Code, aka your FREC rules, but it lets the buyer know where to place the deposit once due under the contract.

Separate and apart from that section of a contract, there is another section that addresses who chooses the closing agent.

The key: These are two separate roles.

Pragmatically, however, the same entity often performs both functions – and that’s why the escrow vs. closing agent issue becomes confusing – and an assumption those roles are interchangeable isn’t a good one.

An example of what can go wrong

Let’s say the buyer wants his attorney to hold the deposit and has put the attorney’s information in the appropriate escrow-agent spot in the contract. The seller wants to choose the closing agent and has checked the corresponding box for him to do so.

The contract says the deposit is due three days after the effective date, and the buyer sends the money to his attorney as specified in the contract. The seller, however, contacts the title company to confirm the deposit and is told that the buyer’s money isn’t there. The upset seller contacts the buyer and asks where the funds are. The buyer tells the seller that they were sent to his attorney, per the contract.

The seller is upset. He believes the money should be with the title company he chose as the closing agent. Is the buyer in default? Can the seller demand the funds be placed immediately with the title company?

In short, the answer to both questions is no. Of course, the buyer needs to make sure the deposit is sent to the closing agent in an appropriate amount of time before closing, but the buyer isn’t in default. If the seller wanted to have the money with his chosen closing agent, he should have changed the information in the escrow agent section of the contract since the two are not one and the same.

As always, careful reading of any contract can often avoid confusion later.

For more information on confirming that an escrow deposit has been received, see “Agents Must Send Copies of Escrow Checks – Right?” in the July 17, 2019, issue of Florida Realtors Legal News.

Meredith Caruso is Associate General Counsel for Florida Realtors

© 2019 Florida Realtor®

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Rules vs. Access When Screening for Assistance Animals

A 1988 amendment to the Fair Housing Act added disability as a protected class, and the change continues to spark a lot of Legal Hotline questions. In general, however, accommodation should be the goal rather than searching for a reason to deny.

ORLANDO, Fla. – The Fair Housing Amendments Act of 1988 added disability as a protected class when it comes to fair housing. Simply put, that means that housing providers (definition includes owners and rental agents, among others) cannot refuse to make reasonable accommodations in rules, policies, practices, and services to afford a person with a disability equal opportunity to occupy and enjoy full use of a dwelling.

Although discrimination can take many forms, the most common ways the disabled person would be protected is by being entitled to a waiver of no-pet policies, not having to make a pet deposit, and being free from any other burdens placed on them because of the assistance animal.

Here’s a recent case that helps illustrate why respectful, interactive discussion should be the correct tone any time a request is received. It also shows how accommodation should be the goal as opposed to searching for a reason to deny.

A Florida condominium association was faced with a request for a waiver of the pet weight limit contained in its rules. The request included this note from a health care professional:

Due to mental illness, [unit owner] has certain limitations regarding social interaction and coping with stress and anxiety. In order to help alleviate these difficulties, and to enhance his ability to live independently and to fully use and enjoy the dwelling unit, I am prescribing an emotional support animal that will assist [unit owner] in coping with his disability.

This was followed up a few days later with a second note clarifying that the unit owner already has a therapeutic relationship with a specific dog that was over the association’s weight limit for pets.

Rather than accommodate the request, the association sent the following letter:

1. What is the exact nature of your impairment? How does it substantially limit a major life activity?

2. How long have you been receiving treatment for this specific impairment?

3. How many sessions have you had with [the doctor who wrote the note]?

4. What specific training has your dog received?

5. Why does it require a dog over 25 pounds to afford you an equal opportunity to use and enjoy your dwelling?

The unit owner provided a third brief note from the doctor responding to these questions. The association sent two additional lists of questions, each more detailed than the last, but the unit owner stopped responding after providing the third doctor’s note.

Complaints were filed with HUD and the Florida Commission on Human Relations, and a lawsuit was filed against the association. This resulted in a lengthy court battle, which included a jury trial and an appeal. What was the ultimate outcome for the association? The association had to waive its pet restriction. Additionally, it owed $5,000 to the unit owner, as well as $127,512 in attorney fees.

Although there may be bad actors out there abusing the broad definition of disability currently in place, this case illustrates the dangers an aggressive tone can present. It’s also a reminder that the definition is broad and can cover many types of health issues that may not be readily apparent. A respectful, interactive conversation is crucial so that housing providers can meet the burden of making reasonable accommodation for all persons who are disabled.

For more information on best practices in assistance animal screening, refer to a new 19-page memo issued on Jan. 28, 2020.

Joel Maxson is Associate General Counsel

© 2019 Florida Realtors®

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Dear Anne: I Lost My Arbitration – Now What?

Most commission disputes involve two agents who are absolutely certain they deserve the money – but one must lose out. What happens next? Can a local board ask for the funds? Does a procedural review give the losing agent a do-over and new chance to keep the money?  

ORLANDO, Fla. – Dear Anne: I sat through a four-hour arbitration with my broker and, to my shock, the arbitration panel found in favor of the cooperating agent. I was the listing agent on this deal, and I am the procuring cause of the sale.

You would think a panel of five experienced real estate agents could get it right. But apparently not. It should have been a slam-dunk decision in my favor.

I won’t bore you with the details, but I found it offensive when I learned my local board is helping the so-called “winners” collect their commission. My broker received an email from board staff reminding him to deposit my commission into the board’s escrow account so they can hold the money while I decide if I want to file a procedural review or take this thing to court. If I don’t do either, they will disperse the money to the complainant.

I’m going to file a procedural review that I understand is an appeal of sorts for arbitration because the board needs to be put on notice their arbitration panel got it wrong. But one thing is for sure: Neither the board nor the complainant will see a dime of my commission under any circumstance. I earned it, it’s spent, end of the story.

There is nothing they can do to me. So, what do you think of this escrow debacle? Signed, It’s My Money

Dear, It’s My Money: Apparently you like using “I” and “my” a lot. You’re right there is nothing they can do to you, assuming the “they” you are referring to is your local board. Here’s an overview of the process:

  • Arbitration is between brokers because compensation is offered and accepted by brokers; therefore, your broker is the one on the proverbial hook – not you. And yes, you participated in the arbitration hearing only because you have a financial interest in the outcome, but you are not a party to the arbitration. Filing for arbitration and procedural reviews must be done by your broker.
  • Your broker has 10 days from the transmittal of the award to pay the prevailing party or deposit the disputed funds into the board’s escrow account for safekeeping. Absent a request for a procedural review or notice of intent to initiate a legal challenge within the timeframes specified under the National Association of Realtors®’ (NAR) Code of Ethics and Arbitration Manual, the award becomes final and the board releases the money to the prevailing party.
  • Failure to deposit the funds into the board’s escrow account will result in your broker receiving an invitation to appear before the board of directors to explain why they did not comply with this policy, which means your broker could be found in violation of a membership duty and the Board of Directors may impose disciplinary sanctions or be given more time on the clock to pay the award or deposit it into the Board’s escrow account. If the deposit isn’t paid within the time set by the Directors, discipline may be imposed automatically. If you don’t believe me, click here to learn more.

A lot of folks seem to think a procedural review is a second chance to have their case heard all over again before a new panel. It is not.

Quite the contrary, the purpose of the procedural review is to address alleged procedural deficiencies or irregularities that could constitute a deprivation of due process. The question is: Did something go wrong that resulted in depriving your broker of his due process rights? The laundry list of procedural deficiencies or irregularities could include:

  • Fraud
  • Coercion
  • Bias
  • Prejudice
  • Evident partiality and more

For example, your broker is entitled to have his case heard before an impartial panel. If a panelist’s manner of questioning appeared to bias in nature, the board of directors could overturn the award and send the matter to a new hearing panel or release the parties to go to court. Another possible flaw: The arbitration hearing officer didn’t allow your broker enough time to review and prepare for evidence he was not aware of prior to the hearing.

When your broker files for a procedural review, the board president or his/her designee will review the request to see if there is a legitimate basis (procedural deficiencies) for the review, like those I have already identified. If the request for a procedural review is based on the undesired outcome of the arbitration, it will be returned to your broker because it’s not a legitimate basis for the procedural review.

Hint: A procedural review is just that – a review of procedures and not a review of the decision itself.

However, if your broker insists that the request goes as written, the matter will be forwarded to the board of directors anyway. Why? Because it is the broker’s due process right to appear before the board of directors. If the board of directors concludes that there was no significant deprivation of due process, the arbitration panel’s award will more than likely be upheld.

The board is not trying to be difficult or take sides. It’s simply following NAR’s policies of enforcement. I suspect, if the tables were turned and you were on the side of the prevailing party, you would be in favor of the board having an escrow account.

Your comments about those who sat on the arbitration tribunal are unfair. These members take time away from their businesses to serve on tribunals. They attend annual training and want to make a positive difference by making the best decision possible based on the facts, testimony and evidence you presented to them.

The quality of your presentation before a panel falls on your doorstep, not the panel’s. And who knows what the outcome of the arbitration will be. One thing that is sure: The panel didn’t see this as a slam-dunk case in your favor.

If you go in believing you’ve got a win in the bag, you’re likely doing yourself a disservice. It’s an attitude that could end up getting you where you are today.

Anne Cockayne is Director of Local Association Services for Florida Realtors

© 2020 Florida Realtors®

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Fla. Legislature Bill Would Regulate Local Impact Fees

If passed and signed by the governor, House and Senate bills would create new oversight for the money local governments charge developers to boost infrastructure.

TALLAHASSEE, Fla. – Companion bills currently in the Florida Legislature’s House and Senate could create new regulations overseeing the impact fees charged by local governments for new real estate developments. Both houses still need to pass the bills and Gov. Ron DeSantis must sign them before they become law. If that happens, they would become effective on July 1, 2020.

Impact fees are imposed to fund the local infrastructure needed to meet the demands of the population growth caused by a development.

A staff analysis of the House bill, HB 637, says local impact fee ordinances must meet certain minimum statutory criteria: The calculation of an amount due must have a “rational nexus both to the need for additional capital facilities and to the expenditures of funds collected and the benefits accruing to the new construction”; and fee collection must occur after issuance of the building permit.

However, the imposition of various types of impact fees – ones targeted for different infrastructure needs – is currently at the discretion of each local government. The related bill in the Senate is SB 1066.

The bill requires counties, municipalities and special districts that adopt, collect or administer an impact fee to calculate the amount based on the most recent and localized data collected within the last 36 months and exclude any cost that doesn’t meet the definition of “infrastructure,” according to the staff analysis.

A local government must segregate revenues and expenditures of any impact fee that addresses the infrastructure needs in a separate impact fee trust fund. New or increased impact fees may not apply to current or pending permit applications submitted before the effective date of an ordinance imposing a new or increased impact fee.

The bill makes impact fee credits assignable and transferable from one development or parcel to another, providing they’re within the same impact fee jurisdiction and the same type of public facility to which the fee applies.

A local government must provide impact fee credits or other forms of compensation where a contribution is greater in value than the applicable impact fee.

The bill requires each county or municipality assessing impact fees to establish an Impact Fee Review Committee composed of seven full-time members and three alternate members. The Committee shall:

  • Establish policy and methodology for determining impact fees on new developments
  • Review proposed impact fees on each new development before the fee becomes final
  • Submit recommendations to the county or city commission
  • The recommendations must be presented at the meeting at which the impact fee on the new development will be discussed and voted
  • Review all proposed expenditures of the impact fee after adoption by the local government to ensure that the fee is used for capital projects within the jurisdiction

© 2020 Florida Realtors®

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The Big Question: What Are Boomers Going to Do?

Boomers’ choices will impact the housing market. Will most hunker down in their current home? Will their kids’ demand more multi-gen homes? No one knows yet.

NEW YORK – The octogenarian population in the U.S. is projected to double over the next two decades, and that could change what households are looking for in their next home.

A large portion of the 80-something population will likely end up in senior housing or assisted living, but their first choice tends to be moving in with family. That will likely spark greater interest in homes with an “in-law unit” or garage apartment.

Investors and homebuilders are putting more focus on multigenerational living in single-family housing, believing it will be a bigger trend as the so-called “silver tsunami” strikes the housing market.

National Association of Realtors®’ data found that 12% of multigenerational home purchases were made with the intention of moving in aging parents, and a lot more shoppers may already have multi-gen households on their minds: Research from John Burns Real Estate Consulting suggests that more than 40% of Americans are shopping for a home with their older relatives in mind.

That number of multigenerational households is expected to grow as baby boomers get older. From 2011 to 2016, the number of households headed by baby boomers age 65 to 74 increased to more than 17 million – a 26% increase. Harvard University’s Joint Center for Housing Studies’ data also showed that the number of head-of-households 80 or older rose by 71% in that time.

But many seniors don’t really want to move.

“Interestingly, the option that may contribute most to the affordable housing crisis is ‘aging in place’ – where seniors simply stay put in the homes they bought 40 or 50 years ago, even though they can’t use the space anymore,” The Motley Fool reports. “It’s the status quo, but it’s a problem for millennials struggling to gain a foothold.”

These staying-in-place seniors, however, may be more willing to move in with their family; and, as a result, more buyers may be looking for a home that can accommodate multiple ages under one roof.

Source: “Will Your Next Home Have Room for an Aging Parent?” The Motley Fool (Feb. 17, 2020)

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