Archive for July, 2008

Exotic loans. FHA loans. Lending Tree can play both sides.

Via HousingWatch we learn that Lending Tree is now offering consumers the ability to shop for FHA-backed loans on their site. Some industry insiders say it’s an “interesting shift” that the mortgage lead generating service has taken, as the company gained notoriety in some circles for allegedly helping to lure unsuspecting consumers into so-called exploding ARMs during the height of the housing boom.

I actually used Lending Tree along with BankRate.com to compare loans several years ago. I had good experiences with both sites.

What say you, REALTORS®? How does this strike you?

Housing-stimulus bill realities

So the housing stimulus bill was signed into law yesterday. Is it good? Is it bad? What does it mean? (Yes, yes, and we’re gonna try to sort that out.)

First, the practicalities as they affect REALTORS®. Well, practicality, because there’s only one, but it’s a biggie: that $7,500 tax credit. It’s basically a 15-year interest-free loan for first-time homebuyers from your dear old Uncle Sam.

To take advantage, you must not have owned your home during the three-years before the purchase; you must buy a home between April 9, 2008 and July 1, 2009; and you must have an income less than $75,000 ($150,000 for married couples).

good_bad_ugly_1 So many, many people will qualify, and it’s something you need to bring up when you’re working with first-time buyers and trying to counsel them in an uncertain market.

And that, of course, is the idea: Give folks an interest-free loan and hope it convinces them to buy a home. But the housing bill is more complicated than that, and it has some notable downsides — and its share of critics.

The good

Offering first-time buyers an incentive in the form of, essentially, an interest-free loan, should help increase home sales, according to NAR. At the very least it could push some ‘fence-sitters’ over the edge and into home ownership. Supporters say even a small increase in home sales could be enough to jump-start the housing market.

The bill also extends a line of credit to Fannie Mae and Freddie Mac, and increases oversight of the companies — both these things should restore confidence in the secondary mortgage market that’s been clobbered by its over-enthusiasm on housing prices.

And the bill also allocates $300 billion, through the Federal Housing Administration, to let the government back cheaper mortgages (to bail out homeowners who can’t afford theirs) and for local governments to repair foreclosed homes and increase property values. “Mortgage relief” is a phrase that thousands of people will love to hear as they try to cope with skyrocketing payments on ARMs that reset on homes that lost value.

The bad

All these programs cost big money, money the government doesn’t have. And when government spends too much, you get inflation. Critics also point out that much of this money is going to bail out private corporations and irresponsible homebuyers, rather than letting the free market determine their fates. Many of the same critics say that this economic adjustment is necessary, and that meddling in the housing market with artificial stimuli will only postpone a full economic rebound.

(There are some other buried measures in the bill that haven’t gotten as much press, but should at least raise an eyebrow. For example, anyone working in the mortgage industry will be fingerprinted. )

While it’s easy to say that the housing bill is “great for America” or “a long-term disaster,” the reality is that, in any legislation this complex (600 pages!), there’s good and bad. And trying to predict its long-term effect on a monster economy like ours is all but impossible. So hang on.

Out on the Net

RealCentralVA brings us Ron Paul’s take: “[T]oday’s vote on the House floor dealing with the housing bubble there’s no sign that we’re about to tighten our belt and live within our means.”

From the Piedmont Real Estate Blog: “First, you should know that almost no one really likes this bill. But even those who don’t will generally admit they think it’s a necessary evil.”

Marc, a REALTOR® in Florida, offers his perspective: “It’s being touted as a panacea for our mortgage and housing market ills, but unfortunately comes nowhere near to being such.

Musings of Caroline Virginia says: “The Housing Bill that President Bush approved on July 30, 2008 appears to be a life preserver for many communities.”

Matthew Kelly of Geek Estate offers a detailed list of suggestions.

And the National Association of Home Builders has lots of information, too.

A Troubling – And Costly – Trend

Has anyone else noticed a nasty little trend emerging in their markets recently?  I have not had much experience in different types of markets – only licensed since 2004 – but one thing has been bugging me.  In the New River Valley, in 2004 – 2006, we had a really hot market and properties were moving … in 2007 it stabilized a bit, and 2008 has seen the same except in some areas.  But one thing has continued to move, and in the wrong direction.

Commissions paid.

What gives?  I’ve been feeling it in my gut for a while, and my year-end totals bear it out – year over year, the total brokerage fee I’ve received has gone down.  Last year was my best year ever in real estate, and the brokerage fee received was the lowest.  2.2%.  GULP.  I did a random sampling of twenty homes currently listed in our MLS this morning and found that of those twenty, 14 were offering 2.5% to the buyer’s agent and 6 were offering 3%.  Compare that to 2004, when, of twenty homes sampled, 12 were offering 3% to the buyer’s agent, 7 were offering 2.5%, and one was offering 2%.  I bet if we sampled every brokerage in the NRVMLS we’d find a similar trend as what I’m reporting here, and I’m wondering what people are seeing in their own markets.

The logic here seems skewed.  In a hot market, it seems sellers would be negotiating lower rates because – in part – properties would sell faster on average, and in slower markets the fees paid might be higher.
Anytime a commission is cut in order to win a listing, I as a buyer’s agent have my income reduced when I had nothing to do with the cut.  Yes – I can have a buyer sign an Exclusive Right to Represent – but I don’t offer that and so any commission that’s cut affects my bottom line.

Any thoughts on what we’re seeing?  It’s a disappointing trend, because there are many markets in Virginia where property values are falling … if others are seeing this as well, in falling markets, then some of these agents have to be gasping for air.  Are we just not defending our value to clients?  Are more and more vendors and referral companies holding their hands out (yes and yes, IMO).  Your thoughts?  What are you seeing in your market?

[Blogmaster's note: While we encourage a free exchange of views, just a reminder to readers that commissions are set by brokers and fully negotiable.]

Don’t turn around (the Policy Board’s in town)

VAR’s Policy Board is meeting today and tomorrow, which means we’ll have plenty of bloggable items to talk about — and plenty of fodder for Commonwealth (which is my main concern).

Where will future conventions be held? Will the budget be approved? Lots of questions, and answers coming soon. You’ll get them here first.

Buyers get it: longer commute = smaller house

Over the past two weeks, I have had three separate buyer clients who have decided not to pursue a home (or homes) in a particular neighborhood or town because of the distance it would put them from their place of employment.  All three work in Harrisonburg, and have decided to primarily look at properties located in the City.

These buyer were considering homes in towns roughly 20 miles away, which (if we only examine gas costs, and their work commute to Harrisonburg) would equate to roughly $2,000 of extra fuel costs per year.  (20 miles, 20 mpg, 2 trips/day, 5 days/week, 50 weeks/year, $4/gallon)

This wouldn’t include other increased costs such as:

  • fuel costs for other trips (entertainment, recreation, church, etc)
  • increased auto maintenance costs
  • changes in quality of life based on a longer commute

To put $2k/year in perspective — if these fuel savings were instead used to allow the buyers to afford a larger home, they could increase their loan amount by $26,000! (30 year fixed, 6.5%).

Are others seeing these same sort of fuel-based buying decisions in your parts of the Commonwealth?

Thanks to NAR & Keith Garner

Could it be? Frank drinking the NAR Kool-Aid?

Well when something is done right, I figured it was worthy of full props.

I just got back from INMAN in San Fran and wanted to take a moment to thank Keith Garner, managing director of NAR’s Center for Realtor® Technology.

I recently bought a $200 laptop on Ebay and he helped me install Linux on it. And at INMAN he even sat down and hacked into my computer (in a good way) to do some great troubleshooting. So I have to thank NAR for having people like Keith on board.

Commonwealth: The Last Word (July/Aug.)

Neighborhood watch: How for want of a speed bump, I’m losing my mind

 

stop_sign“You may be wondering, Mr. Brunner, why we’ve assembled this informal gathering of our homeowner association members here in your front yard this morning.”

“Uh, yes. I was just bringing the dog out to let him, um…. Could you let me throw some clothes on?”

“That’s not necessary, Mr. Brunner; you look dashing enough there in your bathrobe.” 

“Um, thanks. Well good morning, uh, neighbors.”

“I’ll get to the point, Mr. Brunner.”

“Harriett, please call me Scott…I mean, like you usually do.”

“Certainly. As president of our little association, I want you to know you’re among friends here, Mr. Brunner – friends concerned about the unusual zeal with which you have attempted to enforce safety rules here on our little cul de sac. Consider this an intervention, of sorts, Mr. Brunner.”

“Well, I…”

“We understand your interest in assuring our street is safe for the children. We share that interest. But is it not true that you have taken up the habit of accosting random service delivery vehicles here on our street and tongue-lashing the drivers for reckless driving?”

“It wasn’t a tongue-lashing, exactly. You’re talking about when I shouted “slow down” at the mail lady as she whizzed by in her little truck, right?”

“Well yes, that. And when you stopped the UPS man. And that Latino fellow from our grounds maintenance crew, who, I should note, was on a riding lawnmower at the time.”

“He was going fast.”

Continue reading Commonwealth: The Last Word (July/Aug.)

NYT op-ed: To Fight Poverty, Tear Down HUD

From this morning’s New York Times:

WITH the nation embroiled in a housing crisis, one would expect the Department of Housing and Urban Development to be playing a central role. But HUD is a marginal player. Although its Federal Housing Administration division has agreed to underwrite new mortgages, it is merely following the leadership of the Federal Reserve and the Treasury Department.

This is no accident. HUD’s sidelined role is a product of its anachronistic approach to both housing and cities. It might be best to simply close the agency and create a new cabinet-level commitment to urban development.

Complete story here.

CREST social media adoption survey #2

Take the second CREST survey as we drill down into how much business REALTORS® are getting from their blogs and what social networking tools they use in conjunction with their blogging efforts. Everyone who completes the survey gets a copy of the executive summary, so get cracking! This survey closes at 9 a.m. EDT on August 21, 2008.

Oh, by the way, the results of our first survey were released today.


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Word on the street is that mortgages are a lot harder to come by these days, but people are still buying homes. So what’s the real deal? Tell us on our new front-page poll.