Daily Real Estate News July 26, 2006Bad Appraisals Lead to Big Problems LaterThere are concerns that many of the mortgages originated in recent years involved inflated appraisals, leaving homeowners owing more than their property may be worth. These owners could encounter problems of they seek to refinance adjustable-rate loans to avoid higher monthly payments.
Meanwhile, sellers might have to slash their asking prices, and lenders could post substantial losses if borrowers are forced into foreclosure. Much of the problem stems from conflicts of interest, as appraisers are hired by loan officers and mortgage brokers, and appraisers depend on them for repeat business.
These loan officers and mortgage brokers are compensated only for completed transactions, prompting some to pressure appraisers to achieve a particular valuation that will allow a transaction to go through.
Research indicates that brokers orchestrate 50 percent of mortgages, and they are not governed as strictly as lenders at the state level. Inflated appraisals also result from the inclusion of comparative home sales data in the valuations, as it is virtually impossible for appraisers to know if such things as landscaping and closing-cost assistance are included in new-home prices. As a result of these concerns, Congress is considering increasing regulation of appraisers.
Wednesday, July 26, 2006
FULL COMMENTARY IN USA TODAY, JULY 26
In commentary published Wednesday in USA Today, NATIONAL ASSOCIATION OF REALTORS® President Thomas M. Stevens illustrates the ultra-competitive nature of the real estate business and says the Internet has boosted demand for real estate professionals.
We Compete, Clients Benefit
America’s real estate industry is one of the most competitive business environments in the world, characterized by low barriers to entry, intense personal client service and performance-based compensation.
There are approximately 2.6 million real estate licensees in the United States — one for every 83 adults. Nearly 1.3 million of these are REALTORS® who agree to abide by a strict code of ethics. Virtually every business model is represented in our membership, and we believe in the power of the marketplace to drive innovation and foster change.
Firms and agents fiercely compete with each other for listings and sales on the basis of service, reputation and price. New business models, such as limited service firms and Internet-based brokerages, as well as traditional firms and discount models, offer consumers a range of options to work with professionals in residential real estate rarely seen in other professional services. Brokerages and the nation’s 900-plus REALTOR®-owned and operated multiple listing services have invested billions to make their listing information data freely available online to the public, a decision that has fostered innovation and made real estate one of the biggest commercial uses of the Internet.
Increased consumer access to real estate information online is redefining how consumers engage real estate services and may be contributing to the growth of real estate markets and a high level of competition. Potential sellers are more knowledgeable about property values, alternatives, and service options. Better informed consumers demand more of their real estate agents and other service providers. More choices and new ways of doing business are paying off for consumers.
On a national basis, competition and greater efficiency resulting from innovation have paid off for consumers; on a national basis, the average commission has declined 16 percent since 1991.
The fact is that unlike other businesses, where the Internet has diminished the role of the professional, the opposite is occurring in real estate. More families than ever are turning to real estate professionals to help them buy or sell a home.
Tom Stevens is President of the NATIONAL ASSOCIATION OF REALTORS®
We Compete, Clients Benefit
America’s real estate industry is one of the most competitive business environments in the world, characterized by low barriers to entry, intense personal client service and performance-based compensation.
There are approximately 2.6 million real estate licensees in the United States — one for every 83 adults. Nearly 1.3 million of these are REALTORS® who agree to abide by a strict code of ethics. Virtually every business model is represented in our membership, and we believe in the power of the marketplace to drive innovation and foster change.
Firms and agents fiercely compete with each other for listings and sales on the basis of service, reputation and price. New business models, such as limited service firms and Internet-based brokerages, as well as traditional firms and discount models, offer consumers a range of options to work with professionals in residential real estate rarely seen in other professional services. Brokerages and the nation’s 900-plus REALTOR®-owned and operated multiple listing services have invested billions to make their listing information data freely available online to the public, a decision that has fostered innovation and made real estate one of the biggest commercial uses of the Internet.
Increased consumer access to real estate information online is redefining how consumers engage real estate services and may be contributing to the growth of real estate markets and a high level of competition. Potential sellers are more knowledgeable about property values, alternatives, and service options. Better informed consumers demand more of their real estate agents and other service providers. More choices and new ways of doing business are paying off for consumers.
On a national basis, competition and greater efficiency resulting from innovation have paid off for consumers; on a national basis, the average commission has declined 16 percent since 1991.
The fact is that unlike other businesses, where the Internet has diminished the role of the professional, the opposite is occurring in real estate. More families than ever are turning to real estate professionals to help them buy or sell a home.
Tom Stevens is President of the NATIONAL ASSOCIATION OF REALTORS®
Pending Home Sales Indicate Stabilizing Market
The National Association of Realtors® (NAR) reports that "The index of pending home sales, a leading gauge for the housing sector, rose slightly in May ... up 1.3 percent to a level of 113.4 from an index of 111.9 in April, but was 10.1 percent lower than May 2005."
The Pending Home Sales Index,* based on contracts signed in May, was
To read more: Pending Home Sales
The Pending Home Sales Index,* based on contracts signed in May, was
To read more: Pending Home Sales
National Association of Realtors expects home sales to stabilize
The National Association of Realtors is forecasting "Existing-home sales are expected to decline 6.7 percent to 6.60 million in 2006 from 7.08 million last year...The national median existing-home price for all housing types is expected to rise 5.3 percent to $231,300 in 2006. With more construction in lower cost regions as well as price incentives that are helping to clear unsold inventory, the median new-home price should increase 1.0 percent this year to $243,300."
Homes sales expected to stabilize
Homes sales expected to stabilize
Mortgage Applications UP!
The Mortgage Bankers Association (MBA) reports that for the week ending July 7, "The Market Composite Index, a measure of mortgage loan application volume, was 566.8, an increase of 1.0 percent on a seasonally adjusted basis from 561.0 one week earlier. On an unadjusted basis, the Index decreased 29.1 percent compared with the previous week and was down 36.3 percent compared with the same week one year earlier."
Of the mortgage activity, refinances and adjustable rate mortgage activity were down slightly.
To read more: July 12, 2006 Mortgage Survey
Of the mortgage activity, refinances and adjustable rate mortgage activity were down slightly.
To read more: July 12, 2006 Mortgage Survey
Tuesday, July 18, 2006
America's Best Places to Live 2006
MONEY magazine has named Fort Collins, Colo., the Best Place to Live in America.
The magazine released its annual Best Places list yesterday. Fort Collins was followed by (2) Naperville, Ill., (3) Sugar Land, Texas, (4) Columbia/Ellicott City, Md., (5) Cary, N.C., (6) Overland Park, Kans., (7) Scottsdale, Ariz., (8) Boise, Idaho, (9) Fairfield, Conn., (10) Eden Prairie, Minn. Profiles of the top 10 and a full winner's list appear in MONEY's August issue, on sale July 24, and visitors to MONEY's Web site, CNNMoney.com, can pore over the numbers on more than 700 places considered for this year's list.
Best Places To Live In Illinois - http://money.cnn.com/magazines/moneymag/bplive/2006/states/IL.html
Best Places To Live In Wisconsin - http://money.cnn.com/magazines/moneymag/bplive/2006/states/WI.html
The magazine released its annual Best Places list yesterday. Fort Collins was followed by (2) Naperville, Ill., (3) Sugar Land, Texas, (4) Columbia/Ellicott City, Md., (5) Cary, N.C., (6) Overland Park, Kans., (7) Scottsdale, Ariz., (8) Boise, Idaho, (9) Fairfield, Conn., (10) Eden Prairie, Minn. Profiles of the top 10 and a full winner's list appear in MONEY's August issue, on sale July 24, and visitors to MONEY's Web site, CNNMoney.com, can pore over the numbers on more than 700 places considered for this year's list.
Best Places To Live In Illinois - http://money.cnn.com/magazines/moneymag/bplive/2006/states/IL.html
Best Places To Live In Wisconsin - http://money.cnn.com/magazines/moneymag/bplive/2006/states/WI.html
Tuesday, July 11, 2006
NAR: Home Sales Expected to Stabilize
Home sales are projected to ease modestly but should stay within a relatively narrow range during the balance of the year, according to the NATIONAL ASSOCIATION OF REALTORS®.
“The major housing indicators have been moving up and down within a reasonable range, which means the market should even-out just below present levels,” says David Lereah, NAR’s chief economist. “At the same time, housing inventory levels are balanced in much of the country, so overall price appreciation will be at a normal rate. We should see home sales rise and fall month to month, but don’t look for any big shifts one way or the other.”
Existing-home sales are expected to decline 6.7 percent to 6.6 million in 2006 from 7.08 million last year. That would still be the third-highest level on record. New-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.
The 30-year fixed-rate mortgage is likely to reach 7 percent by the end of the year. “The uptick in interest rates has been slowing home sales,” Lereah says. “We remain concerned about the potential impact of higher interest rates in some of the more expensive areas of the country.”
NAR President Thomas M. Stevens from Vienna, Va., says consumers who have been on the sidelines should feel more confident about the market normalization. “When it comes to big ticket purchases, buyers are more comfortable in a stabilizing environment,” says Stevens, senior vice president of NRT Inc. “At the same time, home sellers in most areas understand that the period of abnormal price growth is over, and they have become more realistic about the current market. This is helping to ease the pressure on home prices in some areas.”
The national median existing-home price for all housing types is expected to rise 5.3 percent to $231,300 in 2006. With more construction in lower cost regions as well as price incentives that are helping to clear unsold inventory, the median new-home price should increase 1 percent this year to $243,300.
The unemployment rate is projected to average 4.7 percent in 2006, while inflation, as measured by the Consumer Price Index, is forecast at 3.4 percent. Growth in the U.S. gross domestic product is expected to be 3.4 percent this year, and inflation-adjusted disposable personal income is likely to grow 3.1 percent.
“The major housing indicators have been moving up and down within a reasonable range, which means the market should even-out just below present levels,” says David Lereah, NAR’s chief economist. “At the same time, housing inventory levels are balanced in much of the country, so overall price appreciation will be at a normal rate. We should see home sales rise and fall month to month, but don’t look for any big shifts one way or the other.”
Existing-home sales are expected to decline 6.7 percent to 6.6 million in 2006 from 7.08 million last year. That would still be the third-highest level on record. New-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.
The 30-year fixed-rate mortgage is likely to reach 7 percent by the end of the year. “The uptick in interest rates has been slowing home sales,” Lereah says. “We remain concerned about the potential impact of higher interest rates in some of the more expensive areas of the country.”
NAR President Thomas M. Stevens from Vienna, Va., says consumers who have been on the sidelines should feel more confident about the market normalization. “When it comes to big ticket purchases, buyers are more comfortable in a stabilizing environment,” says Stevens, senior vice president of NRT Inc. “At the same time, home sellers in most areas understand that the period of abnormal price growth is over, and they have become more realistic about the current market. This is helping to ease the pressure on home prices in some areas.”
The national median existing-home price for all housing types is expected to rise 5.3 percent to $231,300 in 2006. With more construction in lower cost regions as well as price incentives that are helping to clear unsold inventory, the median new-home price should increase 1 percent this year to $243,300.
The unemployment rate is projected to average 4.7 percent in 2006, while inflation, as measured by the Consumer Price Index, is forecast at 3.4 percent. Growth in the U.S. gross domestic product is expected to be 3.4 percent this year, and inflation-adjusted disposable personal income is likely to grow 3.1 percent.
Home Appraisals Worth the Read in Tight Market
American Society of Appraisers reports many don’t understand how home appraisals can help them.
It is no secret that the housing market is in a state of flux. Houses are staying on the market longer, mortgage interest rates are rising, and house prices are falling in some areas. It is now more important than ever for Realtors to help sellers to understand what their house is worth in this fluctuating market. The American Society of Appraisers (ASA) recommends that sellers fully understand the appraisal process and how it can help them make decisions about the home.
“Many home buyers and home sellers don’t know much about what goes into an appraisal or how a value opinion is developed,” says ASA real estate property appraiser Mike Evans, a Fellow of the American Society of Appraisers. “Homeowners don’t know that the appraisal report can be helpful to them in the future.”
ASA offers advice to homeowners to educate them about what is in an appraisal report, why everyone should request a copy, and how it can help in the future.
Know what types of information the appraisal report includes. The report includes details about the house, side-by-side comparisons of similar properties, an evaluation of the real estate market in the area, notations of major problems with the property that will affect its value, an estimate of the expected time it will take to sell the property, description of the area, and the neighborhood, etc. Reading the appraisal report will teach homebuyers important things about their property and how it fits into the market. Learn how an appraisal report is developed. Appraisals are opinions of value. Residential real estate appraisals use a Comparison Method, which compares your home to similar homes that have sold to come up with an opinion of value. A residential appraisal gives summarized and concise information about your house and is not the same as a home inspection.
Request a copy of the appraisal. When you bought your house, you paid for an appraisal. If you didn’t request a copy of the appraisal at the time, go back and request it from your lender now. It is your right under federal law to obtain a copy of the appraisal report. Make sure you get one from your lender.
Before you think about selling, review the appraisal report wiith a Realtor, that was created when you bought your house. Look for things in the appraisal report that had a negative adjustment. You may want to look at updating or remodeling those areas. Examples of areas that might have caused a negative adjustment are: having less than the typical number of baths for houses of a similar size; kitchens and baths that are outdated; or a one-car garage or no garage in a neighborhood of two- and three-car garages.
That will help you price it and help ensure that the house will appraise for your asking price. Many sellers are shocked when their house appraises below the asking price and, either their deal falls through, or they have to reduce their asking price.
Let me know if I can Help in the process of Selling Your Home - 1-800-731-1162 Ext.0
Thanks, Dave Rigney - Now With RE/MAX Properties Northwest.
It is no secret that the housing market is in a state of flux. Houses are staying on the market longer, mortgage interest rates are rising, and house prices are falling in some areas. It is now more important than ever for Realtors to help sellers to understand what their house is worth in this fluctuating market. The American Society of Appraisers (ASA) recommends that sellers fully understand the appraisal process and how it can help them make decisions about the home.
“Many home buyers and home sellers don’t know much about what goes into an appraisal or how a value opinion is developed,” says ASA real estate property appraiser Mike Evans, a Fellow of the American Society of Appraisers. “Homeowners don’t know that the appraisal report can be helpful to them in the future.”
ASA offers advice to homeowners to educate them about what is in an appraisal report, why everyone should request a copy, and how it can help in the future.
Know what types of information the appraisal report includes. The report includes details about the house, side-by-side comparisons of similar properties, an evaluation of the real estate market in the area, notations of major problems with the property that will affect its value, an estimate of the expected time it will take to sell the property, description of the area, and the neighborhood, etc. Reading the appraisal report will teach homebuyers important things about their property and how it fits into the market. Learn how an appraisal report is developed. Appraisals are opinions of value. Residential real estate appraisals use a Comparison Method, which compares your home to similar homes that have sold to come up with an opinion of value. A residential appraisal gives summarized and concise information about your house and is not the same as a home inspection.
Request a copy of the appraisal. When you bought your house, you paid for an appraisal. If you didn’t request a copy of the appraisal at the time, go back and request it from your lender now. It is your right under federal law to obtain a copy of the appraisal report. Make sure you get one from your lender.
Before you think about selling, review the appraisal report wiith a Realtor, that was created when you bought your house. Look for things in the appraisal report that had a negative adjustment. You may want to look at updating or remodeling those areas. Examples of areas that might have caused a negative adjustment are: having less than the typical number of baths for houses of a similar size; kitchens and baths that are outdated; or a one-car garage or no garage in a neighborhood of two- and three-car garages.
That will help you price it and help ensure that the house will appraise for your asking price. Many sellers are shocked when their house appraises below the asking price and, either their deal falls through, or they have to reduce their asking price.
Let me know if I can Help in the process of Selling Your Home - 1-800-731-1162 Ext.0
Thanks, Dave Rigney - Now With RE/MAX Properties Northwest.
Saturday, July 01, 2006
NAR Calls for Affordable Natural Disaster Insurance
Recent natural disasters have raised concerns that the cost of home ownership can easily spiral out of reach for the average consumer during times of catastrophe if homeowners' insurance isn’t made affordable, the NATIONAL ASSOCIATION OF REALTORS® said today in written testimony to the House Subcommittee on Housing and Community Opportunity.
“Options for obtaining and maintaining coverage for natural disasters are dwindling,” said Thomas M. Stevens of Vienna, Va., president of NAR. “America’s hard-working families deserve a comprehensive federal natural disaster policy that makes natural disaster insurance available and affordable and reduces the circumstances under which insurance companies cancel these insurance policies.”
Recent research conducted by NAR in the state of Florida concluded that the lack of affordable or available homeowners’ insurance contributed to a slowdown in Florida real estate markets, which can contribute to a slowdown in overall economic activity in the region.
“When buyers and sellers in high-risk states cannot obtain or retain homeowners insurance, which is necessary for a mortgage, it can slow home sales in those areas,” said Stevens. “A strong housing market is the foundation of a healthy economy, and as a nation, we must safeguard the vitality of the residential and commercial real estate markets.”
As Congress addresses the need for a comprehensive natural disaster insurance policy, NAR stands ready to assist in formulating solutions to this problem. “If the ‘big one’ hits, and people are not insured, then the American taxpayer will pay the price,” said Stevens.
—NAR
“Options for obtaining and maintaining coverage for natural disasters are dwindling,” said Thomas M. Stevens of Vienna, Va., president of NAR. “America’s hard-working families deserve a comprehensive federal natural disaster policy that makes natural disaster insurance available and affordable and reduces the circumstances under which insurance companies cancel these insurance policies.”
Recent research conducted by NAR in the state of Florida concluded that the lack of affordable or available homeowners’ insurance contributed to a slowdown in Florida real estate markets, which can contribute to a slowdown in overall economic activity in the region.
“When buyers and sellers in high-risk states cannot obtain or retain homeowners insurance, which is necessary for a mortgage, it can slow home sales in those areas,” said Stevens. “A strong housing market is the foundation of a healthy economy, and as a nation, we must safeguard the vitality of the residential and commercial real estate markets.”
As Congress addresses the need for a comprehensive natural disaster insurance policy, NAR stands ready to assist in formulating solutions to this problem. “If the ‘big one’ hits, and people are not insured, then the American taxpayer will pay the price,” said Stevens.
—NAR
Builders Can't Force You to Use Their Lender
New-home buyers: Don’t forget that your builder can't require you to use their preferred lender. When a builder tries to persuade a buyer to use an affiliated mortgage lender by offering incentives or even threatening to withhold incentives, the right response for the buyer is to slow down and investigate carefully.
Federal real estate settlement rules require that these incentives be legitimate and not built into the price of the house or the cost of the loan.The Federal Trade Commission goes still further, saying, “The sale of one product on the condition that a customer purchase a second product, which the customer may not want or can buy elsewhere at a lower price, is a tie-in.
Requirements like these are illegal if they harm competition."So the bottom line is that builders can entice, wheedle and woo buyers with great deals, but they can’t threaten them, and if buyers do feel threatened, they should first stand their ground, then complain to the builder and to state and federal consumer affairs officials.
Source: Washington Post Writers Group, Kenneth R. Harney
Federal real estate settlement rules require that these incentives be legitimate and not built into the price of the house or the cost of the loan.The Federal Trade Commission goes still further, saying, “The sale of one product on the condition that a customer purchase a second product, which the customer may not want or can buy elsewhere at a lower price, is a tie-in.
Requirements like these are illegal if they harm competition."So the bottom line is that builders can entice, wheedle and woo buyers with great deals, but they can’t threaten them, and if buyers do feel threatened, they should first stand their ground, then complain to the builder and to state and federal consumer affairs officials.
Source: Washington Post Writers Group, Kenneth R. Harney