Archive for the ‘Industry News’ Category

Myth busted: agents do show FSBO’s

Saturday, November 21st, 2015

there is this myth that if you list your property with a flat fee mls agent, the other agents will not show the property. This is a myth that is untrue. For over ten years, FSBO.com has been sending Flat Fee MLS sellers to agents in every state. Results: showings and sales continue to increase. The sellers reduces the commission paid at closing and still gets the maximum exposure on the local MLS, Realtor.com, Trulia.com and more. The buyers agent still get the normal buyers agent commission. Here are two recent examples:

2991Dalton Ln, Austell, GA and  2054 Summer View Pl, Marietta, GA

Both properties were cleaned up with new paint, new carpet, move in condition and priced right. Both properties were under contract with lot’s of showings in less then a week. Properties needing work or that were priced too high have not had the same results. Here is the best place to learn more: FSBO.COM/flat-fee-mls

No more HUD1 settlement statement at closing

Wednesday, May 27th, 2015

beginning August 1, 2015. This Federally required Settlement Statement showing the actual settlement costs of a real estate transaction will be replaced with the ‘Closing Disclosure‘ form. The HUD1 has slowly changed over the years since the RESPA Act of 1974 first required the closing document. The new ‘Closing Disclosure’ form is now referred to as the ‘CD’ in real estate discussions. The required use of ‘CD’ is the result of the new rules of the Consumer Financial Protection Bureau (CFPB). The CFPB was created by the ‘Dodd Frank Act‘ in 2010.  Also, beginning August 1, 2015, The ‘Good Faith Estimate’ provided by your mortgage company will be replaced by the ‘Loan Estimate’, now referred to as the ‘LE’.

REQUIREMENTS: The most important change in real estate transactions nationwide, is that the ‘CD’ is required to be in the hands of the buyer and seller three days prior to closing. No more showing up to closing and seeing the closing documents for the first time. This should improve and make closing go smoother.  With the ‘LE’, it is required to be in the hands of the buyer within three days after making application for the loan.

Closing costs average $2500 or more

Tuesday, August 5th, 2014

Thinking of buying a new home with the help of a mortgage company. That’s the way most people buy. There is a cost involved with buying a new home. Doing some homework prior to buying will save you time and money. The closing cost you pay to the mortgage company is just one of the pieces to the puzzle of buying. The less your down payment is the more your closing costs are. A recent study done by Bankrate.com shows an average of $2500 in closing cost when putting 20% down and getting a $200,000 mortgage. This varies from state to state, see chart below. When putting less then 20% down, the closing costs go up plus the interest rate you pay goes up. If you are getting a no money down VA loan or a 3.5% down FHA loan, the closing cost jump as does the interest rate. This has not changed in 50 years. The fact that the more you have for down payment the less you pay. While your goal is to first buy a home, your next goal is to get the payment & costs as low as possible. The end goal is to pay it off prior to retirement.


1

Texas

$2,280 $766 $3,046
2 Alaska $2,195 $703 $2,897

3

New York

$2,109 $783 $2,892
4 Hawaii $2,009 $799 $2,808
5 Wisconsin $2,035 $671 $2,706

6

Nebraska

$1,975 $679 $2,654
7 Vermont $1,979 $670 $2,649
8 Florida $1,982 $666 $2,648
9 New Hampshire $1,975 $666 $2,641
10 New Jersey $1,891 $733 $2,625

11

Alabama

$1,967 $646 $2,613
12 North Carolina $1,887 $714 $2,602
13 North Dakota $1,936 $663 $2,599
14 Kansas $1,956 $625 $2,582
15 Louisiana $1,928 $652 $2,580
16 Rhode Island $1,931 $645 $2,576
17 Massachusetts $1,871 $693 $2,564
18 South Dakota $1,940 $623 $2,563
19 Mississippi $1,931 $629 $2,560
20 Oregon $1,896 $663 $2,559
21 Connecticut $1,885 $670 $2,555
22 California $1,881 $661 $2,542

23

Utah

$1,889 $648 $2,537
24 Wyoming $1,890 $628 $2,518
25 West Virginia $1,805 $711 $2,516
25 Delaware $1,771 $745 $2,516
25 New Mexico $1,761 $755 $2,516
28 Pennsylvania $1,907 $603 $2,511
29 Oklahoma $1,908 $591 $2,498
30 Maine $1,854 $643 $2,497
31 South Carolina $1,786 $708 $2,494
32 Montana $1,796 $695 $2,491
33 Illinois $1,841 $640 $2,481
34 Virginia $1,840 $639 $2,479
35 Iowa $1,773 $675 $2,448
36 Idaho $1,800 $641 $2,440
36 Indiana $1,796 $644 $2,440
38 Minnesota $1,836 $619 $2,436
39 Colorado $1,817 $619 $2,436

40

Washington

$1,830 $605 $2,435
40 Michigan $1,835 $600 $2,435
42 Georgia $1,766 $667 $2,433
43 Kentucky $1,790 $640 $2,430
44 Arizona $1,810 $615 $2,425
45 Arkansas $1,815 $605 $2,420
46 Maryland $1,836 $568 $2,404
47 District of Columbia $1,791 $612 $2,402
48 Ohio $1,707 $685 $2,392
49 Missouri $1,749 $638 $2,387
50 Tennessee $1,746 $620 $2,366
51 Nevada $1,570 $695 $2,265

Zillow should zestimate itself

Tuesday, July 29th, 2014

Is your house worth 4 times the value of just two years ago? Has Zillow indicated your zestimate is 4 times what is was two years ago? Probably not. You are probably very happy if the value is back to it’s peak in 2007. Well, for some reason, investors think both Zillow.com and Trulia.com are worth 4 times as much as two years ago. In Zillows case, with sales of $300 million and zero profit, the company is now valued at $6 billion and Trulia never having a profit is valued at $2.4 billion. For Zillow to buy Trulia, it will just take paper, that is paper stock. No cash or other value. For revenues to increase they both count on real estate agents to spend more money advertising. As they both move towards agents helping with revenue and profit, they slowly move away from the ‘for sale by owners’. This should strengthen those that help FSBO’s, such as; FSBO.com.  Zillow should look at itself and come up with a true ‘Zestimate’.

Cash is making a comeback

Thursday, May 8th, 2014

Just when you thought ‘institutional investors’ (people or companies that have purchased at least 10 properties in a calendar year) appear to be gradually pulling out of the housing market, new data shows that 43% of all residential sales the 1st quarter of 2014 were cash sales. Yes, well, these institutional investors have pulled back, buying 5% of all houses in the1st quarter, down each quarter for the past year. Who then is buying with cash? It’s the international buyer. From Europe to China, homes are being sold for cash. I remember a few years ago reading an article about the value of the Russian ruble (their currency) and how it was dropping dramatically. In an interview, a Russian lady said “I went out and paid cash for a Buick because I know I will still have something in 5 years from now”. If your countries economy is weak and your currency is dropping, USA properties appear to be a safe haven. Look at property values in London, Tokyo, Beijing, etc and you can easily see that USA properties look very cheap.  Major metro areas where over half of all property sales were done in cash included Miami, New York, Columbia, S.C., Memphis, Detroit, Atlanta and Las Vegas. While many experts are surprised by these numbers, we think until the economies of the world improve you will keep seeing foreign cash buying real estate. We have blogged many times in the past few years how foreign buyers of US Treasuries have helped keep interest rates low, now with more cash available they are buying real estate.

Is FNMA going away?

Tuesday, April 29th, 2014

Not this year! The Senate Banking Committee, in an effort to wind down FNMA (Federal National Mortgage Association), does not have enough votes. What does this mean? More debate and conversation with the politicians in Washington. FNMA & FRED Mac now buy 80% of all new mortgages. This is up from 40% back in 2008 when the financial crisis hit. FNMA was blamed for much of it with their loose lending practices. Funny how that year the major banks received bailout money, now six years later, one by one the major banks are paying huge fines for selling fraudulent mortgages to FNMA. Since 2008, JPMorgan, BofA, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley have agreed to pay $67 billion in settlements and penalties. In addition, the National Association of Realtors have made ’saving FNMA’ their major issue. With PAC money in the millions, see Super Pacs, the Realtors use this money to support candidates that support their issues. The story of FNMA will continue and it’s hard to say what will happen next. Has anybody had good or bad luck once your mortgage was sold to FNMA or Freddie Mac?

President Obama to sign new Flood Insurance bill

Monday, March 17th, 2014

The Homeowner Flood Insurance Affordability Act of 2014 has passed the Senate and President Obama is expected to sign it into law very soon. There are 5.6 million households in a flood plain as mapped out by FEMA, mostly in Texas and Florida. These property owners have been able to purchase insurance direct from the Federal Government since 1968 through the National Flood Insurance Program.  In 2012 a new act, the Biggert-Waters Flood Insurance Reform Act, became law. It was designed to allow premiums to rise to reflect the true risk of living in high-flood areas. This new law ordered FEMA to stop subsidizing flood insurance for second homes and businesses. The consequences of this act in 2012 was primary residence flood insurance began to jump. Plus FEMA re-mapped many areas and these properties in the new flood zones saw their insurance dramatically increase. Stories of insurance premiums going from $500 to $4,000 and other stories of premiums as high as $20,000. For many reasons, one being that homes purchased with a FHA mortgage (80% of all sales the past few years) in a flood zone are required to have flood insurance. So now, the Federal government runs the risk of people walking away from their homes because they can not afford the insurance and the Federal  Government would be back in the property ownership business. They really do not want this to happen. So, after realizing the situation, the bill quickly passed both house and Senate to rein in the Biggert-Waters bill. This new legislation 1. delayed most flood insurance increases for four years 2.sets limits of 15 percent per year for each of the nine property categories listed by FEMA. 3. provides refunds of premiums for people who purchased homes 4. requires the Federal Emergency Management Agency (FEMA) to obtain input from local communities prior to changing their maps.

Flood

What is Federal Mortgage Insurance Corp?

Wednesday, March 12th, 2014

After costing taxpayers hundreds of billions of dollars, Fannie Mae and Freddie Mac will be rolled into a new government agency called the Federal Mortgage Insurance Corp. according to the plan established by the U.S. Senate Banking Committee. This bipartisan measure bill to replace current US backed mortgages with government bond insurance that would kick in after private capital losses of 10% plus would require minimum 5% down payment from the borrowers. Housing finance reform has been discussed for the past five years.

Secondary mortgage market allows local mortgage brokers & banks to lend money to home buyers, they package the loans, then sell them on the secondary market. They take the money they receive and make more loans. Prior to 2008, 40% of all mortgage loans were sold to FNMA & Freddie Mac. Today, and for the past few years, over 75% of all loans were sold the FNMA & Freddie Mac. Obviously, they play a very important roll in having a smooth real estate transaction. How will this change effect the real estate market in the future? Time will tell.

I like my 10 year old car

Thursday, February 20th, 2014

My current automobile is 10 years old and I have had very little trouble with it. The few times I had any problems, the  manufacturer was very good at taking care of me. I am not ready to trade it in yet, but when I do,  I plan to buy from the same company. If they ever sent me notice that they will no longer service/support my model I would not buy from them ever again.  Same is true with my home appliances. All are now 13 years old. They work fine, the manufacturer supports any service needed.

I can not say the same thing about my computer manufacturer. I have been very happy with Windows XP and Microsoft Office 2003. For over 10 years both have worked fine, with very little trouble. Now, the manufacturer is discontinuing support. See article. It’s the big count down to April, 2014. I guess when you are a $300 billion dollar company Wall Street expects you to keep pumping up the sales and profits. New versions do this. That is why companies keep coming up with them. Yes, I understand security is a big issue. Hackers are creative and you have to continually protect your computer with upgrades. It just seems like a $300 billion dollar company would take care of it’s customers so they come back the next time they are ready to buy. As a business owner, to make a sale, it cost much less to have current customers come back and buy from you then it does to go out and find new customers.

Anyone else still using Windows XP and Microsoft Office 2003? (We should note that most of us at FSBO.com are using much newer versions of Windows and Office.)

What products do you own that are over 10 years old that still work fine even though newer versions of the same thing have come out?

Microsoft

Get ready for the Dodd-Frank Act

Tuesday, December 17th, 2013

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, aka: Dodd-Frank Act. This 848 page Act came in response to the financial crisis of 2008. Dozens of changes have been made for those buying a house. A few examples: starting in January, 2014, higher priced mortgage loans will have a maximum debt to income ratio of 43%, down from 45%. (This means less house based on your debt/income ratio), escrow requirements will be in place longer (monthly property tax and insurance payments added to your monthly mortgage bill stays longer), pre-loan counseling requirement for high priced mortgages, new appraisal provisions, loan originator compensation changes, and more.

In response to the financial crisis of 1929,  a far reaching act, the Glass-Steagall Act of 1933 was passed. This was an attempt to establish bank regulations. For over 60 years things were fine, but over the years the banks slowly picked away at this Act. Finally, in 1999 banks were deregulated with the Gramm-Leach-Bliley Act, which repealed Glass-Steagall. Ten years later, a financial/housing crises occurred, which led to big bank bailouts, etc. You know the rest of the story.

Dodd-Frank Act