November 21, 2016
Monday’s Adjudication Roundup
- Passaic, New Jersey developers are ensuring justice happens with a past mayor. Developers paid the past mayor “mandatory” funds in order to secure the progression of their project within the city.
- Residents of Southern Illinois surpassed yet another attempt to dismiss their case against the city’s treasurer and his practices during auctions regarding property taxes.
- Wells Fargo agreed to settle a California class action suit for a total of $880,000. The plaintiffs in this case argue that the banking giant did not disclose insurance proceeds that could have aided homeowners in paying off their mortgage.
November 21, 2016 | Permalink | No Comments
Friday’s Government Reports Roundup
- Rates for home loans rose for a second straight week just before the end of the presidential election, mortgage provider Freddie Mac said Thursday. The 30-year fixed-rate mortgage averaged 3.57%, up three basis points during the week. The 15-year fixed-rate mortgage averaged 2.88%, up from 2.84% the prior week.
- Prospective homebuyers faced a challenging housing market during the third quarter, mostly due to ongoing inventory shortages that are resulting in a faster rate of home price appreciation, according to a quarterly report from the National Association of Realtors (NAR) covering the third quarter.
- More renters claim they are concerned about high utility costs than about rising rent prices, according to a new survey from Freddie Mac. The only thing rising faster than home prices may just be rent prices. Home prices are rising across the nation to levels not seen since before the housing crisis and yet, it’s still cheaper to buy than rent, according to a study by online real estate listing service Trulia.
November 18, 2016 | Permalink | No Comments
November 17, 2016
Honesty Is Best
Grant Wood; “Parson Weems’ Fable”; 1939; oil on canvas; Amon Carter Museum
Trulia quoted me in 6 Things Home Sellers Are Legally Required To Disclose. It opens,
When it comes to selling your home, heed your mother’s advice: Honesty is always the best policy.
Denise Supplee and her husband, Jerry, had been in their new home in Horsham, PA, for just three months when they started to notice something strange in their bathroom. “You could see mold starting to seep through the paint,” says Denise, a co-founder and director of operations of SparkRental.com. “We had a contractor come in and he told us we were lucky,” she says. “It seemed to be an issue kept to the bathroom and occurred most likely because there was no exhaust fan.” The problem: The seller had blatantly painted over existing mold without ever disclosing it to the Supplees. Although the seller made good and paid for the mold removal — a $1,500 cost — the Supplees could have taken them to court for not disclosing the problem before the sale.
It’s a question that plagues many residential sales: As a seller, what do you — and don’t you — need to tell the buyer about your home? “My rule of thumb is this: If you’re not sure if you should disclose something, you probably should,” says Sam Pawlitzki, a real estate agent with Beach Cities Real Estate in Los Angeles, CA. “Think of seller disclosures like a Carfax report.” Plus, the harm in not disclosing something can result in some serious legal and financial woes. Here’s a list of what you legally need to include in your sellers’ disclosure to keep yourself out of hot water.
1. Lead paint
One item is a must when it comes to being upfront with potential buyers: the use of lead-based paint in your home. “If the home was built before 1978, each party in a transaction needs to sign a lead paint disclosure,” says Pawlitzki. “This is a federal law and applies to every state. No matter if you think the lead paint has been removed or not, it still needs to be disclosed.” However, David Reiss, a professor at Brooklyn Law School in Brooklyn, NY, explains, “If you are not aware of a lead-based paint issue in the house, you are not required by the act to investigate whether there is any.”
Thursday’s Advocacy & Think Tank Roundup
- A blog post in the City Observatory examines neighborhood change and shifting community demographics as they relate to economic and racial integration.
- What a Trump administration means for real estate and other major investment sectors.
- Fifty years ago, Robert Moses, the legendary “power broker” who reshaped New York City in the mid 20th century, gave a lunchtime talk at the Joint Center for Urban Studies of MIT and Harvard. Thanks to Adam Tanaka, a 2015 Joint Center Meyer Doctoral Fellow who was doing research for his thesis on the construction of large-scale, middle-income housing in New York City, the Joint Center recently received a copy of his speech.
November 17, 2016 | Permalink | No Comments
November 16, 2016
Firing Your Real Estate Agent
USA Today quoted me in How (And When) To Fire Your Real Estate Agent. It opens,
Breaking up is hard to do. Add a house and tens of thousands of dollars into the mix, and it can get downright ugly.
Unlike romantic entanglements, though, breaking up with your real estate agent as a seller if you’re not getting the service or the results promised doesn’t have to be dramatic. Here’s what you can do early on to minimize the damage — and how to handle the situation if, alas, you do come to irreconcilable differences.
When you first enlist an agent
Review your contract closely. Many real estate agents require their clients to sign an exclusive representation agreement, which is essentially an employment contract, says Brian Pendergraft, a real estate attorney in Greenbelt, Md. These contracts spell out how the client and real estate agent will each uphold their end of the deal, and they tend to be worded to protect the agent’s interests, says David Reiss, a law professor at Brooklyn Law School in Brooklyn, New York.
As a seller, you’ll want to ensure the contract covers your rights, too. This includes outlining exactly how your agent will market your home, and a plan to generate enough showings within a set timeframe so that you’ll have a legal leg to stand on for early termination, Reiss says.
Understand your options for termination from the get-go. There are a few ways to call it quits with your agent, but the win-win situation is a no-penalty termination in which neither party is penalized if the relationship ends prematurely, says Bruce Ailion, a Realtor and attorney in Atlanta. Include this detail in your contract.
If things go sour
Consider what constitutes a fireable offense. If you’re upset with your agent about sales strategy, lack of communication or poor service, those are issues that are unlikely to be resolved easily, Ailion says. Or perhaps you’re worried that your agent is in murky legal waters, such as refusing to show your home to people from certain protected groups or failing to share a property disclosure with buyers. Report these issues immediately to the agent’s broker of record, who is responsible for the real estate agents in a brokerage, Ailion says.
Put it in writing. If your agreement is in writing, you have to get out of it in writing even if there’s no specific expiration date, Pendergraft says. Write a letter or email to your agent requesting to part ways. If you get no response, hire an attorney to write a demand letter for you, Pendergraft says. This shows you mean business — at a fraction of the cost to take the issue to court.
Wednesday’s Academic Roundup
- This paper, How do Household’s Make Mortgage Choices?, reviews recent literature on how households make decisions regarding residential mortgages. It focuses on recent publications in Real Estate Economics that are related to households’ mortgage choices. The paper covers four areas: (1) the role of intermediaries such as mortgage brokers; (2) how households choose between a fixed and an adjustable rate mortgage; (3) how homeowners choose between other features of mortgage contracts; and (4) reverse mortgages.
- This paper, A New Index on Housing Sentiment, proposes a new measure for housing sentiment and show that it accurately tracks expectations about future house price growth rates. It constructs the housing sentiment index using partial least squares on household survey responses to questions about buying conditions for houses. It finds that housing sentiment explains a large share of the time-variation in house prices during both boom and bust cycles and it strongly outperforms several macroeconomic variables typically used to forecast house prices.
November 16, 2016 | Permalink | No Comments
November 18, 2016
Low Down Payment Mortgages, Going Forward
By David Reiss
TheStreet.com quoted me in Home Loan Down Payments Are in Decline: Will Uncle Sam Ride to the Rescue? It opens,
President-elect Donald Trump has enough problems on his hands as his administration takes shape, with the economy, health care, geopolitical strife and a divided country all on his plate.
“U.S. homebuyers are putting less down to purchase homes due to the wide availability of low- and no-down payment loans such as FHA loans, Fannie Mae’s HomeReady program, a resurgence of ‘piggy-back mortgages’ and other programs,” says Erin Sheckler, president of NexTitle, a full-service title and escrow company located in Belleview, Wash. “Meanwhile, USDA and VA loans also do not require any down payment whatsoever.”
Sheckler also notes that lending requirements have begun to ease nationwide, thus giving homebuyers more wiggle room with home down payments. “According to Ellie Mae’s Origination Insight Report, in August, home buyer down payments varied by loan program but, in nearly all cases, down-payments were near minimums,” says Sheckler.
Sheckler also doesn’t expect the low down payment trend to end anytime soon.
“How much money a person decides to put down on the purchase of a new home is a combination of risk and personal tolerance as well as the loan programs available to them,” she says. “As long as mortgage guidelines remain relaxed and with first-time homebuyers being an increasing segment of the market, we will likely see down-payments hover around the minimums into the near-term future.”
The risk with lower home down payments is real, however. “No one wants to find themselves house-poor,” Sheckler adds. “Being house-poor means that the majority of your wealth and monthly income is tied up in your residence. This can be a catastrophic situation if you find yourself suddenly faced with a loss of income or unexpected expenses.”
Homebuyers looking for more help from Uncle Sam, though, may come away disappointed in the next four years. “While Trump has been pretty silent on the housing market, (vice president-elect Mike) Pence and the Republican party platform have made it clear that they want to reduce the federal government’s footprint in the housing market,” says David Reiss, professor of law at Brooklyn Law School. “This is likely to mean fewer low down payment loan options being offered by Fannie Mae, Freddie Mac and the FHA.”
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November 18, 2016 | Permalink | No Comments