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REALTORS® See Good Times Ahead

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 30, 2014

More real estate professionals have high hopes for residential sales in the coming months, as the job market improves, 30-year mortgage rates continue to stay at about 4 percent, and inventories of homes for sale widen in many markets.

Things Are Looking Up

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Practitioners have an optimistic six-month outlook, with the latest REALTORS® Confidence Index rising to 60. A reading above 50 indicates that more RELATORS® view conditions as "strong" rather than "weak." The index, which reflects responses from more than 1,800 REALTORS® about their transactions in November, shows that the strongest outlook for the single-family home market was in North Dakota.

First-time home buyers appear to be slowly coming off the sidelines, as their share of the market rose to 31 percent in November from 28 percent a year ago.

However, REALTORS® continue to report some persistent challenges, mostly citing financing struggles that are still making it difficult for their buyers to qualify for a mortgage (although they do say conditions have slightly improved).

"The increase in mortgage insurance premium payments for FHA-insured loans continued to be reported as an added financial strain for first-time buyers," the report notes. "Obtaining FHA financing for condominiums (typically the entry points for home ownership) continued as a major issue; many condominiums were reported as not meeting FHA eligibility requirements."

Expectations about the general market for condos and townhomes remained weak, except in markets such as the District of Columbia, North Dakota, Colorado, Texas, and Florida, according to the survey.

Another hurdle still facing the market is the lack of "affordable" and "good" houses on the market, REALTORS® noted in the survey. Inventories are rising in many markets, but the available housing options are falling short of buyers' expectations in many cases.

Home prices are still rising, with about 53 percent of REALTORS® reporting that the price of their "average home transaction" was higher in November compared to a year ago. The increase in home prices is slowing, however. The median home price of an existing home in October was $208,300.

REALTORS® generally are optimistic that home prices will continue to modestly increase in the next 12 months, with the median increase expected to be about 3 percent. States that are the most upbeat about price expectations include California, Nevada, Oregon, Washington, Wyoming, Colorado, North Dakota, Texas, Michigan, Florida, Georgia, Tennessee, Massachusetts, Rhode Island, and the District of Columbia. These states have strong job growth and are attracting Millennials and retiring baby boomers, according to the NAR repor

Buyer Agents: Working for You Free of Charge

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Home \\ Advice \\ Buyer Agents: Working for You Free of Charge

Buyer Agents: Working for You Free of Charge
By: Chrystal Caruthers 

Home buyers should always havetheir own agent. Buyer agents work to negotiate the best terms and price for the buyer. Best of all, the buyer agent’s services are free to the buyer.

Most people think they have to pay a sales commission. The truth is this:only the seller pays the commission.

Whether a buyer uses an agent or not, the seller still pays the commission. The only person that wins when buyers are not represented is the listing agent.

Most buyer agents will have their clients sign an agency agreement, an Exclusive Buyer Agency Agreement. It outlines their services, how they are compensated, and how the two parties will work together.

To ensure you’re working with an agent who specializes in representing buyers, seek out an Accredited Buyer Representative (ABR).

Remember, you wouldn’t hire your spouse’s attorney to represent you in your divorce. The same goes for real estate. Why use the seller’s agent to negotiate your best interest? There is an inherent conflict of interest.

The home buying process is stressful enough without worrying about who you can and cannot trust. Your buyer’s agent is your trusted advocate.

Buyer Agents and the Agreements

According to most buyer agency agreements, the buyer’s agent must do these things:

Protect their client’s financial informationNegotiate the best possible price for the buyerMust disclose to the buyer if they are working with another buyer interested in the same propertyShow all properties the buyer is interested in that fits their criteria and budgetConnect you with the service providers—inspectors, lenders, home warranty companies—to best suit your needs

The buyer also has some responsibilities to their buyer’s agent:

Buyers must work with their buyers agent exclusivelyBuyers should never give personal information to any other agentBuyers should not call other agents to see properties, even if they think they are saving their agent some time and effortBuyers should clearly define their must haves and deal breakers to help their agent streamline the showing process

Home buyers are at a premium in today’s housing market. Buyers should interview agents just as seller’s interview listing agents.

Make sure the buyer’s agent you select is familiar the type of property you want to purchase, the area you want to purchase in and the particulars of your situation. An agent is only as effective as the information they are given. Clients relocating from one city to another require a different set of skills from a client moving within the same area, for example.

Buying real estate is a big decision. The best advice is to find a REALTOR® who will guide youthrough the local market conditions.

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Read the rest of the REALTOR® Guide:

What Exactly is a REALTOR®?

Why You Should Use a REALTOR®

The Real Estate Commission Explained

Listing Agent vs. Buyer Agent: Who Works for You?

What is Dual Agency?

How to Find a REALTOR®

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Tags: Buyer Agent, buyer agent agreement,home buying, REALTOR® Guide

Listing Agent vs. Buyer Agent: Who Works for You?

Listing Agent vs. Buyer Agent: Who Works for You?

By: Chrystal Caruthers 

It may seem perfectly logical to call the agent on the yard sign while driving around your dream neighborhood searching for your next house.

The sign might have a QR code or text code to allow you to quickly access more information—but beware. Your information goes directly to the listing agent and the listing agent works for the seller, not the buyer.

Sellers and agents have a written contractual agreement outlining their relationship. It’s called the Exclusive Listing Agreement. It outlines the role of the listing agent, how they will market the party, the commission and the terms of the listing.

The Listing Agent is the Seller’s Representative

That means the listing agent has a legal obligation to work on the seller’s behalf—to get the highest possible price and the best terms available for the seller, not the buyer.

The listing agent legally is obligated to share any information they learn about the buyer with the seller. If a potential buyer walks into an open house and strikes up a conversation with a personable listing agent, any information divulged there can be used against the buyer during eventual negotiations.

So telling a listing agent you are relocating within the next month for a new job at a high profile company with a great offer that increased your salary so now you can afford more house than before? That can hurt you later if it comes to a bid on the property.

Listing Agents Wear Many Hats

There are many facets to a listing agent’s job. They work closely with the seller and provide a bevy of services. Here is a sample of what most listing agents do for each seller client:

Create a marketing plan for the houseHave professional photos taken of the houseAdvise the seller about the best waysto stage the house for saleGenerate Comparative Market Analysis reports to suggest the best selling priceRecommend contractors and vendors to help prepare the home for marketEvangelize the benefits of the house and neighborhood to potential buyersCoordinate showings with buyer agents and unrepresented buyersHost “Broker Opens” to get as many potential buyer agents into the house for feedback and to attract buyersMake the house easily accessible for showingsProvide showing feedbackCommunicate market activity to the seller with weekly updates/reportsPresent and advise sellers of all offersNegotiate the highest possible selling priceCoordinate the purchase process with inspectors, attorneys, appraisers, title company agents and othersVerify buyer eligibility to purchaseMake the home selling process as easy for the seller as possible

The listing agent is the homeowner’s biggest advocate.

The 3% down payment mortgage makes a comeback

NEW YORK (CNNMoney) 

In an effort to open up lending to more low-income and first time home buyers, Fannie Mae and Freddie Mac announced Monday that they will start backing mortgages with down payments of as little as 3% of the home's price.

But borrowers will still need to meet strict criteria first, the two government-backed mortgage giants said. 

The new loans will only be doled out to those who buy private mortgage insurance, have a credit score of at least 620 and offer complete documentation of their income, assets and job status. And, to further mitigate risk, the agencies will require borrowers to receive home ownership counseling. 

Both programs are for fixed-rate loans given to first time homebuyers and those seeking to refinance. Fannie will start backing the loans as soon as December 13, while Freddie will start offering them March 23. 

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The move should expand access to credit for first-time homebuyers, typically younger buyers who have not have had enough time to save a big lump sum. 

Fannie and Freddie already back mortgages with as low as 5% down. And the Federal Housing Administration insures 3.5% loans. 

Still, according to Mark Palim, who directs economic and strategic research at Fannie Mae, it's a welcome expansion of credit. 

"It's not a radical departure from what we're doing now, but anything at the margins helps," he said. 

The 3% loans from Fannie and Freddie should also offer some advantages over the 3.5% down loans offered by FHA, according to Palim. 

For example, the FHA loans require borrowers to pay for private mortgage insurance premiums for the entire term of the mortgage -- typically 30 years. That means adding an extra 1.35 percentage points to monthly mortgage rates. A loan carrying a 4% rate, for example, becomes a 5.35% mortgage. 

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In dollars, that's about an extra $80 a month for every $100,000 borrowed or $960 a year. That adds up to nearly $30,000 over the life of the loan. 

Under Fannie and Freddie's programs, borrowers are permitted to cancel their private mortgage insurance premiums once the mortgage balance drops below 80% of the home's value -- either because they've made enough payments or the home's value has risen. 

If home prices increase 5% a year for three or four years, for example, these borrowers may be able to cancel their insurance and save them tens of thousands of dollars over the next 26 or 27 years.