April Existing-Home Sales Show Modest Improvement Behind Gaining Inventory

Posted on May 28, 2014 by Erin Johnston

WASHINGTON (May 22, 2014) – Existing-home sales increased for the first time this year in April, while inventory meaningfully increased and home price growth moderated, according to the National Association of Realtors®. Monthly sales gains in the West and South offset a modest decline in the Midwest while the Northeast was unchanged.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.3 percent to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March, but are 6.8 percent below the 4.99 million-unit level in April 2013.

Lawrence Yun, NAR chief economist, expected the improvement. “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point,” he said. “Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

Total housing inventory2 at the end of April jumped 16.8 percent to 2.29 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, up from 5.1 months in March. Unsold inventory is 6.5 percent higher than a year ago, when there was a 5.2-month supply.

“We’ll continue to see a balancing act between housing inventory and price growth, which remains stronger than normal simply because there have not been enough sellers in many areas. More inventory and increased new-home construction will help to foster healthy market conditions,” Yun added.

The median existing-home price3for all housing types in April was $201,700, which is 5.2 percent above April 2013; in the first quarter the median price was 8.6 percent above a year earlier. “Current price data suggests a trend of slower growth, which bodes well for preserving favorable affordability conditions in much of the country,” Yun said.

Earlier this month, NAR reported the market share of all-cash purchases has risen despite a downtrend in distressed home sales and investor activity. Distressed homes4 – foreclosures and short sales – accounted for 15 percent of April sales, down from 18 percent in April 2013.

Ten percent of April sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in April, while short sales were discounted 10 percent.

NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, said there was some heating of the market last month. “The typical time on market shrunk in April, with four out of 10 homes selling in less than a month,” he said.  “Homes that show well and are properly priced tend to sell the fastest. More housing inventory gives buyers better choices, and takes the pressure off of the buying process, which is a welcome sign, especially for first-time buyers.”

Properties sold faster for the fourth straight month in April, reflecting the prolonged lag in inventory relative to demand. The median time on market for all homes was 48 days in April, down from 55 days in March; it was 43 days on market in April 2013.

Short sales were on the market for a median of 96 days in April, while foreclosures typically sold in 56 days and non-distressed homes took 45 days. Forty-one percent of homes sold in April were on the market for less than a month.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.34 percent in April, unchanged from March but up from 3.45 percent in April 2013.

First-time buyers continue to represent fewer than one-third of all buyers at 29 percent in April, down from 30 percent in March; they were 29 percent in April 2013.

All-cash sales comprised 32 percent of transactions in April, compared with 33 percent in March and 32 percent in April 2013. Individual investors, who account for many cash sales, purchased 18 percent of homes in April, up from 17 percent in March; they were 19 percent in April 2013. Seven out of 10 investors paid cash in April.

Single-family home sales inched up 0.5 percent to a seasonally adjusted annual rate of 4.06 million in April from 4.04 million in March, but are 7.7 percent below the 4.40 million pace a year ago. The median existing single-family home price was $201,100 in April, up 4.7 percent from April 2013.

Existing condominium and co-op sales rose 7.3 percent to an annual rate of 590,000 units in April from 550,000 units in March, but are unchanged from April 2013. The median existing condo price was $205,500 in April, which is 8.3 percent higher than a year ago.

Regionally, existing-home sales in the Northeast were unchanged at an annual rate of 600,000 in April, but are 6.3 percent below April 2013. The median price in the Northeast was $244,000, down 0.4 percent from a year ago.

Existing-home sales in the Midwest slipped 1.0 percent in April to a pace of 1.03 million, and are 9.6 percent below a year ago. The median price in the Midwest was $157,200, which is 5.8 percent above April 2013.

In the South, existing-home sales increased 1.0 percent to an annual level of 1.94 million in April, but are 3.5 percent below April 2013. The median price in the South was $173,200, up 3.2 percent from a year ago.

Existing-home sales in the West rose 4.9 percent to a pace of 1.08 million in April, but are 10.0 percent below a year ago. The median price in the West was $291,200, which is 9.7 percent above April 2013.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

3The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

4Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

Realtor.com®, NAR’s listing site, posts metro area median listing price and inventory data at: www.realtor.com/data-portal/Real-Estate-Statistics.aspx.

The Pending Home Sales Index for April will be released May 29, and existing-home sales for May is scheduled for June 23; release times are 10:00 a.m. EDT.

 

Source: http://www.realtor.org/news-releases/2014/05/april-existing-home-sales-show-modest-improvement-behind-gaining-inventory

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Forecast for Housing and the Economy

Posted on May 21, 2014 by Erin Johnston

Media Contact: Walter Molony / 202-383-1177 / Email

WASHINGTON (May 15, 2014) – Housing activity was sub-par in the first quarter of this year, dampened in part by severe weather patterns, but an uptrend is expected with healthy underlying demand over the balance of the year and through 2015, according to presentations at a residential real estate forum here during the Realtor® Party Convention Trade Expo.

Lawrence Yun, NAR chief economist, said the U.S. population has been growing steadily, but job creation has not. “When you look at the jobs-to-population ratio, the current period is weaker than it was from the late 1990s through 2007,” he said. “This explains why Main Street America does not fully feel the recovery.” 

Yun said that growth in the Gross Domestic Product slowed in the first quarter, and possibly contracted. “There are no fresh signs of recession, and the second quarter could grow about 3 percent,” he added.

Yun said the home sales-to-population ratio also has been below normal since 2008. Despite a large pent-up demand from years of below-normal home sales, inventory constraints and tight credit conditions continue to impede the market, in combination with strongly rising home prices and higher mortgage interest rates.

Although existing-home sales rose more than 9 percent to nearly 5.1 million in 2013, sales activity retrenched during the past six months. Even with gradual improvement moving forward, they are projected to decline about 3 percent for the year to just over 4.9 million, but should trend up to more than 5.2 million in 2015. 

Because of tight inventories and rising sales last year, the median existing-home price rose 11.5 percent to just over $197,000. Home price growth is likely to moderate from more new home construction, with the median price increasing about 6 percent in 2014 to $209,000 and reaching nearly $219,000 next year as market conditions begin to balance. 

An upside of rising prices is a recovery in home equity. “Based on our forecast for this year, the median home equity gain over three years is expected to be $40,000,” Yun noted. “A gap between new and existing-home prices from rising construction costs shows that prices are well supported by fundamentals in most of the country.” 

He expects the Federal Reserve to end tapering of monetary policy by the end of the year and to hike the Fed funds rates in the first quarter of 2015. 

Although the pattern is uneven month-to-month, mortgage interest rates are forecast to gradually rise, with the 30-year fixed rate averaging 4.7 percent this year and 5.5 percent in 2015. “Inevitably, rising mortgage interest rates will hurt housing affordability,” Yun said. 

Housing starts have stayed below 1 million a year for the past six years, but need to reach the long-term average of 1.5 million to balance the market. “Because of the prolonged slowdown in construction, we now need 1.7 million housing starts per year to catch up,” Yun said. While improving, housing construction is seen at nearly 1.1 million this year and approximately 1.4 million in 2015. 

The sluggish recovery in housing starts is impacted by construction costs rising faster than inflation, labor shortages in the building trades, and the difficulty for small local home builders to obtain construction loans. “Onerous financial regulations are preventing small banks from originating construction loans,” Yun said. 

Job growth, which is the key to overall economic health, has essentially recovered all of the eight million jobs lost since the great recession. Employment is expected to improve, with job growth rising 1.6 percent in 2014 and 1.9 percent next year, after growing 1.7 percent in 2013; consumer confidence should gradually rise. 

The Gross Domestic Product should grow 2.2 percent this year and about 2.9 percent in 2015; GDP grew 1.9 percent in 2013. Inflation, as measured by the Consumer Price Index, was a tame 1.4 percent in 2013 but is projected to rise to 2.5 percent this year and 3.5 percent in 2015.

Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University, agreed we’re unlikely to see a back-up in GDP. “Growth in the stock market and the recovery in housing along with pent-up demand are major factors driving the economy,” he said. 

“There are three federal surveys that measure household growth and that are inconsistent, but we had real growth in 2012 that fell back last year,” Belsky said.  “Even the survey with the strongest household growth shows we’re a million below where we should be, but we’re probably two million below. We could see a notable uptick in household formation later this year.” 

Belsky noted there are nearly three million more young adults who lived with their parents in 2012 than in 2007, and the median incomes for all young adults have declined since the great recession.

According to the Federal Reserve Bank of New York, student loan default rates have soared from just over 6 percent in 2003 to nearly 12 percent last year. Student debt is hurting credit scores and hindering the ability of some young adults to qualify for a mortgage; it could be a problem for as many as one in 10 renters who are in their 20s. 

The Joint Center for Housing Studies projects household growth to rival or top the annual average pace from 1995 to 2000, and projects 76 percent of the growth over the next decade will be from minority households. The greatest increase is expected to be among households age 65 and older.

According to Fannie Mae, roughly nine out of 10 people under the age of 45 expect to buy a home in the future, but Belsky said mortgage underwriting standards are dramatically tighter, which disproportionately impacts minorities and those with lower incomes. 

Dennis McGill, director of research for Zelman & Associates in New York, also focused on trends in housing demand. “Our analysis of Census Data shows an average of only 720,000 housing starts annually from 2010 through 2013, but our projections over the next five years exceed an average of 1.9 million,” he said. 

“We won’t ramp up to that level right away, but if you average housing starts for the entire period from 2010 to 2019, it would be about 1.44 million,” McGill said. “There is a strong tailwind to housing starts. We’re starting to see capital come back to single family construction, which is very favorable.”

McGill notes trends in residential electric consumption mirror the growth in households, and also young adult employment, which is driving the growth. 

The percentage of 24 to 34 year old married couples has risen since the last recession, but they are delaying a transition to homeownership. Zelman believes that the majority of this recent change has been due to recessionary impacts that should start to unwind. 

McGill said their analysis shows the existing-home inventory relative to the number of households in the first quarter of this year is 30 percent lower than the average of the past two decades. In addition, total sales closings in 2013 were 20 percent lower than the 25-year average. “If we don’t bring capacity back to the market, home prices will continue to rise strongly,” he said. 

A Zelman consumer survey shows most young adults believe a lack of savings for a downpayment is their biggest hurdle to obtaining a mortgage, but most of them think they need a much larger downpayment than is actually required. 

For example, 25 percent believe they need a downpayment of 16 to 20 percent, and another 15 percent believe they need a downpayment of more than 20 percent. However, the actual requirement for an FHA loan is 3.5 percent.

Even with the well-known debt issues, nearly one-quarter of people under the age of 35 are debt free, which is better than the historic average. In addition, the Zelman survey shows that contrary to fears, there is no correlation between student loan debt and household formation. “A lot of this is a recessionary impact that we think is overlooked,” McGill said. 

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

source: http://www.realtor.org/news-releases/2014/05/forecast-for-housing-and-the-economy-suggests-gradual-improvement-through-2015

 

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Why the “Zestimate” is OverZealous

Posted on May 20, 2014 by Erin Johnston

Zillow.com has given some homeowners a false sense of security about the value of their homes with the popular “Zestimate” feature on the Zillow website. Two Zillow sales executives recently confided to Beacham & Company that the median margin for error with Zestimates is 10% percent, meaning half of all estimates are incorrect by more than 10 percent when compared to the ultimate sales price of a home. In other words, a home that the Zestimate indicates is worth $ 500,000 has a 50/50 chance of being off by more than $50,000. Much of the reason for the dartboard-like results produced by Zestimates is that Zestimates rely on tax records which are often inaccurate or outdated. And square footage – a favorite data point Zestimate enthusiast – is usually the date paint that is most often inaccurate in the tax records. Think about it:  If Zillow uses the sales price of one home to establish value for another home and the square footage of one or both homes is incorrect, how can the Zestimate accurately predict the value of any home? The answer is it can’t.

 

Printed in Vol 7 Issue 1 April 2014 of the Beacham Insider.

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Stage it With Shine: Add Some Bling to Your Spaces

Posted on May 9, 2014 by Erin Johnston
Posted in Home Trends, by on April 21, 2014  
 
 

By Melissa Dittmann Tracey, REALTOR(R) Magazine

Grays have been catching on in more interiors this year and so has the color’s “flashier cousin” – silver, which is becoming a popular accent color in 2014, according to the Paint Quality Institute’s latest color forecast. Silver is adding some sparkle to rooms, through shimmering fabrics and reflective glassware to even kitchen backsplashes and furniture.

Silver can be an attention-getting touch to liven up a space’s interior.

“Metal tiles gained popularity in the past decade or so with the explosion of stainless steel kitchen appliances, and stainless steel tiles were [and still are] great harmonizers,” writes Karen Egly Thompson, an interior design writer  and contributor for Houzz. “However, they’ve also made their way out of the kitchen – and all that glitters isn’t always stainless steel. Tiles are available in different metals, including bronze, copper, and titanium, as well as different surfaces, such as brushed, polished, and textured.”

HGTV devotes a web page for inspiration around the “heavy metal” look and how to mix the metal finishes in furniture, fabric, and lighting to add shine and texture to a space.

Metallic finishes are everywhere from metal-toned lamp shades to the detailing in fabrics and throw pillows. Brass is also making a comeback in the metal arena. But you might want to still hold off on swapping out all those light fixtures for brass and keep the trend reserved to accessories, for now. The trend is evident, though, as more accessories take on a vintage gold look, such as in mirror frames to gold curtain rods.

Some gold and silver touches may just be the modern touch to bring a room more up-to-date. For example, designer Laura Kirar describes a Corsage Vintage Brass Lamp to House Beautiful as not just a lamp accessory but  a “jewelry accent” to dress up a room.

You can also see the metallic trend popping up in more photos on Houzz. Here are a few.

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May Home Maintenance

Posted on May 7, 2014 by Erin Johnston

Now that the weather is finally warming up, one can finally tackle the to-dos needed to spruce up and prepare our homes for summer barbeques and fun. This segment will focus on mainly the home maintenance needed to prep for the upcoming summer, so whether you own or rent a home in Pasco, Richland and Kennewick, here are some suggestions you may want to consider doing this month.

  1. The Garbage Disposal- So if you are like me and often forget how truly easy it is to clean a garbage disposal, you may not have done it all winter. To get a fresh, clean disposal start by pouring ½ cup baking soda into the disposal. Next pour a cup of white vinegar down and watch science work. The foam created will cut through the grease and grime so you want to let it work for a few minutes. After letting it sit, pour a pot of boiling water down and let sit for 5 minutes, then turn the faucet on and run the disposal for a minute or so to clear out any remaining residue.

    To keep your garbage disposal cleaned, freeze chunks of unpeeled lemon or whatever citrus you prefer in ice cube trays with water. Every so often after doing the dishes, take a couple of the cubes and toss them into the disposal. The ice and fruit fibers will scrub the disposal and also release a fresh smell.

  2. Service the Air Conditioner– No one wants to have the AC stop working in the middle of a hot summer, so having it serviced now would be most ideal. Usually this involves changing the filter, cleaning and inspecting the blower and motor, checking the coolant level, testing safety controls, switches and thermostats, and checking the ductwork and unit for leaks.
  3. Clean glass– Because we live in the Tri Cities, where dust and dirt blow freely and more often then not in the winter and spring months, our windows get dirty fairly quickly. Take the time to clean all your windows and let the sunshine in. The best way to get a streak free result is to first start on a cloudy day. Fill your spray bottle with 1 part white vinegar to 10 parts water or 1 ½ cups per gallon and spray the solution onto the windows, wiping away with a microfiber cloth or wadded up newspaper. Repeat as necessary.
  4. Window screens- While you are cleaning the windows you might as well hit the screens too. To make a repair to small holes in a fiberglass screen you can press the edges of the hole together and coat with clear fingernail polish on both sides. Repeat as necessary until hole is covered. A screen patch kit should be used to repair larger holes or tears. Although the patch kit will show it is much less expensive than replacing the entire screen.

    To replace a window screen, lay on a flat surface and use a flat head screwdriver to pry out the rubber seal that holds the screen in place. Be careful not to cause any damage to it. Remove the old screen wire from the groove. Cut an oversized piece of screen and lay over the frame, using the convex side of a spline roller press the screen into the grooves across one end of frame. Using the opposite or concave side of the tool, push the rubber seal back into the groove to hold the screen in place. Repeat the process on 3 remaining sides making sure to pull it tight as you go. Cut off excess with a utility knife.

    To clean a screen you can fill a child’s pool with water and some biodegradable liquid dish soap or construct a frame from 2x4s and plastic sheeting and do the same. Soak the screens for a bit, then, gently wipe both sides with a soft brush or broom. Rinse and allow to dry before placing back in windows to prevent spotting on your clean glass.

  5. Siding and Trim- Time and weather are harsh on the paint on our homes causing cracks and allowing for water damage, so touching up the damaged or bare spots on the trim and siding could help prevent water damage and won’t cost as much as repainting the entire home. First off clean the siding and trim, removing all dirt, mildew and other so the new coat of paint will stick. If the paint is peeling, scrape away and use a rotary sander or sanding block to taper the edges of the remaining paint creating a flat surface so the new coat of paint will look nice. Next caulk and cracks or gaps found, then prime and paint the bare spots and newly caulked areas. Try to match the brush pattern of the previous paint job and feather the edges to prevent a visible difference in paint levels.
  6. Termites- With the warmer weather comes more activity from these wood eating bugs. More activity means a more likelihood of spotting the damage. Keep an eye out for damaged wood framing, termite tubes and the bugs themselves. Look closely at areas where wood meets the ground.

    To help prevent an infestation from these damaging creatures, keep your foundation exposed around the entire home and avoid piling anything against the sides of your home.

    Don’t store wood or cellulose materials (paper, cardboard, etc.) in your basement, crawlspace or near the foundation. Also make sure the home has proper drainage and keep your basement or crawlspace as dry as possible because the little bugs love a moist environment.

  7. Wood Deck- The winter weather has probably made your wood deck look a little less bright, so simply cleaning it or refinishing if needed, could brighten up your yard considerably. Spray the deck with a commercial deck cleaner and use a pressure washer to remove all dirt, debris, and mildew that may have accumulated during the colder months. Do not hold the pressure washer too close to the deck and do not hold it in one spot or it could do damage to your deck. Examine the boards once washed, replacing any deteriorated boards, reattach any loose boards with decking nails or screws, and drive in any nails that are sticking out. If you need to refinish the deck or just want to refinish it, use a rotary sander to smooth any rough spots and finish with a solid or semitransparent stain or a clear deck sealer using a stain or sealer pump sprayer and saturating one area at a time. While the stain or sealer is still wet, use a paintbrush to brush the stain into the wood grains for a smooth finish.
  8. Patio Furniture- If you happened to leave your patio furniture exposed to the weather all winter, you may have a bit of upkeep to attend to. These are just some quick tips for cleaning different types of patio furniture materials. If your furniture is wrought iron, scrub with soap, smooth out any rough spots with a wire brush or sandpaper, spray with a rust inhibiting metal primer and apply several coats of spray paint.

    If you happen to have aluminum, remove all oxidation by cleaning first with a mixture of half vinegar and half water. Once cleaned, automotive rubbing compound, soap or very fine steel wool will work to remove the oxidation, but be careful not to scratch the aluminum. Rinse and let dry before applying a coat of automotive wax for protection.

    For plastic or resin furniture, scrub with a dampened sponge sprinkled with baking soda, remove any mold or mildew with a mixture of ¼ cup white vinegar in a quart of water. Spray the mixture on the surface of the furniture and let sit for 10-20 minutes, rinse and dry. White furniture can also be cleaned with a light bleach mixture and if you want shine, apply a coat of automotive wax.

    Wood patio furniture can be cleaned with a solution of ¼ cup ammonia and 2 tablespoons of white vinegar per quart of water. This solution can be used on cedar, redwood, and pine. If you happen to have teakwood use a solution of laundry detergent, bleach and water applied with a scrub brush.

    If your furniture has fabric, machine wash the covers if they are washable. Place them back on the cushions while they are still wet to avoid shrinkage. If the cushions are attached, they can be cleaned by mixing a bit of dishwashing liquid, a teaspoon of borax, and a quart of water. Spray onto the fabric and scrub gently with a sponge or soft brush, allow to soak for 10-20 minutes, rinse with hose and let dry. Regular bleach can be used on white fabrics to remove mildew and color safe bleach for color fabrics.

  9. Lawn Mower- Even if you didn’t winterize your lawn mower, you should still do a bit of maintenance, after all, you don’t want to be halfway done with your lawn and have your mower quit on you. First clean or replace the spark plug as a bad plug will cause your mower to either not start, make it near impossible to start and cause your engine to run roughly. The air filter should also be cleaned or replaced to allow the proper amount of air flow to the engine. Changing the oil is essential because dirty or old oil can do damage to your engine. Lastly, you should sharpen the mower blade. If you happen to have a dull blade this can actually damage your grass and make for an unhealthy lawn.
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Understanding Agency

Posted on May 2, 2014 by Erin Johnston

It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.

  1. Seller’s Representative (also known as a listing agent or seller’s agent)- A seller’s agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
  2. Subagent- A subagent owes the same fiduciary duties to the agent’s principle as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer’s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
  3. Buyers Representative (also known as a buyer’s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer’s rep works in the buyer’s best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer’s rep may be paid by the seller or by a commission split with the listing broker.
  4. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual agency relationship, it’s vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and seller are told that the agent is representing them is legal in most states.
  5. Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensee in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
  6. Nonagency relationship (also called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
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10 Things to Take the Trauma Out of Home Buying

Posted on April 29, 2014 by Erin Johnston
  1. Find a real estate agent that’s simpatico. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you choose is both skilled and a good fit with your personality
  2. Remember, there is no “right” time to buy, any more than there is a right time to sell. If you find a home now, don’t try to second guess the interest rates or the housing market by waiting. Changes don’t usually occur fast enough to make that much difference in price and a good home won’t stay on the market long.
  3. Don’t ask for too many opinions. It’s natural to want reassurance for such a big decision, but too many ideas will make it harder to decide.
  4. Accept that no house is ever perfect. Focus on the things that are most important to you and let the minor ones go.
  5. Don’t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra low price may lose you the home you love.
  6. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself- room size, kitchen, etc.- that you forget such issues as amenities, noise level, etc. that have a big impact on what it’s like to live in your new home.
  7. Don’t wait until you’ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make you bid much less attractive to sellers.
  8. Factor in maintenance and repair costs is your post-home buying budget. Even if you buy a new home, there will be some costs. Don’t leave yourself short and let your home deteriorate.
  9. Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but always yields big benefits.
  10. Choose a home first because you love it, then think about appreciation. After all a home’s most important role is as a comfortable, safe place to live.
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Want the Seller to Pay Closing Costs?

Posted on April 24, 2014 by Erin Johnston

So you have found your dream home and want to make an offer, but you would really like to have the seller pay the closing costs without spooking the seller and end up possibly losing the home you have fallen in love with. The easiest way to achieve seller paid closing costs is to construct your offer is such a way as to make sure the seller does not lose any money despite paying these costs.

We all know closing costs are a regular part of every home purchase with the costs typically going to things such as prepaid taxes, homeowners insurance, inspection fees, origination of the loan plus other fees and sellers are allowed to pay the closing costs as well as up to 4% of the concessions which are things of any value outside the original costs, such as any of the prepaid expenses mentioned above and any collections or liens the borrower may have.

Getting preapproved for a loan is an important step to being able to construct a good offer. Not only does being preapproved give you an estimate of the closing costs, it also allows you to know how much money you will need to bring to the table at closing.

Here is how to construct an offer that will possibly get the seller to pay the closing costs for you. As an example let’s say you are preapproved for up to $225,000,so your closing costs on this amount is roughly $4000.  You find a home that you love for $230,000 and you start the negotiation process. The seller ultimately wants to get $220,000 for the home, so the best way for you to get the seller to pay the closing cost is to make an offer as near your max as you can with the stipulation that the seller pay the closing costs. This way the seller gets the wanted $220,000 without losing any money on their part and you get paid closing costs.

However, this all hinges on one thing…. the appraisal. If the appraisal only comes in at $220,000 you will have to renegotiate and possibly lose the home.

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Foreclosure Update

Posted on April 21, 2014 by Erin Johnston

Foreclosure Update:

Foreclosure statistics in 2013 have seemed a bit contradictory. Why, when the housing market is clearly improving are completed foreclosure rising? What about the “shadow inventory” and remaining distressed properties?

RealtyTrac reports that during the first 10 month of 2013 a total of 13,531 Washington homes competed the foreclosure process and were returned to the lender. That is more than the 11,544 home reported for full-year 2012. Why? The reason is largely due to the Foreclosure Fairness Act passed by the state legislature which mandated that properties in jeopardy or foreclosure go through a period of mediation where the borrower and lender attempted to negotiate equitable repayment terms which would allow the family to remain in their home. Unfortunately, many of those loans were too far underwater to benefit, and the foreclosures ultimately resumed.

More encouraging was progress in terms of seriously delinquent mortgages. While several sources of this type data exist, the Runstad Center uses information compiled by the Mortgage Banker Association of America. They report the number of outstanding mortgages and the share of those mortgages that are at least 90-datys past due or at some stage of the foreclosure process (but not yet REO). As of the end of September, there ware still 55,900 mortgages in the state which were seriously delinquent. As bad as the number is, it is 20,000 fewer than a year ago.

 

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