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Tips for Protecting Real Estate Consumers from Costly Scams and Fraud

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If you were to ask a room full real estate professionals if any of their clients were victims of wire fraud during a real estate transaction, chances are there would be many who might raise their hands.  In fact, according to an article published by Realtor Mag, “The Threat of Wire Fraud is Real”, “Wire fraud topped the list as a sophisticated scam causing consumers to lose millions of dollars each year”.  As alarming as that idea may be, real estate professionals can put some simple safe guards in place to help protect their clients.

In the article, written by Erica Christoffer and Graham Wood, a number of suggestions are touched upon.  For example, “If you or your agents do engage in a wire transfer with a client, call them on the phone immediately prior to the transfer of funds so they know they’re sending money to the legitimate source.”  Additionally, make your clients aware that you do no discuss personal financial information over e-mail and review with them what your communication practices are.  Hopefully, with this mutual understanding between you and your client, if they receive questionable e-mails, a red flag will be raised immediately before any sensitive financial information is shared.

Clients should also be reminded to not only use strong passwords, but update them regularly.  Perhaps even updating a password just before any wire instructions are sent.  As a real estate professional, you should also follow these guidelines for strong and updated passwords.

Read the entire article.

 

 

 

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What Impact with Automation have on Real Estate Needs?

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As the age of automation descends upon us, experts analyze its vast and far reaching economic impacts.  One fairly obvious and direct impact is upon employment, as robots and automation eliminate the need for people to complete certain types of work.

Bisnow.com published an article on September 6, 2017 describing some of the findings of a recent report by Carl Benedikt Frey and Citigroup.   Specifically, the article notes that retail jobs will be severely impacted by automation, with Frey suggesting that the retail industry employment is “likely to vanish”.  The impact of this is broader than the elimination of jobs such as manufacturing, which are geographically concentrated.  Frey indicates, “the downfall of retail employment will affect every city and region”.

As these changes begin to take place, a notable effect is a decrease of a need for retail space, resulting in empty storefronts and malls across the United States.  However, what may not have been anticipated was the increased demand for warehouse space.  It is estimated that more than 2.3 billion square feet of new space will be needed for warehousing between now and 2035.  This could require more “mixed-use development, which normally means residential sitting alongside retail or sometimes offices…” according to the article.

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Myth Busters: The Truths of Pricing and Selling Your Home

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One of the most important decisions a home owner who has decided to sell their home can make is what the list price of the home should be.  Emotions, financial strains, and decisions based on inaccurate or misunderstood information can lead to a disappointing and frustrating sales process.

In an article published by Realtor.com, Cathie Ericson helps debunk home pricing myths that might have home sellers hung up on their list price.   Reviewing these myths and understanding the truth about the pricing, listing and hopefully selling a home will help sellers start out on the right foot.

One myth sellers may believe that if a home is overpriced, it can just be lowered later without any negative effects.  As Ericson points out, lowering a price is not a quick and easy fix.  Many house hunters notice when a home has been on the market for a while and know when there have been numerous price reductions.   As she states,  “… buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.”

When deciding on a listing price, sellers may be turned off by the idea of pricing their home too low, assuming they will not make as much money in the sale.  However, low priced homes might just attract more buyers and the increased interest in the home might result in a bidding war.

The article details the truth behind other myths such as recouping 100% of the cost of home renovations, the real estate agent’s stake in the pricing strategy and the whether all home owners make money on the sale of their home.  Read the entire article.

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Scams Targeting Homeowners: Be Sure You Don’t Fall Victim

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It seems that almost daily we read or hear reports and warnings of scams aimed at consumers which can result in significant financial losses.  It is imperative that consumers remain vigilant in protecting their assets and investments; especially in the age of hacking, privacy breaches, robo-calling and phishing scams.  It can be overwhelming to keep up with the warnings; however, a recent article published by U.S. News and World Report by Devon Thorsby offers some sound and easy to follow advice.

For homeowners and prospective homeowners, down payments sent via wire transfers have ended up in the hands of high tech thieves instead of their mortgage companies.  Emails sent from mortgage brokers to their clients with wire transfer instructions can get intercepted by hackers.  The hackers are then able to change the wire instructions in the e mail prior to the customer receiving the message.  In the end, the customer receives an e mail with modified wire instructions and then ends up wiring the funds meant for a home closing directly to the hackers account.

To avoid this type of scam, one broker indicated “she instructs all of her clients to have the title company and bank communicate directly…and verify where the money is going, what the value number is and what the account number is… in any other situation where you have to authorize your bank or title company to do anything, rather than scanning and emailing any personal information or signed authorization, [she] instructs clients to send it via fax to eliminate the possibility of theft from an email hack.”

Thorsby provides additional advice to avoid telephone phishing scams that can result in financial hardships.

Read the entire article.

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Why Are More Americans Choosing to Rent instead of Buy Homes?

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The debate over why households choose renting over purchasing a home in the United States has been a hot topic lately.  Analysts have indicated the young generation of millennials are not interested in being tied down to home ownership and prefer renting over buying. However, an article published by CNN by Daniel B. Kline, points out that it is not just millennials who are opting to rent instead of making a home purchase.  Kline also notes that the decision to rent may not be a lifestyle choice, but a financially driven decision.

It is true that the number of households renting a home has increased over the past decade; almost by 10 million.  It is also true that 65 percent of household headed by those 35 years old and younger rent their homes.  However, it’s the heads of households aged 35-44 that made the biggest increase over the past decade.  In this age group, “the percentage of renters jumped from 31% in 2006 to 41% in 2016”.   Heads of households between 45-65 renting homes also increased over the past decade.

However, these households may not all be renting based on lifestyle choices.  In fact, research indicates that many who rent homes would actually like to purchase a home someday.  Further, surveys show that 65% of renters indicated that they are renting homes due to circumstances, not purely by choice.  Circumstances such as increased home prices and tougher mortgage standards may be partially to blame.

Read the entire article.

 

 

 

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How Is Student Debt Affecting Real Estate Trends?

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Student debt is a thorn in the side of many college students years after they receive their diploma.  The rising cost of tuition and debates as to whether students should be responsible for paying for their college education have been hot topics for several years.   According to an article published by Bloomberg, written by Chris Bryant, “In the U.S., where aggregate student debt has surged 170 percent in a decade, recent graduates owe $34,000 on average. About 5 percent owe more than $100,000. “

This may not seem like an issue that older generations would be worried about.  Their student loans have long been paid off, they may have even helped finance their children’s college education, leaving them debt free from college loans.  However, as the article points out, this mounting debt is a factor in some negative economic trends that affect many, even older generations.

Because the generation of millennials will be dedicating funds to pay their student loans off, with salaries that have not rebounded from the 2008 recession, their focus will not be on purchasing a home.  They are struggling to set money aside for a down payment.  Missed loan payments for student loans can affect credit scores, making mortgages harder to come by.    As baby boomers look to downsize homes in retirement, it might be difficult to find buyer from the next generation who can afford to purchase it.

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Zillow’s Instant Offers: Should We Be Concerned?

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Many home owners and those shopping for homes are familiar with the popular real estate website Zillow.com.  It provides information on not only homes for sale, but estimated values of homes, called “zestimates”, based on a combination of factors.  These zestimates have recently come under fire; nonetheless, Zillow has begun to introduce a new feature, “instant offers”, and some real estate professionals are sounding warning alarms.

In an article published in LinkedIn by Greg Hague, “Zillow’s Secret Plan”, concerns about Zillow’s business model are detailed.  Specifically, Hague warns that the instant offers will most likely come from real estate investors looking to purchase a home at a below market value, only to turn around and sell for a profit.  Further, the seller will have to pay a hefty service fee that does not include professional services such as appraisers, attorneys and real estate agents.

Hague summarizes that ultimately, Zillow is “…trying to commoditize real estate so that homeowners sell to online investors who then sell to retail buyers. If that happens, millions in homeowner equity will be transferred into the pockets of middleman institutional investors. The big winners will be these firms’ shareholders.”

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Sound Advice for First Time Home Buyers

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The real estate market has been improving significantly over the past several months.  Home prices are on the rise and homes aren’t sitting on the market for very long before going under contract.  This is great news for home sellers, but challenging for those looking to purchase a home.  First-time homeowners might find the conditions overwhelming and intimidating.

CNN Money published an article written by Beth Braverman which outlines several mistakes first-time home buyers make and tips for avoiding these pitfalls.  Important reminders noted include getting pre-approved for a mortgage early in the home buying process, not maxing out the mortgage limit provided by the lender and keeping emotions out of the decision making process.

It is highly recommended that all prospective home buyers get pre-approved for a mortgage early in the home buying process.  It allows the buyer to have an idea of how much money a bank is willing to lend them for a home.  As Braverman points out, “Second, it shows sellers that you’re serious and gives you slightly more standing if you’re competing for homes with all-cash buyers.”  This can be an important advantage in a competitive market.

However, upon receiving a pre-approval, home buyers maybe anxious to bump their budget up to the maximum amount the bank has approved.  It is wise to review a detailed budget to be sure the monthly budget can handle the mortgage payment, including potential income changes and other unexpected housing expenses.

As the home search continues, there will be bumps in the road, houses lost to other buyers or dream homes priced just outside the budget.  Braverman warns, “In that kind of environment, it’s easy to fall in love with a house that’s out of your budget, or get caught up in the heat of a bidding war and end up paying more than you expected.”  Being level headed and taking emotions out of the decision making process will ensure financially wise decisions are made.

For more details and additional tips, read the entire article.

 

 

 

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Cook County Property Valuations Cause for Concern?

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Each year home owners receive a new property tax bill and have the opportunity to see what value their county assessor’s office has assigned to their property. The property value on tax bills should be an accurate representation of the home’s true market value.   However, residents of Cook County, according to the Chicago Tribune, are not receiving accurate property values. Sadly, inaccurate valuations are negatively impacting many home owners in lower income communities. Worse yet, it seems as though wealthy home owners are benefiting from their properties being undervalued by the assessor’s office.

After analyzing millions of property tax records over a period of 12 tax cycles, the Chicago Tribune determined, “Residential assessments have been so far off the mark for so many years that the credibility of the entire property tax system is in doubt.”  Despite his announcement in 2015 that his office would be using new technology and models to improve the accuracy of property valuations, Cook County Assessor Joseph Berrios continued to utilize old computer models were still until at least 2015.

A detailed breakdown of the property values, according to their geographic locations, shows that homeowners in some of Cook County’s most affluent neighborhoods are receiving tax bills based on properties that are undervalued by 10 percent or more.  “Meanwhile, home owners in poorer areas of Cook County have properties significantly overvalued by the county.  As a result, people living in poorer areas tended to pay more in taxes as a percentage of their home’s value than residents in more affluent communities,” says Jason Grotto from the Chicago Tribune.

Want to fight your valuation and reduce your real estate tax bill? Contact our office for a free review of your property.

Read the entire article published by the Chicago tribune.

 

 

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Low Inventory is Concerning Real Estate Professionals

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The low inventory of homes for sale is causing some real estate companies to panic a bit.  The number of homes for sale March 2017 compared to March 2016 fell seven percent according to the National Association of Realtors.  In an article published by CNBC by Dian Olick, she quotes Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm, “”The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales.”  

The cause of this low inventory issue can be attributed to a few factors.  To begin, many homeowners are deciding to become landlords.  Instead of selling a home when moving on, homeowners are holding on to their home and renting it out.  Another reason is new home construction is declining.  On average, home builders are building about 18 percent fewer homes than the historic average.

The good news for home owners looking to sell, homes are selling quickly and some are even selling above list price.  Homes in April 2016 went under contract in 50 days, as of April 2017, that number decreased to 40 days.

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