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Will Technology Change the Role of Real Estate Agent?

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Technology has impacted the way people find homes, research neighborhoods, and compare prices; in essence, buyers are able to get much of the initial legwork done by sitting at their computer or scrolling on their smart phone.  Nevertheless, when it comes to actually buying a home, about 90% of buyers still use a hired real estate agent to help them with the actual offer and contract negotiations according to a report released by the National Association of Realtors.

In an article published by Forbes, its noted that “… buyers and sellers can get to the “one yard line” without much help. But deals rarely get done unless an agent is acting as middleman.”  Real estate agents, without a doubt, add value with their professional expertise and negotiating experience.  However, the sticking point for many is the large piece of the sale that the agents get for their commission.  In many cases, the seller pays a total of 6%, with the buying and selling agent getting 3% each. 

The concept of direct sales, hasn’t yet taken over the real estate market and certainly hasn’t made real estate agents obsolete; in fact, realtors may skip showing homes whose sellers aren’t willing to pay the 3% commission.  Yet, technologically based real estate companies are still searching for ways to compete with the current real estate agent.

Case in point, companies such as Opendoor, you simply “type your address into Opendoor’s website, submit a few photos, and it will make you an offer within a couple of days. No open houses, negotiation, or waiting months for the buyer to come up with the money. In fact, the average closing time from the first offer is less than 20 days,”  according to the article written by Stephen McBride. Some experts believe this type of business could change the way people buy and sell houses and the agent’s role in the transaction.

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Could the First Week Of Fall be the Best Time to Buy a House?

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Buyers often wonder which the time of year it is best to purchase a home.  Many know that the spring market is when many homes come on the market and buyers begin looking in order to purchase homes before the start of the next school year.  However, as far as deciding when to buy a home based on getting the best deal, it turn out that the time is now! 

In an article published by Forbes, the week of September 22-28 has been identified, by Realtor.com as the “best week of the year to buy a house”.  In the analysis, it was found that the number of listings increase by more than 6% on average this week and the home on the market are just over 2% more affordable as price cuts close around 6% trend this week of the year. 

Overall, buyers will see less competition this week as the summer has come to a close and a number of buyers have exited the market for the year. Nationally, the competition is down by a quarter, with some local areas seeing a decrease in buyers close to 40%. 

Sellers can look forward to some positive news regarding this first week of fall, “…buyers have a more serious mindset and they are focused on making a purchase before the end of the year.”  Perhaps this unlikely time of the year to buy a home will be a win-win for sellers wanting to close the deal before the end of the year as well.

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Possible Cost Savings for First Time Home Buyers

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Buying a home is expensive, buying a home for the first time is overwhelming and the costs can be surprising and cause some to think twice before signing the papers.  There is good news for first time home buyers; they may be able to save some money when purchasing a home.  Specifically, some may be able to qualify 25 basis-point discount on the FHA mortgage insurance.

The Housing Financial Literacy Act of 2019 passed in the House of Representatives earlier in July.  This bill’s purpose is to encourage first time homeowners to complete a program to educate them on the home buying and home ownership experience in order to promote sustainable homeownership.  Buyers that complete this training could qualify for the discount, but the bill needs to pass the Senate’s vote and move on for presidential approval.

According to an article published by HousingWire.com, although some experts are concerned the discount could have a negative impact the FHA’s insurance fund, many agree that promoting education about home buying and ownership is vital in helping more American’s have a positive homeownership experience. 

“Whether you are managing your credit, creating a budget, saving for retirement, or purchasing a home, understanding the basic principles of planning, saving, and investing for the future is vitally important,” Rep. Joyce Beatty, D-OH, who presented the bill, said. “Studies show that pre-purchase housing counseling equips first-time homebuyers with the much-needed financial skills and tools to make informed financial decisions that ultimately benefit not only their families, but also the surrounding neighborhood and our entire economy.”

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What Challenges to Buyers with Children Face?

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Buying a home can be an overwhelmingly stressful decision.  There are many factors buyers need to take into account when making a final home purchase decision.  Location, size, floor plan, down payments, and mortgage rates are a few that buyers must consider.  The buyer’s budget is another very important factor that must be considered.  It appears, however, that a specific group of buyers is more likely to go over their set budget when purchasing a home.

According to an article published by The M Report, buyers with children seem to have trouble sticking to their budget when purchasing a home.  In fact, 25.6% of buyers with children exceeded their budget when purchasing a home.  This group also had 31% that were denied a mortgage, where buyers without children only saw 11% denied mortgages.

It appears that having children in the home increases the list of demands that buyers make for their homes.  They want shorter commute times to their workplace, which can put them in more desirable and expensive locations.  The size of the home increases as the need for more space to accommodate growing families increases.  Some buyers make sacrifices on these items in order to stay within, or at least closer, to their budget. 

To make matters more stressful for this group of buyers, many decisions on home purchases can be rushed for families as they work to ensure they are settled before the school year begins. 

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Photo Credit: Franco Giovanella

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What Influences Mortgage Rates?

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Keeping up with the ups and downs of mortgage rates can be daunting.  As home owners consider refinancing their home and buyers try to determine the right time to purchase a home and secure a mortgage rate, it can feel like they are aiming at a moving target and aren’t sure when to actually lock in a rate.  It can make many wonder what causes the rates to fluctuate?  The answer is, many factors impact the mortgage rates.

In an article published by Bankrate, Deborah Khearns thoroughly details several of the reasons mortgage rates increase and decrease over time.  As many know, the Federal Reserve can play a roll in mortgage rate changes.  As the article states, “The Federal Reserve doesn’t set mortgage rates but, sometimes, their decisions can indirectly influence them.”

It is probably pretty obvious that the economy and its current conditions influence the mortgage rates.  It may be surprising, however, to learn that it’s a bad economy that actually helps improve mortgage rates for buyers.  As the economy becomes less favorable, investors tend to move toward safer investments like bonds.  According to Greg Mc Bride, Bankrate’s chief financial analyst, increased number of bond investors results in “…pushing bond prices higher but the yields on those bonds lower.”

The article goes on to discuss the influence of inflation and origination costs as well as the borrower’s financial and credit history and the impact of those on rates.  Read the entire article.

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2019: What Do Real Estate Experts Think We Should Expect?

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Just few weeks into this new year and the U.S. already seen some pretty significant events that have, for some investors and consumers, created a lack of confidence in the stability of our economy.  An ongoing government shut down, global trade issues and some stock market dips: it should be no surprise potential home buyers may to take pause before jumping into a big investment.

Yet, many experts remain relatively optimistic about how 2019 will fare as far as the real estate and mortgage markets are concerned.  In an article published by the Washington Post, journalist Kathy Orton states, “In their forecasts for 2019, real estate experts anticipate the housing market slowing down, but not stalling, with prices and mortgage rates moderating.”

Orton reports the chief economist of NAR, Lawerence Yun believes, ““The forecast for home sales will be very boring — meaning stable.”  Although home prices are predicted to rise, it will be at a slower pace than home owners have seen in recent years.

Realtor.com expects mortgage rates to reach 5.5 by the end of 2019 and overall, expects to see just 2.2 percent growth in home prices.  Zillow echoes the other experts, with an expected 5.8 percent mortgage rate and a housing price increase of just 3.79.

The Mortgage Bankers Associations believes 2019 will perform better than other experts have predicted.  MBA economists Michael Fratantoni and Joel Kan stated, “Even with the anticipated cool down in economic growth, we expect that housing demand will remain strong, mortgage rates will stabilize, wage growth will increase and home price growth will moderate, providing favorable conditions for growth in the home purchase market.”

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Predictions on Interest Rates for 2019 May Disappoint Buyers

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When purchasing a home, there are a number of variables that may influence or even dictate which home the buyer can afford.  Obviously the price of the home, the property taxes for a specific home as well as how much money the buyer has to use as a down payment all are important factors for home buyers to consider when zeroing in on a home to purchase.   However, there is another variable that truly can vary and that is the mortgage interest rate.

For the past several years, buyers in the US have been spoiled by rates that hovered near record low interest rates.  Small upticks in the rates may have alarmed some home buyers that disappointed to see how it changed their monthly payment.  Obviously, as the interest rates for mortgages increase, the monthly payment also increases and it could be a deal breaker for some buyers.  This is why it is important for prospective home buyers to continue to be aware of interest rates fluctuations.

Unfortunately, based on an article published in Keeping Current Matters “Where are Interest Rates Headed in 2019?”, Freddie Mac is expecting rates to continue to increase throughout 2019.  Nevertheless, even if rates inch closer to 5.3 by the end of 2019,  a glance back at the history of rates in the US over the past 40 or so years may offer a bit of relief.  It is still nowhere near the 18% homeowners in the 1980s had to work with.

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Do People Still Use Real Estate Agents?

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Technology seems to be the heart of the real estate market.  It begs the question, do house hunters and owners selling their house still feel that they need to use a real estate agent?  Based on a recent housing consumer study completed by Harris Insights, the answer is a resounding yes.

In fact, the percentage of home buyers or sellers who used a real estate agent in a recent transaction has increased 5 percentage points from the last study three years ago and up 9 percentage points since 2001.

Many might assume that the older population of buyers and sellers are the most likely to use a real estate agent for their transaction.  After all, Gen Xers and Millennials are tech savvy and more accustomed to navigating the virtual world.  However, according to an article published by Housing Wire, “91% of those ages 18 to 34 used real estate agents in their transaction. That number is slightly higher among Gen Xers, or those ages 35 to 44 years old, at 94%…Actually, it’s the older generations that are cutting real estate agents out of the picture as just 81% of those ages 55 and older reported using a real estate agent in their transaction.”

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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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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.

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Photo Credit: Blogtrepreneur

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