What's In Store for the 2016 Housing Market?

While the constant headlines of home foreclosure numbers are now a distant memory, the housing market has still not quite returned to its pre-recession strength. New home starts spent this past spring idling in hope that millennials would soon dive full force into home ownership. But a lot of the millennials opted to continue renting and pay down some debt. The federal government enacted numerous rules and laws aimed at protecting home buyers from predatory lending. And mortgage rates remained at historic lows. One positive that has come from the housing market collapse is that more home buyers are aware of the importance of title insurance. This came from the large number of bank-owned (REO) properties that had to be reabsorbed into the market before any substantive market growth could begin. But, what do industry analysts anticipate for 2016?

Many consumers remain pessimistic

Trulia commissioned Harris Poll to survey Americans about their view of the current and future housing market. Business Insider reported the results. Their research found that 80 percent of people in the important millennial demographic hope to someday own their own home. They found that 75 percent of people in all age brackets still hold onto the American dream of home ownership. About 22 percent of respondents believe it will be more difficult to obtain a home loan in 2016 than it was in the preceding years, due primarily to rising interest rates. Thirty-one percent of those millennials say they do plan to purchase a home by 2018. Their job status and how much money they have saved for a down payment will determine whether they pursue that goal in 2016 or later.

Fannie Mae and FHA try to make obtaining a loan easier

In addition to more buyers understanding the importance of title insurance, home buyers are more cautious about getting a home loan. In an effort to draw some of the qualified buyers who are still sitting on the sidelines into the market, the Federal Housing Administration (FHA) lowered premiums on mortgage insurance below the traditional 0.85 percent to 1.35 percent. That is enough to save home buyers about $900 each year on their mortgage insurance. Additionally, Fannie Mae is also trying to make the path to home ownership smoother for buyers. Buyers qualified in other ways can get a home with as little as 3 percent down.

Another effort to make buying easier is the HomeReady mortgage program. HomeReady takes into consideration the income of other people living in the home, without these people being listed as a borrower on the mortgage. This means if a person represents at least 30 percent of the household income, their earnings can count toward the loan qualification. This program can also be used to include persons not living under the roof, like the parents of millennials who are willing to help their children with some monetary assistance.

Boomerang buyers may be coming back into market

While the first-time buyers get the most attention, it is the boomerang buyers who are likely to determine the overall strength of the 2016 housing market. The Northwestern University Institute for Policy Research estimates that  approximately seven million people across the United States lost their home to foreclosure during the recession. While the lenders may be reluctant to lend money to anyone who has a foreclosure in their past, the National Association of Realtors (NAR) says almost one million of those people who lost a home previously are looking to buy again. The housing market will never fully recover until this demographic is once again allowed to borrow money to get their American dream back.


It is important that all home buyers be more prudent with their purchase decision. This includes being sure they can comfortably afford their mortgage. They should also have a thorough home inspection, and purchase title insurance for their own protection, in addition to the title insurance that protects the lender.

Older Homes Have Hidden Value Along With Hidden Costs

 When the housing market is discussed in the news, the new home start numbers and building permit numbers are used to indicate the strength or weakness of the market. Fannie Mae predicts a strong housing market for 2016 and the increase in housing starts that many Realtors have been hoping for since the United States began pulling out of the Great Recession.

Title insurance for old and new homes

Many buyers don't understand the need for Title Insurance on new constructions. Even though they are the original owner of the home, they still need Title Insurance to protect against possible hidden problems with the land or existing liens. With older homes, the need for title insurance is more clear. These homes have had many owners and possibly fell into foreclosure at some time. But these older homes can be hidden gems that still have many benefits for buyers of every age group.

Quality construction of older homes

Someone is going to say it anytime a Realtor is showing an older home to potential buyers: "They don't build them like this anymore." It is true. Homes constructed 50 or more years ago were built with old growth trees. That wood is not in ample supply these days, and the vast majority of new homes have wood from hemlock fir hybrid trees. These trees are scientifically engineered to grow quickly. However, the wood lacks the character of the wood used in older homes and does not have the same durability. A lot of wood used in new homes is what's called "construction grade." It is designed to be covered by paint.
Construction has improved in many areas over the years. Builders began incorporating features like energy-efficient windows during the energy crisis of the 1970s. Modern windows save homeowners thousands of dollars each year in energy costs and are virtually maintenance free. These multi-pane windows are metal or vinyl clad, easy to keep clean, and easy to repair if broken.
It is possible to get the best of both worlds in an older home that has been upgraded. But, potential buyers should know that most tax credits that were available for making energy-efficient improvements to existing homes have expired.

Other difficulties with existing homes

Older homes have those tiny bathrooms and small kitchens. People like being comfortable in every room of their home these days. Even mobile homes and homes in the lower prices ranges have luxurious bathrooms and kitchens with islands, plenty of counter space and outlets for small appliances. Buyers need to consider possible structural limitations to remodeling older homes. And a complete upgrade of the electrical system is often necessary.

Some things that can't be changed

Many millennials prefer being located near the city and are willing to trade having a spacious yard for having the convenient location. The municipal parks are enough recreational space for them. For home buyers who have a large lot with existing shade trees as a top priority, older homes are probably their only option. Homes that are more than 40 years old have trees in the yard that are over 40 years old. These stately trees are a mixed blessing. They do provide a canopy of shade to keep the house cool and enhance the enjoyment of outdoor activities, but they produce a large quantity of gutter-clogging leaves and the large limbs can be a liability. Each year these old trees damage homes (and neighbor's homes) when they succumb to high winds or loose limbs due to disease. Like people, trees are more prone to disease as they get older.

Upfront savings can cost a lot over time

Many first-time buyers are anxious to get as much house as they can possibly afford. A new construction will cost about 15 percent to 30 percent more than an older home with comparable square footage. But, the new home comes with adequate insulation and a new, highly efficient HVAC system to save on monthly bills. It will have vinyl exterior that does not require painting and new appliances.
Novice buyers often take on more than they can handle when they buy an older home with the intention of doing much of the needed work themselves. According to the NAR report Real Estate in a Digital Age, 68 percent of first-time buyers are millennials and 32 percent of all home buyers are between the ages of 25 and 34. With the vast majority of first-time home buyers being young professionals with busy lives, older homes are typically the right choice for just a small percentage of buyers who understand the costs and responsibilities that come with them.

Millennials Buy Homes Differently Than Previous Generations

According to "Real Estate in a Digital Age" from the National Association of Realtors, 40 percent of home buyers turned to newspapers to begin their home search in 1964. Fifty years later, the newspaper is replaced by the internet with 43 percent of potential home buyers beginning their search online. There are now apps to notify buyers when homes come available in their neighborhood of choice and virtual tours that provide a feel for numerous properties, without having to drive all over town. One prediction about the future of real estate that has not come to fruition: the elimination of real estate agents. Eighty-seven percent of buyers still used the services of a Realtor when buying their home in 2014.

Millennials embrace the digital age

Browsing homes online lets young home buyers take their time, and they do. They will typically spend 11 weeks searching for a home compared with 8 weeks of search time for older baby boomers. The newest generation of home buyers also tend to be more particular. Using the internet does not reduce the number of homes they want to see in person. People using the internet will want to look at about 10 homes during a 10 week period of home searching. People not using the internet will spend less time looking and view about one home for each week of their 4-week search, according to the NAR report.

Young buyers multitask and want smartphone apps

While more than 90 percent of real estate companies have websites to feature their listings, many overlook making their website mobile friendly. Realtors use their smartphones to communicate with clients and service providers throughout the day. Many of those home buyers use their smartphone more often than they do their personal laptop or home computer. Young buyers have a lot going on in their lives and grew up in a fast-paced, ever-changing world. When new technology comes along, these young buyers more easily accept the change than older home buyers. And, often, more quickly than real estate agents from a different generation.
While staying up to date with new technology is a major challenge for agents and companies, it is also an essential part of maintaining a stable and profitable business.

Profile of Millennials

The average Millennial home buyer is between the ages of 24 and 35. They do not have any children and their median annual income is $84,500. They are the largest group of first-time home buyers at 68 percent. Twenty-nine percent of first-time buyers are 35 to 49 years old from Generation X. The 24 to 35 age range buyers accounted for 32 percent of all home purchases in 2014. Ninety-four percent of these young buyers use the internet to search for homes. That is 10 percent more than the percentage of Baby Boomers who searched online. Only 65 percent of people from the Silent Generation (born 1929 to 1939) use the internet for their home search.

What devices are they using?

IBM claims Macs are making their life easier, saving money, making money, and reducing the need for tech support. Millennials find Apple products suit their tastes, too. Fifty-eight percent of this new generation of home buyers used an iPhone for their home search. Forty-six percent conducted their search with an iPad. Only six percent searched homes with a Windows based mobile device. Baby Boomers used Windows products slightly more. Only 35 percent of them used an iPhone for their home search in 2014. Eighteen percent of Silent Generation buyers used an iPhone. Fifteen percent of that same demographic used a Windows based mobile device.
Many buyers of all ages search online prior to contacting a real estate agent. It is important for agents to keep their name and contact information in front of these buyers and themselves readily accessible to answer questions and provide information on possible properties.

The CFPB Continues Striving For Transparency in Mortgage Market Practices

The Consumer Financial Protection Bureau (CFPB) strives to empower consumers by providing them with the information they need to make prudent decisions about their finances. Part of that mission involves simplifying the industry jargon and legalese associated with contracts and most financial documents. Their primary purpose is to educate consumers about abusive practices. They also

actively supervise the conduct of lending institutions and other financial service companies. The CFPB analyzes market information and consumer data to determine the best policies for protecting consumers. The CFPB has just updated rules for loan disclosure and mortgage market practices.

The Integrated Disclosure Rule Rollout

There were vocal critics of the Integrated Disclosure Rule when details were first released in 2013. Combining the Truth in Lending Act (TILA) with the Real Estate Settlement Practices Act (RESPA), it became known as Integrated Disclosure, or TRID. Despite approximately two years to prepare for the implementation, the rollout was not as smooth as the CFPB had hoped. The rule was delayed by two months because the CFPB felt the lending industry needed more time to prepare. There remains some uncertainty of how to best lock interest rates for borrowers on closings that may be delayed to comply with the integrated disclosure rule. Historically, most rate locks were for 30 days and at not cost to the borrower. To meet with the "Know Before You Owe" requirements, some closings are delayed and require rate locks of 45 and 60 days. For a borrower to lock an interest rate for that term, they may incur hundreds or thousands of dollars in additional fees.

Prior to the integrated disclosures rule, many lenders were accused of bumping up interest rates on home loans just prior to closing and tacking on additional fees like prepayment penalties. TRID prevents any last-minute changes by giving borrowers three days to review all loan documents prior to signing. Consumers can also walk away from transactions without penalty, under some circumstances.

The CFPB has just updated rules about lending practices and understands that TRID is the biggest change the mortgage industry has had in the past 40 years. Full implementation requires updates to existing software and changes in how vendors supply market data interest rate information to banks and other lending institutions. The CFPB is expected to re-evaluate implementation and report on progress of adapting the TRID rule later in 2016.

Updates to the Home Mortgage Disclosure Act

The CFPB has just updated rules regarding the Home Mortgage Disclosure Act (HMDA). The rule was enacted over 40 years ago by Congress in response to the allegation that banks were not properly servicing some communities. The HMDA addresses this concern in three ways:

It shows whether or not lenders are properly serving the housing needs of their community.

Provides information to public officials so they can make informed decisions on policies for the local area.

Reveals any lending patterns that may be considered discriminatory.
The CFPB has just updated rules to the HMDA that should improve lending data for local, regional and national housing markets. Lenders will be required to report property value, loan terms, an prepayment penalties, and the specifics of any introductory interest rates or teasers. Additionally, lenders mus provide more information than they did previously on underwriting policies. The new data requirements will be effective on January 1, 2018. The compiled data, edited to maintain privacy of applicants and borrowers, will be available to the public in 2019.

When individuals apply for a loan, they will be asked to provide their race, ethnicity, sex, and income. This information is used by consumer groups, researchers, and regulators to ensure all people are receiving fair treatment and an equal opportunity to realize the American dream of home ownership.

Recent Report Provides Some Insights on Smart Home Technology

Despite technical glitches and privacy concerns, more Americans are embracing smart home technology. The likelihood of installing such products increase by about 93 percent when people see what the advanced electronics and automation can do for them first-had, according to the Icontrol Networks State of the Smart Home Report for 2015. The report also finds that protection of personal property and security for family are the main reasons 90 percent of North Americans said they purchase any connected products for their home.

Not surprising, millennials are the largest group of smart home device purchasers, with their parents coming in second. Icontrol Networks reports that about half of the general population is excited about emerging technologies for the home. Most want simple devices that make their day-to-day lives easier.
Bob Hagerty is CEO of Icontrol Networks. His company has been in the smart home sector for over ten years. He says interest in smart home technology and devices has increased dramatically over the past two years. Most interest is in security features and devices that allow home owners to monitor their property while away. Consumers are also looking for products that help them save energy like connected thermostats and programmable lights. When asked about which devices excited them the most, 72 percent of home owners checked self-adjusting thermostats on their questionnaire. Seventy-one percent selected doors capable of being locked remotely. Indoor lights that can be programmed to adjust themselves were of interest to 69 percent of respondents. Sixty-five percent said they are excited about self-adjusting outdoor lights. Sixty-five percent of home owners responded they were very excited about cameras for monitoring their house.

Who is buying smart home products?

The report finds that the vast majority of home owners want some help with the installation and programming of their smart home equipment (74 percent). A little over half of respondents (52 percent) said they wanted a professional to handle all of the installation and programming for them. Half of the people responding to the Icontrol Networks' survey felt smart home products in their elderly parent's home would provide them peace of mind. Over 70 percent of the respondents between the ages of 25 and 34, who also identified themselves as parents, felt this way about having smart home technology in their parent's home.

Perhaps surprisingly, only about 25 percent said they would be most likely to install smart home equipment when purchasing a new home or moving, compared with 42 percent of people saying they would be more inclined to purchase such technology when renovating their current home or updating rooms.

Interest by region

Home owners in the Northeast are the most excited about capabilities of smart home equipment. This same area of the country also has the highest number of respondents who know someone with a connected home. This confirms the primary finding of the 2015 State of the Smart Home Report that seeing smart home products in person increases the probability of that individual installing smart devices in their own home. It was Southerners who said they were most interested in having a connected thermostat for their home (77 percent). Half of all respondents from the Midwest said they were most excited about the possibility of having smart devices in their kitchen. Home owners in western states like California were 100 percent more likely than people from other areas of the U.S. to name sprinklers as the device they would most want to be capable of reading the home owner's mind and operating autonomously.

As Realtors know from working with home buyers, the comfort and security of family members and care for aging parents remain the top priorities for all home buyers and home owners. If smart home devices are going to help them with these things, home owners are more likely to incorporate them into their daily lives, regardless of any concerns they may have about new technology in general.

Coastal Home Owners Need to Brace for Hurricane Season

It seems the storms get more severe every year and the financial toll keeps climbing with every hurricane season. For many Americans, the hurricane season is something they only see on the news. But for owners of coastal homes, it is a part of life. The hurricane season runs from June 1st to November 30th. Some years are worse than others, but people living on the coast or planning to purchase a coastal home must always be prepared for the worst case scenario.

Before the hurricane season
A below-normal hurricane season doesn't mean people living near the coast are going to avoid the catastrophic impact tropical storms can cause. The should always be ready to respond quickly and have some basic supplies readily available.

• Know what evacuation route you will use. Keep in mind that thousands of other drivers will probably be using the same roads.
• Have a disaster kit for each family member and be sure they know where it is. It should include a flashlight, batteries, first aid supplies, food, cash and identification. It is a good idea to have a crank charger and spare battery for cell phones and flashlights.
• Be prepared to remain in your home for several days without power or supplies from the store. You may want to seriously consider a backup generator that is capable of powering the entire home.
• During times of crisis, communication is always difficult and cell towers are pushed to their maximum capacity. Prepare a family communication plan well in advance of any emergency.
• Many coastal communities have alert systems to send emergency notifications by text or email. When moving to a new area sign up for these alerts by searching the community name plus "alerts" on the internet or contacting the area fire department and first responders.

Preparing your home
A person's home is often their place of comfort and protection during life's many storms. But these well-built structures are vulnerable to forces of hurricanes and severe storms. Some advanced planning can reduce risks and minimize the financial toll when storm damage occurs.

• Evaluate your home insurance policy for adequate coverage. Most standard policies do not include flood insurance. You should also add coverage for any exterior buildings or other features that could be costly to replace.
• Routinely inspect your rain gutters and down spouts. They should be clear of debris and securely attached to properly divert water away from your home during heavy rains.
• Have wood cut to size for quickly boarding up windows. Storm shutters are the best protection, but more costly. Taping windows and doors provides absolutely no protection.
• Doors should have multiple locking mechanisms to prevent them from flying open during a storm. Open windows and doors increase internal pressure under the roof and can lift it off the house.
• Consider installing hurricane straps that will securely attach the roof to the rest of the structure for added strength.

The inevitability of hurricane season does not mean people can't enjoy the many benefits of living near the coast. Everyone has to prepare for emergencies. Everyone's life has some storms. There are lessons to be learned during sunny weather and things to learn during storms that will enhance a person's life. In addition to protecting your own home and preparing your family for emergencies, participate in community events and take part in helping others prepare for hurricane season. A strong and resilient community needs your participation. By participating in community activities, you help minimize the disruption a storm can cause and help thing get back on track sooner. Remember to include your pets in the disaster planning and have some extra food on hand for them.

Home buyers should consider each loan type prior to viewing homes

As the home market improves, many buyers are considering a purchase in the near future. Despite the responsibilities that come along with owning a home, for most people, it is more rewarding than renting can ever be. The type of mortgage many buyers used during the run up to the housing market collapse is what lead to them being in trouble when the economy began to sour. Before looking at any houses, home buyers should know which mortgage is best suited for their goals and plans. Here is a bit of information on the most common types of home loans.

30-year fixed rate mortgage

Because it allows buyers to purchase the most home with affordable monthly payments, the 30-year fixed rate home loan remains the most popular. On September 1, 2015, the rate was at 3.75 percent. That is up slightly from the previous week and the number of applications increased by more than 11 percent due to positive economic news. In addition to the standard 30 years, fixed rate loans are available in terms of 10,15, and 50 years. The interest rate remains constant for the life of the loan and home owners know what their monthly payments will be regardless of inflation or other fluctuations in the economy.

Adjustable rate mortgages (ARMs)

Many home buyers were caught holding adjustable rate mortgages during the housing crisis. They had planned to refinance or sell their home prior to any increase in their interest rate and monthly payments. When the housing bubble burst, they were unable to sell or refinance and many were unemployed or getting by on less household income.
The rate and monthly payment is adjusted at specific times during the life of an adjustable rate mortgage. The increase or decrease is typically tied to market behavior. Buyers can get the same house as with a fixed rate mortgage for a lower initial payment. The adjustable rate loan remains popular with buyers who do not plan to remain in their home more than five years. Anyone considering an adjustable rate loan should be sure they can comfortably afford their monthly payments, even if the interest rate increases to the maximum possible amount.

Interest only loan

Another loan that lead to trouble for many home owners during the Great Recession was the interest only loan. For a predetermined amount of time, the home owner is only required to pay interest on the loan amount. The interest may be fixed or adjustable. At the end of the term (typically 5 or 10 years) the home owner must refinance or begin paying both the interest and some amount toward principle. Just as with an adjustable rate loan, home buyers should plan for a worst case scenario of not being able to sell their home or refinance.

Federal Housing Administration loan (FHA)

Contrary to what many home buyers believe, an FHA loan is not a government loan. It is written by a privately owned company and insured by the federal government. The qualification requirements for an FHA loan are more lenient than the requirements for a conventional loan. The down payment and closing cost are also much lower for buyers who are purchasing their primary residence. For first-time buyers the down payment can be as low as 3.5 percent. The loan is available on site built homes and mobile homes. There are also special programs for seniors.

U.S. Department of Veterans Affairs (VA loan)

This loan is available to veterans or their widows/widowers. The number of years in service affects the requirements and terms of the loan. Which type of discharge the veteran received from their branch of the U.S. Armed Service also impacts their eligibility requirements and loan terms. Most people who qualify for a VA loan can also obtain a conventional loan with similar interest rate. The main benefit to veterans is that they can get a VA loan with no down payment.

Home buyers should plan for their home purchase months in advance. It is best to review credit scores prior to meeting with loan officers or mortgage brokers to avoid any surprises that could hinder them from qualifying for the best possible loan.

Home owners, winter storms and falling trees

During the fall and winter months, hundreds of trees will be falling in yards and on houses across America. The problem begins during hurricane season and continues through winter. Heavy snows and ice storms frequently get the best of century-old trees. The odds of your home (and you) been struck by a falling tree increase based on the age of the trees nearest your house. Here are a few other things to know and to help you in the event your house is struck by a falling tree.

Who is responsible?

If a tree falls on your house, most likely your homeowners insurance will have to pay for damages. If a tree falls in your yard and does not damage your home, most likely you will be responsible for the clean up out-of-pocket. Even if the tree was located on your neighbor's property, you could still have to make the claim on your policy, pay the deductible, and be responsible for any cost not covered by your policy. If your insurance policy is basic and for your residence only, it may not cover damage done to outbuildings, fencing, pools, or your lawn. The reverse is typically true if a tree from your yard falls on a neighbor's house. The exceptions are when the tree fell due to disease or was properly documented as being a hazard.

Identifying diseased trees

Just like people, as trees age, they become more susceptible to disease and falls. During the first 25 years of a tree's life, it should not lose a notable amount of limbs. As it gets older, limbs fall off more frequently and the size of the falling limbs increases. This is why the Arbor Day Foundation recommends having a trained arborist inspect older trees and advise on proper care. Some basic identifiers indicate a diseased tree:

Uneven growth patterns: previous damage from storms or wind can cause trees to grow lopsided and be a higher risk for falling.

Decay: Because decay often begins inside the tree, look for signs like mushrooms, fungi, and soft crumbly wood. Mistletoe is also a fungus. Its presence indicates some internal decay.

Dead wood: Occasional dead branches are normal for any mature tree. Any large branches that show signs of dryness and bark loss should be removed immediately.

Cracks: Deep splits in limbs or spots with missing bark indicate the tree's structure is failing.
Documenting a hazardous tree

Start by discussing your concern with your neighbor. It is a good idea to document your request that they remove a hazardous tree. Additionally, photos and an assessment of the situation by a tree professional may help your case in the event the problem tree does tumble. It is still possible your home insurance will have to pay for damages, but having the documentation improves the likelihood that your neighbor will have to foot the bill. It is far better than just you saying "I knew it was going to fall" after the fact.

If a tree falls on your home

Falling trees may also bring down power lines. If you are inside the home, cautiously exit the structure. The weight of the tree against your house is causing continuous pressure. The roof and other support structures do not always give way immediately. If power lines are down, call the police, power company, and then your insurance company.

Do not try to make repairs during a storm or rescue personal items. Understand that emergency services are stretched thin during inclement weather, and there are numerous other people in a similar situation. If a tree falls on your automobile, it is going to be a matter for your auto insurance and probably covered by comprehensive insurance. When it comes to falling trees, a few hundred dollars in prevention can be worth tens of thousands of dollars in repair.

The Importance of a Proper List Price

Who makes the decision about list price and sales price? The home's owner.

Who suffers when the list price is too high? Everybody: the seller, their agent, the buyer's agent, the buyers. An improper list price can cause problems at every point of the transaction. Even when (if) buyers and sellers reach an agreement on price, an appraisal for less than the contract price creates headaches for everyone. One of the most difficult and often unpleasant responsibilities for listing agents is having an honest and direct discussion about the market value of the seller's home.

Sellers must understand market value
Market value is often less than the seller's perceived value of their home. Spending thousands of dollars and hundreds of hours on a water feature in the backyard does not necessarily increase the home's value by the amount invested. It can increase the home's appeal, but not always the value. Market value is different than the assessed value for taxes.
The National Tax Payers Union (NTU) reports that about 60 percent of all properties in the United States are assessed at an amount above their current market value.
Market value is determined by homes that have sold recently in the area. How far the home is from things like schools, shopping, medical services, and work centers also factor in. The impact of future construction projects and road development should also be considered. The local economy is perhaps the most influential factor in a home's market value. Despite the recent housing market crash, it is still difficult for many home owners to accept that real estate values do not always go up year-after-year.

Home value estimators
There are several online Home Value Estimators. While technology has improved the lives of Realtors in many ways, these automatic home value estimators often make their jobs more difficult. Without actually naming any of the available online options, some are better than others, but there is a huge error rate with all of them. For individual sellers, the disparities between these computer generated estimates and an informed opinion of value from a knowledgeable agent are often significant.
When agents discuss market value with their clients, they must learn to incorporate the tax assessed value and estimate from online estimators into the discussion. They can encourage the sellers to view these things as a starting point and to use all available information together for making an informed decision about their listing price.

Why listing price is important
A larger pool of potential buyers: Most interest and activity takes place in the first few weeks a home is listed in the MLS. To maximize the exposure to ready, willing, and able buyers, it is crucial that the price is not too high. Even in a seller's market, qualified buyers should be viewed a valuable. A high list price can instantly scare away potential buyers and result in the home remaining on the market longer than it should.
The price directly impacts days on market: There is no need to add wording like "bring all offers" and "highly motivated seller" when the list price of a home is competitive. Buyers often have spent several weeks or months comparing homes and prices in the area. They know how much house they can get for the same price elsewhere. When a home has an unreasonably high list price, contract negotiations typically take longer and are more contentious. This leads to a reluctance by both parties in working together for a successful closing.
Some sellers are not going to get the sales price they hoped to achieve. As a result, they often resent every penny that is deducted from the sales price (namely the real estate agent's commission) and lowers their net proceeds. When they are prepared well in advance of the negotiations and closing, they have time to understand and accept that reality. They make the decision. A tactful and honest Realtor will go over a reasonable estimate of market value prior to listing the home. Otherwise, the seller can feel misled, trapped, and forced into a situation they do not like.

Home Improvement Projects That Add Value To Your Home

Buying a home is exciting and loaded with possibilities. For the seller, it can be a highly emotional and stressful experience. The place that they have called home for many years is heavily scrutinized and picked apart by potential buyers, real estate agents, and inspectors. There are some smart upgrades every seller can make that will not cost a lot of money and can improve their likelihood of getting the sales price they want.

The most important room in the house?
What room do you think of when asked that question? For most people, it is the kitchen. There are entire TV channels devoted to home cooks. More families are opting to prepare meals at home rather than dine out. In addition to saving money, cooking from home is healthier, more rewarding and improves the family dynamics. Many buyers head straight for the kitchen when viewing possible houses. They are looking for the kitchen that "just feels right" and that they will enjoy spending time in.

Industry experts agree that it is well worth an investment of a few hundred dollars to upgrade kitchen faucets and lighting fixtures. Sellers should choose energy-efficient lighting and make sure that it adequately illuminates all areas of the room. There are several options for kitchen cabinets. Some companies specialize in refinishing the cabinet boxes and replacing the doors and drawers. Short of that, homeowners can give cabinets an updated look with a fresh coat of paint or thorough cleaning. The most important thing is that the kitchen is clean and looks reasonably up-to-date. It is expensive to renovate. Sellers can still make a few low-cost improvements. The seller wants the buyers to envision themselves cooking in the kitchen, not thinking about the cost of upgrading the entire room.

Appliances
Buying all new appliances is not recommended, but sellers may be able to freshen up the look of existing units by purchasing new doors or face panels. Many dishwashers have panels that are easily reversible or changed out. Home sellers want to go for a cohesive look and minimize any concerns buyers may have for unexpected expenses. If the old appliances are in the final stages of their useful life or there is no way to freshen their look, sellers may want to offer an allowance for new appliances to be part of an accepted contract. The buyers can choose the appliances they want, the seller does not have to pay the allowance until the closing of an acceptable offer. Laws regarding such agreements vary by state and allowances can be easily misunderstood. Real estate agents representing each party should carefully review wording for legal compliance and be sure their client understands the terms. But it can be beneficial to both parties.

Bathrooms
Second to kitchens, bathrooms are important rooms and can be costly to to completely update. A new toilet seat, vanity, or pedestal sink are easy to install and can greatly improve the look of any home's bathroom. Dingy looking tile and grout makes buyers think the house is unclean and needs renovating. If possible, re-grout and replace any chipped or missing tiles. It is much less costly than completely replacing the old tile and makes a big difference.

Painting

If sellers are going to do only one thing, they should paint. Most real estate agents and industry analyst agree that painting provides sellers with the best return on investment. The payback can be as much as 300 percent. Sellers should spend a bit of time discussing which colors are current with their Realtor. They should go with neutral, tasteful colors more so than their own thoughts on what looks good.

Curb appeal
It is an old truism that applies to homes and people: "You only get one chance to make a good first impression." The entry should be fresh and clear of any dirt, cobwebs, or overgrown shrubbery. If time and money for painting is limited, make painting the door and entry area a top priority. Also, worn out door knobs and locks convey that the house is also worn out. An impressive bit of hardware on the front door signals that the home is solid.
Just as buyers should begin planning for their purchase months in advance, sellers who make a written plan and break it down into manageable projects have the best chance of being in control of their transaction from start to finish. With the guidance of a knowledgeable Realtor, selling a home can be a rewarding accomplishment they look back on proudly for many years ahead.

Multigenerational Housing Trends

Living in multi-generational households is common in many cultures. It has long been stigmatized in the United States. When the Great Recession led to significant unemployment numbers for young adults, many reluctantly moved back to their childhood home to live with their parents. Once there, many have warmed to the idea of keeping family under one roof to maintain more control over their finances.

Aging Americans

As the economy began to recover, the percentage of multi-generational households continued to increase. The rising cost of retirement home living and in-home health care providers has led many older Americans to move in with children or spend some portion of the year living with each offspring. With improvements in medical science and statistics showing increased life expectancy, one might think older Americans were the group driving multi-generational housing number. But, since 2012, young adults between 25 and 35 have been the group most likely to live in a multi-generational home.

Numbers increased in all age groups but one

Though the percentage of homes that have more than one generation residing there has increased at a slower rate post-recession, the increase continues across all ethnic, racial groups, and genders. For seniors, the women who outlived their husbands are most likely to be living in a multi-generational home. For young adults, men are way more likely than women to be living under the same roof with their parents. According to the Pew Research Center, the only age group that has had a decrease in the percentage of people living in multi-generational homes is people ages 65 to 84. They had a very small decrease between the years of 2010 and 2012.

Numbers have doubled since 1980

According to an analysis of data from the U.S. Census Bureau, Pew Research Center finds the number of individuals with a multi-generational home increased from 28 million in 1980 to 57 million in 2012. The numbers have increased steadily each decade, going from 35 million in 1990 to 42 million in 2000. For the first decade of the 21st century, the number of people residing in multi-generational houses increased from 42 million to 54 million. The upward trend has slowed, but numbers continue to increase.

Will continue being a significant portion of the housing market

The National Association of Realtors reports that 14 percent of homes purchased in 2014 were for the purpose of accommodating multiple generations of occupants under the same roof. Just under 25 percent of those buyers said it was due to boomerang kids. That is people over the age of 18 who once moved out and then moved back home to their parents. That number is 33 percent for buyers aged 59 to 67. Thirty-eight percent of those multi-generational home buyers between 49 and 58 bought to accommodate their boomerang kids.

What it means to the housing market

The traditional 3 bed, 2 bath house is less desirable to more buyers. More buyers want two master bedrooms on the main floor. The ideal design is a split floor plan with bedrooms on the main floor and added privacy for the living area of family members. More buyers seek large dining rooms than large kitchens. The dining room was almost considered obsolete a few years back. It now provides and additional room for the extra occupants to create their own little home within the home. It frequently serves as a second living room, where the family member(s) can have their own TV, computer, etc.
Regional and national builders are already mindful of the impact multi-generational home buyers will have on the real estate market. They change house designs to match the current economic conditions and trends. Home sellers and real estate agents should also consider how they can make room for this growing segment of home buyers.

The Importance of Home Inspections

People often have strong opinions about home inspections. There are some builders who hate home inspections and don't care much for the people who do them. Many sellers think it is just a ploy to further whittle away at their asking price. A comprehensive and thorough examination of the condition of a house by a professional inspector is sure to reveal some defects. It takes time and can be unsettling to both the buyer and seller. Both parties might be fearful that something uncovered will derail the transaction. Sellers do not respond well to the notion that they allowed some defect to remain untreated. Buyers, who have found their dream home, do not want to walk away from the purchase of a home that meets all of their criteria in ever other way. But home inspections are important and should not be skipped.

Why sellers should have home inspections

A pre-listing home inspection will establish a more stable negotiating platform for the seller as they consider and respond to all offers. Historically, home inspections take place after an agreement on price and terms has been reached. When issues are found, it results in re-negotiations and often repairs that are the seller's responsibility. Sometimes, when the seller is already at their lowest price, the transaction will fall apart if the repairs are needed for financing. The buyers may not be willing or able to cover the cost of repairs themselves. When the seller is planning their next home purchase based on the sale of their current home, unexpected defects that are only discovered after contracts are written can be disastrous.

When people live in a residence for a long time, they become accustomed to the property's condition and they do not always notice the minor issues that can add up and lower the overall value of the home. A defective light switch or faulty outlet that the family never used anyway will become an issue to potential buyers. The old HVAC system has probably been working just fine for the past 15 years. But it is really at the end of its useful life and will cost the next owner thousands of dollars to replace.

Having an objective evaluation of the house by a licensed professional before putting it on the market helps sellers know what issues will come up during negotiations. It will help them remain in control of the transaction and keep it moving in the direction suitable for the seller.

Why buyers should have home inspections

Sellers are legally bound to disclose any known defects with the home they are selling. New construction is covered by at least a one-year warranty. But sellers do not always know about damage caused by termites or carpenter ants. They may have a growing mold problem in the crawl space, a small leak that is damaging insulation and sheathing in the attic, or a minor problem with the HVAC system that will soon cost big bucks to repair. Many builders have numerous houses under construction at the same time. When they get one under contract, they will shift focus to other projects or rush the completion. This can result in shoddy workmanship and latent problems that will only become an issue years down the road.

It is better to uncover potential problems prior to closing the transaction. A builder is much easier to reach before you take ownership of a property than they are after you have moved in. Being legally entitled to getting something repaired does not eliminate all of the aggrevation and inconvenience involved in forcing a builder to make something right. Moisture problems and many other issues may not be noticed by homeowners until after the first year. This can further complicate matters.

A home inspection provides an added layer of security for all parties involved in the real estate contract. For buyers, it helps them have more confidence in the condition of the house, whether it be from a private seller, builder, or a bank foreclosure. For sellers, a home inspection empowers them with a full understanding of how their home measures up to the competition. It will help both buyers and sellers prepare for their future and feel good about the transaction for many years to come.

Using Green Home Features to Help Sell Homes

While the right location remains the top priority for home buyers, energy efficiency and low maintenance are rapidly moving up the list of things all buyers look for when searching houses. It is not just about leaving a small carbon footprint and better planet for future generations. Homes with green features save the owners a lot of money on utilities, make sustainable living easier, and are now getting their own unique kind of appraisals that put real value on the features. With all the focus and interest on reducing energy consumption, there is growing evidence that highly efficient homes sell faster and at a higher price than the competing houses. With that being said, here are a few of the top value green features.

Green features that make a home more appealing to buyers

• Natural light- Any feature that utilizes natural daylight inside the home. This can be as simple as a tubular lighting and passive skylights to the new sun-tracking skylights and floor-to-ceiling windows. When retrofitting an existing home, improving the natural light utilization is one of the least costly and most noticeable things a seller can do.
• High-value windows- Though top quality windows can be quite pricey, they are one of the features potential buyers appreciate most. Anyone who has owned a home previously appreciates the difference good insulated windows will make in utility bills. Most of the heat wasted in American homes goes right out cheap windows.
• Solar panels- The current generation of solar panels will pay for themselves in about 12 years. The payback is better with federal, state, or local incentives. Once the investment is recouped, these money savers require very little upkeep and continue to add value to the home.
• Energy ratings- Savy buyers are familiar with the significance of Home Energy Rating System (HERS) scores, EnergyStar and Leadership in Energy & Environmental Design (LEED) certifications. These ratings are rapidly becoming as important to home buyers as MPGs are to automobile buyers.

How to sell a home with green features

The term green has a negative connotation to some people. They associate it with low-quality products made of recycled material and government mandated changes. While younger buyers are more inclined toward environmental conscientiousness, older buyers are more interested in saving money. Rather than stick rigidly to terms like eco-friendly or green, find opportunities to use "high-performance" and "energy-efficient" when applicable.

Buyers are most interested in the opportunities for sustainable living in their own home and backyard than they are in saving the rainforest. While most people do care about the environment, there are daily essentials like food, warmth, and lighting that take president.

Federal Trade Commission's Green Guides

Not surprisingly, with buyers being motivated by green features, there are a number of unscrupulous people who are willing to use deceptive marketing to attract people. The FTC has recently updated their Guides for the Use of Environmental Marketing Claims. Any agent should be familiar with the guidelines and review all of their marketing for compliance. Basically, the FTC wants all environmental claims to be specific, measurable, and verifiable.

Most green features are more easily incorporated into new constructions. But you can still highlight features like energy-efficient windows, a high-performance HVAC system, and EnergyStar appliances. Make a point to mention walls painted with no-VOC paint. A non-toxic or low-toxic home is desirable to any family. Use placards throughout the house to draw attention to various features. It is easy for agents to get sidetracked when speaking and a lot of potential buyers will remember what they read more than what they hear. You can visit the NAHB Research Center for more information on having a home Green Certified.

Benefits of Buying Over Renting

The responsibilities of home ownership are a bit daunting to many people. Some folks spend their lives avoiding what they consider a financial burden; never experiencing the comfort, security, and thrill of owning their own property. There is a common misconception that people who rent are able to save more money than home owners. In reality, if someone is planning to live in the same location for at least seven years, itemize their tax deductions, and has good credit, buying a house is significantly less costly than renting.

Why those three factors matter

Buying is a much better option than renting in practically any major metro market of the United States. For many cities, the savings are calculated to be more than 50 percent, as high as 70 percent in some areas. Savings are this high largely due to the low interest rates. People in a 25 percent federal tax bracket also benefit from buying. Here is why the home buyer's situation, credit score, and tax filing matter:

• If they itemize their tax deductions, they are able to subtract the interest paid on the mortgage and their property tax payments from their pre-tax income. This is going to lower their total tax burden. The higher their tax bracket, the more they benefit. To not itemize will increase the cost of owning a home. How much it raises the cost of home ownership depends on the amount of interest and property taxes paid and the filer's tax bracket.
• Low interest rates make home ownership possible for people of all income levels. People with a good credit score qualify for better loan terms and lower interest rates than people with less than stellar credit. One percentage point on a mortgage interest rate results in at least a 10 percent higher monthly house payment.
• Each time a person buys or sells a house they encounter some transaction cost. These cost are spread out significantly for individuals living in a home for seven or more years. Therefore, their average monthly cost of owning the home is much lower than a person who owns the same house for less than seven years.

It is possible to get bogged down over-analyzing numbers and overlook the many other benefits buying a home has over renting. In addition to tax savings and having more space for the same monthly payment, there are some indirect benefits. Some are financial; some make for a better overall quality of life.

More security

Renters have a more tenuous relationship with the roof over their head than home owners do with theirs. There have been situations where the landlord had a mortgage on the property being rented and allowed it to fall into foreclosure. The tenants were forced to move through no fault of their own. Landlords can also terminate a lease for a wide variety of reasons.

Less stress

On the subject of landlords: Some are good. However, most property managers and landlords are stretched thin trying to cater to the needs of a lot of tenants. This can result in long delays before needed repairs are made. Renters are often stuck living with ongoing plumbing and HVAC problems. Home owners have more control over their situation. If they are not handy at repairs themselves, they have several contractors willing to compete for their business, and they report directly to the homeowner.

Consistent monthly payments

A fixed-rate mortgage can't go up, regardless of what happens with the economy or inflation. Renters can be easily edged out of their residence with increases in rent. People who lock in their monthly mortgage payments at an affordable amount are better protected from inflation than renters.

Renters often have to rent storage units for personal items. If they move frequently (renters often do), they may have to buy furniture with each move to fit small spaces. They often end up giving away many belongings or selling them for a fraction of their true value. Home owners typically have more space and buy less furniture. Perhaps home ownership isn't for everyone. But owning a home is an accomplishment. It brings with it a unique since of pride and emotional satisfaction like nothing else.

What Home Buyers Need To Know About Closing Costs

Closing cost are notoriously confusing to home buyers. Misunderstandings about these fees can lead to animosity toward real estate agents by their buyer clients. Those hard feelings result in the loss of valuable referrals from past clients, and perhaps, powerfully negative reviews shared by word-of-mouth and online. Your clients have a right to know how much they are paying for each service that is their responsibility. The Consumer Financial Protection Bureau (CFPB) is working to simplify forms and ensure home buyers clearly understand all aspects of the buying and mortgage process. Agents who explain closing cost to their clients in an authoritative, easily understood manner will set themselves apart from the typical real estate agent, and benefit from having their past clients enthusiastically recommend their services to others.

Closing cost are fees the buyer must pay in addition to their down payment. The following are typical closing cost charges that appear on the final HUD-1 settlement statement. For the buyer they should appear in section J of the settlement statement. Some charges may be paid out-of-pocket by the purchaser prior to the day of closing or will be paid with the loan. Those should appear in the 200s lines. The total the buyer needs to bring to the closing table is at the bottom. It is the total amount found on line 120 minus the the total amount of line 220.

Loan origination Fee

This fee is typically tax deductible. The loan originators are often paid based on the loan origination fee. It is negotiable and they may lower the fee just to get the business.

Loan discount

The loan origination fee buys down the interest rate by providing the lender with some money upfront. Each point is one percent of the mortgage amount. How much one point lowers the interest rate varies.

Document preparation fee

Also negotiable; some lenders do not charge for compiling the necessary documents.

Administrative fee

This fee typically covers the underwriting and document preparation fee. It is also negotiable and the amount varies by lender.

Funding fee or Wiring fee

This charge was unheard of years ago. Many consumer advocates say it is the lender's responsibility to get the money to you. Buyers should request they waive the cost of wiring the loan money to the closing agent.

Credit report

The lender or broker pay an outside company to complete your credit report. Some will try to make money themselves on the report by padding the actual cost. You can ask for a receipt to know the exact amount.

Appraisal fee

A professional appraisal is needed for purchase loans and for most refinance loans. It is another fee that is paid to a third party and the lender should not be inflating the cost to make money. Buyers can again ask for receipts and refuse to pay any upcharges.

Flood certification and hazard insurance

The flood certification fee is a survey done by an outside company to see if the home is located in a flood zone. Hazard insurance is required to protect the collateral of the loan. Buyers are not required to pay for an entire year upfront. Most lenders are satisfied with two to four months of coverage at the time of closing.

Recording fees

The county clerk charges this fee to officially record the purchaser as the new owner of the property. If the buyer refinances with a different lender, the fee will be necessary to change the lender's name on the record.

Tax stamps or recordation tax

When a property changes hands, it gives government an opportunity to charge a tax based on the purchase price. The amount is sometimes less for first-time buyers. Whether or not it is charged on refinances varies by county. Some charge based on the difference between the new and old loan.

Release of lien fee

The is charged by the closing attorney to have the county records changed to show that ownership of the property has transferred, and the previous owners and previous lender have no claims to the property.

Document prep and notary fees

Some documents must be notarized. Most attorneys have in-house notaries and still charge you for each page they notarize. Settlement agents, like the mortgage company, charge a fee for the legal documents they prepare.

Title search

This fee is charged for researching the history of the purchase property to ensure there is a clear title for ownership.

Closing fee

The charge for overseeing the closing and signing of all legal documents. The closing is typically held at the closing attorney's office.

The government does not regulate many of the fees charged by professionals in real estate transactions. It is important that buyers understand they have the right to shop around and choose the one offering the best rate.