New Homeowners May Need to Rethink Approach Before Buying

Purchasing a home remains one of the largest financial investments most people will make in their lives. Some things do not change. What has changed is the perception that owning a home is a necessary component of achieving the American Dream. The dream turned into a nightmare for millions of Americans when the housing market collapsed. The antiquated notion that real estate and houses always go steadily up in value was obliterated. Some of the top housing markets in the country were also the hardest hit and had the steepest drops in home prices.

Some people learned the lesson the hard way when they were unable to pay their monthly mortgage or sell their home for enough to pay off the loan. Many people who purchased foreclosures discovered first-hand the importance of always buying title insurance. Others watched home ownership become more elusive for them as new regulations and more cautious lenders changed the requirements for obtaining a home loan. As the housing market improves and activity increases, potential new home buyers need to approach the process differently than previous generations of buyers.

Prequalification applies to more than finances
Any potential home buyer should absolutely check their credit report and assess their financial situation and goals themselves before they speak with any professional. These same home buyers should also take a personal inventory of their own priorities and long-term goals. Owning a home is not right for everyone. Just as some people get married too young, some people who purchase their first home are financially capable at the time, but not ready for the many other responsibilities that come with home ownership. Millennials are more likely to embrace apartment living and opt to rent long-term over buying. Some people who owned a home previously and lost it to foreclosure feel a part of their life is left undone until they again own a home. These same buyers should also carefully consider why they want to own a home and whether or not it is necessary to live a fulfilled life.

Potential home buyers have a lot of homework
Home buyers are responsible for providing their lender with all the necessary paperwork and documentation to obtain financing. They also have a responsibility to sellers and real estate professionals. It is reasonable and becoming more common that all offers to purchase be accompanied by a verification of funds letter. Just as a home buyer expects the seller to be fully capable of transferring ownership by a specified day, it is only right that buyers be capable of closing without any preventable delays. Buyers should also speak with a professional about what title insurance policy is right for them before they reach the closing table. Title insurance is vital, and all purchasers should make an informed decision on their policy.

Most delays to closings are due to problems on the buyer's side. This is why a large number of REO "Real estate owned" companies include a "per diem" clause in all of their contracts. More individual sellers are now adding the same type of clause to their agreements. Closing delays increase the seller's costs. They must maintain utilities along with security and lawn maintenance on the property. Prorated costs have to be recalculated and the schedule of the seller changed.

It is important to be ready to take action
A limited inventory in many areas is providing a steady increase in home prices. While interest rates are still low currently, that can change quickly. New home construction is not yet up to full speed and many areas of the country still have high unemployment numbers. The market has remained in a bit of a holding pattern for several years. That can change fast. Buyers who are too picky can see the best home for them sold to someone else. Those who take too long to purchase can potentially see a previously affordable home move out of reach due to higher interest rates.


Buyers must spend an adequate amount of time assessing their own situation, commit to a Realtor who is knowledgeable about the local market, and protect themselves with title insurance and proper legal counsel as they take confident steps toward home ownership in this new market.

New home starts slow, but remain steady

The U.S. economy has been slow to pull out of the Great Recession. Household spending is lower in large part because consumers remain cautious. Many families that were confident with their financial situation prior to the housing market collapse, had their lives disrupted in some way. Another factor hindering consumer spending is rising rent prices across the country. A Harris poll commissioned by Freddie Mac found that saving for a down payment ranked fourth on the list of priorities for most renters. Respondents were more focused on their children's education, saving for retirement, and being prepared for unexpected emergencies.

Rents expected to rise throughout 2016
David Brickman is executive vice president for Freddie Mac Multifamily. Brickman recently said on CNBC that rising rents are keeping many previous home owners from buying again and keeping a new crop of first-time buyers on the sidelines. National Association of Realtors Chief Economist Lawrence Yun said in his 2016 economic and housing forecast that rent prices rising faster than income combined with rising interest rates will slow the momentum of new home starts. The slow new home starts will drive up prices of existing homes. Yun predicts home prices and rents will increase in 2016.

New home permits hit one-year low in March 2016
Reuters reports that new home starts totaled just 1.09 million units for March of 2016 instead of the predicted 1.17 million. That was down from February's 1.19 million units and the lowest level since October of 2015. Still, the February number of new starts for single-family homes was the highest amount since October of 2007. Economists say the construction sector behaved like many other business sectors in Q1 2016. Retail sales, business spending and international trade all appeared to stall as the U.S. dollar dropped against the euro. The positive economic news is that there are more jobs available for millennials and more young people are moving out on their own to form new households.

Title insurance on new constructions
Some home buyers question whether they need an owner's title insurance policy on newly built homes. The lender always requires a policy for the amount of the mortgage. This protects the lender's interest in the property, but does not provide any protection to the homeowner. An owner's title insurance policy is most often for the total amount of the purchase price. This owner's policy protects the purchaser for the entire time they own the property and any of their heirs inheriting the home after their death. In addition to that long-term coverage, the title insurance will identify potential risks prior to a sales transaction.

Protection from mechanic's liens and other undiscovered items
New homes are built on lots that were recently part of a larger parcel. That parcel can have issues that affect all the lot owners. Also, builders with decades of financial stability have encountered hard times and not made agreed payments to contractors like roofers, plumbers electricians, etc. When these contractors file mechanic's liens, the lien attaches to the property, even if the home is built for someone else and already changed ownership. While some builders offer a title policy through an affiliated title company, the Real Estate Settlement Procedures Act (RESPA) gives home buyers the right to shop and compare policies and choose a title company for themselves based on price and policy features that best suit their needs.

Buying with confidence
The National Association of Home Builders (NAHB) provides some helpful advice for people of all ages who are planning to purchase a new constructed home. There are different factors and other considerations with buying a new home that are not involved with purchasing an existing home. Regardless, buyers should talk with a title insurance professional about the type of policy and coverage that will provide full protection of their financial investment and their family's future.

Everyone Should Take Interest in California's Housing Crisis

With a gross state product of (GSP) of more than $2.3 trillion, California has an economy that rivals that of most countries and is the largest state economy in America. Home to almost 40 million people, the state has a median home value of $371,400, according to the US Census. Median gross rent is $1,243. All of that with a median household income of $61,489 and a per capita income of approximately $29,906. You do not have to be an economist to see that those numbers add up to millions of people having difficulty finding affordable housing.

Home prices skyrocketed in the early 2000s with easily obtainable mortgages. When banks tightened their lending requirements in early 2007, prices dropped. This brought many cash buyer investors into the market. Now, with the median price at about $650,000 for the San Francisco Bay Area and the most affordable region being the Central Valley at a median home value of around $290,000, California has one of the lowest Housing Affordability Indexes in the country. It also is the most expensive state in the country to lease a home.

The California Economic Summit

Early in April of 2016, housing experts came together with builders, lawmakers, city planners, and environmentalists at the California Economic Summit to address the housing crisis that is affecting millions of Californians. Their goal is to find a way that people of all income levels can afford quality housing. It is crucial to the health of the state's overall economy that California address its low Housing Affordable Index. By finding ways to lower the percentage of annual income a household must devote to housing, they free up billions of dollars to be spent in other areas of the economy. For years separate groups have been advocating affordable housing for seniors, the homeless population, and veterans. The reality is that California's housing crisis is affecting everyone. New numbers for 2016 show that the housing crisis goes beyond people with minimum wage jobs. It is hitting middle class people and altering their lifestyle and spending.

Why the rest of the country should care

Many people never thought about title insurance before the housing market collapse. The quick shifting of ownership by banks after foreclosure led to many title issues. Approximately one of every three title searchers reveals a cloud on the title or some other defect in the public record that needs clearing to close the real estate transaction. The national housing crisis shined a spotlight on the need for homeowners to have their own title insurance policy, in addition to the lenders coverage. A recent report by the Public and Affordable Housing Research Corporation (PAHRC) reveals another problem growing beneath the radar for every state in the country. While federal programs are providing homes for approximately 5 million American families, there are many more applying for assistance who can't even get on a waiting list for aid.

There are 2.76 million families on the existing waiting lists for housing vouchers. Analyst estimate that an additional 9.5 million households would apply for housing vouchers were there no caps on the waiting lists. Housing agencies have closed their waiting list due to limited resources and vouchers. These numbers do not take into consideration the eligible families who do not seek federal assistance, but are still struggling to keep a roof over their heads.

One in four renters across the US pay over half of their income toward housing. Even for people living in the Eastern United States, California's housing problems are closer than many people realize. We have all seen how one sector of the economy affects the total economy and lifestyle of all Americans. To seriously address issues like poverty and the needs of our aging population, we must consider affordable housing for everyone. It is the only way to protect future generations of hard-working Americans in every state from having their dreams of home ownership evaporate away before their eyes.

Title insurance protects the current home owner and their heirs. A standard title insurance policy will usually protect against fraud, forgeries, and other title issues. For more complete coverage, talk to your title insurance representative.

NAR Report Indicates a Strong Summer for Home Sales

Many home buyers and builders watched the 2015 housing market with cautious optimism. It now appears that after 10 consecutive months of sluggish sales numbers, the housing market could be poised for a strong summer. The recent NAR Pending Home Sales Index shows the number of houses under contract increased by 3.5 percent in February of 2016. That put pending home sales at their highest level since July of 2015. Industry analysts say pending sales reached a nine-year high in April of 2015. This recent uptick surprised many economists and comes as welcome news to real estate agents, builders, title insurance companies, and others employed in the housing sector.



Lenders more welcoming of home buyers

According to Bankrate, a 30-year fixed rate mortgage currently has an interest rate of about 3.70 percent. Additionally, some of the mortgage guidelines implemented after the housing market collapse are now relaxed. Programs like HomeReady™ help low-income and moderate-income home buyers obtain low-downpayment home loans. It also has expanded eligibility for houses located in areas hit by disaster, that are designated as low-income, and minority-heavy areas. This program is backed by the U.S. government through Fannie Mae and available from most mortgage lenders. The HomeReady™ program can also be used for refinancing up to 95 percent loan-to-value (LTV). Perhaps best of all, HomeReady™ is not limited to first-time buyers. Borrowers with a credit score of at least 620 may qualify.

Title insurance a key component of successful transactions

Lending institutions understand the importance of title insurance to protect themselves, but many individual home buyers still do not understand why they should have their own policy. Title insurance protects buyers in the event there are any undisclosed liens or easements on the property. The title insurance policy required by lenders only protects the lending institution's financial position in the property, not the home buyer. Title insurance is more important to home buyers now and in the future than it has ever been. The loose lending standards that led up to the housing market collapse resulted in countless second and third mortgages on homes with sketchy paperwork and little likelihood of proper disposition. Foreclosures were rushed and titles to real estate changed hands numerous times. All of this can create complications and clouds on titles. A owner's title insurance policy is every home buyer's best protection against the possible defects of a title that may be missed by a public records search.

Rising rents make homeownership more appealing

According the the U.S. Census, the number of households renting their primary residence is steadily increasing. The renter share of all U.S. households was approximately 34 percent in 2009. That number had increased to 37 percent in 2014. Many young people saw their parents struggle to maintain ownership of their home. What was once a deeply entrenched component of living a full life appeared more of a burden and source of stress to newly forming households. Millennials are more open to a community lifestyle and renting rather than putting down roots. Another factor adding to the increase in renter numbers is the aging population. More seniors are opting to move from high-maintenance homes to retirement communities that take care of maintenance and basic upkeep. The slight increase in demand quickly resulted in a rise in rent prices.

Home buyers more empowered today
The Consumer Financial Protection Bureau (CFPB) is helping make home buying a simpler and safer investment for people. As more people find it less expensive to purchase a home than rent, more households embrace the many benefits and freedoms that are unique to home owners. Over 6 million homes are expected to change hands in 2016. These home buyers have an abundance of programs and information available to them that can help facilitate a smooth transaction they will feel good about for many years to come.

The Consumer Financial Protection Bureau has Expanded Coverage for Rural Lending

The Consumer Financial Protection Bureau (CFPB) recently began implementation of the Helping Expand Lending Practices in Rural Communities (HELP Act). This act helps small creditors that operate in rural locations and areas with few lenders to provide home loans. It expands the definition of "small creditors" and enables more lending institutions to take full advantage of the special lending provisions of home loan rules that took effect in January of 2014.

HELP Act

Known as H.R. 1259, the Helping Expand Lending Practices in Rural Communities Act provides guidelines for the Consumer Financial Protection Bureau to designate some counties as rural areas. This allows the Bureau to enact regulations under its authority. As such, the Bureau has authority to spend money from the Federal Reserve without appropriation. It is estimated that the HELP Act will increase CFPB direct spending by about $3 million over the ten year period from 2014 to 2024. Under this circumstance, pay-as-you-go procedures are applicable.

The term "rural" is based on Urban Influence Codes (UIC). These codes, set by the Department of Agriculture, make a distinction between what is a metropolitan location and what qualifies for rural development home loans from the USDA. Under the HELP Act, the CFPB is directed to develop a process by which areas that do not currently meet the UIC standards for rural areas be given an opportunity to receive rural designation. The HELP Act lists the criteria the Bureau should use when evaluating an application for a county to be designated as rural. All applications must also be made publicly available for comments. The Bureau must then make a decision as to whether or not the application is approved within 90 days of the end of the public comment period.

New rule takes effect March 31, 2016

The rule begins March 31 and the period for public comments is 30 days. It will allow more lenders to qualify for the small and rural credit provisions. The CFPB established special lending provisions for small lending institutions in January of 2014. The Bureau has taken several steps since that time to expand the definitions of both "small creditors" and what fits the definition of "rural area". Previously, these small lending institutions qualified for special provisions only if over half of its loans were for rural areas or areas classified as under-served. Beginning March 31, creditors can qualify for special provisions when they originate one home loan for a property located in a rural or under-served area during the previous calendar year. The Bureau plans to monitor how these changes effect lending and make any necessary adjustments as it sees fit.

Balloon payments

A controversial aspect of the HELP Act is that it allows these newly designated rural lenders to make Qualified Mortgages that have balloon payments. This runs contrary to the current Ability-to-Repay rule established by the CFPB. The rule does not allow balloon payments or other features that are considered risky on Qualified Loans. Additionally, lending institutions that meet the new standard for small lenders may originate loans of high value that have a balloon payment. These high value loans do not have to have an escrow account.

CFPB partners with Zillow

The CFPB also announced recently that it will partner with Zillow to collect information about home buyers. The CFPB will pay individuals to participate in surveys about their experience of searching for homes, obtaining a home loan, and the buying process of their primary residence. The Bureau says it will use information gathered to create more resources for educating future home purchasers and provide them with knowledge necessary to make more informed decisions about their personal finances.

The New HMDA Rule from the CFPB

In an effort to improve the information reported by lending institutions on residential mortgages, the Consumer Financial Protection Bureau (CFPB) finalized a new rule for the Home Mortgage Disclosure Act (HMDA) in October of 2015. The Bureau hopes this will simplify the process of reporting this vital information for banks and other lenders. In addition to working with other federal agencies to better assemble and organize information from financial institutions, the Bureau has requested public feedback on the submission process, error thresholds, consequences for exceeding these thresholds, and how the process may be improved with technology.

Changes to HMDA data reporting

Improved monitoring of fair lending: Banks and other lenders are now required to further detail the underwriting practices and how these practices affect a borrower's interest rate and other fees. The rule requires more information on how lenders analyze an applicant's deb-to-income ratio. Ensuring fair lending practices to all people in every community is one of the primary reasons the CFPB was formed after the collapse of the housing market. The new rule stipulates that lenders must report, with a few exceptions, applicant information on any loan that uses the applicant's dwelling as collateral. That includes home purchase loans, reverse mortgages, and open lines of credit.

Data lenders are required to report is updated: The new information that now must be reported includes loan duration, the duration of any incentive teasers or introductory interest rates, the details of any prepayment penalty and the property value. The additional data will improve the analysis of area market conditions and help regulatory agencies and the public identify any possible discriminatory lending.

Streamlining the reporting process

Aligning data requirements with industry standards: Banks and other financial institutions were previously collecting the same data required for HMDA compliance for their own internal processing and to prepare the loans for sale on the secondary market. The new rule updates data requirements to align with recognized and common industry standards. The CFPB hopes this will make data reporting easier for lenders by using definitions recognized by practically all financial institutions and people in the mortgage sector.

Lighten reporting burden on small banks: The new rule also eases the reporting burden for credit unions and small banks that operate outside the market of a large metropolitan area. Additionally, small depository corporations with a low volume are no longer required to report HMDA data. It is estimated that this one change alone reduces the total number of financial institutions required to report HMDA data by 22 percent. It also helps lower compliance costs for these small organizations that have few people on staff.

The CFPB is primarily focused on protecting consumers and making sure they have all the information needed to make informed financial decisions in all areas of their life. The CFPB provides consumers with resources free of charge at the CFPB site. Financial institutions will be required to collect data according to the new rule on January 1, 2018. After necessary modifications are made to protect borrower privacy, the data will be made available to the public in 2019.

Public participation is a part of how the HMDA protects all consumers. The information collected under the HMDA is analyzed by consumer groups, regulators, research organizations, educational institutions, and more. For the HMDA to remain effective, it requires quality data on home loans and the individuals who are applying for credit. In an ongoing effort to improve the function of the CFPB, the Bureau recently announced that it is accepting applications for 23 seats on the Advisory Board and Councils that will become available later in 2016.

CFPB Asks for Feedback on Home Mortgage Disclosure Act

The Consumer Financial Protection Bureau (CFPB) is requesting feedback from the public on resubmission of mortgage lending data that is reported under the Home Mortgage Disclosure Act (HMDA). The federal agency finalized a new reporting requirement for the HMDA in October of 2015. Due to the new requirements, the resubmission guidelines may also need changing. This is why the Bureau is asking the public for help on what changes may be best.

The Home Mortgage Disclosure Act

Congress originated the HMDA in 1975. Enforcement fell under the Federal Reserve Board's Regulation C. in  2011. Authority to write rules for Regulation C was transferred to the CFPB when it was formed by the Consumer Protection Act of 2010 (Dodd-Frank Act). The HMDA stipulates that lenders must report data about the home loan applications they receive, purchase, and originate. This allows regulators and the public to monitor whether or not lenders are properly serving the housing needs for the communities in which they are located. It also helps with the distribution of public-sector investing and brings additional private investments when needed. One of the primary purposes of the HMDA is to prevent discriminatory lending practices by identifying any inappropriate patterns in the origination of home loans.

It is imperative that the information gathered is accurate to fulfill the purposes of the HMDA. The CFPB conducts examinations to ensure the data reported is accurate and establishes resubmission guidelines that detail when the lending institutions will correct and resubmit data.

Request for public feedback

Some have asked the CFPB if its guidelines for resubmission of mortgage lending data would be changed to reflect the additional data submission required under the new rules. The Bureau is asking the public to comment on any changes to the resubmission guidelines needed under the new regulations. More specifically, the CFPB's resubmission error thresholds and how these thresholds should be calculated. The Bureau also asks for comments on whether or not the thresholds should change according to the size of a submission or the type of data in the submission. The CFPB also would like to know public opinion on what the consequences of exceeding a threshold should be. Other points in the request for information are about how the CFPB reviews lending data, processes that can be carried out by technology, improvements to the data collection process, and any input that will help the Bureau reduce errors in the HMDA data. The request for information is open for 60 days after its publication in the Federal Register. More information about the request for information is available at the Consumer Financial Protection Bureau website.

An ongoing effort to improve the mortgage industry

Richard Cordray is director of the CFPB. He reiterated the importance of the HMDA to protect the public from discriminatory lending practices and provide accurate information about home lending in communities across the country. The purpose of the Bureau is to make regulations and guidelines clear and streamlined for consumers. In addition to protecting the public by establishing and enforcing rules for lenders, the Bureau takes complaints from consumers, promotes mortgage education, studies consumer behavior, monitors the housing and mortgage market for an new risks to borrowers and home buyers, and strives to eliminate any unfair or abusive lending practices.

The Consumer Financial Protection Bureau was established as a result of the housing market collapse. That market collapse resulted in hundreds of thousands of foreclosures and even more properties with title problems. It is essential that all home buyers are aware they can turn to the CFPB with any question or concerns and that they have a personal title insurance policy in addition to the policy required by their lender.

Technology, Walkability, and Resilience are the Key Housing Words for 2016

As building companies get back to the business of constructing houses, they find the housing landscape has changed significantly. While the economy and housing market has been sluggish, technology has surged right along. Young people embrace technology and are less inclined to seek employment working with their hands. To remain competitive, builders must not only attract young buyers, but also find ways to attract them as workers to help build homes. To do both, construction companies and builders must learn to utilize technology to their advantage. A top feature young buyers want is walkability. Another issue that is always a major concern for every home owner is how well their house can withstand inclement weather. Builders and REALTORS  must understand the issues currently relevant to home buyers and those issues that will continue being important in future years.

Technology

According to the National Association of REALTORS report "Real Estate in a Digital Age," 68 percent of first-time home buyers are Millennials. Thirty-two percent of all home buyers are between the ages of 25 and 34. These buyers begin their search online and are connected to the internet 24/7. Many older generations also rely on technology to find homes and research things like title insurance and mortgages. Even old marketing techniques like open houses that were near extinction a few years ago are finding new life thanks to technology. Savvy builders and REALTORS use Twitter and Facebook to post live updates and promotions that will entice all potential buyers in the nearby area to stop by. The QR code has little worthwhile use in many industries, but it provides a wealth of information about a home for sale to interested buyers. Every real estate agent and builder who has filled one of those little plastic information boxes with flyers, only to get an angry caller the following day complaining it is again empty, understands the value of providing pertinent information on-site at all hours of the day. Technology can do that in a variety of ways. Increasingly, buyers are expecting builders to use technology for communication and showing things like elevations, floor plans, and site maps.

Walkability

The American Institute of Architects (AIA) conducted a Home Design Trends Survey in the third quarter of 2015. Their survey found more buyers seeking a sense of community and opting to located in or near one of the many expanding metro areas across the United States. Some of the community design trends that are currently gaining strength and expected to remain popular for the foreseeable future include walkable neighborhoods, access to public transportation, multi-generational housing,  and mixed-use buildings. AIA Chief Economist Kermit Baker said there has been a significant change in driving habits of the population in recent years. More people use public transportation and want to be near their employment and other commercial activities. For single family homes, these buyers look for contemporary-style with low-maintenance features. Some traditional wants like single-story layouts and front porches remain popular. Regardless, owners still need quality title insurance to protect their investment. A growing number of households are single adults with or without children. They like smaller, simple spaces with an emphasis on aesthetics.


Resilience

Presenters at the recent BUILDER Sustainability Summit emphasized the need for community leaders to think about resiliency before disasters occur. Threats like hurricanes, tornadoes, flooding, and heavy snow can affect people in all parts of the United States. Regardless of where a home is located, it needs title insurance and must be able to withstand one or more of these natural disasters. Alex Wilson is an architect who believes resilient design doesn't have to be expensive. Wilson listed ways builders can construct houses that are better able to withstand disasters:

• Include timber framing and hurricane straps on houses in storm-prone areas.
• Improve living conditions of homes that lose power with better insulation and passive solar features.
• Limit the need for mechanical cooling by orienting homes on an east/west axis, install better windows with some shading, attach awnings, use larger overhangs, reflective roofs, and natural ventilation.
• Have flood barriers along driveways in low-lying areas.

Walkable communities are more resilient. When disaster strikes, it is much easier to provide needed services in areas that are pedestrian friendly. Just as home owners must protect their investment with title insurance, community leaders must protect their local area through resiliency planning before the natural disaster occurs.

How a Land Survey Protects Home Buyers

Purchasing a home involves a lot of different processes all taking place during the same time frame. Once a contract is executed, it puts in motion several actions that must be completed prior to the closing. All of these things take time and require professionals who are knowledgeable and experienced in their particular field. The typical home buyer is a novice to all of this. That is why they need expert counsel by a caring REALTOR who will guide them through the process and explain the importance of things like title insurance and land surveys. Without understanding the purpose of having these things, many home buyers will feel overwhelmed and opt to skip some items to save a little money upfront. Here are a few basics about land surveys and how having one done will help prevent future costs and headaches for home buyers.

What is a survey?

A survey is the official and documented opinion of a certified surveyor on the location of a property's boundaries, buildings, structures, easements, right of way and encroachments. It records projections, variations, easements, boundary lines and is a legal representation of what the home buyer is actually purchasing. A survey is crucial when purchasing title insurance to protect the home buyer.

Why do home buyers need a survey?

The housing market collapse resulted in banks, lending companies, and property management companies receiving a huge volume of properties that they never intended to own and were not prepared to handle. Attorneys and courts were overwhelmed by the number of foreclosures they had to process. For paralegals and and other people in the process, it created mountains of paperwork and massive tangles of red tape (both digital and hard copy) that they had to work through quickly and under ongoing stress. To reduce costs, many essential aspects of proper land transfer were eliminated. These led to many properties being put back on the market with encroachments and other discrepancies in the legal description. Some properties that fell into foreclosure were situated on parcels that were part of large family-owned properties. Banks that made loans to construct homes on these parcels did not always make sure there was proper legal access in place. As a result, the people who purchased the homes from the bank had a costly and tiresome legal process to set things right and have legal access.
Differences between tax maps and survey lines is also a possibility. The property taxes a home owner pays are based on the the size of the property and what is included within the property boundaries. Too often, home buyers pull up tax maps or, even worse, some other online aerial view of property to determine property lines based on fences, trees, the amount of lawn mowed, or driveway locations. This method and taking the word of home sellers, agents, or neighbors is unreliable and will almost certainly lead to confusion and disputes at some time in the future. The only way for a home buyer to know what they are really buying and to protect their purchase is to have a survey done by a certified surveyor and have their own title insurance policy that is in addition to the policy required by lenders.

The cost of a survey

Surveyors typically charge based on how much time it takes to do the survey. Factors like terrain of the property, access to records and size of the parcel all influence the cost. Some surveys do not need a printed map of the property. It reduces costs if all the buyer needs is flags and corner markers. If the buyer uses the same surveyor who did the previous survey, it is typically less costly than hiring someone unfamiliar with the property. Buyers can also reduce the amount of time a surveyor will spend doing their field work by making sure property lines are clear. Much like title insurance, the initial cost is minimal compared to the value of the protection and peace of mind a survey provides.

A Guide to Working With First-Time Home Buyers

Buying a home is exciting. It is easy for buyers to be distracted by all the things they want and to overlook many aspects of the home buying process that are important. For the mortgage company, it is all business. They make sure they are protected by things like title insurance. First-time buyers want the most home they can afford. Sometimes, they pursue more than they can comfortably afford. Without proper guidance and counsel from a knowledgeable REALTOR, these novice buyers will skip on procedures such as home inspections by a third-party professional and their own title insurance policy to try and cut their costs.

Connectivity increases vulnerability

The National Association of REALTORS states in their "Real Estate in a Digital Age" report that 68 percent of first-time buyers are Millennials between the ages of 25 and 35. They make a decent living with an average income of $84,500. Many of them witnessed the housing market collapse and have seen their parents struggle to keep a roof over their family's head. Many of these young buyers have opted to pay down their college debt before they even consider buying a home. They are connected to one another and an infinite source of information on all things (the web) practically 24 hours a day and 7 days a week. However, these accomplished and knowledgeable buyers are vulnerable in many ways. A study by Wombat Security Technologies found that young people 18 to 25 are more vulnerable to phishing attacks because they are so open to provide personal information if they believe doing so will provide additional convenience.

Working with first-time buyers requires tact

It is important to reach and work with all first-time buyers in a way they are comfortable without allowing them to make costly mistakes. These novice buyers think they know more than they actually do. Just as they are more likely to fall for phishing scams, the information they gain from doing their own research online may not be from credible sources. For example, they may stumble across a blog that advises them against purchasing their own title insurance policy because they are already paying for a policy for the mortgage company. But that is not enough to protect the home buyer's investment. Agents must be a resource of reliable information without being condescending.

Really listen and understand their priorities

Far too often, real estate agents fall into a pattern of just going through the motions. Each transaction begins to look the same, and the agent tries to do too much of the decision making for the home buyer because they think they know what is best. It is true that many first-time buyers do not have any understanding of the process, but the agent still works for them and in their best interest. Just because many new home buyers in the market are gravitating to a specific area, price range, or style, that does not mean it is right for every buyer. It is just as important to gather the right information from your buyer as it is to provide them with information.

Be clear about your role upfront

Some first-time buyers do not understand the value of REALTORS. They think agents make a lot of money without actually doing much work. Establish yourself as a resource early in in the relationship, but make sure they understand what you can and can't do. Be sure to provide them with an agency agreement and have them sign a document that explains the different types of agency relationships. Some agents avoid having uncomfortable conversations because they think it might scare potential clients away. It is better to thoroughly discuss the value you bring to them and how you are compensated early, rather than have lingering misunderstandings and conflict down the road.

Taking the time to nurture relationships with first-time buyers is challenging, but also rewarding. Just as many home buyers overlook the value of title insurance, many real estate agents choose to not invest in working with first-time buyers. Title insurance is important to protect a home buyer's investment. Working with first-time buyers is important to have future referrals and a balanced real estate business.

Home Builders are Trying to Woo Millennnials in More Ways Than One

The National Association of REALTORS report "Real Estate in a Digital Age" underscores the important roll people between the ages of 25 and 35 have in the future health of the housing market. Sixty-eight percent of all first-time home buyers are part of this vital demographic. Millennials are responsible for 32 percent of all home purchases. These home buyers have a median annual income  of $84,500 and do not have the stigma of a home foreclosure in their history like many older home buyers. Banks, real estate agents, title insurance companies, and home builders target millennials as customers and clients to maintain a balanced business and remain competitive going forward in 2016. Bloomberg reports that construction companies must add more millennials as employees to handle increased demand and have a stable future.

Companies must develop new talent

Mike Lancaster is president of Frank L. Blum Construction that is headquartered in Winston-Salem, NC. Lancaster says home builders must do more than they have in the past to attract young workers. There was a time that builders would just hire young people and place them on the job site to learn the trade own their own. According to Lancaster, construction firms must attract, appreciate, and develop young talent. Blum Construction is trying to do this by starting a mentoring program. They also put more focus on training new hires. The Winston-Salem area is among the most affordable housing markets in the United States. To be ready for the increased demand for middle-class housing, Blum Construction is improving its employee benefits package to attract and keep young workers.

Builders previously preferred experienced workers

People often take things for granted. They think if they want a new home there will always be plenty to choose from. They also think that title insurance is less important when buying a new home. But, title insurance is needed on any home, and new home construction is a good indicator of the overall health of the economy. When the housing market collapsed, over 2.3  million construction workers became unemployed. The U.S. Census Bureau reports that 900,000 of those people returned to work in the same industry between 2007 and 2010. Very few of those returning workers were under the age of 35. Companies were picky about hiring and found it less costly to choose experienced workers who would not require the added effort of training. People who have worked in construction for many years are less likely to look for employment in some other sector. But, analysts suggest that another reason for the lack of young construction workers is that recent high school and college graduates with more employment options to choose from simply opt for some job that does not involve manual labor.

Fewer young people want to learn a trade

The Associated General Contractors of America (AGC) conducted a survey in September of 2015. Their research found that 79 percent of companies are having a difficult time finding hourly workers. This is especially true for jobs like welder, carpenter, mason, and other positions that require some amount of manual labor. Additionally, 55 percent of the responding companies said they are having some difficulty filling salaried positions like project manager and supervisor. Young people are Millennials prefer to communicate, work, shop, browse homes, and do as much as possible via their tablet or smartphone. Technology often allows young people to complete required tasks from any location. If they can work remotely, they will. A skilled trade requires on-site training, hands-on experience, and that the artisan be present to get the job done. The youngest generation of the work force does not see the importance of learning a skilled trade or has not yet been adequately incentivized to seek employment that requires they use their hands for something other than manipulating a keyboard.

Just as title insurance is a vital part of purchasing a home, skilled workers are, and will continue being, a vital component of the housing market and overall economy. It is a bad idea to skip purchasing title insurance to try to save a few dollars. Perhaps home builders will need to incorporate a more direct approach to attracting young workers to construction. Just pay them more.
accustomed to using technology in their everyday lives and business practices.