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.

Video Marketing in Real Estate

Real estate agents are often early adopters of new technology. If it makes the home shopping process easier for their buyers or gives their seller clients a competitive edge, they will invest the time and money to make it a part of their marketing plan. While some methods are little more than schemes to make money off of gullible agents, one method of marketing for real estate agents has been around in some variation for many years; it continues to give agents who use it the upper hand. That tool is property video marketing.


Advantages of video marketing
Real estate agents typically have different opinions on the best marketing practices. Some embrace new technology, others stay rigidly with what they learned from their mentor or broker decades ago. Things like including as many photos of the property as possible and yard signs are undeniable essentials. Here are a few benefits of property video marketing.

• Video marketing for real estate agents opens up additional marketing channels like YouTube.
   
• By virtually taking potential buyers inside a property, it connects with them earlier.
   
• Helps weed out potential buyers who are not really interested in the house and ensures buyers have a better understanding of the home prior to viewing it in person.
   
• Sellers are more likely to list with you because you have a greater arsenal of marketing tools.
   
• It increases the excitement about the subject property by providing buyers with an easily share able and intriguing presentation of the home.
   
• Video is a compelling and powerful method of marketing to an international audience.

Not just for high-end properties anymore
Video as a business tool is used by every industry. As technology advances, the cost of production decreases. Practically all homes have internet that is fast enough for unlimited video streaming. Many people now take for granted streaming videos on their smart phones and tablets while they are on the go. You do not have to spend a lot of money for professional productions on every home you list. For some properties, the cost may outweigh the benefits. Many agents do quality video presentations themselves on every home they list. It takes some time to learn to do it right, but their clients appreciate them being personally involved in the process and the added effort the agent puts into showcasing their home in every possible way.

A few key considerations
Video marketing for real estate agents is one of those things that needs to be done well or not done at all. Just as it can be a powerful method of making a good impression, it can equally give a negative impact when done poorly. You want every aspect of your business and marketing to exude professionalism and attention to detail. Sloppy, blurry, and rushed property videos convey that you do not put much value on the listing. The potential buyers will not either, and your sellers will not place much value on your services. If you work with a professional production company on a regular basis, they should offer you economical pricing on videos for all your properties.
Video marketing for real estate agents will help you stand out when done right. As the years go by and more agents begin incorporating it into their listing strategy, it becomes less an enhancement and more an expected service. When done economically and strategically, it elevates you in the eyes of buyers and sellers. For subdivision developments and builders, the progressive videos and updates on progress keep buyers interested and returning to your site. Selling homes is still a people business. The best videos include a presenter who highlights various features of the home. By telling a compelling story with your video, you help the potential buyer think of the property as their home. That is ultimately your goal with all aspects of your marketing, and few other tools can do that as effectively as video.

What Is Title Insurance And Why Do I Need It Anyway?

Most home buyers are focused on whether or not they will be able to meet their financial obligations of home-ownership. They take for granted that the property title is in good order and suitable for legal transfer of ownership. But title issues and unknown liens on your home can be more stressful and problematic than the potential stress associated with paying your household bills. What you do know, you can deal with. But what is title insurance for? The things you don't know about.


Potential title problems

The housing market collapse resulted in a lot of titles being sold in bulk, transferred to companies that went under, and being part of some hurried legal processing. The opportunity for clerical mistakes, unknown liens, mistakes in record examination, or home titles being used in some fraud is rampant.  There is also the possibility of undisclosed heirs and other omissions in the deed. By some accounts of real estate law firms, one out of every three title searches finds some defect in the record that must be corrected prior to closing. Title insurance protects you in the event some problem occurs that was not found in the public record or was overlooked in the process of searching the title.


Your title insurance policy

The Owner's Policy is typically in the amount of the purchase price of your home. You get it by paying a one-time fee on the day of closing. This policy insures you for as long as you own the home and it passes to any heirs who may inherit the property from you. It protects you financially and will sometimes provide legal defense in the event of forgery, undisclosed heirs, mistakes made during the title examination process, errors or omissions on the deed, and other covered problems that may occur. The Owner's Policy is not automatically provided and you need to make sure that you request the policy and know who will be responsible for paying. It is always a one-time fee that will protect you and your heirs who hold some interest in the subject property.


The loan company's policy

Practically all lenders will require a Lender's Title Policy when making a home loan. This policy does not protect the home buyer in any way. Many buyers wonder, "What is title insurance for the lender when I already have a policy?" It is for the dollar amount of the loan and decreases in coverage as the loan is paid down. It protects the lender financially in the event some unforeseen problem with the title arises and you are no longer making loan payments to them or, due to some title issue, they are unable to sell the property after foreclosure to recoup the loan amount. The Lender's Title Policy goes away when the loan is paid in full.


Title insurance when refinancing

Even if you refinance with the same bank that originally made the home loan, they will most likely require another title search and Lender's Title Policy. You will still be protected by the original Owner's Policy that was purchased when you closed on your sales transaction. You may ask, "What is title insurance covering when I refinance?" It is possible that you had some work done on the house and incurred a mechanic's lien or had a judgement placed against you for child support or unpaid taxes after your home purchase. In case any of those things occurred, the lender will need a new policy when you refinance.


Additional things to remember

Who pays for the policy may vary by state. Regardless, you have the right to choose the title company when you are paying for the policy. You can research title companies online to see what previous customers have to say about them. To know what is title insurance protected and what is not covered, contact the underwriter for a copy of your policy. Standard Owner's Policies will protect you from the most common and frequent title issues. For an additional fee, expanded coverage is available to protect you in such situations as your home construction not complying with home owner's association restrictions.

Integrated Disclosures : A Crash Course

A recent study by Nationwide Economics shows the housing market is stronger than it has been in the past 14 years. Confidence in the economy continues to improve as more

people are able to find work. As people began feeling more positive about their financial future, they are returning to the pursuit of one of their most significant life-long goals: home ownership. More than half of home buyers each month are first-time buyers. Part of the Consumer Financial Protection Bureau's (CRPB) ongoing effort to protect the public and help them realize their financial goals is the implementation of the TILA-RESPA Integrated Disclosure. It is part of your responsibility as an adviser and real estate agent to clearly explain the new rule in an easy-to-understand manner.

Purpose of the TILA-RESPA Integrated Disclosure rule

The Consumer Protection Act directed the CFPB to establish forms that would combine disclosures for people when they apply for a mortgage. This covers forms required by the Truth in Lending Act, also known as Regulation Z, and the Real Estate Procedures Act, known as Regulation X. In the past, many home buyers were confused and overwhelmed by the amount of paperwork quickly forced on them by unethical people in the lending industry. This led to predatory lending practices and many people with mortgages on their homes that they could not afford to repay. It was a key contributor to the housing market collapse. The TILA-RESPA Integrated Disclosure Rule is meant to simplify and improve the method of supplying information to home buyers. Providing information to borrowers about their rights and responsibilities in clear language empowers borrowers and gives them more opportunity to make informed decisions they will feel good about for many years.

What the rule does

A new form called a Loan Estimate replaces the form required by the Truth-in-Lending Act (TILA) and the Good Faith Estimate required by RESPA. If the borrower is working with a mortgage broker, the actual lender is still responsible for making sure the borrower receives their Loan Estimate. The Integrated Disclosures rule applies to practically all closed-end consumer mortgages, but not to reverse mortgages, loans secured by a mobile home or other residence that is not attached to real property, equity lines of credit, or loans made by creditors who make five or less mortgages a year. With the exception of charging for the cost of a credit check, lenders can not charge borrowers any fees until the borrower has received their Loan Estimate and made the decision to proceed with the loan process.  

The Loan Estimate

Lenders are required to provide consumers with a Loan Estimate when that consumer has given the lender the following information: The consumer's name, social security number, and income. The property address, estimate of value for the property, and the loan amount the borrower seeks. The TILA-RESPA Integrated Disclosures Rule removes other information, called "other relevant information" that was allowed under RESPA. Lenders may collect any additional information needed for extending credit after they have provided the Loan Estimate upon receiving the initial six pieces of consumer information.

The Closing Disclosure

This new document replaces the final document required by the TILA and the HUD-1 settlement statement that has always been required by RESPA. The new Closing Disclosure is five pages and provides consumers with the actual terms of their purchase transaction. The consumer has three days to review the Closing Disclosure before the loan is finalized. If the Closing Disclosure is mailed to the borrower instead of hand-delivered, the three day review period begins three days after it was mailed. The Closing Disclosure must reflect all actual cost of the transaction. If there are any changes in amounts prior to or after the closing, the lender must provide the borrower with a corrected Closing Disclosure with the actual amounts. All amounts must be documented in writing and not delivered verbally.

Countdown to Compliance - What you need to know for Aug. 1

Real estate is a people business. Some of the best agents are not technologically inclined and they have to make an ongoing effort to ensure they properly dot the i's and cross the necessary t's of paperwork. It is fine if your natural talent is face-to-face interaction with your clients or negotiating effectively. But to best represent your clients, you must also understand the new mortgage disclosure forms and be able to explain them to your clients.

Director of the Consumer Financial Protection Bureau (CFPB) Richard Cordray is quick to point out that the new rule was approved 21 months in advance of the August 1, 2015 implementation day. Nobody in the industry can say they were not given time to prepare. Here are a few things all real estate agents need to know.

The Consumer Financial Protection Bureau

Congress formed the CFPB in response to the many people who lost their homes during the 2008 market collapse. The main purpose of the CFPB is to protect the American public from unfair and deceptive practices like the predatory lending that contributed heavily to the housing market bubble of 2006 and the subsequent credit crisis that occurred when that bubble burst. In an effort to help the public better understand their financial products, services, and rights in these matters, the CFPB seeks to simplify required forms and use plain language in all required documents.

The CFPB website has a resource center to answer any questions you may have about forms or the TILA-RESPA Integrated Disclosure rule. It includes sample forms, webinars, and compliance guides. Do not just rely on word-of-mouth information you may receive from other agents or mortgage professionals.  

Initial loan estimates

From August 1, 2015 and going forward, borrowers will receive one Loan Estimate form instead of the separate forms for the Good Faith Estimate (GFE) and the disclosure form mandated by the Truth-in-Lending Act (TILA). This new form is three pages and borrowers should receive it along the same timetable that they had previously received their GFE.

Closing Disclosure form

The HUD-1 Settlement Statement is also combined with the final TILA-mandated form to become one Closing Disclosure form. This form is five pages. It includes terms of the loan and the financials of the sale closing.

Could affect closing date

The new rule mandates that borrowers have some time to review the Closing Disclosure in detail prior to signing. When the rule goes into effect, borrowers will have three days to review the form. That three days stars from the time they receive the form. If it is mailed, the three days start three days after it is mailed. This could result in a total of six days if the form is mailed instead of hand-delivered to the borrower.

No more line numbers

In an effort to make the Closing Disclosure form easier for borrowers to understand, the familiar line numbering of the HUD-1 is gone and in its place the charges and fees will appear under one of the following seven categories:

• Pre-paids
• Taxes and government fees
• Escrow paid at closing
• Origination fees
• Services the borrower did not shop for
• Services the borrower did shop for
• Other

In each of the categories, the individual charges are listed alphabetically. They are divided into columns for the seller, buyer, and other. There are also columns indicating payments made before closing and at closing. It is possible that your clients will get more than one Closing Disclosure. If your buyers receive their Closing Disclosure several days in advance of the closing and final walk-through of the property, another will be necessary to show and adjustments due to issues found during the walk-through or other circumstances. The CFPB requires that any change in the numbers be re-disclosed, even if the changes occur after closing, such as changes to the actual amount of recording fees.