Did you see the article in another e-newsletter last week in which two “successful” social media real estate agents were profiled: one who had never sold a home from her four hours a day efforts and another who had sold one from his two hours a day efforts (oh, but they both have thousands of people following them?). 

You are being told that in order to succeed online you must continue to employ esoteric and obscure social networking sites, in addition to Twitter, Facebook, etc. After all, who can ignore the Twitter nation of 250 million members? You must participate. (Pay no attention to that man behind the curtain reporting that the vast majority of Twitterers make one tweet and never come back). 

Well, as I have been telling you for three years now, that is hogwash. Social media is a sinkhole that absorbs time, effort and money that could better be spent on finding listings and selling houses. Social media is the new blogging. It too will peak, then decline with one very large exception: affinity group business communication. 

Affinity group business communication is where groups of like-minded business professionals in an industry utilize a resource to stay in touch with each other. Unfortunately, it is my belief that such social networking won’t last or really take off between sellers of real estate and people looking to purchase it.

Why social media won’t be a long-term selling tool for real estate
In February 2008, I tried to explain why advertising and social networking don’t complement each other. My friend, Michael Krisa (“That Interview Guy”) explained it to me like this: “Advertising in social network sites is like this: You and I are in my newly renovated kitchen having a coffee. You ask me who did the work and I gladly refer the contractor because I am pleased with the job he did. As I’m writing down his name and number, there is a flash of light and the sickening sound of breaking glass as Home Depot throws a brick through my window promoting their own renovation team…ads on social network sites are just as welcome as that brick…and equally as annoying.” 

I have seen nothing—either in theory or in results—that has changed my mind. The two concepts are not compatible for what real estate professionals are selling. While those with huge sums of money to spend on mass advertising may disagree, my position comes from the frame of reference of the professional agent: someone whose time is money, and whose time cannot be wasted without deleteriously affecting their livelihood. 

It is the function of techies to push new technology upon us
I’m no slouch when it comes to IT. I’m no programmer, but I’m relatively in the know about all phases of the Internet and personal computing. When it comes to marketing, I understand it as well as anyone. My efforts in these columns are to advance marketing. 

Techies, on the other hand, love to wax rhapsodic about “the next big thing.” They write about things outside the experience of agents, regular folks and non-techies because that is their life. By telling us all we must utilize a particular technology, they make themselves more valuable and more influential. By offering new courses on the latest thing, they extract yet more money out of an already reeling agent base. 

Trust me, folks, a course on how to social network isn’t going to sell that next property for you. Neither is a tweet or a placement on your Facebook page. Sure, “everybody’s doing it” but don’t you toss that lame reasoning out when your high school kid told you the same thing trying to justify (insert unjustifiable thing, here)? 

Lemmings rarely are top salespeople, and those who do not understand the one great truth about selling houses in the digital age will never succeed at doing so. 

The one great truth about selling houses in the digital age
You must put the Internet to work for you. An estimated 880 million people search Google for a real estate related thing each month. They search Google—not Twitter, not Facebook or whatever the newest and hippest social site is these days. 

The home-buying audience may be hip, but most are concerned. They want access, value and service from their agent. No matter how “hip” they are, they want a professional who knows more than they do about real estate; to guide them and to help them. They play on Twitter, they social network on Facebook, they buy homes from the Internet. 

Want to sell houses online?
An advanced degree in techie is not required. Three things are required: 
Internet buyers must be able to find you when they search for homes online;
You must attract between 5 and 15% of these buyers to sign in and ask you for more information; you must follow up properly (not with auto-responders) and promptly; NAR says 50% of agents call an internet lead within 54 hours and the other 50% never call them. That may be in part due to the poor quality of many of these purported “leads” but regardless: 54 hours doesn’t cut it. Under one hour cuts it. 

Don’t be stampeded into feeling like you are disconnected
One of the oldest techniques in the world to promote a cure is to create a sickness. Lacking an interest or skills in social networking will not affect your selling real estate. Lacking an Internet presence will greatly affect that ability and having one will bring you success you can’t now imagine. 

If you could talk with agents who sell 10, 20, 50 or more homes from their websites annually, they’d tell you this: response time is far more important than any other factor in responding to a lead. They’d also tell you that the quality of leads is the single biggest factor in selling homes to Internet buyers. If you aren’t getting leads from your website, or you are getting the old “corporate junk leads” and are so frustrated with them that you have mentally kissed them off, re-read the paragraph above this one. Do that and you will succeed. 

The rest of this social networking stuff is fine for becoming and making friends. I don’t know about you, but most agents don’t go into real estate to make friends, they do it to sell homes and make a good living. Put your efforts where the results are, not into what today’s techie says you need to do to stay au courant. Techies don’t sell houses. You do. 

Mike Parker advises thousands of agents and brokers on the subject of online marketing services for realtors. If you want to learn more about how to succeed at selling homes to Internet buyers or to request a free review of your website to determine if it can be found by internet buyers and if it is set up to be effective for you, click here and we’ll review it for you at no cost or obligation. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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All NAR full-conference and day-conference attendees are encouraged to attend. 

This session—held as part of the NAR Conference program, will be led by Top 5 in Real Estate Co-founder & President Allan Dalton—will help Realtors clearly identify and explain short sales, expireds and price reductions to their clients, while also explaining their own understanding of the subject matter and how they will assist those clients. 

Realtors will also learn how they can use various marketing techniques to acquire more listings and how to implement a marketing strategy that benefits their own business, while also educating consumers on the nuances of today’s market. 

This session’s panelists include: 

• Becky Boomsma, Realtor, Coldwell Banker Residential Brokerage
• Valerie Fitzgerald, Previews Director, The Valerie Fitzgerald Group, Coldwell Banker Beverly Hills
• Julie Vanderblue, President, The Higgins Group
• Rosemary West, Team Leader, The Rosemary West Team, RE/MAX of Joliet 

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HomeGain’s recent survey shows the top do-it-yourself home improvements that Realtors recommend to home sellers. HomeGain received responses from nearly 1,000 Realtors nationwide and configured a list of the top 12 do-it-yourself (DIY) home improvements that cost under $5,000 and benefit sellers most when they sell their homes. 

According to the HomeGain survey, the top five home improvements that Realtors recommend to home sellers based on cost and return on investment (from highest to lowest ROI) are: 

1. Cleaning and de-cluttering ($200 cost / $1,700 price increase / 872% ROI)
2. Home staging ($300 cost / $1,780 price increase / 586% ROI)
3. Lightening and brightening ($230 cost / $1,300 price increase / 572% ROI)
4. Landscaping ($320 cost / $1,500 price increase / 473% ROI)
5. Repairing plumbing ($385 cost / $1,250 price increase / 327% ROI) 

Cleaning and de-cluttering continues to rank as the top suggested home improvement (since the survey was originally conducted in 2000), recommended by 98% of Realtors, costing less than $200 and returning a value of nearly $1,700 to the home’s sale price, or an 872% return on investment. 

“Many Realtors agree, especially in a buyer’s market, that sellers who make these recommended home improvements often get their homes sold faster and at higher prices,” stated Louis Cammarosano, General Manager at HomeGain. “We have customized our Home Sale Maximizer online home improvement tool to help identify and prioritize the projects that can increase the salability and selling price of a home.” 

Rounding out the top 12, the list of low cost, do-it-yourself home improvements includes: updating electrical, replacing or shampooing carpets, painting interior walls, repairing damaged floors, updating kitchen, painting outside of home, and updating bathroom/s.

The home improvement projects with the highest price increases to a home’s resale value are updating the kitchen ($1,200 cost / $2,850 price increase), followed by painting the outside of the home ($900 cost / $1,815 price increase) and home staging ($300 cost / $1,780 price increase). 

“Inexpensive cosmetic home improvements and basic improvements greatly enhance the value of the home,” stated Carol Wilson of Carpenter Real Estate in Indianapolis, IN, HomeGain AgentEvaluator member since 1999. 

For more information, visit www.homegain.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate. 

The following details apply to the homebuyer tax credit expansion: 

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program. 

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000. 

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010. 

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify. 

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return. 

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase. 

The www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit. 

For more information, visit www.nahb.org. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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Flexibility may be the buzzword of the millennia. Flexible schedules, flexible work hours, flexible space—Americans are regaining control by rearranging the flow of their day-to-day lives. Very few of us lead cookie-cutter lives, so cookie-cutter home solutions don’t always work. If every family has a unique configuration and life pattern—consider single moms, empty nesters with visiting kids and grandkids, families with young children, multigenerational families—shouldn’t the architecture that surrounds them be flexible enough to accommodate their needs? The opportunity is to identify houses that offer “adaptable possibilities” and develop talking points aligned with your client’s situational needs. 

Buying a home today is an emotional, economic and deeply considered purchase. That home will be a base station for family, friends, neighbors, school, work and play and its layout and traffic pattern will need to accommodate the “busy-ness” of life. As buyers imagine themselves in a potential home, adaptable space may be a selling point over and above simple staging. Here are a few spaces to consider: 

-Kitchen: We cook, we do homework, we entertain, we do crafts there. Open or co-located areas for simultaneous activities and multiple people usually top the wish list. If space is limited, suggest a corner of the kitchen or an adjoining dining room as a homework/conversation area.

-Open, accessible plans: If your client is single, an open plan delivers a great space for entertaining. An older or multi-generational family may view it in terms of accessibility. Either will have visiting family members, so having a “visitable” home offers the opportunity to welcome anyone regardless of age or ability. One zero-threshold entry, wide doorways and a main floor bathroom offer ease of use and accessibility whether you’re unloading groceries or have a temporary or permanent physical impairment.

-Home office/library/reading space: Part of a dining room, den, extra bedroom or even an extra closet can be furnished to create a small space for quiet activities. Bookcases lining a wall speak volumes regarding functionality far beyond the original intention of the room.

-Basement: This extra square footage offers many options so even if the space is un- or partially-finished, paint the vision for tomorrow’s media room, game room, exercise or craft area.

-Outdoor living spaces: Whether it’s a tiny lot or large open space, suggesting ideas that go “beyond the deck” with landscaping, pathways and sitting areas brings even the mundane to life. 

Seeing a home through a different lens may help your clients imagine the space as they would actually use it and gain a new perspective on possibilities. Going beyond the basics of BR/BA-speak to engage your clients in lifestyle discussions will not only help you find solutions that are right for each family; it will help them find the perfect fit for the architecture of their lives. 

Melissa Birdsong is vice president for Trend, Design & Brand, Lowe’s Companies, Inc. 

For more information, visit www.lowes.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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A Fix-Up Strategy Works in Long Run: If You Have Time on Your Side, Improve and Enjoy Your Home

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. 

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years. 

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee. 

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008. 

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

For more information, visit www.realestateeconomywatch.com and www.wsj.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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Breaking News: Senate Plans to Extend and Expand Tax Credit

In a recent interview, Fox-Pitt Kelton analyst Robert Stevenson said the Senate’s proposal for extending the $8,000 tax credit for new homebuyers will have a “limited impact” on home sales.

A Senate committee reached a deal last week to extend the $8,000 tax credit and offer a smaller $6,500 credit for some existing homeowners. The main pitfall of the proposal is that it only pushes back the expiration of the tax credit to the end of April, Stevenson said. It is currently set to go away on Dec. 1. Stevenson said he’s skeptical the tax credit will drive activity during the slower winter months. The prime selling season for the housing market kicks off in the spring and tends to run through the warmer months. “Of course, Congress could come back and extend it again,” the analyst said. “When the next selling season starts, the housing market will depend on the state of the economy and mortgage rates, rather than tax credits.” 

The $6,500 credit for some repeat homebuyers would let more buyers participate albeit at a lower level, “but a lot of those people are effectively trapped in their current homes,” Stevenson said. 

From their peak in 2006, U.S. home prices have fallen about 30% through the end of August 2009 during the housing downturn, according to the S&P/Case-Shiller home price index. More Americans are falling behind on their mortgage payments or losing their homes in the recession as job losses pile up. Rising foreclosures are another key worry. Yet hopes that a recovery is in place were fueled by a report showing the fourth straight month of rising home prices. Some attributed the tentative rebound to buyers rushing to cash in on the expiring $8,000 tax credit. The push to extend and expand the credit has been led by home builders, Realtors and other groups connected to the housing market. 

“Failure to act now could derail the fragile housing recovery even before it has time to take root,” said Jerry Howard, president of the National Association of Home Builders, in a statement urging Congress to stretch the tax credit. “The consequences would be devastating for both housing and the economy.” Howard said the tax credit has already helped create nearly 200,000 jobs, drive home sales, stem foreclosures and stabilize prices. Homebuilder stocks were up sharply in the wake of the news on the Senate compromise. Still, some economists say the incentive’s impact is overblown. 

“I am not applying the recent home-price rebound to the tax credit,” said Cameron Findlay, chief economist at LendingTree, in a recent interview. “I don’t think the tax credit makes as big an impact as people make it out to be, although it certainly motivates first-time buyers,” he said. “If it expires, I don’t think it would shake the housing market as much as some have predicted.” 

The compromise on extending the tax credit doesn’t mean it’s a sure thing, and the proposal still face votes in Congress. One potential snag is a recent government report that uncovered fraud and abuse associated with the tax credit. Thousands of ineligible taxpayers have received millions of dollars under the program, according to the report. 

Stephen East, an analyst at Pali Research, said the proposed new $6,500 credit would likely have some impact on the lower-end of the move-up market. “In essence, this could slowly start to prime the pump,” East forecast. “That said, we remain wary that any measurable impact will be seen until after the holidays and investors need to reconcile their expectations to that.” 

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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Maria Patterson: Please begin by explaining what the 203k program is.
Dennis Walsh: The FHA Section 203k program was originally introduced by HUD in 1978 as a program to rehabilitate and repair single-family homes. HUD considers this an important tool for revitalizing neighborhoods and increasing homeownership. What’s unique about the 203k is that it’s a single mortgage loan that provides funds to purchase a home and make repairs and improvements. It’s intended for owner-occupants to purchase and renovate one- to four-unit residential and mixed-use properties. A simpler version, the Streamline 203k, was introduced in 2005. This version offers less documentation and lower loan fees for renovations that don’t exceed $35,000. 

MP: Why does today’s market present the ‘perfect storm’ conditions for the 203k program?
DW: The reality is, the market has changed and, as always, change brings new opportunities. First, look at all the distressed properties out there that need repair and renovation. So many of these homes haven’t been properly maintained and others have been damaged somewhere along the line—the furnace is missing, the kitchen is gone, or the carpeting rolled up and carried away. 

Secondly, conventional financing is simply out of reach for the majority of people. Without 20% or 25% to put down on a home and a perfect credit score, most Americans can’t get a conventional loan. However, with less-than-perfect credit and as little as 3.5% down, you can get an FHA loan, including the 203k. FHA financing opens up home-buying opportunities for many more people. 

Teresa Walsh: Keep in mind that with FHA financing, it’s critical that the house meet certain code standards—if it doesn’t, you can’t get an FHA loan. There are lots of homes out there that could be sold if the needed work was done. And most people recognize that homes needing repair and updating are some of the best deals available—great homes in great neighborhoods that need a little love.

So the question is, how does a buyer take advantage of a great deal on a home that needs work done? Where does the money come from to make the improvements? Some might run up charge cards at higher interest rates, or tap into savings or even retirement funds, but that’s usually not the best financial decision. The 203k loan offers an ideal solution. 

MP: Given these advantages, why haven’t 203k loans been more prevalent?
DW: There was no need to go through the process of FHA loan approval a few years back. We went through a long period of time where mortgage money was easily available to almost anyone who could fog a mirror—so use of FHA financing all but disappeared. It’s a whole new world now and, as a result, the use of FHA financing has grown to record levels. 

It’s also about awareness. You may have noticed that the U.S. government has not won many marketing awards! The FHA has had no mandate or funds allocated for marketing the 203k loan or providing training and support to real estate professionals. 

There’s also the fact that the 203k approval process is also a little more complicated than a conventional loan. For example, you’re required to secure renovation costs from an established, licensed contractor and deliver a package of the proper paperwork to the lender to secure FHA approval. This can be challenging for the average buyer, as well as agents without the training and resources. 

MP: Is an FHA loan a government loan? Will an increase in FHA lending add to the country’s deficit and overall economic problems?
DW: The great news for taxpayers is that this is not a program that requires the federal government to allocate billions of dollars of support. The FHA does not actually provide mortgage funds, but instead provides lenders with insurance that protects them against losses in the event of homeowner mortgage default. This reduces the lenders’ risk, allowing them to offer loans to buyers with less-than-perfect credit and with lower down payments. Lenders must follow specific guidelines established by FHA to qualify for this insurance. 

The FHA is funded entirely by proceeds from mortgage insurance included in the mortgage payments. As a result, the FHA is the only government agency that is entirely self-funded—operating at no cost to the American taxpayers! Additionally, the home construction and community development driven by FHA programs stimulate the economy through job creation, tax revenues and more. 

MP: What’s the concept behind RE-buildUSA?
DW: RE-buildUSA is designed to simplify the 203k loan process for everyone involved—to drive greater awareness, provide training and a support platform to allow real estate professionals to work most successfully with buyers, lenders, contractors and inspectors. 

Realtors involved in the program receive training to earn a 203k Specialist designation, a membership program for ongoing support and a technology program to facilitate 203k projects. We will work with Lowe’s to provide premier service to RE-buildUSA members and their customers. 

MP: Mark, why was it important for Lowe’s to get involved with RE-buildUSA?
Mark Malone: We, at Lowe’s, fully understand and empathize with each agent out there trying to keep and grow their business in today’s economy. We are here to support their business any way we can, and 203k presents new opportunities for Realtors to build business. We want Lowe’s to be the back-pocket resource for all things home improvement, so it’s a natural for us to be involved in RE-buildUSA. 

MP: Has RE-buildUSA officially launched?
DW: The first phase of our website, re-buildusa.com, is now live, with additional development under way. We’re scheduled to be launching the password-protected membership area some time in December. 

To become a 203k Specialist, an agent must complete approximately five hours of interactive self-paced coursework online. They then gain membership in the RE-buildUSA program, which helps them reach consumers interested in the 203k program, plus continued training and support. 

MP: What does an agent receive for becoming a member of RE-buildUSA?
TW: Agents will be featured in an online membership directory so that home buyers interested in working with a 203k Specialist can go to RE-buildUSA.com and find them. Members will also be able to identify themselves as a 203k Specialist on their websites and in their marketing. Members can access the RE-buildUSA membership site to download forms, checklists and sample marketing materials, as well as forums and a blog, highlighting up-to-date news, trends and best practices. RE-buildUSA is a one-stop shop for members, providing them with access to marketing materials, inspectors, lenders and a direct connection to Lowe’s to help their customers coordinate the bidding and renovation activities. 

MP: If I’m a real estate professional, why do I want to become a 203k Specialist?
DW: We’re showing real estate professionals how the 203k program works because it will help them sell more homes and help more Americans move into homeownership. We’re also excited that we can work together as an industry to reduce the inventory of foreclosed homes and get our housing industry back to greater stability. 

TW: When the market started to turn, a lot of agents steered away from listing foreclosures because it’s difficult business. There are a lot of out-of-pocket expenses, loads of paperwork, security issues and other challenges. Many other agents steered away from short sales because they didn’t want to deal with those headaches. Those, however, who recognized the opportunity and jumped in with both feet, are reaping the benefits today. So, I advise agents not to sit back and pass up the opportunity that now presents itself with the 203k program. Right now, the door is wide open all across America. 
DW: I think it’s also important to recognize that while this is a here-and-now opportunity, it’s also a long-term opportunity as well. Many people are not aware that more than 80% of the homes in America were built before 1990—that’s over 100 million homes that are 20 years old or older. Almost every one of these homes need some amount of repair and updating. It’s our belief that almost every single real estate professional is going to need the education we provide through RE-buildUSA to offer expertise in the 203k as well as other similar loan programs that come along in the future. 

MP: How is Lowe’s helping Realtors in today’s difficult market?
MM: Lowe’s has three main ways in which we help Realtors close more business. First, our free marketing tool, available to all Realtors, allows agents to send 10%-off coupons to their clients before they buy to help them envision how they can turn that house into a home. Second, we know what an effect foreclosures and distressed properties have had on housing and we want to empower agents to get those homes fixed up as quickly and cost effectively as possible. Realtors can download a 10%-off coupon to pass along to a trusted contractor or use it themselves to get these distressed properties to a presentable and, hopefully, sellable state. Third, and probably the most exciting, RE-buildUSA will help deliver a turnkey solution for agents who have buyers utilizing the 203k loan. 

MP: If I’m a consumer, why do I want to work with a 203k Specialist?
TW: First off, most consumers don’t really understand the program, what improvements can be made, how to find a lender, steps in the process…there are an awful lot of questions that need to be asked and answered. A RE-buildUSA 203k Specialist will help them understand 203k details and options, evaluate available properties, compare neighborhoods and introduce them to an FHA-approved 203k lender. They’ll also coordinate the appropriate home inspection and help them evaluate the renovation work and the potential impact on the value of the home.

Just as in short sales and foreclosures, home buyers find it very difficult to wade into these waters without the help of an expert. 

MP: How will a buyer benefit by choosing to work through Lowe’s for their 203k improvements?
MM: Safety, satisfaction and savings. All of Lowe’s installers are licensed*, bonded and insured so you can trust our team with the safety and the security of your buyer’s new home. We also stand behind the quality of our work with a 100% satisfaction guarantee. Don’t forget, the everyday low prices of the product in our stores insure home buyers will get the most value for their hard-earned dollars. 

MP: How will working with a 203k Specialist benefit the lender?
DW: Lenders tell us all the time that it’s very difficult to work with a consumer or agent who doesn’t understand the program. They also agree that working with real estate agents supported by RE-buildUSA training and resources will make life much easier for them—leading to smoother loan approvals and closings. Because of this, a number of lenders are already gearing up to work more closely as partners with RE-buildUSA members. 

MP: Why is the 203k program a critical program for today’s particular market conditions?
MM: We know that this is a different real estate landscape than we have ever dealt with before. Consumers are not in the same mindset as three or four years ago. More first-time home buyers are entering the market than ever before and we all need to be ready to help them learn how to make a house a home. Realtors are repositioning themselves to be even more of a trusted resource for home buyers, many of whom are gun-shy as they re-enter the market. Lowe’s is committed to the partnership we have with the National Association of Realtors and now with RE-buildUSA. We want to support Realtors in any way we can. 
DW: I hear a number of agents telling buyers and sellers that we’re in a “correcting market” and waiting for things to return to “normal.” So what does the typical buyer or seller do? They’ll most likely sit back and wait until the market’s corrected! 

We’re in a different market—a new market with new realities and new opportunities. Agents who are the first on the block to become 203k Specialists can take advantage of these opportunities right here, right now—and position themselves for the future as well. RE-buildUSA is about all of us working together to solve today’s problems and making a long-term investment in the stability of America’s housing industry and economy. 

Don’t miss these top headlines on RISMedia.com:
Where Hollywood Boulevard Meets Main Street and Dreams Meet Reality
Foreclosure Fortune-telling – Adjust for Your Success

For finding out how much your mortgage is going to cost you, a loan mortgage calculator often works as a user-friendly tool. Nevertheless, this tool can’t save you all the time. Similar to other forms of investment, real estate mortgage loans are also subject to scams. Mortgage frauds and scams can make you lose thousands of dollars on interest as a minimum because of excessive fees and other hidden costs. The worst that can happen is that you can lose your home to foreclosure. 

According to industry professionals, there are three principal or familiar types of real estate fraud: 

1. Identity theft via mortgage request
2. Bait and switch
3. Loan flipping 

For preventing scams, it has been witnessed that offense is the best defense. Understand the truth and don’t hesitate to make queries. 

Bait and switch is a fraudulent sales technique where a loan product is publicized at a lucrative rate (bait). However, the product or rate is subsequently changed for the gain of the lender (switch). This is an utterly illegitimate and deceitful practice. For instance, one interest rate is assured at the time of selling a loan, but a bigger rate is provided at the time of closing. 

When you’re obtaining a pre-approval or mortgage quote, you believe that your question with the lender is secret, right? You’re wrong. On many occasions, important financial details about you and your mortgage requirements are hacked by vying lenders. This can happen within 24 hours of your credit bureau inquiry. Your loan officer is even unaware of this. Many firms provide countrywide accessibility to your financial details to the lenders and everybody in your city who requested for a mortgage within the last 24 hours. Any other lender can talk to these individuals the following day and give them a pre-approval for an improved mortgage loan. 

One more dilemma is mortgage solicitation through telephone, the Internet or door to door. These scams involve filling in an application through fax, the Internet or over the telephone and often the rates are phony. However, it is not the largest issue to be bothered about–it is nothing but identity theft. Even though the rates are legitimate, the company would get all your important details such as your social security number that can result in mortgage scam or identity theft. 

Another type of mortgage scam that is prevalent in the real estate industry is loan flipping. Loan flipping denotes frequent refinancing of a mortgage within a small time frame with very small gains to the borrower. It takes place when a borrower can’t keep up with the planned payments or constantly combines other unsecured loans into a new secured loan at the request of a lender. Lenders flipping loans ask for too much origination fee with every consecutive refinancing. They might ask for these fees on the basis of the whole loan amount, not only on the increased amount summed up with the loan principal through refinancing. In addition, every refinancing might attract prepayment penalties that can be funded as a portion of the overall loan amount, accumulating the debt of the borrower. 

If you’re buying a home, looking for a home equity loan or considering a mortgage refinance, it is better to work with a trustworthy lender. You must shop around and do some homework to get the best offers. Try to stay away from furnishing any details until you’re confident that the company or individual you’re talking to is right for you. 

For more information, visit www.mortgagefit.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

For more top stories on RISMedia.com, be sure to see:
First-Time Homebuyers Have Unique Advantage in Mortgage Market
Lose Your Job, Keep Your Home – Ask for Help Before it’s Too Late

While its passage remains uncertain, the agreement would extend the existing credit for first-time homebuyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years. Lawmakers in Washington also raised the qualifying income limits to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000, housing-industry sources said. Under the Senate compromise, buyers must have sales agreements in hand by April 30, but they will have until June 30 to go to settlement, said the sources. The measure still faces votes in the full Senate and the House. 

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan are in full support of the Senate’s proposal to both extend and expand the first-time homebuyer tax credit and called on Congress to approve key housing measures that include the tax credit. “We welcome efforts taken by Congress to extend the First-Time Homebuyer Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,” said Secretaries Geithner and Donovan. “In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners.” 

The current tax credit did little for the new-home market in September, the Commerce Department recently reported—news that took many industry analysts by surprise. Sales fell 3.6% from August and 7.8% from September 2008. Industry observers had expected a fifth consecutive monthly increase in new-home sales, believing that the tax incentive for qualified first-time buyers—credited with 357,000 sales of previously owned homes so far this year—would do the trick. Instead, sales of typically more expensive newly built houses slipped. “The decline in new-home sales seems to us to be more a function of the attractive pricing available on resales in the current environment than a reflection of weakening demand,” said Michael Feder, president of Radar Logic in New York, which tracks the market. 

“Since hitting rock bottom in March, demand is up 20 percent,” said Joel L. Naroff of Naroff Economic Advisers in Holland, Pa. For Naroff, the robust rise in existing-home purchases—9.2% year over year in September—indicated that the housing market was not faltering. “Maybe the issue is supply, which fell to its lowest level in 27 years,” he said. “Builders, at least those left standing, have been making sure they don’t have any houses sitting around, and they have been very successful in controlling inventories.” 

IHS Global Insight economist Patrick Newport echoed that, noting new-home inventories “sank for the 29th straight month to their lowest level since November 1982.” Naroff maintained housing has recovered enough to stand without the tax credit, but Newport said that if the credit were not extended and expanded, housing demand would take a hit, and home sales would drop. 

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real estate market a bigger boost while preventing real estate investors from benefitting. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor. 

(c) 2009, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services. 

For more information, visit www.wsj.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

For more top headlines on RISMedia.com, be sure to check out:
Credit Card Reform Offers Good News and Bad
Seniors Increasingly Realizing Nest Egg in Life Insurance Policies

In the course of my adult life, I’ve lived in 14 different residences, six of which have been single-family homes that I bought. Like most people, each time I had my list of must-haves in terms of living space, floor plan flow, structure, amenities, etc. But as I was also new to the area for half of those decisions, I was also interested in knowing more about the neighborhood and surrounding environment and would always envision myself coming home after dark. Even the most charming tree-lined street takes on a different character when the sun goes down. 

Home as a sanctuary has moved from cultural trend to the essence of what makes a house a home. The term “sanctuary” covers everything from the basic need of shelter, a place of refuge, security, as well as a home that fits the lifestyle of the family living there. Gone are the days when showing a house with a home security system or solid deadbolts might signal the buyer to think the neighborhood was unsafe. Today, a home properly equipped to address general security issues is expected and has become the norm. Making a home more secure doesn’t have to be expensive or time consuming. 

Here are some options for sellers to consider: 

1. Hedging your bet-Trimming the bushes at the front entry and near the windows of the home adds curb appeal and opens sight lines around entrances.
2. Security with style- Choose attractive storm doors and entry doors with more secure locking options.
3. Light it up- Motion-activated lighting, timer controls and dusk-to-dawn options paired with path lighting and landscape lighting means the curb appeal of the home doesn’t go down with the sun.
4. High-tech peace of mind-Easy-to-install, whole-home wireless security systems and monitoring means you can control locks, lights and cameras from a computer or cell phone. 

A buyer in the market for a new home today has more options than ever, and each has his or her own list of must-haves. Leverage the opportunity to show a home’s strength by marrying curb appeal and charm with a few upgrades that deliver on peace of mind.

Melissa Birdsong is vice president for Trend, Design & Brand, Lowe’s Companies, Inc. 

For more information, please visit www.lowes.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

For more top headlines on RISMedia.com, be sure to check out:
Credit Card Reform Offers Good News and Bad
Seniors Increasingly Realizing Nest Egg in Life Insurance Policies

“Broadly speaking, the rate of annual decline in home price values continues to improve,” says David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “The two Composites and 19 of the 20 metro areas showed an improvement in the annual rates of return, as seen through a moderation in their annual declines. Looking at the monthly data, 17 of the MSAs and both Composites saw price increases in August over July. While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement. California, in particular, has seen some real positive prints in recent months. We see this general trend whether you look at the as-reported data or the seasonally adjusted figures. Once again, however, we do want to remind people of the upcoming expiration of the Federal First-Time Buyer’s Tax Credit in November and anticipated higher unemployment rates through year-end. Both may have a dampening effect on home prices.”

The index levels for the 10-City and 20-City Composite Indices show that as of August 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003. From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. With the relative improvement of the past few months, the peak-to-date figures through August 2009 are -30.2% and -29.3%, respectively.

In terms of annual declines, all metro areas and the two composites remain in negative territory, albeit most showing an improvement over the previous month’s figures. Dallas and Denver are continuing their trend from the past month, edging closer into positive territory with August figures of -1.2% and -1.9%, respectively. In addition, both New York and San Diego have emerged out of double-digit declines. New York was down 9.6% in August and San Diego was down 8.9%.

In the monthly data, only Charlotte, Cleveland and Las Vegas reported monthly declines in August over July. Minneapolis and San Francisco reported positive returns greater than +2.0%, and nine of the MSAs plus the two Composites reported monthly returns greater than +1.0%.

For more information, visit www.standardandpoors.com.

For more top stories on RISMedia.com, be sure to check out:

• Taking Advantage of Negotiation – U.S. Homebuyers Paid $7,039 Less Than Listing Price in July
• First-Time Buyers Race to Beat the Clock, Qualify for $8,000 Federal Tax Credit

A personal pattern of Innovation

Beckman has always been known as an innovator and an aggressive marketer of his client’s properties. For example, he combined direct mail and Internet presence to positively dominate an affluent section of suburban Seattle for many years—home to many prominent Seattle families—listing about 80% of all homes sold there. Today, on what many would call a truly basic website, prospects can sign up for his daily “Just listed” e-mail, for foreclosure listings bulletins, for first-time home buyers classes and much more. His website produces 75% of his leads for his team and, in September, originated 7 of the 11 closes his team had.

He has diversified into Property Management in order to have a core business immune from real estate slowdowns and he uses his base of renters to supply his first-time homebuyer classes with folks eager to learn the “8,000 reasons you should buy your first home now.” Beckman has practically owned the first pages of the search engines for years for his specialties and was one of the first agents to realize the tremendous benefits associated with being found on the first pages of every search engine. In sum, he is not a “rest on your laurels” kind of agent—he’s always looking to stay ahead of what is moving the market.

His innovation in 2006 helped save him in 2008

“When I realized I needed to increase my property management business (in early 2008) we had about 20 properties under management. Today, we have over 80 properties under management. It was a great help that when one enters Mason County Property Management on Google, our company comes up number one—even though I never subscribed nor optimized my site for that phrase. My CompassSearch subscription made it possible for Google to bring me people looking for property management. Lots of companies can manage properties, but we can fill them with renters because we attract renters from all over the United States online. That same subscription has me on page one of Google for Mason County Rental Properties, too, so I have plenty of renters looking for a home contact me, too. Of course, I am also on page one of every major search engine for Mason County Real Estate, one of my key phrases I chose back in 2006. The people at Compass tell me that this is what is meant by “long tail search;” evidently, a properly optimized website is found under many different searches relating to the geographic target an agent chooses. Whatever it is, I am grateful that my Internet power enabled me to expand a facet of my business I hadn’t even really thought about in 2006, but that helped save me in 2008. Without a doubt, if I had not made the $3,400 investment in 2006 to be found in organic search placement through Compass, I could not have expanded my business online in these new areas in time to avert potential catastrophe. I am extremely glad that I made the decision to move to the Internet then and that I am so dominant there, now.”

Would you like to have a whole new source of business?

Beckman mentioned being on page one of Google for the above phrases; fact is, he is found on the first pages of the search engines on over 1,000 different search phrases. Since he subscribed to CompassSearch, over 62,000 people have come to his website because of his subscription. About 20,000 Web visitors annually go to Beckman’s website, a solid base of traffic that enabled him to branch into property management and rental properties without missing a beat. Chances are, if Beckman wanted to start selling boats, cars, airplanes or widgets, he would dominate the search engines for those, too. Once you dominate your geographic identifier—your hometown marketplace or any marketplace you choose—you are found under so many different iterations that it almost defies belief. Being found will not sell homes all by itself, however. There are two other major steps to be taken, but if you cannot be found on page one of Google, Yahoo and bing! for your marketplace, you don’t need to worry about those other steps because no one will contact you. If you are waiting for the big time corporate site to bail you out, it’s been nice knowing you. You must take your Internet destiny into your own hands. Take control of your marketplace and take control of your own income and success, for good.

His sure fire method of closing all listing presentations

“I always ask them if their home could be found on the first page of Google when a homebuyer types in Mason County Real Estate, do they think their home would sell faster? They always answer ‘Yes.’ I then pop open my position report from Compass, show them my search engine positions and guarantee them that they will be on the first page of Google when they list with me, because I am on the first page of Google, Yahoo, MSN and all the rest, too. If there are any doubters at this stage, I turn my laptop around and say “go ahead. Go to Google and enter Mason County Real Estate (or any of the other terms I dominate). When I pop up, they are amazed and impressed. Every consumer today recognizes the selling power of the Internet and the advantage of being on the first page of the search engines. They get it. Once I prove to them that they can have that tremendous advantage, they are sold on listing with me and with West Realty Shelton.”

Richard’s lesson is just as vital today as it was then

There will be lots of closings in November, due to the First-time Homebuyer program (odds are it will be continued in some form) deadline. Many agents will make lots of commissions. There won’t ever be a better time to do now what Beckman did then: Establish yourself online. Maybe it won’t “save you” if another monster comes to our doors, but it certainly will broaden your client base, bring new prospects to you and enable you to earn a good living, regardless of what the markets are doing. Take a few of those commission dollars that flow now and get established where people can find you- online.

“2008 was a tough year,” Beckman told me. “Ninety percent of my property management marketing and expansion was done online. Had I not shown up on the first page of Google under Mason County property management I don’t believe I would be here today. Now that we made it through the bad times, it feels really good to get back to our real business—helping people buy and sell real estate. Also, I must say that I can’t speak highly enough about the CompassSearch service. Not only are they responsible for the internet buyers we’ve picked up, but they are also responsible for the listings, property management, and rentals. That’s a pretty remarkable return on a $3,400 investment and that’s one reason that I love the service.

Mike Parker has written more than 200 published articles about online marketing services for realtors. For help in making your Internet marketing as successful as Richard Beckman’s or to you or to request a free review of your website to determine if it can be found by internet buyers and if it is set up to be effective for you, click here and we’ll review it for you at no cost or obligation.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Don’t miss these top headlines on RISMedia.com:

• Single-Family Starts Ease as Credit Deadline Looms
• Return to Housing Peak is 10 Years Away, Analysts Say

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.” 

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth and to fully remove consumer fears, which would then revive the broader economy. Without a firm foundation for middle-class wealth recovery, the post-recession economic growth likely will be one of the weakest in U.S. history.” 

Early information from a large annual consumer study to be released November 13, the 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows that first-time home buyers accounted for more than 45% of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29% of transactions in September. 

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average,” McMillan said. 

Total housing inventory at the end of September fell 7.5% to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0% below a year ago. 

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year. 

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06% in September from 5.19% in August; the rate was 6.04% in September 2008. The national median existing-home price for all housing types was $174,900 in September, which is 8.5% lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. 

Single-family home sales rose 9.4% to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7% above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1% below a year ago. Existing condominium and co-op sales jumped 9.7% to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7% above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7% from September 2008. 

Northeast
Regionally, existing-home sales in the Northeast increased 4.4% to an annual level of 950,000 in September, and are 11.8% higher than September 2008. The median price in the Northeast was $234,700, down 7.0% from a year ago. 

Midwest
Existing-home sales in the Midwest jumped 9.6% in September to a pace of 1.25 million and are 7.8% above a year ago. The median price in the Midwest was $147,600, which is 1.0% below September 2008. 

South
In the South, existing-home sales rose 9.0% to an annual level of 2.06 million in September and are 10.8% higher than September 2008. The median price in the South was $153,500, down 7.6% from a year ago. 

West
Existing-home sales in the West surged 13.0% to an annual rate of 1.30 million in September and are 5.7% above a year ago. The median price in the West was $219,000, which is 15.0% below September 2008. 

For more information, visit www.realtor.org. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

For more top headlines on RISMedia.com, be sure to see:
Taking Advantage of Negotiation – U.S. Homebuyers Paid $7,039 Less Than Listing Price in July
Taking Responsibility for Communication

But short sales can be anything but short. Unless they work with highly skilled agents, buyers and sellers can get frustrated if the process is protracted, which may lead to the deals simply getting abandoned. 

Short sales—when houses sell for less than the mortgages owed on them—and foreclosures rise during tough housing markets. For example, they now account for more than half of the home sales in the Orlando area, according to the Orlando Regional Realtor Association. In the spectrum of home sales, the deals fall somewhere between a regular transaction and a foreclosure. Sellers faced with foreclosure may opt for a short sale because it does not mar their credit as much as if the bank took over the house. They typically contact a real estate agent and set a sales price, based on an appraisal. Once the property sells, the bank must approve the sales price. Getting banks to approve a sale for less than the mortgage amount is what takes time. The process can become so complicated, with different lenders setting different rules, that short sales take about a month longer than other home sales to complete, according to the association. 

Once a buyer signs a contract, foreclosure sales take five weeks to complete, traditional home sales take seven weeks and short sales take more than 10 weeks. And the time it takes to complete a short sale has only grown longer as the year has progressed, with the bank-approved transactions taking up to seven weeks at the moment. 

For sellers, the process can be a tortured farewell to a home that has lost its value. Wanda Gibbons’ 4,000-square-foot Florida home that she purchased at the peak of the market in July 2007 for more than $510,000 was just days from “going to the courthouse steps” to be sold at an auction when she contacted attorney Justin Clark to explore a short-sale option. 

She hired a real estate agent and got an appraisal that showed her five-bedroom pool home with the brick pavers was worth about half what she paid two years earlier. Once Gibbons had a contract on her house, Clark submitted to her lender a package that included everything from the appraisal and a hardship letter to a sales contract. And then the waiting began.

“The problem is, it depends on the bank, the people the bank has and how many mortgages they have,” the attorney said. “These banks, they’re so inundated.” 

Banks typically take 45 to 60 days to even acknowledge they got the paperwork and to assign a negotiator to work on the sale, Clark said. At that point, they get a broker’s price opinion on the value of the home and whether the sales price makes sense. If the sales price doesn’t measure up to the broker’s opinion, the lender may tell the seller the price should be higher. In some cases, Clark said, the buyer will agree to pay more, the seller may have to throw in a few thousand dollars or the real estate agent may agree to cut his commission. 

In Gibbons’ case, the process was somewhat easier because unlike many sellers going through the process of a short sale, she had no second mortgage. Some lenders refuse to share any of the sales proceeds with the bank that holds the second mortgage. In some cases, homeowners face getting their credit rating dinged for not paying the second mortgage. That becomes part of the negotiation, Clark added. At that point, the deals can fall apart. 

(c) 2009, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services. 

Get the advantage on distressed properties direct from the experts in the industry at this year’s RISMedia Power Broker Forum during NAR in San Diego, Nov. 13. For all the details on this year’s session, “Maximizing Distressed Property Business,” click here. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

Don’t miss these top headlines on RISMedia.com:
The Culture within the Virtual Culture
Real Estate Industry Turns to Virtual Staging to Sell Vacant Homes in Tough Market

This year’s faciliators and panelists not to be missed, include:

Facilitators
John Featherston, President & CEO, RISMedia; Chairman & Co-founder, RISMedia’s Top 5 in Real Estate Network
Allan Dalton, President & Co-founder, RISMedia’s Top 5 in Real Estate Network

Panelists
Gino Blefari, Founder, President & CEO, Intero Real Estate Services
Tami Bonnell, President, U.S. Organization, EXIT Realty Corp.
Jon Cook, President & CEO, Prudential California Realty
Jeff Davi, Real Estate Commissioner, State of California
Lawrence Lobpries, Marketing Director for Specialty Sales, Lowe’s Companies, Inc.
Rei Mesa, President & COO, Prudential Florida Real Estate Services
Spencer Rascoff, COO, Zillow
Rick Sharga, SVP, RealtyTrac
Mark Stark, Broker/Owner, Prudential Americana Group
Dennis Walsh, Founder, REbuildUSA™ Membership Network

All NAR full-conference and day-conference attendees are encouraged to attend this important discussion Friday, Nov. 13 from 12:30-2 p.m. at the San Diego Convention Center during the NAR conference.

Why should you attend? Each year, attendees walk away from the Power Broker Forum with tremendous insight into the best practices that have made our panelists the Power Brokers industry leaders they are today. In addition, you will have an opportunity to pose a question or two to these industry power players so make sure you’re prepared.

This year, the Forum will focus on how industry professionals can form strategies and excel in working with distressed properties, such as foreclosures, REOs and short sales.

RISMedia has an additional session on “Staying Up in a Down Market: Short Sales, Expireds & Price Reductions,” on Saturday, November 14 from 1:30-3 p.m. at the San Diego Convention Center during the NAR Conference. Once again, all NAR full-conference and day-conference attendees are encouraged to attend, however, the subject matter is geared toward agents.

This session will help Realtors clearly identify and explain short sales, expireds and price reductions to their clients, while also explaining their own understanding of the subject matter and how they will assist those clients. Realtors will also learn how they can use various marketing techniques to acquire more listings and how to implement a marketing strategy that benefits their own business, while also educating consumers on the nuances of today’s market.

Here is the breakdown of speakers at the Saturday session:

Facilitator
Allan Dalton, President & Co-founder, RISMedia’s Top 5 in Real Estate Network

Panelists
Becky Boomsma, Realtor, Coldwell Banker Residential Brokerage
Valerie Fitzgerald, Realtor, The Valerie Fitzgerald Group, Coldwell Banker Beverly Hills
Julie Vanderblue, President, The Higgins Group
Rosemary West, Team Leader, The Rosemary West Team, RE/MAX of Joliet

For more information contact Stephanie Andre at Stephanie@rismedia.com or 203-855-1234 ext. 141 or visit http://rismedia.com/events/power-broker-forum-annual/.

For more top stories on RISMedia.com, don’t miss:
No Reservations: Manage the Consumer Confidence Slump
Credit Card Reform Offers Good News and Bad

In addition to the tax credit that expires Nov. 30, government mortgage programs have been critical in 2009. The survey reveals that 59% of this year’s sales have been dependent on FHA, VA or USDA financing programs with 96.5% to 100% LTV. 

What percentage of your home buyers this year used this type of financing?

Region           Cash    FHA         Jumbo    Other Conforming    USDA    VA         Don’t 
                                    Insured    Loans      Loans                                       Loans   Know
 Midwest         3%         59%        1%              18%                    3%         3%           13%
Northeast        7%        41%          8%            28%                    2%         6%           8%
Northwest        5%       34%         13%           31%                    6%         11%          1%
Northern CA
Region              4%        68%         0%            16%                      0%         8%           3%
Northern
Florida              6%         47%        2%              15%                    16%        9%          5%
Southeast          7%         48%       6%             18%                     3%          11%          7%
Southern
California        6%          48%        15%            19%                     0%          8%           3%
Southern
Florida              22%         59%       4%              13%                      0%          3%           0% 

The highest use of FHA financing was reported by Northern California builders, while Southern Florida builders reported the highest percentage of cash purchases. “The cash sales are most likely due to investor purchases of attached homes,” said Jody Kahn, a vice president with the firm. 

Not surprisingly, Southern California reported the largest use of jumbo mortgages. “The tough underwriting and higher pricing of jumbos has constrained sales of move-up homes,” said Kahn. 

This month’s survey consists of 262 home building industry executives from public and private companies. In total, their insight is reflective of on-the-ground conditions in 86 MSAs and 1,741 communities. 

“The good news for builders is that there seems to be momentum behind the effort to extend the federal tax credit and that the FHA is going to become more conservative, but not significantly curtail operations,” said CEO John Burns. “Political winds can change quickly though, so stay tuned.” 

Survey Highlights:

-The average unsold, finished inventory per community decreased nationally to 2.7 from 3.7 last month. This significant decline in inventory indicates the speculative starts from the summer are being converted to closings. Regions reporting significant declines in inventory per community since last month include Southern California, the Northwest and Southern Florida.

-Average net sales per community dropped from 2.0 to 1.6 nationally, returning to levels last seen in June and July. The net sales rate declined in seven regions compared to only one during the prior month. While significantly better affordability, low conventional mortgage rates, and the federal tax credit continue to support new home sales, builders across the country are reporting declines in traffic and sales rates in September and into October. Some builders lacking entry level inventory to close by November 30th are losing sales to competitors. Seasonality is also contributing to declining sales. 

-Last month’s reports of price increases in California softened this month. Pricing in Southern California is now rated flat, while Northern California pricing is decreasing. This month, Southern Florida builders rated pricing as increasing. The direction of new home prices was unchanged nationally this month, and remains hovering near flat, as builders reporting further decreases in prices offset those builders seeing flat or increasing prices. 

-Builders started more homes in 4 of 10 regions, and trimmed starts in 3 regions. The Northeast, Southeast and Northwest regions are all reporting increased starts in the 8% to 9% range. The Southern Florida region reported the largest increase in starts this month. Notable declines in start rates were reported in the Midwest, Southern California and Northern Florida. 

For more information, visit www.realestateconsulting.com. 

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Taking Responsibility for Communication

The letter, addressed to Treasury Secretary Geithner, HUD Secretary Donovan and National Economic Council Chair Summers, outlines why the three organizations believe that the tax credit has had a stimulative effect on not only the housing market, but on the U.S. economy as a whole. 

A copy of the letter is below: 

Dear Secretaries Geithner and Donovan and Dr. Summers: 

The undersigned trade associations have supported the first-time homebuyer tax credit as an effective housing stimulus during the current economic crisis. Congress established the homebuyer credit as part of the Housing and Economy Recovery Act of 2008 and it was subsequently expanded in the American Recovery and Reinvestment Act of 2009. The Internal Revenue Service (IRS) recently reported that over 1.4 million taxpayers have benefited from the tax credit as of August 2009. 

The current global credit crunch and economic recession began in the U.S. housing market and recovery will not be complete until the housing market returns to economic health. In normal times, housing represents approximately 15% of U.S. gross domestic product, with numerous spillover benefits into other parts of the economy. Although we are seeing some improvement in the housing market, it is essential that the favorable impact of the first-time homebuyer credit be sustained beyond the upcoming expiration date of November 30, 2009. 

The undersigned trade associations request your support for the extension of the first-time homebuyer tax credit for twelve more months. 

Economic Impacts of Housing
As the housing markets began to falter, the economic ripples were felt across a number of industries. This highlights that housing is a pillar of our economy, and emphasizes the need to ensure we do not jolt today’s very fragile housing market just as we are starting to see signs of stabilization. As the housing market recovers, so do a number of other businesses, including small businesses that rely on family expenditures that accompany home purchases. 

NAR has estimated that the first-time homebuyer tax credit program has generated approximately 355,000 home sales above what would have occurred in the absence of a credit. The credit has also allowed greater mobility among sellers. Existing homeowners are able to relocate (or simply move to a different home) because their current home has been sold to an eligible tax credit buyer. These entry-level, credit-eligible purchases have helped to reduce the glut of homes presently for sale on the market. 

This increased housing activity leads to other benefits as well. A December 2008 report by the National Association of Home Builders (NAHB) examined the spending behaviors of those who recently purchased a home. The study showed that buyers of newly-constructed homes spent an average of $12,332 on additional goods and services. Those who purchased an existing home spent an average of $8,927. The report indicated that this money is spent in three main areas: property repairs and alterations, appliances, and furnishings. NAHB has estimated that this spending, in addition to other economic benefits connected to housing activity stimulated by the tax credit program, has produced 187,000 jobs.

Importantly, the tax credit has produced tangible effects with respect to the imbalance between supply and demand in the housing market. New home inventory has continued to fall due to dramatic declines in construction. In addition, a welcome pickup in sales has also reduced inventory. Consequently, months-supply currently stands at 7 months, down from 12.4 months in January 2009. A healthy housing market ideally has 5 to 6 months-supply. Likewise, months-supply of existing homes on the market has fallen to 8.5 months, down from its high of 10.6 in November 2008. 

Achieving equilibrium between supply and demand for housing is critical to stabilizing housing prices, and therefore household wealth. An extended homebuyer tax credit is a critical policy for achieving this goal. 

Conclusion
The undersigned trade associations believe that the first-time homebuyer tax credit has had a stimulative impact on our economy. We support extending and even expanding it so the credit can help more buyers and sellers. As we approach the sunset date of the current $8,000 tax credit, we urge Congress to expand the program to include all purchasers of principal residences, increase the credit, make the funds available for closing, and extend the overall program by at least 12 months. 

Our fragile economy is just beginning to show signs of recovery. We should not jeopardize that recovery by letting this tax credit expire. The homebuyer tax credit is helping hundreds of thousands of Americans realize the American dream, and it is creating thousands of jobs that rely on housing. Problems in the housing industry led us into a global recession and housing incentives can help lead us out of the recession. 

Our members greatly appreciate the efforts that the current administration has made by helping troubled homeowners to stay in their homes, providing Treasury support to the secondary market for mortgages, and shoring up the housing industry through the first-time homebuyer tax credit. We encourage you to finish the job already started by extending and expanding the current first-time homebuyer tax credit. 

Most sincerely,
Mortgage Bankers Association
National Association of Home Builders
National Association of Realtors 

For more information, visit www.mbaa.org, www.nahb.org or www.realtor.org. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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If you get the answers to those questions right, you’ve pretty much got retirement right, according to Rappaport, a former president of the Society of Actuaries as well a president of a Chicago consulting firm bearing her name. 

Now, there’s plenty of information about the first two questions but not so much about the third. And that’s the one that people really need to get right now, especially given the findings of the SOA’s recent work on the subject. Here’s a snapshot of what Rappaport and her colleagues found: 

What should you do with the equity in your home?
The equity in your home represents a big part of your wealth. If you’re married, your non-financial assets—mostly the equity in your house—represent about 70% of your total assets, according to a 2009 Society of Actuaries report titled “Segmenting the Middle Market: Retirement Risks and Solutions.” What’s more, the report noted the median value of financial assets is less than 1.5 times median income—$75,000—for the majority of middle-class households and that the median value of financial assets is just three times the median income—$132,000—for the vast majority of affluent households. 

There are caveats in the 70% figure, though. The SOA report excluded the value of Social Security and traditional pension plan benefits, which if included would reduce the percent home equity represents to total assets. And the percent is based on analysis of the 2004 Survey of Consumer Finances. Things have certainly changed since then. 

Still, the number is relevant because the equity in your home—downturn or not—is still “a very significant retirement asset and options related to choice and financing of housing are important considerations for retirement planning,” according to “Overview of Housing Wealth, Options, and Spending Issues in Retirement,” a just-released SOA paper co-authored by Rappaport. Rappaport said that housing costs currently represent about 35% of a pre-retiree’s budget. And that means housing equity, as a percent of total assets, is perhaps more than twice what it should be.

Software fails to consider housing wealth
But even though the equity in your home is a big deal, the SOA’s study finds that much is lacking when it comes to helping average Americans figure out what role housing wealth should play in financing retirement. “Although housing wealth was extremely important to middle class Americans, it did not seem to represent a primary consideration as they engaged in retirement planning,” Rappaport wrote. “In fact, many planning tools do not consider it explicitly, leaving a hole in advice that could be provided to middle income Americans.” 

Indeed, most retirement planning software programs don’t consider housing wealth, and of the few that do, it’s apparent that there’s no agreed-upon standard for doing so. Rappaport wrote. “The software tools that did consider housing wealth approached it from a wide range of methodology,” she wrote. 

And users of these sorts of tools, especially those who have much of their wealth in housing, should see all sorts of red flags and disclaimers when the software doesn’t address housing wealth. (By the way, most calculators of this sort don’t include the new present value of your Social Security benefits either and that’s something that should be noted as well). 

How to use housing wealth to finance retirement
So what are people who have 70% of their wealth tied up in their home to do? There are a number of options for using housing value to provide for retirement needs, according to Rappaport. But it should be noted that there is not a consensus on the best course of action. 

“Further research needs to be done to define the options, identify the trade-offs, provide a framework for analysis and help individuals make decisions,” Rappaport wrote. And, as with most things financial, she said the ultimate best course of action will also depend on “individual preferences and circumstances.” 

That said, here are the options you have to unlock the equity in your home: 
-Pay off the mortgage, if possible, to reduce overall expenses
-Sell and downsize to a smaller home, freeing up funds for investment or annuity purchase
-Sell your home, invest the proceeds and then rent
-Secure a home equity loan or secondary mortgage on the house
-Get a reverse mortgage
-Rent out extra rooms
-Rent out your primary residence and live elsewhere at a lower cost
-Keep the house mortgage-free, and let its value serve as an emergency fund if needed 

Not all these options might be viable for your retirement plan and some of the options aren’t quite ready for prime time just yet. For instance, “reverse mortgages may offer significant income potential to some households, but at relatively high cost and risk,” Rappaport wrote. “Furthermore, they may help older home owners remain in their homes, but they limit future housing choices and are presented as a last resort option by some financial planners.” 

The Bottom Line
All this means that there’s much more work to be done, said the SOA report. Researchers and advisers need to put finger to calculator and keyboard to try to figure out what portion of their clients’ personal wealth should be spent on housing and whether it should be scaled back. 

What’s more, researchers need to work on models that show the trade-offs between lower spending on housing and more savings put into financial investments vs. what we have now, higher spending on housing and less savings in financial assets. And think-tank types need to “work towards a consensus around accepted methods” to help Americans better understand how to incorporate housing wealth in their retirement plan. 

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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Maybe you’re faced with tattered carpets, battered appliances and dingy paint. Or maybe we’re talking about truly scary problems, such as asbestos, underground oil tanks or leaking roofs. 

What should you take care of first? What can wait? What can be ignored altogether? And how do you keep costs under control? 

“Basically what we’re talking about is good, solid preventive maintenance on your home,” said Barbara Weissmann of Friedberg Properties in River Vale, N.J. She recommends that homeowners looking at a sale down the road hire a home inspector to check out the house. “You’re looking to discover defects that you can fix over time,” she said. She and other experts say it’s possible to get a house ready for market without spending a fortune, especially if you have time on your side. And if you’re going to fix up the property anyway, Weissmann said, “why not do it several years in advance so you can enjoy it?” 

The first jobs to tackle include anything that’s a danger to your health or the house’s future. If the roof is leaking, for example, that will damage the ceiling, walls and floors below. Funky wiring or leaky plumbing? Deal with it sooner, not later. “The biggest killer of a home’s value is no maintenance,” Weissmann said.

If there’s flaking asbestos insulation on the pipes, that’s a health hazard, and can also delay or kill a sale down the line. Don’t try to remove it yourself; get a licensed contractor. 

You should also make sure you have working smoke and carbon monoxide detectors. Check with your town; some require that at the time of sale, the alarms must be wired into the home’s electrical system, a job that requires an electrician. Other municipalities will accept battery-operated alarms. Either way, you also want these in place for your own safety, along with a fire extinguisher in the kitchen. 

When you’re ready to sell, the buyer will generally require that certain major issues be addressed. Better to handle them now than risk delaying or losing a deal later. Aside from asbestos, another big environmental concern is an underground oil tank, which can leak. Jeana Cowie, a RE/MAX agent in Oradell, N.J., recently advised a couple who plan to sell in a few years to deal with the tank now. “I felt that buyers will skip looking at the home because of oil heat,” Cowie said. “And a new gas furnace is a huge positive for all homes.” Maybe you’ve already dealt with the oil tank. But if it was only abandoned in place, be prepared: a buyer will often seek to have it taken out because of concerns that the job was not done properly, said Louis Chapman, a real estate lawyer in Wayne and Teaneck, N.J.. You might want to have it removed before putting the house up for sale. Check for radon gas and deal with it if it’s there; this is something a buyer will also insist on. Try your state department of environmental protection for testing and correction companies. 

Basement moisture often is an issue in home sales, said Dominick Laurita of Interstate Home Inspections in Califon, N.J. It can lead to mold, which can scare buyers away. The most common cause: gutters that aren’t draining rainwater away from the house. “It’s a simple fix,” said Laurita. 

A termite problem also could derail a sale, so you want to act quickly if you find evidence of that. Though inspectors can’t see termite damage hidden behind walls, the insects sometimes leave visible trails. Keep the paperwork on all these jobs to show an eventual buyer. 

Once you get past the most pressing projects, there are a cluster of jobs where you have to weigh the benefits against the costs. In general, home sellers get back only 60% to 80% of the money spent on home improvements, according to Remodeling magazine. “You’re not getting a dollar back for every dollar you spend,” Weissmann said. “Don’t do any remodeling whatsoever, but anything that has to be replaced should be replaced,” said Dick O’Connor, a Dumont, N.J., real estate broker. “You can spend $50,000 to remodel and get only $30,000 back. Just be sure everything is in working order.” 

Michael Fitzpatrick, a Hackensack, N.J., real estate lawyer, said it’s okay to leave some issues to be handled in a negotiation between the seller and buyer, rather than spend a lot to upgrade the house before you even put it on the market.

Most experts recommend against major kitchen or bath renovations. But less ambitious upgrades, such as replacing scratched countertops or outdated appliances, could make sense, they said. “You’ve got to make it look good,” said Maria Rini, a RE/MAX agent in Oradell. “But the spruce-up bill can be a lot less than you imagine.” 

When it comes to cost-effective fix-ups, most housing experts have three favorites: clear out clutter, paint the walls and rip up old carpet. If the wood floors under the carpet are in good shape, great; otherwise, they can be refinished at a cost that typically ranges from $1.50 to $3 a square foot. Bob Olson, a contractor with Home Resources in Ridgefield Park, N.J., said updating doors, moldings and trim can give a home “a fresh new look” at a reasonable cost. 

Improving the landscaping, especially the front yard, is crucial. But it doesn’t have to look like a manicured estate. “Clean up the flowerbeds and trim back the bushes to expose the house,” Rini said. Plant flowers, especially in the front, for curb appeal, advised Barbara Ostroth, a Coldwell Banker agent in Oradell. In winter, you can plant cabbage plants with colorful leaves. 

If your furnace or hot water heater dies, obviously you must replace it. If those items are old but still working, however, most real estate experts advise that you leave them in place and adjust the home price to reflect their age. “If the heating system is old but works, don’t touch it,” O’Connor said. 

One option is to buy a home warranty when you’re ready to sell. A warranty “is a great way to overcome buyers’ objections to older appliances, pipes, electric systems, furnaces and hot water heaters,” Ostroth said. 

New, energy-efficient windows? That’s a costly job that many sellers would rather just leave to the buyers, even it means getting a lower price for the property. “If you’re getting out of the house you would almost never redo the windows, unless they’re rotted through,” Rini said. 

If you decide to renovate a kitchen or bath for your own enjoyment, keep resale in mind. “Try to pick something that is salable. Keep it neutral; don’t put in a green countertop,” said Margrit Vogler of Margrit Vogler Properties in Oradell.

Finishing a basement could be worthwhile if the house is small and there’s no other family room or play space for the kids. But otherwise, most real estate advisers recommend just tidying up instead, by throwing out clutter and painting the walls and floor. 

(c) 2009, North Jersey Media Group Inc.

Distributed by McClatchy-Tribune Information Services.