Home Buying Sentiment Continues to Diminish

“Rapid price increases have affected the marketplace.”

By Jeff Sorg, OnlineEd Blog

(December 18, 2018)

WASHINGTON (December 18, 2018) National Association of REALTORS®– New findings from a National Association of Realtors® survey show that despite a favorable view on the economy and the direction of home prices, the sentiment on home buying continued to diminish at the close of 2018 – though a majority still think it is a good time to buy. Consumer sentiment about home buying weakened in the fourth quarter with only 34 percent strongly indicating it is now a good time to buy, down from 39 percent in the third quarter and 43 percent one year ago. The percentage of those who believe that is not a good time to buy was unchanged in the fourth quarter, remaining at 37 percent, though up from 28 percent one year ago.

NAR’s fourth quarter Housing Opportunities and Market Experience (HOME) survey1also found that a majority of those polled, 59 percent, believe that the economy is improving. Optimism is the greatest among those who earn $50,000 or more. Fifty-three percent of those in urban areas said the economy is improving, compared to 71 percent of respondents in rural areas.

NAR’s chief economist Lawrence Yun says rapid price increases have affected the marketplace. “Consistently fast-rising home prices well in excess of income growth over recent years have left buyers frustrated while slowly enticing would-be sellers to consider listing.”

From 2012 to 2018, median home prices rose 44 percent, while average hourly wage earnings increased by just 16 percent. NAR’s most recent survey asked about home prices over the last 12 months. Sixty-three percent of respondents feel that prices have increased in their communities over the last 12 months, down from the third when 70 percent of respondents believed that prices had increased. Thirty percent feel housing prices within their communities have remained the same.

Americans living in the West, those with annual incomes of over $100,000 and those 45 to 54 years of age are most likely to report that prices have increased in their neighborhoods. Additionally, 67 percent of homeowners, 56 percent of renters and 50 percent of those living with someone else also felt home prices in their communities increased. Forty percent of those earning less than $50,000 reported that home prices had stayed the same. The national median home price as of October was $255,400, compared to $382,900 in the West.

Respondents were also asked for their views on home prices in the next six months. Forty-one percent predict home prices in their communities will stay the same, unchanged from last quarter but up slightly from 40 percent in 2018’s second quarter.

those who said the economy is advancing, 59 percent live in the West, which Yun found interesting. “The West region has a strong job-creating economy, yet it is the West region showing the weakest buyer sentiment because the West region is the least affordable,” said Yun.

Among those who do not presently own a home, 29 percent of those polled said that it would be very difficult to qualify for a mortgage and 30 percent believe that it would be somewhat difficult given their current financial situation (compared to 28 and 31 percent last quarter).

Yun says some of the fourth quarter findings imply that the softening home buying sentiment is less a result of potential buyers holding off purchases in anticipation of lower home prices, but more related to concerns over qualifying for a higher mortgage and the lack of access to affordable home listings. “Perhaps some communities designated as Opportunity Zones can draw real estate developers using tax incentives to build affordable housing,” Yun said.

[Source: NAR Press Release]

 

 

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Categories: Real Estate

Charlotte, N.C. Joins Growing List Where Home Sellers Can Request Cash Offer from Zillow

Zillow Offers soon to be available in eight markets nationwide

By Jeff Sorg, OnlineEd Blog

(December 12, 2018)

 

Home sellers in Charlotte, N.C. can use Zillow Offers to request a cash offer from Zillow to buy their home.  “We couldn’t be more excited to bring Zillow Offers to our first North Carolina market today,” said Zillow Brand President Jeremy Wacksman. “Selling a home can be extremely stressful – it’s one of the largest financial transactions many people will make in their lifetime. Zillow Offers alleviates some of that stress and uncertainty so home sellers can move onto the next stage of their life.”

Zillow Offers is currently available in Charlotte, Phoenix, Las Vegas, Atlanta and Denver and will launch in Raleigh, N.C., Houston and Riverside, Calif. in early 2019, according to a recent Zillow press release.

“Zillow Offers launched in April, and we’ve already helped thousands of home sellers through one of the most stressful times of their life – selling their home,” said Zillow Brand President Jeremy Wacksman. “Many homeowners are trying to time the sale of their current home with the purchase of a new one, and with rising inventory, this process can become even more uncertain. Zillow Offers alleviates the stress and complexity that typically go along with selling a home, and we can’t wait to begin helping Riverside homeowners early next year.”

When Zillow buys a home, it will make necessary updates and list the home for resale on the open market.

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Categories: Real Estate

Legalized Marijuana and the Real Estate Broker (Part 1 of 2)

Legalized marijuana occupies a special niche as a state-legal but federally-illegal product and industry.

By Jeff Sorg, OnlineEd Blog

(December 1, 2018)

(PORTLAND, Ore.) OnlineEd –  State legalization of marijuana should be of special interest to real estate professionals across the country because it has raised issues for both residential and commercial properties. In states such as Colorado and New York, legalization noticeably stoked demand in the commercial real estate market but there are concerns. For example, legal growing operations generally require building modifications to protect the structure from damage due to heat and humidity. Illegal growing operations face the same issues, as well as safety issues caused by improper electrical work. Real estate brokers must also evaluate the ethical implications involved, including reporting requirements and the level of expertise needed to properly assist their clients and customers. And, commercial and residential landlords need to understand their rights, raising the potential problem of unauthorized practice of law already familiar to real estate professionals.

Like any industry, legalized marijuana has some broader economic benefits. The industry creates jobs for production and retail employees, and boosts related businesses such as construction and transportation. States that have legalized recreational marijuana have also seen increased rates of tourism. However, legalizing pot is far from a no-brainer decision for states since each economic benefit seems to also have a variety of societal and logistical difficulties.

Industry observers also tell us that legalized marijuana raises real estate prices at the production and distribution levels. In California, where the weather allows for outdoor growing, prices for farmland rose dramatically after the state legalized adult-use marijuana. Real estate licensees in the Monterey, CA area have reported that an average 10-acre parcel with greenhouses sold for $5 million in 2017, double the price from just the year before.

Indoor operations require space, ventilation, and tremendous amounts of electricity, making urban area warehouses a preferred choice. Commercial warehouse space in Denver, Colorado is more expensive now than before legalization, and vacancy rates in the properties most popular with marijuana growers dropped from 7.9% to 2% in just five years. Lease rates on the same class of properties rose by 56% in that time. Buyers of Denver warehouse space for marijuana production paid more than $80 per square foot in 2014, compared to $40 to $50 per square foot for traditional warehouse uses.

The New York Times, April 4, 2017 printed that “Commercial real estate developers say they have never seen a change so swift in so many places at once. From Monterey, Calif., to Portland, Me., the new [legal marijuana] industry is reshaping once-blighted neighborhoods and sending property values soaring.”

Retail dispensary space is also commanding a premium price compared to other uses. Retail sales locations may require some modifications, such as waiting areas and additional ventilation. For the most part, though, commercial landlords charge dispensaries premium rents simply because of the businesses’ uncertain legal status. Legal marijuana businesses largely rely on cash to pay these additional expenses. Only about 3% of the nation’s banks and credit unions will even deal with marijuana businesses, and even fewer will consider providing financing. Larger independent businesses, then, need deep pockets to start up.

However, the investment community is starting to show interest in the industry. A recent market analysis report estimates that the industry has spent $1 billion in private and public capital since 2014. Cannabis businesses are publicly traded on the New York Stock Exchange and the Toronto Stock Exchange. Some are experimenting with alternative financing models such as real estate investment trusts (REITs), and multi-million dollar private equity funds have been established with the express purpose of investing in marijuana-related businesses.

Legalized marijuana occupies a special niche as a state-legal but federally-illegal product and industry. This contradiction means real estate licensees interested in serving the legalized marijuana industry must tread a careful path between the exuberance of a booming business sector and the continued looming risk of a federal crackdown.

The political climate in the early 2010s allowed real estate licensees and other professionals to explore business opportunities in legalized medical and adult-use cannabis markets. Some representatives of the Trump Administration identify as strongly anti-legalization, and various political pressures may lead to stronger federal enforcement of marijuana prohibition. This uncertainty means that state-legal marijuana businesses have no idea whether they can safely operate. For the real estate professional, this means that marijuana-related business clients and even clients who own property leased to marijuana businesses are at some degree of legal risk. Licenses should alert their clients and customers to this risk and, if necessary, advise them to seek legal counsel.

Even real estate licensees who don’t have an interest in serving the legalized marijuana industry may encounter new issues related to state legalization. Licensees now need to know how to identify a residential or commercial property damaged by cannabis cultivation and residential buyers will want to know whether a marijuana-related business may open near their new home.

Then there’s the issue of whether a landlord may prohibit legal marijuana use. It seems clear that a landlord can forbid marijuana smoking in a rental unit, just as a landlord is free to prohibit tobacco smoking. A landlord may consider allowing or banning other forms of use that are not disruptive to other tenants such as edible or topical forms of marijuana. In certain states, medical users may be exempt from such prohibitions. In California, for example, hindering a tenant’s legal medical use of marijuana is considered discrimination.

Landlords should establish clear marijuana use policies in their leases. In states with legal adult use, the lease should clearly spell out the landlord’s policy. If the landlord wants to ban all marijuana use on the property, consider using language in the lease that prevents use or possession of all drugs considered illegal under state and federal laws, since pot remains illegal at the federal level. Landlords and brokers should be sure to consult a lawyer before drafting any clause, since pot-related laws are still evolving.

Brokers who choose to proceed to work with clients for any marijuana related purchase might find these practices worthwhile:

  • Check with your errors and omissions policy carrier to find out if you are covered for marijuana-related transactions.
  • Disclose and document, in writing, that you notified all parties to the sale or rental of the conflict between state and federal law regarding the legality of marijuana, and that you advised everyone involved to seek legal advice before proceeding. Also, include a statement about the possibility of chemical contamination or structural issues from land or housing used as a grow site.
  • Disclose when you know that property was previously used as a grow site and that there is the possibility of increased mold growth.
  • Advise clients to seek legal counsel before buying, selling, or leasing for a marijuana grow site or dispensary.
  • Advise clients that pot-related businesses are limited in their ability to get financing.
  • Advise landlords and seller-carried financing clients that their underlying financing can be jeopardized if their lender feels a pot business jeopardizes their collateral.
  • Advise buyers, sellers, lessees, and lessors of grow sites and dispensaries that insurance may be difficult to obtain or could be canceled.
  • Advise clients to always check local regulations to see if the location being considered can be used as a grow site or dispensary.
  • Check with your office manager to make sure you can represent clients for marijuana-related transactions.
  • Clients (and brokers) who choose to ignore federal law in favor of state law, should make sure to know local regulations since many areas have opted out of participating in marijuana grow sites and dispensaries through the passage of local ordinances.

Stay tuned for Part 2.

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Oregon Requires New Course for First Principal Broker License Renewal

 

You've grown into your success. Let's keep it going!

Oregon Principal Broker Advanced Practices – Required for the first renewal of a principal broker license

If your principal broker license expiration date is after July 1, 2019, and you will be renewing your active license for the first time, you will have to take the 27-hour Principal Broker Advanced Practices course.  If your first principal broker license renewal was in inactive status and you want to reactivate it for the first time on or after July 1, 2019, you will have to take the 27-hour Principal Broker Advanced Practices course.

The 3-hour Law and Rule Required Course (LARRC) is also required to renew or reactivate your license. Except for LARRC, if you already have taken regular continuing education, it will not count if you are renewing active for the first time, or if you are reactivating after an inactive first renewal, on or after July 1, 2019.

If you didn’t know of this new requirement, and you erroneously completed regular continuing education through OnlineEd for your first principal broker license renewal, you may qualify to have your previous purchase credited toward the cost of Principal Broker Advanced Practices. Give us a call at 503.670.9278 for details or assistance with enrollment.

 

Available ONLY at OnlineEd!

Just $229.00 and Law and Rule Required Course is included for FREE

Sign up NOW! Get started TODAY!

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

IMPORTANT DEADLINE FOR REALTORS® – Get Your Ethics Course Completed!

The National Association of REALTORS® has moved their Code of Ethics requirement to a 2-year cycle ending December 2018.

By Jeff Sorg, OnlineEd Blog

(November 8, 2018)

(PORTLAND, Ore.) OnlineEd – REALTORS® are required to complete ethics training of not less than 2 hours, 30 minutes of instructional time within two-year cycles. The training must meet specific learning objectives and criteria established by the National Association of REALTORS®. This current cycle began on January 1, 2017, and ends December 31, 2018.  Training must be repeated each cycle to help all members understand and follow NAR’s Code of Ethics and Standards of Practice.

OnlineEd has courses approved in many states to be used to satisfy the NAR requirement and for continuing education for license renewal. These courses emphasize the standards of ethical conduct in the practice of real estate based on the National Association of Realtors® Code of Ethics and Standards of Practice and on federal and state laws governing conduct applicable to the practice of real estate.

For more information about OnlineEd course offerings, please view the course catalog for your state at www.OnlineEd.com.

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OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Oregon Real Estate Agency Requires Principal Broker Advanced Practices Course

Principal brokers with a license expiration date after July 1, 2019, renewing a for the first time must take the 27-hour Principal Broker Advanced Practices course.

By Jeff Sorg, OnlineEd Blog

(November 2, 2018)

(PORTLAND, Ore.) OnlineEd – Principal brokers with a license expiration date after July 1, 2019, who will be renewing their active license for the first time, will have to take the 27-hour Principal Broker Advanced Practices course. If the first principal broker license renewal was in inactive status and the principal broker wants to reactivate it for the first time on or after July 1, 2019, they will have to take the 27-hour Principal Broker Advanced Practices course. The 3-hour Law and Rule Required Course (LARRC) is also required to renew or reactivate the license. Except for LARRC, if the principal broker already completed regular continuing education, it will not count if for renewing active for the first time, or if reactivating after an inactive first renewal, on or after July 1, 2019.

Exclusively for OnlineEd customers who completed their regular continuing education with OnlineEd during their first Principal Broker license renewal cycle who cannot use that education for their renewal, they may qualify with OnlineEd to have their previous purchase credited against the $229 price of the OnlineEd 27-hour Principal Broker Advanced Practices course.

Law and Rule Required Course (LARRC) is another 3-hour course that is required for all license renewals. Together, Principal Broker Advanced Practices and Law and Rule Required Course will complete the required 30-hours of education needed to renew a principal broker license. Law and Rule Required Course is free at OnlineEd to all Oregon real estate licensees, whether property manager, broker or principal broker.

The Oregon Real Estate Agency has eight required course categories for Principal Broker Advanced Practices. These topics are:

Module 1: Brokerage Practices, covering business registration and planning
Module 2: Supervising and Managing Real Estate Licensees
Module 3: Affirmative Duties of Agent and Agency Relationships
Module 4: Advertising Rules
Module 5: Property Management
Module 6: Clients’ Trust Accounts
Module 7: Records and Record Maintenance
Module 8: Professional Real Estate Activity

The OnlineEd course divides each topic into smaller learning segments that cover specific facts, information, and details. Each module is populated with learning assessments to help learners comprehend presented information and a 60-question final exam at the end of the course. As with any Oregon continuing education course, Principal Broker Advanced Practices is required to be time-monitored. Once the learner completes all course elements and has spent the minimum necessary time logged into the course, the course final exam is made available. The final exam is not timed, requires a minimum passing score of 75%, and can be taken as many times as necessary to achieve a passing score. After successfully completing the final exam for this 27-hour course, a course completion certificate is generated. This certificate should be printed and kept by licensees in their education files as proof of meeting the OREA-required first-time renewal education course. You are not required to send this certificate to the Agency but must have it available for the Agency for three years after it is used for license renewal.

To sign up for the OnlineEd Principal Broker Advanced Practices course, please visit the OnlineEd web site.

 

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Buyers Gain Negotiating Power in Some Markets

Zillow research reveals hot markets where competition is letting up just in time for buyers to get ahead of rising rents and mortgage rates.

By Jeff Sorg, OnlineEd Blog

(October 30, 2018)

SEATTLEOct. 30, 2018 /PRNewswire/ — After years of competitive bidding wars and rising prices, a Zillow® data analysis shows it might finally be a good time to buy a home in many U.S. markets.

Zillow researchers looked at three factors to determine which of the largest U.S. housing markets are becoming more buyer-friendly and found that some previously prohibitively competitive markets – including Seattle and Las Vegas – have turned into the best places for buyers this winter.

The three buyer-boosting metrics we considered are:

  • An increase in the share of listings with a price cut. Price cuts indicate homes are sitting on the market longer – which means more options for buyers, less competition for homes and more room for buyers to negotiate. Many recently white-hot markets have seen large jumps in the share of for-sale listings with a price cut.
  • Projected increase in rent appreciation over the next year. Rent appreciation has slowed recently, but as mortgage affordability deteriorates due to rising mortgage rates, rents could begin to increase again as some would-be buyers put their buying plans on hold. We know that nearly half of renters consider buying while they’re looking for a home, and the potential of rising rents also factors in to when it’s a good time to buy.
  • Affordability relative to the past. We looked for markets where mortgage affordability is poor – but not worse than it was historically. With interest rates on the rise, and mortgage affordability already closing in on its historic norm, prepared buyers may want to enter the market before housing payments become historically unaffordable.

Based on those factors, these are the best places for buyers this winter:

  1. Orlando
  2. Boston
  3. Seattle
  4. Las Vegas
  5. Charlotte
  6. Columbus
  7. Portland
  8. Sacramento
  9. Minneapolis
  10. Dallas

“The housing market always lets up a little in the fall, when kids are back in school and the home shopping season wraps up for the holidays,” said Zillow Senior Economist Aaron Terrazas. “But this fall and winter are shaping up to be more favorable for those buyers who have struggled to get into the housing market for several years amid red-hot competition. Mortgage rates are rising, but will climb much further in 2019 and early 2020. As purchase affordability deteriorates, expect rents to pick back up as some would-be buyers put their plans on ice. Renters who were thinking of buying and decided to hold off may want to take another look this winter, as a steady clip of mortgage rate increases chips away at affordability and more homes become available on the market.”

[Source: Zillow press release]

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Zillow is a registered trademark of Zillow, Inc.

OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Purpose and Scope of the CMA (Comparative Market Analysis)

The Licensee’s Duty of Care Requires a CMA Before a Seller Lists or a Buyer Offers.

By Jeff Sorg, OnlineEd Blog

(October 25, 2018)

(Portland, Ore.) OnlineEd® – As a part of a licensee’s fiduciary duty of care, a Comparative (or Competitive) Market Analysis (CMA) should be prepared before a listing price is established with a seller or before an offer is prepared for a buyer. The CMA price is established by comparing the subject property to similar properties actively on the market, listings that have expired without selling, listings that have an accepted offer and are in pending sale status, and listings that have closed escrow and are in sold status.

A CMA is NOT an appraisal; rather it is a written analysis by a real estate licensee relating to the probable sale or offering price for a specific piece of real estate in an identified real estate market. A CMA is specifically used for assisting a buyer in arriving at an offering price or for assisting a seller in arriving at a listing price.

CAUTION: A CMA is limited to establishing the asking or offering price for a specific property for a specific client. Any activity that attempts to establish a value for property for any purpose outside of this limited scope does not fall under the definition of a CMA and requires a licensed appraiser.

A CMA has no required format and can be as simple as a written opinion of a listing or offering price, or can include a more detailed analysis that would review and analyze comparables or details of adjustments. One item that absolutely should be included in the CMA is a disclaimer that a CMA is NOT an appraisal.

EXAMPLE: “This analysis has NOT been performed in accordance with the uniform standards of professional appraisal practice that require real property valuers to act as unbiased, disinterested third parties with impartiality, objectivity, and independence and without accommodation of personal interest. It is not to be construed as an appraisal and may not be used as such for any purpose.”

A detailed CMA is more or less capsulized information comparing the subject property to comparable properties. The information sets forth the number of bedrooms and bathrooms, approximate square footage, the size of major rooms, amenities (fireplaces, swimming pool, etc.) age, property tax amounts, lot size, the presence or absence of a garage, and so forth. To get a complete picture of the marketplace, the information for the CMA is collected on available listings, pending sales, sales that occurred within a reasonable time based on current market conditions, as well as information about listings that did not sell during their listing period (expired listings). A CMA can include an area as narrow as one or two streets surrounding the property, or as broad as an entire neighborhood or subdivision but it is important that comparables be located as close to the subject property as possible, whenever possible.

For sellers, the currently available listings are competition for the seller’s property. How the seller’s property will be priced relative to the competition will be critical to the ultimate success of the agent’s marketing efforts undertaken to sell the property. Pending sales will represent the most recent sales activity in the area. Since the actual sale price of a pending sale is not made public until it closes, the sales price is not known at the time of the CMA and the neighborhood grapevine should not be relied on since a combination of wishful thinking and enthusiasm can result in a rumor that a listing sold for an inflated price. All that can reasonably be relied on by the broker preparing the CMA is the last listed price and the actual sale price may be greater or lesser than the listed price.

WARNING: A listing agent should never disclose the pending sales price just in case the sale does not close and the property comes back on the market.

When analyzing comparable sold properties, some issues should be taken into account. For example, in a slow market, it may be necessary to use properties that sold 12 to 18 months ago and, in a fast market, using properties that sold only 3 months back will be a better indicator of the current marketplace. However, whenever there is an adequate number of sales in a more limited period, these sales should be used. Expired listings usually indicate the highest price range for the subject property, since the most common reason a listing expires without selling is that it was overpriced for present market conditions.

In evaluating the sold price for comparables, inferences can be made about the selling price based on the market history of the listing. This analysis should include such factors as:

  • how long it took to find a buyer for the property;
  • if the price was reduced to stimulate an offer;
  • did the seller receive multiple offers at the same time;
  • did the seller pay any buyer closing costs or make other financial concessions; and
  • any other information that is available by making inquiries of the listing licensee.

A CMA does not include factors that affect perception. Perception is the key difference between why one house with identical features will command a higher price than a perceived twin. Because perception alters reality, perception is a crucial consideration in understanding the buying and selling process beyond a CMA – in other words, price will ultimately be determined by the emotional impact the property has on a particular buyer. These emotions tend to be based on subjective elements such as curb appeal, interior decor, colors, views, light, and room flow.

The CMA will usually include a brief statement by the licensee suggesting a “reasonable” or “suggested” listing price or price range. This statement is usually a combination of fact and subjective opinion based on the licensee’s “feel” for the current market. Estimating a probable sale price based on a CMA involves a certain amount of subjectivity and is easiest when done in neighborhoods of tract housing with little style and size variation from house to house.

A licensee’s knowledge of the local market could affect the accuracy of a CMA. For example, unless a licensee is familiar with or has seen the comparable listings used in the CMA, it is difficult to draw the correct conclusion for a probable sale price. In analyzing CMA data, the licensee should at least drive by the properties discussed in the CMA to get an understanding of how they compare to the subject.

Sellers and buyers should carefully analyze their CMAs, giving special attention to the sold listings. Sold and closed listings are the most reliable indicator of what the market will bear price-wise, and market price is ultimately determined by how much a willing buyer will pay for a property and how little a willing seller will take for the property. These price opinions are always influenced and adjusted by the sales dates of the comparables. In other words, a property that sold yesterday wouldn’t need to be adjusted based on its sales date but one that sold eight months prior would either need to be adjusted up or down based on current market pricing trends.

CAUTION: When preparing a CMA, avoid using “appraisal” and “value.” These words are reserved for licensed appraisers and

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OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Categories: Real Estate

FHA To Require Second Appraisal For Certain Reverse Mortgages

 Where a second appraisal is required, lenders must use the lower value of the two appraisals.

By Jeff Sorg, OnlineEd Blog

(October 2, 2018)

(WASHINGTON) HUD – The Federal Housing Administration (FHA) announced that it will begin requiring lenders originating new Home Equity Conversion Mortgages (HECMs), commonly referred to as reverse mortgages, to provide a second property appraisal under certain circumstances. FHA is instructing lenders to provide a second independent property appraisal in cases where FHA determines there may be inflated property valuations.

FHA’s new requirement takes effect for case numbers assigned on or after October 1, 2018 through September 30, 2019. FHA will periodically review this guidance and, based on the results, may renew these requirements beyond fiscal year 2019. Read FHA’s Mortgagee Letter.

FHA will perform a risk assessment of appraisals submitted for use in new HECM originations. Based on the outcome of that assessment, FHA may require a second appraisal be obtained prior to approving the reverse mortgage for an insurance endorsement. Under the new policy, lenders must not approve or close a HECM before FHA has performed the collateral risk assessment and, if required, a second appraisal is obtained. Where a second appraisal is required by FHA, lenders must use the lower value of the two appraisals.

The appraisal validation policy announced today will further reduce risks to FHA’s Mutual Mortgage Insurance Fund (MMIF) and protect the health of the HECM program. The financial soundness of FHA’s reverse mortgage program is contingent on an accurate determination of a property’s value and condition. The property value is used to determine the amount of equity that is available to the borrower and it is also used by FHA to determine the amount of insurance benefits paid to a mortgagee.

In a 2017 evaluation, the U.S. Department of Housing and Urban Development (HUD) found higher-than-expected losses in the HECM program could be attributed in part to “optimistic estimates of collateral value driven by exaggerated property appraisals when the loan was originated.”

FHA is addressing the accuracy of appraised property values due to continuing volatility in the HECM program. Last year, FHA’s Fiscal Year 2018 Annual Report to Congress found the agency’s reverse mortgage portfolio had a negative capital ratio of 19.84 percent and a negative net worth of $14.5 billion. To begin to address the financial solvency of the program, FHA instituted several reforms to the HECM program to improve its financial health and to ensure reverse mortgages remain a resource to allow senior borrowers to remain in their homes and age in place. FHA is continuing to analyze the impact of these reforms and expects to provide an assessment in its Annual Report on the financial status of the MMIF.

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OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Experts Predict a Buyers Market in 2020

Despite slowing home-value appreciation, it could take until 2020 to see the market change.

By Jeff Sorg, OnlineEd Blog

(August 28, 2018)

According to the 2018 Q3 Zillow® Home Price Expectations Survey,  sellers will continue to have more negotiating power than buyers, at least until 2020. The quarterly survey is sponsored by Zillow and conducted by Pulsenomics LLC, an independent research firm that specializes in data analytics. The survey questioned over 100 real estate experts for their predictions about the housing market.

Survey data found the market might be shifting toward buyers, with three out of four economists surveyed saying the market would shift – but not until 2020 or later. Also according to the Zillow article Home-Value Growth is Slowing in Several Hot Markets,  home values have slowed in more than half the 35 largest metros, and price cuts are now commonplace.

The largest share (43%) of respondents surveyed believed that the national housing market will shift over to a buyers market in 2020. Respondents also believe the Midwest will shift to a buyers market in 2019, a year before the rest of the country.

[Source: To get more information about this article, please visit the original Zillow press release: http://zillow.mediaroom.com/index.php?s=28775&item=137419]

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Zillow® is a registered trademark of Zillow, Inc.  Pulsenomics LLC (www.pulsenomics.com) is an independent research firm that specializes in data analytics.

OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Categories: Real Estate