Post-Downturn Changes Affect Practitioners

Even the most resourceful, resilient real estate practitioners have run into challenges since the downturn. Here are some of the issues they face today:

• Buyers and sellers who strive to pinch pennies make the job more difficult — and less profitable. “Consumers are looking at agents differently and saying, ‘We don’t need to buy the full level of service,'” says Katherine Pancak, professor of finance and real estate at the University of Connecticut.

• The overall number of real estate professionals has dropped during the past two years, although some states, including Texas, Michigan, and New York, have seen increases in the past year of up to 10 percent in new real estate licensing applications.

• Persistence is an important factor in today’s real estate business. The average U.S. home is on the market for 150 days before it sells, up 43 percent from two years ago, according to Altos Research.

Source: SmartMoney, Alyssa Abkowitz (07/15/2010)

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Mortgage Applications Rise as Rates Stay Low

Applications to purchase homes rose 3.4 percent last week compared to the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey.

On an unadjusted basis, the purchase index rose 15.3 percent compared with the previous week, but was down 35.7 percent compared to the same week a year ago.

This is only the second time in 10 weeks that purchase mortgage applications have increased.

“The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower down payment requirements,” says Michael Fratantoni, MBA’s vice president of research and economics.

Mortgage rates remained low:

• 30-year fixed-rate mortgages decreased to 4.59 percent from 4.69 percent.
• 15-year fixed-rate mortgages decreased to 4.05 percent from 4.12 percent.
• 1-year ARMs decreased to 7.17 percent from 7.20 percent.

Source: Mortgage Bankers Association (07/21/2010)

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Feds Asked to Stop Home Resale Fees

Housing advocates and experts hosted a press conference today to launch the Coalition to Stop Wall Street Home Resale Fees and ask United States Secretary of the Treasury Timothy Geithner to ban the financial scheme.

Wall Street Home Resale Fees are a controversial new financial scheme that has already been restricted in 17 states, with Illinois Governor Pat Quinn signing legislation yesterday.

Some actors in the real estate industry, in consultation with Wall Street advisers, are attempting to add language to home purchase contracts requiring a percentage of the final sales price of a home be paid to private third parties every time the property is sold, typically for 99 years. These actors are then attempting to sell the right to collect these fees on Wall Street — lining their pockets while stealing equity from home owners.

The Coalition to Stop Wall Street Home Resale Fees brings together a wide array of organizations, including the American Land Title Association, National Association of REALTORS® , American Federation of State, County, and Municipal Employees, Vote Vets, the Institute for Liberty, the Center for Responsible Lending, and the Property Rights Alliance. The Coalition has organized to fight the financial scheme of Wall Street Home Resale Fees and to protect home owners across the country.

More information is online at

Source: NAR

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Sales Slow but Remain Above Last Year

With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74 percent in June from 4.89 percent in May; the rate was 5.42 percent in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009.
Source: NAR

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Mixing Businesses May Send a Mixed Message

With the economic landscape still unstable, real estate practitioners may be tempted to supplement their income with a side business.

Agents who decide to pursue this approach, however, must be warned that cross-marketing products and services that do not complement each other likely will prove to be an unsuccessful venture. For example, a realty professional who decides to also sell beauty products to the same client base could end up losing credibility with both sets of customers.

While the optimal strategy may be for a real estate practitioner to simply devote 100 percent of his or her time and energy to the primary business of real estate, those who do dabble in other areas should at the very least choose to cross-sell products and services that are compatible.

If that is not possible, another person should be brought in to spearhead the secondary business.

In cases where neither of those options will work, agents should refrain from promoting the two businesses simultaneously, meaning that they should keep marketing for the two income streams completely separate — whether in written marketing materials or in person, such as by wearing a REALTOR® pin while hosting a Pampered Chef event.

Source: Realty Times, Jennifer Allan (07/19/10)

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Apartment Web Sites Sees Bump in 2010

The family of Web sites saw a 14 percent increase in traffic in the first six months of 2010 compared to 2009.

The increase was largely driven by the rise in the use of mobile devices with mobile visits increasing 117 percent in 2010. The number of consumers accessing apartment community information through text messages also has increased by 250 percent.

“The significant level of renter activity on our site throughout the first half of the year is a positive indicator of what’s to come,” says Kevin Doyle, senior vice president and general manager of

Source: (07/20/2010)

A Light at the End of the Commercial Tunnel

Observers of the commercial real estate market in California are beginning to see light at the end of the tunnel.

“After eighteen months of pessimism about office and industrial markets we are now seeing indications that, after the markets hit bottom later in this year or early next year, they will follow the pattern of increased non-residential construction coming two to three years after the end of the recession rather than the pattern of a multi-year stasis in this sector,” said Jerry Nickelsburg, senior economist and an author of the UCLA Anderson Forecast.

Optimism is greater in Los Angeles and Orange County, reflecting improving strength in manufacturing, Nickelsburg says.

Source: UCLA Anderson Forecast (07/16/2010)

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Did the Housing Credit Attract New Buyers?

At least one noted economist doesn’t believe that the home buyer tax credit brought new buyers into the market.

Milton Ezrati, a senior economist and market strategist at Lord Abbett, argues that the credit only encouraged buyers to rethink their timing.

“People who were looking crowded their purchases into March and April in order to qualify for the credit, driving up home sales by almost 30 percent.” Ezrati writes in the Wall Street Journal. “Then, because so many of those sales would have occurred after April, recorded sales fell suddenly by about 30 percent in May. Housing starts and residential construction put in place followed this same up-and-down pattern.”

Source: The Wall Street Journal, Emily Peck (07/19/2010)

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Rentals Are a Booming Business

Web sites like,, and Craigslist are enjoying a surge of listings from home owners, many of whom admit they are hoping to avoid foreclosure by renting out their properties. – its full name is AirBed & Breakfast – is the newest of these sites. Since its founding in 2007, it has grown to encompass rentals in 5,700 cities in 148 countries. The company charges 10 percent to travelers and 3 percent to the home owner. charges home owners $300 annually to list a property. It is adding 15,000 new properties each month.

Craigslist is free of charge.

Source: Bloomberg, Scott Hamilton and Anthony Feld (07/20/2010)

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Seller Financing Can Have Tax Advantages

Offering to hold either a second mortgage or a primary mortgage in either a residential or a commercial sale can be a good deal for the seller.

The primary advantage is deferral of taxes due. Sellers are normally taxed as the principal is received, spreading the tax bill over several years, explains Richard Schank, a financial planner with PTS Brokerage in Mt. Laurel, N.J.

Other advantages can include:

· Support for a higher-than-average price.
· An interest rate that provides a relatively high return on investment.

The safest arrangement includes obtaining a deed in lieu of foreclosure from the buyer, which allows the seller to take back the property if the note isn’t paid in a timely fashion.

Source: Investor’s Business Daily, Jeff Schnepper (07/15/2010)

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