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NAR PULSE—NAR’s Commitment to Excellence (C2EX) program has been selected as a 2019 Learning! 100 award winner, joining past winners such as Amazon, AT&T and the American Heart Association. This award honors organizations for fostering a culture of professional growth, innovation and organizational performance. Encourage your agents to join the 26,000-plus members who are working toward their C2EX Endorsement by logging in to C2EX.realtor today!
Announcing NAR’s New Emerging Technology Team!
With a goal to help REALTORS® navigate new technology, this expert team will identify, research and analyze emerging technologies and their potential impact on real estate. Look for blog and video updates from the Emerging Technology team at NAR.realtor/technology.
Using RPR to Wow Your Clients
Realtors Property Resource® (RPR®) helps REALTORS® wow their clients and close more deals. It puts data, tools and reports at their fingertips so they can respond to questions and requests instantly, while positioning themselves as real estate data experts.
(TNS)—More than a third of Americans have been forced to cut spending on essential items like food and utilities to afford housing, according to a Freddie Mac study.
About 42 percent of renters and 33 percent of homeowners have had to reduce the money spent on essentials to cover the cost of housing during the prior two years, the report said. Overall, 62 percent of renters and 47 percent of owners reported struggling to afford housing.
“Our research confirms much of what we see in our business every day: Affordability remains the essential factor when it comes to determining whether to rent or purchase a home, and the cost of housing is having a significant impact on households of every age, size and location,” said David Brickman, president and incoming CEO of Freddie Mac, as Yahoo reports. “For millennials and many Gen Xers, buying a home is no longer just a decision based on housing and housing costs—increasing pressure from student loans and the rising cost of child care are having a significant impact.”
Freddie Mac conducted the online survey over a four-day period. The poll collected data from 4,040 respondents over the age of 18, including 2,864 homeowners, 1,119 renters and 57 others.
“While we tend to focus primarily on wages not keeping up with house prices and misperceptions of down payments, we should also recognize that for many millennials and Gen Xers, the basic cost of living has gone up,” says Brickman, as Yahoo cited. “Heavy burdens from student loans and the rapidly rising cost of childcare are clearly affecting the housing decisions of these individuals.”
Student debt has more than doubled over the past decade to more than $1.6 trillion, according to the Federal Reserve. Of millennials who rent, 51 percent said they based their choice of housing on their student loan payments.
The cost of childcare has also risen over the past 30 years, according to the report. About 31 percent of renters and 45 percent of homeowners reported choosing cheaper housing to afford daycare, according to Freddie Mac.
Over half of workers employed in such vital positions as healthcare, education and law enforcement have made housing decisions with their student loan repayment obligations in mind, the report noted.
About 35 percent of homeowners who reported trouble affording housing in the last two years had to move to find a more affordable place to live, an increase of 9 percent since last August.
©2019 The Mercury News (San Jose, Calif.)
Visit The Mercury News (San Jose, Calif.) at www.mercurynews.com
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Listen, I’m no attorney, but what I can tell you is that this antitrust lawsuit recently brought against the National Association of REALTORS® (NAR) makes zero sense when you break it down to common sense.
The filing of the lawsuit basically says that NAR violated federal antitrust laws by conspiring to require home sellers to pay buyer’s commissions at inflated rates.
That’s not at all accurate.
Let’s start with the “conspiring” part of that statement. There is no conspiracy. All the agents around the country didn’t get together and say, “Hey, let’s all charge the same amount of money for our services.” NAR didn’t put in the rules and regulations that an agent has to charge a specific amount or percentage to sell a home. The market bears what the market bears. Right now, the average commission is 6 percent because that’s what the market bears. Back when I first started selling real estate, it was 7 – 8 percent, because that was what the market would bear at that time.
Have certain disruptors and changes in our industry caused agents to be more flexible with their commissions? Sure, but there’s no more conspiracy in that than there is in the price of pizza. (I love a good analogy!)
Here’s what I mean. I live in Long Island. In my immediate area, there are five great pizzerias from which I can order a pie and pay somewhere around $12 – $14. Now, did those five shop owners get together and “price-fix” pizza purchases? Of course not. Those prices are just what the market here will bear. It’s the same with real estate.
If you really want to look at conspiracy stuff, turn the table on this legal lens and look at attorney practices. According to the American Bar Association website, attorneys traditionally get paid one of two ways: They can charge an hourly rate or a contingency fee—which is essentially a commission—based on an amount won in a lawsuit. Here’s what their site says: “In a contingent fee arrangement, the lawyer agrees to accept a fixed percentage, often one-third of the recovery.” Essentially, they’re saying that attorneys who base fees on contingency charge 33 percent. So, if they want to look at the National Association of REALTORS® and whether or not they’re price-fixing fees, we should be looking at the American Bar Association and how attorneys are collectively charging 33 percent. I’m not saying they’re conspiring; I’m just stating what it says on their site.
Next, let’s look at the “require home sellers” portion of their allegation. There’s no requirement. We don’t have the monopoly on real estate. Just because agents charge a fee for the work they do doesn’t make it a requirement. Home sellers have choices. They can go to a flat-fee broker, a discount broker, an online service (where they’ll get less by way of marketing and representation), or they can sell themselves.
Do REALTORS® get a large percentage of the business in this industry? Yes. But no one is forcing homeowners to use an agent. Think of it like the Coca-Cola brand. Coke has a large part of their marketshare, but they’re not the only soda game in town. People have options such as Pepsi, in addition to a wide spectrum of other sodas. Consumers aren’t required to buy Coke any more than they’re required to use a REALTOR®. An agent charges what they charge for the myriad services they provide. A seller can choose to use an agent or any of the other options available to get their home sold. No requirement necessary.
Finally, let’s take on the “to pay buyer’s commissions at inflated rates” part of legal-speak. That’s not what happens at all. What really happens is a homeowner interviews agents and then decides to hire one and pay them a fee for their work based on their skills and services. Once a homeowner agrees to hire that agent and pay a commission, that agent then gets to decide how much of that commission they’re willing to give to a buyer’s agent. While some may decide to pay out half, some might pay less if the home doesn’t need a lot of work to sell, and more if it does. The point is that what the listing agent decides to pay out is based on what’s best for the homeowner to get the place sold in the timeframe they need or want.
You have to ask the question: “Why is this lawsuit happening?” There are several reasons. Most importantly, as an industry, we’re starting to falter in establishing and communicating our value and justifying the fees we charge. It’s one reason there are so many new disruptors in the marketplace. That’s why in all the webinars and workshops I’ve done this year, I’m teaching a lot of techniques to help agents communicate just how valuable they are.
Darryl Davis has spoken to, trained and coached more than 100,000 real estate professionals around the globe. He is a best-selling author for McGraw-Hill Publishing, and his book, “How to Become a Power Agent in Real Estate,” tops Amazon’s charts for most sold book to real estate agents. He is the founder of the Next Level® real estate training system The Power Program®, which has proven to help agents double their production over their previous year. Davis earned the Certified Speaking Professional (CSP) designation, held by less than 2 percent of all speakers worldwide. To learn more, visit www.ThePowerProgram.com.
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(TNS)—The old real estate adage of “location, location, location” could be changed to “Trader Joe’s, Trader Joe’s, Trader Joe’s,” if recent analysis is any indication. A report by ATTOM Data looked at how home values were affected by proximity to different grocery stores, and the results are eye-opening.
It turns out that if Trader Joe’s is nearby, your house might be worth more than if it were close to other grocery chains. The average return on investment, or ROI, for Trader Joe’s-adjacent homes is 51 percent, 10 percentage points more than the runner-up, Whole Foods (41 percent), and almost 20 percentage points more than Aldi (34 percent).
The results were based on an analysis of 1,859 zip codes with at least one of each of these grocery stores: Trader Joe’s, Whole Foods and Aldi. ATTOM, a property data company, looked at current average home values from 2014 to 2019, current average home equity, home seller profits and home-flipping rates to learn whether these stores had any impact on equity, home-flipping returns and price appreciation.
Homeowners near the famous “Two-Buck Chuck” retailer, i.e., Trader Joe’s, also had more equity in their homes, with an average of 37 percent ($247,445). The runners-up were Whole Foods with 31 percent ($187,035) and Aldi with an average 20 percent equity ($53,650).
Aldi came in first place in the gross flipping ROI contest, however, with an average of 61 percent—almost double the second-place store, Whole Foods, which had a 35 percent ROI, trailed by Trader Joe’s with a 31 percent ROI.
Aldi also had the best five-year price appreciation: 42 percent, more than 10 percentage points ahead of Trader Joe’s, which had 33 percent. Whole Foods came in last place with an average five-year, home-price appreciation of 31 percent.
What Your House Is Near Today Might Predict Its Value Later
A popular grocery store is not the only neighborhood amenity that can increase your home’s value, according to experts.
Where you live can impact your investment as much—or even more—as your actual house, so it’s important to know what makes a location desirable, says James Marshall, director of Real Estate Analytics Products at Clear Capital.
Clear Capital’s automated valuation model, called ClearAVM, uses machine learning to predict the values of residential properties across the U.S. One of its findings is that desirable locations can predict home values.
“When we overlay points of interest (like transit, shopping and amenities) on top of prices, we see trends in the distance to these features,” Marshall says. “In urban areas, ClearAVM has found that access to public transit has a large correlation with higher property prices. We have found the same with access to restaurants, coffee shops and groceries in urban and suburban areas.”
While different folks will place more or less value on certain things—one person might love their craft brewery neighbor while another would prefer a yoga studio—there are universally positive (and negative) elements, says Chris Hunt, chief appraiser at Clear Capital.
Some of the positive location amenities that can impact home values and equity include high-ranking schools, hospitals, shopping centers, green spaces and being near the waterfront (think oceans and lakes), as well as access to highways and main thoroughfares.
Negative location markers include things like high-traffic and high-noise areas, crowded commercial properties, high-tension power lines or other utility easements, a poorly maintained home or neighborhood, and not being near the appealing attractions mentioned earlier, Hunt says.
Scope Out the Location Before You Buy the Home
Since buying a home is a major decision that can have serious financial consequences, both good and bad, buyers should think beyond the four walls. A solid investment strategy includes looking at the home’s surrounding location.
Whether you plan to sell your house in a few years or stay put for a lifetime, location will have a bearing on both your wallet and long-term satisfaction.
Take the time to get to know the neighborhood. Do people tend to stay, or is there a lot of turnover in sales? It’s important to get an idea of how a neighborhood might age based on community involvement, how long businesses have stayed there and what locals have to say.
“The beneficial amenities listed previously are those that, over time, tend to hold up as positively, adding to the home’s appeal and overall value impact in the market,” Hunt says. “That said, as neighborhoods mature and homes trade in the market, amenities and influences change, as well.”
Buyers should also consider where they’re buying in order to measure the long-term impacts of certain amenities. For instance, in urban areas, transportation is king, Marshall says. Likewise, in coastal markets, the distance to water is the largest driver of desirability.
“On a more micro level, a property that backs up to green space or has a slight view can fluctuate values on homes that may be next to each other,” Marshall points out.
Distributed by Tribune Content Agency, LLC
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Compared to July of last year, there were 7 percent fewer listings new to realtor.com this year, and entry-level inventory—homes priced under $200,000—slid 9.9 percent. In July, inventory in the $750,000-plus tier tracked up 6.6 percent year-over-year.
Meanwhile, the median national price was $315,000, an increase of 5.5 percent year-over-year, but down from an 8.7 percent gain the prior year. Below-$200,000 homes moved in 56 days, while homes priced $750,000-plus sold in 81.
“July’s data highlight tension in the housing markets between buyers eager to take advantage of lower mortgage rates and potential sellers concerned about slowing price growth,” says George Ratiu, realtor.com senior economist. “The decline in newly listed properties suggests that some would-be sellers are stepping back from the market during the peak buying season, when most people are searching for their next home.”
For more information, please visit www.realtor.com.
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Vitals: Better Homes and Gardens Rand Realty
Years in Business: 35
Size: 27 offices, 1,069 agents
Regions Served: Northern New Jersey, Westchester, the Bronx, Rockland, Dutchess, Putnam and Orange Counties
2018 Sales Volume: $2,295,000
2018 Transactions: 6,415
Since 1984, Marsha Rand—founder and president of Better Homes and Gardens Rand Realty—has transformed the business from one office in a small town in New York’s Hudson Valley to offices throughout Northern New Jersey, Westchester, the Bronx, Rockland, Dutchess, Putnam and Orange Counties. A registered nurse, Rand entered the real estate business part-time in the ’70s, and has since learned to love the industry, finding it both stimulating and rewarding.
What’s happening in your markets in 2019? How are things shaking out in Upper New York and New Jersey?
Marsha Rand: It depends on the price point in the different towns we’re in. The medium and lower price points are moving, while the upper price points are moving more slowly. To me, there’s no such thing as a good market or bad market. It’s just the market, and that’s what you have to work in, so we don’t worry about what it’s like. All in all, our listings are up and we’re ahead of last year.
Do you have a growth strategy for 2019?
MR: It’s the same one I have every year, which is to take every opportunity and look at it seriously as it comes our way. It could be an agent, a team, a company, mortgage or insurance. I love expanding the company and having new people involved. We’re very proud of what we’ve established, and it’s wonderful to be able to introduce it to people.
What do you consider the biggest challenges facing the industry today?
MR: It would have to be commission splits—to have enough money on the broker side to be able to continue to provide the things we provide. The Northeast hasn’t really gone to a model where the agent pays for everything, so we’re an old-fashioned company that still does most of the marketing for the agents.
This is a family business. Why is that important?
MR: Right now, we’re the only large, family-owned company in our marketplace. Four of us work in the company, and while we’re all different ages, I think that gives us a lot of creativity. I have a son who is an attorney who has written several real estate books. There’s enough of us, and we all have different talents. Putting that together in a family business makes us unique.
How do you prepare your agents for the customers of 2019—the millennials and those who may be purchasing homes for the first time?
MR: The people we’re preparing for are either of that age group or have children that fall into that age group, and, truthfully, I don’t think it’s that different. Yes, they may want to communicate differently, but you have to match your rhythm to the rhythm of buyers and sellers. If they want a text, you text them back; if they want a call, you call them.
What do agents like about working for the firm?
MR: I think they like the style of the company and the culture we’ve developed. When people come to us from other places, they comment that it’s truly a “family business” and that the family is visible around the office.
Keith Loria is a contributing editor to RISMedia.
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In assistance to condominium homebuyers, the Federal Housing Administration (FHA) finalized new regulation this week, expanding FHA financing to individual units, among other provisions. According to FHA, 20,000 – 60,000 condominiums could become eligible for FHA financing as a result of the rule, which “is part of a broader Administration objective to reduce regulatory barriers that currently restrict affordable homeownership opportunities.”
“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families, and it’s critical that FHA be there to help them,” said U.S. Department of Housing and Urban Development Secretary Ben Carson in a statement. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”
“This new rule allows FHA to meet its core mission to support eligible borrowers who are ready for homeownership and are most likely to enter the market with the purchase of a condominium,” said HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery.
Beginning October 15, FHA can consider condominiums for financing individually, even if the agency has not approved the condominium development overall. If the development has 10 or more units, FHA caps eligibility at 10 percent; in developments with less than 10 units, the FHA maximum is two.
For approved condominium developments, the recertification requirement is stretching to three years, instead of the current two. Additionally, FHA changed its owner-occupancy ratio requirements, allowing for more opportunities.
“The condominium market is a critical gateway to affordable homeownership, and MBA applauds the steps FHA has taken to increase borrowers’ accessibility to quality housing,” said Pete Mill, Mortgage Bankers Association senior vice president for Residential Policy and Member Engagement, in a statement. “The new guidelines, many of which MBA advocated for, will create more financing options that will help first-time homebuyers and low- to moderate-income borrowers. It will also provide lenders with much-needed clarity to promote safe, sustainable and affordable lending.”
“We are thrilled that Secretary Carson has taken this much-needed step to put the American Dream within reach for thousands of additional families,” said John Smaby, National Association of REALTORS® president, in a statement. “It goes without saying that condominiums are often the most affordable option for first-time homebuyers, small families and those in urban areas. This ruling, which culminates years of collaboration between HUD and NAR, will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.”
According to June NAR statistics, condominium sales sunk 6.5 percent year-over-year. Prior to the regulation, 6.5 percent of condo developments were eligible for FHA financing.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at firstname.lastname@example.org.
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Capital is pivotal for the success of any entrepreneur to launch a sustainable and lucrative business. Traditional routes of access to capital are changing as technological development creates new avenues and the distance between entrepreneur and investor decreases due to an increase in fast and efficient communication.
Women entrepreneurs have notoriously faced hardships in gaining access to capital, from lack of information and resources and local and state government assistance, to facing cultural biases from investors. Without adequate capital, women cannot make their creative ideas a reality, nor can they afford to maintain the businesses that provide jobs for a significant portion of the population.
U.S. Census Bureau data reveals that women own 36 percent of privately-held businesses and contribute $3 trillion to the economy due to job creation—creating 16 percent of jobs in the nation. As more women become their own bosses, they compose a larger share of small businesses, of which 80 percent have no employees other than the owner. In 2013, there were 28.8 million small businesses in the U.S.
Traditional means of gaining access to capital, which typically involved a long and cost-intensive process, are being expanded with online options, which provide smaller loan amounts faster and at lower costs.
Here are some new, innovative tools for women entrepreneurs seeking financing:
Crowdfunding is an efficient way to gain capital from many individuals through small donations, and is low risk compared to venture angels and banks. A 2015 Massolution report estimates that $17.2 billion was invested in North America through crowdfunding websites, a number that’s increasing each year. Top crowdfunding platforms include Kickstarter, Indiegogo, GoFundMe, CircleUp, Patreon, Crowdrise, Razoo, AngelList, and many more.
Gender Lens Investment
According to Veris Wealth Partners, investment of this type has risen 41 percent in the past year, up to $910 million. In addition, the number of mandated publicly traded gender lens investment strategies has reached a total of 22, after five years of steady growth. This is an incredible increase from 1993 to 2012, when there were only five strategies for gender lens investing.
Online Lending Tools
An emerging means for access to capital for small businesses in particular are online lending tools. The 2017 Kauffman Foundation report states that many businesses are in need of funds to manage cash flow and to access short-term financing, and the most commonly used tools are loans and lines of credit. Fintech companies like OnDeck and Kabbage are facilitating small businesses’ access to credit in online lending by providing fast online vetting for small business loans, utilizing personal data and credit scores.
Whether they decide to leverage crowdfunding, merchant cash advances or sector-focused angel syndicates like gender lens investment, women entrepreneurs in need of funds for their startup—or capital for their business—have new tools at their disposal.
Desirée Patno is the CEO and president of Women in the Housing and Real Estate Ecosystem (NAWRB) and Desirée Patno Enterprises, Inc. (DPE), as well as chairwoman of NAWRB’s Diversity & Inclusion Leadership Council (NDILC). With 30 years of experience in housing, Patno is a champion for women’s economic growth and independence. In 2017, Entrepreneur.com named her the Highest-Ranking Woman and 4th Overall Top Real Estate Influencer to Follow. For more information, please visit www.nawrb.com.
As a successful real estate professional, international buyers could become an integral part of your business; however, it can be a bit intimidating to figure out how to capture this market. Just as in any real estate market niche, networking and connections are imperative to forming lasting relationships with affluent international prospects.
What are some ways to meet an international buyer?
Networking is essential. Once you’ve targeted your feeder market, finding buyers can be exponentially easier, as one client can lead to 10 other potential clients. Attending real estate events in the desired market can be a good move, as meeting in person generally forges strong relationships. Can’t make the trip? Try using social media or tools such as Proxio Connect to virtually begin relationships with agents based in different countries.
How do I break into a market if I don’t speak the language?
Clients want to feel respected, listened to and comfortable, and there are ways to check those boxes if you get creative. For example, research their culture and what’s expected as a common courtesy before approaching them to work together. “Kiss, Bow, or Shake Hands: The Bestselling Guide to Doing Business in More Than 60 Countries” is an excellent one-stop resource written by Terri Morrison. Learn if it’s appropriate to send a gift, or if it would be considered offensive, as well as many other potential missteps you could make—and how to avoid them.
What are some technology hacks to attract international buyers?
First, making sure your business is mobile-friendly is key when looking to attract an international audience. A simple layout usually works best, especially when prospective clients might not speak the same language. Visual-heavy content is also a good idea, as pictures speak volumes to what you offer as a real estate agent. In general, making sure your social media channels are cohesive and up to date is an easy way to ensure that your brand is taken seriously by potential buyers.
Which international markets are attractive?
China, in particular, has shown immense growth, currently home to 26 of the 30 fastest-growing cities. India is also growing quickly and shows potential to be a powerhouse when it comes to luxury real estate. There are specific markets in the U.S. that attract international buyers at all economic levels, as well. You can get updated data on these luxury markets through our monthly Luxury Market Report, and for information on international markets, Wealth-X and Wealth Engine both produce outstanding and comprehensive reports on global wealth.
Finding and locking in international business comes down to opportunity meeting preparation. Catering to the needs of the international client may require you to do more research, invest in different tools or get on an airplane to visit your target market; however, the results could take your real estate career to the next level.
Diane Hartley is president of The Institute for Luxury Home Marketing, an independent authority in training and designation for real estate agents working in the luxury residential market. She is passionate about luxury marketing and has more than 20 years of experience working with the affluent market. For more information, please visit www.luxuryhomemarketing.com.
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NAR PULSE—Learning is unlimited through the MVP program. Use the NAR Library to your advantage and download FREE eBooks of your choice to earn a free download of “Video in Real Estate: Tapping Into 4 Billion Views.” Act by August 15 to receive your reward!
Limited-Time Hawaiian Sweepstakes From Hertz
Say “aloha” to your dream vacation from REALTOR Benefits® partner Hertz. NAR members can enter for a chance to win a trip to Maui* that includes:
Sweepstakes ends 8/31/2019. Learn more.
Earn 2 entries when you add your Hertz Gold Plus Rewards® member number to your entry.
*No purchase necessary. Open to legal residents of 48 U.S. and D.C. who are 21 or older. Void where prohibited. Subject to official rules.
Volunteer at Your Local BGCA This Summer!
Searching for ways to get involved in your community this summer? Consider volunteering at your local Club and assisting with various Club programs! The Eastern Bergen County Board of REALTORS® (EBCBOR) volunteered at their local Boys & Girls Club of Lodi/Hackensack/Teaneck and donated $1,000 to be used to benefit their Academic Success, Healthy Lifestyle and Citizenship programs. For more ways to get involved and to read success stories, visit NAR.realtor/BGCA. Be sure to let us know how you’re making a difference with BGCA by emailing email@example.com
For families with kids, it all comes down to schools and size, according to findings from the National Association of REALTORS® (NAR), released this week.
In the latest Moving With Kids report:
“Parents inherently make sacrifices for their children and family, and that is no different when shopping for a home,” says Lawrence Yun, chief economist at NAR. “Of course, affordability is a part of the decision, but we have seen buyers with kids willing to spend a little more in order to land a home in a better school zone or district.”
For buyers with children, childcare costs can hinder their home purchase, according to the report; in fact, 26 percent burdened by costs delayed their purchase. Of buyers with childcare expenses who made a purchase, 31 percent compromised on the condition of the home, and another 31 percent compromised on size. Twenty-four percent compromised on price. For both buyers with and without children, the biggest challenge was finding the ideal property.
“When buying or selling a home, exercising patience is beneficial,” says Yun, “but in some cases—such as facing an upcoming school year or the outgrowing of a home—sellers find themselves rushed and forced to accept a less than ideal offer.”
For 23 percent of homeowners with kids, closing quickly was vital, and for 46 percent, “somewhat urgent,” the report shows. By comparison, just 14 percent of homeowners without kids needed to quickly sell.
Across all buyers, more than 85 percent enlisted a REALTOR® in the transaction. In communications with their REALTOR®, however, 67 percent of buyers with children preferred texting, while 74 percent of buyers without children favored a phone call.
“The report’s findings showed that both buyers and sellers, especially those with kids, are often dealing with a time crunch of some sort, trying to house-hunt while simultaneously raising a family,” says NAR President John Smaby. “Tech-savvy REALTORS® recognize this predicament and are meeting clients’ needs by contacting them via smartphone and text message.”
For more information, please visit www.nar.realtor.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at firstname.lastname@example.org.
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(TNS)—Navigating Social Security can be cumbersome, to say the least. Even basic questions such as when you should retire can come to take on an immense and sometimes desperate tone as you try to make a decision that doesn’t screw up your retirement beyond repair.
Bankrate spoke with some experts to get their take on some of the biggest mistakes you can make with Social Security. Here’s what you should try to avoid doing as you navigate Social Security’s labyrinth.
Stick to a One-Size-Fits-All Strategy
The biggest mistake people make is “they do a quick Google search and take information that is meant to be very much at the macro level, and thus not individualized,” says Daniel Milan, managing partner of Cornerstone Financial Services. Often, they “fail to take into account their own household budget, financial needs and outside investment income.”
Since life situations can be different, it’s necessary to have a personalized approach that helps you optimize your retirement. And Social Security is not a “one-size-fits-all” experience. Social Security is complex. While that’s partly by design to help as many people as possible, it still creates a lot of headaches for those nearing retirement. While many retirees have a straightforward experience, others need and can receive specialized aid from the program.
“There are so many different strategies that exist when it comes to collecting benefits, and so many variables to consider, that listening to advice painted with a broad brush can prove to be detrimental,” says Cory Bittner, co-founder and COO of Falcon Wealth Advisors.
“Creating a financial plan and understanding the inner workings of it should be a prerequisite before making the decision to file to collect benefits,” says Bittner. He suggests people look for a financial adviser who is a fiduciary and is experienced at planning for retirement.
Misunderstanding How Much Money You’ll Receive
If you’ve been working and contributing to the Social Security fund, then you’ve likely received a statement of benefits, an estimate of what you might likely receive in the future. But that figure can be misleading in several ways, and you need to understand what’s driving the estimate.
“People see their statements, the dollar amount that is listed on the front, and assume that’s what they will start receiving monthly whenever they begin filing for their benefits,” says Bittner.
“However, the amount reflected on the front page of a Social Security statement is typically the amount someone will receive if they wait until their full retirement age to begin collecting benefits, and it assumes they work until that age and contribute to Social Security,” he says.
So if you stop working immediately at the earliest age to collect your benefits and don’t wait, don’t expect the full amount. In addition, this dollar amount is pre-tax, so you’ll have to figure how much tax will be stripped from your monthly check before you actually receive it.
As you’re planning your retirement budget, you’ll need to carefully assess how much money will actually make its way into your pocket.
Assuming Social Security Will Fully Cover Your Expenses
After a lifetime of working, many people assume that Social Security will meet their needs when they can no longer clock in. But unless your budget is minimal, that probably won’t be the case.
“The biggest mistake people make is thinking Social Security will be sufficient to retire on without also cutting one’s standard of living significantly,” says Ryan McMaken, economist and fellow at the Mises Institute, an economics think tank.
“If they try to fund their entire retirement on Social Security, they’re going to quickly find they’ll need to downsize in terms of housing and also in transportation and entertainment,” he says.
“Social Security is only designed to replace about 40 percent of your income,” says Tony Drake, a CFP and founder of Drake & Associates. “Most people will need at least 80 percent of their pre-retirement income to maintain the lifestyle they want in retirement.”
And with all that free time in retirement, you may be inclined to increase your spending well beyond that 80 percent level, Drake suggests. Healthcare is another expense that may consume a much larger portion of retirees’ budgets than they initially suspect.
So with the limited nature of Social Security, retirees who want to live large in their golden years must make sure that they have other sources of income. Many workers turn to their company’s 401(k) plan, but many other attractive options exist to fund retirement.
Not Making Extra Preparations, as a Woman
For a variety of reasons, women need to be extra prepared when planning for retirement. Women typically earn less than men over their working careers, and studies have shown that women have longer lifespans on average compared to men, leaving many widows with substantial financial needs, for example.
“While Social Security benefits are neutral when it comes to gender, there are many factors that women need to consider with regard to their benefits,” says Mary Ann Ferreira, a certified financial planner at Viridian Advisors.
“Women who work outside the home typically miss an average of 11.5 years of employment due to childcare and care of elderly parents.” She also notes the substantial gender pay gap.
And those lower lifetime earnings carry on into retirement, with smaller retirement accounts and a lower Social Security payout.
She sees many women working longer and saving more in order to cope with the challenge. “Many women are considering retiring at 70 rather than the full retirement age of 66 or 67. In doing so, they may boost their Social Security benefits by as much as 24 percent,” she says.
In addition to spousal support benefits that surviving spouses may receive, divorcees may also receive benefits.
“I find that women typically forget that they are eligible for divorced spousal and survivor benefits if they were married for over 10 years,” says John Foxworthy, director of Financial Planning at Foxworthy Wealth Advisors. “If they have been divorced for more than two years, the ex-spouse doesn’t even need to file in order to receive the divorced spouse benefit.”
Foxworthy says that the ex-spouse is not notified of the benefits election, so “there is no need to worry about a long-lost ex-spouse finding out that you are taking benefits on their record.”
Taking Social Security at the Wrong Time
And the question that keeps soon-to-be retirees up at night: When should they take their benefits? That depends heavily on their unique situation, but one of the biggest blunders is even simpler: failing to calculate what the best option is.
“The biggest mistake that I see most regularly is when people elect their benefits without doing the math first,” says Foxworthy. “There really isn’t a ‘do-over’ when it comes to Social Security, and the vast majority of people are leaving money on the table.”
Foxworthy details a situation involving a married couple, both of whom turned 62 years old and were planning on filing for benefits immediately. “We ran an analysis and uncovered a strategy to elect benefits that will get them $221,000 more over their lifetime,” he says. “That much money can have a significant impact on their retirement picture.”
Retirees who can go a few extra years without claiming their benefits can continue contributing to the program and increase their benefits at the same time.
“Claiming Social Security too soon is one of the most common mistakes we see,” says Drake. “Although 62 is the earliest and most popular age to claim your benefits, your monthly check will be permanently reduced by about 25 percent or more.”
To get your full benefit, you have to wait until full retirement age, between 66 and 67, he says.
But there’s potential for more. “There’s an added benefit to waiting to claim after you hit full retirement age. Your benefit increases by as much as 8 percent each year until you reach age 70.”
Because Social Security is so complex, it’s tough to navigate, maximize your benefits or even just figure out where to begin. Even if you don’t quite maximize your payouts, it’s beneficial to know the mistakes to avoid. Most notably, you’ll want to know how much money you’ll receive and develop personalized strategies—perhaps with a financial adviser—that best fit your needs.
Distributed by Tribune Content Agency, LLC
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RISMedia is accepting nominations for the 2020 Class of Real Estate Newsmakers, those individuals making headlines for their newsworthy contributions to the housing industry, and for their efforts to positively affect the consumers and communities they serve. The deadline for nominations is August 15, 2019.
Readers may nominate as many individuals as they like, as well as themselves, and nominees can be from any walk of the residential or commercial real estate industries, including, but not limited to: brokers, agents, service providers, professionals from the mortgage, title, insurance sectors, etc.
Candidates can be selected as an RISMedia Real Estate Newsmaker for a range of accomplishments, including, but not limited to:
To make your Newsmaker nomination, please visit rismedia.com/newsmaker-nomination. Here, you will find additional information about the nomination process, and the forms to nominate yourself or your candidate(s).
RISMedia’s 2020 Class of Real Estate Newsmakers, chosen by the editors at RISMedia, will be showcased in an RISMedia Real Estate magazine special supplement and in a directory on RISMedia.com. More than 230 Newsmakers were recognized in 2019. This number is expected to significantly increase for 2020.
The 2020 Class of Real Estate Newsmakers will also be honored at the Real Estate Newsmakers Reception & Dinner, held in May 2020 at the National Press Club in Washington, D.C. During the event, a select group of Newsmakers will be inducted into the Real Estate Newsmakers Hall of Fame. Ten individuals in the 2019 Class of Real Estate Newsmakers were inducted this May.
Share your Newsmaker’s story with us and help us honor those making a difference in real estate. For questions, please email email@example.com.
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Years in Business: 12
Region Served: Texas
2018 Sales Volume: $2.2 billion
2018 Transactions: 5,801
It’s not often that you see the name of a real estate pro in “The Guinness Book of World Records,” but Ben Caballero, founder and CEO of HomesUSA.com, is in there for being “the most productive real estate agent in the world.”
Caballero is not a typical broker. He invented the HomesUSA.com platform, an online technology for builders, which enables him to achieve such remarkable sales numbers, and, as such, has become one of America’s top-ranked brokers.
To what do you owe your success?
Ben Caballero: I work with homebuilders and not individuals. We’re open seven days a week, just like builders are, and we take care of them without delay, so they’re all really happy.
You only sell new-construction residential properties and only work with volume builders. Why did you choose that strategy?
BC: I was a homebuilder for 18 years, and during that time, I was also licensed to broker. When I would put my homes on the MLS, I noticed that it was real spotty. I transitioned out of that business and started listing homes for builders, but it was still spotty because there was no real system. By the time I got up to a couple thousand homes a year, it was unmanageable. That’s when I decided to create an online process, which we launched in 2007, and continue to improve.
Yours is a unique platform. Why do you feel it works?
BC: We have a team of developers who are constantly working to make it better. It’s designed for production builders. Someone who builds five to 10 homes a year doesn’t need us because they can manage it. When they’re listing several hundred homes a year—and we even have one builder who has several thousand homes—there’s no way they can manage that with just spreadsheets. Our model works well because we have a very sophisticated platform. It’s been designed specifically for a particular type of client, and everything it does is for them.
What sort of staff do you have in place?
BC: I have a support staff and a team of developers who keep the system up to date. We have customer service people who receive the data, review it and upload it into the MLS. And if a client has a question, we have online chats with people who can answer any requests they have.
You only deal in Texas properties. Are there plans to expand to other states?
BC: Our platform is scalable, and we’re working hard to scale into other markets. The builders in other markets are the same as those here, and we can certainly do for them what we do here.
What are you seeing in the Texas market? How has it fared in 2019?
BC: We’re kind of flat compared to last year, but 2018 was one of the best years we’ve had in a long time. I’ll be happy with a stable, flat year this year. We also hit a little bump around the last quarter of 2018 that spilled into the first quarter of this year with interest rates. That caused the market to hesitate, and we’re seeing the impact of that. But it does appear to be coming back. At our worst month, we were down about 20 percent.
What is your relationship with traditional brokers and agents?
BC: If REALTORS® see HomesUSA on an MLS listing, they know it’s going to be good information, and they’ll be more inclined to take their clients out to the home.
Keith Loria is a contributing editor to RISMedia.
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The Explosion Real Estate Conference is back for its third year, August 19-21, with attendees expected from more than 40 markets this year. Based at Berkshire Hathaway HomeServices Ambassador Real Estate’s mega office in Omaha, Neb., the action-packed event features high-performing REALTORS® and teams, as well as industry leaders, including:
In addition, attendees will hear from a lineup of panelists on relevant topics, and participate in one-hour roundtables, designed to share strategies, stories and successes. There will also be breakout sessions on specific topics, including investing, luxury, staging, teams, and more, and networking opportunities, including a mega office tour.
“Our Explosion events are filling a void that has long existed in real estate, specifically a conference completely devoted to how to enrich the lives of consumers,” says Vince Leisey, Berkshire Hathaway HomeServices Ambassador Real Estate CEO and the conference’s founder. “Our attendees appreciate that they only enjoy greater career rewards through first elevating the service they provide the ever more sophisticated and empowered consumers they serve.”
In 2018, Berkshire Hathaway HomeServices Ambassador Real Estate was named No. 2 in Entrepreneur magazine’s “Top Company Cultures” ranking. The Ambassador Real Estate mega office is 81,000 square feet.
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Analysts are eyeing a recession in 2020, but expelling fears of a Great Recession—and, another crisis in the housing market, according to findings from Zillow, released this week.
When asked to pinpoint the recession’s timing, experts favored Q3 2020, according to the survey, conducted in conjunction with Pulsenomics. More than 100 economists and experts participated in the survey.
Aside from the 2008 meltdown, downturns have largely left the market unscathed, according to research by Zillow. In fact, historically, appreciation remained strong, even in periods of recession. Since 1997, appreciation averaged 4.6 percent during economic expansions, and 4 percent in slowdowns—and in that time, there were two major national recessions: the Dot-Com Bubble and the Great Recession. Additionally, of the more than 1,000 recessions regionally and/or in a specific state in that timeframe, annual appreciation leaned majority-positive.
Of the respondents to the survey, 51 percent anticipate demand in the housing market to moderate in 2020, and 32 percent expect it to mirror 2019, when it is largely predicted to remain the same or soften.
“As we look ahead to the next recession, it’s important to recognize how unusual the conditions were that caused the last one, and what’s different about the housing market today,” says Jeff Tucker, economist at Zillow. “Rather than abundant homes, we have a shortage of new-home supply. Rather than risky borrowers taking on adjustable-rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago, and our experience in recent localized recessions shows how home prices can weather normal economic headwinds.”
For more information, please visit www.zillow.com.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at firstname.lastname@example.org.
In the majority of metropolitan regions, home prices remain on the rise, according to the latest National Association of REALTORS® quarterly report, released this week.
Across the largest markets in the U.S., 91 percent posted upticks, escalating the median nationally to $279,600—a 4.3 percent gain year-over-year.
With an absence of inventory in the most-needed price ranges, the boost is encumbering sales, which, on an annual basis, declined 2.2 percent in June. According to the report, 1.93 million homes were on the market in Q2, approximately the same as this time in 2018, at 4.4 months’ supply.
“New-home construction is greatly needed; however, home construction fell in the first half of the year,” says Lawrence Yun, chief economist at NAR. “This leads to continuing tight inventory conditions, especially at more affordable price points. Home prices are mildly reaccelerating as a result.”
Construction decreased 0.9 percent in June, the Commerce Department recently reported.
Amid inventory pressures, the ability to afford a home is waning, as earnings fail to keep pace with prices. According to the NAR report, although household incomes in Q2 rose to $78,366 (the median nationally), appreciation in the housing market surpassed it—a concern, and especially in expensive markets. Considering the median national price, a buyer with a 5 percent down payment needs $62,192; at 10 percent down, $58,918; and at 20 percent down, $52,372.
In costlier markets, prices reversed, specifically in San Jose, down 5.3 percent in Q2; in San Francisco, down 1.9 percent; and in Honolulu, down 1.2 percent, the report shows. On the other end of the spectrum, in areas like Boise; Burlington, Vt.; and Columbia, Mo., prices surged, climbing by double digits.
“Housing unaffordability will hinder sales irrespective of the local job market conditions,” Yun says. “This is evident in the very expensive markets, as home prices are either topping off or slightly falling.”
Affordability could revive, according to Yun, if conditions hold for low mortgage rates—and broader factors in the economy strengthen.
“The exceptionally low mortgage rates will help with housing affordability over the short run, but if the low interest rates are due to weakening economic confidence, as reflected from a correction in the stock market, then the low rates will not help with job growth and will eventually hinder home-buying and home construction,” he says.
Last week, the Federal Reserve announced a cut to interest rates, but its affect on the housing market remains to be seen.
For more information, please visit www.nar.realtor.
NAR PULSE—Discover NAR’s REALTOR Benefits® Program, your official NAR member benefits resource, bringing you savings and special offers for REALTORS® from more than 30 carefully selected industry-leading companies. Partners include REALTORS® Insurance Marketplace (offering a full array of health and wellness solutions), FCA US LLC (including Jeep®), FedEx, Sprint®, Liberty Mutual, Dell, DocuSign and more. Find out more.
NAR Wins 2019 Sustainability Award
NAR is pleased to announce that it has won a 2019 Sustainability Award from Business Intelligence Group for the work it’s done since implementing the association-wide Sustainability Program in 2017. The program has catalyzed a surge of member interest and support, introducing corporate social responsibility and triple bottom line concepts for NAR’s decision-making practices. Learn more.
Sprint Rolls Out New Savings for REALTORS®
Wireless service is one of NAR’s most requested benefits and Sprint, a REALTOR Benefits® Program partner, is offering exciting new discounts for REALTORS®, including a $100 bill credit opportunity, up to 25% savings on accessories, and more. Please share these details with your agents.
Rental Beast Hands Agents Their Own Pair of Binoculars, Putting Profits in Focus
The rental industry has always been challenged when it comes to empowering agents. That’s how the idea for Rental Beast, an MLS for rentals to make agents’ lives easier, was born, says CEO Ishay Grinberg. The agent-turned-broker became well-acquainted with rentals during the start of his career, and quickly isolated the pain point: a fragmented marketplace in which agents were unable to truly engage and succeed with rentals.
Grinberg’s first commission was a testament to the work that needed to be done from within the industry. After working three months as an agent, he made $182.50—little reward for someone who spent his first months on the job working as hard as anyone could work.
“In my view, this wasn’t a 9-to-5 job. It was eight days a week hustling as hard as I could, and that low commission was very deflating,” he says.
And that’s why he set a goal.
“In any market we exist, we want to provide 100 percent of the total inventory of the rental marketplace. By doing that, we can supercharge careers,” says Grinberg. “Commissionable transactions happen in three days instead of three months, or nationally six months—with immediate income, instead of an eventual $9K in first-year commissions.”
The biggest value-add for agents is in the data Rental Beast provides.
“No other company has a robust, multi-sourced, constantly evolving repository of all things rentals. Our database is like a powerful pair of binoculars. With them, we see further down the road than anyone else,” says Grinberg.
With easier access to this information, today’s agents can better leverage their tenant and rental listing prospects to build a profitable business.
“In this way, Rental Beast makes a real estate career a reality,” says Grinberg. “When you use the rental platform, you close rental deals in a few days and make exponentially more income. Agents’ commission income increases by 50 percent all the way to 500 percent, with an average increase of 102 percent over the first 12 months. We’re pretty excited about that.”
Through Rental Beast University—an online education platform that helps agents maximize the software and their interactions through boot camps with one-on-one coaching, recorded webinars and resource guides—the true earning potential is highlighted. The key is taking advantage of the natural transition from renting to homeownership.
“Ideally, we’re teaching agents to see themselves as a business and think like a business,” says Emily Trainor, director of Training and Education at Rental Beast, who adds that the majority of clients weren’t receiving any rental training. Of top priority is helping enlighten agents to the value of rentals in the current marketplace, and how business can quickly ramp up when a tenant chooses to buy. But this also means teaching them to thrive in a market that can quickly shift.
“The home sales cycle is going into a bit of a down cycle,” says Grinberg, “so in the short term, agents need to be equipped to have sustainable income, even in a down market.”
According to Trainor, most of the agents completing the flagship course are closing their first rental deals and getting their first clients “right away.”
“Emily is doing a great job in providing a helpful and nurturing environment for agents to hone their craft,” says Grinberg. “She’s built our library of coursework, as well as an interactive community with forums and content for agents, of any experience level, to build and enhance their skills.”
Trainor says the agent role is always top of mind for the company, which offers the only end-to-end platform that helps agents close efficient and profitable rental transactions.
“We’re constantly thinking about everything an agent has to do, and how we can make that easier for them,” says Trainor, who adds that they continuously survey agents at various customer touch points, broker events and conventions. “Agents have great ideas on how they want to improve and what they need to have more success in the real estate market.”
“Within the platform lives a never-ending client feedback loop,” says Grinberg. “It drives our innovation and is the motivation for constantly improving on what we deliver to our customers.”
This constant goal of agent improvement has helped set Rental Beast apart within the rental space.
“We’re about to roll out a set of powerful tools for listing agents,” says Grinberg. “They’re designed to help agents be successful when working with landlords and investors. Agents will have access to comp reports and sophisticated marketing tools, including syndication options, presentations and marketing materials with slick designs that agents can plug-and-play and give to a landlord, and much more.
“We have a pretty simple philosophy when it comes to product innovation,” adds Grinberg. “We let our customers guide our continuing innovations. We want to help them generate commissions faster, to get a piece of the $12 billion in annual available rental commissions and build a robust pipeline of renters turning into homebuyers. Our first ground rule for the platform is that it must facilitate that.”
For more information, please visit www.rentalbeast.com.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at email@example.com.
The lightning success of the Broker Public Portal (BPP) has given more than one million real estate agents access to Homesnap technology. And now, engaging millions of consumers everywhere is how BPP with Homesnap will provide consumers a superior alternative to advertising portals.
Make no mistake: Our industry has allowed the advertising portals to get between brokers and consumers. But the industry now provides every consumer a better choice by connecting them to licensed professionals who list and sell homes, not ads. By partnering with BPP with Homesnap, MLSs empower, launch and maintain the most powerful consumer-facing search experience that promotes and honors the listing firm and the buyer’s agent without ads and advertising fees.
MLSs With BPP Can Help You Succeed
Momentum is on the BPP’s side. So is the National Association of REALTORS® (NAR) policy. Six years ago, NAR made public-facing websites a basic service, spelling out that MLSs are able to charge all members for both operation and promotion of these sites. A national MLS consumer site makes sense, drawing collaboration from all MLSs and brokers nationwide.
Partnering with the BPP to deliver a public-facing website solution is the clear winning strategy. The Broker Public Portal with Homesnap is now the second-largest MLS consumer website right behind HAR.com, according to Hitwise, the nation’s leading source for measuring real estate web traffic. HAR.com does an excellent job in Texas and for consumers looking to move to Texas. Today, HAR.com generates more local traffic than Zillow in Houston.
But the average MLS can’t compete against Zillow in their own city or even other ad portals, and certainly not for $1 per agent per month, the cost to an MLS to join the BPP with Homesnap. MLSs that build their own solution need to have vast expertise and tremendous marketing in order to generate any meaningful impact in attracting consumers.
Homesnap now also offers a local public-facing website solution, providing the same hub-and-spoke design that brokerages use, with Homesnap.com as the hub and individual MLS websites as the spokes. Homesnap can create a local public-facing website at no additional cost for MLSs who partner with the BPP, an example of which can be found at www.wisconsinhomes.com.
How Can the BPP Help You?
Every MLS in America should offer agents and brokers Homesnap and feature a download link prominently on their homepage. And every agent should invite every single client to download it. Why?
The question for the MLS is: Do you check a box and put up a site that really doesn’t provide any real value to your agents, or do you partner with the BPP to deliver the most valuable resource your agent has?
It’s time for every MLS to fully collaborate with the BPP to win back the consumer. If your MLS hasn’t partnered with the BPP, visit brokerpublicportal.com today.
Victor Lund is a founding partner of leading industry consulting firm WAV Group; he also serves as manager of the Broker Public Portal’s LLC. Known for leveraging a vast industry perspective, Lund helps clients see first what others see eventually.
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