5 Reasons You Need a REALTOR® 11.06.2007 - REALTOR® Magazine Online
5 Reasons You Need a REALTOR®
1. A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.
2. Selling or buying a home is time consuming. Even in a strong market, homes in our area stay on the market for an average of 60 days. And it usually takes another 60 days or so for the transaction to close after an offer is accepted.
3. Real estate has its own language. If you don't know a CMA from a PUD, you can understand why it's important to work with someone who speaks that language.
4. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you've done it before, laws and regulations change. That's why having an expert on your side is critical.
5. REALTORS® provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they'll every make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you.
Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2005. All rights reserved. www.REALTOR.org/realtormag.
Our national market correction was inevitable and predicted. Homes have been appreciating at rates that were not sustainable over the long haul. Low mortgage rates and incredibly generous qualifying ratios have turned many renters into homeowners earlier than they would normally purchased. Just like all good things, this one is coming (we still have a little ways to go) to an end.
Does that mean nobody will be buying or selling homes? NO. It means homes will not appreciate at the rate they have for the past 4-6 years. It also means that the marketplace needs to re-balance and rid itself of excess inventories. It means mortgage companies will need to tighten up qualifying ratios in order to shore-up their lending portfolios. In the short-term, that means a price leveling with many areas seeing home values fall back from an all time high last year. It means a lack of 1st time buyers as those who have not purchased either increase their wages, correct credit issues, save for a downpayment or all three. After that, we'll see a more balanced inventory with more sustainable appreciation rates.
Please Remember - Home Buyers will buy, Home Sellers will sell, REALTORS® will still make commissions, and Associations will still have members - maybe just not as many. When mortgage interest rates were at 17% buyers still bought and sellers still sold. When unemployment in Minnesota was hovering around 10%, buyers still bought and sellers still sold. None of our current market conditions are that bad. The industry has faced and survived before difficult times before. Today's market is not bad, it is just significantly different from the unsustainable market of the past 5-7 years.
Wanted Buyers
Many buyers are under the misconception that falling prices will mean they are going to "steal" a property. That's simply ridiculous and probably the latest justification many marginal buyers are using to avoid purchasing. Interest rate increases are eating any and all adjustments to housing prices in the marketplace.
Interest rates are hovering around 6.6%, almost a full point higher than at this time last year. That's a 20% increase in the interest rate, which correlates into higher qualifying ratios and a larger re-payment burden on their mortgage. Home values have not fallen 20% and even combined with pay increases, they do not make up enough savings to put off purchasing a home. First-time buyers using price instability in the marketplace to postpone buying are simply looking for an excuse.
What You Can Do:
Meet with your company's mortgage officer or that of a credible mortgage company and get a full understanding of just how interest rates, income, debt and home prices influence affordability. By knowing these relationships you can begin showing consumers that owning is better for them financially than renting. You can begin off setting some of the negative news these people are hearing and show them why real estate is such a terrific investment. This is an especially good strategy for those of you working Open Houses.
Provide buyers with a history of Interest Rates and Home Prices - at Open Houses or during other contact situations. The RMLS, or your local association's system, has some outstanding data related to price appreciation. Put the information on a chart illustrating how low rates correlate with prices increases and during higher interest rate periods, appreciation slows down. This is also a handy graph to help sellers understand the market.
Learn how to qualify buyers and then do it! Too many REALTORS® are pushing consumers to mortgage lenders for this critical piece of the counseling process. We can build trust and consumer confidence by demonstrating competency in all aspects of the transaction. This may take you some time, but will help you be better positioned to help consumers fulfill their housing needs.
Find Out About Special Mortgage Programs. You would be surprised at all of the discount mortgage products available in the marketplace. The Minnesota Housing Finance Agency (MHFA) and others have special programs designed to assist first-time homebuyers. By understanding how the programs work you will be in a better position to counsel your future clients about these programs.
Contact past clients, family and friends who have not made a housing move in the past 7-8 years (or 5 or 10 years) to see if they would be interested in getting in on the last of the low interest rates. These are folks who probably have a decent equity position and may feel like they are going to miss out on a golden opportunity. They will ask (and should) about falling prices, but they are in a unique position to take advantage of the market dynamics - they may sell for less than they would have last year, but will also be buying for less than they would have last year. Prices once you are in the market are relative. In fact a seller of a lower priced home will do better than the seller of a higher priced home - that's simply a supply demand issue.
Contact Parents, Grandparents, and others about helping get Junior into a home. First-time buyers generally have one thing in common - parents, grandparents or aunts & uncles, etc. Why not contact them about the golden opportunity that exists in the real estate marketplace. We have low interest rates - 10-year average is 6.86% and the 20-year average is 7.97% - and homes priced more realistic than a year earlier. If Junior and his partner are going to be homeowners, maybe now is the time to have relatives give them an encouraging call - and of course your name.
We cannot change the current market place. We can only react to it and deal positively with the conditions that exist. We hope this article will help you generate ideas that will help you get in front of consumers wishing to buy a home.
Fed Discount Window Cut What does it mean for you?
The Federal Reserve has taken significant action in the last few weeks due to the credit crunch. And now they've made an unexpected move by cutting the discount window rate - which is great news. I'll get to that in a minute, but first let's look at recent events and understand what they mean.
Market movement To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: Borrowers who want to take out non-conforming loans have fewer, more expensive options.
Many media outlets have incorrectly added fuel to the fire by stating that mortgage lending has stopped altogether and that borrowers can't get a loan without a 20% down-payment. This is not true.
Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.
What did the Fed do? Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.
How exactly does this provide stability? Here's an example: Imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you know you will eventually be reimbursed by your insurance company, you still need the cash now. So do you sell off stocks to get the cash, or tap into an equity line of credit? Most likely, you draw from that line of credit rather than liquidating a long-term investment.
This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.
It's important to note that the discount rate is different than the Fed Funds Rate, which directly impacts interest rates that you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact mortgage rates. Laura Fixsen
No matter how slick your brochures, business cards, hardware, and Personal Marketing Plan, the key to successfully launching your business is acquiring clients. Follow these tips to find prospects: Read The Million Dollar Agent to use the Models that are a proven sucess!
Make sure all family, extended family, and friends know that you're working in real estate sales and are available for their buying and selling needs. Send them your new business card and personal brochure and follow up with a friendly phone call in the first few weeks.
If you're involved in community organizations, activities, or other personal interest groups, be sure to let everyone in those groups know of your new career. Inform members of your religious congregation, your children's sports leagues, your doctor, your insurance agent, your dry cleaner, and other service providers.
Find a high-producing sales associate in your office and offer to assist him or her with open houses or other aspects of his or her transactions to gain experience and possible referrals. Consider joining the sales team of a high-producing practitioner until you can establish your own client base.
Offer to work floor time in your office in order to answer incoming calls and find prospects. If your company has a general e-mail box, offer to respond to incoming e-mail inquiries from potential prospects.
Develop contacts with the human resources departmentsof any major employers in your area and offer your services for relocating employees.
Contact organizations that you're involved with or that interest you and offer to provide free homebuying seminars to its members.
Newly updated home in St. Louis Park, close to HWY 100 and 394
Location: St. Louis Park, MN
Ready to move in! Have your own office space. Updated home with a professional paint job through out. New double hung windows with new blinds. Kitchen tile floors and custom wall tile. Built in microwave, newer wall oven, new cabinets with extra lighting for counter space. Wood floors in living room and dining room. Walk in closet, with master bathroom. Washer and dryer stay. Quiet street, close to highway 100 and 394. Not a drive by, come on in. Call Amy Westerlund to set up a showing at 651-983-4394. MLS # 3403977
$229,900, JUST REDUCED!! 4 BEDROOMS, 3 BATH, OFFICE, ENTERTAINMENT AREA, HUGE YARD & DECK!!
Location: Elk River, MN
This huge split entry on a double lot 1 1/2 acres with mature trees, nice landscaping, and great entertainment deck. This home is over sized, extra wide hall ways and stairways with nice tile floors. Three bedrooms up and one down with an open office with fire place. Large entertainment room ready for a pool table and theater. The upstairs living room has a fire place. The horse shoe driveway allows for extra spots for parking. Custom paintings of unicorn and rabbit in child's bedroom.Garden will raspberries and strawberries and apple trees. MLS # 3406661, Call Amy Westerlund for a showing appointment at 651-983-4397, thank you!
It takes many players to put a real estate deal together and take it from contract to closing. Familiarize yourself with each of these players so that you can expertly guide your clients and customers through the buying or selling process.
Appraisers A professional who estimates the value of a home to be purchased. In the purchase of a home, the appraiser is usually hired by the mortgage lender to determine whether the price paid is in line with fair market value and therefore justifies the mortgage amount.
Buyer's Attorney A real estate attorney who represents the buyer(s) in a real estate transaction.
Buyer's Representative You're a buyer's representative if you have a contractual relationship with a buyer to help the buyer purchase a home.
Client People with whom you've established a contractual relationship to represent them in the buying or selling of a home.
Customer Buyers and sellers you do not represent but whom you assist in the purchase or sale of a home.
Home Inspector Most purchase contracts allow a buyer to have a home inspected within five days of signing the purchase contract. A home inspector performs an inspection of the home to be purchased on behalf of the buyers in the transaction. The inspector examines the home for structural soundness and identifies recommended repairs in his or her report. Depending on the area of the country where you sell, common practice may include other types of inspections, including a termite inspection and a radon inspection.
Insurance Agent A person who sells insurance policies, such as homeowners' and automobile insurance. Typically, homebuyers need to show proof of homeowners' insurance before or at the time of closing on the purchased property. Without this, some closings can't move forward as planned. If you represent buyers, make sure they have secured a homeowners' policy prior to closing.
Loan Officer An employee of a mortgage lender who helps borrowers secure financing for a home purchase.
Mortgage Broker An independent contractor who helps bring borrowers and lenders together by originating residential and/or commercial loans offered by multiple wholesale lenders.
Mortgage Lender A mortgage loan company that originates, services, and sells loans to investors or purchasers.
Seller's Agent You're a seller's representative if you have a contractual relationship with a seller to help sell a home (also often known as "listing agent").
Seller's Attorney A real estate attorney who represents the seller(s) in a real estate transaction.
Surveyor Usually on land deals, this person takes a legal description of the property and maps out the exact boundaries. The legal description in many cases refers to physical landmarks. Those landmarks can change over time-and there may be unintentional or intentional encroachment by neighbors over time. Neighbors may have even been given permission, for example, to put a driveway on a neighbor's property, but when the house is sold, the driveway can become a point of contention.
Title Companies Once the purchase contract on a property is completed, terms are agreed upon, and financing arrangements have been made, the lender orders a title search of the property to be purchased. Depending on the region, a title company or practicing attorney can conduct this search. A title search is the examination of public records to determine that the person selling the property has the right to sell it and the buyer is getting all the rights to the property. The title search seeks to uncover any liens or other problems with the title. The title company then works to fix any problems with the title before issuing lender's title insurance, or the loan policy. The loan policy protects the lender's interests in the property. Buyers also may obtain an owner's policy to protect their interests. In some parts of the country, the seller would purchase the owner's title policy for the buyer-in effect telling them the house they are buying has a clear title. In other areas, the buyer must obtain the owner's policy on his/her own. It's a matter of custom so ask your local title professional how it's handled in your area.
Transaction Broker Also called a "facilitator" or "statutory broker" in some states, these terms refer to real estate professionals who enter into a nonagency relationship with their clients that is governed by statutorily-defined duties. The statutorily-defined duties of a transaction broker replace the common-law agency principles that otherwise govern the relationship between a practitioner and a client and impose a fiduciary duty-or heightened legal duty-upon the real estate professional who is in an agency relationship with a client.
Commercial Real Estate Vacancies Rise Modestly But Investment Up
WASHINGTON, March 15, 2007 -
As some tenants move to newly built locations, commercial real estate vacancies are rising modestly, following a record year for investment activity, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of Realtors®.
David Lereah, NAR's chief economist, said an irony in today's commercial real estate market is that some flush tenants are contributing to rising vacancies. "Job growth has been fueling the demand for space, notably in the office sector," he said. "Even so, some tenants are not ‘back filling' vacated space as they move to higher quality new space, contributing to a modest gain in vacancy rates. Office, hotel and industrial properties continue to be the most sought after commercial sectors for investment."
Outside of the hospitality sector, investors channeled a record $306.8 billion to commercial real estate in 2006, up from $276.0 billion in 2005; that total does not include transactions valued at less than $5 million. An additional $35.3 billion was invested in the hotel sector; however, long-term historic comparisons are not available for the hospitality market.
Cindy Chandler of Charlotte, N.C., chair of the Realtors® Commercial Alliance, said the record investment in commercial real estate was based on sound fundamentals. "Investors poured funds into commercial real estate at unprecedented levels in 2006, underscoring the value of portfolio diversification into real property," she said. "In general, we see rental rates rising with fairly broad consistency across most market areas."
Most of the new commercial space has been build-to-suit, or with significant pre-leasing in place. The expanding new supply will modestly raise office and industrial vacancies through the end of the year.
The NAR forecast for five major commercial sectors includes analysis of quarterly data for various tracked metro areas. The sectors include the office, industrial, retail, multifamily and hospitality markets. Metro data were provided by Torto Wheaton Research and Real Capital Analytics.
Office Market
A flight to quality office space, notably in new buildings, will raise vacancy rates in older class B and class C buildings. In addition, employers are using space more efficiently through telecommuting and "office hotelling." Speculative new construction is being held in-check.
Office vacancies are expected to rise to an average of 13.9 percent by the end of the year from 12.6 percent in the fourth quarter of 2006. Annual rent growth in the office sector is forecast at 3.2 percent in 2007, following a 5.2 percent gain last year.
Estimates for the first quarter show areas with the lowest office vacancies include New York City; Seattle; Honolulu; Orange County, Calif.; Washington, D.C., and Miami, all with vacancy rates of 9.7 percent or less.
Net absorption of office space in 56 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is projected to be 21.9 million square feet this year, down from 76.2 million in 2006.
Office building transaction volume set a record of $133.6 billion trading hands last year, up 32 percent from 2005.
Industrial Market
Trade is continuing to be the dominant influence in the industrial sector in terms of investing and leasing. The needs of modern distribution networks are fueling demand for new space. Property pricing and rising rents in some markets are forcing users to consider other locations where both land and operational costs may be lower.
Vacancy rates in the industrial sector should average 10.1 percent by the end of the year, up from 9.4 percent in the fourth quarter of 2006. Annual rent growth is likely to be 2.3 percent by the fourth quarter, up from a 1.4 percent annual gain in the fourth quarter of 2006.
The areas with the lowest industrial vacancies include Los Angeles; West Palm Beach, Fla.; Orange County; Ventura County, Calif.; Tucson and Tampa, all with vacancy rates of 5.7 percent or less.
Net absorption of industrial space in 54 markets tracked is estimated at 75.9 million square feet in 2007, down from 189.1 million last year.
Industrial transaction volume in 2006 was a record $38.9 billion, up 9 percent from 2005.
Retail Market
Consumer confidence is rising at a fairly slow pace, but a sluggish housing market and economic concerns are dampening consumer spending and, possibly, demand for retail space.
Vacancy rates in the retail sector will probably slip to 8.1 percent in the fourth quarter of 2007 from 8.2 percent in the same quarter last year. Average retail rent is expected to grow 1.1 percent this year, following a 3.9 percent gain in 2006.
Retail markets with the lowest vacancies include Orange County; San Francisco; San Jose, Calif.; Las Vegas; Honolulu and Miami, all with vacancy rates of 4.4 percent or less.
Net absorption of retail space in 54 tracked markets is projected at 19.9 million square feet in 2007, up from 8.4 million in 2006.
Retail transaction volume declined 7 percent in 2006 to a total of $46.9 billion; much of the decline was in regional shopping centers. However, unanchored strip centers, free-standing drug stores and big box retail centers saw large gains. At the same time, pricing for retail space rose 13 percent in 2006 to an average of $168 per square foot.
Multifamily Market
In the apartment rental market - multifamily housing - vacancy rates are forecast at an average of 5.9 percent at the end of this year, which would be unchanged from the fourth quarter of 2006. Average rent is likely to rise 2.8 percent in 2007, following a 4.1 percent increase last year.
With the condo conversion craze coming to an end in most markets, multifamily investment is normalizing. Condo converters accounted for $30 billion out of $88 billion in multifamily transactions in 2005, but were down to $9 billion out of $87.4 billion in 2006. Some converted projects are returning to the rental market, and investors are now focused on income appreciation and improving fundamentals.
Multifamily net absorption should total 223,900 units in 59 tracked metro areas in 2007, up from 221,900 last year.
The areas with the lowest apartment vacancies include Northern New Jersey; San Jose; Salt Lake City; Los Angeles; Miami; Washington, D.C., and Norfolk, Va., all with vacancy rates of 3.1 percent or less.
Hospitality Market
Hotel occupancies are expected to average 68.1 percent in 2007, up from 67.8 percent last year. Revenue per available room (RevPAR) is seen at $82.30 this year, up from $78.40 in 2006. A record 45,500 hotel rooms are scheduled to be added to the inventory in 52 markets tracked this year, compared with 22,000 in 2006.
Markets with the highest RevPAR include West Palm Beach; New York City; Honolulu; Miami; Fort Lauderdale, Fla.; and Phoenix, all with RevPAR of $125 or more.
For properties valued at $5 million or more, transaction activity during 2006 totaled 1,166 hotels with a combined value of $35.3 billion, nearly 20 percent higher than 2005.
The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the Realtors® Commercial Alliance. The RCA, formed by NAR in 1999, serves the needs of the commercial market and the commercial constituency within NAR, including commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and NAR affiliate organizations. These organizations include the CCIM Institute, the Institute of Real Estate Management, the Realtors® Land Institute, the Society of Industrial and Office Realtors®, and the Counselors of Real Estate. The RCA also provides commercial products and services.
More than 100,000 NAR members offer some level of commercial service, with 66,000 specializing primarily in the commercial real estate market.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
# # #
The next Commercial Leading Indicator index will be May 21; the next commercial real estate market forecast is scheduled for June 13.
A rare combination-stunning wooded acreage on a wonderful family friendly cul-de-sac. The setting abounds with natural beaty and wildlife. Custom built French-country/Northwoods with main floor master, grmt kit, vaults, home gym, theater, and steam rm.
All Living Facilities on One Lev, Main Floor Bedroom, Main Floor Laundry
Room Information:
Rooms:
Dining Room, Exercise Room, Family Room, First (1st) Bedroom, Fourth (4th) Bedroom, Kitchen, Living Room, Second (2nd) Bedroom, Second Kitchen, Spa or Sauna Room, Study, Sun Room, Third (3rd) Bedroom, Work Shop
Basement:
Daylight/Lookout Windows, Drain Tiled, Egress Windows, Finished (Livable), Full
Full Baths:
2
3/4 Baths:
2
1/2 Baths:
1
Bathroom Description:
3/4 Basement, Full Master, Main Floor 1/2 Bath, Private Master, Separate Tub & Shower
Family Room Description:
2 Story/High/Vaulted Ceilings, Entertainment/Media Center, Family Room, Great Room, Lower Level
Room Dimensions:
Room
Level
Approx. Size
Living Room:
Main
17x16
Dining Room:
Main
14x8
Family Room:
Lower
34x20
Kitchen:
Main
23x17
Bedroom:
Main
16x14
Bedroom:
Upper
16x10
Bedroom:
Upper
14x14
Bedroom:
Upper
15x14
Exercise Room:
Lower
16x24
Second Kitchen:
Upper
14x13
Spa or Sauna Room:
Lower
10x8
Study:
Lower
12x11
Sun Room:
Main
13x12
Work Shop:
Lower
21x16
School Information:
School District:
832 - Mahtomedi
School District Phone:
651-407-2000
Financial Information:
Listing Price:
$970,000
Annual Taxes:
$8,750.00
Average Monthly Association Fee:
$25.83
Tax With Assessments:
$8,750.00
Tax Year:
2006
Assessment Pending:
Unknown
Assoc Fee:
$310.00
Assoc Fee Includes:
Other
Assoc Fee Paid:
Yearly
Assoc Fee Y/N:
Y
Remarks:
A rare combination-stunning wooded acreage on a wonderful family friendly cul-de-sac. The setting abounds with natural beaty and wildlife. Custom built French-country/Northwoods with main floor master, grmt kit, vaults, home gym, theater, and steam rm.
All Living Facilities on One Lev, Main Floor Bedroom, Main Floor Laundry
Room Information:
Rooms:
Dining Room, Exercise Room, Family Room, First (1st) Bedroom, Fourth (4th) Bedroom, Kitchen, Living Room, Second (2nd) Bedroom, Second Kitchen, Spa or Sauna Room, Study, Sun Room, Third (3rd) Bedroom, Work Shop
Basement:
Daylight/Lookout Windows, Drain Tiled, Egress Windows, Finished (Livable), Full
Full Baths:
2
3/4 Baths:
2
1/2 Baths:
1
Bathroom Description:
3/4 Basement, Full Master, Main Floor 1/2 Bath, Private Master, Separate Tub & Shower
Family Room Description:
2 Story/High/Vaulted Ceilings, Entertainment/Media Center, Family Room, Great Room, Lower Level
Amy Westerlund
5 Reasons You Need a REALTOR®
