This morning, my inbox has received several notifications about the formal extension of the Homebuyer Tax Credit which will provide financial assistance to many New Home Buyers and Existing Homeowners who are considering the purchase of their next home.  Later in the day, a conversation with a client underscored our need to make sure that as real estate professionals, we provide accurate information from the Federal Government about this tax credit.  Here's the question:

Question:  If an existing homeowner sells a home and qualifies to utilize the extended Tax Credit, is the date on the contract OR the settlement closing date the one which is used to determine qualifying eligibility? 

I spoke with 2 mortgage officers, both of whom were not certain about the answer.  Than I visited the Federal Tax Credit information site (which had not yet been updated to reflect the news of the morning 11/06/09) and also read the FAQ from our State Association & the National Association of Realtors. Why was this necessary?  Well, the answer in part may be the result of rapid changes which sometimes create a lack of clarity. However, here's the response from the National Association of Realtors (NAR) which was obtained from my local and state Board.

Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.

This is just on example of the types of questions which consumers will be asking.  Do you know where to send them to get accurate information? The Michigan Association of Realtors has been proactive in getting information out about this program. Other detailed questions about the change in the provisions for the Tax Credit can be found here. 

Kris Wales recently wrote an excellent blog (Members Only) about the dangers of rushing to provide information which may not be fully accurate and the harm this can do to a consumer.  In a rapidly shifting environment, even loan officers are not necessarily getting information prior to the general public or real estate agents.  It becomes even more critical for real estate agents to direct clients to reliable sources and to ask their clients to contact the appropriate professionals for additional guidance when appropriate.

Good News on the housing front & just in time for the Holidays in Grand Rapids, MI.  In a market which has seen the worst of times in recent years, a recent article in the Grand Rapids Press heralding an increase of 35 PERCENT in home sales over 2008 was more than welcome...local professionals are ecstatic!

It's been great to touch base with so many agents who tell me they are busy again. We sold most of our inventory within the last couple of months and are "re-stocking the shelves." The 'HOT PRICE' range is $100,000 ~ $140,000.

This has helped to increase the average Home Sale Price to $109, 826 which was 3.2 percent higher than the same period in 2008. But...year to date, home prices are still down by 15.1% over 2008, a number which can be attributed to the on-going issues with foreclosures and short sales in the local market. 

Other noteworthy improvements in the Grand Rapids, MI market include the decreased number of Short Sales and Foreclosures in September and the possibility of the extension of the Home Buyer tax credit which served to enable over 200,000 new jobs last year according to a quote by Jerry Howard, President of the National Home Builders Association in this article.

Now, all this good news does not necessarily indicate we are totally OK.  There are still huge inventory of foreclosed properties which have not yet been placed on the market and joblessness continues to be a scourge on the Michigan economy.  As we near the end of the year, what happens in these two areas as well as the credit markets will send strong signals about the on-going journey of recovery.

If You're a Homeowner...

These past several months have created some glimmers of hope.  Inventory levels have declined and housing prices have inched up.  More importantly, Sales have increased substantially. One of the critical assessments that homeowners who need to sell a home can make is the OPPORTUNITY COSTS CALCULATION.  It's a fairly simple calculation which aids in determining how long you should hold on to your home, if this is a time to sell your home and what your carrying costs without a Sale actually are.

An Example...Calculating the OPPORTUNITY COST

For example, let's say your home is valued at $140,000.  You've been in the home for less than a decade and you currently owe approximately $120,000. The OPPORTUNITY COST is determined by taking approximately 10% of your current expected Sales Price and dividing it by 12.  In this case:

140,000 X .10 = 14,000

14,000 / 12 = $1,167 = OPPORTUNITY COST per month

That number $1, 167 is approximately what it will cost you EACH MONTH if home prices DECLINE another 10% over the next 12 months. This year, home prices declined approximately 15% overall from last year, and since 2006, there has been a 30% DECLINE nationwide.  So an improvement to a decline of only 10% is not unreasonable.  You can manipulate the numbers to see a range of options, but most experts seem to think that we can expect declines within the neighborhood of 6% - 10% in home prices over the next year.

An Example...Calculating Your Specific OVER-PRICING PENALTY

OPPORTUNITY COST + CURRENT MORTGAGE PAYMENT = OVER-PRICING PENALTY 

For example:  $1,167 + $1,100( est. Mortgage Payment) = $2, 267 (OVER-PRICING PENALTY PER MONTH)

OR...$27,204 PER YEAR

Adding the OPPORTUNITY COST to your current mortgage payment gives you a unique perspective of what it will actually be costing you to OVER-PRICE your house in today's market.  If you'd like a detailed report about housing & pricing in your specific Grand Rapids, MI neighborhood, please give us a call at 616-791-0511 or e-mail us at info@auduhomes.com.

It made headlines on national news and was the focus of considerable debate on "Hot Topics" for the View television program today.  The story of former school teacher Nicole Howell's acquittal after being falsely accused of having sexual relationships with a sixteen year old student.  Although, this was not the first time that the nation's attention has been riveted by a story like this, what was unique about this situation was the role of electronic media. 

Apparently, the young man had been sending sexually explicit messages to his teacher and there had been an exchange of hundreds of text messages between them according to news reports.  The student said that he had been seduced and given vodka.  The text messages were deleted by the phone company and never seen, BUT...a teacher lost her job & reputation in large part due to her lack of discretion about the use of electronic media.  Instructive...and extraordinary.

Many of us today fail to truly comprehend the extent to which electronic media and social media is set to change our lives. Recently, Google announced that it had reached an agreement with Twitter and would be indexing Twitter comments in Google Search results.  Did you know this?

Twitter postings aka 'tweets' are now a part of permanent public record.  They can be used as evidence and once something is online, the shelf life for practical purposes can be assumed to be...forever.  This has implications for real estate agents and the brokers who manage them.  It could be argued that what Ms. Howell did was likely mostly conducted outside of normal working hours.  But, that didn't matter.

Today, many real estate professionals have accounts on various social media portals where they mix personal and professional postings together.  As the topic was discussed on the View, one of the co-hosts noted that there should have been a public forum in which conversations between students and teachers could take place and be MONITORED.  I can see the benefit in this for protecting students AND teachers.

I wonder if there would have been such a rush to pre-judge if Ms. Howell was not a professional?  Is there a higher standard expected when there is a perception of expertise?  In the future, is there a possibility that our comment stream, blogs and postings may be viewed in an entirely different light?  What do you think?

Image courtesy of Sister72 on Flickr by Creative Commons license

The world of real estate has always held a fascination for folks like me.  But things have a way of getting really strange when people who don't spend their waking, working moments around the mayhem and milieu of the brokerage world start telling astounding tales about their recent 'encounters' in real estate country.

Over the past month, I've had several conversations which would have been considered 'beyond bizzare' just a few short years ago.  Folks talking about people they know walking out the door of their homes and just giving the home back to the bank as casually as they might refer to a decision to perhaps purchase a car.

I know you might be thinking at a cursory reading that this reckless attitude is just symptomatic of the chaos that has been the hallmark of so much recent madness, but often during these exchanges, I actually sensed something else.  As I listen intently, the story involves so much more than initially stated. There's an underlying, increasingly recognizable sad thread.

The bundle of trial includes years of struggle, trying to find jobs, being laid off, piling up debt to survive, ravaging investment accounts, pulling home equity out to last just a little longer, and then the straw that breaks the camel's back occurs...one more thing that could not be anticipated which tips the scales. 

Absolute & total weariness...and with resources strained beyond measure, it seems that the only thing to do is ...WALK AWAY.  But before you do...

STOP.

Before your feet set in motion a chain of events which will potentially impact your life for the NEXT DECADE, please consider ALL your options.  TALK to someone.  I'm astounded by the number of people who go through the ENTIRE Foreclosure process without talking to ANYONE about their options.

That's right...

You do have OPTIONS.  Before making a decision to simply stop attending to your obligations, ASK someone for help.  Speak to an Attorney, contact a Real Estate Broker or your Mortgage Lender.  Preferably, engage with all three sources or more...  Information is power when it comes to a decision which can handicap not just your ability to get a new home, but your ability to have a measure of control over your financial life for the foreseeable future.

Just for Starters, Ask about the following:

Will your bank accept a Deed in Lieu of Foreclosure AND forgive your debt in it's entirety?

Can you pursue a Short Sale?

What are your options for Loan Modification?

What are your legal options and obligations?

An old African Proverb reminds us that "No Condition is Permanent in this world."  Remember this truth...especially when things are tough.  This too shall pass...eventually.

picture courtesy of hoyasmeg on flickr

Just about 3 years ago, I decided to write a blog post. Within a month, I stumbled upon Active Rain and signed up.  I had absolutely NO idea how much that simple decision would change my life and career.

Yesterday, 2 extraordinary events intersected together in 1 day aka 1,440 Minutes. During the Annual Broker Meeting of the Grand Rapids Association of Realtors®, I was nominated by Pat Vredevoodg, 2007 NAR President for the position of President-Elect (2009) & elected by the board of Brokers of the Grand Rapids Association of Realtors®.

It was a moment ripe with symbolism on a variety of levels.  Pat captured a unique essence during her brief nomination speech which she termed as a 'tweet' about why the Brokers present should cast their vote in favor of the nomination.

Here's Pat's insightful Twitter nomination: Vote for Lola Audu because she is "Smart, Caring, Cutting Edge, Daring, Forward & Clear Thinking, Humble, Funny, RE Pro, Motivator, Responsible, Experienced, Mom, Inspiration"

Later that afternoon, I picked up a direct message on Twitter from Todd Carpenter, NAR's Social Media Manager who asked me to check my in-box for a message from President-Elect of NAR, Vickie Cox Golder. Here are excerpts from the e-mail which showed up this morning,

Dear Lola,

Congratulations!  You have been identified as an influencer in progressive ideas about real estate and, as a result, we invite you to participate in a new pilot program for the National Association of Realtors ®.  NAR's leadership would like to include your voice in our governance system in 2010 and have selected a national NAR committee for you to join. .....

By serving on a national NAR committee, you will have the opportunity to bring your ideas about today's competitive and evolving marketplace to the industry's leaders and you will be in a position to spark change within the business......

NAR has made a commitment to elevating the voice of young professionals and early adopter of social media in the real estate business, and we want to hear from you.....you were recommended to serve on the Housing Opportunity Committee.

What an opportunity!  I'm so grateful to God that the tapestry which He weaves in our lives through our experiences is never conventional nor is He ever limited by pre-conceived limitations about who we are or can become.

I'd like to also congratulate another fresh young perspective and voice from Michigan...Christa Caulk who has also been selected to a NAR committee , the Political Action Involvement Committee. Congratulations to you Christa, I know that your contributions will enrich the dialog of leaders in our industry!  And...Kudos to NAR for embracing a fresh perspective for the future of our profession!

*Christa Caulk is the daughter of Missy Caulk, a leader and innovative thinker in the real estate industry and in social media.

I'm one of those people who checks things out online BEFORE I go.  Why not?  I figure there is more to be gained from taking advantage of the benefit of other people's experiences before spending the gas, time and money to discover the truth myself.  Apparently, there are a lot of folks like me.

Did you know that the according to Wikepedia, the first ratings site was created by Michael Hussey and called 'RateMyFace.com.  I was intrigued to discover that ratings sites started out as dating sites for the most part and evolved over time to include all sorts of other services, including sites rating professionals such as lawyers, doctors and teachers.  

It was also interesting to learn from this book about the founding of Facebook that this popular site also had a ratings component behind it's inspiration. It's founders envisioned it as tool to enhance their social/dating scene during the college experience at an Ivy league school.

Today, the concept of consumers determining the Value of a product or service through ratings is quickly developing a huge cache in terms of credibility.  People trust what other people have to say about something, even more than the owner or creator of the product.

The viral nature of social media has accelerated the trend. In Grand Rapids, the concept of ratings by a community took a giant leap forward through the launching of Art Prize this fall. Artists from all over the world will be displaying their work from September 23 through October 10, 2009 in venues throughout the city.  The winner of the Art Prize ($250,000) will be decided on by...you guessed it, members of the public who register to vote!

This is why I find it especially intriguing that a Google search for the term 'Rating Services for Realtors' with a hit total of approximately 2 Million, does not highlight a single comprehensive ratings database for real estate professionals or their services on the first 2 pages!  A perplexed consumer asks the question on Ask.com... wondering WHY one can find information on a number of other professions, but not a comprehensive database for Realtors?

There are a few associations which are exploring the utilization of a Ratings Service such as the Houston Association of Realtors®, but these are few and far between.  It might also interest you to know that the Google search results for Rate your Realtor number 13,000,000!  Some of the sites on the first page are powered by consumer generated content and data exchanges.  This is something consumers want, are searching for...and may ultimately successfully create for themselves.

And it won't just be about Realtors®. Can you foresee a time in the near future in which community ratings will play a bigger part of defining the value of any particular area?  Today, Walkability scores for neighborhoods are increasingly a part of the data supplied to prospective new home owners on some aggregate databases.  

The list of options which consumers might be interested in about a community is potentially endless...think school ratings, environmental awareness, diversity, employment opportunities, medical services.  From a consumer perspective, it would be helpful to be able to download a comprehensive profile of a community, then select the issues that were most important and see what others are saying or not saying in one place. What do you think?  Are Realtors® missing the boat by their lack of proactivity in this area?

Picture courtesy of Wolfgang Staudts' photostream on flickr

It seems that every year, a new study comes out which highlights WHY real estate commissions should be lower.  This one was written by academic researchers from Stanford University. The conclusions were: 

"the typical commission paid for the average real estate transaction does not impact the initial price offering for a home or the sale price.  However, the home does tend to sell more quickly.  In the estimation of the researchers, the average Commission of $34,000 (6% was the number quoted) on the average home they researched was too steep a price to pay for the efficiency gained in time."

In a related article, NAR Chief Economist Lawrence Yun, provides some additional insights about the conclusions reached in this study and others like it such as the conclusions in the book Freakonomics which indicated similar findings. 

According to Yun, many of these studies are often debunked later due to issues relating to methodology or new data which was not available to the researchers at the time.  Unfortunately, these findings are rarely publicized with the fanfare and aplomb with which the initial report is.

Yun makes some important observations about consumer perceptions.  The most revealing being this:  CONSUMERS ARE NOT STUPID.  They are more likely to do what makes sense for them. In fact, Yun indicates that consumers are like Royalty. They know what they want and why they are willing to pay for it; something that research conducted within the petri dish of an academic survey may be unable to capture...because it is an "unquantifiable" intangible.

CASE IN POINT.  In spite of the fact that consumers have always been able to sell their own homes, and in recent years been able to advertise them on the MLS for a few hundred dollars, most home owners still prefer to list their homes with Realtors when they decide to sell them.  The percentage of home owners utilizing the services of real estate agents to Sell their homes has remained around 85 ~ 87% for years despite increased options & opportunities for self-promotion by home owners.

Yun also points out that although the public perception of Realtors is one of suspicion, in general this attitude changes dramatically when consumers are asked about THEIR SPECIFIC dealing with THEIR REAL ESTATE PROFESSIONAL.  In this case, consumers overwhelmingly indicate that they appreciate and hold dear their OWN REALTOR.  One wonders how much of this "general suspicion" towards Realtors is media driven.  The vast majority of my clients are repeat and referral clients.  Hardly, an indication of deep loathing for the profession.

In addition, it is highly instructive to look at the sorts of homes which are Sold by Unrepresented Homeowners.  Over the years, I've noticed that a larger percentage of these homes tend to be in the lower price ranges.  This is also a trend that NAR's economist observes.  When you drive into neighborhoods in Grand Rapids that are in the higher price ranges, well, you see very few For Sale By Owner Signs.  Why is this?

According to Yun, this is because

"Time is evidently money, and many well-to-do people prefer not wasting their valuable time trying to sell a home - even though some may actually have the skills to do so."

I would agree to a certain extent with this observation.  But, I would add that there are additional issues which may less obvious, but are no less important such as: 

PROTECTION: Real Estate Agents provide a very critical barrier of protection in screening potential buyers by determining a buyer's ability and motivation in purchasing a home.  It is unwise and unsafe to have buyers for whom you cannot verify their authenticity exploring your home in detail without independent verification and oversight.

TRUST:  A trusted professional is a source of valuable "insider" information.  The vast majority of consumers indicate that they would definitely or probably use their Realtor again. (approx 87%)  Real Estate Agents who garner loyalty and repeat and referral business don't do it by accident.  It's a result of providing extraordinary service and Results!  If it was easy to sell homes, everyone would be doing it. 

EXPERIENCE:  Experience matters!  In his widely read book about excellence, 'The Outliers', Malcolm Gladwell points out that the time to become really skillful is about a decade...that's 10 years! This also holds true for competent professionals in the real estate industry.  Selling real estate is a complex transaction and increasingly so in a challenging market.  Working with a seasoned professional can save time, money and the hassle of being a part of someone's 'learning curve.'

When Consumers are Treated Like Royalty, they respond by giving Loyalty and Referrals.  Consumers are NOT FORCED to use real estate agents, they do so because it makes good sense to do so.  Nor, are they forced to pay any commission.  The Value of Service is determined by the return on the investment. 

So...If it makes sense to:

Spend money to save Time,

Protect the Value of my Investment,

Protect the Safety of my family,

Protect My Privacy & Secure Authorized Access to My Premises,

Access a network of Qualified Potential Buyers for My property,  

Benefit from the Vast Experience gained through numerous sales,

Market my Home Professionally on a Worldwide basis

AND...

Sell More Quickly...

Well, Being Treated LIKE Royalty and paying a small commission may be deemed well worth it.

This blog post was modified and updated from a post written in February of 2008 & is a part of the 'Oldies but Goodies' series. Copyright 2008  Audu Real Estate  All Rights Reserved

photo courtesy of crown: lincolnian(Brian) photostream on flickr.com

photo courtesy of Dr. Yun: tboards photostream on flickr.com

It is said that the Chinese symbol for crisis contains elements of both danger and opportunity.  Over the past couple of years, we've all borne witness to a real estate market gone awry.  

Nothing in my experience could have prepared me for the dramatic market downturn or the escalation in crisis sales which resulted at one point in one out of every ten homes in my county being at risk for foreclosure.

Yet, as I look back over this period, I'm struck by the fact that so many other worthwhile things may not have taken place or had the same impact in my life as they did precisely because of the moment of crisis.  

For instance, over three years ago, I started blogging...almost by accident.  That first keystroke opened up my world of experience to include friends from across the nation and educational opportunities which have enhanced my professional skills.

This afternoon, I attended a Board of Directors meeting for our local board. During the meeting we were shown a video clip highlighting the new programs and opportunities that have emerged within the past year.  It was remarkable to reflect on how much has been accomplished inspite of very challenging odds. It's definitely not been easy, but I can't help but think that there would have been far less impetus to move forward in many critical areas apart from the stark realities which invaded our professional lives.

Now, change has not come without cost.  The membership of our Board decreased significantly as many agents found they could no longer make a living from selling homes.  Home listings soared even as home prices dipped to record low levels.  Agents discovered that amassing new skill sets (i.e. short sales) sometimes meant working harder for less pay.

While doing some research about the Chinese word for crisis, I was surprised to find out the the widespread meaning of the term is actually incorrect/incomplete. There are many nuances which are lost in translation. But one element which did provide additional insight for me is the concept of the symbol encompassing the idea of an incipient moment or a crucial point which can turn out for good or ill. 

We're not completely out of the woods yet. Although there are signs of some light at the end of this tunnel, this moment does have within it the potential for good or ill.  In our market, there seems to be a stabilization and for the first time in a long while, house prices actually went up a tiny bit.  But...we're at a crossroads, a moment in time in which we hold in our hands the awesome responsibility of determining exactly how we will choose to move forward into the future.  Our capacity to exercise responsible leadership with integrity will make a crucial difference.

At the end of the day, we're in this thing together and the responsibility of making things work is not ultimately at the mercy of circumstances and situations.  That power resides within us and how we choose to respond to crisis, even when it requires us to snatch opportunity from the jaws of defeat.

picture is courtesy of respres on flickr.

Copyright 2009  Audu Real Estate  All Rights Reserved

Watching oyster boats on the Chesapeake Bay puts one relaxed vacationer (my hubby) to sleep.