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  • Lifting the HOA Veil Nov. 16th 2018
    In real estate sales, sellers are required to disclose any material fact that any prudent buyer would want to know before completing a purchase. Property located over a toxic waste dump would be an obvious example of disclosure and the need for it. There are less catastrophic issues, like roof condition or a leaking crawlspace but the idea is the same. Anything that could negatively impact the value or marketability of the property needs to be divulged before closing. While there are usually statutory disclosure requirements of single family house sellers, these same disclosures are generally not required of homeowner association home sellers. This is a huge problem and here’s why: Homeowner associations (HOA) impose substantial financial obligations to the members. So, while a buyer may purchase a condo in great condition and needing no repairs, that same buyer is also obligated to share the cost of certain repairs to all the condos, which may be in very bad condition. Since there is no specific legal requirements in most states to disclose these obligations, the buyer often finds out after closing when presented with a special assessment that can amount to many thousands of dollars. Here’s the key to uncloaking this problem: The board of directors controls the quality and quantity of disclosure information. The responsible board treats the HOA like the business that it is and keeps certain basic information available such as: Governing Documents. Includes the Declaration, Bylaws, Rules & Regulations, Resolutions which are the specific obligations each member has. Newsletters. Reveal events (renovation, litigation, etc) that could indicate a possible special assessment. Meeting Minutes. Same as newsletter but with more specifics. Annual Budgets for Last 3 Years. Could reveal expense trends and failure to adjust for inflation. Financial Reports. Monthly reports comparing actual expenses to budget should be available to track income and expenses. Collection Activity. How much of the assessments are overdue 30, 60 or 90 days? If some don’t pay, guess who gets to? Litigation Activity. Are there any pending lawsuits that could trigger a special assessment? Reserve Study. A 30 year plan to maintain components like roofs, painting, paving, etc. This is the biggest time bomb in the many homeowner associations that lack one. Failure to plan for predictable long range expenses often mirrors a lack of ongoing maintenance which causes spiraling property values. Percentage of Rental Units. More than 50% rentals could directly affect financing options and saleability. Key Contact Information. How to contact the board and manager. This list of items is the same information that any informed buyer would want. It’s the board’s responsibility to make it available to owners so they, in turn, can provide proper disclosure to their buyers. If buyers are informed of their responsibilities, they will make better neighbors. Does the HOA really want members that don’t care how business is handled? Is your board prepared to lift the veil of on disclosure? For more innovative homeowner association management strategies, subscribe to www.Regenesis.net

  • Why Get Involved? Nov. 16th 2018
    Q. I have lived in my community association for a number of years. Unlike the horror stories we occasionally read about regarding bad Boards or illogical enforcement of covenants, our community seems to be working fine. We have a good board of directors and a competent manager. One of our long time board members plans to resign for personal reasons, and a number of residents have encouraged me to "throw my hat into the ring." I am seriously considering this possibility, but seek your guidance. A. You have lived in your community for a long time, and are pleased with the way it is working. Do you know why? Most likely it is because there is a conscientious, hard-working board of directors, who are concerned about the welfare -- financial and otherwise -- of your association. A community association does not function -- good, bad or otherwise -- without leadership. Often, as we all have read and heard,some boards of directors are on ego trips. Even though they may care about the welfare of the association, they are more interested in preserving and fostering their own personal agendas. Indeed, I know of one association in which the outgoing Board President seriously considered putting his picture in the social room, as a reminder of his long-term service to the Association. But the great majority of board members are hard-working and honest. Service on the Board is not fun; the hours are long and the pay is zero. Budgets have to be planned to meet the needs of the association while at the same time satisfying the pocketbooks of the owners. Rules have to be adopted -- and then enforced. Delinquencies haveer to be addressed, and it is often difficult -- if not embarrassing -- to have to approach your neighbor or your friend to remind him/her that there is a delinquency. I do not know how many owners are in your community. But regardless of size, boards must understand they are running a business -- and some of these businesses have budgets which are as large (or larger)than corporations trading on the New York Stock exchange. This is a serious responsibility, which cannot be taken lightly. Many years ago a Court ruled in the State of Maryland that Board members only have to exercise good business judgment in carrying out their board responsibilities. This means that unless someone can prove fraud, cheating or stealing, a court of law will not second guess the decisions of a board of directors -- even if their decision turns out to be the wrong one. Despite this "good business judgment" rule, I still maintain that a member of the board has a fiduciary duty to the owners who elected him/her to the board. This means that a board member must act fairly, honestly, openly and -- of most importance -- use common sense in making decisions which impact on the entire community. Many years ago, the President of a large association gave his "state of the community" speech at the annual meeting. I take the liberty of quoting some of his remarks: For the past two years, I have served as your President. You have called me at all hours of the day and night; you have pushed me into the swimming pool, and have poured molasses into my gas tank. The hours are long, and the pay is zilch. But, if I would not have served, you [expletive deleted] would have screwed it all up. I cannot add much more to this erudite speech. You have an investment in your association, and service on the Board of Directors is a way -- perhaps the only way -- of preserving that investment.

  • The Smartest Fall Renovations to Make if You’re Planning to Sell Your Home Nov. 15th 2018
    There are a lot of fall renovation tips centered on bring cozy warmth into the home. In fact, we just took a look at some hot trends last week. This week, we’re looking at renovations you can make with equity building in mind, courtesy of Scott McGillivray from HGTV’s Income Property and Moving the McGillivrays. While some trends carryover, there is some great info here for those who are looking to make some updates to enjoy now, while being able to reap the potential future financial benefits. Matte appliances These are a “hot trend of the moment,” said McGillivray. And while he says that he likes how they “lend a luxurious look to the kitchen, and how they look great when paired with neutral colored cabinets,” he still thinks stainless steel is your best bet if you’re looking to sell anytime soon. It’s the “best choice for a long-term return on investment,” he said. While these matte finishes are great of-the-moment looks, I expect they’ll look dated a few years down the road.” Quartz counters in warm colors We may be moving away from all that white or counters that look like Carrara marble (only easier to care for). While quartz isn’t going anywhere, McGillivray is seeing a trend toward warmer shades. “Countertops that look like marble will always be in demand because they’re classic, but the tide is slowly turning,” he said. “We are seeing a trend where quartz counters in warm neutrals are in high demand. I think people are trying to get away from sterile looks and really make kitchens homey again.” Light floors “Along with the light and airy trend comes a desire for lighter floors,” he said. “Dark walnut and cherry finishes are out, and lighter, blonder woods are in. Similar to kitchen counters, I think the trend will be toward warmer colors rather than cooler colors. But light is definitely the way to go trend-wise.” Hands-free technology Smart homes aren’t the way of the future. They’re here, now, and the smarter the home, the more attractive it may be to buyers. “This may seem like old news to the early adopters, but more and more people are starting to embrace hands-free and SMART technology,” he said. “This means that anything in your home that you can command with your voice is going to be super popular.” Less Serious (and More Fun) Spaces It’s time to go a little wild with your home—but within reason. “I predict that people are going to stop taking their homes too seriously and have a little bit more fun,” he said. “This means more colors, more patterns and less concern over what’s ‘proper.’ While smart return on investment design decisions should still be made for fixed items in your home, let’s all relax a bit and have a little fun with our furniture and decor this year.”

  • Credit Inquiries: Why Lenders Care Nov. 15th 2018
    FICO scores are calculated using an algorithm originally developed by The FICO Company. This algorithm considers five different characteristics of a credit file. Of course, payment history carries the most weight, contributing 35% to the total, three-digit score. The second most important relates to current account balances and credit limits. Scores need consumers to use credit before scores can be properly calculated so having a balance is important. 30% is attributed to this category and the ideal balance appears to be around one-third of credit lines. Keeping balances around this one-third target causes scores to improve. How long someone has used credit is also a factor, making up 15% of the score and the final two of the five both contribute 10%. Types of credit used and credit inquiries. Types of credit boosts scores when consumers responsibly use different types of credit and credit inquiries logs in the number of times someone has requested credit. But about that 10% for a credit inquiry, if it makes up such a small part of the total score, why do lenders care about this category? For one, requests for credit over the past year or so won’t hurt scores but making several requests for different credit accounts in a relatively short period of time can indicate the consumer is going through some sort of financial difficulty, perhaps being laid off or otherwise a loss of regular income. Such requests for credit can cause scores to drop, but still, it’s just 10% of the total score. Each time a consumer makes a request for credit, that request is recorded in the credit file. Again, an occasional request is fine. What can cause a loan application to stop dead in its tracks is to see a recent credit inquiry on a credit report but no indication any account has been opened. It usually takes about 30 days. That can mean someone opened up a credit account or maybe bought a car and financed it but the amount borrowed and the terms haven’t yet made it to the credit bureaus. When a lender looks at a credit report with recent inquiries, there is no way the lender can properly determine a consumer’s new monthly payments. Someone with relatively high debt ratios could take out a new car loan which could push ratios so high they can no longer qualify. When this happens, the lender will request the borrower to explain the inquiry and verify that no account was opened and if an account was opened, to send in documentation regarding the terms of the new account. That’s why loan officers tell you that once you apply for a mortgage, just sit tight with any other credit requests until and after your loan is ultimately funded and closed.

  • Making Canadian Suburbs More Age-Friendly Nov. 14th 2018
    Two-thirds of Canadians live in the suburbs, but the car-dependent neighbourhoods are “no place to grow old,” says Glenn Miller, a senior associate at the Canadian Urban Institute. As the population ages and the life expectancy of Canadians increases, there’s a lot of discussion about where older people are going to live and how to make their communities more age-friendly. The baby boom generation is moving into their senior years, but most of them are not yet interested in downsizing to condominiums or moving from their current homes. In fact, they are still actively purchasing move-up homes and recreational properties. But Statistics Canada says that as the boomers age, beginning in 2031 the share of the population aged 85 and older will increase rapidly. Almost one in four seniors in Canada will be 85 or older by 2051. That’s going to put a lot of pressure on seniors’ residences and long-term care facilities. Currently about a third of those aged 85 and older lives in these types of residence. Most seniors want to stay in their own homes for as long as they are physically and financially able to do so, but some homes and communities make that easier than others. About two-thirds of Canadians live in suburban areas, built after the Second World War and filled with young families who enjoyed their single-family houses and roomy backyards. But if you live in the suburbs, you likely need a car to get to local amenities such as grocery stores, medical services or community centres. A report by Glen Miller for the Institute for Research on Public Policy says that by 2036, 42 per cent of residents aged 75 and older will no longer have a driver’s licence, according to estimates by the Ontario Ministry of Transportation. Citing research by the Canadian Urban Institute (CIU), Miller says, “As the design of subdivisions changed, the average size of single-detached dwellings increased from 850 square feet in the 1950s, to 2,000 square feet in the 1970s, to 2,000 to 3,000 square feet in the 1990s, to 3,500 square feet today, even though average household size has declined. The result is that many neighbourhoods lack the critical mass of population to support local services and amenities. Instead, residents of newer subdivisions rely on power centres or shopping malls accessible by car.” Miller says, “It’s fair to say that our current suburbs are no place to grow old.” Without the ability to drive themselves because of physical or financial limitations, seniors can quickly become isolated in their communities. The problem has been recognized by municipalities for many years, Miller says, and in 2007 the concept of age-friendly communities (AFC) was introduced by the World Health Organization. “More than 500 municipalities have since committed to becoming age-friendly,” writes Miller. “Despite the original enthusiasm, however, the AFC movement has led only to minor physical improvements, such as the addition of park benches, better lighting or clearer signage, and it has thus far failed to generate the scale of public policy intervention needed to bring about significant changes to the built environment.” He says in most municipalities, the planning department doesn’t take AFC into consideration. A study by the CIU of 25 cities that committed to becoming age friendly found that none of them have incorporated the idea into their official plans. None of them modified their approvals process to reflect AFC goals or put the aging population as a priority when planning development. Miller notes that the government’s health care policies support healthy aging and aging at home. “In order to capture the imagination of the older adults who stand to benefit from age-friendly development practices, municipal planners and their developer colleagues need to seek out and deliver compelling examples of age-friendly development that will benefit people, and customers, of all ages.” He provides some recent examples of AFC. In Port Credit, part of the City of Mississauga, Ont., a brownfield site that was once the St. Lawrence Starch factory has been developed into a mixed-use community over 15 years. First townhomes and mid-rise condos were constructed, along with retail and other amenities on the ground floor. Then a retirement residence was added. The development is within walking distance of the commuter rail station. Most of the buyers relocated to the development from low-density suburbs in the area, and the neighbourhood has seen the average age of the population increase as they transition from townhouse to mid-rise to the retirement residence. Another example is in Don Mills, Ont., which was touted as Canada’s first car-oriented suburban subdivision. A local plaza was turned into an indoor mall but later it was redeveloped with mid-rise condominiums and a new plaza with open community spaces. Existing suburbs are a tougher challenge, but Miller points to two examples of streets near suburban areas that have become community hubs. Broadway, in the Kitsilano suburb of Vancouver, and a North Toronto neighbourhood around Yonge Street both have several mixed-used mid-rise developments. “Although not explicitly planned as age-friendly projects, both focus on creating a high-quality public realm through zoning that encourages a mix of community-oriented uses and street grids that facilitate walking and easy access to public transit,” says Miller. “These two community hubs have proven attractive to empty nesters as well as young families who can afford to rent or own condos.”

  • The Best Mobile Plans for Real Estate Agents Nov. 14th 2018
    As a real estate agent, you’re always on the go, and it’s important that your clients can reach you wherever you may be. If your old mobile plan just doesn’t cut it anymore, how can you find the perfect plan for your business? From by-the-gig and unlimited plans, to utilizing WiFi hotspots, we’ll cover all the factors you need to consider so you can find a plan that works for your needs. Find the coverage you need It may seem obvious, but the most important part of a mobile plan is coverage. It doesn’t matter how much data or how many minutes you have if you can’t use them, and this is true not only on your home turf, but wherever you're likely to go. If you typically stay local, that makes the search easier. But if you travel regularly to real estate conferences or for out-of-town clients, make sure your coverage will be just as good when you're on the road. Tips: ● Look at the coverage map for your carrier so you won’t be surprised by gaps in coverage.● Search for online reviews of your carrier in geographic areas you frequent.● Don't forget international coverage, if that's part of your business needs. All about the data Today, most mobile plans (beyond prepaid plans) have unlimited talk and text, but data is still a large variable. Data needs vary from person to person based on their office setup, work style, and other factors. Choosing the wrong data plan can be a costly mistake, so consider your needs carefully before diving in. Which of these scenarios best describes you and your mobile work style? Office boundDo you spend a significant amount of time in the office, with sporadic journeys out for showings and closings? Is your phone largely for communicating and browsing simple listings, reading contracts, or researching? If so, consider a smaller data plan or a pay-by-the-gig plan. Basic Web browsing and using your navigation app won't use much data, and there’s no need to pay for more than you need. Pay-as-you-go plans are particularly flexible, giving you access to as much data as you need at a reasonable price, without wasting money. Road warriorAre you a realtor who lives in the car? While you’re out of the office, are you catching up on listings, watching video walkthroughs, updating images on your site, and sending files? You may get by with a pay-by-the-gig plan, or you may want to go full-out on an unlimited option. If you can, look through your data usage for the past few months. If it's more than 3-4 GB/month per line, it's time to upgrade. If you're not sure if you need unlimited data, start with a flexible data plan and upgrade if you find yourself buying a lot more. Office managerIf you have several agents on one plan for a collective or small office, you may want to jump right into the unlimited plan, especially if your team trends more toward road warriors than office bound. If your data use justifies it, this can help lower tensions that can crop up when one person is using more data than someone else. Saving money If the cost of data is a concern, you can save money with a little effort and creativity, especially if you work in urban or heavily settled areas. Scope out coffee shops, libraries, and other local businesses with free WiFi and move your work out of your car. Also, take a closer look at your mobile plan. You may find that they also offer WiFi hotspots that their customers can use rather than burning through data. Keeping track Once you've picked the best plan for your location and use, you will still want to keep track of your account to make sure you're not leaving money (and unused data) on the table. Most carriers have an app for tracking data usage and billing. Keep an eye on your data use and adjust your plan as needed. With so many options available today, choosing the right mobile plan can be a challenge. But armed with the right questions, you can weed out those that don’t meet your data and financial needs, and find the perfect plan for you and your business. That way, you can focus your efforts on building your business and matching clients with their perfect properties. Christy Matte is a die-hard techie and contributing writer for Xfinity Mobile. She's a Boston-based writer who has been covering tech for the past decade or so, and enjoys video games, surfing the Web, and any gadget she can get her hands on.

  • Ask the HOA Expert: Limited Common Elements, Quorum Rules Nov. 13th 2018
    Question: Does the board have the right to grant exclusive use of common areas to one or a few members? Several of our owners have requested to expand the size of their decks or patios. Answer: Common elements available to one or several members (instead of all) are referred to as "limited common elements". This means they are common but limited to exclusive use of one member (as in the case of a unit deck) or designated members (as in the case of a private street). These limited common elements are typically identified on the legal plat and cannot be expanded without encroaching on common areas which belong to all owners in an undivided interest. So, the board has no authority to allow such requests. Changing this requires a vote of members which may be up to 100%. Question: At our recent annual meeting, an issue was brought up and a motion was made on something that was not on the agenda for the meeting. The president allowed the motion to be made, seconded and voted upon. But, there were not enough members represented to constitute a quorum. Was this an illegal vote? Answer: The vote was illegal due to lack of quorum even if it had appeared on the Meeting Agenda. Without a legal quorum, no business may be transacted or elections held. You might have a lively discussion but nothing official can take place. Lack of quorum is an all too common scenario than can be cured by proxies. A proxy is the written authorization by one member given to someone to act on their behalf at the Annual Meeting. Proxies must be distributed well in advance of the meeting and collected before the meeting to ensure a legal quorum. Getting folks to return their proxies can be challenging and multiple requests may have to be made, including going door to door to collect them if necessary. There is a sample Proxy in the Meetings section of www.Regenesis.net Question: We recently had our unit chimneys cleaned. A board member accompanied the contractor and opened and secured units upon exiting. As a result of this process, it was discovered that one of the units was jammed with stacks of newspapers, garbage, furniture blocking hallways, piles of clothing and cases of cans. The resident is clearly suffering from a hoarding problem. Should the board get involved in this situation? No neighbors have complained of any noxious smell. The area outside her condo is tidy. She keeps to herself, is pleasant to the staff and not a smoker. Answer: Turning a blind eye to a hazardous situation is not the way to go. A letter to the resident (and landlord if applicable) is in order. When garbage isn’t being disposed of regularly, it is only a matter of time before there is vermin problem. The fire hazard potential sounds great as well so the letter should include a request to remove or store flammables. Question: Can the board offer discounts to members that prepay a special assessment rather than participate in a payment plan? Answer: No discounts should be offered since they would cause a shortfall. It is appropriate, however, to charge late fees to those that don’t pay as agreed. However, it is a bad idea for HOAs to finance special assessments at all because of the increased administrative costs and the likelihood of dealing with delinquent payments. For example, If you have a 30 unit condo and allow 24 monthly special payments, you have 720 payments to track and 720 potential collection problems. Instead, require each member to provide special assessment funds from whatever source they have available. Some have cash, some has an equity line of credit or credit card. The HOA should not finance the special assessment or borrow the money. Question: Our homeowner association is made up of condominiums built in a townhouse style. The HOA has the responsibility for all exterior repairs and maintenance. Our board has allowed several of the members to replace their own unit roofs and repaint their units since they wanted to sell. This doesn’t sound right. Answer: It’s a very bad idea to allow individual unit owners to do or pay for this kind of work directly because of: 1. Quality Control. Is the person doing the work experienced? Is the material being used of good or superior quality?2. Risk Management. Is the person doing the work properly insured for injury and liability?3. Owner Still Financially Responsible. Doing this kind of work does not relieve a current or future owner from paying his normal share of regular and special assessments. Question: What kind of expectations or working relationship should an HOA manager have of the client’s board? Answer: The board should: 1. Support the manager's decisions unless a clear mistake has been made.2. Not undermine the manager's actions in rules enforcement and collections.3. Carefully consider the manager's advice since it comes from experience and training.4. Be respectful of the manager's busy schedule.5. Allow the manager to execute the terms of the management agreement without micro-managing.6. Remember that the manager works for the board. For more innovative homeowner association management strategies, subscribe to www.Regenesis.net

  • Student Loans Proving a Barrier to Homeownership. We Have Solutions. Nov. 13th 2018
    The role student loans play in denying would-be buyers from getting into a home of their own has grown to staggering levels. According to the 2018 Homebuyer Profile report from the National Association of Realtors®, “Almost one in four homebuyers this year had student loans, which made it harder for them to save for a down payment and delayed their purchase," said USA Today. “Among buyers rejected for a mortgage from a lender, 40 percent had college debt, the NAR found.” Per the same study, 80 percent of millennials don’t own a home, and 83% of those non-homeowners said student loan debt was a barrier to buying. The NAR found that “Two in five buyers, like Jodi Meyers, cut out luxury or nonessential items to save up for a home,” said USA Today. Her family, in the midst of paying off Meyers’ $55,000 in student debt, cut out all necessities and purchased outside of their preferred area to be able to afford a $249,000, four-bedroom home in Lakeland, Florida. The upshot: “It’s not my dream home, but it got my foot in the door, and now I’m building equity,” she told them. Of course, compromise is nothing new when it comes to buying a home, especially if it’s your first. Few of us can go out there and purchase the waterfront mansion of our dreams, but that doesn't mean we don’t aspire to do so someday from our starter home in the ‘burbs. Check out a site like Student Loan Hero and you’re going to read about things like front-end ratios and back-end ratios and it can all get very confusing. And, the truth is, the average person doesn’t need to know the nitty-gritty. The important takeaway is that, in your lender’s eyes, your income needs to be sufficient to cover a mortgage and all associated expenses when all your debts are taken into account. Having student loans in the hundreds of dollars per month can make it harder to qualify. So what CAN you do if you’re looking to budget and buy a home, but student loans are holding you back? There are options. Amass a higher down payment. “If you can save a 20 percent down payment, your student loans are far less likely to affect your loan process,” said Student Loan Hero. Your lender should be able to give you details of what loans allow your down payment to come from gift funds from a family member. Pay off your debts. Talk to your lender about this. You may be surprised that a scenario in which you redirect some of your down payment funds to smaller debts that can be cleared out could make it easier to qualify for a mortgage. “Paying down that high-interest credit card balance, for example, is a great place to start,” said Dave Mele, president of Homes.com on Bankrate. Get a side hustle. If you can’t negotiate a raise, find other ways to make more money so you can add to your down payment or use it to pay down your student loans. “If education debt is making your debt-to-income ratio too high, consider looking for ways to pay off your student loans faster. There’s no penalty for prepaying student loans, so you can make extra payments anytime,” said Student Loan Hero. Switch to an income-driven repayment plan on your student loans to make payments more affordable. “An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size,” said Federal Student Aid. Fannie Mae changed underwriting rules around income-driven repayment plans last year, making it easier for those on these plans to qualify for a mortgage. “Depending upon the plan, your monthly payment could be capped as low as 10% of your discretionary income,” said Forbes. “And if your discretionary income is low enough, your monthly payment could be as low as $0.” Get creative with your loan type. While many first-time buyers opt for an FHA loan because of the low down payment (as low as 3.5%) and generous credit score requirements (as low as 580), there are other options. “The Fannie Mae HomeReady™ mortgage is another loan available to borrowers with student loans,” said The Mortgage Reports. “Via HomeReady™, buyers can show a debt-to-income of up to 50%, with certain off-setting factors; and a down payment of just three percent is allowed. The minimum credit score to get approved for a HomeReady™ home loan is 620.”

  • Will the New Congress Compromise on Flood Insurance or Are We All Going Under? Nov. 12th 2018
    Among the many other issues tied up in the result of the midterm elections and the ensuing new Congress—and one of the major issues on the minds of homeowners across the country—is what’s going to happen flood insurance. As it currently stands, The National Flood Insurance program, which Inman calls “an ailing 49-year-old insurance plan” will lapse in December “without re-authorization or partisan support of the so-called ‘21st Century Flood Reform Act.’” Part of the issue that has led the bill to “languish in the Senate since late last year” is, not surprising: Republicans and Democrats are on opposite sides. “The GOP-led House voted in favor of the bill 237-189 despite significant opposition from coastal Democrats, who believe premiums on high-risk properties could skyrocket under the reform initiative,” they said. So what’s really at stake? A lot, potentially. Premiums—If the “21st Century Flood Reform Act” passed as is, “premiums, which on average cost homeowners $650 annually but can spin out of control in coastal regions, would be capped at $10,000,” said Inman. A lapse—If the program lapses without signoff by November 30, the National Flood Insurance Program wouldn’t be able to sell or renew flood insurance policies. “Right now our financial position is okay – but we wouldn’t be able to borrow from the U.S. Treasury to pay claims for our existing policies,” said David Maurstad, chief executive of the National Flood Insurance Program, on the Texas Standard. Even more people could end up without flood insurance—Despite the risks associated with having a home in a coastal area, many people still opt to forgo flood insurance in places where it is not required by law. “One recent study suggested about two-thirds of people in areas that have a 1 percent chance of flooding in a given year do not have flood insurance,” said the Citizen-Times. Common reasons laid out by the publication include: homebuyers “don't recognize the risk” because they don’t understand “flood maps and may never inquire whether they have anything to worry about; Banks and mortgage companies don't always require it; there's a myth that the government's going to bail you out; and they think their homeowner's insurance will cover flood damage. Almost all policies exclude claims from flooding.” Flood insurance may ultimately have to look to privatization—Some say this is a much better answer, anyway. “The National Flood Insurance Program’s (NFIP) financial woes stem from the fact that it consistently fails to charge program participants rates that cover the full risk of flooding to their properties,” said Inside Sources. “As a result, the NFIP’s revenues from premiums don’t even cover its claims during an average year. The Congressional Budget Office has calculated that the program is bleeding $1.4 billion annually. In years of catastrophic flooding, the NFIP has needed to borrow from the U.S. Treasury to honor its commitments to policyholders. Its debt now stands at about $20.5 billion, and that’s after Congress forgave $16 billion of the program’s debts last fall. Unless action is taken, the NFIP’s finances will only deteriorate in the wake of the 2018 hurricane season and with each passing year.”

  • 2018 Homebuyer Survey Contains Valuable Information for Agents and Sellers Nov. 12th 2018
    One of the most useful research projects of the National Association of Realtors® (NAR) is the annual survey of homebuyers and sellers. It is particularly useful because it shows sellers and their agents what works and what sources buyers use to find their new homes. This is the 37th year that NAR has conducted an annual survey of those who have purchased and sold homes. The most recent version (2018 Profile of Home Buyers and Sellers) became available in November of this year. The information is based on answers to a 129-question survey mailed to a random sample of 155,250 consumers who purchased a home between July 2017 and June 2018. (Names and addresses were provided by Experian, a company that maintains an extensive database of recent homebuyers that is derived from county records.) After accounting for undeliverable surveys, there was a 4.6% response rate. In 2017, first-time homebuyers constituted 34% of the market. This year, 2018, the first-time buyer rate was 33%. Geographically, the highest percentage of first-time buyers was in the northeast at 45%; the lowest was in the west at 29%. Over the years the historic norms for the country have been in the 40% range. As interest rates continue to crank up, it may be a while until we see such numbers again. The most useful information for sellers and their agents is to be found in the section on the home search process. While the survey results are not significantly different from those of recent years, the trends continue. For example, this year 83% of buyers said that they used the internet frequently during the search process. In 2003 that number was only 42%. This past year 57% of buyers said that they frequently used a mobile or tablet application. That is a newer and growing phenomenon (three years ago, it was 41%). 63% of buyers said that they frequently relied on a real estate agent for information. 44% of buyers went to the internet as the first step in the home search process. 17% contacted a real estate agent first, and 6% began by driving through neighborhoods looking for homes for sale. How can driving around be an option? Half the homes purchased were within 15 miles of the buyers’ previous residence. Interestingly, 7% of home buyers began the process by going to a bank or mortgage company. Buyers use multiple sources of information in the process of looking for a home. Far and away the most used sources are on-line websites (93%) and real estate agents (86%). Mobile or tablet applications (73%) have replaced yard signs as the third most used source of information. Still though, 46% of buyers indicate that yard signs are one of their sources of information. Only 13% of buyers indicate that they used newspaper ads as an information source. A mere 3% said that they garnered information from television. While there are a lot of intriguing data about the sources of information used by prospective homebuyers, certainly the most relevant has to do with where they actually found the home that they ultimately purchased. This year the information source that was highest in that category (50%) was the internet. Agents are second at 28%. Note that this is not to say that buyers bought their home through the internet. The typical scenario would be that a consumer sees the home on the internet, and then contacts his or her agent. 89% of those who used the internet to search purchased their home through an agent. The differences in a little more than a decade are fascinating. In 2001, 48% of buyers learned about their home through a real estate agent, and only 8% found their home on the internet. The times they have changed. Some things, though, remain persistently the same – or close to it. In 2001, a yard sign was the third most likely source of information leading to the home that was purchased (15%). And this year? It is still the third leading source at 7%, but this is now the sixth consecutive year in the survey history that it has been lower than double digits. Print media may not be dead, but it has shrunk to insignificance in this arena. In 2001, 7% of homebuyers found the home they ultimately purchased through a newspaper ad; in 2018, it was only 1%. It has been that way for seven years now. As has been the case for the past ten years, fewer than 1% found their home through a home book or magazine. The 2018 Profile of Home Buyers and Sellers shows what works. It is a valuable resource.