A REALTORS VALUE WHEN ASSOCIATED WITH OR WITHOUT A NATIONAL BRAND

· After a candidate completes the Maryland Real Estate Commissions Licensing Course, (this is a very intense course and covers about 13-weeks for 8 hours a day), and after he or she passes the 2-3 hour exam they are awarded their Real Estate license. Once they pass the exam all the local Big Brand Real Estate Brokerage Firms vigorously recruit these rookie real estate agents; especially the agents who scored high on their exam.

· Once the agent has interviewed with all the Real Estate Brokerage firms that have solicited him or her, that agent selects the Brokerage they want to associate with.  Once he or she  joins that Brokerage, (and that Brokerage must be Registered with the RE Commission,) then he or she can practice real estate but not before joining a Brokerage.  Then they take another 4 weeks of training covering real estate as practiced by the Brokerage he or she selected.  (Generally the local National Brand Brokerages only takes Full Time real estate agents into their staff.)

· The advantage of teaming up with a local National Brand Brokerage is their National Recognition and Reputation and what it has come to represent, real estate agent benefit in many ways by associating with a National Brand.  The Brand gives you instant Credibility & Trustworthiness while you gain valuable experience and  knowledge.  And maybe most importantly the firm has many ways to see that you receive your share of new business.  But the cost of joining a Large Brand is huge i.e.; you split the commission with the firm.  Example: if the Selling or Buying side of the Commission  is say $5,000.00 the company keeps half i.e. $2,500.00.  But the Brokerage does provide you with a desk, a phone, business cards, yard signs, marketing material with their name prominently displayed of course and other office tools, like computers, printers, copiers, pre-printed advertising material, stamps, etc. all at no cost to the real estate agent.  This sounds great at first but based on the example above if you do 8 or 9 transactions the first year you lose about $20,000.00.  And a desk, phone, computer, etc. can’t cost $20,000.00

· After 5 or 6 years of full time Successful experience, the Brand identity doesn’t really do that much for the agent anymore.  Because by now more than 50% of the agents business comes via referrals from their own past clients.  And the referred person could care less what Brokerage the real estate agent is with, they’re satisfied that their friend or family vouched for the agents greatness.   (btw: new agents only last about 2 to 3 years, so if one is still practicing real estate after 5 or 6 years they must be enjoying a successful career)

· So, when a Successful Agent starts his or her own Brokerage firm or moves to a smaller boutique firm, his or her level of service will at least remain the same and in most cases it will improve because he or she isn’t restrained by the large Brokerages corporate policies.  While opening your own firm or moving to a smaller boutique firm can be risky, the benefits to both the agent and the client are more than worth it.

· Most Brokerages require Maryland Real Estate Agents to join The Local Board of Realtors, The Maryland Association of Realtors & The National Association of Realtors and pay the required dues.   Only after you join the National Association of Realtors can you label yourself a “Realtor”; otherwise you are a Real Estate Agent.  The benefits of being a “Realtor” are significant in service to clients.

· The Maryland Real Estate Commission Requires that ALL Real Estate Agents take continuing education classes with a minimum of at least 15 credit hours every two years in order to keep their license active.  These education classes include all the new local & federal laws covering real estate practice.

· So don’t be fearful to hire a Realtor who owns his or her own Brokerage firm or hire a Realtor from a real estate Brokerage firm you may have never heard of.  That Realtor has been thoroughly educated and trained, and continues to be educated on a yearly basis, they’ve accumulating meaningful experience plus he or she has obviously become successful and is well Respected within the industry.   That realtor wouldn’t haven’t have made the change if he or she didn’t feel they had “improved themselves” to better serve their clients. 

· Of course your interview with the “Realtor” will answer and satisfy all your concerns, if you have any.

Mortgage Rates Head Higher on Positive Economic Data

Rates for all mortgage loan products headed higher this week as positive employment indicators rolled in, with job growth over the last six months the strongest it's been since 2006.
That, coupled with the Greek debt restructuring on the international front and the results of the Federal Reserve's stress tests pointing to a stronger U.S. banking system, boosted investor confidence and drove bond yields higher. Studies from both Freddie Mac and Bankrate showed the same measurable increases in rates across-the-board

BofA to Offer Principal Reductions of More than $100K

Some Bank of America borrowers may be in for principal reductions in amounts exceeding $100,000, according to the latest developments in the settlement the bank and four other large servicers made with state and federal regulators.

Of the five servicers participating in the settlement, BofA is set to pay the largest portion of the total $25 billion settlement. The bank will pay $3.24 billion to the government and $8.58 billion to borrowers.
Of BofA’s total, $1 billion is part of a separate settlement regarding loan origination issues for Countrywide, which BofA acquired in 2008.

While the other four servicers in the national settlement are being required to diminish principal so underwater borrowers have loan-to-value ratios of 120 percent or less, BofA will be reducing principal for about 200,000 homeowners to fall in line with current market values.
For some deeply underwater borrowers, this may result in reductions of more than $100,000.
The expanded principal reductions may prevent BofA from paying $850 million in penalties, according to the Wall Street Journal.
Fitch Ratings responded to the news stating that the 200,000 principal reductions will be “neutral to negative for some RMBS bondholders and potentially beneficial for the bank.”
Fitch suggests the loans most likely to qualify for the extended principal reductions will be those originated between 2005 and 2007.
“Because the bank has already reserved for penalties, any reversals could help BAC’s income going forward,” Fitch stated. “While the agreement will help the bank reduce the amount of penalties it owes over time, the aggregate best case benefit is moderate from a financial perspective.”

 

Is the Housing Market Actually Recovering?

Everyone wants to know if the housing market is truly showing signs of a recovery. There are conflicting headlines every day. One day, we hear sales are up. The next day it is reported that prices are down. Is the real estate market coming back? The answer is ‘yes’ and ‘no’.
There are two aspects that must be evaluated: house sales and house prices. They will not recover at the same time. Sales are already increasing rather nicely while prices will still soften in many markets through 2012.

Home Sales
The National Association of Realtors (NAR) issues a Pending Home Sales Report each month. We can see by the graph below that sales have been increasing nicely over the last twelve months. Real estate professionals across the country are reporting that activity has increased  compared to last year. The sales side of the recovery is starting to show great promise.

Home Prices
Many price indices have shown that national home prices are continuing to stumble. Even with demand increasing, we must look at where the supply of housing stock stands. Though ‘visible’ inventory (homes currently on the market) is shrinking, there is  still a large overhang of ‘shadow’ inventory (foreclosures about to come to market as a result of the National Mortgage Settlement). This increase in inventory will outpace the increase in demand and thereby cause prices to continue to soften in many parts of the country.

Bottom Line
Housing is coming back. However, sales will come back before prices. We will not see prices appreciate until we work through the oversupply of homes on the market.

Is it the Price of Your Home or the Value of Your Happiness?

Steve Harvey recently gave a presentation about the current real estate market to a group of home sellers in a city in the Northeast.  That night, he explained to them that home values in their area were about to be negatively impacted by a surge of distressed properties entering their region over the next year. He said, as I have often found to be the case, the homeowners were very receptive; many felt that they now had the information they needed to make a good decision with regard to pricing their home to sell in this market.

After the class that night, several of the homeowners came up to him to privately discuss their personal situations. One of these owners said something he said he will never forget. He shared with Steve that he had come to a revelation that night.

This particular homeowner had put his home on the market with plans to move to Florida, where his daughter and his infant grandson live. He missed his daughter very much and missed his grandson even more. He hated every passing day that he wasn’t able to “hold the baby in my arms and rock him to sleep”.  That night at the seminar, he thanked Steve for reminding him of the reason he put his home on the market in the first place – he needed to rejoin his family.  Steve said he was struck by the wisdom of his final words to him before he turned to walk away.

“I thought I was putting a price on my home. While I hold out– hoping to get a few more dollars, I am actually putting a value on my happiness.”

He adjusted his asking price that night and sold it three days later. Very soon, he will be able to rock his grandson to sleep in his arms, both of them happy and content.

HUD INCREASES BUYERS COSTS Effective April

IN A MOVE TO INCREASE THEIR FINANCIAL STANDING (and to get the FHA back into required capital requirements), on Monday, HUD announced their anticipated increases in the premiums they charge borrowers. Simply stated, the cost of borrowing is going up.

FHA loans, by design, are more liberal in their underwriting guidelines than most conventional loan products (in terms of credit, income ratios, required investment from the borrower, and maximum loan amount). HUD is not a lender. Rather, it is a federally-insured insurance company. They insure lenders against default on loans underwritten in compliance with their published guidelines. It is because of this insurance that lenders approve and close loans with more liberal guidelines.

As an insurance company, HUD charges two types of premiums on the FHA mortgages:

• The UFMIP (Up Front Mortgage Insurance Premium) will be raised effective April 1, 2012 from its current 1% to 1.75%. One advantage to the UFMIP is the fact that it is typically built into the loan amount and does not require additional cash outlay at closing. However, the increase in loan amount does impact monthly payment and cash flow.
• The MMIP (Monthly Mortgage Insurance Premium) will be raised 10 basis points on April 1, 2012 to cover the requirements of the payroll tax extension approved last year. This is a direct increase of 10 basis points in the borrower’s mortgage payment, and has the effect of a 10 basis point increase in interest rates. As a kicker, loans over $625,000 will be bumped 35 basis points from today’s levels effective June 1, 2012. This bump is substantial, as you can see below.

On a loan amount of $300,000, we are seeing an increased payment of $36.41, which doesn’t sound too bad. However, we know that home buyers buy homes comparing what their monthly payment will be after they close. This hike in payment is equivalent to borrowing an additional $7000. Starting next month, it’s as if the home became $7000 more expensive. What is the result? Buyers are going to have to pay more OR they’re going to have to offer less to the seller (to maintain the same mortgage payment they were comfortable with today). A $7000 lower offer is like another 2.5% decline of home prices. Not good for anyone.

ADVICE:

Sellers, price correctly and get into contract before April 1st.

Buyers, today is the cheapest mortgage you are likely to see in your lifetime (all things considered)! Get off the fence and buy NOW!

P.S. – and Rumors are strong that FHA is looking to reduce the allowable sellers’ concession from 6% to 3% in April as well. This move will have a HUGE IMPACT on how much cash will be needed by the buyer.   Hurry—get in the game!

by steve harvey - kmc

FORECLOSURES IN PROCESS BY STATE

RMP Personal Introduction

Negative Equity by State



The above map shows the percentage of homes in each state with a mortgage that are in a ‘negative equity’ situation meaning that the value of the home is less than the mortgage amount. Approximately 30% of the homes in the country don’t have a mortgage on them.

MORTGAGE PREDICTIONS FOR 2012

It’s the time of year that we look ahead and attempt to give our best guesses about the market, the industry, and the effects they may have. So, here are my thoughts about the mortgage world:
Interest Rates Should Be Stable
With a faltering economy nationally and worldwide, including pessimistic estimates for employment, there is little chance that the Fed will risk increasing rates which would jeopardize any recovery. Couple that with a Presidential Election in November and conventional wisdom says we’ll see rates hovering in the same neighborhood for most of 2012.
Mortgage Costs Will Increase
Quietly tucked away in those bills passed in Congress to extend the payroll tax cuts before the holidays was an increase of 10 basis points in the guarantee fees on loans sold to Fannie Mae and Freddie Mac. That will translate into .10% higher interest rates (which would be $4000 extra on a $200,000 loan over 30 years). Interestingly enough, the additional revenue is not going to Fannie or Freddie to help with defaulted loans, but rather going to the US Treasury to make up for the payroll tax cut….go figure.
The Mortgage Interest Deduction Will Be Challenged
Look for people of a certain income level to lose their write off as a measure to increase revenue. Taking away from the wealthy as a way to raise governmental revenue is politically strategic. It is unlikely everyone will lose the deduction (political suicide), but that top 1%…watch out.
Loan Products Will Expand
Common sense lending will start creeping back. Large down payments will liberalize credit and income standards. This will likely begin with local banks who are comfortable with appraised values. I’m not calling for a return to the madness, but some loans that are low risk are not being done today.
Anticipate some lenders expanding their guidelines.
Don’t be shocked by a lowering of FHA loan limits and/or an increase in the FHA Up Front Mortgage Insurance Premium either. Overall, mortgages should give people more reasons to buy homes in 2012 as the economic recovery is strongly tied to housing. Given that most people vote their own personal economy rather than policy beliefs, I expect support by those who are looking to be re-elected.
by KMC