In case you missed it, HUD definitively stated their position on the issue of real estate Brokers rebating a portion of their commission to clients. For the record: it’s legal,does NOT violate RESPA, and simply needs to be disclosed on the HUD-1 lines 204-209.
The reason I bring this up again is because we hear from various parties from time to time that rebating is somehow illegal, that it somehow violates RESPA, that it’s wrong, etc. Those comments normally come from uniformed brokers working in the “Traditional” side of the real estate world. It’s nice to finally have a place to point those folks. Here’s the link to HUD’s own website: Commission rebates are legal and belong on lines 204-209 of the HUD-1 form. (see Highlights “new RESPA rule FAQ”)
Lenders will be slow to recognize this clarification and will likely continue to ask that our rebate NOT be shown on the HUD as each and every lender has their own underwriting department who may or may not be aware of random HUD rule clarifications like this one. We’ll do our best to keep spreading the word.
The cornerstone of our business model here at Real-a-Save involves us rebating a portion of our earned commission back to our clients. Since 2007 we’ve given hundreds of thousands of dollars back to Denver and Boulder real estate consumers in the form of these rebates thus lowering overall real estate costs for consumers. Different? Yes, but there are many different types of buyers and sellers out there and options are always nice. It’s one of the oddities of the real estate world that choice is viewed as a negative when shopping for real estate services. Our industry has not been quick to embrace new business models and the vast majority of real estate transactions are still done by traditional firms.
It seems likely that rebaters, discounters, limited-service shops, and other non-traditional real estate brokerages will continue to operate as niche players only. I once believed that the Internet would be a “game changer” when it came to alternative business models for real estate. I no longer hold that opinion. I believe that brokerages like Real-a-Save will continue to thrive on the margins, catering to a very specific type of buyer and seller. And that’s ok. (the “why” of this conclusion is interesting and likely has more to do with psychology than anything else) As long as there continues to be choice for consumers and the regulating bodies who govern the real estate world offer clearly stated positions (like HUD’s statement herein) about the rules then we’ve got nothing to complain about.
I was watching the Oscars the other night with my wife and couldn’t help but feel a sense of surprise and sadness when the director for Inside Job commented during his acceptance speech that it has been 3 years since the financial crisis and not a single one of the big players at the financial institutions who likely caused the financial crisis has been held accountable. Let that sink in for a minute.
They were nice enough to take our tax dollars offered up so quickly by “American Hero” Paulson and company, and then they quickly stopped lending money to small businesses and homeowners alike. Any rookie Realtor could have negotiated a better deal with the Big Banks than these mutts did. They basically gave away our money with no strings attached. Nice job, guys.
And last year we come to find out that the Big Banks may have committed Mortgage Fraud and have generously given us yet another iconic phrase to add to our collective vocabulary to go along with derivative, mortgage-backed security, and Madoff: enter Robo Signing.
Since all real estate is local I’ll get tot he point: I’m still seeing some fallout in the Denver and Boulder real estate markets from the latest rotten gift from our banking buddies. Where I was previously seeing some first-timers jump into the market and gobble up a foreclosure or two, I’m now seeing that trend grind to a halt. Experienced investors are tentative as well. There are so many unknowns when you buy a foreclosure property that when we now add chain of title to the mix it’s just too much for some to handle.
So, thanks Big Banks. We’re basking in your generous dividends. Part of me really hopes that The Aussie has something up his sleeve for you.
The $8,000 tax credit is set to expire very soon. Buyers must be under contract by April 30, 2010.
The consensus seems to be that Congress will not renew the tax credit. I’m torn between wanting our country to pursue responsible fiscal policy and reducing the national debt, and wanting this tax credit to continue as I’ve seen first-hand the effect it’s had on the market.
Buyers I’ve been working with are quite aware of the tax credit. It remains to be seen what happens to the market after the tax credit expires.
The good news is that we’re entering the traditional busy season in real estate, so it’s likely that the tax credit expiration will not have a measurable effect on the number of contracts given that we’re entering the spring/summer strong season. Final analysis will likely have to wait until next year.
Call or email bob@realasave.com if you have any questions about the tax credit, or Boulder or Denver real estate in general.
Did you know that the Colorado Contract to Buy and Sell Real Estate specifies in paragraph 10.8 that carbon monoxide detectors must be installed in the subject property?
If you are a home seller with their house currently on the market in Colorado, be sure that you have carbon monoxide detectors installed within 15 feet of each bedroom, or in a location as required by the applicable building code.
If you’re buying a home and notice that it does not have carbon monoxide detectors, you should understand that it’s the sellers obligation to install the detectors at their cost. You should not be tricked into thinking that installation of carbon monoxide detectors is one of those negotiable items on your Inspection Objection Notice.
There have been so many cool real estate sites popping up in recent years (Trulia, Zillow, Redfin, etc) that it seemed as if the monsters like Realtor.com were destined for obsolescence just as soon as the average consumer started trusting the new techno sites for their real estate search. But not so fast.
The NAR announced a recent take over of Cyberhomes assets and data, and is revealing an interested long-term strategy to compete with these new kids on the block. Will it work? Maybe. Who does it benefit? See this awesome article on 1000 Watt Consulting for an in-depth analysis.
This news made me recall another incredible article/piece of news by the ever-entertaining and brilliant Notorious ROB where he discusses how a little guy (think local real estate agencies) may have suddenly delivered a potential knock-out punch to the tech-heavy real estate start-ups of the last 4 years. In a nut-shell, ROB comments that a particular local real estate company has just unveiled a new website which competes and possibly exceeds the user experience and amount of data delivered by these tech start-ups. Big deal, right? Maybe not.
One thing is for sure: it’s an interesting time to be in the real estate industry. Who will survive? I’m not sure. I know that I’m constantly amazed by some of the tech start-ups like Redfin and the now bankrupt BuySide Realty/Iggys House who receive all this VC money and ALSO offer deep discounts. How can these companies be soooo top-heavy and programmer heavy and also offer deep discounts and also survive? I don’t know. I know that the only way we’ve survived while offering deep discounts is by offering a level of service that the above discounters don’t or can’t. We’re basically offering the same service as a traditional agent, AND we offer discounts. How? Our overhead is almost non-existent, no multi-level management, no VC money, no standing staff of programmers.
But that’s not enough, is it? No, I don’t think so. I think that we also need to provide great service AND a great user experience on our website. Which brings me back to the above point made by Notorious ROB: if little guys can deliver a big, satisfying punch on their websites then what will drive people to keep using the large tech sites? The answer to that question remains to be seen, but if the age-old adage that “all real estate is local” is true (which i think it is), then the answer is: nothing. If, in the near future, there’s no significant difference between the average local agent’s site in regards to data and user experience when compared to the big non-local tech sites, then there’s really nothing but recent momentum to keep carrying new users to those tech sites. And momentum can change.
Wow, 2009 is certainly going out with a bang. Lots and lots of contract action in the Denver/Boulder region right now in what is traditionally a very SLOW time of year.
It’s possibly a reaction to the 8k tax credit from Uncle Sam, but I don’t think so. It seems like buyers are snatching up bargain properties once they hit the magical correct list price.
It just proves that when it comes to pricing, it’s better to SET the market than to CHASE the market. Yes, it’s honestly better to be a just slightly low and to get a quick sale and/or multiple offers than it is to be over priced and to linger on the market.
The reasoning behind this is many-fold. But if you simply factor in your carrying costs, you’ll see that holding on to your property for 6 months while it lingers on the market has costs associated with it. It can easily cost a seller thousands of dollars a month, for 6 or more months, to sit on a slightly over priced property. We’re talking 10′s of thousands of dollars. Why not just drop the price to begin with and generate multiple offers over a very brief time frame (with low or no carrying costs), the result of which could be a bidding war (higher sales than list price) as well as a quick closing?
Not to mention that properties which sit on the market tend to attract low-ball offers as buyers seem to sense blood in the water.
Email bob@realasave.com for any questions about the Boulder or Denver real estate market, or if you’re interested in getting 50% of our paycheck via our Buyer Rebate Program.
In the land of the broke, the one-nickle man is king. Let me start by stating the obvious: I may be wrong. My opinion doesn’t really mean anything. It’s just my opinion. And I’m not brilliant, just average intelligence at best. But it seems painfully obvious to me that if you encourage a new round of first-time home buyers to jump in to the real estate game when they don’t even have enough for a down payment, then you’re just asking for trouble.
This is pretty much what the current administration is doing by creating this “fake” bond market. I’ve mentioned earlier how the housing collapse took this bond market with it. It just disappeared…there was no longer a bond market where investors bought and sold mortgage-backed securities. Makes sense, right? If those securities are worthless, then who is going to buy them. Well, you are. And me. We are buying them.
The Federal Government is jumping back into the mortgage security game and plans on buying up Fannie and Freddie assets backed by state bonds in order to finance loans to first time home buyers. Part of program also helps people with BAD loans get refinancing. I’m not opposed to that at all, in fact that seems like a good idea to me. If you can take someone from an arm loan that adjusted to 12% to a fixed loan at 5% and they can avoid foreclosure, then great! I’m all for it.
My problem with this program is that it appears that we haven’t learned anything from our recent mistakes. Wouldn’t it be great if everyone could afford a home? Sure, that sounds really nice. Maybe even Utopian. But is that that case? Should we be messing around like this and continuing to encourage home ownership to people who just can’t afford it? What’s wrong with renting and saving for a down payment? I’m NOT talking about saving for a 20% down payment, no. The current FHA minimum down payment is only 3.5%. Just three and a half percent. That’s $7,000 down for a $200,000 home. Doesn’t it seem reasonable to expect a potential home owner to come up with 3.5%? And if they can’t, then that’s ok. It doesn’t mean your a bad person if you need to rent for a while in order to SAVE up that 3.5%. I’ve rented for more of my adult life than I’ve owned a home. I’m a decent guy, not some sort of miscreant.
Rent does not equal Bad. Ownership does not equal good. Let your reality dictate whether you rent or own. RESPONSIBLE home ownership is a great thing. Responsible renting is also a good thing, especially if it affords you the opportunity to SAVE some money.
One of the big debates in the City of Boulder has to do with the proposed “pops and scrapes” ordinance which will limit structure size in Boulder. This issue has been debated and detailed in many other blogs and news sites around town, so I won’t bore you with all the details. But basically, City Council wants to limit what Boulder homeowners can do with their own property. It’s not known as The People’s Republic of Boulder for no reason…
Now, in theory, this sounds fine. Who wants to wake up one morning and as Councilman Macon Cowles says, “find the Queen Mary parked next to their house?”. But the problem is that there are only about 100 6,000+ square foot homes in Boulder. And the council is aiming its actions at “preserving” neighborhoods/structures in the 1200-2000 square foot range. Those are they guys they’re protecting. But…
Listen to this interview on CPR Colorado Matters between homeowner Warren Hultquist and councilman Macon Cowles. In it, Hultquist points out that he simply wants to make an addition in order to access his basement square footage, and that his home is in the neighborhood of the 1200-2000 square foot range mentioned above. But this new ordinance would prohibit him from making such modest additions.
The part that just rubs me the wrong way about Macon Cowles’ championing of the new size limit ordinance is this: councilman Cowles lives in a 4,800 square foot home. That’s a huge home for Boulder. A huge home. Does anything about this rub you the wrong way?
Furthermore, the City Council is opposed to the idea of putting any such ordinance to a general vote because, as council member Macon Cowles says in the attached interview, the issue is too complex for laypeople to understand. Hmmmm…
I’d encourage Boulder residents to visit the website Leave My Home Alone when they have a moment. This is taken from the LMHA position statement on their website:
“The Proposed Regulations are Anti-Family and Unfair
The proposed regulations are anti-family and would unfairly restrict the right of Boulder citizens to build additions to or remodel their homes and unfairly decrease property values, thereby effectively snuffing out the hopes, plans, and dreams of people living and working in Boulder. The proposed regulations are a “one-size fits all” approach that goes too far and would prohibit many types of appropriate additions and remodels. The proposed regulations would have a disproportionate impact on relatively modest neighborhoods like Martin Acres, Aurora 7, West Highlands and Columbine. If families can’t grow in their homes, they will move elsewhere, thereby exacerbating the loss of families with children in Boulder and the declining enrollment in Boulder’s schools.”
Fair warning to all Boulder residents: you need to inform yourselves and voice your concerns to your City Council!
Uncle Sam is indicating that he’d like to use a few of our tax dollars to finance billions in loans. Great. Now, I’m all for the current $8,000.00 tax credit as I’ve seen first hand benefits for buyers I’ve been working with in the Denver and Boulder markets. But this is a much different creature.
The program I’m referring to is the one announced today by the Obama Administration whereby the Federal Government will become the new buyer in the previously evaporated mortgage-backed security market, thus allowing state agencies to fund millions of mortgages. What? Basically, when the economy and housing market imploded last year the bond market for mortgage backed securities disappeared. This caused various HFA’s (housing finance agencies) to cease giving loans or raise rates considerably. So now Uncle Sam is Subprime Sammy!, your mortgage backed security expert and buyer extraordinaire.
All kidding aside- how is the potential of this program any different than what subprime lenders did over the last decade or so to “encourage” first time buyers to jump into the market? Aren’t we currently living through the aftermath of the collapse of just such a program?
Part of this program would allow first-time buyers to use the future $8,000 tax credit as part of their down payment. Another bad idea. This means that this new round of buyers will have the same amount of skin in the game as the subprime borrowers who got 100% financing in 2003. None. So there is no incentive to stay in the game, and we might as well look forward to another massive wave of foreclosures 3-5 years from now when some of these new homeowners realize that this is not their cup of tea.
I’m all for helping first-time buyers…we do it all the time at Real-a-Save. But if a potential buyer has ZERO dollars, then maybe, just maybe, they’re NOT a potential buyer after all. FHA loans require 3.5% down right now. That’s a pretty darn good deal. Why are we looking for ways to require zero down? Isn’t that exactly what got us here in the first place?
Email bob@realasave.com if you have any real estate questions, or if you would like to know about our Colorado commission rebate program. And no, you cannot use a commission rebate towards your down payment;-)
Yes, the sky has fallen. Agreed, the real estate market has been rocked over the past year and a half. Yes, the economy sucks. Yes, it’s completely annoying to hear another tool-box Realtor telling you how GREAT! everything is and WHAT A WONDERFUL TIME IT IS TO BUY!. I’m embarrassed by some of my esteemed colleagues, and completely annoyed by the NAR advertising campaign telling us how GREAT! things are. Puke.
The truth is wrapped in an old cliche: all real estate is local. Maybe it is a great time to buy. Maybe it’s an awful time to buy and you should just keep renting. It all depends on where you live and where you’re looking to buy. Sounds obvious, right?
Colorado has been hit hard, really hard, by the real estate downturn. But there are areas of relative strength. Louisville, Colorado is one of them. It doesn’t hurt that Louisville keeps getting mentioned by Money Magazine as the best place to live. It also doesn’t hurt that it’s a great little town with a lot going for it. But there are a lot of great little towns with a lot going for them that are AWFUL places to buy right now. What sets this one apart?
Conoco Phillips just purchased an office campus a few minutes from Louisville in the Northwest corridor between Denver and Boulder. There are future jobs. They’re building an office tower. Future jobs. IBM, Sun Microsystems,WhiteWave Foods, and Amgen (just to name a few) are some of the big companies just a stone’s throw from Louisville.
But really, the proof is in the pudding. There were 21 sales in Louisville in the last 30 days where the sellers got almost 98% of list price. Anecdotal point: every time we represent a buyer in Louisville it seems that we’re in a competing offer situation; the last home we sold in Louisville was on the market for one weekend before we had 2 offers. Louisville is a good place to buy. Period. Great lifestyle, Boulder Valley Schools, lots of technology jobs.
No kidding.
Check out all the Louisville, Colorado homes for sale on this map search link. And email bob@realasave.com if you have any Denver, Boulder, or Louisville, real estate questions. And remember that we rebate 50% of our commission back to you in our Colorado rebate program.
