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.
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.
Uncle Sammy has agreed to keep his pockets open through April 30, 2010. And now, even more home buyers will be eligible to reach in and grab $8,000. Here are the details:
First-time home buyers are eligible for an $8,000 tax credit.
Current homeowners who have lived in their current home for 5 consecutive years are eligible for a $6,500 tax credit if they purchase a NEW home.
If you have bought a home previously but have not owned a home in last 3 years then you’re eligible for the $8,000 tax credit.
Income limits: $125,000 for an individual, $250,000 for a couple.
The home must be $800,000 or less and cannot be a vacation or second home.
Pretty generous overall.
I’m torn about this tax credit. I’ve come out pretty consistently in favor of the tax credit as it appears to have a direct effect on the buying habits of my Denver and Boulder clients. It’s clearly one of the issues they’re considering when making their decision to buy at this time. So expanding the tax credit will likely continue to help buyers get off the fence and jump in to home ownership if they were considering it in the first place.
But I just can’t help but to wonder what is going to happen with all of our debt in this country. Tax credits like this equal lost revenue for the Fed. God knows we’re already in hock up to our necks with China holding most of the purse strings. What happens if the Chinese decide to transition out of the US Dollar and into other currencies as suggested by this article?
Boulder County’s Septic Smart Program is an important piece of information for home-sellers to know. Am I really writing a blog piece about poop? Yup. It’s important for homeowners in Boulder County to familiarize themselves with this County website and the requirements for sale of their property.
Homeowners can enter their property address and search county records, as well as follow the 4-step process towards becoming “Septic Smart”.
These requirements went into effect back in September of 2008, so if you have a home for sale in Boulder County and you have a septic system then you should get your system inspected right away.
You don’t necessarily have to wait until you get an offer on your property, but if you have waited until that time then don’t worry. From my experience you still have plenty of time to get your Septic Smarts taken care of if you have a typical, 30-day contract time frame. The folks at the Boulder County Septic Smart Program are very helpful and accommodating.
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.
ConocoPhillips is our big, new neighbor up the Denver/Boulder corridor just off of Hwy 36. You probably know that they purchased a 400++ acre campus from Storage Tec a while back, and there’s been lots of news and some considerable speculation as to what their plans are.
Well, it appears as if they’re going to use the site as the research and development center on renewable energy. Good news for this area. Even better news that over the next 20 years or so they’ll ramp things up to around 7,000 employees or more. Very nice for the real estate market, and wonderful to have this type of company in the area.
I hope this acts as a draw for other renewable energy companies in the same way that Sun Microsystems and IBM have helped give us a good foundation and big draw in the technology department.
Won’t you be my….neighbor.
Shoot me an email at bob@realasave.com if you have any Denver or Boulder real estate questions, or if you want some more info about our Colorado commission rebate program where we give you 50% of our paycheck.
Should the $8,000 tax credit be extended? Should everyone just calm down already and stop writing and talking so much about the tax credit. Yes, and yes. I’ve written about it previously, and this likely won’t be the last time.
Why?
Well, in a world of bad real estate news free money! always cheers people up. Is it the right thing to do? I’m really not sure. I know that I’ve come out in favor of it in earlier posts and I still do like the idea because I can see the effect it has had on some “on-the-fence-buyers”. Enough to get them off the fence and writing on a home.
But honestly, if an $8,000 tax credit is your only reason for buying a home,then…maybe it’s not the best idea for you right now. Home ownership is an expensive commitment, and you had better have more reason than Uncle Sam’s 8k to jump in.
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.
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;-)
We’re looking for some new agents in the Fort Collins, Colorado area. If you or one of your friends or family members would like to join the Real-a-Save team then please email us at bob@realasave.com, or simply call 303-415-2541.
Experience: you’ll close a higher volume of deals, and will gain more experience, thus becoming a better agent. Period. There’s really no faking experience.
Best technology and tools: maybe you’re an agent who is not up to date on things like digital signatures, blogging, social media, electronic contracts, virtual offices. We’ll show you how to use these tools in ways that your clients will love and you’ll appreciate.
A place on our site: you’ll get your own agent page on our website, giving your clients access to the best Colorado map search around. Try it, you’ll like it!
Systems: we’ll train you on the best client management systems, blogging, work-flow, and advertising.
Real-a-Save is a great company- sure, I’m biased because I own the company, but I really believe in what I’m doing. I love coming in to work- which is much more than I can say about my time in a traditional real estate company. The traditional company is set up to benefit the Brokerage. That’s it. The brokerage employs as many Broker Associates as possible (reminiscent of “Boiler Room“) and hopes that a few of them will pan out. They charge lopsided splits of up to 50% or more. Then there’s the whole “administrative fee”…but I’ve already written about that one and it’s a total joke. Not here. You’ll keep at least 90% of what you earn, and there’s no “administrative fee”.
So pass along this post if you’ve got a friend who works the Fort Collins real estate market, or just tell them to email me at bob@realasave.com. And remember that we’ve got the best Colorado rebate program around where home buyers receive 50% of our commission, see www.realasave.com for more details.
