Daily Archives: November 15, 2012

Uncertainty, QE3 push mortgage rates to new lows | North Salem NY Real Estate

With U.S. lawmakers heading toward the edge of the “fiscal cliff,” government-backed mortgage bonds that fund the vast majority of home loans are looking like a safe haven for investors, helping push mortgage rates to new lows.

Rates on 30-year fixed-rate mortgages averaged 3.34 percent with an average 0.7 point for the week ending Nov. 15, down from 3.4 percent last week and 4 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

That’s a new low in Freddie Mac records dating to 1971. In the four decades that Freddie Mac has conducted the mortgage market survey, rates on 30-year fixed-rate loans had never been below 4 percent until last year.

The survey showed rates on 15-year fixed-rate mortgages averaging 2.65 percent with an average 0.7 point, down from 2.69 percent last week and 3.31 percent a year ago. That’s also a new record in Freddie Mac records dating to 1991.

For five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.74 percent with an average 0.6 point, up from 2.73 percent last week but down from 2.97 percent a year ago. Rates on five-year ARM loans hit a low in records dating to 2005 of 2.69 percent during the week ending July 19.

Rates on one-year Treasury-indexed ARM loans averaged 2.55 percent with an average 0.3 point, down from 2.59 percent last week and 2.98 percent a year ago. That’s a new low in records dating to 1984.

Applications for mortgage loan applications bounced back last week after being dented by Hurricane Sandy, according to a separate survey by the Mortgage Bankers Association.

That survey showed applications for purchase mortgages were up a seasonally adjusted 11 percent during the week ending Nov. 9 compared to the week before, and up 22 percent from a year ago.

Bond prices and yields move in opposite directions, and increased demand for mortgage-backed securities (MBS) guaranteed by Freddie Mac, Fannie Mae and Ginnie Mae has pushed mortgage rates down.

The Federal Reserve has been one of the biggest purchasers of MBS, in a deliberate move to stimulate the economy by lowering the cost of borrowing.  A first round of “quantitative easing” by the Fed that wrapped up in 2010 helped push mortgage rates below 5 percent. That program involved the purchase of $1.25 trillion in Fannie and Freddie MBS and debt.

A third round of quantitative easing (“QE3”) announced by the Fed on Sept. 13 has boosted its MBS purchases by $40 billion a month. Because of the sluggish pace of the recovery, Fannie Mae economists think that open-ended program could last through all of 2013 and perhaps into 2014, and grow the Fed’s balance sheet by $1 trillion.

Other agents’ tired marketing pitches make it easy to stand out | Waccabuc NY Real Estate

The end of the year is a great time to spiff up your websites and marketing materials, because things can get very busy in the beginning of the year.

After taking inventory of my personal online marketing, I decided that it’s probably doing me more harm than good. Other than some minor tweaks, I have not really changed my personal marketing — “branding,” as some call it — since 2006. And it was not all that great to begin with.

I started by writing a list of ideas that I want to emphasize. When I finished, I got on the Internet and started looking at how other agents market their services. I was looking for inspiration and ideas.

Here is a gem I found on one agent’s website: “I have more local websites than any other agent to feature your home for sale.”

That agent has me beat. Does this agent really believe in her own marketing? Do sellers work with her because of this? Does featuring a home on any website — even one with a lot of traffic — sell it faster? No one really knows because there isn’t any data, just hyperbole.

Most agents offer a “FREE” comparative market analysis (CMA) on their website, but they do not define what that is. I searched everywhere and could not find an agent who charges for a CMA, which makes me kind of cynical about the word “FREE” in all caps, bold print and in bright red.

It’s hard for me to trust someone who offers something for free but nobody charges for it. There are agents who will give buyers a free list of homes that are for sale. Why would anyone pay for a list of homes for sale when they can get the information for free on a zillion websites? Would you even want to work with a buyer who was intrigued by an offer of a free list of homes for sale?

There are several agents who advertise that they are “the No. 1 agent” in a particular market. Sellers almost universally prefer listing with the “No. 1 agent.” The problem is that there can be only one “No. 1,” and it isn’t me.

Or maybe it is, if I look hard enough. How much credibility do we have when we say we are “No. 1?” If I say I am “No. 1,” will I ever have to prove it?

Here’s another common theme in agent marketing: stress reduction. “Sellers, call us for a less stressful transaction.”

The fact that they want to be called causes me stress. I don’t think we are helping when we warn people about how stressful buying and selling real estate can be. We might scare them into renting.

Agent advertising promises: “We promise to make it a smooth ride,” and “We take the stress out of selling.” I have had clients who get stressed out and obsess over problems that exist only in their own minds.

The best I can do for my clients is to be there when they need someone to talk to, and to take care that my actions minimize their stress. I can anticipate and educate, so that they are not caught off guard.

As agents we like to tell our clients that we can control everything and that we can fix everything, but we can’t. I cannot make one of the most stressful experiences in life stress free.

The typical marketing pitch to buyers is similar. We want to take the stress out of the homebuying process.

Generally the process goes fairly smoothly until the buyers make an offer on a home, and then the stress begins. The buyers do not know if the sellers will accept their offer, and neither do I. That alone can cause stress.

With so many agents offering a stress free and smooth experience, you would think homebuying would be stress-free. Yet it is still considered one of life’s biggest stressors.

There are websites that offer “one-stop shopping” for buyers. I am not sure what that means. I sure hope homebuyers do.

When I looked at the “about me” sections on brokerage websites I found different agents with identical biographies. Only the names were changed. Some have for-sale signs or balloons where their face should be.

It would be fairly easy for an agent to stand out on a brokerage website by personalizing the biography and having a current portrait. If 1995 keeps calling because it wants the photo of the agent talking on the phone back, now might be a good time to update that photo with a new headshot.

It wouldn’t be hard for an entire brokerage office to stand out by having each agent create a unique biography. I found a few brokerage and team websites that showed some personality. The agents’ biographies made them more real and likable.

Modern marketing for most industries uses the phrase “customer experience.” The phrase is overused and not well-defined. I am inclined to consider it meaningless, and will keep it out of my marketing materials even though I am an experience that defies description.

My own online personal marketing is a disaster, which means it won’t be hard to improve. It should be easy to distinguish myself in the overcrowded market of real estate agents who take the stress out of homebuying and selling, and who offer free CMAs and lists of homes for sale.

What does your online personal marketing say about you? Would you hire you?

Surprise costs of custom-built homes | Cross River NY Real Estate

Q: My fiancé and I reside in Georgia. He’s been in Afghanistan since January and is due to return in 2013. We are looking to purchase our first home once he returns.

I’m making sure I get my credit report in order and educating myself about the process in the meantime. The area we live in really doesn’t have many new homes, so we are really leaning toward building our own. Can you suggest some resources and things I need to know before deciding to build our dream home?

A: Congratulations on all the momentous life milestones you’re about to experience. You’re wise to get prepared as far in advance as possible and to do some serious research before you proceed down the path of trying to build a custom home.

I’m going to make some assumptions here, including the assumption that what you’re actually contemplating is hiring a contractor to build a custom home for you rather than simply buying a newly built home in a developer’s subdivision.

Personally, I like old and older homes; I like to live in neighborhoods that are more established, and I like the idea that any glitches or flaws in the home will certainly have made themselves known before the time I move in. No home is perfect, but with new homes, the home and the neighborhood often have to settle for a year (or a few) before any problems start to surface.

But to be clear, this is largely a matter of personal preference. There are many advantages to buying new, as well.

Understanding the financial and logistical hurdles

When you buy a resale home or even a new home in a subdivision, you’re generally able to do the basic work of getting your credit and down payment ready, conducting a house hunt, and closing a single mortgage and purchase transaction in one fell swoop.

When you decide to build a new home, you have much more work ahead. You may need to find a lot that is suitable for building the sort of home you like and buy it. You may have to bring utilities to the lot and obtain permits to build on it. You will need to select architects, engineers and contractors to do the work. Finally, you’ll need to have plans drawn up and undergo the building process and all that entails.

You might have to come up with cash out of pocket for the lot, as very few (if any) lenders will lend money to borrowers for a bare lot. Then, unless you have the cash to pay for the build out of pocket, you’ll have to obtain a construction loan, which is a separate transaction that requires the lender to sign off on the plans, and often involves a much larger down payment requirement than a traditional home loan.

Construction loans also require the lender to sign off on your building plans and choice of builder upfront, and to be involved in approving and doling out funds for construction throughout the process. You’ll have to obtain construction insurance, and be prepared to deal with your city building inspectors every step of the way.

I don’t mean to paint an overly negative picture of the work involved with building a custom house from the ground up, just a realistic one. It requires much more time, work, and energy than buying an existing home or a new home in a subdivision, and some would say it’s also more risky.

And that’s a lot for a first-time homeowner to take on.

I would encourage you to ask other folks in your area on Trulia Voices about their experience in building a brand-new home to get a full picture of what the experience is like, warts and all. I also strongly recommend you read the classic book “Building Your Home: An Insider’s Guide, Second Edition” by Carol Smith (Builder Books, 2005) to get a better sense for the complexities involved.

Get clear on if and why you’d rather buy new

Often, people simply like the idea of living in a home that no one else has ever lived in before, or the idea of creating a home layout, design, etc., from scratch, to their personal tastes and needs.

What I’ve found, though, is that the average layperson is less skilled at coming up with good ideas for a home’s design than all the architects, builders, developers and designers who have worked on homes over the years.

Sometimes, custom-built homes end up with well-intentioned but ill-conceived features that make them difficult to resell precisely because they are so heavily customized that the home simply doesn’t work or appeal to many other buyers than the home’s original owners.

Are you absolutely, 100 percent certain that you couldn’t get your wants and needs met with an existing home or a new home in a subdivision already being developed?

If you haven’t already, start house hunting online and start visiting open houses; you might find that a home that has been recently remodeled, or a fixer-upper that is in need of an update, can give you the fresh, customized-home look, feel and features you want, with a fraction of the cost, risk and hassle of building brand-new.

Don’t fall for the myth that it’s cheaper to build

If your primary motivation for wanting to build a new home is the rationale I hear so often that it’s “cheaper to build” from the ground up than to buy an existing home, beware the many pitfalls and fallacies that are often built into this line of thinking.

Is it ever cheaper to build than to buy a home? I’m sure it’s possible. But I often hear people say this who have seen a single, inexpensive lot somewhere, heard an anecdote about a cousin’s cousin who paid $12,000 to build a house, and then add those things up and conclude it’s so much cheaper to build! The reality is that the one lot they saw might not even be buildable, and whoever related the story about their cousin was talking about a treehouse!

Buildable lots, the cost of bringing utilities to them and obtaining the city’s “entitlements” to build on them, the costs of building permits, architect and engineer services, and the margin of error for building cost estimates are all much greater than the average person would estimate. So, don’t let the thought that it might be cheaper to build stop you from exploring other alternatives for owning your dream home.

Take your social strategy to the next level with Learn with Google Hangouts and Webinars | Bedford Real Estate

Over the next few weeks, we’re offering four opportunities to learn more about Google+ for your business. We kick off with a Learn with Google Hangout on Air with bestselling author +Chris Brogan on November 5th at 10am PT / 1pm ET. Chris will cover tactics for successful social marketing and discuss his new book, “Google+ for Business: How Google’s Social Network Changes Everything.” RSVP for the Hangout on the Google+ Event page.


Learn Chris’s recipes for how to grow and engage your Google+ community to build your brand and drive your business’s visibility and conversions. Hear about Chris’s own experiences helping companies succeed in their content marketing and social projects. Chris Brogan is a New York Times bestselling author, CEO of Human Business Works, and advises companies on marketing, business strategy, communications and more.
If you have a question for Chris, leave your question as a comment on the Google+ Event.
Boost your success with Google+
Want to learn more about using Google+ for your business? Sign up for our Learn with Google webinars. Here are some great upcoming webinars to help you get the most out of social for your business:
  • Social that Adds Up: Performance and Measurement (Thurs, Nov 8, 10am PT / 1pm ET)
  • Supercharge your Social Media Initiatives with Video (Wed, Nov 14, 10am PT / 1pm ET)
  • Building a Digital Brand with Google+ (Thurs, Dec 6, 10am PT / 1pm ET)
Posted by the Google Analytics team

Doorsteps: A new generation of buyers are ready to buy a home smarter, better and faster – will you join them? | Pound Ridge Real Estate

A funny thing happened after we launched Doorsteps, an online tool we explicitly designed and marketed to agents. Buyers kept signing up. And not just one or two. Dozens. Then hundreds. Then we lost count.

To be fair, this wasn’t entirely a shock. Doorsteps was conceived as a shared online workspace to help give agents a well-designed way to guide their buyers through the home-buying journey. It’s packed with 100% unbiased, insider information, and lots of smart tools to help their buyers (and potential buyers) make faster, better decisions.

We knew that buyers needed this kind of step-by-step support, and that there were no good places to get a really clear understanding of all the moving pieces. And certainly not in a single place to see it all in context. But what was surprising was how badly they wanted it, even before they had connected with an agent. In a nutshell, they were too impatient to wait to be invited in. They wanted to get going right here, right now.

Looking back, though, it makes perfect sense. Home-buyers are different today than they were even five or ten years ago. This is a generation used to using technology to organize their lives, to connect with others, to make decisions. They expect – and increasingly demand – transparency. And they are surrounded by really well-designed tools they use every single day, whether they are trying to find the right doctor or book a table in a restaurant. So their standards for home-buying went way up even before many of them had bought their first home.

Especially for GenY, who watched their older siblings get pummeled in the housing crisis and don’t want to make the same mistakes. Or even GenX, who last bought a home seven or eight years ago and realize the landscape fundamentally shifted beneath them in the meantime.

Which is why we recently built a buyer-facing version of Doorsteps that would allow any buyer to use the app even before contacting an agent. The best part? The app now actually helps them find the right agent, and they will be way more organized, prepared, and ready to do so when they actually take that step. Pretty soon they’ll be able to find the right lender right within Doorsteps, too. And then the best-of-the-best service providers out there— home insurance, moving companies, you name it.

A New Generation of Homebuyer from Doorsteps on Vimeo.

So it’s a win-win. Buyers get to begin their journey on their own terms, if they choose to. But agents get to step in when those buyers are truly prepared and eager to take the step from curious to committed. Which is why Doorsteps agents are thrilled to connect with buyers who are already in the system, and why it’s such a personal joy for us to be able to enable that connection. It’s not just, “Hey, Jennifer, I saw a listing online that looked sort of nice. Should we meet?”, but more like “Hey, I’m pre-approved, I have clearly articulated my wants and needs, I have a realistic budget in mind, I have a general understanding of which neighborhoods may make the most sense for my life stage and family, and I’d like to move within three months. Should we meet?”.

You can imagine which of those buyers agents have told us they would like to work with more. And, honestly, this is what buyers want, too.

So we’re really excited to announce the launch of two Doorsteps. The agent version, which real estate professionals know and love. And the buyer version, which buyers demanded. And it’s a great lesson for any startup, or any real estate business. Listen. Be nimble. Be open to learn something you weren’t quite expecting. And make sure your welcome mat is as wide as it ought to be.

And even if you don’t use a lot of technology yourself, embody the characteristics that makes using technology so attractive to your clients. Clarity. Openness. Transparency. And for goodness sake, give ‘em what they want. If it happens to also be what they need, all the better.

Don’t let buyers shop new homes without you | Chappaqua NY Real Estate

If you have nothing but resales on your showing schedule, you might want to add a stop by a new homes sales office, just in case. I have the proof.

According to a recent market study commissioned by BHI Inc., homebuyers can be divided into three groups: those who insist on a resale; those who insist on a new home; and those who are indifferent — those who will buy a resale or a new home.

Our qualifying approach to this “indifferent” segment must be anything but indifferent. From our perspective, the indifferent prospect might be the one who, after spending weeks with you looking at resales, decided to wait — then shops new homes without you. Or, he buys a resale and then cancels.

BHI, a consortium of 32 of the largest production homebuilders in America, recently commissioned a marketing study to determine consumer preferences regarding new homes versus existing homes.

In active new-home markets, sales of new homes represent 12 to 15 percent of all residential sales in any given month, when compared to MLS sales for the same period.

According to industry consultants, 60 to 70 percent of all new homes are sold through general real estate agents or co-brokers. Usually the higher priced the home, the greater the percentage of co-broker sales.

BHI is committed to increasing its members’ market share, and is about to roll out a multimillion-dollar campaign to do so, according to CEO Tim Costello.

The study sample structure included 984 completed surveys of prospective homebuyers committed to purchasing a home within the next 12 months, across 25 major markets. Shoppers were at least 25 years old, with a household income of $50,000 or more.

Sixty percent of this group were actively looking for a home and had:

  • Met, spoken to or hired a Realtor.
  • Sought preapproval for a home loan.
  • Visited a model home in a new homes community.
  • Attended a homebuying seminar or had placed their home on the market.

Forty percent had taken the above actions, or had:

  • Regularly looked at home listings online or in the paper.
  • Visited a Realtor and/or homebuilder website.
  • Calculated living costs as a result of a new-home purchase.
  • Attended an open house.
  • Watched a TV show about local homes and real estate for sale.
  • Driven around the neighborhoods looking for homes for sale.
  • We are “considering.”

Here are some highlights from the study:

  • People buy homes for a variety of reasons. However, amenities and features that enhance daily life, increase privacy, and address needs of family and children are at the top of the list.
  • People are citing market conditions, rather than events, as triggers to start looking. Favorable home prices and interest rates are notably more likely to trigger consideration among first-time homebuyers as compared to repeat purchasers.
  • Shoppers are prepared to take their time and most expect to spend between $150,000 and $500,000. Almost two-thirds are unsure about when they will purchase or expect to take at least nine months to make a buying decision.

When people actively search for homes, they go online and they find these two resources most trustworthy:

  • Local real estate listing websites: 34 percent.
  • National real estate listing websites: 27 percent.

When it comes to where they want to buy, most want their homes in the suburbs

  • Suburban area-closer to urban: 54 percent.
  • Outlying suburban area: 20 percent.
  • Heavily populated urban area: 13 percent.
  • Small-town rural: 5 percent.
  • Small town: 5 percent.

People generally prefer existing homes, but many will consider a new home offered by a builder in their search.

When looking for your new home, how strongly will you consider each of the following home choices?

Existing home

  • Will consider existing home: 75 percent.
  • Will consider new (indifferent): 20 percent.
  • Will not consider existing home: 5 percent.

(Comment: If 1 out of 5 of your resale prospects will consider a new home, do you see a need to qualify for “new” as well as “existing”?)

Brand-new home offered by builder

  • Will consider: 49 percent.
  • Will consider resale: 30 percent.
  • Will not consider new home: 21 percent.

Which type of community do you prefer?

  • Established neighborhood of older homes: 33 percent.
  • Existing subdivision of newer homes: 42 percent.
  • New-home communities: 25 percent.

Why do you prefer established neighborhoods/existing subdivisions over new homes?

  • “The neighborhoods have a warmer inviting feel.”
  • “Better constructed.”
  • “Better privacy, homes are not on top of each other and cookie cutter.”
  • “Better pricing.”
  • “Good variety. Established neighborhoods. Good value.”
  • “Prices are more negotiable.”
  • “Houses are still new and may be under warranty, but the neighborhoods will be somewhat established along with landscaping.”

Why do you prefer new-home communities over existing ones?

  • “Ability to make changes to home during construction to suit my needs and desires.”
  • “I like newer home. They are generally more energy efficient and require less upkeep and have lower maintenance costs.”
  • “More modern. More amenities.”
  • “No need for repairs. Less hassle. Able to customize.”

According to the study, “new homes and existing homes are neck and neck on the most important attributes. The majority (69 percent) of shoppers believes there is no difference between the two with regards to safety, and almost half (44 percent) say there is no difference in construction quality.”

Other top concerns regardless of new or existing homes, include floor plans, maintenance expenses, cost per square foot, living space, energy efficiency, architecture/overall design, and larger lot size, in that order.

Existing homes lead for mature landscaping, lot size and sense of community.

BHI asked for beliefs and attitudes that might constrain a visit to a new-home community. Here are some of the comments made by those preferring new-home communities.

  • “You don’t have any existing experience with the community. It’s brand-new to everyone, so any issues that arise you will discover together.”
  • “General not built as well as older homes were.” “Construction may be ongoing, newer communities tend to be more expensive.”
  • “Neighborhood associations are likely to come with newer homes and can restrict individual freedom and impose silly rules.”
  • “No mature landscaping — usually has smaller lots.”

Regardless of segment, new homes dominate for energy efficiency, customization and maintenance costs. There is agreement that new homes offer more living space, but at the expense of yard/lot size.

While less important than other considerations, convenience to work, friends/family and good schools is more important to those who prefer existing homes.

According to the study, those who prefer new homes are more likely to have visited model homes and met with a builder, while those preferring existing homes are more likely to visit an existing home, hire a Realtor, or bid on a property.

There are no differences among the segments for more general behaviors, such as:

  • Visited a Realtor and/or homebuilder website.
  • Calculated living cost.
  • Watched a TV show on local homes and real estate for sale.

In my next column, look for the psychographic results of this compelling study and why new-home buyers tend to be more spiritual and controlling.