Seven Real Estate Trends to Watch For in 2015

2014 marked the best year in economic recovery since the recession, according to the Bureau of Labor Statistics. This means that there may be more opportunities for home ownership in 2015. The economic improvement indicates that the housing market is expected to see gradual growth in home prices and inventory, however increasing mortgage rates and strict lending standards may still put home ownership on hold for some. Real estate experts share their 2015 housing market predictions below, and offer insight on the current market, where it’s headed, and how it will impact buyers and sellers in the coming year.

1) Strict lending standards and rising interest rates may prevent Millennial homebuyers.

Despite a steadily growing economy, mortgage qualifications aren’t expected to relax in the upcoming year. While interest rates hovered around 4% in 2014, chief economists at Freddie Mac anticipate rates to surpass 5% by the end of 2015 due to the rebounding economy. Millennials, aged 18 to 24, may struggle to qualify for traditional financing due to lack of established credit and down payment resources.

Bennie Waller, professor of finance and real estate at Longwood University, adds, “Compounding the difficulties for buyers is the rapidly increasing student loan and credit debt debacle that looms over the economy. This will severely limit the purchasing ability for first-time homebuyers and low to mid-income homebuyers.”

FULL ARTICLE

by; Bennie D. Waller, PhD

Homeowner inspections are incredibly important, however most states have very limited requirements as to what qualifies as a home inspector.

In Virginia, there are NO requirements. If you put forth yourself as a home inspector, then you are.  This is incredibly problematic if you are involved in a dual agency.

If you are looking to buy a home in Virginia, please contact or visit the DPOR  website for a list of licensed (competent) home inspectors.

Who really benefits from a real estate dual-agent?

by Ray Akers, columnist

Buying a home through the listing agent sets up a dual-agency situation. A dual-agency can occur with two agents when both are working for the same real estate brokerage. A dual-agency can also occur when a single agent represents the seller and the buyer, as in the scenario you suggest.

A potential buyer who isn’t working with a buyer’s agent may request the seller’s agent to prepare and submit a purchase offer on their behalf. The agent will act as a dual agent. For obvious reasons, this creates a conflict of interest.

Dual-agency requires the agent to treat both the buyer and the seller honestly and fairly. The dual agent must divide his or her loyalties between two parties with divergent interests — sort of like a divorce attorney representing both husband and wife in a divorce.

Some agents will tell you dual-agency is more efficient and effective. Having just one agent as point-of-contact can expedite a sale. Obviously, the real estate dual-agent has a lot to gain from the transaction: The seller typically pays 5 to 6 percent of the sale price as commission, which is split between the listing broker and selling broker. Clearly, some agents will be motivated to represent both sides of the transaction and earn the entire commission.

In a dual-agency scenario, there is a concern the agent might encourage the seller to accept a lower price for a home to get the double commission. From the buyer’s perspective, a dual-agent is not allowed to reveal the seller’s “bottom-line” price, so you will never know if you got the best price. The dual agent is placed in a precarious position, attempting to balance the interests of the buyer, the seller and their own interest in a transaction. It’s unlikely the interests of all three parties will converge. Frankly, it’s probably impossible.

What studies show

Many states allow dual-agency relationships, in which the agent represents and has a fiduciary duty to both the buyer and seller. Washington state allows dual-agency.

From “The Law Of Real Estate Agency” pamphlet, “Duties of a Dual Agent: Notwithstanding any other provision of this chapter, a licensee may act as a dual agent only with the written consent of both parties to the transaction.”

Licensees are expressly advised “to take no action that is adverse or detrimental to either party’s interest in a transaction” and “not to disclose any confidential information from or about either party, except under subpoena or court order, even after the termination of the agency relationship.”

Dual agency can increase or reduce a home’s sale price, depending on the timing, says Bennie Waller, professor of finance and real estate at Longwood University in Virginia, who studied dual-agency in home sales.

Researchers analyzed sales in which one agent represented both buyer and seller. According to the Journal of Real Estate Research (June 2013), the study found:

•Dual-agency sales in the first 30 days of a listing were 18 percent higher, benefiting the seller.

•Dual-agency sales in the last 30-days of a listing were 6 percent lower, benefiting the buyer.

•Overall, dual-agency reduces a home’s sale price by 1.7 percent.

•Dual-agency sales are 55.1-percent quicker than non-dual-agency sales.

•About 32 percent of all transactions are dual-agency transactions.

Paying extra?

In our tight housing market, with buyers facing bidding-wars, some buyers are incentivizing agents by offering them the opportunity to represent them as well as the seller. Buyers presume that this will motivate the agent to promote their offer. However, there is recent data that shows a buyer pays about $5,000 extra when buying a home with a dual-agent.

While a dual-agency arrangement may appear to give a buyer the edge in some circumstances, I advise a homebuyer to avoid dual-agency if at all possible. Dual-agency jeopardizes the rights of the buyer and the seller, and few agents are skilled enough to manage a dual-agency transaction without favoring one party over another.

My advice: Don’t try to become a real estate expert; hire one instead. Ask friends and family members for a referral to an agent with whom they’ve had a good experience. Having a skilled agent working for you will result in a better outcome.

Are Foreclosures Still a Threat in Today’s Market?

Dr. Scott Wentland discusses foreclosure paper written by co-authors Xun Bian, Bennie D. Waller and Geoffrey K Turnbull.

We’ve heard so much about foreclosures in the news, especially during the mortgage/credit crisis, but are foreclosures still impacting our markets today? The short answer is…Yes! Some areas more than others, but regardless of where you live, a foreclosure in your neighborhood will impact the resale value of your home and maybe even the perception of your entire neighborhood!

Join me as my guest, Scott Wentland, Professor of Economics at Longwood University and I discuss their present University research into “How foreclosures affect us all.”

Some of the items we will be discussing include:

• How did we get into this mess?
• What really is a housing bubble or economic bubble?
• Should I buy a foreclosure?
• There is a foreclosure in my neighborhood, should I list my home for sale now or wait?
• And much, much more!

Listen to entire broadcast here

Submitted by Aaron Crowe on November 03, 2014

Jumbo mortgage rates are at 25-year lows , beating interest rates on traditional, conforming loans. At first glance, that doesn’t make sense because jumbo loans are for expensive homes.

Why would a bank give a lower loan rate to someone who wants to buy an expensive home? If they can afford a higher priced home, can’t they afford a higher loan rate? Why help the rich get richer?

The answer is simple economics, along with some greed to attract more wealthy clients.

“The rates on jumbo loans are a symptom of the overall credit markets,” says Bennie Waller, a professor of finance and real estate at Longwood University in Farmville, VA. “Lenders are very conservative in the lower- and middle-priced home markets. Such borrowers need a high credit score and an above average amount of capital. That is, lenders are focusing on the most highly qualified borrowers.”

Full story

Avoid these costly home loan pitfalls

A mortgage is the biggest debt most of us will ever carry, and a home is the most expensive purchase we will ever make.

That’s why it’s so important to avoid pitfalls like letting the bank decide how much house you can afford or failing to check your credit before you try to buy.

These mistakes can cause you to pay more than you need to, prevent your loan from closing or even lead to foreclosure and bankruptcy.

Don’t let the unfamiliarity and enormity of taking out a home loan scare you.

People make smart mortgage choices every day. They get home loans with great interest rates, low fees and predictable, fixed monthly payments, and they make a budget ahead of time and think about their long-term plans so they don’t get in over their heads.

Our guide to the mortgage mistakes you should avoid will turn you into a savvy borrower so that owning your home will be a joy, not a burden, and will help you achieve long-term financial security.

By Amy Fontinelle Interest.com contributing editor

Full article here

by Aaron Crowe on October 07, 2014

Small business owners and the self-employed who have difficulty being approved for a traditional home mortgage because they can’t provide pay stubs or tax returns to show their income are getting some relief.

Stated income loans are being offered by companies such as Unity West Lending and Westport Mortgage, according to a Reuters story, giving such borrowers a chance to buy properties that they could rent out. Also called “liar loans” before the housing bust, the loans have gotten a bad rap because some borrowers produced fake bank statements or at least “fudged” their income to buy houses they couldn’t afford.

Instead of having to provide tax returns or pay stubs, stated income loans require demonstrating an ability to repay through verifiable bank or brokerage statements and enough assets to make six to 12 months of payments.

Still, the loans have a place in the lending environment, mainly self-employed people just starting out and small business owners with startups, says Bennie Waller, a professor of finance and real estate at Longwood University in Farmville, VA.

“However, lenders may be venturing down a road that was a contributing problem to the housing crisis,” Waller says.

See full story here

REPOSTED FROM http://www.huffingtonpost.com/realtorcom/

A bad landlord can make even the best apartment feel like a trap. If issues progress past the point where you can have a rational discussion and you stand to lose money, you might consider suing your landlord.

If you do decide to pursue legal remedy, there are a few things you should know before — and after — you serve your landlord.

Weigh Your Options Before Suing Your Landlord

There’s no point in suing your landlord for a few hundred bucks when court and attorney fees could cost thousands. Weigh the return on investment before you hire a lawyer.

Bennie Waller, a landlord and real estate professor at Longwood University, found out the hard way back when he was in college.

“I was younger and trying to prove a point,” says Waller.

While his attorney told him he would win the case, the cost to hire a lawyer would have been more than the amount he was suing for, so he dropped it.

“Sometimes you just have to swallow your pride, take it and move on,” Waller adds.

Come to Court Prepared

According to Waller, tenants have a hard time winning most cases, because they don’t have the right documentation.

“Make sure that you have all communications with the landlord in terms of the issue,” says Waller.

Use emails and certified mail rather than phone calls when talking to your landlord about problems. If you have witnesses to bolster your case, bring them as well.

Be sure to document any pre-existing damages on the property. Even if a hole in the floor isn’t related to the issue you’re suing for, an unscrupulous landlord could try to place the blame on you.

“Landlords hate to return deposits,” Waller notes. “They hate it. So if there’s an opportunity to take advantage, they’ll take it.”

If you have evidence of damage prior to your arrival at the property, be sure to bring it.

Taking Your Landlord to Court

The amount you’re suing for will determine which court you’ll go to, but in most cases you’ll wind up in small claims court. Rules and compensation limits for small claims court vary by state, so ask your small claims clerk about local fees and rules.

Keep in mind these fees can be several hundred dollars.

“Generally, the individual doesn’t have the capital or the general wherewithal of a landlord,” says Waller. “Many times a landlord can thread out a poorer tenant with fees.”

Chances are your landlord has a lawyer, especially if they manage multiple properties. However, landlords who manage only one or two homes may not.

Know Your Rights When Suing Your Landlord

If there are clauses that can cost you money, like mandatory cleaning, they will be in the lease. Likewise, your landlord can’t surprise you with rules not in the lease.

Check your state’s tenant’s rights laws if you feel your landlord is overstepping boundaries.

While things may be tense, your landlord can’t evict you without proper cause and an eviction notice while you are on the lease.

Check the lease for other stipulations — for example, if you waived your right for a notice to vacate, your landlord doesn’t have to give you prior notice before suing you for eviction.

Not all disputes have to end in court.

First, talk to your landlord. The landlord may be willing to settle.

If not, you may be able to arrange for arbitration, which is cheaper than going to court.

Real Estate is an increasingly complex, highly competitive, and fast-paced industry, and tomorrow’s professionals require advanced knowledge and training to excel in this field. Graduate studies in real estate are in demand more than ever because an MBA in real estate can open doors to greater job and career opportunities. Developed especially for working real estate professionals, Longwood University’s NEW online MBA in real estate will take you to the next level!

Join me today as my guests, Abigail O’Connor, Asst. Dean and MBA Director of Longwood University, Dr. Bennie Waller, Professor of Finance and Real Estate, and I discuss this NEW exciting online experience. Talent is becoming a key concern for commercial real estate executives and boards—according to Deloittes’ 2014 Commercial Real Estate Outlook. Students with an MBA in real estate will be ready to become leaders in this field.

The program, designed for both residential and commercial professionals, will carry a core curriculum in accounting, finance, economics, and development along with real estate courses such as advanced real estate appraisal, real estate finance and development, real estate law and taxation, commercial real estate, and decision making within the legal and ethical environment.

Listen to show here

10 Cheapest States for Mortgage Rates

By Christina Lavingia

What Affects Regional Mortgage Rates

Several factors work in tandem to drive mortgage rate changes. On the national level, the prime rate, LIBOR, bond yields, inflation and mortgage-backed securities all affect interest rates. Regionally, factors like borrower demand, local property values, default rates, loan concentration and unemployment can play a part in mortgage rate variation, as well.

So where is the cheapest place to take out a loan? Of the 10 best states for affordable mortgage rates, six are located in the Northeast. Conversely, six of the 10 worst states for mortgage rates are located in the Midwest and Northwest.

These trends could be somewhat attributed to the local housing markets, specifically local home prices, according to David Donhoff, a certified mortgage planner.

“In the Midwest where loan amounts are small, rates are forced to be higher simply to cover the transaction costs in the rebate and yield of the rates offered,” Donhoff said. “On the coasts the loan sizes are larger, and that also creates more competition, so the two factors together drive average rates lower.”

Local mortgage rates are also largely dictated by the principle of supply and demand. If a region’s economy is struggling and the unemployment rate is high, people will be less likely to be buying houses, forcing rates to fall to entice borrowers. Likewise, if housing demand is high thanks to local job growth and a strengthening economy, buyer demand will increase, allowing rates to do the same.

Variations in risk can also affect the rates consumers are offered.

“Mortgage rates are largely driven by risk,” said Bennie D. Waller, Ph.D, professor of finance and real estate at Longwood University. “That is, areas with a higher risk of default will command a higher mortgage rate. Much like we saw different areas of the country encounter varying degrees of housing default in the 2007-2008 housing crisis, different areas will also have varying degrees of credit risk.”

Read more: The Cheapest States for Affordable Mortgage Rates | GOBankingRates
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