Aug. 21, 2017 – For-sale-by-owners (FSBOs) tend to sell their homes for lower prices than homes sold through traditional agents via the MLS, and in many cases below the average differential represented by the prevailing commission rate, according to a new study by Collateral Analytics. The study examined the price differences between homes sold through traditional agents versus those sold by FSBOs from 2016 to the first half of 2017.
Some homeowners attempting to avoid commission costs attempt to sell their home on their own – but that can backfire and turn into a much lower sales price, the study found.
Even successful FSBO sellers achieve prices "significantly below" those from similar properties sold more traditionally via Realtors®, the study found. A FSBO sale, on average, nets nearly a 6 percent lower price than an MLS sale for a similar property, the study found.
Overall, the authors found that the differential in selling prices between FSBOs and MLS sales is "remarkably close to average commission rates."
"Assuming that both buyers and sellers pay the commission, one might have expected something less than this average," the researchers note. "It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale."
Source: "Saving Real Estate Commissions at Any Price," Collateral Analytics Research (Aug. 16, 2017)
After Dallas-area real estate pro Laura Barnett put a listing on the market three weeks ago, it quickly received 22 offers. But Barnett didn't take the highest bid. Instead, she took a cash offer because she wanted to ensure that there were no hang-ups along the way toward closing. Appraisals, she says, aren't keeping up with sales prices, and if the appraisal doesn't match the contracted price, buyers often can't get a mortgage and never make it to settlement.
"They're kind of putting a glass ceiling where we can't raise our prices any higher than we have comps to support it, so we're definitely going with more cash offers than we used to," Barnett, a real estate professional with RE/MAX DFW Associates, told CNBC.
Younger, first-time buyers are feeling the brunt of the competition because they tend to be more mortgage-dependent and use low downpayment loans, which have stricter underwriting standards.
As a result, a first-time buyer may submit the highest bid for a listing, but if the mortgage lender's appraisal comes in even a slight bit under the contract price, the mortgage financing – and the real estate transaction – can fall through.
"Anytime prices move up fast, the actual appraisal process – because they're looking back in history, not forward into the future" can lag behind, says Lawrence Yun, chief economist at the National Association of Realtors® (NAR).
"From the buyer's perspective," says Yun, "it's a tough situation where they want to rely on the value of the home, on the appraisal, yet they know that if they decide to back away, there are other buyers waiting to pounce."
Source: "This House Had 22 Offers. Here's Why the Owners Didn't Take the Highest," CNBC (July 24, 2017)
WASHINGTON (AP) – April 25, 2017 – The Trump administration moved Monday to impose a 20 percent tariff on softwood lumber entering the United States from Canada, escalating an intensifying trade dispute between the two countries.
The president announced the decision during a gathering with conservative media outlets at the White House Monday evening. Trump's initial comments were relayed by four people who were in the room and confirmed by an administration official.
On Twitter, Breitbart News White House correspondent Charlie Spiering quoted Trump as saying, "We're going to be putting a 20 percent tax on softwood lumber coming in – tariff on softwood coming into the United States from Canada."
The Commerce Department later announced it had reached a preliminary determination and would impose countervailing duties ranging from 3 percent to 24 percent on imported softwood lumber, with an average of about 20 percent.
One person in the room said Trump threatened that dairy could be next.
The U.S. and Canada typically enjoy a friendly trading relationship, but things have soured in recent months. Trump has been railing against Canada's decision to change its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for products, including ultra-filtered milk. Trump has called the move "a disgrace" that's hurting U.S. producers in dairy states like Wisconsin.
"It has been a bad week for U.S.-Canada trade relations," said Commerce Secretary Wilbur Ross in a statement. "This is not our idea of a properly functioning Free Trade Agreement."
The Canadian government, meanwhile, rejected the assessment, calling the duty "unfair and punitive."
"The Government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty," said Jim Carr, Canada's Minister of Natural Resources, and Chrystia Freeland, Canada's Minister of Foreign Affairs, in a joint statement. "The accusations are baseless and unfounded."
They warned the action would have a negative impact on American families who will have to pay more to build or renovate homes. And they said they would sue, if necessary.
According to the U.S. Commerce Department, imports of softwood lumber from Canada were valued at an estimated $5.66 billion in 2016.
The math behind your credit score is getting an overhaul, with changes big enough that they might alter the behavior of both cautious spenders as well as riskier borrowers.
Most notably for those with high scores: Abiding by the golden rule of "don't close your credit card accounts" may now hurt your standing. On the other side, those with low scores may benefit from the removal of civil judgments, medical debts and tax liens as factors.
Beyond determining whether someone gets approved for a credit card, a credit score can affect what interest rate and what spending limit are offered.
The new method is being implemented later this year by VantageScore, a company created by the credit bureaus Experian, TransUnion and Equifax. It's not as well-known as Fair Isaac Corp., whose FICO score is used for the vast majority of mortgages. But VantageScore handled 8 billion account applications last year, so if you applied for a credit card, that score was likely used to approve or deny you.
Using what's known as trended data is the biggest change. The phrase means credit scores will take into account the trajectory of a borrower's debts on a month-to-month basis. So a person who is paying down debt is now likely to be scored better than a person who is making minimum monthly payments but has been slowly accumulating credit card debt.
"This is a really big deal," said John Ulzheimer, an expert in credit reports and credit scoring. Ulzheimer said taking trended data into account has long been considered by the credit score industry, but hasn't been implemented on a meaningful scale. He expects more lenders to adopt it.
People with high credit scores may be affected the most, since the goal of trended data is to see warning signs long before a borrower actually gets into serious trouble.
"When it comes to prime borrowers, you may not have bad behavior on your credit file, but a trajectory provides very powerful information," said Sarah Davies, senior vice president for research, analytics and product development at VantageScore.
The change also shakes up the maxim that had people keeping open accounts they'd opened long ago. An important metric in calculating credit scores has been the portion of their available credit people are actually using. A person with $5,000 in credit card debt with a $50,000 limit across several cards could score better than someone with $2,000 in debt on a $10,000 limit because of that ratio.
But VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly. Those who have prime credit scores may be hurt the most, since they are most likely to have multiple cards open. But those who like to play the credit card rewards program points game could be affected as well.
Taking civil judgments, medical debts and tax liens out of the equation comes after a 2015 agreement between the three credit bureaus and 31 state attorneys general. The argument was that civil judgments and tax liens – which can significantly hurt a person's credit score – were often full of errors. Medical debt was being reported on a person's credit report before there was time for insurance to reimburse.
People with those items on their credit reports now could see a bump of as much as 20 points. But it won't help much if they also have negative marks like delinquencies and debts that have gone to collection.
Mortgages, though, won't be affected. The government-owned mortgage companies Fannie Mae and Freddie Mac require a FICO score for eligibility. Because of their outsized influence on the market, few mortgage lenders use VantageScore.
Millennials often get all the attention, but members of Generation X are really the ones driving the housing market lately. Gen Xers – adults between the ages of 37 and 51 – make up the second largest share of home buyers, comprising 28 percent in 2016, according to data from the National Association of Realtors® (NAR).
They're also buying the largest, most expensive homes compared to any other generation.
The median price of homes purchased by Gen X buyers is $261,000, and the median size of the homes is 2,100 square feet, according to NAR. Further, Gen Xers boast a median household income of $106,600 – higher than any other generation.
Some Gen Xers are drawn to previously owned homes for their charm and character, while others prefer new homes so they can customize design features, NAR data shows. Gen X buyers are also the most likely to purchase a home in neighborhoods that are convenient to schools.
But they're also willing to compromise: 21 percent of Gen Xers indicate a willingness to make concessions on the condition of a home, more than any other generation.
The largest share of sellers are also members of Gen X (29 percent), according to NAR. They're selling homes at a median price of $240,000. One in five Gen X sellers say they wanted to sell earlier but couldn't because their home had been worth less than their mortgage. On average, Gen X sellers purchased their home 10 years ago.
Other findings about Gen X home buyers
They tend to have the largest families: 62 percent have at least one child under the age of 18 years old living at home; 30 percent have two children.
68 percent are married couples, more than any other generation.
Primary reasons to purchase a home: A desire for a larger home, job-related relocation or a change in family situation.
Median age: 43 years old.
They have the largest number of single-family home purchasers: 87 percent.
They're the most racially and ethnically diverse group of home buyers (21 percent identify their race as other than white/Caucasian) and have the highest percentage of non-English speakers.
Source: "Generation X: Buying the Biggest Homes and Biggest Home Sellers," National Association of Realtors Economists' Outlook blog (April 14, 2017)
The Federal Reserve is finally taking more action to raise its short-term rates. Last week, it voted to raise the Fed funds rate by 25 basis points. That is expected to add pressure to mortgage rates, too. Many housing analysts fear that rising mortgage rates could further impact home affordability and lead home buyers to pause.
However, Rick Sharga, executive vice president of Ten-X and former senior vice president at RealtyTrac, disagrees. He thinks the rise in mortgage rates could prove to be a good thing for the housing market.
He argues that it will cause buyers to get off the fence faster and move into the market sooner – before rates go any higher. He expects that to help increase home sales in 2017.
Sharga also believes higher rates will cause lenders to loosen some of the tight underwriting standards that have plagued the housing market the last few years and prevented many would-be borrowers from moving forward.
"This will happen partly just due to higher mortgage interest rates, which will provide a bit of a cushion for lenders to take on a little more risk," Sharga writes in a recent column. "And higher rates will also drastically reduce the number of refinance loans being issued, which lenders will try to offset by doing more purchase loans."
Sharga thinks the Fed's recent 25-basis-point hike may not actually have a big an impact on mortgage rates.
"The 25-basis-point hike was well within the range that most industry analysts had expected, which means it's possible that this hike won't cause mortgage rates to rise significantly from current levels, which are already the highest they've been in years," Sharga notes.
Source: "Why Rising Federal Funds Rate Might Be Good for the Housing Market," HousingWire (March 16, 2017)