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Where Does That Inspection Report Go?

Lee Warren (NMLS 0536180) – Prospect Inspectors,  CCAR Affiliate Committee Member 

After an inspection is performed, often times the inspector will go over the findings with the potential buyer to let them know about all of the deficiencies that the inspector observed during the course of the inspection.

By rule, the inspector must have the report sent to the client no later than 72 hours after the inspection, unless otherwise agreed to in writing. In most cases, the agent or broker who represents the buyer would like a copy of the inspection report sent to them as well. The inspector is only allowed to send the report to the client, as they are the ones who own the report.

If the buyer’s agent would like a copy of the report, the buyer must give their permission in order for the inspector to do so. It is a good idea to inform the buyer to ask the inspector to send them a copy of the inspection report at the time of the inspection. This will help ensure that the inspector obtains the permission from the buyer to do so, and that the agent gets the report at the same time the buyer does.

In most situations, it is a good idea for the buyer to allow the inspector to send the agent the report. However, there are some situations where that may not be a good idea. One situation in particular is when the agent represents the buyer and seller. It would be best, in that scenario, for the buyer to send the report to the agent themselves, if they choose to do so.

The issue is that if an agent represents a buyer and a seller, they are not allowed to give advice to either party in the transaction. Further, if the agent gets a copy of the report, they are now aware of material defects in the property.  Being that they also represent the seller, that information should be conveyed to them as well. If the seller is aware of the material defects to a property, then they should modify the Seller’s Disclosure to reflect the known issues.

Good News: Cash Buyers Are NOT your Only Option for Distressed Properties

Dawn Ferreiro (NMLS 1048123), Great Western Home Loans,  Member of CCAR’s REALTOR®/Lender Committee

Unfortunately, distressed or extremely outdated properties are a common conundrum in the real estate industry. Often times when this occurs the sellers believe their only option is finding a cash buyer. What if there was another way to market these properties on the MLS? What if there was a way that the property could receive multiple offers rather than the traditionally low-ball cash offer? Good news, there is!

Positioning the listing on the MLS under “Proposed Financing” as eligible for FHA 203K financing or Conventional HomeStyle Renovation financing is a great way to open the property up to a wider audience of potential buyers.

Providing architectural renderings at open houses showing the property as upgraded along with information on rehabilitation loan products is a great marketing tactic and can spur the potential buyers to see a property’s potential. Many times, the property just need a little TLC and many families are eager to customize and love their newly and specifically renovated home.

Homes with foundation issues, handy man specials, corporate or bank-owned properties, short sales, foreclosures, and just generally unloved homes are just diamonds in the rough, and statistically speaking 83% of buyers would like to change the house they are forced to buy because of limited inventory.

These rehabilitation loans are a win/win for all involved.

Please keep the following in mind regarding these products:
  • Typically, rehabilitation loans will require a longer closing.
  • Self-help is not allowed and the contractor cannot employ the borrower. Contractors must have sufficient liability coverage for the project (check with your lender regarding minimum coverage).
  • Contractor bids must itemize and describe all work along with separate line items for labor and materials, permit fees must be included as well.
  • A HUD consultant is required in many instances (consult your lender as this requirement depends on the scope of the project). The main purpose of a HUD Consultant is to advise the client (buyer) of repairs that are necessary to bring the property to minimum property standards.
  • Appraisers will be provided the contractor’s bid in order to deliver a report with an “after-improved” value (changing out the color of tile or upgrading carpet, etc. will generally not result in the sought after “after-improved” value, the change would need to be considered a true upgrade for an outdated home or updates for items in disrepair).
  • Investment properties allowed with the HomeStyle Renovation Program. However, flips are not allowed so it would be for investors wanting to keep the property as a rental.


Government Affairs and TREPAC May 4 Municipal Candidate Interviews

Each election cycle, CCAR conducts candidate interviews for political offices in order to better understand the ideas and visions for when the candidates become elected to public office. TREPAC then may choose to support the candidate who champions private property rights and upholds our REALTOR® members’ values. In order to ensure transparency and participation from our members, CCAR invites you to join the Government Affairs and TREPAC Committees during these interviews by observing them. The schedule of interviews follows:

Allen February 28 12:30-3 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Frisco February 28 3-6 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
McKinney March 1 9-11:30 a.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Plano March 1 11:30 a.m.-5:30 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Prosper March 4 11 a.m.-2:30 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Wylie March 4 2:30-4:15 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Celina March 4 4:15-6 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Anna March 5 9 a.m.-1:45 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Princeton March 5 1:45-4:30 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Little Elm March 5 4:30-6 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024

Note, these interviews are confidential and nothing discussed inside the room or during the interviews may be shared. Therefore, you will be required to sign a confidentiality agreement, among other disclosures, if you plan on attending. Further, you may only attend if you RSVP to Adam Majorie, Chief Advocacy Officer, at [email protected]

*Schedule is subject to change, email [email protected] to confirm times.

Collin County’s Market is Becoming More Favorable for Buyers

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports home buyers are finding themselves in a more attractive market in 2019, with more homes to choose from, a higher ability to qualify for financing, and negotiable sellers.

The year began with 8.4% more new listings than the year prior. Listings remained on the market for 18.9% longer in January 2019, as compared to January 2018; remaining active for 63 days, the longest reported Days on Market since February 2013. This combination created a market with 31% more inventory in January 2019 than January 2018.

Buyers were more easily able to qualify for the median priced home in January 2019 than they were in the previous 11 months of 2018. The Housing Affordability Index in January 2019 was 113, indicating that the median household income is 113% of what is necessary to qualify for the median-priced home under prevailing interest rates. Additionally, sellers continued to be negotiable, on average accepting 5.3% less than their original listing price.

However, despite an increase in favorable buying conditions, January 2019 had only 2,528 projected closed sales, the lowest projected closed sales reported since January 2015. Listings under contract also showed a slowing in real estate activity from the year prior, with 9.3% fewer listings under contract than in January 2018.

“Buyers are beginning the New Year timid and curious which direction the market will trend,” explains CCAR President David Alan Cox.

Their curiosity is not misplaced, in January 2019 there was a 40% increase in months of inventory (2.8 months), as compared to the same time the year prior. While a bold movement towards a more balanced market, Collin County is still a seller’s market, and will only reach a “balanced market” when inventory hits six months.

With a continued increase in both median sales price (+1.6%) as well as average sales price (+1.2%) from January 2018, Cox reminds, “Patient sellers are stilling reaping rewards. Homes are selling for more money than they would have one year ago, but it is important sellers remain patient.”

Soon, we will be in spring, traditionally some of the hottest months of real estate and what is hoped to be a welcomed warm-up from winter’s chillier sales pace.

REALTOR® Day at the Capitol

Have you been hearing all the buzz and excitement about REALTOR® Day at the Capitol? Are you curious what the big deal is?

We sat down with Adam Majorie, CCAR Chief Advocacy Officer, to discuss the special day and why it is so important.

Question: What happens at REALTOR® Day at the Capitol?

Majorie: “REALTOR® Day at the Capitol occurs every Texas legislature (once every two years); it is an expression of our grassroots strength to our legislative members and demonstrates the power of the REALTOR® voice. It is an important grassroots lobby tool that ensures that our elected officials in Austin, while in Austin, truly hear our local advocacy from across the state, particularly that of Collin County’s.

This year, CCAR will be bringing four buses full of our membership to the Capitol for REALTOR® Day. While the day’s agenda has not been fully finalized, it will include the following: An early departure from CCAR the morning of March 26, arrival at the Texas Capitol around 9 a.m., listening to both the House and Senate read the REALTOR® Day resolutions from the chambers’ floors, lunch at TAR across the street, and then back to the capitol building for elected official introductions and meet-and-greets. After a full day, we will go back on the buses to head home, arriving back at CCAR at approximately 7:30 p.m.

Because CCAR has strong connections with our elected officials, our elected official delegation will be meeting with all of the CCAR attendees in an already reserved committee room (this is in lieu of cramming into the elected officials’ small office rooms). When we meet with our elected officials, we will discuss important public policy positions including property tax reform, school finance reform, HOA regulation, and annexation among other important home ownership and property rights policy.

Texas REALTORS® belong to the most influential trade association in the state for public policy and political advocacy. So, if you are a political junkie, want to get more involved, or just want a fun day trip to Austin, the REALTOR® Day at the Capitol is for you.”

Question: Who should attend REALTOR® Day at the Capitol?

Majorie: “Any member of CCAR is welcome and encouraged to come! We are promoting our association’s positions on public policy regarding home ownership and private property rights.  Further, it is our local membership who are most affected by the outcomes, therefore, all membership is highly encouraged to attend.”

Question: Why is this event important?

Majorie: “REALTOR® Day at the Capitol is important because it is an expression of the REALTOR® strength across the state. The elected officials with whom our membership will meet want to hear from their local real estate professionals regarding what they think about current legislation and how they should vote. Our elected officials want to hear from our CCAR membership, not from a lobbyist in Austin, as to what legislation and policies regarding private property rights and home ownership they should support. We are the voice of real estate and the REALTOR® Day at the Capitol is our exercise of grassroots prowess in government affairs and TREPAC.”

Question: If a real estate professional is not familiar with what policies and legislation effects them, where can they look?

Majorie: “To learn more about Texas REALTOR® public policy positions, click here.  If you have questions regarding any of the positions, reach out to me via email at [email protected]. See you in Austin!”

Are you ready to reserve your spot on the bus? Registration is open now! Please register and select your bus here: www.ccar.net/calendar/2019-03-26.

When to Advise Clients to Look Beyond the Mortgage Rate

By Jake Perry (NMLS 231682), Fairway Independent Mortgage Corporation, Member of CCAR’s REALTOR®/Lender Committee

Mortgage interest rates and rate changes are a huge topic of conversation with consumers who are actively looking for a new home, as well as those considering looking for a home. The rate on a mortgage loan impacts monthly payment, but is it the most important item in choosing the right mortgage? Are there borrower strategies we can use that can have a bigger financial impact than rate?

“Rates were this much higher back then,” is a common refrain among REALTORS® and Lenders, and it is true that historically today’s rates are lower than in the past. The 40-year average of interest rates is in the mid 7% range. And, in the early 1980’s, mortgage rates were above 10% into the teens.

However, since the 2008 mortgage meltdown and real estate downturn, the Federal Reserve lowered the federal funds rate, which in turn lowered mortgage rates. Rates dropped and stayed low until 2017. Since then, rates have trended upwards. Within the most recent weeks, the Fed has commented that they may not continue raising the fed rate. This change in the fed stance has brought rates down slightly.

With the constantly changing landscape of interest rates, what is the best advice we can give our clients? Are there other strategies and programs borrowers should be aware of relevant to rates?

Why is rate so important to clients when there are so many more factors that go in to the mortgage?

The answer is that for many consumers, rates have become the go-to measure of the total quality of a mortgage. Nothing could be further from the truth. Although rate is important, correctly qualifying, executing on required time lines, and customizing mortgage strategies that fit the borrower’s long and short term needs is far more important.

As real estate professionals, we have a fiduciary and ethical responsibility to educate clients on the rate topic and differences in mortgage lenders.

The mortgage process is more complex and detailed than many consumers realize. Hundreds of items related to a borrower’s income, credit, assets and property are checked. Professional loan officers then take this information combined with a borrower’s short and long term goals and customize a loan option specific to them. Borrowers often fail to realize that every single mortgage is different and that a mortgage can be customized to their exact situation. Unfortunately, some lenders also incorrectly qualify a consumer, and a borrower going under contract after being incorrectly qualified can cost thousands of dollars immediately due to loss of earnest money and other expenses. Furthermore, purchase contracts dictate specific timelines that must be met. If these timelines are not met by the buyer’s lender, it can lead to losses for the buyer.

Customizing a mortgage strategy specific to the client is crucial part of the mortgage process.

Professional loan officers should listen and dialogue in order to identify the borrower’s goals, hopes and dreams. If a life event is going to happen, what is the best mortgage strategy to fit the client’s needs? These strategies can include lender-paid closing costs, an adjustable rate mortgage, lender-paid mortgage insurance, and the seller buy down strategy.

A borrower that is going to be in the house for a shorter period of time may want to consider lender-paid closing costs and taking a higher rate, because of the time horizon the borrower has the home, a higher rate and lower costs can be less expensive.

ARM- Adjustable Rate Mortgages, these mortgages have a stigma from the 2000’s as being a bad deal for the client. However, the modern ARM loan is not the same as the 2000’s version. Modern ARM’s don’t have prepayment penalties and have longer fixed rates. Their rates can be lower than fixed. If a borrower is sure that they will have the loan shorter than the ARM period, it can be a good choice.

Lender paid mortgage insurance or no PMI loans can be a good option for someone wanting the lowest possible payment, and may not be in the home for a long time period.

A long term strategy is the seller buy down strategy. In this strategy a seller pays for the buyer’s rate buy down to the lowest possible rate. The monthly payment with this strategy can be much lower than it would be in the sales price were reduced. This strategy can save the borrower in short and long term.

What does this all mean and what is the best fiduciary advice we can give clients?

We know that many consumers have been told that rates are the only factor that matters. REALTORS® and Lenders must educate borrowers that choosing a Lender is more than just choosing a rate. Rate does not equate to best! Our dictate is to question our borrowers on their hopes, dreams and goals, then make them aware of other important factors in a mortgage. A professional mortgage planner will then customize an approach specific their goals. This educating professional approach leads to better borrower experience, financial benefits, and in turn additional referral opportunities for the REALTOR® and Lender.

The CCAR REALTOR®/Lender Committee meets the second Tuesday of every month immediately following the Plano Business Development Meeting (approximately 1 p.m.). We invite you to join us at an upcoming meeting.

For these and other questions about lending, contact the REALTOR®/Lender Committee at [email protected].

Sellers More Negotiable on Price: Imperative Buyers Hire Agents Equipped to Handle Changing Market

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that sellers were more motivated to sell and negotiate in December than the area has experienced since 2013. On average, sellers accepted 5.1% less than their original listing price in December 2018.

Despite sellers’ willingness to negotiate on sales price, accompanying stats indicate Collin County remains a seller’s market. A market is considered balanced when there is six months of housing supply; Collin County reverted below three months of supply to 2.7 in December.

Additionally, sellers continue to enjoy increased returns on their investment, as median sales prices continue to rise. The median sales price in December was $309,907, a 2.5% increase from $302,375 reported in December 2017.

However, the good news is not limited to home sellers. The Housing Affordability Index increased to 105 in December, signifying that the median household income is 105 percent of what is necessary to qualify for the median-priced home under prevailing interest rates. This is a surprising rebound after two months of record breaking low index numbers.

Home buyers not only found themselves more financially qualified to buy a home in December, they had more to choose from. December 2018 had 26.1% more inventory than the year prior, with 10,763 properties actively on the market at the close of the month. This is a result of an increase in new listings (+3.5%), a decrease in listings under contract (-4.5%), and an increase in days that homes remained on the market (+15.4%).

David Alan Cox, CCAR President, emphasizes the crucial role real estate professionals have in this unusual climate. “We are starting off the year in a unique situation. We have more homes on the market, highly qualified buyers, and sellers who a more motivated to negotiate than we have seen in over five years,” notes Cox. “Clients are depending heavily on the expertise of their agent during their transactions. Now, more than ever, it is imperative buyers and sellers are represented by a Realtor who is educated on market values, engaged with their clients’ wants and needs, and ready to negotiate and protect their clients’ best interest.”

A New Year With New Challenges: A Lender’s Look at The Year Ahead

By Alexandra Swan (NMLS 117371), Willowbend Mortgage, Member of CCAR’s REALTOR®/Lender Committee

Happy New Year!  It’s hard to believe that the holidays have come and gone and a new year is upon us.

Both the REALTOR® and Lender communities experienced challenges in 2018, and as we roll into January those challenges will continue. The FED is expected to raise rates at least a couple more times in 2019, although they signaled in December that there might be fewer rate hikes than previously expected. Those rate hikes do not directly affect the mortgage rates, however they do affect the cost of other loans and the interest paid on everything from cars to auto loans. Higher interest rates mean that consumers are generally paying more to borrow money, which leaves less money for other expenditures—such as housing. We are also expecting higher mortgage interest rates in 2019 which will directly impact monthly mortgage payments and the amount of house that borrowers can afford.

As rates continue to rise, we are going to see markets continue to soften. Most experts believe that we are transitioning into a buyer’s market in 2019. That will create special challenges for a new generation of real estate professionals and loan originators who have never worked in a more balanced market.

On a brighter note, we are entering 2019 with a 6.9% increase for the new conforming loan limit for all of Texas. The new conforming loan limit of $484,350 for a single-family residence means that a consumer purchasing a $605,000 home can put 20% down and get a conforming loan rather than going into a first and second lien or a jumbo. Likewise, the new FHA loan limit of $395,600 for a single-family residence will allow FHA borrowers to have a wider selection of qualifying properties.

Additionally, Texas, and especially Collin County, remain strong economically. Collin County ranked #54 on the 2018 list of U.S. News 2018 healthiest communities and received “honor roll” status (updated November 20, 2018). The ranking scored Collin County on a number of factors, including education, access to healthcare, housing affordability and employment. We live and work in a thriving community that people from across the U.S. still choose as home. We have a lot to celebrate, and much for which we can and should be grateful.

In keeping with the CCAR 2019 mantra to “engage, equip and empower,” the REALTOR®/Lender Committee will work to engage with both the REALTOR® and Lender members to share ideas and solutions, to equip our members to better serve the consumers and each other through education about new products and programs, and to empower each member to learn and use new tools as we grow personally and professionally.

We meet on the second Tuesday of the month after the Plano Business Development meeting at the CCAR headquarters. We hope that you will make plans to join us as we make the most of the opportunities before us.

Customer Service is The Way of the Future

The National Association of REALTORS® (NAR) officially launched a new program aimed at making you more successful. Aptly named “The Commitment to Excellence” (C2EX), the program scores and rewards agents who exhibit excellence and professionalism to their clients, and is completely free to NAR/CCAR members.

The C2EX is a “cutting-edge program that empowers REALTORS® to evaluate, enhance and showcase the highest levels of professionalism” says the NAR website. To begin the process, agents simply go to www.C2EX.realtor and take an initial self-assessment tool. The assessment measures 10 aspects of professionalism for agents, 11 for brokers, and creates a plan of action to move you to the next level.

You will receive an interactive dashboard, where you can log-in and check-off tasks as they are completed, as well as send out surveys to clients for feedback. At completion, REALTORS® receive the NAR official “Commitment to Excellence” endorsement.

The program marks a significant movement within the real estate industry: Professionalism.

Log on to www.c2ex.realtor to see your personalized steps recommended by NAR to take your business to the next level.

Collin County Housing Market Approaching Balance; Still Better to Be a Seller

The Collin County Association of Realtors (CCAR) reports that the real estate market continues to favor sellers, but if trends continue, North Texas may soon find itself in a more balanced market. Over the past 12 months, median sales price has increased 1.5 percent to $301,500, which is 6 percent less of an increase than the year prior.

Simultaneously last month, the real estate market experienced 15 percent more homes for sale as compared to October 2017, supplying the market with 3.2 months of inventory. A market is considered balanced when it has six months of home inventory, a seller’s market if it has less, and a buyer’s market if it has a surplus above six months of inventory.

“It is important to remember, despite an increase in home inventory, those homes are still selling, and for more money than the year before,” says CCAR President Melissa Hailey. “It is still a great time to be a seller, Collin County is still experiencing growth, and buyers are excited to buy.”

The CCAR Pulse, which delves into the real estate markets of 37 local communities, supports Hailey’s thoughts, projecting that year-to-date closed sales have increased by 9.4 percent.

For the buyer, Hailey has encouraging news, “You are less likely to find yourself in a bidding war, and sellers are open to reviewing comps and setting a competitive listing price.”

On average, buyers paid 95.4 percent of the original list price of a home in October and homes stayed on the market an average of 49 days. The most popular segment of homes among buyers purchasing in October were those priced from $300,000-$499,999.

Last month, the housing affordability index declined 14.8% compared to the same time last year, hitting its lowest point in 2018. In addition, median household income was only 98 percent of what is necessary to qualify for the median-priced home under prevailing interest rates.

While many are anxious to see if the market continues to trend towards balance, the month of October gave both buyers and sellers reason to smile.