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Texas House Bill 2385 Addresses “Required Use”

by CCAR’s REALTOR®/Lender Committee

REALTORS® can make a difference in the current legislative session by eliminating a practice in our industry that regularly harms consumers. Texas House Bill 2385 addresses what is known to regulators as “required use.”

“Required use” is widely used by volume or national builders to require the use of their mortgage and title companies. Here is how it works:

Your client goes to a new home build site and enters into a contract to purchase land and build a home. During your client’s build, the builder of the home offers an incentive of $15,000 towards kitchen upgrades (various incentives can be used), so long as the client agrees via contract to use the choice or owned lender or title company of the home builder. Later, when it is getting close to finalizing the mortgage and title issues, the client must use the lender or title company that they signed to use through the incentive, regardless if the actual market rate at this time is much less. At this stage, the incentive becomes a penalty, as the client must pay the $15,000 if the client decides to use a better market rate from a lender or title company that is not the choice or owned lender/title company.

Although the “required use” issue is viewed as a Real Estate Settlement Procedures Act (RESPA) violation, neither the Housing and Urban Development (HUD) nor the Consumer Financial Protection Bureau (CFPB) has had the resources to redress.

There is a history of Texans asking for “required use” oversight and enforcement at the state level. Legislation in the same spirit of HB 2385 was sponsored in the past, but was withdrawn because in March 2009, HUD indicated that the Department would begin to enforce the “required use” provisions nationally. Unfortunately, a lawsuit dissuaded HUD from moving forward in enforcing the provisions (see National Association of Home Builders, et al. v. Shaun Donovan, et al., Civ. Action No. 08CV1324, United States District Court for the Eastern District of Virginia, Alexandria Division). Today, CFPB oversees the “required use” provisions. Like HUD, CFPB has not taken any action to enforce.

Numbers don’t lie: Choice or owned title and lenders capture approximately 80% of their perspective mortgage and title business. In comparison, REALTOR® in-house mortgage companies struggle to capture 15% of their perspective business because there is no incentive penalty. HB 2385 helps ensure consumers have a choice in their mortgage or title business, up until they close without a penalty.

Examples of “required use” and the consumer:

  • A buyer was offered a $22,000 discount on the price of a home for using an affiliated lender, but the interest rate offered by the lender was 0.5% higher than the market rate and the origination fee charged by the affiliated lender was higher.
  • A buyer would be required to make a higher earnest money deposit and would lose a $2,000 “closing incentive” if the buyer did not use the builder’s affiliated lender.
  • A $3,000 incentive is promised on the purchase price and $6,000 towards closing costs, if the buyer used the affiliated lender, which charged an interest rate that was 1% higher than the market rate and carried additional fees.

How can you make a difference? The REALTOR®/Lender Committee is encouraging you to contact your State Representative and Senator to ask them to support House Bill 2385.

As always, if you have a question or comment about anything related to lending, please contact us at realtorlender@ccar.net.

SteveH

Chief Operating Officer, Steve Haid, Set to Retire

“I’ll miss my work family and the parade of members that come by my office every day. I’ll miss my conversations with the Team Directors who come to bounce ideas off me or just to talk over an issue they are facing. I’m pretty sure I’ll miss the fast pace that happens at CCAR every day.”

—Steve Haid

Since 2012, Steve Haid has served as CCAR’s Chief Operating Officer (COO). Prior to that, he served in various capacities for CCAR since 2004, including MLS Director, and the Director of Education, Communications, Member Services, and Information Technology. However, on March 31, Steve will say good bye to CCAR as he begins a new phase of life–retirement.

“I joined CCAR because I saw it as a great opportunity to stay in real estate, but in a management role,” he said. “I have been in management most of my adult life, except for the six-and-a-half years I sold real estate. I used to come to the Association offices periodically for committee meetings, events, and to pay dues. Every time I was there, the CEO at the time, Randy Wright, would try to get me to join the team in various capacities. Finally, when he offered me the MLS Director position, I jumped on board.”

Although Haid said the organization allowed him the opportunity to grow professionally and try new things, working with the various people he encountered was the best reward. “CCAR’s staff is amazing, and even when one person leaves, we hire another great person to join our family,” he said. “We now have around 7,500 members and Affiliates, and I have personally enjoyed working with many of them. I am blessed to have made many friendships in the real estate industry that will last far beyond my last day as an employee. Every day at CCAR is a new adventure, and it really is like being a part of a big family.”

Among his many accomplishments, Haid made the REALTOR® Store the principal source of non-dues revenue for CCAR and negotiated equipment leases and health plans that have saved the association money. “I think my most significant achievement is being a calm presence for our employees who often endure stressful situations,” he said. “All of our employees know that they can come to me with a difficult problem, and I will either talk them through it or completely take it off their hands. I believe my management style fits perfectly in the family culture that Mary Leidy, our Chief Executive Officer, has developed over the years, and it has been wonderful to be in that family.”

Upon retiring, Haid intends to travel to visit family members and become more involved at his church. He also plans to spend time woodworking and fly fishing, as well as playing music, singing, and performing in community theater.

All CCAR members are invited to join us on Tuesday, March 28 from 11:30 a.m.-1:30 p.m. in the CCAR Banquet Room, for a retirement luncheon to honor Steve’s career and wish him well on his new adventure. Please click here to RSVP for the luncheon no later than March 24.

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3 Tools Every REALTOR® Should Use to Increase Sales

 Janet DeBusk Hensley
Knoxville, TN REALTOR® Janet DeBusk Hensley’s website highlights elements that make her a top contender, including her experience, client testimonials, and finance tools to assist buyers and sellers.

Nowadays, it is simply not enough to just be a good REALTOR®. In order to garner more customers and more sales, it is imperative you stay at the forefront of the real estate industry. In order to do so, utilizing technology is vital. Here are three tools that can help you elevate your REALTOR® game and break away from your competitors.

1. ESTABLISH A SOLID WEB PRESENCE. You’re probably saying to yourself, “I already have a web presence.” Yes, you are listed on your realty company’s website with other members. Yes, your properties are listed in the MLS database. Go past the obvious. As a REALTOR®, you are your own brand. Buyers and sellers who choose you, do so because they trust you will guide them as they undertake the most important financial decision of their lives. More than likely, they researched several REALTORS® and asked their friends for referrals before they selected you. Having your own website puts the focus solely on you and the properties you represent. It provides you with an opportunity to toot your own horn and flex your realty muscles. In addition, if your site utilizes search engine optimization, the more likely it is for people to find you and access your website due to its increased visibility and ranking.

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Houston-based Jamele Mason has over 3,500 followers on his Instagram page. In addition to eye-catching photography, Mason includes his handle in case others repost his images.

2. BECOME MORE SOCIAL AND VISUAL WITH INSTAGRAM. “There is definitely a movement to use more technology in real estate,” said Steve Haid, CCAR Chief Operating Officer. “There are apps for almost everything.” As social media apps ramp up to an all-time high with no signs of slowing down, more REALTORS® are going where people are. Facebook, Twitter, YouTube, and yes, even Snapchat, have millions of users. For the visual-minded individual, there is no better format than Instagram. Using Instagram has its advantages. It allows you to instantly communicate with interested parties and analyze your reach. During an open house, you can tease potential buyers with short, digestible videos of the property. You can highlight features that may be easily overlooked, like that impeccable crown molding, backyard landscaping, or picturesque bay window. There are, however, several things to be wary of. Always keep your personal account separate from your professional account. A good camera phone or one of the latest crops of point-and-shoot cameras will do. If interested parties can imagine themselves living in the house, even before they set-up an appointment, you are a step closer to it being sold.

drone3. TAKE IT TO ANOTHER LEVEL. Drones aren’t just for hobbyists. Once limited to commercial real estate photography, residential REALTORS® are seeking the aide of professionals to capture high-definition aerial photographs and videos from different, often times hard-to-capture angles. Prospective buyers can gleam a lot of information from drone photography and videos. They can view the entire property and the land it sits on and they can view the neighborhood and nearby amenities, among other benefits. It is important to note that according to the Federal Aviation Administration, all unmanned aircraft (including drones) must be registered or the individual will be heavily fined.

NTYPN Anything But White Party 2016

A Sense of Community: NTYPN Fosters Valuable Connections for its Members

During the summer of 2012, Vanessa Harrell attended the North Texas chapter of Young Professionals Network’s (YPN) annual Catamaran Cruise. Like other participating members, Harrell looked forward to networking with like-minded individuals while sipping on refreshing drinks, snacking on tasty hors d’oeuvres, and savoring the breeze swirling through the boat on an otherwise hot Texas day. Since the title company she worked for was a Strategic Partner, she thought attending the event would be beneficial for her career. However, she wasn’t expecting to make a connection that would forever impact her life.

“The best part of being a YPN member is that I met my husband at the very first YPN event I attended in 2012,” she recalled. “We got married in April of 2016.”

While Harrell’s fairytale story is unusual, it lends a credible tale to the impact North Texas’ YPN has had on its members since its beginning in 2009. Making meaningful connections is the core of what attracts more than 870 REALTORS® to the organization.

“NTYPN is really a great way to get connected to other REALTOR® members of CCAR. By becoming connected with other members, this opens up learning opportunities, as well as referral opportunities, in the real estate space,” said Brandon Eichten, Chair of NTYPN and Vice President of Operations for ERA StarCrest Realty.

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“By getting connected within CCAR, the YPN member has the unique opportunity to learn about specific resources inside of CCAR available to each member.”

—Brandon Eichten, Chair of NTYPN

 

This year, Eichten said the organization has four main goals: Connect on a deeper level, bring charity to the forefront, increase membership, and raise $7,000 for TREPAC. “One of the goals is to connect on a deeper level, meaning we have one-on-one time with fellow Strategic Partners and REALTORS® in order to establish a deeper connection by learning how we can partner together to bring more transactions to one another, as well as learn how to impact the real estate community.”

According to Eichten, these connections are the best part of being a YPN member. Christa Fulton agrees. “The best part of being involved with NTYPN is the relationships that this fun, dynamic group builds,” she said. Fulton, CCAR Director of Events, has served as the Staff Liaison for the organization for the past four years and is responsible for the planning and administration of NTYPN meetings and events.

“By getting connected within CCAR, the YPN member has the unique opportunity to learn about specific resources inside of CCAR available to each member,” said Eichten, who joined YPN in January of 2016 as the Communication Director.

“While YPN is overseen by the National Association of REALTORS®, it was Nick Kline, our current CCAR President, who helped establish our chapter,” Fulton said. “Nick felt there was a strong need in North Texas for young professionals in the real estate industry to be able to connect with each other and tap into valuable resources needed to help them succeed in their business.”

As they gain success, members of YPN are able to give back to the communities they serve.

“We’ve had lots of events, but most have a charity component tacked on in some way,” said Harrell, a Sales Executive for Chicago Title DFW who is serving her third year on the Advisory Council and her second year as Vice Chair. “For example, last fall we had an event at a brewery. It was a fun networking event, but we asked everyone attending to bring items of clothing for the Children’s Advocacy Center of Collin County.”

This year, Harrell said the organization is seeking more volunteering opportunities. There are plans in the works to sponsor a backpack drive in preparation for the upcoming school year. “As far as mentoring opportunities, our hope is that we are creating an environment, whether it’s a social or education event, where a new REALTOR® has the opportunity to meet other REALTORS® they might not have had the chance to network with. From there, they can build on that relationship and pursue mentoring opportunities.”

For more information, visit NTYPN or contact Christa Fulton at christa@ccar.net.

mortgage

How Rising Interest Rates Will Impact Buyers and REALTORS® in 2017

By Joe W. Boggs, member of CCAR Realtor®/Lender Committee

Mortgage interest rates have increased over .5 percent since the election and are expected to increase another .5 percent in 2017. With a $300,000 loan amount, that 1 percent increases the principal and interest approximately $178 monthly, amortized for 30 years. Considering the average sales price in Collin County is now above $300,000, what impact will this have on buyers and REALTORS®for 2017?

According to the theory of “economies of scale,” this could impact people either marginally or significantly. Affluent buyers will likely remain unscathed. However, buyers who are looking to upgrade could be discouraged from upsizing for fear of relinquishing their current low interest rate. Upsizing becomes less attractive when the prospective payment will increase due to both a higher loan amount and a higher interest rate than one’s current mortgage.

Last year we noticed an increase in the prospective move-up buyers sitting tight and deciding to take cash out to renovate their current homes. The additional expected .5 percent rate increase could now make it more advantageous for this group to move forward with upsizing, since the interest rate for cash out financing is higher than the rate for a purchase money loan.

The first time home buyer will be the segment most impacted. This is not just due to higher interest rates, but also the shortage of moderately priced homes, increased property taxes, and increased homeowners insurance.

Just last year a first time home buyer could enter the market by purchasing a $250,000 home with an interest rate of about 3.75 percent. The monthly PITI equated to roughly $1,775, excluding any required mortgage insurance. That same first time home buyer is now looking at a sales price of $300,000. With the increased sales price, interest rate, property taxes, and homeowners insurance, the PITI will now be pushing $2,285, excluding any required mortgage insurance.

No doubt first time home buyers are looking at over $500 per month higher house payments to enter the market this year compared to last. The good news for REALTORS® is that rents have increased along that same pace. All things relative, it still makes financial sense to purchase. It’s just a bigger pill to swallow and time will tell if first time home buyers will find this significant increase palatable.

REALTORS® working with buyers should consult with their buyers’ lenders to ensure the lenders are using up to date interest rates for their Conditional Qualification, have explained to the buyers the current volatility of interest rates, and have discussed thoroughly how property taxes have and will likely increase again. It does our community an injustice to put folks in a home that they won’t be able to afford later if interest rates, property taxes, and homeowners insurance continue to rise.

When listing agents receive an offer, they should contact the lender providing the buyer’s financing and confirm the lender is using current market rates for the buyer’s Conditional Qualification. We’d hate to see a rate increase disqualify the buyer after the offer is accepted.

For questions about this article or other lender topics, please contact your REALTORS®/Lender Committee at realtorlender@ccar.net.

Christa

Annual “For the Love” Event Offers Glimpse into CCAR Committees

As a token of appreciation, CCAR is hosting its annual “For the LOVE of Our CCAR Members” event on Tuesday, Feb. 7. While complimentary appetizers, drinks, and gift card drawings will be available, the event provides members with an opportunity to meet representatives from various CCAR committees. Participation in these committees is a benefit that members like Leisa Kiper take advantage of.

Kiper, who received her real estate license in 2007, joined CCAR the same year. A REALTOR® with Keller Williams Prosper Celina, Kiper has participated in various committees over the years.

Kiper

“Every committee brings new members, ideas, conflicts, and, most of all, acceptance of others with goals different than what my goals may be … There is a trust that comes with volunteering on a committee with all of these individuals and obtaining a goal.”

– Leisa Kiper, Chair of the Installation Task Force

“As soon as I was licensed, I applied for the Texas REALTORS® Leadership Program (TRLP) Class; I was accepted,” she said. “That was the start of my committee involvement journey at CCAR. That program taught me to overcome my fears and gave me confidence to embark on a career that brings me so much joy.”

Soon after, Kiper found herself on the TRLP Advisory Committee for three years and served as  Vice-Chair her second year and as Chair the third year. “I felt lead to help this committee so that other REALTORS® could have the same experience I did in the program,” she said. “The connections I made in the class were good for my business, and some of those class members became life-long friends.”

To date, Kiper has been an active member of the Housing Opportunity Committee, the 50 Leadership Committee, and the Government Affairs/ Texas Association of REALTORS® Political Action Committee, of which she served as the Vice–Chair and Chair in 2015 and 2016, respectively. In addition she served on the Board of Directors for two terms and was on the Nominating Committee. She is currently the Chair of the Installation Task Force, which she joined in 2013.

For Kiper, the relationships she has made through the committees have affected her personal and professional life. “Every committee brings new members, ideas, conflicts, and, most of all, acceptance of others with goals different than what my goals may be,” she said. “I have individuals in all aspects of my business such as title companies, lenders, inspectors, and, most of all, other REALTORS® that I know I can trust to take care of my clients as I would take care of them. There is a trust that comes with volunteering on a committee with all of these individuals and obtaining a goal.”

“For the LOVE of Our CCAR Members” will occur from 4-6 p.m. in the CCAR Banquet Room at the Plano office, located at 6821 Coit Road. RSVP is not required. For more information, call 972-618-3800.

inspection

Builders Might Require Different Policies for Home Inspectors

by Lee Warren III, member of CCAR’s Affiliate Committee

With the shortage of homes being such an issue over the last few years, many buyers have turned to purchasing new homes. Many builders offer incentives and bonuses to agents that bring buyers to their properties, increasing the draw toward this trend. As agents, please keep in mind that there are some risks involved with the purchase of a new home.

The issue comes when the buyer wants to have the house inspected. Some buyers get the house inspected when it is complete, while some buyers will have the home inspected throughout the building process. With both of these scenarios, agents should familiarize themselves with the policies of the builders as it relates to inspections.

Many sales representatives will say they welcome a buyer’s inspector. However, some builders have policies in place that require the inspector to sign certain agreements prior to inspecting the home. These agreements may not only limit what the inspector can actually inspect, it can increase the actual liability on the inspectors themselves. Some of the stipulation in these agreements require that the inspector provide proof of a $1 million errors & omissions (E&O) policy.

Texas Real Estate Commission requires that all licensed inspector carry E & O. In fact, without it, an inspector cannot renew their license. However, the required limits on this are substantially lower than $1 million, as the amount of damage that could actually result from something that an inspector does would likely never come close to that dollar amount. Furthermore, some of these agreements require that the inspector put the builder on as an additional insured on their policy. They can also require copies of auto liability policies, worker’s compensation documentation, and much more. Some of these agreements stipulate that the inspector is not allowed to go on the roof for any reason, which substantially limits what an inspector would be able to see. They can stipulate the hours in which the inspector can perform the inspection (often not allowing inspections on the weekends). Many of these agreements also require that the report be given to the builder. The report is the property of the buyer, not the builder. Most inspectors will recommend that the report be sent to the builder, but for the builder to require, this is a stretch.

Know which builders require some of these types of policies, as it may likely have a direct impact on the buyer’s ability to find an inspector willing to perform inspections on properties by these builders. Agents may find it increasingly difficult to find an inspector that is willing to sign these agreements from builders, as it puts an unnecessary burden on the inspector and the buyer alike. Some of the builders that currently require these types of agreements include Meritage, Standard Pacific, Ryland, and CalPacific Homes. Ensure that you are aware of these issues before showing your buyer a new home.  Know before you go.

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Changes in Store for 2017

by Scott Drescher, member of CCAR’s REALTOR®/Lender Committee

The REALTOR®/Lender Committee benefited from positive changes in 2016 as we finally began to see the pendulum swing back from the abyss of 2008-2011. Now, we can look ahead to 2017 with the hope of more improvements. Here are my predictions, some of which are based on expertise and others that are based purely on unbridled optimism.

House prices are going to rise somewhat this year but not as much as in the past because prices are simply pushing too high too quickly, and consumers always push back eventually, no matter the market. We thought we’d never see the end of (fill-in-the-blank) every time we have been in a strong market for (blank), yet the market has always cooled before rising again. Understand, though, I don’t mean a reversal by any means. I simply expect that the 9% annual gains and dozens of offers will become 4% or maybe even 5%, and we’ll have multiple offers only on the best of properties at the most consequential time, that is in May.

FHA will lower the upfront mortgage insurance premium sometime this year, not because it makes sense, but because it should never have been that high in the first place. It is that slow to admit error.

The DFW maximum FHA loan amount will rise near year end to $385,500 (from this year’s $362,250). This is due to the run-up in home prices in our area. We’re still the least expensive major metropolitan area other than Houston, though.

The conforming loan limit will rise bigly for the first time in a decade. It has just risen very slightly to $424,100, but next year it should rise to $451,250.  I may be off by a few hundred dollars but not by more than 2%.  Come find me in December on this one.

Dodd-Frank will not be repealed, as it’s too big to fail, but the CFPB should find itself changed no later than the end of the year. You can bet your Jeb on that one.

On the state level, REALTORS® will rally in Austin to push an act coming out of Collin County that even a good conservative could love because it protects consumers so well.  It’s time for the builder “incentive penalty” to be buried, friends.  The act will prohibit builders from offering bogus incentives to use their preferred mortgage or title company or the consumer loses money or upgrades.  The bill is in Rep. Leach’s capable hands, and all of us will need to support it.

Finally, with my hand on my forehead, I can with absolute certainty predict that my third time as chairman of this committee is my last.  When December rolls around, I will take my final bow as chairman and live the rest of my business days as a committee member, plain and simple.

If you have any questions about this or any other lender topic, please feel free to reach out to any of us wearing a green ribbon or email us at realtorlender@ccar.net.

browsers

3 Reasons to Update to Newest Browser Versions

Your choice of Operating System and Web browser affects your online experience with various website sites like: ntreis.net, ccar.net, texasrealestate.com, and nar.realtor, along with the various tools that you are utilizing from these websites.

Here are the three best reasons to run the newest version of your browser:

  1. Security – Newer browsers have better security features and support newer security protocols. This means that newer browser versions will better protect you from vulnerabilities and viruses, even if you have an anti-virus program. Additionally, as browser manufacturers like Microsoft, Google, and Apple update their browsers, they phase-out support for older versions, which means that older versions will be susceptible to new vulnerabilities.
  2. Better functionality – Sites are designed and built to work with a vast array of browsers and versions, but you’ll normally have the best experience using a modern, updated browser.
  3. It’s free – If you’re using a common browser like Internet Explorer, Chrome, Firefox, Safari, or Opera, upgrading to the newest version is free. Below are manufacturer instructions on how to make sure your browser is up-to-date:

Please contact CCAR at 972-618-3800 or mls@ccar.net if you have any questions.