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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 adam@ccar.net. 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 RealtorLender@ccar.net.

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.

Home Affordability in Collin County and Surrounding Area Remains at All-Time Low

The Collin County Association of Realtors (CCAR) reports that November 2018 continued to be a difficult time to qualify for the purchase of a home. According to the Housing Affordability Index, the October 2018 drop of home affordability did not improve in November, and remained at 97 percent. This means that the median household income is only 97 percent of what is necessary to qualify for the median-priced home under prevailing rates.

The CCAR Pulse, which delves into the real estate markets of 37 local communities, reflects this decrease in affordability. In November 2018, Collin County had 7.2 percent fewer homes under contract and was projected to close 5.1 percent fewer sales. While it is traditionally accepted to see a seasonal decline in sales towards the end of the year, the decline is highlighted by a 3.9 percent decrease year-to-date in listings under contract—the first negative year-to-date stat regarding listings under contract our area has seen in over three years.

The median sales price of a home in Collin County increased again last month to $306,900—2.3 percent more than in November 2017. Sellers accepted on average 95.2 percent of their original list price after staying on the market for an average of 55 days in November 2018—a 14.6 percent increase in days on market than the year prior.

While experiencing an increase in days on market for home listings, Collin County also had 9.9 percent more new listings in November 2018, versus the same time last year. The combination of homes being on the market for more days while experiencing an increase of listings has allowed housing inventory to reach 3.1 months—a continuing sellers’ market.

What does this mean for buyers and sellers? According to Melissa Hailey, CCAR President, it means continuing home sales.

“Individuals who are home shopping during the holiday season are serious buyers. And right now, sellers are aware of the increase of home inventory and options that buyers have. This means the market is seeing motivated buyers and sellers who are ready to make a deal, and that’s a win for everyone,” says Hailey

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.

What Starbucks Holiday Cups Mean to You

Starbucks has a new seasonal cup out, and that means something major for you. It’s time to plan and execute your winning winter marketing strategy.

Need some fresh ideas? We have compiled a list of fun and effective ways to reach your clients and make your name one they will remember all the way to warmer months.

Seven Fun and Effective Holiday Marketing Strategies

Provide your clients with winterization tips and tricks

It is always a good idea to help clients protect one of their largest investments. Provide them with simple checklist of winterization basics and set them up for success. To deliver extra value to your clients, consider working with a local gutter cleaning company or other service provider to create a promo code for special savings.

Take care of their holiday photo

Hire a local photographer to come to your office and set-up a festive back drop. Invite all your clients to come by and have their family photo taken free of charge. Your clients will be so thankful to you for organizing a traditionally expensive and overwhelming task on their behalf that they will be bragging to everyone about their awesome REALTOR®.

Create a calendar of local holiday events

Remind your clients of why it is awesome to live in their town. Research your town’s unique holiday markets, festive parades, and family-friendly events to craft an easy to read calendar they can reference all season long.

Provide year-end review stats

Provide an approachable and informative year-end market review that shows off your industry knowledge and reminds your clients why they trust you with their business. Bonus: If your client purchased a home during the year, be their hero by proactively providing them with their settlement statement for their upcoming taxes.

Create a pumpkin pie tradition

One successful agent mails reminder cards to all his clients November 5, reminding them to come by his office the Wednesday prior to Thanksgiving to pick-up their pumpkin pie. Annually, he gets to see his clients, they never stress about making a pie for Thanksgiving, and they brag about their awesome REALTOR® while consuming pie the following day.

Host a toy drive or canned food drive

Partner together with your clients to help those less fortunate this holiday season. Create your own toy drive, or become a collection site for the Care for Kids Drive by picking up a decorated collection box at CCAR.

Get a new certification or designation

These courses don’t just mean extra letters at the end of your name, they mean more value for your clients. Take initiative this season to earn a new certification or designation, and then write a newsletter to your clients to let them know why you decided to complete the program.

Once you have found your unique approach to reaching clients during the holiday season, set an annual reminder on your calendar so you never forget your holiday marketing tradition. Quickly you will become part of your client’s seasonal traditions and their forever REALTOR®.

Giving Thanks: An Optimistic Overview of Market Conditions

By Alexandra Swan (NMLS 117371), Willow Bend Mortgage, and member of CCAR’s Realtor/Lender Committee

Give thanks!

Here in DFW, we in the real estate community (and all related industries) have a lot to celebrate this Thanksgiving season. And while a cooling market and rising interest rates may seem to some like the beginning of the apocalypse, those of us involved in CCAR’s REALTOR®/Lender Committee who have been around a few years want to remind everyone of a few of the many blessings we can count this year at the Thanksgiving table.

All statistics come from the Dallas Morning News, October 18, 2018.

  1. Statewide, sales are slowing as the market cools, but DFW still saw the largest number of home resales year over year from third quarter 2017 to third quarter 2018, with the total number of resales at 27,660 homes. The next closest market for number of houses sold was Houston at 24,028.
  2. In DFW, prices are up 3.9% year over year. The median resale price in DFW is currently $265,034.00.
  3. Although price appreciation is now slowing, median home values have risen more than 40% over the past five years, which means that many North Texas residents continue to enjoy strong equity in their homes—a significant advantage for move-up buyers wishing to sell a current property.
  4. DFW enjoyed the largest inventory increase of any of the major metros, up 14.5% from the third quarter of 2017.
  5. The average number of days on the market for a house is now 37—just one day more than the third quarter of 2017.
  6. The average number of months of inventory is now three—up from 2.6% in the third quarter of 2017. More inventory makes it easier for buyers to find the perfect home without getting crushed in a bidding war or consistently and repeatedly losing potential homes to cash offers.
  7. Interest rates are still amazingly low. Yes, you read that correctly. Twenty years ago, when some of us began our careers, 8.5% on a 30-year fixed rate loan was a good rate. Rates in the low 7% range triggered a sea of refinances in the early 2000’s. When rates fell to the mid 5’s after 9/11, consumers lined up to take advantage of the savings they could enjoy by reducing their interest rates and payments. Now, 17 years later, we have seen shockingly low interest rates for so long that we have forgotten that a 30-year fixed rate mortgage in the 3% range is not a reflection of normal market conditions. When we examine the past few decades of history, we see that interest rates are still very low, and housing remains affordable—especially as compared to other major U.S. markets.
  8. The overall economy remains strong in the third quarter of 2018, which is a good indicator for the continued health of the real estate market.

Author Andy Andrews states that perspective is the only thing in life that can change the outcome of a situation without changing any of the facts. Right now, rates are rising and an on-fire market is slowing down—compared to the last few years. By applying some perspective to the true state of our housing market, though, we can appreciate that our collective glasses are much more than half-full. We are in one of the nation’s top real estate markets, and our housing industry remains strong and viable.  We have much to be thankful for.

Happy Thanksgiving, from your REALTOR®/Lender Committee.

Phased Inspections: A Crucial Step in the Purchase of a New Home Build

By Lee Warren, Prospect Inspectors, Inc. (License #8411), and member of CCAR’s Affiliate Committee

It has become obvious in the last few years that the DFW Metroplex is growing in vast numbers. With this substantial growth, there is also the inevitable demand for new houses. Many people have the perception that new homes have no deficiencies. Many builders will tell you that they do their own inspections, they hire third party inspectors, and that there are the city inspectors to ensure that the house is built correctly. However, even with these three layers of inspections, one thing is absolutely consistent about them: Not one of them work for the buyer of the home.

It is vital for a buyer of a new home to have an inspection performed on that home. It is one of the largest purchases that one will make in their lifetime. Many people may simply get an inspection done when the house is complete. However, the best time to start having the house inspected is when they first start on the lot.

Many licensed professional inspectors offer “phased inspection” services. This means that they will inspect the property from the time they start moving the dirt, right up until it is completed. Keep in mind that this is the only time that you, as a buyer, will know what is getting installed before the foundation is poured, and before the drywall is installed. Contact a CCAR inspector to determine if they perform phased inspections and find out the benefits that a phased inspection can bring to your client with their purchase.

Keep in mind that some builders have certain requirements of inspectors before they will allow them to perform inspections on the home. Some of these requirements can be excessive, and this can lead some to believe that this may be an effort to prevent the inspection of the home. Many inspectors will not inspect homes by certain builders because of these excessive requirements.  Please ensure that you have a thorough conversation with a builder prior to having your client sign a contract with them. If the builder states that they have no extra requirements for an inspection, make sure that you get it in writing so that they cannot later impose this roadblock when your client’s earnest money is on the hook.