Consumer report blasting real estate fails to address recent changes

WASHINGTON — June 20, 2006 — The Consumer Federation of America (CFA) called a news conference yesterday to call the real estate industry a “brokerage cartel,” and it offered recommendations for change. But the CFA issued a strangely similar report 15 years ago, and the National Association of Realtors® (NAR) claims the new one ignores many industry changes since then, including the competitive environment of the Internet.

NAR President Thomas M. Stevens responded quickly after the CFA issued its latest report. “It’s clear and evident that (CFA) don’t understand the real estate business,” Stevens said. “Real estate is probably one of the most competitive industries out there.”

 

In the current report, the CFA claims the real estate industry structure harms consumers by charging high commissions regardless of experience; by working with buyers and sellers as facilitators rather than fiduciary agents; and by first pushing self-listed homes or homes listed by their broker, which the CFA calls the “double dip.”

 

The current report says that the real estate has five elements that restrict competition:

• Seller-paid commissions that discourage discounts out of a fear that associates won’t show homes below a certain commission level.

• Discrimination by brokers against new business models, such as Internet-only real estate firms.

• Unregulated MLS systems that restrict information access to consumers and nontraditional brokers.

• First-time homebuyers that don’t educate themselves about the buying/selling process.

• State real estate commissions made up primarily with practicing real estate brokers, which allows the industry to regulate itself.

 

But rather than stifling competition, Stevens counters that the industry has grown more competitive rather than less. And he notes that real estate associates constantly put themselves at financial risk, listing and showing homes to clients when, at times, the deal never goes through and they make no money.

 

As proof of recent changes, NAR produced the CFA’s 1991 report that called for changes within the real estate industry, with an analysis of improvements made since then. For example, the Internet has opened the MLS since most home listings can now be found online, making at least two earlier recommendations obsolete. And with buyers’ agents the fastest growing niche in real estate, any criticism of one-sided representation is also moot, says NAR.

 

Even though the real estate industry has gone through dramatic changes in the past 15 years, NAR notes, it does agree with one recommendation offered by CFA, which says, “Home buyers and sellers must increase their understanding of the value of these services, the necessity of comparison shopping and their ability to negotiate with agents or to act as their own agents. Only then will residential real estate markets become truly competitive.”

 

“No argument that there is work to be done,” NAR responds. “Seventy-four percent of sellers and 64 percent of buyers still talk to only one professional before making a decision.”

***As always, the latest in Real Estate News as it pertains to Spring Hill Real Estate, Brooksville Real Estate, Weeki Wachee Real Estate, Hernando Beach North Real Estate, Hernando Beach South Real Estate, and Hudson Beach Real Estate. – Brought to you by Hernando Luxury Homes, Your Luxury Real Estate Leader in Hernando County, Florida and Pasco County, Florida.

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FHA makes friendly changes

When the FHA’s mortgage requirements change Jan. 1 in an effort to win customers, homebuyers will find it easier to qualify for a home.  It will give many buyers access to FHA’s interest rates, which are generally lower, and perhaps the ability to buy a larger home.

WASHINGTON — June 19, 2006 — When Jeff and Lynette Fletcher bought their first house recently, they turned to one of the nation’s oldest lending programs.

 

They got the money to buy a century home in Ravenna from the Federal Housing Administration, or FHA.

 

The federal agency, which issues federally backed loans to people who don’t qualify for regular or conventional mortgages, had fallen out of favor with buyers and sellers because of its rigorous appraisal regulations.

 

Starting Jan. 1, appraisers no longer have to flag a home for a cracked window pane, leaky faucets, a missing handrail or the lack of an all-weather driveway surface.

 

The time and expense of such minor repairs had been driving customers into the arms of subprime lenders who could underwrite a loan more quickly and easily – albeit often at a higher interest rate.

 

In 1997, FHA accounted for 11 percent of all home loans, but that share had dwindled to a mere 3 percent by 2005.

 

FHA is changing its ways in an effort to win customers like the Fletchers.

 

Jeff Fletcher, a 38-year-old plumber, and his wife moved to Northeast Ohio from Sonoma County, Calif., last summer to find a more affordable place to live and raise their children.

 

They’d heard about FHA’s faults.

 

“I’ve heard lots of stories about how their inspectors were really strict” and “wouldn’t pass certain things,” recalled Lynette Fletcher, a 37-year-old stay-at-home mother. “Everything was drawn out.”

 

They’d also heard about FHA’s changes. When they got serious about buying, they talked to their broker and decided to enroll in an FHA program that requires little or no down payment.

 

“It was really a piece of cake,” Lynette Fletcher said.

 

The couple moved into their new home on South Walnut Street two weeks ago. They paid about $120,000.

 

“This home has been gutted and totally remodeled in the last 10 years,” but it still has character, Lynette Fletcher said. “I have gingerbread on the front porch.”

 

The couple got a favorable interest rate and relatively low closing costs through FHA.

 

Appraisals simplified

 

Appraiser Bob Hamilton also is pleased with the new procedures.

 

Gone are the five pages of the VC, or value condition, sheet filled with items that he had to check off.

 

“FHA now is really only concerned with the big items,” said Hamilton, who has been in the appraisal business since 1985. His company, Hamilton Appraisal Services, is located in Cuyahoga Falls.

 

The big items that still require repairs include inadequate access to interior rooms, leaky roofs, standing water around a foundation and structural problems such as a buckled basement wall. In homes built before 1978, any lead paint has to be scraped and removed.

 

The new approach is “in line with conventional lenders” who “didn’t have to worry about a missing handrail,” Hamilton said.

 

FHA’s old regulations slowed the process of selling a home, Hamilton said. The appraisal would often take four to five hours — and longer if the property was located in a rural area far from comparable properties. If repairs were needed, he was required to return to the property to see if they were properly done.

 

Although FHA’s appraisals are simpler, they’re still not the equivalent of a home inspection, Hamilton said. Borrowers are required to sign a form acknowledging the appraisal doesn’t guarantee any parts of the home.

 

An aging roof with no active leak will pass the appraisal process, even though it may need to be replaced.

 

“Everybody should have every house inspected,” Hamilton advised.

 

Financing changes

 

In addition to appraisal changes, FHA also is modifying its financing practices.

 

Until recently, buyers were restricted on how much closing costs they could pay. Lenders would often charge some of those costs to sellers, which made some sellers reluctant to accept purchase offers with FHA financing.

 

FHA now says buyers can be charged for any closing costs that are customary to the area, said Patti McClister at National City Mortgage Co. in Akron.

 

The financing end was where FHA traditionally beat out the competition.

 

People with credit problems or those who have spent a short time on the job who couldn’t qualify for conventional loans often turned to FHA, which also gave them more leeway on how much debt they could carry.

***As always, the latest in Real Estate News as it pertains to Spring Hill Real Estate, Brooksville Real Estate, Weeki Wachee Real Estate, Hernando Beach North Real Estate, Hernando Beach South Real Estate, and Hudson Beach Real Estate. – Brought to you by Hernando Luxury Homes, Your Luxury Real Estate Leader in Hernando County, Florida and Pasco County, Florida.

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Is the Florida housing market really down? I say, “That depends on your perspective”.

Last Quarter, home sales less than $200,000 have declined significantly compared with Q1 of last year, however we have seen a huge increase in the amount of home sales between $200,000 and $300,000, as well as an increase in the 300-400K range as well.  Overall, the number of homes sold is  less – but the dollar amounts per home are significantly higher. Read more

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Welcome to the Hernando Luxury Homes Web Log

Hello – My name is Joshua Hanoud, and I’m a REALTOR with Tropic Shores Realty, based out of Spring Hill, Florida.  I specialize in areas in Hernando County and Pasco County, more specifically Spring Hill, Brooksville, Weeki Wachee, Hernando Beach North, Hernando Beach South, and Hudson Beach.

I am also the co-founder of www.HernandoLuxuryHomes.com – a website that aims to showcase the finest properties that Hernando County and the surrounding Nature Coast has to offer.  Whether buying, selling, relocating, or investing – we are proud to offer a higher level of service.  Contact us today to see what we can do for you.

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