Agents: Are you an IRS audit target?

Every year, the Internal Revenue Service releases detailed statistics about who got audited the previous year.

The stats for 2011, covering 2010 returns — have recently come out and they paint an unpleasant picture for many real estate professionals — particularly the successful ones.

The percentage of business and nonbusiness returns that got audited in 2011 is shown in the following chart:

IRS Audit Rates (2010)

  Audit Rate
Sole proprietors  
Income under $25,000 1.3%
$25,000 to $100,000 2.9%
$100,000 to $200,000 4.3%
$200,000 and more 3.8%
Partnerships 0.4%
S corporations 0.4%
C corporations  
Assets under $250,000 0.9%
$250,000 to $1 million 1.6%
$1 million to $5 million 1.9%
$5 million to $10 million 2.6%
Nonbusiness Returns  
Under $25,000 1.2%
$25,000 to $50,000 0.7%
$50,000 to $75,000 0.8%
$75,000 to $100,000 0.8%
$100,000 to $200,000 1.0%
$200,000 to $500,000 2.7%
$500,000 to $1 million 5.4%

This chart shows that in 2010, 4.3 percent of sole proprietors earning $100,000 to $200,000 were audited. Not even corporations with assets worth between $5 million and $10 million were audited as often.

Moreover, only 1 percent of taxpayers who did not file a Schedule C form, but earned $100,000 to $200,000, were audited. Thus, self-employed taxpayers were four times as likely to be audited as employees earning the same amount.

In fact, employees earning as much as $500,000 were less likely to be audited than self-employed taxpayers earning as little as $100,000.

These statistics undoubtedly reflect the IRS’s belief that sole proprietors habitually underreport their income, take deductions to which they are not entitled, or otherwise cheat on their taxes.

Employees have less opportunity to cheat because their income tax is withheld by their employers and income reported directly to the IRS by them.

Unfortunately, most real estate professionals fall into the high-audit category: They are self-employed businesspeople who file Schedule C. The lesson these numbers teach is that you need to take the IRS seriously.

This doesn’t mean that you shouldn’t take all the deductions you’re legally entitled to take, but you should understand the rules and be able to back up the deductions you do take with proper records.

If you’re really worried about getting audited, think about forming a business entity to operate your real estate business. This could be a pass-through entity, such as a limited liability company taxed as a partnership or an S corporation.

Such entities don’t pay taxes themselves, but do file returns with the IRS. Both have extremely low audit rates: only 0.4 percent of such entities were audited in 2011. Regular C corporations also have relatively low audit rates.

Stephen Fishman is a tax expert, attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors." He welcomes your questions for this weekly column.

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Fed chief calls economy like he sees it

Déjà vu all over again.

Another spring, another housing-recovery chorus. The grass turning green … another turning of economic corner. The days are longer, oil prices are higher, a new fatal shortage nigh. With the vernal equinox, Fed easing must be overdone, bond yields are rising, the easing propelling inflation trading and the stock market.

Spring, and the sweet scent of horse manure.

Birds are chirping, leaves and blossoms bursting open, but the economy is still largely where it has been since bouncing off bottom in the spring of 2009. Home sales are not rising, new or used. Prices may have flattened, but are not going up. The distressed "pig in the python" still threatens to depart the pig in alarming mass, volume and velocity.

Oil is fooling around $100 a barrel, but it’s impossible to square a dangerous shortage with substitutable natural gas one-seventh its price at the decade peak (natural gas, which was $15.38 per 1 million British thermal units in December 2005, was $2.29 this week).

U.S. oil imports have fallen from 60 percent of consumption to 50 percent and falling. Global coal is undoing its entire run from 2007-2011, $165 per ton to $65 per ton.

The jump in bond yields began to reverse this week, the instant that Federal Reserve Chairman Ben Bernanke said, "It’s far too early to declare victory."

The biggest deal, of course, is jobs. While waiting for next week’s Good Friday release of March payrolls, consider more from Bernanke this week: "Importantly, despite the recent improvement, the job market remains far from normal; for example, the number of people working and total hours worked are still significantly below pre-crisis peaks, while the unemployment rate remains well above what most economists judge to be its long-run sustainable level."

Alternate to the drivel that passes for economic news on CNBC, Fox and Bloomberg (and opinion pieces in the Wall Street Journal and New York Times), please try to read the few pages of Bernanke’s full speech.

It’s in English, and a model for how to suspend your biases and hunches and mull evidence while the hopes of the world depend on your judgment.

All seems normal: pain evident among some friends and many strangers, but cars and trucks move as always, lights come on at night, shoppers and goods are in stores, but it’s all a mask covering a U.S. government that hasn’t been this absent from the scene since the 1920s — maybe even the 1850s.

Congress is too afraid of constituents to speak truth. This poor man, the president, soon may endure Supreme Court overthrow of his sole domestic achievement (no matter at whose hand: it would have collapsed of its own overcomplication and expense).

Want a hero? Someone to hold up to your kids as an example? Somebody above and beyond in public service? Selfless? Wishing only to be inconspicuous, but pushed forward by events? Leading as few ever have before? Leading decisively through chaos, but including his opponents, and even encouraging their public disagreement?

Have you given up, that there are such people in public life? Excoriated every day by blimps not half his intellect, not a tenth his understanding, yet treating all with dignified firmness? And in private — his actions always in private — as decisive as any Napoleon, and more aware of the consequences of error than any captain of arms?

Ben S. Bernanke. Annual salary: $191,300. Maybe he’ll write a rich-making book at the end, like his failed predecessor; maybe he’ll have a quiet passage to retirement, like Paul Volcker.

Bernanke blew it as Alan Greenspan’s understudy from 2002-05, and in his first year as chairman in 2006. He missed the credit bubble, which he knows more deeply and painfully than anyone else alive.

He was slow to grasp the extent of emergency in July 2007, but he got it in the following January and ever since he has carried this nation on his back.

He has been the singular effective executive in U.S. government, holding the night at bay: two Treasury secretaries and two presidents in over their heads.

Bernanke knows better than anyone that his utterly experimental measures to stop the greatest bank run of all time risk an inflation disaster.

And he knows that no matter how hard and inventively he tries, he may be unable to prevent a rerun of the 1930s, especially with no help from the rest of government.

One man, a quiet academic, embracing disciplined doubt, clearheaded and willing to act in the face of a warm, glowing, spring-hiding emergency. Do tell the kids someday.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

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Auction firm pitching its services to homeowners

National real estate auction company Williams & Williams has launched a website designed to help homeowners decide whether to sell their home at auction.

The "Sell Your Home" Web portal includes an "Is Auction Right For Me?" survey, a timeline of the auction process, comparisons of auctions vs. traditional sales, an explanation of auction options and fees, and a rundown of the marketing involved to attract buyers.

"Selling a home at auction isn’t new. We’ve been selling on behalf of individual sellers and families for more than a century. Most Americans, however, remain mystified by auction and how it works," said Pam McKissick, Williams & Williams CEO, in a statement.

In reference to the survey, McKissick added, "Sellers answer a series of questions about their home through our online survey and connect with one of our sales representatives to determine a value range for their home, the best type of auction to achieve that goal, details of the deal structure, and if auction is right for them."

Tulsa, Okla.-based Williams & Williams has 30 auction teams that sell all types of real estate in all 50 U.S. states, Washington, D.C., and Puerto Rico.

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Survey: 68% of house hunters contact real estate pros after mobile search

More than two-thirds of prospective buyers who use a mobile device in their home search reported contacting a real estate professional for a showing as a result of their mobile search, according to a survey from property search site The Real Estate Book.

The site conducted the survey between Jan. 26, 2012 and Feb. 3, 2012. Consumers who had shopped for either a home or an apartment in the last 90 days on any of more than 55 real estate-related websites were sent invitations to participate in the survey via email; The Real Estate Book received 4,051 responses.

Over half of the respondents, 52 percent, reported using a mobile device to hunt for a home, while the remaining 48 percent said they had not. Of the latter group, 85 percent said they would consider using a mobile device to search for a home in the future.

Of the respondents who did use a mobile device to shop, 46 percent considered the device an "essential" tool in their search and 52 percent considered it "helpful."

Most, 68 percent, of those respondents said they had contacted a real estate professional to view a home based on their mobile search, the site said.

"Our research supports that homebuyers are turning to their smartphones and tablets in their search and taking action to reach real estate professionals," said Scott Dixon, president of the real estate division for Network Communications Inc. (NCI), The Real Estate Book’s parent company, in a statement.

Other frequent activities for mobile house hunters included viewing photos and videos of homes (reported by 78 percent), asking for more information about a listing (66 percent), finding listing details, including contact information (60 percent), locating a listing via GPS (57 percent), searching for listings by city (55 percent), downloading a for-sale property search application (42 percent), and sharing listing information with family and friends (30 percent).

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Clear Capital automates reviews of appraisals, BPOs

Real estate data and valuation firm Clear Capital has launched an automated valuation review service for loan originators, servicers and investors, the company announced Wednesday.

Based on Clear Capital’s own internal quality assurance system, ClearQC evaluates appraisals and broker price opinions (BPOs) from any provider for factors such as the "selection of comparables, price conclusions, the effect of market trends, and the completeness and validity of data," the company said.

The company scores valuation reports using multiple listing service data, public records, and its own proprietary market and comparables data. Clients pay per report and the cost depends on the type of valuation report to be reviewed and the method of integration with the customer’s management or servicing platform, Clear Capital said.

ClearQC provides Clear Capital’s clients with "confidence that they are spending the time reviewing the loans that have the highest potential for valuation risk or quality issues. This shortens review cycles, lowers their review costs, and drives up the confidence they’ll have in their investment decisions,"  said Kevin Marshall, Clear Capital’s president and co-founder, in a statement.

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Foreclosure rates down in most markets

Foreclosure rates are lower than they were a year ago in 61 of the nation’s 100 largest housing markets, according to a new analysis of loan data by CoreLogic.

CoreLogic counted 1.4 million homes in the foreclosure process during February, down 7.6 percent from a year ago.

With 65,000 homes completing the foreclosure process in February, loan servicers were completing foreclosures at an annual rate of 670,000 per year. That compares to 862,000 foreclosures actually completed in the preceding 12 months.

The percentage of borrowers behind on their mortgage payments by 90 or more days fell to 7.3 percent in February, down from 7.8 percent at the same time a year ago but up slightly from the 7.2 percent seen in January 2012.

About 3.4 percent of all homes with a mortgage were in the foreclosure process, down from 3.6 percent a year ago. Approximately one-third of homes nationally are owned outright and do not have a mortgage.

The five states with the highest foreclosure rates were: Florida (12.0 percent), New Jersey (6.6 percent), Illinois (5.4 percent), Nevada (5.0 percent) and New York (4.9 percent).

The five states with the lowest foreclosure rates were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Montana (1.4 percent).


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Sales of second homes soar to highest level since 2005

Sales of second homes, which include vacation and investment homes, soared in 2011 to their highest market share since the height of the housing boom, according to an annual report from the National Association of Realtors.

NAR’s 2012 Investment and Vacation Home Buyers Survey includes 2,241 responses from U.S. households who bought either new or existing homes in 2011. The association conducted the survey in March 2012 and controlled for age and income.

Investors lead the surge in second-home sales. Sales of investment homes climbed 64.5 percent in 2011, to 1.23 million, from 749,000 the year before, the report said. At the same time, sales of vacation homes increased 7 percent to 502,000, compared to 469,000 in 2010.

Combined, second-home sales accounted for 38 percent of all home sales last year (27 percent investment homes, 11 percent vacation homes), up from 27 percent in 2010 (17 percent investment homes, 10 percent vacation homes). That’s the highest share since 2005, when second-home sales made up 40 percent of sales overall.

Meanwhile, owner-occupied home sales fell 15.5 percent year over year in 2011, to 2.78 million, the report said.

"During the past year investors have been swooping into the market to take advantage of bargain home prices," said Lawrence Yun, NAR’s chief economist, in a statement.

"Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."

Second-home buyers weren’t hesitant to use cash, Yun added. About four out of 10 vacation-home buyers paid in cash last year, while roughly half of investment buyers did. Of those who did finance their purchase, the median down payment was 27 percent, the report said.

Investors paid somewhat more for their purchases in 2011 than in 2010, though vacation-home buyers paid less. The median price for an investment home last year rose 6.4 percent to $100,000 last year, while the median price for a vacation home fell 19.1 percent to $121,300. Distressed properties accounted for half of investment-home sales, 39 percent of vacation-home sales, and 29 percent of primary-home sales.

Primary-home buyers paid a median $167,700 for their purchase in 2011, down 5.1 percent from the year before.

Investors and vacation-home buyers tended to be older and more affluent than primary-home buyers. While the latter had a median age of 39 and earned a median household income of $72,400, the typical investment-home buyer was 50 years old and earned a median household income of $86,100 and the typical vacation-home buyer was also 50 years old with a median income of $88,600.

Investors planned to hold the property for a median five years and generally bought a home that was a median 25 miles from their primary residence. In an indication of flipping activity, 5 percent of homes purchased by investment buyers in 2011 have been resold, up from 2 percent in 2010, the report said. Investors typically bought in suburban areas.

Vacation-home buyers planned to hold the property for a median 10 years and purchased a property that was a median 305 miles away. Vacation-home buyers typically bought in rural or suburban areas.

As in the 2010 survey, the South accounted for the biggest share of second home purchases in 2011, followed by the West.

Region of Home Purchase Primary
Residences
Vacation
Properties
Investment
Properties
Northeast 20% 15% 15%
Midwest 23% 12% 17%
South 35% 42% 44%
West 22% 30% 23%
Outside the U.S.  0% 1% 0%

Source: NAR

Also as in the 2010 survey, second-home buyers, especially investors, were slightly more ethnically diverse than primary-home buyers. Among primary-home buyers, 82 percent were white, 8 percent were Asian, 7 percent were black, 5 percent were Hispanic, and 1 percent were "other."

Among buyers of investment properties, 76 percent were white, 13 percent were Asian, 8 percent were black, 6 percent were Hispanic, and 1 percent were "other."

Roughly half of second-home buyers purchased through a real estate agent or broker. Second-home buyers were somewhat more likely than primary-home buyers to buy through a foreclosure or trustee sale or directly from an owner the buyer knew.

Purchase Method Primary
Residences
Vacation
Properties
Investment
Properties
Through a real estate agent or broker 69% 55% 48%
Foreclosure or trustee sale 5% 14% 17%
Directly from owner whom the buyer knew 9% 16% 17%
Directly from owner whom the buyer didn’t know 5% 8% 7%
Directly from builder or builder’s agent 9% 3% 5%
Other 3% 5% 6%

Source: NAR

Although the report released today is based on responses from U.S. addresses, according to a separate, monthly survey (the Realtors Confidence Index), international purchases accounted for about 3 percent of transactions in 2011, "which would be in addition to today’s findings," NAR spokesman Walter Molony told Inman News.

Because foreign buyers are often limited in how long they are allowed to stay in the U.S. within a given year, their purchases tend to be for either vacation or investment purposes, or both. A recently released Inman News report, "10 Hot Spots for Global Homebuyers," highlights the most popular U.S. areas for international buyers as well as their top countries of origin, preferred property types, and how they find the real estate professionals they work with.

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Why some cities grow, others decline

What causes some cities to grow while others decline?

There are multiple answers to this question: long-term population shifts, i.e., Rust Belt to Sun Belt; loss of headquarter companies; loss or gain from industry; preponderance of higher education opportunities, etc. Generally, a city declines in population due to a multiplication of factors, while a similar city prospers due to a different mix of the same factors.

Boston is a good example. In the 1990s, four major high-tech firms in the city’s metro area — Digital General, Data General, Wang and Apollo — failed, yet the city has maintained relative population consistency and prosperity. A couple of reasons for Boston’s good fortune: a huge university infrastructure and a dense, thriving downtown.

For decades after the decline of the steel industry, Pittsburgh was a city in a population freefall, but unlike other, older industrial cities, it has finally arrested the meltdown and stabilized once again. Part of the reason: Pittsburgh, too, has a very good university infrastructure, which like Boston, has created a fulcrum of employment in particular fields, i.e., health services.

One difference between Boston and Pittsburgh is that the former city has been building on its intellectual resources for a longer period of time. It’s only been in the past decade that Pittsburgh stopped losing so many of its university graduates.

Over the last 60 years, all metro areas have had to contend with a shifting population, mostly further away from the central business district to the suburbs, then exurbs. Over the past two decades, some cities have experienced a reverse migration as young adults and even young families found inner-city living more to their liking. Cities such as Denver and Seattle have been successful in attracting population back to the downtown.

Even the Phoenix metro, notorious for its massive sprawl, has seen a kind of redensification of its central business districts. I’ve lived in the Valley of the Sun, the colloquial name for the Phoenix-Mesa-Scottsdale metroplex, for more than three decades and the central business district (CBD) of Phoenix is the healthiest I’ve ever seen it.

In the modern world, a healthy metro area attains a kind of balance between the CBD and its suburbs. But, what happens when a city loses the balance, i.e., when population density declines at the core and there is no stabilization?

Kyle Fee and Daniel Hartley, two research specialists working for the Federal Reserve Bank in Cleveland, had been watching their city’s population drift downward for years and decided to undertake a study basically trying to understand whether density loss presupposes full economic decline.

Cleveland’s population peaked in 1950 at 914,808. In 2010, the U.S. census reported the city’s population had fallen to 396,815, a level not seen since the end of 1800s. Yet, the full Cleveland metro area was still fairly strong at 2.25 million people.

Fee and Hartley’s study looked at how population density in major MSAs (metropolitan statistical areas) grew or declined over recent 10-year blocks, essentially during the 1980s, 1990s and 2000s. Then it scrutinized how population density changed for growing and declining cities as a function of distance from city center.

The major conclusion from the study showed growing cities tended to be increasing population density near the center and further out, but the declining cities, especially during the 1980s and 1990s, were losing population at the core. In the 2000s, the effects seem to be somewhat mitigated by the recession.

Some highlights from the Fee and Hartley study:

  • The peak increase in population density in MSAs that were growing during the 1980s occurred 10 miles from the central business district. In the 1990s, this pattern was even more pronounced.
  • In the 2000s, for cities that were growing, the biggest increase in population density was near the CBD, while there was smaller growth in population density further away from the CBD. One guess is that this was due to gentrification and redevelopment of neighborhoods closer to the city center.
  • For cities that were shrinking, the 1980s showed a big drop in population near the CBD. Surprisingly, during that decade, at distances between 20 and 30 miles from the CBD, population density was increasing during this same period. As Fee and Hartley note, "This pattern is consistent with home-buying habits where more affluent households upgraded to larger and new housing farther from the center of the city, while less affluent households took up the housing left behind."
  • For cities that were shrinking, the 1990s showed the "biggest" loss of population density close to the CBD. Meanwhile, at distances farther than 20 miles, there was no longer any increase in population density. The change in population density was essentially zero.

Fee and Hartley suggest population density is correlated with productivity in general, and there was a study in the mid-1990s for the American Economic Review that reports a relation between county employment density and productivity at the state level, which, in some ways, illustrates how Boston was able to withstand a loss of four key employers: because there was a strong density in population and a similar dense technology employment cluster 10-20 miles outside the CBD. There was, of course, also the education factor.

However, Hartley does concede, "We still don’t know if density, particularly at the core, is important to the whole metro productivity numbers."

So what should we take away from Fee and Hartley’s study? The most important point, says Hartley, "is that certain cities that had been losing density happen to be the same MSAs that have been declining in population over a long period of time."

That’s actually very important for politicians and urban planners to note; if you don’t take care of the CBD, it doesn’t bode well for the future of your city.

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.

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Programmable thermostat cuts energy costs

What if I told you it would be possible to slip an extra $180 in your pocket this year — and every year after that — and have a more comfortable home at the same time? That should be worth a trip to the home center, right?

A savings of $180 a year is what the U.S. Department of Energy estimates the average homeowner can achieve by installing and maintaining the settings on a programmable thermostat. And the great thing is, once the settings are programmed in, you can forget about them, so your house stays more comfortable, day and night, all year long.

Programmable thermostats are simple to understand. They control your home’s heating and/or cooling systems by adjusting them to specific preset temperatures at specific preset times. No more fiddling with temperatures or forgetting to turn the heat down when you go to bed or leave for work. Just set it and forget it.

The four different modes

Programmable thermostats have four different time and temperature modes programmed in, and that’s what makes them so convenient and easy to use:

Wake: This mode is used to select the time that you normally get up in the morning, and what temperature you want the house to be at that time.

Day: If you leave for work at a specific time, this setting will lower the heat down to a specific temperature and hold it there while you’re away. For air conditioning, it will raise the temperature setting and hold it there.

Evening: This setting is for when you return from work in the evening, and the thermostat will bring the temperature in the house back up to a comfortable level (or, in the case of air conditioning, down) before you get home.

Sleep: Set this time for when you normally go to bed. The thermostat will set the temperature down (or up for AC) to whatever level you set and hold it there until the Wake cycle kicks in again the following morning.

In addition to these four basic modes, there are overrides as well. You can tell the thermostat to temporarily override the program and raise or lower the heat or the air conditioning until the next cycle starts, for those times when you’re home and you want it a little warmer or cooler. There’s also a "hold temperature" mode for use when you’re on vacation, so you can set a higher- or lower-than-normal temperature while you’re gone and the thermostat will hold that indefinitely, regardless of the four different cycles.

Four different models fit your lifestyle

There are four basic types of programmable thermostats available, depending on the needs of your particular lifestyle:

7-day: The 7-day model allows you to program the four modes individually for each day of the week, and often with different settings within each of the modes. These models allow you the most flexibility, and are the best choice if you work odd hours, multiple shifts, have children at home at different hours, or otherwise keep a schedule that’s not really consistent. As you might imagine, 7-day thermostats are the most complicated to program initially, and are typically the most expensive of the four types of thermostats.

5-1-1-day: A 5-1-1 thermostat is for people who keep a pretty consistent schedule during the week, but want some flexibility on the weekends. The thermostat can be set up for five days all the same, typically Monday through Friday, and then Saturday and Sunday can each be set up with individual programs.

5-2-day: These thermostats provide for one set of program settings for the five weekdays, and a second set of program settings for the weekend.

1-week: These thermostats are the least flexible, so consequently they’re the easiest to program and typically the least expensive to purchase. They have all four modes, but utilize the same time and temperature settings for all seven days of the week. They’re a great choice if you’re retired, or for anyone who’s home most of the time.

Cost and installation

Programmable thermostats are available in both low-voltage and line-voltage models, and range in price from around $35 to more than $300. In addition to the features described above, there are other bells and whistles, including wireless operation, exterior temperature connections, dirty-filter warnings, low-battery warnings, and more.

Many of these thermostats are designed for do-it-yourself installation, with clear instructions and only basic tool requirements. Most require that you simply remove wires from the existing thermostat and reconnect them to the new thermostat. However, some of the more sophisticated thermostats can have multiple wire connections and complicated settings, and require professional installation. If you have any questions or concerns, discuss them with the dealer where you purchase the thermostat or with a licensed HVAC contractor prior to beginning the installation.

Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author’s actual testing of free review samples provided by the manufacturers.

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CoreLogic: 2.3M homeowners may qualify for ‘HARP 2.0′

Lenders are finding they can make a bundle refinancing underwater homeowners under the Obama administration’s revamped Home Affordable Refinancing Program (HARP), and CoreLogic has rolled out a new service that helps loan originators identify eligible borrowers.

CoreLogic HARP 2.0 lead-list service searches the company’s vast loan database, applying automated valuation models (AVMs), lien information, and other analytics to identify more than 2.3 million borrowers CoreLogic says have a "strong likelihood" of potential eligibility for HARP refinancing.

"Our ability to provide specific homeowner data, highly accurate loan-to-value estimates, identification of lenders, current owner occupancy status, and liens associated with a property can be especially helpful to originators looking to build or defend their current portfolio," the company said.

When it was launched in February 2009, the HARP program was intended to help "responsible" borrowers with little or no equity in their homes refinance without having to purchase additional private mortgage insurance.

Participation in the program — available only to homeowners whose loans are owned or guaranteed by Fannie Mae and Freddie Mac — fell short of initial expectations.

After raising the initial 105 percent loan-to-value cap to 125 percent, last fall Fannie and Freddie’s regulator, the Federal Housing Financing Agency, dropped the LTV cap altogether in rolling out what’s been dubbed "HARP 2.0."

As an incentive to boost participation, Fannie Mae and Freddie Mac are releasing lenders who sign off on a refinanced loan from some legal liabilities associated with the original loan.

The mortgage giants also have the go-ahead to sign off on refis without an appraisal if they have reliable AVM estimates for the property.

The revamped program is popular with lenders, who can make as much as $10,000 per loan on HARP refinancings, National Mortgage News reports. Loan originators make more money when reselling HARP loans on the secondary market, because borrowers are unlikely to prepay their mortgage because of they have little or no equity in their homes.

Borrowers refinancing under HARP are also paying higher interest rates than non-HARP borrowers, Housing Wire reports, citing an analysis by Amherst Securities Group.

Lenders only benefit from Fannie and Freddie’s waiver of seller servicer "representations and warrants" when they refinance loans they previously originated.

That means borrowers are effectively locked into refinancing with their existing lender, "which conveys tremendous pricing power to the banks," Amherst said in its analysis.

Amherst found that three lenders — Wells Fargo, JPMorgan Chase, and Bank of America — have handled more than 60 percent of HARP refinancings.

According to the most recent numbers from FHFA, lenders had completed 1,021,849 HARP refinancings through December 2011, although only 90,616 of those were for borrowers with loan-to-value ratios above 105 percent.


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Pressure on mortgage rates eases

After climbing for two weeks in a row, mortgage rates reversed course this week, with rates on 30-year fixed-rate loans again below 4 percent after Federal Reserve Chairman Ben Bernanke voiced worries about persistently high unemployment.

Freddie Mac’s Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.99 percent with an average 0.7 point for the week ending March 29, down from 4.08 percent last week and 4.86 percent a year ago. Rates on 30-year fixed-rate mortgages hit an all-time low in records dating to 1971 of 3.87 percent during the first three weeks of February.

Rates on 15-year fixed-rate mortgages, a popular refinancing option, averaged 3.23 percent with an average 0.8 point, down from 3.3 percent last week and 4.09 percent a year ago. Rates on 15-year loans hit a low in records dating to 1991 of 3.13 percent during the week ending March 8.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.9 percent, with an average 0.8 point, down from 2.96 percent last week and 3.7 percent a year ago. The five-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23.

Rates on 1-year Treasury-indexed ARMs averaged 2.78 percent with an average 0.6 point, down from 2.84 percent last week and 3.26 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.

Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans during the week ending March 23 was up a seasonally adjusted 3.3 percent from the week before. The MBA survey showed demand for purchase loans was up 1 percent from a year ago.

Requests to refinance existing mortgages were down for the sixth week in a row, to a level 24.2 percent lower than a peak seen in February, 2012. Requests to refinance still accounted for 71.9 percent of all mortgage applications, but that’s the lowest share since July 2011.

Freddie Mac’s chief economist, Frank Nothaft, attributed the decline in mortgage rates to weaker housing economic indicators.

The Standard & Poor’s/Case Shiller 20-City Composite home price index slid in January to its lowest reading in about a decade, Nothaft said in a statement. "In addition, new-home sales declined 0.5 percent in February, below the market consensus of an increase, and pending existing home sales also declined for the month."

Mortgage rates are determined largely by investor demand for mortgage-backed securities (MBS) guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

During the downturn, the government helped keep mortgage rates low by buying more than $1 trillion in MBS. The government’s "quantitative easing" programs — which also included purchases of Treasury bonds — added to the demand for MBS and similar investments, pushing up their price, and reducing their yields.

Although the Federal Reserve discontinued its mortgage-backed securities purchases in March 2010, mortgage rates continued to fall as MBS remained popular with investors seeking a safe haven from turmoil in financial markets.

As the economic recovery picks up steam, mortgage rates and interest rates could rise if government-backed MBS and Treasury bonds fall out of favor with investors.

Real estate economists and analysts surveyed by the Urban Land Institute expect 10-year Treasurys to rise as the recovery picks up steam, from an average of 2.4 percent this year to 3.1 percent in 2013 and 3.8 percent in 2014.

Historically, mortgage rates have tracked 10-year Treasury yields fairly closely, so that forecast implies mortgage rates could rise 140 basis points, or 1.4 percentage points, in the next two years.

According to Euro Pacific Capital Inc. CEO Peter Schiff, the flight from bonds could be exacerbated by the government’s massive holdings, which Schiff thinks have a distorting effect on the market.

Schiff — whose views are more pessimistic than those of many investors and economists — predicts a bubble in bond markets will lead to another economic crash in the next two to three years.

The root of the problem is similar to the problems faced by debtor nations in Europe, Schiff told Forbes this week: “We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back."

Mortgage rates began their recent surge on March 13 after the Federal Reserve’s open market committee announced that its members do not anticipate an expansion of existing quantitative easing programs.

The committee said the Fed will continue reinvesting principal payments from its MBS holdings into like investments, and rolling over maturing Treasury securities at auction. Signs of an economic recovery and a surge in the stock market may also have hurt demand for Treasurys and MBS.

Yields on Treasurys and MBS came back down this week after Federal Reserve Chairman Ben Bernanke said unemployment remains a worry and that the Fed remains prepared to boost the economy with "continued accommodative policies."

Much of the recent improvement in job markets is due to a slowdown in layoffs rather than increased hiring, Bernanke said Monday at an economics conference.

The private sector employs 5 million fewer workers than it did at its peak, and the workforce has grown in the meantime, he noted. The unemployment rate in February was 3 percentage point above its average over the 20 years before the recession.

Further improvements in the unemployment rate "will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke said.

The National Association of Realtors’ chief economist, Lawrence Yun, stated that fears of rising mortgage rates could spur homebuyer demand. But if rates increase significantly, that would reduce buyers’ purchasing power, Yun said.

Yun predicts rates on 30-year fixed-rate mortgages will soon be in the 4.3 to 4.6 percent range.

In their most recent forecast, economists at Fannie Mae said they expect 30-year fixed-rate loans to average 4.1 percent during the second half of 2012, and 4.3 percent in 2013.


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Trulia: Most popular U.S. cities for international house hunters

Real estate search and marketing company Trulia analyzed its 2011 search traffic to determine its largest sources of visitors outside of the U.S., and also to determine which U.S. markets are most popular among those international visitors.

This report lists the 15 nations that are the source of most of Trulia’s international searches. Canada tops the list with the highest volume of visits to Trulia, followed by the United Kingdom and Germany.

This report also lists the top five U.S. cities where visitors from each nation are searching for homes, in order of most popular (ranked first) to least popular (ranked fifth).

Trulia also compiled a list, included in this report, of the top 30 most popular U.S. markets among the visitors from these 15 nations, based on overall search activity. New York City ranks as the top choice among visitors from all of these nations, followed by Los Angeles and Las Vegas.

This Trulia analysis is also featured in the Inman News report: 10 Hot Spots for Global Homebuyers, prepared by Inman News reporter Andrea V. Brambila.

No. 1: Canada
1.   Las Vegas
2.   Los Angeles
3.   Naples
4.   Fort Lauderdale
5.   New York

No. 2: United Kingdom
1.   Los Angeles
2.   New York
3.   Beverly Hills
4.   Kissimmee
5.   San Francisco

No. 3: Germany
1.   Los Angeles
2.   New York
3.   Cape Coral
4.   Miami
5.   San Antonio

No. 4: Australia
1.   New York
2.   Los Angeles
3.   San Francisco
4.   Beverly Hills
5.   Las Vegas

No. 5: Mexico
1.   San Diego
2.   Chula Vista
3.   El Paso
4.   San Antonio
5.   Los Angeles

No. 6: France
1.   New York
2.   Los Angeles
3.   Miami
4.   Miami Beach
5.   San Francisco

No. 7: India
1.   New York
2.   Chicago
3.   Los Angeles
4.   Brooklyn
5.   Miami

No. 8: Brazil
1.   Miami
2.   New York
3.   Los Angeles
4.   Orlando
5.   Miami Beach

No. 9: Japan
1.   Honolulu
2.   Los Angeles
3.   New York
4.   San Diego
5.   Jacksonville

No. 10: Italy
1.   New York
2.   Miami Beach
3.   Los Angeles
4.   Miami
5.   San Francisco

No. 11: China
1.   New York
2.   San Francisco
3.   Los Angeles
4.   Portland
5.   Las Vegas

No. 12: Netherlands
1.   New York
2.   Los Angeles
3.   Miami
4.   Beverly Hills
5.   Miami Beach

No. 13: Spain
1.   New York
2.   Miami
3.   Los Angeles
4.   Miami Beach
5.   San Francisco

No. 14: Russia
1.   Los Angeles
2.   New York
3.   Miami
4.   Miami Beach
5.   Chicago

No. 15: Switzerland
1.   New York
2.   Miami Beach
3.   Los Angeles
4.   Cape Coral
5.   Miami

Based on the search activity from these 15 countries, here are the most popular U.S. cities, in order of most popular (ranked first) to least popular (30th):

1. New York, N.Y.
2. Los Angeles, Calif.
3. Las Vegas, Nev.
4. Miami, Fla.
5. San Francisco, Calif.
6. Orlando, Fla.
7. Fort Lauderdale, Fla.
8. Naples, Fla.
9. Cape Coral, Fla.
10. Miami Beach, Fla.
11. Beverly Hills, Calif.
12. Fort Myers, Fla.
13. Palm Springs, Calif.
14. Brooklyn, N.Y.
15. Chicago, Ill.
16. Kissimmee, Fla.
17. San Antonio, Texas
18. San Diego, Calif.
19. Chula Vista, Texas
20. Davenport, Fla.
21. El Paso, Texas
22. Malibu, Calif.
23. Brownsville, Texas
24. Honolulu, Hawaii
25. Detroit, Mich.
26. Philadelphia, Pa.
27. Boca Raton, Fla.
28. Phoenix, Ariz.
29. Portland, Ore.
30. Jacksonville, Fla.

Methodology:
Lists are based on property views on Trulia.com by non-U.S.-based users between Jan. 1, 2011, and Dec. 31, 2011. International house hunters accounted for about 6 percent of all the visits Trulia received in 2011.
Source: Trulia.

View the full report: 10 Hot Spots for Global Homebuyers.


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48-hour bedbug rule may not fly

Q: I’ve just signed a lease that has a clause about bedbugs. It says that I must report any evidence of bedbugs in my apartment within 48 hours of seeing it, and that if I don’t, I’ll be responsible for the cost of getting rid of them.

The lease also makes me agree to inspection without prior notice, when the purpose is to check for an infestation. Are these legal provisions? –Marcus D.

A: Like many landlords, your landlord is getting serious about detecting and getting rid of bedbugs. He may have had trouble in the past with tenants who had the problem but failed to report it.

Some tenants think they can handle it on their own; some are afraid of retaliation if they inform the landlord; and some are just in denial or too embarrassed to bring it up. The consequence of delay is often a building-wide infestation, which is a huge problem for other residents and the owners.

Your landlord’s idea of holding you responsible for eradication costs if you fail to report an infestation within 48 hours is similar to a provision in a bill being considered in Iowa, House Study Bill 520.

That bill goes quite a bit further, however: Tenants who fail to report bedbugs will be responsible for building-wide remediation. The Iowa bill also provides that a tenant who doesn’t report an infestation within seven days of moving in is acknowledging that the unit is bedbug-free.

Interestingly, the state’s attorney general has come out against the bill, pointing out that its provisions remove any incentive for landlords to act on their own. And expecting every tenant to recognize an infestation may be asking too much if tenants are not aware of the telltale signs of bedbugs.

It’s one thing for legislators to change the rules. Judges will enforce these changes unless there’s something seriously wrong, public policy-wise, about the new regime. But your landlord is trying to change the rules on his own, without any help from the Legislature. And here is where your landlord may have a problem.

First, what about that "no bugs within 48 hours, it’s bedbug-free" acknowledgement? Presumably, if an infestation appears one week into the tenancy, the landlord can argue that it’s the new tenant who introduced them.

Consequently, the landlord will argue, the tenant should pay the remediation costs. But this reasoning ignores a fact of bedbug life: These hardy creatures can go dormant and live on for months, without a source of food, then spring to life when food (a tenant’s warm body) appears.

In other words, bugs in a vacant apartment may well simply hang out for a while — more than 48 hours after the new resident moves in — before becoming active. Their activity does not mean that the new tenant brought them with him.

Second, the provision that allows for no-notice entry to deal with a bedbug problem may run afoul of your state’s access laws. Most states regulate how much notice a landlord must give before entering, though all allow entry in case of an emergency.

A bedbug infestation, albeit nasty, is not an emergency at the level of leaking gas or billowing smoke. If your state has notice requirements, asking you to waive your rights to notice so that the infestation can be addressed will violate your state’s law.

Q: I need to break my lease to take a job in another city. My lease says that I will be responsible for the landlord’s costs to ready, advertise, show the unit, and screen any replacement. Is this legal? –Rich S.

A: When tenants break a lease without legal justification, they are still responsible for the rent for the balance of the lease term. However, many states require landlords to use reasonable efforts to re-rent the unit; once a new tenant moves in, the original tenant’s responsibility ends.

In all states that impose this "duty to mitigate," if the landlord fails to take steps to re-rent, the tenant is off the hook. On the other hand, if the landlord is able to find a new tenant only at a lower rent (perhaps the market has cooled), the tenant remains responsible for the difference.

Whether the lease-breaking tenant is also responsible for the landlord’s costs to re-rent is not so clear, however. A few state laws say so directly.

For example, Washington allows landlords to collect their "actual costs" of finding a new tenant (see Washington Revised Statute Section 59.18.310). Arizona effectively allows the same thing, by declaring that the security deposit of a tenant who abandons the rental is forfeited, to be applied to "any accrued rent and other reasonable costs incurred by the landlord by reason of the tenant’s abandonment" (see: Arizona Revised Statute, Section 33-1370).

Some states simply don’t address the issue. Others give vague directions: For example, California allows landlords to recover from the tenant, in addition to lost rent, compensation for "all the detriment" caused by the tenant’s breach (see: California Civil Code Section 1951.2).

So, whether your landlord can stick you with re-renting costs will depend on your state’s law on the subject. If there is no clear answer, you might try arguing against having to pay those costs this way: The landlord would have incurred re-renting costs had you stayed until the end of the lease term, and you certainly would not have been responsible for them at that time.

Why should you pay now, simply because the costs are hitting several months earlier? To say that it’s part of your punishment for breaking the lease without justification won’t fly. People who back out of contracts are expected to pay for the actual damages they cause, not to pay penalties.

But that’s not to say that your early departure did not cause damages besides the loss of the rent. There is a fair way to measure your landlord’s damages: His early re-renting efforts meant that he spent money several months earlier than he had planned. For those months, the money he had to lay out was not in his bank account, earning interest.

That lost interest is a true measure of his damages. In addition, he’s had to devote staff and personal time to a chore that he expected would arrive later; he may be able to put a reasonable monetary figure on the value of postponing what he and the staff would otherwise have been doing.

Taken together, these are the landlord’s true damages caused by having to find a new tenant sooner.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@inman.com.

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A seller financing checklist

Q: We own a vacation condo in Florida. Due to a new investor coming in and purchasing 51 out of 232 units in the complex, banks and mortgage companies in the area are no longer financing any units for fear that the investor may go "belly up" and default (which would basically kill the homeowners association).

My unit has been on the market for more than a year awaiting a cash buyer, to no avail. What is your thought on offering "partial seller financing" (e.g., financing 50 percent of the sale and requiring a 50 percent down payment)? –J. Getz

A: When a seller has not exhausted his or her basic options for getting a home sold, like simply reducing the list price to a level consistent with other recent sales, I’m generally inclined to discourage seller financing — or at least to issue a series of cautions.

And frankly, most sellers on today’s market are selling because they want to completely divest of a property and get closure on that stage of their lives — and they need the cash from a sale to pay off the mortgage and move on with things.

Seller financing continues to keep the seller tied up with the property for the term of the financing he or she extends; and it comes with accounting obligations and the risk that the buyer/borrower will default, forcing the seller to incur the expense and trouble of foreclosing and reselling the property.

On the flip side, sellers who finance properties can sometimes charge a premium price for the property itself, and an above-market interest rate on the financing.

Also, if they collect a hefty down payment upfront, as you’re proposing, that does two things: minimizes the risk that the buyer will default later and walk away from their investment, and turns what would be a loss for the seller (foreclosure on the property) into a potential profit, in cases where the seller is able to keep the down payment and the proceeds of reselling the home after foreclosing on it.

In your situation, there simply aren’t too many marketing tactics or things you can do that are liable to lure a buyer by solving for the problem of mortgage lenders refusing to lend in that area — except for seller financing.

And, to be honest, offering 50 percent seller financing might not even do it. Chances are, many buyers are aware of the issue and share the same (somewhat valid) concerns as the bank.

But you can’t control what every buyer thinks; all you can control is what you do, and I think offering seller financing is an action strategy to explore.

As you do, here are three suggestions for your effort to use seller financing to get your place sold:

1. Act like a bank. Run a credit check, get references, and verify the home address and employment of a would-be buyer before you agree to lend to him or her.

If you are able to get the place sold, and the buyer begins making late payments, charge late fees and don’t let months of excuses go by for missed payments before you begin the process of foreclosing on the home (unless you can well afford to forgo the payments and have some reason for coming to some sort of agreement with the buyers).

Many seller-financiers get friendly with their buyer-borrowers over time, but it’s important not to let such relationships interfere with your own personal finances or put you in the hole.

2. Hire an attorney. Have a local attorney (ideally someone who practices real estate law and also has some background with title issues) take a look at your existing mortgage documents (if you have a mortgage) and advise you on how, logistically, to move forward with a seller-financed sale.

There are various ways to execute such a sale, and each way has a different set of rights and obligations on each side, not to mention the differing tax and other implications they pose. Consider also asking the attorney to draw up the documents and record them, as needed, depending on the route you choose.

3. Seller financing is not a panacea. Based on your description of the market factors in your area, it’s entirely possible that you might still need to bring the price down or accept a down payment lower than 50 percent to get your vacation home sold.

Work with your local real estate broker or agent to put a plan in place for maximizing the chances of selling your place, including, but not totally limited to, leveraging seller financing.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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7 mobile trends shaking up real estate

Mobile technologies are revolutionizing the way real estate is being conducted at every level of the transaction. If you’re not part of the mobile revolution, the time to get involved is now.

What are the mobile trends that will influence your business in the not-too-distant future? Here are some of the most important ones:

1. Everyone has a mobile phone (well, almost everyone).
Real estate strategist Stefan Swanepoel, in his Trends Report 2012, points to a number of important mobile trends that are changing how the real estate industry will conduct business in the future. One of the most important trends is the explosion of mobile phone users.

According to a report from the Gartner Group, a tech research company, there were 5.3 billion mobile device users as of the end of 2011. That’s about four out of every five people on the planet. In the U.S., nine out of every 10 Americans also have a cell phone. As a result, an ever-growing number of real estate transaction-related communications are taking place on mobile devices.

2. Laptops give way to phones and tablets.
According to Swanepoel, "55 percent of Gen (Yers) communicate with their friends via social networking sites on their mobile device."

Furthermore, mobile devices have made their way from practicality to fashion accessory: "Almost 1 in 2 Gen (Yers) view their phone as a status symbol and 61 percent consider mobile handsets to be a fashion accessory," according to Swanepoel.

The mobile agent and the mobile transaction have finally started to gain steam. In fact, if you own an Android-based smartphone or an iPhone, you can already do the large majority of your transaction work on your mobile.

The question is: Will you opt for your phone or for carrying your tablet?

Agents almost always have their mobile phone with them. You can use apps such as Evernote or Dragon Dictation to capture notes on your phone. The beauty of these programs is that they sync back with your other devices because they reside in the cloud.

3. Business will move from a paper trail to a digital trail in the cloud.
This means you will no longer be storing your information, your contracts and other documentation on your laptop — or worse, in a metal filing cabinet.

Instead, information is shared through the cloud. You are already using cloud technology if you have a Gmail account, use an online calendar, use Evernote, listen to Pandora radio, or use just about any other application that does not reside on the hard drive on your computer.

4. What will be your strategy for handling mobile signatures?
Paper-based transactions will soon be as obsolete as the old multiple listing service "dumb" terminals that used to take 10 minutes to print a single listing photo. Depending upon the type of device you use, you will have to determine whether your clients sign directly on your device with a finger, a stylus or a light pen.

Alternatively, companies such as DocuSign have the capability to issue digital signatures that work essentially the same way that you would shop online. You are assigned a private "key" that is tied to a login and/or other identifying pieces of information.

5. Location-based advertising
This is the holy grail in the advertising industry. Imagine that you are at your local mall and your favorite shoe store recognizes that you are nearby based upon your phone’s GPS. You receive a text message with a coupon for 10 percent off of any pair of shoes in the store if you drop by in the next hour.

In terms of the real estate industry, you can already drive down any street and determine a wealth of information about any property, whether or not it is listed.

Now imagine that you have registered to be notified of houses that come on the market in a certain price range, with a specific bedroom-bath count, as well as a specific location. When you drive through a neighborhood where you have been looking and there is a listing that fits your criteria, all the listing information, the public records and a video about the property will be pushed to your phone.

6. GPS face-to-face networking
A new app from Highlight may be an important forerunner for the next generation of mobile social networking. Instead of having to proactively check in on apps such as Facebook Places or Foursquare, the app uses the GPS on your phone to identify when someone you know or would like to know is in the same area where you are. There’s no need to check in.

According to online news site GigaOM: "After downloading and installing the (Highlight) app, users connect their accounts with Facebook, add a few minor personal details … and then they sit around and wait. Or move around and wait. Either way, eventually users will be pinged when they get within a reasonable distance of someone they might know or someone their friends know on Facebook."

This means that if one of your Facebook friends tells you that her cousin is thinking about selling his home and the cousin just happens to be at the same ice cream shop next to your office, you can walk over and introduce yourself.

7. Mobile overload
While all of these changes sound exciting, there are some serious issues that will have to be addressed as well. First, how available do you want to be? Do you constantly want to receive push notifications about who is nearby or about every single event happening around your real estate business?

Even more importantly, we are running out of cellular bandwidth due to the explosion of mobile devices. People are already having difficulty using their mobile phones in places such as New York City and San Francisco. How will you conduct your business when you can’t access your mobile carrier?

Changes in mobile technology will permanently alter the real estate landscape. Will you embrace the change or find yourself left behind in the dust?

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, “Real Estate Dough: Your Recipe for Real Estate Success.” Hear Bernice’s five-minute daily real estate show, just named "new and notable" by iTunes, at www.RealEstateCoachRadio.com. You can contact her at Bernice@RealEstateCoach.com or @BRoss on Twitter.

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NCAA ‘March Madness’ champions: a real estate review

Editor’s note: The following item is republished with permission of Realtor.com. See the original article: March Madness Homes: Salute to NCAA Tournament Champions. (All images courtesy of Realtor.com.)

For many, the March basketball foray that is March Madness is the equivalent of (sports) heaven on earth. In a salute to college basketball’s annual extravaganza, the field of 64, powerhouse programs and collegiate hoop legends both past and present, Realtor.com brings you a tournament tribute to the championship teams who have "cut the net" over the last decade.

2011 National Champions — Connecticut Huskies

If they had a March Madness for architects, this exemplary Greenwich, Conn., design by Paul Rudolph would most certainly be a high tournament seed, much like the Kemba Walker-led Connecticut team was when the Huskies ran the table to capture a National Championship in 2011.

March Madness Homes: Salute to NCAA Tournament Champions (PHOTOS)

Similar to Coach Jim Calhoun’s penchant for producing winners, Rudolph, whose home is currently listed for $12.49 million, has also influenced his fair share of star architects over the years, including Norman Foster and Richard Rogers.

March Madness Homes: Salute to NCAA Tournament Champions (PHOTOS)

…CONTINUED

Beverly Hills home where Michael Jackson lived: ‘This is It’

Editor’s note: This article is reposted with permission of Zillow. View the original item: "VIDEO: Home Where Michael Jackson Died Listed for Sale in Los Angeles."

By Erika Riggs

It was inevitable that the home where Michael Jackson met his untimely demise would eventually come up for sale. It was listed previously without much success and now, once again, it has hit the Beverly Hills real estate market and is being listed for $23.9 million.

Only this time, it carries a significant footnote in pop-culture history as the place where the King of Pop died.

But even as images of Jackson’s chaotically messy bedroom from that fateful 2009 night linger, the reality now is that the multimillion-dollar mansion in the tony neighborhood of Beverly Hills, Calif., has been cleaned up — destined for a new chapter with new owners.

The real question now, after so much drama (the word is that Jackson’s mother ordered the queen-sized headboard to be removed from the auction), is how to market the home where the King of Pop died?

Given the headline-news-circumstances of Jackson’s death, and the stunning loss of an entertainment icon, marketing this property would be a Herculean task for any real estate broker.

Unless, of course, the listing agent for the home where Jackson met his tragic end was a professional with a personal stake in not only maintaining the integrity of Jackson’s legacy, but representing the value of the home, too.

"I knew him and my wife (Kyle Richards) has been friends with Michael Jackson since she was 8 to 10 years old," said Mauricio Umansky, the listing broker for the Holmby Hills mansion and co-founder of The Agency. (Umansky appeared on stage during the Inman News Real Estate Connect conference in January.)

"And I personally think there’s some great energy in the house and I see it as a major positive. I’m excited to be selling it."

Umansky doesn’t dance around the subject of Jackson’s death in the home. He knows the pop-culture-changing bit of history will not only come up, but be a major storyline concerning the listing.

"It is what it is. There’s no need to hide it," Umansky said. "Michael Jackson was an amazing human being — he changed music as we know it. Unfortunately, he passed away. It doesn’t take away from the house."

Indeed, the grandeur is what drew Jackson to the 17,000-square-foot French Chateau-style estate that was the creation of Hubert Guez, CEO of Hardy Designs, and his wife Roxanne Guez.

In 2002, they hired Los Angeles designer Richard Landry to create the one-of-a-kind estate, at 100 N. Carolwood Drive in Los Angeles, which sits on over an acre in the prestigious Holmby Hills real estate market.

The seven-bedroom, 13-bathroom home is finished with high-end amenities such as a theater, wine cellar with tasting room, an elevator, 14 fireplaces, a spacious spa with gym, and a large swimming pool. When construction was completed, it was designed to sell and priced at $38 million on the Beverly Hills real estate market. That’s when Jackson fell in love with the property.

"He loved the master bedroom and he loved the grounds," said Umansky. "He was happy there."

The home was leased for Jackson by concert promoter AEG Live from December 2008 up until his death in June 2009 for a reported $100,000 monthly rental. And it was here that Jackson was preparing for his comeback tour, "This is It," when he died of a drug overdose for which his personal physician, Conrad Murray, was later convicted of involuntary manslaughter.

The home was relisted briefly in 2010 for $23.5 million, and the home has now been relisted again at a new price of $23.9 million. All contents relating to Jackson have been removed from the home following the sale of most of Jackson’s personal items, furniture and collections during a December 2011 auction.

Umansky said he has no plans to stage the home.

"You have the chance to live in the same home that an icon lived in. If you look at Elizabeth Taylor’s home, it sold for more money because it was Elizabeth Taylor’s home," explained Umansky. "It’s a beautiful home on a great piece of land."

While curiosity about the property is bound to spike with news of its relisting, there’s little chance that anyone except a preapproved buyer will get a tour of the place. Set behind high walls, thick hedges and double gates, it’s not an easy place to spy on. And Umansky said he will be screening all potential buyers for financial qualifications. This is standard operating procedure for any high-end property.

More Zillow "Eye Candy":

Copyright Zillow 2012


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Bad real estate agent

Am I a bad agent because I don’t use your product? Does that mean that I am not interested in raising the bar or creating a better user experience?

There are days when it seems like real estate agents are the people we love to hate, and some days it seems like I know more experts and people who used to sell real estate than active practitioners.

Many of the educational opportunities for agents are taught by vendors. They know best and work continuously to raise the bar by persuading agents to use their products.

There are people who became real estate experts because they once bought a house. I admire their passion but am not always impressed with their ideas.

What makes a good real estate agent? I am no expert. If I asked my clients what they want from an agent, I don’t think any two of them would have the same answer.

If something goes wrong in a transaction they blame the agent — mostly because they don’t know any better. There are surveys on what consumers want from their agents, but I question how scientific they are. Then again, I question everything because that is how I am.

Does not answering the phone right away make me a bad agent? I spend a lot of time on the phone, and I sometimes miss other calls when I am using the phone. Also, I generally won’t answer it when I am with another client.

I won’t answer after 9 p.m. unless it is a friend, one of my offspring, or maybe the pope. If that makes me a bad agent, I am OK with it. I can’t think of anyone who I do business with who answers the phone.

I’ll let you in on a little secret. I have been known to take my time responding to some of the stupid phone calls and emails that I get. I sometimes wonder if the consumers and agents who complain about agents not responding quickly are the most obnoxious callers.

Getting mixed up with a bad client makes me a bad agent. Have you ever had a seller who would not clean up the home or make repairs? Those homes make the agent look bad.

A good agent uses a stager and gets the home ready to go on the market. What would the experts who want to raise the bar think of some of the rental properties we sell?

There is so much misinformation out there about what a real estate agent is supposed to do. I watched a movie once where a real estate agent got to her open house early and washed all the windows and vacuumed the carpet before the open house.

I know real estate agents who have painted entire basements for their clients. They call it customer service. I call it outside the scope of my job and skill set, and I don’t think that makes me a bad agent.

We need to educate consumers so that they have an understanding of what kinds of services we provide. Some maybe better off hiring a painter.

Sometimes I get called a bad agent because I won’t use a certain product. There are a lot of good products for agents, but I won’t be bullied into buying any product.

Don’t tell me what is in the best interest of my clients unless you can back it up with numbers and those numbers need to be dollar amounts.

It is easy to be an expert and critique the performance of others, and to jump on the soapbox and write or speak about raising the bar.

If you don’t believe me, just give me a call and ask me what I would do to improve your business. I can think of a couple of industries where I could pontificate knowledgeably on what needs to change for a better customer experience.

It is easy to come up with ideas if I don’t have to implement them. I can just let my imagination run wild.

We do need to continuously improve, but buying your product may not be the solution. Asking each client what he or she expects, and then delivering on it or educating them as to what we do, is a better way to raise the bar.

All we need to do is satisfy our clients. It doesn’t much matter what anyone else thinks.

Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.

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