Inman Real Estate News for Realtors and Brokers 2020-10-27T18:01:16Z https://www.inman.com/feed/atom/ WordPress Jim Dalrymple II <![CDATA[Keller Williams NYC gets a new CEO]]> https://www.inman.com/?p=823091 2020-10-27T18:01:16Z 2020-10-27T18:01:16Z Lauren Balbuena will move from a Long Island Keller Williams franchise to lead the Manhattan-based company.

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Seven months after changing hands and consolidating, Keller Williams New York City is now getting a new chief executive officer.

Lauren Balbuena

Lauren Balbuena, who was previously serving as the CEO of Keller Williams Points North on Long Island, will now lead the Manhattan-based brokerage. Balbuena will take the reins from Mark Chin, who became the CEO of Keller Williams New York City in February after it was formed from a merger with another Keller Williams firm in the city.

That merger was the handiwork of Richard Amato, who bought the two Keller Williams offices from Ilan Bracha. Amato also owns and has invested in other Keller Williams franchises in the Tri-State Area, including Keller Williams Points North where Balbuena previously worked.

News of Balbuena’s appointment as CEO was first reported by the Real Deal. Various parties involved in the transition did not immediately respond to Inman’s request for comment, but Chin told the Real Deal that he will stay with the brokerage to run a new training and consulting program.

Mark Chin

In February, when Amato took over and consolidated the Keller Williams franchises in Manhattan, Chin told Inman that there were about 350 agents in the then-newly consolidated brokerage. That was down from many hundreds of agents more in prior years, but Chin said his goal was to build back up to about 500 agents in the short term. His longer term goal was to increase the count to as many as 1,000 agents.

Chin also praised Amato in February, describing him as a “very experienced” industry leader.

Speaking of his new role, he told the Real Deal this week that the leadership shakeup was a “win-win.”

Prior to leading Keller Williams Points North, Balbuena was an assistant team leader at Keller Williams’ Tribeca office. She also previously spent five years with Town Residential.

Email Jim Dalrymple II

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Marian McPherson <![CDATA[Expiring eviction moratoriums could lead to next housing crisis]]> https://www.inman.com/?p=823078 2020-10-27T16:21:49Z 2020-10-27T16:21:49Z Economists say America is on the brink of another housing crisis as rent debt reaches $7 billion.

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The coronavirus and the resulting historic spike in unemployment have pushed millions of Americans to the brink, with homeowners and renters alike worrying about their housing security. However, unlike the previous economic downturn in 2007, renters have fared much worse this time around as local and state governments prepare to lift eviction moratoriums at the end of the year.

According to a Wall Street Journal report published Tuesday, a wave of mass evictions is set to hit the apartment and single-family home rental markets as the outstanding rent debt surpasses the $7 billion mark. If Congress fails to pass another coronavirus stimulus package before years’ end, Moody’s Analytics told WSJ Americans’ outstanding rent debt could skyrocket to $70 billion —  resulting in a housing crisis that could rival what homeowners experienced 13 years ago.

“Federal and local eviction moratoriums have protected many of them from losing their homes if they missed payments during the pandemic,” wrote WSJ reporter Will Parker. “But the national eviction ban and some state and city protections are set to expire by January or sooner.”

“Renters will then be on the hook for months of missed payments, which even those who have jobs could struggle to pay,” Parker continued. “Estimates of total outstanding rent debt vary widely. Yet by any measure, the fallout from missed rent payments is bound to imperil a large swath of the U.S. population and wash over the broader economy.”

The average American renter owes $5,400 in back rent, the report said, with women, people of color, and low-income households at the highest risk of eviction. In California, Black and Latino renters are twice as likely to face housing and rent insecurity than their white counterparts — a trend that holds up in other metros across the country.

To survive, renters have been turning to credit cards to make rent payments, which compounds the amount of debt they’ll have to pay once the moratorium lifts and all back payments are due.

“These households will have to make some pretty massive financial choices and pull back on other spending to pay their rent,” Moody’s Chief Economist Mark Zandi told WSJ. “That’s a hit to the economy.”

“Even if now they are able to make their rent payment that huge inflation to their credit-card debt has become a new threat to their budget and their ability to cover all their expenses,” Money Management International financial counselor Kate Bulger added. “If [they] don’t pay it back that can escalate to things like judgments, potential garnishments against [their] wages.”

Right now, millions of imperiled renters are counting on The Centers for Disease Control and Prevention’s nationwide eviction moratorium that prevents landlords from evicting tenants who meet a number of requirements, such as being eligible for a CARES Act stimulus check, using their “best efforts” to make partial payments, and proving that an eviction would lead to homelessness.

As the CDC eviction moratorium deadline nears on Dec. 31, renters, landlords and their respective advocates are waging legal battles about the morality of evictions during a global pandemic, when and how back rent payments should be repaid, or if the federal government should step in and effectively cancel rent for millions of Americans by paying the bill themselves.

Landlords in multiple states have already found ways to begin or carry out the eviction process despite CDC rules, as evidenced by Florida and New York’s varying stances on evictions. While New York Governor Andrew Cuomo is working to extend renter protections through its Tenant Safe Harbor Act, Florida Governor Ron DeSantis has allowed the statewide eviction ban to expire — a move that some landlords are using to circumvent the CDC mandate.

“There are some hoops tenants have to jump through to be protected by the CDC suspension,” tenant advocate Eric Hauge explained in a previous Inman article about an app that helps landlords carry out evictions.

“The CDC moratorium has some holes in it,” Center on Budget and Policy Priorities Housing Policy Vice President Peggy Bailey added in another Inman article. “Landlords can still move for an eviction if they come up with a reason other than loss of income due to the pandemic, and it’s on the resident to prove the landlord wrong.”

Lobbyists and lawyers who support landlords’ rights are using the loopholes to file state and federal lawsuits arguing against the legality of federal, state or local eviction moratoriums, citing a “flimsy premise” that stopping evictions will prevent renters from contracting the coronavirus.

However, tenants advocates are pushing back: “To understand, ask yourself the question: Why would a landlord want to start eviction proceedings in October for an eviction that can’t happen until January? The answer: to pressure, scare and intimidate renters into leaving sooner,” National Low Income Housing Coalition President Diane Yentel said in a previous Inman report.

As renters and landlords battling for their respective rights, various national housing organizations such as The National Association of Realtors, are lobbying for a federal bill that would help renters and landlords navigate a fraught economic landscape.

“NAR understands the economic distress COVID-19 has caused people across the country, and we applaud efforts to keep families in their homes,” NAR President Vince Malta told Inman in a written statement on Oct. 13. “But while this eviction moratorium provides temporary relief to families, it places huge burdens on housing providers whose financial obligations remain as the pandemic endures.”

“NAR maintains regular communication with the White House while we press Congress to enact emergency rental assistance legislation through whatever vehicle necessary,” Malta added. “We must not allow a short-term emergency for renters to become a prolonged, national economic crisis, and the only way to protect renter households is through rental assistance programs for housing providers.”

Housing experts and advocates say we have little time to stop an impending rental housing crisis, and the main tool needed to create expansive, effective, and non-loophole-ridden local, state, and federal policies is reliable data. In September, renowned housing law expert Yuliya Panfil told Slate a lack of reliable data is preventing legislators from creating policies that fully grasp the scale of the eviction issue.

“In short, local policies, differences in institutional capacity, and a lack of standardization across jurisdictions countrywide lead to a frustrating inability to pull together housing loss data in any meaningful way,” Yanfil explained while pointing to the various ways jurisdictions handle and record evictions. “This has serious implications. For one, without knowing how many people are losing their homes and where they live, municipal leaders can’t prioritize housing aid and outreach.”

“If we’re going to solve America’s housing-loss crisis, we have to start with fixing the data,” she added. “We need national eviction and foreclosure databases.”

Until legislators create a comprehensive policy that benefits renters and landlords, both groups are in limbo, with each of their futures leading toward possible disaster.

“I’m not sure where this will leave me,” renter and single mother Isis Bouzy told WSJ. “I want to be a homeowner one day, and an eviction won’t look good.”

“Am I concerned that some tenants will leave me holding the bag? Yes,” New York City landlord Robert Nelson added in the same article. “But what choice do we have?”

Email Marian McPherson

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Patrick Kearns <![CDATA[EXp Realty doubled sales volume in Q3, earnings preview reveals]]> https://www.inman.com/?p=823068 2020-10-27T15:08:46Z 2020-10-27T15:08:46Z Agent count at eXp climbed north of 35,000 in the third quarter of 2020.

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EXp World Holdings (NASDAQ: EXPI), the parent company of the virtual cloud real estate brokerage eXp Realty, estimates its transaction volume and sales volume approximately doubled in the third quarter of 2020, according to a preliminary, unofficial earnings preview the company self-released Tuesday.

Glenn Sanford | Photo credit: eXp World Holdings

EXp World Holdings’ official earnings report is set to be released on November 9 and will provide a much fuller financial picture — including whether or not the company was profitable in the quarter — but the company released select numbers Tuesday showing transaction sides increased 95 percent, to 75,392, and sales volume increased 112 percent to $23.6 billion for the three months ending September 30, 2020.

“As one of the fastest-growing residential real estate brokerages, we continue to deliver on our value proposition to agents, consumers and shareholders,” Glenn Sanford, the founder chairman and CEO of eXp World Holdings, said in a statement. “Our world-class agents combined with a progressive cloud-based model provides a significant competitive advantage in the real estate industry, driving eXp to yet another quarter of record results.”

The company’s overall agent count continued to explode, hitting 35,877 at the end of the quarter, a year-over-year increase of 56 percent.

VirBELA, the virtual world platform owned by eXp World Holdings – and used by the company for its virtual cloud brokerage — is expected to report a revenue increase of more than 360 percent year over year, in the third quarter.

Companies typically release preliminary results when they expect to materially beat Wall Street consensus estimates or when the company’s stock is under considerable pressure despite sound fundamentals, John Campbell, an analyst with Stephens, told Inman.

“I think EXPI’s pre-release fits the bill relative to these considerations,” Campbell said. “I think that this was a smart and timely move by EXPI given how heavy the stock has been in recent weeks (EXPI down 26 percent over last 2 weeks vs. the Russell index down only [approximately] 2 percent).”

Redfin also released preliminary results this quarter, but that release coincided with the company’s senior notes offering, a move likely intended to entice more investors.

Email Patrick Kearns

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Lillian Dickerson <![CDATA[How to take advantage of your parking lot during the pandemic]]> https://www.inman.com/?p=822379 2020-10-27T14:33:19Z 2020-10-27T14:33:19Z Parking lots have come to serve many uses in the era of coronavirus, from open-air markets to COVID-19 testing sites. Here are some ways property owners can continue to gain from their parking lots even when there's less demand for parking cars.

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Parking lots have served many uses during the era of COVID-19. They’ve become homes to open-air food and farmer’s markets, pick-up locations for to-go meals from restaurants, voter registration sites, drive-in movie theaters, outdoor haunted houses and importantly, COVID-19 testing locations, among other things.

With fewer people driving into the office or spending a significant amount of time shopping in malls or department stores, there’s much more unused space in parking lots these days. Rather than let that space go to waste, property owners and investors can tap into new uses for parking lots, in addition to the ones above, to still generate a bit of income on the property.

Commercial real estate intelligence company Propmodo suggests renting out shared parking spaces at a reduced rate so that property owners can still generate some revenue, and employees renting out the space don’t feel like it’s a waste to do so if they’re only coming into the office once or twice per week. That way, employees can pay a reduced rate to share a space with other workers who come in different days of the week, and property owners can free up spaces to rent out to other entities.

Another option is to advertise parking lot space through an online platform like the one Denver-based company Reactiv has created. The company’s online marketplace connects vacant commercial space with everyday consumers looking for a larger area in which to do some socially distant activities, “creating immediate revenue for owners and flexibility for renters.”

Another way to continue earning dollars on parking spaces is by renting them out to fleets or rental car companies that may not have enough space to house unused vehicles right now, Paul Moore, managing partner at Wellings Capital, told Inman. Because many people have avoided travel during COVID, a lot of rental cars are not being used, and need parking spaces, since rental car companies typically expect 40 to 60 percent of their cars to be rented out at all times. The same may hold true for other kinds of vehicle providers as well, and is worth looking into on a local level.

Paul Moore

“Even if they got $50 a month per space, well if that was 100 spaces, that would still be $5,000 a month they didn’t have,” Moore said.

Similarly, Moore noted that there’s ample demand for RV and boat parking, particularly in homeowners association communities (HOA) where there may be restrictions against parking in a visible location in the community. Owners of parking lots or parking garages could relatively easily market to these types of communities, which may have more individuals looking for parking now moving into winter months.

“People pay up to $200 a month for just parking their RV or boat,” Moore said. “And if there’s electricity and it’s covered, then it could be more.”

For those looking for additional incentives to repurpose their commercial parking lot, Moore said that portable storage with the use of shipping containers is a good option because of the tax benefits.

“You can depreciate them very quickly,” Moore said of shipping containers. “Under the current tax law, I think you can actually depreciate the cost of the entire shipping container in year one against income, and then carry that loss forward to future years.”

Investors looking to do that may want to check demands for storage in the area by visiting a website like Radius Plus, which completes an analysis of self-storage capacity and demand within a certain radius of a designated location for varying fees, depending on how much information you want and how long you spend on their website. Or, you can check demand by calling around to storage facilities in the area to see how full they are can also provide an estimate of local demand.

Dexter C. Rumsey IV

Of course, whether or not a property manager needs to rent out parking lot space right now will likely depend upon the COVID-19, and greater economic, situation in their geographical region.

For instance, Dexter C. Rumsey, IV, partner at NAI Charleston, told Inman that although many tech-occupied office buildings in his markets in South Carolina and Texas have largely been left vacant with most workers opting to work from home, businesses are continuing to pay for use of those parking spaces. Therefore, property owners aren’t feeling quite as much financial stress as perhaps other areas economically harder hit by the pandemic, where more businesses may be going under or are struggling to finance the many bills associated with renting office space.

Email Lillian Dickerson

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Patrick Kearns <![CDATA[FHFA reports biggest home price gain in 29 years]]> https://www.inman.com/?p=823054 2020-10-27T13:40:50Z 2020-10-27T13:40:50Z Prices increased 1.5 percent from July to August according to Federal Housing Finance Agency data, the largest increase since 1991.

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Home prices increased 1.5 percent nationally from July to August, the largest month-to-month increase reported in the Federal Housing Finance Agency’s House Price Index (HPI) since 1991. Prices were up 8 percent annually in August.

“U.S. house prices posted a strong increase in August,” Dr. Lynn Fisher, FHFA’s deputy director of the division of research and statistics, said in a statement.

“This large month-over-month gain contributes to an already strong increase in prices over the summer,” Fisher added. “These price gains can be attributed to the historically low interest rate environment, rebounding housing demand, and continued supply constraints.”

Prices increased both month over month and year over year in all nine census divisions tracked by HPI. The highest annual gains were reported in the Mountain division, which saw a 9.7 percent increase year over year. The West South Central division saw the lowest increase but was still up 7.2 percent year over year.

The HPI, according to the FHFA, is, “a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975.”

Tuesday’s S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index also reported August home price increases. Prices were up 5.7 percent year over year and 4.8 percent month over month, according to the release.

Email Patrick Kearns

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Patrick Kearns <![CDATA[Sluggish in early summer, home price growth accelerates in August]]> https://www.inman.com/?p=823049 2020-10-27T13:30:44Z 2020-10-27T13:30:44Z August's home price index was the largest in two years, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

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Home prices were up 5.7 percent year over year in August, an increase from 4.8 percent the prior month, according to data released Tuesday by the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

Both the 10-city composite index and 20-city composite index — which tracks home prices in the nation’s largest metros — also saw the rate of home price increases accelerate.

The annual increase is the largest in 25 months, according to Craig Lazzara, the managing director and global head of index investment strategy at S&P Dow Jones Indices. If prices continue to increase at this rate, the housing market may officially be past the COVID-19-related price deceleration, Lazzara said in a statement.

“A trend of accelerating increases in the National Composite Index began in August 2019 but was interrupted in May and June, as COVID-related restrictions produced modestly-decelerating price gains,” Craig Lazzara said. “We speculated last month that the accelerating trend might have resumed, and August’s results easily bear that interpretation.”

Regionally prices increased the most in Phoenix, Seattle and San Diego. All 19 cities tracked in the 20-city composite — data isn’t available for Detroit due to COVID-19 — posted year-over-year increases. Even Chicago, the worst-performing city, saw a 1.2 percent increase.

“It’s a measure of housing’s strength that even the worst-performing cities, Chicago and New York, did better in August than in July,” Lazzara said. “Prices were strongest in the West and Southeast regions, and comparatively weak in the Midwest and Northeast.”

Email Patrick Kearns

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Andrea V. Brambila http://inman.com <![CDATA[Federal court stops HUD’s new ‘disparate impact’ rule]]> https://www.inman.com/?p=822975 2020-10-27T13:22:13Z 2020-10-27T13:22:13Z Judge says Trump administration housing discrimination rule appears to "make it easier for offending defendants to dodge liability and more difficult for plaintiffs to succeed."

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A federal judge in Massachusetts has issued a preliminary injunction stopping the U.S. Department of Housing and Urban Development (HUD) from implementing a new rule that would have established a higher threshold for bringing housing discrimination claims under the Fair Housing Act. The new rule would have gone into effect Monday.

Last month, on Sept. 4, HUD finalized a new rule for its implementation of the Fair Housing Act’s “disparate impact” standard. The 2013 Obama-era disparate impact rule was meant to prevent discrimination against protected classes under policies that appear neutral on their face but nonetheless have a disproportionately adverse effect on minorities or perpetuate segregation without justification, regardless of their intent.

A slew of housing and civil rights groups slammed the new rule as an attack on the Fair Housing Act. On Sept. 28, fair housing organizations Massachusetts Fair Housing Center and Housing Works Inc. filed a lawsuit against HUD and its secretary, Ben Carson, challenging the Trump administration’s weakening of the disparate impact standard. On Oct. 22, other fair housing groups filed two other, similar suits seeking to vacate the new rule.

“The 2020 Rule undermines the ability of victims of housing and mortgage lending discrimination to pursue disparate impact claims under the Fair Housing Act … by introducing novel pleading and proof requirements that will be virtually impossible to meet, and creating broad new defenses to liability, contrary to the language and intent of the FHA and decades of practice, both at HUD and in the courts,” attorneys for MFHC and Housing Works argued in their complaint.

“The ability to bring disparate impact claims to root out and eliminate subtle, disguised or ignorant discrimination on the basis of race, color, religion, sex, disability, familial status or national origin is central to the FHA’s structure and purpose to eradicate systemic housing discrimination and create inclusive communities.”

HUD proposed an update to the disparate impact rule in August 2019, which outlined a five-step threshold for plaintiffs to prove unintentional discrimination and give defendants more guidance on how to rebut the claims. Activists at the time argued the updated guidance would make it easier for businesses and landlords to discriminate and harder for tenants to bring housing discrimination suits.

HUD, meanwhile, argued that the changes to the disparate impact rule were aimed at providing legal clarity and bringing the disparate impact rule more in line with a 2015 Supreme Court ruling. In that 2015 ruling in the case of Texas Department of Housing & Community Affairs v. The Inclusive Communities Project, Inc., the court upheld disparate impact but set vague limitations on applying the rule.

Under the new guidance, plaintiffs would have to establish a link that the practice in question is “arbitrary, artificial and unnecessary” and establish a robust link between the practice and impact. It would further require the plaintiff to prove the practice would have an impact on an entire protected class and not just an individual member of a protected class. The final two steps would require the plaintiffs to prove the disparity is significant, and for them to show that their alleged injury is directly caused by the challenged practice.

Whereas previously plaintiffs could show that another practice with a less discriminatory effect could serve the defendant’s legitimate interests, the new rule requires plaintiffs to prove that that other practice not only exists, but serves those interests “in an equally effective manner without imposing materially greater costs on, or creating other material burdens for, the defendant.”

“If the 2020 Rule is allowed to take effect, the vitally important remedial purposes of the FHA will be seriously undermined. Victims of housing and lending discrimination will face unreasonably high barriers, erected by HUD to deter the pursuit of valid disparate housing claims, and fair housing advocates such as the Plaintiffs will be stripped of an essential tool they have relied on for decades in the continuing fight against segregated housing,” the Sept. 28 complaint said.

“By making it nearly impossible for a victim of housing or lending discrimination to plead and prove their case, the 2020 Rule will allow perpetrators of housing and lending discrimination to act with impunity, defeating the central goal of the FHA.”

In his Oct. 25 order, Judge Mark G. Mastroianni of the U.S. District Court of Massachusetts, said the plaintiffs had shown” a substantial likelihood of success on the merits” in regards to their claim that the new rule is “arbitrary and capricious” and therefore violates the Administrative Procedure Act.

“There can be doubt that the 2020 Rule weakens, for housing discrimination victims and fair housing organizations, disparate impact liability under the Fair Housing Act,” Mastroianni wrote. “It does so by introducing new, onerous pleading requirements on plaintiffs, and significantly altering the burden-shifting framework by easing the burden on defendants of justifying a policy with discriminatory effect while at the same time rendering it more difficult for plaintiffs to rebut that justification.”

“In addition, the 2020 Rule arms defendants with broad new defenses which appear to make it easier for offending defendants to dodge liability and more difficult for plaintiffs to succeed. In short, these changes constitute a massive overhaul of HUD’s disparate impact standards, to the benefit of putative defendants and to the detriment of putative plaintiffs (and, by extension, fair housing organizations, such as MFHC).”

HUD’s argument that the changes were meant to provide greater clarity “appear arbitrary and capricious,” he added, because “its new and undefined terminology, altered burden-shifting framework, and perplexing defenses accomplish the opposite of clarity.”

His order postpones the effective date of the new rule until there is a final judgment on the plaintiffs’ claims.

HUD did not immediately respond to a request for comment on the court’s order, but did respond to similar lawsuits filed on Oct. 22. In an emailed statement, a HUD spokesperson told Inman: “The suits ignore the plain text of controlling Supreme Court precedent and well-established doctrine of administrative law.”

On Oct. 22, the National Fair Housing Alliance, Fair Housing Advocates of Northern California, the NAACAP Legal Defense & Educational Fund and lender consulting firm BLDS filed a lawsuit against HUD in the U.S. District Court for the Northern District of California. On the same date, fair housing organizations Open Communities Alliance and SouthCoast Fair Housing sued HUD in the U.S. District Court for the District of Connecticut.

Both lawsuits argue that the new rule is contrary to law in violation of the Administrative Procedure Act, in part because it “unlawfully eliminates perpetuation of segregation as an independent basis of liability.”

In their complaint, attorneys for Open Communities Alliance and SouthCoast argued that the new rule “would eviscerate the federal Fair Housing Act’s discriminatory effects standard and thereby set the clock back a half century in the fight for fair housing in the United States.”

The groups argue that the disparate impact standard has been a crucial tool for challenging structural discrimination, including “exclusionary zoning ordinances that prevent the development of affordable housing in predominantly white suburbs; public housing authority policies that prevent people of color from obtaining Housing Choice [Section 8] Vouchers in surrounding suburbs; and landlord policies of evicting victims for domestic violence occurring in their home, including women tenants who are survivors of domestic violence.”

“If organizations like Plaintiffs Open Communities Alliance and SouthCoast Fair Housing no longer have a reasonable prospect of success in bringing these claims, the societal costs and consequences will be monumental,” the complaint said.

Similarly, attorneys for the NFHA wrote that the organization works with banks and insurers to avoid unnecessary discriminatory impact and that the incentive for these companies to work with the NFHA “will be gone or largely curtailed” because of the new rule.

“The central tenet of disparate-impact law under the Act has always been that a public or private entity must adopt an available alternative to a policy or practice that has discriminatory effect, so long as the alternative can satisfy the entity’s legitimate needs with less discriminatory effect. This rule does not require a business to sacrifice legitimate needs, like a bank’s need to accurately assess the likelihood that an applicant will repay a mortgage loan; it only requires the bank to base policies on legitimate needs and meet them in the least discriminatory manner reasonably available,” attorneys for NFHA wrote.

“It does not require banks to ignore relevant considerations like unequal incomes or credit scores; it only requires a company to avoid considerations that disproportionately harm members of protected classes unnecessarily.”

NFHA has invested in technology that will allow companies to “test their predictive models for discriminatory impact and, where found, determine whether less discriminatory alternatives are available,” the complaint said. “The effectiveness of this ‘debiasing sandbox’ will be much reduced because companies will no longer be incentivized to use it by the prospect of disparate-impact liability.”

Read the judge’s preliminary injunction order:

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Veronika Bondarenko <![CDATA[So your rich client wants to buy mom a home. What now?]]> https://www.inman.com/?p=821403 2020-10-26T22:43:46Z 2020-10-27T09:00:49Z Although videos of children surprising their parents with homes are fun to watch on social media, gifting a property should only be done with a carefully thought out plan. Here’s why.

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October is Luxury Month on Inman. Inman Handbooks offer deep dives on luxury marketing and agent branding, luxury staging, referrals, and more. We’re thinking about what luxury means now, examining how the pandemic is reshaping the needs of luxury buyers, and talking to top luxury agents, all month long.

A sure sign that you’ve made it in life? Buying a home for your parents. Earlier this year, Star Wars actor John Boyega posted an Instagram video of the moment he told his parents he bought them a house in London.

Celebrities including Chris Hemsworth, Nicki Minaj and Niall Horan have all revealed that not long after they made it big as actors or performers, they used the newfound money to buy large and comfortable homes for their parents. And earlier this month, a home that Prince bought for his mother in the 1980s went up for sale in Minnesota.

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Moments like these make all the hard work worth it.

A post shared by John Boyega (@johnboyega) on

But while celebrities tend to pick flashy properties, they aren’t the only ones buying homes as gifts for aging parents. Affluent individuals often consider buying homes for parents or other family members and reach out to agents to help them through the process.

Geoff Southworth, a real estate investor and founder of Real Estate Info Guide, said that both buyers and agents need to be informed of all the legal loopholes that come with buying a house for somebody else. Often, agents are less informed of this type of purchase and need to redirect clients to legal and financial professionals.

Geoff Southworth

“Be as generous as you want to be!” Southworth said. “But make sure you run it by your CPA and real estate attorney first. You need to know how any type of real estate transaction will affect you and your future.”

After the initial commitment to helping someone buy a home, your client will need to make a series of decisions about how to make the purchase. Some of the most obvious options include paying outright in cash and then transferring the deed, becoming co-signers on a mortgage, retaining the deed and letting parents live in it for free, renting it to them or giving them money for a down payment.

If the goal is to gift the property outright, the buyer will need to file a form 709 to the IRS and will be exempt from paying a gift tax if the total sales price does not exceed $11.58 million (the exact number varies from year to year but remains at around $11.5 million.)

“Just as when you own your own home, the parents or recipients will be responsible for all financial obligations in regards to their new home,” Southworth said. “This will include property taxes and any repairs needed.”

Joanne Firstenberg, a Compass agent in New York City, has sold two properties to children looking to buy homes for their parents over the course of her career: a $505,000 co-op in the Lincoln Towers and another $750,000 studio condo in Manhattan. The title would remain with the children and serve as an investment property while the parents would live in the house for free.

“It is not common for this to happen largely because parents are often settled,” Fierstenberg said. “But in this day and age, childcare is hard to find and expensive. If you have the kind of parents who are willing and happy to do it, it can often end up being cheaper [to buy an apartment] over time.”

In both cases, nearness and childcare was the primary motivation for the purchase. The couples wanted their parents, who would not be able to afford living in Manhattan on their own, to be near the family. (Daycare in New York averages out to nearly $12,000 a year for a child between three and five years old while a full-time nanny earns, at an average of $18 an hour, at least $35,000 annually.)

“Historically, people used to live in family compounds all over the world,” Firstenberg said. “It’s only in the U.S. that everybody’s individualism has resulted in families not living close by.”

But multi-generational living arrangements are, according to Firstenberg, still particularly common among immigrant communities who value a family-based system more than the rugged individualism inherent to American society — the pair who bought the Lincoln Towers property were brothers who wanted their parents, who had been living in Russia at the time, in New York and with the grandchildren.

Agents from non-immigrant backgrounds, therefore, should be receptive and accommodating rather than surprised when clients come to them with such requests.

“They felt that their parents have given them an education and they had no student loans,” Firstenberg said. “They felt that they had a great start in life and they made a lot of money so they could do this for their parents.”

Joanne Firstenberg | Compass

Sometimes it comes down to an outright gift of a home but, more often, homebuyers look for a property that will accommodate more than one generation — several floors, many bedrooms and ideally a detached suite.

Another client couple of Firstenberg’s was looking for just that kind of property in New York’s Port Chester for parents and an extended Mexican-American family. Both the parents and the adult children had the means to live apart but wanted to remain close together.

While videos of children saying “Surprise! I bought you a house!” can be fun and emotional to watch on social media, Fierstenberg recommends that those who are seriously considering this kind of purchase plan it out. The parents, or any other family member who will be living in the house, should view it alongside those footing the bill while details need to be talked out so everyone is happy with their living arrangements.

That said, buying a home for parents is often a privilege that many Americans would love to do but cannot always afford — as home values spike and a pandemic-related affordability crisis looms, many are feeling priced out of buying a first home for themselves much less anybody else.

But, as Firstenberg points out, the dream of buying a home for parents remains strong among many communities and individuals — for some it is the ultimate sign of gratitude for parents who helped them get started out in life.

Email Veronika Bondarenko

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Inman http://www.inman.com <![CDATA[Pulse: Your top tips for building a luxury network]]> https://www.inman.com/?p=822939 2020-10-26T22:55:13Z 2020-10-27T09:00:27Z This week, our readers share simple, but to the point pieces of advice on how to build a robust and valuable network as a luxury real estate agent.

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October is Luxury Month on Inman. Inman Handbooks offer deep dives on luxury marketing and agent branding, luxury staging, referrals, and more. We’re thinking about what luxury means now, examining how the pandemic is reshaping the needs of luxury buyers, and talking to top luxury agents, all month long.

Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.

As we’ve mentioned last week, your success as a luxury real estate agent largely depends on your database — the elite network of clients, vendors, other agents and industry professionals you know and trust.

But building that network is no easy feat. That’s why, last week, we asked our readers to share their best pieces of advice when it comes to building and cultivating reliable connections in the high-end real estate sector.

The answers were sparse — cue the crickets! (That said, we believe your sea of responses to our initial Pulse question, which did include tips on network-building, more than made up for it). However, the two short-and-sweet answers we did receive seem to hit the nail on the head. Here’s what you had to say.

  • Be where they are — and network!
  • Raise your expectations to the valuation you hope to achieve, and embrace quality in everything — from the way you look and what you drive to your marketing platform.

What did we miss? Please share your thoughts in the comments section below.

Editor’s note: These responses were given anonymously and, therefore, are not attributed to anyone specifically. Responses were also edited for grammar and clarity. Inman doesn’t endorse any specific method and regulations may vary from state to state. 

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Cara Ameer <![CDATA[Clients planning to rent? 10 realities they need to be aware of]]> https://www.inman.com/?p=822839 2020-10-26T22:51:22Z 2020-10-27T09:00:16Z House shopping in the coronavirus era is a high-intensity exercise, with homes selling at warp speeds. Clients who are turning to renting as a temporary solution might need to be aware of today's realities. Here are a few.

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As a result of the pandemic, people are on the move in record numbers across the country. With the buying craze in full swing, along with low to no inventory in many real estate markets, buyers and sellers (who are would-be buyers) may turn to renting — at least temporarily, until they find what they want. It might also allow them to try out the area they want to settle down in before committing to a purchase.

Renting is typically underestimated and thought of as the path of least resistance. “If nothing else, I can always rent,” I often hear many buyers say, only to be sticker-shocked and frustrated when the available choices are underwhelming and cost more than what they wanted to spend.

There are also many other misconceptions about renting in today’s landscape, too. With that in mind, if your buyers or sellers are considering renting, here are 10 important things they need to know.

1. It’s pricey

It’s going to be more expensive than what your clients think. Rents have risen in many areas of the country over the last few years. In spite of urban markets, which are seeing a decline in rental prices due to the pandemic, many suburban, second-home and resort markets are experiencing a huge increase in demand that’s driving up rental prices.

In many cases, it’s much less expensive to buy the same property at today’s interest rates than pay that monthly rent.

2. Move-in ready? Not so much

Do not expect turnkey. As a treasured customer of mine once said when he wanted to turn his home into a rental as he was moving away from the area for a couple of years — “it’s a rental.” He scoffed at the recommended repairs and improvements I suggested to make the home more livable and certainly more rentable from a marketability perspective.

Many rentals are full of Band-Aid fixes when they are really in need of new flooring, paint, appliances and bathroom and kitchen remodeling or at least substantial updates, not to mention structural fixes.

Prepare your clients for dated kitchen and baths, older flooring and yes — lots of carpet. There are always landlords who try to defy the useful life of a home’s mechanical components until they literally break down. Same goes with the roof.

The amount of repairs and replacements escalate, and oftentimes, landlords don’t have the money to spend on them or simply don’t want to allocate the resources needed. Yet, somehow, they expect tenants to pay top dollar to live there.

3. Planning ahead

Renting a property may not be as easy as people think. Not everything you see online is really available. This is especially true with consumer websites, where you’ll likely see something marked as available — when, in fact, it was rented out several weeks ago.

When it comes to MLS listings, as an agent, you have to double-check the availability of each and every one before arranging a showing. That’s because applications may have been submitted, and the owners might be in the process of evaluating them. Or maybe they’re waiting on a buyer to submit a deposit.

All to say, there’s a very good chance that several of the listings your clients picked out might not be available for various reasons.

4. Access denied

Showing rentals is typically much more difficult than a property that’s listed for sale if it’s occupied. Tenants rule the roost and are usually not flexible about showings. They may require 24 to 48 hours notice, and in some cases, they may not comply with a showing request.

Many rentals are listed near the end of the lease term, which means tenants are often packing. The place is likely full of boxes and may not show well, which could be a potential turnoff for a prospective tenant. This is why most rentals tend to be listed once the tenant has vacated and after any cleaning, repairs and other “prep for rent” work is done.

5. Multiple applications

If you thought multiple offers were challenging when it comes to buying a home, be prepared for multiple rental applications per property. Just like homes for sale, the rentals that are in the best locations, are the most turnkey, and have a yard, a view and ample parking space will go super fast.

Your clients should have their ducks in a row and be prepared to fill out a complete application and supply all requested information down to the last detail. Incomplete applications or pieces of information that cannot be verified will make the process that much harder, and their applications may get passed over for one that is 100 percent complete.

In addition to a rental application, your clients will need to supply a copy of their driver’s license (or other official photo identification), agree to a credit and criminal background check, and provide two to three months’ proof of income or bank statements.

If your clients’ are self-employed or working as independent contractors, they should have a letter of explanation prepared about how their income is derived. If your clients fall into this category, they might also be required to provide two to three years of tax returns.

If living expenses are generated from investment income, tell your clients to prepare a detailed explanation of the financial statements they’re providing, making the source of the funds and their total monthly income clear to the listing agent.

Depending on the specific market your clients are located in, there may be an application fee per applicant as well as a fee for running a credit report and a lease preparation fee.

Each landlord or property management company will have their requirements with respect to a security deposit, and some may want the first and last month’s rent.

6. Fido and fluffy

Tell your clients this: No matter what kind of pet you have and have happily co-existed with over the years, what you don’t think is an issue might be a big deal to a landlord. Do not assume that every landlord will accept pets, and if they do, there are often restrictions on what they will agree to take.

Large dogs, cats and pets that fall outside the scope of normal household animals may simply not be allowed. Your clients’ beloved potbellied pig that roamed acres in their backyard may not be permitted at a new rental house — and the same goes for the pet iguana.

As renters, your clients are not in control of these decisions, and the landlord will often require a significant pet deposit for bringing in a furry friend. Some landlords are allergic to certain creatures, and some simply want to avoid the wear and tear caused by animals on their property.

Everyone says their pets are well-behaved, but unfortunately, many landlords end up spending far more than the pet deposit to restore a property to a rentable condition after tenants (and their pets) move out.

Scratched-up floors, window sills and doors, pet hair and unpleasant smells are typically what an owner has to deal with. Many landlords don’t want the lasting remnants of the last tenant’s pet to detract from their ability to rent their property out again — which is why they often enforce strict pet policies.

In addition, many communities, particularly condominium and townhomes have restrictions on the size, kind and number of pets allowed. If a landlord will work with your client and their pets, they might still have to pay a hefty — and often nonrefundable — pet deposit. They might also have to provide a photo of the pet along with an immunization record.

Gently inform your clients that if their pet doesn’t fall into the accepted category of animals, they might have to come up with a backup plan and decide where their pet will go if they can’t be a roommate in the new place.

If your clients think they can skirt the system and try to classify their pet as an emotional support animal (otherwise known as ESA), they should be careful. Terms, conditions and fine print apply. It may not be as easy as they think.

7. Timing

Trying to time a move-in date with a rental can also be a challenge. Your clients may have to wait for another tenant to move out or for the landlord to take care of cleaning, repairs and painting before they can move in.

Their desired move-in date may not be accommodated. Prepare them for the idea that they might need to extend their current living situation to allow for some time to move.

8. Appliances

Every market is different, and not all rentals come with a refrigerator, washer and dryer. As an agent, you should let your clients know what’s customary in your marketplace so they can plan accordingly.

If your clients are selling their home and have included those appliances with the sale, they might end up having to buy or rent those items — even though they may not potentially work in the next home they buy.

9. Who are you going to call?

Most people don’t think twice about this when submitting an application for rent. However, it’s important to understand if the property is managed by an owner or a property manager. Your clients should know who they’ll be paying rent to and who to contact when something on the property needs attention.

Tenants should know: Is the owner local or out of the area? What kind of response time can you expect from them or the property manager? Will you be authorized to take care of repairs directly up to a certain amount and ask for reimbursement?

10. The lease

A lease is a contract — just like a real estate purchase agreement — to buy or to sell property. However, people who rent often fake amnesia when it comes to signing a lease and think they can get out of it whenever they want.

While they may intend to use this time to shop for a home or decide if the area is right for them, your clients should keep in mind that if they find something they want to buy or wish to pull up stakes, it might not be as simple as notifying their landlord that they want to move out.

Leases typically spell out the ramifications of breaking the term — you just don’t get out of them for free. They typically prevent you from being able to sublease to someone else unless you’ve negotiated otherwise.

A landlord could enforce your ability to continue to pay on the lease until it runs out if they choose to, so proceed carefully. Clients also need to be aware that the lease they sign will tend to be more in favor of the landlord. It’ll have all sorts of rules, regulations and requirements tenants are expected to abide by.

The chances of being able to negotiate or rewrite this document is slim, so don’t plan on it. The answer isn’t always to try to negotiate a shorter lease, either. In a competitive rental market, the landlord is looking for long-term stability and minimizing the cost of having to prepare the property in between tenants.

While a six or seven month lease may seem reasonable, short-term rental regulations in a particular market may subject shorter leases to a hotel tax and/or the community regulations may not allow anything less than a year.

Also, just like a mortgage, a late fee is typically charged for not paying rent on time, and the landlord or property manager could report this to the credit bureaus. While this information seems obvious, it bears repeating and reminding — especially for those who haven’t rented since their college days, back when things seemed a whole lot simpler.

While renting may seem like a flexible option, and market dynamics may dictate that necessity, there will be a substantial amount of planning and logistics involved to secure a property. In some cases, an apartment complex may be better suited to work for your clients, depending on their circumstances and pet situation. It’s important for clients to stay flexible with their options in order to find what will best fit their goals.

Cara Ameer is a broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. You can follow her on Facebook or Twitter.

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