Monthly Archives: January 2017

Winter months are when buyers are more likely to find deals

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Winter is a good time for homebuyers.

NerdWallet researched two years of homes for sale on realtor.com® in 50 metro areas and found that home prices in January and February were, on average, 8.45 percent lower than homes listed in the summer months, June through August.

However, Jonathan Smoke, realtor.com®’s chief economist said that sales in October and November 2016 were stronger than usual, due to the lack of inventory on the market, so January and February may not see as low of prices as they have in the past. But NerdWallet reported that January is still a good time to buy because, on average, less people are searching for a home, instead waiting for the spring and summer, so there will be less competition. Last year, NerdWallet found there was a decrease of 47 percent in sales in January compared to June. There is also a decrease in inventory. In 2016, there were 21 percent less homes on the market in the summer compared to the winter.

“Prices are likely to increase even more than you typically see in spring because of low levels of inventory and because we didn’t see the normal weakness we see in fall,” Smoke said. “You basically face almost half of the competition with almost the same amount of inventory in the market. This potentially means fewer homes with multiple bidders and more room for negotiating with sellers.”

In the past two Januarys, the median home on the market sold for more than $7,000 under the listing price- making winter a pretty good time for buyers.

Mortgage rates causing hesitations in first-time homebuyers

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The rising of mortgage rates at the end of 2016 is causing some would-be first-time homebuyers a little hesitation in house hunting this spring.

In October 2016, 55 percent of potential homebuyers were planning to make their first home purchase in the spring. This number has dropped to 44 percent this month, according to realtor.com®. The website reported that the average 30-year conforming rate rose .8 percent from September to December 2016, and would cost, on average, an extra $720 per year in interest.

“Last fall, we saw a large jump in the number of first timers planning home purchases, which was very encouraging because their market share is still well below pre-recession levels,” said Jonathan Smoke, chief economist for realtor.com®. “But, as evidenced by their decline in share, first-time buyers are really dependent on financing and affordability is one of their largest barriers to home ownership. This number could continue to decline with anticipated increases in interest rates and home prices.”

While first-time buyers accounted for nearly one-third of buyers in November 2016, first-time buyers were almost five times more likely than repeat buyers to report that they struggled to qualify for a mortgage.

In addition to mortgage rates, the continued lack of inventory on the market is impacting would-be first-time homeowners. Inventory on realtor.com® in December 2016 was down 11 percent from December 2015. Another aspect of the low amount of inventory is that the cost of homes is still above average. In December 2016, homes on the market cost 9 percent more than they did in 2015.

Realtor.com® also reported that the average listing views saw an increase of 40 to 80 percent during the last few weeks in December 2016, compared to December 2015, as more buyers are striving to purchase the same homes.

 

And the President’s Cup Winners Are…

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Congratulations to the 16 state REALTOR® Associations who met four advocacy and four RPAC goals to win the 2016 President's Cup. The President's Cup recognizes the hard work of state REALTOR® leaders and association staff who advance the REALTOR® Party. The President's Cup will be presented in May at the 2017 REALTORS® Legislative Meeting & Trade Expo. Also, check out the new 2017 President's Cup advocacy and RPAC goals.

What noise factors can impact your sellers’ home value?

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What’s that noise?

Turns out homebuyers typically have a preference when looking at home near notoriously noisy areas. What does it cost the sellers?

The realtor.com® team analyzed nine “major noise factors” and how they impacted home prices of homes near them.

Not surprisingly, airports are the highest offender. Sellers of homes within two miles of an airport are listing, on average, 13.2 percent below the average listing in their zip code. Relatedly, railway tracks within a tenth of a mile of a home for sale will see a discount of 12.3 percent, compared to other homes in the zip code. This is followed by highways within a tenth of a mile, where homes will see a dip of 11.3 percent, compared to other homes in the zip code.

On the other end of the spectrum, people living within a tenth of a mile of a fire station only see a decrease of 1.8 percent, compared to other homes in their zip code. Schools are another one, homes within a tenth of a mile see a decline of 4.3 percent, compared to other homes in their zip code, as some parents may see this as a positive thing. Yet, homes a little further away from schools, such as 1 to 5 miles generally see a jump in prices, up to 8.6 percent.

A 24-hour supermarket within a tenth of a mile will typically see a decline of 5 percent in price of the home. However, realtor.com® points out that a good store in the area generally increases home prices by 3.4 percent.

The other factors realtor.com® included in the study were busy roads within a tenth of a mile (9.5 percent decrease), a hospital emergency room within a half of a mile (7.6 percent) and a busy church within a half of a mile (5.2 percent).

 

What remodeling projects give homeowners the most resale value?

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Of the 29 home projects in Remodeling Magazine’s annual Cost vs. Value Report, for resale purposes, the average return on investment is 64.3 cents to the dollar.

“Greige,” described as Remodeling Magazine as being a mix of gray and beige is THE color this year, thanks to its subtly.

Of the 29 projects in this year’s report, 24 have been monitored since 2011, and have seen an increase of only three-quarters of a penny for resale value since the 2016 report. However, the average cost for these projects increased 3 percent.

The project that gives homeowners the most bang for their buck in resale value is loose-full insulation in an attic, which is the only project that costs less than its’ resale, at 107.7 percent. The average cost is $1,343, while the average resale value is $1,446. A steel door replacement is second, with a 90.7 percent resale value, costing, on average, $1,413, with an average resale value of $1,2,82. A manufactured stone veneer comes in at 89.4 percent in third, costing $7,851 on average, with a resale value of $7,019. Rounding out the top five are the minor kitchen remodel (80.2 percent return on investment) and a garage door replacement (76.9 percent return on investment). Remodeling Magazine pointed out that these projects are generally some of the most inexpensive ones that homeowners can complete.

The projects with the lowest resales include a bathroom addition, which costs, on average, $43,232, but has an average resale value of $23,283 (53.9 percent) a backup power generator, which only has a resale value of 54 percent, from the cost of $12,860 to a resale value of $6,940, and a backyard patio, which costs homeowners an average of $51,985, with a resale value of $28,546, or 54.9 percent. Rounding out the bottom five are the bathroom remodel, which costs, on average, $18,546, but only sees a resale value of $12,024 (64.8 percent) a master suite addition, which costs $119,533 on average, with a resale value of $77,506 (64.8 percent).

In 2017, it is expected that remodeling projects will increase 4.4 percent, and then 3.3 percent in 2018.

The buyer’s remedy when the seller cannot convey good title

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What can a buyer do when the seller cannot convey good and marketable title as promised in the Agreement of Sale?

Paragraph 17(G) of the Agreement of Sale provides that if the seller is unable to give good and marketable title to the property, the buyer will be entitled to elect from the following remedies: 1) take such title as the seller can provide or 2) seek reimbursement of the deposit and “any costs incurred by buyer for any inspections or certifications obtained according to the terms of this agreement.”

While the buyer is given two remedies, the buyer also loses another remedy that, but for this language, would be available under Pennsylvania law. Generally, in Pennsylvania, a party who is aggrieved by another’s breach of a contract is entitled to sue for the actual damages sustained. In the case of a buyer who has lost the ability to purchase the property because of a title issue, the losses will usually exceed the deposit paid by the buyer. The return of the deposit only makes the buyer whole. The buyer gains nothing more by being reimbursed several out-of-pocket expenses.

The damages a buyer might actually suffer can be far greater. Imagine the buyer who seeks to purchase undeveloped land for the construction of a hotel, a mall or even a home that is likely to benefit from appreciation that outperforms the general market. These losses are “consequential damages” and they represent the profits that may have been seen down the road, but which are lost due to the title problem.

Why do we, in our Agreement of Sale, take away the common law remedy to seek damages that the law would otherwise provide? Generally, title issues are not malicious or intended breaches by sellers. Title problems are insidious and usually uncovered as the result of a title search. In these cases we seek not to punish the seller or even impose the hardship for covering buyer’s losses.

This limitation of the remedies available to a buyer when a seller cannot provide a title are time-worn; as currently written, they have appeared in Agreements of Sale for well over a decade. We seem to live with this remedy quite easily. With respect to commercial agreements, drafted by lawyers, other provisions may be negotiated as may fit the case.

Further, it is always possible to discover a title problem within days of execution of the Agreement of Sale, if not before.  While it is not the practice to do a title search before signing an agreement, it should be the practice to do one as soon as reasonably practicable after the execution of the agreement. In this way a buyer can cut bait and run rather than wait weeks or months before finding out that his aspirations to acquire the property have been dashed.

So, we understand why our agreement includes a limitation of the damages available to a buyer when a seller defaults with respect to the conveyance of title. But that is not the end of the story.  In some cases, the buyer is freed from the bounds of this limited remedy and may pursue the larger consequential damages that he or she may have suffered. Why and when does this occur?

As noted, Paragraph 17(G) provides an election of remedies. In many cases, the first option, take what title the seller can provide, may not be available. What if the title flaw is that the seller doesn’t own the property, or what if there is recorded right-of-first-refusal that is exercised by the owner of that right? In these situations, there is no title for the buyer to acquire, so it would seem that the buyer is left to the second available option, take back the deposit and get reimbursed for inspections and certifications.

Our courts have ruled that when a contract provides for an election of remedies, and one of the options is not available, then the entire clause fails and the buyer may seek what damages the law would otherwise allow.  More plainly put, if the seller can’t give title, the buyer has a right to sue for whatever losses he or she can prove and is not merely stuck with a reimbursement of the deposit and those few costs.

In light of the issues discussed in this article, what is the agent’s best practice? The average agent should encourage her client to get a title search soon after entering into the agreement of sale. By conducting the title search early in the process a buyer can avoid expenses incurred in the anticipation of purchase such as architect or surveyor fees. The agent should also recommend that the client seek the advice of an attorney once a title defect is discovered so that the buyer is fully informed as to what remedies are available to them.

This article was co-authored by James Goldsmith, Esquire. 

Pennsylvania Realtors® named to 2017 Swanepoel Power 200

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Each year, Swanepoel releases its POWER 200, a list of the leaders in the real estate industry.

PAR would like to extend congratulations to five Pennsylvania Realtors® who were recognized by Swanepoel as top leaders of the real estate industry.

13. Howard “Hoddy” Hanna and Helen Hanna Casey, Pittsburgh.  Howard serves as the chairman, while Helen is the CEO of Howard Hanna Real Estate Services, a 60-year old firm, with more than 260 offices and 8,000 agents. The firm is the third largest real estate company in the country, with offices in Pennsylvania, Ohio, New York, Virginia, Michigan, West Virginia, North Carolina and Maryland. The firm recently acquired Nothnagle REALTORS® and RealtyUSA.

61. Joan Docktor, Philadelphia. Serving as president of Berkshire Hathaway HomeServices Fox & Roach since 2013, Docktor has been with the company since 1986. Currently, she manages 62 offices with more than 4,300 agents, accumulating nearly $11 billion in sales each year.

106. Douglas Rebert and Pete Slaugh, Lancaster. The duo oversees more than 1,000 agents at Berkshire Hathaway HomeServices Homesale Realty. They founded Prudential Homesale Services Group, which became Berkshire Hathaway HomeServices Homesale Realty in 2014. The currently do more than $2.6 billion in sales.

We’d be remiss not to mention Howard “Hoby” Hanna IV, who is an integral part of Howard Hanna Real Estate Services, but does not reside in Pennsylvania.

Coming in at number 94 on the Swanepoel list, Howard serves as president of Real Estate Brokerage for Howard Hanna Real Estate Services. Residing in Ohio, he oversees business and operational efforts throughout Ohio, Michigan and New York.

Lancaster, Pittsburgh named safest cities for walkers

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Two Pennsylvania cities were recently ranked on the top 10 list of the safest areas for pedestrians in the country.

According to Curbed.com, who ranked the cities, walkers in this country are now seven times more likely to be killed walking than in a natural disaster.

Lancaster, which was ranked seventh overall, offers several walking trails, some old railroad tracks redone.

Lancaster Association of Realtors® President Lynn Zimmerman said that “good schools, good family units with strong moral teaching and caring law enforcement” are the top reasons Lancaster ranks above most cities in the country for walkers’ safety.

Additionally, Zimmerman said the housing market is “strong with low inventory.” However, affordable rentals can be hard to find, making living in Lancaster a bit of a challenge for low-income residents. But the city offers a good tourist industry, he said, as well as a “very diversified economy which helps balance highs and lows in the economy.”

In Pittsburgh, pedestrian safety is a top priority. In the city, ranked ninth on the list, the Pittsburgh Downtown Partnership worked to bring more awareness to pedestrian safety in October. Actors dressed as zombies and the Grim Reaper surprised pedestrians who weren’t paying attention, thanks to their phones.

Ahead of the trend, the city launched WalkPittsburgh.org a few years ago, which encourages residents to walk when they can. The website and app provide walkable routes, safety tips and walkers can even sign in to log miles for their neighborhoods, and see how much gas they saved by walking.

Overall, Colorado Springs was named the safest city for walkers, while Cape Coral-Fort Myers, FL was named the least.

Ask the Experts: Land Use Initiative Webinar

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Join NAR and Robinson & Cole on Jan. 31 at 2 PM EST as we provide updates and advice about how best to use the Land Use Initiative program, which provides REALTOR® Associations with analyses of state and local government proposed land use and real estate development regulations. Learn about the new and improved way we will be using to deliver the Land Use Initiative memos to GADs.  Hear some of the success stories of the program, and how to use the memos to advocate your position with government decision makers.  We will also provide updated overviews of some of the hottest topics reviewed by the Land Use Initiative in 2016. REGISTER TODAY!

Completed foreclosures down 25 percent from last November

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Foreclosures were down 25.9 percent in November 2016, compared to November 2015, according to CoreLogic’s National Foreclosure Report for November.

In November 2016, 26,000 completed foreclosures happened across the country, a decrease from 35,000 in November 2015. Homes in various states of foreclosure also decreased significantly, from 465,000 in November 2015 to 333,000 in November 2016, representing a decrease of 30 percent. Of all homes with a mortgage, 0.8 percent are in a state of foreclosure, a rate that matches June 2007.

Month-to-month, foreclosures were down 2.4 percent from October to November 2016, marking it 61 months in a row of year-to-year decreases in foreclosures.

CoreLogic also reported that the seriously delinquent rate is at 2.5 percent lowest level in nearly a decade, since August 2007.

“The decline in serious delinquency has been substantial, but the default rate remains high in select markets. Serious delinquency rates were the highest in New Jersey and New York at 5.6 percent and 5 percent, respectively. In contrast, the lowest delinquency rate occurred in Colorado at 0.9 percent, where a strong job market and home price growth have enabled more homeowners to stay current,” said Frank Nothaft, the chief economist at CoreLogic.

In Pennsylvania, 1.1 percent of mortgaged homes were a part of the foreclosure inventory in November 2016, according to CoreLogic. This is a decrease of 30.3 percent from November 2015. Between November 2015 and November 2016, 18,451 homes completed a foreclosure. The seriously delinquent rate in the commonwealth is 3.4 percent.

New Jersey, New York, Hawaii, Maine and Washington, D.C. had the highest foreclosure inventory as a percentage of homes with mortgages, while Colorado, Arizona, California, Minnesota and Utah had the lowest, according to CoreLogic.