By NAR 2013 President Gary Thomas
The Internet has changed everything, and home sales are certainly no exception. A recent joint study by the National Association of REALTORS® and Google finds that real estate searches on Google.com have grown 253 percent over the past four years.
The report, The Digital House Hunt: Consumer and Market Trends in Real Estate, examines the connection between consumer Internet use and online home search and shopping patterns. Google wanted to work with us, using NAR’s custom research and leveraging it against Google’s proprietary and third-party research. The results reveal some interesting consumer trends.
While REALTORS® may not be surprised by these results, it’s important for us to be aware of any and all consumer trends. That way, we can reach home buyers where they are—online. We can do this through paid searches, relevant websites, video environments and mobile applications.
We’ve found that buyers use specific online tools at different points during their home search process. They tend to rely on search engines and general websites at the beginning of the search, then maps in the middle, and mobile applications toward the end.
Indeed, 48 percent of people who used a mobile device in their home search used the device to get directions to homes for sale, and 45 percent used it to request more information about specific home features or real estate services.
According to the 2012 NAR Profile of Home Buyers and Sellers, multiple listing service websites and REALTOR.com were the top two websites used in recent home searches. Realtor.com, NAR’s official property listing website, attracts an average of more than 20 million unique visitors per month. Mirroring the Google/NAR study, search activity on REALTOR.com has picked up 31 percent between March and October of this year.
This trend bodes well for the year ahead. It shows that more people are regaining confidence to invest in their future though homeownership. And rather than replacing real estate agents, the Internet is actually helping connect home buyers and REALTORS® in new ways.
So come see me on Facebook, and check out the new NAR Leadership page. Try it, you’ll “like” it.
By 2013 NAR President Gary Thomas
This time of year is very busy…work projects, gift shopping, holiday parties. It all seems to pile up, and most of us don’t need more to do. Even so, please let me put just one more thing on your Christmas list.
If you haven’t done so already, you have until December 31 to complete ethics training. As you probably know, REALTORS® are required to complete not less than two and one half hours of ethics instruction within a four-year cycle. This training must meet specific learning objectives and criteria established by the NATIONAL ASSOCIATION of REALTORS®.
The year 2013 marks the centennial of the Code of Ethics and Standards of Practice of the NATIONAL ASSOCIATION OF REALTORS®. The first Code was written before license laws and most other regulations governing real estate existed. It was one of the first times that codifications of ethical duties were adopted by any business group.
Modeled on ethical codes of physicians, engineers and lawyers, the Code was the precursor to state license laws. It was seen as a declaration of the industry’s principles and beliefs. Establishing ethical standards for real estate practitioners was the spark that led to organizing the National Association of REALTORS®.
Today, the Code is a living document that today undergoes annual review and revision to ensure it stays relevant.
Because it embodies the “Golden Rule,” the Code has been called a “golden thread,” uniting those devoted to raising the standards of professionalism and service in real estate.
It does this in a number of ways. One is by ensuring that consumers are served by requiring REALTORS® to cooperate with each other in furthering clients’ best interests. Other ways the Code unites REALTORS® is by demanding respect for others’ exclusive relationships with clients and keeping disputes between members “in the family” by requiring REALTORS® to arbitrate—and many associations require members to mediate. The Code is enforced at the local level through knowledgeable peer panels.
So don’t wait. December 31, 2012, is the deadline for all REALTORS® to complete NAR Code of Ethics training this cycle to maintain their membership. Training may be completed through local REALTOR® associations or through another method such as home study, correspondence, classroom courses or online courses. An online training course at REALTOR.org fulfills the requirement and is free of charge. Just go to REALTOR.org/COETraining.
Silver and gold…naughty or nice…learn the Code…don’t think twice!
by Gary Thomas, 2013 NAR President
I wanted to share with all REALTORS® the message that went to our members at the Newtown Board of REALTORS®, in Newtown, Conn., to let them know that the entire membership of NAR is sharing in their loss, and keeping them in our thoughts and prayers.
December 17, 2012
Ms. Eileen Brooks
2012 President
Newtown Board of REALTORS®
I write on behalf of the entire membership of the National Association of REALTORS® to express our deepest sympathies for the lives lost in last week’s tragic shooting. It is truly unfathomable to understand the tragedy, the loss of innocent lives and what it means to all of you who live there.
It is very difficult to accept that such terrible things happen in our world, especially in a town as quaint and traditional as Newtown. We understand that the incident has also touched your office, and our hearts go out to you.
Words seem inadequate to express the sadness of your loss, which is also our collective loss: young lives stopped before they had barely begun to unfold their promise.
If there is any comfort to be found, it was in the loving words offered by some of the family and loved ones of the victims. We should lean on the thoughts of Robbie Parker, whom you heard speak so eloquently about his own daughter Emilie.
He said, “Let it [be] something that inspires us to be better, to be more compassionate and humble people. Let us please keep the sentiments of love that we feel for our families, and the compassion that we feel for others—even complete strangers—and keep them with us at all times, not just in times of sorrow and tragedy. And may we do this so that we can better all of our communities, and all of our cities and all our states, so we can make everyone, everywhere in this country feel safe.”
We can’t say it any better. His words offer comfort and hope. Please know you are in our thoughts and prayers during this difficult time and always.
Sincerely,
Gary Thomas
2013 President
National Association of REALTORS®
by Gary Thomas, NAR President
I recently had a good meeting with leaders in Congress and reminded them why the mortgage interest deduction is vital to the stability of the American housing market and economy. See more in the video below. And if you haven’t already answered our related Call for Action to ask Congress to do no harm to housing, please do so now. Thanks!
Watch the video below and hear 2013 NAR President Gary Thomas talk about what’s in store for REALTORS in 2013.
- NAR President Moe Veissi celebrates the VA Home Loan Program with Department of Veterans Affairs officials and Elizabeth Carpenter, shown at left, who is the recipient of the 20th million loan through the program. Elizabeth’s son, Joey, rides his tricycle in the driveway of their new home.
by Moe Veissi, 2012 NAR President
I was honored today to celebrate the 20th million loan given by the Department of Veterans Affairs home loan program.
Even more special was meeting the recipients of that loan — Elizabeth Carpenter and her son Joey. Elizabeth’s husband, Captain Matthew Carpenter, was a West Point Graduate and a veteran of the Iraq war who died of cancer in December of 2010. Last month, Elizabeth used her surviving spouse benefits to purchase a home in Virginia to be closer to family. I can’t describe what a thrill it was to welcome her and Joey to their new home.
NAR President Moe Veissi and Elizabeth Carpenter
The VA loan guaranty, which began in 1944 under the GI bill, provides veterans with a zero-downpayment loan. VA loans have one of the lowest default rates, and provide affordable financing to our nation’s military families.
NAR is working in partnership with the Department of Veterans Affairs to promote the VA home loan guaranty, and assure REALTORS® are familiar with this program and the benefits it provides veterans and their families. We are proud to work closely with the Department of Veterans Affairs to ensure that the VA guaranteed home loan program is not only a top priority for our nation’s policy makers, but is also widely promoted so that every veteran is aware of home ownership’s invaluable benefits. NAR never stops working with our elected officials to ensure that home ownership is accessible and affordable for our nation’s veterans.
We are especially proud of our work with Congress that raised VA loan limits and make permanent the VA adjustable rate mortgages.
Congratulations to the Department of Veterans Affairs for creating one of the most enduring programs – the VA home loan program – and for reaching 20 million loans.
Learn more about this terrific program in the video below.
By NAR First Vice President Steve Brown
We used to fear things that go bump in the night. With the internet, however, we must now look over our shoulder 24/7/365.
eHarmony…AOL…Monster.com…Google…CardSystems Solutions: what do all these large companies have in common? All were victims of some of the worst data security breaches ever. REALTORS are not immune. Greater use of databases and social media make data privacy and security very important issue for the real estate industry. In our wired world, the vulnerabilities of technology are more than enough to keep us awake at night.
When the 113th Congress meets in January, they are expected to look at the issues of data privacy and security and how they can better protect consumers from criminals ready to exploit weaknesses in technology.
Already in 2009, though, NAR had the foresight to create a Federal Technology Policy Work Group. Their task was to look at the Association’s technology and telecommunications policy positions. Among the work group’s resulting recommendations were a set of principles guiding privacy and data security.
The work group recognized the need to explore the development of a real estate industry self-regulatory program for privacy and data security. The purpose would be to seek a “safe harbor” from future federal privacy legislation. To accomplish this goal, NAR established a permanent Federal Technology Policy Subcommittee.
Now many members, particularly the large brokers, believe it’s critical that we establish a set of “Privacy Best Practices” for REALTORS. These would further enhance the working relationship with consumers and help prepare members for future federal privacy legislation.
The key to implementing a self-regulatory program will be education and outreach efforts by NAR. These will focus on creating educational opportunities for NAR members, centralizing a place where members can go for information, and increasing security precautions on standard real estate forms. These efforts will go forward, even as the Federal Technology Policy Subcommittee continues to explore the best way to achieve a self-regulatory program that will meet future federal requirements.
No one wants their private information in the hands of computer hackers. Know that NAR has been, and continues to work to establish the strongest, cutting edge methods to better protect you, your families and your clients. Things may continue to go bump in the night—but you can get a good night’s sleep. Through NAR, your fellow members are on guard.
To access more information check out our Toolkit, available as PDF. (Login required.)
By NAR 2012 Vice President Gary Thomas
While the real estate market is certainly started on the road to recovery, there are still a few hurdles that are preventing it from gathering steam. These include tight credit and uncertainty about the rules and regulations governing the mortgage market.
A recently released NAR survey found that issues with appraisals are also holding back home sales. We’ve certainly had this problem in Orange County, California, where I live. I’ve also heard about it from my agents, who have had deals delayed or blown due to problems with appraisals.
Appraisals are a vital part of the real estate transaction. Most appraisers work hard to provide accurate valuations that comply with the Uniform Standards of Professional Appraisal Practice.
However, appraisals generally lag market conditions and some changes to the appraisal process have caused difficulty. These include use of out-of-area valuators, inappropriate comparisons and excessive lender demands. Also, before the beginning of last year, some lenders’ loan processors edited valuations across-the-board, cutting them by a certain percentage.
Although most REALTORS® surveyed in September reported no contract problems, about 35 percent reported some kind of problem that negatively impacted completion of the sales contract.
The following problems were reported:
- Some appraisers are using foreclosures, short sales and run-down properties as comparables, without making adjustments for market or property conditions.
- Appraised values don’t always reflect market conditions such as rising prices, multi-bidding and/or low inventory.
- Appraised values fluctuate widely.
- Out-of-town appraisers are unfamiliar with area or local market conditions and may lack full access to data.
- Slow turn-around time by appraisers and banks delay closings.
There are signs of improvement. The appraisal industry has made progress in adapting to market conditions, expanding education and making adjustments for distressed homes used as comparables. We know that there have been cases where appraisers have faced pressure to complete appraisals using distressed sales as comparables, often in too short of a time frame, and with a scope of work not justified by the fee. NAR continues to advocate for an independent appraisal process and enhanced education requirements that allow appraisers to produce the most accurate reports possible.
Fortunately, the number of distressed sales is decreasing. They were one-third of all sales in 2011, but have averaged about one-quarter of sales in recent months. We expect it to continue to decline, reaching about 10 to 15 percent by 2013.
Meanwhile, we should all be aware of the issues surrounding some real estate appraisals. All home valuations should be made without pressure from outside sources. That said, know that REALTORS®, along with buyers and sellers, have the right to communicate with appraisers and lenders about errors or concerns with individual valuations.
By NAR 2012 President Elect Gary Thomas
So how do we sustain the housing recovery? That was the question on the table at a forum put together by the Progressive Policy Institute and the American Action Forum. It drew many people who care deeply about housing, including economists, politicians and public policy experts and media.
As part of the event, I participated in a panel to discuss future reform of government-sponsored enterprises (GSEs). We enjoyed a lively debate among panelists Douglas Holtz-Eakin, President of the American Action Forum; Jason Gold, Senior Fellow for Financial Services at the Progressive Policy Institute; and Christopher Mayer, Professor of Real Estate at Columbia University School of Business.
Most of the policy experts agreed that reforming Fannie Mae and Freddie Mac will be delayed in the near term as lawmakers focus on helping the country recover from the recession. Ultimately, we think it will be the regulator of the government-sponsored enterprises (GSEs)—the Federal Housing Finance Agency—that raises the issue. In the meantime, no real progress will be made on GSE reform until the Consumer Financial Protection Bureau and the Federal Reserve craft rules that establish reasonable underwriting and risk retention standards.
The fact is that today the federal government buys or insures 9 out of every 10 mortgages. In other words, the government provides the capital to keep the mortgage market, and, in turn, the real estate market alive.
Given this reality, there must continue to be a role for government in the secondary mortgage market to ensure the availability of mortgage capital. Therefore, any restructuring must ensure consumers have access to affordable mortgage capital in all markets, at all times, and under all economic conditions.
At the same time, the institutions must be reformed to ensure the failures of the past do not return. The structure that privatized profits and made losses public must be changed.
To address these issues, NAR developed a set of eleven principles to help shape reform that ensures a robust financing environment for both residential and multi-family housing. Broadly, these principles call for reform of the secondary mortgage market to:
1. Ensure the viability and affordability of long-term fixed rate mortgage products.
2. Define a clear and explicit role for the federal government
3. Return to strong regulation and oversight
4. Conduct strong underwriting of government-guaranteed products
5. Continue support of multifamily housing and other specialized consumer products
NAR shared these principles with Congress and industry partners. We have, and will continue to revise these principles to reflect the desires of our members. You can be sure that NAR will continue to speak up loudly and often on this important issue.
by Ron Phipps, 2012 Immediate Past President, NAR
So if you are like me, you have been working in real estate for a long time. You think you have seen it all. Your body of work includes lots of transactions, and some amazing human stories, both happy and sad. In real estate we deal with the full range of life experiences.
Our collective experience right now of getting to closing is an obstacle course. Doesn’t it feel like the stars are conspiring to knock your transaction off track? Just closed one that ended up with 4 appraisals and weeks of heartache before we got to closing.
So what is happening behind the Wizard of Mortgage Oz’s curtain? Am I the only one who struggles to get my buyer to the closing table? The answer is absolutely not.
What we do know is that we have over corrected from the free-flow capital, no underwriting standards of 2004-2006. I repeat…over corrected. Prior to 2004, the average credit score for Fannie Mae and Freddie Mac mortgage was 720; today it is 760. This means that 15 percent of potential buyers cannot qualify.
In the past, pre-approval letters actually meant something. Now, they are a single yellow brick on the road to homeownership. The sad part is that they do not have a lot of value.
So what is going on? The problem is that the market for mortgage backed securities is very limited. The federal government continues to buy or insure most of them, upwards of 9 out of every 10 mortgages. In other words, the government provides the capital to keep the mortgage market, and, in turn, the real estate market alive.
As a result, the mortgage package needs to be perfect and complete. Three years of tax returns and back statements are not enough. Explanations of all deposits and expenses over $1,000 are now required.
You know all of the new requirements. You also know the reality of conditional commitments. Is the lender really committing to the buyer if the ‘commitment letter’ really isn’t a letter of intent? What does that mean for a seller? What does that mean for you? How can a commitment be rescinded two days before closing?
What you need to know is that strict underwriting standards are being applied precisely and aggressively. Some investors will penalize the origination loan company $30,000 if a mortgage defaults in the first year. Yes, that will make the processor obsessive.
We have not even talked about the appraisal process. In general you need direct, like kind sales within six months and within a few miles of the subject. If not, it will be a problem. What is also true is that the “appraisal review” is where the real problems occur. Someone in the process looks at the appraiser’s work as something to just pick apart.
All of this is part of the process of compliance…to make sure the package is “perfect and complete.”
When Dorothy was lost in the Land of Oz and wanted to get back home, she just clicked her heels three times. I wish it were that easy for REALTORS® and consumers to get back to a place where closings would make it to the table.
In the meantime, what can we as REALTORS® do? Here are a few recommendations:
1. Understand the process, particularly underwriting criteria.
2. Educate the buyers (and sellers) to process and requirements.
3. Be realistic in timelines.
4. Manage buyer and seller expectations.
5. Help buyers identify the lenders that are most likely to provide them the loan.
6. Be proactive in real time with the process.
7. Be active in NAR with Calls to Action and RPAC to improve the situation.
We will get through this…sooner rather than later. See you at closing.
So if you are like me, you have been working in real estate for a long time. You think you have seen it all. Your body of work includes lots of transactions, and some amazing human stories, both happy and sad. In real estate we deal with the full range of life experiences.
Our collective experience right now of getting to closing is an obstacle course.
Doesn’t if feel like the stars are conspiring to knock your transaction off track?
Just closed one that ended up with 4 appraisals and weeks of heart ache before we got to closing.
So what is happening behind the Wizard of Mortgage Oz’s curtain? Am I the only one who struggles to get my buyer to the closing table? The answer is absolutely not.
What we do know is that we have over corrected from the free-flow capital, no underwriting standards of 2004-2006. I repeat…over corrected. Prior to 2004, the average credit score for Fannie Mae and Freddy Mac mortgage was 720; today it is
760. This means that 15 percent of potential buyers cannot qualify.
In the past pre-approval letters actually meant something. Now, they are a single yellow brick on the road to homeownership. The sad part is that they do not have a lot of value.
So what is going on? The problem is that the market for mortgage backed securities is very limited. The Federal Government continues to buy or insure most of them, upwards of 9 out of every 10 mortgages. In other words, the Government provides the capital to keep the mortgage market, and, in turn, the real estate market alive.
As a result, the mortgage package needs to be perfect and complete. Three years of tax returns and back statements are not enough. Explanations of all deposits and expenses over $1,000 are now required.
You know all of the new requirements. You also know the reality of conditional commitments. Is the lender really committing to the buyer is the ‘commitment letter’ really isn’t a letter of intent? What does that mean for a seller? What does that mean for you? How can a commitment be rescinded two days before closing?
What you need to know is that strict underwriting standards are being applied precisely and aggressively. Some investors will penalize the origination loan company $30,000 if a mortgage defaults in the first year. Yes, that will make the processor obsessive.
We have not even talked about the appraisal process. In general you need direct, like kind sales within six months and with a few miles of the subject. If not it will be a problem. What is also true is that the ‘appraisal review’ is where the real problems occur. Someone in the process looks at the appraiser’s work as something to just pick apart.
All of this is part of the process of compliance….to make sure the package is ‘perfect and complete.’
When Dorothy was lost in the Land of Oz and wanted to get back home she just clicked her heels three times. I wish it were that easy for REALTORS® and consumers to get back to place where closings would make it to the table.
In the meantime, what can we as REALTORS® do? Here are a few recommendations:
