Be sure to participate in the upcoming U.S. Census.  When your form arrives by mail in mid-March, please fill it out and mail back promptly.  There are only ten questions, so it will take just a few minutes to complete. 

Census participation is important for many reasons, not the least of which is to assure that our area gets its share of an estimated $400 billion in federal funds for uses such as schools and road construction and maintenance.

 For more information about the census, visit http://2010.census.gov/partners/pdf/factSheet_General.pdf

Bring your questions, and concerns to either scheduled presentations.  This is part of the informational blitz scheduled by the Key Box System Task Force to air all issues before the Board of Directors selects which company to enter into a contract with for key box services in 2011. The February Focus Nights gathered useful information about member usage, regional compatibility and key preference but now it is time to ask the vendors about the working of their systems.

Event Dates:
March 3- 9:30 am- 12 noon- Light breakfast provided by vendors
March 4- 6- 8:30 pm- Light dinner provided by vendors

Limited Seating!  To RSVP:
Fax the registration form to (540)736-0301, call 373-7711 or email, pbowles@faarmembers.com.

  Click here to download registration information.

**The views expressed in this post are solely my own and may not reflect the views of the Fredericksburg Area Association of Realtors.  FAAR has established a workgroup to look at options for the upcoming Supra Contract renewal.  If you have an opinion, please email the Association so that they can forward that information to the Lockbox Workgroup.**

The Problem

Sometime before the end of the year the Fredericksburg Area Association of REALTORS will be faced with the decision to stay with our current Supra Lockbox system which is owned by GE, or Sentriock which is owned by NAR.  Change is rarely received well and the Board of Directors must consider many, many issues with this decision.  Current membership polls have shown a majority of members (who took the survey) would like to stay with the current Supra system.  Some members, mainly those who serve clients in the northern part of our market area, would like to convert to Sentrilock.

Cost Considerations

There are some concerns with the cost of a new system.  I’m not sure of the contractual issues for the Association, but for the individual members the cost of changing should be nominal if history repeats itself.  The Associations who changed lockbox systems were able to get an one-for-one exchange on their equipment. 

I’ve recently purchased both a Supra and Sentrilock key system and here were my costs:

Supra (thru FAAR) was $214 for the cradle, key and annual service fee.

Sentrilock (thru PWAR) was $250,  $70 of that was for the card reader, which is evidentially sold separately from the key and service. 

Lockboxes are around the $100 mark for either system. Although I believe that FAAR still has some used boxes at half that price.

Some have voiced concerns over the hassle of a conversion process.  To me that is a short-sighted argument, in that extent of the other areas conversion was one day to go in, take an orientation and grab your new key.  Outside of that would be the time to gather and replace the existing lockboxes.  This is a one or two day hassle, so not a variable to a big picture decision, in my opinion. 

Comparative Benefits – Supra

Supra has been a strong system in our area for many years.  I’ve had little to no failure of any part of the system.  Here is a list of my personal opinions on the Pro’s and Con’s of the Supra system:

Pro’s

• GE is a strong appliance company with a long history of innovation
• The system is easy to use and familiar to most local agents
• GE has been responsive to the needs of the Association
• I’ve never had a system failure
• The new key (to be issues upon contract renewal) will be wireless and updated by cell phone towers
• The new key will have an agent distress button and flashlight
• Only people who have lockbox keys will be able to enter homes
• The new key will also send immediate updates to the Lister upon access
• Supports SmartPhones with infra-red devices
• Boxes are durable and release the key quickly

Con’s

• Support for Blackberry is severally lacking.  The use of any Smartphone is an additional fee and doesn’t provide a lot of additional features.  The Blackberry requires another independent device, which defeats the purpose of a convergence service. 
• My experience with Supra’s web service hasn’t been good.  The website is a bit flaky.
• The USB cradle is a pain to get to work and not always reliable. 
• If your key isn’t synced you have to seek out a cradle or call a number with an extensive phone menu.
• The key (both old and new) is bulky and leaves me with one more thing to break or forget somewhere.
• The new key has been available for the past two years and wasn’t released to FAAR, except for beta testing.  My concern is that our membership will not be provided with new innovations until contract renewal.  Additionally, I understand that there will be an slight fee increase with the new device.

Comparative Benefits – SentriLock

Sentrilock is the new kid in town, and whereas I haven’t personally had any issues with it, the heavy users have had some concerns.  The second hand information I’ve received have been concerns with viruses being transferred (reported to no longer be an issue) and issues with random boxes not recognizing the cards. Again…those are issues that I haven’t yet experienced.

Pro’s

• In heavy use by surrounding Associations with a portion of local market share
• Sentrilock has invested time and effort in engaging agents in Twitter, Facebook and they have developed a library of “how-to” videos on YouTube.  This shows me an effort to engage their consumers (Realtors) and an ability to use progressive tools. (If Supra has these tools, I couldn’t find them)
• Support for Mac users (this is big for me…)
• Easy to use update system
• Credit Card type entrance key that is easy to carry and maintain
• “Cradle” for the card is a very lightweight / portable card reader that I can carry in my laptop bag, so that updating my card can be done anywhere.  This eliminates the bulky cradle or need for a telephone line.
• The user control and interaction on the website is easy and feature-rich.
• The entry card would not need to be charged with power each day, unlike Supra

Con’s

• The biggest problem I have with Sentrilock is their lockboxes.  The boxes are bulky and sluggish for entry. 
• The Sentrilock boxes have a “One Day Code” feature, which I’ve added to the Con list because I don’t believe that agents will truly vet the person calling for an entry key.  Anyone can go to DPOR and grab the name of an active agent…  (We’ll address ways to make this box safe in another post) The “One Day Code” feature makes this expensive system little more than a combo box.
• The cost of this system is a bit higher than Supra
• The additional fee for the Card Reader is excessive.  Similar readers are sold for $20 online and various other locations.
• There will be some cost to the Association to covert and that means dues money will most likely need be used.
• Reported system failures while trying to access boxes
• Company is still fairly new and hasn’t shown the corporate history of GE

This is of course, not an exhaustive list, but rather a good starting point for conversation. 

Ultimately, the things I like about Sentrilock (Online interface and engagement, Mac support etc…) can easily be done by Supra.  My only real contention is having to wait for contract renewal to get better products or services that Supra may have to offer.  This may be a consideration that can be explored as the Workgroup looks at benefits to either service. 

For now, we’re in a two-box system.  Professionals who have an extended market area reach will need to pay the extra $170 (estimate) a year to sell properties regionally instead of in locally.  It’s a small cost of doing business for the ability to provided extended services.

Almost everyone that I have talked to about the upcoming conversion has strong feelings.  Sharing those feelings with your Brokers and the Association would be helpful to those chosen to make the final decision.

Interesting Changes

In the past two years I’ve been watched and listened as agents went from having “inventory overload” to complaining that there isn’t any inventory.  The reality is that there is inventory, but it’s not the ubiquitous foreclosure inventory that we once thought was such a burden. 

Especially true in the Prince William area, I recall agents voicing concern about the overwhelming number of distressed properties and how unsalable they were.  Then the media and home buyers started picking up on the knowledge that prices were pretty good.  Now that area is suffering from a lack of well priced homes as defined by their recent experience.

Enter: Shadow Inventory

Reuters.com reported on December 17th, 2009 that the pending supply of homes not yet for sale has jumped from a year earlier, and is now around 1.7 million homes, being held by banks.  This “Shadow Inventory” is up from 1.1 million the year before.  As ominous as that number sounds, First America CoreLogic says that’s still only a 3.3 months supply.

First American CoreLogic said the visible supply of unsold inventory, which measures the unsold inventory of new and existing homes that are currently on the market, was 3.8 million units in September, down from 4.7 million a year earlier. The visible months’ supply fell to 7.8 months in September, down from 10.1 months a year earlier.

As much as we’re hearing about the economy showing signs of slight improvement, there are still indicators that there is a sever imbalance between Supply and Demand for housing.  

It seems that many REO agents are looking around and asking for more inventory as well. It’s funny how at one point, we’re grumbling on our way to present that REO offer, and now we can’t get enough of them.  Most agents will take a REO over a Short Sale, any day.

HUD Holding Mortgage Lenders Feet To The Fire

I know I’m a bit late on this, but I don’t think everyone has heard the news about the changes to the HUD-1 Settlement Statement and GFE (Good Faith Estimate).  HUD, in an attempt to bring more disclosure to the Consumer and hopefully cut down on predatory lending has adopted new guidelines that take effect on January 1, 2010.  For the consumer it’s great. For the Realtor, it’s one more thing that we’re going to need to keep up to date.  Any changes to the contract will need to get to lender very quickly.

Summary of Changes

There are a number of changes and they can be found on HUD’s very informative website.  They offer this summary:

Fact Sheet on HUD’s final RESPA Rule

    * For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:

          o What’s the term of the loan?
          o Is the interest rate fixed or can it change?
          o Is there a pre-payment penalty should the borrower choose to refinance at a later date?
          o Is there a balloon payment?
          o What are total closing costs?

    * HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.

    * Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a ‘closing script’ to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.

    * HUD’s new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.

    * To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenters suggested.

    * HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD’s new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good Faith Estimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.

    * Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator’s receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.

    * HUD will allow lenders and settlement service providers to correct potential violations of RESPA’s new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.

    * The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

Below you’ll find the new HUD-1 and new GFE:

Beginning about nine months ago, FAAR’s President Sherry Bailey invited leadership from Dulles, Fredericksburg, Greater Piedmont, Prince William and Northern Virginia Associations to enter into a conversation about the ethical challenges induced by the current market.  That meeting resulted in a monthly forum called the Ethics Dialogue Group. 

One of the first tangible tools of this meeting was the creation of the Short Sale Reference Guide.  The intent is to help create a single source of information to unify practices as well as be a reference guide between Realtors.  The information and future updates will be hosted at www.EthicsDialogueGroup.com.  The downloadable eBook is embedded here:

A New Tool

Today NAR announced a new acquisition that will create a National Database of Real Estate Information for Realtors®. The announcement was made on Realtor.org, but many already knew about this move.

Here is the opening statement from the news release:

The National Association of Realtors® has acquired technology to create a database of all properties in the U.S. so Realtors® can better assist consumers in a high-tech, fast-paced business world.

The technology acquisition includes licensed data and secured data aggregation services from LPS Real Estate Group, a wholly owned subsidiary of Lender Processing Services Inc. (NYSE:LPS), a leader in real estate technology. NAR will use the assets to develop the Realtors® Property ResourceTM, a parcel-centric information database covering all of the more than 147 million property parcels in the country as a resource for NAR members. NAR is planning to launch RPRTM in the second quarter 2010.

“Realtors® are the first, best source for real estate information, and the RPR™ is another emphatic feature to that resource. RPR™ will give Realtors® nationwide data on all properties at their fingertips so they can respond quickly to consumers interested in residential and commercial real estate. This is exciting news and a terrific NAR member benefit. NAR is committed to keep Realtors® central to the transaction and to the buying and selling experience with their clients and customers,” said NAR President Charles McMillan, broker with Coldwell Banker Residential Real Estate in Dallas-Fort Worth.

NAR CEO Dale Stinton said, “These acquisitions will allow Realtor® interests to control the program and the content. Realtors® need to respond quickly to today’s tech-savvy consumers, and the RPR™ provides a means for multiple listing services (MLS), commercial information exchanges (CIEs) and real estate brokerage business models to support the Realtor® community, rather than requiring Realtors to purchase data aggregated by third parties.”

There are a number of speculations that this will be a MLS Killer,but NAR is assuring it’s membership that this  is no more than a tool for Realtors®.  Interestingly, Dale Ross, co-founder of MRIS will be on the RPR management team. 

Also from the news release:

RPR™ is not a national MLS, and will carry no offers of cooperation and compensation, Stinton added. “It is a private, NAR members-only benefit. The assets acquired by NAR will be directed through a wholly owned subsidiary corporation, Realtors® Property Resource, LLC,” Stinton said.

We’re sure that this will be a much discussed topic at the NAR Convention and will most likely make the “Future of MLS” panel very popular.  It’ll be interesting to watch and see how this tool will impact members.  As always, it’s important for Realtors® to reach out and learn about, as well as use those tools created by your Association.

The 2009 Homebuyer Tax Credit Has Been Made Law

On Friday November 6, 2009 President Obama executed a bill that extends the Homebuyer Tax Credit and since that time, everyone has had an opinion. It’s beneficial for the practitioner to know the real details, so that clients will have the best possible information. 

The extension and expansion of the Tax Credit has a few nuances, but here are the basics:

• Realtor.org Offers this Question and Answer FAQ:

  Q.  Existing homeowner credit:  Must the new house cost more than the old house?  
  A.  No.   Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit. 

  Q.  I am an existing homeowner.  On October 25, 2009, I signed a contract to purchase a new home.  I have lived in my current  home for more than 5 consecutive years and am within the new income limits.  I will go to settlement on November 20.  If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
  A.  Yes.  The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed).   There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement. 

  Q.  I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009.  I will be covered, however, by the new income limits.  If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?  
  A.  Yes.  The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date.  So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).

  Q.  I am an eligible existing homeowner.  I have a fair amount of equity in my home.  I have found a home with a non-negotiable price of $825,000.  Will I be able to use any of the $6500 tax credit?
  A.  No.  The $800,000 cap on the cost of the purchased home is firm at $800,000.  Any amount above $800,000 makes the home ineligible for any portion of the credit.  The $800,000 is an absolute ceiling. 

  Q. I owned my home for 10 years, but sold it two years ago year and have been renting since.  If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
  A.  Yes.  Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit.  For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be  eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight, what he did since 3 years doesn’t impact eligibility.

  Q.  I am an eligible first-time homebuyer.  I entered into a contract to purchase on November 1, 2009.  Do I have to go to closing before December 1?  How does the extension date affect me?
  A.  You do not have to close before December 1.  Once the legislation has been signed, it will be as if the Nov 30 date had never existed.  Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit.

Additionally, a hat/tip to the awesome guys over at VAR who created this flyer to help your clients understand what the extension means to them!

On October 29, 2009 FAAR hosted VAR’s Special Counsel Lem Marshall on the topic of Short Sales. The program targeted Brokers and office instructors, but we feel that the information is worthy of distribution. The program is 2 hours and 45 minutes, so please be patient while the video loads, once you’ve clicked play. The handout has been provided below.

Special thanks to the VAR Broker Manger’s Counsel for sponsoring this program!