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Take the Worries out of Owning a Second Home
Here in Haywood County, and especially in Maggie Valley, we have a lot of second homes. That is homes that are owned by someone living elsewhere like Georgia, Florida, or even the flat lands of North Carolina. Many of these homes are on a vacation rental program, others are not. When you live a good ways from your second home, it can be difficult to handle many maintenance tasks from that distance. That is where Jess Osborn comes to the rescue. Many of you know Jess, as he is a Realtor® here in our office. Jess also wears another hat. He owns the company While You’re Away, Mountain Home Services. Jess has several different services that he offers. He offers a basic service that includes a thorough inspection of the property with a written report and photos of any areas of concern. Prices begin at $39.95 for once a month inspections and range to twice monthly for $69.95 , three times a month for $89.95, or four times monthly for $99.95. You choose the level of service you desire. He checks for:
- Break-ins and vandalism
- Power outages
- Broken water pipes
- Trees down on roof, driveway, yard, etc.
- Broken windows and doors
- Thermostat for heating and cooling
- Forwarding of mail if needed
- Batteries in fire and smoke detectors
- Many custom services available
- Insured and bonded
I have worked with Jess for many years and know him to be very honest and professional. I highly recommend his services. If you speak with his clients, I am sure they would also highly recommend Jess. You can contact Jess on his cellphone at 828-506-1960, email him at [email protected], or visit his website at MountainHomeServices.net.
Mortgage Rates are the Lowest Since 2016
June 28, 2019
© REALTOR® MAGAZINE
For the seventh time in the last nine weeks, the 30-year fixed-rate mortgage dropped, reaching the lowest average since November 2016, Freddie Mac reports in its weekly mortgage market survey.
“While the industrial- and trade-related economic data continues to dominate the news, the drop in mortgage rates over the last two months is already being felt in the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Through late June, home purchase applications improved by five percentage points compared to the previous month. In the near term, we expect the housing market to continue to improve from both a sales and price perspective.”
Freddie Mac reports the following national averages with mortgage rates for the week ending June 27:
- 30-year fixed-rate mortgages: averaged 3.73%, with an average 0.5 point, falling from last week’s 3.84% average. Last year at this time, 30-year rates averaged 4.55%
- 15-year fixed-rate mortgages: averaged 3.16%, with an average 0.5 point, falling from last week’s 3.25% average. A year ago, 15-year rates averaged 4.04%.
- 5-year hybrid adjustable-rate mortgages: averaged 3.39%, with an average 0.4 point, falling from last week’s 3.48% average. A year ago, 5-year ARMs averaged 3.87%.
News on the Tiny-Home Market
Shop for your Mortgage to Save Thousands in Fees
I found the below article in Realtor® Magazine. This article makes a very valid point about saving money on up front mortgage fees:
Shopping around for a mortgage can provide savings beyond just the interest rate. Borrowers could save thousands in lender fees as well.
Borrowers who collect up to five offers from mortgage lenders could save more than $2,000 on mortgage fees, according to a new study from LendingTree of 300,000 loan offers. These extra fees include the costs for a mortgage application, underwriting, origination, appraisals, and up to 16 other fees that borrowers are charged by lenders.
Some mortgage fees are flat fees. Others may be based on a percentage of the loan amount.
“Most aspiring home buyers are focused on saving for their down payment—and they may not have budgeted for additional thousands of dollars in fees,” the study’s authors note.
About 7% of new-purchase borrowers paid no fees when taking out a mortgage, and 15% paid less than $500. On the other hand, 13% of purchase borrowers paid $5,000 in fees and 3% paid more than $10,000.
Taxes, flood certification, city and county stamps, and recording fees tend not to be negotiable. But other mortgage fees may be, researchers say.
“You can skip the back-and-forth by shopping around for the best rate and fees before you commit to a lender,” the researchers note. “In our study, we looked at the savings available to the same borrower who received offers from multiple lenders. The median spread between the highest and lowest fees proposed was $2,045 for people who received five offers or more. That’s a lot of money to potentially save.”
Appraisals Versus Online Automated Valuation Models
Many clients have complained to me about the automated valuations of their homes on Zillow and other real estate websites. It seems the automated valuations run the gamut from far too low to far too high. The below article discusses these automated valuations as compared to an appraisal done by a professional appraiser. The article is courtesy of Realtor® Magazine.
With these advances, will computers inevitably replace appraisers when it comes to valuing homes? That question is the subject of much debate. In some limited transactions, an automated valuation model may be used appropriately today instead of an appraisal. Based on the specifics of the property and the transaction details, an appraisal may be unnecessary. For example, I‘d be irate if I owned a $2 million home free and clear but had to pay a large fee for an appraisal in order to take out a $50,000 line of credit. However, if I’m looking to buy a $500,000 home with 10 percent down, is it reasonable for a lender to rely on artificial intelligence to determine whether the collateral is adequate? Not likely.
I couldn’t agree more with the sentiments of Karen Belita, a data scientist with the National Association of REALTORS®, who wrote in a blog post, “When it comes to online home value estimates, the number one caveat for consumers is that these estimates are not a substitute for formal appraisals, comparative market analyses, and the in-depth expertise of real estate professionals.” Bravo. Indeed, AVMs are not appraisals. It’s possible that as technology evolves, AVMs may be used to a greater degree. But today, in many cases, an automated valuation is suspect if there is a lack of available data or the property isn’t a “cookie cutter.” Many of us have checked our own properties against the finding of an AVM and thought, “Yeah, right.” When it comes to AVMs, your mileage may vary.
So why aren’t automated models more reliable in more transactions? Because computers don’t buy houses; people do. An AVM does a great job of analyzing tangible features such as a property’s age, number of bedrooms and baths, square footage, and lot size. However, a property’s overall appeal is something that has been, at least to date, extremely difficult to quantify. It’s a uniquely human phenomenon; a property’s overall appeal reflects a combination of characteristics. While not everyone has the same preferences, some unusual features will likely face significant market reluctance.
But wait, you say, aren’t appraisers required by the Uniform Standards of Professional Appraisal Practice to be “independent, impartial, and objective”? Absolutely. Still, appraisers are not machines. They must have relevant data and logic to support their analyses, opinions, and conclusions, but they also incorporate the concept of market value reflecting the interests of consumers who are “typically motivated” and “well-informed.”
Recognizing that AVMs play a role in developing an appraisal, the authors of USPAP acknowledge their relevance with respect to their use of regression, adaptive estimation, neural network, expert reasoning, and artificial intelligence. But appraisers remain better than AVMs at recognizing motivations and knowledge levels of market participants.
The output of an AVM is not, by itself, an appraisal. It may become a basis for one if the appraiser believes the output to be credible for use in a specific assignment. If the appraiser believes it to be credible. Today, that’s a very big “if.” So unless and until AVMs can better emulate the human factor, an ethical and competent appraiser remains indispensable.
This article was written by John S. Brenan, director of appraisal issues at The Appraisal Foundation.
4 Phrases Your Client Should Never Use in an Offer Letter
As the real estate market heats up and becomes more of a sellers’ market, buyers often find themselves competing with other buyers making offers on the same home. I know in the Asheville market, that is happening now in some areas. Buyers will send a cover letter with their offer, hoping to curry favor with the seller, and lend more weight to their offer. I ran across the article below in Realtor® Magazine:
How effective is it for your buyers to write a personal letter to sellers to win over their hearts and get their offers accepted? Personal letters have been drawing criticism lately because of the potential for buyers to inadvertently reveal items that could hurt their negotiating position. Virginia real estate pro Daniel Bortz recently shared in a realtor.com® article some of the phrases he suggests buyers never use in an offer letter, including:
- “I can see our family celebrating Christmas here.” It is illegal under the federal Fair Housing Act for a seller to discriminate based on religion. But if a buyer reveals their faith in an offer letter, it would be difficult to prove in court that it led to discrimination, Craig Blackmon, a broker and real estate attorney in Seattle, told realtor.com®. To prevent such potential for discrimination, Blackmon recommends that buyers never reveal their religion in an offer letter.
- “We would do anything to get this house.” Bortz writes that buyers should never suggest they are desperate to buy the home in an offer letter. It tells the seller that the buyer is willing to pay a higher price and could encourage a higher counteroffer.
- “Our lease is up soon, so we really need to close quickly.” This could hurt negotiations with a seller who is looking for a longer closing timeline. Also, this statement could weaken the buyer’s negotiating power if the seller senses desperation. Buyers may need to be reminded that real estate agents will communicate with the listing agent to find out the seller’s intentions for a move-out date.
- “Your home’s fenced-in backyard will be a perfect place for my dog to run around.” This could turn off a seller who isn’t a pet lover. Bortz cautions buyers specifically against mentioning their dog’s breed since there are some stigmas around certain types, such as pit bulls. “Even though the sellers will be moving, they may be concerned about their neighbors’ safety,” Bortz writes. On the other hand, if you happen to know the seller loves dogs, mentioning your pet in the personal letter may actually help form a connection between the buyer and seller, Mindy Jensen, a real estate professional in Longmont, Colo., told realtor.com®.
Real Estate Agency Explained
I have had several clients ask about “Agency” laws and how they work for the buyer or seller. When a buyer has the “first substantial contact” with a Realtor® , the NC Real Estate Commission expects an agent to present and explain a brochure called “Working With Real Estate Agents.” This brochure explains who the agent actually represents in a given transaction. In other words, the buyer should know that the agent represents the buyer, the seller, or is acting as a dual agent representing both the buyer and the seller. Below is a list of terms and their definitions with regard to agency representation.
The term “agency” is used in real estate to help determine what legal responsibilities your real estate professional owes to you and other parties in the transaction.
The buyer’s representative (also known as a buyer’s agent) is hired by prospective buyers and works in the buyer’s best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer’s rep may be paid by the seller or through a commission split with the seller’s agent.
The seller’s representative (also known as a listing agent or seller’s agent) is hired by and represents the seller. All fiduciary duties are owed to the seller, meaning this person’s job is to get the best price and terms for the seller. The agency relationship usually is created by a signed listing contract.
A subagent owes the same fiduciary duties to the agent’s customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. The subagent works with the buyer to show the property but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent.
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
Designated agents (also called appointed agents) are chosen by a managing broker to act as an exclusive agent of the seller or buyer. This allows the brokerage to avoid problems arising from dual-agency relationships for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties.
As you can see, there are multiple ways an agent can work with parties in a transaction. Just make sure that your agent discloses to you how they will be working, and that you understand the “Working With Real Estate Agents” brochure. Please contact us if you have any questions regarding agency.
Paul’s New Speed Record and Improvements at Cataloochee
As many of you may know, Paul Heathman has a modified BMW that he runs in track nights and autocross. He is very proud of a new speed record he set at Charlotte Motor Speedway. He had an unbelievable average lap speed of just over 200 mph. Paul had recently modified his BMW by adding a new supercharger. He credits the new supercharger with the large increase in speed his beloved BMW has experienced. Unfortunately he could not afford a top notch supercharger, so he opted for a new budget model that operates off a hand crank. Paul must now steer with his left hand while cranking hard with his right hand. Paul tells me that he is sure he can add another 10 mph of speed if he visits the gym more often and develops the muscles in this right arm.
On another note, Cataloochee Ski Area announced today that they will be the first ski area in the eastern USA to install cooling tubes under their ski slopes. With the addition of the cooling tubes, Cataloochee believes they will be able to stay open year around for skiing.
One more item: I hope you all have a wonderful April, and happy April Fools Day.
Water Damage from Faulty Pipes a Rising Threat to U.S. Homes
I read this article in Realtor® Magazine and thought it might be helpful to pass along. The article originally appeared in The Wall Street Journal.
Homes are increasingly flooding, not from weather-related events but from old pipes and valves, worn-out hoses on second-story washing machines, and faulty connections from appliances that use water, The Wall Street Journal reports.
The uptick has sparked an increase in extensive water damage to homes that has been reported to insurers. One in 50 homeowners filed a water damage claim each year between 2013 and 2017, according to Verisk Analytics’ ISO insurance analytics unit. Insurers have faced a $13 billion water damage bill from insuring homes.
Claims for water damage average about $10,000, according to the report.
“Wildfires, hurricanes, and tornadoes catch headlines, but the reality is that the number one kind of risk that the everyday consumer has is a water claim,” Jon-Michael Kowall, an executive at USAA in the property insurance business, told WSJ. “It is lurking in the house.”
Contributing to the rising risk, more homeowners are putting their laundry room upstairs. Leaks and water damage from these upper units can cause extensive damage as they move from the upper floors to the lower ones. Also, the rising number of aging homes with old pipes is causing damage to many homes.
Luxury homes aren’t immune to water damage from old or faulty pipes. An oceanfront property in Southern California had a 12-foot seawall around it to protect it from outside flooding, but a second-story toilet tank crack caused more than $1 million in water damages. The repairs—to the home’s oak floors, walls, artwork, home theater, and more—also took more than eight months to complete.
In a pilot program, USAA is having 6,000 policyholders test water-detecting sensors, which are devices to help spot potential water damage before it becomes more extensive. Also, AIG and some other insurers are offering premium credits for policyholders who use technology that can help detect water leaks.
Homeowners must realize that not every water damage bill will necessarily be covered by insurance. For example, standard homeowner policies exclude storm surges and river flooding from coverage. Also, most homeowners’ policies will cover “sudden and accidental” damage but not routine maintenance. As such, homeowners who have ignored a slow leak for months may find insurance denies their claim.
