How the Trump Presidency Will Impact Housing in 2017

Trump's Impact on Housing

Donald Trump, the real estate tycoon, will be our nation’s 45th president. That’s good news for the housing industry, right? Well, there’s a lot to consider. Here’s how the Trump presidency may impact housing and homeownership in 2017 via NerdWallet.

A ‘responsibly aggressive’ marketplace

A unified call for less government regulation is coming from the Trump camp as well as Republicans in Congress. On the deregulation radar: the Consumer Financial Protection Bureau and other elements of Dodd-Frank, the Wall Street reform act that President Obama signed into law in 2010.

“Since the elections, there has been much discussion of how expected changes under a Trump administration are likely to reduce the [CFPB’s] impact, particularly in the enforcement arena,” says Rob Chrisman, a senior advisor for the Stratmor Group, a mortgage industry consultancy. “Dodd-Frank will not be eliminated. It will be refined — which is a good thing.”

Jeff Taylor is managing partner of Digital Risk, a mortgage processing company. He also says trimming Dodd-Frank would be a good thing for potential homeowners.

“If Dodd-Frank is streamlined, I think you could have banks be more responsibly aggressive in the marketplace, as far as making mortgages,” he says. “And I think that will open up more product for first-time homebuyers … in the next couple of years.”

Taylor says less stringent regulations on lenders might lower the costs of compliance and allow more small community banks to compete with big banks, “boosting bank profits — all of which are likely to increase credit availability.”

However, critics like Noah Smith, former assistant professor of finance at Stony Brook University, worry that deregulation will dial banking risk back up and, perhaps more importantly, put taxpayers back on the hook to bail out the bad actors. Just as during the housing crisis of 10 years ago, it would be another “race to the bottom,” Smith wrote in a Bloomberg analysis.

But a reduction in federal regulations won’t transform the housing industry, Chrisman says. “Trump may mean less federal enforcement, but the states will remain aggressive. Politicians in California, Illinois and New York, primarily Democratic states, have already mentioned a stepped-up regulatory atmosphere,” he says.

Getting Fannie and Freddie ‘out of government ownership’

Another item on the Republican agenda is to reduce the government footprint in the mortgage industry. That means moving Fannie Mae and Freddie Mac into the private sector.

The two government-sponsored companies back a majority of mortgages and were bailed out with taxpayer dollars during the housing crash. Fannie and Freddie buy home loans from lenders and then package and sell those loans in large bundles of bonds.

The quarterly profits that Fannie and Freddie earn are now funneled to the U.S. Treasury, which has been paid back $60 billion more than it provided in bailout funding to the companies. Investors in Fannie and Freddie want to see that money move back into the private sector.

In November, Trump’s Treasury secretary nominee, Steven Mnuchin, told Fox Business Network, “We gotta get Fannie and Freddie out of government ownership.”

“I think there are models that could work,” Taylor says regarding Fannie and Freddie privatization. “What I don’t think you could see is a model [where] the U.S. government doesn’t stand 100% explicitly behind the bonds that Fannie and Freddie issue.”

He says removing that federal guarantee would reduce the global demand for the mortgage-backed securities that the two quasi-government agencies issue. Those bonds are instrumental in freeing up capital for lenders to make more loans.

Homebuilders and a Trump economy

A lack of skilled labor has been one of the biggest constraints to the housing industry for the past couple of years, and Taylor worries that the Trump administration may not help matters in that regard.

“Mr. Trump’s plan to spend money on infrastructure projects around the country could result in more laborers taking those jobs and leaving homebuilders short-handed,” Taylor says. “Also, his immigration stance is likely to keep immigrants out of the country and out of the workforce — a blow to homebuilders who rely on immigrants for many construction jobs.”

Labor shortages also contribute to rising wages for construction workers, which in turn keep new home prices high, he adds.

However, Robert Dietz, chief economist for the National Association of Home Builders, says he expects the Trump administration to take action on some labor rules that could benefit the homebuilding industry. That will almost certainly include the Obama overtime rule “that would’ve affected a lot of construction site managers,” Dietz says.

That rule, blocked by a federal judge on Nov. 22, aimed to double the maximum income a worker could earn and still be eligible for mandatory overtime pay. The new limit of $47,500 would have given 4.2 million more Americans the opportunity to earn overtime, according to the Obama administration.

Dietz also is looking for a Trump administration to help lower building costs. “Just under 25% of the cost of a newly built home is due to regulatory burdens,” he says. “I think it’s reasonable that the new administration can address a lot of them.”

How Trump might affect home affordability

Mortgage rates have soared since Trump won the election. That’s part of a good news/bad news scenario.

“One could argue that the Trump victory has driven up interest rates due to the fear of future inflation, given his tax and infrastructure build proposals,” Chrisman says. “This increase in rates certainly negatively impacts homeownership for first-time buyers. Increasing interest rates, however, often signal a strengthening economy, and if that is the case, more first-time borrowers will qualify.”

Taylor also says home affordability could suffer but offers another factor in the equation. “On the positive side, [higher mortgage rates] could also slow price appreciation, which would help buyers. The housing market has lacked first-time buyers and move-up buyers. Slower price appreciation could benefit move-up buyers who have regained value in their home and want to move up before prices rise again,” he says.

“I’ll tell you, if I’m looking to buy a house for the first time or to sell my house and move into a different house, I really am looking at this next year as probably a moving year because rates still in the 4s are very, very attractive,” Taylor adds.

Will Trump eliminate the mortgage interest deduction?

And then there’s the most sacred cow of all: the mortgage interest deduction. It is frequently mentioned as an important factor in the “buy or rent?” conversation.

The Trump administration and Republicans have floated the idea of putting a cap on the amount of allowed interest that you could deduct from your tax bill.

The thing is, an analysis by the Tax Policy Center of the Urban Institute and Brookings Institution says only about one-fifth of households actually use the deduction. And of those that do, most are way above middle-class taxpayers.

“The Tax Policy Center finds that in 2017, Trump’s cap would affect only about 160,000 singles, a tiny fraction of the 89 million single taxpayers, and about 230,000 couples out of 59 million joint filers,” Howard Gleckman, senior fellow with the Tax Policy Center, writes on Forbes.com. “The vast majority of the taxpayers who would face the cap are high-income.”

Homeownership rates under a Trump presidency

Chrisman is looking for little change in the rate of homeownership in the coming years. From a percentage perspective, homeownership in the U.S. reached its peak during the Clinton/Bush presidential terms, he says. But that’s when banks relaxed underwriting guidelines to such an extent that “people who shouldn’t have been buying houses were.”

The housing crash changed everything. Underwriting, loan documentation and appraisal requirements have strengthened since then. “Marginal borrowers are not borrowing money, and investors feel more secure with investing in mortgage-backed securities,” Chrisman says.

He says that America’s need for housing is just as great as ever and that Trump’s policies won’t move the dial on homeownership rates one way or the other.

“Internal population growth hasn’t stopped, nor has immigration. Nor has the desire for a new generation to want a home for their children,” he says. “I think that from what we know so far, the Trump presidency will have little or no direct impact on homeownership rates.”

A positive outlook for the New Year

All in all, the experts we spoke with are optimistic about 2017. Lenders are using better technology to streamline the mortgage process, and the housing market is “healthy” and “robust,” in their words.

“Builders are excited,” Dietz says. He says reductions in regulatory costs could help homebuilders provide housing to the tightest segment of the market, the entry-level buyer.

“If we do get an administration that’s taking a look at various kinds of regulatory policies — where they’ve grown too large or too expensive — that will certainly be a help [to] the supply side of the market. And I think that’s good news, not just for builders, but it’s good news for renters and prospective homebuyers because adding supply is the way that you address housing affordability issues.”

via Hal Bundrick, a staff writer at NerdWallet, a personal finance website.

Coaching Your Sales Team Is Easier than You Think!

Successful Sales Coaching

Selling Power:  Research shows that ongoing coaching that follows sales training has 400% more impact on productivity than sales training delivered without coaching. As a result, it’s no wonder sales coaching is a hot topic among leading sales managers. In addition, a landmark CEB study of sales teams showed that coaching delivered by managers is more than twice as effective as coaching by high performing peers – or even an internal sales trainer.

There are numerous benefits of managers providing coaching to their direct reports. These include:

  1. Coaching drives higher performance. According to research by CSO insights, companies with formal sales coaching programs report 18% higher win rates than those with discretionary or informal programs.
  2. Coaching creates transparency and trust. Coaching provides an opportunity for the manager to talk one-on-one with – and really listen to – their sales associates. This increased time and attention increases transparency, builds trust, and fosters stronger relationships.
  3. Coaching increases employee engagement. Research shows that salespeople who have received quality coaching report higher engagement levels and are far more likely to stay with their company. With the cost of replacing a sales associate somewhere between two and 10 times their salary, this increased retention represents a significant dollar savings!

Deciding what to coach on is typically quite simple. Viewing a sales presentation will give some sense of the initial needs, or even just asking sales associates which parts of the sales process make them most uncomfortable will yield some areas for coaching.

Common topics for sales coaching include:

  • Delivering an elevator pitch
  • Discovery
  • Handling objections
  • Competitive differentiation
  • Pricing negotiation
  • Closing the deal

For managers who haven’t established a habit of providing coaching, here are some steps to begin the process:

  1. Declare your intent. Share your coaching plans with your boss and ask him or her to hold you accountable for following through. In addition, explaining to your team that you are making coaching a priority will set the stage for successful initial sessions. The public nature of these declarations will help you follow through on your promise!
  2. Establish a schedule. Setting a regular schedule elevates the importance of coaching in the minds of your team, showing that you’re serious about it. Consistency also makes keeping your commitment easier since your time is already blocked off for coaching.
  3. Leverage technology. Using tools which deliver on-demand video-based coaching, can make the experience easier, less time consuming, and more effective for both managers and sales associates.

Once you’ve taken the plunge, you’re likely to find that delivering coaching is easier than you think. The simplest method is “directive coaching.” Feedback is delivered as a statement and is based on your observations and expertise. For example, you might recommend that an associate be more aggressive when asking for a next meeting.

A more advanced form of coaching is “non-directive coaching,” which is delivered in the form of questions. This prompts the sales associate to diagnose his or her own performance and identify potential areas for improvement. For example, you might ask, “How do you feel about the way you asked for a follow-up meeting?” This approach leads to self-assessment by the associate and helps create the need and desire to improve in certain areas.

As your coaching experience evolves, you’ll increase in skill, confidence, and effectiveness while you help your direct reports identify and work on areas for improvement. So, good luck sales manager. Now, get coaching!

via Mat Greenfield, coaching consultant at HireVue. He is a learning and development geek with a passion for helping people be the best they can be through training and coaching. Learn more about HireVue on Facebook, Twitter, and LinkedIn.

Ben Carson… HUD Secretary

President-elect says his former rival has ‘a brilliant mind and is passionate about strengthening communities’.

It’s official: retired neurosurgeon Ben Carson will serve as President-elect Donald Trump’s secretary for the Department of Housing and Urban Development (HUD), so long as Congress confirms him.

“I am thrilled to nominate Dr. Ben Carson as our next Secretary of the US Department of Housing and Urban Development,” Trump said in a statement. “Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities.”

“We have talked at length about my urban renewal agenda and our message of economic revival, very much including our inner cities. Ben shares my optimism about the future of our country and is part of ensuring that this is a presidency that represents all Americans.”

HUD “oversees homeownership, low-income housing assistance, fair housing laws, homelessness, aid for distressed neighborhoods, and housing development,” according to its website.

Today, Carson posted on message on Facebook that said, “I am honored and look forward to working hard on behalf of the American people.”

Ben Carson

The news comes after Trump tweeted about his interest in Carson about two weeks ago. Moreover, on Monday, Nov. 28, sources “close to the appointment” confirmed to HousingWire that Ben Carson would officially accept the role.

“After serious discussions with the Trump transition team, I feel that I can make a significant contribution particularly to making our inner cities great for everyone,” Carson wrote. “We have much work to do in strengthening every aspect of our nation and ensuring that both our physical infrastructure and our spiritual infrastructure is solid.”

Previously, Carson suggested he wasn’t interested in a government position after being offered the job as head of the Department of Health and Human Services a few weeks ago.

But the doctor wavered on this message, later stating on Facebook that “if called upon, I would serve inside of the government.”

If confirmed, Carson will be the first African American appointed to a senior position in Trump’s cabinet. He would replace Julián Castro, the former mayor of San Antonio, and President Obama’s appointee since 2014. Prior to Castro, New York City’s housing commissioner Shaun Donovan filled the role.

Given Carson’s health care background (he was the director of pediatric neurosurgery at Johns Hopkins until his 2013 retirement), Trump’s decision breaks the tradition of appointing HUD secretaries with local government or housing and real estate experience.

“Realtors know that the incoming Secretary of Housing and Urban Development has a big job ahead,” said National Association of Realtors president William E. Brown in a statement. “Potential homebuyers face a range of hurdles, from rising prices to mortgage credit that’s burdened by fees and extra costs.

“We congratulate Dr. Carson on accepting this important challenge and wish him the very best of luck in meeting the task ahead. While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans. The National Association of Realtors and its 1.2 million members looks forward to working with Dr. Carson to fulfill this important mission.”

“The choice of Ben Carson is about more than FHA premiums and rules, but it will play a role,” said Ken Trepeta, executive director at RESPRO (Real Estate Services Providers Council), in a statement.

“This choice is about a vision to use HUD as a leading force in President-elect Trump’s effort to renew our cities an reach out to African Americans, Hispanics, and others who live in those areas. We at RESPRO look forward to working with Dr. Carson.”

In a Nov. 23 statement, president and CEO of the National Low Income Housing Coalition Diane Yentel, emphasized the critical responsibilities of HUD, to include:

  • federal rental assistance programs that serve over 5 million of the country’s lowest income households
  • administering tens of billions of dollars in community development, disaster recovery and homeless assistance funding
  • enforcing fair housing laws
  • acting as one of the largest mortgage insurers in the world
  • alleviating poverty
  • stabilizing and revitalizing communities
  • increasing the educational attainment and incomes of low income families
    providing safe, affordable homes to deeply poor elderly or disabled families

“With so many qualified candidates to choose from with deep knowledge of, and commitment to affordable housing solutions for the poorest families, and with the housing crisis reaching new heights across the country, Dr. Ben Carson’s nomination to serve as HUD secretary is surprising and concerning, given his lack of experience with or knowledge of the programs he would oversee,” Yentel said.

“The little that we do know about Dr. Carson’s position on affordable housing is a reason for concern. In July 2015, Dr. Carson published an editorial describing fair housing as an Obama administration ‘experiment,’ revealing a fundamental misunderstanding of obligations that have been around since 1968, the year the Fair Housing Act was made law.”

She added: “Ultimately, fair housing means all families, including the poorest ones, are able to choose the neighborhoods in which to live based on what’s best for themselves and their families. Providing this choice requires that we work towards making every community one of opportunity. This goal — and the affirmatively furthering fair housing rule as a means to achieve it — should fit squarely within President-elect Trump’s urban revitalization plan.”

via Caroline Feeney, Inman News

Why Do You Think Mortgage Interest Rates Are Increasing?

Mortgage Interest Rates

According to Freddie Mac’s latest Primary Mortgage Market Survey, the 30-year fixed rate mortgage interest rate recently jumped up to 3.94%. Interest rates had been hovering around 3.5% since June, and many are wondering why there has been such a significant increase so quickly.

Why did rates go up?
Whenever there is a presidential election, there is uncertainty in the markets as to who will win. One way that this is noticeable is through the actions of investors. As we get closer to the first Tuesday of November, many investors pull their funds from the more volatile and less predictive stock market and instead, choose to invest in Treasury Bonds.

When this happens, the interest rate on Treasury Bonds does not have to be as high to entice investors to buy them, so interest rates go down. Once the elections are over and a President has been elected, investors return to the stock market and other investments, leaving the Treasury to raise rates to make bonds more attractive again.

Simply put, the better the economy, the higher interest rates will go. For a more detailed explanation of the many factors that contribute to whether interest rates go up or down, you can follow this great link to Investopedia.

The Good News
Even though rates are closer to 4% than they have been in nearly 6 months, they are still slightly below where we started 2016, at 3.97%.

The great news is that even at 4%, rates are still significantly lower than they have been over the last 4 decades.

Any increase in interest rate will impact your monthly housing costs when you secure a mortgage to buy your home. A recent Wall Street Journal article points out that, “While still only roughly half the average over the past 45 years, according to Freddie Mac, the quick rise has lenders worried that home loans could become more expensive far sooner than anticipated.”

Tom Simons, a Senior Economist at Jefferies LLC, touched on another possible outcome for higher rates:

“First-time buyers look at the monthly total, at what they can afford, so if the mortgage is eaten up by a higher interest expense then there’s less left over for price, for the principal. Buyers will be shopping in a lower price bracket; thus demand could shift a bit.”

Key Take-Away

Interest rates are impacted by many factors, and even though they have increased recently, rates would have to reach 9.1% for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Give us a call… we can and will help you find the perfect home in spite of this rate bump.  www.ForeSiteResidential.com

Thanks to Keeping Current Matters for their facts and narrative.

From Empty Nest to Full House… Multigenerational Families Are Back!

Multi-Generational Homes

Quick take-away…

Multigenerational households are making a comeback. While it is a shift from the more common nuclear home, these households might be the answer that many families are looking for as home prices continue to rise in response to a lack of housing inventory.

Multigenerational homes are coming back in a big way!

In the 1950s, about 21%, or 32.2 million Americans shared a roof with their grown children or parents. According to a recent Pew Research Center report, the number of multigenerational homes dropped to as low as 12% in 1980 but has shot back up to 19%, roughly 60.6 million people, as recently as 2014.

Multigenerational households typically occur when adult children (over the age of 25) either choose to, or need to, remain living in their parent’s home, and then have children of their own. These households also occur when grandparents join their adult children and grandchildren in their home.

According to the National Association of Realtors’ (NAR) 2016 Profile of Home Buyers and Sellers, 11% of home buyers purchased multigenerational homes last year. The top 3 reasons for purchasing this type of home were:

  • To take care of aging parents (19%)
  • Cost savings (18%, up from 15% last year)
  • Children over the age of 18 moving back home (14%, up from 11% last year)

Donna Butts, Executive Director of Generations United, points out that,

“As the face of America is changing, so are family structures. It shouldn’t be a taboo or looked down upon if grown children are living with their families or older adults are living with their grown children.”

For a long time, nuclear families (a couple and their dependent children) became the accepted norm, but John Graham, co-author of “Together Again: A Creative Guide to Successful Multigenerational Living,” says, “We’re getting back to the way human beings have always lived in – extended families.”

This shift can be attributed to several social changes over the decades. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living. The Asian and Hispanic populations are more likely to live in multigenerational family households and these two groups are growing rapidly.

Additionally, women are a bit more likely to live in multigenerational conditions than are their male counterparts (20% vs. 18%, respectively). Last but not least, basic economics.

Carmen Multhauf, co-author of the book “Generational Housing: Myth or Mastery for Real Estate,” brings to light the fact that rents and home prices have been skyrocketing in recent years. She says that, “The younger generations have not been able to save,” and often struggle to get good-paying jobs.

via KCM Crew

 

15 THINGS REALTORS WANT BUILDERS TO KNOW (2)

Hand With Magnifying Glass Over House

…continued

8. Baby Boomers
Realtors have noticed that many builders across the country are failing to connect with one of the largest group of buyers: baby boomers looking to downsize. They say there is a shortage of appropriate housing for this demographic, made up of older adults who prefer new, one-level construction to existing dwellings, says Baltimore-area Realtor Janice Kirkner. “Eighty-five percent of my 55-plus buyers prefer new construction because there is no maintenance and all common areas are maintained for them,” she says.

Hailey finds older buyers in Texas desire smaller new-construction one-story houses of 2,500 square feet or less that have the features and amenities they want. “They are looking for smaller single-story homes but they want the upgraded amenities that they feel they deserve. They also want that energy efficiency.”

9. Cultural Considerations
Builders often overlook the needs of foreign buyers, says Miami agent Andre Brown, who works for an Asian-owned company. Marketing materials should be available in a variety of languages depending on the area and bilingual staff or interpreters should be on hand to assist potential buyers.

“As the U.S. population becomes more culturally diverse I think it would be good for builders to research cultural preference, architecture and design to implement different aspects into their development,” says Brown. For instance, Richard says sales in his Asian-dominated market often hinge on a home’s favorable feng shui.

10. Closing the Deal
When it comes time to finalize a deal, there is one thing that Realtors agree on: Home buyers are turned off by overly forceful marketing tactics. They see deals falling through because of salespeople’s relentless calling and inflexible rules. For instance, it’s common practice for builders to tell buyers they must use a specific lender or title agency in order to get the pricing they want.

“The hard-sell on the builders preferred lender and title company is not appreciated by most agents,” says Hailey. “Many times before we assist a buyer in looking for homes, we have already had them get pre-approved with a lender outside of the builder’s preferred lender. Giving the consumer the ability to shop the loan is the right thing to do.”

Instead of “used car salesman tactics,” sales professionals should focus on a specific buyer’s preferences and motivators, adds Rice.

“They should break past old‐school sales tactics and dive into the psychology of what their buyer is looking for in their next home,” he says. “Their interests, wants, needs, and priorities are what a sales agent can search for when developing a relationship with a customer. Closing the sale will come as a result of a sensible process that adds value.”

Realtors can be indispensable in knowing what motivates a buyer. “Ask us what is the best approach to dealing with our buyer, we have a relationship with them and can recommend the best way to enter into negotiations, says Kirkner.

11. Contracts
Home buyers are sometimes shocked by builder’s contracts, Realtors say. They are put off by no option periods, non-refundable earnest money, and no hard close date. They are nervous when they see that builders giving themselves one to two years to complete the home and that they’re locked in to the contract no matter what the inspection shows.

Houston Realtor Kindi Scartaccini has had clients walk away from listings when they realize the deal would involve a builder’s contract. She recommends builder use a standard state form with just a few addendums. “Most realtors and their buyers love that because the contract is not so slighted toward the builder,” she says.

12. Working Together
Although Realtors help facilitate sales, they often feel as if they not a valued by builders. One of their biggest pet peeves is when a builder reaches out directly to their client. “If a buyer has an agent, call the agent not the buyer,” says Scartaccini.

In addition, they say, Realtors should be treated with the same respect as any other industry professional and have their calls returned promptly. Not answering a Realtor’s questions fast enough slows their own customer service. “In the age of the Amazon World, people are used to answers fast and we like to work that way as well,” says Fields.

On the flip side, builders should consider using a selling agent to market and sell their homes, says Benson. Think of Realtors as another subcontractor. “Builders won’t hire a tradesman with no experience but sometimes they think that their homes should sell themselves,” he says. “New homes don’t build themselves and they don’t sell themselves. Hire a professional to do the job.”

13. Realtors Fees
Many builders do not work hard enough to partner with local real estate agents, and few include a fee for a Realtor in their sales process. Some even try to cut them out of the deal or don’t return their calls.

“It’s frustrating to the Realtors, because they may spend many hours in educating the buyers through showing existing homes and general questions about the process of buying,” says DelVecchio, who is the exclusive marketing agent for a local builder Carina Homes, one of the only builders in her area that reaches out to Realtors with a “Realtor Referral Program” that provides a marketing fee of 3% of the build price.

“Our relationship is built on the premise that the builder’s best skills are with construction, but not marketing/sales. Our arrangement is that I get a marketing fee on every home Carina builds, which is about 10-12 per year,” says DelVecchio. “When there’s another Realtor involved in bringing a buyer to Carina, they also get paid a fee for the referral/assistance with the buyer from financing to closing.”

14.Closing
Realtors often see builders do everything right in their sales process but then drop the ball at the eleventh hour by not having the home completed at closing. Benson urges them to have everything ready at least a week before closing so that the builder and buyer can do a walkthrough and create a punchlist, which should be completed prior to closing. “It far more difficult to do repair or finish work in the home when the owner is living in the home, both for the builder and the homeowner,” says Benson.

“Builders need to learn to finish a house,” echoes Baldwin. “93, 97, 98 percent is not finished! A buyer is always going to focus on things not done,” he says. “In football, you can go 99 yards, but you don’t get any points unless you cross the goal line. There’s no A for effort.”

15. Follow Up
Repeat business and referrals are the lifeblood of any home building business. The best way to achieve them is through excellent service before, during, and after the sale, say Realtors.

Fields says many of her clients have heard warranty nightmares about lingering issues in new homes. “Not having a strong system in place will lead to lost referrals and angry customers,” she warns. “If there is a problem, builders need to take ownership of issues and repair them immediately.”

Manage buyers’ expectations with a follow-up service schedule for the first year. Benson recommends that builders check in with homeowners 90 days and 330 days after closing. “The first visit is to check in and make sure that all of the expectation of the homeowner have been met. The second visit is just prior to the end of the typical one-year warranty and goes a long way toward referrals and ensuring the builder can use his past homeowners as references,” he says.

These visits can be helpful for builders, too, as they are a chance to receive feedback on the design and livability of the home to alert them to the need for any changes in future homes, he adds.

Kudos
Most experienced real estate agents feel a kinship with their builder peers, especially after having weathered the down years of the Great Recession together. They understand the stress and challenges of making a living in the volatile U.S. housing industry.

“The shortage of labor and capital, increased land cost, excessive government regulation, elevated taxes and impact fees all make the job of being a builder and developer very difficult,” says Brown.

In spite of the challenges, Realtors say they are impressed with builders’ devotion to their craft. As Parker says, “Truly, they are doing a great job!”

Terrific article via Builder: Jennifer Goodman

15 THINGS REALTORS WANT BUILDERS TO KNOW

Realtor Builder Relationship
From dirty model homes to pushy salespeople, here are the top blunders that real estate agents see builders make.

Builder: Jennifer Goodman Home buyers rely on real estate agents for information about their local market that they can’t get anywhere else. In fact, real estate agents are home buyers’ most important source of information about new homes after the Internet. Last year, 33% of buyers learned about their new homes via a real estate agent.

Agents’ influence is not declining despite consumers’ use of the Web, and for most new home transactions, Americans still prefer to have a Realtor. Last year, 87% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69% in 2001, according to the National Association of Realtors.

In the course of helping their clients find the right house, these buyer agents meet a lot of builders and walk through an untold number of houses. This means they see where builders are making the grade and where they are slipping up. While many of them compliment builders for doing a great job even during tough economic conditions, they have also have strong opinions about what building pros could do better. Here are 15 of the top things they wish builders did differently.

1. New vs. Existing
Realtors say builders undermine sales by not playing up their biggest advantage: New homes are preferred to previously owned ones. They urge builders to market the value of a new home, which comes with warrantees, energy efficiency, and up-to-date design that older homes don’t have.

Buying a new home is especially ideal in markets where there’s a lack of inventory in certain price ranges, especially in entry level and move up categories, they say. In her Edmond, Okla., market, Realtor Jennifer Fields says new homes are highly sought after, especially in popular school districts. Builders in her area are working to design and customize homes that rival the price point of existing homes. “This makes new homes the obvious choice for many buyers,” she says.

In addition, new homes also offer flexibility on closing times, says Dana David, an Amherst, N.Y., real estate agent. “The hardest thing in this market is for my sellers to sell their home and also buy in a timely fashion,” she says. “Building a new home allows them to know where they are going before we list their existing home, and also gives me the ability to negotiate in time to rent back or for an extended close.”

Even though buyers prefer new, in the end it all comes down to price, says Susanna Madden, a Tampa RE/MAX agent. “If the HOAs and CDDs and add-ons are cost prohibitive, buyers will look at a ‘lovingly maintained’ resale that the seller has kept up.”

2. Model Homes
A model is often a prospect’s first impression of their future home, and it should entice them to visualize living there, says David Rice, founder of New Home Star, a Chicago-based real estate sales management firm. “It’s a hugely meaningful thing to be able to conceptualize the next chapter of your life,” he says.

Models need to be fully complete, says Houston agent Bill Baldwin, because ones that are not finished give a bad impression. Moreover, agents are dismayed to walk into a model with a client and find that it isn’t in working order or is dirty. “They should be equipped with everything including light bulbs, working sinks, and door knobs,” says Seattle-based Keller Williams agent Matt Parker. “And they should be cleaned every other week.”

3. Staging
Realtors say that no matter the style or size the model home, it should always be staged. It’s one of the most important steps to selling a home, says New York Realtor David.

“I’ve taken on expired listings of vacant model homes… once staged, buyers can picture themselves living in them and usually they sell in record time,” she says.

But many agents caution builders and their designers not to take staging too far because overdecorated models can look cluttered and confuse customers about what is standard and what is an upgrade. “Sometimes they are set up with lots of bells and whistles that don’t come standard, says Coldwell Banker agent Missy Stagers of San Antonio, Texas. “Make sure to clearly notate what is an upgrade.”

Models need to strike a middle ground between overdesigned and plain vanilla, says David. “It is hard for clients to walk into a fully loaded model home and picture it at the base level,” she says. “While I realize builders need to showcase their ‘best stuff,’ it would be great if there was a way to have a model with every upgrade, and also one available to see with just the basic offerings.”

Stagers has a good idea: “Offer some nice things in the basic package so everything is not an upgrade,” she says.

4. Price
The price of a new home can be a touchy subject between builders and buyer’s agents, who work to get the best deal for their clients. Realtors say they realize that builders need to make a profit, but “we do expect them to price their homes fairly. If you are always getting low ball offers, check where you stand price per foot with your competitors and other homes,” says Oklahoma agent Fields.

The biggest mistake builders make is that they price their homes based on their costs rather than on market conditions, says Garry Benson, managing broker at GPB Marketing Solutions in Chicago. “The market doesn’t care how much the builder had to spend to buy the land or build the home. They only care about the market value.”

Realtors don’t understand why the price of houses in new communities increases so quickly. “I feel as though every house that is built gets bigger, better, and more expensive,” says David. This is offputting to many of her clients who are young buyers or empty nesters on a budget. “It would be amazing if there was a builder that could supply us with reasonable, not overly upgraded homes that could appeal to not only first time homebuyers but also downsizers at an affordable price point,” she says.

When prices do rise, it’s important that builders honor quotes, says Plano, Texas, broker Melissa Hailey, who was shocked when a builder gave her clients a price and then wanted a $3,000 increase four days later when they sat down to sign the paperwork. Her buyers, who couldn’t afford the increase, were heartbroken.

5. Multiple Listing Service
The multiple listing service (MLS) is one of a Realtor’s most powerful tools, letting them know when new houses come on the market and allowing them to see recent sales. But many builders don’t provide enough information in their listings about variations and options, according to Albany, N.Y., broker Wayne Richard.

“If you consistently list on the MLS your to-be-built four-bedroom, 2.5-bath colonial you’ll get filtered out of the buyer (and Realtor) searching for a five bedroom, or a third garage, or an in-law suite,” he says. “You have to tell both buyers and Realtors that you can build those variations.”

6. Construction Updates
Once a house is under contract, builders must communicate with the Realtor about what is happening on the site, adds Richard. “Set construction milestones and expectations and advise them ahead of time: The hole is being dug tomorrow, the sticks start going up this week, the kitchen cabinets are being installed.”

Realtors often are reluctant to bring clients to a job site, says Richard, who worked for a public builder before becoming a Realtor. He thinks this is based on an unspoken fear that they will be embarrassed in front of customers because they don’t know much about the construction process. He urges builders to work with Realtors to educate them on how houses are built so that they are comfortable on site.

7. Buyer Preferences
Real estate agents, who work intimately with their clients sometimes over decades-long periods, often have a better idea than builders what buyers are looking for. Savvy builders use them to follow local statistics and trends, and to understand the demographics of the market. For instance, they can help with design and layout decisions before a house is built.

“Are you sure that theater room is going to go over with your clientele?” asks Fields. “You may think people want a theater room versus a four bedroom, but if you are selling in an area with good schools, four bedrooms may be far more important to the buyers.”

Failure to consult with a Realtor led to major problems for a developer in Christine DelVecchio’s Ithaca, N.Y., market. The spec homes in the development had a floor plan flaw that could have easily been averted: the first-floor master bedroom was located directly off the main entrance to the home and contained an oddly shaped angled wall that made bed placement challenging. “It was just badly designed for the flow of the entire house,” she recalls. In addition, the houses were not priced correctly for the lot size and location. An experienced Realtor could have researched homes in that area and suggested a more appealing lot size and floor plan, she points out.

“Only after the spec house was built did they reach out to the Realtor community after it had taken several years to sell lots/homes in that location,” she says. “They surely lost on their investment by this misstep.”

To be continued…