Social media lets brokers get proactive about recruiting

Once prospects are identified, vet them closely

BY MATT CARTER, FRIDAY, NOVEMBER 9, 2012.

Inman News®

Job interview image via Shutterstock.

ORLANDO, Fla. -- With housing markets on the mend, competition for top agents is heating up, and real estate brokers should be using social media sites like LinkedIn to proactively target agents they want to recruit instead of posting a help wanted ad and waiting passively for responses to come in.

That's the advice former headhunter Daniel Abramson had for real estate brokers attending the National Association of Realtors' annual Realtors Conference and Expo in Orlando today.

But identifying good prospects is only half of the equation, said Abramson, the president and founder of training and coaching firm StaffDynamics. In-depth interviews are needed to determine who's got the right combination of people skills and determination to succeed.

Social networking "is only a vehicle for bringing in people. You still have to interview them," Abramson said.

3 things you should know about mortgage insurance

REThink Real Estate

BY TARA-NICHOLLE NELSON, THURSDAY, OCTOBER 25, 2012 Inman News®

Calculator image via Shutterstock.

Q: I'm trying to get a better understanding of private mortgage insurance (PMI). I understand the fundamentals and that it usually equals 1/2 percent-1 percent of the mortgage, but what I'm not sure about is how it is paid.
Is the PMI paid each year until you reach the 20 percent mortgage-to-value ratio? Can you elect to pay the PMI upfront if you do not want the cost of the policy to be included in your monthly mortgage payments?
If you are allowed to pay PMI upfront, instead of monthly, do you have to pay the full premium at the beginning of each year?
A: When you put less than 20 percent of the purchase price down on a home, your lender will charge you for the costs of placing a private mortgage insurance, or PMI, policy on your home loan. Though the borrower pays for it, the policy actually protects the lender in the event that the borrower defaults on the loan -- a risk that is statistically more likely to damage the lender's interests when there is little equity in the property.

Why is nobody making my dream real estate app?

Realtor Notebook

BY TERESA BOARDMAN, THURSDAY, AUGUST 30, 2012.

Inman News®

Dreaming image via Shutterstock.

I was recently asked by a company that builds iPad apps what kind of app I would like to see.

I did not hesitate to suggest an app that I could use to write real estate contracts. No one but agents who use iPads in the field fully understands what I am looking for, and I don't think the app is being built.

Pen and paper are easier than some of the clunky apps and mobile sites I have used to fill out forms and make offers, and that is just wrong. Some of them can reduce an agent to tears when they crash and the offer vanishes.

I want a single, easy to use app that works on my iPad where I can load or access the entire library of real estate forms, add forms of my own, and write offers for my clients, have them signed on the screen or electronically and manage them from cradle to grave and access them from any device.

Signs that California real estate is making a comeback | Several data point to early stages of seller's market

BY BERNICE ROSS, THURSDAY, JULY 12, 2012 Inman News®

Happy man jumping image via Shutterstock.

A host of factors could send the real estate market back into a tailspin.

Will "Taxmageddon" send us back into recession?

Will Freddie Mac, Fannie Mae and FHA continue to exist?

Will the mortgage interest deduction and low down payments disappear?

Will the euro fail?

Will unemployment and weak manufacturing data in the U.S. and China continue to be the norm?

Get off on the right foot with buyers | Questionnaire can be potent tool for establishing clients' wants, needs

BY ALISHA ALWAY BRAATZ, WEDNESDAY, JULY 11, 2012 Inman News®

Handshake image via Shutterstock.

My last column focused on the three keys to successfully managing a buyer. One of those keys included embodying Perry Mason and investigating your buyer's needs and wants via a questionnaire.

This week, by popular request, I'll tackle how to create your own successful buyer's questionnaire -- or what I refer to as my buyer's guide (it sounds less intrusive and superfluous -- especially to the guys!).

Agents: Are you an IRS audit target?

Real Estate Tax Talk

BY STEPHEN FISHMAN, FRIDAY, MARCH 30, 2012.

Inman News®

Every year, the Internal Revenue Service releases detailed statistics about who got audited the previous year.

The stats for 2011, covering 2010 returns — have recently come out and they paint an unpleasant picture for many real estate professionals — particularly the successful ones.

The percentage of business and nonbusiness returns that got audited in 2011 is shown in the following chart:

IRS Audit Rates (2010)

	Audit Rate
Sole proprietors
Income under $25,000	1.3%
$25,000 to $100,000	2.9%
$100,000 to $200,000	4.3%
$200,000 and more	3.8%
Partnerships	0.4%
S corporations	0.4%
C corporations
Assets under $250,000	0.9%
$250,000 to $1 million	1.6%
$1 million to $5 million	1.9%
$5 million to $10 million	2.6%
Nonbusiness Returns
Under $25,000	1.2%
$25,000 to $50,000	0.7%
$50,000 to $75,000	0.8%
$75,000 to $100,000	0.8%
$100,000 to $200,000	1.0%
$200,000 to $500,000	2.7%
$500,000 to $1 million	5.4%

This chart shows that in 2010, 4.3 percent of sole proprietors earning $100,000 to $200,000 were audited. Not even corporations with assets worth between $5 million and $10 million were audited as often.

Moreover, only 1 percent of taxpayers who did not file a Schedule C form, but earned $100,000 to $200,000, were audited. Thus, self-employed taxpayers were four times as likely to be audited as employees earning the same amount.

In fact, employees earning as much as $500,000 were less likely to be audited than self-employed taxpayers earning as little as $100,000.

These statistics undoubtedly reflect the IRS’s belief that sole proprietors habitually underreport their income, take deductions to which they are not entitled, or otherwise cheat on their taxes.

Employees have less opportunity to cheat because their income tax is withheld by their employers and income reported directly to the IRS by them.

Unfortunately, most real estate professionals fall into the high-audit category: They are self-employed businesspeople who file Schedule C. The lesson these numbers teach is that you need to take the IRS seriously.

This doesn’t mean that you shouldn’t take all the deductions you’re legally entitled to take, but you should understand the rules and be able to back up the deductions you do take with proper records.

If you’re really worried about getting audited, think about forming a business entity to operate your real estate business. This could be a pass-through entity, such as a limited liability company taxed as a partnership or an S corporation.

Such entities don’t pay taxes themselves, but do file returns with the IRS. Both have extremely low audit rates: only 0.4 percent of such entities were audited in 2011. Regular C corporations also have relatively low audit rates.

Real estate professionals optimistic about home values

From AOL Real Estate

BY INMAN NEWS, MONDAY, APRIL 2, 2012.

Editor's note: The following item is republished with permission of AOL Real Estate. See the original article: Home Value Survey Sees Sharp Rise in Realtor Optimism. By Teke Wiggan

With signs that a real estate recovery may be kicking into gear, a new survey shows a sharp increase in optimism among real estate professionals about the direction of home values.

A survey conducted by home valuation website HomeGain found that the number of real estate professionals who expect home values to increase has more than doubled over just one quarter. Thirty-seven percent of respondents surveyed so far in 2012 said they anticipate that home values will rise in the next six months, up from 15 percent in the fourth quarter of 2011.

"The trend has been staying the same or decreasing. And here it flipped for the first time," HomeGain General Manager Louis Cammarosano told AOL Real Estate.

He added that since HomeGain began administering the survey in the second quarter of 2009, the percentage of respondents who have expressed a bullish outlook on the market has never risen above 25 percent, and, for much of the time, has sputtered around 15 percent.

The spike in optimism about home values follows recent reports that corroborate the view that the housing market is stabilizing. Home sales are trending upward and homebuilders are reportedly more optimistic than they've been in many years. Home prices continue to fall, but a number of industry observers say that price direction isn't necessarily the most important bellwether of a recovery.

Budge Huskey, president and chief operating officer of Coldwell Banker Real Estate, says he sees confidence among real estate agents that he hasn't observed since the housing meltdown. "What is consistently being represented out there today is that there is a sense of optimism in the real estate business that has not been seen in the last five to six years," he told AOL Real Estate.

While cautioning that real estate agents "tend to always be optimists," Huskey stressed that "this time it's based on what we believe to be some clear trends."

Prominent among the hopeful signs, Huskey says, is the state of the housing inventory, which had fallen to 2.3 million homes, or approximately a six-month supply of for-sale homes, as of January. That's the lowest level of inventory since March 2005, according to the National Association of Realtors, which released the statistic.

Meanwhile, total home sales have risen by 13 percent in the last six months, according to Capital Economics. And while construction of new homes dropped marginally in February, they still were at the second-highest level since October 2008, the National Association of Homebuilders says.

A last sign, much ballyhooed by industry optimists, is the state of homebuilders' confidence: The National Association of Home Builders sentiment indexreached 28 in February and remained at that level in March. Not since 2007 have homebuilders expressed such confidence in the housing industry.

Despite sprouting green shoots in the market, home prices continue to slide, and even when they do eventually trend upward, many economists say, the increase will be gradual.

That fact has led some industry observers to call for a rethinking of what actually constitutes a housing recovery, and to avoid treating price movement as the all-important indicator of a recover.

Capital Economics, for instance, recently revealed that even though prices declined last year (around 4 percent according to various estimates) and mortgage rates are finally ticking up, the economic analysis firm still believes that the real estate market is making inroads.

But CoreLogic senior economist Sam Khater advises against buying too much into the hype. "I would be cautious about folks getting too optimistic," he says.

The 1.6 million homes that are in a state of foreclosure are about to hit the market at a faster pace in the wake of an agreement reached between the government and major mortgage servicers over acceptable foreclosure practices, Khater says. That'll drive down prices, he says, as banks begin to push through foreclosures that they previously halted during negotiations of the $25 billion settlement reached last month.

"There's going to be a really long tail to this," he cautions. Still, Khater says that rising sales and the fact that fewer homes are flowing into the "shadow inventory" -- homes in a state of foreclosure -- are positive signs for the real estate market.

Huskey says the next healthy housing era will be a more "traditional market" that will stand in stark contrast to what he calls the "steroid years," when prices rose at an unsustainable pace.

As CNNMoney recently put it, "If you're waiting for home prices to go up, then you're missing signs the troubled housing market has finally turned around."

Real estate professionals also stress that a housing recovery should not be judged from a bird's-eye view, since market conditions vary dramatically from state to state and city to city. In states walloped by the real estate market collapse, real estate agents are significantly more optimistic that home prices will rise in the next six months.

Eighty percent of Arizona real estate agents and homeowners, 75 percent of Nevada agents and homeowners and 51 percent of Florida agents and homeowners told HomeGain that they believe home values will rise in the next six months. The optimism in Florida dovetails with dramatic price gains recently reported by Realtor.com.

The online marketplace reports that out of the 10 metropolitan areas that saw the highest price increases in their database in February of 2012, seven were in Florida. Miami median home prices increased by 26.19 percent, the listing service says.

Meanwhile, in states that weathered the housing crisis relatively well, a much higher percentage of real estate agents and homeowners believe that prices will drop. In Connecticut, 60 percent of agents surveyed said that they thought prices would continue to fall.

10 U.S. real estate markets drawing international buyers

Inman News report features data trends, analysis, commentary on popular areas

BY INMAN NEWS, FRIDAY, MARCH 23, 2012.

Inman News®

Affluent international buyers, attracted by fire-sale prices, are snapping up real estate in some U.S. markets. In a report released today, Inman News identifies 10 markets where public records indicate foreign buyers make up the biggest share of overall buyers.

Most of the markets are located in sunny Florida, though areas in Nevada, Arizona, New York and Hawaii are also on the list. The report highlights the economic and personal factors that drive foreign buyers to buy; their preferred property types; top countries of origin; how they find the real estate professionals they work with; why the selected markets appeal to them; and relevant demographic and housing-related characteristics for the markets, including share of foreign-born population, distressed property footprint, home-price trends, and vacancy rates.

Among the findings in this report, researched and written by Inman News reporter Andrea V. Brambila:

• Population levels in the markets range from about 600,000 in Lakeland-Winter Haven, Fla., to nearly 5.6 million in Miami-Fort Lauderdale-Pompano Beach, Fla.
• Seven out of 10 markets had foreign-born populations above the national rate of 13.1 percent in 2010. The Miami metro had the highest share born abroad, at 39.2 percent.
• In six of the 10 markets, area inhabitants who were foreign-born and moved from abroad accounted for a higher-than-average share of overall inhabitants who reported moving in the previous year in 2010. New York County (Manhattan) had the highest share: 7.7 percent of the people who moved in that county were both foreign-born and hailing from abroad.
• In seven out of 10 markets, the median sales price for an existing, single-family home was lower than the national median of $163,500 in fourth-quarter 2011. In eight out of 10 markets, the median sales price for a condo was lower than the national median of $160,800 for that same quarter.
• Condo prices fell on an annual basis in the fourth quarter in seven out of 10 markets. All seven saw their prices decline by more than the national rate of -1.7 percent.
• Seven of the 10 markets had a higher share of distressed sales in fourth-quarter 2011 than the national rate of 23.7 percent. Eight of the 10 markets had higher foreclosure activity rates in fourth-quarter 2011 compared to the national rate.
• Nine of the 10 markets, except for Honolulu, had higher vacancy rates in 2010 than the national rate of 13.1 percent. Cape Coral-Fort Myers, Fla., had the highest rate, at 37 percent.

Sales of second homes soar to highest level since 2005

Investment-home sales, nearly half in cash, jump 64.5%

BY INMAN NEWS, FRIDAY, MARCH 30, 2012.

Inman News®

Sales of second homes, which include vacation and investment homes, soared in 2011 to their highest market share since the height of the housing boom, according to an annual report from the National Association of Realtors.

NAR’s 2012 Investment and Vacation Home Buyers Survey includes 2,241 responses from U.S. households who bought either new or existing homes in 2011. The association conducted the survey in March 2012 and controlled for age and income.

Investors lead the surge in second-home sales. Sales of investment homes climbed 64.5 percent in 2011, to 1.23 million, from 749,000 the year before, the report said. At the same time, sales of vacation homes increased 7 percent to 502,000, compared to 469,000 in 2010.

Combined, second-home sales accounted for 38 percent of all home sales last year (27 percent investment homes, 11 percent vacation homes), up from 27 percent in 2010 (17 percent investment homes, 10 percent vacation homes). That's the highest share since 2005, when second-home sales made up 40 percent of sales overall.

Meanwhile, owner-occupied home sales fell 15.5 percent year over year in 2011, to 2.78 million, the report said.

"During the past year investors have been swooping into the market to take advantage of bargain home prices," said Lawrence Yun, NAR's chief economist, in a statement.

"Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."

Second-home buyers weren't hesitant to use cash, Yun added. About four out of 10 vacation-home buyers paid in cash last year, while roughly half of investment buyers did. Of those who did finance their purchase, the median down payment was 27 percent, the report said.

Investors paid somewhat more for their purchases in 2011 than in 2010, though vacation-home buyers paid less. The median price for an investment home last year rose 6.4 percent to $100,000 last year, while the median price for a vacation home fell 19.1 percent to $121,300. Distressed properties accounted for half of investment-home sales, 39 percent of vacation-home sales, and 29 percent of primary-home sales.

Primary-home buyers paid a median $167,700 for their purchase in 2011, down 5.1 percent from the year before.

Investors and vacation-home buyers tended to be older and more affluent than primary-home buyers. While the latter had a median age of 39 and earned a median household income of $72,400, the typical investment-home buyer was 50 years old and earned a median household income of $86,100 and the typical vacation-home buyer was also 50 years old with a median income of $88,600.

Investors planned to hold the property for a median five years and generally bought a home that was a median 25 miles from their primary residence. In an indication of flipping activity, 5 percent of homes purchased by investment buyers in 2011 have been resold, up from 2 percent in 2010, the report said. Investors typically bought in suburban areas.

Vacation-home buyers planned to hold the property for a median 10 years and purchased a property that was a median 305 miles away. Vacation-home buyers typically bought in rural or suburban areas.

As in the 2010 survey, the South accounted for the biggest share of second home purchases in 2011, followed by the West.

Region of Home Purchase	Primary Residences	Vacation Properties	Investment Properties
Northeast	20%	15%	15%
Midwest	23%	12%	17%
South	35%	42%	44%
West	22%	30%	23%
Outside the U.S.	0%	1%	0%

Source: NAR

Also as in the 2010 survey, second-home buyers, especially investors, were slightly more ethnically diverse than primary-home buyers. Among primary-home buyers, 82 percent were white, 8 percent were Asian, 7 percent were black, 5 percent were Hispanic, and 1 percent were "other."

Among buyers of investment properties, 76 percent were white, 13 percent were Asian, 8 percent were black, 6 percent were Hispanic, and 1 percent were "other."

Roughly half of second-home buyers purchased through a real estate agent or broker. Second-home buyers were somewhat more likely than primary-home buyers to buy through a foreclosure or trustee sale or directly from an owner the buyer knew.

Purchase Method	Primary Residences	Vacation Properties	Investment Properties
Through a real estate agent or broker	69%	55%	48%
Foreclosure or trustee sale	5%	14%	17%
Directly from owner whom the buyer knew	9%	16%	17%
Directly from owner whom the buyer didn’t know	5%	8%	7%
Directly from builder or builder’s agent	9%	3%	5%
Other	3%	5%	6%

Source: NAR

Although the report released today is based on responses from U.S. addresses, according to a separate, monthly survey (the Realtors Confidence Index), international purchases accounted for about 3 percent of transactions in 2011, "which would be in addition to today’s findings," NAR spokesman Walter Molony told Inman News.