Registration is onsite after Aug. 15. You’ll want to be part of it all: Hear Martha Stewart’s real-life insights, see the expo and learn from nearly 40 ed sessions.

ORLANDO, Fla. – Success strategies from top industry leaders, the latest in high-tech devices and a chance to network with other real estate professionals? That’s what the Florida Realtors® 2022 Convention & Trade Expo offers – opportunities to expand business and your bottom line.

Florida Realtors Convention & Trade Expo takes place Aug. 24-25, 2022, at the Rosen Shingle Creek resort in Orlando, with the popular REBarCamp slated to kick off the event on Tuesday, Aug. 23.

“Florida Realtors 2022 Convention and Trade Expo is the one business event this year that every Realtor should attend,” says 2022 Florida Realtors President Christina Pappas, vice president of the Keyes Family of Companies in Miami. “Over the course of just two days, Realtors can learn successful business strategies from top industry leaders, get marketing tips, hear inspirational speakers who offer advice from the trenches, network with colleagues and enjoy exciting entertainment.”

The 2022 convention features nearly 40 education sessions from top industry speakers on various topics such as how-to sell luxury homes, the post-pandemic future of global real estate, how traditional brokerages can increase their profit margin, how to create videos people will actually watch, and proven strategies for “irresistible listing presentations.”

Convention highlights

• REBarCamp: Aug. 23
  Sponsored by Florida Realtors Young Professionals Network (YPN), this peer-to-peer learning and sharing event isn’t a lecture – more of a Q&A session where Realtors ask experts – and sometimes each other – the hard questions. Over 500 members have attended REBarCamp in previous years.

• General Session Keynote: Martha Stewart
  Forbes magazine says Martha Stewart is the first self-made woman to reach billionaire status. Oprah was the second. Instead of a generic presentation, Stewart will answer business-boosting questions provided by Florida Realtors. Be there for real-life business insights from a woman with worldwide star power, unparalleled success as an entrepreneur, crossover celebrity status due to her partnership with Snoop Dog and exemplary communication skills. She paid a price for a bad decision, but when it comes to her businesses, she continues to “Wow the World.” One ticket included with In-Person Convention registration.

• Dance Party with “Party on the Moon”: Aug. 24
  American’s No. 1 Party Band returns – Party on the Moon delivers a high-energy evening of the latest dance music, ‘80s classic rock, Latin, disco/funk, R&B and Motown.

• Awards Luncheon: Aug. 25
  Florida Realtors honors Realtor excellence and service at this ticketed event, including recognizing the Humanitarian of the Year and Realtor of the Year and other award winners. This year’s unique entertainment: comedian Mike Goodwin.

• The Trade Expo: Aug. 24-25
  The expo features more than 200 industry experts and exhibitors showcasing the latest marketing and technology products.

Sponsors for the 2022 convention include: the Miami Association of Realtors; EXIT Southeast; Boomtown; Broward, Palm Beaches & St. Lucie Realtors; LPT Realty; FindAMortageBroker.com; real/MLS; Elm Street; Northeast Florida Association of Realtors; Stellar MLS; Osceola County Association of Realtors; Orlando Regional Realtor Association; Realtor.com; Royal Palm Coast Realtor Association; Brokermint; Realtors Association of Lake & Sumter Counties; Pillar to Post Home Inspections; HomeVist by CoreLogic; Realtors Association of Citrus County; Greater Tampa Realtors; Hernando County Association of Realtors; Realtor Association of Sarasota and Manatee Inc.; Pinellas Realtor Organization/Central Pasco Realtor Organization; GTE Financial; Homes.com/Homesnap; SecurityNational Mortgage Company; TigerLRM; Sentrilock; Amendment 3; Form Simplicity; Tech Helpline; Acra Lending; Old Republic Home Protection; Home Inspection Service; Zillow; Lendai; National Title Solutions; Suncoast Credit Union; and Yardi Breeze.

Register online through Aug. 15 for the Florida Realtors convention. The full in-person registration fee for members is $160 from now through Aug. 15, 2022; for non-members, the cost is $185. After Aug. 15, registration will be handled at onsite; cost will be $170 for members and $195 for non-members. For more info, check out http://convention.floridarealtors.org/.

© 2022 Florida Realtors®

Parents with good credit often want to help their children buy a house. But it’s dangerous to have your name on a mortgage and deed if you don’t control the home.

FORT LAUDERDALE, Fla. – Question: What are the pitfalls for a 72-year-old mother using her credit to buy a house in a different state for her 35-year-old son? My name would be on the title along with my son, but he would make the down payment and pay the lender every month. After a year, how would I remove my name? – Peggy

Answer: Whether you would be the only borrower on the loan or if you would co-sign a loan with your son, you would have to make the payments if your son does not.

It is not a good idea to owe money on a home you cannot control without the consent of another owner who is not legally required to repay the loan.

Anytime you co-own property with someone you are not married to, you should have a written joint ownership agreement. This contract dictates what happens in various scenarios, such as if only one of you wants to sell or if one owner does not pay their share of the expense.

This agreement is even more important if not all the owners are borrowers on the mortgage loan.

When I bring this topic up, I am often met with resistance, being told that a beloved family member would never do anything like that.

Unfortunately, this is not the case, and any lawyer can tell you that disputes between family members are common and often brutal.

Preparing a written agreement can help avoid a misunderstanding later. Even if both parties have the best intentions, the everyday magic of putting pen to paper will help prevent misunderstandings.

When applying for any loan, it is illegal to misrepresent facts or intentions to the prospective lender. This means you must inform the lender you will not be living in the home, which may cause your interest rate to be higher than if the loan was for your residence.

Most mortgage loans have a “due on clause” requiring the loan to be repaid if the borrower deeds the property to someone else.

If you go forward with your plan, have your son refinance the mortgage before taking yourself off the title.

Copyright © South Florida Sun Sentinel, Gary M. Singer. All rights reserved.

Buyers and sellers in separate states may soon find it easier to close a sale remotely after the U.S. House OK’d a bill standardizing the process the Senate will now consider.

WASHINGTON – The U.S. House of Representatives passed a bill Wednesday evening to expand the availability of remote online notarization (RON) nationwide, a key advocacy priority for the National Association of Realtors® (NAR).

The bipartisan SECURE Notarization Act now goes to the Senate for consideration.

RON allows a notary and signer in different physical locations to securely execute electronic documents using two-way audiovisual communication. Currently no nationwide program standardizes the process, which can make remote closing challenging, depending on the buyer or seller’s state of residence.

Nearly half of U.S. states expanded RON during the COVID-19 pandemic, enabling real estate professionals to facilitate closings safely and securely. But without a national program, a patchwork of state laws required some agents in other states to adapt and use other social-distancing measures like drive-by closings.

NAR pressed lawmakers throughout the pandemic to pass a national RON bill while also working within each state to enact changes.

“NAR supported RON even before the pandemic,” says Shannon McGahn, NAR’s chief advocacy officer. “But now more than ever, this progress makes sense. Realtors® want to devote their time to helping homebuyers, not on paperwork.”

Even as COVID-19 becomes less of a factor, virtual sales and closings will remain in demand. In June 2022, 12% of sales took place virtually, according to NAR.

“This measure (the SECURE Notarization Act) establishes minimum standards to ensure strong consumer protections while providing certainty for interstate commerce,” says McGahn.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®

An uptick in buyer cancellations reflects a changing market, though the specific reasons range from interest rates and recession fears to hopes for future options.

FORT LAUDERDALE, Fla. – More buyers are canceling their pending home contracts in South Florida, a sign that the market may be shifting away from the boom of the last two years.

In June, 22.1% of pending home sales were canceled in West Palm Beach, 22% of pending sales were canceled in Fort Lauderdale, while 21.5% were canceled in Miami, according to data from Redfin.

“The rates of cancellations tend to be correlated to a cooling market,” said Taylor Marr, deputy chief economist with Redfin. “All of these areas that have been booming, they are starting to cool off and some of a balance is returning.”

The national rate of pending sales cancellation is at 15% for the month of June.

There are a few key factors in pending home contracts being canceled: rising interest rates that home shoppers did not account for when they started searching for homes months prior; buyers no longer willing to waive the contingency part of their contracts and take the house as is; and buyers becoming weary of the housing market in general, experts said.

When the housing market took off, many buyers didn’t have room to negotiate on homes since sellers had more of the power.

Early phases of a market shift also put buyers and sellers in different mindsets, resulting in cancellations.

“When a market shift is starting, sellers are still riding their highs and don’t want to negotiate on price or terms, so if a buyer asks for repairs to be done after the inspections, sellers may refuse, and buyers may decide to cancel the contract and walk away from the deal, since there are more homes available now,” said Brian Pearl, principal agent of the Pearl Antonacci Group in Boca Raton.

The rise in mortgage rates is also playing a role in pending contracts cancelling, explained Whitney Dutton with the Whitney Dutton Group in Fort Lauderdale.

Rates have increased significantly in the past seven months. In January, rates for a home were around 3.22%; in July, rates hit around 6%.

“Some people have been looking for homes for six months or more and they did not run the new numbers with the new interest rates,” Dutton said, adding that for some buyers the interest rates have pushed them past their debt-to-income maximum, reducing how much they can purchase as well.

The highest cancellations over the past five years happened right as the pandemic hit, as the pandemic caused concern among homebuyers as to the strength of the housing market. There was also a rise in the cancellations in 2017 and in 2018, when interest rates started to rise again.

“It rises when there is a disruption in the market,” said Marr.

© 2022 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

The growing number of homes listed for sale is largely in the pricier side of the market. The number of homes listed below $250K has gotten smaller in many places.

LOS ANGELES (AP) – The chronic shortage of homes for sale that’s made fierce bidding wars common and sent prices to record highs has long frustrated homebuyers. After a streak of annual declines going back three years, however, home listings finally rose on an annual basis in May and June.

But would-be buyers looking for more modestly priced homes will find scant relief in the listings surge. The increase in homes for sale nationally has been concentrated in the higher-price end of the spectrum, $250,000 or higher, while listings for properties priced below that threshold are becoming scarcer.

“In a market that has been so low on inventory, any increase in the availability of homes for sale is going to be welcome, but the biggest increase that we’ve seen so far is in the pricier side of the market,” said Danielle Hale, Realtor.com’s chief economist.

Listings for homes priced at $100,000 or less were down 21.4% in June from a year earlier, while those listed for between $100,000 and $250,000 were down 12.4%, according to Realtor.com.

In contrast, the number of homes listed for more than $250,000 increased 32.1% in June from a year earlier.

On a typical day in June, the number of active home listings totaled 619,305, a nearly 19% increase from the same month last year, according to Realtor.com.

The sorely needed increase in home listings follows a marked slowdown in the housing market.

Sales of previously occupied U.S. homes are slowing as the Federal Reserve hikes rates to combat surging inflation, lifting mortgage rates. In June, sales fell to a seasonally adjusted annual rate of 5.12 million, the slowest pace in two years, according to the National Association of Realtors®.

The average rate on a 30-year home loan climbed to 5.54% last week, almost double from a year ago, according to mortgage buyer Freddie Mac. Higher rates reduce buyers’ purchasing power at a time when the median U.S. home price hit a new high of $416,000 last month.

“The entry level side of the market continues to be challenging, and it’s particularly hard because those entry level buyers are often most likely to be taking on a mortgage and borrowing, so they’re also the ones that are facing higher mortgage rates,” Hale said.

Hale expects the for-sale home inventory will be up about 15% on average this year, which should help some would-be buyers. But it would take a significant housing market slowdown before the number of homes for sale at the most affordable range of the market increases, she said.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

A very non-legal definition: U.S. antitrust laws ban competitors from forming an alliance and “ganging up” on other businesses. A town’s two dominant brokerages, for example, can’t try to run a new entrant out of town.

WASHINGTON – U.S. antitrust laws prohibit an agreement, understanding or conspiracy among competitors that unreasonably restrains trade, according to the National Association of Realtors® (NAR). The philosophical goal is to give every new U.S. business a fair shot at success.

As a result, antitrust laws prohibit things like price-fixing agreements and group boycotts. A traditional example is a small town with two dominant brokerages that feel threatened by the entry of a new broker, perhaps one with a different type of business model. The established brokers cannot join forces to “fight” the new brokerage.

Realtor associations and MLSs play a major role in antitrust oversight because local, state and national organizations are, by definition, a group of Realtors working together. If an association agrees to ban or just ignore a type of business model or specific business, it may be an antitrust violation. For example, associations and MLSs should never come together to agree on fees charged to consumers or to collectively agree not to work with a particular business.

Boycotts

Boycotting is a unique arm of U.S. antitrust laws. In real estate, it could target a supplier or purchaser rather than a competitor.

A group choice not to deal with a vendor will be “treated as per se illegal whenever they involve the purposeful elimination or limitation of competition, regardless of the ultimate motive or objective of the alleged conspirators,” according to NAR. “For example, an agreement among several real estate firms not to employ the services of a particular printer to produce marketing materials, or to refuse to purchase advertising in a certain publication, may be an unlawful boycott of this type.”

Best practices for MLSs, associations, brokerages

• Adopt an antitrust policy and announce it often. Read it at the beginning of meetings and include the policy in meeting materials.
• Train agents and staff to identify antitrust issues and empower them to stop conversations during meetings or events that raise concern.
• Set and follow an agenda for all meetings, take accurate minutes and consider asking counsel to review before finalizing.
• Monitor social media pages and remove comments and discussions that are inconsistent with the association or brokerage’s antitrust policy.

Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

Dear Shannon: If a Realtor sells a home they also own, are they still subject to the obligations of the Code of Ethics? What if a Realtor isn’t acting on behalf of others in the transaction?

ORLANDO, Fla. – Dear Shannon: I listed my home for sale through my broker and put it on the MLS. A buyer – also a Realtor® – purchased the home.

Months later, the buyer called me, furious and screaming because the roof leaked during heavy rainstorms. Their roof contractor said I had to have known about the defective roof before listing the home, and that the roof needs to be completely replaced. The buyer then asked me to pay for a new roof. I calmly explained that I didn’t own the property anymore, and this was not my problem.

I did know about the leaks. Honestly, so what? The buyer had plenty of opportunity to look at and inspect the roof before closing – and besides, I wasn’t obligated to say anything to the buyer about the defective roof.

Then the buyer said they were going to file an ethics complaint against me. I tried to explain that this doesn’t fall under the Code of Ethics. I was the seller of my own home. I wasn’t acting on behalf of others as a “Realtor” in this transaction, so I wasn’t bound by the Code of Ethics.

Please give me the words I need to explain this to the Realtor-buyer. Thank you – Not Bound

Dear Not Bound: Thank you for reaching out. This is a very important concept and I’m glad you’re seeking education. However, you’ve asked me to educate the buyer, when, candidly, it sounds like you are the one who needs the education.

Stay with me, okay? Let’s think this through and see what sections of the Code of Ethics might apply to your situation. (Note: Other laws may apply, but for this Dear Shannon article we’re focusing only on the Code of Ethics.) First, let’s look at relevant parts of Article 2 and then we’ll focus on Article 1, specifically Standard of Practice (SOP) 1-1.

Article 2 says “Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00)”

Let’s focus on the first part of Article 2, “Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.” First, notice the word “shall.” This indicates it’s not a mere suggestion. Second, a defective roof and leakage during heavy rain is clearly a pertinent fact about the property. Third, in your sale, you knew the roof was defective and didn’t tell the buyer. Keeping the defective, leaky roof a secret IS concealing a clearly pertinent fact about the property. So far, it seems like Article 2 applies.

Not done with Article 2 yet. Finally, examine the language of the first part of Article 2 again and notice it says, “Realtors shall avoid concealment of pertinent facts relating to the property.” This Article expressly applies to Realtors. And in your scenario, both you and the buyer are Realtors. So, certainly, Article 2 applies to your situation because you are a Realtor. Despite this, you contend that because you were the seller in the transaction, not acting on behalf of others, that you were not subject to the Code of Ethics.

Now, let’s look to SOP 1-1 to see if we can get clarity on the distinction you are trying to make. Notice we’re going to an entirely different Article for our answer. [Standards of Practice serve to clarify the ethical obligations imposed by various Articles.] Under Article 1, SOP 1-1 is on point for your situation.

SOP 1-1 states: “Realtors®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)”

There it is in plain language. This should relieve you of any doubt.

You were selling your own property, and SOP 1-1 says you’re still obligated by the duties imposed by the Code. And under the Code, Article 2 says “Realtors® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.”

Unfortunately, you wrongly thought it was okay to keep quiet about the defective roof. If the Realtor who bought your property follows through and files an ethics complaint, this is likely going to be an issue for you under both Article 1 and 2 of the Code of Ethics.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

What if a savvy hacker accesses your customer’s data? It’s not just a technology question. Affected customers may file a lawsuit and demand to know what steps you took to prevent cyberattacks.

WASHINGTON – You’re putting your livelihood at risk if you’re “asleep at the wheel” when it comes to creating a data security plan, especially as the real estate industry faces growing cyberthreats, says Maame Nyamekye, staff attorney at the National Association of Realtors® (NAR).

In NAR’s latest “Window to the Law” video, Nyamekye makes a strong case for creating a cyberattack plan: “A data security breach could potentially hurt your business financially, lead to a lawsuit and tarnish your reputation,” Nyamekye says.

Still, many businesses are unprepared. Only 35% of companies have programs in place to detect, prevent and respond to fraud threats, according to a survey earlier this year by tax services firm KPMG.

“Fraud, compliance risk and cyberattacks are increasing at an alarming rate, eating away profits across the U.S.,” says Amanda Rigby, forensic service network leader at KPMG. “Collectively, these issues create a ‘threat loop,’ which can quickly overwhelm companies with economic loss, regulatory loss and reputation loss. Despite the potential for calamity, the majority of U.S. companies are not ready to fight the threat loop.”

In the video, Nyamekye highlights what brokers and agents can do to minimize their risk in the event of a data security breach. The tips are based on Federal Trade Commission (FTC) principles for creating a data security plan.

Nyamekye urges members to:

• Take stock of the information your brokerage handles and where it’s stored. You also need to know who within the company has access to what.
• Create a retention policy. Outline what information your company will retain and for how long based on legal requirements and your business’s needs. At least 35 states have laws addressing the proper disposal of personal information.
• Be proactive. Have safety measures in place both for your technology and physical space to protect sensitive information and prevent unauthorized access.

Cybersecurity in Florida

Florida Statutes address security breaches and business obligations (Chapter 501.171).

Attorney General Ashley Moody’s overview of Florida’s cybersecurity requirements:

• Proper notice must be provided to consumers within 30 days unless good cause is shown for an additional 15 day delay
• Proper notice must be provided to the Office of the Attorney General for a breach affecting 500 or more individuals
• The definition of “personal information” includes health insurance, medical information, financial information and online account information, such as security questions and answers, email addresses and passwords
• Both businesses and state government entities must take reasonable measures to protect data
• The Office of the Attorney General must provide an annual report to the Legislature regarding data breaches of governmental entities
• Enforcement actions for statutory violations fall under Florida’s Unfair and Deceptive Trade Practices Act

Source: National Association of Realtors® (NAR)
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

Clients want to add a simple clause to a contract? It isn’t always simple. When parties add short clauses to their contracts, there can be pitfalls if the clause lacks detail.

ORLANDO, Fla. – When I was in elementary school, I learned about the 5 W’s. It’s a tool to help ensure a message is clear. Does the message answer any questions a reader might have about Who, What, When, Where, and Why? If not, the writer should add detail.

When it comes to legal clauses in a contract, if there’s no clear answer to the W’s, it will be very hard to predict how a court would interpret a clause. Also, if there aren’t enough details spelled out, both sides of a contract could have wildly different interpretations about what the clause does (or doesn’t) do.

Parties to real estate contracts have three main choices when it comes to contracts or clauses within a contract:

• Option one: hire a lawyer to draft the legal language.
• Option two: use a form contract and fill in the blanks.
• Option three: write their own language.

Based on the number of times members access Florida Realtors®’ blank addendum (it’s our No. 1 most accessed form), many buyers and sellers go with option three, often writing short, simple clauses to change aspects of the underlying form contract.

Some additional clauses are indeed quite simple. If the parties want to extend a deadline, for example, that should be an easy enough clause for a buyer or seller to prepare. We hear about extensions frequently, but they’re rarely at the center of a dispute. Simple clauses can also work fine for low-cost, routine issues where the parties just want to see something in writing.

However, we also hear about parties writing simple clauses – often just a sentence or two – to address complex, contentious, or costly issues. If the parties disagree about what these clauses mean, it can be very challenging to predict how a court might interpret them.

Here’s one example of a brief clause we heard about recently. During our recent hot seller’s market, some loans would get denied when a lender’s appraisal came in lower than the purchase price. To address this possibility, some buyers and sellers negotiated a clause that would obligate a buyer to bring cash to cover the difference. Let’s see how one of these simple clauses holds up when we ask if it answers the 5 W’s.

The clause: “Buyer agrees to pay $10,000 over appraised value not to exceed the purchase price.”

• Whose appraisal are we talking about? The lender? What if the buyer obtains their own appraisal? What about an appraisal from former buyer whose deal fell through? This clause doesn’t identify a “Who,” so there’s no clear answer.
• What if the appraisal amount + $10,000 is well under the purchase price? Is the seller obligated to reduce the negotiated purchase price since the simple clause says nothing about purchase price? What if the lender denies the loan – is the buyer still entitled to back out penalty-free, since the clause says nothing about the financing contingency? What if there are two appraisals – which one controls? The one-sentence clause doesn’t specifically answer any of these questions.
• Where must the appraisal be done? In the office of a licensed Florida appraiser? Or can the appraisal come from some other source?

If we contrast this simple clause with the Florida Realtors/Florida Bar Rider F Appraisal Contingency (see below for the full clause), you can see how additional detail makes the 5 W’s much easier to field.

• Who gets to order an appraisal under Rider F? The buyer.
• What price must the appraisal hit? The amount written in the blank (or purchase price, if left blank).
• What happens if the appraisal is low? The buyer has the option to cancel.
• When can the buyer cancel? During a three-day window after the date the parties put in the blank.
• Where must the appraisal come from? The office of a licensed Florida appraiser.
• Why is this clause here? To give buyer an option to cancel if an appraisal comes in lower than a specific amount.

F. APPRAISAL CONTINGENCY

This Contract is contingent upon Buyer obtaining, at Buyer’s expense, a written appraisal from a licensed Florida appraiser, on or before __________________________ (if left blank, then at least ten (10) days prior to Closing), stating that the appraised value of the Property is at least $_______________ (if left blank, the Purchase Price). If the appraisal states that the appraised value of the Property is less than the above value, Buyer shall deliver a copy of such appraisal to Seller within 3 days after the above date and deliver written notice to Seller, either: a) terminating this Contract in which event the Deposit paid shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under this Contract; or b) waiving and removing this contingency and continuing with this Contract without regard to the appraised value of the Property, except as provided in Paragraph 8(b) if it is checked.

If Buyer fails to timely obtain an appraisal, or having timely obtained such appraisal fails to timely deliver notice of Buyer’s exercise of the right to terminate granted above, this contingency shall be waived and removed, and Buyer shall continue with this Contract, without waiving any of Buyer’s rights in Paragraph 8(b) if it is checked.

Joel Maxson is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

Lots of confusion over this one: What happens to an associate’s pending transactions if they depart one brokerage to work for another – do they stay with the original broker or transfer? Fla. law doesn’t offer rules, so it’s important to have a plan.

ORLANDO, Fla. – We cover a variety of topics in Florida Realtors Legal News, but here’s one that has had little coverage yet lots of calls to Florida Realtors Legal Hotline: What happens if an associate leaves a brokerage but has pending transactions? Does that transaction go with the agent to their new brokerage? Does it stay with the current brokerage and go to a new agent?

One thing to remember: the law doesn’t dictate the rules on this one. The associate and broker should have a plan in place that includes the answers to these questions. The problem? Far too many agents – meaning both associates and brokers – have no idea what the answers are.

Here is how many Legal Hotline calls go: An agent is considering leaving Brokerage A to join Brokerage B. Why? Could be for a number of reasons from just a change in scenery and a new fresh start somewhere else, to having an unfortunate falling out between the agent and brokerage. Regardless of the reason, the answer as to “What happens with my pending transactions?” rests on the terms of any independent contractor agreement the parties have and/or any brokerage policy and procedure manual.

When someone calls the Legal Hotline and asks about this scenario, one of the attorneys inevitably asks, “What does your independent contractor agreement say? Is there any brokerage policy and procedure manual that outlines what happens when an agent leaves during a pending transaction?”

I will be blunt: These questions are far too often met with crickets on the other end of the line. So let’s walk through some “good practices” when it comes to this issue to hopefully avoid problems down the road.

Associates

If you’re a sales/broker associate joining a brokerage, my guess is you’re generally asking about the brokerage’s business model and specifically asking what your commission split will be on transactions you handle. And why NOT ask that? It is an important question! This is many Realtors’ primary source of income, and you need to know the answer in order to plan your lifestyle; 100% understandable!

I emphasize this side of your initial conversations to point out that you should also be asking, at this same point in time, “What is the brokerage’s policy on pending transactions if I decide to leave?” Why should you be asking this question now? For the same reasons I’ve stated above regarding what you will be paid when you join the brokerage. This is your source of income and you need to know so you can plan accordingly.

I get it. It’s awkward to ask this question when you aren’t even working at the brokerage yet or maybe recently joined. But as I pointed out, the law doesn’t decide this issue. You need to ask the right questions and establish a clear exit strategy with the brokerage to avoid any surprises later.

Brokers

If you’re a broker/owner overseeing associates at your brokerage, a clear office policy on handling pending transactions if an associate leaves mid-transaction is, in my opinion, one of the most important things to establish in your business model.

Here’s the thing: There isn’t just one way to do handle this issue:

• Brokers can create a policy where exiting associates take their transactions with them, where Broker A assigns the deal over to Broker B.
• Brokers can say, “Nope! The transaction stays here, but we’ll pay you a split of the deal.”
• Brokers can also say, “When you leave, that’s it. We aren’t paying out anything.”

The point is that whatever system you select for your office policy, make that policy clear right from the start with a new associate, so that everyone is on the same page.

Another tip? Create some sort of reminder to update/maintain any independent contractor agreements you may use in your office. Regardless of which role you perform, associate or broker, it’s very important to get whatever your agreement is in writing. Even an email is better than some of the things we hear on the Legal Hotline: “I have no idea what my independent contractor agreement says!” or “I don’t know where it is because I signed it so long ago … I don’t even know if I still have one!” or, from brokers, “I don’t have a set procedure for renewing agent agreements in my office.”

A final note to associates: Remember, absent negotiation, the transaction belongs to the brokerage. If you’re an associate leaving a brokerage, you can’t just take the deal with you. If the transaction remains with Brokerage A and your license with Brokerage B, you can’t continue to work on that deal without risking a licensing law violation since associates may only work for one brokerage.

It can be an uphill battle if a recently departed associate wants to recover money they feel they deserve. Only broker/brokerages can receive real estate compensation, and they then pay an associate their portion of that compensation. Without something in writing or another indication of a broker-associate agreement, the brokerage holds the upper hand.

I’ve said it before in relation to sales contracts, but it fits here: Taking time to work out details at the start of a working relationship can avoid messy situations at the end.

Meredith Caruso is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication

© 2022 Florida Realtors®

In spite of the Fed’s 3/4-point interest rate increase on Wed., the average rate for a 30-year, fixed-rate mortgage fell to 5.3% from last week’s 5.54%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates retreated this week just as the Federal Reserve announced another big rate hike in its bid to get four-decade high inflation under control.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate fell back to 5.3% from 5.54% last week. One year ago the average 30-year rate was 2.8%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes also retreated, to 4.58% from 4.75% last week. A year ago at this time, the rate was 2.1%.

The Fed on Wednesday ratcheted up its main borrowing rate by three-quarters of a point, the second such increase in less than two months. The central bank also raised its benchmark rate by a half-point in May. Rapidly hiking rates risks tossing the U.S. economy into a recession, but it’s the Fed’s most powerful tool to get price increases back to its 2% annual target.

Also Thursday, the Commerce Department reported that the U.S. economy shrank from April through June for a second straight quarter, contracting at a 0.9% annual pace and raising fears that the nation may be approaching a recession.

The decline that the Commerce Department reported Thursday in the gross domestic product – the broadest gauge of the economy – followed a 1.6% annual drop from January through March. Consecutive quarters of falling GDP constitute one informal, though not definitive, indicator of a recession.

Consumer prices have soared 9.1% over the past year, the biggest yearly increase since 1981. The Labor Department’s producer price index – which measures inflation before it reaches consumers – rose by 11.3% in June compared with a year earlier.

Higher borrowing rates have discouraged house hunters and cooled what was a red-hot housing market, one of the most important sectors of the economy. The National Association of Realtors reported earlier this month that sales of previously occupied U.S. homes slowed for the fifth consecutive month in June.

Home prices kept climbing last month – albeit at a slower pace than earlier this year – even as sales slowed. The national median home price jumped 13.4% in June from a year earlier to $416,000. That’s an all-time high according to data going back to 1999, NAR said.

The Mortgage Bankers Association said Wednesday that mortgage applications have declined 18% from last year and refinancings are down 83% to a more than two-decade low.

Layoffs in the housing and lending sectors have already begun. Among those reporting job cuts in recent months are the online mortgage company loanDepot, online real estate broker Redfin, and Compass. The nation’s largest bank by assets, JPMorgan Chase, laid off hundreds from its mortgage unit and reassigned hundreds of others to jobs elsewhere in the firm.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

The Fla. agency that backs policies after an insurer bankruptcy will work with Citizens to keep state insurers solvent if Demotech ever again threatens to lower ratings.

TALLAHASSEE, Fla. – Amid fears that a financial-ratings agency will downgrade numerous property-insurance companies, Florida regulators Wednesday announced a stopgap plan to make sure homeowners can maintain coverage.

The plan involves the state’s Citizens Property Insurance Corp. acting as a financial backstop. Citizens – Florida’s “insurer of last resort” – would take on a reinsurance role to help make sure claims get paid if private insurers go insolvent.

The arrangement is designed to satisfy Fannie Mae and Freddie Mac, the mortgage-industry giants that require homes to be insured by financially sound companies. If Fannie and Freddie decide an insurer falls below their financial standards, any current covered homeowner with a mortgage must switch insurers or accept a force-placed policy.

Regulators have scrambled during the past week after the Demotech ratings agency indicated it could downgrade some Florida insurers to an acceptable level for Fannie Mae and Freddie Mac. Chief Financial Officer Jimmy Patronis described that as “financial chaos,” if homeowners have to find other coverage in the troubled market.

The plan announced Wednesday would use an exception in Fannie Mae and Freddie Mac standards. It applies when reinsurers – basically insurance policies for insurance companies – take responsibility for paying claims if insurers go insolvent. State-backed Citizens, which already insures more than 900,000 homes, would temporarily provide such reinsurance for companies downgraded by Demotech.

“OIR’s (the state Office of Insurance Regulation’s) greatest priority is ensuring consumers have access to insurance, especially during hurricane season. And because of the uncertainty with the status of Demotech’s ratings, we’ve been forced to take extraordinary steps to protect millions of consumers,” Insurance Commissioner David Altmaier said in a prepared statement.

The announcement came amid large problems in the property-insurance market, as many carriers have dropped customers and sought major rate increases because of financial losses. Four property insurers have been declared insolvent since late February, and thousands of policies a week pour into Citizens, which should only be an insurer of last resort.

Gov. Ron DeSantis called a special legislative session in May to address the property-insurance system, but problems have persisted. A report issued July 1 by the Office of Insurance Regulation, for example, said 27 property insurers were subject to “enhanced monitoring” because of their financial conditions.

The Office of Insurance Regulation last week released an Altmaier letter that said “approximately” 17 insurers faced potential downgrades from Demotech. Altmaier and Patronis were critical of Demotech, questioning, for example, its ratings methods.

Demotech had been expected to release ratings changes Tuesday but postponed the decisions. Nevertheless, Demotech President Joseph Petrelli defended the company’s methods and said it has rated Florida insurers since 1996.

“Demotech has worked diligently to be a positive force in the resurrection and sustenance of the Florida residential property insurance marketplace that was devastated by Hurricane Andrew,” Petrelli wrote Tuesday in a six-page letter to Altmaier, referring to the massive 1992 hurricane. “Since 1996, Demotech has consistently applied its rating methodology and appeal process to all rated insurers. Our process does not guarantee every carrier’s financial success, nor does our process guarantee carriers an FSR (financial stability rating) at a level that they desire or require.”

The Office of Insurance Regulation did not provide a detailed explanation of Citizens’ reinsurance role, and an agency official did not immediately respond Wednesday to a request for additional information. However, the arrangement appears to potentially create additional financial exposure for Citizens.

Under state law, another agency, the Florida Insurance Guaranty Association, pays claims when insurers go insolvent. Under the new arrangement, if the association reaches its claims-paying limit, Citizens as a reinsurer would step in and cover claims, Citizens spokesman Michael Peltier said.

Citizens has cash and buys reinsurance on the private market to help pay claims. But if the cash and reinsurance are not enough, it can collect additional money from policyholders throughout the state – a process known as collecting assessments – to pay claims.

© 2022 The News Service of Florida. All rights reserved.

A new member benefit introduced by NAR, Rental Beast, offers rental-listing management tools, such as ones that promote a renter-to-buyer conversion.

CHICAGO – The National Association of Realtors® (NAR) announced an agreement with Rental Beast that adds it to the roster of NAR Realtor Benefits.

“Rental Beast created a lead-to-lease platform, which brings seamless entry into the multibillion-dollar rental industry and its clientele – and we are thrilled to provide this benefit to our members,” says Rhonny Barragan, NAR’s vice president of strategic alliances.

A number of MLS platforms already offer Rental Beast, which allows Realtors to receive additional access to rental listing management tools. Those tools include things like listing add/edit, rental listing syndication, rental lead generation and qualification, and renter-to-buyer conversion.

“This partnership will help Realtors better serve customers countrywide by partnering them with the nation’s more than 113 million renters,” says Ishay Grinberg, founder and CEO of Rental Beast. “With our tools, Realtors can also build relationships with potential homebuyers by serving as their trusted advisers in the rental process.”

Realtors also have access to Rental Beast University, a digital education platform that includes on-demand webinars and self-paced courses covering topics like sales best practices, social media skills, and how to convert renters to buyers.

Source: Realtor Magazine (07/12/22)

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

Economists who estimate demographics and predict growth lowered their Fla. expectations. By April 2027, they now peg Fla. at 1.29% – a drop from their earlier 1.41%.

TALLAHASSEE, Fla. – Florida’s population will continue to grow, but the rate of that growth will slow modestly as deaths outpace births and the rush of people moving from other states during the pandemic subsides.

Still, with an estimated 22.25 million residents as of April 1, 2022, Florida continues to see population increases roughly equivalent to adding a city the size of Orlando each year, according to a state report released Tuesday, though the entire Central Florida metro region is much larger.

The report by economists, sitting as what is known as the Demographic Estimating Conference, revised the state’s growth rate to 1.29% over the next five years – through April 1, 2027. In December, the conference had estimated the growth rate at 1.41%.

Amy Baker, coordinator of the Legislature’s Office of Economic & Demographic Research, said the state is “just halfway” through the retirement period of baby boomers, which accounts for a large number of people moving from other states. Meanwhile, younger generations are waiting longer to have children.

“And when they have children, they’re having fewer children,” Baker said during a July 18 meeting of the conference. “That’s not a Florida statistic. That one’s national.”

For the past two years, Florida during saw an increased number of people moving from states that maintained lockdown and health-safety measures longer than Florida because of the COVID-19 pandemic. But such gains have been offset by “fewer births and more deaths than previously forecast,” according to the report.

The “natural increase is expected to remain negative throughout the forecast horizon as deaths continue to outpace births,” the summary said.

Florida Department of Health figures used by the economists indicated that deaths exceeded births by nearly 45,000 in 2021. Through June 22 this year, the state had totaled 106,000 deaths and 96,000 births.

“The births were lower than what we were expecting back in December, and the deaths are higher than what we were expecting, which obviously pushes down our natural increase,” Pam Schenker, who handles demographics and census issues for the Office of Economic & Demographic Research, said during the July 18 meeting.

Also, the pandemic-driven migration from other states is slowing, according to the forecast.

“The spike was related to COVID, because you have less people moving out of the state than moving into the state,” Holger Ciupalo, policy coordinator for the governor’s Office of Policy and Budget, said. “As a result of that, you see the spikes for two years. And that goes back down with other states being as open as Florida.”

The new estimates put the state on pace to annually add 294,756 net new residents in the next five years, or 808 a day. The earlier December projection of 309,867 new residents would have made it 849 a day.

© 2022 The News Service of Florida. All rights reserved.

The Fed’s inflation battle now includes two 3/4-point interest rate hikes in a row. Since it was expected, most mortgage rate increases have already occurred.

WASHINGTON (AP) — The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive in three decades to tame high inflation.

The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.

The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

The Fed is tightening credit even while the economy has begun to slow, thereby heightening the risk that its rate hikes will cause a recession later this year or next. The surge in inflation and fear of a recession have eroded consumer confidence and stirred public anxiety about the economy, which is sending frustratingly mixed signals.

With the November midterm elections nearing, Americans’ discontent has diminished President Joe Biden’s public approval ratings and increased the likelihood that the Democrats will lose control of the House and Senate.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Florida Trend magazine named the state Realtor association one of the “best companies to work for in Fla.” With a staff of 140, Florida Realtors won as a medium-size firm.

ST. PETERSBURG, Fla. – Florida Realtors®, the largest professional trade association in Florida, has been named one of Florida’s Best Companies To Work For in 2022.

The annual “Best Companies To Work For In Florida” list, featured in a special August issue of Florida Trend magazine, ranks 100 companies in small, medium and large employer categories. Florida Realtors ranked 26th in the mid-size employer category.

“Creating a culture of trust and empowerment is an everyday process,” says Florida Realtors CEO Margy Grant. “When given the opportunity to do the right thing at the right time, employees will choose to do so when they feel trusted and empowered. At Florida Realtors, we invite our employees into the discussion for our mission to be the ‘Voice for Real Estate in Florida.’ They are as important to our brand as any of our products, tools or services.”

Florida Realtors has 140 employees and two Florida offices: its headquarters in Orlando and a public policy office in Tallahassee. As the state Realtor association, it provides programs, services, continuing education, research and legislative representation to its 225,000 members in 51 local Realtor boards and associations.

To participate in the “Best Companies To Work For In Florida” program, companies or government entities were required to have at least 15 workers in Florida and be in operation at least one year. Companies that chose to participate underwent an evaluation of their workplace policies, practices, philosophy, systems and demographics. The process also included a survey to measure employee satisfaction. The combined scores determined the top companies and the final ranking. Workforce Research Group partnered with Florida Trend magazine to conduct the process, do the survey, determine the final rankings and manage the program.

“Nearly every business in Florida has had to implement new and creative ways to attract and retain employees as the nation experiences near historic lows in the unemployment rate,” says Florida Trend Executive Editor Vickie Chachere. “The competition for high-quality talent has never been greater and employees are raising their expectations of their workplaces. Companies that support, elevate and celebrate their employees and are changemakers in creating positive workplace cultures will be the winners in the talent race.”

Florida Trend Publisher David Denor adds, “Florida companies continue to lead, and lead by example. This impressive list of companies has not let adversity get in the way. They continue to innovate and step outside the box with critical thinking to ensure the success of not only their internal employees, but their clients as well. These inspirational and visionary companies provide a glimpse into what tomorrow’s workplace and workforce will look like. Lessons learned from these industry pioneers span far and wide.”

“The Best Companies To Work For In Florida” program is managed by Florida Trend and Workforce Research Group and is endorsed by the HR Florida State Council. For more info, check out Florida Trend’s list of 100 Best Companies To Work For In Florida online.

© 2022 Florida Realtors®

About 12% of the $100M allocated by Fla. lawmakers for the Hometown Heroes homebuying program has been dispersed so far, according to Gov. Ron DeSantis.

TALLAHASSEE, Fla. –Gov. Ron DeSantis announced that $12.1 million has been granted to help homebuyers since the Hometown Heroes housing assistance program launched on June 1.

The Hometown Heroes housing program – passed this year by the Florida Legislature, signed by DeSantis and strongly backed by Florida Realtors® – provided $100 million to the Florida Housing Finance Corporation (Florida Housing) to help the state’s hometown heroes buy a home. A number of occupations qualify for aid, such as law enforcement officers, educators, healthcare professionals, and active military or veterans who are purchasing their first home in Florida. To date, the $12.1 million has helped 843 families throughout the state.

“Our law enforcement, first responders, nurses, and other hometown heroes work hard every day to take care of their communities,” says DeSantis. “I’m proud that we have been able to give back by helping 800 families buy their first home in the communities they serve, and I look forward to seeing this project grow to help thousands more in the coming months.”

“In less than two months, we have provided hundreds of families with the necessary financial assistance to purchase their first home,” says Trey Price, executive director of Florida Housing. “We’re grateful to Governor DeSantis and the Florida Legislature for their dedication to housing efforts and look forward to continuing to see the positive impacts of this program.”

The Hometown Heroes program provides Florida’s frontline community workers in more than 100 eligible professions with down payment and closing cost assistance to help purchase a primary residence in the communities where they work. Eligible homebuyers will receive up to 5% of their first mortgage loan amount (up to a maximum of $25,000) in down payment and closing cost assistance in the form of a 0%, non-amortizing, 30-year deferred second mortgage.

To qualify for the program, homebuyers must connect with one of Florida Housing’s participating loan officers, have a minimum credit score of 640, provide certification for one of the eligible occupations, and meet the income threshold for their county. While they must be first-time homebuyers, the rules are flexible if a hometown hero has not owned a house in the past three years.

© 2022 Florida Realtors®

Year-to-year, pending sales were down 20%. NAR says that over three years (June 2019 to June 2022) home prices rose 80%, and it now predicts a 13% decline in 2022.

WASHINGTON – After a slight May increase, pending home sales decreased in June, according to the National Association of Realtors® (NAR). All four major regions included in NAR’s study posted month-over-month and year-over-year pullbacks, with the West seeing the largest decline.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – dipped 8.6% to 91.0 in June. Year-over-year, transactions shrank 20.0%.

“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” says NAR Chief Economist Lawrence Yun. “There are indications that mortgage rates may be topping, or very close to, a cyclical high in July. If so, pending contracts should also begin to stabilize.”

According to NAR, a home purchased in June was about 80% more expensive than one bought three years earlier, in June 2019, and almost a quarter of June 2019 buyers would be unable to do so today because they no longer have the qualifying income for a median-priced home.

“Home sales will be down by 13% in 2022, according to our latest projection,” Yun adds. “With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023.”

June pending home sales regional breakdown: The Northeast PHSI slid 6.7% compared to last month to 80.9, down 17.6% from June 2021. The Midwest index dropped 3.8% to 93.7 in June, a 13.4% decline from a year ago.

An index of 100 is equal to the level of contract activity in 2001.

The South PHSI slipped 8.9% to 108.3 in June, a decrease of 19.2% from the previous year. The West index slumped 15.9% in June to 68.7, down 30.9% from June 2021.

© 2022 Florida Realtors®

Consumers’ attitudes about their current situation – largely inflation – dragged down July’s numbers more than worries about the future.

BOSTON – The Conference Board Consumer Confidence Index decreased in July, though the drop didn’t match one from the month before. Consumer confidence has now declined for three months in a row.

The Index now stands at 95.7, down 2.7 points from 98.4 in June. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – fell to 141.3 from 147.2 last month. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – ticked down to 65.3 from 65.8.

“Consumer confidence fell for a third consecutive month in July,” said “The decrease was driven primarily by a decline in the Present Situation Index – a sign growth has slowed at the start of the third quarter,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Expectations Index held relatively steady but remained well below a reading of 80, suggesting recession risks persist.”

Franco says concerns about inflation – mainly gas and food prices – continue to weigh on consumers.

“As the Fed raises interest rates to rein in inflation, purchasing intentions for cars, homes and major appliances all pulled back further in July,” Franco says. “Looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”

Present situation in July

Consumers’ appraisal of current business conditions was less favorable:

• 17.0% of consumers said business conditions were “good,” down from 19.5%
• 24.0% of consumers said business conditions were “bad,” up from 22.8%

Consumers’ assessment of the labor market was less optimistic:

• 50.1% of consumers said jobs were “plentiful,” down from 51.5%
• 12.3% of consumers said jobs were “hard to get,” up from 11.6%

Expectations six months in the future

Attitudes were mixed about short-term business conditions outlook:

• 14.0% of consumers expect business conditions to improve, down from 14.6%
• But 27.2% expect business conditions to worsen, down from 29.7%

Consumers were also mixed about the short-term labor market outlook:

• 15.7% of consumers expect more jobs to be available, down a bit from 15.9%
• But 21.4% anticipate fewer jobs, down from 22.2%

Consumers were more pessimistic about short-term financial prospects:

• 14.7% of consumers expect their incomes to increase, down from 16.1%
• 15.7% expect incomes to decrease, up from 15.3%

The monthly Consumer Confidence Survey is conducted for The Conference Board by Toluna. The cutoff date for the preliminary results was July 21.

© 2022 Florida Realtors®

Insurer-rating firm Demotech says it changed direction and won’t lower property insurers’ ratings “until further notice,” easing concerns for homeowners and buyers.

TALLAHASSEE, Fla. – A slew of ratings downgrades for Florida-based insurers won’t be happening Tuesday after all.

Joe Petrelli, the CEO of Ohio-based Demotech who last week sent letters to 27 insurers telling them that their financial strength ratings would be downgraded on July 26, on Monday afternoon sent a letter to Insurance Commissioner David Altmaier calling it off “until further notice.”

The downgrades, from A, which stands for “Exceptional” or “Unsurpassed,” would place hundreds of thousands, perhaps millions of homeowners with mortgage loans out of compliance with loan terms dictated by federal mortgage guarantors Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac requires homes it backs be insured by A-rated carriers. Numerous Florida carriers are only rated by Demotech, meaning loss of their A rating could put policyholders at risk of having more expensive coverage force-placed by their mortgage loan servicers.

Altmaier and Florida Chief Financial Officer Jimmy Patronis on Thursday wrote Demotech, demanding to know why it had seemingly reached beyond its quantitative ratings methodology and planned to downgrade the companies based on the company’s pessimistic view of Florida’s insurance market.

In letters informing insurers of the impending downgrades, Petrelli said that it would not accept remedies, such as increased capital investment, that it had accepted in the past to allow companies to retain their A ratings. The downgrades, he said, resulted largely from “the unwillingness or inability of the [Florida] legislature” – during a special insurance session just before hurricane season – “to address longstanding disparate, disproportionate levels of litigation, and increasing claims frequency that has resulted in a level of dysfunction that renders our previous accommodation inapplicable.”

Monday’s letter put those downgrade plans on hold. Florida’s Office of Insurance Regulation released Petrelli’s letter without comment.

The letter said that Demotech would respond to the letters by Altmaier and Patronis on Tuesday, but added “due to various circumstances, Demotech will not take any rating action including affirmation, downgrade, or withdrawal until further notice. While we are unable to provide a specific date for release, we are working to expedite the release of our ratings as soon as possible.”

Petrelli did not immediately respond to emailed questions about the delays.

Paul Handerhan, president of the consumer-oriented watchdog group Federal Association for Insurance Reform, released a statement reflecting the hope that Demotech has agreed to review supplementary information submitted by insurers hoping to maintain their A ratings.

Handerhan’s statement said: “I appreciate the swift action from Florida’s state regulators to protect consumers, and Demotech’s willingness to delay their proposed rating assignments. Hopefully this will give the affected insurers additional time to provide supplementary documentation for Demotech to consider in support of maintaining their current financial stability rating of A, as required by state and federal mortgagees.”

Demotech questions

If few or no insurers end up downgraded, it wouldn’t be the first time that Demotech has announced such plans and then changed its mind, according to a news release by the Florida Association of Insurance Agents submitted by OIR with Altmaier’s and Patronis’ letters last week.

That release asked, “Is it time for Florida to turn the page on Demotech?” It explained that Demotech rose to prominence after more than a dozen insurers pulled out of the Florida market following Hurricane Andrew in 1992.

Demotech, founded by Petrelli and his wife, became certified by Fannie Mae and Freddie Mac, making Demotech’s A rating acceptable to mortgage lenders and “thus the de facto standard for practically all of Florida’s domestic property insurers,” the agents association’s release said.

After 25 years, Demotech holds a virtual monopoly on issuing financial strength ratings to Florida domestic carriers, the release stated.

Larger and better known ratings firms, such as A.M. Best, have declined to rate many of the Florida-domiciled carriers, contending they are not sufficiently capitalized.

The release said Petrelli has “pushed himself further into the limelight by publicly engaging in political theater threatening carrier downgrades, and holding [press conferences] to explain the company’s unchecked behavior and rating methodologies.”

The release said that Demotech’s most recent letter to insurers “appears to be an attempt at showing the company’s strength and power in Florida.” It also noted that Demotech has previously issued notices of its intent to downgrade companies in 2017, 2018, 2020, 2021 and 2022 – warnings “that never came to pass.”

© 2022 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC. Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel.

The 10-city and 20-city index showed a 19.7% year-to-year increase in May, a slight drop. Tampa (up 36%) topped the list for a third month with Miami (34%) at No. 2.

NEW YORK – Home prices continued their upward spiral in May 2022, according to the latest S&P CoreLogic Case-Shiller Indices (S&P DJI).

Year-over-year

The index that covers all nine U.S. census divisions reported a 19.7% annual gain in May, a drop from 20.6% the month before.

The index’s 10-City Composite increase for May was 19.0%, down from 19.6% in April. The 20-City Composite posted a 20.5% year-over-year gain, down from 21.2% in May.

Tampa, Miami and Dallas saw the highest year-over-year gains among the 20 cities included in the index. Tampa led the way with a 36.1% year-over-year price increase, followed by Miami with a 34.0% increase; Dallas ranked third with a 30.8% increase.

In the 20-city index, four cities (20%) reported higher price increases in May than in April.

Month-over-month

Before seasonal adjustment, the U.S. National Index posted a 1.5% month-over-month increase in May, while the 10-City and 20-City Composites posted increases of 1.4% and 1.5%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.0%, and the 10-City and 20-City Composites both posted increases of 1.3%.

In May, all 20 cities reported increases before and after seasonal adjustments. A seasonal adjustment allows researchers to compare prices in historically slow months to historically busier months.

“Price gains decelerated slightly from very high levels,” says Craig J. Lazzara, managing director at S&P DJI. “Despite this deceleration, growth rates are still extremely robust, with all three composites at or above the 98th percentile historically.

Lazzara says price increases remain very high historically almost across the board, but “at the city level we also see evidence of deceleration. Price gains for May exceeded those for April in only four cities. As recently as February of this year, all 20 cities were accelerating.”

The S&P DJI reports home prices two months earlier than the report’s publication. As a result, Lazzara hesitates to predict what will happen over the next few months.

“We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that was ongoing as our May data were gathered,” he says. And greater financing challenges “may not support extraordinary home price growth for much longer.”

© 2022 Florida Realtors®

June prices increased less than past months, and in two NE Fla. counties – St. Johns and Nassau – the median home price decreased slightly in June.

JACKSONVILLE – The Northeast Florida Association of Realtors (NEFAR) says single-family home sales in June showed the first signs of stabilizing following constant monthly increases for more than a year. Reasons for the slowing sales? Inflation and rising mortgage rates.

Putnam, Clay and Baker counties saw median home prices increase, while they declined by $28,050  in St. Johns and by $18,975 in Nassau counties. In Duval County, the median price rose by $673.

Overall, the median price of a single-family home in Northeast Florida’s six-county region is at a record high of $400,000.

Sellers received 100.6% of their asking price in June, though that’s down slightly from 101% in May. Asking prices fell slightly in Duval, Clay, St. Johns and Nassau counties.

Active inventory, meanwhile, increased in all six counties, as did the month’s supply of homes for sale. For the first time this year, there is a three-month supply in Baker and Putnam counties.

Mark Rosener, 2022 NEFAR president says sellers still have opportunities to make money, but prices need to be attractive to buyers.

Sales fell 4.1% in June while pending sales dropped 13.2%, but NEFAR says sales of condominiums and townhouses increased by 46%.

The future for newly constructed homes slowed down a bit too, as the number of single-family building permits declined for the third consecutive month. Data from the Northeast Florida Builders Association (NEFBA) revealed that Duval, Clay, Nassau and St. Johns counties issued 1,193 permits in June, down from 1,195 in May and 1,208 in April.

Despite the declines in permits, however, 2022 continues to be an active year, with numbers 31% higher than in 2020, notes NEFBA Executive Officer Jessie Spradley.

Source: Jacksonville Daily Record (07/22/22) Macdonald, Dan

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

Most people buy the largest home they can reasonably afford, but upscale buyers have a “sweet spot” for size, future costs and the overall hassle of maintenance.

NEW YORK – The pandemic pushed more homebuyers to expand their living space, but for the subset of buyers that can afford an ultra-large home, there appear to be limits on how big they want to go.

“Most people don’t see a necessity for 10-bedroom homes,” says David Martin, CEO of Terra, a Miami-based development firm.

For some wealthy buyers moving from the city to the suburbs, greater space may have been a primary motivator. But they’re finding that almost unlimited space might not be such a good thing either.

“There is a sweet spot when it comes to square footage,” says Kim Bancroft of Daniel Gale Sotheby’s International Realty on Long Island, N.Y., in an interview with Mansion Global. “People are valuing experience over luxury goods and putting their money toward homes with land and room for kids to play. But they want a manageable space that is not overwhelming.”

Property taxes can be another factor behind the appeal of midsized luxury properties in suburban areas.

“Taxes affect buyers, even at the luxury end,” Bancroft says. “On a huge, magnificent home, the taxes can be $90,000 a year, and buyers may be able to afford that but don’t want to pay so much. Midrange homes are more manageable not only from a property and acreage perspective but also from a tax perspective.”

Source: “Not Too Big, Not Too Small: The Sweet Spot for Luxury Home Sellers,” Mansion Global

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Builders say it’s the lowest level since the start of the pandemic (April 2020), with buyers priced out due to high interest rates and ongoing building and development costs.

WASHINGTON, July 26 – New home sales in June fell to the lowest level since April 2020, the first full month of pandemic lockdowns.

Sales of newly built, single-family homes fell 8.1% last month to a 590,000 seasonally adjusted annual rate from a downwardly revised reading in May, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Year-to-year, new home sales dropped 13.4%.

“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB). “This is just the second time that new home sales have fallen below a 600,000 annual pace since Oct. 2018 – and this latest report also mirrors a sharp decline in builder confidence as noted in our latest survey.”

Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, says buyers face sticker shock. “Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance.”

New single-family home inventory remained elevated at a 9.3 months’ supply, up 60.3% over last year, with 457,000 available for sale. However, only 39,000 of the new-home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction.

The median sales price dipped to $402,400 in June, down 9.5% compared to May but up 7.4% year-to-year.

Regionally, new home sales fell in all four regions, down 12.1% in the Northeast, 24.8% in the Midwest, 12.6% in the South and 9.6% in the West.

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 590,000 units is the number of homes that would sell if this pace continued for the next 12 months.

© 2022 Florida Realtors®

Some financial experts worry consumers are overextending as rising interest rates combine with record average prices on luxury cars, rugged SUVs and trucks.

AUGUSTA, Ga. – For those eyeing a new Tesla, it isn’t just the sticker prices that are electrifying. It’s also mini-shocks that come with every monthly payment.

Whether it’s high-end electric, luxury cars or swanky SUVs and pickups, rising interest rates are combining with record average prices to saddle buyers with payments that can rival what they pay to put a roof over their heads. As such, it’s leading experts to worry that consumers may become overextended, especially with the distinct possibility of a recession looming.

“It concerns me that many Americans are willing to stretch to buy a vehicle,” said Mark Hamrick, senior economic analyst for Bankrate. “This is a cautionary tale.”

For example, Tesla estimates on its website that the monthly payments for the long-range version of its Model Y crossover would be $1,470 a month for a 48-month loan, excluding the down payment and fees.

That’s roughly equal to the monthly payments taking out a 30-year mortgage for a $300,000 home at a 5.7% interest rate after putting down 15%.

Sky-high auto payments will only be made worse if the Federal Reserve raises interest rates again in reaction to Tuesday’s announcement that inflation is now 9.1%, a new 40-year high. Having increased rates by 0.75% last month, speculation is focusing on whether it may boost rates by the same amount again this month – or even go to a full percentage point in order to try to stymie inflation.

Rising interest rates are bad enough, but they are being coupled with average new vehicle prices that hit a record $48,043 in June, Kelley Blue Book reported, up 12.7% from the same month a year ago.

Perhaps, then, it is no surprise that monthly payments are soaring. Monthly payments exceeded $1,000 for 12.7% of consumers who financed a new vehicle bought in June, Edmunds.com said. It was the highest level ever recorded, having risen from 7.3% in the same month last year.

Car prices hit record

“The average price of a car has gone up so much and so quickly. You’re not seeing zero (percent financing), no lease deals. You’re not seeing anything,” said Ian Beavis, chief strategy officer at AMCI, an automotive industry marketing firm.

Some of the highest payments are occurring for luxury vehicles, bought by rich customers who are fairly immune to the ravages of inflation, and rugged but costly heavy-duty SUVs and pickups often purchased by drivers who need them for cargo hauling and passenger capacity.

“It’s an interesting mix,” said Ivan Drury, an analyst for Edmunds.com. “The work vehicle or the ‘completely-over-the-top’ vehicle.”

Since many car dealers or manufacturers list financing options and projected monthly payments, it’s relatively easy to see just how high payments have become. Examples:

• A 2017 Chevrolet Suburban 1500LT with 11,000 miles on its odometer was on sale at a CarMax dealership in Oklahoma for $71,998. That works out to an estimated $1,433 to $1,547 a month on a 48-month loan to buyers with very good credit for the full-size SUV.
• A 2022 Ram 1500 Laramie Crew Cab pickup at a Denver dealership had a list price of $67,790, which translates to $1,271 for 48 months.
• A $65,170 new Mercedes-Benz E-Class 4Matic would have payments estimated at $1,234 to $1,284 a month at a dealership in Clearwater, Florida.

Look for the best interest rate

Of course, payments vary based on factors like interest rates – the lower rates go to customers with better credit scores – and loan term. Many, if not most, buyers also have a trade-in vehicle, which can lower their monthly payments dramatically.

While many buyers’ car payments could have easily exceeded their mortgage payments, it’s important to take into consideration that home values have risen dramatically as well.

The median price of a single-family house in the U.S. was $428,700 in the first quarter, up from $369,800 the year before, the St. Louis Federal Reserve reports. At the current median price, a mortgage might typically go for $1,988, Bankrate reports.

So for every gain in car prices, home prices are galloping ahead as well. Even if inflation eases, prices are unlikely to recede. But this much is clear: The four-figure monthly car payment may be here to stay.

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