RE Q&A: Who Can Serve on HOA Committees?

Also: A condo board may approve/reject leases based on criteria in the Declaration; a background check found a recent arrest for assault and battery. OK to reject?

STUART, Fla. – Question: My homeowner’s association allows for non-owner residents and tenants to serve on committees. I did not think this was possible. Is there a Florida Statute that prohibits them from serving on committees? – E.T., Hollywood, FL

Answer: There is no Florida Statute that prohibits non-owner residents and tenants from serving on committees. Whether or not non-owners are allowed to serve on your association’s committees will depend on your Bylaw provisions.

Typically, Bylaw provisions are silent regarding the composition of committees. It will usually say that committee members serve at the pleasure of the Board of Directors. This means that the Board of Directors will be authorized to appoint and remove committee members at the Board’s discretion. If your association’s Bylaws do not prohibit non-owners from serving on committees, then non-owners may serve on committees.

That being said, unless the Bylaws explicitly allow non-owners from serving on committees, the Board could adopt a policy or rule that prohibits non-owners from serving on committees.

As a practical point on this question, there are many associations that will allow non-owner residents to serve on the Board. Typically, these are renters and other residents who tend to care more about the day-to-day matters at the association compared to absentee owners so it might not be a bad idea for your association to consider allowing non-owners to serve on committees.

Question: I am on the Board of my condominium association. We have the right to approve or reject leases based on certain criteria in the Declaration of Condominium. The background check for a recent applicant came back and showed a recent arrest for assault and battery. The Board of Directors wants to reject the proposed tenant. However, I am not sure if we have the right to do so. Can you help? – Q.M., Fort Lauderdale, FL

Answer: You state above that the Board has the right to approve and reject the lease application based on certain criteria in the Declaration of Condominium. The Board will need to review the criteria closely in order to determine whether it can properly reject the proposed lease application. Typically, in these situations, there is a criterium for rejection for felony convictions involving violence to persons or property. The crime of assault and battery would certainly qualify as a crime of violence against a person. However, the question is whether the charge resulting from the arrest was for a felony and, more importantly, whether there was a conviction from the felony charge.

It is important to thoroughly review the background check to determine whether the arrest led to a felony charge and whether the person was convicted of that felony. If the Board decides to reject the lease application, it must do so at a duly-noticed Board meeting. I also recommend reviewing your Declaration of Condominium provision more fully to determine whether opinion of legal counsel regarding good cause for rejection is required prior to a rejection of the lease application.

I recommend discussing this matter more fully with your association legal counsel so that the Board of Directors is fully advised regarding its options.

The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

© 2022 Journal Media Group


1 in 4 Sellers Cutting Price as Market Cools

Altos Research: Rising rates and economic shifts have slowed down super-eager buyers as the market shifts to “much more normal conditions.”

NEW YORK – Altos Research reports that prices have been cut on more than 25% of homes on the market right now.

“Rising rates and the shift in the economy has slowed down the super-eager buyers,” says Mike Simonsen, co-founder and CEO of Altos Research. “We’re shifting from a real buying frenzy to much more normal conditions.”

He says about a third of homes take a price cut under normal conditions, but that was only 14% this spring amid high demand and low inventory.

“Sellers in the last two years can overprice their home and still get offers – that condition of the frenzy is gone, so it’s a much more normal market,” Simonsen says. “By July, expect to be back to our normal conditions nationally. We’ve been hotter than normal for over two full years since the start of the pandemic. By August, sellers who aren’t prepared will be surprised.”

He says there’s “nothing in the data yet that shows an indication of home prices crashing, [but] there is an indication of probably zero home price appreciation in 2023.”

Source: MarketWatch (06/15/22) Swaminathan, Aarthi

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


U.S. Home Equity Highest on Record – $27.8T

Many homeowners used some of their home equity via a cash-out refinance when rates were dropping. “Tappable equity” rose to $200K per home in 1Q 2022.

NEW YORK – The Federal Reserve reports that total U.S. home equity surged nearly 20% in the first quarter to a record $27.8 trillion.

While rising home values boosted the finances of American homeowners, rising mortgage rates have made it more expensive for homeowners to use that equity. According to Black Knight reports, about 60% of withdrawn equity in 2021 was accessed via cash-out refinances. However, refinances have dropped as mortgage rates rise

Black Knight’s report finds that tappable equity – the amount homeowners can borrow and still retain at least 20% of the home’s equity – increased a record $1.2 trillion in the first quarter to more than $11 trillion. Almost 75% of it belonged to borrowers with mortgage rates below 4%.

According to Black Knight, average tappable equity available to Americans with mortgages jumped to a record $207,000 in the first quarter.

According to CoreLogic, equity gains likely will spur a record amount of home-improvement spending this year.

Source: Wall Street Journal (06/15/22) McCaffrey, Orla

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


Top U.S. Relocation Destinations? Miami and Tampa

Two other Fla. metros – Cape Coral and North Port – are also in the top 10 Redfin report, with New York City and Chicago top feeder markets.

SEATTLE – Homebuyer migration remained at an all-time high in April and May, with 32.3% of Redfin.com users nationwide looking to move to a different metro area, according to a new report. The percentage is unchanged from a record set in the first quarter but up from about 26% before the pandemic began.

Homebuyers aren’t just chasing preferred destinations, they also make moving decisions based on an area’s housing costs.

Florida destinations hold top spots

Miami and Tampa topped the list of most popular destinations for homebuyers moving from one metro to another in April and May measured by net inflow – the number of searchers looking to move into an area rather than out of that area.

Miami has topped the list all year, but Tampa just passed Phoenix for the number-two spot. Phoenix had held the number-two spot since last fall; now it comes in at number three.

Two other Florida metros also made the list with Cape Coral at No. 6 and North Porth at No. 7.

Tampa is more popular with relocating homebuyers largely because it’s relatively affordable, with the typical home selling for $370,000 in April. Although Tampa prices rose nearly 28% year over year, they were still well below the national median of $424,000. It’s the only metro on the top-five list where that’s the case. The typical home sells for $475,000 in Miami, $480,000 in Phoenix, $605,000 in Sacramento and $445,000 in Las Vegas.

Migration into Tampa has steadily ticked up since the pandemic began. Tampa had a net inflow of more than 11,000 homebuyers in the first quarter, up from roughly 7,600 a year earlier and about 4,000 two years earlier.

Top 10 metros by net inflow

  1. Miami – 33.8% of searches from outside, top feeder market is New York
  2. Tampa – 50.3% of searches from outside, top feeder New York
  3. Phoenix – 36.6% from outside, top feeder Los Angeles
  4. Sacramento – 42.6% from outside, top feeder Los Angeles
  5. Las Vegas – 46.5% from outside, top feeder Los Angeles
  6. Cape Coral, Fla. – 67.4% from outside, top feeder Chicago
  7. North Port, Fla. – 67.4% from outside, top feeder Chicago
  8. San Diego – 31.5% from outside, top feeder Seattle
  9. San Antonio – 42.7% from outside, top feeder Los Angeles
  10. Dallas – 25.1% from outside, top feeder Los Angeles

© 2022 Florida Realtors®


Number of Buyers Backing Off? Maybe Half

If rising costs didn’t deter hopeful home buyers, rising mortgage rates might. Realtor survey estimate: About 50% of buyers paused plans at least temporarily.

NEW YORK – The Federal Reserve raised the benchmark interest rate by 75 basis points this week to a 1.5% to 1.75% range, the biggest hike since 1994, as it tries to contain inflation, currently at a 40-year peak.

Eric Finnigan at John Burns Real Estate Consulting tweeted as mortgage rates rise from 3% at the start of this year to 6% now, it effectively prices out 18 million households.

“The cost of borrowing is becoming more expensive, particularly for those with variable rate products,” says Bankrate.com analyst Mark Hamrick.

While the latest mortgage rate increase was baked into the expected 75-basis-point raise, Holden Lewis at personal-finance site NerdWallet says interest rates will continue to climb.

About 50% of buyers are pausing their home-purchasing plans, opting to wait six to 12 months before resuming the process, according to a survey of 900 Realtors by real estate tech startup HomeLight.

And earlier this month, the Mortgage Bankers Association reported that the Market Composite Index hit a 22-year low.

The Fed’s move did not surprise analysts, as Ben McLaughlin at online savings platform SaveBetter.com said the agency was meeting expectations with its third consecutive hike in the Fed Funds target rate since March 2022. “Markets have been rattled lately, so the Fed must walk a narrow path to avoid a jolt so pronounced that it risks tipping the U.S. economy into recession,” he says.

Source: MarketWatch (06/16/22) Fottrell, Quentin

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


Condo Q&A: Unit Owner Tells Vendors What to Do

In a common problem, one condo-unit owner tries to tell landscapers how do their job, but the association employs them – not that individual owner.

FORT LAUDERDALE, Fla. – Question: I am a newly elected director at my condominium association. Our community just turned over from developer control on January 31, 2022. We are trying to find guidance on how our Board of Directors can make decisions for the community.

For example, if we need to enter into a contract, can we obtain a consensus via email? I’ve heard that all decisions must be made at a Board meeting, but our monthly board meeting just happened and the next board meeting is not for another month. Is there a way to allow the president or another officer to enter into contracts without a board meeting? – J.N., Boynton Beach

Answer: Initially, please note that all board decisions and votes must occur at a duly-noticed board meeting. A duly-noticed board meeting is a meeting of the Board where notice has been posted conspicuously on condominium property at least 48 hours prior to the date of the meeting. At that board meeting, the board can properly make a motion and vote to make a decision on behalf of the community. Now, this does not mean that board members are prohibited from communicating with each other regarding association business prior to the Board meeting. In fact, Section 718.112(2)(c) of the Florida Statutes allows board members to communicate with each other via email but prohibits casting votes on an association matter via email.

I understand that situations may arise where a board decision needs to be made but there is some time before the next regularly scheduled board meeting. In those situations, the board can schedule a board meeting as long as it is duly-noticed as described above.

Another option would be for the board to adopt a policy that provides an officer, such as the president, with authority to enter into contracts or make purchases within specific parameters such as value and term of the contract. If the board would like to explore this option, I strongly recommend that you speak with your legal counsel as the board should seek guidance regarding the parameters of the board policy.

Question: We have an owner in our HOA that regularly interferes with our landscaping vendor. She provides them with direction that is contrary to the direction provided by the board. She has no authority to give them any direction.

The landscape vendor has been advised not to listen to her. However, if they do not heed her direction, she yells at them and demeans them. The landscaper has threatened to terminate our agreement and hiring a replacement landscaper will cost significantly more than what we are paying now. What are our options? – T.F., Fort Lauderdale

Answer: You are not alone. We have seen this occurring in a number of community associations – in condominiums, homeowner’s associations, and cooperatives. Often, these owners have an idea on how the landscaping should be done throughout the community. However, they are not on the board and have no authority to speak for the landscaper’s employer – the association.

The association has several options in these situations. Initially, we recommend that the association, through its legal counsel, send a cease and desist to the owner as she is interfering with the association’s landscape vendor. If the owner complies with the cease and desist, then this is no longer an issue.

However, if the owner does not comply, which is the more likely scenario, the board can adopt a rule where it specifically makes interfering with an association vendor a fineable offense. If the owner keeps interfering with the association vendor, then the board can seek to levy fines against her for each instance that she interferes with the landscape vendor.

I am also concerned regarding the landscape vendor’s threat to terminate the landscape agreement. If this occurs, the association will be forced to obtain another landscape vendor at what seems to be a significant increase in price. If this does occur and the owner’s interference is the only reason that the landscape vendor terminated its agreement with the association, then the association could have a claim against the owner for tortious interference with a business relationship. I strongly recommend mentioning this in the cease and desist.

The association may have further options. I recommend speaking with your association’s legal counsel on this matter.

Question: The unit below mine has been experiencing leaks coming from my balcony. The association had an engineer come in and she reported that the balcony needs new waterproofing. Am I responsible for this? – M.S., Boynton Beach

Answer: The answer to your question should be in the maintenance section of your Declaration of Condominium. This section will provide the party responsible for the maintenance, repair, and replacement of various parts of the condominium, including, but not limited to, the building exterior, the unit, and the limited common elements. The balcony is very likely a limited common element to your unit.

In most Declarations, the unit owner is responsible for keeping a limited common element balcony clean and free from debris. The owner might even be responsible for replacing lightbulbs and the fixtures in the balcony area. However, when it comes to waterproofing the balcony slab, most Declarations will keep this the responsibility of the association. This is because there is too much risk associated with allowing different owners with different vendors to waterproof the balcony slabs or even do structural slab work on the balconies.

Although it is likely the association’s responsibility, I recommend reviewing this matter with your legal counsel to confirm the party responsible to waterproof your balcony.

The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein.

© 2022 Journal Media Group. John C. Goede, Esq., is a shareholder of the Law Firm Goede, DeBoest & Cross.


Square Footage: Questions, Irregularities, Confusion

As of April 1, Fannie Mae-backed loans use the ANSI standard for measuring square footage. While it makes the measuring consistent, it also creates confusion.

WASHINGTON – Let’s say you take a listing on a nice little Cape Cod-style home that has 1,000 square feet on the main floor. The second floor, with two bedrooms and a bathroom, measures 500 square feet. You sell the property and, when the appraisal comes back, it shows only 1,000 square feet of above-grade space. What’s going on? Has the appraiser made a mistake?

The answer is no, and here’s why.

As of April 1, Fannie Mae requires the ANSI home measurement standard for appraisals. That standard has guidance on what constitutes living space that may differ from your understanding.

Fannie is the only one of the secondary financial agencies – so far – that has officially adopted this standard, but other government lending institutions – Freddie Mac, FHA, VA and Rural Housing – indicate that they’ll accept the ANSI standard. However, it’s unclear if they’ll accept Fannie Mae’s protocol when there are portions of the property used as living space but not classified as living space under ANSI.

Key elements of the standard

ANSI stands for the American National Standards Institute. It’s a private nonprofit organization founded in 1918 that administers and coordinates the U.S. voluntary standard and conformity assessment system.

ANSI doesn’t develop standards itself but provides a framework for setting them in a wide range of disciplines. The ANSI home measurement standard is one of several; another commonly used standard is the American Measurement Standard.

The ANSI home measurement standard has a few key elements:

  1. It applies only to single-family housing. It doesn’t apply to apartments, condos or commercial property.
  2. The measurement standard is from the exterior walls and includes the area on each floor above grade based on exterior measurements, including stairwells but excluding open areas.
  3. The standard requires a minimum ceiling height of seven feet. In second-story areas with sloped roofs, living area starts at 5 feet on the slope, and 50% or more of the ceiling has to be 7 feet or above.
  4. Living space that is below grade, even if it’s only a foot or two, is considered basement space.
  5. The standard requires that the property be measured to the nearest inch or one-tenth of a foot.

In the case of our Cape Cod home, its second floor has a ceiling height of 6 feet 9 inches. Under the ANSI standard, none of that space is considered living space. Fannie Mae guidance indicates that the space should be included and valued appropriately, but is not to be reported as above-grade living space; rather; it must be reported on the lower section of the adjustment grid as another item. However, bedrooms and baths found in this space are to be reported as above-grade bedrooms and bathrooms.

If you are confused, you are not alone

A host of potential questions and problems accompanies the adoption of this standard, including how to treat functional space that’s not defined as living space by ANSI. Fannie Mae issued an FAQ that should answer many agent questions and provide guidance to appraisers on how to deal with individual situations. In addition, Fannie Mae’s Selling Guide includes a section on how gross living area is measured and calculated.

The quandary: conflicting data

Why did Fannie Mae adopt the ANSI standard? Millions of appraisals are submitted to Fannie Mae every year, and the agency determined that a national standard was needed to improve the consistency and reliability of appraisal reports when it comes to living area determinations.

Getting to that national standard is easier said than done.

Much of the information about property physical characteristics is obtained from public record sources that are usually developed by the county assessor. Some counties have adopted the ANSI rule and some have adopted the AMS. Others follow local tradition and practice.

There are some differences in the two most common home measurement standards. For example, in addition to the issue of ceiling height, the AMS doesn’t include stairwells in the living area, whereas ANSI does; that leads to discrepancies between appraisals and public records.

It is in our interest, as competent real estate professionals, to be aware of the ever-changing valuation landscape so that we can help our clients better understand the appraisal and financing process. In most areas, there are likely to be only minimal discrepancies between public records and the appraisal. But when those discrepancies are significant, it’s important to understand why they exist and to be sure the space is being valued properly.

Broad adoption of the ANSI standard by the secondary mortgage market would reduce confusion.

Craig Morley, GAA, MNAA, is owner and managing partner of Accurity Valuation – Morley & McConkie LC in St. George, Utah. A certified general appraiser licensed in Arizona, Nevada, and Utah, Morley was a member of the Utah Appraiser Licensing and Appraisal Board from 2004 to 2012 and chaired the board for four of those years. He’s a past president of the National Association of Appraisers and a past chair and current member of the National Association of Realtors® (NAR) Real Property Valuation Committee. In 2020, the Appraisal Foundation board of trustees appointed him to serve a three-year term on the Appraisal Standards Board, which is responsible for writing, amending, and interpreting the Uniform Standards of Professional Appraisal Practice, or USPAP.

Source: National Association of Realtors® (NAR)

© 2022 Florida Realtors®


High Mortgage Rates? Not Historically Speaking

In the 2010s, mortgage rates averaged only 4.08% – but today’s rates are still a bargain compared to the 1970s (9.03%), the 1980s (12.7%) and the 2000s (6.29%).

TAMPA, Fla. – Unless you plan on purchasing real estate with an all-cash offer, you’ll likely be taking out a mortgage loan. It’s never a bad idea to be aware of mortgage rates, which can be ever-changing due to various factors – inflation, economic growth, Federal Reserve policies, the bond market and relevant housing market conditions, among them.

Extra Space Storage, a U.S. real estate storage owner and operator, examined historical mortgage data from federal loan purchaser Freddie Mac to find the average annual rate for a 30-year fixed-rate home loan, with data dating back to 1972.

A fixed-rate mortgage is a home loan that has a set interest rate for the entire lifetime of the loan. Typically, you’ll see 30- or 15-year fixed mortgage loans; the former mortgages are the most common type with about 90% of homebuyers using one in their home purchase.

Mortgage rates were highest in the 1980s when the Fed raised interest rates to combat inflation. Today, economic uncertainty and inflation are also behind rising mortgage rates. As of May 2022, the 30-year fixed mortgage rate sits at 5.25% while the average 15-year fixed mortgage rate is 4.43%.

So, what were they like 5 to 10 years ago? Keep reading to see how mortgage rates have changed since the early ‘70s.

Mortgage rates since 1972

For the first time in over a decade, mortgage rates have increased. In April 2022, 30-year fixed mortgage rates rose above 5%. After dropping to historic lows during the height of the COVID-19 lockdowns – when the rate hovered at 3.2% – this upward trajectory has dampened many would-be buyers’ enthusiasm.

However, mortgage rates are now relatively low in comparison to the historical average of around 8%. The early 1980s set records for the highest mortgage rates, jumping above a staggering 16% at one point.

1970s – Average 30-year fixed mortgage rate over the decade: 9.03%

During the 1970s, the Great Inflation was to blame for rising mortgage rates. Among the contributing factors included Keynesian economic policy, central bank policy, market psychology, and the abandonment of the gold window during the Nixon administration, when it was decided the U.S. government would no longer redeem dollars for gold from foreign banks.

This decade led to some of the highest inflation rates seen in U.S. history. The stock market spiraled into a bear market, losing half of its valuation over a 20-month timeframe. Economic growth stalled into stagflation, which combines high inflation with spiking unemployment rates, causing a sharp decline in U.S. industries like automaking.

1980s – Average 30-year fixed mortgage rate over the decade: 12.70%

An oil embargo following the Arab-Israeli War of 1973 worsened the inflation of the ‘70s, pushing the U.S. into a recession. Prices of goods and services grew rapidly, which was an effect of severe inflation.

The Federal Reserve raised interest rates in an attempt to combat the effects of this hyperinflation; this caused the cost of borrowing money to remain higher. The early 1980s saw some of the highest interest rates on record.

1990s – Average 30-year fixed mortgage rate over the decade: 8.12%

In comparison to the previous two decades, the 1990s allowed for a great moderation in interest rates accompanied by growth, as the baby boomers entered their peak earning years. Inflation declined from over 10% in 1990 to below 7% in 1998 – incidentally the last year the federal government enjoyed a budget surplus.

In the latter half of the 1990s, information technology and the nascent internet drove productivity growth. Investments were made in newer technologies, such as laptop computers and cellphones. With the advent of the internet came increased e-commerce through future behemoths like Amazon, as well as the first telecommuters.

2000s – Average 30-year fixed mortgage rate over the decade: 6.29%

Thirty-year fixed mortgage rates showed a continual decrease during the 2000s, going from above 10% to the 5% range in just the first three years. Despite this, the 2000s faced its fair share of economic challenges.

The 2003 invasion of Iraq drove up the price of oil. The rise of India, China, and other Asian economies raised energy prices and boosted industrial metals to 2008 highs. The Great Recession that followed extended from 2007 to 2009 and is known historically as the most severe downturn since the Great Depression of the 1930s. The unprecedented fiscal, monetary, and regulatory stimulus was implemented first by the administration of George Bush and then Barack Obama. This occurred after the 2000s housing bubble led to the subprime crisis of 2007, when many borrowers could no longer service their mortgages.

2010s – Average 30-year fixed mortgage rate over the decade: 4.08%

2010 marked a slow recovery following the Great Recession. Over the last decade, there have been ups and downs, but nothing has rattled the economy like the 2020 coronavirus pandemic. According to Forbes, by boosting remote work, COVID-19 has changed the housing market forever – and the Fed responded by resetting interest rates. The 2021 average 30-year fixed mortgage rate drastically fell to 2.96%, the lowest on record.

© 1998-2022 WFLA, Nexstar Broadcasting, Inc. All rights reserved. This story originally appeared on Extra Space Storage and was produced and distributed in partnership with Stacker Studio.


Core Strategies to Build a Thriving Business

With geographical farming, an agent defines a specific area for intense marketing – but success requires more than randomly picking an area off the map.

NEW YORK – Agents need to master a number of essential strategies to help expand their business, says Jimmy Burgess, CEO of Berkshire Hathaway HomeServices Beach Properties of Florida.

For instance, geographical farming refers to creating a defined area or neighborhood where the agent is known as an expert.

How to pick an area? Ideally, choose a target neighborhood in which no single agent currently listed more than 20% of the total number of homes in the previous 12 months. The best area will also have an average to high turnover – 10% or higher of the number of homes in the neighborhood. Budgeting $2 per month to area residents typically includes direct mail, open house marketing, just listed/just sold marketing and community events.

Meanwhile, circle prospecting stems from a traditional practice of drawing a circle on a map around a group of homes with a subject property in the middle, which is identified by such things as a new listing, pending contract, recent sale or upcoming open house.

Agents also need to maintain a robust database that includes every single person they’ve done business with, every person they know who owns a home, and anyone they know who will consider buying a home in the future.

Another option is buying online leads. The aim is to have to have a consistent, steady flow of new leads coming into their database.

Source: Inman (06/12/22) Burgess, Jimmy

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


Use a Reverse Mortgage to Pay for Long-Term Care?

A reverse mortgage allows older adults to tap into home equity yet still live in the home. For unexpected health care expenses, it might be a good idea – or maybe not.

NEW YORK – Someone turning 65 has nearly a 7-in-10 chance of needing long-term care in the future, according to the Department of Health and Human Services, and many don’t have the savings to manage the cost of assisted living.

But they may have a mortgage-free home – and the equity in it, giving them the potential option of a reverse mortgage to help cover care costs.

Here’s how to evaluate whether a reverse mortgage might be a good option.

What is a reverse mortgage?

A reverse mortgage is a loan or line of credit on the assessed value of your home. Most reverse mortgages are federally backed Home Equity Conversion Mortgages, or HECMs, which are loans up to a federal limit of $970,800. Homeowners must be 62 years old to apply.

If you have at least 50% to 55% equity in your home, you have a good chance of qualifying for a loan or line of credit for a portion of that equity. How much you can access depends on your age and the home’s appraised value. You must keep paying taxes and insurance on the home, and the loan is repaid when the borrower dies or moves out. If there are two borrowers, the line of credit remains until the second borrower dies or moves out.

A reverse mortgage is a non-recourse loan, meaning if the loan amount ends up being more than the home’s value, the borrower or inheritor won’t have to pay more than the loan amount owed or what the home could be sold for.

Can you use a reverse mortgage for long-term care?

A reverse mortgage can provide a crucial stream of income to pay for long-term care, but there are some limitations.

For instance, a reverse mortgage requires that you live in the home. If you’re the sole borrower of a reverse mortgage and you have to move to a care facility for a year or longer, you’ll be in violation of the loan requirements and must repay the loan.

Because of the costs, reverse mortgages are also best suited for a situation where you plan to stay in your home long-term. They don’t make sense if your home isn’t right for aging in place or if you plan to move in the next three to five years, says Marguerita Cheng, a certified financial planner in Potomac, Maryland.

But for home health care or paying for a second borrower who’s in a nursing home, home equity can help bridge the gap. If you want to pay as you go and not pull money out of securities in a down market, you can pull it out of your home equity, says Dennis Nolte, a CFP in Winter Park, Florida.

Advantages of a reverse mortgage

Your home is generally one of your biggest assets, and using its value to handle long-term care costs can make sense.

  • You’re tapping an “up” asset. “Most people will find that their home is the only asset they own appreciating this year, and that makes it a good source to utilize for income needs,” says Byrke Sestok, a CFP in Harrison, New York.
  • You can lock in value. If you think you’ll have trouble covering a future long-term care need, you can get a reverse mortgage now, when home values are high. An unused line of credit grows over time, so your balance will have increased by the time you need the money.
  • The income is tax-free. All money you withdraw from your reverse mortgage line is tax-free, and it doesn’t affect your Social Security or Medicare benefits.

Disadvantages of a reverse mortgage

Reverse mortgages can solve a problem, but there are downsides to using the equity in your home to cover costs.

  • They’re expensive. Getting a reverse mortgage costs about as much as getting a traditional mortgage – expect to pay about 3% to 5% of the home’s appraised value. However, you may be able to roll the costs into the loan.
  • You must pay interest. Interest accrues on any portion you’ve used, so eventually you will owe more than you’ve borrowed.
  • You’ll leave less to heirs. The more of your reverse mortgage you use, the less you’ll be leaving behind.

The question of whether to use your home equity as a stream of income can be complicated and depends on your other assets and plans for the future. A financial planner can help you run the numbers and point you toward a vetted reverse mortgage specialist if the product makes sense for you.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This article was provided to The Associated Press by the personal finance website NerdWallet.


Biden Order: HUD to Study LBGTQ Protections

An Executive Order issued on LGBTQ protection requires HUD to identify housing issues, provide guidance and create training under a goal-specific timeline.

WASHINGTON – On Wednesday, President Joe Biden issued the Executive Order on Advancing Equality for Lesbian, Gay, Bisexual, Transgender, Queer and Intersex Individuals (LGBTQI). It’s a government-wide mandate for change. Housing is part of that mandate under goals and achievement timelines for the Department of Housing and Urban Development (HUD).

In the Executive Order, Biden says it’s the “policy of my Administration to combat unlawful discrimination and eliminate disparities that harm LGBTQI+ individuals and their families, defend their rights and safety, and pursue a comprehensive approach to delivering the full promise of equality for LGBTQI+ individuals, consistent with Executive Order 13988 of January 20, 2021 (Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation).”

The lengthy order creates goals for many government agencies and addresses specific topics independently, such as health and human services, the justice system and “so-called conversion therapy.”

HUD goals in the Executive Order

HUD shall establish a Working Group on LGBTQI+ Homelessness and Housing Equity that will aim to prevent and address homelessness and housing instability among LGBTQI+ individuals. HUD is to:

  • Identify and address barriers to housing faced by LGBTQI+ Americans … that place them at high risk of housing instability and homelessness
  • Provide guidance and technical assistance to HUD contractors, grantees and programs to effectively and respectfully serving LGBTQI+ people
  • Develop and provide guidance, sample policies, technical assistance and training to Continuums of Care, homeless service providers and housing providers to improve services and outcomes for LGBTQI+ … to ensure compliance with the Fair Housing Act, 42 U.S.C. 3601 et seq., and HUD’s 2012 and 2016 Equal Access Rules
  • Seek funding opportunities, including through the Youth Homelessness Demonstration Program, for culturally appropriate services that address barriers to housing for LGBTQI+ Americans.

The federal agencies included in the Executive Order generally have 30 days to create a subcommittee to begin work on collecting sexual orientation, gender identity and sex characteristics (SOGI) data.

© 2022 Florida Realtors®


Fair Housing: DOJ Says Fla. Biz Targeted Hispanics

Officials allege the groups used Spanish ads to falsely promise they’d cut mortgage payments in half – but homeowners shouldn’t pay mortgages or talk to their lenders.

ORLANDO, Fla. – The Department of Justice (DOJ) entered a consent order with numerous Florida businesses that it said violated the Fair Housing Act after targeting Hispanic homeowners.

Advocate Law Groups of Florida, Summit Development Solutions and numerous other parties were accused of targeting of predatory loan modification services, the DOJ announced last Friday.

Federal officials said the groups used Spanish-speaking advertising that falsely promised to cut mortgage payments in half. They engaged with hundreds of Hispanic homeowners promising to lower payments, and extracted thousands of dollars of upfront and continuing fees, according to the DOJ.

The defendants specifically targeted Hispanic homeowners because they didn’t speak English well.

Dept. of Justice officials said the defendants told the homeowners not to pay their mortgage or talk with their lenders while not fulfilling their promise for loan modifications. As a result, many of those people defaulted on their mortgages and lost their homes, according to the DOJ.

The agreed-upon consent order is for $4.5 million. Defendants will pay $95,000 to the three intervenors and a civil penalty to the United States. For now, the monetary judgment is suspended because the defendants claim they can’t afford to pay it back due to limited net worth.

They will have to provide updated financial documents for five years. If they’re found to be lying about their financial assets, the court will make them immediately liable for the total amount.

Officials said in addition to the penalties the defendants are permanently forbidden from providing any form of mortgage relief services.

© 2022 Orlando Sentinel. Distributed by Tribune Content Agency, LLC.


A Cryptocurrency Transaction? It’s Not that Different

NEW YORK – In just a few short years, the public’s perception of cryptocurrency has evolved dramatically. It began with many first seeing it as a novel but impractical idea, then as a scam, then as a valid but volatile investment, and now, it’s finally starting to be seen as a legitimate form of currency for all kinds of transactions.

More recently, it’s even been gaining ground in real estate transactions. This is surprising considering how far behind the industry is when it comes to technology. But things have progressed rapidly. The first NFT real estate sale took place in Gulfport, Florida, in February 2022, and more recently, the largest-known real estate deal of using crypto in America was a Miami Beach penthouse that traded for $22.5 million.

While there are advantages to buying real estate with crypto, there are also some disadvantages as well. Let’s address the disadvantages first.

Most sellers, as well as most real estate professionals, simply don’t understand cryptocurrency yet, let alone how to conduct a real estate transaction with it. That can make it difficult to conduct a transaction this way because the seller, both Realtors, and title professionals involved in the closing all need to understand cryptocurrency. This may be possible in major cities where people tend to be more tech savvy, but it’s unlikely in many areas.

The reality is that the process itself is pretty straightforward and is no different than using traditional funds – with one exception. Rather than money moving between two banks upon closing, it moves from one crypto wallet to another.

Paul Lizell, a real estate investor and educator, says, “Timing can play a critical role as well. If you send the funds in a volatile market, you could actually lose value against the U.S. dollar if the crypto market is going up. Also, if you use a crypto like Ethereum, you could pay high fees ranging in the thousands.”

For the most part, every other aspect of the closing process remains the same.

“Crypto transactions are not as complicated as they seem, especially if you are working with an experienced seller. As it becomes a more accepted form of payment, you will find more companies willing to share the steps to open a wallet, or third party providers that can assist with the transaction,” says Denis Smykalov, with Wolsen Real Estate – a real estate brokerage that has conducted multiple real estate transactions using cryptocurrency.

Lizell recently purchased a property this way. He shared his experience, saying, “Last August I purchased my home in Naples, Florida, and I used $100,000 worth of Bitcoin as my down payment towards the purchase. This transaction was handled by Bitpay, which converted the Bitcoin to U.S. dollars in real time.” This approach meant that the seller didn’t even have to understand crypto, but it can further complicate a deal.

And cryptocurrency is volatile. In the past twelve months, Ethereum, one of the more popular and relatively more stable coins available today, has fluctuated between $1,722.90 to $4,811.70. This means that if you had planned to purchase a $600,000 property, you would need roughly 125 of this particular coin to complete the transaction. (You’d actually need slightly more, or you’d need to bring additional traditional funds to cover closing costs, but there’s no need to over complicate it.)

So, let’s say you signed a contract to purchase a property at Ethereum’s peak on Nov. 8, 2021, but didn’t get to the closing table until Jan. 27, 2022, which wouldn’t be surprising considering the holiday season, appraisal and inspection backlog, and other delays caused by the pandemic. By this date, Ethereum had dropped by nearly 50% to $2,425.17! This means you would have had to either bring another 125 coins or $300,000 in traditional funds to the closing table, and if you couldn’t do that, you would be on the hook for penalty fees for breaking the purchase contract. That’s a pretty big disadvantage.

Smykalov says, “Market volatility has been a problem in the past, but by using a third party company or attorney, they can facilitate the transaction and convert crypto to U.S. dollars. Other options include choosing stable coins that equal US dollars 1-1.”

But the advantages of purchasing with crypto can be significant too.

When buying a property with cryptocurrency, you’re typically dealing with a very different type of seller, which means they may be open to more unconventional terms. Whether you’re a homebuyer looking for a home to live in or you’re a real estate investor looking to add more properties to your portfolio, this gives you more ways to make a deal viable that might not be otherwise. That becomes even more important the more competitive the real estate market becomes. It’s worth noting that it’s already extremely competitive, becoming more competitive every day, and showing no signs of slowing down anytime soon.

And sellers who understand crypto also understand that the balance in a wallet or cold storage is just as good if not better than cash in the bank. This can give you a powerful advantage over traditional buyers who are relying on financing because you can close faster and the seller will get their money immediately. Anyone who has tried to purchase a property lately knows that you need every advantage you can find in this hypercompetitive market.

Taxes are another area where cryptocurrency offers advantages over purchasing a property using traditional funds.

In the past, if you had made a killing in crypto, you basically had two options – continue holding it to delay taxation on your gains, or sell it and pay a capital gains tax. However, now that it’s starting to be accepted in real estate transactions more frequently, you have a third option, which is to use it to directly purchase a property.

In doing so, you will face taxation on your capital gains from the appreciation of your cryptocurrency because you’re essentially cashing it in. But because you’re purchasing real estate with it, you’ll now be able to enjoy tax benefits that only real estate can provide. While you’ll take an initial tax hit, this transaction can be a powerful tax deferment strategy from that point on using depreciation and 1031 exchanges, which creates a significant compounding effect.

It’s important to note that you should make sure the tax professionals you work with have deep expertise in both real estate and crypto – especially the latter because the tax laws on crypto are still unfolding and there is a lot of gray area, so it takes a true expert to keep you on the right side of the law here.

And as a seller, accepting cryptocurrency as a payment method often means a larger pool of potential buyers. More buyers typically means a higher final sale price, driven by bidding wars, which means greater profits for you.

Ultimately, crypto is here to stay, and it’s playing a growing role in real estate, so smart buyers and sellers will leverage this trend early on to maximize their returns. Eventually it will become commonplace, but leading up to that, you absolutely should make the most of the advantages it creates for early adopters.

© 2022 Benzinga.com – Benzinga does not provide investment advice. All rights reserved.


‘Insolvent’ Property Insurer Headed to Receivership

Southern Fidelity is headed toward state receivership. It has 78K policies in Fla., and some of those will likely go to Citizens, the Fla.-owned “insurer of last resort.”

TALLAHASSEE, Fla. – Saddled with financial losses and lacking reinsurance for this year’s hurricane season, another Florida property-insurance company is headed toward receivership.

The Florida Department of Financial Services late Monday filed a petition in Leon County circuit court to be appointed as a receiver for Southern Fidelity Insurance Co. The petition described Southern Fidelity, which has about 78,000 policies in Florida, as “insolvent.”

The move was the latest blow to the state’s troubled property-insurance market. Tallahassee-based Southern Fidelity became the fourth insurer declared insolvent since late February, following Lighthouse Property Insurance Corp., Avatar Property & Casualty Insurance Co. and St. Johns Insurance Co.

The petition, posted on the court website Wednesday, did not detail plans for replacement coverage for Southern Fidelity’s customers. But a June 3 document signed by state Insurance Commissioner David Altmaier said Southern Fidelity was trying to shift policies to other companies.

“Southern Fidelity has represented that it is in active negotiations with other property insurers to effectuate the transition of some or all of Southern Fidelity’s policies to that insurer as part of a wind-down plan,” Altmaier wrote in what is known as a consent order.

At least some policies likely will go to the state-backed Citizens Property Insurance Corp. which has seen its number of customers explode during the past two years as private insurers have shed policies and sought hefty rate increases.

As an example, Citizens Chief Operating Officer Kelly Booten said during a meeting last week that Citizens wrote about 13,000 policies for former customers of Avatar Property & Casualty Insurance Co., or about 39% of the policies Avatar had in the state.

As of May 31, Citizens had 883,333 policies, up from 463,247 policies two years earlier.

The Southern Fidelity petition came less than a month after state lawmakers held a special legislative session to try to shore up the property-insurance system. But the Southern Fidelity insolvency was not a surprise: The rating agency Demotech announced early this month that it had withdrawn the company’s financial-stability rating.

A final straw for insurance regulators was Southern Fidelity’s inability to purchase reinsurance by the June 1 start of the hurricane season. Reinsurance is critical backup coverage for insurers, but it has become more expensive and harder to find.

“Respondent’s lack of catastrophe reinsurance renders the continuation of its insurance business prospectively hazardous to its policyholders,” the petition said.

The petition also said Southern Fidelity, which has about 69,000 additional policies in Louisiana, South Carolina and Mississippi, agreed last week to the appointment of the Department of Financial Services as a receiver.

Altmaier notified state Chief Financial Officer Jimmy Patronis in a letter Friday, leading to the petition being filed Monday.

Documents filed with the petition indicate Southern Fidelity has had financial problems since at least 2019. Among other things, the Office of Insurance of Insurance Regulation placed the company in “confidential administrative supervision” in October 2020 and required the infusion of at least $35 million into the business, according to an affidavit filed by Virginia Christy, director of the office’s property and casualty financial oversight business unit.

In November 2020, Southern Fidelity was approved to be acquired by Gulf & Atlantic Insurance Companies, Inc., which is owned by Hudson Capital Management, L.P., whose general partner is HSCM GP, LLC, according to Christy’s affidavit. That led to Southern Fidelity being provided $50 million in capital.

But Christy said Southern Fidelity continued to sustain underwriting losses, leading to additional infusions of money, non-renewed policies and increased premiums.

“Since the acquisition of Southern Fidelity by Gulf & Atlantic Insurance Companies, Inc., HSCM GP, LLC has provided in excess of $200 million in funding in an effort to avoid the delinquency of Southern Fidelity,” Christy said in the affidavit dated Friday.

Source: News Service of Florida


May Housing Starts Drop More Than 14%

Economists expected housing starts to fall last month, but the size of the drop was the steepest in more than a year. Building permits also declined by 7.0%.

WASHINGTON – A report released by the Commerce Department on Thursday showed new residential construction in the U.S. plunged by much more than expected in the month of May.

The Commerce Department said housing starts tumbled by 14.4% to an annual rate of 1.549 million in May after jumping by 5.5% to a revised rate of 1.810 million in April.

Economists had expected housing starts to decrease by 1.3% to an annual rate of 1.701 million from the 1.724 million originally reported for the previous month.

With the much bigger than expected decline, housing starts dropped to the lowest annual rate since hitting 1.505 million in April of 2021.

Single-family housing starts dove by 9.2% to an annual rate of 1.051 million, while multi-family starts plummeted by 23.7 to a rate of 498,000.

“We expect housing starts to lose some momentum as 2022 progresses, as a sharp rise in mortgage rates sidelines some buyers and as builders have become more cautious,” said Nancy Vanden Houten, lead economist at Oxford Economics. “We think a shortage of supply and a record backlog of starts will keep activity from plummeting, but the May data indicate the risk to our forecast is to the downside.”

The report also showed building permits slumped by 7.0% to an annual rate of 1.695 million in May after falling by 3.0% to a revised rate of 1.823 million in April. Building permits, an indicator of future housing demand, were expected to decline by 1.9% to an annual rate of 1.785 million from the 1.819 million originally reported for the previous month.

Single-family permits tumbled by 5.5% to an annual rate of 1.048 million, while multi-family permits plunged by 9.4% to a rate of 647,000.

Copyright 2022 RTTNews.com. All rights reserved.


Mortgage Rates: Highest Weekly Jump in 35 Years

The rate for a 30-year, fixed-rate mortgage jumped over half a percentage point in one week – from an average 5.23% seven days ago to this week’s 5.78%.

WASHINGTON (AP) – Average long-term U.S. mortgage rates made their biggest one-week jump in 35 years, one day after the Federal Reserve raised its key rate by three-quarters of a point in bid to tame high inflation.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate climbed from 5.23% last week to 5.78% this week, the highest it’s been since November of 2008 during the housing crisis.

Wednesday’s rate hike by the Fed was its biggest in a single action since 1994.

The brisk jump in rates, along with a sharp increase in home prices, has been pushing potential homebuyers out of the market. Mortgage applications are down more than 15% from last year and refinancings are down more than 70%, according to the Mortgage Bankers Association.

Those figures are likely to worsen with more Fed rate increases a near certainty.

The Fed’s unusually large rate hike came after data released last week showed U.S. inflation rose last month to a four-decade high of 8.6%. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% – and Fed policymakers forecast a doubling of that range by year’s end.

Higher borrowing rates appear to be slowing the housing market, a crucial part of the economy. Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices soared.

On Tuesday, the online real estate broker Redfin, under pressure from the cooling housing market, said that it was laying off 8% of its workers.

Homeownership has become increasingly difficult lately, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and soaring home prices, the supply of homes for sale continues to be scarce.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 4.81% from 4.38% last week. A year ago, the rate was 2.24%.

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


Fed Attacks Inflation, Largest Rate Hike Since 1994

With inflation up to a 40-year high of 8.6%, the Fed raised its key interest rate by 3/4ths of a point and suggested that more hefty rate increases are likely.

WASHINGTON (AP) – The Federal Reserve on Wednesday intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point – its largest hike in nearly three decades – and signaling more large rate increases to come that would raise the risk of another recession.

The move the Fed announced after its latest policy meeting will increase its benchmark short-term rate, which affects many consumer and business loans, to a range of 1.5% to 1.75%.

The central bank is ramping up its drive to tighten credit and slow growth with inflation having reached a four-decade high of 8.6%, spreading to more areas of the economy and showing no sign of slowing. Americans are also starting to expect high inflation to last longer than they had before. This sentiment could embed an inflationary psychology in the economy that would make it harder to bring inflation back to the Fed’s 2% target.

The Fed’s three-quarter-point rate increase exceeds the half-point hike that Chair Jerome Powell had previously suggested was likely to be announced this week. The Fed’s decision to impose a rate hike as large as it did Wednesday was an acknowledgment that it’s struggling to curb the pace and persistence of inflation, which has been worsened by Russia’s war against Ukraine and its effects on energy prices.

Borrowing costs have already risen sharply across much of the U.S. economy in response to the Fed’s moves, with the average 30-year fixed mortgage rate topping 6%, its highest level since before the 2008 financial crisis, up from just 3% at the start of the year. The yield on the 2-year Treasury note, a benchmark for corporate borrowing, has jumped to 3.3%, its highest level since 2007.

Even if a recession can be avoided, economists say it’s almost inevitable that the Fed will have to inflict some pain – most likely in the form of higher unemployment – as the price of defeating chronically high inflation.

Copyright © 2022 The Associated Press, Christopher Rugaber, AP economics writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


NAHB: Builder Confidence Dropped Further in June

The builder association’s measure of attitudes has dropped for six months in row, hitting 67 in June. But any number above 50 reflects optimism over pessimism.

WASHINGTON – Builders still side with optimism rather than pessimism, according to a monthly index, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). in June, it fell two points to 67

However, their positive attitudes have been on a slow decline, with the score dropping continuously over the last six months. June marks the lowest HMI reading in two years, since June 2020.

“Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment,” says NAHB Chairman Jerry Konter. “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates.”

“The housing market faces both demand-side and supply-side challenges,” adds NAHB Chief Economist Robert Dietz. “Residential construction material costs are up 19% year-over-year with cost increases for a variety of building inputs – except for lumber, which has experienced recent declines due to a housing slowdown. On the demand-side of the market, the increase for mortgage rates for the first half of 2022 has priced out a significant number of prospective homebuyers.”

All three HMI indices posted declines in June. The component charting traffic of prospective buyers fell 5 points to 48 – the first time this gauge fell below the breakeven level of 50 since June 2020.

The HMI index gauging current sales conditions fell one point to 77, and the gauge measuring sales expectations over the next six months fell two points to 61.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 71, the Midwest dropped six points to 56, the South fell two points to 78 and the West posted a nine-point decline to 74.

The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

© 2022 Florida Realtors®


Fla.’s Investors Pull Back in 1Q 2022

Fla. has 4 of the top 10 cities for real estate investors, but they’re pulling back. U.S. investor purchases dropped 11.5% in 1Q 2022 compared to the previous quarter.

SEATTLE – The number of homes purchased by real estate investors in the first quarter declined 11.5% from the quarter before – and 16.5% from the third quarter of 2021, when investor purchases hit a record high, according to a report from Redfin.

Investor purchases still remain above pre-pandemic levels, and investors buy a larger share of America’s homes than ever before – a record 20% of homes sold in the first quarter, up from 19.2% one quarter earlier and 15.3% one year earlier. While total home sales declined, investors’ share remained strong.

In Florida, four cities made Redfin’s top-10 list for investors, but those also saw a quarter-to-quarter decline in 2022’s first quarter.

Share of homes purchased by investors in 1Q 2022

  1. 33.1%: Atlanta – down 25.3% quarter-to-quarter
  2. 32.3%: Jacksonville – down 21.7%
  3. 32.2%: Charlotte, N.C. – down 19.1%
  4. 29.0%: Phoenix – down 8.6%
  5. 28.2%: Miami – down 3.6%
  6. 26.8%: Las Vegas – down 16.5%
  7. 25.7%: Orlando – down 12.9%
  8. 24.7%: Tampa – down 16.5%
  9. 24.6%: Nashville – down 16.5%
  10. 22.8%: Columbus, Ohio – down 20.5%

The analysis is based on county records across 40 of the most populous U.S. metropolitan areas and defines an investor as a buyer whose name includes at least one of the following keywords: LLC, Inc., Trust, Corp or Homes.

“Investor home purchases are falling for the same reason overall home purchases are falling: Surging interest rates and high housing prices have made it more expensive to get a mortgage and buy a home,” says Redfin Senior Economist Sheharyar Bokhari.

“The fact that investors are still able to grow their market share while buying fewer homes signals they’re not feeling the pain of higher interest rates as intensely as individual buyers, many of whom are getting priced out of the housing market altogether,” Bokhari says. “It also indicates that the individuals who can still afford to buy will continue to face competition from investors.”

Until the end of 2021, investor purchases climbed steadily since the pandemic’s start, in defiance of normal seasonality, while overall sales still reacted to seasonal trends.

Even with the current decline investor purchases remain strong, in part because they can rent out the homes and cash in on soaring rents. Demand for rentals remains high because there aren’t enough homes for sale.

“Investors are on the hunt for deals” and pulling back from the market hoping prices will drop, says Jennifer Bowers, a Redfin agent in Nashville. “Plus, they bought so many houses at the height of the pandemic that some amount of pullback is natural. A few months ago, 95% of homes for sale in Nashville would get at least one cash offer from an investor – one of my listings got eight. Today, most homes aren’t getting any.”

© 2022 Florida Realtors®


Recession Ahead? Most Economists Say ‘No’

WASHINGTON (AP) – Inflation is at a 40-year high. Stock prices are sinking. The Federal Reserve is making borrowing much costlier. And the economy actually shrank in the first three months of this year.

Is the United States at risk of enduring another recession, just two years after emerging from the last one?

For now, most economists don’t foresee a downturn in the near future. Despite the inflation squeeze, consumers – the primary driver of the economy – are still spending at a healthy pace. Businesses are investing in equipment and software, reflecting a positive outlook. And the job market is still booming, with hiring strong, layoffs low and many employers eager for more workers.

“Nothing in the U.S. data is currently suggesting a recession is imminent,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote Tuesday. “Job growth remains strong and households are still spending.

That said, Farooqi cautioned, “the economy faces headwinds.”

Among the signs that recession risks are rising: High inflation has proved far more entrenched and persistent than many economists – and the Fed – had expected: Consumer prices rose 8.6% last month from a year earlier, the biggest annual 12-month jump since 1981. Russia’s invasion of Ukraine has exacerbated global food and energy prices. Extreme lockdowns in China over COVID-19 worsened supply shortages.

Fed Chair Jerome Powell has vowed to do whatever it might take to curb inflation, including raising interest rates so high as to weaken the economy. If that happens, the Fed could potentially trigger a recession, perhaps in the second half of next year, economists say.

On Wednesday, the Fed is set to raise its benchmark interest rate, which affects many consumer and business loans, by as much as three-quarter of a percentage point. That would be the Fed’s largest rate hike since 1994, and it could herald the start of a period of especially aggressive credit tightening by the central bank – and with it, a higher risk of recession.

Analysts say the U.S. economy, which has thrived for years on the fuel of ultra-low borrowing costs, might not be able to withstand the impact of much higher rates.

The nation’s unemployment rate is at a near-half-century low of 3.6%, and employers are posting a near record number of open jobs. Yet even an economy with a healthy labor market can eventually suffer a recession if borrowing becomes costlier and consumers and businesses put a brake on spending.

How would the Fed’s rate hikes weaken the economy?

Higher loan rates are sure to slow spending in areas that require consumers to borrow, with housing the most visible example. The average rate on 30-year fixed mortgages topped 5% in April for the first time in a decade and has stayed there since. A year ago, the average was below 3%.

Home sales have fallen in response. And so have mortgage applications, a sign that sales will keep slowing. A similar trend could occur in other markets, for cars, appliances and furniture, for example.

How is spending affected?

Borrowing costs for businesses are rising, as reflected in increased yields on corporate bonds. At some point, those higher rates could weaken business investment. If companies pull back on buying new equipment or expanding capacity, they will also start to slow hiring.

Rising caution among companies and consumers about spending freely could further slow hiring or even lead to layoffs. If the economy were to lose jobs and the public were to grow more fearful, consumers would pull back further on spending.

Does a sinking stock market hurt the economy?

Falling stock prices may discourage affluent households, who collectively hold the bulk of America’s stock wealth, from spending as much on vacation travel, home renovations or new appliances. Broad stock indexes have tumbled for weeks. Falling share prices also tend to diminish the ability of corporations to expand. Wage growth, adjusted for inflation, would slow and leave Americans with even less purchasing power.

Though a weaker economy would eventually reduce inflation, until then high prices could hinder consumer spending. Eventually, the slowdown would feed on itself, with layoffs mounting as economic growth slowed, leading consumers to increasingly cut back out of concern that they, too, might lose their jobs.

What are signs of an impending recession?

The clearest signal that a recession might be nearing, economists say, would be a steady rise in job losses and a surge in unemployment. As a rule of thumb, an increase in the unemployment rate of three-tenths of a percentage point, on average over the previous three months, has meant that a recession will eventually follow.

Any other signals to watch for?

Many economists also monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual, because longer-term bonds typically pay investors a richer yield in exchange for tying up their money for a longer period.

Inverted yield curves generally mean that investors foresee a recession and will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take as long as 18 or 24 months for the downturn to arrive after the yield curve inverts. A short-lived inversion occurred Tuesday, when the yield on the two-year Treasury briefly fell below the 10-year yield as it did temporarily in April. Many analysts say, though, that comparing the 3-month yield to the 10-year has a better recession-forecasting track record. Those rates are not inverting now.

Powell has said the Fed’s goal was to raise rates to cool borrowing and spending so that companies would reduce their huge number of job openings. In turn, Powell hopes, companies won’t have to raise pay as much, thereby easing inflation pressures, but without significant job losses or an outright recession.

“I do expect that this will be very challenging,” Powell said. ‘It’s not going to be easy.”

Though economists say it’s possible for the Fed to succeed, most now also say they’re skeptical that the central bank can tame such high inflation without eventually derailing the economy.

Deutsche Bank economists think the Fed will have to raise its key rate to at least 3.6% by mid-2023, enough to cause a recession by the end of that year.

Still, many economists say any recession would likely be mild. American families are in much better financial shape than they were before the extended 2008-2009 Great Recession, when plunging home prices and lost jobs ruined many households’ finances.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. AP Economics Writer Paul Wiseman contributed to this report.


Redfin and Compass Announce Lay-Offs

Redfin said Tuesday it would lay off nearly 500 employees. In an SEC filing, Compass said it plans to lay off 10% of its workforce.

SEATTLE – The cooling housing market is catching up with Seattle’s real estate tech companies.

With fewer people buying homes, the listing site and brokerage Redfin said Tuesday it would lay off nearly 500 employees.

“We don’t have enough work for our agents and support staff, and fewer sales leaves us with less money for headquarters projects,” CEO Glenn Kelman wrote in a message to employees that was also posted on the company’s blog. It was not yet clear how many of the laid off workers are based in Seattle.

The cuts mark a reversal of fortune for the real estate companies that basked in the recent white-hot housing market. Homebuyers flooded the market and competed for scarce inventory of homes for sale, and that drove up prices.

Investors in companies such as Seattle-based Zillow and Redfin saw the upside. Their share prices climbed to their highest-ever levels in February 2021. But it’s been downhill since.

Zillow announced in November it would shutter its failed home-flipping business and lay off a quarter of its staff. Now, high home prices and high mortgage rates are dampening homebuyer demand and leading to fewer sales.

Redfin’s share price was about $8 Tuesday, a steep drop from $61 a year ago. Zillow’s hit $30, down from $117 at this time last year.

Redfin said in an SEC filing it plans to finish laying off 470 employees by the end of this month. That amounts to about 6% of its total workforce, or 8% when not including the employees of two other companies Redfin acquired, RentPath and Bay Equity.

“We could be facing years, not months, of fewer home sales,” Kelman wrote in his message to employees. Kelman said the layoffs were “the result of shortfalls in Redfin’s revenues, not in the people being let go,” but also noted a company “shift toward performance and profits.”

Another brokerage, New York-based Compass, also announced cuts Tuesday. Compass said in an SEC filing it plans to lay off 10% of its workforce and shut down its title and escrow software company.

Zillow and Redfin operate slightly different business models, but both are likely to be affected by a slower market. Redfin runs a real estate brokerage with agents on staff. The company also flips houses. Zillow sells other real estate agents ads on its site, promising to help them generate more business. Both companies also offer home loan services.

Fewer home sales could mean less business for Redfin’s agents and less willingness from other agents to advertise on Zillow, analysts from the investment advisory firm Evercore ISI wrote last month.

Both companies posted significant losses last year. Zillow lost about $528 million, up from a loss of $162 million in 2020 and driven in part by big losses in the shuttered flipping business. Redfin lost about $110 million, up from $18.5 million the year before.

At the same time, most of their executives saw pay increases. Zillow executives saw big increases in their compensation because of a boost in stock options, according to an SEC filing. CEO Rich Barton’s total compensation in 2021 was nearly $21 million, including a base salary of $670,000. That’s about 146 times the pay of the median Zillow employee, according to the filing.

At Redfin, Kelman’s total compensation was about $299,000, roughly four times the median employee. According to the filing, Kelman requested to receive no company equity for the year and to forgo a bonus unless the company had positive net income, which it did not. Other Redfin executives’ total compensation ranged from $2.2 million to $3.2 million.

Not including companies they’ve recently acquired, Redfin employs about 5,800 people and Zillow employs about 7,250.

With the layoffs, Redfin plans to spend less on engineers, analytics and user research, Kelman wrote.

“When we were turning away tens of thousands of customers in 2020 and 2021, we had to hire a thousand employees a month to catch up, requiring berserk levels of recruiting, training and licensing,” Kelman’s message said. “There’s no avoiding that those groups will be hardest hit today.”

© 2022 The Seattle Times. Distributed by Tribune Content Agency, LLC.


Economy’s Future Unclear, ‘Soft Landing’ Less Likely

WASHINGTON – For months, Federal Reserve Chair Jerome Powell has held out hope that the Federal Reserve will be able to raise interest rates high enough to throttle rampant inflation without tipping the economy into recession.

Yet with the Fed set to announce another sharp interest rate hike after it meets this week, days after the government issued a scorching inflation report, the likelihood that the central bank can engineer a so-called “soft landing” appears to be dimming.

With inflation at a four-decade high of 8.6%, Fed officials are likely this year to boost borrowing rates even higher than was expected just weeks ago. The central bank may also signal, when its policy meeting ends Wednesday, the possibility of raising rates to a level that could weaken growth – elevating the risk of a recession.

Some economists now even think the Fed may decide to surprise the financial markets this week by raising its benchmark short-term rate by three-quarters of a point, for the first time since 1994, rather than the half-point that Powell had signaled last month. Wall Street traders have priced in a 30% likelihood of such a drastic move, according to the CME Group.

Even if an economic downturn can be avoided, it’s almost inevitable, analysts say, that the Fed will have to inflict some pain – most likely in the form of higher unemployment – as the price of defeating stubbornly high inflation.

“They need to accept the fact that you can’t fight inflation without imposing some pain on the markets and the economy,” said Ethan Harris, head of global economic research at Bank of America. “They shouldn’t coddle the markets by kind of implying that there’s no major issue here, we’re going to have a soft landing for the economy, I think it’s too late for that. We have to have a hard landing.”

The prospect that the Fed will accelerate its credit tightening, further raising borrowing costs for households and businesses, drove the stock market sharply lower Monday. The broad S&P 500 index fell into bear-market territory, having lost more than 20% of its value since its peak at the beginning of the year.

Fed officials, as a group, were slow last year to recognize how persistent inflation would be, believing instead that widespread price spikes would likely prove temporary. They are now acting forcefully to try to make up for their initial delay.

If, on Wednesday, the policymakers raise their benchmark short-term rate by a half-point – double the usual size – for a second straight time, the rate would rise to a range of 1.25% to 1.5%. Another half-point hike is considered likely at the Fed’s meeting in late July.

The officials have left some ambiguity about what they might do after that, at their meeting in September. Some analysts had thought the policymakers might then even pause their rate hikes altogether after comments by Raphael Bostic, president of the Federal Reserve Bank of Atlanta, had seemed to suggest as much.

But after Friday’s inflation report showed no sign of the easing that had been expected, most analysts now foresee another half-point hike in September. And economists at Goldman Sachs say they expect what would be a fifth half-point hike in November.

Last month, Powell laid down something of a marker when he said Fed officials would keep raising rates until they see “clear and convincing evidence that inflation is coming down.” At a news conference Wednesday, he may clarify what that evidence would be.

Inflation has now seeped into nearly every corner of the economy, with prices jumping in May for everything from rents to airline tickets to used cars to clothing to medical services.

Spiking oil prices, stemming from Russia’s invasion of Ukraine, have sent the national average for a gallon of gas above $5, according to AAA. Those high prices are weakening the ability of consumers – who drive most of the economy’s growth – to spend freely. Energy costs also pose a problem for the Fed because it can do little to mitigate such supply shocks yet can’t dismiss their impact.

Another concern for the Fed emerged Friday, when the University of Michigan’s monthly survey of consumer sentiment showed that Americans’ expectations for future inflation are rising. That is an ominous sign, because expectations can become self-fulfilling: If people expect higher inflation in the future, they often change their behavior in ways that increase prices. For example, they may accelerate large purchases before they become more expensive. Doing so can intensify demand and further fuel inflation.

Powell has often pointed to longer-term inflation expectations as “well-anchored,” because consumer surveys and financial market gauges showed that people and investors expected inflation to move back down toward the Fed’s target of 2% over the next five years. Low inflation expectations make it easier for policymakers to control price spikes.

But the Michigan survey found that Americans expect inflation to be 3.3% five years from now, the highest level since 2008 and up from a projection of 3% in May.

“The rise in long-run inflation expectations is a game changer” for the Fed, Thomas Simons and Aneta Markowska, economists at investment bank Jefferies, wrote in an email. As a result, the Jefferies economists now predict that the Fed will raise its rate by three-quarters of a point on Wednesday. Economists at Barclays are also forecasting a hike of that size.

On Wednesday, the Fed will also update its quarterly forecasts. Those projections are expected to show higher estimates for inflation and interest rates this year and slower growth. Economists also expect the Fed to forecast a somewhat higher unemployment rate, which would be its first acknowledgement that higher rates may affect the job market.

In March, Fed officials projected that their benchmark rate would be between 1.75% and 2% by year’s end. That level is now expected to be reached in July.

Krishna Guha, an analyst at investment bank Evercore ISI, thinks the Fed’s rate will be at 2.75% to 3% by the end of this year. At that level, rates will be above what the Fed calls “neutral,” a level that’s believed to neither restrain nor stimulate growth. Powell has acknowledged that it isn’t clear exactly where neutral is, but the Fed has generally assumed it to be around 2.5%.

This week’s meeting will also be the first for two of President Joe Biden’s new picks to serve on the Fed’s board, Lisa Cook and Philip Jefferson. Cook is the first Black woman to serve on the Fed’s Board of Governors and Jefferson only the fourth Black man. Both are economists and have pledged in Senate testimony to support the Fed’s efforts to rein in inflation.

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

© Copyright 2022, Winston-Salem Journal, Winston-Salem, NC


Smart Appliances Are Even Smarter than You Think

In future smart homes – they already exist – the fridge may order groceries, the dryer could call a repair man, and everything can be controlled from a single location.

NEW YORK – If you thought your air fryer was at the height of high-tech gadgetry, wait ‘til you see what’s cooking in “smart appliances” in the kitchen – and in the laundry room, too.

From app-controlled washers and dryers to voice-enabled ranges and A.I. (artificial intelligence)-powered fridges with cameras and touchscreens, many of today’s Wi-Fi appliances benefit from high-tech amenities designed to make home life easier for you and your family.

While the exact features may vary between brands and models – and some companies call them “connected appliances” as opposed to “smart appliances” – here’s a look at how these modern devices add convenience, peace of mind and can help you get more done.

Remote control: You can easily control your smart appliances, even if you’re nowhere near them, by tapping an app on your phone or tablet.

Or, if you are at home, you can ask Alexa, Siri or Google Assistant to initiate a job via a smart speaker.

With Samsung’s SmartThings platform, as an example, you can prep meals and send instructions to a compatible oven; remotely start, stop or delay dishwasher cycles; or keep your dryer tumbling for another, say, 10 minutes.

Real-time notifications: Not only can you remotely talk to your appliances, but they can communicate with you, too. That is, because smart appliances are connected to your Wi-Fi, they can send notifications to your phone, tablet, smartwatch or other device.

With LG’s ThinQ technology, for instance, which powers several of its home appliances, you can receive an alert if, say, a child left the fridge door open or if you forgot to turn the oven off.

Know that moldy smell that develops when wet clothes are left in the washer for too long? Your washing machine can prevent it by sending a note to your phone or smartwatch that a cycle is finished.

Also note, you might opt to see appliance notifications on another compatible ThinQ device – like watching a show on an LG OLED TV and seeing a pop-up window that lets you know your food is ready in the kitchen.

Smart updates, diagnoses: Smart appliances can receive software updates that optimize performance and add new features. If there’s a problem with a dishwasher, for example, it can even notify the manufacturer about the specific issue, so the repair technician only needs to arrive at your home once, with the correct part in hand, instead of you having to pay for multiple visits.

Some appliances can even coordinate a service call on your behalf.

Or maybe you don’t need a visit from a technician at all. Several Whirlpool appliances are “smart,” including support for a companion app that, among other features – like remotely controlling appliances and receiving notifications – also pushes out helpful alerts that let you know if there’s an issue that may affect performance, and then follow step-by-step instructions and select how-to videos to help guide you through quick fixes.

Energy efficiency: Smart appliances can also help you consume less energy, such as a TV that turns off when it knows no one is watching it.

Or you can use the scheduling feature to run these machines, like a dryer, when energy costs are less (such as later at night).

And with the above example, your refrigerator can notify you if the door was left open or if the oven is still turned on after you’ve taken your food out (which could be a fire hazard, too).

Handy extras: Not only do some refrigerators have a giant touch screen that lets you manage your family’s calendar (or stream music while cooking), but a few have a camera inside that lets you see (on your smartphone) what you may be out of while you’re at the supermarket.

Some can automatically log what you place inside and notify you if something is about to expire.

A few smart ovens also let you scan the barcode on frozen food (using your phone or a sensor on the appliance itself) and automatically set the correct temp and time to cook the meal.

Strong signals: For your smart appliances to work smoothly – and all your other devices connected to your network, like laptops and video game systems – make sure you’ve got a fast and reliable wireless router.

Wi-Fi 6 is the latest standard. Place the router on your main floor, as close to the center of the home as possible and have it elevated for optimum performance.

Those in larger homes may consider a “mesh” system, which includes multiple plug-in pods (access points) to place around the home to help extend the wireless range.

Copyright 2022, USATODAY.com, USA TODAY


RE Investors See Opportunity in a Downturn

Under the “buy low, sell high” theory of investing, some larger single-family landlords see economic downturns as a chance to increase their inventory.

NEW YORK – Single-family landlords are watching the decelerating U.S. housing market with an eye out for buying opportunities, wagering that reduced consumer demand will prompt discounts from builders.

American Homes 4 Rent CEO David Singelyn said his company is taking calls daily from potential sellers that include national builders. They’re offering concessions on deals even as they refuse to lower prices – although he anticipates reductions in the future.

Singelyn said that landlords are “sitting on a significant amount of investable cash and funds, and we can take advantage of those opportunities.”

The odds for high profits on new rental homes are improving, especially since a rising number of would-be buyers are getting priced out of the market or losing their ability to save for a down payment as their monthly rent keeps going up.

For builders, slowing price increases and a growing inventory may benefit prospective buyers over the long term, but they’re raising builders’ risk. Dealing with landlords who plan to rent single-family homes can help builders keep work crews busy and add housing inventory if consumer demand falls.

Source: Bloomberg (06/13/22) Clark, Patrick

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


An ARM Saves a Typical Buyer $15K Over 5 Years

In exchange for that savings, however, buyers accept risks. Adjustable rates reset at a future point, and interest rates could be uncomfortably higher when they do.

SEATTLE – When the average 30-year, fixed mortgage rate hit record lows over the past few years, adjustable-rate mortgages (ARMs) seemed to have completely disappeared. But as rates rise, more buyers are considering ARMs as a way to offset higher costs.

According to an analysis by Redfin, the typical homebuyer could save an estimated $15,582 over five years – roughly $260 per month – by taking out an adjustable-rate mortgage rather than a 30-year-fixed-rate mortgage (FRM).

In savings terms, it’s the largest amount of money since at least 2015.

For the analysis, “typical” is based on estimated monthly mortgage payments for a median-asking-price home during the four weeks ending May 12, comparing the 30-year fixed mortgages and 5/1 adjustable-rate mortgages (ARM).

A 5/1 ARM offers a fixed interest rate for five years, and then a varying rate that adjusts once per year, usually for a 30-year loan. However, ARMs vary. A 7/1 offers a fixed rate for seven years, though the initial guaranteed rate is likely higher than the one for a 5/1 ARM.

The typical monthly payment for buyers who took out a 5/1 ARM was an estimated $2,164 during the four weeks ending May 12 – roughly 11% ($260) lower per month than the $2,423 estimated payment for buyers who took out a 30-year FRM.

The week of May 12, the average interest rate on a 5/1 ARM was 3.98% compared to a 5.3% average rate on a 30-year FRM. It’s a spread of 1.32 percentage points, or just shy of the 1.36 percentage-point spread during the week ending April 21, which was the largest since 2014.

About one in 10 (10.8%) of loan applications as of May 6 were for an ARM, up 3.1% from the start of the year and the highest percentage since 2008, when a lack of ARM regulation helped contribute to the housing crash.

In the early 2000s, scores of borrowers were drawn to ARMs offering low initial “teaser rates” and sometimes a 0% down payment. But when those ARMs later reset to a higher interest rate, many of those borrowers could no longer afford their monthly payment. Today’s ARMs are generally safer, in part because federal regulations grew tougher following the Great Recession, and lenders today learned a lesson from those mistakes.

Still, ARMs come with a big risk: No one can predict where interest rates will be five years in the future. If they’re significantly higher, it still might be harder for borrowers to cover their monthly mortgage. For certain types of ARMs, borrowers may even face fees or penalties if they refinance or pay off their loan early.

“Adjustable-rate mortgages can work really well for homebuyers who plan to stay in their home for less than 5 to 10 years and have the means to cover higher payments when the loan resets,” says Arnell Brady, a senior loan officer Bay Equity Home Loans.

© 2022 Florida Realtors®


Client Communication: Start with Video, End with Email

In the beginning, phone and video calls build relationships – but once transactions get serious, email creates a searchable archive of the process.

NEW YORK – Real estate professionals agree: Email is essential for integrating clients into their workflow and reducing the chance they will miss important messages.

“I still love email as a generally easier trail,” says Engel & Völkers Americas broker Nicole Beauchamp. “Some of the other platforms are harder to search and archive, and sometimes there are just too many possible inputs – it can be very frustrating trying to track down which platform a conversation took place in.”

Nexthome Connect Realty agent Annett T. Block says she complements emails by using social media interactions, phone calls or even video chats via Zoom.

“In the prospecting phase, I use video as a communication tool to stay in front of the prospect as I have most of the time no other way to communicate with them,” she says. “Communication starts if they comment on social media where I will comment back and then communicate via messenger to move them into the next phase.

“During the next phase I have some kind of contact information that could include email, messenger, phone that allows me to text, etc. But during the transaction stage, I use email very heavily to have a track record required in real estate.”

An easy way for agents to reduce their writing time and stay focused is to create email templates, says L&K Real Estate agent Michael Pitcairn. Pitcairn suggests using email labels and filtering rules to monitor specific leads, listings and clients.

Source: Inman (06/10/22) McPherson, Marian

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


Beware of Summer Rental Scams

Criminals don’t just post fake home sales or apartment rentals online. They also advertise fake summer rentals. Take safety precautions before making a deposit.

NEW YORK – Scammers don’t take the summer off, says New York Attorney General Letitia James in a release. Vacation fraud happens every year, but there are ways to protect yourself from getting burned.

Steps to avoid vacation rental fraud

  • Verify the host. Make sure the renter or host has a valid address and phone number.
  • Confirm the listing has reviews and read them. Be wary if listings on websites like Airbnb or VRBO don’t have any reviews listed. Also, when reading reviews, look for red flags. Multiple reviews that seem to repeat the same phrases could be a sign the reviews are fake.
  • Check the photos. Make sure they haven’t been stolen from another website. Use a reverse image internet search of the photos to find out if they also appear on another website.
  • Communicate only through the listing site before booking. One way scammers try to trick consumers is posting a listing on a legitimate site like Airbnb or VRBO. Once a renter expresses interest, however, the rental owner than requires them to communicate directly outside the website or app to book the property. James also suggests that potential renters should never share their email address or phone number with a host before a booking has been accepted.
  • Use a credit card or debit card. Verified payment sources, such as a major debit or credit card, can be traced in case something goes wrong. One additional advantage of a credit card is that it offers some protections under the Fair Credit Billing Act, which allows users to dispute unauthorized charges.
  • Make payments through the listing site. If using a known legitimate site such as Airbnb or VRBO, make all payments through the site. They may be able to refund you if you’re later defrauded.
  • Never make wire payments or cash payments. On the flipside, never make a payment where the money can’t be traced, such as a wire transfer or money transfer service like Western Union, Money Gram, Zelle, CashApp or Venmo.
  • Rent security deposits. Generally, you cannot be required to pay more than one month’s security deposit. The owner can apply the security deposit to cover any damages caused by you or for unpaid rent, but otherwise must return the deposit to you at the conclusion of the rental.
  • Know your rights. It’s illegal for a host to deny a vacation rental based on race, religion, national origin, sex, sexual orientation, gender identity, military status, disability or marital status.

© 2022 Florida Realtors®


Floating Mansion Doesn’t Owe Property Taxes

A mega-houseboat docked on Star Island isn’t a “structure,” according to the Miami-Dade property appraiser, and the county won’t demand property taxes.

MIAMI – Miami-Dade County has backed off its fight to collect property taxes on a famous Miami Beach houseboat. The property appraiser’s office on Thursday agreed to drop its effort to declare the Arkup #1, a gleaming rectangle-shaped houseboat anchored off Miami Beach’s exclusive Star Island, a “floating structure.” That means the boat’s owner won’t have to shell out a tax bill of nearly $120,000.

The decision was made five months after Macknight International, owned by British-born businessman Jonathan Brown, sued the county over the tax bill, which lawyers said violated the Florida Constitution’s ban on property taxes on vessels.

“The County’s decision to withdraw the illegal tax is a major victory not only for our client – but for all boat owners in Florida. Miami remains a boater’s paradise free of unconstitutional taxes,” Macknight’s attorneys, Ivan Abrams and Karen Lapekas, said in a statement. “We are grateful our client had the courage to speak truth to power in court and thus may have prevented further such taxation against other yacht owners.”

The Arkup, built by a company with the same name, has been touted as a state-of-the-art eco-friendly houseboat that could serve as a model for more modest neighborhoods on the water and help ease the world’s housing crunch. The gleaming rectangle-shaped houseboat anchored off Brown’s property features a luxury kitchen, spacious living room, two upstairs bedrooms, gym space and even a patio overlooking the sparkling waters of Biscayne Bay.

The Arkup earned write ups in the Miami Herald, Bloomberg and Forbes – and even appeared on Netflix’s “The World’s Most Amazing Vacation Rentals.”

Macknight long insisted that the Arkup was a boat, pointing out that is registered with the U.S. Coast Guard and can travel the seas at a five knots per hour. The boat’s owner even hosted three representatives from the Property Appraiser’s Office for a cruise on Biscayne Bay, to show its nautical capabilities.

The Arkup “has a means of self-locomotion and is equipped with the necessary equipment for boating, such as the required lighting, horns, radios, directional aids, and safety features,” according to a settlement agreement.

So what turned the tide? During pre-trial depositions, the three Property Appraiser reps basically agreed the Arkup was a boat.

Under the agreement, ratified Friday by Miami-Dade Circuit Judge Carlos Guzman, the boat will be taken off the tax rolls and each side will have to “bear its own costs and attorney’s fees.”

© 2022 Miami Herald. Distributed by Tribune Content Agency, LLC.


Brokers Adapt to Ever-Changing Market

WASHINGTON – If the pandemic had any effect in the real estate world, it made real estate professionals more aware than ever of how quickly business can change. “Adaptability” isn’t merely a buzzword for the last two years of doing business; it’s a necessity going forward as well.

The RISMedia Power Broker Forum, “Embracing Change for the Win,” examined how brokers can use the past two years and beyond to define how they move forward in a market that continues to change rapidly.

Brokers and their companies face a new world both in the market and in their offices in ways that have never been seen. Many brokerages saw record-breaking numbers in 2021 but, as Todd Hetherington, CEO and founder of Century 21 New Millennium, which operates in Delaware, Maryland and Virginia, stated, 2022 is already off to a very different start.

“I’m hearing from my colleagues that for many, the start of 2022 was the worst first quarter in the past 10 years,” Hetherington said during the Realtors® Legislative Meetings in Washington, D.C.

Amid rising interest rates, the war in Ukraine, inflation, a crisis of inventory and the new hybrid working world, it’s more important than ever for brokers to hone and articulate a value proposition in their offices and out in the field. That includes getting down to the granular level when assessing finance and processes, and maximizing the use of their affiliated services.

Adapting to a hybrid world

A hybrid work culture is here to stay. The pandemic has highlighted the many tools that make working from home successful, and a return to the office isn’t necessarily right for all workers. This includes real estate agents.

Kymber Menkiti, president of Keller Williams Capital Properties in Washington, D.C., said that rather than requiring everyone to return to work in the office, her brokerage is working diligently to outfit its offices for this new hybrid world. It’s adding technology and resources so that whether agents are in person or online, they have a good experience interacting and connecting for educational sessions, check-ins and meetings.

The transition into a hybrid world, though, isn’t always as easy for older brokers and managers, some of whom have had trouble adapting, said Christina Pappas, vice president of The Keyes Company in South Florida and president of Florida Realtors®.

“The skill set needed for the hybrid world is very different,” Pappas said. “Now we’re having to teach brokers and managers how to reengage the agents who aren’t here.”

It’s time to grow those skill sets brokers need to ensure agents are engaged because, in many cases, it’s harder than ever to get them into the office, Pappas said. Securing the tools needed to make the hybrid office more accessible and providing training is necessary.

Offices refresh post-pandemic

Both Heatherington and Bulman have made extensive renovations to their brick-and-mortar offices, and now they’re both seeing a surge in office attendance. More agents and staff are coming into the workplace than before the pandemic, both say.

Bulman said that the process took some time, but the process has accelerated in recent months. After the brokerage’s original building caught fire and was a total loss during the pandemic, Bulman said the company decided to strategically rebuild, bringing all affiliate services under one roof, making sure the building was cutting-edge technologically, and structuring the rebuild in a way that included open space, green space, and a café.

“We built a building that people would want to be in,” she said. “In the last five weeks since we opened the building, there is a vibrancy and feeling that we just didn’t have when we weren’t seeing each other in person.”

Heatherington noted that in his Alexandria office, where attendance was low long before the pandemic, 150 people showed up for the grand reopening.

Articulating value proposition

In a market where agents can write five or more unsuccessful offers for their clients, a new layer of difficulty is added to agent retention. As a broker who runs a smaller, independent company in a market where large firms are just getting bigger, Bulman said her brokerage used the pandemic as a time to redefine its value proposition.

“It was time to dust off and reenergize the brand,” she said. “We had to clarify our image and message to the world.”

It’s just as important to circulate the message as it is to define it, she said. Brokers need to get in front of their agents and make sure the agents understand the value of being under their name.

The value proposition looks different for every brokerage, said Pappas. Many variables, including the brokerage’s size, name, location, and service offerings, make a difference.

“The goal isn’t to follow what someone else is saying,” she said. “You have to know what makes sense for you.”

Once a brokerage defines its value proposition, it has to be clear on how to use that information to retain. Brokers should bring agents into the fold and reiterate those benefits over and over as time goes on.

Maximizing the numbers

Now is the time to dig into the numbers, Menkiti said. Agents aren’t going to have the same understanding of the numbers as brokers, and they’ll be mostly focused on their own numbers. Putting that into context can help agents plan accordingly and adjust where they need to.

Because the industry is changing so rapidly, Menkiti continued, it’s not enough to only communicate quarterly or just share annual figures.

“Track the numbers and communicate them to the agents. Track the lead indicators every month so you know when and where to double down.”

Processes need to make sense and be easily accessible, she said. Agents need to understand what’s available to them within the office and how to use those things. When it comes to affiliate services, she said, it’s important to place the agent at the center of the transaction and let them know that everything they need to complete the transaction is at their disposal.

“We invest our agents into our [affiliate] services so that they have a stake in that side of the business.” This, she said, gives them a sense of ownership and encourages them to fully use the services available.

Bulman said that if a brokerage is not investing in affiliate services, now is the time.

“These are not ‘nice to haves’ at this point. They are necessary,” she said. “We must be branching out into affiliated services, and we have to impress upon our agents the value these services add.”

At Heatherington’s brokerage, investing in its “tech stack” and explaining to agents the time and money that tech stack saves is important.

“The tech stack wasn’t in our P&L before, but it is there now. It’s been well adopted,” he said, adding that about 25% of his agents use it.

All of the brokers agreed that adoption is another stumbling block that should be addressed at this time.

Panel participants suggested that a 20% to 25% adoption rate of affiliate services, technology, education and events was a typical number. Now, said Pappas, the focus should be on how to encourage the other 75% of the agents at the brokerage to use them.

All agents and brokers are busy, Heatherington said, but in a market where changes are coming at record speed, finding the time to plan for the future and invest in further education is paramount to the success at the brokerage and the agent level.

Source: The National Association of Realtors® (NAR)

© 2022 Florida Realtors®


New Laws End Roofer-Advertising Court Fight

A 2021 law limited roofer advertising, but a court injunction blocked enforcement during the trial. Due to just-passed laws, both sides agree the issue is now moot.

TALLAHASSEE, Fla. – A federal judge dismissed a First Amendment fight about part of a 2021 property-insurance law aimed at curbing advertising by roofers after the Florida Legislature revamped the law last month.

Chief U.S. District Judge Mark Walker dismissed the case Friday after attorneys for the plaintiffs and the state said it was moot.

In July, Walker issued a preliminary injunction that blocked the state from enforcing the law, agreeing with Gale Force Roofing & Restoration LLC that the measure violated First Amendment rights by penalizing protected speech. While the preliminary injunction put the law on hold, the underlying court case continued.

Gov. Ron DeSantis, however, called a special legislative session in May to address widespread problems in the state’s property-insurance system. As part of that session, lawmakers changed advertising restrictions on roofing contractors, “resolving the complaints” of the plaintiffs and intervenors in the case, according to a filing Friday by attorneys for both sides.

“In sum, the declaratory and injunctive relief sought in the complaints is now ‘inappropriate’ and the case is moot,” the filing said.

Roof-damage claims have been a major issue as property insurers have dropped policies and dramatically raised rates during the past two years. Insurers blame questionable, if not fraudulent, roof-damage claims for contributing to financial losses. They contend roofers have improperly advertised and solicited business from homeowners.

The 2021 law sought to prevent contractors from soliciting homeowners to file insurance claims through a “prohibited advertisement.” The law defined a prohibited advertisement as “any written or electronic communication by a contractor that encourages, instructs or induces a consumer to contact a contractor or public adjuster for the purpose of making an insurance claim for roof damage. The term includes, but is not limited to, door hangers, business cards, magnets, flyers, pamphlets and emails.”

But in issuing the preliminary injunction, Walker wrote that the law violated protected speech.

“It is also clear that the threatened injuries to plaintiff from banning plaintiff’s truthful commercial speech outweighs the state’s interest in preventing fraud, protecting consumers from exploitation and stabilizing the insurance market,” Walker wrote.

During last month’s special session, lawmakers made a series of roofing-related changes, including scaling back the definition of a “prohibited advertisement.” Under the change, the law requires advertisements to include disclaimers about issues, such as informing consumers that they’re required to pay any deductibles and that it is fraudulent to file insurance claims that include false or misleading information. Advertisements that do not include the disclaimers would be considered prohibited.

It remains unclear, however, whether the revamped prohibition will face a challenge.

The Restoration Association of Florida and Apex Roofing and Reconstruction LLC filed a separate federal lawsuit last year that raised First Amendment challenges to the 2021 law. That case remains pending, and U.S. District Judge Allen Winsor last week gave the plaintiffs until June 27 to file an amended complaint that considers the new law.

Along with revamping the definition of a prohibited advertisement, the new law also included changes such as allowing insurers to collect 2% deductibles from policyholders for roof-damage repairs.

Source: News Service of Florida