As a real estate practitioner, does it matter whether you put your money into a bank or a credit union or whether you take out a loan with one but not the other? In the third of our monthly video series called Your Money Matters, Victoria Gillespie of REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union, says it does matter, because credit unions are cooperatives owned by their account-holders, so profits get channeled back to account holders in the form of better terms, higher yields, and lower fees. Gillespie is REALTORS® FCU’s director of Business Development.
To be sure, the only way to know what’s best for you is to shop around. You want to see what’s available in terms of yield on your savings or other accounts, the attractiveness of the loan terms, and so forth. Gillespie thinks credit unions in general and REALTORS® FCU in particular will compare favorably in any shopping test. She points to a savings account yield at her credit union that was five times higher than at national banks when she shopped rates and terms at the end of last year.
But REALTORS® FCU has a few other advantages, she thinks, and that includes easy accessibility of your funds. Through partnerships with other financial institutions, the company offers 33,000 fee-free ATMs and a shared-branch network with more than 5,000 offices. It also tries to be user-friendly by maintaining a 24-7 customer support line, something it makes a point to do because of the unpredictable hours real estate agents work.
Again, you can only know what’s best for you by shopping around. As a start, spend a few minutes with the third in our Your Money Matters financial planning series and hear what Gillespie has to say about REALTORS® FCU. Next month we’ll be looking ideas for approaching your 2014 financial planning.
LAS VEGAS — It was all about the “Internet of Things” at the 2014 International Consumer Electronic Show, which wrapped up last week in Las Vegas. More than 3,000 exhibitors showed off the latest gadgets and offered a peek into technology’s future – everything from curved-screen technology to driverless cars, smarter light bulbs, and wearable tech.
One theme that quickly emerged from this year: Your smartphone is going to increasingly become your remote-control to managing your life and your home.
Smartphones are getting smarter, allowing you to take control over everything from your home’s lighting, cars, and even allowing you to send text messages to your refrigerator to see what groceries you need.
This year’s show offered plenty of applications for your real estate business. Here’s a rundown from CES, and some of our picks for emerging technology trends.
Favorite technology debut: Curved-screens Continue reading »
NAR has been working with federal regulators since Congress in 2010 passed massive banking reform legislation, part of which created the qualified mortgage and qualified residential mortgage rules. Today is an important day in the timeline of those rules, because today is the day the qualified mortgage (QM) rule takes effect, and NAR has told regulators it will be watching to see what impact the rules have on mortgage availability.
“I promise you that REALTORS® will be your boots on the ground,” NAR President-elect Chris Polychron told the federal government’s main QM rule-writer, Richard Cordray, earlier this week. Cordray is the director of the U.S. Consumer Financial Protection Bureau (CPB), which was created as part of the same law that created QM and the qualified residential mortgage (QRM) rules.
Under QM, lenders are required to make sure borrowers have a reasonable ability to repay before they can make what’s known as a qualified mortgage. A qualified mortgage represents what CFPB views as a safe mortgage, and thus a mortgage that is expected to cost borrowers less, because the risk is less to lenders. How CFPB defines the “ability to repay” includes a maximum debt-to-income ratio of 43 percent. Also, while Fannie Mae and Freddie Mac are in conservatorship, their conforming loans are considered qualified. Also, loans by small community banks that meet certain criteria are considered qualified, as are FHA, VA and Rural Housing Service (RHS) loans.
In short, the universe of qualified mortgages isn’t particularly large right now, because Fannie, Freddie, FHA, and other federally backed loans make up the vast majority of loans originated today. But the qualified standard is nevertheless important because it defines what a safe mortgage is and what it will be in the future.
As of today, the QM rule is in effect. Will we see much change in mortgage underwriting practices as a result? It’s too soon to say, but lenders have been aware of the rules’ standard for some time now and have been operating with them in mind since CFPB proposed them a year ago. For that reason, lenders to an extent have already built the standards into their operations, so how much practices will change starting today is hard to know.
For the most part, NAR is okay with the QM rule. It fought hard to keep a minimum down payment requirement out of the rule, and on that score, the association won, as did the dozens of other consumer and industry groups that fought alongside it in a coalition. But NAR still has concerns over a part of the rule that limits points and fees to 3 percent for loans provided by lenders with affiliated businesses, such as title businesses. NAR continues to talk with CFPB on whether such a limit makes sense from both a fairness and a business standpoint. For its part, CFPB has said it will be monitoring the impact of that limitation along with others parts of the rule.
So, QM is now in effect. It’s time to see what the impact will be. In the 3-minute video above, CFPB Director Cordray asks NAR to help it monitor the impact of the rule and NAR President-elect Chris Polychron assured Cordray the association will. Also in the video, Cordray outlines the criteria for a qualified mortgage as set forth in the rule.
You don’t think of the changing status of marijuana in many states as having a real estate impact but it does. In the states where medical marijuana is decriminalized (and in Washington and Colorado, where it’s decriminalized even for non-medical use), landlords and their rental agents have a disclosure issue on their hands. The landlord has to decide whether or not the rental property accommodates marijuana use, and if so, the rental agent has to be sure to adequately disclose the policy to prospective tenants. That’s just one of the issues stemming from the changing legality of this controlled substance.
The marijuana issue is one of several trending legal issues you’ll be hearing about more in the months ahead. Fracking, which involves extracting gas from shale rock, raises contractual issues: do the rights to the gas leases convey with the property in a sale? The answer is, it depends on what you negotiate. So, agents need to be up on the contractual issues that fracking raise and also has to be able to manage buyers’ and sellers’ expectations about who gets the rights to the gas leases.
NAR Legal Affairs identifies five trending residential real estate legal issues for 2014 and discuss them in this 9-minute video. The five issues are medical marijuana, fracking, pocket listings, IDX copyright violations, and broker liability for actions of a salesperson. Each issue has its own twist. The goal of the video is to make you aware of these twists so you can have a better idea of what to do if you find yourself dealing with one of the issues this year.
Since the federal government enacted health insurance reform in 2010, NAR has put out a considerable amount of information on the law, including on the basics of signing up for insurance under the law based on a one-hour webinar REALTOR® Magazine hosted in early December.
To provide you with additional guidance, NAR President Steve Brown has taped a 10-minute walk-through on what you need to know to meet the law’s mandatory insurance requirement by March 31 unless you meet one of the law’s exceptions.
It’s a plain-languge walk-through that could answer many of the remaining questions you have on the law. Who needs to have health insurance? What do you do if you already have it? Does your existing insurance meet the law’s requirements? How can you see if you qualify for premium credits, which help reduce the cost of insurance for some households? What’s the difference between a private and a public exchange, and does the difference matter to you?
If you remain unsure what your next step should be now that the clock is ticking toward the March 31 deadline, view the 10-minute video. The goal is is to give you a good idea of what you need to do, based on your current insurance situation The video also directs you to resources for additional help.
Let’s face it; the days between Christmas and New Years Day are a wasteland of rest, relaxation, and “Breaking Bad” binge watching. I know you deserve it. You got last minutes showings, closings, and paper shuffling buttoned up all while getting holiday shopping and family cat herding done. But those couple days can be productive as well, with only a couple hours within each of those days being put to good use!
December 26: Organize your clients. Shuffle your Class A, B and C peeps. Add to them your successfully-closed clients and those who were advocates for your business in the past year. For me, my “Class A” peeps were my top referrers of business and freshly-closed clients from the last year. “Class B” were those who weren’t loud raving fans, usually the families and busy folks who had their hands full living life. “Class C” were those nearing the 4- to 5-year home-cycle, plus warm leads from the previous year – all potential business for the coming year who may not know it yet.
December 27: Analyze your marketing. What worked this last year? What didn’t? What was the best bang for the buck that reached the most people in my sphere with the least amount of time, money, and energy? Cancel everything that didn’t work. Categorize your aforementioned peeps into the relevant lists in your marketing systems; at the very least into email lists.
December 28: Costco run. Pick up a couple cases of cheap champagne and bubbling cider. Full-size or cutesy individual size, whatever your budget allows. It doesn’t even need to be bubbly, pick up something that says “you” or that exemplifies your top clients. Post-holiday sales are awesome for this.
December 29 and 30: Say “Thank You” in person. Remember those “Class A” clients I mentioned? Continue reading »
We spend a lot of time at the end of the year thinking about how we can make the next year so much better than this one. A lot of us gloss over what did make this year a success, focusing more on what fell short and what we need to improve on in the next 12 months. Why don’t we spend more time congratulating ourselves for what we did well this year and what made it a success? That’s exactly what we’d like to do.
We turned to our Facebook page recently and asked our loyal readers what their greatest accomplishments were in 2013. It turns out that there are a lot of things real estate professionals did this year that deserve congratulations! Below are some of the biggest accomplishments this year that our readers told us about. Take a moment to pat yourselves on the back for a job well done in 2013, and if you have an accomplishment you’d like to gloat about, tell us in the comments section of this post. Continue reading »
It’s not what you want to hear, but Victoria Gillespie of REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union, recommends you put away half of each commission check for taxes and a short-term reserve account.
In the second video in our series on financial planning for real estate professionals, called Your Money Matters, Gillespie, the credit union’s director of business development and a former banker and real estate practitioner, says smart money managers set aside 30 percent of each commission check for taxes and 20 percent for reserves, with the goal of creating a six-month reserve fund as soon as possible.
That means if you earn $5,000 in commissions on a home sale, you should think of it as $2,500 in commission income. “I know that sounds like a dramatic number, but I think it’s important practitioners see it that way,” says Gillespie in the video.
Thr fact is, you’re going to pay about 30 percent of your income each year in taxes, and it’s a lot easier to pay that by setting aside money each time you get paid so, come tax time, you have the money available. And on the reserve fund, that’s so you have a comfortable cushion of income for those months when you close fewer transactions than you need to pay your bills.
REALTOR® Magazine started its video series a short while ago to help bring you some practical tips from your credit union, whose professionals are familiar with money management best practices.
Although setting aside half of your commission check is easier in theory than in practice, the credit union has some accounts you can set up that take some of the sting out of it, starting with its basic savings account. There’s no minimum balance and the interest you get on your money, although modest in today’s ultra-low interest rate environment, is nevertheless quite a bit higher than what you would get in an equivalent account at a bank. “We shop what banks are paying and the interest on our regular checking is five times higher than other institutions,” she says.
Once you have a six-month reserve built up, you can consider higher-yielding savings products, including certificates of deposit and money market funds, which require you to lock up your money for defined terms.
NAR and many lawmakers in Congress are pushing for a time-out in the federal government’s efforts to eliminate flood insurance subsidies over time and phase in premium rates that reflect properties’ actuarial risk of flooding. NAR’s Call for Action this week to its members is part of that effort.
But it’s not just hikes in insurance premiums that’s fueling this push by NAR and others to slow things down; it’s the sometimes wildly divergent and uncertain way insurers are assessing new premium rates. As NAR Past President Moe Veissi said in eye-opening testimony before a House subcommittee yesterday, property owners are sometimes getting half a dozen different premium quotes for their property, sometimes even from agents in the same company.
“The law has proven complicated and difficult to implement,” Veissi said in his testimony.
The former association president shared reports from NAR members across the country of some property owners seeing big increases in their flood insurance costs even though their property has never flooded and in some cases their community has never flooded or has instituted community-wide flood mitigation efforts.
The confusion in the market is having dire consequences on the ground. “We’re seeing for-sale signs today that say ‘No insurance impact on this property,’” he said. “That tells us very quickly that folks are making determinations at the point of impact on property that they would normally have bought.”
He also shared findings from a Rand study that home values are declining by $10,000 for every $500 increase in premiums.
Bottom line, there was broad acknowledgement among lawmakers and the witnesses at the hearing table that the flood insurance program must move to a premium structure that reflects the actuarial risk of flooding. But at the same time, a lot needs to be done to ensure that the needed change happens in an appropriate way. And that’s what the NAR-backed, bi-partisan legislation that’s under consideration in Congress would do.
The legislation is called the “Homeowner Flood Insurance Affordability Act,” H.R. 3370 in the House and S. 1610 in the Senate, and It would pause some program changes while the federal government gets a handle on how the new rates are to be set and it looks at the affordability impact of the new premium structure. Importantly, it would also help property owners take action if they feel their premium changes aren’t accurate.
You can get more info on the Call for Action at the REALTOR® Action Center.