Should I use a REALTOR for New Construction?

Many buyers wonder if it is a good idea to hire a REALTOR when purchasing new construction. Some buyers believe that they will get a better deal without an agent (saving the 3% commission the agent would be paid and using it as a discount on the price of the home). Builders want strong relationships with agents. By offering discounts or incentives to the buyers if they don't use an agent, the builder hurt their most important referral source - agents! Therefore, with large builders it is highly unlikely they will offer any incentives for not using agents. Many times they will encourage buyers to hire a buyer's agent. Why you ask? Well, the builder's sales representative works for the builder and they have the builder's best interest at heart, not the buyer's. But they want to have a smooth transaction and good builders know that the best way to ensure a smooth transaction is for the buyer to feel like their best interest is being taken into consideration. The only way to truly provide that security is for the buyer to have full representation from their own REALTOR.

I have had buyers call me after finding a new construction home they want to purchase and tell me, "the sales representative told me to call you so that I can have full representation, can you help me in the negotiations to purchase this home". Immediately in this situation some buyers wonder "does this agent deserve to get paid, I mean they didn't find the house or show any homes to the buyer". Actually, the hardest part of an agent's job is from the point you enter into contract to the close of the sale and coordinating everything in between.

A good agent is going to do the following to assure the buying process goes smoothly:

They are going to negotiate the best price for the home. As agents we work with new construction quite a bit and have a sense of how much "room" the builder has on the price they are offering. A buyer, off the street, can try to negotiate, but will have a more difficult time without the leverage of knowing what that particular builder has done in the past.

A good agent will encourage a new construction buyer to get an inspection on the home and even multiple inspections, depending on the stage of the home being built. Builders do get their own inspections done throughout the building process, but it is very important that the buyer have their own inspections done as well. There have been cases where our buyers have hired an inspector and the inspector has found very little to write-up on their report. This is ideal and gives the buyer the added comfort of knowing their house is sound. In the same regard, many times the inspectors do find items that are code or safety issues, that the builder's inspector did not find. The builder is typically more than willing to have the items fixed prior to close.

Another job the agent has is to help you select a lender. My team encourages our buyers to talk with at least two different lenders and get Good Faith Estimates (GFE's) from each. The Good Faith Estimate will break down the lenders fees and will show the borrower/buyer what to expect in the way of monthly mortgage cost and closing fees. It is easy to be deceived when comparing GFE's since lenders will use different numbers when estimating insurance, taxes and closing dates and so it becomes imperative that your agent takes a look at the GFE's and guides you in deciphering which lender is actually offering the best deal.

Finally, our job as our buyer's agent is to coordinate all parties: the builder, the title company, the lender, the inspector and you, as the buyer, to assure that home closes on time and that any issues that arise are addressed and taken care of. It is a big job and one that, if taken off the shoulders of a buyer that is not use to doing this job on a daily basis, makes their life a lot less stressful.

Building a home is a stressful process and by hiring a good agent that has worked with several new construction builders you will find that even if the builder does offer a discount for not using an agent it will be well worth your money to have full representation.

How to Save on Your Heating Bills

Cool weather (which can be a relative term to us here in Houston) is upon us and we would all do well to know how to cut back on heating expenses this year! Depending on where you live, fall and winter mark the expensive home-heating season. It is important for is to make the most of our energy! Here are some recommendations you can use to save some money this season. Just follow these simple guidelines from the Department of Energy and enjoy lower heating bills.

Tip #1 Set your thermostat as low as is comfortable in the winter. For each degree you raise your thermostat setting, your fuel bill climbs 3 percent. So dress accordingly. Consider slipping into a sweater before you crank up the temperature.

Tip #2 Check the temperature setting of your water heater. In very few circumstances should it be set at 120 degrees or higher. Also, check the location of the water heater. If it is stored in a cold space, such as the garage or basement, purchase an insulation blanket and wrap it around the heater. This step will help reduce heat loss and save you money.

Why Sell Now, During the Holidays?

Every year it is the same story around the holidays in the real estate market. Sellers become increasingly nervous that as the holidays approach, the less and less activity their property is going to receive and they talk themselves out of thinking a contract is "right around the corner." Also, if you don't have your house on the market yet, but have been considering putting it up for sale, often times if it is the holiday season sellers wait until the new year to get it on the market. As Realtors we know that there are advantages to having your house on the market at this time and we would like to share some of those reasons with you in hopes that it will instill confidence in your listing!

Reasons why sellers should still list their home during the Holidays:

* January is traditionally the month for employees to begin new jobs. Since transferees cannot wait until spring to buy, you need to be on the market during the Holidays to capture that market!

* Some people must buy before the end of the year for tax reasons!

* Buyers have more time to look for a home during the holidays than they do during a working week!

* Buyers are more emotional during the Holidays, so they are more likely to pay your price!

* Houses show better when decorated for the Holidays!

October Home Values See a Dip in Houston

There was an interesting article in The Houston Chronicle yesterday reporting that home values in Houston fell 2.7% in October compared to October 2007. The median home price is currently at $142,000. This comes after a 4% rise in September and small, incremental rises throughout the year. The Chronicle reported that a slowing national economy, tighter mortgage guidelines and an uncertain presidential election continued to plague the local housing market, which also saw sales fall 20 percent last month, compared to a year ago. The median price had been holding up because of a shift in the types of homes that had been selling. The number of lower-end sales dropped as sub prime credit dried up, while activity increased for more expensive homes. But in October, the only price segment that posted an increase in sales was that less than $80,000.
Despite the bad news, year-to-date home prices are still up compared to 2007. And national figures show Houston continues to fare better than many other U.S. markets, some of which have experienced price declines of as much as 40 percent, the local association said in its monthly market report. Also on Tuesday, the National Association of Realtors reported prices in the July-September quarter fell in most U.S. cities but were up slightly in Houston."Houston is the highlight in the country, but there's no way to get around the national uncertainty in the economy," said Michael Levitin, chairman of the Houston Association of Realtors. Another bright spot in the data was the number of months it would take to sell all the homes on the market at the end of October, which was about half the national average at the end of October, the association said.Residual business interruptions from Hurricane Ike also hurt the market last month, as did the generally slower time of the year for real estate sales. Realtors sold 4,202 single-family properties in October, marking the 14th consecutive monthly drop, according to the association, which tracks primarily existing homes sold through the Multiple Listing Service. In September, sales fell 30 percent as power outages and damage from the hurricane shut down real estate offices for weeks. Thousands of transactions were postponed as sellers repaired their damaged properties. All can agree that there both buyers and sellers are being very cautious at this time and what the real estate market is really lacking is confidence!

Financial Market Update!

With Veteran's Day last week making it a shortened week in the Bond Market, the financial market was still lively as they reacted to several pieces of bad economic news brought throughout the week. Bad News #1 The week started with Circuit City filing for Chapter 11 Bankruptcy, and stating that they will be closing 150 stores - all this news before the holiday season, when most retailers make a larger portion of their profits for the year. Nordstrom reported its growth rate is down 16%, where they were expecting an increase of 10%. Best Buy and Macy's, Wal-Mart and Intel also reported lower earnings. As if the headlines of the week weren't enough, Friday's Retail Sales report showed that overall retail sales fell for the fourth straight month and plunged to their worst level since record keeping began in 1992. It is looking like this may be the worst holiday season "shopping/money" wise that retailers will have seen in a long, long time. In addition, there was bad news for the automobile industry as Deutsche Bank downgraded shares of General Motors from hold to sell, giving a price target of $0. As a result, General Motors stock fell below $3 for the first time since April 13, 1943. Interestingly enough, the automaker was not even making cars at that time but producing only military equipment for WWII. Nationally, the job market reported bad news as well as Continuing Jobless Claims reached their highest level in 25 years.
Now, remember that poor economic news and a weak labor market usually cause Bonds and home loan rates to improve. This is because fewer jobs and lower confidence about keeping or finding work causes people to spend less. In turn, businesses and retailers lose pricing power, and this is a cycle that keeps inflation - the arch enemy of Bonds and home loan rates - at low levels, especially if oil remains near present reasonable prices. Bonds and Home Loan Interest Rates are stable right now, which is great at this time when the rates are really low! Now is a great time in real estate to be a buyer!
*Source MMG Weekly

How Worried Do I Need To Be About Identity Theft?

If you are still with me on this Identity Theft thread, than you are wanting to know the answer to Question #2: Consumers can prevent criminals from accessing their bank accounts by not writing down their personal identification numbers (PINs). True or false? The answer to question No. 2 is also "false." You don't want to write down your PIN, of course, but keeping it a secret won't necessarily protect your account. Monitoring all your accounts is important, but these days you want to pay particular attention to what's going on in your checking and savings accounts, because thieves increasingly target bank accounts. The bad guys have found plenty of ways to steal all-important PINs. Some set up bogus ATMs or install skimming devices or cameras on legitimate machines to record account numbers and PINs. A few may even have cracked the "holy grail" of bank-account hacking by stealing and decoding encrypted PINs from a retailer's database. Avoid unfamiliar ATMs; consider using your credit card instead of your debit card for transactions; monitor your bank transactions at least once a week and question any unfamiliar charges. If your accounts have been compromised, shut them down and open new ones. The bank may resist, but once the bad guys have access to your account, there's really no foolproof way to keep them out, except by shutting it down and starting with a new account number.
*Source:Liz Pulliam Weston, http://www.moneycentral.msn.com/

Are you ready to fight against Identity Theft?

In the last post I posted a few questions regarding identity theft. The answer to the first question is "false." While Database breaches get a lot of media coverage (245 million consumer records have been exposed in data breaches in the past 4 years according to the Privacy Rights Clearinghouse), the number one method criminals use to steal our IDs is through old school tactics, rather than higher-tech approaches.

In 2007, the following methods were found to be utilized:
33% of the incidents were due to lost or stolen wallets.
23% of victims were "shoulder surfed" while conducting a transaction (the thief watched over the victim's shoulder as the victim punched in a PIN or used a credit card).
17% were victimized by family members or other people they knew.
12% were victimized online.
7% were victimized as a result of data breaches.
That's actually good news, since there's a lot more you can do to protect the information that's under your control than the stuff that's out there in somebody else's database.

Some ideas to help protect yourself are: Program your credit card 800 numbers into your cell phone so you can quickly report lost or stolen cards. Shield the keypad with your hand anytime you type in a PIN, and palm a credit card so the numbers don't show while you're waiting in line or finishing a transaction. Keep your checks, account statements and other sensitive financial information in a locked filing cabinet. This is especially important whenever people you don't absolutely trust will be in your home, such as during parties, when you're having work done on your house or during any family gatherings that include sketchy relatives. Set up e-mail alerts in your bank and credit card accounts to inform you when large transactions have been made or when your balance reaches certain limits. Monitor your credit reports. You can access reports from each of the three major bureaus once a year at the government's free site; consider getting a credit-monitoring subscription. Consider blocking access to your credit reports if you've already been a victim of identity theft or are at high risk. Never click on a link embedded in an e-mail, even if the message looks like it legitimately came from one of your financial institutions. Open a new browser window and type in the institution's URL yourself. Cancel paper bills and statements. Monitor your accounts and pay your bills online. People who monitor their accounts online tend to catch fraud much faster.

Combating Identity Theft

Simply put, tough economic times are ripe for ID theft. Because of that, we are realizing very quickly that our job and our financial portfolio ar not the only things we need to be worrying about right now! We need to keep an eye on our identity as well. Crime tends to increase during hard economic times.

There has been a recent delining trend in identity theft cases recently, however, we may see a reversal in this trend if things continue down the road we are headed! I.E. The percentage of adult Americans victimized by ID theft was 3.58% last year, according to Javelin Strategy and Research, down from 4.25% in 2004.

Think you already know everything that's needed to protect your identity? Here is a pop quiz to see if you are ready to protect yourself against identity theft:

1. Data breaches, in which personal information such as Social Security numbers are stolen or exposed by hackers, have become the leading cause of identity theft. True or false?

2. Consumers can prevent criminals from accessing their bank accounts by not writing down their personal identification numbers (PINs). True or false?

3. What is "vishing"?

Are you comfortable with your level of Identity Theft knowledge?

The Top 10 Reasons To Buy a House!

If you are wondering if now is the time to buy, check out this website! If you are wondering how much of the information the media reports about the housing market is applicable to the Houston housing market, check out this website! If you ever wanted to know anything about the Houston housing market, check out this website! HoustonFacts.org is a great place to find out about what is really happening in our market. It is a refreshing alternative to the negative buzz we are used to hearing regarding our current real estate market. You will find encouraging statistics and helpful points such as the following:

The Top 10 Reasons To Buy a House!

10. MORE SPACE: Kids, pets, hobbies, in-laws. No explanation necessary.

9. Energy and Resource Efficiency: Today’s new homes are increasingly energy-efficient and are constructed with resource conserving materials and techniques to save you money.

8. Amenities: Gourmet kitchen, mini-spa bathroom, home theater. You want it, you got it! It’s all about you.

7. Leveraging: Make a downpayment of 10 percent or less of the value of the house. Earn returns based on the total value of the property. Plus you get to live there! What’s not to like?

6. Equity: College expenses, consumer goods, retirement. Your 401k should be so useful.

5. Interest Rates: Currently near historic lows.

4. Great Selection: Ample inventory of new and existing homes means more choices, better bargains.

3. Tax Benefits: Your kindly Uncle Sam knows homeownership benefits the nation and encourages it through deductions for mortgage interest and state and local property taxes.

2. More For Your Money: Builders are offering free upgrades, mortgage interest buy-downs and a host of other incentives.

1. It’s a Buyer’s Market: You’re in the driver’s seat and can get a great deal on a new home. Yes, dreams do come true.

Houston #1 in Housing

Among the Top 10 U.S. metro housing markets in full year 2006 (according to number of residential building permits issued), only two cities recorded year-over-year percentage increases – Houston (+14.7%) and Los Angeles (+8.7%).Houston’s increase, combined with Atlanta’s decrease (-6.3%), nudged Atlanta back into second place behind first-place Houston. New York, Dallas and Chicago were next in line in terms of total number of permits, although they all recorded year-over-year declines. The Los Angeles increase was entirely due to multiples (+42.1%), as single-family permits in the city declined (-19.4%). Among the top 50 U.S. metro housing markets in all of 2006 (based on preliminary data), only nine had a positive percent change. Almost half of the cities in the top 50 registered year-over-year percentage declines of greater than -20.0%

Now Is a Good Time to Buy a Home

Are housing consumers suffering from some form of “market psychosis”? During the recent boom years in 2003-2005, sellers were calling the shots – dictating prices and terms to multiple bidders who were knocking down their doors in many markets. Today, with the real estate market slowing in many parts of the country, all the market fundamentals show that buyers are now in the driver’s seat. Consider the facts: prices are competitive, interest rates are very affordable, there are plenty of homes in all price ranges to choose from and sellers are ready to bargain. So why are many prospective home buyers having second thoughts? It appears they are letting emotions overtake common sense. For instance, many home owners who are looking to sell and trade up to a better house are hesitating because they have seen the value of their current home drop from peak levels. “If my neighbor sold his house for $250,000 six months ago, why should I have to settle for $225,000 today?” But waiting out the market to recoup a $25,000 “loss” could prove to be a poor decision. While the value of the buyer’s house may have fallen, that so-called loss has probably already been more than offset by a reduction in the price of the home he is thinking about buying. Furthermore, if he waits too long, he may lose out on the price advantage that currently exists. First-time home buyers who are choosing to “play it safe” and keep renting are essentially postponing the opportunity to build household wealth. Also, in the current marketplace, with rental vacancy rates tightening, they can probably expect to see a healthy increase in the rent they pay. No one can accurately predict the peaks and valleys of the housing market. If you sit on the fence and wait for the absolute best deal, you could end up literally waiting for years, and in the meantime miss out on the opportunity to become a homeowner while prices are moderating. Not to be overlooked are the tremendous tax benefits received by homeowners as they accumulate equity in their homes. History shows that buying a home is one of the very best financial investments available to a typical household, and a relatively small downpayment enables the buyer to see appreciation on the entire value of the property. Though local housing markets periodically adjust according to overall economic conditions, over the long term real estate has consistently appreciated. On a national level, home appreciation has historically risen 5-6 percent annually. At that rate the value of a home doubles every 13 years. Not only is homeownership a stepping stone to a future of financial security, it provides a permanent place to call home and enormous personal satisfaction. In today’s housing market, the real risk is in waiting to buy a home. We know that interest rates are low today. We know that home prices are leveling off and even declining in some markets. We know that there are plenty of homes on the market to choose from. We know that sellers are willing to bargain. And we know that builders are willing to offer attractive incentives to get your business.