Will there always be a need for real estate brokers? Will consumers always be willing to pay full commission for the services of a real estate professional? Just what makes a real estate professional indispensable?

I don’t believe there is a long-term, full commission future for real estate hobbyists; or part-time agents; or those who are under-educated and not current in their skills.

More than ever, consumers demand complete, up-to-date, honest and transparent information. Consumers demand professional, timely communication skills and tools. Consumers demand more than just data, they want to know what the data means. They demand zealous advocacy and clear advice. And they want a peaceful, positive experience.

Putting a real estate deal together has never been more complex, but getting it to closing has be-come really problematic. So a key to viability and value is the ability to not just orchestrate the transaction, but to solve problems without involving the consumer in the drama.

By creating a positive, memorable buying or selling experience for the consumer, real estate professionals take the value of their services beyond being just a commodity, and enter the territory of building community.

When consumers know that we are not just “one and done,” but we intend to be part of their life, a trusted advisor, a personal resource, a protector of their rights, a dependable friend – that’s when we will have lasting value, and a viable business forever.

(edited from an article by Mike Pallin May 6, 2013)

Mortgage applications dropped for the second consecutive week as rates ticked up slightly, the Mortgage Bankers Association reports. 

The MBA’s weekly index measuring applications for home purchases and refinancings dropped 1.7 percent for the week ending Feb. 15. Broken out separately, refinancings — which make up the biggest bulk of the index — fell 1.6 percent during the week, while mortgage applications for home purchases dropped 1.7 percent. The gauge for applications for home purchases is viewed as a leading indicator of future home sales. 

Mortgage rates were on the rise during the week, with 30-year fixed-rate mortgages averaging 3.78 percent, up from 3.75 percent the prior week, the MBA reports. 
Source Reuters February 20, 2013

For 2012 the number of home sales nationally were up 9%; the highest annual gain since 2007.

Prices, meanwhile, are picking up because the number of homes for sale continues to drop despite the sales volume gains. The number of homes for sale fell at the end of 2012 by 21.6% from one year earlier.

Here’s a breakdown of why inventory has continued to drop this year:

Many homeowners are underwater: More than 10 million homeowners owe more on their mortgage than their homes are worth.

Others don’t have enough equity to “trade up”: Another 10 million homeowners have less than 20% equity in their current residence.

Everyone wants to buy at the bottom, but few want to sell: Even those people who do have plenty of home equity are likely reluctant to sell if they think prices will be higher tomorrow.

More purchases from investors: Homes that are bought at courthouse foreclosure auctions never show up on multiple-listing services when they’re initially sold. They’re also held out of the for-sale pool because they’re being rented out.

Banks have been slower at foreclosing: Banks have also become better about approving short sales and loan modifications, which has curbed the flow of foreclosed properties onto the market.

Builders have been putting up fewer homes: Housing starts were severely depressed from 2009 through 2011 and have only recently rebounded off of those low levels.

Excerpts from WSJ Nick Timiraos Jan. 22, 2013

Fiscal cliff bill extends real estate tax breaks
Real Estate Tax Law
By Stephen Fishman, Friday, January 4, 2013.
Inman News®

The tax law passed by Congress this week to avert the “fiscal cliff” turned out pretty well for the real estate industry.
First, the Mortgage Forgiveness Debt Relief Act of 2007, which was scheduled to expire on Dec. 31, 2012, has been extended through the end of 2013.
This means that homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale of their principal residence during 2013 may exclude up to $2 million of forgiven debt from their taxable income.
Had this law not been extended, income tax would have had to be paid on such forgiven debt — making short sales and loan modifications less attractive to some distressed homeowners than foreclosure and bankruptcy.
Second, the fiscal cliff deal brings back from the dead the deduction for mortgage insurance premiums. This deduction expired at the end of 2011, but has now been retroactively extended for all of 2012 as well as 2013.
Taxpayers with adjusted gross incomes (AGI) of less than $100,000 per year can deduct as an itemized deduction all of their mortgage insurance premiums.
The deduction is phased out ratably by 10 percent for each $1,000 by which the taxpayer’s AGI exceeds $100,000. Thus, the deduction is unavailable for taxpayers with AGIs over $110,000.
The deduction applies to private mortgage insurance premiums as well as mortgage insurance provided by the FHA, the Department of Veterans Affairs, and the Rural Housing Service.
Third, the home mortgage interest deduction (the “MID”) was left largely untouched — for the moment, at least. Some had feared that the MID might be substantially reduced, an option that remains on the table as lawmakers prepare for a broader debate over the shape of the tax code that will take place in coming months.
Although the MID is intact for now, many high-income taxpayers will see some reduction in the value of their itemized deductions, including the MID. That’s because the fiscal cliff bill brings back the “Pease limitation,” which had expired in 2009. This provision reduces a taxpayer’s itemized deductions by 3 percent of the amount his or her AGI exceeds a threshold amount.
Under the new law, the Pease thresholds are $300,000 for married taxpayers filing jointly, and $250,000 for single taxpayers.
So a married couple with an AGI of $400,000 and $50,000 in itemized deductions (including home mortgage interest), would be $100,000 over the threshold. Because 3 percent of $100,000 equals $3,000, the couple’s itemized deductions would be reduced from $50,000 to $47,000. The couple end up with $3,000 more in taxable income, which at their income level is taxed at a 33 percent rate. They end up paying $999 in extra taxes.
No matter how high a taxpayer’s AGI, the Pease reduction cannot exceed 80 percent of the amount of itemized deductions otherwise allowable for the year.
But this still means that a very high-income homeowner could still lose up to 80 percent of his or her itemized deductions for home mortgage interest, state and local income and property taxes, and charitable contributions.
Finally, in a boon to all homeowners, the $500 credit for various energy-saving improvements to a principal residence has been reinstated — it had expired at the end of 2011. The fiscal cliff law brings it back for 2012 and 2013.

Wall Street Journal
November 27, 2012, 7:30 AM ET
Five Reasons Home Prices Have Been Rising
ByNick Timiraos

Home prices rose by 0.1% in September from the prior month and by 3.6% from one year ago, the largest such gain in six years, according to a report released Monday by Lender Processing Services.

Compared with one year ago, prices are up by 17.7% in Phoenix, the largest gain among the nation’s 40 largest metro areas. Other cities with notable year-over-year increases include Detroit (11.7%), Las Vegas (11.5%), San Jose, Calif. (11.3%), San Francisco (10%), and Sacramento (8.3%). Among the top 40 metros, only a handful have posted year-over-year declines, led by St. Louis, which was down by 4.1%. Bridgeport, Conn., was down by 2.3%, while Chicago (-0.5%) and Cincinnati (-0.1%) also posted declines.

The LPS figures serve as a good reminder that it’s still hard to generalize about housing. Some markets are up sharply amid big declines in both prices and the share of distressed sales, while others are still soft. Generally, though, there are at least five significant contributors to rising prices:

Housing affordability is attractive based on traditional metrics such as price-to-rent and price-to-income measures, largely because prices have fallen so far. Housing is even more affordable considering today’s low mortgage rates. Many buyers judge their decision based on the monthly payment of a mortgage. The average payment on a median priced home last month, assuming a 10% down payment and not including taxes or insurance, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.

Household formation is revving up. The U.S. is on track to add 1 million new households this year, up from 630,000 last year and an average of 570,000 over the past five years, according to economists at Bank of America Merrill Lynch. Based on normal population growth, that rate should be closer to 1.2 million households. The upshot is that some pent-up demand is being unleashed, in part because job growth has picked up.

Rents are rising. Falling mortgage rates and improving job growth didn’t do much for housing last year, in part because buyers didn’t have much confidence or urgency. Rising rents have changed that. Initially, they spurred more investor purchases of properties that could be rented out. More recently, they’ve given buyers a reason to get off the fence. The share of distressed sales, such as foreclosures, are down, and in many Western markets, they are down sharply over the past year.

Why are distressed sales falling? For one, mortgage delinquencies peaked 2½ years ago. Banks also slowed down foreclosures as a result of the robosigning scandal, and they’ve stepped up foreclosure alternatives, notably, by shifting short sales into a higher gear. The share of distressed sales is still high, historically speaking, but because they have fallen from their peak in many markets, prices have stabilized.

Judicial foreclosure states such as Illinois, New York, and Florida that require banks to process foreclosures in courts still face large backlogs of potential foreclosures. But states such as California and Arizona that haven’t required banks to process foreclosures by going to court have seen large drops in the volume of outstanding bad debt.

Inventories of homes for sale have plunged. Inventories of new homes for sale are at their lowest levels in nearly 50 years as builders sharply cut back construction over the past three years. Inventories of existing homes for sale are near a 10-year low, and down by one third over the past two years. Many homeowners have held back from selling because they owe more than their homes are worth, and even those with equity don’t want to accept big declines in prices.

Low inventories have led to more multiple offer situations, as rising demand leads more buyers to chase after fewer properties. In some markets, foreclosure discounts have disappeared. This isn’t to say housing is out of the recovery ward. Credit standards are tight. Millions of homeowners are in some stage of foreclosure or default, and millions of others still owe more than their homes are worth. If the economy weakens again, the housing market could relapse. But if 2012 has taught anything, it’s that those headwinds haven’t been enough to prevent the housing market from healing.
Follow Nick @NickTimiraos

Key Rates
See today’s average mortgage rates across the country.
Type Today
30-Year Fixed 3.44% 3.45%
15-Year Fixed 2.85% 2.83%
10-Year Fixed 2.95% 2.89%
5/1-Year ARM 2.79% 2.97%
30-Year Fixed Refi 3.41% 3.41%
15-Year Fixed Refi 2.82% 2.80%
5/1 ARM Refi 2.75% 2.84%
30-Year Fixed Jumbo4.05% 4.02%
Rates may include points.
Source: Bankrate.com

Mortgage rates go lower for new low

Updated: October 4, 2012 12:08 PM
 By THE ASSOCIATED PRESS
Average U.S. rates on fixed mortgages fell to fresh record lows for the second straight week. With nationwide data on prices and sales trending up, the housing industry may be seeing slight recovery.

WASHINGTON — Average U.S. rates on fixed mortgages fell to fresh record lows for the second straight week. The declines suggest the Federal Reserve’s stimulus efforts are having an impact.

Mortgage buyer Freddie Mac says the rate on the 30-year loan dropped to 3.36 percent. That’s down from last week’s rate of 3.40 percent, which was the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.69 percent, down from last week’s record low of 2.73 percent.

The Fed is spending $40 billion a month to buy mortgage-backed securities.
The goal is to lower mortgage rates and help the housing recovery. The Fed plans to continue the program until there is substantial improvement in the job market.

The market value of your home is not:
1. What you have in it.
2. What you need to get out of it.
3. What it is appraised for.
4. What you heard your neighbor’s house sold for.
5. What the tax office says it is worth.
6. Based on memories and treasures.
7. Based on the price of homes where you are moving.

The true market value of your home is
What a buyer is willing to pay for the property:
1. Based on today’s market
2. Based on today’s competition
3. Based on today’s financing
4. Based on today’s economic conditions
5. Based on the buyer’s perception of the property condition.
6. Based on location.
7. Based on normal market time.

As a seller you control:
1. The price you ask
2. Condition of the property
3. Access to the property

As a seller you DO NOT control:   
1. Market Condition
2. The motivation of competition
3. Value (buyer’s perception)

Warning Signs:
1. Agent elimination-
If agents are not previewing, or if they preview, but do not show it, they are eliminating your property.

2. Buyer elimination-
If your home is being shown with no results, buyers are finding better properties in your price range.
In either case, this is an indication that your home is not priced at current market value.
REMEMBER: Price Overcomes All Objections