It doesn’t mean doing whatever it takes to get a deal done.

It doesn’t mean undermining the very fundamentals of our profession just to line your own personal bank account.

It doesn’t mean trying to sell real estate outside of your area of expertise.

It doesn’t mean delivering poor customer service, but promising the sun, the moon and the stars to unsuspecting buyers and sellers.

I’ve been on this soapbox for a while.

My very first blog post addressed this issue.

Fortunately, there has been a resurgence of conversation surrounding our real estate community’s absolute need for change within our industry. As it stands now, most states require a bare minimum pre-licensing class, take a State administered test, and you have a real estate license. Oh, by the way newly minted real estate agent, congratulations, you are now qualified to help home buyer’s and sellers make decisions regarding possibly the single largest investment in their lives.

What other business can you start with no inventory, no operating capital (besides minimal dues), and only a 40/60 hr (whatever your state requires) time commitment? You pass a test you’re now a bona fide real estate professional. Sounds pretty bad huh… I think it is.

Here’s some of the changes that I think need to occur:

First and foremost have higher admission standards. Require a minimum of a Bachelor’s degree to qualify for a license. You could take classes working towards your real estate license while attending college, or if you already have a degree, and now want to obtain your real estate license, we should then have in place higher pre-licensing requirements. Let’s mandate that those choosing to enter our career (and I call it a career) make a real commitment to learning and understanding the field they are entering. Also, for those that are already in the business, we need to increase the continuing education requirements in order to keep your license.

Getting a real estate license should not happen by default. In too many instances that is the case. In my market, for example, there are many licensees who have retired or left other jobs, re-located, and then decide they’ll “sell a little real estate” part time for a little extra cash. Isn’t that scary? When that individual brings me an offer on one of my listings, I cringe. Inevitably, they are at best, ill prepared, and have presented an improperly executed offer to purchase. I find myself doing their job, because they are clueless. This person is not best representing their customer or client, and furthermore, these kinds of stories continue to feed the public perception of our industry.

I’ll go on. Once you have met the educational requirements and earned a license, there now needs to be supervision of this person who has just been turned loose as an agent. State mandated programs, administrated by the Broker of Record would be appropriate. A Broker must have a pre-approved instructional program in place to educate this new licensee. There is so much more to selling real estate that is not covered in our current day pre-licensing courses.

Let’s talk specialization and different levels of qualifications. We must train in specific areas; i.e – foreclosures, short sales, commercial real estate, 2nd home ownership, investment properties, farm properties, condominiums, industrial properties, leaseholds, etc. etc. We don’t want a licensee who is not qualified, to be able to list, sell and/or lease any type of property they want. There should be a system in place to have mandatory educational requirements in order to work, and represent yourself as a “specialist” in a given area of expertise. Yes, I know there are GRI, CRS, CCIM and so on. But we are not required to have these designations to sell or lease properties within these different speciality markets.

Ok, enough, you get my point. With the ever changing economic climate, and the uncertainty of our housing market, we have to enact stronger guidelines. We need highly trained real estate professionals, who can offer sound advice and guidance to home buyers and sellers. We have to position and empower our National, State and Local Boards, as well as the Departments of Licensing Regulation in order to “Raise The Bar” in our industry.

We need to deliver truly AMAZING service in order to thrive and survive!

HUD, (Housing and Urban Development), in an effort to improve disclosure of key loan terms and closing costs paid by the consumer when they buy or refinance a property, HUD has reformed the RESPA Rules.

Here is a summary of the final rule:

Good Faith Estimate – now it will be a three page document, including disclosure of yield spread premiums and the tolerance restriction. Effective date January 1, 2010.

Settlement Statement (HUD-1)- it will now also be a three page document. It will be redesigned to look like the Good Faith Estimate with cross references and a chart comparing charges in the Good Faith Estimate with the final charges appearing on the HUD-1.  Effective date January 1, 2010.

30 Day Cure Period – loan originators may reimburse the borrower for tolerance violations within 30 days of settlement.  Effective date January 1, 2010.

Tolerance limitations on settlement charges – 10% price tolerances for certain services packaged by lenders.  Effective date January 1, 2010.

No Volume-Based Discounts- this eliminates explicit volume based discount language and reiterates HUD’s contention that all settlement service providers may negotiate discounts as long as they go to the consumer.

Use Of Average Charges – this is available to all settlement service providers with added flexibility for calculations.  Effective date January 16, 2009.

*Revised Definition of Required Use – this is extended to both sellers and borrowers and allows legitimate consumer discounts.  Requires that discounts or incentives be given by the referred provider and not as an inducement by the referrer.  Effective date April 16, 2009.

Application Process – a one stage application process with greater flexibility on selecting underwriting criteria.  Effective date January 1, 2010.

Misc. – miscellaneous modifications regarding escrow accounts, servicing transfer notifications and the applicability of E-Sign.  Effective date January 16, 2009.

HUD has agreed to exercise restraint in enforcing these provisions for the first 120 days of 2010.

For more detailed information on the Final RESPA Rules go to:

http://www.hud.gov/offices/hsg/sfh/res/finalrule.pdf.

Oceanfront Condo - Ocean City, Md.

Why It’s A Good Time To Buy A 2^nd Home Or Investment Property

Most owners that have a 2nd home or an investment property own that property in a different location then where their primary residence is located.

It is quite common to have that property in a resort setting such as a beach or ski destination.  Since I am at the shore, our owners fall into the beach category. They use their property the most during the warmer summer months. They either use their property as a second home and/or vacation spot or put the property in a rental program to generate income.  Some do a combination of both.

Now that it is fall and these owners are using their places less, we do seem to see some additional inventory listed for sale, which can make it the perfect opportunity for a perspective purchaser to buy in a resort market. In some cases, the seller is ready to move on, and has just completed the time of year when they will utilize the property the most, therefore they may be more motivated to competitively price the property.

Hear that sound? That’s opportunity knocking. Many buyers have been uncertain about taking the jump into the housing market. With interest rates and property values at historic lows, what are you waiting for?

Mortgage Rates Seen Below 6% Through 2010

Even as mortgage rates remain near record lows, the Mortgage Bankers Association believes that the looming expiration of a key Federal Reserve program may increase home loan costs next year. Still, the MBA expects rates to remain extremely attractive throughout 2010, helping to juice home sales and insert a floor underneath real estate values. Here are five things you need to know about the MBA’s 2010 economic outlook:

1. Opposing forces: The MBA expects subdued inflation and high unemployment to put downward pressure on 30-year fixed mortgage rates next year. However, “there is a lot of uncertainty regarding rates immediately following the termination of the Federal Reserve’s purchase of mortgage-backed securities,” Jay Brinkmann, MBA’s chief economist and senior vice president for research and economics.  “No doubt the Fed will do its best to minimize adverse effects, but the elimination of these purchases will put upward pressure on all long-term rates as well as the spread between mortgage rates and Treasuries.”

2. Fed programs and rates: The Federal Reserve got into the business of driving down mortgage rates in November of 2008 as it scrambled to stabilize the free-falling housing market. To that end, it announced plans to buy up debt and mortgage-backed securities from Fannie Mae and Freddie Mac. In March of this year, it expanded the program to include the purchase of long-term treasury bonds and additional Fannie and Freddie assets. This asset purchase program is a key reason why rates have remained so attractive for nearly a year. Guy Cecala, publisher of Inside Mortgage Finance, says the program has brought rates roughly a full percentage point lower than they would be otherwise.

3. Getting out: But as the housing market shows signs of stabilization, the Fed is looking to unwind some of this support. Its treasury-bond purchase program, for example, is expected to conclude by the end of the month. However, in the absence of a private market for mortgage-backed securities, the Fed moved in late September to extend its program for buying up these assets. Without committing additional funds to the initiative, the Fed said it will continue buying up debt and mortgage-backed securities from Fannie and Freddie through the first quarter of 2010. (The program had been scheduled to expire at the end of the year.) By remaining in the market, the Fed can help ensure that rates remain in an attractive range for a longer period of time. And rather than risk sharply higher mortgage rates, the Fed may extend the program again, depending on how the economy and housing markets perform in the coming months.

4. Less than 6 percent: While acknowledging that the expiration of this program is likely to push rates higher, the MBA expects rates to remain in an attractive range in 2010. Fixed mortgage rates will average around 5 percent in the final quarter of this year and rise to 5.6 percent by the end of 2010, the MBA predicts.

5. Sales and prices: The MBA predicts the unemployment rate will peak at 10.2 percent in the second quarter of next year. Nevertheless, the trade group expects to see an increase in home buying activity next year, with exiting-home sales up 11 percent from 2009 levels and new-home sales increasing 21 percent. In addition, “[national] average home price declines should abate by early 2010, but will vary by state and home value,” the MBA said in its press release. “The demand will be highest for entry-level homes.”

Mortgage Rates This Week – Relatively Unchanged

NATIONAL RATE SURVEY RESULTS (10/29/2009 Results)

30-year Conv:          5.35% -- w/ avg. points: 0.37 pts

15-year Conv:          4.74% -- w/ avg. points: 0.37 pts

30-year FHA:           5.27% -- w/ avg. points: 0.17 pts

5-year ARM:            4.64% -- w/ avg. points: 0.37 pts

PHH DAILY RATE CHANGES – LAST 10 BUSINESS DAYS

Date                      Conventional                           FHA                                      VA                                        

10/29                     Relatively Unchanged             Relatively Unchanged            Relatively Unchanged                      

10 Year Treasury Yield opens at 3.42

10/28                     Slightly Lower                        Relatively Unchanged            Relatively Unchanged                       

10 Year Treasury Yield closed at 3.41

10/28 (2)                Lower                                    Slightly Lower                       Slightly Lower                                     

Rate Change for the Better!

10/27                     Relatively Unchanged             Relatively Unchanged            Relatively Unchanged                       

10 Year Treasury Yield closed at 3.46

10/27 (2)                Lower                                     Lower                                   Lower               

Rate Change for the Better!

10/26                     Relatively Unchanged             Relatively Unchanged            Relatively Unchanged                       

10 Year Treasury Yield closed at 3.55

10/26 (2)                Slightly Higher                       Slightly Higher                       Slightly Higher  

Rate Change for the Worse.

10/23                     Slightly Higher                       Relatively Unchanged            Relatively Unchanged                       

10 Year Treasury Yield closed at 3.47

10/22                     Relatively Unchanged             Slightly Higher                      Relatively Unchanged                       

10 Year Treasury Yield closed at 3.42

10/21                     Higher                                     Slightly Higher                      Slightly Higher                                       

10 Year Treasury Yield closes at 3.41

10/20                     Lower                                      Lower                                   Lower               

10 Year Treasury Yield closes at 3.34

10/19                     Relatively Unchanged             Slightly Higher                      Slightly Higher

10 Year Treasury Yield closes at 3.40

10/16                     Slightly Higher                         Slightly Higher                     Slightly Higher                                 

10 Year Treasury Yield closes at 3.42

RATE FORECAST

Will rates rise or remain relatively unchanged?

Industry experts and analysts provide their insights.

8% of respondents expect rates to fall in the coming weeks

67% predict a further increase in mortgage rates while the remaining

25% forecast that mortgage rates will remain more or less unchanged

As always many thanks to Paul Soule from Coldwell Banker Home Loans for providing these statistics.