Flat-fee real estate agency Purplebricks plans expansion to New York

Last year, flat-fee real estate agency Purplebricks expanded into the U.S. after building a successful business in the United Kingdom and Australia. The company charges sellers a flat fee of $3,200 to list their home and a “highly competitive” buyers’ agent commission of 2.5% once the home sells. According to Purplebricks, the New York designated market area, which includes more than 20 million people in select counties across New York, New Jersey and Connecticut, is “particularly well suited” for what the company has to offer. The company claims that real estate commissions can reach as high as 7% in the New York area, and with an average home sales price of approximately $560,000, its flat fee model will save buyers thousands of dollars. We are providing a simple and convenient way for both buyers and sellers to conduct business and save thousands of dollars at the same time,” Purplebricks U.S. CEO Eric Eckardt said. We are excited about our planned entry into the New York DMA, which is the largest in the U.S. with more than seven million households.” According to the company, Purplebricks can charge less than other real estate agencies because it offers a technology-focused selling experience. Sellers can also used Purplebricks’ “easy-to-use online platform that provides an unparalleled level of control and transparency over the entire sales process.” Purplebricks is “currently recruiting” licensed real estate professionals in the New York area to serve as the company’s local real estate experts. “It is a sign of confidence in the potential of the U.S. business that we are today announcing our expansion to cover both the East and West coasts, with our planned entry into the New York market,” Michael Bruce, founder and group CEO of Purplebricks, said. “With higher than average rates of commission and transaction volumes, New York was the natural first move on the East Coast for Purplebricks. Our local team have an in-depth understanding of the U.S. market and considerable experience of New York specifically,” Bruce added.

How Your Real Estate Notes Can Rise in Value Through Phantom Appreciation

“Appreciation” is often used to describe something that increases in value, such as a piece of real estate. This happens often in commercial real estate, where an increase in cash flow raises the value of the property, allowing the property owner to refinance. Related: 5 Areas to Study to Know if You Bought a Good Real Estate Note Deal Phantom Appreciation Phantom appreciation is really just a made up term to describe when a note rises in value. Notes are much different than real estate because note values, especially the UPB (or unpaid principal balance), are usually going down over time (unless it’s an interest-only loan) as long as the P+I (principal and interest) payment is being paid by the borrower. I remember how shocked I was when I first found out that a newly originated mortgage could sell for more than the UPB (i.e. $100,000 loan could sell for $103,000-$105,000) if the borrower is an A+ candidate with a strong likelihood to pay consistently and to pay a high amount of interest over time. If an investor had come in and bought this loan for 105% of its UPB 18 months after I started making payments on it (showing a solid pay history), that note buyer would still be getting a nice yield of over 6% over 28.5 years. So, what could this mean for a note investor who bought a re-performing note at a discount? Changing Real Estate Market The second big way one encounters phantom appreciation is from a rising real estate market. It actually takes a down real estate market at first to create this scenario since note values are in direct correlation to real estate values. Cash outs are more common when the economy is improving, unemployment is low, or real estate values are increasing because these factors make it more likely that borrowers will have the means and desire to refinance out of their previous loan.

Blockchain expert: “It’s not going away”

In a conversation with HousingWire's Sarah Wheeler, Hoffman discussed blockchain technology in relation to the mortgage industry. "We’re still in early stages of this, so I equate it to an automobile on a dirt road behind a horse and buggy. Our infrastructure is not there yet, but it is being developed.” Hoffman said. It will not take away jobs but it will change how we do things.” Hoffman explained to conference attendees the originations of blockchain and stressed the differences between it and bitcoin, which is commonly confused with blockchain. "They’re not the same thing," Hoffman explained. "Blockchain is the technology behind digital currencies, such as bitcoin or others," Hoffman said. "Whatever comes of bitcoin or others, the technology still remains." In an interview with HousingWire, Hoffman explained her goal in the mortgage space is to help people understand the importance and the uses of blockchain technology. "Without any discussions, your executive leaders are not going to push the technology forward," she said. "Yes, it’s technology, but so was the Internet and you don’t need to understand all the inner-workings of the Internet, but you need to understand how you can power it to help your business move forward.”

Coming Housing Boom Could Mean It’s Time to Add Raw Materials

In its November report, mortgage security firm Freddie Mac called 2017 the “best year in a decade” for the housing market by a variety of measures. These include low inflation, strong job growth and historically-low mortgage rates. This assessment is very encouraging, not just for homebuyers and builders and the U.S. economy in general, but also for commodities, resources and raw materials as we head into 2018. Although past performance is no guarantee of future results, it’s still instructive to look back at how materials performed the last time the U.S. was ramping up housing starts and mortgages. The last housing boom, which peaked in 2006, was accompanied by elevated commodity prices. We could see a return to these valuations over the next couple of years on higher demand, a stronger macroeconomic backdrop and cyclical fundamentals, as shown in the following chart courtesy of DoubleLine Capital: Speaking on CNBC’s “Halftime Report” last week, DoubleLine founder Jeffrey Gundlach said he thought "investors should add commodities to their portfolios” for 2018, pointing out that they are just as cheap relative to stocks as they were at historical turning points. “We’re at that level where in the past you would have wanted commodities” in your portfolio, Gundlach said. “The repetition of this is almost eerie. And so if you look at that chart, the value in commodities is, historically, exactly where you want it to be a buy.” A Wealth of Positive Housing Data There’s more to support the commodities narrative than cyclicality. December’s National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)soared to 74, eight points up from the November reading and its highest report since July 1999.

Why you want Amazon to be your new neighbor

And the chosen city is likely to get an economic jolt -- particularly to its housing market. The selected city will get an immediate boost to jobs and wages, said Javier Vivas, director of economic research for Realtor.com. It will also push up home prices and lead to new home construction in neighborhoods within commuting distance from the headquarters location, he added. Just how much home prices will rise in Amazon's chosen city will depend on a variety of factors: the existing inventory, recent home price performance, demand and the space available for new construction. "The impact in markets where there has been single-digit appreciation ... we could see a jump, at least in the short term, to double digits of 10%-20% or even more appreciation for the first year," he said. The big winners in the chosen city will be current homeowners who will likely see their home appreciation rise when Amazon moves in. "If you are in a larger house and ready to downsize or move, this will be a pure gain for you," said Stijn Van Nieuwerburgh, professor of finance and director of the Center for Real Estate Finance Research at New York University Stern School of Business. Another indirect advantage for the winning city: Rising home values will likely to lead to higher property taxes, which could help boost a city's budget and services. "As property taxes and revenues go up, that can go to schools and improve their quality and better fund programs ... and infrastructure," said Van Nieuwerburgh. "If you are a first-time homebuyer in the selected city, this is bad news," said Van Nieuwerburgh.

Achieving Financial Wellness in 2018 and Beyond

However, since most members work as independent contractors, or brokerage owners/managers, they don’t have access to employer retirement savings plans, making it especially challenging to plan for long-term financial security. Turning the Corner Changing course requires action. Recognizing the importance of the challenge, 2017 NAR President Bill Brown pledged to help members take charge of their financial lives. Major recommendations and initiatives stemming from the PAG’s work include: New Financial Wellness Program The PAG’s top recommendation focused on engaging members on the importance of financial wellness and wealth-building, including negotiating with a national financial services firm to provide personalized financial and investment planning services with valuable member benefits for those that participate. This past November, NAR announced that Bank of America Merrill Lynch had been selected to develop a financial wellness program with customized member benefits. The new Bank of America Merrill Lynch services will be offered through NAR’s REALTOR Benefits® Program. Investing in Real Estate Even though REALTORS® are intimately familiar with the benefits of building wealth through real estate, only 30 percent of members own investment properties. NAR’s eight-hour course titled “Real Estate Investing: Build Wealth Representing Investors and Becoming One Yourself” is an excellent resource for honing a smart investment strategy. Selling Your Business With proper planning, many brokers, agents and teams can position their business to be a salable asset upon retirement. Working together, we aim to help all members achieve strong financial footing by offering resources and other tools for wealth-building, business-planning, and investing in real estate.

How to Let Your Mission, Vision, and Goals Drive Your Business

When I first started my wholesaling business, I had no vision, no purpose. For eight years, I conducted business without a clearly defined mission or core values. At this time, I hired a business coach to help me define my company’s vision, core values, and goals. Once you have your mission, vision, and core values in place, the next thing you’ll need to do is set companywide goals. Setting Goals When I hired my business coach, he took me through a book called Scaling Up. If you are setting goals but you aren’t keeping score, how do you know if you’re winning the game? Setting Metrics This business is a numbers game. During our team meetings, at least once a month, I mention the core values just to remind our team. During our team meetings, we also take the time to congratulate team members who are living out our core values. Conclusion My goal with this month’s post is to help you paint the vision of what you want your wholesaling business to be—to help you set goals and break down bigger goals into achievable quarterly, monthly, weekly, and daily goals.

Amazon pick for second HQ likely in overheating housing market

Amazon said that it expects to invest more than $5 billion and plans to grow its second headquarters into a “full equal” to Amazon’s current headquarters in Seattle. But what else might come with that much corporate investment and new high-paying jobs? And for half of the 20 markets on Amazon’s shortlist, home prices are already on the verge of overheating. The 20 markets on Amazon’s list are: Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Chicago, Illinois; Columbus, Ohio; Dallas, Texas; Denver, Colorado; Indianapolis, Indiana; Los Angeles, California; Miami, Florida; Montgomery County, Maryland; Nashville, Tennessee; Newark, New Jersey; New York City, New York; Northern Virginia; Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Raleigh, North Carolina; Toronto, and Washington, D.C. Of those, 19 are in the U.S., and a newly released analysis from CoreLogic shows that home prices in 10 of those 19 U.S. markets are already overvalued. CoreLogic monitors the health of the housing economy through historic home price changes and other market conditions including sustainability of prices in the market, referred to as the CoreLogic Market Condition Indicators. The MCI analysis defines an “overvalued” market as one where home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one where home prices are at least 10% below the sustainable level. Image courtesy of CoreLogic.) Regardless of which city Amazon picks (and the retail monolith has given no further indication of which one of the 20 markets it is going to choose), home prices are expected to rise in the winning city. “As leaders at Amazon continue to narrow their location choices, the housing situation is an important consideration,” Nothaft said. “Denver and Nashville lead the pack with home price increases at more that 8%, but CoreLogic research indicates that these markets are overvalued right now.

Watch out for this fake realtor.com leads scam

Online leads are the lifeblood of many real estate businesses, and some agents and brokers pay a pretty penny each month to companies like realtor.com and Zillow to generate these leads with ZIP code-targeted ads and preferred placement on their sites. Footer discovered, not all leads are good leads — in fact, behind those leads may be scammers looking to make a buck off unsuspecting agents. On January 7, about three weeks after he updated his profile, Footer received an email offering one pre-qualified real estate lead as a trial for realtor.com’s lead generation service. To receive the lead’s full information, which included a phone number and email address, all Footer had to do was pay $10. “But I thought, well I did just sign back up with the Realtor association … and maybe this is just a [teaser] ad to buy an ad from them.” So, Footer sent the $10 using his PayPal account and got a follow-up email with Sherri Kramer’s full phone number and email address. He looked up Sherri Kramer on Facebook and found a profile that matched the Dallas/Fort Worth area code he was given. Another member of the Facebook group had received the exact same lead as Footer, and she wanted to make sure it wasn’t a scam. “The leads are normally shared. Footer said he spoke to a customer service representative who said the company was aware of the scam and was “working on it.” Footer said he recognizes that email scams are common and that he should be more careful the next time around, but he’s wary of the fact that realtor.com hadn’t sent out a warning about the scam that new users, like him, are especially susceptible to believing. “Our customer care team is standing by to answer any customer questions.” Lastly, Farrell says agents should always contact their service provider to verify any “suspect communication,” before following through on buying a lead or any other service.

How to Get a Building Permit: Don’t Renovate Without It!

That's right—even though you own your house, you still need to get permits for structural changes, to ensure that your changes will be "up to code," as they say. Here’s everything you need to know about how to get a building permit. Do you need a building permit? How to apply for a building permit The great news is that getting a building permit is easier than you think—mostly because you probably don’t have to do it yourself. Unless you’re a pretty slick DIY-er, chances are good that your project is going to require a contractor, and that’s the person to rely on for the building permit process. First of all, contractors will know the ins and outs of the process for obtaining building permits in your local area, and they’ll also know exactly which permits you need, from structural to electrical to plumbing. Asking how much a building permit costs is a little like asking how much a house renovation will cost—prices vary wildly. The good news is that the upfront permit price will cover all additional inspections that the city will make as the work progresses, including the final sign-off. “Any work with a permit attached usually requires one or more inspections to be performed by licensed inspectors, to verify the work was done according to code, the plans on file, and any other requirements,” says McHugh. Building permit paperwork to keep Once the dust has settled—literally—on your renovation project, a final inspection will occur.

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Single-Family Rental Lease Expirations and Vacancy Rates Improving

Both lease expirations and vacancy rates among single-family rental securitizations showed continued improvement in December 2017, according to the latest data from Morningstar Credit Ratings, LLC. According to Morningstar, single-borrower, single-family rental lease expirations declined for the second consecutive month, dropping from 5.2 percent in November to 4.5 percent in December. This fits with long-established trends, as typically renters are less likely to move during the winter months. The retention rate for expiring leases dipped slightly, hitting 78.0 percent in November 2017 (which is the most recent data available, according to Morningstar). In spite of Houston topping the charts, vacancy rates in H-Town actually improved for two months straight, after six consecutive months of increasing vacancies. The MSA with the second highest vacancy rate for December was Nashville, Tennessee, which declined from 8.0 percent in November to 7.5 percent in December. The Morningstar monthly performance summary covers 24 single-borrower deals with over 88,000 properties. You can read the full report by clicking here. The event will feature top subject matter experts and skilled SFR practitioners leading discussion panels and training sessions that will answer questions and offer viable solutions related to property acquisition and management, financing, strategies for small, mid-cap, and large investors, and new developments related to technology and professional services. You can find out all the details by clicking here.

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