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2015 Real Estate Market

 2015 Early Market Update

This is the time of year for forecasts and market predictions.  What will 2015 bring?  Will the market improve?  What kind of year can we expect?

We are hearing cautious optimism of a solid to strong year in real estate.  Our very early numbers are consistent with this prediction, with Sales orders from December 1st through January 15th up 28% over the same time last year!

Interest rates continue to influence the market, again nearing historic lows.  Mortgages traditionally follow the movement of the bond market. On Friday, the 10-year Bond Yield dipped to 1.76%.  To put this in perspective, Bond rates have only dipped lower for a short time in 2012, when Mortgage rates hit their all time low (just under 3.5%).

bondsvmortgages

Indeed, local Mortgage Rates dropped from 3.8% at the beginning of the year to today’s 3.6%.  It is conceivable they could go lower. This is good news for home affordability (and a good thing for buyers to know when considering houses), but signals weakness in the economy and markets.  Despite the weak stock market, NAR, Freddie Mac, and the Mortgage Banker’s Association all predict robust growth in housing sales in 2015 and an even better 2016!

projections

Thank you to my friend Joe Long at Waterstone Mortgage for this graphic and information. It is significant and unusual that all three predictions match so closely.  Interest rates will likely rise by year end, and this could dampen the market.  Nevertheless, interest rates may not be as important as consumer confidence, especially confidence about Jobs.  If people feel secure in their jobs and confident in their ability keep employed, they buy houses. The national jobs numbers have been strong, with 2014 having the best rate of job creation since 1999.

All of this should translate into a solid 2015. And, so far, our numbers are consistent with this hopeful prediction.  Happy New Year and we hope you have a healthy and prosperous 2015!

Homestead Title Company

Welcome Amy Gervasi

We are excited to announce that Amy Gervasi has joined Homestead Title as our newest closing officer. Amy has over 20 years of real estate experience as a Realtor, lender, and closing officer. She has developed strong relationships and friendships with past clients and colleagues from her experience in the real estate and lending fields. Amy is passionate about home ownership and loves helping people achieve that goal. This passion shows in her commitment to making each client feel like they have a friend who cares about their purchase, sale, or transaction.

Amy grew up in Madison, graduating from Memorial High School. She attended college in Atlanta, GA and finished her education at UW Madison. During college, she was hooked by the Real Estate bug and has been in the field ever since. She lives in Verona and is married to Dwight, an IT geek with a great sense of humor, for almost 20 years. They have 4 kids that keep her hopping between sports, school events, and sleepovers.

Those who have worked with Amy know her to be an outstanding, caring, professional who makes Homestead Title an even better place to close. We are proud to welcome Amy into our Homestead family!

Fraud Warnings

Schemes, Scams, & Frauds

It seems like fraud attempts have spiked in the last 3 months. We have seen each of these scams either sting us or Realtors with whom we work:

  1. Toner Scam: Your company gets a call from your copier service company confirming your correct copier ID and that your shipment of toner is late, but on the way. A week after the shipment arrives, the invoice will arrive. It is from Supply World, Inc., IDC Servco, or some other company and is for 10-15 times the price of your product. If you’re not careful someone will pay the invoice. The scam starts with an earlier call in which the scammer asks to confirm your copier ID number, make and model. They might call later and get more information, such as the name of the person in charge of orders. Now, the hook is set and they can call with all of the information that makes them appear to be your legitimate servicer.
  2. Phishing and Malware Attacks: These are all over the internet – emails with malicious links or files. The key is that they are so well targeted to your business or interests that it can be very hard to tell the scam from the real thing.
  3. Microsoft Hacker Scam:   A “Microsoft representative” calls to tell you’re your computer is signaling their servers that the updates are not running properly.  This is causing trouble on their end and slowing down your computer (your computer is running slow, who’s isn’t).  They provide the Microsoft Webpage, you log in and give access to your computer, and they’re off!  You just gave a hacker access to your computer.  The call was fake, the website an authentic mimic, and the hackers job too easy.
  4. Advertising Scam: A number of local service providers fell pray to a scam in which a company sells advertising space on a prominent Realtor’s marketing materials. For $1500, their company can advertise on the folders that the Realtor gives to customers and clients at closing. The catch: The Realtor never agreed to this, the company has no plans on printing real folders, and the whole operation is just a scam. The parties lost their money and the innocent Realtor’s reputation took a potential hit with angry business owners feeling burned.

To Avoid these and other scams, here are a few simple rules:

  • NEVER provide private information that is solicited over the phone or by email.  Credit Card Companies, Banks, and vendors will never ask for this information when they contact you.  If you call a trusted number, then it is ok to give information.  Examples:
    • Credit Card Fraud:  You may receive calls alerting you of fraud on your account. Do not link to the site in the email and do not call the number provided.  Call the number on the back of your card!
    • Bank Account Issues:  You may receive email of phone alerts about problems with your bank account. Often the emails are incredibly authentic.  Do not link to the email or open any attachments.  Call the number from your own records or your local representative.
    • Toner Scam:  The key to this scam are the first phone calls asking for seemingly harmless information.  Often, the first call is just to “confirm” the copier ID number or the make and model.  Do not give this out. More importantly, all staff should be aware of this scam and avoid agreeing over the phone to anything relating to toner or computer supplies and avoid sending payment for any questionable item.
  • Computer Scams:
    • Microsoft Update Scam:  NEVER give access to your computer to anyone other than a person you have chosen to hire. If they call you, don’t give any information, access to information and certainly don’t allow them remote access to your computer.
    • Phishing Scams:  Don’t open any attachments you are not expecting or links.  An email with nothing but a hyper-link is not linking to something “Awesome” or “Interesting” or anything else.  It’s a virus, malware, etc.  Be especially wary of .zip and .exe files.
  • Advertising Scam: This scam can often be avoided with a simple Google search. Before committing to contracts or payments with unknown parties, do your research. It is as easy as a Google search. If the first page of Google is filled with Ripoff Report.com; bbb.org; snopes.com and complaintsboard.com, your are likely the target of a scam.

Much of this is easier said than done. Scammers are sophisticated and constantly adjusting to appear legitimate. Simply being aware of the scams will keep your radar up for red flags. Be skeptical and curious, do your research, and be cautious of these scams and you have a better chance of avoiding them.

Finally, don’t be embarrassed and don’t hide your story.  Share it with others in your organization and elsewhere.  Knowledge and awareness is the best way to shut these scams down.


Wisconsin Passes New Privacy Law Affecting Closings

A new state law may make the closing process slightly more difficult. The law makes it harder to order water bills for real estate closings. Being aware of the new law can avoid delay and help ease concerns when the title company asks for information or signatures.

Act 25 And Municipal Water Bills

When a home owner sells a house, they must assure that the water bill is paid in full as of closing. Title companies take care of this by ordering the Seller’s final water bill from the municipality. This is typically the only utility that the title company will handle because it is listed on the offer to purchase and can become a lien against the property if not paid.

Wisconsin Act 25 now prohibits a municipality from releasing customer information to any person (including a title company) without the home owner’s consent. This means, title companies need a written authorization and consent from every seller in order to request the water bill.

While this might seem like a minor detail, it adds time and complication to an already rushed and complicated process. Many sellers are nervous about the process and are skeptical and hesitant to give information and authorization to a title company that they hardly know.

The Wisconsin Realtor’s Association has advised all Wisconsin Realtors to include the following authorization on their listing contract:

The Seller authorizes the Broker and/or the title company Seller anticipates will close the transaction, to obtain any municipal utility customer information relating to the Property, including but not limited to customer usage or account information.

Homestead Title has already revised our Authorization (used for mortgage payoffs) to include any municipal utilities.

Homestead’s mission and passion is to make the closing process easier. By providing education and helping Realtors and Sellers understand the process, we make the process more enjoyable, less stressful, and smooth for everyone involved.

 

Too Much Money is a Red Flag!

Realtors, attorneys, and home sellers should be alert to red flags that indicate fraud, scams, or troubled deals. One major red flag is when a buyer offers too much money. Sellers should beware of any offer with a purchase price that is far higher than expected or earnest money that is far more than customary in the market.

Common Scams

Foreign Buyer Blindly Purchasing Home

One common scam involves foreign buyers emailing Realtors asking for help purchasing a home. After a few emails, the buyer (usually from China, England, or Canada) will make a full price offer on a home the he has never seen. He will then send earnest money in a certified check. If the red flags weren’t waiving already, they should be when the Earnest Money is way too high. For instance, in Madison, Wisconsin, earnest money typically ranges from $1,000 – $3,000. The foreign buyer will send $100,000 or more in earnest money. They will then ask for a return of the excess money. If you return the funds via wire, as requested, you will soon find yourself in a bind when the certified check bounces. It was fake.

Too much earnest money is a red flag!

For more information on this, common scam: Link here.

Local Buyer Seeking Occupancy

Another potential scam occurs when a buyer seeks to purchase property with an extended, pre-closing occupancy. In this case, we have seen buyers offer substantial earnest money (10-20 times the typical amount) and request occupancy for many months prior to closing. The buyer then moves in, fails to close and refuses to leave. The seller must file an eviction proceeding to remove the buyer.

Again, too much earnest money raises red flags. In additions, extended, pre-closing occupancy should raise a red flag worthy of retaining an attorney.  Interestingly, one of the ways to mitigate the risk of an extended occupancy period is to ask for an unusually high amount of earnest money.  Thus, red flags don’t always lead to fraud.  But they can indicate additional risks.

Unrealistic Purchase Price

Any time a buyer offers far more than the reasonable value of a home, it is a red flag for fraud. In some cases, this kind of fraud can benefit both buyer and seller. But, it may be fraud nonetheless and can expose the Realtor or other professionals to liability and harm.

For additional resources on avoiding Real Estate Scams, check out the following links:

Various Real Estate Scams: http://realtormag.realtor.org/law-and-ethics/law/article/2010/08/5-real-estate-scams-you-need-know-about

Foreign Buyer Scam: https://homesteadtitle.wordpress.com/2010/06/15/real-estate-scam-warning/

Corporate Records Scam: https://homesteadtitle.wordpress.com/2013/02/01/scam-alert-annual-minutes-requirements/

Deed Copy Scam: https://homesteadtitle.wordpress.com/2012/07/20/deed-copy-scam-alert/

Better Business Bureau False Complaint:
https://homesteadtitle.wordpress.com/2012/01/20/better-business-bureau-false-complaint/

 

Up, Up, and Away

Rates on the Rise, But Sales Remain HOT

Mortgage rates spiked over the last two weeks. In fact, since the end of April, the average rate on a 30-year fixed rate mortgage increased by nearly 25%.

Pressure From The Fed Kept Rates Low

The Fed had helped keep mortgage rates low through a bond purchase program called Quantitative Easing (QE for short). But, recent announcements by Fed Chairman Ben Bernanke signaling a slow down or end to QE spooked the market.

Mortgage rates jumped and have continued to rise since those announcements.

Real Estate Market Continues Hot Streak

Despite rising rates, the real estate market remains hot. Realtors continue to be overwhelmed with activity and many sellers are seeing multiple offers near or at asking price.  Homestead’s numbers are no different. After an incredible year of growth in 2012, we have seen a 30% year over year increase in closings. And, despite the jump in interest rates from April to June, our new orders have not slowed.

Homestead’s growth is both a function of a strong market and of our strong commitment and passion to making the closing process easier for our customers and clients. Our values of caring, empathy, flexibility, loyalty and a hands-on, education based approach have cemented a loyal following of Realtors and do-it-yourself sellers.

Mortgage Rates Shot Up This Week

Mortgage rates shot up this week and many are wondering why and what’s next. Homestead Title is going wonky today and dabbling in the guessing game of mortgage rates.

Bonds and Mortgage Rates

Mortgage Rates tend to follow long term bonds and, specifically, the 10 year Treasury Bond market. As bond yields increase, mortgage rates go up. And, sure enough, bond yields rose this week. But, most economists believe there is a much stronger force at play that has kept interest rates low. It is called the Fed and its program of Quantitative Easing.

Quantitative Easing Explained

The Federal Reserve has ways of influencing the economy. Its primary tool is to lower the interest rate charged to banks for inter-bank lending. By lowering the cost of money they hope Banks will borrow more, lend more freely, and spur economic growth.

Over the past 4 years, the Fed lowered rates to nearly zero, yet banks still weren’t lending enough and the economy wasn’t growing fast enough. In fact, banks were borrowing this cheap money and using it to buy safe bonds that paid a small return. Unable to lower the cost of money, the Fed sought to influence the quantity of money (hence the term Quantitative Easing). They pumped cash into the economy by buying up the same bonds and safe investments that banks were buying. This lowered the yields on bonds and indirectly lowered mortgage rates.

And sure enough, people borrowed. This spring has seen a surge in the real estate market and low interest rates have surely played a role.

Why Did Rates Rise Suddenly This Week?

When the Fed talks, the markets listen. On May 22, Federal Reserve Chairman Ben Bernanke suggested that the Fed might slow down or stop Quantitative Easing sooner than expected. The markets and banks reacted strongly (some would say they overreacted) and mortgage rates spiked.

What Will Happen Next

We’re a Title Company, not fortune tellers. If we could accurately predict the economy, we’d be on a beach in the Caribbean. But we can report what other’s are saying. Many economists think this is still a volatile market and rates will drop back down. It is hard to imagine rates dropping back to the historic lows of the last year, but we never imagined that was possible in the first place. Rates are still well below 4%, which is a screaming deal by comparison to rates over the last 50 years.