National Affordable Housing Trust Fund Introduced
The first major housing program proposal
in decades has been introduced. It may help stabilize home
values.
Senior House Democrats and Republicans in late June
introduced bipartisan legislation intended to produce,
rehabilitate and preserve 1.5 million housing units over the
next 10 years. According to a June, 2007 survey released by
mortgage lender Wells Fargo, 80% of Americans support
legislation that would encourage home ownership. The new
bill will initially allocate between $800 million and $1
billion annually to states and local communities, without
increasing government spending or the federal deficit. The
National Affordable Housing Trust Fund will instead be funded by
proceeds from the recently passed Government Sponsored
Enterprises' (GSE) Affordable Housing Fund (H.R. 1427), from
savings from Federal Housing Administration reforms
contained in H.R. 1852, the Expanding Americans Home
Ownership Act, and from any other funding sources that may
be subsequently identified. Under the Trust Fund bill, 60%
of the funds will be allocated directly to local
communities, with the remainder to be granted to states,
insular areas, and Indian Tribes. The Trust Fund will be
the largest expansion in federal housing programs in
decades.
The fund can be used to provide down payment and closing
cost assistance for first-time home buyers and to build,
rehabilitate, and preserve affordable rental housing.
Expanding the number of first time buyers will also
indirectly increase the number of move-up buyers for
higher-priced homes, and this will help stabilize U.S. home
prices. Understandably, the bill is targeted to those
families most in need - provisions require that
100% of the funds go for the benefit of low income families
and that three quarters of all funds go to extremely low
income families.
States and
localities are required to make Trust Fund grants to
qualified entities (which include for profits, nonprofits,
agencies, and faith-based organizations) that propose
affordable housing projects designed to meet the highest
priority housing needs in their jurisdictions. Funds will be
awarded under funding competition rules that includes
matching requirements from state, local, or locally controlled
other federal funds, and it includes provisions to reallocate
funds from any grantee that does not follow the rules or
does not distribute the funds in a timely manner. The bill
also includes a number of provisions to ensure that the
funds are used for housing and are not misused, including:
-
A
strict prohibition against any funds being used for a
recipient's political activities, advocacy, lobbying,
counseling, travel, preparation or advice on tax
returns, or other unrelated expenses;
-
Limits
set by HUD on how much grantees can spend on
administrative costs;
-
A
requirement by HUD to establish program regulations,
authority for HUD to audit each grantee's compliance, a
requirement that each grantee develop systems to ensure
program compliance, and require annual state fund use
reports, and;
-
Authority of HUD to impose penalties on grantees that do
not comply with requirements, including requiring
grantees to reimburse misused funds.
The
American Homeowners Grassroots Alliance supports the
National Affordable Housing Trust Fund because we believe
that it is balanced and fiscally responsible. Hearings on
National Affordable Housing Trust Fund will be held in July.
AHGA also
supports the Expanding American Homeownership Act, which
would modernize the Federal Housing Administration loan
program to make FHA loans more available to American
homeowners, and other pending measures that will contribute
to both the expansion of home ownership and stabilization of
home values.
Good News for Homeowners on the Tech Front
Several recent developments related to the application of
technology to important policy goals of the American
Homeowners Grassroots Alliance offer good news for
homeowners.
On the healthcare front a comprehensive and
bipartisan bill introduced in June by Senators Edward
Kennedy (D-MA.), Mike Enzi (R-WY.), Hillary Rodham Clinton
(D-NY) and Orrin Hatch (R-UT) joins a growing number of
critically important bills introduced to fundamentally
improve healthcare. The legislation applies technology
applications to reduce healthcare costs and would:
• Provide federal financial incentives to
practitioners of care to facilitate the adoption of health
IT, and for communities, states, and other entities to plan
health IT components and develop health information
exchanges.
• Encourage patient education that would encourage the use
of electronic health records and provider quality
information.
• Establish federal leadership of a federal-state process to
resolve policy issues central to a secure and safe health care
system, like privacy and professional licensure.
• Create a statutory federal responsibility to lead a
public-private process to establish standards for health system
interoperability, product certification, and quality
measures, and an accelerated process for standards
improvement.
The legislation would help drive down health care costs by
significantly reducing 30 percent of all healthcare
spending (about $300 billion annually) that is still
going toward duplicative paperwork, redundant tests,
over-medication, inappropriate care or avoidable
hospitalizations and emergency room visits. It could also
save nearly 100,000 lives annually.
Another significant benefit would be that
the legislation will help promote advanced medical
technology that will soon enable many homeowners with
chronic medical conditions to remain in their homes while their
health can be monitored remotely 24/7 though the
use of wearable wireless medical monitoring devises.
The
Internet has many other important applications for
homeowners in addition to healthcare. For that reason the
results of a study released in late June by the Federal
Trade Commission were very encouraging. The study found that
Internet services competition is alive and well. There is
therefore no immediate need for new federal rules safeguarding the flow
and speed of information on the Internet because there's no
current evidence of market failure. According to the report,
approved by all five FTC commissioners, existing antitrust laws
and FTC oversight responsibility and resources are
sufficient to assure that consumers need not fear that their
unfettered access to Internet content providers will be
threatened by those who provide them Internet
access.
"To date we are unaware of any significant market failure or
demonstrated consumer harm from conduct by broadband
providers," said FTC Chairman Deborah Platt Majoras.
"Policy makers should be wary of enacting regulation solely
to prevent prospective harm to consumer welfare,
particularly given indeterminate effects on such welfare of
potential conduct by broadband providers." she added.
The
Alliance believes that the FTC’s analysis is credible
because of the Commission’s excellent track record in
enforcing competition in the Internet arena. While
competition between Internet service providers is thriving,
there has been substantial abuse by some Internet content
providers. Of particular benefit to homeowners has been the
FTC’s aggressive pursuit of many real estate industry
multiple listing service’s (MLS’s) discrimination against
homeowners who use discount real estate brokers. The MLS’s
are the dominant source of Internet listings of U.S. homes
for sale, which they distribute through the websites of
thousands of real estate brokers across the country. Today
80% of home buyers use the Internet in their home search
process. Until recently many of the MLSs prevented or made
it very difficult for potential buyers to see Internet listings of
home sellers who use discount brokers. Under threat of
lawsuits by the FTC all but one MLS have eliminated barriers
that prevent potential buyers from seeing Internet listings
of home sellers who use discount brokers.
The FTC
is pursuing a federal antitrust lawsuit against the
remaining MLS, Realcomp II, over its restrictions on
consumers Internet access to property listings of home
sellers who use discount brokers. One of the injured discount real
estate brokers also filed an antitrust lawsuit against Realcomp II in June, alleging that
the MLS sought to
block the company's access to MLS data "as part of their
efforts to destroy (its) innovative business model and to
thwart competition.” The discount broker offered a cash rebate of up
to 1 percent of the sale price to buyers who used the
company's services, and for sellers the company typically
offered to list a property for a total commission of 4.5
percent of the home's selling price, which is lower than the
typical 6% commission rate. AHGA believes that addressing
these kinds of existing abuses by Internet vendors, which are costing homeowners millions
of dollars every year, continues to be the highest and best
use of FTC’s limited resources.
The
Department of Justice (DoJ) is also involved. DoJ's
Antitrust Division is currently suing the National
Association of Realtors to overturn association regulations
that restrict the dissemination if homeowner's listings on
the Internet.
AHGA also
expressed these views regarding Internet abuses by real
estate brokers to the Federal Trade Commission’s
sister agency, the Federal Communications Commission (FCC).
In AHGA’s June 15 response to the FCC’s Notice of Inquiry on
the status of the Internet we further noted importance of the
Internet to many other
activities of American homeowners. There is a fast growing U.S. trend towards teleworking – both telecommuting from home and
rapid growth in the creation
of home-based technology-centric small businesses. Homeowners and
other consumers are also increasingly using the Internet for
everything from paying bills to ordering products and
services. The Internet is an increasingly important tool in
the K-college educational process. Developments in
telemedicine will help reduce our nation’s
spiraling medical costs. Many of these trends are also
helping to take many vehicles off the road, lessening
pressure on the nation’s transportation infrastructure and
reducing vehicular pollution and global warming.
AHGA
strongly supported the FCC’s 2005 Internet Policy Statement
containing the FCC’s commitment to protect consumers’ access
to the lawful online content of their choice, and to foster
the creation, adoption and use of Internet broadband
content, applications, and services. The principles
contained in that policy statement concisely define the
essence of a free, open, and neutral Internet. Aggressively
enforcing these principles is the most important role that
the FCC can play in maintaining the vitality and potential
of the Internet.
AHGA urged
the FCC to support the efforts of federal competition
agencies to suppress ongoing and blatant anticompetitive
practices of certain Internet content providers, and take
steps to help address the looming capacity challenge being created by
the exponential increase in Internet bandwidth demand. While the FTC
is currently taking the lead against abuses by Internet
content providers, it is important that the FCC, to the
extent that it is empowered, also fully investigate and
aggressively enforce our antitrust and competition laws to
stop companies who are currently clearly using their market
power to limit competition on the Internet.
The
exponential increase in bandwidth demand is becoming a
growing barrier to broadband speed and affordability. By 2010, twenty
typical households will generate as much traffic as the
entire internet moved in 1995, according to John Chambers,
CEO of Cisco. The many new data-rich content sources and
applications are greatly benefiting homeowners and other
consumers, but they clearly point to the urgent need for new
national policies to encourage the expanded capacity, wider
availability, and affordability of broadband. Although the
rapid expansion of broadband adoption clearly demonstrates
that it continues to provide an increasingly valuable and
affordable service to many consumers, there are clearly
segments of the population for whom broadband affordability
and/or access remains a serious challenge. For these reasons
policies should be implemented to help assure that this very
rapid and very beneficial expansion of Internet traffic,
which some have termed the “exaflood”, does not become a
barrier to the continued rapid expansion of broadband access
and to broadband speed and affordability...
Ensuring an
Internet that can handle the exponential increase in
bandwidth demand is essential for American homeowners, our
economy and our environment. AHGA believes that federal
tax incentives or subsidies to underserved consumers and/or
network platform providers, broadband Internet
access service providers, other broadband transmission
providers, Internet backbone providers, content and
application service providers to increase their
infrastructure investments will be key to expanding
broadband deployment, speed, and affordability. Support for
federal research to expand alternative broadband
technologies can contribute to that goal and also increase the number of competitors and
allay concerns about market concentration. For its part the
FCC should also seek ways within its scope of authority to
encourage faster broadband deployment and increase its
affordability.
Policymakers should also take aggressive actions to protect
privacy, reduce spam, and stave off viruses, worms, or other
“hack attacks” that injure consumers, consume bandwidth,
and/or disrupt networks and interfere with emergency
response. These actions should include stronger criminal
penalties and increased enforcement as well encouraging the
development of technologies that offer similar protections.
top
Annual Declines Continue in the Home-price Index
Although some markets are doing reasonably well, home prices
in many parts of the country continue to drop.
The monthly Standard & Poor's/Case-Shiller 20-City Composite
index measured the 17th consecutive month of annual decline
in April and has been in negative territory since January
2007. The index monitors annual price changes of single
family homes.
Fourteen of
twenty cities registered price declines in April, according
to the report. In many cases unique factors affected to the
status of home values. For example in Detroit, where home
values were down 9.3%, the continuing decline of the U.S.
auto industry has no doubt contributed significantly to the
decline. However there’s no such obvious factor in other
cases, such as San Diego, where home prices have declined by
6.7% and Washington, D.C., down by 5.7%. The latter two were
among the strongest beneficiaries in the run-up of home
prices, so it may be that those declines are more a
realignment with the slower, but still impressive, home
appreciation rates that occurred over most of the rest of
the country over the first half of this decade.
Despite the
decline in home values in most areas, homes appreciated
substantially in
others. In Portland, Oregon home prices increased an
impressive 6.4% over the last year. Seattle and Charlotte,
North Carolina did even better, appreciating at 7% and 9.6
respectively. That appreciation wasn’t typical for other
cities in their regions – “no region is immune to the
weakening price returns," according to Robert J. Shiller,
chief economist at MacroMarkets LLC.
More
declines are expected in the future. David Shulman of the
Anderson Forecast at the University of
California, Los Angeles recently characterized the outlook
as “not a recession, but it is certainly close," In an
interview with
Inman
News, Shuman said he anticipated a 10 percent
price decline in home prices "that will likely extend into
2009."
According to PMI Mortgage Insurance Co.'s latest
Market Risk Index, the 15 largest metropolitan
statistical areas (MSAs) have a 50% or greater chance of a
price decline, and 7 have a 10% chance of price declines in
the next two years.
The
fifteen MSAs with a greater than 50% chance of price
declines, in descending order of risk, were:
-
Riverside-San Bernardino-Ontario, CA
-
Phoenix-Mesa-Scottsdale, AZ
-
Las
Vegas-Paradise, NV
-
West Palm Beach-Boca Raton-Boynton Beach,
FL
-
Los
Angeles-Long Beach-Glendale, CA
-
Santa Ana-Anaheim-Irvine, CA
-
Oakland-Fremont-Hayward, CA.
-
Orlando-Kissimmee, Fla.
-
Sacramento-Arden-Arcade-Roseville,
CA
-
San
Diego-Carlsbad-San Marcos, CA
-
Ft. Lauderdale-Pompano Beach-Deerfield Beach, Fl
-
Miami-Miami Beach-Kendall, Fl
-
Tampa-St.Petersburg-Clearwater, Fl
-
Boston-Quincy, MA
-
Washington D.C.- Arlington-Alexandria, VA
The
seven MSAs with less than a 10% chance of price
declines, in ascending order of risk, were:
-
Pittsburgh, PA
-
Ft. Worth-Arlington, TX
-
Dallas-Plano-Irving, TX
-
Houston-Sugar Land-Baytown, TX
-
Indianapolis-Carmel, IL
-
Columbus, OH
-
Cincinnati-Middletown, OH
There is
a high correlation between affordability and risks of
declining home values. The higher-risk MSAs had much lower
affordability scores than the 7 MSAs with less than a 10
percent chance of a price drop.
Not
everyone is depressed by the decline in home values. The
next year will be a great time to invest in homes, according
to a recent report by Housing Predictor. Record amounts of
subprime foreclosures are creating great opportunities to
buy a home at below market prices. Investors are
aggressively pursuing foreclosures, indicating a level of
confidence that further declines in home values won't be
significant.
Historically real estate investors have made substantial
profits buying homes in declining markets according to the
Housing Predictor Investment survey.
AHGA
urges caution in buying foreclosures. While foreclosure
purchases can save buyers a lot
of money, they are fraught with risk for unsophisticated home
buyers. There is plenty that can go wrong, including
undisclosed structural problems and many other problems.
Unless you have guidance from an experienced foreclosure
expert, and financial reserves in case there turn out to be problems,
most homeowners should think twice before getting involved
in foreclosures.
top
Energy Bill Progresses
Sweeping energy legislation will help reduce homeowners’
energy costs and help the environment.
On June 22 the U.S. Senate passed a sweeping energy
legislation package that would mandate the first major
change in the nation's vehicle fuel-efficiency law since
1975. The final vote was 65 to 27. The fuel-efficiency
language raises the current 27.5 miles per gallon (mpg)
standard for cars and 22.2 mpg standard for SUVs and small
trucks, to a new 35 mpg standard by 2020. Gasoline use
accounts for about half of the nation's petroleum
consumption.
The bill
would also require the use of 36 billion gallons of biofuels
annually by 2022, define penalties for gas price-gouging, and
would expand government powers to investigate price setting
by oil companies. Federal grants and loan guarantees would
be created to promote research into fuel-efficient vehicles
and support projects to capture carbon dioxide from
coal-burning power plants and store it underground.
In a
related Senate battle, a $32 billion tax package that would
have poured money into alternative fuel projects by raising
taxes on oil and gas companies was defeated. AHGA has mixed
feelings about the package. While it would generate revenue
for a worthy cause and would help reduce the pollution
caused by oil and gas companies, the new energy taxes would
inevitably be passed on to hard-pressed homeowners and other
consumers.
Unfortunately neither package included an AHGA-endorsed
proposal to create tax incentives and/or subsidies to expand
teleworking, including both telecommuting and the creation
of home-based businesses. AHGA believes that teleworking
eliminates a lot of automotive pollution, which is an even better
alternative than reducing it. Teleworking incentives would
reduce automotive pollution, ease rush-hour congestion, and
reduce pressure on our transportation infrastructure. The
federal government has set a good example in supporting
telecommuting. Today 6.6 percent of the federal workforce -
119, 248 workers – telecommutes, thanks to favorable federal
policies. Several forward-thing state and local governments
also support employee telecommuting.
On the
House side Democratic leaders are having difficulty reaching
agreement on a comprehensive national energy package.
Speaker Nancy Pelosi had hoped to come up with a comprehensive
package by July 4, but Democratic leaders could find
consensus in only some areas by then. Noticeably absent from
the piecemeal package announced just before the July 4
recess was any increase in automotive mileage standards.
The
current Democratic consensus package is the product of 11
House committees and focuses on conservation. Among the most
significant components in the House package were those
promoting greater energy efficiency in appliances, buildings
and electricity grids. It would set new efficiency standards
for dishwashers, refrigerators and other appliances; require
more energy-efficient lighting; promote E-85 pumps for
vehicles that can run on fuel containing 15 percent ethanol,
and provide tax incentives to buy hybrid cars with
rechargeable batteries. Those components will help reduce
both carbon dioxide emissions and electricity bills. About $16
billion in current tax breaks for the energy industry would
also be repealed.
The
House Democratic leaders may try to first pass the consensus
package before tackling the question of mileage standards
and other energy provisions that are controversial within
the party.
top
Remodeling Revisited
It used to be that that you picked out the flooring, cabinets,
countertop and appliances, and then got out of the
contractor’s way.
Times have changed. When it comes to remodeling, homeowners
are getting more involved, more environmentally conscious,
and more aches and pains. Easy Internet access to a huge
number of vendors with pictures, prices and specifications on their websites of
everything including cabinets, flooring, countertops, sinks
and faucets, and just about every other component of a
remodeling project, has enabled homeowners to do much of the
advance design work before they contact a remodeling
contractor. The increasing orientation towards designer
components by big box hardware stores like Lowes and Home
Depot, as well as the more recent specialization in high end
design by Home Depot’s Expo Design Center and others like
it, are also leading homeowners to get more involved in the
design process.
The process benefits remodeling contractors as well, because
estimates are easier and far more accurate when the exact components
are known in advance. Homeowners who have already looked at
the gamut of choices and taken their time to reach a
decision on components before meeting with a contractor are
also less likely to change their mind during the construction
process. This benefits homeowners, because if they
substitute components in mid process they lose much of
their control over the final cost. Those changes will not
only lead to additional costs if more expensive components
are substituted, but there may be restocking fees or other
add-ons to the contract price that the homeowner will have
only limited latitude to quibble with.
Some homeowners are saving a lot of money by buying
remodeling components on eBay or Craigslist. The selection
is quite large - there were 2,738 kitchen faucets on eBay on
July 7. Although the selection in some categories is great,
and savings can often be very substantial, homeowners should
be cautious about buying remodeling components on the
Internet. Some products advertised as new may in fact be
returns, and others advertised as in excellent condition may
be broken. In addition, returning damaged Internet purchases
takes time and costs money, and some vendors don’t provide warranties and/or
accept returns. According to Consumer Reports 70% of those
they surveyed who used eBay were very satisfied. That’s not
too bad, but if you are one of the 30% who might have ended
up with what looked like a great bargain on what turned out
to be a broken kitchen faucet, you will have a problem if
the contractor hooks it up and it starts spraying water all
over your kitchen. The best advice is to be careful – don’t
buy from Internet vendors who don’t have a lot of
transactions and a very
high (98-100%) approval rating by their buyers, buy well in
advance in case something is wrong, and avoid buying
products whose defects may not be apparent until installed
(like the aforementioned faucet).
Homeowners are also becoming more environmentally conscious
in their remodeling. Reflecting consumer awareness of higher
energy prices, more homeowners are often using more than the
code-required amount of insulation and super insulated
windows in their additions. More are also thinking about the
passive solar energy opportunities and the orientation of
additions to the sun.
Many homeowners are saving additional money by doing all or
part of the remodeling work themselves. Some skills – such
as painting or finish carpentry – are especially useful. They come into play at the very end of a project,
after the contractor’s work is finished, so there are no
scheduling risks. There are other risks however, most
particularly risks of injury to homeowners using tools they
don’t know how to operate or working past their point of
exhaustion.
Homeowners must take steps to prevent injuries. The
first rule is to wear appropriate eyewear and other proper
safety gear. Wearing safety glasses when using saws and
hammers is essential. Wear work gloves, knee pads and back
braces for heavy work, wear earplugs if you are using noisy
tools, and a dust mask for any job that generates dust of
any kind.
Organize
the work space so you are unlikely to trip over power cords
or components. Modern cordless power tools will save time
because moving cords around isn’t a problem, and they’ll
avoid much of the risk of tripping. You can rent tools such
as floor sanders, nail guns, tile cutters and jack hammers,
but ask for training before you leave the tool rental store if you don’t know how
to use them.
Be very
careful using ladders – before climbing triple-check to make
sure a ladder is firmly planted. Make sure your nail gun has a
sequential-trip trigger. The more common contact-trip
trigger, which shoots at any time, is responsible for most of
the nearly 15,000 nail gun injuries to do it yourself
carpenters each year.
Try to
use and keep combustible solvents outdoors. Never store a
product that produces combustible fumes near a furnace or water heater. Most important, quit before you get
tired. The majority of injuries, both the homeowners and
professionals, occur near the end of the day, when people
start to fatigue but haven’t yet realized it. Being just
slightly off in reaction time or alertness can mean a trip
to the hospital, which is not worth trying to get the job finished
a day or two early.
top
Potpourri
Here’s a potpourri of important news, and useful tips and
ideas.
●
Iggys House
offers free multiple listing service (MLS) listings for home sellers in twenty states.
Because MLS’s distribute those listings to the websites of
their many member real estate brokers, this gets home
sellers wide exposure on the Internet, where 80% of today's
home buyers are doing searches of homes for sale.
Home sellers can post
information, pictures and videos of their home in the MLS
listings. Iggys House does not charge a commission if the home sells,
but home sellers
in slow
markets
should
consider offering commissions to buyers agents in their MLS
listings in order to help attract prospective buyers. The service was created by
BuySide Realty, which offers cash rebates to
homebuyers. They are using it to attract customers to use
their rebate service, or buy other items that they sell,
such as such as yard signs, brochure boxes, lockboxes and
real estate forms. The rebate real estate business model is growing
rapidly in popularity, and with the slow real estate market
and wide selection in many areas, smart home buyers willing
to do more of the work themselves are embracing it. The
service is available in California, Colorado, Connecticut,
Florida, Georgia, Illinois, Indiana, Kentucky, Maryland,
Massachusetts, Michigan, Minnesota, New York, North
Carolina, Oregon, South Carolina, Tennessee, Texas, Virginia
and Washington. Even though this MLS listing service is free,
home sellers should think carefully about trying to sell
their homes without a full service agent if they are in a slow market
and/or face a moving deadline. In such situations the
advantages of a very experienced full service agent with a
good track record and good references in your neighborhood
may make that a wiser choice. These considerations may also explain in part why
real estate commission rates, which had been falling
slightly in recent years (though costs in inflation-adjusted
dollars have increased due to home appreciation), actually
increased by nearly .2% in 2006 last year to just under 5.2
percent. (Go to
www.AmericanHomeowners.org for other free home sellers
tips).
●
How to Be a
Dirt-Smart Buyer of Country Property, by Curtis Seltzer ($34.95, Infinity Publishing Company, 2007) is a must
read for anybody thinking about buying country property. As
growing numbers of homeowners have learned, country property, especially if
it’s just outside current urban exurbs, can be both a very
enjoyable and profitable experience if held over the long
term. However buying country property is also filled with
risks for unsophisticated urban and suburban dwellers who
think that septic field is the name of their home team’s
ballpark. This comprehensive (750 pages!) book covers just
about everything you need to know in order to join the
growing number of homeowners who are buying recreational
and/or investment property in the country. It covers farms,
timberlands, and hunting property and second homes,
environmental and natural resource issues, negotiating,
legal considerations, financing and much, much more. Order
your copy at
www.bbotw.com, key word “property”. Seltzer, who
provides a money-back guarantee on the book, also offers 30
minute initial phone consultations ($62.50), longer
open-ended consultations for $125/hour, and other services.
Call him at 540-474-3297 or email curtisseltzer@htcnet.org
for more information. The book’s content proves he’s worth
it, and anyone who lives on Wimer Mountain Road in
Bluegrass, VA must know about country property.
●
Reduce
Global Warming (and your energy bills) with these energy
saving tips from Public Services Enterprise Group, an energy
services company: Always turn off everything electric you're
not using, including lights, TVs, and computers. Use
dimmers, timers and motion detectors on indoor and outdoor
lighting. Set a programmable thermostat to your seasonal,
daily and weekend schedule. Raising your thermostat 5
degrees higher than normal can reduce cooling costs by up to
15% during the summer. Close shades, blinds, and
drapes facing the sun to keep the heat out and help
fans and air conditioners cool more efficiently. Check the
weather-stripping and caulking around doors and windows and
replace it if necessary.
Eliminate air leaks between window air conditioners and
windows with foam insulation or weather-stripping. Keep
doors leading to uncooled parts of your home closed, and
close air vents in those rooms. Use fans to bring
cooler air inside during the night and circulate it during
the day. Ceiling fan blades should rotate clockwise
during the summer and counterclockwise in the winter - most
have a switch on the motor to change rotation direction. Ceiling and other fans provide
cost effective cooling and better
circulation so you can raise the thermostat and reduce air
conditioning costs. Delay activities that generate heat, such as
dishwashing and laundry, until evening, and don’t turn
appliances on until they have a full
load. Replace as many high wattage incandescent bulbs as
possible with
comparable compact fluorescent bulbs (about 23-watt). Plant
shade trees close to the house on the south and west sides.
For a copy of the American Homeowners Foundation’s free ten
minute self conducted home energy audit, which will help
identify more ways to reduce your energy costs, send an email with
“free energy audit” in the subject line to
AHF@AmericanHomeowners.org.
●
Beware of
incompetent real estate agents. Buying and selling a home is a
very complex process, yet the entry standards for becoming a
real estate agent in most states is so low (a fraction of
the time required to become a beautician, for example) that
many inexperienced new agents are incapable of providing
the wise advice and valuable service that home buyers and
sellers need. That lack of knowledge is part of the reason
that there are thousands of consumer lawsuits against real
estate brokers and agents every year. A 2007 study by the
National Association of Realtors found that commission
disputes, property-condition disclosure, and agency issues
are the most common source of lawsuits against real estate
brokers and agents. Dual agency, a situation where the same
broker is trying to simultaneously help both the seller and
the buyer negotiate the best deal on the same property,
continues to cause problems because of the obvious conflict
of interest. Cases involving fraud and deceptive practices,
breach of fiduciary duty and breach of contract resulted in
the most lawsuit damage awards. Antitrust cases related to a rise in
cases over alleged illegal tying agreements are also
growing. Since real estate agents and brokers usually don’t
get paid unless there is a transaction, there is no way to
guarantee that even an extremely experienced and well
qualified real estate broker or agent will always put their
client’s interest above their own. However an experienced
agent is far more likely to know what to do, and by virtue
of their staying power, far more likely than a rookie to
treat their clients fairly. The industry may wise up one day
and substantially increase the entry standards for the
profession, which should help improve service quality and
reduce lawsuits. Until then the best course of action for
home buyers and sellers (especially novices) is never use or
work with a real estate agent with less than five years
experience, and seek agents with knowledge and experience
in your market area who can provide you a list of satisfied
references. (Go to
www.AmericanHomeowners.org for other free home buyers
and home sellers tips).
●
A new study by two
Northwestern University economists, who chose
different methods to sell their homes, revealed that Madison
Wisconsin homeowners who sold their homes through
traditional full service real estate agents usually got a
lower sale price than people who sold their homes
without using a real estate agent. Homes sold
on
FSBOMadison.com, the local for-sale-by-owner Web
site, received an average $175,068 while those who used
traditional agents and sold through the multiple listing
service received an average $173,205 or about $2,000 less.
When the agent’s commission was deducted, the
sell-it-yourself homeowners netted quite a bit more money.
This independent study contradicts another fairly recent
study by the National Association of Realtors (NAR) which
showed that home sellers who used traditional full service
real estate brokers netted 16% more than homeowners who sold
their homes without using a full service real estate agent.
After the real estate commission, which averages slightly above 5%
nationally, homeowners would net almost 11% more according
to the NAR study. A NAR representative said that local
markets vary so widely that “it wouldn’t be surprising to
see a market where there is no difference between an
agent-assisted and FSBO price.” Like the NAR study, the
economists also found that homes sold by full service real
estate brokers sold somewhat faster than houses on the
for-sale-by-owner site. The Madison study also did not take
into account the value that homeowners might place on the
services provided by real estate agents. Nationally,
about 13% of home sales were for-sale-by-owner in 2005. A
third independent study, by the economists/authors of
Freakonomics, concluded that among home sellers using
real estate agents, the ones who did best of all were real
estate agents selling their own homes. Real estate agents
sold their own homes for substantially more than their
clients got for equivalent homes for clients. Given the
disparity of the conclusions and circumstances between the
first two studies, it is difficult to explain the
substantial differences in the data. Certainly a study by
any industry group that supports its own business model
should be carefully scrutinized for potential methodologies
and assumptions that tilt the results in the industry’s
favor. The independent Madison Wisconsin study, while likely
to be more objective, was based on data during a period
(1998-2004), when home demand exceeded supply for much of the
time, making it much easier for do-it-yourself home sellers
to get top dollar. The results of the NAR study, to the
extent that they may be more accurate, also raise a very
serious note of caution for home buyers. If real estate
agents are getting 16% more for their client's home than
FSBO sellers, conversely that means home buyers working with
those agents are paying 16% more for their homes than they
would if they had bought from a FSBO seller. NAR's data
suggests that home sellers are benefiting at the expense of
home buyers, whose interests in getting the lowest price are
apparently largely ignored by traditional real estate agents
they work with. If NAR's data is accurate, buyers will find themselves on
a much more equal footing if they try to find an appropriate
for-sale-by owner home and negotiate with the home seller
directly. Another alternative would be to use an exclusive
buyers agent (EBA). EBAs only represent buyers, never
sellers, so there is no incentive for them to favor the
sellers. To find an EBA in your area go to the National
Association of Exclusive Buyers Agents website (www.naeba.org).
●
The Consumer Federation of America (CFA) recently released the
results of a survey conducted by the Opinion Research
Corporation for AARP last June. CFA’s analysis of the survey
data reveals that most consumers view the real estate
industry and services favorably, but understand them poorly
and object to specific practices, according to Stephen Brobeck, CFA executive director. Only about one-quarter of
consumers know that commissions can be negotiated. In fact,
about two-fifths think that commissions are set by the
industry or its agents while 13% believe commissions are set
by state law. About three-fifths think that a 5-6%
commission on a $300,000 home sale is too high. Over half
think that a "dual agent" cannot effectively represent the
financial interests of buyers and sellers. Two-thirds think
that there is a potential conflict of interest when seller
and buyer agents work for the same company. And fewer than
one-fifth think that buyer access to a local MLS should
require signing an exclusive agreement with a broker - over
three-fifths believe buyers should get this access simply by
paying a fee. Moreover, recent users of agent services are
more critical of these practices than are other consumers.
Yet, all of these practices -- 5-6% commissions, dual
agency, in-house sales, and exclusive buyer-agent agreements
-- are widespread throughout the industry. CFA reiterated
its call on state real estate commissions, which oversee the
industry and are typically appointed by the governor, to more
energetically inform potential buyers and sellers about
these services. One of the most effective ways would be
required distribution by agents at the first contact of a
brochure, reviewed by the FTC and consumer groups as well as
by industry that referred to a website with more detailed
information.
●
The
Internal Revenue Service has ruled that real estate
commission rebates to home buyers are not taxable income, but rather
represent an adjustment to the purchase price of the home. (PLR
200721013). Those rebates, which can be as much as 2% of the
selling price, can amount to $5,000 on a $250,000 home, for
example. As
real estate brokers who offer cash rebates to home buyers
continue to gain in popularity, this is good news. The
February 9, 2007 Private Letter Ruling
contradicts the position of some state real estate
associations, who have been trying to protect high real
estate commissions and stop such discounting practices by
passing state laws that prohibit real estate commission
rebates. Those real estate associations have argued that
real estate commission rebates are taxable to home buyers and would encourage tax
fraud, because many home buyers are dishonest and would not
report the rebates as income when they filed their personal
tax returns. The real estate brokers association in
Tennessee was successful recently, where Governor Phil Bredesen signed a new law that prohibits real estate agents
and brokers from giving home buyers cash rebates. The
Department of Justice and Federal Trade Commission have
expressed their opposition to such anticompetitive laws.
According to the FTC and DoJ, rebates "can be powerful tools
for price competition between brokers. And by returning
money to home buyers, rebates can also benefit home sellers,
because buyers will have more to spend on the home as
opposed to commission payments." AHGA believes
antirebate laws are no more than transparent efforts by full
service real estate brokers to protect their traditional 6%
commission. It is also an abdication of their fiduciary duty
to home buyers and sellers who use their services. The
Alliance urges homeowners to
express their views on the subject to their governors and
state legislators, and to weigh their votes on this issue by
their state legislators in deciding who they will vote
in the next state election.
●
Follow
these tips and leave your home safe and secure while on
vacation: Don't tell anyone that you are leaving except
immediate family and very close friends and/or neighbors.
Stop newspaper and postal mail service until you return.
Ask a neighbor to watch out for any visitors who might be in
your yard or knocking on your door. Lock all the doors,
windows and balcony doors. Install a timer so that a lamp or
television will come on when it gets dark. Don't
leave lights on 24 hours a day.
●
There has
been an increase in crimes, especially robberies and rapes,
associated with unmarked cars posing as police vehicles.
Flashing red or blue lights for cars are sold publicly and unfortunately can be purchased by criminals as well as
volunteer firefighters and other legitimate emergency personnel. Police
are aware of this growing problem, and most will not stop
you from continuing to an active public location such
as a gas station before pulling over. In the meantime you
should indicate that you know they are behind you by turning
on your car's flashers or waving. While you continue driving
you can also call 911 and/or *77 on your cell. The
former can link you to the local police and the latter is a
direct link to state trooper information in most states.
Both can tell you if you are being followed by a real local policeman or a state
trooper, in which case it will be safe to pull over.
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Please take
the time to contact your legislators and express your views
on the policy issues covered in this month’s Home Base. It's
easy - you can reach your legislators by email in a couple of
mouse clicks, and you can use the content in Home Base and
elsewhere on our website to help you develop your message.
To look up the phone number, email, and/or postal address of
your U.S. Representative or your two U.S. Senators, (or your
state representative or state senator)
click here.
The site can look them up by zip code for you if you don’t
recall their names.
Many legislators are also happy to meet personally with
their constituents when they are back home on weekends or
when Congress is not in session. A personal meeting is a
particularly effective way to get their attention and
reinforce your message, so please consider also requesting a
follow up face-to-face meeting in their home state or home
district offices near you when you contact them on policy
issues.
Is there a policy issue that is particularly important to
you which significantly impacts homeowners or home
ownership? Any member may propose a position on a policy
issue, so please check the American Homeowners Grassroots
Alliance's 2007
Issue Guide to see whether it’s
already on our list. If it isn't on the list, we invite you
to send us an email and tell us why you think the American
Homeowners Grassroots Alliance should be working on it.
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