Executives Blog


Dec. 13, 2017

Market Watch: Fed Again Raises Rates

For the third time in 2017, the Federal Reserve has modestly increased interest rates, showing its continued confidence in the U.S. economy.  Lawrence Yun, Chief Economist for the National Association of REALTORS, is predicting the 30-year fixed mortgage rate will continue to rise next year to an average of 4.5%.  Currently, rates are around 3.9%.  

What does this mean for you?  If rates rise to 4.5%, the monthly principal and interest (P&I) payment on a $150,000 mortgage loan will increase from $707 to $760.  Even at 4.5%, rates would still be on the very low side historically, making this year and next a great time to buy. 

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Historical Mortgage Rates, 1972-2017

Aug. 25, 2017

Study: FSBOs Aren't Saving Money

In what is perhaps the "most robust test yet" with the "largest sample ever tested," financial analytics firm Collateral Analytics has concluded that For Sale By Owner (FSBO) transactions achieve sales prices significantly below those achieved by sellers who hire a REALTOR.  

To reach their conclusion, Collateral Analytics used data from normal housing markets (i.e., those not in rapid rise or decline) in 13 counties and 1,008 zip codes during 2016 and the first half of 2017, which accounted for more than 1.35 million sales.  

The factors that go into one's decision to sell by owner or hire a REALTOR vary across price ranges, geographical areas, and even age ranges.  However, using an automated valuation model (AVM), Collateral Analytics made great efforts to account for all of the factors that might sway a seller one way or another.

The results: Price per square foot is 5.02% to 7.26% lower for FSBO sales than REALTOR transactions sold through a Multiple Listing Service (MLS).  Even in the most detailed and comprehensive comparisons made by Collateral Analytics (tests run based on zip codes with confidence scores of 80% or greater), the average difference in the sale price for FSBOs was 5.526% less than those of MLS sales.  

A common argument against studies like this is that FSBO sales prices are always lower because FSBOs are assumed to be lower priced homes.  This is simply not the case.  In Collateral Analytics' study, the average sale of the FSBOs in the study was 15% higher than the average sale on the MLS sales.  Yet, when those same FSBO sales were compared to similar sales completed by REALTORS, the average result for all markets landed the FSBO seller 6% less on a price per square foot basis. 

Collateral Analytics concluded: "Using three different sorts of data and methodologies, we find that the differential in selling prices for FSBOs when compared to MLS sales is remarkably close to an average commission rate."  So, while FSBO sellers may be avoiding commissions, they are netting prices significantly less than they would with an agent.

The takeaway?  While full service real estate brokers are a transaction cost that can be avoided by selling by owner, new empirical evidence suggests that FSBO sellers avoid commissions to their detriment.  In addition, the study did not take into consideration the additional costs a FSBO seller has, such as lawyer fees associated with preparing a proper legal real estate contract (don't Google one, trust me...please!), potential legal exposure for lack of compliance with local, state, and federal disclosure laws, and time and energy expended "DIY'ing" the deal from start to finish.  

After this study, you have to ask yourself: why do all the work and bear all the risk when you can hire a professional and come out in the same financial position?

For more in-depth reading, see "Saving Real Estate Commissions at Any Price," Collateral Analytics Research (Aug. 16, 2017).

By Chris Cole


June 22, 2017

Hot Summer Market



Summer is officially here, and the housing market is warming up right along with temperatures.  Here are four great reasons to list your home for sale this summer:


  1. Buyers galore.  In our local market, buyer activity is strong.  The same is the case in markets across the U.S., according to the latest REALTORS® Confidence Index Survey compiled by the National Association of REALTORS®.  Our Executives are working with a large number of buyers who a ready to buy right now, but can't find what they're looking for.  More and more often, buyers are competing with each other for the same properties.  Why not take advantage of strong buyer activity?  
  2. Inventory (not) galore.  A normal, well-functioning housing market requires a 6-month supply of inventory. In our local market, many price ranges have 4 and 5 months of inventory.  This combined with heavy buyer demand leaves us with a shortage of homes available to satisfy the needs of buyers.  Basic economics tells us that when demand is high and supply is low, prices tend to go up.  But hurry, smart builders have started to fill this void, and better than existing homes do, so your competition is only going to get more fierce in the near future.
  3. Quicker closings now, longer later?  Fannie Mae is predicting a surge in home sales through 2017 and into 2018.  We believe banks and other mortgage originators will be slow to react to increased loan applications, processing, and underwriting needs.  Selling now could be a much less stressful and quicker transaction.
  4. Great time to move up.  If you find a new home that suits you, now is a great time to move up.  As mentioned above, supply and demand will cause prices to appreciate by up to 4.8% through 2018, according to CoreLogic, a real estate data, analytics, and technology company.  And while interest rates have trended slightly upward in 2017, the current 30-year fixed rate continues to hover around 4%, a mere 75 basis points above the record low.  However, rates are predicted to continue to move up over the next year.

As you can see, market conditions are great for both buying and selling.  Contact one of our Executives to get started!

Posted by Chris Cole

Jan. 9, 2017

Federal Housing Administraction (FHA) Reduces Annual Premiums

The U.S. Department of Housing and Urban Development (HUD) announced today that the Federal Housing Administration (FHA) will reduce the annual premium that most borrowers pay on FHA loans by 25 basis points, or 0.25%.  

Like Fannie Mae and Freddie Mac, FHA doesn't make loans, but rather provides a safety net for lenders.  The fee charged on an FHA loan is a "mortgage insurance premium" FHA takes in exchange for insuring the percentage of the loan above 80%.  The premiums fund FHA's Mutual Mortgage Insurance Fund, which helps FHA protect against losses incurred if borrowers run into financial troubles.

"After four straight years of growth and with sufficient reserves on hand to meet future claims, it's time for FHA to pass along some modest savings to working families," HUD Secretary Julian Castro said. 

The new premium schedule applies to loans with an insurance endorsement date of January 27, 2017 or later.  This change is expected to save the average home buyer $500 per year in insurance costs.  

UPDATE 1/21/2017: The Trump administration has suspended the premium cut indefinitely.  While many REALTOR groups praised the cut as a means to help more borrowers access FHA loans, other industry groups viewed the cut as too small to mean big savings for borrowers (FHA estimated the cut would save borrowers an average of $500 per year). Industry economists have cautioned that is it wise to examine any last-minute decisions by previous administrations that could be motivated by politics.  In addition, it is worth noting that FHA took a taxpayer funded bailout in 2013 because its reserves were not sufficient to meet its obligations to banks on defaulting loans.  At least with respect to FHA reserves, it appears the President is choosing to err on the side of caution.


Dec. 16, 2016

Fed Hikes Rates, Mortgage Rates Climb



The Federal Reserve raised the short-term interest rates on Wednesday for the second time in a decade and signaled that rates could continue to rise into 2017.  What does this mean for mortgage rates and your buying power?

First of all, it's important to recognize that mortgage rates are not set by the Federal Reserve.  The Fed sets the short-term benchmark interest rates, which are different from long-term interest rates applicable to mortgage loans.  Mortgage rates typically follow the long-term bond rates, such those tied to the 10-year Treasury note.  Long-term rates typically adjust before the Fed makes an adjustment.  For example, mortgage rates have risen almost 60 basis points, or 0.60%, since the presidential election, a figure more than twice that of the Fed's 0.25% hike on Wednesday.

Importantly, the Fed signaled that it expects to raise short-term rates three times next year by a total of 75 basis points, or 0.75%.  This means that mortgage rates will likely move higher before the Fed acts again.  Economists predict that if the Fed carries out the three planned rate increases in 2017, mortgage loan rates could come close to 5% on 30-year fixed notes.  Currently, Freddie Mac is reporting that 30-year fixed rates are averaging around 4.16%.

How does a rate hike affect your buying power?  Take a look at this chart.  As you can see, even slight increases in mortgage loan rates can have a big impact on your buying power. 

If you're planning on buying this year, doing so sooner could have a big impact on what you can buy.  Call us today!

Nov. 29, 2016

Sellers: Winter is Coming, But Don't Discount it

Sellers beware: WINTER IS COMING [credit: Game of Thrones] (please don't sue us).  

But what does that mean for selling your home?  Should you really wait until Spring like everyone else?

Conventional wisdom, of course, tells us that Spring is the best time to list a home for sale, the thought being that more buyers are actively looking to buy in the spring and thus, sellers have a greater chance of selling more quickly and for more money.

But is it true?  Let's take a closer look.  Like nearly everything, the devil is in the details.  

Consider this first chart, which shows us a downward trend in the number of listings from October to January each year: 

Source: Cape Girardeau County MLS and MARIS MLS

This chart tells us one important thing: Your competition is sitting at home for the winter. Literally.

Consider that fact in light of these figures:

Source: Cape Girardeau County MLS and MARIS MLS

What do these numbers all mean?  Well, for starters, bear in mind that roughly 25% of homes should, in theory, sell in any three month period of a calendar year (3 / 12 = .25).  The chart goes on to tell us what actually happens: (1) roughly 20-21% of homes in a given calendar year sell in the winter months, and (2) roughly 27-28% of homes in a given calendar year sell in the spring months.  Comparing those numbers to 25%, the difference between summer and winter sales activity is not very large.

There's more.  Remember the first chart?  The one that tells us how low inventory is in the winter and how high it starts to creep in the spring?  When you factor in the inventory counts and compare them to the sales numbers, the difference between the time periods is almost negligible.

So when is your home more likely to sell?  That conventional wisdom may be doing you a disservice. 

Winter is coming, but don't discount it!

Nov. 9, 2016

Missouri Votes YES on Amendment 4: No Sales Taxes on Services





Yesterday, Missourians voted YES on Amendment 4, marking a huge victory for hard-working taxpayers.  Amendment 4 sought to amend the Missouri constitution to prohibit state and local governments from imposing any new sales tax or use tax on services.  A statewide coalition consisting of the National Federation of Independent Businesses, the Missouri Bankers Association, the Missouri Independent Bankers Association, the Missouri Automobile Dealers Association, the Missouri Association of Trial Attorneys, and Missouri REALTORS, among many others, paved the way for the Amendment's success.

Scott Charton, spokesman for Missourians for Fair Taxation had this to say following the victory:

"The time was right to make a stand.  This is a victory for Missouri's hard-working taxpayers and their families.  Passage of Missouri's Amendment 4 is a first-in-the-nation, preemptive strike against new sales taxes on everyday services.  The threat of new sales tax on services has been stopped, thanks to the bipartisan support of common-sense Missourians. We are so very proud of the hard work and the extensive grassroots campaign by the Missourians for Fair Taxation coalition. This broad-based coalition was created by the 20,000-member Missouri REALTORS® with financial support from the National Association of REALTORS® and a long list of Missouri based organizations and small business owners.  Much credit for this victory goes to the local boards/associations of REALTORS® throughout Missouri, and their leadership and staff who served as local hubs for Amendment 4 information, campaign materials, signs and coordination with allies on the ground."

As Mr. Charton points out, this Amendment was spearheaded by REALTORS® fighting for property rights.  A sales tax on services would have had a drastic effect on everyone's ability to both buy and sell their homes.  Without this amendment, future legislation could have taxed real estate related services such as lending, title, real estate brokerage, and home inspections.  

"For REALTORS®, passage of Amendment 4 is the latest accomplishment in a long-term commitment to protecting consumers and helping them achieve the American Dream of homeownership," Mr. Charton said.

We are proud REALTORS® here at Realty Executives of Cape County.

Oct. 10, 2016

The Role of a REALTOR®

To most consumers, the terms "real estate agent" and "realtor" are synonymous.  However, a closer look will tell a very different tale; the word "REALTOR®" is a technical term that means much more than "real estate agent."

A REALTOR® is a member of the National Association of REALTORS® ("NAR"), the largest trade association in the United States.  REALTORS® place high importance on honesty and good faith in their dealings with one another and with clients.  REALTORS® take an oath to abide by a stringent, enforceable Code of Ethics along with Standards of Practice, which means REALTORS® owe specific duties to clients, the public, and to other REALTORS®.  Their non-member "real estate agent" counterparts do not have to abide by any such code. 

REALTORS® aggressively fight for the rights of homeowners through well-run state associations and knowledgeable political action committees.  If there's an issue in the legislature that will negatively affect homeowners, you can bet that REALTORS® will fight to protect homeowners.  REALTORS® regularly take training courses to ensure they serve their customers and clients with the level of skill, knowledge, and attention required by today's real estate consumer.  

Most importantly, REALTORS® represent their clients with zeal.  Many people, in fact, are not aware of the expertise, professional knowledge, and hard work that goes into a proper real estate transaction.  The Orlando Regional REALTOR Association compiled these things into a very thorough list.  

At Realty Executives of Cape County, we have set the REALTOR® Code of Ethics as the bare minimum standard for how we do business.  This means we train on, and abide by, the Code and Standards of Practice to the fullest extent in our dealings with clients, the public, and with other REALTORS®, and in many cases, we try to set the bar even higher.  

Anyone can attempt to "DIY" a real estate transaction.  Some even get lucky and get through the transaction without a hitch.  But beware: there are many land mines along the path from listing to closing and beyond, and REALTORS® know what they are and how to effectively navigate through the minefield.

So get REALTOR®.  And more specifically, get Realty Executives.

Posted in Ethics, REALTOR
July 14, 2016

6 Renovations That Can Add Value to Your Home

A lot of people get excited at the idea of a home renovation. They have grand ideas of how they want their home to look. But one thing to keep in mind is how those ideas will affect your home's value once it comes time to sell after a tenure of nine years, according to the National Association of REALTORS®.

It's important that you do some research before committing to any home renovation project. A good place to start is with a cost versus value report. The report is based on information gathered from real estate agents and RemodelMAX, an online remodelers estimator tool. It will will help you outline the average cost, resale value, and cost recouped for a number of home renovation projects, providing both national and regional estimates. City estimates are also available, but you have to register to access these reports.

To help you determine what renovation projects could add value to your home, here are seven renovations that are worth considering:


  1. Bathroom. When renovating a bathroom, there is no need to go overboard with a complete overhaul. In fact, according to Remodeling’s 2016 Cost vs. Value Report, simple low-cost renovations on average yield a 10% higher return on investment compared to upscale renovations. Instead, consider adding new light fixtures and some paint to revitalize your bathroom.
  2. Kitchen. According to the Consumer Reports National Research Center, 53% of real estate professionals believe that the kitchen is one of the most important rooms to prepare before putting your home on the market, so this isn't a room that you want to ignore. However, the national average for a minor kitchen renovation is likely to set you back $20,122 with a resale value of $16,716. Since you're only likely to recoup 80% of the cost, be sure to consider minor repairs and a gentle spruce up before undertaking any major kitchen renovations.
  3. Income Suite. One of the most direct ways of adding value to a home is to have an income suite. Whether you have a beautifully finished basement or an attic/apartment living space, having the option for a tenant (or even just a guest room), will no doubt boost your value.
  4. Make a Good First Impression. First impressions count and they also generate a higher return on investment. Entry and garage door improvements feature near the top of the Cost vs. Value rankings, so if your entrance way looks a little dated, this may be a good place to start.
  5. Energy Efficient Windows. The real estate world continues to go green, so the more energy efficient your home is, the better. Energy Star claims that adding Energy Star-rated windows can save you up to $500 a year. If your windows look like they’re from the 1970s, it could turn off potential buyers.
  6. Energy Efficient Insulation. Attic insulation has the highest return on investment of any project listed on the 2016 Cost vs. Value Report, with a 116.9% return on investment. If your attic lacks proper insulation, the average cost of installation is estimated at $1,268 with a resale value of $1,482.

Do some research before making any major renovations and you’ll be more likely to make decisions that will pay off when it comes time to sell. 

This guest post was written for Realty Executives International by Sara Luckman of CityBlast. The team at CityBlast helps over 10,000 agents and brokers with their social media marketing, keeping their Facebook, Twitter and LinkedIn up-to-date and professional.