HUD Reneges on the No Dual Agency Rule
Just like in the movie, Poltergeist, with it’s famous line, “They’re back,” dual agency on FHA short sales is also back. Set to be prohibited as of October 1, 2013, HUD postponed this ban on dual agency as a result of some fancy footwork by the National Association of Realtors®.
The dual agency restriction came out as part of Mortgagee Letter 2013-23, a July letter from the Department of Housing and Urban Development (HUD) which set out to achieve some positive changes in FHA short sales.
Among those changes was the following statement with respect to dual agency:
“No party that is a signatory on the sales contract, including addenda, can serve in more than one capacity. To meet the PFS Addendum requirements, brokers and their agents may only represent the buyer or the seller, but not both parties.”
Agents across the nation noted that this language meant no more dual agency. Not only was a single agent prohibited from representing both buyer and seller, but also two agents from the same brokerage were not permitted to represent both sides of the transaction. This regulation (particularly the latter part) infuriated the National Association of Realtors®. According to a letter sent by the President of NAR® to the Assistant Secretary of Housing, this policy could have an extremely negative impact on borrowers in certain parts of the United States where a single brokerage may have the bulk of the market share.
Why Prohibit Dual Agency?
It appears as if the original intentions behind this ban were probably pretty good: to prohibit fraud. When a single agent represents both sides of a transaction, HUD may wonder whether the property was placed on the MLS, and whether it was exposed to the mass market, which may in turn increase the price and the bank’s net. Since we are talking about short sales, FHA is looking for the highest net possible since they are already taking a loss.
The problem is that most of the United States is currently in a seller’s market and buyers at certain price points in some areas are having trouble locating properties. Some agents are writing 10, 20, or even 30 offers for a single buyer. When agents have suitable listings, they may be inclined to sell them to one of their own buyers instead of placing the property on the MLS (commonly known as taking a pocket listing).
Because it is not on the MLS, a pocket listing does not have exposure to other real estate brokers, and frequently not even the public. When a property is on the MLS, this can mean multiple offers, a higher price, and better terms or a buyer who is better positioned to close the deal.
If more people are exposed to the listing, there is a higher probability of sale. Additionally, buyers may bid against one another, and the higher the price will go. This is not only good for sellers with equity but short sale sellers, too. A bidding war may net the short sale lender a higher amount.
Fully 26 percent of the homes that sold in the state of California in the first quarter of 2013 were not even listed on the MLS. HUD is aware of statistics like these across the United States and wants to make sure that the pocket listing is not causing them to lose big bucks.
The alternative, as recommended by Gary Thomas, President of the National Association of Realtors®, is to adopt the policy already in place with Fannie Mae: all short sales must be on the MLS for five days (including one weekend), and the agent must provide a copy of the MLS printout when submitting the short sale package.
While there is always someone that can figure out how to work around the rules, this Fannie Mae policy does require proof that the property was open to the public. It seems to be a better option than a complete ban on dual agency for FHA short sales.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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