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When reviewing their credit reports, one in five consumers are likely to receive a different credit score from what a creditor will use to price a loan, according to the Consumer Financial Protection Bureau. The discrepancy has the agency concerned.

Lenders use credit scores to help determine the interest rate they’ll charge customers—with higher credit scores often receiving the best rates.

“Many consumers incorrectly believe that the scores they purchase are the same ones used by lenders," according to a CFPB report. As such, a "substantial minority" of consumers are at risk of overpaying for credit or in applying for loans that they’re ineligible for.

Even the slightest variation in credit scores can make a big difference and has the potential to hamper a person’s chances for qualifying for certain kinds of home loans, according to the CFPB.

The CFPB sites FICO scores, which are widely used by lenders, as having different credit scoring models for lenders and consumers that can vary. VantageScore also has different types of credit scores, CFPB says.

CFPB is evaluating the accuracy that credit reporting firms provide to consumers. It encourages consumers that when they review their credit reports to focus not on credit scores but to check the accuracy of the payment history on the reports because the firms use that to calculate scores. Consumers should take steps to correct any errors they find on the payment history of their reports because it can help improve their scores, CFPB notes.

source:  Wall Street Journal

Home buyers are willing to pay 4.2 percent more for a property with the word “country” in the name, and an additional 5.1 percent for the phrase “country club,” according to researchers from the University of Georgia. 

In the study, researchers evaluated the effect of property names on home values by analyzing MLS data from Baton Rouge, La. 

Researchers found that buyers do assign a price premium to properties that include the word “country” or “country club” in subdivision names. 

Wealthier buyers tend to be more apt to pay for the name, in which they associate with affluence. In fact, researchers say that wealthy buyers are even more willing to pay a premium for a property name that conveys prestige than they are for a good school for their children. 

However, during recessionary times, researchers found that the words have less effect on overall buying behavior and that buyers are less willing to pay a premium for the prestige associated with these words. 

“The implications of this are important in real property marketing strategies and the understanding of naming strategies,” note the researchers Velma Zahirovic-Herbertand and Swarn Chatterjee in the study. “This implies that a more deliberate and empirically-based study of property names could enable significant improvements in return on investment for investors and long-term home owners. In addition, some assumptions about the primary drivers of home values may be challenged; buyers’ perceptions of real property attributes 
may prove as valuable as or more valuable than the real utility of some attributes.” 

This is the first such study to find that buyers are willing to pay more for certain property names, when other attributes of a house are equal, the research notes. 

source:  AOL Real Estate

The rising insurance rates on Federal Housing Administration mortgages are putting home purchases “increasingly out of reach” for many qualified buyers who rely on FHA financing, National Association of REALTORS® President Steve Brown wrote in a letter to FHA Commissioner Carol Galante. In the letter, Brown urged FHA to lower its annual mortgage insurance premiums. 

Brown acknowledged the significant losses that FHA’s Mutual Mortgage Insurance Fund faced during the housing crisis. FHA increased its premium structure as one way to reach a required 2 percent capital reserve ratio.

But now that the agency is on the path to recovery, NAR is urging FHA to lower the annual mortgage insurance premiums and eliminate the requirement that mortgage insurance be held for the life of the loan.

“Achieving home ownership has become more difficult with current FHA mortgage insurance premiums,” Brown writes. Today, FHA fees make up nearly 25 percent of a monthly mortgage payment. On a $150,000 loan at 4.5 percent interest, the mortgage interest is 13 percent higher today than it was in 2008, Brown notes.

He adds that an estimated 125,000 to 375,000 potential buyers were priced out of the market in 2013 because of FHA’s high insurance premiums and mortgage insurance requirements.

The Department of Housing and Urban Development has proposed a new program called Homeowners Armed With Knowledge (HAWK), a pilot program that will offer reductions in FHA mortgage insurance premiums for home buyers who complete housing counseling.

“While HAWK is a step in the right direction, NAR is concerned about the amount of time it will take to develop the program and make it available to home buyers,” Brown writes. “We have many qualified home buyers who need help now but are being shut out of the market due to record high annual premiums and mortgage insurance for the life of the loan.”

source: National Association of REALTORS® and HousingWire


By 2039, commercial real estate is expected to be thriving. But over the next 25 years, it will be greatly influenced by changes in demographics, technology, globalization, and economic and environmental realities, according to CNBC. 

Commercial practitioners gave CNBC several “bold” predictions for the U.S. commercial real estate sector by 2039:

  • The fading away of shopping malls. Malls are expected to continue declining due to the rise in e-commerce. Rick Fedrizzi, president and CEO of the U.S. Green Building Council, expects some teardowns, but repurposing will give new lift to these spaces. “Established places like shopping malls will become like town centers, where people can come together, where their doctors and day care will be, where they can gather after major devastations.”
  • Baby boomers drive a construction boom. Several areas of commercial real estate will likely continue to see baby boomers’ influence, experts predict. For one, “we’re an aging population, so in 25 years, there’s going to be a heavy focus on medical-related facilities,” says Kenneth Riggs, president and CEO of Real Estate Research Corp. Riggs also predicts a shift toward affordable multigenerational housing, particularly near mass transit. Also, more boomers may turn to senior housing, and growth will be explosive, Riggs predicts. “Right now, senior housing is a food group in real estate, but it’s like vegan or something, not that established,” Riggs says. “In 25 years, it will be a major food group.”
  • Urbanization will boom. This trend will, in part, be driven by Gen Xers and Yers who have shown preferences for living and working in compact areas. The multifamily residential market is expected to show gains due to the growing preferences of urbanization, and more companies will be moving to downtown areas to aid in recruitment efforts, says Rick Cleveland, a managing director at Cushman & Wakefield. Suburbs will also remain important, but may look to replicate the city experience more with greater mixed-use projects that comprise rental, retail, and office. "The way most of the suburbs will evolve is that there's an interim step: They'll be connected to cities by high-speed or light rail, and they'll become walkable communities with a sense of place,” says Fedrizzi.
  • Green building continues to evolve. Efforts to meet environmental standards tend to be costly, but industries realize that they are important in the long-run. Commercial buildings 25 years from now will need to be up to the U.S. Green Building Council’s LEED standards, according to the commercial experts interviewed by CNBC. That may mean some existing structures will need to be torn down or undergo a retrofit.



Home buyers are saying they’re willing to pay more for a residential property due to concerns over low inventory, according to a survey of more than 1,300 home buyers in 22 major markets by the real estate brokerage Redfin. 

The number of buyers who say they’re concerned about rising home prices has more than doubled in the past year, according to the survey. Seventy-nine percent of home buyers say they believe prices will increase in the next 12 months—with 23 percent of that group saying by “a lot.” 

“Home buyers are accepting the reality of a seller’s market and expressing a willingness to pay more,” according to the brokerage’s survey. 

source:  Redfin


Energy industry representatives are increasingly making an offer to home owners across the country: Let us drill for your natural gas on your land, and we’ll pay you for the lease. 

The offer is increasingly being made to home owners in Texas, Pennsylvania, and New York. Drilling officials say home owners can earn extra income that can be used to pay off their mortgages and that the gas royalties can even help increase their property values. 

But not so fast, say mortgage officials, who are increasingly being concerned over home owners signing these lease agreements with gas companies without getting permission from their lender first. 

Home owners need to check with their mortgage banker before they ever sign such a lease, experts say. Besides refinancing hurdles that may arise, real estate professionals say it also might make it more difficult to sell your home and devalue your home. 

“When you decide to sell your house you may find it difficult to do so because many banks, here and elsewhere, will not mortgage properties with gas leases, which, in turn, limits the number of buyers willing and able to buy your property,” Linda Hirvonen, a real estate professional in Ithaca, N.Y., wrote in a recent newsletter.

For home owners with mortgages owned or guaranteed by Fannie Mae or Freddie Mac, signing a drilling lease without approval is “generally considered an act of default under the mortgage,” according to a report by the Congressional Research Service. As such, Fannie or Freddie could demand payment in full on a loan, which could push some home owners into foreclosure if they were unable to pay, the report noted. 

But others say they aren’t so worried that these gas leases can potentially jeopardize people’s loans. “The leases have not created any practical conflict or issue with mortgages,” Adam J. Schultz, a lawyer in Syracuse, told The New York Times. He says there are thousands of gas leases on mortgaged properties in New York and Pennsylvania and that state environmental regulations helped protect property values.

source:  New York Times


Vacation home sales rose strongly in 2013, while investment purchases fell below the elevated levels seen in the previous two years, according to the National Association of REALTORS®.

NAR’s 2014 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2013, shows vacation-home sales jumped 29.7 percent to an estimated 717,000 last year from 553,000 in 2012. Investment-home sales fell 8.5 percent to an estimated 1.1 million in 2013 from 1.21 million in 2012. Owner-occupied purchases rose 13.1 percent to 3.7 million last year from 3.27 million in 2012. The sales estimates are based on responses from households and exclude institutional investment activity.

NAR Chief Economist Lawrence Yun expected an improvement in the vacation home market. “Growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” he said. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”

Vacation-home sales accounted for 13 percent of all transactions last year, their highest market share since 2006, while the portion of investment sales fell to 20 percent in 2013 from 24 percent in 2012.

Yun said the pullback in investment activity is understandable. “Investment buyers slowed their purchasing in 2013 because prices were rising quickly along with a declining availability of discounted foreclosures over the course of the year,” he said.

“In 2011 and 2012, investment property was a no-brainer because home prices had sharply overcorrected during the downturn in many areas, creating great bargains that could be quickly turned into profitable rentals. With a return to more normal market conditions, investors now have to evaluate their purchases more carefully and do their homework,” Yun added.

The median investment-home price was $130,000 in 2013, up 13 percent from $115,000 in 2012, while the median vacation-home price was $168,700, up 12.5 percent from $150,000 in 2012.

All-cash purchases remained fairly common in the investment- and vacation-home market: 46 percent of investment buyers paid cash in 2013, as did 38 percent of vacation-home buyers.

Of buyers who financed their purchase with a mortgage, large downpayments continued to be the norm in 2013. The median down payment for investment buyers was 26 percent, while vacation-home buyers typically put 30 percent down.

Forty-seven percent of investment homes purchased in 2013 were distressed homes, as were 42 percent of vacation homes.

Lifestyle factors remain the primary motivation for vacation-home buyers, while rental income is the main factor in investment purchases.

The typical vacation-home buyer was 43 years old, had a median household income of $85,600, and purchased a property that was a median distance of 180 miles from his or her primary residence; 46 percent of vacation homes were within 100 miles and 34 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 6 years, down from 10 years in 2012.

Five percent of vacation-home buyers had already resold their property, while another 9 percent plan to sell within a year. “This reflects the 28 percent of recreational property buyers who said they purchased to diversify investments or saw a good investment opportunity,” Yun said.

Buyers listed many reasons for purchasing a vacation home: 87 percent want to use the property for vacations or as a family retreat, 31 percent plan to use it as a primary residence in the future, 28 percent wanted to diversify their investments or saw a good investment opportunity, 23 percent plan to rent to others, and 22 percent intend it for use by a family member, friend, or relative.

Forty-one percent of vacation homes purchased last year were in the South, 28 percent in the West, 18 percent in the Northeast and 14 percent in the Midwest.

Investment-home buyers in 2013 had a median age of 42, earned $111,400, and bought a home that was relatively close to their primary residence – a median distance of 20 miles.

Fifty percent of investment buyers said they purchased for rental income, 34 percent wanted to diversify their investments or saw a good investment opportunity, and 22 percent bought for a family member, friend, or relative to use – often to house a son or daughter while attending college.

Seven percent of homes purchased by investment buyers last year have already been resold, and another 10 percent are planned to be sold within a year. Overall, investment buyers plan to hold the property for a median of 5 years, down from 8 years in 2012.

Thirty-eight percent of investment properties purchased last year were in the South, 25 percent in the West, 18 percent in the Northeast, and 19 percent in the Midwest.

More than eight out of 10 second-home buyers, both for vacation and investment homes, said it was a good time to buy.

Approximately 43.4 million people in the U.S. are ages 50-59 – a group that dominated second-home sales in the middle part of the past decade and established records. An additional 42.7 million people are 40-49 years old, which is the historic prime age range for purchasing second homes, while another 40.4 million are 30-39 years of age.
NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 43.7 million investment units in the United States, compared with 74.7 million owner-occupied homes.

The 2014 Investment and Vacation Home Buyers Survey, conducted in March 2014, includes answers about 2,203 homes purchased during 2013 from a representative panel of 2,008 U.S. households. The survey controlled for age and income, based on information from the larger 2013 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.

The 2014 Investment and Vacation Home Buyers Survey can be ordered by calling 800-874-6500 or online by visiting The report is free to NAR members and costs $149.95 for nonmembers.

source: National Association of REALTORS®


An old Levi Strauss jeans factory at 1359 Lomaland is being redeveloped by new owners.

The 95,000-sf property on 14 acres is in the midst of a multimillion-dollar remake by Heritage Group and Cooper Companies. About half of the property has already been renovated and has tenants.

A call center for Apogee Retail, the operating company of the Savers family of thrift stores, is already housed in the property. The company is expected to employ about 450 people by summer.

California-based iGate is moving its data-entry center there and expects to have about 400 employees once it’s settled. The company says there is potential for more employees in the future.

The remaining 42,000 sf in the property still needs to be remodeled, but is expected to house one or two tenants.

source:  El Paso Times


Taxpayers claiming a home office deduction should make sure their “home work” is in order before turning in their “assignment” to the Internal Revenue Service (IRS) for “grading.”

“A home office needs to be used on a regular basis,” said Dr. Jerrold Stern, research fellow with the Real Estate Center at Texas A&M University and professor of accounting at Indiana University. “Incidental or occasional use is not sufficient.”

Satisfying the “exclusive use” test means a number of criteria must be met. The home office area may be used only for the business. Unrelated activities disqualify home office deductibility.

“Nonbusiness use of a computer in the room, surfing the Internet for nonbusiness purposes, reading or sending nonbusiness email, paying household bills or entertaining friends in the office are all examples of disqualifying activities,” said Stern.

“Occasional use of the family den or kitchen table for work-related activities, such as the preparation of business documents or business-related reading, does not qualify for deduction purposes. The cost of a dual-use cell phone is not deductible.”

Fully deductible items include business supplies, painting, a separate business phone, business computer and home cleaning services for the office. There is also a “business use percentage” of typical homeowner expenses, such as homeowners insurance, utilities, rent and a security system.

The home office portion of the cost of the home can be written off each year (depreciated). However, if the home is sold for a profit, all depreciation is taxable as a capital gain.

A 2012 tax court decision drew attention to taxpayer mistakes that can limit or eliminate the deduction. The IRS reduced a married couple’s 100 percent business use percentage of their home office to 16 percent.

“The IRS determined that personal records were stored in a closet and on computers the taxpayers claimed as business property, thus disqualifying them,” said Stern.

“For 2013 and later, the IRS recently announced that taxpayers can opt to deduct $5 for each square foot of home office space. However, since the maximum deduction under this method is $1,500 (300 square feet times $5), taxpayers should compare the deduction under all methods.”

source:  Texas Real Estate Center 

With the initial Tax Filing Deadline coming up tomorrow, on April 15th, purchasers of second homes should be aware that, according to the IRS, taxpayers who are married and filing jointly can’t deduct interest on more than a combined total of $1 million of “home acquisition debt” for a primary and a secondary residence.

Taxpayers also may deduct up to a combined total of $100,000 of home-equity debt on their first and second homes.

After refinancing, a home owner can only deduct interest on the original amount of the loan at the time they refinanced, plus $100,000.

Buyers and refinancers also can deduct loan fees – "points” – if the money was used to buy or improve their home. They can’t deduct them if they refinanced to lower the interest rate.

source: Inman News