Real Estate

26 Jul, 2011

Why real estate listing fail

Earlier this year, a client asked Troy Deierling, a realtor in Sedona, Ariz., to set up appointments for three homes he'd seen online. Those viewings never happened: In spite of their supposedly current listings, Deierling discovered the properties had already sold. One had been off the market for three months.

As home buyers cautiously re-enter the market, they're arming themselves with information found online far more than existed pre-housing crash. A record nine out of 10 house-hunters searched online last year, according to the National Association of Realtors; around 15 million people now visit 6-year-old listings site Trulia.com each month. But with this great migration online has come a new set of obstacles, including errors, out-of-date information, and properties that are listed on the web but aren't actually for sale all of which can add up to a handicap for buyers. "You're probably going to get exposed to inaccurate information," says H. Pike Oliver, executive director for industry outreach at Cornell University's Program in Real Estate. "There's no real assurance."

The most common problems that Miami Real Estate Club found are simply errors -- listings that advertise gas heating when in fact the house runs on electric heat or a price cut that hasn't been updated online. But in some cases, "mistakes" may be intentionally misleading, such as touting a partly-finished basement as fully redone, or describing a kitchen as "eat-in" but only "if you were standing [up] with your plate," says New Jersey real estate broker Paul Howard. These discrepancies often appear on the listings that are posted on the Multiple Listing Service, an online database that listing agents are expected to keep current, he says. Separately, around 21% of the data realtors individually submit for posting on real estate web sites is not updated when changes are made to the price or when the property is sold, according to a report released last month by Trulia.

Of course, online misinformation is hardly unique to real estate listings. But because many of the online services are relatively new, and people buy houses so infrequently, home buyers may be less attuned to misinformation than, say, online daters. In general, it requires much more skepticism and diligence by buyers, experts say. For example, some real estate agents keep listings on their personal web sites long after they've sold; when home buyers contact the agent inquiring about the property, they're instead pitched new properties that might not meet their criteria, says Leonard Baron, principal of real estate consulting firm LPB Services and a lecturer at San Diego State University. Such lagging information is more common with smaller firms' web sites and could be a function of real estate agents simply forgetting to update those listings, says a spokesman for the National Association of Realtors. Either way, for buyers, it's a waste of time.

Online listings also seem to level the playing field when it comes time to make an offer, by including sales history and the number of days on the market information most buyers could previously get only from an agent. But "there are a lot of games that are played with 'days on the market'," says Mark Weiss, director of business development at Trulia.com. Properties that are listed for months can get removed from listing sites only to reappear as a new property for sale a few weeks later. That could be because a new listing agent has taken it over, says Baron; in some cases, a realtor can make a listing look new by taking the house off the market for a few weeks.

Popular real estate listing web sites say they try to update information often and they're on constant lookout for errors, but many sites rely on a feed from the MLS, which means it's largely the responsibility of individual realtors to update their listings. On Realtor.com, listings are revised daily as properties' status change, says the NAR spokesman. Trulia.com, which is where Deierling says his client found outdated listings, says it receives seven to eight million listings every day and it prioritizes information that arrives directly from franchises, brokers or MLS feeds. And like Trulia, Zillow says its goal is to give buyers easy access to a lot of information about nearby home values and market trends that can better inform buyer decisions.

For their faults, these web sites still offer home buyers more information than what was available even a few years ago. And that can help them make a more informed decision and eventually, an offer on a property. The point, consumer advocates say, is not to put too much faith in the information contained in a listing. The old shoe-leather tactics like talking to neighbors, getting crime reports from the local police, and asking a real estate agent to pull recent sales prices of similar homes nearby will trump most of the data in an online listing. "It's a reasonable way to start the search but not to finish it," says Barry Zigas, director of housing policy at the Consumer Federation of America, a consumer advocacy organization.

25 Jul, 2011

Foreclosed homes become TV stars

In a weekend read Miami Real Estate Club learned where the hundreds of thousands of foreclosed homes in the U.S. are ending up.On reality television.This summer and fall, several TV networks are unveiling reality shows about buying foreclosed houses as a way to reinvent the popular "house flipping" formula, which proliferated in cable programming alongside the real-estate boom.

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Spike TV

In September, Viacom Inc.'s Spike TV will premiere a new show called "Flip Men" about an entrepreneurial duo living in Salt Lake City who try to make big bucks in the foreclosure market. Later this summer, Bravo's hit reality show about house-flipper-turned-designer Jeff Lewis, called "Flipping Out," takes a personal turn in its fifth season when it shows Mr. Lewis wrangling with lenders in a quest to buy a foreclosed house to live in. A&E Television Networks, a joint venture among Walt Disney Co., Hearst Corp. and Comcast Corp.'s NBC Universal, recently tapped a former "Survivor" contestant to star in a new show later this year about flipping houses—some foreclosed—in Houston. And DIY Network, a division of Scripps Networks Interactive Inc., has a show in development about flipping foreclosed houses that could air in 2012.

The foreclosure trend comes after years when shows about house flipping—where homes are bought, renovated and quickly sold—dominated cable programming amid the housing boom, eventually giving way to shows focusing more on home decoration, design and improvement as the real-estate market softened.

Reality shows about buying homes, such as HGTV's "House Hunters," first became popular more than a decade ago and then exploded with the real-estate boom from 2005 to 2007, when cable channels such as A&E and NBC Universal's Bravo launched programs about entrepreneurs profiting off the surging market, including "Flip This House," "Flip That House" and "Flipping Out."

When the financial crisis hit Wall Street in 2008 and the housing market began to unravel, many of these networks chose to retool those shows or take them off the air to keep current. New episodes of A&E's "Flip This House" haven't aired since 2009, and networks such as Scripps Networks' HGTV introduced programs such as "The Unsellables" about making over homes to help owners who can't sell their properties. The shows that weathered the storm and stayed on the air had to change their focus: Mr. Lewis, the star of Bravo's "Flipping Out," stopped flipping houses and changed professions after the economy slumped. To earn a living, he now designs homes for clients, and recent seasons of the show have focused on his new career.

"I was a successful house flipper but when the market fell, I had to completely reinvent myself," said Mr. Lewis, who lives in Los Angeles. He added that he expects "more and more" reality shows about foreclosed homes. "People want to watch programs that reflect the current reality, not a fantasy," Mr. Lewis said. That's a good reason to join your local Miami Real Estate Club.

On the fifth season of "Flipping Out," which began in early July, Mr. Lewis goes house shopping—for himself. He finds that about half of the houses he makes formal offers on, mostly in wealthy Los Angeles neighborhoods, are foreclosures or short sales. The house he settles on in the final episode of the fifth season was a foreclosure that, ironically, Mr. Lewis lived in for two years and sold for $2.8 million in 2006. He spent four months negotiating with the bank to secure the property, which was listed for about $1.7 million.

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Bravo

Jeff Lewis of Bravo's 'Flipping Out.'Spike's new show, "Flip Men," follows its two hosts, Doug Clark and Mike Baird, as they attend auctions of foreclosed houses and buy up the properties—often sight unseen—and hope they get lucky.

Mr. Clark and Mr. Baird have bought houses where the interior is covered in mold and feces, infested by rats and, in some cases, still inhabited by angry—and sometimes violent—occupants. They also have purchased homes that vagrants have moved into and turned into methamphetamine labs, as well as houses that gangs have overtaken. In order to recoup their costs, they must fix up the homes as quickly as possible—and then attempt to resell them.

"These programs are like the ultimate game show because you don't know what's behind that door before you buy the house," said David Broome, executive producer of Spike's "Flip Men."

22 Jul, 2011

Existing home sales the weakest in 13 years.

In a recent article the Miami Real Estate Club read that existing-home sales in June fell to a seven-month low, and the number of contract cancellations soared, signaling that buyers are rethinking home purchases amid national economic uncertainty.

Sales decreased 0.8% from a month earlier to a seasonally adjusted annual rate of 4.77 million, the National Association of Realtors said Wednesday. It was the third-straight monthly drop and puts this year's pace behind last year's 4.91 million homes sold, which had marked the weakest sales in 13 years.

The median sales price was $184,300, up 0.8% from $182,900 a year earlier

22 Jul, 2011

30 Mortgage rates 4.52%

The Miami Real Estate Club has found that mortgage rates were mostly flat in the past week amid a series of mixed reports on the health of the U.S. economy, according to Freddie Mac's weekly survey of mortgage rates.

"Although both the overall producer price index and consumer price index fell moderately in June on lower energy costs, the core price indexes inched up," said Freddie Mac Chief Economist Frank Nothaft, adding that a consumer sentiment reading fell to the lowest level since March 2009.

The 30-year fixed-rate mortgage inched up to 4.52% in the week ended Thursday, from 4.51% the previous week, though that is down from last year's rate of 4.56%. Rates on 15-year fixed-rate mortgages were 3.66%, compared with 3.65% last week and 4.03% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.27%, down from 3.29% last week and 3.79% a year ago. One-year Treasury-indexed ARM rates were 2.97%, up from 2.95% in the prior week but down from 3.70% in the prior year.

To obtain the rates, fixed-rate mortgages required an average payment of 0.7 point, while adjustable rate mortgages required an average 0.5-point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

22 Jul, 2011

Government may become landlord for foreclosed houses

The Miami Real Estate Club discovered that us landlords may have some unexpected competition. The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter.

While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels.

Trimming the glut of unsold foreclosed homes on the market is "worth looking at," said Federal Reserve Chairman Ben Bernanke in testimony to Congress last week. Just what we need more government intervention.