In the push to make homes greener, more efficient and less expensive every month, home owners are turning to leased solar panels as a solution to these issues. Leasing these earth-friendly kits has been quite in style for home owners as the process requires no money upfront for a system that typically costs thousands of dollars to install. In just one year, leasing of solar panels has gained so much popularity that residential installations across the United States jumped by 38 percent.
With such a marked jump in popularity, it was only a matter of time before home owners began experiencing a backlash for the innovative measure. That backlash became apparent when home owners with leased solar panels went to sell their homes. Many of them found that while the notion is so new, many home buyers are unaccustomed and rather wary of signing up for a financial arrangement that involves leasing a solar panel system for their home.
“Some buyers just won’t be on board” with assuming a solar lease, said Nick Culver, a solar analyst at Bloomberg New Energy Finance, to Bloomberg News. “Even if you save money every month, you limit yourself to a certain subset of buyers.”
While owning a rooftop solar power system can add as much as $25,000 to the value of a home, owners who are leasing these systems are finding that they have to shave off more than a few thousand in order to get buyers to commit to taking ownership of a contract that may still have 15 to 20 years left on it.
Solar Panel Leasing Not a Lose-Lose Situation for Home Buyers
While many home owners are uneasy at the thought of signing on to finance something that they did not take part in authorizing in the first place, the benefits to those that are able to take on the financial commitment are apparent with the first set of utility bills. Dorian Bishopp, a home owner in Maricopa, Arizona, saw his utility prices slash by about $50 a month when he had his leased solar panels installed on the roof of his home.
However, these long-term savings have not been able to provide enough immediate reason to attract buyers into purchasing a home with leased solar panels. When it came time for Bishopp to sell his home, he had to reduce his price three times taking 10 percent off his initial asking price in order to attract the right buyer.
“We had one offer in five months, and they pulled back as soon as they found out about the solar lease,” Bishopp said to Bloomberg News. “It’s a deterrent, definitely.”
As United States home owners become more dependent and knowledgeable on alternative forms of energy for their homes, however, this aversion is expected to wane. In time, many real estate agents and property owners hope that solar panels are as common as having energy efficient lightbulbs.
It seems the National Association of REALTORS® is making good on its promise to promote legitimate and transparent activity for its members. The association recently called out a large Alabama real estate broker as part of a judiciary slap on the wrist for some indecent referral practices with its affiliated businesses.
The Consumer Financial Protection Bureau (CFPB) determined at a recent hearing that Alabama-based RealtySouth failed to comply with a code of ethics known as the Real Estate Settlement Procedures Act (RESPA) after it essentially pressured clients into using their affiliated businesses for assistance in their real estate transactions.
The section of the act that was found to be violated is Section 8(a) which prohibits giving or accepting a “fee, kickback, or thing of value” for business referrals to settlement services for federally-related mortgage loans. The section also outlines that a specific statement must be included in the language of the disclosure of services that clients are free to shop for the best possible rates and services and that they are in no way expected to use a brokers’ affiliated companies.
The CFPB found RealtySouth guilty of violating RESPA as it had strongly encouraged, and in some cases required, its agents to use affiliated companies in addition to completely leaving out a statement from the disclosure of services that encourages clients to shop for settlement services. As a result, the CFPB ordered the broker to emphasize to its agents that the required use of any affiliate is strictly prohibited while also having to pay a hefty civil penalty of $500,000.
RESPA Exists to Protect Clients and Agents
While RESPA outlines many rules and regulations for real estate brokerages, these rules exist as a safeguard as much for clients as they are for agents themselves. In fact, RealtySouth may have been able to protect itself from disciplinary action for referring client to their affiliated businesses had the brokerage just followed a few simple “safe harbor” requirements.
RESPA does not completely negate the possibility of businesses fostering relationships with each other, especially after many years of working together. As a result, the act outlines a few requirements that, if followed correctly, warrant complete compliance for such practices. These requirements exist as a three-prong test and consist of (1) providing a client with a written disclosure that outlines in specific format the nature of the relationship between the two businesses, (2) the client is not at all required to use the affiliated service and (3) the only “thing of value” received by the referring business are returns on ownership interest.
Had RealtySouth recommended its affiliates under these provisions, the brokerage would not be facing the stern actions the CFPB has had to implement. While the brokerage was the main entity at fault, its affiliated companies were also implicated in the violations and were forced to pay a portion of the $500,000 penalty that was enforced on all of the offending parties.
The California Association of REALTORS® is continuing its crusade to establish authority, respect and trust in the real estate professional sphere. Just recently, the association announced that it will begin outing members who are found to be in violation of the strict Code of Ethics the association employs to make sure business practices are safe and fair for all sides of the real estate transaction.
The names will appear in a members-only section of the CAR website as a part of a pilot program conceived by the National Association of REALTORS®. The California affiliation of the national association was chosen as a test market because of its status as the largest state REALTOR® association, with more than 165,000 members. Under the provisions of the test program, CAR will be able to create a statewide database of those who have been disciplined for violations and will publish their names, photos and a brief synopsis of the violation and the disciplinary action received.
In cases where a disciplined member’s name is similar to another member’s name, CAR plans to prevent the unoffending member from being thrown under the bus by publishing the real estate license number and possibly address of the offending member.
In addition to the offending agent’s name being published, CAR will only publish the name of the responsible broker if they too were named and found in violation as well.
CAR Rallies for Professionalism
In an effort to continue to define the distinction between those with a REALTOR® and those without, CAR is attempting to establish a high standard of professionalism for its members. By making Code of Ethics violators transparent within the California REALTOR® community, CAR’s 2014 president Kevin Brown hopes to weed out the bad seeds and create more business for those who are following protocol and conducting business in a respectful manner.
“We just want to shine a light on the people that misbehave in our industry,” he said to Inman News.
The transparency of members in violation of the code will also help to boost awareness of the rules and regulations set by the code. Seeing the name and photo of a fellow REALTOR® who has committed a violation can serve as a wake-up call to agents that may not be totally clear on what is and isn’t allowed by the code.
“The main thing is that our members know what behavior is appropriate and what isn’t. They are required now to take code of ethics training, but sometimes people need to be reminded,” said June Barlow, CAR’s vice president and general counsel, to Inman News.
In the compilation of data regarding code violators, CAR also hopes to more accurately pinpoint what areas are most troublesome for REALTORS® and what steps can be made to help improve the industry from the ground up.
Many of the common ethics violations include advertising, while members have cited through surveys that the failure to cooperate with other agents has been a big road block in business dealings in California.
For many experienced home owners and home buyers, the prospect of purchasing a home for your child to live in while away at college may seem like a promising one. Owning an additional property that your child can take care of and that you may gain equity in has a few perks, however many more issues lie in owning a student-rented property.
Before you buckle down and settle on a property for your college student, here are a few precautions to take into consideration before making a very large, and very risky investment.
Short-Term VS. Long-Term Ownership
One of the golden rules in real estate is to focus on long-term ownership. The typical length of a college program of four to five years is simply not enough time to warrant an such a large investment. Chances are, your college student will spend a few years living in the property and then, hopefully, will move on to bigger and better things in life. After that, what will you do with this property that you’ve put time and money into? Selling after only a few years of ownership is not likely to give you a substantial return on the property to consider it profitable, meaning you will most likely lose money in the investment.
Difficulty of Student Rental Market
The student rental market is a notoriously difficult market to propagate a “good deal,” or a deal that is cash-flow positive and will provide a fair rate of return on your invested capital. Because of the popularity of this market, the initial cost of student rental homes is often driven up while investment returns are driven down. Figure out conservative rent and expense estimates and work out what a good deal would be from there. Otherwise you will be pumping money into a property that will give little back.
Hard Lessons in Property Management
If you’ve ever managed a property with tenants, or even just your own home with your family as inhabitants, you know how difficult it can be to simply maintain a home. All real estate, no matter how new or state-of-the-art, has issues that need to be dealt with at one point or another. Leaving these responsibilities to your young tenants might be a bit much for them, so if you are planning on investing in a rental property, prepare yourself for a world of work.
Summer Insurance Issues
The thing about college towns is that they tend to clear out for the summer, meaning your property could be vacant for as much as three months out of the year. Many insurance policies expire if your property is vacant for more than 30 or 60 days, and you may be forced to invest in an additional policy that makes provisions for these policies. To add expense on top of expense, you won’t be collecting rent during this time and will be spending more in something that isn’t even being used by your child.
Given enough money and technological capability, almost any amenity desired by the luxury home buyer is attainable. For these buyers the sky is the limit, and for that very reason, some REALTORS® are taking to the skies in an effort to attract luxury buyers not just to their dream homes but to their dream lifestyles. With the luxury housing market leading the way for all home sales in the United States, Realtors throughout the country are finding new and inventive ways to appeal to their high-end customers, including using drone technology, private planes and even boat rides.
One of the most important aspects of making a sale is making sure the potential buyer has seen every bit of the property. Given the often rather expansive nature of many luxury properties, Realtors have resorted to using drone technology to give clients a birds-eye view of a property. Drones can fly overhead and capture high-resolution of the home, property and near-by features that may help buyers fall in love with a certain property.
Some real estate agents, like Ken DeLeon in Atherton, Calif., have resorted to even more extreme measures to get his clients the best views of a property. DeLeon takes clients up in his own private plane to give buyers, typically overseas investors, the most exquisite aerial views of what could be their next home.
For Realtors who work near waterways, boat tours have become the ideal tactic to attract buyers because it helps them get a feel for what life could be like in a particular high-end home or community.
“That’s kind of our secret weapon,” said Jack Cotton, a luxury property Realtor in Cape Cod, Mass.. His clients enjoy cruises of the nearby inland waterways to “experience the lifestyle of being here.”
So as to truly showcase the perks of the lifestyles in various locales throughout the country, Cotton’s counterparts in regions like Colorado will take their wealthy clients out skiing while those in New York City might take their clients out in limos or high-end touring cars.
Luxury Tactics Help Sell Luxury Homes
For other agents, luxury tactics to sell homes go beyond touring with clients and into actually investing in their lives. In the River Oaks neighborhood of Houston, luxury home builder Al Ross has taken to offering a personal concierge service with each home in his new development. The service is good for one year and includes seasonal flower and plant renewal, cleaning of the home’s exterior and gutters, touch-ups to walls that are scuffed or scraped and other services.
The $4 million to $5 million price tag on the homes in Ross’ development also includes a three-year warranty on construction within the homes. If anything breaks, Ross will have it fixed without asking any questions.
“It’s no different than buying a very luxurious car,” he said. “You expect everything to function properly.”
Even in the heavenly climate of California where weather tends to be rather ideal all year round, there’s something about the summer months that beckons home owners to the outdoors. While many home owners focus on staging the indoor spaces of their homes to sell, or simply to show off, staging the outdoor areas of the home is just as important for that very reason.
With backyard barbecues and poolside cocktail parties running rampant this time of year, now is the perfect time to pay a little extra attention to the backyard. Here are a few easy tips for staging your home’s outdoor space.
Spruce Up Chair Cushions and Seat Covers
While your patio furniture may be able to withstand a near-constant exposure to the elements, the fabrics on chair cushions and seat covers tend to fatigue after a few years or even just a few seasons outdoors. Breathe new life into the softer side of your lawn furniture by reupholstering seats and cushions. Be sure to consider fabrics that will last as long as possible. Invest in a fabric that is UV-protected and water-repellent for a fresh and tidy look to your furniture.
Brighten the Garage With Fresh Paint
The garage can be one of the dingiest and least-organized spaces of your home. Brighten up the space and your attitude in it by adding a fresh coat of white paint to the walls. A bright, white hue will reflect the sunshine and create a clean and inviting space that you may just be more apt to take care of.
Make Small Accents Pop With Neutral Colors
When sitting outdoors, it’s hard to not be reminded of nature as you are completely immersed in it. Keep your outdoor decor from contrasting with nature too much by painting small accents of natural color around the yard.
“Keep the color connected to nature; think of the calming feel of outdoor water fountains that are popular now,” advises Constantine Vasilos, interim head of the interior design department at Harrington College of Design in Chicago. “Just like a mirror or a painting is a focal point inside, the same applies outside.”
Light Up Your Life
Make your yard accents really pop by illuminating them with inexpensive tea lights. You can place them around main gathering areas such as the patio table or near a beautiful trellis or tree. These small lights can create a very intimate, almost magical vibe around the outdoor space. Vasilos recommends staying away from LED lights unless the home and yard have a very strong contemporary feel.
Invest in Inexpensive Plants
While your outdoor plantings and garden areas can beautifully express the wonderful living aspects of a home, strategically placing plants around the outdoor space can also draw viewers’ eyes back to the house. White flowers such as orchids placed near entryways or on top of stairwells can invite viewers’ eyes and thoughts to return to the beautiful aspects of the home, making it more appealing and lovely.
There’s an old saying in the business world that good business is all about who you know. The same can also be said for real estate. Being the top real estate agent in your area means getting out in your respective community and getting to know the people and places you are representing.
In an industry that circles around ideas of home and personal connections to a community, client referrals and good word of mouth are priceless assets to a good real estate agent. Here are a few practices to avoid in order to maximize relationships with your clients and become the “go-to” agent in your territory.
Drop Connection After the Transaction
Turning a lead into a client takes a lot of hard work, and after that hard work pays off in a home sale for a very satisfied client it would be a disservice to you and your business to just lose contact after that. According to a study by the National Association of REALTORS®, 70 percent of all closed buyer leads come from a “trusted resource” or face-to-face contact. In addition, retaining old clients is about five times less taxing on your time and money than attracting new ones.
NAR also reports that the average person knows between three and five people who will move each year. Multiply that by how many clients you have served and you are looking at an excellent pool of potential clients. Remaining in contact with your current clients maintains your status as a trusted agent and an invaluable resource to those looking to make the biggest investment of their lifetime.
Keep Client and Prospect Contact Information in a Variety of Places
Sometimes client referrals come in when you are in the least likely of situations. It could be at a business function or even in line at the supermarket. This can result in client information being logged in a scattered mix of places: on your phone, in an address book or even on a scratch piece of paper in your pocket. When you are scrambling to take down contact information, or later on scrambling to find it, this can come across as unprofessional.
Getting a system for taking down client information and keeping it organized is a valuable technique that will help streamline your business. Consider a CRM for REALTORS®, which will make it easy to store and pull up information from multiple devices and will allow you to give your clients a higher level of service.
Blindly Invest in Marketing
Marketing can be a savvy investment, but it will do nothing for you if you don’t do the research and just blindly sign up for a program. Take a good look at your business, analyzing where your referrals, leads and clients are coming from. This will allow you to identify where money needs to be spent and where it should be cut back. Tracking and analyzing where your marketing dollars are going will help you to maximize your business and bring out your true potential as the right agent for your community.
Water conservation is an extremely important issue, especially in Southern California. As the Golden State prepares for a particularly dry season later on this summer, extreme measures are being taken to ensure that that the region is not crippled by a potential water crisis.
One measure that was put into effect as of January 1 of year is the Retrofitting Law. This law requires home owners who take on the remodel of a home that was built prior to 2014 to retrofit the home with toilets that use no more than 1.6 gallons per flush, showerheads with flow rates of no more than 2.5 gallons per minute and other interior fixtures that use less than 2.2 gallons of water per minute.
The great reduction in water use will not only help to save the beautiful California environment, but will also help to save local home owners a few cents in their pocketbooks as these appliances can significantly reduce water bills.
Commercial and multifamily properties are also required to follow the same guidelines as single-family homes in cases where the remodel includes 10 percent or more of the property’s square footage.
While most water conservation methods have been largely concentrated outside the home, this measure to retrofit California homes provides that by 2017 all homes built prior to 1994 will be in compliance with these regulations. This will bring all homes and commercial properties up to the same environmental standards as those built since 1994.
California Urges Home Owners to Conserve Water
Earlier this year, Governor Jerry Brown urged all California home owners to take the initiative at home by adopting conservative measures when using water. With the dry season in full effect, the state Water Control Board is currently considering prohibiting activities such as using water to wash down driveway, patio or sidewalk surfaces, landscape watering that can potentially run off your own property, washing or watering with a hose not outfitted with a shut-off nozzle and using potable water in a fountain or decorative water feature. The board is considering resorting to fines up to $500 if these laws are not upheld by residents.
“Having a dirty car and a brown lawn should be a badge of honor because it shows you care about your community,” Felicia Marcus, the board’s chairwoman, recently told reporters in a teleconference. “We don’t know when it will rain again. It’s prudent to act as if it won’t.”
Although these measures may seem rather extreme, they may be absolutely necessary in order for the state to survive what is expected to be a rather lengthy drought. Approximately 80 percent of the state is experiencing an extreme drought with no end in sight.
The Daily News recently reported, “More than 400,000 acres of farmland are expected to be fallowed, thousands of people may be out of work, fish and wildlife species are threatened, and some small communities are at risk of running out of water.”
At the cornerstone of every successful real estate transaction there is the standard Residential Purchase Agreement, a document that paves the way for smooth and efficient real estate exchanges. After a period of great struggle for the California real estate market, the California Association of REALTORS® noticed some room for improvement in the agreement and has lately taken the opportunity to address those issues by revamping the agreement for 2014 and beyond.
Although no major changes have been made that would radically alter the way real estate transactions are carried out in the state of California, significant amendments have been made to the language that account for a number of peculiarities and problems encountered in the most recent market. Here are a few of the most noticeable changes made to the California Residential Purchase Agreement.
Lender Limits on Buyer Credits
In the Financing section of the agreement, a paragraph entitled Lender Limits on Buyer Credits has been added. The language of the paragraph makes provisions to prepare a buyer who offers a large price on a home, but then seeks to reduce it by asking for big credits, for disallowances extended by the lender to those credits.
Another provision that has been added to the agreement is a section titled Representative Capacity. This section outlines what must be done when a signing party is not physically present but acting through representation. The agreement specifically outlines that parties must complete a specified addendum and deliver it within three days in order to give the representative party authority to act on his or her behalf.
Loan Contingency and Appraisal
The new form of the agreement also mandates that loan contingency is not automatically based on the appraisal of the home. The language states that a buyer cannot back out of a sale for the sole reason of the home not appraising to the sale price unless the appraisal contingency has been waived or removed.
Leased or Liened Items and Systems
This section has been added to the area of the agreement that details what items are included and excluded from the sale. The rise in solar systems that come with long-term lease in California homes prompted the addition of this section. The section provides that the buyer’s approval of and ability to assume the lease is made a contingency of the home purchase.
Scope of Duty
In an effort to protect the broker, the CAR added a detailed section to the agreement that outlines the many things that brokers are not responsible for and are not required to do.
Removal of Termite Reports
One change that will be of particular notice to southern California REALTORS®, is the removal of the termite report from the list of inspections whose cost is allocated by negotiation between buyer and seller. Termite inspections are now being lumped in along with other inspections a buyer may want to request.
Throughout the country, local housing markets have been plagued by low inventories of available homes, a factor that has sent many home buyers into bidding frenzies. With buyers in no short supply, home sellers are finding that the offers with the most money on the table aren’t always the most attractive. Many home sellers are paying for piece of mind that their transaction will go as smoothly and painlessly as possible.
“What sellers really don’t want to do is waste time,” said John Walsh, president of Connecticut-based lender Total Mortgage, to CNN Money.
So how can you, as a home buyer, edge out all those other bidders? Here are a few tips to win over home sellers without having to bid over your budget:
Cash is king, and if you have it now is the time to use it. Over the last few months, a sharp increase has been noted in all-cash sales, more than 40 percent. It’s no secret that all-cash sales are infinitely more appealing to home sellers because since the housing crash, the process to securing a mortgage has become more and more arduous. With cash sales the seller is already certain that the buyer is qualified and nobody has to sit and wait for the loan approval process to go through.
In some situations, many sellers have been known to accept a lower offer just because it’s all in cash.
Get Your Mortgage Good to Go
If you don’t have the cash to put down on a home, fear not as being well-prepared by pre-underwriting a mortgage can give you an edge as well. Getting a pre-underwriting for a mortgage allows lenders to review all of your income and asset documentation in the pre-approval process. This gets everything set on your end so the seller will know when you make your offer that your mortgage application will not be rejected and the transaction can flow smoothly.
Keep Contingencies Reasonable
Contingencies are clauses in contracts that are made to protect buyers if certain conditions are not met. For example, a buyer can sign a contract that will allow them to back out of a deal if a buyer cannot be found for their own home. In extreme sellers markets, such as those that many areas throughout the country are experiencing, this contingency is often waived as homes are moving rather quickly on the market.
One contingency that should never be waived is the home inspection. Should an inspector ever find a major problem that could cost you, the buyer, far too much to fix, you will want to know before signing off on the purchase.
Be Number One
Keep a constant watch on the market and be vigilant. When a home comes on the market, see it as soon as you can and be prepared to make your offer. Getting you bid in early will allow you to preempt any other offers and make a diligent first impression for the seller.