Should I Renovate…?

Written by Walter Boomsma, instructor. See his blog.

A question we often hear from potential sellers is whether or not they should renovate or otherwise improve the property before selling. While there’s no one correct answer (except “it depends”), most licensees will recommend some degree of “freshening” — cosmetic improvements that might fall under the headings of staging or curb appeal.

paintBut what about the “bigger” stuff? Should we remodel the bathroom?

Every year Remodeling Magazine reports the results of research designed to determine which projects have the greatest dollar return. The results of the most recent survey are reported on REALTOR.COM and might surprise you. While sexy renovations may help with the sale, it doesn’t necessarily mean a great increase in value. The top return was attic insulation–statistically it returns more than the cost.

We ought to bear in mind (and explain to prospective sellers) that the value of the improvement shouldn’t simply be measured in dollars, but having some data beats pulling our opinions out of the air. If you look at the chart, note also there are regional differences. Also, pay attention to what people are saying. I know when I talk with folks who are buying and selling two things that come up consistently are “energy efficiency” and “aging friendly.” It shouldn’t be a surprise to hear that in Maine where we have an aging population and some mighty cold weather.

One of the funnier questions I had a few years ago came from a young couple who wondered, “Should we remodel and add a bedroom if we’re planning to sell in ten years–will we get back the money we spend?” That’s some strategic thinking! In this case, they ultimately decided ten years living in a home with the additional bedroom would be worth spending the money–even if the long-term payback wasn’t guaranteed. There are too many “it depends” to answer the dollar question with any degree of certainty.

Seth Godin recently wrote a piece (Economics Is Messy) about the difference between value and profit. When considering the “Should I renovate…?” question, it’s an important distinction. The average dollar “return” on improvements is about 64%, making most improvements a loss if we only measure in dollars. When we look at the value we include factors like how much more salable the property becomes and how much pleasure the current owner will reap from the improvement. Those factors add value and may well offset the lack of dollar profit.

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Could Facebook Ads Violate the Fair Housing Act?

Written by Walter Boomsma, instructor. See his blog.

Walter notes: I’ve occasionally observed that Facebook ads are a great place to find ads that do not meet the requirements of Maine License Law and Rules. Well, here’s another article (reposted courtesy of Tuesday Tactics) that raises a slightly different concern!


fair-housing-logoFacebook ads are a powerful way to generate leads, find prospective buyers and sellers, and optimize your marketing spend. There are lots of tips out there on how to maximize your ROI and craft ads.

But recently Pro Publica reported that Facebook’s ad targeting system may violate the Fair Housing Act of 1968. From the piece “Facebook Lets Advertisers Exclude Users by Race“:

“The ubiquitous social network not only allows advertisers to target users by their interests or background, it also gives advertisers the ability to exclude specific groups it calls “Ethnic Affinities.” Ads that exclude people based on race, gender and other sensitive factors are prohibited by federal law in housing and employment.”

Facebook disagrees. According to an article in Engadget:

“Facebook defended the practice, telling USA Today that “multicultural marketing is a common practice in the ad industry and helps brands reach audiences with more relevant advertising.” However, it added that “we’ve heard from groups and policy makers who are concerned about some of the ways our targeting tools could be used by advertisers. We are listening and working to better understand these concerns.”

If you use (or are considering) Facebook’s sophisticated ad targeting, you may want to keep this issue front and center in your mind. Be prudent how you use the targeting, and be aware that there’s a debate going on right now about the legality of the platform’s features.


Tuesday Tactics was developed in the Fall of 2008 and began publishing in the Summer of 2009 by Scott Levitt, owner of Oakley Signs & Graphics, to help real estate agents survive and thrive in an increasingly challenging market. In addition to Oakley Signs & Graphics, Scott is also the founder of My Real Helper, a real estate marketing content service designed to help agents market themselves and build rapport with clients. His newest company is Oakley Canvas Prints, a one-stop source for turning your photos into art you can hang on your wall.
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REALTOR SAFETY ALERT

Written by Walter Boomsma, instructor. See his blog.

caution

PLEASE TAKE NOTE! A female Bangor agent was contacted today by a buyer named “Doug”. The call sounded suspicious, as he refused to give his last name and said he could not receive emails because his server was down. He said he is a hairdresser and looking for a $400-$500K property in the Greater Bangor area because he has a grand opening for a salon next week. She Googled the number and found it was from Massachusetts, and there is a REALTOR Safety Alert regarding his activity, which is copied below.

IF YOU GET A CALL FROM HIM, PLEASE CALL THE POLICE. DO NOT AGREE TO MEET OR SHOW THIS MAN ANY PROPERTIES.


REALTOR SAFETY ALERT: SUSPICIOUS CALLS IN MEDFIELD MASSACHUSETTS:

September, 2014: In February of 2013, we learned that a suspicious individual, identifying himself as “Doug” and calling from phone number 508-816-1064, had been contacting female agents indicating an interest in looking at vacant properties for a hair salon, calling it both “House of Doug” and “Hair by Doug”. Last week, he contacted several female agents of an office in Medfield, with the same story and phone number, interested in properties on the Natick/Framingham line. When asked for an e-mail address by agents he says it is still being set up, which was what he also said in February 2013. The police have been contacted and have reached out to him, and we urge all members, male and female, to exercise vigilance if contacted by anyone who may appear to fit the description above, and always take extreme precautions in performing your duties as a REALTOR®. Please contact your local police if you receive a call so that there is a record.

“New” Core Courses — but let’s not call ’em that

Written by Walter Boomsma, instructor. See his blog.

When my oldest daughter was a toddler we were at the beach. In a parental desire to show her things and develop her understanding and vocabulary, I pointed out sea gulls. (She liked animals and birds–still does.) In short order, she began pointing and saying, “Daddy! Birds!” Somewhat absent-mindedly I would reply, “Those are seagulls, Bethanie.”

After several of those exchanges, she said pointedly, “Daddy, you can call them seagulls. I’m going to call them birds.” I have always admired her independence. On this occasion, I opted to accept her refusal to adopt my vocabulary.

But names can be important. So after announcing that “new core courses” are being released, we will not be referring to them as “new” and “old.” We need some fairly precise language here, so I will refer to them by their proper names. Effective October 1, 2016, there be a Core Course for Designated Brokers 2 and a Core Course for Brokers and Associate Brokers 2. These courses effectively replace the Core Course for Designated Brokers 1 and the Core Course for Brokers and Associate Brokers 1. When I say “replace,” understand that the courses numbered 2 are different than the courses numbered 1–both in content and application.

So what should you take (or have taken) before you renew your license?

What hasn’t changed:

Designated Brokers must take the “Core Course for Designated Brokers.” Brokers and Associate Brokers must take the Core Course for Brokers and Associate Brokers. That’s actually pretty straight-forward.

Where it potentially gets confusing:

Whenever there’s a change in core courses, the question always raised is “which core course do I need to have completed when I renew my license?” The answer is, “It depends!” While figuring out the answer initially sounds a bit daunting, this too is fairly straight forward. It depends on the expiration of the license you are renewing. It might help if you have that information before reading further.

Brokers and Associate Brokers with a license expiration date prior to April 1, 2017 (and who renew before that date) may fulfill the core course requirement with either the Core Course for Brokers and Associate Brokers 1 OR the Core Course for Brokers and Associate Brokers 2.

Designated Brokers with a license expiration date prior to April 1, 2017 (and who renew before that date) may fulfill the core course requirement with either the Core Course for Designated Brokers 1 OR the Core Course for Designated Brokers 2.

Brokers and Associate Brokers with a license expiration date on or after April 1, 2017 (and who renew after that date) must fulfill the core course requirement with the Core Course for Brokers and Associate Brokers 2.

Designated Brokers with a license expiration date prior to April 1, 2017 (and who renew before after date) must fulfill the core course requirement with  the Core Course for Designated Brokers 2.

The same explanation would apply to activating a currently inactive license. If you activate before April 1, 2016, either course is acceptable. On or after April 1, 2017, you must have the appropriate Course 2.

If you are at all confused, don’t guess! If you call or email me, the first question I’m going to ask you is “When does your license expire and when to you plan to renew it?” That one bit of information will allow us to determine the correct answer 99% of the time. You can, of course, also ask your DB or call the Maine Real Estate Commission if you need some help determining the answer.

As a reminder, continuing education is only required to renew a license. Sales Agents, for example, are not required to have continuing education hours–a Sales Agent License is not renewable. A Sales Agent’s “continuing education” is the Associate Broker Course. Associate Brokers who plan to take the required course and apply for a Broker License would also not need “continuing education.” Personally, I still think continuing education is a great idea in both of those scenarios even though it’s not required. I remember one sales agent who came to the Associate Broker Course with a lot of “under contracts” during a very depressed market. His classmates were in awe and wonder. He explained, “I’ve taken over 40 hours of continuing education. There might be a correlation!”

I will be teaching both the Core Course for Brokers and Associate Brokers 2 and the Core Course for Designated Brokers 2 on Friday, October 7, 2016 at the Ramada Inn in Bangor. For more information and to register, you can call the Arthur Gary School of Real Estate at 856-1712 or visit the Arthur Gary School of Real Estate Website.

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Help Me Understand… — is this a solution in search of a problem?

Written by Walter Boomsma, instructor. See his blog.

take_a_walk_150_clr_8169Let’s think about this.

Since I’m not actively engaged in brokerage on a daily basis, I take some extra steps to make certain I’m keeping current with “what’s going on in the business.” I know all too well the hazards created when class content and delivery aren’t in tune with the current environment.

One of those steps is to scan the media regularly and consistently. Recently there have been some headlines regarding action taken by the CFPB (Consumer Financial Protection Bureau) that are at best misleading. One I saw this morning claimed “CFPB makes clear lenders’ ability to share closing disclosure.” Actually, the CFPB has proposed some changes to TRID (TILA-RESPA Integrated Disclosure Rule). Until those changes are adopted, nothing has changed. The original rules remain in place.

In layman’s terms, the current rules adopted last fall created a reluctance on the part of lenders to share Closing Disclosures (a detailed statement of the buyer/borrower’s costs) with third parties–including real estate licensees. I suspect this stemmed in part from a desire to protect borrowers’ privacy. That would seem to be noble goal. But it was a change that did not sit well with some licensees who had become accustomed to the lender sending the previous disclosure (called “the HUD”) to the licensees involved in the transaction.

Under the new rule, lenders were given strong confidentiality guidelines that actually go far beyond the issue of who gets the closing disclosure. Those guidelines increased the borrowers’ confidence that information about them and their transaction would remain confidential. Nothing, however, took away the borrower’s right to share that information with others.

Personally, I never understood why this created a problem for licensees. Under the new rule, the lender would send the closing disclosure to the borrower. The borrower would, if he or she wished, contact his real estate licensee and provide a copy for review and discussion. I informally polled some of my students and, while many admitted it felt like an extra step, no one reported a serious problem with the process. In exchange for what might be seen as an extra step, the buyer/borrower received additional protections and maintained responsibility for the the process. So the campaign to change this rule feels a bit like a solution in search of a problem.

Perhaps someone can help me understand why this change is necessary. The lines of communication between a real estate licensee and his or her client should be open and frequent. We say it often, “The agent (licensee) advises, the client decides.” Why would that not apply here? The information contained in a closing disclosure belongs to the client, not the licensee. This change might actually be seen as a power grab, taking away a borrower’s right.

We sometimes hear licensees “complain” that buyers and sellers do not accept enough responsibility for what happens in a transaction and are quick to blame the licensee when things go wrong. If that’s true, does it really make sense to take this step?

I haven’t looked at the specific language of the proposed rule changes, but a summary indicates the change will include (among other things) “guidance on sharing the disclosures with various parties involved in the mortgage origination process.” It seems to me that we already have that and we might think about what we’re doing and saying if we change that guidance.

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Downsizing Is Not for Everyone! — a guest post by Jack Falvey

From the blog of Walter Boomsma, instructor. See his blog.

Jack is a longtime friend and colleague… one of the things I love about him is the way he shakes cages and challenges traditional thinking. The following piece is his Daily Investor Brief published by St Anselm College on December 14, 2015, challenging some of the traditional thinking often touted by the real estate industry.


Jack-F-Headshot

Jack Falvey

Just because everybody is doing it is no reason to do it! You’re allowed to be who you are and to plan your financial life as you please. “I’ll never have to cut the grass again!” is a poor reason for uprooting your life. Roots are worth a lot.

When the grass is cut by a condo association, you pay to have it done. You can pay to have your grass cut in the house in which you live. Think a little bit about the devil you know versus the one you don’t. Things change, and you may want big changes in your life at any time, but don’t let convention dictate your life.

In doing financial planning, your plan dictates your finances. If you want to fund a downsize move, so be it. Think through your goals and objectives, plusses and minuses, and then see what you can realistically finance. Your finances, of course, limit your plan, but get first things first. What do you want to do and why do you want to do it?

Many people live in the same place for many years and suffer no adverse consequences. Others have wanderlust and enjoy gypsy genes. Following children and/or grandchildren is not a bad strategy.  Think through your reasoning and then test the waters. What looks good in your imagination may not be ideal in practice. Then again, it might be far better than you ever imagined. Your reasons, whatever they may be, are the right reasons. Make sure they are your reasons.

Going home to the home you’ve lived in for forty or fifty years is not a bad place to go. Your investment in a home can also be an investment in a community. First it might be for schools. Next it could be for a religious congregation. Neighbors might become lifelong friends. All of this factors in. Next time you are cutting the grass, think about all this.


Jack Falvey is a widely published freelance business writer, contributing to Barron’s, The Wall Street Journal, and The New Hampshire Union Leader and Sunday News in the areas of sales, sales management, and marketing. He teaches professional sales and sales management at both University of Massachusetts Boston and at his alma mater, Boston College.

Falvey is currently a fellow at the New Hampshire Institute of Politics & Political Library at Saint Anselm College in Manchester, New Hampshire where he offers daily Investor Education Briefs.

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What Worries Real Estate Buyers – – do you know what your clients are worried about?

Written by Walter Boomsma, instructor. See his blog.

According to a recent study by Redfin, buyer’s worries have changed slightly. Of course, that makes sense because we all know the market changes constantly. Last year (2014) buyers were most worried about inventory. This year “prices” are in the number one spot. Actually, the worry seems to be more about prices rising and affordability becoming an issue.

Some will suggest that reflects an improving market with good news for sellers. Others will suggest that buyers are showing a lack of confidence in the general economy.

According to the survey of 3,500 buyers, the top five worries this year are:

  1. Prices (prices are rising or too high)
  2. Competition from other buyers
  3. Inventory (there aren’t enough houses to choose from)
  4. Selling my current home first
  5. Having enough for a downpayment

You might find it interesting to compare that with the top five worries last year. It will not take too much creativity to support your current opinion of the state of the market and the direction it’s taking. But you’ll have to rationalize some things. For example, the fourth worry of buyers last year was that mortgage rates might rise before they could buy–that didn’t make the list this year. Another concern last year that didn’t make the list for 2015 was “fatigue” — referring to buyers finding the process difficult and tiring.

Most know that all generalities are false. In this case, that’s especially true because “worries” are very personal. So while how those 3500 people felt is mildly interesting, real estate licensees should be much more focused on a much smaller number–the number of clients you are working with.

You want to know a lot about your client. Most of those things are basic and concrete. The questions you ask probably include things like, “What is your price range?” and “How many bedrooms?” and “How much land?”

Those are certainly important conversations. But why not ask “What are you worried about?” Some will say, “Nothing,” partly because they are overwhelmed with excitement and haven’t thought about the concerns. It might be tempting to accept that answer. But aren’t there some things a buyer should be worried about?

One of the saddest listings I ever took involved a couple in the middle of a divorce. The short version of their story was they visited Maine and fell in love with our great state. They spent the last few days of their vacation finding a real estate licensee and then a house. It was a very smooth and speedy transaction–their agent handled “everything” while they went home to pack. The realities started showing up after they were settled in their new home. One spouse was forced to return to their home state to find employment that wasn’t available in the vacation area they’d bought. The other found work, but it involved a long commute with resulting childcare and expense issues. Thus began the breakdown of the family. The home they purchased was not an “easy sell” so by the time they realized their mistake, the market was not in their favor.

A little “worrying” during the process might have made a world of difference in the outcome. Personally, I think the licensee who represented them in the purchase should have noticed there were some things they weren’t worried about and raised some of the issues they weren’t seeing.

Of course, licensees also find themselves representing worriers. Folks in the real estate business like to focus on “making it easy” and “getting to closing.” If that’s the case, remember that it’s easier to smooth the road if you locate the bumps and potholes. No matter how you cut it, a discussion of worries with clients (buyer or seller) just makes sense.

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