Report: More Time from Mortgage Application to Closing Drives Decline in Customer Satisfaction
RISMEDIA, November 19, 2010—Driven by an increase in length of time from application to approval, the average timeline of the mortgage origination process has increased for a third consecutive year, while customer satisfaction has declined, according to the J.D. Power and Associates 2010 U.S. Primary Mortgage Origination Satisfaction Study released.
The study, based on the voice of the customer, measures customer satisfaction in four key factors of the mortgage origination experience: application/approval process; loan officer/mortgage broker; closing; and contact.
The study finds that the time from application to approval has increased to 27.5 days in 2010 from 20 days in 2009. As a result, the time frame for the entire origination process has increased to 52.1 days in 2010 from 46.9 days in 2009. Consequently, overall satisfaction has decreased to 734 (on a 1,000-point scale) in 2010 from 739 in 2009.
"While the revised Real Estate Settlement Procedures Act guidelines appear to have streamlined and shortened the time from approval to closing, the unintended consequence is that the application-to-approval time frame has lengthened and become more complicated," said David Lo, director of financial services at J.D. Power and Associates. "Ultimately, this longer timeline has a negative impact on overall satisfaction, although there are specific best practices that may mitigate the negative perceptions."
The study finds that the most important best practices, which are most closely associated with high levels of satisfaction, are:
• Providing proactive updates on the status of the loan
• Providing a welcome acknowledgment after an application is submitted
• Avoiding asking for the same information more than once
• Closing on the promised date
• Clearly explaining loan options and ensuring that the customer understands
• Clearly explaining the entire process from application to approval
The study also finds that usage of the online application channel continues to increase. Nearly 20 percent of customers now go online to start the mortgage application process, up from 14 percent in 2009. In comparison, only 29 percent of customers start the mortgage application process in person, while 33 percent did so in 2009. In addition, fewer customers this year say that they met with their loan officer or mortgage broker in person during the mortgage origination process -- 50 percent, compared with 57 percent in 2009.
"Customer preference and, more importantly, perceptions, continue to increase with the online direct channel," said Lo. "Online lenders do a very good job of keeping their customers informed of the process every step of the way by providing periodic status updates and information pertaining to their loan."
The 2010 U.S. Primary Mortgage Origination Satisfaction Study is based on responses from 3,401 consumers who originated new mortgages. The study was fielded between July and August 2010.
Friday, November 19, 2010
Bankrate: Mortgage Rates Rise Significantly
Bankrate: Mortgage Rates Rise Significantly
RISMEDIA, November 19, 2010—Mortgage rates increased again this week, with the average conforming 30-year fixed mortgage rate now 4.62 percent, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has an average of 0.37 discount and origination points.
To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.
The average 15-year fixed mortgage increased to 4.02 percent, and the larger jumbo 30-year fixed rate soared as well to 5.24 percent. Adjustable rate mortgages also climbed higher, with the average 5-year ARM inching higher to 3.71 percent and the average 7-year ARM rising to 4.01 percent.
Mortgage rates jumped significantly this week, posting a second consecutive weekly increase since the Federal Reserve announced renewed measures to boost the economy. Worries that the Fed's quantitative easing program will spark higher inflation, coupled with stronger economic data on retail sales and weekly unemployment filings fueled the latest increase. Although mortgage rates have increased, they remain extremely low in a historical context and will not be an impediment to well-qualified borrowers for the foreseeable future.
The last time mortgage rates were above 6 percent was November 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.62 percent, the monthly payment for the same size loan would be $1,027.68, a savings of $214 per month for a homeowner refinancing now.
RISMEDIA, November 19, 2010—Mortgage rates increased again this week, with the average conforming 30-year fixed mortgage rate now 4.62 percent, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has an average of 0.37 discount and origination points.
To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.
The average 15-year fixed mortgage increased to 4.02 percent, and the larger jumbo 30-year fixed rate soared as well to 5.24 percent. Adjustable rate mortgages also climbed higher, with the average 5-year ARM inching higher to 3.71 percent and the average 7-year ARM rising to 4.01 percent.
Mortgage rates jumped significantly this week, posting a second consecutive weekly increase since the Federal Reserve announced renewed measures to boost the economy. Worries that the Fed's quantitative easing program will spark higher inflation, coupled with stronger economic data on retail sales and weekly unemployment filings fueled the latest increase. Although mortgage rates have increased, they remain extremely low in a historical context and will not be an impediment to well-qualified borrowers for the foreseeable future.
The last time mortgage rates were above 6 percent was November 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.62 percent, the monthly payment for the same size loan would be $1,027.68, a savings of $214 per month for a homeowner refinancing now.
Thursday, November 18, 2010
Stay Warm and Save This Winter
Stay Warm and Save This Winter
By Stephanie Andre
RISMEDIA, November 18, 2010—The cold weather will be here (if not, already) before you know it. And with it comes the likelihood of rising heating bills and drafty windows, doorways and spaces.
To help you make your home more energy-efficient this year, here are some tips from ComEd:
• Have home heating systems cleaned and inspected by a professional each year to ensure safety and optimum efficiency. Be sure to change the filter prior to the heating season, and check its condition monthly.
• Inspect the caulking and weather-stripping around all windows, doors and any openings for utility services. Replace caulking and weather-stripping as necessary. A drafty house lets warm air escape and is much more costly to keep warm.
• Remove window air conditioners if possible, or install an air conditioner cover to eliminate drafts.
• Keep fireplace dampers closed tightly when not in use.
• Reverse the rotation of ceiling fan blades. During the winter, blades should spin so the warm air that has risen can be re-distributed around the room.
• Switch to more energy-efficient lighting, such as CFLs (compact fluorescent light bulbs), which use about 75 percent less energy than standard incandescent bulbs and last up to 10 times longer.
By Stephanie Andre
RISMEDIA, November 18, 2010—The cold weather will be here (if not, already) before you know it. And with it comes the likelihood of rising heating bills and drafty windows, doorways and spaces.
To help you make your home more energy-efficient this year, here are some tips from ComEd:
• Have home heating systems cleaned and inspected by a professional each year to ensure safety and optimum efficiency. Be sure to change the filter prior to the heating season, and check its condition monthly.
• Inspect the caulking and weather-stripping around all windows, doors and any openings for utility services. Replace caulking and weather-stripping as necessary. A drafty house lets warm air escape and is much more costly to keep warm.
• Remove window air conditioners if possible, or install an air conditioner cover to eliminate drafts.
• Keep fireplace dampers closed tightly when not in use.
• Reverse the rotation of ceiling fan blades. During the winter, blades should spin so the warm air that has risen can be re-distributed around the room.
• Switch to more energy-efficient lighting, such as CFLs (compact fluorescent light bulbs), which use about 75 percent less energy than standard incandescent bulbs and last up to 10 times longer.
17 Ideas for Marketing Listings
17 Ideas for Marketing Your Listings
By Darryl Davis
RISMEDIA, November 18, 2010—Yesterday, we discussed five concepts to help you get your listings sold. Today, we’ll focus on the keys to marketing those listings. Here are tips and techniques that every Realtor can use:
Hold broker open houses. If selling the agents means getting more buyers, then a brokers’ open house is one of the best tools to use. You should look at it as an opportunity to introduce the product. It ideally should be done in the first one to two weeks that a house goes to multiple listing.
It might take some time to build the reputation and to get a good turnout, but eventually it will happen. Make the open house something special – more of a party or an event. Promote it by making fliers or sending faxes. It’s also a great vehicle for promoting listings that are not getting a lot of activity.
At the open house, distribute opinion sheets. The most important question on the sheet is, “What price do you think the house is going to sell for?” After the open house, sit down with the seller and go through the sheets to find out what most agents think. Then, you can give the option to the sellers to adjust the price accordingly so that you’ll get the activity that’s needed, or leave the price as is and hope you’ll get the activity.
Also, attend other agents’ open houses as well, because you want the same support from them.
Hold public open houses. These are time consuming, but the major plus is that it promotes you and highlights your listing. It shows the seller you’re servicing them and most importantly, you’ll get listing leads.
Showcase your listings. Run a larger-than-usual ad in a local paper, and instead of promoting a public open house on just one listing, promote four to six at a time. Put all the information about these houses into the ad and announce open houses that one weekend.
“Just listed” letters. These can be like “just sold” cards. They are highly effective and a lot easier to do if you are computerized. If you’re going to do these, don’t do postcards.
Call 100 surrounding neighbors of a house you just listed. In addition to telling them about the listing, ask if they know anyone else who might be selling in the area. Also, ask them if they themselves might be thinking of selling, and find out if they know anyone who they’d like to make their new neighbor. If you include this as part of your servicing campaign for sellers, it won’t seem like cold calls; it will seem like “just listed” calls.
The 10-10-20 rule. Since the general rule of “knocking on 100 doors” takes a lot of time and energy, it is more useful to knock on 10 doors to the left, 10 to the right and 20 doors across the street. People in these homes are the most likely to know the listing family personally and, therefore, are most likely to want to help them find a buyer.
Advertise in specialized papers. For example, let’s say you just listed a waterfront property. Then, advertise in boating magazines and other such publications.
A gift to the selling agent. Whenever an agent from another company sells one of your listings, give them a huge gift, like a television. And make sure you deliver it to the office of the selling agent in the middle of their office meeting. Watch the next time you do a Broker’s Open House how many agents attend your open house from that office.
Use report cards. This helps you track the activity of other agents calling on your listings. If you have a listing that’s been on the market for 30 days and you’ve gotten very few calls from other agents inquiring about it, then you’ve got to communicate that with the seller. This helps you get either a price adjustment or terms adjustment.
Hold periodic reviews. Meet with the seller at the 30-day and 60-day mark to discuss price adjustment, terms adjustment or marketing.
Have an individual folder for each listing. Even if you’re computerized, there are still papers and forms you must keep.
A list of your listings hanging by your phone with the price and expiration date. This will act as a constant motivator to get your listings sold. It will also help you stay focused on increasing that list of sellers.
Get a higher commission. One of your tasks is to sell other agents to help you sell this home. A higher commission will surely help you sell the agents
Bimonthly calls. Stay in touch with the seller every two weeks. Discuss what the competition has sold or when you’ll be running an ad about their house or about what kind of responses you’re getting from agents.
Agent evaluation cards. Send one of these to agents every time they show your home. This is based on the assumption that you’ve created a good reputation for yourself.
Farming agents. Create a mailing list of successful agents in your area. Personalize any mailing you send to them. That way, they get the personal attention they deserve.
Common sense pricing. Pricing of houses should be listed in such a way that they show up in more searches, meaning more exposure.
These are just some the items to get your listings sold. The most important one, however, is to have a communication system like we teach our students to validate the homeowner made the right decision when they hired you, and to show them you are doing everything you can to get their property sold. After that, it’s up to them to lower the price.
For over 20 years, Darryl Davis has traveled around the country coaching agents and brokers on how to achieve their Next Level of success. He is the creator of the nationally acclaimed www.ThePowerProgram.com, the only yearlong coaching and training course where Power Agents, on average, double their production over their previous year. Darryl is a best-selling author, one of the highest rated speakers at the NAR Convention each year, and has a career-curriculum that brings agents from “Rookies to Retirement”. To find out about his training programs and/or speaking availability, please visit www.DarrylDavisSeminars.com or call 1-800-395-3905. For more information on the get your listings sold program, go to www.GetYourListingsSold.com.
By Darryl Davis
RISMEDIA, November 18, 2010—Yesterday, we discussed five concepts to help you get your listings sold. Today, we’ll focus on the keys to marketing those listings. Here are tips and techniques that every Realtor can use:
Hold broker open houses. If selling the agents means getting more buyers, then a brokers’ open house is one of the best tools to use. You should look at it as an opportunity to introduce the product. It ideally should be done in the first one to two weeks that a house goes to multiple listing.
It might take some time to build the reputation and to get a good turnout, but eventually it will happen. Make the open house something special – more of a party or an event. Promote it by making fliers or sending faxes. It’s also a great vehicle for promoting listings that are not getting a lot of activity.
At the open house, distribute opinion sheets. The most important question on the sheet is, “What price do you think the house is going to sell for?” After the open house, sit down with the seller and go through the sheets to find out what most agents think. Then, you can give the option to the sellers to adjust the price accordingly so that you’ll get the activity that’s needed, or leave the price as is and hope you’ll get the activity.
Also, attend other agents’ open houses as well, because you want the same support from them.
Hold public open houses. These are time consuming, but the major plus is that it promotes you and highlights your listing. It shows the seller you’re servicing them and most importantly, you’ll get listing leads.
Showcase your listings. Run a larger-than-usual ad in a local paper, and instead of promoting a public open house on just one listing, promote four to six at a time. Put all the information about these houses into the ad and announce open houses that one weekend.
“Just listed” letters. These can be like “just sold” cards. They are highly effective and a lot easier to do if you are computerized. If you’re going to do these, don’t do postcards.
Call 100 surrounding neighbors of a house you just listed. In addition to telling them about the listing, ask if they know anyone else who might be selling in the area. Also, ask them if they themselves might be thinking of selling, and find out if they know anyone who they’d like to make their new neighbor. If you include this as part of your servicing campaign for sellers, it won’t seem like cold calls; it will seem like “just listed” calls.
The 10-10-20 rule. Since the general rule of “knocking on 100 doors” takes a lot of time and energy, it is more useful to knock on 10 doors to the left, 10 to the right and 20 doors across the street. People in these homes are the most likely to know the listing family personally and, therefore, are most likely to want to help them find a buyer.
Advertise in specialized papers. For example, let’s say you just listed a waterfront property. Then, advertise in boating magazines and other such publications.
A gift to the selling agent. Whenever an agent from another company sells one of your listings, give them a huge gift, like a television. And make sure you deliver it to the office of the selling agent in the middle of their office meeting. Watch the next time you do a Broker’s Open House how many agents attend your open house from that office.
Use report cards. This helps you track the activity of other agents calling on your listings. If you have a listing that’s been on the market for 30 days and you’ve gotten very few calls from other agents inquiring about it, then you’ve got to communicate that with the seller. This helps you get either a price adjustment or terms adjustment.
Hold periodic reviews. Meet with the seller at the 30-day and 60-day mark to discuss price adjustment, terms adjustment or marketing.
Have an individual folder for each listing. Even if you’re computerized, there are still papers and forms you must keep.
A list of your listings hanging by your phone with the price and expiration date. This will act as a constant motivator to get your listings sold. It will also help you stay focused on increasing that list of sellers.
Get a higher commission. One of your tasks is to sell other agents to help you sell this home. A higher commission will surely help you sell the agents
Bimonthly calls. Stay in touch with the seller every two weeks. Discuss what the competition has sold or when you’ll be running an ad about their house or about what kind of responses you’re getting from agents.
Agent evaluation cards. Send one of these to agents every time they show your home. This is based on the assumption that you’ve created a good reputation for yourself.
Farming agents. Create a mailing list of successful agents in your area. Personalize any mailing you send to them. That way, they get the personal attention they deserve.
Common sense pricing. Pricing of houses should be listed in such a way that they show up in more searches, meaning more exposure.
These are just some the items to get your listings sold. The most important one, however, is to have a communication system like we teach our students to validate the homeowner made the right decision when they hired you, and to show them you are doing everything you can to get their property sold. After that, it’s up to them to lower the price.
For over 20 years, Darryl Davis has traveled around the country coaching agents and brokers on how to achieve their Next Level of success. He is the creator of the nationally acclaimed www.ThePowerProgram.com, the only yearlong coaching and training course where Power Agents, on average, double their production over their previous year. Darryl is a best-selling author, one of the highest rated speakers at the NAR Convention each year, and has a career-curriculum that brings agents from “Rookies to Retirement”. To find out about his training programs and/or speaking availability, please visit www.DarrylDavisSeminars.com or call 1-800-395-3905. For more information on the get your listings sold program, go to www.GetYourListingsSold.com.
October Housing Starts Down
October Housing Starts Down
RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.
Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.
Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.
RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.
Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.
Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.
Wednesday, November 17, 2010
Top 5 Tips for Buying a Newly Built Home
For Your Clients: Top 5 Tips for Buying a Newly Built Home
By Dan Steward
RISMEDIA, November 17, 2010—Newly built homes, often in recently developed communities, are regaining popularity and are more affordable than in years past. New homebuilders are using desirable, open floor plans and are helping buyers get into new homes despite the nationwide credit crunch.
As with any major transaction, it’s critical that the buyer enter the home purchase fully informed and educated. Follow these important tips in a new home transaction to ensure that the outcome is a success.
1. Choose a Realtor Who Has New Home Sales Experience
Hire a buyer’s agent to represent you. Most of the time, your agent will be paid by the seller, but sometimes the responsibility for the agent’s fee is open for discussion. Even if you have to directly pay your agent, you can probably add that fee to the sales price, which would be worthwhile since a strong Realtor negotiating on your behalf can save you thousands more than the commission.
The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand-new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.
Your own agent will represent you, act as your fiduciary and disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.
If your contract contains a contingency to sell your existing home before buying, again, hire your own seller’s agent to list your home. Be aware that buying before selling is not always in your best interest as hard bargaining goes out the window once you’ve emotionally already left your home.
2. Carefully Evaluate the Seller’s Lender before Committing
Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. However, a builder’s lender might not offer you the best deal. This is particularly true if the builder actually owns the lending company.
Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives – that you use their lender. There are many problems that may crop up when you pigeon-hole yourself to one lender – higher rates and higher closing costs are the two biggest.
Ask to see a copy of your credit report and FICO cores. You can also order your own free credit report before shopping for a new home.
Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.
3. Check out the Builder’s Reputation
If a buyer has a bad experience with a builder, word spreads rapidly throughout a community. However, accurately and fairly assessing a builder’s history is the appropriate path—check public records for lawsuits or complaints and evaluate their resolutions.
Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?
Learn if the builder limits investor purchases – this ensures that the neighborhood doesn’t turn into a “rental” neighborhood, which may appear less well-maintained and reduce property value.
4. Hire a Home Inspector
Many people who buy new construction homes don’t bother to get a home inspection. Most new homes come with a one year “bumper-to-bumper” warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.
If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.
An inspection provides education about the property, and offers the validation of a trained, independent third party assessment of the structure and systems.
5. Obtain Legal Advice before Buying a Brand-New Home
Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer.
Ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because it’s a valid concern and other buyers have gone to court over it.
Dan Steward is president, Pillar To Post.
By Dan Steward
RISMEDIA, November 17, 2010—Newly built homes, often in recently developed communities, are regaining popularity and are more affordable than in years past. New homebuilders are using desirable, open floor plans and are helping buyers get into new homes despite the nationwide credit crunch.
As with any major transaction, it’s critical that the buyer enter the home purchase fully informed and educated. Follow these important tips in a new home transaction to ensure that the outcome is a success.
1. Choose a Realtor Who Has New Home Sales Experience
Hire a buyer’s agent to represent you. Most of the time, your agent will be paid by the seller, but sometimes the responsibility for the agent’s fee is open for discussion. Even if you have to directly pay your agent, you can probably add that fee to the sales price, which would be worthwhile since a strong Realtor negotiating on your behalf can save you thousands more than the commission.
The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand-new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.
Your own agent will represent you, act as your fiduciary and disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.
If your contract contains a contingency to sell your existing home before buying, again, hire your own seller’s agent to list your home. Be aware that buying before selling is not always in your best interest as hard bargaining goes out the window once you’ve emotionally already left your home.
2. Carefully Evaluate the Seller’s Lender before Committing
Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. However, a builder’s lender might not offer you the best deal. This is particularly true if the builder actually owns the lending company.
Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives – that you use their lender. There are many problems that may crop up when you pigeon-hole yourself to one lender – higher rates and higher closing costs are the two biggest.
Ask to see a copy of your credit report and FICO cores. You can also order your own free credit report before shopping for a new home.
Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.
3. Check out the Builder’s Reputation
If a buyer has a bad experience with a builder, word spreads rapidly throughout a community. However, accurately and fairly assessing a builder’s history is the appropriate path—check public records for lawsuits or complaints and evaluate their resolutions.
Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?
Learn if the builder limits investor purchases – this ensures that the neighborhood doesn’t turn into a “rental” neighborhood, which may appear less well-maintained and reduce property value.
4. Hire a Home Inspector
Many people who buy new construction homes don’t bother to get a home inspection. Most new homes come with a one year “bumper-to-bumper” warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.
If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.
An inspection provides education about the property, and offers the validation of a trained, independent third party assessment of the structure and systems.
5. Obtain Legal Advice before Buying a Brand-New Home
Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer.
Ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because it’s a valid concern and other buyers have gone to court over it.
Dan Steward is president, Pillar To Post.
5 Concepts to Get Listings Sold in Today's Market
5 Concepts to Get Listings Sold in Today's Market
By Darryl Davis
RISMEDIA, November 17, 2010—Listings are the backbone of the real estate business. It’s important to build your inventory of listed properties, and service and market them well. But most agents don’t do enough with listings once they get them.
The following concepts will help you get your inventory sold, as well as help you service your sellers. What’s important is that you put a system in place that helps you achieve these important goals.
Concept 1: Sellers want communication. Most agents think the only thing homeowners want when they list with an agent is to sell their house. Of course this is important, but from the time they list with you to the time it sells, the No. 1 thing they want is communication. A frequent complaint about agents is that they list homes and are never heard from again. So keep in touch with the seller through various means, such as phone calls, e-mails, notes, and face-to-face meetings.
Concept 2: Commitment counts. Some sellers are totally committed to price, and less committed to moving. There’s nothing wrong with taking an overpriced listing as long as you communicate upfront that it’s overpriced. Make sure sellers know that by being more committed to price, they may not be able to sell.
Concept 3: Don’t make promises you can’t keep. Your job is not to outpromise your competition in order to get the listing. Keep the few promises you make rather than make many promises and break them.
Concept 4: Sell the agents, not the buyers. To boost your chances of selling, you need to have more agents through the door, which means more showings. Get agents excited so that out of all the homes on the market in this particular price range, they remember your listing best. Have the mindset that your job as a marketing agent is to motivate the other agents in your market – not just to sell a home.
Concept 5: Price it right. If your inventory isn’t selling, either your price or the marketing is wrong.
Check back tomorrow for some tips and techniques to market your listings.
For over 20 years, Darryl Davis has traveled around the country coaching agents and brokers on how to achieve their Next Level of success. He is the creator of the nationally acclaimed www.ThePowerProgram.com, the only yearlong coaching and training course where Power Agents, on average, double their production over their previous year. Darryl is a best-selling author, one of the highest rated speakers at the NAR Convention each year, and has a career-curriculum that brings agents from “Rookies to Retirement”. To find out about his training programs and/or speaking availability, please visit www.DarrylDavisSeminars.com or call 1-800-395-3905 1-800-395-3905 .For more information on the get your listings sold program, go to www.GetYourListingsSold.com.
By Darryl Davis
RISMEDIA, November 17, 2010—Listings are the backbone of the real estate business. It’s important to build your inventory of listed properties, and service and market them well. But most agents don’t do enough with listings once they get them.
The following concepts will help you get your inventory sold, as well as help you service your sellers. What’s important is that you put a system in place that helps you achieve these important goals.
Concept 1: Sellers want communication. Most agents think the only thing homeowners want when they list with an agent is to sell their house. Of course this is important, but from the time they list with you to the time it sells, the No. 1 thing they want is communication. A frequent complaint about agents is that they list homes and are never heard from again. So keep in touch with the seller through various means, such as phone calls, e-mails, notes, and face-to-face meetings.
Concept 2: Commitment counts. Some sellers are totally committed to price, and less committed to moving. There’s nothing wrong with taking an overpriced listing as long as you communicate upfront that it’s overpriced. Make sure sellers know that by being more committed to price, they may not be able to sell.
Concept 3: Don’t make promises you can’t keep. Your job is not to outpromise your competition in order to get the listing. Keep the few promises you make rather than make many promises and break them.
Concept 4: Sell the agents, not the buyers. To boost your chances of selling, you need to have more agents through the door, which means more showings. Get agents excited so that out of all the homes on the market in this particular price range, they remember your listing best. Have the mindset that your job as a marketing agent is to motivate the other agents in your market – not just to sell a home.
Concept 5: Price it right. If your inventory isn’t selling, either your price or the marketing is wrong.
Check back tomorrow for some tips and techniques to market your listings.
For over 20 years, Darryl Davis has traveled around the country coaching agents and brokers on how to achieve their Next Level of success. He is the creator of the nationally acclaimed www.ThePowerProgram.com, the only yearlong coaching and training course where Power Agents, on average, double their production over their previous year. Darryl is a best-selling author, one of the highest rated speakers at the NAR Convention each year, and has a career-curriculum that brings agents from “Rookies to Retirement”. To find out about his training programs and/or speaking availability, please visit www.DarrylDavisSeminars.com or call 1-800-395-3905 1-800-395-3905 .For more information on the get your listings sold program, go to www.GetYourListingsSold.com.
Tuesday, November 16, 2010
Well-Kept Yards Most Important Factor in Determining Neighborhood Safety
Survey: Well-Kept Yards Most Important Factor in Determining Neighborhood Safety
RISMEDIA, November 16, 2010--A new survey conducted by Relocation.com finds that 75 percent of Americans believe the most important factor in determining a neighborhood's safety is the up-keep of surrounding homes, especially the conditions of the front lawns, which trumps even Googling neighborhood statistics to get a feel for a community.
The latest Relocation.com survey finds that 74 percent of respondents indicated they would select a neighborhood based on "word-of-mouth" or its local reputation over any other reason, while 67 percent of the respondents say they pay attention to local crime reports and statistics as reported in the local media. Less compelling, according to the survey, are "a gated community with security patrols" and "proximity to a police or fire station" when determining the safety of a neighborhood.
"It's interesting to see how home buyers determine neighborhood safety based on the neighborhood's appearance and not as much based on police statistics or crime reports," says Relocation.com Chairman and Founder Sharon Asher. "Our findings suggest that some home sellers who are struggling to generate interest may want to go the extra mile and help their neighbors with landscaping needs in order to create buyer interest."
The Relocation.com survey was conducted in mid-October, 2010, in a continuing effort to provide information on lifestyle factors that drive moving and relocation decisions in the U.S.
RISMEDIA, November 16, 2010--A new survey conducted by Relocation.com finds that 75 percent of Americans believe the most important factor in determining a neighborhood's safety is the up-keep of surrounding homes, especially the conditions of the front lawns, which trumps even Googling neighborhood statistics to get a feel for a community.
The latest Relocation.com survey finds that 74 percent of respondents indicated they would select a neighborhood based on "word-of-mouth" or its local reputation over any other reason, while 67 percent of the respondents say they pay attention to local crime reports and statistics as reported in the local media. Less compelling, according to the survey, are "a gated community with security patrols" and "proximity to a police or fire station" when determining the safety of a neighborhood.
"It's interesting to see how home buyers determine neighborhood safety based on the neighborhood's appearance and not as much based on police statistics or crime reports," says Relocation.com Chairman and Founder Sharon Asher. "Our findings suggest that some home sellers who are struggling to generate interest may want to go the extra mile and help their neighbors with landscaping needs in order to create buyer interest."
The Relocation.com survey was conducted in mid-October, 2010, in a continuing effort to provide information on lifestyle factors that drive moving and relocation decisions in the U.S.
Monday, November 15, 2010
Reports of E-mail's Death Have Been Greatly Exaggerated
Reports of E-mail's Death Have Been Greatly Exaggerated
By Laura Casey
RISMEDIA, November 13, 2010--(MCT)--All the ballyhoo that social networking sites such as Twitter and Facebook are diminishing our need for e-mail can be best summarized by paraphrasing Mark Twain: Reports of e-mail's death have been greatly exaggerated.
Just ask Wesley Lee, a 21-year-old senior at the University of California-Berkeley studying computer science. He's looking for a job after graduation, and e-mail is his lifeline to job leads and a possible employer contact.
"I am addicted to my e-mail," he says. "I check my phone for new e-mail all the time, and I also bring a laptop wherever I go. When I am not in class, I am working on e-mail."
And while Derek Miller, 18, uses Facebook to chat with his friends, the Diablo Valley College freshman still checks his e-mail account regularly, often multiple times a day.
"I use e-mail when I am talking to adults, like teachers," he says. "E-mail seems more professional than other ways of talking with people, like texting or calling."
Although social networking websites such as Facebook and, to a lesser degree, MySpace, are communication powerhouses — 500 million people are active Facebook users — e-mail is still critically important to web users, social media experts and e-mail service representatives, say. So when Facebook chief operating officer Sheryl Sandberg declared e-mail dead at a Nielsen conference in June, e-mail industry officials bristled.
"People who are heavily involved with the social networking world like to say everything except social networking is dead and dying," says Sara Radicati of The Radicati Group of Palo Alto, Calif., which performs research on messaging and collaboration technology. According to a report by The Radicati Group, as of 2009, there were about 1.4 billion e-mail users, and that number is expected to rise to 1.9 billion by 2013. The group also reports that an estimated 247 billion e-mails were sent each day in 2009.
While people, especially the younger set, are texting, instant messaging and making plans through sites like Facebook, Radicati says people of all ages are still using e-mail in business and personal communication.
"We're finding that people are doing more of everything. People are doing a lot of e-mail, social networking and instant messaging. They are doing a lot of communication in a lot of ways. Just because social networking is growing doesn't mean that everything else dies," Radicati adds.
In fact, social networking sites are generating more mail for people's virtual inboxes, says social media expert and blogger Brian Solace. Solace, of San Francisco's FutureWorks, says most people are alerted that someone has sent them messages through Facebook or Twitter in their e-mail boxes.
"The reality is e-mail is not going anywhere until one of these social networks decides it wants to be your inbox," he says. "Until then, e-mail is a necessary evil."
San Francisco-based Yahoo! has 280 million users who rely on e-mail every day, says Stephanie Shum, senior product manager for Yahoo! Mail. She says that she recognizes that people use different websites and technology to share, say, what they're doing at the moment, but Yahoo! Mail, she says, is working with some of the most popular websites like Facebook to provide a richer e-mail experience. For example, when Yahoo! Mail finishes a deal with Twitter, e-mail users will have the ability to update their Facebook, Twitter and Yahoo! status messages at the same time.
"E-mail is alive and kicking, and we're definitely investing in it," Shum says.
Tuhina Das, a University of California-Berkeley freshman studying pre-business, loves Facebook because she says it is so social and easy to connect with friends. But she uses e-mail for the important communications.
"If you're interviewing or applying for something or need it for business, you're not going to use Facebook," she says.
In fact, e-mail is only becoming more important for working professionals, says Deva Hazarika of ClearContext of San Francisco, a software company that helps people organize all the information that flows through e-mail.
Hazarika says text messaging, instant messaging, Facebook communication and Twitter tweets are all great for "lightweight" communication, such as making plans for dinner, but if you really need to document conversations and keep records and files for work, e-mail is better and more effective than anything else. That goes the same for students and schoolwork, he says.
"People need information to be traceable. They need to look back at information. That's why all of important conversations are pretty much staying with e-mail right now," Hazarika says. "E-mail is really not only sticking around, but it's getting entrenched. It's really the one place where I can reliably send (information like receipts from Amazon or business) communication to you."
And even the younger set, junior high school students who are tethered to MySpace and Facebook, also say they use e-mail. Arianna Campos, 13, of Concord has four e-mail accounts—some for friends, some for family, some for spam.
"I mostly talk to my friends through MySpace," she says. "But I do use e-mail to talk to adults."
(c) 2010, Contra Costa Times (Walnut Creek, Calif.).
Distributed by McClatchy-Tribune Information Services.
By Laura Casey
RISMEDIA, November 13, 2010--(MCT)--All the ballyhoo that social networking sites such as Twitter and Facebook are diminishing our need for e-mail can be best summarized by paraphrasing Mark Twain: Reports of e-mail's death have been greatly exaggerated.
Just ask Wesley Lee, a 21-year-old senior at the University of California-Berkeley studying computer science. He's looking for a job after graduation, and e-mail is his lifeline to job leads and a possible employer contact.
"I am addicted to my e-mail," he says. "I check my phone for new e-mail all the time, and I also bring a laptop wherever I go. When I am not in class, I am working on e-mail."
And while Derek Miller, 18, uses Facebook to chat with his friends, the Diablo Valley College freshman still checks his e-mail account regularly, often multiple times a day.
"I use e-mail when I am talking to adults, like teachers," he says. "E-mail seems more professional than other ways of talking with people, like texting or calling."
Although social networking websites such as Facebook and, to a lesser degree, MySpace, are communication powerhouses — 500 million people are active Facebook users — e-mail is still critically important to web users, social media experts and e-mail service representatives, say. So when Facebook chief operating officer Sheryl Sandberg declared e-mail dead at a Nielsen conference in June, e-mail industry officials bristled.
"People who are heavily involved with the social networking world like to say everything except social networking is dead and dying," says Sara Radicati of The Radicati Group of Palo Alto, Calif., which performs research on messaging and collaboration technology. According to a report by The Radicati Group, as of 2009, there were about 1.4 billion e-mail users, and that number is expected to rise to 1.9 billion by 2013. The group also reports that an estimated 247 billion e-mails were sent each day in 2009.
While people, especially the younger set, are texting, instant messaging and making plans through sites like Facebook, Radicati says people of all ages are still using e-mail in business and personal communication.
"We're finding that people are doing more of everything. People are doing a lot of e-mail, social networking and instant messaging. They are doing a lot of communication in a lot of ways. Just because social networking is growing doesn't mean that everything else dies," Radicati adds.
In fact, social networking sites are generating more mail for people's virtual inboxes, says social media expert and blogger Brian Solace. Solace, of San Francisco's FutureWorks, says most people are alerted that someone has sent them messages through Facebook or Twitter in their e-mail boxes.
"The reality is e-mail is not going anywhere until one of these social networks decides it wants to be your inbox," he says. "Until then, e-mail is a necessary evil."
San Francisco-based Yahoo! has 280 million users who rely on e-mail every day, says Stephanie Shum, senior product manager for Yahoo! Mail. She says that she recognizes that people use different websites and technology to share, say, what they're doing at the moment, but Yahoo! Mail, she says, is working with some of the most popular websites like Facebook to provide a richer e-mail experience. For example, when Yahoo! Mail finishes a deal with Twitter, e-mail users will have the ability to update their Facebook, Twitter and Yahoo! status messages at the same time.
"E-mail is alive and kicking, and we're definitely investing in it," Shum says.
Tuhina Das, a University of California-Berkeley freshman studying pre-business, loves Facebook because she says it is so social and easy to connect with friends. But she uses e-mail for the important communications.
"If you're interviewing or applying for something or need it for business, you're not going to use Facebook," she says.
In fact, e-mail is only becoming more important for working professionals, says Deva Hazarika of ClearContext of San Francisco, a software company that helps people organize all the information that flows through e-mail.
Hazarika says text messaging, instant messaging, Facebook communication and Twitter tweets are all great for "lightweight" communication, such as making plans for dinner, but if you really need to document conversations and keep records and files for work, e-mail is better and more effective than anything else. That goes the same for students and schoolwork, he says.
"People need information to be traceable. They need to look back at information. That's why all of important conversations are pretty much staying with e-mail right now," Hazarika says. "E-mail is really not only sticking around, but it's getting entrenched. It's really the one place where I can reliably send (information like receipts from Amazon or business) communication to you."
And even the younger set, junior high school students who are tethered to MySpace and Facebook, also say they use e-mail. Arianna Campos, 13, of Concord has four e-mail accounts—some for friends, some for family, some for spam.
"I mostly talk to my friends through MySpace," she says. "But I do use e-mail to talk to adults."
(c) 2010, Contra Costa Times (Walnut Creek, Calif.).
Distributed by McClatchy-Tribune Information Services.
Seven Steps to a Sound Retirement
Seven Steps to a Sound Retirement
By Robert Powell
RISMEDIA, November 13, 2010--(MCT)--There are seven keys to a lot of things in life. There are seven steps to heaven and seven types of intelligence and seven habits of effective leaders.
Now we have seven steps to retirement planning courtesy of the Society of Actuaries, which just released a 64-page report with the not-so-consumer-friendly title "Segmenting the Middle Market: Retirement Risks and Solutions Phase II Report."
"Retirement financial planning requires a methodical approach that identifies and quantifies each important component that affects the asset accumulation, income management and product selection/investment decision processes," according to the report, which was sponsored by the society's committee on post-retirement needs and risk and written by Noel Abkemeier of Milliman.
Not surprisingly, Abkemeier says this approach is especially important for middle-income Americans who likely have less than $100,000 set aside for retirement. So what are those steps?
1. Quantify assets and net worth.
The first order of business is taking a tally of all that you own — your financial and non-financial assets, including your home and a self-owned business, and all that you owe. Your home, given that it might be your largest asset, could play an especially important part in your retirement, according to Abkemeier.
And at minimum, you should evaluate the many ways you can create income from your home, such as selling and renting; selling and moving in with family; taking out a home-equity loan; renting out a room or rooms; taking a reverse mortgage; and paying off your mortgage.
Another point that sometimes gets lost in the fray is that assets have to be converted into income and income streams need to be converted into assets. "When we think of assets and income, we need to remember that assets can be converted to a monthly income and that retirement savings are important as a generator of monthly income or spending power," according to SOA's report. "Likewise, income streams like pensions have a value comparable to an asset."
One reason retirement planning is so difficult, according to SOA, is that many people are not able to readily think about assets and income with equivalent values and how to make a translation between the two. Assets often seem like a lot of money, particularly when people forget that they will be using them to meet regular expenses.
Consider, for instance, the notion that $100,000 in retirement savings might translate into just $4,000 per year in retirement income.
2. Quantify risk coverage.
Take stock of all the insurance that you might already have or need — health, disability, life, auto and homeowners. In addition, consider whether you might need long-term-care insurance, especially in light of the cost associated with long-term care and the very real possibility that you might need some assistance at some point in your life.
According to the report, those households with limited assets — say, less than $200,000 in financial assets — may need to spend down their assets and rely on Medicaid, while those with more than $2 million in financial assets can cover long-term-care costs out of pocket. But those households with assets in between $200,000 and $2 million should include long-term care insurance in their plan, according to the SOA. And the best time to buy such insurance is in the late preretirement years.
The SOA also notes in its report the possible need for life insurance, the death benefit of which can be used for bequests or to provide income to a surviving spouse. Life insurance premiums can be expensive if you're getting on in years. That's why the SOA report suggests that you continue "existing preretirement coverages during the retirement period."
Of note, there will soon be many policies that combine long-term-care insurance with life insurance and annuities.
3. Compare expenditure needs against anticipated income.
The thing about retirement is that it's filled with expenses, which according to the SOA report "can be thought of as the minimum needed to sustain a standard of living, plus extra for nonrecurring needs and amounts to help meet dreams." What's more, those expenses are likely to change over time.
So to make your retirement plan work in reality, you first have to make it work on paper. You need to compare whether you'll have enough guaranteed income to cover your essential living expenses, including food, housing and health-insurance premiums, at the point of retirement and then compare what amount of income you'll need to cover your discretionary expenses, such as travel and the like (if those are indeed what you might consider discretionary expenses).
Your guaranteed sources of income include Social Security and possibly a pension and annuity. Not so guaranteed: earnings from work and income from assets such as capital gains, dividends, interest and rental property.
No doubt, as you go about the process of matching income to expenses, you might find yourself having to revise your discretionary expenses, especially if there aren't enough guaranteed sources of income to meet essential expenses.
4. Compare amounts needed in retirement against total assets.
So here's where your math skills (or your Google search skills) might come into play. Besides calculating your income and expenses at the point of retirement, you need to figure out whether your funds will last throughout retirement. In other words, you need to calculate the net present value of your expenses throughout retirement.
Now, truth be told, finding the present value of your expenses is a bit tricky, especially since there are many factors that can affect how much is really needed, including the date of your retirement, inflation rates, gross and after-tax investment returns, and your life expectancy.
But the bottom line is this: If, after crunching the numbers, the present value of your expenses is greater than the present value of your assets, you've got some adjustments to make. And the good news is that there are plenty of adjustments that you can make.
You could, for instance, delay the date of your retirement. You could return to work or work part-time. Those actions might be enough to offset the difference. In addition, you might consider trimming your expenses or consider a more tax-efficient plan to draw down income.
5. Categorize assets.
The SOA also recommends that assets be grouped to fund early, middle and late phases of retirement. Thus, assets for early retirement should be liquid, while mid-retirement assets should include intermediate-term investments such as laddered five- to 10-year Treasury bonds, Treasury Inflation-Protected Securities, laddered fixed-interest deferred annuities, balanced investment portfolios, income-oriented equities, variable annuities and the like. And late retirement assets include longevity insurance, TIPS, balanced portfolios, growth and income portfolios, laddered income annuities, deferred variable annuities and life insurance.
6. Relate investments to investing capabilities and portfolio size.
This should come as no surprise. The SOA recommends that you invest only in things that are suitable, relative to your risk tolerance, investment knowledge and the capacity of the portfolio to accommodate volatility. "In short, a retiree should not invest beyond his investment skills, including those of his adviser," the SOA report stated.
7. Keep the plan current.
This too might be a bit obvious, but retirement-income plans must not be built and set on a shelf. The plan is a point-in-time analysis that must be reviewed on a regular basis.
Consider, for instance, just some of the things that could change in one year, according to the SOA. Health status or health-care costs could change; your life expectancy might change; your investment returns and inflation might be quite different than your assumptions; and your employment status and expected retirement date might change.
What's more, you might suffer the loss of a spouse through death or divorce, or perhaps you might not be able to live independently any longer, or perhaps you might need to sell your house or unexpectedly care for dependents, or change your inheritance plans.
Said Abkemeier: "You want to keep your plan current. You need to tie everything together and go back to the start of the process each year. You want to enjoy retirement, but you don't want to be at rest."
(c) 2010, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
By Robert Powell
RISMEDIA, November 13, 2010--(MCT)--There are seven keys to a lot of things in life. There are seven steps to heaven and seven types of intelligence and seven habits of effective leaders.
Now we have seven steps to retirement planning courtesy of the Society of Actuaries, which just released a 64-page report with the not-so-consumer-friendly title "Segmenting the Middle Market: Retirement Risks and Solutions Phase II Report."
"Retirement financial planning requires a methodical approach that identifies and quantifies each important component that affects the asset accumulation, income management and product selection/investment decision processes," according to the report, which was sponsored by the society's committee on post-retirement needs and risk and written by Noel Abkemeier of Milliman.
Not surprisingly, Abkemeier says this approach is especially important for middle-income Americans who likely have less than $100,000 set aside for retirement. So what are those steps?
1. Quantify assets and net worth.
The first order of business is taking a tally of all that you own — your financial and non-financial assets, including your home and a self-owned business, and all that you owe. Your home, given that it might be your largest asset, could play an especially important part in your retirement, according to Abkemeier.
And at minimum, you should evaluate the many ways you can create income from your home, such as selling and renting; selling and moving in with family; taking out a home-equity loan; renting out a room or rooms; taking a reverse mortgage; and paying off your mortgage.
Another point that sometimes gets lost in the fray is that assets have to be converted into income and income streams need to be converted into assets. "When we think of assets and income, we need to remember that assets can be converted to a monthly income and that retirement savings are important as a generator of monthly income or spending power," according to SOA's report. "Likewise, income streams like pensions have a value comparable to an asset."
One reason retirement planning is so difficult, according to SOA, is that many people are not able to readily think about assets and income with equivalent values and how to make a translation between the two. Assets often seem like a lot of money, particularly when people forget that they will be using them to meet regular expenses.
Consider, for instance, the notion that $100,000 in retirement savings might translate into just $4,000 per year in retirement income.
2. Quantify risk coverage.
Take stock of all the insurance that you might already have or need — health, disability, life, auto and homeowners. In addition, consider whether you might need long-term-care insurance, especially in light of the cost associated with long-term care and the very real possibility that you might need some assistance at some point in your life.
According to the report, those households with limited assets — say, less than $200,000 in financial assets — may need to spend down their assets and rely on Medicaid, while those with more than $2 million in financial assets can cover long-term-care costs out of pocket. But those households with assets in between $200,000 and $2 million should include long-term care insurance in their plan, according to the SOA. And the best time to buy such insurance is in the late preretirement years.
The SOA also notes in its report the possible need for life insurance, the death benefit of which can be used for bequests or to provide income to a surviving spouse. Life insurance premiums can be expensive if you're getting on in years. That's why the SOA report suggests that you continue "existing preretirement coverages during the retirement period."
Of note, there will soon be many policies that combine long-term-care insurance with life insurance and annuities.
3. Compare expenditure needs against anticipated income.
The thing about retirement is that it's filled with expenses, which according to the SOA report "can be thought of as the minimum needed to sustain a standard of living, plus extra for nonrecurring needs and amounts to help meet dreams." What's more, those expenses are likely to change over time.
So to make your retirement plan work in reality, you first have to make it work on paper. You need to compare whether you'll have enough guaranteed income to cover your essential living expenses, including food, housing and health-insurance premiums, at the point of retirement and then compare what amount of income you'll need to cover your discretionary expenses, such as travel and the like (if those are indeed what you might consider discretionary expenses).
Your guaranteed sources of income include Social Security and possibly a pension and annuity. Not so guaranteed: earnings from work and income from assets such as capital gains, dividends, interest and rental property.
No doubt, as you go about the process of matching income to expenses, you might find yourself having to revise your discretionary expenses, especially if there aren't enough guaranteed sources of income to meet essential expenses.
4. Compare amounts needed in retirement against total assets.
So here's where your math skills (or your Google search skills) might come into play. Besides calculating your income and expenses at the point of retirement, you need to figure out whether your funds will last throughout retirement. In other words, you need to calculate the net present value of your expenses throughout retirement.
Now, truth be told, finding the present value of your expenses is a bit tricky, especially since there are many factors that can affect how much is really needed, including the date of your retirement, inflation rates, gross and after-tax investment returns, and your life expectancy.
But the bottom line is this: If, after crunching the numbers, the present value of your expenses is greater than the present value of your assets, you've got some adjustments to make. And the good news is that there are plenty of adjustments that you can make.
You could, for instance, delay the date of your retirement. You could return to work or work part-time. Those actions might be enough to offset the difference. In addition, you might consider trimming your expenses or consider a more tax-efficient plan to draw down income.
5. Categorize assets.
The SOA also recommends that assets be grouped to fund early, middle and late phases of retirement. Thus, assets for early retirement should be liquid, while mid-retirement assets should include intermediate-term investments such as laddered five- to 10-year Treasury bonds, Treasury Inflation-Protected Securities, laddered fixed-interest deferred annuities, balanced investment portfolios, income-oriented equities, variable annuities and the like. And late retirement assets include longevity insurance, TIPS, balanced portfolios, growth and income portfolios, laddered income annuities, deferred variable annuities and life insurance.
6. Relate investments to investing capabilities and portfolio size.
This should come as no surprise. The SOA recommends that you invest only in things that are suitable, relative to your risk tolerance, investment knowledge and the capacity of the portfolio to accommodate volatility. "In short, a retiree should not invest beyond his investment skills, including those of his adviser," the SOA report stated.
7. Keep the plan current.
This too might be a bit obvious, but retirement-income plans must not be built and set on a shelf. The plan is a point-in-time analysis that must be reviewed on a regular basis.
Consider, for instance, just some of the things that could change in one year, according to the SOA. Health status or health-care costs could change; your life expectancy might change; your investment returns and inflation might be quite different than your assumptions; and your employment status and expected retirement date might change.
What's more, you might suffer the loss of a spouse through death or divorce, or perhaps you might not be able to live independently any longer, or perhaps you might need to sell your house or unexpectedly care for dependents, or change your inheritance plans.
Said Abkemeier: "You want to keep your plan current. You need to tie everything together and go back to the start of the process each year. You want to enjoy retirement, but you don't want to be at rest."
(c) 2010, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Cut Costs, Save Energy
For Your Clients: Cut Costs, Save Energy
By Paige Tepping
RISMEDIA, November 15,2010--Homeowners and home buyers alike are all after the same thing today—living in a home that is kind to the environment while saving money on their bills. As we continue to make our way through fall and homeowners begin to prepare for the colder temperatures that are on their way, homeowners should keep in mind that there are some simple things they can do to keep their energy use and bills lower this winter. According to Energy Efficient Home Tips, homeowners should follow these tips to help keep their energy use in check.
An effective seal
While the biggest portion of any homeowner’s energy bill comes from heating the home in the winter and cooling it during the summer, fall provides the perfect opportunity for homeowners to make sure their heating systems are in working order. It is also an opportune time to ensure your home is firmly sealed by checking around windows and doors to see if any air is coming in.
Eliminate unnecessary heating
One of the biggest wastes of energy occurs when homeowners are heating rooms that are unoccupied. To avoid this problem, take the time to close vents in rooms that aren’t being used.
Use window coverings to keep heat in
Be sure to take advantage of all the accessories in your home when trying to keep the warmth in and the cool temperatures out. Take advantage of sunny days by keeping the drapes open during the day and closing them at night to keep the heat in. This will allow you to keep your home comfortable without depending entirely on your heating system.
Control your thermostat
In addition to making the most of your window coverings, homeowners may want to think about investing in a programmable thermostat that can be set to turn on and off at specific times of the day and night. This will allow you to save money on your heating bill while keeping your home comfortable when you are home.
Keeping clean
To cut down on the amount of hot water you use—thus cutting your expenses—use cold water when doing laundry as much as possible. In addition, try to run the dishwasher and laundry machine only when you have a full load.
By Paige Tepping
RISMEDIA, November 15,2010--Homeowners and home buyers alike are all after the same thing today—living in a home that is kind to the environment while saving money on their bills. As we continue to make our way through fall and homeowners begin to prepare for the colder temperatures that are on their way, homeowners should keep in mind that there are some simple things they can do to keep their energy use and bills lower this winter. According to Energy Efficient Home Tips, homeowners should follow these tips to help keep their energy use in check.
An effective seal
While the biggest portion of any homeowner’s energy bill comes from heating the home in the winter and cooling it during the summer, fall provides the perfect opportunity for homeowners to make sure their heating systems are in working order. It is also an opportune time to ensure your home is firmly sealed by checking around windows and doors to see if any air is coming in.
Eliminate unnecessary heating
One of the biggest wastes of energy occurs when homeowners are heating rooms that are unoccupied. To avoid this problem, take the time to close vents in rooms that aren’t being used.
Use window coverings to keep heat in
Be sure to take advantage of all the accessories in your home when trying to keep the warmth in and the cool temperatures out. Take advantage of sunny days by keeping the drapes open during the day and closing them at night to keep the heat in. This will allow you to keep your home comfortable without depending entirely on your heating system.
Control your thermostat
In addition to making the most of your window coverings, homeowners may want to think about investing in a programmable thermostat that can be set to turn on and off at specific times of the day and night. This will allow you to save money on your heating bill while keeping your home comfortable when you are home.
Keeping clean
To cut down on the amount of hot water you use—thus cutting your expenses—use cold water when doing laundry as much as possible. In addition, try to run the dishwasher and laundry machine only when you have a full load.
Top Tips to Winter-Proof Your Home
For Your Clients: Top Tips to Winter-Proof Your Home
RISMEDIA, November 15, 2010--As winter sets in, there's nothing better than hibernating on the sofa with a good book or classic film. But having this spoiled by a home emergency can add a real chill to your winter warmth, especially if it's preventable.
We're all familiar with the issues winter forces upon us: the boiler breaking, pipes bursting or a break-in, which can make the harsh effects of winter far more severe.
Planning ahead now can help protect you against these potential problems. Here are some simple tips from John Lewis Insurance to prevent home emergencies from happening. Many of them are relatively quick and easy to do.
Quick fixes:
* Change the battery in your smoke detector or install them if you don't have any - it's a simple task that can save your life. And make sure you test them regularly.
* Inspect your roof for missing or cracked tiles. If repairs are needed, get them done as soon as you can.
* Vacuum the coils on the back of the fridge. This will help your fridge work more efficiently and will help you save money on your power bills.
* Turn your mattress regularly. We all spend more time in bed over winter - turning your mattress regularly will extend its life and ensure a more comfortable night's sleep.
* Get your boiler serviced. If you haven't had your boiler serviced this year, now is the ideal time to ensure it's in good working order.
More time needed:
* Oil your power tools and if you have a gas-powered lawn mower, drain the gas from it. They will survive the winter better and be in top shape for spring.
* Check all taps for leaks and locate the main pipe to the water mains. Pipes can burst if they freeze so if you leave home for more than a few days, ideally you should turn off the water and drain the pipes.
* Bleed your radiators by opening the valve until water appears - they will work more efficiently.
* The cold doesn't deter burglars so be sure to inspect your locks and any burglar alarms - and consider using lighting timers for that lived in appearance.
Worth the effort:
* It may take a day or two to sort out but cleaning your gutters properly will guarantee they won't get blocked or overflow.
* Trimming back trees is always recommended in the autumn.
* Clean out the garage before anything is stored that can get spoiled by the cold.
Finally, preparing an emergency kit is a great way to make those small and big emergencies as easy to handle as possible. This is what you should have at hand's reach:
* A small tool bag containing a torch, a roll of insulation tape, spare fuses, spare batteries and a screwdriver
* A radiator key
* A fire extinguisher if you have one, checked or recently replaced
* Important telephone numbers like the police, a trusted plumber, electrician, etc.
RISMEDIA, November 15, 2010--As winter sets in, there's nothing better than hibernating on the sofa with a good book or classic film. But having this spoiled by a home emergency can add a real chill to your winter warmth, especially if it's preventable.
We're all familiar with the issues winter forces upon us: the boiler breaking, pipes bursting or a break-in, which can make the harsh effects of winter far more severe.
Planning ahead now can help protect you against these potential problems. Here are some simple tips from John Lewis Insurance to prevent home emergencies from happening. Many of them are relatively quick and easy to do.
Quick fixes:
* Change the battery in your smoke detector or install them if you don't have any - it's a simple task that can save your life. And make sure you test them regularly.
* Inspect your roof for missing or cracked tiles. If repairs are needed, get them done as soon as you can.
* Vacuum the coils on the back of the fridge. This will help your fridge work more efficiently and will help you save money on your power bills.
* Turn your mattress regularly. We all spend more time in bed over winter - turning your mattress regularly will extend its life and ensure a more comfortable night's sleep.
* Get your boiler serviced. If you haven't had your boiler serviced this year, now is the ideal time to ensure it's in good working order.
More time needed:
* Oil your power tools and if you have a gas-powered lawn mower, drain the gas from it. They will survive the winter better and be in top shape for spring.
* Check all taps for leaks and locate the main pipe to the water mains. Pipes can burst if they freeze so if you leave home for more than a few days, ideally you should turn off the water and drain the pipes.
* Bleed your radiators by opening the valve until water appears - they will work more efficiently.
* The cold doesn't deter burglars so be sure to inspect your locks and any burglar alarms - and consider using lighting timers for that lived in appearance.
Worth the effort:
* It may take a day or two to sort out but cleaning your gutters properly will guarantee they won't get blocked or overflow.
* Trimming back trees is always recommended in the autumn.
* Clean out the garage before anything is stored that can get spoiled by the cold.
Finally, preparing an emergency kit is a great way to make those small and big emergencies as easy to handle as possible. This is what you should have at hand's reach:
* A small tool bag containing a torch, a roll of insulation tape, spare fuses, spare batteries and a screwdriver
* A radiator key
* A fire extinguisher if you have one, checked or recently replaced
* Important telephone numbers like the police, a trusted plumber, electrician, etc.
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