Spencer Hayes' Blog

Financial management solutions come in many forms, but have two general flavors for practitioners: generic products that adapt to any business and highly specialized solutions developed specifically for real estate. Usually, an individual, team, or small brokerage can get by with standard, off-the-shelf tools. But the larger the company — and the more associates and listings — the better it will be to focus on solutions that have a focus on real estate.

These specialized financial management systems are usually bundled as part of an integrated suite of industry-specific tools, or easily integrated with other real estate modules from that vendor. In either case, business accounting and all it entails is only one aspect of a system that can also manage leads, clients, listings, marketing activities, and documents through closing.

At heart of all these products, though, is a database that you can use to keep up with financial details: prices, expenses, invoices, and payments. Those figures provide an overall financial picture of your business — in particular its profit and loss. The ability to retrieve and sort those numbers and render them in reports is the major benefit of these tools.

Today’s buyer also must decide between installed software or a cloud-based financial-management service. Because real estate involves sensitive numbers about clients and business, some want assurance that the data will remain exclusively theirs, safely stored on office hardware. For others, it’s not an issue; they see the “anywhere, anytime” access to data as a competitive advantage and they’re migrating to cloud services.

The shift to the cloud isn’t the only new trend in financial management, however. In this mobile era, your tablet or smartphone can be a capable front end to financial management; if you’re a mobile real estate professional who’s racking up expenses while courting buyers and sellers, many apps can document expenses in real time, ensuring that you don’t miss a business deduction.

Effective financial management hinges not so much on any one solution as it does on a process. But no matter how simple or sophisticated the system is, it’s only as valuable as the data you enter. With the right solutions, you’ll gain control over your numbers and have more time for clients and listings.

Selecting paint colors for your walls can be a daunting task. There are so many colors to choose from! Some people simply feel stuck with the colors on the walls and live with them for years just to avoid the challenge of selecting a new color. Add to that the complexity of open floor plans and you can find yourself in a real dilemma.

Homes with open floor plans are a favorite because they have a sense of spaciousness that homes with numerous small rooms can’t offer. An open floor plan offers easy access from room to room making the home feel larger and making it a great space for entertaining.

The problem with this comes when you want to paint the walls. With an open floor plan, does the entire area have to be the same color?

The answer? Not necessarily.

You can paint the open area all the same color and define the spaces with different accent colors. For example, the walls can be a neutral color and the kitchen can be accented with reds, the family room with greens, and the dining room with browns. When the accent colors are used properly this concept can work.

However, playing it safe and only using one wall color throughout the space can also leave the space feeling bland and unfinished.

With an open concept floor plan it is best to use more than one color throughout the space.  This can help to highlight architectural features and will create more definition and interest.

Selection of the colors needs to be done carefully. A common mistake people make is when they select random colors that compete with each other, or even worse, clash. This can break the room up too much and cause an overwhelming feeling that leaves your eyes with nowhere to focus.

The easiest way to select colors for your open floor plan is to select a color that you find pleasing for your living space and then choose two or three different shades of that same color to define each space of the open area, hallways, or architectural features.

You might choose to use the darkest shade in the dining room, the medium shade in the family room, and the lightest shade in the kitchen, for example. Or perhaps you would use the lightest shade to highlight architectural features such as pillars, built-ins, the hallway, or the entry area. The middle shade can be used for the family room, and the darkest in the kitchen and dining room. There are a number of different options.

You will find that the difference between two colors that sit next to each other on a color card is very subtle. You don’t have to choose colors that are consecutive on the color card. Instead you might try to choose shades that look good next to each other.

If you’d like to make even more of a statement, you can use totally different colors for each area. But you need to be careful to select complementary colors that do not clash.

You will want to consult a color wheel to see which colors look good together. Then you will want to unify the spaces by using accents of the colors in each room.

For example, if you paint the dining room with a shade of yellow and the family room with a shade of green, you will add elements to the family room, such as wall hangings or pillows, that have a similar shade of yellow as the dining room.

No matter which colors you select for the walls you will want to bring unity to the open floor plan with the transitional elements. This means that elements such as the doors, ceiling, and trim will all be the same color, typically white.

The key to selecting paint colors for open floor plans is to choose colors that don’t clash or compete with each other, but instead that emphasize the openness of the space, maintain the flow, and highlight the architectural features and design of the home. At the end of the day, the paint colors you choose should be the ones that you find the most pleasing.

Developers have noticed that condo and townhouse buyers enjoy having the chance to create their own living space.

Mary Kate West, who moved with her husband into a four-floor, 4,000-square-foot town home in Chicago's trendy Lincoln Park neighborhood last year, said, "Nothing here is cookie-cutter. Everything is thought out. If there's a molding, we chose it. We even have a coffered ceiling. You don't typically find that in a town home," reports the Chicago Tribune.

The developer, LG Construction + Development, provided for a block of hours with one of several design teams in its contracts, so that buyers could choose fixtures, furnishings, and more.

Vintage properties aren't being ignored. Waterton Residential in Chicago is converting a 1920s hotel in the high-end Gold Coast neighborhood to residential units.

Lela Cirjakovic, senior vice president of operations for Waterton Residential, told the Tribune that the developer is preserving quirky details such as old-style mail chutes. And the property's history means that few units are the same. "All of the layouts are different," Cirjakovic said. "Each place feels like its own."
 
Source: "When cookie-cutter won't cut it," Chicago Tribune (Sept. 21, 2012)

A task force of federal and state investigators issued a warning to banks on Tuesday that more lawsuits are coming from alleged fraud that occurred with the selling of mortgage-backed securities with home loans during the financial crisis. 

This week, President Obama’s Residential Mortgage Backed Securities working group took its first action against a bank, filing a lawsuit against Bear Stearns, owned by JPMorgan Chase. Federal investigators allege that Bear Stearns issued risky mortgage-backed securities in 2006 and 2007, which resulted in $22.5 billion in losses to investors.

The pending lawsuits against banks are centered on the selling of mortgage-backed securities, which are financial products of home loans that get pooled together and sold to investors. When home prices fell in the aftermath of the financial crisis, many of those securities drastically lost value as a soaring number of home owners faced foreclosure. 

“Investigations since then have revealed that many banks were aware of the risks associated with the housing bubble but continued to package poor quality home loans and sell them, collecting hefty fees along the way,” CNNMoney reports. 

Many of the bank giants who were saddled with the bad securities received government bailouts at the time.

The government and investors have up to five years to file fraud lawsuits related to the sales of mortgage-backed securities. 

"As the go-go years for many alleged violations were 2006 and 2007, the ability to bring more of these suits is rapidly disappearing," Jaret Seiberg, a financial services analyst with Guggenheim Washington Research Group, said in a note for investors.

Source: “Government: We Plan to Sue More Banks,” CNNMoney (Oct. 2, 2012)

The majority of economists surveyed by CNNMoney say the nation’s housing market is finally showing solid signs of a turnaround. 

Nine out of 14 economists surveyed say that prices have already started to -- or will -- rise this year. The optimism is much more pronounced than just three months ago, when half of the economists CNNMoney surveyed said that a turnaround in home prices would not occur until 2013 or later. 

The economists have been encouraged by several housing indexes for existing and new homes that have all shown home prices rising in many markets across the country.

"We're seeing the signs of a pulse in a sector that has been flat-lined for a number of years," says Sean Snaith, economics professor at the University of Central Florida.

The economists attribute a big part of the rebound to the growing confidence among home shoppers. 

"The firming in home prices might be feeding on itself," Lynn Reaser, chief economist for Point Loma Nazarene University, told CNNMoney. "You've got buyers not wanting to miss the bottom of home prices and mortgage rates." 

A strong housing market is also vital for the economic recovery, they say. Starting in the fourth quarter of 2011, the housing market began adding to the nation’s gross domestic product. 

“Still, economists don't believe housing is ready to be a major driver of economic growth, as it was during the housing boom and some earlier economic recoveries,” CNNMoney reports. “But housing could keep the economy moving in the right direction.”

Source: “Economists: Housing Recovery Finally Here,” CNNMoney (Oct. 2, 2012)

Starting on Oct. 20, Fannie Mae will be tightening some of its underwriting standards for condo buyers and home owners wanting torefinance. The changes have some in the industry concerned, Realty Times reports. 

The new guidelines are aimed at reducing Fannie Mae’s risk as well as forcing more borrowers to shop around for mortgages. 

Among the changes coming Oct. 20 to Fannie-backed loans:

— Condo buyers who have less than a 20 percent down payment will have to complete a two-page condo questionnaire about the homeowner association’s finance goals as well as provide additional documents, such as a reserve study, by-laws, and a copy of the master insurance policy. Currently, only condo buyers who put down less than 10 percent are required to produce the extra paperwork. Some analysts predict that the extra paperwork could lead to more chances of loans being denied from Fannie’s strict condo loan underwriting criteria. 

— Fannie announced it will end discretionary approvals or “Expanded Approvals” for all Fannie Mae refinances, except for Fannie Mae’s Refi Plus Program loans or HARP loans. EAs were believed to help borderline borrowers qualify for a mortgage when they didn’t have a perfect combo of loan-to-value and debt-to-income ratios, creditworthiness, and financial reserves, Realty Timesreports. 

— Self-employed borrowers also may face more hurdles in qualifying for a Fannie-backed mortgage. Fannie will require self-employed borrowers to provide two consecutive years of federal tax returns, instead of one, the current standard. Underwriters will base income on an average from the last two years of tax returns, Realty Timesreports.

“Because of the new two-year average approach, one bad year out of two could sink a self-employed home owner’s applicationeven if the most recent year would have qualified him or her under the old rules,” San Jose, Calif., mortgage lender Shashank Shekhar writes for Realty Times.

Source: “Fannie Mae Tightens Underwriting Rules for Condo, Refinance Loans, Borderline Borrowers,” Realty Times (Oct. 3, 2012)

Home prices rose in August by their largest amount since July 2006,  CoreLogic reports in its August Home Price Index, which includes distressed sales. 

Home prices increased 4.6 percent year-over-year in August. This marks the sixth consecutive increase in home prices on month-over-month and year-over-year bases too, CoreLogic reports. 

Even when distressed sales -- short sales and REOs -- are excluded, CoreLogic shows that home prices rose nearly 5 percent in August compared to year-ago levels. 

The signs are pointing to a sharp increase in September, too. Excluding distressed sales, CoreLogic’s forecast for home prices in September shows home prices rising 6.3 percent compared to year-ago levels.  

The five states with the highest price appreciation in August, when including distressed sales, were Arizona, Idaho, Nevada, Utah, and Hawaii, according to CoreLogic. Meanwhile, five states with the largest home price declines, when including distressed sales, were Rhode Island, Illinois, New Jersey, Alabama, and Connecticut.  

“Sustained economic recovery in the United States requires a healthy housing market,” says Anand Nallathambi, president and CEO of CoreLogic. “You cannot have a healthy housing market without price stabilization and ultimately home price appreciation. Improving pricing trends over the past few months and our forecast for continued gains in September bode well for a progressive rebound in the residential housing market.”

CoreLogic uses multiple listing system data to measure price changes on a monthly and yearly basis. 

Source: CoreLogic