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5 real estate tasks best done early | Waccabuc NY Real Estate

For the past several years, my cousin Melanie has done my entire family a fantastic favor: She holds Thanksgiving one week early, on the weekend preceding the actual holiday.

What this means is that what is normally a stress-filled, highly dramatic odyssey for many along holiday-impacted freeways, railways and airways has become a highly attended, drama-free family event. (OK, maybe not drama-free, but as low-drama as a family affair can get!)

Instead of many couples having to alternate between his family and hers, or negotiate which side a blended family’s kids will and won’t be able to see for the holiday, everyone can basically show up — easy, peasy, lemon squeezy. (Thanks, Mel!)

While reflecting with gratitude on my quick-and-easy drive home after this year’s early bird Turkey Day, my mind gravitated, as it is wont to do, to real estate. While I’m a big proponent of avoiding premature real estate moves, there are a number of tasks that are best done before you think they need to be. These are things that tend to take longer or often turn out to be more complex than people plan for.

1. Check your credit. Everyone knows that you should check your credit, or have your mortgage broker do it, some time before you get ready to start house hunting. What people fail to factor in are the real-life turnaround times on rehabbing your credit in the event there are errors, fraudulent entries, balances you need to bring down, or trade lines (credit accounts) you need to build up in order to qualify for a home loan.

For the most part, erroneous entries should be removed/removable in relatively short order, but on occasion, something like an account that was truly, but fraudulently, opened by a relative in the borrower’s name can take weeks or months to resolve and remove. Many wannabe buyers who consider themselves uber-responsible, financially, may also be surprised to find that lenders require that they have some demonstrable history of responsibly using credit. In some cases, they will actually need to open and maintain one or more credit accounts in good standing for a short while to qualify.

2. Change your spending habits. The most-overlooked benefit of the tight lending guidelines in place during the past few years is that they motivated mortgage applicants to buckle down, get out of debt and be meticulous about their credit. In the process, people actually rehabbed their spending habits and financial behaviors way in advance of buying a home, creating a level of financial discipline that is freeing, enjoyable and stands them in good stead as homeowners over the long term.

As loan guidelines loosen up a bit, it’s still advisable for buyers-to-be to get serious about the whole picture of their finances as soon as they make the decision that they want to buy a home down the road, and clean up their spending, saving, debting and other money matters, stat.

3. Saving. I’ve seen buyers save up precisely what they need to put down on a home and pay their closing costs, not realizing that they might actually need to demonstrate several months’ worth of payments that will still be in “reserve” in their savings or investment accounts after they close escrow and deplete their cash-to-close savings.

Also, buyers who start saving late often fail to calculate for the very common tendency buyers have to increase their search price range over time, and for the costs of the fixes and furnishings they’ll want when they move in.

These miscalculations tend to result in buyers trying to get unrealistic deals on the first few homes they like, losing a few before they get real about what can truly be had for their dollar in their market.

4. Apply for tax reassessment. Don’t not apply to have your taxes reassessed because the deadline has already passed for the year. Many who hold off because they missed the deadline actually end up losing track of this to-do list item and forget to come back around to it. If you’ve missed the deadline to apply to have your home’s assessed value reduced for property tax purposes, just apply anyway — early for next year.

5. Talk to a real estate or mortgage broker. Don’t delay. Real estate and mortgage brokers are a wealth of information that has the power to take your mental estimations of what will be involved and required to buy or refi or sell into the realm of a reality-based action plan. And they are ecstatic to get calls from prospective clients (that’s you) months, even years, in advance, as it makes their job, once it’s time to do it, much smoother and simpler.

Talking to a pro before you think you need to can be an eye-opening course-corrector in terms of understanding things like how much you need to put down, any work you need to do to your credit, what you can expect your home to go for or cost you, and many other expectation-managing, plan-of-action-driving essentials.

Perks lure tenants to online rent payments | Waccabuc NY Real Estate

About six years ago, Steven Van Praagh received a call from a friend who owned a couple of rental properties in the Harlem area of Manhattan. Praagh, who was a commercial website developer, listened to his friend’s rant about being sick and tired of dealing with paper checks for rent payment.

What his friend really wanted to know: Was there a way create a payment service online?

Praagh listened, and then asked, “Would this be like PayPal for real estate?” And his friend’s response was, “Yeah, exactly.”

Six years later, ClickPay is a bustling business. In short, the company provides property owners and managers the ability to accept secure online payments (rent, homeowners association fees and dues, maintenance fees, etc.) from residents via e-check, credit and debit card.


Steven Van Praagh

What apartment owners and managers like about ClickPay is that they don’t need a bunch of workers to hang around opening envelopes, processing checks and visiting the bank. What tenants like about ClickPay is that it saves them time. They don’t have to write a check and drop it off at management.

Tenants who use online banking to mail their checks think they are paying electronically. In reality, a paper check still gets mailed, Van Praagh said. “What ClickPay does is form partnerships with the banking networks to keep the payments electronic. The banks like it because they save the on postage.”

In New York, where rents can easily be four or five digits, it has become a marketing tool for the landlords.

This is the way it works. Let’s say you are an owner of 750 apartment units in 10 New Jersey buildings of 75 units apiece and you want to use ClickPay.

Someone from ClickPay interviews you to figure out the size of the portfolio, management and types of tenants, as the company wants to make sure ClickPay is marketable to those same tenants. Then ClickPay talks to property management about accounting software to make sure its program can integrate. Once all that happens, ClickPay offers a couple of different services.

Once live on the system, ClickPay does customer training for all bookkeepers, controllers, property managers and asset managers. There are no setup fees or set costs.

Finally, tenants get a note to let them know their rent is due. ClickPay will send rent bills, including emailing a PDF of the bill. In the invoice there is a link that says, “Pay Your Rent Now.” If tenants click on that link, they will be forwarded to the ClickPay website. All they have to do is check in, change the password and take over their account.

Other tenants in other buildings can use the search engine, find their complex and see if ClickPay is available. If so, they find their unit, put in the leasing information, and as long as it matches up, they can use ClickPay.

Although ClickPay works with more than 100 property management companies, a couple of real estate investment trusts, Apollo Real Estate Advisors and hundreds of thousands of tenants, you’ve probably still never heard of ClickPay or its payment system. That because it is still Northeast-centric. Property management in Toronto embraced the evolving trend.

“We work with 10 percent of the top multifamily managers in the country, but in New York, we have 30-40 percent of the top managers,” Van Praagh said. “We have deals with most of the who’s who in New York.”

ClickPay’s penetration in the Big Apple is partly due to the fact it was the first 100 percent electronic payment system offered in the city.

“There were other lockbox services that had other types of electronic systems, but we were the first totally paperless,” Van Praagh said. “We are still the only one in New York.”

Other companies that facilitate electronic rent payments include RentPayment, PayLease, eRentPayment, PayYourRent.com, and SmartRentOnline.com.

“Until recently, it was a fragmented market, but now there are some big players,” Van Praagh said. “Companies that were in the utility payment business have now gone after payment of rent as a new business line.”

At the moment, Van Praagh is not dismayed by the new competition. “It’s not all they do, so they don’t focus 100 percent on it like we do. That’s good for us,” he said.

This is a relatively new product and new product sector, so there’s a lot of expected growth ahead.

Even in buildings where there is ClickPay, penetration varies.

“We range from 30 percent to 70 percent adoptions per building. We have some buildings that are 100 percent, but they are small,” Van Praagh said.

The concept behind ClickPay as a kind of PayPal for renters seems so apparent — a basic service that the industry needed — that it was somewhat of a surprise to me that such a system wasn’t invented back in the 1990s.

ClickPay was founded in 2006, and development was very slow at the start because real estate is a very complicated business due, for example, to the vast amount of federal, state and municipal regulations.

“There are a lot of nuances when it comes to processing real estate versus any other business,” Van Praagh said. “Then you get into places like New York City, which has so many of its own regulations. When you start dealing with large property owners, you quickly see they are dealing with such challenges as collection, rent subsidy, Section 8 housing, etc., so you need a lot of bells and whistles just to be able to tie your software to the property management and accounting software packages.”

I would have thought once ClickPay signed with a management company, it would offer incentives early in the game to entice clients to come over to the new system.

That doesn’t happen.

However, ClickPay, like your airline, does have a loyalty reward program. A client who uses ClickPay gets access to its perks network that boasts a couple of hundred thousand vendors giving rewards of one sort or another.

ClickPay figured it had to do something to make tenants feel better about paying those substantial rents in places like New York. If you’re paying $2,000 a month for a studio apartment, you might just want a toaster to help ease the pain.

5 social media tips from a road warrior | Waccabuc NY Real Estate

Over the last two years or so, I have traveled over 150,000 miles speaking at real estate events. Needless to say, I feel like I have become somewhat of a ‘road warrior.’

I’ve learned the ins and outs of traveling; how to get through security efficiently, the best places to park at the airport and what to pack (more importantly, what not to pack.) On my last trip to this year to Agent Reboot Austin, I realized that a lot of what I’ve learned traveling can be related to a real estate professional trying to get their feet wet and navigate through the sometimes murky waters of social media.

Looking back, I laugh at some of my first few trips. I over packed, I had a bag that was way too big for overnight travel, I wore the wrong clothes to get through security, I didn’t know where I was going, and the list goes on and on.

Here are my 5 road warrior social media tips:

1. Don’t over pack. When travelling, the more you pack, the more have to carry. In social, don’t try to to pack too much into each and every social media post. If your post on Facebook for the day is about a video – let it be about the video, not about your open house, or another link to go to, or how they should call you. Statistically, the Facebook updates that get the most engagement are under 80 characters!

2. Dress simply at the airport. There is nothing worse than being behind the person at security with six inch heels that lace up, dripping in jewelry from head to toe, who is rifling through her bags to find all of her liquids. When you travel, dress simply and comfortably. In social, don’t over think it. Post once a day to your Facebook business page. If you can do that consistently, you will over time, see your likes and engagement grow. The reason why most people “fail” at social media is that they are not there simply and consistently.

3. Don’t be afraid to ask for help. Not sure where the taxi stand is at the airport? Ask someone! In social, if you aren’t sure how to do something – ask. Who in your world is doing a great job at social media? Take them out to coffee and ask them a few questions. Not sure who to ask? Peruse some of our articles here on InmanNext. Post a comment on our Facebook page, or feel free to message me directly and ask! We all were beginners at some point, so don’t be afraid to ask.

4. Be prepared. Travelling to Seattle? You may want to pack an umbrella. Travelling to Hawaii? Throw in some sunscreen. Be prepared when you travel. In social, be prepared by having a strategy. What are you trying to accomplish with social media? Brainstorm all the types of content you could share and where is it going to come from? Pinterest? Instagram? News links from Twitter? Google alerts? Take the time to be prepared with a simple social media strategy.

5. Be organized. When travelling, keep you email notifications from the airline in a place you can find easily, or use an app like TripIt to manage your travel itineraries. In social, be organized with your social strategy. Keep all of your passwords in an easy to locate place. Have a spreadsheet or a content grid that keeps track of the content you posted and what you want to post in the future. Keep track of your statistics monthly (or more often if possible.) Be organized with your social media strategy to make the most of it!

What are your most important social media tips you’ve learned along the way? Am I missing some? I’d love to hear from you – leave me a comment below!

Utilities make progress on NY storm blackouts | Waccabuc Real Estate

NEW YORK — Frustrated Long Island residents have staged a protest against the Long Island Power Authority even as utilities made progress in restoring power to customers whose lights went out during Superstorm Sandy and Wednesday’s nor’easter.

LIPA says nearly 140,000 homes and businesses still didn’t have power by mid-afternoon Saturday.

Hundreds of people demonstrated in front of LIPA’s Hicksville office Saturday to protest what they call unacceptable delays. The utility didn’t return a request for comment.

Meanwhile, Con Edison says it will restore power this weekend to all its New York City and Westchester County customers whose buildings are in good enough shape to turn electricity back on. About 11,400 of them remained without power Saturday evening.

Those figures don’t include about 30,000 homes and businesses too damaged to juice up.

Right away, housing challenges for Obama | Waccabuc NY Real Estate

President Barack Obama image via barackobama.com.President Barack Obama image via barackobama.com.

Now that President Barack Obama has won re-election, there are several housing-related challenges staring the federal government square in the face. These are some of the decisions that will have to be made in the coming weeks:

1. The “fiscal cliff”: The fiscal cliff is a series of tax increases and spending cuts that will go into effect unless U.S. lawmakers come up with an alternative plan to reduce the federal deficit by $1.2 trillion as required by the Budget Control Act of 2011. The spending cuts, known as “sequestrations,” would automatically go into effect on Jan. 2 and be split evenly between defense spending and domestic spending.

The credit rating agency Standard & Poor’s has said there’s a 20 to 25 percent chance the U.S. economy will go into a double-dip recession should Congress fail to reach an agreement avoiding the fiscal cliff. S&P’s deputy chief economist, Beth Ann Bovino, warned that such a scenario would cause home prices, currently at a bottom of 31 percent below their mid-2006 peak, to tumble to a record low of 40 percent below peak.

In a report released in September, the Obama administration called sequestration “bad policy” that “would be deeply destructive to national security, domestic investments, and core government functions.” The president has put forward two deficit reduction proposals that included both spending cuts and revenue increases, but has run into opposition from some members of Congress who oppose tax increases and want to reduce the deficit solely through spending cuts, the report said.

Given that Congress remains divided after the election — Republicans retained control of the U.S. House of Representatives and Democrats retained control of the U.S. Senate — whether lawmakers can come to an agreement over the coming weeks remains a question.

2. The mortgage interest deduction (MID): Revamping the mortgage interest deduction is one of the solutions proposed to head off the fiscal cliff and could be part of a broader plan to streamline the tax code by eliminating some loopholes and deductions. Some experts have said the MID, which costs the government about $90 billion a year, is unlikely to survive in its present form, though what would take its place, if anything, is unclear.

Two years ago, a bipartisan deficit reduction commission recommended scaling back the MID, which is currently capped at mortgages worth up to $1 million for both principal and second homes and home equity debt up to $100,000. The deduction is available only to taxpayers who itemize.

The commission, often referred to as Simpson-Bowles, proposed turning the deduction into a 12 percent nonrefundable tax credit available to all taxpayers, capping eligibility to mortgages worth up to $500,000, and eliminating the deduction on interest from second homes and home equity debt.

The National Association of Realtors, which has consistently defended the mortgage interest deduction in its current form, was highly critical of the recommendation, claiming any changes to the MID could depreciate home prices by up to 15 percent, and promising to “remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”

3. Mortgage debt forgiveness: Another homeowner tax break may be on the table in fiscal negotiations: the Mortgage Debt Relief Act of 2007, which is set to expire at the end of this year. The law exempts up to $2 million in mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure from federal taxation. The law applies only to mortgage debt incurred to fund the purchase or improvement of a principal residence.

Banks have relied heavily on short sales to meet their obligations under the terms of a $25 billion settlement with the nation’s five largest mortgage servicers over so-called “robo-signing” practices. If the debt relief law lapses, however, homeowners would have less of an incentive to pursue short sales because forgiven mortgage debt could be considered taxable income.

4. Qualified mortgages: Now that we know the Dodd-Frank Wall Street Reform and Consumer Protection Act is here to stay — presidential candidate Mitt Romney had vowed to repeal it — there are two controversial rules contained within the law that are waiting to be finalized: the qualified mortgage (QM) and the qualified residential mortgage (QRM).

QM would establish standards for borrowers’ “ability to pay” the mortgages they seek, while QRM would establish certain baseline standards for safe underwriting and require lenders to retain a 5 percent minimum ongoing stake in any loans they originate that don’t meet QRM requirements.

The regulations are under the aegis of the Consumer Financial Protection Bureau (CFPB), which postponed action on both rules in June after protests from Realtors, builders, banks, unions and consumer groups. Under Dodd-Frank, the CFPB is required to issue the qualified mortgage rule by Jan. 21, 2013.

At American Express, Warnings About the ‘Fiscal Cliff’ | Waccabuc NY Realtor

2:14 p.m. | Updated

After the widespread (and highly visible) damage caused by Hurricane Sandy this week, worries about the fiscal cliff may not be at the forefront of most people’s minds.

The economic calamity is a lot less visual (though The Wall Street Journal did come up with this clever video), and the destructive force seems somehow in the faraway future.

But companies are already warning investors about the harsh effects of the fiscal cliff. American Express’s 10-Q quarterly report, which was filed Wednesday, included a new dire warning about the rapidly approaching year-end deadline.

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“The company expects that it will take some time for the U.S. economy to get back onto a steady, upward growth track,” the filing said. “Moreover, in the absence of legislative action, there continues to be growing concerns about the potential impact of the ‘fiscal cliff’ arising from scheduled federal spending cuts and tax increases set for the end of 2012.”

The statement goes into more detail than what the firm’s chief financial officer, Daniel T. Henry, said during the quarterly earnings call two weeks ago. Then, an analyst for the Telsey Advisory Group asked if there might be a larger impact, specifically in terms of the company’s spending on marketing.

“If things were to be better, we know exactly what we’d do. And if things were to be worse, we know exactly what we’re going to do. So we will monitor this closely,” Mr. Henry said, according to a transcript of the call. Marina Hoffmann Norville, a spokeswoman for the company, declined to comment beyond what was in the Securities and Exchange Commission filing.

American Express isn’t the only large company to mention the fiscal cliff in filings with the S.E.C. But others have been more nuanced or noncommittal on the effects. In its quarterly earnings release on Thursday, the payroll processing company Automatic Data Processing noted that “there is concern in the U.S. surrounding the fiscal cliff.” In its quarterly earnings release on Wednesday, Visa, the giant credit card company, included the “so-called fiscal cliff” in a list of economic factors that might affect the company.

Also on Thursday, Tim Pawlenty, the former Minnesota governor who just took over as president and chief executive of the Financial Services Roundtable, issued its own warning in a letter sent to President Obama and Congress.

“We urge Congress and the administration to deal with the fiscal cliff in a two-pronged approach: First, bridge over the fiscal cliff as soon as possible to minimize negative economic consequences. Second, address the federal budget deficit in a comprehensive and bipartisan manner in early 2013 to put the U.S. on a path for sustained growth,” Mr. Pawlenty wrote.

But if the Dec. 31 deadline moves closer without any indication of resolution, companies are likely to step up their disclosures in S.E.C. filings.

Michelle Leder is the editor of footnoted.com, a Web site that takes a closer look at companies’ regulatory filings.

This post has been revised to reflect the following correction:

Correction: November 1, 2012

An earlier version of this post misstated the fiscal quarters that were reported on this week by Automatic Data Processing and Visa. A.D.P.’s report was for its first quarter of 2013 and Visa’s report was for its fourth quarter of 2012, in both cases not the third quarter of 2012.

Great Recession creates 4.8 million renters | Waccabuc NY Real Estate

The United States added 4.8 million renters in the past six years while losing 1.7 million owner households as the dynamics of the real estate space changed in the wake of the 2008 financial meltdown, according to the Mortgage Bankers Association.

The market experienced additional changes in the first nine months of 2012, creating unexpected outcomes in the housing finance sector, prompting the MBA to alter its forecast for 2012.

In brief, the MBA revised its estimate for 2012 mortgage originations to $1.7 trillion, up from $1.4 trillion a year earlier. Still, the trade group predicts total originations will taper off to $1.3 trillion in 2013, eventually hitting $1.1 trillion in 2014. However, mortgage rates are expected to hover below 4% through the mid-part of next year.

The MBA expects gross domestic product will inch up from 1.6% in 2012 to 2% in 2013. Meanwhile, the forecast suggests existing home sales will increase from 4.6 million in 2012 to approximately 4.78 million next year.

Still, economic growth is contingent on government tax policies and at least a temporary avoidance of the fiscal cliff in early 2013.

“The tax increase in particular would be devastating to economic growth,” said MBA chief economist Jay Brinkmann.  “We believe that the entire package of tax increases and spending cuts, if left unaltered, would cut 3.5 to 4 percentage points from our growth forecast.”

Another outlier is the final definition of the qualified mortgage rule from the Consumer Financial Protection Bureau, which will define what type of mortgage qualifies as safe from repurchase risk in cases of default. It’s unknown whether the final rule from CFPB, which is due out in  January, will contain a safe harbor provision to protect lenders from buy back risk if they follow the guidelines.

These forecasts are based on the idea that QM comes in with a safe harbor and legislatures get past the fiscal cliff without dramatic spending and tax changes, said Mike Fratantoni, the MBA vice president of research and economics.

If the nation moves past the QM rule and the fiscal cliff without the introduction of new risks, the MBA expects moderate economic growth and an uptick in home prices annually from roughly 1.2% in 2012 to 3.5% in 2013.

via housingwire.com