Zooming into a New Virtual World

In these uncharted days, it may seem that the world is out of control, and that we are “just making up the rules” as the hours tick by.  In the public health world, that’s somewhat true since no one has experienced a pandemic exactly like our world has now encountered.  Does that mean all rules of civility and etiquette are “out the window”?  Please say it isn’t so!

Several days into my mostly-at-home incarceration in front of my iMac, I have participated in numerous virtual meetings daily (via Zoom, Teams, Facebook and FaceTime.)  Without fail, I am struck by the lack of etiquette – or simply put, common courtesy, exhibited by some – and often those from whom you’d least expect it.  At some level, focusing on etiquette while the world seems to be “teetering on the edge” could be criticized as ill-timed (or other less-flattering characterizations), I submit that underlying tenets of civility and etiquette have forever been woven into the fabric of the culture that made us strong as a nation and people. Certainly, we’ve watched in disbelief as such courtesies have eroded in certain circles (like the political arena), but we each have a choice in how we respond.  As we face uncertain days, there is security — and dare I say “wisdom” in honoring the “good things” which need not change.

With that in mind, and because Emily Post, Amy Vanderbilt, and Letitia Baldridge are no longer here to give guidance, allow me to “step-in” with my thoughts on Virtual Etiquette:

• If you wouldn’t feel comfortable walking into church, a social gathering or a business meeting with a paper bag over your head, please don’t join a videoconference without turning on your video feed! Yes, that means they can SEE you – thus the “video” part of the description!  If the organizer had wanted only to hear your voice, they would have dialed your cell phone, or perhaps you would have received a call from 1968 informing you that a “conference call” had been scheduled via Ma Bell.  As a friend of mine wisely said, for a videoconference, “’Ya gotta wear clothes, and don’t pick your nose!”
• Unless your hairbrush and/or razor is in medical quarantine, use it (preferably BEFORE the video conference!)  Most of us wouldn’t go to the local Wal-Mart without pausing before the mirror for a few adjustments.  Arguably, staying at home should give you even MORE time for personal care —  and yet we see social media posts, and some clueless souls showing up at business video-meetings, looking like “The Covid” has been stomping them in a dark alley for 19 days!
• Learn how to use your computer and Zoom, or whatever program “your tribe” uses:
  1. Create a personal free Zoom account. Everyone can afford one.
  2. Put your NAME in your profile. Don’t just keep dropping in anonymously, making others on the call wonder if [blank black box] or “251-xxx-xxxx” is the FBI hoping to gain juicy information it didn’t already obtain through Alexa, Google and Siri.  And, don’t assume everyone in the conference will recognize your face without a name, particularly if you thought #2 above was just “for other people.”
  3. If you don’t want participants to see your background surroundings, your Zoom profile has a place to choose a Virtual Background – you can virtually hold forth from Hawaii, under the Golden Gate Bridge, from outer space, or in front of any personal photo you choose to upload. Microsoft Teams allows you to “blur” the edges of your image, so the only thing in focus is your face. This is particularly useful if you are somewhere you shouldn’t be…. and trust me, if your home office is your bed, using a virtual background will definitely enhance your professional image.
  4. Know where the audio MUTE button is, then use it liberally! As soon as the leader starts the meeting (if they don’t mute everyone automatically) mute your audio.  The rest of the participants don’t care to hear traffic noises, or your dog barking, and it’s just PLAIN RUDE to the presenter to “contribute” your personal environment in this uninvited way.  If you think others don’t know where the noise is coming from, THINK AGAIN…. Usually the noise causes your image to be enlarged, or surrounded by a square (depending on individual user settings), because the software thinks you are speaking to everyone.
  5. Learn how to virtually “raise your hand.” Most programs allow you to signal the presenter with an icon – but if you can’t do that, in smaller meeting you can literally raise your hand until recognized (if your video feed is on!)   Do understand that in larger groups, the moderator cannot see all participants on the screen at the same time.  When you are speaking, however, your image will be visible.
  6. In larger meetings, use the “Comments” field, and offer to monitor those comments for the presenter if he/she would be distracted by watching that constantly-moving thread. If you have a question that might apply to all, type it in the comments field.  Understand, however, that everyone MAY see what you type there – not just the moderator!  Moderators can set up their meetings where private messaging can occur between participants – but if this is “over your head”, just assume everyone sees what you type!
  7. If you must engage in some brief personal activity that would NOT ENHANCE the experience of others, briefly stop your video feed, then turn it on again after you’ve picked your nose. You can upload a headshot of yourself, which will fill the frame in a flattering pose when your video feed is briefly muted.
• If you use a laptop computer or handheld device and typically look DOWN at the screen, just know that the camera is looking UP at you. That’s not typically the most flattering view for those whose “modeling-days” are in the past, so you may want to experiment with placing your laptop or phone on an elevated surface for a more flattering angle. Most of us need all the help we can get!
• Don’t hesitate to fully PARTICIPATE in virtual meetings, just as you would if everyone was in the room (unless you are prone to interrupting the speaker, in which case, call your Mama for remedial lessons.)  IF THE PRESENTER ASKS QUESTIONS, THAT MEANS THEY WANT INTERACTION – so raise your hand, unmute your microphone, look into your camera, and speak when recognized.  Some savvy presenters in smaller meetings can watch when microphones are unmuted, which may indicate that person wishes to speak.   Teachers are learning just as you are – and the best teachers want and need interaction with their class.

Follow these guidelines, and your friends, associates and bosses will soon welcome you back in person, and they won’t be laughing at you behind your back!   Get your Zoom on…. And let’s stay connected!

Dangers in an improving marketplace

The inevitable question I am asked in any social setting is “How’s the market?”  As a professional Real Estate Optimist, it is a welcome change to be able to report positive news without hesitation or qualification.   In this changing market, however, I’ve seen both buyers and sellers make fundamental mistakes.

Sellers expecting to recover lost equity

While the real estate market across the country is improving, and the market in Mobile, Alabama has seen steady increases for many months, it could be years (or for some, even more than their lifetime) to recover equity that was “lost” in market adjustments since 2007.   Sellers who have not properly priced their home are unrealistic to expect a full-price offer (or any offer) to miraculously materialize on their table.  Some sellers are reluctant to take needed price reductions when they hear that the market is improving – or even when they have a few showings.   “We’ve got people looking at it now…. Let’s hold off on that price reduction!”  Today’s buyer is extremely informed and savvy.  Just because they are willing to take a look, doesn’t mean they will bother to offer on an overpriced home!  I once had a customer tell me in an open house, “Oh, we would never consider paying this price per square foot.  We just wanted to see what was so special that made the seller ask so much!”  Yep, and I was wasting my Sunday afternoon!

Buyers expecting to get a “half-off”

While there is no denying that the last two years offered some incredible opportunities for buyers with cash or good credit, I never found those legendary deals that someone’s cousin, Bubba, got.  For the most part – with the exception of a few sellers covered above – today’s sellers (including banks holding foreclosures) know what price their property should bring, and have set asking prices that are competitive.  The only way a seller might even entertain an offer of half their list price is if they were asking twice the home’s value to begin with!

Buyer’s failing to “bring it” in multiple offer situations

A welcome sign of recovery is the return of multiple-offers.  Yes, we are seeing this more frequently when a seller sets a compelling list price!  Yet, novice buyers who have been listening to Uncle Joey talk about real estate “steals and deals” still expect concessions from sellers who are considering multiple offers — and they don’t understand why anyone would pay higher than asking price.  When I represent these buyers, I feel their disappointment, even though I knew that asking for three-percent in closing cost assistance without offering above list price would be an exercise in futility. Savvy sellers may intentionally under-price their homes just to generate this kind of bidding war, resulting in a fair-market sales price.   It is critical to know your market, and be willing to pay market price for the home you love!

It is our job as Realtors to guide our customers through these tricky market adjustments – and it has never been more important for a buyer to have the assistance of a professional in their marketplace. That’s the job I love…. seven days a week!

FHA MIP Release option “disappearing”

Recently, I posted an article illustrating how releasing the mortgage insurance premium (MIP) on an existing FHA loan — after at least 60 monthly payments, and reaching a loan-to-value (LTV) ratio of 78% or lower — could substantially lower the borrower’s monthly payment, making more cash available for principle reduction. In sweeping reforms designed to shore up the financially ailing Federal Housing Administration, on loans originated after April 1, 2013, this option will not be available — meaning that, regardless of the equity the borrower has in the property, he will pay a monthly mortgage insurance premium for the life of the loan. In the future, the only way to eliminate the MIP will be to refinance the loan using a conventional lender. Of course, if interest rates rise as we all expect they will over the next few years, refinancing will not be a cost-saving option.

To add “insult to injury,” on loans originated after April 1 this year, the rate charged for MIP will increase substantially. On a $400,000 loan with certain LTV ratios would pay an additional $33.00 per month in MIP premium.

What should you do?

If you planned to make a purchase this year using an FHA loan (as the majority of today’s homebuyers do), consider escalating your time-line. You will need to have an accepted offer to purchase (i.e., your new home under contract), and make application with your lender before April 1, 2013. Because these changes are significant, I look for there to be a “rush” on lenders near the end of March, overwhelming them with the number of applications — so for best service, don’t want until the last minute!

Call me with any questions! I have a list of recommended lenders who can handle almost any situation, and although our available inventory is shrinking, we still have a number of great homes available at fantastic prices.

Resolutions

After spending the holidays with family and friends, this is a natural time of the year to start thinking about changes to make in our lives, both personal and in business.  I wanted to share one of mine with you.

My goal is to become your REALTOR® for life.  I want you to think of me first when you need to buy or sell AND that you’ll recommend me to your friends too!  That kind of trust has to be earned and I promise you that I will never pressure your friend or family member to make a decision that is uncomfortable to them.  I will treat them like family, and I will keep you informed in the process.

I’m also committed to helping you be a better homeowner even when you’re not buying or selling.  The strategy is simple.  A well-informed homeowner will make better decisions.  I’ll periodically offer information through articles and social media on a wide variety of home-related topics like maintenance tips, tax law changes, financing suggestions, insurance, equity building strategies, and rental property investments.

Please contact me if you need a recommendation on a service provider.  My experience has built a list of reputable and reasonable contractors that you can rely upon.  When you have any kind of home-related questions, I hope you’ll have the confidence to call me.

Happy New Year!   I sincerely look forward to helping you and your friends!

FHA MIP Release

FHA loans require mortgage insurance premium to cover a possible loss to the lender if the property has to be foreclosed and sold. The premium is substantial and eliminating the MIP would reduce the monthly payment considerably.

The MIP must remain in effect for five years but after that, when the balance is 78% of the original purchase price, FHA will release the requirement and your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today’s interest rates.

In the example below, the MIP would be released in 9 years 6 months with normal payments. An extra $100 a month would allow the borrower to reach the release point in 7 years 1 month. To reach the release point in the minimum five years, the borrower would have to make an extra $268.04 per month principal contribution.

Releasing the MIP in this example would save the borrower $177.67 per month. The borrower would also save interest, build equity and shorten the term of their mortgage. Once the MIP is released, the borrower could continue the same payment schedule to further accelerate the debt reduction.

To make some projections on your mortgage, click here.

** See author’s 2/25/2013 update on changes to FHA financing

Home Safety & Security Tips

A quick review of the items on this list may improve the safety and security of your home and could protect your family and friends. It is important to periodically check these things because conditions change over time.

Security

Does each exterior door have a deadbolt?
Does the lock on each window work?
Have you added pins or clips to your windows for additional security?
Do you have dowels or broom sticks in the track of windows and sliding glass doors?
Do you have security company labels or signs displayed prominently?
Do you have an alarm system? Is the system monitored? When did you last test it?
Do you have a dog that barks when strangers approach the home?
Are emergency numbers posted near the telephones?

Fire

Do you have smoke detectors near all sleeping areas?
Do you check the batteries monthly and change them annually?
Do you have two carbon monoxide detectors?
Do you have an escape ladder for upper floors?
Do you have fire extinguishers near exits and in the kitchen?
Do you have an emergency escape plan and is the family familiar with it?
Are any outlets or switches warm to the touch?
Are kitchen ventilation systems working properly?
Is the dryer ventilated to the outside and is the exhaust free of lint?
Is the furnace cleaned and serviced yearly?
Is the space around the hot water heater clear of combustible materials?

Falls

Are all electrical and phone cords out of the flow of traffic?
Are rugs and runners slip resistant?
Is your step-stool sturdy and in good condition?
Are stairs clear of objects that could cause a fall?
Are all entrance ways, exits, halls and walks well lighted?
Do bath tubs and showers have non-skid strips or suction mats in them?

Other

Do you keep drugs and medicines out of reach and sight of small children?
Are interior doors designed so small children cannot lock themselves in rooms?
Are pool and play areas fenced to keep small children in and uninvited guests out?
Are firearms kept out of reach and sight of children?
Is a well-stocked first aid kit available for emergencies?
Is there one member of your family trained in first aid, CPR and the Heimlich maneuver?

Retirement Home Now?

Maybe you’re not ready to move into it but that doesn’t mean that you shouldn’t take advantage of the present opportunities to acquire the home you want to live in during retirement. The combination of the low interest rates, reduced prices and lower competition may never be this good again in our lifetimes.

The rental market is strong and a tenant could pay for your retirement home. The cash flows are attractive and the yield is bound to be stronger than what you’re currently earning. Even if you don’t retire to this home, it could be a placeholder to control the costs of the home you do move into.

One thought would be to finance it with a 15 year loan that will have a lower rate than that of a 30 year loan and it will obviously amortize in half the time. Even if you don’t have the home paid for by the time you retire, your equity will be larger.

Ideally, if you sell your current home when your move into this retirement home, you may be able to take up to $500,000 of tax-free gain for a married couple. That profit could be used to fund your retirement.

With home prices and mortgage rates certain to rise, this may be one of the best decisions you can make. I want to be your personal source of real estate information and I’m committed to helping from purchase to sale and all the years in between. My SRES designation (Seniors Real Estate Specialist) is one indicator of advanced study to help my clients over the age of 50 plan wisely and address potential issues that could later affect us as we age in the homes that we love so much.

Protect Yourself

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our well-being. Here are a few tips you might want to consider.

Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.

• Always lock outside doors and windows even if you’re gone only a short time.
• Leave lights on when you leave. Consider timers to automatically control the lights.
• Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
• Suspend your mail and newspaper delivery when you’re out of town or get a neighbor to pick it up for you.
• Posting that you’re out of town or away from home on social networks is like advertising your home is unprotected. Equally dangerous could be allowing certain social network sites to track your location.
• Don’t leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
• Trim the shrubs from around your home; don’t give criminals a place to hide.

Gift or Inherit

Transferring the title of a home from one person to another may seem simple but it could have a significant tax implication.

When a person inherits property, the basis is “stepped-up” to fair market value at the time of the decedent’s death. On the other hand, a gift has a carry-over basis which means that the recipient receives the unrealized gain also.

As an example, let’s say an elderly parent, in an attempt to get their affairs in order, gives their home to their adult child. The rationale might be that they are the sole beneficiary and will get the property eventually. In an effort to settle things early, unnecessary income tax may be incurred.

If the home was purchased for $20,000 and worth $100,000 at the time of transfer, there is a possible gain of $80,000. However, if the adult child inherited the property at the time of the parent’s death, their new basis would be $100,000 or the fair market value at the time of death and the possible gain would be zero.

This is meant to be an example and many other variables could be involved. There are multiple other ways to wisely accomplish your estate goals.  If you’re concerned about a situation, you should seek specific advice from a tax professional. As always, I’m here to help you I can as your real estate professional, and can also refer you to excellent estate planners and tax professionals in our community!

Assumption Opportunity

The low interest rates secured by borrowers recently on FHA mortgages may become valuable in a different way in the future. FHA and VA mortgage are assumable at the existing interest rates subject to buyer qualification.

Buyers wanting to assume an existing FHA mortgage must be owner-occupants and meet the current FHA guidelines. Applicants should have a minimum 600 credit score, total debt with house payment to be assumed not to exceed 41% of their monthly gross income and meet other standard income, credit and qualifying requirements.

The benefits are not only assuming a lower interest rate resulting in lower payments but the closing costs on an assumption are much less than originating a new loan. The fact that the mortgage is already into an amortization schedule and that lower interest rate loans amortize faster than higher interest rate loans make it build equity faster than a new mortgage.

When interest rates eventually rise, assumptions will provide an opportunity for buyers to lower their cost of housing significantly while improving their wealth positions.