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California is in the midst of a building boom for accessory dwelling units, which accounted for almost one-fifth of the housing units permitted and built in 2022.

The number of unpermitted ADUs already in existence is jaw-dropping too.

Studies done between 2010 and 2020 found that 11% to 66% of the single-family homes in selected parts of Los Angeles, Oakland and Berkeley had unpermitted units. In fact, one researcher who examined the communities between Long Beach and downtown Los Angeles found that more than 75% of the housing units added between 1991 and 2010 were unpermitted. A UCLA professor estimated in 2018 that Los Angeles had at least 50,000 unpermitted secondary units on single-family lots.

Unauthorized ADUs proliferated in large part because many California cities made it well-nigh impossible to get permits for them. Those barriers did nothing to reduce the demand for living spaces, particularly from lower-income households whose members spanned multiple generations. “If people don’t have housing, they will create housing for themselves and their families,” said Renée Schomp, former director of the Napa Sonoma ADU Center.

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But owning an unpermitted ADU carries risks, especially if you rent it out. You’ll face fines, insurance problems and, potentially, lawsuits from tenants.

The incentives for complying may not be enough, though, to persuade you to get the necessary permits. It can take almost as long to get them as it would for a new ADU, and the cost of bringing your unit into compliance can be quite high.

That’s because unpermitted ADUs can have hidden problems in their foundation, framing, wiring and plumbing that can be expensive to fix. “If it’s a gorgeous unit, that doesn’t mean anything,” said Avi Levi of Levi Design Build, a developer who does most of his work these days on ADUs.

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Common compliance issues

One reason people build dwelling units without permits is that the time-consuming process of getting approvals can raise a project’s price tag by thousands of dollars. But with no inspectors to ensure that the work complies with city codes, nothing stops a contractor from falling short of the local standards — inadvertently or not.

“People don’t get it,” Levi said. “When they’re doing work without a permit, they’re basically letting the person that did the job get away with whatever they wanted to get away with.”

Steven Frasher, spokesman for L.A. County Public Works, offered a list by email when asked what problems the county’s inspectors observed most often. “Improper exiting, improper venting of heating devices, undersized wiring, or improper electrical grounding, to name a few, can lead to life safety issues that are both long-term [chronic] or short-term [acute] exposure risks,” Frasher said. “Most people are aware of acute risks such as fire, but they tend to not pay enough attention to the chronic risks such as headaches, nausea, and breathing problems can be caused by unpermitted building materials, poor ventilation, and mold caused by improper construction methods.”

And even if the contractor did everything by the book, that may not be enough to bring your unit into compliance years later. Although a state law passed in 2018 allows local officials to judge your ADU by the building codes that were in place when it was built, they have the discretion to insist that you upgrade to newer, more stringent standards.

a free, comprehensive guidebook for bringing an ADU into compliance, including descriptions of common problems, cost estimates, and the programs certain cities offer to make the process easier.

City of Los Angeles

The city of Los Angeles, for example, requires unpermitted ADUs to comply with the 2022 state building codes and at least two mandates that probably didn’t exist when your ADU was built: the state’s energy efficiency standards and the city’s Green Building codes.

Builders and the Casita Coalition, a housing advocacy group that backs ADUs, outlined eight compliance issues frequently encountered by homeowners seeking permits for existing units:

  1. Foundation: Most ADUs are converted garages that have a concrete slab foundation that is not stable enough for dwellings — and if the garage was built before 1940, they may have no foundation. In addition to a foundation supported by a sufficient number of footings, these units may need a layer of vapor retarder — a feature not required in garages.
  2. Framing: Unpermitted ADUs often are missing some of the structural safety features that dwelling spaces require, such as the full complement of ceiling joists and braced wall panels. Converted garages may also have kept the garage door as an exterior wall, which is a no-no, said Danny Shuster of Los Angeles-based Construction & Consulting Services.
  3. Wiring and plumbing: In 90% of the unpermitted ADUs he’s seen, Levi said, the wiring and plumbing aren’t up to building-code standards. And in Los Angeles, ADUs must have a separate electrical panel and their own water shut-off valve, along with a source of heat that’s not a portable space heater.
  4. Utility connections and meters: Depending on your city’s requirements, you may need to have separate meters for your ADU’s utilities (which you might want anyway for a rental unit). More significantly, jurisdictions have standards for how and where the ADU’s sewer line connects to the main sewer in the street, and unpermitted ADUs rarely comply, Shuster said.
  5. Energy efficiency: The state’s standards for energy efficient buildings, known as Title 24, are designed to cut electricity and gas use by sealing buildings off better from the elements. But they could force you to replace old windows that leak heat.
  6. Emergency egress: Every bedroom must have an alternate way out in case the door is blocked by fire. As a result, you may have to install a bedroom window large enough for an adult to climb out of.
  7. Water heater: If your ADU’s gas water heater is in a bedroom, it will need to be enclosed in a closet that meets state rules. It will also need to be at least five feet from the property line, as will any heating or cooling appliances, Shuster said.
  8. Firewall: Any exterior wall of an ADU that’s less than 5 feet from the property line must be built to suppress fire for at least 1 hour. Unless your ADU was built fairly recently, you’ll probably have to retrofit it with fire-resistant boards on the inside of the wall.

It’s conceivable that your ADU may not even be permittable, thanks to a noncompliant feature that would be prohibitively expensive to fix — for example, a ceiling that’s too low or the lack of a separate entrance. Another issue for converted garages, Shuster said, is that the exterior walls may have been extended to allow for a larger ADU. If the ADU is closer to the property line than current zoning rules allow, he said, only the portion representing the original garage’s footprint will be grandfathered — the walls and roofline for the additional space will have to be moved back. Ouch.

The path to permits

Not too long ago, there was no way to bring an unpermitted ADU into compliance if it violated setback requirements, limits on lot coverage or other zoning rules. If code enforcers cited your unit, you’d probably have to decide whether to return the space to its original use (e.g., a garage) or dismantle it.

Senate Bill 1069, which lawmakers passed in 2016 to make it easier to build ADUs, forced cities to issue permits “for any existing structure that had been or could be converted to an ADU, so that informal units had a path to safety,” Denise Pinkston, president of the Casita Coalition and a key proponent of the bill, said in an email. Now, Pinkston said, the main impediments are the cost of upgrades, the shortage of financing options, and a general mistrust of government, including fear of rent control among ADU owners, she said.

Nevertheless, contractors say they’re being approached more and more frequently by owners of unpermitted ADUs who are thinking about applying for permits. Levi said he gets at least two such calls a week — sometimes from people who were buying or had bought a lot with an unpermitted ADU, but mainly from property owners who had deliberately built units without getting permits.

About 80% of the time, he said, the ADU is a converted garage. And most of the calls are coming from people who’ve already gotten a citation from local authorities or who know they’re about to get one, Levi said.

How to get started

If you own an unpermitted ADU, chances are good that you’re well aware of the problem. Either you decided to forgo permits when you built it; or, if the ADU was on the property when you bought it, the seller’s agent and the reports you received from the inspector and the title insurance company told you that the space wasn’t legal. But if you have any doubt, your local government’s planning and building-and-safety departments will have records of any permits or certificates of occupancy obtained for your ADU. Many cities, including Los Angeles, enable you to do this online.

Seeking permits retroactively for an ADU will put you in an uncomfortable spot, Levi said: Once you reveal to the city that you have a potentially unsafe dwelling, you’ll have to either bring it into compliance or stop using it as a living space — and maybe even demolish it, depending on how severe the safety problems are.

So the first step is to find out as much as you can from your city before outing your noncompliant unit. Some jurisdictions, including San Francisco and Milpitas, will try to help you figure out how much work you’ll have to do to meet current codes before you seek the necessary permits. And a few, such as Santa Cruz County, will allow you to keep renting out the unit without meeting all of today’s building codes, as long as your unit meets health and safety standards.

Pasadena has even offered local homeowners financial assistance to bring existing ADUs up to code through its Second Unit ADU Program, but it’s not taking new applications at the moment. According to the Pasadena Department of Housing’s website, “The application window is tentatively scheduled to open back up in summer 2023.”

The city of Los Angeles offers a preliminary plan check service (for a fee of at least $227) that can identify building and zoning issues in your plans up front, as well as a call center to answer your questions about local codes, Frank Lara of the L.A. Department of Building & Safety said via email. He also said that merely seeking permits won’t cause an ADU owner to be cited for code violations — the city issues citations in response to complaints, not permit applications.

(To ease the path to permits, the L.A. City Council approved a motion in April to allow owners of unpermitted ADUs to get city approvals without first having to return the unit to its original use — for example, turning a converted garage ADU back into a fully permitted garage. The motion also called for the development of an amnesty program for legalizing unpermitted ADUs, although it set no deadline.)

Looking behind the walls

Next, you’ll want to get some professional help (for your project, not for you personally — at least not at this juncture). You’ll need a licensed architect or structural engineer to sign off on your plans and a licensed contractor to do the work, but first you may want to consult with a pro who can give you a rough idea of what your ADU might require. That way you’ll at least know the scale of what you’re getting yourself into.

The process of obtaining permits starts with you submitting for review an “as built” ADU plan that hews closely to the current structure. “The city’s going to give their own comments about what they want us to comply with — what they will allow and what they will not allow,” Levi said, adding that the plans will go through several revisions and reviews before they’re approved.

How long that process takes will depend on whether you’re in a historic preservation overlay zone, an environmentally sensitive area or other locale that requires extra layers of scrutiny, Shuster said, adding, “It could take a few short weeks; it could take months.”

Once the plans are approved — and remember, this hurdle is significantly lower than it used to be — building and safety inspectors will come out to see how much work needs to be done to bring your unit into compliance. This preconstruction inspection is also a deconstruction inspection, as inspectors will want to tear up walls to check the condition of the wiring and plumbing behind them, as well as looking at the footings under the foundation and other important and potentially inadequate features.

Shuster said these inspections play out in one of three ways, the first being that the unit has to be gutted to expose the framing and foundation because the inspector thinks everything’s out of compliance. He’s seen this happen to maybe 10% of the units he’s worked on, and it came as no surprise because they were in such bad shape. The second possibility is that the inspector says the unit appears to be largely in compliance and pokes the minimum number of holes in the walls. That happens less than 10% of the time, Shuster said.

The most common scenario, he said, is that inspectors will say the unit looks OK but still want to look at the foundation and the framing, measure the insulation, inspect the plumbing and piping, check the wiring and the electrical panel. They may start by pointing out four or five locations where they want the frame or foundation exposed, then ask for more based on what they see.

    How much is this going to cost?

    Shuster said that bringing a converted garage into compliance would cost $20,000 to $30,000 under the best-case scenario, and possibly more than $100,000. Levi pegged the cost of legalizing a garage ADU at $50,000 to $130,000.

    The least expensive job is still pretty costly because of the up-front expense of developing plans and getting them approved. The Casita Coalition estimated that the price tag for plans and permits started at $10,000 and went up from there.

    In addition, once your ADU is officially on the city’s books, its value will be added to your property tax assessment, increasing your property taxes.

    On the other hand, an unpermitted ADU can prove costly too.

    It’s not just the prospect of getting hit with one or more citations for code violations if someone reports you to the city. It’s also what happens after the citation is issued.

    If you have tenants, the Casita Coalition says, you may have to cover their relocation costs and reimburse them for the rent they’d paid. And even if you aren’t cited by the city, your tenant may sue you for providing seriously substandard housing, potentially collecting extra damages in addition to recovering their rent payments.

    Another issue is that your insurer could exclude unpermitted structures from your coverage, said Janet Ruiz, a spokesperson for the Insurance Information Institute. If there’s a fire or some other kind of damage to that property, you could be on the hook for the entire loss.

    About The Times Utility Journalism Team

    This article is from The Times’ Utility Journalism Team. Our mission is to be essential to the lives of Southern Californians by publishing information that solves problems, answers questions and helps with decision making. We serve audiences in and around Los Angeles — including current Times subscribers and diverse communities that haven’t historically had their needs met by our coverage.

    How can we be useful to you and your community? Email utility (at) latimes.com or one of our journalists: Matt Ballinger, Jon Healey, Ada Tseng, Jessica Roy and Karen Garcia.

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    Apache is functioning normally

    Well, folks, this spring marks a major milestone in the housing market: Annual home list prices have gone negative for the first time in years. In other words, they are actually dropping nationally.

    Looking at the country as a whole, sellers have priced their homes this May below where homes were priced just one year ago. That hasn’t happened in recent memory, especially after the past few years of unprecedented price hikes. But as mortgage interest rates shot up, buyers have been unable to afford the higher monthly housing payments.

    Something had to give. And while today’s price dips are slight, there are no indications that overall prices will begin rising anytime soon.

    So where are home prices falling the most? The data team at Realtor.com® found out. These are mostly places where prices shot up the most during the COVID-19 pandemic in the Western and Southern swaths of the country. In most of these places, there has been a lot of new construction helping to ease the housing shortage and taking the pressure off of prices to remain quite so high.

    “Those markets that got the most juiced during the pandemic—where the prices really took off—are the markets where they’re now suffering the biggest declines because affordability has been the hardest there,” says Mark Zandi, Moody’s Analytics chief economist.

    “The market is trying to adjust to the surge in mortgage rates and the collapse in affordability,” says Zandi. With mortgage rates hovering around 7%, he believes the price declines will continue in the near future.

    “I’d be surprised if we don’t have this same conversation a year from now and prices aren’t another 3% or 4% lower than where they are today,” he adds.

    For example, look at Boise, ID, No. 1 on our list, or Austin, TX, which came in at No. 2. Both were practically synonymous with the housing market’s pandemic price pump.

    People who previously had to spend their nine-to-five in a big-city office building were turned into remote workers with more flexibility in where they could live. That led many people to leave more expensive cities like San Francisco and Seattle for smaller cities where they could get more space for their money.

    The big caveat here is that there are still real estate markets around the country where prices are rising steadily. These are typically more affordable Midwestern markets that didn’t see the large upswings that other markets experienced during the pandemic.

    To figure out where prices are falling the most, we looked at the median price per square foot in the 100 largest metropolitan areas. Then we compared median prices in May 2023 with May 2022.

    We used price per square foot as the most reliable metric to track home price movement. This means in a few instances, overall home prices in a metro might be rising while the price per square foot is falling. Price per square foot is generally considered a better indicator of prices because it accounts for changes in the mix of homes for sale. For example, right now many larger, more expensive homes are sitting on the market without attracting buyers. Since those homes aren’t moving, it’s bringing up the overall price for these metros. But the price per square foot compares apples to apples and shows that in some of these markets, it’s actually cheaper to purchase a home now than a year earlier.

    We looked at only one metro per state to ensure geographical diversity. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.

    Here’s where home prices are down the most.

    Median listing price: $609,875
    Median listing price per square foot: $282
    Change in year-over-year price per square foot: -7.8%

    Boise has been one of the poster children for the run-up in home prices during the pandemic. The area saw a massive influx of residents and soaring demand over the past few years, especially from Californians. And it’s not hard to see why.

    The city checks many of the standard quality-of-life boxes that people are seeking: Homes are larger than the national average, and there’s plenty of natural beauty and outdoor recreation.

    Homes in the city, surrounded by mountains, used to be a bargain. Then the pandemic hit, and from March 2020 to May 2022, prices rose 63%. Now prices are coming back down to earth.

    “It’s the entry-level homes where we’re losing value,” says Boise real estate agent Rob Inman, with Boise’s Best Real Estate Keller Williams, “those homes that people got into for $400,000 to $500,000.”

    That reality is rough for buyers who bought at the peak, Inman says, especially first-time buyers. The one consolation, he says, is the low interest rate they probably have on the mortgage.

    But for buyers still looking for a home on the more affordable end of the spectrum in Boise, there’s a lot more to choose from now.

    “Now, you can actually find stuff between $350,000 and $425,000, right in that entry-level price point,” he says. “There’s even new construction.”

    Austin, TX

    (Getty Images)

    Median listing price: $583,751
    Median listing price per square foot: $276
    Change in year-over-year price per square foot: -7.7%

    When it comes to pandemic hot spots, you can’t mention Boise without bringing up Austin, too. This cultural hub and capital of the Lone Star State has attracted hordes of tech companies and homebuyers leading to a surge in prices.

    During the pandemic, the price per square foot for a home in the Austin metro rose around 75% from February 2020 to May 2022. The median home list price, not standardized for size, went from about $364,000 to almost $630,000. Pandemic price growth in Austin outpaced all others on the list.

    Higher mortgage rates have cooled off buyers’ ability to purchase at the same price point. Right now, a relatively new, one-bedroom condo in East Austin is being listed for $420,000, with a recent $5,000 price reduction.

    Median listing price: $366,075
    Median listing price per square foot: $225
    Change in year-over-year price per square foot: -7.3%

    Myrtle Beach, nestled in the center of South Carolina’s “Grand Strand” shoreline, is a popular and affordable summer destination. The city, named after the abundant wax myrtle tree in the area, was recently named one of the nation’s most affordable golf towns by Realtor.com.

    With its beaches, boardwalk and amusement parks, and plenty of golf courses, it’s another spot where prices rose over the past few years and are now coming down.

    Some of that is due to the abundance of new construction in the area. With so many homes to choose from, buyers aren’t under as much pressure to bid them up.

    Homes in Myrtle Beach are relatively small, so if buyers aren’t looking for a colossal home, the actual median price on homes there is 15% to 20% less than the national median. This remodeled three-bedroom, two-bathroom house is on the market for $284,900 after a $15,000 price cut.

    Phoenix, AZ

    (Getty Images)

    Median listing price: $529,450
    Median listing price per square foot: $274
    Change in year-over-year price per square foot: -5.6%

    During the COVID-19 pandemic, home prices in Phoenix got as hot as a sweltering Sonoran summer, and just as the monsoons mark the end of the season, raised interest rates have come like a cold downpour on the market. After more than 50% pandemic-era appreciation here, the median price per square foot is down more than 5%.

    But the housing boom in Phoenix—as well as the subsequent correction—is nothing new for the Valley of the Sun. Phoenix was one of the markets with the biggest swing up and down during the late 2000s housing bubble and crash.

    Part of the reason why is that Phoenix has the capacity for so much growth. Without a real winter to speak of, home construction can go on year-round. And the only thing surrounding Phoenix is more land, so developers can continue to build outward.

    “Developers can keep sprawling,” says local real estate agent Angela MacDonald. “Without the new homes, we wouldn’t be able to keep up with the demand for people moving here.”

    Even with the price decline, sellers still have a bit of an edge in the market. There are still many buyers and not as many homes to go around.

    Median listing price: $549,900
    Median listing price per square foot: $305
    Change in year-over-year price per square foot: -4.7%

    Florida was another red-hot real estate market during the pandemic. As more folks could work remotely, many migrated to the Sunshine State with its low taxes, reasonable cost of living, and year-round warm temperatures.

    Part of the reason Sarasota, about an hour south of Tampa on the southwestern coast of Florida, made our list is because it’s also one of the places in the U.S. where the number of homes for sale has risen the most.

    Sarasota homes are also spending longer on the market, with the median listing on the market for nearly eight weeks. Homes were selling in about half of that time a year ago.

    This midcentury three-bedroom home near downtown Sarasota has undergone a price reduction bringing it down to $499,000.

    Salt Lake City, UT

    (Getty Images)

    Median listing price: $635,000
    Median listing price per square foot: $247
    Change in year-over-year price per square foot: -4.0%

    Salt Lake City is another area that’s grown in popularity over the past few years and attracted more tech companies and workers. That led prices to rise—until recently.

    “Buyers are holding back a little when it comes to waiving contingencies or inspections,” says Lory Hendry, a real estate agent at Windermere Real Estate in Salt Lake City, ”

    That’s in contrast to the frenzy of the pandemic, when fast sales were often sealed without those protections.

    Salt Lake City has the biggest homes of any metro on our list. So buyers looking for more home for their money might want to give the city a hard look. Surprisingly, it’s the higher end of the market, the larger, more luxurious homes, where high demand is still leading to quick sales and competition among buyers.

    “Anything in that $1 million to $2 million price point is going pretty quickly,” says Hendry.

    For people looking for a bit more of a bargain, the Ogden metro, just north of Salt Lake City, is a little less expensive and was recently featured on our list of places where the number of homes for sale is growing the most right now. The number of listings in the Ogden area has roughly tripled over the past year.

    Median listing price: $238,250
    Median listing price per square foot: $152
    Change in year-over-year price per square foot: -3.9%

    Venturing outside of the West and South, the “Steel City” is the only Northeastern spot on our list.

    Pittsburgh stands out on our list as a place with some of the smaller homes, with a median home size around 1,600 square feet. Combined with a price per square foot that’s about one-third less expensive than the national median, this means the price of a Pittsburgh home is quite a bit lower than in most other places.

    This anchor of the Steel Belt didn’t see the same kind of pandemic-era price appreciation as others on the list. However, the overall housing slowdown seems to have pulled down prices anyway.

    Buyers looking in the area can find a three-bedroom home in the South Side Flats neighborhood for $285,000. It recently underwent a $10,000 price reduction.

    Winstone-Salem, NC

    (Kruck20/iStock)

    Median listing price: $345,899
    Median listing price per square foot: $148
    Change in year-over-year price per square foot: -3.6%

    For the previous few metros on our list, there’s a quirk to how home price data is affected by the mix of homes for sale. The anomaly is the most pronounced in the Winston-Salem metro. While the median list price per square foot has dropped, overall prices in the metro are rising.

    This is due to shifting buyer preference. As mortgage rates rose and buyer budgets shrunk, many buyers shied away from larger, more expensive homes. That left these properties on the market as the cheaper, smaller homes were more quickly scooped up. The bigger homes have been pulling up overall prices for the metro even though local real estate costs less than it did a year ago.

    If you were to compare the median home list price in Winston-Salem with Pittsburgh, you’d see that the Winston-Salem price is about $100,000 more. But the median home listing in Winston-Salem is more than 500 square feet larger. So buyers get more space for their money.

    A nearly 100-year-old, three-bedroom home about 10 minutes south of downtown Winston-Salem is listed now for $220,000, after a $9,000 price reduction.

    Median listing price: $662,875
    Median listing price per square foot: $340
    Change in year-over-year price per square foot: -3.4%

    Sacramento, California’s capital city, may be the most expensive of any on our list, with homes priced around 50% higher than the national average. But for California, Sacramento is cheap! The state’s median list price per square foot is more than 30% higher.

    The city became a popular alternative to the pricier San Francisco Bay Area during the pandemic as buyers sought out more space for less money. But as companies have been calling workers back to their offices, the area isn’t as hot as it was during the pandemic. There has also been plenty of new construction in the area.

    A two-bedroom townhome near downtown Sacramento can be picked up for a little under $500,000 right now.

    Chicago, IL

    (Getty Images)

    Median listing price: $376,000
    Median listing price per square foot: $205
    Change in year-over-year price per square foot: -1.1%

    The real estate market in the “Windy City” is really a tale of two cities, says Compass real estate agent Amy Duong Kim.

    Chicago’s dense downtown should be thought of as one market, she says. The suburbs on the periphery, where about two-thirds of the metro residents live, should be thought of as another.

    “In River North and Gold Coast and the other downtown neighborhoods, they were hit the hardest during COVID,” Duong Kim says. “Unfortunately, they haven’t bounced back yet.”

    The listing data backs up her point about the two different markets of Chicago. Where the larger metro area is showing a 1.1% decline in price per square foot, the city of Chicago at the center of the metro is showing the list price per square foot is down just a little more than 4%.

    This two-bedroom, one-bathroom condo in downtown Chicago is on the market for $299,000.

    Source: realtor.com

    Apache is functioning normally

    Get ready to unlock a treasure trove of invaluable insights and expert advice that will revolutionize your vacation rental property. In this Redfin article, we dive deep into the world of vacation rentals, revealing powerful strategies to make your property shine and leave guests in awe. From savvy investments that boost your property’s allure to crafting an unforgettable resort-like experience, forging strategic partnerships, and crafting personalized guest interactions, we’ll equip you with the knowledge to exceed expectations and achieve unrivaled success in the fiercely competitive world of vacation rentals.       

    Whether you own a vacation rental property in the enchanting city of Orlando, FL, or the picturesque town of San Marcos, CA, this comprehensive resource is tailored to elevate your rental business to new heights. Here are 18 transformational secrets to maximize guest satisfaction, earn rave reviews, and propel your property to the one of the most sought after homes in the area.

    1. Make your rental stand out

    “To maintain a five-star rental property, you’ll want to go above and beyond tenant expectations. Our data shows that including a washer and dryer, upgrading to newer appliances, and providing freshly painted walls in neutral tones will not only make your rental stand out, but also make the process of finding great tenants faster,” recommends Doorstead. “Moreover, by ensuring access to a responsive property manager, you can guarantee that all aspects of the home are well taken care of, truly enhancing the tenant experience.”

    2. Pretend your vacation rental is a five-star resort

    “The most important thing to remember about managing a vacation rental is that this is the hospitality business, not the landlord and tenant business,” shares Todd Ortscheid, Co-Owner of Revolution Rental Management. “You have to think of what you’re offering more like a hotel or resort than a traditional rental property. This means cleanliness, fast response time, desirable amenities, and a well-maintained property. The more you think of your property as a five-star resort, the better off you’ll be.”

    3. Consider creating strategic partnerships

     “We recommend partnering with a company that specializes in exclusive vacation rental portfolios. If your property is a top-tier, five-star rental, it’s essential to align it with a company whose branding and services cater to the discerning needs of luxury clientele,” recommends Gary Doss, Co-Owner of SoCal Vacations. “Larger companies that offer a broad range of properties may not be able to meet the high expectations and unique demands of this premium market segment.”

    4. Personalize communication 

    “To ensure a successful guest experience, effective communication plays a pivotal role. It is crucial to make your guests feel genuinely welcomed, leaving a lasting impression. One way to achieve this is by remembering their return and incorporating delightful surprises. Consider offering their favorite snacks accompanied by a bottle of wine, arranging fresh flowers, and providing a personalized welcome message upon their arrival,” recommends Ellie Paget, CEO of HomeSlice Stays.

    “Prompt responsiveness is of utmost importance when it comes to addressing guest requests or concerns. Aim to respond to them in a timely manner, never exceeding a 15-minute timeframe. This level of attentiveness demonstrates your commitment to their satisfaction and enhances their overall experience.

    By prioritizing personalized communication, you can create an exceptional guest experience that fosters satisfaction and builds positive relationships.”

    5. Decorate with style

    “When it comes to guest experience and satisfaction, décor has the potential to make a significant difference in how guests perceive your rental property. To ensure an exceptional experience, it is crucial to infuse your property with chic and stylish decor, incorporating appealing color schemes and well-curated furnishings,” recommends Ellie Paget.

    “To achieve a truly unique and captivating aesthetic, consider leveraging the expertise of our dedicated team. They can assist you in designing your home, helping you create an environment that not only catches the attention of potential guests through eye-catching marketing images but also provides a one-of-a-kind experience during their stay.

    By investing in stylish decor and enlisting professional guidance, you can elevate your rental property’s overall appeal, command top dollar, and leave a lasting impression on your guests.”

    6. Make sure you have security and safety measures

    “To prioritize the safety and security of your guests, it is important to emphasize on security and safety measures. Install reliable locks, smoke detectors, and fire extinguishers. Provide clear instructions on emergency procedures and ensure your guests feel secure throughout their stay. A focus on safety gives guests peace of mind and contributes to their overall satisfaction,” recommends Damir Dumo from Chalet.

    “Smart locks with rotating access keys for each guest are must-haves nowadays. We use a smart home automation system that can be remotely managed for all of our homes.”

    7. Leverage guest’s reviews 

    “Pay attention to guest feedback and reviews,” says Damir Dumo. “Actively seek feedback from your guests and use it to improve your property and services. Address any concerns promptly and implement suggestions that align with your goals. By consistently evolving based on guest feedback, you’ll maintain a high level of guest satisfaction and enhance your reputation as a top-notch rental property.

    Ask for a five-star review on the day the guest checks out. If it wasn’t a five-star experience, ask the guest to give feedback directly to you.”

    8. Discover your secret formula to winning a rave review

    “We’ve found that rave reviews are the secret to creating successful, five-star rental properties,” says ALL IN. “This begins with maintaining excellent communication with our owners, guests, and community management teams. Maintaining a meticulous standard of cleaning, offering modern amenities, and assuring attention to every detail are non-negotiables that must always be upheld as a standard.

    We invite the input of our guests and respond promptly to their questions, needs, and feedback. Creating memorable experiences keeps them wanting to share their experience with others.” 

    9. Elevate your guest’s stay with tailored upsells 

    “When catering to today’s travelers, it’s important to go beyond providing accommodation and focus on creating memorable experiences. Enhance your guests’ stay by offering exciting upsells and activities that align with your property’s location,” says Kennedy Williams from Mount.

    “For instance, if you’re near a beach, consider providing e-bikes, or if you’re situated by a lake, offer kayaks. By incorporating these quality add-ons and upsells, you eliminate the guesswork and reduce trip planning stress for your guests, ensuring your property is a memorable stay for all the right reasons.”

    10. Elevate your guest experience through realistic promises and delightful surprises

    “The top-performing property managers consistently prioritize the basics of a well-maintained property, comfortable beds, and clean linens to create a memorable guest experience. They also excel in attentive guest communication, providing timely and personalized responses that make guests feel valued and supported,” mentions Hostaway.

    “They’re also careful in setting realistic expectations by promoting property highlights without overpromising, along with adding delightful touches like unique decor, outdoor games, or welcome gifts, further enhancing the guest experience.”

    11. Thoughtfully prepare your guest’s needs before they arrive

    “Take the time to think about your guest experience from their perspective,” recommends Floorspace. “By anticipating their requests, you can provide the amenities, information, and special touches that will make their stay seamless and memorable, while also reducing the amount of communication required. 

    It’s also helpful to keep in mind the benefits of providing a positive guest experience, which can’t really be overstated. Not only will you garner more five-star reviews, but you’ll also increase your chances of repeat and direct bookings.”

    12. Set a competitive pricing strategy

    “One thing that often gets overlooked is pricing strategy. You can have high occupancy throughout the year, but if your pricing is not competitive, you will not reach your highest earning potential,” recommends Humberto Pacheco, CEO of Naya Homes. “You will need to research similar listings in your area and take into account factors such as location, size, amenities, and seasonal demand.”

    13. Automate communication

    “Automating communication in a natural tone through templates or automated messages streamlines your interactions with guests while maintaining a personalized touch,” suggests Alex Withorn from  Thorn Point Vacation Rentals. “This approach allows you to experiment with different messaging strategies, refine your communication based on guest responses, and deliver consistently excellent customer service without guests realizing it’s not manual correspondence.

    Investing effort in repeat business can significantly contribute to ensuring another great review. By fostering strong relationships with guests and providing exceptional experiences, you increase the likelihood of them returning, resulting in positive reviews from satisfied repeat guests.”

    14. Harness the power of preemptive reviews

    “When you give guests a five-star review, specifically letting them know before they leave their own review can encourage reciprocity and forgiveness. By expressing gratitude and acknowledging their positive experience, you create a positive feedback loop that encourages guests to leave similarly favorable reviews,” says Alex Withorn from Thorn Point Vacation Rentals

    “Being upfront about expectations and educating guests about the review process is crucial for ensuring positive reviews. Transparent communication sets the stage for mutual understanding and helps guests provide feedback that aligns with their expectations, leading to more favorable reviews.”

    15. Ensure your guests have a streamlined experience checking in and checking out 

    “Being in the cleaning industry for so long, I found that attention to detail, open communication, consistency, and streamlined processes leads to a five-star rental experience,” says Celestial Cleaning Service. “Every little thing counts, from beginning to end. The way your entrance is presented with wine and chocolates and a personalized letter, to the ease of checking out. Ensuring all staff members associated with delivering a five-star experience is up to date with your standards in delivering a great experience is key.”

    16. Create a cleaning schedule

    “To ensure a consistently high standard of cleanliness and maintenance in your vacation rental, it is important to establish a comprehensive cleaning schedule. This schedule should encompass tasks that need to be performed daily, weekly, quarterly, and seasonally,” recommends Jacqueline Barbosa from  Morfin Cleaning Services.

    “Examples of such tasks include carpet cleaning, window washing, and high dusting. Consider small details such as re-caulking, checking batteries, lightbulbs, filters, and even painting the unit if necessary. It is crucial to use quality products and professional cleaning services to ensure that every area, including appliances and windows, receives proper care.

    Attention to detail is key when managing a rental property. In platforms like Airbnb, linens and bedding should be in excellent condition, and all appliances must work properly. Guests should have access to all necessary amenities such as toilet paper and soap, and a complete set of cooking utensils should be provided. It is important to regularly inspect these details and replace anything that is worn or damaged.”

    17. Conduct inspections

    “To maintain a high-quality vacation rental, it is important to regularly inspect, maintain, and upgrade the unit, including appliances and amenities,” says Jacqueline. “Providing a comprehensive guide for guests, which includes information on internet access, streaming services, local attractions, and useful tips, enhances their experience. 

    “Essential amenities and toiletries such as toilet paper, soap, and dish soap should be provided and regularly restocked after every visitor. Maintaining open communication with guests, checking in upon arrival, and seeking their feedback throughout their stay are key to providing excellent customer service and ensuring a positive guest experience.”

    18. Provide uninterrupted guest service anytime, anywhere

    “Providing a smooth and memorable guest experience is essential to maintaining a five-star rental. This involves communicating promptly with guests (no matter what time of the day or night), solving guest problems in a timely manner, and giving guests the tools to create the vacation of their dreams,” shares Sam Ripley from LocalVR.

    19. Provide perfectly maintained appliances, ample storage space, and an inviting ambiance for your guests

    “When it comes to keeping a five-star rental property, I recommend that all appliances and technology be well maintained and in excellent working condition,” suggests Norma Reyen, Professional Organizer and Owner of Simply Fresh Interiors.  “I also recommend making sure that there is enough storage space, such as drawers, cabinetry, shelving, and hanging options. Having an appropriate amount of storage allows for a clean and decluttered space that all guests can enjoy. Lastly, maintaining a fresh-smelling home with good lighting and an airy ambiance will make your rental home memorable.”

    20. Monitor booking requests

    “Be communicative and professional, but warm and friendly. Don’t allow anyone to book without maintaining a standard; for example, guests must have previous and recent positive five-star reviews,” recommends Michael Skomina, from Host Easy BnB. “Liaise with your cleaners and laundry service, as they are the crux of the business and the most important asset to your success. Follow up and inspect after cleans; if necessary, guide and provide feedback in positive ways to help your services provide the best possible standard that you desire.”

    Source: redfin.com

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    Home inspections are an important part of the home buying process. Before finalizing an offer, hire a home inspector who will check the condition of the home. A home inspector will check things such as the electrical system, roof, and ventilation. Although a home inspector will thoroughly review a home, his or her main concern is the actual house, not the surrounding areas. It is possible that your home inspector may miss problems around the home.

    Evaluate these things before you make an offer.

    1. Fences and outdoor buildings: Your inspector may skip the outside portion of your house, so make sure you double check the condition of fences and anything else outside the home. If these features are damaged, they can be an expensive hassle to repair. Make sure your fences, sheds are in top shape before you purchase your home. If they aren’t, you can negotiate your offer. (Credit)

    2. Roofing: Inspectors don’t usually go on the roof. They inspect from ground level and may miss a lot of problems. Inspectors will take note of missing shingles or panels but if there is a deeper problem, like a leak, it can be more difficult to identify. Consider hiring a roof contractor to go up on the roof and make sure everything is in excellent condition. (Credit)

    3. Drains: This is a little problem that can become a major one if it’s not taken care of. Inspectors may overlook the drainage system or go over it quickly, not giving sinks and tubs enough time to show an issue. Fill up your tubs, showers, and sinks to see if there is a drainage problem. This may be a quick fix with a drain clog remover, or you may need to seek a specialist. (Credit)

    4. Air conditioning and heating systems: An inspector might not want to run the air conditioning in freezing temperatures or the heat in 90 degree weather, at risk for ruining the system. For this reason, there may be a bigger problem at hand and you won’t know it. Do your own test of the A/C and heat to determine if there is a problem. (Credit)

    5. Fireplaces: A fireplace is a common mistake when it comes to home inspections. Home inspectors may glance at a fireplace and chimney but not make it a priority. Light a fire in the fireplace to make sure it’s safe and that the chimney is in working condition. Hire a professional to clean the chimney if needed. (Credit)

    If you think that your home inspector may have missed a few issues, look at them yourself and then make the decision to hire a specialist. This will help you ensure that your home is up to code and is the best home for you!

    Source: century21.com

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    What happens when a great opportunity comes along, but you don’t quite have the resources to take advantage of it? That’s what Greg wants to know. He and his wife have found their Dream House. They think they can buy the place — but only if they’re willing to take on some short-term debt in addition to the mortgage. Greg wants to know if this is a smart move. Here’s his story:

    My wife and I are in our late twenties, no kids (yet), both safely employed and living very comfortably with a combined monthly income of around $5,000 after taxes. We currently have about $28,000 in student loans, and plan to pay them all off within the year. The original amount was $37,000 six months ago, so we’ve been making quick progress with them. One loan is in deferment while my wife is in school, another requires $80 a month for the payments, and the one we are aggressively paying off has no monthly payment due until 2014 because of our extra payments. Basically, we only need $80 a month to satisfy our loans for the next two years. We have no car payments, credit card debt, or anything other than the student loans.

    Everything was going as planned until two weeks ago we found a house we absolutely loved. We’ve checked it out, and aside from minor cosmetic things, its move-in ready. It’s a foreclosure with an asking price around $136,000 (houses are cheap in the Houston area!). We’d plan to stay in the area a minimum of ten years, if not longer.

    Given our situation, is it wise to scramble to get the minimum amount necessary to buy this house? We hadn’t planned to begin saving up for a house for another six months. Last week, my dad offered us a monetary gift to cover the down payment. We have the ability to pay for inspections, closing costs, insurance and everything else (about $7,000 total, assuming the seller won’t cover some of these costs), but it might mean wiping out our small savings and taking on some short-term debt. We’d also have to pay about $1,600 to break our apartment lease, but at least that can be spread out over three months.

    Moving so quickly without any heavy financial preparation was not how we envisioned buying a house, but we don’t want to risk losing what amounts to our Dream House. Since it only recently came on the market, we don’t know if it will be something we can wait on or not.

    Being the committed debt-haters that we are, the minor (non-mortgage) debts we’d have to incur to buy the house hopefully wouldn’t last very long anyway. Worst case scenario puts our monthly house/tax/insurance payments well within the range of affordability for us too. Our current loans would go on hold for maybe six months while the minor debt is paid off, then proceed at a slower pace due to the $1200 a month we’d be paying for housing instead of the the $600 we currently pay.

    If you were in my position, what would you do? Jump on the chance for a Dream House? Or take a more financially conservative approach and risk losing out on it? Any and all opinions would be much appreciated!

    This is a tough call. Folks like Dave Ramsey would say, “Don’t do it.” Ramsey would argue that Greg and his wife should first repay all of their student loan debt and then save enough for a substantial down payment. (Or even enough to pay for the house in cash.)

    I’m not nearly that prescriptive. Absolutely, the prudent financial choice is to wait. Dream Homes are problematic — dreams change, and Dream Homes are often more common than buyers believe. Plus, when you have to scrape money together to buy a house, you leave yourself vulnerable to unexpected disasters. By exercising deferred gratification, Greg and his wife could reduce their debt and/or build enough savings to make a substantial down payment.

    That said, personal finance is as much about emotions as it is about money. And heaven knows, Kris and I have made a pair of impulse home-buying decisions:

    • In 1994, we bought our first home. We didn’t really have a reason for buying a house; it just seemed like the adult thing to do. A mortgage broker crunched the numbers, told us what we could afford, and we started shopping. We didn’t shop for long. Within a week, we’d found a house we liked. Two days later, we’d made an offer and had it accepted. Looking back, we rushed things, but it turned out okay because we bought less home than we could afford.
    • In 2004, Kris and I bought our Dream House. We hadn’t intended to move, but when one of Kris’ co-workers brought in a sale flyer for an old farmhouse, we acted quickly. Within 48 hours, we’d made an offer (and had it accepted). In retrospect, this was a poor financial decision. On paper, we could afford the place, but in reality, my debt-load made things tough. If I could give my younger self advice, I’d say, “Don’t do it!” Things have worked out for us, but they could easily have turned sour.

    If Greg and his wife are willing to unwilling to pass up this opportunity, they should at least take steps to mitigate the possibility that things will go wrong.

    • Take out a small mortgage with a low interest rate. Banks will grant mortgages with housing-expense ratios of 33%. That is, they’ll let borrowers spend up to 33% of their gross (pre-tax) income on housing, including taxes and insurance. But what’s good for the bank isn’t necessarily good for you. Greg and his wife can make things easier by trying to keep their monthly expenses below 25% of their gross income.
    • Make debt reduction a priority. If they buy this house, Greg and his wife have to be willing to make some short-term sacrifices: cheap vacations, a reduced restaurant budget, and so on. They have to give up a lot of the little everyday pleasures in order to attack their non-mortgage debt. All purchases require trade-offs, and big purchases require big trade-offs.
    • Build a big emergency fund — ASAP. Speaking from experience, owning a home is expensive. One rule of thumb is that it costs 1% of the home’s value every year for maintenance and repair. This seems accurate to me. Greg and his wife should work hard to create a home repair fund, one that’s separate from their everyday emergency fund.

    What do you think? Should Greg and his wife jump at the chance to buy their Dream Home? Even if doing so means carrying more debt than they’d planned for a few years? Or should they wait until they know they’re financially prepared? Share your personal experience so Greg and his wife can make an informed decision!

    Note: Upon reading this post, Kris made an interesting observation. “You’re missing an important point,” she said. “Are they looking at a one-of-a-kind home? That makes a difference. Maybe their Dream House is a converted fire station or an old farmhouse in a sea of cookie-cutter homes. If that’s the case, they should take it. But if it’s similar to a lot of other homes, they should wait.”

    Update: This has been a great discussion. Thanks for contributing. Here’s a response from Greg, answering many common questions. (And here’s another.)

    Source: getrichslowly.org

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    You’ve found the ideal house in a great location. Before you start packing your moving boxes, make sure it’s a sound investment too. Most of us wouldn’t dream of buying a used car without a mechanical checkup. Yet with only a couple of 20-minute walk-throughs, we consider buying a home that’s much more expensive.

    That makes little sense to Joseph Zagone with CENTURY 21 Aspen Real Estate in Ruidoso, New Mexico. “An inspection is one of the best investments a buyer can make,” he says.

    Here’s what you should know—and what not to ask.

    What to Expect: The inspector will check all components in your house, leaving termite, septic system, and well inspections to specialists. (Here is a list of checkpoints.) A typical inspection costs $300–$400 and takes about three hours. Even if you’re an out of state buyer, arrange to tag along, Zagone says. You can see problems firsthand and you may learn valuable things such as where to find the water shutoffs.

    Why it Pays: Experienced do-it-yourselfer Rebecca Anderson didn’t think an inspection would find anything she hadn’t noticed—until the inspector opened up the furnace and discovered a cracked heat exchanger. The upshot? The sellers threw in half the cost of a new furnace.

    The Forbidden Question: Only one question is off-limits: “Should I buy this house or not?” That decision is yours alone. “I tell them to read the report completely and call me with questions,” says Gary Havens, owner of Good Havens Home Inspections in greater Minneapolis/St. Paul. “If I feel real comfortable about it, I’ll say I’d feel good about my kids buying it.”

    The Seller’s Role: There is nothing to keep a seller from being present for the inspection too, though Zagone doesn’t encourage it. He prefers to help his potential seller line up a handyman beforehand to repair any existing problems. It’s also wise to initiate a separate inspection of your own. Learn more on Ccentury21.com under the “Selling Advice” tab.

    Joe Zagone CENTURY 21 Aspen Real Estate, Ruidoso, New Mexico; www.joezagonerealestate.com

    HIS CODE: “I want to know about any problems and have them remedied before I place a house on the market. My goal is win-win negotiating, to sell a sound house with no surprises at the correct price.”

    OFF-HOURS: In the winter Joe serves as a certified ski instructor on nearby slopes. In warmer weather—even in winter—he makes good use of the seven golf courses in his area.

    WHAT GOT HIM INTO REAL ESTATE: “My dad wasan engineer and later a real estate agent in this area. I took economics and marketing in college and worked as a carpenter’s helper in the summers. It all added up to a great background for becoming an agent. I love it.” He’s been in real estate 30 years and has been the top-producing CENTURY 21® Professional Champion in New Mexico for seven of the last eight years. He and his wife, Joan—also a Sales Professional—have five children.

    Source: century21.com

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    Webinars and Training, Construction Tracking, MERS Certification, 100% Financing, HELOC Products; Jumbo, DSCR Program News

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    Webinars and Training, Construction Tracking, MERS Certification, 100% Financing, HELOC Products; Jumbo, DSCR Program News

    By:
    Rob Chrisman

    2 Hours, 59 Min ago

    The United States has about 336 million people. Did you know that 1/3 of them live within a 500-mile radius of Nashville? This is a cool site for anyone putting together a sales presentation for a real estate agent or a borrower. Speaking of geography, Wyoming has 23 counties, not 58 as the Commentary mentioned yesterday, further proof that this is, and always will be, produced by human hands! (Thank you to everyone who corrected me on that.) While we’re on selling, from a sales perspective, some LOs advocate adding value by subtracting complexity for clients. They are asking themselves, “How do I add value? How am I any different?” They are looking at their sales pitch, comparing bringing up pain (minimizing pain through minimizing paperwork) versus bringing up pleasure (“You’ll save time by working with me.”) And most are doing what they say they’re going to do: If you tell a potential client you’re going to call in two days, call in two days. Simple. Now go get ‘em! (Today’s podcast can be found here and this week’s is sponsored by Lenders One, one of the largest mortgage co-ops in the country with a diverse mix of 250+ member companies and providers of an end-to-end solution independent mortgage professionals trust to drive profitability and growth. Listen to an interview with Lenders One’s Justin Demola on the member benefits of joining a national alliance of independent mortgage banks, banks, and credit unions.)

    Lender and Broker Products, Software, and Services

    Ever feel like you can’t keep up with the latest tech trends? Having trouble separating hype from reality? Black Knight’s Dana Federspiel, SVP of servicing technologies and product innovation, knows these struggles and is helping lenders, servicers and mortgage industry professionals navigate the future. Dana is participating in a panel discussion during the USFNdustry Forum in Charlotte, North Carolina on the emerging trends in technology to help make more sound business decisions to support your business. Special focus will be given to artificial intelligence, machine learning, robotic process automation and more. Panelists will also evaluate options within the cloud computing universe that are becoming increasingly prevalent and affordable. If you need help cutting through buzz words to identify what really matters so you can remain successful both today and in the future, contact Black Knight.

    As lenders adapt to volatile mortgage rates, many are stopping to reconsider their servicing strategy. Do inconsistent mortgage origination volumes have you questioning what makes more sense: retaining servicing or selling servicing released? Seth Sprague, CMB, Richey May’s Director of Mortgage Banking Consulting Services (aka, resident servicing expert), outlines the 13 key trends and strategies in servicing including recommendations on how to make the right decisions for your business. Want more help defining the optimal strategy? You know where to find us.

    Thinking about boosting volume with construction loans? Think outsourcing. Homebuilder confidence is slowly improving, with sales of newly built single-family homes rising 4.1 percent in April, according to the NAHB’s latest numbers. If that’s piquing your interest in launching a construction loan program or scaling your existing offerings, CFSI Loan Management can provide the foundation you need to excel. “We’ve seen it time and time again,” says CFSI CEO Brian Mingham. “Outsourcing the trickiest aspects of construction lending, like budgeting, inspections, funding draws and disbursements, can reduce costs and unleash new business opportunities.” Imagine having all the complexities seamlessly handled by a team of seasoned experts, so you close more deals. CFSI has helped hundreds of lenders do exactly that for the past 10 years. To find out how they can help you, contact Brian Mingham (855-344-3052).

    We know the current market can be stressful. But fortunately, there’s a bright side: home equity. These products have been around for decades but in recent years have taken a back seat to cash-out refinances. Now this is changing as borrowers with historically low first mortgage rates and generationally high levels of tappable equity rediscover HELOCs and home equity loans. Leverage this historic opportunity with FirstClose Equity, the rapid end-to-end digital technology that processes HELOCs and home equity loans in days instead of weeks. FirstClose Equity is designed to enable lenders to dramatically elevate the experience they deliver to existing or potential customers while providing a streamlined workflow for processors. Learn more.

    “Looking for 100 percent financing with competitive pricing? All roads lead to ESSEX CORRESPONDENT and our Down Payment Assistance (DPA) product. Become a fully delegated and underwrite/fund your own 100 percent LTV purchase product. FHA 1st 96.5 percent LTV with two 3.5 percent 2nd mortgage options; 0 percent Forgivable or a 10 year Fully Amortized. No DTI limit, AUS approval required. FICOS as low as 600. One set of guidelines is available in 47 states. No first-time home buyer requirement. No 3rd party underwrite allows you to close as quickly as your team can originate. Email Kim Schenck or contact your Account Executive today and get signed up!”

    While the mortgage industry is flooded with rules, there is no rule prohibiting you from celebrating National Donut Day a day earlier! Plus, we Donut want you to miss an opportunity for a free Krispy Cream. Among other things we don’t want you to miss, MERS season is officially here, and early-bird pricing is available now! If your organization had more than 1,000 MINs [on the MERS® System] on March 31st, you must have the annual review completed by an “authorized MERS third-party reviewer. Donut fret, MQMR aced the MERS certification with flying colors! Donut miss this opportunity to save, pricing will increase through the end of the year. Donut wait until the last minute, as your annual audit report may be submitted anytime between now and December 31, 2023. Schedule a call to discuss your MERS Annual Audit requirement and lock-in the sweetest deal of the season!

    Sponsored Webinars and Training

    Join MCT today, June 1st at 10am PT, for its webinar discussing Strategies to Improve Profitability in the Current Market. In this webinar, MCT’s Phil Rasori and Paul Yarbrough will provide a current market overview and include actionable insights to improve profitability for lenders. Attendees will receive key hedging, trading, best execution, and MSR recommendations, as well as how to leverage technology to improve profitability and efficiency. MCT also recently released a new whitepaper on Mortgage Pipeline Hedging 101. The whitepaper reviews information on moving to mandatory, the strategy of hedging, the benefits of hedging, and how to determine if you are ready. Read the whitepaper to learn how you can use hedging as a tactic to mitigate risk and optimize profitability when selling mortgage loans.

    Lenders that support down payment assistance (DPA) are in high demand as a multitude of market conditions put a strain on affordability. To help more lenders win business by supporting consumers with DPA, the Mortgage Bankers Association is hosting the webinar Profit & Succeed with DPA on June 8 at 2 pm EDT. Best practice approaches to DPA lending will be shared by panelists Mark Hasson of Lennar Mortgage, Kate McDougall of Lake Michigan Credit Union and Down Payment Resource’s Veronica Khandelwal and Sean Moss. Registration is FREE for MBA members! Register now to turn up the heat with DPA programs this summer

    Investors and Lenders: Jumbo, Non-QM, and DSCR News

    Newfi Wholesale’s newly expanded Non-QM product suite offers 90 percent LTV up to $1.5M, loan amounts up to $4M, 2-1 buydowns, DSCR (no minimum ratio) 1-8 units, and alt-doc solutions that make sense for your borrowers. (For more information contact SVP, Non-QM Development & Strategy Dan Bayer or 925-584-0579.)

    Effective 5/15/2023, updates to Kind Lending’s Choice Jumbo Program are now live. See UW guide for full program requirements located in Kwikie. Additionally, based on FHFA’s announcement that it would rescind controversial loan-level pricing adjustments (LLPAs) for conventional borrowers with debt-to-income (DTI) levels at or above 40 percent, as of May 14th,

    Kind Lending will no longer be charging for a DTI >=40 percent on any FNMA or FHLMC loans. If you have an affected loan that is in process now, Kind Lending will automatically remove this price adjustment and will send out a new lock confirmation.

    United Wholesale Mortgage (UWM) is rolling out a suite of six fixed-rate jumbo products. “Brokers now have access to more competitive jumbo pricing, along with transparent investor guidelines and loan qualifications, giving them a leg up on big banks and retail lenders. This will give loan officers the flexibility to tailor a fixed jumbo loan to each borrower’s situation, helping them get into their homes faster, cheaper, and easier.”

    As a leader in Non-QM lending, Carrington Correspondent is working hard to deliver top-notch products to trusted partners. Nearly 2 dozen changes took effect on March 23, 2023, which hopefully will have a positive impact on your business and borrowers. Highlights include reduced FICO at which cash-out may be considered for reserves from 700 to 620 for all Non-QM loans. Investor Advantage (DSCR) changes include Resales within 6 months ok, Cash-out FICO requirement down from 640 to 620 and updated “1st-time investor” definition to no investment ownership within 36 months (was 12) – LTV benefit. Prime Advantage (FICO 660+) Now permits primary residences of 3-4 units (was 1-2).

    Carrington Prime Advantage for borrowers who just miss qualifying for traditional or jumbo financing. Carrington Flexible Advantage Plus for borrowers who have recently re-established credit scores above 620. Carrington Flexible Advantage for borrowers with recent credit events and FICO down to 550. Carrington Investor Advantage for seasoned property investors with no income documentation.

    Did you know there is no State Licensing Required in 20 States & DC? These states consider DSCR loans as commercial loans, so they are generally not subject to licensing requirements.

    Carrington Mortgage Services Investor Advantage (DSCR) loan may be the answer for your borrowers.

    Champions Funding recently announced an expanded business loan product to increase your offerings to real estate investors. Champs Accelerator Expanded (DSCR < .75) / No Ratio, part of its robust suite of DSCR loan options to fit your borrowers’ needs. Champs accepts transferred appraisals on DSCR and can get your loans closed quickly.

    Looking for more options for your borrowers? American Heritage Lending offers CondoTels & Non-Warrantable Condos programs.

    Angel Oak Mortgage Solution’s Investor Cash Flow mortgage (DSCR Loan) program now allows you to offer your clients financing for condotels. In addition to this new program enhancement, Angel Oak has implemented rate reductions across all loan programs. If you haven’t ran a loan scenario recently, today is the day to Get Started!

    Angel Oak Mortgage Solutions shared great news regarding lending services, now offering its DSCR loans to non-permanent residents. Angel Oak believes in the importance of helping everyone achieve their dreams of homeownership, regardless of residency status. If you have clients who are non-permanent residents seeking financing options, Angel Oak Mortgage Solutions would be honored to assist.

    Capital Markets

    What will we talk about without the periodic debt ceiling negotiations to consume the press? There’s always the Fed. The Federal Reserve’s Beige Book for May described overall economic activity as little changed in April and early May with four Districts reporting small increases and two reporting slight-to-moderate declines. Consumer expenditures remained resilient while manufacturing activity was flat or up in most Districts. Residential real estate activity improved, and employment increased in most Districts, while prices rose at a slowing pace.

    For LOs watching prequals stack up on desks across the country, we had a second consecutive bond price rally (rates down) yesterday due to both a sense that the House of Representatives would pass the debt limit bill and dovish Fed speak. Expectations for a June rate hike flipped from over 70 percent to below 30 percent after Fed Governor Jefferson said that a potential decision to hold the fed funds rate range steady at the June meeting should not be viewed as a signal that the hiking cycle is over. Philadelphia Fed President Harker said that he supports holding steady in June, but also acknowledged that more tightening could be done at subsequent meetings.

    Today’s economic calendar includes a series of labor market indicators ahead of tomorrow’s payrolls report. First up were job cuts from Challenger, Gray & Christmas for May: U.S.-based employers announced 80,089 cuts in May, a 20 percent increase from the 66,995 cuts announced one month prior, 287 percent higher than the 20,712 cuts announced in the same month in 2022. Next was ADP employment for May (278k, a huge jump). Weekly jobless claims were 232k with the back month revised higher, while Q1 productivity and unit labor costs were -2.1 percent and 4.2 percent, respectively. Later today brings S&P Global manufacturing PMI and ISM manufacturing PMI for May, April construction spending, Freddie Mac’s Primary Mortgage Markets Survey, and remarks from Philadelphia Fed President Harker. We begin the day with Agency MBS prices roughly unchanged from Wednesday’s close, the 10-year yielding 3.62 after closing yesterday at 3.64 percent, and the 2-year stubbornly high at 4.40 after the spate of jobs news.

    Employment

    “Button Finance, an industry-leading Home Equity mortgage lender, is seeking a dynamic and experienced Marketing Specialist to build out our correspondent lending program. The ideal candidate will have a strong background in creating innovative marketing strategies and a deep understanding of the mortgage industry. You’ll lead campaigns, drive customer acquisition, and enhance our brand visibility. Join a growing company that is constantly delivering top-quality customer service with HELOCs/HELOANs closing in under 12 days and 24-hour review times. Strong skills in digital marketing, data analysis, and exceptional communication are required. Join our team and contribute to shaping the future of mortgage lending. Please send resumes to Rose King.”

    Hey, did you hear that Planet is acquiring right-sized, financially solid distributed retail companies to expand its geographic footprint? This month’s acquisition of Platinum Home Mortgage Corporation brought 20+ branches and 100+ Professionals to Planet. After three decades together, Platinum’s producers were confident in their choice to join Planet because of its financial stability, competitive pricing, and strong leadership. Planet has solidified its position as a leading mortgage industry player by gaining the #9 spot on Inside Mortgage Finance’s overall lender leaderboard and the #4 spot among government loan producers. With the additional volume from Platinum’s power players, Planet expects to continue gaining market share (especially for government, where it’s at 5.2 percent now). To find out how you can profit from working with people who think bigger, work smarter, and perform better, contact Planet’s VP, Talent Acquisition Peter Briggs (435-709-6278).

     Download our mobile app to get alerts for Rob Chrisman’s Commentary.

    Source: mortgagenewsdaily.com

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    This guest post is from Naomi Mannino. Naomi is a freelance consumer personal finance and health journalist who reports on health, medical and personal finance news and how it will affect your life today. You can follow Naomi on Twitter @naomimannino.

    Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.

    Can you really buy a house at auction on the courthouse steps for $100? Do you have to spend hundreds of thousands of dollars as the house-flipping guys do on TV?

    My husband and I have just recently achieved our long-time goal of buying a foreclosed house, turning it into a rental property and creating a steady stream of income from the monthly rent we collect (at 17 percent profit on the initial cash investment every year). It’s neither quick nor easy, but it is a viable investment solution if you meet the five requirements below.

    1. You Need Cash

    I came into a small inheritance and thought hard about what to do with the money. I don’t know enough about the stock market, so I stayed away from that. Then there’s the low interest yet tried-and-true 5-year CD ladder I opened. But my husband and I have always wanted to buy a foreclosure on the courthouse steps and now we finally had the chance. Every county is a little different, but one thing is a constant in all foreclosure auctions: Cash is king, as certified funds are required usually within 24 hours of winning the bid and making any initial deposits required.

    2. You Need Experience

    We are not newcomers to buying houses at a low price, renovating them over a number of years and then selling at a higher price. My husband is a carpentry contractor, skilled in all the building trades, so we do all the work ourselves. That means we can look at a property and calculate in our heads time and expenses necessary to make the house desirable and rentable. We only want houses with good bones on a nice family street. They are not large and upscale and do not require granite counter tops and stainless-steel appliances (in fact, the best place to get the best appliances for less is to buy used through Craigslist.org).

    We don’t need to pay for inspections, surveys or other contractors unless it is for HVAC (air conditioning/heating) or septic system repair or replacement. We have learned this through small mistakes and overspending on the past five houses. Now we have a formula for choosing tile, vanities, cabinets, roof shingles, paint colors, and carpet because we have done this all before and know what works. If you have to hire contractors, you will pay twice as much or more for the entire renovation. (Foreclosure homes are usually severely neglected, if not destroyed, and need a lot of renovation.)

    In terms of the foreclosure auction itself, we had no experience, so we agreed we should attend many auctions and just watch how it works, learn what the rules are and who the major players are in our small county. Every county has seasoned investors who know exactly what they are doing, and it pays to watch and learn from them. I have learned to stay away from the big city auctions with deep-pocketed investor groups who buy up tons of houses, because you really can’t win a bid against them. In my small county, where you can pick up a 1,000-square-foot 2- or 3-bedroom house for $20,000 to $40,000 to flip or to hold and rent, there are just five regular investors plus us, all with different interests and focus areas.

    3. You Need to Research, Research, Research

    Our county publishes a twice-weekly list of the properties to be sold at the foreclosure auction held each Tuesday and Thursday at 11 a.m. A large portion of our time each week is spent physically viewing the properties and researching them online or in the courthouse books. We never skip these steps.

    After you identify a few houses in your chosen location or size range, research each offered property’s sales and tax history, as well as its current assessed value on the County Property Appraiser’s website, which are all public record. Note these details for the properties in which you are interested.

    Next, research each property owner (also listed on the County Appraiser’s property record page) online via the County Clerk of Courts Public Record Search because whatever that the owner owes regarding that property outside of the loans (liens, back taxes, etc.), you will owe when you purchase a foreclosure home.

    Finally, physically go and see each home you might be interested in (we never buy a property sight-unseen.) We’ve made the decision to stick to houses in our city proper so we are intimately familiar with the neighborhoods, not traveling more than a seven-mile radius from our home. We create a map of five or so houses that suit our specific purposes, and then we use our smartphone navigation to get us from house to house. From the outside, you can see the state of the roof, house structure, land, doors and windows and can look inside through any clear windows. Many times houses are so distressed they are open, in which case we can identify pros and cons regarding the inside: kitchens, bathrooms, flooring, lighting, air handler, walls and ceilings (but you didn’t hear that from me!). Bring a flashlight.

    4. You Need to Know the Opening Bid

    People get the idea they can buy a house at auction for $100 because they have heard that someone “bid on behalf of the plaintiff (the bank) for $100.” But auction buyers cannot counter the bank bid at $150 dollars. Instead, you need to start the bidding at the acceptable opening bid amount for each property, which is the lowest amount the bank is willing to accept for a property at the auction that day. And you can get this number by simply asking the bank reps, who are all at the sale. Getting to know these guys and gals on a first-name basis makes things even easier. Once you hear this number you will need to evaluate on the spot whether purchasing the property is financially feasible given your cash budget, current market conditions, the research you did on the property and your personal criteria and plan for the investment.

    Just because the property is offered for sale at public auction doesn’t always mean it’s a good deal. Often, the opening bid equals the judgment amount (the money the bank is trying to recover) or more and includes the original purchase price or mortgage plus a second mortgage, other home equity loans, interest and legal fees. The opening bid is ridiculously high compared with its current assessed value. These high-priced properties revert back to the bank because nobody bids on them. What you are looking for is an opening bid way below the current assessed value, and these are few and far between.

    We can afford to bid a couple of thousand higher than a flipper — an investor who plans to renovate and sell quickly, who needs every bit of profit he can muster out of each house now. I was told that’s how we won our first bid later by the flipper bidding against us.

    5. How to Bid

    Make sure you arrive early enough on auction day to go to the correct county courthouse office to register as a bidder and receive your bidder’s number card. Leave time to approach each bank rep for the opening bid necessary for properties you might want.

    When the auctioneer (the county courthouse employee whose job it is to administer the weekly foreclosure sale) arrives at the sale site, he or she will announce some specific rules about deposits for a winning bid. Then things move quickly. When the auctioneer announces a property (by case number, not by address) you want to bid on, hold up your bidder’s card and announce your opening bid. The auctioneer will repeat it and then open it to other bidders to counter. I learned from a very seasoned investor to only raise the bid by $50 each time. He says, “There’s no sense in bidding it up for myself or the other guy by going hundreds or thousands at a time. I work too hard for my money.” Always have a ceiling in mind, and stick to it. If it goes higher, drop out.

    After lurking on the edge of the auctions for about two months, we were finally ready to jump in with both feet. We got a bidder’s card, talked to the bank reps and found out that one house we saw and researched had an opening bid within our budget and under the assessed value of the home — so we bid on it! Two other investors counter-bid a few times, but we won the bid and got our first house at the foreclosure auction.

    But I must warn you: The fast pace of the auction and hopeful thoughts of steady, slow investment income can be addicting despite all the work involved! Any questions? Have you ever participated in a property auction?

    Source: getrichslowly.org

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    Auctions can be great fun, as well as places for genuine bargains. The key is to know how the auction process works and to take advantage of a bargain if it fits your plans.

    Prior to attending an auction, potential buyers should try to find out as much as possible about specific properties they are interested in. While most real estate auctions allow prospective buyers some inspection rights, direct contact with the administrator of the auction is frequently needed to arrange personal inspections.

    Know The Property

    Be sure to check the features, location and condition of the property. Attempt to discern the current market value of the property by looking at sales of comparable properties in the same area. Compare properties with the same number of rooms, particularly bedrooms and bathrooms, but be sure to allow for price differences due to “extras”-swimming pools or decks, garages, etc. Arriving at an auction well prepared will help you determine your bid price and even help you decide whether to bid on a specific property at all.

    A property is put up for sale through an auction format for any number of reasons – a foreclosure action, a tax deed application, a court-ordered sale, provisions in a contract, a divorce resolution, a provision to satisfy the needs of an estate, a dissolution of a partnership or trust or because the owner chooses the auction as a means to quickly dispose of the property.

    Get Familiar With Auction Process

    Real estate auctioneers employ a variety of auction formats and bidding procedures. Many factors play a part in determining which methods will be used. Following are some of the more common real estate auction formats and bidding procedures used today.

    • An absolute auction is an auction in which the property is sold to the highest bidder, regardless of how low that bid might be. This type of real estate auction typically attracts the most bidders since the public knows that the property has to sell.
    • A reserve auction also referred to as a minimum bid auction, sets a pre-determined minimum bid amount prior to the start of the auction.
    • A subject to owner withdrawal auction allows the seller to bid on the property for himself or herself or to withdraw the property from the auction outright if he or she does not like the amount of money bid.
    • A silent or sealed bid auction allows bids to be made in advance and submitted for review. No one knows what anyone else is bidding.
    • In the case of a foreclosure or other court-ordered sale, state laws generally establish a period of time over which the property must be advertised prior to the sale. This serves several different goals. The most important is to give ample notice to draw prospective buyers. The other main reason for such announcement of the auction is to give all interested parties sufficient time to react to protect their interests. However, even with advance notice and advertising, it is rare for an auction to draw many prospective buyers.

    Have a Talk….With Yourself

    Once you understand how the auction works, you need to ask yourself: Is this for me? It can be fun to bid, but it can be costly. Never bid because you get caught up in the fever of the moment. Some auctions can be very intimidating. It’s a good idea to go to a few as a spectator, so you get used to the speed of the bidding and terminology used.

    There will always be a degree of risk when buying a home at an auction, but with a little due diligence, potential homebuyers could save a lot of money buying in this manner.

    Excerpted, in part, from The Real Estate Investor’s Answer Book by Jack Cummings, a McGraw-Hill publication.

    Source: goodfinancialcents.com