By Erica Christoffer, Contributing Editor, REALTOR® Magazine

  • By next year, Generation Y will outnumber Baby Bombers. And 96 percent of Gen Y has joined a social network.
  • If Facebook were a country, it would be the fourth largest in the world.
  • YouTube is the second largest search engine in the world and has 100 million videos.
  • Approximately 25 percent of search results for the world’s top 20 largest brands are links to user-generated content.

socialnomicsErik Qualman uncovered these startling statistics and more, which he lays out in his new book Socialnomics: How Social Media Transforms the Way We Live and Do Business (Wiley, 2009). Social media has created a fundamental shift in how people communicate, Qualman says. One only needs to look as far as Qualman’s Socialnomics YouTube video that went viral just weeks after its release, topping out at nearly 1 million views. He believes that soon people will not have to search for news, products, and services — but rather news, products, and services will find them via social media. Thus, in order to be successful in business today and in the future, the social interaction with potential clients must be embraced.


What was your first social media experience and what were your thoughts at that time?


Erik Qualman Erik Qualman 

QUALMAN: I joined MySpace, like a lot of people, in 2005. An 18-year-old introduced it to me and it was like she was addicted to crack. She’d always have to check her MySpace to see if she had more friends or to see in anyone commented. It was obvious to me that it was something big, especially for someone to be so ingratiated with it. I hopped on and it made sense to me right away. It wasn’t a surprise once Facebook opened up their platform to go beyond just college students that Facebook became so popular. Then the world was turned on its head when they opened up their application program interface to allow anybody to write applications for Facebook. That decision was so far reaching that it actually caused Apple, which has typically been a very closed environment, to open up and allow others the ability to code applications for the iPhone. That was really the game changer. 

What do you say to people who consider social networking just another fad?

QUALMAN: I like to throw out statistics at them, that’s why I made the video for YouTube. I mention, first, that the Pope is on Facebook, he’s on YouTube, he has an iPhone application – so I don’t think it’s just a fad. It’s fundamentally changing the way businesses have to work, to the point that companies are no longer going to be advertisers; they’re going to look more like content providers or party planners.

What I mean is that companies are not going to be spending money on a 30-second television spot as often. Rather, they’re going to provide free tools that are branded with their company brand, and in the long term it will get people excited to use their products. For instance, it might be a travel company that offers free language or translation tools.

There are four main steps to succeeding on social media:

  1. Listen
  2. Interact
  3. React
  4. Sell

How did you conduct the research for your book?

QUALMAN: I started looking at how people are using social networks, how they are succeeding, and how they are failing. I collected all the statistical data about the platforms people are using, where people are aggregating, what businesses are doing to leverage social media, and why consumers use these tools. The statistic that if Facebook were a country, it would be the fourth largest because they have 300 million users is significant. If you ask someone if they’d rather give up their Facebook or their e-mail, if they are from Generation Y, they’d rather give up their e-mail. That struck a chord with me.

You say in the book that youth under the age of 17 are seeing significantly fewer traditional ads. Do you think social media will completely replace traditional advertising at some point?

QUALMAN: I don’t think it will completely replace it; there will always be that need to see the visual fundamentals of traditional advertising. But it will become less. Social media is not an ‘or,’ it’s an ‘and’ in marketing. Dell recently released a statement that they originally had 40 people focused on social media. But they realized it’s not just the 40 people speaking for the company on social networks, it’s the entire company. Every person, whether it’s someone on the phone answering customer service, or any other employee, they have a Facebook account, they have a Twitter account, and they are representing Dell.

Everyone is engaged, and because humans run companies, you’re going to get that human touch in the dialogue between the consumer and the employees. The companies that listen the best, and are willing to make changes from interactions and feedback, those are the companies that are going to win in the long term.

Are you suggesting that social media is making businesses more honest?

QUALMAN: Yes, transparency drives honesty. It also drives what I call in the book, the elimination of social schizophrenia. For example, in the past someone could go to work and be the best employee during the week. But on the weekend, you have a whole different subset of friends who are party animals. Now with social media tools, it’s not possible to maintain those two different personalities – and the same holds true for companies. If a company claims to be the greenest company out there, but they actually hold a subsidiary in Dubai that’s dumping waste into the ocean, that’s going to be found out. In the end, the transparency is better for society as a whole – both on the individual level and on the company level.

How do people filter through rumors that can spread via social networks?

QUALMAN: Rumors will get sniffed out a little faster. If you think about Wikipedia works, one of the statistics I found is that only one out of 10,000 people contribute to Wikipedia. But since it’s on such a massive scale, it’s more accurate that Britannica, which has opened up its encyclopedia to be edited by people. If you have 20,000 people editing a post, it’s going to be more accurate than if three people worked on it. Social networks are like the world’s largest referral program on steroids.

For someone in real estate, could you name the main points they can take away from your book?

QUALMAN: The first point is really to listen to what’s being said out there. Go to and type in key words. Maybe you’re selling houses in Alfreda, Ga. Type in Alfreda and see what people are saying. Once you do that, start to slowly interact with these folks, softly at first because they don’t know you. Maybe someone is having trouble selling their house and they tweet about it. Send a message letting them know you’re here to help. Eventually you might develop a relationship and sale. It’s so important to listen to people’s needs.

Secondly, they can look at and to see what real estate articles are being bookmarked the most.

Next, they should really be true to themselves and figure out their core. Social networks are making the world more niche. In real estate, you’re going to have to find what you want to specialize in to differentiate you from someone else. You can’t be everything to everybody. And figure out which social networking tools will work for you and help connect you to your customer base.

Lastly, don’t be afraid of these tools. You’re only going to learn by jumping in. It’s better to fail in social media than do nothing, because at least you are going to learn something.FotoFlexer_Photo

FotoFlexer_PhotoWASHINGTON Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.

Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns or amended returns claiming the credit for homes they had not yet purchased. Those claims amounted to $139 million and it was not clear that the IRS planned to go back to verify that those purchases actually took place, he said.

George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.

George’s office said the IRS did not require taxpayers to provide documentation to substantiate the purchase of a home. They were told by the tax agency that it did not have the ability to accept such documentation electronically.

He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.

George said that while the IRS has since taken steps to tighten oversight, “some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit.”

Rep. John Lewis, D-Ga., chairman of the subcommittee, said he was concerned that the quick IRS response to the new credit came at a cost. “There are possibly hundreds of millions of dollars that have been paid to taxpayers who are not entitled to the credit,” he said.

The top Republican on the panel, Rep. Charles Boustany, Jr., of Louisiana, said that while the issue of extending the credit was not the purpose of the hearing, “every time Congress creates a new refundable credit … the incentive for fraud is magnified.”

Linda Stiff, IRS’ deputy commissioner for services and enforcement, agreed that “any time that there is an opportunity to receive cash back it tends to attract people that might have an intent to defraud the government.” The agency “recognizes that there is potential for both fraud and errors” when a new tax credit is enacted. She said the agency “will vigorously pursue those who filed fraudulent claims.”

The home buyer credit was a key element of the $787 billion stimulus package enacted last February. Under the measure, low- and middle-income first-time home buyers purchasing a home between Jan. 1 and Nov. 30 of this year could claim a credit of up to $8,000 on their 2008 or 2009 income tax return.

The Internal Revenue Service says it has processed claims from more than 1.5 million individuals or families. The General Accountability Office, in a report to the subcommittee, said that represented about $10 billion in tax revenue.

With the program scheduled to expire in a month and the housing market’s recovery still shaky, there have been various proposals in Congress to extend and expand it.

At one end, House Majority Leader Steny Hoyer, D-Md., says the program should be extended for a month while lawmakers take another look at how it is being run. On the other end, Sen. Johnny Isakson, R-Ga., with the backing of banking committee chairman Christopher Dodd, D-Conn., wants to extend it through next June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

Housing and Human Development Secretary Shaun Donovan, in testimony to Congress earlier this week, was noncommittal, saying the administration understands the urgency of the housing situation but wants to get a better grasp of the costs involved.

As of the end of September the IRS, according to the GAO report, has frozen more than 110,000 refunds pending civil or criminal examinations, identified 167 criminal schemes and commenced 115 criminal investigations.

Russell said the IRS has implemented computer programming to reject claims from people who have not yet purchased a new home. He also acknowledged that the agency has installed filters to catch claimants who had entered information on tax returns indicating they may have owned a home in the three previous years. Those could include deductions for home mortgage interest or real estate taxes.

Stiff stressed that those claims flagged as potentially erroneous may be found, on further examination, to be legitimate.

While the program has widespread support in Congress, there are growing concerns about the costs. The cause, said Sen. Jack Reed, D-R.I., “is a worthy one.” But “I hope we can find ways to pay for it.”

Critics have also characterized the program as a subsidy for people who would have bought a new home regardless of the tax credit. The National Association of Realtors has estimated that one-fourth of those who have claimed the credit, about 350,000, would not have purchased their homes without the credit.


Pending Home Sales on a Roll, Up for Sixth Straight Month

Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2% to 97.6 from a reading of 94.6 in June, and is 12.0% higher than July 2008 when it was 87.1.The index is at the highest level since June 2007 when it was 100.7.

Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said. “Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25% of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.

NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30, 2009 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible- it is taking approximately two months to complete home sales in the current market.

The Pending Home Sales Index in the Northeast declined 3.0% to 78.8 in July but is 4.7% higher than July 2008. In the Midwest the index slipped 2.0% to 88.1 but is 8.1% above a year ago. In the South, pending home sales activity rose 3.1% to an index of 103.8 in July and is 12.0% above July 2008. In the West the index jumped 12.1% to 112.5 and is 20.0% above a year ago.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said. “To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.

NAR’s Housing Affordability Index (HAI) stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”


The Meredith Mortgage Team


NAR: Housing Tax Credit Is Working
Consumers are just starting to see the first glimmers of a bright future for the housing market and the overall economy. It’s up to Congress to make that glimmer a reality by building on the momentum created by the $8,000 home buyer tax credit. That’s what National Association of REALTORS® First Vice President Ron Phipps, told the Senate Banking, Housing and Urban Affairs Committee Tuesday during a hearing on “The State of the Nation’s Housing Market.”

One of the key ways to do that is for Congress to extend the home buyer tax credit, “The data on the present home buyer tax credit show that the credit has had its intended impact—sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably,” Phipps said. He also pointed out that each home sale generates approximately $63,000 in additional economic activity, providing a tremendous economic boost to the national economy.

“But it is a fragile recovery, and now is the time to build on home sales momentum by extending the tax credit throughout 2010 and expanding it to all home buyers,” he said. The present credit, due to expire on November 30, cannot help new purchasers now who write a contract today—they won’t be able to close before the deadline, and will lose out on the credit, said Phipps. “Without congressional action now, the market and our national economy may freeze again—possibly as soon as this month.”

Make Loan Limits Permanent
Phipps called upon Congress to take action on a number of additional fronts to strengthen the recovery. First, make the FHA and Fannie Mae/Freddie Mac loan limits permanent; these are set to expire on December 31. “Maintaining current loan limits would ensure that families have access to low-cost financing to purchase homes and can refinance problematic loans into safer, more affordable mortgages,” Phipps said.

Secondary Mortgage Markets
In addition, Congress should continue the federal government’s involvement in the secondary mortgage market. “Without the government’s involvement in the secondary mortgage market, market participants will have no incentive to reach out to lower-income, creditworthy consumers. We must ensure that the housing market works in all markets and at all times, and that mortgage capital is provided to all potential and qualified purchasers in a way that promotes sustainable homeownership,” said Phipps.

FotoFlexer_Photo Give First-Timers the Direction They Need By G.M. Filisko | October 2009

Nervous. Arrogant. Cautious. Excited. Although these words seem contradictory, they sum up today’s first-time buyers. “First-time buyers are many things at once,” explains Paul Gorney, a sales associate at Sudler Sotheby’s International Real Estate in Chicago. “They’re scared to pay too much, excited to get a ‘good deal,’ and confused because of the number of homes and the situations in which sellers are selling, such as short sales and foreclosures. “First-timers need serious guidance,” he says. That guidance is especially critical for buyers who are trying to beat the Nov. 30 closing deadline to qualify for the federal first-time home buyer tax credit. (At press time, it was unclear whether the credit would be extended.) Here’s how to overcome three false assumptions that can derail first-timers. 1. “The housing market is weak.” First-timers have likely read every stitch of news about how homes aren’t selling. The trouble is that’s simply not true in many entry-level markets. “First-time buyers need to understand the environment they’re competing in,” says Dana Graham, CRS®, a sales associate at Prudential California Realty in Palos Verdes, Calif. “In my market, homes for first-time buyers priced under $800,000 are hotter than a $2 pistol. A few months ago, one had 21 offers.” Graham turns that fact into a positive. “If there are so many other buyers,” he tells first-timers, “you’re not dumb to be buying now.” 2. “I need to see all the options.” Many buyers proceed with excessive caution because of the endless inventory and their desire to find the perfect home. That can lead to paralysis by analysis, says Kathleen Alexander, ABR®, CRS®, a sales associate with Keller Williams Realty Boston Metro. Like Graham, Alexander uses facts to get buyers off the fence. “I make sure they’re armed with all the data they could possibly desire—which homes have sold in which areas and for how much—and I explain how to interpret the data,” she says. “I want them to have a firm grasp on the market. That takes away a lot of the hesitancy.” Graham stresses today’s low interest rates. “I tell them that rates now are late-1950s type rates,” he says. “They have nowhere to go but up. If they go to an entirely plausible 7.5 percent—which is still low—prices would have to go down by about another 20 percent to make up for the difference in their monthly payments.” Don’t forget to remind them about the first-time home buyer tax credit deadline. “I tell buyers the tax credit is truly $8,000 they’ll get back when they file their taxes,” says Sam DeBord, associate broker at RE/MAX Connected in Seattle. “If they normally get a tax refund, they’ll get an additional $8,000. It’s a gift from the government to get them started as home owners.” (Note: There are income limits; buyers should consult a tax professional.) 3. “I’ve found a bargain!” It’s true that affordability is at record levels today, but many buyers need help putting price into perspective. “They think they can get a really, really nice house for $50,000, but the average home in our market is $150,000,” says Craig Frooninckx, e-PRO®, GRI, a sales associate with DPR Realty LLC in Phoenix. “They perceive that there are really great deals, which is true. But a lot of homes in our area are stripped of all their fixtures. While a home may be listed for $60,000, buyers are going to need $40,000 in cash to replace the plumbing and restore the kitchen and bathrooms.” That can be hard for buyers to accept; Frooninckx often has to ferry them around so that they can witness the homes’ condition themselves. “We have to look at the really low-priced homes for them to realize they don’t want to do all that work,” he says. “Then I say, ‘Give me a shot at showing you a couple of houses I think you’ll like.’” Before you take on any first-time buyers as clients, do some due diligence. “I make them come in for a chat to make sure they’re serious and can qualify financially,” Graham says. “It’s a litmus test. If they’re not willing to spend an hour or two to talk about their needs and financial situation, they’re not serious.”


Jumbo Freeze Might be Thawing
October 15, 2009 by Robert Freedman · 4 Comments
Filed under: Economics, Mortgage Financing
By Robert Freedman, senior editor, REALTOR® Magazine
It’s still early but there are signs the availability of jumbo financing might be improving—although underwriting standards probably won’t ease any time soon. That means the days of creditworthy borrowers having a tough time getting financing for an amount over the conforming loan limit might be ending but they’ll still have to come up with a significant down payment and be prepared to show lots of documentation, like three years worth of tax returns instead of the customary two.

NAR Chief Economist Lawrence Yun says lenders are slowly getting back into the game because the climate of dread is lifting: Wall Street analysts and business executives have recalibrated their performance scenarios to reflect the greatly improved conditions among lower-priced homes (thanks to the home buyer tax credit and steeply discounted pricing). That in turn is creating a virtuous cycle as the improved scenarios help relax concerns over the economy, pushing up equities, which in turn creates the wealth that further increases confidence.

In other words, the improving lower-end housing market and the rising stock market are helping to push big financial services companies back into the business of loaning money rather than hoarding cash. As a result, it’s not just safe agency loans that lenders are willing to make (Fannie, Freddie and FHA) but also non-conforming jumbo loans. That helps further the narrowing of the interest rate spread between comforming and non-conforming loans.

I spoke with Las Vegas luxury home sales specialist Kenneth Lowman yesterday and he says the jumbo market has a long way to go before it’s back to where it needs to be, but, importantly, big loans are being made again. Earlier this year, that wasn’t so clear-cut.

“We recenty did a jumbo loan in record time,” he says. It was for a home listed at a couple of million dollars—obviously not an everyday deal for most salespeople—but it closed in just 22 days. Six months ago, he says, that never would have happened.

Yun predicts that financing for jumbo loans, second homes, and commercial real estate will show marked improvement by the middle of 2010. By late 2011 or early 2012, we might even see more non-agency, private-label loans securitized by Wall Street.

Yet the mortgage market by then will surely be different than it was during the housing boom, and in a good way. Buyers will be far more careful about staying within budget and lenders will be far more cautious about making loans to buyers who aren’t staying within budget.

Yet there remains a big concern: inflation. Although prices remain stable because of continuing slack in the economy (high unemployment, excess business capacity), once the enconomy starts growing again federal budget deficits will create inflationary pressure. The main way to head that off, says Yun, is for the government to produce a credible plan for getting the deficit under control.

Hear some more from Yun in an audio podcast he recorded earlier this week, mainly to talk about the need for Congress to extend the tax credit, and in his latest video interview, below, in which he talks about home-sale trends.

Buyers who are considering the purchase of a condominium should inspect the health of the home owner’s association before they close.

The seller should provide the buyer all financial documents relating to the association in time for an attorney for the buyer to review them before closing.

Here’s some advice from Leonard Baron, professor of finance at San Diego State University, about the information that the seller should consider:

  • Does the association budget include money for operating expenses such as water, lights, elevator maintenance, and landscaping?
  • Is there extra money set aside in a reserve fund for long-term maintenance? If there is an outside reserve study, that should be provided. If not, there should be adequate money in the reserves right now to cover 50 percent of the estimated cost of repairs over the next 30 years.
  • Do the condo’s expenses exceed revenues due to a high foreclosure rate or other reasons that owners’ debts go unpaid?
  • If there is a shortfall, does the association have a plan besides cutting back on services for making it up?

All the leading indicators say housing is definitely on the mend, economists reported in advance of the official release of several pieces of good news expected this week.

Bloomberg News surveyed 53 economists and asked them where they expected the numbers to fall. Here are their predictions:

  • Construction starts in September are expected to hit a 610,000 annual rate, the most since last November.
  • Sales of existing homes likely rose to a two-year high.
  • Because of fear of a relapse, the Federal Reserve is predicted to leave interest rates low for a few more months.
  • Building permits, a sign of future growth, probably rose to a 590,000 annual pace, also the highest level since November, the Commerce Department is likely to announce.

Here’s what we’ve been sharing with our/your clients! For those of you we are not yet working with, this is relevant information for you to communicate effectively to your clients… 



Since the Fed began purchasing mortgage bonds and intervening in the mortgage markets, interest rates on fixed rate mortgages have dropped a full percentage point below where they would be otherwise. Take out the Fed’s subsidy, and mortgage rates are likely to drift back up by at least one percent. 


To put it in perspective: A one percentage point increase in mortgage rates – from 5.25% to 6.25% – would cost an extra $127 per month and $45,730 in interest over the life of a $200,000 fixed rate 30 year mortgage. This is exactly what could happen in 2010 once the Fed stops buying mortgage bonds.


The way mortgage companies set their interest rates is by figuring out the price that Fannie Mae and Freddie Mac are willing to pay them for the mortgage. Fannie and Freddie set their price by figuring out what investors on the bond market are willing to pay them for the Mortgage-Backed Securities (mortgage bonds) that they issue. When the Fed stops buying mortgage-backed securities, the demand for these bonds will be much less, and mortgage rates will go higher.


Fed officials have been signaling for some time that their unprecedented interventions in the mortgage markets may come to an end or even be reversed once the economy begins to improve.  While we don’t believe the Fed will start selling mortgage bonds right away, we do believe that rates will start drifting higher in 2010 once the Fed stops purchasing mortgage bonds.  After all, it’s not every day that the Fed spends a whopping $1.25 trillion to subsidize mortgage rates.


Take out this enormous subsidy, and the average person with a $200,000 mortgage who refinances or buys a house stands to lose $45,000 over the life of their home loan.


Let us help you, help your clients get off the fence!  The window of opportunity to buy and refinance is here!  It’s NOW!  While home prices and rates are “artificially low”.  Lower interest rates = more home affordability.

The Meredith Mortgage Team closes loans clean and on time!  We dazzle our clients with the best service in the mortgage business….hands down!

Prediction: Homes Sales to Rise 11 Percent Sales of existing homes will rise 11 percent in 2010, and sales of new homes will climb 21 percent over this year, Mortgage Bankers Association Chief Economist Jay Brinkmann predicted in a speech Tuesday at the organization’s annual meeting. “We still see a concentration in the lower end of the market,” Brinkmann said. “The entry level homes are in demand.” Brinkmann also predicted further declines in existing home prices, with the median falling to $164,200 in the first quarter of 2010. David Stevens, commissioner of the Federal Housing Administration, concurred, adding that mortgage rates will rise to 5.6 percent by the end of 2010, though not enough of an increase to discourage a 12 percent increase in mortgage applications next year.