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A New Path to Homeownership®

Jul 28, 2018 by

Home Partners of America Creates New Homeownership Opportunities for Consumers While Creating New Business Opportunities for Agents

July18_Home_Partners_300x420_300dpiNot surprisingly, renting skyrocketed in the U.S. in the wake of the housing crisis—and whether it’s due to continued financial restrictions, misinformation about options or other reasons, a decade later, a large swath of the population is still choosing to rent.

However, many of today’s renters would likely opt for homeownership given the proper guidance and the right circumstances—and this is exactly where Home Partners of America comes in. Founded in 2012 with the ambitious yet simple mission to make homeownership a reality for more people, the Chicago-based firm offers a simple solution to put people on the path to buying a home.

“When the company was formed, we were seeing many creditworthy people who still didn’t have access to mortgage credit,” says Home Partners Senior Vice President Ayoub Rabah. While credit standards were loosening, many were still falling slightly short when it came to qualifying for a home loan. That’s where the Home Partners Lease Purchase Program was born.

Through the program, a creditworthy renter can work with a local real estate agent to identify a home listed for sale, and if the home meets certain eligibility requirements, they can lease it from Home Partners with the right to purchase. Home Partners buys the house—at which time the agent earns a sales commission—and then rents the home to the tenant. The tenant signs a one-year lease agreement that’s renewable for up to four additional one-year periods (an additional two years in Texas), and at any point in that timeframe, the renter can buy the home. The price to buy the home is established upfront, as are set annual increases in rent if the lease is renewed—full transparency is a key part of the process. Should the home appreciate in value over the pre-agreed sales price in that timeframe, all the upside goes to the renter turned homebuyer.

According to Rabah, the Home Partners program is designed to help turn renters into buyers. “It’s not easy being a renter today,” he explains. “So many renters sign a lease and love the house, but when they go to renew the lease, the landlord says, ‘Sorry, I’m selling the house.’ Our program is trying to solve this problem for the consumer by giving them more transparency, more control, more choice and more flexibility.”

In addition to not being able to satisfy strict mortgage loan criteria, would-be homeowners are also stuck in the rental cycle due to a fair degree of post-housing bust caution, as well as a lack of knowledge about unique programs like Home Partners’ Lease Purchase Program. These factors and more have contributed to a swelling rental population, and Home Partners believes many of these renters would become homeowners if given just a little more time…and the right options.

That’s exactly why the Home Partners program is experiencing such great success. Working exclusively with real estate professionals to reach consumers, at press time, Home Partners has helped more than 19,500 people (and 9,000-plus pets!) find residence in over 10,000 homes in 40 markets across the country. The firm has formed relationships with an increasing roster of A-list real estate firms, including nearly 800 of the Coldwell Banker offices owned by NRT LLC, one of the nation’s largest residential real estate brokerages; Berkshire Hathaway HomeServices; and Leading Real Estate Companies of the World®.

Ayoub_PQ_p85According to Rabah, NRT LLC President and CEO Ryan Gorman was one of the first to really see the vision of the Home Partners program when it was launched in 2012.

“We thought Home Partners was a wonderful idea for consumers who might not understand that there was a path to homeownership that may be available to them,” says Gorman, but it still took some convincing to get him onboard. “I thought the idea sounded too good to be true. I kept thinking, ‘What’s the catch?’ Home Partners understood my skepticism and I met with the founding team and asked a lot of questions. They were very receptive and actually found our discussion quite helpful in further developing the program. At the end of the meeting, I was convinced.”

Rabah attests to the fact that what you see is what you get with Home Partners, where transparency is central to the program’s effectiveness and success. “We’re a cash buyer, we’re quick to close—typically 21 days or less. There are no hidden fees and no non-refundable deposits. Our rents do go up 3.75 percent a year, but that is all spelled out upfront so the renter knows exactly how much the rent will increase if they choose to renew the lease. The seller wins by selling to a qualified cash purchaser, the resident wins by renting a home they choose with the right to purchase the house at a predetermined price, and the agent wins by representing Home Partners in the purchase of the home and receiving a sales commission as they would on any other home purchase.”

Gorman agrees that the Home Partners program benefits all parties involved, but most importantly, it provides renters with an opportunity to fulfill their American Dream of homeownership…a cause at the heart of NRT’s mission.

When working with Home Partners, explains Gorman, “You’re not convincing someone to buy one house over another; you’re creating an opportunity for homeownership for those who may not have had one without this program. Our agents are trusted advisors, and they need to be able to offer solutions for everyone, no matter where they are in their lifecycle of real estate needs. Within every agent’s client database, there are people for whom homeownership is out of reach, whether due to credit constraints, job uncertainty or many other reasons. This program is designed to fill that gap. For us as a broker, the Home Partners program enables us to empower our agents with the best tools to serve consumers better.”

Rabah concurs. “Home Partners is aligned with the local agent’s mission of helping promote homeownership and being a solutions provider from a housing perspective,” he explains. “Some people are renters by necessity, and some by choice. Many agents and brokerages have focused on buyers and not renters because of the economics of the transaction. Now, the agent has the opportunity to earn a full sales commission on the Home Partners purchase and, at the same time, give that renter a potential path to homeownership.”

As renters look for ways to move into homeownership, embracing this market segment is a wise idea for real estate professionals—many just need the right guidance. As Gorman explains, “There’s a fair bit of misunderstanding and fear about homeownership. A lot of younger people watched what happened a decade ago, and homeownership looks scary from their vantage point. There’s a lot of apprehension, and beyond that, a lot of misperceptions. Things have changed so much in terms of who qualifies for a mortgage and the number of different products and programs there are that can help someone achieve their goals. A combination of fear and a lack of education are causing a lot of people to choose to rent for a period of time prior to homeownership.”

But this is where the real opportunity lies for savvy real estate professionals—an opportunity for them to truly shine as trusted advisors. And, according to Gorman, it’s up to brokers to help agents achieve that ultimate status.

Ryan_Gorman_PQ_p87“As a broker, our role is to make sure our agents are the most educated and informed,” he says. “It’s to our advantage to make sure our affiliated agents remain the trusted advisor by providing them with education, awareness and technology support.

“The fact that we’re making a program like Home Partners available to all affiliated agents, where we’ve done all the legwork and are making sure everyone understands it, shows that we’re truly trying to serve agents and make sure they’re equipped with everything they need to better serve consumers.”

While a lot of factors go into making the Home Partners program successful for real estate professionals and their clients, Gorman stresses that the people behind the program are a critical part of the equation. “They have their heart in the right place and are creating homeownership opportunities by making the program more efficient, more affordable and more accessible.”

Ultimately, early recognition of and involvement with innovative programs like Home Partners is critical for brokerages that want to stay relevant with both agents and consumers in today’s rapidly changing real estate environment. “We need to be looking over the horizon and staying ahead of what’s happening next,” says Gorman.

Home Partners: What You See Is What You Get
A rarity in today’s complicated, technology-centric business world, the Home Partners Lease Purchase Program is clear-cut, easy to follow and actually delivers on what it promises…with no catches! In a nutshell, here’s how it works:

  • Agents sign up to become a Home Partners agent and invite prospective residents to apply for approval at homepartners.com. To qualify, prospects must have an annual household income of $ 50,000+ and stable employment, and pay an application fee of $ 75 per household.
  • Once approved, agents help applicants find a Home Partners qualified home. Qualified homes must: be a single-family home or free-standing townhome; be located in an approved community; be priced between $ 100,000-$ 450,000 (although the maximum may vary in select markets); have a minimum of two bedrooms; be on a lot of three acres or less; and meet certain program criteria.
  • Once a qualified renter chooses a home, Home Partners purchases the home and then leases it to the renter; leases are initially for one year, with renewal options for up to an additional four years (two in Texas). The renter has the right to purchase the home at any point in that timeframe. Home Partners provides the resident with a pre-set price to purchase the home during each year of the lease term. There are no hidden fees or non-refundable deposits. If the home value appreciates above the agreed purchase price, the resident benefits from the appreciation by purchasing at the lower purchase price. If the value of the home doesn’t appreciate—or it declines—the resident can choose to simply continue renting by renewing the lease for the remaining years, or move out at the end of any lease term.
  • Home Partners and its subsidiaries serve as the property management company and handle all transactions and needs with the tenant.

For more information, please visit www.homepartners.com.

This article is sponsored content; however, Real Estate magazine retains editorial discretion.

Patterson_Maria_60x60Maria Patterson is RISMedia’s executive editor. Email her your real estate news ideas at maria@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Homeownership Rate Roadblocked

Apr 29, 2018 by

…And That’s Not a Bad Thing

With distressingly low supply and unprecedented price surges, the homeownership rate is stalling: 64.2 percent in the first quarter of 2018, according to the government—no improvement quarter-over-quarter, and negligible progress year-over-year. Is the nonstarter worrying?

In the first three months of 2017, the homeownership rate was 63.6 percent; in the last three months, it was 64.2 percent, the U.S. Census Bureau’s Quarterly Housing Vacancies and Homeownership Report shows.

“It may be tempting to read the lack of movement in the Q1 2018 homeownership rate as a negative, especially on the heels of a string of incremental quarterly gains throughout 2017…but expecting consistent growth in the homeownership rate is unrealistic, and holding steady in the face of headwinds that emerged in the first quarter—including rising mortgage interest rates and continued lack of inventory—should be considered good enough, at least for now,” said Dr. Svenja Gudell, chief economist at Zillow, in a statement.

“A national homeownership rate around the 64 percent level we’re at now is much more in line with historic averages, and feels sustainable given current conditions,” Gudell said.

“The homeownership rate continued its steady annual ascent to 64.2 percent in the first quarter of 2018, up from 63.6 percent this time last year, but unchanged from last quarter, in the face of fierce headwinds for homebuyers,” says Cheryl Young, senior economist at Trulia. “While demand is buttressed by healthy consumer fundamentals, such as low unemployment and robust job growth, chronically low inventory and skyrocketing prices plague the housing market.”

The challenging conditions are not deterring first-timers and Hispanics, with the homeownership rates for both segments up year-over-year. The under-age 35 homeownership rate was 35.3 percent in the first quarter of this year, up from 34.3 percent in the first quarter of 2017, while the Hispanic homeownership rate was 48.4 percent, up from 46.6 percent.

“The homeownership rate among those 35 years old or younger is up a full percentage point compared to a year ago, indicating first-time buyers are finding some success, despite difficulties,” said Gudell. “The Hispanic homeownership rate was up substantially from the norms of the past few years and is closing in on 50 percent. The black homeownership rate, while still lagging well behind other groups, held steady and maintained the gains made over the past year.”

“Millennials have emerged as the most dogged homebuyers, with those under 35 far outpacing the overall annual homeownership rate change, despite contending with the most vexing portion of the housing market,” Young says. “Millennials make up the largest share of those seeking starter homes, a portion of the market that saw inventory plummet 14.2 percent and prices leap nearly 10 percent year-over-year in Q1 2017.”

Though the general homeownership rate is roadblocked, the demographic drivers can be the motivator for new starter stock.

“The homeownership rate climbing out of its 50-year low should be seen as an opportunity for builders in the for-sale space,” says Young.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Hakan Karahan: Homeownership and Beyond

Feb 24, 2018 by

Hakan_KarahanVitals: HomeSmart First Advantage Realty
Years in Business
: 22
Size: 2 offices, 60-plus agents
Region Served: South Jersey
2016 Sales Volume: Approximately $ 50,000,000
2016 Transactions: 600-plus
www.hsfirstadvantage.com

Working out of his office in Cherry Hill, N.J., Hakan Karahan, president of HomeSmart First Advantage Realty, has been enjoying the real estate life for 23 years and is one of the most respected leaders in the state, ranking as a top-producing agent within a top-producing brokerage for many years.

“I love being out there helping people realize their American Dream of owning a home,” he says. “It feels great to see people when they first purchase their home.”

And Karahan’s commitment to helping others extends far beyond real estate. He came to the U.S. from Turkey as a youngster and started his first business at the age of 13. Another business followed—one he turned into a million-dollar company—and his entrepreneurial spirit has led him to start numerous others, many employing and assisting immigrants from his home country.

Karahan and his agents are extremely involved in charitable work, both in the local community and several countries around the world. One of the organizations has helped build and launch some of the best schools in the U.S., many of which were created in areas where public schooling fell severely short.

Even the new 22,000-square-foot building he recently opened in Cherry Hill includes nearly 7,000 square feet devoted to supporting industry-related companies—and possibly a future school—as he continues to look for ways to help those in need. Karahan adds that the firm has plans to open new offices in both Burlington and Gloucester townships over the next 6-9 months.

“We would like to reach the 300-agent mark by the end of 2018,” he says. “We are also working on the acquisition of several real estate offices in the North Jersey market.”

Karahan prides himself on offering a strong salary and tremendous technology to his agents and bringing them aboard the HomeSmart way.

“We bring agents into our firm and explain why the technology will surpass the traditional model. We have all the tools that will enable us to take this opportunity to the next level,” he says. “Sometimes, agents are cautious jumping on to our concept, so it seems like it will be a slow process, but we actually plan to be very successful in the near future.”

The company offers a great deal of training for its agents, as well as seminars on how to succeed in different areas.

“We hold a first-time buyer’s seminar three times a month in our offices,” says Karahan. “The agents are armed with a lot of knowledge about consumers and their wants and needs. In our seminars, we also educate consumers about buying homes.”

Karahan and his team are also constantly searching for new opportunities in lead generation for the firm’s agents.

“We check the current technologies available that will help differentiate us in the marketplace and implement them into our business model,” Karahan says. “Based on the current technology we have with HomeSmart, we do not need to update much.”

While experienced agents used to traditional real estate models are often hesitant to make the jump to HomeSmart, Karahan says that newer agents are seeing the advantages and maximizing the opportunity.

“Those agents who have been in the business for less than five years see the opportunity with HomeSmart, and those are the agent groups we target,” he explains. “We’d rather improve the agents we have and have them become top producers. Once the agents sign up with HomeSmart, they tend to stay.”

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Americans ‘Concerned’ About Homeownership in Light of Tax Bill

Dec 24, 2017 by

Americans are concerned about homeownership in response to the Tax Cuts and Jobs Act, according to new realtor.com® research. The legislation, awaiting President Trump’s signature (at press time), passed on Wednesday this week.

More than one-third (36.2 percent) of respondents to a realtor.com survey, conducted Dec. 18-19 prior to the passage, were “concerned” about being a homeowner; 17.2 percent were “very concerned.” Just one-quarter of respondents, roughly, felt “positive” or “very positive” about the doubled standard deduction, and only about half that (12.4 percent) felt “very positive” about the elimination of the second-home mortgage interest deduction (MID). The bill doubles the standard deduction, from $ 13,000 to $ 24,000 for married taxpayers and from $ 6,500 to $ 12,000 for single taxpayers, and removes the MID on second homes.

Additionally, the bill is motivating some to move quicker—or not at all. Almost 14 percent of respondents to the survey said they will list their home sooner, while 7.6 percent said they will hold off on their plans to sell. Close to 30 percent of respondents, meanwhile, said they will buy faster; 14.2 percent will buy a cheaper home; 12 percent will delay their plans to purchase; and 2.3 percent will house-hunt in another location.

Notably, 57.1 percent of respondents to the survey believed the legislation will not impact their plans to sell, and 22.9 percent believed it will not impact their plans to purchase.

The bill caps the MID on new loans for primary residences at $ 750,000—a cut from the existing $ 1 million, but higher than the $ 500,000 originally proposed by House Republicans. The bill also:

  • Eliminates the MID for home equity loans, unless the funds go to home improvements;
  • Limits the state and local income, property and sales tax deduction to $ 10,000
  • Preserves the exclusion on capital gains on home sales

“The bill will have a significant impact on the housing market and overall economy, so it makes sense that people are wondering what it means to them,” says Joseph Kirchner, senior economist at realtor.com. “Some house hunters—particularly wealthy buyers—will see an increase in after-tax income, making an already tough housing market even more competitive. This increased demand could drive prices up even higher than they are already. And changes in the deductibility of mortgage interest and state and local taxes could cause challenges for many homeowners.”

Earlier this month, realtor.com Chief Economist Danielle Hale estimated homeowners in California, Maryland, New Jersey and New York would bear the brunt of the changes. California, especially—with its high prices—would be hard-hit.

“High housing costs in California [make] it the state with the third-highest average mortgage interest deduction, behind Hawaii and the District of Columbia,” said Hale. “…Lower-priced housing markets will also eventually be impacted.”

“While the impact of this bill may not be as harmful in many parts of the country, here in California, where the typical home costs two-and-a-half times the national home price, homeowners and would-be buyers will be hit especially hard,” said California Association of REALTORS® (C.A.R.) President Steve White following the passage.

The National Association of REALTORS® (NAR) acknowledged the positives in its own statement.

“The final tax reform bill is far from perfect, but it’s been greatly improved for homeowners over previous versions,” said NAR President Elizabeth Mendenhall in a statement. “REALTORS® should be proud of the good work they did to help get us here. We generated over 300,000 emails to members of Congress through two calls for action and held countless in-person meetings with legislators, all of which helped shape the final product.

“The results are mixed,” Mendenhall said. “We saved the exclusion for capital gains on the sale of a home and preserved the like-kind exchange for real property. Many agents and brokers who earn income as independent contractors or from pass-through businesses will also see a significant deduction on that business income. Despite these successes, we still have some hard work ahead of us. Significant legislative initiatives often require fixes to address unintended consequences, and this bill is no exception.

“The new tax regime will fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors,” Mendenhall said. “That should concern any middle-class family looking to claim their piece of the American Dream.”

More than 2,300 participated in the realtor.com survey.

Stay tuned to RISMedia for more developments.

For the latest real estate news and trends, bookmark RISMedia.com.

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Gap Slims Between Low- and High-Income Homeownership Rate

Aug 13, 2017 by

Individuals with low incomes have historically struggled to become homeowners, cut off from the opportunity to not only build wealth through equity, but also establish an appreciating, long-term asset. New research now shows the homeownership rate in the lowest income tier is catching up to that of high-earners, edging closer since the onset of the recovery.

According to a study by Trulia, the homeownership rate of high-income households is 2.3 times the rate of low-income households: 77 percent versus 34.9 percent. The disparity, however, has thinned since 2012, when the homeownership rate of high-income households was 2.4 times higher than that of low-income households. The trend largely follows past housing cycles, with the gap narrowing during upswings and widening during downturns.

The study demonstrates the margin is more pronounced in major metropolitan areas, where the homeownership rate of high-income households is 79.3 percent, compared to the homeownership rate of low-income households at 27.9 percent—a 2.8 times difference. Some cities have a 4.4 times variance. The starkest inequalities tend to be where—among several indicators—households change homes more often and incomes are most disproportionate, such as Los Angeles, New Haven, Conn., and New York.

There is also a link between home values and the rate gap, the study illustrates, with the former closing as values become more evenly dispersed throughout a metro area (i.e., low-income households have a better chance of buying a home within their means when there is a higher variation in values).

Many other factors play a part in housing inequality, including the average age of a city’s population and homeownership tenure—and, as such, low-income households have improved homeownership rates depending on location, the study shows. Low-income households are more likely to own, for instance, in Daytona Beach, Fla., Long Island, N.Y., and Troy, Mich., where the homeownership rate of high-income households is just 2 times that of low-income households.

While little can be done about the demographic-based causes of the rate gap (e.g., age of population), study author Felipe Chacón, housing economist for Trulia, notes the potential for policy implementations to address the other issues driving inequality:

While demographic factors in some metros, such as a younger than average population, may be fueling unequal housing outcomes, along with a national trend that has been pointing to a gradually widening gap, there still seems to be plenty of opportunity for changes to local housing policy that could move the needle in a favorable wave for low-income groups.

For more information, please visit www.trulia.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

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