What does the term REALTOR®  mean?

REALTOR® is a registered trade name that may only be used by members of the NATIONAL ASSOCIATION OF REALTORS®, an organization with over 1,300,000 members who represent all branches of the real estate industry. REALTORS® subscribe to a strict Code of Ethics which governs their conduct.

This professional is committed to protecting and promoting private ownership of real property, establishing and maintaining high professional standards of practice, and creating unity in the NATIONAL ASSOCIATION OF REALTORS® organization and respect for the real estate profession.

If you are looking for professional real estate advice there is no substitute for a REALTOR®.  Make sure your representative is a REALTOR® member of the NATIONAL ASSOCIATION OF REALTORS®.

Things to Avoid Before Purchasing a Home

      Things to Avoid Before Purchasing a Home

The Effect of Changing Jobs

For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money.  For some homebuyers, however, the effects of changing jobs can be disastrous to your loan application.

How Changing Jobs Affects Buying a Home

Salaried Employees

If you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work.  Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.

Hourly Employees

If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.

Commissioned Employees

If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years.

Changing employers creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.

Changing jobs would negatively impact your ability to buy a home.

Bonuses

If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income.

Changing employers means that you do not have the two-year track record necessary to count bonuses as income.

Part-Time Employees

If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings.

Over-Time

Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.

Self-Employment

If you are considering a change to self-employment before buying a new home, don’t do it. Buy the home first.

Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.

If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home.

Things to Avoid Before Purchasing a Home

Don’t Move Money Around

When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it "easier," could make it more difficult for the lender to properly document.

So leave your money where it is until you talk to a loan officer.

Oh…don’t change banks, either.

11 Ways to Easily Boost Your Curb Appeal in a Weekend

If you're selling your home soon, ensure that prospective buyers will want to come inside by sprucing up the exterior before they drive by. And surprisingly, it doesn't have to be a time-consuming ordeal. Here are some easy improvements you can make to boost your home's curb appeal - all in just one weekend.

1. Paint or stain your front door. You probably won't even have to take it off the hinges. Installing a metal kick plate is another inexpensive way to freshen your entrance - it will cover years of wear.

2. Polish door hardware. Consider replacing the hardware if it's really worn or flaking. Don't forget the doorbell and lighting fixtures.

3. Replace worn welcome mats. A new welcome mat in a cheery complementary color can boost the front entrance welcome factor.

4. Install outdoor lighting. Consider solar garden lights to line a walkway, or a bright new porch light. This will make your home look more inviting in the evening when most buyers have the time to drive by.

5. Kill mold and mildew. Use a pressure washer to easily blast the siding, roof, deck and driveway clean.

6. Mow the lawn. Trim around flowerbeds and other stationary objects. Make sure your lawnmower's blades are sharp for a clean cut.

7. Get rid of weeds. Replace them with blooming flowers and add new bark or gravel for a fresh look.

8. Trim shrubs and tree branches. Cutting overgrown shrubs can open up your home's exterior. Be sure branches aren't creeping onto the roof. Show off appealing architectural elements by trimming around columns and windows.

9. Add a hanging flower basket. Install a stylish but discreet hook on your front porch and add an inexpensive hanging plant.

10. Clean gutters. If the downspout is badly damaged, consider replacing it with a decorative rain chain, which allows water to run down ornamental funnels into the ground drain.

11. Clean windows. Use an industrial cleaner to make your windows sparkle from across the street. Don't forget to wash the screens.

You don't get a second chance to make a first impression. Spending just one weekend to prepare your house for the market can pay off big in a big way. A great first impression can mean the difference between a quick sale versus having your home sit on the market for months.

Ask About Real Estate.net provides top real estate professionals, such as:  Real Estate Agents, Lenders, Home Inspectors, Appraisers, Title Companies, and much more.

For real estate advice from an expert check out www.askaboutrealestate.net. 

 More Space

Both indoors and outdoors, you will probably have more space if you own your own home. Even moving to a condominium from an apartment, you are likely to find you have much more room available – your own laundry and storage area, and bigger rooms. Apartment complexes are more interested in creating the maximum number of income-producing units than they are in creating space for each of the tenants.

If you are moving to a home for the first time, you are going to be very pleased with all the new space you have available. You may have to even buy more "stuff."

Get started today looking into your own home ownership by requesting professional real estate services at www.askaboutrealestate.net.

Freedom & Individualism

When you rent, you are normally limited on what you can do to improve your home. You have to get permission to make certain types of improvements. Nor does it make sense to spend thousand of dollars painting, putting in carpet, tile or window coverings when the main person who benefits is the landlord and not you.

Since your landlord wants to keep his expenses to a minimum, he or she will probably not be spending much to improve the place, either.

When you own a home, however, you can do pretty much whatever you want. You get the benefits of any improvements you make, plus you get to live in an environment you have created, not some faceless landlord.

What inprovements give you the most return of your investment?                                  Contact your local Real Estate Agent or Interior Designer to determine what improvement plans you should be considering to give you the most enjoyment and return of investment.

Need to find that local Real Estate Agent or Interior Designer?                                             Just request the services from a Top Real Estate Professional at www.askaboutrealestate.net.

 Forced Savings

Face it, some people are just lousy at saving money, and a house is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates.

Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate.. Over time, history has shown that owning a home is one of the very best financial investments.

What about today's market?                                                                                                            

Even with a slight downturn in real estate opportunities are everywhere.  Owning your own home is still the best investement you can have, and when real estate rebounds, as it always does, your home, once again, will be your best friend, strongest and safest investment.

Home ownership is where it is at!

  Stable Monthly Housing Costs

When you rent a place to live, you can certainly expect your rent to increase each year – or even more often. If you get a fixed rate mortgage when you buy a home, you have the same monthly payment amount for thirty years. Even if you get an adjustable rate mortgage, your payment will stay within a certain range for the entire life of the mortgage – and interest rates aren’t as volatile now as they were in the late seventies and early eighties.

Imagine how much rent might be ten, fifteen, or even thirty years from now? Which makes more sense? 

If home ownership is for you request services from one of our TOP Real Estate Professionals at www.askaboutrealestate.net

Income Tax Savings

Because of income tax deductions, the government is basically subsidizing your purchase of a home. All of the interest and property taxes you pay in a given year can be deducted from your gross income to reduce your taxable income.

For example, assume your initial loan balance is $150,000 with an interest rate of eight percent. During the first year you would pay $9969.27 in interest. If your first payment is January 1^st, your taxable income would be almost $10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever property taxes you pay in a given year may also be deducted from your gross income, lowering your tax obligation.

Home ownership has many benefits. 

Check with your Real Estate Agent and Lender to see if owning a home is a good goal for your future!

The Benefits of Owning Your Own Home

Your best investment . . .As a fairly general rule, homes appreciate about five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could earn over six percent with the safest investment of all, treasury bonds.

But take a second look…

Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is higher than most any other investment you could make.

If you are moving to a home for the first time, you are going to be very pleased with all the new space you have available. You may have to even buy more "stuff."

Are You Self-Employed?

REALTORS® Make a Difference in Your Community

REALTORS® not only help make the dream of homeownership a reality, they also help build better communities. In small towns and large cities across the globe, REALTORS® help shape and promote community values, giving their time and effort to noble causes. The initiatives highlighted offer examples of how REALTORS® and the NATIONAL ASSOCIATION OF REALTORS® are working to strengthen community bonds.

The Face of U.S. Currency

Legal Statement This phrase is essential and appears on every bill. It ensures the bill can be used to repay debts and provide a standard to measure what is owed.

Signature All currency is signed by the Secretary of the Treasury and the Treasurer of the United States. The people in these positions change, so not every bill has the same name on it. Look at a bill you have in your pocket. Whose names are on it?

Serial Number Serial numbers are in the upper right and lower left part of a bill. No two notes of the same series and denomination have the same serial number.

You probably know who is on the $1 bill, but do you know who is on the $50 bill? Below is a chart of who and what is on the front and back of bills printed in the United States.     Face Back $1   George Washington Great Seal of the United States $5   Abraham Lincoln Lincoln Memorial $10   Alexander Hamilton U.S. Treasury Building $20   Andrew Jackson White House $50   Ulysses S. Grant U.S. Capitol $100   Benjamin Franklin Independence Hall

		Federal Reserve Bank Seal U.S. money is distributed for circulation by the 12 Federal Reserve Banks. These institutions act as “banks for the banks.” To find out more about the what the Federal Reserve does, see The Fed: Our Central Bank.
Before 1996, a seal from a Federal Reserve Bank is printed on each bill. Beginning with the $100 bill in 1996, a general seal that represents the Federal Reserve System will replace individual bank seals. Currently, the letter on the seal matches the district number of that bank. The district number is located in the four corners of the bill. (For more on the changes made to newly issued currency see U.S. Currency — New Designs)

Chairman Ben S. Bernanke

At the U.S. Chamber Education and Workforce Summit, Washington, D.C.

September 24, 2007

Education and Economic Competitiveness

When I travel around the country, meeting with students, business people, and others interested in the economy, I am occasionally asked for investment advice.  Usually (though not always) the question is posed in jest.  No one really expects me to tell them which three stocks they should buy.  However, I know the answer to the question and I will share it with you today:  Education is the best investment.

Here at the U.S. Chamber Education and Workforce Summit, I don’t really need to convince you that, as an investment, education provides excellent returns, both for individuals and for society.  As executives accustomed to making hard cost-benefit decisions, you doubtless assign a high priority to the quality of your business’s workforce because you know that a key--perhaps the key--to your success is the capabilities of the people you employ.  To a significant extent, those capabilities are the product of education.  Here I am speaking not just of education acquired formally in classrooms before entering the workforce but also of lifelong learning that, yes, includes the formal classroom training that might first come to mind but that also includes early childhood programs, informal mentoring on the job, and mid-career retraining, to name a few examples.  And when I speak of capabilities, I mean not only the knowledge derived from education but also the values, skills, and personal traits acquired through education, which are as important as, and sometimes even more important than, the specific knowledge obtained.  These include such qualities as the ability to think critically, to communicate clearly and logically, and to see a project through from start to finish.

Today, I would like to offer a broad overview of education and its importance to our economy from my perspective not only as an economist but also as a one-time school board member, the spouse of a teacher, and the parent of two young adults pursuing higher education.  Although the United States has long been a world leader in expanding educational opportunities, we have also long grappled with challenges, such as troubling high-school dropout rates, particularly for minority and immigrant youths, and frustratingly slow and uneven progress in raising test scores and other measures of educational achievement.  If we are to make progress in meeting these challenges, we must be willing to actively debate their causes and continually experiment and innovate to find solutions.

The Benefits of Education
Education imparts significant benefits both to our society and the individuals who pursue it.  Economists have long recognized that the skills of the workforce are an important source of economic growth.  Moreover, as the increase over time in the returns to education and skill is likely the single greatest cause of the long-term rise in economic inequality, policies that lead to broad investments in education and training can help reduce inequality while expanding economic opportunity (Bernanke, 2007).  But the benefits of education are more than economic.  A substantial body of evidence demonstrates that more-highly-educated individuals are happier on average, make better personal financial decisions, suffer fewer spells of unemployment, and enjoy better health.  Benefiting society as a whole, educated individuals are more likely to participate in civic affairs, volunteer their time to charities, and subscribe to personal values--such as tolerance and an appreciation of cultural differences--that are increasingly crucial for the healthy functioning of our diverse society (Glaeser, Ponzetto, and Shleifer, 2006; Dee, 2004).

From a macroeconomic standpoint, education is important because it is so directly linked to productivity, which, in turn, is the critical determinant of the overall standard of living.  The Bureau of Labor Statistics estimates that, between 1987 and 2006, ongoing improvement in the education and experience of the U.S. workforce contributed 0.4 percentage point per year to the increase in nonfarm business labor productivity (U.S. Department of Labor, 2007), a significant amount.  These estimates are however conservative in that they hold fixed other sources of productivity growth, such as the accumulation of various forms of capital and the advance of technology; but workers’ skills certainly contribute indirectly to productivity growth by affecting these other factors as well.  For example, the state of technology is affected both by the creativity and knowledge of scientists and engineers engaged in formal research and development as well as by the efforts of skilled workers on the shop floor who find more efficient ways to accomplish a given task.  Managers who develop a new business plan or find new ways to use evolving technologies can also be thought of as adding to the “intangible,” or knowledge-based, capital of the firm, which by some estimates is comparable in importance to physical capital such as factories and equipment (Corrado, Hulten, and Sichel, 2006).

For individuals, the economic returns to education are substantial as well.  In 2006, the median weekly earnings of college graduates were 75 percent higher than the earnings of high-school graduates.  In turn, workers with a high-school degree earned 42 percent more than those without any diploma.¹  These differentials are large and have been growing; indeed, they have roughly doubled in the past twenty-five years or so.  The source of the widening wage gap between the more-educated and less-educated is nothing more complicated than supply and demand.  The demand for more-educated workers has been increasing rapidly, partly because the much more widespread use of computers and other sophisticated information and communication technologies in the workplace has increased the reward for technical skills.  The supply of highly educated workers has also risen.  At the start of the 1980s, 22 percent of young adults aged 25 to 29 held a college degree or more; by last year, that fraction had moved up to 28.5 percent.²  Nevertheless, the supply of educated workers has not kept pace with demand, thus generating an increased salary premium for education.  Because the wages of those at the top of the educational ladder have increased the fastest, increasing our investment in education can benefit not only individuals and society but also might narrow income gaps.

Education and the Challenges Facing America Today
The educational challenges our society faces should be considered in the context of three broad trends: the retirement of the baby-boom generation, the inexorable advance of the technological frontier, and the ongoing globalization of economic activity.

As the baby boomers, now ranging in age from their late 40s to early 60s, leave the workforce, their places will be taken by the smaller cohort of workers born in the mid-to-late 1960s and early 1970s.  As a result, the U.S. workforce--as a matter of simple arithmetic--will increase more slowly and is likely to become less experienced on average (Jorgenson and others, 2007; Aaronson and Sullivan, 2002).  In a broader sense, the ratio of working people to retirees will decline, meaning that those still working will, in effect, be supporting relatively more non-working people.  This year, there are about five working-age people (20-64) for every person aged 65 and older; by 2030, the ratio will be about 3-to-1 (Bernanke, 2006).  The slower expansion of the labor force, all else equal, implies slower growth of potential output.  More schooling for more of the workforce could help cushion the impact of this demographic transition on economic growth by boosting productivity growth.

Continuing advances in technology also put a premium on education.  Which jobs will be most affected by technology is difficult to predict, although some research suggests that sectors that now use information technology (IT) relatively less intensively, such as health-care and other service sectors, are likely to step up their use of software and IT services (Mann, 2003).  Regardless, better-educated workers are likely better prepared to adapt to new technologies as they develop (Doms, Dunne, and Troske, 1997).

Ongoing globalization of economic activity will also lead to continuing changes in the structure of the U.S. economy--including the composition of our output of both goods and services, and thus the structure of our labor force.  The world economy is benefiting from the expansion of trade and the rising productivity of countries abroad that are making great strides expanding both their infrastructure and the educational attainment of their workforces.  That can be good for them, and for us.  Importantly, our ability to reap the benefits of globalization will depend on the flexibility of our labor force to adapt to changes in job opportunities, in part by investing in the education and training necessary to meet the new demands (Bernanke, 2004).

Educational Attainment and Achievement: Where Do We Stand?
The United States has a long tradition of recognizing the significant social and economic benefits of providing high-quality education for as many of its citizens as possible.  The United States led the world, first, in expanding access to high-school education and, then, in the post-World War II era, access to college (Goldin, 2001; Goldin and Katz, 1999).  By 1966, about half of the workforce aged 25 and older had completed high school and about 10 percent had completed college.  By 2006, more than 90 percent of adults in the labor force had a high-school education and more than 20 percent held at least a bachelor’s degree.  However, most of the progress over the past forty years occurred in the 1970s and early 1980s.  Since then, for example, the high-school graduation rate for 25-to-29-year-olds has not increased, and the college completion rate has risen only modestly (U.S. Department of Education, 2007b).

One trend is particularly disappointing:  Both high-school and college completion rates for minorities continue to lag.³  Over the past ten years, the high-school completion rate for whites aged 25 to 29 hovered above 93 percent, while the rate for blacks of the same age stayed near 87 percent; the rate for Hispanics, though trending up over the period, was only 63 percent last year.  The gaps in college completion are wider.  In recent years, more than one-third of whites aged 25 to 29 had at least a bachelor’s degree, compared with less than one-fifth of same-aged blacks and around 10 percent of Hispanics.

Assessing where we stand in terms of educational achievement (how much students learn) is fraught with considerably greater difficulties than assessing attainment (how far students progress in their schooling).  And, the results of various metrics highlight both discouraging and encouraging elements.  The Department of Education’s National Assessment of Educational Progress shows the average reading levels of our high-school seniors have stagnated in recent years; however, our fourth graders continue to improve in reading, and both fourth and eighth graders have improved in math (U.S. Department of Education, National Center for Education Statistics, 2007b).  At the same time, some initial results from the adoption of state accountability standards suggest that they have had a positive effect on students’ test-score gains (Jacob, 2005; Hanushek and Raymond, 2004).  International comparisons of student achievement are even more difficult and present a mixed picture.⁴  Compared with students around the world, U.S. students still perform relatively well in reading and, in the lower grades, at math and science.  Older U.S. students, however, show less ability to apply math and science skills than their peers in other industrialized countries.

Lifelong Learning Can Help Us Meet Economic Challenges
In the past, the U.S. education system has responded to the needs of a changing economy, and I believe that as we address such challenges as the retirement of the baby-boom generation, advancing technology, and globalization, our education system will again make an important contribution to the adjustment process.  That means, of course, that we will have to grapple with difficult issues--how to boost educational attainment, particularly for minorities and immigrant youths; how to make more consistent and noticeable progress in raising academic achievement; and how to ensure that older workers have meaningful opportunities to refresh their skills.

What can be done so that our educational system will continue to play a significant role in supporting economic change?  In broad terms, we must begin by recognizing that learning is a lifelong process and that we have opportunities to improve education at every point along the way.  Many of these opportunities lie outside the traditional route of a kindergarten-through-twelfth-grade education followed by four years of college.  I’d like to comment briefly on what economists have found about the benefits of educational investments at different points in the life cycle.

Early Childhood Education
Building the foundation for lifelong learning from the earliest ages is crucial (Heckman, Stixrud, and Urzua, 2006).  Research suggests that the home environment is especially important and that children who start behind find catching up increasingly difficult (Heckman and Masterov, 2007).  Thus, the payoff from high-quality pre-school and home visitation programs is likely very high, especially for children born into poor or otherwise disadvantaged families.  Recent research--some sponsored by the Federal Reserve Bank of Minneapolis in collaboration with the University of Minnesota--has documented high returns from early childhood programs in terms of subsequent educational attainment and in lower rates of social problems, such as crime, teenage pregnancy, and welfare dependency (Burr and Grunewald, 2006).⁵  But early childhood education is only the beginning.  Positive results from programs such as Head Start dissipate without further high-quality schooling at the elementary and secondary levels (Garces, Thomas, and Currie, 2002).

Elementary and Secondary Schooling
Deciding what and how to teach students from kindergarten through high school and then evaluating our schools’ effectiveness in preparing students for the workforce and a lifetime of learning is a daunting task.  I will make only a few observations on the goals we should keep in mind as we explore ways to improve learning at the elementary and secondary levels. 

First, we should encourage experimentation and innovation.  By my reading, the research on K-12 education has, to date, yielded no easy answers to the questions of how to raise academic achievement and how to ensure that students finish high school well prepared to move on to more advanced study.  A wide range of approaches has been and is being explored:  smaller class size, school choice, charter school programs, accountability standards, flexibility in teacher certification rules, better teacher pay, merit-based pay, year-round schooling--the list is long and probably will get longer.  The size and diversity of our country, together with the fact that state and local policymakers retain significant discretion over how to structure their educational systems, provides us a natural laboratory for assessing the effectiveness of alternative educational strategies.  I view the debate about what works and what doesn’t to be a crucial part of discovering cost-effective ways to improve our educational system.

The business community has an obvious interest in how well our schools prepare students for a future in the workforce and should actively participate in the debate.  But we all have a stake.  Students at the elementary and secondary levels are being prepared not just for work but for life.  Such skills and acquired traits as critical and creative thinking, social ability, persistence, and satisfaction in accomplishment make not only good employees but good citizens as well.  Exposure to the arts and culture and experience in serving the community can help support the development of these broader, harder-to-measure skills, alongside more readily measurable cognitive accomplishments in reading, math, and science.  

Second, teacher quality is critical.  Studies show that student performance depends on putting high-quality teachers in the classroom and retaining them as long as possible (Aaronson, Barrow, and Sander, 2007; Rivkin, Hanushek, and Kain, 2005; Rockoff, 2004).  Indeed, many initiatives focus on linking students, especially disadvantaged students, with high-quality schools staffed by high-quality teachers.  High-quality teachers instill in their young students a desire to stay in school and seek more education later in life, and the evidence suggests that the quality of teaching might have the biggest impact on lower-ability students (Murnane and Steele, 2007; Clotfelter and others, 2006; Hanushek, Kain, and Rivkin, 2004).  Unfortunately, our most disadvantaged communities, the ones most troubled by high dropout rates, have difficulty attracting and keeping qualified teachers.

We must instill a desire among students to stay in school and to seek more education and training over their working lives.  Our elementary and secondary schools must provide students a strong foundation for a life of learning.  Although a wide range of remedial education programs exist, research suggests that they are more costly and less effective than a solid, sustained course of study through high school.  In particular, government training programs for disadvantaged youth have a rather disappointing reputation, particularly those that are less intensive and not well tied to labor market needs (Martin and Grubb, 2001; Heckman, LaLonde, and Smith, 1999).

A number of possibilities for improving the education of disadvantaged students seem worth exploring.  For example, several experiments suggest that smaller schools and smaller classes may help disadvantaged students (although the benefits of such programs for the general student population remain controversial).  Supplemental education, including after-school and mentoring programs such as Big Brothers Big Sisters, have been shown to boost school attendance (Grossman and Tierney, 1998).  Increasing school time--either through longer school hours or summer school--also has found some support (Jacob and Lefgren, 2004). 

Higher Education
In many ways, higher education represents the strongest part of the U.S. educational system, as demonstrated by the fact that students from all parts of the world come here to study.  Our institutions of higher learning are extraordinarily varied, ranging from large public research universities to small liberal arts colleges to community colleges and vocational schools.

The main business of our institutions of higher education is, of course, undergraduate teaching.  But unlike some countries, we do not separate research and undergraduate education; our advanced, graduate-level research programs are housed in universities with strong undergraduate programs.  Thus, our colleges and universities are important sources of research and development (National Science Foundation, 2007; Litan, Mitchell, and Reedy, forthcoming).  More than half our basic research--the foundation for breakthroughs that create new industries--is conducted at universities.  Additionally, higher education has embraced the broader mission of translating research into new products and enterprises; our colleges and universities account for 15 percent of applied research and development (National Science Foundation, 2007).  The innovations that begin on campuses are diffused to businesses through patents, start-up companies, and consulting arrangements between faculty and industry.

One great challenge in higher education lies in making sure our high-school graduates are prepared for it and have access to it.  With college enrollment rates having leveled off in recent years, much debate surrounds how we can move more students into higher education and keep them in school until they graduate.  Researchers have demonstrated a strong relationship between family income and college attendance.  Since 1990, nearly 80 percent of high-school completers from high-income families (the top 20 percent of income) have enrolled in college the next fall.  The proportion of those from low-income families who enroll in college the following fall has been moving up gradually, but it remains much lower--just over 50 percent.⁶  This discrepancy holds even for students classified as high achievers:  A longitudinal study of eighth graders in 1988 found that only 29 percent of those scoring in the top fourth of the group in math--but who were from families with low social and economic status--had completed a bachelor’s degree or more by 2000, while three-fourths of those from families with high social and economic status finished their undergraduate degrees (Fox, Connelly, and Snyder, 2005).⁷  Surely, high tuition must be one barrier to attending and completing college (Card, 2001; Kane, 1994), but it is not the only barrier (Dynarski, 2005).  Low-income students, in particular, are more likely to come from school and family environments that do a poor job of preparing them for a successful transition to college (Carneiro and Heckman, 2003).  This suggests that supplemental programs to help under-prepared college students could improve eventual college completion rates; unfortunately, the research on the benefits of such programs is mixed, which reinforces the need to improve educational achievement in regular high school classes (Bettinger and Long, 2005; Angrist, Lang, and Oreopoulos, 2006).

Community colleges have made a significant contribution to expanding educational opportunities.  Offering lower costs and more-flexible schedules, they now enroll almost one-half of U.S. undergraduates.  Attendance at one of these institutions is associated with higher wages, even if a degree is not completed.  Evidence suggests that each year of credit at a community college is worth almost as much, in terms of increased earnings potential, as a year at a four-year college.  The average student who entered, but did not complete, community college earns 9 percent to 13 percent more than the average for students who ended their education with high school.  Those who completed a two-year associate degree earn an even larger premium, 15 percent to 27 percent (Kane and Rouse, 1999).  And the earnings of graduates who started at two-year schools and transferred to four-year programs ultimately match those who begin their post-high-school education at four-year institutions (Gill and Leigh, 2003).  Community colleges play a constructive role not only for 18-to-22-year-olds but also for older adults, providing flexible programs for obtaining new skills, specialized training contracted for by individual businesses, remedial education, and adult enrichment.

Adult Education
Today we are increasingly recognizing that education need not, indeed should not, stop at the age of 22.  Economists have long argued that on-the-job training and learning-by-doing are significant components of the acquisition of human capital.  Research shows that the knowledge and experience gained over time through informal and formal learning on the job appear to pay off for workers and accrues particularly rapidly early in their careers (Altonji and Williams, 2005; Topel, 1991).  An extensive survey of firm-sponsored training a number of years ago found that 84 percent of employees received some kind of formal training while working for their current employer, and 96 percent received some type of informal training (Bureau of Labor Statistics, 1996).  With the advance of technology and the need to attract and retain skilled workers, I am certain that business-sponsored training will remain an important component of the management toolkit.

Upgrading skills through continuing education and training outside the job is also important, particularly in an environment in which workers can face displacement from international competition or technological advance.  Recognizing this possibility, many workers continue to acquire formal education later in life than was once traditional.  For example, almost one-fifth of students at post-secondary institutions of all types are at least 35 years old (National Center for Education Statistics, 2007a).  And, for older workers looking to retool their skills, classroom instruction has been shown to be effective.  For example, classroom training for displaced workers is estimated to boost future wages as much as for students of the usual school age, although the overall return on investment for displaced workers is lower because they have fewer remaining working years than do new entrants to the labor force (Jacobsen, LaLonde, Sullivan, 2005).  Similarly, studies of a number of welfare-to-work programs have reported long-term gains for those who participated in intensive basic education and vocational training (Dyke and others, 2006; Hotz, Imbens, Klerman, 2006).  Such results suggest that well-designed programs to assist workers who lose their jobs can contribute to cushioning the effects of globalization and technological change.

Conclusion
Let me close by reiterating that education--lifelong education for everyone, from toddlers to workers well advanced in their careers--is indeed an excellent investment for individuals and society as a whole.  Education fundamentally supports advances in productivity, upon which our ability to generate continuing improvement in our standard of living depends.  If we are to successfully navigate such challenges as the retirement of the baby-boom generation, advancing technology, and increasing globalization, we must work diligently to maintain the quality of our educational system where it is strong and strive to improve it where it is not.  In particular, we must find ways to move more of our students, especially minorities and students from disadvantaged backgrounds, into educational opportunities after high school.  To do that, we must continually experiment, innovate, and evaluate so that we can make rational decisions about what works and what doesn’t in education.  Because the quality of your workforces is so vital to the success of your businesses, you as business executives must participate fully in this process, along with other stakeholders--students, parents, teachers, and policymakers.  I’m encouraged that you are devoting so much energy and thought to this topic at this three-day conference.

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Footnotes

1.  The data are weekly earnings of full-time wage and salary workers aged twenty-five and older and are derived from the Current Population Survey, published by the U.S. Bureau of Labor Statistics. Return to text

2. The data are derived from the Current Population Survey, published by the U.S. Bureau of Labor Statistics. Return to text

3. The data are derived from the Current Population Survey, March and Annual Social and Economic Supplement, 1971-2006, published by the U.S. Department of Commerce. Return to text

4.  The results of two prominent international assessments--The Trends in International Mathematics and Science Study, conducted under the aegis of the International Association for the Evaluation of Educational Achievement, and the Organization for Economic Cooperation and Development’s Program for International Student Assessment--are summarized in the 2006 Digest of Education Statistics published by the U.S. Department of Education (2007a).  http://nces.ed.gov/programs/digest/d06/ch_6.asp Return to text

5.  More information on the Early Childhood Research Collaborative and copies of its research papers can be obtained from the website of the Federal Reserve Bank of Minneapolis, www.earlychildhoodrc.org. Return to text

6.  These data are derived from the annual October Supplement to the Current Population Survey.  They are summarized in the U.S. Department of Education’s Condition of Education 2007 available at http://nces.ed.gov/programs/coe/2007/section3/indicator 25.asp#info. Return to text

7.  Socioeconomic status was measured by a composite score on parental education and occupations and family income.  The study also found that the proportion of low-scoring math students from high socioeconomic families who completed at least a bachelor’s degree was 30 percent versus only 3 percent for those from lower socioeconomic families.  For those in the middle quintiles of both scores and family characteristics, the proportion was 21 percent. Return to text

How Professional Are You?

When it comes to being a respected professional, you have a reputation to protect. Bad behaviors by other agents can spoil the way you are perceived by your potential clients. Act unprofessional to another agent or sales associate, and your name might be smeared forever. By Michael J. Pallerino

Dorrie Freiman still thinks about the conversation. No matter how many times she replays it in her head, the comment made by a Realtor on the other end of the phone line doesn’t change: “You better pay me my commission.”

Paying a commission was never the issue. The real issue was that Freiman, director of marketing and sales at the Waterview Tower and Shangri-La Hotel in Chicago, couldn’t remember having ever met the Realtor. In fact, she never did. As it turned out, he mentioned the Waterview to a prospective client who had shown some interest in the property, and he wanted to make sure he was going to get his due.

“I couldn’t believe he said it,” she recalls. “He didn’t take his client to visit us. He recommended us. We get Realtors all the time that call, ask what the commission is and then hang up. At some point, you have to ask, ‘what’s driving you, your client or the money?’ We’re finding that more buyers are starting to research properties online or visit places themselves (including the aforementioned Realtor’s client), because they don’t feel they’re getting the help they need. We’re hearing this from the buyers. You have to add value to what you are doing.”

In the ever-changing world of real estate, value can be translated into myriad definitions. But there may not be a more important value than that professionalism, an area many agents and brokers agree needs improvement.

Ever-changing contracts. Misread and misunderstood terms and conditions. Missed appointments. Unreturned phone calls. Incorrect product descriptions. Ask real estate agents or brokers about the sometimes unprofessional conduct – intentional or not – of their colleagues in the field, and watch them squirm, roll their eyes or just plain get mad. Like most industries, the real estate market is not without its share of horror stories regarding agent professionalism. Some agents fall short of conducting business in a respectable manner, let alone above board.

A Miami agent with 30 years in the business tells a story of when she once worked on a contract involving a Realtor who presented himself as not only the nicest agent in the business, but one of the most knowledgeable. Well, let’s just say he was only nice. Midway through the deal, the terms and conditions of the contract he pulled together started to randomly change. To say that nothing added up was the mother of all contract negotiation understatements. To make matters even more complicated and frustrating, the Realtor had no idea what the veteran agent was talking about when she pointed out the discrepancies. In fact, he thought the whole situation was outrageous. When she told him that it appeared that he had never sold a home before, he simply nodded in approval, as if the situation wasn’t uncomfortable enough.

“At risk of sounding cliché, [agents should] following the golden rule,” says Connie Abels, owner and broker of RE/MAX NorthCoast. “[There must be an] understanding that to all of us, time is money. There are several things agents can do to treat each other more professionally. First, it’s respect. Respect that we all have schedules to be met, clients that are late, clients that call at the last minute, keys that don’t work, etc. Understand that anyone can make a mistake. It’s how the Realtor handles the mistake that determines a professional.”

Abel says the little things, and how you deal with them, right or wrong, are how your colleagues and clients will judge you. Take being late or blowing off an appointment, for instance. Most agents or brokers who have been in the business for a reasonable length of time have had this happen. You’d think a simple phone call explaining why you are running late or why you need to reschedule would be in order. Think again.

“I have been stood up by agents on several occasions,” says Ruby M. Ramsey, the Illinois State President of the Women’s Council of Realtors (Chicago Chapter) and owner of RG Ramsey & Associates. “Even after expressing to the agent that you will meet them at the property, if for any reason you can’t make it, just call. Needless to say, the agent doesn’t show up and doesn’t call. This happens often. I make sure I notify an agent in a timely manner, if I find the appointment needs to be cancelled. It’s the professional thing to do.”


Up to code
A paragraph in the “Code of Ethics and Standard of Practice of the National Association of Realtors” should be committed to memory by every real estate agent and broker. It reads: “The term REALTOR has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.”

Mabel Guzman, a director with the Chicago Association of Realtors, says all agents know what is ethical and unethical. “It’s that some have been able to get away with it and find it’s not that bad,” she says. “Until they get caught. I think a combination of lack of experience, lack of education and a lack of accountability are some of the reasons. But, the individual Realtor does not see how their actions impact the industry overall. Good experiences infrequently are communicated. One bad experience is communicated frequently over and over.


Show me the way
Bert Oliva, a renowned public speaker, author and corporate trainer, says a real estate agent cannot help anybody if he cannot help himself first. In almost every misstep and miscommunication, there is a method behind the madness.

“You cannot change the situation, you can only change yourself,” he says. “[When you look at why you have uneducated agents in the field] money is not the root of all evil, the love of money is. It’s time that agents team up and work together. It’s all about relationships and finding the answers to questions that you don’t have. It’s about mentoring. Everybody has one.”

RE/MAX’s Abels says professionalism comes down to understanding your respective role and how it plays into the big picture. “The roles of the buyer agent, the listing agent and, sometimes, how they get defined varies in different areas,” she says. “In the ‘burbs, the listing agent puts a lock box on the property and sometimes never interacts with the buyer agent at all. In the city, it’s more common for the listing agent to meet the buyer’s agent and their buyer for all inspections, the listing agent meets the appraiser, and the listing agent meets the buyer’s agent for the final walk-through.”

For many agents, and especially their clients and colleagues, the bottom line is respect. This is a major factor when it comes to the number of inexperienced agents in the field. “The very first thing a new agent should do is to offer to take a lender to lunch under the premise that the lender needs to give a mortgage lesson 101,” Abels says. “And then, the new agent should take a different lender to lunch, to learn from that lender. I tell my new recruits that if they don’t understand how to finance the buyers, they will not succeed. Understanding the loan is as critical to our business.”

Guzman says the easiest step – asking for advice – is usually the toughest for new agents to do. “They should pull the other agent aside and say, ‘I’m new and I may ask you a lot of questions,’ or ‘I may not do everything right, so please let me know if I screw up.’ Cooperation doesn’t only apply to compensation.”

The steps to being professional are not complicated. In the end, it’s just about using common sense and decency. Freiman believes professionalism should be the code to which all Realtors and brokers adhere, first and foremost. “We set a very high standard for ourselves in our building,” she says. “Our architects, our designers...we except and demand the best from everybody. That’s the way it should be for everybody. We need the brokerage community. They are the heart and soul.” C.A.


CONTACTS:
Connie Abels
Broker
RE/MAX NorthCoast
773.353.9180
connie.abels@gmail.com

Dorrie Freiman
Director, Marketing and Sales
Waterview Tower &
Shangri-La Hotel, Chicago
312.558.9100, ext. 13
dfreiman@waterviewtower.com

Mabel Guzman
Director
Chicago Association of REALTORS
312.214.5539
mguzman@chicagorealtor.com

Bert Oliva
Bert Oliva Enterprises
305.774.3438
bert@bertoliva.com

Ruby M. Ramsey
Illinois State President, Women’s Council of Realtors (Chicago Chapter)
Broker-Owner, RG Ramsey & Associates
773.873.3484
r21ramsey@aol.com

Be Smart, Safe When Showing a House

By Ginger Downs, RCE, CAE, IOM
Chief Executive Officer
Chicago Association of Realtors

In January 2001, when I was serving as executive VP of the Seattle-King County Association of Realtors, one of our agents was brutally murdered while showing a home in an affluent suburb of Seattle. Mike Emert was a happily married man, and he and his wife Mary Beth both enjoyed successful careers in real estate. His murder sent a shockwave through both the Seattle community and the real estate industry. No suspect was ever found.

As Realtor Safety Week approaches (Sept. 9-15), I am reminded of Mike’s senseless and tragic death and remember the important role that personal safety must play in a Realtor’s work. After Mike’s murder, the Real Estate Safety Council, with which the Seattle-King County Association of Realtors became closely involved, spent many hours creating an intensive safety program, “Be on the Safe Side.” Our goal was to provide resources to help brokers, Realtors, and association executives keep themselves safe on the job.

Unfortunately, courses and programs alone are not always enough to protect us.

Mike’s death was not an isolated incident in a far away place. In the year following Mike’s murder, 19 real estate professionals were victims of fatal violent attacks. More recently, in May 2007, a College Park, Maryland-based Realtor, Samuel D’Costa, was found shot to death in the basement of the home he had intended to show. No suspects are in custody, and the police are still investigating to determine a motive. And just this summer, right here in Chicago, at least four women were victims of separate attacks in their affluent Lakeview neighborhood, both in broad daylight and late at night.

My goal is not to scare you with these stories, but to make you realize that your safety is never something to take for granted. These incidents have prompted Realtors across the country to reexamine the ways in which they protect themselves while showing homes.

According to a survey conducted by the National Association of Realtors (NAR) in 2003, 67 percent of those Realtors surveyed had concerns about their on-the-job safety. NAR provides a number of tips and resources on their Web site, including handouts you can distribute amongst your colleagues, safety presentation talking points, and a list of 52 valuable safety tips.

Some of these tips are:
• Meet all new clients at the office and verify their identities
• Whenever possible, avoid being at the office alone
• Take a personal safety course
• Always keep a mobile phone handy; program emergency numbers into speed dial
• Ask the local police department to have a squad car drive by during open-house hours
• Check the cell phone’s strength and signal before an open house
• Upon entering a house for the first time, check all rooms and determine several “escape” routes
• Once inside, turn on the lights and open the curtains
• When prospects begin to arrive, jot down their car descriptions, license numbers and physical descriptions
• Notify someone in the office, or a friend or relative, that you will call every hour, and to notify police if no call is made.

There are three additional pieces of advice
that I would like you to offer:
1. Ensure that all personal information is up-to-date with your supervisor or managing broker. Keep your supervisor aware of any health conditions you may need special assistance for and make certain your next-of-kin’s contact information is current, so that we may get in touch with them quickly in the event of an emergency.

2. Institute office or neighborhood-specific safety policies for your office and agents. While the NAR’s suggestions offer guidelines for protecting yourself, it is important that you and your colleagues customize a plan that works for the neighborhoods and clients that you service. Consider enrolling your entire office in a safety course together. If showing a property alone at night, bring another agent along. When showing any property, make a photocopy of the client’s driver’s license before taking them to the site.

3. Follow common sense guidelines. This may seem like it goes without saying, but following your gut instinct can keep you out of harm’s way. Park your cars in well-lit areas and make sure you aren’t blocked in by other vehicles. Keep 9-1-1 on speed dial.

Mike’s death in 2001 was heartbreaking to our entire community and is something that I still struggle to comprehend six years later. Please take some time this month to consider what actions you and your colleagues can take to make yourselves as safe as possible in all aspects of your jobs.

The Chicago Association of Realtors, “The Voice for Real Estate in Chicago” since 1883, represents the business interests of more than 17,000 real estate professionals in the Chicagoland area. The Chicago Association of Realtors is led by a voluntary board of directors, elected by the membership, who works in partnership with a professional administrative staff.

What are the most difficult of selling new construction?   by Chicago Agent Magazine

Deborah Greenberg
Koenig & Strey GMAC
River North

Selling new construction can pose many challenges. From long delivery times to buying from a floor plan, buyers are being pulled in many different directions. With the large number of new developments and a high inventory of resale units, there is a lot to choose from. Nice finishes, functional floor plans and amenities, both neighborhood and building, provide sellers with the tools to overcome the challenges of selling new construction.


Ismael Perez
Exit Team Realty
Roscoe village

When it comes to new construction, there are three things that require meticulous management. First, it’s critical the builder/developer produces a product that is in high demand from home buyers. Second, a carefully thought out pricing matrix is paramount, especially in our present market. Finally, delivering the new construction product on time and in completed condition solidifies positive feelings toward the builder/developer and advocates strong brand position for the agent and brokerage.


Linda Landsell
Coldwell Banker Residential Brokerage
Lake Forest

New construction appeals to buyers who want to move immediately, without waiting for renovations to finish. However, marketing these houses can be tricky. Agents must make the home feels warm and inviting, and showcase the livability of each room. Depending on the seller’s budget, this can be done by staging the home with furniture and props, or by adding choice floral arrangements for color and depth. Another challenge is educating buyers to the costs of high-end finishes commonly found in new construction, such as moldings, appliances and plumbing fixtures. Buyers often have unrealistic expectations with what features will cost, and it is the agent’s job to anticipate this and forewarn them before they begin their search.


Matthew Kombrink
RE/MAX Excels
Geneva

Right now, in our area, there is just as much greater supply of existing inventory, and a substantial part of that inventory is still relatively new, already landscaped and improved and have gone through the builder punch list phase. When builders/developers purchased the land years ago, the market was different, and their pricing was based on the higher values in the market back then. When you compare that to the falling prices in the existing home market, you end up with less demand for the new construction.”

Sam Zell On The Credit Crisis: It's Not That Bad
Knowledge@Wharton 09.21.07, 12:00 PM ET

How can I get a quick sale, particularly in a slow market?

One of the most important things to consider is price. You may want to reduce the price of your home or, at the very beginning, set it at a low price that will generate more buyer interest. Cash is often an incentive, both for the buyer as well as the agent. You could offer the buyer a $1,000 to $2,000 decorating rebate upon closing the deal. It is also not uncommon to offer the selling agent a $500 bonus. However, some brokers ? who supervise agents and run real estate offices ? may prohibit such incentives, as do some Realtor boards. Check to find out. Other common incentives: paying for the property inspection and warranty policy and getting your home preliminarily approved for FHA and VA loans, thereby making it more attractive to a larger number of buyers. Contact a lender who writes FHA-insured and VA-guaranteed loans.

Are there tips for selling a vacant home?

Yes. Once furniture is removed from the home, you will notice all kinds of imperfections you never paid attention to before ? rips in the carpet, holes in the walls, and dinginess. In an empty house, everything stands out. What you see is what potential buyers will also see. So you may need to paint, tear up old carpet, and replace the kitchen floor. To get rid of the ?empty house? feeling, leave a few pieces of furniture behind ? simple things like a lamp, chairs, and a table will do. Pay special attention to maintenance. Someone will need to dust and vacuum, leaves will need to be raked, and the grass cut. In the winter, consider having the heating system shut down and drained to save money. But keep the electricity running because lights will be needed to show the house. Watch out for that musty smell, particularly during the summer months, that settles in from having the windows sealed and locked. And beware of pests such as mice, squirrels, ants and bats.

Should I sell my home first or wait until I have bought another home?

This is a tough decision, but the answer will depend on your personal situation, as well as the condition of the local housing market. If you put your home on the market first, you may have to scramble to find another one before settlement, which could cause you to buy a home that does not meet all your requirements. If you cannot find another home, you may need to move twice, temporarily staying with relatives or in a hotel. On the other hand, if you make an offer to buy first, you may be tempted to sell your existing home quickly, even at a lower price. The advantage of buying first is you can shop carefully for the right home and feel comfortable with your decision before putting the existing home on the market. On the flip side, the advantage of selling your existing home first is that it maximizes your negotiating position because you are under no pressure to sell quickly. It also eliminates the need to carry two mortgages at once. Talk with your agent for advice. Discuss the pros and of each and whether certain contingencies written into the contract can ease some of the pressures.

What should I do to prepare my home for sale?

Start by finding out its worth. Contact a real estate agent for a comparative market analysis, an informal estimate of value based on the recent selling price of similar neighborhood properties. Or get a certified appraiser to provide an appraisal. Next, get busy working on the home?s appearance. You want to make sure it is in the best condition possible for showing to prospective buyers so that you can get top dollar. This means fixing or sprucing up any trouble spots that could deter a buyer, such as squeaky doors, a leaky roof, dirty carpet and walls, and broken windows. The ?curb appeal? of your home is extremely important. In fact, it is the first impression that buyers form of your property as they drive or walk up. So make sure the lawn is pristine ? the grass cut, debris removed, garden beds free of weeds, and hedges trimmed. The trick is not to overspend on pre-sale repairs and fix-ups, especially if there are few homes on the market but many buyers competing for them. On the other hand, making such repairs may be the only way to sell your home in a down market.

When is the best time to sell a home?

The best time to sell is when you are ready, or when you must. That is, when you have outgrown the space in your current home, or you prefer to trade down to something smaller. Perhaps your martial status has changed, which necessitates a move, or you need to relocate for a job. Market conditions also play a role, as do seasonal conditions. For example, your chances of getting top dollar for your home are more likely in a seller?s market, when demand outweighs supply, than in a buyer?s market. Local and national economic factors also may dictate when to sell. If a major employer in your area is laying off workers, it may not be a good time to put your home up for sale. People will be cautious about buying when the future seems so unpredictable or bleak. Most agents agree the best time to sell is in the spring. This is when the largest number of potential buyers hit the market. Your home is likely to sell faster and at a higher price, although sales begin to pick up as early as February and start to slack off in July, the slowest month for real estate transactions

Fed Lowers Rates - Press Release

Release Date: September 18, 2007

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.  Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time. 

Readings on core inflation have improved modestly this year.  However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully. 

Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook.  The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.  

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.

Countdown to the Fed

The Fed should cut rates! No, it shouldn't!

Countrywide, the mortgage mess and you

Mortgage mess claims new victims

Countrywide financing helps set off a big rally

The Dow jumps more than 151 points as big-cap stocks rally. Countrywide Financial shares soar on news of new financing. GM jumps on an upgrade. McDonald's 50% dividend boost may cause others to follow suit. Crude oil closes above $80.

Stocks, especially large-capitalization stocks, were shooting higher today, led by big gains for General Motors (GM, news, msgs), Countrywide Financial (CFC, news, msgs), McDonald's (MCD, news, msgs) and Target (TGT, news, msgs).

The gains came even though crude oil closed above $80 a barrel for the first time ever.

GM was up more than 8.5% to $32.82 after a Citigroup analyst upgraded the stock to "buy." Countrywide, the nation's largest mortgage lender, jumped about 9.8% to $18.08 after it announced $12 billion of new financing. McDonald's shot up 6.4% to $54.47 after boosting its dividend 50%.

Target added 2.8% to $64.46 amid news that it might sell its credit card business, which has $7 billion in receivables.

At 2:55 p.m. ET, the Dow Jones industrials had jumped 151 points, or 1.1%, to 13,442. The Standard & Poor's 500 Index was up about 15 points, or 0.9%, to 1,486, while the Nasdaq Composite Index showed only a 0.5% gain, or 16 points, to 2,608.

Crude had bounced around $80 all day and finally closed at $80.09 after Hurricane Humberto knocked out power at three oil refineries in Port Arthur, Texas. But traders still see crude falling back once hurricane season eases.

GM was the Dow leader and second in the S&P 500, behind Countrywide. McDonald's was second among 30 Dow stocks and third among S&P 500 stocks.

Much of the buying was the result of traders who didn't want to be short in advance of the Federal Reserve's meeting on Tuesday. The Fed is widely expected to cut its federal funds rate from 5.25%, where it's been for a year, to 5% or lower.

The gains were broad, with 27 Dow stocks and more than360 S&P 500 stocks higher this afternoon.

What's not to like about the rally?

There were two modest downsides to today's rally.

 

First, volume was light again with New York Stock Exchange volume on track for possibly 1.3 billion shares. Nasdaq volume might hit 1.7 billion shares.

Techs were weak, in part because of Alcatel-Lucent (ALU, news, msgs), one of the biggest telecommunications companies, said its third-quarter operating profit would be about break even. The company said talks with wireless companies suggest they will be trimming back capital spending for the rest of the year. Alcatel was down 8.4% to $9.20.

Tech stocks overall were weak with the Philadelphia Semiconductor Index down slightly at 489.60. Chip giant Intel (INTC, news, msgs) was off 0.6% to 25.30, one of three Dow stocks to show a loss today. The Amex Networking Index ($NWX.X) fell 1.7% to $291.11. Cisco Systems was down 0.4% to $31.60.

Countrywide shores up finances

Investors were delighted that Countrywide was able to attract more financing. The move "should substantially address funding concerns," Credit Suisse analyst Moshe Orenbuch said in a research note.

 

 

The financing is all secured financing, made necessary because the company has been largely been unable to sell unsecured commercial paper to fund its mortgages.

Stock Charts (Year)

Countrywide Financial

Lehman Bros.

Countrywide's announcement included the disclosure that its mortgage business is shrinking. The company said it also funded $34.4 billion in mortgages in August, down 17% from a year ago. Its pipeline of unclosed mortgages fell 16.8% from July to $51.8 billion.

 

"The company's recent actions to secure additional funding, as well as the migration of funding its originations through the (Countrywide Bank) thrift

• Video: FTC warns about deceptive mortgage ads

 

Last month, Countrywide received a $2 billion infusion from Bank of America (BAC, news, msgs), which could eventually give the second-largest U.S. bank a one-sixth stake in the lender.

On Wednesday, U.S. Treasury Secretary Henry Paulson urged Countrywide Chief Executive Angelo Mozilo and other mortgage officials to help borrowers who took out adjustable-rate loans that have rates which are resetting to higher levels.

Countrywide's rally helped prompt a rally in financial stocks generally. The Select Sector SPDR Financial (XLF, news, msgs) exchange-traded fund, designed to mirror the financial sector of the S&P 500, was up 1.5% to $33.81, the best among the nine SPDR ETFs. The Amex Securities Broker/Dealer Index ($XBD.X) jumped 2.4% to 225.

Lehman Bros. (LEH, news, msgs), which has had a heavy exposure to the problems in the mortgage markets, was up 4.8% to $59.82. Citigroup (C, news, msgs) was up 1.3% to $46.34. JPMorgan Chase (JPM, news, msgs) added 2.5% to $45.58.

Analyst sees GM successful in labor negotiations

GM shares moved up after Citigroup analyst Itay Michaeli, in a client note assuming coverage of the stock from another analyst, lifted his rating all the way to "buy" from "sell" and bumped his target price to $41 from $27.

 

Nevertheless, Michaeli said GM is currently not a buy-and-hold stock, since the company's long-term turnaround is "heavily tied to the outcome of this fall's labor negotiation."

Stock Charts (Year)

General Motors

But signs have been encouraging, and the upgrade helped shares of Ford Motor (F, news, msgs) move up 5.6% to $7.92.

 

Separately, shares of drug giant Merck (MRK, news, msgs) moved up 0.7% to $50 after analyst Chris Schott of Banc of America Securities upgraded the stock to "buy" from "neutral," saying its new drug candidates will be approved and that sales of its diabetes drug Januvia and HPV treatment Gardasil are getting stronger.

McDonald's big dividend increase

McDonald's boosted its dividend to $1.50 a share as part of a plan to up to $17 billion to shareholders through 2009. The dividend is payable Dec. 3 to shareholders of record on Nov. 15.

 

The new payout brings McDonald's dividend yield to 2.9%, well above the average dividend yield of 0.98% for companies in the Standard & Poor's Consumer Discretionary index.

• Video: A new cell phone bill of rights

 

McDonald's yearly dividend is now more than six times what it was in 2002, the year before the company launched an aggressive turnaround that included putting the brakes on its rapid expansion and focusing on improving results at existing locations with new menu items, extended hours and cashless payments.

That effort has revitalized sales and profits and helped triple its stock price since the beginning of 2003.

Stock Charts (Year)

McDonald's

One investor said McDonald's move may prompt other companies to return more cash to shareholders.

 

"Institutional investors who have significant positions in other companies will probably remind those companies sitting on cash that they might be doing their shareholders a favor by accelerating share repurchases," Fred Dickson, director of retail research at D.A. Davidson & Co., told Reuters.

Why Target may sell its credit card business

Technically, Target says it is weighing strategic options for its $7 billion credit card portfolio. But Wall Street sees that as essentially putting the business up for sale.

 

The timing is odd -- in the middle of a credit crunch. But JPMorgan analyst Charles Grom said in a research note that the decision may well have been the result of pressure by investor Bill Ackman, who recently bought 10% of the company.

The portfolio has been mostly solid through the second quarter, he noted. As a result, he thinks it will generate a premium price.

 

Coupled with a big stock buyback, it could boost earnings per share nicely, he said.

A sign of an easing credit crunch?

The decline in the U.S. commercial paper market slowed last week, as concerns eased that borrowers would be unable to repay their short-term debt.

 

The $8.2 billion reduction, down from $31.3 billion a week earlier, signals the credit squeeze sparked by defaults on subprime mortgages may be easing. The freeze shut out borrowers such as Countrywide, Thornburg Mortgage (TMA, news, msgs) and GMAC. Issuers with the biggest chance of default had stopped trying to sell debt, Tony Crescenzi, chief bond market strategist at Miller Tabak, told Bloomberg News.

"Investors have already pushed out the weakest issuers," Crescenzi said. "The commercial paper that remains is a relatively more respected crop."

Short-term debt maturing in 270 days or less fell to a seasonally adjusted $1.92 trillion in the period ended yesterday, including a $21.6 billion decline in asset-backed commercial paper, according to data released today by the Federal Reserve. Commercial paper outstanding has fallen $306.4 billion in five weeks.

The slump is the longest since at least July and August 2003, when the amount of debt decreased by 1.5% over four weeks, Bloomberg noted. Asset-backed paper, which dropped 2.2% in the past week to $945.1 billion, declined $237.8 billion, or 21%, in the past five weeks.

By Charley Blaine

President Announces New Foreclosure Initiative FHA Secure

Article by the NAR

On August 31, 2007, President Bush announced a new initiative called FHASecure, which will give the Federal Housing Administration (FHA) flexibility to help more families keep their homes in light of the decline of the subprime market and impending interest rate adjustments affecting numerous borrowers in both the subprime and Alt-A markets. The FHASecure program will help people who have not made all of their payments on time because of rising mortgage payments but who otherwise have good credit. The initiative is a temporary program requiring that loan applications be signed no later than December 31, 2008. On September 4, 2007, the US Department of Housing and Urban Development (HUD) released Mortgage Letter 2007-11 further detailing the program.

The President called on Congress to change a key housing provision of the Federal Tax Code to ensure people are not penalized when they refinance their homes. Current tax law counts cancelled mortgage debt on primary residences as taxable income. The President then announced a foreclosure avoidance initiative to help homeowners refinance by working with housing counseling organizations. The President also pushed Congress to pass the broader FHA reform bill.

NAR applauded President Bush’s statement of support for giving homeowners greater flexibility to refinance their loans through the FHA. At a white house conference call on the initiative, the administration specifically signaled out NAR for our timely support of the initiative. NAR has been advocating regulatory changes to the FHA program. On April 9, 2007, NAR sent a letter to Alphonso Jackson, Secretary of Housing and Urban Development, asking that FHA waive the requirement that a homeowner’s mortgage be current to refinance into an FHA loan product. NAR also supports legislation that would give FHA greater flexibility by increasing loan limits, eliminating the statutory 3 percent minimum cash down payment, allowing FHA flexibility to provide risk-based pricing, and revising the condominium program.

NAR Urges the Fed to Adopt Strong Regulations to Prevent Unfair, Deceptive, and Abusive Lending 

Article by the NAR

On August 15, 2007, NAR President Pat Combs sent a letter to the Federal Reserve Board (Fed) urging it to adopt strong regulations to prevent unfair, deceptive, and abusive lending practices in the mortgage markets. The letter is based on NAR’s subprime lending policy.

NAR’s letter notes the current turmoil in the mortgage markets and suggests that a strong Fed rule could help reassure investors and borrowers and help stave off or recover from an unnecessary overreaction that could deny mortgage loans to borrowers who are willing and able to meet their mortgage obligations—whether prime, Alt-A, or subprime.

The letter recommends that the Fed regulations:

• Bar the use of prepayment penalties for all mortgages, or greatly minimize their use.
• Require subprime lenders to require an escrow/reserve/impound account for the payment of insurance and taxes, as is typical for prime mortgages.
• Limit the use of “stated income” or “low doc” underwriting for subprime loans, since practically all subprime borrowers are in a position to supply some type of documents for verifying their income and, therefore, qualify for a lower cost loan.
• Require strong underwriting standards for all mortgage originators that include flexibility to accommodate borrowers with unique circumstances. For subprime loans, lenders should exercise more caution when underwriting loans that may result in a significant “payment shock” and adopt a policy to assure a reasonable debt-to-income ratio.
• Require mortgage originators providing loans to refinance an existing mortgage to verify that the new loans provides a significant benefit to the borrower.
• Require all institutional prime and subprime mortgage lenders (or servicers acting on their behalf) to report payment history of all borrowers to at least the three national credit bureaus on a monthly basis.
• Require mortgage originators to offer borrowers one or more mortgages with interest rates and fees that appropriately reflect the borrower’s credit risk.

The letter also urges the Fed to encourage the lending industry to expand the use of alternative creditor histories and to work with HUD to improve consumer disclosures under the Real Estate Settlement Procedures Act (RESPA).

Mixing Banking and Commerce:
Bad for Consumers and Bad for the Economy

Article by the NAR

The U.S. economy depends in large part on the health of the banking and real estate industries.  Several regulatory actions that would allow banks in the real estate industry are putting our economy and the well-being of American consumers at risk.  These ill-considered moves would upend one our nation’s most fundamental economic policies – the separation of banking and commerce.  In return, we’re likely only to get bigger banks, higher costs, and less consumer choice and service. 

Allowing Banks in Real Estate Hurts Competition and Hurts Consumers.  Regulations proposed by the Federal Reserve and Treasury would allow big banking conglomerates into real estate brokerage and property management.  If adopted, the regulations will lead to:

• The same large-scale consolidation that has taken place in the banking industry itself.
• Less competition, less choice, and higher costs for consumers.
• Pressure on bank-affiliated real estate brokers and agents to market and sell financial products such as insurance, securities, and credit cards.
• Banks sharing of private consumer data obtained in real estate transactions with their affiliates and third parties.
• Unfair competitive advantages for banking conglomerates, which benefit from access to capital at lower rates--thanks to federally insured deposits--than local real estate companies.
• According to a J.D. Power survey, 28 percent of homebuyers had problems with their lenders, such as errors in closing documents, miscommunication of loan terms and unavailable or unresponsive loan consultants or mortgage brokers.  If almost 1 in 3 homebuyers can’t get adequate customer service for their loan, how will they be served by banks during the much more complex process of buying or selling a home?

Banks Are Special – Let’s Keep Them That Way.  Banks play a unique role in our financial system.  In response to the bank failures of the 1930’s, the federal government established federal deposit insurance.  As a trade-off, banks accepted comprehensive federal regulation and limitations on their eligible activities.  The S&L crisis of the 1980’s demonstrates the importance of strong federal rules keeping financial services separate from commercial activities.   

• To avoid giving banks undue competitive advantages over nonbanking firms, Congress has established the national policy against mixing banking and commerce.  It’s simple, it’s straightforward, and it avoids the entanglements that dilute the clear mission of banks to provide and support a strong payment system and provide banking services that are essential to a healthy economy.
• Allowing banks to enter the real estate brokerage industry is inconsistent with this policy and weakens the regulatory structure necessary to protect the federal deposit insurance fund, the payment system, and the U.S. economy.
• Amid today’s rapid technical innovations and fast-moving markets, unintended and unforeseen consequences of expanding bank powers pose very real risks to the security and vitality of our economy.  We’ve experienced this before, and it’s been costly.  Loosening restrictions on the activities of federally insured depository institutions led to the S&L crisis of the 1980’s.  There’s no reason to risk a rerun of that $124 billion debacle. 

Banks Want Consolidation of the Real Estate Industry into a Few Hands.  Large banking conglomerates are looking to assemble a few nationwide organizations to handle the very local business of buying and selling homes.  If this is successful, consumer interests will be on the back burner.

• Bank-controlled real estate brokerages will most likely become marketing arms for  mortgage departments and other proprietary products and services banks sell, whether they are in the consumer’s interest or not.

• The real estate industry, dominated by tens of thousands of small businesses, will lose its consumer service focus if banks are allowed to consolidate the industry.
• Realtors^® provide extensive personal attention to consumers during the lengthy process of buying or selling a home – banks simply can’t provide that type of personal counsel because of the inherent conflicts with their other business objectives.

The American People Agree: Keep Banks Out.  According to a recent national survey conducted by Public Opinion Strategies, American consumers believe that bank-owned real estate brokerages will result in worse customer service, trample privacy through unrestricted access to private financial information, force them to pay more and higher fees, and cause serious conflicts of interest. According to survey results:

• Americans believe consumers are going to be hurt by banks that own real estate brokerages and have access to home buyers’ and home sellers’ bank account and other financial information.*
• Americans believe it would be a conflict of interest for a bank to offer and approve loans on homes that they were already involved in as a real estate broker (66% say true – 28% say false)*
• Americans believe banks will pass on real estate costs to their account holders (64% say true – 29% say false)*

* +/- 3.46% Margin of Error

8 money moves you must make at 50

Your 5-minute guide to credit scores

Your 5-minute guide to home loans

Release Date: September 4, 2007

For release at 2:00 p.m. EDT

The Federal Reserve Board on Tuesday released the minutes of its discount rate
meetings from July 9 through August 6, 2007.

The minutes are attached.

Attachment (8 KB PDF)

The hidden costs of moving

Not only is moving one of life’s most stressful and exhausting experiences, it can cost more than you ever imagined. Here's why.

By Liz Pulliam Weston

If forced to choose between childbirth and moving a household, I'd pick childbirth any day.

Both can be deeply painful and expensive experiences. But on moving day, no one offers you an epidural. And labor tends to produce a wonderful result at the end, while moving just leaves you surrounded by boxes.

There's another thing the two ordeals have in common: over time, the most excruciating details tend to fade from memory, which is why we're willing to do it more than once.

With that in mind, I thought I'd remind veterans and terrify novices with some of the many hidden costs that accompany shifting from one household to the next. Given that it's prime moving season, some of these details might be helpful to know -- so you can avoid them, plan for them or use them as an excuse to stay put.

The actual move
You may think you're prepared for the big expense of hiring professional movers, or at least a rental truck. But that's just the beginning.

Moving supplies. Unless a corporate fairy godmother is paying for your move, you'll need to worry about the costs of packing supplies -- boxes, tape, markers, paper, bubble wrap. Boxes alone can run $2 a pop and up, with the average eight-room house requiring more than 100 boxes.

You can reduce the cost with a little footwork. Liquor stores and some grocery stores may have boxes to give away; if you start collecting a few weeks in advance, you can drastically reduce the number of boxes you need to buy. Also, check Craigslist and Freecycle.org for people who have recently moved to your community and have boxes and other supplies to give away (or to sell for less).

By the way, it's customary to tip professional movers about $25 each, according to Realty Times. Feeding them isn't required, but pizza and sodas are usually appreciated (and all but required if you've dragooned friends into helping you).

A potential silver lining: if your move is job-related and your new work site is at least 50 miles from your previous one, your expenses could be deductible. See "On the move? Watch for deductions."

Insurance. If you're moving yourself, you may need to purchase insurance from the truck rental company, since your regular coverage (home and vehicle) might not apply. (Call your insurers and ask.) Professional movers are legally liable for your stuff, but their level of liability can vary. The cheapest, no-additional-fee option typically only pays you pennies per pound if your possessions are lost or damaged, so you may well want to pay for extra coverage.

Moving special items. Certain big or expensive items--like pianos or cars--may require special handling, which means extra charges. Shipping a vehicle can easily add hundreds of dollars to your move, for example. Extraordinarily valuable items, like art collections or antiques, might not be covered under your mover's regular insurance--you may need to buy extra coverage or even hire special handlers. One MSN staffer paid $450 to move a grand piano from Seattle to Portland using specially-trained movers to pack and protect the instrument during transit.

Getting hijacked by your mover. As I wrote in "Don't get scammed by your mover," complaints about moving companies have more than tripled in the decade since the federal government stopped regulating interstate moves. The most common tactic: Your movers take your stuff hostage and demand you pay them hundreds or even thousands of dollars more than the agreed-upon price.

You can reduce your chances of getting hijacked by getting referrals from friends who have moved recently or asking large local employers which companies they use for executive relocations. Check with the Better Business Bureau and MovingScam.com about a company's complaint history.

"In transit" costs. Longer-distance moves usually incur significant travel costs, such as gas, lodging and meals.

If you're moving yourself, you may be stunned by how quickly your rental truck goes through gas. One poster on the Your Money message board estimated high and still wound up paying $300 more than expected. Ask the rental company for a gas-mileage estimate, then build in a fudge factor of at least 25%.

Also remember that delays can happen on either end of a move, requiring you to cough up more than you expected on lodging, supplies or a storage facility to hold your stuff while you wait.

These expenses don't necessarily end when you're ensconced in your new place. You may, for instance, find yourself eating out more for days or even weeks after the move as you deal with the strain of unpacking.

Cancellation and late fees. If I was ever unsure about the advisability of automatic debits and online bill payment, those doubts were erased the last time we moved and the U.S. Postal Service forwarded our mail -- for weeks -- to a complete stranger in Newport Beach, Calif. (It took so long to straighten out because the venerable USPS argued that what was happening couldn't possibly be happening ah, bureaucracy.) If I'd been waiting for bills to arrive to trigger the payments, I would have racked up a host of late fees.

If you can't bring yourself to automate the process, at least be sure to make a list of all your bills and their due dates. That way you can make payments on time even if your statements go awry. Also, check to make sure you give sufficient notice to utilities, phone providers, cable companies and other vendors so you don't incur cancellation fees.

Getting set up again
The nickeling-and-diming has just begun. Empty fridges, empty rooms, empty phone jacks and empty light sockets must all be filled.

Deposits and connection fees. Utility, phone and television companies typically charge $50 to $100 each to establish service, depending on the provider and area; deposits also may be required. You may be able to get some of these waived if you have good credit or if the particular provider, like a cable company, is providing free installation deals. Be sure to ask.

Re-keying the locks. This is a security essential. Who knows how many keys the previous occupant gave out? If you're renting, the landlord may have already taken care of this. Otherwise, you'll need to hire a locksmith to change the pins in your lock cylinders. It's cheaper than replacing the locks, but expect to spend $10 to $25 per lock.

Filling the space. You may need to buy appliances, window treatments, lamps, rugs or more furniture to make your new space liveable. Then there are all the little piddling purchases that add up. The last time we moved, I was amazed at how many trips I made to Bed, Bath & Beyond for various hooks, racks, shelves and organizers .

Stocking up. You didn't want to pay to move a dozen half-empty bottles of condiments, but now you have to replace them all -- and also buy