A New Type Of Credit Score Is Coming

The current score system works well in that it provides a sufficient way to figure out low costs and in an automated way how likely someone is able repay you. But it has a disadvantage in that a lot of people don’t provide a payment history because they don’t have credit cards such as younger people and immigrants.

Ultra FICO changes that dynamic by using consumer contributed data. The Fair Isaac Corp., the creators of FICO, announced that Ultra FICO will be more widely released in April 2019. Alongside traditional metrics, the Ultra FICO looks at your banking behavior in 3 areas:

  • Your account history
  • Your account balance
  • Your account activity

It gives consumers the ability to give permission for their data—rich data that can be used as valuable insight for lenders. It has the potential to score people that are considered unscorable and enhance existing scores. This may help people get better interest rates.

Marketplace.org reported that “there are 53 million people in the United States who do not have FICO scores, and the new Ultra FICO will catch 10 million to 15 million of those.”

Don’t look for Ultra FICO to replace the regular FICO score. Ultra FICO is voluntary, so it will likely be used to give more insight to lender if the regular FICO is not high enough to qualify the consumer.



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Haunted Houses Scare Buyers Away

Sellers are required to disclose material defects such as a structural issue or a leaky roof, but when it comes to a haunted house’s reputation, if it elicits an “emotional response,” that’s when it gets tricky for real estate agents.  Haunted houses are often stigmatized and scare buyers away in what may otherwise be a perfectly fine structure.

A recent survey conducted by Realtor.com shows desirable features like a reasonable price or a bigger kitchen helps buyers get past the spook factor. The survey found that 1 in 3 people are willing to take a chance on a haunted home if the deal was attractive.

In one extreme example of a haunted house impacting the sale of a property was Stambovsky v. Ackley, a landmark case in New York better known as the “Ghostbusters Ruling.” In 1989, a woman named Helen Ackley was selling her circa-1890 Queen Ann Victorian. It was a nice house right on the Hudson River in Nyack, New York, with 5 bedrooms, 3 ½ baths…..oh, and 3 poltergeists. According to Ackley, she had reported the existence of ghosts in the house to newspaper and magazine articles on 3 occasions between 1977 and 1989. Stambovsky was a buyer from out of town and claimed that Ackley and her real estate agent failed to tell him that the home had a haunting reputation. He argued that the house’s ghosts, real or imagined, affected the value and the potential for resale.

The New York Appellate Court ruled in the plaintiff’s favor stating, “as a matter of law, the house is haunted,” mostly because Ackley proclaimed it to be. Stambovsky was refunded half of his down payment and set a precedent to make sellers disclose if their house had a ghost. After the court case, Ackley had no issue finding people who want to live in a haunted house. Singer-songwriter Ingrid Michaelson owned the home for a short while before selling it in 2015 for $1.7 million. Although, nobody reported any spooky occurrences since Ackley sold it.


Dress For Success

What would you do to sell a home? Most real estate photo galleries are staged and they rarely feature people but some real estate agents are taking a unique approach by dressing up in costumes to help bring more views to their listings.

In 2016, an agent in Texas dressed up as a Panda and it helped her get 12 showings in the first two days. Another agent went prehistoric and donned a T-Rex costume,  and agents in Baltimore dressed up as Spiderman and a Unicorn to show off their listings.

Real estate agents trying unconventional marketing techniques is a smart way to get listings to stand out in the internet age. People like to go viral and are always looking for something new and refreshing online. In the past, real estate agents used different strategies during open house events like baking cookies to make a home smell good or playing music to cancel out traffic noises. Dressing in a costume is just another way to get buyers to pay attention and in the door.

Real Estate agents Christina Dudley and Michael Frank think the costumes are a great way to show some of Baltimore's local flavor too. They plan on doing another stage photo shoot featuring another goofy character, but they understand it’s not for every house, agent, or seller.


Technology May Change How Real Estate Agents View Safety

It’s important to be aware of potential security issues as technology evolves. One new concern is home surveillance. Cameras in doorbells and front entrance are becoming increasingly common with new the accessibility of technology and smart devices. Although it seems like surveillance is expected in luxury homes to watch over high-end objects, real estate agents are discovering them more in general across the home-price spectrum.

According to Twice, smart-home technology is used by 21% of U.S. households with 36% being future customers. Chicago Agent Magazine reported that “9 million homes have WiFi-enabled cameras with microphones, while 11 million have limited-function cameras on front doors on property exteriors.”

There is no federal law regarding camera surveillance on private property but there are some on the state level. Some states have a law that makes a video recording illegal when there is a situation where people have a reasonable exaction of privacy like a bathroom or changing room. But it’s hard to argue the level of expected privacy when you’re in somebody else’s home.

If an agent represents a seller who has surveillance, it’s best to make sure they are honest with the devices and make sure other parties are aware. E.g., have sign-in sheets at open houses that disclose surveillance inside a home. Although it might seem appealing to use cameras as some sort of leverage tool during the negotiation, it’s often better to be transparent for reputation purposes.


Why Would A Hospital Get Into The Real Estate Business?

A 2008 initiative by the Nationwide Children’s Hospital, located in Southern Orchards Columbus, began investing in neighborhood homes with a program called Healthy Neighborhoods Healthy Families (HNHF). In partnership with city and community groups, they are helping residents renovate vacant homes for resale, building affordable housing, and offering grants to homeowners to fund home renovations.

Increasing evidence points to a correlation between living in areas of concentrated poverty and health. The doctors at Nationwide Children’s Hospital, like Dr. Kelly Kelleher, saw this first-hand. “Houses that are falling apart, plumbing problems, mold, rat infestations, and violence. You see 26 kids a day, and maybe two-thirds of them are in these desperate straits. The impact on kids goes beyond toxic living conditions like mold and lead,” says Kelleher. The stress of living with violence, racial segregation, and other unstable living conditions leads to what researchers call “the neighborhood effect.”

The hospital is treating “the neighborhood as a patient.” They hope that by providing children with safe and stable housing, they can help prevent many health conditions through physical and socio-economic environments. According to NPR Illinois, “the hospital-led partnership built 58 affordable housing units, renovated 71 homes, built 15 new homes, and gave out 149 home improvement grants between 2008 and 2018. With additional grants, it also built a 58-unit housing development combined with office space.”

New changes in Medicaid reimbursement serve as a motivation to invest in community projects like housing. The fee-for-service model where hospitals are reimbursed for each procedure is losing popularity. A newer trend of states funding health organizations with a lump sum of money to help manage someone in a population helps investment in preventative care. One example of preventative care being a healthy place to live.

Some positive metrics of the neighborhood are the dramatic reduction of murders and that high school graduation rates have risen. Nationwide Children’s Hospital and Dr. Kelleher are also studying metrics on the number of emergency room visits, inpatient days, and the various types of problems that children present at the hospital. But it may take more time to show signs of improvement.


Utah’s Population Growth Will Reshape Future Housing Market

The real estate market in Utah has been experiencing dwindling inventory that’s been increasing prices, alongside with growth in the multifamily sector. But Utah is projected to double it’s population by 2065 and that growth will have a large impact on reshaping housing and communities.

Although the labor shortage is a current challenge, an emerging issue will be the lack of vacant land according to Ari Bruening, the chief operating officer at Envision Utah. “We can’t just keep growing outward because we hit mountains and lakes and federal lands,” he told Utah Business. “The lack of land is going to be an issue for a long time, and I think that raises the questions: are we going to find ways to accommodate limited land or not? Will people pay a lot for housing close to their jobs or pay less and live farther away?”

With land becoming less available, builders are choosing smaller lots to keep up with home affordability. The market shifted, land became more expensive, and builders started to focus on expanding their business model to include multifamily units, condos, and townhomes at a price people can afford.

Overall, why does a land shortage matter? Bruening says it matters because things like air quality will suffer by forcing people to drive longer distances to work, and workers could feel excluded because they won’t be able to afford to live in the communities they work in. He goes on to say “One reason we’ve done well economically compared to places like California is because we’ve been affordable for setting up business,” he adds. We don’t want to lose that competitive advantage. On the other hand, it’s a good challenge to have, because we’re a growing place where people want to be and our economy is doing well. We just have to recognize the constraints of land supply."

The four Wasatch Front counties and Washington County will see the largest share of population growth over the next 40 years. As Utah’s population continues to grow there will always be people looking for affordability in exchange for a longer commute. But more people will also start looking into apartments, townhomes, and small lots.


Idaho’s Housing Challenges With Population Growth

According to the U.S. Census Bureau, Idaho was the fastest growing state between July 1, 2016, and July 1, 2017, with a population growing by 2.2% and had an increase of 1.7% in the number of housing units built. Since the last census, Idaho was number 4 in terms of housing unit growth. The state saw it’s housing stock increase by 8.1% between April 1, 2010, July 1, 2017—lagging behind only North Dakota, Utah, and Texas.

Between the years 2011 and 2015, developers built more housing units that were needed to compensate for the growth in population. According to the Idaho Statesman, “between 2011 and 2012, the state added 11,493 more people. It Needed 4,272 houses to shelter them. Developers built 5,948.” But there was a slow construction period during the recession while the population grew and experienced a bottled-up effect.

Other areas like Treasure Valley, the most populous region, are experiencing the need for more affordable housing. Building codes have lightened up to allow houses with smaller rooms and lower ceilings in an effort to spur construction towards more affordability.

Jason Blais, a city building official, said that in the last decade, Boise and the rest of the country have been building bigger homes.  According to the Idaho Statesman, Blais did an analysis of new single-family housing units built from March 2017-2018 and found that the average home being constructed was around 2,200 square feet.  “There’s just not many small and medium single-family dwellings in that 1,100-1,500 square foot range that we used to see.” He believes that if you take 600 square feet off of 2,200 square feet, that reduces the house cost by $90,000-$96,000 and allows more people to qualify for a loan and afford a home.

Being one of the fastest growing states with developers focusing on larger houses has brought new concerns on preserving local landmarks and fighting proposed subdivisions that impact agricultural land and open spaces. It’s important for the state to think about housing affordability with more people coming into the state while balancing how it will impact land use.


Brokerages of the Future Face Challenges

According to a recent Forbes article, brokerages have been avoiding big changes in their business models to meet the needs of their customers and employees. Residential real estate continues to be sold via real estate offices, brokers and exclusive property listings, but that seems to be changing quickly. In the past, brokers closely held real estate listing data. Multiple listing services have helped centralize data and websites have made it easy to publish. In other words, technology changes are causing brokers to lose their role as keeper of the information.

Potential problems facing brokerages include:

  • Technology (e.g., artificial intelligence & blockchain)
  • Real estate agents are increasingly organizing themselves into powerful teams and putting increased demands on brokerages for more services and facilities.
  • Startups with innovative business models (e.g., Amazon & Expedia) that can potentially challenge legacy brokerages.

Forbes describes brokerages of the future will be a company that:

  • Spend more on technology and research than marketing and payroll combined.
  • Deploys AI and sophisticated technology to anticipate and meet the demands of its customers.
  • Creates a custom experience for each website or app visitor (via AI and technology)
  • Provides its customers with sophisticated tools that help them identify, locate, assess and purchase properties, aided—but not controlled or managed – by a real estate agent.
  • Leverages the blockchain to optimize and secure all interactions and transactions with its clients, employees, and partners.
  • Understands the mobile nature of our society, and creates innovative and creative ways to market to and engage with mobile client base.
  • Offer different ways to hold real estate listings, such as keeping some as exclusives, sharing others as multiple brokerages listing and offering certain types of listing via an online shopping car model of listings.
  • Becomes less reliant on physical offices for customers visits, while expanding offices as workplaces for its agents and teams.
  • Supports and brands its various agent team structures, handling them as “companies within the company,” where the teams are co-branded with the company, rather than sitting under the brand.

The human service aspect of real estate won’t go away when real estate remains a high-value transaction. But clients will demand more control and brokerages will likely spend more time studying, predicting, and pursuing their clients. The business model of how brokerages operate in the future will likely shift.


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