What you need to know to serve this protected class.

Definition: Federal fair housing law defines a person with a disability as any individual with a physical or mental impairment that substantially limits one or more major life activities. Some disabilities, such as blindness or mobility impairment, are readily observable, while others are invisible.

What’s required: Besides prohibiting discrimination, the law requires housing providers to make reasonable accommodations in rules or policies—such as assigning parking spaces—and allow reasonable modifications at the tenant’s expense—such as the installation of grab bars. HUD says 60% of fair housing complaints it receives relate to reasonable accommodation requests.

Assistance animals: The law says housing providers must modify or make exceptions to pet policies to allow a person with a disability equal opportunity to enjoy use of the property. In 2020, HUD released guidance on assessing a request. Key takeaways:

• You must reply promptly to a request for a reasonable accommodation.
• You may seek confirmation of a connection between the individual’s disability and the animal if the need for the accommodation is not readily apparent or known.
• You may request information verifying the individual’s disability and need for the accommodation. In most cases, medical records aren’t needed—a credible statement by the individual or reliable third party is sufficient.
• You may refuse a reasonable accommodation for an animal that poses a direct threat that can’t be eliminated or reduced by the individual controlling the animal.
• Before denying a reasonable accommodation request due to a lack of information confirming the individual’s disability or need for an animal, engage in a good-faith dialogue with the requestor.

Advertising: When advertising property for sale or rental, use factual language to describe the property. Avoid describing what type of person might want to—or not want to—buy or lease the property. Unacceptable: ads that disallow handicap accessories. Acceptable: phrases that describe the property characteristics, such as “third-floor walk-up,” or neighborhood characteristics, such as “bike trails nearby.”

Sources: hud.gov; Real Estate Brokerage Essentials; “Window to the Law: Fair Housing Assistance Animal Guidance”

©National Association of REALTORS®
Reprinted with permission

As a listing agent, am I required to disclose that I already have offers on the property to any agent who wants to show my listing or any buyer who wants to see my listing?

The ethical course depends on two factors: First, has the agent or prospective buyer asked if there are offers on the property? And second, has the seller given you approval to make that disclosure?

Ask sellers upfront how they’d like you to respond to such an inquiry from a buyer or cooperating broker. If sellers haven’t given you approval to disclose, you have to respond that the sellers don’t want the presence of other offers disclosed but you would be happy to present any offer.

This is an important conversation to have with sellers at the time of listing, especially if multiple offers are typical in the market. That way you will be able to respond promptly and appropriately.

Article 1, Standard of Practice 1-15 states:

“REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, IF ASKED, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker.”

(Adopted 1/03, Amended 1/09)

©National Association of REALTORS®
Reprinted with permission

Persistent inflation is proving “quite harmful to the housing market,” says NAR Chief Economist Lawrence Yun.

The housing market is quickly contracting as rising mortgage rates and stubbornly high inflation prompts more home buyers—and even sellers—to back away. The National Association of REALTORS®’ Pending Home Sales Index, a forward-looking indicator based on home contract signings, dropped for the fourth consecutive month in September, down 10.2% compared to August and a whopping 31% compared to a year earlier.

“Persistent inflation has proven quite harmful to the housing market,” says NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”

The number of active listings also is falling quickly as more homeowners grow reluctant to trade in the lower mortgage rates they secured in the last few years for today’s higher rates. “The new normal for mortgage rates could be around 7% for a while,” Yun says. “On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago—a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”

NAR’s latest report also shows that all four major regions of the U.S. are seeing a sharp pullback in home sales, with pending home sales down about 27% or more on a year-over-year basis in each region. The West is seeing the largest yearly contraction in pending home sales, down 38.7% annually. However, the Northeast posted the largest month-over-month drop in September, with pending home sales down 16.1% compared to August, NAR reports.

©National Association of REALTORS®
Reprinted with permission

NAR Chief Economist Lawrence Yun paints a picture of what could happen with borrowing costs once it passes a critical threshold.

Mortgage rates remained just shy of 7% this week—the 30-year fixed rate loan is at 6.94%—which could be a “new normal” after recent rapid increases in borrowing costs, says Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®. Mortgage rates have been hovering near 7% for the last month.

Higher mortgage rates are prompting home buyers to adjust their price points so they don’t go over budget. A year ago, a home buyer looking to spend about $1,500 on a monthly mortgage payment could afford a $380,000 home, says Lisa Sturtevant, chief economist for Bright MLS. Today, with mortgage rates more than double what they were a year ago, that budget has dropped to $250,000. “In many areas of the country, homes in this price range don’t exist,” she says. First-time home buyers may be hit particularly hard because they don’t have equity to roll into a new home purchase, Sturtevant adds.

The heights that mortgage rates have reached caught the housing market off guard. “At the beginning of the year, it seemed very unlikely that mortgage rates would push past 6%,” Sturtevant says. “Now the question is how high will they go? A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in its next two meetings. But the impacts of the Federal Reserve’s actions are crystal clear: The Fed will continue to raise rates in an attempt to tamp down inflation, even if it causes pain in the short term.”

NAR Chief Economist Lawrence Yun warned at the recent National Association of Real Estate Investors conference in Atlanta that mortgage rates could rise up to 8.5%, “which would be another big shock to the housing market.” With inflation outpacing wage growth, the typical family is spending more than 25% of their income on mortgage payments, Evangelou writes at the association’s blog, Economists’ Outlook. “Including other expenses, such as mortgage insurance, home insurance, taxes and expenses for property maintenance, homebuying costs exceed 30% of a typical family’s income,” she notes. Many financial experts consider households in this situation to be cost-burdened.

Mortgage rates at 7% were typical in the mid- to late-1990s and early 2000s. But home buyers today are facing high inflation and more expensive home prices. “The 30-year fixed-rate mortgage continues to remain just shy of 7% and is adversely impacting the housing market in the form of declining demand,” says Sam Khater, Freddie Mac’s chief economist. “Additionally, homebuilder confidence has dropped to half of what it was just six months ago, and construction—particularly single-family residential construction—continues to slow down.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 20:

• 30-year fixed-rate mortgages: averaged 6.94%, with an average 0.9 point, rising from last week’s 6.92% average. Last year at this time, 30-year rates averaged 3.09%.
• 15-year fixed-rate mortgages: averaged 6.23%, with an average 1.1 point, rising from last week’s 6.09% average. A year ago, 15-year rates averaged 2.33%.
• 5-year hybrid adjustable-rate mortgages: averaged 5.71%, with an average 0.4 point, dropping from last week’s 5.81% average. A year ago, 5-year ARMs averaged 2.54%.

Freddie Mac reports commitment rates along with average points to better reflect the upfront cost of obtaining the mortgage.

©National Association of REALTORS®
Reprinted with permission

Not revealing known property defects to a buyer—a common problem in real estate, studies show—can land you in court. Follow these best practices to avoid liability.

When a home buyer discovers a property defect that wasn’t disclosed by the seller or listing agent, the buyer may sue, claiming the home was misrepresented. This has become a more urgent problem in real estate since buyers in last year’s frenzied market started waiving the home inspection contingency to win bidding wars. Sixty percent of sellers admit to not disclosing a known problem with their property to buyers, according to a July study from Cinch Home Services(link is external).

“Failure to properly disclose can lead to misrepresentation claims, ranging from fraud to negligence and, in some states, innocent misrepresentation,” Deanne Rymarowicz, associate counsel at the National Association of REALTORS®, warns in the latest “Window to the Law” video. She cites a court case in which an agent was ordered to pay $170,000 after being found to have shown a “reckless disregard for the truth” by not disclosing a listing’s prior water damage.

Rymarowicz offers best practices to help avoid a misrepresentation claim due to the failure of the seller to disclose:

• Do not complete a disclosure form on behalf of a seller.
• Encourage the seller to reveal all known facts and defects, and share them with the buyer.
• Review the seller’s disclosure form to make sure they answered all the questions.
• If the seller refuses to disclose a material fact or defect you’re aware of, you should disclose it to the buyer as soon as possible.
• Document any information the seller has provided to the buyer, such as answers to questions about the condition of the property. Keep any research you’ve done separately on the condition of the property as well.

©National Association of REALTORS®
Reprinted with permission

Economists eye two possible scenarios: Rates could rise to 8% or higher by the end of the year, or they could stabilize. Know what to expect.

Mortgage rates this week dipped slightly below 7%, even after the Federal Reserve aggressively raised its benchmark interest rate again to tame inflation. The 30-year fixed-rate mortgage averaged 6.95% this week after hitting a 20-year high of 7.08% last week, Freddie Mac reports.

“Even with the Federal Reserve raising its short-term fed funds rate by another large amount, longer-term interest rates look to move only slightly,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “The mortgage market has already priced in the latest Fed move.”

On Wednesday, the Fed approved its fourth consecutive rate hike of three-quarters of a percentage point to help bring down 40-year high inflation. The central bank’s lending rate now falls within the target range of 3.75% to 4%—its highest since January 2008. “The inflation picture has become more and more challenging over the course of this year,” Fed Chairman Jerome Powell said at a news conference Wednesday. “That means we have to have policy be more restrictive, and that narrows the path to a soft landing.”

What Happens Next?

Mortgage rates will start to “drift lower” once inflation has been contained—but that could be another year or two, Yun notes. However, the slight dip this week in rates likely will offer little relief to priced-out buyers. “Unsure buyers navigating an unpredictable landscape keeps demand declining while other potential buyers remain sidelined from an affordability standpoint,” says Sam Khater, Freddie Mac’s chief economist.

Mortgage rates likely will be volatile in the coming weeks, adds Lisa Sturtevant, chief economist for Bright MLS. “Home buyers expecting mortgage rates to fall significantly will be disappointed,” she says. “The question is: Will rates stabilize or will they push even higher?”

Sturtevant says that if inflation remains stubbornly high, the Federal Reserve could continue to aggressively raise rates. “Under this scenario of persistently higher inflation, mortgage rates could climb to 8% or beyond in late 2022 and into the first part of 2023,” she says.

But if October’s inflation data—which will be released next week—shows signs of easing and offers some indication that the Fed’s tactics are working, the Fed could pull back on its rate increases. That could mean mortgage rates would stabilize, “though probably still remaining around 7%, on average, through the first part of 2023,” she notes.

Mortgage Rate Averages This Week

Freddie Mac reported the following national averages with mortgage rates for the week ending Nov. 3:

• 30-year fixed-rate mortgages: averaged 6.95%, with an average 0.8, falling last week’s 7.08% average. Last year at this time, 30-year rates averaged 3.09%.
• 15-year fixed-rate mortgages: averaged 6.29%, with an average 1.2 point, dropping from last week’s 6.36% average. A year ago, 15-year rates averaged 2.35%.
• 5-year hybrid adjustable-rate mortgages: averaged 5.95%, with an average 0.2 point, falling from last week’s 5.96% average. A year ago, 5-year ARMs averaged 2.54%.

Freddie Mac reports commitment rates along with average fees to better reflect the total upfront cost of obtaining the mortgage.

©National Association of REALTORS®
Reprinted with permission