Study On The Impact of Realtors When Buying New Construction

Home buyers often question if Realtors can actually contribute to a lower sale price on the purchase of a new home. They recognize that Realtors have knowledge of contracts, but other than listing a property on MLS and helping obtain signatures do they actually provide any benefit? This question is no more apparent than in the purchase of new construction where builders have established a process that is effortless permitting potential buyers to visit and purchase their homes. Potential buyers can speak directly with a sales representative and view a breakdown of prices along with the upgrade options. If a Realtor is involved they believe it will potentially reduce the savings potential since they are ultimately paid by a builder. At CCLR we have performed a study using actual homes sales to determine if Realtors really do impact the final sales price for new construction. Below you will find two sets of data. Each set was a random selection of over one hundred new construction sales throughout Houston and the surrounding suburbs. The builders were a mix of national organizations like Toll Brothers and Meritage Homes along with regional builders such as Perry Homes. At first glance the data doesn’t appear to exhibit many trends, however upon closer inspection there are a few. The first trend is that the higher the listing price the higher the probability a buyer will be utilizing a Realtor. Another trend shows that for homes below $200,000 the builder appears less willing to accept an offer that is significantly below the list price. We believe these two trends are not anomalies but instead actual behavior by both buyers and builders. Similar to luxury vehicles the mark-up is generally larger on higher end homes thereby limiting a builder’s ability to drop the price. At the upper end of the market buyers may be less concerned with shaving a few percentage points off the list price. Both of these trends would most likely evident even if additional data points were included in the study. Below is the statistical result and two plots showing a normal distribution of the data utilizing a statistical bell curve. Foregoing a Realtor:

• % of List Price (Average): - 5.37%
• Study Accuracy: 0.495%
• Median: - 4.50%
• Standard Deviation: 5.54%

Employing a Realtor:

• % of List Price (Average): - 6.57%
• Study Accuracy: 0.609%
• Median: - 6.00%
• Standard Deviation: 5.03%

The study clearly indicates that using a Realtor will provide a buyer with a 1.2% savings off the current list price of a new construction home. This amounts to between $1200 and $6000 in savings for the range of home values utilized within this study. Beyond just the average savings there are a few other significant differences as well. The median sale price when foregoing a Realtor was – 4.50% of the list price. Over 50.4% of all sales by these buyers yielded a savings of no more than 4%. Contrasting this with buyers that employed a Realtor only 38.4% of buyers performed as poorly. The data is undoubtedly weighted towards a smaller savings off the list price when foregoing a Realtor. This is primarily caused by the 28.3% buyers that purchased a new construction home that paid more than the advertised list price. Only 9.8% of buyers that employed a Realtor paid above the list price on a new construction home. Lastly, regardless the buyer 17% of the home purchased yielded a savings of over 10%. This would indicate that educated and savvy buyers do have the potential to save significant money regardless if a Realtor is present. By selecting the correct property and having good negotiation skills any buyer has the potential in obtaining a significant reduction in the list price. The data clearly reveals that Realtors actually improve a buyer’s odds in saving money and obtaining a lower sales price on a new construction home. By utilizing a Realtor the buyer will most likely yield a savings between 1-10% off the list price with the average between 6 and 7 percent. For those buyers determined to purchase without the aid of a Realtor our suggestion is to not accept just any offer provided by the builder especially if the savings is below 4%. Becoming emotionally attached to a new construction home is the worst possible scenario for a buyer and places the builder in a position of control. There are numerous homes for sale so shopping combined with skilled negotiating tactics is critical in obtaining a savings on a home. In closing, new construction contracts provided by builders are meant to favor the builder so don’t accept everything you are told by a sales representative. Read the contract, understand each section fully, and feel free to seek changes. You also have the right to take a copy of the contract and have a lawyer review before signing. Additional Information and Studies Available at CCLR: New Study - Relationship Between Housing Costs and Public Schools Has The Economy Caused Property Tax Revenue To Fall? How Accurate Is Zillow - New Study of Actual Home Sales Says Not Really

New Study - Relationship Between Housing Costs and Public Schools!

The Brookings Institute through the Metropolitan Policy Program performed a study examining 84,077 schools and how the quality of education is impacted by housing costs and city zoning. The majority of the data in the study was collected by GreatSchool and the National Center for Education Statistics between 2009 and 2011. The full study is available here on the Brookings website.

Calvin and Hobbes regularly confronted the public school system and particularly math. Although Calvin wanted to be excused from math we should not ignore this study.



The majority of people would agree that housing costs are higher in areas known to have highly rated school systems. Here in Houston the Memorial area is one such example with the lowest priced home coming in around half a million. However, how much of the home value equates to public education and is this difference similar to the cost of private education? If a family of five is living within an area known to have high housing costs and higher taxes could that same family live elsewhere and send their children to private school for the same or less cost? In addition could the city modify zoning laws specifically to help struggling school districts?

The study analyzed the 100 largest metropolitan areas around the country and found that housing costs average 2.4 times more ($10,707 per year) near high scoring public school systems. When compared to US median home values this equates to a home value increase of $205,000. The average size of the home within the higher scoring district contained 1.5 additional rooms and the number of rental properties/units was 30% lower.

We have known that the quality of public education is vastly unequal across income and racial/ethnic groups. There is countless debate as to the main causes. Studies have shown that placing low income children into high income area schools does actually increase their academic achievement. However, is this move worth the added cost when looking solely at education? The National Center for Education Statistics during the 2007-2008 school year places nationwide private education tuition for elementary and secondary students at $8,549. For private Catholic schools the cost drops to approximately $6000 per year. These values as stated are a nationwide average. When compared by region the Northeast has the biggest discrepancy showing that housing costs are 3.5 times higher in high scoring public school systems. In contrast Boise, Modesto, Madison, Little Rock, Honolulu, and parts of Utah and Florida exhibited the lowest ratios (1.3 - 1.6). Thus, it is clear that private education for elementary and secondary education costs less than the cost to move within a

Zoning laws also contribute to the general make-up of a city and their school districts. The study found that for larger metro areas with the least restrictive zoning requirements the gap in housing costs were 40-63 percentage points lower. More affluent sections of communities typically exhibit the most strict zoning laws preventing rental and multifamily housing units from being developed. These rental units house a large number of lower income families since they are unable to afford a home.

Communities have known for some time that maintaining deed restrictions combined with strict zoning laws preventing dense commercial and multifamily units will increase home values at a significant rate. They also significantly impact the quality of education, but as this study reveals the costs do not outweight sending your child to a private school. Saving money on housing costs and living in a less affluent area of town should be something people consider.

Worst Hit Housing Markets Now Showing Increases in Home Values

CoreLogic monitors Real Estate data throughout the country and produces statistical data monthly.  This month there is a notable change in home values specifically in the hardest hit areas including Florida, Michigan, and Arizona.  Other areas around the country including here in Houston has already seen increases in home values but some areas are still struggling.  Based on this new study a larger portion of the country than previously thought is seeing a positive trend in the housing markets.  Provided mortgage rates continue to stay low the trend will/should continue. The Federal Reserve stated they have yet to  witness strong signs of inflation and have no near term plans to raise rates.  Still, anyone seeking to purchase a home should seriously consider doing so while the values and rates are still low.  Warren Buffet back in February stated that he would be buying "a couple hundred thousand of homes" if he had enough liquid cash and a means to manage all those properties.

For more on the report including a few statistical numbers click here.

EPA Loses Court Battle, Supreme Court Sides with Land Owners.

Till now the EPA had the authority to levy extreme fines. Based on court documents, when the EPA prevails against any person who has been issued a compliance order but has failed to comply, that amount is increased to $75,000—up to$37,500 for the statutory violation and up to an additional $37,500 for violating the compliance order. Land owners were required to pay the stiff fines and had no avenue in which to challenge an EPA ruling.



In northern Idaho couple decided to take the EP to court. The case labeled Sackett v. EPA involved the building of a property located on Priest Lake but the EPA had labeled the area a wetland and informed the Sackett's that any disturbance or building on the land would result in stiff fines. The EPA had rules that the Spackett's at times had discharged fill material into wetlands at the site filling approximately one half acre. By causing such fill material to enter waters the Sacketts have engaged, and are continuing to engage, in the ‘discharge of pollutants’. The discharge of pollutants without a permit constituted a violation of section 301 of the Clean Water Act.

The had couple hired several engineers to analyze the land and produced data that disputed the EPA's findings. The Sacketts, who do not believe that their property is subject to the Act, asked the EPA for a hearing, but that request was denied. During an interview last fall Mrs. Sackett reported this conversation she had with the EPA; 'So, why would I stop building my house?' The EPA response? 'Because we told you to.'"

The couple decided to take the EPA to District Court and eventually it was appealed all the way to the Supreme Court. The ultimate ruling was unanimous (9-0) in favor of the Sackett's.

Justice Alito responded in brief by saying,

The reach of the Clean Water Act is notoriously unclear.Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on alot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy. The EPA may issue a compliance order demanding that the owners cease construction, engage in expensive remedial measures, and abandon any use of the property. If the owners do not do the EPA’s bidding, they may be fined upto $75,000 per day ($37,500 for violating the Act andanother $37,500 for violating the compliance order). And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that is just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to mention private property, such treatment is unthinkable.

We applaud th Supreme Court for taking the correct course of action and limiting the EPA's powers!

Has the Economy Caused Property Tax Revenue to Fall?

Most home owners, including activists that consistently promote increases in government spending, desire to have their home values consistent with the current housing market. (Ironic in a way.) Knowing you are paying more in taxes when rates are based on decreasing home values is something most individuals despise. While there has been a reduction in tax revenue due to reduced spending the local governments have yet to strongly lower owner's assessed values.



A new study from USA Today shows that property tax collection has increased even while the economy tanked. However, for the first time since 1995 collection rates for 2011 were below the rate of inflation. Many local governments are just now starting to review property values. Most local governments created laws preventing assessments of the same home over a short time period thereby preventing drastic increases in property taxes. Well, these rules also apply when property values decrease as they did the past several years.

Based on the USA Today report the property tax collections last year rose 1.2% but actually declined 0.9% when adjusted for inflation. Property taxes generated $436 billion which is about $66 billion more than in 2006 when home values peaked.

Realtors are a great source of information regarding true property value. The only way to have a home value reduced is through a Comparative Market Analysis (CMA). Many Realtors will help fight by providing actual CMA's when confronting the local government. Providing a Zillow Zestimate to a government official will only have them laughing. Hiring an appraiser is an option but even then they are not always the most reliable.

For more on the study head over to USA Today.

Jobless Claims Hits 4-Year Low, Fed's Business Index Highest Level Since June 2010

The unemployment rate held steady for February at 8.5% despite increased jobs numbers as reported last week.  This was caused by more individuals coming back into the labor market seeking jobs.  The U6 unemployment rate (which includes people who stopped searching for employment) actually dropped.

State Unemployment Claims

"This suggests that the recovery is firmly on track," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

The consumer price index increased 0.4% last month driven by increased fuel prices. Food prices actually dropped for the third straight month.

For more details on the data click here.

Guest Article from NewHomes.move.com - Retrofit Your Home

Homes In Sugar Land (Country Club Lifestyle Realty) has teamed up with www.NewHomes.move.com the official website for the National Association of Home Builders to bring even more exciting and relevant content to our Real Estate Blog! Not only do we feature National and Local News, Housing Statistics, Local Community Information, Charity Events and our very own housing studies, but we can now bring connections and advice from Home Builders! So, please welcome Andrew Hill as our very first guest blogger!

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With all the hype about going green, you may just think it’s an expensive that just saves a couple of trees. But what if going green didn’t have to cost a fortune? What if going green meant you could actually save money? At first, this may sound like an outlandish idea. After all, when I hear the words “green home” I often mistakenly picture a strangely shaped “house” made out of organic tea-leaves and recycled aluminum cans. But going green isn’t a strange space-age concept and better yet, retrofitting your home can create significant savings.



To retrofit your home, the first thing you should consider is having an energy audit. These experts will look at every aspect of your house and tell you where your energy savings can be improved. If you’re serious about going green, having an energy audit is a very important step. For those of you that aren’t quite ready to dive in, we have other suggestions for how you too can go green (and save some green while you’re at it.)

The two most sensible and easiest ways to retrofit a home are programming the thermostat and switching the light bulbs. Every family has a different threshold for temperature, so we won’t dictate the required settings. It’s up to you to decide what’s comfortable, but make sure to utilize other means of heating and cooling, such as putting on a sweater or using a fan. By programming your thermostat to be less stringent with the temperature while you are at work or asleep, you can significantly reduce your energy expenditures. Likewise, switching from incandescent to CFLs can potentially save you hundreds of dollars over the lifetime of the bulbs. CFLs not only reduce heat production and energy usage, but they also last much longer than incandescent bulbs.



Another simple way to retrofit your home is to plant trees. Trees? Yes. Planting trees that are native to your region can help save your air conditioning bill by providing shade and can even act as a wind blocker to protect your home on those drafty nights.

As you can see, going green doesn’t have to be a strange or even expensive. There are hundreds of other ways to go green, including switching to energy efficient appliances, using low-flow faucet heads, and caulking all of those leaky areas around your door. And if you’re thinking about buying, selling, or investing in real estate, green retrofits are a great way to boost the value of your home. So the next time you consider the cost of going green, think about what you could save by making the switch!

Andrew Hill

ahill@thebdx.com

Senate Legislation Requires Lenders to Speed Up Short Sale Process

Short Sales only impact the credit record for three years while foreclosures last seven years. Thus, many people under water on their mortgages have sought this route to sell their homes. However, lenders are extremely slow and have no strong desire to accept the loss. They hope that over time the home owner will obtain additional finances to continue payment.

Three senators are now banding together to require lenders to speed up the short sale process. The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer. The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.

For more head over to DSNEWS

US Housing Starts Continues Increase - Hits 2008 Levels

The U.S. housing starts rose more than most economists expected in January. The rise was caused by a surge in new rental property boosting hopes the housing sector could help economic growth this year.

The Commerce Department reported on Thursday that housing starts climbed 1.5 percent to an annual rate of 699,000 units.

Starts of multi-unit buildings, which are often rented, jumped 8.5 percent last month. New construction on buildings with five units or more increased 14.4 percent.

Groundbreaking on single-family units, which make up a much larger portion of the sector, fell 1.0 percent. This might appear as bad news, but in actuality it is positive news because the current inventory of single family homes continues to steadily drop. In Houston for January the number of sales actually increased in 2011 compared to 2010, and the inventory significantly dropped. The average price of single family home increased just below 1%. All this data continues to show that the housing market is improving and investors and some home owners realize that prices and loan rates are at all time lows.

U.S. Housing Starts

While housing starts are still increadibly low when compared to 2006 (2.2 million) we must remember that during the housing boom builders were flooding the market. We do not want to witness those insane levels again until the population increases substantially.

Tax Review - Debt Relief Forgiveness Act of 2007

The IRS requires anyone that received forgiveness from a previous debt to report that amount as income. However, the Mortgage Relief Debt Forgiveness Act of 2007 allows individuals to exclude the amount forgiven on their principal place of residence. This particularly helps individuals that were under water on their mortgage and thus utilized a short sale to unload the property. Currently the exemption applies from 2007-2012.

Obama is now seeking to have this act extended through January 1st of 2015. DSNews

To learn about what qualifies read IRS publication 4681.

Here are some more examples of debt which is not taxable.

• Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
• Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
• Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
• Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
• Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

For specifics you can also contact a certified professional accountant.

Unemployment rate drops to 8.3% on strong jobs numbers!

The US economy created 243,000 jobs in January dropping the unemployment rate to 8.3%. Even better were the revised November and December numbers that increased by 50,000 jobs. The biggest gains were in the professional and business service category. The markets have responded favorably as all currently experiencing over 1.0% gains.

For more details head over to CNNMoney.

Housing Market Showing Real Signs of Strengthening

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.” The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently. “The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

For more head over to DSNEWS.com

How Accurate Is Zillow? New Study of Actual Home Sales Says Not Really.

Zillow, based in Seattle, Washington, has made millions of dollars since its launch many years ago. The idea of allowing anyone to see the value of their home for free was a novel idea with extraordinary appeal to home owners. Zillow seeks to utilize public records combined with math formulas to calculate a home value.

So, how accurate is this “Zestimate®” value? At Country Club Lifestyle Realty we have analyzed 91 homes sold throughout Houston to show that Zillow will at times be consistent with the actual sales price of a home, but the overall results are not a ringing endorsement. In a few cases Zillow missed the sales value of a home by 25-30%. In one specific case the value was off by $121,000. That is a large chunk of change.

The study involved home sales ranging in value from $130,000 to $530,000 over a 30 day period beginning in December 2011. The majority of sales in the Houston and surrounding suburbs fall within this range. Higher end homes were specifically excluded from the study since luxury homes may tend to skew the data. The intent of the study is to determine an accuracy level for the vast majority of home owners. While the study includes the Houston and surrounding suburbs the author believes the values are consistent for the majority of the country. The results are similar to a study performed by The Wall Street Journal in 2007.

The actual data utilized in the study is presented below. Figure 1 provides the raw data. Figure 2 shows a linear comparison of the same data with 5% error bands. Figure 3 shows the normal distribution using a bell curve.

Percent Error of Zillow's Zestimate Against Actual Home Sales

5% Error Bands for Zillow Zestimate When Compared Against Actual Home Sales

The Normal Distribution of Zillow's Zestimate in Percent Error Against Actual Home Sales

Using a statistical analysis the results are the following:

• Zillow’s Average Percent Error: 6.14%
• Study Accuracy: +/- 0.86%
• Median: 6.70%
• Standard Deviation: 8.45%

As evident by first glance (plus the large standard deviation) the only clear trend is that Zillow generally underestimates the value of the home. For this study homes below $160,000 tended to not exhibit large swings in percent error when compared to their actual sales price. Beyond this value a specific home may be undervalued by 25% or overvalued by 15%. Overall 77% of the homes were undervalued. This is good news for buyers when they convince sellers that Zillow is an accurate representation of their home’s value. In other scenarios they may lose out on the house of their dreams by insulting the home owner with a low ball offer.

For a given home owner there is only a 1 in 5 chance their Zestimate is within 2% of the actual value and a 1 in 3 chance the value is within 4%. The same 1 in 3 chance also exists for a Zestimate above 10%. Overall these results are not impressive.

As reported by The Wall Street Journal, through an interview with Stan Humphries, Vice President of Data and Analytics, Zillow's estimates utilize sales prices, past sales history, tax assessment data, and general home size. In addition they seek to obtain a value through similar comparable homes. Based on this information, why then is Zestimate wrong and why so much random variation when compared to actual sales?

The approach as stated by Mr. Humphries appears sound; however, after reviewing this statement the error becomes apparent. First, tax assessments can vary significantly from home to home. Some homes may be homestead while others may not have been re-assessed for several years. Second, past sales history (as most real estate agencies and banks will attest) provide no indication of current or future performance. The housing economy can change quickly as evidenced in 2008. Third, the general home size leaves out the amenities associated with homes and communities. For example, gated communities generally increase the home value. Upgraded kitchens and bathrooms on a 1970’s home can impact the overall value. The overall condition of the building and lawn clearly influences the sale value. Even the energy rating of a home can have a significant impact.

Clearly Zestimate is not a reliable number but sadly many home owners lean on Zillow to determine the value of their home. A quick run through blogs posted by home owners in Zillow’s Real Estate Advice section illustrates this fact. Many voice their frustration to Zillow when their Zestimate changes due to tweaks in the algorithm and the value declines.

So how should a home owner obtain a better representation of their home value? The most accurate method is to contact a local Realtor. However no longer are in home visits or long extended phone conversations required. Many Realtors (including CCLR) now offer a free market analysis through e-mail. Home owners can sign-up for monthly email campaigns that provide current home sales in their area. For anyone around Houston and the surrounding suburbs, CCLR utilizes a program called Market Snapshot that provides the latest home sales and listing details tailored for a specific home. Click here to enter your home's address and information for your free Market Snapshot.

National Average Home Loan Amount Also By State

Lending Tree has released data showing the average home mortgage amount broken down by state. The national average is $222,261 which amounts $1061/month on a 30-yr note at 4% without insurance and taxes. So where is Texas? They came in near the bottom at just under $183,000.

Surprisingly New York or California did not top the list. Actually they didn't even make the top 3. Based on loan amount the top five most expensive places to live is:

1. Alaska - $677,299
2. Washington D.C. - $393,453
3. New Jersey - $344,240
4. New York - $340,124
5. Maryland - $328,650

The five cheapest places are:

1. Mississippi - $137,182
2. Nebraska - $137,515
3. Delaware - $140,398
4. Indiana - $147,135
5. Iowa - $148,344

Photography Tips From Professional - Lesson #3

Welcome back! It is now time for our third and final lesson right before Christmas. In Lesson #1 we learned about the simplicity of the camera mechanics with the f-stop (aperture) and shutter speed. In Lesson #2 we learned about ISO as well as how the average person should set his camera when shooting various scenes. Today I will touch on the final two rules for creating stunning photos. As an added bonus for our more advanced users I will include one tip using the f-stop (aperture) to improve the depth of field.

When creating a photo or painting the artist should always consider the Rule of Thirds. So what is the Rule of Thirds? For top painters and photographers alike they view each area of interest by dividing it into thirds both in height and lengthwise. This creates three columns and three rows with nine sections. When you take a photo or create a painting the points of interest should be located around the various quadrants/lines created by this division. The main intention is to have the eyes flow through the picture from one quadrant to another. The picture below illustrates this rule. The castle, horizon, rocks all fall within a quadrant and around the division lines. As you view the picture pay attention to how your eyes move throughout the entire shot. Too many amateur photographers place the point of interest directly in the middle of the frame. Imagine how the castle picture would look if everything was shifted with the castle right in the middle? It would clearly be lacking in pizazz and the eyes would not move throughout the picture.

NOTE: All rules are meant to be broken, but you must first learn the rule before you can break it.

Rule of Thirds

Castle In Italy

Most individuals love portrait shots of friends and family. However, they don’t need to be composed shots with everyone saying “cheese”. (In reality they should say “Whiskey” during that type of shot because it brings about a more natural smile.) When having a family or group of individuals gather together they typically are at their most relaxed and humorous state before you begin shooting. These times provide excellent opportunities to take some really interesting and fun shots without anyone noticing. Notice how the shot captures the candid and relaxed aspect of everyone while also following the Rule of Thirds. (Faces are NOT in the middle of the picture.) Lastly, when taking candid portraits you need to be “in the moment”. Try and become the subject and predict their next move, thoughts, or facial expressions. Doing so allows you to capture some fascinating photographs.

Family Shot at Christmas

Predict Your Subjects Behavior

Before moving to the final tip let’s summarize the past three lessons. I still recommend reading all of them one final time to see the connection between each lesson.

Lesson #1 – The main idea behind f-stop, shutter speed, and auto programing is to determine the amount of light necessary for a properly exposed photograph. The faster the shutter speed and the larger the f-stop number the less light allowed into the camera.

Lesson #2 – Larger ISO numbers mean less light required to produce a good exposed photograph. Large ISO numbers should be used in low light and indoor settings. Amateurs should utilize the Tv (S) setting for their cameras instead of the auto programming features such as Portrait, Action, or Auto. This allows you to adjust and match the shutter speed with the subject matter allowing the auto aperture feature to control the exposure.

Now the bonus feature. Anyone that has spent a small amount of time shooting realizes that not everything in a photograph is in focus. This behavior is more pronounced when using your zoom. This affect is due to physics but a photographer can control the amount of subject matter within focus using the aperture. The area in focus is termed the depth of field - how much distance in front of and behind the subject remains in focus. To increase this distant use a higher f-stop setting. For example instead of shooting at f-8 shoot at f-11 or even f-16. Just remember that the larger the number the smaller the aperture (hole) and the less light allowed into the camera. You will need to reduce the shutter speed or increase the ISO setting to compensate for the reduced amount of light.

Well, I hope everyone enjoyed the lessons and are now ready for some incredible picture taking over the holidays. Take care everyone!

Photography Tips From Professional - Lesson #2

Welcome back and it’s now time for our second lesson. Last week we learned about the simplicity of the camera through the f-stop (aperture) and shutter speed. Hopefully you dusted off the camera and performed the homework assignment. If so you should now feel very comfortable with the main functions (Av, Tv, Auto, Manual, Portrait, etc.) on your camera that control the main factors in creating a photograph. This week’s topic will focus on two more aspects (ISO and the Tv Setting) for creating a nice photo.

The ISO numbering convention is not important except to realize that the higher the number the less light required by the film or sensor to get a properly exposed photograph. The numbers typically seen are 100, 200, 400, 800, and 1600. A simple rule for most shots is that on a very bright and sunny day you should utilize ISO of 100 or 200. For indoor shots and times around dusk 400 and 800 are good choices. This doesn’t mean you can’t utilize any ISO setting you desire, however for most amateurs that shoot using ISO 100 during darker settings the only light source you really have available for a properly exposed photo is your flash. The two pictures below illustrate what happens when using a low ISO setting with a flash in a dark environment.

Duck shot at ISO 800.

Duck shot at ISO 100

Both photos were shot using the Auto feature (what most amateurs select) utilizing flash with the left at ISO 800 and right at ISO 100. Notice the difference in color and exposure of the ISO 100 photo (bottom photo). The chair should be green, the feet orange, and beak a stronger yellow as evident in the ISO 800 photo. However, due to the ISO setting these colors were muted by the flash and the overall picture appears washed out. There are ways professionals can adjust this effect on a higher end camera or through color correction on a computer, but for the amateur it's best to always shoot with a high ISO setting! So, figure out how to set it manually instead of allowing the camera to adjust the setting.

The last tip for today deals with shutter speed and aperture combinations. For most people these are the most confusing aspects of a camera. In my opinion this is caused by manufacturers and other photographers not providing two very basic rules for shooting. Instead they get technical and begin providing information more suited for a thesis.

The first rule for shutter speed/aperture setting combinations is that every amateur should be shooting with either the Tv (or S) setting on their camera. They should rarely every require the auto program features like Portrait, Landscape, Sports, or any other auto feature.

The second rule is shutter speed. When shooting anything that is stationary the shutter speed should be between 1/60^th and 1/125^th. The sole intent is to have nothing blurry in the photo as a result of your own movement. If you can hold the camera extremely steady you may be able to shoot at 1/30^th or slower but for 99.9% of all your stationary shots the above range is perfect. If the scene is moving quickly (like sports) then use a shutter speed of 1/200^th and above. This will stop all movement. This means on almost all your shots the camera should be set on Tv (or S depending on your camera) thereby allowing you to set the shutter speed! Here are two examples.

Example 1: Your on vacation and you see a beautiful mountain range. The day is sunny. You pull out your camera with the Tv setting, set the ISO to 100 or 200 (bright sunny day setting), set the shutter speed to 1/125^th of a second (nothing moving) and shoot the picture. Done! It’s that simple!

Example 2: Your at your son’s indoor basketball game. You want some actions shots but need to make sure your son is not blurry. You then put the ISO setting to 800 (indoor/darker setting) and place the shutter speed at 1/200^th. Done! Again it’s that simple.

Next week (Lesson 3) we will talk about arranging a photo. Until then start adjusting your ISO and Shutter Speeds and see if that alone doesn’t improve your photos! I promise it will!

Photography Tips From Professional - Lesson #1

With Christmas approaching I thought a blog on photography would be appreciated by the masses. There is nothing I like more than a photograph or well written song that stirs the soul. I have always enjoyed not only shooting but teaching others photography my entire life. Watching someone grow in their ability always brings a smile to my face.

I have read many articles and books on photography plus seen many tips for the amateur shooter and the one thing I found most frustrating was the inability to teach in an easy to understand method. Through a series of three simple blogs I hope to have everyone understand the basics of a camera, what the different settings mean, and simple techniques to significantly improve on your abilities. What I present here will be simple to remember so note taking is not required.



Today I will talk about the basics of a camera. Regardless of film or digital they all work the same. A camera has a hole on the front that allows light to pass through and impact film or a computer chip called a CCD or CMOS. In all cases the amount of light determines the exposure. If there is too much light the picture is white, if little to no light the picture is dark. To control the amount of light allowed onto the film or sensor a camera uses two mechanical techniques. These are the shutter speed and f-stop (also called aperture).

Before you begin to panic understanding these two are extremely simple. The f-stop is essentially the size of a hole in the opening. The smaller the f-stop number the larger the hole diameter thereby allowing more light. The number and size have an inverse relationship. Imagine your window blinds partially open allowing some light into your living room. If you open them further you get more light.

The shutter speed is how long the camera absorbs light. One example might be 1/60^th of a second. As the speed increases the amount of light hitting the film or sensor decreases.

At this point I could speak about ISO rating, flash, and other aspects but everything revolves around controlling the amount of light hitting the film or sensor. All the settings on a camera control these two aspects. Below I put together a list of typical settings showing what each controls.

• Manual (M) – user sets the f-stop AND shutter speed.
• Aperture (A) – user sets the f-stop ONLY. The shutter speed is controlled by the camera.
• Shutter Speed (S) – user set the shutter seed ONLY. The f-stop is controlled by the camera.
• Auto, Program, Portrait, Action, Landscape, Night, etc. – user sets nothing as the computer guesses and the correct f-stop and shutter speed combination.

With the advent of the CCD and CMOS users now get direct feedback on their pictures. This is a HUGE advantage because you can retake the shot quickly by adjusting the amount of light entering the camera if your first shot was either too dark or too light. With this in mind there is NO reason not to constantly shoot and do so frequently. Who cares if you get ten shots of the same thing? They can be easily deleted and by adjusting the settings you get different results. So your homework for now is to go play with your camera and try different settings. I promise it won’t break!

The next lesson will teach you about ISO and what combinations of settings you should generally use for most daily shots. The third lesson will teach you a few simple tricks professionals use when taking shots.

Five Energy Tips to Save Upwards of $100 a Month!

There are numerous tasks that can provide energy savings but as we all are aware many aren't really helpful or practical without much work. For example filling the car ties up with air or caulking windows. Well, duh! We all know this, but how about something more realistic including areas you probably haven't realized? Using my engineering background I have compiled five items that you may not realize provide a significant impact on your energy costs. I personally utilize these techniques and my home's energy bill this summer never exceeded $150. So without further ado here is the list.

First, almost all refrigerators allow you to adjust the internal temperature with many now showing the actual temperature in Fahrenheit. Most normal settings are 36 degrees for refrigerators and 2 degrees for freezers. All contents within the refrigerators survive fine at temperatures as high as 39 degrees and freezers upwards of 10 degrees. Depending on the change in temperature this can save you on average $10 a month on your energy bill.



Second, your computer probably has a 750 watt power supply that runs continually when not show off. They have the potential to use upwards of $30 or more a month in electricity. All computers should be turned off when not in use. If standing around for a boot up is frustrating then use the sleep mode. This still shuts down the computer but remembers all your settings providing for a much faster startup.

Third, hot water heaters are typically 3500 watt storage devices. Some homes have two or more. Along side the air conditioner, stoves, microwaves, and furnaces they utilize a large amount of electricity. If your family takes a large number of showers maybe increasing the temperature is worthwhile, but most families should have their hot water heaters set below the recommended setting, especially if you are single. The savings can amount to upwards of $10 a month.

Fourth, the oven is an energy hog having ratings usually around 3500 watts similar to hot water heaters. Most families rarely fill the oven during use because most items cook at varying temperatures. Instead of utilizing the oven purchase a larger toaster oven that instead utilizes 1500-1700 watts. You will cut the energy usage for stove cooked items in half saving upwards of $20 a month depending on the amount of cooking. In addition cooking with convection reduces the cooking temperature by 25 degrees providing additional savings.

Fifth, sprinklers can utilize a large amount of water especially during the summer months. The ground gets hard increasing the surface tension preventing water from fully being absorbed into the ground. To prevent runoff and maximize absorption utilize the same technique as top quality golf courses. They water twice with the first watering lasting only a short period thereby allowing time for the surface tension to break and maximize water absorption. They then utilize a second watering cycle with longer times. This approach reduces the water usage by upwards of 25-30% over a single watering cycle. During the summer when water bills can reach in the upper $100's this amount of savings can easily reach $20-$30 or more. Not to mention your grass will thank you!



There is your total savings of $100 a month in energy costs and the amount of effort to accomplish these savings was essentially zero.

Company now offering insurance for incorrect appraisals.

One concern for banks and investors who purchase mortgage backed securities is the quality of the appraisal. If the appraisal is below actual market conditions the bank has a lower risk of lost revenue. However, if an REO property was appraised too high then upon auction or sale of this property a higher revenue loss is essentially guaranteed. To combat this problem Kirchmeyer & Associates is partnering with Group9 Insurance Solutions to offer appraisal insurance for banks and investors to cover this financial loss.

At first glance this insurance might not seem helpful to home owners. However, home owners currently have issues selling their homes for two reasons. First, banks are reluctant to loan money to particular individuals fearing they will default on the loan. Second, in many cases the appraisals are coming in under the contract price. This prevents banks from providing loans unless larger down payments are made to cover the difference in contract and appraised value. In addition some appraisers are fearing law suits by banks if their evaluations are too high so they tend to evaluate conservatively.

The new insurance coverage will now allow banks to insure against loss due to poor appraisals hopefully freeing up banks to increase their loan amount, and re-leaving some fears of appraisers halting their conservative approaches. For more details click HERE.

Freddie Mac to Provide Cost Incentives For REO Home Buyers!

Yep, you read that correctly. Freddie Mac is offering a new program designed to help reduce the number of REO's from the market. The real estate sales unit of Freddie Mac called HomeSteps is providing several promotions to reduce inventory and depending on your own personal situation you may qualify. Here are the details:

• Freddie Mac will pay up to 3% of the final sales price towards the buyer's closing costs and a $1,000 selling agent bonus for initial offers received by HomeSteps between November 15, 2011 and January 31, 2012 with escrow closed on or before March 15, 2012. This offer is valid only on HomeSteps homes sold to owner-occupant buyers.
• A two-year Home Protect^® limited home warranty that covers electrical, plumbing, air conditioning, heating and other major systems and appliances is offered on some eligible HomeSteps homes. Home Protect also provides discounts of up to 30 percent on the purchase of appliances.

On average a HomeStep house sells for 94% of the estimated market price.

For more details including who actually qualifies head over to the press release or to HomesSteps.com.