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Most Creative Loans We Funded in 2013

1- We funded a $900,000 Orange County purchase with just 6.5% down payment and no mortgage insurance

2- We funded an Orange County condo, with a VA loan, and got both the Master Association and Condo Association VA approved in 30 days

3- We funded a $600,000 San Diego County purchase, with just 5% down payment and a seller-carry back second mortgage and a conventional first mortgage.

4- We funded a 7-unit San Diego apartment property, $820,000 purchase price with just 10% down and a 20% seller-carry back second mortgage.

5- We funded an “underwater” property with loan values at 135% of the appraised value in Los Angeles County.

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  • 3 comments

    If the condominum is not VA-approved, how do I get a VA home loan offer accepted?

    Many veterans in California purchase properties which are classified as condominiums.  Some are large complexes, with professional HOA management, some are small complexes (under 6 units) with no monthly HOA fee and an informal cost-sharing agreement, and some are townhomes.  All share on thing in common–they are listed on the county records as a condominium.  This, the VA loan can not be funded until the condominium complex is approved.

    The Southern California market has shifted, seemingly overnight from a buyer’s market to a seller’s market.  Many listing agents are presenting multiple offers to sellers.  Sadly, sellers leave some money on the table because the best offer is one using a VA home loan.  The sellers believe that the VA home loan can not be used because the condominium complex does not have a VA approval.

    Buyer’s agents jobs then, are to present the VA offer with an eye towards minimizing the risk associated with it.

    First, the buyer’s agent would do well to present documentation which demonstrates that the veteran is a strong buyer.  Some successful agents go so far to present my automated underwriting findings along with asset and income documentation (with the veteran’s permission, of course).  Demonstrating that the veteran has the credit, income, and asset requirements, to be approved for the loan amount, shows that the veteran is “bankable”.

    Second, the buyer’s agent might address the three common concerns, sellers have with VA loans in the cover letter.  The cover letter should highlight that the veteran earned the no-down payment loan as compensation for his or her service to our country.  I sometimes call this “wrapping the offer in the flag” and the buyer’s agent should not be shy about doing it.  If the veteran served overseas, highlight it. If the veteran earned a distinctive award, highlight it.

    The buyer’s agent should be clear about whether the seller is being asked to pay for the VA non-allowable costs and specify the dollar amount.  If the offer does not include seller-paid costs, the letter should state who is paying for those costs (usually the lender) and reference the section in the offer which states that.  I generally recommend that agents use this language

    “VA non-allowable costs to be  paid by lender.  Seller not required to pay any of the veteran’s non-allowable closing costs”

    The buyer’s agent should discuss the condominium approval process in the cover letter, too.  The lender’s name, email, and number should be included, along with 2-3 references who can confirm that the lender knows how to get the complex VA-approved.    This point is important.  The lender should be able to demonstrate proficiency in the complex approval complex and should state that the appraisal can be ordered before the complex is approved.  Not all lenders will do this.  Many lenders state that the complex has to be approved prior to ordering the appraisal–that just ain’t so.  The loan can be processed, underwritten, and approved before the complex approval comes in.  Ultimately, the lender should have a full approval with one condition remaining; the complex approval.

    Finally, the buyer’s agent should confidently present the VA Amendatory Clause with the offer.  The VA Amendatory Clause is nothing to hide.  Sellers should understand that the appraisal will be performed conditioned upon the complex approval.  Ultimately, that means that the veteran buyer’s deposit is refundable if the complex can’t be approved.  If the buyer is bearing the cost of the attorney opinion letter, that should be disclosed as well–it shows that the veterans has “skin in the game” and a vested interest in a quick closing.

    VA home loans are a great tool for buyers who have served our country.  Sellers can get top-dollar for their properties if they address the “risks” a VA offer might present, have a game plan for how to mitigate those risks, and help the agents, veteran, and lender to close the loan quickly.  Communication is key to a successful VA home loan transaction and that communication starts with a prepared buyer’s agent.

     

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  • Comments are off for this post

    Can Bernanke Keep Mortgage Rates This Low Into 2015?

    I’ve been a vocal critic of Ben Bernanke.  I thought his Quantitative Easing schemes would eventually create a bubble in the Treasury and mortgage-bond markets.  Bernanke has committed to keeping rates low for another 18-24 months.

    I was wrong.  I violated the first rule of market prognostication (from the late Marty Zweig):  Don’t Fight the Fed

    Let me give you some background.  Mortgage rates are driven by the secondary market (which is a fancy word for bond buyers on Wall Street).  I offered an abbreviated history of secondary mortgage marketing , six years ago, here on Bloodhound Blog.  Essentially it works like this:

    • Home buyer applies for a loan with a mortgage originator
    • Originator processes the loan for submission to a lender
    • Lender underwrites the loan to agency guidelines (FHA, FNMA, FHLMC, VA)
    • Lender funds the loan
    • Lender secures guaranty from agency
    • Lender retains servicing rights but assigns rights to principal and interest to an investment bank
    • Investment bank packages loans in a pool, carves up the pool into bonds, and sells them to individual investors

    Two things are important in secondary marketing:  the agency guaranty and the ability to sell the bonds.  The agency guaranty offers a sense of security to the investors and the demand for the bonds must be there.  When I thought rates would rise, because of runaway inflation, I posited the the Federal Reserve Bank’s power was quickly deteriorating.  What I hadn’t anticipated was that central banks, all over the word, were in even worse shape.  The Fed might be ugly but she’s the prettiest gal at the dance.

    Last month, I asked Alan Nevin, economist with the London Group, “What if the buyers run away?”  To which, he replied, “Where will they go?”.

    This is not a pollyannish answer.  Where WILL investors go?  I offered these options:  Hong Kong, Australia,  and Canada

    Then it hit me–the world wide capital market is huge and the options for capital investment are limited.  Imagine the global capital market as a 64-gallon trash can.  The Hong Kong, Australian, and Canadian bond markets are like a shot glass, a pint bottle, and a quart can.  Even if you tried to dump all that trash into those three little receptacles, you’d have at least 63 gallons of trash which needed a landfill.

    The domestic treasury and mortgage-backed securities markets are that landfill—a great place to dump all of that trash.  Maybe Hong Kong, Australia, and Canada can pull some capital away from the domestic bond markets but The Fed-controlled landfill is still a good place for investment.  For now…

     

     

     

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  • 3 comments

    There is no real estate inventory problem in Oceanside, CA

    How often had you heard real estate agents complain about “the inventory problem” this past year?  I used to think their complaints were farcical until these past 3-4 months.  I have about a dozen pre-approved buyers out looking for homes.  Interest rates are low and the foreclosures are getting snapped up as soon as they hit the market.  Not one of those dozen has been able to get an accepted offer since Labor Day, 2012.

    Clearly, there must be an inventory problem. 

    It’s time to change gears real estate agents.  A few years back, I suggested that buyers would be controlling the market and the listings side of the business should be de-emphasized.  All the properties being offered were short sales or foreclosures.  Paperwork-intensive transactions didn’t sound so appealing to me and I recommended that agents focus all their efforts on finding buyers and getting them into contracts.  Those who followed such advice didn’t get rich but earned a darned good living these past few years.

    I had breakfast this morning with Mr. Oceanside, Don Reedy.  We discussed the local market and “the inventory problem” when it hit me; there is no shortage of homes.  In Oceanside alone, there are thousands of home owners, with equity, who can sell their properties to ready and willing home buyers.  This offers the ambitious real estate agent a great opportunity.  Too often, real estate agents (and loan originators) forget that we are paid to add value to transactions.  If we’re simply acting as gatekeepers, we are no different from everyone else.  We need to “create personal inventory”–find sellers for the buyers who want their homes.

    Here is my ten- step plan for real estate agents, for a great 2013…with PLENTY of “personal” inventory:

    1. Attend your local caravan meeting each week.  Pay close attention to the agents who speak during the “buyers’ needs” segment.
      Call a dozen local agents weekly who work with buyers.  Find out where the inventory problem is.  At this point, you will see a glaring opportunity in your town/market area.  If you know that those agents have 2-3 buyers, for a certain price range, in a certain area, you have identified “half” a market.
    2. Look at the property tax records in the “problem” subdivision.  Choose only properties with owner’s equity.  Generally speaking, you’ll look for homes bought prior to 2006 or in 2010.  If you’re doing a search with the local title company, and you know the homes are worth $350,000-$400,000, you could also search for sales which had recorded mortgages under $250,000 (that can eliminate a lot of problems).  Compile a lit of potential “equity sellers”.
    3. Visit those equity sellers on a Saturday morning or Sunday afternoon.  Don’t mail them.  Don’t call them.  Don’t email them.  Bang on their door and tell them that you KNOW where 2-3 willing buyers of their property are.  Ask to meet with them to discuss the idea of “equity transfer” to different property.
    4. Meet the now interested seller and explain that, when they look at their original mortgage payment (before they refinanced), and add the expected equity from the sale of their home, they might be able to buy a “better” (bigger, nicer, closer to work) home.  It might be useful to have some listings printed out, in the “better” homes’ price range, to whet their appetite.  Recommend that they speak with America’s #1 mortgage broker, to get pre-qualified for the “equity transfer” program, with mortgage payments which were equal to their original (before they refinanced) payment.  Schedule a follow-up visit and tell them you’ll have the mortgage broker call them in the morning.
    5. Speak with the agents who have willing buyers for the home.  Verify that they are still in the market and that you might have a property about to hit the MLS.  Explain that you’ll give them a “heads up”, right after the listing agreement is signed, and tell them that you’ll let their buyers “preview” the property the day the listing is entered into the MLS.  Estimate when you think that will be.
    6. At the follow up visit to the interested seller, start the meeting off by showing them the available inventory for the pre-approved amount (you’ll have a pre-approval letter from the mortgage broker).  Sell the fact that you are transferring the equity from the existing property.  If they seem excited, offer to list thee property for 30 days only.  Explain that this market is a bit of an anomaly and, if you can’t get them the price they need, to affect the “equity transfer” in 30 days, it may not make sense to sell at that time.  Have the seller sign a 30-day listing agreement along with a 60-day buyer’s brokerage agreement.
    7. Instruct them to be out of the property from 2PM-7PM on the next Friday and out of the property from 1PM-4PM on the next Saturday.  Schedule time to review offers, at 6PM on that Sunday evening.
    8. Plan to enter the listing into the MLS on Friday morning (or late Thursday night).  Schedule an open house for that Saturday.  Call the agents with buyers, and instruct them to schedule a showing on that Friday (from 2:30PM until 6PM).  Tell those agents you plan to hold it open that Saturday and that quick offers are the wisest policy.  Explain that you expect to be presenting offers all day Sunday.
    9. Find your seller a new home.  Collect commission checks for adding real value to a lopsided market.  Celebrate.
    10. Repeat.

    It really is that simple.  If there are more buyers than sellers in a market, find more sellers.

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  • 17 comments

    SOPAStrike.com

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  • 6 comments

    Slugging Away. One E-mail Address At A Time

    I’m on a quest to find 75 San Diego real estate agents.  I need 75 agents, to give me permission, to e-mail them weekly.  I told you about my plan to secure those permissions and I thought I’d update you as I get results.

    Bill Lyons agreed to do a joint marketing deal with me but I haven’t taken him up on that yet.  I’ve been scrambling around with year-end stuff, and I took a holiday trip to Arizona, but I’ll do something with Bill next year. For now, I’m focused on the SDAR Officers’ Installation and Dinner as a magnet.

    I held a drawing at the Downtown San Diego caravan.  Thirty agents gave me their cards and Debbie Neuman won the tickets.  This works pretty well because while she is a quality agent, with established lending relationships, she’ll sit at my table that night.  This will be a good chance to get to know her and pitch ourselves as her “number two lender” (I’m not proud).    The challenge with the thirty “new” contacts has been securing permission to e-mail them..  I have spoken with ten agents thus far and only five agreed to receive my newsletter.  I do have a drawing scheduled at the La Jolla REBA, next week. and those folks know me better.  I guess if I have 25-30 permissions, by next Friday, I can celebrate the fact that I have achieved one-third of my goal.

    That means I’m going to have to grit it out for the final fifty permissions.  I’m going to start the “open house plan” after the first of the year.  The plan is to visit open houses and drop off a “care basket”, filled with snacks.  Agents get hungry at open houses so this is what I’ll give them:

    A couple of bottles of water, three bags of snacks, and a couple of oranges (or apples, or bananas).

    I’ll assemble them in my newly delivered TANSTAAFL lunch bags.  I ordered these from 4imprint.com and 100 of them cost me less than $300.

    I had my name, website, and phone number imprinted on them, along with the word TANSTAAFL.  The idea is that I can call later and play on the “There ain’t no such thing as a free lunch” idea and secure permission to email them.

    The front pouch holds 20-25 business cards in it.  Agents can hand these to buyers,

    I don’t LOVE the lunch bags.  They aren’t the best quality and I doubt they’ll be brought to the beach.  Agents could use them to keep a lunch and water cold so I’m hoping they keep these for future open houses.  Notwithstanding, I’ll spend $3-5 to be memorable to an agent and these bags are bright.  I think they make a cool statement too.  I’m pretty sure they will remember who I am when I call to follow-up.

    Retail selling is a grind.  I’m always looking for short cuts, to make my marketing efforts scalable, but sometimes the one-off selling situation cements the relationship more easily than large numbers.  As always, your feedback and suggestions are appreciated.

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  • 5 comments

    Who else wants some cheap and easy ways, to generate more purchase business from REALTORS?

    I cleaned up my e-mail database this week and was pretty surprised.  The lion’s share of our business comes from real estate agents.  Many times, I don’t speak with nor hear from an agent for 5-6 months…then…WHAM—I get a loan call.  That call always seems to come within two weeks of one of my email newsletters.  I understand my numbers pretty well:

    • for every California agent, in my database, it results in .6 purchase loans/year
    • over 75% of that business comes from agents, in the database, who open at least 50% of my emails (that comprises just 20% of the total number)

    Last year, I cleaned up the data base.  I whittled the number down to 70 agents.  15 of those agents accounted for 32 purchase loans and 55 agents accounted for 11 purchase loans.  If I want to close 72 purchase loans in 2012, I probably need 30 agents, who open at least 50% of my emails.  To add those extra 15 agents, I need to meet and add some 75 NEW agents to the database…pretty quickly.

    I broke down the content offered, too:

    • the highest click-through ratio (55%) came from marketing ideas
    • mortgage tips (like how to get a VA offer accepted) generated a 35% click-through
    • mortgage rates reports were largely unread (10% click-through)

    Agents want to hear how to get more business and then, how to do business properly.  Agents just don’t care about mortgage rates.  I’ll stop writing those onerous mortgage rates reports (nobody’s reading them and, because their time sensitive, they are more of a short-head).  I will start adding marketing ideas to my blog, then use those blog posts for my email newsletter content.

    Here’s what I did last night:

    • I created a new list, of the serial readers, and named it the “top-gun file”.  I’ll add new agents there, check it every 90 days, and move the agents, who are not opening 50% of my emails, to the “general agents” list.
    • I pre-loaded weekly emails, for the “top-gun file”, out to April 15, 2012.  I want to insure consistency
    • The “general agents” file will get a bi-weekly marketing idea.  I pre-loaded that content, out to April 15, 2012.

    Now I have to “find” 75 new agents, pretty darned quickly.  All I have to do is to secure permission to email them weekly.  I always tell them that if it annoys them, they can unsubscribe and some do.  Most just stop reading.  Almost every agent I meet gives me that permission so let’s just say I have to meet 100 agents to secure the permission from the 75 I need. Here are some ideas I have to meet those agents:

    Agents who hold open houses talk to buyers.  Agents who hold open houses get bored at those open houses.  I had 100 “customized lunch boxes” printed, with my name, website, phone number, and a message (TANSTAAFL) on it.  I’m going to go to Costco and fill these lunch boxes with a couple of 7-oz water bottles, a bag of pretzels, a bag of peanut-butter crackers, and an apple.    I’ll put a bunch of cards in the front pocket, along with a couple of articles about mortgage financing.  Then, I’ll deliver them to agents holding open houses, pick up their card, and call them a few days later to see how they liked the lunch box.  I’m hoping they’ll ask what TANSTAFFL means so I can transition to the question about receiving my weekly email newsletter.

    I attend the weekly pitch sessions and caravan for La Jolla Real Estate Brokers Association and have been invited to the Downtown San Diego pitch session and caravan, too.  I’m sponsoring a table for the SDAR Officers’ installation dinner, next month.  I figure that I can raffle off 2 tickets to the dinner.  Each “entry” will be a business card (and permission to e-mail), at each of those.  I might be able to partner up with an agent, who is holding a listing open on caravan, and hold the raffle there while exchanging my TANSTAFFL lunch bags for the business card (and permission to e-mail).

    I could probably do a cross-promotion with Bill Lyons of Revestor.  I can ask him to “donate” a couple of 90-day “free zip codes” certificates, in addition the 90 day trial he offers (I just gave you a link, Bill so consider that when I ask you).  I can also ask him to announce our “joint raffle” to the real estate agents in his database, and have them “enter” online.  I should have two extra dinners to contribute to that separate raffle.

    Consistency has always been my major challenge; I think I have that fixed until at least April 15, 2012.  I think I have a handle on which content “makes the frog jump”.  My other challenge is adding emails of quality agents…quickly.  Any critique of my current plan or ideas you might have is appreciated.

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  • 19 comments

    Revestor.com is live now. Revestor.com searches current listings by cash flow and capitalization rate.

    I received an email, from BHB Anaheim presenter Bill Lyons, that Revestor.com is live now and will be announced to the public tomorrow.  Bill knows that the Bloodhound way is to fly under the radar, sneak in the back door, and quietly win so I appreciate the chance to break the news.

    Revestor.com is a new property search site.  It’s unique proposition is that it allows users to search by either capitalization rate or cash flow.  Revestor believes it will become a useful tool for both investors and primary residence home buyers.  Bill Lyons suggested that its unique ranking display, offers data to a home buyer, which is currently unavailable.  Incorporating the income potential of a property offers another valuation model for home buyers to consider.

    I ran a search for an area with which I’m familiar; Oceanside, CA  zip code 92056.  I searched for properties listed from $150,000 to $250,000, by cash flow, and ten current listings were displayed.  The top two listings appealed to me:

    3906 Marvin -  a 3BR 2BA, 1064 s.f. SFD with $902 of free cash flow, with an 80% LTV loan, listed at $169, 767

    3132 Glenn -  a 4BR 2BA, 1302 s.f. SFD with $533 of free cash flow, with an 80% LTV loan, listed at 249,900

    Revestor offers a “launch” blog post and I’ll insert Bill’s comments from there (italicized), as I offer my ideas  here.

    Here is what I like about the site:  I like the map display of the listings and I love the fact that it ranks the listings by investment potential.  The financial data offered, on individual listings, is pretty comprehensive.  It drills down on expense data and allows the user to customize it.  The mortgage data is cool because it allows you to slide the down payment tool and see real-time figures.  The exit strategy information is unique but I’m unclear as to how they determine the potential resale value.

    Bill offered:  While San Diego is just a starting point we are still very much a “work in progress“. The site is not perfect (especially for a perfectionist that is striving for simplicity). We launched with about 75% of the functionality/capability that we wanted to, but hey, we were anxious to bring about change.

    Here is what I think needs improvement:  It’s only available for San Diego County right now.  That works fine for me but, as I’m sure the management of Revestor,com knows, that ain’t gonna fly if they intend to be a player.  I’m unclear as to the accuracy of the rental rates.  I thought the data look pretty high but I haven’t seen a property lease, in that zip code, for over a year now.  The individual property listing display page seems kind of boring with incomplete MLS listing data but the financial data exceeds my expectations.  Finally, the mortgage information is not “live” yet and a tad too ambitious.  That should improve as they secure live mortgage feeds.

    Bill offered: We will be the first to admit our ‘estimated rent’ and our algorithm are not 100% accurate. Over time (as the algorithm recognizes patterns in our database and our users give feedback it WILL gain more intelligence and get very close!). At this point, Revestor is not an end all be all, but rather a pre-due diligence tool. You certainly aren’t going to call up your real estate agent and say “buy 1234 Main St – now!” without doing any additional research but it sure is going to give you a good place to start

    All in all, Revestor,com is a great tool with a limited reach.  Tomorrow, it works for San Diego County agents and home buyers,  If Revestor,com wants to last past their cash burn rate, it is going to have to add new markets…quickly.  I’ve know Bill for five years now and I’ve seen him build profitable businesses pretty quickly.  If I had to bet on on a horse race, I’d bet on the Lyon.  Give Bill your feedback and don’t be too kind. He’s a big boy who can handle constructive criticism.

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  • 13 comments

    Lower VA funding fees, as of November 18, 2011, attract year-end veteran buyers

    N.B:  On the day before I published this, HR 674 passed, reverting the funding fee amounts to the “old” levels.  It was updated in VA Circular 26-11-19, published November 22, 2011.  The “new” lower funding fee schedule was in effect for three days, from Nov 18-21.  Sorry for the confusion.

    Home buying became a bunch cheaper for eligible veterans.  On November 18, 2011, the VA lowered the amount it charges veteran borrowers, for the VA loan guaranty.  Rather than charge private mortgage insurance (PMI), like conventional loans do, or a combination of an upfront mortgage insurance premium (UFMIP) and a monthly insurance premium (MIP), like the FHA does, the VA relies on a one-time charge, which can be financed, called a funding fee.

    The VA looks at a service member’s life cycle and tailors the funding fee to meet his/her expected abilities to finance a home.  For example, a first-time home buyer pays a funding fee of 1.4% of the loan amount, for a zero-down loan.  The VA expects that service member to have some equity for his/her second home purchase so, should the veteran choose to buy “no-money-down”, on a subsequent purchase, the VA funding fee is double, or 2.8% of the loan amount.

    Veterans who put down 5% of the purchase price are only charged .75% of the loan amount.  Veterans who put down 10% of the purchase price are only charged .5% of the purchase price.  All refinance transactions, including the no-income qualification and no appraisal needed, refinance transaction, otherwise known as the VA Interest Rate Reduction Loan (IRRL), are charged .5% of the refinanced loan.

    A full table, of the new VA funding fee amounts, can be found on Mortgage Rates Report.

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  • 5 comments

    Blessed Are The Implementers, For They Will Inherit the Moniker “Unchained”

    I caught up on some much needed sleep yesterday, after the fifth BloodhoundBlog Unchained Conference, held in Anaheim, CA.  It is my hope that my partner Greg Swann celebrates his birthday, in relaxation and Splendor, before pondering the future of these conferences.  As the Godfather of the Unchained movement, Greg argued that the title of these conferences be “Unchained” rather than the “Unleashed” title I offered.  What Greg knew, and I understand now, is that Unchained suggests that the Bloodhound was never enslaved while unleashed suggests prior submission.

    If you missed our show in Anaheim, you missed the proof in the pudding.  I’ll give you an overview:

    Greg Swann led us off with a demonstration of his Chinese army; software which creates tens of thousands of unique webpages, with granular listing data.  Greg showed us how he can close the publishing gap, in less than an hour each week.  Greg continually invents new and exciting software, to stay one step ahead of the market competitors, who would try tho chain him.

    Scott Schang came to Unchained 2008 on, how he has described it, “his final few bucks”.  He took the ideas offered there, implemented them here, and created a business which employs a half-dozen people.  He shared his online business plan, his accomplishments and mistakes, and how he overcame market changes to stay relevant in the consumers’ eyes.  From borrowed bus fare to accomplished entrepreneur, in 40 months, Scott has a database of willing home buyers, numbering in the five figures—Scott is Unchained.

    Brian Summerfield, of the National Association of Realtors, came to take some body blows from the crew.  It was his motivation which impressed me; he transparently announced that he came to address us because he wants content for Realtor.org .  Mr. Summerfield invites constructive criticism of NAR on its forum.  Contact him if you have an opinion to offer.

    Bill Lyons, a serial entrepreneur, shared his latest creation for consumers, Revestor.com .  Revestor.com offers investors an IDX search with rental data.  Home buyers can search listings by net cash flow or capitalization rate.  Revestor.com is expected to be released right before Thanksgiving.

    Mark Madsen and Tony Sena reflect their Vegas heritage well.  Never content to seek the chains of employment, the pair created WannaNetwork.com as a business community alternative to Myspace.com.  That site inspired the wildly successful group blog, MortgageDaily.tv where Mark assembles some of the greatest mortgage minds across the country.  Mark and Tony attended Unchained 2009,  learned some valuable information and made invaluable contacts, to launch their latest venture, Shelter Realty.  Their presentation chronicled the steps they took to make this new business a force in the SERPs.  Both gentlemen embody the Unchained spirit.

    Eric Blackwell knows search engine optimization.  When we first met Eric, at Unchained Orlando, he was toiling away for a Louisville brokerage.  The contacts he made, along with some salesmanship skills he learned, set Eric up for the challenge of entrepreneurship.  Eric overcame a health scare to launch his own SEO consultancy; Eric on Search.  Today, Eric helps regional brokerages and high-producing agents, dominate the SERPS in their region.  While Eric is certainly the “rock star” of Unchained, he also demonstrated some of the things he learned, to wear the Unchained moniker.

    Trudy Smit was an Unchained first-timer and shared her project, Loan Interchange, an online marketing platform for loan origination and secondary notes marketing.  Her technology offers notes investors and opportunity to buy and sell, in a centralized location where participants are vetted.

    Finally, I led an ill-prepared session on email marketing.  I intended to share my video e-mail marketing campaigns, which helped me to achieve a higher conversion rate, but the hotel internet was too slow for a good performance.  Good entrepreneurs however, have plans– and contingent plans. Business never pans out the way you think it will so you must anticipate the problems you might have.  In a sense, I had chained myself to a presentation which relied upon an inflexible plan.  Our Unchained conferences teach lessons to everybody so my takeaway is that you must be prepared for any and all opportunities.  If luck is what happens when preparation meets opportunity, I was “unlucky” because I was unprepared.

    The Unchained philosophy is one of freedom–the freedom to succeed and the freedom to fail.  We know that our world and industries are changing rapidly.  Old bosses are being replaced by new bosses and the Unchained practitioner will supplant all bosses, to chart her own course, serve her customers, and profit wildly.  We hope to continue to give you the tools you need, to profit wildly, and share the experiences of those who implemented the strategies they learned with us.

    Born Free and Determined to Stay That Way,

    Brian Brady

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    Who has “Cutting Edge Marketing” for Mortgage Origination?

    The mortgage business is pretty cut-and-dry today.  Historically low interest rates, a whole lot less people in the industry, and five screwed-up banks are making it easy for originators to pick the “low-hanging fruit” today.  I’m not so naive to think that the Garden of Eden will be as lush as it is today.  I know we are going to have to return (once again) to the basic building blocks of business generation when rates rise (my guess for the inevitable rise is sometime after the New Year).

    A lot of things have changed in the past two years, especially the way we find loans which can be funded.  Some of the ideas I think make sense include:

    1. an automatic CRM, like Top Of Mind manages for you
    2. video email marketing, like I have been exploring
    3. Continuing education for REALTORS, like Educate2Earn is doing
    4. Old-fashioned blogging for mortgages
    5. Even older-fashioned but proven systems, as offered by Loan Toolbox
    6. Some of the many ideas offered by Mortgage Marketing Animals

    Are you doing something differently to get the telephone to ring?  Is there anything you might have heard, which allegedly works, which you would like to learn?

    I’m interested in your feedback.

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    Why Build “The Pearl” in Solana Beach When Buying Existing Resale Housing Would Save Taxpayers Money?

    My little slice of Heaven, Solana Beach, is developing  A $6 million, ten-unit, low-income housing complex:

    The three-level building would have a 1,300 square-foot market on the ground floor, and 10 housing rental units above. The site is now a parking lot with 31 spots, used heavily for beach access and for the junior lifeguard program. A lot with some underground parking with 54 spots is proposed.

    “The Pearl” will be a mixed-use development, with a small market and ten housing units which can house up to 44 people.  Ginger Hitzke is the Temecula-based developer.  Her work history includes various “public/private developments”, as a Vice President with the Affirmed Housing Group and now, as a lead developer with Community Collective.

    Naturally, the coastal residents are up in arms about the affect on the neighborhood:

    Residents packed the City Council chambers, many complaining that The Pearl would increase traffic, loitering, reduce property values, and wouldn’t mesh with the surrounding blufftop condominiums that line Sierra Avenue.

    “The city just seems too desperate to fund the building of 10 units to complete the settlement of a bungled lawsuit regarding the loss of 13 low-income units,” said Mark Tiddens, an area resident.

    The Condominium Organization of South Sierra Avenue will vote by Sept. 2 on whether to formally oppose the project. Story poles indicating the outline of the building are now in place at the site, a public parking lot near a beach access.

    The morality of redistribution of wealth schemes, and the efficacy of Keynesian stimulii notwithstanding, wouldn’t it just be easier to buy ten listed homes for sale?   I searched for Solana Beach homes for sale, under $600,000, and found 24 active listings. To purchase existing listings meets the ideals of “integrating low-income residents” throughout the community, would be easier to manage, and can be accomplished quickly.

    The City could make a public announcement that it intends to purchase ten homes for less than $550,000, offer a 4% co-brokerage fee, and suggest that it will give preference to short sales or foreclosure situations,  My guess is it would be flooded with offers to sell.

    Solana Beach is stuck with the State’s mandate so we might as well get it completed as inexpensively, and as quickly as possible.

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    Greco-Roman Rejection of Rotarian Socialism Is The Cure For What Ails the United States

    Europe has tried all sorts of Statist approaches to the PIIGS problems.  Today, Europeans are considering “liberalization”:

    As the European financial crisis moves into its next phase, there’s a new word to learn: “liberalization,” and it’s likely to be even more unpopular than “austerity.”

    Leaders in Europe are promising to “liberalize” their economies in an effort to grow those economies, but they face an enormous wall of vested interests that don’t want anything to change.

    Greg Swann talked about cutting regulations a year ago.  My comment:

    There are close to 400 licensed occupations. Compile a list of half of them, introduce legislation that outlaws states (and Feds) to regulate any of these professions.  Repeat each quarter. Within a year, you’ll only have 25 regulated industries. Within two years, the unemployment rate will drop to 6%, and there will be some 2 million new businesses created

    Ohmygosh, cut the licensing regulations?  Does that mean that someone, who hasn’t taken a 400-hour licensing course, will be charging money for weaving hair in their living room?  The horror.  How will the public ever be protected from bad hair-weavererers?  Reputation management is already happening in the free market.  Read Greg’s response:

    Check. There’s more that can be done, much of it to the benefit of very small businesses. Consider this: When you’re trying to decide if you should take a chance on a restaurant, who do you trust more, a city inspector who may be on the take or nine fiercely independent Yelpers? The dollar cost of preventing injuries that almost never happen is half of our economy — which is nothing compared to the opportunity costs and interest value of those lost opportunities. We’ve got a dinghy loaded up with admirals and we can’t figure out why it’s slowly sinking.

    Who then would stand in the way of  “liberalization”?  Let’s go back to the CNBC article:

    Leaders in Europe are promising to “liberalize” their economies in an effort to grow those economies, but they face an enormous wall of vested interests that don’t want anything to change.

    Take the case of Simon Galina, a 38-year-old taxi driver in Rome. His profession is one of many in Italy likely to undergo “liberalization,” and he doesn’t like it one bit.  Liberalization is a very big problem. It’s a big problem for him because he took out a $185,000 loan ten years ago to purchase a taxi license and he still has five years of payments left. He’s worried that if the government changes the rules now, it will likely be much more difficult for him to pay it back.

    Right now the number of taxis in Italian cities is tightly controlled by the local governments. If liberalization really does occur there will no longer be a cap on the number of cabs, and the cost for a license will fall dramatically, if not to zero. Bottom line, it’s going to be a lot easier to get into the taxi business. (Economists call this lower barriers to entry.)

    Regulation of commerce, under the guise of consumer protection, actually turns out to be BAD for the consumer.  Continue reading:

    That will be good news for Italian consumers: It’s going to be easier to find a cab, and cheaper to boot. But falling fares mean less income for Galina, and there’s that monthly loan payment  he will still have to pay regardless.

    The government has already begun this process in Athens, Greece, and it has led to tremendous violence as drivers protest the changes. Now imagine this change writ large across an entire society where hundreds and hundreds of professions have the same decades-old pay-to-play fee structure. Italian Prime Minister Silvio Berlusconi and Finance Minister Giulio Tremonti promised to do just that on Friday night. Berlusconi agreed to the measures in exchange for the European Central Bank buying Italian debt on the open market, and acting as a buyer of last resort.

    Economists believe liberalization will lead to more jobs, which means higher economic growth and more tax revenue, exactly what countries like Italy need to pay back their debts.

    There is absolutely no reason, other than Rotarian Socialism, for the State to “license” any profession, be it a hair weavererer or a physician.  Occupational licensing is a conspiracy to defraud consumers, by impeding the price discovery,  which competition affords.  I just hope we won’t wait until there are people starving in the streets to “liberalize” here.

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    Could Mortgage Rates DROP after a Treasuries’ credit ratings downgrade?

    The dictated debt limit deadline looms and a credit rating downgrade, to US Treasury securities and agency mortgage-backed securities, seems likely.  Naturally, a spike in treasury yields is expected and a subsequent rise in mortgage rates should follow.   That’s right out of the senior year textbook, in most American business schools.

    I’m not so sure the fixed-income markets will follow the textbook.  Mortgage rates might … do nothing in response the the credit rating downgrade.  Here’s why:

    The credit ratings agencies lack……well…credibility.

    The independent credit ratings agencies ( Moodys, Standard & Poors, Fitch, etc) have a reputation for being late on the scene.  They got hoodwinked with Enron, MCI/Worldcom, and Greece.  They were asleep at the wheel during the mortgage meltdown, issuing AAA ratings to CDOs, up until late 2007.  They are often considered to be too chummy with the issuers (the issuers pay their fee) and when the issuer is a government (with the power to regulate their business), they generally walk on eggshells.

    The news may be baked into the market already.

    The ratings agencies have been signaling a potential downgrade for months.  Clearly, raising the US debt limit will allow the Treasury to remain “liquid” but the agencies have said a downgrade is likely unless a substantive plan is enacted to reduce spending.  Cut, Cap & Balance, the “most extreme” of the proposals offered, still might not have been “extreme” enough to avoid a downgrade.  Both political parties are demonstrating that they lack the political will to address the long-term structural deficits, needed to bolster the Federal budget, to avoid the ratings downgrade.  Fixed income traders seem to be shrugging that off.

    US Treasury securities are still considered to be the safest investment in the world.

    Certainly there are better run countries than the US but their debt offerings lack SIZE; there ain’t enough of that debt for the real money.  Germany has its EU obligations hanging around in the background and Japan seems to be in worse shape than we are.  Chinese sovereign debt could be a consideration but the Chinese and Japanese still want their investments dollar-denominated.  The US is, for all purposes is “too big to fail”.  While a world-wide bailout, under the auspices of the IMF seems unlikely, a de facto bailout, by countries who have no other place to park their cash, will probably happen.  As paradoxical as it might sound, the ratings downgrade might attract more money because it affirms that while the US is getting ugly, we’re still the prettiest girl at this dance.

    Domestic institutional investors are married to the US Treasury.

    Insurance companies, state pension funds, union pension funds, banks, and credit unions are bound by charter to invest a certain amount of assets in US Treasury securities or agency derivatives.  Banks are amending their charters to read that they “must invest in AAA securities or government debt” this week, to facilitate the downgrade.  If you can’t be, with the one you love, baby, love the one your with.

    Rebalanced portfolios could attract more money to US Treasuries

    A downgrade will most likely affect the credit markets through the overnight borrowing market (where short-term treasuries are used as collateral).  This could hamper the availability of private sector lending a bit which could be detrimental for domestic equity markets and corporate fixed income issuers.  Subsequently, portfolio managers might rebalance their portfolios by trimming back on stocks and corporate bonds, and seek a “safe haven” with the proceeds. That safe haven may be the very asset class which caused the mess.  Go figure.

    The Fed might just continue to be…The Fed.

    I’ve given up on trying to figure this creature out.  The Fed does crap I never knew it could do (well, because it never could do what it’s done these past few years).  The Fed could announce QE17 and start bidding 102 for  the new treasury auctions, with the sole intent of “fooling” other investors into thinking the issue is in high demand.  Please don’t tell me I’m a conspiracy theorist; the Fed has transparently operated outside of its charter for AT LEAST 3-4 years now.

    Another thought is that the spread between mortgage-backed securities and treasuries could narrow after a downgrade.  The bad news buried in the back of the breadbox is tempered by the fact that the MBS market has a sugar daddy rich Uncle Fred and Aunt Fannie, which continue to be wealth redistribution conduits.  Traders might figure that the profitable loans stay in the MBS pools while losses are laid off on the Treasury.  If this theory gets traction, mortgage rates could be flat or actually go down.

    None of this makes any sense but, in the world of “too big to fail” it ain’t supposed to make sense…it’s just the “right thing to do”.  Right?

    Call me Alfred E Neumann but I’m not too worried.

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    If There Really Were A Real Estate Agents’ Union…

    …this is how business might be done:

    You (a willing home seller) would look for a real estate agent and discover that the government mandates that you hire, its delegated agent, to market and negotiate on your behalf.  That chosen agent will be the only one who can deal with potential buyers and will select which offer you should consider, among the many offers available.  The agent presents the offer, to which you suggest a counter-offer or refusal.

    In this hypothetical example, the agent tells you that you don’t have the option to counter and reminds you that you have a binding contract with her as an exclusive agent; she says “Take the ‘reasonable’ offer or suffer the consequences”.  Obviously, you don’t think that’s fair and want to test the free market.  You might consider another real estate agent because you don’t think she’s negotiating on your behalf.

    Rather than allow you to pursue your own course of action, the real estate agent accuses you of “agent busting”.  She sets up a picket line, in front of your home, with big signs proclaiming you to be “evil” or responsible for “unfair tactics”, or “greedy”.  She turns away all potential buyers of the home by calling them “scabs” and proclaiming that a reasonable enough offer was on the table and you were just an evil, greedy agent buster.

    She might convince the power company to sever your electricity, phone and internet.  She might try to prevent the grocery store, pizza delivery guy, landscapers, and pool maintenance guy from servicing you, per your standing contract with them.  Finally, she might try to restrict your income by hampering your ability to work .

    You’re a tough cookie, though.  It’s your home.  You bought it, improved it, kept it clean, and want the best price a willing buyer might pay you. You hold out, regardless of the wacky protesters, bused in from out-of-town, screaming at you, your children, your neighbors, and anyone who might dare speak with you.  Even your priest declines your dinner invitation because he wants to stand “in solidarity” with the “fair traders”.  He dare not call you evil but his actions suggest that you are being unfair.

    The manufactured shunning, and (false) threat to eternal damnation still doesn’t work.  It’s your damned house, paid for with your hard-earned money!  You intend to sell it for the best price you can receive!

    The real estate agent brings a government board in to bind you to mediated terms, whether you’re in agreement with them or not.  If you try to walk away from the home, and let the agent deal with the bank (which will foreclose on your property), she’ll get the government board to seize your home, or have that government board order you to sell it to her hand-picked buyer, or have that government board throw you in jail.

    That sounds crazy, doesn’t it?

    Of course it does but that’s the exact effect The Wagner Act of 1935 had on labor relations.   The Wagner Act assigned exclusive negotiating rights, to a designated agent, on behalf of all employees.  Whether the employee consents to that agency relationship or not, the designated agent has the power of force (the government) behind it and all employees are bound to accept that agents’ negotiated terms.

    The Wagner Act permitted the coercive tactics of picket lines, to scare away customers, potential employees, suppliers, etc.   In essence, the Wagner Act proclaimed that the labor monopoly has the “right”, under the direction of its exclusive agent, to engage in such coercion.  If the business owner complained, well then he had to deal with force (the government),,, again.

    Finally, The Wagner Act also established the National Labor Relations Board , to mediate the price of labor, if that designated agent could not convince a business owner to accept the terms offered.   The business owner could either:

    • (a) accept the mediated terms (offered by the NLRB), or
    • (b) surrender the business to the NLRB, or
    • (c) move to another jurisdiction, outside of the reach of the NLRB.

    Which option do you think private business owners chose? If you remember the outsourcing movement, in the 1980′s, you have discovered the answer.

    Labor, like land or capital, is a factor of production.  When force is introduced, to a commercial exchange of  any of those factors, it is no longer voluntary.  There will be unintended reactions to that introduction of force.

    If you wouldn’t condone my hypothetical real estate agency relationship (monopoly backed by force), why would you turn a blind eye to the very same practice in the labor movement?

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