BLOODHOUNDBLOG.COM

There’s always something to howl about

Archive for December, 2006

LEREAH PUSHES IT EVEN FURTHER

NAR Chief Economist, David Lereah totally ignores his detractors by continuing to make predictions about the real estate market. Now he is officially in the dictionary (dictionary.com), listed under the word, “persuasive”.

Lereah persuasive

United States citizens not wanting to purchase a home have been powerless to resist Mr. Lereah’s announcements that “they should” purchase a home now.

Using a form of Mind Control known only to the initiated few, Lereah has run roughshod over anyone trying to not buy a home.

Now, even his detractors, previously intent on renting, are starting to “call a Realtor” – as Mr. Lereah has “suggested” they do. 2007 will be very interesting to watch, as this battle continues to unfold.

What is at stake in this fight is the freedom for individuals to think what they want to think. It seems the National Association of Realtors will stop at nothing short of World Domination and uses Lereah to force everyone to “see it their way”.

__

HAPPY NEW YEAR!!

Related posts:
  • LEREAH SAYS BUY NOW !!
  • Merry Christmas David Lereah
  • Anonymous Posters Who Hate Lereah

  • 13 comments

    My 3 Blogging Resolutions for 2007 (Bloodhound Blog Edition)

    I am not a big fan of New Year’s Resolutions for a lot of reasons. Mostly, it’s because when I identify a part of my life that I want to change, I don’t wait until January 1 to change it. I do it right away.

    So, it’s December 31. Here are 3 things I resolve to do on the Bloodhound Blog in 2007… starting tomorrow.

    1. I resolve to discuss “big picture” items that impact real estate and mortgage lending such as government oversight and international economics. If I can help you understand why it’s relevant to all of our businesses and livelihoods, you’ll be the hit of all of your cocktail parties. Not really.
    2. I resolve to respond to comments as often as possible. Even the ones that are clearly trying to bait me. Ask good questions and you’ll get my answers.
    3. I resolve to write clear and concise blog entries. Sometimes it’s easier to watch the commercials than the show.

    See my other resolutions on my other blogs, The Mortgage Reports and Bring the Blog.

    Related posts:
  • 25 Most Influential Real Estate Bloggers: 2007
  • Podcast interview with fellow Bloodhound Blog contributor Dan Green
  • Making New Year’s resolutions is easy. It’s keeping them that’s hard. How people are getting year ’round results from their year-end goals.

  • 1 comment

    Real Estate Blogging For Cash

    I am noticing a troubling trend.

    Many real estate blogs are using text link ads and Google ads – and now some bloggers are even getting paid to post. Does anybody else feel like this is a fundamental mistake for most real estate professionals?

    Don’t get me wrong – those bloggers whose blogs ARE their business need to be compensated for their time… I have no problem whatsoever with those guys.

    It’s the Realtors that I question.

    First of all, I think it’s fairly stupid to allow ads from competing Realtors to be shown on your website. I was on an agent’s site this morning and before you knew it – BAM – I’m on the competitor’s site. Needless to say, I forgot all about the original site I was on – and closed my browser window before returning to it.

    Now there are a few companies out there that are paying bloggers to post about advertisers products or services. Although this practice is supposedly done with transparency, I can’t help but wonder…

    “What business are you in? Real estate or blogging?”

    I can’t believe that the public views it any differently.

    Maybe I’m wrong. I’ve been wrong before. Many times, in fact. Maybe I’m just an overly critical type of person.

    I will be very interested to hearing YOUR thoughts on this phenomenon.

    Related posts:
  • Does anyone know any good blogging jokes?
  • Want Garlic On That Ice Cream? You Don’t Want Cash Flow On Your Capital Growth Either
  • Owning versus renting: In the long-run, owners appreciate their returns . . .

  • 31 comments

    Fred Flintstone speaks: Sniffing around video podcasting . . .

    The link below will bring up a video we made in September of 2005. There’s much to apologize for: I do, beyond doubt, look like Fred Flintstone, no one went to the MTV school of interesting videography and my presentation is punctuated by too many um’s and random interrogatories (“right?”). Worst of all, this was near the apogee of the real estate boom in Phoenix, and my near-term and mid-term predictions have proved to be way off.

    This was delivered to a college-level class of real estate pre-licensing students, so there is quite a bit of inside baseball. The file is huge, too, around 150MB, so you might want to give it a miss on that basis alone.

    This video is called Real Estate in Real Life, Part I. Part II dealt with a four-sided, entirely-brokered transactions (that is, I introduced and represented all four sides). This was very intricate, and it’s a nice illustration of the Realtor’s art. I thought about posting that, instead, but good Realtors already know how to put complicated transactions together, and, of course, our BubbleHeaded friends have nothing to learn from anyone.

    But: What I’m really doing is installing and testing the technology necessary for us to deliver audio and video podcasting content in the coming year. In the short run, I want to archive interviews with some of the amazing people we get to talk to. In the longer run, we may put together something more formal, like a podcasted real estate radio or television show.

    For now: Watch it if you like. It’s informative and at least mildly inspiring. There will be more audio and video content to come in 2007.

    Related posts:
  • Who ARE These Guys?
  • Zillow’s Zindex of historic Bedrock shows significant gains
  • Fred Flintstone speaks: Listen to me today on Real Estate Radio USA

  • 14 comments

    The S & P Is Up Over 16% In 2006!

    Over the last half century or so the S & P has averaged, give or take, about 8% growth annually. Pretty impressive. A lot of folks are very impressed, especially those who’ve invested into vehicles tied to the S & P index. They did better than ok this year, don’t you think? Twice the average for the last half century ain’t bad by anyone’s calculations. As a matter of fact let’s say the S & P annual growth rate for the five year period) averaged 10% annually, which is still 25% better than the average since Eisenhower was president. For those already retired and receiving income from investment grade insurance vehicles, many of which are tied directly to that index, 2006 has been a banner year. If you’re wondering why the grandkids made out like bandits at Christmas this year, that could very well be the answer.

    For the same period of time let’s have two investors, one in the S & P, the other in real estate. They both have a hundred grand to invest. The real estate guy is at a little disadvantage though because he’ll need to hold some of his cash back as reserves. The S & P investor can afford to put his entire hundred grand into his investment.

    So the real estate guy finds three duplexes for $200k apiece. (Remember, even though it’s San Diego, it’s 2001.) He puts 10% down on each one. His total investment including closing costs was about $75k. He put the remaining $25k in the bank as a cash reserve account. The duplexes all provided about $100 monthly positive cash flow, though our investor was just hoping they’d at least break even.

    Note: My office structured transactions like this a few times a month back then, month in and month out.

    Even though the real estate appreciation rate was three times what we’re assigning to the S & P for these five years, we’re going to limit it for this example to 10% a year for the real estate also. This results in a value of roughly $254k half way through the five years. It’s now the summer of 2003 (June) and I’ve advised him buying in San Diego no longer makes sense. This isn’t because I don’t believe the area will continue appreciating, but that the ability to buy with 10% down is still doable, but very difficult. Therefore I advise him to exchange into Phoenix, where the median home price is now about $150k.

    He nets about $146k from the sales of the three duplexes after all selling costs. (8%) He then completes his tax deferred exchange into eight Phoenix homes averaging $150k each. He used the same 10% down approach. It’s the end of July 2003 and he now owns $1.2Mil in real estate. He also has managed to use only $3k of his reserves. During the sale the buyers wanted him to buy some new appliances, and do a little painting. Not counting negligable interest, he now has about $22K left.

    It’s now the last quarter of 2005 and his eight homes are worth $1,524,000 give or take a few bucks.

    He’s seeing that Phoenix is on the front end of a breather, and he likes what he sees in Boise. He sells his eight homes for $1.5Mil, and after paying all selling costs (8%) he nets $280K. Over the five years he made use, of course, of the depreciation from his properties. The first three duplexes gave him about $60k total depreciation for the 2.5 years he held them. (The buildings + the personal property.) His income puts him in the combined state/fed tax bracket of 33.3%. When he traded to Phoenix his depreciation increased by about $21k due to his increased debt. The total tax savings he enjoyed over the five year period amounted to somewhat over $50k. He put these tax savings into his reserve account, preparing to add some of the cash if needed to his Boise purchases.

    Arm Wrestling

    It’s time for the final tally. Let’s go the the scoreboard and see what’s happend to these guys.

    S & P guy put his entire $100k into the S & P. He made 10% a year growth (pretty dang good) for the five years. His original capital has grown to roughly $161k. There were no tax savings.

    Real estate guy invested just 75% of his original capital because he wanted a strong cash reserve. His ending balance was about $352k. (22k remaining in reserve + 50k accumulated tax savings + $280k net proceeds from sale of Phoenix properties headed tax deferred to Boise.)

    Since neither guy has chosen to sell and pay taxes, we’ll look at what each has actually earned as a simple annual return. Since both of them are sane, and pack three digit IQ’s, they’ve decided not to sell and pay taxes. Duh

    S & P guy made a 10% annual return on his money.

    Real estate guy made 28.62% on his money. If he’d thrown caution to the wind he’d have bought an additional duplex in the first year and come out significantly better than he did opting for the wiser approach.

    Now, imagine how wide this gap becomes over 10, 20, or 30 years. Some of those years will be down years. Some will be flat or just slightly up. Some will be up 10% or more. Over any particular decade you can count on one moderate to large spike in property value. You can also count on a downturn. Pick any particular 10 year period in the last 35 years, and your numbers won’t be much different than this example, relatively speaking.

    Again, take the time to apply these numbers for 10-30 years. Real estate investors not only retire better, they retire sooner much of the time.

    The majority of long term real estate investors live a more financially abundant life than they did while working. Allow me to say that more clearly. They enjoy more after tax income in retirement than they ever did before retirement.

    The S & P went up 16% this year!

    Related posts:
  • Ardell’s book should be entitled . . .
  • Work is work and fun is fun . . .
  • RedFinesse? None in evidence. RedFaces? None to be seen. RedFiasco? None so deserving . . .

  • 26 comments

    Real Estate: The Big Ballers’ Crap Shoot

    My hands were sweaty as I nervously darted my eyes around the craps table . I was the pariah because I was “betting on the don’t line”. This particular strategy can be extraordinarily frustrating when a table gets hot. It requires a bettor to double up his stake each time he is incorrect. It takes incredible faith in the mathematical probability of a negative result.

    “Seven Out!” yelled the croupier.

    Victory, while inevitable, doesn’t really feel that sweet. I risked $2500 to win five bucks. I proved my strategy to the reckless gamblers betting the other way. I yelped exuberantly, not for my intellectual superiority, but in relief that my bet, the family vacation money, hadn’t disappeared. While I was yelping, the players at my table were pocketing pink and black chips and cheering raucously. Confused, I learned that they were collecting chips every time those dice hit various numbers on the way to making ten straight points .

    Now craps may seem like a poor analogy to the real estate market. It really isn’t. I know that craps, a loaded game of chance, always favors the house no matter what strategy you employ. Real estate is a loaded game of chance; the best thing about it is that it is loaded in the owner’s favor. The “MySpace Generation” and the immigrant population are entering the housing market in the next 10 years. The demographics are astoundingly favorable, especially for the sunbelt states.

    I think all the bubbleheads and doom pundits should yelp. You were absolutely correct this year. 2006, perhaps part of 2007, will be the year (s) of the bubbleheads. Gloat! Wipe your brow with confidence in your marked intelligence. I commend you for your prowess. You had to be correct one of these years; you had mathematics on your side.

    Take a look around. Your neighbor sold that rental property in Anaheim and lost $30,000. So why, like the gamblers betting on the come line, is he cheering ?. He is cheering because he still has rental properties in Albuquerque, Salt Lake City, and Bakersfield.

    Now that I’ve commended you, I must warn you of something.
    You really don’t want a 30% decline in housing prices because every financial asset you have will be devalued . If you’re stashing your cash in the local bank, it will be gone because the bank will collapse. The FDIC will not weather a bailout without significant tax increases. Stocks will sink and mortgage-backed securities will be worthless setting your well-diversified, employer-sponsored 401(k) account back to it’s 1984 value. Think of the big picture bubbleheads. Isn’t that a huge price to pay for bragging rights?

    2007 should be the year you stop gloating and start asking the tough questions about how YOU can profit off the changing markets. It is far more courageous to ask those questions than to post argumentum ad hominum under a pseudonym (although I secretly enjoy the mindless banter). The real estate market, like a cold craps table, will quickly get hot.. History and demographics dictate that this table will have a lot of winners on it.

    I hope you’ll get prepared for the big roll.

    Happy Anniversary Bloodhound Blog !
    Happy New Year to All !

    Related posts:
  • Cathy’s drama: Photos from the whatever-it-takes school of listing
  • Introducing RE.net’s Hottest Bloggers Contest
  • The ActiveRain hokey pokey: You shoot your left foot off, you shoot your right foot off, you shoot your left hand off — and then you present the audience with an invoice…

  • 21 comments

    Common Sense Office Policy

    Have you ever called an agent’s office and asked, “May I please speak with John?”, and find yourself sent directly to John’s voice mail? Does it irritate you? It is one of my pet peeves. Or how about email? How many times have you sent information by email, or a series of questions to someone during an escrow, only to have them call you with several questions which were answered in your initial message — Or answer only two of the five questions you asked.

    Ever found yourself after lunch waiting for a response from an email you sent in the morning, only to find out they hadn’t even looked at their mail yet? Often these are the same people who fancy themselves as being part of a ‘hi-tech’ operation.

    Tin Can Phone

    Faxes too have become a major headache in our business. By the time a document has done a few fax-laps it may resemble pages copied from the Red Sea scrolls. With the cost of scanners down these days to just above a case of Pepsi Vanilla, (Less that is unless you’re selling it to The Phoenix Real Estate Guy :-)) scanning signed docs for emailing makes a lot of sense. It also has saved hours of needless conversations between agents and escrow, lenders, and other agents. How many times would you have given serious money just to have a readable contract when time mattered? This is where scanning, and the use of pdf’s are simply a no-brainer.

    All this can cost the agent money, and worse, clients. In the short run clients will accept the fact that others are slowing you down through poor performance. But eventually the failures of those upon whom you rely will be associated with you. And if the offender is you, your clients will not long think of you as a real pro.

    I offer the solutions we’ve installed in our office. They’re surely not the only way to go, but they work for us.

    • With rare exception the phone will be answered before the third ring by a live voice.
    • If the person called is unavailable, a time for the returned call is established.
    • If someone else can help the caller immediately they go out of their way to do just that.
    • Our email programs are set to send & receive every five minutes. Furthermore, they are set to appear in front of anything else we might be working on if there are in fact messages.
    • Unless on the phone or with clients all emails are to be returned immediately if not sooner.
    • If good judgment dictates, emails are sometimes answered by phone to avoid confusion.
    • All docs will be emailed and not faxed if the choice is available.
    • Lenders, escrows, transaction coordinators, title companies, and inspectors who work with our firm all agree to adopt these policies when dealing with us or our clients.

    Our clients have often commented how nice it is to get their calls answered by a human voice 90% of the time. And love getting the vast majority of their emails responded to in 2-15 minutes. Their transaction file folders contain contracts, disclosures, and other documents which, unlike previous experiences, are actually readable. They feel spoiled – which was the goal in the first place.

    Related posts:
  • Creating an Online Policy and Procedure Manual
  • Writing an office policy manual for Real Estate 2.0
  • New NAR policy allows “objective” exclusion of certain listings from members’ presentations of IDX feeds . . .

  • 18 comments

    BloodhoundBlog at six months: Getting our legs under us . . .

    BloodhoundBlog is six month’s old today. The first post, an accidental prophesy, was about the incipient disintermediation of for-pay content providers in the age of the internet:

    If almost-as-good is free or nearly free, what is the market value of slightly-better?

    I documented the birth of the blog soon thereafter, but it’s reasonable to argue that BloodhoundBlog is a natural progression in the erosion of the castle walls surrounding for-pay intellectual property. When Joseph Rago rails that weblogs are “written by fools to be read by imbeciles,” by what sum, precisely, is the Wall Street Journal enriched? Is it plausible that more wealth was “monetized” in the Rago-reaction than ever was realized by the original rant? If “no man but a blockhead ever wrote, except for money,” who made more — Rago or the anti-Ragoons? And what persists, in the end, but another “free” opinion in an unmetered atmosphere of “free” opinions?

    Their world is done. Ours is but begun. There may be a way to build a wall around original reporting, particularly where the information is time-sensitive, is difficult to obtain or is available only from an easily-restricted source. The obvious example is a real-time — as against time-delayed — stock ticker. What’s left after that? Habit? Status? Higher production quality — which may be a further expression of status? What argument can the vestigial Joseph Ragos make for the added value of “metered” air? It’s time for a deep breath, isn’t it? Why not? The air is “free.”

    Do you want to argue for the superiority of your content? Good on ya! Produce superior content. Is it your goal to argue that your content is so much better that you deserve to be paid for it? Good luck with that plan. You may be able to draw enough eyes that you can dupe some advertisers into paying for the chance to try to hook a few — just like the endlessly preening broadcast news. If you see your future in a box office — a toll booth on the information superhighway — then do, please, take that deep breath. There’s a clue in the air, and you just might catch it.

    We come at this game with no illusions. I have never believed in the real estate marketing power of real estate weblogs — certainly not at the level this is purported to exist. We built BloodhoundBlog to be by, for and about real estate professionals. This is where the audience is, and this is where our interests lie. But here is the interesting thing about “free” intellectual property. The internet is a lousy way to sell that content itself, but it’s a great way to sell intellectual property producers.

    If you sniff around that paragraph for a while, you will understand BloodhoundBlog. We’re not selling real estate, and we’re not selling real estate intermediaries. We are selling experts and their expertise. In the long run, we could be market makers in real estate expertise. But the long run can be very long, and the rules of the game change every day. It is sufficient for now to be the best we can be in everything we do.

    Counting Richard Riccelli — who wishes not to be counted but who continues to surge forth geyser-like with killer post ideas — we are eleven webloggers strong by now, where we were but two when we began. The minds we have added are among the best in the RE.net, and this will continue as a matter of policy. We want to be a place where you know you must come every day. And if Russell Shaw should deliver a speech at your state’s Realtor convention, you’ll know why you must attend. And if Kris Berg should write a book, you’ll know why you must buy it.

    I’d love to tell you that I foresaw all of this, six months ago, when we were putting this together — but I didn’t. I knew what I wanted, but I had no idea how to get it. But if the rules change every day, then every day is a fresh opportunity to learn them anew. What we have achieved — at our puppyish age — is so far beyond what I had envisioned, I can only marvel at what might be yet to come.

    I am very proud of — and very grateful to — the roster of contributors we have assembled. The truth is we’re just getting our legs under us. Keep an eye on us over the next six months and we’ll see just how far this hound dog can run.

    Speaking for everyone at BloodhoundBlog, here’s to your health, wealth and happiness in the coming year!

    Technorati Tags: , ,

    Related posts:
  • I ran today for the first time in sixteen years…
  • What’s Your Six Month Plan?
  • Query: Should the Bloodhounds write a book?

  • 10 comments

    Information comes with experience

    This is me from today’s Arizona Republic (permanent link):

    Information comes with experience

    Continuing from last week, let’s work together as Realtors and round out the purchase offer for our buyers.

    What’s the best closing date? The buyers have never thought about it, but it’s our job to know. They’re in a lease until the end of January, and obviously they would want to limit the number of days they pay for two homes.

    But mortgage interest is paid in arrears. If the buyers close very late in the month, they will pay a small amount for those few days of interest, and then their next payment will not come until March 1 — a nice breather.

    Closing too late in the month is bad because things can spill over to the start of the month — which means almost a full month of interest payments in advance. Ideally, we want a Tuesday, seven to 10 days from the end of the month.

    But wait: The buyers are taking 3 percent in closing costs. Who cares about pre-paid interest? The buyers might not know to care, but we get paid to care. Our costs are so low that we might be able to apply a big chunk of that 3 percent to buying down the interest rates, leaving the buyers with extra money in their pockets with every monthly payment.

    How much in earnest? A thousand dollars, right now. It’s a buyer’s market.

    Now this is not a hugely aggressive offer. Buyers are rarely willing to push things as hard as they might. But, the aggression in this offer was put there by us, not by the buyers. Most of the very subtle ideas the buyers will have known nothing about until we explained them.

    That’s representation — real, not perceived. Truly, the buyers had no idea how to construct an offer for their home.

    Every home is unique, and every real estate transaction is unique. There is no way that unrepresented buyers and sellers can do as well for themselves as they could with professional representation. The information that matters doesn’t come from the MLS, it comes from the accumulated experience of a Realtor.

    Technorati Tags: , , , ,

    Related posts:
  • Selling Out
  • How Much Does Knowledge Cost?
  • Transparency And The Wizard Of Oz

  • 12 comments

    LEREAH SAYS BUY NOW !!

    It is official – David Lereah quoted on CNN – and everyone is doing just what he says!

    Lereah Says Buy

    Related posts:
  • LEREAH PUSHES IT EVEN FURTHER
  • Merry Christmas David Lereah
  • Anonymous Posters Who Hate Lereah

  • 11 comments

    Consumer Federation of America – Controlled by Big Banks?

    A somewhat remarkable report has been released by the Consumer Federation of America. I first read about it on Inman News and wondered who they were. Was this just another front group (obviously bought and paid for by big banking) like the American Homeowners Grass Roots Alliance? I also first ran across that group on Inman – Inman will almost always find any letter written by Bruce Hahn, the President of the American Homeowners Grass Roots Alliance, worth publishing. As Hahn is so obviously getting funding from some organization with pretty deep pockets, it was easy to spot him and his organization as a front for someone with an agenda they would prefer be kept hidden. I don’t actually know it is Bank of America but, for sure, it is big banking that keeps Mr. Hahn’s “alliance” afloat.

    So I am expecting to find something similar when I read about the report issued a couple of weeks ago by the Consumer Federation of America. Surprise, surprise – they really are a “federation” and they really do have lots of links that have nothing to do with real estate sales being regulated by the federal government. For anyone who would like to wade through the entire report from the CFA here is a PDF of it.

    For anyone who would care to read excellent expert analysis of the report and the overall “flow” that is coming from the CFA – there are two articles by Blanche Evans that I think are well worth spending the time they will take to read. I read her most recent one first, it was first published December 12. Then the one she wrote on July 25 of this year.

    __

    I would also like to extend a warm welcome to our newest member, Brian Brady. I was surprised (and pleased) to see you on BloodhoundBlog, as I had just found you (on your blog) a couple of weeks ago and really liked what I saw. Also, I just have to commend our “Top Blogger” on BloodhoundBlog (she is the first one on the list). I vote that if any new writer (with a last name starting with “A”) ever joins – Greg needs to find some other way of arranging the list than the alphabet. Is saying aesthetic and charming public fawning? If so, it is alright, I plead guilty.

    Related posts:
  • I Still Want to Know Who Pays You, Bruce
  • What’s in a name? That Which We Call a “Job” Summit, by Any Other Name…
  • Niggling Peeves: The NAR and How NOT to Conduct PR

  • 4 comments

    A Realtor’s Guide to Alien Lenders

    “First you get the money, then you get the power, then you get the ….”

    -Tony Montana in the movie, Scarface

    The professional Realtor has always helped a would be homebuyer by referring her to a credible financing source. That paradigm has shifted much in the past few years as lenders have positioned themselves as the first stop on the home buying highway. Our marketing message has basically been the aforementioned Tony Montana quote. That message has caused a new phenomenon for Realtors that I call “Alien Mortgage Originators”. The point of my post here is to temper the xenophobia that exists in Realtors’ hearts when dealing with Alien Mortgage Originators. These five tips will help Realtors identify which Alien Originators are credible and which are just a voice on the phone looking to scalp your buyer.

    1- The first question to ask an Alien Originator is one you hear down South a lot. “Just who are your people?” Southerners, wary of carpetbaggers, find that question an effective way of finding common bonds. The internet is an inexpensive way to let Alien Originators broadcast who “our people” are so google them. Maybe the connection is a college tie, an old job, an old hometown, etc. When you ask me that question, it humanizes both you and me. Now… we both cheer for the Arizona Cardinals, or both dated Julie from Joliet, or both went to Big East colleges. It’s not much to both cheer for the Arizona Cardinals but I’m less likely to let you down knowing that small fact about you.

    2- The second question would be to ask for referrals, preferably from Realtors within your town or franchise. Why the Realtor rather than the client? Realtors have inside intelligence about originators that a client wouldn’t. I love when I’m funding a purchase with a Keller Williams agent because I know so many of them. I understand their Belief System and can recite it for them. I know “their” rules. An Alien Originator wants to show off his stuff to a new Realtor relationship. If the Alien Originator has no common referral sources for you because you are an independent brokerage in a small town, go back to question one. Find the common bond so the Alien Originator can give you a credible referral.

    3- The third question to ask is how the Alien Originator is getting paid and how much. Transparency in lending actually defends the Alien Originator’s margins. Your compensation to the client is completely disclosed, shouldn’t the lender’s be disclosed as well? If a lender is unwilling to disclose this to you, be concerned. The answer to this question allows you to ask your lender buddy if the Alien Originator is reasonable in their terms offering to your buyer. Now, don’t make this a bidding war, that is counter-productive. If the figure is too low for your market, be wary of the low incentive the Alien Originator has to close the loan, if it’s too high, well… your client’s getting scalped. Ask for all loan disclosures sent to the client to be e-mailed to you. You don’t have to read all of them but it helps if the Alien Originator thinks you might. To better understand how lenders are paid, READ: A Realtor’s Guide to Yield Spread Premium.

    4- Ask the Alien Originator about the last time she had a surprise and how she handled it. If she’s had no surprises, run for the hills. Experienced originators ALWAYS goof up or get caught by surprise. The good ones own up to the “oh, shit” immediately and usually have 2-3 back up plans in place. I blew up a manufactured home loan just 3 months ago. Three days from the COE, I discovered that I hadn’t clicked the proper “property type” in the automated loan approval. The deal needed to be shopped again causing a seven day delay in closing. It worked out fine in the end for all parties. You, as a Realtor, need to know that you have an originator that can handle herself with the cool hand of a Top Gun aviator when the flack starts bursting. Call the Realtors from the last deal she blew up to be certain that she earned her wings.

    5- Finally, my parting piece of advice. Just stay away from the online lenders. It is impossible for you to find out who their people are, what Realtors admire them, how they earn money, or how they handle screw-ups. My friend, Jeff Corbett, The X Broker, wrote a piece about the deception of online lenders a few months ago. Share it with your client and ask them to consider a more accountable lending source.

    Related posts:
  • Hey Zillow, hey Trulia, hey SmarterAgent: Here’s what I really want in a smart-phone app…
  • The Odysseus Medal: Propagating better ideas in real estate by celebrating better ideas in real estate
  • A Realtor’s Guide to Creating A Market Through Lease Options

  • 13 comments

    Santa brought us a new contributor: Introducing Brian Brady . . .

    We’re adding a tenth contributor today, Mortgage Broker Brian Brady:

    Brian Brady is a San Diego-based mortgage broker. Working with his wife, Debra, Brian deploys six years of experience on Wall Street to make sure the loans he underwrites fit his clients’ overall financial plans.

    You may know Brian’s work from his own weblog or from his participation on ActiveRain. Brian promises that he is “America’s most opinionated mortgage broker,” so we should be disabused of even vestigial errors in short order.

    Take note that we are always on the lookout for talented writers. If you think your work belongs here, say so.

    Technorati Tags: ,

    Related posts:
  • Is Brian Brady the Easter Bunny?
  • Introducing Hank Miller, Atlanta Realtor and Appraiser
  • Dawgs on the run: Brian Brady in Phoenix

  • 9 comments

    Life’s Good

    This is the comment I found on my own blog Christmas morning:

    I can honestly say I wish there were fewer agents like you… Buyer beware, right?

    Joy to the world! This from a gentleman whose own blog promotes his mission as sharing his vast research of the Pacific Beach, San Diego real estate market. Specifically, he says, “I plan to focus on listings where the seller is taking a loss”. His most recent post is titled “Another Notice of Default Filed in PB”. Lovely. Notice, I don’t provide a link, because I am finding this recent proliferation of to-hell-in-a-hand-basket reporting nothing more than childish, ambulance chasing tripe of which I have grown weary. Get a hobby, read a book, play with your children, but stop taking perverse pleasure in the misfortune of others. Grow up and stop blaming your personal unrest on NAR, economists, real estate agents, mortgage lending practices and everything and everybody in between.

    His little holiday message to me was an epiphany of sorts, and in my typical around the block fashion, I will attempt to explain.

    It has been a long-standing tradition in our family to spend the week at our cabin in Lake Arrowhead. Steve and I have been fortunate to be able to offer our children many opportunities, but we are not blessed with a large extended family, the kind that you see in the warm and fuzzy Christmas movies. So each year we pack up Simon-the-world’s-dumbest-dog and the NSYNC Christmas CD and head out of Dodge. Each year has seemingly been better than the last; we look forward to the opportunity for sledding, hiking, entire “Jammie Days” and the annual 007 Days of Christmas. (The girls prefer Pierce Brosnan, while I am still partial to the Sean Connery Bond, for whatever it’s worth).

    So, with the greatest of expectations, we headed off for our little definition of family bliss as soon as school was out. Actually, we left a day late due to illness. Fluffy, the family feline, picked the morning of our departure to show the first serious symptoms of Something Is Very Wrong With The Cat disease. The first sign that something was amiss came when she let Steve pet her, this being a bad sign in that she likes Steve about as much as Donald Trump likes Rosie O’Donnell. Day One of my Very Brady Christmas was spent identifying the only vet in town who could see us before the vernal equinox. $363.87 later, we could find comfort in the knowledge that Fluffy (who isn’t) was “not feeling well.”

    By Vacation Day Two, we were on the road. Granted, we had to practically carry our oldest to the car as she now had the Something is Very Wrong With Becky disease, but keep in mind that we only delay vacations for our pets’ illnesses. And, this marked the beginning of my very blue week. It is hard for me still to put my finger on the defining moment. The children grew up overnight, and suddenly it became clear that family time was not the priority it had once been. At times, I get the distinct feeling that my daughters see our time together as a sentence, yet I think I have finally figured out how to get them to tackle their chores. “Clean your room or else we are going somewhere together!” Eiyeeee! I know now that this isn’t bad, but just different. We were evolving as a family unit, and I didn’t like it. I knew I was in trouble when I pulled a book off the shelf to cheer myself up, and Death of a Salesman actually did the trick! (I won’t tell you how it ends). Sure, there were some high points to my week leading up to Christmas. I successfully accomplished my goal of finishing A Year in Province in better than real time (by one month). My brisket did, in fact, taste slightly better than shoe leather (but not the fine, Italian variety). On the feed-the-family front, we managed to put four transaction sides into escrow from our remote location in a little under a week.

    I woke up Christmas Eve morning with renewed enthusiasm. Fearing my extended absence from the Bloodhound would cause Greg to rethink my “contributor” status, I fired up the internet connection. Alas, in a single morning when Tech Support (or as I like to call them, The Ghost of Christmas Past) is apparently too busy with the holiday office party to answer the phones, my own blog server is down (as in gone from the planet for the better part of the day), my website has decided to morph into an intelligent being who has decided that actual photos of my listings do not belong there, and Sellsius, in a post dedicated to the Who’s Who of real estate bloggers, sends their best wishes to everyone but yours truly. Ouch.

    Then it hit me. I am sitting on a deck at 5300 feet, and I can’t see the forest for the trees. As Willy Loman so eloquently put it, “Work a lifetime to pay off a house. You finally own it, and there’s nobody to live in it.” Jeff Brown’s clients make real estate decisions based wholly on financial merits, but most of us make our purchases with a “home” in mind. When I began to see the redefinition of my definition of home, I got uneasy. And, yes, we are mirrors of those around us. I was letting others, including my children and the bubbleheads (even Sellsius), bring me down.

    Ironically, during our stay, Steve and I found a vacation home three doors down from our current one that we fell in love with. It has all of the features we have always wanted in our retirement and would serve us well in the meantime as we prepare to close the chapter on our children-at-home years. Steve called our agent in Lake Arrowhead to inquire about the home and, much to the delight of our bubble friends I’m sure, she told him what we knew: “The market sucks”. And do you know our reaction? “So what.” This is a home that, from a strictly financial standpoint, makes absolutely no sense. The timing is wrong, and the price tag is wrong. We have a perfectly good, albeit infinitely older and inferior vacation home, a home that we stretched and sweated to afford. Yet, if we had made all of our life decisions based solely on return-on-investment, we wouldn’t have this second home, we wouldn’t have our San Diego home, and, dare I say, we wouldn’t have children.

    We may take the plunge on this new property, but we probably won’t. The point is that, for most of us, home purchase decisions have always been and will remain a very personal decision and a very personal choice. Many will chose to heed the warnings of the doomsdayers and wait it out, which is a perfectly appropriate response if that is what you find best for your personal situation. In the meantime, I see no value in lambasting those whose goals or decisions may not jibe with yours. I fail to see how devoting an entire blog to counting the numbers of homeowners in the red serves any useful purpose, except perhaps to justify a real estate decision you were unable to or failed to make. Your decision to not purchase is no more valid than the decisions of many others, such as four of our clients this past week, to buy. Their motivations and goals may simply have been different. To those on the bubble train that like to consider their cargo of negativity a public service, you will likely continue to hold to your beliefs of an industry maliciously driving the weak and unsuspecting into bankruptcy. Steve and I, as professionals in that very industry, are all too aware of the “market sucks” conditions of which you and our agent speak, yet we define our return-on-investment in different terms. In short, we don’t want to find ourselves waiting for the right time to purchase a home only to find that no one will be living in it.

    Life’s good.

    Related posts:
  • Two out of three ain’t bad when purchasing a home
  • Mortgage Market Week in Review
  • Catching a glimpse of Don Reedy’s vision: So far, so good.

  • 28 comments

    Merry Christmas!

    Related posts:
  • Merry Christmas David Lereah
  • Merry Christmas to hard-working dogs everywhere!
  • Merry Christmas!

  • 5 comments

    Next Page »