There’s always something to howl about.

Month: December 2006 (page 1 of 6)

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”.

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HAPPY NEW YEAR!!

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.

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.

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.

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 Read more

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 Read more

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 Read more

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 Read more

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 Read more

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.

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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 Read more

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 Read more

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.

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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 Read more