There’s always something to howl about.

Month: May 2008 (page 1 of 8)

Who’s a Mortgage Fiduciary?

Are you ready for the next big argument about fiduciary capacity? It’s coming in the form of national loan originator licensing and it promises to be a doozy.

The Federal Housing Finance and Regulatory Reform Act of 2008 is proposed legislation that seeks to license anyone who quotes rates or fees to borrowers (among other things). It’s a political stunt, veiled as consumer protection that is yet another revenue racket for the government. It’s requiring a 20 hour pre-licensing course, with testing and national fingerprint registry.

Anyway, there’s a lot of talk about “acting as a fiduciary” to the borrower. The rhetoric leads me to this conclusion; it just can’t be done (at least under the current environment). A fiduciary is someone who subordinates her interests to her client’s. I just can’t determine how a mortgage banker can TRULY act as a fiduciary; they don’t have all the product offerings available.

Wells Fargo doesn’t offer negative amortization loans . Contrary to what you hear in the media, there are times when a negative amortization loan is JUST what the doctor ordered. If someone has a large amount of debt, it might be in their best interest to defer interest (at 6.75% pre-tax) so that they can free up some cash flow to pay down the higher interest debt (at 13% post-tax). In this flat housing market, it may be the only chance someone has to improve their credit score by swapping 13% money for 6.75% money. Many bankers can’t offer that product. Would they refer that loan out to a specialist (like an attorney or doctor would) or “sell” the client on the “in-house” loan program?

Conversely, would a Wachovia originator, who just cashed a check at Bank of America and noticed that they aggressively priced their 15-year loan, refer that loan across the street or write it at .25% higher?

Mortgage brokers, then, should be perfectly positioned to act as “true” fiduciaries. If transparent brokerage compensation was pre-negotiated in an exclusive right-to-finance agreement (much like a Read more

Imagineering Unchained Orlando: The All-You-Can-Eat Buffet

Everything about taking BloodhoundBlog Unchained to Orlando is in flux until we find out what we can do about meeting rooms. Even so, I’m swimming in ideas for how I want it to work.

As before, as always, I want for there to be a ton of hard-headed content. We set a new high-water mark for real estate conferences in Phoenix, and I want to bump that mark quite a bit higher.

Here’s how my thoughts run right now, all subject to amendment by cruel reality and subsequent brainstorms:

This is a one-day affair, and so it has to be a concentrated dose of that Unchained attitude. We also have to accommodate the comings and goings of the conventioneers, since it seems less than likely that they will all be available for the same one huge block of time.

What I thought we might do is run the circus from 8 am to 8 pm, with Brian and I doing a four-hour show three times or a three-hour show four times — thus to deliver the most that we can to the greatest number of people. An even better idea: Two different three-hour shows, each delivered twice. Unchained in Phoenix was eleven-plus hours of content, but we could condense that down to a very highly-concentrated six hours of material.

Then, in the next room over we could have a trade show floor with vendors we trust having an opportunity to present their value propositions and give away tee shirts and frisbees.

And then in a third room, this one cut into three or four breakout rooms, we could offer hour-long breakout sessions aimed at every level of geek, from infra to ultra. We need beginner sessions. We need expert sessions. This is a way we can meet a multitude of needs. Twelve hours times three rooms could accommodate up to 36 unique class sessions. I would expect many sessions to be repeated through the day, but 36 class slots presents a lot of teaching opportunities.

In the end, we end up with a sort of All-You-Can-Eat Buffet: Show up when you can, stay for as long as you Read more

Looking for the bottom? Real estate speculators are establishing the bottom-dollar price for lender-owned homes in Phoenix

This is my column for this week from the Arizona Republic (permanent link).

 
Looking for the bottom? Real estate speculators are establishing the bottom-dollar price for lender-owned homes in Phoenix

If you’re looking for the bottom of the real estate market in Phoenix, chances are it’s right up the block. It’s that house with the jungle of overgrown weeds in front.

It used to be for sale. Then it was a short sale. By now it’s lender-owned. A year ago it might have been listed for $250,000. Now the price has been slashed to $120,000 — maybe less.

That’s a sad story, particularly if you knew the owners. And now, as you watch the parade of investors checking it out, you might feel a certain anger toward them.

If so, your anger is misdirected. Between syrupy books and movies and high-strung high-school-teachers, we have been indoctrinated to despise speculators. But the truth is, speculators are the garbage collectors of capitalism. They come in and clean up messes they did not create, returning productive value to underperforming assets.

It you’re looking for a villain in these stories, look to the borrower, to the lender or just to the vicissitudes of life. But it is the speculators who are going to bring the real estate market back to a viable state.

How? By establishing the bottom-dollar price.

What is your home really worth right now? It’s worth as much as the lowest-price lender-owned comparable plus the cost of returning that home to turn-key condition plus a small convenience premium. In other words, if the lender-owned house sells for $120,000, and if it will take $10,000 to make it as nice as your home, then your home is worth $135,000 — $140,000 at most.

And if you’re not willing to sell you home for that price? Get it off the market right now. It will not sell for more, but the surplus of over-priced inventory is a false signal to buyers that the market has not found its bottom.

If you must sell into this market, you’ll sell at the market price. If you can afford to wait, you will almost certainly do better Read more

1.0 = !.0 For Most Agents — What Old School M.O. Works For You?

I used M.O. so once and for all I can say something here in Latin. Modus Operandi — there, I said it. In simple terms it means mode of operation. In real estate parlance, you work one way, the lady down the hall works another. Same results, different M.O.’s.

So, in the 1.0 world of generating business — closed business — what works for you best?

Let’s limit this discussion, for the benefit of those who aren’t doing as well as they’d like, to those agents closing a minimum of 24 deals a year. And remember, 1.0 M.O.’s only. This isn’t about the 2.0 world of electronic wizardry.

Tell us what your M.O. is. What’s generating 24 or more transactions a year for you? How’d you learn it? From whom did you learn it? Have you added your own special sauce? Are you adding other 1.0 M.O.’s to your repertoire? Are you considering increasing your efforts using the same one?

OK — your turn — fire at will.

Are you a professional practitioner or just an order-taking lackey? How to list a home for sale like you own the damn place

I’ve written a ton about how we list homes for sale (and not just in that post; surfing the archives repays effort). At Unchained I illustrated some of our ideas, and you can catch this show on the DVDs if you missed it live. Everything we do is about selling the house — not selling us as a brokerage or as agents and not attracting buyers for other listings. We reap a substantial secondary marketing benefit from listing as hard as we do — both the efforts we undertake and our victory dance when we succeed — but our entire focus is on selling the house.

There is more stuff I could talk about, and we are always playing with new ideas. It’s fun — for me at least — to work with buyers, but listing is a perfectible praxis: By the assiduous application of thought and effort, we can get better and better at it the more we do it. But there is a limit to that proposition: You cannot sell a house that won’t sell, and that’s what I want to talk about.

But first: Listing in Phoenix right now, and in many other markets, can be a heart-breaking endeavor. There is too much inventory and there are too few buyers, and even the most perfect home can come up second-best again and again. “If you list, you’ll last,” but it could be that you’ll last a little better right now if you focus your attentions on motivated, qualified buyers, rather than speculating on sellers. You don’t have to blow off sellers, but I think you might be wise to reschedule listing appointments in favor of showing appointments, if one has to give way for the other.

Here’s the real meat of the matter, though: How much will you get paid for a listing that does not sell?

We charge a $1,500 non-refundable retainer when we list, but that doesn’t begin to cover our costs before we even hit the MLS. I’ll come back to this idea, but the point for now is that we actually lose money if our listings don’t sell. Read more

True Confessions of A Real Estate Broker

The times are indeed changing.  I am not a real estate salesperson.  I am the broker/co-owner of a small real estate office.    Please put the hammer away, Greg.  My partner Bob, and I, opened it up precisely in order to own our own systems,  and develop our own approach to business.  Initially, it was just us, but after over 25 years in the business I realized I wouldn’t mind having a few agents on board to help with the heavy lifting.  And while I certainly don’t want to milk any underlings, there are bills to pay.

So here’s the question … In true Web 2.0 spirit I am putting it out to the community.

Gentle readers, if you were a broker-owner of a small independent real estate office, just precisely how would you structure your business to survive in the Web 2.0 world?  Or is the extinction of the broker/salesperson model so close and inevitable that it would not be worth the effort?

Could a small independent brokerage reinvent itself based on, say, a team concept?  What commission split would you offer agents?  What services would you provide for agents, or not provide?  

Any and all comments and opinions are welcome.  Thank you, everyone.

Damn-straight department: “Greg Swann I believe has a better understanding of where the real estate industry is going than most people out there right now.”

Real Estate Success Tools CEO Matthew Hardy speaking on BrokerIPTV.com:

Greg Swann I believe has a better understanding of where the real estate industry is going than most people out there right now. Greg has a perspective on understanding that this is a bottom up industry, that the individual real estate agent, their ability, their ability to own their own technology, to own their own systems, to own their own approach to business, is what is changing the entire industry. It is wrapped up in this thing called Web 2.0, but it is all based upon the idea of control and the power for the individual real estate agent to do what they want to do for their business.

You bet. We’ve known Matthew for more than a year, and his approach to business is very much like ours. If your income depends on milking underlings you think you have hypnotized into believing they need you, I cannot wait for the hammer of justice to fall on your head…

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Mortgage Rates Higher at the End of May

Here’s how bad it gets when the mortgage-backed securities market deteriorates:

From May 21:

This is a chart for the last 30 days for mortgage-backed securities.  When MBS prices go up, mortgage rates come down.  In this case, I noticed a meteoric rise in MBS prices in the last week in April (off a low of 99.5).  I called for clients to lock on May 2, 2008, when the 30 year fixed rate mortgage was at 5.875%.  Today, it has improved to 5.625%.

Today, mortgage rates are over a half a point higher (in rate) :

This is panic selling that we’re seeing in the fixed-income securities market.  I knew it would happen but I was early.  The 30-year fixed rate mortgage was at 5.625%, nine days ago.  Yesterday, it went to 6.0%.  Today a 30 -year fixed rate mortgage is at 6.25%.  Expect rates to be above 6.0% for the next two weeks; we should see them creep down by the end of June to the sub-6 level.

Don’t fret- they’ll be back.

Agent branding is good, but Trulia.com is still deliberately hi-jacking street addresses, frustrating the interests of sellers

I’m still digging out from Unchained, so this is not as timely as it might have been.

First, I think we might have gotten distracted by whatever cozy arrangement does or does not exist between Trulia.com and Number 1 Agent.

Second, I think Trulia’s recent announcement that agents can “brand” their own listings is a move in the right direction. Trulia has always seemed to me to play favorites with the White Shoe set, and giving the grunts on the ground a chance to compete with their bosses for their own business is… damned near decent.

But: I am not prepared to yield on the main issue. When Trulia.com puts a “nofollow” on the link back to my single-property web site for my listing, it is depriving my sellers of the natural dominance they should have in Google over their own street address.

The issue is one of canonicity. If Truila were giving my URL an ordinary HTML anchor link, then Google would know that my site is canonical and Trulia’s is derivative — which is undeniably the truth.

By putting the “nofollow” tag on what is in fact a JavaScript link, Trulia is falsely implying that it is the canonical resource for information about that property.

That much is a lie, but it gets worse: If someone Googles the street address for my property and finds my single-property web site, my sellers — through me — have an uncontested opportunity to sell their home to that potential buyer.

If instead that potential buyer finds Trulia’s link to that home, the buyer is thrust into a vast supermarket of real estate, and the sellers are deprived of their opportunity to sell their home and their home only.

This is not a dual agency issue here, this is simply a matter of giving sellers the best advantage they can possibly have from searches on their own street address.

Because Google would regard a normal link as leading to a more canonical resource — regardless of differences in Page Rank — by putting a “nofollow” tag on its links to agent- and broker-supplied real estate listings, Trulia.com is deliberately hi-jacking the street Read more

What Hi-Tech Tool Helps Agents/Lenders The Most — Bottom Line Most

Though I think I know the answer to this query, the answers might just surprise many of us. Also, it makes sense the answer for me might be third best for you, right? Hi-tech tools, not toys, are what we’re lookin’ for here. Though for some, blogs and/or websites might top the list, I’m eliminating them from the menu. For me they simply don’t qualify as hi-tech. I’m lookin’ for what you closet geeks out there are leveraging to the max.

An incomplete list might include spreadsheets, presentation apps, Blackberrys, iPhones, data bases, and the list is almost endless.

Or maybe there’s an office machine to which you attribute increased income. What hi-tech tool is performing like a champ in your business these days? How much impact has it actually had on your bottom line?

For the legitimate geeks on steroids out there, what hi-tech stuff have you combined in order to build your personal Frankenstein tool? Or maybe there’s a group of apps out there that play well together.

There’s no right answer here. Well, that’s not really the case. I think there’s a right answer, but what’s right for my operation might be on your B-List. As I’ve been known to say once or twice in the past, bottom line results is what we’re searchin’ for with this question.

There you have it. Now, what’s performing for you from the Hi-Tech menu that’s translating into dead presidents?

A Little Tough Love: We Don’t Get Paid For Tryin’ — We Get Paid For Doin’

Before beginning, and to head off the ‘you’re so mean’ crowd at the pass, I’m talking here of those things in our careers for which we, more or less, hold the reigns. We never totally control everything when it comes to our scorecard (read: results), but we can reasonably agree most (80/20?) of what we wish to accomplish is under our control to a greater or lesser extent.

There was a short period when I was a trier. I empathize with those who say they tried hard in this business. I don’t feel sorry for them, but I empathize. I realize it sounds hard-hearted, but for Heaven’s sake, they don’t even believe themselves. They were the ones not doing what they knew what had to be done to produce results, right? My money says they were there at the precise moments they weren’t doing them.

In other words, around here‘The dog ate my homework’ will fall on deaf ears.

I made a comment on Russell Shaw’s most recent post. I’ve always loved the way Russell pokes good hearted fun at old sayings. In this case it was, ‘work hard, play hard’. I’m with him in saying, whatever that means. I prefer to work hard and play however it pleases me. Isn’t that at least part of the reason I’m working hard in the first place? Duh. Sorry, I digress.

Anyway, he pointed out the difference between ‘having to’ and ‘wanting to’. As usual with Russell, he nailed it. Russell inspires me with his uncanny ability to do surgery painlessly, yet without anesthesia. His post is what brought to mind the whole Try vs Do thing with which we all have struggled at one time or another.

Here’s my comment verbatim.

I truly don’t mean to be harsh here, as there is some real suffering out there amongst the RE community. Still, there are two classes of agents.

Those who DO, and those who Try.

Do you ‘try’ to prospect daily, or do you ‘prospect daily?’

Labeling this line of thinking as ‘positive thinking’ replaces doing with trying.

Those for whom results are the only measuring stick, don’t ‘try’ Read more

All roads lead to Rome, but where three roads converge, the trivia that is yet another meme game is to be found

Eight questions, eight mostly inadequate answers:

1. Who is your favorite musical artist? (post a youtube video)

I like so much stuff that this becomes completely unfair. If you watch my choices of videos on BHB, those doesn’t even begin to scratch the surface of my tastes. The folks at Unchained got to hear songs from my iTunes library, which includes a lot of bootlegs and otherwise unobtainable stuff. All that notwithstanding, if I had to pick one first-among-equals favorite, it would be Bob Dylan. But just writing that feels like a betrayal, because everything I love in art comes from a kind of visceral honesty that Dylan almost never achieves — mostly studiously avoids. But take a look at this:

The real Blind Willie McTell was a fairly ordinary early blues musician. He was nothing compared to Skip James, in my opinion. And why is Dylan celebrating the blues in a ballad? I think McTell is a cypher for Dylan in this song, and I think this is as close to an auto-encomium as we can ever expect from the man. In any case, this is great art from the first note to the last, an Apollonian frenzy made more violent because it is so tightly constrained.

2. Who is your favorite artist (post a flicker photo)

I don’t have a favorite visual artist. Of everything I’ve seen, Rodin is the most interesting to me, this because he is truly in love with humanity. I’ve worked in photography most of my life, at one time very seriously. I hate almost everything associated with the visual arts.

3. Who is your favorite blogger?

Again I must disappoint. Everything I love in art is a form of literature — even the music I love best. Almost no one in the history of literature was able to write both very quickly and very well. Shakespeare could, as could Mencken, but they don’t update their blogs that often. There’s no one in the world of weblogs who makes me crazy like the great writers of the world’s literature. How could there be? That’s an unfair standard to judge by. To have Read more

NAR/DOJ settlement: “A tale told by an idiot, full of sound and fury, signifying nothing…”

After years of song and dance, the DOJ reached a settlement with the NAR that seems to have achieved absolutely nothing — except the waste of a bunch of tax and dues money. At least that’s what you would think if you read nothing but the NAR’s spin. In fact, the NAR lost the major point of contention, the attested right of brokers to withhold listings from Virtual Office Websites (VOWs). From eWeek.com:

The Department of Justice said May 27 it has reached a settlement in its long-running legal dispute with the National Association of Realtors. Under the terms of the settlement, the Realtors will enact a new policy that guarantees Internet-based brokerage companies will not be treated differently than traditional brokers. 

Under the new policy, Realtor-affiliated brokers participating in multiple listing services will be prohibited from withholding their listings from brokers who use virtual office websites, generally known as VOWs. The Realtors agreed to a 10-year settlement to ensure the group continues to abide by the requirements of the settlement.

“Today’s settlement prevents traditional brokers from deliberately impeding competition,” Deborah A. Garza, deputy assistant attorney general of the DOJ’s Antitrust Division, said in a statement. “When there is unfettered competition from brokers with innovative and efficient approaches to the residential real estate market, consumers are likely to receive better services and pay lower commission rates.”

The Realtors also agreed to adopt antitrust compliance training programs that will instruct local associations of about the antitrust laws generally and about the requirements of the proposed settlement. The National Association of Realtors is a trade association of more than 1.2 million residential real estate members who operate in local real estate markets nationwide.

That sounds like something, but it ain’t. For one thing, the NAR gets to define what a VOW is. From its own press release:

The terms of the proposed final order validate NAR’s position – that MLS members must be actively engaged in real estate brokerage by actually helping people buy or sell homes. This will ensure that MLSs are used for what they were originally intended to do – to help real estate professionals find Read more

Building Content for Others …when is it right?

First off, I’d like to thank Eric Bramlett for a great post explaining the BASICS of links and linking to other sites. What he was doing was setting a good foundational understanding based on known facts and avoid much of the speculation that exists out there in the world today about Search Engine Optimization. What he did not go into of that basic foundation, I’d now like to explore a bit further.

Here are some facts that we know about Building Content on other peoples’ sites:

Fact 1: Adding content on another person’s site builds opportunities for them to build internal links. Internal links (read: pages) have value

Item #1 that he did not go into was internal links vs external links. Internal links are the links to and from pages within your site. Let’s (for now) avoid the temptation to go into page rank sculpting, internal link sculpting, or the details of internal page structure. Please note that I have linked to a couple of resources there on the subject for your further reading if desired. Do we KNOW exactly how Google values internal vs external links. NO. Is there much speculation and testing on the concept. YES. True search engine professionals TEST these concepts as they change over time and they RARELY comment on them publicly. They often compare notes with other search engine professionals who are testing similar concepts. What we do know is that experienced webmasters can made GOOD use of hundreds or thousands of indexed pages to internally link and support pages that they want to rank for a given term. They would not be SCULPTING it if it did not have VALUE.

Fact 2: Adding Content on another person’s site provides opportunities for more people to EXTERNALLY link to their site.

Whether I write here on the Bloodhound Blog, on Real Estate Webmasters, or as a columnist on RE/MAX Times Online, people who read that can link to it externally. This is also true of comments on blogs and forums, LISTINGS and really, on ANY online community that you choose to participate and spend time in. This not Read more