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Archive for May, 2009

Show Me “Paint the Fence”

I have a confession to make:  CRM isn’t as complicated as people tend to make it.  Take a look at an app like Salesforce and they purposely build the interface to look like you’re piloting a 747 jet when in reality all you’re looking to do is deepen a few hundred relationships and organize your life.  We CRM experts like to try and look a lot smarter than we actually are.

Over the next few weeks, I’d like to share some easy action items that will make managing your database a snap.  WARNING: I’M FLORIDA EDUCATED SO I TEND TO KEEP THINGS AT A 7TH GRADE LEVEL.  GREG SWANN: INITIATE LOBOTOMY NOW.

Lesson #1:  Paint the Fence

Remember when Mr. Miyagi made poor Daniel Son paint the fence?  And wash the car?  And paint the fence again?  If we’re gonna make you a black belt database manager, you’re going to have to suck it up too.  One must not deliver kick to opponent family jewel without proper training.

The most common problem I notice when consulting with mortgage/real estate professionals:  the quality of your data sucks.

  1. Lazy Data Entry:  If you’re populating data from an internet form, expect respondents to take as little time as possible getting to the goodies you’re dangling.  No less than 50% of your data will come in with capitalization, punctuation and other grammatical errors.  There are some automated ways to help clean this data, and I’ll leave that for another day.  But in the meantime, I’m asking you to make a habit of cleaning data as you go.
  2. Incomplete Data:  For the belly-to-belly folks:  I have my salespeople take the extra 120 seconds to visit a new prospect’s website as they enter data into our CRM system.  When I find records with just a name and email address, I get pissed.  When you take the extra time to dig for granular data on a contact, you’re in essence learning more of their story in the process.  Did my prospect give me a fake phone number (easy to learn if the the phone number on their website is different than the one they gave you!)?  How polished of a prospect am I talking to (ie:  how nice is their site?)?  Does my prospect have an area of specialization that I ought to know about?  You get the idea.  While you’re at it, go ahead and populate their physical address.  Why?  Because if you get into this habit today, you won’t have an excuse to hold off on conducting a timely and profitable direct mail campaign down the road because you need to “clean your data up”.  When opportunity arises, you’ll be able to pounce immediately.  Case in point, the client I collaborated with on the preceding letter originated 52 loans in December 2008 – by himself.
  3. Make Notes About the Contact:  When I enter a new contact into our mortgage CRM system, I always make a quick note with details on where the prospect came from and how impressed I was with him/her (if at all).  Remember that one of our core functions with CRM isn’t just identifying who’s most likely to buy, it’s just as important for us to segment out our B, C and D players.  I’ll be talking about data segmentation in more detail another time.

I know I shouldn’t have to say this, but I will anyway.  BACK YOUR FREAKING DATA UP!  Even today I’m dealing with people, even smart people, who lose their entire DB when a computer goes down.  If you’ve got your entire database on a desktop running ACT or Outlook, and you don’t know how to go about backing your data up, leave a comment and we’ll address that down below.

Garbage In –> Garbage Out

We’ve heard this saying a million times, but 9/10 of you still do a poor job of maintaining a pristine database.  Today’s takeaway:  don’t finish reading this and say “Yeah Yeah, I know Green, we get it”.  Just make sure every record in your DB moving forward contains the following fields:

  1. FN & LN
  2. Nickname (if applicable)
  3. Company Name
  4. Main Phone
  5. Cell Phone
  6. Full Physical Address
  7. Email Address (secondary email address is also huge if you can get it)
  8. Website Address
  9. Referred By
  10. Quick Note:  How you met them, how impressed you were, plus an item to jog your memory)

Are you guilty of keeping a messy database?  Hire a high school kid to dig in and fix grammatical, spelling and other errors one night a week.  Within a couple months, you’ll be good to go.  And that’s when things get fun.

11 comments

Memorial Day – A Time To Give Thanks

gg_cemetery_grave_vista

Golden Gate Cemetery Memorial Day - United States Marine

Take the time to participate in one of the many remembrances in your community.

They gave months, years, blood, sweat, tears and lives. Give them a few hours.

Celebrations will be held on Monday at Oakland’s Mountain View Cemetery, Alameda’s USS Hornet, San Francisco’s Presidio and USS Pompanito, and San Bruno’s Veteran Cemetery, among other places.

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The Secret to Success (part 372)

Want to know the secret to becoming a wildly successful, top producing, charismatic, healthy and attractive real estate agent?  Want to feel ten pounds lighter and ten years younger?  Want the whole thing in one easy to swallow pill?  Me too.

I know all of us want to make money – some more than others.  But our ultimate goals: security for our family, a peaceful sense of happiness, a worry free future – they are much more than just money, aren’t they?

Earlier this week I was driving my two boys to school.  The older one piped up and asked what day it was.  “Wednesday” I replied.  He was ecstatic with that answer; bouncing on the back seat and just as excited as a nine year old can be on his way to school.  I asked him what made Wednesdays so special.  “On Wednesday we have PE,” he explained.  “That’s like an extra recess!  And on some days we play ‘anything-goes.’  Those are the best days ever!”

I started wondering: when was the last time any of us scheduled an extra recess?  Hell, when was the last time any of us scheduled a regular recess?  Can you remember the last time you found yourself enjoying a game of ‘anything-goes?’  May I suggest that when you finish reading this article you go directly to your calendar and schedule yourself an extra recess.  I’m not talking about some quiet time where you can get caught up on your paperwork!  I’m talking about a long lunch or a long walk.  Maybe going down to the beach or the park and bringing a picnic.  How about meeting your husband or wife at a hotel near their work for a romantic afternoon?

Schedule yourself an extra recess; preferably involving a little ‘anything-goes.’  I guarantee it will do wonders for your business.  You might even have “the best day ever.

13 comments

The End of No-Cost Mortgage Loans and Other HR 1728 Concerns

The H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act is a problem that all mortgage and real estate professionals need to pay attention to.

My first rule of blogging has always been to avoid political discussions, especially if I’m not an expert on every angle of the topic.

So, with my second post to the BHB, I’m breaking all of my rules…. I guess this means that I’m starting to get the hang of things around here.

The difference with this post is that I’m putting my self-consciousness and ego aside for a moment.  I believe that there is way too much at stake for me to wait around until I’m comfortable putting my neck on the line.  I’m taking Greg’s 70% approach and running with it

If I’m wrong or barking up the wrong tree, I humbly respect that the Hounds of this community will set me straight.  Matter of fact, I’ll do my best to encourage any type of discussion, rant, or other demonstration of disgust, as long as it helps us get closer to the truth behind HR 1728.

Here’s the deal, friends – HR 1728 has passed the House, which means it still has to go before the Senate and then pass Obamanomics before it becomes a law.

I’ve spent a significant amount of time reading, researching and writing about how mortgage originators can battleback against this new Mortgage Reform bill.

I’m either missing a beat, presenting the wrong info, or not yelling loud enough, because it doesn’t seem like there is much talk online about how this new Anti-Predatory Lending bill will impact our industry.

Obviously, HVCC is getting some reaction, probably because people are already feeling the pain in their wallets.

However, a lot of us may have to turn to online gaming and selling weed to make a living if H.R. 1728 makes it through the Senate without our voices being heard.

What are the main bullets of HR 1728 that I care about?

  • Mortgage brokers lose the ability to use their YSP (Yield Spread Premium) to offer No-Cost mortgage loans.  Banks, on the other hand, still don’t have to disclose their same (SRP).
  • It will be a 30 year fixed rate only world, or borrowers will have the ability to sue lenders for up to three times their loan amount.
  • Mortgage companies will have to put up 5-10 percent in reserves on any loan that they originate, fund or transfer –  other than the standard full doc 30 year fixed.  This will basically force all non-depository lenders out of the business.  Yipee for big Government owned banks!
  • Nobody (including attorneys) will be able to charge homeowners to negotiate with a lender on the borrower’s behalf for better loan terms.  This is bad, I don’t care what your opinions are about the loan modification business.  There has to be an equal balance of power, and homeowners should have the right to pay an expert for a fair trial.

>>Read the Full Text Here

>>Read Summary Here

Whether you believe that the current foreclosure crisis is a result of the Clinton Treasury Department’s 1995 regulations which made getting CRA ratings much harder, Fannie Mae’s attempt to increase home ownership, or maybe something more obvious like Credit Default Swaps, the politicians and big banks find it more convenient to just blame mortgage brokers.

The thing that pisses me off the most about this bill is its name –

“Anti-Predatory Lending”

WTF!  –  I mean, who doesn’t think that Mortgage Reform is good and Predatory Lending is bad?

They have given a complex bill a creative name to fool our clients and professional colleagues who are too busy dealing with their own nightmares to see a new one on the horizon.

When a few banks control our industry, mortgage rate and program options become limited.

The following videos could probably sum up the past 10 years and how we got to this new Anti-Mortgage Originator Act:

Video 1: Barney Frank – Pro Housing, Fannie Mae, and Sub-Prime

Video 2: Barney Frank “There is no housing bubble, we’ll be fine or the Government will bail us out.”

Video 3: Barney Frank – The Republicans caused this mess

Video 4: Rep Brad Miller – Borrowers were duped into bad loans (min. 4-6)

Confused yet? Having a hard time trying to decide if it was the Republicans or Democrats who let this happen?

Don’t worry about it, they are probably going to spend the rest of eternity trying to blame each other while the consumer and active real estate / mortgage professionals pay the price.

I’m not open to a political debate, but maybe some of the readers here are. My main objective for posting this article is to create awareness, and hopefully an educational discussion.

Like I mentioned earlier, I barely feel qualified based on my overall knowledge of this topic to write about it.  Either way, motion creates emotion.

Whether you feel the need to express your opinions in the comment section, or you bring H.R. 1728 up in your next office meeting, we need to start creating noise.

14 comments

Trulia – A search engine?

Quote from Rudy Bachraty on REBarCamp Denver’s announcement that he will be speaking there: (my emphasis added)

“Trulia is a real estate search engine and online community where you can find homes for sale and detailed local real estate information.”

This is the second time in recent days that I have seen Trulia refer to itself as a search engine. In my opinion that is no accident. So time for me to offer some clarity.

Ummm…OK…calling yourself a search engine is a nice little attempt to muddy the water in our little blissfully ignorant vertical and blur the differences between a scraper (which your site started as–more references available upon request), a third party listing aggregator, and a search engine. There are huge differences between them. Google is not a scraper. They are a search engine. They index data that resides on other peoples servers. You, on the other hand, pull the listing data onto your own site for the purposes of monetizing it.

Let’s see, how can I explain this the easiest way…perhaps a video:

You see, Trulia? I know search engines.

Search engines are a friend of mine…

and Trulia?…

You’re no search engine.

12 comments

Is NAR Criminal or Clueless? What difference does it make?

I  read the give and take between Greg and Mike DiMella (full disclosure, Mike is a client) with interest, because I respect them both, and it is always interesting when smart people agree to disagree and do so with civility and eloquence and without resorting to the ad hominem.

When that single MIBOR director derailed a policy change that went against them, even though it was unanimously approved by the NAR’s own technology committee, we were all left to discern a motive.

Was this the result of a long-standing “criminal conspiracy” (Greg)? Is this an attempt by some local MLSs, who see Google’s handwriting on the wall, to remian relevant by competing with their own members (me)? Or was this a consequence of the realities of trying to pull coherent policy from the collective mind of a large membership organization in a timely fashion (Mike)?

Its an interesting question, but the answer, it seems to me,  is irrelevant in the discussion of what to do next.

One thing we all agree on, I think, is that the MIBOR director used his knowledge of  NAR parliamentary procedure to work the system to MIBOR’s benefit and to the detriment of brokers and agents.

The prima facie evidence is that, at least for the next 6 months, Paula Henry is still being forced to dis-allow Google from indexing her site.

That means the damage is real.

Yes, it is contained to Indianapolis for the moment, but will it stay that way? My guess is that MIBOR will be huddling with other MLSs who share their control fetish over the next 6 months, and our friend the objecting director from Indianapolis will have a quorum come November.

Now that NAR has proven itself to be subject to the whims of directors who are nostalgic for a paper-bound MLS that brokers kept behind their desks, modern brokers and agents need to aggressively defend their own interests because, clearly, the organization that is supposed to do that is not.

I see signs of this happening now, with people getting fed up enough to get involved with their boards at the local level, but is that enough?

Perhaps now is the time forward-thinking real estate professionals to organize outside of NAR or the local MLS, and around something more solid than a diaspora of blog posts.

Of course, Internet-based technologies would still be central to the effort. Organizing has never been easier. You are looking at one of the social networking tools and at the network that we could use to do it, and we have the example of Obama’s campaign to use as a template.

Can we use these tools and our collective knowledge to create a new lobby for sane real estate practices? Can we network the people who are trying to get involved to modernize the existing boards together so they can share notes and encourage each other?

Or would any new organization be subject to the same cat herding problems that seem to plague NAR? Only with younger, more nimble cats. Call it “kitten herding” which sounds like it might come with its own set of issues.

When the time comes, will people put their money where their blog posts are? Or are we all too “heads down” in our own businesses to make a collective difference?

Is it “yes we can” or “no we can’t”?

7 comments

News from the right side of the number line: Graphene, a possible replacement for silicon in computer chips, and a DVD-sized storage device that can hold more than a thousand DVDs

One of the paths to the singularity, and the one that is mostly readily plausible given the current state of physics, is nanotechnology. Here are two new nano-entities ready to break out of the laboratory.

First, how would you like to store your entire movie collection on one DVD-sized disc?

A DVD that can store up to 2,000 films could usher in an age of three-dimensional TV and ultra-high definition viewing, scientists say.

The ultra-DVD is the same size and thickness as a conventional disc, but uses nano-technology to store vast amounts of information.

Scientists believe it could be on sale in five years and say it will revolutionise the way we store films, music and data. 

One disc could back up the memory of a computer or record thousands of hours of film.

The breakthrough comes from Swinburne University of Technology, Melbourne, Australia, where scientists created a prototype using ‘nano rods’ – tiny particles of gold too small to see – and polarised light, in which the light waves only flow in one direction.

Professor Min Gu, whose findings appear in the journal Nature, said: ‘We were able to show how nano-structured material can be incorporated on to a disc to increase data capacity without increasing the size of the disc.’

A DVD can hold up to 8.5 gigabytes of information, enough for a movie, several special features and an alternative soundtrack.

Blu-ray discs, which were designed to replace them, can store 50GB, enough for a film and extra features in high definition.

But ultra-DVDs will be able to store ten terabytes – or 10,000GB.

Of much greater moment, consider Graphene, a perfect carbon structure one atom thick.

Eight MIT researchers, along with colleagues at Harvard and Boston University, have just received a major U.S. Department of Defense grant for graphene research. With this five-year grant, Palacios says, MIT and its collaborators “would become one of the strongest multidisciplinary teams working on graphene in the world.”

Its unique electrical characteristics could make graphene the successor to silicon in a whole new generation of microchips, surmounting basic physical constraints limiting the further development of ever-smaller, ever-faster silicon chips.

But that’s only one of the material’s potential applications. Because of its single-atom thickness, pure graphene is transparent, and can be used to make transparent electrodes for light-based applications such as light-emitting diodes (LEDs) or improved solar cells. The potential solar cell applications are now being studied by some MIT researchers including Associate Professor of Electrical Engineering Vladimir Bulovic and Associate Dean of Engineering for Research Karen Gleason.

Graphene could also substitute for copper to make the electrical connections between computer chips and other electronic devices, providing much lower resistance and thus generating less heat. And it also has potential uses in quantum-based electronic devices that could enable a new generation of computation and processing.

“The field is really in its infancy,” says Michael Strano, associate professor of chemical engineering who has been investigating the chemical properties of graphene. “I don’t think there’s any other material like this.”

The mobility of electrons in graphene — a measure of how easily electrons can flow within it — is by far the highest of any known material. So is its strength, which is, pound for pound, 200 times that of steel. Yet like its cousin diamond, it is a remarkably simple material, composed of nothing but carbon atoms arranged in a simple, regular pattern.

“It’s the most extreme material you can think of,” says Palacios. “For many years, people thought it was an impossible material that couldn’t exist in nature, but people have been studying it from a theoretical point of view for more than 60 years.”

Palacios and his team just last month published new results showing that graphene can be used to make frequency multipliers that could enable much faster computer chips and communications devices.

When you turn on the television and find nothing but one beggar after another bitching about how no one will give him an unearned dollar, take a moment to remember this: It’s raining soup. It always will be, as long as human beings are free to use their minds.

4 comments

What would it take to reform the National Association of Realtors, to turn it from an anti-consumer cartel into a steadfast defender of the right of American citizens to own, use and enjoy real property?

Joe Loomer: > what could and should NAR do to dispell your views of it as a criminal enterprise?

In very broad outlines:

1. Stop writing and lobbying for legislation devised to churn the real estate markets.

2. Work tirelessly to eliminate all laws that serve to advance the interests real estate brokers at the expense of consumers in general as well as other people who might want to broker real estate for compensation.

3. Eliminate all coercive membership requirements.

4. Work with lenders and HUD to eliminate the co-brokerage fee so that buyers can obtain — and pay for — true, honest, untainted representation.

5. Work tirelessly to eliminate all laws impinging upon the right of each citizen to buy, own, use, enjoy, profit from and sell real property without interference.

For what it’s worth, I think number 5 is the greatest betrayal of the American people by the National Association of Realtors. Zoning? The NAR is for it. Eminent domain? The NAR is for it. Expropriation of ancillary rights such as water rights? The NAR is for it. At the national level, the grand poohbahs might issue a toothless snarl about Kelo, but at the local level, the Boards of Real Estate that make up the NAR are always working hand-in-pocket with governments and developers to rob ordinary citizens of their right to own their own property.

Soldiers are to be found everywhere in history, but freedom is won and held by citizen soldiers — which means a soldier who has his own land to return to when the fighting is done. By undermining the right to own real property, the NAR works — insidiously, corrosively — to undermine American liberty.

And, for what it’s worth, if the NAR were to apply itself and achieve item number 4 on my list, none of the rest would matter. More than anything else, the NAR and the MLS are made possible by the co-broke. Get rid of that and the rest of this ugly mess will crumble to dust in due course.

5 comments

It’s not an EOD

I am stealing from myself in this posting, which I believe is okay because the message just never seems to ring loud enough for me.  Some years back I met a Marine and his wife while showing homes.  What follows is my recount of meeting them.  It’s an account I hope some of you will follow with your own stories about perhaps your own EOD encounters.

U.S. Marine Corps


I took a young couple out looking for homes today. First time we had met, and our initial introduction had been through my web site and a couple of emails.In the course of our meeting I engaged in my usual convivial chatter, finding out in small snippets where they were from, what they were dreaming, and of course, what they “did for a living.” Now an old philosopher, Soren Kierkegaard, once wrote “if you label me, you negate me”, and being not quite that old, but old enough to remember and revere the 60’s, I always ask “what do you do” hoping it creates something that really takes me to the core of that person, not just to the superficial meaning of his or her life as labeled by a job.

So today I asked “what do you both do?” She said, “I’m ex-military, and he’s still on active duty.”

“What branch?”, I asked.

“I was in the Air Force”, she said, “and he’s in the Marines.”

We’re here in Oceanside, California, home of Camp Pendleton, and some of the finest young men and women in the whole world. I myself served as a Marine many years ago, but continue to find that meeting and interacting with young service people always makes me glad I live in the San Diego area where so many opportunities arise to do so.

“What do you do in the Marines?”, I asked.

“EOD’s,”, he said.

I’m looking at him, and he’s a young guy who clearly loves his gal, his country, and is not a big talker like me. So I ask him, “EOD’s….what are they?”

“Explosive Ordinance Devices,” he says. “You know, when they set the roadside bombs, me and my unit find them and neutralize them. We make it safe for the rest of the guys.”

“Been to Iraq yet?”, I asked. “Three tours,” he says, and again he’s taking his girl’s hand and concentrating on her.

He’s not even looking straight at me, and I think I sense he’s reluctant to make it sound like anything he does is important. After all, I have my Realtor’s badge on, my head filled with facts about the market and all the homes I’m going to show them. It’s clear he’s looking at me as though I am important.

Well, for today, and to once again remind all of us, Real Estate  is NOT AN EOD!! It’s a job, and it’s a job some of us do well, love, and that can make a difference, but one that nonetheless “labels” us. I want to say that the next time someone meets me and engages in small talk, including asking “what do you do”, I’ll say something really honest, really revealing, and perhaps really dangerous. I’ll say, “I met a Marine who did EOD removal…..do you know what that is?”…..and then talk about this young man and young woman until the subject changes to why what THEY do make what WE do possible.

Hug a Marine, sailor, soldier, Coast Guard or flyer today.  The ones you can hug today aren’t the ones we’re honoring this weekend.  Those honorees we celebrate this weekend can no longer be hugged.  Take your respect and honor to the streets.  You won’t find an EOD anywhere, but you will find silent heros and heroines…..

16 comments

$8,000 Tax Credit Advance Friend or Foe?

I have been following the $8,000 Federal Tax Credit with great interest this year. Currently it is the most talked about topic that I am discussing with potential home buyers. There is a lot of interest in receiving $8,000 when a first time buyer files their taxes for 2009. Now that many states (Washington being one of them) are discussing ways to use the $8,000 tax credit as a way to help first time home buyers get into their homes through bridge loans the discussions have really become spirited. When HUD announced that they would allow the $8,000 tax credit as collateral for “bridge loans” to cover the down payment on FHA insured mortgages the pot literally boiled over with opinions.

Currently it seems on a daily basis that the $8,000 tax credit advance is in the news for one thing or another. Yesterday the Arizona Republic announced that the tax credit would be ineligible for down payment. Later in the afternoon the Seattle Post Intelligencer announced that the Feds still plan to allow use of tax credit for down payments.  Today the Arizona Republic reports the HUD bridge loan program hasn’t been killed. So what exactly is going on with the $8,000 tax credit advance? It would appear that nobody even HUD and FHA really know. I am sure that by the time I actually publish this post there will be something new to report.

What I want to know is what the readers of Bloodhound Blog think of the $8,000 tax credit and in particular what you think of allowing the tax credit to be used towards a buyer’s down payment?

I will go on record that I feel that this makes sense in some particular situations and with some additional requirements on the borrowers.

  • Potential home buyer has the income to cover the complete cost of home ownership out of their current income. The ratios must be well within the FHA guidelines.
  • The credit score of the home buyer is greater than 675. There is no need to allow marginal credit worthy buyer’s even easier access to borrowing money that they might have troubles repaying.
  • The borrower attends and completes a first time home buyer course.
  • The borrower needs to stay in the home five years or repay the $8,000 instead of the three years if they get the money when they file their taxes. They need to have some incentive to keep the home.

Since we already have zero down loans for people wanting to buy in rural areas and for people who have served in the military I am not sure why this program is creating such a public upheaval. Do USDA or VA loans have a significantly higher default rate than other loan programs? What makes us think that the $8,000 tax credit advance program would cause an increase in defaults?

I asked this question yesterday to my LinkedIn connections and I was not surprised that the responses were spirited. Many feel that this is simply going to continuing the overly liberal lending that has created the mess that we are in with regards to real estate. Others feel that lending the money will help jumpstart the economy and that it is of great importance that the government does everything possible to help stimulate the housing markets. Everybody seemed to not have an opinion on the topic. I am sure that the readers here will have something to say on this topic. So, what say you?

16 comments

What’s the best way to use ALT Tags on a web site?

I usually use a dozen or more photos for EACH neighborhood, and want to include neighborhood name in each Alt Tag:

For Instance: Berkeley 4th St “what it is”

Berkeley 4th St Spenger’s

Berkeley 4th St Peets Coffee

Berkeley 4th St Amtrak Station

Will the repetition of “Berkeley 4th St.. ” in the beginning (or end) of the Alt Tag be considered keyword spamming if EACH of the 12 photos on that web page has an Alt Tag starting (or ending) with the same expression?

Ira

12 comments

No more free lunch! Understanding the National Association of Realtors — all the way down to your bones…

Michael DiMella wrote the remarks quoted below in a comment, but I’ve extracted them and my responses to him into a separate post.

The meta issue is this: Is the NAR a criminal conspiracy against consumers, and, whether or not it is, is there nothing else good about it?

Michael DiMella: > you seem to have a thorough unwillingness to learn what NAR actually is and does.

That’s astoundingly false. I have written more about the NAR’s criminality than anyone, ever. You may not want to focus on that, but criminality is NAR’s sole reason for being. Everything else it might do is window dressing devised to fool the public — and gullible patsies within the NAR.

> That doesn’t make you a bad guy, but I, for one, would appreciate a modicum of respect.

Good grief. I will offer you and the NAR the oath of respect Fiorello LaGuardia paid to a similar criminal mob when he was inaugurated as Mayor of New York: “E finita la cuccagna!” (“No more free lunch!”)

> To [eliminate mortgage interest deductibility without comprehensively revising the tax code] would be careless and have a major negative impact on a majority of Americans.

False. The deductibility of mortgage interest is a handout to the rich. I’m opposed to all taxation, but it is absurd to argue that the wealthiest Americans cannot afford to bear their own economic weight. In any case, as is discussed below, using tax policy to favor one group over another, thus artificially to churn the markets, is vicious and wrong no matter who is hurt or helped.

The next argument would be that, in a condition of pressure-group warfare, to lay down arms is suicidal. That’s as may be, but, in order to make this argument, you must first argue that there can be circumstances in which you feel yourself justified in expropriating other people’s property — stealing, that is — for your own benefit. Are you an advocate of theft? Did I hear you say something about wanting respect?

> I would say NAR’s support of the MID is well intentioned to protect consumers

The sole purpose of the mostly mythical idea of mortgage interest deductibility is to churn the real estate markets, to cause people to buy and sell more real estate more often than they would in the absence of a specious tax benefit almost nobody gets. The only beneficiaries of mortgage interest deductibility are the real estate brokers and salespeople (and other industry hangers-on), who get to collect unwarranted commissions ensuing from this artificially churned-up real estate market.

> but many economists agree the only way we prevented this recession from getting much worse was spending and more spending

Also an obvious lie. This recession was caused by the NAR and its churning of the real estate markets, this more than any other causative factor.

> It’s nothing but a policy disagreement you may have, not a criminal act by NAR.

Theft is always wrong, no matter how you dress it up, and no matter how many witch doctors you hire to sanctify it. Theft from innocent children is particularly vile.

> if you ever get to be a very large organization

I have zero interest in any sort of organization. Honest men have no need to run in gangs. The NAR formed itself as a criminal gang precisely because its motives were and are dishonest. As you yourself are an honest man, I will expect to see you move in my direction over time. If you remain aligned with the NAR, you will very likely become a more adept apologist for theft. Your business either way.

Quoted below is an extract from a post I wrote about mortgage interest deductibility earlier this year:

The idea of mortgage interest deductibility is the key argument in the almost-always bogus rent vs. buy debate. Putative deductibility provides supposed cash benefits right now — and it promotes the investment value of your home.

Sit still for a moment. Take a few deep breaths. Forget everything about our current political and economic context and then tell me in twenty-five words or fewer why relatively fungible non-commercial real estate should ever be thought of as an investment. Do you think of your clothing as an investment? Do you anticipate a big cash payday for your knocked-around production-line mini-van?

We’ve been stupid for a long, long time, but not without cause. The NAR has told us for decades that we get a mortgage interest deduction, even though almost nobody does. They told us it was worth serious dough, even though it wasn’t. And they told us it turned our homes into investments, even though treating our homes as investments has resulted in massive over-building, massive over-lending, massive defaults, massive foreclosures and a massive clusterfrolic in the residential real estate business.

Who is at fault? Who claims credit for the idea of mortgage interest deductibility? The National Association of Realtors.

Two paragraphs ago you were thinking about reality and not just the news, so let’s try to make a habit of it. Suppose the car dealers in your state passed a law that put an excise tax on every vehicle — owned, financed or leased. But they also passed a law that let the drivers of financed vehicles deduct their interest payments from their excise tax bill. If you bought your car on credit, you might stand up and shout, “It’s a great day to be a Rotarian Socialist!” But if you lease or own your car — or if you own a fleet of trucks — you might not be so happy.

A tax system like that is obviously unjust — and its underlying motivation should be equally obvious: To get more people to buy more cars more often than they otherwise would.

This is also the motivation behind the putative deductibility of mortgage interest. People who own their own homes free and clear are being robbed, as are people who rent, but not even the mortgagee is the true beneficiary. The law is written for the benefit of Realtors — and lenders — who can talk you into buying more house than you otherwise would, trading houses more often than you otherwise would, all with the promise of a tax deduction that you almost certainly will not get, and which won’t amount to anything even if you do.

And that is why the NAR must wail so balefully that the deduction of mortgage interest is sacred and must not be touched — because it’s a sleazy scam for churning the real estate markets, and, if anything changes, there’s a chance that someone might catch on to the con game.

I’m talking to everyone who is still reading, not just to Michael. I do not have any doubt that the NAR is a criminal organization, but if you do, I want you to help you see my side of this issue.

The National Association of Realtors was formed as a cartel. Its original objective was to get laws passed in state legislatures to make it unlawful for otherwise honest people to broker real estate transactions for compensation. These were the original real estate licensing laws, and they were all written by the NAR. The purpose of all occupational licensing laws is to increase the compensation paid to licensees at the expense of consumers. In other words, the NAR has been a criminal conspiracy against consumers since its inception.

There are two side issues here. First, in order to usurp advantages for its members, at the expense of the general public, the NAR had to blow its horn about the vitally important role occupational licensing plays in providing consumer protection. As we all know, and as some of us are willing to admit even in full daylight, exactly the opposite is the case: Licensing lends the color of competence and legality to all manner of boobs and crooks. In this respect, occupational licensing is surely worse than nothing, since consumers are gulled into the belief that the license actually means something, rather than serving as camouflage for a much larger crime.

Still worse, since the NAR outlawed unlicensed brokerage for compensation, it will soon have the embarrassing task of trying to outlaw unlicensed real estate brokers who choose to work for free. Who might those be? How about the ad-supported Realty.bots? They’re already introducing borrowers to lenders for free. How much longer before someone starts introducing buyers to sellers without collecting any compensation for the introduction? When this happens, the NAR’s drawers will be all the way down. It will be fun to watch its apologists then.

There’s more. As we have discussed here many times, the NAR’s main focus, by now, is influencing legislation at all levels of government to churn the real estate markets. Whatever the consumer’s interests might be, the NAR’s interest, always, is to induce more people to buy and sell more real estate — sooner rather than later. If it were the NAR’s function to promote the sale of after-market car stereos, it would lobby for leniency for petty criminals!

If you work in real estate, you may think it’s somehow a good thing for the NAR to churn up more and more transactions. But as is discussed above, every bit of this churning is effected by acts of theft, by stealing from one innocent person in order to confer unearned wealth upon another. The $8,000 tax credit is not a credit against the home-buyer’s taxes. It’s an unearned cash gift stolen from every taxpayer who doesn’t get one. Still worse, since the United States’ government is broke, the funds are being stolen from future taxpayers — your children and grandchildren.

To say, “I support the NAR,” you must first be prepared to say, “I am in favor of enslaving innocent children so that I can have some unearned treats today.”

You must be prepared to say, “I am in favor of forbidding otherwise innocent people from earning a living however they choose.”

You must be prepared to say, “I think pushing innocent people around at gunpoint is a good thing, provided it benefits me.”

To say, “I support the NAR,” you must be willing to say, “I am proud to be a thief, proud to enrich myself at the expense of my neighbors and my own children, proud to beggar an entire nation of once-free people — provided I get mine!”

If you’re willing to say things like that, you’re hardly alone. Socialism is a philosophy of brigands, and Rotarian Socialism is the philosophy of the NAR.

But if you are not a thief, why would you ever issue apologies for thievery? Why would you permit a criminal gang like the NAR to sully your good name?

I know that no one has ever explained these issues to you in this way before. But now that I have, you have to make a choice.

You can say, “Yeah, but,” and then proceed to make ever-more-ludicrous excuses for ever-more-vicious crimes.

Or you can hide behind you hand and pretend that there is no need to do anything so off-putting as taking a side — as the cannibal vampire dinosaurs in the NAR devour your neighbors — and then your children — and then you.

Or you can stand up on your hind legs and bellow, “Not in my name, damn you!”

I live very comfortably in a world of absolutes, so there is no strain for me in writing treatises like this one. But one of the penalties you pay for reading me, and for reading me all the way to the end, is that I rob you of your middle — of your mights and your maybes. You spend your days peering through of fog of vague generalities, and then you go and ruin it all by showing up here!

It doesn’t matter to me what you do now. I’ll supplant the NAR with your help or without it. But it very definitely matters to you what you do about this. I’ve robbed you of the ability to make excuses for the NAR’s fundamental evil. You’ll do what you do, going forward, and that’s your business. But you will never forget this essay, never forget that you know all the way down to your bones that the NAR is a criminal conspiracy against the consumer — against your neighbors, against your children, against you.

Here’s what I think I want to say, just for now: “No more free lunch!”

15 comments

NAR midyear: They’ve got a lot of what it takes to get along

Did midyear throw you for a few loops? Why?

We real cool, but for all our coolness, our cutting edginess, our self-important bellowing, we belong to an enormous *ahem* trade organization. So step back a moment and let me break it down for you.

A trade organization exists to represent its members.

All decisions it makes will be in the best interest of the majority of its members. Why? Because a trade organizations exists to represent its members. The end.

If you are not in the majority then your edgey place represents one of two things to a trade organization: Something to be ignored, or something to be absorbed. There are no buts.

“But they twitter!”

“But they leave comments on my blog!”

“But I met them at REBC and they were nice!”

They represent their members. They speak on behalf on their members. You may wish and hope and want to believe that things are different, however, facts is facts. It is what it is.

Meanwhile, how about those “Transaction Fees“? I don’t pass transaction fees on to my clients. I would hate it if it happened to me. So as the NAR creates a song and dance regarding Busby v. JRHBW Realty, Inc. (members only, sorry) thereby protecting the majority of its members, here’s a little toe-tapping number dedicated to the wackadoodle world of the NAR. Appropriately, she’s singing in pig latin!

13 comments

What’s the HVCC and what does it mean to Loan Officers, Realtors and Consumers?

Okay, first, I have a confession to make.   The bank that I work for chose to be proactive and we began implementing the Home Valuation Code of Conduct on mortgage applications taken on or after January 12.   Why did we do it so early?   I’m not going to attempt to read the minds of the corporate people on that one.

I am going to share what I’ve learned about the Home Valuation Code of Conduct and what it means for lenders, Realtors and consumers.   Please remember this is not a formal analysis of the rules of the HVCC, this is strictly my personal experience of what it means:

The Five Most Important Things About the Home Valuation Code of Conduct:
1. For consumers – it means that the cost of an appraisal has gone up.   6 months ago, a standard appraisal in my area would cost between $275 and $300.   Now, that same appraisal is going to run $375.  What does the consumer get for his additional $75?  Basically, he gets one thing.   He gets a bit more comfort that the appraiser isn’t necessarily a friend of the Realtor or the lender and he doesn’t need to be as concerned that the appraiser is being pressured by someone to “meet a number” so the deal gets done.

2. For Realtors – it means that they can’t rely on “a friend” to get the deal done.   The days of working with the local appraiser who knows pretty much the entire market are over.   Now they have no impact on who does the appraisal.  So what does that mean?  It means that they are probably going to be getting some appraisers who don’t know the market as well.   What does that mean?  It means the Realtor has to not only know the market, they have to have the data available and be able to pass that information quickly and easily to the appraiser.   I don’t believe that it would violate any rules if the Realtor were to look up what they feel are the 6 best comparables, print the information and have it waiting at the house when the appraiser went through. 

3. For Lenders – the days of calling up an appraiser to “see what they think” about the value of a house are gone.   I was talking to a prospective refinance client the other day and he didn’t qualify for the “Obama” loans because he was pulling cash out to pay off a rental property.   Whether the deal would do what he wants would depend on the appraisal.   I used to be able to call an appraiser and discuss the deal with him and give the client a “good feeling” about whether it would work or not.   Not any more.   Now I had to tell the customer to check www.zillow.com or talk to a local Realtor and do their own research to determine whether it was possible to get that value and whether it’s worth spending $375 to “try it.”   The opportunity to help with advice and counsel in that way is now gone.   On the flip side, consumers don’t need to worry about an unscrupulous lender pressuring the appraiser to get a “higher” than true value so the deal would close.

4. For Everyone – time.   This is probably the biggest difference with the HVCC.   I remember a transaction where we got the appraisal done in 24 hours so that the buyers could take possession of the house when they got back from their honeymoon.    That wouldn’t happen any more.   Plain and simple, the layers of management, administration and quality control that have been put between the front line lender and the appraiser are making anything less than a 2 week turn around time somewhat miraculous.  Oh, and it makes it very important to make sure when you are writing a purchase agreement and/or locking in an interest rate that you give it enough time for today’s realities.

5. For Everyone – coordination.  Nope, I’m not talking about the ability to dance or ride a bike or anything like that.   I’m talking about coordinating the details on a file.   The client, the Realtor and the lender need to be in constant contact between when the purchase agreement gets signed, inspections done and the appraisal ordered to make sure that not a day gets missed.   I had a file earlier this year where I talked to the Realtor in the transaction two days before inspections were to be done.   I said, “Let me know when inspections are done so we can order the appraisal.”   He neglected to let me know and I didn’t follow up with him for a number of days.   Long story short, it was a bank owned property, the delay due to the appraisal cost the buyer $100 per day and I made $300 less on the deal because I felt at least partially responsible for the delay.    Those type of delays are not tolerable in today’s market and you need to work with people who are organized enough to avoid them.

Is the HVCC a good thing?   I’m not so sure that it is.    But, is the HVCC the end of the world?  Nope, it’s not that either.   It does prevent the unscrupulous lenders and Realtors from blackmailing appraisers, but it also adds a layer of bureacracy and red tape that is hard to work through.

So, let’s all take a deep breath, work with the system and make the necessary adjustments.

We’ll be fine.

Tom Vanderwell

If you are organized, patient and plan ahead, the HVCC is an obstacle that can be overcome.

20 comments

Nothin’ New Under The Sun — Especially If I’m Involved

I learned early on in my career I had no problem whatsoever taking others’ ideas and running with ’em like a thief out of a 7/11 carrying a paper bag full of ones and fives. I’m BawldJapan — I can take your idea, tweak it for my uses, and most of the time make it work to some degree. Ideas don’t have to be new, or even perceived as cool — they just have to work. What a concept — excuse me a sec while I write that gem down.

For the record, often times epiphanies for me are just empirical evidence I may have arrived at grammar school via the little bus. I’m reminded of my never ending irritation with the various business magazines aimed at entrepreneurs. Two lifelong best friends succeed wildly with a Mexican restaurant in their hometown, and are interviewed by Peter S. Small of Entrepreneurs and Stuff.

“Tell me guys, to what do you attribute your wild success?” “Well Peter, one day we were lamenting the dearth of high quality, affordable Mexican restaurants in Southern California. Then it came to us like a flash! We’ll do our own, and we’ll do it right. The rest is history.” You KNOW you’ve read those interviews too. You can’t swing a dead cat in SoCal without hittin’ an affordable Mexican restaurant with good food.

I’m now about to take what I’ve been saying here for quite awhile to house agents, into what I do. The concept of hyper-local has been cussed and discussed into oblivion. This isn’t about that exactly. This is about taking something that’s traditionally been done on a much larger scale, and narrowing it down to its lowest common denominator. Or something like that. It’s nothing new, and you may have even tried before.

For years I generated impressive business volume using direct (mass) mail — it was always successful, once we figured out the winning formula. From 1987 ’till around 2004 or so, no letter sent out yielded less than five figures worth of closed escrows. A few resulted in six figures. Then it stopped cold turkey, no warning, no downward trend, just the haunting sound of phones not ringing. Not one, but two 16,000 piece mailings in a span of about 100 days or so produced bupkis. To this day I have not a hint of a fragment of an X-Files theory as to why. Finally, I just accepted it.

I’m now ready to begin doing what I tried once back in the late ’70’s — sending out letters so highly targeted, only a handful, 5-10, can be sent out every day or two. I didn’t know what I was doing back then, except following through with an idea Dad gave me. I’m now gonna reinvent that wheel.

Before you race to make the obvious comment, I know I’m not Christopher Columbus with this stuff. Of course, if I do this right, it won’t be because I screwed up monumentally only to be hailed as the discoverer of the New Marketing World. 🙂

Later this week, or early next week depending upon the logistics gods, we’ll be sending out our first letters. How highly targeted will they really be? Try a few a day out of an already highly filtered data base of over 25,000 local properties — culled from an original 60,000. We’ll expand past that number of course, but will stick to the principle of only mailing to the cherriest of the cherry at first. With Josh and I each sending out an average of only about 5-7 or so daily, it will take awhile to plow our way through the 24 carat gold cherries.

But what will the letters say to the property owners, who are, generally speaking, ‘experienced’ real estate investors?

It depends upon the recipient of course — which is where the magic resides. These letters aren’t ‘one size fits all’ — they’re customized for each recipient every time.

It gets better.

There are several distinct investment strategies available in markets such as we’re now experiencing — strategies generally dormant during normal or boom markets. We’re targeting about three of them, using the tax assessor’s information as a guide. We can address their status quo in the letter, then give them the strategy to leverage what must surely seem to them a dead end, into a significant positive. They will not have heard anything like what we’ll put in that letter. It will perfectly describe their dilemma, while simultaneously showing them a viable and available exit door — to a better place.

At the very least we expect to get around 10-20% of these recipients to call us before we’re even able to ‘warm call’ them. Anyone familiar with direct mail numbers knows that percentage response is either ludicrous, a lie, or chemically generated. Since strictly speaking, this isn’t mass mailing — I’m gonna stick with that prediction ’till I’m shown to be in full blown denial. 🙂

Note: All letters will be hand addressed, and will be sent using a first class stamp. That alone with get far more of our letters opened before they’re unceremoniously tossed you know where.

We’ll be following up on these letters in 24-48 hours with the aforementioned warm calls. With our experience, expertise, and plain old knowledge, it’s my guess we’ll gain traction quickly — credibility too. That’s nice of course, but all we need is for them to be interested in what we have to say. We think the key to this strategy’s success will be found in the letter’s content and the first minute or so of any phone conversation. Duh? OK, fair enough. But our content will contain something they’ve not seen before.

They’ll get answers to questions they never knew to ask.

What they usually get is, “We’re so bitchen, merely being in our presence you’ll wet your pants.” Our letter’s message is about them — in detail — and it’s correct. It’s that last part that’ll surprise them. We know we’re right about their status quo, a fact they’ll recognize immediately — which nobody else has pointed out, even after having an in depth conversation with them first.

We’re also gonna apply this ‘puny mailing’ concept to a small percentage of expired income property listings. This one holds the most interest for me, as investors unable to sell property are ripe (Hoping against hope?) to talk with someone who actually knows which way is north on the investment map. I’ve never marketed to expired listings before. I think the results of these letters/calls might find me regretting that decision.

I’m also toying with the idea of repeating one of the most successful approaches I’ve ever stolen. Back in the ’80’s I’d say in a cold call or put into a letter that I’d seen their property — which in fact I had. Not only had I, but had a separate page for each property in a 3-ring binder with an attached picture of the exterior, and any data I deemed pertinent. Whenever I mailed or called owners using this approach, my batting average jumped way up. It was especially fun when they’d challenge my claim of having seen the property.

I’d glance at the photo and ask them if they really thought that beat up Pinto really added to the units’ ambiance. 🙂 A bond was born.

How do you, as a house agent, effectively put this approach into play?

Here’s where I go back to the hyper-local concept, though I don’t think it’s absolutely necessary for it to work. If you specialize in an area and are a bona fide expert, you’ll have no problem sending these sort of highly detailed letters to expireds there.

Hey, I have an idea. Why don’t you find all the non-owner occupied homes in your area, and I’ll show you what to look for and what to say in letters and phone calls. Keep your listing commissions, as I don’t want a referral fee of any kind. We’ll speak to them together about what they should be doing with the proceeds of their sale. They’ll love how you brought in an investment expert to help them with the proper strategies.

Since I don’t sport a Red Cross on my forehead, you might be wondering what’s in it for me.

It’s simple, they’ll remain your ‘house’ client locally, but become my investment client from close of escrow forward. Everyone leaves the table smiling — a true win, win, win scenario. I’ve done this around the country and it works big time. Bottom line is, you as the house agent end up listing properties you’d never even approach before, because it’s likely you don’t know how to answer the investor’s most crucial question — what do I do now? I do. You gain a new and appreciative client, who’ll be loyal because you solved his problem.

Make sense?

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