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Archive for March, 2011

Catching a glimpse of Don Reedy’s vision: So far, so good.

Email from Don Reedy regarding his post-op appointment yesterday:

Exhausted.

But the news is good.

The last operation was successful….so far. The scar tissue that was of such concern was eliminated. I have my next appointment one week from today, a milestone that should determine if we are “likely” to have scar tissue problems from this event. I must remain in the facedown position 12-14 hours a day, BUT THIS MEANS THAT I CAN NOW READ, WRITE AND BE PRODUCTIVE THE OTHER 10-12 HOURS!!! I am so very thankful. There is a good prognosis for vision to return, the quality of which is yet to be determined….and yet again, I am thankful and optimistic.

Nothing’s ever over in the world of medicine. The good news comes in the form of fewer and fewer appointments.

Don Reedy has a beautiful soul. He will never be robbed of the light of human goodness, regardless of how this turns out. And it takes nothing to note that our heroic battles against the relentless forces of entropy are but temporary, and, for now at least, are ultimately doomed to failure. But we are human, and to be human is to wish, to hope, to pray — and to press on regardless. In the end, what matters is not what you lose, but what you refuse to lose.

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Rage and Rates… a Tin Foil Hat Production

I wrote the article below a couple of days ago for a blog on political and economic freedom.  I’m reprinting it here after enjoying some discussion on the matter with fellow Bloodhound and VA mortgage expert Brian Brady.  Besides it being a brilliant piece (of tin foil hat wearing rantings), the article does actually touch on an area that could be of great importance to our real estate buying clients:  mortgage rates.  You see (in an over-simplified explanation), when the world gets scared, money flows to safety.  Safety, at least for the time being, still resides in US bonds.  Though not always correlated, the interest rates on mortgages often travel in the same direction as those on bonds.  So if, for some crazy, unforseen reason, the world becomes a little apprehensive over the next 2 weeks, we might see mortgage rates drop.  The question is: when do you lock the rate for your client?  Well, if we knew the actual date this crazy, unforseen event may occur, we could watch closely and lock right up to the day before. Why the day before?  Because there are three possible outcomes to this disruptive event, and two of them are bad:

  1. It could turn out to be a tempest in a teapot, in which case money will quickly flow out of the bond market and interest rates will rise.  (Because of the inverse relationship between bond prices and interest rates, when people sell bonds the price drops and the rate rises… I see people’s eyes rolling back in their heads… moving on then);
  2. Or, things could go as bad or even worse than expected and oil prices shoot up (geographical hint), causing inflationary fears. Because inflation erodes fixed rate returns, bonds sell off and interest rates rise in response;
  3. Or, things could go as bad or even worse than expected adding to the already existing fear – oil prices be damned; in which case even more money flows to the safety of bonds and interest rates continue to drop.

As you can see, of the three scenarios, two give rise to higher interest rates making us heroes for locking our client’s rate before the event.  If, on the other hand, we find ourselves knee deep in the third option… well, we don’t like to talk about it in the mortgage world, but the right thing to do by our client is move the loan and lock in the new, lower rate.  Either way: hero.

Obviously you should discuss this with your lender, as your mileage may vary. But if rates begin to drop over the next week or two – and maybe you read some crazy article that mentions a big event on the horizon – think about locking in ahead of time.  Now, to scan that horizon. Hey, maybe Congress can give us a clue… 

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(Before reading, please make sure your tin foil hat is securely buckled…)

Don’t Let a Good Rage Go to Waste

Anticipation
It’s been a little while since I pulled the shades, broke out the tin-foil hat and dipped my quill with crazy ink, but old habits do die hard.  I’m reading about Congress delaying their eventual vote on the federal budget by creating a 2 week stop-gap measure with a whopping $4 billion cut in spending. (For those just tuning in, that’s .001 of the Federal Budget or 1/10 of 1%.  Don’t ever say those people in Congress aren’t up there making the tough decisions…) So, Congress is delaying the vote for two weeks, with no real reasoning behind the decision.  Does it seem likely that either side is going to have a come-to-Jesus moment in the next 14 days and realize the other side was right all along?  I don’t think so either; so why the delay? Alright, this is a tough one.  Much like Congress, let’s come back to it.

The vote on whether or not to raise the debt limit has been pushed out as well.  The deadline was approaching quickly; the money was expected to run out around March 31st.  But then the Treasury took another look at their accounts receivable (also known as expected tax receipts …which, I suppose, meant they looked down at their ledgers, put a really fine pencil to the numbers, and realized they were underestimating how much wealth they would confiscate from American citizens over the next few weeks…) and announced that the money wouldn’t run out until April!  So, as my old friend Kevin Bacon said so memorably toward the end of Animal House: “Remain calm! All is well!”

Why Wait
Hmmm, they’ve delayed the vote on the budget and they’ve delayed the vote on the debt ceiling and a curious boy just has to ask: Why?  Why put these things off when the debate is already engaged?  Well, one usually puts off a tough decision in the hopes that something else will come along and make it easier.  But I can’t imagine what would possibly come along and bring ease to a $1.5 trillion budget deficit, or to the government’s desire to add even more debt to what is already a Ponzi scheme grown so large only Bernie Madoff can make heads or tails of it.  There is, however, another reason to put off a tough decision.  Sometimes we delay a decision that’s going to negatively affect people until those same people are too busy doing something else to notice.  Something so engaging they scarcely feel the rug being pulled out from under them.  You often see this with the so-called Friday News Dump; relatively bad news is put out to the press just as they’re going home for the weekend.  Gives the dumper a couple days’ news cycles before the dumpee can follow up on whatever was dumped in the first place.  But the budget and the debt ceiling are a little too big for that, aren’t they?

It’s almost as if Congress and the administration are waiting for something… an event so big that they can vote to raise the debt ceiling and pass a budget that contains no material cuts. I just wish I could figure out what big event they are pushing everything past…

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Moving Right Along…
In other news, a Day of Rage to protest Saudi Arabia’s government and incite a revolution similar to what is already occurring across the Middle East has been declared for March 11th.  It is being closely watched around the world due to Saudi Arabia’s status as de facto leader of the Middle East, as well as being its largest producer of oil.  Some are saying that…

Hey, wait a minute. If Saudi Arabia goes up in flames… or even if the protesters fail to ignite anything more than gratitude for not being killed, it’s still going to dominate the news cycle for what: two or three days at least? Gee whiz, I bet something like that would knock a congressional vote over budgets and debt ceilings right off of page one.

I’m not sayin’… I’m just sayin’.

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To say the truth, my plan was to say nothing about the iPad 2…

…but that was before I saw the new Smart Covers

Minor upgrade to the product. Major upgrade to the experience. The video samples Extraordinary Machine, and that’s just exactly right.

This is egoism in action: Steve Jobs is a spectacular genius at satisfying himself. Not everyone loves what he loves, but he never releases a product that is not perfect in his estimation. Bill Gates and all of the CEOs of the kleptocracy can say that about not one thing they do in their whole benighted lives…

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I have a no-fee referral for a hard-working listing agent in Minneapolis.

Mom has moved to managed care in sunny Arizona. Daughter and son-in-law need to get the old family homestead sold. Zip code is 55418, and it looks fairly near into town. Zillow has it at $147,000, decent money if you’re willing to work.

But: You’ll need to be a hard-working dog. The sellers have sold and bought four homes with us, and they know what a good marketing effort looks like.

But if you’re the lister for this house, I’ll give you the referral no-strings-attached. I don’t want your money. I want you to take care of my clients.

Hit me by email if you want to talk to the sellers.

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Shouldn’t Sellers Invoice Listing Agents?

I suppose it’s pretty rare that a seller actually hands their listing agent an invoice during the course of a listing, but it shouldn’t be. Based on what I see, the vast majority of listing agents should be billed by the seller, same as they would be by any other third party vendor. The fact that it doesn’t happen simply means most sellers don’t understand what is really going on during the course of a listing and, I’d wager, neither do most agents – or if they do they certainly haven’t informed their client.

Here’s a question every seller should ask their listing agent: “Why are you going to put up a For Sale sign in my front yard?” Standard answer: “A sign is just one part of my ‘Handy-Dandy, Super-Duper, 24 Point, 7 Step, Maximum Sales Price Marketing Plan’ or HDSD-24/7-MSM Plan… which I offer to all my clients completely free of charge.” (The standard answer is impressive, wouldn’t you agree? We agents are very creative indeed.). Of course, given the use of internet these days, I suggest to you, dear reader, that most For Sale signs are more directional than informational, but let’s not split hairs. Okay, so the sign is a part of the marketing plan. Next question by an informed home seller: “If that sign is part of your plan to market my house, why doesn’t it mention anything about my actual, you know… house?”

This is old Greg Swann stuff, but I’m rehashing because it needs to be taken further. There are actually two correct reasons for placing a sign in someone’s front yard:

  1. Sell the actual home. (The primary objective from a fiduciary standpoint.)
  2. Attract future home sellers from the neighborhood. (Secondary objective, but a legitimate expectation of work well done.)

So why is it then, that the vast majority of signs fail both of these objectives? Because they are designed with a different purpose altogether; they are designed to advertise the brokerage (hence the uniform colors, logos, big brokerage name and phone number). To a smaller degree, they are also designed to advertise a brokerage’s presence in a neighborhood (hence the requirement that most agents not deviate from the standard issue signs). Wait a minute, I thought we were hired to sell the client’s home; did we also contract with them for advertising and marketing allowances? Put another way: next question from informed seller: “Do you expect me to allow a company (even a one-man real estate company) to erect an advertising billboard on my property without charging them a fee?”

Yes, a fee. If we are going to advertise our business on someone’s property, we should expect to pay them for use of their property. And please don’t insult anyone’s intelligence by suggesting the contract signed by the sellers gave us permission to do this. We have a fiduciary obligation with our client. The fact that we have not explained that we are going to erect a small advertising sign on their front yard – a sign for which they would be paid were it any other business – is a breach of that obligation.

(Note: we see this played out in the home remodeling world as well. Signs in the window or yard. But these signs are, generally speaking, negotiated into the contract for what they are: advertising.  Whether or not the homeowner is smart enough to ask for a discount or fee does not impact here because general contractors do not engage their customers in a fiduciary relationship.)

So, what should an agent do? For my small little band of rebel agents, the answer is easy. First, we explain what’s actually happening. Then, we can either offer to pay our client for the right to advertise on their property, or we can create a sign that satisfies its two stated purposes. We find it cheaper and more appropriate to actually do our job and create a custom sign. For many agents, however, and many reading this article right now, that is not an option; you are required to use the sign the broker wants you to use, rather than a sign that actually helps the client. That’s alright; once the seller understands what’s happening and passes along an invoice, maybe you can bill it to your broker…

Here’s a second question every seller should ask their listing agent: “Why are you going to hold my house Open this weekend?” Standard answer: “To attract buyers.” Yes well, that is an honest answer, isn’t it? But it’s more than a bit misleading too. Statistically speaking, Open Houses don’t sell homes.  According to NAR, when asked, less than 1% of eventual homebuyers first found their home through an Open House. But then, that’s sort of the point, isn’t it: to meet new buyers who, while not buying the house we’ve held open, will probably buy something. Wait a minute, I thought we were hired to sell the client’s home; did we also contract with them for lead generation? Put another way: next question from informed seller: “Do you expect me to spend time cleaning and prepping my house, then spend more time and money keeping my family and I busy all afternoon while you use my home to build your business, and not charge you a fee?”

Yes, a fee. This is no different than the sign business. If we know that the primary (and secondary and even tertiary) purpose of holding an Open House is to meet new buyers who, more than 99 times out of 100, are not going to buy our client’s home, then we have a fiduciary obligation to inform them. Did they think we were actually trying to sell their home rather than increase our client base? Do they have any idea we are using their house as bait? Do they realize they are, in fact, acting as a third party vendor at that point and entitled to the same fee? If they don’t… who’s not doing their fiduciary job?

Again, my little band tries very hard at the beginning of the listing to disabuse the seller of various beliefs and chief among them is their misunderstanding of Open Houses. We will certainly hold one (ONE) if they request it. But if we request it – and there are properties where we are definitely interested in attracting similar property buyers – the client should expect payment for their time and money. Wouldn’t you?

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