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Category: Real Estate (page 100 of 266)

September 14, 2008

Fannie and Freddie fall to foreclosure, but, still, lenders lend

by

Suburban Phoenix Real Estate Broker

Author website

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

 
Fannie and Freddie fall to foreclosure, but, still, lenders lend

I write this column at the beginning of the week, and it appears at the end of the week. My topics are usually timeless, but, if I turn my attention to current events, there’s always the chance that I’ll end up with my foot in my mouth.

Even so, the news that matters most in residential real estate this week is the takeover by the federal government of the Federal National Mortgage Association (FannieMae) and the Federal Home Loan Mortgage Corporation (FreddieMac). These two quasi-private corporations define the lion’s share of the secondary mortgage market in the United States.

What does that mean? If you got a conforming loan for your home, it will have been sold into the secondary mortgage market in short order. FannieMae or FreddieMac would have guaranteed the loan to investors, this so your lender could have had a renewed supply of capital from which to make new loans. Federal Housing Authority and Veterans’ Administration loans would have been guaranteed by those entities, and sub-prime (non-conforming) loans would have been marketed directly to private investors. The secondary mortgage market exists to keep loan originators liquid in a market where very few people keep their savings in banks.

Given the federal takeover, has the sky fallen on the secondary mortgage market? No, although things may be a little sluggish as the newly-installed management teams learn the ropes. But as San Diego real estate broker Jeff Brown says, “Lenders lend.” There are still plenty of dollars chasing mortgages, so there will be mortgages chasing dollars. It’s plausible that interest rates could even go down, now that the secondary mortgage market has a rich Uncle Sam to back its loans.

What is not so plausible is the notion that investors will suddenly abandon housing altogether. Things will shake out. The ideal situation would be for a new free-market clearinghouse for the secondary mortgage market to arise. A business like that could cherry-pick the strongest loans, those least likely to go into foreclosure, leaving Read more

September 13, 2008

A Bloodhound’s arrogance stumblin’ on the heart of Saturday night

by

Suburban Phoenix Real Estate Broker

Author website

Cross your fingers, Cathy may have brought home a $600,000 listing today. As my contribution to our household finances, I lassoed a $50,000 prize of my own. Mine will be fun for the whole family though: We’re going to discuss it here as a unique marketing problem. Why unique? It’s a vacant lot with a structure on it. It’s a tear-down that can’t be torn down. It’s a certified antiquity with no discernible historic value. In short: It’s a challenge.

Why did I take the listing? Because I’m committed to the idea that marketing real estate is not fundamentally different from marketing anything else. I believe I can target-market this outrageously anomalous property and get it sold. I think this will be a fun exercise, a chance to explore radically different ideas about selling real property.

I linked today to a post I wrote more than a year ago. Like this post, it has that strangely disorganized cohesion of a weblog entry — part essay, part letter to a beloved friend — but I think it’s one of the best things I’ve ever written here. I reread it today, and Teri tells us in a comment that she did, too.

Here’s the best of it:

A Bloodhound’s virtues are genetic accidents, but that doesn’t make them less than perfectly admirable, whether evidenced in the dog or anthropomorphized and expressed in thoroughly conscious human behavior. Brought up right, a Bloodhound is a natural alpha, regal and indomitable. The dog will move with a lanky, un-self-conscious arrogance that is simply heart-breakingly beautiful to look upon: This what a thriving organism looks like.

I am steadfastly, philosophically opposed to the idea of humility. I think it is one of many evil ideas foisted off on us by malefactors who love us best at our absolute worst. To say to me, “You’re arrogant,” or, “you have a big ego,” is no reproach. On the one hand, it is a statement of obvious fact. But on the other, it puts me on my guard against you. A healthy, normal human being moves and acts and thinks and speaks with the lanky Read more

September 13, 2008

Some Days It’s Not Worth Chewing Through the Restraints

by

Realtor, Rabble-Rouser

Author website

In addition to our discussions here at Bloodhound, if you’ve been reading the blogs lately, the commission debate continues.  Jonathan Dalton’s post on Agent Genius has recently spawned a long series of comments regarding how agents are compensated.

One comment (below) got me thinking,

“… I fully believe that my service is worth 6%. Clients in my area seem to be less concerned with getting a “deal” on their commission rate than they are with getting an EXPERT to work for them.”

I am not questioning the agent’s value – it’s hard to debate that consumers want an expert. The issue I have with the comment is “I fully believe my service is worth 6%.”

Why?

What is the significance of 6%?  As we discuss the issue of commissions, why are we stuck on a percentage of the sale? Why isn’t the number 10% or higher – or in some cases, lower? 

In actuality, if you’re cooperating with a buyer’s agent, aren’t you really saying you’re really worth only 3%?

Indulge me for a moment as I share a little story…

In early winter 2007, I happened to represent a client in the sale of his 3-flat in Lakeview – highly desirable area north of Lincoln Park – the building generated solid rental income. I listed the property and generated 2 offers within the first 20 days on the market. The first deal fell apart due to an over-zealous inspector who told my clients the building was worth no more than land value,

Pardon me, but you’re an inspector, not an appraiser.

But that was the least of my problems …

The second deal blew apart 3 days prior to closing. The zoning certificate was incorrect – issued by the city. Chicago stated that that building was a 5-flat. My client was thrilled – LOOK! We can now ask for more! Um – excuse me, but no. When he purchased the building 2 years prior, the city correctly issued a zoning certificate indicating that the building was in fact a legal 3-flat.

The attorney and I discussed Read more

September 13, 2008

It’s The Weekend, Right? Time For Another Deal.

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Lehman Brothers has been shopping their firm.  Here’s Paul Muolo, who co-authored a book I’m reading, Chain of Blame, with OC Register’s Matt Padilla:

THIS JUST IN: It could be a busy Sunday again at the Treasury Department in Washington. Lehman Brothers (and Aurora Loan Services) may be sold in a deal brokered by the government. The rumor mill was working overtime dishing out speculation on Merrill Lynch, whose share price was sinking to a new 52-week low. There was also talk the Federal Deposit Insurance Corp. was contemplating the takeover of two depositories. Stay tuned…

Hank Paulson works weekends.

Lehman Brothers is one of the most treasured names on Wall Street.  Its roots go back to before the Civil War, when they operated as cotton traders and established the Cotton Exchange in New York.  They financed Sears, Woolworth’s, and Macy’s, at the turn of the century.  They had a large hand in financing the growth that defined the 20th Century as “The American Century”, providing capital for the movie, television, aerospace, and information services industries.

One more venerable investment banking firm becomes a casualty of the credit meltdown.

September 13, 2008

Listing real estate the Bloodhound way: Working like a dog to achieve specific marketing objectives

by

Suburban Phoenix Real Estate Broker

Author website

Teri Lussier:

My other question: Good ideas and bad ideas. This bites me in the butt over and over. My brain is great at generating ideas, not so great at knowing what makes an idea great. Something new or different is not always better (I need to have that tattooed on the inside of my eyelids). The million dollar question: How do you know?

The way we work is to think backward from the marketing objective: What event or outcome do we want to have happened? “Sell the house!” is a lot to tear off in one mouthful, but how about, “What can we do to get visitors to sit down and ‘try the house on’ in their minds?” That’s where the coffee table book came from.

I wrote the original version of our sign philosophy before I created our first yard sign. That sign was very different from the signs we make now, but that paragraph of small text was there from the very beginning. I knew that if a yard sign was actually going to work to sell the house, I had to get people to stop their cars, and that paragraph of text has been doing that one little job ever since.

This is all Richard Riccelli again, thinking in terms of direct response marketing. The big yes to the house is an accumulation of smaller yeses to particular marketing tactics, so the most effective marketing efforts will consist of taking away the negatives — eliminating the deal-killers. Who can you turn to for that kind of marketing advice? Your buyers. When you show, again and again your buyers will teach you what’s not working in other listers’ houses. Learn from your buyers and eliminate the turn-offs from your own listings.

That’s important. People will read the things I write and decide that I’m talking about tricks or gimmicks or tactics. I’m not. I’m talking about a complete home-marketing strategy, and each individual element of that strategy is expected to fulfill a particular strategic objective. But our strategy starts with four obvious tactics that are omitted in at least 90% of the homes Read more

September 12, 2008

“Success” Sung in a High C

by

Real Estate Renaissance Man

Author website

In the discussions over how much a real estate agent gets paid, there is one aspect often left out: stress.  There is a lot of stress being a real estate agent.  It is probably the least definable aspect of a deal, yet I believe it justifies a large percentage of what an agent earns.  The problem for me is this: stress is hugely unhealthy.  My passion is health; lowering my stress level and the stress level of the agents I do mortgages for is of paramount interest to me and I am always on the lookout for new ways to do so.

The following is an excerpt from a book about a young man on a journey and the guide he meets along the way.  It reveals an interesting way of dealing with stress.

… I had been short-tempered and I was unhappy.  “I’m under a lot of stress” I offered by way of excuse, “and this trip isn’t reducing it any!”  The Guide turned and asked me if I knew the four C’s of diamonds.  A little confused, I nodded yes and began to recite “cut, color…”  “Understand” he interrupted with an impatient wave of his left hand, “people are twice as brilliant as any diamond and require half as many C’s to be happy.”  He sat down across from me with a sigh and rested his hands in his lap.  He reminded me of Sister Christine, my fourth grade teacher, who often gave the exhausted impression of someone sharing something obvious to her, yet so obviously new to me.  “You have only these: Congruence and Continuity.  Congruence is how well your inner vision of yourself matches the outer world you witness every day.  Continuity is when your thoughts and your actions and your interactions align.  Which is just another way of saying ‘Keep your word’ especially to yourself.”

The story continues on a bit about something called The Mirror Effect which, while interesting, would require too much space to cover in this post.

“Your unhappiness is a product of your stress and stays with you because you do not recognize the power of Read more

September 12, 2008

Attention Old Fart Brokers: Listen to the Young Farts!

by

IDX Search Entrepreneur

Author website

At the risk of becoming the Seinfeld of Real Estate demographics; What’s the deal with broker/owners of a certain age ignoring the advice of their own Marketing Managers, Managing Brokers, and best agents when it comes to Web technology?

I often work with people who have been asked to manage or improve a broker’s Web presence. Its a process that starts before they are clients, and over the past 6 months, on several occasions, I’ve had bright people pick my brain, learn our program, and then go talk to The Boss only to have The Boss decide he knows more about Real Estate Web sites than the people he hired or tasked to run one.

Sure, there are legitimate reasons to take a different approach. I can respect that. But I have Zero respect for decisions based on ignorant assumptions that trump the recommendations of the people they hired to make judgments that they themselves are not qualified to make.

Example 1: Earlier this week I was contacted by someone who found me through this Blog. I love it when that happens, because if you are reading this Blog that tells me that we can have a substantive conversation from the get-go. He was shot down when he presented our solution to his boss because the boss wants to “own” his Web site and not pay for it on a “subscription model”.

“Subscription model”? What does that even mean in the context of a Web App? Nothing. What that broker is really saying is that he doesn’t want a monthly payment. He is equating a Web Application with a car loan or a mortgage, where, if you can afford a cash purchase you avoid the added expense of financing.

Large brokerages who have an in-house Web team developing a custom app “own” their program at the expense of salaries and overhead, so even they have a “monthly payment” in the form of paychecks and Web hosting. The reality is everybody else rents because its the smart thing to do: Our Software as a Service (SaaS) model makes it possible for a broker to benefit from a Read more

September 12, 2008

Notes from the Peanut Gallery

by

Real Estate Renaissance Man

Author website

I have been enjoying the fray caused by Greg’s post Wednesday inviting one and all to Bloodhound Unchained in November, as I am sure many of you have.  In the post Greg responds to some personal attacks by referencing the success he has had with his ideas.  Interestingly, the “Bloodhound Way” gets criticized, not on merit or content, but rather volume.  Interesting logic that.  Confusing volume with validity is common among common people.  I used to work with a mortgage broker whose office spent $150,000 per month on lead purchases and generated many hundreds of thousands more in gross income.  It was a poorly run, poorly executed operation that succeeded on sheer size and volume.  Was this a valid way to do business?  Numbers don’t lie.  Does his success invalidate the one-man office who uses localism, innovation and advanced marketing skills?  Hardly.  (Side note: can you guess which office is still conducting business?)  High volume is a measure of success… but not the tool I would use to discern quality or even future success.

I have been following the Bloodhound Way for only a few months now.  As I got back into Real Estate it struck me as eminently doable (after all, Greg and the other hounds here share their ideas freely) and obviously innovative.  In today’s real estate industry I believe the motto is “Differentiate of Die”  so innovative works for me.  I posted my first effort at these ideas in Custom Signs and Brake Lights.  That listing was taken June 09, 2008.  Since then I have taken two more listings.  (I am chagrined to say I took no listings in August, but I do have 2 listings coming online in September).  Suffice to say I am not a big volume hitter.  As I said previously, I am getting back into active Real Estate after a prolonged absence running a mortgage division.  Here are the stats:

  • 2219 Eucalyptus SOLD 23 days on market
  • 2324 Donnington SOLD 17 days on market
  • 642 Glover SOLD 2 days on market

That is roughly $1.3 million dollars and an average of 14 days on market.  The absorption rate for Read more

September 12, 2008

Washington Mutual: The Spiral of Death

by

Real Estate Investor

Author website

Many people will be surprised to know that “The Spiral of Death or Death Spiral” is actually a financial term and not just reserved for the latest sci-fi film.  Ok, maybe its not approved by FASB, but most people in the industry have heard the term once or twice.  For those people who may not be familiar, “The Spiral of Death” refers to an event or series of events that triggers and inescapable decline in market value, usually leading to a change in ownership or bankruptcy.  The term is most often used in conjunction with Start Ups that issue convertible debt that can be converted to common stock at a deep discount.  As the stock price falls, the convertible debt can be converted to a great percent of ownership, until some tipping point where the debt holders own the company.

But as the title betrays, Washington Mutual is the focus here and they may be facing their own kind of “Death Spiral.”  With the recent downgrade of WAMU to Junk Bond status (Ba2), their cost of borrowing increases substantially.  This becomes very problematic for a bank because they make money by lending at high rates and borrowing at low rates.  As their cost of borrowing increases, the amount they must charge customers for loans must increase and the amount they pay for the use of customers funds must decrease.  In plain English, their lending rates have to increase and their saving/CD rates have to decrease.

Unfortunately for Washington Mutual, many of their competitors remain in the A+ credit range, putting them at a significant disadvantage.  It does not take an rocket scientist to figure out if your competitors can do exactly what you can do for a much lower cost, you should probably find another line of work.  Many investors find this obvious, making it even harder for WAMU to raise much needed capital.

The only savior for WAMU is the Federal Government’s open lending policy.  But with the government up to their eyeballs in debt (Fannie, Freddie, Bear, Lehman???), one has to wonder how long WAMU can survive?  In this not so humble writer’s opinion, Read more

September 11, 2008

Listing real estate the Bloodhound way: How we do open houses

by

Suburban Phoenix Real Estate Broker

Author website

Alas, not every visitor to BloodhoundBlog has the sublime gifts to preen at length about the salutary benefits of a carefully-cultivated humility. Some people, oddly enough, come here to learn about real estate. From my email:

I’ve been looking at your listing/marketing process, and am curious about your open house strategy. You comment something to the effect that you hold opens every week because a) you have the time with only really salable listings and b) there are lots of unrepresented buyers out there.
 
We’re probably a little more old school that you, but we try to not be “lazy, stupid and cheap.” We try to price realistically, and we try to promote our opens energetically. Sometimes we get a lot of traffic, but sometimes we don’t (FWIW, we’ve got just over 12 months of inventory right now, and falling, but still very high prices). Is your market way different from ours? Do you get lots of traffic all the time, or is it hit and miss? Just curious.

Here’s the thing, and I guess I can’t say this enough: We don’t do anything the way other Realtors do it. Many of our ideas are original to us, things we worked out on our own. But many others are tactics that we have heard about from other agents. These ideas we Bloodhoundize, a process I’ve talked about before. We strip the idea down to its essence, then rebuild it from the ground up our way, so that the fundamental marketing objectives don’t get lost in the shuffle.

What could be more ordinary than a Realtor holding an open house? Here is our policy on open houses from ABetterListing.com:

We hold Open Houses every week until the home is sold. Why? Because there are an awful lot of un- or under-represented buyers out there, and we want for them to be able to see our home. We avoid dual agency, but we have no problem showing the home to buyers who accidentally left their buyer’s agents at home. If a listing is near the commuter traffic flow — and most of ours are — we like to Read more

September 11, 2008

Rate-a-Realtor is for Ding-a-Lings

by

Mapping Technology Entrepreneur

Author website

Techie agent types have probably googled their name (or the name of a competitor) only to find a agent review website that says something like:

Barbie Baker is a San Diego real estate agent. Barbie Baker has no reviews. Click here to review Barbie Baker.

If you’re uncommonly lucky, you’ll hit an agent with a review:

1 person has reviewed Barbi Baker. Phoenix Rand said the following about Barbie Baker: “Barbie was a fantastic agent to work with and helped us find the right house! Wow!”

Now, if you’re an agent, you’re saying to yourself “I wish they had a phone number at least,” but if you’re a consumer with half a brain, you’re saying to yourself “One rave review – I bet Barbie wrote it herself.” And, no offense to San Diego Realtors, but odds are she did. It’s easy and jeez – who’s going to catch you?

Everyone likes to compare real estate to other industries (travel anyone?), and the clear direct comparison here is business / restaurant review – sites like City Search / Urban Spoon / Yelp / Menuism. But the comparison is only valid in the most superficial sense.

How many customers will write a review?

Take one of my favorite lunch spots: Kau Kau in Seattle. Say they serve 10 people an hour from noon until 8. That’s 80 people a day or 29,200 people a year. Urban Spoon has four reviews of Kau Kau. Menuism has two reviews of Kau Kau. That’s one review for every 7,300 or so transactions on Urban Spoon and twice that many on Menuism.

That means that the average agent should not have a single review – even Russell Shaw does not do that many transactions per year. And agents who have more than one review are suspect. They’re either reviewing themselves or they’re sitting down with their favorite clients and “helping” them write a review.

Do you see value in these sites for consumers?

September 10, 2008

Once more unto the breach for Vlad — and for your right to free speech

by

Suburban Phoenix Real Estate Broker

Author website

The good news is that Vlad Zablotskyy is nearing the end of his legal battles with ePerks.com. As you will recall, ePerks sued Vlad to try to compel him to squelch criticism of the lead vendor.

That bad news is that Vlad has had to take a night job to help defray his mounting legal expenses. The Vlad Zablotskyy Legal Defense Fund has raised a significant amount of money, but as anyone who has ever gotten trapped in the court system knows, there is never enough money to cover legal fees.

What can you do to help? Push the “Donate” button you see below or in our sidebar. If you want to add a button to your own weblog or web site, you can find the HTML code here. But the most significant difference you can make in Vlad’s life, right now, is to make as big a donation as you can afford.

Vlad is stuck in this quagmire a little longer, but it’s worth noting that no one else has been threatened, neither by ePerks nor by any other vendors. By participating in this Legal Defense Fund, we have made it plain that we will defend our right to speak freely — to speak truth to power. I count that a victory for the good guys. How about you?

Click on the “Donate” button and let’s put “paid” to this kind of intimidation against real estate webloggers.


Support Vlad Zablotskyy’s Defense Fund
Defend your own right to free speech!

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September 10, 2008

Zillow.com launches Mortgages Unzipped, a new consumer-focused lenderblog

by

Suburban Phoenix Real Estate Broker

Author website

Hither. The weblog will be an adjunct to Zillow Mortgage Marketplace, with a crew of loan bloggers and frequent ZMM mortgageurs providing the content. Our own Brian Brady and Tom Vanderwell are early contributors, and Zillow’s man on the job, David Gibbons, will be looking to add more writers as time goes on.

Visit the site for more info.

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September 10, 2008

Why should Realtors come to BloodhoundBlog Unchained in Orlando? To learn the Bloodhound art of marketing listings, for one thing, as an expression of an attainable moral perfection

by

Suburban Phoenix Real Estate Broker

Author website

I like to think that, as a secondary consequence of the things I do, I goad good people into becoming better people. This is a part of everything I do, but it’s why there is a category called “Egoism in Action” in BloodhoundBlog, and it’s why so much of what I write about is focused on the idea I call “Splendor.” As much as I can, I want to help the people I come into contact with — here and in the corporeal world — to navigate the path from rational self-interest to undiluted self-adoration — an attainable moral perfection.

I like to think I help good people become better people. I know beyond all doubting that coming into contact with me induces bad people to become worse people. I absolve myself of all guilt in the matter: I would never, ever encourage anyone to pursue any sort of disvalue. But Joseph Ferrara, as an example, seems to have wasted two years of his irreplaceable life sticking metaphorical pins into a metaphorical doll of me. How sad for him, but I am undaunted, undamaged, undiminished — quite the contrary.

Poor Joseph is an extreme specimen, but he is hardly alone. Closer to home is Jonathan Dalton, who seems to devote some huge fraction of his every waking moment to trying to vanquish me in his imagination. He does this in secret, without naming me or linking to me. I wouldn’t even know it was happening, except that people keep sending me his snarky little posts. I cannot imagine what crime the poor slob has committed, that he would punish himself endlessly with thoughts of me, but never doubt that nature is just: Whatever his crime, certainly he believes that obsessing over me — striving with all his might to shout me down inside his own mind — is the fate he has earned and deserved. How sad for him.

Here’s a recent specimen of poor Jonathan’s obsession:

So when you read that a listing agent will be checking your house every other day and will hold your house open every single weekend until it [sells] Read more

September 9, 2008

Nehemiah and AmeriDream May Be Restored By End of the Month

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Tomorrow’s Mortgage Industry March on Washington, to save the seller-contributed down payment assistance programs, may be for naught.  It looks like the deal’s been cut already.

Last month, I explained that House Financial Services Commmitee Chair, Barney Frank, was maneuvering to save the seller-contributed down payment assistance program.  Chairman Frank wanted to restore these programs and held risk-based pricing (higher upfront MIP) as his leverage.    HUD Secretary Preston wanted risk-based pricing and held the seller-assisted DPA programs hostage.  Apparently, the HUD Secretary flinched this past weekend and signaled that he would bless the restoration if he got what he wanted.

Rumor has it that Chairman Frank is working with Central California Congressman Dennis Cardoza, and his builder buddies, to green light this prior to the October 1, 2008 deadline.  The deadline was part of Chairman Frank’s original compromise in the last enacted housing law.  Frank made a stink about risk-based pricing, defeated it, and held it as a chit.

The new program appears to be exactly what I thought it might be; tiered credit scoring for pricing and qualification.  What we learned two weeks ago was that the default risk, associated with 100% financing, can be mitigated through strict adherence to published underwriting guidelines.  In layman’s terms, that means if you’re getting a break on the down payment, you better have good credit and a strong ability to repay the loan.  That’s logical; it’s true risk-layering and is the cornerstone of “make sense underwriting”.

What don’t I like about this development? I hate the hypocrisy associated with the seller-assisted DPA programs.  As Sean Purcell, said, it violated the “spirit” if not the letter of the FHA rule.  I also dislike the incessant lobbying our industries have done to promote this hypocrisy. I’d much rather have seen HUD offer 100% financing rather than to perpetuate this flagrant abuse.  I detest the “wink-wink, nudge-nudge” characteristic of these “charities”.  That’s why I never got involved in the industry’s “political movement” to restore these programs.

Alas, it isn’t law, yet.  Chairman Frank should have the support of his side of Congress but the Senators haven’t signaled that they’re playing Read more

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Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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