Category: Real Estate (page 109 of 266)
In a comment on a recent post, I shared with David Shafer the “revulsion that an ignorant, greedy originator causes.” The Great and Powerful Oz – one of the sharpest minds in lending… actually just one of the sharpest minds period – called me on it and asked if I might define “greedy originator”. Never one to back down from a challenge, I decided to give it a try… but in a post. I want to hear what the ‘hounds on the street’ think.
The primary purpose of any business is to maximize profits. To quote the great Gordon Gecko: “Greed is good.” But I believe “greedy” – especially when used in a pejorative sense as I am doing here – defines someone who has crossed an ethical line in service of that greed. Lies of commission and omission are obvious examples of such a breach. More common and more directly related to my comment, however, is the originator who chooses an inappropriate product for their client because the profit in that product is greater than the appropriate recommendation.
I do not believe (as I once did) that there is a fiduciary obligation between originator and borrower. An originator is not working as an agent on behalf of a client the way a real estate agent does. An originator is in the retail business. Some originators are in the Kmart retail business (a market for clients who want very little service – simply shelves of loans to choose from) and some are in the diamond store retail business. I argue that a great many, if not most, originators see themselves as the latter. In which case, the borrower is paying the originator, at least to some degree, for their advice. There is an expectation and perception (usually encouraged if not advertised) that the originator is helping the client to choose an appropriate financial tool. Maximizing your profits in that process is just plain financially sound business practice. But suggesting a product that may not be among the best options – or in some cases is demonstratably a bad option – solely because the profit is greater… that is crossing an ethical line and earns that originator the Read more
David Shafer at Uncommon Financial Wisdom is smarter than the average bear, as Yogi used to say. We met online, though I don’t remember exactly how. Over time you discover he’s the real deal. After half a dozen conversations with him you’re not surprised to learn he’s also earned a Ph.D. What kind of mind gets a degree in finance and a doctorate in social science? How about a person who can understand the numbers in the relatively black and white world of business/finance while simultaneously being able to think.
Don’t engage mouth before putting brain in gear when dealing with David. Frankly, I think he’s a natural as a contributor here. But that’s a different post for another day.
Today he wrote a guest post on my blog. I was gonna add my 2¢ here before linking you to it, but wasn’t in the mood to embarrass myself. Read, and notice how quickly he lays out some fairly complex ideas. He points out problems and then brings solutions to the table.
So go find out What Happened To The Middle Class then head over to David’s blog. You won’t regret it.
This is my column for last week from the Arizona Republic (permanent link).
Don’t learn all the wrong lessons about creative mortgages
Arguably, the Phoenix real estate market is in a state of incipient recovery. Will there be more bad news? Certainly. There are still thousands of homes stuck in the foreclosure process. But prices are low enough, by now, that our surplus inventory will be absorbed — by investors, new-comers and second-home bargain-hunters.
The bad news is that, at the end of all this, we will have learned all the wrong lessons from the real estate market downturn.
Are Adjustable Rate Mortgages a bad thing? People learned to hate the first generation of ARMs, so lenders built in guaranteed flat starter rates, fixed adjustment periods, maximum adjustment caps. But even with all that, ARMs came through the down market with a sullied reputation. With fixed rates still riding so low, ARMs don’t make a lot of sense right now, but that doesn’t mean they never make sense.
How about stated-income loans? Many of the foreclosed homes in the Valley were bought on stated income. But the problem wasn’t the loans, it was the buyers — who lied about their income — and the lenders — who let them get away with it.
Negative-amortization loans were another source of foreclosures, even though the idea behind the loan product itself is perfectly sound — in an appreciating real estate market.
The problem with all these loan products — and other “exotics” — was not the particular loan program. The problem was the profligacy of a surging real estate market — coupled with the securitization of mortgages.
Everyone acted as if the party would never end, that home prices would continue to rise indefinitely. Still worse, lenders had socialized the risk of their poorly-vetted loans to securities investors. Ultimately, lenders didn’t have to care if their loans were properly secured by good credit, steady income and valuable assets.
You can blame the people involved if you want, but don’t blame creative mortgage programs. Everything’s a trade-off, and it could make sense for you to get a stated neg-am ARM for your next Read more
Okay, I want to try to do a little brainstorming here. Let me lay out what I’m thinking….
I had a conversation (about an hour and a half long) with a local Realtor who has been in the business for over 20 years. We were talking about the current state of the housing and financial markets. She made a comment and raised a question that I’ve got my own thoughts on, but I’d like to hear from the collective wisdom of the group.
The comment that she made was this: “I think that the majority of our clients and consumers as a whole don’t have a clue as to what’s going on in the economy, what’s going on in the housing market and what’s going on in the banking world.”
The question she had was: “What can we, as Realtors and lenders, do to educate and inform people in our markets so that they can wisely navigate through the market that we’re in?”
That got me thinking, are we, as the professionals who really understand (more than most) what’s happening in the market, really doing what we should to help people who want or need to either buy, sell or refinance in today’s turbulent markets?
I’d love to hear what the group has to say. What are you doing? How’s it working? I’m hoping we can raise the bar for all of us and help us all be better advocates for our clients.
What do you think?
Thanks in advance,
Tom Vanderwell
Okay, here’s an overview of my take on the Fannie Freddie issue:
Do you think the Stock Markets like the Fannie Freddie Bailout?
Uh, that would be a classic example of an initial elation followed by the let down that comes from looking at the details. I’m not going to get into the details of exactly what was offered, but to focus more on the big picture instead.
So here’s the big picture (in my opinion):
1. The government has acknowledged officially that Fannie and Freddie are financially in trouble.
2. They have also indicated that they are not going to let Fannie and Freddie fail.
3. The Treasury got out their bandaids and have attempted to put a bandaid on the situation.
4. As part of their bandaid solution, they are essentially obligating the entire government and therefore the tax payers, to pay for Fannie and Freddie’s losses.
The markets initially said, “Yeah! The government isn’t going to let Fannie and Freddie fail! Our worries over!”
Then the markets looked at the details and said, “Uh, wait a minute, I’m not sure this is really going to work….”
The government is going to be able to prop up “publicly traded companies” by buying stock in them? Under what rules?
What really happened at IndyMac bank? Are there really 10,000 people who are going to lose money in a bank? What’s that going to do to the rest of the banks?
If we’re going to bail out Fannie and Freddie, what impact is that going to have on the Fed’s financial position? What’s that going to do the overall borrowing costs for the government? How much of a hit are us taxpayers going to take for all of this? These are all of the questions that are circulating out there.
Are there any solid answers? There’s probably only one solid answer. Ben Bernanke has done a huge amount of studying of the Great Depression and he firmly believes that the 1927 real estate crash caused the depression. You can be certain that he’s going to do everything in his power to make sure that doesn’t happen again.
Will there be pain? Yep, will there be Read more
In this market the answer to that ponderous question would seem to be, “Are you out of your frolicking mind?!” But intrepid real estate weblogger Jay Thompson takes on the question in U.S. News & World Report in an iterative debate starting today.
Technorati Tags: blogging, disintermediation, real estate, real estate marketing
Attend, if you please: OmniFocus for the iPhone. It will not only help you Get Things Done, it will tell you when to do them. No kidding. If one of your tasks is to ship a parcel at the post office, OmniFocus will sound an alarm when you are near one. Approaching the supermarket? Here’s your shopping list.
That much is just the idea of a PDA coupled with a GPS system. Still, it’s cool. But my dream for a hand-held computer is much larger than that.
Consider: I carry my digital still camera and my Flip video camera with me wherever I go. I have LowePro belt-mounted camera cases, so they’re easy to carry, never in the way. I keep those two cameras with my car keys, along with everything else I take with me when I put my car keys in my pocket: My wallet, my business cards, my watch, my phone, my Bluetooth headset and my MLS key. All of these things are small and portable, either pocketable or belt-mounted, so I have almost all of the tools of my trade upon my person when I leave the house. I look like a freakin’ cop — which is not always a bad thing — but I have my stuff with me so that I can work when I need to.
This is what I want for the iPhone — and for later iterations of the idea of a hand-held computer. A laptop or a notebook computer is luggable, not portable. Even the Canon and HP rechargeable printers are luggable, not portable. You might have a laptop and printer in your trunk — absorbing damage from every bump in the road and cooking in the summer heat — but you don’t have that computing power on your person.
My dream is simple: Everything that I might do on a desktop or laptop computer, I want to be able to do from a hand-held computer. I want to be able to carry my entire real estate business with me, every time I leave the house. This implies cloud computing, of course, since I will Read more
And the beat goes on… but sometimes it helps to have that little bouncing ball show us exactly what lyric we are singing this week. All together now:
Today the Fed suprised no one by opening the discount window to ailing siblings: Fannie Mae and Freddie Mac. Together they hold more than half of all mortgages in the US and the guarantee that they would not fail has been implied for some time. The Fed also intimated there would be no other bail outs in the foreseeable future. Who is walking the thin line? WaMu, Wachovia, Downey, Indy Mac (oops, they were written out of the chorus last week). Now it looks as if the Fed has reworked a few more lines and their song to the Wall Street firms goes a little something like this: if you can not fix your problem with the ability to borrow at 2.25%, your problem is not fixable.
This does not bode well for our short list. Downey is more of a regional and will likely go down under its own weight of Losses and Lawsuits (the real “L” words). Previous posts right here on BHB have fixed WaMu as the consensus “next big one” to fall. Wachovia, in my opinion, is more of a question mark. Straight-laced, tea-loving bank goes to a frat party where “everyone who is anyone” is drinking and the peer pressure just becomes too much. This is a hangover for which they are ill prepared.
What does this mean for real estate and the mortgages that drive its cycles? Here’s one thought: if you are a specialist in homes that do not play the Fannie/Freddie tune, you may want to create some more income streams and fast. Any regional that has not already eviscerated it’s “improvisational jazz” lending will find themselves looking at a Wall Street that no longer believes anyone is above failing. If recent history has taught us anything it is this: the big firms currently involved in lending are either asleep at the wheel or lying outright. We watched Counrywide lie about their financials right up until the end. We watched WaMu take hits twice their predictions. Even Wachovia, a stalwart bank, was “surprised” by losses more Read more
Feedback
“Okay,” I finally tell the other realtor after two solid minutes of back and forth phone chatter. “You’re right. I’m wrong. You win the argument. But guess what…? We’re still not buying the house.”
I try to be nice. I really do. But sometimes my fellow property slingers just touch on that last raw nerve (I think we all know which one I’m referring to) and I say something mean. One agent even called me “Meano Geno.”
“Thanks for the feedback, Meano Geno,” she snapped into the phone.
“You’re not very welcome,” I muttered back into the dial tone.
I’ve written about this before; listing agents who, within hours and sometimes even minutes of a showing, ring me up for feedback. And occasionally, they don’t even wait for everyone to leave the premises. One recently minted licensee strategically positioned himself in the foyer as my clients and I were scurrying to safety through the living room. Blocking the front door with his presumptuousness, he posed to us, with the toothy despondence of a Ford sales trainee, the universal cliche of the day…
“What do we have to do to earn your business today, sir?” he asked, looking right past me and my client’s wife, going straight to the perceived decision maker. The husband looked at me. I looked at the wife. We paused for a moment of silence. I reached into my shirt pocket and took out the business card of an agent we met an hour earlier at a different showing; another panter. (Pant”er\, n. One who pants. –Congreve.)
“Here…call me later for feedback,” I said as we all inched past him, close enough to catch a whiff of that new car smell cologne he was wearing, and slipped out the front door in single file, toward higher, more residentially improved ground. Our new toothy friend stared down at the gold embossed Century 21 card for a few seconds then looked up at us before finally calling out toward the sidewalk…
“Thank you Barbara!”
Me too, me too
Yes, I know. I can be glib at times. And the truth is, I am hardly ever without a half dozen or so of my own problematic listings that need to be sold yesterday. The difference between me (along with those like me–us, we…) and Read more
The Erics and I have been trying to figure out why Google has been holding out on us for coming on two months now. We tripped some trigger, obviously, but we can’t figure out which. The upshot is that we’re losing between 500 and 1,000 hard clicks we would have gotten every day — most all of them with a uselessly-high bounce rate. The other end of the stick is that, because we’re seeing nothing but serious visitors, our pageviews and time on site are way up.
And at the other other end of the stick, there is Technorati, the gift that keeps on giving. Our rank is 615 as I write this, as high as it has ever been. I don’t know how many more links we will need to make it into the Top 5,000 weblogs — but I would love to find out.
Technorati Tags: real estate, real estate marketing
About a month ago, Zillow started showing the number of contributions you have made to their data base in your profile. Up at the top you see the total number of contributions, and down below you get a running total of recent contributions.
It was obvious where they were headed, a de facto ranking system based on user contributions. In the co-branding information released earlier this week, Zillow made mention of “badges,” and one of the pix they released showed a badge in the co-branding area.
But… I didn’t actually dare to think that I would qualify as a Zillow All Star…
There’s a point at which it’s kind of funny — does it come with a secret decoder ring? But even so, I don’t hate the idea. Active Rain built something that might someday be a business on a completely brain-dead points system. There is no way to make a brain-dead contribution to Zillow. Everything matters.
And thrusting everything associated with the sale of real estate to the side, I love the idea of Zillow becoming fully-populated with data. There may come a day when the Zillow data base is the de facto museum of residential real estate. Hundreds of biz school PhD theses could emerge from that vast store of information.
In the mean time, your Zillow All Star badge is another co-branding trinket you can put on your weblog.
Technorati Tags: disintermediation, real estate, real estate marketing, technology, Zillow.com
As If This Crappy Real Estate Market Wasn’t Bad Enough
One of the potential hazards of working with the public – is that you have to work with the public. Most of the time, it’s a great social experience – and you’ll find most agents to be outgoing and friendly. But working with the public can bring some unexpected – and unwelcome – surprises.
July 1st started out as any other day for Troy VanderStelt, a real estate agent with Nexes Realty in Muskegon, Michigan. Robert Johnson, a former client whom VanderStelt represented in the purchase of his home, came to the Nexes Realty office where he was asked to wait for VanderStelt in a conference room. When VanderStelt arrived at the conference room, Johnson allegedly distracted VanderStelt with a portfolio of papers – then shot him point blank in the temple.
Apparently Johnson was getting ready to sell his home – and was advised by another agent that his home was not worth what he paid for it… so instead of considering the current real estate market conditions – Johnson decided he was going to take matters into his own hands.
Troy VanderStelt, 33, leaves behind a loving wife and four children… and a damaged community that feels the loss. This is the first murder this year in the county – and the first murder in 20 years in the town.
If you have a few extra dollars that you can spare, an educational trust has been set up for Troy’s children where you help this family in their time of need.
If you would like to read more about this tragic story, try here:
Apple. John Cook with a nice Jott for the iPhone video. Most popular apps so far. TechCrunch’s picks. LifeHacker’s picks. Continuous fanboy fanaticism at The Unofficial Apple Weblog.
Here is a sweet built-for-the-iPhone iPhone User’s Guide.
I know Cathy wants to buy tomorrow — the 16GB white monsters with Jawbones. We’re listing tonight, so who knows when we’ll get any sleep.
Addendum: Not so fast…
Technorati Tags: real estate, real estate marketing, technology
Map-based web search start-up Estately.com has uncanny timing for launching new cities and services. No matter what dates they pick, it seems that either Zillow or Redfin will have news on those days.
Here’s the news, which I sat on to get Estately out of Zillow’s glare:
Estately.com is expanding into a new market. Beginning on Thursday, July 10th, over 40,000 San Francisco homes and condos from four Bay Area MLSes will be added to Estately.com’s 115,000+ properties for sale. The Bay Area marks our fourth major market – Seattle, Portland, and San Diego are all live on Estately right now – and the third major market we have entered this summer.
As always, Estately will provide the richest kind of map-based search experience: All MLS listings plus neighborhood-based searches, local schools mapped with the homes, search by transit availability, etc.
Disclosure: Estately.com co-founder Galen Ward writes for BloodhoundBlog.
Technorati Tags: disintermediation, real estate, real estate marketing, technology