BloodhoundBlog

There’s always something to howl about.

Month: March 2007 (page 7 of 9)

March 13, 2007

Countrywide, LendingTree and Bear Stearns Mortgage

by

Associate Broker

Author website

The lending roller coaster is just starting to roll

Most real estate professionals have to deal with an occasional unexpected consequence involving lenders… but not a string of them like this revelation.

A client of mine decided to be a generous friend. He’s not a wealthy man in the strictest sense of the word, but that doesn’t stop him from trying to help his fellow man – or woman, in this case.

Some of you might know a little about him, as he is Jack in my interview with noted investment real estate broker Jeff Brown on my website.

Jack has a friend who has been living in a drafty house owned by a slumlord. Although she didn’t live in a slum – the owner was treating the building as if it was. She was paying as much as $300 or more each month to heat her little place, as the cold wind blew through it like Swiss cheese.

While looking at other investment opportunities for Jack, he asked me to find a condo that he could buy for this friend – thus allowing her to get out of this awful place she was living in.

Remember – no good deed goes unpunished

My favorite mortgage broker found the perfect program with Countrywide – an 80/20 loan for non-owner occupancy… and I found a perfect condo that Jack’s friend really liked – and with a price that worked.

Our offer, though aggressive, was accepted. So far – so good.

Enter the lead aggregator LendingTree. Jack logged onto their website to look at doing a refi on his home. What Jack did NOT know is that LendingTree would give his info to a dozen lenders who would all pull Jack’s credit (not pulled once and shared with member lenders like you might believe).

So what difference does this make?

Plenty. While Jack was rearranging his finances and paying off debts – he was draining his cash reserves down. The refi was going to bring cash back into the picture for the rehab of his next real estate acquisition.

The trouble is that when all those LendingTree lenders pulled his credit – his credit Read more

March 13, 2007

Subprime Mortgages: Turning Really Bitter Lemons into Lemonade

by

Real Estate Investor

Author website

It appears the Wall Street Journal has sniffed out major issues in the sub prime lending market only two weeks after Brian Brady broke the news here first. They focused on one of the strongest lenders, New Century, who is now poised to take the biggest fall because of their lax lending practices and perhaps illegal accounting. So why do I bring this up? Simple, it’s a great time to talk about some great investment opportunities on the horizon.

Let me start by saying that this truly is a tragedy. Many unsuspecting people will lose their homes because of poor lending practices. Additionally, many mortgage companies will go under costing thousands more their jobs. While this does not appear to be the 1980’s S&L crisis reborn, it will have some serious repercussions on the mortgage and asset back securities industries.

So where is the opportunity for the investor? Essentially, the foreclosure market will be flush with properties in the coming years. As defaults continue to rise, foreclosures will soon follow. Worse yet, many of the banks that make these loans will be trying to get them off their books as soon as possible. This creates great investment opportunities in markets that might have been inaccessible before. Lots of these loan products were/are huge in markets like California and New York, where prices have sky rocketed. Additionally, with the influx of bank owned properties on the market, expect housing price increases to slow in these markets.

Furthermore, many mortgage companies are now tightening their belts. Countrywide, the nation’s largest mortgage lender, has completely stopped doing 100% financing. Since they are the industry leader, it is safe to assume many of their peers will follow. This practice will push more people to renting because essentially less people will be able to afford to buy.

This is one example of a way to makes lemonade from some pretty bitter lemons. The ripples of the sub prime fall out will be far and wide, but make no mistake, there will be people that do pretty well because of it. Regardless of your opinion on how or why this situation Read more

March 12, 2007

Passive marketing can swing sale

by

Suburban Phoenix Real Estate Broker

Author website

I was too busy doing this last week to talk about it. This is me from Friday’s Arizona Republic (permanent link):

 
Passive marketing can swing sale

How much time and effort should you expend to sell your house? The answer is simple: whatever it takes.

Last week, we talked about pricing, repairs and staging. Let’s talk now about passive marketing.

You’ll have a sign in your yard. Is it effective? There’s a flier box out there. Are any fliers in it? You have a listing in the MLS systems. Six photos are permitted. How many will you have? Is your listing on Realtor.com? Other Internet listing sites?

On Realtor.com, buyers often skip listings that don’t have a virtual tour. Does yours have one? Does it have its own Web site? A video podcast? A floor plan?

Your house is in great repair, it looks fabulous, and it’s priced right. This is where passive marketing can succeed or fail.

Here are some ideas we have been exploring:

  • We’re building custom, full-color signs for our listings. The point? Stopping traffic.
  • We do full-color fliers, but we also do a full-color, business-card-size flier we hope will be retained.
  • We build a custom weblog for every home we list, with dozens of photos. We do one or more virtual tours of the home and neighborhood, and we’re planning to do video podcasts of listings. The MLS listing, the flier and an interactive floor plan will all be available on the weblog, along with any other documentation.
  • We make everything we can available on the MLS system, on Realtor.com and other listing sites.

Why go to all this trouble? If someone is interested in the house, we want to answer every conceivable question. And the more time buyers spend exploring the listing, the less time they will have available for other homes.

You can call this “aggressive passive” marketing if you want, but this is the kind of effort that can swing the balance in your favor in this real estate market.

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March 12, 2007

Reminder: Russell Shaw Sales Success Seminar tomorrow

by

Suburban Phoenix Real Estate Broker

Author website

As a reminder, tomorrow is the first of the Russell Shaw Sales Success seminars.

The event will be held Tuesday March 13, 2007, at the offices of North American Title, 3200 East Camelback Road, Phoenix, AZ 85018. The event will run from 6:30 PM to approximately 9:30 PM, and refreshements will be served.

There is no charge to attend.

Russell will handle two meta-topics, followed by question and answer sessions, with a short break between.

North American Title and Worldwide Credit Corporation are sponsoring the event.

I’ve made a poster you can hang up in your office to let other agents know about the seminar. All the details plus driving directions.

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March 11, 2007

We’re not MENSA members – but real estate is a dream job

by

Mega-Producing Realtor

Author website

The following was on the front page, just under the masthead of Sunday’s Arizona Republic:

Home Values rise despite slowdown

Despite falling prices by year’s end, leftover momentum from the Valley’s housing boom pushed 2006 values above the previous year’s values in almost every city.

Median price increases in Maricopa County ranged from 2% in Higley to 47% in Tonopah. Only Waddell and Youngtown experienced declines, according to The Republic’s latest Valley Home Values survey.

So what now? Analysts agree the market is in transition. Some believe the market has not yet hit bottom; others predict a turnaround.

“This is a good market,” analyst Jay Butler says. “It’s good vanilla ice cream. It’s not gourmet ice cream.” – Glen Creno

I’ve met Glen Creno and honestly believe him to be a good person. Also, I have no reason to believe that Jay Butler is anything but a decent man, as well. Unlike someone like Keith Brand or Mike Ferry who will knowingly spread lies and mis-information in order to achieve their goals – a social personality may err, but they aren’t doing it on purpose.

Using the median sales prices of an area (which almost all economists and others doing sales data analysis seem to want to do) may be quite useful in Not MENSAdetermining which city has the best (or worst) affordability. Median sales prices have no meaningful value if used to determine short-term movement of home prices. NONE. The median price of a home can go down and that does not mean that the actual selling price of any home in that area went down even one dollar! The median price can go up and it does not even begin to suggest that “the prices went up”. Everyone who thinks otherwise is wrong.

How do I know? I’m a member of Not MENSA. I know and use the MENSA pick up lines. I don’t have a PHD so I don’t have to take loads of statistics and churn out predictions for the valley or the nation. Based on a survey that NAR wrote about, I’m happy; I have a dream job. A real big part of my dream Read more

March 11, 2007

The Death Of Printed Newspapers: The Sooner, The Better

by

Real Estate Marketing Executive

Author website

I don’t care how printed newspapers die.

I’ve read the pundit’s opinions on why they WILL die. Some of them make sense. Some of them don’t. Laurie Manny even pointed out that the New York Times publisher is predicting the death of print. I have a few opinions of my own I could add to the mix. But I don’t care.

I only care that the printed newspaper SHOULD die, and sooner than later. Sulzberger’s five year prediction is too long for my taste. Why?

newsprint waste 2Let me throw out some numbers. 38.9% of the waste stream in the United States is paper. (1) Paper! How much of that total is newsprint? I have no idea. The newspaper industry certainly isn’t going to tell us, but let’s just consider this:

Each and ever day in the USA, American’s trash 44 Million newspapers. (1) Repeat that out loud and see how it rolls off the tongue. Does it feel good? I read that number and thought to myself, “Holy crap!” And here I thought the number of napkins wasted at In-N-Out was a problem. It pales in comparison.

In November, the latest numbers I could find, total newsprint consumption was 719,000 metric tons. Newspapers accounted for 567,000 tons of that usage. (2) The way I was taught math, that’s 73%. It’s staggering.

I’m not even going to go into the environmental impact of pulp mill production, or the energy savings that comes as a result of NOT producing the paper in the first place. If you’re interested, you can read more about it here.

I haven’t purchased a printed newspaper in more than four years. I simply don’t have a reason to. I read newspapers online. The times I have picked a “real” newspaper up – on a seat next to me at the airport, or at my door in a hotel – my thought is always the same; I’ve already read about this. I’m certainly not alone in this thought.

What an incredible waste of natural resources.

I was talking to my neighbor, Mike Whitman, about this and he said, “Well yes, that’s fine for you and me. I don’t Read more

March 10, 2007

Makin’ Whoppee: In praise of the sacrament of holy matrimony

by

Suburban Phoenix Real Estate Broker

Author website

Spring comes early to the desert and I have to get dressed for a Wedding Mass. In honor of the happy couple, here are the complete lyrics to Makin’ Whoppee:

Another bride, another June
Another sunny honeymoon
Another season, another reason
For makin’ whoopee

A lot of shoes, a lot of rice
The groom is nervous, he answers twice
It’s so killin’ that he’s so willin’
To make whoopee

Picture a little love nest
Down where the roses cling
Picture the same sweet love nest
See what a year can bring

He’s washing dishes and baby clothes
He’s so ambitious, he even sews
But don’t forget, folks, thats what you get, folks
For makin’ whoopee

Another year, or maybe less
What’s this I hear? Well can’t you guess?
She feels neglected and he’s suspected
Of makin’ whoopee

She sits alone most every night
He doesn’t phone, he doesn’t write
He says he’s busy, but she says “Is he
Out makin’ whoopee?”

He doesn’t make much money
Only five thousand per
And some judge who thinks he’s funny
Says he’s paying six to her

He says, “Now, judge, suppose I fail?”
The judge says, “Son, right into jail
You might just keep her, I’d say it’s cheaper
Than makin’ whoopee”

March 10, 2007

What is the difference between a weblogger and the press?

by

Suburban Phoenix Real Estate Broker

Author website

Most men have bound their eyes with one or another handkerchief, and attached themselves to some one of these communities of opinion. This conformity makes them not false in a few particulars, authors of a few lies, but false in all particulars. Their every truth is not quite true. Their two is not the real two, their four not the real four; so that every word they say chagrins us, and we know not where to begin to set them right. Meantime nature is not slow to equip us in the prison-uniform of the party to which we adhere. We come to wear one cut of face and figure, and acquire by degrees the gentlest asinine expression. — Ralph Waldo Emerson, Self Reliance

The other day I was on the phone with Jessica Swesey from Inman News and 17 bigfoot real estate webloggers. We were discussing the plans for the Bloggers Connect event at this summer’s Inman Connect. Someone suggested that a panel could address how bloggers can come to be treated as “press.”

To which my instant reaction was, “Ew!”

I really like Jessica Swesey, but, to me, “media” or “press” or especially “mainstream media” suggest the worst kind of teacher’s pet, hall monitor, establishment toadyism. Support the blood drive! Adopt a puppy! Come to the Ladies Auxiliary Bake Sale! It’s not the intense fascination with bad news that riles me as much as the plastic-smiled saccharine boosterism. I am least comfortable when I don’t know if I am being lied to. When I lend my mind to the “press,” I feel like I am being lied to in one way or another most of the time.

This is exactly what weblogging evolved to eliminate. Love him or hate him, Charles Johnson is never trying to hustle you or pander to you. Webloggers say exactly what they mean, and they document every controversy with copious links. Doubt me? Please do! Here’s how you can find out everything I know, with links at each stop to further amend your knowledge. You will die trying to pursue all the links, but — unlike all the preening Read more

March 9, 2007

Stopping traffic to sell houses

by

Suburban Phoenix Real Estate Broker

Author website

This is another level of our hoped-for untouchable assault on the marketplace. I’ve talked about our custom signs before, but this is what everything looks like on the post. We compete against broker’s signs — never custom but really, really ugly. We built a promo postcard out of the main sign, just to rub it in.

We are a boutique brokerage. There are just the two of us, so we are certainly a very tiny brokerage. It would not be wide of the mark to insist that we are an experimental brokerage. I, personally, would rather play with new ideas than do anything else. But, house by house, and piece by piece of this listing puzzle, we are going to take the market for these kinds of homes. The kinds of things we do would be useless on other homes. At $400,000 and up, there is no limit to what we can do, and no limit to the demand to have those things done.

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March 9, 2007

Single-property weblogs: Our latest vision

by

Suburban Phoenix Real Estate Broker

Author website

I’ve been slugging away for days on a new single-property weblog for 909 West Culver Street in Phoenix. Sandboxed for now, and who knows if the extra searchability will matter. The ease of editability for people who aren’t me is a huge bonus. The idea of using WordPress as a CMS only really works if the upfront investment is going to pay off over time, which is not the case here. But the fixed-first-post idea in WordPress 2.1 is perfect for our application, putting the “cover” plus eleven slide shows all in one spot.

What’s new in what we’re doing?: The slide shows and the interactive floor plan. I tried using a Google API map, but it clobbered MSIE 7.0, so I have a static map for now. I’ll be adding a video podcast, but that ain’t there yet.

Not as pretty as Dan Green’s site, I don’t think, but what could be?

Take a look and let me know what you think. We’re aiming at complete untouchability — a listing so rich in value-added features that none of our competitors can touch us. Are we wide of the mark?

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March 9, 2007

Real Estate Investment Theories that can Actually Help You Make Money

by

Real Estate Investor

Author website

Some of you may have noticed a drop in my postings over the last two weeks. The driver behind this has been mid terms. For those of you who don’t remember what that was like when you were in school, imagine doing all of the work you do in a typical month in a week. All of my studying got me really thinking about this issue of theory vs. practice. One of my pet peeves about most educational experiences is that there is too much theory and not enough practice. Worse yet, many of the theories do not work in practice. I thought I would spend some brief time outlining a few higher level theories that work and their implications in practice (don’t click away, I promise there is good practical knowledge to come).

Theory #1: Most markets tend to have a natural vacancy rate and there is a mean reversion tendency if prices get too high or too low. A lot of very complicated math proves this out for most markets

Practice #1: Most markets tend to stay at a certain vacancy rate. If the level of vacancy gets too high, rents come down until the natural vacancy rate is achieve. If vacancy gets too low, expect prices to increase until this vacancy rate is achieved.

How can the investor use this? Take a look at the historical vacancy of a market. If you are technically literate a simple chart will give you an idea of the natural vacancy rate. If you are not, you can probably simply eyeball it and be close. Try to buy when vacancy levels are above the natural vacancy rate. Properties will be cheaper and you will experience appreciation by simply waiting for the market to correct itself. This is a simple strategy that really works in practice. Smart buying can keep an investor in profits in an up or down market. This point is an interesting twist on buy low/sell high. Essentially buy vacant, sell full.

Theory #2: Interest rates affect cap rates directly and indirectly. As interest rates rise, cap rates rise and property values fall. Additionally, Read more

March 8, 2007

Mortgage Brokers and Used-Car Salesmen

by

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

Author website

Q: What do mortgage originators and used-car salesmen have in common?

A: Their customers like to negotiate.

Wanna hear about how I screwed up this week?

I read Jeff Corbett and think highly about what he preaches; mortgage transparency. I read Pat Kitano and think he is on the right track with transparency in real estate. I have practiced and written about transparency since I started originating mortgages. I used to do it this way:

Mr. Customer, there are certain fixed costs associated with every loan. Appraisal, underwriting, etc.. Then there is our margin. We like to make $X,000 per loan. If I am able to retain that margin, and close 8-10 transactions each month, I can make a pretty good living for me, pay the light bill, the broker, the supplies, etc., and give you a pretty good deal. Now, I’m about to let you in on a secret…

We all do this in the mortgage business. I choose to do this upfront and give you access to my wholesale ratesheets. I’m going to “pull back the curtain” and give you “access to the great and powerful Oz” (The great and powerful Oz is Wall Street). Let’s get in the game together and make this happen. I think you’ll get a really good deal if we do this.

Some people love this transparency approach; many do not.

I ran this idea past Laurie Manny today. I’m helping one of her customers with an investment property purchase in Long Beach, CA. Her comment ?

“What-ever! I trust you to do my client right.”

Laurie further cautioned that not everyone practices transparency in the mortgage business and I could be eliminating myself from the transaction by my inability to flexibly negotiate terms. She brought up a great point; people LOVE to “get a deal”. She reminded me that the reason I “captured” her client was because of the way I confidently quoted terms and “closed” her.

I was in Phoenix earlier this week to meet with a would-be home buyer; I Read more

March 8, 2007

What Keeps Some Of Us Going — Making A Difference

by

Real Estate Investments Broker

Author website

Yesterday afternoon I had a meeting with a client for the purpose of updating her Plan. ‘Stella’ was referred to me by her sister, and they’re both among my favorites. Since we both lived in the East County, and so she could avoid rush hour traffic, we met at a Starbucks in La Mesa.

Turns out she had some pretty cool news of her own.

She’d become engaged. She was practically vibrating with anticipatory excitement. “I won’t be needing that San Diego duplex for the future any more! When the school year is over, (she’s a teacher) I’m headed to Alaska until his job there is completed, then we’re going to Hawaii to live.” She was euphoric.
Talk about a slight change in plans.

This was a great development because now she could take all the money generated by the first round of her Plan and get it growing. Her capital, around $150K after taking out $50K for a Sominex account, will make her at least $50K in the first year alone. As I was telling her what she needed to do in preparation for this new round, she was jazzed. It was contagious.

I began to have one of those moments I live for. It’s when you are reminded that what we do for a living changes lives in such an efficacious way. How that makes me feel can only be described as a tremendous high. It’s the biggest paycheck I ever receive. The excited look on Stella’s face is priceless.

She’s no longer acting as a client but as a friend with great news. It’s a shared moment of unfettered giddiess for both of us. Everything is coming together in such a rewarding way for her. She realizes and appreciates her life is at an undeniably positive pivot point.

Meetings like that are why I still get charged up after almost four decades. That natural high never gets old. It comes from being allowed to make a difference, and it’s a consistently humbling experience.

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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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