There’s always something to howl about.

Month: September 2008 (page 5 of 7)

“Success” Sung in a High C

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 ContinuityCongruence 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

Attention Old Fart Brokers: Listen to the Young Farts!

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

Notes from the Peanut Gallery

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

Mortgage Market Week in Review

Well, it’s Friday again, so it’s time for another Mortgage Market Week in Review.   I’m going to talk just a little about Fannie and Freddie and then deal with some of the other issues that are currently affecting the financial markets.

First Fannie and Freddie: As EVERYONE knows by now, Fannie and Freddie were taken over by the Federal Government last Sunday.   What does that mean?   A couple of things that have become clear so far:  1) The fact that US government is now not only implicitly backing Fannie and Freddie’s debt but explicitly (putting your money where their mouth is) has had a good effect on mortgage rates.   We dropped as much as .5% on Monday and since then, things have trickled back up a bit, but we’re still .25% lower than we were last Friday.   2) One of the reasons that they did it was to keep the mortgage markets moving and that appears, at least so far, to be a success.

The things that aren’t so clear yet about the Fannie Freddie bailout are: 1) How much is it going to cost the taxpayers long term?   2) Are the executives really going to get the multi million dollar golden parachutes that it looks like?  3) Starting in 2010, Fannie and Freddie are supposed to downsize by 10% per year.   What sort of mortgage market is going to take their place?   That’s going to be a topic of a lot of discussion in the government going forward.

Now on to what else is effecting the markets.   Let’s just say that it is looking like Fannie and Freddie won’t be the only financial firms that are going to suffer a financial death during the month of September.   Here’s the latest as I know it:

Lehman Brothers is rumored (LOTs of rumors) to be on it’s death bed.   What killed it?   Too many investments in risky mortgages.    They are supposedly looking for buyers who would save them from the untimely death.   Will someone step in and buy them at the last minute?   Maybe…..  Who are the most likely buyers?   The rumors have Read more

Washington Mutual: The Spiral of Death

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

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

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

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

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?

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

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

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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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

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

Every now and then…..

Every now and then, I get one of those moments that puts life in a different perspective.   You know, the times when you look at all of the “stuff” that you deal with every day and realize that it’s not nearly as important as you’d like to think it is?

I had one of those tonight.  I got an e-mail from a close personal friend of mine who is an orphanage director in Haiti at the orphanage that two of my kids came from and she shared some very troubling news about what they are dealing with there.

I wrote about it in more detail at Straight Talk About Mortgages and shared it with Greg and he encouraged me to write a brief post and put a link to more details.   I’d really appreciate it if you would take a few minutes, click here and read more about what’s happening and how we have the opportunity to make a difference in the lives of people who are significantly less fortunate than we are, even if we are in a lousy market.

Thank you in advance,

Tom

Nehemiah and AmeriDream May Be Restored By End of the Month

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

A reprieve for seller-paid down-payment assistance programs? Brian Brady has the inside track

Inman News is reporting today on a possible reprieve for seller-paid down-payment assistance programs like AmeriDream and Nehemiah. As you will recall, Brian Brady gave you the heads-up on this initiative on August 27th. Brian will be checking in shortly with details of his schmoozing adventures with Barney Frank’s kitchen cabinet. Cliff’s Notes: Don’t tear up those purchase contracts just yet.

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San Diego City Attorney Aguirre’s “Sanctuary” Best Left For Fairy Tales

San Diego City Attorney Michael Aguirre attempts to halt the flow of new loans, into San Diego , by calling a “do over”:

San Diego’s city attorney said on Wednesday he filed a lawsuit against Bank of America and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a “foreclosure sanctuary.”

City Attorney Michael Aguirre plans to file similar lawsuits against Washington Mutual, Wells Fargo and Wachovia in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure.

“We would like to see San Diego become a foreclosure sanctuary,” Mr. Aguirre said.

Oh brother.  This is so stupid I don’t even know where to begin.  Foreclosure is an important part of a loan contract.  If a government interferes with the execution of that contract, then a precedent of interference will be set.  Two things can happen:

1- Lenders will need to assess the cost of the “foreclosure sanctuary” and build it into the cost of the newly originated loans.  Buyers will reject the new loans, priced far above loans made in Del Mar, and the City of San Diego housing prices will plummet even farther.

2- Lenders will, most likely, just ignore San Diego.  We saw it happen in Cleveland, about ten years ago.

I knew a shylock, back in Philly.  He worked the union halls.  He’d loan a guy a few hundred bucks, until payday, and make 30%  vig for the effort.  His default rate, for first -time borrowers, was extraordinarily high.  I asked him about his collection policy, visions of The Sopranos in my head. The “shy” didn’t like to get his hands dirty.

If a borrower defaulted, the shylock refused to lend money in that particular union hall.  He let his steady customers  enforce his collection policy.    If a bright borrower decided to alert the authorities, the shylock simply denied any lending activity, and took the loss.  Of course, he never lent in that union hall again.

Mr. Aguirre’s political stunt could lead to that “mob mentality” should lenders halt all activity in the City of San Diego.  Sellers, frustrated with the Read more

Notes on Inbound Link Text

I broke my blog a few weeks ago and it proved something pretty interesting about Google.  The lesson behind that experience can help you bring in higher quality visitors from search engines.

Fixing my mistake was simple since I’d just put a semicolon where it didn’t belong, and while the error was ugly, my site was back to normal in about a minute.

But sometimes coincidences happen, and while my site was belly up talking about some PHP parse error, Google’s friendly spiderbot came crawling by to pick up its latest snapshot of my site.  Oops!

So, normally, a search for “silicon valley real estate” shows my entry like this:

And, for the next day or so, it would look like this:

After reading the ugly description text, I put my eyes back in their sockets and thought about the title text.  I never use the phrase “steve leung silicon valley” on my site and my title tag at the moment was something like “Unexpected Error”.  But I knew, like the Erics have mentioned on BHB before, that Google gives a lot of weight to what people link to you say.

It takes those links so seriously, that it will literally use their text in its own search results if your site loses the plot for some reason.  Which shows how important other people’s links to you are.

How do I know people used that phrase to link to my site?  In this case, Google Webmaster Tools.  You won’t use it everyday, but it’s indispensable for a few reasons.  The most important is that it gives you insight into the great undocumented void of how Google sees your site, and if you have any technical issues that will prevent you from getting indexed correctly in their search engine.

In fact, Google Webmaster Tools has evolved to a point where it will flag issues that aren’t purely technical, like repeated titles.  This happens a lot with WordPress blogs which use the same title any time there’s pagination.

It also gives you the ability to communicate with Google if you really need to.  I once bought a domain name from someone who’d Read more