Market Trends

Converstations on Shorts sales, HERA with Ed Dean with Potomac Mortgage Group

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The shorts sales continue to rear their ugly head. Our agents continue to have problems with the time spent working on them, the energy devoted to them and the lack of results they are getting out of them.  It appears now that many of the banks have gone to call centers handling the shorts sale calls for the banks and these people have no training no experience, but more importantly no authority to make decisions on whether or not to approve or disapprove a short sale. 

Enough of short sales, now onto the mortgage news…

This week the head of FHA, Dave Stevens, made the announcement that FHA will not be going the way of HVCC because he is a wise man and recognizes the inherent problem associated with the HVCC.  Great news for all of us in this regard!

In a recent conversation with Ed Dean, we were further educated on the new TIL reforms and told us that 10 days is a reasonable amount of time to get a loan to close, you would have to move heaven and earth to get a loan done in 7 days (it can be done, but it’s not recommended), but his belief is that it is not going to have as much of an impact as many people are indicating. Check out his notes on the subject from our conversation.  Ed did a review of 5,000 loans that his former mortgage company had done and noted that only 30 of those loans would have needed re-disclosure. A majority of those 30 needed re-disclosure as a result of people failing to lock in their interest rate or it was initially a pre-qualification and it went to contract several months later. You’ll note at the bottom of page 3 of his notes, how significantly the numbers need to change to get a re-disclosure.

Other mortgage news included guidelines continue to get tougher on condos with more restrictions imposed. In addition it has become virtually standard operating procedure for every lender to pull the Form 4506 from the IRS to request the borrower’s tax returns to make sure they match the ones they provided in the loan application process. Basically with the way the loans are going today, you have to fit inside the box. There is no thinking outside, underwriting or loans being approved outside the box. And lastly, second trusts continue to have no future or part of the mortgage or sales landscape.

As is always we strive to keep you educated in the real estate world.  Get it? Got it? Good!

Joe Theisman…the hightlight of the RE/MAX Broker Conference

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Joe What a performance by Joe Theismann – again!  Being a lifelong Washington Redskin fan, I experienced many of Joe’s outstanding performances on the field but at the RE/MAX Broker/Owner meetings in Chicago, he outdid himself with his speaking.  He inspired many of us, surprised many more with his message and his delivery when he spoke about how he overcame a major challenge – a career ending injury – and how we can overcome our challenges in our lives by thinking about the following items.

 

· Be a part of something unique and special

· Think about what you will do to make a difference

· Who is it all about – the answer is – it isn’t you

· Embrace change

· Have a heart to heart with yourself – what do you believe in

· You can’t be a major success until you realize you can’t do it all by yourself

· Don’t accept failure

· Think, what can I do to help the team

· Who is your team

· Do you want to make a difference

· You have to want more for yourself – what will you give of yourself to get you there

· Reposition your attitude, thoughts, etc

· What do you do with a challenge when it is presented to you

· Have a passion

· Do it with enthusiasm

· Ask yourself, how high is your ladder – why does it have a last wrung

· Why do you believe in you

· Give and accept recognition

· Become an excited student – make it your mission to learn something today you didn’t know yesterday – everyday

· Fear is a motivator – what are you afraid of

· Attitude carries you to attain your goals

· To survive, you have to have written goals and post them.  98% of people don’t have written goals

· How will you know where you are going if it’s not written down and visualized

· Give yourself direction

· Life is filled with educational experiences not failures

· Be committed to having the feeling you can get it done

· Have pride in you, your company, your brand, what you do and why, and lastly be the best you – everyday

· Be reliable, accountable, available, be customer service oriented, have the right goals, the right attitude and be motivated

As I mentioned, he was right on with many of his statements and comments.  So, the questions is, what are you going to do about it?  Review the bullet points above, write you answers down on paper, review them and get started in a positive direction and live a more successful life.  Get it?  Got it?  Good!

 

Platinum Club….another great meeting!

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Another Platinum Club meeting, another short sale discussion meeting, when will the madness end?  My short answer is, when the government steps in and does something GOOD for our industry and gets banks to streamline and systemize the short sale process.

A few observations from today’s meeting include:  the processor makes all the difference in short sales, not the bank; as the foreclosures diminish, REO managers are migrating to Loss Mitigation departments – too early to tell if this will work better or not but us being optimists in this group, believe it will; despite what others say, make calls on your cases everyday – the squeaky wheel gets the grease.  The belief is that short sale departments are small – not big like everyone may think – in one case, one processor is handling 5 cases for one of the agents; everyone in the chain is overworked – negotiator, processor, and listing agent – much of the paperwork is lost in the process; the deals continue to get more difficult and take longer – one agent lost 6 deals in the last month; if the bank knows the property is vacant, it will speed up the foreclosure process;  the short sale part of the business has made agents more suspicious of each other – no MLS updates or incorrect/unauthorized status changes, unprofessional and/or unethical processes are instituted by many agents – they have clients ratify multiple contracts, and releasing contracts & accepting others without bank rejection of first contract is becoming more commonplace are just a few examples of what is taking place in our market;  only about 23% of short sales are making it to closing due to bank rejection, banks asking for notes from mortgagor, and the time it takes to get them to close today that buyers are releasing themselves from the contract.  From the listing side, to get better success, have buyers remove all contingencies prior to submitting the offer – it is easy to do in multiple contract situations and gets buyer buy in – provide title work, your own BPO, and mock HUD 1 with the offer, don’t wait on these procedures.

Additional discussions covered foreclosures.  There isn’t much happening on the foreclosure front.  The promise of the flood of foreclosures coming on the market is continuing to be delayed – bring it on is what we say as our inventory level is down 56% from the same time last year and the most competitive market is in the first time buyer price range where many of the supposed foreclosures will be priced.  We can sell’em if they list’em.  Listing assignments are down 75% from last year.  BPO’s are up – suspect they are for short sales – not for potential bank inventory.  Last year 1 BPO for every 5 listings obtained, this year it is the opposite, 1 listing for every 5 BPO’s.

Many markets are still extremely price sensitive – even when they are priced just a little high.  When priced right, in the right condition and show well – they sell.  Get it?  Got it?  Good!

Now, go sell something!

The numbers are looking good!

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Numbers review – we are up as a company!  Our transactions are up 21% over last year – We have gone from 674 last year to 874 this year.  With 80 agents that is a 10.6 average number of transactions per agent through July!

HERA update – no more closings within 7 days, lock early, get accurate numbers to your lender from your title company – more communication between all parties is paramount – HERA affects any applications taken after July 30th – any questions on HERA?

Advice for getting appraisals to come in at value: meet appraiser at property and provide all comps you believe are important – provide numbers we provide you – show anything else you believe was integral in the sale, i.e. number of contracts, number of showings, days on market, number of competing properties, month’s supply in hood, in the surrounding area and any insight you can gain from listing agents on houses under contract.  Don’t forget to mention condition of recent sales through your previewing efforts-you do preview, don’t you?  Any detail can make all the difference.  Be sure to ask the appraisers familiarity with the neighborhood, trends, prices, etc as many appraisers are coming from great distances.

10 year treasuries are on the rise putting upward pressure on long term rates – primarily mortgage rates – encourage having your clients lock in their rates

New home sales are up dramatically – KHOV 90 sales last 60 days

Existing home sales are up nationally 5 consecutive months of growth, first time since July of 2003 – what happened then?  Our inventory numbers are down and Case Shiller pricing index – 14 of 20 markets are up – first time in 3 years this has happened – if anyone asks – yes we hit the bottom – locally in November – nationally now.  This is also good to share with appraisers gang!

No big wave of foreclosures hitting our market – BPO orders are down

Short sales are taking longer – second trusts are unresponsive for weeks at a time

More arms length transactions are occurring

Gov’t is pushing top 25 loan servicers to have 500,000 trial modifications in place by Nov 1st – only 200,000 have actually been done.  Banks may be forced into doing modifications by enacting a Bankruptcy bill that got defeated earlier this year where banks will be forced by bankruptcy judges to slash balances of people who are delinquent on their mortgages in involuntarily.

Other key indicators to watch – Index of Leading Economic Indicators (interest rate spread, building permits, stock prices, weekly initial claims (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors – beginning with the largest negative contributor – were real money supply*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations) – rose close to 1 point in June – 3rd straight month it has grown – 1st time index has grown 3 consecutive months since 2004.  The Index of Leading Economic Indicators are closely tied to the housing industry and its recovery.   Obviously we didn’t hear much about these numbers in the news – strange, huh.

New Unemployment claims filed are down 5 straight times indicating worst may be behind us.  The number of Americans filingclaims for jobless benefits fell more than economists predicted, a sign some employers have stopped paring staff as the recession eases.

Applicationsdropped by 38,000 to 550,000 in the week ended Aug. 1, figures from the Labor Department showed today in Washington, the fifth straight time claims were under 600,000 after being above that level since January. The total number of people collecting unemployment insurance rose.

The bottom line is we are continuing to see great progress in our market – we just need more inventory, rates to remain low, and prices to increase slightly – not significantly and we will continue on our pace of record transactions.  Get it?  Got it?  Good!

Now go sell something!

 

August Market Update

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It’s amazing!  Our market continues to flourish despite the rest of the economy and other market segments in the real estate business.  Year to date, our transactions are up 21% over last year numbers.  Our belief is that we provide our agents with up-to-date, cutting edge, continuous training to keep them current which has helped us excel in today’s perceived “down” market.  In addition to our success, nationally, June’s numbers of existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors®.  Our belief is that low rates, lower prices, and the $8,000 tax credit for first time buyers are fueling our business.

 

Some of the trends we are closely monitoring are the Home Valuation Code of Conduct, the Housing and Economic Recovery Act and the Mortgage Disclosure Improvement Act to educate our clients on how the appraisal and lending process will impact their sale from a valuation and timeframe standpoint.  In addition, we are closely monitoring new loan programs, revisiting underutilized programs such as VHDA, buy downs, and FHA ARMS to find ways to finance our purchasers. And we are continuing to stay up-to-date on short sales and the short sale process.  Our experience has been that the process is taking longer and we are having more difficulty in getting them through the banks.  Nationally, only 23% of short sales are getting to settlement.  Make sure to stay current on these changes and updates to give the right advice.

 

A few additional insights are that new home sales continue to flourish, there are more move up buyers entering our market and when we meet the appraiser we are having fewer value issues.  By providing them with comparable sales and details on those sales (short sale, condition, foreclosure, etc.), information on activity, days on market comparisons, number of contracts received and current market conditions to provide the appraiser at the time of the inspection – we are experiencing fewer problems.  We still are having appraisal issues but by meeting the appraiser at the house, we have experienced more appraisals coming in at value than we previously encountered.

 

By staying on top of industry trends, changes within our industry, and educating yourself and clients, you will gain more loyal clients and receive more referrals.  Get it?  Got it?  Good!

 

It’s Time!

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It is time, to take the time, to analyze, reassess and reenergize yourself and your team.  What are you saying to clients?  What are your team members saying to their contacts?  Where is your attitude?  What is your team’s attitude?  Where are you spending your time?  Where are your teammates spending their time?  Is everyone effective?  Are they utilizing their strengths?  Are you maximizing yours?  What needs to be altered to get the results you want or need?  Take the time – today – to answer these questions and develop a plan to adapt to your recent activity and mindset to get to where you want to go.

 

Over the last few weeks, I have been part of CEO groups and involved in an executive networking groups and the atmosphere has been:  Flat is where it’s at – we are doing good but not great – things are better for us than our competition so we are happy.  Complacency is not a good attribute in my opinion.  When I hear this, it makes me wonder what the culture is in the office.  Is the negative news they are hearing creeping into their conversations around the water cooler, in interoffice emails, at staff meetings, etc.  These areas of communication need to be evaluated and adjusted.  If you are the best of the best, there is no excuse.  You need to work harder – on your attitude, your efforts, your communication and the message conveyed.  There are opportunities in every market – good, bad and flat.  Again, what are your people saying, doing, and working on to improve themselves.  We all know the saying. “When the going gets tough, the tough get going.”

 

We don’t want to be flat and happy about it.  We don’t just want to be better than the others in the business, and just flat lining because of the economy and media says the economy is bad.  We want to improve ourselves and not compare ourselves to anyone but ourselves.  We want to be better than we were the year before, and the year before that, and so on.  We need to be better than we were previously.  We need to look at our personal efforts and those around us and ask the tough questions I asked above. 

 

As the market has been adjusting, we find ourselves doing more.  We are making more phone calls, attending more networking sessions, speaking with more people about their business as well as ours, spending more money than our competitors to convey our message, participating in more educational events and attending more functions to learn more about others and their businesses. 

 

Our message is positive, we speak about results and refer to numbers to convey our message and we ask how we can help others and their business.  As a result, we are receiving more business.  Focus on your activities, your message, your attitude, and your servant mentality and you will get business.  Get it?  Got it?  Good!

 

We’re moving on up!

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It is true!  The housing market is making its comeback.  Last week we reported sales of existing homes rose 3 consecutive months and that new home sales were up in June over 3%.  Well, guess what?  New home sales were up 11% in July!   This is more great news for us to “build” upon moving into the dog days of summer. 

What is the reason for this growth?  There are several factors in my opinion:  low rates, the right price point, multiple offers on existing homes, the tax credit and the market conditions.  As we all know, rates have been low for an extended period of time and according to Ben Bernanke in his economic update, they are going to remain low as a strategy to aid in our economy’s recovery.  Builders, banks and home owners alike have been reducing prices to encourage offers – well, it appears that the sale of the century for housing has worked and buyers are coming out of the woodwork.  As these buyers are making offers on resale properties and losing out to other buyers, the frustration has lead them to new homes – no multiple offers on to be builts!  As the tax credit has aided in getting first time buyers off the fence, it has also spurred activity in the move up market which is resulting in the increase in new home sales as well.  And lastly, the market has been decreasing for over 4 years – June or July of 2005 is when we earmarked the down turn in housing.  Additionally, as we all know, what goes up must come down and vice versa so it was about time for the market to change.  You can’t keep a good thing down.

The housing recovery is critical in so many ways to the general economy’s recovery – let’s keep the momentum moving in a positive direction by spreading the word.  Get it?  Got it?  Good!

Social Media

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Fb Li Twitter

As many of you have read and are experiencing.  Social Media is a growing part of our industry.  As I mentioned to Bryan Felder yesterday, it is a spoke in your marketing wheel and it definitely needs to be there but should not overwhelm you.  Many people spend an inordinate amount of time with Social Media so you need to be cautioned on how much time and resources you are spending on this part of your business.  You need  to have exposure on LinkedIn, Facebook, Twitter and post blogs at a minimum to get your real estate business to Web 2.0. 

 

We are trying to keep you abreast of what to do in our efforts to keep you informed in this arena.  Our wonderful Great Falls Office Coordinator, Kendall Bennett, is teaching Social Media classes on a monthly basis and is available to speak with you about what she has learned, what she is experiencing and what her thoughts are on this latest real estate tool.  Here is a quiz she sent me yesterday – see how you do. http://www.realtor.org/RMOQuiz2.nsf/SocialNetworking?OpenForm.

 

Here is another article I came across that we need to pass to keep our business moving along in a positive direction. http://www.inman.com/news/2009/07/21/bill-would-extend-higher-loan-limits.  Spread the word!  Get it?  Got it?  Good!

 

Now, go sell something!

The market is heating up and so are tempers!

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You are not going to believe the first part of this story but the second part you will.  This weekend, one of our RE/MAX Gateway agents placed a townhouse on the market for sale in Centreville, VA for $250,000.  If you have been reading my previous blogs at www.scottymacsblog.com you would know that this segment of the market is extremely competitive with upwards of 15 contracts on houses that are in good condition.  Well, this property fits this description and we received 7 contracts which are what our sellers were prepared for but what happened on Saturday was completely unexpected.  As you can imagine, to receive 7 contracts, you need to have a lot of activity to produce these results.  An agent, who was showing the property, had removed the key from the lockbox, locked the door and proceeded to show the house.  Another agent arrived to show the house shortly thereafter, knocked on the door, opened the lockbox, found it empty and proceeded to ring the doorbell.  The first agent opened a second floor window and told the second agent they would have to wait until they finished showing the property to see it.  When the first agent opened the door, the second agent attempted to walk into the house.  As the second agent walked into the house, the first agent grabbed the second agent by the throat, lifted them up, slammed them twice against the wall, threw them to the floor and proceeded to kick them out of the door while slamming the door against their legs.  Luckily, for the second agent, a third agent pulled up and proceeded to call 911 as well as the owner of the property to inform them of the situation.   Shortly thereafter, the owner got home, saw an ambulance driving away and two police cars in front of their townhouse.  We are awaiting the results of this assault and will keep you posted.  By the way, agent number one is male, agent number two is female.  Unbelievable but true.

The second story is also true but is more believable, our market is going strong.  Inventory levels continue to decline, demand is on the rise, we have multiple offers in virtually every price range and we are experiencing appraisal issues.  This is adding to frustration levels of agents in our area.  However, it does not mean we need to resort to violence.  We as agents need to respect other agents, and protect the public.  We need to be courteous, professional, and keep our emotions in check.  By controlling our emotions and giving the right advice and acting responsibly we will raise the standards of agents in our industry. 

 

Get it?  Got it? Good.

Valuable information from today’s training

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Appraisal issues

 

·         Coming in low in all price ranges               

·         Too long to complete

·         Appraisers and lenders can’t communicate which is causing delays in settlement dates

·         Appraisers are coming from outside market areas – in some case close to 100 miles away

·         Maintenance issues are listed as safety issues – in one instance a carpet stain was listed as a potential mold hazard

·         Low appraisals on FHA loans are not being submitted to HUD

·         Why are FHA appraisals good for 6 months when appraisers and lenders are only going back 90 days?

 

Short sale issues today

·          Banks are inundated with too many cases and not enough “trained” staff to handle processing

·         Short sales are taking longer to complete

·         Some banks are asking defaulting borrowers to repay a portion of their loans through signature loans – no interest – 5 to 8 year terms

·         Some banks are countering ratified contracts with higher prices

·         Be sure to not have home warranties or seller paid termite inspections as these are getting “kicked” out at the last minute

·         Cases are being closed with no notice given to parties for “technical” issues of missing suffixes after a long period of negotiations

·         Still no standard procedure in place to streamline the process – even within same bank

·         Be sure to check listing agent’s success with getting short sales approved

 

 

Motivate sellers and build your inventory

·         Lack of supply today is an opportunity for sellers today

·         Increased demand

·         Multiple contracts in all price points below $400,000 and above $1,000,000 in certain locations

·         $8,000 tax credit for first time buyers is only in place through the end of November 2009

·         Will HVCC continue to erode home equity – $1.7 Trillion already lost since its implementation

·         Rates are great today but where will they be next year

·         Will short sales turn into foreclosures and reduce prices further?

Now, go sell something!