Mortgage & Finance

Gateway’s Year in Review…now on to 2010!

Leave a comment

As the Leadership Team at Gateway reflects on the year that was 2009 and to see where we need to go to achieve our goals for 2010, we thought we would share our accomplishments and significant events that shaped 2009 for us as well as let you know what we want to accomplish in 2010.  We also want to share with you, RE/MAX’s Vision of 2010 and show you how we are aligned with their goals which is pretty exciting in my opinion!

RE/MAX Vision:

The number one goal is – Increase market share and associate production through recruiting, retention and franchise sales.  We have on our plate for 2010 to open at least one new office – Brambleton in July.  Additionally, we are looking to expand our operations to take advantage of the extended downturn in the real estate market and grow strategically through partnerships with area industry leaders.  Additionally, Gateway has increased agent count and productivity over the last year which is a testament to your hard work and efforts. 

The number 2 goal is – Overwhelm the competition with strategic Regional advertising to maximize Brand exposure.    We have seen the growth of Social Media and have embraced this form of marketing to communicate our vision to the public as well as our agents.  Additionally, our extensive email marketing campaign has been extremely successful through constant contact.  And lastly, our post card campaigns highlighting the affiliation of new agents has increased our market presence.  We believe our marketing efforts are second to none in the industry…we are always out there! 

The number 3 goal is – To aggressively pursue and complete the fold-in, merger or conversion of quality independent franchises into our existing RE/MAX brokerages.  As you know, our recent acquisition of Signature Real Estate in Culpeper may possibly lead to additional acquisitions in that region for Gateway.  Through contacts with Signature Real Estate, we have the inside track on the merger with 2 small boutique operations in Culpeper that we plan on diligently pursuing.  We are also looking at other opportunities and are happy to discuss any that you are aware of and want to be a part of going forward.

Under the Regional Office Priorities:

Recruit top 25% in each MLS.  Through the use of our subscription of Broker Metrix, we have determined who our target list of prospects is for our offices.  We have had strategic discussions with several agents in the areas near our offices and we are looking to enlist the support of our agents to help acquire these agents and others they are aware familiar with to affiliate with Gateway.  Our plans are to communicate with these agents through our “Get to Know Gateway” events, our Real Estate Exchanges, Social Media outreach and constant contact email campaigns detailing our educational programs, our competitive compensation schedule, RE/MAX initiatives and upcoming Gateway events.  By utilizing this continuous and persistent recruiting plan approach, we are confident we can capture the market share RE/MAX is hoping to attain.  Additionally, the benefit to you is that you get to work with the best and most respected agents in the business who want to help you succeed.

Facilitate networking and retention programs for existing agents.  Through the use of our emails, blog posts, our weekly Friday trainings, monthly Real Estate Exchanges (March of 2010 marks our 5 year anniversary of these events), quarterly meetings with nationally recognized speakers (Paul Muolo is slated for March’s meeting and Amy Crews Cutts, deputy Chief Economist for Freddie Mac is slated for June’s meeting, Stephen Fuller www.cra-gmu.org – his office’s 4th consecutive year – is on our September schedule and we are working on our year end meeting speaker.  This past year we had Doug Duncan, Stephen Fuller and Dave Stephens – under secretary of FHA) along with our awards party, agent appreciation events and annual Christmas party, we believe we have been able to retain our great agents such as yourselves as well as recruit several other top producing agents to our offices through this level of communication.  We want you to feel appreciated for being part of our team and we look forward to you continued participation at these and other events we host for you.

Partner with Broker/Owners to analyze and identify profitability models.  We have conducted thorough and extensive research of the market through an independent marketing firm – Verasolve – to determine the offerings of our competition and to place Gateway at the forefront of our marketplace in terms of education, trainings, and competitive compensation models that lead to profitability.  Through in depth discussions with Gateway’s leadership team, we have come up with a compensation/profitability/accountability plan that works for us as well as our recruits.  We have presented our model to our agents as well as our recruits and the model has allowed us to attract top talent from our competitors.  Also, by providing feedback opportunities to our agents, we have shown our transparency to our agents which has allowed us to maintain higher retention rates.  We are always open to receiving your thoughts on how we can serve you better as our valued agents.

And lastly, Award Franchises.  We couldn’t agree more – we are looking to grow, help us achieve this goal!

Under Brokerage Priorities:

Continue to reduce overhead/increase revenue streams.  As you know, we have closed the Great Falls office and we still have achieved a net gain of 14 agents this year at Gateway.  In addition, we have relocated our Gainesville office to a more visible location in our building with a better floor plan.  Additionally, we have incorporated training centers into both of our Chantilly and Gainesville locations.  We plan on doing the same in Brambleton as well as our future office locations.

Recruit the top 25% producers in your MLS.  Through the use of Broker Metrix, we have determined our ‘Hot List” of prospects that we want to join Gateway.  As such, we have just recently recruited several top producing agents which is great exposure for both Gateway and RE/MAX alike.

Optimize the use of the RE/MAX system in your office.  We have been incorporating the emails from the region into our regular communication with our agents and have utilized recent RE/MAX events such as Demand Success Today to educate our agents on RE/MAX offerings as well as a recruiting tool.  If you are unfamiliar with what RE/MAX has to offer, please attend our next New Agent Orientation to learn more.

Generate a high level of PR in your local community.  Through my recent election to the Board of Directors of NVAR, we have been introduced to Ann Gutkin, the head of Public Relations for our association.  She has connected us with several newspapers who request articles to be written for their respective papers.  Our quick responses to her requests as well as the newspapers have given our agents the ability to get published as experts in real estate.  In addition to this, we have established relationships with newspapers through our charitable contributions – most recently – Breakfast with Santa for our Toys for Tots campaign.  In conjunction with these efforts we get press releases published on a regular basis in business publications such as The Washington Business Journal.  Additionally, we are heavily involved with the Top 5 in Real Estate network and have achieved great PR success with RISMedia as a result of our affiliation.  In addition to this, we have a Director of Social Media which enables us to get maximum exposure, consistently out to the public as well as agents through Social Media outlets such as Facebook, Linkedin and Twitter.  Lastly, our leadership team is also deeply involved in our local associations which results in great exposure to the real estate community.  Brett, Jason and Kate are involved committees.  Additionally, for 2010, Kate is the Chair of the Convention committee as well as Vice Chair of the Education committee – outstanding exposure for Gateway.   Help us, help you get more publicity for you and aid in growing you as an expert in real estate!

And Persistence…our continuous emails, communication and our business plan (which is attached)are evidence of this desire!

Franchise Growth Strategy:

Expansion Franchises:

Existing locations must be in full compliance.  Just so you know, in short, we pay and pay on time consistently and comply with all RE/MAX requests promptly.  We have exceeded our quotas in each of our locations and we attend RE/MAX events locally, nationally, and internationally on a continuous basis.

Under Final Details:

Recruiting Business Plans.   We will be happy to provide you with our recruiting plan of action we have in place if required.  Many aspects have already been discussed in this email as well as the business plan but we can provide you with the specific plan for your review if requested.  We are looking to grow and thrive in any market and would love your input on who can help us be the best.

Quota adjustments – none needed – we are compliant and far exceed the requirements outlined in our franchise agreements.

Business Continuity Planning – provided over a month ago per your request to be compliant with RE/MAX.

Statistics Reporting provided monthly through Lone Wolf with our monthly bill payment to remain compliant with RE/MAX.

Membership Profiles provided as agents affiliate with our office.  Each agent in MRIS and at DPOR with Gateway is also in the RE/MAX system to be compliant with RE/MAX.  Also, all agents are agents – not listed as licensed assistants to be compliant with RE/MAX rules and regulations.

Children’s Miracle Network was at our year end meeting and we have signed up in hopes of becoming a Miracle Office.  We are also extremely involved in other charities and can provide a specific list of continuous involvement with these charities upon your request.  Life with Cancer, Susan G. Komen, Toys for Tots, Leukemia/Lymphoma Society, and many others are on our list.

In addition to the items listed, we plan to embrace the New Events for 2010 proposed by RE/MAX and look forward to participating in these events.  Most notably, the Swing for Success, Broker/Owner Boot Camp, Broker/Owner Retreat 2010 (we have relationships with exceptional speakers that are reasonably priced if you need suggestions), New Agent Orientations (we have one for our agents if you would like to review or implement items from our presentation) and all the others listed in the email.

As you can tell, we are passionate about our franchise as well as the expansion of Gateway and believe that we have presented a compelling case for us to be noted as one of the best franchises in the RE/MAX organization.  Our commitment to our agents, Central Atlantic Region and the RE/MAX brand as a whole is evidenced by our desire to build the best franchise in the network.  We have put together a strong group of agents who are dedicated to each other’s success.  We will continue to grow, evolve as a franchise, and tackle the challenges of the real estate market head on!  We will not remain complacent – this is our commitment to you, our Gateway Agents. 

Below is a brief list of our accomplishments in 2009 and a look ahead into 2010!

Here were just a few of our Charitable contributions this year…

Golf tournament raised $6,400 for YouthQuest Foundation

We fielded a team for the 5th straight year and walked in the Susan G. Komen Race for the Cure

Nearly $2,000 was collected for Life with Cancer

273 toys were collected at our Breakfast with Santa for Toys for Tots – 5 years running!

 

New Path to Excellence Seminar Series started…

Leadership Seminar

Team Summit

2nd annual Successful Business Planning Retreat

 

Our Distinguished Speaker series blossomed…

Doug Duncan – Chief Economist for Fannie Mae

Steve Fuller, PHD  – Head of GMU Center for Regional Analysis

Dave Stevens – Under Secretary of FHA

America’s Home Rescue, Michael & Stacey Spickes

In addition to these events we experienced…

16 net new agents

Closed our Great Falls location in a cost savings measure…needed to tighten the belt in 2009

Moved Gainesville to more prominent location on first floor

Incorporated training rooms in all offices as trainings became better attended

Received approval for Brambleton office from RE/MAX – office due to open in July of 2010

Scott was elected to the NVAR Board of Directors

Hired a Director of Social Media

Incorporated Social Media in all aspects of the office: Facebook, LinkedIn and Twitter for all offices

Group designations CDPE and CDRS both for short sales and both were excellent in their own ways!

 

As far as the calendar of events for 2010 – here you go!

February 11th Get to know Gateway – Logan’s Fair Lakes

March 12th Paul Muolo: Quarterly Company meeting (not confirmed)

March 19th Golf Tournament

April 21st Gateway Awards Night

May 12th Team Summit

June 5th Race for the Cure

June 16th Get to know Gateway – Gueseppi’s in Haymarket

June 18th Quarterly meeting with Amy Crews Cutts

July 17th Company Picnic – Scott’s court

August 4th Leadership Seminar

September 17th Quarterly Meeting

September 22nd Get to know Gateway – TBD Brambleton

October date TBD Flu Clinic

October 22-24th Business Planning Retreat – potentially Kingsmill Resort

November Food Bank Collection due date November 19th

December 3rd Year End Meeting

December 4th Breakfast with Santa for Toys for Tots

December 9th Gateway Christmas Party

As well as all of our other regularly scheduled trainings and Real Estate Exchanges – keep an eye open for your monthly calendar!  You are guaranteed to experience more at RE/MAX Gateway!

Now, go sell something!

 

As the year comes to a close…

Leave a comment

As the year comes to a close, you read, see, and hear a lot of different things about our current real estate market.  In one report you read foreclosures are going to crash on us like a tidal wave and in the next you read that foreclosure filings are down 4 straight months in a row.  You hear that new home sales are skyrocketing as are their prices as buyers are flocking to new home sites because they are sick of losing out on multiple contracts in the resale market yet builder confidence is down to its lowest level ever in another article you read. 

As you can tell, there are mixed messages in the media which is makes it easy to understand why the consumer is so unsure of what is happening out there in the market and as a result, they are sitting on the sidelines.  It is my belief that you can also poll agents and you will get similar mixed messages.  Where you stand on your beliefs about the market is in direct proportion to how involved you are in the business and whom you speak with on a regular basis.  If you aren’t out showing properties, speaking with lenders, new home sales agents, other active agents (those listing and selling homes, not talking about selling homes), and even title companies who are closing sales – you are most likely getting your information from elsewhere.  The elsewhere is the media, out of touch lenders, unproductive agents, non producing title companies and wherever else people get their information – neighbors, friends and coworkers.  This elsewhere is typically providing uninformed and negative comments about our market.  My suggestion is for you to get busy and get the facts.  Communicate what is happening in the market and help people make informed decisions on whether now is the right time to buy or sell their home by seeking out the right people and getting the right information.  If you aren’t out working the business, you won’t be able to communicate the accurate message to your clients. 

He is a perfect example.  I was on a listing appointment yesterday afternoon and after laying out the market conditions to our new clients they asked me if now was a good time to sell?  My answer was yes.  Why?  There are buyers out in our market, the homebuyer tax credit has been extended as well as expanded, mortgage interest rates are low – albeit slightly on the rise recently- inventory levels are low, they have equity and they can take advantage of the market as buyers as prices are more affordable than over the last few years.  The one caveat, they had to price their house to sell.  Our market is extremely price sensitive today.  Buyers are looking for bargains – not houses that are priced right.  As a result, they have decided to price the property to get it sold after finding a home in Florida they feel comfortable living in there.  Proper education, given in the right way based upon experience helped me help them.

So, what is your action item?  Do your own research, write your own blog, call your people, communicate your message through what you have learned by speaking with productive, educated, active agents, new home sales agents, lenders, and title companies.  Do your due diligence on the market by previewing houses – be observant as you drive to these homes.  Do you see abandoned properties?  Are there homes in total disrepair you notice as you drive around?  Are there many for sale signs?  Make a mental note that will help you tell the story about our market.  Remember, real estate is local and the media portrays national news and trends.  My advice is to get busy getting educated.  Get it?  Got it?  Good!

 

 

3 website links you’ll want to keep!

Leave a comment

At today's training in our Chantilly office, we discussed the real estate market and how sales and inventory levels remain low. Additionally, we talked about credit scores with Mike McNamara with United One Resources.  In this conversation, he had these 3 great websites we wanted to share with you.

www.annualcreditreport.com (free annual credit report)


www.optoutprescreen.com (to remove yourself from pre-approval   credit card offers)


www.gethuman.com  (avoid automated calls)

Scott also presented his Top 10 Predictions for the 2010 Real Estate market…check them out!

Scott’s Top 10 & Market Update

Leave a comment

Last year the 2009 predictions were that foreclosures would slow, loan modifications would be more acceptable to banks, adjustable rates will go lower as the Fed continues to lower its rates….conventional arms did not go down…new home sales flat…wrong, prices came down, new home sales went up, builders did consolidate offices, etc. most builders are not doing design centers, but back in basements selling like they use today, more offices will consolidate and merge..Yes. More agents will leave the business…that is correct…88% renewal rate in 2009, 9200 agents at NVAR now, down from 11,000. Prices did not remain stable, but Gateway did grown and expand.

So he was 8 out of 10, so that’s not so bad.

This year, Scott’s predictions are…

House values stable below $400,000. More people are saving and not planning on moving unless they have to. More agents will leave the business as it becomes more specialized. If you don’t know the process, ex. Short sales, they will exit the business.  Foreclosure activity will increase, but anything that comes up will be absorbed quickly due to the pent up demand. It will increase, but there won’t be a huge influx of properties coming on the market. They are getting absorbed if they are priced right according to Kent Eley.

Short sale inventory will greater than foreclosure activity. You have to get your head out of the sand and do them and not avoid them. It’s the nature of the business.

More will go “green”. Get your green designation today. More real estate offices will merge or close their doors especially the boutique businesses.

Unemployment should rise through late in the third quarter…it has to get better at some point. We might lose or gain some, but should stay at half of where we are nationally.

Social media…get on board.

Videos….they are the wave of the future.  They will replace virtual tours. Get a recorder and get on it.

Interest rates will rise due to the government backing out of MBS.

Prepare for what the future might bring, so you can act today for what might come going forward. Get into the mindset and prepare for it so when it happens you aren’t shocked or unprepared to handle it.

Who buys the MBS after the government? Foreign investors, big banks with large deposits are hopefully going to step up.  Why then? Government is buying and the yield spread isn’t there. Once they stop, the yield spread will increase and be more attractive to investors and banks to buy at that time.

Rate change…1 ½ percent increase…think Dave Stevens was right, probably won’t go straight up immediately, but it will get there.

Price drops…10% nationally, active properties on the market, less than 1%. 

Spencer….expecting drop as bad as 10% , increase of rates, end of tax credit, etc. first time home buyers and investors are driving the market right now that’s why they are thinking that 10% drop in price is accurate.

Chris…unemployment is going to be huge. People aren’t going to be moving due to no job, etc. economy is expanding, but until unemployment starts to change, nothing will change. No money to buys, etc. not below 9%. If healthcare is passed, it will be an even lower number.

Spencer…references Steve Fuller….lost more entry level jobs, builders are buying land, if the builders start building, then those jobs will be taken.

Brett… builders are building spec and they are going fast…can’t build fast enough. That’s a plus.

Scott…ex. 13 out of 36 houses since March, Camberly homes has sold in the $1.3 million price range.  Winchester is selling (4 sold so far) in Brambleton off of a model the same as model they are in and the people cannot see the lots.  Can’t see them, to them or feel them but people are still buying them. They are even seeing a house that they aren’t going to build on those lots.  Many similar sales situations to South Riding in the late 90’s are.  People bought without knowing the lot configuration with utility easements, etc.

Spencer…condos and FHA approval.  If they are approved…they will sell like hotcakes.   No more spot approvals on condos make approved projects more valuable.  Need to know and keep up with ever changing rules and regulations with FHA.

What is the target market for next year?  First time buyers but how many are there out there?  Investors – maybe.  What we really need is move up buyers…need to get consumer confidence back and the only way to do that is to get jobs back.  Question I –  how do we do that?  Many jobs won’t be replaced.  The term “jobless” recovery is too tough to happen or sustain.  Consumer confidence won’t come back until jobs come back.

Appraisal issues are still out there – not as bad as they were 6 months ago.  Must meet appraiser at property to avoid problems – bring comps, survey, home pricing wizard information, and feedback from agent

Fairfax County is going after flippers – making post inspections of properties, giving current owners amnesty and do inspections to see what improvements have been made to see if they pulled permits and did to code.  Somehow they will go after them for not “playing by the rules”.

Conversations with Dave Stevens from FHA

Leave a comment

Profile[1].stevens

At RE/MAX Gateway, we strive to bring the most current information and speakers to our agents enabling them to rise above our competition.  This past Friday was no different.  Our office of just 90 agents was able to secure the Commissioner of FHA to speak one on one with me and answer all of our agent’s questions – as candidly as he could – and took nearly 2 hours out of his busy schedule help us understand the role of FHA and the direction it is headed to aid in our economic recovery.  As we sat down with Dave Stevensfrom FHA, we thought we would share some highlights from our conversation.

· Where do you get your info?  There is no number one source, market data is complied on a weekly basis.  His belief is that Realtytrac has ineffective data and their foreclosure numbers are way off. NAR’s numbers aren’t accurate either, so FHA scrubs data from different sources. SIFMAis one of those sources (a bond tracking market group on Wall Street that reviews mortgage data). Looking at bonds reflects mortgages that are securitized, they won’t count any other mortgages that aren’t securitized. The majority of mortgages are securitized with Fannie Mae as the servicer for all Fannie and Freddie loans. As a part of Dave’s plan, he wants to have more numbers up on the HUD website for everyone to see and use.  

· Information for policy changes depends on the policy. For RESPA, that change started in 2005 and took until 2010 to be complete, pass and get out to the public.  Sometimes they can happen more quickly as is the case with mortgagee letters.

· We have been reading about upcoming changes for mortgage brokers, what will these changes reflect? Lenders will need to be directly responsible to FHA for the loans they underwrite for brokers.  As it stands today, lenders have different guidelines for loans they originate for themselves and others that they originate for brokers.  So, at this time, brokers don’t underwrite or fund loan their own loans and therefore if someone defaults, it is on the US taxpayer to foot the bill on the defaults for loans they originate.  Today the guidelines to be FHA approved are:  a broker only needs $250,000 in net assets; only $67,000 needs to be in tangible assets; of the $67,000 only 20% of theses tangible assets need to be in cash – only $13,400. This change was proposed because brokers can’t back the loans they are originating, so when goes into default, who do they go after?  The taxpayer.  FHA wants to make sure that they can stand up to what the loans they are generating. 

· The world has no faith in our mortgage system right now. The Bank of China was the largest buyer of MBS (mortgage backed securities); basically they were buying our debt. The government had to step in and start buying because China has lost their faith in our system and stopped buying them.  They got burned from the foreclosures so many people had from the loose underwriting policies of lenders.  Not everyone should be a home owner – some need to be renters.

· So what are some other policy changes on the horizon at FHA?  Some noted changes that we will see in the coming months are…

o   Currently, the Streamline Refinance will allow you to refinance and give you a new fixed rate, no questions asked. No appraisal, no credit check and at 105% loan to value. In January, streamlined FHA Refinance’s will be full document loans with appraisals, etc. One of the reasons behind this is because a company, Fortress bought MBS and bought distressed assets, got them to perform, turned them into FHA loans, then streamline refinanced them and then went into default – with no recourse. Now, one true streamline refinance is left. It’s a refinance from balance to balance where the owner pays closing costs, etc. and it will stay in effect for a while. All other refinances through FHA will be subject to full document review.

o   Appraisals will see a new policy which takes the good parts of HVCC (House Values Code of Conduct) to create a new model. FHA would like to see more arms length transactions.   They are going to discontinue allowing the lender to order the appraisal because FHA feels they are too involved in the transaction as it is.  FHA is also working on shortening the term of getting another appraisal if a contract falls through and a new buyer purchases that home.  The new buyer will be assigned a new FHA case number and would not have to utilize the first appraisal.  Going forward, they would be able to get a new number and appraisal even if it’s within that 6 month window that is currently in place. Also, FHA is not mandating that lenders use an AMC (Appraisal Management Company) just the originator and appraiser cannot speak.  The lender could designate someone in their office to order the appraisals and that is acceptable with FHA. Additionally, the appraiser must know the local market in which they appraise.   There will not be a required mile radius for appraisers because of rural areas vs. suburban areas.  As agents we will also be able to deal with appraisal issues through dispute resolution which can be an issue for lenders who send appraisers without local knowledge and could result in litigation.

o   The capital reserves required for lenders to indemnify loans (loan loss) will go up to one million dollars immediately! Then $2.5 million in 2 years.  Again, 20% of that number has to be in tangible capital and even that number might change.  FHA wants lenders to have more skin in the game.  There will be more changes to come from Fannie, Freddie, etc. and for lenders who can participate with these programs will have to be more legit and have more money.

o   Brokers are not going to be approved by FHA.  They have no ability to pay for loans they originate that go into default. 

o   For Short sales, the Treasury Department and HUD have created a new process and it will take some time to figure it all out. There is a lot of concern with flips, unfair advantages of the system, etc.  These new guidelines roll out April 5th.  Dave is meeting with servicers on Monday to discuss these guidelines.  As we know, the government is pushing for loan modification.  Going forward, FHA will publish a scorecard monthly on how lenders are doing with loan modifications.  FHA is very concerned about moving distressed properties off the market while their main concern is keeping people in their homes.  Short sales guidelines discussion started in July.  FHA felt that we put too many people in houses who couldn’t afford them, now they have to do something to fix it.  Not every bank will sign up for the new program.  To see who is participating, a list of the banks that will be uploaded on the HAMP website.  A couple of large banks refuse to participate and they didn’t take tarp money, so there is nothing FHA can do to make them abide by the guidelines.  

We have heard about some policy changes at Fannie such as the increase in minimum credit scores and lower debt to income ratios, can you speak to these changes?

· Fannie is going to 640 min credit scores and FHA is going to follow suit shortly more than likely.

· 18% of borrowers with FHA loans are in default and FHA feels that raising the FICOscore will lower that default rate.  As of the beginning of 2009, the average FICO score of an FHA borrower is 693 and virtually none of those borrowers are in default. The previous problems in 2004-2008 was in the down payment assistance programs which caused $10.4 billion in losses going forward…it was a disaster. 

If 2009 programs are working, then why change now?

· FHA forecasters are concerned about a double dip in home prices. Home price forecasts that at a minimum there will be another 9-10% drop in home prices through the first quarter of 2010…nationwide. They are looking at current unemployment trends as a huge factor in determining this drop.  It has been forecasted to remain high and as such, we are looking at a jobless recovery. Surprisingly, 2009 has been the best quality book (year economically overall) in a long time.

· Scenario forecasting in a jobless recovery shows that you won’t get the home appreciation rates that you normally would. Growth is predicted at .7% over the inflation rate which is very low and will take several years to have housing prices come back to the levels they are today. They are looking for ways to make it work to avoid another bailout.

· The real estate industry will be a better industry once it’s all done with better lenders in business.  FHA is looking at the rent vs. own index, MSA (Metropolitan Service Area) by MSA, borrower behavior, etc. in order to make cautious decisions as we bottom out and experience a  slow recovery.  Some factors, if not approached soon enough, could have us go into a recession again.

So what’s next – with the extended tax credit, no more government purchase of MBS, there will be a raise in rates, fewer first time home buyers, and then a predicted foreclosure release in the second quarter of 2010?

· Dave said there is an expected ¾ to 1 ½ point rate increase when the Fed backs out of the market (the Fed has already spent $1 trillion and has committed to spend a total of $1.4 trillion).  At this time the government is not buying Ginnie Mae MBS as they are selling verywell in foreign markets. China continues to waitand doesn’t want to start buying again until we decide what we are going to do with Fannie and Freddie. If the government doesn’t continue to purchase MBS, then the MBS will become worthless.  Banks who have huge deposits with no loan demand and may possibly start buying MBS to offset their deposits.  When the Fed pulls out, we will feel an immediate effect of an increase that is expected to be 300-600 basis points above current interest rates which equates to .75% to 1½% in rate increase.

· Before the Fed bought MBS, rates were up 1 ½% above where they are today , so they think that will be the premium to get investors to start purchasing MBS. Currently, we are totally dependent on foreign capital to keep our housing market afloat and America is bankrupt in that department.

· The tax credit is the single biggest expense of the government.  The government stimulus is an artificial growth for the economy.  A lot of people in the government want out of helping the housing market.  They feel they have done enough.  By slowly pulling out of purchasing MBS and discontinuing the tax credit, the housing market should be able to sustain itself.

· If the Chinese economy starts to take a downturn, the first asset they are likely to sell will be US Treasuries and then we’ll really feel it because currently they are the largest buyer of US Treasuries!

· There is a legislative cap of $1.4 trillion for the rest of MBS that the government will buy and they might hit that cap before the program is phased out.  

· So Dave’s advice for Realtors is to be prepared and look forward for what is going to happen, keep growing, invest in your business, get back to basics, don’t deal with uncontrollable and drive forward.

· The government has no money, social security will run out on paper, but the money is already spent. In order to buy these MBS, they have to sell debt; the more debt auctions will drive prices up, so have to drop the price for debts and treasuries which would almost equal the cost for the debt. The spread will have to be there or it’s not good for taxpayer.

· Dave’s big concern is about the disadvantaged as well as sustaining safe housing for all.

· FHA’s HAMP loan modification program, where they tack the excess loan balance due to the back of loan and adjust the payment to a level to a level they can afford, has a 96.6% success rate for no defaults. The majority of the distressed market is due to cultural and language barriers. Dave’s asked for a budget of $75 million for next year to add more counseling services in distressed communities.

· Hardship will be a big factor in the new short sales guidelines. Too many people are taking advantage of the process which is a moral hazard.

· Condo approvals will be more stringent. They will have a permanent policy in place soon and currently have a temporary policy in place.

In closing….

FHA needs to back out of the market and get back to why it was created; Freddie and Fannie can’t be government owned forever and a lot of work has to be done in the process.

Anyone who predicts the future is wrong, homeownership=community stability.  Agents are the key to this recovery. They did it all wrong and the only way to get out is with the real estate agent.

We need to get faith back in the system. Safe act for loan officers, RESPA changes, etc. are just the beginning of the changes that have to take place to stabilize the industry.  

Finally, be excited about the work you do and remember, you are key to the economic recovery.

The Market from ALL Angles

Leave a comment

Another successful RE/MAX Gateway Real Estate Exchange

 

I was at a lunch with business leaders across the Washington Metropolitan Area and we discussed various challenges we were having within our businesses and what our opinions were on what was to happen going forward into 2010 – here is what we discussed:

 

First and foremost, everyone is blessed to be in DC – others around the country are bleak with no hope. 

 

  • People at Rosenthal Automotive are concerned about economy
    • November was a really bad month for car sales – feels like November in first two days of December

 

  • Mike Jacoby at Broad Street says the commercial real estate market is flat and will stay there for the next few years.  One bright spot is that the Route 28 corridor’s vacancy rate had dipped.

 

  • Johnson and Strachan, the insurance company is taking a hit because of the following areas:
    • Renewals / expiration vales are down – payrolls are down, valuations on companies are down, house values are down so their revenues as a result are down. 

 

  • UBT – a copier sales and service team say in their opinion the economy is flat/stable – not terrific just like their business but they expect slight growth anticipated in 2010

 

  • Roofers are on a roller coaster this year but will probably be down at year end – the market is a race to the bottom in pricing but they remain cautiously optimistic.  John Francis on NVRoofing believes it will be a long recovery over the next 5 years. 

 

  • Jeff Nay of Sandler Training say there is still a lot of business is out there – need better skills and better systems to eat others lunches today.  Get educated and trained and you will survive in today’s market – especially in D.C.

 

  • Derek Coburn of Washington Financial Group who specialize in wealth management – money is in Bonds – not Stocks right now they are not afraid the market will crash and that the market will come down.

 

  • RE/MAX Gateway spoke about the following topics:
    • Inventory is down
    • Buyers are there but $$ are down or flat
    • Tax Credit for Home Buyers was extended
    • MBS end in March
    • HVCC is keeping $$$ down
    • Foreclosures are hitting market 2nd Quarter of next year
    • FHA raising down payment requirements this year from 3% – 3.5% and perhaps to 5% down next year
    • Credit is tightening up
    • If we continue to lose jobs it’s important to keep in mind that every 6 job lose results on 1 foreclosure.

 

Next year will be an interesting year in residential real estate with the Government getting out of purchasing Mortgage Backed Securities, the Home Buyer Tax Credit ending, and a supposed flood of foreclosures coming on the market the second quarter next year and the impact that will have on housing prices.  Stay tuned!

 

We then introduced Keith Barrett of Champion Title & Settlements, Inc. to discuss the new regulations going into effect April 5, 2010.

 

General Short Sale Guidelines under HAFA

 

Overview

 

Eligibility for Home Affordable Modification Program (HAMP):

1. Property is borrower’s principal residence

2. First lien mortgage originated on or before Jan 1, 2009

3. Mortgage is delinquent or reasonably foreseeable

4. Unpaid principal balance less than 729, 750

5. Mortgage payment exceeds 31% of gross income

 

Not guaranteed but must be in place

 

In the event modification process above does not work out, every potentially eligible borrower must be considered for Home Affordable Foreclosure Alternative (HAFA)

 

The percentages of loan modifications that default are greater than successes where people remain in their homes – there is a huge opportunity here folks!!

 

General Information:

 

Effective date April 5, 2010

 

Servicers must execute participation agreement for non-GSE Mortgages prior to end of the year.  If already participating, must follow HAFA guidelines.

 

Servicer has 30 days to contact borrower regarding short sale or deed in lieu

 

Borrower then has 14 days to respond

 

Prohibits servicer from reducing commission as stated in listing agreement

 

Doesn’t protect settlement companies and their fees – it’s unfortunate.

 

Suspension of foreclosure while under consideration for short sale

 

Short Sale Agreement under HAFA:

 

Termination date of not less than 120 calendar days after agreement signed

 

Agreement is available on line

 

Release of liability for borrower for cancellation of default

 

Allowable transaction costs

 

Roles and responsibilities of servicer and borrower, upkeep of property, pay a portion of their monthly payment until closing.

 

Borrow must submit offer/request for short sale approval within 3 days of receipt. Servicer has 10 business days to approve/deny short sale from when contract and request for short sale approval submitted. At this time, we are not aware of any penalties given if there is no response by bank by the deadline.

 

Incentives:

 

$1500.00 for relocation expenses paid to borrower

 

$1000.00 paid to servicer

 

Investor paid $1000.00 for allowing up to $3000.00 to be paid to subordinate lien holder, which lien holder must forgive the debt and release liability

 

Again, there is opportunity here – don’t miss out!

 

We had discussed if the government had given everyone $100,000.00 vs. bailing out everyone would be in a better position today versus the situation we are in today with all of the debt the government is in.

 

Inventory levels continue to shrink:

5,074 Active resales in Northern Virginia

1.9 month supply of homes

1.9 month supply of rentals

 

Our market is strong for sellers with equity!  Get them on the market today.  Get it?  Got it?  Good!

 

Now, go sell something!

A Perfect Storm

Leave a comment

I was
recently interviewed for the Washington Examiner newspaper about the extension of the tax credit of home
buyers – here is a synopsis of our discussion:

 

The
extension of the home buyer tax credit will definitely spur housing sales and
here’s why.  It brings into play move up buyers as well as extends the
first time buyer credit.  On the move up buyer side, you have to have
owned and lived in your principal residence 5 consecutive years out of the last
8 years to qualify but it will bring “new” buyers into our market place. 
Over the last year, we have seen little move up buyers as a result of lost
equity; uncertainty of perceived value in the market as a result of
foreclosures and short sales, and consumer confidence has been low because of
reports on unemployment and news on the recession.  Therefore, our market
has been primarily first time buyers and investors with a few relocation buyers
and even fewer move up buyers thrown into the mix.  It is a matter of
education on the REALTOR’s part as well as the media to get the word out on to
our move up market on what an advantage this is to them and why they should
jump on this tax credit.  We have a perfect storm for buying real estate
right now – the tax credit, historically low rates, and prices are affordable
in many areas – especially in the move up buyer price range.  There are a
few restrictions that apply but not many.  The purchase of the new home
must be a principal residence that would qualify for the capital gain tax
exclusion of $250,000 for singles and $500,000 for married people
definition;  the purchaser’s income cannot exceed $125,000 for individuals
and $225,000 for a couple filing jointly on their tax returns; the home’s
purchase price cannot exceed $800,000 and the tax credit is equal to 10% of the
purchase price up to $6,500; you cannot purchase the new residence from a
family member;  the tax may have to be repaid if you sell the acquired
property or cease to use it as your principal residence in less than three
years of acquiring the property; and lastly, it is for contracts written
between November 9, 2009 and April 30, 2010 that must close by June 30,
2010.  The contract and settlement dates will also help builders or people
who wish to build on land they already own if people react quickly as most
builders don’t have inventory/spec houses available and the typical timeframe
to build locally is 4 – 6 months.

 

The
extension of the first time buyer tax credit has been modified slightly but it
is for the better.  The main difference of the previous tax credit and the
new one is the income qualifications – they have been increased to $125,000 for
singles and $225,000 for married couples.  The tax credit is 10% of the
purchase price up to $8,000 so it applies to homes purchased up to
$800,000.  The tax credit applies to homes that are purchased between
January 1, 2009 and April 30, 2010 and they too must settle by June 30,
2010.  There is no repayment of the credit unless you sell with three years
or cease to use the property as your principal residence within the three year
time frame.  If you purchase in DC, you can only use the tax credit and
cannot piggy back the with the District’s first time buyer tax credit –
sorry!  As a clarification, a first time buyer is anyone – including
spouses – who have not owned a principal residence in the previous 3 years.

 

In both
instances, buyers may claim their credit on their tax returns by filling out
IRS form 5405 and documenting the appropriate deductible amount on line 69 of
the 1040 for 2009 tax returns or line 67 for 2008 tax returns.  They must
also provide a copy of the HUD – 1 form proving the completed purchase within
the appropriate timeframes allotted by the guidelines.  Additionally, the
homes purchased must be a principal residence and do not apply to investment
properties or second homes.

 

Today,
our biggest challenge is inventory.  As an example, inventory levels of
existing homes are down 57% from the same week last year in Northern
Virginia.  Our inventory levels are at April/May of 2005
levels– lots of buyers and not many homes to choose from make buying a home
tough in today’s market.  The reasons for the number of buyers in the
market match the aforementioned perfect storm for home buying – the tax credit,
low rates, and affordable housing prices.  We expect the credit to
continue to encourage buyers to enter the housing market through the extension
dates, then the typical spring market should take hold and the housing industry
will help carry us further out of the recession if conditions remain
stable.  There are questions lurking on the horizon in the housing market
that question stability – not everything may be so rosy.  The uncertainty
is over; rate constancy after the government purchasing of mortgage backed
securities ends at the end of March, 2010 and housing prices being suppressed
by the implementation of the HVCC and lastly, the effect of foreclosures moving
forward on housing prices.

 

It is our
job to get the word out and help our clients take advantage of this
unprecedented opportunity.  Get it?  Got it? 
Good!

 

Now, go
sell something!

Where are we today in Residential Real Estate?

Leave a comment

Existing home sales were up 10% in October over last year’s
sales pace.  Why?  One of the main reasons is that prices are
down.   In many price points and
locations, prices are slowly increasing but in others, they continue to
fall.  In a recent poll by Zillow, home owners responded to a question
asking about their property values…here are their answers:  26% thought their property values went
up;  25% thought their value had remained
unchanged and 49% thought their values went down.  Well, the truth of the matter is that 72% of
the country has lost value in their homes this year and only 18% had seen an
increase.  Unfortunately, as we all know,
perception isn’t reality – too bad for us. 
Why are we having value issues? 
As we have discussed in the past, a lot of the problems stem from the
Home Valuation Code of Conduct and the ramifications it has had on our
appraisals lately – let’s hope this gets reversed soon!  Another reason for the increase in sales is
interest rates.  Rates are at historic
lows and have been for several months. And lastly, the first time home buyer tax credit and the subsequent
extension has generated additional sales. 
The extension of the credit also includes a component where home owners
who have been in their principal residence greater than 5 years can sell and
move into another principal residence and receive a $6,500 tax credit under
certain conditions.  See the link above
for additional details.

So, you ask, what does this mean to me?  Well, you need to get busy finding first time
buyers and move up buyers who have been in their homes for more than 5 years!  You need to become proactive and seek out
people wanting to be educated on the market and take advantage of the
opportunity available to them.  Why?  If you aren’t being proactive and you are
sitting back waiting for people to come to you or you are lucky enough to be in
the situation where you are taking orders – like many did from 2003-2006 – you
will be out of business in 2011!  History
repeats itself as we all know.  Don’t sit
back and wait for it to happen – make it happen.  Get it? 
Got it?  Good!

Now, go sell something!

Numbers, Short Sales and Taxation…oh my!!!

Leave a comment

ScottsCam 001

Wow!  Lots of great info was shared today at training
– numbers, top ten questions ready to be answered, short sales in any market
and then Aronson & Company notes on taxation of debt forgiveness.

 

Numbers (in Northern Virginia)

 

  • Active (Sales)                                      5414
  • Vacant                                                 1597
  • % of Market                                         29.5%
  • Month Supply (For Sale)                      1.8
  • Month Supply (For Rent)                     2.2
  • Month Supply Sold                              2.1

 

 

Top Ten Questions – ready
to be answered!

 

  1. Is the housing market getting better?
  2. When will housing bottom out?
  3. What signals should I watch to determine
    whether my local market is improving?
  4. How can I figure out the value of my home?
  5. Does it matter whether I’m ‘under water’?
  6. If I lose my home to foreclosure, how long
    will it take to repair my credit record?
  7. If I’m renting, is now a good time to buy a
    house?
  8. Can I get a tax credit if I buy a home now?
  9. Can I get a mortgage on attractive terms?
  10. Should I invest in foreclosed homes?

 

 

Aronson & Company
Notes

 

·       
Cancellation
of debt is a taxable event

·       
Bankruptcy
does protect from tax liability from a tax liability that occurred prior to
bankruptcy.

·       
Deed in Lieu
of Foreclosure – similar to short sale – selling to third party with bank’s
approval. 

·       
Loan
Modifications can also result in cancellation of debt and the modifier may
receive a 1099 from the lender – be aware this is could possibly happen!

·       
The discharge
of acquisition debt secured by the taxpayer’s principal residence is excluded
from income up to $2,000,000 until December 31, 2012.  This date is subject to change.


For a complete chart of
the implications of the Taxation of Debt Forgiveness handout we received call
or email me and we will get it to you. 
As is always the case – you learn more by listening, taking notes and
reading the materials than you do by reading my synopsis – get to training
yourself to internalize it more!  Get
it?  Got it?  Good!

 

Now, go sell something!

It’s all about continuous improvement!

Leave a comment

Continuous improvement is a critical piece of the puzzle when putting together a successful career.  To be the best in any field, it requires practice, education, training/coaching and participation.  Let’s take a quick look at Tiger Woods.  Without question, he is the best in his field today.  Does he practice golf?  Does he study the golf course he is going to play and visualize each shot on the course?  Does he train and have a coach or multiple coaches? And does he go out and play or just sit back and watch?  I think we all know the answers to the questions.  If you want to be the best, why aren’t you doing what it takes?  Why do you only go half way?  Continuous improvement means you take risks, make mistakes and then learn and grow from those mistakes.

In order to determine where you need to improve, you must first analyze where you are today.  How is your business?  How are your marketing efforts?  What is your ideal client? How is your prospecting?  How is your follow up?  How are your results?  How is your knowledge of our business? How are your systems?  By careful, through thoughtful analysis of these areas, you can determine how, if you pay a little attention to what you can do to improve yourself and your business.

When looking at your business, are you working “on” your business or are you working “in” your business?  Do you study trends?  Meet with other industry experts?  Review and revise your business plan?  Do you educate yourself on what is currently happening in the marketplace?  Are you obtaining designations?  Are you involved in your association and hear different points of view on what is happening in the industry?  Do you have the right team members and are they in the right job to ensure your success?  Take a look and see where you can improve on your business.

Where are your marketing efforts, marketing dollars and time going and are you seeing results?  How do you know if you are getting results?  What tracking systems do you have in place?  Have you researched other advertising venues?  The question is – are you a secret agent?  Make yourself known in the market but do it wisely and inexpensively!

Have you determined who your ideal client is for you and your business?  Are you spending time or better yet, wasting time with people who don’t fit your profile?  If you are – why?  By working with those outside of your parameters can cause frustration, higher stress levels and drain your energy.  If people won’t help themselves, why should you help them?  Take the time to define your ideal client then spend your time finding and helping them.  You will be much happier and have more energy when working with them and your business will prosper.

We just hit on finding your ideal client so let’s review your prospecting strategies.  How are your sphere contacts?  How often are you communicating with them?  How are you communicating with them?  How are you building your database?  How broad is your database?  How are your networking skills?  Are you referring prior to asking to be referred?  Are you getting out in front of clients or are you hiding behind your desk either at home or in the office?

How do you measure results?  Is it number of leads?  Sales?  Hours worked?  Your pay per hour?  Have you analyzed and determined if you are getting the results you desire?

How is your education?  How is your knowledge of the contract?  The listing agreement?  Can you recite each paragraph and reference its number without having to see it?  Do you know what the right advice is to give your clients based upon how the contracts read?  What addendums are you using and are you intimately familiar with what they mean?  Are you obtaining designations in areas of our business that will help your clients buy and sell real estate in areas like distressed properties, green designations or with your Accredited Buyer Representation designation?  Are you attending training?  Seminars?  Are you building your educational base to help your clients?  You’ve got to learn more to earn more!

If you continuously improve in each of these areas – consistently – you will get results and obtain the success in our business you desire.  Get it?  Got it?  Good!

Now, go sell something!