Real Estate

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!

 

Broken Records

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At times I feel like a broken record – our market is different, we aren’t impacted like the rest of the country, we are seeing houses sell, etc.  Well, it looks like other areas are beginning to experience what we are experiencing here in Northern Virginia.  In a recent article on MSNBC it has been reported that existing home sales are up 3 months in a row – check it out here: http://www.msnbc.msn.com/id/32104105/ns/business-real_estate/from/ET – thanks for sharing Kendall Bennett.  I am not sure if they are experience the number of multiple contract situations we are facing in the lower and upper price ranges like we are, but we will find out.  However, I am sure they are having challenges with HVCC as it is a nationwide problem and they will experience the same problems we will have with H.E.R.A. as well – thanks Mindy Littleton.  Please be sure to review the H.E.R.A. rules to give our clients the right advice with timing on closings with the new rules being implemented July 30. 

 

In addition to the great news on existing home sales, new home starts were revised and reported to be up 3.6% in June over May 2009 numbers to an annualized rate of 562,000 – check it out even though it is a negative in regards to numbers “anticipated” last year: http://www.census.gov/const/newresconst.pdf. It is our hopes – even though hope isn’t a strategy – that with more good news like this, the media will start to report “our story” of success! 

 

The advice for the day is to continue staying positive, find the good in each situation and keep the ball moving down field and you will get the results you are looking to achieve.  Get it?  Got it?  Good!

 

Now, go sell something!

Summertime fun!

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It has been typical to see this time of year slow down in real estate.  Families take vacations, agents take breaks to spend time with their families as kids are out of school, and it is golf season and so many other reasons.  Well, this year is different.  We are busy!  Houses are selling!  The new home market is also on fire. 

This week, I had the opportunity to speak with several different builders.  It was refreshing to hear that their sales have been above expectations and they have met or exceeded business plans for the month and some, even the year.  Some builders are even talking about hiring construction workers as new housing starts up 3.6% in June!  Additionally, in speaking with our friends in the title business, they continue to post strong numbers.  Mortgage rates remain low so as a result – lenders are staying busy.  It is a great time for those who work hard and take the time to educate themselves and their clients to produce results.  We continue to see first time buyers enter the market as the $8,000 tax credit, low rates and low prices help boost sales.  Investors are seeing opportunities as well so they continue to enter the market and contribute to our sales numbers.

Are there challenges?  Absolutely.  We are experiencing issues with appraisals, short sales and lack of inventory.  The question is, when will these issues get resolved?  The HVCC – home value code of conduct – needs to be dissolved.  Appraisers shouldn’t be placed in an Ivory Tower, not held accountable for their actions, and communication between the lender and appraisers should be restored – it is bad policy.  Short sales need to have a streamlined, standard process to get them approved.  If all qualifications for a short sale are met – especially true hardship – they should get approved quickly with no last minute hitches.  As more short sales come on the market, we see longer approval times and/or last minute foreclosures as communication between loss mitigation and REO departments are minimal or nonexistent.  And lastly, people who are considering selling, should do so now to bolster inventory levels.  We are currently at May 2005 levels.  We are seeing multiple contracts across all price points, rates are low, the tax credit is only in effect for limited time, and we don’t know if prices will continue to decline with the HVCC, continued  foreclosures and short sales and if demand will continue to be so strong.  Today is a great time to sell and move up!

Call us today to learn more!  We are here to help!

How to win in multiple short sale/reo contract situations

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Art Grace’s ways to win multiple contracts:

  • Write a perfect contract – it reflects your professionalism.  Put in all details for listing agent on page 10 of contract, dot the i’s and cross the T’s.

  • Be aware of appraisal train wreck ahead

  • Don’t write in “As-is” contract – home inspection for informational purposes only.

  • Read the bank addendum and see if the addendum says you have the right to inspect, or does it allow you to have a home inspection opportunity?

  • Reasonable price is paramount to the bank – don’t make ridiculously high offers – especially with FHA loans or a price you know won’t appraise

  • Submit comparables that will help your offer and appraisal through when you come in high

  • Ask for a repair credit and any balance will be returned to the seller prior to closing – not all banks will approve

  • Fannie Mae will not allow any repairs prior to closing and you cannot obtainFHA financing unless it’s a 203K loan program

  • Have a licensed contractor or home inspector preview property prior to submitting offer – relieves obligation of home inspection contingency

  • Human element of buyers does not impact the sale as much as it does with arms length transactions

  • Don’t make multiple contacts to listing agent – don’t be threatening or confrontational or overbearing.  Listing agent doesn’t hound their asset manager so don’t hassle them.

  • Email is typically the best way to communicate with listing agents

  • Scratch through paragraph 13 on contract removing the right to change financing.

  • Highest and best is still critical – Competence of agent, title, mortgage company in addition to big deposit, quick closing, waving inspections, etc.

  • Write on bank addendums or refer to your client’s addendum on their addendum unless it’s Fannie Mae – they don’t allow you to alter their addendum

  • Watch out for anti-flipping rules in Freddie/Fannie addendum

Short sales

  • Problem #1 – there are too many processes – virtually a process for every agent

  • Ask the listing agent how they are going to handle the process

  • Don’t avoid them – they are everywhere and you can make a lot of money doing them

  • Write into the contract that the seller will only ratify and send one offer to the bank for approval

  • Get written evidence of rejection if seller is truly denied

  • It is not possible for the seller to provide a release of recordable lien in recordable from at the time of settlement-lender always has 90 days – not a “real” clause so strike the sentence in the addendum

Seller side:

  • Get seller in touch with attorney to discuss short sale versus foreclosure and ramifications of bankruptcy

  • Avoid tax consequences by utilizing tax relief act that is in effect until 2012 if it is your principal residence – insolvency exemption as well to relieve tax obligation due to debt relief.  Always have seller consult with tax advisor and attorney first – insolvency exemption can allow investors to sell under a short sale situation

  • Most success in short sales comes when sellers deals with lender directly – agents second – short sale negotiator 3rd (fees can be too high)

All in all, maintain your professionalism and communication with all parties involved in order to ensure a fair shot for your clients.