homes for sale

D-I-S-C-I-P-L-I-N-E

Leave a comment

Recently we discussed change and in my opinion, one of the key ingredients to true change is discipline. Discipline is defined as conscious control over lifestyle – mental self-control used in directing or changing behavior, learning something, or training for something.  Here is a breakdown of discipline to help you continue down the path or perhaps blaze a new trail to incorporate this quality characteristic into your daily habits.

Desire – you must want what you have written or listed as your goal or objective.

Initiate – you must initate the proper behaviors or changes into your life.

Sacrifices – you must realize there are sacrifices necessary to implement in your life to achieve success.

Commit – you must commit to the changes you desire and stick with them to get the results you want.

Intentional – your actions must be intentional towards your new behavior and away from the old in order for true change to occur in your life.

Passion – you must have passion to achieve what lifestyle change you are implementing into your routine.

Learn – you must learn to accept the challenges you will face and fight through the “pain” of old habits.

Inspire – reward your new behavior to inspire yourself to stay on course and in the process, perhaps you will inspire others to do the same!

Numbers – it starts with small incremental changes, one by one that will add up to huge results.  As the saying goes, you eat an elephant one bite at a time.

Excellence – is what you will achieve if you stick with your plan of action through discipline.

In order to effectively implement change in your life, you must embrace discipline.  By writing your goals down, it will help you have focus, desire and the will to achieve, which will result in discipline becoming easier for you.  Remember, it all starts within you.  Get it?  Got it?  Good!

What are your daily habits?

Leave a comment

As I read John Wooden’s latest book – A Game Plan for Life – and review the habits his father had passed on to him through his mentorship, it got me thinking…what can I pass along to my children and those I encounter.  Here is what I discovered are my daily habits:

1. Always do your best…

2. Always do the right thing…

3. Always strive to learn something from every situation…

4. Be a continuous learner…

5. Always give back…

6. Live with passion and optimism…

7. Be strategic – in your life and in your relationships…

8. Be respectful and kind…

9. Have fun…

10.       Live your life to the fullest…

It is important in life to have your list of daily habits to improve yourself and the quality of your interactions.  Just a little food for thought as you set your New Year’s resolutions.

We are here to help you have a successful 2010.  Get it?  Got it?  Good!

Now, go sell something!

Still going strong…

Leave a comment

The market continues be strong for sellers looking to move up or move out!  Existing home sales spiked in October and November to the highest level since February of 2007.  Buyers are out in full force looking to take advantage of low rates, low prices and the tax credits that are available – there hasn’t been a better time in recent memory to take advantage of the real estate market!  Our biggest challenge today is inventory.  Our existing home inventory is at the lowest level since April of 2005.

Even with this outstanding news, it is critical to realize that it our market remains extremely price sensitive.  This means properties must be priced right, must be in the right condition and must show well (staged) if you expect to sell instead of just being for sale.  Buyers recognize when houses have a perceived value and are acting quickly when homes fall within this category.  If houses are priced at market value or a little high – they will collect days on market and help the other houses sell faster.  To assist our buyers and sellers determine if properties are priced properly we have developed a unique pricing model – The Home Pricing Wizard. It takes asking prices, under contract prices, sold prices, square footage prices, tax assessments and market trends to determine the right price for a home.   If you would like to learn more about our system or to see where the Wizard prices your home, feel free to call us today.

You still notice some reports out there that are casting a negative light on the housing market.  What you need to realize is that the news you see, read and hear is national news and not necessarily local.  As we have been telling you for years, real estate is local and even in some cases – hyperlocal.  However, some national news that may be of consequence to us and may affect our area is the mortgage delinquencies and how they are on the rise with “prime” borrowers.  This scenario is going to lead to our next wave of foreclosures both nationally and locally and will affect many in our area over the next few years.  Borrowers who have ARM’s that are set to readjust are most likely to be affected as they are unable to refinance due to declining housing values or they cannot afford the newly adjusted payments.  Keep your eyes and ears open and look for news on this as it will impact our market.

Again it’s a great time to buy or sell a home today.  Our team of knowledgeable and professional agents are happy to help you negotiate the best deal whether you are buying or selling a house in this competitive market.  Call us today!

The Numbers tell the Story

Leave a comment

As many of you know – and as my DISC profile told me Friday – I like numbers to support my case.  Well, the numbers I am going to share with you are facts you need to know to help you in your business and show us trends in the business:

 

33% of agents have been licensed fewer than 5 years – just 2.5 years ago at the RE/MAX Broker/Owner Convention, that number was 59%!  In my predictions for 2010 I believe we will continue to see even more agents drop out of the business because of the continuous changes that are occurring and the specialization that is required of agents to serve their clientele.

 

53% of agents have been licensed fewer than 10 years – again, from the same conference just 2.5 years ago, it was 78% of agents were licensed fewer than 10 years.  The lower this number goes, the better it is for us ethical and professional agents.

And, in my opinion, you have to own what you sell – 91% of Realtors own a home compared with the national home ownership rate of 67%.

 

In a survey of buyers and sellers this information was gathered…the 3 things buyers want from their agent:

 

1 – Find them the right home to purchase.  Do you know what this means?  You have to listen!  Check out my blog from earlier this week… www.scottymacsblog.com and while you are there, click the RSS feed in the lower right hand corner to subscribe to my blog site please – you don’t know what you are missing if you don’t register!  Oh yeah, it’s free!

 

2 – To negotiate the price.  Quick question…when was the last time you practiced your negotiation skills?  What new techniques have you found valuable?  Have you read any good blogs, books or magazine articles lately about negotiating?

 

3 – To negotiate the terms of the sale.  Hummmm sound familiar to #2?  Are you marketing yourself as a negotiator?  Do you have testimonials to back you up if you do?  When you meet with clients, do you have specific stories that relate to how you negotiated on behalf of a buyer in a particular situation?  Oh, by the way, listening is a huge part of negotiating!

 

Now, here is what the sellers say they want from their agent – see if you realize what is missing:

 

1 – Price the home competitively.  You have to know your comps, market conditions, and trends to know how to price accordingly.  Basically, do in depth research of the market to get it done for you seller.  What are the per square foot prices, pricing trends – are they up or down and how much, the correlation between tax assessed values and sales prices, number of competing properties, average days on market, and where to price it to get maximum exposure while on the market.

 

2 – Sell the home to sell within a specific timeframe.  Again, this requires you to price it to sell and what else?  Get it in the right condition and get it to show well…let’s see what is next!

 

3 – Find a buyer for the home.  Well, what do you need to know to do this?  You have to know where buyers go to find houses…other agents, and the internet.  Basically, you have to market your listings where the buyers go to find them.  Research the sites that get the most exposure, the most hits from buyers, what agents sell the most homes in the price range of the house you are selling, etc.  It’s not rocket science.

 

4 – Market the home to potential buyers.  As previously mentioned – you’ve got to know how to market on the internet – Social Media sites, your website, other real estate related sites, etc.  Also you need to know what they want to see when they get there – multiple pictures and in my opinion, videos.  Pictures and videos of the house, yard, views up and down the street, neighborhood, schools, and shopping centers – get creative!  Also, do your research on MLS and get your listings in front of Realtors who have buyers in your properties price range – get the word out!

 

5 – Find ways to fix up the home to sell it for more.  Have the listing pre-inspected to have the home in the right condition.  When buyers see one thing wrong, they begin to look for more things that are wrong and then pick at the price.  Have the home staged to have your stager recommend low cost items that get the biggest returns for your sellers. 

 

When houses are pre-inspected, staged and priced right – they sell in the timeframe your sellers desire.

 

So you ask, what was missing.  Well, in my opinion – negotiating.  If you can’t negotiate, you can’t get them to price it right or get them to get it in the right condition to sell it in the timeframe they want it sold within.  Also, you have to negotiate with buyers and agents to get your sellers what they want when they want it so learn how to negotiate and market yourself as a negotiator.  Have specific stories that tell sellers what you have done for others to get them what they wanted from the sale of their home.

 

The more you appeal to buyers and sellers through showing your experience in areas that are important to them, the more success you will have in our business.  Get it?  Got it?  Good!

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!

 

 

Do you hear me?

Leave a comment

One of the most critical pieces of the communication process is listening.  To set yourself apart from others and to get further faster, take the time to listen.  Why do people have such difficulty with listening?  First, the mind thinks at about 1,000 words per minute and the average person speaks at 250 words per minute leaving the listener with the opportunity to have their mind wander, become unfocused or more often than not – get ready to say what they want to say next and they stop listening. 

The skills required include discipline, focus, concentration and respect of the other party with whom you are communicating.  The discipline factor includes stopping yourself from thinking of what to say next.  Use the technique of pausing before you speak to slow down the pace of the conversations.  Ask for clarification of what was said.  Rephrase what you believe you heard them say.  Focus on the person you are speaking with.  Look in their eyes, watch their lips, and observe their body language to help you better understand what they are saying.  Concentrate on the speaker and ask if it is OK to take notes so you can be clear on what is being said to you.  Rephrase what you believe was said and ask for clarification of what you repeat is correct.  Respect the other person by watching them when they speak.   It has been said that communication is 7% of what you say, 38% is your body language when you say it and 55% is the tonality which is used to say it.  Therefore, you must be an active participant when listening to others and pay attention to the verbal and non verbal pieces of communication to excel at listening.

Set yourself apart by improving this one piece of the communication puzzle – listening and you will see your business improve.  Get it?  Got it?  Good!

Now, go sell something!

 

 

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.