real estate market

The Market from ALL Angles

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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!

It’s all about continuous improvement!

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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!

It’s time to invest!

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What was the first thought that came into your mind?  Was it about the stock market?  Or was it about buying investment properties?   Perhaps you thought it was getting others to invest in the previous two areas of opportunities.  Now, what do you believe this statement is about?  What does invest mean?  Dictionary.com says it means :

1.

To put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

 

2.

To use (money), as in accumulating something: to invest large sums in books or education.

 

3.

To use, give, or devote (time, talent, etc.), as for a purpose or to achieve something: He invested a lot of time in growing himself personally and professionally.

 Well, taking this into account, my intention was that it is time to invest in yourself and your business.  The top companies in the world invest in their people – you should invest in you as well!  If companies do it, why don’t you?

The real estate market, the economy and your business are not out of the woods yet.  Yes, some aspects of the economy are stabilizing but we have a long way to go – foreclosure numbers, default rates, and unemployment rates (although reported to have slowed) continue to rise.  Therefore, now is the time to invest in your business.  It has become obvious to me that during times like these, many agents get too involved “in” their business when in fact, if they want their business to soar to the next level, they should get involved working “on” their business – today.  It is time to reflect on what is working and what isn’t – where are trends in our area heading – who are key players in the industry and what are they doing – more importantly, what are you doing?  Are you attending training?  If not, why not.  If you are involved in foreclosures, are you going to conferences out of town to meet new people, strategize and get new accounts?  If not, why not?  If you are doing short sales, are you meeting with experts who are experiencing success in the business locally and nationally to learn more about trends and what they are doing to be successful?  If not, why not?  Are you taking advantage of the free educational opportunities your association is making available to you?  If not, why not?  Are you taking advantage of one on one opportunities with your broker, fellow agents or a coaching program to help get through the market we are in and are going to encounter?  Again, if not, why not?

These examples could go on for some time.  It is my belief that you need to get out of your house, get out from behind your desk and educate yourself or else you will be left behind – doing what you’ve always done and get the results you’ve always gotten will not propel you to success.  Times change, programs change, economies fluctuate and you need to as well if you want to succeed now and in the future. 

It is important not to confuse activity with accomplishment.  Determine what you want to accomplish and what you need to do to achieve what you set out to do.  If you get willowed in the mire of day to day activities, put blinders on to what is happening around you,  get out and network with others, and ask yourself how can you accomplish “big” things in your life.  It is my opinion you need to invest in you today.  Attend trainings, get coaching, attend business planning (it’s not too late), get a designation, attend mastermind sessions, go to real estate information exchanges.  Take the time to get educated – NOW!  Get it?  Got it?  Good!

Now go sell something!

An Enlightening Weekend

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As a Realtor, you never know who you will run into to discuss our business.  This weekend was no different for me.  I was invited to attend a political function for an incumbent who is attempting to keep his seat as a delegate for our area.  Of course, Chuck Caputo is the right candidate and the right person for the job and, for our area, we need him to be re-elected.  His views on education, business and transportation for our area far exceed his competitor’s opinions on how to continue to run our region and for us to stay the number one state to do business in 4 years in a row. 

But I digress, at this function I had the opportunity to meet Mark Warner and we discussed our local real estate market.  Our conversation included inventory levels, supply and demand challenges, trends in housing prices, profiles of our purchasers, as well as HVCC and the First Time Buyer $8,000 Tax Credit.  Over the last several years, we have discussed the need to know your numbers, and know the trends in our business and to have them ready to discuss at any time.  As a result of staying abreast in these areas, I was able to accurately convey why we need to address the HVCC issue but more importantly, the need to extend the First Time Buyer Tax Credit.  In our discussion, he told me he was going to vote to extend the credit!  It is a wise decision to keep the housing sector of our economy moving forward and to help continue to bring our country out of the recession.  When it comes to making the right decisions about our economy, we need to knock down political affiliations and work together for the common good.  Get it?  Got it?  Good.

Now, go sell something!

Prince William Listing Exchange

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Jason Smith’s comments:

Inventory levels up slightly but everything else is staying steady so the market is going strong!  We are just under a 2 month supply of houses in

Prince William County.  The active inventory has 36% of the market as distressed sales.  Nationally, inventory levels are up 7.6% in July – here we are down – houses continue to sell which is great news for us.  There was a home with 20 contracts on it in Piedmont priced under $350,000.  It is still a very competitive environment for us in the first time buyer price range.  New construction activity is up as well and KB Homes is coming back to our area – stay tuned on where as we haven’t heard yet.

Loan modifications aren’t working with a majority of the lenders – anywhere.  The push to modify from the government hasn’t yielded results from what we’ve heard. 

There are very few FSBO’s on the market as well.  Auction activity only showed 3 houses on the “block” in October – other auctions previously featured 100’s of houses…the tide is changing – inventory is getting absorbed prior to auction.

Scott’s comments:

Career Night, September 24th: Bring an agent and get into a drawing for a designation and your guest agent gets thrown into a separate drawing for a designation at the end of the night. We’d love for you to invite those agents that would be a great fit for our company.

Business planning retreat…Pat Cunningham is one of our wonderful sponsors. Friday starts with golf, spa, cocktail party, and business planning starts on Saturday. It’s going to be a different format this year  with tons of interaction to help jump start your 2010!  The location is easy to get to and it’s a beautiful resort – the Hyatt in Cambridge  be sure to sign up today.

In today’s Market Watch, our monthly market update you will see that there is not much to talk about this month. For the first time in a long time, there is nothing earth shattering. It’s been relatively quiet.  There is nothing new that we need to be concerned about – yet.  There is a lot coming down the pike so stay tuned.  So what’s next?  Is the loan limit going to stay $729,750 or is going to be cut back to revert back to $629,650. Is the first time buyer tax credit going to be extended or will it go away?   When are rates going to go up and how high? When is the government going to dismiss the FED’s advice to continue to purchase mortgage backed securities.   If inventory levels go up by a thousand houses – BOA foreclosures in

Northern Virginia – it’s not going to affect the market too drastically.

Right now we are at May of 2005 inventory levels.  We need more homes to sell!

Pat Cunningham agrees that there is not much has been going on the mortgage front.   Rates are awesome – ARM’s are coming more into favor because of better education and lower start rates.

A year ago I remember the mid September of last year and we were literally in a financial firestorm and one of the things I was thinking then is about the fact that that Fannie & Freddie were going out of the business and lending institution having a hard time making loan and wondering if there will there be a credit freeze.

Let’s fast forward to today, its business as usual. We’ve gotten out of the toughest financial market of our time.  Interest rates are at historic lows.  PMI may require anti-flipping rules to be enforced and will be scrutinized heavily on 91-120 days be on the lookout for changes in this arena.

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

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

Enough of short sales, now onto the mortgage news…

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

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

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

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

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!

We’re moving on up!

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

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

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