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October 13, 2008

The Glass IS Half Full

by

Real Estate Renaissance Man

Author website

The “new, post-bail-out era of real estate” is how Cheryl Johnson describes things going forward amidst the “collapsing global financial markets” in Back At The Ranch. In a comment to Friday’s edition of the Bloodhound Blog Radio Mortgage program Brian Brady and I co-host, the optimistic view I have for real estate practitioners was gently questioned.  I believe the exact quote was “I thought you were starting to sound like NAR spokesmen”… a particularly disheartening comparison on a number of levels.  The truth of the matter is this: I believe we are entering one of the greatest real estate opportunities in years – maybe decades.

The idea is two-fold:

  • Consumer credit has collapsed and will not be coming back any time soon.  That means store credit, car loans, credit cards, home equity and so on have stopped flowing.  The bailout package did not make a dent in this secondary level of credit.  Financial institutions (those that are left) are hoarding cash; when they finally do trust enough to poke their heads out, consumer credit will not top their list of “things to finance.”
  • Real estate mortgages have gone vanilla.  Similar to Henry Ford‘s sentiment when he said: Any customer can have a car painted any color that he wants… so long as it is black.  We have Fannies, Freddies, FHAs and VAs – you can have any mortgage you like… so long as it is a conforming government loan.  BUT, these vanilla loans are being served with gusto.  Money for these loans is flowing though the pipeline and the valves are wide open.

So, what does this mean?  It means the government wants to see real estate serve a function it has come to perform so well: propping up a sagging economy.  The government is pumping money down this pipeline and will continue to do so.  Combine that with the lack of consumer debt and you only have one place where people can spend: real estate.  The demand created by cheap money and even cheaper homes is causing volume to increase in many of the hardest hit areas.  According to the NAR (I know, I know), Read more

October 12, 2008

Meanwhile, back at the ranch…. (Or Creating a local, independent, powerhouse brokerage)

by

Real Estate Broker, Investor

Author website

Bob and I opened our own office, Bob Taylor Properties, Inc. in 2000.  Good friend and friendly competitor Dan Jordinelli had already opened his own office, Jordinelli and Associates,  in 1986.   I like to think that over the years both offices have built up some recognition and respect.

A few weeks ago, Dan approached us with a proposal.  Dan wants to close his office and join us. He wants to get back in the field and do what he loves: Sell real estate. Oh, and some of his agents want to come along.

So, as the global financial markets are collapsing, amidst this ruin of all space, shattered glass and toppling masonry,  I’ve been rather preoccupied with the notion of creating a local, independent, powerhouse brokerage in Northeast Los Angeles, in this new, post-bail-out era of real estate.

I’ve read all Sean Purcell’s posts here, here, here, and here all Mike Farmer’s posts here, here, here, here, here, and here.  But, in the end, while the new models and structures suggested are very intriguing,  I decided on a simple, basic, traditional commission split model.  Agent gets XX%.  Company gets XX%.

Branding? I have no concern over agents designing their own logos, their own business cards with their color schemes, and running their own businesses in a way that works for them.  I want only core concept associated with my company:  Excellence.  I want our people recognized as the most knowledgeable and most competent.

However, there is one area where I do want to impose some structure:  The taking and marketing of listings.  Marketing a listing as Greg demonstrates in http://www.abetterlisting.com is a definable, perfectible praxis.  No matter which agent in the company they list with, I want sellers to know they can expect proper pricing, good preparation and presentation, good photography, a custom web-site, custom signage.

Meanwhile, there are practical and pragmatic issues to address.  I usually identify myself as a “high-functioning hoarder” so the process of making room for several new people in the office has been interesting.   My Ebay/Etsy photo Read more

October 11, 2008

Boringly functional artwork in the service of marketing homes: If people can’t figure out what you’re selling, they won’t buy it

by

Suburban Phoenix Real Estate Broker

Author website

I wrote about the back side of that card last week. It’s the Open House invitation for 56 West Willetta Street in Downtown Phoenix, a home we listed for sale yesterday. This is a full-bore Bloodhound launch, but the card itself is kinda boring, wouldn’t you say?

That’s not an accident. I could wish I were more talented as a graphic designer, but I’m a firm believer that, if something is so cool looking that no one knows what it is, you’ve wasted your money. As radical as our real estate signs are, they still look like real estate signs. And the most profoundly valuable graphic element on our signs was suggested by marketing-provocateur Richard Riccelli: The snipe in the upper left hand corner that says “For sale.” In the uncivil war between obvious and obtuse, obtuse wins all the glamorous awards and obvious wins all the money.

Which brings us to our directionals. I’ve been writing about custom directional signs for more than a year. In that time, we’ve gone through many designs, and we’ve never done the same thing twice. For this house, I think I’ve finally hit on something I like and will use again:

Could not possibly be more obvious, yes?

That “Buy me” call to action is swiped from Redfin.com. Their signs do nothing for me otherwise, but those two words are the essence of good copywriting, in my opinion.

In our own small way, we launch a house in the same we someone else might launch a new car or a new kind of dishwasher or a new magazine. Those business-card-sized Open House cards will be distributed to 6,000 homes. We’ll get a 1% or at most 2% response on that effort — extremely direct mail — but the chances are excellent that the ultimate buyer will be among the parties who come to the first open house.

And: The signs, the directionals, the web site, everything else we do to market our listings — these techniques sell houses. This is not rocket science. Drawing more attention — and more-positive attention — to a house will make it sell faster and Read more

October 11, 2008

If you have cash or can qualify for a mortgage, this could be the ideal time to grab a bargain-priced home in the Phoenix area

by

Suburban Phoenix Real Estate Broker

Author website

This is my column for this week from the Arizona Republic (permanent link).

 
If you have cash or can qualify for a mortgage, this could be the ideal time to grab a bargain-priced home in the Phoenix area

The Phoenix area is hosting a wave of real estate investors like we haven’t seen since 2005. Unlike the novices who came here during the boom, these are experienced landlords. They’re here now because lender-owned homes are selling for bargain-basement prices.

They’re not alone. Savvy home-buyers are scooping up bargains, too, especially first-time homeowners. Interest rates are still attractive — even if the homes themselves are less appealing.

Interestingly, over the last couple of weeks, many of the lowest priced homes have seemed to evaporate. I’m guessing that October is going to be a banner month for closed transactions. Yes, most of these will be foreclosed homes, but buyers are performing the liquidator function, restoring the value of underperforming assets.

With so many homes selling, are we nearing a bottom in the Phoenix market? It’s plausible, if the number of sales meets or exceeds the number of newly-listed homes to be sold. But, even now, around 7,500 homes a month are entering the foreclosure process.

It could be a long time before that inventory is absorbed. And if it comes onto the market faster than buyers can snap it up, prices will continue to decline.

Visualize the real estate market as a pipeline. The home that gets a foreclosure notice today won’t hit the lender-owned market for three to six months. Are there enough investors and other buyers to snap up record numbers of homes, month-after-month, for the next two years — or longer?

The answer to that question is yes — if the price is right. If the demand for low-priced homes already exceeds the supply in the pipeline, prices will stabilize or even start to rise. If not, lenders will be forced to cut prices until buyers find them impossible to resist.

It’s an awful time if you have lost your home, and it’s not great if you are living in a home you cannot sell profitably. But if you Read more

October 10, 2008

Bloodhound Blog Radio: Free Falling (But We Keep Hope Alive)

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Sean Purcell and I recorded a 15 minute episode this afternoon about what the stock market crash means for working REALTORs.  We may come across as a couple of polyannas but we think the stock market might get some respite from…Columbus Day.

We talk about the great opportunities for investors and how REALTORs can court them.

Listen to the episode here

October 9, 2008

Should Walmart Sell Real Estate?

by

Realtor, Rabble-Rouser

Author website

It appears that Coldwell Banker may be following the Walmart approach to real estate pricing – recommending that sellers cut their home prices 10% across the board – not locally, but nationwide.  I can’t help but find the similarity to the McCain approach to cut government spending – simply freeze spending across the board.

Shouldn’t price cutting be done with a scalpel-ly machete?   Pardon the pun, but in many cases 10% doesn’t cut it.

I had a very difficult discussion today with the developer whom I represent regarding a new and very aggressive pricing strategy for their condominium project slated to deliver just about when the snow flies.

New lending guidelines regarding new construction could potentially crush them – even with units under contract, no potential buyer can close without at least 51% of the units being under contract – we’re not even close.  While Chicago may be a stable market per Fannie Mae guidelines, in light of the recent Wall Street meltdowns, I suspect the we may be in a declining market faster than you can say bailout.

If they don’t get aggressive quickly, we as taxpayers may just be owning 8 stunning, uniquely contemporary condos.  My recommendation was a bit more dramatic – depending upon the units, as much as a 15% price cut.  They didn’t take it well.  They “hoped” to get the prices we had established – they forgot the second half of the word  – “less”.  The good new is – we have time to thoughtfully approach the pricing strategy.

If we aren’t having the tough conversation with our sellers regarding pricing – okay, I’m going to go there – aren’t we like Congress, complicit in extending this housing market nightmare by not doing what we’re paid to do – provide knowledge, expertise and guidance?  While I can’t completely fault the strategy that Coldwell Banker wants to deploy, where did 10% come from exactly?

As far as I’m concerned regarding my own client’s situation, the comps matter significantly less than current lending guidelines do.  If mortgage money for conforming loans is still relatively plentiful to the well-qualified buyer, my client’s units need Read more

October 8, 2008

Camp Pendleton/Oceanside Fires News On Twitter

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

It’s fall in San Diego, right?

Here we go again:

More than 1000 acres of land on Camp Pendleton goes up in flames, after a wildfire breaks out on the base Wednesday.

If you want to follow the action, check out this Twitter feed and this blog.  Social media are the 21 century version of the ham radio operators. Twitter played a big role during the 2007 San Diego Wildfires; it should be even more useful this year.

Think good thoughts for and send out prayers to Unchained graduate Don Reedy tonight. He’s in the eastern path of the fire.

October 8, 2008

Will Mortgage Brokers Be the Hope For Homeowners?

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

The FHA Hope For Homeowners program was designed for existing homeowners, struggling with mortgage payments and an “upside-down” equity position in their primary residence.  It is a new program with lots of misinformation.  Some believe it can only be offered by existing loan servicers, some think only participating lender/servicers can offer the program, and few are certain if the program will be offered through mortgage brokers.

I discussed the key components of the FHA Hope For Homeowners loan program on Mortgages Unzipped.  They are are not limited to but include:

  • An appraisal will be performed and the maximum loan amount will be 90% of that appraised value.  All subordinate liens will be extinguished and the exiting lienholder will have to agree to a loss of principal.
  • The current housing payment must be more than 31% of the homeowner’s gross monthly income.
  • The homeowner must not have misrepresented his/her income on the original loan application.
  • The homeowner must get a new 30-year fixed rate loan and qualify based upon documented income.
  • The homeowner must agree to an declining equity sharing agreement (for the existing equity), with the FHA, for a specified period of time.
  • The homeowner will share in future appreciation with the FHA.
  • The program is completely voluntary; existing lienholders don’t have to participate.

This article isn’t about whether the Hope for Homeowners program is a “good” idea.  I believe that the future of mortgage refinancing lies in the immediate reality that lenders will accept short payoffs for refinance loans in addition to resale transactions.  Robert Kerr made a comment, about a year ago, about the morality of loan modifications and suggested that lenders should “mark-to-the market”and accept lower balances to be commensurate with declined valuations.  That comment inspired my semi-satirical recommendation of short payoffs, cross-collateralized against the net present value of government retirement entitlements. Robert made me think that the moral is the practical.

Will the investors play ball? One lender, acquired at the tail of the sub-prime boom, sold its entire loan portfolio for about 22 cents on the dollar this past summer.  This means that a $300,000, 100% financing home loan, made in 2005, was bought for $75,000.  Read more

October 8, 2008

Mortgage Market Week in Review – on a Wednesday?

by

Mortgage Officer

Author website

Yeah, I know it’s only Wednesday, but when I looked at my schedule for the rest of the week, I realized that I wasn’t going to be in one place long enough or have the time to sit down and write this update, so I decided that I better do it today.    In addition to that, we’ve had plenty of news in the last couple of days.   So, here are some thoughts about the markets, the housing market, perception and reality.

The markets – I think that it’s safe to say that none of us have seen this type of stock market declines in our lives.   I wanted to bring up a couple of points about the markets:

1. It’s very important, when looking at long term investing, to keep a rational view of things.   If you aren’t going to need the money for 25 years, don’t make decisions based on fear and panic that is currently swirling around in the markets.  Look at the long term and make decisions for the long term.

2. Stop listening to the main stream media.   There are many things where they don’t know what they are talking about and they love to paint a darker and more scary picture because it helps ratings.   I was listening to a local AM radio talk show yesterday while driving between appointments and was struck by a couple of things:

a. Morning talk show hosts shouldn’t be giving out advice about FDIC insurance.   The facts as they were stating them were just plain wrong.

b. Someone who is 44 years old (they said so) called in and said that on Monday (one of the lowest points in the market in the last 5 years) he sold everything in his 401K plan and moved it to cash.   If I had the time, I would have called in and told them a thing or two.   I was shocked at how much fear is taking over for rational long term planning.

3. I’m 43 (yeah I know, I’m over the hill) and I want to answer the question a lot of people are Read more

October 8, 2008

It’s a great time to be a Realtor or a lender — if you’re a good one. At BloodhoundBlog Unchained in Orlando, you’ll learn how to dominate your market in the dark days ahead

by

Suburban Phoenix Real Estate Broker

Author website

What came out of last night’s Presidential debate? No matter who wins, we all lose. As painful as it might be to suffer a quick drop in housing values, followed by a recovery, we are in for a much more extended agony. Whether Obama wins in November or McCain, we’re in for an lengthy period of government “help” — mortgage work-outs or price supports or some other crafty means of disguising the true value of homes. This might be good for you if you are headed for foreclosure but haven’t yet crossed the bar, but it promises years of depressed housing prices for everyone else.

That’s bad for homeowners — but good for many landlords. And it’s bad for lenders who have perfected the art of re-financing the same clients again and again — but good for lenders who can generate the flow of new business necessary to live off of primary purchase loans. And a perpetually plateaued real estate market is very bad for by-owners sellers and lazy, stupid, cheap Realtors — but very good for Realtors who can actually get the job done.

An all of this is why you should be coming to BloodhoundBlog Unchained in Orlando. We’re about nothing but practical tactics for taking advantage of the internet to build your business — which is precisely what you need to be doing right now. Real estate has always been a hard way to make an easy living — and it’s about to get a lot harder. The Realtors and lenders who can sustain a pipeline of viable prospects will prosper in the coming years. The rest will get other jobs.

Here’s just a few of the topics we’ll be talking about:

  • Brian Brady will show you how to build a presence on the internet so that your prospective clients will not be able to go anywhere without finding you.
  • Mitch Ribak will talk to you about the techniques he and his team are using to close dozens of transactions a month.
  • Kelly Koehler will share with you her unique pay-per-click strategies, using an array of long-tail keywords to net clients at a very Read more
October 7, 2008

Does Your Home Equity Have 4 Wheels?

by

Realtor, Rabble-Rouser

Author website

I received a call the other day from a young couple wanting to take a look at my new construction project.  Because the building is starting to look more and more like a building, I recommended that they meet me at the site so we could walk through the units – albeit still a skeleton.  For those who can’t visualize the space while it is taking shape, I knew it could be a crap shoot, but hey – they could at least see it in progress.  The plans were taking life.

I was at the site a few minutes before our scheduled appointment, checking up on the progress, pleased to see that the steel staircase had been installed.  We could use stairs, not ladders.

At roughly 2:00pm, a jet black, late model Range Rover Sport with chrome tipped exhaust screeched to a halt in front of the building.  It was snazzy.  Out hopped my potential clients – young – attractive almost 30-something couple.  Unfortunately, not quite dressed to walk through an active construction site – but we’d manage.

We introduced ourselves.

“I like your car”  I said.

“Yeah – it’s a sweet ride”  the husband said.

I handed them the marketing brochure and rattled off my schpel regarding the developer, the construction method, available finishes, delivery etc.  I asked them about their timing – what was prompting a the search for a new home?

“We want to take advantage of the market” the husband stated.  “I’ve been reading that home prices are way down and developers are really hurting – we want to make a deal.”

Can’t say I haven’t heard that reason before.

“Do you have a home to sell?”  I probed.

“Umm – we’re not sure if we’ll sell.  I think we may keep our current place – at this point, we’re expl….”

“We’re expecting a baby and we need more room” the wife interjected.  “We have a 2 bedroom condo that we purchased when we got married 2 years ago in Lakeview.  We’re not sure what we can get for it – so we don’t know if we should sell our not.”

Ahh – the voice of reason.

“Honestly, that is Read more

October 7, 2008

Following a trail of breadcrumbs from an internet-enabled cell phone

by

Suburban Phoenix Real Estate Broker

Author website

I’ve written about our breadcrumbs philosophy before. Cliff’s Notes: If we build a single property web site for a listing — or a previewing site for buyers featuring dozens of houses — we never delete worthwhile work product from our file server:

We leave the pages and sites on our file server forever. If there were anything confidential in the pages, we would excise it. But there never is — because the web is not secure. So the pages live on forever, each one a detailed chronicle of a particular house at a particular moment in time.

This Sunday just past, a potential buyer was sitting outside 14179 West Shaw Butte Drive in Surprise, AZ. From her phone, she Googled the address. Guess who she found?

I’m not the lister on that house — and it had sold before she called me. But I stand a fair chance of selling her something else, with my client-acquisition cost being pretty close to $0.00.

Leaving breadcrumbs on the trail is not a strategy, not even a tactic. It’s a side-effect. We’re building the content for other purposes. But we sometimes get extra business simply by not killing those pages. This has always been good for us, going back years, but it promises to get better and better. First, we’re always building new pages, which increases our long-tail exposure. And second, there are more and more web-enabled mobile phones out there every day.

There’s more: I think it’s important to “triangulate” on pages like this from a weblog, this so Google finds the new content in a sprightly fashion. I talked about triangulation at Unchained in Phoenix, and I’ll be addressing it again in Orlando. (And if you buttonhole Brian Brady, he might reveal to you what I’m doing in this post as a side-effect of having written it.)

Bur even though this is all just a side-effect of other efforts, we still have a complicated, scientific name for this phenomenon: We call it free money.

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Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

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