Author: Sean Purcell (page 10 of 11)

by Sean Purcell

Real Estate Renaissance Man

Author website

In a comment on a recent post, I shared with David Shafer the “revulsion that an ignorant, greedy originator causes.”  The Great and Powerful Oz – one of the sharpest minds in lending… actually just one of the sharpest minds period – called me on it and asked if I might define “greedy originator”.  Never one to back down from a challenge, I decided to give it a try… but in a post.  I want to hear what the ‘hounds on the street’ think.

The primary purpose of any business is to maximize profits. To quote the great Gordon Gecko: “Greed is good.” But I believe “greedy” – especially when used in a pejorative sense as I am doing here – defines someone who has crossed an ethical line in service of that greed. Lies of commission and omission are obvious examples of such a breach. More common and more directly related to my comment, however, is the originator  who chooses an inappropriate product for their client because the profit in that product is greater than the appropriate recommendation.

I do not believe (as I once did) that there is a fiduciary obligation between originator and borrower.  An originator is not working as an agent on behalf of a client the way a real estate agent does.  An originator is in the retail business.  Some originators are in the Kmart retail business (a market for clients who want very little service – simply shelves of loans to choose from) and some are in the diamond store retail business.  I argue that a great many, if not most, originators see themselves as the latter.  In which case, the borrower is paying the originator, at least to some degree, for their advice. There is an expectation and perception (usually encouraged if not advertised) that the originator is helping the client to choose an appropriate financial tool. Maximizing your profits in that process is just plain financially sound business practice. But suggesting a product that may not be among the best options – or in some cases is demonstratably a bad option – solely because the profit is greater… that is crossing an ethical line and earns that originator the Read more

by Sean Purcell

Real Estate Renaissance Man

Author website

And the beat goes on…  but sometimes it helps to have that little bouncing ball show us exactly what lyric we are singing this week.  All together now:

Today the Fed suprised no one by opening the discount window to ailing siblings: Fannie Mae and Freddie Mac.  Together they hold more than half of all mortgages in the US and the guarantee that they would not fail has been implied for some time.  The Fed also intimated there would be no other bail outs in the foreseeable future.  Who is walking the thin line?  WaMu, Wachovia, Downey, Indy Mac (oops, they were written out of the chorus last week).  Now it looks as if the Fed has reworked a few more lines and their song to the Wall Street firms goes a little something like this: if you can not fix your problem with the ability to borrow at 2.25%, your problem is not fixable.

This does not bode well for our short list.  Downey is more of a regional and will likely go down under its own weight of Losses and Lawsuits (the real “L” words).  Previous posts right here on BHB have fixed WaMu as the consensus “next big one” to fall.  Wachovia, in my opinion, is more of a question mark.  Straight-laced, tea-loving bank goes to a frat party where “everyone who is anyone” is drinking and the peer pressure just becomes too much.  This is a hangover for which they are ill prepared.

What does this mean for real estate and the mortgages that drive its cycles?  Here’s one thought: if you are a specialist in homes that do not play the Fannie/Freddie tune, you may want to create some more income streams and fast.  Any regional that has not already eviscerated it’s “improvisational jazz” lending will find themselves looking at a Wall Street that no longer believes anyone is above failing.  If recent history has taught us anything it is this: the big firms currently involved in lending are either asleep at the wheel or lying outright.  We watched Counrywide lie about their financials right up until the end.  We watched WaMu take hits twice their predictions.  Even Wachovia, a stalwart bank, was “surprised” by losses more Read more

by Sean Purcell

Real Estate Renaissance Man

Author website

Recently experimented with one of the countless ideas that pour out of BHB like water from a hydrant.  Created a single site blog page and a custom sign for a listing.  The idea, of course, is stolen from Greg Swann and some of the other brilliant minds that visit here.  The purpose is this: be so much better as an agent (which is to say: so much better at marketing), others will have to increase their value proposition markedly… or get out of the game.  Here are a couple pictures of the sign:

The first one is an overview and the second one is a close-up.  I think they turned out nice and I was VERY happy with the process.

But that is not why I am posting.

Here’s the really interesting part.  After hanging the sign I started to pull away and had to stop and get my camera out again.  Three cars in a row stopped to look at the sign and one actually sent their child out to get the flyer.

So… within minutes of hanging the sign I had eyeballs from three cars and conversion on one; you have got to love that kind of impact!  BTW, the first thing my clients said was they loved the sign.  I remarked how standard signs only tell people a house is for sale while marketing for the brokerage.  One of the ideas behind a custom sign is to encourage people to stop the car and get out to read the sign (thus increasing the possibility of interest).  They replied: “This should do it.  You know… every agent in the area is going to stop and read it!”  Just love that.