There’s always something to howl about.

Month: August 2007 (page 4 of 9)

So if there has to be a bail out…

What if Jeff and Brian are right?  What if it is preordained in the cards that a federal bail out of Countrywide is an absolute necessity and a foregone conclusion should the behemoth lender fail?  While Jeff certainly provides a well reasoned and thrilling John Grisham version of a Countrywide rescue; why wouldn’t we look at some other (less plausible no doubt) bail out options?

Let me say this first and foremost: I don’t support a bail out of Countrywide.  Period. I think its a horrible idea for all the same reasons bail outs in the past have been bad ideas – they reward the wrong-doers.  Why do we reward the Mozilos and their billions of dollars while punishing the American public?    If I am forced to accept a bail out, I would rather it be a bail out of the American public rather than a few rich puppeteers overlooking the pacific ocean from their posh Malibu homes.

Here are a few outrageous ideas that probably won’t work for a million reasons, and have a shot longer than you do of being hit by an asteroid tomorrow morning; but just for fun lets float a few out there.  My bail out options to keep from rewarding the greedmongers:

A couple of general guidelines:

  • Bail out options apply only to loans secured by primary residences; and maybe even just to owners of one property.
  • Bail out options apply only to those loans underwritten with full income documentation (maybe stated income for self-employed borrowers)

Bail out options for the American public (hey, if my tax money’s going to anyone, I’d rather give it to my neighbor):

  • Pre-payment waivers: Anyone with a prepayment penalty on their existing mortgage receives a voucher to refinance with out being penalized. This could be financed by individual lenders, Wall Street banks, or investors.
  • Voiding of pre-payment penalties: Alternatively, the government could pass legislation nullifying all pre-payment penalties allowing borrowers to refinance immediately with out paying the fees associated with the penalty.
  • For those that paid a pre-payment penalty between June 2006 and today – a tax credit for the full amount of any pre-payment penalty paid Read more

Sub-Prime Borrowers Got Lucky- They Didn’t Pay Enough

I floated an idea about a federal bailout, along the lines of Chrysler in 1980, of Countrywide Financial Corporation. I wanted to highlight two things in this post: Countrywide is in trouble and their trouble is our trouble. My premise is that the collapse of CFC goes beyond the 55,000 employees. I may have been guilty of thinking like Charles Erwin Wilson.

Jeff Brown replied, “Countrywide ain’t no Chrysler” and proved that my premise may be an insult to Adam Smith. His idea of a bailout was more along the lines of a Tom Clancy novel with Ben Bernanke playing Jack Ryan, Angelo Mozilo playing Dr. Strangelove, and Bank of America playing the United States Marine Corps. Life often imitates art so my money’s on Jeff’s covert bailout plan.

What really happened to the mortgage market ? They didn’t properly price loans for the risk they assumed. While Hilary Clinton is crying about the “poor borrowers” what about the poor lenders who got caught in the middle of this mess? Borrowers said “We’ll buy it if you give it to us on the cheap !”, Wall Street said “We’ll take the extra yield!”, and we all said “This time it’s different !” Extrapolations proved that a two bedroom condo on the Las Vegas Strip would sell for at least $5 million in this new economy, fueled by leverage.

Read Ralph Alter at The American Thinker:

The dirty little secret of the sub-prime crisis is the fact that sub-prime lenders failed to charge interest rates high enough to offset their expected level of defaults. Make no mistake: sub-prime lending is going to have borrowers who fail. Even conforming borrowers sometimes default. Enabling lenders to charge enough to make profitable loans to less qualified borrowers will result in a higher level of foreclosures. But it will also enable legions of “sub-prime Americans” to realize the American dream of home-ownership.

Who were the losers of the explosion of non-prime lending? The 10-15% of the homeowners who were able to buy homes, Read more

The Odysseus Medal: A challenge to the mind and a challenge to the-way-things-have-always-been-done

We had a lot of truly great posts this week. I’m not the kind to pick three posts for first place and six for second place, but I do understand the temptation. Steven Groves, for instance, has much to teach us with MLS2.0 – What is the future of real estate listings? Is the market turning? There are good reasons to say no, but what if it is? Then Patrick Kapowich has news for you with Deja Vu ~ Many Qualified Buyers Sit Out the “Sweet Spot” of a Buyer’s Market, Then Enter The Market in Droves, When the Scales Tip. There are other truly outstanding posts in the short list of entries, and the truth is, I could go on about them all day.

But: There can only be one best. This week, that honor and The Odysseus Medal go to Michael Cook with Does the Real Estate Industry Need Realtors? I know many Realtors reading here disagree with Michael’s argument. That’s fine. The question is, what are you doing about it? It were well if you were able to defend your value proposition well enough to best Michael in a fair debate, but you don’t have to set the bar the high. Here is what you do need to do, though, and what you need to get better and better at doing: You have to create and be able to defend your value proposition with your own clients. What is it that you are bringing to your transactions that exceeds your cost in sales commission? If Michael’s post — and others like it — lead you to internal turmoil, that’s a good thing. Pain is nature’s gentle way of letting you know there is a flaw in your thinking. Ruminating on the challenges a thoughtful man like Michael Cook puts before you will make you better at what you do — and better able to defend your value to your clients.

And if that’s not unsettling enough to our sensibilities, The Black Pearl this week goes to Carl Drews with How real estate commissions work. Drews is not a professional, he’s Read more

The People’s Choice Award: Pick the best of this week’s real estate writing

Here is the (not very) short list of this week’s nominees for The Odysseus Medal. You can vote for one of these posts for the People’s Choice Award.

These are this week’s entires:

Voting ends Monday at 12 Noon PDT/MST. We have file permissions issues with the new server, so you definitely can vote more than once, and I definitely will catch you. So don’t.

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Is it Stupid to Hold An Open House – Or is it Great Marketing?

Kris Berg had a wonderfully written post regarding open houses. This was my comment:

There are just two valid reasons for an agent to hold an open house and neither of them has much to do with selling the house being held open.

Reason 1: find stray (motivated) buyers (those that do not have an agent) and become their agent.

Reason 2: meet neighbors who will later want to sell their home.

Doing something time consuming one doesn’t want to do in order to “keep the seller happy” makes no sense.

One time many many years ago before I understood what I have written above I was holding an open house. I had lots of traffic and came to realize that virtually all of the people streaming through were not buyers but were neighbors, looking for decorating ideas and just liked seeing the inside of the other units in the complex. After seeing all of the rooms, as they were on their way out, they would realize they hadn’t even asked me the price – and as they were leaving would ask how much it was selling for. As any real buyer would have wanted to know the price sooner than later – after about 10 people through – I knew my day (yes, it was a Sunday) was a total waste, unless I could find a way to entertain myself. I choose the price. Just to see what would happen, I started quoting prices (in $10,000 increments) lower and lower to see if anyone would even blink. This was a $150,000 condo and I got the quoted price down below 100k. Each of the visitors just thanked me for my time and left.

There were several comments commenting on my comment (The BloodhoundBlog Method?) and I wanted to respond to those – and possibly clarify why I wrote what I did.

GolfingAnyoneAm I aware that some agents are very skilled at actually selling the house being held open? Yes. In fact, Greg and Kris both commented that they have sold houses numerous times by holding them open. My good friend Dean Selvey (currently the number 1 Re/Max Read more

Drive On: We’re back, but DNS resolution can be flaky

If you’re seeing this post, you’re finding BloodhoundBlog on our new file server. A word of caution: Domain Name Servers attach like Velcro, at little at a time. You may yet see Delia’s Gone again before we’re done. By Monday or Tuesday, any flakiness should be gone. I’m just warning you, that’s all.

I know, too, that email to me has been bouncing since yesterday as a consequence of this switch. If you got something back, send it through again, if you would.


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Redfin: Lessons in How NOT to Succeed

No apologies for the topic. As many problems as exist in the real estate industry — many more than the practiced elites would like to acknowledge, many fewer than the bubbleheads need to satisfy their tantrums — Redfin has made itself a prominent example of how not to improve things.

A few days ago in a comment section I wrote that Glenn Kelman’s a phony. It was the heat of the moment and I only wrote it because, well, he is a phony. He has to be.

On the one hand he has to corral capital and customers by feeding the realtor stereotype of the venal do-nothing narcissist, exemplified here in the Sixty Minutes shtick. But on the other he desperately needs the cooperation of the very people he’s trashed if his model has any chance of succeeding, thus the apparent charm exuded at Inman Connect. He creates a crisis of disdain for the full service agent, sets himself up as the champion of the little guy to quell the crisis, then calls on the full service agents to help him do it. Quite a dance, that.

But.

I admit I haven’t spent a lot of time on the Redfin website. It’s not in my market, and I’ve read and seen enough to know it’s a model that’s not likely to succeed. I’ve left the particulars to others and the market to its natural flow.

But I never thought the champion of the little guy would be dumb enough to try to con: the little guy. The following comes from a BHB reader, Leonard Wallace, who…I’ll let him tell it:

I’m a broker in Maryland where Redfin arrived last month. I’ve read many of your [BHB] posts about Redfin, but I haven’t seen anyone comment on their blatantly false advertising. Here’s a screen shot of a listing in the Washington area:

Leonard goes on to point out:

Redfin’s minimum commission on any buyer transaction is $3000. That never came out in the Sixty Minutes piece or anything else I’ve seen: note here, the first page of the ‘how to buy’ section. That’s why, I suppose, a $500,000 selling price Read more

How to take away the objections to drawbacks in a home

This is me in the Arizona Republic (permanent link):

 
How to take away the objections to drawbacks in a home

I was looking at the web site for a For Sale By Owner home the other day. In the site menu was a heading called, “Drawbacks.” I thought this was an excellent idea at first blush, the kind of inspired salesmanship I almost never see.

The fact is, everything is a trade-off. Everything has advantages and disadvantages. This is not a secret. Buyers already know that every home they look at will have drawbacks.

What is inspired — what could have been inspired — is calling the drawbacks to the buyer’s attention. Why? Because then you can take away the objections.

Like this: “We know this room is small for a bedroom, so we pre-wired it for digital cable and two phone lines. That way, you can use it as a home-office and also as a guest bedroom.”

The buyers will see that the room is small, but by acknowledging and addressing the defect in advance, you can help them see around the problem.

I said the idea of a “Drawbacks” page could have been inspired. Instead, when I clicked through to the page, I saw this:

“There are no drawbacks! Come and buy this house right away!”

This is far beyond being uninspired marketing. This is the kind of ham-handed ignorance and arrogance we associate with Hollywood’s idea of a venal Realtor.

Since you know exactly what objections buyers are going to raise with your home, your best strategy is to acknowledge and address them in advance. This communicates that you are honest, that you are not trying to pull one over on your buyer, and it also gives you a chance to reframe objections in a way that can help to sell the home.

If you don’t want to admit that your home has drawbacks, say nothing. Every buyer’s biggest objection is the fear of being hustled into a bad decision. If you go out of your way to look like a hustler, you will scare buyers away even if your home really is close to perfection.

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When Russell Shaw Speaks – You Should Listen

Fellow BloodhoundBlog contributor Russell Shaw is a fountain of practical real estate knowledge… so when Mr. Shaw recommended a Xerox Phaser color printer to us – I took him up on the offer.

The street price for this particular printer is $1100, so I had to think hard about this purchase. There are so many other things that I could spend a thousand bucks on… but after all – it was a highly recommended purchase by Russell.

After checking out Ebay, I found a seller with a few of these printers brand new in stock at a [gasp] shockingly low price. So… I jumped on it.

The printer arrived a few days later (all 60 pounds of it) and it installed very easily. It’s nice having a network printer, for a change. I can send it a print job from any of my computers without worrying about a particular computer being on.

The prints are great – regular magazine quality… all nice and glossy.

The next day, I went to print some flyers and – nothing. No power lights, no indicators, nothing. I checked Xerox’s website to follow their troubleshooting guide… but to no avail. It would appear that I now had a rather large paperweight.

So I called Xerox, and they were nice as they could be. They contacted the local service representative and he came out the next day to install a new power supply. When you buy one of these printers, you get a full year of on-site service including parts and labor… a nice benefit. Russell advises us to purchase the extended warranty, as well.

Well I am tickled with this purchase… and I would like to publicly thank Mr. Shaw for his recommendation.

Now if any of you might be thinking about following Russell’s advice, perhaps I can save you a few dollars. Here’s another one from the same seller on Ebay for $599 (or $629 with Buy It Now.)

http://tinyurl.com/2z5qbo

You can thank me after you thank Russell. 🙂

Is opportunity knocking in the real estate market?

I tell people we live in the last affordable ghetto in North Central Phoenix. We live right on the edge of the neighborhood, the place where $400,000 makes its leap to $750,000 on the way to a million. We moved here knowing what the neighborhood had to do, and, so far, it has not disappointed us.

This morning, I’ve been drooling over this listing. The comp value of this home in turn-key condition should be around $600,000, maybe more. Sad for the sellers, and I could kick them for letting the house go to hell, but this is a sweet opportunity that will bear fruit right about the time Persephone comes back from Hades.

This is my friend and client, investor Richard Nikoley, writing yesterday:

Probably not what everyone is thinking, right now, but if I’m going to keep my head about me and keep a market perspective on the market, then I have to consider that when some people sell out of fear, panic, to preserve diminishing profits, or to stop losses, there’s always someone on the other side of that trade. So the question arises — and one should always, always try to discern the motivations behind each side of a transaction — why are an equal number of people buying, right now, what so many are selling, right now? Could it be because others are selling at cheaper and cheaper prices and those buying are seeing bargain-basement prices? If you had to guess, who would you suspect is likely getting the advantage?

For some reason, people don’t tend to think of the stock market like they do most other things. In other areas, it’s called a sale. There’s always someone, somewhere, wanting to get out of an asset — for whatever reason — and depending on their motivation, they’ll take less and less for it. Others lie in wait for such opportunities in order to accumulate assets at relatively low prices.

Everyone is welcome to their doomsday, economic collapse, chickens-coming-home-to-roost scenario, or whatever. But do keep in mind that what is going on is essentially and mostly an exercise in total freedom and Read more

Growing pains: BloodhoundBlog is moving to a more-robust server

You will have noticed outages over the past few weeks. What’s happening is that our MySQL server is getting hammered at peak hours by too many connections at once. The cause is almost always our RSS feeds, so, most often, our mail server is going down also. HTTP and FTP are working fine during these outages, but you would never know that, since BloodhoundBlog itself, and our other weblogs, can’t work without MySQL.

In any case, after doing everything we could think of to try to alleviate the problem, we have elected to move up to a more-robust file server. We will be moving into a fully-dedicated dual-core Xeon machine. We’ll pick up five times the storage space, five times the bandwidth and, we hope, ten times the MySQL power. This is something we would have done in due course, anyway, if only because we’ll be serving more and more video.

Right now, I don’t know when for sure the move will happen. When it does, we may lose some data. I’ll tell the contributors to stand down, but some comments may not make the shift. The transfer is in-house at HostGator.com, but there will be a delay between the time that our files are copied to the new server and the IP address for BloodhoundRealty.com is propagated through the DNS system.

I’ll post a note before and after the transition. Thanks for hanging with us through the recent outages. Cross your paws, shortly they’ll be a part of our history.

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If your wife doesn’t nag you enough, sign up for PingMe!

pingme-reminder-service.pngDon’t worry, my husband doesn’t need this service; I’ve got it covered! PingMe.com is a free reminder system that reminds me of an advancement on the Outlook calendar function. I typically set up Outlook “reminders” for everything ranging from “follow up on Lakeline listing” to “email April” but get irritated that I can’t direct it to my phone or to my Yahoo account.

So, if you don’t get nagged enough from your wife (or children if you are the wife), here’s how PingMe works:

1. Create a ping/ name your task. For example, “Clip Toenails.” Whatever, you know you forget. You’ll also note if this is a recurring task or not.

2. Determine the pestering function. This is how often you would like to ping yourself until you’ve told PingMe you’ve completed the task. “Clip Toenails” is important, but I would probably set the pester to go off every 30 minutes in case we’re on a date or something… I’ll get to it.

Come to think of it, this could be a great “oh I have to go” interrupter making your phone ring mid-meeting… just act important and walk away from the encyclopedia salesperson (you’ve got an important pretend call to tend to)!

3. Select a target. You can assign places for your reminder to go- your work email, your cell phone, wherever. For my reminder to “clip toenails,” I would probably have it remind my phone; it’s a pretty important task.

3. Assign a Tag. Like in blogging, this organization will help you to sort through your to do reminders in an orderly fashion.

4. Save, creating a sticky note. PingMe will email to your designated location your desired task reminder. But hey PingMe, just because I say you should remind me of something doesn’t make you the boss of me. Got it?

So, consider this your reminder to go sign up for PingMe. Do it now. Do it now. Do it now. >Ping complete.

The extinction of the pterosaur – If your goal is long-term profitability, skimming the surface can kill you.

From the San Diego Union Tribune, dateline August 16, 2007:

Paleontologists studying pterosaurs had theorized that some the extinct flying reptiles fed by skimming along the water with their mouths open. However, a new analysis by British scientists indicates pterosaurs were too large and would have created too much drag to feed in this way.

And this is precisely why I see the traditional real estate agent not only surviving but thriving. Many predict the demise of the likes of me. They predict a future where I have been stripped of my MLS, at least in the proprietary sense, and where I have been stripped of my paycheck, rendering me crippled and ineffective chum.

Good, successful traditional agents find their sustenance in a much deeper ocean, while this point seems to be lost on the new fisherman, the alternative for-fee, for-less business models, and even the fish.

360-Marlow wrote last week about how Lennox Scott of John L. Scott Realty, speaking at the recent Inman Connect conference, “seemed unable to articulate why a commissioned sales person may be preferable to one paid on salary”. Well, let me give it a shot.

  • The salaried employee is not required to front their own money (in my case, thousands of dollars per month per assignment) on the promise (not to be confused with “guarantee”) of some future paycheck.
  • The salaried employee does not run the risk that, having worked on their employer’s behalf for months (and months and months), their employer will “change their mind”.
  • The salaried employee does not bear the burden of their employer’s overhead.
  • If the salaried employee’s employer is unsuccessful in selling their product to the end user, the salaried employee will still be paid for their time expended.
  • The salaried employee wakes up each morning knowing they have a job, a job secured by a single interview, where their commission-based counterpart must attend job interviews on a daily basis. (Job interviews take time and money; let’s, just for fun, call them “non-billable hours”).
  • The salaried employee is assured lunch breaks and days off. The salaried employee clocks out at the end of the shift.
  • The salaried employee’s job description does Read more