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Family First, House Second

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Over the past couple of weeks I have spent a great deal of time exploring why now is the time for you to buy. And, I firmly believe that it is…if, you are able to do so. While I have been espousing the many benefits of homeownership, I have unintentionally ignored a large subset of the current housing market. They are those who are losing their homes because they can no longer carry the weight of their obligations.I bring this up because I met a couple recently who are more typical then they might realize.Most likely they are in their late twenties to early thirties. They have two adorable children and they are living in the house of their dreams. A massive home by any measure, they got it for a great price and believed that this would be the family home for years to come.
It is often very sad how life sometimes makes a mockery out of our best plans and intentions. You see, this family is now another statistic of an economy struggling to rebound from near melt …

The Power Of Mindset

The power of mindset is truly an amazing thing. By way of illustrating this fact I offer the following for your consideration. This past week, I was in Anaheim for the National Association of REALTORS ® business meetings. And, at those meetings, I had the occasion to hear the President of the California Association of REALTORS ®, The Hawaii Association of REALTORS ® and the Guam Association of REALTORS ® all speak to us about their markets.
This is what they said. Properties listed are selling quickly at or near list price. Inventories are low by traditional standards. In all three places, prices have been stable or on the increase for a protracted period of time and yet they are in a buyer’s market.
Think about this for a second, demand is higher than supply. Prices are (in many areas) rising and they are in a buyer’s market. For the life of me I cannot remember the last time that this scenario has played out like this.
The classic law of supply and demand is that when you have deman…

The First Offer You Get...

Recently I had a transaction where after due consultation the seller agreed to list the home at the price which I suggested. I arrived at this price by doing a in depth analysis of the current activity within a half mile of the subject property.
In attempting to arrive at the best possible price point (the point at which someone would offer on the home) I looked at the most recent sales of similar properties including those which were in escrow, but had not yet closed. And, at the active listings (those currently on the market but not yet sold). I look at the recent sales for obvious reasons. These are the homes which had completed the sales process. By studying these properties, I can see where they were priced when listed, how long they were on the market. And, what the final sales price was.
All of this is vital information when determining where to price your listing. If a home is on the market for a protracted period of time without selling, it most likely will sell for less than i…

Drunk Monkey's

Recently I spent the weekend in Long Beach watching my fiancé  run her first marathon. For the record, she was amazing. Finishing the 13.1 mile trek in a scant  two hours and forty six minutes. This of itself is noteworthy and should be proclaimed for all to read in a publication such as the press enterprise. However, while I am very proud of her effort, I am actually writing for a completely different reason.
For the two weeks leading up to this event, she was filled with self-doubt. Was she ready for this challenge? Did she train as effectively as she could have? Would it be too hot or too cold? Would she be able to go the distance which was 3 miles farther then she had previously run?
And as we discussed her concerns (call me silly) I actually started thinking of all the insecurities that buyers have to overcome in order to create a mindset conducive to buying. Is this the right house? What about the neighborhood…Will my family be safe? Are the schools going to offer my child the be…

Lessons of 911

Today (September 11, 2011) as I write this I am preparing to board a plane bound for Hawaii. Part vacation and part work this trip in and of itself is a statement to those who would bring America to her knees if they could. We as a country have never settled for defeat. And, I pray we never will. Ten years after the last plane fell from the sky. Ten years from the time the last tower fell. Ten years from the time the last hero breathed his (or her) last breath. We continue to remember those who we lost, and those who were saved. As I await takeoff I cannot get enough of the television coverage marking this historic date in a most appropriate manner. And, front and center in the celebration is arguably the most famous piece of real estate in America, Ground Zero. Ten years ago almost to the minute this hallowed ground having just seen her twin monuments to capitalism fall, and the land now intrinsically holding little value.  In the world of commercial development the value of land is of…

Congressman Calvert Member of the REALTOR(R) Party

I had the pleasure of sharing lunch with Congressman Ken Calvert from the 44th District a week ago. And, I have to tell you, if it is your hope to once again have a robust economy. One in which the housing industry plays a prominent role, we need more leaders who think like the Honorable Mr. Calvert. Over the course of lunch our conversation ranged across many topics. But, as you can imagine real estate was the main course of this meal. We started out the meal oddly enough, by his asking me what the residential market was like currently here in the Inland Empire. My response was that our average days on market appears to be rising. And, despite the fact that money is on sale (we are seeing historically low 30 year fixed rates) buyer activity is still tepid. He in turn advised me that the commercial market is very similar. And, that a high percentage of sales are coming from investors who have pulled out of the stock market and are positioning themselves in the “historically” more secure…

Old Solutions for Today's Problems

Today, I read an article in the newspaper that said Congress had passed a bill asking the banks to rent out their foreclosed homes while they waited to market the homes for sale. The idea is that this will stabilize neighborhoods impacted by a high number of foreclosures. And, in doing so preventing further erosion in values.
On the surface this seems like a reasonable request. One well founded in reason. And, this is one possible solution to a concern certain to impact neighborhoods across the country. However the real solution is not in a temporary fix like this. Instead, the solution  is to see that these loans become performing loans once again. Now before I go any further, I must say that the ideas, I am about to discuss are not my own. In fact, they come from Bruce Norris (of whom I spoke last week). As I said in my last article, I have a tremendous respect for  Bruce. His understanding of our market borders on genius. And, having followed his projections for the past fifteen year…

Norris Speaks I Listen

For nearly 20 years now, I have been a faithful attendee of the Thursday morning breakfast meeting held at The Inland Gateway Association of Realtors. Over these past two decades I have built many strong friendships. And, I have secured many transactions that might otherwise have been missed. But the main reason that I have religiously attended these meetings is that on this one day every week I am forced to focus on my craft. And, I am given access to information that I might not otherwise receive because of the speakers that they invite to enlighten us. This past week I sat in pure awe as Bruce Norris, a man whose opinions I respect greatly spoke to us at great length about the current real estate market. And, the challenges and opportunities that this market offers those willing to participate. There is no way that I can possibly cover in any detail all that he shared with us in such a limited space. I will however do my best. First it starts with our current interest rates. I have sa…

More Seller Financing Options

Over the past couple of weeks we have been examining the some of the benefits and risk associated with creative alternatives to conventional financing. And, I hope that you have found the information helpful. Today, we will explore two more methods to complete an otherwise difficult sale. They are the seller financing options of holding a first or second note on the property. First you might wonder why anyone would want to carry the note on a home that they intend to sell. Great question. And the answer is more common than you might think. Let us assume that our seller is older and he holds title to his home free and clear. And, that he has sufficient assets to retire comfortably. Selling his home will provide him with cash he may not need at the time and expose him to tax liabilities that he does not want to pay at the moment. In this scenario, if the seller decided to carry the note, he could structure the loan over thirty years, with an interest only payment and require that the note …

The Short Book on Short Sales

Last week we spoke of two “creative” methods of transacting the sale of your home when you have insufficient equity to do so through traditional means. They were the Land Contract and AITD (wrap around mortgage). Each of these methods can be useful “tools” and a skilled professional should be well versed as to when to pull them out of their “Toolbox”.That being said, each of them do have their own risk and benefits for both the buyer and the seller. And, they should only be used when traditional methods are not an option. Today, I thought we should all talk about the five hundred pound gorilla in the room. We all know he is there. And yet we refuse to discuss his presence for fear of dire consequences. That is the Short Sale. I actually did my first short sale in 1993 shortly after receiving my license to conduct real estate. It truly was a fluke. While attending a breakfast meeting at the then Corona Norco Association of Realtors, a gentleman got up and started promoting his book called…

The Up (And Down) Side Of Creative Fincancing

Back in 1993 when I began my real estate career, we had many options to sell a home (few of which were conventional).At the time interest rates were higher than FHA limits would allow. Many of the best houses offered for sale were upside down in value.And, selling a house was a real challenge.
We had a number of alternative methods to overcome the hurdles we had to cross all effective. And, all of them had risk or benefits for the principals involved in the transaction.
First there was the wrap around (All Inclusive Trust Deed): This simply stated allowed the buyer to take title to the loan while the sellers name remained on the loan for the term of the contract. It worked something like this. Your home might have been worth ninety thousand dollars. But you might have owed one hundred and twenty five. The buyer with the full understanding of the value might offer the seller five thousand in cash in return for being deeded to the house.
The upside for the buyer in this scenario is simple,…

Market Showing Mixed Signs

Recently DataQuick released its report showing that the Southern California Real Estate Market was still feeling the effects of the collapse we experienced at the end of 2007. In the Southland home sales overall are down slightly in year to year comparisons. On a similar note the median sales price from across Southern California has fallen modestly from a year ago to today (280K from 285K). The total number of sales in the six county area was down nominally for the 10th straight month when compared to the previous year. This comes at a time when we are usually building some momentum as we head into the peak selling season. What this tells us really is that there is still some buyer hesitance to be dealt with. According to DataQuick, “sales have been below average for a protracted period of time. And, there is little doubt that there is a pent-up demand out there”. Buyer hesitation seems to be coming from a continued fear of prices falling further combined with the reality that qualifyi…

Look And You Can Clearly See

Last week while in Austin Texas for some training, while reading the local newspaper, I came across the story of Zach Thibodeaux. Zach is an eight year old boy who is suffering from a degenerative disease known as Cone-Rod Dystrophy. This disease is rapidly robbing Zach of his sight. In fact, at this point in his life, he has already lost 75% of his vision in one eye, and 85% in the other. Soon he will be blind. Currently Zach is on a fast paced tour of New York City, in a feverous attempt to see all that can with the hope that those visions will be committed to his memory. His story is tragic, incredible, and inspiring all in one. And it made me think…Why is it that despite all the opportunities that we have before us, we often can’t see them before it is too late. I have said many times (in many different ways) that today’s market offers buyers and sellers many opportunities. And, yet we fail to see them. Quite probably because we take today’s opportunities for granted. A seller today,…

Buyers Need Representation Too!

Last week we explored the value for the seller of working hand in hand with a REALTOR®. Today we need to delve into the much misunderstood relationship between a buyer and his or her agent. It is this relationship above all others that is at the heart of who we are and what we do for the consumer. First let me tell you of the very real, very common scenario. One that replays itself each and every day. A buyer decides to begin the process of looking for a home. Usually they will start out either searching on the internet, or driving neighborhoods looking for homes that address their needs. When they see a listing that interest them, they call the listing agent and ask for a showing. This is their first mistake. You see the listing agent already has a relationship with the seller. And it is to their mutual benefit to see that you pay the highest price possible for the home that you covet. While this is in no way unethical, it is a reality. And, because of the obligation that the listing age…

Seller-Realtor Value Proposition

Good market or bad there is one constantly nagging question that is consistently asked by home sellers (and buyers) and that is “why do we need to use a REALTOR®? I thought that this week would be a great time to truly explore the value proposition that working with a highly skilled professional can bring to the transaction no matter what side of the aisle you are on. The number one argument is that of commission. Be it 4%, 6% or (you pick the number) it is often said that these cost cannot be justified. That the skill sets required to negotiate a purchase or sale do not warrant the cost. So it is this premise that I will first address. It is a fact that a home listed and properly marketed by a licensed real estate professional will in fact sell for 24% more on average than that of a home that is for sale by owner (FISBO). This fact alone would argue the point. It has been proven that the average seller would have a net profit that is at least 18% greater from his sale if he engages the…

NAR and CAR Respond

First let me say that last week’s article caused a flurry of responses asking for more information. So if you will indulge me, I will expand on the topic. And, add a couple of divergent opinions in an attempt to draw even more of you into the debate. First, on February 11, 2011 in response to the White House’s floating the idea of dissolving Freddie and Fannie over the next few years, the California Association of Realtors (CAR) had the following response. “The elimination of government involvement would raise borrowing cost for home buyers. And, severely restrict a safe and affordable flow of financing, further impeding the still fragile housing market recovery”. “A reduced government presence in the mortgage market will raise the cost of homeownership and make mortgages less available,” according to CAR President Beth Peerce. She goes on to say “Congress needs to understand that during economic downturns, the housing market needs government involvement to ensure capital stability”. CAR …

Goodby Fannie and Freddie

Recently the Press Enterprise ran a story about the Obama administration’s planned phase out of industry giants FANNIE MAE and FREDDIE MACwho combined hold over half of the nations mortgage securities. The stated motivation for this move is to lessen governments role inthe real estate industry. The big question is twofold first what does this mean for us today?And, what will it mean for us in the future? It should be noted thatthe prevailing thought is that in order to avoid a catastrophic collapse of our financial systemthe transition will need tobe stretched out over a protracted period (probably five years or more). So for the short term this will hardly cause a ripple. However, in order forour secondary market to survive (which is in our best interest) the private sector will need to fill the void left by the exit of Fannie and Freddie from the market place. The likelihood of this happening today is very slim. You see not only is America on sale (evidenced by the most affordable housi…

If It Smells Fishy...

It never ceases to amaze me the level of creativity that exist out there when it comes to those who would use illegal means to capitalize on a shifted or down market. The internet has spawned a new level of sophistication to the scams of yesterday. And today, the buyers and sellers would be well advised to ask questions and look before they leap. It should come as no surprise that currently the vast majority of fraud occurring is in the short sale and loan modification arena. This niche market (which currently represents over 50% of the transactions in our area) has been inundated by those who would use fraud and deception for their own financial gain to the detriment of those on whom they prey. In November of 2010, the Federal Trade Commission (FTC) implemented the Mortgage Assistance Relief Services (better known as MARS) act in an attempt to protect distressed homeowners from the ever increasing list of foreclosure relief scams. The primary function of this new rule is to make it ill…