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After 4 months of research, much review of the facts, and discussions with lenders, real estate agents, sellers and buyers we have begun a new project. We now have a working solution to the bad bargaining practices on Short Sales.

The two biggest complaints in the short sale process from buyers and their agents are that nobody keeps in touch with you and sometimes you wait for months to find out that you were never even in the race since better offers were tendered completely nullifying any possibility of yours being accepted.

We have a solution and are trying it now on a limited basis to see how people respond to the changes. First our short sale listings come with the seller’s permission to disclose all offers to anyone who asks. Hey! how much time and wasted drafting of useless contracts did that just save?

Simple fair and honest.

To those about to jump up and scream ETHICS!! ETHICS!! How can you represent your client when you disclose all offers? Go ahead and write in and I’ll let you down gently.

The objections received were few and the positive response to date has been overwhelmingly “THANK YOU”.

Since in a short sale there is no actual negotiating going on until you reach a decision maker at the short sale lender’s office we are implementing an automated update system to send emails to interested Parties on the status changes in the short sale process.

What this means is you can watch it like an ebay auction and make a bid when there is actually someone there to receive it instead of waiting two months and making numerous phone calls and writing notes saying “no new info” or “still waiting”.

Now remember that you can see the other bids just like on ebay so you don’t even have to decide whether or not to write a contract until the very end AFTER THE LONG WAIT.

I put forth the proposition that the short sales are not actually for sale until the lender gets into the negotiations so let’s quit pretending that an offer on a short sale is anything more than a letter of intent. In fact don’t write offers on short sales, just use leters of intent until you have a lender’s representative in the mix to actually negotiate with you.

The two biggest complaints of the sellers and seller’s agents were almost the same 1.No communication, and 2 the process is so slow.

The above addresses much of this already.

What we also implemented from a sellers perspective is to not sign an offer on a short sale until the lender directs you to do so. How hard is it to get a cancellation of contract from agent after you waited two months to call them and tell them the offer was rejected or that there is now a higher one?

Oh just use the Short Sale addendum and that speaks to that.

Now I am getting up on my soap box and your going to hear about walking uphill, barefoot and backwards in the snow to get to school.

When I started in this business the contracts were one page long and you filled in about 8-10 blanks . Now the contracts are ten pages long and you still fill in the same number of blanks. The truth is no one reads the contracts nor understands them. Has anyone out there ever had a client read their loan docs?

In 28 years I had one client do so and he got up and left the title company and refused to complete the transaction.

The point is the clients are relying on us to explain very complicated concepts to them in a very simple manner. The discovery we made was that most people, agents and clients alike, don’t even know what a short sale is and can’t explain why writing an offer has no effect on the bank.

That’s a subject for another day.

Its late and I am going back to bed.

Its Father’s day and I want to say that its a stupid holiday with the sole purpose being increased retail sales.

I love my children and I am proud of them, everyday and I believe they are happy to live with me.

They make me feel special everyday and I thank them by feeding them, laughing with them and spending time with them.

I don’t need beer or a tie to know how fortunate I am to have children that live with me in America, where we are lucky enough to sleep indoors and eat three times a day.

Peace

Do you have a horror story about a Short Sale or REO purchase?

Check in here because you are not alone.

There is now talk of class action suits being prepared against lenders for some of their unusual practices surrounding Short Sales and REO’s. Many agents and brokers are complaining that the business practices being followed by the lenders are unethical, illegal, and against any sense of fair play.

Here is one example that I know of that illustrates the problem.

A home was on the market for several weeks and finally attracted multiple offers for a potential short sale. (Remember that from the seller’s viewpoint a short sale is desired over a foreclosure because a short sale ruins your credit for a year or two whereas a foreclosure ruins your credit for 7 years.)

Offers came in ranging from 180k-235k. They were submitted to the lender for short sale approval with all necessary documentation required by the lender. Instead of completing a short sale the lender ended up giving the home to an auction house and sold it for 165k.

Question… who benefited from this transaction?

Not the seller, not the investor who had a beneficial interest in the loan, not the real estate professionals that diligently marketed the property and brought in offers, not the neighbors whose properties are now appraised using a 165k sale instead of a 235k sale.

Others report making offers and not receiving any response from the lenders regarding the short sale process for 4-8 weeks, if at all.

If the lenders have so many of these that they can’t keep up then perhaps they should hire more staff.

Everyone trying to sell a home in this market is negatively affected by this activity and yet the governments bailouts tend to ignore the realities of the market place and instead offer incentives to failing lending institutions who are at the heart of the problem and are no part of the solution.

What do you think?

Heard a crazier story?

Something even more bizarre happen to you?

Let me know and we will try to sift them and categorize them here because my information says a few of the big players are at the center of this tragedy and they need to be held accountable.

I am busy revamping the entire website so I haven’t written for awhile but this morning’s full page ad  in my local advertising rag (which calls itself a newspaper, THE SACTO BEE) was just a bit too much for me to handle.

First point, Homebuyers begin their shopping by going to the internet. People who read newspapers and believe them are decreasing in number each day. Why is the NAR using this medium to offer a plea to the home buyers of America? Because thay are victims of their own misunderstandings. (Hey mom notice how I didn’t say they believe their own bull……t?)

Do these guys even realize that placing ads in newspapers is an expensive waste of time? A very big player in our local market,  Lyon Real Estate (and one of the few brokerages that actually uses the concept of “fiduciary” in their strategic planning) recently decided to stop using newspaper ads. This goes against years of Realtor indoctrination that took great courage to resisit . GO LYONS!

Even though I have been saying it for years I still appalaud their move, however late in the game, and when others follow suit the newspapers will effectively be out of the real estate business and the rest of the real estate myths I have been busting will be easier to pull down.

Does NAR  even realize that we are not in a crisis but in a GLOBAL DISASTER? The interrelatedness of international banking has tied together banks all over the world. The fact that mortgages are sold as securities has compounded this fact. For a great treatise on why Banking and Stock Market Analysts should be laughed at and not listened to read the BLACK SWAN by Nassim Nicholas Taleb.

He makes a clear case of the reasons why stock market analysts and bank risk assesment managers are no more likely to accurately predict the future than a five year old child  can predict the future using dice or a ouija board.

The current disaster in the mortgage industry is bigger in terms of dollars than the Savings and Loan Crisis which none of the risk analysis people predicted. Can you say “Lincoln Savings” boys and girls?

America’s latest boom was fueled almost entirely by the availablity of FREE MONEY. When you loan a person with poor credit and no verifiable assets half a million dollars to buy a house which turns out to be worth something closer to a quarter million then something will break. Of course it all seemed fine as long as the phony prices, (which should never be confused with value) continued to climb. Even the five year old with dice can see that prices can not climb forever without a disaster at some point.

Consider for a moment the following definition. “The true measure for the value of a home is the price offered on today’s date by a buyer with CASH. ”

This points out clearly the fallacy that home values had been rising. The prices paid for them rose but since it was almost all borrowed money it did not meet the definition of value. As long as banks continue to make loans based not on creditworthiness or the ability to pay but rather on speculation then the market will rise and rise but then ultimately fall and fall. This is not a predicition it is a fact of life.

The problem with never ending price increases and speculative lending by banks is that it points out the relative worthlessness of money in general. Money doesn’t really exist, ( for more on this see my economics essays elsewhere) but as long as people pretend it has value and also agree collectively to accept it from one another then it flows around as if it has value.

Can’t you see the difference between a symbol meant to represent wood and a piece of wood? Which will keep you warm on a cold day?

So back to the NAR which is a group that does absolutely nothing to encourage affordable housing, to encourage home ownership, or to better the lives of people, but now insists in a newspaper ad that it is a good time to buy. BULLSHIT, (sorry mom.)

Why buy a house which costs you $2000-$3000 per month to live in, requires that you pay for the maintenance of the structure and is actually losing value each day? Especially when you consider you can rent the same house for $1000-$1500 per month and the landlord will maintain it . Plus,  if you want to move you can, without having to pay money to sell your home which isn’t worth what you paid for it. This is the actual scenario for many homeowners buying in today’s market and I tell them WAIT.

DO I get paid for telling them this information? YES I DO.  I get credibility, goodwill, future business and neighbors that don’t want to kill me for giving them bad advice. I think long term not short term. The NAR thinks of revenues not people and their revenues are declining as their dues paying members are declining rapidly. Let them go out of business like the banks that are holding all of the bogus paper that they created.

WHat’s that you say, that people lied and committed fraud to make these loans? The banking industry and lending requirements are  far too complex for the average Joe to even guess at how to fill out the applications let alone figure out how to fool all of the underwriters, PMI risk specialists and other so called experts. The fraud only can occur through the complicity of the lenders authorized representatives who understand these principles and share them with the borrower.

Yet the borrower is laible for the fraud and the lenders’ representatives rarely if ever are brought to heel over such things. The  guilty borrower may have done it once, twice, even thrice whereas the lenders representative has committed a series of acts which should cause many institutions to be closed under the RICO act for operating an ongoing criminal enterprise.

OH MIGHY FED WE NOW PRAY FOR LOWER INTEREST RATES THAT ALL MAY ENJOY MORE FREE MONEY.

Just drop it from a helicopter and cut the banks out of the deal. If they had done this from the beginning the people who bought the houses would still have them, the economy would still be robust and the banks that are all going out of businmess would already be gone and nobody but bankers would miss them.

Real estate firms routinely pay 25% or more of their commissions to my firm for referring them clients. If you wish to buy or sell anywhere in the United States, including Alaska and Hawaii, contact us first and we will help you find a firm that meets your personal or corporate needs. 10% of our gross revenues go to support charitable works in the greater Sacramento area.

The process is simple and without cost to you.

Just get in touch and tell us your needs and we will find someone to help you.

All 50 States

Any day of the week.

Well there has certainly been a lot of talk about sub prime loans, defaults and other lending worries.

Now there is some real action. A nationwide lender, (not a sub prime lender), couldn’t make its margin call and had to close it’s doors. This is the beginning of the secondary wave effect that is rippling through the industry. (The primary effect was the sub prime people losing their shirts.)

The same day this hit the fan, just about all of the other sources of money that we track daily announced that they were discontinuing most of their Limited Doc, Stated Income, and other alternative documentation loan program.

You are saying great its about time etc etc etc.

What does this really mean?

Half or more of all deals that closed last month in my neck of the woods only closed because of the programs that have just been discontinued. The other part of the news is that credit requirements have been raised for many of the remaining programs.

Question… If the market is slow and the supply of money further dwindles what is the market likely to do?

We have been noticing only two main types of buyers in the market other than the few people that just have to buy because of their own personal circumstances ( moving to new area, etc).

These two types are

1) savvy investors looking for ( and getting ) real bargains with substantial concessions from the sellers and

2) broken credit high risk buyers who couldn’t/didn’t buy when the market was good and now mistakenly belive they can get a deal at a time when credit is drying up.

The changes mentioned above are going to greatly curtail the pool of real buyers ( those that can actually close an escrow) in group number 2 and make for better bargains for those in group number1.

The slow market we are in is going to get slower.

Why are we excited about this?

The marginal players will be dropping out of the business (something that always happens in a downturn) but at a faster rate. The real professionals with ethical business practices will be standing when the others have gone.

Also the slamming of the FREE MONEY door will deepen the slowdown and speed up the process of foreclosures and bank repos WHICH MUST END before there will be any real recovery.

Remember the 35% rule. For every 10 houses for sale there are always 3-4 people who MUST sell. These people lower and lower their prices until they sell. If only 35% or less of available inventory is moving the market will be dropping.

Now with the number of bank owned properties hitting the market ( and you better believe they dump these fast once they own them, ouch my reserve requirements are aching) plus the number of new homes coming out of the ground because they have to finish what they started ( no builder starts a development with a plan to sit on them for a whole down cycle AND they better sell them now and lose 50 grand each or sell them next year and lose 1oo grand each) there is no hope for a dwindling inventory until these guys are done peeing in the pool.

The bad news is there is no bottom yet. The good news is that we are coming to it faster so it will be over sooner. Remember that the boom was fueled almost entirely by FREE MONEY and it went on longer than any normal cycle should have but for that factor. Without making lending decisions based on creditworthiness and ability to pay WE ARE ALL SPECULATORS.

So our tip for the day to sellers, IF you must sell then cut and run, drop your price, get out. If you have no room to drop then you need to review our ALTERNATIVES THAT THE BANKS DON”T WANT YOU TO CONSIDER.

Buyers, don’t buy unless you are planning on being there for 10-20 years OR you are practically stealing the property.

Remember, that with a mortgage most people are no more than renters with the additional obligation to pay taxes, insurance and maintenance. Home ownership only has value if it really lifts you up rather than keeping you down.

PHILOSOPHY
Treat others as you would like to be treated.

Help anyone who genuinely asks for help,

Give without first thinking of yourself

If I can assist you to make your life better
then I have enriched mine as well.

Always give something back to the community that provides you sustenance

WHY ANOTHER WEBSITE ABOUT Real Estate?

If you ever wanted to search for homes without getting annoying phone calls or emails here is the most up to date and complete list of homes in 7 counties. (More are on the way). Look at 100 homes and No One Will Call You and No One Will Email You.
If you ever wanted an honest and simple answer to your real estate questions here is the place to ask the question and get the answers.

Whether or not you are our client, information is always free.

If you want these things in a simple clean format without ads, pop ups, and requests for personal data here it is.

To learn the simple truths about real estate and make the complex subjects bow to a certain set of very few rules….To learn what the pros know, so you can do what the pros do, join us for a chat sometime.

Here is where you can peek behind the curtain and talk to the wizard and learn how things really work.

Why? Because ignorance is what binds us to failure and it is wholly curable with a little knowledge.

PRIVACY
We don’t collect, nor ask for, private data. If you want to leave an email, then go ahead (it will be used to contact you but never purposefully shared or sold to others).

However, having said that please read what we have noticed about the internet….

There is no privacy on the internet. Even with encryption and passwords you can have your information lost, stolen or shared. Be aware of this and don’t expect your forays across the wordlwide web to be private THEY ARE NOT AND NEVER WILL BE since some of the people using the internet are selfish, reckless, malicious, angry, or just plain nosey.

THE INTERNET IS MEANT TO BE A TOOL FOR SHARING INFORMATION NOT FOR HIDING IT.

This is a main premise of the internet that
Information
Like Water
Is Free and Flows
Everywhere

Another way to state this is ” A secret is something only one person knows. When a second person has the information it is by definition, “news”.

Supporting efforts to ban access TO ANY SITE only gives those who would invoke cencorship tools to use to control access to information.We believe that adults have the right to choose for themselves which sites to visit and which to ignore.

Arresting people solely for having information on their computers does nothing to combat the efforts of those who create and disseminate the information. Let’s distinguish between reading about or watching depictions of a crime and the crime itself. Should everyone who watches “COPS” be arrested for the crimes committed on TV? We think not.

However, you can minimize the risk of having your viewing habits or your personal data stolen or shared.

Use a firewall to protect your computer from most intrusions and to surf (almost) invisibly. Regularly use virus protection and anti-spyware software. Tell the owners of the sites that you visit that you don’t want your information sold or shared.

Remember that anyone with the key can unlock the door and the more valuable a thing that you possess the greater will be the efforts of dishonest persons to obtain it from you.

Though I have been an agent, broker, manager, investor, developer, builder and also owner at various times in the last 27 years I have been a teacher and a student all of my life. Here are some of the lessons I’ve learned.

1) The only real “sin” in business is “waste”

I have managed businesses for others including a large manufacturing facility where I was taught to do time and material studies to track actual costs in real time. I discovered that once you see the true cost as well as the true benefits of your efforts the decisions you have to make can be made using simple easy guidelines. Here are those guidelines.

First ask your self the question,” Is this an ethical action that I plan to take?”

(If the answer is YES) then ask,

Does it make sense financially, that is, are the benefits justified by the cost?

(If the answer is YES) then ask,

Is this action legal?

If one can not answer “YES” to all three questions then it is best that you not undertake the action.

The reasons for the above statement will appear obvious to most of us.

2) Once you need a lawyer, you have already lost your case

I studied law and managed a law firm where I learned that the law is essentially a set of rules to define and end disputes. Avoiding disputes is a simpler, and therefore a better process for all to live through.

3) Money is only a symbol of wealth, wealth itself is something entirely different

Which would you rather have on a cold day, wood for a fire, or a drawing in the dirt meant to represent wood?

One’s happiness or level of contentment will always be more greatly affected by the quality of one’s personal relationships than by the size of one’s wallet.

Real estate is complex for everyone

After working for over 25 years  in this industry I have met only a handful of people who understand  it well. The common perceptions held by most professionals, and the public as well, are entirely based on non statistical evidence.

Here are two of the most common misunderstandings. 1) Real Estate companies sell real estate. (This is utterly False)

Real estate agents and real estate brokers don’t even sell houses.  The individual agents and brokers who actually meet clients, draft/ tender contracts or close escrows for real people are the ones  doing the work and generally with little or no  training or actual supervision by the companies they work for.

It is also possible for a real estate company to hire  people  (agents and brokers) without pay.

This website is here for me to teach others about the complex set of relationships known as real estate.
If you don’t need any help you are still welcome to join in at any time.

Maybe you know something I don’t.

The information here is considered useful and reliable but if you believe either of these statements to be untrue, let me know, and I will reexamine them in light of your comments. Each person must decide for themselves.

Be prepared for an answer though, if you do ask a question.

Want some help?
Just ask

First rule of doing business,

Willing participants only

A buyer is free to negotiate any arrangement for payment with the broker that represents the buyer. However, by custom, the seller almost always pays the buyer’s broker’s commissions. When a seller agrees to offer a home for sale they state what they are willing to pay to a broker that finds a ready, willing and able buyer. This information is available to the brokers before they show the property. Usually it is all a broker receives but a buyer may agree to compensate a broker in addition to the fees paid by the seller if he so chooses. You should discuss this with your broker when you begin to work with them and again at the time you make an offer on a specific property. Remember all commissions are negotiable by law, even if you don’t pay them.

Loans

Very few home buyers actually pay cash for their homes. Most take out a home loan for all or part of the purchase price. The interest on the average home loan actually exceeds the price of the home itself

Your credit score determines what interest rate you will pay. Your income only determines the size of the loan available to you.

When home purchases fail it is almost always because the financing becomes unmanageable or unaffordable

Take some time to investigate your loan options before you shop for a home. Many credit problems are able to be overcome with a little time and effort. This time and effort can save you tens of thousands of dollars and it must be done in advance to be most effective.

Once you have a contract to buy a home you will begin to spend money on appraisals, inspections and other non refundable items. If the loan fails you don’t get this money back.

Most purchase contracts call for the transaction to be completed within 30-45 days. This may or may not leave you time to fix a problem with your credit report.

First find a company that charges NO UPFRONT FEES. Then check your credit and see what can be done to improve it.

Make a timetable to complete the credit repairs if needed.

After the repairs are completed get an underwriter’s approval for a specific loan progam and then shop for a home with a copy of this approval in hand.

A pre-approval is meaningless unless done by an underwriter. Letters from a loan officer must be backed up by an underwriter or they have no force or effect.

Buying

Before you look at homes there are 4 important steps to take. Remember that the interest on your home loan can be larger than the price of the home so shop carefully for your loan. This means you should allow a month or two to improve/ repair your credit before you shop for a home as small differences in your credit score can mean tens of thousands of dollars in interest

1. Determine what you have and what you want.

(where do I live now?, how much money do I have?, where do I want to live?, how much money will I have in the future? What am I looking for?)

2. Find the cost to you to purchase what you want .

( get financing information, how much are other expenses, closing costs, taxes, insurance, etc?)

3. Determine if the cost is acceptable.

(can you afford the payments?, do you have the money needed to buy?)

4. Decide whether or not to purchase .

(With the other facts in hand now make a decision)

5 If yes then look for a home. ( look after you know you can and will buy)

Without planning you will rarely arrive at the place you thought you were going.