Picture this…main watering hole for the agents of  a large Brokerage office…”Happy Hour!”   The agents are having a drink and sharing their weekly  war stories.  Let’s listen in:

“So Freddie, didn’t I hear you nailed a ‘hogger’ this week?”  “Yeah baby, you heard right…I’m at the house, a $475,000 listing, putting up a rider on the sign that says ‘Great N’Hood,’ and a couple drives up and wants to see it.  Ms. Homeowner was just leaving to get groceries and told me to go ahead and show it, so I did.  They liked it and said to write up an offer.  I showed the offer to the sellers and they went with it.  So…I didn’t have to split the commission with another agent…got the whole 6%, $28,500 for myself…hogged that one!”

See, in a normal situation, the listing agent lists the house at 6% and when a different agent brings a buyer, the selling agent gets 2.7% ($12,825) and the listing agent gets 3.3% ($15,675). The listing agent is the one that covers the marketing expense of the house.  Only makes sense the listing agent should get more…to offset expenses , right? 

 The listing agent probably took pictures (no cost?), made brochures ($15. ?), provided copies of the disclosure document ($5.?), had a yard sign installed ($40.?), spent a couple hours working with the home sellers, before the listing was secured, showed the home a few times (4 more hours?), took calls from other agents who showed the home (two more total hours?), wrote the offer (another hour and a half?), and will attend the closing (another 2 hours?).  So, a total of 11.5 hours.  But I usually find an agent will spend about 20 hours per deal.  So lets say the agent worked 20 man hours and had total expenses of $60.  Landing the hogger means he made $28,500 - $60 = $28,440 divided by 20 man hours = $1,422 per hour.  Yeah baby, hog it up!

Most buyers don’t understand this whole process.  They’ll sometimes be working with their agent but attend an open house or call to see one from the info on a sign and the listing agent shows them the house, writes the deal and gets a “hogger” on it.  The agent the buyers has been working with, sometimes for months, gets absolutely nothing and the agent that wrote the deal…spent maybe, a couple hours with the buyers, gets the big reward.  Bad deal, this?

Agents are supposed to not only ask a potential buyer if they have an agent, they’re suipposed to defer to the other agent, if there is one.  Then, if there is no other agent, the listing agent is required to disclose to the potential buyers, on an “Agency” document, how the process works…and…have the buyers sign it.  But do they?  The Hoggers are in waiting…c’mon uninformed buyers…line up!

When you start working with an agent, if you’re happy with them, have them set up all showings and situations for you.  That’s the only way they can get paid.  Don’t hand over the pay to some agent you don’t even know, who hasn’t done a thing for you.  And, if you do look at a home while in the search process, if the showing agent does not ask you if you are represented by another agent, let your agent know about it…the showing agent is either derelict in their procedure or unethical or plain stupid?  Would you want to reward someone like that?

One more thing (I’ll bet many readers are wondering about this), If a listing agent was happy with the normal way home sales pay out…and…an unrepresented buyer comes along…and…the offer is less than the sellers want…why wouldn’t the listing agent offer up all or part of the 2.7% he wouldn’t have to pay out to another agent, to help his sellers?  We do here…we do even more…check us out?

Beware…the “Hogger” may come your way?

Next: How to get the best deal when qualifying for a mortgage!

Ed

Whether you’re downsizing, up-sizing, investing in real estate or buying your first home…buying now, right now…is the best time to buy in 40+ years!

With over 7 million home owners behind on their mortgages, the already huge inventory of homes will get even bigger.  The choices available are phenomenal!

We’ve recently looked at so many foreclosures and short-sale homes and find a good percentage are not beat up at all.  In addition, many are eligible for the super FHA 203k plan, whereby you can get the fix-up cash you need…and…it gets better, since most of these will be devoid of all appliances, this program will kick in cash for that as well.  Nice! 

One of our “pros” recently put his client in a home that sold in the $230k’s just a few years ago.  Now, our client is in a large 4 bedroom, 2 bath home on a large, fenced lot with landscaping, a very big - new asphalt drive, new interior fixtures, new bath fixtures, new electrical box and some wiring, new plumbing, some new carpet and all new - higher end appliances.  He’s on cloud nine, thanks to our pro being informed.

All this was financed through this terrific FHA product and the client has nearly a new home.  He’s in it for the $164,900 he paid, plus the $25k he didn’t have but the FHA plan provided.

If you care to know how this plan could work for you, give us a call and we’ll give you the details.  We have so many first time buyers that know they can get a good deal but just don’t have the money to make repairs.  Find out how this plan can get you in the home you want and put the cash in your hand that you need.

And by the way, for those of you that would like to stay in your home, vs. a short sale or letting it go into foreclosure, give us a call, we’ll help you get the info you need.  No worries, you don’t have to be selling or buying, this one’s on the house!

We come across so many people that don’t understand how the “HAMP” program works…or…they’ve called their mortgage company and get nowhere on the phone with them.  You have to know how to work with these birds and what the rules are because half the time, they don’t know themselves.  Let me share a success story with you:

another of our “pro’s” is talking with one of our clients; a single mom with a serious financial crisis…less hours and very reduced pay, no where near the child support money she needs and…increased mortgage payments from an adjusted rate mortgage plan.  What to do?  She calls her lender and is told they will have to see if she’s qualified to adjust her payment…they’ll get back to her.  Weeks go by, no call back. 

She calls again and gets the same story.  (Enter our guy.)  She tells him what’s going on and he tells her she is qualified and asks her to give him an authorization letter, where he will be allowed to talk with her lender on her behalf.  He called the lender and told them she was absolutely qualified, to read the mandates and get busy helping this lady.  Within days…new ball game.  The lender is cooperating and the mortgage will be adjusted to a comfort level for her.  The family can stay put!

                                                                   Dontchaloveit!

And don’t be embarrassed if you paid too much, have no equity and the bank is on your case. (Cute story,see theWSJ /2/8/2010 by JamesHagerty.)  

My interpretation: the MBA (mortgage bankers association), movers  and shakers…right(?)…paid $79 million for their newer headquarters in 2007.  They thought they might be better off to sell it now.  They have an offer and it looks like they’re going to take it.  They owe the bank $75 million but the offer is for less, only $41.3 million.  Oh shucks…looks like they’ll have to come to the close with the balance…right?  Oh, but some good luck, they may not have drawn the whole amount because the bldg. was under construction.  They’ve refused to be interviewed about their intentions.  Smell fishy to you too?  But wait..there’s more!

Their chief executive, John Courson, in an interview last year, said that people that were “under water” -borrowers owing more on their home than it was worth- should keep paying their loans if they could.  He went on to say defaults hurt by lowering property values and sent the wrong message to their kids.  Well guess what?  He refused to be interviewed about what his Association was going to do about the balance owed.  Can we guess what that means?  Funny stuff, this?  You should feel bad about your situation?

                        Call us, we’d be happy to help you end the financial pain!

Back to the “buy” side; rates we thought were going up are still in the 5% range and jumbo rates are still in the 5.5% range…hey…the time to buy is right now…remember…you make money in real estate “on the buy.”  Also, if you’re buying to occupy, there’s the $6.5k to $8.5k govt. tax credit, or, cash if you don’t owe taxes. But that will blow away if you aren’t under contract by the end of April and scheduled to close by June 29th of this year.  Doesn’t look like they’ll extend it either…so…latch on if you can! 

Next time: “The Hogger.”  (Don’t miss it, it’s pretty funny…pathetic…but funny.)

Ed

You’re probably not old enough to have known a better time to be investing in Real Estate.? For Home Sellers, they’ve probably never seen a worse time to be for sale?   It’s not only a “buyer’s market,” its as hot as it can get for Investors!  You make money in Real Estate on the buy! Buy now, don’t wait, let’s look at why.

The bank bail-out deal did not work according to plan.  The banks got to borrow at 1/4% and lend out at 4.75%+.  Who wouldn’t jump on that arrangement!  Trouble is…few loans are being made, except to highly qualified buyers.  Not only are the Banks messing up the housing market, the PMI insurers are fighting with the Banks, refusing to pay according to their original agreements.   In some cases, the PMI Insurers don’t have the reserves they need to pay up. Case in point, a sad story…

I’m helping a young couple try to short-sell their home.  Both have been laid off, she has cancer and couldn’t return to work even if she wanted to.  They have a young son, have moved in to less than desirable quarters but it’s all they can afford,  they are both under 30 years old, they owe $270k on their mortgage and they’re 5 months behind on their payments.

So I get a ridiculous offer…$167k and the buyer wants $10k back for closing costs.  (I really don’t think the bank will get more than $185k for this house.) The bank does an appraisal and turns down the offer.  Not surprising?  Next, I get an offer for $190k and this buyer only wants $6k for closing costs.  The bank will look at it.  Weeks go by and no answer.  I have to work through a couple different Reps at this bank, to get the proposed deal looked at.  Meanwhile, the buyer wants an answer soon - they don’t want to miss out on the second choice.  We get an answer; the bank will go with the deal but the PMI Insurer wants the young couple to sign a $25k promissory note.  I’ve already sent the bank tax records, closed bank account records, a hardship letter, monthly budget and “comps.”  This young couple couldn’t sign a note for $25 bucks, let alone $25k?  The bank won’t allow me to negotiate with the Insurer.  When I informed the prospective buyer’s agent, she came back to us with a $200k offer and I informed the bank.  They said they would take another look.

Several days later, the agent withdrew the offer and I informed the bank that the deal was dead.  Several days  after that, the bank notified me they would accept the offer - they hadn’t even read my e-mail to them from days earlier.  Who’s in charge at this bank?

We now work with an attorney and a staff totally dedicated to doing short-sales.  This strengthens our marketing efforts and reduces the time necessary to get these done.

This whole mess adds value for the Realty Investor. The stumbling and bumbling of these banks has put a huge number of homes in front of Investors that have good financing sources.  If you can close fast and have savvy lenders, you’re in the drivers seat!  What we’re finding though, is that too many Investors are sitting on the fence, hoping for even more price reductions, before they snap the trigger.  More and more realty tracking firms are projecting a slide in prices for up to another 18 months.  There’s more to consider though…an increase in rates is inevitable and those rate increases may eat up the dollars saved on the buy, within a few years.  The time to buy is right now, especially since the banks, Fannie and Freddie are going to make it harder for buyers to get financing.  Look at these guys…struggling with depleted reserves.  Last week, a WSJ article pointed out that these reserves were supposed to be at 2% but were only at less than .6%

Fan/Fred put the ‘touch’ on the FED to the tune of $111 billion so far.  FHA requires lenders to have cash reserves of $250,000.  But now they’re considering to raise this reserve amount to $2.5 million.  You can guess how many Lenders will no longer be offering their services for FHA deals if this goes through.  They’re in trouble folks - and the loan game is going to tighten up like nothing we’ve seen.  The time to buy…if you can…is now!  Rates will go up, they always have.  When this will start is hard to say but when it does, it will be swift and severe!  Don’t get trapped, buy now while there’s plenty of choices and some money still available!

Now, where to go for the deals? We always look at the areas that offer the best potential for rental and resale.  If you’re not working with a proactive, ambitious Realtor that’s taking their time to do previews for you and pulling ‘comps’ to find the very best deals for you, give us a call…we can find you what you want in less than 30 days.  And…December is one of the best months for an Investor to be busy in the market.

But wait, there’s more!  Sound familiar? There really is more though, here’s how we work with you:

We get together to set up a strategy to find you what you want.  We nail down the best areas to search in.  We set you up with a search program that gets all new listings to you, the same day all Realtors get them…you’ll be at the front of the line so you don’t miss anything.

If you’re too busy to see the homes you have the greatest interest in, we’ll preview these for you and give you a report on them.  That will save you time  - we’ll only set up showings for the homes at the top of your list.  Make sense?

Once we find what you want and close on it, you’ll get 25% of the commission paid by the sellers.  This is to compensate you for your work in the search process.

There are over 1,525 homes for sale at prices less than $150k right now, in just 4 counties! Many of these were purchased and renovated or updated within the last few years.  This means you may have only minor items to repair or just cosmetic work to do in order to rent them out or re-sell them.
Time is money…don’t get caught in a rate increase and lose out on some of the hottest deals ever!  We just put a deal together for an Investor at 5.25%.  If that same deal ($150k) was 7%, it would require an additional $170/month.  Get in while you can ‘cash flow!’

Ed

What can we learn from Wall Street?      

 Is the “DOW” any help?  Up about $200 one day and down about $250 the next…obvious hype effect created within the ranks of the WS players.  The great bank bailout program - any help there?

What a joke!  You should be in this business (real estate) where transparency reins…the banks are helping themselves but not home sellers and buyers.

Uptick in home sales is touted by the media and govt.  Well, I suppose…drive the prices down as far as you can and buyers will show up.  Short-sales, foreclosures, first time buyers after the $8k deal, most sales under $200k, heck ya, we’re cruisin now baby!

Working short-sales recently, for both buyers and sellers, I find the banks willing to sit on their toxic loans and drag out the process.  After all, while these loans are sitting there, not yet written off, they represent a value far past what they’re worth…right?  When you’re at the bank filling out your net worth statement, they let you put your car down for what you paid for it, right?  I mean, you can play too…no?

Care to go along with me today on a short-sale deal, just for the ride?  Hop on, here we go, hope you don’t have a full stomach for this one.

WARNING: INEFFICIENCY AND GREED AHEAD!

Here’s how it works:  The home owners know they can’t keep up with their inflated mortgage payment.  Besides, the home is worth far less than it was when they bought it.  They want to see if their bank will accept a short-sale; take less for the home than what they owe.  They heard they can save some of their credit vs letting the home go into foreclosure.  They call the bank to see if the bank will allow this.  Bank says…’if you get an offer send it in and we’ll decide at that point.’

Our home owners put it on the market and the listing agent puts the price as high as he thinks it can go.  Now, they have to compete with other sellers who are in the same financial mess…sellers who have been out there a long time, with no results and who have continually been dropping their price.

But our home sellers are  lucky, an offer comes in.  Aw shucks…it’s 20% below their listed price.   Their agent tells them that “this is not unusual…let’s send it to the bank.”  They’ll need to add some documents to the offer and send in a whole package.  They need to send two years tax statements, the latest two months of their bank statements, last two pay stubs, a hardship letter (the bank wants to know why they can’t continue paying), and their present home budget.  The whole package is submitted to the bank. 

Now, why would the bank consider something like this?  Well, the bank knows that if this home goes into foreclosure, they may lose even more money than they would with the offer submitted.  Maybe not though?  The bank has an ‘Asset Manager’ that will make this decision.  So the package goes to the Asset Manager…right?  You’re right,of course not.  It goes though a screening process first.  Probably goes through two or more people assigned to make sure all the info is there for the Asset Manager to make a decision.  (Are you thinking what I’m thinking?  Will this be an expedient process?  Will all that are involved know this is a time-sensitive matter, that both the sellers and the buyers want an answer ASAP? I dunno hey, sure hope so!)

So the package arrives at the bank fax room and is sorted to go to the ’short-sale’ dept.  In a day or two, it goes to screen person #1.  Aw shucks! (my substitute word here.)  The listing agent didn’t send a HUD statement in with the package. (The HUD statement is what both sellers and buyers get at the close.  It has all the financial data regarding the deal and is required by law.  The bank needs to see it now, so they know all costs involved and what their net will be.)

So, does #1 one call the agent to let him know the package wasn’t complete?  This is a test question gang…whatcha got?  You’re right, no call to the agent, the file goes to the incomplete dept., awaiting the missing document. 

The agent was told, when he called to submit the offer, that it would take from 5 to 7 days for the fax to get to the right dept.  He was told to call in about a week to get the status of the offer.  A week’s gone by and the agent calls, sits on hold ’bout 20 minutes…hey…a live voice!  He learns that he forgot to send a HUD with the package and to do so now.  He calls his Title company to get a HUD and within a day or two has faxed it to the bank. Progress!  When will the right dept. get it?  Good for you!  That’s right…in about 5 to 7 days.

Let’s get out of the bank now and turn to the buyer, a buyer who’s been waiting 3 - 4 weeks now for an answer.  What if the banks says no?  Will that other home the buyer was also interested in still be available?  Maybe the buyer should cancel and go with the other one…it was a normal sale and they’d know in a day or two if the deal was going to fly. Their agent tells them to “give it a day or two before they cancel the offer, and move on to another home.”

Back to the bank.  The HUD was received and the whole package is now in the hands of screen person #2.  #2 will often have the package from a few to as many as 15 days before it goes to the Asset Manager.  Everyone is lucky on this one though…#2 passed it on in just two days. (Thanks #2, we know that no one else is appreciative for your wok ethic but we sure are.)

Asset Manager to his assistant: “yeah, this deal stinks.  I noticed the listing agent sent us comparable listings but he just wants to get his commission, can’t trust those birds!  We’re required to do a BPO (brokers price opinion), so get to that dept. and get it set up.”  Notice; he didn’t say when.

Here’s the deal; a BPO is ordered from another broker - other than the one who listed the property, to see if the BPO comes it close to what the offer is.  If the BPO is lower…no problem, we’re in the game.  But if it’s higher, the deal will probably get shot down?  I have some very disturbing news folks, you can guess who they send out to do these, in most cases, not the top hitters in the house.  It’s the agents willing to run around for very little money, the bank does not pay well!

Let’s put a time line on this part, your call here; how long from the time the bank gets everything, to the order for the BPO…and…how long before the bank receives it…and…how long before the Asset Manager gets it?  You say _________. (Days, hours, minutes?)

The sellers, the buyers, the agents…all sittin on nins and peedles, awaiting the good news.  Oh no, oh no!  The bank ordered a ‘drive-by’ BPO but now needs an interior BPO.  It’s ordered though, should hear any day from the BPO assignee about getting into the house to do this.

Ok, so if you’re still with me, we’ll jump off here, nuffs ‘n nuff!  Quite the deal ‘eh?  Think I’m full of hot air?  Many are far worse than this example.

The bank bail out designed to help us all…?

Here’s the good news; there are many ways to bust up this disorganized system and get things done faster.  Weknowwhatandwhentodowhathastobedone! So if you’re in a short-sale state of mind or wonder what your options are, call us!  We understand your pain and we’ll walk you through the process so you can make an intelligent and informed decision about - how to get your pain relieved!  No obligation, we’ll meet, we’ll talk, you’ll get the info you need and then - you can call us, if and when you’d like us to help.  Fair’n nuff?

See you again soon.  Next up: Residential Investors

Ed

             Ever wonder where your precious, hard earned equity goes when you sell your home?

Let’s take a look. Real Estate agents work for brokers and receive a split of the commission when a property is bought or sold.  The broker needs their cut, to support a variety of amenities: the building, furnishings, equipment, office staff payroll, administration payroll, advertising, dues, etc., etc.  So, who pays?  You do, if you’re the seller.

Generally, most brokers take from 10% to as much as 50% of the selling agent’s commission.  That’s considered payment, for the agent operating out of the broker’s bldg. and all the support services.  So, when a Realtor brings a buyer for the listing agent’s seller, the total commission (usually 6%) gets split like this:  (Say, the sale is for a $250k home) - selling agent that brought the buyer sees 2.7% go to their broker, and the listing agent’s broker gets 3.3%.  Then, the listing agent’s broker pays the agent from $ 4,125 to $ 7,425.  The agent that brought the seller, will usually get from $ 3,375. to $ 6,075 from their broker. (Total paid by the home seller was $ 15,000.)  This is how it goes in most transactions today.

There are brokers today who recruit agents on a 100% commission basis.  They pay the agents almost all of the commission but the agent then operates out of their home…no big building and conference room, no phone answering service, no fax, just a place to park their license.

By the way, national statistics show that listing agents only sell about 2 of every 10 listings they have.  The majority are sold by other agents.

When an agent starts a search for a home buyer, they should have learned exactly what the buyer wants in a home.  The agent should know how many bedrooms, baths, finished sq. feet, style of home, what size lot the buyer wants and whether they want a fenced lot, the #1 and #2 n’hoods the buyer wants to live in and the most important rooms in the house…like; open kitchen floor plan…or…huge master bedroom with large walk-in closets and spacious bathroom.  Trouble is, too many agents ignore this procedure.  They tell their customer; "well, when you see one you like, let me know and I’ll getcha in!"  Not good, this!  Some of the websites folks search, don’t give them enough info about the home and the agent doesn’t do his homework, so - they go out to look at homes they have no interest in.  Waste of time and irritating at a minimum!

I’ve talked with agents that tell me they’ve shown their customer 50 homes or more.  How’s that possible?  Those agents don’t get it!  We can find the buyer a home in less than 30 days.  How?  By asking questions and taking them to see only the homes that line up with their interests.  Easy, fast and fun.  We also reward our buyers with cash back at the closing for the effort they put into a search.  So many buyers have told me that when they worked with other agents, they would go to open houses or search the Internet and feed their agent the addresses.  The agent would then set up showings and they would hit the road. In a situation like this, does the agent deserve all of the commission paid by the sellers?  Your call!  When I say we can find a buyer a home in less than 30 days, I’m talking about calendar days.  The total ‘man hours,’ is less than 20 hours, spread out over the 30 days.  We might be out there only a few days and a couple week ends.

Recently, a lovely lady told me that she called an agent from a yard sign message.  She wanted to see the home she was in front of. The Agent directed her to her office and when they met, the lady was told she’d have to pay $ 1,000. up-front, if she wanted to hire the realtor to find a house.  She passed on the offer - you would too, right?  Then, this lovely lady contacts a second realtor and meets with her at the broker’s office.  No talk of any fees, so, she’s all right so far.  She tells the realtor she’s looking for a very small house (she’s near retirement, doesn’t want stairs, a big house nor a big yard to take care of…two bedrooms and 1 bath will do it.  Even a home with less than 1,000 finished sq. feet will work), they hit the road.  The agent takes her to a split level with four bedrooms,  two baths and over 2,000 finished sq. feet.  Whaaaa?  They head back to the agent’s office.  She then learns, that to continue the search, she’ll have to pay $400. up-front.  The lovely lady passes on this offer as well.  (Applause please!)   Cute stuff, these "up-front-fee realtors"

Here’s something else you should know; agents can share their commissions with the parties to a transaction.  For example: The selling agent and the buyer’s agent can negotiate to receive less commission to get a deal done.  Could help both the seller and the buyer?  But many big brokers won’t allow their agents to do this.  Too bad…nice to have the option available, it’s helped us help both parties many times over.  Independent brokers might also offer a lessor fee if they sell your home.  They may reduce the fee to 3% or 4% if they sell your home.  (We’ll do that for just 1.5%!)

So, if you’re a home buyer, make sure your agent is doing the majority of the work, they get paid handsomely for what they do.  If you’re a home seller, ask for a break on the listing fee.  If you can’t get to a win-win solution, call us…you don’t have to fight for it here, we’re on the same team, your team!

Always looking for stories about buying or selling real estate…got anything you’re willing to share?  Get in the comment box and let ‘er rip, we’d love to hear from you!

Ed