The Law Of Unintended Consequences

At the risk of sounding like a spoiled sport about the governments new plan to help struggling homeowners, I must point out the obvious—-Any time the government steps in to help they generally create opportunity for scam artists. It’s known as “The law of Unintended Consequences“.

For instance; loan modifications. Sound good on the surface right? You’ve heard that banks are helping struggling homeowners by changing the terms of their loans to more affordable interests rates. Who would argue with that? Let’s take a closer look.

Fact: These “loan modifications” are not available to everyone. I know I know, that’s not mentioned in the news but it is fact. They are available to borrowers with ARM’s (adjustable rate mortgages) and other types of subprime mortgages generally prone to default. However, if you have a conventional loan you have little or no options. Since ARM’s and subprime loans account for a very small percentage of the total amount of mortgages in the US, that equates to few, if any opportunities for the majority of homeowners, many of which are currently struggling. Fact: The vast majority of modified loans end up in default and foreclosure.

Over the past couple years, companies calling themselves “loan modification” specialists have formed. They charge upfront fees and take advantage of distressed homeowners. They claim to stop foreclosure, negotiate lower rates and save thousands in mortgage payments. What’s the problem you ask? ---The upfront fees of course and the simple truth that loan modification services are available directly through your lender without third party assistance.

If you or someone you know is considering a loan modification DO NOT use a third party negotiator. Contact your lender directly for information on whether you qualify for modification. Keep in mind however, they are a debt collector. If you do not feel comfortable working directly with your lender, contact the law firm of Oldfield & Helsdon, at http://www.tacomalawfirm.com/ or call Tom Oldfield directly at 253-564-9500 for a consultation about your legal rights. Tell him Gene and Kim sent you. If you discover “loan modification” is not an option, we may be able to help with a “Short Sale”. Contact us for details at 253-539-7653 or send an email to geneandkim@comcast.net.

List To Last! Why Are You Just Working With Buyers?!!!

Ever since the market started tumbling I've heard agents complain about the expense and problems of working with sellers. Not work with sellers! Are you crazy?

Their reasoning, in a market where home sales are virtually non-existent, one good qualified buyer is worth two sellers. Well I'm here to tell ya--- that type of business approach is doomed for failure. Ever hear that Ole' adage 'list to last"? If you haven't, you are probably headed out the proverbial real estate door and if you have---you're probably sitting on a couple listings that have been collecting dust. What a dilemma.

So---how does one "list to last" in a market where homes are sitting for hundreds of days? Why have a listing that isn't selling?

1) Having listings on the market ensures that your phone will ring. Maybe not as regularly as years past but it will ring and having the opportunity to speak to and possibly procure buyers is what it's all about right?

2) Having listings on the market shows buyers and sellers that you are a motivated go-getter with area expertise.

3) Having listings on the market shows the neighboring property owners that you have been selected to represent that owner. This, in and of itself gives you a huge advantage over other agents who may be considered to list homes in that neighborhood in the future.

Now---The only thing you must do is educate the sellers about proper pricing so the home sells. Easy right? Keep the sellers informed about the current market so they are prepared to remain competitive with value adjustments. Another easy task. Keep the neighborhood informed so they do not think you just listed the home and vanished. Again---simple.

The "list to last" principle is not one that focuses all marketing and sales efforts on the listing aspect of the real estate market. it is merely one of many ever changing assortments of tools we have at our disposal. As we progress through these tough times it's my opinion that agents should use every tool available. Work with buyers. Work with sellers. Work with everyone who needs the services of a professional real estate agent. Only then will you capitalize on every available possibility.

If you do not have listings---you are missing a very fundamental element of the "list to last" priniple.....The"List" part. Without it you can not "Last"...

HOW SWEET IT IS!

For many years, particularly the years of soaring home values and equity gains where just owning a house made you an instant investor, home buyers had to move quick when they found a home that fit their wants, needs, and desires.

Can you imagine a scenario in today’s slower market, when homes are averaging hundreds of days on the market where the same may be true? Make no bones about it, it exists.
Let’s briefly reflect on how we arrived where we are today. Loans buyers couldn’t afford. Unscrupulous lenders with teaser rates that re-set to higher rates after a couple years. Government programs that forced banks to loan to less than qualified borrowers. These ingredients were a recipe for disaster.

Now we have a situation where the news is reporting a recent increase in home sales. I also seen an interview on TV where the vice president of some large real estate company was boasting about zero down loan programs for first time home buyers. Ever hear that old adage “don’t believe everything you hear”? Believe it, but that’s a topic for another day.

Although great news, that increase is not an indication of a market recovery, it’s merely a symptom of market activity and an indication of what IS selling. Since the second quarter of 2006 the market has been in steady decline. Bank Foreclosures and Short Sale properties have been flooding the market and from what I see with increasing unemployment numbers that scenario is not changing any time soon.

Here’s the rub. When banks foreclose they generally re-list at very affordable AS-IS prices to compensate buyers for the condition of the properties, which many times is very poor. Banks do not make repairs, make no warranties and make no representations so with bank owned homes being sold for up to 50% off of typical market prices there is a huge push by investors to pick up these foreclosed properties. Hence boosting the number of sales.

Short Sales have also contributed to the increased numbers, yet lag far behind bank owned homes. Does that translate to a recovery? In my opinion, no. There remains a glut of foreclosed homes and every Short Sale that does not sell will eventually become a foreclosed property so until we reduce the amount of foreclosures, sell off the vast majority of current inventory and get unemployment under control, we will continue to see the down ward slide. The good news is home prices are very affordable which has buyers and investors singing “how sweet it is”…

Say Goodbye To Brick & Mortar

Just when you thought the age of the Dinosaurs was long gone another Dinosaur is on the verge of extinction. "Brick & Mortar" Real Estate Companies. Crazy idea you say? Crazy like a Fox.
The Northwest Multiple Listing Service has been experiencing shifts in the past couple years. Agents leaving the NWMLS at a rate of about 14% every year for going on three years, a reduction in membership, and agents moving onto greener pastures.

If not for the innovation and creativity of a select few Brokers, those green pastures might well be outside the fences of the real estate industry. These trends could indicate a possible sign of concern for the industry if not for safe havens created by Brokers ahead of the curve. These safe havens are the wave of the future. "Online Brokerages". Northwest Equity Home Sales provide this virtual office platform. Although not entirely new to the industry their growing popularity can be contributed to the slow down of the market which is driving agents to scrub their plates clean of unnecessary expenses and if you really think about it, isn't that what should be done even without market forces. A lean clean business machine is always better than the alternative.

In days and years past the bloated bank accounts of agents and broker alike afforded a certain level of carelessness and complacency when it came to advertising, listing, and marketing expenses but those days are long gone and I say good riddance. Brought on by market demand “Online” brokerages provide a host of benefits for experienced agents that rival those services offered by the old Dinosaur brick and mortar companies. Today’s agent isn’t shackled to the confines of an office or to the wires and cables of technologically handicapped firms that charge outrageous fees for service that should other wise be free.

The modern day real estate agent is wireless and deserve a wireless platform in order to thrive in today‘s environment. They travel the landscape using GPS navigation, laptops with WI FI and hands free devices with infared technology to access listed homes. They send text messages with the ease and nimbleness of an Olympic champion. They have adapted to the new era of home buyers and sellers who email and peruse the Internet during their morning cup of Joe just as regularly as if it were delivered to their door step in print form by the neighborhood delivery person.

Today’s agent isn’t relying on the big name brokerage companies anymore. They have learned through hard work, intensive labor and long hours the rewards of their labor should be exactly that. THEIRS! They have finally began to realize the buyer and or seller agrees to work with the agent 99% of the time NOT the brokerage company. It’s the agent that gains the trust of the client NOT the company. It’s the agent that builds, establishes, and maintains the relationship with the client, NOT the company.

It’s the agent that meets with the owner and lists a home, meets with buyers and sells a home, closes the transaction, coordinates the Title Company, the inspection , the appraisal, and the signing. For all their hard work what do they get from the company? A huge office bill and the balance of what should have been a nice paycheck.

For those very reasons agents are asking this question. Why pay tens of thousands of dollars to a company when it’s the agent who is doing 99% of the work and what am I really getting for all this money. Good questions right. You bet they are and many agents are asking themselves the same thing.

Market forces work and when the market slows down for one sector it picks up for another, or forces change the market would not have other wise undergone. What will happen when the big brick and mortar mega-brokerage companies start to fade away? Will the agents who stuck with them go down with the ship or will they be adventurous enough to move on to greener pastures?
While many will simply slide into their pre-real estate lives as the Dinosaurs fade away, many who are not afraid to think outside the box or harness that independent entrepreneurial spirit that compelled them into real estate in the first place will make the choices that may just ensure their future otherwise they could go into extinction as the Dinosaurs have and will again…

Home Buyers Starting to Seize Opportunities in Some Western Washington Areas

Pending sales during January jumped from the same month a year ago in eight of the 19 counties in the Northwest Multiple Listing Service area. Last month's pending sales outgained December's weather-hampered activity by nearly 1,100 transactions, prompting one MLS director to report "We're starting to feel the train building up steam."
The latest report from Northwest MLS shows inventory is shrinking and prices in most areas are below year-ago levels.

NWMLS members tallied 4,353 pending sales of single family homes and condominiums area-wide during January, up from December's total of 3,255, but down about 3.3 percent from a year ago when sellers accepted 4,499 offers. Sales surged more than 26 percent in both Pacific and Pierce counties, according to the new figures from Northwest MLS. Cowlitz, Grays Harbor, Kitsap, and Okanogan counties also experienced double-digit gains in pending sales compared with a year ago. Read More.

HUD Mortgage Reform

Consumers should save nearly $700 at the closing table, thanks to mortgage reforms issued in November by the U.S. Department of Housing and Urban Development. The long-anticipated changes – the first such revisions in more than three decades – are intended to help consumers shop for the lowest cost mortgage and avoid costly and potentially harmful loan offers. For the first time in its history, HUD will require lenders and mortgage brokers to provide consumers with a standard "Good Faith Estimate" (GFE) that clearly discloses key loan terms and closing costs.

In announcing HUD's final changes to the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA), HUD Secretary Steve Preston said that changes in the housing market and increases in home foreclosures demand action. He expects the new regulations will bring more clarity and certainty into the market. Preston explained the new GFE will be given to borrowers at the time an estimate is provided. It will more clearly answer several key questions consumers have when applying for a mortgage: Is the interest rate fixed or can it change? Is there a pre-payment penalty should the borrower choose to refinance at a later date?
Is there a potentially crippling balloon payment? What are total closing costs?

The new standardized GFE will offer consumers more certainty about the loan they’re agreeing to, while enabling them to shop more effectively for the lowest cost loan. Last March, HUD proposed reforms to the longstanding regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) by improving disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home.

Last May, HUD extended the rule's comment period to June 12th to allow for more opportunity for comment on the Department's proposed GFE form. HUD received approximately 12,000 comment letters. Upon considering the feedback, the Department made considerable modifications, including shortening the form. Brian Montgomery, HUD's Assistant Secretary of Housing, Federal Housing Commissioner, said, "I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don't understand all the fine print of their mortgages and this, in many respects, is at the heart of today's mortgage crisis."

This new, final RESPA rule is effective 60 days after publication. HUD will require the new standardized GFE and HUD-1 Settlement Statement beginning January 1, 2010. "It has been a long road but today we can finally announce a better way to buy homes in America," said Preston. "Consumers need and deserve to know what they're getting themselves into before they sign on the dotted line. After carefully considering the concerns of consumers and the different businesses in the housing sector, we have developed an approach that empowers the average family to shop for the most appropriate loan to meet their needs." NWReporter..

For More Information ClickHere

Who’s On First?

The Meltdown

With all the turmoil in our financial markets you have to wonder who’s on first and who and or what is at the foundation of or current problems. Typically, economic meltdowns do not happen over night, so that leaves a person to ponder when it all started? Here’s my take...

Back in the late 70’s congress passed a law designed to increase homeownership for those who may not have had the type of credit banks typically looked for in terms of qualified buyers. This new law, The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 563e, was intended to encourage depository institutions (Banks) to help meet the credit needs of the communities in which they operate. Homeownership for all Americans is a lofty goal and this endeavor was indeed noble but what wasn’t noble was the unintended consequences of this type of potentially risky business practices including relax underwriting guidelines that ultimately became the vehicle that drove us down the road to millions of foreclosures.

Rekindled in the early 1990’s, that 1977 lofty goal to increase homeownership by allowing those with less than perfect credit was exacerbated by changes with the two institution Freddie Mac and Fannie Mae who purchase loans on the secondary market. These GSE’s (Government Sponsored Enterprises) were under constant political pressure to help low to moderate income families qualify for home loans. This pressure spawned another practice called “Desk top Underwriting”. Desktop underwriting is a general term used to describe an automated way of underwriting mortgage loan applications which uses artificial intelligence to enable lenders to make credit decisions based on a computer review of the loan application. As a sophisticated computer-based method, desktop underwriting also commonly referred to as automated underwriting, was developed to review the critical factors that affect a loan underwriting decision.

Two of the most commonly used automated underwriting systems are run by Fannie Mae and Freddie Mac. Desktop Underwriter® (DU) is Fannie Mae's automated underwriting software program, while Loan Prospector® (LP) is Freddie Mac's software program. The computer analyzes credit history, calculates debt-to-income and loan-to-value ratios, employment stability, assets and affordability to determine a borrower's profile and whether loans meet eligibility requirements.

Banks all across the country then used DU to qualify borrowers at times requiring very little verification of work history, income, debt or ability and willingness to repay the loan. Let’s face it, computer programs can not use it’s intuition or experience to help determine whether or not a borrower may be a high risk, but when all is said and done, that is exactly what these programs were designed to do. Eliminate the possibility of discrimination.

Now we’re looking at yet another government sponsored proposal. An economic recovery plan that will put at risk 700Billion dollars of tax payers money. Although sold to the public as a loan or asset reinvestment and procurement plan, this new law H.R. 3221: The Housing and Economic Recovery Act of 2008 addresses the housing problem, the credit crunch and hopefully will restore consumer confidence, but the one thing it does not address is the fact that the government expects us, the average taxpayer to trust them to fix a problem they started.

Ronald Reagan said it best. “Government is not the solution to our problems, government is the problem.”

Break The Rules And It WILL Hurt!

Complaint: Agent took a listing and failed to deliver it to NWMLS for input or input it by 5:00 p.m. the next day, failed to timely present a buyer’s offer to seller, and failed to report status change in a timely manner. Agent listed own telephone number in the owner’s phone field. Penalty: $5,000.

Complaint: Agent altered listing information on many listings before they expired. Penalty: $5,000 fine with $2,000 suspended on the condition that the member not be found guilty of any further Rules violations within 12 months. Agent must take Rules and Regulations class within 1 year.

Complaint: Agent input duplicate listing without submitting it to NWMLS for input and payment of fee, and failed to report notice of sale in a timely manner. Penalty: $3,000 fine with $1,500 suspended on the condition that the member not be found guilty of any further Rules violations within 12 months.

Complaint: Agent solicited another member’s active listing. Penalty: $5,000.

Complaint: Agent solicited another member’s active listing, including preparing a Form 19 to cancel the listing. Penalty: $1,000.

Complaint: Agent failed to disclose a Short Sale, listed inaccurate information, pressured the selling agent to lower the selling office commission, and failed to report status change in a timely manner. Penalty: $500 fine with $250 suspended on the condition that the member not be found guilty of any further Rules violations within 12 months.

Complaint: Agent removed the key from the keybox and left it outside so the home inspector could access another member’s listing. Penalty: Subscriber fined $5,000 with $2,500 suspended on the condition that the subscriber not be found guilty of any further Rules violations within 12 months. Member and agent must take Rules and Regulations Class within 60 days.

Complaint: Agent sent another member’s listing client an email alerting them to errors in the current listing and suggesting the client change listing agents. Penalty: $5,000 fine with $4,000 suspended on the condition that the member not be found guilty of any further Rules violations within 24 months.

Complaint: Agent used his Supra Key to access another member’s listing after his real estate license had expired. Office failed to notify NWMLS that agent’s license had expired. Penalty: $2,500 fine with $2,000 suspended on the condition that the member not be found guilty of any further Rules violations within 24 months.

Distressed Property Law

Scam Artists Beware!

The "Mortgage Meltdown", "Housing Slump", and "Credit Crunch" have led to many a new program. Risk, as we know it is mitigated by the good intentions of legislators through the introduction of bills to relieve the pain consumers experience from market forces and protect us from----ourselves.

Owning a home was once an endeavor that served to provide shelter from the elements, a place to raise your family and fill photo albums with memories but lately, over the past couple decades many people, with the help of numerous home improvement T.V. shows have lost track of the primary function of home ownership and have turned the traditional buying and selling process into an industry of profit and loss.

Flippers, people buying homes for the sole purpose of reselling them for a profit forced changes in FHA guidelines to help protect buyers buying homes that are "flipped". States and local governments across the country have passed laws to protect or mitigate the potential damage caused by flipping homes. A new law in King County Washington require flippers (under certain circumstances) to be licensed and bonded contractors in an attempt to mitigate the potential damage caused by those who may not be skilled at home improvement and or try to avoid building code compliance.

As of March 2008 the Washington State Legislature passed HB2791 into law. This new law called the "Distressed Property Law" identifies certain homeowners as "Distressed Owners" if they fall into any of these categories.

1) The homeowner is at risk of losing the home due to nonpayment of taxes;
2) The homeowner is at least 30 days late on a mortgage payment;
3) The homeowner is in default of any mortgage term such that the lender could accelerate the balance owing; or
4) The homeowner believes they are likely to default on the mortgage within 4 months and tells this to, among others, a real estate agent.

This new law carries with it a new legal classification of "Distressed Home Consultants" for Brokers and Agents who provide distressed property services to distressed owners and under the new law have fiduciary responsibilities that extend beyond the statutory requirements of current Washington State "Agency Law".

This new law was intended to prevent fraud in situations where a homeowner with equity in their home who happens to be facing foreclosure, enters into an agreement with a buyer/scam artist to purchase their home to avoid foreclosure and rent it back and maybe someday in the future buy the home back form the new owner. Unfortunately however, many times the distressed homeowner is unable to qualify for financing and eventually is evicted from their own home losing all their equity.

The Washington REALTORS® closely monitored the legislation as it was proposed by the Attorney General as the legislation progressed through the House and the Senate. Both the Washington REALTORS® and the AG were satisfied that the Bill, as proposed and intended by the AG, did not include the adverse language now causing the problems. However, after the Bill was passed in one form by the House and in a slightly different form by the Senate, it moved into a process that occurs outside the arena where public comment or influence are allowed. It was at that stage that the adverse language was added and the Bill was immediately voted out of the Legislature without any opportunity for the AG or the Washington REALTORS® to testify about the problems.

Law makers have a tendency to pass laws without consideration to the unintended consequences. They pass them then let the courts sort it out through trial and error. No pun intended. The new law, well intended as it may be and in typical fashion causes problems within the real estate industry in it's practical application.

Some issues arising from this new law are; Language within the current listing agreements is insufficient to address the concerns of the new classification of homeowners and consultants. The standard purchase and sale forms used throughout the industry are insufficient to address the new language and none have been produced thus far. Agents must identify themselves as "Distressed Property Consultants" in cases where the sale or purchase of a home is "distressed" and potentially when listing a home, sellers may not disclose or even be aware they are distressed, especially with long term listings. To comply with this new law, listing agreements must be written in the sellers "First Language".

Other problematic issues are being looked at by Washington Realtors who are working diligently in conjunction with the AG to produce acceptable literature to provide to folks thinking about selling or buying distressed properties. Neither entity have committed to publishing anything yet and local MLS's and it's members are working to facilitate a smooth transition for buyers and sellers affected by this new law.

The new law takes affect June 12th, 2008.

Technology & People

The Human Element

What a difference a few decades make. When it comes to technology we have come a long way haven’t we? From days of broken down cars on the sides of the road with mechanical problems or flat tires, to more dependable automobiles using run-flat tires and no required tune ups for the first 100,000 miles.

Home and car phones with cords and rotary dials to voice activated hands free mobile devices with streaming video and web application brought directly to you, any time, any day 24/7/365. Computers the size of entire rooms are now held in your hands. Camera and video phones with direct connectivity to host websites you can post pictures or video virtually as it’s being recorded, or minutes later are used as readily as your morning coffee cup. A space shuttle. A space station. The list goes on and on. Gene Roddenberry would be proud, but what does any of this have to do with real estate?

Advancements in technology have enabled techno-savvy agents to utilize the world wide web, mobile devices and satellite imagery in our everyday business lives. From the moment we receive a call on a property we can locate that property on our laptop with wireless card, our PDA with direct MLS feeds, download arial satellite photos of the property and surrounding areas, email links to property data from the road or in the field, read showing activity reports online for listed homes from a secure online location and much more all in a matter of minutes...Bravo!

Never before has the ability to transfer information been so easy. Looking for a no obligation market analysis of your home? Get one free online. Need tax information? Go to the County Assessors website. Even pay your taxes online. Is there anything that can’t be done online? Well, yes— thank goodness we can’t replace the human element completely.

Client Kills Wisconsin Realtor

Wisconsin Real Estate Agent, 71, Is Killed by Client During Showing, Police Say

A convicted sex offender was charged Thursday with killing a 71-year-old real estate agent whose body was found near a smoldering mattress in a home she had been showing him.

The criminal complaint alleges that James A. Hole choked Ann B. Nelson with her scarf and beat her with a fireplace poker Tuesday after she said something he didn't like, then set the house on fire with the still-conscious grandmother of 16 inside.

Hole, 34, of Brookfield, Ill., was charged with first-degree intentional homicide, arson and burglary. Bond was set at $1 million and a preliminary hearing was scheduled for April 4. He had not been assigned a public defender as of Thursday afternoon....

More Relief From The Fed

Federal Reserve Actions

The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS. The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.

Politics

Not In Front Of The Kids?

Well folks I don't talk politics because of the caustic nature of heated political debates, personal opinions and down right nastiness but in this case I think I'll try to beat around the bushes regarding some issues with some questions... Change is definitely a theme in this primary season but what type of change should we expect? Better yet, do we really believe after decades of Washington insider status quo politics change is even possible? Maybe...Maybe Not.

The Economy;Are we really heading toward a recession or are politicians and the media driving this issue for political reasons?

The Housing Slump; Is the country on the brink of a housing crisis or is the media and willing politicians trying to score points with the voters by giving money away?

Energy Independence; Is it a reasonable expectation for Washington to achieve energy independence?

Global Warming; Scientists on both side of the debate have data to support their theory's. Man made problem or cyclical natural event. How can we as voters expect the right choice to be made in the face of conflicting information?

Whether you're a Democrat or a Republican or Independent, the choices are not clear although they have stark contrasting positions on a variety of issues. All candidates seem to have a passion for change and it's our choice as voters to decide what change we desire. When the time is right folks get out there and let your voice be heard. VOTE!

FED SLASHES RATES!

FEDERAL RESERVE SLASHES RATES BY 3/4

For all the the wary buyers out there (you know who you are) sitting on the side lines waiting for the market to sweeten up--your fruit is ripe for pick'n. Prices have settled down over the course of the last year or so to a reasonable level, inventory is higher than normal which makes for a competitive atmosphere for motivated sellers and the Federal Reserve with the precision of a clever weilding butcher just cut interest rate by 3/4 making it the steepest cut since 1984. Read Full Article Here. In other words....The time to buy a house is NOW!

The Puget Sound region has been somewhat inoculated from the huge market fluctuations experienced in other areas of the country. September 2006 Panic Not My Puget Sound Neighbors. Rejoice. Mainly due to it's highly desirable geographical location and diverse and mostly stable jobs market, not to mention the beautiful ocean and mountain scenery from East to West.

As of December 2007 home prices around the Puget Sound Region have still realized marginal yet welcomed increases in value unlike our neighboring states, making this the right time to buy a home In Pierce, King, Thurston and other counties around the beautiful Puget Sound Region.

False and Misleading Advertising?

CAUTION! Washington State Homeowners.

If you receive one of these notices be sure to check with the Washington State Department of Financial Institutions to verify they are licensed in this State BEFORE calling the number on the mailing.

It appears on the surface to be a violation of Washington State disclosure requirements so I would caution anyone who received one of these mailings.

If you did have a loan originated with First Magnus Financial Corp it was probably sold to another servicing company. Do not fall for this kind of deceptive advertising. If you have any doubt check the link provided and above all....Don't panic.

"Nobody Can Do What Countrywide Can"

Sound familiar---It should. The commercial has been running all across the fruited plains now for several months. I suppose they didn't get the memo that someone out there can do what Countrywide can...

"Bank of America would gain greater scale in originating and servicing mortgages in the U.S. Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million loans. The purchase also includes Countrywide's Lender Placed insurance and other businesses."

Bank of America Agrees to Purchase Countrywide Financial Corp.

Bail-Out or Legitimate Program?

"An estimated 240,000 families can avoid foreclosure by refinancing their mortgages using the new FHASecure plan. FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing."

"FHA Secure"

If you don't trust the media and believe they have a vested interest and or personal agendas to persuade the public and influence certain outcomes, particularly during an election cycle, visit the HUD link I provided to become more informed about the current plan to help struggling homeowners. Jimmy Carter bailed out Chrysler. Are we bailing out homeowners who made bad choices or is this a proper economic program?

The Power Of Positive Thinking!

As the year winds down so does the market. Thank goodness for that. Well...What I mean is it's nice to get the year 2007 behind us so we can start a-new. Although sale prices are on a slow upward climb, Fact of the matter is the overall sales volumes for 2007 were grim.

With the new year comes a new advertising campaign from the National Association of Realtors and Pierce County's local association...The Tacoma Pierce County Association of Realtors. Their efforts throughout this ad campaign will be to draw attention to the Pierce County market which is doing much better than the national market.

A noble effort indeed and somewhat accurate but having said that the numbers are not up to par. It is better to focus on the positive aspects of the current market but I would be remiss if I didn't provide the statistical data. Below is the Pierce County numbers for the year to date totals. Judge for yourself... Pierce County Year to Date Stats 2007

The New Year has an element of hope which invokes a revived sense of enthusiasm for buyers and sellers alike. Recently the Federal Reserve chose to lower short term interest rates twenty five basis points which should help home buyers feel better about the new 2008 market. See ya in the new year and have a Merry Christmas!

Hero!

Every now and then something is so inspiring you have to share.

Money or Your Life?

Does working with shady characters increase your chance of victimhood?

This is a touchy subject due to anti-discrimination laws but where do you draw the line. Notice no question mark. Entering a vacant home with a complete stranger after dark is dangerous. Entering a vacant home in the middle of the day is just as dangerous, isn't it.

According to the Department of Justice, most crimes occur in the middle of the day in broad daylight as did the murder of Linda S. Stein (second from the left) a noted Broker to the stars and once manager of infamous Punk Rock group the Ramones. According to investigators "Ms. Stein had many tumultuous relationships in her life, but investigators have not focused on any particular people, and did not comment on possible motives,..."

Every time someone walks into your office you face the risk of placing yourself in a dangerous situation. My wife never shows a home in my absence. Real estate agents, man or woman should take precautionary measures to reduce the risk of victimhood. If someone calls to see a home you have listed, get as much information as possible about this person. Use the buddy system and take along a friend. Have the prospect meet you at your office first. An excellent office policy to implement is never allow agents to show a home to an unknown prospect unless they are met at the office and a copy of the prospects driver license is made. Be respectfully suspicious. It's far better in my opinion to lose a potential sale by being careful than to lose your life from over eagerness.

UPDATE! Arrest made.

Witch School Is It?

I thought it poignant on Halloween to note there is a school for Wiccans in a small town in Illinois. I'm not sure if they teach broom stick flight lessons, or witch spells you'll learn but like it or not they have an online school. Click here for more details.

Constitutional Right To Own a Home?

Whoa! Pretty deep subject huh. "Rights".

All kidding aside, I've heard it said that we have a 'right' to affordable housing. I've also heard plenty of other things. A 'right' to have affordable health care. A 'right' to an Education. A 'right' to affordable prescription drugs.

No matter where you go someone believes they have a "right" or an entitlement. Well I'm sorry to say...You don't!
Nowhere in the Constitution or the Bill Of Rights do we have a right to any of the aforementioned items. We are privileged to live in a country that allows us the opportunity to buy a home. If we work for it . Health care is there, if we work for it. A quality education is there, if we work for it. Prescription drugs are there, if we work for them.

So why didn't the founding fathers write in the constitution the right to all those things. I guess they wanted all Americans to work for them...

Agents Flying Fast & Loose?

Follow The Rules or Pay Big Time!

The Northwest Multiple Listing Service otherwise known as the NWMLS occasionally needs to enforce their rules through disciplinary action. Good for them! Member Brokers and subscriber agents are expected to follow not only the letter of The Law and the Code of Ethics (for Realtors), they're expected to follow the rules and regulations of the NWMLS. Every now and then agents go willy nilly with the rules. Some get a slap on the hand, and some, very stiff fines.

Agent advertised another member’s listing in a real estate guide without written permission. Penalty: $3,000 fine with $2,000 suspended on the condition that the member not be found guilty of any further Rules violations within 12 months. Agent must take a NWMLS Rules and Regulations course.

Agent took the key to the house from the keybox, gave it to the electrician, and allowed the electrician to remain on the property unattended. Penalty: $5,000 fine.

Agent modified the listing price on several occasions by $1.00 or $2.00 to make it appear on the hotsheet. The property was listed at the same price after the changes as it was before. Penalty: $3,000 fine.

Agent lent his key to his unlicensed assistant who showed the property without an appointment while the agent remained outside. Agent failed to leave a business card after the showing. Penalty: $5,000 fine.

Agent failed to remove the keybox in a timely manner, failed to update the status of the property, and failed to upload a primary photo in a timely manner. Penalty: $1,500 fine.

Agent’s key was used by her friend, an unlicensed individual, to show listings. Penalty: $5,000 fine.

Market Forces

Understanding Your Market

All across the fruited plains real estate agents log on to their computers punch in a their secret agent number and watch as the world wide web streams market data from a secure server in cyberspace to their warm well lit offices. Let’s take a look at the different types of data and how it affects buyers, sellers and real estate professionals.

Newly matched listings and listings ‘back on market’ offer the prospect of a sale for agents an brokers working with ready willing and able buyers. For a buyer, newly matched listings serve as an opportunity to pounce on a fresh listing. For a seller, a newly matched listing (to their property) in their MLS area serves as more competition.

For agents, newly expired listings offer the prospect of a new client. Agents may consider contacting that property owner to consider a re-list. Although a lucrative endeavor, it’s extremely competitive. At times sellers of expired listings are not happy with their previous agent for a variety of reasons, some valid, and some based on unreasonable expectations, a lack of understanding, or a unwillingness to trust their hired professional. Expired listings generally reflect prices other sellers could not obtain.

The previous days cancelled listings also come streaming through the agents high speed connection. Buyers could view this category as a missed opportunity and sellers are left with less competition. Cancelled listings are fewer today than in the past. This category of listing status has undergone changes due to NWMLS policy. Many agents had previously abused this listing status to attract buyers to a old property listing by simply canceling and re-listing. Today, a significant change in the property and or price change of 5% or more must take place in order to cancel and re-list. Good job NWMLS!

Last night there were 465 price reductions across the NWMLS which puts pressure on existing home seller to remain competitive. An increase in value may not be possible for those with little or no wiggle room. For those who have flexibility and wish to stay competitive being aware of your competition is prudent and strategically wise. For buyers, better value.

Pending and sold properties also add to the data real estate professionals see on a daily basis. Pending properties are those sellers who have found willing buyers and are undergoing the closing process. Sold properties are ones that have completed the closing process and are in fact closed and recorded. Sold properties are the only true indication of value. Think of it this way. The active market (available properties) indicate the price sellers want for their homes. The sold market indicates what sellers are actually getting for them.

Brokers, agents, and sellers across the fruited plains must recognize these factors and understand how they impact the market. Sometimes it’s positive. Sometimes it’s not. Understanding market forces help sellers remain competitive and for buyers, the price reductions and increased available housing translates to more choices and better value.

Home Evaluations

The value of a home is typically determined by recent home sales of similar homes in the same area. That’s not to say that a similar home can’t sell for more or less. Each seller and buyer enter the real estate market faced with different challenges. A pending foreclosure, divorce, expiration of a lease, multiple offers on the same home, or relocation are some occasions that could influence the sale price of a home.

The definition of fair market vale is “The highest price estimated in terms of money which the property will bring when exposed for sale in the open market by a willing seller allowing time to find a willing buyer, neither buyer or seller acting under compulsion, both having full knowledge of all the uses to which the property is adapted and for which the property is capable of being used”. So long as there are no extenuating circumstances involved in the recent area sales these comparable sales can be used in the comparison. This type of valuation is known as the Comparable Market Analysis.

Homes of similar size and age should be used in this approach since a home with more square footage could have a substantially higher price based on square footage. Example: Two homes sell for $150,000 one home is 2000 square feet, the other home is 2089 square feet. Theoretically, with all other features the same the larger home could sell for $6675.00 more for the additional 89 square feet. Another method of valuating homes is the Replacement Cost Approach. This approach to property valuation is seldom used since most areas of all major cities provide an adequate supply of comparable homes.

When an area has no similar homes sales or the home in question is Historical or Monumental in nature then this approach can be used. This approach to valuation can take a very long time to complete since estimates to rebuild the home back to it’s original state could require custom or even hand made materials and craftsmanship. Remember, any market analysis or appraisal regardless of the comparable homes used or the person performing the valuation is an Opinion of Value. How the market data is extrapolated and adjusted could have a profound influence on the list or sale price.

"Chipping Away At CBS's Credibility"

"Chipping Away At CBS's Credibility"

should have been the title to this so called news piece.

For those having used services of a real estate agent prior to watching the CBS News Magazine segment on May 13 called "Chipping Away At Realtors' Six Percent", a report purporting the Internet based real estate brokerage 'Redfin' and their crusade to change the real estate industry by providing a 'no service' business model has been met with opposition by the National Association of Realtors, must have made you feel cheated, robbed or taken advantage of or maybe.... a victim.

The truth is...you were deceived. You were cheated. You were misled - With false information. You were a "victim". A victim of false reporting. Lied to by a once responsible news organization. Cheated from knowing the truth. Robbed by a team of thieves who stole your trust and took advantage of their positions of influence.

Similar to past CBS reporting indiscretions, it left me yearning for the days when you could trust the major news networks to provide accurate information, balanced perspective and honest reporting. Not today. This latest example of intellectual dishonesty by the so called news team at CBS contains blatant disregard for truths reminiscent of their debacle that lead to the resignation of several senior news executives including the once honorable Dan Rather and the firing of Mary Mapes over airing a story based on false National Guard documents prior to the 2004 election known as "Rathergate".

So here we go again. With the political campaigns heating up, CBS news fires up their rhetoric and propaganda machine to impugn an entire industry that has been a major component in the stability of our Nations Economy. By setting the stage with an "Empty Chair" they have once again proven to the world they are not worthy of respect as a "news" network.

The NAR (National Association of Realtors) and it's staff spent nearly a year working with CBS. Legal council for NAR met with CBS producers in Chicago, and a conference for Realtors was attended by the producers of CBS and they still got it wrong.

Let's focus on obvious reporting errors.

1) Calling six percent commission "sacrosanct". Fact. There is no set commission. To do so would be a violation of Anti-Trust Laws. 'Price fixing' provisions covered under the Sherman Act to be precise. Commissions are negotiable. According to "Real Trends" a company that tracks real state trends coast to coast the average commission is 5.1 percent.

2) NAR is the industry's" Governing Body". Fact. NAR is a trade organization. Here in Washington State it is not required to join the National Association of Realtors in order to become licensed real estate agents or brokers and help buyers and sellers buy and sell.

3) NAR issued a rule in 2003 threatening to block access to MLS services by Internet discounters. Fact. No Virtual Office rule blocked or threatened to block access. An important note is, MLS rules apply to it's members and subscribers, NAR cannot dictate to any MLS how to regulate or manage their independent listing databases.

4) The MLS is a database that lists virtually every home in the country. Fact. There are over 900 individual MLS services nation wide. There is no national database or national MLS. MLS data is privately owned and regulated through a series of rules and laws governing the sale of real estate. They are not just isting databases. Listings are individual contractual agreements to cooperate and compensate between brokers.

5) Eight states have minimum service laws that require Realtors to provide a level of service many Internet discounters cannot provide. Fact. Minimum service laws ensure the general public receive a minimum level of service from real estate licensees. Not from Realtors. Remember, real estate agents (licensees) are not required to join NAR to sell real estate. The term "Realtor" is a trademark not synonymous with "real estate agent". Internet discounters chose their business model that provides less that the laws require.

6) The Brokerage industry has a powerful lobby. Eleven states flatly prohibit rebates. Fact. Laws preventing rebates are designed to protect the consumer against kickbacks during a real estate transaction not to limit brokers from attracting customers.

Other important facts left out of the report is that the Redfin website itself provides evidence of misleading half truths and deceptions.

For example; From the Redfin website.

"Even in the seller’s case, commissions have been found to create conflicts of interest: according to award-winning University of Chicago economist Steven Levitt, the commission motivates the seller’s agent to take any offer, even if low, for fear that the agent may lose the commission if he doesn’t complete the sale.

Fact. Agents do not "Take offers". Only sellers and buyers can agree to an offer or counter offer.

The buyer’s agent and the seller’s agent each earn a percentage of the overall home price. When listing a property, the seller sets this percentage, known as the commission, earned by each. Traditionally, the seller sets a commission of 6%, with 3% going to the seller’s agent and 3% going to the buyer’s agent.

Fact. There is no set commission, it's negotiable. As mentioned earlier the national average is 5.1 percent.

This one sided reporting from a discredited news organization also stated that eRealty went belly up from unfair business practices "choking off air supply" and "threatening" rule changes from NAR in 1999. What they forgot to clarify was that the company did not go belly up. It was purchased by Prudential Real Estate Affiliates for a loss of 33 million to investors. Must have slipped their minds. A small kudos for at least posting the correction on the CBS website. Think they'll get around to making the corrections about NAR and industry practices. I won't hold my breath but remain cautiously optimistic.

I guess it's trendy now in today's society to place blame on others when your business model fails. Solution; Find a willing participant in the news media. Fabricate a feel good story alleging victimhood. Set the stage for a one sided barrage of half truths and lies. Then sit back and let the consumer fall prey to yet another example of irresponsible news reporting.

Maybe the Internet discounters should try selling services consumers want instead of whining when their business models fail. Just an idea...

Ready Set Go!

Your Waiting is Over

What do you create when you cross years of brisk sales and rising prices with higher than normal valuations?

Report after report indicate the real estate industry has experienced record Growth both in the numbers of new construction starts and residential re-sale homes, not to mention the increasing numbers of new communities specifically designed for the 55 and better home buyer. Cities around the country have flourished with double digit increases in market values helping to maintain economic growth amid the lackluster new jobs market, alarming some economists warning of a bursting housing bubble due to an over exuberant real estate market.

Housing starts and resale home sales including condominiums are not the only numbers increasing at alarming rates. Price reductions, expired listings, cancelled listings, and the number of New Real Estate Agents entering the industry have a dramatic negative affect on the market as well, artificially inflating prices literally forcing some buyers to sit on the side lines awaiting affordable housing.

Let’s focus on price reductions, expired listings, cancelled, re-listed properties and valuating property. As I write, the NWMLS (Northwest Multiple Listing Service) had 493 price reductions in the last 24hrs up sharply from the same 24hr time period last year. Expired listings the night of 5/1/07 totaled 55 properties in King, Pierce and Thurston Counties up from a mere 17 expired properties on 5/1/06. Cancelled listings in the three counties totaled 42 properties the night of 5/1/07 down from 50 on 5/1/06, but dramatically up from 4 cancelled properties on 4/1/04.

The three most common methods used to valuate real property are. The Income Approach, typically used in multi family dwelling of four or more units or investment properties producing income. The Replacement Cost Approach, normally used to valuate historical or monumental properties where the re-construction would require handcrafted materials and workmanship. The Comparative Market Analysis or C.M.A. Real estate agents will use this market data to help a seller determine what the market value of a property would likely be using other similar ‘SOLD’ properties from the same area, adjustments notwithstanding. These CMA’s are an indication of an affective price range.

In the first quarter of 1998 there was an estimated 11,000 real estate agents in the Northwest Multiple Listing Service. In the first quarter of 2007 we have nearly 30,000. What this translates into is a tremendous competitiveness between agents fighting for listings and good qualified buyers, many times dismissing market data.

The evidence is clear. The days of pricing a home based on the active market (what folks want for their home) as opposed to the sold market (what folks are actually getting for their homes) are over. At least for a while. The industry will experience some changes as new agents filter back to their pre real estate existence. The face of real estate will forever be changed with inevitable and welcomed State Legislation mandating Broker only licenses as found in states like California and Oregon, which will raise the level of legal accountability and responsibility for every agent. A long anticipated achievement indeed, and we'll be providing the same quality services as these changes take place.

One of my goals as an active member in our local association Professional Standards Grievance Committee is to promote a higher level of professionalism and expertise within the industry itself by raising awareness. I believe there are better days ahead for our local real estate market and I feel fortunate to be on the cutting edge helping to advance those positive changes for the good of the industry and the general public.

The answer to the question... what do you create when you cross years of brisk sales and rising prices with higher than normal valuations? You provide an opportunity for those sitting on the side lines to enter the realm of homeownership amid falling prices. You realize a purging of the industry from within. You invite governmental regulation, but what you create is a “BUYERS MARKET”.

Nothing Beats Good Old Fashion Honesty

Snake Oil Salesmen

"If I can't sell your home I'll buy it"

"Your home sold in under 60 days or I'll give you $1000 CASH"

"You're approved regardless of credit"

"Your home sold in 45 days guaranteed"

Since the beginning of time snake oil salesmen have preyed on the naive claiming their concoction of colored water and cooking oils possess the power to cure. The power to clean, or the power of hope. After all , isn't everyone searching for that magic elixir. The fountain of youth. Or that pot of gold at the end of the rainbow. The question we should all be asking ourselves is not why these scoundrels seek out the weak or uninformed with their empty promises of hope. Rather, the question should be...Why do we as a society allow these unscrupulous characters to roam the streets in search of their next victim? But are they victims at all? Maybe, if one person is helped by the power of hope, then we can make the case that the magical concoction works. Maybe if a formerly impenetrable stain is removed by the bottled liquid the consumer is not a victim.

With the passing of time comes changes in the manner by which societies view any particular behavior. Whether it be public, private , or professional. In a democratically elected society, the general public makes distinctions between activities and actions and whether they are to be considered acceptable. Lawmakers derive their motivation based on public support for any issue involving the safety and well being of their constituents, and as a result, many un-acceptable behaviors of yesterday are acceptable today. The opposite holds true as well.

The snake oils salesman's horse drawn wagon of deception has evolved into the flashy foreign sports car that carries him or her into crowded neighborhoods of frolicking kids and unsuspecting parents. The elixir of hope once contained in a bottle and paraded around middle America is now presented in the form of empty promise and guarantees that do not exist or were never intended to be fulfilled.

Although some programs are legitimate, many could be considered Fraud. Fact is, these offers are nothing more than a deceptive means of getting you to call the snake oil salesman and buy a bottle of stain remover. Or at least give the salesman the opportunity to show how wonderful the bottle of colored water really is.

Remember the ole adage " if it sounds to good to be true, it probably is". That ole adage rings true today as much, if not more than any time in the past. The only difference being, the snake oil salesman of today are camouflaged behind expensive fancy suits and flashy foreign sports cars.

If you are considering one of these gimmicks, think long and hard. Get the guarantee in writing and understand the fine print and hold the promisor legally accountable to perform. Nobody will buy your home unless there is something to gain for them. Nobody will give you money if your home doesn't sell unless there is a catch. Banks will not give you a loan if you cannot perform.

Beware! That bottle of elixir may work fine on shallow surface stains, but when dealing with the complexities of the real estate market there's no match for good old fashion elbow grease and honesty.

Homeless Grants

BUSH ADMINISTRATION ANNOUNCES NEARLY $1.4 BILLION TO SUPPORT A RECORD NUMBER OF LOCAL HOMELESS PROGRAMS NATIONWIDE.

WASHINGTON - More than 5,300 local homeless programs throughout the nation will receive nearly $1.4 billion in funding announced today by U.S. Housing and Urban Development Secretary Alphonso Jackson. HUD grants will support a record number of local programs, providing critically needed emergency shelter, transitional housing and permanent support more than 150,000 individuals and families. For a detailed local summary of the projects awarded funding, visit HUD's website. Or click Here.

The Good The Bad And The Ugly

Home Inspectors

You probably thought I was referring to Clint Eastwood staring down a couple of hombres in the scorching desert sun preparing for a gun fight. Not at all. I was referring to Home Inspectors. Some good. Some bad. And well, let's not get into personal appearance here.

Any agent that has been a part of many home inspections know that inspectors come in different shapes and sizes. Meaning, basically, some are better than others. The same goes for any industry though, we must take the good with the bad. Right?


Unfortunately, when it comes to home inspections, there's too much at stake for all parties involved especially the buyers and sellers to leave an ispection up to a inspector of questionable experience. There is nothing worse than having to explain to a seller why they were told a light fixture needs replacment, when the only problem was that the inspector could not find the right switch.


Or why a seller is expected to pay for an engineering report showing the Manufactured Home they have lived in for nearly a decade, and bought using V.A. Financing was not installed with proper tie downs, when the only problem was the inspector was too large to fit through the crawl space access area and had no idea they were installed properly 10 years ago.


Or believe it or not, when a seller is faced with a recommendation from a home inspector to cut a hole in the homes hard wood floors to create an access area to the crawl space measuring 18"x30" because the one in the foundation is not up to today's codes and is only 12"x30". Believe it! It happens all the time. Why? Because there are no regulatory standards to enforce Home Inspector Qualifications. In other words, anyone can become a home inspector. That's right! Anyone.

Since the vast majority of real state professionals are burdened with concerns of liability, many shy away form recommending any particular inspector, and with that I cry foul. How, in the course of any transaction can an agent assure their client that the professionals involved with the many facets of a real estate transaction are qualified, experienced, and professional, if they leave the responsibility of selecting a home inspector to their clients by letting their fingers do the walking? I say you can't.


It is the responsibility of all agents to assure their clients that the home buying process is handled by competent and responsible professionals. From the agent themselves to the Mortgage Lender, the Title Company, the Closing Company and everyone in between. Although there are rare cases when a buyer or seller has selected real estate related professionals prior to the selection of a real estate agent, it is imperative to coordinate all parties during the transaction, and to advise buyers and sellers while undergoing the closing process and it helps all parties when we know the ones involved are experienced.

By arming your clients with the knowledge that inspectors are experienced professionals, buyers and sellers can avoid unnecessary showdowns and battles that leave everyone burnt from the scorching threat of inexperience.

You Pay For It. They Don't!

Online Theft Of Private Information. An Unintended Consequence.

Appraisals are expensive. Ranging from $450 for a single family residence to up to thousands of dollars for large commercial projects. Appraisals are also confidential. Let me put it this way. If you pay for an appraisal of your property, why should anyone else be privy to that information without your authorization? The following article stems from what could be considered online information theft.

Read Full Article Here