Conversations on Short Sales & HERA w/ Ed Dean from PMG

The shorts sales continue to rear their ugly head. Our agents continue to have problems with the time spent working on them, the energy devoted to them and the lack of results they are getting out of them. It appears now that many of the banks have gone to call centers handling the shorts sale calls for the banks and these people have no training no experience, but more importantly no authority to make decisions on whether or not to approve or disapprove a short sale.
Enough of short sales, now onto the mortgage news…

This week the head of FHA, Dave Stevens, made the announcement that FHA will not be going the way of HVCC because he is a wise man and recognizes the inherent problem associated with the HVCC. Great news for all of us in this regard!

In a recent conversation with Ed Dean, we were further educated on the new TIL reforms and told us that 10 days is a reasonable amount of time to get a loan to close, you would have to move heaven and earth to get a loan done in 7 days (it can be done, but it’s not recommended), but his belief is that it is not going to have as much of an impact as many people are indicating. Check out his notes on the subject from our conversation. Ed did a review of 5,000 loans that his former mortgage company had done and noted that only 30 of those loans would have needed re-disclosure. A majority of those 30 needed re-disclosure as a result of people failing to lock in their interest rate or it was initially a pre-qualification and it went to contract several months later. You’ll note at the bottom of page 3 of his notes, how significantly the numbers need to change to get a re-disclosure.

Other mortgage news included guidelines continue to get tougher on condos with more restrictions imposed. In addition it has become virtually standard operating procedure for every lender to pull the Form 4506 from the IRS to request the borrower’s tax returns to make sure they match the ones they provided in the loan application process. Basically with the way the loans are going today, you have to fit inside the box. There is no thinking outside, underwriting or loans being approved outside the box. And lastly, second trusts continue to have no future or part of the mortgage or sales landscape.

As is always we strive to keep you educated in the real estate world. Get it? Got it? Good!

Joe Theismann...a highlight of the RE/MAX Broker Conference

What a performance by Joe Theismann – again! Being a lifelong Washington Redskin fan, I experienced many of Joe’s outstanding performances on the field but at the RE/MAX Broker/Owner meetings in Chicago, he outdid himself with his speaking. He inspired many of us, surprised many more with his message and his delivery when he spoke about how he overcame a major challenge – a career ending injury – and how we can overcome our challenges in our lives by thinking about the following items.

• Be a part of something unique and special
• Think about what you will do to make a difference
• Who is it all about – the answer is – it isn’t you
• Embrace change
• Have a heart to heart with yourself – what do you believe in
• You can’t be a major success until you realize you can’t do it all by yourself
• Don’t accept failure
• Think, what can I do to help the team
• Who is your team
• Do you want to make a difference
• You have to want more for yourself – what will you give of yourself to get you there
• Reposition your attitude, thoughts, etc
• What do you do with a challenge when it is presented to you
• Have a passion
• Do it with enthusiasm
• Ask yourself, how high is your ladder – why does it have a last wrung
• Why do you believe in you
• Give and accept recognition
• Become an excited student – make it your mission to learn something today you didn’t know yesterday - everyday
• Fear is a motivator – what are you afraid of
• Attitude carries you to attain your goals
• To survive, you have to have written goals and post them. 98% of people don’t have written goals
• How will you know where you are going if it’s not written down and visualized
• Give yourself direction
• Life is filled with educational experiences not failures
• Be committed to having the feeling you can get it done
• Have pride in you, your company, your brand, what you do and why, and lastly be the best you – everyday
• Be reliable, accountable, available, be customer service oriented, have the right goals, the right attitude and be motivated
As I mentioned, he was right on with many of his statements and comments. So, the questions is, what are you going to do about it? Review the bullet points above, write you answers down on paper, review them and get started in a positive direction and live a more successful life. Get it? Got it? Good!

Platinum Club...another great meeting!

Another Platinum Club meeting, another short sale discussion meeting, when will the madness end? My short answer is, when the government steps in and does something GOOD for our industry and gets banks to streamline and systemize the short sale process.

A few observations from today’s meeting include: the processor makes all the difference in short sales, not the bank; as the foreclosures diminish, REO managers are migrating to Loss Mitigation departments – too early to tell if this will work better or not but us being optimists in this group, believe it will; despite what others say, make calls on your cases everyday – the squeaky wheel gets the grease. The belief is that short sale departments are small – not big like everyone may think – in one case, one processor is handling 5 cases for one of the agents; everyone in the chain is overworked – negotiator, processor, and listing agent – much of the paperwork is lost in the process; the deals continue to get more difficult and take longer – one agent lost 6 deals in the last month; if the bank knows the property is vacant, it will speed up the foreclosure process; the short sale part of the business has made agents more suspicious of each other – no MLS updates or incorrect/unauthorized status changes, unprofessional and/or unethical processes are instituted by many agents - they have clients ratify multiple contracts, and releasing contracts & accepting others without bank rejection of first contract is becoming more commonplace are just a few examples of what is taking place in our market; only about 23% of short sales are making it to closing due to bank rejection, banks asking for notes from mortgagor, and the time it takes to get them to close today that buyers are releasing themselves from the contract. From the listing side, to get better success, have buyers remove all contingencies prior to submitting the offer – it is easy to do in multiple contract situations and gets buyer buy in – provide title work, your own BPO, and mock HUD 1 with the offer, don’t wait on these procedures.

Additional discussions covered foreclosures. There isn’t much happening on the foreclosure front. The promise of the flood of foreclosures coming on the market is continuing to be delayed – bring it on is what we say as our inventory level is down 56% from the same time last year and the most competitive market is in the first time buyer price range where many of the supposed foreclosures will be priced. We can sell’em if they list’em. Listing assignments are down 75% from last year. BPO’s are up – suspect they are for short sales – not for potential bank inventory. Last year 1 BPO for every 5 listings obtained, this year it is the opposite, 1 listing for every 5 BPO’s.

Many markets are still extremely price sensitive – even when they are priced just a little high. When priced right, in the right condition and show well – they sell. Get it? Got it? Good!

Now, go sell something!

The numbers are looking good!

Numbers review – we are up as a company! Our transactions are up 21% over last year – We have gone from 674 last year to 874 this year. With 80 agents that is a 10.6 average number of transactions per agent through July!

HERA update – no more closings within 7 days, lock early, get accurate numbers to your lender from your title company – more communication between all parties is paramount – HERA affects any applications taken after July 30th – any questions on HERA?

Advice for getting appraisals to come in at value: meet appraiser at property and provide all comps you believe are important – provide numbers we provide you – show anything else you believe was integral in the sale, i.e. number of contracts, number of showings, days on market, number of competing properties, month’s supply in hood, in the surrounding area and any insight you can gain from listing agents on houses under contract. Don’t forget to mention condition of recent sales through your previewing efforts-you do preview, don’t you? Any detail can make all the difference. Be sure to ask the appraisers familiarity with the neighborhood, trends, prices, etc as many appraisers are coming from great distances.

10 year treasuries are on the rise putting upward pressure on long term rates – primarily mortgage rates – encourage having your clients lock in their rates
New home sales are up dramatically – KHOV 90 sales last 60 days
Existing home sales are up nationally 5 consecutive months of growth, first time since July of 2003 – what happened then? Our inventory numbers are down and Case Shiller pricing index – 14 of 20 markets are up – first time in 3 years this has happened – if anyone asks – yes we hit the bottom - locally in November – nationally now. This is also good to share with appraisers gang!

No big wave of foreclosures hitting our market – BPO orders are down
Short sales are taking longer – second trusts are unresponsive for weeks at a time

More arms length transactions are occurring
Gov’t is pushing top 25 loan servicers to have 500,000 trial modifications in place by Nov 1st – only 200,000 have actually been done. Banks may be forced into doing modifications by enacting a Bankruptcy bill that got defeated earlier this year where banks will be forced by bankruptcy judges to slash balances of people who are delinquent on their mortgages in involuntarily.

Other key indicators to watch – Index of Leading Economic Indicators (interest rate spread, building permits, stock prices, weekly initial claims (inverted), average weekly manufacturing hours, index of supplier deliveries (vendor performance), and manufacturers' new orders for consumer goods and materials*. The negative contributors – beginning with the largest negative contributor – were real money supply*, manufacturers' new orders for nondefense capital goods*, and index of consumer expectations) – rose close to 1 point in June – 3rd straight month it has grown – 1st time index has grown 3 consecutive months since 2004. The Index of Leading Economic Indicators are closely tied to the housing industry and its recovery. Obviously we didn’t hear much about these numbers in the news – strange, huh.

New Unemployment claims filed are down 5 straight times indicating worst may be behind us. The number of Americans filing claims for jobless benefits fell more than economists predicted, a sign some employers have stopped paring staff as the recession eases.

Applications dropped by 38,000 to 550,000 in the week ended Aug. 1, figures from the Labor Department showed today in Washington, the fifth straight time claims were under 600,000 after being above that level since January. The total number of people collecting unemployment insurance rose.

The bottom line is we are continuing to see great progress in our market – we just need more inventory, rates to remain low, and prices to increase slightly – not significantly and we will continue on our pace of record transactions. Get it? Got it? Good!

It's amazing....market update!

It’s amazing! Our market continues to flourish despite the rest of the economy and other market segments in the real estate business. Year to date, our transactions are up 21% over last year numbers. Our belief is that we provide our agents with up-to-date, cutting edge, continuous training to keep them current which has helped us excel in today’s perceived “down” market. In addition to our success, nationally, June’s numbers of existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors®. Our belief is that low rates, lower prices, and the $8,000 tax credit for first time buyers are fueling our business.

Some of the trends we are closely monitoring are the Home Valuation Code of Conduct, the Housing and Economic Recovery Act and the Mortgage Disclosure Improvement Act to educate our clients on how the appraisal and lending process will impact their sale from a valuation and timeframe standpoint. In addition, we are closely monitoring new loan programs, revisiting underutilized programs such as VHDA, buy downs, and FHA ARMS to find ways to finance our purchasers. And we are continuing to stay up-to-date on short sales and the short sale process. Our experience has been that the process is taking longer and we are having more difficulty in getting them through the banks. Nationally, only 23% of short sales are getting to settlement. Make sure to stay current on these changes and updates to give the right advice.

A few additional insights are that new home sales continue to flourish, there are more move up buyers entering our market and when we meet the appraiser we are having fewer value issues. By providing them with comparable sales and details on those sales (short sale, condition, foreclosure, etc.), information on activity, days on market comparisons, number of contracts received and current market conditions to provide the appraiser at the time of the inspection – we are experiencing fewer problems. We still are having appraisal issues but by meeting the appraiser at the house, we have experienced more appraisals coming in at value than we previously encountered.

By staying on top of industry trends, changes within our industry, and educating yourself and clients, you will gain more loyal clients and receive more referrals. Get it? Got it? Good!