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By John N. Frank
I’ve just been in a fascinating meeting, speaking with 10 real estate pros in the Sacramento, Calif., area about what’s happening in their market.
Sacramento was mentioned in a recent Business Week story as the U.S. market that has seen the deepest home price cuts over the past 12 months.
The Sacramento real estate people I met say a lot of the pain in their area has been limited to certain ZIP codes while other locales continue to do well. But news about market woes has led to an interesting phenomenon – a scarcity of sellers in desirable parts of town.
One pro mentioned that he’s started sending out letters to home owners in neighborhoods where he has buyers waiting to buy. One mailing he did brought him nine inquiries from potential sellers wanting to know about market conditions.
There’s been a lot of talk about buyers sitting on the sidelines waiting for housing prices to bottom out. In Sacramento, buyers are putting their toes into the market waters again, these pros say, so it's sellers that real estate people need to be prospecting for.
Every market is unique, of course, but there may be a business tip here for your market.
The most-read real estate stories this week from REALTOR® magazine online’s Daily Real Estate News ranged from challenging housing markets to new foreclosure rules for borrowers.
The stories, in order of their popularity, are:
1. Why Are Short Sales So Troublesome?
2. 10 Most Challenging Housing Markets
3. Prospecting Without a Sales Pitch
4. Mortgage Rates Hit Low Point
5. New Rules for Borrowers With Foreclosures
To subscribe to the Daily or Weekly Real Estate News e-mail or RSS feed, visit REALTOR® Magazine Online.
By Daniel Rothamel, ABR®, SRES
This post is part of a series covering my journey of discovery through the history of the National Association of REALTORS. As my guide and my inspiration, I am using a book published by NAR, "100 Years in Celebration of The American Dream," celebrating the Centennial of NAR. The following was inspired by reading just the first ten pages.
The NATIONAL ASSOCIATION OF REALTORS® turns 100 years old this year. That is pretty old, as organizations go. It is old enough that there is not one single member of our organization alive today that can remember the birth of NAR. This is both good and bad.
The Good. One hundred years is a long time. Here is some simple math:
1908 to 2008 = 100 years. 1776 to 2008 = 232 years. NAR has been around for ALMOST HALF OF AMERICAN HISTORY! The people who make up the membership of NAR have lived and worked through many of the significant events in American history. The fact that our organization is 100 years old is a testament to the vision and hard work of the men who met together in Chicago 100 years ago with the idea of starting a national organization of "real estate men," as they were then called. As a general rule, bad ideas don't usually stick around for 100 years (I can think of a few exceptions, but most of them required a war or two for survival). Those men, and all those who have come and gone since, obviously did something right.
The Bad. One hundred years is a long time. Our culture has changed quite a lot over that time. Attention spans are much shorter, and so are memories. This means that much of what has been learned might have already have been forgotten. This fact is what makes the NAR centennial book such an important publication. We should always be reminded of those who came before, we should always be willing to learn from their example and from their work. If we fail to do that, then the end result is that all of their hard work will have been in vain. I hope very sincerely that those of us who have chosen to bear the title of REALTOR® today, will do our best to honor those without whom our privileges would not be possible.
Let's Begin at the Beginning
I dare think that the practice of real estate at the turn of the 20th century would be almost completely foreign to REALTORS® practicing today. When I say this, I'm not talking about the many technologies that make our daily work life more efficient. I'm talking about the actual cultural, professional, historical, and legal climate that was present 100 years ago for real estate men. Some things to consider about the world of real estate 100 years ago:
1) Widespread private real estate ownership is brand new. I think it is pretty safe to say that the majority of you reading this post own the home in which you currently live. There is also a pretty good chance that you live in a suburb, or even a rural area (like me). One hundred years ago, that was not the case. Most Americans did not own their homes, and the cities held the vast majority of the American population. The concept of the suburb hadn't even been born yet. It was about this time, however, that many cities and towns were rapidly expanding. This meant that those expanding cities and towns needed a place for people to live, they needed real estate.
2) There were no licensees. One hundred years ago, anyone, I mean ANYONE could call themselves a real estate dealer. There were people called "curbstoners." These unscrupulous individuals would basically set up shop as a real estate dealer on the sidewalk (the curbstone), and bilk or swindle anyone they could. Have you ever been in a city and been approached by people handing out flyers for something, or saying, "Psst, come check out these watches and handbags I have. . .." Now, imagine if those people were peddling real estate. Scary, but it was happening all over.
3) There were no rules or laws governing transactions. We live in a world with RESPA. One hundred years ago, however, real estate transactions were governed by simple contracts common law. All that was needed was an agreement between the buyer and the seller. No mountains of paperwork, no lengthy disclosures, no warranties, and very little recourse if they whole thing went awry.
These Conditions Warranted A Solution
The ethical practitioners of real estate recognized there were problems. What they didn't have was a viable way of solving them. They did recognize, however, that the problems were similar all over the country. As the number of real estate practitioners grew, so too did the need for cooperation and collaboration among them if they were to address the issues facing their profession. It took the leadership and vision of some of the nation's largest real estate boards at that time to address these issues and launch the organization that would eventually be known as the NATIONAL ASSOCIATION OF REALTORS®. We all know, however, what can happen to the best laid plans of mice and men if there is no leadership to guide them. The necessary leadership would come first from the man who would eventually be the fifth president of NAR. More on him, and the seed that he planted, in my next installment. . ..
By John N. Frank
Wells Fargo Home Mortgage took a dramatic step last Thursday to pump up the spirits of 12,000 real estate professionals while also reminding them that Wells want to stay a major force in mortgage lending.
It beamed a live telecast featuring three real estate coaches and the co-president of Wells Home Mortgage, Cara Heiden, to 50 theaters in 29 markets where it had invited real estate pros to watch and listen.
The message – when the going gets tough, the tough have to inspire others to get going.
Real estate pros need to not only tell clients that real estate remains a good investment, they have to lead by example and by their own demeanor, the panelists agreed. “People have to feel our commitment to real estate,” said Brian Buffini, founder of real estate training company Buffini & Co.
“If you believe in real estate, they will believe,” said Terry Watson, a real estate pro himself and founder and president of Watson World, Inc., a consulting firm. “Real estate people should be investing in real estate now,” he said. David Bach, an author who has written about real estate, agreed. He sees the U.S. housing market as being in a down cycle that presents investment opportunities. Real estate people should be telling their best clients now is the time to buy, Bach said.
Watson recommended using YouTube to post video real estate seminars and testimonials from past clients that will attract new business. Buffini advocated writing what he calls a “confession letter” to past customers – confessing you’re sorry you haven’t been in touch but that you wanted to write them now about the opportunities the market is presenting.
Wells’ Heiden said the lender will co-host buyer education seminars with interested real estate professionals. Potential buyers need to know that some of the myths floating around today’s market – such as that it’s impossible to get low down payment loans or to get a mortgage with anything less than a perfect credit score --- simply aren’t true, Heiden said.
A lot of the tips mentioned have been discussed in other venues but what was most interesting about the session was that a major lender like Wells would sponsor it. It worked with the National Association of Hispanic Real Estate Professionals, the National Association of Real Estate Brokers and the Asian Real Estate Association of America to pull the event off. Planning for it started last November.
Wells’ commitment to mortgage lending at a time when other financial giants are hurting has to be reassuring to the real estate world.
By Stacey Moncrieff
We have friends visiting from Germany this week. They confirmed for me the news I read in last week’s New York Times about the “housing slump ‘contagion’ ” with slowdowns and price declines now hitting Europe and Asia. Prices ran up so high in my friends' neck of the woods (a couple hours south of Hamburg) that buyers are now sitting on the proverbial fence fearing they’ll be stuck when the time comes to sell.
Of course, what sets successful real estate practitioners apart from the rest is that they can find opportunity in any market. On that subject, check out Bernice Ross’s column, posted last Friday at Inman News, which offers a convincing argument for “getting buyers off the fence.”
By Daniel Rothamel
Virginia REALTOR® Daniel Rothamel is writing a series of blog posts about real estate industry history for the Virginia Association of REALTORS® blog, “VAR buzz. ” Rothamel's source is the new book, “NATIONAL ASSOCIATION OF REALTORS®: 100 Years in Celebration of the American Dream”, edited by REALTOR® magazine editor in chief Stacey Moncrieff. Daniel agreed to share his posts with our readers.
Recently, I stopped-in at my local association (the Charlottesville Area Association of REALTORS®), because my wife and I had to exchange our lock box keys. Due to the fact that Supra was having some network difficulties (big surprise), the process took more time than expected.
As we were milling about the office, I noticed a book I had never seen before. I like books, and this book was particularly interesting to me. It was, NATIONAL ASSOCIATION OF REALTORS®: 100 Years in Celebration of the American Dream. The book caught my attention for two reasons–
1) It was big, blue, shiny, and had a nice cover graphic.
2) I had no idea that such a book even existed.
I spent a few minutes flipping through the book and quickly realized that I had been waiting for
a book just such as this one.
Why Don’t We Know More REALTOR® History?
As I flipped through the book casually, browsed the photos, and even read some of the passages that caught my attention, it occurred to me– why didn’t I already know some of this stuff?
This is my 5th year as a REALTOR®, and up until the point that I picked up the book and started reading, I had no knowledge of just about anything that was in it. NONE. NADA. ZIP.
In my mind, that is a travesty. Part of it is my fault, admittedly, since I never really took the time to search this type of historical information out. There is also another issue at play here, though. One that I have become particularly aware of in recent weeks– there is no discernible culture of REALTORS®. By “culture” I mean that there seems to be very little that we share that binds us together. No sort of shared knowledge of the past that ties in with the present. Other professions have this. A few examples:
First– Name me the first President of the National Association of REALTORS® way back in 1908. Or how about the year that the word REALTOR® first became a registered mark.
Can’t do it? Why not?
When I was studying to go to law school, just about any law student could give you the names of DOZENS of historically prominent attorneys. The same goes for doctors, scientists, writers, you name it. Heck, up until I picked up that book, I could name more prominent auto manufacturers than I could historically significant REALTORS®. That’s not good.
What I Plan to DO About This Problem
So here’s what happened. I picked up the book (pretty much by accident), and quickly realized that it is filled with a lot of great information. I also quickly realized that if I didn’t know about the book’s existence, it would stand to reason that there are a whole bunch of other REALTORS® who are similarly unaware. Like I said, I like books, so I bought my very own copy of this one.
Maybe you like books, maybe you don’t. Maybe you will by this one, maybe you won’t. Point is, you should still learn some of the lessons contained inside. That is exactly what I aim to do here.
Every week, as I make my way through the book, I will highlight the stories or issues that I find most interesting, and most critical. I won’t just re-print them straight from the book (that would be a copyright violation, and even worse, potentially boring). What I will do is share some of those stories in my own voice and with my own insights and editorializing, good or bad. Of course, I will reference them in the book. That way you can find the source, if you want.
My hope is that, first and foremost, you will learn something about the history of our organization and our profession. I also hope that you will come away with a greater understanding and appreciation for those who have come before us and the issues that have shaped the organization into what it is today.
And, hey, who says we can’t have a little fun along the way. . .
By Rob Freedman
Last summer, right before the subprime mortgage debacle exploded onto the front page of our newspapers, I had a conversation with Steven Krystofiak, a California mortgage broker who had become so concerned about the widespread use of stated income underwriting in residential mortgage loans that earlier in the year he had launched an organization called Mortgage Brokers Association for Responsible Lending. (www.mbarl.org) The group's sole mission was to publicize the dangers of underwriting loans without requiring borrowers to document their income.
As we know all too well today, that underwriting method has the potential to be abused and Krystofiak's main point in the interview was that it was being heavily abused at the time by mortgage brokers, particularly in high-cost states. The underwriting was intended for borrowers who face hurdles when applying for financing because they don't earn a regular paycheck--borrowers like real estate sales people, as a matter of fact.
But the use of stated income had gone far off the charts at the height of the housing boom. Krystofiak says account representatives at the big lending houses were typically seeing half the loan applications coming in from mortgage brokers underwritten as stated income, and some account executives were seeing more than 90 percent of their loans coming in that way.
These numbers applied to subprime as well as conforming loans. Indeed, the automated underwriting software of Fannie Mae and Freddie Mac permit originations to be structured as stated income at the same pricing as fully documented loans. With good pricing as their incentive, mortgage originators would "change the numbers until they got the response they wanted to hear" from the software, said Krystofiak.
In some cases, borrowers didn't know their loans were being structured as stated income. All they knew was that the loan officer had made it possible for them to get the home they wanted, and at the same pricing as fully documented loans. What's more, they didn't have to submit their past tax returns or recent pay stubs. For an unsuspecting borrower who knows little about the mortgage process, what could be better than that?
Given the resulting disaster we've seen in the mortgage market, with hundreds of thousands of loans going bad, particularly in the subprime area, you'd think mortgage brokers would stay as far away from stated income underwriting as they could. But just last week I received a promotional e-mail from a mortgage broker touting stated income underwriting for loans up to $1 million, either fixed-rate or adjustable, at full-doc pricing. No doubt the mortgage broker is trying to leverage the new $720,750 maximum high-cost conforming loan limit passed by Congress for 2008.
To be sure, borrower's would have to put some skin in the game: maximum LTV is 75 percent for loans up to $650,000, 65 percent for loans up to $1 million, and 70 percent for second-home loans. Borrowers who can't come up with equity in these amounts could try to get a second loan, but lenders say that's difficult today.
But at its core the ad is a marketing pitch for stated-income underwriting, which we've seen can wreak havoc on markets when it's made available indiscriminately to borrowers for whom it wasn't intended. Let's hope lenders take a balanced approach and limit stated-income underwriting to borrowers who really need it.
By Mariwyn Evans
I’m writing this on the plane, coming back to Chicago after watching members of the Columbus Board of REALTORS® get tips and practice in working with the media. (Watch for the story and video in the August REALTOR® magazine and Web site.)
The experience of watching REALTORS® answering a trainer’s questions before a camera got me thinking about how important it is to see the media as a conduit for sharing all the wonderful things about home ownership instead of as an adversary.
Sure, there are a few reporters out there who seem to actually enjoy writing about every drop in national median home prices and who ignore all the millions of home owners who pay their mortgages on time. Sometimes it can be frustrating, but keep in mind that reporting the negative is part of the reporter’s job. And unfortunately, many readers relish bad news. (Admit it, haven’t you ever sneaked a peak at those tabloid headlines about stars with drug problems near the checkout line.)
But the vast majority journalists aren’t out to make real estate look bad; they’re just trying to do their job and get the most accurate information they can for their readers. As the group attending the media training learned, the way to ensure that the positive information about real estate reaches the public is to provide it, complete with facts and examples to back up your statements. Complaining about the media gets you nothing.
The most-read real estate stories this week from REALTOR® magazine online’s Daily Real Estate News ranged from tips on how to hold successful open houses to the top 10 cities to sell a home.
The stories, in order of their popularity, are:
1. Couple Takes Issue With Google Street View
2. Secret Formula for Open Houses
3. States Enact Roadblocks to Foreclosure
4. Top 10 Best Cities for Home Sellers
5. Neighbor Complaints Here to Stay
To subscribe to the Daily or Weekly Real Estate News e-mail, visit REALTOR® Magazine Online.
By Wendy Cole
A funny thing happened on my way to a real estate panel discussion in downtown Chicago today: It’s name changed. When the email invitation arrived a few weeks ago beckoning me to attend a gathering called “Staying Afloat in a Sinking Market,” the characterization struck me as strangely hyperbolic, particularly for a market like Chicago’s which has been relatively stable (sale prices are still rising, even as volume slows.) The anxiety-ridden invite made me think the dour national headlines about “the market” had begun to infiltrate the industry mindset. What happened to the logical, justifiable protestations from real estate thought leaders that there is no single U.S. housing market any more than there is a national weather forecast? It seemed like Metro Chicago Real Estate Magazine, the event organizer, was sipping a bit too much of the mainstream media Kool-Aid and replacing reason with alarm in promoting its summit.
And then I got to the meeting this morning only to find it was now called “Thriving in a Changing Market.” The program screamed, “ Thriving,” by the way, in a bold font upwards of 72 point. After my momentary confusion over whether I was at the right place, I realized that some shrewd marketing minds had intervened since the initial invite. And while the speakers and topics promising “secrets from top producers” and “success strategies from top brokers” were the same all along, the new moniker for the event was as inspired as it was inspiring. After all, you can attract more flies with honey than with vinegar, according to the timeless adage. However, this is not to give the impression that real estate practitioners are flies. OK? Wait a minute. This naming thing is trickier than it seems.
The most-read real estate stories this week from REALTOR® magazine online’s Daily Real Estate News ranged from preventing home rage on foreclosed properties to taking better property photos to help move listings.
The stories, in order of their popularity, are:
1. Foreclosed Owners Paid to Leave
2. Couple Sue Associate Over Home Price
3. Bush: More Help on Way for Home Owners
4. How Photos Help Sell Homes
5. Slow Sales Drive Some Builders to Brink
To subscribe to the Daily or Weekly Real Estate News e-mail, visit REALTOR® Magazine Online.
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