RealEstateRaves

A good friend recommended I read “The Four Hour Work Week” by Tim Ferris http://www.fourhourworkweek.com/ .   I am definitely an accomplished work-aholic and take some pride in that achievement.  My wife and family don’t necessarily feel the same.  But I figured I would read the book on such a strong recommendation from a good friend and besides the thought has occurred to me that maybe I should consider taking more time off…   [family applause]

The book is quite fascinating and is basically a treatise on how best to utilize the current layers of technology to work smarter and make more money…who could disagree?  It certainly gave me pause and caused me to think about the “new” way of doing business as outlined by Mr. Ferris.  I think what I was most interested in was the use of “virtual” assistants capable of doing almost anything that doesn’t require their actual presence.  Most of the organizations Mr. Ferris mentioned were in places far, far away and for what ever reason bothered me.  I didn’t give the “virtual assistant” approach much thought since I just didn’t see how I would ever be comfortable working with people on opposite ends of the earth.    Then one day I got an email from a young lady located in the Midwest claiming to be a virtual assistant and asking if I would consider using her services.  It was just what I needed after having read Mr. Ferris’ book so I emailed her and asked her to call me.  Call me she did…and we spoke on the phone for about 10 minutes with me concluding the conversation with I can’t think of anything right now… “but I will call you if I think of something you can do for me”.  She said fine.

It wasn’t more than 15 minutes later that it occurred to me I needed to build a website and I wondered if this “virtual assistant” assuming she really existed….could help me.  I called and of course she “no problem” and within 4 hours of work she had designed a beautiful website http://www.quickprobatepropertysales.com and I have become a believer and great supporter of my new “virtual assistant”.  Every chance I get I tell this story and suggest that anyone interested call her….so if you are interested please do….  http://www.leyanisvirtualadministrator.com

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It’s been quite some time since I took up the “pen” keyboard to express my thoughts in my blog.  Now I feel a bit overwhelmed with thoughts of where do I even begin as there is so much to talk about in our fast paced information overloaded world….what can I contribute that isn’t already out there somewhere?  Well, what I can say is I continue to be facinated with the technology that exists and consider myself a helpless “early adopter” unable to restrain myself…even as recently as several days ago with the purchase of  the Google/Verizon/Motorola Droid.  The nearest Verizon store hadn’t been open more than several hours after the public intro of this new phone when I felt the urge (uncontrollable) to purchase this suppossed iPhone killer….Right….Not!   Well….its not bad and seems to be a platform that will grow and perform more like an iPhone than any other model out there right now….I still laugh each time I get an email and hear the grovely voice…”DROID”…it cracks me up.  Reminds me of a SciFi flick.  Come to think of it…it was just a few weeks ago that I bought the Ultra HD Flip Cam….I’ve got to get help.  Technology is moving at too fast a pace for me to afford my addictive “early adopter”  habit…I may need a second job.  Well, this is what I call putting my “toe” in the water with my first post…and it wasn’t so hard.  As always I send all my best to any onlookers.  Bye the way…did I mention my “virtual assistant”?  OK, OK, I’ll save that for another time….but don’t let me forget to tell you about her….she is sensational!

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This past Sunday was about as busy as I have seen in a long, long time. It was a drop dead gorgeous day and that may have helped get interested buyers out shopping. I decided to get to my open house in Redwood City early to check to be sure the house was in order, lights on, and a little classical music playing in the background. By the time I opened the door carrying my reams of research, maps and property details I had a throng of people all around me. Later that day I laughed to myself because I realized I had been so busy I never put the “open” sign out on the street. I was constantly in conversation with various people answering questions about this beautiful home. Many commented about the small master bath and I realized it took me nearly 3 hours to finally wind my way back to the master suite to actually check it out and see what my visitors were in fact talking about all day. I would estimate I saw or visited with at least 150 people…it could have easily been 175…I finally closed up and went off to a client meeting about 6pm.

The thought occurred to me as I was driving home after the open house that each day I read the paper, listen to the radio, and watch the evening news I hear the same or similar negative remarks about the real estate market and how things continue to get worse. I am sure that is true in some spots but not everywhere….certainly not at the house I was holding open Sunday. The officiandos know that real estate is a local business and the news reports we hear are often the national view and typically the areas hardest hit by foreclosures, short sales, and REO’s bank owned properties… giving [most] everyone the impression that the market is upside down everywhere and getting worse. That’s just not true….there are areas that are actually doing quite well.

If history repeats as it has done for the past 39 years since California started tracking house appreciation we likely will again see an active spring real estate market….particularly if the conforming loan limit is raised to the $730,000 mark and interest rates remain at these bargain basement levels. It is the making for a “perfect storm” motivating sellers and buyers to do their thing. What we really need is more sunshine.

Joe Parsons

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I have been going to my favorite coffee shop for over 10 years and each time I visit it’s a nice experience.  The crew has gotten to know me so I feel at home and recognized by everyone….nice feeling.  Almost a club atmosphere.  I have gotten to know the assistant manager at this establishment and as a result she has taken an interest in my real estate business and now helps me get all my marketing materials in the mail each month.  This task was daunting for me and very difficult maintaining consistency so I am very appreciative of the quality assistance I am now getting. 

A coffee shop is not just a coffee shop to me.  It’s an interesting part of all our lives [culture] it seems and I find I frequently invite customers, friends, and associates to meet at my favorite coffee shop rather than a more sterile office environment.  Even though it’s not nearly as private the sights and sounds keep it interesting and enjoyable and I manage to get lots done.

Joe Parsons

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Here is what I have heard.  In Orange County, CA in about 1990 an investment banker, William Komperda, came up with an idea for raising money by floating bonds backed by mortgages.   The idea was not really new since it had always been done by hard money lenders.  The difference was Mr. Komperda’s efforts got these sub-prime loans securitized by Wall Street.   What’s important is he pursuaded insurers and bond rating firms to accept and whole heartedly approve this new Wall Street bound  security vehicle with a much needed AAA rating.   It became a funding bonanza in 1990 when Wall Street adopted and promoted this new investment security.   All based on loans to risky borrowers ill equipped to borrow…hence the new term “Sub-Prime”.   Reference my previous article “Collective Intelligence vs Bush’s rescue plan”.

Mr. Kamperda’s client at the time [circa 1990], Long Beach Savings, was pursuaded and agreed to float a $70m bond issue backed by home loans.  This new security helped Long Beach Savings raise lots and lots of cash and eventually allowed them to  help start Ameriquest Mortgage Corp.  Ameriquest Mortgage grew and became the largest supplier of sub-prime loans in the U.S.  In 1999 Ameriquest Mortgage was purchased by Washington Mutual for $350m and became WAMU’s sub-prime lending division.  Ameriquest Mortgage was in the news  often after the acquisition by MAMU when in 2006 Ameriquest  agreed to pay a $325m fine without admitting guilt for “predatory lending practices” in 49 states.  In 2005, the peak of the sub-prime loans, Wall Street sold $508B dollars worth of loans…in 2007 the bubble burst.

In 2007 financial firms have taken over $80B dollars in write downs.  This past Thursday, Goldman Sachs Group Inc.analyst doubled its forecast for fourth-quarter writedowns at Citigroup Inc., Merrill Lynch & Co. and J.P. Morgan Chase & Co.to $33.6 billion.   Forecasters say there is more to come in 08. 

Joe Parsons

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Here is a look at the Median Price€ of a home in Redwood City during all of 2007.  I am sure you can draw lots of conclusions from this graph below.  But, let s be sure we are on the same page regarding median€€¦..as a refresher this is the point at which half of all prices are below and half above the price indicated at any given time or point on this graph.  So we have ended the year with a median price in Redwood City of  $839,000 after seeing this median mark hit $920,000 at its high point back in February.  Early in 2007 we were  hearing more and more about a subject called sub-prime loans€ but most of us didn t clearly understand what that meant?  We were hearing more and more negative news about the housing market and about how some 2 million loans were getting ready to reset in 2007€¦.we weren t sure what reset€ meant?  As the year progressed we all became very well educated and now most of us can clearly explain what sub-prime means as well as resetting€ adjustable home loans. 

The mortgage folks are not going to fold their tents and go away€¦.to return when things get better.  Just the opposite!  In 2008 they will aggressively be finding ways to help people borrow and buy.  Mark my words!  So, if you are on the fence about buying or selling€¦take a long hard look at what well may be happening early in the new year and re-think your home buying or selling goals. 

If history is important and drives your ultimate strategy making decisions know that for the last 39 years in California homes across the board have increased on average more that 8% every year.  Do you really think in the land of plenty€ that this appreciation factor is really going to change in the longer term?   With the exception of the recent past and no other time during those 39 years have interest rates been as low as they are right now. 

Joe Parsons

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Nevada leads the way in foreclosure filings per household, but in sheer numbers California unfortunately has accumulated more foreclosures than anywhere else in the nation.   Because our population here in California is so large we can’t compete with Nevada for the most foreclosure filings per household.  In either case this is an extremely bothersome situation for our nation.  I applaud the efforts being made by President Bush and others to help solve this problem but it may be too little to late.  Those individuals considering short sales or actual foreclosure options are naturally traumatized beyond belief.  Families are being pulled apart with stress levels well beyond what is humanly manageable.  While we can say it’s their problem not ours… the truth is it is our problem and will likely impact all of us in many ways over the course of the next 18-24 months.  We all know when the government gets involved in any major crisis, problems generally don’t get better any time soon. 

Some of you may remember the “gas crisis” of the 70’s where we believed [told] the world was running out of petroleum and lines began to form around city blocks while frustrated drivers waited in very long lines to fill up.  Then when that didn’t work well someone came up with the idea of allowing people to fill up on “odd” and “even” days depending upon their license plate number.  The culprit wasn’t that we were running out of gas in this country it was because the supply of gas was distributed based on a year earlier arbitrary index.  Many, many suppliers of gas [gas stations] could not get enough gas to supply to you and me through the government imposed ”allocation plan”  so the individual operators of those gas stations  had to themselves wait in long lines at the Federal Energy Department making application to change their year earlier allocation to current day requirements.  What seemed like an eternity waiting in unbelievably long lines only lasted 6 weeks….just enough time to process each of those individual gas station operator requests for an allocation increase to meet demand. 

Let’s hope that this time the government works swiftly and solves our credit & liquidity crisis quickly.  Unlike the “gas crisis” the financial liquidity crisis time line has already exceeded the gas crisis of the 70’s.  I remain hopefull this too shall pass and we will begin to see signs of normalcy in early 2008.  It’s very allarming when you examine the number of foreclosures this year with many more to come without a little help from our leaders:

Total foreclosures reported in November 2007:  201,950  

Top 10 States in November 07:  California  39,992, Florida 29, 238, Ohio 16,308, Texas 11,599, Michigan 11,464, Georgia 8,968, Nevada 6,694, Colorado 6,425, New York 5,794, Arizona 5,767

The foreclosure statistics above don’t account for all the “short sales” that often are the chosen method for banks to recoup their “under water” loans by taking back properties in lieu of foreclosure.   Banks put their hopes on the “short sale” method by eventually selling the property and recapturing some of their investment.  Short sales are typically a more economical solution for banks when the true cost of foreclosure is considered. 

Joe Parsons

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I know there are lots of opinions about President Bush’s rescue plan.  Some support it [like yours truly] while others believe it is a big mistake to let borrowers off the hook.  Which ever point of view you take…consider this….the mortgage industry, wallstreet, and the millions of extremely well educated and bright professional loan and mortgage experts couldn’t or didn’t predict the implosion that occurred and is occuring.  While these people are bright enough to have conceived of this innovative and clever way to eak out billions of profit dollars  by lending to the sub-prime market…..I don’t think they did.  Instead the greed factor that drives wall street was at work again and participated in this tradegy.  While it lasted many people became grotesqely rich at this clever and seemingly innocent approach to lending.  When the smoke cleared many of these sophisticated professionals were safely elesewhere leaving these loans in the hands of people like Country Wide, Washington Mutual, and many, many other mortgage brokers now out of business.   

My point is you can’t compare the collective intelligence of the mortage industry and that of the individual borrower.   Borrowers became intoxicated and significantly influenced by these extremely bright folks and took the bait and borrowed money at interest only knowing and believing that their properties would continue to appreciate.   It’s not a surprise to me that the average guy and gal would fall for this ploy.  

I applaud President Bush for recognizing this and putting together a rescue program to help these people and at the same time helping us all.   After all who among us believe they can really compete with the collective intelligence of wall street and all those mortgage bankers?

Joe Parsons

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Not much.  It does depend on the age of the information.  What is lost in the translation of reviewing past sold listings is an understanding of the circumstances at the time of sale.  Often there are conditions that exist that impact the moment of sale that isn’t reflected when the numbers are studied at much later dates.  I am referring to events like the sub-prime debackle and resulting implosion, significant events that impact our nation like New Orelean’s Katrena, Sept. 11, dollar devaluations, changes within the fed….Greenspan to Bernanke, interest rates, and inventory levels, etc., etc.  Now much of this is remembered but the actual impact on the housing market isn’t always known when looking at historical sold listings.

What can be studied looking at sold listings are apparent incorrect list prices and the number of days needed for a sale.  The market is meticulous, exacting, and ruthless about the price a property brings at closing time.   There is no Mr. Nice guy….it’s all about value and what someone is willing to pay at that moment.   Checking sold listings should reveal that its not prudent to mess with “mother market”…she has a mind of her own.    Reviewing sold listings should hammer home the point that a buyer’s personal financial needs has nothing to do with what a property is worth on the open market.  Thinking otherwise is mistake.

These revelations reviewing and studying sold listings may be more obvious to real estate professionals than buyers or sellers.  Professionals in any industry tend to be less emotionally impacted by the informaion gleaned than the ultimate consumer.   When the review of sold listings are digested in the right context taking into account the circumstances at that time this information can be somewhat helpful.  The best advice is to review current information about current listings with an eye on current circumstances and estimate as best you can where real estate prices and value are going in the future.  The rest is probably a waste of time.  It’s all about today.

Joe Parsons

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BUYERS………Mistakes:

1.  Not knowing how much they can afford to pay for a house before they make an offer.

Prevented by:  obtaining pre-approval for a mortgage from a lender, so you know in advance eactly how much you can afford.

2.  Not finding out in advance whom the real estate agent represents.

Prevented by:  Asking your Realtor.  Most people think their agent is working for them.  But unless the agent is working as your buyer representative, he/she represents the seller.

3.  Not realizing that the wrong mortgage can cost thousands of dollars in unnecessary interest and taxes.

Prevented by:  Consulting with a mortgage consultant, accountant, and/or financial planner before making a final decision on which mortgage to choose.  CPA’s can tell you the long-term effects on your income.

4.  Not discovering hidden defects before buying a home.

Prevented by:  Hiring a professional to conduct a pre-purchase home inspection.

5.  Not knowing how debt can affect their ability to buy or refinance a home.

Prevented by:  Asking your mortgage professional to help you review and repair your credit in advance.

SELLERS…….Mistakes:

6.  Setting their asking price too high because of personal need or emotion rather than fair market value.

Prevented by:  Consulting with a professional real estate agent.  He/She can assist you in pricing your home correctly.

7.  Failing to “showcase” their home by highlighting the best features.

Prevented by:  Thoroughly cleaning, repairing, and readying your home for showing before you put it on the market.

8.  Signing a listing contract with no way out.

Prevented by:  Asking your real estate agent if you can cancel your lisitng agreement at any time, no questions asked, prior to signing the contract agreement.

9.  Choosing an agent for the wrong reasons.  (For example, listing a home with the agent who works of the most popular company.

Prevented by:  Selecting a listing agent with the best marketing plan and track record.

10.  Not knowing their leagal rights and obligations.

Prevented by:  Consulting a knowledgeable, trustworthy professional who understands the technical and legal aspects of a real estate transaction.  Contracts are legally binding.  Neglected details can wind up costing sellers thousands of dollars.

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