The Property Pontiffs

Why overpricing your home is a costly mistake in oh so many ways.

When you sit down with the typical client at the listing appointment, it is easy to get caught up in the feel good moment of pricing the client’s home.    The client has many reasons for wanting to have the price set high.   Some being, not qualifying as a short sale, having more money left over to pay off debts, more money for a down payment for next home, or paying for that long sought after vacation.  There needs to be a soft reality interjected into the listing appointment, unfortunately many agents just don’t want to go down that road, they want to just simply accept the price that the sellers are happy with and hope they change their mind down the road. 

We understand that the reality is many clients choose their agent by who says their home is worth the most, forget the fact that no matter how much the client loves their home, or how much they want the neighbors to see how their home is worth, it just doesn’t make any rational sense.  It does not matter what the agent thinks, or a handful of agents think, sadly it does not matter what the client thinks their home is worth.  It only matters what the “Market” knows is the value, and what those potential buyers value the home at. 

The pricing is an art, mixed with science, or a sciart (yes I made that up, so if it sticks you can thank me), you can make many psychological pricing tweaks and adjustments with comparables in mind, to come to a decision that will stick.  This does not mean it is the end all be all, but simply a good educated guess.

In today’s market, pricing a home too low is not much of a problem as this will probably start a bidding war and raise the price to the level the listing agent wanted in the first place (a common practice we advocates do not care for).   Too low, and the other agents will surely catch on and be wary of making offers, thus hurting the listing in the long run. 

Pricing a home too high has many, many negative attributes that come along with this sort of practice.  For the homeowner, they become frustrated with the agent that the home is not selling when they themselves approved and wanted the higher price.  They will blame an agent who told the client that the price was too high.   Many consumers will not even see the property on their searches due to the fact that if they are looking for a home less than $200,000.00 and your home is $200,000.00 then most searches cut off at $199,999.00 and thus you don’t even come up, or if the agent is smart and realizes most homes are priced low, they will pull up homes lower than $150,000.00 knowing that bidding wars will reach higher than the client can afford.  So your home is not even being pulled to be shown.

Having an overpriced home also means that the home will sit on the market for too long and then the buyers simply move on thinking that there is something wrong with the home.  It also over-inflates the comparables in the neighborhood and creates a false sense of a market in that neighborhood, sending shock-waves through the comparables and thus tearing down a whole neighborhood in the process.  Many agents don’t think of the market as a whole, but when they pull the potential listing’s competition, a few overpriced homes which are more money makes the client feel as if they need to also price theirs up that high, and thus creating an entire map of homes overpriced destined to fail.

The homes end up staying on the market many, many, months, even a year or so and the agents get fired and a new one gets hired, and then fired, and finally the home owner frustrated ends up selling all cash at much lower than expected.  They are upset, the agents fired are upset, and the domino effect on the rest of the homes rises exponentially.

In the end it costs the seller and the agent a lot of money.  It costs the seller money in interest, and mortgage payment that were paid the many days it was on the market too high, utilities, and possible cost them the home they wanted to buy because this home was sold on contingency. It costs the seller in value because the seller is not going to try that hard for a market worn, stale, and old listing.  It costs the agent in time and marketing money, as well as the headache and stress in dealing with the after effects of a client listing gone wrong.

Make sure you look at all the reasons a home does not sell.  The reason a home does not sell may not be just price, it could be that a home seller does not wish to put a sign out front, (usually for vain reasons), which is much akin to winking at a pretty girl in complete darkness, no one knows your doing it but you.  Put a sign out, many potential buyers drive around selecting homes, this is free advertisement and should be utilized.  Also how does the home look, should it be spruced up?  Higher market value homes also have another reason for failing to sell.  With these type homes, the sellers only want appointment only, or no lock box, I call these appointments for failure listings.  Good luck selling a home you can’t show, there are far too many homes these buyers will see that don’t have these restrictions and the buyers get the last laugh as the home sits and waits for an even lower market.  Don’t let this happen to you as a seller, or to your clients, as agents, it does no one any good to not state the truth in the beginning.

Well that was our 8 cents, remember to listen to our podcast and subscribe today!  Feel free to comment on this or any of our other blog postings.  http://realestaterant.podbean.com

The 14 most common mistakes people make when buying a home.

Here are some of the most common mistakes buyers make when buying a home.  What we pontiffs wanted to do is better inform our loyal followers to these so they will be better prepared going into the process all together.  We understand that many will know to go with a Carrigan Group advocate and you can avoid many of these problems, but some can’t and so this will help you better inform your agent to protect yourself.

1.    Ignoring the costs and effects of low credit score…

What score should I have?   Well I wish I could tell you but I can’t it varies, there is so many variables involved, what is your income, what type of credit do you have, what is the amount of liabilities do you have, and are you leveraged too high?   But I can tell you that below 650 it will cost you, in many ways this number will affect you and your wallet.   For example, your car insurance will be more expensive, your loan interest may be higher, your payments for furniture and other installment contracts will be higher, you may be turned down for loans, apartments, and even jobs because of it (regardless that it is against the law, you may never know the real reason) and you may be required to put more money down.

So ignoring the warning signs and the report itself can have a terrible effect on your score and your financial history.   Pull that report, look at it, analyze it, and fix what you can now.  Look at items in which you had negative notations, but now you have been on time for two years or more and have the negative items removed.   Double check to make sure there are no mistakes on the report or possible an issue of identity theft or identity mistake, it can happen.  Pay down balances that are close to the limit, or even ask for a higher limit (but don’t fill that extra amount).   There are many things you can do to help your credit, call us and we can help, BUT DON”T call these scam artists who claim they can improve your credit for a mere $3000.00.  Check your credit score early and fix what you can now.

2.    Know how much a house you can afford….ALL the costs involved

One mistake many buyers make is they ask for a particular payment, or have a specific payment in mind and they don’t take into consideration the other costs either direct, related, or hidden that are involved in owning a home.  Many people say, I need a payment of no more than $1900.00 a month or I can’t afford the home.  They then get a quote from a loan officer who says “sure we can do that, here is a loan amount of $.......00 with a payment of only $1800.00 a month, how do you like that?”  However, this payment does not include insurance, HOA dues, other assessed taxes, property insurance, monthly utilities, pool maintenance, gardening maintenance, etc.   Remember that some of your monthly costs will go up and that you will still have other costs that you had before and you should take those into consideration as well. 

What you should do is ask the loan officer if the payment quoted is taxes insurance, PMI, interest, and principle included.  Remember your loan officer does not have an insurance quote for you nor does he/she know the average utilities you will have for your new home.  Have them in mind by researching those costs, and you will have a better idea of all the costs involved in owning your home and what it does to your monthly payment.  Always shoot for a lower house price then you want to afford so you don’t over stretch yourself, especially if this is your first home.  Understand that there are tax incentives to owning your home but also there are maintenance and other costs as well.

3.    Failing to have an agent represent you and staying loyal

This should be an obvious one, and of course it is also a touchy subject.  Many people just don’t understand how Agents get paid.  It is easy for those so called investment gurus to slam agents and commissions paid, and yet will they give their advice for free?  Will these same experts give you their book free, let you attend their costly seminars for free, or even have no strings attached?   After giving you their advice are they personally responsible for the outcome?  Are they economically tied to the successful outcome of your transaction like a realtor is? 

No, you see, there are those who have bought so many houses, and investment properties who understand the ins and outs of a transaction and also can afford to lose a few thousand dollars, but not the average consumer, the average consumer needs someone who will represent them, and their interests.

An agent only gets paid if you buy a house and the transaction closes, in the interim however, the many hours driving to and from houses, the faxing and research and the length of escrow the agent receives nothing.  They don’t get paid until it closes AND there is enough money left over at the end of the transaction.  So remember no one likes to work for free, and you need to be loyal and honest with your agent.  If the agent is not doing their job, let them know, and if you get no response, dump them.  But remember, trying to straddle the fence and have multiple agents working on your behalf will mean that once they figure this out, they will dump you or worse, string you along and not care whether your interests are taken care of or not.  After all, you didn’t think enough of them to consider their interests either.

Remember that a listing agent works for the seller, an REO broker works for the bank, an auctioneer works for the seller, and if they represent you too, who’s interest will first be sacrificed?  The buyer’s (yours) that’s whose interest will fall down the list of priorities first.  So don’t be fooled into thinking they will aggressively try and get you the best deal.    If you believe the experts, then the agent is out for only their commission at worst and at best there is a conflict of interest and they are going to try and get the highest price for the house.  Where you, on the other hand, have an interest in getting the lowest price for the house possible.

4.    Focusing on your wish list is not a reality check

When you go and look for a home you want it all, you want what you don’t have now, or what others have that you like.  However, that may not be out there, or at least not in total.  A house needs to meet your needs at a minimum and then needs to have the highest priorities on your list met.   You may or may not get all of them in one home, or in the home that accepts your offer.  You need to prioritize, and step back from the transaction and think rationally rather than emotionally.  Am I saying you need to compromise on your dream?  No, but you will need to come to a realization that your dream home is not out there unless you build it, and even then once you live in it you will see issues.

What we recommend is always update your priority list and keep realistic about your chances of finding all of your wants in one house.  Be open and honest with your agent and always talk about your likes and dislikes as they will change.   As we talk about in our podcast and blogs, you will be making many offers and looking at many houses before completing the transaction ultimately.  So things happen and the housing market is volatile. Although many homes are on the market, many are not going to match what you need or want.

5.    Assuming foreclosures and auction are such a great deal…

Remember, these same investors and banks who got us into this mess are also the ones trying to put the blame solely on the agents out there trying to sell this inventory.  Foreclosures are a trustee sale, that means the bank now owns them and they have not seen the property, and sellers make no warranties as to its condition.  You also may not even be able to see the home prior to bidding.  You have to also understand that the reo brokers work for the bank and not you, as stated above they do not have your best interests at heart.  Watch out for the fine print, you may still have some costs that won’t be knocked out by the foreclosure, and you may be responsible for evicting the current tenants who are not so happy to be leaving.  I have seen owners smash the property up just as escrow closes, and there is NOTHING a bank or reo broker will do about it.

Auctions are all these problems and can even be worse.  They add insult to injury and they charge you an extra 5% just for the opportunity to not preview the property beforehand, accept the property as-is, and sometimes force you to use their loans which are also high priced.  Price conscious buyers need to be educated and wary at the same time, some of these auctions allow you to bring an agent with you, do so, and have cash on hand or you will be out, and be ready to compete with the other investors who are out there and gave you the advice not to use an agent (so they can get you to screw up and they can swoop in and buy).

Short sales can also be difficult and time consuming, so make sure you are prepared for what might happen.  Listen to our podcasts that talk about these type transactions, so you can be better prepared in the end.  And on a side note, these silly buses that truck unsuspecting buyers around only show you the properties they want  to show you (their own listings and we have spoken about that problem above) and yes you can make an offer, along with the other 50 people on the bus with you, great odds there huh?

6.    Assuming your first offer will be accepted

Many buyers get frustrated when they find a house, and make an offer they believe was good, and don’t want to sit patiently for an answer.  And if the answer comes at all, it seems that a property that when we made an offer surprisingly, now has multiple offers and they are all higher than yours.  Believe us, we know how frustrating this is, and many a buyer gets angry and frustrated to only leave the process entirely.  Well, what is going on then?   Well, there are many truths, and not all things on the up and up.  Am I saying there are bad agents out there?  Yes, Yes I am, there are desperate, hungry, jaded, unethical, and do anything to make a dollar agents out there.   Are there professional buyers who have done their homework and are willing to pay all cash to get a home?   Yes, yes there is.  There are agents who hold on to a listing so they can double end the deal (represent both sides themselves), and there are homes which are priced too low in order to attract more buyers into a bidding war.

Then what should you do?  Have patience, and stick with your advocate.  Remember that many times you can bid and then never hear from them again, so please be patient and keep bidding, and keep looking.  Many listings on the market today are priced well below what they should so that many buyers will bid and they can counter offer the price upwards.  Some people bid very high on a well priced listing in order to start a bidding war, artificially inflating the going asking price.  They do this knowing that the price they offered will never make it to appraisal and thus the bank will renegotiate to a price closer to what you were offering all along.  Sometimes we as your advocate can make sure the offer is well thought out and well within the good price range, and we can also speak to the broker of the agent’s listing (that sometimes can work against you), but that does not ensure we can overcome the shady dealings.

So the quick answers are, be patient, look for homes a little below your price range in order to have room to price up your bid to get the house, remember that your offer has to compete with other buyers who want the house so don’t ask for too much, and again worth repeating be patient, be patient, be patient.

7.    Not buying with contingencies

This can be a big one if you are on the wrong end, buying a home knowing that it must meet your loan criteria, or that you must close on your current home is crucial.  Missing this one could cost you your home; I have seen it many times before.  An agent writes an offer and sends it to us without contingencies.   When in the offer, and by talking with the agent you can tell there needs to be one.  That client is going to be very upset when those contingencies are not met and they can’t pull out of the deal.  Make sure you have a good advocate who knows how to write an offer (not simply putting it on their assistant to do, or their pre-done template offers).

8.    Scrimping on inspections (home and termite)

This too may sound obvious, but I have been on the other side of transactions where the buyer’s agent allows, or even encourages their client to forgo an inspection because the seller won’t pay for any repairs.  Well that agent needs to find a new line of work, because it is clear they don’t understand the need nor the value of these inspections.

A home inspection, a good thorough one, will help you pin point the most pressing problem areas that will need to be addressed once or before you move in.   A termite problem will allow you to see where the problems lie in the pest area, or the rotting wood that will need to be replaced, or even the good news that there is nothing pressing to deal with and you should be happy to buy the home.  At least you will know, and better prepared.

Pay the inspection, because the agent, who doesn’t press you to do it, won’t be there when you find out the extent of the damages because you were the buyer and you had a responsibility to do those inspections.  Don’t expect to come after an agent who told you that you should do these inspections and you decided not to, it’s just plain silly.

9.    Not getting a home warranty

These warranty plans are a great deal, depending on who you use, they can save you a bundle of money on repairs.  Oh, and a great tip is, you can buy these warranty plans anytime you like.  Even after you have the home, remember whether your agent, seller, or you pay for it, it will help you in the long run.  What are they?  Well they are a policy that you can purchase for around $400.00 that in the event your ac or your water heater breaks down, for a small fee (between $25-$55 dollars) they will fix it or replace it, you can also get it on septic systems, roofs, ACs, appliances, and the like so remember the first year you WILL have some issue that a home warranty will come to the rescue.  I will have a podcast later to discuss this very issue, with lots of tips on what to buy.  Why not spend the $450.00 now instead of the $1000.00 later.

10.   Don’t shop for other things while getting a home

I can tell you that this has happened a few times with some clients of mine, they are so excited to get the new home and they buy a few other things to go with it, like a spa, or a new truck.  Then all of a sudden just before funding the bank checks your credit again and whammo your debt to income ratio is off and now you don’t qualify for the loan anymore.  Watch it, and be careful, better yet, don’t buy anything until everything closes.

11.   Getting the right mortgage

We all have seen what the last buying craze did to the overall economy.  I blame banks and many an agent for that, but I also blame the consumer.  Many a consumer saw the appeal of fast and easy money to buy the house of their dreams that was way too expensive but they believed they had the time and opportunity to later change that bad loan out for a good one.  Well we know where that philosophy got them right?  So please get a good loan, even it is for less than you wanted, and assume that things get worse before they get better, and ALWAYS work on improving your financial situation to better withstand the effects of the economy down the line.

Get a good loan officer, ask questions that may stump them, if they make something up, dump them now, or pay the price later.  Ask them about their toughest deal and how they got it fixed, and see if you can speak to that client.  Remember once the advocates have done their job, it will be up to the 2 most important people in the world at that given moment, the loan officer and the escrow agent to close it in the end.  Have a bad loan officer who can’t get the deal funded and knew all along, or didn’t ask the right questions and sure enough the deal falls out at the last minute, and who do you think you’ll blame???  Don’t fib, we know, the AGENT, that’s who, I have seen it many times, every month they write a check for a bad loan and they get angry at us, and forget that we didn’t do the loan and you got yourself into it.  So do your homework, you will thank us for it later.

12.   Save save save your money, ask ask ask for money

It used to be that you went to a wedding and they had gifts for the bride and groom, and usually it was money in order to have a down payment for their new home.  Those days are gone (or maybe coming back).  In this day and age, one positive thing that has emerged is, you have to have skin in the game, you have to have some money down to get a home now.  That’s reality, and it’s a good thing.    So save your money, don’t buy that new 4x4, or that new quad, save your money for a down payment or the costs associated with your purchase.  Always ask for money, ask it from the seller, but don’t go overboard, see if you can’t work in certain costs into the loan or the deal so you can get into that home, be creative.

13.   Get utilities turned on in time

Okay you have had all the stress and excitement imaginable to get into your new house, you are ready to move in on the weekend, and you have done it, only to find out you missed one crucial thing, the utilities are not on.  Great, you roll with the punches and eat by candle light, but after call the evil electric company and Gas Company and Water Company, you find out they cannot do anything to Monday and maybe have someone out by Wednesday.  Now your romantic elation about your house has dropped to record lows and you need to stay somewhere else and the glow has dimmed on your new home experience.  I have had it happen with new tenants and buyers of other agents who buy one of our listings.  What we try to do is gently remind the client that you will need to get those things turned on and get ready to change your address and such.  So remember that this is a simple thing that can cause a real headache in the end when it happens.

14.   Be flexible and be patient, and stay positive

Remember that there is a bit of the wild-wild-west in this housing frontier.  No one can guarantee a smooth buying process (sometimes it happens but it is rare).  Remember that the “experts” also have an angle, and your uncle’s/sister’s/friend’s/coworker’s/neighbor’s experience is not indicative of your possible outcome (you don’t know all the variable involved in their deal).   Be patient, trust your advocate, and be prepared with the right kind of knowledge and you can minimize the false expectations and thus increase the level of pleasure and excitement that can accompany your house buying experience, and turn the process of buying a house and making it your home more fulfilling.

Well I hope this was informative for you, please contact us today for all your real estate needs, and even questions.  Remember to subscribe to the blog and to our podcast to continue to hear our 8 cents on issues in real estate that make a difference to you.

ryan

Where are we now? (or, why in my humble opinion BofA sucks!)

Wow, this market can be very frustrating, especially when you are dealing with BofA.   Short sales and negotiations are taking forever, and BofA is the prime suspect.   These banks have it all, a sweet deal of making trillions of dollars off people during the hot real estate market, the a bigger killing on the refi-boom, then the government steps in and says they are too big to fail, and bails them out and BofA gets 45 billion dollars.   Wow, that’s a lot of money, our money (mine and yours), they whine and cry how they need our help when they are the number one reason we can’t get out of this slump! 

 

If you listen to our award winning podcast, “what to expect” you can see the frustrating long process it is to get a short sale done.   BofA is notorious for losing files, faxes, and other important documents when it is beneficial to them to stall the process.   They constantly play the negotiator roulette, one week you work with one the next they are gone.   Then they tell you that everything has to start over again and they need updated files before they can move on, then when you think that it is on its way you are told to call back, then you NEVER hear from them again, and weeks later after phone calls, emails, and faxes, you have to call a different number to fax to a different fax line, or they want you to start over and email them.   Then after that, and more weeks have gone by, nothing, absolutely nothing, and no one can tell you what’s going on or where it is, and no one can answer “where are we now?”

 

Meanwhile you have the property losing value, buyers losing interest, and your hair is falling out and your clients think you don’t know what you’re doing.   One problem is, before this the big bad evil mortgage bank was Countrywide, man EVERYONE loved to hate countrywide, then BofA bought Countrywide and decided to eat the poison they were selling and become an even more evil company.   BofA is so inept, the right hand has no idea what the left hand is doing meanwhile their foot is in their mouth and they really don’t care, it’s that simple.

Obviously, (all you BofA lawyers back off) this is in my own humble yet important opinion and is based entirely on the numerous occasions that this has happened to me and my agents personally, I am not here just to bash but to scream from the mountain tops that this is happening and its wrong!   Another problem is they are backed up, I understand that, but please let’s get some semblance of order, let’s keep the files moving, and let’s start approving deals.

Now our government is also trying to sweeten the deal and pay the banks an extra few thousand for every deal they close, WOW, that should have changed things huh, do ya think?   Well no it did not, they are holding up deals and allowing deals to fail every day, regardless of the bailouts, mergers, friendly regulations, powerful lobbyists, monetary incentives, and so called presidential threats.   BofA and its investors who hold the notes could speed things up and significantly improve this market overnight.   

All this government intervention has not helped one bit, (remember this is the same government who was not overseeing the growing crisis before it happened, and regardless of how you feel about who is in office (he WAS a senator for the years during this crisis) Congress was in charge and they wanted these risky loans, in order to secure votes,  and they didn’t prepare for the consequences.   Remember many of these congressional leaders have been around for years, on both parties, Frank, Dodd, Reid, Rangel, Pelosi, they have been in charge for many years, and on their watch this happened.   So banks are just simply waiting it out to see if the congress can come along and buy them all out again. 

Now we have a new idea, coming straight from BofA themselves, let’s get rid of brokers, and those greedy investors (who made a fortune off flipping properties) also want to do the same.   Listen I am not saying nor have I ever said that there were not any bad brokers or loan officers out there, there were, but there was a lot more greedy banks and the banks are where the buck stopped, they didn’t have to lend those silly loans in the first place, but they were receiving pressure from Barney Frank, and the likes of ACORN (yes, I said it, what about it? it’s the truth).   So the banks that profited immensely now cry foul!  Okay, I get it, you got hurt in the speculative real estate market, well, welcome to planet earth.   Why punish us brokers who are trying to offload these toxic homes for you?

Why do they always lose files?   Why do the negotiators always change?   Why do we not have a BPO ordered?   Why out of 22 pages faxed successfully you somehow don’t have one?   Why do I get a voicemail all the time?    Why doesn’t someone return my calls?    Why can’t someone shoot me an email with an answer to my question of “where are we now?”    Every day we call, we call multiple times and when and IF we ever get a live person that person cannot give us an answer to “where are we now?”    So, to all of you loyal readers, and to my clients, where are we now?

I’ll tell you, we are now in a situation where congress is trying to look like they are helping but really don’t want to.   Look at the finance regulation, Fannie Mae and Freddie Mac are conspicuously absent from the reform?   (see http://finance.yahoo.com/news/Dems-Dont-Address-Freddie-And-ibd-1664037314.html?x=0&.v=1)   And yet they are the main culprits, and they are the closest to the problem and the solution.   Unfortunately for us they are VERY close to the problems, Barney Frank and Chris Dodd, both have been their pockets since the beginning and still are.   I know it’s easy to say Republicans are wedded to the big businesses but we need to look at the Dems too, not assume they are fighting for us.   Look at the sweetheart deal given to Chris Dodd, or the looking of the other way by Barney Frank when they were giving loans to people who could not afford them, and Barney wanted to be able to keep those people as votes, rather than keep our economy healthy.   They were in charge and THEY need to be held accountable, after all the head of Freddie Mac was paid over $800,000.00 in salary last year, the previous CEO to him was paid $1.4 million.    Are we not in a recession here?   Why did we bail them out?   Please, Leaders of congress were in bed with the banks and throughout history we have seen banks time and time again exempted from reform, or regulations.   So where are we now?  Headed for even more trouble!   And that’s just my 8 cents on the subject……

Ryan S. Carrigan, J.D.

Good blog entry, ANOTHER confirming view

here is a quick blog I read recently which states a report that confirms what we have been saying, BANKS are not cooperating and they don't want to.  Don't feel sorry for the banks! here we go, go to it, it also has some other great articles

great blog!

http://www.californiadebtblog.com/

here is a link to the article as well.... http://www.boston.com/business/articles/2009/07/07/lenders_avoid_redoing_loans_fed_concludes/

http://www.typepad.com/services/trackback/6a00d8341c6e4553ef011570e0a893970c

Frustrating Short-Sales: Posted By Realtor Sara Griffin

There are a number of frustrations when having to deal with short-sales. First off, each bank has different standards as to the timelines in getting paperwork pushed through for approvals or assignment to the negotiators. Each representative that I speak with has different timelines as to how long it will take to get short-sales approved and to whom the paperwork has to reach to be approved. Some individuals reveal that it will take between 15-30 days, continuing to push the dates back further and further, until the buyer’s agent, buyers, listing agents, and sellers are all extremely frustrated and discouraged with the process. Some banks announce from the beginning that their process could take several months.  A minimum of three months has passed and nothing has been accomplished in most cases. Second, the guidelines and response times need to be set the same for every bank. There needs to be a national standard that the banks follow as to the response times. Every bank has set their own standards, and when speaking with a different representative each time you call in, some cannot even find the paperwork in the computer or off of the fax after it has been sent numerous times before, and the destructive cycle continues. Third, the passing of the short-sale packages from employee to employee and loss of faxes due to the fact that there are several fax numbers becomes frustrating and tiring day after day.  Many phone numbers that when called lead to a dead line.

            The bottom line is that there needs to be consistent structure within the individual banks, and the regulators need to write laws with specific guidelines as to how the banks structure themselves. Once the specific guidelines are written, the banks would have only so much time to approve the short sales. As an example, it should take 15 days for the short-sale packages to be assigned to the negotiator, then another 15 days from that point to get the information to the investor who only has possibly another week or so to agree to the terms of the offer, and submission back to the bank. At this point the appraisal is already done, the short-sale and offer from a buyer are approved, and escrow begins. This process would improve the waiting time from the beginning if all worked toward reaching the set standards.

             Once the negotiator has been assigned, we as agents working on behalf of our clients need to be able to get a hold of the representative handling the account. It is understood that these individuals are extremely busy, but not being able to even get a name or number of a negotiator leads to frustration and discouragement. I as an agent need to be able to call or email the negotiator if need be, so this information should be in the computer system readily available the moment I or any other agent calls in to discuss the account. It is pointless to call in to speak with someone who is unaware of the information on the account, then shuffles the phone call until a dead phone line is reached.  There needs to be universal fax numbers to individuals assigned to the accounts. Once that certain account is faxed in, it needs to be directed to the appropriate person by way of last four digits of account or so on, and used consistently within the banks as to the work flow. There are a number of banks that are able to pull the accounts up and view them from the moment the paperwork is sent through the computer, and they are on your tail to get the paperwork in on time. If only each bank was this organized and consistent, the frustrations would end. As a Realtor, I along with many agree that we have a strong hand in leading the negotiations behind the law makers and are available to put forth as much if not more time and energy to help solve these problems and frustrations as we have sitting on the phone on hold waiting to speak with a representative at the banks.

Sara Griffin

Repost from now defunct other blog 2

(also taken from my other now defunct blog posted to the new one to enlighten all!)

October 20^th 2008

Foreclosures are on the rise and what should we do about it?

Well real estate Armageddon is here (well some people want you to believe that), and there are more vacant homes in a neighborhood than occupied.  Can be scary and no the federal government won’t be the direct solution.  I have submitted (since 2006) a program to the city of Riverside that I fee is a very unique and innovative solution to an ever growing crisis. 

The homes need to be available at even lower rates than we have now, and we need to treat them as actual sales.  What I mean by that is, if we help lower to mid income people get into the house it needs to be in good neighborhoods, not low income housing districts.  And we need to have the owner actually on title and not showing the title in HUD or some other government agency.  This way the new owner has pride AND responsibility in the game.  This is not that original, down payment assistance programs have been around for years, they obviously have not solved the problem.

My approach has a twist, of course not divulging everything AND It would take too long on specifics; they have to refinance at market rate in 3 years and the city housing authority carries the paper for 3 years and is paid back in full at the end in order to do it again.  During the three years they make full payments (no options, no adjustable, no interest only) principle, interest, taxes and insurance.  The interest can be 3-4% (not sure), that way it won’t be payment shock at the end.  During the 3 years however they must continue to upkeep the property, they cannot rent it out, they cannot sell, and they cannot further encumber it.   They must have a budget seminar before and every 6 months must show attendance at further education such as home improvement and repair workshops, how to workshops, and finance workshops.  They must be bettering their position somehow or they will never join the rest of us.  If they learn how to take care of their house they take more pride in the house, if they have to make the payment just like everyone else, then they are not on the public housing welfare system and can take pride in that.  The workshops are available now through Lowes, home depot, the county, HUD, Bank Of America etc…. these exist but no one takes advantage of them, here we would require it.

Again, there are elements of ownership, pride and responsibility.  They have skin in the game as we say.  This differs from other programs and the no down interest only crazy loans we had before.  They had no stake and it didn’t matter to them after purchase.  Here they have accountability and continuing education to better themselves and their neighbors. if they fail to pay they get foreclosed on just like everyone else, and the home goes to another on the list. One of the biggest aspects and selling points is the fact that the city gets paid back at the end to do it again and gets the interest on payments to help administer it (my company actually wants to administer it for 1% service fee).  This too differs from the down payment assistance grant programs, once given it is GONE, never to come back again.  Our agency (or another broker) will help select the homes and process the loans and escrows (which is what we do already) NOT the federal government who have no idea how to do it.  The people in the program, would come from the waiting list from the city and the monies come from the feds or the city directly.  THAT way the local governments can control the purchases and what happens to them and where it happens.  Unlike federal programs where the city housing board is not in the loop and neither are the local brokers.

I have submitted this idea with an executive summary to every city council member and many other influential persons since 2006 with very little movement.  So we will see, hopefully the city does see the crisis we are in and responds appropriately.  On the flip side this is probably the greatest buying time of our lives and buyers can get unbelievable deals on homes that EVENUALLY will rise again in value. So in the mean time……to be continued……

reposting from now defunct blog1

(originally posted and written on our other blog oct 3^rd 2008)

Oct 3^rd 2008

Surprise, surprise, surprise the fat cat politicians won again.

Headline: “Gloom and doom, must pass this bill or Lord Voldemort will return to kill us all.”  They crammed this legislation (chock FULL of pork barrel additions) through without thought for what can happen, not what WILL happen, what can happen.  These type of decisions need to be thought through more thoroughly.  I know John McCain wants to be president, Obama wants pork barrel and to show he knows how to fix the economy, but come on!  Have we not learned our lesson here?  If we give these fat cats money, Wall Street will just find a way to exploit it, to take monies when they don’t deserve them, postpone the inevitable bankruptcy and still get their million dollar pay.

We need to look at what may happen, what do I mean by that? Well in business, and in the law decisions need to go through a what can happen filter; what can go wrong, what if scenarios.  We know they want this money, I know the economy looks bad and Barney Frank and Schumer (who were at the helm steering this ship to disaster without taking responsibility) want to make you look the other way.  The politicians SAY that this money is intended to help small business and Main Street.  But it won’t, it won’t help you and me, it won’t get the banks to loosen the loan money for good people, it won’t save the failing businesses it is served on a silver platter to.  What it will do is postpone the inevitable demise of bad business run by greedy executives who will still pay their lavish salaries and give themselves golden parachutes.

Whenever you have a client that wants to make a decision or someone who wants to plan their estate, you have to ask the decision’s result, or document, what if?  What can happen and how do we, in advance, protect against a problem, or better improve the results?  On a will or trust you need to look to the document and go through the scenario of what if they just passed away and we now need to enact the trust. How does what we have in front of us work and how would it play out?  Did it do what we wanted?  How could someone attack it or get what they weren’t supposed to?  Then you fix it and rest easier that at least you tested it.  Not that you can prepare for everything, but you took your time and made the best decision at the time with what you had.  Another service we provide is business formations, sounds easy right?  Why you can do them online, or go to one of those pay us and you help yourselves type unservices. However, you have to go through an elaborate process to form an agreement and working policy everyone can be happy with, allow the most flexibility, and in the event of a tragedy, or split up and liquidation of the company, a PLAN. That plan has to be tested early on and many what ifs asked.  If you don’t and something happens your client will be on the raw end of something that could have been avoided. 

Many times with estate plans for non-traditional relationships for example you can have relatives who did not support nor like the deceased come out of the woodwork and thus deny the trust and will;s ultimate goals.  In that case a do it yourself will and trust will not work and you have to design a document and test what could happen.

To get back to the crammed legislation at hand, the politicians need to stop and look at what could happen with this plan in place. How could someone take advantage of it? Will it do what we want?  What is the accountability?  Who will answer if something goes wrong? None of these things are happening and Barney Frank and his Pelosi gang will shove this down our throats with an all to willing disappointment of a president.  It will NOT do what we need and it WILL be a disaster mark my words.  we dont HAVE to act now, and so what if they fail? lets slow down and think before we pony up so much money to greedy executives who made the bad decisions in the first place. So call your congressman and tell them your thoughts, and better yet, post your response to us here!  Good luck and see you again!

Rally My Troops

Here is a letter I am drafting to send to all my agents concerning the current state of affairs in this market.  I know I may sound all general Schwarzkopf-ish but hey I believe it needs to be said.  I did take my inspiration and plagiarized a bit from Marc Davison, so thank you for the inspiration.  Although most if not all is my own words and my own feelings.  Yes it is a draft and some changes may be occurring. I wanted to put it up here to get some comments.

Ryan Sean Carrigan, J.D., and Edward Bankston Carrigan

President, Senior Vice President The Carrigan Group, CG Funding, Earras Corporation

Dear Agents and Staff:

As you know, we are in the midst of a storm raining down on many Americans. Foreclosures are skyrocketing, many banks are closing their doors, many loan originators, and real estate agents are out of a job. Many people are waking up today to the fact that they believe they have no other hope or options available to them and they must pack up all they have accumulated in their home and leave...somewhere else, not in the home they felt was their dream home, the home they would retire in and build wealth with.

Many of you of course, are all too painfully aware of this type of situation. You may have former clients in this situation; you may have neighbors, friends, and even family members that are going through this.

Despite the efforts of the Federal Reserve and some banks, the loan market has not quite stabilized and escrows and deals continue to fall away. Even some of our well intentioned, and what we use to think were strong buyers, have been struggling to get their loans approved. Many times you will feel the pressure of sellers who want or desperately NEED to get a specific price for their home, and sadly are unrealistic in those goals.  Many of you will bear the brunt of the anger of consumers and sellers as if this is somehow your fault.

So starting today, we -- you and me, together -- will begin to rehabilitate our company into a stronger leaner company that still believes in the client and all that is good about Real Estate.  Together we as a small army must attempt to revive an industry that has over the last 10 years become fat, lazy, greedy, bloated with agents who don’t care, and spoiled brokers and agents who were used to selling homes within hours and getting clients into loans they should not have afforded. If you join the struggle, in time we will emerge healthier, stronger and more prosperous. If you shirk, dig in, do nothing, wait for something to fall in your lap, and cling to the past, then I ask you now to take your real estate license elsewhere. There may be a place for you in this industry (although not a strong one or one who cares about you and your future), but it is not within our family of The Carrigan Group.

To begin, I want you to be reintroduced to our company, to who it is we are and if you stay who you are. That name that appears on our signs, on your business cards, on the letterhead, and on your yard signs is a name that has meaning and history. The people that built this firm did so on a handshake, goodwill, a belief that through thick OR thin we will always be there WITH our client for their good not our own bottom line.  We have always strived to go that extra mile for our clients and they have always believed in us and put their trust in us. We have given our clients our word, and on deeds performed within the community. All of these in the past have paid dividends. Beginning now, I expect you to carry that history faithfully forward.

We will have to work hard to gain the confidence and trust of the public. From now on, every human being we touch will no longer wonder if we have their interest at heart. They will know it. They will know it in the way you speak, in your actions, and your attempt to educate everyone you come into contact with, that WE are different and WE are making a difference.  Yes it is difficult right now, yes we must struggle to make it, but we will, we will not only survive but we will begin to truly prosper.  With your help and the support of the many people we will help along the way.

Starting today, we will begin an audit of every program, practice, application, vendor relationship and product we have. What doesn't fully honor and respect our customers will be discarded. We will begin to diversify, offer products and services that others don’t and in a way others have not thought about before. We must produce products and services that truly HELP people, clients, consumers, our environment, our economy, and our communities.  We must not shirk OUR responsibility to roll our sleeves up and get ready to work hard, for if we do this now, we will all prosper in the future.  We will be as a company build a future that is more stable and built more solidly and more ready to weather whatever the lord may bring our way.

Beginning now, everything that communicates our mutual message to the community must be unified and spoken with a passion that belies the fact that you truly believe in what you are saying. You will say it with Your email signature file, your business cards, your personal letters, your websites, your communications with others, your advertisements, your open houses, your fliers, and your listings, your listing and sales presentations, everything must convey this message.

The story you tell and the actions you convey will reflect on your peers within this company and throughout the entire industry. As professional men and women who handle the most important financial transaction in our customers' lives, we will present ourselves accordingly. We must earn their trust and safeguard that trust with everything we have.  It is then and only then that we may show them that we are here for the long haul, not just for the hot markets where we can make a fast buck and move on.  I know it is tough out there; it is tough for everyone, INCLUDING your clients.  Show your empathy by educating them and providing them with service that goes above and beyond the call of the norm.  Stick with it, think outside the box, pray hard, and really put yourself out there for others, they will come, and we will prosper.

Stay connected to people, LISTEN to people, and offer our services to them, what we have to offer is truly unique and will help them and in the long run help you.  Yes you will earn less, and yes you will have a lot of deals fall through, but in the end we will rise up and become a beacon for all others to emulate. The products we offer such as the credit repair and budget analysis is like none other, the ray of sunshine in a gloomy world program, the expert analysis and education we can provide current, future, and past clients are unparallel.  Believe in them and your clients will too. Believe in yourself because we believe in you.

Finally, as a member of this (family) firm, remind yourself everyday of your commitment to be the best. If you're not the best, then you are nothing. Look around you. This building, our executive team, your peers, our past clients, and our history -- it's a foundation we expect you to add to, not take from. Honor it and you have our word that it will honor you.

Sincerely,

Ryan Sean Carrigan, J.D.                            Edward Bankston Carrigan                                          

President/ Senior Vice President, The Carrigan Group, CG Funding, Earras Corporation

so there you go, in a nutshell, this too shall pass. 

Ryan

WHAT IS GOING ON HERE???$#*&%#$(&%)

Where should we go from here?  What should we all do?

WOW we Pontiffs foresaw a slowed market and a price drop but not this.  We spoke about the drop in the market, but we did not expect the out of the box OTHER variable….The banks dropping out of site!  Normally you have what all of us in junior high learned; when supply increases prices drop and then demand may eventually go up then prices increase.  Here we have a market with lots of supply and actually a good demand however when the buyers cannot come through with the financing to actually buy it nullifies their demand.  This puts undue strain on the market and sends everyone into panic and inaction.  In the market with foreclosures at an all time high and short sales not understood by all, serious instability reigns supreme. 

American Brokers Conduit closed, Agire mortgage gone, New Century gone, First NLC no longer operating on west coast, Wells Fargo not wholesaling alt-a, Express Capital not accepting submissions, and the biggie COUNTRYWIDE having problems.  For some of these banks I say good riddance, WHAT????, yes I said good riddance, when the market was good and interest rates were okay some of these banks were gouging customers to make incredible profits.  Ethics should always play a part in doing business, and we at the Carrigan Group have always striven to do what is right by the customer NOT just what is good for business.

So what do we do?  Hang on, do what is right by the customer, and DIVERSIFY.  We as a company started because we wanted to help people, and we did not start this company to operate ONLY in a great market.  We expect to be here for the long haul, and in doing so we as a company will see probably MANY sagging markets.  We have to think and adapt to whatever market there is.  So what do we do now?

Well here we go:

1.       Don’t panic and educate ourselves AND our clients. 

We have been studying the market and looking to past markets, we have been open and honest with our current and past clients about what is going on.  We have this blog to update everyone who wants to hear us pontificate.  We have been praying and meditating daily (and nightly) to make it through.  We have fielded calls by some of our past clients concerned about what they should do.  We read blogs, newspapers, newsletters, watch news reports and industry interviews in order to stay abreast of the situation.  We can look to the past to see signs that coincide with this market and try our best to predict what we should do.

2.       Try to gain new products and services that will continue to help our clients.

We at CG Funding now offer reverse mortgages, this is a great product for those clients who fit the needs required. We continually search out those banks that are still offering good products for our clients needs.  We are in constant contact with our current banks to see what they have.  We have been scouring the market for good buys for our clients and yes they are still out there.  We have developed new strategies for our clients that best suit their needs.  We have been one of the few firms who have been dealing with Short sales since the beginning. Many people and Realtors have not understood them fully and still don’t.  We hold informational sessions with clients to let them know what we can do.  We offer short sale and foreclosure packages that include attempts and information that may SAVE your home.  We continue to use the latest techniques and innovative ideas to help our clients in this difficult atmosphere. 

3.       Offer credit analysis and repair

Yes, we offer for a moderate fee REAL analysis and repair.  We have in recent months seen more and more of our clients being taken advantage of by unscrupulous rip-off artists claiming to do credit repair, only to find out they have done nothing, and charged our clients a fortune!  We offer our services with full disclosure and with your interaction so you learn AND get the help you need.  We sit down with the clients, and actually help them!  It is something we have been able to do before with our education and experience but now more than ever our clients need it. There is even a way to get most of the fees refunded in escrow.

4.       Aggressively pursue frauds and scams to help our clients and our industry.

We have begun to alert the appropriate licensing departments anytime we see fraud or someone perpetrating a scam.  We have also been actively notifying our clients of these scams and how to avoid them (one way is to go through us!).  We have contacted banks about squatters on REO properties and let the banks know when REO brokers are neglecting the properties.

These are just some of the products and services we offer to help everyone in these trying and confusing times.  Remember that the real estate market is here to stay and we pontiffs at The Carrigan Group will continue to pontificate and ride it out WITH you!  Now is the time to prepare yourselves and if you want to buy than GREAT, guess what?  EVERYTHING IS ON SALE NOW!

big bad wolf of a market

Oh me oh my…what a big bad market we have….

Country wide announcing no more 100% loans, Argent, ACC, WAMU laying off thousands.

New century no longer accepting loan submissions then files bankruptcy, rumors about WMC ge capital keep resurfacing.  Everyone tightening up the requirements for loans (dti, reserves, credit score, cltv etc)

80/20’s harder to do, hard to find neg ams at all.

The nothing down late night tv ads of the flipping craze will go away

Gone are the days of 106% financing, no money down strange loan contraptions.

First of all shame on all those lenders who allowed them for so long….the stated, stated, stated, stated here put your name here and here is your 670,000 dollar loan for 400.00 a month.  But then again how dumb do you have to be to believe that the bank was giving you a free lunch (and an apple pie to boot) consumer.   Many of the banks, brokers, and realtors did not care, many thought this gravy train would never run dry; well they were wrong, and now many banks are reconfiguring their standards.  It was stated recently that with some of the new rules coming out it will definitely change the market, AND, that if these standards were in place a year ago, 50% of the subprime loans would have never been approved.

Well I know it looks bad (and it is) but soon, think about it (insert profession) we will only have qualified buyers with actual money down and great credit not expecting the world of the bank and unrealistic loan rates.  Then you will have sellers who understand the plight of the buyer and will have a more realistic sales price.  Plus those homeowners will no longer see their home as an atm machine. 

Right now it is difficult to say the least, we have inventory, and buyers who want to buy even at the prices offered, but the banks will not lend to them.  This creates an awful dynamic within your normal supply and demand curve.  What is the buyer to do? What is the seller to do? What are the banks to do?  Well I am not entirely sure right now but the feds have some very bright people working for them and sooner or later they will have this figured out.   When they do they may have a solid market again but this time slowly rising and homeowners more secure in their position with their mortgages. 

Many banks and their loss mitigation departments have been reeling from the sudden influx of borrowers late and defaulting.  Many are starting to see that forbearance might help to stave off the rising tidal wave.  Some are also looking at recasting loans more favorable to the buyers.  Many banks will have to hold on to their loans and portfolio more rather than sell them off in the secondary market.  All parties need to have a more realistic viewpoint on all of this and slow down a bit. 

Many realtors are getting out, many loan brokers are getting out, many rookie flippers are getting out, and many banks don’t have a choice but are shutting down.

Our banking system is stronger than most countries and our fed is quicker in response then they use to be as well.  Something will happen that will slow this down, maybe not fix it entirely soon but something will happen.

Meanwhile what do we do?  We need to educate the public; we need to get rid of the department of corporation finance lenders!!! (I will always say this), go to a license required brokering system, and allow temporarily for down payment assistance for more people than just the low income.  Brokers need to educate their sellers as to what are their options.  Short sales are a way to go but the sellers do not always understand the ramifications to doing this.  Banks need to settle down and standardize their requirements, and compete on rate not how complex a loan w can give for as little documentation as we can.  Realtors have to pre-qualify their buyers not necessarily like a lender but simply finding out how they intend to pay and how much do they have down.  Many people will be hurt, many companies will go out of business, many people will not be able to get a home, and many will probably profit from this as well.  All we can do is sit back, hold on, and wonder where we will be in a year from now.

March 14 2007