Rain City Guide

What will be the tipping point that creates the paradigm shift that is needed in the Real Estate Industry? 

To begin, I would like to quote a small portion of “Productive Workplaces Revisited” noted in the second link above.  “He put into…context, the age old struggle between authority and dependency”…In so doing he found an audience hungry to find alternatives to bureaucracy, authoritarianism, alienation…not simple ideology…an expression of life’s purpose - affirming diginity in every person, finding meaning in valued work, achieving community through mutual support and accomplishment.”

The above is from a book titled “PRODUCTIVE WORKPLACES REVISITED” - Dignity, Meaning and Community in the 21st Century” by Marvin Weisbord in 1987.  That link provides information regarding Mr. Weisbord’s many books.  For the purpose of this blog post, I am simply borrowing the above excerpt which I have modified to fit most any Real Estate Office in the Country, and a movement that is afoot.

The Paradigm Shift is also referred to as “A Mental Revolution” elsewhere in that publication, (use the search feature and put in paradigm shift for more info on that.)

The problem as I see it, in the structure of the Real Estate Industry, may simply be the old “Too many chiefs and not enough Indians”.  What the Real Estate Industry, and every Real Estate Company in the Industry, and every Real Estate Office in every Real Estate Company, has not answered correctly is quite simply this:

WHO IS THE CUSTOMER?

In most realities, the customer of the Brokerage is the Agent.  That is something that most buyers and sellers of real estate do not get to see.  The inside of a real estate office is about the customer…the customer being the Agent.  The Agent is paying the Broker.  The Broker cannot survive unless it adequately serves its customers…the agents, not the buyers and sellers of homes.

Take a look at the photo below:

Meeting of Professionals

If the people gathered around that table were Doctors, you might hear talk such as: “I have a patient…I have tried this and that…has anyone had a similar… Yes, I have found X to work for many of my patients, here is a study on X I found the other day…”  The talk around that table, would be about better treatment for the patient.

If the people gathered around that table were lawyers and paralegals, you might hear talk such as “I have a case where the defendent is…I haven’t found adequate support for this client’s…. Try X vs. X, I’ll go get it for you.  Is there any other way we might tackle this in Court to show that our client…”  The talk around that table, would be about helping this client win this case.”

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Rarely, if ever, do you find a room full of real estate agents discussing ways to find a better answer for a particular buyer or seller. 

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The reality is that most times a Broker will set up meetings that help agents sell more houses.  Rarely is the discussion about the buyers and sellers of homes.  If an agent has a problem selling a home, then agents will filter ideas that ultimately do help the seller.  But when the client/customer is a buyer, the conversation all too often revolves around helping the agent “sell a house TO” that buyer.

There are many discussions with regard to “Real Estate ProfessIonals“.  Some of us equate ourselves to doctors and lawyers.  Many more view themselves as (merely) salespeople, and then complain when “real estate agent” comes up on a list next to “used car salesman” on consumer confidence and trust lists.

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The Tipping Point that will create the needed Paradigm Shift is A Mental Revolution with this Call to Arms:

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TO BROKERS:

1) TAKE DOWN ALL OF THE “SALES” BOARDS AND STOP HAVING SALES CONTESTS.

2) STOP TALKING ABOUT “MORE LEADS” AND INSTEAD ASK YOUR AGENTS IF THEY NEED ANY HELP MEETING THE NEEDS OF THEIR EXISTING CLIENTS.

3) HAVE AT LEAST ONE MEETING A WEEK WHERE THE AGENTS MEET TO DISCUSS THE NEEDS OF THEIR BUYER AND SELLER CLIENTS, AND NEVER TALK ABOUT THEIR NEED TO “CLOSE” A PERSON IN THAT MEETING.  CONSUMER-CENTRIC VS. AGENT-CENTRIC MEETING.

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TO AGENTS:

1) TRY NOT USING THE WORD “I” FOR 21 DAYS. 

2) WHEN YOU APPROACH SOMEONE FOR ASSISTANCE, MAKE SURE THAT ASSISTANCE IS FOR YOUR CLIENT AND NOT YOURSELF

3) FIGHT FOR ANYTHING YOU “NEED” TO HELP “THEM” AND NOT YOU.

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TO THE GOVERNOR OF THE STATE OF WASHINGTON (& possibly other States, as well)

RECOGNIZE THE DISCONNECT BETWEEN YOUR AGENCY LAW THAT HOLDS REAL ESTATE LICENSEES TO THE STANDARD OF “REPRESENTATION OF PEOPLE”…AND THEN GIVES THEM A “SALESPERSON” LICENSE.

There are many, many real estate agents who aspire to assist their clients well.  There are many, many real estate agents who “hung(er for) alternatives to bureaucracy, authoritarianism, alienation…not simple ideology…an expression of life’s purpose - affirming diginity in every person, finding meaning in valued work, achieving community through mutual support and accomplishment.” FOR THEIR CLIENTS VS. THEMSELVES.

They lack the support…they are faced with sales boards and sales contests…they are treated like salespeople and given a license to sell by the State. 

A SIMPLE PARADIGM SHIFT. A SIMPLE TIPPING POINT CREATED IN AN INSTANT BY A MENTAL REVOLUTION:

“WE DO NOT SELL ANYTHING FOR A LIVING.  RATHER, WE REPRESENT PEOPLE FOR A LIVING.”

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“YES WE CAN; YES WE WILL.”

#10 - You may lose your job.  When you don’t pay your rent, they put you on the street in 20 days.  When you don’t pay your mortgage payment, they don’t put you on the street for at least 8 months.

#8 - Many a marriage has been saved…by buying a house with two staircases.

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#7 - You just read *page 114* of Harlan Coben’s “Promise Me” (see below), and you live in a “garden apartment”.

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#6 - Your girlfriend is demanding equal treatment to your wife.

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#5 - Your boyfriend is demanding equal treatment to your wife.

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#4 - Your mother-in-law just bought a 1 way ticket to your apartment

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#3 - Your bank account is bigger than your home office

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#2 - God said: Your real estate agent, banker and mortgage rep all need you to buy a house, right NOW!.  This is a direct message from God.  No kidding.

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NUMBER ONE: Your 4 year old is riding the dog, and dragging the baby around like a pull toy, because she needs a yard and swing set.

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*Page 114* “lived alone in the same crappy “garden” apartment for more than a decade…they call them “garden” though the only thing that seemed to grow was the monotonous red brick…sturdy structures with the personality of prison cells, way stations for people on their way up or down and for a few, stuck in a certain personal-life purgatory.”

Frustrated Home Buyer

Remember when JFK said we would go to the moon?  Remember the excitement of being part of something new!?  Let’s create a big, fat wish today that we, in the Seattle area, want to constantly be the prototype for the Country with regard to an MLS and how it functions.

We are the trendsetters (we being Seattle) as to The Internet and how people use it.

 Here’s a “workshop” post.  I think “the mls” is ”broke” and it needs fixing.  You decide for yourself after reading this. We all “accept” that people start their search on the Internet…right? 

Let’s all take a good, hard look at HOW they start their search on the internet.

OK…I’m Average Joe and I think I want to move to Kirkland.  I go to the internet and I Google “Kirkland” and I find this super-duper site provided by The City of Kirkland.  It tells me:

Where all the parks are

It gives an an “on demand” video stream of all of the Kirkland Council meetings and provides the minutes of the meetings, so I can see if it’s the kind of place I might like to live.

There’s even a link to Kirkland TV on every topic I might be interested in…WOW!  I like this place called Kirkland.  They certainly care about keeping everyone informed, and they clearly embrace new technologies.  My kind of place.

Bur where in Kirkland might be the best place for me?  OK…lets Google “Kirkland Neighborhoods”. I find this great link to everything I every wanted to know about Kirkland Neighborhoods.  I find the cool Explore Kirkland site and even Walking Maps sorted by the various Neighborhoods.  Wow!  Every Neighborhood in Kirkland has it’s own Association!  What a wonderful sense of community, and they certainly take their Neighborhoods seriously!

Isn’t this Super-Cool!!!  I can figure out everything I need to know in my jammies, without leaving the house…at 1 a.m!  That’s the kind of place I want to live in!  They have embraced Technology!  Woohoo! 

My world’s a better place because the City of Kirkland cared enough to make everything they do, and everything I need to know, accessible on the Internet!  I’m going to buy a house in Kirkland!  YAY!!!

SO JOE TAKES THE KIRKLAND NEIGHBORHOOD MAP (that he found on the Internet) TO A REAL ESTATE OFFICE, because he doesn’t know which Neighborhoods of these he can afford to live in.

BEFORE looking at houses on the Internet…he has a few questions.

Agent:  Can I help you?

Joe:  Can you please hit a button on your computer over there, and tell me the median price of a home in each of these neighborhoods?

Agent:  What’s your price range?  I’ll be happy to show you some homes right now!

Joe:  Well..no…I really just want to know which of these neighborhoods on this map here from the City I can afford to live in.  I’m not ready to look at homes yet.

Agent: Do you have a pre-approval letter?  I’ll be happy to get our lender over here and tell you how much you can afford.

Joe: (starting to get angry) Lady, I just want to know the median price of these neighborhoods!  Can you help me or not!?  OK…let me make this easier for you (you idiot).  Just tell me the median price of this neighborhood.  This one.  Here on the map of Kirkland Neighborhoods.  “Lakeview”  Just go over to the computer and hit a couple of buttons and tell me what the median price of Lakeview is, PLEASE!

Agent: Well, you don’t need to get angry, sir.  I am more than happy to help you, but you OBVIOUSLY don’t know what you are doing, because the mls doesn’t HAVE a neighborhood called “Lakeview”, (Mr. Smartypants).

Joe: Hmmm?  How about this one over here…”Norkirk”?

Agent: “We” call that East of Market. kindof.  When you get down here some agents call that “Downtown”.  Some agents just put in Kirkland for all of it.  Would you like me to do a search by Zip Code?

Joe:  NO!  I don’t want you to do a search by Zip Code!  According to this great map the City “gave me” there are a dozen neighborhoods!  I don’t want TWO zip code answers!  I want TWELVE median price answers you freakin’ moron!  One for each of these REAL Neighborhoods!!!

(Joe leaves in a huff.  Agent says to agent next to them in the office, “one of those Microsoftees.  Boy are they a pain in the ass”  They think they know everything.)

Joe goes into a different real estate office:

Joe:  Can you please hit a button on your computer over there, and tell me the median price of a home in each of these neighborhoods?  Joe hands the agent the same great map the City of Kirkland “gave him” on their cool site.

Agent: Here’s “our” map.  This is the one “WE” use.  It’s broken down by all of these code numbers that only agents know. 

Joe: Can you give me a few minutes to study this thing, because all of my research so far geared me to searching by the neighborhoods.  The real neighborhoods.  The one’s the City and the people who live here use.  (Joe realizes he’s not going to get anywhere until he figures out this stupid “code map”, so he gives it a quick study.)

Agent: Do you have a pre-approval letter?  Do you want to go see some houses today, because it’s really a Great Time to Buy!  Can I make some appointments while you study “our” map?  How many bedrooms do you want?  Do you have children?  Pets?  Where do you work?  Here’s some testimonials from some of my clients who love me.  Here’s a link to my website with lots of useful information.  Here’s a Buyer’s Guide to help you understand all the things I’m going to be doing for you.

Joe: (I wish this agent would shut the fck up, so I can look at this map.) You know what.  I think I’m going to go get something to eat.  Can I borrow this code map to read while I’m eating?

Agent: What’s your price range?  I’ll line up a few houses to see while you’re eating lunch!

Joe: $750,000

(Joe leaves with the secret code map and never returns.  Agent says to agent next to him, “Well…what the heck is wrong with that guy?  Where IS he?  I’ve made five appointments to see these houses.  What am I going to do?”  Other agent, “You know what they say, “Buyers are Liars”.)

Joe tries to decipher the secret code map.

Joes’ Wife: Honey, did you figure out which neighborhoods we can afford in Kirkand?

Joe: Well, I’ve spent all day in two different real estate offices, and I can’t get a straight answer out of anyone!  This stupid realtor code map doesn’t help at all!!! They are calling ALL of Kirland, Area 560!

Joe’s Wife:  Honey…I know you’ve wasted a whole day with this stupid real estate agent stuff.  We don’t need an agent!  Let’s just go Google “mls Kirkland”and look at some houses and calm down, OK?

Joe: OK.  Sorry.  I didn’t mean to take it out on you.  I’m just SO FRUSTRATED!

Joe Googles “mls Kirkland”.  He finds Kirkland Home Search - The MLS Online He clicks “home search”.  He changes the drop down to “King County”.  He clicks on “Kirkland”.  He puts in his real price, not the lie he told the agent to get the heck out of that office.  He puts in minimum of 3 bedrooms. It says “10 Actives Found”. 

Joe: This site says there are only 10 houses in Kirkland priced between $500,000 and $525,000.  I thought there was a record number of houses for sale?  This can’t be right!

Joe’s Wife: Try $450,000 to $550,000.

Joe: OK.  That’s better.  It says 58.  Still, not as many as I was expecting based on what I’ve been reading in the paper.  A whole City only has 58 houses in our price range?  Let’s see if I can figure out which of these Neighborhoods they are in. (He clicks “View Actives List”.)  Honey?  What do you think “active” means?  Can’t they just say For Sale!?

Joe’s Wife: Now down’t get started.  Just get to the houses, OK?  What do you see?

(Joe says FCK…it’s starting at the most expensive house at $550,000.  I don’t want her to see this.  Good, here’s a re-sort button from lo to hi.)

Joe: One second, honey.  OK…here’s a really nice one for $450,000.

Joe’s Wife: That looks nice.  What’s a “split-entry”?

Joe:  I don’t know.  Can’t these G’damn agents speak English!!!

Joe’s Wife: Calm down.  What neighborhood is it in?

Joe: I’m looking at the pictures.  It has wood floors.  Those look like new windows.  Looks pretty nice.

Joe’s Wife: What neighborhood is it in?

Joe: It doesn’t say.  It says “Kirkland”.  Here’s a map of where it is…I can see a train track.  FCK…THIS ISN’T WORKING!!!

Joe Wife:  Honey, I think we really DO need to get an agent.

Joe: NO!  Fck that!  That’s why they are doing this!  They are making it impossible for me to do anything!  All I wanted was the median price of the neighborhoods in Kirkland.  Is that too much to ask!?!?  No.  No agent.  They are not going to win!  NO!

Joe’s Wife: (Crying)

Joe: (turns on the football game.)

I think it’s broke and needs fixing.  What do you think?

I recently heard the term “balloon frame” from someone on Twitter discussing the fire hazards and potential dangers to firemen.  It was a local person, and so it caught my attention.  I have never heard a home inspector advise a home owner that they were buying a home with a “balloon frame”.  Nor have I ever heard a home inspector note the potential hazards.

Here are a couple of links regarding balloon homes and firemen that the Twitterer was kind enough to send me.

I would appreciate comments from anyone having knowledge on this topic.

Thank you.

We have a few hours to go before we ring in the New Year of 2009.  But I wanted to take a few moments to thank all of our readers, my fellow writers, and the many people who comment here, for making Rain City Guide the special place that it is.

Tomorrow will mark my third anniversary of blogging.  Honestly, I can hardly imagine my world without it.  It’s been a rewarding experience and, I value my “blogfriends” and my “blogclients” more than…well, more than lots of things.

Tonight at midnight, I’ll take a cup of kindess, probably hot chocolate, and think of all the special people in my life.  Not the least of which being, Dustin and Anna Luther, Jillayne Schlicke, Rhonda Porter, Tim and Lynlee Kane,  Robbie, Steph and Harrison Paplin, Galen Ward, Deborah Burns…these wonderful people are part of my extended family. 

And as the Coke/Walmart young man said: “When you stock up on Joy, there’s enough to go round”.

Thank you everyone, for being part of the Joy of my Life.  Many Happy Returns…

Merit Financial has the dubious reputation as being the very first company on the ML-Implode list which now sits at 312 imploded lenders.

The original Statement of Charges from 2007 focuses on violations of the state’s Mortgage Broker Practices Act such as failing to pay appraisers over and over and over again, failing to maintain a mortgage broker license, failing to attend the required continuing ed classes, failing to maintain an surety bond, failing to adequately disclose fees to consumers, and so forth. 

From the Seattle Times

Merit did put loan officers through a 19-step program. “Loan Officer 101″ was 15 minutes long…Saulness wasn’t impressed. She sat next to two 18-year-old loan officers. “They didn’t even know how to read a credit report,” she said.  Barry said wryly that many “had no idea what product they were selling, but they knew how much money they could make.” Merit employees proudly posted their résumés, plus photos of their luxury cars and drinking parties, on various Web sites. One loan officer had come to work fresh from being a Hooters Girl. Another solicited clients for two endeavors: writing mortgages for Merit and selling marijuana paraphernalia on the side. Indeed, several Merit loan officers boasted online that doing drugs was a favorite pastime. “Let’s get hopped up and make some bad decisions,” wrote one beside a photo of himself grinning broadly. Numerous former employees, including loan officer Sunny Hoppe, described working at Merit as a raucous — sometimes lewd — frat party. It was “young, hip, drugs and drinking,” Hoppe said, and that was at work. Former employees also said Merit regularly provided a keg of beer for some staff meetings, but Greenlaw said that, no, it was actually two kegs, and employees were free to bring in six-packs on Fridays. Asked about rumors of drug use in the office, Greenlaw said, “We just never checked.”

Washington State DFI and Merit/Greenlaw decided to settle the case and move on.  The Consent Order filed Dec 2008 says our state DFI will collect only $1500 in fines. Merit is banned from the industry for five years. Greenlaw is banned from applying for a mortgage broker/designated broker license for five years yet he is not prohibited from applying to become a loan originator.  Let’s take a look at some of the financial carnage from 2006-07:

Thousands of dollars owed to appraisers for work performed.
Thousands of dollars owed in back wages to Merit employees
Unpaid business and occupation taxes owed to the state of $351,294.
Wells Fargo was owed $244,033.
Firstam  Credco was owed $228,249.

I wonder how he’s been paying for beer and pizza these days. Let’s find out. 

Well how about that. He is now a “real estate consultant” at a company called Propertybuyers.net, “a real estate acquisition company that specializes in helping motivated or troubled sellers get out of the financial obligation of owning. We help owners that are facing foreclosure, bankruptcy, divorce or any other difficult situation life brings along.”

It warms my heart to know that Scott Greenlaw has access to homeowners who are in a vulnerable financial situation, and that his resume describes tasks that he does which sure do sound like he may need a loan originator license and/or a real estate license:

PropertyBuyers.net, Kirkland, WA  – 2008 - Present
We are a local firm that helps unite buyers and sellers through the simple and successful process of lease to own contracts. We facilitate the entire transaction which includes defining and locating the property, all lease and purchase contracts, mortgage solutions, credit restoration and property management. This is all done without real estate commissions or management fees paid by either the buyer or the seller.

This sounds too good to be true and we all know what that mean. Hey folks! It’s a “no cost” way to get out of financial trouble!  I can only imagine how the real “cost” is disclosed to homeowners. We now have proof that predatory lenders are still with us. They’re just operating on the other side of the fence. The last line from this 2006 story:  “Merit was great fun for five years, but now it’s time to move on and give it another shot,” Greenlaw said. “I’m looking forward to the challenge of coming back and proving to people who Scott Greenlaw really is.”

Now we know.

I recently received an email from Christoper Hain of Terra Firma L.A., which caused me to view the chart below.  Often people try to take general median percentages and apply them in the wrong place.

The current median 12 month change in King County is down 12%.  But if you get a house for 12% less where it is down 30%, that’s not a great buy.  If you get a house for 12% less where it is only down 7%, that’s a good (not great) buy.

Chris’ article drives home the point that in one agent’s “service area”, which is not really very big, there are areas down 7% vs. 42%…HUGE SPREAD!!!

Plus he asks the question that is not discussed often enough:

“You could read either end of this chart in completely opposite ways. Perhaps, the ones that have fallen furthest are the ones you want to buy in 2009. Or perhaps, the ones that have held their value best are the ones to bet on long-term.”

I’ll be doing some neighborhood breakdowns for Seattle and Eastside today, and finding our highs and lows in my service areas.  I’ll post a graph similar to the one for L.A. below, as related to our immediate area.

Look at Beverly Hills, as example. Even in that small area (which due to the TV show most think of as 90210) there is a variance in % down for the three different Beverly Hills Zip Codes of 90210, 90211 and 90212.  Big difference between 24% down and 42% down…in one small area.

I’m going to try to do the neighborhoods accurately, vs. Zip Code.  i.e. Wallingford, Green Lake, East of Market, West of Market, etc…  I have to use a polygon search feature for that.  It’s time consuming, but given this is still “the holidays”, now would be a good time for me to expend the excess effort, and the results will be of value in tracking changes during 2009.

7% down to 42% down…it boggle’s the mind. Here’s Chris’ chart:

Housing prices down 7%? or 42?

This may seem like an odd analogy, but I remember this story about my Mom when she was having her 7th baby.  She was in “a ward” with only curtains drawn around each bed.  She overheard some people telling the lady in the bed next to her that she should have “her tubes tied”.  They were explaining the procedure to her.  My Mom jumped out of bed, ripped open the curtain of the woman next to her and yelled  “I want one of those!!!”  The people were embarassed and said, “I’m sorry but we’re only allowed to offer these to single women on welfare having their third child.  You weren’t supposed to hear that.”

Yes…I’m suggesting that to some extent The Information Age is in part responsible for the Subprime Crisis.   Subprime loans did not come into being in late 2003.  2003 is the year more people said “I want one of those!!!”

Couple that with the fact that the World as it IS has come to the conclusion that spinning words (like Death Tax vs. Estate Tax) is a persuasion tool. We used to say, “You can’t get a good loan, but we can find you a BAD loan, if that’s what you want.”  Most people said, “No, thank you…we’ll wait.”  Loans had letters that were easy to understand.  A Paper  = most lenders.  B through D Paper was a different lender for buyers with one or a few correctable issues over the short term.  Z Paper was basically the Mob with a license to lend.

People understood the alphabet, and they knew that a C-Mortgage was not as good as an A-Mortgage.  Life was more Transparent back then.  The need for Transparency today is largely due to the fact that professionals hide truth behind more persuasive language.  Don’t get me started on Listing Agent vs. Agent for the Seller.  Everytime I hear a buyer say “The listing agent was MY agent, looking out for me (and I heard it twice in the last 4 days) I want to scream. How the heck can you believe that “the agent for the seller” is looking out for you, the buyer? Maybe because they use the words “listing agent” for that reason. But that’s a different, though related, subject.

Couple that with small businesses (who only offered Sub-Prime loans) getting gobbled up by larger “one stop shops”.  All of a sudden the lender could give you an A Paper loan or a C Paper loan without a loan denial in between. When there was a loan denial in between, the buyer had a legal out with the Finance Contingency.  When the approval came…but it was for “a bad loan”, the buyer was locked into the transaction with no legal out.

Couple that with Real Estate Agents only caring if the buyer could get a loan, period…without caring on what basis.  Couple all of THAT with the fact that many Finance Contingencies did not give a buyer “a legal out” if they could not get a conservative “A Paper” loan, but could qualify for a SubPrime loan.

There are many factors that contributed to this mess.  Perhaps a fuller understanding of how the world changing in many and small ways led do the catostrophic consequence, will help all people who played a small part in the Country’s demise, change their small part in The Crime of the Decade.  In the end it was mostly No victims; no villains, just a lot of small tweaks and changes that snowballed into a Crisis Situation.

Let’s go back to the world as it was for a minute. 

1) Conventional Loan = 20% downpayment, 28% of gross income for housing payment, 36% of gross income for total recurring debt including the housing payment.  An 8% spread for debt payments.  If debt payments equalled 10%, then the housing portion was reduced to 26%.  There were no Credit Scores.  All credit issues were underwritten by hand and each and every negative item was explained by the buyer, in writing.  A separate letter for each negative item.

2) FHA Loan = slightly more lenient terms and dramatically reduced downpayment requirement.  The biggest reason to use FHA vs. Convential being the downpayment requirement, not the looser standards as to ratio and credit issues.  Almost no downpayment - 3% vs. 20% at the time. 

The first change was a long time ago! It started as a quiet whisper, like the people talking behind the curtain in the next bed from my Mom.  Some people were getting loans with only 5% downpayment, conventional.  When I started in real estate in 1990, most people’s perception was that they needed 20% downpayment or FHA.  Few knew that they could get a 5% down conventional.

The beginning of all of these problems goes all the way back to there.  Conventional lending guidelines made FHA less desirable.  The primary purpose of FHA was low downpayment…no longer a big spread between the two.

THEN in the early 90s, the lenders started stretching ratios from 28% to 33% of gross income on ”the front end”  BUT the back end was only stretched to 38%, at first.  Stretched ratios entered the scene ONLY for people with little or no debt payments (just like tubal ligations being only for single women on welfare).  It had a stated and targeted “appropriate” audience.

When cars started costing more, lenders had to start figuring out a way for people to buy a house who already owned a car.  In many cases in the early nineties (before car leasing became popular, and probably why car leasing became popular) most young couples who each owned a car, could not buy a house.  The two car payments sucked up their whole back end ratio and subtracted from their front end ratio.  “I thought we could get a mortgage for 28% of our gross income or 33% of our gross income?”  “Well, yes…but the combined value of your two new cars is almost as much as the house you are trying to purchase!”

Everyone agreed that people needed both cars and houses…so ratios grew and grew and grew.  So, Sniglet, the changes in FHA are NOT fascinating at all. In fact FHA hasn’t changed all that much.  What’s happening is that lending standards on the Conventional side are creeping back to “The Way We Were”, putting the spotlight back on FHA, which is closer to the way IT was IF you cut out “automated” approvals.

Before you even think about buying a house, get your “other debt” issues down to no more than 10% of your gross income.  If you make $45,000 a year and your wife makes $25,000 a year, and you each have a car with a $400 monthly payment, you are spending 14% of your gross income on car payments!

Of course this Rise and Fall story would clearly fill a book.  But until everyone understands that a bailout or bandaid in ONE area only (or two) is not going to fix what ails this Country, we cannot have HOPE…and HOPE is what we need more than bailouts and fixes.

As I said in one of my previous posts: “2009 will not be a year of great change.  It will be a year of Great Hope for Change, one small step at a time, via you and me acting the best we can in each moment.”  Falsely creating hope with “Talking Points” and “Good News” articles is NOT the solution.  Expecting any one source to be the Messiah, is NOT the solution.  Every single person doing their part to improve the situation…is the only long term solution.  That means YOU!

Stop looking for someone else to come up with an answer.  Get out your teacup, and start emptying out your own little piece of the ocean.

I kissed a girl once. I was almost 50 years old and was in the middle of a divorce from a 20 year marriage.  I just wanted to make sure before I started over again, that I wasn’t starting out on a faulty premise that had been “fed” to me.  2009 is the year to test your foundations…so that when “The Rocovery” does come…it isn’t the old mess wrapped up in a bright shiny red bow.

I’m busy making James’ Biscotti , but I just got a Tweet from Matt Goyer over at Redfin about a Cover Story in the Seattle PI.  I glanced at it and everyone and their mother is putting in their $.02 about the Seattle Real Estate Market in 2009.

You can read it HERE

I didn’t see much of a concensus.  The usual suspects saying it’s going to be good vs. the usual contra-suspects saying it’s going to be bad.  I’ll look at it more closely when the bis-cotti is twice baked (biscotti means twice-baked; not biscuit).  In the meantime, if anyone sees a strong case for believing in one person more than another, let me know.

James, your recipe calls for “a lb. of flour” and I have a half used 5 lb. bag.  I guess I’ll have to Google how many cups = 1lb. of flour

We’re back to work…but’s it’s still Holiday Time too!   Plus, we can’t really do any meaningful year end or 4th Quarter stats until a week or so into the New Year.

So far, December is neck and neck with November as to median prices (per square foot), and 12% down for the year.

Everyone who is going to buy or sell a house in 2009, should answer this question before choosing an agent:

Are you looking for a Leader-Agent, or are you looking for a Follower-Agent?

For those who have never heard of Seth Godin and/or Tribes, the hyperlinked words in this sentence are links to valuable resources, in that regard.  Now…forget Seth.  This is not a post about Seth Godin and Seth Godin is not in my tribe. 

This is a post about how people CHOOSE a real estate agent, and how agents decide whether or not they should work with a given potential client.

If you are looking to hire an agent, but you want to give the agent a list of things to do,.   Or you want the agent to have a list of things that the agent will do, in sequence, regardless of whether or not that step is appropriate at that time. Then you are looking for a Follower-Agent.  That’s OK! 

What’s not OK is for you to pay a LeaderAgent-Price for a Follower-Agent, or expect a Leader-Agent at a Follower-Price.

What’s not OK is for you to hire a Follower-Agent, lead him, and then blame him when the results are less than satisfactory.

The “picture” below is my integration of Godin’s Tribe Concept, with the age old Probe, Evaluate, Close Concept.  The more quickly you can Probe, Evaluate and Close in each moment, the less time you will waste dealing with people who are just Not In Your Tribe. 

“CLOSE” = Determining if someone is right for any of your Tribes, quickly putting them in the “right” Tribe, or putting them on the outside of the Cycle Chart altogether.  The more quickly and accurately you can “close”, the happier you will be in 2009.  That’s true of all business and personal “choices”.

“Outsiders” are not bad people.  Well, a few are.  In the photo below, you will see dots outside of the circle.  Those are people you choose not to deal with, for whatever reason.  The one’s with the X over them are the bad ones :) 

Truth is, we all have many Tribes.

Tribe 3 is the Real Estate Transaction for a couple without children who want to hire a few followers to “assist” them. 

Tribe 1 is more reflective of my typical real estate transactions:  4 equally important forces all doing their part well.

Tribe 4 is indicative of the networks used by each of those 4 people in Tribe 1, to accomplish their part of the transaction.  Each Leader-Participant has a Tribe of followers.

For Agents:  If you are a single practitioner, then you likely will have 24 to 36 people in your Tribe in a year’s time.  Stop trying to be all things to all people.  Recognize that 24 - 36 fabulous “Tribal Relationships” is all you need, and learn how to quickly “Probe, Evaluate and Close”, to select the best mutual relationships.

For Buyers: The most important thing for you to understand is that most often, a buyer will not know that they need a Leader vs. a Follower, until it is too late to go get one.  That’s just a weakness of the system.  Knowing that up front may help you…maybe not.  It is what it is.

For Sellers: Be honest with yourself about your ability to be objective.  Don’t hire an agent; and then act like a For Sale By Owner.  You just complicate things to the point where no one is successful.  If you want to run the show…GREAT!  Just make sure you hire a Follower-Agent and pay a Follower-Price.  Don’t hire a Leader-Agent and spend all of your time butting heads with the agent.  That tension will lead to failure somewhere along the line.  Knowing that up front may help you…maybe not.  It is what it is.

Tribes and Choosing