Price per square foot revisited

Are formal dining rooms becoming obsolete? Are huge master suites too “selfish” for today’s changing society? Is “keeping up with the Joneses” turning into “Cutting down with the Joneses”?

In a market projected to be flat at best for the foreseeable future, these questions are fast becoming very important for each home buyer to ask and answer, each in their own way.

In the age of “me”, me being the parents vs. the children, the places where children “go” in their home got smaller and smaller. Families used to spend more time together in the “living” room until the children were banished to the “family room” and the living room became a “formal” living room that most no one ever used. People gathered in the kitchen with friends and family, until the “formal” dining room became a place and space ONLY used once in a while when “guests” came. As if the kitchen was OK for the kids, but the visitors were somehow more important, so much so that we paid big money for a special room just for “guests” vs the family on an everyday basis.

Beyond price per square foot, it is time for home buyers to determine price per square foot of WHAT? Forget about how it currently “works”. It’s time to change how it works.

First Floor = 1,630 sf of which only 534 square feet represent rooms the children enter on a regular basis. The rest is “formal” living room, “formal” dining room, “Dad’s” study, “grand” staircase and foyer. Even if you throw in the 1/2 bath, the space the children live in is smaller than the square footage of the attached 3 car garage at 660 sf.

When did the children become entitled to less space than the cars?

Second Floor = 1,260 sf of which each child’s bedroom is only 130 sf. If you have two children and throw in the bathroom they share at 5 x 8, that gives them 380 sf on the second floor. Let’s be generous and give them an open loft “bonus” room to do their homework in at 15 x 15 and you still have a full HALF of the second floor devoted to master suites and grand staircases.

2,890 sf of home plus 660 sf of garage = 3,550 sf of which only 1,165 sf is space the children enter on a regular basis. The “children’s” place is not even double the amount devoted to housing the cars. Given the “children’s” space includes the kitchen and the family room, that’s just sad.

Let’s put a price tag of $550,000 on this home = $154 per square foot including the garage. 1,165 sf times $154 = $180,500 of that $550,000 devoted to the “family” and places where the children go on a daily basis. That’s about $370,000 for formal areas, master bedrooms and baths, showy staircases and places to put the cars.

Do you really want to spend $380,000 for places your children don’t enjoy?

Put this house on a small lot, as a zero lot line home, and we have to ask ourselves: I know we’ve come a long way, we’re changing day to day. But tell me, where do the children play?

Live Video Streams on RCG? With Facebook Chat?

I’ve been told my interest in using Facebook for marketing is a bit unhealthy, but I’ve been having so much fun, and this week I pushed the limits in some ways that I thought I’d share in the hope we could spark some interesting conversations…

275x229First off, I’ve been really fortunate to work with the team behind a really interesting movie called The Stoning of Soraya M. that’s being released in selected theaters today (and Seattle on July 17th). It’s a controversial movie based on the true story of a woman who was stoned to death in the Iran after being accused of adultly adultery by her husband. To help with outreach for the movie, I built (with some ridiculously well-timed help from Loren Nason of the Future of Real Estate Technology) a Facebook app that let me combine both a live video stream with a streaming facebook chat-style app. The result was an interview with the director where we took questions from the Facebook community. You can see a recording of the video on the Spinnio app page where we hosted the conversation.

However, before I was ready to go live with the app for the movie, I decided to use the Spinnio app to record a weekly radio show that I run with Rob Hahn called the RE:RnD (Real Estate Radio with Rob and Dustin)… Normally, Rob and I record our radio show form opposite sides of the country, but this week, we were both in Orange County for REBCOC. We took advantage of some of the great real estate people in attendance to interview:

You can watch the video here:

But wait, there’s more!!!

seattle-channelI happen to think the technology of streaming video with Facebook Chat is simply too interesting to resist… so I created a page on RCG that combines the live stream from the Seattle Channel with a chat box that lets you comment on the video with anyone else on RCG watching the video. While I doubt this page will get the critical mass to be extremely interesting, hopefully you can see how cool it could be and just where the Facebook chat/status update technology is heading.

Also, I’m somewhat hesitant to throw a generic chat on RCG in a prominent place, but what do you think?

FB.init(“639647c0b027e22dfc546244ab17a875”, “files/xd_receiver.htm”);

(By the way, this works! Feel free to try it out, although be prepared that each comment leaves a “status” update on your profile.)

I’ve never liked the idea of adding a message board because I simply don’t have the time to moderate it, but I have a feeling that this would be pretty self-moderating considering it’s tied to people’s Facebook account… But what do you think? Should I create a place on RCG where you can leave comments and engage in conversations that aren’t tied to any blog post?

The Third Bubble …

It has often been said that we have even more of a bubble in real estate agents than we have in real estate prices. In fact we have had three concurrent bubbles – house prices, number of purchases, and number of agents. Unfortunately for the members of the residential real estate sales profession, we are making a lot more ‘progress’ on reducing the first two bubbles than we are on the third bubble.

Last week I went through an exercise of trying to track the growth and reported decline of the number of licensed agents in King County, including metro Seattle and Bellevue, who are members of the Northwest Multiple Listing Service. I had heard that the NWMLS had expected about 25% fallout in 2008. As I got into it, it looked like taking the transaction volumes and median prices at the same time might produce some interesting insights into agent incomes and the desirability of the profession. ( I admit that I considered an alternate title for this post: ‘The Grass Is Not Always Greener…’)

So here’s what I found, using year-end data from published NWMLS statistical reports, but doing my own analysis (and making my own errors – please let me know if you find some or think I missed a point of interpretation).

First are three charts to show the Three Bubbles of King County Real Estate:
bubble-triptych

Second is to show how the growth in number of agents has affected the average number of transactions per agent. A couple of notes on methodology here. For transactions per agent, I split each transaction into two sides, and then just divided the total transaction sides by the number of agents. For the 2009 estimate, I took the business volume for the first four months, through April, and factored it up by the same ratio as the last 8 month of 2008 were to the first 4 months of that year. We’ll get another check on it shortly with the May 2009 data.

(Required disclaimer: Statistics not compiled or published by the Northwest multiple Listing Service)

agents-vs-transactions1

Note how the average number of transactions per agent have been dropping dramatically as the total number of agents rises and the total number of transactions falls. Total number of agents is only down about 10% so far. Some people expected a far faster fallout rate, including NWMLS in one talk I heard, but the inhibiting question is probably ‘Where would they go for an alternate job in this economy?’ A related article from Inman News appeared in the Times last Sunday – Less Experienced Hands Leaving the Business.

And third is to show how the combination of all three factors plays out in average agent earnings. For nominal earnings, I assumed 2.5% commission on each transaction side – we don’t always get 3%, and we often have to give up a bit here or there to keep everyone happy and on track. The data behind the charts is stored here.

agent-earnings1

So for the average agent (and I recognize that most clients would prefer to deal with an above average agent), earnings have dropped from a decent professional income to a pretty marginal income. Last year (2008) it was a little over $30,000 – about $15/hr if you work full time, and this year looks worse. How about $10/hr?

I guess the grass really isn’t always greener…

Buyers want a house; Sellers want a buyer

The National Association of Realtors held their Mid-Year conference this week. Often the Mid-Year Conference kicks up more dirt than the Annual event, as the Mid-Year conference focuses more on the business end and the mls issues (legislative sessions).  Less partying…more in depth issue discussions.

The big new issue is about Trulia and Zillow and the like. “Scraping” data vs. being spoon fed “appropriate” data. The big old issue is Dual Agency and what are “we” going to do about “it”.

The only news we must all and always be mindful of during these discussions is “we” are not the only ones in the “room”, and never will be.  Remember in the Bible when the Powers That Be of the time tried to trick Jesus into boiling everything He said in His whole life down to ONE major and single Rule?  Jesus didn’t skip a beat. If you don’t know what His one line answer was, well…go Google that. This is a Real Estate blog .

The one and only single rule of real estate, from which all other rules should follow is this: Buyers want a house at the lowest overall cost; Sellers want a buyer who gives them the highest net return.

Now take every mls rule, every State’s agency law, everything any broker wants and doesn’t want, everything any agent wants or doesn’t want, and hold it up against that one measurement…that one rule above all rules. Does what you want help buyers get their house at the lowest overall cost to them? Does what you want help sellers sell their house at the highest net return possible? If the answer is no…then change what you want.

The Big “New” Issue is about control of the mls data, control of the inventory, data scraping vs. direct feed via what insiders call IDX.  IDX is what you see when you search property on any agent site. Simple as that.

The sticky wicket for issue number one is that buyers want to see all the houses, including For Sale by Owner homes, preferably all on one site. That is why a Public MLS (kind of what Trulia and Zillow may turn into) serves the needs of buyers better than a private and Broker controlled site. That will continue to be true until and unless the Brokers fill the need of buyers (and to some extent sellers) by permitting listings that have no listing agent. Don’t hold your breath on that one.

The answer, as I see it, is two sources and not one.  One that has all listed property via any Brokerage site (as we all have access to all via IDX) and one that has all UN-listed property…and nothing else. Until then, buyer’s of homes will be confused into thinking that Zillow and Trulia and the like have all of the listed property PLUS…which it doesn’t. That means some portion of the public is always being mislead. Those that use only a brokerage site, and miss a choice For Sale By Owner property, and those that use Trulia or Zillow or Realtor.com, and miss a choice listed property. [One additional site for all rental property would be nice too. There’s a need someone should fill. But there never seems to be enough money generated by rental fees to support it actually happening.]

The Big “Old” Issue is Dual Agency. We already have that answer to some extent, it’s called Designated Agency. We simply need more time and practice and experience in the actual practice of Designated Agency…and that as they say is the SLOG of it. Until California adopts Designated Agency…there is no answer beyond the slog of it. When and IF California adopts Designated Agency, we’ll be able to make quicker progress.

Eradicating Dual Agency is not The NAR’s prerogative (Jim Duncan). Why? Look at The main rule of real estate according to ARDELL, characteristically in BOLD lettering in this post at paragraph four.

Sometimes and often, the buyer’s best way to get the house and/or get lowest overall cost, is by using the listing agent.  Not always, but sometimes and often. The State can’t…the NAR can’t…remove that option from the buying public. In reality what a buyer wants is full representation, from the person who knows the most about the house, and at the lowest possible cost which is free (or what they sometimes perceive to be free).

Sometimes and often, the seller’s best way to get a buyer to buy his house and get the highest net return is to cut out one of (or both of) the agents in the process.The State can’t…the NAR can’t…remove that option from the selling public In reality what a seller wants is ready access to all buyers in the marketplace without having to pay two agents, AND they want the buyer agent fee to come back to them vs. it being given to the buyer, if the buyer has no agent. They also don’t want to pay a buyer agent to tell the buyer that the house is overpriced or inadequate. They also want the agent they hire to be free to bring them a buyer direct (dual agency).

All of the answers with regard to Dual Agency are done with from the NAR’s perspective. They discourage agents from practicing it, until and unless it is absolutely necessary (when the buyer and seller want it). Each State has a long way to go on agency issues, like explaining “no agency” in it’s required agency disclosure noting it as an option. Until States stop asking for the real estate industry to approve and help with it’s agency options, “No Agency” will not appear as a fully explained option for their constituency.

Seattle Area Open House Information Sources

Can you tell me where I can find a list of all the Open Houses that are happening in my area this Sunday?

boy-looking-at-toy-houseI’ve been asked this question lots of times and I have always had to answer, “I’m sorry. There is no single, good source. Everyplace is going to list the ones they are promoting.” Sadly, this is still the case. The Seattle Times classifieds was the defacto hub of information for Open Houses during the pre-internet-print-is-king era. Now that the web has taken over as the main source of any information, a “Complete Open House Times and Locations Guide” should be as easy as pulling up a Google Map. But it’s not.

Enter the major Brokerage Firms
Our NWMLS (Northwest Multiple Listing Service) does publish open house information if the agent requests it. However the larger brokerage firms restrict their agents from participating in publishing this information. Why? Because they all want you to come to THEIR websites and just see THEIR listings. God forbid that smaller companies might ride on the coattails of this and reap the benefits of centralized exposure to the public of their listings.

Meanwhile, the consumer looses. They don’t care which brokerage has the open house. All they care about is finding out about ALL of them in their desired price range and location. Until the brokerages figure out that not sharing is a loose-loose proposition, they are going to hold on tightly to one of the few pieces of information that they think they can control, even to the detriment of the industry as a whole.

Enter the free upstart website
Craigslist is generally a good source for open house information and has been devastating to the Seattle Times Classified section as more and more Sellers and agents realize that this is a popular source of information for Buyers to find out about real estate listings and open houses. The problem is that it is hopelessly unorganized and difficult to filter well. Properties scroll off quickly and the average consumer misses a number of worthwhile ads.

For now, here is a list of a few of the various companies Open House sites where you can find Seattle area open house information and then assemble it yourself.

Coldwell Banker Bain Open Houses

Winderemere Open Houses

John L Scott Open Houses

Re/MAX Open Houses

Craigslist Open Houses
(I recommend you search for “open” rather than “open house’ – otherwise you may miss alternate titles eg. “Open Sunday”. Use price and bedrooms to filter further.)

Seattle Times Open Houses
Keep in mind that ads placed in the company-sponsored sections of the The Seattle Times classifieds (often referred to as “block ads”) DO NOT automatically show up when you search on the NWSource website. If available, these ads are often an extra charge to the agents and may or may not be included in the ads they have placed.

nwmls-open-house-mapping

NWMLS Open House mapping feature could be a GREAT tool for agents AND consumers. But because the major brokerages and some of the smaller brokerages refuse to participate, and because it currently doesn’t differentiate between “Brokers Open” and “Public Open” events, consumers are on their own to dig and find the open houses they may want to see. (sources tell me that in the next major update, the NWMLS will be able to break out public vs. brokers open houses) Hopefully the NWMLS will start offering a report of this that can be emailed or subscribed to. That might be the tipping-point that would get other brokerages to participate.

Then there is the old-fashion way
The one sure method for Buyers: Get in your car and drive around the areas you are interested in. Agents almost always put out a sign to lure you in, even if the collective NWMLS Brokers won’t help them online.

Virtual Discrimination by Real Estate Brokers

A real estate broker who operates in 23 states has filed a complaint with Federal authorities against the local MLS for “restraint of trade” practices, according to Inman News. Ryan Gehris, who is a broker of record for flat-fee real estate company Housepad.com in 10 of those states, alleges that the North Carolina MLS’s requirement to physically attend specific MLS orientation classes discriminates against non-traditional web-based brokerages. I think he has a point.

handcuffed to laptop

Do I have to be here?

While I can see an argument for the advantages of attending specific events, I think that the mandatory requirement of attendance takes it too far. I think of it like networking – It makes sense to do it, but if you don’t it’s your business that is likely to suffer and that’s your choice.

In this age of WebEx, Skype or UStream.TV online meetings, it just isn’t necessary to physically go somewhere for most types of training, especially computer training. And the cost and time concerns associated with attending far away events can make it prohibitive, especially for agents that have other obligations and commitments.

The spokesperson for the MLS said the training is “not intended to be a burden to participants and is required because of the substantial changes in technology.” But if people can get a college degree with online training, it’s hard to imagine why basic MLS user training requires someone’s physical presence to be effective.

The real reason may be that the MLS would like to make it hard for non-brick-and-mortar business models because they do not like the competition. I say let their business model succeed or fail on it’s own merits, not because of discriminatory road blocks put in their way.

Should builders and banks receive an excise tax exemption as WA State faces a budget deficit?

House Bill 1495 has been introduced into the legislature and is now in committee.  In these times filled with hope, I am hoping this bill dies or at least comes out looking substantially different.  Let’s take a look.

AN ACT Relating to real estate excise tax exemptions to stabilize neighborhoods…

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
The legislature finds that there is a substantial inventory of unsold or foreclosed vacant homes on the market that is driving property values down and destabilizing neighborhoods. These homes also present an opportunity to provide affordable homes to low-income families, addressing some of the unmet need for affordable housing in the state of Washington. The legislature also finds that providing targeted incentives to housing developers will stimulate the sale of these vacant homes to low-income buyers now and stabilize neighborhoods affected by this growing inventory. The legislature intends to provide such incentives through excise tax relief on sales of homes to low-income first-time homebuyers.

I’ve been asking Realtors in all my classes to begin watching the percentage of financially distressed sellers with homes for sale in their market area.  Agents can do an MLS keyword search using terms such as “short sale,

Obama plans on tighter regulations for mortgage brokers

From the New York Times

The Obama administration plans to move quickly to tighten the nation’s financial regulatory system. Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis.

Aides said they would propose new federal standards for mortgage brokers who issued many unsuitable loans and are largely regulated by state officials. They are considering proposals to have the S.E.C. become more involved in supervising the underwriting standards of securities that are backed by mortgages.

None of this should be a surprise for regular readers of Raincityguide.  I’ve been talking about tighter rules for mortgage brokers since 2001 and here on RCG for two years.   Mortgage brokers will always argue that they are already tightly regulated. In some states, brokers have tougher regulations than consumer loan companies.  Hey, wait a minute.  Is President Obama going to let the consumer loan companies slide by without proposing tougher regulations for them as well?  The top two largest predatory lending lawsuits were against consumer loan lenders Household Finance and Ameriquest. Both companies settled out of court and “admitted no wrongdoing” even though there was lots of evidence that their sales people were meticulously trained by management on how to do wrong. 

Maybe tougher minimum sanctions and penalties are in order as well.  We must also realize that these new regulations mean nothing without enforcement.  I would rather see the states be in charge of enforcement than the federal government (well, with the exception of Florida where they have proven their supreme incompetence.) We need only to look at RESPA and the miserable job HUD has done trying to enforce this massive piece of regulation since 1975.  So if it’s going to be up to the states, then the industry should prepare for a higher cost of doing business as a mortgage broker or consumer loan lender.  This will be passed on to the consumer in the way of higher fees, rates, or both.

Paradigm Shift: Changing the Human Experience

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

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.”

*

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.

Q&A with the Banker Panel at the National Auctioneers Association

Here are my notes from yesterday’s Mortgage Industry Panel from the National Auctioneers Association’s Convention in Denver.  When known, the name of the panelist answering the question is noted.

Panelists
A. Wesley Schuneman
Founder, Ultimate Funding Group Mortgage Brokerage

Kevin Feakes
Mortgage Banker, First National Bank; Residential Mortgage Lending

Ken West
VP Commercial Lending Mountain Plains Farm Credit Services

Q: Are lending standards currently too tight or not tight enough compared to 1985?
A: (Kevin) Contrary to what you’re hearing in the media, it’s still relatively easy to get a mortgage loan right now.
A: (Wes) Underwriting guidelines will continue to get tighter. We have a few more years of tightening.  The industry will overcorrect before the pendulum will swing back the other way.
A: (Ken) Agriculture loans are underwritten in a much different way than residential. Loans are still widely available for agricultural buyers.   

Q: What is your firm doing to prepare for another significant drop in home values?
A: (Ken) Requiring more downpayment.  The lenders I work with learned from the S&L bailout.
A: (Wes) We’re close to the bottom here in Denver. We have a decent market. I’m not expecting further, drastic price declines.
A: (Kevin) We’re preparing for more LTV changes from lenders.

Q for Wes: What does the future look like for the mortgage broker?
A: from Wes: Higher standards and raising the barrier to entry will be good for the industry. The mortgage brokerage industry needs a cleansing.  I anticipate further erosion in the number of licensed mortgage loan originators.
A: from Kevin: I’m more hopeful than Wes. Competition is good for the industry. Fewer players isn’t necessarily a good thing for the consumer. You may see some former brokers shifting to a bank during these times, and then back to being a broker in the future.

Q: On short sales, Kevin, why are banks taking so long approving short sales and is there any hope for getting answers faster from loan servicing?
A: Loan servicing does not have an efficient system in place to process the overwhelming number of requests for a short sale.  It’s going to take time to work out all the short sales and foreclosures. 
A: It would be better if all the foreclosures right now were HUD REOs because HUD has a good system of disposing of their REOs.

Q: Why haven’t banks embraced auctions as a way to dispose of their REO inventory?
A: The systems in place right now are for the banks/asset management companies to reach for a Realtor first, and to try and sell REOs using systems that are already in place (MLS) to reach potential buyers.

Follow up Q: Why aren’t banks wanting to move their REOs? Why list the home for month after month? Why are banks holding on to their REOS?
Panelists did not know. Jillayne’s answer:  It is possible that the banks are trying like mad to spread out their losses over many months/quarters. It is also possible that if a bank quickly disposed of their REO inventory and had to claim the losses, that a bank’s insolvency would become more transparent to regulators.  It is also possible that there is such a huge backlog of inventory, that it’s a time/resource backlog issue. 

Q: Should FICO scores be completely tossed out, returning us to a world where real humans touch each file?
A: (Wes) The idea of using any kind of scoring system at all isn’t inherently “bad.