Category Archives: Seattle Real Estate Stats

Let Brokers charge what they want. Do away with YSP.

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Couldn’t the whole yield spread premium (YSP) debate with all the trimmings end with a simple solution such as allowing the broker to charge whatever they want? Let the free market sort it out. Certainly lenders would have to be on board and do away with incentives or change them somehow, but it seems to me that everyone is making it so complicated.

Yes, compliance issues, licensing and fair dealing issues are important and should be implemented in some manner.

Solution:

  • Just disclose up front what the compensation is based on the interest rate or program the borrower qualifies for. Therefore…….
    • No more the need to attend sales seminars on learning how to overcome objections, which will allow more time to attend seminars on how to provide sterling service.
    • No more awkward moments for the loan officer attending an escrow singing when the borrower questions that “YSP thingy.”
    • No more loan officers asking escrow “how will you explain YSP” to the borrower, as if escrow’s response somehow dictates whether or not they will receive future business.
    • No more agents having to watch helplessly at their clients becoming frustrated or stressed out due to lending problems associated with YSP’s and the completely preventable situation where a transaction spirals out of control at the last moment.
  • How about lenders just have a simplified schedule of programs and rates that the borrower can choose from and if they pay a higher interest rate they receive a rebate that can be used on their behalf. How about just turning the PC monitor around and showing the consumer the several programs available and then have a good old fashioned counseling session. It would save every single moving part in a transaction a lot of grief. And it would save transactions from failing at the last moment because a “nuclear bomb disclosure” by a lender about the yield spread premium a loan officer is earning that freaks out the borrower.

I can just about darn near guarantee that if a consumer knows where all the chips are on the table, they would have no problem moving forward with a transaction. Give a consumer the very best rate they can qualify for, at the very lowest fee structure you can, with all the chips clearly on the table and Bam! you have a happy client, fostering long-term value.

When will someone just give the consumer what they want? Somebody is working on it and they are going to will be very successful. Is it really more complicated? If so, sound off.

Mythbusters takes on water heaters as rockets….

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The other night I watched Mythbusters with my partner, Michael, a show which I have to admit I only see occasionally and only when he’s watching it. It’s okay, but I usually prefer reading. Anyhow, one of the myths that they were attempting to bust is the idea that a water heater can become like a rocket and shoot through a home’s roof when it has failed.

Ok, I’ve been an agent, and a homeowner, for many years and I am fully aware of this “truth” mostly from having spoken with many knowledgeable contractors and inspectors over the years – not to mention feedback from my dad who is an all around great fix-it guy.

Well, for anyone who has heard about this “myth” before but didn’t believe it… here is the clip from the Mythbusters folks. It’s quite eye-opening….

I wonder, if this happened to a homeowner and the insurance company determined it was the homeowner’s fault due to negligence because of lack of maintenance – does this mean they wouldn’t pay? I’m all about maintenance on a home’s water heater and replacing them BEFORE failure of any kind so I hope I never find out personally.

Did you find everything OK?

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[photopress:cashier.jpg,thumb,alignright]Did you find everything OK Ma’am?  That’ll be $725,000.  Suzy at register 4 will help you with the loan paperwork and we’ll have this all ready for you to move into in 30 days.  Thanks for shopping RDC Realty.

Did you find everything OK Ma’am?  That’s a really good choice, but did you notice that the house with the view is on sale today at only $699,950?  The owners have already moved out of state, and need to close on this house before they can buy a home in their new state.  John?  Can you take these nice people back through both houses?

Did you find everything OK folks?  Didn’t see anything you like?  Oh, you did see something you liked, but it has a “hold” ticket on it.  Would you like to leave your name and number so we can call you when another one like it becomes available?

Return on aisle 1!  Return on aisle 1!  What seems to be the problem ma’am?  The inspector said the roof is leaking?  Well we can patch that up for you, would that be OK?  No?  You want a brand new roof?  Let me get the seller on the phone and see what we can do. 

((Ring))…((ring)).  Good morning, RDC Realty.  You would like to see the house on 123 main at 4?  Hold please.  Mary?  Can you meet the Smiths over at 123 Main at 4?  Good.  Hello Ma’am.  Yes, we can have someone meet you over there.  No there’s no extra charge for that.  The seller is paying a sufficient commission to cover our costs.  Mary will meet you there at 4 sharp.

Joe?  What the heck is happening over at aisle 10?!  There’s a big line over there.

Oh, that’s the new self check out lane.

What about Suzy in aisle 4?  She’s doing her nails again!

Oh, the people in the self check out lane already have their loan documents.  They got them online before they came in to purchase.

What’s going on over at aisle 6?

We’re adding four more self check out lanes.  Aisles 6 through 10 will all be self check out lanes.

Mortgage Brokers and Loan Originators Should Support HR3915

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Why am I not surprised that mortgage brokers are in a panic over HR3915, the Mortgage Reform and Anti-Predatory Lending Legislation? Back in January, Barney Frank gave everyone ample notice that he was committed to passing anti-predatory lending legislation before the end of 2007. Then the subprime meltdown began, setting a political stage for a perfect storm, putting mortgage brokers right in the path of harm’s way. Bush, your weapons of mass destruction are in the hands of Congress. Or so the mortgage brokerage industry would have us believe.

The fear racing through the brokerage community is rampant.  Wide-eyed loan originators are dragging themselves into my classroom looking like Iraq war veterans needing post traumatic stress disorder talk therapy, and the bill hasn’t even been put before the full house for a vote yet.   Let’s see if we can identify where all the fear is coming from.

Establishes a Licensing System for Residential Mortgage Loan Originators
We already knew this was coming. Chuck Cross with the Conference of State Bank Supervisors has been working on national loan originator licensing for months. Even better, the current proposed version of HR3915 says we’ll be keeping track of all LOs, including loan originators who work at federal and state chartered banks. This is what the mortgage brokers have said they want.

Creates a Residential Mortgage Loan Origination Standard
There’s nothing inside this paragraph that sounds too scary.  Licensing? Full disclosure? LOs are already required to do these things. What’s next? Oh, here it is:  Anti-Steering.

Anti-Steering
“For mortgage loans that are not prime loans, no mortgage originator can receive, and no person can pay, any incentive compensation (including yield spread premiums) that varies with the terms of the mortgage loan (except for size of the loan and number of loans).  Regulations will be promulgated to prohibit mortgage originators from (1) steering any consumer to a loan that the consumer lacks a reasonable ability to repay, does not provide net tangible benefit, or has predatory characteristics, (2) steering any consumer from a prime loan to a subprime loan, and (3) engaging in abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but different race, ethnicity, gender, or age.” Let’s try to analyze why mortgage brokers and LOs are so upset about this provision. For the past year, LOs on this website have fallen all over themselves telling us how they don’t do any of these things like (gasp!) steering consumers from a prime to a subprime loan IN ORDER TO MAKE A HIGHER YIELD.  So, if you good guys out there didn’t steer or originate loans with predatory characteristics, why are you so mad about this bill? You keep saying you want the bad guys out of the business. If it’s true that you’re not doing any of this stuff, then why all the whining? If the subprime market weren’t already dead enough, this bill will put the nail in the coffin. But don’t be fooled. Instead of subprime, the loans will be called something else.  When there’s money to be made, the creative mind knows no boundaries.  This provision gives mortgage brokers and LOs exactly what they’ve been telling us they want: the end to the abuse of YSPs.

Ability to Repay/Net Tangible Benefits
“Requires creditors to make a reasonable determination, at the time the mortgage is consummated, that  the consumer has a reasonable ability to repay the loan, or;  for refinancing, the refinanced loan will provide a net tangible benefit to the consumer.”

Well I call “reasonable ability to repay

Three Steps to Staging a Listed Property

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[photopress:Jackass_20Penguin.jpg,thumb,alignright]On Friday Fieldtrips, I have been going to properties that are already listed for sale and doing a 3 Step Staging Technique. Since the properties are already for sale and listed in the MLS, it is a shortened process that takes anywhere from two hours to most of the day. Getting a property ready for market that is not already listed often has more steps and takes much longer. This simple process will help to improve a property already on market.

It is also the method I use on a listing appointment to give the seller a few tips of what they might need to do before putting the home on market. These homes are occupied and already furnished.

1) WALK LIKE A PENGUIN

From the time you enter the front door, walk at a fairly rapid pace from the front door, through the main living areas and back to the front door. Keep your arms at your side with your hands about 8″ from your hip. In other words…Walk Like a Penguin.

Remember there are often three people walking through the property during a showing, the buyer(s) and their agent. Anytime they need to walk around a piece of furniture or get cornered inside the furniture or are just uncomfortably fitting through an opening, the house “feels too small” even if it is a 2,500 square foot home.

Make sure the walk path is as wide as possible. If one of your hands hits anything as you walk through, whatever you hit with your hand likely needs to be moved.

As you walk quickly like a penguin, keep your head straight and even with your shoulders. Don’t look up, down or sideways. When you get back to the front door, walk through again in the reverse direction.

2) HAPPY FACE :)? SAD FACE :(?

It really is quite that simple. When your hand hits something, you get a sad face. When you can move through freely and without impediment, you have a happy face. When you smell something bad, you have a sad face. When you see attractive things, you have a happy face. When you see unhappy things (I call them implements of destruction) you have a sad face. Remove knives, arrows, scary masks on the walls, anything that makes you grimace or feel uncomfortable for even a split second.

Now go back through the area slowly and look for your best items (mirrors, pictures, vases, etc…) that you DID NOT SEE while walking through like a penguin. Move those to the walk path so that you see your best pieces when walking through quickly.

Do you see something good out the window, or something bad out the window as you walk through quickly? Open all the blinds and window treatments and walk through again. Happy Face? Leave the window treatments open. Sad Face? Close the blinds or drapes if you see moving cars, trash cans or anything else that is not attractive.

If when you first walked through you had 3 happy faces and 14 sad faces and now you have 14 happy faces and 3 sad faces, you have improved the property showings. If a buyer feels good most of the time during the showing, they are more likely to buy the property, than if they had a sad face during most of the showing.

Pretty simple stuff.

3) SHOP AND UPDATE

If it is a newer property, I often don’t have to shop. One of the purposes of shopping for items is to have at least one item in every room that is CURRENT. Often the homeowners things are very nice, but from 15 years ago. If the house is 15-20 years old and all of their things are 15 to 20 years old, the house screams “needs updating”, and that means lower offer.

Seems silly, but I can tell you for fact that homes where buyers said, “It’s going to cost $100,000 to update this place”, sold after a bit of updating. The more people see something in the house that they may have seen recently while shopping, the more you have added current to needs updating.

By Shopping and adding currently popular items and colors, you can change your showing feedback from “too 80s!” to an offer.

My inspiration for this week: Hamoody

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Life in real estate. Good days, bad days, good weeks, bad weeks. When things get a little bit crazy, what picks you up? A few weeks ago I mentioned that inspiration is everywhere, if you let it in your world.

My inspriation was someone who I read about, but today, I got to see in person. A remarkable story. An amazing boy.

Meet Hamoody.

Be sure to click on the photo’s.

Blog Wars: It's everywhere.

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The last month has been educational for me in a lot of ways about our industry and confirmed a lot of my thoughts, both good and bad. There is a lot of passion out there in the blogosphere and out in the work place. The one nugget I always come away with is that the real estate industry is full of very independent people who are fierce in the way they do business and in the manner in which they convey their positions on issues. Both in the work place and blogging, some are professional, others make fools of themselves, intended or not.

One common denominator I see is that people genuinely want to improve our industry, its function and image. The problem is, how can that happen with such fragmented independent practitioners that all play a part in this industry? There are so many moving parts with industry specific (lending, title, escrow, Realtors, consumers) internal self-serving issues. Perhaps this fragmentation of independent real estate practitioners is a core reason why the industry and associated moving parts has suffered from image and credibility problems for so long. Just take a recent look at all the folks that were operating under the radar over the past two or three years with criminal records.

Recently, I don’t know how many times on local or national blogs and forums, I’ve seen the quote from agents and loan officers, “sure be glad to see (insert any practitioner here) get out of the business,” or “I’ll be happy if there are less (insert practitioner) here as this market shifts,” and so on. Again, the problem is, everyone is saying it. It’s like each team praying to God…..”and help us beat the other team.”

Passion and Blog Wars extend far outside our real estate industry. That’s what is so interesting to me as a small business owner involved in the real estate industry and blogging. I know this is foreign for many of my friends and colleagues in the real estate business, but here goes anyway: The world does not revolve around real estate. The Blog Wars extend into every crack and corner of our society: soccer mom’s, politics, economics, Church, professional sports and the “Holy Land of Blogging” known as the technology and software industry.

A Shopping Trip for Staging a Home

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For the past several Fridays I have been taking “Friday Fieldtrips” with agents from my office.  Mostly we have been staging their listings.  Just a little spruce up.  Adding a bit of color.  I thought I’d share some of our great finds.

The home we were staging is in Woodinville, so we shopped in Woodinville at TJ MAXX, Target and World Market.  The photo below are just the things we bought today.  I have a huge growing collection in this particular color family of reds, golds and greens which work well for homes built in the 1980s.

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The curtains are only $15 at World Market.  They come in that orange twisted coil in a little bag of the same fabric, to create the wrinkle effect.  We used the patterned ones behind the dining room table.  They are only about 24″ wide and tie on.  Best buy were the small wavy square plates at only $2.00 each at TJ Maxx on the clearance table.  I try to keep pillows at $10 each, these came in sets of 2 for $20 at Target.

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The big green goblets were $5.00 each at World Market.  I get plates of all shapes and colors at Target for $3.00 to $4.00 each all the time.  They have every color imaginable and I usually buy them in sets of 4 from $12.00 to $16.00.

The tall red oval vase on the right I just had to have and was about $12.00 and we spotted the red and white photo box below it for only $3.00 and it was a perfect color match.  Most of my big pictures are out at my two pending listings in Sammamish and Edmonds.  Often I can take them from one house to another, but this was Hilde Webber’s listing so we started her collection and I added a bit to my collection and lent the items to her.

We staged most of the first floor, but didn’t pre-set the kitchen area too much as a family of five still lives here.  It’s tough on a family getting the house ready and keeping it that way.  A little help goes a long way, and if you shop well you won’t spend too much money and you can use the items over and over again from one listing to the next.

This one is all ready for the Open House this Sunday and Hilde and I had a great Friday Fieldtrip.  I find it’s also a great way to get to know my agents really well.  Gives new meaning to TGIF!