Rudy is to Trulia…

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rudy

I woke up this morning to this email:

Rudolph Bachraty wrote:

Hi All!

We’re conducting a poll and would appreciate any feedback you may have.

What are the 3 most important things Real Estate Agents should do to improve their online presence?

There are lots of choices with little or no clear ROI.

Agents are blinded by the bling. Time is money. It has to be spent wisely. Not everyone can dedicate endless amounts of time testing new products and services. Even I get overwhelmed at times. Yet agents know that most consumers go online to conduct their search for real estate information and they want to join the conversation too. Agents just want to know where and how to start.

Thanks for your time.

Rudy

For more info, please visit:

http://www.truliablog.com/?p=287

Of course I am going to answer Rudy, formerly of Sellsius for obvious reasons.

The thought crossed my mind that Trulia is just as on the ball as Zillow, given that

DavidGibbons

Rudy is to Trulia…as David G. is to Zillow.

How can you not love Trulia and Zillow as much as you love Rudy and David G.? It reminds us that this is the day of Who You REALLY ARE No gimmicks. No phony crap. No “how do I want to present myself?” I think, for the first time in history, people are responding to who you really are vs. the Sound Bites and canned schpiels and “make a problem; fix a problem”. The smart money’s on choosing based on reality, not smoke and mirrors and dog and pony shows. Credibility is key.

Kudos to both Trulia and Zillow for choosing these two guys to be their voice out in the world.

Setting the Asking Price for a Home in Redmond

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Later today I will be setting the asking price for a home in Redmond near Microsoft, and thought it would be interesting to some to follow how my brain wraps around the task.

The goal is to find the house they will be moving to first, but I always go to the house they will be selling in order to buy, ASAP after meeting them. This way the owner has plenty of time to do everything they need to do, and will be ready to list the property the minute they find the house they want to buy. It also assists by making sure their Net Proceeds Expectation on the home they are selling is not over-stated, BEFORE they make an offer thinking they are getting more than they will. That can be a very dangerous mistake, in my experience.

So laying out their net proceeds from the sale of their home, before they make an offer or even establish a firm purchase price target, is the first step in the home buying process.

First I pull the tax records of the “Subject Property” and note the layout as to main floor footprint, basement square footage and anything over the main floor. In this case there appears to be a bedroom or bonus room on the 2nd/3rd floor. Tax records call it 3rd, I call it 2nd. Then I look to see if the property had been listed for sale in the mls when they bought it. No luck there. The timeframe is available, but the house was apparently not listed in the mls when they bought it. An off-market transaction. That likely means the price they paid was not market-tested, so I’m putting no relevance in its accuracy.
I just thought of David G. since my next step is finding their Significant Other Sold Property, which reminded me of Zillow. Since I already know where I value this one, I’ll go peek at Zillow…be right back.

WOW! That was an eye opening experience. OK then. David G., call me if you want to know what I saw. Glad I took that step. I also saw one of my favorite agents and neighbor, Mike Moghaddas, on a Zillow ad in the sidebar. OK, enough on Ardell’s Field Trip to Zillow.

The Significant Other Sale, which is just a house or two from the subject property, tells me everything I need to know to get a ballpark value before I go to see the house later today. Zillow told me everything else and more. While the Significant Other sold in 2007, it sold in early 2007, so I have to try to calculate change and I can already tell you that I’m pricing this one UP and not DOWN. No, the market is not down as to price for this home. Only question is how much up is it.

No agent can make recommendations as to work to be done to get the home ready for market, until they have a ballpark value in their head that they come up with on their own, without owner input. I already know that if he lists it at X price, he doesn’t need to do anything. If he lists at at Y price, then we have our work cut out for us and some major staging and aesthetic and cosmetic fixing to do. In fact this is one case where I will likely recommend a pre-inspection. Something I rarely if ever do.

I know exactly what the interior looked like on the Significant Other sale. Original, but good, condition. I also have a pretty good feel for being able to get 5% more than the early 2007 comp would indicate. Now I go to see the house and add the missing pieces to the puzzle.

Before all of this technology, and Zillow, we often had to see the house first and then go back and do the homework. Today, technological advances have turned the tables on the way we work. Homework first, see house second. The advantage this technology affords the agent and the owner, is that we can now give the owner the list of things they need to do at first visit.

The owner should only do things if doing those things is going to assist in the sale and get a higher price. And that is not always the case. Sometimes a lower price is warranted due to price breaks. For example, if without the work the home would list at $599,950 and doing the work might put it at $615,000, maybe better to go with the 5 on the front and just clean it up and lightly stage it. If the owner does a lot of work in those cases, it would be a waste of time and money. This is one of those cases, and I can already tell that before going to see the house. Ain’t technology great! Only question is, how much work was already done to the house since the time it was purchased. Zillow didn’t help me with that one, so a trip to the house is the final step rather than the first step.

Had the property been on market last year, cancelled and I was re-listing a property that was already tested, the steps would be different. This is not one of those cases. Never listed for sale since the owners purchased it.

Valuing property is one of the most important things we do for buyers and sellers. It’s fun and rewarding and very meaningful to the lives we touch day in and day out. No computer program will replace us, but clearly they are very helpful to us. Speaking from someone who knows as when I started in real estate the mls was a DOS version with no photos, and the mls was a weekly book with black and white thumbnail exterior photos only. No access to tax records or square footage when I started either. I love technology…and Seattle Area does it best.

Homeowners in Foreclosure Should Hire an Attorney

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When I teach the Short Sale class, I say many times during the class that homeowners selling short and homeowners in default should always be directed more than one time to seek legal counsel. Sometimes homeowners in financial distress don’t hear you the first time. Just handing them the agency pamphlet isn’t enough. Attorneys can help homeowners in ways that real estate agents cannot. They will know more about their state’s deed of trust laws and any state-specific anti-predatory lending laws as well as federal residential mortgage lending laws than an average real estate agent, and attorneys will have access to recent case law.

justiceStuck with a bad loan, a Staten Island family fights back
Staten Island Advance

David and Karen Shearon were like many other Staten Islanders stuck with bad loans, collapsing financially under the weight of a crushing mortgage less than a year after buying their first home.

But unlike thousands of others who have entered foreclosure as part of the fallout from the subprime lending crisis — homeowners often embarrassed by their situation and unable to afford legal representation — the Shearons fought back.

A judge recently ruled that the owners of this Westport Lane townhouse in New Springville home were victims of predatory lending.They argued through their attorney that brokers aggressively marketed them a high-cost loan and then pressured them to go through with the closing when they could have qualified for a traditional fixed-rate mortgage.

In what is likely to be a precedent-setting decision in New York, state Supreme Court Justice Joseph J. Maltese agreed with the Shearons, recently telling the bank that it could not foreclose on the couple’s New Springville townhouse and that it may have to pay them damages for their troubles and void the $355,000 mortgage on their Westport Lane home…

Judge Maltese determined the original lender violated banking law by failing to check the Shearons’ income and ability to pay the high-cost loan. He said the lender crossed the line again when it financed the home above the $335,000 sale price, using an additional $19,145 to pay the costs and fees associated with securing the high-cost loan. The Shearons’ $5,000 deposit, meanwhile, was never deducted from the ultimate $355,000 in financing.

“This ultimately left Shearon with negative equity in the property,” the judge wrote.

“The mortgage loans may be unenforceable and the homeowner may be entitled to reimbursement of all prior mortgage loan payments, the fees for obtaining the loans and attorney fees,” Maltese added.

At a hearing Feb. 28, the judge is expected to decide whether the mortgage should be voided and damages granted to the Shearons.

Read the entire story here.

I keep reading comments about how there are not enough regulators to adequately oversee state and federal lending laws. With the mortgage lending meltdown continuing into this election year, we are already seeing more proposed state and federal laws.

Question: Would the threat of having the mortgage voided in the courtroom be a more effective way of bringing some rapid order into the mortgage industry?

Hold On To Your Hats! Sunday Night Stats

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Whoa Baby!  To say these numbers are interesting is an understatement.  I better put that MLS required disclaimer that this data was hand calculated by ARDELL using the MLS system, but not posted or compiled by NWMLS.

We’ll start with the January data Year Over Year (YOY).  Remember a few more sales will trickle in since we are so early in February, and some agents don’t post immediately after the sale.

But as of tonight, the Jan. month end closings (drumroll please):

**UPDATE FOR LATE POSTINGS OF JANUARY CLOSINGS as of 2/7/08 and again on 2/10/08):

King County SFH sales for Jan. 2008 came in at 861 895 902 vs. 1,357 in 2007.  A 36% drop.34%

King County Condo sales are down about 43% 39% from 511 in 2007 to 293306311.

Remember that for every city that is performing better than those percentages, like Bellevue and Redmond whose SFH sales are only down about 15%, there are other cities and areas whose performance was worse than the overall King County numbers.

People ask why I always calculate Kirkland, Bellevue and Redmond statistics.  I expect these areas to outperform King County as a whole.  Bellevue and Redmond did.  Kirkland did not.  Living close to Microsoft is still the criteria that gives homeowners the edge in certain parts of Bellevue and Redmond, though not all of those two cities. 

For instance if Factoria performed the same as King County overall, then close to Microsoft is virtually unscathed.  I didn’t break that down, but I expect that is the case given Bellevue and Redmond’s overall performance of down 15% or so.  Next week when we see if there are any more month end closings posted, I’ll break that down to see where really close to Microsoft is coming in.

I’m also tracking which homes are selling and which aren’t.  By visiting the properties in person and picking the ones that should sell, we can tell if there is any impact at all.  If the properties that should sell do sell, then that area ( close to Microsoft) is not affected. 

Now for the weekly stats.  I’ll keep this running with closings on a YTD basis throughout the year and compare the YOY at the end of each month. 

Inventory being “down” means that the sales are happening faster than new listings are coming on market this week.  So a slight, very slight, reduction in inventory for the first time this year.  Sales are keeping pace with, and exceeding, new listings on market by a small margin.

King County – Residential

For sale – 8,638 – DOWN 22

In Escrow – 2,154 – UP 90

Closed year to date – 888 – UP 280

 

King County – Condo Market

For sale – 2,983 – down 26

In escrow – 795- down 28

Closed year to date – 293 – UP 89

Seems a bit odd that In Escrow is down also, but I expect that is because of month end closings.  We’ll see how that shakes out next week and in the weeks to come.

I can’t help but think of the commenter whose monicker is “bored”.  Don’t know how anyone can be bored with this housing market. 

“Statistics not compiled or published by NWMLS.

Pondering the 2008 RMBS Vintage

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Because of increased loss expectations, Fitch Ratings has moved $139 billion subprime RMBS to Watch Negative due to losses from the 2006 and 2007 subprime vintages that are expected to range from 21 to 26 percent. Hat tip to Housing Wire.

Other ratings agencies have also increased their expectation on losses.  Standard & Poor expects losses on 2006 vintage subprime to approach 19%. Moody’s is estimating losses of 14 to 18%.

[photopress:fitch.jpg,thumb,alignleft]All throughout 2007 and now again in 2008 we continue to read stories from the ratings agencies about enhancements made to their default and loss models.   

Read: We should plan on more increases in loss expectations.

What I find interesting in the Housingwire article is that this is the first time a ratings agency is taking into account the fact that homeowners are walking away from their homes.  [emphasis added]

In Fitch’s opinion the contraction in the mortgage markets has contributed to an acceleration and deepening of home price declines, and has eliminated the option to sell or refinance a home to avoid foreclosure for many borrowers. Additionally, the apparent willingness of borrowers to ‘walk away’ from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages. As Fitch has described in recent research reports, this behavior appears to be largely attributable to the use of high risk mortgage products such as ‘piggy-back’ second liens and stated-income documentation programs, which in many instances were poorly underwritten and susceptible to borrower/broker fraud.

Fitch said it expected the 2007 classes under review (report due out in February) would be subject to “widespread and significant downgrades

Great Views = Landslide Waiting to Happen? Looking for a Geologist to Evaluate Slope Stability

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Wow, what a view!  It takes your breath away…now let’s not let it take away good judgement too.

Sometimes a great house, with a fabulous view needs a little extra inspection and evaluation to help our clients make informed decisions when buying a house.  I have been working with a wonderful couple for awhile now and it looks like we have finally found their next home.  This home is hitting all the important criteria, and has a bonus of a beautiful view. 

There is a BIG territorial and mountain view because the home sits on a high, steep bluff.  So while to my untrained eye there does not look to be anything that indicates a problem, I have suggested to my clients that we have the slope’s stability looked at and evaluated by a professional to be reasonably sure that this is good home for them.

Since I have not needed a geologist technician before, I asked around and found one one who was referred to me by a commercial Geo-tech company and will probably have him evaluate the slope.

My question is, have any of you needed to have a slope evaluated either for clients or yourself?  If you did, who did you use?  What did the evaluation determine?

Fed Funds Rate now at 3%

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Today the FOMC reduced the Fed Funds rate by a half point to 3%.   A half point rate cut was expected by Traders and so far we do not have significant changes (yet) to mortgage interest rates.  However, if you have a HELOC, your interest rate has just gone down again.   The Fed also reduced the Discount Rate to 3.5%.   The Fed is leaving the door open for future cuts as needed.   You can read the press release here.

We still have Thursday’s PCE report and Friday’s Jobs Report which both highly impact mortgage interest rates.  If either indicate strong inflation, we will see mortgage rates increase.

 

If You Walk Away, I'll Walk Away

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A couple of Seattle Bubble readers sent news stories to me last week on a new company called You Walk Away (hat tip to Alan and synthetik.) This company, which is headquartered in California, is selling a how-to kit for $1,195 to help homeowners make the process of walking away from their home and the mortgage, as painless as possible.  Even the promotional pictures on the site display happy people who look like regular, ordinary homeowners….except they’re moving OUT of their homes and they look like they’re really, really having some good quality HAPPY family time.

[photopress:brighteyes.jpg,thumb,alignright]A long time ago, in a galaxy far, far away, most all mortgage lenders use to require a downpayment.  The reasons now seem obvious but even in a relatively stable housing market, when a person is putting some of their own money into the home purchase, that personal investment was seen as a good reason that could compensate for other reasons on why the lender said “yes” to the American dream for this particular borrower.  People use to think two, three and four times before walking away from a home when they would be walking away from their own hard-earned, after-tax dollar investment into the real property.  Those days went away with zero down, seller-paid closing cost loans.  One of the cards left that the lender is holding is a person’s credit history.  You Walk Away claims to connect you with their affiliated credit repair service so the borrowers can start repairing their credit immediately.

Then we had the 60 Minutes episode, “House of Cards” this past week interviewing a couple who had been advised to just walk away, which comes very close to legitimizing the practice: just stop making the payments, save the money, and live in your home until you absolutely have to move out.  Lender use to rely on the social stigma of foreclosure and the shame of walking away from one’s obligations. Now the logic of putting one foot in front of the other and walking away is starting to trump shame. 

So, what should homeowners do who are trying to make this decision?  I recommend finding a lawyer in your city that specializes in consumer protection or real estate law and paying for a face-to-face meeting to discuss all your options.  I will bet that in most cases, the cost of an attorney will be less expensive than the kit.  Google your state’s bar association to get started. 

Mortgage loan originators routinely give advice on how to repair your credit, and loan originators in most all states are only able to earn a fee when a loan is made, therefore this advice is given free of charge, as part of their ongoing relationship with you.  State laws on the foreclosure process such as your state’s Deed of Trust Act will also be available for you to read free of charge. To get started, just google it: “_Your State_ Deed of Trust Act.”  Also, non-profit housing associations provide FREE counseling to homeowners in default.  We all pay for this service by way of our tax dollars.  As a tax-paying person, I personally invite you to use these services if you need them and not to feel like this is only an option for someone unlike yourself.  To get started, visit Hud.gov and click on the phrase talk to a housing counselor located in the section “at your service.”  You’ll need to scroll through the list, and select an agency that offers “default counseling.”   What I would like you to avoid, because I care about you, reader-who-is-thinking-about-walking-away, is avoid the signs by the side of the road or any other person who appears to present themselves as an angel here on earth to rescue you, and promises something that sounds too good to be true. It is.  You are better off hiring an attorney.  Don’t have money for an attorney? See if you qualify for your state bar association’s free legal aid program. 

Free Speech? Miami Realtor/Blogger sued by developer for $25Million

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It was reported by the Miami Herald that a local Realtor blogger is being sued by a developer who is not pleased that the blogger, Lucas Lachuga, remarked that the development was “doomed” on a January 10th post.

”Like any other blog out there, it’s a collection of my unbiased opinions and thoughts,” he said. “I have buyers all over the world who go to my blog. They know I’m not going to sugarcoat the market.”

Realtor Lucas Lachuga’s Blog is called Miami Condo Investments.

This is the kind of case attorneys probably would watch very closely.

Sunday Night Stats – King County

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King County – Residential

For sale – 8,680 – UP 172

In Escrow – 2,064 – UP 158

Closed month to date – 608 – UP 169

 

King County – Condo Market

For sale – 3,009 – UP 80

In escrow – 823 – UP 25 – 2.6% of those are contingent contracts

Closed month to date –  204 – UP 60

Next week I’ll have to post both end of month and Sunday night stats plus YOY closings for the month of January.

Single family home market keeping pretty good pace with those closing and going into escrow vs. coming on market.  Condos not so good.  Hard to believe that with over 3,000 on market, only 18 went into escrow two weeks ago and 25 this past week.  If the condos don’t move, the single family market will see the consequences of that come Spring and Summer.

“Statistics not compiled or published by NWMLS.