Unbelievable!

Some days I hear something that just sends me running to my blog! This has been one of those days and it's not even noon yet!

I listed a house, probably about a year and a half ago now. I was the second agent. There was a third after me. The house never did sell and eventually went into foreclosure. I've kept my eye on it and I recently noticed the bank had gotten a contract on it. The list price at that time was almost $200K less than the original sales price. It hasn't closed yet so I don't know what the final sales price will end up being.

The truly amazing piece of this story is that the people who are buying the house still have a house to sell! Their agent had warned them repeatedly against buying a house when they hadn't sold theirs. But they drove by got very excited, called the listing agent and wrote an offer on the house. Since this is a foreclosure the offer COULD NOT be contingent on the sale of their home. And there are no other contingencies that would let them out since, typically, banks won't accept them. The listing agent assured them that he could sell their house "just like that", no problem!

There are so many bad things happening here you hardly know where to start!

First of all, let me reiterate again that the listing agent represents the seller, will do what he can to get the property sold and does not give two figs how that impacts the buyer! "Buyer beware" doesn't begin to cover it. If you call a listing agent and use them to buy the property without your own representation you are asking to be taken advantage of!

And, if you fall for an agent telling you they can get your house sold "just like that" you need to have your head examined! Anyone who tells you that is either delusional or lying! There's just no way to sugar coat that!

Here's the really amazing part! The reason the house is in foreclosure is because the previous owner, against the advice of their agent, bought another house without selling the one they already owned. History appears about to repeat itself!

Some days I'm not sure this downturn can last long enough for people to wise up!

Just my rather agitated two cents for the day!

Teams

Nationally and on a local level we've seen an increase in real estate teams. Usually a team starts when one agent has more business than they can handle. And, generally, the first person hired is an administrative support person. If business continues to grow, the agent moves into handling more listings and fewer buyers and hires a buyer's specialist for that piece of the business. Some teams eventually grow to have quite a few buyer specialists. And, in some cases, the original agent assumes a "rainmaker" role and functions more in a business development/management role while others handle the actual real estate transactions.

From a real estate agent's perspective, perhaps the most attractive thing about the team concept is the ability to have someone there to cover your business when you want time off. After all, as a one person company in a 7 day a week business it can be tough to manage those times you need a vacation.

But let's take a minute and talk about what the advantages and disadvantages are for you as the buyer or seller. Typically, when someone who is part of a team is asking for your business they argument is that they can better serve you because they're not spread as thin. There's certainly some truth in that.

But it also depends on the caliber of the individuals on a given team. While the agent at the top of the team is almost certainly a seasoned professional, that's often not true of everyone on the team. In many of the teams operating locally there seems to be a fair amount of turnover. And while the top agent may be the person who initially makes contact with you, after that initial appointment you're unlikely to deal directly with them most of the time.

The other potential down side of a team is that shared responsibilities always has the potential for creating gaps. Hand offs can mean things fall through the cracks.

I'd argue that one great agent may actually serve your interests better than a team if that team is inexperienced and doesn't have good systems in place.

If you're talking to someone about their team, make sure you find out more than just about the the team leader. Who will be working with you on a day to day basis? How much experience do they have? How much access will you have to the team leader?

The truth is either a team or an individual agent can give you spectacular service. It's up to you to ask the right questions and make sure you understand what you're getting when you hire anyone, agent or team.

As always, you need to do your homework!

Impact Fees

In Commonwealth Magazine, the publication of the Virginia Association of REALTORS, there is an article this month that discusses the effect of impact fees on home affordability.

It quotes a study from the NAHB of saying that each $1,000 increase in the costs of home ownership reduces the number of prospective buyers by 217,000.

The implication of the article is that fees such as higher construction permit fees, tap fees, proffers required frombuilders and such things as the new taxes contemplated by some northern VA counties to pay for infrastructure are a bad thing.

Here's the problem with that implication. All of these fees, taxes, etc. are, in their own way, a way to offset the increased infrastructure required as new homes are built and new residents are added to an area. Increased population requires additional roads, schools, hospitals, sewers, etc.

Since all of these things have costs associated with them, the money has to come from somewhere. If you're not going to get that money from the builders making money off selling those homes, or from the new homeowners who, after all, will be the people utilizing those new services, who should pay?

The only people left, it would seem, are the existing homeowners. They would see an increase in their own taxes to help fund new infrastructure for the benefit of other people. It's hard to see anyone jumping on that bandwagon!

No one likes fees or taxes, regardless of their political persuasion, regardless of whether they use the services that those fees fund. But you can not simply continue to add population without infrastructure. And you can't expect existing home owners to absorb the entire burden. You're asking for an anti-growth backlash!

"Even modest impact fees can have a dramatic effect on housing affordability," says Jerry Howard, the CEO of NAHB.

I'm still waiting for his suggestion on who, then, should pay for the infrastructure!

I think we've all seen what happens when no one pays and construction continues and the services aren't there for the newcomers. Is everyone enjoying their commute from this area into northern VA and DC?

So, what do you think? How do we pay for infrastructure?

Discount It and They Will Come

K Hovnanian, one of the largest homebuilders in the country recently did a nationwide sale event called "The Deal of the Century". It included steep discounts of up to 25% or $100,000 in an effort to clear out inventory. In places like New Jersey and New York those discounts amounted to almost $150K.

And, it worked! They got contracts for 1700 homes and have deposits on 400 more. They've almost met their quarterly sales goals, all in one weekend.

There are a lot of analysts talking about how this proves there is pent up demand out there. Duh! Who didn't know that?! Buyers will buy at the right price! Of course they will!

Here's the problem. How many home sellers are in a position to reduce the sales price by 25%? And, if they are in a position to do so, will they? So far, the answer has clearly been "no". Most of the people I meet with about selling their homes these days don't have the kind of equity that would allow them to do that. They don't deal in volume and can't make it up by selling 100 houses!

There's an old saying in the real estate industry that "price cures everything." meaning that if I get the price of your house low enough it doesn't matter what's wrong with it. And the saying is true. Which is not to say that it should be your mantra in getting homes sold. In my opinion it usually makes much more sense to correct anything objectionable in a home, improve the look of the place and try that first. And, in this market, maybe you lower the price some AND do that work.

I can lower the price of your home to $1000 and I guarantee I will sell it and sell it quickly! That doesn't mean it's the best strategy.

But, heck, if you can discount your home 25% I absolutely believe it will get your home sold. I'm not holding my breath, though. I suspect the typical homeowner isn't going that low until the rush of foreclosures forces his or her hand!

Why Are Real Estate Agents so Upbeat?

Industry associations such as the National Association of REALTORS (NAR) or the National Association of Home Builders (NAHB) frequently put out public statements that appear to be nothing more than self-serving statements full of positive spin about what a great time this is to buy a house. And, let's be honest, that's exactly what a lot of them are. They have every reason to try and persuade people, especially now, that it's a great time to buy.

And, many real estate agents have been heard making similarly upbeat statements. I know that many of you think it's the same sort of self-serving claptrap!

Anybody who has been reading this blog for any length of time knows that I'm certainly no industry apologist. But I do believe that my fellow agents and I are often falsely maligned by such accusations.

Yes, there are agents who would say anything to get someone to buy a home. But I still maintain that they're in a minority.

Real estate agents, like other self-employed individuals, are by nature, optimists. Trust me, no one would go into this type of career, and take the kind of financial risks we take unless they were optimistic by nature. Real estate agents are, by nature, people who will automatically see the glass as half full. I personally, veer towards a three-quarters full view on a regular basis. Extreme optimism helps a lot in markets like this! It keeps people in this business who, if they had any sense at all, would go get a job that pays better, has actual benefits and more regular hours!

And, any savvy business person learns early on it never does your business any good to say things are anything but "great". Announcing to the world that your business is suffering is unlikely to attract more business! And, besides, any decent optimist knows things are turning around tomorrow!

So, give that absurdly optimistic real estate agent a little slack. If you're a seller, isn't it a little reassuring to hear a little optimism when there's so much gloom about the market everywhere you turn?

I've got to go take my happy pills now!

Half a Percentage Point

I do know that the correct phrasing for yesterday's rate cuts is "50 basis points" but let's face it, all us lay people are thinking about it as half a percentage point!

Whatever you want to call it, it's good news for buyers and sellers!

Let me explain that this is NOT a half percentage point cut in mortgage interest rates. While the Fed rate does impact mortgage interest rates it's not a direct one to one correlation. And, some of the Fed rate cut has been gradually factored in already.

That said, this will put downwards pressure on mortgage interest rates. Today's release of CPI numbers showing almost no inflationary pressure will help that as well.

So...now what do you do? If you're a potential buyer it's a great time to think about buying a house. You probably qualify for a little more than you did a week or two ago. There are unlikely to be much in the way of additional rate cuts in my opinion. If you're even semi serious it's time to talk to a mortgage lender and find out what you can afford to buy. Then go looking! But read my advice to sellers as well!

Sellers, good news at last! But...don't blow this! This is not the time to raise your price. In fact, I'd argue just the opposite is true. You're likely to get a brief uptick in buyers. Lower the price now and get the place sold. This new, small surge of buyers isn't likely to last long and the spring market is a very long time away! I believe pricing pressure will continue to push home prices down. The bulk of foreclosures haven't begun to hit the market here locally yet. And, as always, make sure your home is in tip top showing condition and is easy to show! Always!

Time to Step Up

Let's face it, things are not looking rosy in the real estate industry at the moment. If you're selling I'm not telling you anything you didn't already know! The August numbers showing another jump in inventory only reinforce the story.

There is no one place to point the finger of blame on how we got here. And, in the end, does it matter right now? It's time to figure out how to fix this mess!

While there have been lots of ideas floating around in the political realm and in the economic world of the Fed, I'd like to talk a little about what real estate agents can do to help.

I see plenty of seminars for first time home buyers, working on educating them and helping them buy their first house. There's nothing wrong with that, but I think a bigger area of need right now is education for the homeowner in trouble.

I'd like to see us offering classes, in partnership with mortgage companies and settlement companies, walking homeowners who have already missed payments or those with mortgages about to adjust, through their options. The vast majority of homeowners don't understand all the options available to them and the pluses and minuses associated with each one. We need to talk about short sales, deed in lieu of foreclosure and foreclosure.  People need to know what to expect with each step of the process.

We are in a unique position to help here. I realize that this is a for profit business. And I know this sounds like a seminar that's unlikely to produce much in the way of income. But I think we'd do our profession a service. I also think you'd build long-term income potential by helping people in a tight spot. Most of those people will eventually buy another house. If you're there when they need you, many of them will remember that.

When times are tough we can show our character and step up and do the right thing. It's good for everyone! And it can't hurt the reputation of real estate agents either!

Rappahannock and Prince William August Numbers

For those of you who wanted to see August numbers for Rappahannock and Prince William Counties:

Rappahannock

Prince William

MONTH	ACTIVE	NEW LISTINGS	NEW CONTRACTS	SOLD
02/06	3354	1443	637	513
03/06	4015	2078	780	699
04/06	4686	2000	681	608
05/06	5227	2042	709	661
06/06	5481	1884	647	732
07/06	5559	1616	537	567
08/06	5348	1410	529	530
09/06	5061	1267	446	470
10/06	4770	1222	479	434
11/06	4248	959	386	411
12/06	3695	710	463	457
01/07	3739	1336	474	391
02/07	3928	1172	488	360
03/07	4527	1764	508	418
04/07	5073	1668	471	427
05/07	5431	1698	509	432
06/07	5703	1539	454	456
07/07	Fauquier County Market Conditions, Culpeper County Market Conditions Can I just start by saying "ugh"? I've heard lots of comments over the last couple of weeks (from local real estate agents) about market improvements. This is all anecdotal evidence. And to be perfectly honest, I've seen a slight pick up in traffic on my listings as well. But clearly, based on August numbers, they're only looking right now! The exception is Culpeper County where there's a clear uptick in contracts written. The really bad news here is that inventory climbed in every single county I look at. Since we were already at all time highs, this is not a hopeful sign. Some of these are clearly foreclosures. And we are probably only on the leading edge of that wave right now. I also think we're starting to see some sellers who while they might not NEED to sell right now, know they will be selling within a year and have decided there's not likely to be a better time between now and then. And the likelihood is that they're right. For those of you who want to actually see the numbers, here is the chart, including history, for Culpeper: MONTH ACTIVE NEW LISTINGS NEW CONTRACTS SOLD 02/06 465 133 65 49 03/06 556 204 74 58 04/06 592 177 70 67 05/06 689 226 72 65 06/06 738 183 53 64 07/06 759 140 48 43 08/06 751 151 43 40 09/06 723 138 64 44 10/06 705 121 32 44 11/06 625 81 39 38 12/06 612 80 30 38 01/07 640 165 41 19 02/07 623 91 48 36 03/07 643 145 54 52 04/07 740 211 53 32 05/07 788 165 37 40 06/07 784 113 47 31 07/07 803 145 39 40 08/07 814 154 50 32 Here is the Fauquier chart MONTH ACTIVE NEW LISTINGS NEW CONTRACTS SOLD 02/06 489 149 64 54 03/06 610 296 91 61 04/06 692 254 94 77 05/06 732 237 107 87 06/06 781 218 78 90 07/06 816 190 62 54 08/06 823 206 79 79 09/06 794 162 62 61 10/06 821 197 51 Comments (0) :: Post A Comment! :: Permanent Link :: Email This Entry Will They or Won't They Date: Sep. 10, 2007 Tags: Fed Funds Rate Cut, Effect On Housing Market Of Fed Funds Rate Cut The news media in general is saturated with speculation about whether the Fed will raise interest rates at their next meeting on September 18th. I might as well join in and have some fun! A few weeks ago I'd have been among the minority, saying there would be no Fed rate cut on September 18th and probably not this year. But that's before the mortgage mess got even worse, the jobs report was abysmal and the stock market looked ready to jump off a bridge! The truth is the Fed doesn't want to cut rates. They remain more worried about inflation than about the housing market or the current employment situation. Their strong preference would be to leave the Fed Funds rate alone and rely on help elsewhere to help with specific economic trouble spots. But I believe that things have gotten so ugly that there's just too much pressure. I believe the Fed will bow to that pressure and cut interest rates a quarter point. There's still some question in my mind whether they'll do it on September 18th or try to hold out until the next meeting. But unless there's some significant good news very soon I suspect that the cut is probably coming sooner rather than later. The really interesting question is what will that do for all of us. Well, it will probably get some buyers who were sitting on the fence out the door and looking at homes. I believe we're already seeing some of that as there's evidence of increased traffic over the last couple of weeks. And, some of those people out looking will buy. I believe that 30-60 days from now you're going to see a little bit of a bump in sales. I'm not yet convinced that this will completely turn things around and that recovery is just around the corner. There is still a tremendous back log of inventory out there and somebody has to clear it. Buyers may be out shopping but if sellers don't start dropping prices I think the buyers will continue to sit and wait. It may be a game of chicken but buyers really do have an advantage in this version! OK, your turn to have some fun. What does your crystal ball show? Comments (0) :: Post A Comment! :: Permanent Link :: Email This Entry Celebrate! Date: Sep. 10, 2007 Tags: Fauquier County Real Estate, Culpeper County Real Estate, Bealton Virginia Homes For Sale, Centex Homes Sellers finally got some good news locally this week. Centex announced that they are cancelling plans to build Freedom Place in Bealeton. It was going to be a 350 unit development and it DEFINITELY was NOT needed! Listening to some of the comments from some county officials you'd think someone had made off with the family silver! This is another example of county officials paying more attention to big builders and developers than to their own local taxpayers. They should have been sending big bouquets of flowers to Centex along with a thank you note! The truth is that when the housing market turns around the big builders and developers will be back knocking on the county's door, wanting to do business. But right now, local builders can easily fill the demand for new construction, assuming there's still a gap after you consider all the unsold new construction still sitting here! And local homeowners who are trying to sell their homes in a miserably soft market definitely don't need more competition from builders! The announcement by Centex this week is a huge help for homeowners in both Fauquier and Culpeper counties. It protects the value of your home. Considering that we're still likely facing oodles of foreclosures hitting the market in the next year, this is very, very welcome news. You might want to get out those thank you notes and start writing! Comments (0) :: Post A Comment! :: Permanent Link :: Email This Entry Help For Homeowners in Trouble Date: Sep. 5, 2007 Tags: Where To Turn For Help, Foreclosure Prevention, Foreclosure Counseling Assistance There was a list of resources in Sunday's Washington Post aimed at homeowners who are facing a problem paying their mortgage. In case you missed it and need the information I wanted to share it with you here. This is certainly not an exhaustive list. If you know of other good resources please respond and add them! And if you don't need them today, say a little "thank you" prayer and tuck them away! None of us knows when it might be our turn! Tips on what to do when worried about foreclosure: Federal Trade Commission Fact Sheet "Mortgage Payments Sending You Reeling? Here's What to Do." Department of Housing and Urban Development's list of approved housing counseling agencies Freddie Mac's guide to avoiding foreclosure. NeighborWorks America's Center for Foreclosure Solutions The Homeownership Preservation Foundation's national housing hotline: 1-888-995-HOPE Some groups that can provide housing or information: Americans for Fairness in Lending Consumer Federation of America Neighborhood Assistance Corporation of America ACORN Housing National Community Reinvestment Coalition Center for Responsible Lending National Association of Consumer Advocates HomeFree-USA If you have any questions on any of these organizations or would like more personal guidance on your situation, please don't hestitate to call or e-mail. I'm here to help! Comments (1) :: Post A Comment! :: Permanent Link :: Email This Entry First Appearances Date: Sep. 4, 2007 Tags: Curb Appeal, Photography Real Estate I believe both real estate agents and consumers are still trying to figure out how technology is changing the way homes are bought and sold. I'm trying to stay on the leading edge of this stuff. But sometimes the most obvious things still surprise me and they definitely surprise my clients. Let's face it, they have better things to do with their days than to think about real estate every waking moment! A new one came up for clients this week. I'm talking to a lot more families who have already listed their house with someone else and are now looking for a new real estate agent. One of the things I always look at are the photographs of the house. It continues to astonish me how truly awful some of them are. We are used to thinking that the first impression that clients get is when they drive up to your house and walk through the front door. We've been talking for years about curb appeal. The fact is, first impressions are now made on the web. And by and large, they're the only chance you have to impress. When there are oodles and oodles of houses to look at, a buyer has to figure out how to narrow down their search. Once you get through the obvious criteria such as style of house, number of bedrooms, number of baths, size of lot, garage, basement, you get to the photographs pretty quickly. The thing about the photographs is that what makes a buyer steer away from you house may have nothing to do with the house itself. If the house looks like a mess, somewhere in the back of their mind is the idea that if they lived in that house they would be more likely to be messy. If the house looks crowded and/or cluttered they'll believe it will look the same when they live there. It doesn't have to be the truth. They may have one tenth the furniture you have. But the impression has been formed and it's enough to make them go on to the next house. It used to be that you ran around making the house look terrific when you knew someone was coming to look at it that day. Now, you'd better make sure it looks terrific on those photos that will be on the internet. "You never get a second chance to make a first impression" has never been more true! If that first, photographic, impression of your home on the internet doesn't wow them, they're never coming for a second look! Comments (0) :: Post A Comment! :: Permanent Link :: Email This Entry President Bush's Speech Date: Sep. 3, 2007 Tags: President Bush Speech Housing Mortgage Real Estate, Real Estate Market Conditions President Bush gave a speech last week on the mortgage mess. In case you missed it, here are the main points: 1. The FHA rules will be modified to allow them to offer loans to more of the families who need to refinance out of their current Adjustable Rate Mortgages (ARMS). 2. The President will sign the bill currently in Congress to eliminate federal income tax on debt forgiveness from mortgage companies. 3. The government will launch a foreclosure avoidance initiative aimed at allowing families in troubles to stay in their homes and find ways to refinance. 4. New regulations will be issues requiring mortgage brokers to fully disclose their fees and closing costs. 5. Those in the mortgage industry who have engaged in wrong doing are being investigated and will face consequences for their actions. To all those of you who are struggling, worrying and praying for some help, you didn't get much here. Let me explain what I mean by that. The main provision here is the first point saying the FHA will be modernized to enable them to help more homeowners refinance. It's a nice first step, but it will help only a tiny percentage of homeowners, at least in our area. Let's say you bought your home two years ago with zero down for $350,000 and it's now worth only $300,000 and on top of that your lender has pre-payment penalties that must be paid if you refinanced. In this fairly common scenario the proposed FHA program is likely to be useless to you. The big problem here is that you have no equity in your home. In fact, you actually have negative equity in your home. The new FHA-Secure program requires that you have at least 3 percent equity in your home. Unfortunately that means only a tiny fraction of homeowners will qualify. And, if they do qualify they already probably had other refinancing options. The second point is important and needs to get done and I've written about that proposal in this blog. But all the President did here was say he'd sign the bill when and if it gets to him. Again, not terribly helpful in the short term. The third option appears to primarily involve counseling. It's a good idea but, again, unlikely to have large scale impacts. I've yet to see the details on this one and I hope that when I do I'm proven wrong. Items four and five clearly are of no help! I do wish the President had said a little more and asked for a little help from the American people. I wish he'd added something like this: "My fellow Americans this is a time when we can all work together to help solve the problems before us. Our economy needs to stay strong because we've got important work to do, here at home and elsewhere in the world. In order to do that I'm announcing the following initiatives: 1. In all the reports about the mortgage problems some buyers may not have noticed that it's a great time to buy a home. Interest rates are near historic lows and prices are very attractive. I'm encouraging home buyers who have been sitting on the side lines to go ahead and buy that house. You'll be helping your fellow Americans and your country. I commit that my administration will do its part to ensure that you're making a good economic decision by working to keep the housing market and the credit markets strong. 2. Mortgage companies who deliberately defrauded borrowers will pay large fines and those fines will be used to help those they defrauded. The executives in charge of those companies will be held accountable as well. 3. Because real estate is a local issue I'm asking that each state governor appoint a task force to determine what other steps can be taken to assist homeowners who are in danger of foreclosure. The federal government is standing by to assist where it makes sense." 4. While the federal and state governments are looking for ways to help families in danger of losing their homes, let there be no doubt that this offer is not for those who were only looking to make a quick buck. The home in question must be the primary residence, not an investment property. I believe that these additional items would have made a serious difference. One of our biggest current problems is a huge backlog of inventory. The housing market can not recover as long as that's true. And the foreclosure problem isn't going away until the overall market conditions improve. By helping reassure potential buyers that the government is committed to keeping a close eye on the market and avoiding a complete melt down the mind set could start to change. It's the kind of leadership we need right now! Comments (0) :: Post A Comment! :: Permanent Link :: Email This Entry Page 1 of 1	Recent Posts Unbelievable! Teams Impact Fees Discount It and They Will Come Why Are Real Estate Agents so Upbeat? 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