Let me start by saying the views expressed in this blog are mine alone and in no way reflects the beliefs or opinions of my company or any others.  The two quotes I mention below are just two of several I have seen recently that offer a similar opinion on the tax credits and their effect on the real estate market.  Let me also say that my view may be skewed a bit as well, due to the fact that much of the work we do is representing first time buyers.  This post is a reflection of what I experience daily and what our clients tell us.  

In my previous post I pointed out some good news on the real estate front, among them the first time home buyer tax credit extension and expansion.  A few recent quotes around this issue include, "I am not applying the recent home-price rebound to the tax credit," said Cameron Findlay, chief economist at LendingTree, in a recent interview. "I don't think the tax credit makes as big an impact as people make it out to be, although it certainly motivates first-time buyers," he said. "If it expires, I don't think it would shake the housing market as much as some have predicted." And in a recent interview, Fox-Pitt Kelton analyst Robert Stevenson said the Senate's proposal for extending the $8,000 tax credit for new homebuyers will have a "limited impact" on home sales. Ok, so what do these analysts attribute to the fact that for 8 consecutive months (according to the National Association of REALTORS) housing sales have spiked?  If not the tax credit, then what is it?  Look, I know this is not all we need to continue the recovery, but from the perspective of someone on the street these measures absolutely make an impact!  Here's what NAR has to say:

Pending home sales rose again, marking eight consecutive monthly gains - the longest streak since measurement began in 2001, according to the National Association of Realtors®. Lawrence Yun, NAR chief economist, said the momentum is understandable. "What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," he said. "Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery."

We can argue the merits of tax credits all day, but the reality is 40% of first time buyers have said they only bought a home because of the credit!  40%!  If that does not say it all then what does?  Our recent experience tells me that with the looming deadline of the first time buyer tax credit has caused buyers to stop their search as they now understand they could not beat the deadline.  By extending it we will see a spike in activity as these buyers get back in the game and drive volume into 2010.  The proposed extension that will include a $6500 credit for move up buyers will also have an impact.  By including language that the move up buyer has had to have owned the home for at least 5 years, that effectively limits the number of potential buyers...and sellers...that are upside down.  Don't overlook what I said...sellers!  This credit will help drive fresh inventory that we desperately need to the market and create not one but two transaction sides.  This was a bold move by Congress...and a smart one.  I have blogged about this in the past, we have huge need for new inventory.  Most homes have multiple offers or are in the long process of getting short sale approval from the banks, so it has limited what buyers can select from.  Add in that more cash buyers are flooding the market and it makes it even more difficult for FHA and VA buyers to get offers accepted.  This is the reality of the market and varies drastically from what is reported.  You want the straight truth?  Talk to a busy REALTOR who is out in the trenches all day.

To say it's been a tough few years in real estate would be a huge understatement.  However in every market there is opportunity to be found and believe it or not people make money in every real estate market.  As an example, real estate brokers that handle foreclosure property are experiencing the best years of their careers.  Same with brokers that handle short sales.  Now, it's a lot more work and it's tough, but nonetheless they are busy.  While thinking about these types of things I started to wonder, "What is the good news in real estate?"  Here's what I came up with.

Conforming loan limits extended through 2010.   The California Association of REALTORS noted the U.S. Congress late yesterday passed a congressional resolution extending through 2010 the current conforming loan limits of $417,000 for most areas in the U.S. and $729,750 for high-cost areas, including many in California. President Obama is expected to sign the resolution today or tomorrow as part of a broader piece of budgetary legislation that will prevent a government shutdown. "There is no doubt that higher loan limits and the federal tax credit for first-time home buyers have helped stabilize California's housing market over the last year," said C.A.R. President James Liptak. "C.A.R. applauds our congressional representatives for their actions to extend the higher loan limits through 2010. They now should focus on making higher loan limits permanent."

C.A.R. calls for extension of federal tax credit.  The proposed extension AND expansion of this tax credit includes language that extends the closing deadline for first time buyers from November 30, 2009 to June 30th 2010. A buyer must be under contract by April 30th 2010 and close by June 30, 2010.  The new bill also includes a tax credit of up to $6500 for move up buyers that have been in their homes for at least 5 consecutive years over the past 8 years. According to The California Asscociation of REALTORS, nearly 40 percent of first-time buyers said they would not have purchased a home if the federal tax credit for first-time home buyers was not offered. This underscores the significance of the federal tax credit to the housing market's recovery in California.

 September sales rise...Median price declines.  The California Association of REALTORS reported that September sales were up 2.1 percent to a seasonally adjusted rate of 530,520 units on an annualized basis. The Unsold Inventory Index fell to 4.2 months in September, compared with 6.5 months in September 2008. The index estimates how long it would take to sell off the existing inventory. Fewer listings typically equates to more sales happening faster. The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3 percent decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1 percent compared with August's $292,960 median price. 

 Economy up, interest rates down.  In a recent statement, the Federal Reserve said that financial markets have improved, home sales have increased, household spending seems to be stabilizing and businesses have continued to make progress toward aligning inventory levels with sales. The Fed also said it will keep the benchmark federal funds rate at just zero to 0.25 percent and continue other policies that have helped to support mortgage lending and home sales. "Economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period," the Fed said. A recent loan quote on LendingTree.com listed a 30 year fixed FHA loan of $272,500 at an interest rate of 4.88%, an APR of 5.19%, and a monthly payment of $1556.  Good news for borrowers looking at historic rates and terms!

As real estate professionals we know very well that we wear a lot of hats.  The average real estate customer sees it as, "Sheesh...all you do is put up a sign and wait for a buyer!"  They don't see the marketing hat, or the showing hat, or the qualifying hat we all have to put on just to get a buyer through the door!  I have often said you could train a monkey to stick a sign in a yard with a toll free number on it, a buyer can call it and say, "I'll take it!"  But the monkey could not handle the details of closing that deal.

So you have the buyer on the hook and it's time to change hats...you are now...The Negotiator!  So Capone may not be the best example, but let's be honest...in this market you need leverage!  Heck, you may have to get downright heavy handed to even get a return phone call.  The fine art of negotiation has changed in this environment and you may find yourself getting down and dirty just to get the right person on the phone.  The point is you have to, "Go to the mattresses" to put your client's offer in the best position to win the deal!

At this point in the game it may come down to the fine art of seduction.  If the heavy handed approach is not working we need to try a little finesse.  You know, smooth things over, make some small talk, a little wink of the eye may go a long way.  Hey, we work on commission and I gotta do what I gotta do!

At times we may be confused as to just exactly what hat we should be wearing.  So we might have to try them all on at once and see what fits.  Am I the therapist, the babysitter, the mother?  We may be all of them at once.  Look, we know buyers get cold feet and we have to help them understand the next step.  So our job is to smooth things over, help them understand the big picture.  Everyone has doubts so we need to reassure them and maybe even coddle them a bit.  Hey, if the hat fits wear it!

Now we are talking!  This is a hat I love to put on.  It's all about the fun we get to have as we get to know our new client and maybe even become friends.  And that is one of the great benefits of real estate...we work with people and get to enjoy some great times and adventures with them.  It may not quite be like this: Elwood: It's 106 miles to Chicago, we got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses. Jake: Hit it.  But we can certainly enjoy the ride!

Which brings me to the Stingy Brim.  My favorite hat of all.  Why?  Well it let's me be me and just have fun and celebrate the small things in life.  Like meeting a new client, or enjoying my sons soccer game, or signing a nice commission check for an agent that just closed a big deal.  For more on that you can check out my video blog on The Many Hats We Wear here:  http://www.twitvid.com/ACCD4

New rules targeted primarily at mortgage lenders making higher-cost loans take effect Thursday, more than a year after they were finalized by the Federal Reserve. On Oct. 1, new rules adopted by the Federal Reserve will go into effect, requiring greater diligence on the part of mortgage lenders and brokers who make so-called high cost loans for borrowers with weak credit. The interest rates on these loans are at least 1.5 percentage points higher than the average prime mortgage rate.

The regulations - finalized in July 2008 but only now being put into effect - bar lenders from making a high-cost mortgage without verifying that a borrower could repay the loan in the conventional way, and not simply through a foreclosure sale. During the home lending boom from 2003 to 2006, subprime lenders would often offer loans without requiring borrowers to prove that they could make the monthly payments. With stated-income loans - or as some called them, "liar loans" - borrowers could easily fabricate annual income figures and even buy a home without a down payment.

The final rule adds four key protections for a newly defined category of "higher-priced mortgage loans" secured by a consumer's principal dwelling. For loans in this category, these protections will:

· Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice."

· Require creditors to verify the income and assets they rely upon to determine repayment ability.

· Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed.

• Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.

Now we are getting somewhere!  After several weeks of the dreaded, "Getting ready to do something" stage, we are now moving into the actual doing!  I love it when a plan comes together...sorry George Pepard aka John "Hannibal" Smith.  So what does one do when it's a buyers market and you have no inventory to sell?  We keep hearing about the suppossed release of thousands of new foreclosures and that the banks are trying to do the right thing...but how does that help The Smith Family that wants a new home now, has made 15 offers, and just can't get what they NEED...not want...but NEED?  You get proactive and go out and find the inventory...and that is exactly what we are doing.

I have met with the top agents in my company and we have brainstormed, discussed, thought out, and created a plan of attack that is not only working...but working fast!  I laid out an agressive plan to add 500 new listings to our books by the end of the year and we are out of the gate fast. The first week we have had nearly double digit listings, three great meetings with short sale negotiators, and a meeting with a solid contact for REO listings.  The best part is we can feel the momentum building.  Like I said, "I love it when a plan comes together!"

The cool things is that because we have some fantastic agents, with so much experience, it was just a matter of time before we broke out. But it's the enthusiasm, and responsibility for their own future and business that really excites me.  Whenever a group gets together to talk about issues and challenges, well having 50 heads is better than one, right?  The synergy and teamwork that has been created is just awesome and I can't wait to see what the 4th quarter holds for these exceptional people.  Going back to my first post on change, I mentioned that transparency and keeping our eye on the goal was a key factor in making this work.  I could not be more convinced of this now!  Just the simple act of putting it out there, the good and the bad, and then having an honest discussion about what needed to happen and asking these true professionals for their best ideas and help to bring it all together has been THE driving force behind making these changes not only possible, but DRAMATIC!

So, I have decided to end this series and focus on making sure we keep the ship headed in the right direction.  I would challenge any of you facing challenges and/or change to embrace the opportunity.  At the end of the day it's about doing what you love and seeing others be successful...and we all have it in us to make that change a reality!     

After posting part one of the Dramatic Changes series I did not realize exactly what I had gotten myself into!  So I apologize for taking so long to post Part 2.  Work first and all that!  At any rate, what a great couple of weeks it has been.  I have spent time with my staff, some of our other market leaders, and several of my agents here in California.  Truely an eye opening process and I want to thank all of you for sharing ideas and expressing your feelings and ideas.  With that said let's examine some of the changes and plans.

1.  First on the list was taking a hard look at our agent roster.  It is critical we have the right mix, sufficient coverage for our lead system, but most importantly is making sure the agents we have hired are really on borad with what we are trying to do.  The market and economy has taken a toll on the real estate industry and so we wanted to find out who was really here and who was not.  So we went through our roster, agent by agent, and made contact with everyone.  Sounds easy, but the reality is we had 300 agents spread out from San Diego to San Jose!  The end result is a leaner and meaner RealEstate.com in California.  Along with that are stricter hiring guidelines to insure we have the highest caliber agent.  So far so good, but is always hard to change the make up of an organization.   

2.  Next up is growing our listing inventory.  We have primarily represented buyers, and certainly a large portion of our company lead generation is on the buyer side.  We need to have more listings and so we set an agressive goal to add 500 listings by the end of the year...100 in each of our five main counties.  We scheduled a series of meetings and invited our top agents to attend and explore ideas around this.  What a great group and I'm blown away by the work ethic, team work and comittment to this project!  We have now targeted several areas to go after and we are already seeing some results wirth a few new listings in this week alone.  Stay tuned and be on the lookout for all those cool RealEstate.com signs!

3.  The last big change was getting everyone to feel ok with the changes!  I'm big on transparency and feel if everyone knows what the goals and expectations are, then we can all work toward a common end result.  So breaking down why these changes were happening and getting everyone to see that they are changes that will have a positive impact on all of us and our organization.  We will continue meeting with our top agents and exposing our new agents to what these great agents do each and everday to provide the highest level of service to our clients!  Stay tuned for more as we progress toward meeting these goals...it should be a fun and wild ride! 

So the trouble with making changes is that it's never easy.  And I don't mean the actual "change" part, but rather figuring out exactly what needs to be changed.  This is where having a great team comes in handy.  By asking one simple question, "What are your 3 or 4 major priorities for the rest of the year?",  I got some great ideas and strategies.  It's great to be able to see the big picture and have smart people helping you do it.  So we sat down, went through the goals, steps, action plans, and timelines and realized we had basically written a new business plan to take us through the rest of 2009.  And it excited me to see the enthusiasm it brought to my team!

Being a big proponent of transparency, I rolled out our game plan to our agents this week at our sales meetings.  First in San Diego, then Orange County and yesterday in LA/Inland Empire.  What a great response we got and in a weird way it helped me to see the light on a few things.  First, it was clear to see some people just don't get it.  And that makes one of our priorities easy...cut the dead weight and replace with better quality.  Second, to see the excitement in others and see them when the light goes on, well that's just plain refreshing!  You instantly recognize who the players are and who you need to spend time with.  They ask the tough questions, they want to know more, they contribute ideas, and they care...they really care about the direction we are going and the service we are trying to provide.

Over the next few weeks I'll post a little something about the path we are going down, the challenges and the triumphs in hopes that it will help you to overcome your fear of change.  For me, this will be part therapy and part diary and I know I will learn many lessons along the way.  The past few weeks have shown me that not only does change happen, but good positive change happens and quickly!  New technology, new ideas, and new energy create amazing things and we have to be willing to recognize that change will happen...whether we want it to or not.       

Spending a week in San Francisco at the Inman Connect Real Estate conference is both invigorating and exhausting!  Great ideas, innovation everywhere, presenter after presenter sharing ideas on everything from social media to branding.  Whoooo...breathe! 

So I thought I'd share just a few things today and then expand on a couple of the topics later in the week.  This gives you a chance to process, absorb and hopefully put it into perspective.  Now, Inman being a tech heavy event, I want to make sure my points are clear and easy for everyone to understand.  But know this...technology has changed the way we do business...across the board.  And think about it from the consumers eyes...how do they access information?  Where can they go to find out about you?  How do they use the data they gather?  It's all out tehre folks and you ahve to understand the dynamics behind the mission.  Here's what I learned from Alfred Lin, the CFO of Zappos.

If you are not familiar with Zappos, they are an online shoe and clothing company that has grown quickly and been recognized as the top company to work for by Fortune Magazine in their annual poll.  Hundreds of companies try to emulate the Zappos culture.  It was recently announced that they have been acquired by Amazon.com for a reported $900 Million plus!  During Al's discussion he noted several times that a big part of their success was transparency.  In other words they are open, honest and seek out employee's ideas and contributions.  Their strategy is based on the essence of, "Without happy employee's they would not have happy customers."  In fact his big idea was to "DELIVER HAPPINESS".  Think about what the customer see's, how they feel and ultimately what their experience is like.  Certainly something we can all take to heart.  Al also gave us 7 tips on branding:

1. Decide on your image.  This requires patience and commitment to the process and end result.
2. Consider what your core values are and exactly what you want your culture to be.  Your culture is your brand!
3. Commit to transparancy.  Be open and honest about everything.
4. Build relationships.  Take an interest in and know your customers.
5. Have a vision.  Always think bigger and more beautiful.
6. Build a team...Visionaries, Artists, and Scientists are needed to build a high quality team.
7. Think long term.  What is the 5 year plan?  10 year plan and exit strategy.

I will have more to come on other topics soon.  In the meantime, enjoy your week and think about how you can deliver some happiness to those around you!  

As the market heats up it is becoming more and more clear that buyers are having a tough time getting offers accepted.  One example is Brian Garlin.  Brian's wife is active duty military and was on deployment during much of the property search and escrow process.  After losing out on several multiple offer OVER-BIDS during their five month search, their offer was finally accepted.  Brian's agents, Gordon and Diane Kane with RealEstate.com, REALTORS, said, "It is tough to compete with cash investors when you have VA financing. VA is not doing any favors with such stringent standards on property condition which eliminates many first time buyers and properties priced for first time buyers.  With the downturn in prices, many first time buyers are jumping in only to find the process frustrating, to the point of giving up."  Fortunately for Brian and his family, they had true professionals like Gordon and Diane helping them to understand the market, what the expectation was, and how in the long run it would pay off.  Check out the video here:

http://www.10news.com/video/20198373/index.html

The silver lining of the market downturn has been the opportunity for first time buyers to purchase a home.  I blogged about this recently and explained also that first time buyers are buying for the right reasons.  They desire a home for their family, not an ATM machine to max out their equity to buy a boat, RV or other toy.  The $8000 first time buyer federal tax credit and the $10,000 California state credit for new construction purchases has certainly helped, but more needs to be done.  Many real estate insiders see these credits as band-aid fixes for a mortgage system that needs major overhauling.  Even after the influx of Housing Stimulus money many banks are still "frozen".  I'm not advocting throwing open the doors to the vault like they did previously, but make it easy for QUALIFIED BORROWERS to get loans.

Whenever the real estate market takes a turn, for better or worse, cottage industries seem to pop up.  In the current downturn it's all about the loan modification.  My personal belief is most of these companies are bottom feeders and taking advantage of people who are already in dire straights.  Add in the fact that loan modification rarely works, and that homeowners can do the work themselves, and well it's not hard to see why real estate professionals are at the bottom of the food chain when it comes to popularity.

There are several ways homeowners in California can protect themselves.  First, do your homework BEFORE paying anyone upfront fees.  Several resources exist online where you can read up on the current market.  The California Department of Real Estate (DRE) web site is a great place to learn about all things real estate.  The DRE even issued a Fraud Warning in March, 2009 about loan modification scams.  To view that warning and other resources visit the DRE nia Department of Real Estate's (DRE) web site at:

http://www.dre.ca.gov/pdf_docs/FraudWarningsCaDRE03_2009.pdf

http://www.dre.ca.gov/cons_adv_fees_alert.html   

Here you can check the license status of real estate professionals, visit other resources such as the FHA and Hope Alliance sites, and even see the latest information on Advance Fee Agreements.  In California a real estate broker must have an Advance Fee Agreement that clearly spells out what the broker will do for you.  They must also have a letter filed with the DRE stating they are performing loan modification services for an upfront fee.  They even have a list of brokers who have filed such a letter for your review.  Please note the following is prominently displayed on the DRE site:  The Department of Real Estate does not approve, endorse, recommend or make any representations about any of the agreements or their terms, or any aspect of a licensee's business activities. Consumers wishing to contract with a real estate broker for loan modification or any other similar or related services should carefully review the agreement(s) and consider obtaining independent advice before signing an agreement(s) or advancing any fees. Consumers should also consider comparing the services and fees offered by other licensed brokers on the list.

The bottomline is you have resources to tap into if you feel you have been taken advantage of.  Use them!  Educate and protect yourself on current trends and issues that can have huge consequences for you and your family.