Marston's Blog

Loan Limits Up, Interest Rates Down, Short Sales Sideways (Oh My!)

Marston Myers (Area Pro Realty - People's Choice) — Mon, 18 Feb 2008 20:14:06 -0500

Reality Check # 1

"The Feds have approved raising the conforming loan limits - soon it will be raining Buyers!" In a word WRONG! Yes the conforming loan limits appear to be heading up to around $725K or so in high cost areas (yes like CC County - this is driven on a county by county basis) BUT that does not mean that the banks will either agree to do so or they may add a surcharge onto a loan above the current $417K effectively negating the limit increase. Just because it is "conforming" does not mean the risk has been lowered! Even Fannie Mae and Freddie Mac do not have to play along! Plus this may be a TEMPORARY increase, about a year. So what does this mean today? To the Seller it means do not turn down a solid offer based on potential limit increases and more potential buyers. To the Buyer it means make your best deal now and do not delay thinking that if you wait you will get a much lower rate. There are simply too many "if's" involved. The banks may raise the rates even though the loan is "conforming". If you re-fi into the "new" rate you will pay fees and possibly penalties plus incur PMI if that takes you below 20% down payment.

Reality Check # 2

Over on one of my daily read consumer blog sites I keep seeing the same question posed by "Buyers". "How much lower than asking should I offer on a home in _________?" Other "Buyers" usually give a numerical answer such as 5% 10% etc. Gee (I say smugly to myself) if the house is already priced 20 percent over market than the Buyer will only end up paying 10% over market. Perhaps the home will not appraise at the Buyers accepted offer price and the Seller will simply refuse to sell at the appraised price. (This is not just hypothetical - trust me). Now the Buyer has wasted from a few days to a couple of weeks and possibly missed what they were really looking for. Buying Real Estate is not (no really, NOT) like standing at the Craps table yelling COME ON HARD 10! (I have personal experience from the Seed Foundation Casino night on that one!") A Buyer MUST evaluate all the data. As I am a major proponent of consumers having access to all the information, the caveat is that they must then have a professional filter and guide them through all the data. So please avoid the temptation to simply look at an asking price and assume that you can buy that home for _____ % lower. The rule of thumb (in a normal market) is that a properly priced home will sell within 3% of it's asking price. BTW - The same theory applies to WebMD.com. Check out all your symptoms, look at the treatments but talk to the Doc before anyone cuts!

Reality Check # 3

I got a call the other day on one of my listings from a Buyer who was out driving around. He wanted to know if the home was still available and some of the details. His next question was "is this a short sale or REO (bank owned foreclosure?") When my answer was "no, it is simply properly priced for this market" we were done talking. His assumption was that if the Sellers were not "in trouble" than this house could not possibly be a "deal". How wrong he was. Some sellers bought there homes a number of years ago - say 8-15 years and did not spend the next decade using their home like an ATM with nice window coverings. Some have actually paid them off! (Shocking but true - I have seen them!) These Sellers are selling now for the usual reasons (retiring, closer to kids etc.) and in some cases still doubling their money selling "below" market and the home is beautiful to boot! My point? Shorts and REO's are not always such a great deal! Many of them need major work and virtually all have deferred maintenance. The Banks do not make either of them easy, and may take WEEKS just to get an answer on your FULL PRICE offer (which they are under zero obligation to accept)!

If you are looking for a HOME - now is a great time to look. There are always great deals, but you need to LOOK and not ASSUME!

Is Realtor.com becoming irrelevent? Thoughts?

Marston Myers (Area Pro Realty - People's Choice) — Sat, 16 Feb 2008 14:59:57 -0500

As I have posted before, The Information Genie is out of the Bottle! it is no longer our job to hand out information, but to maximize the value of the informaiton available and put it in context for our clients, both Buyers and Sellers and then use our local knowledge regarding our own area to bring the transaction into sharp focus.

With that in mind and a purusal of Trulia.com, PropertyMaps.com, Craigslist.com, Redfin.com, PropertyShark.com, Zillow.com and others is the consumer getting value from Realtor.com? I had a discussion with a Gen X Buyer the other day who told me that Realtor.com is no longer relevent to her or her friends. They see Realtor.com as a glorified Sunday classified section. Glossy Pictures, glorius pronounements by agents with no shortage of verbiage to describe how wonderful every single home is and little else. Basically real estate porn. At least the monthly centerfolds tell you they like warm puppy kisses and long walks on the beach! (Of course I do not know that from first hand experience but Guys talk and you hear things..) The other sites mentioned above include demographics, school info, overlay maps from the Feds with Megan's Law houses (propertymaps.com) and other very useful information including estimated values and recent sales all in one place.

It is my experience as I share these sites and data with clients, I gain credibility. Those that don't seem to lose credibility because they seem to be hiding something, even by ommision. Even if the the client doesn't really care about a piece of data I have made it available. If I have to explain why it is faulty, I have gained credibility by being a true facilitator and guide.

Realtor.com forces us to buy back our own listings to be "featured" on their sites with very high fees. They then market to the public adding percieved value to their product forcing us (Realtors) to join and pay the fees because our Seller's demand the exposure caused by the advertising. (see Catch 22) These fees add to our costs of marketing a home that is then paid by the consumer as a commission. Neat trick!

If you are a Realtor, where do you think Realtor.com is going in the next couple of years? Will they grow or will we as a professional group simply move over to other venues as both we and our clients understand the value of Web 2.0?

If you are a Consumer, what do you want from the Real Estate internet community? You are here on AR so you obviously want more than pretty pictures. Where do you see YOUR Realtor in the BIG picture of gathering and filtering information that is relevant to YOU?

PC or MAC - I'm thinking of taking a bite of the Apple! Thoughts?

Marston Myers (Area Pro Realty - People's Choice) — Wed, 13 Feb 2008 10:15:42 -0500

It is just about time for a new laptop. I use my laptop as a full desktop replacement. Now I am very good with the PC platform (even considered the Alpha Geek in the office) I keep getting my eye drawn towards the new Apple Laptops. I use multiple monitors (only 2 for now), know I need 2GB of RAM, 50GB Hard Disk etc. I know that Office runs on Apple but any problems sending to the PC world as attachments. What about joining a workgroup in the office? Networking? WiFi?

My question is do you have any real world, in the trenchs, Real Estate experience with the newer Mac laptops? Do all the MLS platforms run on them? Is there a steep learning (unlearning) curve?

Thanks!

Voicemail Mayhem - Update your Phone NOW!

Marston Myers (Area Pro Realty - People's Choice) — Sat, 02 Feb 2008 14:57:06 -0500

I have been having trouble for the last couple of weeks or so getting my Voicemail in a timely fashion. Sometimes I get a VM right away, I hear it beep in. Other times it is HOURS between a client leaving a message and it showing up as a new VM.

I am on Verizon here in Northern California, and am very happy with the service. I called Tech support, 611 and explained my concern. I also said that my daughter who lives a couple of hours away (different set of towers etc) told me she has been having the same trouble.

The very helpful tech checked my phone and told me that they recommend updating the software (tower addresses etc) ONCE A MONTH! Who knew, at least not me...

So very simply hit * (star) 228, and as soon as the voice prompts start, simply hit the number 1 (one). This will update your phone to all the latest and greatest. We will soon see if this corrects my problem, I suspect it will.

Bottom line, no matter your carrier, check on how to update your software using a similar method and make it a recurring first of the month calendar event. None of us can afford to be without voicemail for hours or perhaps have other unknown issues but for a simple push of a button.

So you think you paid too much for your home? SO SUE ME!

Marston Myers (Area Pro Realty - People's Choice) — Wed, 30 Jan 2008 18:48:11 -0500

Out of San Diego comes the news that the first legal action for "buyers remorse" has been filed. Some of the details are sketchy but basically the Buyer's think that THEIR agent withheld information from them (due diligence) and/or the appraiser "manipulated the appraisal" was the term the plaintiffs used.

The legal standard will be the same as any other suit against an agent/Realtor/Broker i.e. did the agent "willfully, deliberately and with malicious intent" withhold information? Disclosure. If it can also be shown that the appraiser "manipulated the appraisal" now you have a much larger case against the Broker and Appraiser which we call "fraud" or even "constructive fraud". This will involve loss of licenses and LOTs of money. I do not believe this will stand based soley on other homes selling for 10% less in a given time frame. (If it does, than maybe I can sue by clients for more commission when the value goes up faster than we thought it would!)

Some basic questions I would ask. What comparable properties/statistics were you shown prior to submitting your offer? On what other data did you base your offer? What was the time frame of the other closed sales that you say sold much lower? Did you not initial the mediation and arbitration clauses of your purchase agreement? Was "your" agent a LOCAL agent that truly knew the area/neighborhood?

We use an Agency Disclosure Addendum (not a CAR form) that includes the verbiage that it is not the Broker's responsibility to "set the purchase price of the property". The Buyers agreed to the price based on some data, signed a contract, wrote a check, proceeded through their inspection period, obtained through their bank an appraisal of the property (albeit potentially after close of escrow per the suit) and moved in. It was not until they got a flyer on their door handle that they found out about houses closing for less just down the street. Obviously after they had closed on their property. Perhaps during their escrow period (length?) the market was beginning to turn and the other sellers saw that. There are dozens of variables, mostly all subjective.

When working with Buyers I keep copies, electronic or otherwise, of all the comparables, Market Analysis reports (CMA's), and other data I present to my clients. Of course I guide them on their offer but based on all available objective data. I also make numerous sites on the internet available to them. It is all public data. I link too many different sites from my website DiscoveryBayGuide. The sites I link to contain sold information as well as Megan's law map overlays (PropertyMaps.com), demographics (PropertyShark.com), and various models that pull value (Trulia.com and Zillow.com.) YES some are better than other BUT it is all data that should be looked at and analyzed. I will NEVER be in a position of a client telling someone that I did not give them all the information I had available. As a professional, it is my job to guide my clients through the vast amounts of data in determining value. At the very least when I give an absolute opinion I use data to justify that opinion.

Caveat Emptor (Let the Buyer Beware) Ask questions! Ask for data and comparables. Ask for justification for your Realtor's opinions of value. Look on the internet, it's all there. You (Buyer) have a "due diligence" duty as well as your Realtor per the Buyer Inspection Advisory attached to your Purchase Agreement.

Caveat Venditor (Let the Seller Beware) (Sellers/Brokers/Agents) Offer all the available data both directly and on your websites. See my post "The Information Genie has Left the Bottle". CC (NOT BCC) yourself on all CMA's sent to your clients and keep these electronically.

"Coverus Ubuttas" (C.Y.A.) Disclose, be smart, be informed.

Rent Vs. Buy - You mean FOREVER!!

Marston Myers (Area Pro Realty - People's Choice) — Mon, 28 Jan 2008 18:53:23 -0500

It is traditional wisdom and the mantra of the real estate industry that to BUY a home is your best long term financial move. In this turbulent market atmosphere it is time to review.

Why did you (want to) buy a home in the first place? When you think about buying a home do you analyze the home like a stock investment or do you focus on how it makes you feel. You know, your gut feeling. How many times have people said "We just fell in love with our home"? Not many people say the same thing about a stock pick!

Buying a home because you "love it" is fine! Just realize that is what you are doing. We have been programmed to buy a home, pay it off and live in it as long as we can or sell it and move into a larger home. Ownership conveys security. A warm fire on a cold night. A green lawn to play catch with our kids and pets. Marks on the kids doors as they grow. Growing equity as the home continues to appreciate. Security in our golden years.

How nice.....

According to these calculator links, it is possible that your best FINANCIAL investment is NOT to buy, but to rent - forever.

Go ahead, look at these calculators. If you rent for the rest of your life and invest the difference between renting and buying, you may be surprised at how much better off financially than you would be if you bought. Of course this is dependent on the specifics you plug into the calculator's and your ability and discipline to invest wisely and consistently. Look at this calculator from Ginne Mae (Federal Gov).

Next take a look at the New York Times calculator. Remember to be realistic and use historical home appreciation rates. Obviously 10% per year appreciation on a purchase cannot continue forever.

If you Rent, the fireplace is just as warm, the grass is just an green and the growth marks on the doors cover up with paint. As long as you are there it is your "home".

If you Buy after investigating all the options, you are doing so with the knowledge that you have looked at all sides of the question. In most cases, buying will prove to be better financial choice. Some will decide that for them, renting is best.

Do the math then search your heart.

There is a lot to be said for emotional security. Do not try to time the bottom of the market, you can't. If you find a home that you "fall in love with" AND you can afford it AND you intend to stay in the home for 5 years or more, Buy it!

Wait a minute, isn't that the smell of fresh apple pie cooling in the kitchen?

Marston

The 64 Million Dollar Question...

Marston Myers (Area Pro Realty - People's Choice) — Mon, 28 Jan 2008 18:15:38 -0500

In response to blog comments plus most every friend and client I come in contact with I want to give you my OPINION on where the prices are going in Discovery Bay as well a regionally. When to buy, how long to wait. That is the real question. Heres the deal. Right now, today, as we move into late winter I believe that the MARKET (as oppossed to the asking prices) is as soft as it going to get. What is happening is that the best houses are either selling now (at prices well below asking per the MLS data) or the sellers are simply taking them off the market and leaving them vacant or leasing them out for a year or two in order to minimize their negative cash flow while waiting for the market to "come back".

What I am trying to say is that NOW is the best time to OFFER what you believe is a fair price for the exact home you want. Use the tools I have given you on DiscoveryBayGuide, talk to your agent or call me (yes I do this for a living) and make your OFFER. If it is not accepted, your offer will be countered or simply rejected. But the offer was REAL, it was made in good faith with justifiable comps and placed in the Sellers hand. If the Seller counters your offer and YOU (Buyer) rejects their (Seller) counter offer, the offer was still made and the Seller knows that THEY rejected a real offer based on real information. Perhaps in a several weeks they will be awake in the middle of the night wondering if your offer is still available and call back (hopefully in the morning). In other words, by OFFERING now you are forcing the Seller to make a decision. Any good Realtor will justify their clients written offer with actual comps and current and foreseable market conditions, therefore the seller will not be "insulted".

They may even wonder why their agent didn't tell them this before....

The Information Genie has left the Bottle! Web 2.0

Marston Myers (Area Pro Realty - People's Choice) — Sat, 19 Jan 2008 19:06:38 -0500

Consumer Driven Information - Real Estate 2.0 or The Information Genie has Left the Bottle!

Information is Power. For years, Realtors have been the gatekeepers of information related to local properties. For a fee i.e. commission they utilized the information to bring buyers and sellers together. Over the last couple of years the Internet has transformed the Real Estate industry and (begun to) make it democratic and is starting to allow (not without major dissent from some of the gatekeepers) a truly capitalistic and consumer driven model. Why, for example, is your Realtor the only one that can find what price houses have sold for on your street, zip code, size within the past X weeks or months etc? I don't know either, as these are all public record.

I absolutely believe that you do need someone to help you analyze all the data as it relates to you and your situation and shapes that barrage of information with LOCAL knowledge and LOCAL experience. This is where a trusted LOCAL Realtor comes in.

I believe in providing consumers with all the information that is available and then helping them to make informed decisions regarding their needs. Thus DiscoveryBayGuide.com was born. Here you will find links to major information providers, links to on-line competitors and brick and mortar competitors that provide real information. Links to data providers that both Buyers and Sellers are looking at to make their own decisions are also provided. Some sites work very well, while some are so new (the bleeding edge of development that they are still a bit "buggy"). SOLD information TITLE and TRANSFER RECORD reports, FEMA maps, CRIME MAPS updated monthly, FORECLOSURE NOTICES. These are not separate websites but other "mash" models. I actually believe that I have a fiduciary duty to provide information to my potential clients and community at large and NOT follow a "don't ask, don't tell" policy. You will be able to see what is working and what is not working for Buyers and Sellers in this brave new world. You will even be able to build your own real CMA (comparative market analysis) on various sites to comp your own home for sale or one that you have seen listed on my site or elsewhere. This will also show you the complexity involved and some of the flaws in the system. Links to Blogs you never knew existed with great commentary on all things affecting Discovery Bay, CC County and the Marketplace. Come back often as we add new Blog contributors from the community. They will all be adding material during the month and as hot information becomes available. Real Estate is only one component of this site! Have a GREAT VIDEO from the area, send me the link and up it goes. Our interactive Calendar will provide information of COMMUNITY EVENTS looking FORWARD for at least the next 12 rolling months! Have an item to add to the CALENDAR, just send it in!

Why am I doing all this? Over the past 8 years in Discovery Bay and East CC County I have built a reputation as a trusted advisor in my community. I was awarded Best Realtor in Discovery Bay in 2006 by the members of the Community. I am now taking that to the next level on my own terms to benefit my community. I want to provide true value to my neighbors and friends in a way that I believe I am uniquely qualified to provide. I want to place the knowledge in the hands of the consumer (where it belongs) and then guide them as they make vital decisions affecting their lives. By providing all this for MY COMMUNITY, I will enable positive change in OUR COMMUNITY.

There is an old adage. Lead, Follow or Get out of the way. I choose to LEAD. For those still trying to put the genie back in the bottle, you have my sympathy!