Real Estate News

Slow Market Survival Guide: How to Survive in Today's Market

2008-08-28T17:24:00Z

Slow Market Survival Guide

How to Survive and Prosper in Today's Slow Real Estate Market

By: Ben Curry

The news has been full of Doom and Destruction concerning the housing market. Is this really what's going on in the U.S housing market? Real Estate Agents had it easy during the booming market. As long as you had buyers or listings, you were guaranteed to make money.

Homes closed quickly and banks were quick to accept sketchy loans. Borrowers with no job could buy a house. People with damaged credit could buy a home with little out of pocket. And agents in their first year in the business could make six figures easy.

Remember not so long ago, when you could make your fortune in real estate. It was nothing then to buy a home, wait a short while, and then sell it at a tidy profit. And then do it all over again. Investors and house flippers bought homes and flipped them for big bucks.

All the spec home builders were selling their homes before they were even finished. Builders Ire making $10,000 to $30,000 more if they waited to the end of construction before they sold because prices Ire going up so fast. Homebuyers were waiting in line to buy, and sending personal letters to homeowners who had a home for sale telling them how badly their family wanted their home. It seemed like everyone was buying at the same time.

So, what happened and why has everything seemed to have come sliding down. Ill, when home builders, investors, developers and banks saw the buyer frenzy get started they all jumped in at once. Many lowered their standards and let down their guard.

Home builders started building more spec homes than ever before and new builders Ire popping up everywhere wanting to get in on the money. Banks lowered their lending standards and lent money to anyone who could fog a mirror. Investors bought everything they could get their hands on and don't forget all the would-be house flippers looking to get rich. Developers built way too many new housing developments and communities.

They all made a fortune for a while until home sales started slowing down. But they could not stop because many new homes, developments and communities Ire halfway done and had to be finished. I'm sad to say it but now it's all catching up. Interest rates started creeping up again.

Banks and lenders lent money to home buyers with crazy rates and the buyers are defaulting on their loans. They are unable to refinance their homes to bail out of trouble. Banks are now investigating more before granting a loan. Buyers got scared and started to re-consider buying a home.

Builders who overbuilt are stuck with multiple homes and discounting them just to unload them. Developers have over developed and now there are is a flood of lots for sale. Many new subdivisions are not even completed. Investors and house flippers are freaking out and doing whatever they can to get rid of their homes. Not everyone will sell and already builders, developers, banks and investors have gone belly up. Despite all this sellers Ire still thinking that their house was worth more money than ever.

The housing market is controlled by supply and demand. When demand is high and supply is low it's a seller's market and Seller's are in control. That's what happened between 2003 and 2005. Now the reverse is true.

Supply is high and demand is low. We are in a buyer's market. Buyers are making the rules and have become very discriminating with what home their money buys. It's not uncommon to have a buyer look at a home and not like one thing and decide to buy a different home.

How do you get an unrealistic seller and uneasy buyer

to the closing table?

I don't have a magic pill answer to that question, but it is a lot of work. Us agents now have to figure out how to survive this slow market. What can I do to make it? How can I get our listings to sell? How do I make money in this market? I'll go through and answer some of these questions.

So sit down... relax... turn off the television and grab yourself a warm cup of coffee or a cold soda and find your favorite easy chair. I want you to relax and have your eyes and ears open because this is going to be one of the most important guides you may ever read.

Selling a home during the hot market didn't take any skill. Throw a buyer into your car and show them the few homes available on the market. Or, if you knew someone that needed to sell their home, when you got the listing it was almost like a guaranteed check. So thousands and thousands of brand new agents were able to make money in this business.

Today's market is a lot tougher

Buyers are scared that the home they buy today will be worth less tomorrow. Sellers still think their home is worth what comparable home used to sell for. And if they reduce their price, they want you to reduce your commission. So, how do I get homes sold?

If I look at selling a home from a very basic level, there are two things necessary to sell a home. A buyer that has the money to buy it, and a house that the buyer likes that is priced where they have enough money to buy it. There are buyers out there buying homes right now.

2007 will be the fifth highest year on record for existing homes sales. 2007 will be a better year for sales than 2002. The year 2002 was a record year for sales up to that date. There is business out there. We just have to go out and find it.

The Key is Motivated Buyers and Motivated Sellers

If a seller or buyer is motivated, they don't worry as much about the market. They want to sell their home or buy a home, come regardless. Let me explain. If a seller must sell their home to move to a different city for a new job, they will reduce the price on the home to sell it so they can move. See, a motivated seller just wants to sell the home and get moved on to the next one.

They might complain about a lower price, but they will accept it because they want the new job. If the motivating factor is stronger than the amount of money they are ‘'losing'' (come on, the market went up 38% from 2004 to 2006 and you are now still priced 19% higher than 2004) because of a lower price, they don't care as much.

Despite conventional wisdom that buyers are good in down markets, buyers are actually a worse source of business in a down market. Let me explain. Buyers take longer to make decisions, they "nibble" more, and they will eat away your net profit versus taking listings. The best way to make money in a down market is to list more homes at a much greater rate than during the boom. You are going to have to pre-qualify listings and sellers much more. Before even going out on a listing appointment, you must determine the seller's motivation. The reason is simple.

The only sellers who will sell in a down market are those who are motivated. Sellers that don't have to move and are overpriced will only whine and complain. They will call and ask; "You told us we could get $380,000 for our home. How come you haven't been able to find a buyer yet?" After hearing enough of this you will be pretty fed up with the constant blame.

I read somewhere that an expert said that people get stressed out most from one thing. Things they can't control. And we can't control buyers and which home they buy. It's not like I can put a gun to a buyer's head and tell him he must buy this home. And no amount of marketing will bring in the buyer who wants to pay more money for a home when he can buy the same home down the street for less.

How do I find Motivated Sellers?

There are several sources: FSBOs, Expired Listings, and Foreclosures. The key is to find sellers just like usual, but to determine how motivated they are before wasting time on them. For me, the absolute best source of new listings has been Expired Listings. When I realized what it took to survive this slow market, I focused most of my time on Expireds. Here's why.

Expireds are the easiest sellers to convert to a commission check. They have already listed with an agent (so they are willing to use an agent), they are motivated (they have already been on the market for 6 months), they aren't listing with the agent that promises the highest price, and they are willing to price the home right.

Now, there are lots of expireds to chase. And, they are very receptive to my sales message. Overall, it is much easier to grow your business and production today than it was during the boom. The trick is to know how to get the listings sold. That is what I learned how to do in 2006 and 2007, after the market had shifted. Prices were coming down, and you couldn't sell anything unless you asked for and got price reductions. I have actually put together a program that any agent can use to list expireds and get them sold.

Here are the three things you must be able to do to be successful with expireds:

Get Your foot in the door for a listing presentation. I find that easy to do with my Mail-Call Plan. I get some appointments right upfront by calling the expired the day the listing runs out. But, then I keep calling and mailing them for another month or so. All the other agents have disappeared and I am the only one left standing.
Once you get your foot in the door for a presentation, you've got to be able to sell them on listing with you. I have a Power Point Presentation that handles that. I shows them why they should not go with all the other agents, and how tough the market really is. Then, I show them why they need me and what I can do for them.
You got to get the listing priced to sell, before it expires on you. After much practice I have figured out how to do this. It's not too complicated, because the key is keeping in touch with the sellers and building trust.

I have put together a solid system that handles all of these items. It comes with solid letters you can send, a good script to call the expireds, a listing presentation that closes them, and an explanation of how to get price reductions. I have packaged all of these for sale as what I call my Real Estate Agent's Motivated Seller Gold Mine System. You can get more info on this system here www.cuttingedgerealtormagazine.com/Motivated_Seller_GoldMine.html.

Not all homes are affected by the current market. If your home is priced under $200,000 in our area you're in pretty good shape compared to the rest of the market. The Gen-Y, First Time Buyers in our area are still buying home. Gen-Y is the people born between 1978 and 1998. These are called ‘'Echo Boomers''. Their number is estimated at 78 million population. These are starting to buy their first homes. Buying your first home is very exciting. First time buyers are not as worried about price declines that scare off move up buyers.

Also, in big cities like New York and San Francisco the expensive homes close to the urban center are going up in price and demand. With the rich getting richer, demand for premium properties is high. The rich people in these cities are willing to pay top dollar to live close to work and in the city. With ‘'Urban Living'' becoming popular again these big city properties are popular again and the prices are rising.

See, There Is Still Plenty of Business Available

For The Agent That Works To Find It

If you think there isn't enough business, you'll never go out and get it. And if you aren't trying to get business, someone else is. Right now, monthly home sales are comparable to the years 2000 and 2001. So people are still buying homes. We simply have to find the buyers that are buying and the sellers that are selling.

A lot of agents think that they won't make any sales in December. I know of several agents who make December their most productive month in the year. How? They work just as hard looking for new business in December as they do during the busy months.

They work hard looking for business while all the other agents stop working. The other agents say to themselves; ‘'Oh, it's the holidays, no one is buying and nobody wants to sell. I might as well stay home''. There are still sales in December. A lot of re-locating buyers have to buy before the end of the year for their company's tax purposes. And a lot of listings will expire in December and the first of the year. Whoever lists those homes will have a great spring when the buyers buy. And you have little competition because no other realtor's are working to list and sell homes.

Set a date to stop work in December and a date to start working again in January. I always go back to work on January 2nd because that is the day to list a lot of expireds. If you work hard in January, you will have a great, profitable spring.

Few Agents Do a Decent Job of Chasing Expireds

Expired Listings are the easiest listings for you to take. But nobody is doing a good job listing them. Sure, some agents call them, but that doesn't always break thru the frustration they feel. Remember, they are frustrated because they have been on the market for 6 months and few buyers have looked at their home. My letters ring a cord with the expired seller. Then they educate the seller on marketing to sell a home. Basically in a very roundabout way it sells the expired seller on using me to sell their home.

For more info, go to my website (www.cuttingedgerealtormagazine.com) that enables us to list a lot of expireds. Using this system causes me to get the best priced, most saleable listings.

Here are a Few More Tips on Succeeding in a Slow Market

Don't hang around with negative real estate agents! 95% of agents are negative about the market, and they aren't going to buy a house from you. Spend the time instead on finding new buyers and sellers. Don't listen to their negativity. If you think the market is bad, you won't go out and work to find new business. And right now, the opportunity to find new business is better than ever. And I'm talking about new business that will make you money. Motivated sellers who will price their home to sell and be happy that you can sell their home.

Finding new business is easier in a Slow Market. It takes more work to get homes sold and buyers to buy in a slow market, but it is a lot easier to get the business in the door. Most agents don't succeed because they are unwilling to do what it takes to make sales in a slow market.

Here are the items you must do if you want to be successful in this slow market:

Ask your Listings for Price Reductions.
Don't take responsibility or blame for the "losses" that sellers have to live with when selling their home. Even though prices have declined by 15-20% from the peak, prices are still higher than in 2004. So compared to then, sellers have made money. I couldn't take credit for the increase in prices during the boom and I am sure not going to take the blame for the current decline.
Only spend time with the most motivated buyers that need to buy quickly. Buyer takes even more time to turn into a sale during a down market because they are much more picky and scared of making the wrong decision. They "nibble" more and suck up more of your time.
Look at the MLS numbers. For example, last month in my area, 24 homes sold. And 456 are on the market. Based on just the homes on the market, we have a 19 months supply of homes on the market. That is 456 divided by 24. That's a lot of homes for buyers to go thru before making a decision to buy. Which one do you think the buyers are going to buy, the most expensive homes or the ones that offer the most home for the money? Even worse, last month 53 homes came on the market. Ultimately, this means that buyers have a lot of choices. Only the competitively priced homes are going to sell. Break up the numbers just like that and show them to your sellers. That, more than anything else shows them the reality of the market, and how even Superman or some crazy marketing plan can't sell their home if it's overpriced.
Ask your listings to take offers that are lower than what the home appraises for based on past sales. If the sellers get mad that they can't get their price, then tell them; "A home is only worth what a buyer is willing to pay. If the US government collapsed and the US dollar wasn't worth anything, how much would your home be worth? Would it be worth what it appraises for? So, it's only worth what the person buying it from you is willing to pay you for it. No on has agreed to pay you what you are asking so far, right? It must be overpriced then.'' You just have to use common sense and explain it to them.
Find Motivated Buyers. These can be first time buyers who are more excited about buying a home than if they lose a little money. With "Generation Y" starting to buy homes there are a lot of first time buyers out there. Generation Y is the people born between 1978 and 1998. Their number is 78 Million people, which is just a little less than the Baby Boomers. These are a great source of buyers that will pay off.

You must follow a plan. Here are the parts of the plan that I follow:

First, have a plan for how much business you are going to do and how you are going to get it. For example, if you want to sell 50 homes next year that means you need to get 4 sales every month. Where and how are you going to get those sales? So many expireds converted? So many buyers? At the beginning of the year we must plan what we are going to do to be successful and hit our goals.
The second important thing to consider is blocking time. Blocking time is when you focus on completing just one item or task at a time. For example, when I handle closings I don't take phone calls, check e-mails, or let staff people interrupt me. This enables me to complete the task at hand much faster.
I schedule one afternoon a week for three hours to call my sellers, since my most profitable time spent is servicing my listings and getting price reductions. These cause my listings to sell, my sellers to get moved on with their lives, and me to make money. It takes literally hours of time to take a listing. Calling all fifteen plus at a time sellers takes less than two hours a week.
I spend my mornings on Lead Generation. First I get all my letters mailed out. Then I spend a little time cold calling the best expired listings. Then I finish up with Lead Follow Up to any and all leads that I need to call that day. Finally when I am finished with generating new business I return any calls I received that morning.
I usually take lunch when all the morning stuff is complete.
After Lunch I first prepare for any listing appointments I have.
Then I handle my closings. A lot of agents I know just jump from closing item to closing item. Before I start making any calls I write down the items that need to be done. For example: follow up on Walter's WDO, call the title attorney about the Daugherty Closing, call the lender for the King closing, etc. Then I decide which item is the most important and call on that one. I do not go to a new item until that one is complete. And, if I call on an item and can't get an answer I simply leave a message and forget about it until tomorrow (if we are a few days from closing then I will be more persistent.) Many agents spend all their time on closings. That is not in their best interest. I prefer to spend more time on Lead Generation and then I have more closings which means more are likely to close. No agent, no matter how skilled can save a closing if it is doomed to start with.
Finally, I go on any listings appointments I have or work with a buyer. When I am done with that, I handle anything else that needs to be done and go home. During a slow market we have to be more productive with our time. We must make sure that each moment of the day is used to service clients or bring in more business. There is a lot of opportunity and business out there for the agent that looks for it. There are frustrated sellers that want an agent that can sell their home and buyers that need reassurance from an agent that they are doing the right thing. You can be that agent! Now, let's go find some business.

Housing Bill To Provide Mortgage Relief...

2008-07-30T12:55:36Z

Bush signs housing bill to provide mortgage relief

By JENNIFER LOVEN, Associated Press Writer

WASHINGTON - President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.ipt"

Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.

"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.

It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.

The House passed the bill a week ago; the Senate voted Saturday to send it to the president.

Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.

But he withdrew that threat early last week, saying hurting homeowners could not wait - and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.

Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.

Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.

The bill takes several approaches to curing the ailing housing market.

It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.

The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.

The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

It goes far beyond addressing the current crisis, however.

The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.

The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.

The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.

Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

Fed plans new rules to protect future homebuyers

2008-07-08T15:04:16Z

Fed plans new rules to protect future homebuyers

By JEANNINE AVERSA, AP Economics Writer

WASHINGTON - The Federal Reserve will issue new rules next week aimed at protecting future homebuyers from dubious lending practices, its most sweeping response to a housing crisis that has propelled foreclosures to record highs.

Fed Chairman Ben Bernanke spoke of the much-awaited rules in a broader speech Tuesday about the challenges confronting policymakers in trying to stabilize a shaky U.S. financial system. To that end, Bernanke said the Fed may give squeezed Wall Street firms more time to tap the central bank's emergency loan program.

To prevent a repeat of the current mortgage mess, Bernanke said the Fed will adopt rules cracking down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers - those with spotty credit or low incomes - who were hardest hit by the housing and credit debacles.

The plan, which will be voted on at a Fed board meeting on Monday, would apply to new loans made by thousands of lenders of all types, including banks and brokers.

Under the proposal unveiled last December, the rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

"These new rules ... will address some of the problems that have surfaced in recent years in mortgage lending, especially high-cost mortgage lending," Bernanke said.

Consumer groups have complained that the proposed rules aren't strong enough, while mortgage lenders worry that they are too tough and could crimp customers' choices.

In an extraordinary action aimed at averting a financial catastrophe, the Fed in March agreed to let investment houses go to the Fed - on a temporary basis - for a quick, overnight source of cash. Those loan privileges, which are supposed to last through mid-September, are similar to those permanently afforded to commercial banks for years.

"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end should the current unusual and exigent circumstances continue to prevail in dealer funding markets," Bernanke said in prepared remarks to a mortgage-lending forum in Arlington, Va.

The Fed's decision to act - temporarily at least - as a lender of last resort for Wall Street firms was made after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that others might be in jeopardy. It was the broadest use of the Fed's lending powers since the 1930s.

Bear Stearns was eventually taken over by JPMorgan Chase & Co., with the Fed providing $28.82 billion in financial backing.

Those controversial decisions have drawn criticism from Democrats in Congress and elsewhere that the Fed is bailing out Wall Street and putting billions of taxpayer dollars at risk.

Bernanke, in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.

In his speech Tuesday, the Fed chief defended those actions anew. If the Fed didn't intervene, he said, problems in financial markets would have snowballed, imperiling the country.

"Allowing Bear Stearns to fail so abruptly at a time when the financial markets were already under considerable stress would likely have had extremely adverse implications for the financial system and for the broader economy," Bernanke said to the mortgage forum, organized by the Federal Deposit Insurance Corp.

The Fed's consideration of giving Wall Street firms more time to tap the Fed's emergency loan program is part of an ongoing effort by the central bank to bring back stability to fragile financial markets and help to bolster shaky confidence on the part of investors.

Policymakers - in the White House, in Congress and other federal agencies - will need to work together to come up with ways to make the U.S. financial system more resilient and stable and to prevent a repeat of the types of problems that brought about the end of Bear Stearns, an 85-year-old institution, Bernanke said.

Although those efforts are already under way and will be the focus of a House Financial Services Committee hearing Thursday, it will fall to the next president and next Congress to settle them. Both Bernanke and Treasury Secretary Henry Paulson are scheduled to testify at Thursday's hearing.

The Bush administration has proposed revamping the nation's financial regulatory structure. That plan would make the Fed an ubercop in charge of financial market stability. But the Fed would lose daily supervision of big banks. Bernanke said the Fed must maintain this power if it is to be an effective overseer of financial stability.

The Fed, which regulates banks, and the Securities and Exchange Commission, which oversees investment firms, announced an information-sharing agreement on Monday aimed at better detecting potential risks to the financial system.

Over the longer term, though, Congress may need to adopt legislation to bolster supervision of investment banks and other large securities dealers, Bernanke said.

Bernanke recommended that Congress give a regulator the authority to set standards for capital, liquidity holdings and risk management practices for the holding companies of the major investment banks. Currently, the SEC's oversight of these holding companies is based on a voluntary agreement between the SEC and those firms.

Six Secrets of Internet Home Buying

2008-06-27T20:54:01Z

Six Secrets of Internet Home Buying

By Luke Mullins Posted May 6, 2008

With the worst housing slump in a generation slashing home prices across the country, the dynamics of the market have shifted squarely in favor of buyers. And as the real estate industry grows increasingly Web-savvy, house hunters can now scour through neighborhoods, inspect front porches, and even peek inside bedrooms from the comfort of their desktops. But while this surge of new information can help you find that perfect home, it can also-at times-make the whole process overwhelming. Here are six ways to ensure that your online real estate search is as efficient and effective as possible.

(Gregor Schuster/Iconica/Getty Images)

Related News

1. Know when to say when. There are plenty of ways to waste time on the Internet. When it comes to home buying, searching through properties you admire-but can't afford-tops the list. So before you grab for that mouse, contact a lender and get preapproved for a mortgage. That way you'll know exactly what you can afford. "It's not difficult," says Elizabeth Deal, senior vice president of ICBA Mortgage, a subsidiary of the trade group Independent Community Bankers of America. After contacting a lender, prospective home buyers will typically be asked to provide information about their income and debts, Deal says. (In some cases, lenders will want to see a credit report as well.) From that information, the lender will be able to issue a letter outlining the price range that the buyer can afford. The whole process can take as little as a half-hour, Deal says.

2. Find the right tools... Real estate search engines are getting better and better. Pat Kitano, a cofounder of Domus Consulting Group, which works with real estate brokerage firms on technology marketing strategies, calls Trulia.com "the most complete national site." Kitano also recommends DotHomes. Jay Thompson, of Thompson's Realty in Arizona, suggests using Zillow.com or Realtor.com, the official site of the National Association of Realtors. Realtor.com "has probably the most listings of any national site," Thompson says. "Just about anything that is on a local [multiple listing service] will be on realtor.com." But rather than limit your search to national search engines, Thompson says, it's a good idea to visit the Web sites of real estate agents and brokers in the market that you are considering as well.

3. ...and put them in a belt. Instead of trying to pinpoint the one "best" search engine, home buyers should put together a list of resources and use them in tandem. After all, no single search engine can provide a complete picture of the entire housing market. But by using several as a group, prospective home buyers can get a much better look at the inventory. "A consumer has to go to multiple sites to figure out the whole landscape," Kitano says

4. Don't forget the indies. The majority of Internet search tools enable users to look through homes that are being sold through agents. But if you use those exclusively, you will miss the sizable chunk of homes being sold independently. "Agents list about 77 to 78 percent of the homes on the market, so there is another 22 to 23 percent of homes that 10 to 15 years ago people wouldn't be able to find," says Greg Healy, vice president of operations at ForSaleByOwner.com, which markets the homes of sellers who are looking to cut out the agent and save on commission. "Using sites that are not agent-related is really critical."

Joshua Dorkin, the founder and CEO of BiggerPockets.com, a real estate networking and information site, says that Craigslist is a great way to find non-agent-affiliated listings that might not show up on mainstream real estate search engines. "It's the classified powerhouse of the world now," Dorkin says.

5. Be alert. Some online real estate resources now offer e-mail alerts or RSS feeds that provide instant notification of new listings and other information of interest to prospective home buyers. Sign up! This is a great way to stay on top of the changing real estate market as your home search progresses. "Rather than actually pulling the information from a particular source, you want that information pushed to you," says Douglas de Jager, cofounder of DotHomes. "It saves you time."

6. Find a good blog. Few resources allow home buyers to take the pulse of the national and local markets like real estate blogs. "Real estate bloggers know in real time what is going on in the market," Kitano says. Like anything else on the Internet, some blogs are better than others. Shop around. Use your favorite search engine to find a couple of blogs that cover real estate in the markets you are interested in, bookmark them and click through them every day. (Pay special attention to the blogs with the most comments and postings.) By and large, the real estate blogging community understands the dynamics of today's housing market in the way few others do. They've emerged as an important voice on housing issues and a wonderful resource for prospective home buyers.

Investor Report: Section 1031

2008-06-08T14:18:04Z

Investor Report: Section 1031

by Kenneth R. Harney

Here's some great news for the thousands of real estate investors and brokers who use "Section 1031" (ten thirty-one) tax-deferred real exchanges every year: Congress has backed off its latest plan to narrow the definition of "like kind" for real estate swaps.

That's important because under current tax law, real estate investors have broad flexibility in choosing properties and structuring exchanges. For example, they can exchange a rental house for farmland, an apartment building for a commercial shopping strip. They can even exchange office buildings for mineral rights.

San Antonio Botanical Garden

Given the tight statutory timetables to choose qualified properties for exchanges, that flexibility can be crucial.

Other types of investment assets, by contrast, get much stricter treatment under the tax code -- and that difference in treatment opens the door to periodic attempts by green-eyeshade tax reformers on Capitol Hill to raise federal revenues by cutting down the number of eligible real estate exchanges.

If you could only swap a rental condo for another rental condo, cornfields for cornfields or commercial buildings for commercial buildings, there'd be a lot fewer exchanges every year -- and probably a lot more IRS audits of taxpayers to make sure the properties swapped met all the "like kind" requirements.

So when tax reformers tucked away a tiny, technical amendment deep inside the massive federal farm bill pending in Congress, they apparently hoped they could sneak it through with nobody looking. But instead, alarm bells went off among real estate lobbyists who get paid to read through thousand-page bills like the farm legislation to make sure there are no unpleasant surprises lurking for real estate.

That's precisely what they found. The tax reformers had inserted a provision that would have only affected only certain agricultural property exchanges by narrowing the window for what constitutes "like kind."

But any restriction on "like kind" for real estate would be the proverbial "camel's nose in the tent." It would open the door to still further revenue-driven restrictions that could seriously limit the utility of tax-deferred exchanges for all real estate owners.

Linda Goold, chief tax lobbyist for the National Association of Realtors and a leader in the effort to get the 1031 amendment dropped from the final legislation approved by Congress, confirmed the successful deletion. In comments to Realty Times earlier this week, she said:

"Yes, we killed that obnoxious farm bill 1031 provision. (And) it felt good, I might add."

Real estate investors nationwide should share that sentiment.

Published: June 6, 2008

Trust Deeds, Mortgages, Contracts, Warranty Deeds: What are They?

2008-05-27T00:06:24Z

Trust Deeds, Mortgages, Contracts, Warranty Deeds: What are They?

by Clifford Hockley

Charles was confused. He was trying to buy a four-plex, but just did not understand the real estate jargon.

Deeds, trust deed, contacts, mortgages all were words he thought he knew, but in the end really did not understand.

He was sitting in his real estate broker's office embarrassed that he did not understand, when the broker Mimi, said to him,"You know, the language of real estate can be very confusing. I have prepared a short summary of terms that might be helpful to you as we move forward with this transaction.

Instantly Charles glazed look disappeared. "You have a tool for me? Great!" he exclaimed. "I really am stymied by the words and I really like the four-plex and want to buy it."

Mimi pulled out her glossary and shared it with Charles.

"First of all there is a distinction to be made between financing instruments and ownership instruments," she commented.

Financing Instruments

Mortgage

A mortgage is a document created whereby one party pledges to another party as a security for obligations owed to that party. A promissory note is normally executed at the same time as a mortgage. The note creates the obligation to repay the loan in accordance with its terms and is secured by the mortgage. The elements essential to the existence of a mortgage are the obligation to pay (or perform) and a pledge of the property (as security) for that obligation. If foreclosed upon involves a judicial foreclosure

What's a trust deed?

A trust deed (also called a deed of trust) isn't like the other types of Deeds; It's a version of a mortgage, commonly used in some states (California, for example). It's not used to transfer property. And if foreclosed on involves a non-judicial foreclosure.

A trust deed transfers title of land to a "trustee," usually a trust or title company, which holds the land as security for a loan. When the loan is paid off, title is transferred to the borrower. The trustee has no powers unless the borrower defaults on the loan; then the trustee can sell the property and pay the lender back from the proceeds, without first going to court. After the property has been sold on the courthouse steps there may be a right of redemption, especially for homeowners.

Deficiency Judgments - Are permitted in Oregon.

A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage or deed of trust secures

Generally, a deficiency judgment may not be obtained using the non-judicial foreclosure process when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage or deed of trust secures. A deficiency judgment can be obtained in judicial foreclosure sale, unless the property had been abandoned for the preceding six (6) months prior to the foreclosure judgment or decree that would preclude any deficiency.

The Differences between a trust deed and a mortgage

The basic difference between the mortgage as a security instrument and a Deed of Trust is that in a Deed of Trust there are three parties involved, the borrower, the lender, and a trustee, whereas in a mortgage document there are only two parties involved, the borrower and the lender.

In a Deed of Trust, the borrower conveys title to a trustee who will hold title to the property for the benefit of the lender. The title remains in trust until the loan is paid. Often a title company, escrow company or bank, is listed as the trustee on the Deed of Trust. When the loan has been paid, the trustee will issue a release deed or trustee's reconveyance deed. This deed of reconveyance should be recorded at the county recorder's office, to make public notice that the loan has been paid off and that the lender's interest in the property has ended. Occasionally the recording of a reconveyance deed is forgotten. Typically this is discovered when the property is sold.

Another difference between a mortgage and a deed of trust is the manner in which foreclosure proceedings take place. State law will determine the method of foreclosure which must be used. Generally, the rules when using a Deed of Trust allow for a faster foreclosure time than with a judicial foreclosure required with a mortgage. Under a Deed of Trust, when the borrower defaults on the loan, the lender delivers the Deed of Trust to the trustee, who then is instructed to sell the property.

Right of redemption - After the foreclosure the person that owes the money (and owned the property) may have a right to redeem their property. This right is different in every state and must be researched on a case by case basis. A good resource for this is www.foreclosure.com.

Oregon for example, has a post-sale statutory right of redemption for judicial foreclosures, which would allow a party whose property has been foreclosed to reclaim that property 180 days after the sale by making payment in full of the sum of the unpaid loan plus costs and by submitting notice to the Sheriff not more than 30 and not less than 2 days in advance of the redemption.

Washington has a no post-sale statutory right of redemption for non-judicial foreclosures. For judicial foreclosures, there is a one-year right of redemption and a residential owner may remain in possession of the property during the redemption period.

When is seller financing used?

If a seller owns a property that is free and clear of any debt, or if the existing loan allows a "wrap" a seller might offer a buyer a Land Sales contract, also called an installment sales contract. This is easier and quicker than applying for a loan with a bank, or credit union. Typically there is no appraisal and no loan costs. In this financing the Seller of the property also becomes the banker.

Under a land sales contract, the seller retains the legal title to the property, while permitting the buyer to take possession of it for most purposes other than legal ownership. The sale price is typically amortized over 30 years and paid in periodic installments, and often includes a balloon payment after a mutually agreed upon time. At that time the loan is either paid off or refinanced.

When the full purchase price has been paid, the seller is obligated to deliver legal title to the property to the buyer. The legal status of land contracts varies from region to region, and the deal terms vary from contract to contract. There is more freedom to define payback terms and prepayment penalties for example in land sales contracts.

Ownership instruments

On the other hand we have Ownership deeds that convey the ownership of a property rather than financing. These deeds vary from state to state and application to application. Below summarized are the key generally accepted deeds.

General Warranty Deed

The seller or grantor conveys the property with certain covenants or warranties. The grantor is legally bound by these warranties. Whether expressly written into the deed, or implied by certain statutory words, basic warranties include:

Covenant of Seisin - Seisin means possession, and the grantor warrants that they own the property and have the legal right to convey it. (Seisin is the possession of such an estate in land as was anciently thought worthy to be held by a free man from Wikipedia)

Covenant against encumbrances -

The Grantor warrants that the property is free of any liens or encumbrances unless they're specifically stated in the deed. Covenant of quiet enjoyment-The buyer is guaranteed that the title will be good against third parties attempting to establish title to the property. Covenant of further assurance- The Grantor promises, in order to make the title good, they will deliver any document or instrument necessary.

The covenants or warranties in a general warranty deed do not cover just the period of ownership of this grantor.

They extend back to the origin of the property. Each grantor of a general warranty deed in the title chain would be liable for title problems before and through their ownership

Statutory warranty deed

The special warranty deed is not nearly as protective of the buyer as is the general warranty deed. The grantor of a special warranty deed conveys the property with two warranties: The grantor warrants that they have received title. The grantor warrants, unless noted specifically in the deed, that the property was not encumbered during their period of ownership.

The grantor of the special warranty deed, in effect, only warrants the title against their own actions or omissions. They warrant nothing prior to their taking title. If specifically stated in the deed, other warranties can be conveyed. Special warranty deeds are frequently used by executors and trustees.

For obvious reasons, most transfers are accomplished using the special warranty deed.

Quit claim deed

The quit claim deed is the least protective deed for the buyer. Basically, it only conveys whatever rights or interests the grantor has in the property. It provides no warranties or covenants to the buyer. If the grantor has good title, the quitclaim deed is as effective as a general warranty deed, but with none of the guarantees. Quitclaim deeds are frequently used to cure defects in the title. Quitclaim deeds are also frequently used to transfer property between family members also.

Bargain and sale deed

This deed does not warrant against any encumbrances. It does imply that the grantor holds title to the property. Since it does not warrant good title from the grantor, the grantee could be in trouble if title defects appear at a later date. This type of deed is used frequently in tax sales and for foreclosure actions. As with the special warranty deed, other warranties can be conveyed in a bargain and sale deed if they are specifically stated.

Sheriff's deed

A document giving ownership rights in property to a buyer at a sheriff's sale (a sale held by a sheriff to pay a court judgment against the owner of the property). A deed given at a sheriff's sale in the foreclosure of a mortgage. The giving of said deed begins a statutory redemption period.

A Trustee's deed

A trustee's deed is a deed to be executed by a person serving as a trustee in their appointed capacity. A trustee's deed is often used, for example, by a trustee in bankruptcy to sell real property of the debtor.

Conclusion

After Mimi finished her review of the glossary, Charles visibly relaxed. "Thank you Mimi," he murmured. "O.K. lets get down to business and write the offer. Please be sure to specify that we want to use a special warranty deed in our transaction and let's see if the seller will carry a land sales contract."

Mimi smiled to herself. It looked like she had gained Charlie's confidence and that they were well on their way to completing a real estate transaction with the writing of a purchase and sale agreement for the four-plex.

Published: May 22, 2008

Clifford A. Hockley is the President of Bluestone & Hockley Real Estate Services, one of the larger brokerage and property management companies in Portland, Oregon.

Real Estate Outlook: Index Says Positive Growth Underway

2008-04-24T12:13:37Z

PLAY VIDEO

Real Estate Outlook: Index Says Positive Growth Underway

by Kenneth R. Harney

You might not hear much about them on TV or in the papers, but there are some economic signs popping up right now that are -- at the VERY least -- encouraging for housing and real estate.

Take the gold standard of all forward indicators for the U.S. economy -- the Conference Board's "Index of Leading Indicators," which is based on a broad survey of industry data and predicts economic activity three to six months down the road.

The latest Conference Board index registered its first increase in six months. Now I know that all we hear about these days is recession: it's either already here or it's about to happen.

But the index suggests that there should be positive growth underway in the second half of the year, if not sooner.

Buttressing that forecast is a new report from the National Bureau of Economic Research which found that industrial production in the U.S. showed an unexpected uptick in March.

Here are some other noteworthy developments this past week:

Applications for mortgages to buy houses were up again, it was the second straight week, according to the Mortgage Bankers Association of America's national survey. Applications for FHA loans to buy houses jumped by three and a half percent -- and conventional purchase applications rose 2.1 percent.
The federal government reported that house prices nationwide stopped their slide between January and February -- and actually increased by six tenths of one percent.
Interest rates remain well under 6 percent, according to the Mortgage Bankers, with 30-year fixed rate loans last week averaging 5.74 percent and 15-year loans at 5.27 percent. The Federal Reserve is likely to knock another quarter percent off short term rates next week.
Freddie Mac announced plans to pump up to 15 billion dollars into the "jumbo conforming" loan market -- those are for high cost areas that really need some stimulus right now, like California.

Now, we're the first to admit that these positive-sounding economic developments are not ballgame-changers for real estate.

We've still got lots of housing inventory to sell before calling an end to the down cycle -- and total sales dipped 2 percent in March, according to the National Association of Realtors.

We're still dealing with a lack of confidence on the part of some consumers who are afraid that maybe prices still have a ways to fall.

But here's the point: It's undeniable that there are some glimmers out there that the underlying economy and financing marketplace, which after all are what support real estate activity, finally may be headed in a positive direction.

Published: April 24, 2008

Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation.

He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate

Selling Your Home In a Market Full of Foreclosures

2008-04-18T11:19:41Z

by Phoebe Chongchua

Take a look in just about any neighborhood and you may find the sign of distressed times. Foreclosures are on the rise and that can cause a lot of panic for sellers who aren't in the same financial crisis.

"We're in a very price-sensitive market and obviously in any buyers' market that's the case," says Chris Heller, President of The Heller Real Estate Group, Inc. at Keller Williams.

The increase of awareness about foreclosures is stimulating buyers to keep fishing and pushing for even lower prices for homes.

"So the sellers who are not in foreclosure or who are not in distress have to compete with those properties with the same pool of buyers. So there are two things that they can do; the two things are: pricing the property so it is competitively priced ... and they have to make sure that the property shows in absolute perfect condition," says Heller. He adds, "The more choices the buyer has, the more critical the showing condition."

Get clear about your market-length time. Having an accurate picture of how long you can have your home on the market will help you to price it correctly. Remember, that buyers aren't going to pay a premium price out of sympathy simply because the seller owes more on the mortgage. Price your home based on its worth, not on what you owe.

Work with an agent. Now more than ever, an experienced agent can help provide the advice and knowledge sellers need to get their home sold. Agents can also help to aggressively market your home so that it doesn't get lost in a sea of foreclosure homes.

Price your home correctly from the start.

All too often sellers end up taking a humble ride down and diminishing their possible gain. "They end up chasing the market down -- whether they realize it or not," says Heller. Price is critical. When determining price, don't just look at computer screen shots of homes that are selling in your neighborhood, get in the car and take a ride around to view the exterior and interior of properties that your home will be competing against -- that's exactly what buyers will do. Overpricing your home will cause it to sit on the market for an extended period. Eventually your listing will become stale and you may receive many lowball offers from buyers who are simply fishing to see how low you'll go. If a home is slightly underpriced you can generate more attention and improve your chances of getting a qualified offer.

Choose the best methods to promote your home. "Nowadays, advertising isn't really important because every buyer has access to almost complete information via the Internet -- everyone can find the properties," says Heller. "Advertising used to be important when buyers didn't have access to the property or a way of finding the property, but now buyers can do their own shopping, searching, and finding. They're going to do that based on their perception of value and how it's priced based on the other properties that they are looking at," explains Heller. However, that doesn't mean you shouldn't have virtual tours and lots of pictures loaded on websites that feature your home -- buyers like to preview before they actually see the home in person.

Make your home the best value "Buyers are going to look at all their options. We have to make it painfully obvious that we're the best value. It doesn't always mean the lowest price. It may mean a nicer house for the same price. It may mean having more goodies for the same price. It may mean having a lower price, but the buyers have the information and prices of what's available and they will choose the one that is the best value -- and we're either going to help sell the other homes or the other homes are going to help sell ours," says Heller.

Published: April 18, 2008

Phoebe is a writer, speaker, and author. She is the Director of Business Development for Quality Service Certification and a trainer in customer service for the real estate industry. She is a Realtor with The Guiltinan Group, a division of Prudential California Realty.

Her articles, feature stories, and columns appear in various publications including The Coast News, Del Mar Village Voice, and Rancho Santa Fe Review in San Diego. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Phoebe's writing is also featured in Donald Trump's book: The Best Real Estate Advice I Ever Received. She is the author of If the Trash Stinks, TAKE IT OUT!: 14 Worriless Principles for Your Success.

Contact Phoebe at 858.259.3646 or mail@phoebechongchua.com. Visit PhoebeChongchua.com for more information.

Implementation Of The Two Mortgage Provisions In The FHA and GSE Limits

2008-02-29T21:49:01Z

Date: February 14, 2008

RE: Implementation of the Two Mortgage Provisions in the Stimulus Bill

On February 13, 2008, the President signed the stimulus bill, H.R. 5140. This is the first in a series of memorandums discussing the implementation of the two mortgage related provisions included in the signed measure. The bill provides temporary increases to both the Federal Housing Administration (FHA) and government sponsored enterprises (GSE) mortgage limits until December 31, 2008. NAR will provide updated information on these provisions as it becomes available.

The new law makes seven temporary changes to the FHA and GSE loan limits:

• Raises the base FHA loan limit ("floor") to $271,050 (65 percent of the current GSE limit of $417,000),

• Sets the base GSE loan limit ("floor") at $417,000.

• Raises the maximum FHA loan limit from $362,750 to $729,750 (175 percent of the Fannie/Freddie (GSE) floor of $417,000)

• For all areas where the FHA limit exceeds $417,000, the GSE limit will be the same as the FHA limit. So, for example, if the FHA limit is $590,000, the GSE limit will also be $590,000.

• Increases the factor used to calculate FHA limits from 95 percent to 125 percent of area median sales price. Any area with an area median sales price above $216,840 will benefit from this change.

• Replaces the existing FHA ratios used to calculate maximum loan amounts for two-, three- and four-family units financed by FHA with the ratio used by Fannie Mae/Freddie Mac ratios to calculate their limits for two-, three- and four family unit properties.

Fannie Mae and Freddie Mac two-, three- and four family unit loan limits increase the same percentage that the single family limit increases. In 2006, for example, the GSE single family limit increased 15.95 percent and the mortgage limits for multiple units increased 15.95 percent. This change should result in significant increases in FHA limits for multi-unit properties. 2

• The Secretary of the US Department of Housing and Urban Development (HUD) will now have the discretion to raise the maximum FHA loan limit by an additional $100,000 for all properties (including 2-4 family units).

Implementation

HUD is required by the law to publish the new mortgage limits by March 14, 2008. These new limits will be effective for FHA immediately upon publication. NAR developed estimates of the temporary FHA and GSE single-family loan limits. This data can be found at http://www.realtor.org/GAPublic.nsf/files/new_loan_limits.pdf/$FILE/new_loan_limits.pdf

The NAR sent a letter to HUD on February 13, 2008, urging HUD to implement the limits as quickly as possible.

The implementation schedule is complicated by the fact that Fannie Mae and Freddie Mac will be using the same limits above $417,000 and Office of Federal Housing Enterprise Oversight (OFHEO) Director James B. Lockhart, III (Fannie and Freddie's regulator) noted in a recent speech that implementation could take up to three months with an additional month for partial enactment. Mr. Lockhart offered no explanation as to what partial enactment means. NAR sent a letter to OFHEO on February 13, 2008, urging immediate adoption of the new loan limits.

To date, Fannie Mae and Freddie Mac have not indicated their implementation plans once limits are established by OFHEO.

Eligible loans

FHA - The statute applies to "mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008". We believe this means any loan which receives underwriting approval before January 1, 2009.

GSE - The statute applies to "mortgages originated during the period beginning on July 1, 2007, and ending at the end of December 31, 2008". We believe this means any loan originated before January 1, 2009. This also means that GSE can buy loans that meet the new loan limits that were originated after June 30, 2007. Consumers with existing jumbo mortgages may want to consider refinancing under the new loan limits prior to January 1, 2009.

What if I don't think my loan limit accurately reflects the median home price?

FHA has a process by which the local area median loan limits may be challenged. If you do not believe the published loan limit accurately reflects 125 percent of your median home price, you may provide HUD with comparable home sales data 3

to make the case that the loan limit should be raised. NAR is currently creating a guide for REALTORS^{® on how to challenge your loan limit and it will be available shortly.}^{The opinions expressed below are from consultant Brian Chappelle, Partner, Potomac Partners 2127 S. Street N.W. Washington D.C. 20008. These are the consultants opinions and do not necessarily reflect the views of NAR. When can Lenders or Brokers start taking applications? (This portion of the memorandum is primarily for firms with a lending component to their organization.) While every client must make their own decision on this topic, below is an assessment of the risks.
Areas at the new base loan limit ("floor") of 65 percent of the current GSE limit ($417,000) = $271,050 Since this amount is established in the bill and the law requires that HUD implement the provision in 30 days, there appears to be minimal risk in taking applications at the higher base loan limit ("floor") immediately.
If you wanted to close a loan at the higher base limit prior to HUD's implementation of the statute, the primary risks are two-fold. 1) You would have to run the loan through the Total Scorecard again to remove the "Ineligible" message because of an excessive mortgage amount for the area. If the borrower's credit quality deteriorated in the interim, there could be an eligibility issue. You could underwrite the loan manually to avoid this issue and 2) the insurance endorsement process. A loan must be submitted within 60 days of closing. Otherwise, the lender is required to certify that the most recent payment was made in the current month (See Mortgagee Letter 2005-23 for FHA late endorsement requirements)
High cost areas (Above $271,050) The mortgage limit is determined by calculating 125 percent of the area median sales price which is determined at the county or metropolitan statistical area (MSA) level. We believe that HUD is likely to use the same methodology and data that were utilized for calculating the 2008 mortgage limits. However, although it has been less than 30 days since HUD published those limits, it is also possible that HUD could update its data. 4
Risk is Divided into Two Categories:
First, for areas with mortgage amounts below the current Fannie/Freddie mortgage limit ($417,000), we see less risk since HUD will be able to make its decision independently and implement these limits reasonably soon (i.e. less than the month) and will probably not implement any special underwriting requirements. The main issue is, of course, the calculation process for the maximum mortgage amount. In this regard, maximum loan amounts are increasing in many high cost areas because of the 125 percent of area median calculation (instead of 95 percent that was previously used). The issue is really how much. Second, for areas that will have maximum mortgage limits above the current Fannie/Freddie maximum limit, it is more complicated because of the impact on Fannie Mae and Freddie Mac, the role of their regulator (OFHEO) and possible special pricing and underwriting requirements for these loans in addition to the calculation issue discussed above. We believe there is much more uncertainty about the speed with which the new provisions will be implemented for loans above $417,000 particularly for conforming loans. However, pricing and underwriting issues would also apply for FHA loans. For example, since these loans will be available for a short period of time (until December 31, 2008), it is possible that Ginnie Mae would form special customized pools that could affect pricing.
NAR Contacts FHA Programs Regulatory Contact:
Jerome Nagy, jnagy@realtors.org, 202.383.1233
FHA Programs Legislative Contact:
Megan Booth, mbooth@realtors.org, 202.383.1222
GSE Programs Regulatory Contact:
Jeff Lischer, jlischer@realtors.org, 202.383.1117
GSE Programs Legislative Contact:
Lynn King, lking@realtors.org, 202.383.1156}

Unsigned Letter Accuses Agent Of Mortgage Fraud.

2008-02-06T00:45:23Z

Unsigned letter accuses agent of mortgage fraud

Real estate agent says it may be a rival using smear tactics.

By SUSAN TAYLOR MARTIN, Times Senior Correspondent

Published November 23, 2007

Susan Taylor Martin | Times] Neighbors say this Palm Harbor home, sold by real estate agent Lori Polin last year, turned into a "crack house," with several transients arrested on drug charges.

Lori Polin says her success is due to her hard work.

In 2006 - a year when most Tampa Bay real estate agents saw their business plummet - Lori Polin did remarkably well.

An agent for Re/Max International, Polin was honored at the company's convention in Atlanta last March with the Chairman's Club Award. That put her in an elite group - fewer than 1,400 of Re/Max's 120,000 agents worldwide - who had gross commissions last year of at least $500,000.

It was an impressive feat at a time when Florida home sales and prices were dropping dramatically. But now Polin, a member of the Re/Max Hall of Fame, is accused of owing at least some of her success to mortgage fraud.

In a letter to Re/Max's Denver headquarters, the Pinellas Realtor Organization and many of her fellow agents, an anonymous sender claims Polin "artificially inflated" the prices of nine homes in Tampa and North Pinellas so buyers could get larger loans.

Most of the houses were mortgaged for far more than the actual sales price, with the buyer or a third party pocketing the difference. Except for well-documented renovations, such "cash-back-at-closing" transactions can be a sign of mortgage fraud. In one transaction, $109,000 went to a construction cleanup company although there is no evidence of any construction or cleanup up since the run-down Clearwater house sold last year.

That house and the others listed by the anonymous sender are all now in foreclosure proceedings, contributing to a Florida foreclosure rate that is the nation's third highest.

"The buyers purchased multiple properties in short periods of time to avoid lenders detecting multiloan transactions and fraud," the letter charges. "Lori's contribution to this fraudulent activity has distorted property values and undermined neighborhoods."

The 48-year-old Polin said she is the innocent victim of a "smear campaign," which she says may have been started by a jealous rival.

"It's serious about these people going into foreclosure, but it has nothing to do with me except this Realtor trying to get me into trouble," Polin said. "All these deals were put together by attorneys and title companies and lenders. Nothing was inappropriate as far as what I did."

All of the transactions involved lawyer Allen Boyarksy, who bought Polin's own Oldsmar home. Polin said she didn't know that Boyarsky's law license had been suspended, that he had a history of drug arrests or that he had filed for bankruptcy protection, listing debts of $300,000.

Boyarsky, who recently started a marketing business with former Tampa Bay Buccaneer Lamar Thomas, didn't respond to requests for comment. In 2006, he was vice president of a mortgage company whose owner, Marcus Habeeb, recently closed all four of his Florida offices because mortgage fraud had become so rampant.

"The whole of Florida, all the transactions are funny," said Habeeb, who lives in New York. "All you got is fraud going on."

Some sketchy buyers

In 1997, Polin was making about $400 a month as a part-time visiting nurse. But after her divorce from her husband, a doctor, she began a real estate career that by 2003 was so successful Judge Nancy Moate agreed to a change in child support payments.

"There was a substantial increase in the wife's income," Moate said at a hearing. "Obviously she's done great."

Divorce files show Polin grossed about $120,000 in 2002, a time when Florida's real estate market was beginning to boom. But as the market began its steep slide in early 2006, she did even better.

Polin listed her house in the Multiple Listing Service, or MLS, at $544,900. But in January 2006, she raised the price to $610,000 and immediately got a contract from Boyarsky. He took out two loans, both co-signed by then-boss Habeeb.

Polin said Boyarsky paid more for the house because it included the furniture. She said she didn't question why an apparently successful lawyer needed someone to co-sign a loan.

"He brought his wife and his baby, he came in a suit and tie," Polin said. "Nothing seemed out of line."

For the rest of 2006, she continued to work with Boyarsky, who told her he represented investors. Among the deals was one involving a Tampa house whose owners had moved to Central Florida.

Iris Alfonso said her house had been on the market for months when Polin asked if she would accept a reduced price of $449,900. So Alfonso was surprised to find a contract price of $540,000.

She was surprised, too, that the buyer, Robert McCauley, agreed to let her sister stay on as a tenant at the same low rent she had been paying.

"It did make us wonder if something was going on here," Alfonso said. "Why would he be willing to take such a small amount of rent when his loan was so much higher than ours had been?"

As foreclosure notices arrived, Alfonso's brother-in-law met McCauley at a club and handed them over. McCauley, 30, was expensively dressed and driving a Cadillac Escalade. But after his arrest last July on a cocaine charge, he applied for a public defender.

He listed zero income and debts totaling $2.4-million.

Polin also was the agent on five houses bought by a young Central Florida woman and two homes sold to an Illinois man, Todd Kittel. Prices on five of the six houses were raised substantially just before they went under contract, and all six were financed for 100 percent of the new, higher amount.

One of the houses - in Palm Harbor - had been reduced to $335,000 in November 2006. Two weeks later, Polin increased the price to $425,000 and immediately got a contract from Kittel.

Utilities records show the water was turned on in Allen Boyarsky's name. Neither he nor Kittel ever moved into the house, which became a crash pad for convicted drug users and their pit bulls.

"It was the scourge of the neighborhood," said Cynthia Conciatu, who lives next door to the now-vacant house.

Kittel, whose other property is also in foreclosure, had only this comment: "I've hired a lawyer and I'm getting my life back together."

Polin defends prices

Reaction to the letter alleging Polin's involvement in possible mortgage fraud has varied.

Re/Max Mutual Realty of Clearwater, where Polin then worked, declined to comment. The Pinellas Realtor Organization said it doesn't act on anonymous complaints. But Re/Max International is "very concerned" about the allegations and is investigating, a spokesman said.

Polin, now with a Re/Max office near her Tampa home, said she could not discuss specific sales because of client confidentiality. But she said she did nothing illegal or improper by increasing prices.

"Prices are always raised and lowered in the MLS," she said. "In fact, there's a phenomenon where if you're not getting bites, you raise the price and you start getting bites."

But a prominent Pinellas real estate broker and appraiser questions such large price increases.

"People don't raise prices $100,000 in this market," said Jack Bowman, past chairman of a state board that has investigated mortgage fraud. "The market began to go south about September of 2005 and anybody who's any good knew it was going. (A price increase) is a red flag."

Polin said she stopped doing business with Boyarsky after the Pinellas Realtor Organization warned agents to be wary of 100 percent financing deals in which borrowers or third parties got cash from the loans. "If he brought clients I said, 'No, go elsewhere."'

Boyarsky worked for American Heritage Mortgage Group until the owner, Habeeb, fired him last year. "I can't prove these things, but I knew prices were escalated and money was passing hands that shouldn't be passing hands," Habeeb said.

Jail records show Boyarsky, 50, was still in the mortgage business as of last February when he was arrested on a cocaine charge. He recently moved out of the house - now in foreclosure - that he bought from Polin.

As for Polin, she insists her success is due solely to hard work. And she doesn't think it's a reflection on her that she sold so many houses to people who defaulted.

"How would I know what the intent of these buyers were? Look at the thousands of foreclosures out there. You can't say Realtors are responsible for that."

Times researchers Carolyn Edds and Caryn Baird contributed to this report. Susan Taylor Martin can be contacted at susan@sptimes.com.

[Last modified November 23, 2007, 00:06:56]

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Comments on this article

by Jane	11/29/07 01:28 PM
There are over 5,000 plus Realtors in Pinellas County that do not do business this way. Do not let Lori's business practices steer you away from using a Realtor. There are always a few bad apples in any business

by Julia	11/28/07 10:06 PM
As a Realtor in Pinellas County, this story disgusts me. Innoncent until proven guilty -but this stinks to high heaven. What comes around, goes around -deservedly.This makes me sad because it just hurts us Realtors that know the meaning of integrity.

by Joe	11/28/07 08:37 PM
Hey, this looks like another one for the web site www.remaxlawsuits.com - check it out!

by Lucy	11/28/07 04:44 PM
If Lori did not know this was wrong raising sales prices then she does not know her job.... She should not be allowed to be in Real Estate

by Sean	11/28/07 04:01 PM
I live next door to 1 of the properties and another 1 is just down the street.What a horrible feeling. Do Realtors such as Lori not care about our children and safety. I can see if it was just 1 but 9, curious does she live next to a foreclosure

by Jeremy	11/28/07 03:35 PM
why did the article not mention the appraiser or mortgage broker or title company involved? did Lori represent the buyer? no? she represented the seller. why whould she have to check into the background of the buyer if she was not representing them

by Mike	11/27/07 01:12 PM
Shame on you St. Pete Times. An unsigned letter? Be real. And where in your article does it state the law broken? Who at the Times is freinds with this "anonymous" writer? Look at the grammer in some of the comments. I'll NEVER buy your paper.

by Kelly	11/27/07 12:52 PM
Re/Max Mutual declined to comment why? Why did they not back her and make a statement that fraud was not an issue on the transactions in question? Why is Lori not employed by Re/Max Mutual anymore? Maybe they know raising the price 100k is fraud

by stan	11/27/07 11:06 AM
Hey I know Lori.. as a ethical Mortgage Broker I can tell you that these deals were common..It was lender greed that made these scams so easy to finance. Lori was just an innocent party fooled by a a network of dishonest people.

by Cameron	11/27/07 10:46 AM
As a Realtor I know that every listing is taken in the brokers name....I'm sure this agent spoke to her broker and the company Atty. before proceeding with these transactions. I think the Times failed to mention this FACT!Do the research before story

by Sam	11/26/07 11:48 PM
Here in Lodi, 15 miles North of Stockton,CA - the foreclosure- capital of the USA 1 of 22 houses we see the same games played by Realtors, loan officers and appraisers. Now I understand why buyers are paying 100K above the MLS. It was relisted!

by Kari	11/26/07 07:03 PM
I commend the person who sent that letter, they have created awareness. Lori may feel it is a jealous rival but it was the right thing, bottom line if Lori had not raised the sale prices that would have been that many less foreclosures for Florida

by TV	11/26/07 05:45 PM
This is a class A type of Real Estate Fraud Ms. Polin knew exactly what was going on. Real Estate 101 never increase the sales price huge RED FLAG. She should take all the money she earned and get a good lawyer/ AKA Birthday Cake!

by L	11/26/07 12:48 PM
The question is "Was she paid comission on 500K or 600K?" If she did nothing wrong why wasn't she paid on the inflated price?

by Marianne	11/25/07 09:21 PM
The system does not work. We put a complaint in with the State about a fraudelent realtor we used. We gave them all the evidence too. The State came back and said there was no probable cause to bring charges. So the fraud will continue!

by Leni	11/25/07 07:55 PM
We know this person. We know she was fraudulent realtor for quite some time know..Bad bad lady!! Should g to prison!!

by John	11/24/07 07:02 PM
This woman is clearly a fraud and it is unbelievable that for her to say ""How would I know what the intent of these buyers were?" In my view, she is a liar who should be jailed for her action.

by Jim	11/23/07 10:26 PM
COME ON NOW FOLKS, WHAT DO YOU EXPECT LIVING IN FLORIDA. WE ARE THE #1 FOR PREDATORY MORTGAGE FRAUD 2007, AND WE ARE #3 FOR FORECLOSURES. OUR STATE OFFICALS NEED TO PUT A STOP TO THIS AND SEND EVERYONE MESSAGES,SERIOUS JAIL TIME. ENOUGH ALREADY FL!!!

by Tony	11/23/07 05:25 PM
She knows she was wrong, we all know she was wrong, but it will be very hard to proove. As usual the honest realtor will suffer--if there are any left, that is.

by Anthony	11/23/07 05:07 PM
Until it is no longer possible for real estate agents to misrepresent purchases and manipulate the MLS, we will continue to have these problems. Many agents cannot even spell simple words in their adds but can talk people into enormous debt.

by JR	11/23/07 12:01 PM
If the appraiser does their job properly, past MLS price data is included in the appraisal, so it's ultimately up to the lender and appraiser on acceptable value. Assuming full disclosure and ethics, of course.

by Teeny	11/23/07 11:42 AM
If they would just ask how many people have been taken by this scam they would not have enough computer space to record the deluge of responses. It is a shame that folks like this will look down their noses at street level thieves

by brad	11/23/07 09:56 AM
This is a classic relisting scam and is very easy to identify if the appraiser is showing the relisting. Everyone involved should be brought up on charges and never allowed in the real estate industry again.

by Alex	11/23/07 09:41 AM
Fraud? In Florida?? You gotta be kidding! Next thing you know we'll find out about inept politicians, rob-you-blind insurance rates and DCF losing kids and cutting back services. Say it ain't so!

by Frank	11/23/07 08:53 AM
I thought it was AGAINST good journalistic policy to give space to letters written anonymously? Anyone can slander anyone if they do not identify themselves. Polin may be dishonest, but the Times is "feeding" the slander. WHY?

by James	11/23/07 08:38 AM
This type of behavior is rampant among realtors in Pinellas. Why are there not more people prosecuted for mortgage fraud. I know several cases like this. Who do I report them to?

by Todd	11/23/07 07:50 AM
Come on, any Realtor who reads this will immediately think "fraud"! Raising the list price by $100K? Sorry, no one other than Ms. Polin is using that tactic to try to get a legitimate sale. It's Realtors like her that give the rest of us a bad name!

by Joseph	11/23/07 07:31 AM
Sounds like Lori needs to find a lawyer soon to represent her in what is obvious a scam and from the looks of it was a big player.

Realtor Caught in Cash-Back-at-Closing's Crosshairs

2008-02-01T09:14:48Z

Realtor Caught in Cash-Back-at-Closing's Crosshairs

by Ralph Roberts

According to Realtor Lori Polin, she was totally unaware that what she was involved with consisted of real estate and mortgage fraud. If ignorance of the law was an appropriate defense, she could be off the hook. Unfortunately it's not. According to a recent story in the St. Petersburg Times entitled "Unsigned letter accuses agent of mortgage fraud," Polin was allegedly involved in classic cash back at closing schemes.

Here's how a cash back at closing scheme works: The buyer pays more for a property than it's worth, and the seller agrees to kick back the surplus cash to the buyer at the closing. On its surface, cash back at closing seems to benefit everyone involved. The buyer pockets some extra cash. The seller unloads his house at or near the asking price. The real estate agent gets a bigger commission. The loan officer chalks up another successful loan. And the lender stands to earn more interest over the life of the loan. Everybody wins.

Or so it seems.

Unfortunately, as with most deals that seem too good to be true, cash back at closing schemes are just another way of scamming someone -- in this case, the lender, who's fooled into loaning more money than the collateral used to secure that loan is worth. If the borrower defaults on the loan (which is almost a sure thing in cash back at closing schemes), then the lender can't recover the money by selling the property.

Cash back at closing also:

Inflates housing values, making housing less affordable
Artificially raises property taxes
Hurts honest real estate agents because they lose business to dishonest agents who offer cash back deals
Stimulates foreclosure and destroys neighborhoods that begin to buckle when homeowners default on the inflated loans

With cash back at closing, what may have seemed like a win-win situation leaves plenty of losers in its wake.

According to an anonymous letter distributed to the press and many of Polin's colleagues, Polin artificially inflated the prices of nine homes in Tampa and North Pinellas, so buyers could get larger loans. In most cases, the homes were mortgaged for approximately $100,000 more than their true market value, and if the allegations prove true, then these transactions definitely fall into the category of cash back at closing. The perpetrators need to be brought to justice. The question is, did Polin do anything wrong?

Polin firmly believes she is innocent, because "All these deals were put together by attorneys and title companies and lenders." All she did was list and sell the homes. Some of the evidence, however, makes it look as though Polin could not possibly be unaware of what was going on.

In the case of Iris Alfonso, for example, Alfonso's house had been on the market for several months when Polin allegedly asked if she would accept a reduced price of $449,900. Shortly thereafter, Alfonso received a purchase contract offering her $540,000 for her home. Why would any buyer offer a seller $90,100 more than the seller was willing to accept? The only possible answer is cash back at closing.

According to Polin, she simply listed the homes for sale. What the buyer and seller agree to has nothing to do with her, according to Polin. If the reported incidents did occur, a law was clearly broken. As the FBI clearly states:

"It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution."

Whether or not Polin broke the law and is guilty of conspiring to commit fraud is up to law enforcement and the courts to decide. Whatever the outcome, this case highlights the need for real estate and mortgage fraud training in the real estate and mortgage lending industries. Attorneys and law enforcement agencies could also benefit from such training programs. Time and time again, I hear about professionals who should know better becoming involved in fraudulent transactions. Some are willing accomplices or even ringleaders. Others are unwilling accomplices or victims who are simply abused by savvy con artists. By receiving the proper training, these professionals can help defend themselves, their clients, and the housing industry from those who are committed to destroying the American Dream of homeownership.

Published: February 1, 2008

Once dubbed by TIME Magazine "the best-selling REALTOR® in America," Ralph R. Roberts, CRS, GRI is an award-winning and internationally recognized real estate agent, author, coach, and speaker.

As president and CEO of Ralph Roberts Realty, Ralph has personally helped thousands of consumers realize their dream of homeownership. While selling over 10,000 homes (and buying and selling over 3,000 investment properties) throughout his 30-year career, Ralph has made the time to mentor and coach hundreds of professionals in real estate, sales, and a host of other fields. Ralph is a recognized authority on Real Estate and Mortgage Fraud; Residential Real Estate; Personal Salesmanship; and, Sales Force and Office Management, Motivation, and Design.

Ralph's numerous websites, blogs, seminars, and speaking engagements engage, entertain, and educate both consumers and professionals. Ralph is also an accomplished author with several successful titles to his credit, including:

Power Teams: The Complete Guide to Building and Managing a Winning Real Estate Agent Team
Mortgage Myths: 77 Secrets That Will Save You Thousands on Home Financing (John Wiley & Sons)
Foreclosure Self-Defense For Dummies (John Wiley & Sons)
Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan)
Foreclosure Investing For Dummies (John Wiley & Sons)
Advanced Selling For Dummies (John Wiley & Sons)
Flipping Houses For Dummies (John Wiley & Sons)
Walk Like a Giant, Sell Like a Madman (HarperCollins)
Real Wealth by Investing in Real Estate (Prentice Hall/Penguin Group)
Sell it Yourself (Adams Media)
52 Weeks of Sales Success (HarperCollins)

To learn more about Ralph, visit AboutRalph.com or check out his daily insights on real estate and mortgage fraud prevention at FlippingFrenzy.com.

You can reach Ralph at RalphRoberts@RalphRoberts.com or by calling (586) 751-0000.