I was asked today, "So how's the market". Â And as usual, I say, "it depends" : ) Â We have a lot of unusual factors influencing the real estate market in Los Angeles today. Â Banks are still holding on to homes that were foreclosed upon ages ago. Â Short sales are starting to move more quickly, and thank goodness - we're beginning to see REGULAR SALES - where seller's actually have some equity return to the market in larger numbers than we've seen in the past few years.Â
Is that because prices have increased? Â Not really - just the opposite - But, I believe it's a naturally occuring event because many people have had a "pent up need" to sell, and have delayed selling their homes as long as possible. Â By this point, life has dictated to many of these people that waiting for a return of equity is no longer an option, and it's time to cut one's losses and move forward. Â Because of this, however, there is an even greater need for care and attention when it comes to selling your home, because every single penny counts. Â Most sellers who do have equity simply can't afford to waste the little bit they have by hiring an agent who does a sloppy job of marketing or costs them the opportunity to sell at the highest price possible.Â
Pricing and marketing is both a science and an art form to agents who truly understand this. Â It's vital to understand who your market is, and how they can be expected to behave...respond to your offering. Â A good agent who is in tune with this market will help you not only list your home, but use a strategy that includes how the home is staged...how - and WHEN it is presented, how it is priced and will help to create a "buzz" around your home. Â Â
Today's buyer, remember, is overwhelmed with the sights, smells, and unpleasantness of dirty, unkempt REO properties and sad, underwhelming houses where you can actually feel the despair of the owner when you walk through the door. Â People don't pay top dollar for a sad, dirty home....they want a discount in order to consider it. Â This is where details matter. Â If you want to pull top dollar out of your equity sale, you need to pull out all the stops and make it stand out. Â Use the contrast between what the buyers are "used to seeing" versus your, pristine, well-cared for home, with fresh blooming plantings and clean, neat exteriors that beg you to come in and feel what it's like to live in a happy, successful home. Â Today's buyer will stretch for hope and hapiness. Â If they see you being happy and living well in your home, they will infer "that could be me - this house could do that for me". Â I've seen it happen hundreds of times. Â Â
Pricing comes next - there is a perfect price for every home that will bring in the most activity, will make every buyer feel like....I gotta push a little further to get this one, or I'll lose it.... and at the same time will NOT make the buyer feel like, "wow, nice house, too bad they want too much for it!". Â No guesswork here. Â HOMEWORK here. Â The wrong starting price in this market will kill your one and only chance to get the highest price possible. Â Â Making your house too hard to see will do the same thing. Â When prices are reduced in order to sell because they were set too high to begin with, and/or there were access issues, the end selling price is, always, well below the original top price potential that you started with. Â It just is. Â There is no way to get that second chance to make that first impression. Â You can salvage a badly priced, badly marketed listing, but there is always a price that is paid in lost potential value. Â Â
In the end, it's the "whole package" that matters. Â Perfect pricing, professional presentation, visuals, smells, positive impressions that set your home apart in this market and make your listing seem "special and unique" will win you that top dollar bid. Â
Did you ever wonder how celebrities buy their homes, and keep their ownership off of the property tax roll searches? Â They use a trust. Â So do many judges, public officials, attorneys and other high profile individuals. Â But ask most lenders and they will tell you, "If you want to get a loan, you're going to have to first finance the property in your name, and then after close of escrow, you can transfer it into a trust."
That's dead wrong... and if you are truly concerned about your privacy...i.e.: letting the general public know where you and your children sleep at night... the results could be devastating. Â Â
There is a way to purchase, and finance your purchase directly into a trust so that your personal name(s) never, ever, hit the public records and property tax rolls. Â It takes a little extra planning in advance. Â It requires finding a lender who understands how to do this, and has experience lending directly to a trust. Â It certainly helps to also find a real estate agent who understands privacy issues and supports your desire to maintain your privacy. Â Beyond those considerations, accomplishing this only adds a little extra time to the lending process when everyone knows what they are doing. Â Â
Some may say, "I'll just transfer my home into a trust after close of escrow". Â And that's certainly a good idea, however, in this day and age of information technology, it only offers you the most basic first line of defense against someone who is interested in you, and not in a good way. Â Transfers of real estate are considered public knowledge, so, even if the "last known owner of record" may be a trust, the chain of ownership...finding who owned a property just prior to the property being transferred into a trust is just a matter of a few additional clicks in may cases. Â That's certainly not enough security to help me sleep well at night. Â Â
At the risk of sounding paranoid, I will say, with 100% certainty that a security breach can become of great concern and happen to anyone, at any time. Â I, myself gained a heightened awareness when suddenly, and without expecting this to happen, I found myself having to file a restraining order against a person who had become fixated on me. Â Very quickly, I learned that once information is provided as public record, in this digital age, it is nearly impossible to get back. Â Â
Living and working in the heart of the entertainment industry, and being that my "family's business" is in the personal security sector to boot, I probably run into a much larger percentage of clientele who need this level of privacy and protection than the average person. Â As such, over the years, I have integrated additional security measures, privacy protocals and have embraced a heightened awareness for the real life need for security and privacy in real estate. Â I am just now starting to see the public in general beginning to become aware of their own personal vulnerabilities in response to many of the frightening events that have played out in the news of late. Â Â
The good news is that the vast majority of people will never have a true need to hide their home address in order to feel safe, however there are many classes of individuals who would benefit greatly from doing so. Â They include: Â celebrities, "above the line" entertainment professionals, police officers, teachers, counselors, mental health professionals, business executives, attorneys .... especially family law attorneys... and so on. Â Basically, anyone who is, or can foresee being in the public eye in any way, or, by the very nature of their work, are the "bearer of bad news", disciplinarian or antagonist of individuals who might seek out personal retribution, Â should seriously consider purchasing their home directly into a trust - and name that trust something other than one's own family name, such as "The Emerson Family Trust"... instead, name your trust "15th Avenue Trust". Â There are a few restrictions on the name of the trust, but there are virtually millions of things you can call legally name your trust without giving out clues as to who you are. Â
Also, these types of trusts that are used for this specific purpose are called "intervivos revocable trusts", and, as the name implies, can be revoked or amended at any time as part of your overall estate planning. Â Â As with any tool in regard to estate planning, it is always best to consult with an attorney who is knowledgable about estate planning and taxation prior to taking any course of action to weigh out the costs/benefits/risks and rewards of doing so.Â
As I sit indoors, by my window, watching a freakishly out of season thunderstorm wreak untold havoc on our Los Angeles spring.... storm drains, unaccustomed to more than a sprinkling of precipitation...flooding of streets and crashing of vehicles driven by people who only understand how to drive in the sunshine here... Â I mourn the loss of my gorgeous 70 degree spring day of hiking at the LA Zoo. Â Â
As many Angelenos understand: Â Living in Los Angeles can be a love/hate relationship for certain. Â There are very few places in the US so culturally diverse, so invested in entertainment and industry that if you can't find something interesting to do here...well, you just aren't trying. Â The other side of the coin is a bit grittier, though. Â We have a lot of grime, a lot of crime... ridiculously crowded freeways where pompous drivers of high end luxury cars who tend to act as if they have some kind of "luxury immunity" to the same rules the rest of us follow, regularly collide with drivers from the other end of the spectrum, sporting low-riders, and old, jacked up cars with stolen hub-caps who cruise defiantly down the road passing a joint, and driving as one would expect... Â hmmm. Â Urban chaos, grime and crime amongst the glitter and galas of Hollywood. Â Who wouldn't love this place? Â
Alas, I have found my Mecca and Retreat: Â Griffith Park. Â I officially credit Griffith Park with the fact that I have any sanity left at all. Â As a real estate broker, even though, on the average, I would say that I put in 10-12 hours a day working on behalf of my clients, I do enjoy the "luxury" of deciding, for the most part, when those 10-12 hours will take place. Â There are many drawbacks to being in real estate: Â The long hours, the uncertainty of income, the bizarre and unexpected twists and turn of events in escrow... but being one's own boss of one's own time is a big bonus for me. Â Â
Many years ago, when I was a struggling junior agent, I learned that if one does not control one's own calendar, the calendar (and phone) control YOU. Â Exercise, fresh air (well, "sort of" fresh air..anyway), and being exposed to beauty is vitally important, in my opinion to one's success, health and sanity. Â So here's what I do:
Most mornings - anytime that I can manage it - I hike, either at one of the many trails at Griffith Park, or at the Zoo, with my camera for 1 1/2 hours. Â Almost 2 hours out of my work day - you say??? Â I can't do that! Â Oh, yes you can - you just have to insist upon it. Â Here's what I do: Â I have my cell phone, and sometimes, even, a netbook with me with my wi-fi hotspot on my telephone. Â As a small bonus, the additional weight in my back pack adds to my work out. Â Â If need be, and something terribly urgent arises, like unexpected issues with a short sale negotiator or ... Â escrow problems...etc., I can sit down, figure it out and get back to the office if need be, but usually, I can just get back to my hike. Â A small price to pay. Â And there is some kind of poetic justice about sitting amongst the beauty of nature while solving the world's problems. Â Usually, nothing happens during this 1 1/2 hours that simply cannot wait. Â So I allow myself that time.Â
During that time, I get out of myself...out of my stress, and into my creativity. Â Many, many solutions to problems come to me in this relaxed, heightened state. Â I sell more, solve more, and help more people than I could have done all clenched up, stressed out and tethered to my office. Â The zoo opens at 10:00 a.m. - so I like to be there when the gates open. Â There are very few people there... the animals are relaxed, awake and lively. Â It's an ideal time to indulge my photography hobby and get some great shots in. Â Some, by the way, I sell on the web for stock photography... not much, but a nice little stream of income for doing something that I'd be doing anyway! Â If you've never been to the LA ZOO, I'd encourage you to become a member and visit often. Â The terrain is hilly, and provides a good, solid hike. Â The foliage is dense, tropical and lovely, beyond words. Â GLAZA, the Greater Los Angeles Zoo Association has done a phenomenal job creating a wilderness wonderland with healthy, happy animals and extensive, docent-led educational programs. Â We're very fortunate, here in LA to have the Zoo. Â Â
By 11:45...I'm on my way out. Â Reluctantly. Â Back to the old grind...putting my cape back on...meeting my scheduled buyers...checking back in on my files, and saving the world for all those desperately needing real estate. Â Ah...but with a smile on my face - a song in my heart and a fervent hope to be able to return again... soon. Â Â
The long awaited principal reduction loan modifcations are not - I repeat - are not merely a rumor, nor a pie in the sky, it can't happen to me kind of reality. Â I'm happy to say that one of my clients was amongst the first to receive a significant ($170,000) principal reduction offer on his B of A loan modification. Â Â
This particular client has been in loss mitigation for over two years. Â He has not made a single payment in two years, until today, when he made his first trial period modification payment. Â He has been turned down for B of A Modifications three times, and we were standing by, in case this modification attempt failed, ready to do a short sale. Â And the letter finally came. Â Â
So, it would seem that the tides are turning. Â The recovery process has been painfully slow, and many may say, "too little, too late" for the millions of Americans who have lost their homes already. Â And those people would be right. Â But we are here - how we got here is a lesson at best, but what we do going forward will determine both the length and scope of the final toll of this heinous financial crisis. Â Â
Today, I attended one of Bank of America's large-scale Short Sale Forums - mini-seminars currently being held across the country which outline their new short sale policies and procedures. Â We were given new tools and "insider access" Â for escalation of short sale issues (limited to forum participants only), and taken, step by step through the new programs, requirements and processes. Â The idea is to reduce the vast majority of short sales from 3-6 months down to 30 days from application to a pre-approved price and terms agreed to by the investor so that a "normal" sale can take place from that point forward. Â Â They have instituted some very good new policies and procedures. Â The system isn't perfect, and they will, undoubtedly, continue to make tweeks and changes as they go forward, but I do have to applaud B of A for taking a leadership role in their approach to improving the short sale process. Â This level of bank/agent communication...having real tools in place to handle the inevitable problems and find a path to resolution inherent in short sales has been a long time in the making, and we, as both agents and consumers are hoping to be seeing a little light at the end of the tunnel.Â
Let's all collectively hope that this new light isn't actually an oncoming train!
They say, you get what you pay for. Â But when it comes to shopping the internet for the absolute lowest, rock bottom price on loans, you very well may get a whole lot more than you bargained for. Â Â
Everyone likes to get the lowest price possible, but a few common-sense precautions should be adhered to when tempted to trade service for price. Â It's easy for today's internet shopper to fall into what I call "The Internet Lie" - that's the syndrome where we fool ourselves into believing that all similar looking items are equal, and we may freely price-shop accordingly. Â It isn't true. Â We know this. Â Anyone who has ever bought something electronic on Ebay from a slightly less reputable seller, and experienced the HORROR of the return, repair or warranty process will tell you, service has a value and needs to be factored into any "bargain" we find on the internet. Â Â
The same is true when it comes to shopping for a lender - but more so, because, usually, the loan you may save a few dollars on represents your single most significant purchase: Â Your home. Â The risks for a few dollars of savings are enormous. Â
BEYOND RATES AND POINTS: Â Â
Aren't lenders pretty much the same? Â In the end, they fund the loan, and you have locked in a mortgage. Â So who cares if you have to go through a little more hassle to lock in a great rate? Â Isn't 30 years of a great rate worth it? Â Answer: Â It depends. Â We're assuming that you GET to lock that great rate and close that loan after all the extra hassle. Â But tell me this: Â What about when the service is so bad that the loan never closes, you lose your contract ... everything you've invested AND potentially your earnest money? Â Think it can't happen? Â Think again. Â Â
There's one precious commodity in an escrow that can't be retrieved once it's lost: Â Time. Â Here's a real life story, and something to think about next time you are tempted to go with rock bottom pricing on an internet lender. Â Â
All was well with the world. Â Buyer Smith was successful in negotiating a great price on the perfect Â house... it was a Bank Owned Property. Â He was given 30 days to close. Â Immediately he shopped rates, and locked his loan with an internet lender. Â The broker had some good reviews on sites like Zillow - although, the wholesale lender the broker used had very MIXED reviews.... Â
Appraisal was done on time...loan application was done, completely, and quickly. Â The buyers responded instantly to any request for information. Â The buyers had FICO scores in the 800's, long term, stable employment, were purchasing well within their means... one of the cleanest, simplest files I've ever seen. Â And we were 100% on top of this file at all times. Â None of this mattered. Â One week before our closing deadline, the loan was still in line for underwriting. Â We were told that the lender was overloaded with files....And of course they were - as the lowest possible priced lender, they regularly sacrifice quality and service. Â They understaff, have no one who can be reached for intervention on an issue, and don't communicate. Â Bottom line their motto is: Â "We're cheap. Â We don't care." Â
We pointed out that this was an REO with a $500 per day penalty for delays... ONE extension allowed IF the seller felt like it (no guarantees) AND if the time ran out on the extension the seller was fully within it's rights to cancel the contract AND keep the $15,000 earnest money deposit. Â Those of you who have ever seen an REO addendum know that this is pretty standard language with REOs. Â It's not something to play with.Â
All of this was disclosed upfront to the internet lender, and they said, "no problem - 30 days - no problem". Â Fast forward to one day before our close of escrow deadline, despite much screaming, threatening, cajoling...and such, we STILL did not have loan docs. Â When I say that I'm a "hands on" agent, I'm not kidding. Â I am the kind of agent who will take a problem, take matters into my own hands and do everything in my power to make things happen by any means necessary. Â Still, despite outrageous efforts and constant attention, nothing would move this process forward.
Â Every step with this lender was PAINFULLY slow and required another wait in line just to get their attention. Â We were helpless. Â The loan broker said his hands were tied, there was nothing he could to do speed up the process. Â The buyer knew by now that this was a bad choice...he was kicking himself for not taking my advice on mortgage brokers, but it was too late - nothing could be done but hope and wait. Â An extension was agreed to - but only one week was allowed.
At last, loan docs arrived and were signed...meticulously checked for accuracy, and returned as quickly as we could get them back for funding. Â We moved heaven and earth to speed up the process. Â And still the clock ticked away. Â Â 2 business days before the hard deadline, the loan was in line for funding. Â The loan processor (who was great by the way) Â and I, worked hand in hand, pushing escrow, fixing problems, getting documentation, despite escrow's "laissez-faire" attitude and lack of urgency. Â In the end it came down to 2 minutes before we lost the loan lock, and the contract. Â They didn't make it. Â The last condition came through 2 minutes too late and the funder was locked out of the wire program. Â My heart fell. Â My buyer cried. Â We begged for an exception. Â
By now, can you feel the tension? Â It's not over...the loan broker pulled in his last remaining card and managed to convince the lender do a special wire after cut off. We squeaked by with seconds to spare. Â We're ok - whew - BUT - it was truly a 50/50 chance or worse - that we might have lost it all. Â
And what if they hadn't pulled it off? Â Â So, where would we go from here? Â Threaten lawsuits? Â Legal manuevering? Â A hunt for the guilty? Â Punishment of the Innocent? Â Â It would have been a mess. Â And all could have been prevented if only the recommendations of using a known lender, with a trusted track record of service and an in-house underwriting department had been heeded. Â For the sake of .25 of one point in rates, and $1000 in lender rebates, so much, so much was at risk. Â So much time wasted...nerves shot... was it worth it? Â
These are not things to gamble with. Â This is not an isolated event. Â Â Please, think twice when you shop for lenders. Â Your agent probably has some good recommendations for lenders. Â There's a reason I recommend a handful of lenders - and it isn't because I get kick backs or make any extra money - that would be illegal, and I've never, not once, done it...most agents wouldn't. Â A few would. Â The only reason I recommend a few good lenders to my clients is that I am trying to protect them from the kinds of trouble and loss that most buyers never even imagine is possible in a transaction...until it is far, far too late. I recommend good lenders because I know, from experience what can happen, even to perfect files, with an unknown lender. Â
Â I feel so strongly about this, that I have a new policy: Â I will happily credit my buyers $500 towards closing costs out of my commission if they will use any one of my preferred, known lenders - because it's well worth the peace of mind for me, and the savings of time to NEVER have to go through a nightmare with a low-ball internet lender, ever again. Â
I'm pretty sure "these" particular agents aren't reading this, as it is highly unlikely that an agent who doesn't take care of the daily business has extra time to participate on Trulia... But we all know who "they" are, don't we?
Â Â It seems to me, as we descend further and further into a predominantly short sale market that the percentage of "garbage" listings, where it is virtually impossible to get in contact with the listing agent for inquiries or offers, is exponentially increasing. Â We, as professionals, already know - these unreachable listings aren't even real, genuine, fair market competitive listings. Â Sometimes they are bogus, and not really for sale, while people try to stall foreclosure. Â Sometimes they are little "inside jobs", where a small minded agent has no intention of creating a level playing field and entertaining offers from othersâ€¦other times, who knows? Â But one thing is for certain: Â After making 10 phone calls, 5 emails, and emails/calls to the "broker of record" of the company, and STILL not getting a responseâ€¦Something is Fishy. Â
Is it annoying? Â Yes. Â But that's not the point. Â The point is this: Â OUR buyers call us on these listings, and expect us to be able to get answers for them. Â When, increasingly, we have to return to them saying, "I don't know....can't reach the agent"... they get upset...suspicious..and sometimes we even lose buyers over it. Â But still worse, is when those agents WILL return the buyers call, hoping to capture a new buyer, but will never return an agent's call. Â How do I know this happens? Â I've made these calls, not identifying myself as an agent, and lo and behold... well you get the picture. Â It's unprofessional. Â It makes us all look like a bunch of buffoons, and quite honestly, if the listing isn't genuine...it's fraud.Â
So what is the answer? Â Should we, as agents and members of our respective MLS' put rules and procedures in place to identify and eliminate this activity? Â Do we already have those procedures in place, via the "report a violation" button on the MLS? Â Â Does anyone have experience with or knowledge about this kind of activity being actively pursued and dealt with through our associations? Â Â I believe the association is the proper venue for dealing with this increasing problem. Â It will, undoubtedly, create some additional work - but I, for one, would be willing to participate in an agent committee who would take on some responsibility for even-handed investigation of these types of complaints. Â Â I would propose that if an agent reports a listing agent as non-responsive after 5 attempts to contact, that the matter be turned over to volunteer agents on a committee for investigation. Â If the listing information is found to not be factual, real, and an open market opportunity for all agents to show and present offers on it, that agent should be fined the first time. Â The third time, they should lose all MLS privileges. Â Period. Â That will stop this. Â Agent to Agent...we jointlyÂ own the MLS data by our cooperation agreements. Participation in the MLS has always been a privilege, not a right. Â I believe it's up to us to police it...and our industry professionalism in the eyes of the world demands it of us. Â
Real estate traditions and processes with how listings are managed, advertised and the offer process conducted have changed, greatly, over the past several years - mostly in response to extreme changes in the real estate and foreclosure environment.Â Â Many of these practices were dictated arbitrarily by REO departments, and melted into common practice along the way.Â Â
I feel that, in our client's best interests, it's time to re-examine some of these practices, lest we harm our clients unintentionally.
Practice 1: Demanding that a buyer obtain a pre-approval from the listing agents preferred lender.Â Â
This came about, originally, in response to the plethora of "phony", "worthless" pre approval letters generated by mortgage brokers.Â Â At the time, it was a real concern.Â Â However, the practice has now evolved into one where mortgage brokers often pass along leads to agents who will feed clients back to them in this manner.Â Â This practice does NOT benefit the seller - it benefits the agent.Â As long as the buyer provides a pre approval from a direct lender, proof of funds to close, and reveals their fico score, the seller has enough information to make good decisions about which offer to accept.Â One could also ask for the DU Approval from the buyers lender, and to require that the approval letter state the basis of the approval, for example, a review of tax returns, income, debt and credit file before providing the pre approval. Many buyers are hesitant enough to jump through the unnecessary, and quite frankly, insulting hoops of going through another pre approval process, just to be able to bid on a certain property that they will decline to offer, and move on.Â Â Folks:Â This Seriously Harms your Seller.Â Â If you scare away otherwise good, potential buyers, you have financially harmed your client.Â Â
Bottom line:Â There are better ways to verify a buyer's pre approval status than arbitrarily requiring them to pre approve through YOUR lender.
Practice 2:Â Highest and Best Call:Â Â
IMHO this is like asking people to bid against themselves.Â Â Again, I have seen more highly qualified buyers back away, and/or get firmly stubborn on their price position with this tactic than anything else.Â Â And it backfires, regularly.Â Â By causing an almost "auction-like" frenzy, the fall out rate of escrowsÂ when a bidding period is conducted in this way is unnecessarily high.Â Why is that?Â You get the wrong buyer in escrow.Â Â What your seller needs is the most qualified, most committed buyer who is willing to pay at the top end of fair market value for the home.Â Â What you do not need is someone who, in an act of ill-considered desperation bids above where they logically would have priced this home, only to have second thoughts and cold feet in the days and weeks to come.Â Â What happens most of the time when a failed escrow returns to the market?Â It sells the second time for a lower price.Â
Again...We are potentially harming our sellers!Â Â A better idea:Â Â Cull the offers to the top 5 or fewer.Â Look at the trend, and the fair market value.Â Pick a number that works for your seller, and makes sense with the current interest level, and counter each offer.Â Â Some will accept, others will not.Â Now you know where the commitment levelÂ is.Â Â Now you can choose the most stable, most likely to complete the transaction amongst the top offers.Â Â This feels more fair to a buyer.Â Â When you alienate a buyer with the offer process, you have already shot yourself in the foot should new obstacles and further negotiations need to happen later in escrow.Â Keep the buyer happy and flexible, and keep your seller in escrow.
Practice 3:Â This one should go without saying...but, it happens often enough that it bears mention:Â Don't Give Unwarranted Preference to Direct Buyers where you'll Double End the Commission!Â
The only time a listing agent should recommend the offer from a buyer who goes directly to them, versus one working with another agent, is when that buyer also happens to be the most qualified, highest offer and by all indications demonstrates the highest level of commitment to seeing the transaction to completion.Â Â Â There are lots of buyers out there - and the blogs are chock full of "tips and techniques" to get a good deal on real estate.Â Â Many buyers will go direct, playing upon the presumed greed of the listing agent, and hoping for an advantage in the process - either that the agent will recommend their offer over others, or cut them back a deal for part of the "extra" commission.Â This is sleezy.Â I'm sorry.Â It is.Â Maybe I'm old fashioned, but I tell these buyers, "No - hire me to represent you if you like my service, but you're going to get the same preference, based on the merits of your offer as any other buyer".Â Â I have found that once one steps out on a slippery slope that they can expect to continue sliding all the way through the transaction.Â Â Nobody likes a cheater - and the fact remains:Â Anything someone will do FOR you, they will also, likely do TO you.Â Â Keep it clean, and keep your eye on your seller's best interest - not your own pocketbook.Â