Professional Courtesy and Respect: Killed by the Internet?

When I first entered the world of business there was no Internet, no email, and no text messaging. When we needed to communicate with someone, we picked-up the phone or met face-to-face. Deals were closed by looking each other in the eye and shaking hands.  We got to know one another and develop business relationships, and even friendships based on a foundation of common courtesy and respect.

 

OK, so I age myself.  But I’m experiencing a new level of disrespect and lack of courtesy that I’m having a difficult time dealing with as a professional – and I blame much of it on the Internet and the technology we all take for granted.  Don’t get me wrong, I embrace technology and can’t imagine how I did business in the pre www era.  However, I believe the very nature of a real-time, worldwide marketplace is removing the obligation to at least be courteous and respectful of people’s time and efforts.

 

I’m a Realtor and mortgage broker and receive my leads both through referrals and Internet marketing.  For example, I used to receive mortgage leads from Lending Tree…you know, “When banks compete, you win.”   What most borrowers don’t understand is that we’re paid nothing, unless we close your loan by working hard and finding the loan that is right for you. The professional courtesy I expect in exchange for the work I’m fronting is for a borrower to be honest with me and tell me if they are getting other quotes and where I fall in the competition for their business.  Recently, I had a borrower, unbeknownst to me, still getting quotes from others while I had her loan locked, appraisal completed and ready for approval!   I thought she was committed to working with me, but largely I believe because of having such a broad, anonymous marketplace, she was still shopping the loan to other brokers!  Because we had never met, or had an opportunity to shake hands, I feel it was easier for her to go behind my back.  Again, some common courtesy and respect for my time and efforts is all I ask.

 

Real estate also has its share of discourtesies based on access to a very broad marketplace.  Because anyone can search for properties online, some buyers think they are experts and that my services as a buyer’s agent aren’t really that complicated. They email me with pages of foreclosure listings, and wonder why I’m not showing them these properties.  Those of you in the industry are nodding your heads and sighing.  Many buyers again don’t understand the countless hours of research that goes into helping a buyer find the right property.  The courtesy I expect is to trust me as a professional.  I’m happy to evaluate the listings a buyer might send to me that they found on the Internet….but trust me, most are inappropriate for a variety of reasons and just a waste of my time, and their time.  If the property had met the buyer’s search parameters, I would have found it.  Just trust me and let me do my job and please have respect for my time.

 

My final gripe has to do with email.  Do you remember what a business letter used to look like?  I remember learning the very distinct formats and acceptable salutations that helped provide a professional framework for discussion.  Now, I’m not advocating that emails resemble a snail mail letter from the early ‘80s, but the casual nature of salutations, “Hi Bob,” the use of abbreviations, lack of punctuation, use of all lower case letters and general lack of any niceties, such as inquiring about someone’s family, demonstrates a lack of respect for the recipient.  And don’t even get me started on text messages.

 

Do I believe that the Internet and associated technologies are changing our business relationships?  Absolutely.  But I think that the change can be good.  I love the fact that because of the Internet and email I can do business all over the country and meet people I would have otherwise never encountered. I have never met 95% of my mortgage clients face-to-face, and yet I count many of them as my friends and look forward to their Christmas cards each year. I just hope we all remember that there is a live human being with thoughts, feelings, and a need to feel respected behind the website, or at the other end of the email before we hit send.

 

Would love to hear your thoughts.

 

 

Lenders Being Taken for a Ride on REO Listings?

We’ve all seen the statistics every night on the evening news; foreclosures continue to rise and lenders are scrambling to dump inventory.  In the last year, many in the real estate industry have refocused their businesses on selling REO (real estate owned, bank owned) properties, but just how good a job are they doing?

 

My company offers both mortgage and real estate services, and on the real estate side, I currently work primarily as a buyer’s agent.  What I’ve encountered in showing over 100 foreclosure properties in the last 3 months is downright pathetic.  Many of the listings are with real estate firms that might have over 100 REO properties.  While some agents do a good job, for the majority there is no marketing, and really nothing but a bare bones MLS listing with a few bad photos at best.  I can’t tell you how many times I’ve tried to show one of these listings and can’t even get into the property due to incorrect or lack of information: No access code to gated communities; incorrect combinations provided for lock boxes; and even keys that don’t work!  And if I do get into the property with my buyer the home is often in shambles:  ripped-up carpet, dirty toilets and just plain filth…and that’s the least of it….not to mention dead rats and things I don’t even want to mention.  No wonder these Listings are glutting our market!

 

What are these agents really doing to deserve a commission?  I know that in many cases they have to deal with an eviction and that is never an easy process, but in many cases they simply have to list and market the property.  Technically speaking, most asset management companies want to have their properties at least cleaned and debris removed, but that doesn’t seem to be happening.

 

My opinion is that the lenders and asset management companies holding all of this inventory should spread it out and not overload any one company to the point that they can’t effectively market the property.  It might be easiest to simply contact the same company and give them the listing, but if that listing sits on the market for 6 months due to lack of effective marketing, how smart is that?

 

So what does a buyer expect when viewing a foreclosure property?  Unless they are a seasoned buyer, we have to remember that they might not have a lot of imagination and perhaps won’t see past some of the larger obstacles.  The goal should be to remove enough distractions so that the buyer can actually get a sense of what the home offers.

 

• Cut down weeds and remove any debris in the front and back yard
• Remove any interior debris
• Clean the house, including appliances.  Even if the carpet is stained, the walls need painting and appliances should be replaced, clean goes a long way to helping a buyer imagine what the home might look like.

 

Marketing should, as mentioned earlier include something more than an MLS listing, but let’s start there.  How difficult is it to provide complete, accurate information and enough photos to spike interest?  Have the home cleaned and then take enough photos to show it to its best advantage.  Other standard real estate marketing should be provided for REO properties including holding an open house and email flyer campaigns.

 

If you are an asset management company and tired of having your listings sit on the market for months and months, please contact me and we’ll discuss an aggressive strategy to get your properties sold now.

 

 

 

Fannie, Freddie and Fear

I remember when I was a young girl, and my mother would tell me horror stories of the Great Depression; banks closing, money lost, no work and food shortages.  It never seemed quite real to me as a baby boomer, and I always wondered how things ever got to such a desperate state.

 

Well, I don’t think we’re on the verge of a depression, but I think it’s hard to deny that we’re in a recession. And more so now then at any time in our history, the declining housing and mortgage markets are playing a major role in this economic downward spiral.

 

The demise of Indymac was a wake-up call for many as it was all too reminiscent of those depression stories or the savings and loan crisis of the ‘80s and early ‘90s.  The difference now of course, is that we (the government) actually did learn from those debacles and unless you were foolish enough to have over $100,000 in deposits at Indymac, your money is safe.

 

But what about Fannie Mae and Freddie Mac?  Last Friday’s scare had many of you writing me to learn just what that might mean to you and your home loan.  And the bottom line is probably nothing at all.

 

Fannie Mae, The Federal National Mortgage Association (FNMA), was originally created as a government agency back in 1938 to provide a secondary market for FHA loans, which were also new at that time.  In 1968 Fannie Mae was re-chartered and became a publicly held organization, and in 1972 began buying conventional loans, (those not insured or guaranteed by the federal government – non FHA or VA).

 

Freddie Mac, the Federal home Loan Mortgage Corporation (FHLMC), didn’t come on the scene until it was created by the Emergency Home Finance Act of 1970.  It is a Government Sponsored Enterprise that is stock-holder owned.  Freddie Mac is authorized to make loans and loan guarantees. Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market.

 

What is critical about Fannie and Freddie is that they are the largest investors in home mortgages in the country.  Without Fannie and Freddie there would be little money avaialbe to lenders to make home loans, thus thier stability is critical to the economy.  Although both organizations have lost money over the past year, both have reserves above the government required minimums and neither is in danger of being taken over by the Federal Government.

 

So what does this scare really mean?  I’m no economist, but as a mortgage broker I see two probable results:  1) In order to deliver only the highest quality loans for re-sale on the secondary market both organizations are likely to tighten their lending guidelines, which although spurring investor confidence may limit the number of people who are able to purchase or refinance; and 2) As a result of tightening guidelines in the conventional loan marketplace, we’re likey to see continued growth in the numbers of FHA loans.

 

My advice?  If you are thinking about making a home purchase or refinancing and not sure if you’d qualify for a conventional loan, don’t overlook FHA as there are several aspects to the program that just might open doors you thought were closed, such as low credit scores and high loan-to-value ratios.  Please drop me an email at marti@kilby.com  if you’d like to know more.

 

Avoiding Loan Modification Scams

Given the current lending market which has become much more stringent, I know that many are facing challenges when trying to refinance.  If you are unable to refinance for any number of reasons, a loan modification might work for you.

A loan modification is when the lender modifies your current mortgage in order to work with you and make your mortgage payments more affordable.  This is usually accomplished by lowering the interest rate and locking it at that new rate for a certain number of years. In the past this was only used when a borrower was delinquent but now it is being used before someone is delinquent to give them relief from a future interest rate adjustment on an ARM.  If there is a delinquency, payment on the delinquent amount is often deferred or stretched out over a longer period of time.

My suggestion has always been to talk to your lender as soon as you feel that you’re headed for trouble.  Over 50% of foreclosures could be avoided if borrowers contacted their lenders and tried to work something out before it becomes too late. Unfortunately, lenders today are overwhelmed and unresponsive and as many borrowers discover, just getting through to the appropriate person or department is next to impossible.

The current need for so many to modify their loans in order to save their homes has unfortunately bred a whole new pack of scam artists.  Many of these companies charge huge upfront fees, as much as $7500 to negotiate a loan modification on your behalf with your lender, promising to return half of your fee if they are unsuccessful.  They make one phone call, report to you that the lender won’t budge, return $3750 to you and pocket the balance for doing absolutely nothing!  You’re short $3750 and still have no loan relief!  The scam takes several forms, but you get the idea.

There is however, legitimate help available.  If you are personally unable to make any progress with your lender, I would suggest working with a real estate attorney.  Once they legally represent you, the lender is required to respond and work with them within a 60-day dispute time-frame.  The key is to finding an attorney who is experienced in loan modification and has a thorough understanding of how to use the Truth in Lending Act and the Real Estate Settlement Procedures Act to get the lenders to cooperate.

After much investigation, I have found a law firm that I would be happy to refer.  They charge a flat fee and will not accept a fee unless they feel that your loan can be modified to lower your payments.  If you are facing foreclosure, they might also be able to help protect your assets and your credit.  They work in all 50 states and would be happy to discuss your situation at no charge.  If you are interested in speaking with them, please give me a call or drop me an email at marti@kilby.com.

It is always very frustrating to me when I can’t do a loan for someone, so I hope this information is useful.

 

A Lesson in Foreclosure Buying

In my post last week, I mentioned that I had made an offer on behalf of my client on a foreclosure, versus a short-sale.  The property listed on June 11 and we made a full price offer on the 23rd.  Too late!  We learned today that the bank accepted an earlier offer. 

I knew this was a steal of a deal…about $30K below market, so I’m not surprised that it was snatched-up so quickly.  But I do have a bit of a gripe with the listing company.  Some of these companies seem to be nothing more than listing mills.  I was never able to actually speak to the listing agent and was continually directed to assistants, who basically wasted my time.  The assistants seem to have been out of the loop, and didn’t even know that the bank had accepted the earlier offer and thus still had us complete a bunch of additional REO forms.  Had I know we were only submitting a back-up, I wouldn’t have wasted time, and would have had my buyer out there looking at more properties.  Sigh.

So we hit the streets again this Thursday.  My buyer is in a situation where she needs to buy and close in July, so we can’t waste any time.  Instead of waiting for the weekend, I’m pushing my clients to take time and get out there during the week if there is a hot property they need to see. I’ll keep you posted.

 

Buy Now or Wait?

Many would-be homebuyers seem to be standing on the sidelines, watching to see just how far home prices will drop.  According to Standard & Poor’s/Case-Schiller Home Price Index of 20 cities, housing prices for April fell for the 21^st consecutive month.  San Diego was one of the cities included in the index and here prices were down 2.6% for the month and 22.4% since April 2007.

 

But falling prices aren’t the only consideration.  Interest rates have been steadily increasing and are at their highest point in the last nine months.  Additionally, in reaction to the thousands of foreclosures sitting on their books and crippling the industry, lenders have tightened their criteria and raised requirements across the board.

 

Have we hit bottom?  This housing market slump is as bad as any since WWII, and according to experts will be longer in turning around.  Nicolas Retsinas of Harvard’s Joint Center for Housing Studies, observed in a report issued on Monday that housing markets “historically recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability.  It will take longer to rebound given the unusually high levels of foreclosures and constrained credit markets.  The slump in housing markets has not yet run its full course.”

 

So buy now, or wait?  Let’s say you buy a home today at $375,000 and have an 80% mortgage.  A $300,000 mortgage at 6.5% would be $1896.20 per month for the principal and interest payment. Now, what if you waited for a couple of months and the house price dropped to $350,000, but interest rates continued to increase?  The same 80% mortgage would be $280,000 but assuming an interest rate of 7.25% the monthly principal and interest payment would be $1910.09.  So you would owe less in principal, but quite possibly could be paying more on a monthly basis.  $14.00 a month difference isn’t such a big deal, but over the life of loan you would pay $407,637.34 in finance charges on the $280,000 loan, and $382,636.71 on the larger $300,000 loan.  That’s $25,000 more on a smaller loan, but at a higher rate.

 

So the answer to buying now or waiting isn’t easy without a crystal ball.  However, as interest rates continue to rise waiting for the price to fall another $10,000 – $25,000 may not be the best decision after all.

 

Short-Sale, Foreclosure…Guess Which I’d Prefer?

Foreclosures….  seems like a great way to steal a deal, but there is an interesting sidebar called a short-sale.  At the beginning of the value dropping avalanche from the heights, foreclosures were a sure way to bid low and come away with a great deal.  But then came the tidal wave of short sales as all of the ARM mortgages readjusted.  Combine the two and we’re all spinning around in a nasty market where getting deals closed has become a time-robbing, patience-testing experience.

What we’re seeing today in San Diego County is a high percentage of short-sales.  Short-sales are the dread of buyer’s agents as it could take over 3 months to learn whether or not the lender will accept the short-sale offer….3 months!  Who wants to put an offer on that property?  The surprising outcome of this is that foreclosures are actually more atractive and thus perhaps getting better, higher priced offers as the response time isn’t nearly as long.

After showing one of my clients close to 20 condos, she put in an offer on a foreclosure, versus some of the other choices whch were short-sales.  This came after I called all of the listing agents on the short-sale properties and recieved less than encouraging responses:  Some had not even collected the necessary documentation from the homeowner; some were stalled by overwhelmed lenders who don’t have time to review all of the short-sale applications; and some just didn’t know where to begin.

Foreclosures, priced to sell are looking good.  We made a full price offer as the foreclosure listing price was easliy $30,000 under the comps, and $190,000 under what the defaluted owner had paid just 18 months ago.  We expect a response in the next day or so.